Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 01, 2020 | Jun. 30, 2019 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Registrant Name | Esquire Financial Holdings, Inc. | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 7,697,146 | ||
Entity Public Float | $ 154.2 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001531031 | ||
Amendment Flag | false | ||
Entity Ex Transition Period | true |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 61,806 | $ 30,562 |
Securities available-for-sale | 146,419 | 145,698 |
Securities, restricted, at cost | 2,665 | 2,583 |
Loans | 565,369 | 468,101 |
Less: allowance for loan losses | (6,989) | (5,629) |
Loans, net | 558,380 | 462,472 |
Premises and equipment, net | 2,835 | 2,694 |
Accrued interest receivable | 3,242 | 3,855 |
Deferred tax assets | 2,049 | 3,072 |
Other assets | 20,612 | 12,963 |
Total assets | 798,008 | 663,899 |
Deposits: | ||
Demand | 201,837 | 212,721 |
Savings, NOW and money market | 459,037 | 335,283 |
Time | 19,746 | 20,417 |
Total deposits | 680,620 | 568,421 |
Secured borrowings | 86 | 89 |
Accrued expenses and other liabilities | 6,240 | 2,615 |
Total liabilities | 686,946 | 571,125 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $0.01; authorized 15,000,000 shares; issued and outstanding 7,652,170 shares at December 31, 2019 and 7,532,723 shares at December 31, 2018 | 77 | 75 |
Additional paid-in capital | 89,682 | 88,539 |
Retained earnings | 20,917 | 6,774 |
Accumulated other comprehensive income (loss) | 386 | (2,614) |
Total stockholders' equity | 111,062 | 92,774 |
Total liabilities and stockholders' equity | $ 798,008 | $ 663,899 |
CONSOLIDATED STATEMENTS OF FI_2
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Consolidated Statements of Financial Condition | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 7,652,170 | 7,532,723 |
Common stock, shares outstanding | 7,652,170 | 7,532,723 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Interest income: | |||
Loans | $ 31,790 | $ 24,375 | $ 17,554 |
Securities | 3,909 | 3,945 | 2,549 |
Interest earning deposits and other | 960 | 631 | 291 |
Total interest income | 36,659 | 28,951 | 20,394 |
Interest expense: | |||
Savings, NOW and money market deposits | 2,070 | 908 | 424 |
Time deposits | 473 | 275 | 93 |
Borrowings | 5 | 29 | 21 |
Total interest expense | 2,548 | 1,212 | 538 |
Net interest income | 34,111 | 27,739 | 19,856 |
Provision for loan losses | 1,850 | 1,375 | 905 |
Net interest income after provision for loan losses | 32,261 | 26,364 | 18,951 |
Noninterest income: | |||
Total noninterest income | 11,811 | 7,855 | 5,516 |
Noninterest expense: | |||
Employee compensation and benefits | 14,677 | 13,039 | 10,072 |
Occupancy and equipment | 1,913 | 1,736 | 1,557 |
Professional and consulting services | 2,919 | 2,589 | 1,902 |
FDIC and regulatory assessments | 242 | 321 | 256 |
Advertising and marketing | 718 | 524 | 485 |
Travel and business relations | 548 | 504 | 428 |
Data processing | 2,470 | 1,896 | 1,709 |
Other operating expenses | 1,447 | 1,686 | 1,024 |
Total noninterest expense | 24,934 | 22,295 | 17,433 |
Net income before income taxes | 19,138 | 11,924 | 7,034 |
Income tax expense | 4,995 | 3,190 | 3,390 |
Net income | $ 14,143 | $ 8,734 | $ 3,644 |
Earnings per share | |||
Basic (in dollars per share) | $ 1.91 | $ 1.18 | $ 0.59 |
Diluted (in dollars per share) | $ 1.82 | $ 1.13 | $ 0.58 |
Merchant processing income | |||
Noninterest income: | |||
Noninterest income | $ 10,976 | $ 4,961 | $ 3,322 |
Customer related fees and service charges | |||
Noninterest income: | |||
Noninterest income | $ 835 | $ 2,894 | $ 2,194 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 14,143 | $ 8,734 | $ 3,644 |
Other comprehensive income (loss): | |||
Unrealized gains (losses) arising during the period on securities available-for-sale | 4,139 | (1,685) | (465) |
Reclassification adjustment for net gains included in net income | 0 | 0 | 0 |
Tax effect | (1,139) | 461 | 181 |
Total other comprehensive income (loss) | 3,000 | (1,224) | (284) |
Total comprehensive income | $ 17,143 | $ 7,510 | $ 3,360 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | AOCI Attributable to Parent | Total |
Balance at Dec. 31, 2016 | $ 1 | $ 50 | $ 58,845 | $ (5,826) | $ (884) | $ 52,186 |
Balance (in shares) at Dec. 31, 2016 | 66,985 | 5,002,950 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 3,644 | 3,644 | ||||
Other comprehensive loss | (284) | (284) | ||||
Conversion of preferred stock for common stock | $ (1) | $ 1 | ||||
Conversion of preferred stock for common stock (in shares) | (66,985) | 66,985 | ||||
Exercise of stock options, net | $ 1 | 941 | 942 | |||
Exercise of stock options, net (in shares) | 101,941 | |||||
Issuance of common stock | $ 21 | 26,320 | 26,341 | |||
Issuance of common stock (in shares) | 2,154,660 | |||||
Stock compensation expense | 554 | 554 | ||||
Reclassification due to adoption of ASU 2018-02 | 222 | (222) | 222 | |||
Balance at Dec. 31, 2017 | $ 73 | 86,660 | (1,960) | (1,390) | 83,383 | |
Balance (in shares) at Dec. 31, 2017 | 7,326,536 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 8,734 | 8,734 | ||||
Other comprehensive loss | (1,224) | (1,224) | ||||
Exercise of stock options, net | 378 | 378 | ||||
Exercise of stock options, net (in shares) | 42,687 | |||||
Restricted stock grants | $ 2 | (2) | ||||
Restricted stock grants (in shares) | 163,500 | |||||
Stock compensation expense | 1,503 | 1,503 | ||||
Reclassification due to adoption of ASU 2018-02 | 0 | |||||
Balance at Dec. 31, 2018 | $ 75 | 88,539 | 6,774 | (2,614) | 92,774 | |
Balance (in shares) at Dec. 31, 2018 | 7,532,723 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 14,143 | 14,143 | ||||
Other comprehensive loss | 3,000 | 3,000 | ||||
Exercise of stock options, net | 50 | 50 | ||||
Exercise of stock options, net (in shares) | 8,947 | |||||
Restricted stock grants | $ 2 | (2) | ||||
Restricted stock grants (in shares) | 110,500 | |||||
Stock compensation expense | 1,095 | 1,095 | ||||
Reclassification due to adoption of ASU 2018-02 | 0 | |||||
Balance at Dec. 31, 2019 | $ 77 | $ 89,682 | $ 20,917 | $ 386 | $ 111,062 | |
Balance (in shares) at Dec. 31, 2019 | 7,652,170 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 14,143 | $ 8,734 | $ 3,644 |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Provision for loan losses | 1,850 | 1,375 | 905 |
Depreciation | 506 | 421 | 411 |
Stock compensation expense | 1,095 | 1,503 | 554 |
Deferred tax (benefit) expense | (116) | (370) | 1,048 |
Net amortization: | |||
Securities | 550 | 446 | 403 |
Loans | 278 | 476 | 632 |
Right of use asset | 382 | ||
Changes in other assets and liabilities: | |||
Accrued interest receivable | 613 | (1,019) | (1,295) |
Other assets | (4,974) | (3,351) | (2,309) |
Operating lease liability | (314) | ||
Accrued expenses and other liabilities | 882 | 1,213 | (14) |
Net cash provided by operating activities | 14,895 | 9,428 | 3,979 |
Cash flows from investing activities: | |||
Net change in loans | (98,036) | (119,609) | (71,086) |
Purchases of securities available-for-sale | (28,202) | (42,482) | (58,503) |
Principal repayments on securities available-for-sale | 31,070 | 23,411 | 21,522 |
Purchase of securities, restricted | (82) | (400) | (534) |
Purchase of equity investment without readily determinable fair value | (2,410) | ||
Purchases of premises and equipment | (647) | (569) | (190) |
Net cash used in investing activities | (95,897) | (142,059) | (108,791) |
Cash flows from financing activities: | |||
Net increase in deposits | 112,199 | 119,927 | 77,706 |
Decrease in secured borrowings | (3) | (189) | (93) |
Exercise of stock options | 50 | 378 | 942 |
Proceeds from the issuance of common stock, net of issuance costs | 26,341 | ||
Net cash provided by financing activities | 112,246 | 120,116 | 104,896 |
Increase (decrease) in cash and cash equivalents | 31,244 | (12,515) | 84 |
Cash and cash equivalents at beginning of the period | 30,562 | 43,077 | 42,993 |
Cash and cash equivalents at end of the period | 61,806 | 30,562 | 43,077 |
Cash paid during the period for: | |||
Interest | 2,551 | 1,203 | 535 |
Taxes | 5,149 | $ 2,675 | 2,630 |
Noncash transactions: | |||
Exchange of preferred stock for common stock | $ 1 | ||
Right of use asset obtained in exchange for lease liability | $ 3,640 |
Business and Summary of Signifi
Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Business and Summary of Significant Accounting Policies | |
Business and Summary of Significant Accounting Policies | NOTE 1 — Business and Summary of Significant Accounting Policies Business Esquire Financial Holdings, Inc. (the “Company”) is a bank holding company incorporated in Maryland and headquartered in Jericho, New York, with one branch office in Jericho, New York and an administrative office in Boca Raton, Florida. Its wholly-owned subsidiary, Esquire Bank, National Association (the “Bank”), is a full service commercial bank dedicated to serving the financial needs of the legal industry and small businesses nationally, as well as commercial and retail customers in the New York metropolitan area. The Bank offers tailored products and solutions to the legal community and their clients as well as dynamic and flexible merchant services solutions to small business owners. Banking products offered for businesses and consumers include checking, savings, money market and time deposits; a wide range of commercial and consumer loans, as well as customary banking services. These activities, primarily anchored by our legal community focus, generate a stable source of low cost core deposits and a diverse asset base to support our overall operations. The Bank operates a merchant services platform through third party Independent Sales Organizations (“ISOs”). As an acquiring bank, fees are charged to merchants for the settlement of credit card, debit card and ACH transactions. The Bank’s revenue from these operational services is presented as merchant processing income on the Consolidated Statement of Income. The Consolidated Financial Statements include Esquire Financial Holdings, Inc. and its wholly owned subsidiary, Esquire Bank, N.A. and are referred to as “the Company.” Intercompany transactions and balances are eliminated in consolidation. Common Stock On June 30, 2017, we completed our initial public offering (“IPO”) and sold 1,800,000 shares of common stock. We received aggregate net proceeds of approximately $21,741, after deducting underwriting discount and other offering related expenses. On July 20, 2017 we sold 354,580 additional shares of common stock at the public offering price of $14.00 per share pursuant to the underwriter’s over-allotment options. The net proceeds of the additional shares after deducting the underwriting discount and other offering related expenses was approximately $4,600. Preferred Stock In December of 2014, the Company issued 157,985 0.00% Series B Non-Voting Preferred shares at a price of $12.50 per share for proceeds, net of offering costs, of approximately $1,800. The preferred stock did not have a maturity date and was not convertible by the holder, but was convertible on a one for one basis into common stock by us under certain circumstances. In addition, the preferred stock did not have a liquidation preference and had equal rights to receive dividends when dividends are declared on common stock, and thus were considered participating securities. These shares were later exchanged for 157,985 shares of common stock, par value $0.01. As of December 31, 2019 and 2018, there are no preferred shares outstanding . Dividend Restriction Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders. Basis of Presentation and Use of Estimates The accounting and financial reporting policies are in conformity with U.S. generally accepted accounting principles (GAAP). The preparation of financial statements requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual results could differ from those estimates. Statement of Cash Flows For purposes of the accompanying statements of cash flows, cash and cash equivalents are defined as the amounts included in the Consolidated Statements of Financial Condition under the captions “Cash and cash equivalents”, with contractual maturities of less than 90 days. Net cash flows are reported for customer loan and deposit transactions. Debt Securities All securities are classified as available-for-sale and carried at fair value. Unrealized gains and losses on these securities are reported, net of applicable taxes, as a separate component of accumulated other comprehensive income (loss), a component of stockholders’ equity. Interest income on securities, including amortization of premiums and accretion of discounts, is recognized using the level yield method without anticipating prepayments (except for mortgage-backed securities where prepayments are anticipated) over the lives of the individual securities. Realized gains and losses on sales of securities are computed using the specific identification method. Loans Loans that management has the intent and ability to hold for the foreseeable future until maturity or payoff are stated at the principal amount outstanding, net of deferred loan fees and costs for originated loans and net of unamortized premiums or discounts for purchased loans. Interest income is recognized using the level yield method. Net deferred loan fees, origination costs, unamortized premiums or discounts are recognized in interest income over the loan term as a yield adjustment. Nonaccrual Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to nonaccrual status in accordance with the Company’s policy, typically after 90 days of non-payment. All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Provision and Allowance for Loan Losses The allowance for loan losses is a valuation allowance for probable incurred credit losses. The allowance for loan losses is increased by provisions for loan losses charged to income. Losses are charged to the allowance when all or a portion of a loan is deemed to be uncollectible. Subsequent recoveries of loans previously charged off are credited to the allowance for loan losses when realized. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. All loans, except for smaller dollar consumer loans, are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated as a specific allowance. The measurement of an impaired loan is based on (i) the present value of expected future cash flows discounted at the loan’s effective interest rate, (ii) the loan’s observable market price or (iii) the fair value of the collateral if the loan is collateral dependent. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses. The general component is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The determination of the economic factors is a qualitative assessment that involves significant management judgment and subjective measurement. Management has identified the following loan segments: Commercial Real Estate, Multifamily, Construction, Commercial, 1 – 4 Family Residential and Consumer. The risks associated with a concentration in real estate loans include potential losses from fluctuating values of land and improved properties. Commercial Real Estate and Multifamily loans are expected to be repaid from the cash flow of the underlying property so the collective amount of rents must be sufficient to cover all operating expenses, property management and maintenance, taxes and debt service. Increases in vacancy rates, interest rates or other changes in general economic conditions can all have an impact on the borrower and their ability to repay the loan. Construction loans are considered riskier than commercial financing on improved and established commercial real estate. The risk of potential loss increases if the original cost estimates or time to complete are significantly off. The remainder of the loan portfolio is comprised of commercial and consumer loans. The primary risks associated with the commercial loans is the cash flow of the business, the experience and quality of the borrowers’ management, the business climate, and the impact of economic factors. The primary risks associated with 1 – 4 Family Residential and Consumer loans relate to the borrower, such as the risk of a borrower’s unemployment as a result of deteriorating economic conditions or the amount and nature of a borrower’s other existing indebtedness, and the value of the collateral securing the loan if the Bank must take possession of the collateral. Post-settlement consumer loans are also subject to unforeseen rulings or administrative legal anomalies that may eliminate or greatly reduce a borrowers settlement amount. Premises and Equipment Premises and equipment, including leasehold improvements, are stated at cost, net of accumulated depreciation and amortization. Equipment, which includes furniture and fixtures, are depreciated over the assets’ estimated useful lives using the straight-line method (three to ten years). Amortization of leasehold improvements is recognized on a straight-line basis over the lesser of the expected lease term or the estimated useful life of the asset. Costs incurred to improve or extend the life of existing assets are capitalized. Repairs and maintenance are charged to expense. Internal-Use Software Implementation costs with respect to internal-use software is capitalized once the project stage is complete. Project stage includes determining the performance requirements, strategic decisions related to allocation of resources, determining the technology needed to achieve performance requirements, selection of vendors, and other items. Costs during the project stage are expensed as incurred. Once the internal-use software is placed into operation, capitalized software costs are amortized using the straight-line method over 3-5 years. Securities, Restricted, at Cost The Bank is a member of the Federal Home Loan Bank (FHLB) system and the Federal Reserve Bank of New York (FRB), and Atlantic Central Banker’s Bank where members are required to own a certain number of shares of stock in order to conduct business with these institutions. FHLB stock holdings are based on the level of mortgage related assets, borrowings and other factors while FRB stock holding levels are capital based. These equity investments are carried at cost and classified as restricted securities which are periodically evaluated for impairment based on the ultimate recovery of par value. Dividends from these equity investments are reported as interest income on the Consolidated Statements of Income. Loan Commitments The Company enters into commitments to extend credit to customers to meet their financing needs which are in the form of lines of credit, letters of credit, and loan funding commitments. The face amount of these financial instruments represents the exposure to loss before considering customer collateral or ability to repay. Such financial instruments are recorded on balance sheet at cost when funded and presented as loans on the Consolidated Statements of Financial Condition. Equity Investment Without Readily Determinable Fair Value In April 2018, the Company purchased a 4.95% interest in Litify, Inc., a technology solution to automate and manage a law firm’s business and cases, for a cost of $2,410. As Litify, Inc. is a private company, the investment does not have a readily determinable fair value and management has elected to determine the recorded carrying amount based on its cost adjusted for observable price changes less impairment. At December 31, 2019, the investment’s carrying amount was $2,410. Based on our evaluation, we noted no significant adverse changes which would indicate the asset is impaired or any observable price changes as of December 31, 2019. The investment is presented within other assets on the Consolidated Statements of Financial Condition. Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Income Taxes Income taxes are provided for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period the change occurs. Deferred tax assets are reduced, through a valuation allowance, if necessary, by the amount of such benefits that are not expected to be realized based on current available evidence. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters in income tax expense on the Consolidated Statements of Income. Earnings per Common Share Basic earnings per common share is net earnings allocated to common stock divided by the weighted average number of common shares outstanding during the period. Any outstanding preferred shares are considered participating securities for computation of basic earnings per common share. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options and restricted stock awards. Share-Based Payment Share based payment guidance requires the Company to recognize the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees in the statements of income. A Black-Scholes model is utilized to estimate the fair value of stock options. Compensation cost for stock options are recognized as noninterest expense in the statement of income on a straight-line basis over the vesting period of each stock option grant. Compensation cost for stock options includes the impact of an estimated forfeiture rate. Compensation expense for restricted stock awards is based on the fair value of the award on the measurement date, which is the date of grant, and the expense is recognized ratably over the service period of the award. At December 31, 2019, no equity-based compensation had vesting conditions linked to the performance of the Company or market conditions. Segment Reporting The Company’s operations are exclusively in the financial services industry and include the provision of traditional banking services. Management evaluates the performance of the Company based on only one business segment, that of community banking. In the opinion of management, the Company does not have any other reportable segments as defined by Accounting Standards Codification (ASC) Topic 280, “Disclosure about Segments of an Enterprise and Related Information.” Restrictions on Cash Cash on hand or on deposit with the FRB is required to meet regulatory reserve and clearing requirements. Reclassifications Some items in the prior year financial statements were reclassified to conform to the current presentation. The reclassifications are immaterial and had no effect on prior year net income or stockholders’ equity. Comprehensive Income Comprehensive income consists of net income and other comprehensive income (loss) which includes unrealized gains and losses on securities available-for-sale. Fair Value of Financial Instruments Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the Consolidated Financial Statements. New Accounting Pronouncements On February 25, 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. The new standard was adopted by the Company on January 1, 2019 utilizing the modified retrospective transition approach where it was applied to all leases existing at the date of initial application. Upon adoption, we recognized a ROU asset, presented within other assets on the Consolidated Statement of Financial Condition, and a lease liability, presented within accrued expenses and other liabilities on the Consolidated Statement of Financial Condition, of approximately $3.1 million and $3.6 million, respectively. In transition, we elected the ‘package of practical expedients’, which permitted the Company not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. Management did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. The new standard also provided practical expedients for an entity’s ongoing accounting. Management elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases with an initial term of 12 months or less, the Company did not recognize ROU assets or lease liabilities, and this included not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. In recognizing ROU lease assets and related lease liabilities, we exclude variable and non-lease components (such as taxes, insurance, and common area maintenance costs) and expense these costs as incurred. At lease commencement date, the lease payments over the expected term are discounted using our incremental borrowing rate referenced to the Federal Home Loan Bank advance rates of a similar term to determine the present value of our lease obligation and ROU asset to be recorded on the Statement of Financial Condition. Lease expense is then recognized on a straight-line basis. The Company has committed to rent premises used in business operations under non-cancelable operating leases that have renewal options for additional 3-5 year terms which were not considered in determining our ROU asset or lease liability as renewal is not reasonably certain . On June 16, 2016, the FASB issued Accounting Standards Update No. 2016‑13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (the ASU). This ASU replaces the incurred loss model with an expected loss model, referred to as “current expected credit loss” (CECL) model. It will significantly change estimates for credit losses related to financial assets measured at amortized cost, including loans receivable and certain other contracts. This ASU will be effective for the Company in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. At its July 17, 2019 public meeting, FASB issued a proposal to delay the effective date of ASU 2016-13 for certain entities, including SEC filers classified as smaller reporting companies. On October 16, 2019, FASB voted for the delay, the revised effective date for adoption for the Company, which is classified as a smaller reporting company, is January 1, 2023. Due to this change in effective date, the Company plans to adopt ASU 2016-13 on or before January 1, 2023, using the required modified retrospective method with a cumulative effect adjustment as of the beginning of the reporting period. The Company has gathered the necessary data and continues to prepare for the implementation of this standard. |
Debt Securities
Debt Securities | 12 Months Ended |
Dec. 31, 2019 | |
Debt Securities | |
Debt Securities | NOTE 2 — Debt Securities Available-for-Sale Securities The amortized cost, gross unrealized gains and losses and estimated fair value of securities available-for-sale were as follows at December 31: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value 2019 Mortgage-backed securities – agency $ 24,603 $ 524 $ (90) $ 25,037 Collateralized mortgage obligations (CMO’s) – agency 121,276 451 (345) 121,382 Total available-for-sale $ 145,879 $ 975 $ (435) $ 146,419 2018 Mortgage-backed securities – agency $ 27,384 $ 15 $ (724) $ 26,675 Collateralized mortgage obligations (CMO’s) – agency 121,913 32 (2,922) 119,023 Total available-for-sale $ 149,297 $ 47 $ (3,646) $ 145,698 Mortgage-backed securities included all residential pass-through certificates guaranteed by FHLMC, FNMA, or GNMA and the CMO’s are backed by government agency pass-through certificates. The 2019 and 2018 pass-through certificates are fixed rate instruments. CMO’s, by virtue of the underlying residential collateral or structure, are fixed rate current pay sequentials or planned amortization classes (PAC’s). As actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations, these securities are not considered to have a single maturity date. There were no sales of securities in 2019, 2018, and 2017. At December 31, 2019, securities having a fair value of $122,805 were pledged to the FHLB for borrowing capacity totaling $116,741. At December 31, 2018, securities having a fair value of $120,673 were pledged to the FHLB for borrowing capacity totaling $114,963. At December 31, 2019 and 2018, the Company had no outstanding FHLB advances. At December 31, 2019, securities having a fair value of $23,614 were pledged to the FRB of New York for borrowing capacity totaling $22,915. At December 31, 2018, securities having a fair value of $25,025 were pledged to FRB of New York for borrowing capacity totaling $24,177. At December 31, 2019 and 2018, the Company had no outstanding FRB borrowings. The following table provides the gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, as of December 31: Less Than 12 Months 12 Months or Longer Total Fair Gross Fair Gross Fair Gross 2019 Mortgage-backed securities – agency $ — $ — $ 9,529 $ (90) $ 9,529 $ (90) CMO’s – agency 20,639 (66) 22,295 (279) 42,934 (345) Total temporarily impaired securities $ 20,639 $ (66) $ 31,824 $ (369) $ 52,463 $ (435) 2018 Mortgage-backed securities - agency $ 9,528 $ (99) $ 15,497 $ (625) $ 25,025 $ (724) CMO's - Agency 19,184 (73) 85,775 (2,849) 104,959 (2,922) Total temporarily impaired securities $ 28,712 $ (172) $ 101,272 $ (3,474) $ 129,984 $ (3,646) Management reviews the investment portfolio on a quarterly basis to determine the cause, magnitude and duration of declines in the fair value of each security. In estimating other-than-temporary impairment (OTTI), management considers many factors including: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the security or more likely than not will be required to sell the security before its anticipated recovery. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether any other than temporary decline exists may involve a high degree of subjectivity and judgment and is based on the information available to management at a point in time. Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. At December 31, 2019, securities in unrealized loss positions were issuances from government sponsored entities. Due to the decline in fair value attributable to changes in interest rates and illiquidity, not credit quality and because the Company does not have the intent to sell the securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider the securities to be other-than-temporarily impaired at December 31, 2019. No impairment charges were recorded in 2019, 2018 and 2017. |
Loans
Loans | 12 Months Ended |
Dec. 31, 2019 | |
Loans | |
Loans | NOTE 3 — Loans The composition of loans by class is summarized as follows at December 31: 2019 2018 1 – 4 family residential $ 48,140 $ 56,043 Commercial 257,957 191,828 Multifamily 152,633 136,537 Commercial real estate 52,477 33,145 Construction 6,450 5,921 Consumer 47,322 43,675 Total Loans 564,979 467,149 Deferred costs and unearned premiums, net 390 952 Allowance for loan losses (6,989) (5,629) Loans, net $ 558,380 $ 462,472 The following tables present the activity in the allowance for loan losses by class for the years ending December 31, 2019, 2018 and 2017: 1-4 Family Commercial Residential Commercial Multifamily Real Estate Construction Consumer Total December 31, 2019 Allowance for loan losses: Beginning balance $ 407 $ 3,110 $ 952 $ 357 $ 149 $ 654 $ 5,629 Provision (credit) for loan losses (63) 957 159 203 12 582 1,850 Recoveries — — — — — — — Loans charged-off — (19) (63) — — (408) (490) Total ending allowance balance $ 344 $ 4,048 $ 1,048 $ 560 $ 161 $ 828 $ 6,989 December 31, 2018 Allowance for loan losses: Beginning balance $ 382 $ 2,272 $ 713 $ 266 $ 127 $ 504 $ 4,264 Provision for loan losses 25 838 239 91 22 160 1,375 Recoveries — — — — — — — Loans charged-off — — — — — (10) (10) Total ending allowance balance $ 407 $ 3,110 $ 952 $ 357 $ 149 $ 654 $ 5,629 December 31, 2017 Allowance for loan losses: Beginning balance $ 360 $ 1,934 $ 621 $ 238 $ 141 $ 119 $ 3,413 Provision (credit) for loan losses 22 352 92 28 (14) 425 905 Recoveries — — — — — — — Loans charged-off — (14) — — — (40) (54) Total ending allowance balance $ 382 $ 2,272 $ 713 $ 266 $ 127 $ 504 $ 4,264 The following tables present the balance in the allowance for loan losses and the recorded investment in loans by class and based on impairment method as of December 31, 2019 and 2018: 1‑4 Family Commercial Residential Commercial Multifamily Real Estate Construction Consumer Total December 31, 2019 Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 344 4,048 1,048 560 161 828 6,989 Total ending allowance balance $ 344 $ 4,048 $ 1,048 $ 560 $ 161 $ 828 $ 6,989 Loans: Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ 1,476 $ 1,476 Loans collectively evaluated for impairment 48,140 257,957 152,633 52,477 6,450 45,846 563,503 Total ending loans balance $ 48,140 $ 257,957 $ 152,633 $ 52,477 $ 6,450 $ 47,322 $ 564,979 Recorded investment is not adjusted for accrued interest, unearned premiums or deferred costs. 1 – 4 Family Commercial Residential Commercial Multifamily Real Estate Construction Consumer Total December 31, 2018 Allowance for loan losses: Ending allowance Balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 407 3,110 952 357 149 654 5,629 Total ending allowance balance $ 407 $ 3,110 $ 952 $ 357 $ 149 $ 654 $ 5,629 Loans: Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment 56,043 191,828 136,537 33,145 5,921 43,675 467,149 Total ending loans balance $ 56,043 $ 191,828 $ 136,537 $ 33,145 $ 5,921 $ 43,675 $ 467,149 The following tables provide an analysis of the impaired loans by segment as of December 31, 2019. There were no impaired loans as of December 31, 2018: December 31, 2019 Unpaid Recorded Principal Investment Balance 1-4 family residential $ — $ — Commercial — — Multifamily — — Commercial real estate — — Construction — — Consumer 1,476 1,476 Total $ 1,476 $ 1,476 For the year ended December 31, 2019 Average Interest Recorded Income Investment Recognized 1-4 family residential $ — $ — Commercial — — Multifamily — — Commercial real estate — — Construction — — Consumer 541 — Total $ 541 $ — There were no impaired loans during the years ended December 31, 2018 and 2017. The following tables present the aging of the recorded investment in past due loans by class of loans as of December 31, 2019 and 2018: Total Past 30-59 60-89 Greater than Due & Days Days 90 Days Nonaccrual Nonaccrual Loans Not Past Due Past Due Past Due Loans Loans Past Due Total December 31, 2019 1 – 4 family residential $ — $ — $ — $ — $ — $ 48,140 $ 48,140 Commercial — — — — — 257,957 257,957 Multifamily — 2,602 — — 2,602 150,031 152,633 Commercial real estate — — — — — 52,477 52,477 Construction — — — — — 6,450 6,450 Consumer — 6 — 1,476 1,482 45,840 47,322 Total $ — $ 2,608 $ — $ 1,476 $ 4,084 $ 560,895 $ 564,979 The $2,602 past due multifamily loan balance was paid off subsequent to December 31, 2019. Total Past 30-59 60-89 Greater than Due & Days Days 90 Days Nonaccrual Nonaccrual Loans Not Past Due Past Due Past Due Loans Loans Past Due Total December 31, 2018 1 – 4 family residential $ — $ — $ — $ — $ — $ 56,043 $ 56,043 Commercial — — — — — 191,828 191,828 Multifamily — — — — — 136,537 136,537 Commercial real estate — — — — — 33,145 33,145 Construction — — — — — 5,921 5,921 Consumer — 40 — — 40 43,635 43,675 Total $ — $ 40 $ — $ — $ 40 $ 467,109 $ 467,149 Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed whenever a credit is extended, renewed or modified, or when an observable event occurs indicating a potential decline in credit quality, and no less than annually for large balance loans. The Company uses the following definitions for risk ratings: Special Mention — Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard — Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful — Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows: Pass Special Mention Substandard Doubtful December 31, 2019 1 – 4 family residential $ 48,140 $ — $ — $ — Commercial 257,832 — 125 — Multifamily 152,633 — — — Commercial real estate 52,477 — — — Construction 6,450 — — — Consumer 42,431 3,415 1,476 — Total $ 559,963 $ 3,415 $ 1,601 $ — Pass Special Mention Substandard Doubtful December 31, 2018 1 – 4 family residential $ 56,043 $ — $ — $ — Commercial 182,482 9,166 180 — Multifamily 136,537 — — — Commercial real estate 33,145 — — — Construction 5,921 — — — Consumer 43,675 — — — Total $ 457,803 $ 9,166 $ 180 $ — The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For 1 – 4 family residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The Company has no loans identified as troubled debt restructurings at December 31, 2019 and 2018. Furthermore, there were no loan modifications during 2019, 2018 and 2017 that were troubled debt restructurings. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. Related Party Loans Loans to related parties include loans to directors, their related companies and executive officers of the Company. Loans to principal officers, directors, and their affiliates during 2019 were as follows: Beginning balance $ 8,464 New advances 2,567 Repayments (2,814) Ending balance $ 8,217 |
Premises and Equipment
Premises and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Premises and Equipment | |
Premises and Equipment | NOTE 4 — Premises and Equipment The following is a summary of premises and equipment at December 31: 2019 2018 Leasehold improvements $ 2,128 $ 1,614 Equipment 3,462 2,975 Construction in progress 24 479 5,614 5,068 Less: accumulated depreciation and amortization 2,779 2,374 Total premises and equipment, net $ 2,835 $ 2,694 Depreciation and amortization of premises and equipment, reflected as a component of occupancy and equipment, net in the statements of income, was $506, $421 and $411 for the periods ended December 31, 2019, 2018 and 2017, respectively. |
Deposits
Deposits | 12 Months Ended |
Dec. 31, 2019 | |
Deposits. | |
Deposits | NOTE 5 — Deposits As of December 31, 2019, deposits of $680,620, was comprised of core deposit relationships of $660,874 and certificates of deposit of $19,746. Core deposits are defined as all deposits except certificates of deposits which include demand, savings, NOW, and money market deposit accounts. Our noninterest bearing demand deposits are presented as demand deposits and all core interest bearing deposits are presented as savings, NOW and money market deposits on the Consolidated Statements of Financial Condition. Certificates of deposit are presented as time deposits on the Consolidated Statements of Financial Condition. The contractual maturities of certificates of deposit as of December 31, 2019, are as follows: Total 2020 $ 17,866 2021 1,880 Total $ 19,746 As of December 31, 2019 and 2018, certificates of deposits greater than $250 were $15,543 and $15,281, respectively. Deposits from principal officers, directors, and their affiliates at year-end 2019 and 2018 were $9,869 and $6,191, respectively. |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2019 | |
Borrowings | |
Borrowings | NOTE 6 — Borrowings The Company had a secured borrowing of $86 and $89 as of December 31, 2019 and 2018, respectively, relating to certain loan participations sold by the Company that did not qualify for sales treatment. At December 31, 2019 and 2018, we had the ability to borrow a total of $143,732 and $114,963, respectively, from the Federal Home Loan Bank of New York. We also had an available line of credit with the Federal Reserve Bank of New York discount window of $22,915 and $24,177 at December 31, 2019 and 2018, respectively. These borrowings are collateralized by loans and securities. At December 31, 2019 and 2018, we also had lines of credit with three other financial institutions totaling $17,500. No amounts were outstanding on any of the aforementioned lines as of December 31, 2019 and 2018. |
Noninterest Income
Noninterest Income | 12 Months Ended |
Dec. 31, 2019 | |
Noninterest Income | |
Noninterest Income | NOTE 7 — Noninterest Income The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit, and investment securities. Descriptions of revenue-generating activities that are within the scope of ASC 606, and are presented in the accompanying Consolidated Statements of Income as components of noninterest income, are as follows: For the Years Ended December 31, 2019 2018 Noninterest income Customer related fees and service charges Administrative service income $ 491 $ 2,528 Merchant processing income Merchant services income 10,403 4,620 ACH income 573 341 Other 344 366 Total noninterest income $ 11,811 $ 7,855 The · Administrative service income – Administrative service income is derived primarily from the management of qualified settlement funds (QSFs), which are funds from settled mass torts and class action lawsuits. Our performance obligations with the QSFs are outlined in court approved orders which includes ensuring funds are invested into safe investment vehicles such as U.S. treasuries and FDIC insured products. Our fees for placing these funds in appropriate vehicles are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. · Merchant services income – We provide merchant services as an acquiring bank through the third-party or ISO business model in which we process credit and debit card transactions on behalf of merchants. We enter into a tri-party merchant agreement, between the company, ISO and each merchant. The Company’s performance obligation is clearing and settling credit and debit transactions on behalf of the merchants. The Company recognizes revenue monthly once it summarizes and computes all revenue and expenses applicable to each ISO, which is our performance obligation. · ACH income – We provide ACH services for merchants and other commercial customers. Contracts are entered into with third parties that require ACH transactions processed on behalf of their customers. Fees are variable and based on the volume of transactions within a given month. Our performance obligations are processing and settling ACH’s on behalf of the customers. Our obligation is satisfied within each business day when the transactions (ACH files) are sent to the Federal Reserve Bank for clearing. Revenue is recognized based on the total volume of transactions processed that month for a given customer. · Other – The other category includes revenue from service charges on deposit accounts, debit card interchange fees, and certain loan related fees where revenue is recognized as performance obligations are satisfied. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | NOTE 8 — Income Taxes The following summarizes components of income tax expense for the years ended December 31: 2019 2018 2017 Current Federal expense $ 3,905 $ 2,761 $ 1,955 State and city expense 1,206 799 387 Total current tax expense 5,111 3,560 2,342 Deferred Federal (benefit) expense 153 (257) 444 State and city (benefit) expense (269) (113) 604 Total deferred tax (benefit) expense (116) (370) 1,048 Income tax expense $ 4,995 $ 3,190 $ 3,390 The following is a reconciliation of the Company’s statutory federal income tax rate of 21% for 2019, 21% for 2018 and 35% for 2017 to its effective tax rate at December 31: 2019 2018 2017 Federal tax expense at statutory rate $ 4,019 $ 2,504 $ 2,462 State and local income taxes, net of federal income tax benefit 1,157 608 200 Incentive stock options 48 33 117 Stock-based compensation excess tax benefit (23) (60) (85) Change to deferred tax as a result of tax reform — — 683 Research and development tax credits (129) — — Other (77) 105 13 Income tax expense $ 4,995 $ 3,190 $ 3,390 The following summarizes the components of the Company’s deferred tax assets and deferred tax liabilities at December 31: 2019 2018 Deferred tax assets: Net operating loss carry forwards $ 321 $ 237 Pre-opening costs 44 70 Stock based compensation 754 505 Allowance for loan loss 1,931 1,509 Unrealized loss on securities available-for-sale — 985 Total deferred tax assets 3,050 3,306 Deferred tax liabilities: Fixed assets (414) (64) Deferred rent (52) (48) Unrealized gain on securities available-for-sale (154) — Investment in partnership (352) — Deferred loan fees (29) (122) Total deferred tax liabilities (1,001) (234) Deferred tax asset, net $ 2,049 $ 3,072 The Company has New York state and city net operating loss carryforwards of $4,474 and $336, respectively, as of December 31, 2019. The net operating losses are available to reduce future taxable income and begin to expire in 2026. Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on its evaluation, the Company has determined that it is more likely than not that the deferred tax asset as of December 31, 2019 and 2018, will be realized. The Company does not have any unrecognized tax benefits at December 31, 2019 and 2018, and does not expect this to increase in the next twelve months. There were no interest and penalties recorded in the consolidated statement of income for the years ended December 31, 2019, 2018 and 2017. The Company is subject to U.S. federal income tax as well as income tax of the state of New York, New York City and Florida. The Company is no longer subject to examination by taxing authorities for years before 2016. |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefits | |
Employee Benefits | NOTE 9 — Employee Benefits 401(k) Plan A savings plan is maintained under section 401(k) of the Internal Revenue Code and covers substantially all current full-time employees. Newly hired employees can elect to participate in the savings plan after completing one month of service. In 2019, 2018 and 2017, the Company matched 100% of employee contributions up to 2% of their salary in 2019 and 1% in prior years resulting in total expenses of $126, $47 and $18, respectively. Share Based Payment Plans The Company issues incentive and non-statutory stock options and restricted stock awards to certain employees and directors pursuant to its equity incentive plans, which have been approved by the stockholders. Share-based awards are granted by the Compensation Committee of the Board of Directors. The Company’s 2007 Stock Option Plan allowed for a maximum of 270,000 shares of common stock to be issued. As of December 31, 2019, 269,500 shares have been issued. The 2007 Stock Option Plan expired in May of 2017 and no new options can be granted from the plan. The Company’s 2011 Stock Compensation Plan allows for a maximum of 754,607 shares of common stock to be issued. The Company has 62 shares available for issuance under the 2011 Stock Compensation Plan as of December 31, 2019. The Company’s 2017 Equity Incentive Plan allows for a maximum of 300,000 shares of common stock to be issued. A total of 6,750 shares remain available for grant under the 2017 Equity Incentive Plan all of which are to be granted as stock options. The Company’s 2019 Equity Incentive Plan allows for a maximum of 300,000 shares of common stock to be issued. A total of 226,000 shares remain available for grant under the 2019 Equity Incentive Plan of which 100,000 can be granted as stock options and 126,000 can be granted as restricted shares. Under the plans, options are granted with an exercise price equal to the fair value of the Company’s stock at the date of the grant. Options granted vest over three or five years and have ten-year contractual terms. All options provide for accelerated vesting upon a change in control (as defined in the plans). Restricted shares are granted at the fair value on the date of grant and typically vest over 6 years with a third vesting after years four, five, and six. Restricted shares have the same voting rights as common stock and nonvested restricted shareholders do not have rights to the accrued dividends until vested. The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on peer volatility. The Company uses peer data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on peer data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The fair value of options granted was determined using the following weighted-average assumptions as of grant date. 2019 2018 2017 Risk-Free Interest Rate 1.85 % 2.65 % N/A Expected Term 84 months 84 months N/A Expected Stock Price Volatility 22.1 % 20.6 % N/A Dividend Yield % % N/A Weighted Average Fair Value $ 7.18 6.43 N/A The following table presents a summary of the activity related to options as of December 31, 2019: Weighted Weighted Average Average Remaining Exercise Contractual Options Price Life (Years) December 31, 2019 Outstanding at beginning of year 919,175 $ 13.39 Granted 11,250 25.50 Exercised (14,000) 12.50 Forfeited — — Outstanding at period end 916,425 $ 13.56 5.92 Vested or expected to vest 916,425 $ 13.56 5.92 Exercisable at period end 709,660 $ 12.95 5.59 The Company recognized compensation expense related to options of $521, $1,007 and $554 for the years ended December 31, 2019, 2018 and 2017, respectively. At December 31, 2019, unrecognized compensation cost related to non-vested options was approximately $738 and is expected to be recognized over a weighted average period of 1.67 years. The intrinsic value for outstanding options net of expected forfeitures was $11,469. The intrinsic value for exercisable options at December 31, 2019 was $9,312. Cash received from options exercised in 2019 totaled $50 with an intrinsic value of $163. The excess tax benefit of options exercised was $23. The following table presents a summary of the activity related to restricted stock as of December 31, 2019: Weighted Average Grant Date Shares Fair Value December 31, 2019 Outstanding at beginning of year 148,500 $ 22.56 Granted 110,500 25.50 Vested — — Outstanding at period end 259,000 $ 23.81 The Company recognized compensation expense related to restricted stock of $574 and $496 for the years ended December 31, 2019 and 2018. As of December 31, 2019, there was $5,387 of total unrecognized compensation cost related to non-vested shares granted under the plan. The cost is expected to be recognized over a weighted-average period of 5.35 years. |
Earnings per Common Share
Earnings per Common Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings per Common Share | |
Earnings per Common Share | NOTE 10 — Earnings per Common Share The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to participation rights in undistributed earnings. The factors used in earnings per share computation follow: For the Years Ended December 31, 2019 2018 2017 Basic Net income $ 14,143 $ 8,734 $ 3,644 Less: Earnings allocated to preferred stock — — 23 Net income allocated to common shareholders $ 14,143 $ 8,734 $ 3,621 Weighted average common shares outstanding 7,388,702 7,374,013 6,163,549 Basic earnings per share $ 1.91 $ 1.18 $ 0.59 Diluted Net income $ 14,143 $ 8,734 $ 3,621 Weighted average shares outstanding for basic earnings per share 7,388,702 7,374,013 6,163,549 Add: Dilutive effects of share based awards 396,034 359,359 68,695 Average shares and dilutive potential common shares 7,784,736 7,733,372 6,232,244 Diluted earnings per share $ 1.82 $ 1.13 $ 0.58 Stock based awards totaling 164,250 and 129,500 shares of common stock were not considered in computing diluted earnings per common share for 2019 and 2018, respectively, because they were anti-dilutive. There were no antidilutive shares in 2017. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingent Liabilities | |
Commitments and Contingent Liabilities | NOTE 11 — Commitments and Contingent Liabilities Change-In-Control Arrangements Certain key executive officers have arrangements that provide for the payment of a multiple of base salary, should a change-in control, as defined, occur. These payments are limited under guidelines for deductibility pursuant to the Internal Revenue Code. Credit Related Commitments The Company provides off-balance sheet financial products to customers in the form of commitments to extend credit which are agreements to lend to customers in accordance with contractual provisions. These commitments usually have fixed expiration dates or other termination clauses and may require the payment of a fee. Total commitments outstanding do not necessarily represent future cash flow requirements as many commitments expire without being funded. Each customer’s creditworthiness is evaluated prior to issuing these commitments and may require the customer to pledge certain collateral (i.e., inventory, income-producing property) prior to the extension of credit. Fixed rate commitments are subject to interest rate risk based on changes in prevailing rates during the commitment period. The Company is also subject to credit risk in the event that the commitments are drawn upon and the customer is unable to repay the obligation. Letters of credit are irrevocable commitments issued at the request of customers. They authorize the beneficiary to draw drafts for payment in accordance with the stated terms and conditions. Letters of credit substitute the Company’s creditworthiness for that of the customer and are issued for a fee commensurate with the risk. The Company can issue two types of letters of credit: commercial (documentary) letters of credit and standby letters of credit. Commercial letters of credit are commonly issued to finance the purchase of goods and are typically short term in nature. Standby letters of credit are issued to back financial or performance obligations of a Bank customer and are typically issued for periods up to one year. Due to their long-term nature, standby letters of credit require adequate collateral in the form of cash or other liquid assets. In most instances, standby letters of credit expire without being drawn upon. The credit risk involved in issuing letters of credit is essentially the same as extending credit facilities to comparable customers. For the Years Ended December 31, 2019 2018 Fixed Rate Variable Rate Fixed Rate Variable Rate Unused lines of credit $ 80 $ 22,580 $ 692 $ 4,287 Standby letters of credit 1,338 — 786 — Total credit related commitments $ 1,418 $ 22,580 $ 1,478 $ 4,287 The fixed rate loan commitments have interest rates ranging from 5.50% to 18.00% and maturities ranging from 1 month to 2 years. Lease Commitments As of December 31, 2019, right of use lease assets and related lease liabilities were $2.7 million and $3.3 million, respectively. As of December 31, 2019, the Company was obligated under several non-cancelable leases for certain premises and equipment. The minimum annual rental commitments, exclusive of taxes and other charges, under non-cancelable lease agreements for premises at December 31, 2019, are summarized as follows: Year ending December 31, 2020 $ 581 2021 605 2022 620 2023 636 2024 652 Thereafter 1,295 Total operating lease payments $ 4,389 Less: interest 1,063 Present value of operating lease liabilities $ 3,326 As of and for the year ended December 31, 2019 Operating lease cost $ 500 Cash paid for operating lease liability 432 Weighted-average remaining lease term 6.88 years Weighted-average discount rate 3.11 % These leases contain periodic escalation clauses and all expiring leases are evaluated for extensions at renewal. Rent expense for the years ended December 31, 2019, 2018, and 2017 amounted to $561, $599 and $501, respectively. Litigation The Company and its subsidiary are subject to certain pending and threatened legal actions that arise out of the normal course of business. In the opinion of management at the present time, the resolution of any pending or threatened litigation will not have a material adverse effect on its Consolidated Financial Statements. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 12 — Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values. Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 — Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 — Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For available-for-sale securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). Assets and liabilities measured at fair value on a recurring basis are summarized below: Fair Value Measurements Using Quoted Prices Significant Significant (Level 1) (Level 2) (Level 3) December 31, 2019 Assets Available-for-sale securities Mortgage-backed securities – agency $ — $ 25,037 $ — CMO’s – agency — 121,382 — Total $ — $ 146,419 $ — December 31, 2018 Assets Available-for-sale securities Mortgage-backed securities – agency $ — $ 26,675 $ — CMO’s – agency — 119,023 — Total $ — $ 145,698 $ — There were no transfers between Level 1 and Level 2 during the year. There were no assets measured on a non-recurring basis as of December 31, 2019 and 2018. Estimated Fair Value of Financial Instruments Fair value estimates are made at specific points in time and are based on existing on-and off-balance sheet financial instruments. Such estimates are generally subjective in nature and dependent upon a number of significant assumptions associated with each financial instrument or group of financial instruments, including estimates of discount rates, risks associated with specific financial instruments, estimates of future cash flows, and relevant available market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do not reflect the value of anticipated future business, premiums or discounts that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, or the tax consequences of realizing gains or losses on the sale of financial instruments. The Company used the following method and assumptions in estimating the fair value of its financial instruments: Securities Available-for-Sale: The fair values for securities available-for-sale are determined by quoted market prices in active markets, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities with observable transactions (Level 2 inputs). The following table presents the carrying amounts and fair values (represents exit price) of the Company’s financial instruments: Fair Value Measurement at December 31, 2019, Using: Carrying Value (Level 1) (Level 2) (Level 3) Total Financial Assets: Cash and cash equivalents $ 61,806 $ 669 $ 61,007 $ — $ 61,676 Securities available-for-sale 146,419 — 146,419 — 146,419 Securities, restricted, at cost 2,665 N/A N/A N/A N/A Loans, net 558,380 — — 560,859 560,859 Accrued interest receivable 3,242 — 386 2,856 3,242 Financial Liabilities: Time deposits 19,746 — 19,763 — 19,763 Demand and other deposits 660,874 660,874 — — 660,874 Secured borrowings 86 — 86 — 86 Accrued interest payable 12 — 12 — 12 Fair Value Measurement at December 31, 2018, Using: Carrying Value (Level 1) (Level 2) (Level 3) Total Financial Assets: Cash and cash equivalents $ 30,562 $ 659 $ 29,903 $ — $ 30,562 Securities available-for-sale 145,698 — 145,698 — 145,698 Securities, restricted, at cost 2,583 N/A N/A N/A N/A Loans, net 462,472 — — 464,144 464,144 Accrued interest receivable 3,855 — 368 3,487 3,855 Financial Liabilities: Time deposits 20,417 — 20,377 — 20,377 Demand and other deposits 548,004 548,004 — — 548,004 Secured borrowings 89 — 89 — 89 Accrued interest payable 15 — 15 — 15 |
Capital
Capital | 12 Months Ended |
Dec. 31, 2019 | |
Capital. | |
Capital | NOTE 13 — Capital Banks are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules of implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. Banks (Basel III rules) became effective for the Company on January 1, 2015, with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The net unrealized gain or loss on available-for-sale securities and certain deferred tax assets are not included in computing regulatory capital. Management believes as of December 31, 2019, the Bank met all capital adequacy requirements to which it is subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. As of December 31, 2019, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. Since that notification, there are no conditions or events that management believes have changed the institution’s category. For Capital To be Well Required Adequacy Purposes Capitalized Under For Capital Including Capital Prompt Corrective Actual Adequacy Purposes* Conservation Buffer Action Regulations* Amount Ratio Amount Ratio Amount Ratio Amount Ratio December 31, 2019 Total capital to risk weighted assets $ 107,738 17.83 % $ 48,335 8.00 % $ 63,439 10.50 % $ 60,418 10.00 % Tier 1 (core) capital to risk weighted assets 100,748 16.68 36,251 6.00 51,356 8.50 48,335 8.00 Tier 1 (common) capital to risk weighted assets 100,748 16.68 27,188 4.50 42,293 7.00 39,272 6.50 Tier 1 (core) capital to adjusted total assets 100,748 13.50 29,841 4.00 29,841 4.00 37,301 5.00 December 31, 2018 Total capital to risk weighted assets $ 90,958 18.70 % $ 38,920 8.00 % $ 48,042 9.88 % $ 48,650 10.00 % Tier 1 (core) capital to risk weighted assets 85,328 17.54 29,190 6.00 38,312 7.88 38,920 8.00 Tier 1 (common) capital to risk weighted assets 85,328 17.54 21,893 4.50 31,014 6.38 31,623 6.50 Tier 1 (core) capital to adjusted total assets 85,328 13.26 25,733 4.00 25,733 4.00 32,166 5.00 * |
Parent Company Only Condensed F
Parent Company Only Condensed Financial Information | 12 Months Ended |
Dec. 31, 2019 | |
Parent Company Only Condensed Financial Information | |
Parent Company Only Condensed Financial Information | NOTE 14 — Parent Company Only Condensed Financial Information Condensed financial information of Esquire Financial Holdings, Inc. follows: CONDENSED STATEMENTS OF FINANCIAL CONDITION At December 31, 2019 2018 ASSETS Cash and cash equivalents $ 5,571 $ 4,041 Investment in banking subsidiary 101,414 82,994 Loans — 1,775 Equity investment without readily determinable fair value 2,410 2,410 Other assets 2,046 1,611 Total assets 111,441 92,831 LIABILITIES Other liabilities 379 57 Total liabilities 379 57 STOCKHOLDERS’ EQUITY Preferred stock — — Common stock 77 75 Additional paid-in-capital 89,682 88,539 Retained earnings 20,917 6,774 Other comprehensive income (loss) 386 (2,614) Total stockholders’ equity $ 111,062 $ 92,774 Total liabilities and equity $ 111,441 $ 92,831 CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Years Ended December 31, 2019 2018 2017 Interest income $ 95 $ 156 $ — Other expense 1,822 2,263 883 Loss before income tax and undistributed subsidiary income (1,727) (2,107) (883) Income tax benefit 450 563 388 Equity in undistributed subsidiary income 15,420 10,278 4,139 Net income $ 14,143 $ 8,734 $ 3,644 Comprehensive income $ 17,143 $ 7,510 $ 3,360 CONDENSED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2019 2018 2017 Cash flows from operating activities: Net income $ 14,143 $ 8,734 $ 3,644 Adjustments: Stock compensation expense 1,095 1,503 554 Equity in undistributed subsidiary income (15,420) (10,278) (4,139) Change in other assets (435) (563) (388) Change in other liabilities 322 (9) 34 Net cash used in operating activities (295) (613) (295) Cash flows from investing activities Investments in subsidiaries — (11,000) (12,000) Net change in loans 1,775 (1,775) — Purchase of equity investment without readily determinable fair value — (2,410) — Net cash provided by (used in) investing activities 1,775 (15,185) (12,000) Cash flows from financing activities: Exercise of stock options 50 378 942 Proceeds from the issuance of common stock — — 26,341 Net cash provided by financing activities 50 378 27,283 Net change in cash and cash equivalents 1,530 (15,420) 14,988 Beginning cash and cash equivalents 4,041 19,461 4,473 Ending cash and cash equivalents $ 5,571 $ 4,041 $ 19,461 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2019 | |
Consolidated Statements of Comprehensive Income | |
Accumulated Other Comprehensive Loss | NOTE 15 — Accumulated Other Comprehensive Income (Loss) The following is changes in accumulated other comprehensive income (loss) by component, net of tax, for the years ending December 31, 2019, 2018, and 2017: For the Years Ended December 31, 2019 2018 2017 Unrealized Gains (Losses) on Available-for-Sale Securities Unrealized Gains (Losses) on Beginning balance $ (2,614) $ (1,390) $ (884) Other comprehensive income (loss) before reclassifications, net of tax $ 3,000 $ (1,224) $ (284) Amounts reclassified from accumulated other comprehensive income — — (222) Net current period other comprehensive income (loss) 3,000 (1,224) (506) Ending balance $ 386 $ (2,614) $ (1,390) There were no reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2019, 2018, and 2017. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Business and Summary of Significant Accounting Policies | |
Common Stock Issuances | Common Stock On June 30, 2017, we completed our initial public offering (“IPO”) and sold 1,800,000 shares of common stock. We received aggregate net proceeds of approximately $21,741, after deducting underwriting discount and other offering related expenses. On July 20, 2017 we sold 354,580 additional shares of common stock at the public offering price of $14.00 per share pursuant to the underwriter’s over-allotment options. The net proceeds of the additional shares after deducting the underwriting discount and other offering related expenses was approximately $4,600. |
Preferred Stock | Preferred Stock In December of 2014, the Company issued 157,985 0.00% Series B Non-Voting Preferred shares at a price of $12.50 per share for proceeds, net of offering costs, of approximately $1,800. The preferred stock did not have a maturity date and was not convertible by the holder, but was convertible on a one for one basis into common stock by us under certain circumstances. In addition, the preferred stock did not have a liquidation preference and had equal rights to receive dividends when dividends are declared on common stock, and thus were considered participating securities. These shares were later exchanged for 157,985 shares of common stock, par value $0.01. As of December 31, 2019 and 2018, there are no preferred shares outstanding . |
Dividend Restriction | Dividend Restriction Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders. |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The accounting and financial reporting policies are in conformity with U.S. generally accepted accounting principles (GAAP). The preparation of financial statements requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual results could differ from those estimates. |
Statement of Cash Flows | Statement of Cash Flows For purposes of the accompanying statements of cash flows, cash and cash equivalents are defined as the amounts included in the Consolidated Statements of Financial Condition under the captions “Cash and cash equivalents”, with contractual maturities of less than 90 days. Net cash flows are reported for customer loan and deposit transactions. |
Debt Securities | Debt Securities All securities are classified as available-for-sale and carried at fair value. Unrealized gains and losses on these securities are reported, net of applicable taxes, as a separate component of accumulated other comprehensive income (loss), a component of stockholders’ equity. Interest income on securities, including amortization of premiums and accretion of discounts, is recognized using the level yield method without anticipating prepayments (except for mortgage-backed securities where prepayments are anticipated) over the lives of the individual securities. Realized gains and losses on sales of securities are computed using the specific identification method. |
Loans | Loans Loans that management has the intent and ability to hold for the foreseeable future until maturity or payoff are stated at the principal amount outstanding, net of deferred loan fees and costs for originated loans and net of unamortized premiums or discounts for purchased loans. Interest income is recognized using the level yield method. Net deferred loan fees, origination costs, unamortized premiums or discounts are recognized in interest income over the loan term as a yield adjustment. |
Non-Accrual | Nonaccrual Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to nonaccrual status in accordance with the Company’s policy, typically after 90 days of non-payment. All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. |
Provision and Allowance for Loan Losses | Provision and Allowance for Loan Losses The allowance for loan losses is a valuation allowance for probable incurred credit losses. The allowance for loan losses is increased by provisions for loan losses charged to income. Losses are charged to the allowance when all or a portion of a loan is deemed to be uncollectible. Subsequent recoveries of loans previously charged off are credited to the allowance for loan losses when realized. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. All loans, except for smaller dollar consumer loans, are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated as a specific allowance. The measurement of an impaired loan is based on (i) the present value of expected future cash flows discounted at the loan’s effective interest rate, (ii) the loan’s observable market price or (iii) the fair value of the collateral if the loan is collateral dependent. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses. The general component is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The determination of the economic factors is a qualitative assessment that involves significant management judgment and subjective measurement. Management has identified the following loan segments: Commercial Real Estate, Multifamily, Construction, Commercial, 1 – 4 Family Residential and Consumer. The risks associated with a concentration in real estate loans include potential losses from fluctuating values of land and improved properties. Commercial Real Estate and Multifamily loans are expected to be repaid from the cash flow of the underlying property so the collective amount of rents must be sufficient to cover all operating expenses, property management and maintenance, taxes and debt service. Increases in vacancy rates, interest rates or other changes in general economic conditions can all have an impact on the borrower and their ability to repay the loan. Construction loans are considered riskier than commercial financing on improved and established commercial real estate. The risk of potential loss increases if the original cost estimates or time to complete are significantly off. The remainder of the loan portfolio is comprised of commercial and consumer loans. The primary risks associated with the commercial loans is the cash flow of the business, the experience and quality of the borrowers’ management, the business climate, and the impact of economic factors. The primary risks associated with 1 – 4 Family Residential and Consumer loans relate to the borrower, such as the risk of a borrower’s unemployment as a result of deteriorating economic conditions or the amount and nature of a borrower’s other existing indebtedness, and the value of the collateral securing the loan if the Bank must take possession of the collateral. Post-settlement consumer loans are also subject to unforeseen rulings or administrative legal anomalies that may eliminate or greatly reduce a borrowers settlement |
Premises and Equipment | Premises and Equipment Premises and equipment, including leasehold improvements, are stated at cost, net of accumulated depreciation and amortization. Equipment, which includes furniture and fixtures, are depreciated over the assets’ estimated useful lives using the straight-line method (three to ten years). Amortization of leasehold improvements is recognized on a straight-line basis over the lesser of the expected lease term or the estimated useful life of the asset. Costs incurred to improve or extend the life of existing assets are capitalized. Repairs and maintenance are charged to expense. |
Internal-Use Software | Internal-Use Software Implementation costs with respect to internal-use software is capitalized once the project stage is complete. Project stage includes determining the performance requirements, strategic decisions related to allocation of resources, determining the technology needed to achieve performance requirements, selection of vendors, and other items. Costs during the project stage are expensed as incurred. Once the internal-use software is placed into operation, capitalized software costs are amortized using the straight-line method over 3-5 years. |
Securities, Restricted at Cost | Securities, Restricted, at Cost The Bank is a member of the Federal Home Loan Bank (FHLB) system and the Federal Reserve Bank of New York (FRB), and Atlantic Central Banker’s Bank where members are required to own a certain number of shares of stock in order to conduct business with these institutions. FHLB stock holdings are based on the level of mortgage related assets, borrowings and other factors while FRB stock holding levels are capital based. These equity investments are carried at cost and classified as restricted securities which are periodically evaluated for impairment based on the ultimate recovery of par value. Dividends from these equity investments are reported as interest income on the Consolidated Statements of Income. |
Loan Commitments | Loan Commitments The Company enters into commitments to extend credit to customers to meet their financing needs which are in the form of lines of credit, letters of credit, and loan funding commitments. The face amount of these financial instruments represents the exposure to loss before considering customer collateral or ability to repay. Such financial instruments are recorded on balance sheet at cost when funded and presented as loans on the Consolidated Statements of Financial Condition. |
Equity Investment Without Readily Determinable Fair Value | Equity Investment Without Readily Determinable Fair Value In April 2018, the Company purchased a 4.95% interest in Litify, Inc., a technology solution to automate and manage a law firm’s business and cases, for a cost of $2,410. As Litify, Inc. is a private company, the investment does not have a readily determinable fair value and management has elected to determine the recorded carrying amount based on its cost adjusted for observable price changes less impairment. At December 31, 2019, the investment’s carrying amount was $2,410. Based on our evaluation, we noted no significant adverse changes which would indicate the asset is impaired or any observable price changes as of December 31, 2019. The investment is presented within other assets on the Consolidated Statements of Financial Condition. |
Transfers of Financial Assets | Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
Income Taxes | Income Taxes Income taxes are provided for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period the change occurs. Deferred tax assets are reduced, through a valuation allowance, if necessary, by the amount of such benefits that are not expected to be realized based on current available evidence. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters in income tax expense on the Consolidated Statements of Income. |
Earnings per Common Share | Earnings per Common Share Basic earnings per common share is net earnings allocated to common stock divided by the weighted average number of common shares outstanding during the period. Any outstanding preferred shares are considered participating securities for computation of basic earnings per common share. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options and restricted stock awards. |
Share-Based Payment | Share-Based Payment Share based payment guidance requires the Company to recognize the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees in the statements of income. A Black-Scholes model is utilized to estimate the fair value of stock options. Compensation cost for stock options are recognized as noninterest expense in the statement of income on a straight-line basis over the vesting period of each stock option grant. Compensation cost for stock options includes the impact of an estimated forfeiture rate. Compensation expense for restricted stock awards is based on the fair value of the award on the measurement date, which is the date of grant, and the expense is recognized ratably over the service period of the award. At December 31, 2019, no equity-based compensation had vesting conditions linked to the performance of the Company or market conditions. |
Segment Reporting | Segment Reporting The Company’s operations are exclusively in the financial services industry and include the provision of traditional banking services. Management evaluates the performance of the Company based on only one business segment, that of community banking. In the opinion of management, the Company does not have any other reportable segments as defined by Accounting Standards Codification (ASC) Topic 280, “Disclosure about Segments of an Enterprise and Related Information.” |
Restrictions on Cash | Restrictions on Cash Cash on hand or on deposit with the FRB is required to meet regulatory reserve and clearing requirements. |
Reclassifications | Reclassifications Some items in the prior year financial statements were reclassified to conform to the current presentation. The reclassifications are immaterial and had no effect on prior year net income or stockholders’ equity. |
Comprehensive Income | Comprehensive Income Comprehensive income consists of net income and other comprehensive income (loss) which includes unrealized gains and losses on securities available-for-sale. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. |
Loss Contingencies | Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the Consolidated Financial Statements. |
New Accounting Pronouncements | New Accounting Pronouncements On February 25, 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. The new standard was adopted by the Company on January 1, 2019 utilizing the modified retrospective transition approach where it was applied to all leases existing at the date of initial application. Upon adoption, we recognized a ROU asset, presented within other assets on the Consolidated Statement of Financial Condition, and a lease liability, presented within accrued expenses and other liabilities on the Consolidated Statement of Financial Condition, of approximately $3.1 million and $3.6 million, respectively. In transition, we elected the ‘package of practical expedients’, which permitted the Company not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. Management did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. The new standard also provided practical expedients for an entity’s ongoing accounting. Management elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases with an initial term of 12 months or less, the Company did not recognize ROU assets or lease liabilities, and this included not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. In recognizing ROU lease assets and related lease liabilities, we exclude variable and non-lease components (such as taxes, insurance, and common area maintenance costs) and expense these costs as incurred. At lease commencement date, the lease payments over the expected term are discounted using our incremental borrowing rate referenced to the Federal Home Loan Bank advance rates of a similar term to determine the present value of our lease obligation and ROU asset to be recorded on the Statement of Financial Condition. Lease expense is then recognized on a straight-line basis. The Company has committed to rent premises used in business operations under non-cancelable operating leases that have renewal options for additional 3-5 year terms which were not considered in determining our ROU asset or lease liability as renewal is not reasonably certain . On June 16, 2016, the FASB issued Accounting Standards Update No. 2016‑13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (the ASU). This ASU replaces the incurred loss model with an expected loss model, referred to as “current expected credit loss” (CECL) model. It will significantly change estimates for credit losses related to financial assets measured at amortized cost, including loans receivable and certain other contracts. This ASU will be effective for the Company in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. At its July 17, 2019 public meeting, FASB issued a proposal to delay the effective date of ASU 2016-13 for certain entities, including SEC filers classified as smaller reporting companies. On October 16, 2019, FASB voted for the delay, the revised effective date for adoption for the Company, which is classified as a smaller reporting company, is January 1, 2023. Due to this change in effective date, the Company plans to adopt ASU 2016-13 on or before January 1, 2023, using the required modified retrospective method with a cumulative effect adjustment as of the beginning of the reporting period. The Company has gathered the necessary data and continues to prepare for the implementation of this standard. |
Securities (Tables)
Securities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Securities | |
Schedule of amortized cost, gross unrealized gains and losses and estimated fair value of securities available-for-sale | Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value 2019 Mortgage-backed securities – agency $ 24,603 $ 524 $ (90) $ 25,037 Collateralized mortgage obligations (CMO’s) – agency 121,276 451 (345) 121,382 Total available-for-sale $ 145,879 $ 975 $ (435) $ 146,419 2018 Mortgage-backed securities – agency $ 27,384 $ 15 $ (724) $ 26,675 Collateralized mortgage obligations (CMO’s) – agency 121,913 32 (2,922) 119,023 Total available-for-sale $ 149,297 $ 47 $ (3,646) $ 145,698 |
Schedule of gross unrealized losses and fair value, securities in continuous unrealized loss position | Less Than 12 Months 12 Months or Longer Total Fair Gross Fair Gross Fair Gross 2019 Mortgage-backed securities – agency $ — $ — $ 9,529 $ (90) $ 9,529 $ (90) CMO’s – agency 20,639 (66) 22,295 (279) 42,934 (345) Total temporarily impaired securities $ 20,639 $ (66) $ 31,824 $ (369) $ 52,463 $ (435) 2018 Mortgage-backed securities - agency $ 9,528 $ (99) $ 15,497 $ (625) $ 25,025 $ (724) CMO's - Agency 19,184 (73) 85,775 (2,849) 104,959 (2,922) Total temporarily impaired securities $ 28,712 $ (172) $ 101,272 $ (3,474) $ 129,984 $ (3,646) |
Loans (Tables)
Loans (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Loans | |
Schedule of composition of loans | 2019 2018 1 – 4 family residential $ 48,140 $ 56,043 Commercial 257,957 191,828 Multifamily 152,633 136,537 Commercial real estate 52,477 33,145 Construction 6,450 5,921 Consumer 47,322 43,675 Total Loans 564,979 467,149 Deferred costs and unearned premiums, net 390 952 Allowance for loan losses (6,989) (5,629) Loans, net $ 558,380 $ 462,472 |
Schedule of activity in allowance for loan losses | 1-4 Family Commercial Residential Commercial Multifamily Real Estate Construction Consumer Total December 31, 2019 Allowance for loan losses: Beginning balance $ 407 $ 3,110 $ 952 $ 357 $ 149 $ 654 $ 5,629 Provision (credit) for loan losses (63) 957 159 203 12 582 1,850 Recoveries — — — — — — — Loans charged-off — (19) (63) — — (408) (490) Total ending allowance balance $ 344 $ 4,048 $ 1,048 $ 560 $ 161 $ 828 $ 6,989 December 31, 2018 Allowance for loan losses: Beginning balance $ 382 $ 2,272 $ 713 $ 266 $ 127 $ 504 $ 4,264 Provision for loan losses 25 838 239 91 22 160 1,375 Recoveries — — — — — — — Loans charged-off — — — — — (10) (10) Total ending allowance balance $ 407 $ 3,110 $ 952 $ 357 $ 149 $ 654 $ 5,629 December 31, 2017 Allowance for loan losses: Beginning balance $ 360 $ 1,934 $ 621 $ 238 $ 141 $ 119 $ 3,413 Provision (credit) for loan losses 22 352 92 28 (14) 425 905 Recoveries — — — — — — — Loans charged-off — (14) — — — (40) (54) Total ending allowance balance $ 382 $ 2,272 $ 713 $ 266 $ 127 $ 504 $ 4,264 The following tables present the balance in the allowance for loan losses and the recorded investment in loans by class and based on impairment method as of December 31, 2019 and 2018: 1‑4 Family Commercial Residential Commercial Multifamily Real Estate Construction Consumer Total December 31, 2019 Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 344 4,048 1,048 560 161 828 6,989 Total ending allowance balance $ 344 $ 4,048 $ 1,048 $ 560 $ 161 $ 828 $ 6,989 Loans: Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ 1,476 $ 1,476 Loans collectively evaluated for impairment 48,140 257,957 152,633 52,477 6,450 45,846 563,503 Total ending loans balance $ 48,140 $ 257,957 $ 152,633 $ 52,477 $ 6,450 $ 47,322 $ 564,979 Recorded investment is not adjusted for accrued interest, unearned premiums or deferred costs. 1 – 4 Family Commercial Residential Commercial Multifamily Real Estate Construction Consumer Total December 31, 2018 Allowance for loan losses: Ending allowance Balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 407 3,110 952 357 149 654 5,629 Total ending allowance balance $ 407 $ 3,110 $ 952 $ 357 $ 149 $ 654 $ 5,629 Loans: Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment 56,043 191,828 136,537 33,145 5,921 43,675 467,149 Total ending loans balance $ 56,043 $ 191,828 $ 136,537 $ 33,145 $ 5,921 $ 43,675 $ 467,149 |
Schedule of analysis of the impaired loans | December 31, 2019 Unpaid Recorded Principal Investment Balance 1-4 family residential $ — $ — Commercial — — Multifamily — — Commercial real estate — — Construction — — Consumer 1,476 1,476 Total $ 1,476 $ 1,476 For the year ended December 31, 2019 Average Interest Recorded Income Investment Recognized 1-4 family residential $ — $ — Commercial — — Multifamily — — Commercial real estate — — Construction — — Consumer 541 — Total $ 541 $ — |
Schedule of aging of recorded investment in past due loans | Total Past 30-59 60-89 Greater than Due & Days Days 90 Days Nonaccrual Nonaccrual Loans Not Past Due Past Due Past Due Loans Loans Past Due Total December 31, 2019 1 – 4 family residential $ — $ — $ — $ — $ — $ 48,140 $ 48,140 Commercial — — — — — 257,957 257,957 Multifamily — 2,602 — — 2,602 150,031 152,633 Commercial real estate — — — — — 52,477 52,477 Construction — — — — — 6,450 6,450 Consumer — 6 — 1,476 1,482 45,840 47,322 Total $ — $ 2,608 $ — $ 1,476 $ 4,084 $ 560,895 $ 564,979 The $2,602 past due multifamily loan balance was paid off subsequent to December 31, 2019. |
Schedule of risk category of loans | Pass Special Mention Substandard Doubtful December 31, 2019 1 – 4 family residential $ 48,140 $ — $ — $ — Commercial 257,832 — 125 — Multifamily 152,633 — — — Commercial real estate 52,477 — — — Construction 6,450 — — — Consumer 42,431 3,415 1,476 — Total $ 559,963 $ 3,415 $ 1,601 $ — Pass Special Mention Substandard Doubtful December 31, 2018 1 – 4 family residential $ 56,043 $ — $ — $ — Commercial 182,482 9,166 180 — Multifamily 136,537 — — — Commercial real estate 33,145 — — — Construction 5,921 — — — Consumer 43,675 — — — Total $ 457,803 $ 9,166 $ 180 $ — |
Schedule of related parties include loans to directors, their related companies and executive officers | Beginning balance $ 8,464 New advances 2,567 Repayments (2,814) Ending balance $ 8,217 |
Premises and Equipment (Tables)
Premises and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Premises and Equipment | |
Schedule of premises and equipment | 2019 2018 Leasehold improvements $ 2,128 $ 1,614 Equipment 3,462 2,975 Construction in progress 24 479 5,614 5,068 Less: accumulated depreciation and amortization 2,779 2,374 Total premises and equipment, net $ 2,835 $ 2,694 |
Deposits (Tables)
Deposits (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Deposits. | |
Schedule of maturities of certificates of deposit | Total 2020 $ 17,866 2021 1,880 Total $ 19,746 |
Noninterest Income (Tables)
Noninterest Income (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Noninterest Income | |
Schedule of Consolidated Statements of Income as components of noninterest income | For the Years Ended December 31, 2019 2018 Noninterest income Customer related fees and service charges Administrative service income $ 491 $ 2,528 Merchant processing income Merchant services income 10,403 4,620 ACH income 573 341 Other 344 366 Total noninterest income $ 11,811 $ 7,855 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of components of income tax expense | 2019 2018 2017 Current Federal expense $ 3,905 $ 2,761 $ 1,955 State and city expense 1,206 799 387 Total current tax expense 5,111 3,560 2,342 Deferred Federal (benefit) expense 153 (257) 444 State and city (benefit) expense (269) (113) 604 Total deferred tax (benefit) expense (116) (370) 1,048 Income tax expense $ 4,995 $ 3,190 $ 3,390 |
Schedule of reconciliation statutory federal income tax rate | 2019 2018 2017 Federal tax expense at statutory rate $ 4,019 $ 2,504 $ 2,462 State and local income taxes, net of federal income tax benefit 1,157 608 200 Incentive stock options 48 33 117 Stock-based compensation excess tax benefit (23) (60) (85) Change to deferred tax as a result of tax reform — — 683 Research and development tax credits (129) — — Other (77) 105 13 Income tax expense $ 4,995 $ 3,190 $ 3,390 |
Schedule of deferred tax assets and deferred tax liabilities | 2019 2018 Deferred tax assets: Net operating loss carry forwards $ 321 $ 237 Pre-opening costs 44 70 Stock based compensation 754 505 Allowance for loan loss 1,931 1,509 Unrealized loss on securities available-for-sale — 985 Total deferred tax assets 3,050 3,306 Deferred tax liabilities: Fixed assets (414) (64) Deferred rent (52) (48) Unrealized gain on securities available-for-sale (154) — Investment in partnership (352) — Deferred loan fees (29) (122) Total deferred tax liabilities (1,001) (234) Deferred tax asset, net $ 2,049 $ 3,072 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefits | |
Schedule of fair value of weighted-average assumptions of options granted | 2019 2018 2017 Risk-Free Interest Rate 1.85 % 2.65 % N/A Expected Term 84 months 84 months N/A Expected Stock Price Volatility 22.1 % 20.6 % N/A Dividend Yield % % N/A Weighted Average Fair Value $ 7.18 6.43 N/A |
Schedule of activity related to options | Weighted Weighted Average Average Remaining Exercise Contractual Options Price Life (Years) December 31, 2019 Outstanding at beginning of year 919,175 $ 13.39 Granted 11,250 25.50 Exercised (14,000) 12.50 Forfeited — — Outstanding at period end 916,425 $ 13.56 5.92 Vested or expected to vest 916,425 $ 13.56 5.92 Exercisable at period end 709,660 $ 12.95 5.59 |
Schedule of activity related to restricted stock | Weighted Average Grant Date Shares Fair Value December 31, 2019 Outstanding at beginning of year 148,500 $ 22.56 Granted 110,500 25.50 Vested — — Outstanding at period end 259,000 $ 23.81 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings per Common Share | |
Schedule of earnings per share | For the Years Ended December 31, 2019 2018 2017 Basic Net income $ 14,143 $ 8,734 $ 3,644 Less: Earnings allocated to preferred stock — — 23 Net income allocated to common shareholders $ 14,143 $ 8,734 $ 3,621 Weighted average common shares outstanding 7,388,702 7,374,013 6,163,549 Basic earnings per share $ 1.91 $ 1.18 $ 0.59 Diluted Net income $ 14,143 $ 8,734 $ 3,621 Weighted average shares outstanding for basic earnings per share 7,388,702 7,374,013 6,163,549 Add: Dilutive effects of share based awards 396,034 359,359 68,695 Average shares and dilutive potential common shares 7,784,736 7,733,372 6,232,244 Diluted earnings per share $ 1.82 $ 1.13 $ 0.58 |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingent Liabilities | |
Schedule of credit related commitments | For the Years Ended December 31, 2019 2018 Fixed Rate Variable Rate Fixed Rate Variable Rate Unused lines of credit $ 80 $ 22,580 $ 692 $ 4,287 Standby letters of credit 1,338 — 786 — Total credit related commitments $ 1,418 $ 22,580 $ 1,478 $ 4,287 |
Schedule of maturities of operating lease liabilities | Year ending December 31, 2020 $ 581 2021 605 2022 620 2023 636 2024 652 Thereafter 1,295 Total operating lease payments $ 4,389 Less: interest 1,063 Present value of operating lease liabilities $ 3,326 |
Schedule of lease cost | As of and for the year ended December 31, 2019 Operating lease cost $ 500 Cash paid for operating lease liability 432 Weighted-average remaining lease term 6.88 years Weighted-average discount rate 3.11 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements | |
Schedule of assets and liabilities measured at fair value on a recurring basis | Fair Value Measurements Using Quoted Prices Significant Significant (Level 1) (Level 2) (Level 3) December 31, 2019 Assets Available-for-sale securities Mortgage-backed securities – agency $ — $ 25,037 $ — CMO’s – agency — 121,382 — Total $ — $ 146,419 $ — December 31, 2018 Assets Available-for-sale securities Mortgage-backed securities – agency $ — $ 26,675 $ — CMO’s – agency — 119,023 — Total $ — $ 145,698 $ — |
Schedule of carrying amounts and fair values of financial instruments | Fair Value Measurement at December 31, 2019, Using: Carrying Value (Level 1) (Level 2) (Level 3) Total Financial Assets: Cash and cash equivalents $ 61,806 $ 669 $ 61,007 $ — $ 61,676 Securities available-for-sale 146,419 — 146,419 — 146,419 Securities, restricted, at cost 2,665 N/A N/A N/A N/A Loans, net 558,380 — — 560,859 560,859 Accrued interest receivable 3,242 — 386 2,856 3,242 Financial Liabilities: Time deposits 19,746 — 19,763 — 19,763 Demand and other deposits 660,874 660,874 — — 660,874 Secured borrowings 86 — 86 — 86 Accrued interest payable 12 — 12 — 12 Fair Value Measurement at December 31, 2018, Using: Carrying Value (Level 1) (Level 2) (Level 3) Total Financial Assets: Cash and cash equivalents $ 30,562 $ 659 $ 29,903 $ — $ 30,562 Securities available-for-sale 145,698 — 145,698 — 145,698 Securities, restricted, at cost 2,583 N/A N/A N/A N/A Loans, net 462,472 — — 464,144 464,144 Accrued interest receivable 3,855 — 368 3,487 3,855 Financial Liabilities: Time deposits 20,417 — 20,377 — 20,377 Demand and other deposits 548,004 548,004 — — 548,004 Secured borrowings 89 — 89 — 89 Accrued interest payable 15 — 15 — 15 |
Capital (Tables)
Capital (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Capital. | |
Schedule of minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios | For Capital To be Well Required Adequacy Purposes Capitalized Under For Capital Including Capital Prompt Corrective Actual Adequacy Purposes* Conservation Buffer Action Regulations* Amount Ratio Amount Ratio Amount Ratio Amount Ratio December 31, 2019 Total capital to risk weighted assets $ 107,738 17.83 % $ 48,335 8.00 % $ 63,439 10.50 % $ 60,418 10.00 % Tier 1 (core) capital to risk weighted assets 100,748 16.68 36,251 6.00 51,356 8.50 48,335 8.00 Tier 1 (common) capital to risk weighted assets 100,748 16.68 27,188 4.50 42,293 7.00 39,272 6.50 Tier 1 (core) capital to adjusted total assets 100,748 13.50 29,841 4.00 29,841 4.00 37,301 5.00 December 31, 2018 Total capital to risk weighted assets $ 90,958 18.70 % $ 38,920 8.00 % $ 48,042 9.88 % $ 48,650 10.00 % Tier 1 (core) capital to risk weighted assets 85,328 17.54 29,190 6.00 38,312 7.88 38,920 8.00 Tier 1 (common) capital to risk weighted assets 85,328 17.54 21,893 4.50 31,014 6.38 31,623 6.50 Tier 1 (core) capital to adjusted total assets 85,328 13.26 25,733 4.00 25,733 4.00 32,166 5.00 * |
Parent Company Only Condensed_2
Parent Company Only Condensed Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Parent Company Only Condensed Financial Information | |
Schedule of Condensed Balance Sheets | At December 31, 2019 2018 ASSETS Cash and cash equivalents $ 5,571 $ 4,041 Investment in banking subsidiary 101,414 82,994 Loans — 1,775 Equity investment without readily determinable fair value 2,410 2,410 Other assets 2,046 1,611 Total assets 111,441 92,831 LIABILITIES Other liabilities 379 57 Total liabilities 379 57 STOCKHOLDERS’ EQUITY Preferred stock — — Common stock 77 75 Additional paid-in-capital 89,682 88,539 Retained earnings 20,917 6,774 Other comprehensive income (loss) 386 (2,614) Total stockholders’ equity $ 111,062 $ 92,774 Total liabilities and equity $ 111,441 $ 92,831 |
Schedule of Condensed Statements of Income and Comprehensive income | For the Years Ended December 31, 2019 2018 2017 Interest income $ 95 $ 156 $ — Other expense 1,822 2,263 883 Loss before income tax and undistributed subsidiary income (1,727) (2,107) (883) Income tax benefit 450 563 388 Equity in undistributed subsidiary income 15,420 10,278 4,139 Net income $ 14,143 $ 8,734 $ 3,644 Comprehensive income $ 17,143 $ 7,510 $ 3,360 |
Schedule of Condensed Statements of Cash Flows | For the Years Ended December 31, 2019 2018 2017 Cash flows from operating activities: Net income $ 14,143 $ 8,734 $ 3,644 Adjustments: Stock compensation expense 1,095 1,503 554 Equity in undistributed subsidiary income (15,420) (10,278) (4,139) Change in other assets (435) (563) (388) Change in other liabilities 322 (9) 34 Net cash used in operating activities (295) (613) (295) Cash flows from investing activities Investments in subsidiaries — (11,000) (12,000) Net change in loans 1,775 (1,775) — Purchase of equity investment without readily determinable fair value — (2,410) — Net cash provided by (used in) investing activities 1,775 (15,185) (12,000) Cash flows from financing activities: Exercise of stock options 50 378 942 Proceeds from the issuance of common stock — — 26,341 Net cash provided by financing activities 50 378 27,283 Net change in cash and cash equivalents 1,530 (15,420) 14,988 Beginning cash and cash equivalents 4,041 19,461 4,473 Ending cash and cash equivalents $ 5,571 $ 4,041 $ 19,461 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Consolidated Statements of Comprehensive Income | |
Schedule of changes in accumulated other comprehensive loss by component, net of tax | For the Years Ended December 31, 2019 2018 2017 Unrealized Gains (Losses) on Available-for-Sale Securities Unrealized Gains (Losses) on Beginning balance $ (2,614) $ (1,390) $ (884) Other comprehensive income (loss) before reclassifications, net of tax $ 3,000 $ (1,224) $ (284) Amounts reclassified from accumulated other comprehensive income — — (222) Net current period other comprehensive income (loss) 3,000 (1,224) (506) Ending balance $ 386 $ (2,614) $ (1,390) |
Business and Summary of Signi_2
Business and Summary of Significant Accounting Policies (Details) $ / shares in Units, $ in Thousands | Jul. 20, 2017USD ($)$ / sharesshares | Jun. 30, 2017USD ($)shares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2019USD ($)segment$ / sharesshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016shares | Jan. 01, 2019USD ($) | Dec. 31, 2018$ / sharesshares | Apr. 30, 2018USD ($) |
Accounting Policies [Line Items] | |||||||||
Depreciation Method | straight-line method | ||||||||
Number of reportable segments | segment | 1 | ||||||||
Number of Shares issued | shares | 354,580 | 1,800,000 | |||||||
Value of common stock shares issued | $ 4,600 | $ 21,741 | $ 26,341 | ||||||
Public offering price per share | $ / shares | $ 14 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||||
Preferred shares value per share | $ / shares | $ 0.01 | $ 0.01 | |||||||
Preferred stock, shares outstanding | shares | 0 | 0 | |||||||
lease asset | $ 2,700 | ||||||||
Lease liability | $ 3,326 | ||||||||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets | ||||||||
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Accrued Liabilities and Other Liabilities | ||||||||
Series B Non-Voting Preferred Shares | |||||||||
Accounting Policies [Line Items] | |||||||||
Number of Shares issued | shares | 157,985 | ||||||||
Dividend rate of non-voting preferred stock | 0.00% | ||||||||
Preferred shares value per share | $ / shares | $ 12.50 | ||||||||
Proceeds from preferred stock | $ 1,800 | ||||||||
Preferred stock, conversion basis | one for one | ||||||||
Preferred Stock | |||||||||
Accounting Policies [Line Items] | |||||||||
Number of B Non-Voting preferred shares converted for voting common shares | shares | (66,985) | ||||||||
Common Stock | |||||||||
Accounting Policies [Line Items] | |||||||||
Number of Shares issued | shares | 2,154,660 | ||||||||
Value of common stock shares issued | $ 21 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||||||
Number of B Non-Voting preferred shares converted for voting common shares | shares | 66,985 | 157,985 | |||||||
ASU 2016-02 | |||||||||
Accounting Policies [Line Items] | |||||||||
lease asset | $ 3,100 | ||||||||
Lease liability | $ 3,600 | ||||||||
Litify LLC | |||||||||
Accounting Policies [Line Items] | |||||||||
Percentage of equity securities without readily determinable fair value | 4.95% | ||||||||
Investment in equity security without readily determinable fair value | $ 2,410 | $ 2,410 | |||||||
Minimum | |||||||||
Accounting Policies [Line Items] | |||||||||
Useful life | 3 years | ||||||||
Renewal options | 3 years | ||||||||
Maximum | |||||||||
Accounting Policies [Line Items] | |||||||||
Useful life | 10 years | ||||||||
Renewal options | 5 years |
Debt Securities - Summary of re
Debt Securities - Summary of reconciliation of amortized cost to fair value (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | $ 145,879 | $ 149,297 | |
Gross Unrealized Gains | 975 | 47 | |
Gross Unrealized Losses | (435) | (3,646) | |
Fair Value | 146,419 | 145,698 | |
Sales or calls of securities | 0 | 0 | $ 0 |
Mortgage-backed securities - agency | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 24,603 | 27,384 | |
Gross Unrealized Gains | 524 | 15 | |
Gross Unrealized Losses | (90) | (724) | |
Fair Value | 25,037 | 26,675 | |
Collateralized mortgage obligations (CMO's) - agency | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 121,276 | 121,913 | |
Gross Unrealized Gains | 451 | 32 | |
Gross Unrealized Losses | (345) | (2,922) | |
Fair Value | $ 121,382 | $ 119,023 |
Debt Securities (Details)
Debt Securities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Fair value of pledged securities | $ 2,665 | $ 2,583 | |
Impairment charges | 0 | 0 | $ 0 |
Federal Home Loan Bank Advances | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fair value of pledged securities | 122,805 | 120,673 | |
Securities pledged borrowed amount | 116,741 | 114,963 | |
Short-term debt | 0 | 0 | |
Federal Reserve Bank Advances | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fair value of pledged securities | 23,614 | 25,025 | |
Securities pledged borrowed amount | $ 22,915 | $ 24,177 |
Debt Securities - Summary of se
Debt Securities - Summary of securities in unrealized loss position (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value | ||
Less Than 12 Months | $ 20,639 | $ 28,712 |
12 Months or Longer | 31,824 | 101,272 |
Total | 52,463 | 129,984 |
Gross Unrealized Losses | ||
Less Than 12 Months | (66) | (172) |
12 Months or Longer | (369) | (3,474) |
Total | (435) | (3,646) |
Mortgage-backed securities - agency | ||
Fair Value | ||
Less Than 12 Months | 9,528 | |
12 Months or Longer | 9,529 | 15,497 |
Total | 9,529 | 25,025 |
Gross Unrealized Losses | ||
Less Than 12 Months | (99) | |
12 Months or Longer | (90) | (625) |
Total | (90) | (724) |
Collateralized mortgage obligations (CMO's) - agency | ||
Fair Value | ||
Less Than 12 Months | 20,639 | 19,184 |
12 Months or Longer | 22,295 | 85,775 |
Total | 42,934 | 104,959 |
Gross Unrealized Losses | ||
Less Than 12 Months | (66) | (73) |
12 Months or Longer | (279) | (2,849) |
Total | $ (345) | $ (2,922) |
Loans - Summary of loan composi
Loans - Summary of loan composition (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Loans and Leases Receivable Disclosure [Line Items] | ||||
Total Loans | $ 564,979 | $ 467,149 | $ 467,149 | |
Deferred costs and unearned premiums, net | 390 | 952 | ||
Allowance for loan losses | (6,989) | (5,629) | (4,264) | $ (3,413) |
Loans, net | 558,380 | 462,472 | ||
Real Estate | 1 - 4 Family Residential | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Total Loans | 48,140 | 56,043 | ||
Allowance for loan losses | (344) | (407) | (382) | (360) |
Real Estate | Multifamily | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Total Loans | 152,633 | 136,537 | ||
Allowance for loan losses | (1,048) | (952) | (713) | (621) |
Real Estate | Commercial Real Estate | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Total Loans | 52,477 | 33,145 | ||
Allowance for loan losses | (560) | (357) | (266) | (238) |
Real Estate | Construction | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Total Loans | 6,450 | 5,921 | ||
Allowance for loan losses | (161) | (149) | (127) | (141) |
Commercial | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Total Loans | 257,957 | 191,828 | ||
Allowance for loan losses | (4,048) | (3,110) | (2,272) | (1,934) |
Consumer | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Total Loans | 47,322 | 43,675 | ||
Allowance for loan losses | $ (828) | $ (654) | $ (504) | $ (119) |
Loans - Summary of activity in
Loans - Summary of activity in allowance for loan losses by class (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Allowance for loan losses: | |||
Beginning balance | $ 5,629 | $ 4,264 | $ 3,413 |
Provision (credit) for loan losses | 1,850 | 1,375 | 905 |
Recoveries | 0 | ||
Loans charged-off | (490) | (10) | (54) |
Total ending allowance balance | 6,989 | 5,629 | 4,264 |
Real Estate | 1 - 4 Family Residential | |||
Allowance for loan losses: | |||
Beginning balance | 407 | 382 | 360 |
Provision (credit) for loan losses | (63) | 25 | 22 |
Recoveries | 0 | ||
Loans charged-off | 0 | ||
Total ending allowance balance | 344 | 407 | 382 |
Real Estate | Multifamily | |||
Allowance for loan losses: | |||
Beginning balance | 952 | 713 | 621 |
Provision (credit) for loan losses | 159 | 239 | 92 |
Recoveries | 0 | ||
Loans charged-off | (63) | 0 | |
Total ending allowance balance | 1,048 | 952 | 713 |
Real Estate | Commercial Real Estate | |||
Allowance for loan losses: | |||
Beginning balance | 357 | 266 | 238 |
Provision (credit) for loan losses | 203 | 91 | 28 |
Recoveries | 0 | ||
Loans charged-off | 0 | ||
Total ending allowance balance | 560 | 357 | 266 |
Real Estate | Construction | |||
Allowance for loan losses: | |||
Beginning balance | 149 | 127 | 141 |
Provision (credit) for loan losses | 12 | 22 | (14) |
Recoveries | 0 | ||
Loans charged-off | 0 | ||
Total ending allowance balance | 161 | 149 | 127 |
Commercial | |||
Allowance for loan losses: | |||
Beginning balance | 3,110 | 2,272 | 1,934 |
Provision (credit) for loan losses | 957 | 838 | 352 |
Recoveries | 0 | ||
Loans charged-off | (19) | (14) | |
Total ending allowance balance | 4,048 | 3,110 | 2,272 |
Consumer | |||
Allowance for loan losses: | |||
Beginning balance | 654 | 504 | 119 |
Provision (credit) for loan losses | 582 | 160 | 425 |
Recoveries | 0 | ||
Loans charged-off | (408) | (10) | (40) |
Total ending allowance balance | $ 828 | $ 654 | $ 504 |
Loans - Summary of balance in a
Loans - Summary of balance in allowance for loan losses and recorded investment in loans (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Ending allowance balance attributable to loans: | ||||
Individually evaluated for impairment | $ 0 | $ 0 | ||
Collectively evaluated for impairment | 6,989 | 5,629 | ||
Total ending allowance balance | 6,989 | 5,629 | $ 4,264 | $ 3,413 |
Loans: | ||||
Loans individually evaluated for impairment | 1,476 | 0 | ||
Loans collectively evaluated for impairment | 563,503 | 467,149 | ||
Total ending loans balance | 564,979 | 467,149 | 467,149 | |
Real Estate | 1 - 4 Family Residential | ||||
Ending allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 0 | 0 | ||
Collectively evaluated for impairment | 344 | 407 | ||
Total ending allowance balance | 344 | 407 | 382 | 360 |
Loans: | ||||
Loans individually evaluated for impairment | 0 | 0 | ||
Loans collectively evaluated for impairment | 48,140 | 56,043 | ||
Total ending loans balance | 48,140 | 56,043 | ||
Real Estate | Multifamily | ||||
Ending allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 0 | 0 | ||
Collectively evaluated for impairment | 1,048 | 952 | ||
Total ending allowance balance | 1,048 | 952 | 713 | 621 |
Loans: | ||||
Loans individually evaluated for impairment | 0 | 0 | ||
Loans collectively evaluated for impairment | 152,633 | 136,537 | ||
Total ending loans balance | 152,633 | 136,537 | ||
Real Estate | Commercial Real Estate | ||||
Ending allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 0 | 0 | ||
Collectively evaluated for impairment | 560 | 357 | ||
Total ending allowance balance | 560 | 357 | 266 | 238 |
Loans: | ||||
Loans individually evaluated for impairment | 0 | 0 | ||
Loans collectively evaluated for impairment | 52,477 | 33,145 | ||
Total ending loans balance | 52,477 | 33,145 | ||
Real Estate | Construction | ||||
Ending allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 0 | 0 | ||
Collectively evaluated for impairment | 161 | 149 | ||
Total ending allowance balance | 161 | 149 | 127 | 141 |
Loans: | ||||
Loans individually evaluated for impairment | 0 | 0 | ||
Loans collectively evaluated for impairment | 6,450 | 5,921 | ||
Total ending loans balance | 6,450 | 5,921 | ||
Commercial | ||||
Ending allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 0 | 0 | ||
Collectively evaluated for impairment | 4,048 | 3,110 | ||
Total ending allowance balance | 4,048 | 3,110 | 2,272 | 1,934 |
Loans: | ||||
Loans individually evaluated for impairment | 0 | 0 | ||
Loans collectively evaluated for impairment | 257,957 | 191,828 | ||
Total ending loans balance | 257,957 | 191,828 | ||
Consumer | ||||
Ending allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 0 | 0 | ||
Collectively evaluated for impairment | 828 | 654 | ||
Total ending allowance balance | 828 | 654 | $ 504 | $ 119 |
Loans: | ||||
Loans individually evaluated for impairment | 1,476 | 0 | ||
Loans collectively evaluated for impairment | 45,846 | 43,675 | ||
Total ending loans balance | $ 47,322 | $ 43,675 |
Loans - Impaired loans (Details
Loans - Impaired loans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Recorded Investment | $ 1,476 | ||
Unpaid Principal Balance | 1,476 | $ 0 | $ 0 |
Average Recorded Investment | 541 | ||
Consumer | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Recorded Investment | 1,476 | ||
Unpaid Principal Balance | 1,476 | ||
Average Recorded Investment | $ 541 |
Loans - Summary of loans by pas
Loans - Summary of loans by past due status (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Nonaccrual Loans | $ 1,476 | ||
Total Past Due & Nonaccrual Loans | 4,084 | $ 40 | |
Loans Not Past Due | 560,895 | 467,109 | |
Total Loans | 564,979 | 467,149 | $ 467,149 |
60-89 Days Past Due | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Past Due | 2,608 | 40 | |
Multifamily | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Past due loans paid off subsequent to balance sheet date. | 2,602 | ||
Real Estate | 1 - 4 Family Residential | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Loans Not Past Due | 48,140 | 56,043 | |
Total Loans | 48,140 | 56,043 | |
Real Estate | Multifamily | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due & Nonaccrual Loans | 2,602 | ||
Loans Not Past Due | 150,031 | 136,537 | |
Total Loans | 152,633 | 136,537 | |
Real Estate | Multifamily | 60-89 Days Past Due | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Past Due | 2,602 | ||
Real Estate | Commercial Real Estate | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Loans Not Past Due | 52,477 | 33,145 | |
Total Loans | 52,477 | 33,145 | |
Real Estate | Construction | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Loans Not Past Due | 6,450 | 5,921 | |
Total Loans | 6,450 | 5,921 | |
Commercial | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Loans Not Past Due | 257,957 | 191,828 | |
Total Loans | 257,957 | 191,828 | |
Consumer | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Nonaccrual Loans | 1,476 | ||
Total Past Due & Nonaccrual Loans | 1,482 | 40 | |
Loans Not Past Due | 45,840 | 43,635 | |
Total Loans | 47,322 | 43,675 | |
Consumer | 60-89 Days Past Due | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Past Due | $ 6 | $ 40 |
Loans - Summary of loans by cre
Loans - Summary of loans by credit quality indicator based on internally assigned credit grade (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | $ 564,979 | $ 467,149 | $ 467,149 |
Pass | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 559,963 | 457,803 | |
Special Mention | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 3,415 | 9,166 | |
Substandard | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 1,601 | 180 | |
Doubtful | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | 1 - 4 Family Residential | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 48,140 | 56,043 | |
Real Estate | 1 - 4 Family Residential | Pass | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 48,140 | 56,043 | |
Real Estate | 1 - 4 Family Residential | Special Mention | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | 1 - 4 Family Residential | Substandard | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | 1 - 4 Family Residential | Doubtful | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | Multifamily | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 152,633 | 136,537 | |
Real Estate | Multifamily | Pass | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 152,633 | 136,537 | |
Real Estate | Multifamily | Special Mention | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | Multifamily | Substandard | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | Multifamily | Doubtful | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | Commercial Real Estate | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 52,477 | 33,145 | |
Real Estate | Commercial Real Estate | Pass | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 52,477 | 33,145 | |
Real Estate | Commercial Real Estate | Special Mention | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | Commercial Real Estate | Substandard | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | Commercial Real Estate | Doubtful | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | Construction | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 6,450 | 5,921 | |
Real Estate | Construction | Pass | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 6,450 | 5,921 | |
Real Estate | Construction | Special Mention | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | Construction | Substandard | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Real Estate | Construction | Doubtful | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Commercial | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 257,957 | 191,828 | |
Commercial | Pass | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 257,832 | 182,482 | |
Commercial | Special Mention | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 9,166 | |
Commercial | Substandard | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 125 | 180 | |
Commercial | Doubtful | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 0 | 0 | |
Consumer | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 47,322 | 43,675 | |
Consumer | Pass | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 42,431 | 43,675 | |
Consumer | Special Mention | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 3,415 | 0 | |
Consumer | Substandard | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | 1,476 | 0 | |
Consumer | Doubtful | |||
Financing Receivable, Recorded Investment [Line Items] | |||
Total Loans | $ 0 | $ 0 |
Loans - Summary of Related Part
Loans - Summary of Related Party Loans (Details) - Principal officers, directors and their affiliates $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Loans and Leases Receivable, Related Parties [Roll Forward] | |
Beginning balance | $ 8,464 |
New advances | 2,567 |
Repayments | (2,814) |
Ending balance | $ 8,217 |
Premises and Equipment (Details
Premises and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 5,614 | $ 5,068 |
Less: accumulated depreciation and amortization | 2,779 | 2,374 |
Total premises and equipment, net | 2,835 | 2,694 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 2,128 | 1,614 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 3,462 | 2,975 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 24 | $ 479 |
Premises and Equipment (Detai_2
Premises and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Premises and Equipment | |||
Depreciation and amortization expense | $ 506 | $ 421 | $ 411 |
Deposits - Contractual maturiti
Deposits - Contractual maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deposits. | ||
2020 | $ 17,866 | |
2021 | 1,880 | |
Total | $ 19,746 | $ 20,417 |
Deposits (Details)
Deposits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Deposits | $ 680,620 | $ 568,421 |
Core deposits | 660,874 | |
Certificates of deposit | 19,746 | 20,417 |
Time Deposits $250 Or More | 15,543 | 15,281 |
Principal officers, directors and their affiliates | ||
Deposits from related Party | $ 9,869 | $ 6,191 |
Borrowings (Details)
Borrowings (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Borrowings | ||
Secured borrowing | $ 86 | $ 89 |
Line of credit, maximum borrowing capacity | 17,500 | 17,500 |
Line of credit | 0 | 0 |
Federal Home Loan Bank Advances | ||
Borrowings | ||
Line of credit, maximum borrowing capacity | 143,732,000 | 114,963 |
Federal Reserve Bank Advances | ||
Borrowings | ||
Line of credit, remaining borrowing capacity | $ 22,915 | $ 24,177 |
Noninterest Income (Details)
Noninterest Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Non-interest income | |||
Total noninterest income | $ 11,811 | $ 7,855 | $ 5,516 |
Administrative service income | |||
Non-interest income | |||
Total noninterest income | 491 | 2,528 | |
Merchant services income | |||
Non-interest income | |||
Total noninterest income | 10,403 | 4,620 | |
ACH income | |||
Non-interest income | |||
Total noninterest income | 573 | 341 | |
Other | |||
Non-interest income | |||
Total noninterest income | $ 344 | $ 366 |
Income Taxes - Components of in
Income Taxes - Components of income tax expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current | |||
Federal expense | $ 3,905 | $ 2,761 | $ 1,955 |
State and city expense | 1,206 | 799 | 387 |
Total current tax expense | 5,111 | 3,560 | 2,342 |
Deferred | |||
Federal (benefit) expense | 153 | (257) | 444 |
State and city (benefit) expense | (269) | (113) | 604 |
Total deferred tax (benefit) expense | (116) | (370) | 1,048 |
Income tax expense | $ 4,995 | $ 3,190 | $ 3,390 |
Income Taxes - Effective tax ra
Income Taxes - Effective tax rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | |||
Federal tax expense at statutory rate | $ 4,019 | $ 2,504 | $ 2,462 |
State and local income taxes, net of federal income tax benefit | 1,157 | 608 | 200 |
Incentive stock options | 48 | 33 | 117 |
Stock-based compensation excess tax benefit | (23) | (60) | (85) |
Change to deferred tax as a result of tax reform | 0 | 0 | 683 |
Research and development tax credits | (129) | ||
Other | (77) | 105 | 13 |
Income tax expense | $ 4,995 | $ 3,190 | $ 3,390 |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets and deferred tax liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Net operating loss carry forwards | $ 321 | $ 237 |
Pre-opening costs | 44 | 70 |
Stock based compensation | 754 | 505 |
Allowance for loan loss | 1,931 | 1,509 |
Unrealized loss on securities available-for-sale | 985 | |
Total deferred tax assets | 3,050 | 3,306 |
Deferred tax liabilities: | ||
Fixed assets | (414) | (64) |
Deferred rent | (52) | (48) |
Unrealized gain on securities available-for-sale | (154) | |
Investment in partnership | (352) | |
Deferred loan fees | (29) | (122) |
Total deferred tax liabilities | (1,001) | (234) |
Deferred tax asset, net | $ 2,049 | $ 3,072 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Line Items] | |||
Statutory federal income tax rate | 21.00% | 21.00% | 35.00% |
New York state | |||
Income Tax Disclosure [Line Items] | |||
Net operating loss carryforwards | $ 4,474 | ||
New York city | |||
Income Tax Disclosure [Line Items] | |||
Net operating loss carryforwards | $ 336 |
Employee Benefits - Weighted-av
Employee Benefits - Weighted-average assumptions (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Employee Benefits | ||
Risk-Free Interest Rate | 1.85% | 2.65% |
Expected Term | 84 months | 84 months |
Expected Stock Price Volatility | 22.10% | 20.60% |
Dividend Yield | 0.00% | 0.00% |
Weighted average fair value of options granted | $ 7.18 | $ 6.43 |
Employee Benefits - Summary of
Employee Benefits - Summary of options activity (Details) - Stock Options | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Options | |
Outstanding at beginning of year | shares | 919,175 |
Granted | shares | 11,250 |
Exercised | shares | (14,000) |
Outstanding at period end | shares | 916,425 |
Vested or expected to vest | shares | 916,425 |
Exercisable at period end | shares | 709,660 |
Weighted Average Exercise Price | |
Outstanding at beginning of year | $ / shares | $ 13.39 |
Granted | $ / shares | 25.50 |
Exercised | $ / shares | 12.50 |
Outstanding at period end | $ / shares | 13.56 |
Vested or expected to vest | $ / shares | 13.56 |
Exercisable at period end | $ / shares | $ 12.95 |
Weighted Average Remaining Contractual Life (Years), Outstanding at year end | 5 years 11 months 1 day |
Weighted Average Remaining Contractual Life (Years), Vested or expected to vest | 5 years 11 months 1 day |
Weighted Average Remaining Contractual Life (Years), Exercisable at year end | 5 years 7 months 2 days |
Employee Benefits - Summary o_2
Employee Benefits - Summary of restricted stock activity (Details) - Restricted Stock | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Shares | |
Outstanding at beginning of year | shares | 148,500 |
Granted | shares | 110,500 |
Outstanding at period end | shares | 259,000 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of year | $ / shares | $ 22.56 |
Granted | $ / shares | 25.50 |
Outstanding at period end | $ / shares | $ 23.81 |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 01, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of matched funds for employee contributions | 100.00% | 100.00% | 100.00% | ||
Percentage of employer matching contribution | 1.00% | 1.00% | 2.00% | ||
Employee contributions expenses | $ 126 | $ 47 | $ 18 | ||
Weighted average fair value of options granted | $ 7.18 | $ 6.43 | |||
Stock options expense | $ 521 | $ 1,007 | 554 | ||
Unrecognized compensation cost related to non-vested options | $ 738 | $ 738 | |||
Recognition period of nonvested stock options | 1 year 8 months 1 day | ||||
Intrinsic value of outstanding options | $ 11,469 | 11,469 | |||
Intrinsic value of exercisable options | 9,312 | 9,312 | |||
Exercise of stock options | 50 | 378 | $ 942 | ||
Intrinsic value for options exercised | 163 | ||||
Tax benefit for options exercised | $ 23 | ||||
Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of stock options issued | 11,250 | ||||
Contractual term of awards | 10 years | ||||
Exercise of stock options | $ 50 | ||||
Stock Options | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Stock Options | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 5 years | ||||
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of restricted shares issued | 110,500 | ||||
Vesting period | 6 years | ||||
Stock options expense | $ 574 | $ 496 | |||
Unrecognized compensation cost related to non-vested options | $ 5,387 | $ 5,387 | |||
Recognition period of nonvested stock options | 5 years 4 months 6 days | ||||
2007 Stock Option Plan ("the 2007 Plan") | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of maximum shares of common stock to be issued | 270,000 | 270,000 | |||
Number of stock options issued | 269,500 | ||||
2011 Stock Compensation Plan ("the 2011 Plan") | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of maximum shares of common stock to be issued | 754,607 | 754,607 | |||
Number of shares available for issuance under stock compensation plan | 62 | 62 | |||
2017 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of maximum shares of common stock to be issued | 300,000 | 300,000 | |||
Number of shares available for issuance under stock compensation plan | 6,750 | 6,750 | |||
2019 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of maximum shares of common stock to be issued | 300,000 | 300,000 | |||
Number of shares available for issuance under stock compensation plan | 226,000 | 226,000 | |||
2019 Equity Incentive Plan | Stock Options | Forecast | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of stock options issued | 100,000 | ||||
2019 Equity Incentive Plan | Restricted Stock | Forecast | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of stock options issued | 126,000 |
Earnings per Share - Summary of
Earnings per Share - Summary of earnings per share computation (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Basic | |||
Net income | $ 14,143 | $ 8,734 | $ 3,644 |
Less: Earnings allocated to preferred stock | 23 | ||
Net income allocated to common shareholders | $ 14,143 | $ 8,734 | $ 3,621 |
Weighted average common shares outstanding | 7,388,702 | 7,374,013 | 6,163,549 |
Basic earnings per common share | $ 1.91 | $ 1.18 | $ 0.59 |
Diluted | |||
Net income | $ 14,143 | $ 8,734 | $ 3,621 |
Weighted average shares outstanding for basic earnings per common share | 7,388,702 | 7,374,013 | 6,163,549 |
Add: Dilutive effects of share based awards | 396,034 | 359,359 | 68,695 |
Average shares and dilutive potential common shares | 7,784,736 | 7,733,372 | 6,232,244 |
Diluted earnings per common share | $ 1.82 | $ 1.13 | $ 0.58 |
Earnings per Common Share (Deta
Earnings per Common Share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings per Common Share | |||
Stock options not considered in computing diluted earnings per share because they were anti-dilutive | 164,250 | 129,500 | 0 |
Commitments and Contingent Li_3
Commitments and Contingent Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Loss Contingencies [Line Items] | |||
ROU lease assets | $ 2,700 | ||
Lease liability | 3,326 | ||
Rent expense | $ 561 | ||
Rent expense | $ 599 | $ 501 | |
Minimum | |||
Loss Contingencies [Line Items] | |||
Interest rate | 5.50% | ||
Period | 1 month | ||
Maximum | |||
Loss Contingencies [Line Items] | |||
Interest rate | 18.00% | ||
Period | 2 years | ||
Fixed rate commitments | |||
Loss Contingencies [Line Items] | |||
Extending credit facilities to comparable customers. | $ 1,418 | 1,478 | |
Fixed Rate - Unused lines of credit | |||
Loss Contingencies [Line Items] | |||
Extending credit facilities to comparable customers. | 80 | 692 | |
Fixed Rate - Standby letters of credit | |||
Loss Contingencies [Line Items] | |||
Extending credit facilities to comparable customers. | 1,338 | 786 | |
Variable rate commitments | |||
Loss Contingencies [Line Items] | |||
Extending credit facilities to comparable customers. | 22,580 | 4,287 | |
Variable Rate - Unused lines of credit | |||
Loss Contingencies [Line Items] | |||
Extending credit facilities to comparable customers. | $ 22,580 | $ 4,287 |
Commitments and Contingent Li_4
Commitments and Contingent Liabilities - Total minimum rental due in future periods (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Commitments and Contingent Liabilities | |
2020 | $ 581 |
2021 | 605 |
2022 | 620 |
2023 | 636 |
2024 | 652 |
Thereafter | 1,295 |
Total operating lease payments | 4,389 |
Less: interest | 1,063 |
Present value of operating lease liabilities | $ 3,326 |
Commitments and Contingent Li_5
Commitments and Contingent Liabilities - Lease Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments and Contingent Liabilities | |
Operating lease cost | $ 500 |
Cash paid for operating lease liability | $ 432 |
Weighted-average remaining lease term | 6 years 10 months 17 days |
Weighted-average discount rate | 3.11% |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of assets and liabilities measured at fair value on recurring basis (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Available-for-sale securities | ||
Fair Value | $ 146,419 | $ 145,698 |
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | 0 | |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | |
Fair Value | ||
Available-for-sale securities | ||
Fair Value | 146,419 | 145,698 |
Fair Value | (Level 1) | ||
Available-for-sale securities | ||
Fair Value | 0 | 0 |
Fair Value | (Level 2) | ||
Available-for-sale securities | ||
Fair Value | 146,419 | 145,698 |
Fair Value | (Level 3) | ||
Available-for-sale securities | ||
Fair Value | 0 | 0 |
Recurring | (Level 1) | ||
Available-for-sale securities | ||
Fair Value | 0 | 0 |
Recurring | (Level 1) | Mortgage-backed securities - agency | ||
Available-for-sale securities | ||
Fair Value | 0 | 0 |
Recurring | (Level 1) | Collateralized mortgage obligations (CMO's) - agency | ||
Available-for-sale securities | ||
Fair Value | 0 | 0 |
Recurring | (Level 2) | ||
Available-for-sale securities | ||
Fair Value | 146,419 | 145,698 |
Recurring | (Level 2) | Mortgage-backed securities - agency | ||
Available-for-sale securities | ||
Fair Value | 25,037 | 26,675 |
Recurring | (Level 2) | Collateralized mortgage obligations (CMO's) - agency | ||
Available-for-sale securities | ||
Fair Value | 121,382 | 119,023 |
Recurring | (Level 3) | ||
Available-for-sale securities | ||
Fair Value | 0 | 0 |
Recurring | (Level 3) | Mortgage-backed securities - agency | ||
Available-for-sale securities | ||
Fair Value | 0 | 0 |
Recurring | (Level 3) | Collateralized mortgage obligations (CMO's) - agency | ||
Available-for-sale securities | ||
Fair Value | 0 | 0 |
Non-recurring | ||
Available-for-sale securities | ||
Assets | $ 0 | $ 0 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of estimated fair values of financial instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Financial Assets: | ||||
Cash and cash equivalents | $ 61,806 | $ 30,562 | $ 43,077 | $ 42,993 |
Securities available-for-sale | 146,419 | 145,698 | ||
Securities, restricted, at cost | 2,665 | 2,583 | ||
Loans, net | 558,380 | 462,472 | ||
Accrued interest receivable | 3,242 | 3,855 | ||
Financial Liabilities: | ||||
Time deposits | 19,746 | 20,417 | ||
Secured borrowings | 86 | 89 | ||
Carrying Value | ||||
Financial Assets: | ||||
Cash and cash equivalents | 61,806 | 30,562 | ||
Securities available-for-sale | 146,419 | 145,698 | ||
Securities, restricted, at cost | 2,665 | 2,583 | ||
Loans, net | 558,380 | 462,472 | ||
Accrued interest receivable | 3,242 | 3,855 | ||
Financial Liabilities: | ||||
Time deposits | 19,746 | 20,417 | ||
Demand and other deposits | 660,874 | 548,004 | ||
Secured borrowings | 86 | 89 | ||
Accrued interest payable | 12 | 15 | ||
Fair Value | ||||
Financial Assets: | ||||
Cash and cash equivalents | 61,676 | 30,562 | ||
Securities available-for-sale | 146,419 | 145,698 | ||
Loans, net | 560,859 | 464,144 | ||
Accrued interest receivable | 3,242 | 3,855 | ||
Financial Liabilities: | ||||
Time deposits | 19,763 | 20,377 | ||
Demand and other deposits | 660,874 | 548,004 | ||
Secured borrowings | 86 | 89 | ||
Accrued interest payable | 12 | 15 | ||
Fair Value | (Level 1) | ||||
Financial Assets: | ||||
Cash and cash equivalents | 669 | 659 | ||
Securities available-for-sale | 0 | 0 | ||
Loans, net | 0 | 0 | ||
Accrued interest receivable | 0 | 0 | ||
Financial Liabilities: | ||||
Time deposits | 0 | 0 | ||
Demand and other deposits | 660,874 | 548,004 | ||
Secured borrowings | 0 | 0 | ||
Accrued interest payable | 0 | 0 | ||
Fair Value | (Level 2) | ||||
Financial Assets: | ||||
Cash and cash equivalents | 61,007 | 29,903 | ||
Securities available-for-sale | 146,419 | 145,698 | ||
Loans, net | 0 | 0 | ||
Accrued interest receivable | 386 | 368 | ||
Financial Liabilities: | ||||
Time deposits | 19,763 | 20,377 | ||
Demand and other deposits | 0 | 0 | ||
Secured borrowings | 86 | 89 | ||
Accrued interest payable | 12 | 15 | ||
Fair Value | (Level 3) | ||||
Financial Assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Securities available-for-sale | 0 | 0 | ||
Loans, net | 560,859 | 464,144 | ||
Accrued interest receivable | 2,856 | 3,487 | ||
Financial Liabilities: | ||||
Time deposits | 0 | 0 | ||
Demand and other deposits | 0 | 0 | ||
Secured borrowings | 0 | 0 | ||
Accrued interest payable | $ 0 | $ 0 |
Capital (Details)
Capital (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Capital. | ||
Total capital to risk weighted assets, Actual, Amount | $ 107,738 | $ 90,958 |
Total capital to risk weighted assets, Actual, Ratio | 17.83% | 18.70% |
Total capital to risk weighted assets, Required For Capital Adequacy Purposes, Amount | $ 48,335 | $ 38,920 |
Total capital to risk weighted assets, Required For Capital Adequacy Purposes, Ratio | 8.00% | 8.00% |
Total capital to risk weighted assets, For Capital Adequacy Purposes Including Capital Conservation Buffer, Amount | $ 63,439 | $ 48,042 |
Total capital to risk weighted assets, For Capital Adequacy Purposes Including Capital Conservation Buffer, Ratio | 10.50% | 9.88% |
Total capital to risk weighted assets, To be Well Capitalized Under Prompt Corrective Action Regulations, Amount | $ 60,418 | $ 48,650 |
Total capital to risk weighted assets, To be Well Capitalized Under Prompt Corrective Action Regulations, Ratio | 10.00% | 10.00% |
Tier 1 (core) capital to risk weighted assets, Actual, Amount | $ 100,748 | $ 85,328 |
Tier 1 (core) capital to risk weighted assets, Actual, Ratio | 16.68% | 17.54% |
Tier 1 (core) capital to risk weighted assets Required, For Capital Adequacy Purposes, Amount | $ 36,251 | $ 29,190 |
Tier 1 (core) capital to risk weighted assets, Required For Capital Adequacy Purposes, Ratio | 6.00% | 6.00% |
Tier 1 (core) capital to risk weighted assets, To be Well Capitalized Under Prompt Corrective Action Regulations, Amount | $ 51,356 | $ 38,312 |
Tier 1 (core) capital to risk weighted assets, To be Well Capitalized Under Prompt Corrective Action Regulations, Ratio | 8.50% | 7.88% |
Tier 1 (core) capital to risk weighted assets, For Capital Adequacy Purposes Including Capital Conservation Buffer, Amount | $ 48,335 | $ 38,920 |
Tier 1 (core) capital to risk weighted assets, For Capital Adequacy Purposes Including Capital Conservation Buffer, Ratio | 8.00% | 8.00% |
Tier 1 (common) capital to risk weighted assets, Actual, Amount | $ 100,748 | $ 85,328 |
Tier 1 (common) capital to risk weighted assets, Actual, Ratio | 16.68% | 17.54% |
Tier 1 (common) capital to risk weighted assets, Required For Capital Adequacy Purposes, Amount | $ 27,188 | $ 21,893 |
Tier 1 (common) capital to risk weighted assets, Required For Capital Adequacy Purposes, Ratio | 4.50% | 4.50% |
Tier 1 (common) capital to risk weighted assets, For Capital Adequacy Purposes Including Capital Conservation Buffer, Amount | $ 42,293 | $ 31,014 |
Tier 1 (common) capital to risk weighted assets, For Capital Adequacy Purposes Including Capital Conservation Buffer, Ratio | 7.00% | 6.38% |
Tier 1 (common) capital to risk weighted assets, To be Well Capitalized Under Prompt Corrective Action Regulations, Amount | $ 39,272 | $ 31,623 |
Tier 1 (common) capital to risk weighted assets, To be Well Capitalized Under Prompt Corrective Action Regulations, Ratio | 6.50% | 6.50% |
Tier 1 (core) capital to adjusted total assets, Actual, Amount | $ 100,748 | $ 85,328 |
Tier 1 (core) capital to adjusted total assets, Actual, Ratio | 13.50% | 13.26% |
Tier 1 (core) capital to adjusted total assets, Required For Capital Adequacy Purposes, Amount | $ 29,841 | $ 25,733 |
Tier 1 (core) capital to adjusted total assets, Required For Capital Adequacy Purposes, Ratio | 4.00% | 4.00% |
Tier 1 (core) capital to adjusted total assets, For Capital Adequacy Purposes Including Capital Conservation Buffer, Amount | $ 29,841 | $ 25,733 |
Tier 1 (core) capital to adjusted total assets, For Capital Adequacy Purposes Including Capital Conservation Buffer, Ratio | 4.00% | 4.00% |
Tier 1 (core) capital to adjusted total assets, To be Well Capitalized Under Prompt Corrective Action Regulations, Amount | $ 37,301 | $ 32,166 |
Tier 1 (core) capital to adjusted total assets, To be Well Capitalized Under Prompt Corrective Action Regulations, Ratio | 5.00% | 5.00% |
Parent Company Only Condensed_3
Parent Company Only Condensed Financial Information - Condensed financial information (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
ASSETS | ||||
Cash and cash equivalents | $ 61,806 | $ 30,562 | ||
Loans | 565,369 | 468,101 | ||
Other assets | 20,612 | 12,963 | ||
Total assets | 798,008 | 663,899 | ||
LIABILITIES | ||||
Total liabilities | 686,946 | 571,125 | ||
STOCKHOLDERS' EQUITY | ||||
Common stock | 77 | 75 | ||
Additional paid-in-capital | 89,682 | 88,539 | ||
Retained earnings | 20,917 | 6,774 | ||
Other comprehensive income (loss) | 386 | (2,614) | $ (1,390) | $ (884) |
Total stockholders' equity | 111,062 | 92,774 | $ 83,383 | $ 52,186 |
Total liabilities and stockholders' equity | 798,008 | 663,899 | ||
Esquire Financial Holdings Inc | ||||
ASSETS | ||||
Cash and cash equivalents | 5,571 | 4,041 | ||
Investment in banking subsidiary | 101,414 | 82,994 | ||
Loans | 1,775 | |||
Investment in equity security without readily determinable fair value | 2,410 | 2,410 | ||
Other assets | 2,046 | 1,611 | ||
Total assets | 111,441 | 92,831 | ||
LIABILITIES | ||||
Other liabilities | 379 | 57 | ||
Total liabilities | 379 | 57 | ||
STOCKHOLDERS' EQUITY | ||||
Common stock | 77 | 75 | ||
Additional paid-in-capital | 89,682 | 88,539 | ||
Retained earnings | 20,917 | 6,774 | ||
Other comprehensive income (loss) | 386 | (2,614) | ||
Total stockholders' equity | 111,062 | 92,774 | ||
Total liabilities and stockholders' equity | $ 111,441 | $ 92,831 |
Parent Company Only Condensed_4
Parent Company Only Condensed Financial Information - Condensed Statements of Income and Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Condensed Income Statements, Captions [Line Items] | |||
Interest income | $ 36,659 | $ 28,951 | $ 20,394 |
Other expense | 2,548 | 1,212 | 538 |
Income tax benefit | 4,995 | 3,190 | 3,390 |
Net income | 14,143 | 8,734 | 3,644 |
Total comprehensive income | 17,143 | 7,510 | 3,360 |
Esquire Financial Holdings Inc | |||
Condensed Income Statements, Captions [Line Items] | |||
Interest income | 95 | 156 | 0 |
Other expense | 1,822 | 2,263 | 883 |
Loss before income tax and undistributed subsidiary income | 1,727 | 2,107 | 883 |
Income tax benefit | 450 | 563 | 388 |
Equity in undistributed subsidiary income | 15,420 | 10,278 | 4,139 |
Net income | 14,143 | 8,734 | 3,644 |
Total comprehensive income | $ 17,143 | $ 7,510 | $ 3,360 |
Parent Company Only Condensed_5
Parent Company Only Condensed Financial Information - Condensed Statemetns of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 14,143 | $ 8,734 | $ 3,644 |
Adjustments: | |||
Stock compensation expense | 1,095 | 1,503 | 554 |
Change in other assets | (4,974) | (3,351) | (2,309) |
Net cash provided by (used in) operating activities | 14,895 | 9,428 | 3,979 |
Cash flows from investing activities | |||
Purchase of equity investment without readily determinable fair value | (2,410) | ||
Net cash used in investing activities | (95,897) | (142,059) | (108,791) |
Cash flows from financing activities: | |||
Exercise of stock options | 50 | 378 | 942 |
Proceeds from the issuance of common stock | 26,341 | ||
Net cash provided by financing activities | 112,246 | 120,116 | 104,896 |
Net change in cash and cash equivalents | 31,244 | (12,515) | 84 |
Cash and cash equivalents at beginning of the period | 30,562 | 43,077 | 42,993 |
Cash and cash equivalents at end of the period | 61,806 | 30,562 | 43,077 |
Esquire Financial Holdings Inc | |||
Cash flows from operating activities: | |||
Net income | 14,143 | 8,734 | 3,644 |
Adjustments: | |||
Stock compensation expense | 1,095 | 1,503 | 554 |
Equity in undistributed subsidiary income | (15,420) | (10,278) | (4,139) |
Change in other assets | (435) | (563) | (388) |
Change in other liabilities | 322 | (9) | 34 |
Net cash provided by (used in) operating activities | (295) | (613) | (295) |
Cash flows from investing activities | |||
Investments in subsidiaries | (11,000) | (12,000) | |
Net change in loans | 1,775 | (1,775) | |
Purchase of equity investment without readily determinable fair value | (2,410) | ||
Net cash used in investing activities | 1,775 | (15,185) | (12,000) |
Cash flows from financing activities: | |||
Exercise of stock options | 50 | 378 | 942 |
Proceeds from the issuance of common stock | 26,341 | ||
Net cash provided by financing activities | 50 | 378 | 27,283 |
Net change in cash and cash equivalents | 1,530 | (15,420) | 14,988 |
Cash and cash equivalents at beginning of the period | 4,041 | 19,461 | 4,473 |
Cash and cash equivalents at end of the period | $ 5,571 | $ 4,041 | $ 19,461 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive (Loss) Income - Summary of changes in accumulated other comprehensive (loss) income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Unrealized Gains on Available for Sale Securities | |||
Beginning balance | $ (2,614) | $ (1,390) | $ (884) |
Other comprehensive income (loss) before reclassifications, net of tax | 3,000 | (1,224) | (284) |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | (222) |
Net current period other comprehensive income (loss) | 3,000 | (1,224) | (506) |
Ending balance | 386 | (2,614) | (1,390) |
Reclassifications | $ 0 | $ 0 | $ 0 |