Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 03, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2023 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-38290 | |
Entity Registrant Name | Sterling Bancorp, Inc. | |
Entity Incorporation, State or Country Code | MI | |
Entity Tax Identification Number | 38-3163775 | |
Entity Address, Address Line One | One Towne Square | |
Entity Address, Address Line Two | Suite 1900 | |
Entity Address, City or Town | Southfield | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48076 | |
City Area Code | 248 | |
Local Phone Number | 355-2400 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | SBT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 52,072,631 | |
Entity Central Index Key | 0001680379 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and due from banks | $ 563,622 | $ 379,798 |
Interest-bearing time deposits with other banks | 1,174 | 934 |
Debt securities available for sale, at fair value (amortized cost $427,272 and $370,489 at September 30, 2023 and December 31, 2022, respectively) | 398,302 | 343,558 |
Equity securities | 4,505 | 4,642 |
Loans held for sale | 7,725 | |
Loans, net of allowance for credit losses of $34,267 and $45,464 at September 30, 2023 and December 31, 2022, respectively | 1,382,860 | 1,613,385 |
Accrued interest receivable | 8,854 | 7,829 |
Mortgage servicing rights, net | 1,631 | 1,794 |
Leasehold improvements and equipment, net | 5,583 | 6,301 |
Operating lease right-of-use assets | 12,197 | 14,800 |
Federal Home Loan Bank stock, at cost | 18,923 | 20,288 |
Federal Reserve Bank stock, at cost | 9,001 | 0 |
Company-owned life insurance | 8,658 | 8,501 |
Deferred tax asset, net | 22,475 | 23,704 |
Other assets | 8,888 | 11,476 |
Total assets | 2,446,673 | 2,444,735 |
Liabilities | ||
Noninterest-bearing deposits | 40,780 | 53,041 |
Interest-bearing deposits | 1,999,878 | 1,900,996 |
Total deposits | 2,040,658 | 1,954,037 |
Federal Home Loan Bank borrowings | 50,000 | 50,000 |
Subordinated notes, net | 65,271 | |
Operating lease liabilities | 13,317 | 15,990 |
Accrued expenses and other liabilities | 26,595 | 46,810 |
Total liabilities | 2,130,570 | 2,132,108 |
Shareholders' equity | ||
Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding | ||
Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 52,081,886 shares and 52,072,631 shares at September 30, 2023 and December 31, 2022, respectively | 84,323 | 83,295 |
Additional paid-in capital | 15,882 | 14,808 |
Retained earnings | 236,901 | 234,049 |
Accumulated other comprehensive loss | (21,003) | (19,525) |
Total shareholders' equity | 316,103 | 312,627 |
Total liabilities and shareholders' equity | $ 2,446,673 | $ 2,444,735 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Condensed Consolidated Balance Sheets | ||
Debt securities available for sale, amortized cost | $ 427,272 | $ 370,489 |
Allowance for credit losses | $ 34,267 | $ 45,464 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, issued (in shares) | 52,081,886 | 50,795,871 |
Common stock, outstanding (in shares) | 52,072,631 | 50,795,871 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Interest income | ||||
Interest and fees on loans | $ 21,663 | $ 20,975 | $ 65,715 | $ 65,589 |
Interest and dividends on investment securities and restricted stock | 3,134 | 1,945 | 8,256 | 4,133 |
Interest on interest-bearing cash deposits | 8,081 | 1,925 | 19,890 | 2,931 |
Total interest income | 32,878 | 24,845 | 93,861 | 72,653 |
Interest expense | ||||
Interest on deposits | 16,391 | 3,724 | 39,537 | 8,070 |
Interest on Federal Home Loan Bank borrowings | 250 | 253 | 743 | 919 |
Interest on subordinated notes | 243 | 1,329 | 3,727 | 3,383 |
Total interest expense | 16,884 | 5,306 | 44,007 | 12,372 |
Net interest income | 15,994 | 19,539 | 49,854 | 60,281 |
Provision for (recovery of) credit losses | (1,942) | (4,357) | (4,170) | (9,755) |
Net interest income after provision for (recovery of) credit losses | 17,936 | 23,896 | 54,024 | 70,036 |
Non-interest income | ||||
Service charges and fees | 97 | 124 | 269 | 351 |
Loss on the sale of investment securities | (2) | |||
Gain on sale of mortgage loans held for sale | 1,695 | 200 | ||
Unrealized loss on equity securities | (137) | (184) | (137) | (590) |
Net servicing income (loss) | 107 | (384) | 268 | (118) |
Income earned on company-owned life insurance | 83 | 87 | 244 | 670 |
Other | 234 | 236 | 586 | |
Total non-interest income | 384 | (357) | 2,573 | 1,099 |
Non-interest expense | ||||
Salaries and employee benefits | 8,753 | 9,336 | 27,437 | 24,522 |
Occupancy and equipment | 2,110 | 2,112 | 6,273 | 6,441 |
Professional fees | 4,242 | 5,756 | 10,984 | 17,979 |
FDIC insurance | 274 | 316 | 794 | 1,031 |
Data processing | 745 | 725 | 2,237 | 2,292 |
Net provision for (recovery of) mortgage repurchase liability | (80) | (145) | (19) | (670) |
Other | 1,658 | 3,521 | 5,174 | 8,943 |
Total non-interest expense | 17,702 | 21,621 | 52,880 | 60,538 |
Income before income taxes | 618 | 1,918 | 3,717 | 10,597 |
Income tax expense | 304 | 742 | 1,367 | 6,358 |
Net income | $ 314 | $ 1,176 | $ 2,350 | $ 4,239 |
Income per share, basic | $ 0.01 | $ 0.02 | $ 0.05 | $ 0.08 |
Income per share, diluted | $ 0.01 | $ 0.02 | $ 0.05 | |
Weighted average common shares outstanding: | ||||
Basic | 50,699,967 | 50,400,412 | 50,606,566 | 50,326,951 |
Diluted | 51,069,683 | 50,572,931 | 50,749,879 | 50,523,076 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Net income | $ 314 | $ 1,176 | $ 2,350 | $ 4,239 |
Other comprehensive income (loss), net of tax: | ||||
Unrealized loss on investment securities, arising during the period, net of tax effect of $(1,014), $(2,632), $(563) and $(7,515), respectively | (2,671) | (7,154) | (1,479) | (19,839) |
Reclassification adjustment for loss included in net income of $-, $-, $2 and $-, respectively, included in loss on sale of investment securities, net of tax effect of $-, $-, $1 and $-, respectively | 1 | |||
Total other comprehensive loss | (2,671) | (7,154) | (1,478) | (19,839) |
Comprehensive income (loss) | $ (2,357) | $ (5,978) | $ 872 | $ (15,600) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Unrealized gain (loss) on investment securities, arising during the period, net of tax effect | $ (1,014) | $ (2,632) | $ (563) | $ (7,515) |
Reclassification adjustment for gains (losses) included in net income on sale of investment securities, before tax | $ 2 | |||
Reclassification adjustment for gains (losses) included in net loss on sale of investment securities, tax effect | $ 1 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings Cumulative effect adjustment | Retained Earnings | Accumulated Other Comprehensive Loss | Cumulative effect adjustment | Total |
Balance at beginning of the period at Dec. 31, 2021 | $ 82,157 | $ 14,124 | $ 248,243 | $ (897) | $ 343,627 | ||
Balance at beginning of the period (in shares) at Dec. 31, 2021 | 50,460,932 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 5,260 | 5,260 | |||||
Repurchase of restricted shares to pay employee tax liability | (84) | (84) | |||||
Repurchase of restricted shares to pay employee tax liability (in shares) | (13,383) | ||||||
Stock-based compensation | 146 | 146 | |||||
Stock-based compensation (in shares) | 49,284 | ||||||
Other comprehensive loss | (7,543) | (7,543) | |||||
Balance at end of the period at Mar. 31, 2022 | $ 82,157 | 14,186 | 253,503 | (8,440) | 341,406 | ||
Balance at end of the period (in shares) at Mar. 31, 2022 | 50,496,833 | ||||||
Balance at beginning of the period at Dec. 31, 2021 | $ 82,157 | 14,124 | 248,243 | (897) | 343,627 | ||
Balance at beginning of the period (in shares) at Dec. 31, 2021 | 50,460,932 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 4,239 | ||||||
Other comprehensive loss | (19,839) | ||||||
Balance at end of the period at Sep. 30, 2022 | $ 83,295 | 14,560 | 252,482 | (20,736) | 329,601 | ||
Balance at end of the period (in shares) at Sep. 30, 2022 | 50,800,012 | ||||||
Balance at beginning of the period at Dec. 31, 2021 | $ 82,157 | 14,124 | 248,243 | (897) | 343,627 | ||
Balance at beginning of the period (in shares) at Dec. 31, 2021 | 50,460,932 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | ASU 2016-13 | $ 778 | ||||||
Net income | ASU 2022-02 | 276 | ||||||
Balance at end of the period (ASU 2016-13) at Dec. 31, 2022 | $ 778 | 778 | |||||
Balance at end of the period (ASU 2022-02) at Dec. 31, 2022 | (276) | (276) | |||||
Balance at end of the period at Dec. 31, 2022 | $ 83,295 | 14,808 | 234,049 | (19,525) | 312,627 | ||
Balance at end of the period (in shares) at Dec. 31, 2022 | 50,795,871 | ||||||
Balance at beginning of the period at Mar. 31, 2022 | $ 82,157 | 14,186 | 253,503 | (8,440) | 341,406 | ||
Balance at beginning of the period (in shares) at Mar. 31, 2022 | 50,496,833 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | (2,197) | (2,197) | |||||
Repurchase of restricted shares to pay employee tax liability | (112) | (112) | |||||
Repurchase of restricted shares to pay employee tax liability (in shares) | (16,345) | ||||||
Issuance of shares of common stock to defined contribution retirement plan | $ 1,138 | 1,138 | |||||
Issuance of shares of common stock to defined contribution retirement plan (in shares) | 160,978 | ||||||
Stock-based compensation | 239 | 239 | |||||
Stock-based compensation (in shares) | 176,746 | ||||||
Other comprehensive loss | (5,142) | (5,142) | |||||
Balance at end of the period at Jun. 30, 2022 | $ 83,295 | 14,313 | 251,306 | (13,582) | 335,332 | ||
Balance at end of the period (in shares) at Jun. 30, 2022 | 50,818,212 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 1,176 | 1,176 | |||||
Repurchase of restricted shares to pay employee tax liability | (8) | (8) | |||||
Repurchase of restricted shares to pay employee tax liability (in shares) | (1,299) | ||||||
Stock-based compensation | 255 | 255 | |||||
Stock-based compensation (in shares) | (16,901) | ||||||
Other comprehensive loss | (7,154) | (7,154) | |||||
Balance at end of the period at Sep. 30, 2022 | $ 83,295 | 14,560 | 252,482 | (20,736) | 329,601 | ||
Balance at end of the period (in shares) at Sep. 30, 2022 | 50,800,012 | ||||||
Balance at beginning of the period at Dec. 31, 2022 | $ 83,295 | 14,808 | 234,049 | (19,525) | 312,627 | ||
Balance at beginning of the period (in shares) at Dec. 31, 2022 | 50,795,871 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | (503) | (503) | |||||
Repurchase of restricted shares to pay employee tax liability | (75) | (75) | |||||
Repurchase of restricted shares to pay employee tax liability (in shares) | (12,166) | ||||||
Stock-based compensation | 173 | 173 | |||||
Stock-based compensation (in shares) | 24,411 | ||||||
Other comprehensive loss | 2,786 | 2,786 | |||||
Balance at end of the period at Mar. 31, 2023 | $ 83,295 | 14,906 | 234,048 | (16,739) | 315,510 | ||
Balance at end of the period (in shares) at Mar. 31, 2023 | 50,808,116 | ||||||
Balance at beginning of the period (ASU 2016-13) at Dec. 31, 2022 | 778 | 778 | |||||
Balance at beginning of the period (ASU 2022-02) at Dec. 31, 2022 | $ (276) | $ (276) | |||||
Balance at beginning of the period at Dec. 31, 2022 | $ 83,295 | 14,808 | 234,049 | (19,525) | 312,627 | ||
Balance at beginning of the period (in shares) at Dec. 31, 2022 | 50,795,871 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 2,350 | ||||||
Other comprehensive loss | (1,478) | ||||||
Balance at end of the period at Sep. 30, 2023 | $ 84,323 | 15,882 | 236,901 | (21,003) | 316,103 | ||
Balance at end of the period (in shares) at Sep. 30, 2023 | 52,072,631 | ||||||
Balance at beginning of the period at Mar. 31, 2023 | $ 83,295 | 14,906 | 234,048 | (16,739) | 315,510 | ||
Balance at beginning of the period (in shares) at Mar. 31, 2023 | 50,808,116 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 2,539 | 2,539 | |||||
Repurchase of restricted shares to pay employee tax liability | (158) | (158) | |||||
Repurchase of restricted shares to pay employee tax liability (in shares) | (28,826) | ||||||
Issuance of shares of common stock to defined contribution retirement plan | $ 1,028 | 1,028 | |||||
Issuance of shares of common stock to defined contribution retirement plan (in shares) | 184,928 | ||||||
Stock-based compensation | 350 | 350 | |||||
Stock-based compensation (in shares) | 1,117,668 | ||||||
Other comprehensive loss | (1,593) | (1,593) | |||||
Balance at end of the period at Jun. 30, 2023 | $ 84,323 | 15,098 | 236,587 | (18,332) | 317,676 | ||
Balance at end of the period (in shares) at Jun. 30, 2023 | 52,081,886 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 314 | 314 | |||||
Repurchase of restricted shares to pay employee tax liability | (2) | (2) | |||||
Repurchase of restricted shares to pay employee tax liability (in shares) | (106) | ||||||
Stock-based compensation | 786 | 786 | |||||
Stock-based compensation (in shares) | (9,149) | ||||||
Other comprehensive loss | (2,671) | (2,671) | |||||
Balance at end of the period at Sep. 30, 2023 | $ 84,323 | $ 15,882 | $ 236,901 | $ (21,003) | $ 316,103 | ||
Balance at end of the period (in shares) at Sep. 30, 2023 | 52,072,631 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash Flows From Operating Activities | ||
Net income | $ 2,350 | $ 4,239 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Provision for (recovery of) credit losses | (4,170) | (9,755) |
Deferred income taxes | 1,601 | 5,034 |
Gain on extinguishment of Subordinated Notes | 234 | |
Loss on sale of investment securities | 2 | |
Unrealized loss on equity securities | 137 | 590 |
Net amortization (accretion) on investment securities | (1,859) | (342) |
Depreciation and amortization on leasehold improvements and equipment | 1,031 | 1,162 |
Net principal payments (originations) of loans held for sale | (2,655) | 2,284 |
Proceeds from sale of mortgage loans held for sale | 2,979 | 1,831 |
Gain on sale of mortgage loans held for sale | (1,695) | (200) |
Net provision for (recovery of) mortgage repurchase liability | (19) | (670) |
Increase in cash surrender value of company-owned life insurance, net of premiums | (157) | (292) |
Valuation allowance adjustments and amortization of mortgage servicing rights | 163 | 891 |
Stock-based compensation | 1,309 | 640 |
Other | (1) | 82 |
Change in operating assets and liabilities: | ||
Accrued interest receivable | (1,025) | 635 |
Other assets | 2,187 | (503) |
Accrued expenses and other liabilities | (24,308) | 1,905 |
Net cash provided by (used in) operating activities | (24,364) | 7,531 |
Cash Flows From Investing Activities | ||
Purchases of interest-bearing time deposits with other banks | (240) | |
Maturities and principal receipts of investment securities | 43,231 | 80,551 |
Sales of investment securities | 2,977 | |
Purchases of investment securities | (101,287) | (147,493) |
Maturities (purchases) of investment securities, net | 153 | |
Proceeds from redemption of Federal Home Loan Bank stock | (1,365) | (2,662) |
Purchase of shares of Federal Reserve Bank stock | (4,501) | |
Net decrease in loans | 205,495 | 380,865 |
Purchases of portfolio loans | (67,127) | |
Principal payments received on loans held for sale previously classified as portfolio loans | 1,959 | 2,529 |
Proceeds from loans held for sale previously classified as portfolio loans | 37,930 | 67,584 |
Proceeds received from settlement of company-owned life insurance policies | 24,877 | |
Proceeds from the sales of equipment | 46 | |
Purchases of leasehold improvements and equipment | (326) | (326) |
Net cash provided by investing activities | 186,802 | 344,122 |
Cash Flows From Financing Activities | ||
Net increase (decrease) in deposits | 86,621 | (310,721) |
Proceeds from Federal Home Loan Bank advances | 35,000 | |
Repayments of Federal Home Loan Bank advances | (135,000) | |
Payments on redemption of Subordinated Notes | (65,000) | |
Cash paid for surrender of vested shares to satisfy employee tax liability | (235) | (204) |
Net cash provided by (used in) financing activities | 21,386 | (410,925) |
Net change in cash and due from banks | 183,824 | (59,272) |
Cash and due from banks at beginning of period | 379,798 | 411,676 |
Cash and due from banks at end of period | 563,622 | 352,404 |
Cash paid for: | ||
Interest | 44,528 | 11,872 |
Income taxes | 300 | 1,779 |
Noncash investing and financing activities: | ||
Transfer of residential real estate loans to loans held for sale | 34,581 | |
Transfer of residential real estate loans from loans held for sale | 3,906 | |
Shares of common stock issued in satisfaction of Company's matching contribution in defined contribution retirement plan | $ 1,028 | $ 1,138 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Nature of Operations and Basis of Presentation | |
Nature of Operations and Basis of Presentation | Note 1—Nature of Operations and Basis of Presentation Nature of Operations Sterling Bancorp, Inc. (unless stated otherwise or the context otherwise requires, together with its subsidiaries, the “Company”) is a unitary thrift holding company that was incorporated in 1989 and the parent company of its wholly owned subsidiary, Sterling Bank and Trust, F.S.B. (the “Bank”). The Company’s business is conducted through the Bank, which was formed in 1984. The Bank originates commercial real estate loans and commercial and industrial loans, and provides deposit products, consisting primarily of checking, savings and term certificate accounts. Historically, the Company’s largest asset class has been residential mortgage loans. The Bank’s residential lending program has been suspended since the third-party residential lending service provider announced in November 2022 its intention to cease conducting business. Pending residential loan applications were processed through February 2023. The Company is currently performing an evaluation of its alternatives for new banking products and services. The Bank also engages in mortgage banking activities and, as such, acquires, sells and services residential mortgage loans. The Bank operates through a network of 28 branches of which 26 branches are located in the San Francisco and Los Angeles, California metropolitan areas with the remaining branches located in New York, New York and Southfield, Michigan. The Company is headquartered in Southfield, Michigan, and its operations are in the financial services industry. Management evaluates the performance of the Company’s business based on one reportable segment, community banking. The Company is subject to regulation, examination and supervision by the Board of Governors of the Federal Reserve System (the “FRB” or “Federal Reserve”). The Bank is a federally chartered stock savings bank that has elected to operate as a covered savings association, effective August 9, 2023. As a covered savings association, the Bank will generally function as a commercial bank without the constraints applicable to a thrift institution. Prior to the election becoming effective, the Bank was subject to the Qualified Thrift Lender (“QTL”) test. Under the QTL test, a savings institution is required to maintain at least 65% of its portfolio assets in certain qualified thrift investments (primarily residential mortgages and related investments, including certain mortgage-backed and related securities) in at least nine months out of each 12-month period. The Bank is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (“OCC”) of the U.S. Department of Treasury and the Federal Deposit Insurance Corporation (“FDIC”) and is a member of the FRB system and Federal Home Loan Bank (“FHLB”) system. Basis of Presentation The condensed consolidated balance sheet as of September 30, 2023, and the condensed consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity and cash flows for the three and nine months ended September 30, 2023 and 2022 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, in the opinion of management, of a normal recurring nature that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The financial data and other financial information disclosed in these notes to the condensed consolidated financial statements related to these periods are also unaudited. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ended December 31, 2023 or for any future annual or interim period. The condensed consolidated balance sheet at December 31, 2022 included herein was derived from the audited financial statements as of that date. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2023 (the “2022 Form 10-K”). |
Adoption of New Accounting Stan
Adoption of New Accounting Standards | 9 Months Ended |
Sep. 30, 2023 | |
Adoption of New Accounting Standards | |
Adoption of New Accounting Standards | Note 2— Adoption of New Accounting Standards In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2022-02, Financial Instruments – Credit Losses ( Topic 326): Troubled Debt Restructurings and Vintage Disclosures , Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ”) — In June 2016, the FASB issued ASU 2016-13 (and subsequent amendments), which significantly changes estimates for credit losses related to financial assets measured at amortized cost, including loan receivables and other contracts, such as off-balance sheet credit exposure, specifically, loan commitments and standby letters of credit, financial guarantees and other similar instruments. The guidance replaced the current incurred loss accounting model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model requires the measurement of the lifetime expected credit losses on financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Additionally, ASU 2016-13 requires credit losses on available for sale debt securities to be presented as an allowance rather than as a write-down. The guidance requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The Company adopted ASU 2016-13 on January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while amounts for prior periods continue to be reported in accordance with previously applicable accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company recorded a cumulative effect adjustment of $778, net of tax, to increase the opening balance of retained earnings as of January 1, 2023, for the initial application of CECL. Upon adoption, the allowance for credit losses for loans decreased by $1,651 primarily driven by the allowance for credit losses on the construction loan portfolio due to the short contractual maturities of the loans in this portfolio segment (all construction loans mature in 2023). This was partially offset by an increase in the allowance for credit losses in both the residential real estate and commercial real estate portfolio segments which have longer contractual maturities. In addition, the Company established a liability for unfunded commitments of $579. The details of the changes and quantitative impact on the financial statement line items in the condensed consolidated balance sheet as of January 1, 2023 for the adoption of ASU 2016-13, along with the adoption of ASU 2022-02, were as follows: Prior to Adjustments for Adjustments for After Adoption ASU 2016-13 ASU 2022-02 Adoption Assets: Allowance for credit losses – loans $ 45,464 $ (1,651) $ 380 $ 44,193 Liabilities: Liability for unfunded commitments — 579 — 579 Pretax cumulative effect adjustment of a change in accounting principle (1,072) 380 Less: income taxes 294 (104) Cumulative effect adjustment of a change in accounting principle, net of tax $ (778) $ 276 The loan portfolio is pooled into segments with similar characteristics and risk profiles for which the probability of default/loss given default methodology is then applied. The Company utilizes a 24-month economic forecast. For all classes of financial assets deemed collateral dependent, the Company elected the practical expedient to estimate the expected credit losses based on the respective collateral’s fair value less cost to sell. The Company also made an accounting policy election to not measure an allowance for credit losses on accrued interest receivable and to present accrued interest receivable separately from the related financial asset on the condensed consolidated balance sheet. The Company’s available for sale debt securities are comprised of debt, mortgage-backed securities and collateralized mortgage obligations. The debt, mortgage-backed securities and the majority of the collateralized mortgage obligations are issued by the U.S. government, its agencies and government-sponsored enterprises. The Company has a long history with no credit losses from these issuers. Thus, the Company has not recorded an allowance for credit losses for its available for sale debt securities at the date of adoption. As stated, the comparative prior period information presented before January 1, 2023 has not been adjusted and continues to be reported under the Company’s historical allowance for loan losses policies as described in Note 2 to the consolidated financial statements in the 2022 Form 10-K. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3— Summary of Significant Accounting Policies Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP. The condensed consolidated financial statements include the results of Sterling Bancorp, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates. Concentration of Credit Risk The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At September 30, 2023 and December 31, 2022, residential real estate loans accounted for 80% and 84%, respectively, of total gross loans. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At September 30, 2023 and December 31, 2022, approximately 80% and 81%, respectively, of gross loans were originated with respect to properties or businesses located in the state of California. Also, the loan portfolio consists of a loan product of one-, three-, five- or seven-year adjustable-rate mortgages that required a down payment of at least 35% (also referred to herein as “Advantage Loan Program loans”) which was terminated at the end of 2019 and continues to be the largest portion of gross residential loans. An internal review of the Advantage Loan Program and investigations conducted by the U.S. Department of Justice (the "DOJ") and the OCC indicated that certain employees engaged in misconduct in connection with the origination of a significant number of such loans, including the falsification of information with respect to verification of income, the amount of income reported for borrowers, reliance on third parties and related documentation. Refer to Note 17 - Investment Securities Debt Securities (Effective January 1, 2023) Debt securities are classified as either available for sale or held to maturity. Management determines the classification of the debt securities when they are purchased. All debt securities were categorized as available for sale at September 30, 2023 and December 31, 2022. Available for sale debt securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive loss, net of income taxes. The amortized cost of debt securities is adjusted for amortization of premiums (noncallable) and accretion of discounts. The Company amortizes premiums and accretes discounts using the effective interest method over the contractual life of the individual securities or, in the case of asset-backed securities, using the effective yield method over the estimated life of the individual securities. Interest income includes amortization or accretion of purchase premium or discount. Gains and losses realized on the sales of available for sale debt securities are recorded on the settlement date and determined using the specific identification method. For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available for sale debt securities that do not meet the aforementioned criteria, the Company evaluates at the individual security level whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of income taxes. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit losses. Losses are charged against the allowance for credit losses when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available for sale debt securities is recorded separately from the amortized cost basis of the debt securities in the condensed consolidated balance sheets and is excluded from the estimate of credit losses. Equity Securities Equity securities with readily determinable fair values are stated at fair value with unrealized and realized gains and losses reported in income. Those equity securities without readily determinable fair values are recorded at cost less any impairments, adjusted for subsequent observable price changes in orderly transactions for an identical or similar investment of the same issuer. Any changes in the carrying value of the equity investments are recognized in income. Management performs a qualitative assessment each reporting period to identify impairment of equity securities without readily determinable fair values. When a qualitative assessment indicates that an impairment exists, management determines the fair value of the investment and if the fair value is less than the investment’s carrying value, an impairment charge is recorded in income equal to the difference between the fair value and the carrying amount of the investment. Loans Held for Sale The Company originates certain loans intended for sale in the secondary market. Loans held for sale are carried at the lower of amortized cost or fair value on an individual loan basis. The fair value of loans held for sale are primarily determined based on quoted prices for similar loans in active markets or outstanding commitments from third-party investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to non-interest income in the condensed consolidated statements of income. Performing residential real estate loans that are held for sale are generally sold with servicing rights retained. The carrying value of mortgage loans sold is reduced by the amount allocated to the servicing right. On the sale of an originated loan, the servicing right is recorded at its estimated fair value. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold and are recorded as a component of non-interest income in the condensed consolidated statements of income. Loans that are originated and classified as held for investment are periodically sold in order to manage liquidity, asset credit quality, interest rate risk or concentration risk. Loans that are reclassified into loans held for sale from loans held for investment, due to a change in intent, are recorded at the lower of cost or fair value. Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at amortized cost, net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred loan fees and costs. Accrued interest receivable related to loans is recorded separately from the amortized cost basis of loans on the condensed consolidated balance sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct loan origination costs, are deferred and amortized over the contractual lives of the respective loans as a yield adjustment using the effective interest method. Other credit-related fees are recognized as fee income, as a component of non-interest income, in the condensed consolidated statements of income. Interest income on loans is accrued as earned using the interest method over the term of the loan. The accrual of interest income is discontinued at the time the loan is 90 days past due or earlier if conditions warrant and placed on nonaccrual status. In all cases, loans are placed on nonaccrual status at an earlier date if collection of principal or interest is considered doubtful. All interest accrued and not received for loans placed on nonaccrual status is reversed against interest income. Any payments received on nonaccrual loans are applied to interest income on a cash basis if the loan is considered well secured. Otherwise, all payments received are applied first to outstanding loan principal amounts and then to the recovery of the charged off loan amounts. Any excess is treated as a recovery of interest and fees. Loans are returned to accrual status after all principal and interest amounts contractually due are made and future payments are reasonably assured. Allowance for Credit Losses - Loans (Effective January 1, 2023) The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of held for investment loans to present the net amount expected to be collected on the loans. The allowance for credit losses is adjusted through a charge (recovery) to provision for (recovery of) credit losses in the condensed consolidated statements of income. When the Company determines that all or a portion of a loan is uncollectible, the appropriate amount is written off, and the allowance for credit losses is reduced by the same amount. The Company applies judgment to determine when a loan is deemed uncollectible; however, generally a loan will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the allowance for credit losses when received. Portions of the allowance for credit losses may be allocated for specific credits; however, the entire allowance for credit losses is available for any credit that, in management’s judgment, should be charged off. The Company estimates the allowance for credit losses on loans based on the underlying loans’ amortized cost. If the collection of principal becomes uncertain, the Company stops accruing interest and reverses the accrued but unpaid interest against interest income. The Company has made a policy election to exclude accrued interest receivable from the measurement of the allowance for credit losses. The allowance for credit losses process involves procedures to appropriately consider the unique characteristics of the Company’s portfolio segments. The allowance for credit losses is measured on a collective (pool) basis for portfolios of loans with similar risk characteristics and risk profiles. The Company’s portfolio segments include the following: (i) commercial real estate, (ii) commercial construction, (iii) commercial and industrial, (iv) residential real estate and (v) home equity lines of credit. These portfolio segments were identified based on their common characteristics: loan type/purpose of loan, underlying collateral type, historical/expected credit loss patterns, availability of credit quality indicators (i.e., FICO, risk rating, delinquency) and completeness of the historical information. Loans which do not share risk characteristics — — The amount of the allowance for credit losses represents management’s best estimate of current expected credit losses on loans considering available information from internal and external sources, which is relevant to assessing collectability of the loans over the loans’ contractual terms, adjusted for expected prepayments. The contractual term excludes expected extensions, renewals and modifications unless: (i) management has a reasonable expectation at the reporting date that an individual borrower is experiencing financial difficulty and a modification of the loan will be executed, or (ii) the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company. The Company estimates the allowance for credit losses using relevant available information related to past events, current conditions, and reasonable and supportable forecasts. In determining the total allowance for credit losses, the Company calculates the quantitative portion of the allowance for credit losses using a methodology, the Advanced Probability of Default model, a logistic regression model, and adds qualitative adjustments to the model results and the results from any individual loan assessments. The Advanced Probability of Default model estimates the expected lifetime net charge off balance utilizing the following: (i) probability that the loan will stop performing or default; (ii) probability that a loan will pay-off entirely prior to maturity; and (iii) macroeconomic variables, including but not limited to unemployment rates, gross domestic product, and the Treasury Yield Curve. This information is specific to each portfolio segment, though not necessarily solely reliant on internally sourced data. Internal data is supplemented by, but not replaced by, peer data when required, primarily to determine the probability of default. The Company then applies a recovery rate to reflect the recoveries over an approximate 10-year period. The probability of default is estimated by analyzing the relationship between the historical performance of each loan pool and historical economic trends over a complete economic cycle. The probability of default for each pool is adjusted using a statistical model to reflect the current impact of certain macroeconomic variables and their expected changes over a reasonable and supportable forecast period of eight quarters. The Company determined that it was reasonably able to forecast the macroeconomic variables used in the forecast modeling processes with an acceptable degree of confidence for a total of eight quarters. This forecast period is followed by a reversion process whereby the macroeconomic variables are relaxed to revert to the average historical loss rates for periods after the forecasted eight-quarter period. Management qualitatively adjusts the allowance for credit loss model results for risk factors not considered within the quantitative modeling processes but are nonetheless relevant in assessing the expected credit losses within the portfolio segments. These qualitative risk factor adjustments may increase or decrease management’s estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. Qualitative risk factors considered include adjustments for model limitations, management’s adjustments to economic market forecasts and other current or forecasted events not captured in the Company’s historical loss experience. For loans that do not share risk characteristics that are evaluated on an individual basis, specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. In such cases, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The Company reevaluates the fair value of collateral supporting collateral dependent loans on an annual basis. As disclosed above, the Company has identified the following portfolio segments used in measuring its expected credit losses in the loan portfolio and their respective risk characteristics. The Residential Real Estate Mortgages portfolio includes residential first mortgages and residential second mortgages. The degree of risk in residential real estate lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. Economic trends determined by unemployment rates and other key economic indicators, particularly at the regional and local levels, are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers’ capacity to repay their obligations may be deteriorating. The Home Equity Lines of Credit portfolio includes residential second mortgages in the form of a revolving line of credit that requires interest only payments for a period followed by an amortizing period. These loans have higher risk of default compared to first liens making it harder to rely on loan-to-value ratios and loan balances can fluctuate. These loans are secured by the residential real estate by serving as a second lien behind the first mortgage lien. The Commercial Real Estate portfolio includes commercial loans made to many types of businesses involving retail, multifamily, offices, hotels/single-room occupancy hotels, industrial and other commercial properties. Adverse economic developments or an overbuilt market may impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for the properties to produce sufficient cash flow to service debt obligations. The Construction Loans portfolio is comprised of loans to builders and developers primarily for residential, commercial and mixed-use development. In addition to general commercial real estate risks, construction loans have additional risk of cost overruns, market deterioration during construction, lack of permanent financing, and no operating history. The Commercial and Industrial portfolio is comprised of loans to many types of businesses for their operating needs of the business. The risk characteristics of these loans vary based on the borrowers’ business and industry as repayment is typically dependent on cash flows generated from the underlying business. These loans may be secured by real estate or other assets or may be unsecured. Federal Reserve Bank Stock The Bank is a member of its regional Federal Reserve Bank. As a covered savings association, the Bank is required to own a certain amount of capital stock of the Federal Reserve Bank of Chicago. The Federal Reserve Bank stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on the ultimate recovery of its par value. The Federal Reserve Bank stock does not have a readily determinable fair value and no quoted market value as ownership is restricted to member institutions. Cash and stock dividends on the Federal Reserve Bank stock are reported as income in interest and dividends on investment securities and restricted stock in the condensed consolidated statements of income. Liability for Unfunded Commitments (Effective January 1, 2023) Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for these off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk through a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The estimate of expected credit losses generally follows the same methodology as the funded loans by utilizing the loss rates generated for each portfolio segment with an adjustment for the probability of funding to occur. The liability for unfunded commitments, which is recorded in accrued expenses and other liabilities in the condensed consolidated balance sheets, is adjusted through the provision for (recovery of) credit losses. |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2023 | |
Investment Securities | |
Investment Securities | Note 4—Investment Securities Debt Securities The following tables summarize the amortized cost and fair value of debt securities available for sale at September 30, 2023 and December 31, 2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss: September 30, 2023 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury and Agency securities $ 250,763 $ 2 $ (6,381) $ 244,384 Mortgage-backed securities 37,161 — (5,115) 32,046 Collateralized mortgage obligations 139,196 41 (17,507) 121,730 Collateralized debt obligations 152 — (10) 142 Total $ 427,272 $ 43 $ (29,013) $ 398,302 December 31, 2022 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury and Agency securities $ 175,878 $ 17 $ (7,458) $ 168,437 Mortgage-backed securities 41,388 — (4,655) 36,733 Collateralized mortgage obligations 153,066 4 (14,829) 138,241 Collateralized debt obligations 157 — (10) 147 Total $ 370,489 $ 21 $ (26,952) $ 343,558 Investment securities with a fair value of Accrued interest receivable on available for sale debt securities totaled $1,372 and $808 at September 30, 2023 and December 31, 2022, respectively. The mortgage-backed securities, and a majority of the collateralized mortgage obligations are issued and/or guaranteed by a U.S. government agency (Government National Mortgage Association) or a U.S. government-sponsored enterprise (Federal Home Loan Mortgage Corporation (“Freddie Mac”) or Federal National Mortgage Association (“Fannie Mae”)). The fair value of the private-label collateralized mortgage obligations was $321 and $353 at September 30, 2023 and December 31, 2022, respectively. No securities of any single issuer, other than debt securities issued by the U.S. government, government agency and government-sponsored enterprises, were in excess of 10% of total shareholders’ equity at September 30, 2023 and December 31, 2022. Information pertaining to the sales of available for sale debt securities for the three and nine months ended September 30, 2023 and 2022 is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Proceeds from the sale of debt securities $ — $ — $ 2,977 $ — Gross realized gains $ — $ — $ 1 $ — Gross realized losses — — (3) — Total net realized losses $ — $ — $ (2) $ — The income tax expense related to the net realized losses was $1 for the nine months ended September 30, 2023. The amortized cost and fair value of U.S. Treasury and Agency securities at September 30, 2023 are shown by contractual maturity in the table below. Mortgage-backed securities, collateralized mortgage obligations and collateralized debt obligations are disclosed separately as the expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Fair Cost Value U.S. Treasury and Agency securities: Due less than one year $ 171,352 $ 170,525 Due after one year through five years 79,411 73,859 Mortgage-backed securities 37,161 32,046 Collateralized mortgage obligations 139,196 121,730 Collateralized debt obligations 152 142 Total $ 427,272 $ 398,302 The following table summarizes available for sale debt securities, at fair value, in an unrealized loss position for which an allowance for credit losses has not been recorded at September 30, 2023 and December 31, 2022, aggregated by major security type and length of time the individual debt securities have been in a continuous unrealized loss position: September 30, 2023 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses U.S. Treasury and Agency securities $ 98,578 $ (70) $ 122,804 $ (6,311) $ 221,382 $ (6,381) Mortgage-backed securities — — 32,046 (5,115) 32,046 (5,115) Collateralized mortgage obligations 6,643 (168) 110,868 (17,339) 117,511 (17,507) Collateralized debt obligations — — 142 (10) 142 (10) Total $ 105,221 $ (238) $ 265,860 $ (28,775) $ 371,081 $ (29,013) December 31, 2022 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses U.S. Treasury and Agency securities $ 100,815 $ (2,839) $ 44,605 $ (4,619) $ 145,420 $ (7,458) Mortgage-backed securities 5,792 (139) 30,941 (4,516) 36,733 (4,655) Collateralized mortgage obligations 69,088 (3,169) 64,715 (11,660) 133,803 (14,829) Collateralized debt obligations — — 147 (10) 147 (10) Total $ 175,695 $ (6,147) $ 140,408 $ (20,805) $ 316,103 $ (26,952) As of September 30, 2023, the debt securities portfolio consisted of 33 debt securities, with 29 debt securities in an unrealized loss position. For debt securities in an unrealized loss position, the Company has both the intent and ability to hold these investments and, based on current conditions, the Company does not believe it is likely that it will be required to sell these debt securities prior to recovery of the amortized cost. As the Company had the intent and the ability to hold the debt securities in an unrealized loss position at September 30, 2023, each security with an unrealized loss position was further assessed to determine if a credit loss exists. The Company’s debt, mortgage-backed securities and the majority of the collateralized mortgage obligations are issued by the U.S. government, its agencies and government-sponsored enterprises. The Company has a long history with no credit losses from issuers of U.S. government, its agencies and government-sponsored enterprises. Also, the Company’s available for sale debt securities are explicitly or implicitly fully guaranteed by the U.S. government. As a result, management does not expect any credit losses on its available for sale debt securities. Accordingly, the Company has not recorded an allowance for credit losses for its available for sale debt securities at September 30, 2023. Similarly, for the same reasons noted above, at December 31, 2022, the Company determined that the unrealized losses in these securities were due to non-credit-related factors, including changes in interest rates and other market conditions. Equity Securities Equity securities consist of an investment in a qualified community reinvestment act investment fund, which is a publicly-traded mutual fund and an investment in the common equity of Pacific Coast Banker’s Bank, a thinly traded restricted stock. At September 30, 2023 and December 31, 2022, equity securities totaled $4,505 and $4,642, respectively. Equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in non-interest income in the condensed consolidated statements of income. At September 30, 2023 and December 31, 2022, equity securities with readily determinable fair values were $4,259 and $4,396, respectively. The following is a summary of unrealized and realized gains and losses recognized in the condensed consolidated statements of income: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net loss recorded during the period on equity securities $ (137) $ (184) $ (137) $ (590) Less: net gains (loss) recorded during the period on equity securities sold during the period — — — — Unrealized loss recorded during the period on equity securities held at the reporting date $ (137) $ (184) $ (137) $ (590) The Company has elected to account for its investment in a thinly traded, restricted stock using the measurement alternative for equity securities without readily determinable fair values, resulting in the investment carried at cost based on no evidence of impairment or observable trading activity during the nine months ended September 30, 2023 and 2022. The investment was reported at $246 at September 30, 2023 and December 31, 2022. |
Loans
Loans | 9 Months Ended |
Sep. 30, 2023 | |
Loans | |
Loans | Note 5—Loans Loans Held for Sale The major categories of loans held for sale were as follows: September 30, December 31, 2023 2022 Residential real estate $ — $ 6,181 Commercial real estate — 1,544 Total loans held for sale $ — $ 7,725 At December 31, 2022, loans held for sale included nonaccrual residential real estate loans of $1,942. In March 2023, residential real estate loans held for investment with an amortized cost of $41,059 were transferred to loans held for sale due to management’s change in intent and decision to sell the loans. On the transfer, the Company recorded a $6,478 charge off applied against the allowance for credit losses to reflect these loans at their estimated fair value. In addition, residential real estate loans held for sale with an amortized cost of $3,906 were transferred to loans held for investment due to management’s change in intent and decision to not sell the loans. During the nine months ended September 30, 2023, the Company sold loans held for sale, with a carrying value of $36,210 on the date of sale, to a third party for net cash proceeds of $37,930. In February 2022, the Company sold substantially all of its commercial real estate loans held for sale, which loans had a carrying value of $49,455 on the date of sale, to a third party for cash proceeds of $49,610. Loans Held for Investment and Allowance for Credit Losses The major categories of loans held for investment and the allowance for credit losses were as follows: September 30, December 31, 2023 2022 Residential real estate $ 1,139,205 $ 1,391,276 Commercial real estate 237,812 221,669 Construction 22,292 44,503 Commercial and industrial 17,809 1,396 Other consumer 9 5 Total loans 1,417,127 1,658,849 Less: allowance for credit losses (34,267) (45,464) Loans, net $ 1,382,860 $ 1,613,385 Accrued interest receivable related to total gross loans, including loans held for sale, was $6,645 and $6,894 at September 30, 2023 and December 31, 2022, respectively. As disclosed above, residential real estate loans with an amortized cost of $41,059 were transferred to loans held for sale and subsequently sold in May 2023. Also, in March 2023, residential real estate loans with an amortized cost of Loans totaling $439,718 and $389,830 were pledged as collateral on the FHLB borrowings at September 30, 2023 and December 31, 2022, respectively. The allowance for credit losses at September 30, 2023 was estimated using the current expected credit loss model. The Company’s estimate of the allowance for credit losses reflects losses expected over the remaining contractual life of the loans. The contractual term does not consider extensions, renewals or modifications unless the Company has identified a loan where the individual borrower is experiencing financial difficulty. The following tables present the activity in the allowance for credit losses related to loans held for investment by portfolio segment for the three and nine months ended September 30, 2023: Residential Commercial Commercial Other Three Months Ended September 30, 2023 Real Estate Real Estate Construction and Industrial Consumer Total Allowance for credit losses: Balance at the beginning of the period $ 16,909 $ 16,728 $ 2,475 $ 41 $ — $ 36,153 Provision for (recovery of) credit losses 1,307 (2,482) (752) 40 — (1,887) Charge offs — — — — — — Recoveries — — 1 — — 1 Total ending balance $ 18,216 $ 14,246 $ 1,724 $ 81 $ — $ 34,267 Residential Commercial Commercial Other Nine Months Ended September 30, 2023 Real Estate Real Estate Construction and Industrial Consumer Total Allowance for credit losses: Balance at the beginning of the period $ 27,951 $ 11,694 $ 5,781 $ 38 $ — $ 45,464 Adoption of ASU 2016-13 865 1,151 (3,633) (34) — (1,651) Adoption of ASU 2022-02 (11) — 391 — — 380 Provision for (recovery of) credit losses (4,477) 1,301 (818) 77 — (3,917) Charge offs (6,478) — — — — (6,478) Recoveries 366 100 3 — — 469 Total ending balance $ 18,216 $ 14,246 $ 1,724 $ 81 $ — $ 34,267 The following tables present the activity in the allowance for loan losses for the three and nine months ended September 30, 2022, as determined in accordance with ASC 310, Receivables , Commercial Residential Commercial Lines of Other Three Months Ended September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance 29,982 $ 15,035 $ 6,708 $ 36 $ 5 $ 51,766 Provision for (recovery of) loan losses (1,841) (209) (2,304) 2 (5) (4,357) Charge offs — (4,064) — — — (4,064) Recoveries 46 5 1,966 — — 2,017 Total ending balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Commercial Residential Commercial Lines of Other Nine Months Ended September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 32,202 $ 12,608 $ 11,730 $ 8 $ — $ 56,548 Provision for (recovery of) loan losses (4,594) 2,138 (7,329) 30 — (9,755) Charge offs (197) (4,064) — — — (4,261) Recoveries 776 85 1,969 — — 2,830 Total ending balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Prior to the adoption of ASU 2016-13, the Company individually evaluated commercial real estate loans, construction loans and commercial lines of credit for impairment and large homogeneous loans, such as residential real estate loans and other consumer loans were collectively evaluated for impairment. The following table presents loans individually and collectively evaluated for impairment and their respective allowance for credit loss allocation as of December 31, 2022, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13: Commercial Residential Commercial Lines of Other December 31, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 11 $ — $ — $ — $ — $ 11 Collectively evaluated for impairment 27,940 11,694 5,781 38 — 45,453 Total ending allowance balance $ 27,951 $ 11,694 $ 5,781 $ 38 $ — $ 45,464 Loans: Loans individually evaluated for impairment $ 45 $ — $ 2,485 $ 107 $ — $ 2,637 Loans collectively evaluated for impairment 1,391,231 221,669 42,018 1,289 5 1,656,212 Total ending loans balance $ 1,391,276 $ 221,669 $ 44,503 $ 1,396 $ 5 $ 1,658,849 The following table presents information related to impaired loans by class of loans at December 31, 2022, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13: At December 31, 2022 Unpaid Allowance Principal Recorded for Loan Balance Investment Losses With no related allowance for loan losses recorded: Commercial real estate: Retail $ 227 $ — $ — Construction 2,485 2,485 — Commercial lines of credit: Private banking 107 107 — Subtotal 2,819 2,592 — With an allowance for loan losses recorded: Residential real estate, first mortgage 79 45 11 Total $ 2,898 $ 2,637 $ 11 The following table presents average impaired loans, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13, and interest recognized on such loans, for the three and nine months ended September 30, 2022: Three Months Ended Nine Months Ended September 30, 2022 September 30, 2022 Average Interest Cash Basis Average Interest Cash Basis Recorded Income Interest Recorded Income Interest Investment Recognized Recognized Investment Recognized Recognized With no related allowance for loan losses recorded: Construction $ 5,375 $ 40 $ 27 $ 6,885 $ 118 $ 105 Commercial lines of credit: Private banking 111 2 1 113 5 4 Subtotal 5,486 42 28 6,998 123 109 With an allowance for loan losses recorded: Residential real estate, first mortgage 48 2 2 198 3 3 Total $ 5,534 $ 44 $ 30 $ 7,196 $ 126 $ 112 Nonaccrual Loans and Past Due Loans Past due loans held for investment are loans contractually past due 30 days or more as to principal or interest payments. A loan held for investment is classified as nonaccrual, and the accrual of interest on such loan is discontinued, when the contractual payment of principal or interest becomes 90 days past due. In addition, a loan may be placed on nonaccrual at any other time management has serious doubts about further collectability of principal or interest according to the contractual terms, even though the loan is currently performing. A loan held for investment may remain in accrual status if it is in the process of collection and well secured. When a loan held for investment is placed in nonaccrual status, interest accrued but not received is reversed against interest income. Interest received on such loans is applied to the principal balance of the loan until qualifying for return of accrual status. Loans are returned to accrual status after all principal and interest amounts contractually due are made to return the loan to current status and future payments are reasonably assured. The following table presents the amortized cost basis of loans on nonaccrual status, amortized cost basis of loans on nonaccrual status with no related allowance for credit losses and loans past due 90 days or more and still accruing at September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 Nonaccrual Past Due 90 Nonaccrual Past Due 90 With No Days or More With No Days or More Nonaccrual Allowance for and Still Nonaccrual Allowance for and Still Loans Credit Losses Accruing Loans Credit Losses Accruing Residential real estate: Residential first mortgage $ 5,035 $ 392 $ 32 $ 33,501 $ — $ 35 Residential second mortgage — — — 189 — — Commercial real estate — — 1,115 — — — Total $ 5,035 $ 392 $ 1,147 $ 33,690 $ — $ 35 At September 30, 2023, the Company had nonaccrual loans of $5,035 in its held for investment loan portfolio. The decrease in nonaccrual loans from December 31, 2022 is primarily due to nonaccrual loans of $28,637 that were transferred to held for sale in March 2023 and subsequently sold in May 2023. On the transfer, a charge off on these nonaccrual loans of $4,231 was recorded to the allowance for credit losses. The remainder of the decrease in nonaccrual loans is primarily due to loans of $4,162 that were paid in full and loans of $5,538 that were returned to accrual status. Partially offsetting these decreases, loans totaling $9,871 were added to nonaccrual status, a portion of which were transferred to held for sale and sold in May 2023. The total interest income that would have been recorded if the nonaccrual loans had been current in accordance with their original terms was $96 and $572 for the three months ended September 30, 2023 and 2022, respectively, and $157 and $1,542 for the nine months ended September 30, 2023 and 2022, respectively. The Company does not record interest income on nonaccrual loans. Aging Analysis of Past Due Loans The following table presents an aging of the amortized cost basis of contractually past due loans at September 30, 2023: 30 - 59 60 - 89 90 Days Days Days or More Total Current September 30, 2023 Past Due Past Due Past Due Past Due Loans Total Residential real estate $ 19,424 $ 2,991 $ 5,067 $ 27,482 $ 1,111,723 $ 1,139,205 Commercial real estate — — 1,115 1,115 236,697 237,812 Construction — — — — 22,292 22,292 Commercial and industrial — — — — 17,809 17,809 Other consumer — — — — 9 9 Total $ 19,424 $ 2,991 $ 6,182 $ 28,597 $ 1,388,530 $ 1,417,127 The following table presents the aging of the recorded investment in past due loans, presented in accordance with ASC 310, at December 31, 2022, by class of loans: 30 - 59 60 - 89 90 Days Days Days or More Total Current December 31, 2022 Past Due Past Due Past Due Past Due Loans Total Residential real estate: Residential first mortgage $ 17,881 $ 5,337 $ 33,536 $ 56,754 $ 1,324,545 $ 1,381,299 Residential second mortgage 99 — 189 288 9,689 9,977 Commercial real estate: Retail — — — — 28,971 28,971 Multifamily — — — — 81,444 81,444 Office — — — — 39,610 39,610 Hotels/Single-room occupancy hotels — — — — 5,208 5,208 Industrial — — — — 30,242 30,242 Other — — — — 36,194 36,194 Construction — — — — 44,503 44,503 Commercial lines of credit: Private banking — — — — 107 107 C&I lending — — — — 1,289 1,289 Other consumer — — — — 5 5 Total $ 17,980 $ 5,337 $ 33,725 $ 57,042 $ 1,601,807 $ 1,658,849 Collateral-Dependent Loans A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. For all classes of financial assets deemed collateral-dependent, the Company estimates the expected credit losses based on the collateral’s fair value less cost to sell. At September 30, 2023, the Company did not have any collateral dependent loans in loans held for investment. Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Historically, the Company has provided loan forbearances to residential borrowers when mandated and modified construction loans by providing term extensions. The Company did not have any loans held for investment made to borrowers experiencing financial difficulty that were modified during the nine months ended September 30, 2023. The Company did not have any loans held for investment made to borrowers experiencing financial difficulty that were previously modified that subsequently defaulted during the nine months ended September 30, 2023. Foreclosure Proceedings There were no residential mortgage loans in formal foreclosure proceedings at September 30, 2023. At December 31, 2022, the recorded investment of residential mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $5,711. Of the loans in formal foreclosure proceedings, $603 were included in loans held for sale in the condensed consolidated balance sheet at December 31, 2022 and were carried at the lower of amortized cost or fair value. The balance of the loans at December 31, 2022 were classified as held for investment and received an allocation of the allowance for credit losses consistent with a substandard loan loss allocation rate as the loans were classified as substandard. 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 includes homogeneous loans, such as residential real estate and other consumer loans, and non-homogeneous loans, such as commercial and industrial, construction and commercial real estate loans. This analysis is performed at least quarterly. 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 Company’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 loan. They are characterized by the distinct possibility that the Company 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, based on 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 pass-rated loans. For residential and consumer loan classes, the Company evaluates credit quality based on the accrual status of the loan. The following table presents the amortized cost in residential loans based on accrual status: Revolving Revolving Loans Loans Term Loans Amortized Cost Basis by Origination Year Amortized Converted As of September 30, 2023 2023 2022 2021 2020 2019 Prior Costs Basis to Term Total Residential lending Residential mortgage loans: Payment performance: Accrual $ 767 $ 73,260 $ 134,150 $ 101,212 $ 215,263 $ 600,849 $ 8,384 $ 285 $ 1,134,170 Nonaccrual — — — — 1,031 4,004 — — 5,035 Total residential mortgage loans $ 767 $ 73,260 $ 134,150 $ 101,212 $ 216,294 $ 604,853 $ 8,384 $ 285 $ 1,139,205 Residential mortgage loans: Current period gross write offs $ — $ — $ — $ — $ 1,858 $ 4,601 $ 19 $ — $ 6,478 The amortized cost basis by year of origination and credit quality indicator of the Company’s commercial loans based on the most recent analysis performed was as follows: Revolving Revolving Loans Loans Term Loans Amortized Cost Basis by Origination Year Amortized Converted As of September 30, 2023 2023 2022 2021 2020 2019 Prior Costs Basis to Term Total Commercial lending Real estate - construction: Risk rating Pass $ — $ — $ — $ 6,252 $ 5,783 $ — $ — $ — $ 12,035 Special mention — — — — — — — — — Substandard or lower — — — — 10,257 — — — 10,257 Total real estate – construction $ — $ — $ — $ 6,252 $ 16,040 $ — $ — $ — $ 22,292 Real estate – construction: Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial and industrial: Risk rating Pass $ 16,440 $ 1,078 $ — $ — $ — $ 101 $ 96 $ 94 $ 17,809 Total commercial and industrial $ 16,440 $ 1,078 $ — $ — $ — $ 101 $ 96 $ 94 $ 17,809 Commercial and industrial: Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Real estate – commercial real estate: Risk rating Pass $ 27,045 $ 78,923 $ 35,210 $ 35,346 $ 6,985 $ 13,792 $ — $ — $ 197,301 Special mention — 3,598 1,419 2,732 8,649 5,397 — — 21,795 Substandard or lower — — 11,771 — 2,822 4,123 — — 18,716 Total real estate – commercial real estate $ 27,045 $ 82,521 $ 48,400 $ 38,078 $ 18,456 $ 23,312 $ — $ — $ 237,812 Real estate – commercial real estate: Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — The credit risk profiles by internally assigned grade for loans by class of loans as of December 31, 2022, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13, were as follows: Special December 31, 2022 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,347,763 $ — $ 33,536 $ — $ 1,381,299 Residential second mortgage 9,788 — 189 — 9,977 Commercial real estate: Retail 28,971 — — — 28,971 Multifamily 67,361 14,083 — — 81,444 Office 39,610 — — — 39,610 Hotels/Single-room occupancy hotels — 3,669 1,539 — 5,208 Industrial 30,242 — — — 30,242 Other 21,036 15,158 — — 36,194 Construction 31,369 4,650 8,484 — 44,503 Commercial lines of credit: Private banking 107 — — — 107 C&I lending 1,289 — — — 1,289 Other consumer 5 — — — 5 Total $ 1,577,541 $ 37,560 $ 43,748 $ — $ 1,658,849 |
Mortgage Servicing Rights, net
Mortgage Servicing Rights, net | 9 Months Ended |
Sep. 30, 2023 | |
Mortgage Servicing Rights, net | |
Mortgage Servicing Rights, net | Note 6—Mortgage Servicing Rights, net The Company records servicing assets from the sale of residential real estate mortgage loans to the secondary market for which servicing has been retained. Residential real estate mortgage loans serviced for others are not included in the condensed consolidated balance sheets. The principal balance of these loans at September 30, 2023 and December 31, 2022 are as follows: September 30, December 31, 2023 2022 Residential real estate mortgage loan portfolios serviced for: FNMA $ 107,702 $ 113,704 FHLB 31,740 34,282 Private investors 36,334 43,274 Total $ 175,776 $ 191,260 Custodial escrow balances maintained with these serviced loans were $822 and $380 at September 30, 2023 and December 31, 2022, respectively. These balances are included in noninterest-bearing deposits in the condensed consolidated balance sheets. Activity for mortgage servicing rights and the related valuation allowance are as follows: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Mortgage servicing rights: Beginning of period $ 1,701 $ 2,542 $ 1,840 $ 3,332 Additions — — — 11 Disposals — (487) — (863) Amortization (32) (170) (171) (595) End of period 1,669 1,885 1,669 1,885 Valuation allowance: Beginning of period 43 89 46 610 Additions (recoveries) (5) (46) (8) (567) End of period 38 43 38 43 Mortgage servicing rights, net $ 1,631 $ 1,842 $ 1,631 $ 1,842 Servicing income (loss), net of amortization of servicing rights and changes in the valuation allowance, was $107 and $(384) for the three months ended September 30, 2023 and 2022, respectively, and $268 and $(118) for the nine months ended September 30, 2023 and 2022, respectively. The fair value of mortgage servicing rights was $1,993 and $2,154 at September 30, 2023 and December 31, 2022, respectively. The fair value of mortgage servicing rights is highly sensitive to changes in underlying assumptions. Changes in prepayment speed assumptions have the most significant impact on the estimate of the fair value of mortgage servicing rights. The fair value at September 30, 2023 was determined using discount rates ranging from 10.0% to 12.5%, prepayment speeds with a weighted average of 9.8% (depending on the stratification of the specific right), a weighted average life of the mortgage servicing right of 77 months Impairment is determined by stratifying the mortgage servicing rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. At September 30, 2023 and December 31, 2022, the carrying amount of certain individual groupings exceeded their fair value, resulting in write-downs to fair value. Refer to Note 15—Fair Values of Financial Instruments. |
Deposits
Deposits | 9 Months Ended |
Sep. 30, 2023 | |
Deposits | |
Deposits | Note 7—Deposits Time deposits, included in interest-bearing deposits, were $872,143 and $861,733 at September 30, 2023 and December 31, 2022, respectively. Time deposits that meet or exceed the FDIC insurance limit of $250 were $249,962 and $243,861 at September 30, 2023 and December 31, 2022, respectively. |
FHLB Borrowings
FHLB Borrowings | 9 Months Ended |
Sep. 30, 2023 | |
FHLB Borrowings | |
FHLB Borrowings | Note 8—FHLB Borrowings FHLB Advances At September 30, 2023 and December 31, 2022, the Company has a long-term fixed-rate FHLB advance of $50,000 with a maturity date of May 2029. The FHLB advance requires monthly interest-only payments at 1.96% per annum with the principal amount due on the maturity date and may contain a prepayment penalty if paid before maturity. The advance is callable by the FHLB in May 2024. FHLB Overdraft Line of Credit and Letters of Credit The Company has established a short-term overdraft line of credit agreement with the FHLB, which provides for maximum borrowings of $20,000. The overdraft line of credit was not used during nine months ended September 30, 2023 and 2022. Borrowings accrue interest at a variable-rate based on the FHLB’s overnight cost of funds rate, which was 5.73% and 4.74% at September 30, 2023 and December 31, 2022, respectively. At September 30, 2023 and December 31, 2022, there were no outstanding borrowings under this agreement. The overdraft line of credit was renewed in October 2023. The overdraft line of credit is issued for a one-year term and automatically extends for an additional one-year term unless terminated in advance of the renewal by the Company. The Company entered into irrevocable standby letters of credit arrangements with the FHLB to provide credit support for certain of its obligations related to its commitment to repurchase certain pools of Advantage Loan Program loans. An irrevocable standby letter of credit of $4,000 has a 36-month term and expires in July 2024. This letter of credit was reduced to $2,000 during the second quarter of 2022; thereby, the Company has total available letters of credit of $2,000 at September 30, 2023 and December 31, 2022, respectively. There were no borrowings outstanding on these standby letters of credit during the nine months ended September 30, 2023 and 2022. The long-term fixed-rate advance and the overdraft line of credit with the FHLB are collateralized by certain investment securities and loans. Based on this collateral and holdings of FHLB stock, the Company had additional borrowing capacity with the FHLB of $341,601 at September 30, 2023. Refer to Note 4—Investment Securities for further information on securities pledged and Note 5—Loans for further information on loans pledged. Other Borrowings The Company has available unsecured credit lines with other banks totaling $80,000 at September 30, 2023 and December 31, 2022. There were no borrowings under these unsecured credit lines during the nine months ended September 30, 2023 and 2022. In addition, as a result of the bank failures occurring in the first half of 2023, the FRB has made available to banks a new borrowing facility under the Bank Term Funding Program. This program allows for the Company to borrow with qualifying collateral, which includes the majority of its investment securities, except the non-Agency collateralized mortgage obligations and those allowable investments pledged with FHLB, valued at par. Advances under the program may have a term of up to one year with the interest rate fixed at the time the advance is taken and there is no prepayment penalty. At September 30, 2023, the Company pledged certain allowable investments, and based on the collateral, the Company has unused borrowing capacity of $65,000. The Company had no advances outstanding under this program. The program expires on March 11, 2024. Refer to Note 4—Investment Securities for further information on securities pledged. |
Subordinated Notes, net
Subordinated Notes, net | 9 Months Ended |
Sep. 30, 2023 | |
Subordinated Notes, net | |
Subordinated Notes, net | Note 9—Subordinated Notes, net On June 15, 2023, the Company provided notice to the holders of the 7% Fixed to Floating Subordinated Notes, due April 15, 2026 (the “Subordinated Notes”) that it would redeem all of the outstanding Subordinated Notes on July 15, 2023. The Company redeemed its outstanding Subordinated Notes at a redemption price equal to 100% of the outstanding principal amount plus accrued interest, for a total cash payment of $66,821. The Company recorded a gain on the extinguishment of the Subordinated Notes of $234 which equaled the remaining unamortized note premium. The gain on the extinguishment of the Subordinated Notes is recorded in other income within non-interest income in the condensed consolidated statements of income for the three and nine months ended September 30, 2023. The Subordinated Notes accrued interest at a variable interest rate based on the three-month London Interbank Offered Rate (“LIBOR”) plus a margin of 5.82%, payable quarterly in arrears. Note premium costs were amortized over the contractual term of the Subordinated Notes into interest expense using the effective interest method. Interest expense on these Subordinated Notes was $243 and $1,329 for the three months ended September 30, 2023 and 2022, respectively, and $3,727 and $3,383 for the nine months ended September 30, 2023 and 2022, respectively. The Company currently may not issue new debt without the prior approval of the FRB. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Shareholders' Equity. | |
Shareholders' Equity | Note 10—Shareholders’ Equity In April 2023, the Company issued and contributed 184,928 shares of common stock to fund the matching contribution made under the Bank’s defined contribution retirement plan. The contribution amount of $1,028 was valued using the closing market price of the stock on the date contributed or $5.56 per share. In April 2022, the Company issued and contributed 160,978 shares of common stock to fund the matching contribution made under the Bank’s defined contribution retirement plan. The contribution amount of $1,138 was valued using the closing market price of the stock on the date contributed or $7.07 per share. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Stock-based Compensation | |
Stock-based Compensation | Note 11—Stock-based Compensation The board of directors established the 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which was approved by the shareholders in December 2020. The 2020 Plan provides for the grant of up to 3,979,661 shares of common stock for stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares for issuance to employees, consultants and the board of directors of the Company, of which 2,299,858 shares were available for future grants. The stock-based awards are issued at no less than the market price on the date the awards are granted. Previously, the board of directors had established a 2017 Omnibus Equity Incentive Plan (the “2017 Plan”) which was approved by the shareholders. The 2017 Plan initially provided for the grant of up to 4,237,100 shares of common stock for stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards for issuance to employees, consultants and the board of directors of the Company. The stock-based awards were issued at no less than the market price on the date the awards were granted. Due to the adoption of the 2020 Plan, no further grants will be issued under the 2017 Plan. Stock Options Stock option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of grant. The stock option awards vest one - third per year over three years after the date of grant. All stock option awards have a maximum term of ten years . No stock option awards were granted during the nine months ended September 30, 2023 and 2022. A summary of the Company’s stock option activity as of and for the nine months ended September 30, 2023 is as follows: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term Value (Years) Outstanding at January 1, 2023 349,545 $ 5.19 7.17 $ 627 Granted — Exercised — Forfeited/expired (9,150) 13.73 Outstanding at September 30, 2023 340,395 $ 4.96 6.48 $ 552 Exercisable at September 30, 2023 340,395 $ 4.96 6.48 $ 552 The Company recorded stock-based compensation expense associated with stock options of $3 for the three months ended September 30, 2022, and $1 and $(8) for the nine months ended September 30, 2023 and 2022, respectively. Restricted Stock Awards Restricted stock awards are issued to independent directors and certain key employees. The restricted stock awards generally vest one third year one-third During the nine months ended September 30, 2023, the board of directors approved the issuance of 1,195,838 shares of restricted stock, of which 60,000 were awarded to independent directors with a weighted average grant-date fair value of $6.09 and 1,135,838 shares were awarded to key employees with a weighted average grant-date fair value of $5.10. During the nine months ended September 30, 2022, the board of directors approved the issuance of 231,842 shares of restricted stock, of which 45,000 shares were awarded to independent directors with a weighted average grant-date fair value of $5.75 and 186,842 shares were awarded to key employees with a weighted average grant-date fair value of $6.77. During the nine months ended September 30, 2023 and 2022, the Company withheld 41,098 shares and 31,027 shares of common stock, respectively, representing a portion of the restricted stock awards that vested during the period in order to satisfy certain related employee tax withholding liabilities of $235 and $204, respectively, associated with vesting. These withheld shares are treated the same as repurchased shares for accounting purposes. A summary of the restricted stock awards activity for the nine months ended September 30, 2023 is as follows: Weighted Average Number Grant Date of Shares Fair Value Nonvested at January 1, 2023 390,125 $ 6.17 Granted 1,195,838 5.15 Vested (152,207) 6.31 Forfeited (62,908) 6.04 Nonvested at September 30, 2023 1,370,848 $ 5.27 The fair value of the award is recorded as compensation expense on a straight-line basis over the vesting period. The Company recorded stock-based compensation expense associated with restricted stock awards of $786 and $252 for the three months ended September 30, 2023 and 2022, respectively, and $1,308 and $648 for the nine months ended September 30, 2023 and 2022, respectively. At September 30, 2023, there was $6,041 of total unrecognized compensation cost related to the nonvested stock granted which is expected to be recognized over a weighted-average period of 2.4 years. The total fair value of shares vested during the nine months ended September 30, 2023 and 2022 was $879 and $644, respectively. |
Regulatory Capital Requirements
Regulatory Capital Requirements | 9 Months Ended |
Sep. 30, 2023 | |
Regulatory Capital Requirements | |
Regulatory Capital Requirements | Note 12—Regulatory Capital Requirements The Bank is subject to the capital adequacy requirements of the OCC. The Company, as a thrift holding company, generally is subject to the capital adequacy requirements of the Federal Reserve. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Prompt corrective action regulations provide five classifications for depository institutions like the Bank, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors, and the regulators, in their discretion, can require the Company to lower classifications in certain cases. Failure to meet minimum capital requirements can initiate regulatory action that could have a direct material effect on the Company’s business, financial condition and results of operations. The federal banking agencies’ regulations provide for an optional simplified measure of capital adequacy for qualifying community banking organizations (that is, the “CBLR” framework), as implemented pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018. The CBLR framework is designed to reduce the burden of the requirements for calculating and reporting risk-based capital ratios for qualifying community banking organizations that opt into the framework. In order to qualify for the CBLR framework, a community banking organization must have (i) a Tier 1 leverage ratio of greater than 9.0%, (ii) less than $10 billion in total consolidated assets, and (iii) limited amounts of off-balance-sheet exposure and trading assets and liabilities. A qualifying community banking organization that opts into the CBLR framework and meets all requirements under the framework will be considered to have met the capital ratio requirements for the “well capitalized” capital category under applicable prompt corrective action regulations and will not be required to report or calculate risk-based capital under generally applicable capital adequacy requirements. Failure to meet the qualifying criteria within the grace period of two reporting periods, or to maintain a leverage ratio of 8.0% or greater, would require the institution to comply with the generally applicable capital adequacy requirements. An eligible banking organization can opt out of the CBLR framework and revert to compliance with general capital adequacy requirements and capital measurements under prompt corrective action regulations without restriction. The Company and the Bank have determined the organization is a qualifying community banking organization and has elected to measure capital adequacy under the CBLR framework, effective as of January 1, 2023. Management believes as of September 30, 2023, the Company and the Bank meet all capital adequacy requirements to which they are subject. The following tables present the consolidated Company’s and the Bank’s actual and minimum required capital amounts and ratios at September 30, 2023 and December 31, 2022: To be Well Capitalized Under Prompt Corrective Action Regulations Actual (CBLR Framework) Amount Ratio Amount Ratio September 30, 2023 Tier 1 (core) capital to average total assets (leverage ratio) Consolidated $ 333,998 13.42 % $ 223,953 9.00 % Bank 321,594 12.93 % 223,839 9.00 % For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio December 31, 2022 Total adjusted capital to risk-weighted assets Consolidated $ 390,591 25.64 % $ 121,888 8.00 % N/A N/A Bank 425,159 27.93 121,795 8.00 $ 152,244 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 332,068 21.79 91,416 6.00 N/A N/A Bank 405,803 26.65 91,346 6.00 121,795 8.00 Common Equity Tier 1 (CET1) Consolidated 332,068 21.79 68,562 4.50 N/A N/A Bank 405,803 26.65 68,510 4.50 98,959 6.50 Tier 1 (core) capital to average total assets (leverage ratio) Consolidated 332,068 13.54 98,073 4.00 N/A N/A Bank 405,803 16.56 98,032 4.00 122,540 5.00 Dividend Restrictions As noted above, federal banking regulations require the Bank to maintain certain capital levels and may limit the dividends paid by the Bank to the holding company or by the holding company to its shareholders. The holding company’s principal source of funds for dividend payments is dividends received from the Bank. Regulatory approval is required if (i) the total capital distributions for the applicable calendar year exceed the sum of the Bank’s net income for that year to date plus the Bank’s retained net income for the preceding two years or (ii) the Bank would not be at least “adequately capitalized” following the distribution. In addition, the Company currently is required to obtain the prior approval of the FRB in order to pay dividends to the Company’s shareholders. The QTL test requires that a minimum of 65% of assets be maintained in qualified thrift investments, including mortgage loans, housing- and real estate-related finance and other specified areas. If the QTL test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends, or the Bank must convert to commercial bank charter. Effective August 9, 2023, the Bank operates as a covered savings association, which allows the Bank to operate as a commercial bank without being subject to the QTL test. |
Income Per Share
Income Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Income Per Share | |
Income Per Share | Note 13—Income Per Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted income per common share further includes any common shares available to be issued upon the exercise of outstanding stock options and restricted stock awards if such inclusions would be dilutive. The Company determines the potentially dilutive common shares using the treasury stock method. The following table presents the computation of income per share, basic and diluted: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Numerator: Net income $ 314 $ 1,176 $ 2,350 $ 4,239 Denominator: Weighted average common shares outstanding, basic 50,699,967 50,400,412 50,606,566 50,326,951 Weighted average effect of potentially dilutive common shares: Stock options 95,066 97,884 89,380 107,671 Restricted stock 274,650 74,635 53,933 88,454 Weighted average common shares outstanding, diluted 51,069,683 50,572,931 50,749,879 50,523,076 Income per share, basic and diluted $ 0.01 $ 0.02 $ 0.05 $ 0.08 The weighted average effect of certain stock options and nonvested restricted stock that were excluded from the computation of weighted average diluted shares outstanding, as inclusion would be anti-dilutive, are summarized as follows: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Stock options 43,031 49,545 45,987 49,897 Restricted stock 23,566 176,707 510,472 99,784 Total 66,597 226,252 556,459 149,681 |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2023 | |
Employee Benefit Plans | |
Employee Benefit Plans | Note 14—Employee Benefit Plans In May 2022, the Bank surrendered life insurance policies associated with a split-dollar life program and company-owned life insurance policies related to former executives and a controlling shareholder with a cash surrender value of $24,877. The increase in cash surrender value of the policies of $13,142 over the duration of the ownership of the policies has moved from non-taxable income to taxable income, resulting in a $3,614 increase in income tax expense for the nine months ended September 30, 2022. Additional taxes of $1,314 relating to this surrender are included in other expense within non-interest expense during the nine months ended September 30, 2022. In connection with the surrender, the Bank also cancelled certain deferred compensation and the split dollar life insurance agreement with its controlling shareholder which resulted in the reversal of the related liabilities of $4,514 which are included as a reduction in salaries and employee benefits expense for the nine months ended September 30, 2022. |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Fair Values of Financial Instruments | |
Fair Values of Financial Instruments | Note 15—Fair Values of Financial Instruments Financial instruments include assets carried at fair value, as well as certain assets and liabilities carried at cost or amortized cost but disclosed at fair value in these condensed consolidated financial statements. Fair value is defined as the exit price, the price that would be received for an asset or paid to transfer a liability in the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date under current market conditions. The inputs to valuation techniques used to measure fair value are prioritized into a three-level hierarchy. The hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: 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 reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The following methods and significant assumptions are used to estimate fair value: Investment Securities The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar investment securities (Level 2). For investment securities where quoted prices or market prices of similar investment securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). The fair value of the collateralized debt obligations, which are categorized as Level 3, is obtained from third-party pricing information. It is determined by calculating discounted cash flows that include spreads that adjust for credit risk and illiquidity. The Company also performs an internal analysis that considers the structure and term of the collateralized debt obligations and the financial condition of the underlying issuers to corroborate the information used from the independent third party. Loans Held for Sale Loans held for sale are carried at the lower of amortized cost or fair value. Loans held for sale may be carried at fair value on a nonrecurring basis when fair value is less than cost. The fair value is based on outstanding commitments from investors or quoted prices for loans with similar characteristics (Level 2). Mortgage Servicing Rights Fair value of mortgage servicing rights is initially determined at the individual grouping level based on an internal valuation model that calculates the present value of estimated future net servicing income. On a quarterly basis, mortgage servicing rights are evaluated for impairment based upon third-party valuations obtained. As disclosed in Note 6—Mortgage Servicing Rights, net, the valuation model utilizes interest rate, prepayment speed and default rate assumptions that market participants would use in estimating future net servicing income (Level 3). Assets Measured at Fair Value on a Recurring Basis The table below presents the assets measured at fair value on a recurring basis categorized by the level of inputs used in the valuation of each asset at September 30, 2023 and December 31, 2022: Fair Value Measurements at September 30, 2023 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Financial Assets Available for sale debt securities: U.S. Treasury and Agency securities $ 244,384 $ 192,476 $ 51,908 $ — Mortgage-backed securities 32,046 — 32,046 — Collateralized mortgage obligations 121,730 — 121,730 — Collateralized debt obligations 142 — — 142 Equity securities 4,259 4,259 — — Fair Value Measurements at December 31, 2022 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Financial Assets Available for sale debt securities: U.S. Treasury and Agency securities $ 168,437 $ 116,355 $ 52,082 $ — Mortgage-backed securities 36,733 — 36,733 — Collateralized mortgage obligations 138,241 — 138,241 — Collateralized debt obligations 147 — — 147 Equity securities 4,396 4,396 — — The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2023 and 2022: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Collateralized Debt Obligations Nine Months Ended September 30, 2023 2022 Balance of recurring Level 3 assets at beginning of period $ 147 $ 203 Total gains or losses (realized/unrealized): Included in other comprehensive income (loss) (1) 3 Principal maturities/settlements (4) (53) Balance of recurring Level 3 assets at end of period $ 142 $ 153 Assets Measured at Fair Value on a Nonrecurring Basis From time to time, the Company may be required to measure certain other assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. For assets measured at fair value on a nonrecurring basis that were recorded in the condensed consolidated balance sheets at September 30, 2023 and December 31, 2022, the following table provides the level of valuation assumptions used to determine each adjustment and the related carrying value: Fair Value Measurements at September 30, 2023 Quoted Prices in Significant Other Significant Active Markets Observable Unobservable Fair Identical Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) Mortgage servicing rights $ 296 $ — $ — $ 296 Fair Value Measurements at December 31, 2022 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Fair Identical Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) Mortgage servicing rights $ 391 $ — $ — $ 391 The following tables present quantitative information about Level 3 fair value measurements for assets measured at fair value on a nonrecurring basis at September 30, 2023 and December 31, 2022: Quantitative Information about Level 3 Fair Value Measurements at September 30, 2023 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Mortgage servicing rights $ 296 Discounted cash flow Discount rate 10.0% - 12.5% (12.2%) Prepayment speed 7.4% - 22.5% (18.7%) Default rate 0.1%-0.2% (0.2%) Quantitative Information about Level 3 Fair Value Measurements at December 31, 2022 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Mortgage servicing rights $ 391 Discounted cash flow Discount rate 10.0% - 12.5% (12.2%) Prepayment speed 7.5% - 22.4% (19.0%) Default rate 0.1% - 0.2% (0.2%) (1) The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment. Fair Value of Financial Instruments The carrying amounts and estimated fair values of financial instruments not carried at fair value at September 30, 2023 and December 31, 2022, are as follows: Fair Value Measurements at September 30, 2023 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 563,622 $ 563,622 $ 563,622 $ — $ — Interest-bearing time deposits with other banks 1,174 1,174 1,174 — — Loans, net 1,382,860 1,361,791 — — 1,361,791 Financial Liabilities Time deposits 872,143 872,051 — 872,051 — Federal Home Loan Bank borrowings 50,000 48,840 — 48,840 — Fair Value Measurements at December 31, 2022 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 379,798 $ 379,798 $ 379,798 $ — $ — Interest-bearing time deposits with other banks 934 934 934 — — Loans held for sale 7,725 7,833 — 7,833 — Loans, net 1,613,385 1,516,771 — — 1,516,771 Financial Liabilities Time deposits 861,733 855,566 — 855,566 — Federal Home Loan Bank borrowings 50,000 48,360 — 48,360 — Subordinated notes, net 65,271 65,355 — 65,355 — |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions | |
Related Party Transactions | Note 16—Related Party Transactions The Company subleased certain office space to entities owned by the Company’s controlling shareholders. Amounts received under such subleases totaled $112 for the nine months ended September 30, 2022. The sublease agreements ended March 31, 2022. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 17—Commitments and Contingencies Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit, such as loan commitments and unused credit lines, and standby letters of credit, which are not reflected in the condensed consolidated financial statements. The Company adopted ASU 2016-13, effective January 1, 2023, which requires the Company to estimate expected credit losses for off-balance sheet credit exposures which are unconditionally cancellable. The Company maintains an estimated liability for unfunded commitments, primarily related to commitments to extend credit, on the condensed consolidated balance sheet. The liability for unfunded commitments is reduced in the period in which the off-balance sheet financial instruments expire, loan funding occurs or is otherwise settled. The following presents the activity in the liability for unfunded commitments for the nine months ended September 30, 2023: Residential Commercial Commercial Other Real Estate Real Estate Construction and Industrial Consumer Total Balance beginning of the period $ — $ — $ — $ — $ — $ — Adoption of ASU 2016-13 53 125 398 3 — 579 Increase (decrease) in provision for (recovery of) credit losses (52) 4 (206) 1 — (253) Balance end of period $ 1 $ 129 $ 192 $ 4 $ — $ 326 Unfunded Commitments to Extend Credit A commitment to extend credit, such as a loan commitment, credit line and overdraft protection, is a legally binding agreement to lend funds to a customer, usually at a stated interest rate and for a specific purpose. Such commitments have fixed expiration dates and generally require a fee. The extension of a commitment gives rise to credit risk. The actual liquidity requirements or credit risk that the Company may experience is expected to be lower than the contractual amount of commitments to extend credit because a significant portion of those commitments are expected to expire without being used. Certain commitments are subject to loan agreements containing covenants regarding the financial performance of the customer that must be met before the Company is required to fund the commitment. The Company uses the same credit policies in making commitments to extend credit as it does in making loans. The commitments outstanding to make loans include primarily residential real estate loans that are made for a period of 90 days or less. At September 30, 2023, there were no outstanding commitments to make loans as the Bank’s residential lending program has been suspended while the Company performs an evaluation of its alternatives for new products and services. Unused Lines of Credit The Company also issues credit lines to meet customer financing needs. At September 30, 2023, the unused lines of credit include residential second mortgages of $9,568, construction loans of $4,651 and commercial and industrial loans of $910, totaling $15,129. These variable-rate unused lines of credit commitments have interest rates ranging from 4.72% to 10.88% at September 30, 2023 with maturities ranging from 2 months 22 years Standby Letters of Credit Standby letters of credit are issued on behalf of customers in connection with construction contracts between the customers and third parties. Under standby letters of credit, the Company assures that the third parties will receive specified funds if customers fail to meet their contractual obligations. The credit risk to the Company arises from its obligation to make payment in the event of a customer’s contractual default. The maximum amount of potential future payments guaranteed by the Company is limited to the contractual amount of these letters. Collateral may be obtained at exercise of the commitment. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The following is a summary of the total amount of unfunded commitments to extend credit and standby letters of credit outstanding at September 30, 2023 and December 31, 2022: September 30, December 31, 2023 2022 Commitments to make loans $ — $ — Unused lines of credit 15,129 20,865 Standby letters of credit 24 24 Legal Proceedings The Company and its subsidiaries may be subject to legal actions and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened legal proceedings, except as described below, that are considered other than routine legal proceedings. The Company believes that the ultimate disposition or resolution of its routine legal proceedings, in the aggregate, are immaterial to its financial position, results of operations or liquidity. On July 19, 2023, the United States District Court for the Eastern District of Michigan approved the Company’s Plea Agreement with the DOJ, resolving the DOJ’s investigation focused on the Bank’s Advantage Loan Program and related issues, including residential lending practices and public disclosures about that program contained in the Company’s filings with the SEC. Under the Plea Agreement, the Company pleaded guilty to one count of securities fraud primarily relating to disclosures with respect to the Advantage Loan Program contained in the Company’s 2017 Registration Statement for its initial public offering and its immediately following Annual Reports on Form 10-K filed in March 2018 and March 2019. Consistent with the Plea Agreement, the sentence issued by the court required the Company to pay $27,239 in restitution for the benefit of non-insider victim shareholders; further enhance its compliance program and internal controls with respect to securities law compliance; and provide periodic reports to the DOJ with respect to compliance matters. The restitution amount was paid by the Company in the third quarter of 2023 and will be administered by a special master appointed by the court. No criminal fine was imposed. The Company’s obligations under the Plea Agreement are generally effective for three years. This resolution releases the Company, as well as the Bank, from further prosecution for securities fraud and underlying mortgage fraud in the Advantage Loan Program. The Company had a liability for contingent losses of $27,239 for the outcome of the investigations which was recorded in accrued expenses and other liabilities in the condensed consolidated balance sheet at December 31, 2022. As noted above, the restitution amount of $27,239 was paid in the third quarter of 2023 and recorded against the liability for contingent losses. The Bank has incurred and expects to continue to incur significant costs in connection with its ongoing cooperation with the government investigations of certain individuals and the advancement or reimbursement of third parties for the legal costs pursuant to requests for indemnification and advancement of expenses, which are reflected in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2023 and 2022. In addition, the Company was recently advised that its directors and officers insurance policies for matters related to the ongoing government investigations against selected individuals was exhausted based on invoices submitted prior to and during the three months ended September 30, 2023, subject to the receipt of the Company's final payment. The Company understands that the government investigations into certain individuals are continuing, including calling individuals as witnesses. Therefore, the Company expects to continue to receive claims for advancement or reimbursement of legal fees and any future costs the Company incurs will not be reimbursed by its insurance carriers. Mortgage Repurchase Liability The Company has previously sold portfolio loans originated under the Advantage Loan Program to private investors in the secondary market. The Company also sells conventional residential real estate loans (which excludes Advantage Loan Program loans) in the secondary market primarily to Fannie Mae on an ongoing basis. In connection with these loans sold, the Company makes customary representations and warranties about various characteristics of each loan. The Company may be required pursuant to the terms of the applicable mortgage loan purchase and sale agreements to repurchase any previously sold loan or indemnify (make whole) the investor for which the representation or warranty of the Company proves to be inaccurate, incomplete or misleading. In the event of a repurchase, the Company is typically required to pay the unpaid principal balance, the proportionate premium received when selling the loan and certain expenses. As a result, the Company may incur a loss with respect to each repurchased loan. To avoid the uncertainty of audits and inquiries by third-party investors in the Advantage Loan Program, beginning at the end of the second quarter of 2020, the Company commenced making offers to each of those investors to repurchase 100% of the previously sold Advantage Loan Program loans. These loans were previously sold to third-party investors with servicing of the loan retained. Losses expected to be incurred upon the repurchase of such loans were reflected in the mortgage repurchase liability. During the three months ended September 30, 2022, the Bank repurchased pools of Advantage Loan Program loans with a total outstanding principal balance of $35,241. In connection with this repurchase, the Company recognized a loss of $1,608 related to a fair value discount in other non-interest expense and a disposition of $487 of mortgage servicing rights and charged a loss of $884 against the mortgage repurchase liability. During the nine months ended September 30, 2022, the Bank repurchased pools of Advantage Loan Program loans with a total outstanding principal balance of $65,621. In connection with these repurchases, the Company recognized a loss of $2,303 related to a fair value discount in other non-interest expense and a disposition of $863 of mortgage servicing rights and charged a loss of $1,506 against the mortgage repurchase liability. Pursuant to the existing agreements with such investors, the Company also agreed to repurchase additional pools of Advantage Loan Program loans at the predetermined repurchase prices as stated in the agreements. At September 30, 2023, there was an outstanding agreement to repurchase an additional pool of Advantage Loan Program loans with an unpaid principal balance of $17,176 that extends to July 2025, with the final decision to effect any such repurchase as determined by the applicable investor. At September 30, 2023 and December 31, 2022, the mortgage repurchase liability was $790 and $809, respectively, which is included in accrued expenses and other liabilities in the condensed consolidated balance sheets. The unpaid principal balance of residential real estate loans sold that were subject to potential repurchase obligations in the event of breach of representations and warranties totaled $63,652 and $112,542 at September 30, 2023 and December 31, 2022, respectively, including Advantage Loan Program loans totaling $36,334 and $43,274 at September 30, 2023 and December 31, 2022, respectively. Activity in the mortgage repurchase liability was as follows: Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 809 $ 2,954 Net provision (recovery) (19) (670) Loss on loan repurchases — (1,506) Balance, end of the period $ 790 $ 778 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP. The condensed consolidated financial statements include the results of Sterling Bancorp, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates. |
Concentration of Credit Risk | Concentration of Credit Risk The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At September 30, 2023 and December 31, 2022, residential real estate loans accounted for 80% and 84%, respectively, of total gross loans. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At September 30, 2023 and December 31, 2022, approximately 80% and 81%, respectively, of gross loans were originated with respect to properties or businesses located in the state of California. Also, the loan portfolio consists of a loan product of one-, three-, five- or seven-year adjustable-rate mortgages that required a down payment of at least 35% (also referred to herein as “Advantage Loan Program loans”) which was terminated at the end of 2019 and continues to be the largest portion of gross residential loans. An internal review of the Advantage Loan Program and investigations conducted by the U.S. Department of Justice (the "DOJ") and the OCC indicated that certain employees engaged in misconduct in connection with the origination of a significant number of such loans, including the falsification of information with respect to verification of income, the amount of income reported for borrowers, reliance on third parties and related documentation. Refer to Note 17 - |
Investment Securities | Investment Securities Debt Securities (Effective January 1, 2023) Debt securities are classified as either available for sale or held to maturity. Management determines the classification of the debt securities when they are purchased. All debt securities were categorized as available for sale at September 30, 2023 and December 31, 2022. Available for sale debt securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive loss, net of income taxes. The amortized cost of debt securities is adjusted for amortization of premiums (noncallable) and accretion of discounts. The Company amortizes premiums and accretes discounts using the effective interest method over the contractual life of the individual securities or, in the case of asset-backed securities, using the effective yield method over the estimated life of the individual securities. Interest income includes amortization or accretion of purchase premium or discount. Gains and losses realized on the sales of available for sale debt securities are recorded on the settlement date and determined using the specific identification method. For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available for sale debt securities that do not meet the aforementioned criteria, the Company evaluates at the individual security level whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of income taxes. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit losses. Losses are charged against the allowance for credit losses when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available for sale debt securities is recorded separately from the amortized cost basis of the debt securities in the condensed consolidated balance sheets and is excluded from the estimate of credit losses. Equity Securities Equity securities with readily determinable fair values are stated at fair value with unrealized and realized gains and losses reported in income. Those equity securities without readily determinable fair values are recorded at cost less any impairments, adjusted for subsequent observable price changes in orderly transactions for an identical or similar investment of the same issuer. Any changes in the carrying value of the equity investments are recognized in income. Management performs a qualitative assessment each reporting period to identify impairment of equity securities without readily determinable fair values. When a qualitative assessment indicates that an impairment exists, management determines the fair value of the investment and if the fair value is less than the investment’s carrying value, an impairment charge is recorded in income equal to the difference between the fair value and the carrying amount of the investment. |
Loans Held for Sale | Loans Held for Sale The Company originates certain loans intended for sale in the secondary market. Loans held for sale are carried at the lower of amortized cost or fair value on an individual loan basis. The fair value of loans held for sale are primarily determined based on quoted prices for similar loans in active markets or outstanding commitments from third-party investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to non-interest income in the condensed consolidated statements of income. Performing residential real estate loans that are held for sale are generally sold with servicing rights retained. The carrying value of mortgage loans sold is reduced by the amount allocated to the servicing right. On the sale of an originated loan, the servicing right is recorded at its estimated fair value. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold and are recorded as a component of non-interest income in the condensed consolidated statements of income. Loans that are originated and classified as held for investment are periodically sold in order to manage liquidity, asset credit quality, interest rate risk or concentration risk. Loans that are reclassified into loans held for sale from loans held for investment, due to a change in intent, are recorded at the lower of cost or fair value. |
Loans | Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at amortized cost, net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred loan fees and costs. Accrued interest receivable related to loans is recorded separately from the amortized cost basis of loans on the condensed consolidated balance sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct loan origination costs, are deferred and amortized over the contractual lives of the respective loans as a yield adjustment using the effective interest method. Other credit-related fees are recognized as fee income, as a component of non-interest income, in the condensed consolidated statements of income. Interest income on loans is accrued as earned using the interest method over the term of the loan. The accrual of interest income is discontinued at the time the loan is 90 days past due or earlier if conditions warrant and placed on nonaccrual status. In all cases, loans are placed on nonaccrual status at an earlier date if collection of principal or interest is considered doubtful. All interest accrued and not received for loans placed on nonaccrual status is reversed against interest income. Any payments received on nonaccrual loans are applied to interest income on a cash basis if the loan is considered well secured. Otherwise, all payments received are applied first to outstanding loan principal amounts and then to the recovery of the charged off loan amounts. Any excess is treated as a recovery of interest and fees. Loans are returned to accrual status after all principal and interest amounts contractually due are made and future payments are reasonably assured. |
Allowance for Credit Losses - Loans | Allowance for Credit Losses - Loans (Effective January 1, 2023) The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of held for investment loans to present the net amount expected to be collected on the loans. The allowance for credit losses is adjusted through a charge (recovery) to provision for (recovery of) credit losses in the condensed consolidated statements of income. When the Company determines that all or a portion of a loan is uncollectible, the appropriate amount is written off, and the allowance for credit losses is reduced by the same amount. The Company applies judgment to determine when a loan is deemed uncollectible; however, generally a loan will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the allowance for credit losses when received. Portions of the allowance for credit losses may be allocated for specific credits; however, the entire allowance for credit losses is available for any credit that, in management’s judgment, should be charged off. The Company estimates the allowance for credit losses on loans based on the underlying loans’ amortized cost. If the collection of principal becomes uncertain, the Company stops accruing interest and reverses the accrued but unpaid interest against interest income. The Company has made a policy election to exclude accrued interest receivable from the measurement of the allowance for credit losses. The allowance for credit losses process involves procedures to appropriately consider the unique characteristics of the Company’s portfolio segments. The allowance for credit losses is measured on a collective (pool) basis for portfolios of loans with similar risk characteristics and risk profiles. The Company’s portfolio segments include the following: (i) commercial real estate, (ii) commercial construction, (iii) commercial and industrial, (iv) residential real estate and (v) home equity lines of credit. These portfolio segments were identified based on their common characteristics: loan type/purpose of loan, underlying collateral type, historical/expected credit loss patterns, availability of credit quality indicators (i.e., FICO, risk rating, delinquency) and completeness of the historical information. Loans which do not share risk characteristics — — The amount of the allowance for credit losses represents management’s best estimate of current expected credit losses on loans considering available information from internal and external sources, which is relevant to assessing collectability of the loans over the loans’ contractual terms, adjusted for expected prepayments. The contractual term excludes expected extensions, renewals and modifications unless: (i) management has a reasonable expectation at the reporting date that an individual borrower is experiencing financial difficulty and a modification of the loan will be executed, or (ii) the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company. The Company estimates the allowance for credit losses using relevant available information related to past events, current conditions, and reasonable and supportable forecasts. In determining the total allowance for credit losses, the Company calculates the quantitative portion of the allowance for credit losses using a methodology, the Advanced Probability of Default model, a logistic regression model, and adds qualitative adjustments to the model results and the results from any individual loan assessments. The Advanced Probability of Default model estimates the expected lifetime net charge off balance utilizing the following: (i) probability that the loan will stop performing or default; (ii) probability that a loan will pay-off entirely prior to maturity; and (iii) macroeconomic variables, including but not limited to unemployment rates, gross domestic product, and the Treasury Yield Curve. This information is specific to each portfolio segment, though not necessarily solely reliant on internally sourced data. Internal data is supplemented by, but not replaced by, peer data when required, primarily to determine the probability of default. The Company then applies a recovery rate to reflect the recoveries over an approximate 10-year period. The probability of default is estimated by analyzing the relationship between the historical performance of each loan pool and historical economic trends over a complete economic cycle. The probability of default for each pool is adjusted using a statistical model to reflect the current impact of certain macroeconomic variables and their expected changes over a reasonable and supportable forecast period of eight quarters. The Company determined that it was reasonably able to forecast the macroeconomic variables used in the forecast modeling processes with an acceptable degree of confidence for a total of eight quarters. This forecast period is followed by a reversion process whereby the macroeconomic variables are relaxed to revert to the average historical loss rates for periods after the forecasted eight-quarter period. Management qualitatively adjusts the allowance for credit loss model results for risk factors not considered within the quantitative modeling processes but are nonetheless relevant in assessing the expected credit losses within the portfolio segments. These qualitative risk factor adjustments may increase or decrease management’s estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. Qualitative risk factors considered include adjustments for model limitations, management’s adjustments to economic market forecasts and other current or forecasted events not captured in the Company’s historical loss experience. For loans that do not share risk characteristics that are evaluated on an individual basis, specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. In such cases, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The Company reevaluates the fair value of collateral supporting collateral dependent loans on an annual basis. As disclosed above, the Company has identified the following portfolio segments used in measuring its expected credit losses in the loan portfolio and their respective risk characteristics. The Residential Real Estate Mortgages portfolio includes residential first mortgages and residential second mortgages. The degree of risk in residential real estate lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. Economic trends determined by unemployment rates and other key economic indicators, particularly at the regional and local levels, are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers’ capacity to repay their obligations may be deteriorating. The Home Equity Lines of Credit portfolio includes residential second mortgages in the form of a revolving line of credit that requires interest only payments for a period followed by an amortizing period. These loans have higher risk of default compared to first liens making it harder to rely on loan-to-value ratios and loan balances can fluctuate. These loans are secured by the residential real estate by serving as a second lien behind the first mortgage lien. The Commercial Real Estate portfolio includes commercial loans made to many types of businesses involving retail, multifamily, offices, hotels/single-room occupancy hotels, industrial and other commercial properties. Adverse economic developments or an overbuilt market may impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for the properties to produce sufficient cash flow to service debt obligations. The Construction Loans portfolio is comprised of loans to builders and developers primarily for residential, commercial and mixed-use development. In addition to general commercial real estate risks, construction loans have additional risk of cost overruns, market deterioration during construction, lack of permanent financing, and no operating history. The Commercial and Industrial portfolio is comprised of loans to many types of businesses for their operating needs of the business. The risk characteristics of these loans vary based on the borrowers’ business and industry as repayment is typically dependent on cash flows generated from the underlying business. These loans may be secured by real estate or other assets or may be unsecured. |
FRB Stock | Federal Reserve Bank Stock The Bank is a member of its regional Federal Reserve Bank. As a covered savings association, the Bank is required to own a certain amount of capital stock of the Federal Reserve Bank of Chicago. The Federal Reserve Bank stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on the ultimate recovery of its par value. The Federal Reserve Bank stock does not have a readily determinable fair value and no quoted market value as ownership is restricted to member institutions. Cash and stock dividends on the Federal Reserve Bank stock are reported as income in interest and dividends on investment securities and restricted stock in the condensed consolidated statements of income. |
Liability for Unfunded Commitments | Liability for Unfunded Commitments (Effective January 1, 2023) Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for these off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk through a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The estimate of expected credit losses generally follows the same methodology as the funded loans by utilizing the loss rates generated for each portfolio segment with an adjustment for the probability of funding to occur. The liability for unfunded commitments, which is recorded in accrued expenses and other liabilities in the condensed consolidated balance sheets, is adjusted through the provision for (recovery of) credit losses. |
Adoption of New Accounting St_2
Adoption of New Accounting Standards (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Adoption of New Accounting Standards | |
Schedule of recently adopted accounting guidance | Prior to Adjustments for Adjustments for After Adoption ASU 2016-13 ASU 2022-02 Adoption Assets: Allowance for credit losses – loans $ 45,464 $ (1,651) $ 380 $ 44,193 Liabilities: Liability for unfunded commitments — 579 — 579 Pretax cumulative effect adjustment of a change in accounting principle (1,072) 380 Less: income taxes 294 (104) Cumulative effect adjustment of a change in accounting principle, net of tax $ (778) $ 276 |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Investment Securities | |
Summary of amortized cost and fair value of debt securities available for sale | September 30, 2023 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury and Agency securities $ 250,763 $ 2 $ (6,381) $ 244,384 Mortgage-backed securities 37,161 — (5,115) 32,046 Collateralized mortgage obligations 139,196 41 (17,507) 121,730 Collateralized debt obligations 152 — (10) 142 Total $ 427,272 $ 43 $ (29,013) $ 398,302 December 31, 2022 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury and Agency securities $ 175,878 $ 17 $ (7,458) $ 168,437 Mortgage-backed securities 41,388 — (4,655) 36,733 Collateralized mortgage obligations 153,066 4 (14,829) 138,241 Collateralized debt obligations 157 — (10) 147 Total $ 370,489 $ 21 $ (26,952) $ 343,558 |
Schedule of information pertaining to sales of available for sale debt securities | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Proceeds from the sale of debt securities $ — $ — $ 2,977 $ — Gross realized gains $ — $ — $ 1 $ — Gross realized losses — — (3) — Total net realized losses $ — $ — $ (2) $ — |
Schedule of amortized cost and fair value of debt securities available for sale, shown by contractual maturity | Amortized Fair Cost Value U.S. Treasury and Agency securities: Due less than one year $ 171,352 $ 170,525 Due after one year through five years 79,411 73,859 Mortgage-backed securities 37,161 32,046 Collateralized mortgage obligations 139,196 121,730 Collateralized debt obligations 152 142 Total $ 427,272 $ 398,302 |
Summary of available for sale debt securities, at fair value, continuous unrealized loss position | September 30, 2023 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses U.S. Treasury and Agency securities $ 98,578 $ (70) $ 122,804 $ (6,311) $ 221,382 $ (6,381) Mortgage-backed securities — — 32,046 (5,115) 32,046 (5,115) Collateralized mortgage obligations 6,643 (168) 110,868 (17,339) 117,511 (17,507) Collateralized debt obligations — — 142 (10) 142 (10) Total $ 105,221 $ (238) $ 265,860 $ (28,775) $ 371,081 $ (29,013) December 31, 2022 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses U.S. Treasury and Agency securities $ 100,815 $ (2,839) $ 44,605 $ (4,619) $ 145,420 $ (7,458) Mortgage-backed securities 5,792 (139) 30,941 (4,516) 36,733 (4,655) Collateralized mortgage obligations 69,088 (3,169) 64,715 (11,660) 133,803 (14,829) Collateralized debt obligations — — 147 (10) 147 (10) Total $ 175,695 $ (6,147) $ 140,408 $ (20,805) $ 316,103 $ (26,952) |
Summary of unrealized and realized gains and losses recognized in the condensed consolidated statements of income | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net loss recorded during the period on equity securities $ (137) $ (184) $ (137) $ (590) Less: net gains (loss) recorded during the period on equity securities sold during the period — — — — Unrealized loss recorded during the period on equity securities held at the reporting date $ (137) $ (184) $ (137) $ (590) |
Loans (Tables)
Loans (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Loans | |
Schedule of major categories of loans held for sale, investment and allowance for credit losses | September 30, December 31, 2023 2022 Residential real estate $ — $ 6,181 Commercial real estate — 1,544 Total loans held for sale $ — $ 7,725 September 30, December 31, 2023 2022 Residential real estate $ 1,139,205 $ 1,391,276 Commercial real estate 237,812 221,669 Construction 22,292 44,503 Commercial and industrial 17,809 1,396 Other consumer 9 5 Total loans 1,417,127 1,658,849 Less: allowance for credit losses (34,267) (45,464) Loans, net $ 1,382,860 $ 1,613,385 |
Schedule of activity in allowance for loan losses and recorded investment by portfolio segment | Residential Commercial Commercial Other Three Months Ended September 30, 2023 Real Estate Real Estate Construction and Industrial Consumer Total Allowance for credit losses: Balance at the beginning of the period $ 16,909 $ 16,728 $ 2,475 $ 41 $ — $ 36,153 Provision for (recovery of) credit losses 1,307 (2,482) (752) 40 — (1,887) Charge offs — — — — — — Recoveries — — 1 — — 1 Total ending balance $ 18,216 $ 14,246 $ 1,724 $ 81 $ — $ 34,267 Residential Commercial Commercial Other Nine Months Ended September 30, 2023 Real Estate Real Estate Construction and Industrial Consumer Total Allowance for credit losses: Balance at the beginning of the period $ 27,951 $ 11,694 $ 5,781 $ 38 $ — $ 45,464 Adoption of ASU 2016-13 865 1,151 (3,633) (34) — (1,651) Adoption of ASU 2022-02 (11) — 391 — — 380 Provision for (recovery of) credit losses (4,477) 1,301 (818) 77 — (3,917) Charge offs (6,478) — — — — (6,478) Recoveries 366 100 3 — — 469 Total ending balance $ 18,216 $ 14,246 $ 1,724 $ 81 $ — $ 34,267 Commercial Residential Commercial Lines of Other Three Months Ended September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance 29,982 $ 15,035 $ 6,708 $ 36 $ 5 $ 51,766 Provision for (recovery of) loan losses (1,841) (209) (2,304) 2 (5) (4,357) Charge offs — (4,064) — — — (4,064) Recoveries 46 5 1,966 — — 2,017 Total ending balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Commercial Residential Commercial Lines of Other Nine Months Ended September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 32,202 $ 12,608 $ 11,730 $ 8 $ — $ 56,548 Provision for (recovery of) loan losses (4,594) 2,138 (7,329) 30 — (9,755) Charge offs (197) (4,064) — — — (4,261) Recoveries 776 85 1,969 — — 2,830 Total ending balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Commercial Residential Commercial Lines of Other December 31, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 11 $ — $ — $ — $ — $ 11 Collectively evaluated for impairment 27,940 11,694 5,781 38 — 45,453 Total ending allowance balance $ 27,951 $ 11,694 $ 5,781 $ 38 $ — $ 45,464 Loans: Loans individually evaluated for impairment $ 45 $ — $ 2,485 $ 107 $ — $ 2,637 Loans collectively evaluated for impairment 1,391,231 221,669 42,018 1,289 5 1,656,212 Total ending loans balance $ 1,391,276 $ 221,669 $ 44,503 $ 1,396 $ 5 $ 1,658,849 |
Schedule of information related to impaired loans by class of loans, as determined prior to adoption of ASU 2016-13 | The following table presents information related to impaired loans by class of loans at December 31, 2022, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13: At December 31, 2022 Unpaid Allowance Principal Recorded for Loan Balance Investment Losses With no related allowance for loan losses recorded: Commercial real estate: Retail $ 227 $ — $ — Construction 2,485 2,485 — Commercial lines of credit: Private banking 107 107 — Subtotal 2,819 2,592 — With an allowance for loan losses recorded: Residential real estate, first mortgage 79 45 11 Total $ 2,898 $ 2,637 $ 11 The following table presents average impaired loans, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13, and interest recognized on such loans, for the three and nine months ended September 30, 2022: Three Months Ended Nine Months Ended September 30, 2022 September 30, 2022 Average Interest Cash Basis Average Interest Cash Basis Recorded Income Interest Recorded Income Interest Investment Recognized Recognized Investment Recognized Recognized With no related allowance for loan losses recorded: Construction $ 5,375 $ 40 $ 27 $ 6,885 $ 118 $ 105 Commercial lines of credit: Private banking 111 2 1 113 5 4 Subtotal 5,486 42 28 6,998 123 109 With an allowance for loan losses recorded: Residential real estate, first mortgage 48 2 2 198 3 3 Total $ 5,534 $ 44 $ 30 $ 7,196 $ 126 $ 112 |
Schedule of recorded investment in nonaccrual and loans past due over 90 days or more and still on accrual by class of loans and aging of the recorded investment in past due loans | September 30, 2023 December 31, 2022 Nonaccrual Past Due 90 Nonaccrual Past Due 90 With No Days or More With No Days or More Nonaccrual Allowance for and Still Nonaccrual Allowance for and Still Loans Credit Losses Accruing Loans Credit Losses Accruing Residential real estate: Residential first mortgage $ 5,035 $ 392 $ 32 $ 33,501 $ — $ 35 Residential second mortgage — — — 189 — — Commercial real estate — — 1,115 — — — Total $ 5,035 $ 392 $ 1,147 $ 33,690 $ — $ 35 The following table presents an aging of the amortized cost basis of contractually past due loans at September 30, 2023: 30 - 59 60 - 89 90 Days Days Days or More Total Current September 30, 2023 Past Due Past Due Past Due Past Due Loans Total Residential real estate $ 19,424 $ 2,991 $ 5,067 $ 27,482 $ 1,111,723 $ 1,139,205 Commercial real estate — — 1,115 1,115 236,697 237,812 Construction — — — — 22,292 22,292 Commercial and industrial — — — — 17,809 17,809 Other consumer — — — — 9 9 Total $ 19,424 $ 2,991 $ 6,182 $ 28,597 $ 1,388,530 $ 1,417,127 The following table presents the aging of the recorded investment in past due loans, presented in accordance with ASC 310, at December 31, 2022, by class of loans: 30 - 59 60 - 89 90 Days Days Days or More Total Current December 31, 2022 Past Due Past Due Past Due Past Due Loans Total Residential real estate: Residential first mortgage $ 17,881 $ 5,337 $ 33,536 $ 56,754 $ 1,324,545 $ 1,381,299 Residential second mortgage 99 — 189 288 9,689 9,977 Commercial real estate: Retail — — — — 28,971 28,971 Multifamily — — — — 81,444 81,444 Office — — — — 39,610 39,610 Hotels/Single-room occupancy hotels — — — — 5,208 5,208 Industrial — — — — 30,242 30,242 Other — — — — 36,194 36,194 Construction — — — — 44,503 44,503 Commercial lines of credit: Private banking — — — — 107 107 C&I lending — — — — 1,289 1,289 Other consumer — — — — 5 5 Total $ 17,980 $ 5,337 $ 33,725 $ 57,042 $ 1,601,807 $ 1,658,849 |
Schedule of risk rating of loans by class of loans | For residential and consumer loan classes, the Company evaluates credit quality based on the accrual status of the loan. The following table presents the amortized cost in residential loans based on accrual status: Revolving Revolving Loans Loans Term Loans Amortized Cost Basis by Origination Year Amortized Converted As of September 30, 2023 2023 2022 2021 2020 2019 Prior Costs Basis to Term Total Residential lending Residential mortgage loans: Payment performance: Accrual $ 767 $ 73,260 $ 134,150 $ 101,212 $ 215,263 $ 600,849 $ 8,384 $ 285 $ 1,134,170 Nonaccrual — — — — 1,031 4,004 — — 5,035 Total residential mortgage loans $ 767 $ 73,260 $ 134,150 $ 101,212 $ 216,294 $ 604,853 $ 8,384 $ 285 $ 1,139,205 Residential mortgage loans: Current period gross write offs $ — $ — $ — $ — $ 1,858 $ 4,601 $ 19 $ — $ 6,478 The amortized cost basis by year of origination and credit quality indicator of the Company’s commercial loans based on the most recent analysis performed was as follows: Revolving Revolving Loans Loans Term Loans Amortized Cost Basis by Origination Year Amortized Converted As of September 30, 2023 2023 2022 2021 2020 2019 Prior Costs Basis to Term Total Commercial lending Real estate - construction: Risk rating Pass $ — $ — $ — $ 6,252 $ 5,783 $ — $ — $ — $ 12,035 Special mention — — — — — — — — — Substandard or lower — — — — 10,257 — — — 10,257 Total real estate – construction $ — $ — $ — $ 6,252 $ 16,040 $ — $ — $ — $ 22,292 Real estate – construction: Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial and industrial: Risk rating Pass $ 16,440 $ 1,078 $ — $ — $ — $ 101 $ 96 $ 94 $ 17,809 Total commercial and industrial $ 16,440 $ 1,078 $ — $ — $ — $ 101 $ 96 $ 94 $ 17,809 Commercial and industrial: Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Real estate – commercial real estate: Risk rating Pass $ 27,045 $ 78,923 $ 35,210 $ 35,346 $ 6,985 $ 13,792 $ — $ — $ 197,301 Special mention — 3,598 1,419 2,732 8,649 5,397 — — 21,795 Substandard or lower — — 11,771 — 2,822 4,123 — — 18,716 Total real estate – commercial real estate $ 27,045 $ 82,521 $ 48,400 $ 38,078 $ 18,456 $ 23,312 $ — $ — $ 237,812 Real estate – commercial real estate: Current period gross charge offs $ — $ — $ — $ — $ — $ — $ — $ — $ — The credit risk profiles by internally assigned grade for loans by class of loans as of December 31, 2022, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13, were as follows: Special December 31, 2022 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,347,763 $ — $ 33,536 $ — $ 1,381,299 Residential second mortgage 9,788 — 189 — 9,977 Commercial real estate: Retail 28,971 — — — 28,971 Multifamily 67,361 14,083 — — 81,444 Office 39,610 — — — 39,610 Hotels/Single-room occupancy hotels — 3,669 1,539 — 5,208 Industrial 30,242 — — — 30,242 Other 21,036 15,158 — — 36,194 Construction 31,369 4,650 8,484 — 44,503 Commercial lines of credit: Private banking 107 — — — 107 C&I lending 1,289 — — — 1,289 Other consumer 5 — — — 5 Total $ 1,577,541 $ 37,560 $ 43,748 $ — $ 1,658,849 |
Mortgage Servicing Rights, net
Mortgage Servicing Rights, net (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Mortgage Servicing Rights, net | |
Schedule of principal balance of mortgage loans serviced for others | September 30, December 31, 2023 2022 Residential real estate mortgage loan portfolios serviced for: FNMA $ 107,702 $ 113,704 FHLB 31,740 34,282 Private investors 36,334 43,274 Total $ 175,776 $ 191,260 |
Schedule of activity for mortgage servicing rights and related valuation allowance | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Mortgage servicing rights: Beginning of period $ 1,701 $ 2,542 $ 1,840 $ 3,332 Additions — — — 11 Disposals — (487) — (863) Amortization (32) (170) (171) (595) End of period 1,669 1,885 1,669 1,885 Valuation allowance: Beginning of period 43 89 46 610 Additions (recoveries) (5) (46) (8) (567) End of period 38 43 38 43 Mortgage servicing rights, net $ 1,631 $ 1,842 $ 1,631 $ 1,842 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stock-based Compensation | |
Summary of stock option activity | Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term Value (Years) Outstanding at January 1, 2023 349,545 $ 5.19 7.17 $ 627 Granted — Exercised — Forfeited/expired (9,150) 13.73 Outstanding at September 30, 2023 340,395 $ 4.96 6.48 $ 552 Exercisable at September 30, 2023 340,395 $ 4.96 6.48 $ 552 |
Summary of the company's restricted stock awards activity | Weighted Average Number Grant Date of Shares Fair Value Nonvested at January 1, 2023 390,125 $ 6.17 Granted 1,195,838 5.15 Vested (152,207) 6.31 Forfeited (62,908) 6.04 Nonvested at September 30, 2023 1,370,848 $ 5.27 |
Regulatory Capital Requiremen_2
Regulatory Capital Requirements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Regulatory Capital Requirements | |
Schedule of minimum requirements under prompt corrective action regulations classifications | To be Well Capitalized Under Prompt Corrective Action Regulations Actual (CBLR Framework) Amount Ratio Amount Ratio September 30, 2023 Tier 1 (core) capital to average total assets (leverage ratio) Consolidated $ 333,998 13.42 % $ 223,953 9.00 % Bank 321,594 12.93 % 223,839 9.00 % For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio December 31, 2022 Total adjusted capital to risk-weighted assets Consolidated $ 390,591 25.64 % $ 121,888 8.00 % N/A N/A Bank 425,159 27.93 121,795 8.00 $ 152,244 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 332,068 21.79 91,416 6.00 N/A N/A Bank 405,803 26.65 91,346 6.00 121,795 8.00 Common Equity Tier 1 (CET1) Consolidated 332,068 21.79 68,562 4.50 N/A N/A Bank 405,803 26.65 68,510 4.50 98,959 6.50 Tier 1 (core) capital to average total assets (leverage ratio) Consolidated 332,068 13.54 98,073 4.00 N/A N/A Bank 405,803 16.56 98,032 4.00 122,540 5.00 |
Income Per Share (Tables)
Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Per Share | |
Schedule of computation of income per share, basic and diluted | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Numerator: Net income $ 314 $ 1,176 $ 2,350 $ 4,239 Denominator: Weighted average common shares outstanding, basic 50,699,967 50,400,412 50,606,566 50,326,951 Weighted average effect of potentially dilutive common shares: Stock options 95,066 97,884 89,380 107,671 Restricted stock 274,650 74,635 53,933 88,454 Weighted average common shares outstanding, diluted 51,069,683 50,572,931 50,749,879 50,523,076 Income per share, basic and diluted $ 0.01 $ 0.02 $ 0.05 $ 0.08 |
Schedule of anti-dilutive shares that were excluded from the computation of weighted average diluted shares outstanding | Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Stock options 43,031 49,545 45,987 49,897 Restricted stock 23,566 176,707 510,472 99,784 Total 66,597 226,252 556,459 149,681 |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Values of Financial Instruments | |
Schedule of assets measured at fair value on a recurring basis categorized by level of inputs | Fair Value Measurements at September 30, 2023 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Financial Assets Available for sale debt securities: U.S. Treasury and Agency securities $ 244,384 $ 192,476 $ 51,908 $ — Mortgage-backed securities 32,046 — 32,046 — Collateralized mortgage obligations 121,730 — 121,730 — Collateralized debt obligations 142 — — 142 Equity securities 4,259 4,259 — — Fair Value Measurements at December 31, 2022 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Financial Assets Available for sale debt securities: U.S. Treasury and Agency securities $ 168,437 $ 116,355 $ 52,082 $ — Mortgage-backed securities 36,733 — 36,733 — Collateralized mortgage obligations 138,241 — 138,241 — Collateralized debt obligations 147 — — 147 Equity securities 4,396 4,396 — — |
Schedule of reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Collateralized Debt Obligations Nine Months Ended September 30, 2023 2022 Balance of recurring Level 3 assets at beginning of period $ 147 $ 203 Total gains or losses (realized/unrealized): Included in other comprehensive income (loss) (1) 3 Principal maturities/settlements (4) (53) Balance of recurring Level 3 assets at end of period $ 142 $ 153 |
Schedule of assets measured at fair value on a nonrecurring basis categorized by level of inputs | Fair Value Measurements at September 30, 2023 Quoted Prices in Significant Other Significant Active Markets Observable Unobservable Fair Identical Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) Mortgage servicing rights $ 296 $ — $ — $ 296 Fair Value Measurements at December 31, 2022 Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Fair Identical Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) Mortgage servicing rights $ 391 $ — $ — $ 391 |
Schedule of quantitative information about nonrecurring Level 3 fair value measurements | Quantitative Information about Level 3 Fair Value Measurements at September 30, 2023 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Mortgage servicing rights $ 296 Discounted cash flow Discount rate 10.0% - 12.5% (12.2%) Prepayment speed 7.4% - 22.5% (18.7%) Default rate 0.1%-0.2% (0.2%) Quantitative Information about Level 3 Fair Value Measurements at December 31, 2022 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Mortgage servicing rights $ 391 Discounted cash flow Discount rate 10.0% - 12.5% (12.2%) Prepayment speed 7.5% - 22.4% (19.0%) Default rate 0.1% - 0.2% (0.2%) (1) The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment. |
Schedule of carrying amounts and estimated fair values of financial instruments not carried at fair value | Fair Value Measurements at September 30, 2023 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 563,622 $ 563,622 $ 563,622 $ — $ — Interest-bearing time deposits with other banks 1,174 1,174 1,174 — — Loans, net 1,382,860 1,361,791 — — 1,361,791 Financial Liabilities Time deposits 872,143 872,051 — 872,051 — Federal Home Loan Bank borrowings 50,000 48,840 — 48,840 — Fair Value Measurements at December 31, 2022 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 379,798 $ 379,798 $ 379,798 $ — $ — Interest-bearing time deposits with other banks 934 934 934 — — Loans held for sale 7,725 7,833 — 7,833 — Loans, net 1,613,385 1,516,771 — — 1,516,771 Financial Liabilities Time deposits 861,733 855,566 — 855,566 — Federal Home Loan Bank borrowings 50,000 48,360 — 48,360 — Subordinated notes, net 65,271 65,355 — 65,355 — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Summary of the activity in the liability for unfunded commitments | Residential Commercial Commercial Other Real Estate Real Estate Construction and Industrial Consumer Total Balance beginning of the period $ — $ — $ — $ — $ — $ — Adoption of ASU 2016-13 53 125 398 3 — 579 Increase (decrease) in provision for (recovery of) credit losses (52) 4 (206) 1 — (253) Balance end of period $ 1 $ 129 $ 192 $ 4 $ — $ 326 |
Summary of total amount of unfunded commitments to extend credit and standby letters of credit outstanding | September 30, December 31, 2023 2022 Commitments to make loans $ — $ — Unused lines of credit 15,129 20,865 Standby letters of credit 24 24 |
Summary of activity in the mortgage repurchase liability | Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 809 $ 2,954 Net provision (recovery) (19) (670) Loss on loan repurchases — (1,506) Balance, end of the period $ 790 $ 778 |
Nature of Operations And Basi_2
Nature of Operations And Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2023 item segment | |
Nature of Operations and Basis of Presentation | |
Number of branches | 28 |
Number of reportable segments | segment | 1 |
San Francisco and Los Angeles, California | |
Nature of Operations and Basis of Presentation | |
Number of branches | 26 |
Adoption of New Accounting St_3
Adoption of New Accounting Standards (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Adoption of New Accounting Standards | ||||||||||
Retained earnings | $ 236,901 | $ 236,901 | $ 234,049 | |||||||
Allowance for credit losses | $ 45,362 | $ 51,766 | $ 45,362 | 45,464 | $ 56,548 | |||||
Liability for unfunded commitments | 26,595 | 26,595 | 46,810 | |||||||
Pretax cumulative effect adjustment of a change in accounting principle | 618 | 1,918 | 3,717 | 10,597 | ||||||
Income tax expense | 304 | 742 | 1,367 | 6,358 | ||||||
Net income | $ 314 | $ 2,539 | $ (503) | $ 1,176 | $ (2,197) | $ 5,260 | $ 2,350 | $ 4,239 | ||
After Adoption of ASC | ||||||||||
Adoption of New Accounting Standards | ||||||||||
Allowance for credit losses | 44,193 | |||||||||
Liability for unfunded commitments | 579 | |||||||||
ASU 2016-13 | Cumulative effect adjustment | ||||||||||
Adoption of New Accounting Standards | ||||||||||
Retained earnings | 778 | |||||||||
Allowance for credit losses | (1,651) | |||||||||
Liability for unfunded commitments | 579 | |||||||||
Pretax cumulative effect adjustment of a change in accounting principle | 1,072 | |||||||||
Income tax expense | 294 | |||||||||
Net income | 778 | |||||||||
ASU 2022-02 | Cumulative effect adjustment | ||||||||||
Adoption of New Accounting Standards | ||||||||||
Retained earnings | (276) | |||||||||
Allowance for credit losses | 380 | |||||||||
Pretax cumulative effect adjustment of a change in accounting principle | 380 | |||||||||
Income tax expense | 104 | |||||||||
Net income | $ 276 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Concentration of Credit Risk | ||
Loans held for sale | $ 7,725 | |
Loans receivable | 1,658,849 | |
Residential real estate | ||
Concentration of Credit Risk | ||
Loans receivable | $ 1,391,276 | |
Residential real estate loans | Loans receivables | Residential real estate | ||
Concentration of Credit Risk | ||
Concentration of credit risk | 80% | 84% |
California | Loans receivables | Residential real estate | ||
Concentration of Credit Risk | ||
Concentration of credit risk | 80% | 81% |
Advantage Loan Program | Loans receivables | Residential real estate | ||
Concentration of Credit Risk | ||
Loans held for sale | $ 6,181 | |
Loans receivable | $ 671,643 | $ 880,373 |
Concentration of credit risk | 59% | 63% |
Investment Securities - Amortiz
Investment Securities - Amortized Cost and Fair Value, Realized Gains and Losses (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Investment Securities | ||
Debt securities available for sale, amortized cost | $ 427,272 | $ 370,489 |
Debt securities available for sale, Gross Unrealized Gain | 43 | 21 |
Debt securities available for sale, Gross Unrealized Loss | (29,013) | (26,952) |
Debt securities available for sale, at fair value | 398,302 | 343,558 |
Accrued interest receivable on available for sale debt securities | 1,372 | 808 |
Carrying value of debt securities held of any single issuer in excess of 10% of shareholders equity | $ 0 | $ 0 |
Threshold percentage of total shareholders' equity above which securities of any single issuer exceed | 10% | 10% |
Proceeds from the sale of debt securities | $ 2,977 | |
Gross realized gains | 1 | |
Gross realized losses | (3) | |
Total net realized losses | (2) | |
Income tax expense on net realized losses | 1 | |
Collateralized mortgage obligations | US Government Corporations and Agencies Securities | ||
Investment Securities | ||
Debt securities available for sale, at fair value | 321 | $ 353 |
Debt securities | Assets pledged as collateral | FHLB borrowings | ||
Investment Securities | ||
Debt securities available for sale, at fair value | 82,632 | |
Debt securities | Assets pledged as collateral | FRB | ||
Investment Securities | ||
Debt securities available for sale, at fair value | 63,174 | |
U.S. Treasury and Agency securities | ||
Investment Securities | ||
Debt securities available for sale, amortized cost | 250,763 | 175,878 |
Debt securities available for sale, Gross Unrealized Gain | 2 | 17 |
Debt securities available for sale, Gross Unrealized Loss | (6,381) | (7,458) |
Debt securities available for sale, at fair value | 244,384 | 168,437 |
Mortgage-backed securities | ||
Investment Securities | ||
Debt securities available for sale, amortized cost | 37,161 | 41,388 |
Debt securities available for sale, Gross Unrealized Loss | (5,115) | (4,655) |
Debt securities available for sale, at fair value | 32,046 | 36,733 |
Collateralized mortgage obligations | ||
Investment Securities | ||
Debt securities available for sale, amortized cost | 139,196 | 153,066 |
Debt securities available for sale, Gross Unrealized Gain | 41 | 4 |
Debt securities available for sale, Gross Unrealized Loss | (17,507) | (14,829) |
Debt securities available for sale, at fair value | 121,730 | 138,241 |
Collateralized debt obligations | ||
Investment Securities | ||
Debt securities available for sale, amortized cost | 152 | 157 |
Debt securities available for sale, Gross Unrealized Loss | (10) | (10) |
Debt securities available for sale, at fair value | $ 142 | $ 147 |
Investment Securities - Amort_2
Investment Securities - Amortized Cost and Fair Value By Contractual Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | $ 427,272 | $ 370,489 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | 398,302 | 343,558 |
U.S. Treasury and Agency securities | ||
Available for sale, Amortized Cost | ||
Due less than one year | 171,352 | |
Due after one year through five years | 79,411 | |
Available for sale, Amortized Cost | 250,763 | 175,878 |
Available for sale, Fair Value | ||
Due less than one year | 170,525 | |
Due after one year through five years | 73,859 | |
Available for sale, Fair Value | 244,384 | 168,437 |
Mortgage-backed securities | ||
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | 37,161 | 41,388 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | 32,046 | 36,733 |
Collateralized mortgage obligations | ||
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | 139,196 | 153,066 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | 121,730 | 138,241 |
Collateralized debt obligations | ||
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | 152 | 157 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | $ 142 | $ 147 |
Investment Securities - Aggrega
Investment Securities - Aggregated by Major Security Type and Length of Time in a Continuous Unrealized Loss Position (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 USD ($) security | Dec. 31, 2022 USD ($) | |
Fair Value | ||
Less than 12 Months, Fair value | $ 105,221 | $ 175,695 |
12 Months or More, Fair Value | 265,860 | 140,408 |
Available for sale, Continuous unrealized loss position, Fair Value | 371,081 | 316,103 |
Unrealized Losses | ||
Less than 12 Months, Unrealized Losses | (238) | (6,147) |
12 Months or More, Unrealized Losses | (28,775) | (20,805) |
Available for sale, Continuous unrealized loss position, Unrealized Losses | $ (29,013) | (26,952) |
Number of debt securities in portfolio | security | 33 | |
Number of debt securities in an unrealized loss position | security | 29 | |
U.S. Treasury and Agency securities | ||
Fair Value | ||
Less than 12 Months, Fair value | $ 98,578 | 100,815 |
12 Months or More, Fair Value | 122,804 | 44,605 |
Available for sale, Continuous unrealized loss position, Fair Value | 221,382 | 145,420 |
Unrealized Losses | ||
Less than 12 Months, Unrealized Losses | (70) | (2,839) |
12 Months or More, Unrealized Losses | (6,311) | (4,619) |
Available for sale, Continuous unrealized loss position, Unrealized Losses | (6,381) | (7,458) |
Mortgage-backed securities | ||
Fair Value | ||
Less than 12 Months, Fair value | 5,792 | |
12 Months or More, Fair Value | 32,046 | 30,941 |
Available for sale, Continuous unrealized loss position, Fair Value | 32,046 | 36,733 |
Unrealized Losses | ||
Less than 12 Months, Unrealized Losses | (139) | |
12 Months or More, Unrealized Losses | (5,115) | (4,516) |
Available for sale, Continuous unrealized loss position, Unrealized Losses | (5,115) | (4,655) |
Collateralized mortgage obligations | ||
Fair Value | ||
Less than 12 Months, Fair value | 6,643 | 69,088 |
12 Months or More, Fair Value | 110,868 | 64,715 |
Available for sale, Continuous unrealized loss position, Fair Value | 117,511 | 133,803 |
Unrealized Losses | ||
Less than 12 Months, Unrealized Losses | (168) | (3,169) |
12 Months or More, Unrealized Losses | (17,339) | (11,660) |
Available for sale, Continuous unrealized loss position, Unrealized Losses | (17,507) | (14,829) |
Collateralized debt obligations | ||
Fair Value | ||
12 Months or More, Fair Value | 142 | 147 |
Available for sale, Continuous unrealized loss position, Fair Value | 142 | 147 |
Unrealized Losses | ||
12 Months or More, Unrealized Losses | (10) | (10) |
Available for sale, Continuous unrealized loss position, Unrealized Losses | $ (10) | $ (10) |
Investment Securities - Equity
Investment Securities - Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Investment Securities | |||||
Equity securities | $ 4,505 | $ 4,505 | $ 4,642 | ||
Investment in equity securities without readily determinable fair value | 4,259 | 4,259 | 4,396 | ||
Equity securities with readily determinable fair values | |||||
Net loss recorded during the period on equity securities | (137) | $ (184) | (137) | $ (590) | |
Unrealized loss recorded during the period on equity securities held at the reporting date | (137) | $ (184) | (137) | $ (590) | |
Level 3 | |||||
Investment Securities | |||||
Investment in equity securities without readily determinable fair value | $ 246 | $ 246 | $ 246 |
Loans - Loans Held for Sale (De
Loans - Loans Held for Sale (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Feb. 28, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | |
Loans | ||||
Total loans held for sale | $ 7,725 | |||
Nonaccrual loans held for sale | $ 5,035 | |||
Transfer of residential real estate loans to loans held for sale | 34,581 | |||
Transfer of residential real estate loans from loans held for sale | 3,906 | |||
Loans carrying value on date of sale | 36,210 | |||
Proceeds from sale of loans held for sale | $ 37,930 | |||
Residential real estate | ||||
Loans | ||||
Total loans held for sale | 6,181 | |||
Transfer of residential real estate loans to loans held for sale | $ 41,059 | |||
Loans receivable charged off | 6,478 | |||
Transfer of residential real estate loans from loans held for sale | 3,906 | |||
Nonaccrual residential real estate loans | ||||
Loans | ||||
Nonaccrual loans held for sale | 1,942 | |||
Transfer of residential real estate loans to loans held for sale | 28,637 | |||
Transfer of residential real estate loans from loans held for sale | $ 3,906 | |||
Commercial real estate | ||||
Loans | ||||
Total loans held for sale | $ 1,544 | |||
Loans carrying value on date of sale | $ 49,455 | |||
Proceeds from sale of loans held for sale | $ 49,610 |
Loans - Loans Held for Investme
Loans - Loans Held for Investment - Major categories, accrued interest, pledged (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |||||
Mar. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | |
Loans | |||||||
Total loans | $ 1,417,127 | ||||||
Total loans | $ 1,658,849 | ||||||
Less: allowance for loan losses | (45,464) | $ (45,362) | $ (51,766) | $ (56,548) | |||
Less: Allowance for loan losses | (34,267) | $ (36,153) | (45,464) | ||||
Total outstanding principal balance | 1,382,860 | 1,613,385 | |||||
Total outstanding principal balance | 1,613,385 | ||||||
Accrued interest receivable related to gross loans | 6,645 | 6,894 | |||||
Transfer of residential real estate loans to loans held for sale | 34,581 | ||||||
Transfer of residential real estate loans from loans held for sale | 3,906 | ||||||
FHLB borrowings | |||||||
Loans | |||||||
Loans pledged as collateral | 439,718 | 389,830 | |||||
Residential real estate | |||||||
Loans | |||||||
Total loans | 1,139,205 | ||||||
Total loans | 1,391,276 | ||||||
Less: allowance for loan losses | (27,951) | (28,187) | (29,982) | (32,202) | |||
Less: Allowance for loan losses | (18,216) | (16,909) | (27,951) | ||||
Transfer of residential real estate loans to loans held for sale | $ 41,059 | ||||||
Transfer of residential real estate loans from loans held for sale | 3,906 | ||||||
Nonaccrual residential real estate loans | |||||||
Loans | |||||||
Transfer of residential real estate loans to loans held for sale | 28,637 | ||||||
Transfer of residential real estate loans from loans held for sale | $ 3,906 | ||||||
Commercial real estate | |||||||
Loans | |||||||
Total loans | 237,812 | ||||||
Total loans | 221,669 | ||||||
Less: allowance for loan losses | (11,694) | (10,767) | (15,035) | (12,608) | |||
Less: Allowance for loan losses | (14,246) | (16,728) | (11,694) | ||||
Construction | |||||||
Loans | |||||||
Total loans | 22,292 | ||||||
Total loans | 44,503 | ||||||
Less: allowance for loan losses | (5,781) | $ (6,370) | (6,708) | $ (11,730) | |||
Less: Allowance for loan losses | (1,724) | (2,475) | (5,781) | ||||
Commercial and industrial | |||||||
Loans | |||||||
Total loans | 17,809 | ||||||
Total loans | 1,396 | ||||||
Less: Allowance for loan losses | (81) | $ (41) | (38) | ||||
Other consumer | |||||||
Loans | |||||||
Total loans | 9 | ||||||
Total loans | 5 | ||||||
Less: allowance for loan losses | $ (5) | ||||||
Less: Allowance for loan losses | $ 0 | $ 0 |
Loans - Activity in the Allowan
Loans - Activity in the Allowance For Loan Losses by Portfolio Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Allowance for loan losses | ||||
Beginning balance | $ 51,766 | $ 45,464 | $ 56,548 | |
Provision for (recovery of) loan losses | (4,357) | (9,755) | ||
Charge offs | (4,064) | (4,261) | ||
Recoveries | 2,017 | 2,830 | ||
Total ending balance | 45,362 | 45,362 | ||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | $ 36,153 | 45,464 | ||
Allowance for credit losses | 45,362 | 45,362 | ||
Provision for (recovery of) credit losses | (1,887) | (3,917) | ||
Charge offs | (6,478) | |||
Recoveries | 1 | 469 | ||
Total ending balance | 34,267 | 34,267 | ||
ASU 2016-13 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | (1,651) | |||
ASU 2022-02 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 380 | |||
Residential Real Estate | ||||
Allowance for loan losses | ||||
Beginning balance | 29,982 | 27,951 | 32,202 | |
Provision for (recovery of) loan losses | (1,841) | (4,594) | ||
Charge offs | (197) | |||
Recoveries | 46 | 776 | ||
Total ending balance | 28,187 | 28,187 | ||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 16,909 | 27,951 | ||
Allowance for credit losses | 28,187 | 28,187 | ||
Provision for (recovery of) credit losses | 1,307 | (4,477) | ||
Charge offs | (6,478) | |||
Recoveries | 366 | |||
Total ending balance | 18,216 | 18,216 | ||
Residential Real Estate | ASU 2016-13 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 865 | |||
Residential Real Estate | ASU 2022-02 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | (11) | |||
Commercial Real Estate | ||||
Allowance for loan losses | ||||
Beginning balance | 15,035 | 11,694 | 12,608 | |
Provision for (recovery of) loan losses | (209) | 2,138 | ||
Charge offs | (4,064) | (4,064) | ||
Recoveries | 5 | 85 | ||
Total ending balance | 10,767 | 10,767 | ||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 16,728 | 11,694 | ||
Allowance for credit losses | 10,767 | 10,767 | ||
Provision for (recovery of) credit losses | (2,482) | 1,301 | ||
Recoveries | 100 | |||
Total ending balance | 14,246 | 14,246 | ||
Commercial Real Estate | ASU 2016-13 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 1,151 | |||
Construction | ||||
Allowance for loan losses | ||||
Beginning balance | 6,708 | 5,781 | 11,730 | |
Provision for (recovery of) loan losses | (2,304) | (7,329) | ||
Recoveries | 1,966 | 1,969 | ||
Total ending balance | 6,370 | 6,370 | ||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 2,475 | 5,781 | ||
Allowance for credit losses | 6,370 | 6,370 | ||
Provision for (recovery of) credit losses | (752) | (818) | ||
Recoveries | 1 | 3 | ||
Total ending balance | 1,724 | 1,724 | ||
Construction | ASU 2016-13 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | (3,633) | |||
Construction | ASU 2022-02 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 391 | |||
Commercial Lines of Credit | ||||
Allowance for loan losses | ||||
Beginning balance | 36 | 38 | 8 | |
Provision for (recovery of) loan losses | 2 | 30 | ||
Total ending balance | 38 | 38 | ||
Allowance for loan losses | ||||
Allowance for credit losses | 38 | $ 38 | ||
Commercial and industrial | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 41 | 38 | ||
Provision for (recovery of) credit losses | 40 | 77 | ||
Total ending balance | 81 | 81 | ||
Commercial and industrial | ASU 2016-13 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | (34) | |||
Other consumer | ||||
Allowance for loan losses | ||||
Beginning balance | 5 | |||
Provision for (recovery of) loan losses | $ (5) | |||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 0 | |||
Allowance for credit losses | ||||
Provision for (recovery of) credit losses | 0 | |||
Charge offs | 0 | |||
Recoveries | 0 | |||
Total ending balance | $ 0 | 0 | ||
Other consumer | ASU 2016-13 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | 0 | |||
Other consumer | ASU 2022-02 | ||||
Allowance for loan losses | ||||
Allowance for credit losses beginning of period | $ 0 |
Loans - Disaggregation of the A
Loans - Disaggregation of the Allowance For Credit Losses (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Ending allowance balance attributable to loans: | ||||
Individually evaluated for impairment | $ 11 | |||
Collectively evaluated for impairment | 45,453 | |||
Total ending allowance balance | 45,464 | $ 45,362 | $ 51,766 | $ 56,548 |
Loans: | ||||
Loans individually evaluated for impairment | 2,637 | |||
Loans collectively evaluated for impairment | 1,656,212 | |||
Total loans | 1,658,849 | |||
Residential Real Estate | ||||
Ending allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 11 | |||
Collectively evaluated for impairment | 27,940 | |||
Total ending allowance balance | 27,951 | 28,187 | 29,982 | 32,202 |
Loans: | ||||
Loans individually evaluated for impairment | 45 | |||
Loans collectively evaluated for impairment | 1,391,231 | |||
Total loans | 1,391,276 | |||
Commercial Real Estate | ||||
Ending allowance balance attributable to loans: | ||||
Collectively evaluated for impairment | 11,694 | |||
Total ending allowance balance | 11,694 | 10,767 | 15,035 | 12,608 |
Loans: | ||||
Loans collectively evaluated for impairment | 221,669 | |||
Total loans | 221,669 | |||
Construction | ||||
Ending allowance balance attributable to loans: | ||||
Collectively evaluated for impairment | 5,781 | |||
Total ending allowance balance | 5,781 | 6,370 | 6,708 | 11,730 |
Loans: | ||||
Loans individually evaluated for impairment | 2,485 | |||
Loans collectively evaluated for impairment | 42,018 | |||
Total loans | 44,503 | |||
Commercial and industrial | ||||
Ending allowance balance attributable to loans: | ||||
Collectively evaluated for impairment | 38 | |||
Total ending allowance balance | 38 | $ 38 | 36 | $ 8 |
Loans: | ||||
Loans individually evaluated for impairment | 107 | |||
Loans collectively evaluated for impairment | 1,289 | |||
Total loans | 1,396 | |||
Other consumer | ||||
Ending allowance balance attributable to loans: | ||||
Total ending allowance balance | $ 5 | |||
Loans: | ||||
Loans collectively evaluated for impairment | 5 | |||
Total loans | $ 5 |
Loans - Impaired Loans by Class
Loans - Impaired Loans by Class of Loans Prior to Adoption (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2022 | |
Loans | |||
Unpaid principal balance, with no related allowance for loan losses recorded | $ 2,819 | ||
Total Unpaid Principal Balance | 2,898 | ||
Recorded investment, with no related allowance for loan losses recorded | 2,592 | ||
Total Recorded Investment | 2,637 | ||
Allowance for Loan Losses | 11 | ||
Average recorded investment, with no related allowance for loan losses recorded | $ 5,486 | $ 6,998 | |
Total Average Recorded Investment | 5,534 | 7,196 | |
Interest Income Recognized, with no related allowance for loan losses recorded | 42 | 123 | |
Total Interest Income Recognized | 44 | 126 | |
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | 28 | 109 | |
Total Cash Basis Interest Recognized | 30 | 112 | |
Residential real estate | Real estate loan, first mortgage | |||
Loans | |||
Unpaid principal balance, with an allowance for loan losses recorded | 79 | ||
Recorded investment, with an allowance for loan losses recorded | 45 | ||
Allowance for Loan Losses | 11 | ||
Average recorded investment, with an allowance for loan losses recorded | 48 | 198 | |
Interest Income Recognized, with an allowance for loan losses recorded | 2 | 3 | |
Cash Basis Interest Recognized, with an allowance for loan losses recorded | 2 | 3 | |
Commercial real estate | Retail | |||
Loans | |||
Unpaid principal balance, with no related allowance for loan losses recorded | 227 | ||
Construction | |||
Loans | |||
Unpaid principal balance, with no related allowance for loan losses recorded | 2,485 | ||
Recorded investment, with no related allowance for loan losses recorded | 2,485 | ||
Average recorded investment, with no related allowance for loan losses recorded | 5,375 | 6,885 | |
Interest Income Recognized, with no related allowance for loan losses recorded | 40 | 118 | |
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | 27 | 105 | |
Commercial and industrial | Private banking | |||
Loans | |||
Unpaid principal balance, with no related allowance for loan losses recorded | 107 | ||
Recorded investment, with no related allowance for loan losses recorded | $ 107 | ||
Average recorded investment, with no related allowance for loan losses recorded | 111 | 113 | |
Interest Income Recognized, with no related allowance for loan losses recorded | 2 | 5 | |
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | $ 1 | $ 4 |
Loans - Nonaccrual loans cost b
Loans - Nonaccrual loans cost basis, Aging analysis of past due loans, foreclosure (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Loans | ||||||
Nonaccrual loans | $ 5,035 | $ 5,035 | $ 33,690 | |||
Nonaccrual With No Allowance for Credit Losses | 392 | |||||
Past Due Over 90 Days and Still Accruing | 1,147 | 1,147 | 35 | |||
Total | 1,658,849 | |||||
Total | 1,417,127 | 1,417,127 | ||||
Nonaccrual loans held for sale | 5,035 | 5,035 | ||||
Transfer of loans to loans held for sale | 34,581 | |||||
Gain on sale of mortgage loans held for sale | 1,695 | $ 200 | ||||
Not Past Due | ||||||
Loans | ||||||
Total | 1,601,807 | |||||
Total | 1,388,530 | 1,388,530 | ||||
Past Due | ||||||
Loans | ||||||
Total | 57,042 | |||||
Total | 28,597 | 28,597 | ||||
30 - 59 Days Past Due | ||||||
Loans | ||||||
Total | 17,980 | |||||
Total | 19,424 | 19,424 | ||||
60 - 89 Days Past Due | ||||||
Loans | ||||||
Total | 5,337 | |||||
Total | 2,991 | 2,991 | ||||
90 Days or More Past Due | ||||||
Loans | ||||||
Total | 33,725 | |||||
Total | 6,182 | 6,182 | ||||
Residential real estate | ||||||
Loans | ||||||
Total | 1,391,276 | |||||
Total | 1,139,205 | 1,139,205 | ||||
Transfer of loans to loans held for sale | $ 41,059 | |||||
Nonaccrual residential real estate loan charge off | 4,231 | |||||
Payment of nonaccrual residential real estate loan | 4,162 | 4,162 | ||||
Loans returned to accrual status | 5,538 | |||||
Loans added to nonaccrual status | 9,871 | |||||
Total interest income on nonaccrual loan | 96 | $ 572 | 157 | $ 1,542 | ||
Loans in formal foreclosure proceedings | 0 | 0 | 5,711 | |||
Residential real estate | Mortgage loans held for sale | ||||||
Loans | ||||||
Loans in formal foreclosure proceedings | 603 | |||||
Residential real estate | Not Past Due | ||||||
Loans | ||||||
Total | 1,111,723 | 1,111,723 | ||||
Residential real estate | Past Due | ||||||
Loans | ||||||
Total | 27,482 | 27,482 | ||||
Residential real estate | 30 - 59 Days Past Due | ||||||
Loans | ||||||
Total | 19,424 | 19,424 | ||||
Residential real estate | 60 - 89 Days Past Due | ||||||
Loans | ||||||
Total | 2,991 | 2,991 | ||||
Residential real estate | 90 Days or More Past Due | ||||||
Loans | ||||||
Total | 5,067 | 5,067 | ||||
Residential real estate | Real estate loan, first mortgage | ||||||
Loans | ||||||
Nonaccrual loans | 5,035 | 5,035 | 33,501 | |||
Nonaccrual With No Allowance for Credit Losses | 392 | |||||
Past Due Over 90 Days and Still Accruing | 32 | 32 | 35 | |||
Total | 1,381,299 | |||||
Residential real estate | Real estate loan, first mortgage | Not Past Due | ||||||
Loans | ||||||
Total | 1,324,545 | |||||
Residential real estate | Real estate loan, first mortgage | Past Due | ||||||
Loans | ||||||
Total | 56,754 | |||||
Residential real estate | Real estate loan, first mortgage | 30 - 59 Days Past Due | ||||||
Loans | ||||||
Total | 17,881 | |||||
Residential real estate | Real estate loan, first mortgage | 60 - 89 Days Past Due | ||||||
Loans | ||||||
Total | 5,337 | |||||
Residential real estate | Real estate loan, first mortgage | 90 Days or More Past Due | ||||||
Loans | ||||||
Total | 33,536 | |||||
Residential real estate | Real estate loan, second mortgage | ||||||
Loans | ||||||
Nonaccrual loans | 189 | |||||
Total | 9,977 | |||||
Residential real estate | Real estate loan, second mortgage | Not Past Due | ||||||
Loans | ||||||
Total | 9,689 | |||||
Residential real estate | Real estate loan, second mortgage | Past Due | ||||||
Loans | ||||||
Total | 288 | |||||
Residential real estate | Real estate loan, second mortgage | 30 - 59 Days Past Due | ||||||
Loans | ||||||
Total | 99 | |||||
Residential real estate | Real estate loan, second mortgage | 90 Days or More Past Due | ||||||
Loans | ||||||
Total | 189 | |||||
Commercial real estate | ||||||
Loans | ||||||
Past Due Over 90 Days and Still Accruing | 1,115 | 1,115 | ||||
Total | 221,669 | |||||
Total | 237,812 | 237,812 | ||||
Commercial real estate | Not Past Due | ||||||
Loans | ||||||
Total | 236,697 | 236,697 | ||||
Commercial real estate | Past Due | ||||||
Loans | ||||||
Total | 1,115 | 1,115 | ||||
Commercial real estate | 90 Days or More Past Due | ||||||
Loans | ||||||
Total | 1,115 | 1,115 | ||||
Commercial real estate | Retail | ||||||
Loans | ||||||
Total | 28,971 | |||||
Commercial real estate | Retail | Not Past Due | ||||||
Loans | ||||||
Total | 28,971 | |||||
Commercial real estate | Multifamily | ||||||
Loans | ||||||
Total | 81,444 | |||||
Commercial real estate | Multifamily | Not Past Due | ||||||
Loans | ||||||
Total | 81,444 | |||||
Commercial real estate | Office | ||||||
Loans | ||||||
Total | 39,610 | |||||
Commercial real estate | Office | Not Past Due | ||||||
Loans | ||||||
Total | 39,610 | |||||
Commercial real estate | Hotels/Single-room occupancy hotels | ||||||
Loans | ||||||
Total | 5,208 | |||||
Commercial real estate | Hotels/Single-room occupancy hotels | Not Past Due | ||||||
Loans | ||||||
Total | 5,208 | |||||
Commercial real estate | Industrial | ||||||
Loans | ||||||
Total | 30,242 | |||||
Commercial real estate | Industrial | Not Past Due | ||||||
Loans | ||||||
Total | 30,242 | |||||
Commercial real estate | Other | ||||||
Loans | ||||||
Total | 36,194 | |||||
Commercial real estate | Other | Not Past Due | ||||||
Loans | ||||||
Total | 36,194 | |||||
Construction | ||||||
Loans | ||||||
Total | 44,503 | |||||
Total | 22,292 | 22,292 | ||||
Construction | Not Past Due | ||||||
Loans | ||||||
Total | 44,503 | |||||
Total | 22,292 | 22,292 | ||||
Commercial and industrial | ||||||
Loans | ||||||
Total | 1,396 | |||||
Total | 17,809 | 17,809 | ||||
Commercial and industrial | Not Past Due | ||||||
Loans | ||||||
Total | 17,809 | 17,809 | ||||
Commercial Lines of Credit | ||||||
Loans | ||||||
Total | 1,396 | |||||
Commercial Lines of Credit | Private banking | ||||||
Loans | ||||||
Total | 107 | |||||
Commercial Lines of Credit | Private banking | Not Past Due | ||||||
Loans | ||||||
Total | 107 | |||||
Commercial Lines of Credit | C&I lending | ||||||
Loans | ||||||
Total | 1,289 | |||||
Commercial Lines of Credit | C&I lending | Not Past Due | ||||||
Loans | ||||||
Total | 1,289 | |||||
Other consumer | ||||||
Loans | ||||||
Total | 5 | |||||
Total | 9 | 9 | ||||
Other consumer | Not Past Due | ||||||
Loans | ||||||
Total | $ 5 | |||||
Total | $ 9 | $ 9 |
Loans - Credit quality indicato
Loans - Credit quality indicator by origination year (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Commercial Portfolio Segment | Internal Noninvestment Grade | Construction Loans [Member] | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2020 | $ 6,252 |
2019 | 16,040 |
Total, term and revolving loans by origination year | 22,292 |
Commercial Portfolio Segment | Internal Noninvestment Grade | C&I lending | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2023 | 16,440 |
2022 | 1,078 |
Prior | 101 |
Revolving Loans Amortized Costs Basis | 96 |
Revolving Loans Converted to Term | 94 |
Total, term and revolving loans by origination year | 17,809 |
Commercial Portfolio Segment | Internal Noninvestment Grade | Commercial Mortgage Loans | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2023 | 27,045 |
2022 | 82,521 |
2021 | 48,400 |
2020 | 38,078 |
2019 | 18,456 |
Prior | 23,312 |
Total, term and revolving loans by origination year | 237,812 |
Commercial Portfolio Segment | Pass | Construction Loans [Member] | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2020 | 6,252 |
2019 | 5,783 |
Total, term and revolving loans by origination year | 12,035 |
Commercial Portfolio Segment | Pass | C&I lending | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2023 | 16,440 |
2022 | 1,078 |
Prior | 101 |
Revolving Loans Amortized Costs Basis | 96 |
Revolving Loans Converted to Term | 94 |
Total, term and revolving loans by origination year | 17,809 |
Commercial Portfolio Segment | Pass | Commercial Mortgage Loans | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2023 | 27,045 |
2022 | 78,923 |
2021 | 35,210 |
2020 | 35,346 |
2019 | 6,985 |
Prior | 13,792 |
Total, term and revolving loans by origination year | 197,301 |
Commercial Portfolio Segment | Special Mention | Commercial Mortgage Loans | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2022 | 3,598 |
2021 | 1,419 |
2020 | 2,732 |
2019 | 8,649 |
Prior | 5,397 |
Total, term and revolving loans by origination year | 21,795 |
Commercial Portfolio Segment | Substandard | Construction Loans [Member] | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2019 | 10,257 |
Total, term and revolving loans by origination year | 10,257 |
Commercial Portfolio Segment | Substandard | Commercial Mortgage Loans | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2021 | 11,771 |
2019 | 2,822 |
Prior | 4,123 |
Total, term and revolving loans by origination year | 18,716 |
Residential Portfolio Segment | Performing And Nonperforming Financial Instruments | Residential Mortgage Loans | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2023 | 767 |
2022 | 73,260 |
2021 | 134,150 |
2020 | 101,212 |
2019 | 216,294 |
Prior | 604,853 |
Revolving Loans Amortized Costs Basis | 8,384 |
Revolving Loans Converted to Term | 285 |
Total, term and revolving loans by origination year | 1,139,205 |
Residential Portfolio Segment | Accrual | Residential Mortgage Loans | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2023 | 767 |
2022 | 73,260 |
2021 | 134,150 |
2020 | 101,212 |
2019 | 215,263 |
Prior | 600,849 |
Revolving Loans Amortized Costs Basis | 8,384 |
Revolving Loans Converted to Term | 285 |
Total, term and revolving loans by origination year | 1,134,170 |
Residential Portfolio Segment | Nonaccrual | Residential Mortgage Loans | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2019 | 1,031 |
Prior | 4,004 |
Total, term and revolving loans by origination year | 5,035 |
Residential Portfolio Segment | Current Period Gross Charge offs, Performance Rated | Residential Mortgage Loans | |
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract] | |
2019 | 1,858 |
Prior | 4,601 |
Revolving Loans Amortized Costs Basis | 19 |
Total, term and revolving loans by origination year | $ 6,478 |
Loans - Credit risk profiles pr
Loans - Credit risk profiles prior to adoption (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Loans | |
Total | $ 1,658,849 |
Pass | |
Loans | |
Total | 1,577,541 |
Special Mention | |
Loans | |
Total | 37,560 |
Substandard | |
Loans | |
Total | 43,748 |
Residential real estate | |
Loans | |
Total | 1,391,276 |
Residential real estate | Real estate loan, first mortgage | |
Loans | |
Total | 1,381,299 |
Residential real estate | Real estate loan, first mortgage | Pass | |
Loans | |
Total | 1,347,763 |
Residential real estate | Real estate loan, first mortgage | Substandard | |
Loans | |
Total | 33,536 |
Residential real estate | Real estate loan, second mortgage | |
Loans | |
Total | 9,977 |
Residential real estate | Real estate loan, second mortgage | Pass | |
Loans | |
Total | 9,788 |
Residential real estate | Real estate loan, second mortgage | Substandard | |
Loans | |
Total | 189 |
Commercial real estate | |
Loans | |
Total | 221,669 |
Commercial real estate | Retail | |
Loans | |
Total | 28,971 |
Commercial real estate | Retail | Pass | |
Loans | |
Total | 28,971 |
Commercial real estate | Multifamily | |
Loans | |
Total | 81,444 |
Commercial real estate | Multifamily | Pass | |
Loans | |
Total | 67,361 |
Commercial real estate | Multifamily | Special Mention | |
Loans | |
Total | 14,083 |
Commercial real estate | Office | |
Loans | |
Total | 39,610 |
Commercial real estate | Office | Pass | |
Loans | |
Total | 39,610 |
Commercial real estate | Hotels/Single-room occupancy hotels | |
Loans | |
Total | 5,208 |
Commercial real estate | Hotels/Single-room occupancy hotels | Special Mention | |
Loans | |
Total | 3,669 |
Commercial real estate | Hotels/Single-room occupancy hotels | Substandard | |
Loans | |
Total | 1,539 |
Commercial real estate | Industrial | |
Loans | |
Total | 30,242 |
Commercial real estate | Industrial | Pass | |
Loans | |
Total | 30,242 |
Commercial real estate | Other | |
Loans | |
Total | 36,194 |
Commercial real estate | Other | Pass | |
Loans | |
Total | 21,036 |
Commercial real estate | Other | Special Mention | |
Loans | |
Total | 15,158 |
Construction | |
Loans | |
Total | 44,503 |
Construction | Pass | |
Loans | |
Total | 31,369 |
Construction | Special Mention | |
Loans | |
Total | 4,650 |
Construction | Substandard | |
Loans | |
Total | 8,484 |
Commercial Lines of Credit | |
Loans | |
Total | 1,396 |
Commercial Lines of Credit | Private banking | |
Loans | |
Total | 107 |
Commercial Lines of Credit | Private banking | Pass | |
Loans | |
Total | 107 |
Commercial Lines of Credit | C&I lending | |
Loans | |
Total | 1,289 |
Commercial Lines of Credit | C&I lending | Pass | |
Loans | |
Total | 1,289 |
Other consumer | |
Loans | |
Total | 5 |
Other consumer | Pass | |
Loans | |
Total | $ 5 |
Mortgage Servicing Rights, ne_2
Mortgage Servicing Rights, net - Principle Balance by Category (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Mortgage Servicing Rights, net | ||
Total | $ 175,776 | $ 191,260 |
Custodial escrow balances | 822 | 380 |
FNMA | ||
Mortgage Servicing Rights, net | ||
Total | 107,702 | 113,704 |
FHLB | ||
Mortgage Servicing Rights, net | ||
Total | 31,740 | 34,282 |
Private investors | ||
Mortgage Servicing Rights, net | ||
Total | $ 36,334 | $ 43,274 |
Mortgage Servicing Rights, ne_3
Mortgage Servicing Rights, net - Activity and Related Valuation Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Mortgage servicing rights activity | |||||
Mortgage servicing rights Beginning of period | $ 1,701 | $ 2,542 | $ 1,840 | $ 3,332 | |
Additions | 11 | ||||
Disposals | (487) | (863) | |||
Amortization | (32) | (170) | (171) | (595) | |
Mortgage servicing rights End of period | 1,669 | 1,885 | 1,669 | 1,885 | |
Valuation allowance at beginning of period | 43 | 89 | 46 | 610 | |
Additions (recoveries) | (5) | (46) | (8) | (567) | |
Valuation allowance at end of period | 38 | 43 | 38 | 43 | |
Mortgage servicing rights, net | 1,631 | 1,842 | 1,631 | 1,842 | $ 1,794 |
Net servicing income (loss) | $ 107 | $ (384) | $ 268 | $ (118) |
Mortgage Servicing Rights, ne_4
Mortgage Servicing Rights, net - Valuation techniques (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Mortgage Servicing Rights, net | ||
Fair value of mortgage servicing rights | $ 1,993 | $ 2,154 |
Prepayment speed range | 9.80% | 10.20% |
Weighted average life of the mortgage servicing right | 0 months | 77 months |
Weighted average default rate | 0.20% | 0.20% |
Minimum | ||
Mortgage Servicing Rights, net | ||
Discount rate range | 10% | 10% |
Maximum | ||
Mortgage Servicing Rights, net | ||
Discount rate range | 12.50% | 12.50% |
Deposits (Details)
Deposits (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Deposits | ||
Interest-bearing time deposits | $ 872,143 | $ 861,733 |
Time deposits that meet or exceed the FDIC insurance limit of $250 | $ 249,962 | $ 243,861 |
FHLB Borrowings - FHLB Advances
FHLB Borrowings - FHLB Advances (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
FHLB Borrowings | ||
Long-term fixed-rate FHLBNY advances | $ 50,000 | $ 50,000 |
Long-Term Debt | ||
FHLB Borrowings | ||
FHLB interest rates (as a percent) | 1.96% |
FHLB Borrowings - FHLB Overdraf
FHLB Borrowings - FHLB Overdraft Line of Credit and Letters of Credit (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||||
Jul. 31, 2021 | Sep. 30, 2023 | Oct. 31, 2026 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | |
FHLB Borrowings | ||||||
FHLB letter of credit | $ 2,000 | $ 2,000 | ||||
Borrowings outstanding on FHLB standby letters of credit | 0 | $ 0 | ||||
FHLB fixed rate advances and overdraft line of credit additional borrowing capacity | 341,601 | |||||
FHLB short-term overdraft line of credit expiring October, 2023 | ||||||
FHLB Borrowings | ||||||
FHLB overdraft line of credit outstanding borrowings | $ 0 | $ 0 | ||||
FHLB overdraft line of credit (as percent) | 5.73% | 4.74% | ||||
FHLB short-term overdraft line of credit expiring October, 2023 | Subsequent events | ||||||
FHLB Borrowings | ||||||
FHLB overdraft line of credit | $ 20,000 | |||||
FHLB short-term overdraft line of credit expiring October, 2024 | ||||||
FHLB Borrowings | ||||||
FHLB, agreement term | 1 year | |||||
FHLB, additional agreement term | 1 year | |||||
Standby letter of credit expiring July, 2022 | ||||||
FHLB Borrowings | ||||||
FHLB overdraft line of credit outstanding borrowings | $ 0 | $ 0 | ||||
Standby letters of credit expiring July 2024 | ||||||
FHLB Borrowings | ||||||
FHLB letter of credit | $ 4,000 | $ 2,000 | ||||
FHLB letter of credit term | 36 months |
FHLB Borrowings - Other Borrowi
FHLB Borrowings - Other Borrowings (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Other Banks | ||
Other Borrowings | ||
Maximum borrowing capacity | $ 80,000 | |
Outstanding balance | 0 | $ 0 |
FRB | ||
Other Borrowings | ||
Outstanding balance | 0 | |
Prepayment penalty | 0 | |
Unused borrowing capacity | $ 65,000 | |
FRB | Maximum | ||
Other Borrowings | ||
Maturity period | 1 year |
Subordinated Notes, net (Detail
Subordinated Notes, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jul. 15, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Subordinated Notes, net | |||||
Interest expense | $ 243 | $ 1,329 | $ 3,727 | $ 3,383 | |
Notes redeemed | $ 65,000 | ||||
Subordinated notes | |||||
Subordinated Notes, net | |||||
Interest rate (in percent) | 7% | ||||
Redemption price percentage | 100% | ||||
Cash payment on redemption | $ 66,821 | ||||
Interest expense | $ 243 | $ 1,329 | $ 3,383 | ||
LIBOR | Subordinated notes | |||||
Subordinated Notes, net | |||||
Variable interest rate on subordinate notes (in percent) | 5.82% |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Apr. 30, 2023 | Apr. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Shareholders' Equity. | ||||
Number of shares common stock to fund the matching contribution issued and contributed | 184,928 | 160,978 | ||
Contribution amount | $ 1,028 | $ 1,138 | $ 1,028 | $ 1,138 |
Share price | $ 5.56 | $ 7.07 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Stock-based Compensation | |||||
Number of stock options granted | 0 | 0 | |||
Stock options | |||||
Stock-based Compensation | |||||
Maximum term of stock awards granted | 10 years | ||||
Weighted Average Remaining Contractual Term | |||||
Stock-based compensation costs recognized | $ 3 | $ 1 | $ (8) | ||
Restricted Stock | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 1,195,838 | 231,842 | |||
Restricted Stock | Key employee | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 1,135,838 | ||||
Weighted average grant-date fair value | $ 5.10 | $ 6.77 | |||
Restricted Stock | Non-employee directors Restricted Stock Awards | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 60,000 | ||||
Weighted average grant-date fair value | $ 6.09 | $ 5.75 | |||
2017 Omnibus Equity Incentive Plan | |||||
Stock-based Compensation | |||||
Number of shares authorized | 4,237,100 | 4,237,100 | |||
2017 Omnibus Equity Incentive Plan | Stock options | |||||
Number of Shares | |||||
Outstanding at January 1, 2023 | 349,545 | ||||
Forfeited/expired | (9,150) | ||||
Outstanding at September 30, 2023 | 340,395 | 340,395 | 349,545 | ||
Exercisable at September 30, 2023 | 340,395 | 340,395 | |||
Weighted Average Exercise Price | |||||
Outstanding at January 1, 2023 | $ 5.19 | ||||
Forfeited/expired | 13.73 | ||||
Outstanding at September 30, 2023 | $ 4.96 | 4.96 | $ 5.19 | ||
Exercisable at September 30, 2023 | $ 4.96 | $ 4.96 | |||
Weighted Average Remaining Contractual Term | |||||
Weighted Average Remaining Contractual Term (Years) | 0 years | 7 years 2 months 1 day | |||
Weighted Average Remaining Contractual Term, Exercisable | 0 years | ||||
Aggregate Intrinsic Value | $ 552 | $ 552 | $ 627 | ||
Aggregate Intrinsic Value Exercisable | 552 | $ 552 | |||
2017 Omnibus Equity Incentive Plan | Stock Options granted starting in 2020 | |||||
Stock-based Compensation | |||||
Vesting period | 3 years | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted starting in 2020 | Awards vesting on the first anniversary of the grant date | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted starting in 2020 | Awards vesting at the end of the second year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted starting in 2020 | Awards vesting at the end of the third year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2017 Omnibus Equity Incentive Plan | Restricted Stock | |||||
Weighted Average Remaining Contractual Term | |||||
Shares withheld in order to pay employee tax liabilities on vested awards | 41,098 | 31,027 | |||
Stock-based compensation costs recognized | 786 | $ 252 | $ 1,308 | $ 648 | |
Employee tax liability associated with restricted stock awards the vested during the period | 235 | 204 | |||
Total unrecognized compensation cost - restricted stock awards | $ 6,041 | $ 6,041 | |||
Unrecognized compensation cost related to nonvested awards, expected to be recognized over a weighted-average period | 2 years 4 months 24 days | ||||
Number of Shares | |||||
Nonvested, Opening balance | 390,125 | ||||
Granted | 1,195,838 | ||||
Vested | (152,207) | ||||
Forfeited | (62,908) | ||||
Nonvested, Ending balance | 1,370,848 | 1,370,848 | 390,125 | ||
Weighted Average Grant Date Fair Value | |||||
Nonvested, Opening balance | $ 6.17 | ||||
Granted | 5.15 | ||||
Vested | 6.31 | ||||
Forfeited | 6.04 | ||||
Nonvested, Ending balance | $ 5.27 | $ 5.27 | $ 6.17 | ||
Grant Date Fair Value of Restricted Stock that Vested During the year | |||||
Fair value of restricted stock awards vested | $ 879 | $ 644 | |||
2020 Omnibus Equity Incentive Plan | |||||
Stock-based Compensation | |||||
Number of shares authorized | 3,979,661 | 3,979,661 | |||
Number of shares available for future grants | 2,299,858 | 2,299,858 | |||
2020 Omnibus Equity Incentive Plan | Restricted Stock | |||||
Stock-based Compensation | |||||
Vesting period | 18 months | 3 years | |||
2020 Omnibus Equity Incentive Plan | Restricted Stock | Awards vesting on the first anniversary of the grant date | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2020 Omnibus Equity Incentive Plan | Restricted Stock | Awards vesting at the end of the second year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2020 Omnibus Equity Incentive Plan | Restricted Stock | Awards vesting at the end of the third year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2020 Omnibus Equity Incentive Plan | Restricted Stock | Key employee | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 186,842 | ||||
2020 Omnibus Equity Incentive Plan | Restricted Stock | Non-employee directors Restricted Stock Awards | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 45,000 |
Regulatory Capital Requiremen_3
Regulatory Capital Requirements - Actual and minimum required capital amounts and ratios and dividend restrictions (Details) $ in Thousands | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Regulatory Capital Requirements | ||
Minimum required Tier 1 leverage ratio for CBRL framework | 9% | |
Maximum allowed total consolidated assets for CBRL framework | $ 10,000,000 | |
Leverage ratio percentage | 8% | |
Tier 1 (core) capital to average total assets, Amount | ||
Actual | $ 333,998 | |
To be Well Capitalized | $ 223,953 | |
Tier 1 (core) capital to average total assets, Leverage Ratio | ||
Actual | 0.1342 | |
To be Well Capitalized | 0.0900 | |
Risk-weighting 100% Scenario | ||
Total adjusted capital to risk-weighted assets, Amount | ||
Actual | $ 390,591 | |
For Capital Adequacy Purposes | $ 121,888 | |
Total adjusted capital to risk-weighted assets, Ratio | ||
Actual | 0.2564 | |
For Capital Adequacy Purposes | 0.0800 | |
Tier 1 (core) capital to risk-weighted assets, Amount | ||
Actual | $ 332,068 | |
For Capital Adequacy Purposes | $ 91,416 | |
Tier 1 (core) capital to risk-weighted assets, Ratio | ||
Actual | 0.2179 | |
For Capital Adequacy Purposes | 0.0600 | |
Common Equity Tier 1 (CET1), Amount | ||
Actual | $ 332,068 | |
For Capital Adequacy Purposes | $ 68,562 | |
Common Equity Tier 1 (CET1), Ratio | ||
Actual | 0.2179 | |
For Capital Adequacy Purposes | 0.0450 | |
Tier 1 (core) capital to average total assets, Amount | ||
Actual | $ 332,068 | |
For Capital Adequacy Purposes | $ 98,073 | |
Tier 1 (core) capital to average total assets, Leverage Ratio | ||
Actual | 0.1354 | |
For Capital Adequacy Purposes | 0.0400 | |
Bank | ||
Tier 1 (core) capital to average total assets, Amount | ||
Actual | $ 321,594 | |
To be Well Capitalized | $ 223,839 | |
Tier 1 (core) capital to average total assets, Leverage Ratio | ||
Actual | 0.1293 | |
To be Well Capitalized | 0.0900 | |
Bank | Risk-weighting 100% Scenario | ||
Total adjusted capital to risk-weighted assets, Amount | ||
Actual | $ 425,159 | |
For Capital Adequacy Purposes | $ 121,795 | |
Total adjusted capital to risk-weighted assets, Ratio | ||
Actual | 0.2793 | |
For Capital Adequacy Purposes | 0.0800 | |
Tier 1 (core) capital to risk-weighted assets, Amount | ||
Actual | $ 405,803 | |
For Capital Adequacy Purposes | $ 91,346 | |
Tier 1 (core) capital to risk-weighted assets, Ratio | ||
Actual | 0.2665 | |
For Capital Adequacy Purposes | 0.0600 | |
Common Equity Tier 1 (CET1), Amount | ||
Actual | $ 405,803 | |
For Capital Adequacy Purposes | $ 68,510 | |
Common Equity Tier 1 (CET1), Ratio | ||
Actual | 0.2665 | |
For Capital Adequacy Purposes | 0.0450 | |
Tier 1 (core) capital to average total assets, Amount | ||
Actual | $ 405,803 | |
For Capital Adequacy Purposes | $ 98,032 | |
Tier 1 (core) capital to average total assets, Leverage Ratio | ||
Actual | 0.1656 | |
For Capital Adequacy Purposes | 0.0400 | |
Bank | Risk-weighting 100% Scenario | Advantage Loan Program | ||
Total adjusted capital to risk-weighted assets, Amount | ||
For Capital Adequacy Purposes | $ 121,795 | |
To be Well Capitalized | $ 152,244 | |
Total adjusted capital to risk-weighted assets, Ratio | ||
To be Well Capitalized | 0.1000 | |
Tier 1 (core) capital to risk-weighted assets, Ratio | ||
To be Well Capitalized | 0.0800 | |
Common Equity Tier 1 (CET1), Amount | ||
To be Well Capitalized | $ 98,959 | |
Common Equity Tier 1 (CET1), Ratio | ||
To be Well Capitalized | 0.0650 | |
Tier 1 (core) capital to average total assets, Amount | ||
To be Well Capitalized | $ 122,540 | |
Tier 1 (core) capital to average total assets, Leverage Ratio | ||
To be Well Capitalized | 0.0500 |
Income Per Share (Details)
Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | |||||||||
Net income | $ 314 | $ 2,539 | $ (503) | $ 1,176 | $ (2,197) | $ 5,260 | $ 2,350 | $ 4,239 | |
Denominator: | |||||||||
Weighted average common shares outstanding, basic | 50,699,967 | 50,400,412 | 50,606,566 | 50,326,951 | |||||
Weighted average effect of potentially dilutive common shares: | |||||||||
Weighted average common shares outstanding, diluted | 51,069,683 | 50,572,931 | 50,749,879 | 50,523,076 | |||||
Income per share: | |||||||||
Basic (in dollars per shares) | $ 0.01 | $ 0.02 | $ 0.05 | $ 0.08 | |||||
Diluted (in dollars per shares) | $ 0.01 | $ 0.01 | $ 0.02 | $ 0.02 | $ 0.08 | $ 0.05 | |||
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive | 66,597 | 226,252 | 556,459 | 149,681 | |||||
Stock options | |||||||||
Income per share: | |||||||||
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive | 43,031 | 49,545 | 45,987 | 49,897 | |||||
Restricted stock | |||||||||
Income per share: | |||||||||
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive | 23,566 | 176,707 | 510,472 | 99,784 | |||||
Common Stock | Stock options | |||||||||
Weighted average effect of potentially dilutive common shares: | |||||||||
Incremental shares from share-based compensation | 95,066 | 97,884 | 89,380 | 107,671 | |||||
Common Stock | Restricted stock | |||||||||
Weighted average effect of potentially dilutive common shares: | |||||||||
Incremental shares from share-based compensation | 274,650 | 74,635 | 53,933 | 88,454 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - Split-dollar life program - Cash surrender value - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended |
May 31, 2022 | Sep. 30, 2022 | |
Employee Benefit Plans | ||
Cash surrender value | $ 24,877 | |
Increase in the cash surrender value | $ 13,142 | |
Income tax expense | $ 3,614 | |
Additional taxes | 1,314 | |
Benefit plan benefit obligation | $ 4,514 |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments - Assets measured at fair value on a recurring basis (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | $ 398,302 | $ 343,558 |
Equity securities | ||
Equity securities | 4,505 | 4,642 |
U.S. Treasury and Agency securities | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 244,384 | 168,437 |
U.S. Treasury and Agency securities | Recurring | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 244,384 | 168,437 |
U.S. Treasury and Agency securities | Level 1 | Recurring | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 192,476 | 116,355 |
U.S. Treasury and Agency securities | Level 2 | Recurring | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 51,908 | 52,082 |
Mortgage-backed securities | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 32,046 | 36,733 |
Mortgage-backed securities | Recurring | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 32,046 | 36,733 |
Mortgage-backed securities | Level 2 | Recurring | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 32,046 | 36,733 |
Collateralized mortgage obligations | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 121,730 | 138,241 |
Collateralized mortgage obligations | Recurring | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 121,730 | 138,241 |
Collateralized mortgage obligations | Level 2 | Recurring | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 121,730 | 138,241 |
Collateralized debt obligations | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 142 | 147 |
Collateralized debt obligations | Recurring | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 142 | 147 |
Collateralized debt obligations | Level 3 | Recurring | ||
Available for sale debt securities: | ||
Debt securities available for sale, at fair value | 142 | 147 |
Equity securities | Recurring | ||
Equity securities | ||
Equity securities | 4,259 | 4,396 |
Equity securities | Level 1 | Recurring | ||
Equity securities | ||
Equity securities | $ 4,259 | $ 4,396 |
Fair Values of Financial Inst_4
Fair Values of Financial Instruments - Reconciliation and income statement classification using Level 3 inputs (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) | ||
Fair Value, Asset, Recurring Basis, Unobservable Input Reconciliation, Asset, Gain (Loss), Statement of Other Comprehensive Income or Comprehensive Income [Extensible Enumeration] | Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax | Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax |
Collateralized debt obligations | Recurring | Level 3 | ||
Reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) | ||
Included in other comprehensive income (loss) | $ (1) | $ 3 |
Balance of recurring Level 3 assets at beginning of year | 147 | 203 |
Principal maturities/settlements | (4) | (53) |
Balance of recurring Level 3 assets at end of year | $ 142 | $ 153 |
Fair Values of Financial Inst_5
Fair Values of Financial Instruments - Assets Measured at Fair Value on a Nonrecurring Basis and Fair Value of Financial Instruments (Details) $ in Thousands | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Financial Assets | ||
Interest-bearing time deposits with other banks | $ 1,174 | $ 934 |
Loans held for sale | 7,725 | |
Financial Liabilities | ||
Interest-bearing deposits | 1,999,878 | 1,900,996 |
Nonrecurring | Mortgage servicing rights | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | 296 | 391 |
Nonrecurring | Mortgage servicing rights | Level 3 | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | 296 | 391 |
Nonrecurring | Mortgage servicing rights | Level 3 | Discounted cash flow | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | $ 296 | $ 391 |
Nonrecurring | Mortgage servicing rights | Maximum | Level 3 | Discounted cash flow | Discount rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.125 | 0.125 |
Nonrecurring | Mortgage servicing rights | Maximum | Level 3 | Discounted cash flow | Prepayment speed | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.225 | 0.224 |
Nonrecurring | Mortgage servicing rights | Maximum | Level 3 | Discounted cash flow | Default rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.002 | 0.002 |
Nonrecurring | Mortgage servicing rights | Minimum | Level 3 | Discounted cash flow | Discount rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.100 | 0.100 |
Nonrecurring | Mortgage servicing rights | Minimum | Level 3 | Discounted cash flow | Prepayment speed | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.074 | 0.075 |
Nonrecurring | Mortgage servicing rights | Minimum | Level 3 | Discounted cash flow | Default rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.001 | 0.001 |
Nonrecurring | Mortgage servicing rights | Weighted Average | Level 3 | Discounted cash flow | Discount rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.122 | 0.122 |
Nonrecurring | Mortgage servicing rights | Weighted Average | Level 3 | Discounted cash flow | Prepayment speed | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.187 | 0.190 |
Nonrecurring | Mortgage servicing rights | Weighted Average | Level 3 | Discounted cash flow | Default rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.002 | 0.002 |
Carrying value per balance sheet | ||
Financial Assets | ||
Cash and due from banks | $ 563,622 | $ 379,798 |
Interest-bearing time deposits with other banks | 1,174 | 934 |
Loans held for sale | 7,725 | |
Loans, net | 1,382,860 | 1,613,385 |
Financial Liabilities | ||
Time deposits | 872,143 | 861,733 |
Federal Home Loan Bank borrowings | 50,000 | 50,000 |
Subordinated notes, net | 65,271 | |
Estimated fair value | ||
Financial Assets | ||
Cash and due from banks | 563,622 | 379,798 |
Interest-bearing time deposits with other banks | 1,174 | 934 |
Loans held for sale | 7,833 | |
Loans, net | 1,361,791 | 1,516,771 |
Financial Liabilities | ||
Time deposits | 872,051 | 855,566 |
Federal Home Loan Bank borrowings | 48,840 | 48,360 |
Subordinated notes, net | 65,355 | |
Estimated fair value | Level 1 | ||
Financial Assets | ||
Cash and due from banks | 563,622 | 379,798 |
Interest-bearing time deposits with other banks | 1,174 | 934 |
Estimated fair value | Level 2 | ||
Financial Assets | ||
Loans held for sale | 7,833 | |
Financial Liabilities | ||
Time deposits | 872,051 | 855,566 |
Federal Home Loan Bank borrowings | 48,840 | 48,360 |
Subordinated notes, net | 65,355 | |
Estimated fair value | Level 3 | ||
Financial Assets | ||
Loans, net | $ 1,361,791 | $ 1,516,771 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Controlling Shareholders | |
Related Party Transactions | |
Sublease income | $ 112 |
Commitments and Contingencies -
Commitments and Contingencies - Rollforward of the activity in the liability for unfunded commitments (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | $ 0 |
Increase (decrease) in provision for (recovery of) credit losses | (253) |
Liability for unfunded commitment, end of period | 326 |
ASU 2016-13 | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 579 |
Residential real estate | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 0 |
Increase (decrease) in provision for (recovery of) credit losses | (52) |
Liability for unfunded commitment, end of period | 1 |
Residential real estate | ASU 2016-13 | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 53 |
Commercial real estate | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 0 |
Increase (decrease) in provision for (recovery of) credit losses | 4 |
Liability for unfunded commitment, end of period | 129 |
Commercial real estate | ASU 2016-13 | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 125 |
Construction | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 0 |
Increase (decrease) in provision for (recovery of) credit losses | (206) |
Liability for unfunded commitment, end of period | 192 |
Construction | ASU 2016-13 | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 398 |
Commercial and industrial | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 0 |
Increase (decrease) in provision for (recovery of) credit losses | 1 |
Liability for unfunded commitment, end of period | 4 |
Commercial and industrial | ASU 2016-13 | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 3 |
Other consumer | |
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward] | |
Liability for unfunded commitment, beginning of period | 0 |
Liability for unfunded commitment, end of period | $ 0 |
Commitments and Contingencies_2
Commitments and Contingencies - Unfunded Commitments and Litigation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Loss contingency from Internal review of Advantage Loan Program | |||
Commitments and Contingencies | |||
Liability for contingent losses | $ 27,239 | ||
Restitution amount paid | $ 27,239 | ||
Litigation settlement amount | $ 27,239 | ||
Unfunded commitments to extend credit | Residential real estate | |||
Commitments and Contingencies | |||
Outstanding commitments with fixed interest rates | $ 0 | ||
Unfunded commitments to extend credit | Residential real estate | Maximum | Demand letter from purported stockholders | |||
Commitments and Contingencies | |||
Maturity period | 90 days | ||
Unused lines of credit | |||
Commitments and Contingencies | |||
Unused lines of credit | $ 15,129 | $ 15,129 | 20,865 |
Unused lines of credit | Minimum | |||
Commitments and Contingencies | |||
Variable interest rate (as a percentage) | 4.72% | 4.72% | |
Maturity period for variable interest loans | 2 months | ||
Unused lines of credit | Maximum | |||
Commitments and Contingencies | |||
Variable interest rate (as a percentage) | 10.88% | 10.88% | |
Maturity period for variable interest loans | 22 years | ||
Unused lines of credit | Construction | |||
Commitments and Contingencies | |||
Unused lines of credit | $ 4,651 | $ 4,651 | |
Unused lines of credit | Commercial and industrial loans | |||
Commitments and Contingencies | |||
Unused lines of credit | 910 | 910 | |
Unused lines of credit | Real estate loan, second mortgage | |||
Commitments and Contingencies | |||
Unused lines of credit | 9,568 | 9,568 | |
Standby letters of credit | |||
Commitments and Contingencies | |||
Unused lines of credit | $ 24 | $ 24 | $ 24 |
Commitments and Contingencies_3
Commitments and Contingencies - Mortgage Repurchase Liability and Offers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Jun. 30, 2020 | |
Commitments and Contingencies | ||||||
Net provision (recovery) | $ (19) | $ (670) | ||||
Other non-interest expense | $ 1,658 | $ 3,521 | 5,174 | 8,943 | ||
Unpaid principal balance | $ 1,613,385 | |||||
Unpaid principal balance | 1,382,860 | 1,382,860 | $ 1,613,385 | |||
Advantage Loan Program | ||||||
Commitments and Contingencies | ||||||
Percentage of loans offered to each of investors to repurchase | 100% | |||||
Advantage Loan Program | Obligation to repurchase receivables sold | ||||||
Commitments and Contingencies | ||||||
Unpaid principal balance | $ 17,176 | $ 17,176 | ||||
Advantage Loan Program loans repurchased | ||||||
Commitments and Contingencies | ||||||
Other non-interest expense | 1,608 | 2,303 | ||||
Disposition of mortgage servicing rights | 487 | 863 | ||||
Increase in mortgage loan repurchase liability | 884 | 1,506 | ||||
Unpaid principal balance | 35,241 | 35,241 | ||||
Unpaid principal balance | $ 65,621 | $ 65,621 |
Commitments and Contingencies_4
Commitments and Contingencies - Mortgage Repurchase Liability Activity and Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Commitments and Contingencies | |||||
Unpaid principal balance | $ 1,613,385 | ||||
Unpaid principal balance | $ 1,382,860 | $ 1,382,860 | 1,613,385 | ||
Mortgage repurchase liability: | |||||
Balance, beginning of period | 809 | $ 2,954 | |||
Net provision (recovery) | (19) | (670) | |||
Loss on loan repurchases | (1,506) | ||||
Balance, end of the period | 790 | $ 778 | 790 | 778 | |
Net provision (recovery) | (80) | $ (145) | (19) | $ (670) | |
Loans sold subject to potential repurchase obligations | Residential real estate | |||||
Commitments and Contingencies | |||||
Unpaid principal balance | 112,542 | ||||
Unpaid principal balance | 63,652 | 63,652 | |||
Advantage Loan Program | Loans sold subject to potential repurchase obligations | Residential real estate | |||||
Commitments and Contingencies | |||||
Unpaid principal balance | $ 43,274 | ||||
Unpaid principal balance | $ 36,334 | $ 36,334 |