Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 10, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | MainStreet Bancshares, Inc. | |
Entity Central Index Key | 0001693577 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 7,542,223 | |
Entity File Number | 001-38817 | |
Entity Incorporation, State or Country Code | VA | |
Entity Tax Identification Number | 81-2871064 | |
Entity Address, Address Line One | 10089 Fairfax Boulevard | |
Entity Address, City or Town | Fairfax | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22030 | |
City Area Code | 703 | |
Local Phone Number | 481-4567 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Common Stock [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock | |
Trading Symbol | MNSB | |
Security Exchange Name | NASDAQ | |
Depositary Shares [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Depositary Shares (each representing a 1/40th interest in a share of 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock) | |
Trading Symbol | MNSBP | |
Security Exchange Name | NASDAQ |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and due from banks | $ 118,399 | $ 75,935 |
Federal funds sold | 51,598 | 31,593 |
Cash and cash equivalents | 169,997 | 107,528 |
Investment securities available-for-sale, at fair value | 180,028 | 147,414 |
Investment securities held-to-maturity | 26,427 | 22,520 |
Restricted securities, at cost | 4,664 | 4,616 |
Loans held for sale | 57,006 | |
Loans, net of allowance for loan losses of $13,215 and $12,877, respectively | 1,299,169 | 1,230,379 |
Premises and equipment, net | 13,975 | 14,289 |
Other real estate owned, net | 1,180 | 1,180 |
Accrued interest and other receivables | 9,349 | 9,604 |
Bank owned life insurance | 25,518 | 25,341 |
Other assets | 12,722 | 23,288 |
Total Assets | 1,743,029 | 1,643,165 |
Liabilities | ||
Non-interest bearing deposits | 492,463 | 370,497 |
Interest bearing demand deposits | 69,180 | 70,307 |
Savings and NOW deposits | 72,259 | 74,099 |
Money market deposits | 342,468 | 426,600 |
Time deposits | 561,772 | 496,743 |
Total deposits | 1,538,142 | 1,438,246 |
Subordinated debt, net | 14,841 | 14,834 |
Other liabilities | 17,868 | 22,420 |
Total Liabilities | 1,570,851 | 1,475,500 |
Stockholders’ Equity | ||
Preferred stock, $1.00 par value, 2,000,000 shares authorized; 28,750 shares issued and outstanding as of March 31, 2021 and December 31, 2020 | 27,263 | 27,263 |
Common stock, $4.00 par value, 10,000,000 shares authorized; issued and outstanding 7,544,365 shares (including 185,131 nonvested shares) for March 31, 2021 and 7,443,842 shares (including 161,435 nonvested shares) for December 31, 2020 | 29,437 | 29,130 |
Capital surplus | 66,233 | 66,116 |
Retained earnings | 49,090 | 44,179 |
Accumulated other comprehensive income | 155 | 977 |
Total Stockholders’ Equity | 172,178 | 167,665 |
Total Liabilities and Stockholders’ Equity | $ 1,743,029 | $ 1,643,165 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Statement Of Financial Position [Abstract] | ||
Loans, net of allowance for loan losses | $ 13,215 | $ 12,877 |
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, authorized shares | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 28,750 | 28,750 |
Preferred stock, shares outstanding | 28,750 | 28,750 |
Common stock, par value | $ 4 | $ 4 |
Common stock, authorized shares | 10,000,000 | 10,000,000 |
Common stock, shares issued | 7,544,365 | 7,443,842 |
Common stock, shares outstanding | 7,544,365 | 7,443,842 |
Common stock, non-vested shares | 185,131 | 161,435 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Interest Income | ||
Interest and fees on loans | $ 15,792,000 | $ 14,220,000 |
Interest on investments securities | 530,000 | 501,000 |
Interest on federal funds sold | 15,000 | 395,000 |
Total Interest Income | 16,337,000 | 15,116,000 |
Interest Expense | ||
Interest on interest bearing DDA deposits | 55,000 | 117,000 |
Interest on savings and NOW deposits | 42,000 | 64,000 |
Interest on money market deposits | 277,000 | 778,000 |
Interest on time deposits | 2,250,000 | 3,566,000 |
Interest on Federal Home Loan Bank advances and other borrowings | 50,000 | |
Interest on subordinated debt | 238,000 | 241,000 |
Total Interest Expense | 2,862,000 | 4,816,000 |
Net Interest Income | 13,475,000 | 10,300,000 |
Provision for Loan Losses | 320,000 | 350,000 |
Net Interest Income After Provision For Loan Losses | 13,155,000 | 9,950,000 |
Non-Interest Income | ||
Deposit account service charges | 539,000 | 487,000 |
Bank owned life insurance income | 177,000 | 199,000 |
Loan swap fee income | 0 | 403,000 |
Net gain on held-to-maturity securities | 3,197 | |
Net gain on sale of loans | 344,000 | |
Other fee income | 383,000 | 325,000 |
Total Non-Interest Income | 1,446,000 | 1,414,000 |
Non-Interest Expense | ||
Salaries and employee benefits | 4,767,000 | 4,433,000 |
Furniture and equipment expenses | 526,000 | 454,000 |
Advertising and marketing | 275,000 | 256,000 |
Occupancy expenses | 306,000 | 267,000 |
Outside services | 336,000 | 276,000 |
Administrative expenses | 150,000 | 164,000 |
Other operating expenses | 1,449,000 | 1,293,000 |
Total Non-Interest Expense | 7,809,000 | 7,143,000 |
Income Before Income Taxes | 6,792,000 | 4,221,000 |
Income Tax Expense | 1,342,000 | 751,000 |
Net Income | 5,450,000 | 3,470,000 |
Preferred stock dividends | 539,000 | |
Net Income Available To Common Shareholders | $ 4,911,000 | $ 3,470,000 |
Net Income Per Common Share: | ||
Basic | $ 0.65 | $ 0.42 |
Diluted | $ 0.65 | $ 0.42 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Comprehensive Income, net of taxes | ||
Net Income | $ 5,450 | $ 3,470 |
Other comprehensive income (loss), net of tax: | ||
Unrealized gains (losses) on available for sale securities arising during the period (net of tax (benefit) expense, ($234) and $103, respectively) | (827) | 400 |
Add: reclassification adjustment for amortization of unrealized losses on securities transferred from available for sale to held to maturity (net of tax, $1 and $1, respectively) | 5 | 5 |
Other comprehensive income (loss) | (822) | 405 |
Comprehensive Income | $ 4,628 | $ 3,875 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Unrealized gains (losses) on arising during the period | $ (234) | $ 103 |
Reclassification adjustment for amortization of unrealized losses on securities transferred | $ 1 | $ 1 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Preferred Stock [Member] | Common Stock [Member] | Capital Surplus [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income [Member] |
Beginning Balance at Dec. 31, 2019 | $ 137,034 | $ 32,397 | $ 75,117 | $ 29,097 | $ 423 | |
Vesting of restricted stock | 261 | (261) | ||||
Stock based compensation expense | 376 | 376 | ||||
Common stock repurchased | (990) | (240) | (750) | |||
Net income | 3,470 | 3,470 | ||||
Other comprehensive loss | 405 | 405 | ||||
Ending Balance at Mar. 31, 2020 | 140,295 | 32,418 | 74,482 | 32,567 | 828 | |
Beginning Balance at Dec. 31, 2020 | 167,665 | $ 27,263 | 29,130 | 66,116 | 44,179 | 977 |
Vesting of restricted stock | 307 | (307) | ||||
Stock based compensation expense | 424 | 424 | ||||
Dividends on preferred stock | (539) | (539) | ||||
Net income | 5,450 | 5,450 | ||||
Other comprehensive loss | (822) | (822) | ||||
Ending Balance at Mar. 31, 2021 | $ 172,178 | $ 27,263 | $ 29,437 | $ 66,233 | $ 49,090 | $ 155 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash Flows from Operating Activities | ||
Net income | $ 5,450,000 | $ 3,470,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization, and accretion, net | 453,000 | 419,000 |
Deferred income tax benefit | (152,000) | (150,000) |
Provision for loan losses | 320,000 | 350,000 |
Gain on sale of loans held for sale | (344,000) | |
Stock based compensation expense | 424,000 | 376,000 |
Income from bank owned life insurance | (177,000) | (199,000) |
Subordinated debt amortization expense | 7,000 | 7,000 |
Gain on disposal of premises and equipment | (14,000) | |
Gain on call of held-to-maturity securities | (3,197) | |
Proceeds from sale of loans | 31,304,000 | |
Amortization of operating lease right-of-use assets | 63,000 | 96,000 |
Change in: | ||
Accrued interest receivable and other receivables | 281,000 | 611,000 |
Other assets | 10,919,000 | (6,946,000) |
Other liabilities | (4,552,000) | 7,528,000 |
Net cash provided by operating activities | 43,993,000 | 5,548,000 |
Activity in available-for-sale securities: | ||
Payments | 2,269,000 | 2,284,000 |
Maturities | 90,000,000 | 50,000,000 |
Purchases | (126,070,000) | (61,318,000) |
Activity in held-to-maturity securities: | ||
Purchases | (5,259,000) | |
Called | 1,300,000 | |
Purchases of restricted investment in bank stock | (375,000) | (159,000) |
Redemption of restricted investment in bank stock | 327,000 | 1,275,000 |
Net increase in loan portfolio | (43,064,000) | (29,553,000) |
Proceeds from sale of premises and equipment | 14,000 | |
Purchases of premises and equipment | (9,000) | (758,000) |
Net cash used in investing activities | (80,881,000) | (38,215,000) |
Cash Flows from Financing Activities | ||
Net increase (decrease) in non-interest deposits | 121,966,000 | (11,728,000) |
Net increase (decrease) in interest bearing demand, savings, and time deposits | (22,070,000) | 83,316,000 |
Net decrease in Federal Home Loan Bank advances and other borrowings | (30,000,000) | |
Cash dividends paid on preferred stock | (539,000) | |
Repurchases of common stock | (990,000) | |
Net cash provided by financing activities | 99,357,000 | 40,598,000 |
Increase in Cash and Cash Equivalents | 62,469,000 | 7,931,000 |
Cash and Cash Equivalents, beginning of period | 107,528,000 | 64,844,000 |
Cash and Cash Equivalents, end of period | 169,997,000 | 72,775,000 |
Supplementary Disclosure of Cash Flow Information | ||
Cash paid during the period for interest | 2,710,000 | $ 4,653,000 |
Right of use assets obtained in exchange for new operating lease liabilities | $ 1,907,000 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Impact of Recently Issued Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2021 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Impact of Recently Issued Accounting Pronouncements | Note 1. Organization, Basis of Presentation and Impact of Recently Issued Accounting Pronouncements Organization MainStreet Bancshares Inc. (the “Company”) is a bank holding company incorporated under the laws of the Commonwealth of Virginia whose principal activity is the ownership and management of MainStreet Bank. The Company is authorized to issue 10,000,000 shares of common stock with a par value of $4.00 per share. Additionally, the Company is authorized to issue 2,000,000 shares of preferred stock at a par value $1.00 per share. There is currently 28,750 shares of preferred stock outstanding. The Company is regulated under the Bank Holding Company Act of 1956, as amended (“BHC Act”) and is subject to inspection, examination, and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). On April 18, 2019, the Company completed the registration of its common stock with the Securities Exchange Commission through its filing of a General Form for Registration of Securities on Form 10 (“Form 10”), pursuant to Section 12(b) of the Securities Exchange Act of 1934. The Company is considered an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act,” and as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities Act.” We are also a “smaller reporting company” as defined in Exchange Act Rule 12b-2. As such, we may elect to comply with certain reduced public company reporting requirements in future reports that we file with the Securities and Exchange Commission, or the “SEC.” We were approved to list shares of our common stock on the Nasdaq Capital Market under our current symbol “MNSB” as of April 22, 2019. We were approved to list shares of preferred stock on the Nasdaq Capital Market on the symbol “MNSBP” as of September 16, 2020. MainStreet Bank (the “Bank”) is headquartered in Fairfax, Virginia where it also operates a branch. The Bank was incorporated on March 28, 2003 and received its charter from the Bureau of Financial Institutions of the Commonwealth of Virginia (the “Bureau”) on March 16, 2004. The Bank commenced regular operations on May 26, 2004 and is supervised by the Bureau and the Federal Reserve Bank. The Bank is a member of the Federal Reserve System and the Federal Deposit Insurance Corporation. The Bank places special emphasis on serving the needs of individuals, and small and medium-sized business and professional concerns in the Washington, D.C. metropolitan area. Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim information and with the instructions to the Quarterly Report on Form 10-Q, as applicable to a smaller reporting company. Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements. The financial statements are unaudited; but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation thereof. The balances as of December 31, 2020 have been derived from the audited consolidated financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto contained in the Form 10-K filed by the Company with the U.S. Securities and Exchange Commission on March 23, 2021. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, or any other period. Principles of Consolidation – The unaudited interim consolidated financial statements include accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany transactions and balances have been eliminated in consolidation. Cash and cash equivalents – For the purpose of presentation in the Statements of Cash Flows, the Bank has defined cash and cash equivalents as those amounts included in the balance sheet captions “Cash and due from banks” and “Federal funds sold.” Investment securities – The Bank’s investment securities are classified as either held to maturity, available for sale or trading. At March 31, 2021 and December 31, 2020, the Bank held approximately $26.4 million and $22.5 million, respectively, in securities classified as held to maturity. The Bank held no securities classified as trading. Municipal securities that were originally purchased as available for sale were transferred to held to maturity during 2013. The unrealized loss on the securities transferred to held to maturity is being amortized over the expected life of the securities. At March 31, 2021 and December 31, 2020, the unamortized unrealized loss was $48,381 and $54,836, respectively, before tax, and remains in accumulated other comprehensive income, net of tax. Securities which are not classified as held to maturity or trading are classified as securities available for sale. Securities available for sale are reported at fair value. Any unrealized gain or loss, net of applicable income taxes, is reported as a separate addition to or reduction from stockholders’ equity. Gains and losses arising from the sale of securities available for sale are recognized based on the specific identification method on a trade-date basis and included in results of operations. Securities held to maturity include securities purchased with the ability and positive intent to hold to maturity. Debt securities are stated at historical cost adjusted for amortization of premiums and accretion of discount. Any investment security, for which there has been a value impairment deemed by management to be other than temporary, is written down to its estimated fair value with a charge to current operations. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of held to maturity and available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In determining whether other-than-temporary impairment exists, management considers many factors, including (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Bank intends to sell the security, whether it is more likely than not that the Bank will be required to sell the security before recovery of its amortized cost basis, and whether the Bank expects to recover the security’s entire amortized cost basis. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. Restricted equity securities consist of the Federal Reserve Bank of Richmond and Federal Home Loan Bank of Atlanta (“FHLB”) stock in the amount of $3.7 million and $821,800 respectively, as of March 31, 2021, compared to $3.3 million and $1.1 million, respectively, as of December 31, 2020. Restricted equity securities also consisted of $126,800 in Community Bankers Bank stock at March 31, 2021 and December 31, 2020. This restricted stock is recorded at cost because its ownership is restricted, and it lacks a market for resale. The Bank is required to maintain Federal Reserve Bank stock at a level of 6% of capital and surplus. The FHLB requires the Bank to maintain stock, at a minimum, in an amount equal to 4.5% of outstanding borrowings and 0.20% of total assets. When evaluating restricted stock for impairment, its value is based on ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Bank does not consider these investments to be impaired at March 31, 2021 or December 31, 2020 and no previous impairment has been recognized. Loans held for sale - Loans intended for sale are recorded at the lower aggregate cost or fair value as of the balance sheet date. Gains and losses on loan sales are determined by the specific-identification method. Loans - The Bank makes commercial and consumer loans to customers. Our recorded investment in loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, generally are reported at their unpaid principal balances adjusted for charge-offs, unearned discounts, any deferred fees or costs on originated loans, and the allowance for loan losses. Interest on loans is credited to operations based on the principal amount outstanding. Loan fees and origination costs are deferred, and the net amount is amortized as an adjustment of the related loan’s yield using the effective interest method. The Bank is amortizing these amounts over the contractual life of the related loans. A loan’s past due status is based on the contractual due date of the most delinquent payment due. All loans which are 30 or more days past due at the end of the month are reported to the Board of Directors. Commercial loans are generally placed on nonaccrual status when the collection of principal or interest is 90 days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower. Consumer loans are generally placed on nonaccrual status when the collection of principal or interest is 120 days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower. Loans greater than 90 days past due may remain on accrual status if management determines it has adequate collateral to cover the principal and interest. For those loans that are carried on nonaccrual status, payments are first applied to principal outstanding. A loan may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed. It is Bank policy to charge-off loans whose collectability is sufficiently questionable and can no longer be justified as an asset on the balance sheet. To determine if a loan should be charged-off, all possible sources of repayment are analysed, including: (1) the potential for future cash flow, (2) the value of the Bank’s collateral, and (3) the strength of co-makers or guarantors. All principal and previously accrued interest is charged to the allowance for loan losses. All future payments received on the loan are credited to the allowance for loan losses as a recovery. These policies are applied consistently across our loan portfolio. Impairment of a loan - The Bank considers a loan impaired when it is probable that the Bank will be unable to collect all interest and principal payments as scheduled in the loan agreement. A loan is not considered impaired during a period of an insignificant delay in payment if the ultimate collectability of all amounts due is expected. Impairment is measured on a loan-by-loan basis for all commercial, construction and residential loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Consistent with the Bank’s method for nonaccrual loans, payments on impaired loans are first applied to principal outstanding. Smaller balance consumer loans are not individually evaluated for impairment. Troubled Debt Restructuring (TDR) occurs when the Bank agrees to modify the original terms of a loan due to the deterioration in the financial condition of the borrower. TDRs are considered impaired loans. Upon designation as a TDR, the Bank evaluates the borrower’s payment history, past due status and ability to make payments based on the revised terms of the loan. If a loan was accruing prior to being modified as a TDR and if the Bank concludes that the borrower is able to continue making such payments, and there are no other factors or circumstances that would cause it to conclude otherwise, the loan will remain on an accruing status. If a loan was on nonaccrual status at the time of the TDR, the loan will remain on nonaccrual status following the modification and may be returned to accrual status based on the policy for returning loans to accrual status as noted above. Restructured loans for which there was no rate concession, and therefore made at a market rate of interest, may be eligible to be removed from TDR status in periods after the restructuring depending on the performance of the loan. As of March 31, 2021, and December 31, 2020, the Bank had no loans classified as TDR’s. For additional discussion see “Note 3. Loans Receivable” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Allowance for Loan Losses - The allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. Loan losses are charged against the allowance for loan losses for the difference between the carrying value of the loan and the estimated net realizable value or fair value of the collateral, if collateral dependent, when: • Management believes that the collectability of the principal is unlikely regardless of delinquency status. • The loan is a consumer loan and is 120 days past due. • The loan is a non-consumer loan, and is 90 days past due, unless the loan is well secured, and recovery is probable. • The borrower is in bankruptcy, unless the debt has been reaffirmed, is well secured and recovery is probable. Subsequent recoveries, if any, are credited to the allowance. The allowance represents an amount that, in management’s judgment, will be adequate to absorb probable losses inherent in the loan portfolio. Management’s judgment in determining the level of the allowance is based on evaluations of the collectability of loans while taking into consideration such factors as trends in delinquencies and charge-offs, changes in the nature and volume of the loan portfolio, current economic conditions that may affect a borrower’s ability to repay and the value of collateral, overall portfolio quality and review of specific potential losses. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. The evaluation also considers the following risk characteristics of each loan portfolio segment: • Real estate residential mortgage loans, including equity lines of credit, carry risks associated with the continued creditworthiness of the borrower and the changes in the value of the collateral. • Real estate construction loans and land improvement carry risks that the project will not be finished according to schedule, the project will not be finished according to budget and the value of the collateral may, at any point in time, be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be a loan customer, may be unable to finish the construction project as planned because of financial pressure unrelated to the project. • Commercial real estate loans carry risks of the client’s ability to repay the loan from the cash flow derived from the underlying real estate. Risks inherent in managing a commercial real estate portfolio relate to sudden or gradual drops in property values as well as changes in the economic climate. Real estate security diminishes risks only to the extent that a market exists for the subject collateral. These risks are attempted to be mitigated by carefully underwriting loans of this type and by following appropriate loan-to-value standards. • Commercial and industrial loans carry risks associated with the successful operation of a business or a real estate project, in addition to other risks associated with the ownership of real estate, because the repayment of these loans may be dependent upon the profitability and cash flows of the business or project. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision. • Consumer secured loans (indirect lending) carry risks associated with the continued creditworthiness of the borrower and the value of the collateral (e.g., rapidly depreciating assets such as automobiles). These risks are attempted to be mitigated by following appropriate loan-to-value standards and an experienced management team for this type of portfolio. • Consumer unsecured loans (credit cards) carry risks associated with the continued credit-worthiness of the borrower. Consumer unsecured loans are more likely to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy. The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired and is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. For collateral dependent loans, an updated appraisal will be ordered if a current one is not on file. Appraisals are performed by independent third-party appraisers with the relevant industry experience. Adjustments to the appraised value may be made based on recent sales of like properties or general market conditions when appropriate. The general component covers non-classified or performing loans and those loans classified as substandard or special mention that are not impaired. The general component is based on historical loss experience adjusted for qualitative factors, such as current economic conditions, including current home sales and foreclosures, unemployment rates and retail sales. Non-impaired classified loans are assigned a higher allowance factor based on an internal migration analysis, which increases with the severity of classification, than non-classified loans. The characteristics of the loan ratings are as follows: • Pass rated loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio. The borrower has paid all obligations as agreed and it is expected that this type of payment history will continue. When necessary, acceptable personal guarantors support the loan. • Watch rated loans have all the characteristics of pass rated loans but show signs of emerging financial weaknesses which the Bank will continue monitoring more closely. Watch rated loans are still performing as agreed. • Special mention loans have a specific defined weakness in the borrower’s operations and the borrower’s ability to generate positive cash flow on a sustained basis. The borrower’s recent payment history is characterized by late payments. The Bank’s risk exposure is mitigated by collateral supporting the loan. The collateral is well-margined, well maintained, accessible and readily marketable. • Substandard loans are considered to have specific and well-defined weaknesses that jeopardize the viability of the Bank’s credit extension. The payment history for the loan has been inconsistent and the expected or projected primary repayment source may be inadequate to service the loan. The estimated net liquidation value of the collateral pledged and/or ability of the personal guarantor(s) to pay the loan may not adequately protect the Bank. There is a distinct possibility that the Bank would sustain some loss if the deficiencies associated with the loan are not corrected in the near term. A substandard loan would not automatically meet our definition of impaired unless the loan is significantly past due and the borrower’s performance and financial condition provide evidence that it is probable that the Bank will be unable to collect all amounts when due. • Doubtful rated loans have all the weaknesses inherent in a loan that is classified substandard but with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high. • Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off. Other Real Estate Owned (“OREO”) - Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less costs to sell at the date of foreclosure, establishing a new cost basis. After foreclosure, management periodically performs valuations of the foreclosed assets based on updated appraisals, general market conditions, and recent sales of like properties, length of time the properties have been held and our ability and intention with regard to continued ownership of the properties. The Bank may incur additional write-downs of foreclosed assets to fair value less costs to sell if valuations indicate a further deterioration in market values. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets and improvements are capitalized. Interest income on loans – Interest on loans is accrued and credited to income on daily balances of the principal amount outstanding. The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication that the borrower may be unable to meet payments as they become due. Upon such discontinuance, all unpaid accrued interest is reversed. Generally, the Bank will return a loan to accrual status when all delinquent interest and principal becomes current and remains current for six consecutive months under the terms of the loan agreement or the loan is well-secured or in process of collection. Upon returning to accrual status, interest payments applied to the principal balance of a loan while in nonaccrual status are recognized as a yield adjustment over the remaining life. Loan origination and commitment fees and certain related direct costs - Loan origination and commitment fees charged by the Bank and certain direct loan origination costs are deferred and the net amount is amortized as a yield adjustment. The Bank amortizes these net amounts over the life of the related loans or, in the case of demand loans, over the estimated life. Net fees related to standby letters of credit are recognized over the commitment period. Premises and equipment – Land is carried at cost. Premises and equipment are stated at cost, less accumulated depreciation and amortization computed principally on the straight-line basis over the estimated useful life of each asset, which ranges from 3 to 39 years. Leasehold improvements are amortized over the shorter of the related lease term or the estimated useful lives of the improvements. Construction in progress includes assets which will be reclassified and depreciated once placed into service. Income taxes – The Bank uses an asset and liability approach in financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future. The principal items relate primarily to differences between the allowance for loan losses, deferred loan fees, and accumulated depreciation and amortization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. As of March 31, 2021, and December 31, 2020, there were no such liabilities recorded. Interest and penalties associated with unrecognized tax benefits, if any, would be classified as additional income taxes in the statement of operations. Comprehensive income – Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although, certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. Stock compensation plans – Stock compensation accounting guidance (FASB ASC 718, “Compensation – Stock Compensation”) requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Bank’s common stock at the date of grant is used for restricted stock awards. No stock options were granted during 2021 and 2020. Earnings per share – Net income per common share has been determined under the provisions of FASB ASC 260, “Earnings Per Share” and has been computed based on the weighted average common shares outstanding during the three months ended March 31, (7,523,547 for 2021 and 8,287,317 for 2020). Diluted earnings per share reflect additional potential common shares that The only potential dilutive stock of the Company as defined in FASB ASC 260 would be stock options granted to various directors, officers, and employees of the Company. There were no such options outstanding at March 31, 2021 or March 31, 2020. Restricted stock is included in the computation of basic earnings per share as the holder is entitled to full benefits of a stockholder during the vesting period. Off-balance sheet instruments – In the ordinary course of business, the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded, or related fees are incurred or received. Advertising and marketing expense – Advertising and marketing costs are expensed as incurred. Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from the estimates. The Company’s critical accounting policies relate to (1) the allowance for loan losses, (2) fair value of financial instruments, (3) derivative financial instruments, and (4) income taxes. These critical accounting policies require the use of estimates, assumptions and judgments which are based on information available as of the date of the financial statements. Accordingly, as this information changes, future financial statements could reflect the use of different estimates, assumptions, and judgments. Certain determinations inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. In connection with the determination of the allowances for losses on loans and valuation of other real estate owned management obtains independent appraisals for significant properties. Fair value of financial instruments – Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 5. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. Derivative Financial Instruments – The Company recognizes derivative financial instruments at fair value as either another asset or other liability in the consolidated balance sheet. The Company’s derivative financial instruments include interest rate swaps with certain qualifying commercial loan customers and dealer counterparties. Because the interest rate swaps with loan customers and dealer counterparties are not designated as hedging instruments, adjustments to reflect unrealized gains and losses resulting from changes in fair value of these instruments are reported as noninterest income or noninterest expense, as applicable. The Company’s interest rate swaps with loan customers and dealer counterparties are described more fully in Note 4. Transfers of financial assets – Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank – put presumptively beyond reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Revenue Recognition Most revenue associated with the Company’s financial instruments, including interest income and gains/losses on investment securities, derivatives and sales of financial instruments are outside the scope of ASC Topic 606. The Company’s services that fall within the scope of ASC Topic 606 are presented within noninterest income and are recognized as revenue. A description of the primary revenue streams accounted for under ASC Topic 606 follows: Service Charges on Deposit Accounts. The Company earns fees from its deposit customers for overdraft and account maintenance services. Overdraft fees are recognized when the overdraft occurs. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the company satisfies the performance obligation. Other Service Charges and Fees. The Company earns fees from its customers for transaction-based services. Such services include safe deposit box, ATM, stop payment, wire transfer, Small Business Administration (“SBA”) loan originations and mortgage originations. In each case, these service charges and fees are recognized in income at the time or within the same period that the Company’s performance obligation is satisfied. Interchange Income. The Company earns interc |
Investment Securities
Investment Securities | 3 Months Ended |
Mar. 31, 2021 | |
Available For Sale Securities [Abstract] | |
Investment Securities | Note 2. Investment Securities Investment securities available-for-sale was comprised of the following: March 31, 2021 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury Securities $ 125,000 $ — $ — $ 125,000 Collateralized Mortgage Backed 22,577 230 (678 ) 22,129 Subordinated Debt 4,320 35 (15 ) 4,340 Municipal Securities 21,339 1,127 (336 ) 22,130 U.S. Governmental Agencies 6,567 — (138 ) 6,429 Total $ 179,803 $ 1,392 $ (1,167 ) $ 180,028 Investment securities held-to-maturity was comprised of the following: March 31, 2021 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Municipal Securities $ 18,686 $ 987 $ — $ 19,673 Subordinated Debt 7,741 — — 7,741 Total $ 26,427 $ 987 $ — $ 27,414 Investment securities available-for-sale was comprised of the following: December 31, 2020 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury Securities $ 90,000 $ — $ — $ 90,000 Collateralized Mortgage Backed 24,743 282 (129 ) 24,896 Subordinated Debt 3,250 29 (1 ) 3,278 Municipal Securities 21,348 1,257 — 22,605 U.S. Governmental Agencies 6,785 — (150 ) 6,635 Total $ 146,126 $ 1,568 $ (280 ) $ 147,414 Investment securities held-to-maturity was comprised of the following: December 31, 2020 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Municipal Securities $ 20,015 $ 1,058 $ — $ 21,073 Subordinated Debt 2,505 — — 2,505 Total $ 22,520 $ 1,058 $ — $ 23,578 The scheduled maturities of securities available-for-sale and held-to-maturity at March 31, 2021 were as follows: March 31, 2021 Available-for-Sale Held-to-Maturity (Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 125,001 $ 125,001 $ — $ — Due from one to five years 1,007 1,026 1,701 2,210 Due from after five to ten years 4,000 4,020 7,947 8,359 Due after ten years 49,795 49,981 16,779 16,845 Total $ 179,803 $ 180,028 $ 26,427 $ 27,414 Securities with a fair value of $267,846 and $269,075 at March 31, 2021 and December 31, 2020, respectively, were pledged to secure FHLB advances. There were no securities sold from the available-for-sale portfolio for both the three months ended March 31, 2021 and 2020. During the three months ended March 31, 2021, one held-to-maturity security was called and resulted in a gain of $3,197. The following tables summarize the unrealized loss positions of securities available-for-sale and held-to-maturity as of March 31, 2021 and December 31, 2020: March 31, 2021 Less than 12 Months 12 Months or Longer Total (Dollars in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Available-for-sale: Collateralized Mortgage Backed $ 13,831 $ (678 ) $ — $ — $ 13,831 $ (678 ) Subordinated Debt 735 (15 ) — — 735 (15 ) Municipal securities 5,317 (336 ) — — 5,317 (336 ) U.S Governmental Agencies — — 6,429 (138 ) 6,429 (138 ) Total $ 19,883 $ (1,029 ) $ 6,429 $ (138 ) $ 26,312 $ (1,167 ) December 31, 2020 Less than 12 Months 12 Months or Longer Total (Dollars in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Available-for-sale: Collateralized Mortgage Backed $ 14,971 $ (129 ) $ — $ — $ 14,971 $ (129 ) Subordinated Debt 749 (1 ) — — 749 (1 ) U.S Government Agencies — — 6,785 (150 ) 6,785 (150 ) Total $ 15,720 $ (130 ) $ 6,785 $ (150 ) $ 22,505 $ (280 ) The factors considered in evaluating securities for impairment include whether the Bank intends to sell the security, whether it is more likely than not that the Bank will be required to sell the security before recovery of its amortized cost basis, and whether the Bank expects to recover the security’s entire amortized cost basis. These unrealized losses are primarily attributable to current financial market conditions for these types of investments, particularly changes in interest rates, causing bond prices to decline, and are not attributable to credit deterioration. At March 31, 2021, there were two collateralized mortgage backed securities with fair values totaling $13.8 million were in an unrealized loss position of less than 12 months. At March 31, 2021 two subordinated debt securities with fair values totaling approximately $735,000 were in an unrealized loss position of less than 12 months. At March 31, 2021 four municipal securities with fair values totaling approximately $5.3 million were in an unrealized loss position of less than 12 months. At March 31, 2021 nine U.S. government agencies with fair values totaling approximately $6.4 million were in an unrealized loss position of more than 12 months. At March 31, 2021, there were no held-to-maturity securities in an unrealized loss position. The Bank does not consider any of the securities in the available for sale or held to maturity portfolio to be other-than-temporarily impaired at March 31, 2021 and December 31, 2020. All municipal securities originally purchased as available for sale were transferred to held to maturity during 2013. The unrealized loss on the securities transferred to held to maturity is being amortized over the expected life of the securities. The unamortized, unrealized loss, before tax, at March 31, 2021 and December 31, 2020 was $48,381 and $54,836, respectively. |
Loans Receivable
Loans Receivable | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Loans Receivable | Note 3. Loans Receivable Loans receivable were comprised of the following: (Dollars in thousands) March 31, 2021 December 31, 2020 Residential Real Estate: Single family $ 135,239 $ 139,338 Multifamily 45,556 43,332 Farmland 854 861 Commercial Real Estate: Owner-occupied 141,845 141,813 Non-owner occupied 357,288 325,085 Construction and Land Development 327,393 324,906 Commercial – Non Real-Estate: Commercial & Industrial 272,515 230,027 Consumer – Non Real-Estate: Unsecured 80 241 Secured 39,484 43,832 Total Gross Loans 1,320,254 1,249,435 Less: unearned fees (7,870 ) (6,178 ) Less: unamortized discount on consumer secured loans — (1 ) Less: allowance for loan losses (13,215 ) (12,877 ) Net Loans $ 1,299,169 $ 1,230,379 The unsecured consumer loans above include $80,000 and $241,000 of overdrafts reclassified as loans at March 31, 2021 and December 31, 2020, respectively. The commercial and industrial loans above include $179.8 million and $135.2 million in Paycheck Protection Program loans at March 31, 2021 and December 31, 2019, respectively. The Company held $0 and $57.0 million in loans for sale at March 31, 2021 and December 31, 2020, respectively. The following tables summarize the activity in the allowance for loan losses by loan class for the three months ended March 31, 2021 and 2020. Allowance for Credit Losses By Portfolio Segment Real Estate For the three months ended March 31, 2021 Residential Commercial Construction Consumer Commercial Total (Dollars in thousands) Beginning Balance $ 1,223 $ 6,552 $ 3,326 $ 371 $ 1,405 $ 12,877 Recoveries — — — 13 5 18 Provision (23 ) 343 166 (238 ) 72 320 Ending Balance $ 1,200 $ 6,895 $ 3,492 $ 146 $ 1,482 $ 13,215 Ending Balance: Individually evaluated for Impairment $ — $ — $ — $ — $ — $ — Collectively evaluated for Impairment $ 1,200 $ 6,895 $ 3,492 $ 146 $ 1,482 $ 13,215 Real Estate For the three months ended March 31, 2020 Residential Commercial Construction Consumer Commercial Total (Dollars in thousands) Beginning Balance $ 1,030 $ 4,254 $ 2,180 $ 568 $ 1,552 $ 9,584 Charge-offs — (1 ) — — (47 ) (48 ) Recoveries — — — 3 9 12 Provision (29 ) 277 108 (46 ) 40 350 Ending Balance $ 1,001 $ 4,530 $ 2,288 $ 525 $ 1,554 $ 9,898 Ending Balance: Individually evaluated for Impairment $ — $ — $ — $ — $ — $ — Collectively evaluated for Impairment $ 1,001 $ 4,530 $ 2,288 $ 525 $ 1,554 $ 9,898 The Company maintains a general allowance for loan losses based on evaluating known and inherent risks in the loan portfolio, including management’s continuing analysis of the factors underlying the quality of the loan portfolio. These factors include changes in the size and composition of the loan portfolio, actual loan loss experience, and current and anticipated economic conditions. The reserve is an estimate based upon factors and trends identified by management at the time the financial statements are prepared. The following tables summarize information in regards to the recorded investment in loans receivable by loan class as of March 31, 2021 and December 31, 2020: March 31, 2021 Loans Receivable (Dollars in thousands) Ending Balance Ending Balance: Individually Evaluated for Impairment Ending Balance: Collectively Evaluated for Impairment Residential Real Estate $ 181,649 $ 300 $ 181,349 Commercial Real Estate 499,133 1,082 498,051 Construction and Land Development 327,393 — 327,393 Commercial & Industrial 272,515 41 272,474 Consumer 39,564 — 39,564 Total $ 1,320,254 $ 1,423 $ 1,318,831 December 31, 2020 Loans Receivable (Dollars in thousands) Ending Balance Ending Balance: Individually Evaluated for Impairment Ending Balance: Collectively Evaluated for Impairment Residential Real Estate $ 182,499 $ 301 $ 182,198 Commercial Real Estate 467,930 1,088 466,842 Construction and Land Development 324,906 — 324,906 Commercial & Industrial 230,027 58 229,969 Consumer 44,073 — 44,073 Total $ 1,249,435 $ 1,447 $ 1,247,988 The following table summarizes information in regard to impaired loans by loan portfolio class as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance recorded Residential Real Estate: Single family $ 300 $ 300 $ — $ 301 $ 301 $ — Commercial Real Estate Non-owner Occupied 1,082 1,082 — 1,088 1,088 — Commercial & Industrial 41 41 — 58 58 — Total $ 1,423 $ 1,423 $ — $ 1,447 $ 1,447 $ — The following table presents additional information regarding the impaired loans for the three months ended March 31, 2021: Three Months Ended March 31, 2021 2020 (Dollars in thousands) Average Record Investment Interest Income Recognized Average Record Investment Interest Income Recognized With no related allowance recorded Residential Real Estate: Single family $ 301 $ 2 $ 1,631 $ 15 Commercial Real Estate Non-owner Occupied 1,084 16 — — Commercial & Industrial 50 1 — — Total $ 1,435 $ 19 $ 1,631 $ 15 If interest on nonaccrual loans had been accrued, such income would have been $583 and $3,718 for the three months ended March 31, 2021 and 2020. The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2021 and December 31, 2020: (Dollars in thousands) March 31, 2021 December 31, 2020 Residential Real Estate Single family $ 149 $ 149 Total $ 149 $ 149 Credit quality risk ratings include regulatory classifications of Pass, Watch, Special Mention, Substandard, Doubtful and Loss. Loans classified as Pass have quality metrics to support that the loan will be repaid according to the terms established. Loans classified as Watch have similar characteristics as Pass loans with some emerging signs of financial weaknesses that should be monitored closer. Loans classified as Special Mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of prospects for repayment. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, based on current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. The following tables summarize the aggregate Pass and criticized categories of Watch, Special Mention, and Substandard within the Company’s internal risk rating system as of March 31, 2021 and December 31, 2020: March 31, 2021 (Dollars in thousands) Pass Watch Special Mention Substandard Total Residential Real Estate: Single Family $ 132,897 $ — $ 741 $ 1,601 $ 135,239 Multifamily 45,556 — — — 45,556 Farmland 854 — — — 854 Commercial Real Estate: Owner occupied 133,081 8,764 — — 141,845 Non-owner occupied 298,371 41,300 — 17,617 357,288 Construction & Land Development 308,230 19,163 — — 327,393 Commercial – Non Real Estate: Commercial & Industrial 265,368 4,396 1,506 1,245 272,515 Consumer – Non Real Estate: Unsecured 80 — — — 80 Secured 39,484 — — — 39,484 Total $ 1,223,921 $ 73,623 $ 2,247 $ 20,463 $ 1,320,254 December 31, 2020 (Dollars in thousands) Pass Watch Special Mention Substandard Total Residential Real Estate: Single Family $ 137,937 $ — $ 738 $ 663 $ 139,338 Multifamily 43,332 — — — 43,332 Farmland 861 — — — 861 Commercial Real Estate: Owner occupied 136,257 5,556 — — 141,813 Non-owner occupied 264,546 59,453 — 1,086 325,085 Construction & Land Development 322,149 2,757 — — 324,906 Commercial – Non Real Estate: Commercial & Industrial 225,012 4,059 $ 591 365 230,027 Consumer – Non Real Estate: Unsecured 241 — — — 241 Secured 43,832 — — — 43,832 Total $ 1,174,167 $ 71,825 $ 1,329 $ 2,114 $ 1,249,435 The following tables present the segments of the loan portfolio summarized by aging categories as of March 31, 2021 and December 31, 2020: March 31, 2021 (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loans Receivable Nonaccrual Residential Real Estate: Single Family $ — $ — $ — $ — $ 135,090 $ 135,239 $ 149 Multifamily — — — — 45,556 45,556 — Farmland — — — — 854 854 — Commercial Real Estate: Owner occupied 874 — — 874 140,971 141,845 — Non-owner occupied — — — — 357,288 357,288 — Construction & Land Development — — — — 327,393 327,393 — Commercial – Non Real Estate: Commercial & Industrial — — — — 272,515 272,515 — Consumer – Non Real Estate: Unsecured — — — — 80 80 — Secured — 36 — 36 39,448 39,484 — Total $ 874 $ 36 $ — $ 910 $ 1,319,195 $ 1,320,254 $ 149 December 31, 2020 (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loans Receivable Nonaccrual Residential Real Estate: Single Family $ — $ — $ — $ — $ 139,189 $ 139,338 $ 149 Multifamily — — — — 42,300 42,300 — Farmland — — — — 861 861 — Commercial Real Estate: Owner occupied — — — — 141,813 141,813 — Non-owner occupied — — — — 326,117 326,117 — Construction & Land Development — — — — 324,906 324,906 — Commercial – Non Real Estate: Commercial & Industrial — — — — 230,027 230,027 — Consumer – Non Real Estate: Unsecured — — — — 241 241 — Secured 68 — — 68 43,764 43,832 — Total $ 68 $ — $ — $ 68 $ 1,249,218 $ 1,249,435 $ 149 The Company may grant a concession or modification for economic or legal reasons related to a borrower’s financial condition that it would not otherwise consider resulting in a modified loan that is then identified as a troubled debt restructuring (“TDR”). The Company may modify loans through rate reductions, extensions of maturity, interest only payments, or payment modifications to better match the timing of cash flows due under the modified terms with the cash flows from the borrowers’ operations. Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. TDRs are considered impaired loans for purposes of calculating the Company’s allowance for loan losses. TDRs are restored to accrual status when the obligation is brought current, has performed in accordance with the modified contractual terms for a reasonable period, generally six months, and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Troubled Debt Restructuring According to United States generally accepted accounting principles, restructuring a debt constitutes a TDR if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The CARES Act states that from March 1, 2020, until the end of the year (unless the President terminates the COVID-19 emergency declaration sooner), financial institutions may elect to suspend the TDR accounting principles for loan modifications related to COVID-19. The Consolidated Appropriations Act of 2021, enacted in December 2020, extended this relief to the earlier of January 1, 2022 or the first day of a bank’s fiscal year that begins after the national emergency ends. The Company may identify loans for potential restructure primarily through direct communication with the borrower and evaluation of the borrower’s financial statements, revenue projections, tax returns, and credit reports. Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions and negative trends may result in a payment default in the near future. As of March 31, 2021, and December 31, 2020, the Company did not have any TDRs. |
Derivatives and Risk Management
Derivatives and Risk Management Activities | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivatives and Risk Management Activities | Note 4. Derivatives and Risk Management Activities The Bank uses derivative financial instruments (or “derivatives”) primarily to assist customers with their risk management objectives. The Company classifies these items as free standing derivatives consisting of customer accommodation interest rate loan swaps (or “interest rate loan swaps”). The Bank enters into interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. The Bank simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of these interest rate swaps is that the customer pays a fixed rate of interest and the Bank receives a floating rate. These back-to-back interest rate loan swaps qualify as financial derivatives with fair values reported in “Other assets” and “Other liabilities” in the consolidated financial statements. Changes in fair value are recorded in other noninterest expense and net to zero because of the identical amounts and terms of the interest rate loan swaps. The following tables summarize key elements of the Banks’s derivative instruments as of March 31, 2021 and December 31, 2020. March 31, 2021 Customer-related interest rate contracts Dollars in thousands) Notional Amount Positions Assets Liabilities Collateral Pledges Matched interest rate swap with borrower $ 209,890 38 $ — 58 $ 15,120 Matched interest rate swap with counterparty $ 209,890 38 58 $ — $ 15,120 December 31, 2020 Customer-related interest rate contracts Dollars in thousands) Notional Amount Positions Assets Liabilities Collateral Pledges Matched interest rate swap with borrower $ 210,314 38 $ 12,152 — $ 15,120 Matched interest rate swap with counterparty $ 210,314 38 — $ 12,152 $ 15,120 The Company is able to recognize fee income upon execution of the interest rate swap contract. Interest rate swap fee income for the three months ended March 31, 2021 was $0. Interest rate swap income for the same period for 2020 was $403,000. |
Fair Value Presentation
Fair Value Presentation | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Presentation | Note 5. Fair Value Presentation In accordance with FASB ASC 820, “Fair Value Measurements and Disclosure”, the Bank uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Bank’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The fair value guidance provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous market for the asset or liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is the most representative of fair value under current market conditions. In accordance with the guidance, a hierarchy of valuation techniques is based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Bank’s market assumptions. The three levels of the fair value hierarchy under FASB ASC 820 based on these two types of inputs are as follows: Level 1 –Valuation is based on quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 –Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. Level 3 –Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. The following describes the valuation techniques used by the Bank to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements: Securities available for sale Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2). In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. As of March 31, 2021, and December 31, 2020, the Bank’s entire portfolio of available for sale securities are considered to be Level 2 securities. Derivative asset (liability) – interest rate swaps on loans As discussed in “Note 4: Derivative Financial Instruments”, the Bank recognizes interest rate swaps at fair value on a recurring basis. The Bank has contracted with a third party vendor to provide valuations for these interest rate swaps using standard valuation techniques and therefore classifies such interest rate swaps as Level 2. The following tables provide the fair value for assets required to be measured and reported at fair value on a recurring basis as of March 31, 2021 and December 31, 2020: March 31, 2021 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Investment securities available-for-sale: U.S. Treasury Securities $ — $ 125,000 $ — $ 125,000 Collateralized Mortgage Backed — 22,129 — 22,129 Subordinated Debt — 4,340 — 4,340 Municipal Securities — 22,130 — 22,130 U.S. Government Agencies — 6,429 — 6,429 Derivative asset – interest rate swap on loans — 58 — 58 Total $ — $ 180,086 $ — $ 180,086 Liabilities: Derivative liability – interest rate swap on loans — 58 — 58 Total $ — $ 58 $ — $ 58 December 31, 2020 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Investment securities available-for-sale: U.S. Treasury Securities $ — $ 90,000 $ — $ 90,000 Collateralized Mortgage Backed — 24,896 — 24,896 Subordinated Debt — 3,278 — 3,278 Municipal Securities — 22,605 — 22,605 U.S. Government Agencies — 6,635 — 6,635 Derivative asset – interest rate swap on loans — 12,152 — 12,152 Total $ — $ 159,566 $ — $ 159,566 Liabilities: Derivative liability – interest rate swap on loans — 12,152 — 12,152 Total $ — $ 12,152 $ — $ 12,152 Certain assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The following describes the valuation techniques used by the Bank to measure certain assets recorded at fair value on a nonrecurring basis in the financial statements: Impaired loans Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected when due. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair value of the collateral. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. Most of the collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Bank using observable market data (Level 2). However, if the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Bank because of marketability, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Impaired loans allocated to the Allowance for Loan Losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Statements of Income. Other real estate owned Other real estate owned (“OREO”) is measured at fair value less cost to sell, based on an appraisal conducted by an independent, licensed appraiser outside of the Bank. If the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Bank because of marketability, then the fair value is considered Level 3. OREO is measured at fair value on a nonrecurring basis. Any initial fair value adjustment is charged against the Allowance for Loan Losses. Subsequent fair value adjustments are recorded in the period incurred and included in other noninterest expense on the Statements of Income. The following table summarizes the value of the Bank’s assets as of March 31, 2021 and December 31, 2020 that were measured at fair value on a nonrecurring basis during the period: March 31, 2021 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Other Real Estate Owned $ — $ — $ 1,180 $ 1,180 Total $ — $ — $ 1,180 $ 1,180 December 31, 2020 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Other Real Estate Owned $ — $ — $ 1,180 $ 1,180 Total $ — $ — $ 1,180 $ 1,180 The following table summarizes the value of the Bank’s assets as of March 31, 2021 that were measured at fair value on a nonrecurring basis during the period: Fair Value Measurements at March 31, 2021 (Dollars in thousands) Fair Value Valuation Technique(s) Unobservable Inputs Range of Inputs Other Real Estate Owned, net $ 1,180 Appraisals Discount to reflect current market conditions and estimated selling costs. 6% - 10% Total $ 1,180 Fair Value of Financial Instruments FASB ASC 825, Financial Instruments, requires disclosure about fair value of financial instruments, including those financial assets and financial liabilities that are not required to be measured and reported at fair value on a recurring or nonrecurring basis. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. In accordance with ASU 2016-01, the Company uses the exit price notion, rather than the entry price notion, in calculating the fair values of financial instruments not measured at fair value on a recurring basis. The following tables reflect the carrying amounts and estimated fair values of the Company’s financial instruments whether or not recognized on the Consolidated Balance Sheets at fair value. March 31, 2021 Carrying Estimated Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Dollars in thousands) Amount Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 169,997 $ 169,997 $ 169,997 $ — $ — Restricted equity securities 4,664 4,664 — 4,664 — Securities: Available for sale 180,028 180,028 — 180,028 — Held to maturity 26,427 27,414 — 27,414 — Loans, net 1,299,169 1,331,604 — — 1,331,604 Derivative asset – interest rate swap on loans 58 58 — 58 — Bank owned life insurance 25,518 25,518 — 25,518 — Accrued interest receivable 9,043 9,043 — 9,043 — Liabilities: Deposits $ 1,538,142 $ 1,525,405 $ — $ 976,370 $ 549,035 Derivative liability – interest rate swaps on loans 58 58 — 58 — Accrued interest payable 642 642 — 642 — December 31, 2020 Carrying Estimated Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Dollars in thousands) Amount Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 107,528 $ 107,528 $ 107,528 $ — $ — Restricted equity securities 4,616 4,616 — 4,616 — Securities: Available for sale 147,414 147,414 — 147,414 — Held to maturity 22,520 23,578 — 23,578 — Loans, net 1,230,379 1,259,671 — — 1,259,671 Loans held for sale 57,006 58,930 — — 58,930 Derivative asset – interest rate swap on loans 12,152 12,152 — 12,152 — Bank owned life insurance 25,341 25,341 — 25,341 — Accrued interest receivable 9,154 9,154 — 9,154 — Liabilities: Deposits $ 1,438,246 $ 1,451,708 $ — $ 941,503 $ 510,205 Derivative liability – interest rate swaps on loans 12,152 12,152 — 12,152 — Accrued interest payable 490 490 — 490 — The above information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. There were no changes in methodologies or transfers between levels at March 31, 2021 from December 31, 2020. |
Earnings Per Common Share
Earnings Per Common Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Note 6. Earnings Per Common Share Basic earnings per common share excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock which then shared in the earnings of the Bank. There were no such potentially dilutive securities outstanding in 2021 or 2020. The weighted average number of shares used in the calculation of basic and diluted earnings per common share includes unvested restricted shares of the Company’s common stock outstanding. Applicable guidance requires that outstanding un-vested share-based payment awards that contain voting rights and rights to non-forfeitable dividends participate in undistributed earnings with common shareholders. For the Three Months Ended March 31, (Dollars in thousands, except for per share data) 2021 2020 Net income available to common shareholders $ 4,911 $ 3,470 Weighted average number of common shares issued, basic and diluted 7,523,547 8,287,317 Net income per common share: Basic and diluted income per common share $ 0.65 $ 0.42 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | Note 7. Accumulated Other Comprehensive Income The following table presents the cumulative balances of the components of accumulated other comprehensive income, net of deferred taxes, as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Unrealized gain on securities $ 225 $ 1,287 Unrealized loss on securities transferred to HTM (49 ) (55 ) Tax effect (21 ) (255 ) Total accumulated other comprehensive income $ 155 $ 977 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Leases | Note 8. Leases Right-of-use assets and lease liabilities are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets. Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. The incremental borrowing rate was equal to the rate of borrowing from the FHLB that aligned with the term of the lease contract. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs, and any incentives received from the lessor. The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations. Cash paid for amounts included in the measurement of lease liabilities during the three months ended March 31, 2021 was $130,000. During the three months ended March 31, 2021 and 2020, the Company recognized lease expense of $128,000 and $147,000, respectively. As of March 31, (Dollars in thousands) 2021 Lease liabilities $ 7,881 Right-of-use assets $ 7,485 Weighted-average remaining lease term – operating leases (in months). 180.1 Weighted-average discount rate – operating leases 2.82 % For the three months ended March 31, (Dollars in thousands) 2021 Lease Cost Operating lease cost $ 128 Total lease costs $ 128 Cash paid for amounts included in measurement of lease liabilities $ 130 The Company is the lessor for three operating leases. One lease is extended on a month-to-month basis while two of these leases have arrangements for over twelve months with an option to extend the lease terms. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations. Total rent income on these operating leases is approximately $6,000 per month. During the three months ending March 31, 2021, the Company entered into one new operating lease. This lease is intended to be used as an operation center to accommodate the growing efforts of the Company. As of March 31, 2021, all of the Company’s lease obligations are classified as operating leases. The Company does not have any finance lease obligations. A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities as of March 31, 2021 is as follows: (Dollars in thousands) 2021 $ 533 2022 607 2023 638 2024 654 2025 671 Thereafter 6,837 Total undiscounted cash flows $ 9,940 Discount (2,059 ) Lease liabilities $ 7,881 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9. Subsequent Events On April 6, 2021, MainStreet Bancshares, Inc. entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with the purchasers signatory thereto providing for a private placement of $30.0 million in aggregate principal amount of 3.75% Fixed-to-Floating Rate Subordinated Notes Due 2031 (the “Notes”). The Notes were issued by the Company to the purchasers at a price equal to 100% of their face amount. On April 20, 2021, the Company extinguished $3.6 million of previous subordinated debt. |
Organization, Basis of Presen_2
Organization, Basis of Presentation and Impact of Recently Issued Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization | Organization MainStreet Bancshares Inc. (the “Company”) is a bank holding company incorporated under the laws of the Commonwealth of Virginia whose principal activity is the ownership and management of MainStreet Bank. The Company is authorized to issue 10,000,000 shares of common stock with a par value of $4.00 per share. Additionally, the Company is authorized to issue 2,000,000 shares of preferred stock at a par value $1.00 per share. There is currently 28,750 shares of preferred stock outstanding. The Company is regulated under the Bank Holding Company Act of 1956, as amended (“BHC Act”) and is subject to inspection, examination, and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). On April 18, 2019, the Company completed the registration of its common stock with the Securities Exchange Commission through its filing of a General Form for Registration of Securities on Form 10 (“Form 10”), pursuant to Section 12(b) of the Securities Exchange Act of 1934. The Company is considered an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act,” and as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities Act.” We are also a “smaller reporting company” as defined in Exchange Act Rule 12b-2. As such, we may elect to comply with certain reduced public company reporting requirements in future reports that we file with the Securities and Exchange Commission, or the “SEC.” We were approved to list shares of our common stock on the Nasdaq Capital Market under our current symbol “MNSB” as of April 22, 2019. We were approved to list shares of preferred stock on the Nasdaq Capital Market on the symbol “MNSBP” as of September 16, 2020. MainStreet Bank (the “Bank”) is headquartered in Fairfax, Virginia where it also operates a branch. The Bank was incorporated on March 28, 2003 and received its charter from the Bureau of Financial Institutions of the Commonwealth of Virginia (the “Bureau”) on March 16, 2004. The Bank commenced regular operations on May 26, 2004 and is supervised by the Bureau and the Federal Reserve Bank. The Bank is a member of the Federal Reserve System and the Federal Deposit Insurance Corporation. The Bank places special emphasis on serving the needs of individuals, and small and medium-sized business and professional concerns in the Washington, D.C. metropolitan area. |
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) for interim information and with the instructions to the Quarterly Report on Form 10-Q, as applicable to a smaller reporting company. Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements. The financial statements are unaudited; but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation thereof. The balances as of December 31, 2020 have been derived from the audited consolidated financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto contained in the Form 10-K filed by the Company with the U.S. Securities and Exchange Commission on March 23, 2021. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, or any other period. |
Principles of Consolidation | Principles of Consolidation – The unaudited interim consolidated financial statements include accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany transactions and balances have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and cash equivalents – For the purpose of presentation in the Statements of Cash Flows, the Bank has defined cash and cash equivalents as those amounts included in the balance sheet captions “Cash and due from banks” and “Federal funds sold.” |
Investment Securities | Investment securities – The Bank’s investment securities are classified as either held to maturity, available for sale or trading. At March 31, 2021 and December 31, 2020, the Bank held approximately $26.4 million and $22.5 million, respectively, in securities classified as held to maturity. The Bank held no securities classified as trading. Municipal securities that were originally purchased as available for sale were transferred to held to maturity during 2013. The unrealized loss on the securities transferred to held to maturity is being amortized over the expected life of the securities. At March 31, 2021 and December 31, 2020, the unamortized unrealized loss was $48,381 and $54,836, respectively, before tax, and remains in accumulated other comprehensive income, net of tax. Securities which are not classified as held to maturity or trading are classified as securities available for sale. Securities available for sale are reported at fair value. Any unrealized gain or loss, net of applicable income taxes, is reported as a separate addition to or reduction from stockholders’ equity. Gains and losses arising from the sale of securities available for sale are recognized based on the specific identification method on a trade-date basis and included in results of operations. Securities held to maturity include securities purchased with the ability and positive intent to hold to maturity. Debt securities are stated at historical cost adjusted for amortization of premiums and accretion of discount. Any investment security, for which there has been a value impairment deemed by management to be other than temporary, is written down to its estimated fair value with a charge to current operations. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of held to maturity and available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In determining whether other-than-temporary impairment exists, management considers many factors, including (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Bank intends to sell the security, whether it is more likely than not that the Bank will be required to sell the security before recovery of its amortized cost basis, and whether the Bank expects to recover the security’s entire amortized cost basis. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. Restricted equity securities consist of the Federal Reserve Bank of Richmond and Federal Home Loan Bank of Atlanta (“FHLB”) stock in the amount of $3.7 million and $821,800 respectively, as of March 31, 2021, compared to $3.3 million and $1.1 million, respectively, as of December 31, 2020. Restricted equity securities also consisted of $126,800 in Community Bankers Bank stock at March 31, 2021 and December 31, 2020. This restricted stock is recorded at cost because its ownership is restricted, and it lacks a market for resale. The Bank is required to maintain Federal Reserve Bank stock at a level of 6% of capital and surplus. The FHLB requires the Bank to maintain stock, at a minimum, in an amount equal to 4.5% of outstanding borrowings and 0.20% of total assets. When evaluating restricted stock for impairment, its value is based on ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Bank does not consider these investments to be impaired at March 31, 2021 or December 31, 2020 and no previous impairment has been recognized. |
Loans Held for Sale | Loans held for sale - Loans intended for sale are recorded at the lower aggregate cost or fair value as of the balance sheet date. Gains and losses on loan sales are determined by the specific-identification method. |
Loans | Loans - The Bank makes commercial and consumer loans to customers. Our recorded investment in loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, generally are reported at their unpaid principal balances adjusted for charge-offs, unearned discounts, any deferred fees or costs on originated loans, and the allowance for loan losses. Interest on loans is credited to operations based on the principal amount outstanding. Loan fees and origination costs are deferred, and the net amount is amortized as an adjustment of the related loan’s yield using the effective interest method. The Bank is amortizing these amounts over the contractual life of the related loans. A loan’s past due status is based on the contractual due date of the most delinquent payment due. All loans which are 30 or more days past due at the end of the month are reported to the Board of Directors. Commercial loans are generally placed on nonaccrual status when the collection of principal or interest is 90 days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower. Consumer loans are generally placed on nonaccrual status when the collection of principal or interest is 120 days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower. Loans greater than 90 days past due may remain on accrual status if management determines it has adequate collateral to cover the principal and interest. For those loans that are carried on nonaccrual status, payments are first applied to principal outstanding. A loan may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed. It is Bank policy to charge-off loans whose collectability is sufficiently questionable and can no longer be justified as an asset on the balance sheet. To determine if a loan should be charged-off, all possible sources of repayment are analysed, including: (1) the potential for future cash flow, (2) the value of the Bank’s collateral, and (3) the strength of co-makers or guarantors. All principal and previously accrued interest is charged to the allowance for loan losses. All future payments received on the loan are credited to the allowance for loan losses as a recovery. These policies are applied consistently across our loan portfolio. Impairment of a loan - The Bank considers a loan impaired when it is probable that the Bank will be unable to collect all interest and principal payments as scheduled in the loan agreement. A loan is not considered impaired during a period of an insignificant delay in payment if the ultimate collectability of all amounts due is expected. Impairment is measured on a loan-by-loan basis for all commercial, construction and residential loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Consistent with the Bank’s method for nonaccrual loans, payments on impaired loans are first applied to principal outstanding. Smaller balance consumer loans are not individually evaluated for impairment. Troubled Debt Restructuring (TDR) occurs when the Bank agrees to modify the original terms of a loan due to the deterioration in the financial condition of the borrower. TDRs are considered impaired loans. Upon designation as a TDR, the Bank evaluates the borrower’s payment history, past due status and ability to make payments based on the revised terms of the loan. If a loan was accruing prior to being modified as a TDR and if the Bank concludes that the borrower is able to continue making such payments, and there are no other factors or circumstances that would cause it to conclude otherwise, the loan will remain on an accruing status. If a loan was on nonaccrual status at the time of the TDR, the loan will remain on nonaccrual status following the modification and may be returned to accrual status based on the policy for returning loans to accrual status as noted above. Restructured loans for which there was no rate concession, and therefore made at a market rate of interest, may be eligible to be removed from TDR status in periods after the restructuring depending on the performance of the loan. As of March 31, 2021, and December 31, 2020, the Bank had no loans classified as TDR’s. For additional discussion see “Note 3. Loans Receivable” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Allowance for Loan Losses - The allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. Loan losses are charged against the allowance for loan losses for the difference between the carrying value of the loan and the estimated net realizable value or fair value of the collateral, if collateral dependent, when: • Management believes that the collectability of the principal is unlikely regardless of delinquency status. • The loan is a consumer loan and is 120 days past due. • The loan is a non-consumer loan, and is 90 days past due, unless the loan is well secured, and recovery is probable. • The borrower is in bankruptcy, unless the debt has been reaffirmed, is well secured and recovery is probable. Subsequent recoveries, if any, are credited to the allowance. The allowance represents an amount that, in management’s judgment, will be adequate to absorb probable losses inherent in the loan portfolio. Management’s judgment in determining the level of the allowance is based on evaluations of the collectability of loans while taking into consideration such factors as trends in delinquencies and charge-offs, changes in the nature and volume of the loan portfolio, current economic conditions that may affect a borrower’s ability to repay and the value of collateral, overall portfolio quality and review of specific potential losses. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. The evaluation also considers the following risk characteristics of each loan portfolio segment: • Real estate residential mortgage loans, including equity lines of credit, carry risks associated with the continued creditworthiness of the borrower and the changes in the value of the collateral. • Real estate construction loans and land improvement carry risks that the project will not be finished according to schedule, the project will not be finished according to budget and the value of the collateral may, at any point in time, be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be a loan customer, may be unable to finish the construction project as planned because of financial pressure unrelated to the project. • Commercial real estate loans carry risks of the client’s ability to repay the loan from the cash flow derived from the underlying real estate. Risks inherent in managing a commercial real estate portfolio relate to sudden or gradual drops in property values as well as changes in the economic climate. Real estate security diminishes risks only to the extent that a market exists for the subject collateral. These risks are attempted to be mitigated by carefully underwriting loans of this type and by following appropriate loan-to-value standards. • Commercial and industrial loans carry risks associated with the successful operation of a business or a real estate project, in addition to other risks associated with the ownership of real estate, because the repayment of these loans may be dependent upon the profitability and cash flows of the business or project. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision. • Consumer secured loans (indirect lending) carry risks associated with the continued creditworthiness of the borrower and the value of the collateral (e.g., rapidly depreciating assets such as automobiles). These risks are attempted to be mitigated by following appropriate loan-to-value standards and an experienced management team for this type of portfolio. • Consumer unsecured loans (credit cards) carry risks associated with the continued credit-worthiness of the borrower. Consumer unsecured loans are more likely to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy. The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired and is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. For collateral dependent loans, an updated appraisal will be ordered if a current one is not on file. Appraisals are performed by independent third-party appraisers with the relevant industry experience. Adjustments to the appraised value may be made based on recent sales of like properties or general market conditions when appropriate. The general component covers non-classified or performing loans and those loans classified as substandard or special mention that are not impaired. The general component is based on historical loss experience adjusted for qualitative factors, such as current economic conditions, including current home sales and foreclosures, unemployment rates and retail sales. Non-impaired classified loans are assigned a higher allowance factor based on an internal migration analysis, which increases with the severity of classification, than non-classified loans. The characteristics of the loan ratings are as follows: • Pass rated loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio. The borrower has paid all obligations as agreed and it is expected that this type of payment history will continue. When necessary, acceptable personal guarantors support the loan. • Watch rated loans have all the characteristics of pass rated loans but show signs of emerging financial weaknesses which the Bank will continue monitoring more closely. Watch rated loans are still performing as agreed. • Special mention loans have a specific defined weakness in the borrower’s operations and the borrower’s ability to generate positive cash flow on a sustained basis. The borrower’s recent payment history is characterized by late payments. The Bank’s risk exposure is mitigated by collateral supporting the loan. The collateral is well-margined, well maintained, accessible and readily marketable. • Substandard loans are considered to have specific and well-defined weaknesses that jeopardize the viability of the Bank’s credit extension. The payment history for the loan has been inconsistent and the expected or projected primary repayment source may be inadequate to service the loan. The estimated net liquidation value of the collateral pledged and/or ability of the personal guarantor(s) to pay the loan may not adequately protect the Bank. There is a distinct possibility that the Bank would sustain some loss if the deficiencies associated with the loan are not corrected in the near term. A substandard loan would not automatically meet our definition of impaired unless the loan is significantly past due and the borrower’s performance and financial condition provide evidence that it is probable that the Bank will be unable to collect all amounts when due. • Doubtful rated loans have all the weaknesses inherent in a loan that is classified substandard but with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high. • Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off. Other Real Estate Owned (“OREO”) - Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less costs to sell at the date of foreclosure, establishing a new cost basis. After foreclosure, management periodically performs valuations of the foreclosed assets based on updated appraisals, general market conditions, and recent sales of like properties, length of time the properties have been held and our ability and intention with regard to continued ownership of the properties. The Bank may incur additional write-downs of foreclosed assets to fair value less costs to sell if valuations indicate a further deterioration in market values. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets and improvements are capitalized. Interest income on loans – Interest on loans is accrued and credited to income on daily balances of the principal amount outstanding. The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication that the borrower may be unable to meet payments as they become due. Upon such discontinuance, all unpaid accrued interest is reversed. Generally, the Bank will return a loan to accrual status when all delinquent interest and principal becomes current and remains current for six consecutive months under the terms of the loan agreement or the loan is well-secured or in process of collection. Upon returning to accrual status, interest payments applied to the principal balance of a loan while in nonaccrual status are recognized as a yield adjustment over the remaining life. Loan origination and commitment fees and certain related direct costs - Loan origination and commitment fees charged by the Bank and certain direct loan origination costs are deferred and the net amount is amortized as a yield adjustment. The Bank amortizes these net amounts over the life of the related loans or, in the case of demand loans, over the estimated life. Net fees related to standby letters of credit are recognized over the commitment period. |
Premises and Equipment | Premises and equipment – Land is carried at cost. Premises and equipment are stated at cost, less accumulated depreciation and amortization computed principally on the straight-line basis over the estimated useful life of each asset, which ranges from 3 to 39 years. Leasehold improvements are amortized over the shorter of the related lease term or the estimated useful lives of the improvements. Construction in progress includes assets which will be reclassified and depreciated once placed into service. |
Income Taxes | Income taxes – The Bank uses an asset and liability approach in financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future. The principal items relate primarily to differences between the allowance for loan losses, deferred loan fees, and accumulated depreciation and amortization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. As of March 31, 2021, and December 31, 2020, there were no such liabilities recorded. Interest and penalties associated with unrecognized tax benefits, if any, would be classified as additional income taxes in the statement of operations. |
Comprehensive Income | Comprehensive income – Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although, certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. |
Stock Compensation Plans | Stock compensation plans – Stock compensation accounting guidance (FASB ASC 718, “Compensation – Stock Compensation”) requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Bank’s common stock at the date of grant is used for restricted stock awards. No stock options were granted during 2021 and 2020. |
Earnings Per Share | Earnings per share – Net income per common share has been determined under the provisions of FASB ASC 260, “Earnings Per Share” and has been computed based on the weighted average common shares outstanding during the three months ended March 31, (7,523,547 for 2021 and 8,287,317 for 2020). Diluted earnings per share reflect additional potential common shares that The only potential dilutive stock of the Company as defined in FASB ASC 260 would be stock options granted to various directors, officers, and employees of the Company. There were no such options outstanding at March 31, 2021 or March 31, 2020. Restricted stock is included in the computation of basic earnings per share as the holder is entitled to full benefits of a stockholder during the vesting period. |
Off-balance Sheet Instruments | Off-balance sheet instruments – In the ordinary course of business, the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded, or related fees are incurred or received. |
Advertising and Marketing Expense | Advertising and marketing expense – Advertising and marketing costs are expensed as incurred. |
Use of Estimates | Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from the estimates. The Company’s critical accounting policies relate to (1) the allowance for loan losses, (2) fair value of financial instruments, (3) derivative financial instruments, and (4) income taxes. These critical accounting policies require the use of estimates, assumptions and judgments which are based on information available as of the date of the financial statements. Accordingly, as this information changes, future financial statements could reflect the use of different estimates, assumptions, and judgments. Certain determinations inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. In connection with the determination of the allowances for losses on loans and valuation of other real estate owned management obtains independent appraisals for significant properties. |
Fair Value of Financial Instruments | Fair value of financial instruments – Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 5. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. |
Derivative Financial Instruments | Derivative Financial Instruments – The Company recognizes derivative financial instruments at fair value as either another asset or other liability in the consolidated balance sheet. The Company’s derivative financial instruments include interest rate swaps with certain qualifying commercial loan customers and dealer counterparties. Because the interest rate swaps with loan customers and dealer counterparties are not designated as hedging instruments, adjustments to reflect unrealized gains and losses resulting from changes in fair value of these instruments are reported as noninterest income or noninterest expense, as applicable. The Company’s interest rate swaps with loan customers and dealer counterparties are described more fully in Note 4. |
Transfers of Financial Assets | Transfers of financial assets – Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank – put presumptively beyond reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. |
Revenue Recognition | Revenue Recognition Most revenue associated with the Company’s financial instruments, including interest income and gains/losses on investment securities, derivatives and sales of financial instruments are outside the scope of ASC Topic 606. The Company’s services that fall within the scope of ASC Topic 606 are presented within noninterest income and are recognized as revenue. A description of the primary revenue streams accounted for under ASC Topic 606 follows: Service Charges on Deposit Accounts. The Company earns fees from its deposit customers for overdraft and account maintenance services. Overdraft fees are recognized when the overdraft occurs. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the company satisfies the performance obligation. Other Service Charges and Fees. The Company earns fees from its customers for transaction-based services. Such services include safe deposit box, ATM, stop payment, wire transfer, Small Business Administration (“SBA”) loan originations and mortgage originations. In each case, these service charges and fees are recognized in income at the time or within the same period that the Company’s performance obligation is satisfied. Interchange Income. The Company earns interchange fees from debit and credit cardholder transactions conducted through various payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services. Swap Fee Income. The Company earns fees from certain qualifying commercial loan customers for entering into interest rate swaps in order for the customer to receive a fixed rate of interest while the Company receives a floating rate. In each case, there are fees that are recognized in income as the time or within the same period that the Company’s performance obligation is satisfied. |
Impact of Recently Issued Accounting Pronouncements and Recently Adopted Accounting Developments | Impact of Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The FASB has issued multiple updates to ASU 2016-13 as codified in Topic 326, including ASU’s 2019-04, 2019-05, 2019-10, 2019-11, 2020-02, and 2020-03. These ASU’s have provided for various minor technical corrections and improvements to the codification as well as other transition matters. Smaller reporting companies who file with the U.S. Securities and Exchange Commission (SEC) and all other entities who do not file with the SEC are required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently assessing the impact that ASU 2016-13 will have on its consolidated financial statements. The Company has formed a Committee to oversee the accounting impact of this ASU. In anticipation of the ASU, the Company is working with a third party to compile data and develop an estimate using historical and qualitative data based on the requirements of ASU 2016-13. Effective November 25, 2019, the SEC adopted Staff Accounting Bulletin (SAB) 119. SAB 119 updated portions of SEC interpretative guidance to align with FASB ASC 326, “Financial Instruments – Credit Losses.” It covers topics including (1) measuring current expected credit losses; (2) development, governance, and documentation of a systematic methodology; (3) documenting the results of a systematic methodology; and (4) validating a systematic methodology. In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. Subsequently, in January 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2021-01 “Reference Rate Reform (Topic 848): Scope.” This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. An entity may elect to apply ASU No. 2021-01 on contract modifications that change the interest rate used for margining, discounting, or contract price alignment retrospectively as of any date from the beginning of the interim period that includes March 12, 2020, or prospectively to new modifications from any date within the interim period that includes or is subsequent to January 7, 2021, up to the date that financial statements are available to be issued. An entity may elect to apply ASU No. 2021-01 to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020, and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. The Company is monitoring developments into rates that may be acceptable alternatives to LIBOR and working with those we have a relationship with that could be impacted by a change in reference rate from LIBOR. The Company is assessing ASU 2020-04 and its impact on the Company’s transition away from LIBOR for its loan and other financial instruments. In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06 “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas. In addition, the amendment updates the disclosure requirements for convertible instruments to increase the information transparency. For public business entities, excluding smaller reporting companies, the amendments in the ASU are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2020-06 to have a material impact on its consolidated financial statements. Recently Adopted Accounting Developments In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes.” The ASU is expected to reduce cost and complexity related to the accounting for income taxes by removing specific exceptions to general principles in Topic 740 (eliminating the need for an organization to analyze whether certain exceptions apply in a given period) and improving financial statement preparers’ application of certain income tax-related guidance. This ASU is part of the FASB’s simplification initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. ASU 2019-12 was effective for the Company on January 1, 2021. There was no material impact on the Company’s consolidated financial statements. In January 2020, the FASB issued ASU 2020-01, “Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. ASU 2020-01 was effective for the Company on January 1, 2021. In October 2020, the FASB issued ASU 2020-08, “Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable fees and Other Costs.” This ASU clarifies that an entity should re-evaluate whether a callable debt security is within the scope of ASC paragraph 310-20-35-33 for each reporting period. ASU 2020-08 was effective for the Company on January 1, 2021. There was no material impact on the Company’s consolidated financial statements. |
Investment Securities (Tables)
Investment Securities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Available For Sale Securities [Abstract] | |
Schedule of Investment Securities Available-for-Sale | Investment securities available-for-sale was comprised of the following: March 31, 2021 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury Securities $ 125,000 $ — $ — $ 125,000 Collateralized Mortgage Backed 22,577 230 (678 ) 22,129 Subordinated Debt 4,320 35 (15 ) 4,340 Municipal Securities 21,339 1,127 (336 ) 22,130 U.S. Governmental Agencies 6,567 — (138 ) 6,429 Total $ 179,803 $ 1,392 $ (1,167 ) $ 180,028 Investment securities available-for-sale was comprised of the following: December 31, 2020 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury Securities $ 90,000 $ — $ — $ 90,000 Collateralized Mortgage Backed 24,743 282 (129 ) 24,896 Subordinated Debt 3,250 29 (1 ) 3,278 Municipal Securities 21,348 1,257 — 22,605 U.S. Governmental Agencies 6,785 — (150 ) 6,635 Total $ 146,126 $ 1,568 $ (280 ) $ 147,414 |
Schedule of Investment Securities Held-to-Maturity | Investment securities held-to-maturity was comprised of the following: March 31, 2021 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Municipal Securities $ 18,686 $ 987 $ — $ 19,673 Subordinated Debt 7,741 — — 7,741 Total $ 26,427 $ 987 $ — $ 27,414 Investment securities held-to-maturity was comprised of the following: December 31, 2020 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Municipal Securities $ 20,015 $ 1,058 $ — $ 21,073 Subordinated Debt 2,505 — — 2,505 Total $ 22,520 $ 1,058 $ — $ 23,578 |
Schedule of Scheduled Maturities of Securities Available-for-Sale and Held-to-Maturity | The scheduled maturities of securities available-for-sale and held-to-maturity at March 31, 2021 were as follows: March 31, 2021 Available-for-Sale Held-to-Maturity (Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 125,001 $ 125,001 $ — $ — Due from one to five years 1,007 1,026 1,701 2,210 Due from after five to ten years 4,000 4,020 7,947 8,359 Due after ten years 49,795 49,981 16,779 16,845 Total $ 179,803 $ 180,028 $ 26,427 $ 27,414 |
Schedule of Unrealized Loss Positions of Securities Available-for-Sale and Held-to-Maturity | The following tables summarize the unrealized loss positions of securities available-for-sale and held-to-maturity as of March 31, 2021 and December 31, 2020: March 31, 2021 Less than 12 Months 12 Months or Longer Total (Dollars in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Available-for-sale: Collateralized Mortgage Backed $ 13,831 $ (678 ) $ — $ — $ 13,831 $ (678 ) Subordinated Debt 735 (15 ) — — 735 (15 ) Municipal securities 5,317 (336 ) — — 5,317 (336 ) U.S Governmental Agencies — — 6,429 (138 ) 6,429 (138 ) Total $ 19,883 $ (1,029 ) $ 6,429 $ (138 ) $ 26,312 $ (1,167 ) December 31, 2020 Less than 12 Months 12 Months or Longer Total (Dollars in thousands) Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Available-for-sale: Collateralized Mortgage Backed $ 14,971 $ (129 ) $ — $ — $ 14,971 $ (129 ) Subordinated Debt 749 (1 ) — — 749 (1 ) U.S Government Agencies — — 6,785 (150 ) 6,785 (150 ) Total $ 15,720 $ (130 ) $ 6,785 $ (150 ) $ 22,505 $ (280 ) |
Loans Receivable (Tables)
Loans Receivable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Schedule of Loan Receivable | Loans receivable were comprised of the following: (Dollars in thousands) March 31, 2021 December 31, 2020 Residential Real Estate: Single family $ 135,239 $ 139,338 Multifamily 45,556 43,332 Farmland 854 861 Commercial Real Estate: Owner-occupied 141,845 141,813 Non-owner occupied 357,288 325,085 Construction and Land Development 327,393 324,906 Commercial – Non Real-Estate: Commercial & Industrial 272,515 230,027 Consumer – Non Real-Estate: Unsecured 80 241 Secured 39,484 43,832 Total Gross Loans 1,320,254 1,249,435 Less: unearned fees (7,870 ) (6,178 ) Less: unamortized discount on consumer secured loans — (1 ) Less: allowance for loan losses (13,215 ) (12,877 ) Net Loans $ 1,299,169 $ 1,230,379 |
Schedule of Allowance for Credit Losses by Portfolio Segment | The following tables summarize the activity in the allowance for loan losses by loan class for the three months ended March 31, 2021 and 2020. Allowance for Credit Losses By Portfolio Segment Real Estate For the three months ended March 31, 2021 Residential Commercial Construction Consumer Commercial Total (Dollars in thousands) Beginning Balance $ 1,223 $ 6,552 $ 3,326 $ 371 $ 1,405 $ 12,877 Recoveries — — — 13 5 18 Provision (23 ) 343 166 (238 ) 72 320 Ending Balance $ 1,200 $ 6,895 $ 3,492 $ 146 $ 1,482 $ 13,215 Ending Balance: Individually evaluated for Impairment $ — $ — $ — $ — $ — $ — Collectively evaluated for Impairment $ 1,200 $ 6,895 $ 3,492 $ 146 $ 1,482 $ 13,215 Real Estate For the three months ended March 31, 2020 Residential Commercial Construction Consumer Commercial Total (Dollars in thousands) Beginning Balance $ 1,030 $ 4,254 $ 2,180 $ 568 $ 1,552 $ 9,584 Charge-offs — (1 ) — — (47 ) (48 ) Recoveries — — — 3 9 12 Provision (29 ) 277 108 (46 ) 40 350 Ending Balance $ 1,001 $ 4,530 $ 2,288 $ 525 $ 1,554 $ 9,898 Ending Balance: Individually evaluated for Impairment $ — $ — $ — $ — $ — $ — Collectively evaluated for Impairment $ 1,001 $ 4,530 $ 2,288 $ 525 $ 1,554 $ 9,898 |
Schedule of Investment in Loans Receivable by Loan Class | The following tables summarize information in regards to the recorded investment in loans receivable by loan class as of March 31, 2021 and December 31, 2020: March 31, 2021 Loans Receivable (Dollars in thousands) Ending Balance Ending Balance: Individually Evaluated for Impairment Ending Balance: Collectively Evaluated for Impairment Residential Real Estate $ 181,649 $ 300 $ 181,349 Commercial Real Estate 499,133 1,082 498,051 Construction and Land Development 327,393 — 327,393 Commercial & Industrial 272,515 41 272,474 Consumer 39,564 — 39,564 Total $ 1,320,254 $ 1,423 $ 1,318,831 December 31, 2020 Loans Receivable (Dollars in thousands) Ending Balance Ending Balance: Individually Evaluated for Impairment Ending Balance: Collectively Evaluated for Impairment Residential Real Estate $ 182,499 $ 301 $ 182,198 Commercial Real Estate 467,930 1,088 466,842 Construction and Land Development 324,906 — 324,906 Commercial & Industrial 230,027 58 229,969 Consumer 44,073 — 44,073 Total $ 1,249,435 $ 1,447 $ 1,247,988 |
Schedule of Impaired Loan | The following table summarizes information in regard to impaired loans by loan portfolio class as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance recorded Residential Real Estate: Single family $ 300 $ 300 $ — $ 301 $ 301 $ — Commercial Real Estate Non-owner Occupied 1,082 1,082 — 1,088 1,088 — Commercial & Industrial 41 41 — 58 58 — Total $ 1,423 $ 1,423 $ — $ 1,447 $ 1,447 $ — The following table presents additional information regarding the impaired loans for the three months ended March 31, 2021: Three Months Ended March 31, 2021 2020 (Dollars in thousands) Average Record Investment Interest Income Recognized Average Record Investment Interest Income Recognized With no related allowance recorded Residential Real Estate: Single family $ 301 $ 2 $ 1,631 $ 15 Commercial Real Estate Non-owner Occupied 1,084 16 — — Commercial & Industrial 50 1 — — Total $ 1,435 $ 19 $ 1,631 $ 15 |
Schedule of Nonaccrual Loans by Classes of the Loan Portfolio | The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2021 and December 31, 2020: (Dollars in thousands) March 31, 2021 December 31, 2020 Residential Real Estate Single family $ 149 $ 149 Total $ 149 $ 149 |
Schedule of Financing Receivable Credit Quality Indicators | The following tables summarize the aggregate Pass and criticized categories of Watch, Special Mention, and Substandard within the Company’s internal risk rating system as of March 31, 2021 and December 31, 2020: March 31, 2021 (Dollars in thousands) Pass Watch Special Mention Substandard Total Residential Real Estate: Single Family $ 132,897 $ — $ 741 $ 1,601 $ 135,239 Multifamily 45,556 — — — 45,556 Farmland 854 — — — 854 Commercial Real Estate: Owner occupied 133,081 8,764 — — 141,845 Non-owner occupied 298,371 41,300 — 17,617 357,288 Construction & Land Development 308,230 19,163 — — 327,393 Commercial – Non Real Estate: Commercial & Industrial 265,368 4,396 1,506 1,245 272,515 Consumer – Non Real Estate: Unsecured 80 — — — 80 Secured 39,484 — — — 39,484 Total $ 1,223,921 $ 73,623 $ 2,247 $ 20,463 $ 1,320,254 December 31, 2020 (Dollars in thousands) Pass Watch Special Mention Substandard Total Residential Real Estate: Single Family $ 137,937 $ — $ 738 $ 663 $ 139,338 Multifamily 43,332 — — — 43,332 Farmland 861 — — — 861 Commercial Real Estate: Owner occupied 136,257 5,556 — — 141,813 Non-owner occupied 264,546 59,453 — 1,086 325,085 Construction & Land Development 322,149 2,757 — — 324,906 Commercial – Non Real Estate: Commercial & Industrial 225,012 4,059 $ 591 365 230,027 Consumer – Non Real Estate: Unsecured 241 — — — 241 Secured 43,832 — — — 43,832 Total $ 1,174,167 $ 71,825 $ 1,329 $ 2,114 $ 1,249,435 |
Schedule of Aging of Past Due | The following tables present the segments of the loan portfolio summarized by aging categories as of March 31, 2021 and December 31, 2020: March 31, 2021 (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loans Receivable Nonaccrual Residential Real Estate: Single Family $ — $ — $ — $ — $ 135,090 $ 135,239 $ 149 Multifamily — — — — 45,556 45,556 — Farmland — — — — 854 854 — Commercial Real Estate: Owner occupied 874 — — 874 140,971 141,845 — Non-owner occupied — — — — 357,288 357,288 — Construction & Land Development — — — — 327,393 327,393 — Commercial – Non Real Estate: Commercial & Industrial — — — — 272,515 272,515 — Consumer – Non Real Estate: Unsecured — — — — 80 80 — Secured — 36 — 36 39,448 39,484 — Total $ 874 $ 36 $ — $ 910 $ 1,319,195 $ 1,320,254 $ 149 December 31, 2020 (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loans Receivable Nonaccrual Residential Real Estate: Single Family $ — $ — $ — $ — $ 139,189 $ 139,338 $ 149 Multifamily — — — — 42,300 42,300 — Farmland — — — — 861 861 — Commercial Real Estate: Owner occupied — — — — 141,813 141,813 — Non-owner occupied — — — — 326,117 326,117 — Construction & Land Development — — — — 324,906 324,906 — Commercial – Non Real Estate: Commercial & Industrial — — — — 230,027 230,027 — Consumer – Non Real Estate: Unsecured — — — — 241 241 — Secured 68 — — 68 43,764 43,832 — Total $ 68 $ — $ — $ 68 $ 1,249,218 $ 1,249,435 $ 149 |
Derivatives and Risk Manageme_2
Derivatives and Risk Management Activities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following tables summarize key elements of the Banks’s derivative instruments as of March 31, 2021 and December 31, 2020. March 31, 2021 Customer-related interest rate contracts Dollars in thousands) Notional Amount Positions Assets Liabilities Collateral Pledges Matched interest rate swap with borrower $ 209,890 38 $ — 58 $ 15,120 Matched interest rate swap with counterparty $ 209,890 38 58 $ — $ 15,120 December 31, 2020 Customer-related interest rate contracts Dollars in thousands) Notional Amount Positions Assets Liabilities Collateral Pledges Matched interest rate swap with borrower $ 210,314 38 $ 12,152 — $ 15,120 Matched interest rate swap with counterparty $ 210,314 38 — $ 12,152 $ 15,120 |
Fair Value Presentation (Tables
Fair Value Presentation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Assets Measured on Recurring Basis | The following tables provide the fair value for assets required to be measured and reported at fair value on a recurring basis as of March 31, 2021 and December 31, 2020: March 31, 2021 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Investment securities available-for-sale: U.S. Treasury Securities $ — $ 125,000 $ — $ 125,000 Collateralized Mortgage Backed — 22,129 — 22,129 Subordinated Debt — 4,340 — 4,340 Municipal Securities — 22,130 — 22,130 U.S. Government Agencies — 6,429 — 6,429 Derivative asset – interest rate swap on loans — 58 — 58 Total $ — $ 180,086 $ — $ 180,086 Liabilities: Derivative liability – interest rate swap on loans — 58 — 58 Total $ — $ 58 $ — $ 58 December 31, 2020 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Investment securities available-for-sale: U.S. Treasury Securities $ — $ 90,000 $ — $ 90,000 Collateralized Mortgage Backed — 24,896 — 24,896 Subordinated Debt — 3,278 — 3,278 Municipal Securities — 22,605 — 22,605 U.S. Government Agencies — 6,635 — 6,635 Derivative asset – interest rate swap on loans — 12,152 — 12,152 Total $ — $ 159,566 $ — $ 159,566 Liabilities: Derivative liability – interest rate swap on loans — 12,152 — 12,152 Total $ — $ 12,152 $ — $ 12,152 |
Schedule of Financial Assets Measured at Fair Value on a Nonrecurring Basis | The following table summarizes the value of the Bank’s assets as of March 31, 2021 and December 31, 2020 that were measured at fair value on a nonrecurring basis during the period: March 31, 2021 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Other Real Estate Owned $ — $ — $ 1,180 $ 1,180 Total $ — $ — $ 1,180 $ 1,180 December 31, 2020 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Other Real Estate Owned $ — $ — $ 1,180 $ 1,180 Total $ — $ — $ 1,180 $ 1,180 |
Schedule of Quantitative Information about Level 3 Fair Value Measurements for Financial Assets Measured at Fair Value on Nonreoccuring Basis | The following table summarizes the value of the Bank’s assets as of March 31, 2021 that were measured at fair value on a nonrecurring basis during the period: Fair Value Measurements at March 31, 2021 (Dollars in thousands) Fair Value Valuation Technique(s) Unobservable Inputs Range of Inputs Other Real Estate Owned, net $ 1,180 Appraisals Discount to reflect current market conditions and estimated selling costs. 6% - 10% Total $ 1,180 |
Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments | The following tables reflect the carrying amounts and estimated fair values of the Company’s financial instruments whether or not recognized on the Consolidated Balance Sheets at fair value. March 31, 2021 Carrying Estimated Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Dollars in thousands) Amount Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 169,997 $ 169,997 $ 169,997 $ — $ — Restricted equity securities 4,664 4,664 — 4,664 — Securities: Available for sale 180,028 180,028 — 180,028 — Held to maturity 26,427 27,414 — 27,414 — Loans, net 1,299,169 1,331,604 — — 1,331,604 Derivative asset – interest rate swap on loans 58 58 — 58 — Bank owned life insurance 25,518 25,518 — 25,518 — Accrued interest receivable 9,043 9,043 — 9,043 — Liabilities: Deposits $ 1,538,142 $ 1,525,405 $ — $ 976,370 $ 549,035 Derivative liability – interest rate swaps on loans 58 58 — 58 — Accrued interest payable 642 642 — 642 — December 31, 2020 Carrying Estimated Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Dollars in thousands) Amount Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 107,528 $ 107,528 $ 107,528 $ — $ — Restricted equity securities 4,616 4,616 — 4,616 — Securities: Available for sale 147,414 147,414 — 147,414 — Held to maturity 22,520 23,578 — 23,578 — Loans, net 1,230,379 1,259,671 — — 1,259,671 Loans held for sale 57,006 58,930 — — 58,930 Derivative asset – interest rate swap on loans 12,152 12,152 — 12,152 — Bank owned life insurance 25,341 25,341 — 25,341 — Accrued interest receivable 9,154 9,154 — 9,154 — Liabilities: Deposits $ 1,438,246 $ 1,451,708 $ — $ 941,503 $ 510,205 Derivative liability – interest rate swaps on loans 12,152 12,152 — 12,152 — Accrued interest payable 490 490 — 490 — |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Common Share Basic and Diluted | For the Three Months Ended March 31, (Dollars in thousands, except for per share data) 2021 2020 Net income available to common shareholders $ 4,911 $ 3,470 Weighted average number of common shares issued, basic and diluted 7,523,547 8,287,317 Net income per common share: Basic and diluted income per common share $ 0.65 $ 0.42 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Income | The following table presents the cumulative balances of the components of accumulated other comprehensive income, net of deferred taxes, as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Unrealized gain on securities $ 225 $ 1,287 Unrealized loss on securities transferred to HTM (49 ) (55 ) Tax effect (21 ) (255 ) Total accumulated other comprehensive income $ 155 $ 977 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Schedule of Leases Cost | As of March 31, (Dollars in thousands) 2021 Lease liabilities $ 7,881 Right-of-use assets $ 7,485 Weighted-average remaining lease term – operating leases (in months). 180.1 Weighted-average discount rate – operating leases 2.82 % For the three months ended March 31, (Dollars in thousands) 2021 Lease Cost Operating lease cost $ 128 Total lease costs $ 128 Cash paid for amounts included in measurement of lease liabilities $ 130 |
Schedule of Maturity Analysis of Annual Undiscounted Cash Flows of Operating Lease Liabilities | A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities as of March 31, 2021 is as follows: (Dollars in thousands) 2021 $ 533 2022 607 2023 638 2024 654 2025 671 Thereafter 6,837 Total undiscounted cash flows $ 9,940 Discount (2,059 ) Lease liabilities $ 7,881 |
Organization, Basis of Presen_3
Organization, Basis of Presentation and Recent Accounting Pronouncements - Additional Information (Detail) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021USD ($)SecurityLoan$ / sharesshares | Mar. 31, 2020shares | Dec. 31, 2020USD ($)SecurityLoan$ / sharesshares | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Common stock, shares authorized | shares | 10,000,000 | 10,000,000 | |
Common stock, par value | $ / shares | $ 4 | $ 4 | |
Preferred stock, shares authorized | shares | 2,000,000 | 2,000,000 | |
Preferred stock, par value | $ / shares | $ 1 | $ 1 | |
Preferred stock, shares outstanding | shares | 28,750 | 28,750 | |
Investment securities held-to-maturity | $ 26,427,000 | $ 22,520,000 | |
Unamortized unrealized loss | $ (48,381) | (54,836) | |
Federal reserve bank stock percentage | 6.00% | ||
Minimum required percentage of Federal Reserve Bank stock to be maintained of outstanding borrowings | 4.50% | ||
Minimum required percentage of Federal Reserve Bank stock to be maintained of total assets | 0.20% | ||
Impairment of investments | $ 0 | $ 0 | |
Number of loans | SecurityLoan | 0 | 0 | |
Tax benefit realization threshold | 50.00% | ||
Unrecognized tax benefits, Income tax penalties and interest accrued | $ 0 | $ 0 | |
Number of shares of stock options granted | shares | 0 | 0 | |
Weighted average number of shares outstanding | shares | 7,523,547 | 8,287,317 | |
Options outstanding | shares | 0 | 0 | |
ASU 2019-12 [Member] | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Change in accounting principle, accounting standards update, adopted | true | ||
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2021 | ||
Change in accounting principle, accounting standards update, immaterial effect | true | ||
ASU 2020-01 [Member] | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Change in accounting principle, accounting standards update, adopted | true | ||
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2021 | ||
Change in accounting principle, accounting standards update, immaterial effect | true | ||
ASU 2020-08 [Member] | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Change in accounting principle, accounting standards update, adopted | true | ||
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2021 | ||
Change in accounting principle, accounting standards update, immaterial effect | true | ||
Minimum [Member] | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Property, plant and equipment, useful life | 3 years | ||
Maximum [Member] | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Property, plant and equipment, useful life | 39 years | ||
Federal Reserve Bank of Richmond [Member] | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Restricted equity securities | $ 3,700,000 | $ 3,300,000 | |
Federal Home Loan Bank of Atlanta [Member] | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Restricted equity securities | 821,800 | 1,100,000 | |
Community Bankers Bank Stock [Member] | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Restricted equity securities | $ 126,800 | $ 126,800 |
Investment Securities - Schedul
Investment Securities - Schedule of Investment Securities Available-for-Sale (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 179,803 | $ 146,126 |
Gross Unrealized Gains | 1,392 | 1,568 |
Gross Unrealized Losses | (1,167) | (280) |
Fair Value | 180,028 | 147,414 |
U.S. Treasury Securities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 125,000 | 90,000 |
Fair Value | 125,000 | 90,000 |
Collateralized Mortgage Backed [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 22,577 | 24,743 |
Gross Unrealized Gains | 230 | 282 |
Gross Unrealized Losses | (678) | (129) |
Fair Value | 22,129 | 24,896 |
Subordinated Debt [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 4,320 | 3,250 |
Gross Unrealized Gains | 35 | 29 |
Gross Unrealized Losses | (15) | (1) |
Fair Value | 4,340 | 3,278 |
Municipal Securities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 21,339 | 21,348 |
Gross Unrealized Gains | 1,127 | 1,257 |
Gross Unrealized Losses | (336) | |
Fair Value | 22,130 | 22,605 |
U.S Government Agencies [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 6,567 | 6,785 |
Gross Unrealized Losses | (138) | (150) |
Fair Value | $ 6,429 | $ 6,635 |
Investment Securities - Sched_2
Investment Securities - Schedule of Investment Securities Held-to-Maturity (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | $ 26,427 | $ 22,520 |
Gross Unrealized Gains | 987 | 1,058 |
Fair Value | 27,414 | 23,578 |
Municipal Securities [Member] | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 18,686 | 20,015 |
Gross Unrealized Gains | 987 | 1,058 |
Fair Value | 19,673 | 21,073 |
Subordinated Debt [Member] | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 7,741 | 2,505 |
Fair Value | $ 7,741 | $ 2,505 |
Investment Securities - Sched_3
Investment Securities - Schedule of Scheduled Maturities of Securities Available-for-Sale and Held-to-Maturity (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Available-for-Sale, Amortized Cost | ||
Due in one year or less | $ 125,001 | |
Due from one to five years | 1,007 | |
Due from after five to ten years | 4,000 | |
Due after ten years | 49,795 | |
Amortized Cost | 179,803 | $ 146,126 |
Available-for-Sale, Fair Value | ||
Due in one year or less | 125,001 | |
Due from one to five years | 1,026 | |
Due from after five to ten years | 4,020 | |
Due after ten years | 49,981 | |
Total | 180,028 | 147,414 |
Held-to-Maturity, Amortized Cost | ||
Due from one to five years | 1,701 | |
Due from after five to ten years | 7,947 | |
Due after ten years | 16,779 | |
Amortized Cost | 26,427 | 22,520 |
Held-to-Maturity, Fair Value | ||
Due from one to five years | 2,210 | |
Due from after five to ten years | 8,359 | |
Due after ten years | 16,845 | |
Total | $ 27,414 | $ 23,578 |
Investment Securities - Additio
Investment Securities - Additional Information (Detail) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021USD ($)Security | Mar. 31, 2020Security | Dec. 31, 2020USD ($) | |
Net Investment Income [Line Items] | |||
Securities pledged as collateral | $ 267,846 | $ 269,075 | |
Number of securities sold | Security | 0 | 0 | |
Number of held-to-maturity securities called | Security | 1 | ||
Net gain on held-to-maturity securities | $ 3,197 | ||
Held-to-maturity unrealized loss position, fair value | 0 | ||
Unamortized unrealized loss | $ (48,381) | $ (54,836) | |
Collateralized Mortgage Backed [Member] | |||
Net Investment Income [Line Items] | |||
Number of securities temporarily impaired and unrealized loss position of less than 12 months | 2 | ||
Available for sale securities, temporarily impaired and unrealized loss position of less than 12 months, fair value | $ 13,800,000 | ||
Subordinated Debt [Member] | |||
Net Investment Income [Line Items] | |||
Number of securities temporarily impaired and unrealized loss position of less than 12 months | 2 | ||
Available for sale securities, temporarily impaired and unrealized loss position of less than 12 months, fair value | $ 735,000 | ||
U.S Government Agencies [Member] | |||
Net Investment Income [Line Items] | |||
Number of securities temporarily impaired and unrealized loss position of more than 12 months | 9 | ||
Available for sale securities, temporarily impaired and unrealized loss position of more than 12 months, fair value | $ 6,400,000 | ||
Municipal Securities [Member] | |||
Net Investment Income [Line Items] | |||
Number of securities temporarily impaired and unrealized loss position of less than 12 months | 4 | ||
Available for sale securities, temporarily impaired and unrealized loss position of less than 12 months, fair value | $ 5,300,000 |
Investment Securities - Sched_4
Investment Securities - Schedule of Unrealized Loss Positions of Securities Available-for-Sale and Held-to-Maturity (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Investment Securities [Line Items] | ||
Available-for-sale securities, Less than 12 Months, Fair Value | $ 19,883 | $ 15,720 |
Available-for-sale securities, Less than 12 Months, Unrealized Loss | (1,029) | (130) |
Available-for-sale securities, 12 Months or Longer, Fair Value | 6,429 | 6,785 |
Available-for-sale securities, 12 Months or Longer, Unrealized Loss | (138) | (150) |
Available-for-sale securities, Fair Value | 26,312 | 22,505 |
Available-for-sale securities, Unrealized Loss | (1,167) | (280) |
Collateralized Mortgage Backed [Member] | ||
Investment Securities [Line Items] | ||
Available-for-sale securities, Less than 12 Months, Fair Value | 13,831 | 14,971 |
Available-for-sale securities, Less than 12 Months, Unrealized Loss | (678) | (129) |
Available-for-sale securities, Fair Value | 13,831 | 14,971 |
Available-for-sale securities, Unrealized Loss | (678) | (129) |
Municipal Securities [Member] | ||
Investment Securities [Line Items] | ||
Available-for-sale securities, Less than 12 Months, Fair Value | 5,317 | |
Available-for-sale securities, Less than 12 Months, Unrealized Loss | (336) | |
Available-for-sale securities, Fair Value | 5,317 | |
Available-for-sale securities, Unrealized Loss | (336) | |
Subordinated Debt [Member] | ||
Investment Securities [Line Items] | ||
Available-for-sale securities, Less than 12 Months, Fair Value | 735 | 749 |
Available-for-sale securities, Less than 12 Months, Unrealized Loss | (15) | (1) |
Available-for-sale securities, Fair Value | 735 | 749 |
Available-for-sale securities, Unrealized Loss | (15) | (1) |
U.S Government Agencies [Member] | ||
Investment Securities [Line Items] | ||
Available-for-sale securities, 12 Months or Longer, Fair Value | 6,429 | 6,785 |
Available-for-sale securities, 12 Months or Longer, Unrealized Loss | (138) | (150) |
Available-for-sale securities, Fair Value | 6,429 | 6,785 |
Available-for-sale securities, Unrealized Loss | $ (138) | $ (150) |
Loans Receivable - Schedule of
Loans Receivable - Schedule of Loan Receivable (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | $ 1,320,254 | $ 1,249,435 |
Less: unearned fees | (7,870) | (6,178) |
Less: unamortized discount on consumer secured loans | (1) | |
Less: allowance for loan losses | (13,215) | (12,877) |
Net Loans | 1,299,169 | 1,230,379 |
Single Family [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | 135,239 | 139,338 |
Residential Real Estate Multi Family [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | 45,556 | 43,332 |
Residential Real Estate Farm Land [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | 854 | 861 |
Owner Occupied [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | 141,845 | 141,813 |
Non Owner Occupied [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | 357,288 | 325,085 |
Commercial Real Estate Construction Land Development Loan [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | 327,393 | 324,906 |
Commercial & Industrial [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | 272,515 | 230,027 |
Unsecured [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | 80 | 241 |
Secured [Member] | ||
Loans and Leases Receivable Disclosure [Line Items] | ||
Total Gross Loans | $ 39,484 | $ 43,832 |
Loans Receivable - Additional I
Loans Receivable - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Loans and Leases Receivable Disclosure [Line Items] | ||||
Unsecured consumer loan include overdrafts reclassified as loans | $ 80,000 | $ 241,000 | ||
Total Gross Loans | 1,320,254,000 | 1,249,435,000 | ||
Loans held for sale | 0 | 57,000,000 | ||
Interest income on nonaccural loans, accrued | 583 | $ 3,718 | ||
TDRs | 0 | 0 | ||
Commercial & Industrial [Member] | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Total Gross Loans | 272,515,000 | $ 230,027,000 | ||
Commercial & Industrial [Member] | Small Business Administration (SBA), CARES Act, Paycheck Protection Program [Member] | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Total Gross Loans | $ 179,800,000 | $ 135,200,000 |
Loans Receivable - Schedule o_2
Loans Receivable - Schedule of Allowance for Credit losses by Portfolio Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning Balance | $ 12,877 | $ 9,584 |
Charge-offs | (48) | |
Recoveries | 18 | 12 |
Provision | 320 | 350 |
Ending Balance | 13,215 | 9,898 |
Collectively evaluated for Impairment | 13,215 | 9,898 |
Residential Portfolio Segment [Member] | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning Balance | 1,223 | 1,030 |
Provision | (23) | (29) |
Ending Balance | 1,200 | 1,001 |
Collectively evaluated for Impairment | 1,200 | 1,001 |
Commercial Real Estate Portfolio Segment [Member] | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning Balance | 6,552 | 4,254 |
Charge-offs | (1) | |
Provision | 343 | 277 |
Ending Balance | 6,895 | 4,530 |
Collectively evaluated for Impairment | 6,895 | 4,530 |
Construction Development And Land [Member] | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning Balance | 3,326 | 2,180 |
Provision | 166 | 108 |
Ending Balance | 3,492 | 2,288 |
Collectively evaluated for Impairment | 3,492 | 2,288 |
Consumer Portfolio Segment [Member] | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning Balance | 371 | 568 |
Recoveries | 13 | 3 |
Provision | (238) | (46) |
Ending Balance | 146 | 525 |
Collectively evaluated for Impairment | 146 | 525 |
Commercial Portfolio Segment [Member] | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning Balance | 1,405 | 1,552 |
Charge-offs | (47) | |
Recoveries | 5 | 9 |
Provision | 72 | 40 |
Ending Balance | 1,482 | 1,554 |
Collectively evaluated for Impairment | $ 1,482 | $ 1,554 |
Loans Receivable - Schedule o_3
Loans Receivable - Schedule of Investment in Loans Receivable by Loan Class (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule Of Financial Receivables [Line Items] | ||
Loan Receivable Ending Balance | $ 1,320,254 | $ 1,249,435 |
Loan Receivable Ending Balance: Individually Evaluated for Impairment | 1,423 | 1,447 |
Loan Receivable Ending Balance: Collectively Evaluated for Impairment | 1,318,831 | 1,247,988 |
Residential Real Estate [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Loan Receivable Ending Balance | 181,649 | 182,499 |
Loan Receivable Ending Balance: Individually Evaluated for Impairment | 300 | 301 |
Loan Receivable Ending Balance: Collectively Evaluated for Impairment | 181,349 | 182,198 |
Commercial Real Estate [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Loan Receivable Ending Balance | 499,133 | 467,930 |
Loan Receivable Ending Balance: Individually Evaluated for Impairment | 1,082 | 1,088 |
Loan Receivable Ending Balance: Collectively Evaluated for Impairment | 498,051 | 466,842 |
Real Estate Construction Land And Land Development [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Loan Receivable Ending Balance | 327,393 | 324,906 |
Loan Receivable Ending Balance: Collectively Evaluated for Impairment | 327,393 | 324,906 |
Commercial and Industrial Sector [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Loan Receivable Ending Balance | 272,515 | 230,027 |
Loan Receivable Ending Balance: Individually Evaluated for Impairment | 41 | 58 |
Loan Receivable Ending Balance: Collectively Evaluated for Impairment | 272,474 | 229,969 |
Consumer Loan [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Loan Receivable Ending Balance | 39,564 | 44,073 |
Loan Receivable Ending Balance: Collectively Evaluated for Impairment | $ 39,564 | $ 44,073 |
Loans Receivable - Schedule o_4
Loans Receivable - Schedule of Information of Impaired Loans by Loan Portfolio Class (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule Of Financial Receivables [Line Items] | ||
Recorded Investment | $ 1,423 | $ 1,447 |
Unpaid Principal Balance | 1,423 | 1,447 |
Single Family [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Recorded Investment | 300 | 301 |
Unpaid Principal Balance | 300 | 301 |
Related Allowance | 0 | 0 |
Commercial & Industrial [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Recorded Investment | 41 | 58 |
Unpaid Principal Balance | 41 | 58 |
Non Owner Occupied [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Recorded Investment | 1,082 | 1,088 |
Unpaid Principal Balance | $ 1,082 | $ 1,088 |
Loans Receivable - Schedule o_5
Loans Receivable - Schedule of Additional Information of Impaired Loans (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Schedule Of Financial Receivables [Line Items] | ||
Average Record Investment, with no related allowance recorded | $ 1,435 | $ 1,631 |
Interest Income Recognized, with no related allowance recorded | 19 | 15 |
Single Family [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Average Record Investment, with no related allowance recorded | 301 | 1,631 |
Interest Income Recognized, with no related allowance recorded | 2 | $ 15 |
Non Owner Occupied [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Average Record Investment, with no related allowance recorded | 1,084 | |
Interest Income Recognized, with no related allowance recorded | 16 | |
Commercial & Industrial [Member] | ||
Schedule Of Financial Receivables [Line Items] | ||
Average Record Investment, with no related allowance recorded | 50 | |
Interest Income Recognized, with no related allowance recorded | $ 1 |
Loans Receivable - Schedule o_6
Loans Receivable - Schedule of Nonaccrual Loans by Classes of the Loan Portfolio (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule Of Financing Receivables Non Accrual Status [Line Items] | ||
Nonaccrual Loans | $ 149 | $ 149 |
Single Family [Member] | ||
Schedule Of Financing Receivables Non Accrual Status [Line Items] | ||
Nonaccrual Loans | $ 149 | $ 149 |
Loans Receivable - Schedule o_7
Loans Receivable - Schedule of Financing Receivable Credit Quality Indicators (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | $ 1,320,254 | $ 1,249,435 |
Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 1,223,921 | 1,174,167 |
Watch [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 73,623 | 71,825 |
Special Mention [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 2,247 | 1,329 |
Substandard [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 20,463 | 2,114 |
Single Family [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 135,239 | 139,338 |
Single Family [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 132,897 | 137,937 |
Single Family [Member] | Special Mention [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 741 | 738 |
Single Family [Member] | Substandard [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 1,601 | 663 |
Residential Real Estate Multi Family [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 45,556 | 43,332 |
Residential Real Estate Multi Family [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 45,556 | 43,332 |
Residential Real Estate Farm Land [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 854 | 861 |
Residential Real Estate Farm Land [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 854 | 861 |
Owner Occupied [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 141,845 | 141,813 |
Owner Occupied [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 133,081 | 136,257 |
Owner Occupied [Member] | Watch [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 8,764 | 5,556 |
Non Owner Occupied [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 357,288 | 325,085 |
Non Owner Occupied [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 298,371 | 264,546 |
Non Owner Occupied [Member] | Watch [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 41,300 | 59,453 |
Non Owner Occupied [Member] | Substandard [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 17,617 | 1,086 |
Commercial Real Estate Construction Land Development Loan [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 327,393 | 324,906 |
Commercial Real Estate Construction Land Development Loan [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 308,230 | 322,149 |
Commercial Real Estate Construction Land Development Loan [Member] | Watch [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 19,163 | 2,757 |
Commercial & Industrial [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 272,515 | 230,027 |
Commercial & Industrial [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 265,368 | 225,012 |
Commercial & Industrial [Member] | Watch [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 4,396 | 4,059 |
Commercial & Industrial [Member] | Special Mention [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 1,506 | 591 |
Commercial & Industrial [Member] | Substandard [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 1,245 | 365 |
Unsecured [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 80 | 241 |
Unsecured [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 80 | 241 |
Secured [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | 39,484 | 43,832 |
Secured [Member] | Pass [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total Gross Loans | $ 39,484 | $ 43,832 |
Loans Receivable - Schedule o_8
Loans Receivable - Schedule of Aging of Past Due (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due Loans | $ 910 | $ 68 |
Current | 1,319,195 | 1,249,218 |
Total Loans receivable | 1,320,254 | 1,249,435 |
Nonaccrual | 149 | 149 |
Financing Receivables, 30 to 59 Days Past Due [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due Loans | 874 | 68 |
Financing Receivables, 60 to 89 Days Past Due [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due Loans | 36 | |
Single Family [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 135,090 | 139,189 |
Total Loans receivable | 135,239 | 139,338 |
Nonaccrual | 149 | 149 |
Residential Real Estate Multi Family [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 45,556 | 42,300 |
Total Loans receivable | 45,556 | 42,300 |
Residential Real Estate Farm Land [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 854 | 861 |
Total Loans receivable | 854 | 861 |
Owner Occupied [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due Loans | 874 | |
Current | 140,971 | 141,813 |
Total Loans receivable | 141,845 | 141,813 |
Owner Occupied [Member] | Financing Receivables, 30 to 59 Days Past Due [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due Loans | 874 | |
Non Owner Occupied [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 357,288 | 326,117 |
Total Loans receivable | 357,288 | 326,117 |
Commercial Real Estate Construction Land Development Loan [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 327,393 | 324,906 |
Total Loans receivable | 327,393 | 324,906 |
Commercial & Industrial [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 272,515 | 230,027 |
Total Loans receivable | 272,515 | 230,027 |
Unsecured [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Current | 80 | 241 |
Total Loans receivable | 80 | 241 |
Secured [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due Loans | 36 | 68 |
Current | 39,448 | 43,764 |
Total Loans receivable | 39,484 | 43,832 |
Secured [Member] | Financing Receivables, 30 to 59 Days Past Due [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due Loans | $ 68 | |
Secured [Member] | Financing Receivables, 60 to 89 Days Past Due [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due Loans | $ 36 |
Derivatives and Risk Manageme_3
Derivatives and Risk Management Activities - Schedule of Derivative Instruments (Detail) $ in Thousands | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Matched Interest Rate Swap With Borrower [Member] | ||
Derivative [Line Items] | ||
Notional Amount | $ 209,890 | $ 210,314 |
Positions | 38 | 38 |
Assets | $ 12,152 | |
Liabilities | $ 58 | |
Collateral Pledges | 15,120 | 15,120 |
Matched Interest Rate Swaps With Counterparty [Member] | ||
Derivative [Line Items] | ||
Notional Amount | $ 209,890 | $ 210,314 |
Positions | 38 | 38 |
Assets | $ 58 | |
Liabilities | $ 12,152 | |
Collateral Pledges | $ 15,120 | $ 15,120 |
Derivatives and Risk Manageme_4
Derivatives and Risk Management Activities - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | ||
Interest rate swap fee income | $ 0 | $ 403,000 |
Fair Value Presentation - Sched
Fair Value Presentation - Schedule of Fair Value Assets Measured on Recurring Basis (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Investment securities available-for-sale | $ 180,028 | $ 147,414 |
Level 2 [Member] | ||
Assets: | ||
Investment securities available-for-sale | 180,028 | 147,414 |
Derivative asset | 58 | 12,152 |
Liabilities: | ||
Derivative liability | 58 | 12,152 |
U.S. Treasury Securities [Member] | ||
Assets: | ||
Investment securities available-for-sale | 125,000 | 90,000 |
Collateralized Mortgage Backed [Member] | ||
Assets: | ||
Investment securities available-for-sale | 22,129 | 24,896 |
Subordinated Debt [Member] | ||
Assets: | ||
Investment securities available-for-sale | 4,340 | 3,278 |
Municipal Securities [Member] | ||
Assets: | ||
Investment securities available-for-sale | 22,130 | 22,605 |
U.S Government Agencies [Member] | ||
Assets: | ||
Investment securities available-for-sale | 6,429 | 6,635 |
Fair Value, Measurements, Recurring [Member] | ||
Assets: | ||
Total | 180,086 | 159,566 |
Liabilities: | ||
Total | 58 | 12,152 |
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap on Loans [Member] | ||
Assets: | ||
Derivative asset | 58 | 12,152 |
Liabilities: | ||
Derivative liability | 58 | 12,152 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | ||
Assets: | ||
Total | 180,086 | 159,566 |
Liabilities: | ||
Total | 58 | 12,152 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Interest Rate Swap on Loans [Member] | ||
Assets: | ||
Derivative asset | 58 | 12,152 |
Liabilities: | ||
Derivative liability | 58 | 12,152 |
Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities [Member] | ||
Assets: | ||
Investment securities available-for-sale | 125,000 | 90,000 |
Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities [Member] | Level 2 [Member] | ||
Assets: | ||
Investment securities available-for-sale | 125,000 | 90,000 |
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Backed [Member] | ||
Assets: | ||
Investment securities available-for-sale | 22,129 | 24,896 |
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Backed [Member] | Level 2 [Member] | ||
Assets: | ||
Investment securities available-for-sale | 22,129 | 24,896 |
Fair Value, Measurements, Recurring [Member] | Subordinated Debt [Member] | ||
Assets: | ||
Investment securities available-for-sale | 4,340 | 3,278 |
Fair Value, Measurements, Recurring [Member] | Subordinated Debt [Member] | Level 2 [Member] | ||
Assets: | ||
Investment securities available-for-sale | 4,340 | 3,278 |
Fair Value, Measurements, Recurring [Member] | Municipal Securities [Member] | ||
Assets: | ||
Investment securities available-for-sale | 22,130 | 22,605 |
Fair Value, Measurements, Recurring [Member] | Municipal Securities [Member] | Level 2 [Member] | ||
Assets: | ||
Investment securities available-for-sale | 22,130 | 22,605 |
Fair Value, Measurements, Recurring [Member] | U.S Government Agencies [Member] | ||
Assets: | ||
Investment securities available-for-sale | 6,429 | 6,635 |
Fair Value, Measurements, Recurring [Member] | U.S Government Agencies [Member] | Level 2 [Member] | ||
Assets: | ||
Investment securities available-for-sale | $ 6,429 | $ 6,635 |
Fair Value Presentation - Sch_2
Fair Value Presentation - Schedule of Financial Assets Measured at Fair Value on a Nonrecurring Basis (Detail) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Assets | $ 1,180 | $ 1,180 |
Other Real Estate Owned [Member] | ||
Assets: | ||
Assets | 1,180 | 1,180 |
Level 3 [Member] | ||
Assets: | ||
Assets | 1,180 | 1,180 |
Level 3 [Member] | Other Real Estate Owned [Member] | ||
Assets: | ||
Assets | $ 1,180 | $ 1,180 |
Fair Value Presentation - Sch_3
Fair Value Presentation - Schedule of Quantitative Information about Level 3 Fair Value Measurements for Financial Assets Measured at Fair Value on Nonrecurring Basis (Detail) $ in Thousands | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Other Real Estate Owned Fair Value, Net | $ 1,180 | $ 1,180 |
Fair Value, Measurements, Nonrecurring [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Other Real Estate Owned Fair Value, Net | $ 1,180 | |
Alternative Investment, Valuation Technique [Extensible List] | mnsb:ValuationTechniqueAppraisalMember | |
Alternative Investment, Measurement Input [Extensible List] | us-gaap:MeasurementInputDiscountRateMember | |
Fair Value, Measurements, Nonrecurring [Member] | Minimum [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Range of Inputs | 0.06 | |
Fair Value, Measurements, Nonrecurring [Member] | Maximum [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Range of Inputs | 0.10 |
Fair Value Presentation - Sch_4
Fair Value Presentation - Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Cash and cash equivalents | $ 169,997 | $ 107,528 |
Restricted equity securities | 4,664 | 4,616 |
Securities: | ||
Available for sale | 180,028 | 147,414 |
Held to maturity | 26,427 | 22,520 |
Bank owned life insurance | 25,518 | 25,341 |
Level 1 [Member] | ||
Assets: | ||
Cash and cash equivalents | 169,997 | 107,528 |
Level 2 [Member] | ||
Assets: | ||
Restricted equity securities | 4,664 | 4,616 |
Securities: | ||
Available for sale | 180,028 | 147,414 |
Held to maturity | 27,414 | 23,578 |
Derivative asset – interest rate swap on loans | 58 | 12,152 |
Bank owned life insurance | 25,518 | 25,341 |
Accrued interest receivable | 9,043 | 9,154 |
Liabilities: | ||
Deposits | 976,370 | 941,503 |
Derivative liability – interest rate swaps on loans | 58 | 12,152 |
Accrued interest payable | 642 | 490 |
Level 3 [Member] | ||
Securities: | ||
Loans, net | 1,331,604 | 1,259,671 |
Loans held for sale | 58,930 | |
Liabilities: | ||
Deposits | 549,035 | 510,205 |
Reported Value Measurement [Member] | ||
Assets: | ||
Cash and cash equivalents | 169,997 | 107,528 |
Restricted equity securities | 4,664 | 4,616 |
Securities: | ||
Available for sale | 180,028 | 147,414 |
Held to maturity | 26,427 | 22,520 |
Loans, net | 1,299,169 | 1,230,379 |
Loans held for sale | 57,006 | |
Derivative asset – interest rate swap on loans | 58 | 12,152 |
Bank owned life insurance | 25,518 | 25,341 |
Accrued interest receivable | 9,043 | 9,154 |
Liabilities: | ||
Deposits | 1,538,142 | 1,438,246 |
Derivative liability – interest rate swaps on loans | 58 | 12,152 |
Accrued interest payable | 642 | 490 |
Estimate of Fair Value Measurement [Member] | ||
Assets: | ||
Cash and cash equivalents | 169,997 | 107,528 |
Restricted equity securities | 4,664 | 4,616 |
Securities: | ||
Available for sale | 180,028 | 147,414 |
Held to maturity | 27,414 | 23,578 |
Loans, net | 1,331,604 | 1,259,671 |
Loans held for sale | 58,930 | |
Derivative asset – interest rate swap on loans | 58 | 12,152 |
Bank owned life insurance | 25,518 | 25,341 |
Accrued interest receivable | 9,043 | 9,154 |
Liabilities: | ||
Deposits | 1,525,405 | 1,451,708 |
Derivative liability – interest rate swaps on loans | 58 | 12,152 |
Accrued interest payable | $ 642 | $ 490 |
Earnings Per Common Share - Add
Earnings Per Common Share - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Outstanding potentially dilutive securities | 0 | 0 |
Earnings Per Common Share - Sch
Earnings Per Common Share - Schedule of Earnings Per Common Share Basic and Diluted (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net income available to common shareholders | $ 4,911 | $ 3,470 |
Weighted average number of common shares issued, basic and diluted | 7,523,547 | 8,287,317 |
Net income per common share: | ||
Basic and diluted income per common share | $ 0.65 | $ 0.42 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income - Components of Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Accumulated Other Comprehensive Loss [Line Items] | ||
Tax effect | $ (21) | $ (255) |
Total accumulated other comprehensive income | 155 | 977 |
Unrealized gain/(loss) on securities [Member] | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Accumulated other comprehensive gain(loss), before tax | 225 | 1,287 |
Unrealized loss on securities transferred to HTM [Member] | ||
Accumulated Other Comprehensive Loss [Line Items] | ||
Accumulated other comprehensive gain(loss), before tax | $ (49) | $ (55) |
Leases - Additional Information
Leases - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2021USD ($)Lease | Mar. 31, 2020USD ($) | |
Leases [Abstract] | ||
Cash paid for amounts included in measurement of lease liabilities | $ 130,000 | |
Operating leases expense | $ 128,000 | $ 147,000 |
Operating lease, number of leases | Lease | 3 | |
Lessor, operating lease, option to extend | One lease is extended on a month-to-month basis while two of these leases have arrangements for over twelve months with an option to extend the lease terms. | |
Rent income on operating leases per month | $ 6,000 | |
Number of operating lease | Lease | 1 | |
Financing lease obligation | $ 0 | |
Finance lease right of use asset | $ 0 |
Leases - Schedule of Leases Cos
Leases - Schedule of Leases Cost (Detail) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Leases [Abstract] | |
Lease liabilities | $ 7,881,000 |
Right-of-use assets | $ 7,485,000 |
Weighted-average remaining lease term – operating leases (in months). | 180 months 3 days |
Weighted-average discount rate – operating leases | 2.82% |
Lease Cost | |
Operating lease cost | $ 128,000 |
Total lease costs | 128,000 |
Cash paid for amounts included in measurement of lease liabilities | $ 130,000 |
Leases - Schedule of Maturity A
Leases - Schedule of Maturity Analysis of Annual Undiscounted Cash Flows of Operating Lease Liabilities (Detail) $ in Thousands | Mar. 31, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 533 |
2022 | 607 |
2023 | 638 |
2024 | 654 |
2025 | 671 |
Thereafter | 6,837 |
Total undiscounted cash flows | 9,940 |
Discount | (2,059) |
Lease liabilities | $ 7,881 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - Subsequent Event - USD ($) $ in Millions | Apr. 20, 2021 | Apr. 06, 2021 |
Subsequent Event [Line Items] | ||
Extinguishment of previous subordinated debt | $ 3.6 | |
Subordinated Notes Due 2031 | ||
Subsequent Event [Line Items] | ||
Debt instrument, face amount | $ 30 | |
Percentage of fixed-to-floating rate | 3.75% | |
Percentage of purchasers equal to face amount | 100.00% |