Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 03, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2023 | |
Entity File Number | 001-41315 | |
Entity Registrant Name | John Marshall Bancorp, Inc. | |
Entity Incorporation, State or Country Code | VA | |
Entity Tax Identification Number | 81-5424879 | |
Entity Address, Address Line One | 1943 Isaac Newton Square East | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Reston | |
Entity Address State Or Province | VA | |
Entity Address, Postal Zip Code | 20190 | |
City Area Code | 703 | |
Local Phone Number | 584-0840 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | JMSB | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,126,084 | |
Entity Central Index Key | 0001710482 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and due from banks | $ 7,642 | $ 6,583 |
Interest-bearing deposits in other banks | 185,014 | 55,016 |
Total cash and cash equivalents | 192,656 | 61,599 |
Securities available-for-sale, at fair value | 169,084 | |
Securities available-for-sale, at fair value | 357,576 | |
Securities held-to-maturity at amortized cost, fair value of $75,733 and $81,161 as of September 30, 2023 and December 31, 2022, respectively | 96,347 | 99,415 |
Securities held-to-maturity, net | 96,347 | 99,415 |
Restricted securities, at cost | 5,007 | 4,425 |
Equity securities, at fair value | 2,443 | 2,115 |
Loans, net of unearned income | 1,789,508 | |
Less: Allowance for loan credit losses | 0 | (20,208) |
Loans, net | 1,769,300 | |
Loans, net of unearned income | 1,820,132 | |
Less: Allowance for loan credit losses | (20,036) | |
Loans, net | 1,800,096 | |
Bank premises and equipment, net | 1,264 | 1,219 |
Accrued interest receivable | 5,701 | 5,531 |
Bank owned life insurance | 21,170 | |
Right of use assets | 4,136 | 4,611 |
Other assets | 21,468 | 21,274 |
Total assets | 2,298,202 | 2,348,235 |
Deposits: | ||
Non-interest bearing demand deposits | 437,880 | 476,697 |
Interest-bearing demand deposits | 675,819 | 691,945 |
Savings deposits | 57,408 | 95,241 |
Time deposits | 810,516 | 803,857 |
Total deposits | 1,981,623 | 2,067,740 |
Federal funds purchased | 25,500 | |
Federal Reserve Bank borrowings | 54,000 | |
Subordinated debt | 24,687 | 24,624 |
Accrued interest payable | 2,610 | 1,035 |
Lease liabilities | 4,415 | 4,858 |
Other liabilities | 10,300 | 11,678 |
Total liabilities | 2,077,635 | 2,135,435 |
Commitments and contingencies | ||
Shareholders' Equity | ||
Preferred stock, par value $0.01 per share; authorized 1,000,000 shares; none issued | ||
Additional paid-in capital | 95,510 | 94,726 |
Retained earnings | 141,886 | 146,630 |
Accumulated other comprehensive loss | (16,970) | (28,697) |
Total shareholders' equity | 220,567 | 212,800 |
Total liabilities and shareholders' equity | 2,298,202 | 2,348,235 |
Common stock, voting | ||
Shareholders' Equity | ||
Common stock | $ 141 | $ 141 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Securities held-to-maturity, fair value | $ 75,733 | $ 81,161 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, voting | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, issued (in shares) | 14,126,084 | 14,098,986 |
Common stock, outstanding (in shares) | 14,126,084 | |
Common stock, voting | Unvested shares | ||
Common stock, issued (in shares) | 45,871 | 55,185 |
Common stock, non voting | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Common stock, issued (in shares) | 0 | 0 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Interest and Dividend Income | ||||
Interest and fees on loans | $ 21,925 | $ 18,222 | $ 63,355 | $ 53,740 |
Interest on investment securities, taxable | 1,507 | 2,323 | 5,895 | 5,597 |
Interest on investment securities, tax-exempt | 10 | 30 | 45 | 90 |
Dividends | 75 | 62 | 222 | 185 |
Interest on deposits in banks | 2,746 | 571 | 4,654 | 897 |
Total interest and dividend income | 26,263 | 21,208 | 74,171 | 60,509 |
Interest Expense | ||||
Deposits | 13,273 | 3,068 | 33,590 | 6,090 |
Federal funds purchased | 10 | |||
Federal Home Loan Bank advances | 67 | 42 | ||
Federal Reserve Bank borrowings | 662 | 1,001 | ||
Subordinated debt | 349 | 448 | 1,047 | 1,461 |
Total interest expense | 14,284 | 3,516 | 35,715 | 7,593 |
Net interest income | 11,979 | 17,692 | 38,456 | 52,916 |
Provision for (recovery of) credit losses | (829) | (2,471) | ||
Net interest income after provision for (recovery of) credit losses | 12,808 | 17,692 | 40,927 | 52,916 |
Non-interest Income | ||||
Service charges on deposit accounts | 85 | 79 | 239 | 240 |
Bank owned life insurance | 23 | 255 | 224 | 445 |
Other service charges and fees | 160 | 175 | 677 | 469 |
Losses on sale of available-for-sale securities | (17,114) | (17,316) | ||
Insurance commissions | 54 | 47 | 310 | 312 |
Gain on sale of government guaranteed loans | 27 | 50 | ||
Non-qualified deferred compensation plan asset gains (losses), net | (60) | (107) | 112 | (498) |
Other income | 10 | 1 | 140 | 5 |
Total non-interest income (loss) | (16,815) | 450 | (15,564) | 973 |
Non-interest Expenses | ||||
Salaries and employee benefits | 5,052 | 5,072 | 14,929 | 15,754 |
Occupancy expense of premises | 445 | 461 | 1,363 | 1,435 |
Furniture and equipment expenses | 282 | 323 | 882 | 989 |
Other operating expenses | 1,881 | 2,102 | 6,087 | 6,247 |
Total non-interest expenses | 7,660 | 7,958 | 23,261 | 24,425 |
Income (Loss) before income taxes | (11,667) | 10,184 | 2,102 | 29,464 |
Income tax expense (benefit) | (1,530) | 2,139 | 1,446 | 5,863 |
Net income (loss) | $ (10,137) | $ 8,045 | $ 656 | $ 23,601 |
Earnings (loss) per share, basic | $ (0.72) | $ 0.57 | $ 0.05 | $ 1.69 |
Earnings (loss) per share, diluted | $ (0.72) | $ 0.57 | $ 0.05 | $ 1.67 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Consolidated Statements of Comprehensive Income (Loss) | ||||
Net Income (Loss) | $ (10,137) | $ 8,045 | $ 656 | $ 23,601 |
Other comprehensive income (loss): | ||||
Unrealized (loss) on available-for-sale securities, net of tax of $(503) and $(3,709) for the three months ended September 30, 2023 and September 30, 2022, respectively. Unrealized (loss) on available-for-sale securities, net of tax of $(500) and $(8,081) for the nine months ended September 30, 2023 and September 30, 2022, respectively. | (1,891) | (13,952) | (1,880) | (30,401) |
Reclassification adjustment for losses on available-for-sale securities included in net income, net of tax of $(3,594) for the three months ended September 30, 2023. Reclassification adjustment for losses on available-for-sale securities included in net income, net of tax of $(3,636) for the nine months ended September 30, 2023. | 13,520 | 13,680 | ||
Amortization of unrealized gains on securities transferred to held-to-maturity, net of tax of $(7) and $(10) for the three months ended September 30, 2023 and September 30, 2022, respectively. Amortization of unrealized gains on securities transferred to held-to-maturity, net of tax of $(19) and $(31) for the nine months ended September 30, 2023 and September 30, 2022, respectively. | (24) | (36) | (73) | (115) |
Total other comprehensive income (loss) | 11,605 | (13,988) | 11,727 | (30,516) |
Total comprehensive income (loss) | $ 1,468 | $ (5,943) | $ 12,383 | $ (6,915) |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Consolidated Statements of Comprehensive Income (Loss) | ||||
Unrealized gain (loss) on available-for-sale securities, tax | $ (503) | $ (3,709) | $ (500) | $ (8,081) |
Reclassification adjustment for losses on available-for-sale securities included in net income, tax | (3,594) | (3,636) | ||
Unrealized gains on securities transferred to held-to-maturity, tax | $ (7) | $ (10) | $ (19) | $ (31) |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Accumulated Other Comprehensive (Loss) | Cumulative Effect, Period of Adoption, Adjustment | Total |
Beginning balance at Dec. 31, 2021 | $ 137 | $ 91,107 | $ 117,626 | $ (400) | $ 208,470 | ||
Beginning balance (in shares) at Dec. 31, 2021 | 13,669,772 | ||||||
Net Income (Loss) | 23,601 | 23,601 | |||||
Other comprehensive income (loss) | (30,516) | (30,516) | |||||
Dividend declared on common stock | (2,799) | (2,799) | |||||
Exercise of stock options | $ 3 | 3,051 | 3,054 | ||||
Exercise of stock options (in shares) | 325,649 | ||||||
Restricted stock vesting (in shares) | 16,613 | ||||||
Share-based compensation | 402 | 402 | |||||
Ending balance at Sep. 30, 2022 | $ 140 | 94,560 | 138,428 | (30,916) | 202,212 | ||
Ending balance (in shares) at Sep. 30, 2022 | 14,012,034 | ||||||
Beginning balance at Jun. 30, 2022 | $ 140 | 93,935 | 130,383 | (16,928) | 207,530 | ||
Beginning balance (in shares) at Jun. 30, 2022 | 13,968,053 | ||||||
Net Income (Loss) | 8,045 | 8,045 | |||||
Other comprehensive income (loss) | (13,988) | (13,988) | |||||
Exercise of stock options | 492 | 492 | |||||
Exercise of stock options (in shares) | 43,615 | ||||||
Restricted stock vesting (in shares) | 366 | ||||||
Share-based compensation | 133 | 133 | |||||
Ending balance at Sep. 30, 2022 | $ 140 | 94,560 | 138,428 | (30,916) | 202,212 | ||
Ending balance (in shares) at Sep. 30, 2022 | 14,012,034 | ||||||
Beginning balance at Dec. 31, 2022 | $ 141 | 94,726 | $ (2,292) | 146,630 | (28,697) | $ (2,292) | 212,800 |
Beginning balance (in shares) at Dec. 31, 2022 | 14,043,801 | ||||||
Net Income (Loss) | 656 | 656 | |||||
Other comprehensive income (loss) | 11,727 | 11,727 | |||||
Dividend declared on common stock | (3,108) | (3,108) | |||||
Exercise of stock options | 320 | 320 | |||||
Exercise of stock options (in shares) | 27,375 | ||||||
Restricted stock vesting (in shares) | 9,037 | ||||||
Share-based compensation | 464 | 464 | |||||
Ending balance at Sep. 30, 2023 | $ 141 | 95,510 | 141,886 | (16,970) | 220,567 | ||
Ending balance (in shares) at Sep. 30, 2023 | 14,080,213 | ||||||
Beginning balance at Jun. 30, 2023 | $ 141 | 95,380 | 152,024 | (28,575) | 218,970 | ||
Beginning balance (in shares) at Jun. 30, 2023 | 14,079,847 | ||||||
Net Income (Loss) | (10,137) | (10,137) | |||||
Other comprehensive income (loss) | 11,605 | 11,605 | |||||
Dividend declared on common stock | (1) | (1) | |||||
Restricted stock vesting (in shares) | 366 | ||||||
Share-based compensation | 130 | 130 | |||||
Ending balance at Sep. 30, 2023 | $ 141 | $ 95,510 | $ 141,886 | $ (16,970) | $ 220,567 | ||
Ending balance (in shares) at Sep. 30, 2023 | 14,080,213 |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Consolidated Statements of Shareholders' Equity | ||||
Dividend paid per share | $ 0.22 | $ 0.22 | $ 0.20 | |
Restricted stock vesting, shares surrendered | 54 | 54 | 87 | 97 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash Flows from Operating Activities | ||
Net income | $ 656 | $ 23,601 |
Adjustment to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 364 | 430 |
Right of use asset amortization | 924 | 1,033 |
Provision for (recovery of) credit losses | (2,471) | |
Share-based compensation expense | 464 | 402 |
Net (accretion)/amortization of securities | (197) | 68 |
Fair value adjustment on equity securities | (112) | 498 |
Amortization of debt issuance costs | 63 | 296 |
Net gains on premises and equipment | (16) | 1 |
Losses on available-for-sale securities | 17,316 | |
Deferred tax expense | 603 | 670 |
Net increase in cash surrender value of life insurance | (224) | (73) |
Gain on sale of government guaranteed loans | (50) | |
Changes in assets and liabilities: | ||
(Increase) Decrease in accrued interest receivable | (170) | 199 |
Increase in other assets | (3,305) | (732) |
Increase (decrease) in accrued interest payable | 1,575 | (200) |
(Decrease) in other liabilities | (2,855) | (1,030) |
Net cash provided by operating activities | 12,565 | 25,163 |
Cash Flows from Investing Activities | ||
Net (increase) in loans | (31,178) | (58,645) |
Proceeds from sale of government guaranteed loans originally classified as held for investment | 586 | |
Purchase of available-for-sale securities | (206,889) | |
Purchase of held-to-maturity securities | (1,003) | |
Proceeds from sale of available-for-sale securities | 156,011 | 0 |
Proceeds from maturities, calls and principal repayments of available-for-sale securities | 30,353 | 41,151 |
Proceeds from maturities, calls and principal repayments of held-to-maturity securities | 2,921 | 5,712 |
Net (purchases) redemptions of restricted securities | (582) | 530 |
Net purchases of equity securities | (216) | (542) |
Proceeds from bank owned life insurance contracts | 21,394 | |
Proceeds from sale of premises and equipment | 82 | |
Purchases of bank premises and equipment | (475) | (142) |
Net cash provided by (used in) investing activities | 178,896 | (219,828) |
Cash Flows from Financing Activities | ||
Net (decrease) increase in deposits | (86,116) | 181,788 |
Net repayment of Federal Home Loan Bank advances | (18,000) | |
Proceeds from Federal Reserve Bank borrowings | 54,000 | |
Issuance of subordinated debt | 24,579 | |
Repayment of subordinated debt | (25,000) | |
Cash dividends paid | (3,108) | (2,799) |
Repayment of federal funds purchased | (25,500) | |
Issuance of common stock for share options exercised | 320 | 3,054 |
Net cash (used in) provided by financing activities | (60,404) | 163,622 |
Net increase in cash and cash equivalents | 131,057 | (31,043) |
Cash and cash equivalents, beginning of period | 61,599 | 105,799 |
Cash and cash equivalents, end of period | 192,656 | 74,756 |
Supplemental Disclosures of Cash Flow Information | ||
Interest | 34,076 | 7,497 |
Income taxes | 4,110 | 4,387 |
Supplemental Disclosures of Noncash Transactions | ||
Unrealized gain (loss) on securities available-for-sale | 14,936 | (38,480) |
Right of use asset obtained in exchange for new operating lease liability | $ 505 | $ 56 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Nature of Business and Summary of Significant Accounting Policies | |
Nature of Business and Summary of Significant Accounting Policies | Note 1— Nature of Business and Summary of Significant Accounting Policies Nature of Banking Activities John Marshall Bancorp, Inc. (the “Company”), headquartered in Reston, Virginia, became the registered bank holding company under the Bank Holding Company Act of 1956 for its wholly-owned subsidiary, John Marshall Bank (the “Bank”), on March 1, 2017. This reorganization was completed through a one-for-one share exchange in which the Bank’s shareholders received one share of voting common stock of the Company in exchange for each share of the Bank’s voting common stock. The Company was formed on April 21, 2016 under the laws of the Commonwealth Virginia. The Bank was formed on April 5, 2005 under the laws of the Commonwealth of Virginia and was chartered as a bank on February 9, 2006, by the Virginia Bureau of Financial Institutions. The Bank is a member of the Federal Reserve System and is subject to the rules and regulations of the Virginia Bureau of Financial Institutions, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and the Federal Deposit Insurance Corporation (“FDIC”). The Bank opened for business on April 17, 2006 and provides banking services to its customers primarily in the Washington, D.C. metropolitan area. Basis of Presentation The accounting and reporting policies of John Marshall Bancorp, Inc. conform to generally accepted accounting principles in the United States of America (“GAAP”) and reflect practices of the banking industry. The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and with applicable quarterly reporting regulations of the U.S. Securities and Exchange Commission (“SEC”). They do not include all of the information and notes required by GAAP for complete financial statements. As such, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, included in the Company’s 2022 Annual Report on Form 10-K filed with the SEC on March 23, 2023. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions between the Company and the Bank have been eliminated. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan credit losses. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for any other interim period or for the full year. All amounts and disclosures included in this quarterly report as of December 31, 2022, were derived from the Company’s audited consolidated financial statements. Certain items in the prior period financial statements have been reclassified to conform to the current presentation. These reclassifications had no effect on prior year net income or shareholders’ equity. Significant Accounting Policies and Estimates Application of the principles of GAAP and practices within the banking industry requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements may reflect different estimates, assumptions, and judgments. Certain policies inherently rely more extensively on the use of estimates, assumptions, and judgments and as such may have a greater possibility of producing results that could be materially different than originally reported. The Company's significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in Note 1 of the audited financial statements and notes for the year ended December 31, 2022 and are contained in the Company's 2022 Annual Report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2022, except for the following: Accounting Standards Adopted in 2023 ASU 2016-13 In addition, CECL made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell. The Company adopted ASC 326 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach for all financial assets measured at amortized cost and off-balance sheet credit exposures. At adoption, the after tax impact to retained earnings was a reduction of $(2.3) million based on our evaluation as of that date. This adjustment consisted of increases to the allowance for credit losses on loans, as well as the Company's allowance for unfunded loan commitments. The Company elected not to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on loans or securities that are placed on nonaccrual status, which is generally when the instrument is 90 days past due, or earlier if the Company believes the collection of interest is doubtful. The Company has concluded that this policy results in the timely reversal of uncollectible interest. ASU 2022-02 Allowance for Credit Losses - Held-to-Maturity Securities The Company estimates expected credit losses on held-to-maturity securities on an individual basis based on a Probability of Default/Loss Given Default (“PD/LGD”) methodology primarily using security-level credit ratings. The primary indicators of credit quality for the Company’s held-to-maturity portfolio are security type and credit rating, which are influenced by a number of factors including obligor cash flow, geography, seniority, among other factors. The Company’s held-to-maturity securities with credit risk are municipal bonds, which had a credit rating of AA or better as of September 30, 2023. All other held-to-maturity securities are covered by the explicit or implied guarantee of the United States government or one of its agencies. Changes in the allowance for credit loss are recorded as provision for (or recovery of) credit losses in the Consolidated Statements of Income. The Company did not have an allowance for credit losses on held-to-maturity securities as of September 30, 2023 or upon adoption of ASC 326. Refer to Note 2 – Investment Securities for further discussion. Allowance for Credit Losses - Available-for-Sale Securities Management evaluates all available-for-sale securities in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specific to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any deficiency is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. Changes in the allowance for credit loss are recorded as a provision for (or recovery of) credit losses in the Consolidated Statements of Income. Losses are charged against the allowance for credit loss when management believes an available-for-sale security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met. At September 30, 2023, there was no allowance for credit loss related to the available-for-sale portfolio. Refer to Note 2 – Investment Securities for further discussion. Accrued interest receivable on available-for-sale securities totaled $535 thousand at September 30, 2023 and was excluded from the estimate of credit losses. Allowance for Credit Losses - Loans The allowance for loan credit losses represents an amount which, in management's judgment, is adequate to absorb the lifetime expected losses that may be sustained on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions, and prepayment experience. The allowance for loan credit losses is measured and recorded upon the initial recognition of a financial asset. The allowance for loan credit losses is reduced by charge-offs, net of recoveries of previous losses, and is increased or decreased by a provision for (or recovery of) credit losses, which is recorded in the Consolidated Statements of Income. The Company is utilizing a discounted cash flow model to estimate its current expected credit losses. For the purposes of calculating its quantitative reserves, the Company has segmented its loan portfolio based on loans which share similar risk characteristics. Within the quantitative portion of the calculation, the Company utilizes at least one or a combination of loss drivers, which may include unemployment rates, home price indices, and/or gross domestic product, to adjust its loss rates over a reasonable and supportable forecast period of one year. A straight-line reversion technique is used for the following four quarters, at which time the Company reverts to historical averages. To further adjust the allowance for credit losses for expected losses not already included within the quantitative component of the calculation, the Company may consider qualitative factors, including but not limited to: variability in the economic forecast, changes in volume and severity of adversely classified loans, changes in concentrations of credit, changes in the nature and volume of the loan segments, factors related to credit administration, and other Loans that do not share risk characteristics are evaluated on an individual basis. The Company designates individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk and loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. The adoption of CECL did not result in a significant change to any other credit risk management and monitoring processes, including identification of past due or delinquent borrowers, nonaccrual practices or charge-off policy. Allowance for Credit Losses – Unfunded Commitments Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for (or recovery of) credit losses in the Consolidated Statements of Income. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the CECL model using the same methodology as the loan portfolio, taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for unfunded commitments is included in other liabilities on the Company’s consolidated balance sheets. Accrued Interest Receivable The Company has elected to exclude accrued interest from the amortized cost basis in its determination of the allowance for credit losses for both loans and held-to-maturity securities, as well as elected the policy to write-off accrued interest receivable directly through the reversal of interest income. Accrued interest receivable totaled $4.8 million on loans and $241 thousand on held-to-maturity securities at September 30, 2023, and is included in “Accrued Interest Receivable” on the Company’s Consolidated Balance Sheets. |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2023 | |
Investment Securities | |
Investment Securities | Note 2— Investment Securities Available-for-Sale Each of the securities in the Company’s available-for-sale investment portfolio is either covered by the explicit or implied guarantee of the United States government or one of its agencies or rated investment grade or higher. All available-for-sale securities were current with no securities past due or on nonaccrual as of September 30, 2023 or December 31, 2022. The following tables summarize the amortized cost and fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses at September 30, 2023 and December 31, 2022, respectively. September 30, 2023 Gross Gross Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains (Losses) Value Available-for-sale U.S. Treasuries $ 44,765 $ — $ (2,571) $ 42,194 U.S. government and federal agencies 13,821 — (940) 12,881 Corporate bonds 3,000 — (594) 2,406 Collateralized mortgage obligations 41,486 — (7,964) 33,522 Tax-exempt municipal 1,380 — (224) 1,156 Taxable municipal 607 — (27) 580 Mortgage-backed 85,726 — (9,381) 76,345 Total Available-for-sale Securities $ 190,785 $ — $ (21,701) $ 169,084 December 31, 2022 Gross Gross Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains (Losses) Value Available-for-sale U.S. Treasuries $ 63,480 $ — $ (4,270) $ 59,210 U.S. government and federal agencies 38,748 — (3,988) 34,760 Corporate bonds 3,000 — (386) 2,614 Collateralized mortgage obligations 44,732 — (6,258) 38,474 Tax-exempt municipal 4,993 — (348) 4,645 Taxable municipal 608 — (29) 579 Mortgage-backed 238,652 — (21,358) 217,294 Total Available-for-sale Securities $ 394,213 $ — $ (36,637) $ 357,576 During the three months ended September 30, 2023, the Company sold available-for-sale securities with a total par value of $161.2 million resulting in a gross pre-tax loss of $17.1 million. During the nine months ended September 30, 2023, the Company sold available-for-sale securities with a total par value of $173.2 million resulting in a gross pre-tax loss of $17.3 million. The Company did not sell or recognize any gain or loss for any securities for the three or nine months ended September 30, 2022. Available-for-sale securities having a market value of $87.7 million and $83.4 million at September 30, 2023 and December 31, 2022, respectively, were pledged to secure public deposits and for other purposes required by law. These securities had an amortized cost of $95.4 million and $91.0 million at September 30, 2023 and December 31, 2022, respectively. The following tables summarize the fair value of securities available-for-sale at September 30, 2023 and December 31, 2022 and the corresponding amounts of gross unrealized losses. Management uses the valuations as of month-end in determining when securities are in an unrealized loss position. Therefore, a security’s market value could have exceeded its amortized cost on other days during the prior twelve-month period. September 30, 2023 Less than 12 Months 12 Months or Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Available-for-sale U.S. Treasuries $ — $ — $ 42,194 $ (2,571) $ 42,194 $ (2,571) U.S. government and federal agencies — — 12,881 (940) 12,881 (940) Corporate bonds — — 2,406 (594) 2,406 (594) Collateralized mortgage obligations — — 33,522 (7,964) 33,522 (7,964) Tax-exempt municipal — — 1,156 (224) 1,156 (224) Taxable municipal — — 580 (27) 580 (27) Mortgage-backed — — 76,345 (9,381) 76,345 (9,381) Total Available-for-sale Securities $ — $ — $ 169,084 $ (21,701) $ 169,084 $ (21,701) December 31, 2022 Less than 12 Months 12 Months or Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Available-for-sale U.S. Treasuries $ 31,261 $ (1,194) $ 27,949 $ (3,076) $ 59,210 $ (4,270) U.S. government and federal agencies 16,107 (1,078) 18,653 (2,910) 34,760 (3,988) Corporate bonds 2,614 (386) — — 2,614 (386) Collateralized mortgage obligations 16,746 (1,143) 21,728 (5,115) 38,474 (6,258) Tax-exempt municipal 4,645 (348) — — 4,645 (348) Taxable municipal 337 (2) 242 (27) 579 (29) Mortgage-backed 145,795 (9,612) 71,499 (11,746) 217,294 (21,358) Total Available-for-sale Securities $ 217,505 $ (13,763) $ 140,071 $ (22,874) $ 357,576 $ (36,637) The Company had 158 and 98 securities in an unrealized loss position for 12 months or longer as of September 30, 2023 and December 31, 2022, respectively. The Company has evaluated available-for-sale securities in an unrealized loss position for credit related impairment at September 30, 2023 and December 31, 2022 and concluded no impairment existed based on a combination of factors, which included: (1) the securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the par value of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis. As such, there was no allowance for credit losses on available-for-sale securities at September 30, 2023. The table below summarizes the contractual maturities of our available-for-sale investment securities as of September 30, 2023. Issuers may have the right to call or prepay certain obligations and as such, the expected maturities of our securities may differ from the scheduled contractual maturities presented below. September 30, 2023 Amortized Fair (Dollars in thousands) Cost Value Available-for-sale Due in one year or less $ 14,322 $ 14,055 Due after one year through five years 54,845 51,453 Due after five years through ten years 56,992 51,886 Due after ten years 64,626 51,690 Total Available-for-sale Securities $ 190,785 $ 169,084 In the prevailing rate environments as of September 30, 2023 and December 31, 2022, the Company’s available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.2 years and 3.8 years, respectively. Held-to-Maturity Each of the securities in the Company’s held-to-maturity investment portfolio is either covered by the explicit or implied guarantee of the United States government or one of its agencies or rated investment grade or higher. All held-to-maturity securities were current with no securities past due or on nonaccrual as of September 30, 2023 or December 31, 2022. The following tables summarize the amortized cost and fair value of securities held-to-maturity and the corresponding amounts of gross unrealized losses at September 30, 2023 and December 31, 2022, respectively. September 30, 2023 Gross Gross Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains (Losses) Value Held-to-maturity U.S. Treasuries $ 6,001 $ — $ (873) $ 5,128 U.S. government and federal agencies 35,463 — (6,743) 28,720 Collateralized mortgage obligations 19,773 — (4,920) 14,853 Taxable municipal 6,061 — (1,409) 4,652 Mortgage-backed 29,049 — (6,669) 22,380 Total Held-to-maturity Securities $ 96,347 $ — $ (20,614) $ 75,733 December 31, 2022 Gross Gross Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains (Losses) Value Held-to-maturity U.S. Treasuries $ 6,000 $ — $ (840) $ 5,160 U.S. government and federal agencies 35,551 — (6,135) 29,416 Collateralized mortgage obligations 21,275 — (4,227) 17,048 Taxable municipal 6,073 — (1,364) 4,709 Mortgage-backed 30,516 — (5,688) 24,828 Total Held-to-maturity Securities $ 99,415 $ — $ (18,254) $ 81,161 Held-to-maturity securities having a market value of $34.2 million and $31.0 million at September 30, 2023 and December 31, 2022, respectively, were pledged to secure public deposits and for other purposes required by law. These securities had an amortized cost of $42.3 million and $37.7 million at September 30, 2023 and December 31, 2022, respectively. The following table summarizes the fair value of securities held-to-maturity at December 31, 2022 and the corresponding amounts of gross unrealized losses. Management uses the valuations as of month-end in determining when securities are in an unrealized loss position. Therefore, a security’s market value could have exceeded its amortized cost on other days during the prior twelve-month period. December 31, 2022 Less than 12 Months 12 Months or Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Held-to-maturity U.S. Treasuries $ — $ — $ 5,160 $ (840) $ 5,160 $ (840) U.S. government and federal agencies — — 29,416 (6,135) 29,416 (6,135) Collateralized mortgage obligations — — 17,048 (4,227) 17,048 (4,227) Taxable municipal — — 4,709 (1,364) 4,709 (1,364) Mortgage-backed 825 (159) 24,003 (5,529) 24,828 (5,688) Total Held-to-maturity Securities $ 825 $ (159) $ 80,336 $ (18,095) $ 81,161 $ (18,254) The Company evaluates the credit risk of its held-to-maturity securities on at least a quarterly basis. The Company estimates expected credit losses on held-to-maturity securities on an individual basis based on a PD/LGD methodology primarily using security-level credit ratings. The primary indicators of credit quality for the Company’s held-to-maturity portfolio are security type and credit rating, which is influenced by a number of factors including obligor cash flow, geography, seniority, and others. The Company’s held-to-maturity securities with credit risk were comprised of municipal bonds and had a credit rating of AA or better as of September 30, 2023. All other held-to-maturity securities are covered by the explicit or implied guarantee of the United States government or one of its agencies. The Company did not have an allowance for credit losses on held-to-maturity securities as of September 30, 2023 or upon adoption of ASC 326. The table below summarizes the contractual maturities of our held-to-maturity investment securities as of September 30, 2023. Issuers may have the right to call or prepay certain obligations and as such, the expected maturities of our securities are likely to differ from the scheduled contractual maturities presented below. September 30, 2023 Amortized Fair (Dollars in thousands) Cost Value Held-to-maturity Due in one year or less $ — $ — Due after one year through five years 20,163 17,117 Due after five years through ten years 24,465 19,496 Due after ten years 51,719 39,120 Total Held-to-maturity Securities $ 96,347 $ 75,733 In the prevailing rate environments as of September 30, 2023 and December 31, 2022, the Company’s held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 7.0 years and 7.3 years, respectively. Restricted Securities The table below summarizes the carrying amount of restricted securities as of September 30, 2023 and December 31, 2022. (Dollars in thousands) September 30, 2023 December 31, 2022 Federal Reserve Bank Stock $ 3,306 $ 3,292 Federal Home Loan Bank Stock 1,641 1,073 Community Bankers’ Bank Stock 60 60 Total Restricted Securities $ 5,007 $ 4,425 Equity Securities The Company held equity securities with readily determinable fair values totaling $2.4 million and $2.1 million at September 30, 2023 and December 31, 2022, respectively. These securities consist of mutual funds held in a trust and were obtained for the purpose of economically hedging changes in the Company’s nonqualified deferred compensation liability. Changes in the fair value of these securities are reflected in earnings. A loss of $(60) thousand and $(107) thousand were recorded in non-interest income in the Consolidated Statements of Income for the three months ended September 30, 2023 and September 30, 2022, respectively. A gain of $112 thousand and a loss of $(498) thousand were recorded in non-interest income in the Consolidated Statements of Income for the nine months ended September 30, 2023 and September 30, 2022, respectively. |
Loans
Loans | 9 Months Ended |
Sep. 30, 2023 | |
Allowance for Loan Credit Losses | |
Loans | Note 3— Loans The following table presents the composition of the Company’s loan portfolio as of September 30, 2023 and December 31, 2022. (Dollars in thousands) September 30, 2023 December 31, 2022 Real Estate Loans: Commercial $ 1,133,069 $ 1,118,127 Construction and land development 179,570 195,027 Residential 464,509 426,841 Commercial - Non-Real Estate: Commercial loans 37,925 44,924 Consumer - Non-Real Estate: Consumer loans 467 529 Total Gross Loans $ 1,815,540 $ 1,785,448 Allowance for loan credit losses (20,036) (20,208) Net deferred loan costs 4,592 4,060 Total net loans $ 1,800,096 $ 1,769,300 Portfolio Segments The Company currently manages its loan products and the respective exposure to credit losses by the following specific portfolio segments which are levels at which the Company develops and documents its systematic methodology to determine the allowance for loan credit losses attributable to each respective portfolio segment. These segments are: ● Real estate - commercial loans – The real estate commercial loans category contains commercial mortgage loans secured by owner occupied, non-owner occupied, and multifamily real estate. ● Real estate - construction and land development loans – The real estate construction and land development loans category contains residential and commercial construction loan financing to builders and developers and to consumers building their own homes. ● Real estate - residential loans – The real estate residential mortgage loans category contains permanent mortgage loans principally to consumers secured by residential real estate. ● Commercial loans – The commercial loans category contains business purpose loans made to provide funds for the financing of equipment, receivables, contract administration expenses, and other general corporate needs of commercial businesses. ● Consumer loans – The consumer loans category contains personal loans such as installment loans and lines of credit. |
Allowance for Loan Credit Losse
Allowance for Loan Credit Losses | 9 Months Ended |
Sep. 30, 2023 | |
Allowance for Loan Credit Losses | |
Allowance for Loan Credit Losses | Note 4— Allowance for Loan Credit Losses On January 1, 2023, the Company adopted the CECL methodology as required under ASC 326. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables. For further discussion on the Company’s accounting policies and policy elections related to the accounting standard update refer to Note 1 in this Quarterly Report on Form 10-Q. All loan information presented as of September 30, 2023 is in accordance with ASC 326. All loan information presented prior to September 30, 2023 is in accordance with previous applicable GAAP. Allowance for loan credit losses The following tables present the activity in the allowance for loan credit losses for the nine months ended September 30, 2023. September 30, 2023 Real Estate Construction & Land Dollars in thousands Commercial Development Residential Commercial Consumer Unallocated Total Beginning balance, December 31, 2022 $ 13,205 $ 2,860 $ 3,044 $ 456 $ 5 $ 638 $ 20,208 Adjustment to allowance for adoption of ASC 326 (2,649) 476 4,552 367 57 (638) 2,165 Charge-offs — — — — — — — Recoveries — — — 2 — — 2 Provision for (recovery of) credit losses 2,187 (1,148) (3,014) (360) (4) — (2,339) Ending balance, September 30, 2023 $ 12,743 $ 2,188 $ 4,582 $ 465 $ 58 $ — $ 20,036 The following table presents the activity for the allowance for loan losses for the nine months ended September 30, 2022. September 30, 2022 Real Estate Construction & Land Dollars in thousands Commercial Development Residential Commercial Consumer Unallocated Total Allowance for loan losses: Beginning Balance, December 31, 2021 $ 13,091 $ 2,824 $ 2,769 $ 711 $ 5 $ 632 $ 20,032 Charge-offs (1) — — — — — (1) Recoveries — — — 1 — — 1 Provision for (recovery of) loan losses 345 97 (186) (208) 1 (49) — Ending Balance, September 30, 2022 $ 13,435 $ 2,921 $ 2,583 $ 504 $ 6 $ 583 $ 20,032 The following tables present the balance of the allowance for loan losses, the allowance by impairment methodology, total loans, and loans by impairment methodology as of December 31, 2022 and September 30, 2022, respectively. There were no collateral dependent or individually evaluated loans as of September 30, 2023. December 31, 2022 Real Estate Construction & Land Dollars in thousands Commercial Development Residential Commercial Consumer Unallocated Total Allowance balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 13,205 2,860 3,044 456 5 638 20,208 Total allowance $ 13,205 $ 2,860 $ 3,044 $ 456 $ 5 $ 638 $ 20,208 Loans: Individually evaluated for impairment $ — $ — $ 418 $ — $ — $ — $ 418 Collectively evaluated for impairment 1,118,127 195,027 426,423 44,924 529 — 1,785,030 Total loans $ 1,118,127 $ 195,027 $ 426,841 $ 44,924 $ 529 $ — $ 1,785,448 September 30, 2022 Real Estate Construction & Land Dollars in thousands Commercial Development Residential Commercial Consumer Unallocated Total Allowance balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 13,435 2,921 2,583 504 6 583 20,032 Total allowance $ 13,435 $ 2,921 $ 2,583 $ 504 $ 6 $ 583 $ 20,032 Loans: Individually evaluated for impairment $ — $ — $ 530 $ — $ — $ — $ 530 Collectively evaluated for impairment 1,091,221 199,324 385,166 45,105 585 — 1,721,401 Total loans $ 1,091,221 $ 199,324 $ 385,696 $ 45,105 $ 585 $ — $ 1,721,931 Impaired loans Prior to the adoption of ASC 326, loans were considered impaired when, based on current information and events, it was probable the Company would be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include loans on nonaccrual status and accruing TDRs. When determining if the Company would be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considered the borrower’s capacity to pay, which included such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. The following tables present a summary of impaired loans and the related allowance as of December 31, 2022. December 31, 2022 Recorded Recorded Unpaid Investment Investment Total Average Interest Principal with with Recorded Related Recorded Income (Dollars in thousands) Balance No Allowance Allowance Investment Allowance Investment (1) Recognized (1) Real Estate Loans Commercial $ — $ — $ — $ — $ — $ — $ — Construction and land development — — — — — — — Residential 418 418 — 418 — 427 15 Commercial — — — — — — — Consumer — — — — — — — Total Impaired Loans $ 418 $ 418 $ — $ 418 $ — $ 427 $ 15 (1) Amounts shown for the twelve-month period ended December 31, 2022. Delinquency Information The following tables present a summary of past due and nonaccrual loans by segment as of September 30, 2023 and December 31, 2022. September 30, 2023 30-59 Days 60-89 Days 90 Days or 90 Days or More Past Past More Total Past Total Past Due and Nonaccrual (Dollars in thousands) Due Due Past Due Due Current Loans Still Accruing Loans Real Estate Loans Commercial $ — $ — $ — $ — $ 1,133,069 $ 1,133,069 $ — $ — Construction and land development — — — — 179,570 179,570 — — Residential — — — — 464,509 464,509 — — Commercial — — — — 37,925 37,925 — — Consumer — — — — 467 467 — — Total Loans $ — $ — $ — $ — $ 1,815,540 $ 1,815,540 $ — $ — December 31, 2022 30-59 Days 60-89 Days 90 Days or 90 Days or More Past Past More Total Past Total Past Due and Nonaccrual (Dollars in thousands) Due Due Past Due Due Current Loans Still Accruing Loans Real Estate Loans Commercial $ — $ — $ — $ — $ 1,118,127 $ 1,118,127 $ — $ — Construction and land development — — — — 195,027 195,027 — — Residential — — — — 426,841 426,841 — — Commercial — — — — 44,924 44,924 — — Consumer — — — — 529 529 — — Total Loans $ — $ — $ — $ — $ 1,785,448 $ 1,785,448 $ — $ — Credit Quality Indicators The Company assesses credit quality indicators based on internal risk rating of loans. Each loan is evaluated at least annually with more frequent evaluation of more severely criticized loans. The indicators represent the rating for loans as of the date presented is based on the most recent credit review performed. Internal risk rating definitions are: Pass Special Mention Substandard Doubtful Loss The Company has a portfolio of smaller homogenous loans that are not individually risk rated and include residential permanent and construction mortgages, home equity lines of credit, and consumer installment loans. For these loans, management uses payment status as the primary credit quality indicator. The payment status of these loans is then translated into an internal risk rating. The following table summarizes the translation of past due status to risk rating for loans that are not individually risk rated. Internal Days Past Due Risk Rating 0 - 29 days Pass 30-59 days Special Mention 60-89 days Substandard 90-119 days Doubtful 120+ days Loss The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of September 30, 2023. Term Loans by Year of Origination (Dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Total Real Estate Loans - Commercial Pass $ 56,696 $ 303,898 $ 205,417 $ 122,694 $ 97,273 $ 342,686 $ 3,168 $ 1,131,832 Special mention — — — 1,237 — — — 1,237 Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Commercial $ 56,696 $ 303,898 $ 205,417 $ 123,931 $ 97,273 $ 342,686 $ 3,168 $ 1,133,069 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Real Estate Loans - Construction and land development Pass $ 33,136 $ 58,071 $ 31,471 $ 18,087 $ 30 $ 8,845 $ 27,780 $ 177,420 Special mention — — — — 2,150 — — 2,150 Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Construction and land development $ 33,136 $ 58,071 $ 31,471 $ 18,087 $ 2,180 $ 8,845 $ 27,780 $ 179,570 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Real Estate Loans - Residential Pass $ 61,683 $ 115,508 $ 134,133 $ 88,589 $ 25,147 $ 22,213 $ 17,236 $ 464,509 Special mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Residential $ 61,683 $ 115,508 $ 134,133 $ 88,589 $ 25,147 $ 22,213 $ 17,236 $ 464,509 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial Loans Pass $ 3,425 $ 7,354 $ 2,146 $ 3,384 $ 5,245 $ 5,198 $ 11,173 $ 37,925 Special mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Commercial Loans $ 3,425 $ 7,354 $ 2,146 $ 3,384 $ 5,245 $ 5,198 $ 11,173 $ 37,925 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer Loans Pass $ 399 $ 6 $ 29 $ — $ — $ 12 $ 21 $ 467 Special mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Consumer Loans $ 399 $ 6 $ 29 $ - $ — $ 12 $ 21 $ 467 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — The following table presents the Company’s recorded investment in loans by credit quality indicators as of December 31, 2022. December 31, 2022 Special Total (Dollars in thousands) Pass Mention Substandard Doubtful Loss Loans Real Estate Loans Commercial $ 1,116,890 $ 1,237 $ — $ — $ — $ 1,118,127 Construction and land development 192,877 2,150 — — — 195,027 Residential 426,841 — — — — 426,841 Commercial 44,924 — — — — 44,924 Consumer 529 — — — — 529 Total Loans $ 1,782,061 $ 3,387 $ — $ — $ — $ 1,785,448 The allowance for loan credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination. The starting point for the estimate of the allowance for loan credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. As part of the Company’s loan modification program to borrowers experiencing financial difficulty, the Company may provide concessions to minimize the economic loss and improve long-term loan performance and collectability. The Company did not make any loan modifications to borrowers experiencing financial difficulty during the three or nine months ended September 30, 2023. The Company had a recorded investment in TDRs of $418 thousand as of December 31, 2022, all of which were in compliance with their modified terms at December 31, 2022. There were no loans modified in TDRs that subsequently defaulted within 12 months of their modification date during the three or nine months ended September 30, 2022. As of December 31, 2022, none of the Bank’s TDRs required a specific reserve. As of December 31, 2022, there were no additional commitments to disburse funds on loans classified TDRs. The Company adopted ASU 2022-02 on January 1, 2023, which eliminated the accounting guidance for TDRs. Unfunded Commitments The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable by the Company. The allowance for off-balance sheet credit exposures is adjusted as a provision for (or recovery of) credit losses in the Consolidated Statements of Income. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for loan credit losses. The allowance for credit losses for unfunded loan commitments of $908 thousand and $303 thousand at September 30, 2023 and December 31, 2022, respectively, is separately classified within Other Liabilities on the Consolidated Balance Sheets. The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the nine months ended September 30, 2023. Allowance for Credit Losses (Dollars in thousands) Unfunded Commitments Beginning balance, December 31, 2022 $ 303 Adjustment to allowance for unfunded commitments for adoption of ASC 326 737 Provision for (recovery of) credit losses (132) Ending balance, September 30, 2023 $ 908 |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2023 | |
Derivatives | |
Derivatives | Note 5— Derivatives The Company enters into interest rate swap agreements (“swaps”) with commercial loan customers to provide a facility for customers to manage their interest rate risk. These swaps are matched in exact offsetting terms with swaps that the Company enters into with an independent third party. These swaps qualify as derivatives, but are not designated as hedging instruments. The following tables summarize the Company’s swaps at September 30, 2023 and December 31, 2022. September 30, 2023 Estimated Weighted Average Notional Fair Years to Receive Pay (Dollars in thousands) Amount Value Maturity Rate Rate Interest rate swap agreements: Pay fixed/receive variable swaps $ 19,591 $ 1,390 3.5 years 6.60 % 3.39 % Pay variable/receive fixed swaps 19,591 (1,390) 3.5 years 3.39 % 6.60 % Total interest rate swap agreements $ 39,182 $ — 3.5 years 5.00 % 5.00 % December 31, 2022 Estimated Weighted Average Notional Fair Years to Receive Pay (Dollars in thousands) Amount Value Maturity Rate Rate Interest rate swap agreements: Pay fixed/receive variable swaps $ 13,767 $ 1,217 2.8 years 6.02 % 2.59 % Pay variable/receive fixed swaps 13,767 (1,217) 2.8 years 2.59 % 6.02 % Total interest rate swap agreements $ 27,534 $ — 2.8 years 4.31 % 4.31 % The |
Deposits and Borrowings
Deposits and Borrowings | 9 Months Ended |
Sep. 30, 2023 | |
Deposits and Borrowings | |
Deposits and Borrowings | Note 6— Deposits and Borrowings The following tables show the components of the Company’s funding sources. (Dollars in thousands) September 30, 2023 December 31, 2022 Deposits: Non-interest bearing demand deposits (1) $ 437,880 $ 476,697 Interest-bearing demand deposits (1) 675,819 691,945 Savings deposits 57,408 95,241 Time deposits (2) 810,516 803,857 Total Deposits $ 1,981,623 $ 2,067,740 September 30, 2023 December 31, 2022 (Dollars in thousands) Stated Interest Rate Weighted-Average Interest Rate Carrying Value Carrying Value Short-term Debt: Federal Reserve Bank borrowings 4.80 % 4.80 % $ 54,000 — Total Short-term Debt $ 54,000 — Long-term Debt: Subordinated debt 5.25 % 5.25 % $ 24,687 $ 24,624 Total Long-term Debt $ 24,687 $ 24,624 (1) Overdraft demand deposits reclassified to loans totaled $5 thousand at September 30, 2023 and $1 thousand at December 31, 2022, respectively. (2) The aggregate amount of certificates of deposit with a minimum denomination of $250,000 was $358.6 million and $318.7 million at September 30, 2023 and December 31, 2022, respectively. The Company obtains certain deposits through the efforts of third-party brokers. Brokered deposits totaled $288.9 million and $352.0 million at September 30, 2023 and December 31, 2022, respectively, and were included primarily in time deposits on the Company’s Consolidated Balance Sheets. Reciprocal IntraFi certificates of deposit totaled $41.7 million and $25.7 million at September 30, 2023 and December 31, 2022, respectively. Reciprocal IntraFi demand and money market deposits totaled $265.6 million and $197.3 million at September 30, 2023 and December 31, 2022, respectively. At September 30, 2023, there were no depositors that represented 5% or more of the Company’s total deposits. The Company completed a private placement of a $25.0 million fixed-to-floating subordinated note on June 15, 2022. Subject to limited exceptions permitting earlier redemption, the note is callable, in whole or in part, commencing July 1, 2027. Unless redeemed earlier, the note will mature on July 1, 2032. The note bears interest at a fixed rate of 5.25% to but excluding July 1, 2027, and will bear interest at a floating rate equal to the three-month Secured Overnight Financing Rate plus 245 basis points thereafter. The note is carried at its principal amount, less unamortized issuance costs. The Company from time to time uses FHLB advances as a source of funding and to manage interest rate risk. FHLB advances are secured by a blanket floating lien on all real estate mortgage loans secured by 1-to-4 family residential, multi-family and commercial real estate properties. At September 30, 2023, the Company did not have any outstanding FHLB advances. Available borrowing capacity based on collateral value amounted to approximately $444.7 million as of September 30, 2023. The Company also has the capacity to borrow up to $24.8 million at the Federal Reserve discount window of which $0 had been drawn upon at September 30, 2023. The Bank had loans pledged at the Federal Reserve discount window totaling $26.5 million as of September 30, 2023. On March 12, 2023, the Federal Reserve Bank of Richmond (“Reserve Bank”) made available the Bank Term Funding Program (“BTFP”), which enhances the ability of banks to borrow against the par value of certain high-quality, unencumbered investments. On May 15, 2023, the Company obtained a $54.0 million BTFP advance to secure lower funding costs relative to wholesale deposits. The BTFP advance has a term of one year, bears interest at a fixed rate of 4.80% and can be prepaid without penalty prior to maturity. At September 30, 2023, the Company had pledged as collateral for the BTFP advance investment securities with an amortized cost and fair value of $55.5 million and $42.6 million, respectively. The Company also has federal funds lines of credit with correspondent banks available for overnight borrowing of $110.0 million, of which $0 had been drawn upon at September 30, 2023. The following table shows the carrying amount of the Company’s time deposits by contractual maturity as of September 30, 2023. (Dollars in thousands) September 30, 2023 2023 $ 146,873 2024 477,572 2025 144,346 2026 40,324 2027 1,117 Thereafter 284 Total $ 810,516 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 7— Commitments and Contingencies The Company is party to financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments. Refer to Note 4 – Allowance for Loan Credit Losses for further discussion regarding the Company’s estimate of lifetime credit losses for off-balance sheet exposure. The following table summarizes the contract or notional amount of the Company’s exposure to off-balance sheet risk as of September 30, 2023 and December 31, 2022. (Dollars in thousands) September 30, 2023 December 31, 2022 Commitments to extend credit $ 288,081 $ 240,084 Standby letters of credit $ 19,804 $ 14,677 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property and equipment, income-producing commercial properties, and other real estate properties. Unfunded commitments under lines of credit are commitments for possible future extensions of credit to existing customers. Those lines of credit may not be drawn upon to the total extent to which the Company is committed. Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | Note 8— Fair Value Measurements Determination of Fair Value The Company determines the fair values of its financial instruments based on the fair value hierarchy established by Accounting Standards Codification (“ASC”) Topic 820 – Fair Value Measurement The fair value measurements and disclosures topic specifies a hierarchy of valuation techniques 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 Company’s market assumptions. Fair Value Hierarchy In accordance with this guidance, the Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. 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 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 - Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3 - Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Assets Measured at Fair Value on a Recurring Basis In accordance with ASC Topic 820, the following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a recurring basis in the financial statements. Securities Available-for-sale and Equity Securities Securities available-for-sale and equity securities with readily determinable fair values 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 (Level 2). If the inputs used to provide the evaluation for certain securities are unobservable and/or there is little, if any, market activity then the security would fall to the lowest level of the hierarchy (Level 3). The Company’s investment portfolio is primarily valued using fair value measurements that are considered to be Level 2. The Company has contracted with a third party portfolio accounting service vendor for valuation of its portfolio of debt securities. The vendor’s primary source for security valuation is ICE Data Services, which evaluates securities based on market data. ICE Data Services utilizes evaluated pricing models that vary by asset class and include available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, vast descriptive terms and conditions databases, as well as extensive quality control programs. The vendor utilizes proprietary valuation matrices for valuing all municipals securities. The initial curves for determining the price, movement, and yield relationships within the municipal matrices are derived from industry benchmark curves or sourced from a municipal trading desk. The securities are further broken down according to issuer, credit support, state of issuance and rating to incorporate additional spreads to the industry benchmark curves. Interest Rate Swap Agreements Interest rate swap agreements are measured by alternative pricing sources using a discounted cash flow method that incorporates current market interest rates. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets. These characteristics classify interest rate swap agreements as Level 2 in the fair value hierarchy. The following tables summarize the fair value of assets measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022. Fair Value Measurements at September 30, 2023 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs (Dollars in thousands) September 30, 2023 (Level 1) (Level 2) (Level 3) Assets: Securities available-for-sale: U.S. Treasuries $ 42,194 $ — $ 42,194 $ — U.S. government and federal agencies 12,881 — 12,881 — Corporate bonds 2,406 — 2,406 — Collateralized mortgage obligations 33,522 — 33,522 — Tax-exempt municipal 1,156 — 1,156 — Taxable municipal 580 — 580 — Mortgage-backed 76,345 — 76,345 — Equity securities, at fair value 2,443 2,443 — — Interest rate swap agreements 1,390 — 1,390 — Mortgage servicing rights 9 — — 9 Total assets at fair value $ 172,926 $ 2,443 $ 170,474 $ 9 Liabilities: Interest rate swap agreements $ 1,390 $ — $ 1,390 $ — Total liabilities at fair value $ 1,390 $ — $ 1,390 $ — Fair Value Measurements at December 31, 2022 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs (Dollars in thousands) December 31, 2022 (Level 1) (Level 2) (Level 3) Assets: Securities available-for-sale: U.S. Treasuries $ 59,210 $ — $ 59,210 $ — U.S. government and federal agencies 34,760 — 34,760 — Corporate bonds 2,614 — 2,614 — Collateralized mortgage obligations 38,474 — 38,474 — Tax-exempt municipal 4,645 — 4,645 — Taxable municipal 579 — 579 — Mortgage-backed 217,294 — 217,294 — Equity securities, at fair value 2,115 2,115 — — Interest rate swap agreement 1,217 — 1,217 — Total assets at fair value $ 360,908 $ 2,115 $ 358,793 $ — Liabilities: Interest rate swap agreement $ 1,217 $ — $ 1,217 $ — Total liabilities at fair value $ 1,217 $ — $ 1,217 $ — Assets Measured at Fair Value on a Nonrecurring Basis Under certain circumstances, the Company makes adjustments to fair value for assets and liabilities although they are not measured at fair value on an ongoing basis. The following describes the valuation techniques used by the Company to measure certain assets recorded at fair value on a nonrecurring basis in the financial statements: Collateral Dependent Loans In accordance with ASC 326, loans that do not share risk characteristics are evaluated on an individual basis. The Company designates individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk and loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. The measurement of loss associated with collateral dependent 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. The vast majority of the Company’s collateral is real estate. The value of real estate collateral is determined utilizing a market valuation approach based on an appraisal, of one year or less, conducted by an independent, licensed appraiser using observable market data (Level 2). However, if the collateral is a house or building in the process of construction, or if an appraisal of the property is more than one-year-old and not solely based on observable market comparables, or management determines the fair value of the collateral is further impaired below the appraised value, then a Level 3 valuation is considered to measure the fair value. The value of business equipment is based upon an outside appraisal, of one year or less, if deemed significant, or the net book value on the applicable business’s financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Consolidated Statements of Income. The Company had no collateral dependent loans with a recorded reserve as of September 30, 2023 or December 31, 2022. Other Real Estate Owned (“OREO”) OREO is carried at the lower of cost or fair value less selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value using observable market data, the Company records the property as Level 2. When an appraised value using observable market data is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the property as Level 3 valuation. Any fair value adjustments are recorded in the period incurred and expensed against current earnings. The Company had no OREO as of September 30, 2023 or December 31, 2022. The following tables present the carrying value and estimated fair value, including the level within the fair value hierarchy, of the Company’s financial instruments as of September 30, 2023 and December 31, 2022. Fair Value Measurements at September 30, 2023 Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Carrying Value as of Assets Observable Inputs Inputs Fair Value as of (Dollars in thousands) September 30, 2023 (Level 1) (Level 2) (Level 3) September 30, 2023 Assets: Cash and cash equivalents $ 192,656 $ 192,656 $ — $ — $ 192,656 Securities: Available-for-sale 169,084 — 169,084 — 169,084 Held-to-maturity 96,347 — 75,733 — 75,733 Equity securities, at fair value 2,443 2,443 — — 2,443 Restricted securities, at cost 5,007 — 5,007 — 5,007 Loans, net 1,800,096 — — 1,660,836 1,660,836 Interest rate swap agreements 1,390 — 1,390 — 1,390 Mortgage servicing rights 9 — — 9 9 Accrued interest receivable 5,701 — 5,701 — 5,701 Liabilities: Deposits $ 1,981,623 $ — $ 1,977,757 $ — $ 1,977,757 Federal Reserve Bank borrowings 54,000 — 54,000 — 54,000 Subordinated debt 24,687 — — 21,269 21,269 Interest rate swap agreements 1,390 — 1,390 — 1,390 Accrued interest payable 2,610 — 2,610 — 2,610 Fair Value Measurements at December 31, 2022 Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Carrying Value as of Assets Observable Inputs Inputs Fair Value as of (Dollars in thousands) December 31, 2022 (Level 1) (Level 2) (Level 3) December 31, 2022 Assets: Cash and cash equivalents $ 61,599 $ 61,599 $ — $ — $ 61,599 Securities: Available-for-sale 357,576 — 357,576 — 357,576 Held-to-maturity 99,415 — 81,161 — 81,161 Equity securities, at fair value 2,115 2,115 — — 2,115 Restricted securities, at cost 4,425 — 4,425 — 4,425 Loans, net 1,769,300 — — 1,676,887 1,676,887 Interest rate swap agreement 1,217 — 1,217 — 1,217 Bank owned life insurance 21,170 — 21,170 — 21,170 Accrued interest receivable 5,531 — 5,531 — 5,531 Liabilities: Deposits $ 2,067,740 $ — $ 2,065,248 $ — $ 2,065,248 Subordinated debt 24,624 — — 22,457 22,457 Federal funds purchased 25,500 — 25,500 — 25,500 Interest rate swap agreement 1,217 — 1,217 — 1,217 Accrued interest payable 1,035 — 1,035 — 1,035 |
Earnings per Common Share
Earnings per Common Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings per Common Share | |
Earnings per Common Share | Note 9— Earnings per Common Share Earnings per common share is calculated in accordance with ASC 260 - Earnings Per Share Under the two-class method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of voting common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. The following table summarizes the computation of earnings per share for the three and nine months ended September 30, 2023 and September 30, 2022. Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Earnings (Loss) per common share - basic: Income (Loss) available to common shareholders (in thousands): Net income (loss) $ (10,137) $ 8,045 $ 656 $ 23,601 Less: Income attributable to unvested restricted stock awards — (33) (2) (103) Net income (loss) available to common shareholders $ (10,137) $ 8,012 $ 654 $ 23,498 Weighted average shares outstanding: Common shares outstanding, including unvested restricted stock 14,126,114 14,047,746 14,174,804 13,963,307 Less: Unvested restricted stock (46,088) (58,332) (48,282) (60,983) Weighted-average common shares outstanding - basic 14,080,026 13,989,414 14,126,522 13,902,324 Earnings (Loss) per common share - basic $ (0.72) $ 0.57 $ 0.05 $ 1.69 Earnings (Loss) per common share - diluted: Income (loss) available to common shareholders (in thousands): Net income (loss) $ (10,137) $ 8,045 $ 656 $ 23,601 Less: Income attributable to unvested restricted stock awards — (33) (2) (103) Net income (loss) available to common shareholders $ (10,137) $ 8,012 $ 654 $ 23,498 Weighted average shares outstanding: Common shares outstanding, including unvested restricted stock 14,126,114 14,047,746 14,174,804 13,963,307 Less: Unvested restricted stock (46,088) (58,332) (48,282) (60,983) Plus: Effect of dilutive options — 118,872 72,656 163,563 Weighted-average common shares outstanding - diluted 14,080,026 14,108,286 14,199,179 14,065,887 Earnings (Loss) per common share - diluted $ (0.72) $ 0.57 $ 0.05 $ 1.67 Outstanding options to purchase common stock were considered in the computation of diluted earnings per share for the periods presented. No stock options outstanding as of September 30, 2023 were included in computing diluted earnings per share for the three months ended September 30, 2023 as the Company reported a net loss and the impact would have been anti-dilutive. All stock options outstanding as of September 30, 2023 were included in computing diluted earnings per share for the nine months ended September 30, 2023, as none had anti-dilutive effects. All stock options outstanding as of September 30, 2022 were included in computing diluted earnings per share for the three and nine months ended September 30, 2022, as none had anti-dilutive effects. |
Stock Based Compensation Plan
Stock Based Compensation Plan | 9 Months Ended |
Sep. 30, 2023 | |
Stock Based Compensation Plan | |
Stock Based Compensation Plan | Note 10— Stock Based Compensation Plan The Company’s share-based compensation plan, approved by stockholders and effective April 28, 2015 (the “2015 Plan”), provides for the grant of share-based awards in the form of incentive stock options, non-incentive stock options, restricted stock and restricted stock units to directors and employees. The Company has reserved 976,211 shares of voting common stock for issuance under the 2015 Plan, which will remain in effect until April 28, 2025. The Company’s Compensation Committee administers the 2015 Plan and has the authority to determine the terms and conditions of each award thereunder. As of September 30, 2023, 301,242 shares are available to grant in future periods under the 2015 Plan. The Company’s previous share-based compensation plan, the 2006 Stock Option Plan (the “2006 Plan”), provided for the grant of share-based awards in the form of incentive stock options and non-incentive stock options to directors and employees. As amended, the 2006 Plan provided for awards of up to 1,490,700 shares. In April 2015, the 2006 Plan was terminated and replaced with the 2015 Plan. Options outstanding prior to April 28, 2015 were granted under the 2006 Plan and shall be subject to the provisions of the 2006 Plan. To date, options granted under the 2015 Plan typically vest over five years and expire 10 years from the grant date. Under the 2015 Plan, the exercise price of options may not be less than 100% of fair market value at the grant date with a maximum term for an option award of 10 years from the grant date. The table below provides a summary of the stock options activity for the nine months ended September 30, 2023. September 30, 2023 Weighted Average Aggregate Intrinsic Shares Exercise Price Value Outstanding at January 1, 2023 189,934 $ 11.76 Granted — — Exercised (27,375) 11.75 Forfeited or expired (412) 9.44 Outstanding at September 30, 2023 162,147 11.77 $ 985,741 Exercisable September 30, 2023 162,147 $ 11.77 $ 985,741 The aggregate intrinsic value of stock options in the table above represents the total amount by which the current market value of the underlying stock exceeds the exercise price of the option that would have been received by the Company had all option holders exercised their options on September 30, 2023. The intrinsic value of options exercised was $370 thousand for the nine months ended September 30, 2023, and $693 thousand and $4.4 million for the three and nine months ended September 30, 2022, respectively. There were no options exercised during the three months ended September 30, 2023. These amounts and the intrinsic values noted in the table above change based on changes in the market value of the Company’s voting common stock. The table below provides a summary of the stock options outstanding and exercisable as of September 30, 2023. September 30, 2023 Options Outstanding Options Exercisable Weighted Average Weighted Average Remaining Remaining Number Contractual Life Number Contractual Life Exercise Prices Outstanding in Years Exercisable in Years $11.01 - $12.00 161,085 1.57 161,085 1.57 $12.01 - $13.00 1,062 1.23 1,062 1.23 Total 162,147 1.57 162,147 1.57 There were no options granted during the three or nine months ended September 30, 2023 or September 30, 2022. The Company did not record any share-based compensation expense applicable to the Company’s share-based compensation plans for stock options during the three or nine months ended September 30, 2023 or September 30, 2022. The Company does not have any unrecognized share-based compensation expense related to nonvested options as of September 30, 2023. The table below provides a summary of the restricted stock awards granted under the 2015 plan for the nine months ended September 30, 2023. September 30, 2023 Weighted Average Shares Grant Date Fair Value Nonvested at January 1, 2023 55,185 $ 21.80 Granted 180 21.78 Vested (9,124) 19.15 Forfeited (370) 15.50 Nonvested at September 30, 2023 45,871 22.37 Compensation expense for restricted stock grants is recognized over the vesting period of the awards based on the fair value of the Company’s voting common stock at issue date. The fair value of the stock was determined using the closing stock price on the day of grant. The restricted stock grants vest over two Share-based compensation expense applicable to the Company’s share-based compensation plans for restricted stock grants was $130 thousand and $133 thousand for the three months ended September 30, 2023 and September 30, 2022, respectively. The total fair value of the shares, which vested during the three months ended September 30, 2023 and September 30, 2022, was $8 thousand and $10 thousand, respectively. Share-based compensation expense applicable to the Company’s share-based compensation plans for restricted stock grants was $464 thousand and $402 thousand for the nine months ended September 30, 2023 and September 30, 2022, respectively. The total fair value of the shares, which vested during the nine months ended September 30, 2023 and September 30, 2022, was $218 thousand and $381 thousand, respectively. Unrecognized share-based compensation expense related to nonvested restricted stock grants amounted to $631 thousand as of September 30, 2023. This amount is expected to be recognized over a weighted-average period of 1.5 years. |
Regulatory Capital
Regulatory Capital | 9 Months Ended |
Sep. 30, 2023 | |
Regulatory Capital | |
Regulatory Capital | Note 11— Regulatory Capital The Company is a bank holding company with less than $3 billion in assets and does not (i) have significant off balance sheet exposure, (ii) engage in significant non-banking activities, or (iii) have a material amount of securities registered under the Securities Exchange Act of 1934, as amended (“Exchange Act”). As a result, the Company qualifies as a small bank holding company under the Federal Reserve’s Small Bank Holding Company Policy Statement and is currently not subject to consolidated regulatory capital requirements. The Bank is subject to capital adequacy standards adopted by the Federal Reserve, including the capital rules that implemented the Basel III regulatory capital reforms developed by the Basel Committee on Banking Supervision. Failure to meet minimum capital requirements can initiate certain mandatory – possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Management believes that the Bank met all capital adequacy requirements to which it was subject as of September 30, 2023 and December 31, 2022. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, common equity Tier 1 to risk-weighted assets, and Tier 1 capital to average assets. In addition to the minimum regulatory capital required for capital adequacy purposes, the Bank is required to maintain a minimum capital conservation buffer above those minimums in the form of common equity. The capital conservation buffer, which was phased in ratably over a four year period beginning January 1, 2016, is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and discretionary compensation paid to certain officers, based on the amount of the shortfall. The capital conservation buffer was 2.5% at September 30, 2023, and is applicable for the common equity Tier 1, Tier 1, and total capital ratios. On January 1, 2023, the Company adopted ASC 326, which replaced the incurred loss methodology with the CECL methodology for estimating credit losses and generally applies to financial assets measured at amortized cost. The Federal Reserve and FDIC have adopted rules to identify which credit loss allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over a three-year transition period ending January 1, 2026 the day-one impact on regulatory capital that may result from the adoption of the CECL model. The Company implemented the CECL model on January 1, 2023 and elected to apply the provisions of the CECL deferral transition in the determination of its risk based capital ratios. The impact of the application of this deferral transition on the ratios was not significant. As of September 30, 2023, the most recent notification from the Reserve Bank categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the institution must maintain minimum total risk-based, common equity Tier 1, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since the notification that management believes have changed the Bank’s category. The table below provides a summary of the Bank’s capital ratios as of September 30, 2023 and December 31, 2022. Minimum To Be Well Capitalized Actual Minimum Capital Requirement (1) Under Prompt Corrective Action (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio As of September 30, 2023 Total capital (to risk weighted assets) $ 280,891 15.7 % $ 188,433 10.5 % $ 179,460 10.0 % Tier 1 capital (to risk weighted assets) 261,666 14.6 % 152,541 8.5 % 143,568 8.0 % Common equity tier 1 capital (to risk weighted assets) 261,666 14.6 % 125,622 7.0 % 116,649 6.5 % Tier 1 capital (to average assets) 261,666 11.3 % 92,625 4.0 % 115,781 5.0 % As of December 31, 2022 Total capital (to risk weighted assets) $ 283,471 15.6 % $ 190,798 10.5 % $ 181,712 10.0 % Tier 1 capital (to risk weighted assets) 262,960 14.4 % 155,219 8.5 % 146,089 8.0 % Common equity tier 1 capital (to risk weighted assets) 262,960 14.4 % 127,828 7.0 % 118,697 6.5 % Tier 1 capital (to average assets) 262,960 11.3 % 93,083 4.0 % 116,354 5.0 % (1) |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2023 | |
Revenue | |
Revenue | Note 12— Revenue Certain of the Company’s non-interest revenue streams are derived from short-term contacts associated with services provided to deposit account holders as well as other ancillary services, which are accounted for in accordance with ASC 606 – Revenue Recognition The following table shows the components of non-interest income for the three and nine months ended September 30, 2023 and September 30, 2022. Three months ended Nine months ended September 30, September 30, (Dollars in thousands) 2023 2022 2023 2022 Service charges on deposit accounts (1) Overdrawn account fees $ 20 $ 19 $ 55 $ 60 Account service fees 65 60 184 180 Other service charges and fees (1) Interchange income 101 108 304 306 Other charges and fees 59 67 373 163 Bank owned life insurance 23 255 224 445 Losses on sale of available-for-sale securities (17,114) — (17,316) — Net gains (losses) on premises and equipment (1) — — 16 (1) Insurance commissions (1) 54 47 310 312 Gain on sale of government guaranteed loans 27 — 50 — Non-qualified deferred compensation plan asset gains (losses), net (60) (107) 112 (498) Other operating income (2) 10 1 124 6 Total non-interest income $ (16,815) $ 450 $ (15,564) $ 973 (1) Income within the scope of ASC 606. (2) Includes other operating income within the scope of ASC 606 amounting to $10 thousand and $33 thousand for the three and nine months ended September 30, 2023, respectively. Includes other operating income of $91 thousand related to swap fee income on a back-to-back loan swaps for the nine months ended September 30, 2023, which is outside the scope of ASC 606. There was no swap fee income on back-to-back loan swaps for the three months ended September 30, 2023. Includes other operating income within the scope of ASC 606 amounting to $1 thousand and $6 thousand for the three and nine months ended September 30, 2022, respectively. A description of the Company’s revenue streams accounted for under ASC 606 follows: Service charges on deposit accounts Service charges on deposit accounts consist of overdrawn account fees and account service fees. Overdrawn account fees are recognized at the point in time that the overdraft occurs. Account service fees consist primarily of account analysis and other maintenance fees and are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Payment for service charges on deposit accounts is received immediately or in the following month through a direct charge to customers’ accounts. Other service charges and fees Other service charges and fees are primarily comprised of interchange income and other charges and fees. Interchange income is earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. Other charges and fees include revenue from processing wire transfers, cashier’s checks, and other transaction based services. The Company’s performance obligation for these charges and fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. Net gains (losses) on premises and equipment The Company records a gain or loss on the disposition of premises and equipment when control of the property transfers or is involuntarily converted to a monetary asset (e.g., insurance proceeds). This income is reflected in other operating income on the Company’s Consolidated Statements of Income. Insurance commissions The Company performs the function of an insurance intermediary by introducing the policyholder and insurer and is compensated in the form of a commission for placement of an insurance policy based on a percentage of premiums issued and maintained during the period. Revenue is recognized when received. |
Other Operating Expenses
Other Operating Expenses | 9 Months Ended |
Sep. 30, 2023 | |
Other Operating Expenses | |
Other Operating Expenses | Note 13— Other Operating Expenses The following table shows the components of other operating expenses for the three and nine months ended September 30, 2023 and September 30, 2022. Three months ended Nine months ended September 30, September 30, (Dollars in thousands) 2023 2022 2023 2022 Advertising expense $ 87 $ 47 $ 239 $ 147 Data processing 493 484 1,374 1,412 FDIC insurance 275 140 771 410 Professional fees (141) 281 154 852 State franchise tax 604 523 1,785 1,570 Director costs 186 200 629 615 Other operating expenses 377 427 1,135 1,241 Total other operating expenses $ 1,881 $ 2,102 $ 6,087 $ 6,247 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | Note 14— Accumulated Other Comprehensive Income (Loss) The following table presents the changes in accumulated other comprehensive income (loss), by category, net of tax for the nine months ended September 30, 2023 and September 30, 2022. September 30, 2023 Unrealized Gains on Securities Transferred from Unrealized Gain (Loss) on Available-for-sale to Accumulated Other (Dollars in thousands) Available-for-sale Securities Held-to-maturity Comprehensive Income (Loss) Beginning balance, January 1, 2023 $ (28,942) $ 245 $ (28,697) Net change during the period 11,800 (73) 11,727 Ending balance, September 30, 2023 $ (17,142) $ 172 $ (16,970) September 30, 2022 Unrealized Gains on Securities Transferred from Unrealized Loss on Available-for-sale to Accumulated Other (Dollars in thousands) Available-for-sale Securities Held-to-maturity Comprehensive Loss Beginning balance, January 1, 2022 $ (789) $ 389 $ (400) Net change during the period (30,401) (115) (30,516) Ending Balance, September 30, 2022 $ (31,190) $ 274 $ (30,916) Items reclassified out of accumulated other comprehensive income (loss) to net income during the nine months ended September 30, 2023 consisted of losses on securities classified as available-for-sale. The losses on these transactions totaled $17.3 million and the related tax benefit was $3.6 million. Losses are included in the “Losses on sale of available-for-sale securities” line item and the related tax is presented in the “Income tax expense” line item in the Consolidated Statements of Income. The Company did not have any items reclassified out of accumulated other comprehensive income (loss) to net income during the nine months ended September 30, 2022. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Nature of Business and Summary of Significant Accounting Policies | |
Accounting Standards Adopted in 2023 | Accounting Standards Adopted in 2023 ASU 2016-13 In addition, CECL made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell. The Company adopted ASC 326 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach for all financial assets measured at amortized cost and off-balance sheet credit exposures. At adoption, the after tax impact to retained earnings was a reduction of $(2.3) million based on our evaluation as of that date. This adjustment consisted of increases to the allowance for credit losses on loans, as well as the Company's allowance for unfunded loan commitments. The Company elected not to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on loans or securities that are placed on nonaccrual status, which is generally when the instrument is 90 days past due, or earlier if the Company believes the collection of interest is doubtful. The Company has concluded that this policy results in the timely reversal of uncollectible interest. ASU 2022-02 |
Allowance for credit losses | Allowance for Credit Losses - Held-to-Maturity Securities The Company estimates expected credit losses on held-to-maturity securities on an individual basis based on a Probability of Default/Loss Given Default (“PD/LGD”) methodology primarily using security-level credit ratings. The primary indicators of credit quality for the Company’s held-to-maturity portfolio are security type and credit rating, which are influenced by a number of factors including obligor cash flow, geography, seniority, among other factors. The Company’s held-to-maturity securities with credit risk are municipal bonds, which had a credit rating of AA or better as of September 30, 2023. All other held-to-maturity securities are covered by the explicit or implied guarantee of the United States government or one of its agencies. Changes in the allowance for credit loss are recorded as provision for (or recovery of) credit losses in the Consolidated Statements of Income. The Company did not have an allowance for credit losses on held-to-maturity securities as of September 30, 2023 or upon adoption of ASC 326. Refer to Note 2 – Investment Securities for further discussion. Allowance for Credit Losses - Available-for-Sale Securities Management evaluates all available-for-sale securities in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specific to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any deficiency is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. Changes in the allowance for credit loss are recorded as a provision for (or recovery of) credit losses in the Consolidated Statements of Income. Losses are charged against the allowance for credit loss when management believes an available-for-sale security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met. At September 30, 2023, there was no allowance for credit loss related to the available-for-sale portfolio. Refer to Note 2 – Investment Securities for further discussion. Accrued interest receivable on available-for-sale securities totaled $535 thousand at September 30, 2023 and was excluded from the estimate of credit losses. Allowance for Credit Losses - Loans The allowance for loan credit losses represents an amount which, in management's judgment, is adequate to absorb the lifetime expected losses that may be sustained on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions, and prepayment experience. The allowance for loan credit losses is measured and recorded upon the initial recognition of a financial asset. The allowance for loan credit losses is reduced by charge-offs, net of recoveries of previous losses, and is increased or decreased by a provision for (or recovery of) credit losses, which is recorded in the Consolidated Statements of Income. The Company is utilizing a discounted cash flow model to estimate its current expected credit losses. For the purposes of calculating its quantitative reserves, the Company has segmented its loan portfolio based on loans which share similar risk characteristics. Within the quantitative portion of the calculation, the Company utilizes at least one or a combination of loss drivers, which may include unemployment rates, home price indices, and/or gross domestic product, to adjust its loss rates over a reasonable and supportable forecast period of one year. A straight-line reversion technique is used for the following four quarters, at which time the Company reverts to historical averages. To further adjust the allowance for credit losses for expected losses not already included within the quantitative component of the calculation, the Company may consider qualitative factors, including but not limited to: variability in the economic forecast, changes in volume and severity of adversely classified loans, changes in concentrations of credit, changes in the nature and volume of the loan segments, factors related to credit administration, and other Loans that do not share risk characteristics are evaluated on an individual basis. The Company designates individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk and loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. The adoption of CECL did not result in a significant change to any other credit risk management and monitoring processes, including identification of past due or delinquent borrowers, nonaccrual practices or charge-off policy. Allowance for Credit Losses – Unfunded Commitments Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for (or recovery of) credit losses in the Consolidated Statements of Income. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the CECL model using the same methodology as the loan portfolio, taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for unfunded commitments is included in other liabilities on the Company’s consolidated balance sheets. |
Accrued Interest Receivable | Accrued Interest Receivable The Company has elected to exclude accrued interest from the amortized cost basis in its determination of the allowance for credit losses for both loans and held-to-maturity securities, as well as elected the policy to write-off accrued interest receivable directly through the reversal of interest income. Accrued interest receivable totaled $4.8 million on loans and $241 thousand on held-to-maturity securities at September 30, 2023, and is included in “Accrued Interest Receivable” on the Company’s Consolidated Balance Sheets. |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Investment Securities | |
Summary of amortized cost and fair value of securities available-for-sale | September 30, 2023 Gross Gross Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains (Losses) Value Available-for-sale U.S. Treasuries $ 44,765 $ — $ (2,571) $ 42,194 U.S. government and federal agencies 13,821 — (940) 12,881 Corporate bonds 3,000 — (594) 2,406 Collateralized mortgage obligations 41,486 — (7,964) 33,522 Tax-exempt municipal 1,380 — (224) 1,156 Taxable municipal 607 — (27) 580 Mortgage-backed 85,726 — (9,381) 76,345 Total Available-for-sale Securities $ 190,785 $ — $ (21,701) $ 169,084 December 31, 2022 Gross Gross Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains (Losses) Value Available-for-sale U.S. Treasuries $ 63,480 $ — $ (4,270) $ 59,210 U.S. government and federal agencies 38,748 — (3,988) 34,760 Corporate bonds 3,000 — (386) 2,614 Collateralized mortgage obligations 44,732 — (6,258) 38,474 Tax-exempt municipal 4,993 — (348) 4,645 Taxable municipal 608 — (29) 579 Mortgage-backed 238,652 — (21,358) 217,294 Total Available-for-sale Securities $ 394,213 $ — $ (36,637) $ 357,576 |
Summary of amortized cost and fair value of securities held-to-maturity | September 30, 2023 Gross Gross Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains (Losses) Value Held-to-maturity U.S. Treasuries $ 6,001 $ — $ (873) $ 5,128 U.S. government and federal agencies 35,463 — (6,743) 28,720 Collateralized mortgage obligations 19,773 — (4,920) 14,853 Taxable municipal 6,061 — (1,409) 4,652 Mortgage-backed 29,049 — (6,669) 22,380 Total Held-to-maturity Securities $ 96,347 $ — $ (20,614) $ 75,733 December 31, 2022 Gross Gross Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains (Losses) Value Held-to-maturity U.S. Treasuries $ 6,000 $ — $ (840) $ 5,160 U.S. government and federal agencies 35,551 — (6,135) 29,416 Collateralized mortgage obligations 21,275 — (4,227) 17,048 Taxable municipal 6,073 — (1,364) 4,709 Mortgage-backed 30,516 — (5,688) 24,828 Total Held-to-maturity Securities $ 99,415 $ — $ (18,254) $ 81,161 |
Schedule of gross unrealized loss position of investments | September 30, 2023 Less than 12 Months 12 Months or Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Available-for-sale U.S. Treasuries $ — $ — $ 42,194 $ (2,571) $ 42,194 $ (2,571) U.S. government and federal agencies — — 12,881 (940) 12,881 (940) Corporate bonds — — 2,406 (594) 2,406 (594) Collateralized mortgage obligations — — 33,522 (7,964) 33,522 (7,964) Tax-exempt municipal — — 1,156 (224) 1,156 (224) Taxable municipal — — 580 (27) 580 (27) Mortgage-backed — — 76,345 (9,381) 76,345 (9,381) Total Available-for-sale Securities $ — $ — $ 169,084 $ (21,701) $ 169,084 $ (21,701) December 31, 2022 Less than 12 Months 12 Months or Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Available-for-sale U.S. Treasuries $ 31,261 $ (1,194) $ 27,949 $ (3,076) $ 59,210 $ (4,270) U.S. government and federal agencies 16,107 (1,078) 18,653 (2,910) 34,760 (3,988) Corporate bonds 2,614 (386) — — 2,614 (386) Collateralized mortgage obligations 16,746 (1,143) 21,728 (5,115) 38,474 (6,258) Tax-exempt municipal 4,645 (348) — — 4,645 (348) Taxable municipal 337 (2) 242 (27) 579 (29) Mortgage-backed 145,795 (9,612) 71,499 (11,746) 217,294 (21,358) Total Available-for-sale Securities $ 217,505 $ (13,763) $ 140,071 $ (22,874) $ 357,576 $ (36,637) December 31, 2022 Less than 12 Months 12 Months or Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Held-to-maturity U.S. Treasuries $ — $ — $ 5,160 $ (840) $ 5,160 $ (840) U.S. government and federal agencies — — 29,416 (6,135) 29,416 (6,135) Collateralized mortgage obligations — — 17,048 (4,227) 17,048 (4,227) Taxable municipal — — 4,709 (1,364) 4,709 (1,364) Mortgage-backed 825 (159) 24,003 (5,529) 24,828 (5,688) Total Held-to-maturity Securities $ 825 $ (159) $ 80,336 $ (18,095) $ 81,161 $ (18,254) |
Contractual maturities of investment securities | September 30, 2023 Amortized Fair (Dollars in thousands) Cost Value Available-for-sale Due in one year or less $ 14,322 $ 14,055 Due after one year through five years 54,845 51,453 Due after five years through ten years 56,992 51,886 Due after ten years 64,626 51,690 Total Available-for-sale Securities $ 190,785 $ 169,084 September 30, 2023 Amortized Fair (Dollars in thousands) Cost Value Held-to-maturity Due in one year or less $ — $ — Due after one year through five years 20,163 17,117 Due after five years through ten years 24,465 19,496 Due after ten years 51,719 39,120 Total Held-to-maturity Securities $ 96,347 $ 75,733 |
Summary of restricted securities | (Dollars in thousands) September 30, 2023 December 31, 2022 Federal Reserve Bank Stock $ 3,306 $ 3,292 Federal Home Loan Bank Stock 1,641 1,073 Community Bankers’ Bank Stock 60 60 Total Restricted Securities $ 5,007 $ 4,425 |
Loans (Tables)
Loans (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Allowance for Loan Credit Losses | |
Schedule of composition of the loan portfolio | (Dollars in thousands) September 30, 2023 December 31, 2022 Real Estate Loans: Commercial $ 1,133,069 $ 1,118,127 Construction and land development 179,570 195,027 Residential 464,509 426,841 Commercial - Non-Real Estate: Commercial loans 37,925 44,924 Consumer - Non-Real Estate: Consumer loans 467 529 Total Gross Loans $ 1,815,540 $ 1,785,448 Allowance for loan credit losses (20,036) (20,208) Net deferred loan costs 4,592 4,060 Total net loans $ 1,800,096 $ 1,769,300 |
Allowance for Loan Credit Los_2
Allowance for Loan Credit Losses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Allowance for Loan Credit Losses | |
Schedule of allowance for loan losses activity and balance | The following tables present the activity in the allowance for loan credit losses for the nine months ended September 30, 2023. September 30, 2023 Real Estate Construction & Land Dollars in thousands Commercial Development Residential Commercial Consumer Unallocated Total Beginning balance, December 31, 2022 $ 13,205 $ 2,860 $ 3,044 $ 456 $ 5 $ 638 $ 20,208 Adjustment to allowance for adoption of ASC 326 (2,649) 476 4,552 367 57 (638) 2,165 Charge-offs — — — — — — — Recoveries — — — 2 — — 2 Provision for (recovery of) credit losses 2,187 (1,148) (3,014) (360) (4) — (2,339) Ending balance, September 30, 2023 $ 12,743 $ 2,188 $ 4,582 $ 465 $ 58 $ — $ 20,036 The following table presents the activity for the allowance for loan losses for the nine months ended September 30, 2022. September 30, 2022 Real Estate Construction & Land Dollars in thousands Commercial Development Residential Commercial Consumer Unallocated Total Allowance for loan losses: Beginning Balance, December 31, 2021 $ 13,091 $ 2,824 $ 2,769 $ 711 $ 5 $ 632 $ 20,032 Charge-offs (1) — — — — — (1) Recoveries — — — 1 — — 1 Provision for (recovery of) loan losses 345 97 (186) (208) 1 (49) — Ending Balance, September 30, 2022 $ 13,435 $ 2,921 $ 2,583 $ 504 $ 6 $ 583 $ 20,032 The following tables present the balance of the allowance for loan losses, the allowance by impairment methodology, total loans, and loans by impairment methodology as of December 31, 2022 and September 30, 2022, respectively. There were no collateral dependent or individually evaluated loans as of September 30, 2023. December 31, 2022 Real Estate Construction & Land Dollars in thousands Commercial Development Residential Commercial Consumer Unallocated Total Allowance balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 13,205 2,860 3,044 456 5 638 20,208 Total allowance $ 13,205 $ 2,860 $ 3,044 $ 456 $ 5 $ 638 $ 20,208 Loans: Individually evaluated for impairment $ — $ — $ 418 $ — $ — $ — $ 418 Collectively evaluated for impairment 1,118,127 195,027 426,423 44,924 529 — 1,785,030 Total loans $ 1,118,127 $ 195,027 $ 426,841 $ 44,924 $ 529 $ — $ 1,785,448 September 30, 2022 Real Estate Construction & Land Dollars in thousands Commercial Development Residential Commercial Consumer Unallocated Total Allowance balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — Collectively evaluated for impairment 13,435 2,921 2,583 504 6 583 20,032 Total allowance $ 13,435 $ 2,921 $ 2,583 $ 504 $ 6 $ 583 $ 20,032 Loans: Individually evaluated for impairment $ — $ — $ 530 $ — $ — $ — $ 530 Collectively evaluated for impairment 1,091,221 199,324 385,166 45,105 585 — 1,721,401 Total loans $ 1,091,221 $ 199,324 $ 385,696 $ 45,105 $ 585 $ — $ 1,721,931 |
Schedule of impaired loans | December 31, 2022 Recorded Recorded Unpaid Investment Investment Total Average Interest Principal with with Recorded Related Recorded Income (Dollars in thousands) Balance No Allowance Allowance Investment Allowance Investment (1) Recognized (1) Real Estate Loans Commercial $ — $ — $ — $ — $ — $ — $ — Construction and land development — — — — — — — Residential 418 418 — 418 — 427 15 Commercial — — — — — — — Consumer — — — — — — — Total Impaired Loans $ 418 $ 418 $ — $ 418 $ — $ 427 $ 15 (1) Amounts shown for the twelve-month period ended December 31, 2022. |
Schedule of past due and non-accrual loans | September 30, 2023 30-59 Days 60-89 Days 90 Days or 90 Days or More Past Past More Total Past Total Past Due and Nonaccrual (Dollars in thousands) Due Due Past Due Due Current Loans Still Accruing Loans Real Estate Loans Commercial $ — $ — $ — $ — $ 1,133,069 $ 1,133,069 $ — $ — Construction and land development — — — — 179,570 179,570 — — Residential — — — — 464,509 464,509 — — Commercial — — — — 37,925 37,925 — — Consumer — — — — 467 467 — — Total Loans $ — $ — $ — $ — $ 1,815,540 $ 1,815,540 $ — $ — December 31, 2022 30-59 Days 60-89 Days 90 Days or 90 Days or More Past Past More Total Past Total Past Due and Nonaccrual (Dollars in thousands) Due Due Past Due Due Current Loans Still Accruing Loans Real Estate Loans Commercial $ — $ — $ — $ — $ 1,118,127 $ 1,118,127 $ — $ — Construction and land development — — — — 195,027 195,027 — — Residential — — — — 426,841 426,841 — — Commercial — — — — 44,924 44,924 — — Consumer — — — — 529 529 — — Total Loans $ — $ — $ — $ — $ 1,785,448 $ 1,785,448 $ — $ — |
Schedule of credit quality indicators | Internal Days Past Due Risk Rating 0 - 29 days Pass 30-59 days Special Mention 60-89 days Substandard 90-119 days Doubtful 120+ days Loss |
Schedule of credit quality information | The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of September 30, 2023. Term Loans by Year of Origination (Dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Total Real Estate Loans - Commercial Pass $ 56,696 $ 303,898 $ 205,417 $ 122,694 $ 97,273 $ 342,686 $ 3,168 $ 1,131,832 Special mention — — — 1,237 — — — 1,237 Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Commercial $ 56,696 $ 303,898 $ 205,417 $ 123,931 $ 97,273 $ 342,686 $ 3,168 $ 1,133,069 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Real Estate Loans - Construction and land development Pass $ 33,136 $ 58,071 $ 31,471 $ 18,087 $ 30 $ 8,845 $ 27,780 $ 177,420 Special mention — — — — 2,150 — — 2,150 Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Construction and land development $ 33,136 $ 58,071 $ 31,471 $ 18,087 $ 2,180 $ 8,845 $ 27,780 $ 179,570 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Real Estate Loans - Residential Pass $ 61,683 $ 115,508 $ 134,133 $ 88,589 $ 25,147 $ 22,213 $ 17,236 $ 464,509 Special mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Residential $ 61,683 $ 115,508 $ 134,133 $ 88,589 $ 25,147 $ 22,213 $ 17,236 $ 464,509 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial Loans Pass $ 3,425 $ 7,354 $ 2,146 $ 3,384 $ 5,245 $ 5,198 $ 11,173 $ 37,925 Special mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Commercial Loans $ 3,425 $ 7,354 $ 2,146 $ 3,384 $ 5,245 $ 5,198 $ 11,173 $ 37,925 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer Loans Pass $ 399 $ 6 $ 29 $ — $ — $ 12 $ 21 $ 467 Special mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Loss — — — — — — — — Total Consumer Loans $ 399 $ 6 $ 29 $ - $ — $ 12 $ 21 $ 467 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — The following table presents the Company’s recorded investment in loans by credit quality indicators as of December 31, 2022. December 31, 2022 Special Total (Dollars in thousands) Pass Mention Substandard Doubtful Loss Loans Real Estate Loans Commercial $ 1,116,890 $ 1,237 $ — $ — $ — $ 1,118,127 Construction and land development 192,877 2,150 — — — 195,027 Residential 426,841 — — — — 426,841 Commercial 44,924 — — — — 44,924 Consumer 529 — — — — 529 Total Loans $ 1,782,061 $ 3,387 $ — $ — $ — $ 1,785,448 |
Schedule of unfunded commitments | Allowance for Credit Losses (Dollars in thousands) Unfunded Commitments Beginning balance, December 31, 2022 $ 303 Adjustment to allowance for unfunded commitments for adoption of ASC 326 737 Provision for (recovery of) credit losses (132) Ending balance, September 30, 2023 $ 908 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivatives | |
Schedule of Company's swaps | September 30, 2023 Estimated Weighted Average Notional Fair Years to Receive Pay (Dollars in thousands) Amount Value Maturity Rate Rate Interest rate swap agreements: Pay fixed/receive variable swaps $ 19,591 $ 1,390 3.5 years 6.60 % 3.39 % Pay variable/receive fixed swaps 19,591 (1,390) 3.5 years 3.39 % 6.60 % Total interest rate swap agreements $ 39,182 $ — 3.5 years 5.00 % 5.00 % December 31, 2022 Estimated Weighted Average Notional Fair Years to Receive Pay (Dollars in thousands) Amount Value Maturity Rate Rate Interest rate swap agreements: Pay fixed/receive variable swaps $ 13,767 $ 1,217 2.8 years 6.02 % 2.59 % Pay variable/receive fixed swaps 13,767 (1,217) 2.8 years 2.59 % 6.02 % Total interest rate swap agreements $ 27,534 $ — 2.8 years 4.31 % 4.31 % |
Deposits and Borrowings (Tables
Deposits and Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deposits and Borrowings | |
Schedule of deposits | (Dollars in thousands) September 30, 2023 December 31, 2022 Deposits: Non-interest bearing demand deposits (1) $ 437,880 $ 476,697 Interest-bearing demand deposits (1) 675,819 691,945 Savings deposits 57,408 95,241 Time deposits (2) 810,516 803,857 Total Deposits $ 1,981,623 $ 2,067,740 |
Schedule of short-term debt and long-term debt | September 30, 2023 December 31, 2022 (Dollars in thousands) Stated Interest Rate Weighted-Average Interest Rate Carrying Value Carrying Value Short-term Debt: Federal Reserve Bank borrowings 4.80 % 4.80 % $ 54,000 — Total Short-term Debt $ 54,000 — Long-term Debt: Subordinated debt 5.25 % 5.25 % $ 24,687 $ 24,624 Total Long-term Debt $ 24,687 $ 24,624 (1) Overdraft demand deposits reclassified to loans totaled $5 thousand at September 30, 2023 and $1 thousand at December 31, 2022, respectively. (2) The aggregate amount of certificates of deposit with a minimum denomination of $250,000 was $358.6 million and $318.7 million at September 30, 2023 and December 31, 2022, respectively. |
Schedule of carrying amount of the time deposits by contractual maturity | (Dollars in thousands) September 30, 2023 2023 $ 146,873 2024 477,572 2025 144,346 2026 40,324 2027 1,117 Thereafter 284 Total $ 810,516 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Summary of the contract or notional amount of the Company's exposure to off-balance sheet risk | (Dollars in thousands) September 30, 2023 December 31, 2022 Commitments to extend credit $ 288,081 $ 240,084 Standby letters of credit $ 19,804 $ 14,677 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Summary of fair value of assets measured at fair value on a recurring basis | Fair Value Measurements at September 30, 2023 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs (Dollars in thousands) September 30, 2023 (Level 1) (Level 2) (Level 3) Assets: Securities available-for-sale: U.S. Treasuries $ 42,194 $ — $ 42,194 $ — U.S. government and federal agencies 12,881 — 12,881 — Corporate bonds 2,406 — 2,406 — Collateralized mortgage obligations 33,522 — 33,522 — Tax-exempt municipal 1,156 — 1,156 — Taxable municipal 580 — 580 — Mortgage-backed 76,345 — 76,345 — Equity securities, at fair value 2,443 2,443 — — Interest rate swap agreements 1,390 — 1,390 — Mortgage servicing rights 9 — — 9 Total assets at fair value $ 172,926 $ 2,443 $ 170,474 $ 9 Liabilities: Interest rate swap agreements $ 1,390 $ — $ 1,390 $ — Total liabilities at fair value $ 1,390 $ — $ 1,390 $ — Fair Value Measurements at December 31, 2022 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs (Dollars in thousands) December 31, 2022 (Level 1) (Level 2) (Level 3) Assets: Securities available-for-sale: U.S. Treasuries $ 59,210 $ — $ 59,210 $ — U.S. government and federal agencies 34,760 — 34,760 — Corporate bonds 2,614 — 2,614 — Collateralized mortgage obligations 38,474 — 38,474 — Tax-exempt municipal 4,645 — 4,645 — Taxable municipal 579 — 579 — Mortgage-backed 217,294 — 217,294 — Equity securities, at fair value 2,115 2,115 — — Interest rate swap agreement 1,217 — 1,217 — Total assets at fair value $ 360,908 $ 2,115 $ 358,793 $ — Liabilities: Interest rate swap agreement $ 1,217 $ — $ 1,217 $ — Total liabilities at fair value $ 1,217 $ — $ 1,217 $ — |
Summary of carrying value and estimated fair value of financial instruments | The following tables present the carrying value and estimated fair value, including the level within the fair value hierarchy, of the Company’s financial instruments as of September 30, 2023 and December 31, 2022. Fair Value Measurements at September 30, 2023 Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Carrying Value as of Assets Observable Inputs Inputs Fair Value as of (Dollars in thousands) September 30, 2023 (Level 1) (Level 2) (Level 3) September 30, 2023 Assets: Cash and cash equivalents $ 192,656 $ 192,656 $ — $ — $ 192,656 Securities: Available-for-sale 169,084 — 169,084 — 169,084 Held-to-maturity 96,347 — 75,733 — 75,733 Equity securities, at fair value 2,443 2,443 — — 2,443 Restricted securities, at cost 5,007 — 5,007 — 5,007 Loans, net 1,800,096 — — 1,660,836 1,660,836 Interest rate swap agreements 1,390 — 1,390 — 1,390 Mortgage servicing rights 9 — — 9 9 Accrued interest receivable 5,701 — 5,701 — 5,701 Liabilities: Deposits $ 1,981,623 $ — $ 1,977,757 $ — $ 1,977,757 Federal Reserve Bank borrowings 54,000 — 54,000 — 54,000 Subordinated debt 24,687 — — 21,269 21,269 Interest rate swap agreements 1,390 — 1,390 — 1,390 Accrued interest payable 2,610 — 2,610 — 2,610 Fair Value Measurements at December 31, 2022 Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Carrying Value as of Assets Observable Inputs Inputs Fair Value as of (Dollars in thousands) December 31, 2022 (Level 1) (Level 2) (Level 3) December 31, 2022 Assets: Cash and cash equivalents $ 61,599 $ 61,599 $ — $ — $ 61,599 Securities: Available-for-sale 357,576 — 357,576 — 357,576 Held-to-maturity 99,415 — 81,161 — 81,161 Equity securities, at fair value 2,115 2,115 — — 2,115 Restricted securities, at cost 4,425 — 4,425 — 4,425 Loans, net 1,769,300 — — 1,676,887 1,676,887 Interest rate swap agreement 1,217 — 1,217 — 1,217 Bank owned life insurance 21,170 — 21,170 — 21,170 Accrued interest receivable 5,531 — 5,531 — 5,531 Liabilities: Deposits $ 2,067,740 $ — $ 2,065,248 $ — $ 2,065,248 Subordinated debt 24,624 — — 22,457 22,457 Federal funds purchased 25,500 — 25,500 — 25,500 Interest rate swap agreement 1,217 — 1,217 — 1,217 Accrued interest payable 1,035 — 1,035 — 1,035 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings per Common Share | |
Schedule of computation of earnings per share | The following table summarizes the computation of earnings per share for the three and nine months ended September 30, 2023 and September 30, 2022. Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Earnings (Loss) per common share - basic: Income (Loss) available to common shareholders (in thousands): Net income (loss) $ (10,137) $ 8,045 $ 656 $ 23,601 Less: Income attributable to unvested restricted stock awards — (33) (2) (103) Net income (loss) available to common shareholders $ (10,137) $ 8,012 $ 654 $ 23,498 Weighted average shares outstanding: Common shares outstanding, including unvested restricted stock 14,126,114 14,047,746 14,174,804 13,963,307 Less: Unvested restricted stock (46,088) (58,332) (48,282) (60,983) Weighted-average common shares outstanding - basic 14,080,026 13,989,414 14,126,522 13,902,324 Earnings (Loss) per common share - basic $ (0.72) $ 0.57 $ 0.05 $ 1.69 Earnings (Loss) per common share - diluted: Income (loss) available to common shareholders (in thousands): Net income (loss) $ (10,137) $ 8,045 $ 656 $ 23,601 Less: Income attributable to unvested restricted stock awards — (33) (2) (103) Net income (loss) available to common shareholders $ (10,137) $ 8,012 $ 654 $ 23,498 Weighted average shares outstanding: Common shares outstanding, including unvested restricted stock 14,126,114 14,047,746 14,174,804 13,963,307 Less: Unvested restricted stock (46,088) (58,332) (48,282) (60,983) Plus: Effect of dilutive options — 118,872 72,656 163,563 Weighted-average common shares outstanding - diluted 14,080,026 14,108,286 14,199,179 14,065,887 Earnings (Loss) per common share - diluted $ (0.72) $ 0.57 $ 0.05 $ 1.67 |
Stock Based Compensation Plan (
Stock Based Compensation Plan (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stock Based Compensation Plan | |
Summary of stock options activity | September 30, 2023 Weighted Average Aggregate Intrinsic Shares Exercise Price Value Outstanding at January 1, 2023 189,934 $ 11.76 Granted — — Exercised (27,375) 11.75 Forfeited or expired (412) 9.44 Outstanding at September 30, 2023 162,147 11.77 $ 985,741 Exercisable September 30, 2023 162,147 $ 11.77 $ 985,741 |
Summary of stock options outstanding and exercisable | September 30, 2023 Options Outstanding Options Exercisable Weighted Average Weighted Average Remaining Remaining Number Contractual Life Number Contractual Life Exercise Prices Outstanding in Years Exercisable in Years $11.01 - $12.00 161,085 1.57 161,085 1.57 $12.01 - $13.00 1,062 1.23 1,062 1.23 Total 162,147 1.57 162,147 1.57 |
Summary of restricted stock awards | The table below provides a summary of the restricted stock awards granted under the 2015 plan for the nine months ended September 30, 2023. September 30, 2023 Weighted Average Shares Grant Date Fair Value Nonvested at January 1, 2023 55,185 $ 21.80 Granted 180 21.78 Vested (9,124) 19.15 Forfeited (370) 15.50 Nonvested at September 30, 2023 45,871 22.37 |
Regulatory Capital (Tables)
Regulatory Capital (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Regulatory Capital | |
Schedule of compliance with regulatory capital requirements under banking regulations | Minimum To Be Well Capitalized Actual Minimum Capital Requirement (1) Under Prompt Corrective Action (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio As of September 30, 2023 Total capital (to risk weighted assets) $ 280,891 15.7 % $ 188,433 10.5 % $ 179,460 10.0 % Tier 1 capital (to risk weighted assets) 261,666 14.6 % 152,541 8.5 % 143,568 8.0 % Common equity tier 1 capital (to risk weighted assets) 261,666 14.6 % 125,622 7.0 % 116,649 6.5 % Tier 1 capital (to average assets) 261,666 11.3 % 92,625 4.0 % 115,781 5.0 % As of December 31, 2022 Total capital (to risk weighted assets) $ 283,471 15.6 % $ 190,798 10.5 % $ 181,712 10.0 % Tier 1 capital (to risk weighted assets) 262,960 14.4 % 155,219 8.5 % 146,089 8.0 % Common equity tier 1 capital (to risk weighted assets) 262,960 14.4 % 127,828 7.0 % 118,697 6.5 % Tier 1 capital (to average assets) 262,960 11.3 % 93,083 4.0 % 116,354 5.0 % (1) |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue | |
Schedule of components of non-interest income | The following table shows the components of non-interest income for the three and nine months ended September 30, 2023 and September 30, 2022. Three months ended Nine months ended September 30, September 30, (Dollars in thousands) 2023 2022 2023 2022 Service charges on deposit accounts (1) Overdrawn account fees $ 20 $ 19 $ 55 $ 60 Account service fees 65 60 184 180 Other service charges and fees (1) Interchange income 101 108 304 306 Other charges and fees 59 67 373 163 Bank owned life insurance 23 255 224 445 Losses on sale of available-for-sale securities (17,114) — (17,316) — Net gains (losses) on premises and equipment (1) — — 16 (1) Insurance commissions (1) 54 47 310 312 Gain on sale of government guaranteed loans 27 — 50 — Non-qualified deferred compensation plan asset gains (losses), net (60) (107) 112 (498) Other operating income (2) 10 1 124 6 Total non-interest income $ (16,815) $ 450 $ (15,564) $ 973 (1) Income within the scope of ASC 606. (2) Includes other operating income within the scope of ASC 606 amounting to $10 thousand and $33 thousand for the three and nine months ended September 30, 2023, respectively. Includes other operating income of $91 thousand related to swap fee income on a back-to-back loan swaps for the nine months ended September 30, 2023, which is outside the scope of ASC 606. There was no swap fee income on back-to-back loan swaps for the three months ended September 30, 2023. Includes other operating income within the scope of ASC 606 amounting to $1 thousand and $6 thousand for the three and nine months ended September 30, 2022, respectively. |
Other Operating Expenses (Table
Other Operating Expenses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Operating Expenses | |
Schedule of components of other operating expenses | The following table shows the components of other operating expenses for the three and nine months ended September 30, 2023 and September 30, 2022. Three months ended Nine months ended September 30, September 30, (Dollars in thousands) 2023 2022 2023 2022 Advertising expense $ 87 $ 47 $ 239 $ 147 Data processing 493 484 1,374 1,412 FDIC insurance 275 140 771 410 Professional fees (141) 281 154 852 State franchise tax 604 523 1,785 1,570 Director costs 186 200 629 615 Other operating expenses 377 427 1,135 1,241 Total other operating expenses $ 1,881 $ 2,102 $ 6,087 $ 6,247 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss) | |
Schedule of changes in accumulated other comprehensive income (loss) | September 30, 2023 Unrealized Gains on Securities Transferred from Unrealized Gain (Loss) on Available-for-sale to Accumulated Other (Dollars in thousands) Available-for-sale Securities Held-to-maturity Comprehensive Income (Loss) Beginning balance, January 1, 2023 $ (28,942) $ 245 $ (28,697) Net change during the period 11,800 (73) 11,727 Ending balance, September 30, 2023 $ (17,142) $ 172 $ (16,970) September 30, 2022 Unrealized Gains on Securities Transferred from Unrealized Loss on Available-for-sale to Accumulated Other (Dollars in thousands) Available-for-sale Securities Held-to-maturity Comprehensive Loss Beginning balance, January 1, 2022 $ (789) $ 389 $ (400) Net change during the period (30,401) (115) (30,516) Ending Balance, September 30, 2022 $ (31,190) $ 274 $ (30,916) |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jan. 01, 2023 | Dec. 31, 2022 |
Recent Accounting Pronouncements | |||
Retained earnings | $ 141,886 | $ 146,630 | |
Allowance for credit loss | 0 | ||
Accrued interest receivable | 535 | ||
Accrued interest receivable on loans | 4,800 | ||
Held-to-maturity securities | $ 241 | ||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-13 | |||
Recent Accounting Pronouncements | |||
Retained earnings | $ (2,300) |
Investment Securities - Amortiz
Investment Securities - Amortized Cost and Fair Value - Available-for-sale Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Securities Available-for-Sale | ||
Amortized cost | $ 394,213 | |
Amortized cost. | $ 190,785 | |
Gross unrealized (losses) | (21,701) | (36,637) |
Available-for-sale, at fair value | 357,576 | |
Available-for-sale, fair value | 169,084 | |
U.S Treasuries | ||
Securities Available-for-Sale | ||
Amortized cost | 63,480 | |
Amortized cost. | 44,765 | |
Gross unrealized (losses) | (2,571) | (4,270) |
Available-for-sale, at fair value | 59,210 | |
Available-for-sale, fair value | 42,194 | |
U.S. government and federal agencies | ||
Securities Available-for-Sale | ||
Amortized cost | 38,748 | |
Amortized cost. | 13,821 | |
Gross unrealized (losses) | (940) | (3,988) |
Available-for-sale, at fair value | 34,760 | |
Available-for-sale, fair value | 12,881 | |
Corporate bonds | ||
Securities Available-for-Sale | ||
Amortized cost | 3,000 | |
Amortized cost. | 3,000 | |
Gross unrealized (losses) | (594) | (386) |
Available-for-sale, at fair value | 2,614 | |
Available-for-sale, fair value | 2,406 | |
Collateralized mortgage obligations | ||
Securities Available-for-Sale | ||
Amortized cost | 44,732 | |
Amortized cost. | 41,486 | |
Gross unrealized (losses) | (7,964) | (6,258) |
Available-for-sale, at fair value | 38,474 | |
Available-for-sale, fair value | 33,522 | |
Tax-exempt municipal | ||
Securities Available-for-Sale | ||
Amortized cost | 4,993 | |
Amortized cost. | 1,380 | |
Gross unrealized (losses) | (224) | (348) |
Available-for-sale, at fair value | 4,645 | |
Available-for-sale, fair value | 1,156 | |
Taxable municipal | ||
Securities Available-for-Sale | ||
Amortized cost | 608 | |
Amortized cost. | 607 | |
Gross unrealized (losses) | (27) | (29) |
Available-for-sale, at fair value | 579 | |
Available-for-sale, fair value | 580 | |
Mortgage-backed | ||
Securities Available-for-Sale | ||
Amortized cost | 238,652 | |
Amortized cost. | 85,726 | |
Gross unrealized (losses) | (9,381) | (21,358) |
Available-for-sale, at fair value | $ 217,294 | |
Available-for-sale, fair value | $ 76,345 |
Investment Securities - Securit
Investment Securities - Securities in a Gross Unrealized Loss Position - Available-for-sale Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Available-for-Sale, Fair Value | ||
Fair Value, Less than 12 Months | $ 217,505 | |
Fair Value, 12 Months or Longer | $ 169,084 | 140,071 |
Fair Value | 169,084 | 357,576 |
Gross Unrealized Losses | ||
Gross Unrealized Losses, Less than 12 Months | (13,763) | |
Gross Unrealized Losses, 12 Months or Longer | (21,701) | (22,874) |
Gross Unrealized Losses | (21,701) | (36,637) |
U.S Treasuries | ||
Available-for-Sale, Fair Value | ||
Fair Value, Less than 12 Months | 31,261 | |
Fair Value, 12 Months or Longer | 42,194 | 27,949 |
Fair Value | 42,194 | 59,210 |
Gross Unrealized Losses | ||
Gross Unrealized Losses, Less than 12 Months | (1,194) | |
Gross Unrealized Losses, 12 Months or Longer | (2,571) | (3,076) |
Gross Unrealized Losses | (2,571) | (4,270) |
U.S. government and federal agencies | ||
Available-for-Sale, Fair Value | ||
Fair Value, Less than 12 Months | 16,107 | |
Fair Value, 12 Months or Longer | 12,881 | 18,653 |
Fair Value | 12,881 | 34,760 |
Gross Unrealized Losses | ||
Gross Unrealized Losses, Less than 12 Months | (1,078) | |
Gross Unrealized Losses, 12 Months or Longer | (940) | (2,910) |
Gross Unrealized Losses | (940) | (3,988) |
Corporate bonds | ||
Available-for-Sale, Fair Value | ||
Fair Value, Less than 12 Months | 2,614 | |
Fair Value, 12 Months or Longer | 2,406 | |
Fair Value | 2,406 | 2,614 |
Gross Unrealized Losses | ||
Gross Unrealized Losses, Less than 12 Months | (386) | |
Gross Unrealized Losses, 12 Months or Longer | (594) | |
Gross Unrealized Losses | (594) | (386) |
Collateralized mortgage obligations | ||
Available-for-Sale, Fair Value | ||
Fair Value, Less than 12 Months | 16,746 | |
Fair Value, 12 Months or Longer | 33,522 | 21,728 |
Fair Value | 33,522 | 38,474 |
Gross Unrealized Losses | ||
Gross Unrealized Losses, Less than 12 Months | (1,143) | |
Gross Unrealized Losses, 12 Months or Longer | (7,964) | (5,115) |
Gross Unrealized Losses | (7,964) | (6,258) |
Tax-exempt municipal | ||
Available-for-Sale, Fair Value | ||
Fair Value, Less than 12 Months | 4,645 | |
Fair Value, 12 Months or Longer | 1,156 | |
Fair Value | 1,156 | 4,645 |
Gross Unrealized Losses | ||
Gross Unrealized Losses, Less than 12 Months | (348) | |
Gross Unrealized Losses, 12 Months or Longer | (224) | |
Gross Unrealized Losses | (224) | (348) |
Taxable municipal | ||
Available-for-Sale, Fair Value | ||
Fair Value, Less than 12 Months | 337 | |
Fair Value, 12 Months or Longer | 580 | 242 |
Fair Value | 580 | 579 |
Gross Unrealized Losses | ||
Gross Unrealized Losses, Less than 12 Months | (2) | |
Gross Unrealized Losses, 12 Months or Longer | (27) | (27) |
Gross Unrealized Losses | (27) | (29) |
Mortgage-backed | ||
Available-for-Sale, Fair Value | ||
Fair Value, Less than 12 Months | 145,795 | |
Fair Value, 12 Months or Longer | 76,345 | 71,499 |
Fair Value | 76,345 | 217,294 |
Gross Unrealized Losses | ||
Gross Unrealized Losses, Less than 12 Months | (9,612) | |
Gross Unrealized Losses, 12 Months or Longer | (9,381) | (11,746) |
Gross Unrealized Losses | $ (9,381) | $ (21,358) |
Investment Securities - Contrac
Investment Securities - Contractual Maturities of Investment Securities - Available-for-sale Securities (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Available-for-sale, Amortized Cost | ||
Due in one year or less | $ 14,322 | |
Due after one year through five years | 54,845 | |
Due after five years through ten years | 56,992 | |
Due after ten years | 64,626 | |
Total Available-for-sale Securities | 190,785 | |
Available-for-sale, Fair Value | ||
Due in one year or less | 14,055 | |
Due after one year through five years | 51,453 | |
Due after five years through ten years | 51,886 | |
Due after ten years | 51,690 | |
Total Available-for-sale Securities | $ 169,084 | |
Weighted average remaining life | 3 years 2 months 12 days | 3 years 9 months 18 days |
Investment Securities - Amort_2
Investment Securities - Amortized Cost and Fair Value - Held-to-maturity Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Securities Held-to-Maturity | ||
Amortized cost | $ 96,347 | $ 99,415 |
Gross unrealized (losses) | (20,614) | (18,254) |
Securities held-to-maturity, fair value | 81,161 | |
Securities held-to-maturity, fair value. | 75,733 | |
U.S Treasuries | ||
Securities Held-to-Maturity | ||
Amortized cost | 6,001 | 6,000 |
Gross unrealized (losses) | (873) | (840) |
Securities held-to-maturity, fair value | 5,160 | |
Securities held-to-maturity, fair value. | 5,128 | |
U.S. government and federal agencies | ||
Securities Held-to-Maturity | ||
Amortized cost | 35,463 | 35,551 |
Gross unrealized (losses) | (6,743) | (6,135) |
Securities held-to-maturity, fair value | 29,416 | |
Securities held-to-maturity, fair value. | 28,720 | |
Collateralized mortgage obligations | ||
Securities Held-to-Maturity | ||
Amortized cost | 19,773 | 21,275 |
Gross unrealized (losses) | (4,920) | (4,227) |
Securities held-to-maturity, fair value | 17,048 | |
Securities held-to-maturity, fair value. | 14,853 | |
Taxable municipal | ||
Securities Held-to-Maturity | ||
Amortized cost | 6,061 | 6,073 |
Gross unrealized (losses) | (1,409) | (1,364) |
Securities held-to-maturity, fair value | 4,709 | |
Securities held-to-maturity, fair value. | 4,652 | |
Mortgage-backed | ||
Securities Held-to-Maturity | ||
Amortized cost | 29,049 | 30,516 |
Gross unrealized (losses) | (6,669) | (5,688) |
Securities held-to-maturity, fair value | $ 24,828 | |
Securities held-to-maturity, fair value. | $ 22,380 |
Investment Securities - Secur_2
Investment Securities - Securities in a Gross Unrealized Loss Position - Held-to-maturity Securities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Schedule of Held-to-Maturity Securities [Line Items] | |
Fair value, less than 12 months | $ 825 |
Fair value, 12 months or longer | 80,336 |
Fair value | 81,161 |
Gross unrealized losses, less than 12 months | (159) |
Gross unrealized losses, 12 months or longer | (18,095) |
Gross unrealized losses | (18,254) |
U.S Treasuries | |
Schedule of Held-to-Maturity Securities [Line Items] | |
Fair value, 12 months or longer | 5,160 |
Fair value | 5,160 |
Gross unrealized losses, 12 months or longer | (840) |
Gross unrealized losses | (840) |
U.S. government and federal agencies | |
Schedule of Held-to-Maturity Securities [Line Items] | |
Fair value, 12 months or longer | 29,416 |
Fair value | 29,416 |
Gross unrealized losses, 12 months or longer | (6,135) |
Gross unrealized losses | (6,135) |
Collateralized mortgage obligations | |
Schedule of Held-to-Maturity Securities [Line Items] | |
Fair value, 12 months or longer | 17,048 |
Fair value | 17,048 |
Gross unrealized losses, 12 months or longer | (4,227) |
Gross unrealized losses | (4,227) |
Taxable municipal | |
Schedule of Held-to-Maturity Securities [Line Items] | |
Fair value, 12 months or longer | 4,709 |
Fair value | 4,709 |
Gross unrealized losses, 12 months or longer | (1,364) |
Gross unrealized losses | (1,364) |
Mortgage-backed | |
Schedule of Held-to-Maturity Securities [Line Items] | |
Fair value, less than 12 months | 825 |
Fair value, 12 months or longer | 24,003 |
Fair value | 24,828 |
Gross unrealized losses, less than 12 months | (159) |
Gross unrealized losses, 12 months or longer | (5,529) |
Gross unrealized losses | $ (5,688) |
Investment Securities - Contr_2
Investment Securities - Contractual Maturities of Investment Securities - Held-to-maturity Securities (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Held-to-maturity, Amortized Cost | ||
Due after one year through five years | $ 20,163 | |
Due after five years through ten years | 24,465 | |
Due after ten years | 51,719 | |
Total Held-to-maturity Securities | 96,347 | |
Held-to-maturity, Fair Value | ||
Due after one year through five years | 17,117 | |
Due after five years through ten years | 19,496 | |
Due after ten years | 39,120 | |
Total Held-to-maturity Securities | $ 75,733 | |
Weighted average remaining life | 7 years | 7 years 3 months 18 days |
Investment Securities - Additio
Investment Securities - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 USD ($) security | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) security | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) security | Dec. 31, 2021 USD ($) | |
Proceeds from Sale and Maturity of Debt Securities, Available-for-Sale | ||||||
Available-for-sale securities sold at par value | $ 161,200 | $ 173,200 | ||||
Debt Securities, Available-for-Sale, Realized Gain (Loss) | ||||||
Proceeds from sale of available-for-sale securities | $ 0 | 156,011 | $ 0 | |||
Debt securities, available-for-sale, realized gain (loss) | $ (17,100) | 0 | $ (17,300) | 0 | ||
Number of securities in unrealized loss position | security | 158 | 158 | 98 | |||
Allowance for loan losses | $ 0 | $ 20,032 | $ 0 | $ 20,032 | $ 20,208 | $ 20,032 |
Investment Securities - Pledged
Investment Securities - Pledged Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Investment Securities | ||
Available-for-sale, at fair value | $ 357,576 | |
Available-for-sale, fair value | $ 169,084 | |
Securities held-to-maturity, fair value | 81,161 | |
Amortized cost | 394,213 | |
Amortized cost | 96,347 | 99,415 |
Asset Pledged as Collateral without Right | Deposits | ||
Investment Securities | ||
Available-for-sale, at fair value | 87,700 | 83,400 |
Securities held-to-maturity, fair value | 34,200 | 31,000 |
Amortized cost | 95,400 | 91,000 |
Amortized cost | $ 42,300 | $ 37,700 |
Investment Securities - Restric
Investment Securities - Restricted Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Investment Securities | ||
Federal Reserve Bank Stock | $ 3,306 | $ 3,292 |
Federal Home Loan Bank Stock | 1,641 | 1,073 |
Community Bankers' Bank Stock | 60 | 60 |
Total Restricted Securities | $ 5,007 | $ 4,425 |
Investment Securities - Equity
Investment Securities - Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Equity Securities | |||||
Equity securities with readily determinable fair values | $ 2,443 | $ 2,443 | $ 2,115 | ||
Equity Securities, Realized Gain (Loss) | |||||
Gain (loss) on investments | $ (60) | $ (107) | $ 112 | $ (498) |
Loans (Details)
Loans (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total Gross Loans | $ 1,785,448 | |||
Total Gross Loans. | $ 1,815,540 | |||
Allowance for loan credit losses | 0 | (20,208) | $ (20,032) | $ (20,032) |
Less: Allowance for loan credit losses | (20,036) | |||
Net deferred loan costs | 4,060 | |||
Net deferred loan costs. | 4,592 | |||
Total net loans | 1,769,300 | |||
Total net loans | 1,800,096 | |||
Real Estate Loans | Commercial Real Estate | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total Gross Loans | 1,118,127 | |||
Total Gross Loans. | 1,133,069 | |||
Allowance for loan credit losses | (13,205) | (13,435) | (13,091) | |
Real Estate Loans | Construction and land development | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total Gross Loans | 195,027 | |||
Total Gross Loans. | 179,570 | |||
Allowance for loan credit losses | (2,860) | (2,921) | (2,824) | |
Real Estate Loans | Residential Real Estate | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total Gross Loans | 426,841 | |||
Total Gross Loans. | 464,509 | |||
Allowance for loan credit losses | (3,044) | (2,583) | (2,769) | |
Commercial - Non-Real Estate | Commercial | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total Gross Loans | 44,924 | |||
Total Gross Loans. | 37,925 | |||
Allowance for loan credit losses | (456) | (504) | (711) | |
Consumer - Non-Real Estate | Consumer | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total Gross Loans | 529 | |||
Total Gross Loans. | $ 467 | |||
Allowance for loan credit losses | $ (5) | $ (6) | $ (5) |
Allowance for Loan Credit Los_3
Allowance for Loan Credit Losses - Allowance for loan losses activity (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | $ 20,208 | $ 20,032 |
Charge-offs | (1) | |
Recoveries | 1 | |
Ending Balance | 0 | 20,032 |
Beginning Balance | 20,208 | |
Recoveries | 2 | |
Provision for (recovery of) credit losses | (2,339) | |
Ending balance | 20,036 | |
Cumulative Effect, Period of Adoption, Adjustment | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 2,165 | |
Unallocated | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 638 | 632 |
Provision for (recovery of) credit losses | (49) | |
Ending Balance | 583 | |
Beginning Balance | 638 | |
Unallocated | Cumulative Effect, Period of Adoption, Adjustment | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | (638) | |
Real Estate Loans | Commercial Real Estate | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 13,205 | 13,091 |
Charge-offs | (1) | |
Provision for (recovery of) credit losses | 345 | |
Ending Balance | 13,435 | |
Beginning Balance | 13,205 | |
Provision for (recovery of) credit losses | 2,187 | |
Ending balance | 12,743 | |
Real Estate Loans | Commercial Real Estate | Cumulative Effect, Period of Adoption, Adjustment | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | (2,649) | |
Real Estate Loans | Construction and land development | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 2,860 | 2,824 |
Provision for (recovery of) credit losses | 97 | |
Ending Balance | 2,921 | |
Beginning Balance | 2,860 | |
Provision for (recovery of) credit losses | (1,148) | |
Ending balance | 2,188 | |
Real Estate Loans | Construction and land development | Cumulative Effect, Period of Adoption, Adjustment | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 476 | |
Real Estate Loans | Residential Real Estate | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 3,044 | 2,769 |
Provision for (recovery of) credit losses | (186) | |
Ending Balance | 2,583 | |
Beginning Balance | 3,044 | |
Provision for (recovery of) credit losses | (3,014) | |
Ending balance | 4,582 | |
Real Estate Loans | Residential Real Estate | Cumulative Effect, Period of Adoption, Adjustment | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 4,552 | |
Commercial - Non-Real Estate | Commercial | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 456 | 711 |
Recoveries | 1 | |
Provision for (recovery of) credit losses | (208) | |
Ending Balance | 504 | |
Beginning Balance | 456 | |
Recoveries | 2 | |
Provision for (recovery of) credit losses | (360) | |
Ending balance | 465 | |
Commercial - Non-Real Estate | Commercial | Cumulative Effect, Period of Adoption, Adjustment | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 367 | |
Consumer - Non-Real Estate | Consumer | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | 5 | 5 |
Provision for (recovery of) credit losses | 1 | |
Ending Balance | $ 6 | |
Beginning Balance | 5 | |
Provision for (recovery of) credit losses | (4) | |
Ending balance | 58 | |
Consumer - Non-Real Estate | Consumer | Cumulative Effect, Period of Adoption, Adjustment | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Beginning Balance | $ 57 |
Allowance for Loan Credit Los_4
Allowance for Loan Credit Losses - Balance of allowance for loan losses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Individually evaluated for impairment | $ 0 | |||
Collectively evaluated for impairment | $ 20,208 | $ 20,032 | ||
Total allowance | $ 0 | 20,208 | 20,032 | $ 20,032 |
Individually evaluated for impairment | 418 | 530 | ||
Collectively evaluated for impairment | 1,785,030 | 1,721,401 | ||
Total loans | 1,785,448 | 1,721,931 | ||
Unallocated | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Collectively evaluated for impairment | 638 | 583 | ||
Total allowance | 638 | 583 | 632 | |
Real Estate Loans | Commercial Real Estate | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Collectively evaluated for impairment | 13,205 | 13,435 | ||
Total allowance | 13,205 | 13,435 | 13,091 | |
Collectively evaluated for impairment | 1,118,127 | 1,091,221 | ||
Total loans | 1,118,127 | 1,091,221 | ||
Real Estate Loans | Construction and land development | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Collectively evaluated for impairment | 2,860 | 2,921 | ||
Total allowance | 2,860 | 2,921 | 2,824 | |
Collectively evaluated for impairment | 195,027 | 199,324 | ||
Total loans | 195,027 | 199,324 | ||
Real Estate Loans | Residential Real Estate | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Collectively evaluated for impairment | 3,044 | 2,583 | ||
Total allowance | 3,044 | 2,583 | 2,769 | |
Individually evaluated for impairment | 418 | 530 | ||
Collectively evaluated for impairment | 426,423 | 385,166 | ||
Total loans | 426,841 | 385,696 | ||
Commercial - Non-Real Estate | Commercial | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Collectively evaluated for impairment | 456 | 504 | ||
Total allowance | 456 | 504 | 711 | |
Collectively evaluated for impairment | 44,924 | 45,105 | ||
Total loans | 44,924 | 45,105 | ||
Consumer - Non-Real Estate | Consumer | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Collectively evaluated for impairment | 5 | 6 | ||
Total allowance | 5 | 6 | $ 5 | |
Collectively evaluated for impairment | 529 | 585 | ||
Total loans | $ 529 | $ 585 |
Allowance for Loan Credit Los_5
Allowance for Loan Credit Losses - Impaired loans (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Financing Receivable, Impaired [Line Items] | |
Unpaid Principal Balance | $ 418 |
Recorded Investment with No Allowances | 418 |
Total Recorded Investment | 418 |
Average Recorded Investment | 427 |
Interest Income Recognized | 15 |
Real Estate Loans | Residential Real Estate | |
Financing Receivable, Impaired [Line Items] | |
Unpaid Principal Balance | 418 |
Recorded Investment with No Allowances | 418 |
Total Recorded Investment | 418 |
Average Recorded Investment | 427 |
Interest Income Recognized | $ 15 |
Allowance for Loan Credit Los_6
Allowance for Loan Credit Losses - Past due and non-accrual loans (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Financing receivable, past due | |||
Current | $ 1,815,540 | $ 1,785,448 | |
Total loans | 1,785,448 | $ 1,721,931 | |
Commercial Real Estate | Real Estate Loans | |||
Financing receivable, past due | |||
Current | 1,133,069 | 1,118,127 | |
Total loans | 1,118,127 | 1,091,221 | |
Construction and land development | Real Estate Loans | |||
Financing receivable, past due | |||
Current | 179,570 | 195,027 | |
Total loans | 195,027 | 199,324 | |
Residential Real Estate | Real Estate Loans | |||
Financing receivable, past due | |||
Current | 464,509 | 426,841 | |
Total loans | 426,841 | 385,696 | |
Commercial | Commercial - Non-Real Estate | |||
Financing receivable, past due | |||
Current | 37,925 | 44,924 | |
Total loans | 44,924 | 45,105 | |
Consumer | Consumer - Non-Real Estate | |||
Financing receivable, past due | |||
Current | $ 467 | 529 | |
Total loans | $ 529 | $ 585 |
Allowance for Loan Credit Los_7
Allowance for Loan Credit Losses - Credit quality indicators (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Financing receivable, credit quality indicator | |||
Total loans | $ 1,785,448 | $ 1,721,931 | |
Total | $ 1,820,132 | ||
Commercial Real Estate | Real Estate Loans | |||
Financing receivable, credit quality indicator | |||
Total loans | 1,118,127 | 1,091,221 | |
2023 | 56,696 | ||
2022 | 303,898 | ||
2021 | 205,417 | ||
2020 | 123,931 | ||
2019 | 97,273 | ||
Prior | 342,686 | ||
Revolving | 3,168 | ||
Total | 1,133,069 | ||
Construction and land development | Real Estate Loans | |||
Financing receivable, credit quality indicator | |||
Total loans | 195,027 | 199,324 | |
2023 | 33,136 | ||
2022 | 58,071 | ||
2021 | 31,471 | ||
2020 | 18,087 | ||
2019 | 2,180 | ||
Prior | 8,845 | ||
Revolving | 27,780 | ||
Total | 179,570 | ||
Residential Real Estate | Real Estate Loans | |||
Financing receivable, credit quality indicator | |||
Total loans | 426,841 | 385,696 | |
2023 | 61,683 | ||
2022 | 115,508 | ||
2021 | 134,133 | ||
2020 | 88,589 | ||
2019 | 25,147 | ||
Prior | 22,213 | ||
Revolving | 17,236 | ||
Total | 464,509 | ||
Commercial | Commercial - Non-Real Estate | |||
Financing receivable, credit quality indicator | |||
Total loans | 44,924 | 45,105 | |
2023 | 3,425 | ||
2022 | 7,354 | ||
2021 | 2,146 | ||
2020 | 3,384 | ||
2019 | 5,245 | ||
Prior | 5,198 | ||
Revolving | 11,173 | ||
Total | 37,925 | ||
Consumer | Consumer - Non-Real Estate | |||
Financing receivable, credit quality indicator | |||
Total loans | 529 | $ 585 | |
2023 | 399 | ||
2022 | 6 | ||
2021 | 29 | ||
Prior | 12 | ||
Revolving | 21 | ||
Total | 467 | ||
Pass | |||
Financing receivable, credit quality indicator | |||
Total loans | 1,782,061 | ||
Pass | Commercial Real Estate | Real Estate Loans | |||
Financing receivable, credit quality indicator | |||
Total loans | 1,116,890 | ||
2023 | 56,696 | ||
2022 | 303,898 | ||
2021 | 205,417 | ||
2020 | 122,694 | ||
2019 | 97,273 | ||
Prior | 342,686 | ||
Revolving | 3,168 | ||
Total | 1,131,832 | ||
Pass | Construction and land development | Real Estate Loans | |||
Financing receivable, credit quality indicator | |||
Total loans | 192,877 | ||
2023 | 33,136 | ||
2022 | 58,071 | ||
2021 | 31,471 | ||
2020 | 18,087 | ||
2019 | 30 | ||
Prior | 8,845 | ||
Revolving | 27,780 | ||
Total | 177,420 | ||
Pass | Residential Real Estate | Real Estate Loans | |||
Financing receivable, credit quality indicator | |||
Total loans | 426,841 | ||
2023 | 61,683 | ||
2022 | 115,508 | ||
2021 | 134,133 | ||
2020 | 88,589 | ||
2019 | 25,147 | ||
Prior | 22,213 | ||
Revolving | 17,236 | ||
Total | 464,509 | ||
Pass | Commercial | Commercial - Non-Real Estate | |||
Financing receivable, credit quality indicator | |||
Total loans | 44,924 | ||
2023 | 3,425 | ||
2022 | 7,354 | ||
2021 | 2,146 | ||
2020 | 3,384 | ||
2019 | 5,245 | ||
Prior | 5,198 | ||
Revolving | 11,173 | ||
Total | 37,925 | ||
Pass | Consumer | Consumer - Non-Real Estate | |||
Financing receivable, credit quality indicator | |||
Total loans | 529 | ||
2023 | 399 | ||
2022 | 6 | ||
2021 | 29 | ||
Prior | 12 | ||
Revolving | 21 | ||
Total | 467 | ||
Special Mention | |||
Financing receivable, credit quality indicator | |||
Total loans | 3,387 | ||
Special Mention | Commercial Real Estate | Real Estate Loans | |||
Financing receivable, credit quality indicator | |||
Total loans | 1,237 | ||
2020 | 1,237 | ||
Total | 1,237 | ||
Special Mention | Construction and land development | Real Estate Loans | |||
Financing receivable, credit quality indicator | |||
Total loans | $ 2,150 | ||
2019 | 2,150 | ||
Total | $ 2,150 |
Allowance for Loan Credit Los_8
Allowance for Loan Credit Losses - Additional information (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 loan | Dec. 31, 2022 USD ($) loan | |
Allowance for Loan Credit Losses | ||
Recorded investment in TDR's | $ | $ 418 | |
Number of loans modified in TDRs | loan | 0 | |
Number of financing receivable contracts | loan | 0 | |
Additional commitments funds | $ | $ 0 |
Allowance for Loan Credit Los_9
Allowance for Loan Credit Losses - Unfunded Commitments (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Financing Receivable, Allowance for Credit Loss [Line Items] | |
Beginning Balance | $ 20,208 |
Provision for (recovery of) credit losses | 2,471 |
Ending balance | 20,036 |
Cumulative Effect, Period of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Line Items] | |
Beginning Balance | 2,165 |
Unfunded loan commitments | |
Financing Receivable, Allowance for Credit Loss [Line Items] | |
Beginning Balance | 303 |
Provision for (recovery of) credit losses | (132) |
Ending balance | 908 |
Unfunded loan commitments | Cumulative Effect, Period of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Line Items] | |
Beginning Balance | $ 737 |
Derivatives (Details)
Derivatives (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivatives | ||
Years to maturity | 3 years 6 months | 2 years 9 months 18 days |
Interest Rate Swap | Not Designated as Hedging Instrument | ||
Derivatives | ||
Notional amount | $ 39,182 | $ 27,534 |
Derivative, average variable interest rate (as a percent) | 5% | 4.31% |
Derivative, average fixed interest rate (as a percent) | 5% | 4.31% |
Pay fixed/receive variable swaps | Not Designated as Hedging Instrument | ||
Derivatives | ||
Notional amount | $ 19,591 | $ 13,767 |
Estimated fair value, assets | $ 1,390 | $ 1,217 |
Derivative, average variable interest rate (as a percent) | 6.60% | 6.02% |
Derivative, average fixed interest rate (as a percent) | 3.39% | 2.59% |
Pay variable/receive fixed swaps | Not Designated as Hedging Instrument | ||
Derivatives | ||
Notional amount | $ 19,591 | $ 13,767 |
Estimated fair value, (liabilities) | $ (1,390) | $ (1,217) |
Derivative, average variable interest rate (as a percent) | 3.39% | 2.59% |
Derivative, average fixed interest rate (as a percent) | 6.60% | 6.02% |
Deposits and Borrowings - Depos
Deposits and Borrowings - Deposits (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Deposits: | ||
Non-interest bearing demand deposits | $ 437,880 | $ 476,697 |
Interest-bearing demand deposits | 675,819 | 691,945 |
Savings deposits | 57,408 | 95,241 |
Time deposits | 810,516 | 803,857 |
Total deposits | $ 1,981,623 | $ 2,067,740 |
Deposits and Borrowings - Short
Deposits and Borrowings - Short- term Debt and Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Carrying Value - Short-term Debt | $ 54,000 | |
Carrying Value - Long-term Debt | $ 24,687 | $ 24,624 |
Subordinated debt | ||
Debt Instrument [Line Items] | ||
Stated Interest Rates | 5.25% | |
Weighted-Average Interest Rate | 5.25% | |
Carrying Value - Long-term Debt | $ 24,687 | $ 24,624 |
FHLB advances | ||
Debt Instrument [Line Items] | ||
Stated Interest Rates | 4.80% | |
Weighted-Average Interest Rate | 4.80% | |
Carrying Value - Short-term Debt | $ 54,000 |
Deposits and Borrowings - Addit
Deposits and Borrowings - Additional Information (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |||
May 15, 2023 USD ($) | Sep. 30, 2023 USD ($) customer | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Jun. 15, 2022 USD ($) | |
Debt instrument | |||||
Overdraft demand deposits reclassified to loans | $ 5 | $ 1 | |||
Certificate of deposits | 358,600 | 318,700 | |||
Brokered deposits | 288,900 | 352,000 | |||
Reciprocal certificates of deposits | 41,700 | 25,700 | |||
Reciprocal demand and money market deposit | $ 265,600 | 197,300 | |||
Number of depositors representing five percent or more of total deposits | customer | 0 | ||||
Percentage of deposits exceed five or more | 5% | ||||
Repayment of subordinated debt | $ 25,000 | ||||
Total collateral under the blanket lien | $ 444,700 | ||||
Loans, net of unearned income | 1,820,132 | ||||
Proceeds from Federal Reserve Bank borrowings | 54,000 | ||||
Fair value of held-to-maturity Securities | $ 81,161 | ||||
Loans, net | 1,800,096 | ||||
Federal Reserve Bank borrowings | |||||
Debt instrument | |||||
Stated Interest Rates | 4.80% | ||||
Proceeds from Federal Reserve Bank borrowings | $ 54,000 | ||||
Term of advance | 1 year | ||||
Asset Pledged as Collateral without Right [Member] | Federal Reserve Bank borrowings | |||||
Debt instrument | |||||
Held-to-maturity securities at amortized cost | 55,500 | ||||
Fair value of held-to-maturity Securities | 42,600 | ||||
Minimum | |||||
Debt instrument | |||||
Certificate of deposits | $ 250 | ||||
Subordinated debt | |||||
Debt instrument | |||||
Face amount or Principal amount | $ 25,000 | ||||
Stated Interest Rates | 5.25% | ||||
FHLB advances | |||||
Debt instrument | |||||
Stated Interest Rates | 4.80% | ||||
Federal Funds | |||||
Debt instrument | |||||
Federal home loan, advances, general debt obligations, unused funds | $ 110,000 | ||||
Line of credit | 0 | ||||
Federal Reserve Bank borrowings | |||||
Debt instrument | |||||
Maximum borrowing capacity | 24,800 | ||||
Line of credit | 0 | ||||
Federal Reserve Bank borrowings | Asset Pledged as Collateral without Right [Member] | |||||
Debt instrument | |||||
Loans, net of unearned income | $ 26,500 | ||||
Secured Overnight Financing Rate (SOFR) | Subordinated debt | |||||
Debt instrument | |||||
Stated Interest Rates | 5.25% | ||||
Basis points | 2.45% |
Deposits and Borrowings - Time
Deposits and Borrowings - Time deposits and FHLB advances by contractual maturity (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Contractual maturity | |
2023 | $ 146,873 |
2024 | 477,572 |
2025 | 144,346 |
2026 | 40,324 |
2027 | 1,117 |
Thereafter | 284 |
Total | $ 810,516 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Commitments to extend credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance sheet risks, face amount | $ 288,081 | $ 240,084 |
Standby letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance sheet risks, face amount | $ 19,804 | $ 14,677 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair value of assets measured at fair value on a recurring basis (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Securities available-for-sale: | ||
Equity securities, at fair value | $ 2,443 | $ 2,115 |
Total assets at fair value | 360,908 | |
Fair Value, Inputs, Level 1 | ||
Securities available-for-sale: | ||
Total assets at fair value | 2,115 | |
Fair Value, Inputs, Level 2 | ||
Securities available-for-sale: | ||
Total assets at fair value | 358,793 | |
Fair Value, Recurring | ||
Securities available-for-sale: | ||
Equity securities, at fair value | 2,443 | 2,115 |
Mortgage servicing rights | 9 | |
Total assets at fair value | 172,926 | |
Total liabilities at fair value | 1,390 | 1,217 |
Fair Value, Recurring | Interest Rate Swap [Member] | ||
Securities available-for-sale: | ||
Derivative assets | 1,390 | |
Total assets at fair value | 1,217 | |
Derivative liability | 1,390 | 1,217 |
Fair Value, Recurring | U.S Treasuries | ||
Securities available-for-sale: | ||
Securities available-for-sale | 42,194 | 59,210 |
Fair Value, Recurring | U.S. government and federal agencies | ||
Securities available-for-sale: | ||
Securities available-for-sale | 12,881 | 34,760 |
Fair Value, Recurring | Corporate bonds | ||
Securities available-for-sale: | ||
Securities available-for-sale | 2,406 | 2,614 |
Fair Value, Recurring | Collateralized mortgage obligations | ||
Securities available-for-sale: | ||
Securities available-for-sale | 33,522 | 38,474 |
Fair Value, Recurring | Tax-exempt municipal | ||
Securities available-for-sale: | ||
Securities available-for-sale | 1,156 | 4,645 |
Fair Value, Recurring | Taxable municipal | ||
Securities available-for-sale: | ||
Securities available-for-sale | 580 | 579 |
Fair Value, Recurring | Mortgage-backed | ||
Securities available-for-sale: | ||
Securities available-for-sale | 76,345 | 217,294 |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | ||
Securities available-for-sale: | ||
Equity securities, at fair value | 2,443 | 2,115 |
Total assets at fair value | 2,443 | |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | ||
Securities available-for-sale: | ||
Total assets at fair value | 170,474 | |
Total liabilities at fair value | 1,390 | 1,217 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | Interest Rate Swap [Member] | ||
Securities available-for-sale: | ||
Derivative assets | 1,390 | |
Total assets at fair value | 1,217 | |
Derivative liability | 1,390 | 1,217 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | U.S Treasuries | ||
Securities available-for-sale: | ||
Securities available-for-sale | 42,194 | 59,210 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | U.S. government and federal agencies | ||
Securities available-for-sale: | ||
Securities available-for-sale | 12,881 | 34,760 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | Corporate bonds | ||
Securities available-for-sale: | ||
Securities available-for-sale | 2,406 | 2,614 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | Collateralized mortgage obligations | ||
Securities available-for-sale: | ||
Securities available-for-sale | 33,522 | 38,474 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | Tax-exempt municipal | ||
Securities available-for-sale: | ||
Securities available-for-sale | 1,156 | 4,645 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | Taxable municipal | ||
Securities available-for-sale: | ||
Securities available-for-sale | 580 | 579 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | Mortgage-backed | ||
Securities available-for-sale: | ||
Securities available-for-sale | 76,345 | $ 217,294 |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | ||
Securities available-for-sale: | ||
Mortgage servicing rights | 9 | |
Total assets at fair value | $ 9 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying value and estimated fair value of financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Securities: | ||
Equity securities, at fair value | $ 2,443 | $ 2,115 |
Restricted securities, at cost | 5,007 | 4,425 |
Carrying Value | ||
Assets: | ||
Cash and cash equivalents | 192,656 | 61,599 |
Securities: | ||
Available-for-sale | 169,084 | 357,576 |
Held-to-maturity | 96,347 | 99,415 |
Equity securities, at fair value | 2,443 | 2,115 |
Restricted securities, at cost | 5,007 | 4,425 |
Loans, net | 1,800,096 | 1,769,300 |
Derivative assets, at fair value | 1,390 | 1,217 |
Mortgage servicing rights | 9 | |
Bank owned life insurance | 21,170 | |
Accrued interest receivable | 5,701 | 5,531 |
Liabilities: | ||
Deposits | 1,981,623 | 2,067,740 |
Federal Reserve Bank borrowings | 54,000 | |
Subordinated debt | 24,687 | 24,624 |
Federal funds purchased | 25,500 | |
Derivative liabilities, at fair value | 1,390 | 1,217 |
Accrued interest payable | 2,610 | 1,035 |
Fair Value | ||
Assets: | ||
Cash and cash equivalents | 192,656 | 61,599 |
Securities: | ||
Available-for-sale | 169,084 | 357,576 |
Held-to-maturity | 75,733 | 81,161 |
Equity securities, at fair value | 2,443 | 2,115 |
Restricted securities, at cost | 5,007 | 4,425 |
Loans, net | 1,660,836 | 1,676,887 |
Derivative assets, at fair value | 1,390 | 1,217 |
Mortgage servicing rights | 9 | |
Bank owned life insurance | 21,170 | |
Accrued interest receivable | 5,701 | 5,531 |
Liabilities: | ||
Deposits | 1,977,757 | 2,065,248 |
Federal Reserve Bank borrowings | 54,000 | |
Subordinated debt | 21,269 | 22,457 |
Federal funds purchased | 25,500 | |
Derivative liabilities, at fair value | 1,390 | 1,217 |
Accrued interest payable | 2,610 | 1,035 |
Fair Value, Inputs, Level 1 | Fair Value | ||
Assets: | ||
Cash and cash equivalents | 192,656 | 61,599 |
Securities: | ||
Equity securities, at fair value | 2,443 | 2,115 |
Fair Value, Inputs, Level 2 | Fair Value | ||
Securities: | ||
Available-for-sale | 169,084 | 357,576 |
Held-to-maturity | 75,733 | 81,161 |
Restricted securities, at cost | 5,007 | 4,425 |
Derivative assets, at fair value | 1,390 | 1,217 |
Bank owned life insurance | 21,170 | |
Accrued interest receivable | 5,701 | 5,531 |
Liabilities: | ||
Deposits | 1,977,757 | 2,065,248 |
Federal Reserve Bank borrowings | 54,000 | |
Federal funds purchased | 25,500 | |
Derivative liabilities, at fair value | 1,390 | 1,217 |
Accrued interest payable | 2,610 | 1,035 |
Fair Value, Inputs, Level 3 | Fair Value | ||
Securities: | ||
Loans, net | 1,660,836 | 1,676,887 |
Mortgage servicing rights | 9 | |
Liabilities: | ||
Subordinated debt | $ 21,269 | $ 22,457 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional information (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value Measurements | ||
Collateral dependent loans | $ 0 | $ 0 |
Other real estate owned | $ 0 | $ 0 |
Earnings per Common Share - Com
Earnings per Common Share - Computation of earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income available to common shareholders (in thousands): | ||||
Net Income (Loss) | $ (10,137) | $ 8,045 | $ 656 | $ 23,601 |
Less: Income attributable to unvested restricted stock awards | (33) | (2) | (103) | |
Net income (loss) available to common shareholders | $ (10,137) | $ 8,012 | $ 654 | $ 23,498 |
Weighted average shares outstanding: | ||||
Common shares outstanding, including unvested restricted stock | 14,126,114 | 14,047,746 | 14,174,804 | 13,963,307 |
Less: Unvested restricted stock | (46,088) | (58,332) | (48,282) | (60,983) |
Weighted-average common shares outstanding - basic | 14,080,026 | 13,989,414 | 14,126,522 | 13,902,324 |
Earnings per common share - basic | $ (0.72) | $ 0.57 | $ 0.05 | $ 1.69 |
Income available to common shareholders (in thousands): | ||||
Net Income (Loss) | $ (10,137) | $ 8,045 | $ 656 | $ 23,601 |
Less: Income attributable to unvested restricted stock awards | (33) | (2) | (103) | |
Net income (loss) available to common shareholders | $ (10,137) | $ 8,012 | $ 654 | $ 23,498 |
Weighted average shares outstanding: | ||||
Common shares outstanding, including unvested restricted stock | 14,126,114 | 14,047,746 | 14,174,804 | 13,963,307 |
Less: Unvested restricted stock | 46,088 | 58,332 | 48,282 | 60,983 |
Plus: Effect of dilutive options | 118,872 | 72,656 | 163,563 | |
Weighted-average common shares outstanding - diluted | 14,080,026 | 14,108,286 | 14,199,179 | 14,065,887 |
Earnings (Loss) per common share - diluted | $ (0.72) | $ 0.57 | $ 0.05 | $ 1.67 |
Earnings per Common Share - Add
Earnings per Common Share - Additional information (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock options | ||||
Antidilutive securities excluded from computation of earnings per share | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 0 | 0 | 0 | 0 |
Stock Based Compensation Plan_2
Stock Based Compensation Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Apr. 28, 2015 | |
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Intrinsic value of options exercised | $ 0 | $ 693 | $ 370 | $ 4,400 | |
Share-based compensation expense | 0 | 0 | 0 | $ 0 | |
Unrecognized share-based compensation expense | 0 | $ 0 | |||
Restricted Stock Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Restricted stock grants | 180 | 500 | |||
Share-based compensation expense | 130 | 133 | $ 464 | $ 402 | |
Fair value of vested shares | 8 | $ 10 | 218 | $ 381 | |
Unrecognized share-based compensation expense | $ 631 | $ 631 | |||
Recognition period | 1 year 6 months | ||||
Restricted Stock Awards | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting term | 2 years | ||||
Restricted Stock Awards | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting term | 5 years | ||||
2015 Plan | Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares reserved for issuance | 976,211 | ||||
Number of shares available for grant | 301,242 | 301,242 | |||
Vesting term | 5 years | ||||
Expiration term | 10 years | ||||
2015 Plan | Stock options | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Price of stock expressed in fair value percentage | 100% | ||||
2015 Plan | Stock options | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Term of award | 10 years | ||||
2006 Plan | Stock options | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares authorized | 1,490,700 | 1,490,700 |
Stock Based Compensation Plan -
Stock Based Compensation Plan - Summary of Stock Options Activity (Details) - Stock options - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options outstanding, beginning balance | 189,934 | |||
Options granted | 0 | 0 | 0 | 0 |
Options exercised | (27,375) | |||
Options forfeited or expired | (412) | |||
Options outstanding, ending balance | 162,147 | 162,147 | ||
Options exercisable | 162,147 | 162,147 | ||
Weighted average exercise price, beginning balance | $ 11.76 | |||
Weighted average exercise price, exercised | 11.75 | |||
Weighted average exercise price, forfeited or expired | 9.44 | |||
Weighted average exercise price, ending balance | $ 11.77 | 11.77 | ||
Weighted average exercise price, exercisable | $ 11.77 | $ 11.77 | ||
Aggregate intrinsic value outstanding | $ 985,741 | $ 985,741 | ||
Aggregate intrinsic value exercisable | $ 985,741 | $ 985,741 |
Stock Based Compensation Plan_3
Stock Based Compensation Plan - Summary of Stock Options Outstanding and Exercisable (Details) - Stock options - $ / shares | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Options outstanding | 162,147 | 189,934 |
Options outstanding, weighted average remaining contractual life (in years) | 1 year 6 months 25 days | |
Options exercisable | 162,147 | |
Options exercisable, weighted average remaining contractual life (in years) | 1 year 6 months 25 days | |
$11.01 - $12.00 | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price range minimum rate | $ 11.01 | |
Exercise price range maximum rate | $ 12 | |
Options outstanding | 161,085 | |
Options outstanding, weighted average remaining contractual life (in years) | 1 year 6 months 25 days | |
Options exercisable | 161,085 | |
Options exercisable, weighted average remaining contractual life (in years) | 1 year 6 months 25 days | |
$12.01 - $13.00 | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price range minimum rate | $ 12.01 | |
Exercise price range maximum rate | $ 13 | |
Options outstanding | 1,062 | |
Options outstanding, weighted average remaining contractual life (in years) | 1 year 2 months 23 days | |
Options exercisable | 1,062 | |
Options exercisable, weighted average remaining contractual life (in years) | 1 year 2 months 23 days |
Stock Based Compensation Plan_4
Stock Based Compensation Plan - Summary of Restricted Stock Awards (Details) - Restricted Stock Awards - $ / shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Nonvested shares outstanding, beginning balance | 55,185 | |
Nonvested shares, granted | 180 | 500 |
Nonvested shares, vested | (9,124) | |
Nonvested shares, forfeited | (370) | |
Nonvested shares outstanding, ending balance | 45,871 | |
Weighted average grant date fair value outstanding, beginning balance | $ 21.80 | |
Weighted average grant date fair value, granted | 21.78 | |
Weighted average grant date fair value, vested | 19.15 | |
Weighted average grant date fair value, forfeited | 15.50 | |
Weighted average grant date fair value, ending balance | $ 22.37 |
Regulatory Capital (Details)
Regulatory Capital (Details) | Sep. 30, 2023 |
Regulatory Capital | |
Capital conservation buffer ratio | 0.025 |
Regulatory Capital - Schedule o
Regulatory Capital - Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations (Details) $ in Thousands | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Total capital (to risk weighted assets) | ||
Actual, Amount | $ 280,891 | $ 283,471 |
Actual, Ratio | 0.157 | 0.156 |
Minimum Capital Requirements, Amount | $ 188,433 | $ 190,798 |
Minimum Capital Requirements, Ratio | 0.105 | 0.105 |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount | $ 179,460 | $ 181,712 |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 0.100 | 0.100 |
Tier 1 capital (to risk weighted assets) | ||
Actual, Amount | $ 261,666 | $ 262,960 |
Actual, Ratio | 0.146 | 0.144 |
Minimum Capital Requirements, Amount | $ 152,541 | $ 155,219 |
Minimum Capital Requirements, Ratio | 0.085 | 0.085 |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount | $ 143,568 | $ 146,089 |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 0.080 | 0.080 |
Common equity tier 1 capital (to risk weighted assets) | ||
Actual, Amount | $ 261,666 | $ 262,960 |
Actual, Ratio | 0.146 | 0.144 |
Minimum Capital Requirements, Amount | $ 125,622 | $ 127,828 |
Minimum Capital Requirements, Ratio | 0.070 | 0.070 |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount | $ 116,649 | $ 118,697 |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 0.065 | 0.065 |
Tier 1 capital (to average assets) | ||
Actual, Amount | $ 261,666 | $ 262,960 |
Actual, Ratio | 0.113 | 0.113 |
Minimum Capital Requirements, Amount | $ 92,625 | $ 93,083 |
Minimum Capital Requirements, Ratio | 0.040 | 0.040 |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount | $ 115,781 | $ 116,354 |
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio | 0.050 | 0.050 |
Revenue - Components of Non-int
Revenue - Components of Non-interest Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Service charges on deposit accounts and Other service charges and fees | ||||
Bank owned life insurance | $ 23 | $ 255 | $ 224 | $ 445 |
Losses on sale of available-for-sale securities | (17,114) | (17,316) | ||
Gain on sale of government guaranteed loans | 27 | 50 | ||
Non-qualified deferred compensation plan asset gains (losses), net | (60) | (107) | 112 | (498) |
Other operating income | 10 | 1 | 124 | 6 |
Total non-interest income (loss) | (16,815) | 450 | (15,564) | 973 |
Overdrawn account fees | ||||
Service charges on deposit accounts and Other service charges and fees | ||||
Non-interest income | 20 | 19 | 55 | 60 |
Account service fees | ||||
Service charges on deposit accounts and Other service charges and fees | ||||
Non-interest income | 65 | 60 | 184 | 180 |
Interchange income | ||||
Service charges on deposit accounts and Other service charges and fees | ||||
Non-interest income | 101 | 108 | 304 | 306 |
Other Charges and Fees | ||||
Service charges on deposit accounts and Other service charges and fees | ||||
Non-interest income | 59 | 67 | 373 | 163 |
Premises And Equipment | ||||
Service charges on deposit accounts and Other service charges and fees | ||||
Non-interest income | 16 | (1) | ||
Insurance Commissions | ||||
Service charges on deposit accounts and Other service charges and fees | ||||
Non-interest income | $ 54 | $ 47 | $ 310 | $ 312 |
Revenue - Additional informatio
Revenue - Additional information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue | ||||
Other operating income (loss) | $ 10 | $ 1 | $ 33 | $ 6 |
Gain (loss) on fair value of adjustment on equity securities | $ 0 | $ 91 |
Other Operating Expenses (Detai
Other Operating Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Other Operating Expenses | ||||
Advertising expense | $ 87 | $ 47 | $ 239 | $ 147 |
Data processing | 493 | 484 | 1,374 | 1,412 |
FDIC insurance | 275 | 140 | 771 | 410 |
Professional fees | (141) | 281 | 154 | 852 |
State franchise tax | 604 | 523 | 1,785 | 1,570 |
Director costs | 186 | 200 | 629 | 615 |
Other operating expenses | 377 | 427 | 1,135 | 1,241 |
Total other operating expenses | $ 1,881 | $ 2,102 | $ 6,087 | $ 6,247 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | $ 218,970 | $ 207,530 | $ 212,800 | $ 208,470 |
Net change during the period | 11,605 | (13,988) | 11,727 | (30,516) |
Ending balance | 220,567 | 202,212 | 220,567 | 202,212 |
Debt securities, available-for-sale, realized gain (loss) | (17,100) | 0 | (17,300) | 0 |
Gain (loss) on available-for-sale securities, related tax | (3,600) | |||
Accumulated Other Comprehensive (Loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (28,575) | (16,928) | (28,697) | (400) |
Net change during the period | 11,605 | (13,988) | 11,727 | (30,516) |
Ending balance | (16,970) | (30,916) | (16,970) | (30,916) |
Unrealized Gain (Loss) on Available-for-sale Securities | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (28,942) | (789) | ||
Net change during the period | 11,800 | (30,401) | ||
Ending balance | (17,142) | (31,190) | (17,142) | (31,190) |
Unrealized Gains on Securities Transferred from Available-for-sale to Held-to-maturity | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | 245 | 389 | ||
Net change during the period | (73) | (115) | ||
Ending balance | $ 172 | $ 274 | $ 172 | $ 274 |