Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 06, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | METROCITY BANKSHARES, INC. | |
Entity Central Index Key | 0001747068 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 25,529,891 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Cash and due from banks | $ 264,981 | $ 130,263 |
Federal funds sold | 9,567 | 8,164 |
Cash and cash equivalents | 274,548 | 138,427 |
Securities purchased under agreements to resell | 15,000 | 15,000 |
Securities available for sale (at fair value) | 15,913 | 18,888 |
Loans, less allowance for loan losses of $6,850 and $6,645, respectively | 1,252,196 | 1,136,930 |
Loans held for sale | 56,865 | |
Accrued interest receivable | 5,465 | 4,957 |
Federal Home Loan Bank stock | 3,842 | 1,163 |
Premises and equipment, net | 14,484 | 14,391 |
Operating lease right-of-use asset | 12,431 | |
Foreclosed real estate, net | 423 | |
SBA servicing asset, net | 8,566 | 8,446 |
Mortgage servicing asset, net | 17,740 | 14,934 |
Bank owned life insurance | 20,101 | 19,749 |
Other assets | 4,036 | 2,900 |
Total assets | 1,644,745 | 1,432,650 |
Deposits: | ||
Non-interest-bearing demand | 311,198 | 299,182 |
Interest-bearing | 1,024,154 | 945,050 |
Total deposits | 1,335,352 | 1,244,232 |
Federal Home Loan Bank advances | 60,000 | |
Other borrowings | 3,154 | 4,257 |
Operating lease liability | 12,922 | |
Accrued interest payable | 940 | 1,251 |
Other liabilities | 37,955 | 14,302 |
Total liabilities | 1,450,323 | 1,264,042 |
Shareholders' Equity: | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding | ||
Common stock, $0.01 par value, 40,000,000 shares authorized 24,305,378 and 24,258,062 shares issued and outstanding | 243 | 242 |
Additional paid-in capital | 39,526 | 39,915 |
Retained earnings | 154,652 | 128,555 |
Accumulated other comprehensive income (loss) | 1 | (104) |
Total shareholders' equity | 194,422 | 168,608 |
Total liabilities and shareholders' equity | $ 1,644,745 | $ 1,432,650 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for loan losses | $ 6,850 | $ 6,645 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 24,305,378 | 24,258,062 |
Common stock, shares outstanding | 24,305,378 | 24,258,062 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Interest and dividend income: | ||||
Loans, including fees | $ 20,857 | $ 18,153 | $ 59,855 | $ 52,130 |
Other investment income | 907 | 500 | 2,271 | 1,421 |
Federal funds sold | 144 | 113 | 462 | 305 |
Total interest income | 21,908 | 18,766 | 62,588 | 53,856 |
Interest expense: | ||||
Deposits | 5,873 | 3,822 | 16,375 | 9,466 |
FHLB advances and other borrowings | 56 | 32 | 182 | 661 |
Total interest expense | 5,929 | 3,854 | 16,557 | 10,127 |
Net interest income | 15,979 | 14,912 | 46,031 | 43,729 |
Provision for loan losses | 318 | 1,189 | ||
Net interest income after provision for loan losses | 15,979 | 14,594 | 46,031 | 42,540 |
Noninterest income: | ||||
Service charges on deposit accounts | 294 | 256 | 811 | 776 |
Other service charges, commissions and fees | 2,592 | 2,792 | 8,049 | 7,668 |
Gain on sale of residential mortgage loans | 2,901 | 1,605 | 6,454 | 3,956 |
Mortgage servicing income, net | 2,594 | 3,313 | 7,248 | 9,279 |
SBA servicing income, net | 900 | 416 | 3,080 | 2,328 |
Gain on sale of SBA loans | 1,404 | 621 | 4,296 | 4,039 |
Other income | 316 | 142 | 595 | 459 |
Total noninterest income | 11,001 | 9,145 | 30,533 | 28,505 |
Noninterest expense: | ||||
Salaries and employee benefits | 6,573 | 6,436 | 18,926 | 17,007 |
Occupancy and equipment | 1,161 | 1,075 | 3,547 | 2,953 |
Data processing | 245 | 214 | 765 | 644 |
Advertising | 142 | 146 | 455 | 457 |
Other expenses | 2,041 | 2,549 | 6,467 | 7,029 |
Total noninterest expense | 10,162 | 10,420 | 30,160 | 28,090 |
Income before provision for income taxes | 16,818 | 13,319 | 46,404 | 42,955 |
Provision for income taxes | 4,462 | 3,466 | 12,356 | 11,357 |
Net income available to common shareholders | $ 12,356 | $ 9,853 | $ 34,048 | $ 31,598 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.51 | $ 0.41 | $ 1.40 | $ 1.31 |
Diluted (in dollars per share) | $ 0.50 | $ 0.40 | $ 1.39 | $ 1.29 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 12,356 | $ 9,853 | $ 34,048 | $ 31,598 |
Other comprehensive income (loss): | ||||
Unrealized holding gains (losses) on securities available for sale arising during the period | 15 | (4) | 134 | (81) |
Tax effect | (3) | 1 | (29) | 4 |
Other comprehensive income (loss) | 12 | (3) | 105 | (77) |
Comprehensive income | $ 12,368 | $ 9,850 | $ 34,153 | $ 31,521 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning Balance at Dec. 31, 2017 | $ 240 | $ 38,418 | $ 96,525 | $ (68) | $ 135,115 |
Beginning Balance (in shares) at Dec. 31, 2017 | 24,074,882 | ||||
Stockholders' Equity | |||||
Stock based compensation expense | 924 | 924 | |||
Vesting of restricted stock | $ 2 | (2) | |||
Vesting of restricted stock (in shares) | 183,180 | ||||
Net income | 31,598 | 31,598 | |||
Impact of adoption of new accounting standard | Accounting Standards Update 2018-02 | (13) | 13 | |||
Other comprehensive income (loss) | (77) | (77) | |||
Dividends on common stock | (6,838) | (6,838) | |||
Ending Balance at Sep. 30, 2018 | $ 242 | 39,340 | 121,272 | (132) | 160,722 |
Ending Balance (in shares) at Sep. 30, 2018 | 24,258,062 | ||||
Beginning Balance at Jun. 30, 2018 | $ 242 | 38,765 | 113,873 | (129) | 152,751 |
Beginning Balance (in shares) at Jun. 30, 2018 | 24,241,206 | ||||
Stockholders' Equity | |||||
Stock based compensation expense | 575 | 575 | |||
Vesting of restricted stock (in shares) | 16,856 | ||||
Net income | 9,853 | 9,853 | |||
Other comprehensive income (loss) | (3) | (3) | |||
Dividends on common stock | (2,454) | (2,454) | |||
Ending Balance at Sep. 30, 2018 | $ 242 | 39,340 | 121,272 | (132) | 160,722 |
Ending Balance (in shares) at Sep. 30, 2018 | 24,258,062 | ||||
Beginning Balance at Dec. 31, 2018 | $ 242 | 39,915 | 128,555 | (104) | 168,608 |
Beginning Balance (in shares) at Dec. 31, 2018 | 24,258,062 | ||||
Stockholders' Equity | |||||
Stock based compensation expense | 1,097 | 1,097 | |||
Vesting of restricted stock | $ 2 | (2) | |||
Vesting of restricted stock (in shares) | 157,316 | ||||
Repurchase and retirement of common stock | $ (1) | (1,484) | (1,485) | ||
Repurchase and retirement of common stock (in shares) | (110,000) | ||||
Net income | 34,048 | 34,048 | |||
Impact of adoption of new accounting standard | 2016-02 | (362) | (362) | |||
Other comprehensive income (loss) | 105 | 105 | |||
Dividends on common stock | (7,589) | (7,589) | |||
Ending Balance at Sep. 30, 2019 | $ 243 | 39,526 | 154,652 | 1 | 194,422 |
Ending Balance (in shares) at Sep. 30, 2019 | 24,305,378 | ||||
Beginning Balance at Jun. 30, 2019 | $ 243 | 39,096 | 144,989 | (11) | 184,317 |
Beginning Balance (in shares) at Jun. 30, 2019 | 24,305,378 | ||||
Stockholders' Equity | |||||
Stock based compensation expense | 430 | 430 | |||
Net income | 12,356 | 12,356 | |||
Other comprehensive income (loss) | 12 | 12 | |||
Dividends on common stock | (2,693) | (2,693) | |||
Ending Balance at Sep. 30, 2019 | $ 243 | $ 39,526 | $ 154,652 | $ 1 | $ 194,422 |
Ending Balance (in shares) at Sep. 30, 2019 | 24,305,378 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Common Stock | ||||
Dividend on common stock declared (in dollars per share) | $ 0.11 | $ 0.1 | $ 0.31 | $ 0.28 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flow from operating activities: | ||
Net income | $ 34,048 | $ 31,598 |
Adjustments to reconcile net income to net cash provided (used) by operating activities: | ||
Depreciation, amortization and accretion | 1,972 | 650 |
Provision for loan losses | 1,189 | |
Stock based compensation expense | 1,097 | 924 |
Gain on sale of foreclosed real estate | 0 | (36) |
Origination of residential real estate loans held for sale | (356,715) | (450,429) |
Proceeds from sales of residential real estate loans | 420,034 | 394,987 |
Gain on sale of residential mortgages | (6,454) | (3,956) |
Origination of SBA loans held for sale | (90,353) | (78,016) |
Proceeds from sales of SBA loans held for sale | 94,649 | 82,055 |
Gain on sale of SBA loans | (4,296) | (4,039) |
Increase in cash value of bank owned life insurance | (352) | (360) |
Increase in accrued interest receivable | (508) | (349) |
(Increase) decrease in SBA servicing rights | (120) | 674 |
Increase in mortgage servicing rights | (2,806) | (6,632) |
(Increase) decrease in other assets | (1,164) | 2,731 |
(Decrease) increase in accrued interest payable | (311) | 488 |
Increase in other liabilities | 22,603 | 9,974 |
Net cash flow provided (used) by operating activities | 111,324 | (18,547) |
Cash flow from investing activities: | ||
Increase in loans, net | (115,689) | (12,582) |
Proceeds from maturities, calls or paydowns of securities available for sale | 3,080 | 1,839 |
(Purchase) redemption of Federal Home Loan Bank stock | (2,679) | 4,929 |
Purchases of premises and equipment | (858) | (1,999) |
Proceeds from sales of foreclosed real estate owned | 907 | |
Net cash flow used by investing activities | (116,146) | (6,906) |
Cash flow from financing activities: | ||
Dividends paid on common stock | (7,589) | (6,838) |
Repurchase of common stock | (1,485) | |
Increase in deposits, net | 91,120 | 235,115 |
Decrease in other borrowings, net | (1,103) | (705) |
Proceeds (repayments) from Federal Home Loan Bank advances | 60,000 | (120,000) |
Net cash flow provided by financing activities | 140,943 | 107,572 |
Net change in cash and cash equivalents | 136,121 | 82,119 |
Cash and cash equivalents at beginning of period | 138,427 | 95,833 |
Cash and cash equivalents at end of period | 274,548 | 177,952 |
Supplemental schedule of noncash investing and financing activities: | ||
Transfer of loan principal to foreclosed real estate, net of write-downs | 423 | 261 |
Initial recognition of operating lease right-of-use assets | 13,610 | |
Initial recognition of operating lease liabilities | 14,011 | |
Supplemental disclosures of cash flow information-Cash paid during the year for: | ||
Interest | 16,868 | 9,639 |
Income taxes | $ 10,390 | $ 7,319 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of MetroCity Bankshares, Inc. (“Company”) and its wholly-owned subsidiary. The Company owns 100% of Metro City Bank (the “Bank”). The “Company” or “our,” as used herein, includes Metro City Bank. These unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) followed within the financial services industry for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or notes required for complete financial statements. The Company principally operates in one business segment, which is community banking. In the opinion of management, all adjustments, consisting of normal and recurring items, considered necessary for a fair presentation of the consolidated financial statements for the interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to current year presentation. These reclassifications did not have a material effect on previously reported net income, shareholders’ equity or cash flows. Operating results for the three and nine month period ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2018. The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2018, which are included in the Company’s Registration Statement on Form S-1 filed with the SEC on September 4, 2019 (Registration No. 333-233625) and declared effective on October 2, 2019. There were no new accounting policies or changes to existing policies adopted during the first nine months of 2019 which had a significant effect on the Company’s results of operations or statement of financial condition. For interim reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period. On August 30, 2019, the Company effected a 2-for-1 common stock split, as approved by the Company’s Board of Directors. Common stock and per share data included in these financial statements have been restated to reflect this stock split. Contingencies Due to the nature of their activities, the Company and its subsidiary are at times engaged in various legal proceedings that arise in the course of normal business, some of which were outstanding as of September 30, 2019. Although the ultimate outcome of all claims and lawsuits outstanding as of September 30, 2019 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on the Company’s results of operations or financial condition. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842) . ASU 2016‑02 amends the existing standards for lease accounting effectively requiring that most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability. ASU 2016‑02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of an entity’s leasing activities. ASU 2016‑02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU 2016‑02 during the first quarter of 2019 and elected the optional transition method. The Company also elected the package of practical expedients provided in the guidance which permits the Company to not reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the hindsight practical expedient to determine lease term and in assessing impairment of the Company’s right-of-use asset. The adoption of ASU 2016‑02 resulted in the recognition of a right-of-use asset of $13.6 million, a lease liability of $14.0 million, and a cumulative effect decrease to retained earnings of $362,000. See Note 7 - Operating Leases for additional information. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018‑13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The update is effective for interim and annual periods in fiscal years beginning after December 31, 2019, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2020 permitted for new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The adoption of this standard is not expected to have a material effect on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016‑13, Financial Instruments - Credit Losses (Topic 326) to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and similar instruments) and net investments in leases recognized by a lessor. For debt securities with other-than-temporary impairment (OTTI), the guidance will be applied prospectively. Existing purchased credit impaired (PCI) assets will be grandfathered and classified as purchased credit deteriorated (PCD) assets at the date of adoption. The assets will be grossed up for the allowance of expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance. Adoption is effective for interim and annual reporting periods beginning after December 15, 2022. Early adoption is permitted. The Company has selected a software solution supported by a third-party vendor to be used in developing an expected credit loss model compliant with ASU 2016‑13 and will continue to evaluate the impact of this new accounting standard through its effective date. The Company has further evaluated other Accounting Standards Updates issued during 2019 but does not expect updates other than those summarized above to have a material impact on the consolidated financial statements. |
SECURITIES AVAILABLE FOR SALE
SECURITIES AVAILABLE FOR SALE | 9 Months Ended |
Sep. 30, 2019 | |
SECURITIES AVAILABLE FOR SALE. | |
SECURITIES AVAILABLE FOR SALE | NOTE 2 – SECURITIES AVAILABLE FOR SALE The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale as of September 30, 2019 and December 31, 2018 are summarized as follows: September 30, 2019 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 12,521 $ — $ — $ 12,521 States and political subdivisions 1,246 30 — 1,276 Mortgage-backed GSE residential 2,162 — (46) 2,116 Total $ 15,929 $ 30 $ (46) $ 15,913 December 31, 2018 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 15,183 $ — $ — $ 15,183 States and political subdivisions 1,248 — (35) 1,213 Mortgage-backed GSE residential 2,607 — (115) 2,492 Total $ 19,038 $ — $ (150) $ 18,888 The amortized costs and estimated fair values of investment securities available for sale at September 30, 2019, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities Available for Sale Amortized Estimated (Dollars in thousands) Cost Fair Value Due in one year or less $ 804 $ 804 Due after one year but less than five years 2,300 2,300 Due after five years but less than ten years 4,208 4,238 Due in more than ten years 6,455 6,455 Mortgage-backed GSE residential 2,162 2,116 Total $ 15,929 $ 15,913 There were no securities pledged as of September 30, 2019 and December 31, 2018 to secure public deposits and repurchase agreements. Information pertaining to securities with gross unrealized losses at September 30, 2019 and December 31, 2018 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows: September 30, 2019 Twelve Months or Less Over Twelve Months Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair (Dollars in thousands) Losses Value Losses Value Mortgage-backed GSE residential — — (46) 2,111 Total $ — $ — $ (46) $ 2,111 December 31, 2018 Twelve Months or Less Over Twelve Months Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair (Dollars in thousands) Losses Value Losses Value States and political subdivisions $ (35) $ 1,213 $ — $ — Mortgage-backed GSE residential — — (115) 2,492 Total $ (35) $ 1,213 $ (115) $ 2,492 Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. At September 30, 2019, the three debt securities with unrealized losses have depreciated 2.15% from the Company’s amortized cost basis and have been in a loss position for greater than twelve months. Mortgage-backed GSE residential. The Company’s unrealized loss on three investments in residential GSE mortgage-backed securities was caused by interest rate increases. The contractual cash flows of the investment are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the security would not be settled at a price less than the amortized cost base of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has no immediate plans to sell the investment, and because it is not more likely than not that the Company will be required to sell the investment before recovery of their amortized cost base, which may be maturity, management does not consider this investment to be other-than-temporarily impaired at September 30, 2019. |
LOANS AND ALLOWANCE FOR LOAN LO
LOANS AND ALLOWANCE FOR LOAN LOSSES | 9 Months Ended |
Sep. 30, 2019 | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES Major classifications of loans at September 30, 2019 and December 31, 2018 are summarized as follows: September 30, December 31, (Dollars in thousands) 2019 2018 Construction and development $ 42,106 $ 42,718 Commercial real estate 436,692 396,598 Commercial and industrial 47,247 33,100 Residential real estate 733,702 670,341 Consumer and other 1,658 2,957 Total loans receivable 1,261,405 1,145,714 Unearned income (2,359) (2,139) Allowance for loan losses (6,850) (6,645) Loans, net $ 1,252,196 $ 1,136,930 The Company is not committed to lend additional funds to borrowers with non-accrual or restructured loans. In the normal course of business, the Company may sell and purchase loan participations to and from other financial institutions and related parties. Loan participations are typically sold to comply with the legal lending limits per borrower as imposed by regulatory authorities. The participations are sold without recourse and the Company imposes no transfer or ownership restrictions on the purchaser. A summary of changes in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2019 and 2018 is as follows: Three Months Ended September 30, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 129 $ 2,384 $ 587 $ 3,165 $ 197 $ 21 $ 6,483 Charge-offs — (237) — — (162) — (399) Recoveries — 738 — — 28 — 766 Provision 93 (570) (132) 252 61 296 — Ending balance $ 222 $ 2,315 $ 455 $ 3,417 $ 124 $ 317 $ 6,850 Nine Months Ended September 30, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Charge-offs — (237) (14) — (493) — (744) Recoveries — 749 — — 200 — 949 Provision (13) (798) 89 375 30 317 — Ending balance $ 222 $ 2,315 $ 455 $ 3,417 $ 124 $ 317 $ 6,850 Three Months Ended September 30, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 160 $ 2,144 $ 263 $ 3,363 $ 652 $ 184 $ 6,766 Charge-offs — — — — (297) — (297) Recoveries — 4 — — 90 — 94 Provision (77) 491 310 (293) 71 (184) 318 Ending balance $ 83 $ 2,639 $ 573 $ 3,070 $ 516 $ — $ 6,881 Nine Months Ended September 30, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 127 $ 2,135 $ 261 $ 3,048 $ 1,170 $ 184 $ 6,925 Charge-offs — (14) — — (1,672) — (1,686) Recoveries — 14 — — 439 — 453 Provision (44) 504 312 22 579 (184) 1,189 Ending balance $ 83 $ 2,639 $ 573 $ 3,070 $ 516 $ — $ 6,881 The following tables present, by portfolio segment, the balance in the allowance for loan losses disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans as of September 30, 2019 and December 31, 2018. September 30, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Individually evaluated for impairment $ 47 $ 757 $ 94 $ — $ — $ — $ 898 Collectively evaluated for impairment 175 1,558 361 3,417 7 317 5,835 Acquired with deteriorated credit quality — — — — 117 — 117 Total ending allowance balance $ 222 $ 2,315 $ 455 $ 3,417 $ 124 $ 317 $ 6,850 Loans: Individually evaluated for impairment $ 1,360 $ 8,089 $ 971 $ 6,699 $ — $ — $ 17,119 Collectively evaluated for impairment 40,316 426,793 46,157 727,003 635 — 1,240,904 Acquired with deteriorated credit quality — — — — 1,023 — 1,023 Total ending loans balance $ 41,676 $ 434,882 $ 47,128 $ 733,702 $ 1,658 $ — $ 1,259,046 December 31, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Individually evaluated for impairment $ 117 $ 872 $ 110 $ — $ — $ — $ 1,099 Collectively evaluated for impairment 118 1,729 270 3,042 3 — 5,162 Acquired with deteriorated credit quality — — — — 384 — 384 Total ending allowance balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Loans: Individually evaluated for impairment $ 1,360 $ 8,144 $ 986 $ 1,722 $ — $ — $ 12,212 Collectively evaluated for impairment 40,928 386,819 32,040 668,619 316 — 1,128,722 Acquired with deteriorated credit quality — — — — 2,641 — 2,641 Total ending loans balance $ 42,288 $ 394,963 $ 33,026 $ 670,341 $ 2,957 $ — $ 1,143,575 Impaired loans as of September 30, 2019 and December 31, 2018, by portfolio segment, are as follows: Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related September 30, 2019 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ — $ 1,360 $ 1,360 $ 47 Commercial real estate 8,089 5,724 3,010 8,734 757 Commercial and industrial 971 931 43 974 94 Residential real estate 6,699 6,699 — 6,699 — Total $ 17,119 $ 13,354 $ 4,413 $ 17,767 $ 898 Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2018 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ — $ 1,360 $ 1,360 $ 117 Commercial real estate 8,144 5,312 2,967 8,279 872 Commercial and industrial 986 302 684 986 110 Residential real estate 1,722 1,722 — 1,722 — Total $ 12,212 $ 7,336 $ 5,011 $ 12,347 $ 1,099 The average recorded investment in impaired loans and interest income recognized on the cash and accrual basis for the three and nine months ended September 30, 2019 and 2018, by portfolio segment, are summarized in the tables below. Three Months Ended September 30, 2019 2018 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ 1,360 $ — $ 1,360 $ 11 Commercial real estate 8,281 172 6,816 45 Commercial and industrial 955 8 763 1 Residential real estate 7,529 46 2,330 4 Total $ 18,125 $ 226 $ 11,269 $ 61 Nine Months Ended September 30, 2019 2018 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ 1,360 $ 6 $ 1,360 $ 40 Commercial real estate 8,179 331 6,985 238 Commercial and industrial 968 21 845 7 Residential real estate 5,847 87 2,460 29 Total $ 16,354 $ 445 $ 11,650 $ 314 A primary credit quality indicator for financial institutions is delinquent balances. Delinquencies are updated on a daily basis and are continuously monitored. Loans are placed on nonaccrual status as needed based on repayment status and consideration of accounting and regulatory guidelines. Nonaccrual balances are updated and reported on a daily basis. Following are the delinquent amounts, by portfolio segment, as of September 30, 2019 and December 31, 2018: Accruing Total Total (Dollars in thousands) Greater than Accruing Financing September 30, 2019 Current 30-89 Days 90 Days Past Due Non-accrual Receivables Construction and development $ 40,316 $ — $ — $ — $ 1,360 $ 41,676 Commercial real estate 429,734 1,702 509 2,211 2,937 434,882 Commercial and industrial 47,085 — — — 43 47,128 Residential real estate 722,783 4,220 — 4,220 6,699 733,702 Consumer and other 1,658 — — — — 1,658 Total $ 1,241,576 $ 5,922 $ 509 $ 6,431 $ 11,039 $ 1,259,046 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2018 Current 30-89 Days 90 Days Past Due Non-accrual Receivables Construction and development $ 42,288 $ — $ — $ — $ — $ 42,288 Commercial real estate 390,601 1,102 — 1,102 3,260 394,963 Commercial and industrial 32,315 26 — 26 685 33,026 Residential real estate 651,439 17,180 — 17,180 1,722 670,341 Consumer and other 2,957 — — — — 2,957 Total $ 1,119,600 $ 18,308 $ — $ 18,308 $ 5,667 $ 1,143,575 The Company utilizes a ten grade loan rating system for its loan portfolio as follows: · Loans rated Pass – Loans in these categories have low to average risk. · Loans rated Special Mention – The loan does not presently expose the Company to a sufficient degree of risk to warrant adverse classification, but does possess deficiencies deserving close attention. · Loans rated Substandard – Loans are inadequately protected by the current sound worth and paying capability of the obligor or of the collateral pledged, if any. · Loans rated Doubtful – Loans which have all the weaknesses inherent in loans classified Substandard, with the added characteristic that the weaknesses make collections or liquidation in full, or on the basis of currently known facts, conditions and values, highly questionable or improbable. · Loans rated Loss – Loans classified Loss are considered uncollectible and such little value that there continuance as bankable assets is not warranted. Loan grades are monitored regularly and updated as necessary based upon review of repayment status and consideration of periodic updates regarding the borrower’s financial condition and capacity to meet contractual requirements. The following presents the Company’s loans, included purchased loans, by risk rating based on the most recent information available: Construction (Dollars in thousands) and Commercial Commercial Residential Consumer September 30, 2019 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 40,316 $ 428,022 $ 46,131 $ 725,719 $ 1,658 $ 1,241,846 Special Mention — — — — — — Substandard 1,360 6,860 997 7,983 — 17,200 Doubtful — — — — — — Loss — — — — — — Total $ 41,676 $ 434,882 $ 47,128 $ 733,702 $ 1,658 $ 1,259,046 Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2018 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 40,928 $ 383,857 $ 32,040 $ 667,249 $ 2,957 $ 1,127,031 Special Mention — 5,112 — — — 5,112 Substandard 1,360 5,994 986 3,092 — 11,432 Doubtful — — — — — — Loss — — — — — — Total $ 42,288 $ 394,963 $ 33,026 $ 670,341 $ 2,957 $ 1,143,575 Purchased Credit Impaired Loans: The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. Loans are recorded under the scope of ASC 310‑30 when it is deemed probable at acquisition that all contractually required payments will not be collected. Loans within the scope of ASC 310‑30 are initially recorded at fair value and are evaluated for impairment on an ongoing basis. As of September 30, 2019 and December 31, 2018, the Company had auto loan pools included within the consumer segment of loans outstanding that are accounted for under ASC 310‑30 with a carrying value of $1. 0 million and $2.6 million, respectively. There was no remaining accretable yield for these loans at September 30, 2019 and December 31, 2018. At September 30, 2019 and December 31, 2018, the allowance for loan losses allocated on these loans was $117,000 and $384,000, respectively, as these loans are collectively evaluated for impairment. Interest income recognized on these loans was $16,000 and $78,000 for the three months ended September 30, 2019 and 2018, respectively. Interest income recognized on these loans was $66,000 and $267,000 for the nine months ended September 30, 2019 and 2018, respectively. Troubled Debt Restructures: In this current real estate environment it has become more common to restructure or modify the terms of certain loans under certain conditions (i.e. troubled debt restructures or “TDRs”). In those circumstances it may be beneficial to restructure the terms of a loan and work with the borrower for the benefit of both parties, versus forcing the property into foreclosure and having to dispose of it in an unfavorable real estate market. When we have modified the terms of a loan, we usually either reduce or defer payments for a period of time. We have not forgiven any material principal amounts on any loan modifications to date. Nonperforming TDRs are generally placed on non-accrual under the same criteria as all other loans. TDRs as of September 30, 2019 and December 31, 2018 quantified by loan type classified separately as accrual and nonaccrual are presented in the table below. (Dollars in thousands) September 30, 2019 Accruing Nonaccrual Total Commercial real estate $ 2,969 $ 482 $ 3,451 Commercial and industrial — 29 29 Total $ 2,969 $ 511 $ 3,480 (Dollars in thousands) December 31, 2018 Accruing Nonaccrual Total Commercial real estate $ 3,298 $ — $ 3,298 Commercial and industrial — 13 13 Total $ 3,298 $ 13 $ 3,311 Our policy is to return nonaccrual TDR loans to accrual status when all the principal and interest amounts contractually due, pursuant to its modified terms, are brought current and future payments are reasonably assured. Our policy also considers payment history of the borrower, but is not dependent upon a specific number of payments. The Company recorded a specific reserve of $342,000 and $523,000, as of September 30, 2019 and December 31, 2018, respectively, and recognized no partial charge offs on the TDR loans described above during the three and nine months ended September 30, 2019 and 2018. TDR commercial real estate loans totaling $482,000 defaulted during the nine months ended September 30, 2019. These defaults did not have a material impact on the Company’s allowance for loan loss. There were no TDRs which defaulted during the three months ended September 30, 2019 or the three and nine months ending September 30, 2018. During the nine months ended September 30, 2019, we modified one commercial and industrial loan and one commercial real estate loan. The total recorded investment in these modified loans was $640,000 as of September 30, 2019. During the year ended December 31, 2018, we modified one commercial real estate loan. The total recorded investment in the modified loan as of December 31, 2018 was $503,000. The modification of these loans did not result in a permanent reduction of the recorded investment in the loan, but did result in a payment deferment period on the loans. At September 30, 2019, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings. Loans are modified to minimize loan losses when we believe the modification will improve the borrower’s financial condition and ability to repay the loan. We typically do not forgive principal. We generally either defer, or decrease monthly payments for a temporary period of time. A summary of the types of concessions for loans classified as troubled debt restructurings are presented in the table below: (Dollars in thousands) September 30, December 31, Type of Concession 2019 2018 Deferral of payments $ 531 $ 482 Extension of maturity date 2,949 2,829 Total TDR loans $ 3,480 $ 3,311 The following table presents loans by portfolio segment modified as TDRs and the corresponding recorded investment, which includes accrued interest and fees, as of September 30, 2019 and December 31, 2018: September 30, 2019 December 31, 2018 (Dollars in thousands) Number of Recorded Number of Recorded Type Loans Investment Loans Investment Commercial real estate 5 $ 4,003 6 $ 3,527 Commercial and industrial 2 29 1 116 Total 7 $ 4,032 7 $ 3,643 |
SBA AND USDA LOAN SERVICING
SBA AND USDA LOAN SERVICING | 9 Months Ended |
Sep. 30, 2019 | |
SBA AND USDA LOAN SERVICING | |
SBA AND USDA LOAN SERVICING | NOTE 4 – SBA AND USDA LOAN SERVICING The Company sells the guaranteed portion of certain SBA and USDA loans it originates and continues to service the sold portion of the loan. The portion of the loans sold are not included in the financial statements of the Company. As of September 30, 2019 and December 31, 2018, the unpaid principal balances of serviced loans totaled $446.3 million and $431.2 million, respectively. Activity for SBA loan servicing rights are as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, (Dollars in thousands) 2019 2018 2019 2018 Beginning of period $ 8,643 $ 9,283 $ 8,419 $ 9,329 Change in fair value (105) (619) 119 (665) End of period, fair value $ 8,538 $ 8,664 $ 8,538 $ 8,664 Fair value at September 30, 2019 and December 31, 2018 was determined using discount rates ranging from 4.47% to 12.21% and 8.78% to 14.56%, and prepayment speeds ranging from 10.72% to 15.90% and 6.82% to 12.87%, depending on the stratification of the specific right. Average default rates are based on the industry average for the applicable NAICS/SIC code. The aggregate fair market value of the interest only strips included in SBA servicing assets was $28,000 and $27,000 at September 30, 2019 and December 31, 2018, respectively. Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value. For purposes of measuring impairment, risk characteristics including product type and interest rate, were used to stratify the originated loan servicing rights. No valuation allowances are recorded against capitalized servicing rights or interest only strips as of September 30, 2019 and December 31, 2018. |
RESIDENTIAL MORTGAGE LOAN SERVI
RESIDENTIAL MORTGAGE LOAN SERVICING | 9 Months Ended |
Sep. 30, 2019 | |
RESIDENTIAL MORTGAGE LOAN SERVICING | |
RESIDENTIAL MORTGAGE LOAN SERVICING | NOTE 5 – RESIDENTIAL MORTGAGE LOAN SERVICING Residential mortgage loans serviced for others are not reported as assets. The outstanding principal of these loans at September 30, 2019 and December 31, 2018 was $1.12 billion and $804.2 million, respectively. Activity for mortgage loan servicing rights are as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, (Dollars in thousands) 2019 2018 2019 2018 Beginning of period $ 16,771 $ 11,237 $ 14,934 $ 6,843 Additions 1,971 2,838 5,483 8,073 Amortization expense (1,002) (600) (2,677) (1,441) End of period, carrying value $ 17,740 $ 13,475 $ 17,740 $ 13,475 The fair value of servicing rights was $18.0 million and $16.5 million at September 30, 2019 and December 31, 2018, respectively. Fair value at September 30, 2019 was determined by using a discount rate of 14%, prepayment speeds of 18%, and a weighted average default rate of 0.96%. Fair value at December 31, 2018 was determined using discount rates ranging from 11% to 14%, prepayment speeds of 15%, and a weighted average default rate of 0.88%. |
FEDERAL HOME LOAN BANK ADVANCES
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | 9 Months Ended |
Sep. 30, 2019 | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | NOTE 6 – FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS Advances from the Federal Home Loan Bank (FHLB) at September 30, 2019 and December 31, 2018 are summarized as follows: (Dollars in thousands) September 30, 2019 December 31, 2018 Convertible advance with Bermudan option maturing August 6, 2029; fixed rate of 0.85% $ 20,000 $ — Convertible advance with Bermudan option maturing August 7, 2029; fixed rate of 0.57% 20,000 — Convertible advance with Bermudan option maturing August 8, 2029; fixed rate of 0.52% 10,000 — Convertible advance with Bermudan option maturing August 30, 2029; fixed rate of 0.4725% 10,000 — Total FHLB advances $ 60,000 $ — At September 30, 2019, the Company had maximum borrowing capacity from the FHLB of $458.4 million based on the value of residential and commercial real estate loans pledged as collateral. At September 30, 2019, the Company had unsecured federal funds lines available with correspondent banks of approximately $47.5 million. There were no advances outstanding on these lines at September 30, 2019. At September 30, 2019, the Company had Federal Reserve Discount Window funds available of approximately $10.0 million. The funds are collateralized by a pool of commercial real estate and commercial and industrial loans totaling $29.3 million as of September 30, 2019. There were no outstanding borrowings on this line as of September 30, 2019. The Company sells the guaranteed portion of certain SBA loans it originates and continues to service the sold portion of the loan. The Company sometimes retains an interest only strip or servicing fee that is considered to be more than customary market rates. An interest rate strip can result from a transaction when the market rate of the transaction differs from the stated rate on the portion of the loan sold. The sold portion of SBA loans that satisfies at least one of the above provisions are considered secured borrowings and are included in other borrowings. Secured borrowings at September 30, 2019 and December 31, 2018 were $3.2 million and $4.3 million, respectively. |
OPERATING LEASES
OPERATING LEASES | 9 Months Ended |
Sep. 30, 2019 | |
OPERATING LEASES | |
OPERATING LEASES | NOTE 7 – OPERATING LEASES The Company has entered into various operating leases for certain branch locations with terms extending through July 2028. Generally, these leases have initial lease terms of ten years or less. Many of the leases have one or more renewal options which typically are for five years at the then fair market rental rates. We assessed these renewal options using a threshold of reasonably certain. For leases where we were reasonably certain to renew, those option periods were included within the lease term, and therefore, the measurement of the right-of-use (ROU) asset and lease liability. None of our leases included options to terminate the lease and none had initial terms of 12 months or less (i.e. short-term leases). Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities on the Consolidated Balance Sheets. The Company currently does not have any finance leases. Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental collateralized borrowing rate provided by the FHLB at the lease commencement date. ROU assets are further adjusted for lease incentives, if any. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in occupancy expense in the Consolidated Statements of Income. The components of lease cost were as follows: Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2019 September 30, 2019 Operating lease cost $ 528 $ 1,564 Variable lease cost 44 132 Short-term lease cost — — Sublease income — — Total net lease cost $ 572 $ 1,696 Future maturities of the Company’s operating lease liabilities are summarized as follows: (Dollars in thousands) Twelve Months Ended: Lease Liability September 30, 2020 $ 2,027 September 30, 2021 1,931 September 30, 2022 1,896 September 30, 2023 1,931 September 30, 2024 1,810 After September 30, 2024 4,965 Total lease payments 14,560 Less: interest discount (1,638) Present value of lease liabilities $ 12,922 (Dollars in thousands) Supplemental Lease Information September 30, 2019 Weighted-average remaining lease term (years) 7.5 Weighted-average discount rate 3.14 % Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 507 $ 1,474 Operating cash flows from operating leases (lease liability reduction) $ 404 $ 1,165 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ — $ 13,610 |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 30, 2019 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 8 – REVENUE RECOGNITION Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. The implementation of the new guidance did not have a material impact on the measurement or recognition of revenue. The Company did not record a cumulative effect adjustment to opening retained earnings. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit, and investment securities, as well as revenue related to our loan servicing activities and revenue on bank owned life insurance, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our income statements as components of noninterest income are as follows: Service charges on deposits: Income from service charges on deposits is within the scope of ASC 606. These include general service fees for monthly account maintenance and activity or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue on these types of fees are recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed. Payment for such performance obligations are generally received at the time the performance obligations are satisfied. Service charges on deposits also include overdraft and NSF fees. Overdraft fees are charged when a depositor has a draw on their account that has inadequate funds. All services charges on deposit accounts represent less than 1% of total revenues in the three and nine months ended September 30, 2019. Other Service Charges, Commissions and Fees: Other service charges, commissions and fees are primarily comprised of mortgage origination related income, wire fees, interchange fees, and other service charges and fees. Mortgage origination related income, which makes up the majority of the other service charges, commissions and fees line item amounts reported on the Consolidated Statements of Income, consists of mortgage loan origination fees, underwriting fees, processing fees, and application fees. The Company’s performance obligations for other service charges, commissions 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. Gain or loss on sale of OREO : This revenue stream is recorded when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain or loss on sale if a significant financing component is present. This revenue stream is within the scope of ASC 606 and is included in other income in noninterest income, but no revenues were generated from gains and losses on the sale and financing of OREO for the three and nine months ended September 30, 2019. Other revenue streams that are recorded in other income in noninterest income include revenue generated from letters of credit and income on bank owned life insurance. These revenue streams are either not material or out of scope of ASC 606. |
LOAN COMMITMENTS AND RELATED FI
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2019 | |
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS | |
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS | NOTE 9 – LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS The Company is a 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 and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The contract 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 written is represented by the contractual 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. Financial instruments where contract amounts represent credit risk as of September 30, 2019 and December 31, 2018 include: September 30, December 31, (Dollars in thousands) 2019 2018 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 61,192 $ 65,283 Standby letters of credit $ 5,180 $ 4,250 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 to extend credit includes $61.2 million of unused lines of credit and $5.2 million to make loans as of September 30, 2019. 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 creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty. Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan commitments to customers. The Company maintains cash deposits with a financial institution that during the year are in excess of the insured limitation of the Federal Deposit Insurance Corporation. If the financial institution were not to honor its contractual liability, the Company could incur losses. Management is of the opinion that there is not material risk because of the financial strength of the institution. |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2019 | |
FAIR VALUE | |
FAIR VALUE | NOTE 10 – FAIR VALUE Financial Instruments Measured at Fair Value Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The following presents the assets and liabilities as of September 30, 2019 and December 31, 2018 which are measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, and the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy, for which a nonrecurring change in fair value has been recorded: September 30, 2019 Total Gains (Dollars in thousands) Total Level 1 Level 2 Level 3 (Losses) Assets Recurring fair value measurements: Securities available for sale: Obligations of U.S. Government entities and agencies $ 12,521 $ — $ — $ 12,521 States and political subdivisions 1,276 — 1,276 — Mortgage-backed GSE residential 2,116 — 2,116 — Total securities available for sale 15,913 — 3,392 12,521 SBA servicing asset 8,538 — — 8,538 Interest only strip 28 — — 28 $ 24,479 $ — $ 3,392 $ 21,087 Non-recurring fair value measurements: Impaired loans $ 3,477 $ — $ — $ 3,477 $ 257 December 31, 2018 Total Gains (Dollars in thousands) Total Level 1 Level 2 Level 3 (Losses) Assets Recurring fair value measurements: Securities available for sale: Obligations of U.S. Government entities and agencies $ 15,183 $ — $ — $ 15,183 States and political subdivisions 1,213 — 1,213 — Mortgage-backed GSE residential 2,492 — 2,492 — Total securities available for sale 18,888 — 3,705 15,183 SBA servicing asset 8,419 — — 8,419 Interest only strip 27 — — 27 $ 27,334 $ — $ 3,705 $ 23,629 Non-recurring fair value measurements: Impaired loans $ 3,472 $ — $ — $ 3,472 $ 169 The Company used the following methods and significant assumptions to estimate fair value: Securities, Available for Sales: The Company carries securities available for sale at fair value. For securities where quoted prices are not available (Level 2), the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The investments in the Company’s portfolio are generally not quoted on an exchange but are actively traded in the secondary institutional markets. The Company owns certain SBA investments that for which the fair value is determined using Level 3 hierarchy inputs and assumptions as the trading market for such securities was determined to be “not active.” This determination was based on the limited number of trades or, in certain cases, the existence of no reported trades. Discounted cash flows are calculated by a third party using interest rate curves that are updated to incorporate current market conditions, including prepayment vectors and credit risk. During time when trading is more liquid, broker quotes are used to validate the model. SBA Servicing Assets and Interest Only Strip : The fair values of the Company’s servicing assets are determined using Level 3 inputs. All separately recognized servicing assets and servicing liabilities are initially measured at fair value initially and at each reporting date and changes in fair value are reported in earnings in the period in which they occur. The fair values of the Company’s interest-only strips are determined using Level 3 inputs. When the Company sells loans to others, it may hold interest-only strips, which is an interest that continues to be held by the transferor in the securitized receivable. It may also obtain servicing assets or assume servicing liabilities that are initially measured at fair value. Gain or loss on sale of the receivables depends in part on both (a) the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the interests that continue to be held by the transferor based on their relative fair value at the date of transfer, and (b) the proceeds received. To obtain fair values, quoted market prices are used if available. However, quotes are generally not available for interests that continue to be held by the transferor, so the Company generally estimates fair value based on the future expected cash flows estimated using management’s best estimates of the key assumptions — credit losses and discount rates commensurate with the risks involved. Under certain circumstances we make adjustments to fair value for our assets and liabilities although they are not measured at fair value on an ongoing basis. Impaired loans : Impaired loans are evaluated and valued at the time the loan is identified as impaired, at the lower of cost or fair value. Fair value is measured based on the value of the collateral securing these loans and is classified at a Level 3 in the fair value hierarchy. Collateral may include real estate, or business assets including equipment, inventory and accounts receivable. The value of real estate collateral is determined based on an appraisal by qualified licensed appraisers hired by the Company. The value of business equipment is based on an appraisal by qualified licensed appraisers hired by the Company if significant, or the equipment’s net book value on the business’ financial statements. Inventory and accounts receivable collateral are valued based on independent field examiner review or aging reports. Appraisals may utilize a single valuation approach or a combination or approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Appraised values are reviewed by management using historical knowledge, market considerations, and knowledge of the client and client’s business. Foreclosed real estate : Foreclosed real estate is adjusted to fair value upon transfer of the loans to foreclosed real estate. Subsequently, foreclosed real estate is carried at the lower of carrying value or fair value. Fair value is based upon independent market prices or appraised values of the collateral and is classified as nonrecurring Level 3. Adjustments are routinely made in the appraisal process by the independent appraisers engaged by the Company to adjust for differences between the comparable sales. Appraised values are reviewed by management using our market knowledge and historical experience. Changes in level 3 fair value measurements The table below presents a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2019 and 2018 and year ended December 31, 2018: Obligations of SBA (Dollars in thousands) U.S. Government Servicing Interest Only Three Months Ended: Entities and Agencies Asset Strip Liabilities Fair value, July 1, 2019 $ 14,280 $ 8,643 $ 39 $ — Total loss included in income — (105) (11) — Settlements — — — — Prepayments/paydowns (1,759) — — — Transfers in and/or out of level 3 — — — — Fair value, September 30, 2019 $ 12,521 $ 8,538 $ 28 $ — Fair value, July 1, 2018 $ 16,455 $ 9,283 $ 31 $ — Total loss included in income — (619) (3) — Settlements — — — — Prepayments/paydowns (1,177) — — — Transfers in and/or out of level 3 — — — — Fair value, September 30, 2018 $ 15,278 $ 8,664 $ 28 $ — Nine Months Ended: Fair value, January 1, 2019 $ 15,183 $ 8,419 $ 27 $ — Total gain included in income — 119 1 — Settlements — — — — Prepayments/paydowns (2,662) — — — Transfers in and/or out of level 3 — — — — Fair value, September 30, 2019 $ 12,521 $ 8,538 $ 28 $ — Fair value, January 1, 2018 $ 16,661 $ 9,329 $ 36 $ — Total loss included in income — (665) (8) — Settlements — — — — Prepayments/paydowns (1,383) — — — Transfers in and/or out of level 3 — — — — Fair value, September 30, 2018 $ 15,278 $ 8,664 $ 28 $ — Twelve Months Ended: Fair value, January 1, 2018 $ 16,661 $ 9,329 $ 36 $ — Total loss included in income — (910) (9) — Settlements — — — — Prepayments/paydowns (1,478) — — — Transfers in and/or out of level 3 — — — — Fair value, December 31, 2018 $ 15,183 $ 8,419 $ 27 $ — There were no gains or losses included in earnings for securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods presented above. The only activity for these securities were prepayments. There were no purchases, sales, or transfers into and out of Level 3. The following table presents quantitative information about recurring Level 3 fair value measures at September 30, 2019 and December 31, 2018: Valuation Unobservable General Technique Input Range September 30, 2019 Obligations of U.S. Government entities and agencies Discounted Cash Flows Discount Rate 0%-3% SBA servicing asset and interest only strip Discounted Cash Flows Prepayment speed 10.72%-15.90% Discount rate 4.47%-12.21% December 31, 2018 Obligations of U.S. Government entities and agencies Discounted Cash Flows Discount Rate 0%-3% SBA servicing asset and interest only strip Discounted Cash Flows Prepayment speed 6.82%-12.87% Discount rate 8.78%-14.56% The carrying amounts and estimated fair values of the Company’s financial instruments at September 30, 2019 and December 31, 2018 are as follows: Carrying Estimated Fair Value at September 30, 2019 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 274,548 $ — $ 274,548 $ — $ 274,548 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 15,913 — 3,392 12,521 15,913 FHLB stock 3,842 — — — N/A Loans, net 1,252,196 — — 1,280,746 1,280,746 Loans held for sale — — — — — Accrued interest receivable 5,465 — — 5,465 5,465 SBA servicing assets 8,538 — — 8,538 8,538 Mortgage servicing assets 17,740 — — 17,966 17,966 Interest only strips 28 — — 28 28 Financial Liabilities: Deposits 1,335,352 — 1,337,355 — 1,337,355 Federal Home Loan Bank advances 60,000 — 54,972 — 54,972 Other borrowings 3,154 — 3,154 — 3,154 Accrued interest payable 940 — 940 — 940 Carrying Estimated Fair Value at December 31, 2018 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 138,427 $ — $ 138,427 $ — $ 138,427 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 18,888 — 3,705 15,183 18,888 FHLB stock 1,163 — — — N/A Loans, net 1,136,930 — — 1,166,945 1,166,945 Loans held for sale 56,865 — 56,865 — 56,865 Accrued interest receivable 4,957 — — 4,957 4,957 SBA servicing asset 8,419 — — 8,419 8,419 Mortgage servicing assets 14,934 — — 16,460 16,460 Interest only strips 27 — — 27 27 Financial Liabilities: Deposits 1,244,232 — 1,242,863 — 1,242,863 Other borrowings 4,257 — 4,257 — 4,257 Accrued interest payable 1,251 — 1,251 — 1,251 |
REGULATORY MATTERS
REGULATORY MATTERS | 9 Months Ended |
Sep. 30, 2019 | |
REGULATORY MATTERS | |
REGULATORY MATTERS | NOTE 11 – REGULATORY MATTERS Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2019 is 2.50% and was 1.875% for 2018. The net unrealized gain or loss on available for sale securities, if any, is not included in computing regulatory capital. Management believes as of September 30, 2019, the Company and Bank meets all capital adequacy requirements to which they are subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At September 30, 2019 and December 31, 2018, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category. The Company’s actual capital amounts (in thousands) and ratios are also presented in the following table: To Be Well Capitalized For Capital Under Prompt Corrective Actual Adequacy Purposes: Action Provisions: Amount Ratio Amount ≥ Ratio ≥ Amount ≥ Ratio ≥ As of September 30, 2019: Total Capital (to Risk Weighted Assets) Consolidated $ 192,706 19.51 % N/A * N/A * N/A N/A Bank 190,742 19.34 % 78,902 8.0 % 98,628 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 185,856 18.82 % N/A * N/A * N/A N/A Bank 183,892 18.65 % 59,177 6.0 % 78,902 8.0 % Common Tier 1 (CET1) Consolidated 185,856 18.82 % N/A * N/A * N/A N/A Bank 183,892 18.65 % 44,383 4.5 % 64,108 6.5 % Tier 1 Capital (to Average Assets) Consolidated 185,856 11.68 % N/A * N/A * N/A N/A Bank 183,892 11.56 % 63,605 4.0 % 79,506 5.0 % As of December 31, 2018: Total Capital (to Risk Weighted Assets) Consolidated $ 166,851 18.16 % N/A * N/A * N/A N/A Bank 163,339 17.80 % 73,392 8.0 % 91,740 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 160,207 17.44 % N/A * N/A * N/A N/A Bank 156,696 17.08 % 55,044 6.0 % 73,392 8.0 % Common Tier 1 (CET1) Consolidated 160,207 17.44 % N/A * N/A * N/A N/A Bank 156,696 17.08 % 41,283 4.5 % 59,631 6.5 % Tier 1 Capital (to Average Assets) Consolidated 160,207 11.14 % N/A * N/A * N/A N/A Bank 156,696 10.91 % 57,455 4.0 % 71,819 5.0 % * The Board of Governors of the Federal Reserve raised the threshold for determining applicable of the Small Bank Holding Company and Savings and Loan Company Policy Statement in August 2018 from $1 Billion to $3 Billion in consolidated total assets to provide regulatory burden relief, therefore, the Company is no longer subject to the minimum capital requirements. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2019 | |
STOCK BASED COMPENSATION. | |
STOCK BASED COMPENSATION | NOTE 12 – STOCK BASED COMPENSATION The Company adopted the MetroCity Bankshares, Inc. 2018 Stock Option Plan (the “Prior Option Plan”) effective as of April 18, 2018, and the Prior Option Plan was approved by the Company’s shareholders on May 30, 2018. The Prior Option Plan provided for awards of stock options to officers, employees and directors of the Company. The Board of Directors of the Company determined that it was in the best interests of the Company and its shareholders to amend and restate the Prior Option Plan to provide for the grant of additional types of awards. Acting pursuant to its authority under the Prior Option Plan, the Board of Directors approved and adopted the MetroCity Bankshares, Inc. 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”), which constitutes the amended and restated version of the Prior Option Plan. The Board of Directors has reserved 2,400,000 shares of Company common stock for issuance pursuant to awards under the 2018 Incentive Plan, any or all of which may be granted as nonqualified stock options, incentive stock options, restricted stock, restricted stock units, performance awards and other stock-based awards. In the event all or a portion of a stock award is forfeited, cancelled, expires, or is terminated before becoming vested, paid, exercised, converted, or otherwise settled in full, any unissued or forfeited shares again becomes available for issuance pursuant to awards granted under the 2018 Incentive Plan and do not count against the maximum number of reserved shares. In addition, shares of common stock deducted or withheld to satisfy tax withholding obligations will be added back to the share reserve and will again be available for issuance pursuant to awards granted under the plan. The 2018 Incentive Plan is administered by the Compensation Committee of our Board of Directors (the “Committee”). The determination of award recipients under the 2018 Incentive Plan, and the terms of those awards, will be made by the Committee. At September 30, 2019, 240,000 stock options had been granted and no shares of restricted stock had been issued under the 2018 Incentive Plan. Stock Options A summary of stock option activity for the nine months ended September 30, 2019 is presented below: Weighted Average Shares Exercise Price Outstanding at January 1, 2019 240,000 $ 12.70 Granted — — Exercised — — Forfeited — — Outstanding at September 30, 2019 240,000 $ 12.70 As of September 30, 2019 and December 31, 2018, there was $833,000 and $1.2 million of total unrecognized compensation cost related to options granted under the Plan. As of September 30, 2019, the cost is expected to be recognized over a weighted-average period of 1.8 years. Restricted Stock The Company has periodically issued restricted stock to its directors, executive officers and certain employees under the 2018 Incentive Plan. Compensation expense for restricted stock is based upon the grant date fair value of the shares and is recognized over the vesting period of the awards. Shares of restricted stock issued to officers and employees vest in equal annual installments on the first three anniversaries of the grant date. Shares of restricted stock issued to directors vest 25% on the grant date and 25% on each of the first three anniversaries of the grant date. A summary of restricted stock activity for the nine months ended September 30, 2019 is presented below: Weighted- Average Grant- Nonvested Shares Shares Date Fair Value Nonvested at January 1, 2019 278,202 $ 7.07 Granted 48,724 13.75 Vested (157,316) 6.68 Forfeited (406) 9.85 Nonvested at September 30, 2019 169,204 $ 9.35 As of September 30, 2019 and December 31, 2018, there was $1. 3 million and $1.5 million of total unrecognized compensation cost related to nonvested shares granted under the Plan. As of September 30, 2019, the cost is expected to be recognized over a weighted-average period of 2. 0 years. The grant date fair value of shares vested during the three and nine months ended September 30, 2019 was $0 and $1.1 million, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 13 – EARNINGS PER SHARE The factors used in the earnings per share computation follow: Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands except per share data) 2019 2018 2019 2018 Basic earnings per share Net Income $ 12,356 $ 9,853 $ 34,048 $ 31,598 Weighted average common shares outstanding 24,305,378 24,258,062 24,247,605 24,156,072 Basic earnings per common share $ 0.51 $ 0.41 $ 1.40 $ 1.31 Diluted earnings per share Net Income $ 12,356 $ 9,853 $ 34,048 $ 31,598 Weighted average common shares outstanding for basic earnings per common share 24,305,378 24,258,062 24,247,605 24,156,072 Add: Dilutive effects of restricted stock and options 197,243 309,863 192,880 290,569 Average shares and dilutive potential common shares 24,502,621 24,567,925 24,440,485 24,446,641 Diluted earnings per common share $ 0.50 $ 0.40 $ 1.39 $ 1.29 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS On October 7, 2019, the Company completed its initial public offering with the issuance of 1,000,000 shares of common stock at a public offering price of $13.50 per share. The Company received proceeds, before expenses, of approximately $12.6 million in the offering. The shares began trading on the Nasdaq Global Select Market on October 3, 2019, under the ticker symbol “MCBS”. On October 30, 2019, the underwriters of the initial public offering exercised their option to purchase an additional 224,513 shares of common stock at the initial public offering price less the underwriting discount. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | The accompanying unaudited consolidated financial statements include the accounts of MetroCity Bankshares, Inc. (“Company”) and its wholly-owned subsidiary. The Company owns 100% of Metro City Bank (the “Bank”). The “Company” or “our,” as used herein, includes Metro City Bank. These unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) followed within the financial services industry for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or notes required for complete financial statements. The Company principally operates in one business segment, which is community banking. In the opinion of management, all adjustments, consisting of normal and recurring items, considered necessary for a fair presentation of the consolidated financial statements for the interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to current year presentation. These reclassifications did not have a material effect on previously reported net income, shareholders’ equity or cash flows. Operating results for the three and nine month period ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2018. The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2018, which are included in the Company’s Registration Statement on Form S-1 filed with the SEC on September 4, 2019 (Registration No. 333-233625) and declared effective on October 2, 2019. There were no new accounting policies or changes to existing policies adopted during the first nine months of 2019 which had a significant effect on the Company’s results of operations or statement of financial condition. For interim reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period. On August 30, 2019, the Company effected a 2-for-1 common stock split, as approved by the Company’s Board of Directors. Common stock and per share data included in these financial statements have been restated to reflect this stock split. |
Contingencies | Contingencies Due to the nature of their activities, the Company and its subsidiary are at times engaged in various legal proceedings that arise in the course of normal business, some of which were outstanding as of September 30, 2019. Although the ultimate outcome of all claims and lawsuits outstanding as of September 30, 2019 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on the Company’s results of operations or financial condition. |
Recently Adopted And Issued But Not Yet Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842) . ASU 2016‑02 amends the existing standards for lease accounting effectively requiring that most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability. ASU 2016‑02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of an entity’s leasing activities. ASU 2016‑02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU 2016‑02 during the first quarter of 2019 and elected the optional transition method. The Company also elected the package of practical expedients provided in the guidance which permits the Company to not reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the hindsight practical expedient to determine lease term and in assessing impairment of the Company’s right-of-use asset. The adoption of ASU 2016‑02 resulted in the recognition of a right-of-use asset of $13.6 million, a lease liability of $14.0 million, and a cumulative effect decrease to retained earnings of $362,000. See Note 7 - Operating Leases for additional information. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018‑13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The update is effective for interim and annual periods in fiscal years beginning after December 31, 2019, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2020 permitted for new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The adoption of this standard is not expected to have a material effect on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016‑13, Financial Instruments - Credit Losses (Topic 326) to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and similar instruments) and net investments in leases recognized by a lessor. For debt securities with other-than-temporary impairment (OTTI), the guidance will be applied prospectively. Existing purchased credit impaired (PCI) assets will be grandfathered and classified as purchased credit deteriorated (PCD) assets at the date of adoption. The assets will be grossed up for the allowance of expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance. Adoption is effective for interim and annual reporting periods beginning after December 15, 2022. Early adoption is permitted. The Company has selected a software solution supported by a third-party vendor to be used in developing an expected credit loss model compliant with ASU 2016‑13 and will continue to evaluate the impact of this new accounting standard through its effective date. The Company has further evaluated other Accounting Standards Updates issued during 2019 but does not expect updates other than those summarized above to have a material impact on the consolidated financial statements. |
SECURITIES AVAILABLE FOR SALE (
SECURITIES AVAILABLE FOR SALE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
SECURITIES AVAILABLE FOR SALE. | |
Schedule of available for sale securities | September 30, 2019 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 12,521 $ — $ — $ 12,521 States and political subdivisions 1,246 30 — 1,276 Mortgage-backed GSE residential 2,162 — (46) 2,116 Total $ 15,929 $ 30 $ (46) $ 15,913 December 31, 2018 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 15,183 $ — $ — $ 15,183 States and political subdivisions 1,248 — (35) 1,213 Mortgage-backed GSE residential 2,607 — (115) 2,492 Total $ 19,038 $ — $ (150) $ 18,888 |
Schedule of available for sale securities by contractual maturities | Securities Available for Sale Amortized Estimated (Dollars in thousands) Cost Fair Value Due in one year or less $ 804 $ 804 Due after one year but less than five years 2,300 2,300 Due after five years but less than ten years 4,208 4,238 Due in more than ten years 6,455 6,455 Mortgage-backed GSE residential 2,162 2,116 Total $ 15,929 $ 15,913 |
Schedule of available for sale securities by investment category and length of time | September 30, 2019 Twelve Months or Less Over Twelve Months Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair (Dollars in thousands) Losses Value Losses Value Mortgage-backed GSE residential — — (46) 2,111 Total $ — $ — $ (46) $ 2,111 December 31, 2018 Twelve Months or Less Over Twelve Months Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair (Dollars in thousands) Losses Value Losses Value States and political subdivisions $ (35) $ 1,213 $ — $ — Mortgage-backed GSE residential — — (115) 2,492 Total $ (35) $ 1,213 $ (115) $ 2,492 |
LOANS AND ALLOWANCE FOR LOAN _2
LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | |
Summary of major classifications of loans | September 30, December 31, (Dollars in thousands) 2019 2018 Construction and development $ 42,106 $ 42,718 Commercial real estate 436,692 396,598 Commercial and industrial 47,247 33,100 Residential real estate 733,702 670,341 Consumer and other 1,658 2,957 Total loans receivable 1,261,405 1,145,714 Unearned income (2,359) (2,139) Allowance for loan losses (6,850) (6,645) Loans, net $ 1,252,196 $ 1,136,930 |
Schedule of allowance for loan losses by portfolio segment | Three Months Ended September 30, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 129 $ 2,384 $ 587 $ 3,165 $ 197 $ 21 $ 6,483 Charge-offs — (237) — — (162) — (399) Recoveries — 738 — — 28 — 766 Provision 93 (570) (132) 252 61 296 — Ending balance $ 222 $ 2,315 $ 455 $ 3,417 $ 124 $ 317 $ 6,850 Nine Months Ended September 30, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Charge-offs — (237) (14) — (493) — (744) Recoveries — 749 — — 200 — 949 Provision (13) (798) 89 375 30 317 — Ending balance $ 222 $ 2,315 $ 455 $ 3,417 $ 124 $ 317 $ 6,850 Three Months Ended September 30, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 160 $ 2,144 $ 263 $ 3,363 $ 652 $ 184 $ 6,766 Charge-offs — — — — (297) — (297) Recoveries — 4 — — 90 — 94 Provision (77) 491 310 (293) 71 (184) 318 Ending balance $ 83 $ 2,639 $ 573 $ 3,070 $ 516 $ — $ 6,881 Nine Months Ended September 30, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 127 $ 2,135 $ 261 $ 3,048 $ 1,170 $ 184 $ 6,925 Charge-offs — (14) — — (1,672) — (1,686) Recoveries — 14 — — 439 — 453 Provision (44) 504 312 22 579 (184) 1,189 Ending balance $ 83 $ 2,639 $ 573 $ 3,070 $ 516 $ — $ 6,881 The following tables present, by portfolio segment, the balance in the allowance for loan losses disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans as of September 30, 2019 and December 31, 2018. September 30, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Individually evaluated for impairment $ 47 $ 757 $ 94 $ — $ — $ — $ 898 Collectively evaluated for impairment 175 1,558 361 3,417 7 317 5,835 Acquired with deteriorated credit quality — — — — 117 — 117 Total ending allowance balance $ 222 $ 2,315 $ 455 $ 3,417 $ 124 $ 317 $ 6,850 Loans: Individually evaluated for impairment $ 1,360 $ 8,089 $ 971 $ 6,699 $ — $ — $ 17,119 Collectively evaluated for impairment 40,316 426,793 46,157 727,003 635 — 1,240,904 Acquired with deteriorated credit quality — — — — 1,023 — 1,023 Total ending loans balance $ 41,676 $ 434,882 $ 47,128 $ 733,702 $ 1,658 $ — $ 1,259,046 December 31, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Individually evaluated for impairment $ 117 $ 872 $ 110 $ — $ — $ — $ 1,099 Collectively evaluated for impairment 118 1,729 270 3,042 3 — 5,162 Acquired with deteriorated credit quality — — — — 384 — 384 Total ending allowance balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Loans: Individually evaluated for impairment $ 1,360 $ 8,144 $ 986 $ 1,722 $ — $ — $ 12,212 Collectively evaluated for impairment 40,928 386,819 32,040 668,619 316 — 1,128,722 Acquired with deteriorated credit quality — — — — 2,641 — 2,641 Total ending loans balance $ 42,288 $ 394,963 $ 33,026 $ 670,341 $ 2,957 $ — $ 1,143,575 |
Summary of impaired loans by portfolio segment | Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related September 30, 2019 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ — $ 1,360 $ 1,360 $ 47 Commercial real estate 8,089 5,724 3,010 8,734 757 Commercial and industrial 971 931 43 974 94 Residential real estate 6,699 6,699 — 6,699 — Total $ 17,119 $ 13,354 $ 4,413 $ 17,767 $ 898 Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2018 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ — $ 1,360 $ 1,360 $ 117 Commercial real estate 8,144 5,312 2,967 8,279 872 Commercial and industrial 986 302 684 986 110 Residential real estate 1,722 1,722 — 1,722 — Total $ 12,212 $ 7,336 $ 5,011 $ 12,347 $ 1,099 |
Summary of average recorded investment in impaired loans | Three Months Ended September 30, 2019 2018 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ 1,360 $ — $ 1,360 $ 11 Commercial real estate 8,281 172 6,816 45 Commercial and industrial 955 8 763 1 Residential real estate 7,529 46 2,330 4 Total $ 18,125 $ 226 $ 11,269 $ 61 Nine Months Ended September 30, 2019 2018 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ 1,360 $ 6 $ 1,360 $ 40 Commercial real estate 8,179 331 6,985 238 Commercial and industrial 968 21 845 7 Residential real estate 5,847 87 2,460 29 Total $ 16,354 $ 445 $ 11,650 $ 314 |
Schedule of delinquent amounts by portfolio segment | Accruing Total Total (Dollars in thousands) Greater than Accruing Financing September 30, 2019 Current 30-89 Days 90 Days Past Due Non-accrual Receivables Construction and development $ 40,316 $ — $ — $ — $ 1,360 $ 41,676 Commercial real estate 429,734 1,702 509 2,211 2,937 434,882 Commercial and industrial 47,085 — — — 43 47,128 Residential real estate 722,783 4,220 — 4,220 6,699 733,702 Consumer and other 1,658 — — — — 1,658 Total $ 1,241,576 $ 5,922 $ 509 $ 6,431 $ 11,039 $ 1,259,046 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2018 Current 30-89 Days 90 Days Past Due Non-accrual Receivables Construction and development $ 42,288 $ — $ — $ — $ — $ 42,288 Commercial real estate 390,601 1,102 — 1,102 3,260 394,963 Commercial and industrial 32,315 26 — 26 685 33,026 Residential real estate 651,439 17,180 — 17,180 1,722 670,341 Consumer and other 2,957 — — — — 2,957 Total $ 1,119,600 $ 18,308 $ — $ 18,308 $ 5,667 $ 1,143,575 |
Summary of purchased loans by risk rating | Construction (Dollars in thousands) and Commercial Commercial Residential Consumer September 30, 2019 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 40,316 $ 428,022 $ 46,131 $ 725,719 $ 1,658 $ 1,241,846 Special Mention — — — — — — Substandard 1,360 6,860 997 7,983 — 17,200 Doubtful — — — — — — Loss — — — — — — Total $ 41,676 $ 434,882 $ 47,128 $ 733,702 $ 1,658 $ 1,259,046 Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2018 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 40,928 $ 383,857 $ 32,040 $ 667,249 $ 2,957 $ 1,127,031 Special Mention — 5,112 — — — 5,112 Substandard 1,360 5,994 986 3,092 — 11,432 Doubtful — — — — — — Loss — — — — — — Total $ 42,288 $ 394,963 $ 33,026 $ 670,341 $ 2,957 $ 1,143,575 |
Schedule of TDRs classified separately as accrual and non-accrual | (Dollars in thousands) September 30, 2019 Accruing Nonaccrual Total Commercial real estate $ 2,969 $ 482 $ 3,451 Commercial and industrial — 29 29 Total $ 2,969 $ 511 $ 3,480 (Dollars in thousands) December 31, 2018 Accruing Nonaccrual Total Commercial real estate $ 3,298 $ — $ 3,298 Commercial and industrial — 13 13 Total $ 3,298 $ 13 $ 3,311 |
Summary of the types of concessions for loans classified as troubled debt restructurings | (Dollars in thousands) September 30, December 31, Type of Concession 2019 2018 Deferral of payments $ 531 $ 482 Extension of maturity date 2,949 2,829 Total TDR loans $ 3,480 $ 3,311 |
Summary of loans by portfolio segment modified as TDRs and the corresponding recorded investment | September 30, 2019 December 31, 2018 (Dollars in thousands) Number of Recorded Number of Recorded Type Loans Investment Loans Investment Commercial real estate 5 $ 4,003 6 $ 3,527 Commercial and industrial 2 29 1 116 Total 7 $ 4,032 7 $ 3,643 |
SBA AND USDA LOAN SERVICING (Ta
SBA AND USDA LOAN SERVICING (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
SBA AND USDA LOAN SERVICING | |
Activity for SBA loan servicing rights | For the Three Months Ended September 30, For the Nine Months Ended September 30, (Dollars in thousands) 2019 2018 2019 2018 Beginning of period $ 8,643 $ 9,283 $ 8,419 $ 9,329 Change in fair value (105) (619) 119 (665) End of period, fair value $ 8,538 $ 8,664 $ 8,538 $ 8,664 |
RESIDENTIAL MORTGAGE LOAN SER_2
RESIDENTIAL MORTGAGE LOAN SERVICING (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
RESIDENTIAL MORTGAGE LOAN SERVICING | |
Schedule of activity for mortgage loan servicing rights | For the Three Months Ended September 30, For the Nine Months Ended September 30, (Dollars in thousands) 2019 2018 2019 2018 Beginning of period $ 16,771 $ 11,237 $ 14,934 $ 6,843 Additions 1,971 2,838 5,483 8,073 Amortization expense (1,002) (600) (2,677) (1,441) End of period, carrying value $ 17,740 $ 13,475 $ 17,740 $ 13,475 |
FEDERAL HOME LOAN BANK ADVANC_2
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
Schedule of advances from the Federal Home Loan Bank | (Dollars in thousands) September 30, 2019 December 31, 2018 Convertible advance with Bermudan option maturing August 6, 2029; fixed rate of 0.85% $ 20,000 $ — Convertible advance with Bermudan option maturing August 7, 2029; fixed rate of 0.57% 20,000 — Convertible advance with Bermudan option maturing August 8, 2029; fixed rate of 0.52% 10,000 — Convertible advance with Bermudan option maturing August 30, 2029; fixed rate of 0.4725% 10,000 — Total FHLB advances $ 60,000 $ — |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
OPERATING LEASES | |
Schedule of components of lease cost | Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2019 September 30, 2019 Operating lease cost $ 528 $ 1,564 Variable lease cost 44 132 Short-term lease cost — — Sublease income — — Total net lease cost $ 572 $ 1,696 |
Schedule of Future maturities of the Company’s operating lease liabilities | (Dollars in thousands) Twelve Months Ended: Lease Liability September 30, 2020 $ 2,027 September 30, 2021 1,931 September 30, 2022 1,896 September 30, 2023 1,931 September 30, 2024 1,810 After September 30, 2024 4,965 Total lease payments 14,560 Less: interest discount (1,638) Present value of lease liabilities $ 12,922 |
Schedule Of Supplemental Lease Information | (Dollars in thousands) Supplemental Lease Information September 30, 2019 Weighted-average remaining lease term (years) 7.5 Weighted-average discount rate 3.14 % Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 507 $ 1,474 Operating cash flows from operating leases (lease liability reduction) $ 404 $ 1,165 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ — $ 13,610 |
LOAN COMMITMENTS AND RELATED _2
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS | |
Schedule of financial instruments whose contract amounts represent credit risk | September 30, December 31, (Dollars in thousands) 2019 2018 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 61,192 $ 65,283 Standby letters of credit $ 5,180 $ 4,250 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
FAIR VALUE | |
Schedule of fair values of assets and liabilities measured on recurring and non-recurring basis | September 30, 2019 Total Gains (Dollars in thousands) Total Level 1 Level 2 Level 3 (Losses) Assets Recurring fair value measurements: Securities available for sale: Obligations of U.S. Government entities and agencies $ 12,521 $ — $ — $ 12,521 States and political subdivisions 1,276 — 1,276 — Mortgage-backed GSE residential 2,116 — 2,116 — Total securities available for sale 15,913 — 3,392 12,521 SBA servicing asset 8,538 — — 8,538 Interest only strip 28 — — 28 $ 24,479 $ — $ 3,392 $ 21,087 Non-recurring fair value measurements: Impaired loans $ 3,477 $ — $ — $ 3,477 $ 257 December 31, 2018 Total Gains (Dollars in thousands) Total Level 1 Level 2 Level 3 (Losses) Assets Recurring fair value measurements: Securities available for sale: Obligations of U.S. Government entities and agencies $ 15,183 $ — $ — $ 15,183 States and political subdivisions 1,213 — 1,213 — Mortgage-backed GSE residential 2,492 — 2,492 — Total securities available for sale 18,888 — 3,705 15,183 SBA servicing asset 8,419 — — 8,419 Interest only strip 27 — — 27 $ 27,334 $ — $ 3,705 $ 23,629 Non-recurring fair value measurements: Impaired loans $ 3,472 $ — $ — $ 3,472 $ 169 |
Schedule of reconciliation of fair values of assets and liabilities measured on recurring basis using unobservable inputs | Obligations of SBA (Dollars in thousands) U.S. Government Servicing Interest Only Three Months Ended: Entities and Agencies Asset Strip Liabilities Fair value, July 1, 2019 $ 14,280 $ 8,643 $ 39 $ — Total loss included in income — (105) (11) — Settlements — — — — Prepayments/paydowns (1,759) — — — Transfers in and/or out of level 3 — — — — Fair value, September 30, 2019 $ 12,521 $ 8,538 $ 28 $ — Fair value, July 1, 2018 $ 16,455 $ 9,283 $ 31 $ — Total loss included in income — (619) (3) — Settlements — — — — Prepayments/paydowns (1,177) — — — Transfers in and/or out of level 3 — — — — Fair value, September 30, 2018 $ 15,278 $ 8,664 $ 28 $ — Nine Months Ended: Fair value, January 1, 2019 $ 15,183 $ 8,419 $ 27 $ — Total gain included in income — 119 1 — Settlements — — — — Prepayments/paydowns (2,662) — — — Transfers in and/or out of level 3 — — — — Fair value, September 30, 2019 $ 12,521 $ 8,538 $ 28 $ — Fair value, January 1, 2018 $ 16,661 $ 9,329 $ 36 $ — Total loss included in income — (665) (8) — Settlements — — — — Prepayments/paydowns (1,383) — — — Transfers in and/or out of level 3 — — — — Fair value, September 30, 2018 $ 15,278 $ 8,664 $ 28 $ — Twelve Months Ended: Fair value, January 1, 2018 $ 16,661 $ 9,329 $ 36 $ — Total loss included in income — (910) (9) — Settlements — — — — Prepayments/paydowns (1,478) — — — Transfers in and/or out of level 3 — — — — Fair value, December 31, 2018 $ 15,183 $ 8,419 $ 27 $ — |
Schedule of quantitative information about recurring Level 3 fair value measures | Valuation Unobservable General Technique Input Range September 30, 2019 Obligations of U.S. Government entities and agencies Discounted Cash Flows Discount Rate 0%-3% SBA servicing asset and interest only strip Discounted Cash Flows Prepayment speed 10.72%-15.90% Discount rate 4.47%-12.21% December 31, 2018 Obligations of U.S. Government entities and agencies Discounted Cash Flows Discount Rate 0%-3% SBA servicing asset and interest only strip Discounted Cash Flows Prepayment speed 6.82%-12.87% Discount rate 8.78%-14.56% |
Schedule of carrying amounts and estimated fair values of Company's financial instruments | Carrying Estimated Fair Value at September 30, 2019 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 274,548 $ — $ 274,548 $ — $ 274,548 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 15,913 — 3,392 12,521 15,913 FHLB stock 3,842 — — — N/A Loans, net 1,252,196 — — 1,280,746 1,280,746 Loans held for sale — — — — — Accrued interest receivable 5,465 — — 5,465 5,465 SBA servicing assets 8,538 — — 8,538 8,538 Mortgage servicing assets 17,740 — — 17,966 17,966 Interest only strips 28 — — 28 28 Financial Liabilities: Deposits 1,335,352 — 1,337,355 — 1,337,355 Federal Home Loan Bank advances 60,000 — 54,972 — 54,972 Other borrowings 3,154 — 3,154 — 3,154 Accrued interest payable 940 — 940 — 940 Carrying Estimated Fair Value at December 31, 2018 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 138,427 $ — $ 138,427 $ — $ 138,427 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 18,888 — 3,705 15,183 18,888 FHLB stock 1,163 — — — N/A Loans, net 1,136,930 — — 1,166,945 1,166,945 Loans held for sale 56,865 — 56,865 — 56,865 Accrued interest receivable 4,957 — — 4,957 4,957 SBA servicing asset 8,419 — — 8,419 8,419 Mortgage servicing assets 14,934 — — 16,460 16,460 Interest only strips 27 — — 27 27 Financial Liabilities: Deposits 1,244,232 — 1,242,863 — 1,242,863 Other borrowings 4,257 — 4,257 — 4,257 Accrued interest payable 1,251 — 1,251 — 1,251 |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
REGULATORY MATTERS | |
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations | The Company’s actual capital amounts (in thousands) and ratios are also presented in the following table: To Be Well Capitalized For Capital Under Prompt Corrective Actual Adequacy Purposes: Action Provisions: Amount Ratio Amount ≥ Ratio ≥ Amount ≥ Ratio ≥ As of September 30, 2019: Total Capital (to Risk Weighted Assets) Consolidated $ 192,706 19.51 % N/A * N/A * N/A N/A Bank 190,742 19.34 % 78,902 8.0 % 98,628 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 185,856 18.82 % N/A * N/A * N/A N/A Bank 183,892 18.65 % 59,177 6.0 % 78,902 8.0 % Common Tier 1 (CET1) Consolidated 185,856 18.82 % N/A * N/A * N/A N/A Bank 183,892 18.65 % 44,383 4.5 % 64,108 6.5 % Tier 1 Capital (to Average Assets) Consolidated 185,856 11.68 % N/A * N/A * N/A N/A Bank 183,892 11.56 % 63,605 4.0 % 79,506 5.0 % As of December 31, 2018: Total Capital (to Risk Weighted Assets) Consolidated $ 166,851 18.16 % N/A * N/A * N/A N/A Bank 163,339 17.80 % 73,392 8.0 % 91,740 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 160,207 17.44 % N/A * N/A * N/A N/A Bank 156,696 17.08 % 55,044 6.0 % 73,392 8.0 % Common Tier 1 (CET1) Consolidated 160,207 17.44 % N/A * N/A * N/A N/A Bank 156,696 17.08 % 41,283 4.5 % 59,631 6.5 % Tier 1 Capital (to Average Assets) Consolidated 160,207 11.14 % N/A * N/A * N/A N/A Bank 156,696 10.91 % 57,455 4.0 % 71,819 5.0 % * The Board of Governors of the Federal Reserve raised the threshold for determining applicable of the Small Bank Holding Company and Savings and Loan Company Policy Statement in August 2018 from $1 Billion to $3 Billion in consolidated total assets to provide regulatory burden relief, therefore, the Company is no longer subject to the minimum capital requirements. |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
STOCK BASED COMPENSATION. | |
Summary of stock option activity | Weighted Average Shares Exercise Price Outstanding at January 1, 2019 240,000 $ 12.70 Granted — — Exercised — — Forfeited — — Outstanding at September 30, 2019 240,000 $ 12.70 |
Summary of restricted stock activity | Weighted- Average Grant- Nonvested Shares Shares Date Fair Value Nonvested at January 1, 2019 278,202 $ 7.07 Granted 48,724 13.75 Vested (157,316) 6.68 Forfeited (406) 9.85 Nonvested at September 30, 2019 169,204 $ 9.35 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER SHARE | |
Schedule of earnings per share computation | Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands except per share data) 2019 2018 2019 2018 Basic earnings per share Net Income $ 12,356 $ 9,853 $ 34,048 $ 31,598 Weighted average common shares outstanding 24,305,378 24,258,062 24,247,605 24,156,072 Basic earnings per common share $ 0.51 $ 0.41 $ 1.40 $ 1.31 Diluted earnings per share Net Income $ 12,356 $ 9,853 $ 34,048 $ 31,598 Weighted average common shares outstanding for basic earnings per common share 24,305,378 24,258,062 24,247,605 24,156,072 Add: Dilutive effects of restricted stock and options 197,243 309,863 192,880 290,569 Average shares and dilutive potential common shares 24,502,621 24,567,925 24,440,485 24,446,641 Diluted earnings per common share $ 0.50 $ 0.40 $ 1.39 $ 1.29 |
BASIS OF PRESENTATION - Other I
BASIS OF PRESENTATION - Other Information (Details) | 9 Months Ended |
Sep. 30, 2019segment | |
Number of operating business segments | 1 |
Metro City Bank - Subsidiaries Member | |
Percentage of holding in subsidiary | 100.00% |
BASIS OF PRESENTATION - Recentl
BASIS OF PRESENTATION - Recently Adopted Accounting Pronouncements (Details) - USD ($) | Jan. 01, 2019 | Sep. 30, 2019 |
New Accounting Pronouncements or Change in Accounting Principle | ||
Lease Practical Expedients, Package | true | |
Lease Practical Expedients, Use of Hindsight | true | |
Right-of-use assets | $ 12,431,000 | |
Operating lease liability | 12,922,000 | |
2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Cumulative effect decrease to retained earnings | $ 362,000 | |
2016-02 | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Right-of-use assets | $ 13,600,000 | |
Operating lease liability | 14,000,000 | |
Cumulative effect decrease to retained earnings | $ 362,000 |
SECURITIES AVAILABLE FOR SALE -
SECURITIES AVAILABLE FOR SALE - Amortized cost, gross unrealized gains and losses (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities Available-for-sale | ||
Gross Amortized Cost | $ 15,929 | $ 19,038 |
Gross Unrealized Gains | 30 | |
Gross Unrealized Losses | (46) | (150) |
Total securities available for sale | 15,913 | 18,888 |
Obligations of U.S. Government entities and agencies. | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 12,521 | 15,183 |
Total securities available for sale | 12,521 | 15,183 |
States and political subdivisions | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 1,246 | 1,248 |
Gross Unrealized Gains | 30 | |
Gross Unrealized Losses | (35) | |
Total securities available for sale | 1,276 | 1,213 |
Mortgage-backed GSE residential | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 2,162 | 2,607 |
Gross Unrealized Losses | (46) | (115) |
Total securities available for sale | $ 2,116 | $ 2,492 |
SECURITIES AVAILABLE FOR SALE_2
SECURITIES AVAILABLE FOR SALE - Expected maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due in one year or less | $ 804 | |
Due after one year but less than five years | 2,300 | |
Due after five years but less than ten years | 4,208 | |
Due in more than ten years | 6,455 | |
Mortgage-backed GSE residential | 2,162 | |
Total | 15,929 | $ 19,038 |
Estimated Fair Value | ||
Due in one year or less | 804 | |
Due after one year but less than five years | 2,300 | |
Due after five years but less than ten years | 4,238 | |
Due in more than ten years | 6,455 | |
Mortgage-backed GSE residential | 2,116 | |
Total | $ 15,913 | $ 18,888 |
SECURITIES AVAILABLE FOR SALE_3
SECURITIES AVAILABLE FOR SALE - Aggregated by investment category and length of time (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities Available-for-sale, Unrealized Loss Position | ||
Twelve Months or Less - Gross Unrealized Losses | $ (35) | |
Twelve Months or Less - Estimated Fair Value | 1,213 | |
Over Twelve Months - Gross Unrealized Losses | $ (46) | (115) |
Over Twelve Months - Estimated Fair Value | 2,111 | 2,492 |
States and political subdivisions | ||
Debt Securities Available-for-sale, Unrealized Loss Position | ||
Twelve Months or Less - Gross Unrealized Losses | (35) | |
Twelve Months or Less - Estimated Fair Value | 1,213 | |
Mortgage-backed GSE residential | ||
Debt Securities Available-for-sale, Unrealized Loss Position | ||
Over Twelve Months - Gross Unrealized Losses | (46) | (115) |
Over Twelve Months - Estimated Fair Value | $ 2,111 | $ 2,492 |
SECURITIES AVAILABLE FOR SALE_4
SECURITIES AVAILABLE FOR SALE - Other information (Details) - security | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
SECURITIES AVAILABLE FOR SALE. | ||
Number of securities pledged | 0 | 0 |
Number of securities with unrealized losses | 3 | |
Rate of depreciation | 2.15% |
LOANS AND ALLOWANCE FOR LOAN _3
LOANS AND ALLOWANCE FOR LOAN LOSSES - Major classifications of loans (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Loans and allowance for loan losses | ||||||
Total loans receivable | $ 1,261,405 | $ 1,145,714 | ||||
Unearned income | (2,359) | (2,139) | ||||
Allowance for loan losses | (6,850) | $ (6,483) | (6,645) | $ (6,881) | $ (6,766) | $ (6,925) |
Loans, net | 1,252,196 | 1,136,930 | ||||
Construction and development | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 42,106 | 42,718 | ||||
Allowance for loan losses | (222) | (129) | (235) | (83) | (160) | (127) |
Commercial real estate | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 436,692 | 396,598 | ||||
Allowance for loan losses | (2,315) | (2,384) | (2,601) | (2,639) | (2,144) | (2,135) |
Commercial and industrial | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 47,247 | 33,100 | ||||
Allowance for loan losses | (455) | (587) | (380) | (573) | (263) | (261) |
Residential real estate | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 733,702 | 670,341 | ||||
Allowance for loan losses | (3,417) | (3,165) | (3,042) | (3,070) | (3,363) | (3,048) |
Consumer and Other | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 1,658 | 2,957 | ||||
Allowance for loan losses | $ (124) | $ (197) | $ (387) | $ (516) | $ (652) | $ (1,170) |
LOANS AND ALLOWANCE FOR LOAN _4
LOANS AND ALLOWANCE FOR LOAN LOSSES - Allowance for loan losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Allowance for loan losses: | ||||
Beginning balance | $ 6,483 | $ 6,766 | $ 6,645 | $ 6,925 |
Charge-offs | (399) | (297) | (744) | (1,686) |
Recoveries | 766 | 94 | 949 | 453 |
Provision | 318 | 1,189 | ||
Ending balance | 6,850 | 6,881 | 6,850 | 6,881 |
Construction and development | ||||
Allowance for loan losses: | ||||
Beginning balance | 129 | 160 | 235 | 127 |
Provision | 93 | (77) | (13) | (44) |
Ending balance | 222 | 83 | 222 | 83 |
Commercial real estate | ||||
Allowance for loan losses: | ||||
Beginning balance | 2,384 | 2,144 | 2,601 | 2,135 |
Charge-offs | (237) | (237) | (14) | |
Recoveries | 738 | 4 | 749 | 14 |
Provision | (570) | 491 | (798) | 504 |
Ending balance | 2,315 | 2,639 | 2,315 | 2,639 |
Commercial and industrial | ||||
Allowance for loan losses: | ||||
Beginning balance | 587 | 263 | 380 | 261 |
Charge-offs | (14) | |||
Provision | (132) | 310 | 89 | 312 |
Ending balance | 455 | 573 | 455 | 573 |
Residential real estate | ||||
Allowance for loan losses: | ||||
Beginning balance | 3,165 | 3,363 | 3,042 | 3,048 |
Provision | 252 | (293) | 375 | 22 |
Ending balance | 3,417 | 3,070 | 3,417 | 3,070 |
Consumer and Other | ||||
Allowance for loan losses: | ||||
Beginning balance | 197 | 652 | 387 | 1,170 |
Charge-offs | (162) | (297) | (493) | (1,672) |
Recoveries | 28 | 90 | 200 | 439 |
Provision | 61 | 71 | 30 | 579 |
Ending balance | 124 | 516 | 124 | 516 |
Unallocated | ||||
Allowance for loan losses: | ||||
Beginning balance | 21 | 184 | 184 | |
Provision | 296 | $ (184) | 317 | $ (184) |
Ending balance | $ 317 | $ 317 |
LOANS AND ALLOWANCE FOR LOAN _5
LOANS AND ALLOWANCE FOR LOAN LOSSES - Allowance for loan losses disaggregated (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Allowance for loan losses: | ||||||
Individually evaluated for impairment | $ 898 | $ 1,099 | ||||
Collectively evaluated for impairment | 5,835 | 5,162 | ||||
Total ending allowance balance | 6,850 | $ 6,483 | 6,645 | $ 6,881 | $ 6,766 | $ 6,925 |
Loans: | ||||||
Individually evaluated for impairment | 17,119 | 12,212 | ||||
Collectively evaluated for impairment | 1,240,904 | 1,128,722 | ||||
Total ending loans balance | 1,259,046 | 1,143,575 | ||||
Acquired with deteriorated credit quality | ||||||
Allowance for loan losses: | ||||||
Total ending allowance balance | 117 | 384 | ||||
Loans: | ||||||
Total ending loans balance | 1,023 | 2,641 | ||||
Construction and development | ||||||
Allowance for loan losses: | ||||||
Individually evaluated for impairment | 47 | 117 | ||||
Collectively evaluated for impairment | 175 | 118 | ||||
Total ending allowance balance | 222 | 129 | 235 | 83 | 160 | 127 |
Loans: | ||||||
Individually evaluated for impairment | 1,360 | 1,360 | ||||
Collectively evaluated for impairment | 40,316 | 40,928 | ||||
Total ending loans balance | 41,676 | 42,288 | ||||
Commercial real estate | ||||||
Allowance for loan losses: | ||||||
Individually evaluated for impairment | 757 | 872 | ||||
Collectively evaluated for impairment | 1,558 | 1,729 | ||||
Total ending allowance balance | 2,315 | 2,384 | 2,601 | 2,639 | 2,144 | 2,135 |
Loans: | ||||||
Individually evaluated for impairment | 8,089 | 8,144 | ||||
Collectively evaluated for impairment | 426,793 | 386,819 | ||||
Total ending loans balance | 434,882 | 394,963 | ||||
Commercial and industrial | ||||||
Allowance for loan losses: | ||||||
Individually evaluated for impairment | 94 | 110 | ||||
Collectively evaluated for impairment | 361 | 270 | ||||
Total ending allowance balance | 455 | 587 | 380 | 573 | 263 | 261 |
Loans: | ||||||
Individually evaluated for impairment | 971 | 986 | ||||
Collectively evaluated for impairment | 46,157 | 32,040 | ||||
Total ending loans balance | 47,128 | 33,026 | ||||
Residential real estate | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 3,417 | 3,042 | ||||
Total ending allowance balance | 3,417 | 3,165 | 3,042 | 3,070 | 3,363 | 3,048 |
Loans: | ||||||
Individually evaluated for impairment | 6,699 | 1,722 | ||||
Collectively evaluated for impairment | 727,003 | 668,619 | ||||
Total ending loans balance | 733,702 | 670,341 | ||||
Consumer and Other | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 7 | 3 | ||||
Total ending allowance balance | 124 | 197 | 387 | $ 516 | 652 | 1,170 |
Loans: | ||||||
Collectively evaluated for impairment | 635 | 316 | ||||
Total ending loans balance | 1,658 | 2,957 | ||||
Consumer and Other | Acquired with deteriorated credit quality | ||||||
Allowance for loan losses: | ||||||
Total ending allowance balance | 117 | 384 | ||||
Loans: | ||||||
Total ending loans balance | 1,023 | $ 2,641 | ||||
Unallocated | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 317 | |||||
Total ending allowance balance | $ 317 | $ 21 | $ 184 | $ 184 |
LOANS AND ALLOWANCE FOR LOAN _6
LOANS AND ALLOWANCE FOR LOAN LOSSES - Impaired loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Loans impaired | |||||
Unpaid Total Principal Balance | $ 17,119 | $ 17,119 | $ 12,212 | ||
Recorded Investment With No Allowance | 13,354 | 13,354 | 7,336 | ||
Recorded Investment With Allowance | 4,413 | 4,413 | 5,011 | ||
Total Recorded Investment | 17,767 | 17,767 | 12,347 | ||
Related Allowance | 898 | 898 | 1,099 | ||
Average Recorded Investment | 18,125 | $ 11,269 | 16,354 | $ 11,650 | |
Interest income recognized | 226 | 61 | 445 | 314 | |
Construction and development | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 1,360 | 1,360 | 1,360 | ||
Recorded Investment With Allowance | 1,360 | 1,360 | 1,360 | ||
Total Recorded Investment | 1,360 | 1,360 | 1,360 | ||
Related Allowance | 47 | 47 | 117 | ||
Average Recorded Investment | 1,360 | 1,360 | 1,360 | 1,360 | |
Interest income recognized | 11 | 6 | 40 | ||
Commercial real estate | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 8,089 | 8,089 | 8,144 | ||
Recorded Investment With No Allowance | 5,724 | 5,724 | 5,312 | ||
Recorded Investment With Allowance | 3,010 | 3,010 | 2,967 | ||
Total Recorded Investment | 8,734 | 8,734 | 8,279 | ||
Related Allowance | 757 | 757 | 872 | ||
Average Recorded Investment | 8,281 | 6,816 | 8,179 | 6,985 | |
Interest income recognized | 172 | 45 | 331 | 238 | |
Commercial and industrial | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 971 | 971 | 986 | ||
Recorded Investment With No Allowance | 931 | 931 | 302 | ||
Recorded Investment With Allowance | 43 | 43 | 684 | ||
Total Recorded Investment | 974 | 974 | 986 | ||
Related Allowance | 94 | 94 | 110 | ||
Average Recorded Investment | 955 | 763 | 968 | 845 | |
Interest income recognized | 8 | 1 | 21 | 7 | |
Residential real estate | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 6,699 | 6,699 | 1,722 | ||
Recorded Investment With No Allowance | 6,699 | 6,699 | 1,722 | ||
Total Recorded Investment | 6,699 | 6,699 | $ 1,722 | ||
Average Recorded Investment | 7,529 | 2,330 | 5,847 | 2,460 | |
Interest income recognized | $ 46 | $ 4 | $ 87 | $ 29 |
LOANS AND ALLOWANCE FOR LOAN _7
LOANS AND ALLOWANCE FOR LOAN LOSSES - Loan delinquencies (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Loans past due | ||
Current | $ 1,241,576 | $ 1,119,600 |
Total Accruing Past Due | 6,431 | 18,308 |
Non-accrual | 11,039 | 5,667 |
Total Financing Receivables | 1,259,046 | 1,143,575 |
30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 5,922 | 18,308 |
Accruing Greater than 90 Days | ||
Loans past due | ||
Total Accruing Past Due | 509 | |
Construction and development | ||
Loans past due | ||
Current | 40,316 | 42,288 |
Non-accrual | 1,360 | |
Total Financing Receivables | 41,676 | 42,288 |
Commercial real estate | ||
Loans past due | ||
Current | 429,734 | 390,601 |
Total Accruing Past Due | 2,211 | 1,102 |
Non-accrual | 2,937 | 3,260 |
Total Financing Receivables | 434,882 | 394,963 |
Commercial real estate | 30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 1,702 | 1,102 |
Commercial real estate | Accruing Greater than 90 Days | ||
Loans past due | ||
Total Accruing Past Due | 509 | |
Commercial and industrial | ||
Loans past due | ||
Current | 47,085 | 32,315 |
Total Accruing Past Due | 26 | |
Non-accrual | 43 | 685 |
Total Financing Receivables | 47,128 | 33,026 |
Commercial and industrial | 30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 26 | |
Residential real estate | ||
Loans past due | ||
Current | 722,783 | 651,439 |
Total Accruing Past Due | 4,220 | 17,180 |
Non-accrual | 6,699 | 1,722 |
Total Financing Receivables | 733,702 | 670,341 |
Residential real estate | 30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 4,220 | 17,180 |
Consumer and Other | ||
Loans past due | ||
Current | 1,658 | 2,957 |
Total Financing Receivables | $ 1,658 | $ 2,957 |
LOANS AND ALLOWANCE FOR LOAN _8
LOANS AND ALLOWANCE FOR LOAN LOSSES - Risk ratings (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | $ 1,259,046 | $ 1,143,575 |
Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 1,241,846 | 1,127,031 |
Special Mention | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 5,112 | |
Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 17,200 | 11,432 |
Construction and development | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 41,676 | 42,288 |
Construction and development | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 40,316 | 40,928 |
Construction and development | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 1,360 | 1,360 |
Commercial real estate | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 434,882 | 394,963 |
Commercial real estate | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 428,022 | 383,857 |
Commercial real estate | Special Mention | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 5,112 | |
Commercial real estate | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 6,860 | 5,994 |
Commercial and industrial | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 47,128 | 33,026 |
Commercial and industrial | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 46,131 | 32,040 |
Commercial and industrial | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 997 | 986 |
Residential real estate | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 733,702 | 670,341 |
Residential real estate | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 725,719 | 667,249 |
Residential real estate | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 7,983 | 3,092 |
Consumer and Other | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 1,658 | 2,957 |
Consumer and Other | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | $ 1,658 | $ 2,957 |
LOANS AND ALLOWANCE FOR LOAN _9
LOANS AND ALLOWANCE FOR LOAN LOSSES - Purchased Credit Impaired Loans (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Purchase credit impaired loans | |||||
Carrying value of the loan | $ 1,259,046,000 | $ 1,259,046,000 | $ 1,143,575,000 | ||
Allowance for loan losses, collectively evaluated for impairment | 5,835,000 | 5,835,000 | 5,162,000 | ||
Acquired with deteriorated credit quality | |||||
Purchase credit impaired loans | |||||
Carrying value of the loan | 1,023,000 | 1,023,000 | 2,641,000 | ||
Acquired with deteriorated credit quality | Consumer | |||||
Purchase credit impaired loans | |||||
Carrying value of the loan | 1,000,000 | 1,000,000 | 2,600,000 | ||
Accretable yield | 0 | 0 | 0 | ||
Allowance for loan losses, collectively evaluated for impairment | 117,000 | 117,000 | $ 384,000 | ||
Interest income recognized | $ 16,000 | $ 78,000 | $ 66,000 | $ 267,000 |
LOANS AND ALLOWANCE FOR LOAN_10
LOANS AND ALLOWANCE FOR LOAN LOSSES - Troubled Debt Restructures (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)item | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)item | |
Loans past due | |||||
Accruing | $ 2,969,000 | $ 2,969,000 | $ 3,298,000 | ||
Nonaccrual | 511,000 | 511,000 | 13,000 | ||
Total | 3,480,000 | 3,480,000 | 3,311,000 | ||
Specific reserve | 342,000 | 342,000 | 523,000 | ||
Charge offs | 0 | $ 0 | 0 | $ 0 | |
Commercial real estate | |||||
Loans past due | |||||
Accruing | 2,969,000 | 2,969,000 | 3,298,000 | ||
Nonaccrual | 482,000 | 482,000 | |||
Total | 3,451,000 | 3,451,000 | $ 3,298,000 | ||
Amount of loan defaulted | 0 | $ 0 | $ 482,000 | $ 0 | |
Number of loans modified | item | 1 | 1 | |||
Total recorded investment | $ 640,000 | $ 503,000 | |||
Commercial and industrial | |||||
Loans past due | |||||
Nonaccrual | 29,000 | 29,000 | 13,000 | ||
Total | $ 29,000 | $ 29,000 | $ 13,000 | ||
Number of loans modified | item | 1 | ||||
Total recorded investment | $ 640,000 |
LOANS AND ALLOWANCE FOR LOAN_11
LOANS AND ALLOWANCE FOR LOAN LOSSES - Types of concessions for TDR loans (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Loans troubled debt restructuring | ||
Total TDR loans | $ 3,480 | $ 3,311 |
Deferral of payments | ||
Loans troubled debt restructuring | ||
Total TDR loans | 531 | 482 |
Extension of maturity date | ||
Loans troubled debt restructuring | ||
Total TDR loans | $ 2,949 | $ 2,829 |
LOANS AND ALLOWANCE FOR LOAN_12
LOANS AND ALLOWANCE FOR LOAN LOSSES - Loans modified as TDRs (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Loans troubled debt restructuring | ||
Number of Loans | 7 | 7 |
Recorded Investment | $ 4,032 | $ 3,643 |
Commercial real estate | ||
Loans troubled debt restructuring | ||
Number of Loans | 5 | 6 |
Recorded Investment | $ 4,003 | $ 3,527 |
Commercial and industrial | ||
Loans troubled debt restructuring | ||
Number of Loans | 2 | 1 |
Recorded Investment | $ 29 | $ 116 |
SBA AND USDA LOAN SERVICING - O
SBA AND USDA LOAN SERVICING - Other information (Details) | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Unpaid principal balances of serviced loans | $ 446,300,000 | $ 431,200,000 |
Aggregate fair market value of the interest only strips included in SBA servicing assets | 28,000 | 27,000 |
Valuation allowances | $ 0 | $ 0 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 18 | 15 |
Minimum | Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 11 | |
Minimum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 4.47 | 8.78 |
Minimum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 10.72 | 6.82 |
Maximum | Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | |
Maximum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 12.21 | 14.56 |
Maximum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 15.90 | 12.87 |
SBA AND USDA LOAN SERVICING - A
SBA AND USDA LOAN SERVICING - Activity for SBA loan servicing rights (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Servicing Asset at Fair Value Roll Forward | ||||
Beginning of period | $ 16,500 | |||
End of period, fair value | $ 18,000 | 18,000 | ||
SBA And USDA Loan | ||||
Servicing Asset at Fair Value Roll Forward | ||||
Beginning of period | 8,643 | $ 9,283 | 8,419 | $ 9,329 |
Change in fair value | (105) | (619) | 119 | (665) |
End of period, fair value | $ 8,538 | $ 8,664 | $ 8,538 | $ 8,664 |
RESIDENTIAL MORTGAGE LOAN SER_3
RESIDENTIAL MORTGAGE LOAN SERVICING - Other information (Details) $ in Thousands | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
SBA AND USDA LOAN SERVICING | ||
Fair value of servicing rights | $ 18,000 | $ 16,500 |
Loans, less allowance for loan losses | $ 1,252,196 | $ 1,136,930 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | |
Discount Rate | Minimum | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 11 | |
Discount Rate | Maximum | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 18 | 15 |
Default rate | Weighted average | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 0.96 | 0.88 |
Residential Mortgage | ||
SBA AND USDA LOAN SERVICING | ||
Loans, less allowance for loan losses | $ 1,120,000 | $ 804,200 |
RESIDENTIAL MORTGAGE LOAN SER_4
RESIDENTIAL MORTGAGE LOAN SERVICING - Activity for mortgage loan servicing rights (Details) - Residential Mortgage - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Servicing Asset at Amortized Cost Roll Forward | ||||
Beginning of period | $ 16,771 | $ 11,237 | $ 14,934 | $ 6,843 |
Additions | 1,971 | 2,838 | 5,483 | 8,073 |
Amortization expense | (1,002) | (600) | (2,677) | (1,441) |
End of period, carrying value | $ 17,740 | $ 13,475 | $ 17,740 | $ 13,475 |
FEDERAL HOME LOAN BANK ADVANC_3
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Tabular (Details) $ in Thousands | Sep. 30, 2019USD ($) |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FHLB advances | $ 60,000 |
Convertible advance with Bermudan option maturing August 6, 2029; fixed rate of 0.85% | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FHLB advances | $ 20,000 |
Interest Rate | 0.85% |
Convertible advance with Bermudan option maturing August 7, 2029; fixed rate of 0.57% | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FHLB advances | $ 20,000 |
Interest Rate | 0.57% |
Convertible advance with Bermudan option maturing August 8, 2029; fixed rate of 0.52% | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FHLB advances | $ 10,000 |
Interest Rate | 0.52% |
Convertible advance with Bermudan option maturing August 30, 2029; fixed rate of 0.4725% | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FHLB advances | $ 10,000 |
Interest Rate | 0.4725% |
FEDERAL HOME LOAN BANK ADVANC_4
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Other (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
Maximum borrowing capacity | $ 458,400 | |
FHLB advances | 60,000 | |
Secured borrowings | 3,200 | $ 4,300 |
Unsecured federal funds lines | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
Unsecured federal funds lines available | 47,500 | |
FHLB advances | 0 | |
Federal Reserve Discount Window funds | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
Maximum borrowing capacity | 10,000 | |
FHLB advances | 0 | |
Collateralized pledged | $ 29,300 |
OPERATING LEASES - Other inform
OPERATING LEASES - Other information (Details) | 9 Months Ended |
Sep. 30, 2019leaseitem | |
Lessee Lease Description | |
Option to extend | true |
Lessee operating lease renewal term | 5 years |
Option to terminate | false |
Number of short term leases | lease | 0 |
Minimum | |
Lessee Lease Description | |
Number of renewal options | item | 1 |
Maximum | |
Lessee Lease Description | |
Lessee operating lease term of contract | 10 years |
OPERATING LEASES - Lease cost (
OPERATING LEASES - Lease cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
OPERATING LEASES | ||
Operating lease cost | $ 528 | $ 1,564 |
Variable lease cost | 44 | 132 |
Total net lease cost | $ 572 | $ 1,696 |
OPERATING LEASES - Maturities (
OPERATING LEASES - Maturities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Lessee Operating Lease Maturity | |
September 30, 2020 | $ 2,027 |
September 30, 2021 | 1,931 |
September 30, 2022 | 1,896 |
September 30, 2023 | 1,931 |
September 30, 2024 | 1,810 |
After September 30, 2024 | 4,965 |
Total lease payments | 14,560 |
Less: interest discount | (1,638) |
Present value of lease liabilities | $ 12,922 |
OPERATING LEASES - Supplemental
OPERATING LEASES - Supplemental Lease Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
OPERATING LEASES | ||
Weighted-average remaining lease term | 7 years 6 months | 7 years 6 months |
Weighted-average discount rate (as a percent) | 3.14% | 3.14% |
Operating cash flows from operating leases (cash payments) | $ 507 | $ 1,474 |
Operating cash flows from operating leases (lease liability reduction) | $ 404 | 1,165 |
Operating lease right-of-use assets obtained in exchange for leases entered into during the period | $ 13,610 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Gains and losses on the sale and financing of OREO | $ 0 | $ 0 | $ 36 |
Maximum | |||
Percentage of all services charges on deposit accounts to total revenue | 1.00% | 1.00% |
LOAN COMMITMENTS AND RELATED _3
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Commitments to extend credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 61,192 | $ 65,283 |
Standby letters of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | 5,180 | $ 4,250 |
Unused lines of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | 61,200 | |
Loans | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 5,200 |
FAIR VALUE - Other information
FAIR VALUE - Other information (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | $ 15,913 | $ 18,888 |
SBA servicing assets | 18,000 | 16,500 |
States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,276 | 1,213 |
Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 2,116 | 2,492 |
Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 15,913 | 18,888 |
SBA servicing assets | 8,538 | 8,419 |
Interest only strip | 28 | 27 |
Assets | 24,479 | 27,334 |
Recurring | Obligations of U.S. Government entities and agencies | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 12,521 | 15,183 |
Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,276 | 1,213 |
Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 2,116 | 2,492 |
Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Impaired loans | 3,477 | 3,472 |
Total Gains (Losses) | 257 | 169 |
Level 2 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 3,392 | 3,705 |
Assets | 3,392 | 3,705 |
Level 2 | Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,276 | 1,213 |
Level 2 | Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 2,116 | 2,492 |
Level 3 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 12,521 | 15,183 |
SBA servicing assets | 8,538 | 8,419 |
Interest only strip | 28 | 27 |
Assets | 21,087 | 23,629 |
Level 3 | Recurring | Obligations of U.S. Government entities and agencies | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 12,521 | 15,183 |
Level 3 | Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Impaired loans | $ 3,477 | $ 3,472 |
FAIR VALUE - Level 3 reconcilia
FAIR VALUE - Level 3 reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Fair value assets and liabilities measured on recurring basis unobservable input reconciliation | |||||
Purchases, sales, or transfers into and out of Level 3 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Gain or Losses included in earnings for securities at fair value | 0 | 0 | 0 | 0 | 0 |
Obligations of U.S. Government entities and agencies | |||||
Fair value assets measured on recurring basis unobservable input reconciliation | |||||
Fair value | 14,280 | 16,455 | 15,183 | 16,661 | 16,661 |
Prepayments/paydowns | (1,759) | (1,177) | (2,662) | (1,383) | (1,478) |
Fair value | 12,521 | 15,278 | 12,521 | 15,278 | 15,183 |
SBA servicing assets | |||||
Fair value assets measured on recurring basis unobservable input reconciliation | |||||
Fair value | 8,643 | 9,283 | 8,419 | 9,329 | 9,329 |
Total gain (loss) included in income | (105) | (619) | 119 | (665) | (910) |
Fair value | 8,538 | 8,664 | 8,538 | 8,664 | 8,419 |
Interest only strip | |||||
Fair value assets measured on recurring basis unobservable input reconciliation | |||||
Fair value | 39 | 31 | 27 | 36 | 36 |
Total gain (loss) included in income | (11) | (3) | 1 | (8) | (9) |
Fair value | $ 28 | $ 28 | $ 28 | $ 28 | $ 27 |
FAIR VALUE - Inputs and Valuati
FAIR VALUE - Inputs and Valuation technique (Details) | Sep. 30, 2019 | Dec. 31, 2018 |
Discount Rate | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 14 | |
Discount Rate | Minimum | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 11 | |
Discount Rate | Minimum | Obligations of U.S. Government entities and agencies | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 0 | 0 |
Discount Rate | Minimum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 4.47 | 8.78 |
Discount Rate | Maximum | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 14 | |
Discount Rate | Maximum | Obligations of U.S. Government entities and agencies | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 3 | 3 |
Discount Rate | Maximum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 12.21 | 14.56 |
Prepayment speed | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 18 | 15 |
Prepayment speed | Minimum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 10.72 | 6.82 |
Prepayment speed | Maximum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 15.90 | 12.87 |
FAIR VALUE - Carrying amounts a
FAIR VALUE - Carrying amounts and Estimated fair values (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Financial Assets: | ||
SBA servicing assets | $ 18,000 | $ 16,500 |
Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,538 | 8,419 |
Interest only strip | 28 | 27 |
Recurring | Carrying Amount | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 274,548 | 138,427 |
Securities purchased under agreements to resell | 15,000 | 15,000 |
Investment securities | 15,913 | 18,888 |
FHLB stock | 3,842 | 1,163 |
Loans, net | 1,252,196 | 1,136,930 |
Loans held for sale | 56,865 | |
Accrued interest receivable | 5,465 | 4,957 |
SBA servicing assets | 8,538 | 8,419 |
Mortgage servicing assets | 17,740 | 14,934 |
Interest only strip | 28 | 27 |
Financial Liabilities: | ||
Deposits | 1,335,352 | 1,244,232 |
Federal Home Loan Bank advances | 60,000 | |
Other borrowings | 3,154 | 4,257 |
Accrued interest payable | 940 | 1,251 |
Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 274,548 | 138,427 |
Securities purchased under agreements to resell | 15,000 | 15,000 |
Investment securities | 15,913 | 18,888 |
Loans, net | 1,280,746 | 1,166,945 |
Loans held for sale | 56,865 | |
Accrued interest receivable | 5,465 | 4,957 |
SBA servicing assets | 8,538 | 8,419 |
Mortgage servicing assets | 17,966 | 16,460 |
Interest only strip | 28 | 27 |
Financial Liabilities: | ||
Deposits | 1,337,355 | 1,242,863 |
Federal Home Loan Bank advances | 54,972 | |
Other borrowings | 3,154 | 4,257 |
Accrued interest payable | 940 | 1,251 |
Level 2 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 274,548 | 138,427 |
Securities purchased under agreements to resell | 15,000 | 15,000 |
Investment securities | 3,392 | 3,705 |
Loans held for sale | 56,865 | |
Financial Liabilities: | ||
Deposits | 1,337,355 | 1,242,863 |
Federal Home Loan Bank advances | 54,972 | |
Other borrowings | 3,154 | 4,257 |
Accrued interest payable | 940 | 1,251 |
Level 3 | Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,538 | 8,419 |
Interest only strip | 28 | 27 |
Level 3 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Investment securities | 12,521 | 15,183 |
Loans, net | 1,280,746 | 1,166,945 |
Accrued interest receivable | 5,465 | 4,957 |
SBA servicing assets | 8,538 | 8,419 |
Mortgage servicing assets | 17,966 | 16,460 |
Interest only strip | $ 28 | $ 27 |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2015 | Sep. 30, 2019 | |
Regulatory matters | ||||
Capital conservation buffer percentage (as a percent) | 2.50% | 1.875% | 0.00% | |
Total Capital (to Risk Weighted Assets) | ||||
Actual amount | $ 166,851 | $ 192,706 | ||
Actual ratio (as a percent) | 18.16% | 19.51% | ||
Tier I Capital (to Risk Weighted Assets) | ||||
Actual amount | $ 160,207 | $ 185,856 | ||
Actual ratio (as a percent) | 17.44% | 18.82% | ||
Common Tier 1 (CET1) | ||||
Actual amount | $ 160,207 | $ 185,856 | ||
Actual ratio (as a percent) | 17.44% | 18.82% | ||
Tier 1 Capital (to Average Assets) | ||||
Actual amount | $ 160,207 | $ 185,856 | ||
Actual ratio (as a percent) | 11.14% | 11.68% | ||
Bank | ||||
Total Capital (to Risk Weighted Assets) | ||||
Actual amount | $ 163,339 | $ 190,742 | ||
Actual ratio (as a percent) | 17.80% | 19.34% | ||
Capital Adequacy Purposes, amount | $ 73,392 | $ 78,902 | ||
Capital Adequacy Purposes, ratio (as a percent) | 8.00% | 8.00% | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 91,740 | $ 98,628 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 10.00% | 10.00% | ||
Tier I Capital (to Risk Weighted Assets) | ||||
Actual amount | $ 156,696 | $ 183,892 | ||
Actual ratio (as a percent) | 17.08% | 18.65% | ||
Capital Adequacy Purposes, amount | $ 55,044 | $ 59,177 | ||
Capital Adequacy Purposes, ratio (as a percent) | 6.00% | 6.00% | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 73,392 | $ 78,902 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 8.00% | 8.00% | ||
Common Tier 1 (CET1) | ||||
Actual amount | $ 156,696 | $ 183,892 | ||
Actual ratio (as a percent) | 17.08% | 18.65% | ||
Capital Adequacy Purposes, amount | $ 41,283 | $ 44,383 | ||
Capital Adequacy Purposes, ratio (as a percent) | 4.50% | 4.50% | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 59,631 | $ 64,108 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 6.50% | 6.50% | ||
Tier 1 Capital (to Average Assets) | ||||
Actual amount | $ 156,696 | $ 183,892 | ||
Actual ratio (as a percent) | 10.91% | 11.56% | ||
Capital Adequacy Purposes, amount | $ 57,455 | $ 63,605 | ||
Capital Adequacy Purposes, ratio (as a percent) | 4.00% | 4.00% | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 71,819 | $ 79,506 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 5.00% | 5.00% |
STOCK BASED COMPENSATION - 2018
STOCK BASED COMPENSATION - 2018 Incentive Plan (Details) - shares | 9 Months Ended | |
Sep. 30, 2019 | Apr. 18, 2018 | |
Restricted Stock | ||
STOCK BASED COMPENSATION | ||
Restricted stock issued | 48,724 | |
2018 Incentive Plan | ||
STOCK BASED COMPENSATION | ||
Shares reserved for future issuance | 2,400,000 | |
2018 Incentive Plan | Stock Options | ||
STOCK BASED COMPENSATION | ||
Stock options granted | 240,000 | |
2018 Incentive Plan | Restricted Stock | ||
STOCK BASED COMPENSATION | ||
Restricted stock issued | 0 |
STOCK BASED COMPENSATION - Stoc
STOCK BASED COMPENSATION - Stock Options (Details) - Stock Options - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Shares | ||
Outstanding at beginning of the period (in shares) | 240,000 | |
Outstanding at ending of the period (in shares) | 240,000 | |
Weighted Average Exercise Price | ||
Outstanding at beginning of the period (in dollars per share) | $ 12.70 | |
Outstanding at ending of the period (in dollars per share) | $ 12.70 | |
Total unrecognized compensation cost | $ 833,000 | $ 1,200,000 |
Cost is expected to be recognized over a weighted-average period | 1 year 9 months 18 days |
STOCK BASED COMPENSATION - Rest
STOCK BASED COMPENSATION - Restricted Stock (Details) - Restricted Stock $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2019USD ($)item$ / sharesshares | Dec. 31, 2018USD ($) | |
Nonvested Shares | |||
Outstanding at beginning of the period (in shares) | shares | 278,202 | ||
Granted (in shares) | shares | 48,724 | ||
Vested (in shares) | shares | (157,316) | ||
Forfeited (in shares) | shares | (406) | ||
Outstanding at ending of the period (in shares) | shares | 169,204 | 169,204 | |
Weighted-Average Grant-Date Fair Value | |||
Outstanding at beginning of the period (in dollars per share) | $ / shares | $ 7.07 | ||
Granted (in dollars per share) | $ / shares | 13.75 | ||
Vested (in dollars per share) | $ / shares | 6.68 | ||
Forfeited (in dollars per share) | $ / shares | 9.85 | ||
Outstanding at ending of the period (in dollars per share) | $ / shares | $ 9.35 | $ 9.35 | |
Total unrecognized compensation cost | $ | $ 1,300 | $ 1,300 | $ 1,500 |
Cost is expected to be recognized over a weighted-average period | 2 years | ||
Grant date fair value of shares vested during period | $ | $ 0 | $ 1,100 | |
Officers and employees | |||
STOCK BASED COMPENSATION | |||
Vesting Percentage | 33.00% | ||
Number of anniversaries anniversaries of the grant date | item | 3 | ||
Vest on grant date | Directors | |||
STOCK BASED COMPENSATION | |||
Vesting Percentage | 25.00% | ||
Vest on each of the first three anniversaries of the grant date | Directors | |||
STOCK BASED COMPENSATION | |||
Vesting Percentage | 25.00% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basic earnings per share | ||||
Net income | $ 12,356 | $ 9,853 | $ 34,048 | $ 31,598 |
Weighted average common shares outstanding (in shares) | 24,305,378 | 24,258,062 | 24,247,605 | 24,156,072 |
Basic earnings per common share (in dollars per share) | $ 0.51 | $ 0.41 | $ 1.40 | $ 1.31 |
Diluted earnings per share | ||||
Net income | $ 12,356 | $ 9,853 | $ 34,048 | $ 31,598 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 24,305,378 | 24,258,062 | 24,247,605 | 24,156,072 |
Add: Dilutive effects of restricted stock and options (in shares) | 197,243 | 309,863 | 192,880 | 290,569 |
Average shares and dilutive potential common shares (in shares) | 24,502,621 | 24,567,925 | 24,440,485 | 24,446,641 |
Diluted earnings per common share (in dollars per share) | $ 0.50 | $ 0.40 | $ 1.39 | $ 1.29 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Millions | Oct. 30, 2019 | Oct. 07, 2019 |
IPO | ||
Subsequent events | ||
IPO Shares issued (in shares) | 1,000,000 | |
Public price offering | $ 13.50 | |
Proceeds received, before expenses | $ 12.6 | |
Over-Allotment Option | ||
Subsequent events | ||
IPO Shares issued (in shares) | 224,513 |