Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 10, 2020 | |
Cover [Abstract] | ||
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 | 25,674,067 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
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 | Jun. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Cash and due from banks | $ 208,325 | $ 270,496 |
Federal funds sold | 7,444 | 5,917 |
Cash and cash equivalents | 215,769 | 276,413 |
Securities purchased under agreements to resell | 40,000 | 15,000 |
Securities available for sale (at fair value) | 18,415 | 15,695 |
Loans held for sale | 85,793 | |
Loans, less allowance for loan losses of $7,894 and $6,839, respectively | 1,357,095 | 1,154,323 |
Accrued interest receivable | 8,270 | 5,101 |
Federal Home Loan Bank stock | 4,873 | 3,842 |
Premises and equipment, net | 14,231 | 14,460 |
Operating lease right-of-use asset | 11,220 | 11,957 |
Foreclosed real estate, net | 423 | 423 |
SBA servicing asset, net | 8,446 | 8,188 |
Mortgage servicing asset, net | 16,064 | 18,068 |
Bank owned life insurance | 20,450 | 20,219 |
Other assets | 6,501 | 2,376 |
Total assets | 1,721,757 | 1,631,858 |
Deposits: | ||
Non interest-bearing demand | 449,185 | 292,008 |
Interest-bearing | 900,713 | 1,015,369 |
Total deposits | 1,349,898 | 1,307,377 |
Federal Home Loan Bank advances | 80,000 | 60,000 |
Other borrowings | 3,060 | 3,129 |
Operating lease liability | 11,769 | 12,476 |
Accrued interest payable | 549 | 890 |
Other liabilities | 47,060 | 31,262 |
Total liabilities | 1,492,336 | 1,415,134 |
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 25,674,067 and 25,529,891 shares issued and outstanding as of June 30, 2020 and December 31, 2019 | 257 | 255 |
Additional paid-in capital | 54,524 | 53,854 |
Retained earnings | 174,518 | 162,616 |
Accumulated other comprehensive income (loss) | 122 | (1) |
Total shareholders' equity | 229,421 | 216,724 |
Total liabilities and shareholders' equity | $ 1,721,757 | $ 1,631,858 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for loan losses | $ 7,894 | $ 6,839 |
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 | 25,674,067 | 25,529,891 |
Common stock, shares outstanding | 25,674,067 | 25,529,891 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Interest and dividend income: | ||||
Loans, including fees | $ 18,826 | $ 20,159 | $ 38,334 | $ 38,998 |
Other investment income | 196 | 496 | 1,078 | 1,364 |
Federal funds sold | 61 | 163 | 227 | 318 |
Total interest income | 19,083 | 20,818 | 39,639 | 40,680 |
Interest expense: | ||||
Deposits | 3,096 | 5,445 | 7,610 | 10,502 |
FHLB advances and other borrowings | 144 | 125 | 276 | 126 |
Total interest expense | 3,240 | 5,570 | 7,886 | 10,628 |
Net interest income | 15,843 | 15,248 | 31,753 | 30,052 |
Provision for loan losses | 1,061 | 1,061 | ||
Net interest income after provision for loan losses | 14,782 | 15,248 | 30,692 | 30,052 |
Noninterest income: | ||||
Service charges on deposit accounts | 202 | 262 | 489 | 517 |
Other service charges, commissions and fees | 970 | 3,058 | 3,173 | 5,457 |
Gain on sale of residential mortgage loans | 2,615 | 2,529 | 3,553 | |
Mortgage servicing income, net | 783 | 3,315 | 1,155 | 4,654 |
Gain on sale of SBA loans | 1,276 | 1,565 | 2,577 | 2,892 |
SBA servicing income, net | 1,959 | 1,137 | 2,475 | 2,180 |
Other income | 310 | 146 | 711 | 279 |
Total noninterest income | 5,500 | 12,098 | 13,109 | 19,532 |
Noninterest expense: | ||||
Salaries and employee benefits | 5,749 | 6,037 | 12,262 | 12,353 |
Occupancy and equipment | 1,277 | 1,231 | 2,488 | 2,386 |
Data processing | 201 | 227 | 478 | 520 |
Advertising | 140 | 143 | 301 | 313 |
Other expenses | 2,357 | 2,296 | 4,344 | 4,426 |
Total noninterest expense | 9,724 | 9,934 | 19,873 | 19,998 |
Income before provision for income taxes | 10,558 | 17,412 | 23,928 | 29,586 |
Provision for income taxes | 2,819 | 4,452 | 6,373 | 7,894 |
Net income available to common shareholders | $ 7,739 | $ 12,960 | $ 17,555 | $ 21,692 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.30 | $ 0.54 | $ 0.69 | $ 0.90 |
Diluted (in dollars per share) | $ 0.30 | $ 0.53 | $ 0.68 | $ 0.89 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 7,739 | $ 12,960 | $ 17,555 | $ 21,692 |
Other comprehensive income: | ||||
Unrealized holding gains on securities available for sale arising during the period | 470 | 75 | 133 | 119 |
Tax effect | (80) | (16) | (10) | (26) |
Other comprehensive income | 390 | 59 | 123 | 93 |
Comprehensive income | $ 8,129 | $ 13,019 | $ 17,678 | $ 21,785 |
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, 2018 | $ 242 | $ 39,915 | $ 128,555 | $ (104) | $ 168,608 |
Beginning Balance (in shares) at Dec. 31, 2018 | 24,258,062 | ||||
Stockholders' Equity | |||||
Net income | 21,692 | 21,692 | |||
Stock based compensation expense | 667 | 667 | |||
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) | ||||
Impact of adoption of new accounting standard | (362) | (362) | |||
Other comprehensive income | 93 | 93 | |||
Dividends on common stock | (4,896) | (4,896) | |||
Ending Balance at Jun. 30, 2019 | $ 243 | 39,096 | 144,989 | (11) | 184,317 |
Ending Balance (in shares) at Jun. 30, 2019 | 24,305,378 | ||||
Beginning Balance at Mar. 31, 2019 | $ 242 | 38,746 | 134,471 | (70) | 173,389 |
Beginning Balance (in shares) at Mar. 31, 2019 | 24,148,062 | ||||
Stockholders' Equity | |||||
Net income | 12,960 | 12,960 | |||
Stock based compensation expense | 352 | 352 | |||
Vesting of restricted stock | $ 1 | (2) | (1) | ||
Vesting of restricted stock (in shares) | 157,316 | ||||
Other comprehensive income | 59 | 59 | |||
Dividends on common stock | (2,442) | (2,442) | |||
Ending Balance at Jun. 30, 2019 | $ 243 | 39,096 | 144,989 | (11) | 184,317 |
Ending Balance (in shares) at Jun. 30, 2019 | 24,305,378 | ||||
Beginning Balance at Dec. 31, 2019 | $ 255 | 53,854 | 162,616 | (1) | 216,724 |
Beginning Balance (in shares) at Dec. 31, 2019 | 25,529,891 | ||||
Stockholders' Equity | |||||
Net income | 17,555 | 17,555 | |||
Stock based compensation expense | 672 | 672 | |||
Vesting of restricted stock | $ 2 | (2) | |||
Vesting of restricted stock (in shares) | 144,176 | ||||
Other comprehensive income | 123 | 123 | |||
Dividends on common stock | (5,653) | (5,653) | |||
Ending Balance at Jun. 30, 2020 | $ 257 | 54,524 | 174,518 | 122 | 229,421 |
Ending Balance (in shares) at Jun. 30, 2020 | 25,674,067 | ||||
Beginning Balance at Mar. 31, 2020 | $ 255 | 54,142 | 169,606 | (268) | 223,735 |
Beginning Balance (in shares) at Mar. 31, 2020 | 25,529,891 | ||||
Stockholders' Equity | |||||
Net income | 7,739 | 7,739 | |||
Stock based compensation expense | 384 | 384 | |||
Vesting of restricted stock | $ 2 | (2) | |||
Vesting of restricted stock (in shares) | 144,176 | ||||
Other comprehensive income | 390 | 390 | |||
Dividends on common stock | (2,827) | (2,827) | |||
Ending Balance at Jun. 30, 2020 | $ 257 | $ 54,524 | $ 174,518 | $ 122 | $ 229,421 |
Ending Balance (in shares) at Jun. 30, 2020 | 25,674,067 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Common Stock | ||||
Dividend on common stock declared (in dollars per share) | $ 0.11 | $ 0.10 | $ 0.22 | $ 0.20 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flow from operating activities: | ||
Net income | $ 17,555 | $ 21,692 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization and accretion | 1,459 | 1,349 |
Provision for loan losses | 1,061 | |
Stock based compensation expense | 672 | 667 |
Gain on sale of foreclosed real estate | (99) | |
Origination of residential real estate loans held for sale | (6,992) | (273,864) |
Proceeds from sales of residential real estate loans | 95,314 | 264,596 |
Gain on sale of residential mortgages | (2,529) | (3,553) |
Origination of SBA loans held for sale | (66,277) | (60,867) |
Proceeds from sales of SBA loans held for sale | 68,854 | 63,759 |
Gain on sale of SBA loans | (2,577) | (2,892) |
Increase in cash value of bank owned life insurance | (231) | (233) |
Increase in accrued interest receivable | (3,169) | (333) |
Increase in SBA servicing rights | (258) | (236) |
Decrease (increase) in mortgage servicing rights | 2,004 | (1,837) |
Increase in other assets | (4,135) | (818) |
(Decrease) increase in accrued interest payable | (341) | 164 |
Increase in other liabilities | 14,923 | 10,731 |
Net cash flow provided by operating activities | 115,234 | 18,325 |
Cash flow from investing activities: | ||
Purchases of securities under resell agreements | (25,000) | |
Purchases of securities available for sale | (3,719) | |
Proceeds from maturities, calls or paydowns of securities available for sale | 1,112 | 1,143 |
Purchase of Federal Home Loan Bank stock | (1,031) | (129) |
Increase in loans, net | (205,193) | (45,006) |
Purchases of premises and equipment | (342) | (579) |
Proceeds from sales of foreclosed real estate owned | 1,459 | |
Net cash flow used by investing activities | (232,714) | (44,571) |
Cash flow from financing activities: | ||
Dividends paid on common stock | (5,616) | (4,896) |
Repurchase of common stock | (1,485) | |
Increase in deposits, net | 42,521 | 51,955 |
Decrease in other borrowings, net | (69) | (672) |
Proceeds from Federal Home Loan Bank advances | 20,000 | |
Net cash flow provided by financing activities | 56,836 | 44,902 |
Net change in cash and cash equivalents | (60,644) | 18,656 |
Cash and cash equivalents at beginning of period | 276,413 | 138,427 |
Cash and cash equivalents at end of period | 215,769 | 157,083 |
Supplemental schedule of noncash investing and financing activities: | ||
Transfer of loan principal to foreclosed real estate, net of write-downs | 1,360 | |
Initial recognition of operating lease right-of-use assets | 131 | 13,610 |
Initial recognition of operating lease liabilities | 131 | 14,011 |
Supplemental disclosures of cash flow information-Cash paid during the year for: | ||
Interest | 8,227 | 10,464 |
Income taxes | $ 1,395 | $ 6,340 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements include the accounts of MetroCity Bankshares, Inc. (“Company”) and its wholly-owned subsidiary, Metro City Bank (the “Bank”). The Company owns 100% of 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 six month period ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2019. The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2019, which are included in the Company’s 2019 Form 10-K. There were no new accounting policies or changes to existing policies adopted during the first six months of 2020 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. 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 June 30, 2020. Although the ultimate outcome of all claims and lawsuits outstanding as of June 30, 2020 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. Operating, Accounting and Reporting Considerations Related to COVID-19 The COVID-19 pandemic has negatively impacted the global economy, including the Company’s market areas. In response to this crisis, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was passed by Congress and signed into law on March 27, 2020. The CARES Act provides an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the economy by supporting individuals and businesses through loans, grants, tax changes, and other types of relief. Some of the provisions applicable to the Company include, but are not limited to: · Accounting for Loan Modifications - The CARES Act provides that financial institutions may elect to suspend (1) the requirements under GAAP for certain loan modifications that would otherwise by categorized as a troubled debt restructure (“TDR”) and (2) any determination that such loan modifications would be considered a TDR, including the related impairment for accounting purposes. · Paycheck Protection Program - The CARES Act established the Paycheck Protection Program (“PPP”), an expansion of the Small Business Administration’s 7(a) loan program and the Economic Injury Disaster Loan Program (“EIDL”), administered directly by the SBA. Also in response to the COVID-19 pandemic, the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration (“NCUA”), the Office of the Comptroller of the Currency (“OCC”), and the Consumer Financial Protection Bureau (“CFPB”), in consultation with the state financial regulators (collectively, the “agencies”) issued a joint interagency statement (issued March 22, 2020; revised statement issued April 7, 2020). Some of the provisions applicable to the Company include, but are not limited to: · Accounting for Loan Modifications - Loan modifications that do not meet the conditions of the CARES Act may still qualify as a modification that does not need to be accounted for as a TDR. The agencies confirmed with the Financial Accounting Standards Board (“FASB”) staff that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term (e.g., three months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or insignificant delays in payment, as long as such modifications are (1) related to COVID-19; (2) executed on a loan that was not more than 30 days past due at the time of modification; and (3) executed between March 1, 2020 and the earlier of (a) 60 days after the date of termination of the national emergency declaration or (b) December 31, 2020. · Past Due Reporting - With regard to loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral. A loan’s payment date is governed by the due date stipulated in the legal agreement. If a financial institution agrees to a payment deferral, these loans would not be considered past due reporting during the period of the deferral. · Nonaccrual Status - During short-term COVID-19 modifications, these loans generally should not be reported as nonaccrual or as classified. Recently Adopted Accounting Pronouncements 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. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between the Level 1 and Level 2 hierarchy, but will be required to disclose the range and weighted average used to develop unobservable inputs for Level 3 fair value measurements. The update was 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. As ASU 2018-13 only revises disclosure requirements, it did not have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted 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. We 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 2020 to date 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 | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 and December 31, 2019 are summarized as follows: June 30, 2020 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 11,575 $ — $ — $ 11,575 States and political subdivisions 4,959 134 (17) 5,076 Mortgage-backed GSE residential 1,750 14 — 1,764 Total $ 18,284 $ 148 $ (17) $ 18,415 December 31, 2019 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 12,436 $ — $ — $ 12,436 States and political subdivisions 1,246 33 — 1,279 Mortgage-backed GSE residential 2,015 — (35) 1,980 Total $ 15,697 $ 33 $ (35) $ 15,695 The amortized costs and estimated fair values of investment securities available for sale at June 30, 2020, 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 $ 265 $ 265 Due after one year but less than five years 11,960 11,981 Due after five years but less than ten years 4,309 4,405 Due in more than ten years — — Mortgage-backed GSE residential 1,750 1,764 Total $ 18,284 $ 18,415 There were no securities pledged as of June 30, 2020 and December 31, 2019 to secure public deposits and repurchase agreements. There were no securities sold during the three and six months ended June 30, 2020 and 2019. Information pertaining to securities with gross unrealized losses at June 30, 2020 and December 31, 2019 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows: June 30, 2020 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 $ (17) $ 976 $ $ Total $ (17) $ 976 $ — $ — December 31, 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 $ — $ — $ (35) $ 1,975 Total $ — $ — $ (35) $ 1,975 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 June 30, 2020, the two securities available for sale with unrealized losses have depreciated 1.69% from the Company’s amortized cost basis. None of these securities has been in a loss position for greater than twelve months. State and political subdivisions. The Company’s unrealized losses on two investments in state and political subdivision bonds relate to interest rate increases. Management currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the investments. Because the Company does not plan to sell the investments, and because it is not more likely than not that the Company will be required to sell the investments before the recovery of the par value, which may be at maturity, management does not consider these investments to be other-than-temporarily impaired at June 30, 2020. |
LOANS AND ALLOWANCE FOR LOAN LO
LOANS AND ALLOWANCE FOR LOAN LOSSES | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 and December 31, 2019 are summarized as follows: June 30, December 31, (Dollars in thousands) 2020 2019 Construction and development $ 42,847 $ 31,739 Commercial real estate 429,019 424,950 Commercial and industrial 141,540 53,105 Residential real estate 755,521 651,645 Consumer and other 967 1,768 Total loans receivable 1,369,894 1,163,207 Unearned income (4,905) (2,045) Allowance for loan losses (7,894) (6,839) Loans, net $ 1,357,095 $ 1,154,323 Included in the commercial and industrial loans are PPP loans totaling $96.1 million as of June 30, 2020. 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 six months ended June 30, 2020 and 2019 is as follows: Three Months Ended June 30, 2020 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 $ 152 $ 2,647 $ 523 $ 3,473 $ 64 $ — $ 6,859 Charge-offs — — — — (48) — (48) Recoveries — 3 — — 19 — 22 Provision 111 1,118 (119) (50) 1 — 1,061 Ending balance $ 263 $ 3,768 $ 404 $ 3,423 $ 36 $ — $ 7,894 Three Months Ended June 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 $ 163 $ 2,433 $ 334 $ 3,100 $ 266 $ 230 $ 6,526 Charge-offs — — (14) — (92) (106) Recoveries — 6 — — 57 63 Provision (34) (55) 267 65 (34) (209) — Ending balance $ 129 $ 2,384 $ 587 $ 3,165 $ 197 $ 21 $ 6,483 Six Months Ended June 30, 2020 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 $ 131 $ 2,320 $ 448 $ 3,457 $ 91 $ 392 $ 6,839 Charge-offs — — — — (71) — (71) Recoveries — 5 25 — 35 — 65 Provision 132 1,443 (69) (34) (19) (392) 1,061 Ending balance $ 263 $ 3,768 $ 404 $ 3,423 $ 36 $ — $ 7,894 Six Months Ended June 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 — — (14) — (331) — (345) Recoveries — 11 — — 172 — 183 Provision (106) (228) 221 123 (31) 21 — Ending balance $ 129 $ 2,384 $ 587 $ 3,165 $ 197 $ 21 $ 6,483 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 June 30, 2020 and December 31, 2019. June 30, 2020 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 $ — $ 540 $ 29 $ — $ — $ — $ 569 Collectively evaluated for impairment 263 3,228 375 3,423 5 — 7,294 Acquired with deteriorated credit quality — — — — 31 — 31 Total ending allowance balance $ 263 $ 3,768 $ 404 $ 3,423 $ 36 $ — $ 7,894 Loans: Individually evaluated for impairment $ — $ 6,370 $ 249 $ 7,348 $ — $ — $ 13,967 Collectively evaluated for impairment 42,820 420,927 138,135 748,173 567 — 1,350,622 Acquired with deteriorated credit quality — — — — 400 — 400 Total ending loans balance $ 42,820 $ 427,297 $ 138,384 $ 755,521 $ 967 $ — $ 1,364,989 December 31, 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 $ — $ 716 $ 30 $ — $ — $ — $ 746 Collectively evaluated for impairment 131 1,604 418 3,457 9 392 6,011 Acquired with deteriorated credit quality — — — — 82 — 82 Total ending allowance balance $ 131 $ 2,320 $ 448 $ 3,457 $ 91 $ 392 $ 6,839 Loans: Individually evaluated for impairment $ 1,360 $ 7,527 $ 957 $ 7,936 $ — $ — $ 17,780 Collectively evaluated for impairment 30,076 415,773 52,056 643,709 958 — 1,142,572 Acquired with deteriorated credit quality — — — — 810 — 810 Total ending loans balance $ 31,436 $ 423,300 $ 53,013 $ 651,645 $ 1,768 $ — $ 1,161,162 Impaired loans as of June 30, 2020 and December 31, 2019, by portfolio segment, are as follows. The recorded investment consists of the unpaid total principal balance plus accrued interest receivable. Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related June 30, 2020 Balance Allowance Allowance Investment Allowance Construction and development $ — $ — $ — $ — $ — Commercial real estate 6,370 4,435 2,001 6,436 540 Commercial and industrial 249 216 35 251 29 Residential real estate 7,348 7,348 — 7,348 — Total $ 13,967 $ 11,999 $ 2,036 $ 14,035 $ 569 Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2019 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ 1,360 $ — $ 1,360 $ — Commercial real estate 7,527 4,716 2,882 7,598 716 Commercial and industrial 957 925 39 964 30 Residential real estate 7,936 7,936 — 7,936 — Total $ 17,780 $ 14,937 $ 2,921 $ 17,858 $ 746 The average recorded investment in impaired loans and interest income recognized on the cash and accrual basis for the three and six months ended June 30, 2020 and 2019, by portfolio segment, are summarized in the tables below. Three Months Ended June 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ — $ — $ 1,360 $ — Commercial real estate 6,413 66 8,017 88 Commercial and industrial 277 5 970 8 Residential real estate 7,546 13 5,725 3 Total $ 14,236 $ 84 $ 16,072 $ 99 Six Months Ended June 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ 194 $ — $ 1,360 $ 6 Commercial real estate 6,575 195 8,067 169 Commercial and industrial 566 15 976 14 Residential real estate 7,663 96 4,556 41 Total $ 14,998 $ 306 $ 14,959 $ 230 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 June 30, 2020 and December 31, 2019: Accruing Total Total (Dollars in thousands) Greater than Accruing Financing June 30, 2020 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 42,820 $ — $ — $ — $ — $ 42,820 Commercial real estate 424,348 — — — 2,949 427,297 Commercial and industrial 138,346 — — — 38 138,384 Residential real estate 743,015 5,158 — 5,158 7,348 755,521 Consumer and other 967 — — — — 967 Total $ 1,349,496 $ 5,158 $ — $ 5,158 $ 10,335 $ 1,364,989 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2019 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 30,076 $ — $ — $ — $ 1,360 $ 31,436 Commercial real estate 419,406 973 — 973 2,921 423,300 Commercial and industrial 52,936 58 — 58 19 53,013 Residential real estate 625,222 18,487 — 18,487 7,936 651,645 Consumer and other 1,768 — — — — 1,768 Total $ 1,129,408 $ 19,518 $ — $ 19,518 $ 12,236 $ 1,161,162 (1) For the June 30, 2020 table above, nonperforming and past due loans exclude COVID-19 loan modifications. The Company utilizes a ten grade loan rating system for its loan portfolio as follows: · Loans rated Pass – Loans in this category have low to average risk. · Loans rated Special Mention – Loans do not presently expose the Company to a sufficient degree of risk to warrant adverse classification, but do possess deficiencies deserving close attention. · Loans rated Substandard – Loans are inadequately protected by the current credit-worthiness 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 their 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 June 30, 2020 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 42,820 $ 420,756 $ 137,481 $ 748,173 $ 967 $ 1,350,197 Special Mention — 800 — — — 800 Substandard — 5,741 903 7,348 — 13,992 Doubtful — — — — — — Loss — — — — — — Total $ 42,820 $ 427,297 $ 138,384 $ 755,521 $ 967 $ 1,364,989 Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2019 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 30,076 $ 416,183 $ 52,033 $ 641,544 $ 1,768 $ 1,141,604 Special Mention — 800 — — — 800 Substandard 1,360 6,317 980 10,101 — 18,758 Doubtful — — — — — — Loss — — — — — — Total $ 31,436 $ 423,300 $ 53,013 $ 651,645 $ 1,768 $ 1,161,162 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”), especially due to the impact of the COVID-19 pandemic. 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 June 30, 2020 and December 31, 2019 quantified by loan type classified separately as accrual and nonaccrual are presented in the table below. (Dollars in thousands) June 30, 2020 Accruing Nonaccrual Total Commercial real estate $ 2,896 $ 479 $ 3,375 Commercial and industrial — 25 25 Total $ 2,896 $ 504 $ 3,400 (Dollars in thousands) December 31, 2019 Accruing Nonaccrual Total Commercial real estate $ 2,437 $ 482 $ 2,919 Commercial and industrial 22 5 27 Total $ 2,459 $ 487 $ 2,946 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 allocated a specific reserve of $405,000 and $344,000, as of June 30, 2020 and December 31, 2019, respectively, and recognized no partial charge offs on the TDR loans described above during the three and six months ended June 30, 2020 and 2019. TDR commercial and industrial loans totaling $21,000 defaulted during the three and six months ended June 30, 2020. TDR commercial real estate loans totaling $482,000 and $777,000 defaulted during the three and six months ended June 30, 2019, respectively. These defaults did not have a material impact on the Company’s allowance for loan loss. During the six months ended June 30, 2020, we modified one commercial real estate loan. The total recorded investment in this modified loan was $511,000 as of June 30, 2020. During the year ended December 31, 2019, we modified one commercial and industrial loan. The total recorded investment in the modified loan was $25,000 as of December 31, 2019. 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 June 30, 2020, 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) June 30, December 31, Type of Concession 2020 2019 Deferral of payments $ 508 $ 22 Extension of maturity date 2,892 2,924 Total TDR loans $ 3,400 $ 2,946 The following table presents loans by portfolio segment modified as TDRs and the corresponding recorded investment, which includes accrued interest and fees, as of June 30, 2020 and December 31, 2019: June 30, 2020 December 31, 2019 (Dollars in thousands) Number of Recorded Number of Recorded Type Loans Investment Loans Investment Commercial real estate 5 $ 3,429 4 $ 2,923 Commercial and industrial 2 25 2 31 Total 7 $ 3,454 6 $ 2,954 Modifications in Response to COVID-19 Certain borrowers are currently unable to meet their contractual payment obligations because of the adverse effects of COVID-19. To help mitigate these effects, loan customers may apply for a deferral of payments, or portions thereof, for up to three months. In the absence of other intervening factors, such short-term modifications made on a good faith basis are not categorized as troubled debt restructurings, nor are loans granted payment deferrals related to COVID-19 reported as past due or placed on nonaccrual status (provided the loans were not past due or on nonaccrual status prior to the deferral). See Note 1 - Summary of Significant Accounting Policies for more information. As of June 30, 2020, we had non-SBA commercial loans and residential mortgages with outstanding balances of $157.5 million and $145.3 million, respectively, that had been approved for a three month payment deferral. The Small Business Administration (“SBA”) has guaranteed the principal and interest payments of all our SBA loan customers for six months through the end of September 2020. |
SBA AND USDA LOAN SERVICING
SBA AND USDA LOAN SERVICING | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 and December 31, 2019, the unpaid principal balances of serviced loans totaled $ 476.6 million and $441.6 million, respectively. Activity for SBA loan servicing rights are as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, (Dollars in thousands) 2020 2019 2020 2019 Beginning of period $ 7,573 $ 8,475 $ 8,162 $ 8,419 Change in fair value 849 168 260 224 End of period, fair value $ 8,422 $ 8,643 $ 8,422 $ 8,643 Fair value at June 30, 2020 and December 31, 2019 was determined using discount rates ranging from 4.20% to 11.08% and 5.80% to 12.06%, respectively, and prepayment speeds ranging from 13.24% to 18.37% and 10.82% to 16.54%, respectively, 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 $24,000 and $26,000 at June 30, 2020 and December 31, 2019, 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 June 30, 2020 and December 31, 2019. |
RESIDENTIAL MORTGAGE LOAN SERVI
RESIDENTIAL MORTGAGE LOAN SERVICING | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 and December 31, 2019 was $1.14 billion and $1.17 billion, respectively. Activity for mortgage loan servicing rights and the related valuation allowance are as follows: (Dollars in thousands) For the Three Months Ended June 30, For the Six Months Ended June 30, Mortgage loan servicing rights: 2020 2019 2020 2019 Beginning of period $ 16,791 $ 14,909 $ 18,068 $ 14,934 Additions — 2,718 984 3,512 Amortization expense (1,258) (856) (2,635) (1,675) Valuation allowance 531 — (353) — End of period, carrying value $ 16,064 $ 16,771 $ 16,064 $ 16,771 (Dollars in thousands) For the Three Months Ended June 30, For the Six Months Ended June 30, Valuation allowance: 2020 2019 2020 2019 Beginning balance $ 884 $ — $ — $ — Additions expensed — — 353 — Reductions credited to operations (531) — — — Direct write-downs — — — — Ending balance $ 353 $ — $ 353 $ — The fair value of servicing rights was $16.3 million and $19.0 million at June 30, 2020 and December 31, 2019, respectively. Fair value at June 30, 2020 was determined by using a discount rate of 14%, prepayment speeds of 19%, and a weighted average default rate of 1.04%. Fair value at December 31, 2019 was determined using a discount rate of 14%, prepayment speeds of 16%, and a weighted average default rate of 0.98%. |
FEDERAL HOME LOAN BANK ADVANCES
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 and December 31, 2019 are summarized as follows: (Dollars in thousands) June 30, 2020 December 31, 2019 Convertible advance with Bermudan option maturing August 6, 2029; fixed rate of 0.85% $ 20,000 $ 20,000 Convertible advance with Bermudan option maturing November 7, 2029; fixed rate of 0.68% 30,000 30,000 Convertible advance with Bermudan option maturing December 5, 2029; fixed rate of 0.75% 10,000 10,000 Convertible advance with Bermudan option maturing February 1, 2030; fixed rate of 0.59% 20,000 — Total FHLB advances $ 80,000 $ 60,000 At June 30, 2020, the Company had maximum borrowing capacity from the FHLB of $482 .5 million based on the value of residential and commercial real estate loans pledged as collateral. At June 30, 2020, 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 June 30, 2020. At June 30, 2020, 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 $24.3 million as of June 30, 2020. There were no outstanding borrowings on this line as of June 30, 2020. 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 June 30, 2020 and December 31, 2019 were $3.1 million. |
OPERATING LEASES
OPERATING LEASES | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, Six Months Ended June 30, (Dollars in thousands) 2020 2019 2020 2019 Operating lease cost $ 540 $ 574 $ 1,091 $ 1,064 Variable lease cost 47 47 95 95 Short-term lease cost — — — — Sublease income — — — — Total net lease cost $ 587 $ 621 $ 1,186 $ 1,159 Future maturities of the Company’s operating lease liabilities are summarized as follows: (Dollars in thousands) Twelve Months Ended: Lease Liability June 30, 2021 $ 1,994 June 30, 2022 1,897 June 30, 2023 1,953 June 30, 2024 1,863 June 30, 2025 1,727 After June 30, 2025 3,684 Total lease payments 13,118 Less: interest discount (1,349) Present value of lease liabilities $ 11,769 Supplemental Lease Information June 30, 2020 Weighted-average remaining lease term (years) 6.9 Weighted-average discount rate 3.13 % Six Months Ended June 30, (Dollars in thousands) 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 1,017 $ 967 Operating cash flows from operating leases (lease liability reduction) $ 830 $ 761 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ 131 $ 13,610 |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Jun. 30, 2020 | |
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 six months ended June 30, 2020 and 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 significant revenues were generated from gains and losses on the sale and financing of OREO for the three and six months ended June 30, 2020 and 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 | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 and December 31, 2019 include: June 30, December 31, (Dollars in thousands) 2020 2019 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 49,146 $ 64,243 Standby letters of credit $ 4,796 $ 5,213 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 $ 49.1 million of unused lines of credit and $4.8 million to make loans as of June 30, 2020. 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 | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020 and December 31, 2019 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: June 30, 2020 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 $ 11,575 $ — $ — $ 11,575 States and political subdivisions 5,076 — 5,076 — Mortgage-backed GSE residential 1,764 — 1,764 — Total securities available for sale 18,415 — 6,840 11,575 SBA servicing asset 8,422 — — 8,422 Interest only strip 24 — — 24 $ 26,861 $ — $ 6,840 $ 20,021 Non-recurring fair value measurements: Impaired loans $ 2,057 $ — $ — $ 2,057 $ 193 December 31, 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 $ 12,436 $ — $ — $ 12,436 States and political subdivisions 1,279 — 1,279 — Mortgage-backed GSE residential 1,980 — 1,980 — Total securities available for sale 15,695 — 3,259 12,436 SBA servicing asset 8,162 — — 8,162 Interest only strip 26 — — 26 $ 23,883 $ — $ 3,259 $ 20,624 Non-recurring fair value measurements: Impaired loans $ 4,523 $ — $ — $ 4,523 $ 338 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 six months ended June 30, 2020 and 2019: Obligations of SBA (Dollars in thousands) U.S. Government Servicing Interest Only Three Months Ended: Entities and Agencies Asset Strip Liabilities Fair value, April 1, 2020 $ 11,663 $ 7,573 $ 25 $ — Total gain (loss) included in income — 849 (1) — Settlements — — — — Prepayments/paydowns (88) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2020 $ 11,575 $ 8,422 $ 24 $ — Fair value, April 1, 2019 $ 15,078 $ 8,475 $ 25 $ — Total gain included in income — 168 14 — Settlements — — — — Prepayments/paydowns (798) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2019 $ 14,280 $ 8,643 $ 39 $ — Six Months Ended: Fair value, January 1, 2020 $ 12,436 $ 8,162 $ 26 $ — Total gain (loss) included in income — 260 (2) — Settlements — — — — Prepayments/paydowns (861) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2020 $ 11,575 $ 8,422 $ 24 $ — Fair value, January 1, 2019 $ 15,183 $ 8,419 $ 27 $ — Total gain included in income — 224 12 — Settlements — — — — Prepayments/paydowns (903) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2019 $ 14,280 $ 8,643 $ 39 $ — 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 June 30, 2020 and December 31, 2019: Valuation Unobservable General Technique Input Range June 30, 2020 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 13.24%-18.37% Discount rate 4.20%-11.08% December 31, 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 10.82%-16.54% Discount rate 5.80%-12.06% The carrying amounts and estimated fair values of the Company’s financial instruments at June 30, 2020 and December 31, 2019 are as follows: Carrying Estimated Fair Value at June 30, 2020 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 215,769 $ — $ 215,769 $ — $ 215,769 Securities purchased under agreements to resell 40,000 — 40,000 — 40,000 Investment securities 18,415 — 6,840 11,575 18,415 FHLB stock 4,873 — — — N/A Loans, net 1,357,095 — — 1,392,379 1,392,379 Accrued interest receivable 8,270 — — 8,270 8,270 SBA servicing assets 8,422 — — 8,422 8,422 Interest only strips 24 — — 24 24 Mortgage servicing assets 16,064 — — 16,312 16,312 Financial Liabilities: Deposits 1,349,898 — 1,352,328 — 1,352,328 Federal Home Loan Bank advances 80,000 — 80,000 — 80,000 Other borrowings 3,060 — 3,060 — 3,060 Accrued interest payable 549 — 549 — 549 Carrying Estimated Fair Value at December 31, 2019 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 276,413 $ — $ 276,413 $ — $ 276,413 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 15,695 — 3,259 12,436 15,695 FHLB stock 3,842 — — — N/A Loans, net 1,154,323 — — 1,169,214 1,169,214 Loans held for sale 85,793 — 88,178 — 88,178 Accrued interest receivable 5,101 — — 5,101 5,101 SBA servicing asset 8,162 — — 8,162 8,162 Interest only strips 26 — — 26 26 Mortgage servicing assets 18,068 — — 19,035 19,035 Financial Liabilities: Deposits 1,307,377 — 1,308,946 — 1,308,946 Federal Home Loan Bank advances 60,000 — 60,000 — 60,000 Other borrowings 3,129 — 3,129 — 3,129 Accrued interest payable 890 — 890 — 890 |
REGULATORY MATTERS
REGULATORY MATTERS | 6 Months Ended |
Jun. 30, 2020 | |
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 Bank 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 Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios. The net unrealized gain or loss on available for sale securities, if any, is not included in computing regulatory capital. Management believes as of June 30, 2020, 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 June 30, 2020 and December 31, 2019, 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 Minimum Capital Required - Under Prompt Corrective Actual Basel III Action Provisions: (Dollars in thousands) Amount Ratio Amount ≥ Ratio ≥ Amount ≥ Ratio ≥ As of June 30, 2020: Total Capital (to Risk Weighted Assets) Consolidated $ 228,747 22.53 % N/A * N/A * N/A N/A Bank 212,995 20.98 % 106,576 10.5 % 101,501 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 220,853 21.75 % N/A * N/A * N/A N/A Bank 205,101 20.21 % 86,276 8.5 % 81,201 8.0 % Common Tier 1 (CET1) Consolidated 220,853 21.75 % N/A * N/A * N/A N/A Bank 205,101 20.21 % 71,051 7.0 % 65,976 6.5 % Tier 1 Capital (to Average Assets) Consolidated 220,853 13.44 % N/A * N/A * N/A N/A Bank 205,101 12.49 % 65,697 4.0 % 82,121 5.0 % As of December 31, 2019: Total Capital (to Risk Weighted Assets) Consolidated $ 215,377 22.01 % N/A * N/A * N/A N/A Bank 199,539 20.40 % 102,705 10.5 % 97,814 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 208,538 21.31 % N/A * N/A * N/A N/A Bank 192,700 19.70 % 83,142 8.5 % 78,251 8.0 % Common Tier 1 (CET1) Consolidated 208,538 21.31 % N/A * N/A * N/A N/A Bank 192,700 19.70 % 68,470 7.0 % 63,579 6.5 % Tier 1 Capital (to Average Assets) Consolidated 208,538 12.70 % N/A * N/A * N/A N/A Bank 192,700 11.74 % 65,655 4.0 % 82,069 5.0 % * The FRB 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 | 6 Months Ended |
Jun. 30, 2020 | |
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 granted 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 become 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 June 30, 2020, 240,000 stock options had been granted and 145,459 shares of restricted stock had been issued under the 2018 Incentive Plan. Stock Options A summary of stock option activity for the six months ended June 30, 2020 is presented below: Weighted Average Shares Exercise Price Outstanding at January 1, 2020 240,000 $ 12.70 Granted — — Exercised — — Forfeited — — Outstanding at June 30, 2020 240,000 $ 12.70 During the three months ended June 30, 2020 and 2019, the Company recognized compensation expense for stock options of $119,000. During the six months ended June 30, 2020 and 2019, the Company recognized compensation expense for stock options of $238,000. As of June 30, 2020 and December 31, 2019, there was $476,000 and $714,000, respectively, of total unrecognized compensation cost related to options granted under the Plan. As of June 30, 2020, the cost is expected to be recognized over a weighted-average period of 1.0 year. 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 six months ended June 30, 2020 is presented below: Weighted- Average Grant- Nonvested Shares Shares Date Fair Value Nonvested at January 1, 2020 169,204 $ 9.35 Granted 145,459 11.56 Vested (144,176) 9.03 Forfeited (202) 9.85 Nonvested at June 30, 2020 170,285 $ 11.51 During the three months ended June 30, 2020 and 2019, the Company recognized compensation expense for restricted stock of $265,000 and $233,000, respectively. During the six months ended June 30, 2020 and 2019, the Company recognized compensation expense for restricted stock of $434,000 and $429,000, respectively. As of June 30, 2020 and December 31, 2019, there was $2.2 million and $1. 1 million, respectively, of total unrecognized compensation cost related to nonvested shares granted under the Plan. As of June 30, 2020, the cost is expected to be recognized over a weighted-average period of 2.6 years. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 13 – EARNINGS PER SHARE The following table presents the calculation of basic and diluted earnings per common share for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, (Dollars in thousands except per share data) 2020 2019 2020 2019 Basic earnings per share Net Income $ 7,739 $ 12,960 $ 17,555 $ 21,692 Weighted average common shares outstanding 25,575,837 24,198,196 25,552,864 24,237,168 Basic earnings per common share $ 0.30 $ 0.54 $ 0.69 $ 0.90 Diluted earnings per share Net Income $ 7,739 $ 12,960 $ 17,555 $ 21,692 Weighted average common shares outstanding for basic earnings per common share 25,575,837 24,198,196 25,552,864 24,237,168 Add: Dilutive effects of restricted stock and options 141,502 187,853 178,850 190,474 Average shares and dilutive potential common shares 25,717,339 24,386,049 25,731,714 24,427,642 Diluted earnings per common share $ 0.30 $ 0.53 $ 0.68 $ 0.89 There were no stock options or restricted stock excluded from the computation of diluted earnings per common share since they were antidilutive for the three and six months ended June 30, 2020 and 2019. |
COVID UPDATE
COVID UPDATE | 6 Months Ended |
Jun. 30, 2020 | |
COVID UPDATE | |
COVID UPDATE | NOTE 14 – COVID UPDATE The COVID-19 pandemic is having, and will likely continue to have, significant effects on global markets, supply chains, businesses and communities. COVID-19 is likely to impact the Company’s future financial condition and results of operations, including, but not limited to, additional loan loss reserves, additional collateral and/or modifications to debt obligations, liquidity, limited dividend payouts or potential shortages of personnel. Management continues to take appropriate actions to mitigate the negative impact the virus has on the Company, including restricting employee travel, directing employees to work remotely, cancelling in-person meetings and implementing our business continuity plans and protocols to the extent necessary. However, the full impact of COVID-19 is unknown and cannot be reasonably estimated as these events are still developing. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | The accompanying unaudited consolidated financial statements include the accounts of MetroCity Bankshares, Inc. (“Company”) and its wholly-owned subsidiary, Metro City Bank (the “Bank”). The Company owns 100% of 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 six month period ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2019. The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2019, which are included in the Company’s 2019 Form 10-K. There were no new accounting policies or changes to existing policies adopted during the first six months of 2020 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. |
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 June 30, 2020. Although the ultimate outcome of all claims and lawsuits outstanding as of June 30, 2020 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. |
Operating, Accounting and Reporting Considerations Related to COVID 19 | Operating, Accounting and Reporting Considerations Related to COVID-19 The COVID-19 pandemic has negatively impacted the global economy, including the Company’s market areas. In response to this crisis, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was passed by Congress and signed into law on March 27, 2020. The CARES Act provides an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the economy by supporting individuals and businesses through loans, grants, tax changes, and other types of relief. Some of the provisions applicable to the Company include, but are not limited to: · Accounting for Loan Modifications - The CARES Act provides that financial institutions may elect to suspend (1) the requirements under GAAP for certain loan modifications that would otherwise by categorized as a troubled debt restructure (“TDR”) and (2) any determination that such loan modifications would be considered a TDR, including the related impairment for accounting purposes. · Paycheck Protection Program - The CARES Act established the Paycheck Protection Program (“PPP”), an expansion of the Small Business Administration’s 7(a) loan program and the Economic Injury Disaster Loan Program (“EIDL”), administered directly by the SBA. Also in response to the COVID-19 pandemic, the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration (“NCUA”), the Office of the Comptroller of the Currency (“OCC”), and the Consumer Financial Protection Bureau (“CFPB”), in consultation with the state financial regulators (collectively, the “agencies”) issued a joint interagency statement (issued March 22, 2020; revised statement issued April 7, 2020). Some of the provisions applicable to the Company include, but are not limited to: · Accounting for Loan Modifications - Loan modifications that do not meet the conditions of the CARES Act may still qualify as a modification that does not need to be accounted for as a TDR. The agencies confirmed with the Financial Accounting Standards Board (“FASB”) staff that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term (e.g., three months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or insignificant delays in payment, as long as such modifications are (1) related to COVID-19; (2) executed on a loan that was not more than 30 days past due at the time of modification; and (3) executed between March 1, 2020 and the earlier of (a) 60 days after the date of termination of the national emergency declaration or (b) December 31, 2020. · Past Due Reporting - With regard to loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral. A loan’s payment date is governed by the due date stipulated in the legal agreement. If a financial institution agrees to a payment deferral, these loans would not be considered past due reporting during the period of the deferral. · Nonaccrual Status - During short-term COVID-19 modifications, these loans generally should not be reported as nonaccrual or as classified. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements 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. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between the Level 1 and Level 2 hierarchy, but will be required to disclose the range and weighted average used to develop unobservable inputs for Level 3 fair value measurements. The update was 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. As ASU 2018-13 only revises disclosure requirements, it did not have a material impact on the Company’s consolidated financial statements. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted 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. We 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 2020 to date 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) | 6 Months Ended |
Jun. 30, 2020 | |
SECURITIES AVAILABLE FOR SALE. | |
Schedule of available for sale securities | June 30, 2020 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 11,575 $ — $ — $ 11,575 States and political subdivisions 4,959 134 (17) 5,076 Mortgage-backed GSE residential 1,750 14 — 1,764 Total $ 18,284 $ 148 $ (17) $ 18,415 December 31, 2019 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 12,436 $ — $ — $ 12,436 States and political subdivisions 1,246 33 — 1,279 Mortgage-backed GSE residential 2,015 — (35) 1,980 Total $ 15,697 $ 33 $ (35) $ 15,695 |
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 $ 265 $ 265 Due after one year but less than five years 11,960 11,981 Due after five years but less than ten years 4,309 4,405 Due in more than ten years — — Mortgage-backed GSE residential 1,750 1,764 Total $ 18,284 $ 18,415 |
Schedule of available for sale securities by investment category and length of time | June 30, 2020 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 $ (17) $ 976 $ $ Total $ (17) $ 976 $ — $ — December 31, 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 $ — $ — $ (35) $ 1,975 Total $ — $ — $ (35) $ 1,975 |
LOANS AND ALLOWANCE FOR LOAN _2
LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | |
Summary of major classifications of loans | June 30, December 31, (Dollars in thousands) 2020 2019 Construction and development $ 42,847 $ 31,739 Commercial real estate 429,019 424,950 Commercial and industrial 141,540 53,105 Residential real estate 755,521 651,645 Consumer and other 967 1,768 Total loans receivable 1,369,894 1,163,207 Unearned income (4,905) (2,045) Allowance for loan losses (7,894) (6,839) Loans, net $ 1,357,095 $ 1,154,323 |
Schedule of allowance for loan losses by portfolio segment | Three Months Ended June 30, 2020 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 $ 152 $ 2,647 $ 523 $ 3,473 $ 64 $ — $ 6,859 Charge-offs — — — — (48) — (48) Recoveries — 3 — — 19 — 22 Provision 111 1,118 (119) (50) 1 — 1,061 Ending balance $ 263 $ 3,768 $ 404 $ 3,423 $ 36 $ — $ 7,894 Three Months Ended June 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 $ 163 $ 2,433 $ 334 $ 3,100 $ 266 $ 230 $ 6,526 Charge-offs — — (14) — (92) (106) Recoveries — 6 — — 57 63 Provision (34) (55) 267 65 (34) (209) — Ending balance $ 129 $ 2,384 $ 587 $ 3,165 $ 197 $ 21 $ 6,483 Six Months Ended June 30, 2020 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 $ 131 $ 2,320 $ 448 $ 3,457 $ 91 $ 392 $ 6,839 Charge-offs — — — — (71) — (71) Recoveries — 5 25 — 35 — 65 Provision 132 1,443 (69) (34) (19) (392) 1,061 Ending balance $ 263 $ 3,768 $ 404 $ 3,423 $ 36 $ — $ 7,894 Six Months Ended June 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 — — (14) — (331) — (345) Recoveries — 11 — — 172 — 183 Provision (106) (228) 221 123 (31) 21 — Ending balance $ 129 $ 2,384 $ 587 $ 3,165 $ 197 $ 21 $ 6,483 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 June 30, 2020 and December 31, 2019. June 30, 2020 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 $ — $ 540 $ 29 $ — $ — $ — $ 569 Collectively evaluated for impairment 263 3,228 375 3,423 5 — 7,294 Acquired with deteriorated credit quality — — — — 31 — 31 Total ending allowance balance $ 263 $ 3,768 $ 404 $ 3,423 $ 36 $ — $ 7,894 Loans: Individually evaluated for impairment $ — $ 6,370 $ 249 $ 7,348 $ — $ — $ 13,967 Collectively evaluated for impairment 42,820 420,927 138,135 748,173 567 — 1,350,622 Acquired with deteriorated credit quality — — — — 400 — 400 Total ending loans balance $ 42,820 $ 427,297 $ 138,384 $ 755,521 $ 967 $ — $ 1,364,989 December 31, 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 $ — $ 716 $ 30 $ — $ — $ — $ 746 Collectively evaluated for impairment 131 1,604 418 3,457 9 392 6,011 Acquired with deteriorated credit quality — — — — 82 — 82 Total ending allowance balance $ 131 $ 2,320 $ 448 $ 3,457 $ 91 $ 392 $ 6,839 Loans: Individually evaluated for impairment $ 1,360 $ 7,527 $ 957 $ 7,936 $ — $ — $ 17,780 Collectively evaluated for impairment 30,076 415,773 52,056 643,709 958 — 1,142,572 Acquired with deteriorated credit quality — — — — 810 — 810 Total ending loans balance $ 31,436 $ 423,300 $ 53,013 $ 651,645 $ 1,768 $ — $ 1,161,162 |
Summary of impaired loans by portfolio segment | Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related June 30, 2020 Balance Allowance Allowance Investment Allowance Construction and development $ — $ — $ — $ — $ — Commercial real estate 6,370 4,435 2,001 6,436 540 Commercial and industrial 249 216 35 251 29 Residential real estate 7,348 7,348 — 7,348 — Total $ 13,967 $ 11,999 $ 2,036 $ 14,035 $ 569 Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2019 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ 1,360 $ — $ 1,360 $ — Commercial real estate 7,527 4,716 2,882 7,598 716 Commercial and industrial 957 925 39 964 30 Residential real estate 7,936 7,936 — 7,936 — Total $ 17,780 $ 14,937 $ 2,921 $ 17,858 $ 746 |
Summary of average recorded investment in impaired loans | Three Months Ended June 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ — $ — $ 1,360 $ — Commercial real estate 6,413 66 8,017 88 Commercial and industrial 277 5 970 8 Residential real estate 7,546 13 5,725 3 Total $ 14,236 $ 84 $ 16,072 $ 99 Six Months Ended June 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ 194 $ — $ 1,360 $ 6 Commercial real estate 6,575 195 8,067 169 Commercial and industrial 566 15 976 14 Residential real estate 7,663 96 4,556 41 Total $ 14,998 $ 306 $ 14,959 $ 230 |
Schedule of delinquent amounts by portfolio segment | Accruing Total Total (Dollars in thousands) Greater than Accruing Financing June 30, 2020 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 42,820 $ — $ — $ — $ — $ 42,820 Commercial real estate 424,348 — — — 2,949 427,297 Commercial and industrial 138,346 — — — 38 138,384 Residential real estate 743,015 5,158 — 5,158 7,348 755,521 Consumer and other 967 — — — — 967 Total $ 1,349,496 $ 5,158 $ — $ 5,158 $ 10,335 $ 1,364,989 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2019 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 30,076 $ — $ — $ — $ 1,360 $ 31,436 Commercial real estate 419,406 973 — 973 2,921 423,300 Commercial and industrial 52,936 58 — 58 19 53,013 Residential real estate 625,222 18,487 — 18,487 7,936 651,645 Consumer and other 1,768 — — — — 1,768 Total $ 1,129,408 $ 19,518 $ — $ 19,518 $ 12,236 $ 1,161,162 (1) For the June 30, 2020 table above, nonperforming and past due loans exclude COVID-19 loan modifications. |
Summary of purchased loans by risk rating | Construction (Dollars in thousands) and Commercial Commercial Residential Consumer June 30, 2020 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 42,820 $ 420,756 $ 137,481 $ 748,173 $ 967 $ 1,350,197 Special Mention — 800 — — — 800 Substandard — 5,741 903 7,348 — 13,992 Doubtful — — — — — — Loss — — — — — — Total $ 42,820 $ 427,297 $ 138,384 $ 755,521 $ 967 $ 1,364,989 Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2019 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 30,076 $ 416,183 $ 52,033 $ 641,544 $ 1,768 $ 1,141,604 Special Mention — 800 — — — 800 Substandard 1,360 6,317 980 10,101 — 18,758 Doubtful — — — — — — Loss — — — — — — Total $ 31,436 $ 423,300 $ 53,013 $ 651,645 $ 1,768 $ 1,161,162 |
Schedule of TDRs classified separately as accrual and non-accrual | (Dollars in thousands) June 30, 2020 Accruing Nonaccrual Total Commercial real estate $ 2,896 $ 479 $ 3,375 Commercial and industrial — 25 25 Total $ 2,896 $ 504 $ 3,400 (Dollars in thousands) December 31, 2019 Accruing Nonaccrual Total Commercial real estate $ 2,437 $ 482 $ 2,919 Commercial and industrial 22 5 27 Total $ 2,459 $ 487 $ 2,946 |
Summary of the types of concessions for loans classified as troubled debt restructurings | (Dollars in thousands) June 30, December 31, Type of Concession 2020 2019 Deferral of payments $ 508 $ 22 Extension of maturity date 2,892 2,924 Total TDR loans $ 3,400 $ 2,946 |
Summary of loans by portfolio segment modified as TDRs and the corresponding recorded investment | June 30, 2020 December 31, 2019 (Dollars in thousands) Number of Recorded Number of Recorded Type Loans Investment Loans Investment Commercial real estate 5 $ 3,429 4 $ 2,923 Commercial and industrial 2 25 2 31 Total 7 $ 3,454 6 $ 2,954 |
SBA AND USDA LOAN SERVICING (Ta
SBA AND USDA LOAN SERVICING (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
SBA AND USDA LOAN SERVICING | |
Activity for SBA loan servicing rights | For the Three Months Ended June 30, For the Six Months Ended June 30, (Dollars in thousands) 2020 2019 2020 2019 Beginning of period $ 7,573 $ 8,475 $ 8,162 $ 8,419 Change in fair value 849 168 260 224 End of period, fair value $ 8,422 $ 8,643 $ 8,422 $ 8,643 |
RESIDENTIAL MORTGAGE LOAN SER_2
RESIDENTIAL MORTGAGE LOAN SERVICING (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
RESIDENTIAL MORTGAGE LOAN SERVICING | |
Schedule of activity for mortgage loan servicing rights | (Dollars in thousands) For the Three Months Ended June 30, For the Six Months Ended June 30, Mortgage loan servicing rights: 2020 2019 2020 2019 Beginning of period $ 16,791 $ 14,909 $ 18,068 $ 14,934 Additions — 2,718 984 3,512 Amortization expense (1,258) (856) (2,635) (1,675) Valuation allowance 531 — (353) — End of period, carrying value $ 16,064 $ 16,771 $ 16,064 $ 16,771 |
Schedule of valuation allowance activity for mortgage loan servicing rights | (Dollars in thousands) For the Three Months Ended June 30, For the Six Months Ended June 30, Valuation allowance: 2020 2019 2020 2019 Beginning balance $ 884 $ — $ — $ — Additions expensed — — 353 — Reductions credited to operations (531) — — — Direct write-downs — — — — Ending balance $ 353 $ — $ 353 $ — |
FEDERAL HOME LOAN BANK ADVANC_2
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
Schedule of advances from the Federal Home Loan Bank | (Dollars in thousands) June 30, 2020 December 31, 2019 Convertible advance with Bermudan option maturing August 6, 2029; fixed rate of 0.85% $ 20,000 $ 20,000 Convertible advance with Bermudan option maturing November 7, 2029; fixed rate of 0.68% 30,000 30,000 Convertible advance with Bermudan option maturing December 5, 2029; fixed rate of 0.75% 10,000 10,000 Convertible advance with Bermudan option maturing February 1, 2030; fixed rate of 0.59% 20,000 — Total FHLB advances $ 80,000 $ 60,000 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
OPERATING LEASES | |
Schedule of components of lease cost | Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2020 2019 2020 2019 Operating lease cost $ 540 $ 574 $ 1,091 $ 1,064 Variable lease cost 47 47 95 95 Short-term lease cost — — — — Sublease income — — — — Total net lease cost $ 587 $ 621 $ 1,186 $ 1,159 |
Schedule of Future maturities of the Company’s operating lease liabilities | (Dollars in thousands) Twelve Months Ended: Lease Liability June 30, 2021 $ 1,994 June 30, 2022 1,897 June 30, 2023 1,953 June 30, 2024 1,863 June 30, 2025 1,727 After June 30, 2025 3,684 Total lease payments 13,118 Less: interest discount (1,349) Present value of lease liabilities $ 11,769 |
Schedule Of Supplemental Lease Information | Supplemental Lease Information June 30, 2020 Weighted-average remaining lease term (years) 6.9 Weighted-average discount rate 3.13 % Six Months Ended June 30, (Dollars in thousands) 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 1,017 $ 967 Operating cash flows from operating leases (lease liability reduction) $ 830 $ 761 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ 131 $ 13,610 |
LOAN COMMITMENTS AND RELATED _2
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS | |
Schedule of financial instruments whose contract amounts represent credit risk | June 30, December 31, (Dollars in thousands) 2020 2019 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 49,146 $ 64,243 Standby letters of credit $ 4,796 $ 5,213 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
FAIR VALUE | |
Schedule of fair values of assets and liabilities measured on recurring and non-recurring basis | June 30, 2020 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 $ 11,575 $ — $ — $ 11,575 States and political subdivisions 5,076 — 5,076 — Mortgage-backed GSE residential 1,764 — 1,764 — Total securities available for sale 18,415 — 6,840 11,575 SBA servicing asset 8,422 — — 8,422 Interest only strip 24 — — 24 $ 26,861 $ — $ 6,840 $ 20,021 Non-recurring fair value measurements: Impaired loans $ 2,057 $ — $ — $ 2,057 $ 193 December 31, 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 $ 12,436 $ — $ — $ 12,436 States and political subdivisions 1,279 — 1,279 — Mortgage-backed GSE residential 1,980 — 1,980 — Total securities available for sale 15,695 — 3,259 12,436 SBA servicing asset 8,162 — — 8,162 Interest only strip 26 — — 26 $ 23,883 $ — $ 3,259 $ 20,624 Non-recurring fair value measurements: Impaired loans $ 4,523 $ — $ — $ 4,523 $ 338 |
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, April 1, 2020 $ 11,663 $ 7,573 $ 25 $ — Total gain (loss) included in income — 849 (1) — Settlements — — — — Prepayments/paydowns (88) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2020 $ 11,575 $ 8,422 $ 24 $ — Fair value, April 1, 2019 $ 15,078 $ 8,475 $ 25 $ — Total gain included in income — 168 14 — Settlements — — — — Prepayments/paydowns (798) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2019 $ 14,280 $ 8,643 $ 39 $ — Six Months Ended: Fair value, January 1, 2020 $ 12,436 $ 8,162 $ 26 $ — Total gain (loss) included in income — 260 (2) — Settlements — — — — Prepayments/paydowns (861) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2020 $ 11,575 $ 8,422 $ 24 $ — Fair value, January 1, 2019 $ 15,183 $ 8,419 $ 27 $ — Total gain included in income — 224 12 — Settlements — — — — Prepayments/paydowns (903) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2019 $ 14,280 $ 8,643 $ 39 $ — |
Schedule of quantitative information about recurring Level 3 fair value measures | Valuation Unobservable General Technique Input Range June 30, 2020 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 13.24%-18.37% Discount rate 4.20%-11.08% December 31, 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 10.82%-16.54% Discount rate 5.80%-12.06% |
Schedule of carrying amounts and estimated fair values of Company's financial instruments | Carrying Estimated Fair Value at June 30, 2020 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 215,769 $ — $ 215,769 $ — $ 215,769 Securities purchased under agreements to resell 40,000 — 40,000 — 40,000 Investment securities 18,415 — 6,840 11,575 18,415 FHLB stock 4,873 — — — N/A Loans, net 1,357,095 — — 1,392,379 1,392,379 Accrued interest receivable 8,270 — — 8,270 8,270 SBA servicing assets 8,422 — — 8,422 8,422 Interest only strips 24 — — 24 24 Mortgage servicing assets 16,064 — — 16,312 16,312 Financial Liabilities: Deposits 1,349,898 — 1,352,328 — 1,352,328 Federal Home Loan Bank advances 80,000 — 80,000 — 80,000 Other borrowings 3,060 — 3,060 — 3,060 Accrued interest payable 549 — 549 — 549 Carrying Estimated Fair Value at December 31, 2019 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 276,413 $ — $ 276,413 $ — $ 276,413 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 15,695 — 3,259 12,436 15,695 FHLB stock 3,842 — — — N/A Loans, net 1,154,323 — — 1,169,214 1,169,214 Loans held for sale 85,793 — 88,178 — 88,178 Accrued interest receivable 5,101 — — 5,101 5,101 SBA servicing asset 8,162 — — 8,162 8,162 Interest only strips 26 — — 26 26 Mortgage servicing assets 18,068 — — 19,035 19,035 Financial Liabilities: Deposits 1,307,377 — 1,308,946 — 1,308,946 Federal Home Loan Bank advances 60,000 — 60,000 — 60,000 Other borrowings 3,129 — 3,129 — 3,129 Accrued interest payable 890 — 890 — 890 |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 Minimum Capital Required - Under Prompt Corrective Actual Basel III Action Provisions: (Dollars in thousands) Amount Ratio Amount ≥ Ratio ≥ Amount ≥ Ratio ≥ As of June 30, 2020: Total Capital (to Risk Weighted Assets) Consolidated $ 228,747 22.53 % N/A * N/A * N/A N/A Bank 212,995 20.98 % 106,576 10.5 % 101,501 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 220,853 21.75 % N/A * N/A * N/A N/A Bank 205,101 20.21 % 86,276 8.5 % 81,201 8.0 % Common Tier 1 (CET1) Consolidated 220,853 21.75 % N/A * N/A * N/A N/A Bank 205,101 20.21 % 71,051 7.0 % 65,976 6.5 % Tier 1 Capital (to Average Assets) Consolidated 220,853 13.44 % N/A * N/A * N/A N/A Bank 205,101 12.49 % 65,697 4.0 % 82,121 5.0 % As of December 31, 2019: Total Capital (to Risk Weighted Assets) Consolidated $ 215,377 22.01 % N/A * N/A * N/A N/A Bank 199,539 20.40 % 102,705 10.5 % 97,814 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 208,538 21.31 % N/A * N/A * N/A N/A Bank 192,700 19.70 % 83,142 8.5 % 78,251 8.0 % Common Tier 1 (CET1) Consolidated 208,538 21.31 % N/A * N/A * N/A N/A Bank 192,700 19.70 % 68,470 7.0 % 63,579 6.5 % Tier 1 Capital (to Average Assets) Consolidated 208,538 12.70 % N/A * N/A * N/A N/A Bank 192,700 11.74 % 65,655 4.0 % 82,069 5.0 % * The FRB 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) | 6 Months Ended |
Jun. 30, 2020 | |
STOCK BASED COMPENSATION | |
Summary of stock option activity | Weighted Average Shares Exercise Price Outstanding at January 1, 2020 240,000 $ 12.70 Granted — — Exercised — — Forfeited — — Outstanding at June 30, 2020 240,000 $ 12.70 |
Summary of restricted stock activity | Weighted- Average Grant- Nonvested Shares Shares Date Fair Value Nonvested at January 1, 2020 169,204 $ 9.35 Granted 145,459 11.56 Vested (144,176) 9.03 Forfeited (202) 9.85 Nonvested at June 30, 2020 170,285 $ 11.51 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
EARNINGS PER SHARE | |
Schedule of earnings per share computation | Three Months Ended Six Months Ended June 30, June 30, (Dollars in thousands except per share data) 2020 2019 2020 2019 Basic earnings per share Net Income $ 7,739 $ 12,960 $ 17,555 $ 21,692 Weighted average common shares outstanding 25,575,837 24,198,196 25,552,864 24,237,168 Basic earnings per common share $ 0.30 $ 0.54 $ 0.69 $ 0.90 Diluted earnings per share Net Income $ 7,739 $ 12,960 $ 17,555 $ 21,692 Weighted average common shares outstanding for basic earnings per common share 25,575,837 24,198,196 25,552,864 24,237,168 Add: Dilutive effects of restricted stock and options 141,502 187,853 178,850 190,474 Average shares and dilutive potential common shares 25,717,339 24,386,049 25,731,714 24,427,642 Diluted earnings per common share $ 0.30 $ 0.53 $ 0.68 $ 0.89 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other Information (Details) $ in Trillions | Mar. 27, 2020USD ($) | Jun. 30, 2020segment |
Number of operating segments | segment | 1 | |
CARES value of relief package provided by government | $ | $ 2.2 | |
Metro City Bank - Subsidiaries Member | ||
Percentage of holding in subsidiary | 100.00% |
SECURITIES AVAILABLE FOR SALE -
SECURITIES AVAILABLE FOR SALE - Amortized cost, gross unrealized gains and losses (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Securities Available-for-sale | ||
Gross Amortized Cost | $ 18,284 | $ 15,697 |
Gross Unrealized Gains | 148 | 33 |
Gross Unrealized Losses | (17) | (35) |
Total securities available for sale | 18,415 | 15,695 |
Obligations of U.S. Government entities and agencies. | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 11,575 | 12,436 |
Total securities available for sale | 11,575 | 12,436 |
States and political subdivisions | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 4,959 | 1,246 |
Gross Unrealized Gains | 134 | 33 |
Gross Unrealized Losses | (17) | |
Total securities available for sale | 5,076 | 1,279 |
Mortgage-backed GSE residential | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 1,750 | 2,015 |
Gross Unrealized Gains | 14 | |
Gross Unrealized Losses | (35) | |
Total securities available for sale | $ 1,764 | $ 1,980 |
SECURITIES AVAILABLE FOR SALE_2
SECURITIES AVAILABLE FOR SALE - Expected maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Due in one year or less | $ 265 | |
Due after one year but less than five years | 11,960 | |
Due after five years but less than ten years | 4,309 | |
Mortgage-backed GSE residential | 1,750 | |
Total | 18,284 | $ 15,697 |
Estimated Fair Value | ||
Due in one year or less | 265 | |
Due after one year but less than five years | 11,981 | |
Due after five years but less than ten years | 4,405 | |
Mortgage-backed GSE residential | 1,764 | |
Total | $ 18,415 | $ 15,695 |
SECURITIES AVAILABLE FOR SALE_3
SECURITIES AVAILABLE FOR SALE - Aggregated by investment category and length of time (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020USD ($)item | Dec. 31, 2019USD ($)item | Jun. 30, 2019item | |
Debt Securities Available-for-sale, Unrealized Loss Position | |||
Twelve Months or Less - Gross Unrealized Losses | $ (17) | ||
Twelve Months or Less - Estimated Fair Value | $ 976 | ||
Over Twelve Months - Gross Unrealized Losses | $ (35) | ||
Over Twelve Months - Estimated Fair Value | $ 1,975 | ||
Number of securities pledged | item | 0 | 0 | |
Number of securities sold | item | 0 | 0 | |
Number of securities with unrealized losses | item | 2 | ||
Rate of depreciation | 1.69% | ||
States and political subdivisions | |||
Debt Securities Available-for-sale, Unrealized Loss Position | |||
Twelve Months or Less - Gross Unrealized Losses | $ (17) | ||
Twelve Months or Less - Estimated Fair Value | $ 976 | ||
Number of securities with unrealized losses | item | 2 | ||
Mortgage-backed GSE residential | |||
Debt Securities Available-for-sale, Unrealized Loss Position | |||
Over Twelve Months - Gross Unrealized Losses | $ (35) | ||
Over Twelve Months - Estimated Fair Value | $ 1,975 |
LOANS AND ALLOWANCE FOR LOAN _3
LOANS AND ALLOWANCE FOR LOAN LOSSES - Major classifications of loans (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Loans and allowance for loan losses | ||||||
Total loans receivable | $ 1,369,894 | $ 1,163,207 | ||||
Unearned income | (4,905) | (2,045) | ||||
Allowance for loan losses | (7,894) | $ (6,859) | (6,839) | $ (6,483) | $ (6,526) | $ (6,645) |
Loans, net | 1,357,095 | 1,154,323 | ||||
Construction and development | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 42,847 | 31,739 | ||||
Allowance for loan losses | (263) | (152) | (131) | (129) | (163) | (235) |
Commercial real estate | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 429,019 | 424,950 | ||||
Allowance for loan losses | (3,768) | (2,647) | (2,320) | (2,384) | (2,433) | (2,601) |
Commercial and industrial | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 141,540 | 53,105 | ||||
Allowance for loan losses | (404) | (523) | (448) | (587) | (334) | (380) |
PPP loan, net | 96,100 | |||||
Residential real estate | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 755,521 | 651,645 | ||||
Allowance for loan losses | (3,423) | (3,473) | (3,457) | (3,165) | (3,100) | (3,042) |
Consumer and Other | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 967 | 1,768 | ||||
Allowance for loan losses | $ (36) | $ (64) | $ (91) | $ (197) | $ (266) | $ (387) |
LOANS AND ALLOWANCE FOR LOAN _4
LOANS AND ALLOWANCE FOR LOAN LOSSES - Allowance for loan losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Allowance for loan losses: | ||||
Beginning balance | $ 6,859 | $ 6,526 | $ 6,839 | $ 6,645 |
Charge-offs | (48) | (106) | (71) | (345) |
Recoveries | 22 | 63 | 65 | 183 |
Provision | 1,061 | 1,061 | ||
Ending balance | 7,894 | 6,483 | 7,894 | 6,483 |
Construction and development | ||||
Allowance for loan losses: | ||||
Beginning balance | 152 | 163 | 131 | 235 |
Provision | 111 | (34) | 132 | (106) |
Ending balance | 263 | 129 | 263 | 129 |
Commercial real estate | ||||
Allowance for loan losses: | ||||
Beginning balance | 2,647 | 2,433 | 2,320 | 2,601 |
Recoveries | 3 | 6 | 5 | 11 |
Provision | 1,118 | (55) | 1,443 | (228) |
Ending balance | 3,768 | 2,384 | 3,768 | 2,384 |
Commercial and industrial | ||||
Allowance for loan losses: | ||||
Beginning balance | 523 | 334 | 448 | 380 |
Charge-offs | (14) | (14) | ||
Recoveries | 25 | |||
Provision | (119) | 267 | (69) | 221 |
Ending balance | 404 | 587 | 404 | 587 |
Residential real estate | ||||
Allowance for loan losses: | ||||
Beginning balance | 3,473 | 3,100 | 3,457 | 3,042 |
Provision | (50) | 65 | (34) | 123 |
Ending balance | 3,423 | 3,165 | 3,423 | 3,165 |
Consumer and Other | ||||
Allowance for loan losses: | ||||
Beginning balance | 64 | 266 | 91 | 387 |
Charge-offs | (48) | (92) | (71) | (331) |
Recoveries | 19 | 57 | 35 | 172 |
Provision | 1 | (34) | (19) | (31) |
Ending balance | $ 36 | 197 | 36 | 197 |
Unallocated | ||||
Allowance for loan losses: | ||||
Beginning balance | 230 | 392 | ||
Provision | (209) | $ (392) | 21 | |
Ending balance | $ 21 | $ 21 |
LOANS AND ALLOWANCE FOR LOAN _5
LOANS AND ALLOWANCE FOR LOAN LOSSES - Allowance for loan losses disaggregated (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Allowance for loan losses: | ||||||
Individually evaluated for impairment | $ 569 | $ 746 | ||||
Collectively evaluated for impairment | 7,294 | 6,011 | ||||
Total ending allowance balance | 7,894 | $ 6,859 | 6,839 | $ 6,483 | $ 6,526 | $ 6,645 |
Loans: | ||||||
Individually evaluated for impairment | 13,967 | 17,780 | ||||
Collectively evaluated for impairment | 1,350,622 | 1,142,572 | ||||
Total ending loans balance | 1,364,989 | 1,161,162 | ||||
Acquired with deteriorated credit quality | ||||||
Allowance for loan losses: | ||||||
Total ending allowance balance | 31 | 82 | ||||
Loans: | ||||||
Total ending loans balance | 400 | 810 | ||||
Construction and development | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 263 | 131 | ||||
Total ending allowance balance | 263 | 152 | 131 | 129 | 163 | 235 |
Loans: | ||||||
Individually evaluated for impairment | 1,360 | |||||
Collectively evaluated for impairment | 42,820 | 30,076 | ||||
Total ending loans balance | 42,820 | 31,436 | ||||
Commercial real estate | ||||||
Allowance for loan losses: | ||||||
Individually evaluated for impairment | 540 | 716 | ||||
Collectively evaluated for impairment | 3,228 | 1,604 | ||||
Total ending allowance balance | 3,768 | 2,647 | 2,320 | 2,384 | 2,433 | 2,601 |
Loans: | ||||||
Individually evaluated for impairment | 6,370 | 7,527 | ||||
Collectively evaluated for impairment | 420,927 | 415,773 | ||||
Total ending loans balance | 427,297 | 423,300 | ||||
Commercial and industrial | ||||||
Allowance for loan losses: | ||||||
Individually evaluated for impairment | 29 | 30 | ||||
Collectively evaluated for impairment | 375 | 418 | ||||
Total ending allowance balance | 404 | 523 | 448 | 587 | 334 | 380 |
Loans: | ||||||
Individually evaluated for impairment | 249 | 957 | ||||
Collectively evaluated for impairment | 138,135 | 52,056 | ||||
Total ending loans balance | 138,384 | 53,013 | ||||
Residential real estate | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 3,423 | 3,457 | ||||
Total ending allowance balance | 3,423 | 3,473 | 3,457 | 3,165 | 3,100 | 3,042 |
Loans: | ||||||
Individually evaluated for impairment | 7,348 | 7,936 | ||||
Collectively evaluated for impairment | 748,173 | 643,709 | ||||
Total ending loans balance | 755,521 | 651,645 | ||||
Consumer and Other | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 5 | 9 | ||||
Total ending allowance balance | 36 | $ 64 | 91 | 197 | 266 | $ 387 |
Loans: | ||||||
Collectively evaluated for impairment | 567 | 958 | ||||
Total ending loans balance | 967 | 1,768 | ||||
Consumer and Other | Acquired with deteriorated credit quality | ||||||
Allowance for loan losses: | ||||||
Total ending allowance balance | 31 | 82 | ||||
Loans: | ||||||
Total ending loans balance | $ 400 | 810 | ||||
Unallocated | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 392 | |||||
Total ending allowance balance | $ 392 | $ 21 | $ 230 |
LOANS AND ALLOWANCE FOR LOAN _6
LOANS AND ALLOWANCE FOR LOAN LOSSES - Impaired loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Loans impaired | |||||
Unpaid Total Principal Balance | $ 13,967 | $ 13,967 | $ 17,780 | ||
Recorded Investment With No Allowance | 11,999 | 11,999 | 14,937 | ||
Recorded Investment With Allowance | 2,036 | 2,036 | 2,921 | ||
Total Recorded Investment | 14,035 | 14,035 | 17,858 | ||
Related Allowance | 569 | 569 | 746 | ||
Average Recorded Investment | 14,236 | $ 16,072 | 14,998 | $ 14,959 | |
Interest income recognized | 84 | 99 | 306 | 230 | |
Construction and development | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 1,360 | ||||
Recorded Investment With No Allowance | 1,360 | ||||
Total Recorded Investment | 1,360 | ||||
Average Recorded Investment | 1,360 | 194 | 1,360 | ||
Interest income recognized | 6 | ||||
Commercial real estate | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 6,370 | 6,370 | 7,527 | ||
Recorded Investment With No Allowance | 4,435 | 4,435 | 4,716 | ||
Recorded Investment With Allowance | 2,001 | 2,001 | 2,882 | ||
Total Recorded Investment | 6,436 | 6,436 | 7,598 | ||
Related Allowance | 540 | 540 | 716 | ||
Average Recorded Investment | 6,413 | 8,017 | 6,575 | 8,067 | |
Interest income recognized | 66 | 88 | 195 | 169 | |
Commercial and industrial | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 249 | 249 | 957 | ||
Recorded Investment With No Allowance | 216 | 216 | 925 | ||
Recorded Investment With Allowance | 35 | 35 | 39 | ||
Total Recorded Investment | 251 | 251 | 964 | ||
Related Allowance | 29 | 29 | 30 | ||
Average Recorded Investment | 277 | 970 | 566 | 976 | |
Interest income recognized | 5 | 8 | 15 | 14 | |
Residential real estate | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 7,348 | 7,348 | 7,936 | ||
Recorded Investment With No Allowance | 7,348 | 7,348 | 7,936 | ||
Total Recorded Investment | 7,348 | 7,348 | $ 7,936 | ||
Average Recorded Investment | 7,546 | 5,725 | 7,663 | 4,556 | |
Interest income recognized | $ 13 | $ 3 | $ 96 | $ 41 |
LOANS AND ALLOWANCE FOR LOAN _7
LOANS AND ALLOWANCE FOR LOAN LOSSES - Loan delinquencies (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Loans past due | ||
Current | $ 1,349,496 | $ 1,129,408 |
Total Accruing Past Due | 5,158 | 19,518 |
Non-accrual | 10,335 | 12,236 |
Total Financing Receivables | 1,364,989 | 1,161,162 |
30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 5,158 | 19,518 |
Construction and development | ||
Loans past due | ||
Current | 42,820 | 30,076 |
Non-accrual | 1,360 | |
Total Financing Receivables | 42,820 | 31,436 |
Commercial real estate | ||
Loans past due | ||
Current | 424,348 | 419,406 |
Total Accruing Past Due | 973 | |
Non-accrual | 2,949 | 2,921 |
Total Financing Receivables | 427,297 | 423,300 |
Commercial real estate | 30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 973 | |
Commercial and industrial | ||
Loans past due | ||
Current | 138,346 | 52,936 |
Total Accruing Past Due | 58 | |
Non-accrual | 38 | 19 |
Total Financing Receivables | 138,384 | 53,013 |
Commercial and industrial | 30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 58 | |
Residential real estate | ||
Loans past due | ||
Current | 743,015 | 625,222 |
Total Accruing Past Due | 5,158 | 18,487 |
Non-accrual | 7,348 | 7,936 |
Total Financing Receivables | 755,521 | 651,645 |
Residential real estate | 30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 5,158 | 18,487 |
Consumer and Other | ||
Loans past due | ||
Current | 967 | 1,768 |
Total Financing Receivables | $ 967 | $ 1,768 |
LOANS AND ALLOWANCE FOR LOAN _8
LOANS AND ALLOWANCE FOR LOAN LOSSES - Risk ratings (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | $ 1,364,989 | $ 1,161,162 |
Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 1,350,197 | 1,141,604 |
Special Mention | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 800 | 800 |
Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 13,992 | 18,758 |
Construction and development | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 42,820 | 31,436 |
Construction and development | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 42,820 | 30,076 |
Construction and development | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 1,360 | |
Commercial real estate | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 427,297 | 423,300 |
Commercial real estate | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 420,756 | 416,183 |
Commercial real estate | Special Mention | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 800 | 800 |
Commercial real estate | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 5,741 | 6,317 |
Commercial and industrial | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 138,384 | 53,013 |
Commercial and industrial | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 137,481 | 52,033 |
Commercial and industrial | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 903 | 980 |
Residential real estate | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 755,521 | 651,645 |
Residential real estate | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 748,173 | 641,544 |
Residential real estate | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 7,348 | 10,101 |
Consumer and Other | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 967 | 1,768 |
Consumer and Other | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | $ 967 | $ 1,768 |
LOANS AND ALLOWANCE FOR LOAN _9
LOANS AND ALLOWANCE FOR LOAN LOSSES - Troubled Debt Restructures (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($)item | |
Loans past due | |||||
Accruing | $ 2,896,000 | $ 2,896,000 | $ 2,459,000 | ||
Nonaccrual | 504,000 | 504,000 | 487,000 | ||
Total | 3,400,000 | 3,400,000 | 2,946,000 | ||
Specific reserve | 405,000 | 405,000 | 344,000 | ||
Charge offs | 0 | $ 0 | 0 | $ 0 | |
Commercial real estate | |||||
Loans past due | |||||
Accruing | 2,896,000 | 2,896,000 | 2,437,000 | ||
Nonaccrual | 479,000 | 479,000 | 482,000 | ||
Total | 3,375,000 | $ 3,375,000 | $ 2,919,000 | ||
Amount of loan defaulted | $ 482,000 | $ 777,000 | |||
Number of loans modified | item | 1 | 1 | |||
Total recorded investment | $ 511,000 | $ 25,000 | |||
Commercial and industrial | |||||
Loans past due | |||||
Accruing | 22,000 | ||||
Nonaccrual | 25,000 | 25,000 | 5,000 | ||
Total | 25,000 | 25,000 | $ 27,000 | ||
Amount of loan defaulted | $ 21,000 | $ 21,000 |
LOANS AND ALLOWANCE FOR LOAN_10
LOANS AND ALLOWANCE FOR LOAN LOSSES - Types of concessions for TDR loans (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Loans troubled debt restructuring | ||
Total TDR loans | $ 3,400 | $ 2,946 |
Deferral of payments | ||
Loans troubled debt restructuring | ||
Total TDR loans | 508 | 22 |
Extension of maturity date | ||
Loans troubled debt restructuring | ||
Total TDR loans | $ 2,892 | $ 2,924 |
LOANS AND ALLOWANCE FOR LOAN_11
LOANS AND ALLOWANCE FOR LOAN LOSSES - Loans modified as TDRs (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Loans troubled debt restructuring | ||
Number of Loans | 7 | 6 |
Recorded Investment | $ 3,454 | $ 2,954 |
CARES loan deferral period | 3 months | |
Commercial real estate | ||
Loans troubled debt restructuring | ||
Number of Loans | 5 | 4 |
Recorded Investment | $ 3,429 | $ 2,923 |
CARES loan deferral value for three months | 157,500 | |
Residential real estate | ||
Loans troubled debt restructuring | ||
CARES loan deferral value for three months | $ 145,300 | |
Commercial and industrial | ||
Loans troubled debt restructuring | ||
Number of Loans | 2 | 2 |
Recorded Investment | $ 25 | $ 31 |
SBA AND USDA LOAN SERVICING - O
SBA AND USDA LOAN SERVICING - Other information (Details) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Unpaid principal balances of serviced loans | $ 476,600,000 | $ 441,600,000 |
Aggregate fair market value of the interest only strips included in SBA servicing assets | 24,000 | 26,000 |
Valuation allowances | $ 0 | $ 0 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | 14 |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 19 | 16 |
Minimum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 4.20 | 5.80 |
Minimum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 13.24 | 10.82 |
Maximum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 11.08 | 12.06 |
Maximum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 18.37 | 16.54 |
SBA AND USDA LOAN SERVICING - A
SBA AND USDA LOAN SERVICING - Activity for SBA loan servicing rights (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Servicing Asset at Fair Value Roll Forward | ||||
Beginning of period | $ 19,000 | |||
End of period, fair value | $ 16,300 | 16,300 | ||
SBA And USDA Loan | ||||
Servicing Asset at Fair Value Roll Forward | ||||
Beginning of period | 7,573 | $ 8,475 | 8,162 | $ 8,419 |
Change in fair value | 849 | 168 | 260 | 224 |
End of period, fair value | $ 8,422 | $ 8,643 | $ 8,422 | $ 8,643 |
RESIDENTIAL MORTGAGE LOAN SER_3
RESIDENTIAL MORTGAGE LOAN SERVICING - Other information (Details) $ in Thousands | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
SBA AND USDA LOAN SERVICING | ||
Fair value of servicing rights | $ 16,300 | $ 19,000 |
Loans, less allowance for loan losses | $ 1,357,095 | $ 1,154,323 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | 14 |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 19 | 16 |
Default rate | Weighted average | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 1.04 | 0.98 |
Residential Mortgage | ||
SBA AND USDA LOAN SERVICING | ||
Loans, less allowance for loan losses | $ 1,140,000 | $ 1,170,000 |
RESIDENTIAL MORTGAGE LOAN SER_4
RESIDENTIAL MORTGAGE LOAN SERVICING - Activity for mortgage loan servicing rights (Details) - Residential Mortgage - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Servicing Asset at Amortized Cost Roll Forward | ||||
Beginning of period | $ 16,791 | $ 14,909 | $ 18,068 | $ 14,934 |
Additions | 2,718 | 984 | 3,512 | |
Amortization expense | (1,258) | (856) | (2,635) | (1,675) |
Valuation allowance | 531 | (353) | ||
End of period, carrying value | 16,064 | $ 16,771 | 16,064 | $ 16,771 |
Servicing Assets Valuation Allowance Roll Forward | ||||
Beginning balance, valuation allowance | 884 | |||
Additions expensed | 353 | |||
Reductions credited to operations | (531) | |||
Ending balance, valuation allowance | $ 353 | $ 353 |
FEDERAL HOME LOAN BANK ADVANC_3
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Tabular (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 80,000 | $ 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 | 20,000 |
Interest Rate | 0.85% | |
Convertible advances with Bermudan option maturing November 7, 2029, fixed rate of 0.68% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 30,000 | 30,000 |
Interest Rate | 0.68% | |
Convertible advances with Bermudan option maturing December 5, 2029, with fixed rate of 0.75% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 10,000 | $ 10,000 |
Interest Rate | 0.75% | |
Convertible advances with Bermudan option maturing February 1, 2030, with fixed rate of 0.59% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 20,000 | |
Interest Rate | 0.59% |
FEDERAL HOME LOAN BANK ADVANC_4
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Other (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
Maximum borrowing capacity | $ 482,500 | |
FHLB advances | 80,000 | $ 60,000 |
Secured borrowings | 3,100 | $ 3,100 |
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 | $ 24,300 |
OPERATING LEASES - Other inform
OPERATING LEASES - Other information (Details) | 6 Months Ended |
Jun. 30, 2020leaseitem | |
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 | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
OPERATING LEASES | ||||
Operating lease cost | $ 540 | $ 574 | $ 1,091 | $ 1,064 |
Variable lease cost | 47 | 47 | 95 | 95 |
Total net lease cost | $ 587 | $ 621 | $ 1,186 | $ 1,159 |
OPERATING LEASES - Maturities (
OPERATING LEASES - Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Lessee Operating Lease Maturity | ||
June 30, 2021 | $ 1,994 | |
June 30, 2022 | 1,897 | |
June 30, 2023 | 1,953 | |
June 30, 2024 | 1,863 | |
June 30, 2025 | 1,727 | |
After June 30, 2025 | 3,684 | |
Total lease payments | 13,118 | |
Less: interest discount | (1,349) | |
Present value of lease liabilities | $ 11,769 | $ 12,476 |
OPERATING LEASES - Supplemental
OPERATING LEASES - Supplemental Lease Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
OPERATING LEASES | ||
Weighted-average remaining lease term | 6 years 10 months 24 days | |
Weighted-average discount rate (as a percent) | 3.13% | |
Operating cash flows from operating leases (cash payments) | $ 1,017 | $ 967 |
Operating cash flows from operating leases (lease liability reduction) | 830 | 761 |
Operating lease right-of-use assets obtained in exchange for leases entered into during the period | $ 131 | $ 13,610 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Maximum | ||||
Percentage of all services charges on deposit accounts to total revenue | 1.00% | 1.00% | 1.00% | 1.00% |
LOAN COMMITMENTS AND RELATED _3
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Commitments to extend credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 49,146 | $ 64,243 |
Standby letters of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | 4,796 | $ 5,213 |
Unused lines of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | 49,100 | |
Loans | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 4,800 |
FAIR VALUE - Assets and liabili
FAIR VALUE - Assets and liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | $ 18,415 | $ 15,695 |
SBA servicing assets | 16,300 | 19,000 |
States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 5,076 | 1,279 |
Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,764 | 1,980 |
Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 18,415 | 15,695 |
SBA servicing assets | 8,422 | 8,162 |
Interest only strip | 24 | 26 |
Assets | 26,861 | 23,883 |
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 | 11,575 | 12,436 |
Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 5,076 | 1,279 |
Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,764 | 1,980 |
Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Impaired loans | 2,057 | 4,523 |
Total Gains (Losses) | 193 | 338 |
Level 2 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 6,840 | 3,259 |
Assets | 6,840 | 3,259 |
Level 2 | Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 5,076 | 1,279 |
Level 2 | Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,764 | 1,980 |
Level 3 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 11,575 | 12,436 |
SBA servicing assets | 8,422 | 8,162 |
Interest only strip | 24 | 26 |
Assets | 20,021 | 20,624 |
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 | 11,575 | 12,436 |
Level 3 | Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Impaired loans | $ 2,057 | $ 4,523 |
FAIR VALUE - Level 3 reconcilia
FAIR VALUE - Level 3 reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
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 |
Gain or Losses included in earnings for securities at fair value | 0 | 0 | 0 | 0 |
Obligations of U.S. Government entities and agencies | ||||
Fair value assets measured on recurring basis unobservable input reconciliation | ||||
Fair value | 11,663 | 15,078 | 12,436 | 15,183 |
Prepayments/paydowns | (88) | (798) | (861) | (903) |
Fair value | 11,575 | 14,280 | 11,575 | 14,280 |
SBA servicing assets | ||||
Fair value assets measured on recurring basis unobservable input reconciliation | ||||
Fair value | 7,573 | 8,475 | 8,162 | 8,419 |
Total gain (loss) included in income | 849 | 168 | 260 | 224 |
Fair value | 8,422 | 8,643 | 8,422 | 8,643 |
Interest only strip | ||||
Fair value assets measured on recurring basis unobservable input reconciliation | ||||
Fair value | 25 | 25 | 26 | 27 |
Total gain (loss) included in income | (1) | 14 | (2) | 12 |
Fair value | $ 24 | $ 39 | $ 24 | $ 39 |
FAIR VALUE - Inputs and Valuati
FAIR VALUE - Inputs and Valuation technique (Details) | Jun. 30, 2020 | Dec. 31, 2019 |
Fair value measurement inputs and valuation techniques | ||
Valuation technique of available for sale securities | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Valuation technique of servicing asset | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Discount Rate | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 14 | 14 |
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 | 4.20 | 5.80 |
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 | 11.08 | 12.06 |
Prepayment speed | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 19 | 16 |
Prepayment speed | Minimum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 13.24 | 10.82 |
Prepayment speed | Maximum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 18.37 | 16.54 |
FAIR VALUE - Carrying amounts a
FAIR VALUE - Carrying amounts and Estimated fair values (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Financial Assets: | ||
SBA servicing assets | $ 16,300 | $ 19,000 |
Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,422 | 8,162 |
Interest only strips | 24 | 26 |
Recurring | Carrying Amount | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 215,769 | 276,413 |
Securities purchased under agreements to resell | 40,000 | 15,000 |
Investment securities | 18,415 | 15,695 |
FHLB stock | 4,873 | 3,842 |
Loans, net | 1,357,095 | 1,154,323 |
Loans held for sale | 85,793 | |
Accrued interest receivable | 8,270 | 5,101 |
SBA servicing assets | 8,422 | 8,162 |
Mortgage servicing assets | 16,064 | 18,068 |
Interest only strips | 24 | 26 |
Financial Liabilities: | ||
Deposits | 1,349,898 | 1,307,377 |
Federal Home Loan Bank advances | 80,000 | 60,000 |
Other borrowings | 3,060 | 3,129 |
Accrued interest payable | 549 | 890 |
Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 215,769 | 276,413 |
Securities purchased under agreements to resell | 40,000 | 15,000 |
Investment securities | 18,415 | 15,695 |
Loans, net | 1,392,379 | 1,169,214 |
Loans held for sale | 88,178 | |
Accrued interest receivable | 8,270 | 5,101 |
SBA servicing assets | 8,422 | 8,162 |
Mortgage servicing assets | 16,312 | 19,035 |
Interest only strips | 24 | 26 |
Financial Liabilities: | ||
Deposits | 1,352,328 | 1,308,946 |
Federal Home Loan Bank advances | 80,000 | 60,000 |
Other borrowings | 3,060 | 3,129 |
Accrued interest payable | 549 | 890 |
Level 2 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 215,769 | 276,413 |
Securities purchased under agreements to resell | 40,000 | 15,000 |
Investment securities | 6,840 | 3,259 |
Loans held for sale | 88,178 | |
Financial Liabilities: | ||
Deposits | 1,352,328 | 1,308,946 |
Federal Home Loan Bank advances | 80,000 | 60,000 |
Other borrowings | 3,060 | 3,129 |
Accrued interest payable | 549 | 890 |
Level 3 | Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,422 | 8,162 |
Interest only strips | 24 | 26 |
Level 3 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Investment securities | 11,575 | 12,436 |
Loans, net | 1,392,379 | 1,169,214 |
Accrued interest receivable | 8,270 | 5,101 |
SBA servicing assets | 8,422 | 8,162 |
Mortgage servicing assets | 16,312 | 19,035 |
Interest only strips | $ 24 | $ 26 |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Jun. 30, 2020 | |
Regulatory matters | ||
Capital conservation buffer percentage (as a percent) | 2.50% | |
Total Capital (to Risk Weighted Assets) | ||
Actual amount | $ 215,377 | $ 228,747 |
Actual ratio (as a percent) | 22.01% | 22.53% |
Tier I Capital (to Risk Weighted Assets) | ||
Actual amount | $ 208,538 | $ 220,853 |
Actual ratio (as a percent) | 21.31% | 21.75% |
Common Tier 1 (CET1) | ||
Actual amount | $ 208,538 | $ 220,853 |
Actual ratio (as a percent) | 21.31% | 21.75% |
Tier 1 Capital (to Average Assets) | ||
Actual amount | $ 208,538 | $ 220,853 |
Actual ratio (as a percent) | 12.70% | 13.44% |
Bank | ||
Total Capital (to Risk Weighted Assets) | ||
Actual amount | $ 199,539 | $ 212,995 |
Actual ratio (as a percent) | 20.40% | 20.98% |
Capital Adequacy Purposes, amount | $ 102,705 | $ 106,576 |
Capital Adequacy Purposes, ratio (as a percent) | 10.50% | 10.50% |
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 97,814 | $ 101,501 |
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 | $ 192,700 | $ 205,101 |
Actual ratio (as a percent) | 19.70% | 20.21% |
Capital Adequacy Purposes, amount | $ 83,142 | $ 86,276 |
Capital Adequacy Purposes, ratio (as a percent) | 8.50% | 8.50% |
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 78,251 | $ 81,201 |
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 8.00% | 8.00% |
Common Tier 1 (CET1) | ||
Actual amount | $ 192,700 | $ 205,101 |
Actual ratio (as a percent) | 19.70% | 20.21% |
Capital Adequacy Purposes, amount | $ 68,470 | $ 71,051 |
Capital Adequacy Purposes, ratio (as a percent) | 7.00% | 7.00% |
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 63,579 | $ 65,976 |
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 | $ 192,700 | $ 205,101 |
Actual ratio (as a percent) | 11.74% | 12.49% |
Capital Adequacy Purposes, amount | $ 65,655 | $ 65,697 |
Capital Adequacy Purposes, ratio (as a percent) | 4.00% | 4.00% |
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 82,069 | $ 82,121 |
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 | 6 Months Ended | |
Jun. 30, 2020 | Apr. 18, 2018 | |
Restricted Stock | ||
STOCK BASED COMPENSATION | ||
Restricted stock issued | 145,459 | |
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 | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Shares | |
Outstanding at beginning of the period (in shares) | shares | 240,000 |
Outstanding at ending of the period (in shares) | shares | 240,000 |
Weighted Average Exercise Price | |
Outstanding at beginning of the period (in dollars per share) | $ / shares | $ 12.70 |
Outstanding at ending of the period (in dollars per share) | $ / shares | $ 12.70 |
STOCK BASED COMPENSATION - Rest
STOCK BASED COMPENSATION - Restricted Stock (Details) - Restricted Stock | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Nonvested Shares | |
Outstanding at beginning of the period (in shares) | shares | 169,204 |
Granted (in shares) | shares | 145,459 |
Vested (in shares) | shares | (144,176) |
Forfeited (in shares) | shares | (202) |
Outstanding at ending of the period (in shares) | shares | 170,285 |
Weighted-Average Grant-Date Fair Value | |
Outstanding at beginning of the period (in dollars per share) | $ / shares | $ 9.35 |
Granted (in dollars per share) | $ / shares | 11.56 |
Vested (in dollars per share) | $ / shares | 9.03 |
Forfeited (in dollars per share) | $ / shares | 9.85 |
Outstanding at ending of the period (in dollars per share) | $ / shares | $ 11.51 |
STOCK BASED COMPENSATION - Othe
STOCK BASED COMPENSATION - Other (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
STOCK BASED COMPENSATION | |||||
Compensation cost | $ 672,000 | $ 667,000 | |||
Stock Options | |||||
STOCK BASED COMPENSATION | |||||
Compensation cost | $ 119,000 | $ 119,000 | 238,000 | 238,000 | |
Total unrecognized compensation cost | 476,000 | $ 476,000 | $ 714,000 | ||
Cost is expected to be recognized over a weighted-average period | 1 year | ||||
Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Compensation cost | 265,000 | $ 233,000 | $ 434,000 | $ 429,000 | |
Total unrecognized compensation cost | $ 2,200,000 | $ 2,200,000 | $ 1,100,000 | ||
Cost is expected to be recognized over a weighted-average period | 2 years 7 months 6 days | ||||
Officers and employees | Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Vesting Percentage | 33.00% | ||||
Number of anniversaries of the grant date | item | 3 | ||||
Directors | Vest on grant date | Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Vesting Percentage | 25.00% | ||||
Directors | Vest on each of the first three anniversaries of the grant date | Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Vesting Percentage | 25.00% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Basic earnings per share | ||||
Net income | $ 7,739 | $ 12,960 | $ 17,555 | $ 21,692 |
Weighted average common shares outstanding (in shares) | 25,575,837 | 24,198,196 | 25,552,864 | 24,237,168 |
Basic earnings per common share (in dollars per share) | $ 0.30 | $ 0.54 | $ 0.69 | $ 0.90 |
Diluted earnings per share | ||||
Net income | $ 7,739 | $ 12,960 | $ 17,555 | $ 21,692 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 25,575,837 | 24,198,196 | 25,552,864 | 24,237,168 |
Add: Dilutive effects of restricted stock and options (in shares) | 141,502 | 187,853 | 178,850 | 190,474 |
Average shares and dilutive potential common shares (in shares) | 25,717,339 | 24,386,049 | 25,731,714 | 24,427,642 |
Diluted earnings per common share (in dollars per share) | $ 0.30 | $ 0.53 | $ 0.68 | $ 0.89 |
Securities excluded from the computation of diluted earnings per common share | 0 | 0 | 0 | 0 |