Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 01, 2022 | |
Cover Abstract | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-39068 | |
Entity Registrant Name | METROCITY BANKSHARES, INC. | |
Entity Incorporation, State or Country Code | GA | |
Entity Tax Identification Number | 47-2528408 | |
Entity Address, Address Line One | 5114 Buford Highway | |
Entity Address, City or Town | Doraville | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30340 | |
City Area Code | 770 | |
Local Phone Number | 455-4989 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | MCBS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 25,447,790 | |
Entity Central Index Key | 0001747068 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Assets: | ||
Cash and due from banks | $ 220,027 | $ 432,523 |
Federal funds sold | 3,069 | 8,818 |
Cash and cash equivalents | 223,096 | 441,341 |
Equity securities | 10,778 | 11,386 |
Securities available for sale | 21,394 | 25,733 |
Loans, less allowance for loan losses of $16,678 and $16,952, respectively | 2,753,342 | 2,488,118 |
Accrued interest receivable | 10,990 | 11,052 |
Federal Home Loan Bank stock | 15,619 | 19,701 |
Premises and equipment, net | 12,847 | 13,068 |
Operating lease right-of-use asset | 8,518 | 9,338 |
Foreclosed real estate, net | 3,562 | 3,618 |
SBA servicing asset | 8,216 | 10,234 |
Mortgage servicing asset, net | 6,090 | 7,747 |
Bank owned life insurance | 68,267 | 59,437 |
Other assets | 25,131 | 5,385 |
Total assets | 3,167,850 | 3,106,158 |
Deposits: | ||
Non-interest-bearing demand | 620,182 | 592,444 |
Interest-bearing | 1,776,826 | 1,670,576 |
Total deposits | 2,397,008 | 2,263,020 |
Federal Home Loan Bank advances | 375,000 | 500,000 |
Other borrowings | 399 | 459 |
Operating lease liability | 9,031 | 9,861 |
Accrued interest payable | 703 | 204 |
Other liabilities | 62,640 | 42,391 |
Total liabilities | 2,844,781 | 2,815,935 |
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, 25,451,125 and 25,465,236 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 255 | 255 |
Additional paid-in capital | 49,831 | 51,559 |
Retained earnings | 266,426 | 238,577 |
Accumulated other comprehensive income (loss) | 6,557 | (168) |
Total shareholders' equity | 323,069 | 290,223 |
Total liabilities and shareholders' equity | $ 3,167,850 | $ 3,106,158 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for loan losses | $ 16,678 | $ 16,952 |
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 | 25,451,125 | 25,465,236 |
Common stock, shares outstanding | 25,451,125 | 25,465,236 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Interest and dividend income: | ||||
Loans, including fees | $ 32,310 | $ 25,728 | $ 63,769 | $ 48,228 |
Other investment income | 711 | 159 | 1,203 | 329 |
Federal funds sold | 4 | 1 | 6 | 3 |
Total interest income | 33,025 | 25,888 | 64,978 | 48,560 |
Interest expense: | ||||
Deposits | 2,384 | 919 | 3,523 | 1,911 |
FHLB advances and other borrowings | 421 | 144 | 582 | 290 |
Total interest expense | 2,805 | 1,063 | 4,105 | 2,201 |
Net interest income | 30,220 | 24,825 | 60,873 | 46,359 |
Provision for loan losses | 2,205 | 104 | 3,804 | |
Net interest income after provision for loan losses | 30,220 | 22,620 | 60,769 | 42,555 |
Noninterest income: | ||||
Gain on sale of residential mortgage loans | 806 | 2,017 | ||
Mortgage servicing income, net | (5) | (957) | 96 | (791) |
Gain on sale of SBA loans | 2,845 | 1,568 | 4,699 | |
SBA servicing income, net | (1,077) | 1,905 | 567 | 4,038 |
Other income | 764 | 513 | 1,256 | 775 |
Total noninterest income | 4,653 | 8,594 | 12,309 | 16,780 |
Noninterest expense: | ||||
Salaries and employee benefits | 7,929 | 6,915 | 15,025 | 13,614 |
Occupancy and equipment | 1,200 | 1,252 | 2,427 | 2,527 |
Data processing | 261 | 283 | 538 | 591 |
Advertising | 126 | 117 | 276 | 262 |
Other expenses | 3,603 | 3,526 | 7,032 | 5,807 |
Total noninterest expense | 13,119 | 12,093 | 25,298 | 22,801 |
Income before provision for income taxes | 21,754 | 19,121 | 47,780 | 36,534 |
Provision for income taxes | 5,654 | 4,728 | 12,251 | 9,160 |
Net income available to common shareholders | $ 16,100 | $ 14,393 | $ 35,529 | $ 27,374 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.63 | $ 0.56 | $ 1.40 | $ 1.07 |
Diluted (in dollars per share) | $ 0.63 | $ 0.56 | $ 1.38 | $ 1.06 |
Service charges on deposit account | ||||
Noninterest income: | ||||
Revenue from contract with customer | $ 518 | $ 411 | $ 999 | $ 784 |
Other service charges, commissions and fees | ||||
Noninterest income: | ||||
Revenue from contract with customer | $ 3,647 | $ 3,877 | $ 5,806 | $ 7,275 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 16,100 | $ 14,393 | $ 35,529 | $ 27,374 |
Other comprehensive gain (loss): | ||||
Unrealized holding losses on securities available for sale | (1,330) | 167 | (2,814) | (42) |
Net changes in fair value of cash flow hedges | 4,423 | 11,781 | ||
Tax effect | (773) | (42) | (2,242) | 11 |
Other comprehensive gain (loss) | 2,320 | 125 | 6,725 | (31) |
Comprehensive income | $ 18,420 | $ 14,518 | $ 42,254 | $ 27,343 |
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, 2020 | $ 257 | $ 55,674 | $ 188,705 | $ 195 | $ 244,831 |
Beginning Balance (in shares) at Dec. 31, 2020 | 25,674,573 | ||||
Stockholders' Equity | |||||
Net income | 27,374 | 27,374 | |||
Stock based compensation expense | 671 | 671 | |||
Vesting of restricted stock | $ 1 | (1) | |||
Vesting of restricted stock (in shares) | 101,472 | ||||
Repurchase of common stock | $ (2) | (3,420) | (3,422) | ||
Repurchase of common stock (in shares) | (197,377) | ||||
Other comprehensive income (loss) | (31) | (31) | |||
Dividends declared on common stock | (5,169) | (5,169) | |||
Ending Balance at Jun. 30, 2021 | $ 256 | 52,924 | 210,910 | 164 | 264,254 |
Ending Balance (in shares) at Jun. 30, 2021 | 25,578,668 | ||||
Beginning Balance at Mar. 31, 2021 | $ 257 | 55,977 | 199,102 | 39 | 255,375 |
Beginning Balance (in shares) at Mar. 31, 2021 | 25,674,573 | ||||
Stockholders' Equity | |||||
Net income | 14,393 | 14,393 | |||
Stock based compensation expense | 368 | 368 | |||
Vesting of restricted stock | $ 1 | (1) | |||
Vesting of restricted stock (in shares) | 101,472 | ||||
Repurchase of common stock | $ (2) | (3,420) | (3,422) | ||
Repurchase of common stock (in shares) | (197,377) | ||||
Other comprehensive income (loss) | 125 | 125 | |||
Dividends declared on common stock | (2,585) | (2,585) | |||
Ending Balance at Jun. 30, 2021 | $ 256 | 52,924 | 210,910 | 164 | 264,254 |
Ending Balance (in shares) at Jun. 30, 2021 | 25,578,668 | ||||
Beginning Balance at Dec. 31, 2021 | $ 255 | 51,559 | 238,577 | (168) | 290,223 |
Beginning Balance (in shares) at Dec. 31, 2021 | 25,465,236 | ||||
Stockholders' Equity | |||||
Net income | 35,529 | 35,529 | |||
Stock based compensation expense | 553 | 553 | |||
Vesting of restricted stock | $ 1 | (1) | |||
Vesting of restricted stock (in shares) | 101,097 | ||||
Repurchase of common stock | $ (1) | (2,280) | (2,281) | ||
Repurchase of common stock (in shares) | (115,208) | ||||
Other comprehensive income (loss) | 6,725 | 6,725 | |||
Dividends declared on common stock | (7,680) | (7,680) | |||
Ending Balance at Jun. 30, 2022 | $ 255 | 49,831 | 266,426 | 6,557 | 323,069 |
Ending Balance (in shares) at Jun. 30, 2022 | 25,451,125 | ||||
Beginning Balance at Mar. 31, 2022 | $ 255 | 51,753 | 254,165 | 4,237 | 310,410 |
Beginning Balance (in shares) at Mar. 31, 2022 | 25,465,236 | ||||
Stockholders' Equity | |||||
Net income | 16,100 | 16,100 | |||
Stock based compensation expense | 359 | 359 | |||
Vesting of restricted stock | $ 1 | (1) | |||
Vesting of restricted stock (in shares) | 101,097 | ||||
Repurchase of common stock | $ (1) | (2,280) | (2,281) | ||
Repurchase of common stock (in shares) | (115,208) | ||||
Other comprehensive income (loss) | 2,320 | 2,320 | |||
Dividends declared on common stock | (3,839) | (3,839) | |||
Ending Balance at Jun. 30, 2022 | $ 255 | $ 49,831 | $ 266,426 | $ 6,557 | $ 323,069 |
Ending Balance (in shares) at Jun. 30, 2022 | 25,451,125 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY | ||||
Dividend on common stock declared (in dollars per share) | $ 0.15 | $ 0.10 | $ 0.30 | $ 0.20 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flow from operating activities: | ||
Net income | $ 35,529 | $ 27,374 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization and accretion | 1,416 | 1,452 |
Provision for loan losses | 104 | 3,804 |
Stock based compensation expense | 553 | 671 |
Unrealized losses recognized on equity securities | 608 | |
Loss on sale of foreclosed real estate | 15 | |
Proceeds from sales of residential real estate loans | 96,932 | |
Gain on sale of residential mortgages | (2,017) | |
Origination of SBA loans held for sale | (23,391) | (57,489) |
Proceeds from sales of SBA loans held for sale | 24,959 | 62,188 |
Gain on sale of SBA loans | (1,568) | (4,699) |
Increase in cash value of bank owned life insurance | (830) | (457) |
Decrease in accrued interest receivable | 62 | 3 |
Decrease (increase) in SBA servicing rights | 2,018 | (1,512) |
Decrease in mortgage servicing rights | 1,657 | 3,462 |
(Increase) decrease in other assets | (10,101) | 261 |
Increase (decrease) in accrued interest payable | 499 | (20) |
Increase in other liabilities | 19,273 | 15,421 |
Net cash flow provided by operating activities | 145,718 | 50,459 |
Cash flow from investing activities: | ||
Purchases of securities available for sale | (1,034) | |
Proceeds from maturities, calls or paydowns of securities available for sale | 1,489 | 2,352 |
Redemption (purchase) of Federal Home Loan Bank stock | 4,082 | (2,304) |
Increase in loans, net | (360,243) | (462,314) |
Purchases of premises and equipment | (339) | (290) |
Proceeds from sales of foreclosed real estate owned | 41 | |
Purchase of bank owned life insurance | (8,000) | |
Net cash flow used by investing activities | (362,970) | (463,590) |
Cash flow from financing activities: | ||
Dividends paid on common stock | (7,640) | (5,135) |
Repurchase of common stock | (2,281) | (3,422) |
Increase in deposits, net | 133,988 | 494,942 |
Decrease in other borrowings, net | (60) | (9) |
Proceeds from Federal Home Loan Bank advances | 375,000 | 120,000 |
Repayments of Federal Home Loan Bank advances | (500,000) | (30,000) |
Net cash flow (used) provided by financing activities | (993) | 576,376 |
Net change in cash and cash equivalents | (218,245) | 163,245 |
Cash and cash equivalents at beginning of period | 441,341 | 150,688 |
Cash and cash equivalents at end of period | 223,096 | 313,933 |
Supplemental schedule of noncash investing and financing activities: | ||
Transfer of residential real estate loans to loans held for sale | 94,915 | |
Transfer of loan principal to foreclosed real estate, net of write-downs | 812 | |
Initial recognition of operating lease right-of-use assets | 560 | |
Initial recognition of operating lease liabilities | 560 | |
Supplemental disclosures of cash flow information - Cash paid during the year for: | ||
Interest | 3,606 | 2,221 |
Income taxes | $ 14,453 | $ 10,127 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2022 | |
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 unless the context indicates that we refer only to MetroCity Bankshares, Inc. 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2021. The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2021, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Company’s 2021 Form 10-K”). There were no new accounting policies or changes to existing policies adopted during the first six months of 2022 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, 2022. Although the ultimate outcome of all claims and lawsuits outstanding as of June 30, 2022 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on the Company’s results of operations or financial condition. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) 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; however, we plan to adopt ASU 2016-13 on January 1, 2023. 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. The Company has also contracted with a third-party vendor to assist with our CECL implementation and help establish the necessary policies and procedures to be fully 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 2022 to date but does not expect updates other than those summarized above to have a material impact on the consolidated financial statements. |
INVESTMENT SECURITIES
INVESTMENT SECURITIES | 6 Months Ended |
Jun. 30, 2022 | |
INVESTMENT SECURITIES | |
INVESTMENT SECURITIES | NOTE 2 – INVESTMENT SECURITIES The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale as of June 30, 2022 and December 31, 2021 are summarized as follows: June 30, 2022 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 5,900 $ — $ — $ 5,900 States and political subdivisions 8,146 — (1,307) 6,839 Mortgage-backed GSE residential 10,109 — (1,454) 8,655 Total $ 24,155 $ — $ (2,761) $ 21,394 December 31, 2021 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 6,949 $ — $ — $ 6,949 States and political subdivisions 8,169 203 (11) 8,361 Mortgage-backed GSE residential 10,562 11 (150) 10,423 Total $ 25,680 $ 214 $ (161) $ 25,733 The amortized costs and estimated fair values of investment securities available for sale at June 30, 2022 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 $ 5,321 $ 5,321 Due after one year but less than five years 1,822 1,798 Due after five years but less than ten years — — Due in more than ten years 6,903 5,620 Mortgage-backed GSE residential 10,109 8,655 Total $ 24,155 $ 21,394 There were no securities pledged as of June 30, 2022 and December 31, 2021 to secure public deposits and repurchase agreements. There were no securities sold during the three and six months ended June 30, 2022 and 2021. Information pertaining to securities with gross unrealized losses at June 30, 2022 and December 31, 2021 aggregated by investment category and length of time that individual securities have been in a continuous loss position, are summarized in the table below. June 30, 2022 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 $ 1,307 $ 6,839 $ — $ — Mortgage-backed GSE residential 1,454 8,655 — — Total $ 2,761 $ 15,494 $ — $ — December 31, 2021 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 $ 11 $ 2,201 $ — $ — Mortgage-backed GSE residential 150 9,530 — — Total $ 161 $ 11,731 $ — $ — 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, 2022, the twenty securities available for sale with an unrealized loss have depreciated 15.13% from the Company’s amortized cost basis. These securities have not been in a loss position for greater than twelve months. State and political subdivisions. Mortgage-backed GSE residential. Equity Securities As of June 30, 2022 and December 31, 2021, the Company had equity securities with carrying values totaling $10.8 and $11.4 million, respectively. The equity securities consist of our investment in a market-rate bond mutual fund that invests in high quality fixed income bonds, mainly government agency securities whose proceeds are designed to positively impact community development throughout the United States. The mutual fund focuses exclusively on providing affordable housing to low- and moderate-income borrowers and renters, including those in Majority Minority Census Tracts. During the three and six months ended June 30, 2022, we recognized an unrealized loss of $245,000 and $608,000, respectively, in net income on our equity securities. The unrealized loss is recorded in Other Expenses on the Consolidated Statements of Income. No unrealized gains or losses on equity securities were recognized in net income during the three and six months ended June 30, 2021. |
LOANS AND ALLOWANCE FOR LOAN LO
LOANS AND ALLOWANCE FOR LOAN LOSSES | 6 Months Ended |
Jun. 30, 2022 | |
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, 2022 and December 31, 2021 are summarized as follows: June 30, December 31, (Dollars in thousands) 2022 2021 Construction and development $ 45,042 $ 38,857 Commercial real estate 581,234 520,488 Commercial and industrial 57,843 73,072 Residential real estate 2,092,952 1,879,012 Consumer and other 165 79 Total loans receivable 2,777,236 2,511,508 Unearned income (7,216) (6,438) Allowance for loan losses (16,678) (16,952) Loans, net $ 2,753,342 $ 2,488,118 Included in the commercial and industrial loans are PPP loans totaling $8.9 million and $31.0 million as of June 30, 2022 and December 31 2021, respectively. 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, 2022 and 2021 is as follows: Three Months Ended June 30, 2022 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 $ 93 $ 4,294 $ 4,441 $ 7,624 $ 5 $ 217 $ 16,674 Charge-offs — — — — — — — Recoveries — 2 2 — — — 4 Provision 47 (757) (224) 1,054 1 (121) — Ending balance $ 140 $ 3,539 $ 4,219 $ 8,678 $ 6 $ 96 $ 16,678 Three Months Ended June 30, 2021 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 $ 190 $ 5,738 $ 608 $ 5,142 $ — $ 57 $ 11,735 Charge-offs — (26) (60) — — — (86) Recoveries — 3 — — 3 — 6 Provision 21 1,447 51 746 (3) (57) 2,205 Ending balance $ 211 $ 7,162 $ 599 $ 5,888 $ — $ — $ 13,860 Six Months Ended June 30, 2022 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 $ 100 $ 4,146 $ 4,989 $ 7,717 $ — $ — $ 16,952 Charge-offs — — (390) — — — (390) Recoveries — 4 3 — 5 — 12 Provision 40 (611) (383) 961 1 96 104 Ending balance $ 140 $ 3,539 $ 4,219 $ 8,678 $ 6 $ 96 $ 16,678 Six Months Ended June 30, 2021 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 $ 178 $ 5,161 $ 438 $ 4,350 $ 8 $ — $ 10,135 Charge-offs — (26) (64) — — — (90) Recoveries — 6 — — 5 — 11 Provision 33 2,021 225 1,538 (13) — 3,804 Ending balance $ 211 $ 7,162 $ 599 $ 5,888 $ — $ — $ 13,860 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 unpaid principal balance in loans as of June 30, 2022 and December 31, 2021. June 30, 2022 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 $ — $ 63 $ 436 $ — $ — $ — $ 499 Collectively evaluated for impairment 140 3,476 3,783 8,678 6 96 16,179 Acquired with deteriorated credit quality — — — — — — — Total ending allowance balance $ 140 $ 3,539 $ 4,219 $ 8,678 $ 6 $ 96 $ 16,678 Loans: Individually evaluated for impairment $ — $ 23,423 $ 1,154 $ 5,863 $ — $ — $ 30,440 Collectively evaluated for impairment 44,899 555,707 56,478 2,082,331 165 — 2,739,580 Acquired with deteriorated credit quality — — — — — — — Total ending loans balance $ 44,899 $ 579,130 $ 57,632 $ 2,088,194 $ 165 $ — $ 2,770,020 December 31, 2021 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 $ — $ 242 $ 434 $ — $ — $ — $ 676 Collectively evaluated for impairment 100 3,904 4,555 7,717 — — 16,276 Acquired with deteriorated credit quality — — — — — — — Total ending allowance balance $ 100 $ 4,146 $ 4,989 $ 7,717 $ — $ — $ 16,952 Loans: Individually evaluated for impairment $ — $ 6,395 $ 565 $ 4,889 $ — $ — $ 11,849 Collectively evaluated for impairment 38,567 512,253 71,419 1,870,903 — 79 2,493,221 Acquired with deteriorated credit quality — — — — — — — Total ending loans balance $ 38,567 $ 518,648 $ 71,984 $ 1,875,792 $ — $ 79 $ 2,505,070 Impaired loans as of June 30, 2022 and December 31, 2021, 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, 2022 Balance Allowance Allowance Investment Allowance Construction and development $ — $ — $ — $ — $ — Commercial real estate 23,423 23,936 234 24,170 63 Commercial and industrial 1,154 192 1,117 1,309 436 Residential real estate 5,863 5,863 — 5,863 — Total $ 30,440 $ 29,991 $ 1,351 $ 31,342 $ 499 Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2021 Balance Allowance Allowance Investment Allowance Construction and development $ — $ — $ — $ — $ — Commercial real estate 6,395 5,451 957 6,408 242 Commercial and industrial 565 25 585 610 434 Residential real estate 4,889 4,889 — 4,889 — Total $ 11,849 $ 10,365 $ 1,542 $ 11,907 $ 676 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, 2022 and 2021, by portfolio segment, are summarized in the tables below. Three Months Ended June 30, 2022 2021 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ — $ — $ — $ — Commercial real estate 10,974 59 5,188 45 Commercial and industrial 416 5 257 3 Residential real estate 5,251 23 6,303 16 Total $ 16,641 $ 87 $ 11,748 $ 64 Six Months Ended June 30, 2022 2021 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ — $ — $ — $ — Commercial real estate 9,006 163 5,658 157 Commercial and industrial 479 6 283 6 Residential real estate 5,409 47 6,720 36 Total $ 14,894 $ 216 $ 12,661 $ 199 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, 2022 and December 31, 2021: Accruing Total Total (Dollars in thousands) Greater than Accruing Financing June 30, 2022 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 44,899 $ — $ — $ — $ — $ 44,899 Commercial real estate 565,171 — — — 13,959 579,130 Commercial and industrial 57,486 2 — 2 144 57,632 Residential real estate 2,079,207 3,124 — 3,124 5,863 2,088,194 Consumer and other 165 — — — — 165 Total $ 2,746,928 $ 3,126 $ — $ 3,126 $ 19,966 $ 2,770,020 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2021 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 38,567 $ — $ — $ — $ — $ 38,567 Commercial real estate 514,179 752 — 752 3,717 518,648 Commercial and industrial 70,702 788 342 1,130 152 71,984 Residential real estate 1,859,615 11,287 — 11,287 4,890 1,875,792 Consumer and other 79 — — — — 79 Total $ 2,483,142 $ 12,827 $ 342 $ 13,169 $ 8,759 $ 2,505,070 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. There are six loan risk ratings (grades 1-6) included in loans rated Pass. ● 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, 2022 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 44,899 $ 550,576 $ 50,017 $ 2,081,019 $ 165 $ 2,726,676 Special Mention (1) — 5,417 7,323 — — 12,740 Substandard — 23,137 292 7,175 — 30,604 Doubtful — — — — — — Loss — — — — — — Total $ 44,899 $ 579,130 $ 57,632 $ 2,088,194 $ 165 $ 2,770,020 Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2021 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 38,567 $ 499,135 $ 64,226 $ 1,870,902 $ 79 $ 2,472,909 Special Mention (1) — 13,884 7,053 — — 20,937 Substandard — 5,629 705 4,890 — 11,224 Doubtful — — — — — — Loss — — — — — — Total $ 38,567 $ 518,648 $ 71,984 $ 1,875,792 $ 79 $ 2,505,070 (1) All of the loans classified as Special Mention at June 30, 2022 and December 31, 2021 have been heavily impacted by the ongoing COVID pandemic. While all of these loans are performing, we elected to classify as Special Mention as an abundance of caution as we closely monitor the performance of the underlying businesses. Troubled Debt Restructures: The restructuring of a loan is considered a “troubled debt restructuring” or “TDR” if both (i) the borrower is experiencing financial difficulties and (ii) the Company has granted a concession. Under certain 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, 2022 and December 31, 2021 quantified by loan type classified separately as accrual and nonaccrual are presented in the table below. (Dollars in thousands) June 30, 2022 Accruing Nonaccrual Total Commercial real estate $ 9,464 $ 233 $ 9,697 Commercial and industrial 1,010 — 1,010 Total $ 10,474 $ 233 $ 10,707 (Dollars in thousands) December 31, 2021 Accruing Nonaccrual Total Commercial real estate $ 2,678 $ 479 $ 3,157 Commercial and industrial 20 — 20 Total $ 2,698 $ 479 $ 3,177 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 $498,000 and $242,000 as of June 30, 2022 and December 31, 2021, respectively, and recognized no partial charge offs on the TDR loans described above during the three and six months ended June 30, 2022 and 2021. No TDRs defaulted during the three and six months ended June 30, 2022 and 2021. During the three and six months ended June 30, 2022, we modified two commercial real estate loans and three commercial and industrial loans as trouble debt restructurings. The total recorded investment in these modified loans were $7.6 million as of June 30, 2022. We did not modify any loans as a troubled debt restructuring during the year ended December 31, 2021. At June 30, 2022, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled debt 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 2022 2021 Deferral of payments $ 233 $ 488 Extension of maturity date 10,474 2,689 Total TDR loans $ 10,707 $ 3,177 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, 2022 and December 31, 2021: June 30, 2022 December 31, 2021 (Dollars in thousands) Number of Recorded Number of Recorded Type Loans Investment Loans Investment Commercial real estate 7 $ 10,444 4 $ 3,170 Commercial and industrial 4 1,164 1 20 Total 11 $ 11,608 5 $ 3,190 Modifications in Response to COVID-19 To help mitigate the adverse effects of COVID-19, loan customers were able to 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). As of June 30, 2022, no loans were under approved payment deferrals. As of December 31, 2021, non-Small Business Administration (“SBA”) commercial loans and SBA loans with outstanding balances $8.1 million and $6.5 million ($1.6 million unguaranteed book balance), respectively, were under approved payment deferrals. No residential mortgages were under approved payment deferrals as of December 31, 2021. |
SBA AND USDA LOAN SERVICING
SBA AND USDA LOAN SERVICING | 6 Months Ended |
Jun. 30, 2022 | |
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, 2022 and December 31, 2021, the unpaid principal balances of serviced loans totaled $504.9 million and $543.0 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) 2022 2021 2022 2021 Beginning of period $ 10,395 $ 10,374 $ 10,091 $ 9,488 Change in fair value (2,333) 609 (2,029) 1,495 End of period, fair value $ 8,062 $ 10,983 $ 8,062 $ 10,983 Fair value at June 30, 2022 and December 31, 2021 was determined using discount rates ranging from 10.50% to 16.01% and 7.57% to 12.25%, respectively, and prepayment speeds ranging from 12.82% to 17.44% and 14.43% to 17.12%, 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 $154,000 and $143,000 at June 30, 2022 and December 31, 2021, 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 fair value measurement, risk characteristics including product type and interest rate, were used to stratify the originated loan servicing rights. |
RESIDENTIAL MORTGAGE LOAN SERVI
RESIDENTIAL MORTGAGE LOAN SERVICING | 6 Months Ended |
Jun. 30, 2022 | |
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, 2022 and December 31, 2021 was $589.5 million and $608.2 million, 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: 2022 2021 2022 2021 Beginning of period $ 6,925 $ 11,722 $ 7,747 $ 12,991 Additions 347 — 760 — Amortization expense (1,270) (1,590) (2,580) (3,059) Valuation allowance 88 (603) 163 (403) End of period, carrying value $ 6,090 $ 9,529 $ 6,090 $ 9,529 (Dollars in thousands) For the Three Months Ended June 30, For the Six Months Ended June 30, Valuation allowance: 2022 2021 2022 2021 Beginning balance $ 88 $ 441 $ 163 $ 641 Additions expensed — 603 — 603 Reductions credited to operations (88) — (163) (200) Direct write-downs — — — — Ending balance $ — $ 1,044 $ — $ 1,044 The fair value of servicing rights was $7.8 million $7.9 million at June 30, 2022 and December 31, 2021, respectively. Fair value at June 30, 2022 was determined by using a discount rate of 12.08%, prepayment speeds of 19.66%, and a weighted average default rate of 1.27%. Fair value at December 31, 2021 was determined using a discount rate of 13.50%, prepayment speeds of 21.79%, and a weighted average default rate of 1.22%. |
FEDERAL HOME LOAN BANK ADVANCES
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | 6 Months Ended |
Jun. 30, 2022 | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | NOTE 6 – FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS (Dollars in thousands) June 30, 2022 December 31, 2021 Convertible advance maturing August 6, 2029; fixed rate of 0.85% $ — $ 20,000 Convertible advance maturing November 7, 2029; fixed rate of 0.68% — 30,000 Convertible advance maturing December 5, 2029; fixed rate of 0.75% — 10,000 Convertible advance maturing February 1, 2030; fixed rate of 0.59% — 20,000 Convertible advance maturing August 18, 2031; fixed rate of 0.025% — 50,000 Convertible advance maturing October 7, 2031; fixed rate of 0.01% — 50,000 Convertible advance maturing October 8, 2031; fixed rate of 0.01% — 50,000 Convertible advance maturing October 20, 2031; fixed rate of 0.01% — 150,000 Convertible advance maturing December 17, 2031; fixed rate of 0.01% — 50,000 Convertible advance maturing December 23, 2031; fixed rate of 0.01% — 50,000 Convertible advance maturing December 30, 2031; fixed rate of 0.01% — 20,000 Convertible advance maturing May 6, 2032; fixed rate of 0.83% 100,000 — Convertible advance maturing June 16, 2032; fixed rate of 1.68% 50,000 — Convertible advance maturing June 16, 2032; fixed rate of 1.91% 50,000 — Convertible advance maturing June 23, 2032; fixed rate of 1.95% 100,000 — Convertible advance maturing May 12, 2037; fixed rate of 1.14% 75,000 — Total FHLB advances $ 375,000 $ 500,000 The FHLB advances outstanding at June 30, 2022 all have a conversion feature that allows the FHLB to call the advances every 3 months ($100.0 million), 6 months ($50.0 million), 9 months ($125.0 million) or 1 year ($100.0 million). At June 30, 2022, the Company had maximum borrowing capacity from the FHLB of $943.8 million based on the value of residential real estate loans pledged as collateral. At June 30, 2022, 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, 2022. At June 30, 2022, the Company had Federal Reserve Discount Window funds available of approximately $10.0 million. The funds are collateralized by a pool of commercial real estate and commercial and industrial loans totaling $29.5 million as of June 30, 2022. There were no outstanding borrowings on this line as of June 30, 2022. 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 have an interest only strip are considered secured borrowings and are included in other borrowings. Secured borrowings at June 30, 2022 and December 31, 2021 were $399,000 and $459,000, respectively. |
OPERATING LEASES
OPERATING LEASES | 6 Months Ended |
Jun. 30, 2022 | |
OPERATING LEASES | |
OPERATING LEASES | NOTE 7 – OPERATING LEASES The Company has entered into various operating leases for certain branch locations with terms extending 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 for the three and six months ended June 30, 2022 and 2021 were as follows: Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2022 2021 2022 2021 Operating lease cost $ 511 $ 553 $ 1,016 $ 1,107 Variable lease cost 43 40 87 86 Short-term lease cost — — — — Sublease income — — — — Total net lease cost $ 554 $ 593 $ 1,103 $ 1,193 Future maturities of the Company’s operating lease liabilities are summarized as follows: (Dollars in thousands) Twelve Months Ended: Lease Liability June 30, 2023 $ 2,003 June 30, 2024 1,909 June 30, 2025 1,770 June 30, 2026 1,521 June 30, 2027 1,249 After June 30, 2027 1,938 Total lease payments 10,390 Less: interest discount (1,359) Present value of lease liabilities $ 9,031 Supplemental Lease Information June 30, 2022 Weighted-average remaining lease term (years) 5.3 Weighted-average discount rate 3.06 % Six Months Ended June 30, (Dollars in thousands) 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 920 $ 987 Operating cash flows from operating leases (lease liability reduction) $ 790 $ 822 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ — $ 560 |
INTEREST RATE DERIVATIVES
INTEREST RATE DERIVATIVES | 6 Months Ended |
Jun. 30, 2022 | |
INTEREST RATE DERIVATIVES | |
INTEREST RATE DERIVATIVES | NOTE 8 – INTEREST RATE DERIVATIVES During third and fourth quarters of 2021 and the first and second quarters of 2022, the Company entered into thirteen separate interest rate swap agreements with notional amounts totaling $725.0 million. Six of the interest rate swaps are two-year forward three-year term swaps (five-year total term) where cash settlements begin in October 2023, January 2024 or April 2024. Four of the interest rate swaps are two-year forward two-year term swaps (four-year total term) where cash settlements begin in November 2023 or April 2024. Two of the interest rate swaps are a one-year forward two-year term swap (three-year total term) and a one-year forward three-year term swap (four-year term total) where cash settlements begin in May 2023 or July 2023. The remaining interest rate swap is a 3-year spot swap where cash settlements began in June 2022. The swap agreements were designated as cash flow hedges of our deposit accounts that are indexed to the Federal Funds Effective rate. The swaps are determined to be highly effective since inception and therefore no amount of ineffectiveness has been included in net income. The aggregate fair value of the swaps amounted to an unrealized gain of $10.9 million and $46,000 and an unrealized loss of $152,000 and $46,000 at June 30, 2022 and December 31, 2021, respectively. These unrealized gains and losses are recorded in Other Assets and Other Liabilities on the Consolidated Balance Sheets. The Company expects the hedges to remain highly effective during the remaining terms of the swap. During October 2021, the Company entered into an interest rate cap agreement with a notional amount of $50.0 million and a cap rate of 2.50%. This interest rate cap is a two-year forward three-year term (five-year total term) where cash settlements begin on November 2023. The interest rate cap was designated as a cash flow hedge of our deposit accounts that are indexed to the Federal Funds Effective rate. The rate cap premium paid by the Company at inception will be amortized on a straight line basis to deposit interest expense over the total term of the interest rate cap agreement. The fair value of the interest rate cap amounted to an unrealized gain of $1.3 million and $321,000 at June 30, 2022 and December 31, 2021, respectively, and are recorded in Other Assets on the Consolidated Balance Sheets. The Company is exposed to credit related losses in the event of the nonperformance by the counterparties to the interest rate swaps. The Company performs an initial credit evaluation and ongoing monitoring procedures for all counterparties and currently anticipates that all counterparties will be able to fully satisfy their obligation under the contracts. In addition, the Company may require collateral from counterparties in the form of cash deposits in the event that the fair value of the contracts are positive and such fair value for all positions with the counterparty exceeds the credit support thresholds specified by the underlying agreement. Conversely, the Company is required to post cash deposits as collateral in the event the fair value of the contracts are negative and are below the credit support thresholds. At June 30, 2022, there were no cash deposits pledged as collateral by the Company. At June 30, 2022, the Company held cash deposits of $12.0 million from the counterparty as collateral pledged against the large positive fair value of our interest rate derivatives. Summary information for the interest rate swaps designated as cash flow hedges is as follows: As of or for the Six Months Ended (Dollars in thousands) June 30, 2022 Notional Amounts $ 725,000 Weighted-average pay rate 2.06% Weighted-average receive rate 0.44% Weighted-average maturity 4.3 years Weighted-average remaining maturity 3.9 years Net interest (expense) income $ (85) As of or for the Six Months Ended (Dollars in thousands) June 30, 2022 Notional Amounts $ 50,000 Rate Cap Premiums 619 Cap Rate 2.50% Weighted-average maturity 5.0 years Weighted-average remaining maturity 4.3 years Net interest (expense) income $ (62) |
LOAN COMMITMENTS AND RELATED FI
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2022 | |
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, 2022 and December 31, 2021 include: June 30, December 31, (Dollars in thousands) 2022 2021 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 49,705 $ 61,345 Standby letters of credit $ 3,958 $ 4,674 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 $49.7 million of unused lines of credit and $4.0 million for standby letters of credit as of June 30, 2022. 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, 2022 | |
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, 2022 and December 31, 2021 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, 2022 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 $ 5,900 $ — $ — $ 5,900 States and political subdivisions 6,839 — 6,839 — Mortgage-backed GSE residential 8,655 — 8,655 — Total securities available for sale 21,394 — 15,494 5,900 Equity securities 10,778 10,778 — — SBA servicing asset 8,062 — — 8,062 Interest only strip 154 — — 154 Interest rate derivatives 12,192 — 12,192 — $ 52,580 $ 10,778 $ 27,686 $ 14,116 Nonrecurring fair value measurements: Impaired loans $ 1,068 $ — $ — $ 1,068 $ 225 Liabilities Recurring fair value measurements: Interest rate swaps $ 152 $ — $ 152 $ — December 31, 2021 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 $ 6,949 $ — $ — $ 6,949 States and political subdivisions 8,361 — 8,361 — Mortgage-backed GSE residential 10,423 — 10,423 — Total securities available for sale 25,733 — 18,784 6,949 Equity securities 11,386 11,386 — — SBA servicing asset 10,091 — — 10,091 Interest only strip 143 — — 143 Interest rate derivatives 367 — 367 — $ 47,720 $ 11,386 $ 19,151 $ 17,183 Nonrecurring fair value measurements: Impaired loans $ 947 $ — $ — $ 947 $ (7) Liabilities Recurring fair value measurements: Interest rate swaps $ 46 $ — $ 46 $ — The Company used the following methods and significant assumptions to estimate fair value: Securities, Available for Sale : The Company owns certain SBA investments 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. Equity Securities : SBA Servicing Assets and Interest Only Strip : 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. Interest Rate Derivatives : 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 : 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, 2022 and 2021: 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, 2022 $ 6,729 $ 10,395 $ 159 $ — Total losses included in income — (2,333) (5) — Settlements — — — — Prepayments/paydowns (829) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2022 $ 5,900 $ 8,062 $ 154 $ — Fair value, April 1, 2021 $ 9,232 $ 10,374 $ 161 $ — Total gains included in income — 609 11 — Settlements — — — — Prepayments/paydowns (2,023) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2021 $ 7,209 $ 10,983 $ 172 $ — Six Months Ended: Fair value, January 1, 2022 $ 6,949 $ 10,091 $ 143 $ — Total (losses)/gains included in income — (2,029) 11 — Settlements — — — — Prepayments/paydowns (1,049) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2022 $ 5,900 $ 8,062 $ 154 $ — Fair value, January 1, 2021 $ 9,306 $ 9,488 $ 155 $ — Total gains included in income — 1,495 17 — Settlements — — — — Prepayments/paydowns (2,097) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2021 $ 7,209 $ 10,983 $ 172 $ — 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, 2022 and December 31, 2021: Valuation Unobservable General Technique Input Range June 30, 2022: Recurring: 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 12.82%-17.44% Discount rate 10.50%-16.01% Nonrecurring: Impaired loans Appraised value less estimated selling costs Estimated selling costs 6% December 31, 2021: Recurring: 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 14.43%-17.12% Discount rate 7.57%-12.25% Nonrecurring: Impaired Loans Appraised value less estimated selling costs Estimated selling costs 6% The carrying amounts and estimated fair values of the Company’s financial instruments at June 30, 2022 and December 31, 2021 are as follows: Carrying Estimated Fair Value at June 30, 2022 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 223,096 $ — $ 223,096 $ — $ 223,096 Investment securities 32,172 10,778 15,494 5,900 32,172 FHLB stock 15,619 — — — N/A Loans, net 2,753,342 — — 2,749,212 2,749,212 Accrued interest receivable 10,990 — 99 10,891 10,990 SBA servicing assets 8,062 — — 8,062 8,062 Interest only strips 154 — — 154 154 Mortgage servicing assets 6,090 — — 7,751 7,751 Interest rate derivatives 12,192 — 12,192 — 12,192 Financial Liabilities: Deposits 2,397,008 — 2,393,652 — 2,393,652 Federal Home Loan Bank advances 375,000 — 372,600 — 372,600 Other borrowings 399 — 399 — 399 Accrued interest payable 703 — 703 — 703 Interest rate derivatives 152 — 152 — 152 Carrying Estimated Fair Value at December 31, 2021 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 441,341 $ — $ 441,341 $ — $ 441,341 Investment securities 37,119 11,386 18,784 6,949 37,119 FHLB stock 19,701 — — — N/A Loans, net 2,488,118 — — 2,561,269 2,561,269 Accrued interest receivable 11,052 — 100 10,952 11,052 SBA servicing asset 10,091 — — 10,091 10,091 Interest only strips 143 — — 143 143 Mortgage servicing assets 7,747 — — 7,937 7,937 Interest rate derivatives 367 — 367 — 367 Financial Liabilities: Deposits 2,263,020 — 2,263,246 — 2,263,246 Federal Home Loan Bank advances 500,000 — 501,450 — 501,450 Other borrowings 459 — 459 — 459 Accrued interest payable 204 — 204 — 204 Interest rate derivatives 46 — 46 — 46 |
REGULATORY MATTERS
REGULATORY MATTERS | 6 Months Ended |
Jun. 30, 2022 | |
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, 2022, 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, 2022 and December 31, 2021, 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, 2022: Total Capital (to Risk Weighted Assets) Consolidated $ 324,972 17.60 % 193,838 10.5 % 184,607 10.0 % Bank 317,641 17.21 % 193,820 10.5 184,590 10.0 Tier I Capital (to Risk Weighted Assets) Consolidated 308,295 16.70 % 156,916 8.5 % 147,686 8.0 % Bank 300,964 16.30 % 156,902 8.5 147,672 8.0 Common Tier 1 (CET1) Consolidated 308,295 16.70 % 129,225 7.0 % 119,995 6.5 % Bank 300,964 16.30 % 129,213 7.0 119,984 6.5 Tier 1 Capital (to Average Assets) Consolidated 308,295 10.31 % 119,663 4.0 % 149,579 5.0 % Bank 300,964 10.06 % 119,631 4.0 149,538 5.0 As of December 31, 2021: Total Capital (to Risk Weighted Assets) Consolidated $ 297,108 17.77 % 175,564 10.5 % N/A N/A Bank 287,258 17.18 % 175,525 10.5 167,166 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 280,156 16.76 % 142,123 8.5 % N/A N/A Bank 270,306 16.17 % 142,091 8.5 133,733 8.0 % Common Tier 1 (CET1) Consolidated 280,156 16.76 % 117,043 7.0 % N/A N/A Bank 270,306 16.17 % 117,016 7.0 108,658 6.5 % Tier 1 Capital (to Average Assets) Consolidated 280,156 9.44 % 118,682 4.0 % N/A N/A Bank 270,306 9.11 % 118,667 4.0 148,333 5.0 % |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2022 | |
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, 2022, 240,000 stock options had been granted and 585,444 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, 2022 is presented below: Weighted Average Shares Exercise Price Outstanding at January 1, 2022 240,000 $ 12.70 Granted — — Exercised — — Forfeited — — Outstanding at June 30, 2022 240,000 $ 12.70 During the three months ended June 30, 2022 and 2021, the Company recognized compensation expense for stock options of $0 and $119,000, respectively. During the six months ended June 30, 2022 and 2021, the Company recognized compensation expense for stock options of $0 and $238,000, respectively. As of both June 30, 2022 and December 31, 2021, there was $0 of total unrecognized compensation cost related to options granted under the 2018 Incentive Plan. As of June 30, 2022, all of the cost related to the outstanding stock options had been recognized. Restricted Stock Units The Company has periodically issued restricted stock units 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 units. Shares of restricted stock units issued to officers and employees vest in equal A summary of restricted stock activity for the six months ended June 30, 2022 is presented below: Weighted- Average Grant- Nonvested Shares Shares Date Fair Value Nonvested at January 1, 2022 134,703 $ 13.86 Granted 143,793 20.31 Vested (101,097) 15.86 Forfeited — — Nonvested at June 30, 2022 177,399 $ 17.95 During the three months ended June 30, 2022 and 2021, the Company recognized compensation expense for restricted stock of $359,000 and $249,000, respectively. During the six months ended June 30, 2022 and 2021, the Company recognized compensation expense for restricted stock of $553,000 and $433,000, respectively. As of June 30, 2022 and December 31, 2021, there was $3.7 million and $1.4 million, respectively, of total unrecognized compensation cost related to nonvested shares granted under the 2018 Incentive Plan. As of June 30, 2022, 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, 2022 | |
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) 2022 2021 2022 2021 Basic earnings per share Net Income $ 16,100 $ 14,393 $ 35,529 $ 27,374 Weighted average common shares outstanding 25,459,003 25,642,350 25,462,102 25,658,373 Basic earnings per common share $ 0.63 $ 0.56 $ 1.40 $ 1.07 Diluted earnings per share Net Income $ 16,100 $ 14,393 $ 35,529 $ 27,374 Weighted average common shares outstanding for basic earnings per common share 25,459,003 25,642,350 25,462,102 25,658,373 Add: Dilutive effects of restricted stock and options 270,153 190,978 284,589 182,157 Average shares and dilutive potential common shares 25,729,156 25,833,328 25,746,691 25,840,530 Diluted earnings per common share $ 0.63 $ 0.56 $ 1.38 $ 1.06 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, 2022 and 2021. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
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 unless the context indicates that we refer only to MetroCity Bankshares, Inc. 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2021. The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2021, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Company’s 2021 Form 10-K”). There were no new accounting policies or changes to existing policies adopted during the first six months of 2022 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, 2022. Although the ultimate outcome of all claims and lawsuits outstanding as of June 30, 2022 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on the Company’s results of operations or financial condition. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) 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; however, we plan to adopt ASU 2016-13 on January 1, 2023. 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. The Company has also contracted with a third-party vendor to assist with our CECL implementation and help establish the necessary policies and procedures to be fully 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 2022 to date but does not expect updates other than those summarized above to have a material impact on the consolidated financial statements. |
INVESTMENT SECURITIES (Tables)
INVESTMENT SECURITIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
INVESTMENT SECURITIES | |
Schedule of available for sale securities | June 30, 2022 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 5,900 $ — $ — $ 5,900 States and political subdivisions 8,146 — (1,307) 6,839 Mortgage-backed GSE residential 10,109 — (1,454) 8,655 Total $ 24,155 $ — $ (2,761) $ 21,394 December 31, 2021 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 6,949 $ — $ — $ 6,949 States and political subdivisions 8,169 203 (11) 8,361 Mortgage-backed GSE residential 10,562 11 (150) 10,423 Total $ 25,680 $ 214 $ (161) $ 25,733 |
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 $ 5,321 $ 5,321 Due after one year but less than five years 1,822 1,798 Due after five years but less than ten years — — Due in more than ten years 6,903 5,620 Mortgage-backed GSE residential 10,109 8,655 Total $ 24,155 $ 21,394 |
Schedule of available for sale securities by investment category and length of time | June 30, 2022 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 $ 1,307 $ 6,839 $ — $ — Mortgage-backed GSE residential 1,454 8,655 — — Total $ 2,761 $ 15,494 $ — $ — December 31, 2021 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 $ 11 $ 2,201 $ — $ — Mortgage-backed GSE residential 150 9,530 — — Total $ 161 $ 11,731 $ — $ — |
LOANS AND ALLOWANCE FOR LOAN _2
LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | |
Summary of major classifications of loans | June 30, December 31, (Dollars in thousands) 2022 2021 Construction and development $ 45,042 $ 38,857 Commercial real estate 581,234 520,488 Commercial and industrial 57,843 73,072 Residential real estate 2,092,952 1,879,012 Consumer and other 165 79 Total loans receivable 2,777,236 2,511,508 Unearned income (7,216) (6,438) Allowance for loan losses (16,678) (16,952) Loans, net $ 2,753,342 $ 2,488,118 |
Schedule of allowance for loan losses by portfolio segment | Three Months Ended June 30, 2022 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 $ 93 $ 4,294 $ 4,441 $ 7,624 $ 5 $ 217 $ 16,674 Charge-offs — — — — — — — Recoveries — 2 2 — — — 4 Provision 47 (757) (224) 1,054 1 (121) — Ending balance $ 140 $ 3,539 $ 4,219 $ 8,678 $ 6 $ 96 $ 16,678 Three Months Ended June 30, 2021 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 $ 190 $ 5,738 $ 608 $ 5,142 $ — $ 57 $ 11,735 Charge-offs — (26) (60) — — — (86) Recoveries — 3 — — 3 — 6 Provision 21 1,447 51 746 (3) (57) 2,205 Ending balance $ 211 $ 7,162 $ 599 $ 5,888 $ — $ — $ 13,860 Six Months Ended June 30, 2022 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 $ 100 $ 4,146 $ 4,989 $ 7,717 $ — $ — $ 16,952 Charge-offs — — (390) — — — (390) Recoveries — 4 3 — 5 — 12 Provision 40 (611) (383) 961 1 96 104 Ending balance $ 140 $ 3,539 $ 4,219 $ 8,678 $ 6 $ 96 $ 16,678 Six Months Ended June 30, 2021 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 $ 178 $ 5,161 $ 438 $ 4,350 $ 8 $ — $ 10,135 Charge-offs — (26) (64) — — — (90) Recoveries — 6 — — 5 — 11 Provision 33 2,021 225 1,538 (13) — 3,804 Ending balance $ 211 $ 7,162 $ 599 $ 5,888 $ — $ — $ 13,860 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 unpaid principal balance in loans as of June 30, 2022 and December 31, 2021. June 30, 2022 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 $ — $ 63 $ 436 $ — $ — $ — $ 499 Collectively evaluated for impairment 140 3,476 3,783 8,678 6 96 16,179 Acquired with deteriorated credit quality — — — — — — — Total ending allowance balance $ 140 $ 3,539 $ 4,219 $ 8,678 $ 6 $ 96 $ 16,678 Loans: Individually evaluated for impairment $ — $ 23,423 $ 1,154 $ 5,863 $ — $ — $ 30,440 Collectively evaluated for impairment 44,899 555,707 56,478 2,082,331 165 — 2,739,580 Acquired with deteriorated credit quality — — — — — — — Total ending loans balance $ 44,899 $ 579,130 $ 57,632 $ 2,088,194 $ 165 $ — $ 2,770,020 December 31, 2021 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 $ — $ 242 $ 434 $ — $ — $ — $ 676 Collectively evaluated for impairment 100 3,904 4,555 7,717 — — 16,276 Acquired with deteriorated credit quality — — — — — — — Total ending allowance balance $ 100 $ 4,146 $ 4,989 $ 7,717 $ — $ — $ 16,952 Loans: Individually evaluated for impairment $ — $ 6,395 $ 565 $ 4,889 $ — $ — $ 11,849 Collectively evaluated for impairment 38,567 512,253 71,419 1,870,903 — 79 2,493,221 Acquired with deteriorated credit quality — — — — — — — Total ending loans balance $ 38,567 $ 518,648 $ 71,984 $ 1,875,792 $ — $ 79 $ 2,505,070 |
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, 2022 Balance Allowance Allowance Investment Allowance Construction and development $ — $ — $ — $ — $ — Commercial real estate 23,423 23,936 234 24,170 63 Commercial and industrial 1,154 192 1,117 1,309 436 Residential real estate 5,863 5,863 — 5,863 — Total $ 30,440 $ 29,991 $ 1,351 $ 31,342 $ 499 Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2021 Balance Allowance Allowance Investment Allowance Construction and development $ — $ — $ — $ — $ — Commercial real estate 6,395 5,451 957 6,408 242 Commercial and industrial 565 25 585 610 434 Residential real estate 4,889 4,889 — 4,889 — Total $ 11,849 $ 10,365 $ 1,542 $ 11,907 $ 676 |
Summary of average recorded investment in impaired loans | Three Months Ended June 30, 2022 2021 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ — $ — $ — $ — Commercial real estate 10,974 59 5,188 45 Commercial and industrial 416 5 257 3 Residential real estate 5,251 23 6,303 16 Total $ 16,641 $ 87 $ 11,748 $ 64 Six Months Ended June 30, 2022 2021 Average Interest Average Interest Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Construction and development $ — $ — $ — $ — Commercial real estate 9,006 163 5,658 157 Commercial and industrial 479 6 283 6 Residential real estate 5,409 47 6,720 36 Total $ 14,894 $ 216 $ 12,661 $ 199 |
Schedule of delinquent amounts by portfolio segment | Accruing Total Total (Dollars in thousands) Greater than Accruing Financing June 30, 2022 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 44,899 $ — $ — $ — $ — $ 44,899 Commercial real estate 565,171 — — — 13,959 579,130 Commercial and industrial 57,486 2 — 2 144 57,632 Residential real estate 2,079,207 3,124 — 3,124 5,863 2,088,194 Consumer and other 165 — — — — 165 Total $ 2,746,928 $ 3,126 $ — $ 3,126 $ 19,966 $ 2,770,020 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2021 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 38,567 $ — $ — $ — $ — $ 38,567 Commercial real estate 514,179 752 — 752 3,717 518,648 Commercial and industrial 70,702 788 342 1,130 152 71,984 Residential real estate 1,859,615 11,287 — 11,287 4,890 1,875,792 Consumer and other 79 — — — — 79 Total $ 2,483,142 $ 12,827 $ 342 $ 13,169 $ 8,759 $ 2,505,070 |
Summary of purchased loans by risk rating | Construction (Dollars in thousands) and Commercial Commercial Residential Consumer June 30, 2022 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 44,899 $ 550,576 $ 50,017 $ 2,081,019 $ 165 $ 2,726,676 Special Mention (1) — 5,417 7,323 — — 12,740 Substandard — 23,137 292 7,175 — 30,604 Doubtful — — — — — — Loss — — — — — — Total $ 44,899 $ 579,130 $ 57,632 $ 2,088,194 $ 165 $ 2,770,020 Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2021 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 38,567 $ 499,135 $ 64,226 $ 1,870,902 $ 79 $ 2,472,909 Special Mention (1) — 13,884 7,053 — — 20,937 Substandard — 5,629 705 4,890 — 11,224 Doubtful — — — — — — Loss — — — — — — Total $ 38,567 $ 518,648 $ 71,984 $ 1,875,792 $ 79 $ 2,505,070 |
Schedule of TDRs classified separately as accrual and non-accrual | (Dollars in thousands) June 30, 2022 Accruing Nonaccrual Total Commercial real estate $ 9,464 $ 233 $ 9,697 Commercial and industrial 1,010 — 1,010 Total $ 10,474 $ 233 $ 10,707 (Dollars in thousands) December 31, 2021 Accruing Nonaccrual Total Commercial real estate $ 2,678 $ 479 $ 3,157 Commercial and industrial 20 — 20 Total $ 2,698 $ 479 $ 3,177 |
Summary of the types of concessions for loans classified as troubled debt restructurings | (Dollars in thousands) June 30, December 31, Type of Concession 2022 2021 Deferral of payments $ 233 $ 488 Extension of maturity date 10,474 2,689 Total TDR loans $ 10,707 $ 3,177 |
Summary of loans by portfolio segment modified as TDRs and the corresponding recorded investment | June 30, 2022 December 31, 2021 (Dollars in thousands) Number of Recorded Number of Recorded Type Loans Investment Loans Investment Commercial real estate 7 $ 10,444 4 $ 3,170 Commercial and industrial 4 1,164 1 20 Total 11 $ 11,608 5 $ 3,190 |
SBA AND USDA LOAN SERVICING (Ta
SBA AND USDA LOAN SERVICING (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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) 2022 2021 2022 2021 Beginning of period $ 10,395 $ 10,374 $ 10,091 $ 9,488 Change in fair value (2,333) 609 (2,029) 1,495 End of period, fair value $ 8,062 $ 10,983 $ 8,062 $ 10,983 |
RESIDENTIAL MORTGAGE LOAN SER_2
RESIDENTIAL MORTGAGE LOAN SERVICING (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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: 2022 2021 2022 2021 Beginning of period $ 6,925 $ 11,722 $ 7,747 $ 12,991 Additions 347 — 760 — Amortization expense (1,270) (1,590) (2,580) (3,059) Valuation allowance 88 (603) 163 (403) End of period, carrying value $ 6,090 $ 9,529 $ 6,090 $ 9,529 |
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: 2022 2021 2022 2021 Beginning balance $ 88 $ 441 $ 163 $ 641 Additions expensed — 603 — 603 Reductions credited to operations (88) — (163) (200) Direct write-downs — — — — Ending balance $ — $ 1,044 $ — $ 1,044 |
FEDERAL HOME LOAN BANK ADVANC_2
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
Schedule of advances from the Federal Home Loan Bank | (Dollars in thousands) June 30, 2022 December 31, 2021 Convertible advance maturing August 6, 2029; fixed rate of 0.85% $ — $ 20,000 Convertible advance maturing November 7, 2029; fixed rate of 0.68% — 30,000 Convertible advance maturing December 5, 2029; fixed rate of 0.75% — 10,000 Convertible advance maturing February 1, 2030; fixed rate of 0.59% — 20,000 Convertible advance maturing August 18, 2031; fixed rate of 0.025% — 50,000 Convertible advance maturing October 7, 2031; fixed rate of 0.01% — 50,000 Convertible advance maturing October 8, 2031; fixed rate of 0.01% — 50,000 Convertible advance maturing October 20, 2031; fixed rate of 0.01% — 150,000 Convertible advance maturing December 17, 2031; fixed rate of 0.01% — 50,000 Convertible advance maturing December 23, 2031; fixed rate of 0.01% — 50,000 Convertible advance maturing December 30, 2031; fixed rate of 0.01% — 20,000 Convertible advance maturing May 6, 2032; fixed rate of 0.83% 100,000 — Convertible advance maturing June 16, 2032; fixed rate of 1.68% 50,000 — Convertible advance maturing June 16, 2032; fixed rate of 1.91% 50,000 — Convertible advance maturing June 23, 2032; fixed rate of 1.95% 100,000 — Convertible advance maturing May 12, 2037; fixed rate of 1.14% 75,000 — Total FHLB advances $ 375,000 $ 500,000 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
OPERATING LEASES | |
Schedule of components of lease cost | Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2022 2021 2022 2021 Operating lease cost $ 511 $ 553 $ 1,016 $ 1,107 Variable lease cost 43 40 87 86 Short-term lease cost — — — — Sublease income — — — — Total net lease cost $ 554 $ 593 $ 1,103 $ 1,193 |
Schedule of Future maturities of the Company's operating lease liabilities | (Dollars in thousands) Twelve Months Ended: Lease Liability June 30, 2023 $ 2,003 June 30, 2024 1,909 June 30, 2025 1,770 June 30, 2026 1,521 June 30, 2027 1,249 After June 30, 2027 1,938 Total lease payments 10,390 Less: interest discount (1,359) Present value of lease liabilities $ 9,031 |
Schedule Of Supplemental Lease Information | Supplemental Lease Information June 30, 2022 Weighted-average remaining lease term (years) 5.3 Weighted-average discount rate 3.06 % Six Months Ended June 30, (Dollars in thousands) 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 920 $ 987 Operating cash flows from operating leases (lease liability reduction) $ 790 $ 822 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ — $ 560 |
INTEREST RATE DERIVATIVES (Tabl
INTEREST RATE DERIVATIVES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
INTEREST RATE DERIVATIVES | |
Summary information for the interest rate swaps designated as cash flow hedges | Summary information for the interest rate swaps designated as cash flow hedges is as follows: As of or for the Six Months Ended (Dollars in thousands) June 30, 2022 Notional Amounts $ 725,000 Weighted-average pay rate 2.06% Weighted-average receive rate 0.44% Weighted-average maturity 4.3 years Weighted-average remaining maturity 3.9 years Net interest (expense) income $ (85) As of or for the Six Months Ended (Dollars in thousands) June 30, 2022 Notional Amounts $ 50,000 Rate Cap Premiums 619 Cap Rate 2.50% Weighted-average maturity 5.0 years Weighted-average remaining maturity 4.3 years Net interest (expense) income $ (62) |
LOAN COMMITMENTS AND RELATED _2
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS | |
Schedule of financial instruments whose contract amounts represent credit risk | June 30, December 31, (Dollars in thousands) 2022 2021 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 49,705 $ 61,345 Standby letters of credit $ 3,958 $ 4,674 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE | |
Schedule of fair values of assets and liabilities measured on recurring and non-recurring basis | June 30, 2022 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 $ 5,900 $ — $ — $ 5,900 States and political subdivisions 6,839 — 6,839 — Mortgage-backed GSE residential 8,655 — 8,655 — Total securities available for sale 21,394 — 15,494 5,900 Equity securities 10,778 10,778 — — SBA servicing asset 8,062 — — 8,062 Interest only strip 154 — — 154 Interest rate derivatives 12,192 — 12,192 — $ 52,580 $ 10,778 $ 27,686 $ 14,116 Nonrecurring fair value measurements: Impaired loans $ 1,068 $ — $ — $ 1,068 $ 225 Liabilities Recurring fair value measurements: Interest rate swaps $ 152 $ — $ 152 $ — December 31, 2021 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 $ 6,949 $ — $ — $ 6,949 States and political subdivisions 8,361 — 8,361 — Mortgage-backed GSE residential 10,423 — 10,423 — Total securities available for sale 25,733 — 18,784 6,949 Equity securities 11,386 11,386 — — SBA servicing asset 10,091 — — 10,091 Interest only strip 143 — — 143 Interest rate derivatives 367 — 367 — $ 47,720 $ 11,386 $ 19,151 $ 17,183 Nonrecurring fair value measurements: Impaired loans $ 947 $ — $ — $ 947 $ (7) Liabilities Recurring fair value measurements: Interest rate swaps $ 46 $ — $ 46 $ — |
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, 2022 $ 6,729 $ 10,395 $ 159 $ — Total losses included in income — (2,333) (5) — Settlements — — — — Prepayments/paydowns (829) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2022 $ 5,900 $ 8,062 $ 154 $ — Fair value, April 1, 2021 $ 9,232 $ 10,374 $ 161 $ — Total gains included in income — 609 11 — Settlements — — — — Prepayments/paydowns (2,023) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2021 $ 7,209 $ 10,983 $ 172 $ — Six Months Ended: Fair value, January 1, 2022 $ 6,949 $ 10,091 $ 143 $ — Total (losses)/gains included in income — (2,029) 11 — Settlements — — — — Prepayments/paydowns (1,049) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2022 $ 5,900 $ 8,062 $ 154 $ — Fair value, January 1, 2021 $ 9,306 $ 9,488 $ 155 $ — Total gains included in income — 1,495 17 — Settlements — — — — Prepayments/paydowns (2,097) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2021 $ 7,209 $ 10,983 $ 172 $ — |
Schedule of quantitative information about recurring Level 3 fair value measures | Valuation Unobservable General Technique Input Range June 30, 2022: Recurring: 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 12.82%-17.44% Discount rate 10.50%-16.01% Nonrecurring: Impaired loans Appraised value less estimated selling costs Estimated selling costs 6% December 31, 2021: Recurring: 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 14.43%-17.12% Discount rate 7.57%-12.25% Nonrecurring: Impaired Loans Appraised value less estimated selling costs Estimated selling costs 6% |
Schedule of carrying amounts and estimated fair values of Company's financial instruments | Carrying Estimated Fair Value at June 30, 2022 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 223,096 $ — $ 223,096 $ — $ 223,096 Investment securities 32,172 10,778 15,494 5,900 32,172 FHLB stock 15,619 — — — N/A Loans, net 2,753,342 — — 2,749,212 2,749,212 Accrued interest receivable 10,990 — 99 10,891 10,990 SBA servicing assets 8,062 — — 8,062 8,062 Interest only strips 154 — — 154 154 Mortgage servicing assets 6,090 — — 7,751 7,751 Interest rate derivatives 12,192 — 12,192 — 12,192 Financial Liabilities: Deposits 2,397,008 — 2,393,652 — 2,393,652 Federal Home Loan Bank advances 375,000 — 372,600 — 372,600 Other borrowings 399 — 399 — 399 Accrued interest payable 703 — 703 — 703 Interest rate derivatives 152 — 152 — 152 Carrying Estimated Fair Value at December 31, 2021 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 441,341 $ — $ 441,341 $ — $ 441,341 Investment securities 37,119 11,386 18,784 6,949 37,119 FHLB stock 19,701 — — — N/A Loans, net 2,488,118 — — 2,561,269 2,561,269 Accrued interest receivable 11,052 — 100 10,952 11,052 SBA servicing asset 10,091 — — 10,091 10,091 Interest only strips 143 — — 143 143 Mortgage servicing assets 7,747 — — 7,937 7,937 Interest rate derivatives 367 — 367 — 367 Financial Liabilities: Deposits 2,263,020 — 2,263,246 — 2,263,246 Federal Home Loan Bank advances 500,000 — 501,450 — 501,450 Other borrowings 459 — 459 — 459 Accrued interest payable 204 — 204 — 204 Interest rate derivatives 46 — 46 — 46 |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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, 2022: Total Capital (to Risk Weighted Assets) Consolidated $ 324,972 17.60 % 193,838 10.5 % 184,607 10.0 % Bank 317,641 17.21 % 193,820 10.5 184,590 10.0 Tier I Capital (to Risk Weighted Assets) Consolidated 308,295 16.70 % 156,916 8.5 % 147,686 8.0 % Bank 300,964 16.30 % 156,902 8.5 147,672 8.0 Common Tier 1 (CET1) Consolidated 308,295 16.70 % 129,225 7.0 % 119,995 6.5 % Bank 300,964 16.30 % 129,213 7.0 119,984 6.5 Tier 1 Capital (to Average Assets) Consolidated 308,295 10.31 % 119,663 4.0 % 149,579 5.0 % Bank 300,964 10.06 % 119,631 4.0 149,538 5.0 As of December 31, 2021: Total Capital (to Risk Weighted Assets) Consolidated $ 297,108 17.77 % 175,564 10.5 % N/A N/A Bank 287,258 17.18 % 175,525 10.5 167,166 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 280,156 16.76 % 142,123 8.5 % N/A N/A Bank 270,306 16.17 % 142,091 8.5 133,733 8.0 % Common Tier 1 (CET1) Consolidated 280,156 16.76 % 117,043 7.0 % N/A N/A Bank 270,306 16.17 % 117,016 7.0 108,658 6.5 % Tier 1 Capital (to Average Assets) Consolidated 280,156 9.44 % 118,682 4.0 % N/A N/A Bank 270,306 9.11 % 118,667 4.0 148,333 5.0 % |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
STOCK BASED COMPENSATION | |
Summary of stock option activity | Weighted Average Shares Exercise Price Outstanding at January 1, 2022 240,000 $ 12.70 Granted — — Exercised — — Forfeited — — Outstanding at June 30, 2022 240,000 $ 12.70 |
Summary of restricted stock activity | Weighted- Average Grant- Nonvested Shares Shares Date Fair Value Nonvested at January 1, 2022 134,703 $ 13.86 Granted 143,793 20.31 Vested (101,097) 15.86 Forfeited — — Nonvested at June 30, 2022 177,399 $ 17.95 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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) 2022 2021 2022 2021 Basic earnings per share Net Income $ 16,100 $ 14,393 $ 35,529 $ 27,374 Weighted average common shares outstanding 25,459,003 25,642,350 25,462,102 25,658,373 Basic earnings per common share $ 0.63 $ 0.56 $ 1.40 $ 1.07 Diluted earnings per share Net Income $ 16,100 $ 14,393 $ 35,529 $ 27,374 Weighted average common shares outstanding for basic earnings per common share 25,459,003 25,642,350 25,462,102 25,658,373 Add: Dilutive effects of restricted stock and options 270,153 190,978 284,589 182,157 Average shares and dilutive potential common shares 25,729,156 25,833,328 25,746,691 25,840,530 Diluted earnings per common share $ 0.63 $ 0.56 $ 1.38 $ 1.06 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other Information (Details) | 6 Months Ended |
Jun. 30, 2022 segment | |
Number of operating segments | 1 |
Metro City Bank - Subsidiaries Member | |
Percentage of holding in subsidiary | 100% |
INVESTMENT SECURITIES - Amortiz
INVESTMENT SECURITIES - Amortized cost, gross unrealized gains and losses (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Debt Securities Available-for-sale | ||
Gross Amortized Cost | $ 24,155 | $ 25,680 |
Gross Unrealized Gains | 214 | |
Gross Unrealized Losses | (2,761) | (161) |
Total securities available for sale | 21,394 | 25,733 |
Obligations of U.S. Government entities and agencies. | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 5,900 | 6,949 |
Total securities available for sale | 5,900 | 6,949 |
States and political subdivisions | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 8,146 | 8,169 |
Gross Unrealized Gains | 203 | |
Gross Unrealized Losses | (1,307) | (11) |
Total securities available for sale | 6,839 | 8,361 |
Mortgage-backed GSE residential | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 10,109 | 10,562 |
Gross Unrealized Gains | 11 | |
Gross Unrealized Losses | (1,454) | (150) |
Total securities available for sale | $ 8,655 | $ 10,423 |
INVESTMENT SECURITIES - Expecte
INVESTMENT SECURITIES - Expected maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Amortized Cost | ||
Due in one year or less | $ 5,321 | |
Due after one year but less than five years | 1,822 | |
Due in more than ten years | 6,903 | |
Mortgage-backed GSE residential | 10,109 | |
Total | 24,155 | |
Estimated Fair Value | ||
Due in one year or less | 5,321 | |
Due after one year but less than five years | 1,798 | |
Due in more than ten years | 5,620 | |
Mortgage-backed GSE residential | 8,655 | |
Total | $ 21,394 | $ 25,733 |
INVESTMENT SECURITIES - Aggrega
INVESTMENT SECURITIES - Aggregated by investment category and lengths of time (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 USD ($) security | Jun. 30, 2021 USD ($) security | Jun. 30, 2022 USD ($) security | Jun. 30, 2021 USD ($) security | Dec. 31, 2021 USD ($) security | |
Debt Securities Available-for-sale, Unrealized Loss Position | |||||
Twelve Months or Less - Gross Unrealized Losses | $ 2,761,000 | $ 2,761,000 | $ 161,000 | ||
Twelve Months or Less - Estimated Fair Value | $ 15,494,000 | $ 15,494,000 | $ 11,731,000 | ||
Number of securities pledged | security | 0 | 0 | 0 | ||
Number of securities sold | security | 0 | 0 | 0 | 0 | |
Number of securities with unrealized losses | security | 20 | 20 | |||
Rate of depreciation | 15.13% | ||||
Equity securities | $ 10,778,000 | $ 10,778,000 | $ 11,386,000 | ||
Equity securities unrealized loss | 245,000 | $ 0 | 608,000 | $ 0 | |
States and political subdivisions | |||||
Debt Securities Available-for-sale, Unrealized Loss Position | |||||
Twelve Months or Less - Gross Unrealized Losses | 1,307,000 | 1,307,000 | 11,000 | ||
Twelve Months or Less - Estimated Fair Value | $ 6,839,000 | $ 6,839,000 | 2,201,000 | ||
Number of securities with unrealized losses | security | 11 | 11 | |||
Mortgage-backed GSE residential | |||||
Debt Securities Available-for-sale, Unrealized Loss Position | |||||
Twelve Months or Less - Gross Unrealized Losses | $ 1,454,000 | $ 1,454,000 | 150,000 | ||
Twelve Months or Less - Estimated Fair Value | $ 8,655,000 | $ 8,655,000 | $ 9,530,000 | ||
Number of securities with unrealized losses | security | 9 | 9 |
LOANS AND ALLOWANCE FOR LOAN _3
LOANS AND ALLOWANCE FOR LOAN LOSSES - Major classifications of loans (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Loans and allowance for loan losses | ||||||
Total loans receivable | $ 2,777,236 | $ 2,511,508 | ||||
Unearned income | (7,216) | (6,438) | ||||
Allowance for loan losses | (16,678) | $ (16,674) | (16,952) | $ (13,860) | $ (11,735) | $ (10,135) |
Loans, net | 2,753,342 | 2,488,118 | ||||
Construction and development | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 45,042 | 38,857 | ||||
Allowance for loan losses | (140) | (93) | (100) | (211) | (190) | (178) |
Commercial real estate | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 581,234 | 520,488 | ||||
Allowance for loan losses | (3,539) | (4,294) | (4,146) | (7,162) | (5,738) | (5,161) |
Commercial and industrial | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 57,843 | 73,072 | ||||
Allowance for loan losses | (4,219) | (4,441) | (4,989) | (599) | (608) | (438) |
PPP loan, net | 8,900 | 31,000 | ||||
Residential real estate | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 2,092,952 | 1,879,012 | ||||
Allowance for loan losses | (8,678) | (7,624) | (7,717) | $ (5,888) | $ (5,142) | (4,350) |
Consumer and Other | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 165 | $ 79 | ||||
Allowance for loan losses | $ (6) | $ (5) | $ (8) |
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, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Allowance for loan losses: | ||||
Beginning balance | $ 16,674 | $ 11,735 | $ 16,952 | $ 10,135 |
Charge-offs | (86) | (390) | (90) | |
Recoveries | 4 | 6 | 12 | 11 |
Provision | 2,205 | 104 | 3,804 | |
Ending balance | 16,678 | 13,860 | 16,678 | 13,860 |
Construction and development | ||||
Allowance for loan losses: | ||||
Beginning balance | 93 | 190 | 100 | 178 |
Provision | 47 | 21 | 40 | 33 |
Ending balance | 140 | 211 | 140 | 211 |
Commercial real estate | ||||
Allowance for loan losses: | ||||
Beginning balance | 4,294 | 5,738 | 4,146 | 5,161 |
Charge-offs | (26) | (26) | ||
Recoveries | 2 | 3 | 4 | 6 |
Provision | (757) | 1,447 | (611) | 2,021 |
Ending balance | 3,539 | 7,162 | 3,539 | 7,162 |
Commercial and industrial | ||||
Allowance for loan losses: | ||||
Beginning balance | 4,441 | 608 | 4,989 | 438 |
Charge-offs | (60) | (390) | (64) | |
Recoveries | 2 | 3 | ||
Provision | (224) | 51 | (383) | 225 |
Ending balance | 4,219 | 599 | 4,219 | 599 |
Residential real estate | ||||
Allowance for loan losses: | ||||
Beginning balance | 7,624 | 5,142 | 7,717 | 4,350 |
Provision | 1,054 | 746 | 961 | 1,538 |
Ending balance | 8,678 | 5,888 | 8,678 | 5,888 |
Consumer and Other | ||||
Allowance for loan losses: | ||||
Beginning balance | 5 | 8 | ||
Recoveries | 3 | 5 | 5 | |
Provision | 1 | (3) | 1 | $ (13) |
Ending balance | 6 | 6 | ||
Unallocated | ||||
Allowance for loan losses: | ||||
Beginning balance | 217 | 57 | ||
Provision | (121) | $ (57) | 96 | |
Ending balance | $ 96 | $ 96 |
LOANS AND ALLOWANCE FOR LOAN _5
LOANS AND ALLOWANCE FOR LOAN LOSSES - Allowance for loan losses disaggregated (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Allowance for loan losses: | ||||||
Individually evaluated for impairment | $ 499 | $ 676 | ||||
Collectively evaluated for impairment | 16,179 | 16,276 | ||||
Total ending allowance balance | 16,678 | $ 16,674 | 16,952 | $ 13,860 | $ 11,735 | $ 10,135 |
Loans: | ||||||
Individually evaluated for impairment | 30,440 | 11,849 | ||||
Collectively evaluated for impairment | 2,739,580 | 2,493,221 | ||||
Total ending loans balance | 2,770,020 | 2,505,070 | ||||
Construction and development | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 140 | 100 | ||||
Total ending allowance balance | 140 | 93 | 100 | 211 | 190 | 178 |
Loans: | ||||||
Collectively evaluated for impairment | 44,899 | 38,567 | ||||
Total ending loans balance | 44,899 | 38,567 | ||||
Commercial real estate | ||||||
Allowance for loan losses: | ||||||
Individually evaluated for impairment | 63 | 242 | ||||
Collectively evaluated for impairment | 3,476 | 3,904 | ||||
Total ending allowance balance | 3,539 | 4,294 | 4,146 | 7,162 | 5,738 | 5,161 |
Loans: | ||||||
Individually evaluated for impairment | 23,423 | 6,395 | ||||
Collectively evaluated for impairment | 555,707 | 512,253 | ||||
Total ending loans balance | 579,130 | 518,648 | ||||
Commercial and industrial | ||||||
Allowance for loan losses: | ||||||
Individually evaluated for impairment | 436 | 434 | ||||
Collectively evaluated for impairment | 3,783 | 4,555 | ||||
Total ending allowance balance | 4,219 | 4,441 | 4,989 | 599 | 608 | 438 |
Loans: | ||||||
Individually evaluated for impairment | 1,154 | 565 | ||||
Collectively evaluated for impairment | 56,478 | 71,419 | ||||
Total ending loans balance | 57,632 | 71,984 | ||||
Residential real estate | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 8,678 | 7,717 | ||||
Total ending allowance balance | 8,678 | 7,624 | 7,717 | $ 5,888 | 5,142 | 4,350 |
Loans: | ||||||
Individually evaluated for impairment | 5,863 | 4,889 | ||||
Collectively evaluated for impairment | 2,082,331 | 1,870,903 | ||||
Total ending loans balance | 2,088,194 | 1,875,792 | ||||
Consumer and Other | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 6 | |||||
Total ending allowance balance | 6 | 5 | $ 8 | |||
Loans: | ||||||
Collectively evaluated for impairment | 165 | |||||
Total ending loans balance | 165 | 79 | ||||
Unallocated | ||||||
Allowance for loan losses: | ||||||
Collectively evaluated for impairment | 96 | |||||
Total ending allowance balance | $ 96 | $ 217 | $ 57 | |||
Loans: | ||||||
Collectively evaluated for impairment | 79 | |||||
Total ending loans balance | $ 79 |
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, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Loans impaired | |||||
Unpaid Total Principal Balance | $ 30,440 | $ 30,440 | $ 11,849 | ||
Recorded Investment With No Allowance | 29,991 | 29,991 | 10,365 | ||
Recorded Investment With Allowance | 1,351 | 1,351 | 1,542 | ||
Total Recorded Investment | 31,342 | 31,342 | 11,907 | ||
Related Allowance | 499 | 499 | 676 | ||
Average Recorded Investment | 16,641 | $ 11,748 | 14,894 | $ 12,661 | |
Interest income recognized | 87 | 64 | 216 | 199 | |
Commercial real estate | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 23,423 | 23,423 | 6,395 | ||
Recorded Investment With No Allowance | 23,936 | 23,936 | 5,451 | ||
Recorded Investment With Allowance | 234 | 234 | 957 | ||
Total Recorded Investment | 24,170 | 24,170 | 6,408 | ||
Related Allowance | 63 | 63 | 242 | ||
Average Recorded Investment | 10,974 | 5,188 | 9,006 | 5,658 | |
Interest income recognized | 59 | 45 | 163 | 157 | |
Commercial and industrial | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 1,154 | 1,154 | 565 | ||
Recorded Investment With No Allowance | 192 | 192 | 25 | ||
Recorded Investment With Allowance | 1,117 | 1,117 | 585 | ||
Total Recorded Investment | 1,309 | 1,309 | 610 | ||
Related Allowance | 436 | 436 | 434 | ||
Average Recorded Investment | 416 | 257 | 479 | 283 | |
Interest income recognized | 5 | 3 | 6 | 6 | |
Residential real estate | |||||
Loans impaired | |||||
Unpaid Total Principal Balance | 5,863 | 5,863 | 4,889 | ||
Recorded Investment With No Allowance | 5,863 | 5,863 | 4,889 | ||
Total Recorded Investment | 5,863 | 5,863 | $ 4,889 | ||
Average Recorded Investment | 5,251 | 6,303 | 5,409 | 6,720 | |
Interest income recognized | $ 23 | $ 16 | $ 47 | $ 36 |
LOANS AND ALLOWANCE FOR LOAN _7
LOANS AND ALLOWANCE FOR LOAN LOSSES - Loan delinquencies (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Loans past due | ||
Non-accrual | $ 19,966 | $ 8,759 |
Total Financing Receivables | 2,770,020 | 2,505,070 |
Current | ||
Loans past due | ||
Loans | 2,746,928 | 2,483,142 |
Past Due | ||
Loans past due | ||
Loans | 3,126 | 13,169 |
30-89 Days | ||
Loans past due | ||
Loans | 3,126 | 12,827 |
Greater than 90 Days | ||
Loans past due | ||
Loans | 342 | |
Construction and development | ||
Loans past due | ||
Total Financing Receivables | 44,899 | 38,567 |
Construction and development | Current | ||
Loans past due | ||
Loans | 44,899 | 38,567 |
Commercial real estate | ||
Loans past due | ||
Non-accrual | 13,959 | 3,717 |
Total Financing Receivables | 579,130 | 518,648 |
Commercial real estate | Current | ||
Loans past due | ||
Loans | 565,171 | 514,179 |
Commercial real estate | Past Due | ||
Loans past due | ||
Loans | 752 | |
Commercial real estate | 30-89 Days | ||
Loans past due | ||
Loans | 752 | |
Commercial and industrial | ||
Loans past due | ||
Non-accrual | 144 | 152 |
Total Financing Receivables | 57,632 | 71,984 |
Commercial and industrial | Current | ||
Loans past due | ||
Loans | 57,486 | 70,702 |
Commercial and industrial | Past Due | ||
Loans past due | ||
Loans | 2 | 1,130 |
Commercial and industrial | 30-89 Days | ||
Loans past due | ||
Loans | 2 | 788 |
Commercial and industrial | Greater than 90 Days | ||
Loans past due | ||
Loans | 342 | |
Residential real estate | ||
Loans past due | ||
Non-accrual | 5,863 | 4,890 |
Total Financing Receivables | 2,088,194 | 1,875,792 |
Residential real estate | Current | ||
Loans past due | ||
Loans | 2,079,207 | 1,859,615 |
Residential real estate | Past Due | ||
Loans past due | ||
Loans | 3,124 | 11,287 |
Residential real estate | 30-89 Days | ||
Loans past due | ||
Loans | 3,124 | 11,287 |
Consumer and Other | ||
Loans past due | ||
Total Financing Receivables | 165 | 79 |
Consumer and Other | Current | ||
Loans past due | ||
Loans | $ 165 | $ 79 |
LOANS AND ALLOWANCE FOR LOAN _8
LOANS AND ALLOWANCE FOR LOAN LOSSES - Risk ratings (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | $ 2,770,020 | $ 2,505,070 |
Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 2,726,676 | 2,472,909 |
Special Mention | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 12,740 | 20,937 |
Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 30,604 | 11,224 |
Construction and development | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 44,899 | 38,567 |
Construction and development | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 44,899 | 38,567 |
Commercial real estate | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 579,130 | 518,648 |
Commercial real estate | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 550,576 | 499,135 |
Commercial real estate | Special Mention | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 5,417 | 13,884 |
Commercial real estate | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 23,137 | 5,629 |
Commercial and industrial | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 57,632 | 71,984 |
Commercial and industrial | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 50,017 | 64,226 |
Commercial and industrial | Special Mention | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 7,323 | 7,053 |
Commercial and industrial | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 292 | 705 |
Residential real estate | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 2,088,194 | 1,875,792 |
Residential real estate | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 2,081,019 | 1,870,902 |
Residential real estate | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 7,175 | 4,890 |
Consumer and Other | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 165 | 79 |
Consumer and Other | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | $ 165 | $ 79 |
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, 2022 USD ($) item | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) item | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) item | |
Loans past due | |||||
Accruing | $ 10,474,000 | $ 10,474,000 | $ 2,698,000 | ||
Nonaccrual | 233,000 | 233,000 | 479,000 | ||
Total | 10,707,000 | 10,707,000 | 3,177,000 | ||
Specific reserve | 498,000 | 498,000 | $ 242,000 | ||
Charge offs | 0 | $ 0 | 0 | $ 0 | |
Number of loans modified | item | 0 | ||||
Total recorded investment | 7,600,000 | ||||
Commercial real estate | |||||
Loans past due | |||||
Accruing | 9,464,000 | 9,464,000 | $ 2,678,000 | ||
Nonaccrual | 233,000 | 233,000 | 479,000 | ||
Total | 9,697,000 | 9,697,000 | 3,157,000 | ||
Amount of loan defaulted | $ 0 | $ 0 | $ 0 | $ 0 | |
Number of loans modified | item | 2 | 2 | |||
Commercial and industrial | |||||
Loans past due | |||||
Accruing | $ 1,010,000 | $ 1,010,000 | 20,000 | ||
Total | $ 1,010,000 | $ 1,010,000 | $ 20,000 | ||
Number of loans modified | item | 3 | 3 |
LOANS AND ALLOWANCE FOR LOAN_10
LOANS AND ALLOWANCE FOR LOAN LOSSES - Types of concessions for TDR loans (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Loans troubled debt restructuring | ||
Total TDR loans | $ 10,707 | $ 3,177 |
Deferral of payments | ||
Loans troubled debt restructuring | ||
Total TDR loans | 233 | 488 |
Extension of maturity date | ||
Loans troubled debt restructuring | ||
Total TDR loans | $ 10,474 | $ 2,689 |
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, 2022 | Dec. 31, 2021 | |
Loans troubled debt restructuring | ||
Number of Loans | 11 | 5 |
Recorded Investment | $ 11,608 | $ 3,190 |
CARES loan deferral period | 3 months | |
CARES loan deferral unguaranteed book value for three months | $ 1,600 | |
Commercial real estate | ||
Loans troubled debt restructuring | ||
Number of Loans | 7 | 4 |
Recorded Investment | $ 10,444 | $ 3,170 |
Residential real estate | ||
Loans troubled debt restructuring | ||
Recorded Investment | $ 0 | |
Commercial and industrial | ||
Loans troubled debt restructuring | ||
Number of Loans | 4 | 1 |
Recorded Investment | $ 1,164 | $ 20 |
SBA Loans | ||
Loans troubled debt restructuring | ||
Recorded Investment | 6,500 | |
Non SBA | ||
Loans troubled debt restructuring | ||
Recorded Investment | $ 0 | $ 8,100 |
SBA AND USDA LOAN SERVICING - O
SBA AND USDA LOAN SERVICING - Other information (Details) | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Unpaid principal balances of serviced loans | $ 504,900,000 | $ 543,000,000 |
Aggregate fair market value of the interest only strips included in SBA servicing assets | $ 154,000 | $ 143,000 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 12.08 | 13.50 |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 19.66 | 21.79 |
Minimum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 10.50 | 7.57 |
Minimum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 12.82 | 14.43 |
Maximum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 16.01 | 12.25 |
Maximum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 17.44 | 17.12 |
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, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Servicing Asset at Fair Value Roll Forward | ||||
Beginning of period | $ 7,900 | |||
End of period, fair value | $ 7,800 | 7,800 | ||
SBA And USDA Loan | ||||
Servicing Asset at Fair Value Roll Forward | ||||
Beginning of period | 10,395 | $ 10,374 | 10,091 | $ 9,488 |
Change in fair value | (2,333) | 609 | (2,029) | 1,495 |
End of period, fair value | $ 8,062 | $ 10,983 | $ 8,062 | $ 10,983 |
RESIDENTIAL MORTGAGE LOAN SER_3
RESIDENTIAL MORTGAGE LOAN SERVICING - Activity for mortgage loan servicing rights (Details) - Residential Mortgage - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Servicing Asset at Amortized Cost Roll Forward | ||||
Beginning of period | $ 6,925 | $ 11,722 | $ 7,747 | $ 12,991 |
Additions | 347 | 760 | ||
Amortization expense | (1,270) | (1,590) | (2,580) | (3,059) |
Valuation allowance | 88 | (603) | 163 | (403) |
End of period, carrying value | 6,090 | 9,529 | 6,090 | 9,529 |
Servicing Assets Valuation Allowance Roll Forward | ||||
Beginning balance, valuation allowance | 88 | 441 | 163 | 641 |
Additions expensed | 603 | 603 | ||
Reductions credited to operations | $ (88) | $ (163) | (200) | |
Ending balance, valuation allowance | $ 1,044 | $ 1,044 |
RESIDENTIAL MORTGAGE LOAN SER_4
RESIDENTIAL MORTGAGE LOAN SERVICING - Other information (Details) $ in Thousands | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
SBA AND USDA LOAN SERVICING | ||
Fair value of servicing rights | $ 7,800 | $ 7,900 |
Loans, less allowance for loan losses | $ 2,753,342 | $ 2,488,118 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 12.08 | 13.50 |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 19.66 | 21.79 |
Default rate | Weighted average | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 1.27 | 1.22 |
Residential Mortgage | ||
SBA AND USDA LOAN SERVICING | ||
Loans, less allowance for loan losses | $ 589,500 | $ 608,200 |
FEDERAL HOME LOAN BANK ADVANC_3
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Tabular (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 375,000 | $ 500,000 |
Convertible advance maturing August 6, 2029; fixed rate of 0.85% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 20,000 | |
Interest Rate | 0.85% | |
Convertible advances maturing November 7, 2029, fixed rate of 0.68% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 30,000 | |
Interest Rate | 0.68% | |
Convertible advances maturing December 5, 2029, with fixed rate of 0.75% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 10,000 | |
Interest Rate | 0.75% | |
Convertible advances 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% | |
Convertible advances maturing August 18, 2031, with fixed rate of 0.025% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 50,000 | |
Interest Rate | 0.025% | |
Convertible advances maturing October 7, 2031, with fixed rate of 0.01% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 50,000 | |
Interest Rate | 0.01% | |
Convertible advances maturing October 8, 2031, with fixed rate of 0.01% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 50,000 | |
Interest Rate | 0.01% | |
Convertible advances maturing October 20, 2031, with fixed rate of 0.01% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 150,000 | |
Interest Rate | 0.01% | |
Convertible advances maturing December 17, 2031, with fixed rate of 0.01% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 50,000 | |
Interest Rate | 0.01% | |
Convertible advances maturing December 23, 2031, with fixed rate of 0.01% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 50,000 | |
Interest Rate | 0.01% | |
Convertible advance maturing December 30, 2031, with fixed rate of 0.01% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 20,000 | |
Interest Rate | 0.01% | |
Convertible advances maturing May 6, 2032, with fixed rate of 0.83% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 100,000 | |
Interest Rate | 0.83% | |
Convertible advances maturing June 16, 2032, with fixed rate of 0.68% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 50,000 | |
Interest Rate | 1.68% | |
Convertible advances maturing June 16, 2032, with fixed rate of 1.91% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 50,000 | |
Interest Rate | 1.91% | |
Convertible advances maturing June 23, 2032, with fixed rate of 1.95% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 100,000 | |
Interest Rate | 1.95% | |
Convertible advances maturing May 12, 2037, with fixed rate of 1.14% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 75,000 | |
Interest Rate | 1.14% |
FEDERAL HOME LOAN BANK ADVANC_4
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Other (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advance amount that can be called every three months | $ 100,000,000 | |
FHLB advance amount that can be called every six months | 50,000,000 | |
FHLB advance amount that can be called every nine months | 125,000,000 | |
FHLB advance amount that can be called every twelve months | 100,000,000 | |
Maximum borrowing capacity | 943,800,000 | |
FHLB advances | 375,000,000 | $ 500,000,000 |
Secured borrowings | 399,000 | $ 459,000 |
Unsecured federal funds lines | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
Unsecured federal funds lines available | 47,500,000 | |
FHLB advances | 0 | |
Federal Reserve Discount Window funds | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
Maximum borrowing capacity | 10,000,000 | |
FHLB advances | 0 | |
Collateralized pledged | $ 29,500,000 |
OPERATING LEASES - Other inform
OPERATING LEASES - Other information (Details) | 6 Months Ended |
Jun. 30, 2022 item lease | |
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, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING LEASES | ||||
Operating lease cost | $ 511 | $ 553 | $ 1,016 | $ 1,107 |
Variable lease cost | 43 | 40 | 87 | 86 |
Total net lease cost | $ 554 | $ 593 | $ 1,103 | $ 1,193 |
OPERATING LEASES - Maturities (
OPERATING LEASES - Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Lessee Operating Lease Maturity | ||
June 30, 2023 | $ 2,003 | |
June 30, 2024 | 1,909 | |
June 30, 2025 | 1,770 | |
June 30, 2026 | 1,521 | |
June 30, 2027 | 1,249 | |
After June 30, 2027 | 1,938 | |
Total lease payments | 10,390 | |
Less: interest discount | (1,359) | |
Present value of lease liabilities | $ 9,031 | $ 9,861 |
OPERATING LEASES - Supplemental
OPERATING LEASES - Supplemental Lease Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING LEASES | ||
Weighted-average remaining lease term | 5 years 3 months 18 days | |
Weighted-average discount rate (as a percent) | 3.06% | |
Operating cash flows from operating leases (cash payments) | $ 920 | $ 987 |
Operating cash flows from operating leases (lease liability reduction) | $ 790 | 822 |
Operating lease right-of-use assets obtained in exchange for leases entered into during the period | $ 560 |
INTEREST RATE DERIVATIVES - Oth
INTEREST RATE DERIVATIVES - Other (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Oct. 31, 2021 USD ($) | Jun. 30, 2022 USD ($) item | Jun. 30, 2022 USD ($) item | Jun. 30, 2022 USD ($) item | Dec. 31, 2021 USD ($) | |
INTEREST RATE SWAPS | |||||
Unrealized loss from net changes in fair vale of cash flow hedges | $ 4,423,000 | $ 11,781,000 | |||
Cash deposits pledged as collateral | $ 0 | $ 0 | $ 0 | $ 12,000,000 | |
Interest Rate Swaps. | Cash flow hedges | |||||
INTEREST RATE SWAPS | |||||
Number of interest rate derivatives | item | 13 | 13 | 13 | ||
Notional Amounts | $ 725,000,000 | $ 725,000,000 | $ 725,000,000 | ||
Amount of gain (loss) recognized in net income for hedges | 0 | ||||
Unrealized loss from net changes in fair vale of cash flow hedges | 152,000 | 46,000 | |||
Interest Rate Swaps. | Cash flow hedges | Other Assets. | |||||
INTEREST RATE SWAPS | |||||
Unrealized loss from net changes in fair vale of cash flow hedges | 10,900,000 | ||||
Interest Rate Swaps. | Cash flow hedges | Other Liabilities. | |||||
INTEREST RATE SWAPS | |||||
Unrealized loss from net changes in fair vale of cash flow hedges | (46,000) | ||||
Interest Rate Swap One | Cash flow hedges | |||||
INTEREST RATE SWAPS | |||||
Notional Amounts | $ 725,000,000 | $ 725,000,000 | $ 725,000,000 | ||
Derivative forward term | 1 year | ||||
Derivative swap term | 3 years | ||||
Derivative total term | 4 years | ||||
Interest Rate Swap Two | Cash flow hedges | |||||
INTEREST RATE SWAPS | |||||
Number of interest rate derivatives | item | 2 | 2 | 2 | ||
Derivative forward term | 1 year | ||||
Derivative swap term | 2 years | ||||
Derivative total term | 3 years | ||||
Interest Rate Swap Four | Cash flow hedges | |||||
INTEREST RATE SWAPS | |||||
Number of interest rate derivatives | item | 4 | 4 | 4 | ||
Derivative forward term | 2 years | ||||
Derivative swap term | 2 years | ||||
Derivative total term | 4 years | ||||
Interest Rate Swap Six | Cash flow hedges | |||||
INTEREST RATE SWAPS | |||||
Number of interest rate derivatives | item | 6 | 6 | 6 | ||
Derivative forward term | 2 years | ||||
Derivative swap term | 3 years | ||||
Derivative total term | 5 years | ||||
Interest Rate Cap | Cash flow hedges | |||||
INTEREST RATE SWAPS | |||||
Notional Amounts | $ 50,000,000 | $ 50,000,000 | $ 50,000,000 | $ 50,000,000 | |
Derivative forward term | 2 years | ||||
Derivative swap term | 3 years | ||||
Derivative total term | 5 years | ||||
Cap rate (as a percent) | 2.50% | 2.50% | 2.50% | 2.50% | |
Unrealized loss from net changes in fair vale of cash flow hedges | $ 1,300,000 | $ 321,000 |
INTEREST RATE DERIVATIVES - Sum
INTEREST RATE DERIVATIVES - Summary information for the interest rate swaps (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Oct. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
INTEREST RATE SWAPS | |||||
Net interest (expense) income | $ 30,220 | $ 24,825 | $ 60,873 | $ 46,359 | |
Interest Rate Swaps. | Cash flow hedges | |||||
INTEREST RATE SWAPS | |||||
Notional Amounts | $ 725,000 | 725,000 | |||
Net interest (expense) income | $ (85) | ||||
Interest Rate Swaps. | Cash flow hedges | Weighted average | |||||
INTEREST RATE SWAPS | |||||
Weighted-average pay rate (as a percent) | 2.06% | 2.06% | |||
Weighted-average receive rate (as a percent) | 0.44% | 0.44% | |||
Weighted-average maturity | 4 years 3 months 18 days | ||||
Weighted-average remaining maturity | 3 years 10 months 24 days | ||||
Interest Rate Cap | Cash flow hedges | |||||
INTEREST RATE SWAPS | |||||
Notional Amounts | $ 50,000 | $ 50,000 | $ 50,000 | ||
Rate Cap Premiums | $ 619 | ||||
Cap rate (as a percent) | 2.50% | 2.50% | 2.50% | ||
Weighted-average maturity | 5 years | ||||
Net interest (expense) income | $ (62) | ||||
Interest Rate Cap | Cash flow hedges | Weighted average | |||||
INTEREST RATE SWAPS | |||||
Weighted-average maturity | 5 years | ||||
Weighted-average remaining maturity | 4 years 3 months 18 days |
LOAN COMMITMENTS AND RELATED _3
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Commitments to extend credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 49,705 | $ 61,345 |
Standby letters of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | 3,958 | $ 4,674 |
Unused lines of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 49,700 |
FAIR VALUE - Assets and liabili
FAIR VALUE - Assets and liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | $ 21,394 | $ 25,733 |
Equity securities | 10,778 | 11,386 |
SBA servicing assets | 7,800 | 7,900 |
States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 6,839 | 8,361 |
Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 8,655 | 10,423 |
Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 21,394 | 25,733 |
Equity securities | 10,778 | 11,386 |
SBA servicing assets | 8,062 | 10,091 |
Interest only strip | 154 | 143 |
Interest rate derivatives | 12,192 | 367 |
Assets | 52,580 | 47,720 |
Liabilities | 152 | 46 |
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 | 5,900 | 6,949 |
Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 6,839 | 8,361 |
Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 8,655 | 10,423 |
Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Impaired loans | 1,068 | 947 |
Gains (Losses) for Impaired loans | 225 | (7) |
Level 1 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Equity securities | 10,778 | 11,386 |
Assets | 10,778 | 11,386 |
Level 2 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 15,494 | 18,784 |
Interest rate derivatives | 12,192 | 367 |
Assets | 27,686 | 19,151 |
Liabilities | 152 | 46 |
Level 2 | Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 6,839 | 8,361 |
Level 2 | Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 8,655 | 10,423 |
Level 3 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 5,900 | 6,949 |
SBA servicing assets | 8,062 | 10,091 |
Interest only strip | 154 | 143 |
Assets | 14,116 | 17,183 |
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 | 5,900 | 6,949 |
Level 3 | Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Impaired loans | $ 1,068 | $ 947 |
FAIR VALUE - Level 3 reconcilia
FAIR VALUE - Level 3 reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
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 | 6,729 | 9,232 | 6,949 | 9,306 |
Prepayments/paydowns | (829) | (2,023) | (1,049) | (2,097) |
Fair value | 5,900 | 7,209 | 5,900 | 7,209 |
SBA servicing assets | ||||
Fair value assets measured on recurring basis unobservable input reconciliation | ||||
Fair value | 10,395 | 10,374 | 10,091 | 9,488 |
Total gains (losses) included in income | (2,333) | 609 | (2,029) | 1,495 |
Fair value | 8,062 | 10,983 | 8,062 | 10,983 |
Interest only strip | ||||
Fair value assets measured on recurring basis unobservable input reconciliation | ||||
Fair value | 159 | 161 | 143 | 155 |
Total gains (losses) included in income | (5) | 11 | 11 | 17 |
Fair value | $ 154 | $ 172 | $ 154 | $ 172 |
FAIR VALUE - Inputs and Valuati
FAIR VALUE - Inputs and Valuation technique (Details) | Jun. 30, 2022 | Dec. 31, 2021 |
Obligations of U.S. Government entities and agencies | ||
Fair value measurement inputs and valuation techniques | ||
Valuation technique of available for sale securities | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Valuation technique of servicing asset | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Impaired Loans | ||
Fair value measurement inputs and valuation techniques | ||
Valuation technique of available for sale securities | us-gaap:ValuationTechniqueConsensusPricingModelMember | us-gaap:ValuationTechniqueConsensusPricingModelMember |
Discount Rate | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 12.08 | 13.50 |
Prepayment speed | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 19.66 | 21.79 |
Recurring | 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 |
Recurring | Discount Rate | Minimum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 10.50 | 7.57 |
Recurring | 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 |
Recurring | Discount Rate | Maximum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 16.01 | 12.25 |
Recurring | Prepayment speed | Minimum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 12.82 | 14.43 |
Recurring | Prepayment speed | Maximum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 17.44 | 17.12 |
Non-recurring fair value measurements | Estimated selling costs | Impaired Loans | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 6 | 6 |
FAIR VALUE - Carrying amounts a
FAIR VALUE - Carrying amounts and Estimated fair values (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Financial Assets: | ||
SBA servicing assets | $ 7,800 | $ 7,900 |
Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,062 | 10,091 |
Interest only strips | 154 | 143 |
Interest rate derivatives | 12,192 | 367 |
Recurring | Carrying Amount | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 223,096 | 441,341 |
Investment securities | 32,172 | 37,119 |
FHLB stock | 15,619 | 19,701 |
Loans, net | 2,753,342 | 2,488,118 |
Accrued interest receivable | 10,990 | 11,052 |
SBA servicing assets | 8,062 | 10,091 |
Mortgage servicing assets | 6,090 | 7,747 |
Interest only strips | 154 | 143 |
Interest rate derivatives | 12,192 | 367 |
Financial Liabilities: | ||
Deposits | 2,397,008 | 2,263,020 |
Federal Home Loan Bank advances | 375,000 | 500,000 |
Other borrowings | 399 | 459 |
Accrued interest payable | 703 | 204 |
Interest rate swaps | 152 | 46 |
Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 223,096 | 441,341 |
Investment securities | 32,172 | 37,119 |
Loans, net | 2,749,212 | 2,561,269 |
Accrued interest receivable | 10,990 | 11,052 |
SBA servicing assets | 8,062 | 10,091 |
Mortgage servicing assets | 7,751 | 7,937 |
Interest only strips | 154 | 143 |
Interest rate derivatives | 12,192 | 367 |
Financial Liabilities: | ||
Deposits | 2,393,652 | 2,263,246 |
Federal Home Loan Bank advances | 372,600 | 501,450 |
Other borrowings | 399 | 459 |
Accrued interest payable | 703 | 204 |
Interest rate swaps | 152 | 46 |
Level 1 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Investment securities | 10,778 | 11,386 |
Level 2 | Recurring | ||
Financial Assets: | ||
Interest rate derivatives | 12,192 | 367 |
Level 2 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 223,096 | 441,341 |
Investment securities | 15,494 | 18,784 |
Accrued interest receivable | 99 | 100 |
Interest rate derivatives | 12,192 | 367 |
Financial Liabilities: | ||
Deposits | 2,393,652 | 2,263,246 |
Federal Home Loan Bank advances | 372,600 | 501,450 |
Other borrowings | 399 | 459 |
Accrued interest payable | 703 | 204 |
Interest rate swaps | 152 | 46 |
Level 3 | Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,062 | 10,091 |
Interest only strips | 154 | 143 |
Level 3 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Investment securities | 5,900 | 6,949 |
Loans, net | 2,749,212 | 2,561,269 |
Accrued interest receivable | 10,891 | 10,952 |
SBA servicing assets | 8,062 | 10,091 |
Mortgage servicing assets | 7,751 | 7,937 |
Interest only strips | $ 154 | $ 143 |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Regulatory matters | |||||
Capital conservation buffer percentage (as a percent) | 2.50% | ||||
Common dividends | $ 3,839 | $ 2,585 | $ 7,680 | $ 5,169 | |
Total Capital (to Risk Weighted Assets) | |||||
Actual amount | $ 324,972 | $ 324,972 | $ 297,108 | ||
Actual ratio (as a percent) | 0.1760 | 0.1760 | 0.1777 | ||
Capital Adequacy Purposes, amount | $ 193,838 | $ 193,838 | $ 175,564 | ||
Capital Adequacy Purposes, ratio (as a percent) | 0.105 | 0.105 | 0.105 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 184,607 | $ 184,607 | |||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 0.100 | 0.100 | |||
Tier I Capital (to Risk Weighted Assets) | |||||
Actual amount | $ 308,295 | $ 308,295 | $ 280,156 | ||
Actual ratio (as a percent) | 0.1670 | 0.1670 | 0.1676 | ||
Capital Adequacy Purposes, amount | $ 156,916 | $ 156,916 | $ 142,123 | ||
Capital Adequacy Purposes, ratio (as a percent) | 0.085 | 0.085 | 0.085 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 147,686 | $ 147,686 | |||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 0.080 | 0.080 | |||
Common Tier 1 (CET1) | |||||
Actual amount | $ 308,295 | $ 308,295 | $ 280,156 | ||
Actual ratio (as a percent) | 0.1670 | 0.1670 | 0.1676 | ||
Capital Adequacy Purposes, amount | $ 129,225 | $ 129,225 | $ 117,043 | ||
Capital Adequacy Purposes, ratio (as a percent) | 0.070 | 0.070 | 0.070 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 119,995 | $ 119,995 | |||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 0.065 | 0.065 | |||
Tier 1 Capital (to Average Assets) | |||||
Actual amount | $ 308,295 | $ 308,295 | $ 280,156 | ||
Actual ratio (as a percent) | 0.1031 | 0.1031 | 0.0944 | ||
Capital Adequacy Purposes, amount | $ 119,663 | $ 119,663 | $ 118,682 | ||
Capital Adequacy Purposes, ratio (as a percent) | 0.040 | 0.040 | 0.040 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 149,579 | $ 149,579 | |||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 0.050 | 0.050 | |||
Bank | |||||
Total Capital (to Risk Weighted Assets) | |||||
Actual amount | $ 317,641 | $ 317,641 | $ 287,258 | ||
Actual ratio (as a percent) | 0.1721 | 0.1721 | 0.1718 | ||
Capital Adequacy Purposes, amount | $ 193,820 | $ 193,820 | $ 175,525 | ||
Capital Adequacy Purposes, ratio (as a percent) | 0.105 | 0.105 | 0.105 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 184,590 | $ 184,590 | $ 167,166 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 0.100 | 0.100 | 0.100 | ||
Tier I Capital (to Risk Weighted Assets) | |||||
Actual amount | $ 300,964 | $ 300,964 | $ 270,306 | ||
Actual ratio (as a percent) | 0.1630 | 0.1630 | 0.1617 | ||
Capital Adequacy Purposes, amount | $ 156,902 | $ 156,902 | $ 142,091 | ||
Capital Adequacy Purposes, ratio (as a percent) | 0.085 | 0.085 | 0.085 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 147,672 | $ 147,672 | $ 133,733 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 0.080 | 0.080 | 0.080 | ||
Common Tier 1 (CET1) | |||||
Actual amount | $ 300,964 | $ 300,964 | $ 270,306 | ||
Actual ratio (as a percent) | 0.1630 | 0.1630 | 0.1617 | ||
Capital Adequacy Purposes, amount | $ 129,213 | $ 129,213 | $ 117,016 | ||
Capital Adequacy Purposes, ratio (as a percent) | 0.070 | 0.070 | 0.070 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 119,984 | $ 119,984 | $ 108,658 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 0.065 | 0.065 | 0.065 | ||
Tier 1 Capital (to Average Assets) | |||||
Actual amount | $ 300,964 | $ 300,964 | $ 270,306 | ||
Actual ratio (as a percent) | 0.1006 | 0.1006 | 0.0911 | ||
Capital Adequacy Purposes, amount | $ 119,631 | $ 119,631 | $ 118,667 | ||
Capital Adequacy Purposes, ratio (as a percent) | 0.040 | 0.040 | 0.040 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 149,538 | $ 149,538 | $ 148,333 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 0.050 | 0.050 | 0.050 |
STOCK BASED COMPENSATION - 2018
STOCK BASED COMPENSATION - 2018 Incentive Plan (Details) - shares | 6 Months Ended | |
Jun. 30, 2022 | Apr. 18, 2018 | |
Restricted Stock | ||
STOCK BASED COMPENSATION | ||
Restricted stock issued | 143,793 | |
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 | 585,444 |
STOCK BASED COMPENSATION - Stoc
STOCK BASED COMPENSATION - Stock Options (Details) - Stock Options | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
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, 2022 $ / shares shares | |
Nonvested Shares | |
Outstanding at beginning of the period (in shares) | shares | 134,703 |
Granted (in shares) | shares | 143,793 |
Vested (in shares) | shares | (101,097) |
Outstanding at ending of the period (in shares) | shares | 177,399 |
Weighted-Average Grant-Date Fair Value | |
Outstanding at beginning of the period (in dollars per share) | $ / shares | $ 13.86 |
Granted (in dollars per share) | $ / shares | 20.31 |
Vested (in dollars per share) | $ / shares | 15.86 |
Outstanding at ending of the period (in dollars per share) | $ / shares | $ 17.95 |
STOCK BASED COMPENSATION - Othe
STOCK BASED COMPENSATION - Other (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) item | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
STOCK BASED COMPENSATION | |||||
Compensation cost | $ 553,000 | $ 671,000 | |||
Stock Options | |||||
STOCK BASED COMPENSATION | |||||
Compensation cost | $ 0 | $ 119,000 | 0 | 238,000 | |
Total unrecognized compensation cost | 0 | 0 | $ 0 | ||
Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Compensation cost | 359,000 | $ 249,000 | 553,000 | $ 433,000 | |
Total unrecognized compensation cost | $ 3,700,000 | $ 3,700,000 | $ 1,400,000 | ||
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% | ||||
Number of anniversaries of the grant date | item | 3 | ||||
Directors | Vest on grant date | Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Vesting Percentage | 25% | ||||
Directors | Vest on each of the first three anniversaries of the grant date | Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Vesting Percentage | 25% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Basic earnings per share | ||||
Net income | $ 16,100 | $ 14,393 | $ 35,529 | $ 27,374 |
Weighted average common shares outstanding (in shares) | 25,459,003 | 25,642,350 | 25,462,102 | 25,658,373 |
Basic earnings per common share (in dollars per share) | $ 0.63 | $ 0.56 | $ 1.40 | $ 1.07 |
Diluted earnings per share | ||||
Net income | $ 16,100 | $ 14,393 | $ 35,529 | $ 27,374 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 25,459,003 | 25,642,350 | 25,462,102 | 25,658,373 |
Add: Dilutive effects of restricted stock and options (in shares) | 270,153 | 190,978 | 284,589 | 182,157 |
Average shares and dilutive potential common shares (in shares) | 25,729,156 | 25,833,328 | 25,746,691 | 25,840,530 |
Diluted earnings per common share (in dollars per share) | $ 0.63 | $ 0.56 | $ 1.38 | $ 1.06 |
Securities excluded from the computation of diluted earnings per common share | 0 | 0 | 0 | 0 |