Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 01, 2023 | |
Cover Abstract | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
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 $0.01 per share | |
Trading Symbol | MCBS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 25,279,846 | |
Entity Central Index Key | 0001747068 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Cash and due from banks | $ 250,503 | $ 150,964 |
Federal funds sold | 12,224 | 28,521 |
Cash and cash equivalents | 262,727 | 179,485 |
Equity securities | 10,358 | 10,300 |
Securities available for sale | 18,696 | 19,245 |
Loans, less allowance for credit losses of $18,091 and $13,888, respectively | 3,002,623 | 3,041,801 |
Accrued interest receivable | 13,877 | 13,171 |
Federal Home Loan Bank stock | 15,534 | 17,493 |
Premises and equipment, net | 16,374 | 14,257 |
Operating lease right-of-use asset | 7,761 | 8,463 |
Foreclosed real estate, net | 1,001 | 4,328 |
SBA servicing asset | 8,018 | 7,085 |
Mortgage servicing asset, net | 2,514 | 3,973 |
Bank owned life insurance | 70,010 | 69,130 |
Interest rate derivatives | 39,284 | 28,781 |
Other assets | 6,310 | 9,727 |
Total assets | 3,475,087 | 3,427,239 |
Deposits: | ||
Non-interest-bearing demand | 575,301 | 611,991 |
Interest-bearing | 2,123,181 | 2,054,847 |
Total deposits | 2,698,482 | 2,666,838 |
Federal Home Loan Bank advances | 325,000 | 375,000 |
Other borrowings | 387 | 392 |
Operating lease liability | 7,985 | 8,885 |
Accrued interest payable | 3,859 | 2,739 |
Other liabilities | 66,211 | 23,964 |
Total liabilities | 3,101,924 | 3,077,818 |
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, 25,279,846 and 25,169,709 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 253 | 252 |
Additional paid-in capital | 45,516 | 45,298 |
Retained earnings | 301,752 | 285,832 |
Accumulated other comprehensive income | 25,642 | 18,039 |
Total shareholders' equity | 373,163 | 349,421 |
Total liabilities and shareholders' equity | $ 3,475,087 | $ 3,427,239 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for credit losses | $ 18,091 | $ 13,888 |
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 | 25,279,846 | 25,169,709 |
Common stock, shares outstanding | 25,279,846 | 25,169,709 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Interest and dividend income: | ||||
Loans, including fees | $ 44,839 | $ 32,310 | $ 88,821 | $ 63,769 |
Other investment income | 2,582 | 711 | 4,521 | 1,203 |
Federal funds sold | 61 | 4 | 105 | 6 |
Total interest income | 47,482 | 33,025 | 93,447 | 64,978 |
Interest expense: | ||||
Deposits | 19,804 | 2,384 | 37,180 | 3,523 |
FHLB advances and other borrowings | 2,708 | 421 | 5,064 | 582 |
Total interest expense | 22,512 | 2,805 | 42,244 | 4,105 |
Net interest income | 24,970 | 30,220 | 51,203 | 60,873 |
Provision for credit losses | (416) | (416) | 104 | |
Net interest income after provision for credit losses | 25,386 | 30,220 | 51,619 | 60,769 |
Noninterest income: | ||||
Gain on sale of residential mortgage loans | 806 | 2,017 | ||
Mortgage servicing income, net | (51) | (5) | (147) | 96 |
Gain on sale of SBA loans | 1,054 | 3,023 | 1,568 | |
SBA servicing income, net | 1,388 | (1,077) | 3,202 | 567 |
Other income | 640 | 764 | 1,646 | 1,256 |
Total noninterest income | 4,761 | 4,653 | 10,777 | 12,309 |
Noninterest expense: | ||||
Salaries and employee benefits | 7,103 | 7,929 | 13,469 | 15,025 |
Occupancy and equipment | 1,039 | 1,200 | 2,253 | 2,427 |
Data processing | 353 | 261 | 628 | 538 |
Advertising | 165 | 126 | 311 | 276 |
Other expenses | 2,874 | 3,603 | 5,552 | 7,032 |
Total noninterest expense | 11,534 | 13,119 | 22,213 | 25,298 |
Income before provision for income taxes | 18,613 | 21,754 | 40,183 | 47,780 |
Provision for income taxes | 5,505 | 5,654 | 11,345 | 12,251 |
Net income available to common shareholders | $ 13,108 | $ 16,100 | $ 28,838 | $ 35,529 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.52 | $ 0.63 | $ 1.15 | $ 1.40 |
Diluted (in dollars per share) | $ 0.51 | $ 0.63 | $ 1.13 | $ 1.38 |
Service charges on deposit account | ||||
Noninterest income: | ||||
Revenue from contract with customer | $ 464 | $ 518 | $ 913 | $ 999 |
Other service charges, commissions and fees | ||||
Noninterest income: | ||||
Revenue from contract with customer | $ 1,266 | $ 3,647 | $ 2,140 | $ 5,806 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net Income (Loss) | $ 13,108 | $ 16,100 | $ 28,838 | $ 35,529 |
Other comprehensive gain: | ||||
Unrealized holding gains (losses) on securities available for sale | (150) | (1,330) | 217 | (2,814) |
Net changes in fair value of cash flow hedges | 16,478 | 4,423 | 11,345 | 11,781 |
Tax effect | (5,213) | (773) | (3,959) | (2,242) |
Other comprehensive gain | 11,115 | 2,320 | 7,603 | 6,725 |
Comprehensive income | $ 24,223 | $ 18,420 | $ 36,441 | $ 42,254 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Adjustment Retained Earnings | Adjustment | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
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 (Loss) | 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 | 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 (Loss) | 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 | 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 | ||||||
Beginning Balance (2016-13) at Dec. 31, 2022 | $ (3,801) | $ (3,801) | |||||
Beginning Balance at Dec. 31, 2022 | $ 252 | 45,298 | 285,832 | 18,039 | 349,421 | ||
Beginning Balance (in shares) at Dec. 31, 2022 | 25,169,709 | ||||||
Stockholders' Equity | |||||||
Net Income (Loss) | 28,838 | 28,838 | |||||
Stock based compensation expense | 772 | 772 | |||||
Vesting of restricted stock | $ 2 | (2) | |||||
Vesting of restricted stock (in shares) | 136,171 | ||||||
Repurchase of common stock | $ (1) | (552) | (553) | ||||
Repurchase of common stock (in shares) | (26,034) | ||||||
Other comprehensive income | 7,603 | 7,603 | |||||
Dividends declared on common stock | (9,117) | (9,117) | |||||
Ending Balance at Jun. 30, 2023 | $ 253 | 45,516 | 301,752 | 25,642 | 373,163 | ||
Ending Balance (in shares) at Jun. 30, 2023 | 25,279,846 | ||||||
Beginning Balance at Mar. 31, 2023 | $ 251 | 45,044 | 293,139 | 14,527 | 352,961 | ||
Beginning Balance (in shares) at Mar. 31, 2023 | 25,143,675 | ||||||
Stockholders' Equity | |||||||
Net Income (Loss) | 13,108 | 13,108 | |||||
Stock based compensation expense | 474 | 474 | |||||
Vesting of restricted stock | $ 2 | (2) | |||||
Vesting of restricted stock (in shares) | 136,171 | ||||||
Other comprehensive income | 11,115 | 11,115 | |||||
Dividends declared on common stock | (4,495) | (4,495) | |||||
Ending Balance at Jun. 30, 2023 | $ 253 | $ 45,516 | $ 301,752 | $ 25,642 | $ 373,163 | ||
Ending Balance (in shares) at Jun. 30, 2023 | 25,279,846 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | ||||
Dividend on common stock declared (in dollars per share) | $ 0.18 | $ 0.15 | $ 0.36 | $ 0.30 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flow from operating activities: | ||
Net income | $ 28,838 | $ 35,529 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization and accretion | 1,249 | 1,416 |
Provision for credit losses | (416) | 104 |
Stock based compensation expense | 772 | 553 |
Unrealized (gains) losses recognized on equity securities | (58) | 608 |
(Gain) loss on sale of foreclosed real estate | (547) | 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 | (67,803) | (23,391) |
Proceeds from sales of SBA loans held for sale | 70,826 | 24,959 |
Gain on sale of SBA loans | (3,023) | (1,568) |
Increase in cash value of bank owned life insurance | (880) | (830) |
(Increase) decrease in accrued interest receivable | (706) | 62 |
(Increase) decrease in SBA servicing rights | (933) | 2,018 |
Decrease in mortgage servicing rights | 1,459 | 1,657 |
Decrease (increase) in other assets | 951 | (10,101) |
Increase in accrued interest payable | 1,120 | 499 |
Increase in other liabilities | 41,884 | 19,273 |
Net cash flow provided by operating activities | 72,733 | 145,718 |
Cash flow from investing activities: | ||
Proceeds from maturities, calls or paydowns of securities available for sale | 731 | 1,489 |
Redemption of Federal Home Loan Bank stock | 1,959 | 4,082 |
Decrease (increase) in loans, net | 34,306 | (360,243) |
Purchases of premises and equipment | (2,629) | (339) |
Proceeds from sales of foreclosed real estate owned | 4,109 | 41 |
Purchase of bank owned life insurance | (8,000) | |
Net cash flow provided (used) by investing activities | 38,476 | (362,970) |
Cash flow from financing activities: | ||
Dividends paid on common stock | (9,053) | (7,640) |
Repurchases of common stock | (553) | (2,281) |
Increase in deposits, net | 31,644 | 133,988 |
Decrease in other borrowings, net | (5) | (60) |
Proceeds from Federal Home Loan Bank advances | 275,000 | 375,000 |
Repayments of Federal Home Loan Bank advances | (325,000) | (500,000) |
Net cash flow used by financing activities | (27,967) | (993) |
Net change in cash and cash equivalents | 83,242 | (218,245) |
Cash and cash equivalents at beginning of period | 179,485 | 441,341 |
Cash and cash equivalents at end of period | 262,727 | 223,096 |
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 | 235 | |
Supplemental disclosures of cash flow information - Cash paid during the year for: | ||
Interest | 41,124 | 3,606 |
Income taxes | $ 7,473 | $ 14,453 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
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 months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2022. The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Company’s 2022 Form 10-K”). Aside from the adoption of ASU 2016-13 (which is further discussed below), there were no new accounting policies or changes to existing policies adopted during the first six months of 2023 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, 2023. Although the ultimate outcome of all claims and lawsuits outstanding as of June 30, 2023 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. Accounting Standards Adopted in 2023 In January 2023, the Company adopted ASU 2016-13, “ Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This ASU significantly changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. impaired debt securities and loans and expands the disclosure requirements regarding an entity’s assumptions, models and methods for estimating the allowance for credit losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU No. 2016-13 was effective for interim and annual reporting periods beginning after December 15, 2022. The Company adopted ASU 2016-13 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach. The adoption of this standard resulted in an increase to the allowance for credit losses on loans of $5.1 million and the creation of an allowance for unfunded commitments of $239,000. These one-time cumulative adjustments resulted in a $3.8 million decrease to retained earnings, net of a $1.5 million increase to deferred tax assets. For available for sale (“AFS”) securities, the new CECL methodology replaces the other-than-temporary impairment model and requires the recognition of an allowance for reductions in a security’s fair value attributable to declines in credit quality, instead of a direct write-down of the security, when a valuation decline is determined to be other-than-temporary. There was no financial impact related to this implementation since the credit risk associated with our securities portfolio is minimal. The Company has made a policy election to exclude accrued interest from the amortized cost basis of AFS securities. Accrued interest receivable for AFS securities totaled $115,000 and $114,000 as of June 30, 2023 and December 31, 2022, respectively. This accrued interest receivable is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets. In January 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” The Company has further evaluated other Accounting Standards Updates issued during 2023 to date but does not expect updates other than those summarized above to have a material impact on the consolidated financial statements. Allowance for Credit Losses – Available for Sale Securities The impairment model for available for sale (“AFS”) securities differs from the CECL approach utilized by HTM debt securities because AFS debt securities are measured at fair value rather than amortized cost. Although ASU 2016-13 replaced the legacy other-than-temporary impairment (“OTTI”) model with a credit loss model, it retained the fundamental nature of the legacy OTTI model. One notable change from the legacy OTTI model is when evaluating whether credit loss exists, an entity may no longer consider the length of time fair value has been less than amortized cost. For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria is met, the security’s amortized cost basis is written down to fair value through income. For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. As of June 30, 2023, the Company determined that the unrealized loss positions in AFS securities were not the result of credit losses, and therefore, an allowance for credit losses was not recorded. See Note 2 below for further details. Allowance for Credit Losses - Loans Under the CECL model, the allowance for credit losses (“ACL”) on loans is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. The Company estimates the ACL on loans based on the underlying loans’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of ACL. Expected credit losses are reflected in the allowance for credit losses through a charge to provision for credit losses. When the Company deems all or a portion of a loan to be uncollectible the appropriate amount is written off and the ACL is reduced by the same amount. Loans are charged off against the ACL when management believes the collection of the principal is unlikely. Subsequent recoveries of previously charged off amounts, if any, are credited to the ACL when received. The Company measures expected credit losses of loans on a collective (pool) basis, when the loans share similar risk characteristics. Depending on the nature of the pool of loans with similar risk characteristics, the Company uses the discounted cash flow (“DCF”) method and a qualitative approach as discussed further below. The Company’s methodologies for estimating the ACL consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for loan-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the loans that are reasonable and supportable, to the identified pools of loans with similar risk characteristics for which the historical loss experience was observed. The Company’s methodologies revert back to historical loss information on a straight-line basis over eight quarters when it can no longer develop reasonable and supportable forecasts. The Company has identified the following pools of loans with similar risk characteristics for measuring expected credit losses: Construction and development Commercial real estate Commercial and industrial Single family residential mortgages Consumer and other Discounted Cash Flow Method The Company uses the discounted cash flow method to estimate expected credit losses for each of its loan segments. The Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on benchmark peer data. The Company uses regression analysis of peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers. For all loan pools utilizing the DCF method, the Company uses national data including gross domestic product, unemployment rates and home price indices (residential mortgage loans only) depending on the nature of the underlying loan pool and how well that loss driver correlates to expected future losses. For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over eight quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics. The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (“NPV”). An ACL is established for the difference between the instrument’s NPV and amortized cost basis. Qualitative Factors The Company also considers qualitative adjustments to the quantitative baseline discussed above. For example, the Company considers the impact of current environmental factors at the reporting date that did not exist over the period from which historical experience was used. Relevant factors include, but are not limited to, concentrations of credit risk (geographic, large borrower, and industry), local/regional economic trends and conditions, changes in underwriting standards, changes in collateral value, experience and depth of lending staff, trends in delinquencies, and the volume and terms of loans. Individually Analyzed Loans Loans that do not share risk characteristics are evaluated on an individual basis. For collateral dependent loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized costs basis of the loan exceeds the fair value of the underlying collateral less estimated cost to sell. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan. Allowance for Unfunded Commitments The Company records an allowance for credit losses on unfunded loan commitments, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the Company’s Consolidated Statements of Income. The ACL on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur. The allowance for unfunded commitments totaled $241,000 as of June 30, 2023 and is included in Other Liabilities on the Company’s Consolidated Balance Sheets. |
INVESTMENT SECURITIES
INVESTMENT SECURITIES | 6 Months Ended |
Jun. 30, 2023 | |
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, 2023 and December 31, 2022 are summarized as follows: June 30, 2023 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 4,790 $ — $ — $ 4,790 States and political subdivisions 8,097 — (1,573) 6,524 Mortgage-backed GSE residential 9,067 — (1,685) 7,382 Total $ 21,954 $ — $ (3,258) $ 18,696 December 31, 2022 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 5,059 $ — $ — $ 5,059 States and political subdivisions 8,121 — (1,718) 6,403 Mortgage-backed GSE residential 9,540 — (1,757) 7,783 Total $ 22,720 $ — $ (3,475) $ 19,245 The amortized costs and estimated fair values of investment securities available for sale at June 30, 2023 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 $ — $ — Due after one year but less than five years 5,653 5,620 Due after five years but less than ten years 378 371 Due in more than ten years 6,856 5,323 Mortgage-backed GSE residential 9,067 7,382 Total $ 21,954 $ 18,696 Accrued interest receivable for securities available for sale totaled $115,000 and $114,000 as of June 30, 2023 and December 31, 2022, respectively. This accrued interest receivable is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets. As of June 30, 2023, the Company had securities pledged to the Federal Reserve Bank Discount Window with a carrying amount of $13.9 million. There were no securities pledged as of December 31, 2022 to secure borrowing lines, public deposits or repurchase agreements. There were no securities sold during the three or six months ended June 30, 2023 and 2022. Information pertaining to securities with gross unrealized losses at June 30, 2023 and December 31, 2022 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, 2023 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 $ — $ — $ 1,573 $ 6,524 Mortgage-backed GSE residential — — 1,685 7,382 Total $ — $ — $ 3,258 $ 13,906 December 31, 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 $ 756 $ 3,556 $ 962 $ 2,847 Mortgage-backed GSE residential 48 541 1,709 7,242 Total $ 804 $ 4,097 $ 2,671 $ 10,089 At June 30, 2023, the twenty securities available for sale ( 11 municipal securities and 9 mortgage-backed securities) All The Company does not believe that the securities available for sale that were in an unrealized loss position as of June 30, 2023 represent a credit loss impairment. As of June 30, 2023, there have been no payment defaults nor do we currently expect any future payment defaults. Furthermore, the Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity. Equity Securities As of June 30, 2023 and December 31, 2022, the Company had equity securities with carrying values totaling $10.4 million and $10.3 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 months ended June 30, 2023 and 2022, we recognized unrealized losses of $70,000 and $245,000, respectively, in net income on our equity securities. During the six months ended June 30, 2023 and 2022, we recognized an unrealized gain of $58,000 and an unrealized loss of $608,000, respectively, in net income on our equity securities. These unrealized gains and losses are recorded in Other Expenses on the Consolidated Statements of Income. |
LOANS AND ALLOWANCE FOR CREDIT
LOANS AND ALLOWANCE FOR CREDIT LOSSES | 6 Months Ended |
Jun. 30, 2023 | |
LOANS AND ALLOWANCE FOR CREDIT LOSSES | |
LOANS AND ALLOWANCE FOR CREDIT LOSSES | NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES Major classifications of loans at June 30, 2023 and December 31, 2022 are summarized as follows: June 30, December 31, (Dollars in thousands) 2023 2022 Construction and development $ 51,759 $ 47,779 Commercial real estate 625,111 657,246 Commercial and industrial 63,502 53,173 Residential real estate 2,289,050 2,306,915 Consumer and other 102 216 Total loans receivable 3,029,524 3,065,329 Unearned income (8,810) (9,640) Allowance for credit losses (18,091) (13,888) Loans, net $ 3,002,623 $ 3,041,801 The Company is not committed to lend additional funds to borrowers with nonaccrual 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. The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this note. As of June 30, 2023, and December 31, 2022, accrued interest receivable for loans totaled $13.8 million and $13.1 million, respectively, and is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets. Allowance for Credit Losses As previously mentioned in Note 1, the Company’s January 1, 2023 adoption of ASU 2016-13 resulted in a significant change to our methodology for estimating the allowance for credit losses since December 31, 2022. As a result of this adoption, the Company recorded a $5.1 million increase to the allowance for credit losses as a cumulative-effect adjustment on January 1, 2023. A summary of changes in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2023 and 2022 is as follows: Three Months Ended June 30, 2023 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for credit losses: Beginning balance $ 45 $ 6,088 $ 1,021 $ 11,792 $ 1 $ — $ 18,947 Charge-offs — (231) (221) — — — (452) Recoveries — 1 13 — — — 14 Provision expense (15) 350 (160) (593) — — (418) Ending balance $ 30 $ 6,208 $ 653 $ 11,199 $ 1 $ — $ 18,091 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 credit losses: Beginning balance $ 93 $ 4,294 $ 4,441 $ 7,624 $ 5 $ 217 $ 16,674 Charge-offs — — — — — — — Recoveries — 2 2 — — — 4 Provision expense 47 (757) (224) 1,054 1 (121) — Ending balance $ 140 $ 3,539 $ 4,219 $ 8,678 $ 6 $ 96 $ 16,678 Six Months Ended June 30, 2023 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for credit losses: Beginning balance $ 124 $ 2,811 $ 1,326 $ 9,626 $ 1 $ — $ 13,888 Impact of adopting ASU 2016-13 (79) 3,275 (307) 2,166 — — 5,055 Charge-offs — (231) (221) — — — (452) Recoveries — 3 15 — — — 18 Provision expense (15) 350 (160) (593) — — (418) Ending balance $ 30 $ 6,208 $ 653 $ 11,199 $ 1 $ — $ 18,091 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 credit 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 Prior to the adoption of ASU 2016-13 December 31, 2022 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for credit losses: Individually evaluated for impairment $ — $ 249 $ 465 $ — $ — $ — $ 714 Collectively evaluated for impairment 124 2,562 861 9,626 1 — 13,174 Acquired with deteriorated credit quality — — — — — — — Total ending allowance balance $ 124 $ 2,811 $ 1,326 $ 9,626 $ 1 $ — $ 13,888 Loans: Individually evaluated for impairment $ — $ 23,767 $ 1,122 $ 5,037 $ — $ — $ 29,926 Collectively evaluated for impairment 47,567 631,031 51,989 2,294,960 216 — 3,025,763 Acquired with deteriorated credit quality — — — — — — — Total ending loans balance $ 47,567 $ 654,798 $ 53,111 $ 2,299,997 $ 216 $ — $ 3,055,689 Impaired Loans Prior to the adoption of ASU 2016-13, loans were considered impaired when, based on current information and events, it was probable the Company would be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally were not classified as impaired. Management determined the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impaired loans were measured by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the estimated fair value of the collateral if the loan is collateral dependent. The amount of impairment, if any, and any subsequent changes were included in the allowance for credit losses. Impaired loans as of December 31, 2022, 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 December 31, 2022 Balance Allowance Allowance Investment Allowance Construction and development $ — $ — $ — $ — $ — Commercial real estate 23,767 23,121 1,415 24,536 249 Commercial and industrial 1,122 155 997 1,152 465 Residential real estate 5,037 5,037 — 5,037 — Total $ 29,926 $ 28,313 $ 2,412 $ 30,725 $ 714 Collateral-Dependent Loans Collateral-dependent loans are loans for which foreclosure is probable or loans for which the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The estimated credit losses for these loans are based on the collateral’s fair value less selling costs. In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less selling costs at the time of foreclosure. As of June 30, 2023, there were $ million and $3.5 million of collateral-dependent loans which which were secured by residential and commercial real estate, respectively. The allowance for credit losses allocated to these loans as of June 30, 2023 was $460,000 . Past Due and Nonaccrual Loans 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. The following summarizes the Company’s past due and nonaccrual loans, by portfolio segment, as of June 30, 2023 and December 31, 2022: Accruing Total Total (Dollars in thousands) Greater than Accruing Financing June 30, 2023 Current 30-59 Days 60-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 51,638 $ — $ — $ — $ — $ — $ 51,638 Commercial real estate 621,266 — 349 — 349 1,079 622,694 Commercial and industrial 61,624 — 101 — 101 1,615 63,340 Residential real estate 2,267,079 — 5,518 — 5,518 10,343 2,282,940 Consumer and other 102 — — — — — 102 Total $ 3,001,709 $ — $ 5,968 $ — $ 5,968 $ 13,037 $ 3,020,714 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2022 Current 30-59 Days 60-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 47,567 $ — $ — $ — $ — $ — $ 47,567 Commercial real estate 649,552 354 — — 354 4,892 654,798 Commercial and industrial 52,485 — 310 180 490 136 53,111 Residential real estate 2,282,089 8,882 3,989 — 12,871 5,037 2,299,997 Consumer and other 216 — — — — — 216 Total $ 3,031,909 $ 9,236 $ 4,299 $ 180 $ 13,715 $ 10,065 $ 3,055,689 The following table presents an analysis of nonaccrual loans with and without a related allowance for credit losses as of June 30, 2023: Nonaccrual Nonaccrual (Dollars in thousands) Loans With a Loans Without a Total June 30, 2023 Related ACL Related ACL Nonaccrual Loans Commercial real estate $ 233 $ 846 $ 1,079 Commercial and industrial 93 1,522 1,615 Residential real estate — 10,343 10,343 Total $ 326 $ 12,711 $ 13,037 All payments received while a loan is on nonaccrual status are applied against the principal balance of the loan. The Company does not recognize interest income while loans are on nonaccrual status. Credit Quality Indicators The Company utilizes a ten grade loan risk 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 (grade 7) – 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 (grade 8) – 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 (grade 9) – 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 (grade 10) – 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 table presents the loan portfolio's amortized cost by loan type, risk rating and year of origination as of June 30, 2023. There were no loans with a risk rating of Doubtful or Loss at June 30, 2023. (Dollars in thousands) Term Loan by Origination Year Revolving June 30, 2023 2023 2022 2021 2020 2019 Prior Loans Total Loans Construction and development Pass $ 404 $ 10,727 $ 21,380 $ 1,202 $ 17,684 $ 241 $ — $ 51,638 Special Mention — — — — — — — — Substandard — — — — — — — — Total construction and development $ 404 $ 10,727 $ 21,380 $ 1,202 $ 17,684 $ 241 $ — $ 51,638 Commercial real estate Pass $ 37,369 $ 204,009 $ 108,453 $ 85,529 $ 55,193 $ 112,852 $ 3,030 $ 606,435 Special Mention — — — 1,948 — — — 1,948 Substandard — 600 — 1,163 10,808 1,740 — 14,311 Total commercial real estate $ 37,369 $ 204,609 $ 108,453 $ 88,640 $ 66,001 $ 114,592 $ 3,030 $ 622,694 Commercial real estate: Current period gross write offs $ — $ — $ — $ — $ — $ 231 $ — $ 231 Commercial and industrial Pass $ 7,715 $ 15,451 $ 5,221 $ 3,464 $ 2,984 $ 3,753 $ 21,002 $ 59,590 Special Mention — — — 369 231 1,297 — 1,897 Substandard — — 1,281 — 551 21 — 1,853 Total commercial and industrial $ 7,715 $ 15,451 $ 6,502 $ 3,833 $ 3,766 $ 5,071 $ 21,002 $ 63,340 Commercial and industrial: Current period gross write offs $ — $ — $ 142 $ — $ 79 $ — $ — $ 221 Residential real estate Pass $ 106,981 $ 758,556 $ 877,670 $ 303,911 $ 65,583 $ 156,802 $ — $ 2,269,503 Special Mention — — — — — — — — Substandard — — 1,957 2,110 1,656 7,714 — 13,437 Total residential real estate $ 106,981 $ 758,556 $ 879,627 $ 306,021 $ 67,239 $ 164,516 $ — $ 2,282,940 Consumer and other Pass $ 102 $ — $ — $ — $ — $ — $ — $ 102 Special Mention — — — — — — — — Substandard — — — — — — — — Total consumer and other $ 102 $ — $ — $ — $ — $ — $ — $ 102 Total loans $ 152,571 $ 989,343 $ 1,015,962 $ 399,696 $ 154,690 $ 284,420 $ 24,032 $ 3,020,714 The following table presents the Company’s loan portfolio by risk rating as of December 31, 2022: Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2022 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 47,567 $ 628,165 $ 48,848 $ 2,292,568 $ 216 $ 3,017,364 Special Mention — 3,677 3,897 — — 7,574 Substandard — 22,956 366 7,429 — 30,751 Doubtful — — — — — — Loss — — — — — — Total $ 47,567 $ 654,798 $ 53,111 $ 2,299,997 $ 216 $ 3,055,689 Loan Modifications to Borrowers Experiencing Financial Difficulty. In January 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (“TDRs”) while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This guidance was applied on a prospective basis. Upon adoption of this guidance, the Company no longer establishes a specific reserve for modifications to borrowers experiencing financial difficulty, unless those loans do not share the same risk characteristics with other loans in the portfolio. Provided that is not the case, these modifications are included in their respective cohort and the allowance for credit losses is estimated on a pooled basis consistent with the other loans with similar risk characteristics. Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, payment deferrals, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. No loan modifications were made to borrowers experiencing financial difficulty during the three and six months ended June 30, 2023. No charge-offs of previously modified loans were recorded during the three and six months ended June 30, 2023. |
SBA AND USDA LOAN SERVICING
SBA AND USDA LOAN SERVICING | 6 Months Ended |
Jun. 30, 2023 | |
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, 2023 and December 31, 2022, the unpaid principal balances of serviced loans totaled $493.6 million and $465.1 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) 2023 2022 2023 2022 Beginning of period $ 7,736 $ 10,395 $ 7,038 $ 10,091 Change in fair value 282 (2,333) 980 (2,029) End of period, fair value $ 8,018 $ 8,062 $ 8,018 $ 8,062 Fair value at June 30, 2023 and December 31, 2022 was determined using discount rates ranging from 5.96% to 14.74% and 8.21% to 19.30%, respectively, and prepayment speeds ranging from 12.74% to 18.08% and 13.12% to 17.60%, 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 $0 and $47,000 at June 30, 2023 and December 31, 2022, 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, 2023 | |
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, 2023 and December 31, 2022 was $487.8 million and $526.7 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: 2023 2022 2023 2022 Beginning of period $ 3,205 $ 6,925 $ 3,973 $ 7,747 Additions — 347 — 760 Amortization expense (691) (1,270) (1,459) (2,580) Valuation allowance — 88 — 163 End of period, carrying value $ 2,514 $ 6,090 $ 2,514 $ 6,090 (Dollars in thousands) For the Three Months Ended June 30, For the Six Months Ended June 30, Valuation allowance: 2023 2022 2023 2022 Beginning balance $ — $ 88 $ — $ 163 Additions expensed — — — — Reductions credited to operations — (88) — (163) Direct write-downs — — — — Ending balance $ — $ — $ — $ — The fair value of servicing rights was $7.1 million and $7.2 million at June 30, 2023 and December 31, 2022, respectively. Fair value at June 30, 2023 was determined by using a discount rate of 12.55%, prepayment speeds of 16.99%, and a weighted average default rate of 1.31%. Fair value at December 31, 2022 was determined by using a discount rate of 12.56%, prepayment speeds of 18.63%, and a weighted average default rate of 1.29%. |
FEDERAL HOME LOAN BANK ADVANCES
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | 6 Months Ended |
Jun. 30, 2023 | |
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, 2023 December 31, 2022 Convertible advance maturing February 13, 2026; fixed rate of 4.184% $ 50,000 $ — Convertible advance maturing May 7, 2027; fixed rate of 3.025% 50,000 — Convertible advance maturing October 26, 2027; fixed rate of 3.530% 25,000 25,000 Convertible advance maturing January 25, 2028; fixed rate of 3.243% 50,000 — Convertible advance maturing February 14, 2028; fixed rate of 3.625% 25,000 — Convertible advance maturing May 8, 2028; fixed rate of 2.860% 50,000 — Convertible advance maturing June 23, 2028; fixed rate of 3.655% 50,000 — Convertible advance maturing June 16, 2032; fixed rate of 1.905% — 50,000 Convertible advance maturing June 23, 2032; fixed rate of 1.950% — 100,000 Convertible advance maturing August 6, 2032; fixed rate of 1.892% — 100,000 Convertible advance maturing October 26, 2032; fixed rate of 3.025% 25,000 25,000 Convertible advance maturing May 12, 2037; fixed rate of 1.135% — 75,000 Total FHLB advances $ 325,000 $ 375,000 The FHLB advances outstanding at June 30, 2023 all have a conversion feature that allows the FHLB to call the advances after six months ($100.0 million) or one year ($225.0 million). At June 30, 2023 and December 31, 2022, the Company had a line of credit with the FHLB, set as a percentage of total assets, with maximum borrowing capacity of $1.03 billion and $1.01 billion, respectively. The available borrowing amounts are collateralized by the Company’s FHLB stock and pledged residential real estate loans, which totaled $2.27 billion and $2.29 billion at June 30, 2023 and December 31, 2022, respectively. At June 30, 2023, 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, 2023. At June 30, 2023, the Company had Federal Reserve Discount Window funds available of approximately $444.6 million. The funds are collateralized by a pool of construction and development, commercial real estate and commercial and industrial loans with carrying balances totaling $523.7 million as of June 30, 2023, as well as all of the Company’s municipal and mortgage backed securities. There were no outstanding borrowings on this line as of June 30, 2023. 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, 2023 and December 31, 2022 were $387,000 and $392,000, respectively. |
OPERATING LEASES
OPERATING LEASES | 6 Months Ended |
Jun. 30, 2023 | |
OPERATING LEASES | |
OPERATING LEASES | NOTE 7 – OPERATING LEASES The Company has entered into various operating leases for certain branch locations with terms extending through April 2033. Generally, these leases have initial lease terms of ten years or less. Many of the leases have one or more renewal options which typically are for five years at the then fair market rental rates. We assessed these renewal options using a threshold of reasonably certain. For leases where we were reasonably certain to renew, those option periods were included within the lease term, and therefore, the measurement of the right-of-use (“ROU”) asset and lease liability. None of our leases included options to terminate the lease and none had initial terms of 12 months or less (i.e. short-term leases). Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities on the Consolidated Balance Sheets. The Company currently does not have any finance leases. Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental collateralized borrowing rate provided by the FHLB at the lease commencement date. ROU assets are further adjusted for lease incentives, if any. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in occupancy expense in the Consolidated Statements of Income. The components of lease cost for the three and six months ended June 30, 2023 and 2022 were as follows: Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2023 2022 2023 2022 Operating lease cost $ 368 $ 511 $ 909 $ 1,016 Variable lease cost 44 43 88 87 Short-term lease cost — — — — Sublease income — — — — Total net lease cost $ 412 $ 554 $ 997 $ 1,103 Future maturities of the Company’s operating lease liabilities are summarized as follows: (Dollars in thousands) Twelve Months Ended: Lease Liability June 30, 2024 $ 1,957 June 30, 2025 1,799 June 30, 2026 1,550 June 30, 2027 1,277 June 30, 2028 1,007 After June 30, 2028 1,091 Total lease payments 8,681 Less: interest discount (696) Present value of lease liabilities $ 7,985 Supplemental Lease Information June 30, 2023 Weighted-average remaining lease term (years) 5.6 Weighted-average discount rate 3.19 % Six Months Ended June 30, (Dollars in thousands) 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 1,029 $ 920 Operating cash flows from operating leases (lease liability reduction) $ 898 $ 790 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ — $ — |
INTEREST RATE DERIVATIVES
INTEREST RATE DERIVATIVES | 6 Months Ended |
Jun. 30, 2023 | |
INTEREST RATE DERIVATIVES | |
INTEREST RATE DERIVATIVES | NOTE 8 – INTEREST RATE DERIVATIVES During 2021 and 2022, the Company entered into fourteen separate interest rate swap agreements with notional amounts totaling $800.0 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 two remaining interest rate swaps are 3-year spot swaps where cash settlements began in June 2022 and December 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 $36.6 million and $26.7 million and an unrealized loss of $0 and $779,000 at June 30, 2023 and December 31, 2022, respectively. These unrealized gains and losses are recorded in Interest Rate Derivatives and Other Liabilities on the Consolidated Balance Sheets. The Company expects the hedges to remain highly effective during the remaining terms of the swaps. 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 $2.7 million and $2.1 million at June 30, 2023 and December 31, 2022, respectively, and are recorded in Interest Rate Derivatives 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, 2023, there were no cash deposits pledged as collateral by the Company. At June 30, 2023, the Company had $29.1 million of restricted cash obtained from the counterparties as collateral for the significant unrealized gains on our interest rate derivatives. Summary information for the interest rate swaps designated as cash flow hedges is as follows: As of or for the As of or for the Six Months Ended Year Ended (Dollars in thousands) June 30, 2023 December 31, 2022 Notional Amounts $ 800,000 $ 800,000 Weighted-average pay rate 2.28% 2.28% Weighted-average receive rate 4.76% 1.68% Weighted-average maturity 4.2 years 4.2 years Weighted-average remaining maturity 2.9 years 3.4 years Net interest income (expense) $ 1,084 $ (163) As of or for the As of or for the Six Months Ended Year Ended (Dollars in thousands) June 30, 2023 December 31, 2022 Notional Amounts $ 50,000 $ 50,000 Rate Cap Premiums 413 474 Cap Rate 2.50% 2.50% Weighted-average maturity 5.0 years 5.0 years Weighted-average remaining maturity 3.3 years 3.8 years Net interest expense $ (62) $ (124) |
LOAN COMMITMENTS AND RELATED FI
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2023 | |
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, 2023 and December 31, 2022 include: June 30, December 31, (Dollars in thousands) 2023 2022 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 64,849 $ 62,334 Standby letters of credit $ 6,228 $ 6,303 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 $64.8 million of unused lines of credit and $6.2 million for standby letters of credit as of June 30, 2023. 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, 2023 | |
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, 2023 and December 31, 2022 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, 2023 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 $ 4,790 $ — $ — $ 4,790 States and political subdivisions 6,524 — 6,524 — Mortgage-backed GSE residential 7,382 — 7,382 — Total securities available for sale 18,696 — 13,906 4,790 Equity securities 10,358 10,358 — — SBA servicing asset 8,018 — — 8,018 Interest rate derivatives 39,284 — 39,284 — $ 76,356 $ 10,358 $ 53,190 $ 12,808 Nonrecurring fair value measurements: Collateral-dependent loans $ 2,629 $ — $ — $ 2,629 $ (137) December 31, 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 $ 5,059 $ — $ — $ 5,059 States and political subdivisions 6,403 — 6,403 — Mortgage-backed GSE residential 7,783 — 7,783 — Total securities available for sale 19,245 — 14,186 5,059 Equity securities 10,300 10,300 — — SBA servicing asset 7,038 — — 7,038 Interest only strip 47 — — 47 Interest rate derivatives 28,781 — 28,781 — $ 65,411 $ 10,300 $ 42,967 $ 12,144 Nonrecurring fair value measurements: Impaired loans $ 1,045 $ — $ — $ 1,045 $ 229 Liabilities Recurring fair value measurements: Interest rate swaps $ 779 $ — $ 779 $ — 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. Collateral-dependent and impaired loans : Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale of the underlying collateral and there are no other available and reliable sources of repayment. Prior to the adoption of ASU 2016-13, impaired loans were evaluated and valued at the time the loan was identified as impaired, at the lower of cost or fair value. Fair value for both collateral-dependent and impaired loans are measured based on the value of the collateral securing these loans and are classified at a Level 3 in the fair value hierarchy. Collateral may include real estate, or business assets including equipment, inventory and accounts receivable. The value of real estate collateral is determined based on an appraisal by qualified licensed appraisers hired by the Company. The value of business equipment is based on an appraisal by qualified licensed appraisers hired by the Company if significant, or the equipment’s net book value on the business’ financial statements. Inventory and accounts receivable collateral are valued based on independent field examiner review or aging reports. Appraisals may utilize a single valuation approach or a combination or approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Appraised values are reviewed by management using historical knowledge, market considerations, and knowledge of the client and client’s business. 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, 2023 and 2022: 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, 2023 $ 4,834 $ 7,736 $ 55 $ — Total gains/(losses) included in income — 282 (55) — Settlements — — — — Prepayments/paydowns (44) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2023 $ 4,790 $ 8,018 $ — $ — 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 $ — Six Months Ended: Fair value, January 1, 2023 $ 5,059 $ 7,038 $ 47 $ — Total gains/(losses) included in income — 980 (47) — Settlements — — — — Prepayments/paydowns (269) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2023 $ 4,790 $ 8,018 $ — $ — 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 $ — 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, 2023 and December 31, 2022: Valuation Unobservable General Technique Input Range June 30, 2023: Recurring: Obligations of U.S. Government entities and agencies Discounted cash flows Discount rate 3%-5% SBA servicing asset and interest only strip Discounted cash flows Prepayment speed 12.74%-18.08% Discount rate 5.96%-14.74% Nonrecurring: Collateral-dependent loans Appraised value less estimated selling costs Estimated selling costs 6% December 31, 2022: Recurring: Obligations of U.S. Government entities and agencies Discounted cash flows Discount rate 3%-5% SBA servicing asset and interest only strip Discounted cash flows Prepayment speed 13.12%-17.60% Discount rate 8.21%-19.30% 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, 2023 and December 31, 2022 are as follows: Carrying Estimated Fair Value at June 30, 2023 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 262,727 $ — $ 262,727 $ — $ 262,727 Investment securities 29,054 10,358 13,906 4,790 29,054 FHLB stock 15,534 — — — N/A Loans, net 3,002,623 — — 2,903,536 2,903,536 Accrued interest receivable 13,877 — 13,877 13,877 SBA servicing assets 8,018 — — 8,018 8,018 Mortgage servicing assets 2,514 — — 7,104 7,104 Interest rate derivatives 39,284 — 39,284 — 39,284 Financial Liabilities: Deposits 2,698,482 — 2,691,466 — 2,691,466 Federal Home Loan Bank advances 325,000 — 325,943 — 325,943 Other borrowings 387 — 387 — 387 Accrued interest payable 3,859 — 3,859 — 3,859 Carrying Estimated Fair Value at December 31, 2022 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 179,485 $ — $ 179,485 $ — $ 179,485 Investment securities 29,545 10,300 14,186 5,059 29,545 FHLB stock 17,493 — — — N/A Loans, net 3,041,801 — — 2,999,520 2,999,520 Accrued interest receivable 13,171 — 98 13,073 13,171 SBA servicing asset 7,038 — — 7,038 7,038 Interest only strips 47 — — 47 47 Mortgage servicing assets 3,973 — — 7,209 7,209 Interest rate derivatives 28,781 — 28,781 — 28,781 Financial Liabilities: Deposits 2,666,838 — 2,658,837 — 2,658,837 Federal Home Loan Bank advances 375,000 — 376,575 — 376,575 Other borrowings 392 — 392 — 392 Accrued interest payable 2,739 — 2,739 — 2,739 Interest rate derivatives 779 — 779 — 779 |
REGULATORY MATTERS
REGULATORY MATTERS | 6 Months Ended |
Jun. 30, 2023 | |
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. Under the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“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, 2023 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, 2023 and December 31, 2022, 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, 2023: Total Capital (to Risk Weighted Assets) Consolidated $ 357,834 17.59 % 213,589 10.5 % N/A N/A Bank 357,220 17.56 % 213,585 10.5 203,414 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 339,503 16.69 % 172,905 8.5 % N/A N/A Bank 338,889 16.66 % 172,902 8.5 162,731 8.0 % Common Tier 1 (CET1) Consolidated 339,503 16.69 % 142,393 7.0 % N/A N/A Bank 338,889 16.66 % 142,390 7.0 132,219 6.5 % Tier 1 Capital (to Average Assets) Consolidated 339,503 10.03 % 135,359 4.0 % N/A N/A Bank 338,889 10.01 % 135,357 4.0 169,196 5.0 % As of December 31, 2022: Total Capital (to Risk Weighted Assets) Consolidated $ 338,185 16.68 % 212,932 10.5 % N/A N/A Bank 336,866 16.61 % 212,915 10.5 202,777 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 324,297 15.99 % 172,374 8.5 % N/A N/A Bank 322,978 15.93 % 172,360 8.5 162,221 8.0 % Common Tier 1 (CET1) Consolidated 324,297 15.99 % 141,955 7.0 % N/A N/A Bank 322,978 15.93 % 141,944 7.0 131,805 6.5 % Tier 1 Capital (to Average Assets) Consolidated 324,297 9.57 % 135,485 4.0 % N/A N/A Bank 322,978 9.54 % 135,446 4.0 169,307 5.0 % |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2023 | |
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, 2023, 240,000 stock options had been granted and 774,437 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, 2023 is presented below: Weighted Average Shares Exercise Price Outstanding at January 1, 2023 240,000 $ 12.70 Granted — — Exercised — — Forfeited — — Outstanding at June 30, 2023 240,000 $ 12.70 The Company recognized no compensation expense for stock options during the three and six months ended June 30, 2023 and 2022. As of both June 30, 2023 and December 31, 2022, there was $0 of total unrecognized compensation cost related to options granted under the 2018 Incentive Plan. As of June 30, 2023, 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, 2023 is presented below: Weighted- Average Grant- Nonvested Shares Shares Date Fair Value Nonvested at January 1, 2023 177,399 $ 17.95 Granted 188,993 16.43 Vested (136,171) 16.25 Forfeited — — Nonvested at June 30, 2023 230,221 $ 17.71 During the three months ended June 30, 2023 and 2022, the Company recognized compensation expense for restricted stock of $473,000 and $359,000, respectively. During the six months ended June 30, 2023 and 2022, the Company recognized compensation expense for restricted stock of $772,000 and $553,000, respectively. As of June 30, 2023 and December 31, 2022, there was $4.6 million and $2.3 million, respectively, of total unrecognized compensation cost related to nonvested shares granted under the 2018 Incentive Plan. As of June 30, 2023, 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, 2023 | |
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) 2023 2022 2023 2022 Basic earnings per share Net Income $ 13,108 $ 16,100 $ 28,838 $ 35,529 Weighted average common shares outstanding 25,188,567 25,459,003 25,166,746 25,462,102 Basic earnings per common share $ 0.52 $ 0.63 $ 1.15 $ 1.40 Diluted earnings per share Net Income $ 13,108 $ 16,100 $ 28,838 $ 35,529 Weighted average common shares outstanding for basic earnings per common share 25,188,567 25,459,003 25,166,746 25,462,102 Add: Dilutive effects of restricted stock and options 288,576 270,153 302,195 284,589 Average shares and dilutive potential common shares 25,477,143 25,729,156 25,468,941 25,746,691 Diluted earnings per common share $ 0.51 $ 0.63 $ 1.13 $ 1.38 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, 2023 and 2022. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
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 months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2022. The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Company’s 2022 Form 10-K”). Aside from the adoption of ASU 2016-13 (which is further discussed below), there were no new accounting policies or changes to existing policies adopted during the first six months of 2023 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, 2023. Although the ultimate outcome of all claims and lawsuits outstanding as of June 30, 2023 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. |
Accounting Standards Adopted in 2023 | Accounting Standards Adopted in 2023 In January 2023, the Company adopted ASU 2016-13, “ Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This ASU significantly changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. impaired debt securities and loans and expands the disclosure requirements regarding an entity’s assumptions, models and methods for estimating the allowance for credit losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU No. 2016-13 was effective for interim and annual reporting periods beginning after December 15, 2022. The Company adopted ASU 2016-13 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach. The adoption of this standard resulted in an increase to the allowance for credit losses on loans of $5.1 million and the creation of an allowance for unfunded commitments of $239,000. These one-time cumulative adjustments resulted in a $3.8 million decrease to retained earnings, net of a $1.5 million increase to deferred tax assets. For available for sale (“AFS”) securities, the new CECL methodology replaces the other-than-temporary impairment model and requires the recognition of an allowance for reductions in a security’s fair value attributable to declines in credit quality, instead of a direct write-down of the security, when a valuation decline is determined to be other-than-temporary. There was no financial impact related to this implementation since the credit risk associated with our securities portfolio is minimal. The Company has made a policy election to exclude accrued interest from the amortized cost basis of AFS securities. Accrued interest receivable for AFS securities totaled $115,000 and $114,000 as of June 30, 2023 and December 31, 2022, respectively. This accrued interest receivable is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets. In January 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” The Company has further evaluated other Accounting Standards Updates issued during 2023 to date but does not expect updates other than those summarized above to have a material impact on the consolidated financial statements. Allowance for Credit Losses – Available for Sale Securities The impairment model for available for sale (“AFS”) securities differs from the CECL approach utilized by HTM debt securities because AFS debt securities are measured at fair value rather than amortized cost. Although ASU 2016-13 replaced the legacy other-than-temporary impairment (“OTTI”) model with a credit loss model, it retained the fundamental nature of the legacy OTTI model. One notable change from the legacy OTTI model is when evaluating whether credit loss exists, an entity may no longer consider the length of time fair value has been less than amortized cost. For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria is met, the security’s amortized cost basis is written down to fair value through income. For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. As of June 30, 2023, the Company determined that the unrealized loss positions in AFS securities were not the result of credit losses, and therefore, an allowance for credit losses was not recorded. See Note 2 below for further details. Allowance for Credit Losses - Loans Under the CECL model, the allowance for credit losses (“ACL”) on loans is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. The Company estimates the ACL on loans based on the underlying loans’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of ACL. Expected credit losses are reflected in the allowance for credit losses through a charge to provision for credit losses. When the Company deems all or a portion of a loan to be uncollectible the appropriate amount is written off and the ACL is reduced by the same amount. Loans are charged off against the ACL when management believes the collection of the principal is unlikely. Subsequent recoveries of previously charged off amounts, if any, are credited to the ACL when received. The Company measures expected credit losses of loans on a collective (pool) basis, when the loans share similar risk characteristics. Depending on the nature of the pool of loans with similar risk characteristics, the Company uses the discounted cash flow (“DCF”) method and a qualitative approach as discussed further below. The Company’s methodologies for estimating the ACL consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for loan-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the loans that are reasonable and supportable, to the identified pools of loans with similar risk characteristics for which the historical loss experience was observed. The Company’s methodologies revert back to historical loss information on a straight-line basis over eight quarters when it can no longer develop reasonable and supportable forecasts. The Company has identified the following pools of loans with similar risk characteristics for measuring expected credit losses: Construction and development Commercial real estate Commercial and industrial Single family residential mortgages Consumer and other Discounted Cash Flow Method The Company uses the discounted cash flow method to estimate expected credit losses for each of its loan segments. The Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on benchmark peer data. The Company uses regression analysis of peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers. For all loan pools utilizing the DCF method, the Company uses national data including gross domestic product, unemployment rates and home price indices (residential mortgage loans only) depending on the nature of the underlying loan pool and how well that loss driver correlates to expected future losses. For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over eight quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics. The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (“NPV”). An ACL is established for the difference between the instrument’s NPV and amortized cost basis. Qualitative Factors The Company also considers qualitative adjustments to the quantitative baseline discussed above. For example, the Company considers the impact of current environmental factors at the reporting date that did not exist over the period from which historical experience was used. Relevant factors include, but are not limited to, concentrations of credit risk (geographic, large borrower, and industry), local/regional economic trends and conditions, changes in underwriting standards, changes in collateral value, experience and depth of lending staff, trends in delinquencies, and the volume and terms of loans. Individually Analyzed Loans Loans that do not share risk characteristics are evaluated on an individual basis. For collateral dependent loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized costs basis of the loan exceeds the fair value of the underlying collateral less estimated cost to sell. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan. Allowance for Unfunded Commitments The Company records an allowance for credit losses on unfunded loan commitments, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the Company’s Consolidated Statements of Income. The ACL on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur. The allowance for unfunded commitments totaled $241,000 as of June 30, 2023 and is included in Other Liabilities on the Company’s Consolidated Balance Sheets. |
INVESTMENT SECURITIES (Tables)
INVESTMENT SECURITIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
INVESTMENT SECURITIES | |
Schedule of available for sale securities | June 30, 2023 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 4,790 $ — $ — $ 4,790 States and political subdivisions 8,097 — (1,573) 6,524 Mortgage-backed GSE residential 9,067 — (1,685) 7,382 Total $ 21,954 $ — $ (3,258) $ 18,696 December 31, 2022 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 5,059 $ — $ — $ 5,059 States and political subdivisions 8,121 — (1,718) 6,403 Mortgage-backed GSE residential 9,540 — (1,757) 7,783 Total $ 22,720 $ — $ (3,475) $ 19,245 |
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 $ — $ — Due after one year but less than five years 5,653 5,620 Due after five years but less than ten years 378 371 Due in more than ten years 6,856 5,323 Mortgage-backed GSE residential 9,067 7,382 Total $ 21,954 $ 18,696 |
Schedule of available for sale securities by investment category and length of time | June 30, 2023 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 $ — $ — $ 1,573 $ 6,524 Mortgage-backed GSE residential — — 1,685 7,382 Total $ — $ — $ 3,258 $ 13,906 December 31, 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 $ 756 $ 3,556 $ 962 $ 2,847 Mortgage-backed GSE residential 48 541 1,709 7,242 Total $ 804 $ 4,097 $ 2,671 $ 10,089 |
LOANS AND ALLOWANCE FOR CREDI_2
LOANS AND ALLOWANCE FOR CREDIT LOSSES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
LOANS AND ALLOWANCE FOR CREDIT LOSSES | |
Summary of major classifications of loans | June 30, December 31, (Dollars in thousands) 2023 2022 Construction and development $ 51,759 $ 47,779 Commercial real estate 625,111 657,246 Commercial and industrial 63,502 53,173 Residential real estate 2,289,050 2,306,915 Consumer and other 102 216 Total loans receivable 3,029,524 3,065,329 Unearned income (8,810) (9,640) Allowance for credit losses (18,091) (13,888) Loans, net $ 3,002,623 $ 3,041,801 |
Schedule of allowance for credit losses by portfolio segment | A summary of changes in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2023 and 2022 is as follows: Three Months Ended June 30, 2023 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for credit losses: Beginning balance $ 45 $ 6,088 $ 1,021 $ 11,792 $ 1 $ — $ 18,947 Charge-offs — (231) (221) — — — (452) Recoveries — 1 13 — — — 14 Provision expense (15) 350 (160) (593) — — (418) Ending balance $ 30 $ 6,208 $ 653 $ 11,199 $ 1 $ — $ 18,091 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 credit losses: Beginning balance $ 93 $ 4,294 $ 4,441 $ 7,624 $ 5 $ 217 $ 16,674 Charge-offs — — — — — — — Recoveries — 2 2 — — — 4 Provision expense 47 (757) (224) 1,054 1 (121) — Ending balance $ 140 $ 3,539 $ 4,219 $ 8,678 $ 6 $ 96 $ 16,678 Six Months Ended June 30, 2023 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for credit losses: Beginning balance $ 124 $ 2,811 $ 1,326 $ 9,626 $ 1 $ — $ 13,888 Impact of adopting ASU 2016-13 (79) 3,275 (307) 2,166 — — 5,055 Charge-offs — (231) (221) — — — (452) Recoveries — 3 15 — — — 18 Provision expense (15) 350 (160) (593) — — (418) Ending balance $ 30 $ 6,208 $ 653 $ 11,199 $ 1 $ — $ 18,091 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 credit 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 December 31, 2022 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for credit losses: Individually evaluated for impairment $ — $ 249 $ 465 $ — $ — $ — $ 714 Collectively evaluated for impairment 124 2,562 861 9,626 1 — 13,174 Acquired with deteriorated credit quality — — — — — — — Total ending allowance balance $ 124 $ 2,811 $ 1,326 $ 9,626 $ 1 $ — $ 13,888 Loans: Individually evaluated for impairment $ — $ 23,767 $ 1,122 $ 5,037 $ — $ — $ 29,926 Collectively evaluated for impairment 47,567 631,031 51,989 2,294,960 216 — 3,025,763 Acquired with deteriorated credit quality — — — — — — — Total ending loans balance $ 47,567 $ 654,798 $ 53,111 $ 2,299,997 $ 216 $ — $ 3,055,689 |
Summary of impaired loans by portfolio segment | Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2022 Balance Allowance Allowance Investment Allowance Construction and development $ — $ — $ — $ — $ — Commercial real estate 23,767 23,121 1,415 24,536 249 Commercial and industrial 1,122 155 997 1,152 465 Residential real estate 5,037 5,037 — 5,037 — Total $ 29,926 $ 28,313 $ 2,412 $ 30,725 $ 714 |
Schedule of delinquent amounts by portfolio segment | Accruing Total Total (Dollars in thousands) Greater than Accruing Financing June 30, 2023 Current 30-59 Days 60-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 51,638 $ — $ — $ — $ — $ — $ 51,638 Commercial real estate 621,266 — 349 — 349 1,079 622,694 Commercial and industrial 61,624 — 101 — 101 1,615 63,340 Residential real estate 2,267,079 — 5,518 — 5,518 10,343 2,282,940 Consumer and other 102 — — — — — 102 Total $ 3,001,709 $ — $ 5,968 $ — $ 5,968 $ 13,037 $ 3,020,714 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2022 Current 30-59 Days 60-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 47,567 $ — $ — $ — $ — $ — $ 47,567 Commercial real estate 649,552 354 — — 354 4,892 654,798 Commercial and industrial 52,485 — 310 180 490 136 53,111 Residential real estate 2,282,089 8,882 3,989 — 12,871 5,037 2,299,997 Consumer and other 216 — — — — — 216 Total $ 3,031,909 $ 9,236 $ 4,299 $ 180 $ 13,715 $ 10,065 $ 3,055,689 |
Schedule of of nonaccrual loans with and without a related allowance | Nonaccrual Nonaccrual (Dollars in thousands) Loans With a Loans Without a Total June 30, 2023 Related ACL Related ACL Nonaccrual Loans Commercial real estate $ 233 $ 846 $ 1,079 Commercial and industrial 93 1,522 1,615 Residential real estate — 10,343 10,343 Total $ 326 $ 12,711 $ 13,037 |
Summary of purchased loans by risk rating | (Dollars in thousands) Term Loan by Origination Year Revolving June 30, 2023 2023 2022 2021 2020 2019 Prior Loans Total Loans Construction and development Pass $ 404 $ 10,727 $ 21,380 $ 1,202 $ 17,684 $ 241 $ — $ 51,638 Special Mention — — — — — — — — Substandard — — — — — — — — Total construction and development $ 404 $ 10,727 $ 21,380 $ 1,202 $ 17,684 $ 241 $ — $ 51,638 Commercial real estate Pass $ 37,369 $ 204,009 $ 108,453 $ 85,529 $ 55,193 $ 112,852 $ 3,030 $ 606,435 Special Mention — — — 1,948 — — — 1,948 Substandard — 600 — 1,163 10,808 1,740 — 14,311 Total commercial real estate $ 37,369 $ 204,609 $ 108,453 $ 88,640 $ 66,001 $ 114,592 $ 3,030 $ 622,694 Commercial real estate: Current period gross write offs $ — $ — $ — $ — $ — $ 231 $ — $ 231 Commercial and industrial Pass $ 7,715 $ 15,451 $ 5,221 $ 3,464 $ 2,984 $ 3,753 $ 21,002 $ 59,590 Special Mention — — — 369 231 1,297 — 1,897 Substandard — — 1,281 — 551 21 — 1,853 Total commercial and industrial $ 7,715 $ 15,451 $ 6,502 $ 3,833 $ 3,766 $ 5,071 $ 21,002 $ 63,340 Commercial and industrial: Current period gross write offs $ — $ — $ 142 $ — $ 79 $ — $ — $ 221 Residential real estate Pass $ 106,981 $ 758,556 $ 877,670 $ 303,911 $ 65,583 $ 156,802 $ — $ 2,269,503 Special Mention — — — — — — — — Substandard — — 1,957 2,110 1,656 7,714 — 13,437 Total residential real estate $ 106,981 $ 758,556 $ 879,627 $ 306,021 $ 67,239 $ 164,516 $ — $ 2,282,940 Consumer and other Pass $ 102 $ — $ — $ — $ — $ — $ — $ 102 Special Mention — — — — — — — — Substandard — — — — — — — — Total consumer and other $ 102 $ — $ — $ — $ — $ — $ — $ 102 Total loans $ 152,571 $ 989,343 $ 1,015,962 $ 399,696 $ 154,690 $ 284,420 $ 24,032 $ 3,020,714 Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2022 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 47,567 $ 628,165 $ 48,848 $ 2,292,568 $ 216 $ 3,017,364 Special Mention — 3,677 3,897 — — 7,574 Substandard — 22,956 366 7,429 — 30,751 Doubtful — — — — — — Loss — — — — — — Total $ 47,567 $ 654,798 $ 53,111 $ 2,299,997 $ 216 $ 3,055,689 |
SBA AND USDA LOAN SERVICING (Ta
SBA AND USDA LOAN SERVICING (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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) 2023 2022 2023 2022 Beginning of period $ 7,736 $ 10,395 $ 7,038 $ 10,091 Change in fair value 282 (2,333) 980 (2,029) End of period, fair value $ 8,018 $ 8,062 $ 8,018 $ 8,062 |
RESIDENTIAL MORTGAGE LOAN SER_2
RESIDENTIAL MORTGAGE LOAN SERVICING (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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: 2023 2022 2023 2022 Beginning of period $ 3,205 $ 6,925 $ 3,973 $ 7,747 Additions — 347 — 760 Amortization expense (691) (1,270) (1,459) (2,580) Valuation allowance — 88 — 163 End of period, carrying value $ 2,514 $ 6,090 $ 2,514 $ 6,090 |
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: 2023 2022 2023 2022 Beginning balance $ — $ 88 $ — $ 163 Additions expensed — — — — Reductions credited to operations — (88) — (163) Direct write-downs — — — — Ending balance $ — $ — $ — $ — |
FEDERAL HOME LOAN BANK ADVANC_2
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
Schedule of advances from the Federal Home Loan Bank | (Dollars in thousands) June 30, 2023 December 31, 2022 Convertible advance maturing February 13, 2026; fixed rate of 4.184% $ 50,000 $ — Convertible advance maturing May 7, 2027; fixed rate of 3.025% 50,000 — Convertible advance maturing October 26, 2027; fixed rate of 3.530% 25,000 25,000 Convertible advance maturing January 25, 2028; fixed rate of 3.243% 50,000 — Convertible advance maturing February 14, 2028; fixed rate of 3.625% 25,000 — Convertible advance maturing May 8, 2028; fixed rate of 2.860% 50,000 — Convertible advance maturing June 23, 2028; fixed rate of 3.655% 50,000 — Convertible advance maturing June 16, 2032; fixed rate of 1.905% — 50,000 Convertible advance maturing June 23, 2032; fixed rate of 1.950% — 100,000 Convertible advance maturing August 6, 2032; fixed rate of 1.892% — 100,000 Convertible advance maturing October 26, 2032; fixed rate of 3.025% 25,000 25,000 Convertible advance maturing May 12, 2037; fixed rate of 1.135% — 75,000 Total FHLB advances $ 325,000 $ 375,000 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
OPERATING LEASES | |
Schedule of components of lease cost | Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2023 2022 2023 2022 Operating lease cost $ 368 $ 511 $ 909 $ 1,016 Variable lease cost 44 43 88 87 Short-term lease cost — — — — Sublease income — — — — Total net lease cost $ 412 $ 554 $ 997 $ 1,103 |
Schedule of Future maturities of the Company's operating lease liabilities | (Dollars in thousands) Twelve Months Ended: Lease Liability June 30, 2024 $ 1,957 June 30, 2025 1,799 June 30, 2026 1,550 June 30, 2027 1,277 June 30, 2028 1,007 After June 30, 2028 1,091 Total lease payments 8,681 Less: interest discount (696) Present value of lease liabilities $ 7,985 |
Schedule of Supplemental Lease Information | Supplemental Lease Information June 30, 2023 Weighted-average remaining lease term (years) 5.6 Weighted-average discount rate 3.19 % Six Months Ended June 30, (Dollars in thousands) 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 1,029 $ 920 Operating cash flows from operating leases (lease liability reduction) $ 898 $ 790 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ — $ — |
INTEREST RATE DERIVATIVES (Tabl
INTEREST RATE DERIVATIVES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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 As of or for the Six Months Ended Year Ended (Dollars in thousands) June 30, 2023 December 31, 2022 Notional Amounts $ 800,000 $ 800,000 Weighted-average pay rate 2.28% 2.28% Weighted-average receive rate 4.76% 1.68% Weighted-average maturity 4.2 years 4.2 years Weighted-average remaining maturity 2.9 years 3.4 years Net interest income (expense) $ 1,084 $ (163) As of or for the As of or for the Six Months Ended Year Ended (Dollars in thousands) June 30, 2023 December 31, 2022 Notional Amounts $ 50,000 $ 50,000 Rate Cap Premiums 413 474 Cap Rate 2.50% 2.50% Weighted-average maturity 5.0 years 5.0 years Weighted-average remaining maturity 3.3 years 3.8 years Net interest expense $ (62) $ (124) |
LOAN COMMITMENTS AND RELATED _2
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS | |
Schedule of financial instruments whose contract amounts represent credit risk | June 30, December 31, (Dollars in thousands) 2023 2022 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 64,849 $ 62,334 Standby letters of credit $ 6,228 $ 6,303 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
FAIR VALUE | |
Schedule of fair values of assets and liabilities measured on recurring and non-recurring basis | June 30, 2023 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 $ 4,790 $ — $ — $ 4,790 States and political subdivisions 6,524 — 6,524 — Mortgage-backed GSE residential 7,382 — 7,382 — Total securities available for sale 18,696 — 13,906 4,790 Equity securities 10,358 10,358 — — SBA servicing asset 8,018 — — 8,018 Interest rate derivatives 39,284 — 39,284 — $ 76,356 $ 10,358 $ 53,190 $ 12,808 Nonrecurring fair value measurements: Collateral-dependent loans $ 2,629 $ — $ — $ 2,629 $ (137) December 31, 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 $ 5,059 $ — $ — $ 5,059 States and political subdivisions 6,403 — 6,403 — Mortgage-backed GSE residential 7,783 — 7,783 — Total securities available for sale 19,245 — 14,186 5,059 Equity securities 10,300 10,300 — — SBA servicing asset 7,038 — — 7,038 Interest only strip 47 — — 47 Interest rate derivatives 28,781 — 28,781 — $ 65,411 $ 10,300 $ 42,967 $ 12,144 Nonrecurring fair value measurements: Impaired loans $ 1,045 $ — $ — $ 1,045 $ 229 Liabilities Recurring fair value measurements: Interest rate swaps $ 779 $ — $ 779 $ — |
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, 2023 $ 4,834 $ 7,736 $ 55 $ — Total gains/(losses) included in income — 282 (55) — Settlements — — — — Prepayments/paydowns (44) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2023 $ 4,790 $ 8,018 $ — $ — 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 $ — Six Months Ended: Fair value, January 1, 2023 $ 5,059 $ 7,038 $ 47 $ — Total gains/(losses) included in income — 980 (47) — Settlements — — — — Prepayments/paydowns (269) — — — Transfers in and/or out of level 3 — — — — Fair value, June 30, 2023 $ 4,790 $ 8,018 $ — $ — 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 $ — |
Schedule of quantitative information about recurring Level 3 fair value measures | Valuation Unobservable General Technique Input Range June 30, 2023: Recurring: Obligations of U.S. Government entities and agencies Discounted cash flows Discount rate 3%-5% SBA servicing asset and interest only strip Discounted cash flows Prepayment speed 12.74%-18.08% Discount rate 5.96%-14.74% Nonrecurring: Collateral-dependent loans Appraised value less estimated selling costs Estimated selling costs 6% December 31, 2022: Recurring: Obligations of U.S. Government entities and agencies Discounted cash flows Discount rate 3%-5% SBA servicing asset and interest only strip Discounted cash flows Prepayment speed 13.12%-17.60% Discount rate 8.21%-19.30% 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, 2023 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 262,727 $ — $ 262,727 $ — $ 262,727 Investment securities 29,054 10,358 13,906 4,790 29,054 FHLB stock 15,534 — — — N/A Loans, net 3,002,623 — — 2,903,536 2,903,536 Accrued interest receivable 13,877 — 13,877 13,877 SBA servicing assets 8,018 — — 8,018 8,018 Mortgage servicing assets 2,514 — — 7,104 7,104 Interest rate derivatives 39,284 — 39,284 — 39,284 Financial Liabilities: Deposits 2,698,482 — 2,691,466 — 2,691,466 Federal Home Loan Bank advances 325,000 — 325,943 — 325,943 Other borrowings 387 — 387 — 387 Accrued interest payable 3,859 — 3,859 — 3,859 Carrying Estimated Fair Value at December 31, 2022 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 179,485 $ — $ 179,485 $ — $ 179,485 Investment securities 29,545 10,300 14,186 5,059 29,545 FHLB stock 17,493 — — — N/A Loans, net 3,041,801 — — 2,999,520 2,999,520 Accrued interest receivable 13,171 — 98 13,073 13,171 SBA servicing asset 7,038 — — 7,038 7,038 Interest only strips 47 — — 47 47 Mortgage servicing assets 3,973 — — 7,209 7,209 Interest rate derivatives 28,781 — 28,781 — 28,781 Financial Liabilities: Deposits 2,666,838 — 2,658,837 — 2,658,837 Federal Home Loan Bank advances 375,000 — 376,575 — 376,575 Other borrowings 392 — 392 — 392 Accrued interest payable 2,739 — 2,739 — 2,739 Interest rate derivatives 779 — 779 — 779 |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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, 2023: Total Capital (to Risk Weighted Assets) Consolidated $ 357,834 17.59 % 213,589 10.5 % N/A N/A Bank 357,220 17.56 % 213,585 10.5 203,414 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 339,503 16.69 % 172,905 8.5 % N/A N/A Bank 338,889 16.66 % 172,902 8.5 162,731 8.0 % Common Tier 1 (CET1) Consolidated 339,503 16.69 % 142,393 7.0 % N/A N/A Bank 338,889 16.66 % 142,390 7.0 132,219 6.5 % Tier 1 Capital (to Average Assets) Consolidated 339,503 10.03 % 135,359 4.0 % N/A N/A Bank 338,889 10.01 % 135,357 4.0 169,196 5.0 % As of December 31, 2022: Total Capital (to Risk Weighted Assets) Consolidated $ 338,185 16.68 % 212,932 10.5 % N/A N/A Bank 336,866 16.61 % 212,915 10.5 202,777 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 324,297 15.99 % 172,374 8.5 % N/A N/A Bank 322,978 15.93 % 172,360 8.5 162,221 8.0 % Common Tier 1 (CET1) Consolidated 324,297 15.99 % 141,955 7.0 % N/A N/A Bank 322,978 15.93 % 141,944 7.0 131,805 6.5 % Tier 1 Capital (to Average Assets) Consolidated 324,297 9.57 % 135,485 4.0 % N/A N/A Bank 322,978 9.54 % 135,446 4.0 169,307 5.0 % |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
STOCK BASED COMPENSATION | |
Summary of stock option activity | Weighted Average Shares Exercise Price Outstanding at January 1, 2023 240,000 $ 12.70 Granted — — Exercised — — Forfeited — — Outstanding at June 30, 2023 240,000 $ 12.70 |
Summary of restricted stock activity | Weighted- Average Grant- Nonvested Shares Shares Date Fair Value Nonvested at January 1, 2023 177,399 $ 17.95 Granted 188,993 16.43 Vested (136,171) 16.25 Forfeited — — Nonvested at June 30, 2023 230,221 $ 17.71 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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) 2023 2022 2023 2022 Basic earnings per share Net Income $ 13,108 $ 16,100 $ 28,838 $ 35,529 Weighted average common shares outstanding 25,188,567 25,459,003 25,166,746 25,462,102 Basic earnings per common share $ 0.52 $ 0.63 $ 1.15 $ 1.40 Diluted earnings per share Net Income $ 13,108 $ 16,100 $ 28,838 $ 35,529 Weighted average common shares outstanding for basic earnings per common share 25,188,567 25,459,003 25,166,746 25,462,102 Add: Dilutive effects of restricted stock and options 288,576 270,153 302,195 284,589 Average shares and dilutive potential common shares 25,477,143 25,729,156 25,468,941 25,746,691 Diluted earnings per common share $ 0.51 $ 0.63 $ 1.13 $ 1.38 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basis of presentation (Details) | 6 Months Ended |
Jun. 30, 2023 segment | |
Number of operating segments | 1 |
Metro City Bank - Subsidiaries Member | |
Percentage of holding in subsidiary | 100% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounting Standards Adopted in 2023 (Details) - USD ($) | Jun. 30, 2023 | Mar. 31, 2023 | Jan. 01, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
New Accounting Pronouncements or Change in Accounting Principle | |||||||
Allowance for credit losses | $ 18,091,000 | $ 18,947,000 | $ 13,888,000 | $ 16,678,000 | $ 16,674,000 | $ 16,952,000 | |
Allowance for unfunded commitments | 241,000 | ||||||
Decrease in retained earnings | 301,752,000 | 285,832,000 | |||||
Accrued interest receivable for AFS securities | $ 115,000 | $ 114,000 | |||||
Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] | Interest Receivable | Interest Receivable | |||||
Adjustment | 2016-13 | |||||||
New Accounting Pronouncements or Change in Accounting Principle | |||||||
Allowance for credit losses | $ 5,100,000 | $ 5,055,000 | |||||
Allowance for unfunded commitments | 239,000 | ||||||
Decrease in retained earnings | (3,800,000) | ||||||
Increase in deferred tax assets | $ 1,500,000 |
INVESTMENT SECURITIES - Amortiz
INVESTMENT SECURITIES - Amortized cost, gross unrealized gains and losses (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Securities Available-for-sale | ||
Gross Amortized Cost | $ 21,954 | $ 22,720 |
Gross Unrealized Losses | (3,258) | (3,475) |
Total securities available for sale | 18,696 | 19,245 |
Obligations of U.S. Government entities and agencies. | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 4,790 | 5,059 |
Total securities available for sale | 4,790 | 5,059 |
States and political subdivisions | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 8,097 | 8,121 |
Gross Unrealized Losses | (1,573) | (1,718) |
Total securities available for sale | 6,524 | 6,403 |
Mortgage-backed GSE residential | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 9,067 | 9,540 |
Gross Unrealized Losses | (1,685) | (1,757) |
Total securities available for sale | $ 7,382 | $ 7,783 |
INVESTMENT SECURITIES - Expecte
INVESTMENT SECURITIES - Expected maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Amortized Cost | ||
Due after one year but less than five years | $ 5,653 | |
Due after five years but less than ten years | 378 | |
Due in more than ten years | 6,856 | |
Mortgage-backed GSE residential | 9,067 | |
Total | 21,954 | |
Estimated Fair Value | ||
Due after one year but less than five years | 5,620 | |
Due after five years but less than ten years | 371 | |
Due in more than ten years | 5,323 | |
Mortgage-backed GSE residential | 7,382 | |
Total | $ 18,696 | $ 19,245 |
INVESTMENT SECURITIES - Aggrega
INVESTMENT SECURITIES - Aggregated by investment category and lengths of time (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) security | Jun. 30, 2022 USD ($) security | Jun. 30, 2023 USD ($) security | Jun. 30, 2022 USD ($) security | Dec. 31, 2022 USD ($) security | |
Debt Securities Available-for-sale, Unrealized Loss Position | |||||
Twelve Months or Less - Gross Unrealized Losses | $ 804,000 | ||||
Twelve Months or Less - Estimated Fair Value | 4,097,000 | ||||
Over Twelve Months - Gross Unrealized Losses | $ 3,258,000 | $ 3,258,000 | 2,671,000 | ||
Over Twelve Months - Estimated Fair Value | 13,906,000 | 13,906,000 | $ 10,089,000 | ||
Fair value of securities pledged | $ 13,900,000 | $ 13,900,000 | |||
Number of securities pledged | security | 0 | ||||
Number of securities sold | security | 0 | 0 | 0 | 0 | |
Number of securities with unrealized losses | security | 20 | 20 | |||
Rate of depreciation | 18.98% | ||||
Number of securities with unrealized losses great than 12 months | security | 20 | 20 | |||
Equity securities | $ 10,358,000 | $ 10,358,000 | $ 10,300,000 | ||
Equity securities unrealized gain (loss) | (70,000) | $ (245,000) | 58,000 | $ (608,000) | |
Accrued interest receivable for securities available for sale | 115,000 | 115,000 | 114,000 | ||
States and political subdivisions | |||||
Debt Securities Available-for-sale, Unrealized Loss Position | |||||
Twelve Months or Less - Gross Unrealized Losses | 756,000 | ||||
Twelve Months or Less - Estimated Fair Value | 3,556,000 | ||||
Over Twelve Months - Gross Unrealized Losses | 1,573,000 | 1,573,000 | 962,000 | ||
Over Twelve Months - Estimated Fair Value | $ 6,524,000 | $ 6,524,000 | 2,847,000 | ||
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 | 48,000 | ||||
Twelve Months or Less - Estimated Fair Value | 541,000 | ||||
Over Twelve Months - Gross Unrealized Losses | $ 1,685,000 | $ 1,685,000 | 1,709,000 | ||
Over Twelve Months - Estimated Fair Value | $ 7,382,000 | $ 7,382,000 | $ 7,242,000 | ||
Number of securities with unrealized losses | security | 9 | 9 |
LOANS AND ALLOWANCE FOR CREDI_3
LOANS AND ALLOWANCE FOR CREDIT LOSSES - Major classifications of loans (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Loans and allowance for loan losses | ||||||
Total loans receivable | $ 3,029,524 | $ 3,065,329 | ||||
Unearned income | (8,810) | (9,640) | ||||
Allowance for loan losses | (18,091) | $ (18,947) | (13,888) | $ (16,678) | $ (16,674) | $ (16,952) |
Loans, net | 3,002,623 | 3,041,801 | ||||
Accrued interest receivable for loans | $ 13,800 | $ 13,100 | ||||
Accounts Receivable, Noncurrent, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration] | Interest Receivable | Interest Receivable | ||||
Construction and development | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | $ 51,759 | $ 47,779 | ||||
Allowance for loan losses | (30) | (45) | (124) | (140) | (93) | (100) |
Commercial real estate | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 625,111 | 657,246 | ||||
Allowance for loan losses | (6,208) | (6,088) | (2,811) | (3,539) | (4,294) | (4,146) |
Commercial and industrial | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 63,502 | 53,173 | ||||
Allowance for loan losses | (653) | (1,021) | (1,326) | (4,219) | (4,441) | (4,989) |
Residential real estate | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 2,289,050 | 2,306,915 | ||||
Allowance for loan losses | (11,199) | (11,792) | (9,626) | (8,678) | (7,624) | $ (7,717) |
Consumer and Other | ||||||
Loans and allowance for loan losses | ||||||
Total loans receivable | 102 | 216 | ||||
Allowance for loan losses | $ (1) | $ (1) | $ (1) | $ (6) | $ (5) |
LOANS AND ALLOWANCE FOR CREDI_4
LOANS AND ALLOWANCE FOR CREDIT LOSSES - Allowance for credit losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Allowance for credit losses: | ||||
Beginning | $ 18,947 | $ 16,674 | $ 13,888 | $ 16,952 |
Charge-offs | (452) | (452) | (390) | |
Recoveries | 14 | 4 | 18 | 12 |
Provision expense | (418) | (418) | 104 | |
Ending balance | 18,091 | 16,678 | 18,091 | 16,678 |
Construction and development | ||||
Allowance for credit losses: | ||||
Beginning | 45 | 93 | 124 | 100 |
Provision expense | (15) | 47 | (15) | 40 |
Ending balance | 30 | 140 | 30 | 140 |
Commercial real estate | ||||
Allowance for credit losses: | ||||
Beginning | 6,088 | 4,294 | 2,811 | 4,146 |
Charge-offs | (231) | (231) | ||
Recoveries | 1 | 2 | 3 | 4 |
Provision expense | 350 | (757) | 350 | (611) |
Ending balance | 6,208 | 3,539 | 6,208 | 3,539 |
Commercial and industrial | ||||
Allowance for credit losses: | ||||
Beginning | 1,021 | 4,441 | 1,326 | 4,989 |
Charge-offs | (221) | (221) | (390) | |
Recoveries | 13 | 2 | 15 | 3 |
Provision expense | (160) | (224) | (160) | (383) |
Ending balance | 653 | 4,219 | 653 | 4,219 |
Residential real estate | ||||
Allowance for credit losses: | ||||
Beginning | 11,792 | 7,624 | 9,626 | 7,717 |
Provision expense | (593) | 1,054 | (593) | 961 |
Ending balance | 11,199 | 8,678 | 11,199 | 8,678 |
Consumer and Other | ||||
Allowance for credit losses: | ||||
Beginning | 1 | 5 | 1 | |
Recoveries | 5 | |||
Provision expense | 1 | 1 | ||
Ending balance | $ 1 | 6 | 1 | 6 |
Unallocated | ||||
Allowance for credit losses: | ||||
Beginning | 217 | |||
Provision expense | (121) | 96 | ||
Ending balance | $ 96 | $ 96 | ||
2016-13 | Adjustment | ||||
Allowance for credit losses: | ||||
Beginning | 5,055 | |||
2016-13 | Adjustment | Construction and development | ||||
Allowance for credit losses: | ||||
Beginning | (79) | |||
2016-13 | Adjustment | Commercial real estate | ||||
Allowance for credit losses: | ||||
Beginning | 3,275 | |||
2016-13 | Adjustment | Commercial and industrial | ||||
Allowance for credit losses: | ||||
Beginning | (307) | |||
2016-13 | Adjustment | Residential real estate | ||||
Allowance for credit losses: | ||||
Beginning | $ 2,166 |
LOANS AND ALLOWANCE FOR CREDI_5
LOANS AND ALLOWANCE FOR CREDIT LOSSES - Allowance for credit losses disaggregated (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Allowance for credit losses: | ||||||
Individually evaluated for impairment | $ 714 | |||||
Collectively evaluated for impairment | 13,174 | |||||
Total ending allowance balance | $ 18,091 | $ 18,947 | 13,888 | $ 16,678 | $ 16,674 | $ 16,952 |
Loans: | ||||||
Individually evaluated for impairment | 29,926 | |||||
Collectively evaluated for impairment | 3,025,763 | |||||
Total ending loans balance | 3,055,689 | |||||
Total ending loans balance | 3,020,714 | 3,055,689 | ||||
Construction and development | ||||||
Allowance for credit losses: | ||||||
Collectively evaluated for impairment | 124 | |||||
Total ending allowance balance | 30 | 45 | 124 | 140 | 93 | 100 |
Loans: | ||||||
Collectively evaluated for impairment | 47,567 | |||||
Total ending loans balance | 47,567 | |||||
Total ending loans balance | 51,638 | 47,567 | ||||
Commercial real estate | ||||||
Allowance for credit losses: | ||||||
Individually evaluated for impairment | 249 | |||||
Collectively evaluated for impairment | 2,562 | |||||
Total ending allowance balance | 6,208 | 6,088 | 2,811 | 3,539 | 4,294 | 4,146 |
Loans: | ||||||
Individually evaluated for impairment | 23,767 | |||||
Collectively evaluated for impairment | 631,031 | |||||
Total ending loans balance | 654,798 | |||||
Total ending loans balance | 622,694 | 654,798 | ||||
Commercial and industrial | ||||||
Allowance for credit losses: | ||||||
Individually evaluated for impairment | 465 | |||||
Collectively evaluated for impairment | 861 | |||||
Total ending allowance balance | 653 | 1,021 | 1,326 | 4,219 | 4,441 | 4,989 |
Loans: | ||||||
Individually evaluated for impairment | 1,122 | |||||
Collectively evaluated for impairment | 51,989 | |||||
Total ending loans balance | 53,111 | |||||
Total ending loans balance | 63,340 | 53,111 | ||||
Residential real estate | ||||||
Allowance for credit losses: | ||||||
Collectively evaluated for impairment | 9,626 | |||||
Total ending allowance balance | 11,199 | 11,792 | 9,626 | 8,678 | 7,624 | $ 7,717 |
Loans: | ||||||
Individually evaluated for impairment | 5,037 | |||||
Collectively evaluated for impairment | 2,294,960 | |||||
Total ending loans balance | 2,299,997 | |||||
Total ending loans balance | 2,282,940 | 2,299,997 | ||||
Consumer and Other | ||||||
Allowance for credit losses: | ||||||
Collectively evaluated for impairment | 1 | |||||
Total ending allowance balance | 1 | $ 1 | 1 | 6 | 5 | |
Loans: | ||||||
Collectively evaluated for impairment | 216 | |||||
Total ending loans balance | 216 | |||||
Total ending loans balance | $ 102 | $ 216 | ||||
Unallocated | ||||||
Allowance for credit losses: | ||||||
Total ending allowance balance | $ 96 | $ 217 |
LOANS AND ALLOWANCE FOR CREDI_6
LOANS AND ALLOWANCE FOR CREDIT LOSSES - Impaired loans (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Jun. 30, 2023 | |
Loans impaired | ||
Unpaid Total Principal Balance | $ 29,926,000 | |
Recorded Investment With No Allowance | 28,313,000 | |
Recorded Investment With Allowance | 2,412,000 | |
Total Recorded Investment | 30,725,000 | |
Related Allowance | 714,000 | |
Commercial real estate | ||
Loans impaired | ||
Unpaid Total Principal Balance | 23,767,000 | |
Recorded Investment With No Allowance | 23,121,000 | |
Recorded Investment With Allowance | 1,415,000 | |
Total Recorded Investment | 24,536,000 | |
Related Allowance | 249,000 | |
Unpaid total principal balance of collateral dependent loans | $ 3,500,000 | |
Commercial and industrial | ||
Loans impaired | ||
Unpaid Total Principal Balance | 1,122,000 | |
Recorded Investment With No Allowance | 155,000 | |
Recorded Investment With Allowance | 997,000 | |
Total Recorded Investment | 1,152,000 | |
Related Allowance | 465,000 | |
Residential real estate | ||
Loans impaired | ||
Unpaid Total Principal Balance | 5,037,000 | |
Recorded Investment With No Allowance | 5,037,000 | |
Total Recorded Investment | $ 5,037,000 | |
Unpaid total principal balance of collateral dependent loans | 10,300,000 | |
Collateral-dependent loans | ||
Loans impaired | ||
Related Allowance | $ 460,000 |
LOANS AND ALLOWANCE FOR CREDI_7
LOANS AND ALLOWANCE FOR CREDIT LOSSES - Past due and nonaccrual loans by portfolio segment (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Loans past due | ||
Non-accrual | $ 13,037 | $ 10,065 |
Total Financing Receivables | 3,055,689 | |
Total Financing Receivables | 3,020,714 | 3,055,689 |
Current | ||
Loans past due | ||
Loans | 3,001,709 | 3,031,909 |
Past Due | ||
Loans past due | ||
Loans | 5,968 | 13,715 |
30-59 Days | ||
Loans past due | ||
Loans | 9,236 | |
60-89 Days | ||
Loans past due | ||
Loans | 5,968 | 4,299 |
Accruing Greater than 90 Days | ||
Loans past due | ||
Loans | 180 | |
Construction and development | ||
Loans past due | ||
Total Financing Receivables | 47,567 | |
Total Financing Receivables | 51,638 | 47,567 |
Construction and development | Current | ||
Loans past due | ||
Loans | 51,638 | 47,567 |
Commercial real estate | ||
Loans past due | ||
Non-accrual | 1,079 | 4,892 |
Total Financing Receivables | 654,798 | |
Total Financing Receivables | 622,694 | 654,798 |
Commercial real estate | Current | ||
Loans past due | ||
Loans | 621,266 | 649,552 |
Commercial real estate | Past Due | ||
Loans past due | ||
Loans | 349 | 354 |
Commercial real estate | 30-59 Days | ||
Loans past due | ||
Loans | 354 | |
Commercial real estate | 60-89 Days | ||
Loans past due | ||
Loans | 349 | |
Commercial and industrial | ||
Loans past due | ||
Non-accrual | 1,615 | 136 |
Total Financing Receivables | 53,111 | |
Total Financing Receivables | 63,340 | 53,111 |
Commercial and industrial | Current | ||
Loans past due | ||
Loans | 61,624 | 52,485 |
Commercial and industrial | Past Due | ||
Loans past due | ||
Loans | 101 | 490 |
Commercial and industrial | 60-89 Days | ||
Loans past due | ||
Loans | 101 | 310 |
Commercial and industrial | Accruing Greater than 90 Days | ||
Loans past due | ||
Loans | 180 | |
Residential real estate | ||
Loans past due | ||
Non-accrual | 10,343 | 5,037 |
Total Financing Receivables | 2,299,997 | |
Total Financing Receivables | 2,282,940 | 2,299,997 |
Residential real estate | Current | ||
Loans past due | ||
Loans | 2,267,079 | 2,282,089 |
Residential real estate | Past Due | ||
Loans past due | ||
Loans | 5,518 | 12,871 |
Residential real estate | 30-59 Days | ||
Loans past due | ||
Loans | 8,882 | |
Residential real estate | 60-89 Days | ||
Loans past due | ||
Loans | 5,518 | 3,989 |
Consumer and Other | ||
Loans past due | ||
Total Financing Receivables | 216 | |
Total Financing Receivables | 102 | 216 |
Consumer and Other | Current | ||
Loans past due | ||
Loans | $ 102 | $ 216 |
LOANS AND ALLOWANCE FOR CREDI_8
LOANS AND ALLOWANCE FOR CREDIT LOSSES - Analysis of nonaccrual loans (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Financing Receivable, Nonaccrual [Line Items] | ||
Nonaccrual Loans With a Related ACL | $ 326 | |
Nonaccrual Loans Without a Related ACL | 12,711 | |
Total Nonaccrual Loans | 13,037 | $ 10,065 |
Commercial real estate | ||
Financing Receivable, Nonaccrual [Line Items] | ||
Nonaccrual Loans With a Related ACL | 233 | |
Nonaccrual Loans Without a Related ACL | 846 | |
Total Nonaccrual Loans | 1,079 | 4,892 |
Commercial and industrial | ||
Financing Receivable, Nonaccrual [Line Items] | ||
Nonaccrual Loans With a Related ACL | 93 | |
Nonaccrual Loans Without a Related ACL | 1,522 | |
Total Nonaccrual Loans | 1,615 | 136 |
Residential real estate | ||
Financing Receivable, Nonaccrual [Line Items] | ||
Nonaccrual Loans Without a Related ACL | 10,343 | |
Total Nonaccrual Loans | $ 10,343 | $ 5,037 |
LOANS AND ALLOWANCE FOR CREDI_9
LOANS AND ALLOWANCE FOR CREDIT LOSSES - Risk ratings (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Term Loan by Origination Year | ||||
2023 | $ 152,571 | $ 152,571 | ||
2022 | 989,343 | 989,343 | ||
2021 | 1,015,962 | 1,015,962 | ||
2020 | 399,696 | 399,696 | ||
2019 | 154,690 | 154,690 | ||
Prior | 284,420 | 284,420 | ||
Revolving Loans | 24,032 | 24,032 | ||
Total Financing Receivables | $ 3,055,689 | |||
Total Financing Receivables | 3,020,714 | 3,020,714 | 3,055,689 | |
Gross write-offs | 452 | 452 | $ 390 | |
Revolving loans converted to term loan | 0 | 0 | ||
Pass | ||||
Term Loan by Origination Year | ||||
Total Financing Receivables | 3,017,364 | |||
Special Mention | ||||
Term Loan by Origination Year | ||||
Total Financing Receivables | 7,574 | |||
Substandard | ||||
Term Loan by Origination Year | ||||
Total Financing Receivables | 30,751 | |||
Doubtful | ||||
Term Loan by Origination Year | ||||
Total Financing Receivables | 0 | 0 | ||
Loss | ||||
Term Loan by Origination Year | ||||
Total Financing Receivables | 0 | 0 | ||
Construction and development | ||||
Term Loan by Origination Year | ||||
2023 | 404 | 404 | ||
2022 | 10,727 | 10,727 | ||
2021 | 21,380 | 21,380 | ||
2020 | 1,202 | 1,202 | ||
2019 | 17,684 | 17,684 | ||
Prior | 241 | 241 | ||
Total Financing Receivables | 47,567 | |||
Total Financing Receivables | 51,638 | 51,638 | 47,567 | |
Construction and development | Pass | ||||
Term Loan by Origination Year | ||||
2023 | 404 | 404 | ||
2022 | 10,727 | 10,727 | ||
2021 | 21,380 | 21,380 | ||
2020 | 1,202 | 1,202 | ||
2019 | 17,684 | 17,684 | ||
Prior | 241 | 241 | ||
Total Financing Receivables | 51,638 | 51,638 | 47,567 | |
Commercial real estate | ||||
Term Loan by Origination Year | ||||
2023 | 37,369 | 37,369 | ||
2022 | 204,609 | 204,609 | ||
2021 | 108,453 | 108,453 | ||
2020 | 88,640 | 88,640 | ||
2019 | 66,001 | 66,001 | ||
Prior | 114,592 | 114,592 | ||
Revolving Loans | 3,030 | 3,030 | ||
Total Financing Receivables | 654,798 | |||
Total Financing Receivables | 622,694 | 622,694 | 654,798 | |
Gross write-offs | 231 | 231 | ||
Commercial real estate | Pass | ||||
Term Loan by Origination Year | ||||
2023 | 37,369 | 37,369 | ||
2022 | 204,009 | 204,009 | ||
2021 | 108,453 | 108,453 | ||
2020 | 85,529 | 85,529 | ||
2019 | 55,193 | 55,193 | ||
Prior | 112,852 | 112,852 | ||
Revolving Loans | 3,030 | 3,030 | ||
Total Financing Receivables | 606,435 | 606,435 | 628,165 | |
Commercial real estate | Special Mention | ||||
Term Loan by Origination Year | ||||
2020 | 1,948 | 1,948 | ||
Total Financing Receivables | 1,948 | 1,948 | 3,677 | |
Commercial real estate | Substandard | ||||
Term Loan by Origination Year | ||||
2022 | 600 | 600 | ||
2020 | 1,163 | 1,163 | ||
2019 | 10,808 | 10,808 | ||
Prior | 1,740 | 1,740 | ||
Total Financing Receivables | 14,311 | 14,311 | 22,956 | |
Commercial real estate | Write-offs | ||||
Term Loan by Origination Year | ||||
Prior | 231 | 231 | ||
Total Financing Receivables | 231 | 231 | ||
Commercial and industrial | ||||
Term Loan by Origination Year | ||||
2023 | 7,715 | 7,715 | ||
2022 | 15,451 | 15,451 | ||
2021 | 6,502 | 6,502 | ||
2020 | 3,833 | 3,833 | ||
2019 | 3,766 | 3,766 | ||
Prior | 5,071 | 5,071 | ||
Revolving Loans | 21,002 | 21,002 | ||
Total Financing Receivables | 53,111 | |||
Total Financing Receivables | 63,340 | 63,340 | 53,111 | |
Gross write-offs | 221 | 221 | $ 390 | |
Commercial and industrial | Pass | ||||
Term Loan by Origination Year | ||||
2023 | 7,715 | 7,715 | ||
2022 | 15,451 | 15,451 | ||
2021 | 5,221 | 5,221 | ||
2020 | 3,464 | 3,464 | ||
2019 | 2,984 | 2,984 | ||
Prior | 3,753 | 3,753 | ||
Revolving Loans | 21,002 | 21,002 | ||
Total Financing Receivables | 59,590 | 59,590 | 48,848 | |
Commercial and industrial | Special Mention | ||||
Term Loan by Origination Year | ||||
2020 | 369 | 369 | ||
2019 | 231 | 231 | ||
Prior | 1,297 | 1,297 | ||
Total Financing Receivables | 1,897 | 1,897 | 3,897 | |
Commercial and industrial | Substandard | ||||
Term Loan by Origination Year | ||||
2021 | 1,281 | 1,281 | ||
2019 | 551 | 551 | ||
Prior | 21 | 21 | ||
Total Financing Receivables | 1,853 | 1,853 | 366 | |
Commercial and industrial | Write-offs | ||||
Term Loan by Origination Year | ||||
2021 | 142 | 142 | ||
2019 | 79 | 79 | ||
Total Financing Receivables | 221 | 221 | ||
Residential real estate | ||||
Term Loan by Origination Year | ||||
2023 | 106,981 | 106,981 | ||
2022 | 758,556 | 758,556 | ||
2021 | 879,627 | 879,627 | ||
2020 | 306,021 | 306,021 | ||
2019 | 67,239 | 67,239 | ||
Prior | 164,516 | 164,516 | ||
Total Financing Receivables | 2,299,997 | |||
Total Financing Receivables | 2,282,940 | 2,282,940 | 2,299,997 | |
Residential real estate | Pass | ||||
Term Loan by Origination Year | ||||
2023 | 106,981 | 106,981 | ||
2022 | 758,556 | 758,556 | ||
2021 | 877,670 | 877,670 | ||
2020 | 303,911 | 303,911 | ||
2019 | 65,583 | 65,583 | ||
Prior | 156,802 | 156,802 | ||
Total Financing Receivables | 2,269,503 | 2,269,503 | 2,292,568 | |
Residential real estate | Substandard | ||||
Term Loan by Origination Year | ||||
2021 | 1,957 | 1,957 | ||
2020 | 2,110 | 2,110 | ||
2019 | 1,656 | 1,656 | ||
Prior | 7,714 | 7,714 | ||
Total Financing Receivables | 13,437 | 13,437 | 7,429 | |
Consumer and Other | ||||
Term Loan by Origination Year | ||||
2023 | 102 | 102 | ||
Total Financing Receivables | 216 | |||
Total Financing Receivables | 102 | 102 | 216 | |
Consumer and Other | Pass | ||||
Term Loan by Origination Year | ||||
2023 | 102 | 102 | ||
Total Financing Receivables | $ 102 | $ 102 | $ 216 |
LOANS AND ALLOWANCE FOR CRED_10
LOANS AND ALLOWANCE FOR CREDIT LOSSES - Troubled Debt Restructures (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 USD ($) item | Jun. 30, 2023 USD ($) item | |
LOANS AND ALLOWANCE FOR CREDIT LOSSES | ||
Charge offs | $ | $ 0 | $ 0 |
Number of loans modified | item | 0 | 0 |
SBA AND USDA LOAN SERVICING - O
SBA AND USDA LOAN SERVICING - Other information (Details) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Unpaid principal balances of serviced loans | $ 493,600,000 | $ 465,100,000 |
Aggregate fair market value of the interest only strips included in SBA servicing assets | $ 0 | $ 47,000 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 12.55 | 12.56 |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 16.99 | 18.63 |
Minimum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 5.96 | 8.21 |
Minimum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 12.74 | 13.12 |
Maximum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14.74 | 19.30 |
Maximum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 18.08 | 17.60 |
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, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Servicing Asset at Fair Value Roll Forward | ||||
Beginning of period | $ 7,200 | |||
End of period, fair value | $ 7,100 | 7,100 | ||
SBA And USDA Loan | ||||
Servicing Asset at Fair Value Roll Forward | ||||
Beginning of period | 7,736 | $ 10,395 | 7,038 | $ 10,091 |
Change in fair value | 282 | (2,333) | 980 | (2,029) |
End of period, fair value | $ 8,018 | $ 8,062 | $ 8,018 | $ 8,062 |
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, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Servicing Asset at Amortized Cost Roll Forward | ||||
Beginning of period | $ 3,205 | $ 6,925 | $ 3,973 | $ 7,747 |
Additions | 347 | 760 | ||
Amortization expense | (691) | (1,270) | (1,459) | (2,580) |
Valuation allowance | 88 | 163 | ||
End of period, carrying value | $ 2,514 | 6,090 | $ 2,514 | 6,090 |
Servicing Assets Valuation Allowance Roll Forward | ||||
Beginning balance, valuation allowance | 88 | 163 | ||
Reductions credited to operations | $ (88) | $ (163) |
RESIDENTIAL MORTGAGE LOAN SER_4
RESIDENTIAL MORTGAGE LOAN SERVICING - Other information (Details) $ in Thousands | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
SBA AND USDA LOAN SERVICING | ||
Fair value of servicing rights | $ 7,100 | $ 7,200 |
Outstanding principal | $ 3,002,623 | $ 3,041,801 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 12.55 | 12.56 |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 16.99 | 18.63 |
Default rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 1.31 | 1.29 |
Default rate | Weighted average | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 1.31 | |
Residential Mortgage | ||
SBA AND USDA LOAN SERVICING | ||
Outstanding principal | $ 487,800 | $ 526,700 |
FEDERAL HOME LOAN BANK ADVANC_3
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Tabular (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 325,000 | $ 375,000 |
Convertible advance maturing February 13, 2026; fixed rate of 4.184% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 50,000 | |
Interest Rate | 4.184% | |
Convertible advance maturing May 7, 2027; fixed rate of 3.025% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 50,000 | |
Interest Rate | 3.025% | |
Convertible advance maturing October 26, 2027; fixed rate of 3.530% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 25,000 | 25,000 |
Interest Rate | 3.53% | |
Convertible advance maturing January 25, 2028; fixed rate of 3.243% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 50,000 | |
Interest Rate | 3.243% | |
Convertible advance maturing February 14, 2028; fixed rate of 3.625% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 25,000 | |
Interest Rate | 3.625% | |
Convertible advance maturing May 8, 2028; fixed rate of 2.860% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 50,000 | |
Interest Rate | 2.86% | |
Convertible advance maturing June 23, 2028; fixed rate of 3.655% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 50,000 | |
Interest Rate | 3.655% | |
Convertible advance maturing June 16, 2032; fixed rate of 1.905% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 50,000 | |
Interest Rate | 1.905% | |
Convertible advance maturing June 23, 2032; fixed rate of 1.950% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 100,000 | |
Interest Rate | 1.95% | |
Convertible advance maturing August 6, 2032; fixed rate of 1.892% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | 100,000 | |
Interest Rate | 1.892% | |
Convertible advance maturing October 26, 2032; fixed rate of 3.025% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 25,000 | 25,000 |
Interest Rate | 3.025% | |
Convertible advance maturing May 12, 2037; fixed rate of 1.135% | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advances | $ 75,000 | |
Interest Rate | 1.135% |
FEDERAL HOME LOAN BANK ADVANC_4
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Other (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
FHLB advance amount that can be called every six months | $ 100,000,000 | |
FHLB advance amount that can be called every twelve months | 225,000,000 | |
Maximum borrowing capacity | 1,030,000,000 | $ 1,010,000,000 |
FHLB advances | 325,000,000 | 375,000,000 |
Collateralized pledged | 2,270,000,000 | 2,290,000,000 |
Secured borrowings | 387,000 | $ 392,000 |
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 | 444,600,000 | |
FHLB advances | 0 | |
Collateralized pledged | $ 523,700,000 |
OPERATING LEASES - Other inform
OPERATING LEASES - Other information (Details) | 6 Months Ended |
Jun. 30, 2023 lease item | |
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, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
OPERATING LEASES | ||||
Operating lease cost | $ 368 | $ 511 | $ 909 | $ 1,016 |
Variable lease cost | 44 | 43 | 88 | 87 |
Total net lease cost | $ 412 | $ 554 | $ 997 | $ 1,103 |
OPERATING LEASES - Maturities (
OPERATING LEASES - Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Lessee Operating Lease Maturity | ||
June 30, 2024 | $ 1,957 | |
June 30, 2025 | 1,799 | |
June 30, 2026 | 1,550 | |
June 30, 2027 | 1,277 | |
June 30, 2028 | 1,007 | |
After June 30, 2028 | 1,091 | |
Total lease payments | 8,681 | |
Less: interest discount | (696) | |
Present value of lease liabilities | $ 7,985 | $ 8,885 |
OPERATING LEASES - Supplemental
OPERATING LEASES - Supplemental Lease Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
OPERATING LEASES | ||
Weighted-average remaining lease term (years) | 5 years 7 months 6 days | |
Weighted-average discount rate (as a percent) | 3.19% | |
Operating cash flows from operating leases (cash payments) | $ 1,029 | $ 920 |
Operating cash flows from operating leases (lease liability reduction) | $ 898 | $ 790 |
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 ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) item | |
INTEREST RATE SWAPS | ||||||
Unrealized gain (loss) from net changes in fair vale of cash flow hedges | $ 16,478,000 | $ 4,423,000 | $ 11,345,000 | $ 11,781,000 | ||
Restricted cash and cash equivalents | 29,100,000 | 29,100,000 | ||||
Asset Pledged as Collateral with Right | ||||||
INTEREST RATE SWAPS | ||||||
Cash deposits pledged as collateral | 0 | 0 | ||||
Interest Rate Swaps. | Cash flow hedges | ||||||
INTEREST RATE SWAPS | ||||||
Number of interest rate derivatives | item | 14 | |||||
Notional Amounts | 800,000,000 | 800,000,000 | $ 800,000,000 | |||
Interest Rate Swaps. | Cash flow hedges | Other Liabilities. | ||||||
INTEREST RATE SWAPS | ||||||
Unrealized gain (loss) from net changes in fair vale of cash flow hedges | 0 | (779,000) | ||||
Interest Rate Swaps. | Cash flow hedges | Interest Rate Derivatives. | ||||||
INTEREST RATE SWAPS | ||||||
Unrealized gain (loss) from net changes in fair vale of cash flow hedges | 36,600,000 | $ 26,700,000 | ||||
Interest Rate Swap One | Cash flow hedges | ||||||
INTEREST RATE SWAPS | ||||||
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 | |||||
Derivative forward term | 1 year | |||||
Derivative swap term | 2 years | |||||
Derivative total term | 3 years | |||||
Interest Rate Swap Three | Cash flow hedges | ||||||
INTEREST RATE SWAPS | ||||||
Number of interest rate derivatives | item | 2 | |||||
Derivative total term | 3 years | |||||
Interest Rate Swap Four | Cash flow hedges | ||||||
INTEREST RATE SWAPS | ||||||
Number of interest rate derivatives | item | 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 | |||||
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% | ||
Interest Rate Cap | Cash flow hedges | Interest Rate Derivatives. | ||||||
INTEREST RATE SWAPS | ||||||
Unrealized gain (loss) from net changes in fair vale of cash flow hedges | $ 2,700,000 | $ 2,100,000 |
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 | 12 Months Ended | ||
Oct. 31, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
INTEREST RATE SWAPS | ||||||
Net interest income (expense) | $ 24,970 | $ 30,220 | $ 51,203 | $ 60,873 | ||
Interest Rate Swaps. | Cash flow hedges | ||||||
INTEREST RATE SWAPS | ||||||
Notional Amounts | $ 800,000 | 800,000 | $ 800,000 | |||
Net interest income (expense) | $ 1,084 | $ (163) | ||||
Interest Rate Swaps. | Cash flow hedges | Weighted average | ||||||
INTEREST RATE SWAPS | ||||||
Weighted-average pay rate (as a percent) | 2.28% | 2.28% | 2.28% | |||
Weighted-average receive rate (as a percent) | 4.76% | 4.76% | 1.68% | |||
Weighted-average maturity | 4 years 2 months 12 days | 4 years 2 months 12 days | ||||
Weighted-average remaining maturity | 2 years 10 months 24 days | 2 years 10 months 24 days | 3 years 4 months 24 days | |||
Interest Rate Cap | Cash flow hedges | ||||||
INTEREST RATE SWAPS | ||||||
Notional Amounts | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | ||
Rate Cap Premiums | $ 413 | $ 474 | ||||
Cap rate (as a percent) | 2.50% | 2.50% | 2.50% | 2.50% | ||
Weighted-average maturity | 5 years | |||||
Net interest income (expense) | $ (62) | $ (124) | ||||
Interest Rate Cap | Cash flow hedges | Weighted average | ||||||
INTEREST RATE SWAPS | ||||||
Weighted-average maturity | 5 years | 5 years | ||||
Weighted-average remaining maturity | 3 years 3 months 18 days | 3 years 3 months 18 days | 3 years 9 months 18 days |
LOAN COMMITMENTS AND RELATED _3
LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Commitments to extend credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 64,849 | $ 62,334 |
Standby letters of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | 6,228 | $ 6,303 |
Unused lines of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 64,800 |
FAIR VALUE - Assets and liabili
FAIR VALUE - Assets and liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | $ 18,696 | $ 19,245 |
Equity securities | 10,358 | 10,300 |
SBA servicing assets | 7,100 | 7,200 |
States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 6,524 | 6,403 |
Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 7,382 | 7,783 |
Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 18,696 | 19,245 |
Equity securities | 10,358 | 10,300 |
SBA servicing assets | 8,018 | 7,038 |
Interest only strip | 47 | |
Interest rate derivatives | 39,284 | 28,781 |
Assets | 76,356 | 65,411 |
Liabilities | 779 | |
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 | 4,790 | 5,059 |
Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 6,524 | 6,403 |
Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 7,382 | 7,783 |
Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Collateral-dependent loans | 2,629 | |
Impaired loans | 1,045 | |
Gains (Losses) for Impaired loans | (137) | 229 |
Level 1 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Equity securities | 10,358 | 10,300 |
Assets | 10,358 | 10,300 |
Level 2 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 13,906 | 14,186 |
Interest rate derivatives | 39,284 | 28,781 |
Assets | 53,190 | 42,967 |
Liabilities | 779 | |
Level 2 | Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 6,524 | 6,403 |
Level 2 | Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 7,382 | 7,783 |
Level 3 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 4,790 | 5,059 |
SBA servicing assets | 8,018 | 7,038 |
Interest only strip | 47 | |
Assets | 12,808 | 12,144 |
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 | 4,790 | 5,059 |
Level 3 | Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Collateral-dependent loans | $ 2,629 | |
Impaired loans | $ 1,045 |
FAIR VALUE - Level 3 reconcilia
FAIR VALUE - Level 3 reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
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 | 4,834 | 6,729 | 5,059 | 6,949 |
Prepayments/paydowns | (44) | (829) | (269) | (1,049) |
Fair value | 4,790 | 5,900 | 4,790 | 5,900 |
SBA servicing assets | ||||
Fair value assets measured on recurring basis unobservable input reconciliation | ||||
Fair value | 7,736 | 10,395 | 7,038 | 10,091 |
Total gains/(loss) included in income | 282 | (2,333) | 980 | (2,029) |
Fair value | 8,018 | 8,062 | 8,018 | 8,062 |
Interest only strip | ||||
Fair value assets measured on recurring basis unobservable input reconciliation | ||||
Fair value | 55 | 159 | 47 | 143 |
Total gains/(loss) included in income | $ (55) | (5) | $ (47) | 11 |
Fair value | $ 154 | $ 154 |
FAIR VALUE - Inputs and Valuati
FAIR VALUE - Inputs and Valuation technique (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
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 |
Collateral-dependent loans | ||
Fair value measurement inputs and valuation techniques | ||
Valuation technique of available for sale securities | us-gaap:ValuationTechniqueConsensusPricingModelMember | |
Impaired Loans | ||
Fair value measurement inputs and valuation techniques | ||
Valuation technique of available for sale securities | us-gaap:ValuationTechniqueConsensusPricingModelMember | |
Discount Rate | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 12.55 | 12.56 |
Prepayment speed | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 16.99 | 18.63 |
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 | 3 | 3 |
Recurring | Discount Rate | Minimum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 5.96 | 8.21 |
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 | 5 | 5 |
Recurring | Discount Rate | Maximum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 14.74 | 19.30 |
Recurring | Prepayment speed | Minimum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 12.74 | 13.12 |
Recurring | Prepayment speed | Maximum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 18.08 | 17.60 |
Non-recurring fair value measurements | Estimated selling costs | Collateral-dependent loans | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 6 | |
Non-recurring fair value measurements | Estimated selling costs | Impaired Loans | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 6 |
FAIR VALUE - Carrying amounts a
FAIR VALUE - Carrying amounts and Estimated fair values (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Financial Assets: | ||
SBA servicing assets | $ 7,100 | $ 7,200 |
Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,018 | 7,038 |
Interest only strips | 47 | |
Interest rate derivatives | 39,284 | 28,781 |
Recurring | Carrying Amount | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 262,727 | 179,485 |
Investment securities | 29,054 | 29,545 |
FHLB stock | 15,534 | 17,493 |
Loans, net | 3,002,623 | 3,041,801 |
Accrued interest receivable | 13,877 | 13,171 |
SBA servicing assets | 8,018 | 7,038 |
Mortgage servicing assets | 2,514 | 3,973 |
Interest only strips | 47 | |
Interest rate derivatives | 39,284 | 28,781 |
Financial Liabilities: | ||
Deposits | 2,698,482 | 2,666,838 |
Federal Home Loan Bank advances | 325,000 | 375,000 |
Other borrowings | 387 | 392 |
Accrued interest payable | 3,859 | 2,739 |
Interest rate swaps | 779 | |
Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 262,727 | 179,485 |
Investment securities | 29,054 | 29,545 |
Loans, net | 2,903,536 | 2,999,520 |
Accrued interest receivable | 13,877 | 13,171 |
SBA servicing assets | 8,018 | 7,038 |
Mortgage servicing assets | 7,104 | 7,209 |
Interest only strips | 47 | |
Interest rate derivatives | 39,284 | 28,781 |
Financial Liabilities: | ||
Deposits | 2,691,466 | 2,658,837 |
Federal Home Loan Bank advances | 325,943 | 376,575 |
Other borrowings | 387 | 392 |
Accrued interest payable | 3,859 | 2,739 |
Interest rate swaps | 779 | |
Level 1 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Investment securities | 10,358 | 10,300 |
Level 2 | Recurring | ||
Financial Assets: | ||
Interest rate derivatives | 39,284 | 28,781 |
Level 2 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 262,727 | 179,485 |
Investment securities | 13,906 | 14,186 |
Accrued interest receivable | 98 | |
Interest rate derivatives | 39,284 | 28,781 |
Financial Liabilities: | ||
Deposits | 2,691,466 | 2,658,837 |
Federal Home Loan Bank advances | 325,943 | 376,575 |
Other borrowings | 387 | 392 |
Accrued interest payable | 3,859 | 2,739 |
Interest rate swaps | 779 | |
Level 3 | Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,018 | 7,038 |
Interest only strips | 47 | |
Level 3 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Investment securities | 4,790 | 5,059 |
Loans, net | 2,903,536 | 2,999,520 |
Accrued interest receivable | 13,877 | 13,073 |
SBA servicing assets | 8,018 | 7,038 |
Mortgage servicing assets | $ 7,104 | 7,209 |
Interest only strips | $ 47 |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2021 | Dec. 31, 2022 USD ($) | |
Regulatory matters | ||||||
Capital conservation buffer percentage (as a percent) | 2.50% | |||||
Common dividends | $ 4,495 | $ 3,839 | $ 9,117 | $ 7,680 | ||
Total Capital (to Risk Weighted Assets) | ||||||
Actual amount | $ 357,834 | $ 357,834 | $ 338,185 | |||
Actual ratio (as a percent) | 0.1759 | 0.1759 | 0.1668 | |||
Capital Adequacy Purposes, amount | $ 213,589 | $ 213,589 | $ 212,932 | |||
Capital Adequacy Purposes, ratio (as a percent) | 0.105 | 0.105 | 0.105 | |||
Tier I Capital (to Risk Weighted Assets) | ||||||
Actual amount | $ 339,503 | $ 339,503 | $ 324,297 | |||
Actual ratio (as a percent) | 0.1669 | 0.1669 | 0.1599 | |||
Capital Adequacy Purposes, amount | $ 172,905 | $ 172,905 | $ 172,374 | |||
Capital Adequacy Purposes, ratio (as a percent) | 0.085 | 0.085 | 0.085 | |||
Common Tier 1 (CET1) | ||||||
Actual amount | $ 339,503 | $ 339,503 | $ 324,297 | |||
Actual ratio (as a percent) | 0.1669 | 0.1669 | 0.1599 | |||
Capital Adequacy Purposes, amount | $ 142,393 | $ 142,393 | $ 141,955 | |||
Capital Adequacy Purposes, ratio (as a percent) | 0.070 | 0.070 | 0.070 | |||
Tier 1 Capital (to Average Assets) | ||||||
Actual amount | $ 339,503 | $ 339,503 | $ 324,297 | |||
Actual ratio (as a percent) | 0.1003 | 0.1003 | 0.0957 | |||
Capital Adequacy Purposes, amount | $ 135,359 | $ 135,359 | $ 135,485 | |||
Capital Adequacy Purposes, ratio (as a percent) | 0.040 | 0.040 | 0.040 | |||
Bank | ||||||
Total Capital (to Risk Weighted Assets) | ||||||
Actual amount | $ 357,220 | $ 357,220 | $ 336,866 | |||
Actual ratio (as a percent) | 0.1756 | 0.1756 | 0.1661 | |||
Capital Adequacy Purposes, amount | $ 213,585 | $ 213,585 | $ 212,915 | |||
Capital Adequacy Purposes, ratio (as a percent) | 0.105 | 0.105 | 0.105 | |||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 203,414 | $ 203,414 | $ 202,777 | |||
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 | $ 338,889 | $ 338,889 | $ 322,978 | |||
Actual ratio (as a percent) | 0.1666 | 0.1666 | 0.1593 | |||
Capital Adequacy Purposes, amount | $ 172,902 | $ 172,902 | $ 172,360 | |||
Capital Adequacy Purposes, ratio (as a percent) | 0.085 | 0.085 | 0.085 | |||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 162,731 | $ 162,731 | $ 162,221 | |||
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 | $ 338,889 | $ 338,889 | $ 322,978 | |||
Actual ratio (as a percent) | 0.1666 | 0.1666 | 0.1593 | |||
Capital Adequacy Purposes, amount | $ 142,390 | $ 142,390 | $ 141,944 | |||
Capital Adequacy Purposes, ratio (as a percent) | 0.070 | 0.070 | 0.070 | |||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 132,219 | $ 132,219 | $ 131,805 | |||
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 | $ 338,889 | $ 338,889 | $ 322,978 | |||
Actual ratio (as a percent) | 0.1001 | 0.1001 | 0.0954 | |||
Capital Adequacy Purposes, amount | $ 135,357 | $ 135,357 | $ 135,446 | |||
Capital Adequacy Purposes, ratio (as a percent) | 0.040 | 0.040 | 0.040 | |||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 169,196 | $ 169,196 | $ 169,307 | |||
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, 2023 | Apr. 18, 2018 | |
Restricted Stock | ||
STOCK BASED COMPENSATION | ||
Restricted stock issued | 188,993 | |
2018 Incentive Plan | ||
STOCK BASED COMPENSATION | ||
Shares reserved for future issuance | 2,400,000 | |
2018 Incentive Plan | Employee Stock Option [Member] | ||
STOCK BASED COMPENSATION | ||
Stock options granted | 240,000 | |
2018 Incentive Plan | Restricted Stock | ||
STOCK BASED COMPENSATION | ||
Restricted stock issued | 774,437 |
STOCK BASED COMPENSATION - Stoc
STOCK BASED COMPENSATION - Stock Options (Details) - Employee Stock Option [Member] | 6 Months Ended |
Jun. 30, 2023 $ / 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, 2023 $ / shares shares | |
Nonvested Shares | |
Outstanding at beginning of the period (in shares) | shares | 177,399 |
Granted (in shares) | shares | 188,993 |
Vested (in shares) | shares | (136,171) |
Outstanding at ending of the period (in shares) | shares | 230,221 |
Weighted-Average Grant-Date Fair Value | |
Outstanding at beginning of the period (in dollars per share) | $ / shares | $ 17.95 |
Granted (in dollars per share) | $ / shares | 16.43 |
Vested (in dollars per share) | $ / shares | 16.25 |
Outstanding at ending of the period (in dollars per share) | $ / shares | $ 17.71 |
STOCK BASED COMPENSATION - Othe
STOCK BASED COMPENSATION - Other (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) item | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
STOCK BASED COMPENSATION | |||||
Compensation cost | $ 772,000 | $ 553,000 | |||
Employee Stock Option [Member] | |||||
STOCK BASED COMPENSATION | |||||
Compensation cost | $ 0 | $ 0 | 0 | 0 | |
Total unrecognized compensation cost | 0 | 0 | $ 0 | ||
Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Compensation cost | 473,000 | $ 359,000 | 772,000 | $ 553,000 | |
Total unrecognized compensation cost | $ 4,600,000 | $ 4,600,000 | $ 2,300,000 | ||
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, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Basic earnings per share | ||||
Net Income (Loss) | $ 13,108 | $ 16,100 | $ 28,838 | $ 35,529 |
Weighted average common shares outstanding (in shares) | 25,188,567 | 25,459,003 | 25,166,746 | 25,462,102 |
Basic earnings per common share (in dollars per share) | $ 0.52 | $ 0.63 | $ 1.15 | $ 1.40 |
Diluted earnings per share | ||||
Net Income (Loss) | $ 13,108 | $ 16,100 | $ 28,838 | $ 35,529 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 25,188,567 | 25,459,003 | 25,166,746 | 25,462,102 |
Add: Dilutive effects of restricted stock and options (in shares) | 288,576 | 270,153 | 302,195 | 284,589 |
Average shares and dilutive potential common shares (in shares) | 25,477,143 | 25,729,156 | 25,468,941 | 25,746,691 |
Diluted earnings per common share (in dollars per share) | $ 0.51 | $ 0.63 | $ 1.13 | $ 1.38 |
Securities excluded from the computation of diluted earnings per common share | 0 | 0 | 0 | 0 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 13,108 | $ 16,100 | $ 28,838 | $ 35,529 |
Insider Trading Arrangements
Insider Trading Arrangements - Don T.P. Leung | 3 Months Ended |
Jun. 30, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On May 9, 2023, Don T.P. Leung, director and Vice Chairman of the Board of Directors of the Company, adopted a trading plan intended to satisfy the conditions under Rule 10b5-1(c) of the Exchange Act. Mr. Leung’s plan is for the sale of up to 300,000 shares of our common stock beginning on or after August 9, 2023 in amounts and prices determined in accordance with formulas set forth in the plan and terminates on the earlier of the date all the shares under the plan are sold or August 8, 2024. |
Name | Don T.P. Leung |
Title | director and Vice Chairman of the Board of Directors |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | May 9, 2023 |
Aggregate Available | 300,000 |