Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 30, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Registrant Name | Meridian Corp | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 99,618,818 | ||
Entity Common Stock, Shares Outstanding | 6,094,341 | ||
Entity Central Index Key | 0001750735 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Cash and due from banks | $ 19,106 | $ 23,159 |
Federal funds sold | 20,265 | 793 |
Cash and cash equivalents | 39,371 | 23,952 |
Securities available for sale (amortized cost of $58,874 and $50,942 as of December 31, 2019 and December 31, 2018) | 58,856 | 50,428 |
Securities held-to-maturity (fair value of $9,003 and $12,655 as of December 31, 2019 and December 31, 2018) | 8,780 | 12,741 |
Equity Investments | 1,009 | |
Mortgage loans held for sale (amortized cost of $33,363 and $37,337 as of December 31, 2019 and December 31, 2018) | 33,704 | 37,695 |
Loans, net of fees and costs (includes $10,546 and $11,422 of loans at fair value, amortized cost of $10,186 and $11,466 as of December 31, 2019 and December 31, 2018) | 964,710 | 838,106 |
Allowance for loan and lease losses | (9,513) | (8,053) |
Loans, net of the allowance for loan and lease losses | 955,197 | 830,053 |
Restricted investment in bank stock | 8,072 | 7,002 |
Bank premises and equipment, net | 8,636 | 9,638 |
Bank owned life insurance | 11,859 | 11,569 |
Accrued interest receivable | 3,148 | 2,889 |
Other real estate owned | 120 | 0 |
Deferred income taxes (Footnote 1) | 2,115 | 1,728 |
Goodwill and intangible assets | 4,773 | 5,046 |
Other assets | 14,379 | 4,739 |
Total assets | 1,150,019 | 997,480 |
Deposits: | ||
Noninterest bearing | 139,450 | 126,150 |
Interest-bearing | 711,718 | 625,980 |
Total deposits | 851,168 | 752,130 |
Short-term borrowings | 123,676 | 114,300 |
Long-term debt | 3,123 | 6,238 |
Subordinated debentures | 40,962 | 9,239 |
Accrued interest payable | 1,088 | 305 |
Other liabilities (Footnote 1) | 9,307 | 5,716 |
Total liabilities | 1,029,324 | 887,928 |
Stockholders’ equity: | ||
Common stock, $1 par value. Authorized 10,000,000 shares; issued and outstanding 6,407,685 and 6,406,795 as of December 31, 2019 and December 31, 2018 | 6,408 | 6,407 |
Surplus | 80,196 | 79,919 |
Treasury Stock | (3) | |
Retained earnings (Footnote 1) | 34,097 | 23,616 |
Accumulated other comprehensive loss | (3) | (390) |
Total stockholders’ equity | 120,695 | 109,552 |
Total liabilities and stockholders’ equity | $ 1,150,019 | $ 997,480 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Available-for-sale, Amortized Cost | $ 58,874 | $ 50,942 |
Securities held-to-maturity | 9,003 | 12,655 |
Mortgage loans held for sale, amortized cost | 33,363 | 37,337 |
Loans at fair value | 10,546 | 11,422 |
Loans at amortized cost | $ 10,186 | $ 11,466 |
Common stock, par value | $ 1 | $ 1 |
Common stock, Authorized shares | 10,000,000 | 10,000,000 |
Common Stock, Shares, Issued | 6,407,685 | 6,406,795 |
Common Stock, Shares, Outstanding | 6,407,685 | 6,406,795 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Interest income: | ||
Loans, including fees | $ 51,127 | $ 42,694 |
Securities: | ||
Taxable | 1,248 | 797 |
Tax-exempt | 324 | 451 |
Cash and cash equivalents | 164 | 122 |
Total interest income | 52,863 | 44,064 |
Interest expense: | ||
Deposits | 13,907 | 9,227 |
Borrowings | 2,620 | 2,180 |
Total interest expense | 16,527 | 11,407 |
Net interest income | 36,336 | 32,657 |
Provision for loan losses | 901 | 1,577 |
Net interest income after provision for loan losses | 35,435 | 31,080 |
Non-interest income: | ||
Mortgage banking income | 26,167 | 26,187 |
Wealth management income | 3,624 | 3,917 |
SBA loan income | 1,448 | |
Earnings on investment in life insurance | 290 | 300 |
Net change in the fair value of derivative instruments | 111 | (161) |
Net change in the fair value of loans held-for-sale | (13) | 7 |
Net change in the fair value of loans held-for-investment | 391 | (214) |
Net gain on sale of investment securities available-for-sale | 165 | |
Service charges | 110 | 115 |
Other | 805 | 2,204 |
Total non-interest income | 33,098 | 32,355 |
Non-interest expenses: | ||
Salaries and employee benefits | 35,157 | 34,794 |
Occupancy and equipment | 3,806 | 3,779 |
Loan expenses | 2,579 | 2,643 |
Professional fees | 2,614 | 2,162 |
Advertising and promotion | 2,475 | 2,355 |
Data processing | 1,327 | 1,261 |
Information technology | 1,256 | 1,107 |
Communications | 675 | 886 |
Other | 5,130 | 3,958 |
Total non-interest expenses | 55,019 | 52,945 |
Income before income taxes | 13,514 | 10,490 |
Income tax expense | 3,033 | 2,327 |
Net income | $ 10,481 | $ 8,163 |
Basic earnings per common share | $ 1.64 | $ 1.28 |
Diluted earnings per common share | $ 1.63 | $ 1.27 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income: | $ 10,481 | $ 8,163 |
Net change in unrealized gains (losses) on investment securities available for sale: | ||
Net unrealized gains (losses) arising during the period, net of tax (benefit) expense of $154, and ($37), respectively | 512 | (92) |
Less: reclassification adjustment for net gains on sales realized in net income, net of tax expense of ($38), and $0, respectively | (125) | |
Unrealized investment gains (losses), net of tax expense (benefit) of $116, and ($37), respectively | 387 | (92) |
Total other comprehensive income (loss) | 387 | (92) |
Total comprehensive income | $ 10,868 | $ 8,071 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Tax (benefit) expense on unrealized (losses) gains arising during the period | $ 154 | $ (37) |
Tax expense on reclassification adjustment for net gains on sales realized in net income | (38) | 0 |
Tax (benefit) expense on unrealized investment gains (losses) | $ 116 | $ (37) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Common stock | Surplus | Treasury Stock | Retained Earnings | Other Comprehensive Income (loss) | Total |
Balance beginning of the period (Footnote 1) at Dec. 31, 2017 | $ 6,392 | $ 79,501 | $ 15,453 | $ (298) | $ 101,048 | |
Comprehensive income: | ||||||
Net income | 8,163 | 8,163 | ||||
Change in unrealized gains on securities available-for-sale, net of tax | (92) | (92) | ||||
Total comprehensive income | 8,071 | |||||
Share-based awards and exercises | 15 | 125 | 140 | |||
Compensation expense related to stock option grants | 293 | 293 | ||||
Balance ending of the period at Dec. 31, 2018 | 6,407 | 79,919 | 23,616 | (390) | 109,552 | |
Comprehensive income: | ||||||
Net income | 10,481 | 10,481 | ||||
Change in unrealized gains on securities available-for-sale, net of tax | 387 | 387 | ||||
Total comprehensive income | 10,868 | |||||
Share-based awards and exercises | 1 | 5 | 6 | |||
Net purchase of treasury stock through publicly announced plans | $ (3) | (3) | ||||
Compensation expense related to stock option grants | 272 | 272 | ||||
Balance ending of the period at Dec. 31, 2019 | $ 6,408 | $ 80,196 | $ (3) | $ 34,097 | $ (3) | $ 120,695 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Net income | $ 10,481 | $ 8,163 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Gain on sale of investment securities | (165) | |
Depreciation and amortization | 1,685 | 1,422 |
Loss on disposal of premises and equipment | 14 | |
Provision for loan losses | 901 | 1,577 |
Compensation expense for stock options | 272 | 293 |
Net change in fair value of loans held for sale | 13 | (7) |
Net change in fair value of derivative instruments | (111) | 161 |
Net change in fair value of contingent assets | 177 | |
Gain on sale of OREO | (57) | |
SBA loan income | (1,448) | |
Proceeds from sale of loans | 607,122 | 660,344 |
Loans originated for sale | (573,416) | (633,219) |
Mortgage banking income | (26,167) | (26,187) |
Increase in accrued interest receivable | (259) | (353) |
Increase in other assets | 276 | (402) |
Earnings from investment in life insurance | (290) | (300) |
Deferred income tax (benefit) (Footnote 1) | (503) | (385) |
Increase in accrued interest payable | 783 | 89 |
Increase (decrease) in other liabilities (Footnote 1) | 2,382 | (286) |
Net cash provided by operating activities | 21,569 | 11,030 |
Activity in available-for-sale securities: | ||
Maturities, repayments and calls | 14,046 | 6,070 |
Sales | 24,627 | 0 |
Purchases | (44,679) | (17,094) |
Proceeds from sale of OREO | 494 | |
Settlement of forward contracts | (67) | 109 |
(Increase) decrease in restricted stock | (1,070) | (188) |
Net increase in loans | (135,188) | (146,119) |
Purchases of premises and equipment | (746) | (1,639) |
Proceeds from settlement of loans | 2,766 | |
Net cash used in investing activities | (143,077) | (155,601) |
Cash flows from financing activities: | ||
Net increase in deposits | 99,038 | 125,021 |
Increase (decrease) in short term borrowings | 9,376 | 12,750 |
Repayment of long term debt (FHLB advances) | (2,290) | |
Repayment of long term debt (Acquisition note) | (825) | (825) |
Repayment of long term debt (Subordinated debt) | (7,432) | (4,069) |
Proceeds from issuance of long term debt (Subordinated debt) | 40,000 | |
Debt issuance costs on Subordinated debt | (942) | |
Net purchase of treasury stock through publicly announced plans | (3) | |
Share based awards and exercises | 6 | 140 |
Net cash provided by financing activities | 136,927 | 133,017 |
Net change in cash and cash equivalents | 15,419 | (11,554) |
Cash and cash equivalents at beginning of period | 23,952 | 35,506 |
Cash and cash equivalents at end of period | 39,371 | 23,952 |
Supplemental disclosure of cash flow information: | ||
Interest | 15,744 | 11,318 |
Income taxes | 2,643 | $ 2,735 |
Supplemental disclosure of cash flow information: | ||
Transfers from loans and leases to real estate owned | 120 | |
Transfers from loans held for sale to loans held for investment | 3,561 | |
Net loans purchased, not settled | 1,001 | |
Net loans sold, not settled | $ (9,255) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (1) Summary of (a) Nature of Operations Meridian Corporation (the “Corporation”) was incorporated on June 8, 2009, by and at the direction of the board of directors of Meridian Bank (the “Bank”) for the sole purpose of acquiring the Bank and serving as the Bank’s parent bank holding company. On August 24, 2018, the Corporation acquired the Bank in a merger and reorganization effected under Pennsylvania law and in accordance with the terms of a Plan of Merger and Reorganization dated April 26, 2018 (the “Agreement”). Pursuant to the Agreement, on August 24, 2018 at 5:00 p.m. all of the outstanding shares of the Bank’s $1.00 par value common stock formerly held by its shareholders was converted into and exchanged for one newly issued share of the Corporation’s par value common stock, and the Bank became a subsidiary of the Corporation. Because the Bank and the Corporation were entities under common control, this exchange of shares between entities under common control resulted in the retrospective combination of the Bank and the Corporation for all periods presented as if the combination had been in effect since inception of common control. As the Corporation had no assets, liabilities, revenues, expenses or operations prior to August 24, 2018, the historical financial statements of the Bank are the historical financial statements of the combined entity. The Corporation operates in a highly competitive market area that includes local, national and regional banks as competitors along with savings banks, credit unions, insurance companies, trust companies and registered investment advisors. The Corporation and its subsidiaries are regulated by many regulatory agencies including the Securities and Exchange Commission (“SEC”), Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve and the Pennsylvania Department of Banking. The Bank was incorporated on March 16, 2004 under the laws of the Commonwealth of Pennsylvania and is a Pennsylvania state-chartered bank. The Bank commenced operations on July 8, 2004 and is a full-service bank providing personal and business lending and deposit services through 6 full-service banking offices in Pennsylvania and 9 mortgage loan production offices throughout the Delaware Valley. The Bank and Corporation are headquartered in Malvern, Pennsylvania, located in the western suburbs of Philadelphia and serves southeastern Pennsylvania and the rest of the Delaware Valley. (b) Basis of Presentation The accounting policies of the Corporation conform to U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include accounts of the Corporation and its wholly owned subsidiary, the Bank, and the wholly owned subsidiaries of the Bank: APEX Realty LLC; Meridian Wealth Partners LLC; and Meridian Land Settlement Services LLC. All significant intercompany balances and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Amounts subject to significant estimates are items such as the allowance for loan and lease losses and lending related commitments, the fair value of financial instruments, other-than-temporary impairments of investment securities, the valuations of goodwill and intangible assets, and servicing assets. Although our current estimates contemplate current conditions and how we expect them to change in the future, due to the impact that the COVID-19 pandemic has had on financial markets and the economy both locally and nationally, it is reasonably possible that this could materially affect these significant estimates and our results of operations and financial condition. The World Health Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.” The COVID-19 outbreak is disrupting supply chains and affecting production and sales across a range of industries. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers, employees and vendors all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain. Certain prior year amounts have been reclassified to conform to the current year’s presentation. During the quarter-ended March 31, 2019, the Corporation identified and corrected an immaterial error related to Maryland state licensing requirements for mortgage loan originations by our Mortgage division. As the result of our mortgage operations not being fully compliant with Maryland licensing law, we agreed to reimburse consumers approximately $474 thousand in interest and certain fees on loans originated, in addition to paying a fine of $12 thousand to resolve the matter. The Corporation has revised its comparative consolidated financial statements in the amount of $407 thousand, or $315 thousand net of tax, for periods prior to January 1, 2018 related to interest and fees on loans. The error correction impacted beginning retained earnings, deferred tax assets and other liabilities as of January 1, 2018, as shown below. The following table summarizes the impacts of the correction on the consolidated balance sheet as of January 1, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,312 92 1,404 Other liabilities 5,426 407 5,833 Retained earnings 15,768 (315) 15,453 The following table summarizes the impacts of the correction on the consolidated balance sheet as of December 31, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,728 Other liabilities 5,716 Retained earnings (315) 23,616 The following table summarizes the impacts of the corrections to our capital ratios as of December 31, 2018: December 31, 2018 - as reported To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,577 $ 71,577 $ 89,472 Common equity tier 1 capital (to risk-weighted assets) 105,196 40,262 58,157 Tier 1 capital (to risk-weighted assets) 105,196 53,683 71,577 Tier 1 capital (to average assets) 105,196 37,578 46,972 December 31, 2018 - as revised To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,262 $ 71,585 $ 89,481 Common equity tier 1 capital (to risk-weighted assets) 104,881 40,266 58,163 Tier 1 capital (to risk-weighted assets) 104,881 53,689 71,585 Tier 1 capital (to average assets) 104,881 37,581 46,977 * Does not include capital conservation buffer of 1.250% for 2019 and 1.875% for 2018 (c) Significant Concentrations of Credit Risk Most of the Corporation’s activities are with customers located within the tri-state area of Pennsylvania, Delaware and New Jersey. Note 4 discusses the types of securities that the Corporation invests in. Note 5 discusses types of lending that the Corporation engages in. Although the Corporation has a diversified loan portfolio, its debtors’ ability to honor their contracts is influenced by the region’s economy. The Corporation does not have any significant concentrations to any one industry or customer, however there is significant concentration of commercial real estate-backed loans, amounting to 37% and 37% of total loans held for investment, as of December 31, 2019 and December 31, 2018, respectively. (d) Presentation of Cash Flows For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold. Generally, federal funds are purchased or sold for one day periods. Cash balances required to meet regulatory reserve requirements of the Federal Reserve Board amounted to $1.1 million at December 31, 2019. (e) Securities Management determines the appropriate classification of debt securities at the time of purchase and re‑evaluates such designation as of each balance sheet date. Securities classified as available‑for‑sale are those securities that the Corporation intends to hold for an indefinite period of time but not necessarily to maturity. Securities available‑for‑sale are carried at fair value. Any decision to sell a security classified as available‑for‑sale would be based on various factors, including significant movement in interest rates, changes in maturity mix of the Corporation’s assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Unrealized gains and losses are reported as increases or decreases in other comprehensive income. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Securities classified as held to maturity are those debt securities the Corporation has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs or changes in general economic conditions. These securities are carried at cost adjusted for the amortization of premium and accretion of discount, computed on a level yield basis. Investments in equity securities are recorded in accordance with ASC 321-10, Investments - Equity Securities. The Corporation’s accounting policy specifies that (a) if the Corporation does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other‑than‑temporarily impaired, unless there is a credit loss. When the Corporation does not intend to sell the security, and it is more likely than not, the Corporation will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other‑than‑temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. The Corporation did not recognize any other‑than‑temporary impairment charges during the years ended December 31, 2019 and 2018. (f) Loans Receivable Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Corporation generally amortizes these amounts over the contractual life of the loan. Loans that were originated by the Corporation and intended for sale in the secondary market to permanent investors, but were either repurchased or unsalable due to defect, are held for the foreseeable future or until maturity or payoff, but are carried at fair value. The accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and charged against current year income. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt. (g) Allowance for Loan and Lease Losses The allowance for loan and lease losses (“ALLL” or “Allowance”) is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the Allowance, and subsequent recoveries, if any, are credited to the Allowance. All, or part, of the principal balance of loans receivable are charged off to the Allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. Charge-offs for retail consumer loans are generally made for any balance not adequately secured after 120 cumulative days past due. The Allowance is maintained at a level considered adequate to provide for losses that are probable and estimable. Management’s periodic evaluation of the adequacy of the Allowance is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is subjective as it requires material estimates that may be susceptible to significant revisions as more information becomes available. In addition, Federal regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s Allowance and may require the Corporation to recognize additions to the Allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. The Allowance consists of general and specific components. The general component covers non-classified loans, as well as, non-impaired classified loans and is based on historical loss experience adjusted for qualitative factors. The specific component relates to loans that are classified as doubtful, substandard, and are on non-accrual and have been deemed impaired. Loan classifications are determined based on various assessments such as the borrower’s overall financial condition, payment history, repayment sources, guarantors and value of collateral. A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or 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 are not classified as impaired. Management determines 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. For commercial and construction loans, impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral adjusted for cost to sell, if the loan is collateral dependent. Large groups of smaller balance homogeneous residential mortgage and consumer loans are collectively evaluated for impairment. Accordingly, the Corporation does not separately identify individual loans of this nature for impairment disclosures, unless such loans become impaired or are troubled and the subject of a restructuring agreement. Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a temporary reduction in interest rate or an extension of a loan’s stated maturity date. No portion of the Allowance is restricted to any individual loan or groups of loans, and the entire Allowance is available to absorb any and all loan losses. (h) Mortgage Banking Activities and Mortgage Loans Held for Sale The Corporation’s mortgage banking division operates 9 offices in the tri-state area of Pennsylvania, Delaware and New Jersey. The mortgage banking division originates conventional mortgages, FHA, VA, USDA, and other state insured mortgages. The loans are generally sold to various investors in the secondary market. Mortgage loans originated by the Corporation and intended for sale in the secondary market to permanent investors are carried at fair value and are classified as mortgage loans held for sale on the balance sheet. Gains and losses on loan sales are recorded in mortgage banking income. The Corporation enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (interest rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Time elapsing between the issuance of a loan commitment and closing and sale of the loan generally ranges from 30 to 120 days. The Corporation protects itself from changes in interest rates through the use of best efforts forward sale contracts, whereby the Corporation commits to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed interest rate risk on the loan. The Corporation also commits to loan sales through a mandatory sales channel which are economically hedged by the future sale of mortgage-backed securities to third-party counterparties to mitigate the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. By entering into best efforts commitments and economically hedging the mandatory commitments, the Corporation limits its exposure to loss and its realization of significant gains related to its rate lock commitments due to changes in interest rates. The Corporation utilizes a third-party model to determine the fair value of rate lock commitments or forward sale contracts. This model uses investor quotes while taking into consideration the probability that the rate lock commitments will close. Net derivative assets and liabilities are recorded within other assets or other liabilities, respectively, on the consolidated balance sheets, with changes in fair value during the period recorded within net change in the fair value of derivative instruments on the consolidated statements of income. (i) Loan Servicing Rights The Corporation sells substantially all of the residential mortgage loans we originate to third parties; however, the Corporation may retain the servicing rights related to some of these loans. A fee, usually based on a percentage of the outstanding principal balance of the loan, is received in return for these services. Mortgage servicing rights (“MSRs") are recognized when a loan’s servicing rights are retained upon sale of a loan. The Corporation also sells the guaranteed portion of certain Small Business Administration (“SBA”) loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. These servicing assets amortize to noninterest expense in proportion to, and over the period of, the estimated future net servicing life of the underlying loans. The servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the servicing assets. (j) Other Real Estate Owned Other real estate owned (OREO) is comprised of property acquired through a foreclosure proceeding or acceptance of a deed‑in‑lieu of foreclosure. The Corporation acquires OREO through the wholly owned subsidiary of the Bank, Apex Realty. OREO is recorded at the lower of cost or fair value, or the loan amount net of estimated selling costs, at the date of foreclosure. The cost basis of OREO is its recorded value at the time of acquisition. After acquisition, valuations are periodically performed by management and subsequent changes in the valuation allowance are charged to OREO expense. Revenues, such as rental income, and holding expenses are included in other income and other expenses, respectively. The Corporation had $120 and $0 thousand of OREO at December 31, 2019 and 2018, respectively. (k) Restricted Investment in Bank Stock Restricted bank stock is principally comprised of stock in the Federal Home Loan Bank of Pittsburgh (FHLB). Federal law requires a member institution of the FHLB to hold stock according to a predetermined formula. As of December 31, 2019, and 2018, the Corporation had an investment of $8.0 million and $6.9 million, respectively, related to the FHLB stock. Also included in restricted stock is Atlantic Central Bankers Bank (primary correspondent bank) stock in the amount of $50 thousand as of December 31, 2019 and 2018. All restricted stock is carried at cost. Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB. Management believes no impairment charge is necessary related to the FHLB restricted stock as of December 31, 2019 or 2018. (l ) Transfers of Financial Assets Transfers of financial assets, including loan and loan participation sales, are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. (m) Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation. The costs of maintenance and repairs are expensed as incurred; while major replacements, improvements and additions are capitalized. Depreciation expense is computed on the straight‑line method over the estimated useful lives of the related assets or, for leasehold improvements, over the effective life of the related lease if less than the estimated useful life. (n) Advertising Costs The Corporation follows the policy of charging the costs of advertising to expense as incurred. (o) Employee Benefit Plans The Corporation has a 401(k) Plan (the Plan) and an Employee Stock Ownership Plan (ESOP). All employees are eligible to participate in the Plan and ESOP after they have attained the age of 21 and have also completed 3 consecutive months of service. Employees must participate in the Plan to be eligible for participation in the ESOP. The employees may contribute to the Plan up to the maximum percentage allowable by law of their compensation. The Corporation may make a discretionary matching contribution to the Plan and the ESOP. Full vesting in the Corporation’s contribution to the Plan and ESOP is over a three‑year period. The Corporation’s contribution to the Plan and ESOP was $ 636 thousand and $ 325 thousand, respectively for the year ended December 31, 2019 and $ 577 thousand and $33 2 thousand, respectively for the year ended December 31, 2018. During the year ended December 31, 2019, no shares were purchased by the ESOP, while for the year ended December 31, 2018, 4,462 shares were purchased by the ESOP at an average market value of $17.50. Shares in the ESOP that are committed to be released to employees are treated as outstanding shares in the Corporation’s computation of earnings per share. There were 36,619 shares in the ESOP as of December 31, 2019. Shares in the ESOP would be impacted by any stock dividends and stock splits in the same manner as all other outstanding common shares of the Corporation. (p) Income Taxes Deferred income taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and net operating losses and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and net operating loss carry-forwards and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Corporation follows accounting guidance related to accounting for uncertainty in income taxes. Under the “more likely than not” threshold guidelines, the Corporation believes no significant uncertain tax positions exist, either individually or in the aggregate, that would give rise to the non-recognition of an existing tax benefit. As of December 31, 2019, and 2018, the Corporation had no material unrecognized tax benefits or accrued interest and penalties. The Corporation’s policy is to account for interest as a component of interest expense and penalties as a component of other expense. The Corporation is no longer subject to examination by federal, state and local taxing authorities for years before January 1, 2016. (q ) Stock Compensation Plans Stock compensation accounting guidance requires that the compensation cost relating to share‑based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share‑based compensation arrangements including stock options and restricted share plans. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded‑vesting, compensation cost is recognized on a straight‑line basis over the requisite service period for the entire award. A Black‑Scholes model is used to estimate the fair value of stock options, while the market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. (r) Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available‑for‑sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. The components of other comprehensive income (loss) for the years ended December 31, 2019 and 2018 consist of unrealized holding gains and (losses) arising during the year on available‑for‑sale securities. (s ) Off‑Balance Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off‑balance sheet financial instruments consisting of commitments to extend credit and letters of credit. Such financial instruments are recorded in the balance sheet when they are funded. (t) Derivative Financial Instruments The Corporation recognizes all derivative financial instruments related to its mortgage banking activities on its balance sheet at fair value. The Corporation utilizes investor quotes to determine the fair value of interest rate lock commitment derivatives and market pricing to determine the fair value of forward security purchase commitment derivatives. All changes in fair value of derivative instruments are recognized in earnings. The Corporation enters into interest rate swaps that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. The interest rate swaps are recognized on the Corporation’s balance sheet at fair value. Under these agreements, the Corporation originates variable-rate loans with customers in addition to interest rate swap agreements, which serve to effectively swap the customers’ variable-rate loans into fixed-rate loans. The Corporation then enters into corresponding swap agreements with swap dealer counterparties to economically hedge its exposure on the variable and fixed components of the customer agreements. The interest rate swaps with both the customers and third parties are not designated as hedges under ASC 815 and are marked to market through earnings. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820. (u) Earnings per Common Share Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period. Diluted earnings per common share takes into account the potential dilution that would occur if in the-money stock options were exercised and converted into shares of common stock and restricted stock awards and performance-based stock awards were vested. Proceeds assumed to have been received on options exercises are assumed to be used to purchase shares of the Corporation’s common stock at the average market price during the period, as required by the treasury stock method of accounting. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive. (v) Revenue Recognition The Corporation recognizes all sources of income on the accrual method, with the exception of nonaccrual loans and leases. The Corporation earns wealth management fee income from investment advisory services provided to individual and 401k customers. Fees that are determined based on the market value of the assets held in their accounts are generally billed quarterly, in arrears, based on the market value of assets at the end of the previous billing period. Other related services that are based on a fixed fee schedule are recognized when the services are rendered. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e. the trade date. Included in other assets on the balance sheet is a receivable for wealth management fees that have been earned but not yet collected. |
Earnings per Common Share
Earnings per Common Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings per Common Share | |
Earnings per Common Share | (2) Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period. Diluted earnings per common share takes into account the potential dilution computed pursuant to the treasury stock method that could occur if stock options were exercised and converted into common stock. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be anti-dilutive. Year Ended December 31, (dollars in thousands, except per share data) 2019 2018 Numerator: Net income available to common stockholders $ 10,481 8,163 Denominator for basic earnings per share - weighted average shares outstanding 6,407 6,397 Effect of dilutive common shares 31 30 Denominator for diluted earnings per share - adjusted weighted average shares outstanding 6,438 6,427 Basic earnings per share $ 1.64 1.28 Diluted earnings per share $ 1.63 1.27 Antidilutive shares excluded from computation of average dilutive earnings per share 199 126 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Other Intangibles | |
Goodwill and Other Intangibles | (3) The Corporation’s goodwill and intangible assets are detailed below: Balance Balance Amortization December 31, Amortization December 31, Period (dollars in thousands) 2018 Expense 2019 (in years) Goodwill - Wealth $ 899 — 899 Indefinite Total Goodwill 899 — 899 Intangible assets - trade name 266 — 266 Indefinite Intangible assets - customer relationships 3,727 (204) 3,523 20 Intangible assets - non competition agreements 154 (69) 85 4 Total Intangible Assets 4,147 (273) 3,874 Total $ 5,046 (273) 4,773 Accumulated amortization on intangible assets was $750 thousand and $477 thousand as of December 31, 2019 and 2018, respectively. In accordance with ASC Topic 350, the Corporation performed a qualitative assessment of goodwill and identifiable intangible assets as of December 31, 2019 and determined it was more likely than not that the fair value of the Corporation, including the wealth reporting unit where the goodwill and identifiable intangible assets are held, was more than its carrying amount. At December 31, 2019, the schedule of future intangible asset amortization is as follows (in thousands): 2020 273 2021 221 2022 204 2023 204 2024 204 Thereafter 2,502 $ 3,608 |
Securities
Securities | 12 Months Ended |
Dec. 31, 2019 | |
Securities | |
Securities | (4) The amortized cost and approximate fair value of securities as of December 31, 2019 and 2018 are as follows: December 31, 2019 Gross Gross Amortized unrealized unrealized Fair (dollars in thousands) cost gains losses value Securities available-for-sale: U.S. asset backed securities $ 11,967 — (101) 11,866 U.S. government agency mortgage-backed securities 5,457 66 (26) 5,497 U.S. government agency collateralized mortgage obligations 35,096 300 (173) 35,223 State and municipal securities 6,354 — (84) 6,270 Total securities available-for-sale $ 58,874 366 (384) 58,856 Securities held to maturity: State and municipal securities 8,780 223 — 9,003 Total securities held-to-maturity $ 8,780 223 — 9,003 December 31, 2018 Gross Gross Amortized unrealized unrealized Fair (dollars in thousands) cost gains losses value Securities available-for-sale: U.S. government agency mortgage-backed securities $ 24,092 45 (271) 23,866 U.S. government agency collateralized mortgage obligations 14,754 52 (142) 14,664 State and municipal securities 11,096 22 (199) 10,919 Investments in mutual funds 1,000 — (21) 979 Total securities available-for-sale $ 50,942 119 (633) 50,428 Securities held to maturity: U.S. Treasuries $ 1,991 — (13) 1,978 State and municipal securities 10,750 17 (90) 10,677 Total securities held-to-maturity $ 12,741 17 (103) 12,655 At December 31, 2019, the Corporation had an investment in mutual funds with a fair value of $1 million. At December 31, 2019, the Corporation had nine U.S. asset backed securities, one U.S. Government sponsored agency mortgage‑backed security, fifteen U.S. Government sponsored agency collateralized mortgage obligations, and six State and municipal securities in unrealized loss positions. At December 31, 2018, the Corporation had two U.S. Treasuries, twenty-four U.S. Government sponsored agency mortgage-backed securities, twelve U.S. Government sponsored agency collateralized mortgage obligations, twenty-six State and municipal securities, and one mutual fund in realized loss positions. As of December 31, 2019, the temporary impairment is primarily the result of changes in market interest rates subsequent to purchase and the Corporation did not intend to sell these securities prior to recovery and it is more likely than not that the Corporation will not be required to sell these securities prior to recovery to satisfy liquidity needs, and therefore, no securities are deemed to be other‑than‑temporarily impaired. As of December 31, 2019 and 2018, securities having a fair value of $19.5 million and $20.6 million, respectively, were specifically pledged as collateral for public funds, the FRB discount window program, FHLB borrowings and other purposes. The FHLB has a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB. The following table shows the Corporation’s investment gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at December 31, 2019 and 2018: December 31, 2019 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (dollars in thousands) value losses value losses value losses Securities available-for-sale: U.S. asset backed securities $ 11,866 (101) — — (101) U.S. government agency mortgage-backed securities — — (26) 1,636 (26) U.S. government agency collateralized mortgage obligations 16,283 (116) (57) 19,391 (173) State and municipal securities 6,270 (84) — — 6,270 (84) Total securities available-for-sale $ 34,419 (301) 4,744 (83) 39,163 (384) December 31, 2018 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (dollars in thousands) value losses value losses value losses Securities available-for-sale: U.S. government agency mortgage-backed securities $ 2,354 (6) 15,223 (265) 17,577 (271) U.S. government agency collateralized mortgage obligations 2,636 (14) 5,620 (128) 8,256 (142) State and municipal securities 957 (11) 8,746 (188) 9,703 (199) Investments in mutual funds 980 (21) — — 980 (21) Total securities available-for-sale $ 6,927 (52) 29,589 (581) 36,516 (633) Securities held-to-maturity: U.S. Treasuries $ — — 1,978 (13) 1,978 (13) State and municipal securities 1,545 (5) 4,783 (85) 6,328 (90) Total securities held-to-maturity $ 1,545 (5) 6,761 (98) 8,306 (103) The amortized cost and carrying value of securities at December 31, 2019 and 2018 are shown below by contractual maturities. Actual maturities may differ from contractual maturities as issuers may have the right to call or repay obligations with or without call or prepayment penalties. December 31, 2019 December 31, 2018 Available-for-sale Held-to-maturity Available-for-sale Held-to-maturity Amortized Fair Amortized Fair Amortized Fair Amortized Fair (dollars in thousands) cost value cost value cost value cost value Investment securities: Due in one year or less $ — — — — $ 906 902 1,991 1,978 Due after one year through five years — — 4,242 4,311 1,236 1,226 3,154 3,148 Due after five years through ten years 1,329 1,324 4,538 4,692 6,411 6,290 7,596 7,529 Due after ten years 16,992 16,812 — — 2,543 2,501 — — Subtotal 18,321 18,136 8,780 9,003 11,096 10,919 12,741 12,655 Mortgage-related securities 40,553 40,720 — — 38,846 38,530 — — Mutual funds with no stated maturity — — — — 1,000 979 — — Total $ 58,874 58,856 8,780 9,003 $ 50,942 50,428 12,741 12,655 Proceeds from the sale of available for sale investment securities totaled $24.6 million for the year ended December 31, 2019. Net gain on sale of available for sale securities totaled $165 thousand for the year ended December 31, 2019. There were no sales of available for sale securities for the year ended December 31, 2019. |
Allowance for Loan Losses (the
Allowance for Loan Losses (the Allowance) | 12 Months Ended |
Dec. 31, 2019 | |
Allowance for Loan Losses (the Allowance) | |
Allowance for Loan Losses (the Allowance) | (6) The Allowance is established through provisions for loan and lease losses charged against income. Loans deemed to be uncollectible are charged against the Allowance, and subsequent recoveries, if any, are credited to the Allowance. The Allowance is maintained at a level considered adequate to provide for losses that are probable and estimable. Management’s periodic evaluation of the adequacy of the Allowance is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is subjective as it requires material estimates that may be susceptible to significant revisions as more information becomes available. Roll-Forward of the Allowance by Portfolio Segment The following tables detail the roll‑forward of the Corporation’s Allowance, by portfolio segment, as of December 31, 2019 and 2018, respectively: Balance, Balance, (dollars in thousands) December 31, 2018 Charge-offs Recoveries Provision December 31, 2019 Commercial mortgage $ 3,209 — 237 (20) 3,426 Home Equity lines and loans 323 — 10 9 342 Residential mortgage 191 — 5 (17) 179 Construction 1,627 — — 735 2,362 Commercial and industrial 2,612 (30) 333 (231) 2,684 Small business loans 78 — — 431 509 Consumer 3 — 4 (1) 6 Leases 10 — — (5) 5 Total $ 8,053 (30) 589 901 9,513 Balance, Balance, (dollars in thousands) December 31, 2017 Charge-offs Recoveries Provision December 31, 2018 Commercial mortgage $ 2,434 — 7 768 3,209 Home Equity lines and loans 280 (221) 18 246 323 Residential mortgage 82 — 61 48 191 Construction 1,689 — — (62) 1,627 Commercial and industrial 2,097 (244) 142 617 2,612 Small business loans 117 — — (39) 78 Consumer 5 — 4 (6) 3 Leases 5 — — 5 10 Total $ 6,709 (465) 232 1,577 8,053 The Allowance Allocated by Portfolio Segment The following table details the allocation of the Allowance and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of December 31, 2019 respectively: Allowance on loans and leases Carrying value of loans and leases Individually Collectively Individually Collectively December 31, 2019 evaluated evaluated evaluated evaluated (dollars in thousands) for impairment for impairment Total for impairment for impairment Total Commercial mortgage $ — 3,426 3,426 $ 2,138 360,452 362,590 Home Equity lines and loans 46 296 342 536 81,047 81,583 Residential mortgage — 179 179 854 42,265 43,119 Construction — 2,362 2,362 1,247 170,797 172,044 Commercial and industrial 27 2,657 2,684 1,288 272,013 273,301 Small business loans 63 446 509 1,244 20,372 21,616 Consumer — 6 6 — 1,003 1,003 Leases — 5 5 — 697 697 Total $ 136 9,377 9,513 $ 7,307 948,646 955,953 (1) (1) Excludes deferred fees and loans carried at fair value. The following table details the allocation of the Allowance and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of December 31, 2018 respectively: Allowance on loans and leases Carrying value of loans and leases Individually Collectively Individually Collectively December 31, 2018 evaluated evaluated evaluated evaluated (dollars in thousands) for impairment for impairment Total for impairment for impairment Total Commercial mortgage $ — 3,209 3,209 $ 1,929 323,464 325,393 Home Equity lines and loans — 323 323 83 82,203 82,286 Residential mortgage — 191 191 969 40,969 41,938 Construction — 1,627 1,627 1,281 115,625 116,906 Commercial and industrial 103 2,509 2,612 443 253,607 254,050 Small business loans — 78 78 1,094 4,662 5,756 Consumer — 3 3 — 701 701 Leases — 10 10 — 1,335 1,335 Total $ 103 7,950 8,053 $ 5,799 822,566 828,365 (1) (1) Excludes deferred fees and loans carried at fair value. Loans and Leases by Credit Ratings As part of the process of determining the Allowance to the different segments of the loan and lease portfolio, Management considers certain credit quality indicators. For the commercial mortgage, construction and commercial and industrial loan segments, periodic reviews of the individual loans are performed by Management. The results of these reviews are reflected in the risk grade assigned to each loan. These internally assigned grades are as follows: · Pass – Loans considered to be satisfactory with no indications of deterioration. · Special mention – Loans classified as special mention have a potential weakness that deserves Management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. · Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. · Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loan balances classified as doubtful have been reduced by partial charge-offs and are carried at their net realizable values. The following table details the carrying value of loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of December 31, 2019 and 2018, respectively: December 31, 2019 Special (dollars in thousands) Pass mention Substandard Doubtful Total Commercial mortgage $ 353,724 5,821 3,045 — 362,590 Home equity lines and loans 81,046 — 537 — 81,583 Construction 170,823 1,221 — — 172,044 Commercial and industrial 251,320 9,648 12,333 — 273,301 Small business loans 20,351 — 1,265 — 21,616 Total $ 877,264 16,690 17,180 — 911,134 December 31, 2018 Special (dollars in thousands) Pass mention Substandard Doubtful Total Commercial mortgage $ 320,130 3,713 1,550 — 325,393 Home equity lines and loans 82,121 — 165 — 82,286 Construction 114,249 2,657 — — 116,906 Commercial and industrial 234,813 12,590 6,617 30 254,050 Small business loans 4,368 30 1,358 — 5,756 Total $ 755,681 18,990 9,690 30 784,391 In addition to credit quality indicators as shown in the above tables, Allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status as December 31, 2019 and 2018, respectively. No troubled debt restructurings performing according to modified terms are included in performing residential mortgages below for the twelve months ended December 31, 2019 and 2018, respectively. December 31, 2019 December 31, 2018 (dollars in thousands) Performing Nonperforming Total Performing Nonperforming Total Residential mortgage $ 42,265 854 43,119 $ 40,969 969 41,938 Consumer 1,003 — 1,003 701 — 701 Leases 697 — 697 1,335 — 1,335 Total $ 43,965 854 44,819 $ 43,005 969 43,974 There were five nonperforming residential mortgage loans at December 31, 2019 and six at December 31, 2018 with a combined outstanding principal balance of $839 thousand and $1.9 million, respectively, which were carried at fair value and not included in the table above. Impaired Loans The following tables detail the recorded investment and principal balance of impaired loans by portfolio segment, their related Allowance and interest income recognized for the periods. At December 31, 2019 At December 31, 2018 Average Average Recorded Principal Related recorded Recorded Principal Related recorded (dollars in thousands) investment balance allowance investment investment balance allowance investment Impaired loans with related allowance: Commercial mortgage $ — — — — — — — — Commercial and industrial 617 617 27 622 676 679 103 680 Small business loans 1,002 1,002 63 1,027 — — — — Home equity lines and loans 461 461 46 462 — — — — Residential mortgage — — — — — — — — Construction — — — — — — — — Total 2,080 2,080 136 2,111 676 679 103 680 Impaired loans without related allowance: Commercial mortgage $ 2,138 2,173 — 2,162 1,929 2,379 — 1,982 Commercial and industrial 671 718 — 693 598 682 — 618 Small business loans 242 242 — 250 263 263 — 267 Home equity lines and loans 75 75 — 76 83 89 — 84 Residential mortgage 854 854 — 855 969 978 — 978 Construction 1,247 1,248 — 1,262 1,281 1,281 — 1,293 Total 5,227 5,310 — 5,298 5,123 5,672 — 5,222 Grand Total $ 7,307 7,390 136 7,409 5,799 6,351 103 5,902 Interest income recognized on performing impaired loans amounted to $206 thousand and $327 thousand for the twelve months ended December 31, 2019 and 2018, respectively. Troubled Debt Restructuring The restructuring of a loan is considered a “troubled debt restructuring” if both of the following conditions are met: (i) the borrower is experiencing financial difficulties, and (ii) the creditor has granted a concession. The most common concessions granted include one or more modifications to the terms of the debt, such as (a) a reduction in the interest rate for the remaining life of the debt, (b) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (c) a temporary period of interest-only payments, (d) a reduction in the contractual payment amount for either a short period or remaining term of the loan, and (e) for leases, a reduced lease payment. A less common concession granted is the forgiveness of a portion of the principal. The determination of whether a borrower is experiencing financial difficulties takes into account not only the current financial condition of the borrower, but also the potential financial condition of the borrower, were a concession not granted. The determination of whether a concession has been granted is very subjective in nature. For example, simply extending the term of a loan at its original interest rate or even at a higher interest rate could be interpreted as a concession unless the borrower could readily obtain similar credit terms from a different lender. The balance of TDRs at December 31, 2019 and 2018 are as follows: December 31, December 31, (dollars in thousands) 2019 2018 TDRs included in nonperforming loans and leases $ 319 1,219 TDRs in compliance with modified terms 3,599 3,047 Total TDRs $ 3,918 4,266 There were no loan and lease modifications granted during the year ended December 31, 2019 that were categorized as TDRs. The following table presents information regarding loan and lease modifications granted during the year ended December 31, 2018 that were categorized as TDRs: For the Year Ended December 31, 2018 Pre-Modification Post-Modification Outstanding Outstanding Number of Recorded Recorded Related (dollar in thousands) Contracts Investment Investment Allowance Real Estate: Commercial mortgage 1 $ 796 $ 796 $ — Land and Construction 1 1,628 1,628 — Commercial and industrial 2 282 282 63 Small business loans 1 267 267 Total 5 $ 2,973 $ 2,973 $ 63 No loan and lease modifications granted during the twelve months ended December 31, 2019 and 2018 subsequently defaulted during the same time period. The following table presents information regarding the number of contracts by type of loan and lease modifications made for the twelve months ended December 31, 2018: For the Year Ended December 31, 2018 Interest Rate Loan Term Change and Loan Extension Term Extension Real Estate: Commercial Mortgage 1 — Land and Construction 1 — Commercial and industrial 1 1 Small business loans 1 — Total 4 1 |
Bank Premises and Equipment
Bank Premises and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Bank Premises and Equipment | |
Bank Premises and Equipment | (7) The components of premises and equipment at December 31, 2019 and 2018 are as follows: (dollars in thousands) 2019 2018 Building $ 4,141 3,824 Leasehold improvements 3,156 3,013 Land 600 600 Land Improvements 215 215 Furniture, fixtures and equipment 2,574 2,447 Computer equipment and data processing software 6,360 6,211 Construction in process 102 118 Less: accumulated depreciation (8,512) (6,790) Total $ 8,636 9,638 Total depreciation expense for the years ended December 31, 2019 and 2018 totaled $ 1.7 million and $1.7 million , respectively . |
Deposits
Deposits | 12 Months Ended |
Dec. 31, 2019 | |
Deposits: | |
Deposits | (8) The components of deposits at December 31, 2019 and 2018 are as follows: (dollars in thousands) 2019 2018 Demand, noninterest bearing $ 139,450 126,150 Demand, interest-bearing 94,416 114,610 Savings accounts 3,231 3,097 Money market accounts 302,242 229,557 Time deposits 311,829 278,716 Total $ 851,168 752,130 The aggregate amount of time deposits in denominations over $250 thousand were $271.1 million and $233.7 milllion as of December 31, 2019 and 2018, respectively. At December 31, 2019, the scheduled maturities of time deposits are as follows (in thousands): 2020 $ 261,473 2021 27,438 2022 727 2023 11,249 2024 10,942 $ 311,829 |
Short-Term Borrowings and Long
Short-Term Borrowings and Long -Term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Short-Term Borrowings and Long-Term Debt | |
Short-Term Borrowings and Long-Term Debt | (9) The Corporation’s short‑term borrowings generally consist of federal funds purchased and short‑term borrowings extended under agreements with Federal Home Loan Bank of Pittsburgh. The Corporation has two Federal Funds borrowing facilities with correspondent banks: one of $15 million and one of $24 million, respectively, which are both unsecured. Federal funds purchased generally represent one‑day borrowings. The Corporation had no Federal funds purchased at December 31, 2019 or December 31, 2018, respectively. The Corporation also has a facility with the Federal Reserve discount window of $10.4 million that is fully secured by investment securities and loans. There were no borrowings under this facility at December 31, 2019. Short‑term borrowings as of December 31, 2019 consisted of short‑term advances from FHLB of Pittsburgh in the amounts of $102.3 million with interest at 1.81%, $7.7 million with interest of 1.59%, $5.1 million with interest at 1.59%, $5.0 million with interest at 2.76%, $3.1 million with interest of 2.03%, as well as the acquisition note for the Wealth division that had a balance of $413 thousand as of December 31, 2019. Short‑term borrowings as of December 31, 2018 consisted of short‑term advances from FHLB of Pittsburgh in the amount of $112.5 million with interest at 2.62%, $1.8 million with an original terms of 4 years and interest at 1.70%. Long‑term debt at December 31, 2019 consisted of the following fixed rate notes with the FHLB of Pittsburgh: Balance as of Maturity Interest December 31, December 31, (dollars in thousands) date rate 2019 2018 Mid-term Repo-fixed 06/28/21 1.88 % $ 3,123 — Mid-term Repo-fixed 08/10/20 2.76 — 5,000 Acquisition Purchase Note (1) 04/01/20 3.00 — 1,238 Total $ 3,123 6,238 (1) The acquisition purchase note for the Wealth division is classified as short-term borrowing at December 31, 2019. The FHLB of Pittsburgh had issued $102.8 million of letters of credit to the Corporation for the benefit of the Corporation’s public deposit funds and loan customers. These letters of credit expire throughout 2019. The Corporation has a maximum borrowing capacity with the FHLB of Pittsburgh of $507.3 million and $437.2 million as of December 31, 2019 and 2018, respectively. All advances and letters of credit from the FHLB are secured by a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB. |
Subordinated Debentures
Subordinated Debentures | 12 Months Ended |
Dec. 31, 2019 | |
Subordinated Debentures | |
Subordinated Debentures | (10) In December 2008, the Bank issued $550 thousand of mandatory convertible unsecured subordinated debentures (2008 Debentures). The 2008 Debentures have a maturity date of December 18, 2023 and interest on the 2008 Debentures is paid quarterly at 6%. The 2008 Debentures are convertible into 1 share of the Bank’s common stock for every $15 in principal amount of the 2008 Debentures automatically on such date, if any, as accumulated losses of the Bank first exceed the sum of the retained earnings and capital surplus accounts of the Bank. The 2008 Debentures began to repay principal in eight equal installments which commenced in December of 2016. As of December 31, 2019, $ 225 thousand of the 2008 Debentures remained outstanding, after pay downs of $119 thousand during 2019. In December 2011, the Bank issued $1.4 million of mandatory convertible unsecured subordinated debentures (2011 Debentures). The 2011 Debentures have a maturity date of December 31, 2026 and interest on the 2011 Debentures is paid quarterly at 6%. The 2011 Debentures are convertible into 1 share of the Bank’s common stock for every $17 in principal amount of the 2011 Debentures automatically on such date, if any, as accumulated losses of the Bank first exceed the sum of the retained earnings and capital surplus accounts of the Bank. The 2011 Debentures began to repay principal in eight equal installments which commenced in December of 2019. As of December 31, 2019, $ 809 thousand of the 2011 Debentures remained outstanding, after pay downs of $116 thousand during 2019. In April 2013, the Bank issued $1.4 million of mandatory convertible unsecured subordinated debentures (2013 Debentures). The 2013 Debentures have a maturity date of December 31, 2028 and interest on the 2013 Debentures is paid quarterly at 6.5%. The 2013 Debentures are convertible into 1 share of the Bank’s common stock for every $22 in principal amount of the 2013 Debentures automatically on such date, if any, as accumulated losses of the Bank first exceed the sum of the retained earnings and capital surplus accounts of the Bank. As of December 31, 2019, $ 870 thousand of the 2013 Debentures remained outstanding, after pay downs of $0 thousand during 2019. In June, August and September 2014, the Bank issued $3 million, $100 thousand, and $7 million of non-convertible unsecured subordinated debentures (2014 Debentures). The 2014 Debentures have maturity dates of June 30, 2024, June 30, 2024 and September 30, 2024, respectively. Interest on all three tranches of the 2014 Debentures is paid quarterly at 7.25%. As of December 31, 2019, the Coporation redeem ed the remaining $7.1 million of 2014 Debentures. Upon formation of the bank holding company as described in detail in footnote 1, the Corporation assumed the 2008, 2011, 2013 and 2014 Debentures that were originally issued by the Bank. In December 2019, The Corporation issued $40 million of fixed-to-floating rate mandatory convertible unsecured subordinated debentures (2019 Debentures). The 2019 Debentures have a maturity date of December 30, 2029 and interest on the 2019 Debentures is paid semiannually at 5.375%. The debt issuance costs are included as a direct deduction from the debt liability and these costs are amortized to interest expense using the effective yield method. The 2008, 2011, and 2013 Debentures are includable as Tier 2 capital for determining the Bank’s compliance with regulatory capital requirements (see footnote 19). The 2019 Debentures are included as Tier 2 capital for the Corporation and as Tier 1 capital for the Bank. |
Servicing Assets
Servicing Assets | 12 Months Ended |
Dec. 31, 2019 | |
Servicing Assets | |
Servicing Assets | (11) The Corporation sells certain residential mortgage loans and the guaranteed portion of certain SBA loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. When the Corporation sells a residential mortgage loan, it does not retain any portion of that loan and its continuing involvement in such transfers is limited to certain servicing responsibilities. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. When the contractual servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing, a capitalized servicing asset is recognized. The Corporation accounts for the transfers and servicing of financial assets in accordance with ASC 860, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. Residential Mortgage Loans MSRs are amortized to non-interest expense in proportion to, and over the period of, the estimated future net servicing life of the underlying assets. MSR’s are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the MSR. The Corporation serviced $60.3 million and $24.9 million of residential mortgage loans as of December 31, 2019 and 2018, respectively. During the twelve months ended December 31, 2019, the Corporation recognized servicing fee income of $372 thousand, compared to $241 thousand during the twelve months ended December 31, 2018, respectively. Changes in the MSR balance are summarized as follows: Year Ended December 31, (dollars in thousands) 2019 2018 Balance at beginning of the period $ 232 — Servicing rights capitalized 372 241 Amortization of servicing rights (60) (9) Change in valuation allowance (98) — Balance at end of the period $ 446 232 Activity in the valuation allowance for MSR’s was as follows: Year Ended December 31, (dollars in thousands) 2019 2018 Valuation allowance, beginning of period $ — — Impairment (98) — Recovery — — Valuation allowance, end of period $ (98) — The Corporation uses assumptions and estimates in determining the fair value of MSRs. These assumptions include prepayment speeds and discount rates. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At December 31, 2019, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 13.08% and a discount rate equal to 9.00%. At December 31, 2018, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 11.78% and a discount rate equal to 9.5%. At December 31, 2019 and 2018, the sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% unfavorable changes in key economic assumptions are included in the following table. (dollars in thousands) December 31, 2019 December 31, 2018 Fair value of residential mortgage servicing rights $ 446 $ 213 Weighted average life (years) 7.8 3.4 Prepayment speed Impact on fair value: 10% adverse change $ (19) $ (9) 20% adverse change (37) (17) Discount rate Impact on fair value: 10% adverse change $ (14) $ (8) 20% adverse change (27) (15) The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change. SBA Loans SBA loan servicing assets are amortized to non-interest expense in proportion to, and over the period of, the estimated future net servicing life of the underlying assets. SBA loan servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the SBA loan servicing asset. The Corporation serviced $18.0 million of SBA loans, as of December 31, 2019 and no SBA loans, as of December 31, 2018. During the year ended December 31, 2019, the Corporation recognized servicing fee income of $25 thousand. Changes in the SBA loan servicing asset balance are summarized as follows: Year Ended December 31, (dollars in thousands) 2019 2018 Balance at beginning of the period $ — — Servicing rights capitalized 383 — Amortization of servicing rights (20) — Change in valuation allowance (26) — Balance at end of the period $ 337 — Activity in the valuation allowance for SBA loan servicing assets was as follows: Year Ended December 31, (dollars in thousands) 2019 2018 Valuation allowance, beginning of period $ — — Impairment (26) — Recovery — — Valuation allowance, end of period $ (26) — The Corporation uses assumptions and estimates in determining the fair value of SBA loan servicing rights. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At December 31, 2019, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 10.77%, and a discount rate equal to 11.28%. The Corporation did not service SBA loans at December 31, 2018. At December 31, 2019, the sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% unfavorable changes in key economic assumptions are included in the following table. (dollars in thousands) December 31, 2019 Fair value of SBA loan servicing rights $ 337 Weighted average life (years) 4.3 Prepayment speed Impact on fair value: 10% adverse change $ (12) 20% adverse change (23) Discount rate Impact on fair value: 10% adverse change $ (9) 20% adverse change (18) The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the SBA servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change. |
Lease Commitments
Lease Commitments | 12 Months Ended |
Dec. 31, 2019 | |
Lease Commitments | |
Lease Commitments | (12) The Corporation leases seventeen branch spaces from third parties under operating lease agreements expiring at different periods through February 2030. Under all current agreements, the Corporation is responsible for its portion of real estate taxes, utilities, insurance, and repairs and maintenance. Total rental expense for the years ended December 31, 2019 and 2018 was $1.3 million and $1.4 million, respectively. Future minimum lease payments by year and in the aggregate, under these lease agreements, are as follows: Future minimum lease payments (dollars in thousands) 2020 $ 1,133 2021 1,027 2022 857 2023 750 2024 764 Thereafter 3,319 $ 7,850 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | (13) The Corporation has issued stock options under the Meridian Bank 2004 Stock Option Plan (2004 Plan). The 2004 Plan authorized the Board of Directors to grant options up to an aggregate of 446,091 shares, as adjusted for the 5% stock dividends in 2012, 2014 and 2016 to officers, other employees and directors of the Corporation. No additional shares are available for future grants. The shares granted under the 2004 Plan to directors are nonqualified options. The shares granted under the 2004 Plan to officers and other employees are incentive stock options, and are subject to the limitations under Section 422 of the Internal Revenue Code. The Meridian Bank 2016 Equity Incentive Plan (2016 Plan) was amended on May 24, 2018 to authorize the Board of Directors to grant up to an aggregate of 686,900 awards, as adjusted for the 2016 5% stock dividend. A total of 128,450 options have been granted under the 2016 Plan through December 31, 2019. Options granted under the 2016 Plan to directors are nonqualified options, while options granted to officers and other employees are incentive stock options, and are subject to the limitations under Section 422 of the Internal Revenue Code. Stock-based compensation cost is measured at the grant date, based on the fair value of the award and is recognized as an expense over the vesting period. The fair value of stock option grants is determined using the Black-Scholes pricing model. The assumptions necessary for the calculation of the fair value are expected life of options, annual volatility of stock price, risk-free interest rate and annual dividend yield. All awards granted under the 2016 Plan to date have a term that does not exceed ten years and vest 25% upon grant and become fully exercisable after three years of service from the grant date. The following table provides information about options outstanding as of December 31, 2019 and 2018: Weighted Weighted Average Average Exercise Grant Date Shares Price Fair Value Outstanding at December 31, 2017 211,915 $ 14.99 $ 4.00 Exercised (14,508) 12.43 3.44 Granted 79,450 17.70 5.49 Forfeited (2,787) 17.94 4.27 Outstanding at December 31, 2018 274,070 15.88 4.46 Exercised (689) 11.79 3.89 Granted 73,000 17.03 4.90 Outstanding at December 31, 2019 346,381 16.13 4.55 Exercisable at December 31, 2019 240,208 15.52 4.34 Nonvested at December 31, 2019 106,173 $ 17.49 $ 5.03 The weighted average remaining contractual life of the outstanding stock options at December 31, 2019 is 7.2 years. The range of exercise prices is $9.88 to $19.00. The aggregate intrinsic value of options outstanding and exercisable was $240 thousand as of December 31, 2019. The fair value of each option granted in 2019 was estimated on the date of grant using the Black‑Scholes option‑pricing model with the following weighted average assumptions: dividend yield of 0.0%, risk‑free interest rate of between 1.95% and 2.61%, expected life of 5.75 years, and expected volatility of between 22.44% and 22.48% based on an average of the Corporation’s share price since going public and the expected volatility of similar public financial institutions in the Corporation’s market area for the period before the Corporation went public. The weighted average fair value of options granted in 2019 was $4.84 to $5.30 per share. The fair value of each option granted in 2018 was estimated on the date of grant using the Black‑Scholes option‑pricing model with the following weighted average assumptions: dividend yield of 0.0%, risk‑free interest rate of between 2.84% and 3.06%, expected life of 5.75 years, and expected volatility of 19.68% and 26.11% based on an average of the Corporation’s share price since going public and the expected volatility of similar public financial institutions in the Corporation’s market area. The weighted average fair value of options granted in 2018 was $4.87 to $5.52 per share. Total stock compensation cost for the twelve months ended December 31, 2019 and December 31, 2018 was $2 72 thousand and $293 thousand, respectively. During the twelve months ended December 31, 2019, the Corporation received $128 thousand from the exercise of stock options. There were no tax benefits recognized related to stock compensation cost for the twelve months ended December 31, 2019. In accordance with ASU 2016-09 – Compensation – Stock Compensation (ASU 2016-09), forfeitures are recognized as they occur instead of applying an estimated forfeiture rate to each grant. For purposes of the determination of stock-based compensation expense for the year ended December 31, 2019, we did not recognize any forfeitures of shares of stock options that were granted to officers and other employees. As of December 31, 2019, there was $350 thousand of unrecognized compensation cost related to nonvested stock options. This cost will be recognized over a weighted average period of 1.14 years. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | (14) The components of the federal and state income tax expense for the years ended December 31, 2019 and 2018 are as follows: (dollars in thousands) 2019 2018 Federal: Current $ 3,287 2,413 Deferred (489) (288) 2,798 2,125 State: Current 249 207 Deferred (14) (5) 235 202 Totals $ 3,033 2,327 A reconciliation of the statutory income tax at 21% to the income tax expense included in the statement of operations is as follows for 2019 and 2018, respectively: (dollars in thousands) 2019 2018 Federal income tax at statutory rate $ 2,838 21.0 % 2,203 21.0 % State tax expense, net of federal benefit 186 1.4 160 1.5 Tax exempt interest (65) (0.5) (92) (0.9) Bank owned life insurance (61) (0.5) (63) (0.6) Incentive stock options 66 0.5 52 0.5 Other 69 0.5 67 0.6 Effective income tax rate $ 3,033 22.4 % 2,327 22.1 % The components of the net deferred tax asset at December 31, 2019 and 2018 are as follows: (dollars in thousands) 2019 2018 Deferred tax assets: Allowance for loan and lease losses $ 2,111 1,802 Litigation reserve 220 — Intangibles 58 74 Accrued incentive compensation 176 — Accrued retirement 432 380 Unrealized loss on available for sale securities 2 118 Deferred rent 142 155 Mortgage repurchase reserve 16 15 Other 78 169 Total deferred tax asset 3,235 2,713 Deferred tax liabilities: Property and equipment (388) (524) Loan servicing rights (183) — Mortgage pipeline fair-value adjustment (77) (80) Hedge instrument fair-value adjustment (41) (16) Prepaid expenses (152) (131) Deferred loan costs (279) (234) Total deferred tax liability (1,120) (985) Net deferred tax asset $ 2,115 1,728 The effective tax rates for the twelve-month periods ended December 31, 2019 and 2018 were 22.4% and 22.1% respectively. The increase in rate from 22.1% to 22.4% between 2018 and 2019 was directly related to a decrease in the impact of tax exempt interest. Under ASC 740, Income Taxes, the effect of income tax law changes on deferred taxes should be recognized as a component of income tax expense related to continuing operations in the period in which the law is enacted. This requirement applies not only to items initially recognized in continuing operations, but also to items initially recognized in other comprehensive income. During 2019 and 2018 we did not recognize income tax expense related to tax reform. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deferred tax assets. As of December 31, 2019, the Corporation had an investment in low income housing tax credits of $1.5 million on which it recognized tax credits of $224 thousand, amortization of $245 thousand and tax benefits from losses of $33 thousand during the year ended December 31, 2019. |
Revenue from contracts with cus
Revenue from contracts with customers | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customers | |
Revenue from contract with customers | (15) All of the Corporation’s revenue from contracts with customers in the scope of FASB ASU 2014-09 (Topic 606), “Revenue for Contracts with Customers” (ASC 606) is recognized within noninterest income. The following table presents the Corporation’s noninterest income by revenue stream and reportable segment for the year ended December 31, 2019 (in accordance with ASC 606), and for the year ended December 31, 2018 (in accordance with ASC 605 – Revenue Recognition) as the Corporation adopted ASC 606 as of December 31, 2019. Items for the year ended December 31, 2019 outside the scope of ASC 606 are noted as such. Year Ended December 31, 2019 Year Ended December 31, 2018 (Dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Non-interest Income Mortgage banking income (1) $ 268 — 25,899 26,167 $ 124 — 26,063 26,187 Wealth management income 92 3,532 — 3,624 200 3,717 — 3,917 SBA income (1) 1,448 — — 1,448 — — — — Net change in fair values (1) (29) — 518 489 — — (368) (368) Earnings on investment in life insurance (1) 290 — — 290 300 — — 300 Gain on sale of securities (1) 165 — — 165 — — — — Dividends on FHLB stock (1) 430 — — 430 168 — — 168 Service charges on deposit accounts 110 — — 110 115 — — 115 Other (2) 819 — (444) 375 1,058 — 978 2,036 Non-interest income $ 3,593 3,532 25,973 33,098 $ 1,965 3,717 26,673 32,355 (1) Not within the scope of ASC 606. (2) Other operating non-interest income includes wire transfer fees, ATM/debit card commissions, and title fee income totaling $621 thousand and $530 thousand for the years ended December 31, 2019 and 2018, respectively, which are in the scope of ASC 606. A description of the Corporation’s primary revenue streams accounted for under ASC 606 follows: Wealth Management Income: The Corporation earns wealth management fee income from investment advisory services provided to individual and 401k customers. Fees that are determined based on the market value of the assets held in their accounts are generally billed quarterly, in arrears, based on the market value of assets at the end of the previous billing period. Other related services that are based on a fixed fee schedule are recognized when the services are rendered. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e. the trade date. Included in other assets on the balance sheet is a receivable for wealth management fees that have been earned but not yet collected. Service Charges on Deposit Accounts: The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance. Gains/Losses on Sales of OREO: The Corporation records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. There were no such sales of OREO for the years ended December 31, 2019 or 2018. |
Transactions with Executive Off
Transactions with Executive Officers, Directors and Principal Stockholders | 12 Months Ended |
Dec. 31, 2019 | |
Transactions with Executive Officers, Directors and Principal Stockholders | |
Transactions with Executive Officers, Directors and Principal Stockholders | (16) The Corporation has had, and may be expected to have in the future, banking transactions in the ordinary course of business with its executive officers, directors, principal stockholders, their immediate families and affiliated companies (commonly referred to as related parties). Loans receivable from related parties totaled $3.7 million and $3.5 million at December 31, 2019 and 2018, respectively. Advances and repayments during 2019 totaled $8.7 million and $8.5 million respectively. Advances and repayments during 2018 totaled $5.6 million and $3.5 million respectively. Deposits of related parties totaled $20.2 million and $17.8 million at December 31, 2019 and 2018, respectively. Subordinated debt held by related parties totaled $519 thousand and $616 thousand at December 31, 2019 and 2018, respectively. The Corporation paid legal fees of $16 thousand and $32 thousand to a law firm of a director for the years ended December 31, 2019 and 2018, respectively. |
Financial Instruments with Off-
Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies | |
Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies | (17) The Corporation 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 letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The Corporation’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on‑balance sheet instruments. A summary of the Corporation’s financial instrument commitments at December 31, 2019 and 2018 is as follows: (dollars in thousands) 2019 2018 Commitments to grant loans and commitments under lines of credit $ 327,788 290,614 Letters of credit 9,750 5,158 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. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Corporation evaluates each customer’s credit worthiness on a case‑by‑case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment. Outstanding letters of credit written are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. The majority of these standby letters of credit expire within the next twelve months. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Corporation requires collateral supporting these letters of credit as deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees. The current amount of the liability as of December 31, 2019 and 2018 for guarantees under standby letters of credit issues is not material. Included in commitments to grant loans are mortgage loan commitments of $72.9 million and $33.4 million in 2019 and 2018, respectively, which included interest rate lock commitments. These rate lock commitments represent an agreement to extend credit to a mortgage loan applicant whereby the interest rate on the loan is set prior to funding. The loan commitment binds the Corporation to lend funds to a potential borrower at the specified rate, regardless of whether interest rates change between the commitment date and the loan funding date. The Corporation’s loan commitments generally range between 30 and 90 days; however, the borrower is not obligated to obtain the loans. As such, these commitments are subject to interest rate risk and related price risk during the period from interest rate lock commitment through the loan funding date or expiration date. The Corporation economically hedges its mandatory sales channel using the forward sale of mortgage-backed securities, in addition to best-efforts forward sale commitments to substantially eliminate these risks. At December 31, 2019 and 2018, the Corporation had a notional amount of $62.8 million and $26.5 million, respectively. At December 31, 2019 and 2018, the Corporation had best efforts forward sale commitments to sell loans amounting to $18.6 million and $9.3 million, respectively. The Corporation is only obligated to settle the forward sale commitment if the loan closes in accordance with the terms of the interest rate lock commitment. The Corporation’s forward sale commitments generally expire within 90 days. Loans sold under FHA or investor programs are subject to repurchase or indemnification if they fail to meet the origination criteria of those programs. In addition, loans sold to investors may be subject to repurchase or indemnification if the loan is two or three months delinquent during a set period that usually varies from the first six months to a year after the loan is sold. At December 31, 2019 there were no indemnification or repurchase requests pending. Although repurchases and losses have been infrequent, repurchase reserves of $71 thousand and $68 thousand were recorded as of December 31, 2019 and 2018. There were no such repurchases for the year ended December 31, 2019. |
Recent Litigation
Recent Litigation | 12 Months Ended |
Dec. 31, 2019 | |
Recent Litigation | |
Recent Litigation | (18) In the ordinary course of business, the Corporation and its subsidiaries are routinely defendants in or parties to pending and threatened legal actions and proceedings, including actions brought on behalf of various classes of claimants. These actions and proceedings are generally based on alleged violations of banking, employment, contract and other laws. In some of these actions and proceedings, claims for substantial monetary damages are asserted against the Corporation and its subsidiaries. In the ordinary course of business, the Corporation and its subsidiaries are also subject to regulatory and governmental examinations, information gathering requests, inquiries, investigations, and threatened legal actions and proceedings. In connection with formal and informal inquiries by federal, state, and local agencies, the Corporation and its subsidiaries receive numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of their activities. On November 21, 2017, three former employees of the mortgage-banking division of the Bank filed suit in the United States District Court for the Eastern District of Pennsylvania, Juan Jordan et al. v. Meridian Bank, Thomas Campbell and Christopher Annas , against the Bank purporting to be a class and collective action seeking unpaid and overtime wages under the Fair Labor Standards Act of 1938, the New Jersey Wage and Hour Law, and the Pennsylvania Minimum Wage Act of 1968 on behalf of similarly situated plaintiffs. In September 2019, plaintiffs’ counsel and the Bank agreed to move forward with non-binding mediation. Although the Bank believes it had strong and meritorious defenses, given the expense and inconvenience of litigation, on July 24, 2019 through mediation, the Bank reached an agreement in principle with the plaintiffs to settle this litigation for $990 thousand in total. The Bank had a litigation reserve of $990 thousand at December 31, 2019. The parties submitted a negotiated settlement agreement to the court, and received final court approval on December 19, 2019. On February 29, 2020 the Bank made a payment, which included additional minor expenses, of $1.0 million in final settlement of this matter. |
Regulatory Matters
Regulatory Matters | 12 Months Ended |
Dec. 31, 2019 | |
Regulatory Matters | |
Regulatory Matters | (19) The Bank and the Corporation are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank and the Corporation must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off‑balance sheet items as calculated under regulatory accounting practices. The Bank’s and the Corporation’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk‑weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank and the Corporation to maintain minimum amounts and ratios (set forth below) of total and Tier 1 capital (as defined in the regulations) to risk‑weighted assets, and of Tier 1 capital to average assets. Management believes, as of December 31, 2019, that the Bank and the Corporation meets all capital adequacy requirements to which it is subject. As of December 31, 2019, the Federal Deposit Insurance Corporation categorized the Bank and the Corporation 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 Bank’s and the Corporation’s category. The Bank is subject to certain restrictions on the amount of dividends that it may declare and pay to the Corporation due to regulatory considerations. The Pennsylvania Banking Code provides that cash dividends may be declared and paid only out of accumulated net earnings. The Banks’s and the Corporation’s actual capital amounts and ratios at December 31, 2019 and 2018 are presented below. The Corporation was not subject to these regulatory capital requirements as of December 31, 2018 and therefore the presentation below is for Bank only as of December 31, 2018. December 31, 2019 To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) Corporation $ 166,471 $ 108,576 $ 103,405 Bank 166,360 108,571 103,401 Common equity tier 1 capital (to risk-weighted assets) Corporation 115,934 72,384 67,214 Bank 154,881 72,381 67,211 Tier 1 capital (to risk-weighted assets) Corporation 115,934 87,895 82,724 Bank 154,881 87,891 82,721 Tier 1 capital (to average assets) Corporation 115,934 43,973 54,966 Bank 154,881 44,013 55,017 December 31, 2018 - as revised To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,262 $ 71,585 $ 89,481 Common equity tier 1 capital (to risk-weighted assets) 104,881 40,266 58,163 Tier 1 capital (to risk-weighted assets) 104,881 53,689 71,585 Tier 1 capital (to average assets) 104,881 37,581 46,977 * Does not include capital conservation buffer of 1.250% for 2019 and 1.875% for 201 8 |
Fair Value Measurements and Dis
Fair Value Measurements and Disclosures | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements and Disclosures | |
Fair Value Measurements and Disclosures | (20) The Corporation uses fair value measurements to record fair value adjustments to certain assets and liabilities. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Corporation’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation techniques or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Corporation groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation. For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2019 and 2018 are as follows: December 31, 2019 (dollars in thousands) Total Level 1 Level 2 Level 3 Securities available for sale: U.S. asset backed securities $ 11,866 — 11,866 — U.S. government agency mortgage-backed securities 5,497 — 5,497 — U.S. government agency collateralized mortgage obligations 35,223 — 35,223 — State and municipal securities 6,270 — 6,270 — Investments in mutual funds 1,009 — 1,009 — Mortgage loans held-for-sale 33,704 — 33,704 — Mortgage loans held-for-investment 10,546 — 10,546 — Mortgage servicing rights 446 — — 446 SBA loan servicing rights 337 — — 337 Interest rate lock commitments 504 — — 504 Customer derivatives - Interest rate swaps 382 — 382 — Total $ 105,784 — 104,497 1,287 December 31, 2018 (dollars in thousands) Total Level 1 Level 2 Level 3 Securities available for sale: U.S. government agency mortgage-backed securities $ 23,866 — 23,866 — U.S. government agency collateralized mortgage obligations 14,664 — 14,664 — State and municipal securities 10,919 — 10,919 — Investments in mutual funds and other equity securities 979 — 979 — Mortgage loans held-for-sale 37,695 — 37,695 — Mortgage loans held-for-investment 11,422 — 11,422 — Mortgage servicing rights 213 — — 213 Interest rate lock commitments 310 — — 310 Customer derivatives - Interest rate swaps 141 — 141 — Total $ 100,209 — 99,686 523 Assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2019 and 2018 are as follows: December 31, 2019 (dollars in thousands) Total Level 1 Level 2 Level 3 Impaired loans (1) $ 7,307 — — 7,307 Other real estate owned (2) 120 — — 120 Total $ 7,427 — — 7,427 December 31, 2018 (dollars in thousands) Total Level 1 Level 2 Level 3 Impaired loans (1) $ 5,799 — — 5,799 Other real estate owned (2) — — — — Total $ 5,799 — — 5,799 (1) Impaired loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third‑party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. (2) Real estate properties acquired through, or in lieu of, foreclosure are to be sold and are carried at fair value less estimated cost to sell. Fair value is based upon independent market prices or appraised value of the property. These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement. Appraised values may be discounted based on management’s expertise, historical knowledge, changes in market conditions from the time of valuation and/or estimated costs to sell. Below is management’s estimate of the fair value of all financial instruments, whether carried at cost or fair value on the Corporation’s balance sheet. The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair value of the Corporation’s financial instruments: (a) Cash and Cash Equivalents The carrying amounts reported in the balance sheet for cash and short‑term instruments approximate those assets’ fair values. (b) Securities The fair value of securities available‑for‑sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. (c) Mortgage Loans Held-for-Sale The fair value of loans held for sale is based on secondary market prices. (d) Loans Receivable The fair value of loans receivable is estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate‑risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair value below is reflective of an exit price. (e) Mortgage Loans Held-for-Investment The fair value of mortgage loans held for investment is based on the price secondary markets are currently offering for similar loans using observable market data . (f) Loan Servicing Rights The Corporation estimates the fair value of mortgage servicing rights and SBA servicing rights using discounted cash flow models that calculate the present value of estimated future net servicing income. The model uses readily available prepayment speed assumptions for the interest rates of the portfolios serviced. These servicing rights are classified within Level 3 in the fair value hierarchy based upon management’s assessment of the inputs. The Corporation reviews the servicing rights portfolios on a quarterly basis for impairment. (g) Impaired Loans Impaired loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third‑party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. (h) Restricted Investment in Bank Stock The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities. (i) Accrued Interest Receivable and Payable The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value. (j) Deposit Liabilities The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed‑rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. (k) Short‑Term Borrowings The carrying amounts of short‑term borrowings approximate their fair values. (l) Long‑Term Debt Fair values of FHLB advances and the acquisition purchase note payable are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party. (m) Subordinated Debt Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity. (n) Off‑Balance Sheet Financial Instruments Off-balance sheet instruments are primarily comprised of loan commitments, which are generally priced at market at the time of funding. Fees on commitments to extend credit and stand-by letters of credit are deemed to be immaterial and these instruments are expected to be settled at face value or expire unused. It is impractical to assign any fair value to these instruments and as a result they are not included in the table below. Fair values assigned to the notional value of interest rate lock commitments and forward sale contracts are based on market quotes. (o) Derivative Financial Instruments The fair value of forward commitments and interest rate swaps is based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement. The estimated fair values of the Corporation’s financial instruments at December 31, 2019 and 2018 are as follows: December 31, 2019 December 31, 2018 Fair Value Carrying Carrying (dollars in thousands) Hierarchy Level amount Fair value amount Fair value Financial assets: Cash and cash equivalents Level 1 $ 39,371 39,371 23,952 23,952 Securities available-for-sale Level 2 58,856 58,856 50,428 50,428 Securities held-to-maturity Level 2 8,780 9,003 12,741 12,655 Equity investments Level 2 1,009 1,009 — — Mortgage loans held-for-sale Level 2 33,704 33,704 37,695 37,695 Loans receivable, net Level 3 954,164 973,057 818,631 820,512 Mortgage loans held-for-investment Level 2 10,546 10,546 11,422 11,422 Interest rate lock commitments Level 3 504 504 310 310 Forward commitments Level 2 6 6 — — Restricted investment in bank stock Level 3 8,072 8,072 7,002 7,002 Mortgage servicing rights Level 3 446 446 232 213 SBA loan servicing rights Level 3 337 337 — — Accrued interest receivable Level 3 3,148 3,148 2,889 2,889 Customer derivatives - Interest rate swaps Level 2 382 382 141 141 Financial liabilities: Deposits Level 2 851,168 880,400 752,130 744,300 Short-term borrowings Level 2 123,676 123,678 114,300 114,300 Long-term debt Level 2 3,123 3,123 6,238 6,240 Subordinated debentures Level 2 40,962 40,962 9,239 9,396 Accrued interest payable Level 2 1,088 1,088 305 305 Interest rate lock commitments Level 3 157 157 40 40 Forward commitments Level 2 119 119 176 176 Customer derivatives - Interest rate swaps Level 2 431 431 161 161 Notional Notional Off-balance sheet financial instruments: amount Fair value amount Fair value Commitments to extend credit Level 2 $ 327,788 504 290,614 310 Letters of credit Level 2 9,750 — 5,158 — The following table includes a rollforward of interest rate lock commitments for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the years ended December 31, 2019 and 2018. Year Ended December 31, 2019 2018 Balance at beginning of the period $ 310 344 (Decrease) increase in value 194 (34) Balance at end of the period $ 504 310 Significant Valuation Techniques for Level 3 interest rate lock Fair Value Unobservable Range of Weighted commitments as of December 31, 2019 Level 3 Valuation Technique Input Inputs Average Interest rate lock commitments $ 504 Market comparable pricing Pull through 1 - 99 % 91.70 % Losses of $78 thousand and gains of $40 thousand due to changes in the fair value of interest rate lock commitments which are classified as Level 3 assets and liabilities for the twelve months ended December 31, 2019 and 2018, respectively, are recorded in non-interest income as net change in the fair value of derivative instruments in the Corporation’s consolidated statements of income. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | (21) Risk Management Objective of Using Derivatives The Corporation is exposed to certain risk arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash receipts and its known or expected cash payments principally related to the Corporation’s loan portfolio. Mortgage Banking Derivatives In connection with its mortgage banking activities, the Corporation enters into commitments to originate certain fixed rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, the Corporation enters into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may also be in the form of commitments to sell individual mortgage loans or interest rate locks at a fixed price at a future date. The amount necessary to settle each interest rate lock is based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Interest rate lock commitments and forward commitments are recorded within other assets/liabilities on the consolidated balance sheets, with changes in fair values during the period recorded within net change in the fair value of derivative instruments on the unaudited consolidated statements of income. Customer Derivatives – Interest Rate Swaps Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers to swap a fixed rate product for a variable rate product, or vice versa. The Corporation executes interest rate derivatives with commercial banking customers to facilitate their respective risk management strategies. Those interest rate derivatives are simultaneously hedged by offsetting derivatives that the Corporation executes with a third party, such that the Corporation minimizes its net interest rate risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. The following table presents a summary of the notional amounts and fair values of derivative financial instruments: December 31, 2019 December 31, 2018 (dollars in thousands) Balance Sheet Line Item Notional Asset Notional Asset Interest Rate Lock Commitments Positive fair values Other assets $ 47,660 504 27,188 310 Negative fair values Other liabilities 22,663 (157) 6,218 (40) Total 70,323 347 33,406 270 Forward Commitments Positive fair values Other assets 4,500 6 — — Negative fair values Other liabilities 58,250 (119) 26,500 (176) Total 62,750 (113) 26,500 (176) Customer Derivatives - Interest Rate Swaps Positive fair values Other assets 3,271 382 3,330 141 Negative fair values Other liabilities 3,271 (431) 3,330 (161) Total 6,541 (49) 6,660 (20) Total derivative financial instruments $ 139,614 185 66,566 74 Interest rate lock commitments are considered Level 3 in the fair value hierarchy, while the forward commitments and interest rate swaps are considered Level 2 in the fair value hierarchy. The following table presents a summary of the fair value gains and losses on derivative financial instruments: Year Ended December 31, (dollars in thousands) 2019 2018 Interest Rate Lock Commitments $ 77 (40) Forward Commitments 63 (101) Customer Derivatives - Interest Rate Swaps (29) (20) Net fair value gains (losses) on derivative financial instruments $ 111 (161) Realized gains/(losses) on derivatives were $(816) thousand and $627 thousand for the year ended December 31, 2019 and 2018, respectively, and are included in other non-interest income in the consolidated statements of income. |
Segments
Segments | 12 Months Ended |
Dec. 31, 2019 | |
Segments | |
Segments | (22) ASC Topic 280 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Corporation’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to allocate resources and assess performance. The Corporation has applied the aggregation criterion set forth in this codification to the results of its operations. Our Banking segment consists of commercial and retail banking. The Banking segment generates interest income from its lending (including leasing) and investing activities and is dependent on the gathering of lower cost deposits from its branch network or borrowed funds from other sources for funding its loans, resulting in the generation of net interest income. The Banking segment also derives revenues from other sources including gains on the sale of available for sale investment securities, gains on the sale of residential mortgage loans, service charges on deposit accounts, cash sweep fees, overdraft fees, BOLI income, title insurance fees, and other less significant non-interest income. Meridian Wealth, a registered investment advisor and wholly-owned subsidiary of the Bank, provides a comprehensive array of wealth management services and products and the trusted guidance to help its clients and our banking customers prepare for the future. The unit generates non-interest income through advisory fees. Meridian’s mortgage banking segment (“Mortgage”) consists of one central loan production facility and several retail and profit sharing loan production offices located throughout the Delaware Valley. The Mortgage segment originates 1 – 4 family residential mortgages and sells nearly all of its production to third party investors. The unit generates net interest income on the loans it originates and holds temporarily, then earns fee income (primarily gain on sales) at the time of the sale. The unit also recognizes income from document preparation fees, changes in portfolio pipeline fair values and related net hedging gains. The table below summarizes income and expenses, directly attributable to each business line, which has been included in the statement of operations. Year Ended December 31, 2019 Year Ended December 31, 2018 (Dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 36,019 65 252 36,336 $ 31,807 289 561 32,657 Provision for loan losses 901 — — 901 1,577 — — 1,577 Net interest income after provision 35,118 65 252 35,435 30,230 289 561 31,080 Non-interest Income Mortgage banking income 268 — 25,899 26,167 124 — 26,063 26,187 Wealth management income 92 3,532 — 3,624 200 3,717 — 3,917 SBA income 1,448 — — 1,448 — — — — Net change in fair values (29) — 518 489 — — (368) (368) Other 1,814 — (444) 1,370 1,641 — 978 2,619 Non-interest income 3,593 3,532 25,973 33,098 1,965 3,717 26,673 32,355 Non-interest Expense Salaries and employee benefits 16,408 2,194 16,555 35,157 13,803 1,897 19,094 34,794 Occupancy and equipment 2,166 126 1,514 3,806 2,114 131 1,534 3,779 Professional fees 1,494 18 1,102 2,614 1,709 21 432 2,162 Advertising and promotion 1,502 347 626 2,475 1,197 432 726 2,355 Other 6,362 580 4,025 10,967 5,285 752 3,818 9,855 Non-interest expense 27,932 3,266 23,822 55,019 24,108 3,233 25,604 52,945 Operating Margin $ 10,780 331 2,403 13,514 $ 8,087 773 1,630 10,490 Total Assets $ 1,112,862 5,234 31,923 1,150,019 $ 951,224 6,146 40,110 997,480 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2019 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | (23) As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), the Bank is permitted an extended transition period for complying with new or revised accounting standards affecting public companies. We will remain an emerging growth company until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1,070,000,000 or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of this offering, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the end of the fiscal year in which the market value of our equity securities that are held by non-affiliates exceeds $700 million as of June 30 of that year. We have elected to take advantage of this extended transition period, which means that the financial statements included herein, as well as any financial statements that we file in the future, will not be subject to all new or revised accounting standards generally applicable to public companies for the transition period for so long as we remain an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period under the JOBS Act. If we do so, we will prominently disclose this decision in the first periodic report following our decision, and such decision is irrevocable. As a filer under the JOBS Act, we will implement new accounting standards subject to the effective dates required for non-public entities. Adopted Pronouncements in 2019: FASB ASU 2014‑09 (Topic 606), “Revenue from Contracts with Customers” The Corporation adopted ASU 2014-09 and all subsequent amendments to the ASU (collectively, “ASC 606”), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as OREO. The majority of the Corporation’s revenues come from interest income and other sources, including loans, leases, investment securities and derivatives, that are outside the scope of ASC 606. The Corporation’s services that fall within the scope of ASC 606 are presented within noninterest income and are recognized as revenue as the Corporation satisfies its obligation to the customer. Services within the scope of ASC 606 include wealth management fee income, service charges on deposits, and the net gain on sale of OREO. Refer to Note 15, “Revenue from Contracts with Customers,” in the accompanying notes to the consolidated financial statements for further discussion on the Corporation’s accounting policies for revenue sources within the scope of ASC 606. The Corporation adopted ASC 606 on December 31, 2019 using the modified retrospective method. The adoption of this ASU did not have a material impact to our consolidated financial statements and required the Corporation to make the revenue disclosures as detailed in note 15. FASB ASU 2017-05 (Topic 610), “ Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” Issued in February 2017, ASU 2017-05 provides clarification of the scope of ASC 610-20. Specifically, the new guidance clarifies that ASC 610-20 applies to nonfinancial assets which do not meet the definition of a business or not-for-profit activity. Further, the new guidance clarifies that a financial asset is within the scope of ASC 610-20 if it meets the definition of an in-substance nonfinancial asset which is defined as a financial asset promised to a counterparty in a contract where substantially all of the assets promised are nonfinancial. Finally, the new guidance clarifies that each distinct nonfinancial asset and insubstance nonfinancial asset should be derecognized when the counterparty obtains control of it. The Corporation adopted this ASU on December 31, 2019 at the same time we adopted ASU 2014-09. The adoption of this ASU did not have a material impact to our consolidated financial statements or disclosures. FASB ASU 2016‑15 (Topic 230), “Classification of Certain Cash Receipts and Cash Payments” Issued in August 2016, ASU 2016‑15 provides guidance on eight specific cash flow issues and their disclosure in the consolidated statements of cash flows. The issues addressed include debt prepayment, settlement of zero-coupon debt, contingent consideration in business combinations, proceeds from settlement of insurance claims, proceeds from settlement of BOLI, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the Predominance principle. ASU 2016‑15 is effective for public companies for the annual and interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted. For non-public companies ASU 2016‑15 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Corporation adopted ASU 2016-15 on December 31, 2019. Upon the adoption of this ASU the Corporation recorded $98 thousand from the prepayment of subordinated debt as a financing activity in the consolidated statement of cash flows for the year ended December 31, 2019 instead of as an operating activity. FASB ASU 2016‑01 (Subtopic 825‑10), “Financial Instruments – Overall, Recognition and Measurement of Financial Assets and Financial Liabilities” The Corporation adopted ASU 2016-01 which requires that equity investments be measured at fair value with changes in fair value recognized in net income. The Corporation’s equity investments with a readily determinable fair value are currently included within equity securities and are measured at fair value with changes in fair value recognized in net income. In connection with the adoption of this ASU, the Corporation elected the practicability exception to fair value measurement for investments in equity securities without a readily determinable fair value (other than our Federal Home Loan Bank (“FHLB”) and Atlantic Central Bankers Bank stock, which are outside of the scope of this ASU). Under the practicability exception, the investments are measured at cost, less impairment, plus or minus observable price changes (in orderly transactions) of an identical or similar investment of the same issuer. The adoption of this ASU did not have a material impact on our consolidated financial statements and related disclosures. Additionally, upon adoption of this ASU we continued to disclose the fair value of loans using an “exit price”. Pronouncements Not Effective as of December 31, 2019: FASB ASU 2017‑01 (Topic 805), “Business Combinations” Issued in January 2017, ASU 2017‑01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. ASU 2017‑01 is effective for public companies for annual periods beginning after December 15, 2017 including interim periods within those periods, while for non-public companies the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The adoption of this standard on January 1, 2020 did not have a material impact on the Corporation’s consolidated financial statements and related disclosures. FASB ASU 2016‑13 (Topic 326), “Measurement of Credit Losses on Financial Instruments” Issued in June 2016, ASU 2016‑13 significantly changes how companies measure and recognize credit impairment for many financial assets. This ASU requires businesses and other organizations to measure the current expected credit losses (“CECL”) on financial assets, such as loans, net investments in leases, certain debt securities, bond insurance and other receivables. The amendments affect entities holding financial assets and net investments in leases that are not accounted for at fair value through net income. Current GAAP requires an incurred loss methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. The amendments in this ASU replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonableness and supportable information to inform credit loss estimates. An entity should apply the amendments through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (modified retrospective approach). Acquired credit impaired loans for which the guidance in Accounting Standards Codification (ASC) Topic 310-30 has been previously applied should prospectively apply the guidance in this ASU. A prospective transition approach is required for debt securities for which an other-than-temporary impairment has been recognized before the effective date. ASU 2016‑13 is effective for public companies for the annual and interim periods in fiscal years beginning after December 15, 2019, with early adoption permitted. For non-public companies the ASU is effective for fiscal years and interim periods beginning after December 15, 2022, or January 1, 2023 for the Corporation. The Corporation will adopt ASU 2016-13 on January 1, 2023 and is currently determining under which method. The Corporation has assembled a cross-functional team from Finance, Credit, and IT that is leading the implementation efforts to evaluate the impact of this guidance on the Corporation's consolidated financial statements and related disclosures, internal systems, accounting policies, processes and related internal controls. At this time the Corporation cannot yet estimate the impact to the consolidated financial statements. FASB ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” Issued in April 2019, ASU 2019-04 clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments (addressed by ASUs 2016-13, 2017-12, and 2016-01, respectively). The amendments to estimating expected credit losses (ASU 2016-13), in particular, how a company considers recoveries and extension options when estimating expected credit losses, are the most relevant to the Corporation. The ASU clarifies that (1) the estimate of expected credit losses should include expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off, and (2) that contractual extension or renewal options that are not unconditionally cancellable by the lender are considered when determining the contractual term over which expected credit losses are measured. Management will consider the impact of ASU 2019-04 when considering the impact of ASU 2016-13 as discussed above. FASB ASU 2016‑02 (Topic 842), “Leases” Issued in February 2016, ASU 2016‑02 revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. ASU 2016‑02 is effective for public companies for the first interim period within annual periods beginning after December 15, 2018, with early adoption permitted. For non-public companies the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within the fiscal years beginning after December 31, 2020. In July 2018 ASU 2018-11 was issued which creates a new, optional transition method for implementing ASU 2016-02 and a lessor practical expedient for separating lease and non-lease components and has the same effective date as ASU 2016-02. Under the optional transition method of ASU 2018-11, the Corporation may initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Corporation will adopt ASU 2016-12 and ASU 2018-11 as of December 31, 2020 and apply ASC 840 throughout 2020. The Corporation is evaluating the effects that ASU 2016‑02 and ASU 2018-11 will have on its consolidated financial statements and related disclosures. FASB ASU 2017‑08 (Subtopic 310‑20), “Nonrefundable Fees and Other Costs (Subtopic 310‑20): Premium Amortization on Purchased Callable Debt Securities” Issued in March 2017, ASU 2017‑08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendment requires the premium to be amortized to the earliest call date. The amendment does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. For non-public companies the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within the fiscal years beginning after December 31, 2020. The Corporation will adopt ASU 2017-08 as of December 31, 2020 and apply existing guidance throughout 2020. The Corporation is evaluating the effect that ASU 2017‑08 will have on its consolidated financial statements and related disclosures. FASB ASU 2017‑12 (Subtopic 815), “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities” Issued in August 2017, ASU 2017‑12 better aligns hedge accounting with an organization’s risk management activities in the financial statements. In addition, the ASU simplifies the application of hedge accounting guidance in areas where practice issues exist. Specifically, the proposed ASU eases the requirements for effectiveness testing, hedge documentation and application of the shortcut and the critical terms match methods. Entities would be permitted to designate contractually specified components as the hedged risk in a cash flow hedge involving the purchase or sale of nonfinancial assets or variable rate financial instruments. In addition, entities would no longer separately measure and report hedge ineffectiveness. Also, entities, may choose refined measurement techniques to determine the changes in fair value of the hedged item in fair value hedges of benchmark interest rate risk. For public business entities, the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. Early application is permitted in any interim period after issuance of the ASU for existing hedging relationships on the date of adoption and the effect of adoption should be reflected as of the beginning of the fiscal year of adoption (that is, the initial application date). The Corporation has evaluated ASU 2017‑12, and has determined it has no current hedging strategies for which it plans to implement the ASU but we will consider the impact of the ASU on future hedging strategies that may arise. The Corporation will adopt ASU 2017-12 as of December 31, 2020 and apply existing guidance throughout 2020. FASB ASU 2018-16 (Subtopic 815), “Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes” In October 2018 ASU 2018-16 was issued. The new guidance applies to all entities that elect to apply hedge accounting to benchmark interest rate hedges under Topic 815. It permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes in addition to the existing applicable rates. The guidance is required to be adopted concurrently with ASU 2017-12, on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after adoption. The Corporation does not anticipate the adoption of this ASU to have a material impact on its consolidated financial statements and related disclosures. FASB ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting” Issued in June 2018, ASU 2018-07: Compensation - Stock Compensation (Topic 718), “ Improvements to Nonemployee Share-Based Payment Accounting ” expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this update become effective for us January 1, 2020. The adoption will not have an impact on our consolidated financial statements and related disclosures as the Corporation has not historically granted share based payment awards to nonemployees other than to the Corporation’s Board of Directors, who are treated as employees for share-based payment accounting. FASB ASU 2018-13, "Fair Value Measurement Disclosure Framework" Issued in August 2018, ASU 2018-13 modifies, adds and removes certain disclosures aimed to improve the overall usefulness of the disclosure requirements for fair value measurements. ASU 2018-13 is effective for the Corporation on January 1, 2020. Adoption is required on both a prospective and retrospective basis depending on the amendment. Management does not expect the adoption of this ASU to have a material impact on our consolidated financial statements and related disclosures. FASB ASU 2018-15 (Topic 350), "Intangibles - Goodwill and Other - Internal-Use Software" Issued in August 2018, ASU 2018-15 provides clarity on capitalizing and expensing implementation costs for cloud computing arrangements in a service contract. If an implementation cost is capitalized, the cost should be recognized over the noncancellable term and periodically assessed for impairment. The guidance is effective in annual and interim periods in fiscal years beginning after December 15, 2020 and interim periods within annual periods beginning after December 15, 2021. Adoption should be applied retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Corporation does not expect the adoption of this ASU to have a material impact on our consolidated financial statements and related disclosures as we currently do not have any such cloud computing arrangements. FASB ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” Issued in December 2019, ASU 2019-12 adds new guidance to simplify accounting for income taxes, changes the accounting for certain income tax transactions and makes minor improvements to the codification. The guidance is effective for annual periods beginning after December 15, 2020. Early adoption is permitted. Management has not yet determined what the impact of the adoption of this ASU will be on our consolidated financial statements and related disclosures. |
Parent Company Financial Statem
Parent Company Financial Statements | 12 Months Ended |
Dec. 31, 2019 | |
Parent Company Financial Statements | |
Parent Company Financial Statements | (24) The condensed financial statements of the Corporation (parent company only) are presented below. These statements should be read in conjunction with the notes to the consolidated financial statements. A. Condensed Balance Sheets December 31, December 31, (dollars in thousands, except per share data) 2019 2018 Cash and due from banks $ 148 — Cash and cash equivalents 148 — Investments in subsidiaries 159,643 109,867 Other assets 40 — Total assets $ 159,831 109,867 Liabilities: Subordinated debentures 39,058 — Accrued interest payable 78 — Total liabilities 39,136 — Stockholders’ equity: Common stock, $1 par value. Authorized 10,000,000 shares; issued and outstanding 6,406,795 and 6,392,287 as of December 31, 2019 and December 31, 2018 6,408 6,407 Surplus 80,196 79,919 Treasury Stock (3) — Retained earnings 34,097 23,931 Accumulated other comprehensive loss (3) (390) Total stockholders’ equity 120,695 109,867 Total liabilities and stockholders’ equity $ 159,831 109,867 B. Condensed Statements of Income Year ended December 31, (dollars in thousands, except per share data) 2019 2018 Dividends from subsidiaries $ — — Net interest and other income — — Total operating income — — Expenses 81 — Income before equity in undistributed income of subsidiaries (81) — Equity in undistributed income of subsidiaries 10,562 8,163 Income before income taxes 10,481 8,163 Income tax (benefit) expense — — Net income 10,481 8,163 Total other comprehensive income 387 (92) Total comprehensive income $ 10,868 8,071 C. Condensed Statements of Cash Flows Year ended December 31, (dollars in thousands) 2019 2018 Net income $ 10,481 8,163 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed income of subsidiaries (10,562) (8,163) Increase in accrued interest payable 78 Decrease (increase) in other assets (40) — Net cash used in operating activities (43) — Cash flows from investing activities: Investment in subsidiaries (38,804) — Net cash used in investing activities (38,804) — Cash flows from financing activities: Issuance of long term subordinated debt 39,051 — Notes repaid (received) for common stock (59) — Net purchase of treasury stock through publicly announced plans (3) — Share based awards and exercises 6 — Net cash provided by financing activities 38,995 — Net change in cash and cash equivalents 148 — Cash and cash equivalents at beginning of period — — Cash and cash equivalents at end of period $ 148 — |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events | |
Subsequent Events | (25) On March 7, 2019 the Corporation announced a stock repurchase plan (the “2019 Stock Repurchase Plan”) pursuant to which the Corporation may repurchase up to 5% of its common stock. In March 2020 the Corporation repurchased 314,825 of its own outstanding common shares at an average price of $18.17 per common share. These purchases completed the share repurchases authorized by the 2019 Stock Repurchase Plan. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Nature of Operations | (a) Nature of Operations Meridian Corporation (the “Corporation”) was incorporated on June 8, 2009, by and at the direction of the board of directors of Meridian Bank (the “Bank”) for the sole purpose of acquiring the Bank and serving as the Bank’s parent bank holding company. On August 24, 2018, the Corporation acquired the Bank in a merger and reorganization effected under Pennsylvania law and in accordance with the terms of a Plan of Merger and Reorganization dated April 26, 2018 (the “Agreement”). Pursuant to the Agreement, on August 24, 2018 at 5:00 p.m. all of the outstanding shares of the Bank’s $1.00 par value common stock formerly held by its shareholders was converted into and exchanged for one newly issued share of the Corporation’s par value common stock, and the Bank became a subsidiary of the Corporation. Because the Bank and the Corporation were entities under common control, this exchange of shares between entities under common control resulted in the retrospective combination of the Bank and the Corporation for all periods presented as if the combination had been in effect since inception of common control. As the Corporation had no assets, liabilities, revenues, expenses or operations prior to August 24, 2018, the historical financial statements of the Bank are the historical financial statements of the combined entity. The Corporation operates in a highly competitive market area that includes local, national and regional banks as competitors along with savings banks, credit unions, insurance companies, trust companies and registered investment advisors. The Corporation and its subsidiaries are regulated by many regulatory agencies including the Securities and Exchange Commission (“SEC”), Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve and the Pennsylvania Department of Banking. The Bank was incorporated on March 16, 2004 under the laws of the Commonwealth of Pennsylvania and is a Pennsylvania state-chartered bank. The Bank commenced operations on July 8, 2004 and is a full-service bank providing personal and business lending and deposit services through 6 full-service banking offices in Pennsylvania and 9 mortgage loan production offices throughout the Delaware Valley. The Bank and Corporation are headquartered in Malvern, Pennsylvania, located in the western suburbs of Philadelphia and serves southeastern Pennsylvania and the rest of the Delaware Valley. |
Basis of Presentation | (b) Basis of Presentation The accounting policies of the Corporation conform to U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include accounts of the Corporation and its wholly owned subsidiary, the Bank, and the wholly owned subsidiaries of the Bank: APEX Realty LLC; Meridian Wealth Partners LLC; and Meridian Land Settlement Services LLC. All significant intercompany balances and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Amounts subject to significant estimates are items such as the allowance for loan and lease losses and lending related commitments, the fair value of financial instruments, other-than-temporary impairments of investment securities, the valuations of goodwill and intangible assets, and servicing assets. Although our current estimates contemplate current conditions and how we expect them to change in the future, due to the impact that the COVID-19 pandemic has had on financial markets and the economy both locally and nationally, it is reasonably possible that this could materially affect these significant estimates and our results of operations and financial condition. The World Health Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.” The COVID-19 outbreak is disrupting supply chains and affecting production and sales across a range of industries. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers, employees and vendors all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain. Certain prior year amounts have been reclassified to conform to the current year’s presentation. During the quarter-ended March 31, 2019, the Corporation identified and corrected an immaterial error related to Maryland state licensing requirements for mortgage loan originations by our Mortgage division. As the result of our mortgage operations not being fully compliant with Maryland licensing law, we agreed to reimburse consumers approximately $474 thousand in interest and certain fees on loans originated, in addition to paying a fine of $12 thousand to resolve the matter. The Corporation has revised its comparative consolidated financial statements in the amount of $407 thousand, or $315 thousand net of tax, for periods prior to January 1, 2018 related to interest and fees on loans. The error correction impacted beginning retained earnings, deferred tax assets and other liabilities as of January 1, 2018, as shown below. The following table summarizes the impacts of the correction on the consolidated balance sheet as of January 1, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,312 92 1,404 Other liabilities 5,426 407 5,833 Retained earnings 15,768 (315) 15,453 The following table summarizes the impacts of the correction on the consolidated balance sheet as of December 31, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,728 Other liabilities 5,716 Retained earnings (315) 23,616 The following table summarizes the impacts of the corrections to our capital ratios as of December 31, 2018: December 31, 2018 - as reported To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,577 $ 71,577 $ 89,472 Common equity tier 1 capital (to risk-weighted assets) 105,196 40,262 58,157 Tier 1 capital (to risk-weighted assets) 105,196 53,683 71,577 Tier 1 capital (to average assets) 105,196 37,578 46,972 December 31, 2018 - as revised To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,262 $ 71,585 $ 89,481 Common equity tier 1 capital (to risk-weighted assets) 104,881 40,266 58,163 Tier 1 capital (to risk-weighted assets) 104,881 53,689 71,585 Tier 1 capital (to average assets) 104,881 37,581 46,977 * Does not include capital conservation buffer of 1.250% for 2019 and 1.875% for 2018 |
Significant Concentrations of Credit Risk | (c) Significant Concentrations of Credit Risk Most of the Corporation’s activities are with customers located within the tri-state area of Pennsylvania, Delaware and New Jersey. Note 4 discusses the types of securities that the Corporation invests in. Note 5 discusses types of lending that the Corporation engages in. Although the Corporation has a diversified loan portfolio, its debtors’ ability to honor their contracts is influenced by the region’s economy. The Corporation does not have any significant concentrations to any one industry or customer, however there is significant concentration of commercial real estate-backed loans, amounting to 37% and 37% of total loans held for investment, as of December 31, 2019 and December 31, 2018, respectively. |
Presentation of Cash Flows | (d) Presentation of Cash Flows For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold. Generally, federal funds are purchased or sold for one day periods. Cash balances required to meet regulatory reserve requirements of the Federal Reserve Board amounted to $1.1 million at December 31, 2019. |
Securities | (e) Securities Management determines the appropriate classification of debt securities at the time of purchase and re‑evaluates such designation as of each balance sheet date. Securities classified as available‑for‑sale are those securities that the Corporation intends to hold for an indefinite period of time but not necessarily to maturity. Securities available‑for‑sale are carried at fair value. Any decision to sell a security classified as available‑for‑sale would be based on various factors, including significant movement in interest rates, changes in maturity mix of the Corporation’s assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Unrealized gains and losses are reported as increases or decreases in other comprehensive income. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Securities classified as held to maturity are those debt securities the Corporation has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs or changes in general economic conditions. These securities are carried at cost adjusted for the amortization of premium and accretion of discount, computed on a level yield basis. Investments in equity securities are recorded in accordance with ASC 321-10, Investments - Equity Securities. The Corporation’s accounting policy specifies that (a) if the Corporation does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other‑than‑temporarily impaired, unless there is a credit loss. When the Corporation does not intend to sell the security, and it is more likely than not, the Corporation will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other‑than‑temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. The Corporation did not recognize any other‑than‑temporary impairment charges during the years ended December 31, 2019 and 2018. |
Loans Receivable | (f) Loans Receivable Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Corporation generally amortizes these amounts over the contractual life of the loan. Loans that were originated by the Corporation and intended for sale in the secondary market to permanent investors, but were either repurchased or unsalable due to defect, are held for the foreseeable future or until maturity or payoff, but are carried at fair value. The accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and charged against current year income. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt. |
Allowance for Loan and Lease Losses | (g) Allowance for Loan and Lease Losses The allowance for loan and lease losses (“ALLL” or “Allowance”) is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the Allowance, and subsequent recoveries, if any, are credited to the Allowance. All, or part, of the principal balance of loans receivable are charged off to the Allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. Charge-offs for retail consumer loans are generally made for any balance not adequately secured after 120 cumulative days past due. The Allowance is maintained at a level considered adequate to provide for losses that are probable and estimable. Management’s periodic evaluation of the adequacy of the Allowance is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is subjective as it requires material estimates that may be susceptible to significant revisions as more information becomes available. In addition, Federal regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s Allowance and may require the Corporation to recognize additions to the Allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. The Allowance consists of general and specific components. The general component covers non-classified loans, as well as, non-impaired classified loans and is based on historical loss experience adjusted for qualitative factors. The specific component relates to loans that are classified as doubtful, substandard, and are on non-accrual and have been deemed impaired. Loan classifications are determined based on various assessments such as the borrower’s overall financial condition, payment history, repayment sources, guarantors and value of collateral. A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or 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 are not classified as impaired. Management determines 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. For commercial and construction loans, impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral adjusted for cost to sell, if the loan is collateral dependent. Large groups of smaller balance homogeneous residential mortgage and consumer loans are collectively evaluated for impairment. Accordingly, the Corporation does not separately identify individual loans of this nature for impairment disclosures, unless such loans become impaired or are troubled and the subject of a restructuring agreement. Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a temporary reduction in interest rate or an extension of a loan’s stated maturity date. No portion of the Allowance is restricted to any individual loan or groups of loans, and the entire Allowance is available to absorb any and all loan losses. |
Mortgage Banking Activities and Mortgage Loans Held for Sale | (h) Mortgage Banking Activities and Mortgage Loans Held for Sale The Corporation’s mortgage banking division operates 9 offices in the tri-state area of Pennsylvania, Delaware and New Jersey. The mortgage banking division originates conventional mortgages, FHA, VA, USDA, and other state insured mortgages. The loans are generally sold to various investors in the secondary market. Mortgage loans originated by the Corporation and intended for sale in the secondary market to permanent investors are carried at fair value and are classified as mortgage loans held for sale on the balance sheet. Gains and losses on loan sales are recorded in mortgage banking income. The Corporation enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (interest rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Time elapsing between the issuance of a loan commitment and closing and sale of the loan generally ranges from 30 to 120 days. The Corporation protects itself from changes in interest rates through the use of best efforts forward sale contracts, whereby the Corporation commits to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed interest rate risk on the loan. The Corporation also commits to loan sales through a mandatory sales channel which are economically hedged by the future sale of mortgage-backed securities to third-party counterparties to mitigate the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. By entering into best efforts commitments and economically hedging the mandatory commitments, the Corporation limits its exposure to loss and its realization of significant gains related to its rate lock commitments due to changes in interest rates. The Corporation utilizes a third-party model to determine the fair value of rate lock commitments or forward sale contracts. This model uses investor quotes while taking into consideration the probability that the rate lock commitments will close. Net derivative assets and liabilities are recorded within other assets or other liabilities, respectively, on the consolidated balance sheets, with changes in fair value during the period recorded within net change in the fair value of derivative instruments on the consolidated statements of income. (i) Loan Servicing Rights The Corporation sells substantially all of the residential mortgage loans we originate to third parties; however, the Corporation may retain the servicing rights related to some of these loans. A fee, usually based on a percentage of the outstanding principal balance of the loan, is received in return for these services. Mortgage servicing rights (“MSRs") are recognized when a loan’s servicing rights are retained upon sale of a loan. The Corporation also sells the guaranteed portion of certain Small Business Administration (“SBA”) loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. These servicing assets amortize to noninterest expense in proportion to, and over the period of, the estimated future net servicing life of the underlying loans. The servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the servicing assets. |
Other Real Estate Owned | (j) Other Real Estate Owned Other real estate owned (OREO) is comprised of property acquired through a foreclosure proceeding or acceptance of a deed‑in‑lieu of foreclosure. The Corporation acquires OREO through the wholly owned subsidiary of the Bank, Apex Realty. OREO is recorded at the lower of cost or fair value, or the loan amount net of estimated selling costs, at the date of foreclosure. The cost basis of OREO is its recorded value at the time of acquisition. After acquisition, valuations are periodically performed by management and subsequent changes in the valuation allowance are charged to OREO expense. Revenues, such as rental income, and holding expenses are included in other income and other expenses, respectively. The Corporation had $120 and $0 thousand of OREO at December 31, 2019 and 2018, respectively. |
Restricted Investment in Bank Stock | (k) Restricted Investment in Bank Stock Restricted bank stock is principally comprised of stock in the Federal Home Loan Bank of Pittsburgh (FHLB). Federal law requires a member institution of the FHLB to hold stock according to a predetermined formula. As of December 31, 2019, and 2018, the Corporation had an investment of $8.0 million and $6.9 million, respectively, related to the FHLB stock. Also included in restricted stock is Atlantic Central Bankers Bank (primary correspondent bank) stock in the amount of $50 thousand as of December 31, 2019 and 2018. All restricted stock is carried at cost. Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB. Management believes no impairment charge is necessary related to the FHLB restricted stock as of December 31, 2019 or 2018. |
Transfers of Financial Assets | (l ) Transfers of Financial Assets Transfers of financial assets, including loan and loan participation sales, are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
Bank Premises and Equipment | (m) Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation. The costs of maintenance and repairs are expensed as incurred; while major replacements, improvements and additions are capitalized. Depreciation expense is computed on the straight‑line method over the estimated useful lives of the related assets or, for leasehold improvements, over the effective life of the related lease if less than the estimated useful life. |
Advertising Costs | (n) Advertising Costs The Corporation follows the policy of charging the costs of advertising to expense as incurred. |
Employee Benefit Plans | (o) Employee Benefit Plans The Corporation has a 401(k) Plan (the Plan) and an Employee Stock Ownership Plan (ESOP). All employees are eligible to participate in the Plan and ESOP after they have attained the age of 21 and have also completed 3 consecutive months of service. Employees must participate in the Plan to be eligible for participation in the ESOP. The employees may contribute to the Plan up to the maximum percentage allowable by law of their compensation. The Corporation may make a discretionary matching contribution to the Plan and the ESOP. Full vesting in the Corporation’s contribution to the Plan and ESOP is over a three‑year period. The Corporation’s contribution to the Plan and ESOP was $ 636 thousand and $ 325 thousand, respectively for the year ended December 31, 2019 and $ 577 thousand and $33 2 thousand, respectively for the year ended December 31, 2018. During the year ended December 31, 2019, no shares were purchased by the ESOP, while for the year ended December 31, 2018, 4,462 shares were purchased by the ESOP at an average market value of $17.50. Shares in the ESOP that are committed to be released to employees are treated as outstanding shares in the Corporation’s computation of earnings per share. There were 36,619 shares in the ESOP as of December 31, 2019. Shares in the ESOP would be impacted by any stock dividends and stock splits in the same manner as all other outstanding common shares of the Corporation. |
Income Taxes | (p) Income Taxes Deferred income taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and net operating losses and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and net operating loss carry-forwards and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Corporation follows accounting guidance related to accounting for uncertainty in income taxes. Under the “more likely than not” threshold guidelines, the Corporation believes no significant uncertain tax positions exist, either individually or in the aggregate, that would give rise to the non-recognition of an existing tax benefit. As of December 31, 2019, and 2018, the Corporation had no material unrecognized tax benefits or accrued interest and penalties. The Corporation’s policy is to account for interest as a component of interest expense and penalties as a component of other expense. The Corporation is no longer subject to examination by federal, state and local taxing authorities for years before January 1, 2016. |
Stock Compensation Plans | (q ) Stock Compensation Plans Stock compensation accounting guidance requires that the compensation cost relating to share‑based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share‑based compensation arrangements including stock options and restricted share plans. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded‑vesting, compensation cost is recognized on a straight‑line basis over the requisite service period for the entire award. A Black‑Scholes model is used to estimate the fair value of stock options, while the market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. |
Comprehensive Income | (r) Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available‑for‑sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. The components of other comprehensive income (loss) for the years ended December 31, 2019 and 2018 consist of unrealized holding gains and (losses) arising during the year on available‑for‑sale securities. |
Off Balance Sheet Financial Instruments | (s ) Off‑Balance Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off‑balance sheet financial instruments consisting of commitments to extend credit and letters of credit. Such financial instruments are recorded in the balance sheet when they are funded. |
Derivative Financial Instruments | (t) Derivative Financial Instruments The Corporation recognizes all derivative financial instruments related to its mortgage banking activities on its balance sheet at fair value. The Corporation utilizes investor quotes to determine the fair value of interest rate lock commitment derivatives and market pricing to determine the fair value of forward security purchase commitment derivatives. All changes in fair value of derivative instruments are recognized in earnings. The Corporation enters into interest rate swaps that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. The interest rate swaps are recognized on the Corporation’s balance sheet at fair value. Under these agreements, the Corporation originates variable-rate loans with customers in addition to interest rate swap agreements, which serve to effectively swap the customers’ variable-rate loans into fixed-rate loans. The Corporation then enters into corresponding swap agreements with swap dealer counterparties to economically hedge its exposure on the variable and fixed components of the customer agreements. The interest rate swaps with both the customers and third parties are not designated as hedges under ASC 815 and are marked to market through earnings. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820. |
Earnings per Common Share | (u) Earnings per Common Share Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period. Diluted earnings per common share takes into account the potential dilution that would occur if in the-money stock options were exercised and converted into shares of common stock and restricted stock awards and performance-based stock awards were vested. Proceeds assumed to have been received on options exercises are assumed to be used to purchase shares of the Corporation’s common stock at the average market price during the period, as required by the treasury stock method of accounting. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive. |
Revenue Recognition | (v) Revenue Recognition The Corporation recognizes all sources of income on the accrual method, with the exception of nonaccrual loans and leases. The Corporation earns wealth management fee income from investment advisory services provided to individual and 401k customers. Fees that are determined based on the market value of the assets held in their accounts are generally billed quarterly, in arrears, based on the market value of assets at the end of the previous billing period. Other related services that are based on a fixed fee schedule are recognized when the services are rendered. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e. the trade date. Included in other assets on the balance sheet is a receivable for wealth management fees that have been earned but not yet collected. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summarized the impacts of the correction | The following table summarizes the impacts of the correction on the consolidated balance sheet as of January 1, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,312 92 1,404 Other liabilities 5,426 407 5,833 Retained earnings 15,768 (315) 15,453 The following table summarizes the impacts of the correction on the consolidated balance sheet as of December 31, 2018: (dollars in thousands, except per share data) Reported Corrections Revised Deferred income taxes $ 1,728 Other liabilities 5,716 Retained earnings (315) 23,616 The following table summarizes the impacts of the corrections to our capital ratios as of December 31, 2018: December 31, 2018 - as reported To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,577 $ 71,577 $ 89,472 Common equity tier 1 capital (to risk-weighted assets) 105,196 40,262 58,157 Tier 1 capital (to risk-weighted assets) 105,196 53,683 71,577 Tier 1 capital (to average assets) 105,196 37,578 46,972 December 31, 2018 - as revised To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,262 $ 71,585 $ 89,481 Common equity tier 1 capital (to risk-weighted assets) 104,881 40,266 58,163 Tier 1 capital (to risk-weighted assets) 104,881 53,689 71,585 Tier 1 capital (to average assets) 104,881 37,581 46,977 * Does not include capital conservation buffer of 1.250% for 2019 and 1.875% for 2018 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings per Common Share | |
Schedule of basic and diluted earnings per common share | Year Ended December 31, (dollars in thousands, except per share data) 2019 2018 Numerator: Net income available to common stockholders $ 10,481 8,163 Denominator for basic earnings per share - weighted average shares outstanding 6,407 6,397 Effect of dilutive common shares 31 30 Denominator for diluted earnings per share - adjusted weighted average shares outstanding 6,438 6,427 Basic earnings per share $ 1.64 1.28 Diluted earnings per share $ 1.63 1.27 Antidilutive shares excluded from computation of average dilutive earnings per share 199 126 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Other Intangibles | |
Schedule of goodwill and intangibles assets related to acquisition | Balance Balance Amortization December 31, Amortization December 31, Period (dollars in thousands) 2018 Expense 2019 (in years) Goodwill - Wealth $ 899 — 899 Indefinite Total Goodwill 899 — 899 Intangible assets - trade name 266 — 266 Indefinite Intangible assets - customer relationships 3,727 (204) 3,523 20 Intangible assets - non competition agreements 154 (69) 85 4 Total Intangible Assets 4,147 (273) 3,874 Total $ 5,046 (273) 4,773 |
Schedule of future amortization | At December 31, 2019, the schedule of future intangible asset amortization is as follows (in thousands): 2020 273 2021 221 2022 204 2023 204 2024 204 Thereafter 2,502 $ 3,608 |
Securities (Tables)
Securities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Securities | |
Schedule of amortized cost and fair value of securities | December 31, 2019 Gross Gross Amortized unrealized unrealized Fair (dollars in thousands) cost gains losses value Securities available-for-sale: U.S. asset backed securities $ 11,967 — (101) 11,866 U.S. government agency mortgage-backed securities 5,457 66 (26) 5,497 U.S. government agency collateralized mortgage obligations 35,096 300 (173) 35,223 State and municipal securities 6,354 — (84) 6,270 Total securities available-for-sale $ 58,874 366 (384) 58,856 Securities held to maturity: State and municipal securities 8,780 223 — 9,003 Total securities held-to-maturity $ 8,780 223 — 9,003 December 31, 2018 Gross Gross Amortized unrealized unrealized Fair (dollars in thousands) cost gains losses value Securities available-for-sale: U.S. government agency mortgage-backed securities $ 24,092 45 (271) 23,866 U.S. government agency collateralized mortgage obligations 14,754 52 (142) 14,664 State and municipal securities 11,096 22 (199) 10,919 Investments in mutual funds 1,000 — (21) 979 Total securities available-for-sale $ 50,942 119 (633) 50,428 Securities held to maturity: U.S. Treasuries $ 1,991 — (13) 1,978 State and municipal securities 10,750 17 (90) 10,677 Total securities held-to-maturity $ 12,741 17 (103) 12,655 |
Schedule of investment unrealized loss in continuous unrealized loss position | December 31, 2019 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (dollars in thousands) value losses value losses value losses Securities available-for-sale: U.S. asset backed securities $ 11,866 (101) — — (101) U.S. government agency mortgage-backed securities — — (26) 1,636 (26) U.S. government agency collateralized mortgage obligations 16,283 (116) (57) 19,391 (173) State and municipal securities 6,270 (84) — — 6,270 (84) Total securities available-for-sale $ 34,419 (301) 4,744 (83) 39,163 (384) December 31, 2018 Less than 12 Months 12 Months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (dollars in thousands) value losses value losses value losses Securities available-for-sale: U.S. government agency mortgage-backed securities $ 2,354 (6) 15,223 (265) 17,577 (271) U.S. government agency collateralized mortgage obligations 2,636 (14) 5,620 (128) 8,256 (142) State and municipal securities 957 (11) 8,746 (188) 9,703 (199) Investments in mutual funds 980 (21) — — 980 (21) Total securities available-for-sale $ 6,927 (52) 29,589 (581) 36,516 (633) Securities held-to-maturity: U.S. Treasuries $ — — 1,978 (13) 1,978 (13) State and municipal securities 1,545 (5) 4,783 (85) 6,328 (90) Total securities held-to-maturity $ 1,545 (5) 6,761 (98) 8,306 (103) |
Schedule of amortized cost and fair value of held-to-maturity securities and available-for-sale securities by contractual maturity | December 31, 2019 December 31, 2018 Available-for-sale Held-to-maturity Available-for-sale Held-to-maturity Amortized Fair Amortized Fair Amortized Fair Amortized Fair (dollars in thousands) cost value cost value cost value cost value Investment securities: Due in one year or less $ — — — — $ 906 902 1,991 1,978 Due after one year through five years — — 4,242 4,311 1,236 1,226 3,154 3,148 Due after five years through ten years 1,329 1,324 4,538 4,692 6,411 6,290 7,596 7,529 Due after ten years 16,992 16,812 — — 2,543 2,501 — — Subtotal 18,321 18,136 8,780 9,003 11,096 10,919 12,741 12,655 Mortgage-related securities 40,553 40,720 — — 38,846 38,530 — — Mutual funds with no stated maturity — — — — 1,000 979 — — Total $ 58,874 58,856 8,780 9,003 $ 50,942 50,428 12,741 12,655 |
Loans Receivable (Tables)
Loans Receivable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Loans Receivable | |
Summary of loans and leases outstanding | December 31, December 31, (dollars in thousands) 2019 2018 Mortgage loans held for sale $ 33,704 37,695 Real estate loans: Commercial mortgage 362,590 325,393 Home equity lines and loans 81,583 82,286 Residential mortgage (1) 53,665 53,360 Construction 172,044 116,906 Total real estate loans 669,882 577,945 Commercial and industrial 273,301 254,050 Small business loans 21,616 5,756 Consumer 1,003 701 Leases, net 697 1,335 Total portfolio loans and leases 966,499 839,787 Total loans and leases $ 1,000,203 877,482 Loans with predetermined rates $ 293,114 264,376 Loans with adjustable or floating rates 707,089 613,106 Total loans and leases $ 1,000,203 877,482 Net deferred loan origination (fees) costs $ (1,789) (1,681) (1) Includes $10,546 and $11,422 of loans at fair value as of December 31, 2019 and 2018, respectively. |
Schedule of components of the net investment in leases | December 31, December 31, (dollars in thousands) 2019 2018 Minimum lease payments receivable $ 729 1,420 Unearned lease income (32) (85) Total $ 697 1,335 |
Schedule of age analysis of past due loans and leases | Total 90+ days Accruing Nonaccrual December 31, 2019 30-89 days past due and Total past Loans and loans and Total loans Delinquency (dollars in thousands) past due still accruing due Current leases leases and leases percentage Commercial mortgage $ — — — 361,857 361,857 733 362,590 0.20 % Home equity lines and loans — — — 81,046 81,046 537 81,583 0.66 Residential mortgage (1) 4,675 — 4,675 47,446 52,121 1,544 53,665 11.59 Construction — — — 172,044 172,044 — 172,044 — Commercial and industrial 206 — 206 272,674 272,880 421 273,301 0.23 Small business loans — — — 21,616 21,616 — 21,616 — Consumer — — — 1,003 1,003 — 1,003 — Leases 162 — 162 535 697 — 697 23.24 Total $ 5,043 — 5,043 958,221 963,264 3,235 966,499 0.86 % (1) Includes $10,546 of loans at fair value as of December 31, 2019 ($9,056 of current, $786 of 30-89 days past due and $704 of nonaccrual). Total 90+ days Accruing Nonaccrual December 31, 2018 30-89 days past due and Total past Loans and loans and Total loans Delinquency (dollars in thousands) past due still accruing due Current leases leases and leases percentage Commercial mortgage $ — — — 324,169 324,169 1,224 325,393 0.38 % Home equity lines and loans 348 — 348 81,855 82,203 83 82,286 0.52 Residential mortgage (1) 195 — 195 51,018 51,213 2,147 53,360 4.39 Construction — — — 116,906 116,906 — 116,906 — Commercial and industrial 217 — 217 253,356 253,573 477 254,050 0.27 Small business loans — — — 5,756 5,756 — 5,756 — Consumer — — — 701 701 — 701 — Leases 49 — 49 1,286 1,335 — 1,335 3.67 Total $ 809 — 809 835,047 835,856 3,931 839,787 0.56 % (1) Includes $11,422 of loans at fair value as of December 31, 2018 ($10,098 of current, $187 of 30-89 days past due and $1,137 of nonaccrual). |
Allowance for Loan Losses (th_2
Allowance for Loan Losses (the Allowance) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Allowance for Loan Losses (the Allowance) | |
Roll-forward of allowance for loan and lease losses by portfolio segment | Balance, Balance, (dollars in thousands) December 31, 2018 Charge-offs Recoveries Provision December 31, 2019 Commercial mortgage $ 3,209 — 237 (20) 3,426 Home Equity lines and loans 323 — 10 9 342 Residential mortgage 191 — 5 (17) 179 Construction 1,627 — — 735 2,362 Commercial and industrial 2,612 (30) 333 (231) 2,684 Small business loans 78 — — 431 509 Consumer 3 — 4 (1) 6 Leases 10 — — (5) 5 Total $ 8,053 (30) 589 901 9,513 Balance, Balance, (dollars in thousands) December 31, 2017 Charge-offs Recoveries Provision December 31, 2018 Commercial mortgage $ 2,434 — 7 768 3,209 Home Equity lines and loans 280 (221) 18 246 323 Residential mortgage 82 — 61 48 191 Construction 1,689 — — (62) 1,627 Commercial and industrial 2,097 (244) 142 617 2,612 Small business loans 117 — — (39) 78 Consumer 5 — 4 (6) 3 Leases 5 — — 5 10 Total $ 6,709 (465) 232 1,577 8,053 |
Schedule of allocation of the allowance for loan and lease losses | The following table details the allocation of the Allowance and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of December 31, 2019 respectively: Allowance on loans and leases Carrying value of loans and leases Individually Collectively Individually Collectively December 31, 2019 evaluated evaluated evaluated evaluated (dollars in thousands) for impairment for impairment Total for impairment for impairment Total Commercial mortgage $ — 3,426 3,426 $ 2,138 360,452 362,590 Home Equity lines and loans 46 296 342 536 81,047 81,583 Residential mortgage — 179 179 854 42,265 43,119 Construction — 2,362 2,362 1,247 170,797 172,044 Commercial and industrial 27 2,657 2,684 1,288 272,013 273,301 Small business loans 63 446 509 1,244 20,372 21,616 Consumer — 6 6 — 1,003 1,003 Leases — 5 5 — 697 697 Total $ 136 9,377 9,513 $ 7,307 948,646 955,953 (1) (1) Excludes deferred fees and loans carried at fair value. The following table details the allocation of the Allowance and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of December 31, 2018 respectively: Allowance on loans and leases Carrying value of loans and leases Individually Collectively Individually Collectively December 31, 2018 evaluated evaluated evaluated evaluated (dollars in thousands) for impairment for impairment Total for impairment for impairment Total Commercial mortgage $ — 3,209 3,209 $ 1,929 323,464 325,393 Home Equity lines and loans — 323 323 83 82,203 82,286 Residential mortgage — 191 191 969 40,969 41,938 Construction — 1,627 1,627 1,281 115,625 116,906 Commercial and industrial 103 2,509 2,612 443 253,607 254,050 Small business loans — 78 78 1,094 4,662 5,756 Consumer — 3 3 — 701 701 Leases — 10 10 — 1,335 1,335 Total $ 103 7,950 8,053 $ 5,799 822,566 828,365 (1) Excludes deferred fees and loans carried at fair value. |
Schedule of carrying value of loans and leases by portfolio segment based on the credit quality indicators | December 31, 2019 Special (dollars in thousands) Pass mention Substandard Doubtful Total Commercial mortgage $ 353,724 5,821 3,045 — 362,590 Home equity lines and loans 81,046 — 537 — 81,583 Construction 170,823 1,221 — — 172,044 Commercial and industrial 251,320 9,648 12,333 — 273,301 Small business loans 20,351 — 1,265 — 21,616 Total $ 877,264 16,690 17,180 — 911,134 December 31, 2018 Special (dollars in thousands) Pass mention Substandard Doubtful Total Commercial mortgage $ 320,130 3,713 1,550 — 325,393 Home equity lines and loans 82,121 — 165 — 82,286 Construction 114,249 2,657 — — 116,906 Commercial and industrial 234,813 12,590 6,617 30 254,050 Small business loans 4,368 30 1,358 — 5,756 Total $ 755,681 18,990 9,690 30 784,391 |
Schedule of allocations based on the credit quality indicators | December 31, 2019 December 31, 2018 (dollars in thousands) Performing Nonperforming Total Performing Nonperforming Total Residential mortgage $ 42,265 854 43,119 $ 40,969 969 41,938 Consumer 1,003 — 1,003 701 — 701 Leases 697 — 697 1,335 — 1,335 Total $ 43,965 854 44,819 $ 43,005 969 43,974 |
Schedule of recorded investment and principal balance of impaired loans | At December 31, 2019 At December 31, 2018 Average Average Recorded Principal Related recorded Recorded Principal Related recorded (dollars in thousands) investment balance allowance investment investment balance allowance investment Impaired loans with related allowance: Commercial mortgage $ — — — — — — — — Commercial and industrial 617 617 27 622 676 679 103 680 Small business loans 1,002 1,002 63 1,027 — — — — Home equity lines and loans 461 461 46 462 — — — — Residential mortgage — — — — — — — — Construction — — — — — — — — Total 2,080 2,080 136 2,111 676 679 103 680 Impaired loans without related allowance: Commercial mortgage $ 2,138 2,173 — 2,162 1,929 2,379 — 1,982 Commercial and industrial 671 718 — 693 598 682 — 618 Small business loans 242 242 — 250 263 263 — 267 Home equity lines and loans 75 75 — 76 83 89 — 84 Residential mortgage 854 854 — 855 969 978 — 978 Construction 1,247 1,248 — 1,262 1,281 1,281 — 1,293 Total 5,227 5,310 — 5,298 5,123 5,672 — 5,222 Grand Total $ 7,307 7,390 136 7,409 5,799 6,351 103 5,902 |
Schedule of balances of TDRs | December 31, December 31, (dollars in thousands) 2019 2018 TDRs included in nonperforming loans and leases $ 319 1,219 TDRs in compliance with modified terms 3,599 3,047 Total TDRs $ 3,918 4,266 |
Schedule of loan and lease modifications granted | For the Year Ended December 31, 2018 Pre-Modification Post-Modification Outstanding Outstanding Number of Recorded Recorded Related (dollar in thousands) Contracts Investment Investment Allowance Real Estate: Commercial mortgage 1 $ 796 $ 796 $ — Land and Construction 1 1,628 1,628 — Commercial and industrial 2 282 282 63 Small business loans 1 267 267 Total 5 $ 2,973 $ 2,973 $ 63 |
Schedule of type of number of contracts by type of loan and lease modifications | For the Year Ended December 31, 2018 Interest Rate Loan Term Change and Loan Extension Term Extension Real Estate: Commercial Mortgage 1 — Land and Construction 1 — Commercial and industrial 1 1 Small business loans 1 — Total 4 1 |
Bank Premises and Equipment (Ta
Bank Premises and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Bank Premises and Equipment | |
Schedule of components of premises and equipment, net of depreciation | (dollars in thousands) 2019 2018 Building $ 4,141 3,824 Leasehold improvements 3,156 3,013 Land 600 600 Land Improvements 215 215 Furniture, fixtures and equipment 2,574 2,447 Computer equipment and data processing software 6,360 6,211 Construction in process 102 118 Less: accumulated depreciation (8,512) (6,790) Total $ 8,636 9,638 |
Deposits (Tables)
Deposits (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Deposits: | |
Summary of components of deposits | (dollars in thousands) 2019 2018 Demand, noninterest bearing $ 139,450 126,150 Demand, interest-bearing 94,416 114,610 Savings accounts 3,231 3,097 Money market accounts 302,242 229,557 Time deposits 311,829 278,716 Total $ 851,168 752,130 |
Scheduled maturities of time deposits | At December 31, 2019, the scheduled maturities of time deposits are as follows (in thousands): 2020 $ 261,473 2021 27,438 2022 727 2023 11,249 2024 10,942 $ 311,829 |
Short-Term Borrowings and Long-
Short-Term Borrowings and Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Short-Term Borrowings and Long-Term Debt | |
Schedule of long term debt | Balance as of Maturity Interest December 31, December 31, (dollars in thousands) date rate 2019 2018 Mid-term Repo-fixed 06/28/21 1.88 % $ 3,123 — Mid-term Repo-fixed 08/10/20 2.76 — 5,000 Acquisition Purchase Note (1) 04/01/20 3.00 — 1,238 Total $ 3,123 6,238 The acquisition purchase note for the Wealth division is classified as short-term borrowing at December 31, 2019. |
Servicing Assets (Tables)
Servicing Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Mortgage Servicing Rights | |
Servicing Assets at Fair Value [Line Items] | |
Schedule of servicing assets | Year Ended December 31, (dollars in thousands) 2019 2018 Balance at beginning of the period $ 232 — Servicing rights capitalized 372 241 Amortization of servicing rights (60) (9) Change in valuation allowance (98) — Balance at end of the period $ 446 232 |
Schedule of valuation allowance for servicing assets | Year Ended December 31, (dollars in thousands) 2019 2018 Valuation allowance, beginning of period $ — — Impairment (98) — Recovery — — Valuation allowance, end of period $ (98) — |
Schedule of sensitivity of fair value of servicing assets | (dollars in thousands) December 31, 2019 December 31, 2018 Fair value of residential mortgage servicing rights $ 446 $ 213 Weighted average life (years) 7.8 3.4 Prepayment speed Impact on fair value: 10% adverse change $ (19) $ (9) 20% adverse change (37) (17) Discount rate Impact on fair value: 10% adverse change $ (14) $ (8) 20% adverse change (27) (15) |
SBA Loan Servicing Rights | |
Servicing Assets at Fair Value [Line Items] | |
Schedule of servicing assets | Year Ended December 31, (dollars in thousands) 2019 2018 Balance at beginning of the period $ — — Servicing rights capitalized 383 — Amortization of servicing rights (20) — Change in valuation allowance (26) — Balance at end of the period $ 337 — |
Schedule of valuation allowance for servicing assets | Year Ended December 31, (dollars in thousands) 2019 2018 Valuation allowance, beginning of period $ — — Impairment (26) — Recovery — — Valuation allowance, end of period $ (26) — |
Schedule of sensitivity of fair value of servicing assets | (dollars in thousands) December 31, 2019 Fair value of SBA loan servicing rights $ 337 Weighted average life (years) 4.3 Prepayment speed Impact on fair value: 10% adverse change $ (12) 20% adverse change (23) Discount rate Impact on fair value: 10% adverse change $ (9) 20% adverse change (18) |
Lease Commitments (Tables)
Lease Commitments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Lease Commitments | |
Schedule of Future minimum lease payments | Future minimum lease payments (dollars in thousands) 2020 $ 1,133 2021 1,027 2022 857 2023 750 2024 764 Thereafter 3,319 $ 7,850 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Summary of stock option activity | Weighted Weighted Average Average Exercise Grant Date Shares Price Fair Value Outstanding at December 31, 2017 211,915 $ 14.99 $ 4.00 Exercised (14,508) 12.43 3.44 Granted 79,450 17.70 5.49 Forfeited (2,787) 17.94 4.27 Outstanding at December 31, 2018 274,070 15.88 4.46 Exercised (689) 11.79 3.89 Granted 73,000 17.03 4.90 Outstanding at December 31, 2019 346,381 16.13 4.55 Exercisable at December 31, 2019 240,208 15.52 4.34 Nonvested at December 31, 2019 106,173 $ 17.49 $ 5.03 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Summary of components of the federal and state income tax expense | (dollars in thousands) 2019 2018 Federal: Current $ 3,287 2,413 Deferred (489) (288) 2,798 2,125 State: Current 249 207 Deferred (14) (5) 235 202 Totals $ 3,033 2,327 |
Schedule of reconciliation of the statutory income tax | (dollars in thousands) 2019 2018 Federal income tax at statutory rate $ 2,838 21.0 % 2,203 21.0 % State tax expense, net of federal benefit 186 1.4 160 1.5 Tax exempt interest (65) (0.5) (92) (0.9) Bank owned life insurance (61) (0.5) (63) (0.6) Incentive stock options 66 0.5 52 0.5 Other 69 0.5 67 0.6 Effective income tax rate $ 3,033 22.4 % 2,327 22.1 % |
Summary of net deferred tax assets | (dollars in thousands) 2019 2018 Deferred tax assets: Allowance for loan and lease losses $ 2,111 1,802 Litigation reserve 220 — Intangibles 58 74 Accrued incentive compensation 176 — Accrued retirement 432 380 Unrealized loss on available for sale securities 2 118 Deferred rent 142 155 Mortgage repurchase reserve 16 15 Other 78 169 Total deferred tax asset 3,235 2,713 Deferred tax liabilities: Property and equipment (388) (524) Loan servicing rights (183) — Mortgage pipeline fair-value adjustment (77) (80) Hedge instrument fair-value adjustment (41) (16) Prepaid expenses (152) (131) Deferred loan costs (279) (234) Total deferred tax liability (1,120) (985) Net deferred tax asset $ 2,115 1,728 |
Revenue from contracts with c_2
Revenue from contracts with customers (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customers | |
Schedule of revenue from contracts with customers in the scope of ASC 606 | Year Ended December 31, 2019 Year Ended December 31, 2018 (Dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Non-interest Income Mortgage banking income (1) $ 268 — 25,899 26,167 $ 124 — 26,063 26,187 Wealth management income 92 3,532 — 3,624 200 3,717 — 3,917 SBA income (1) 1,448 — — 1,448 — — — — Net change in fair values (1) (29) — 518 489 — — (368) (368) Earnings on investment in life insurance (1) 290 — — 290 300 — — 300 Gain on sale of securities (1) 165 — — 165 — — — — Dividends on FHLB stock (1) 430 — — 430 168 — — 168 Service charges on deposit accounts 110 — — 110 115 — — 115 Other (2) 819 — (444) 375 1,058 — 978 2,036 Non-interest income $ 3,593 3,532 25,973 33,098 $ 1,965 3,717 26,673 32,355 (1) Not within the scope of ASC 606. (2) Other operating non-interest income includes wire transfer fees, ATM/debit card commissions, and title fee income totaling $621 thousand and $530 thousand for the years ended December 31, 2019 and 2018, respectively, which are in the scope of ASC 606. |
Financial Instruments with Off
Financial Instruments with Off Balance Sheet Risk, Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies | |
Schedule of financial instrument commitments | (dollars in thousands) 2019 2018 Commitments to grant loans and commitments under lines of credit $ 327,788 290,614 Letters of credit 9,750 5,158 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Regulatory Matters | |
Schedule of corporation’s actual capital amounts and ratios. | December 31, 2019 To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) Corporation $ 166,471 $ 108,576 $ 103,405 Bank 166,360 108,571 103,401 Common equity tier 1 capital (to risk-weighted assets) Corporation 115,934 72,384 67,214 Bank 154,881 72,381 67,211 Tier 1 capital (to risk-weighted assets) Corporation 115,934 87,895 82,724 Bank 154,881 87,891 82,721 Tier 1 capital (to average assets) Corporation 115,934 43,973 54,966 Bank 154,881 44,013 55,017 December 31, 2018 - as revised To be well capitalized under For capital adequacy prompt corrective action Actual purposes * provisions (dollars in thousands): Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) $ 122,262 $ 71,585 $ 89,481 Common equity tier 1 capital (to risk-weighted assets) 104,881 40,266 58,163 Tier 1 capital (to risk-weighted assets) 104,881 53,689 71,585 Tier 1 capital (to average assets) 104,881 37,581 46,977 * Does not include capital conservation buffer of 1.250% for 2019 and 1.875% for 201 8 |
Fair Value Measurements and D_2
Fair Value Measurements and Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements and Disclosures | |
Schedule of financial assets measured at fair value on a recurring basis | December 31, 2018 (dollars in thousands) Total Level 1 Level 2 Level 3 Securities available for sale: U.S. government agency mortgage-backed securities $ 23,866 — 23,866 — U.S. government agency collateralized mortgage obligations 14,664 — 14,664 — State and municipal securities 10,919 — 10,919 — Investments in mutual funds and other equity securities 979 — 979 — Mortgage loans held-for-sale 37,695 — 37,695 — Mortgage loans held-for-investment 11,422 — 11,422 — Mortgage servicing rights 213 — — 213 Interest rate lock commitments 310 — — 310 Customer derivatives - Interest rate swaps 141 — 141 — Total $ 100,209 — 99,686 523 |
Schedule of financial assets measured at fair value on non-recurring basis | December 31, 2019 (dollars in thousands) Total Level 1 Level 2 Level 3 Impaired loans (1) $ 7,307 — — 7,307 Other real estate owned (2) 120 — — 120 Total $ 7,427 — — 7,427 December 31, 2018 (dollars in thousands) Total Level 1 Level 2 Level 3 Impaired loans (1) $ 5,799 — — 5,799 Other real estate owned (2) — — — — Total $ 5,799 — — 5,799 (1) Impaired loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third‑party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. (2) Real estate properties acquired through, or in lieu of, foreclosure are to be sold and are carried at fair value less estimated cost to sell. Fair value is based upon independent market prices or appraised value of the property. These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement. Appraised values may be discounted based on management’s expertise, historical knowledge, changes in market conditions from the time of valuation and/or estimated costs to sell. |
Schedule of estimated fair values of financial instruments | December 31, 2019 December 31, 2018 Fair Value Carrying Carrying (dollars in thousands) Hierarchy Level amount Fair value amount Fair value Financial assets: Cash and cash equivalents Level 1 $ 39,371 39,371 23,952 23,952 Securities available-for-sale Level 2 58,856 58,856 50,428 50,428 Securities held-to-maturity Level 2 8,780 9,003 12,741 12,655 Equity investments Level 2 1,009 1,009 — — Mortgage loans held-for-sale Level 2 33,704 33,704 37,695 37,695 Loans receivable, net Level 3 954,164 973,057 818,631 820,512 Mortgage loans held-for-investment Level 2 10,546 10,546 11,422 11,422 Interest rate lock commitments Level 3 504 504 310 310 Forward commitments Level 2 6 6 — — Restricted investment in bank stock Level 3 8,072 8,072 7,002 7,002 Mortgage servicing rights Level 3 446 446 232 213 SBA loan servicing rights Level 3 337 337 — — Accrued interest receivable Level 3 3,148 3,148 2,889 2,889 Customer derivatives - Interest rate swaps Level 2 382 382 141 141 Financial liabilities: Deposits Level 2 851,168 880,400 752,130 744,300 Short-term borrowings Level 2 123,676 123,678 114,300 114,300 Long-term debt Level 2 3,123 3,123 6,238 6,240 Subordinated debentures Level 2 40,962 40,962 9,239 9,396 Accrued interest payable Level 2 1,088 1,088 305 305 Interest rate lock commitments Level 3 157 157 40 40 Forward commitments Level 2 119 119 176 176 Customer derivatives - Interest rate swaps Level 2 431 431 161 161 Notional Notional Off-balance sheet financial instruments: amount Fair value amount Fair value Commitments to extend credit Level 2 $ 327,788 504 290,614 310 Letters of credit Level 2 9,750 — 5,158 — |
Schedule of level 3 inputs reconciliation | Year Ended December 31, 2019 2018 Balance at beginning of the period $ 310 344 (Decrease) increase in value 194 (34) Balance at end of the period $ 504 310 |
Schedule of measurement inputs | Significant Valuation Techniques for Level 3 interest rate lock Fair Value Unobservable Range of Weighted commitments as of December 31, 2019 Level 3 Valuation Technique Input Inputs Average Interest rate lock commitments $ 504 Market comparable pricing Pull through 1 - 99 % 91.70 % |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Financial Instruments | |
Summary of the notional amounts and fair values of derivative financial instruments | December 31, 2019 December 31, 2018 (dollars in thousands) Balance Sheet Line Item Notional Asset Notional Asset Interest Rate Lock Commitments Positive fair values Other assets $ 47,660 504 27,188 310 Negative fair values Other liabilities 22,663 (157) 6,218 (40) Total 70,323 347 33,406 270 Forward Commitments Positive fair values Other assets 4,500 6 — — Negative fair values Other liabilities 58,250 (119) 26,500 (176) Total 62,750 (113) 26,500 (176) Customer Derivatives - Interest Rate Swaps Positive fair values Other assets 3,271 382 3,330 141 Negative fair values Other liabilities 3,271 (431) 3,330 (161) Total 6,541 (49) 6,660 (20) Total derivative financial instruments $ 139,614 185 66,566 74 |
Summary of the fair value gains and losses on derivative financial instruments | Year Ended December 31, (dollars in thousands) 2019 2018 Interest Rate Lock Commitments $ 77 (40) Forward Commitments 63 (101) Customer Derivatives - Interest Rate Swaps (29) (20) Net fair value gains (losses) on derivative financial instruments $ 111 (161) |
Segment (Tables)
Segment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segments | |
Schedule of business segment financial information | Year Ended December 31, 2019 Year Ended December 31, 2018 (Dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 36,019 65 252 36,336 $ 31,807 289 561 32,657 Provision for loan losses 901 — — 901 1,577 — — 1,577 Net interest income after provision 35,118 65 252 35,435 30,230 289 561 31,080 Non-interest Income Mortgage banking income 268 — 25,899 26,167 124 — 26,063 26,187 Wealth management income 92 3,532 — 3,624 200 3,717 — 3,917 SBA income 1,448 — — 1,448 — — — — Net change in fair values (29) — 518 489 — — (368) (368) Other 1,814 — (444) 1,370 1,641 — 978 2,619 Non-interest income 3,593 3,532 25,973 33,098 1,965 3,717 26,673 32,355 Non-interest Expense Salaries and employee benefits 16,408 2,194 16,555 35,157 13,803 1,897 19,094 34,794 Occupancy and equipment 2,166 126 1,514 3,806 2,114 131 1,534 3,779 Professional fees 1,494 18 1,102 2,614 1,709 21 432 2,162 Advertising and promotion 1,502 347 626 2,475 1,197 432 726 2,355 Other 6,362 580 4,025 10,967 5,285 752 3,818 9,855 Non-interest expense 27,932 3,266 23,822 55,019 24,108 3,233 25,604 52,945 Operating Margin $ 10,780 331 2,403 13,514 $ 8,087 773 1,630 10,490 Total Assets $ 1,112,862 5,234 31,923 1,150,019 $ 951,224 6,146 40,110 997,480 |
Parent Company Financial Stat_2
Parent Company Financial Statements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Parent Company Financial Statements | |
Schedule of parent only consolidated balance sheets | December 31, December 31, (dollars in thousands, except per share data) 2019 2018 Cash and due from banks $ 148 — Cash and cash equivalents 148 — Investments in subsidiaries 159,643 109,867 Other assets 40 — Total assets $ 159,831 109,867 Liabilities: Subordinated debentures 39,058 — Accrued interest payable 78 — Total liabilities 39,136 — Stockholders’ equity: Common stock, $1 par value. Authorized 10,000,000 shares; issued and outstanding 6,406,795 and 6,392,287 as of December 31, 2019 and December 31, 2018 6,408 6,407 Surplus 80,196 79,919 Treasury Stock (3) — Retained earnings 34,097 23,931 Accumulated other comprehensive loss (3) (390) Total stockholders’ equity 120,695 109,867 Total liabilities and stockholders’ equity $ 159,831 109,867 |
Schedule of parent only consolidated statements of operations | Year ended December 31, (dollars in thousands, except per share data) 2019 2018 Dividends from subsidiaries $ — — Net interest and other income — — Total operating income — — Expenses 81 — Income before equity in undistributed income of subsidiaries (81) — Equity in undistributed income of subsidiaries 10,562 8,163 Income before income taxes 10,481 8,163 Income tax (benefit) expense — — Net income 10,481 8,163 Total other comprehensive income 387 (92) Total comprehensive income $ 10,868 8,071 |
Schedule of parent only consolidated statements of cash flows | Year ended December 31, (dollars in thousands) 2019 2018 Net income $ 10,481 8,163 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed income of subsidiaries (10,562) (8,163) Increase in accrued interest payable 78 Decrease (increase) in other assets (40) — Net cash used in operating activities (43) — Cash flows from investing activities: Investment in subsidiaries (38,804) — Net cash used in investing activities (38,804) — Cash flows from financing activities: Issuance of long term subordinated debt 39,051 — Notes repaid (received) for common stock (59) — Net purchase of treasury stock through publicly announced plans (3) — Share based awards and exercises 6 — Net cash provided by financing activities 38,995 — Net change in cash and cash equivalents 148 — Cash and cash equivalents at beginning of period — — Cash and cash equivalents at end of period $ 148 — |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Nature of Operations (Details) | Aug. 24, 2018$ / shares | Dec. 31, 2019Office$ / shares | Dec. 31, 2018$ / shares |
Business Acquisition [Line Items] | |||
Common stock, par value | $ / shares | $ 1 | $ 1 | |
Number of full-service offices | Office | 6 | ||
Number of mortgage loan production offices | Office | 9 | ||
Meridian Bank | |||
Business Acquisition [Line Items] | |||
Common stock, par value | $ / shares | $ 1 | ||
Reorganization stock conversion ratio | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Impact of correction (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Mortgage interest and fees to be reimbursed | $ 474 | ||
Mortgage loan origination licensing error fine to Maryland | 12 | ||
Deferred income taxes | 1,404 | $ 2,115 | $ 1,728 |
Other liabilities | 5,833 | 9,307 | 5,716 |
Retained earnings | 15,453 | 34,097 | 23,616 |
Total capital (to risk-weighted assets) | |||
Actual, Amount | 166,471 | 122,262 | |
For capital adequacy purpose, Amount | 108,576 | 71,585 | |
To be well capitalized under prompt corrective action provisions, Amount | $ 103,405 | $ 89,481 | |
Actual, Ratio | 16.10% | 13.66% | |
For capital adequacy purpose, Ratio | 10.50% | 8.00% | |
To be well capitalized under prompt corrective action provisions, Ratio | 10.00% | 10.00% | |
Common equity tier 1 capital (to risk-weighted assets) | |||
Actual, Amount | $ 115,934 | $ 104,881 | |
For capital adequacy purpose, Amount | 72,384 | 40,266 | |
To be well capitalized under prompt corrective action provisions, Amount | $ 67,214 | $ 58,163 | |
Actual, Ratio | 11.21% | 11.72% | |
For capital adequacy purpose, Ratio | 7.00% | 4.50% | |
To be well capitalized under prompt corrective action provisions, Ratio | 6.50% | 6.50% | |
Tier 1 capital (to risk-weighted assets) | |||
Actual, Amount | $ 115,934 | $ 104,881 | |
For capital adequacy purpose, Amount | 87,895 | 53,689 | |
To be well capitalized under prompt corrective action provisions, Amount | $ 82,724 | $ 71,585 | |
Actual, Ratio | 11.21% | 11.72% | |
For capital adequacy purpose, Ratio | 8.50% | 6.00% | |
To be well capitalized under prompt corrective action provisions, Ratio | 8.00% | 8.00% | |
Tier 1 capital (to average assets) | |||
Actual, Amount | $ 115,934 | $ 104,881 | |
For capital adequacy purpose, Amount | 43,973 | 37,581 | |
To be well capitalized under prompt corrective action provisions, Amount | $ 54,966 | $ 46,977 | |
Actual, Ratio | 10.55% | 11.16% | |
For capital adequacy purpose, Ratio | 4.00% | 4.00% | |
To be well capitalized under prompt corrective action provisions, Ratio | 5.00% | 5.00% | |
Capital conservation buffer (as a percent) | 1.25% | 1.875% | |
Reported | |||
Total capital (to risk-weighted assets) | |||
Actual, Amount | $ 122,577 | ||
For capital adequacy purpose, Amount | 71,577 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 89,472 | ||
Actual, Ratio | 13.70% | ||
For capital adequacy purpose, Ratio | 8.00% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 10.00% | ||
Common equity tier 1 capital (to risk-weighted assets) | |||
Actual, Amount | $ 105,196 | ||
For capital adequacy purpose, Amount | 40,262 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 58,157 | ||
Actual, Ratio | 11.76% | ||
For capital adequacy purpose, Ratio | 4.50% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 6.50% | ||
Tier 1 capital (to risk-weighted assets) | |||
Actual, Amount | $ 105,196 | ||
For capital adequacy purpose, Amount | 53,683 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 71,577 | ||
Actual, Ratio | 11.76% | ||
For capital adequacy purpose, Ratio | 6.00% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 8.00% | ||
Tier 1 capital (to average assets) | |||
Actual, Amount | $ 105,196 | ||
For capital adequacy purpose, Amount | 37,578 | ||
To be well capitalized under prompt corrective action provisions, Amount | $ 46,972 | ||
Actual, Ratio | 11.20% | ||
For capital adequacy purpose, Ratio | 4.00% | ||
To be well capitalized under prompt corrective action provisions, Ratio | 5.00% | ||
Revision State Licensing Mortgage Loan Originations | Reported | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Deferred income taxes | 1,312 | $ 1,636 | |
Other liabilities | 5,426 | 5,309 | |
Retained earnings | 15,768 | 23,931 | |
Revision State Licensing Mortgage Loan Originations | Corrections | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Deferred income taxes | 92 | 92 | |
Other liabilities | 407 | 407 | |
Retained earnings | $ (315) | $ (315) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Significant Concentrations of Credit Risk (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Assets Total | Credit Concentration Risk | ||
Concentration Risk [Line Items] | ||
Total loans (as a percent) | 37.00% | 37.00% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Cash Flows, Allowance for Loan Losses and Mortgage Banking Activities (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)Office | Dec. 31, 2018USD ($) | |
Presentation of Cash Flows | ||
Cash balances | $ 1,100 | |
Allowance for Loan Losses | ||
Cumulative days past due for charge off for retail consumer loans | 120 days | |
Mortgage Banking Activities and Mortgage Loans Held for Sale | ||
Number of mortgage loan production offices | Office | 9 | |
Other real estate owned | ||
Other real estate owned | $ 120 | $ 0 |
Minimum | ||
Mortgage Banking Activities and Mortgage Loans Held for Sale | ||
Loan commitment to sale duration | 30 days | |
Maximum | ||
Mortgage Banking Activities and Mortgage Loans Held for Sale | ||
Loan commitment to sale duration | 120 days |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Restricted Investment in Bank Stock (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Federal Home Loan Bank (FHLB) | ||
Restricted Investment in Bank Stock | ||
FHLB stock | $ 8,000 | $ 6,900 |
Investment impairment | 0 | 0 |
Atlantic Central Bankers Bank | ||
Restricted Investment in Bank Stock | ||
Investment | $ 50 | $ 50 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Employee Benefit Plans (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Employee Benefit Plans | ||
Age | 21 years | |
Minimum service term | 3 months | |
Vesting period | 3 years | |
Employer contribution under 401(k) plan | $ 636,000 | $ 577,000 |
Employer contribution under ESOP | $ 325,000 | $ 332,000 |
Shares purchased under ESOP | 0 | 4,462 |
Average market value of shares purchased under ESOP | $ 17.50 | |
Shares held by ESOP | 36,619 |
Earnings per Common Share (Deta
Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Numerator: | ||
Net income available to common stockholders | $ 10,481 | $ 8,163 |
Denominator for basic earnings per share - weighted average shares outstanding | 6,407 | 6,397 |
Effect of dilutive common shares | 31 | 30 |
Denominator for diluted earnings per share - adjusted weighted average shares outstanding | 6,438 | 6,427 |
Basic earnings per share (in dollars per share) | $ 1.64 | $ 1.28 |
Diluted earnings per share (in dollars per share) | $ 1.63 | $ 1.27 |
Antidilutive shares excluded from computation of average dilutive earnings per share | 199 | 126 |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and other intangibles rollforward | ||
Goodwill, Beginning Balance | $ 899 | |
Goodwill, Ending Balance | 899 | |
Amortization expense | (273) | |
Finite-Lived Intangible Assets, Net, Ending Balance | 3,608 | |
Total Intangible Assets | 3,874 | $ 4,147 |
Accumulated Amortization | 750 | 477 |
Grand total | 4,773 | $ 5,046 |
Trade name | ||
Goodwill and other intangibles rollforward | ||
Indefinite-lived Intangible Assets (Excluding Goodwill), Beginning Balance | 266 | |
Indefinite-lived Intangible Assets (Excluding Goodwill), Ending Balance | 266 | |
Customer relationships | ||
Goodwill and other intangibles rollforward | ||
Finite-Lived Intangible Assets, Net, Beginning Balance | 3,727 | |
Amortization expense | (204) | |
Finite-Lived Intangible Assets, Net, Ending Balance | $ 3,523 | |
Amortization Period | 20 years | |
Non competition agreements | ||
Goodwill and other intangibles rollforward | ||
Finite-Lived Intangible Assets, Net, Beginning Balance | $ 154 | |
Amortization expense | (69) | |
Finite-Lived Intangible Assets, Net, Ending Balance | $ 85 | |
Amortization Period | 4 years |
Goodwill and Other Intangible_3
Goodwill and Other Intangibles - Future Amortization (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Goodwill and Other Intangibles | |
2020 | $ 273 |
2021 | 221 |
2022 | 204 |
2023 | 204 |
2024 | 204 |
Thereafter | 2,502 |
Total future amortization | $ 3,608 |
Securities - Amortized cost and
Securities - Amortized cost and fair value (Details) $ in Thousands | Dec. 31, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Securities available-for-sale: | ||
Amortized Cost | $ 58,874 | $ 50,942 |
Available-for-sale, Gross Unrealized Gains | 366 | 119 |
Available-for-sale, Gross Unrealized Losses | (384) | (633) |
Securities available-for-sale | 58,856 | 50,428 |
Securities held to maturity: | ||
Held-to-maturity, Amortized Cost | 8,780 | 12,741 |
Held-to-maturity, Gross Unrealized Gains | 223 | 17 |
Held-to-maturity, Gross Unrealized (Losses) | (103) | |
Fair Value | 9,003 | 12,655 |
Securities pledged as collateral fair value | 19,500 | 20,600 |
U.S. asset backed securities | ||
Securities available-for-sale: | ||
Amortized Cost | 11,967 | |
Available-for-sale, Gross Unrealized Losses | (101) | |
Securities available-for-sale | $ 11,866 | |
Securities held to maturity: | ||
Number of securities in unrealized loss positions | security | 9 | |
U.S. government agency mortgage-backed securities | ||
Securities available-for-sale: | ||
Amortized Cost | $ 5,457 | 24,092 |
Available-for-sale, Gross Unrealized Gains | 66 | 45 |
Available-for-sale, Gross Unrealized Losses | (26) | (271) |
Securities available-for-sale | $ 5,497 | $ 23,866 |
Securities held to maturity: | ||
Number of securities in unrealized loss positions | security | 1 | 24 |
U.S. government agency collateralized mortgage obligations | ||
Securities available-for-sale: | ||
Amortized Cost | $ 35,096 | $ 14,754 |
Available-for-sale, Gross Unrealized Gains | 300 | 52 |
Available-for-sale, Gross Unrealized Losses | (173) | (142) |
Securities available-for-sale | $ 35,223 | $ 14,664 |
Securities held to maturity: | ||
Number of securities in unrealized loss positions | security | 15 | 12 |
State and municipal securities | ||
Securities available-for-sale: | ||
Amortized Cost | $ 6,354 | $ 11,096 |
Available-for-sale, Gross Unrealized Gains | 22 | |
Available-for-sale, Gross Unrealized Losses | (84) | (199) |
Securities available-for-sale | 6,270 | 10,919 |
Securities held to maturity: | ||
Held-to-maturity, Amortized Cost | 8,780 | 10,750 |
Held-to-maturity, Gross Unrealized Gains | 223 | 17 |
Held-to-maturity, Gross Unrealized (Losses) | (90) | |
Fair Value | $ 9,003 | $ 10,677 |
Number of securities in unrealized loss positions | security | 6 | 26 |
U.S. Treasuries | ||
Securities held to maturity: | ||
Held-to-maturity, Amortized Cost | $ 1,991 | |
Held-to-maturity, Gross Unrealized (Losses) | (13) | |
Fair Value | $ 1,978 | |
Number of securities in unrealized loss positions | security | 2 | |
Investments in mutual funds | ||
Securities available-for-sale: | ||
Amortized Cost | $ 1,000 | |
Available-for-sale, Gross Unrealized Losses | (21) | |
Securities available-for-sale | $ 1,000 | $ 979 |
Securities held to maturity: | ||
Number of securities in unrealized loss positions | security | 1 |
Securities - Continuous Unreali
Securities - Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | $ 34,419 | $ 6,927 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 4,744 | 29,589 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 39,163 | 36,516 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (301) | (52) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (83) | (581) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (384) | (633) |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 1,545 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 6,761 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Total | 8,306 | |
Debt securities, Held-to-maturity securities, Continuous unrealized loss position, accumulated loss | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss | (5) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (98) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (103) | |
U.S. asset backed securities | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 11,866 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 11,866 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (101) | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (101) | |
U.S. government agency mortgage-backed securities | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 2,354 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 1,636 | 15,223 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 1,636 | 17,577 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (6) | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (26) | (265) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (26) | (271) |
U.S. government agency collateralized mortgage obligations | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 16,283 | 2,636 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 3,108 | 5,620 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 19,391 | 8,256 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (116) | (14) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (57) | (128) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (173) | (142) |
State and municipal securities | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 6,270 | 957 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 8,746 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 6,270 | 9,703 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (84) | (11) |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (188) | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | $ (84) | (199) |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 1,545 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 4,783 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Total | 6,328 | |
Debt securities, Held-to-maturity securities, Continuous unrealized loss position, accumulated loss | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss | (5) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (85) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (90) | |
Investments in mutual funds | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 980 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Total | 980 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | (21) | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | (21) | |
U.S. Treasuries | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 1,978 | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Fair Value, Total | 1,978 | |
Debt securities, Held-to-maturity securities, Continuous unrealized loss position, accumulated loss | ||
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | (13) | |
Held-to-maturity securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | $ (13) |
Securities - Contractual Maturi
Securities - Contractual Maturities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Contractual Maturities, Available-for-sale, Amortized Cost | ||
Amortized Cost | $ 58,874 | $ 50,942 |
Contractual Maturities, Available-for-sale, Fair Value | ||
Fair Value | 58,856 | 50,428 |
Contractual Maturities, Held-to-maturity, Amortized Cost | ||
Amortized Cost | 8,780 | 12,741 |
Contractual Maturities, Held-to-maturity, Fair Value | ||
Fair Value | 9,003 | 12,655 |
Proceeds from Sale of Debt Securities, Available-for-sale | 24,627 | 0 |
Gain (Loss) on Sale of Investments | 165 | |
U.S. Asset Backed And State And Municipal Securities | ||
Contractual Maturities, Available-for-sale, Amortized Cost | ||
Due in one year or less | 906 | |
Due after one year through five years | 1,236 | |
Due after five years through ten years | 1,329 | 6,411 |
Due after ten years | 16,992 | 2,543 |
Amortized Cost | 18,321 | 11,096 |
Contractual Maturities, Available-for-sale, Fair Value | ||
Due in one year or less | 902 | |
Due after one year through five years | 1,226 | |
Due after five years through ten year | 1,324 | 6,290 |
Due after ten years | 16,812 | 2,501 |
Fair Value | 18,136 | 10,919 |
Contractual Maturities, Held-to-maturity, Amortized Cost | ||
Due in one year or less | 1,991 | |
Due after one year through five years | 4,242 | 3,154 |
Due after five years through ten years | 4,538 | 7,596 |
Amortized Cost | 8,780 | 12,741 |
Contractual Maturities, Held-to-maturity, Fair Value | ||
Due in one year or less | 1,978 | |
Due after one year through five years | 4,311 | 3,148 |
Due after five years through ten years | 4,692 | 7,529 |
Fair Value | 9,003 | 12,655 |
Mortgage-related securities | ||
Contractual Maturities, Available-for-sale, Amortized Cost | ||
Amortized Cost | 40,553 | 38,846 |
Contractual Maturities, Available-for-sale, Fair Value | ||
Fair Value | 40,720 | 38,530 |
Investments in mutual funds | ||
Contractual Maturities, Available-for-sale, Amortized Cost | ||
Amortized Cost | 1,000 | |
Contractual Maturities, Available-for-sale, Fair Value | ||
Fair Value | $ 1,000 | $ 979 |
Loans Receivable - Loans and le
Loans Receivable - Loans and leases outstanding by category (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Loans Receivable | ||
Mortgage loans held for sale | $ 33,704 | $ 37,695 |
Total portfolio loans and leases | 966,499 | 839,787 |
Total loans and leases | 1,000,203 | 877,482 |
Loans at fair value | 10,546 | 11,422 |
Commercial mortgage | ||
Loans Receivable | ||
Total portfolio loans and leases | 362,590 | 325,393 |
Home equity lines and loans | ||
Loans Receivable | ||
Total portfolio loans and leases | 81,583 | 82,286 |
Residential mortgage | ||
Loans Receivable | ||
Total portfolio loans and leases | 53,665 | 53,360 |
Loans at fair value | 10,546 | 11,422 |
Construction | ||
Loans Receivable | ||
Total portfolio loans and leases | 172,044 | 116,906 |
Commercial and industrial | ||
Loans Receivable | ||
Total portfolio loans and leases | 273,301 | 254,050 |
Small Business Loans | ||
Loans Receivable | ||
Total portfolio loans and leases | 21,616 | 5,756 |
Consumer | ||
Loans Receivable | ||
Total portfolio loans and leases | 1,003 | 701 |
Leases, net | ||
Loans Receivable | ||
Total portfolio loans and leases | 697 | 1,335 |
Real estate loans | ||
Loans Receivable | ||
Total portfolio loans and leases | 669,882 | 577,945 |
Real estate loans | Commercial mortgage | ||
Loans Receivable | ||
Total portfolio loans and leases | 362,590 | 325,393 |
Real estate loans | Home equity lines and loans | ||
Loans Receivable | ||
Total portfolio loans and leases | 81,583 | 82,286 |
Real estate loans | Residential mortgage | ||
Loans Receivable | ||
Total portfolio loans and leases | 53,665 | 53,360 |
Real estate loans | Construction | ||
Loans Receivable | ||
Total portfolio loans and leases | $ 172,044 | $ 116,906 |
Loans Receivable - Loans and _2
Loans Receivable - Loans and leases outstanding by rate type (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Loans Receivable | ||
Loans with predetermined rates | $ 293,114 | $ 264,376 |
Loans with adjustable or floating rates | 707,089 | 613,106 |
Total loans and leases | 1,000,203 | 877,482 |
Net deferred loan origination (fees) costs | $ (1,789) | $ (1,681) |
Loans Receivable - Components o
Loans Receivable - Components of the net investment in leases (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Loans Receivable | ||
Minimum lease payments receivable | $ 729 | $ 1,420 |
Unearned lease income | (32) | (85) |
Total | $ 697 | $ 1,335 |
Loans Receivable - Age analysis
Loans Receivable - Age analysis of past due loans and leases (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Age Analysis of Past Due Loans and Leases | ||
Total past due | $ 5,043 | $ 809 |
Current | 958,221 | 835,047 |
Total Accruing Loans and leases | 963,264 | 835,856 |
Nonaccrual loans and leases | 3,235 | 3,931 |
Loans and Leases Receivable, Gross, Total | $ 966,499 | $ 839,787 |
Delinquency percentage | 0.86% | 0.56% |
Loans at fair value | $ 10,546 | $ 11,422 |
Commercial mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Current | 361,857 | 324,169 |
Total Accruing Loans and leases | 361,857 | 324,169 |
Nonaccrual loans and leases | 733 | 1,224 |
Loans and Leases Receivable, Gross, Total | $ 362,590 | $ 325,393 |
Delinquency percentage | 0.20% | 0.38% |
Home equity lines and loans | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | $ 348 | |
Current | $ 81,046 | 81,855 |
Total Accruing Loans and leases | 81,046 | 82,203 |
Nonaccrual loans and leases | 537 | 83 |
Loans and Leases Receivable, Gross, Total | $ 81,583 | $ 82,286 |
Delinquency percentage | 0.66% | 0.52% |
Residential mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | $ 4,675 | $ 195 |
Current | 47,446 | 51,018 |
Total Accruing Loans and leases | 52,121 | 51,213 |
Nonaccrual loans and leases | 1,544 | 2,147 |
Loans and Leases Receivable, Gross, Total | $ 53,665 | $ 53,360 |
Delinquency percentage | 11.59% | 4.39% |
Loans at fair value | $ 10,546 | $ 11,422 |
Construction | ||
Age Analysis of Past Due Loans and Leases | ||
Current | 172,044 | 116,906 |
Total Accruing Loans and leases | 172,044 | 116,906 |
Loans and Leases Receivable, Gross, Total | 172,044 | 116,906 |
Commercial and industrial | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 206 | 217 |
Current | 272,674 | 253,356 |
Total Accruing Loans and leases | 272,880 | 253,573 |
Nonaccrual loans and leases | 421 | 477 |
Loans and Leases Receivable, Gross, Total | $ 273,301 | $ 254,050 |
Delinquency percentage | 0.23% | 0.27% |
Small Business Loans | ||
Age Analysis of Past Due Loans and Leases | ||
Current | $ 21,616 | $ 5,756 |
Total Accruing Loans and leases | 21,616 | 5,756 |
Loans and Leases Receivable, Gross, Total | 21,616 | 5,756 |
Consumer | ||
Age Analysis of Past Due Loans and Leases | ||
Current | 1,003 | 701 |
Total Accruing Loans and leases | 1,003 | 701 |
Loans and Leases Receivable, Gross, Total | 1,003 | 701 |
Leases, net | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 162 | 49 |
Current | 535 | 1,286 |
Total Accruing Loans and leases | 697 | 1,335 |
Loans and Leases Receivable, Gross, Total | $ 697 | $ 1,335 |
Delinquency percentage | 23.24% | 3.67% |
Current | Residential mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Loans at fair value | $ 9,056 | $ 10,098 |
30-89 days past due | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 5,043 | 809 |
30-89 days past due | Home equity lines and loans | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 348 | |
30-89 days past due | Residential mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 4,675 | 195 |
Loans at fair value | 786 | 187 |
30-89 days past due | Commercial and industrial | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 206 | 217 |
30-89 days past due | Leases, net | ||
Age Analysis of Past Due Loans and Leases | ||
Total past due | 162 | 49 |
Nonaccrual | Residential mortgage | ||
Age Analysis of Past Due Loans and Leases | ||
Loans at fair value | $ 704 | $ 1,137 |
Allowance for Loan Losses (th_3
Allowance for Loan Losses (the Allowance) - Roll-forward of allowance by portfolio segment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||
Balance at beginning of period | $ 8,053 | $ 6,709 |
Charge-offs | (30) | (465) |
Recoveries | 589 | 232 |
Provision | 901 | 1,577 |
Balance at end of period | 9,513 | 8,053 |
Commercial mortgage | ||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||
Balance at beginning of period | 3,209 | 2,434 |
Recoveries | 237 | 7 |
Provision | (20) | 768 |
Balance at end of period | 3,426 | 3,209 |
Home equity lines and loans | ||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||
Balance at beginning of period | 323 | 280 |
Charge-offs | (221) | |
Recoveries | 10 | 18 |
Provision | 9 | 246 |
Balance at end of period | 342 | 323 |
Residential mortgage | ||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||
Balance at beginning of period | 191 | 82 |
Recoveries | 5 | 61 |
Provision | (17) | 48 |
Balance at end of period | 179 | 191 |
Construction | ||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||
Balance at beginning of period | 1,627 | 1,689 |
Provision | 735 | (62) |
Balance at end of period | 2,362 | 1,627 |
Commercial and industrial | ||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||
Balance at beginning of period | 2,612 | 2,097 |
Charge-offs | (30) | (244) |
Recoveries | 333 | 142 |
Provision | (231) | 617 |
Balance at end of period | 2,684 | 2,612 |
Small Business Loans | ||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||
Balance at beginning of period | 78 | 117 |
Provision | 431 | (39) |
Balance at end of period | 509 | 78 |
Consumer | ||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||
Balance at beginning of period | 3 | 5 |
Recoveries | 4 | 4 |
Provision | (1) | (6) |
Balance at end of period | 6 | 3 |
Leases, net | ||
Roll-Forward of Allowance for Loan and Lease Losses by Portfolio Segment | ||
Balance at beginning of period | 10 | 5 |
Provision | (5) | 5 |
Balance at end of period | $ 5 | $ 10 |
Allowance for Loan Losses (th_4
Allowance for Loan Losses (the Allowance) - Allowance allocated by portfolio segment (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Impaired Loans | |||
Allowance on loans and leases individually evaluated for impairment | $ 136 | $ 103 | |
Allowance on loans and leases collectively evaluated for impairment | 9,377 | 7,950 | |
Total | 9,513 | 8,053 | $ 6,709 |
Carrying value of loans and leases individually evaluated for impairment | 7,307 | 5,799 | |
Carrying value of loans and leases collectively evaluated for impairment | 948,646 | 822,566 | |
Total | 955,953 | 828,365 | |
Commercial mortgage | |||
Impaired Loans | |||
Allowance on loans and leases collectively evaluated for impairment | 3,426 | 3,209 | |
Total | 3,426 | 3,209 | 2,434 |
Carrying value of loans and leases individually evaluated for impairment | 2,138 | 1,929 | |
Carrying value of loans and leases collectively evaluated for impairment | 360,452 | 323,464 | |
Total | 362,590 | 325,393 | |
Home equity lines and loans | |||
Impaired Loans | |||
Allowance on loans and leases individually evaluated for impairment | 46 | ||
Allowance on loans and leases collectively evaluated for impairment | 296 | 323 | |
Total | 342 | 323 | 280 |
Carrying value of loans and leases individually evaluated for impairment | 536 | 83 | |
Carrying value of loans and leases collectively evaluated for impairment | 81,047 | 82,203 | |
Total | 81,583 | 82,286 | |
Residential mortgage | |||
Impaired Loans | |||
Allowance on loans and leases collectively evaluated for impairment | 179 | 191 | |
Total | 179 | 191 | 82 |
Carrying value of loans and leases individually evaluated for impairment | 854 | 969 | |
Carrying value of loans and leases collectively evaluated for impairment | 42,265 | 40,969 | |
Total | 43,119 | 41,938 | |
Construction | |||
Impaired Loans | |||
Allowance on loans and leases collectively evaluated for impairment | 2,362 | 1,627 | |
Total | 2,362 | 1,627 | 1,689 |
Carrying value of loans and leases individually evaluated for impairment | 1,247 | 1,281 | |
Carrying value of loans and leases collectively evaluated for impairment | 170,797 | 115,625 | |
Total | 172,044 | 116,906 | |
Commercial and industrial | |||
Impaired Loans | |||
Allowance on loans and leases individually evaluated for impairment | 27 | 103 | |
Allowance on loans and leases collectively evaluated for impairment | 2,657 | 2,509 | |
Total | 2,684 | 2,612 | 2,097 |
Carrying value of loans and leases individually evaluated for impairment | 1,288 | 443 | |
Carrying value of loans and leases collectively evaluated for impairment | 272,013 | 253,607 | |
Total | 273,301 | 254,050 | |
Small Business Loans | |||
Impaired Loans | |||
Allowance on loans and leases individually evaluated for impairment | 63 | ||
Allowance on loans and leases collectively evaluated for impairment | 446 | 78 | |
Total | 509 | 78 | 117 |
Carrying value of loans and leases individually evaluated for impairment | 1,244 | 1,094 | |
Carrying value of loans and leases collectively evaluated for impairment | 20,372 | 4,662 | |
Total | 21,616 | 5,756 | |
Consumer | |||
Impaired Loans | |||
Allowance on loans and leases collectively evaluated for impairment | 6 | 3 | |
Total | 6 | 3 | 5 |
Carrying value of loans and leases collectively evaluated for impairment | 1,003 | 701 | |
Total | 1,003 | 701 | |
Leases, net | |||
Impaired Loans | |||
Allowance on loans and leases collectively evaluated for impairment | 5 | 10 | |
Total | 5 | 10 | $ 5 |
Carrying value of loans and leases collectively evaluated for impairment | 697 | 1,335 | |
Total | $ 697 | $ 1,335 |
Allowance for Loan Losses (th_5
Allowance for Loan Losses (the Allowance) - Carrying value based on credit quality indicators (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | $ 911,134 | $ 784,391 |
Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 877,264 | 755,681 |
Special mention | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 16,690 | 18,990 |
Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 17,180 | 9,690 |
Doubtful | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 30 | |
Commercial mortgage | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 362,590 | 325,393 |
Commercial mortgage | Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 353,724 | 320,130 |
Commercial mortgage | Special mention | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 5,821 | 3,713 |
Commercial mortgage | Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 3,045 | 1,550 |
Home equity lines and loans | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 81,583 | 82,286 |
Home equity lines and loans | Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 81,046 | 82,121 |
Home equity lines and loans | Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 537 | 165 |
Construction | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 172,044 | 116,906 |
Construction | Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 170,823 | 114,249 |
Construction | Special mention | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 1,221 | 2,657 |
Commercial and industrial | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 273,301 | 254,050 |
Commercial and industrial | Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 251,320 | 234,813 |
Commercial and industrial | Special mention | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 9,648 | 12,590 |
Commercial and industrial | Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 12,333 | 6,617 |
Commercial and industrial | Doubtful | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 30 | |
Small Business Loans | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 21,616 | 5,756 |
Small Business Loans | Pass | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 20,351 | 4,368 |
Small Business Loans | Special mention | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | 30 | |
Small Business Loans | Substandard | ||
Loans and Leases by Credit Ratings | ||
Carry value of loans and leases excluding residential mortgage, consumer and leases | $ 1,265 | $ 1,358 |
Allowance for Loan Losses (th_6
Allowance for Loan Losses (the Allowance) - Carrying value based on performance status (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Loans and Leases by Credit Ratings | ||
Troubled debt restructurings | $ 3,918,000 | $ 4,266,000 |
Carrying value of residential mortgage, consumer and leases | 44,819,000 | 43,974,000 |
Performing | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 43,965,000 | 43,005,000 |
Nonperforming | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 854,000 | 969,000 |
Residential mortgage | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 43,119,000 | 41,938,000 |
Residential mortgage | Performing | ||
Loans and Leases by Credit Ratings | ||
Troubled debt restructurings | 0 | 0 |
Carrying value of residential mortgage, consumer and leases | 42,265,000 | 40,969,000 |
Residential mortgage | Nonperforming | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | $ 854,000 | $ 969,000 |
Number of loans | 5 | 6 |
Loans receivable, net | $ 839,000 | $ 1,900,000 |
Consumer | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 1,003,000 | 701,000 |
Consumer | Performing | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 1,003,000 | 701,000 |
Leases, net | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | 697,000 | 1,335,000 |
Leases, net | Performing | ||
Loans and Leases by Credit Ratings | ||
Carrying value of residential mortgage, consumer and leases | $ 697,000 | $ 1,335,000 |
Allowance for Loan Losses (th_7
Allowance for Loan Losses (the Allowance) - Impaired loans (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Impaired loans with related allowance: | ||
Recorded investment | $ 2,080 | $ 676 |
Principal balance | 2,080 | 679 |
Related allowance | 136 | 103 |
Average recorded investment | 2,111 | 680 |
Impaired loans without related allowance: | ||
Recorded investment | 5,227 | 5,123 |
Principal balance | 5,310 | 5,672 |
Average recorded investment | 5,298 | 5,222 |
Grand Total | ||
Recorded investment | 7,307 | 5,799 |
Principal balance | 7,390 | 6,351 |
Related allowance | 136 | 103 |
Average recorded investment | 7,409 | 5,902 |
Interest income recognized on performing impaired loans | 206 | 327 |
Commercial mortgage | ||
Impaired loans without related allowance: | ||
Recorded investment | 2,138 | 1,929 |
Principal balance | 2,173 | 2,379 |
Average recorded investment | 2,162 | 1,982 |
Commercial and industrial | ||
Impaired loans with related allowance: | ||
Recorded investment | 617 | 676 |
Principal balance | 617 | 679 |
Related allowance | 27 | 103 |
Average recorded investment | 622 | 680 |
Impaired loans without related allowance: | ||
Recorded investment | 671 | 598 |
Principal balance | 718 | 682 |
Average recorded investment | 693 | 618 |
Small Business Loans | ||
Impaired loans with related allowance: | ||
Recorded investment | 1,002 | |
Principal balance | 1,002 | |
Related allowance | 63 | |
Average recorded investment | 1,027 | |
Impaired loans without related allowance: | ||
Recorded investment | 242 | 263 |
Principal balance | 242 | 263 |
Average recorded investment | 250 | 267 |
Home equity lines and loans | ||
Impaired loans with related allowance: | ||
Recorded investment | 461 | |
Principal balance | 461 | |
Related allowance | 46 | |
Average recorded investment | 462 | |
Impaired loans without related allowance: | ||
Recorded investment | 75 | 83 |
Principal balance | 75 | 89 |
Average recorded investment | 76 | 84 |
Residential mortgage | ||
Impaired loans without related allowance: | ||
Recorded investment | 854 | 969 |
Principal balance | 854 | 978 |
Average recorded investment | 855 | 978 |
Construction | ||
Impaired loans without related allowance: | ||
Recorded investment | 1,247 | 1,281 |
Principal balance | 1,248 | 1,281 |
Average recorded investment | $ 1,262 | $ 1,293 |
Allowance for Loan Losses (th_8
Allowance for Loan Losses (the Allowance) - Troubled debt restructuring (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Allowance for Loan Losses (the Allowance) | ||
TDRs included in nonperforming loans and leases | $ 319 | $ 1,219 |
TDRs in compliance with modified terms | 3,599 | 3,047 |
Total TDRs | $ 3,918 | $ 4,266 |
Allowance for Loan Losses (th_9
Allowance for Loan Losses (the Allowance) - Loan and lease modifications granted categorized as TDRs (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($)contract | |
Loan and lease modifications | ||
Number of Contracts | contract | 5 | |
Pre-Modification Outstanding Recorded Investment | $ 2,973 | |
Post-Modification Outstanding Recorded Investment | 2,973 | |
Related Allowance | 63 | |
Loan and lease modifications granted and subsequently defaulted | $ 0 | $ 0 |
Commercial mortgage | ||
Loan and lease modifications | ||
Number of Contracts | contract | 1 | |
Pre-Modification Outstanding Recorded Investment | $ 796 | |
Post-Modification Outstanding Recorded Investment | $ 796 | |
Land and Construction | ||
Loan and lease modifications | ||
Number of Contracts | contract | 1 | |
Pre-Modification Outstanding Recorded Investment | $ 1,628 | |
Post-Modification Outstanding Recorded Investment | $ 1,628 | |
Commercial and industrial | ||
Loan and lease modifications | ||
Number of Contracts | contract | 2 | |
Pre-Modification Outstanding Recorded Investment | $ 282 | |
Post-Modification Outstanding Recorded Investment | 282 | |
Related Allowance | $ 63 | |
Small Business Loans | ||
Loan and lease modifications | ||
Number of Contracts | contract | 1 | |
Pre-Modification Outstanding Recorded Investment | $ 267 | |
Post-Modification Outstanding Recorded Investment | $ 267 |
Allowance for Loan Losses (t_10
Allowance for Loan Losses (the Allowance) - Loan and lease modifications made by type (Details) | 12 Months Ended |
Dec. 31, 2018contract | |
Loan and lease modifications | |
Number of Contracts | 5 |
Loan Term Extension | |
Loan and lease modifications | |
Number of Contracts | 4 |
Interest Rate Change and Loan Term Extension | |
Loan and lease modifications | |
Number of Contracts | 1 |
Commercial mortgage | |
Loan and lease modifications | |
Number of Contracts | 1 |
Commercial mortgage | Loan Term Extension | |
Loan and lease modifications | |
Number of Contracts | 1 |
Land and Construction | |
Loan and lease modifications | |
Number of Contracts | 1 |
Land and Construction | Loan Term Extension | |
Loan and lease modifications | |
Number of Contracts | 1 |
Commercial and industrial | |
Loan and lease modifications | |
Number of Contracts | 2 |
Commercial and industrial | Loan Term Extension | |
Loan and lease modifications | |
Number of Contracts | 1 |
Commercial and industrial | Interest Rate Change and Loan Term Extension | |
Loan and lease modifications | |
Number of Contracts | 1 |
Small Business Loans | |
Loan and lease modifications | |
Number of Contracts | 1 |
Small Business Loans | Loan Term Extension | |
Loan and lease modifications | |
Number of Contracts | 1 |
Bank Premises and Equipment (De
Bank Premises and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Bank Premises and Equipment | ||
Less: accumulated depreciation | $ (8,512) | $ (6,790) |
Total | 8,636 | 9,638 |
Depreciation | 1,700 | 1,700 |
Building | ||
Bank Premises and Equipment | ||
Property, Plant and Equipment, Gross | 4,141 | 3,824 |
Leasehold improvements | ||
Bank Premises and Equipment | ||
Property, Plant and Equipment, Gross | 3,156 | 3,013 |
Land | ||
Bank Premises and Equipment | ||
Property, Plant and Equipment, Gross | 600 | 600 |
Land Improvements | ||
Bank Premises and Equipment | ||
Property, Plant and Equipment, Gross | 215 | 215 |
Furniture, fixtures and equipment | ||
Bank Premises and Equipment | ||
Property, Plant and Equipment, Gross | 2,574 | 2,447 |
Computer equipment and data processing software | ||
Bank Premises and Equipment | ||
Property, Plant and Equipment, Gross | 6,360 | 6,211 |
Construction in process | ||
Bank Premises and Equipment | ||
Property, Plant and Equipment, Gross | $ 102 | $ 118 |
Deposits - Components of deposi
Deposits - Components of deposits (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deposits: | ||
Demand, noninterest bearing | $ 139,450 | $ 126,150 |
Demand, interest-bearing | 94,416 | 114,610 |
Savings accounts | 3,231 | 3,097 |
Money market accounts | 302,242 | 229,557 |
Time Deposits | 311,829 | 278,716 |
Total deposits | 851,168 | 752,130 |
Time deposits over FDIC Insurance Limit | $ 271,100 | $ 233,700 |
Deposits - Scheduled maturities
Deposits - Scheduled maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Scheduled maturities | ||
2020 | $ 261,473 | |
2021 | 27,438 | |
2022 | 727 | |
2023 | 11,249 | |
2024 | 10,942 | |
Time Deposits, Total | $ 311,829 | $ 278,716 |
Short-Term Borrowings and Lon_2
Short-Term Borrowings and Long-Term Debt - Short-term borrowings (Details) | 12 Months Ended | |
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Short-Term Borrowings | ||
Amount of short term borrowings | $ 9,376,000 | $ 12,750,000 |
Short term borrowings | 123,676,000 | 114,300,000 |
Federal Home Loan Bank of Pittsburgh | Wealth Division | ||
Short-Term Borrowings | ||
Short term borrowings | $ 413,000 | |
Federal funds purchased | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Number of borrowing facilities | item | 2 | |
Short term borrowings | $ 0 | 0 |
Federal funds purchased, facility one | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 15,000,000 | |
Federal funds purchased, facility two | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 24,000,000 | |
Federal Reserve discount window | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 10,400,000 | |
Short term borrowings | 0 | |
Short-term borrowing with interest rate 1.81% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 102,300,000 | |
Interest rate (as a percent) | 1.81% | |
Short-term borrowing with interest rate 1.59% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 7,700,000 | |
Interest rate (as a percent) | 1.59% | |
Short-term borrowing with interest rate 1.59% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 5,100,000 | |
Interest rate (as a percent) | 1.59% | |
Short-term borrowing with interest rate 2.76% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 5,000,000 | |
Interest rate (as a percent) | 2.76% | |
Short-term borrowing with interest rate 2.03% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 3,100,000 | |
Interest rate (as a percent) | 2.03% | |
Short-term borrowing with interest rate 2.62% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 112,500,000 | |
Interest rate (as a percent) | 2.62% | |
Short-term borrowing with interest rate 1.70% | Federal Home Loan Bank of Pittsburgh | ||
Short-Term Borrowings | ||
Short term borrowings | $ 1,800,000 | |
Interest rate (as a percent) | 1.70% | |
Duration of debt (in years) | 4 years |
Short-Term Borrowings and Lon_3
Short-Term Borrowings and Long-Term Debt - Long-term debt (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Long Term Debt | ||
Long-term debt | $ 3,123 | $ 6,238 |
Federal Home Loan Bank of Pittsburgh | ||
Long Term Debt | ||
Long-term debt | $ 3,123 | 6,238 |
Federal Home Loan Bank of Pittsburgh | Mid-term Repo-fixed Maturing On 06/28/2021 | ||
Long Term Debt | ||
Fixed interest rate (as a percent) | 1.88% | |
Long-term debt | $ 3,123 | |
Federal Home Loan Bank of Pittsburgh | Mid-term Repo-fixed Maturing On 08/10/2020 | ||
Long Term Debt | ||
Fixed interest rate (as a percent) | 2.76% | |
Long-term debt | 5,000 | |
Federal Home Loan Bank of Pittsburgh | Acquisition Purchase Note maturing On 04/01/2020 | ||
Long Term Debt | ||
Fixed interest rate (as a percent) | 3.00% | |
Long-term debt | 1,238 | |
Federal Home Loan Bank of Pittsburgh | Letters of credit | ||
Long Term Debt | ||
Proceeds from long term debt | $ 102,800 | |
Maximum borrowing capacity | $ 507,300 | $ 437,200 |
Subordinated Debentures (Detail
Subordinated Debentures (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019USD ($)installment | Apr. 30, 2013USD ($) | Dec. 31, 2011USD ($) | Dec. 31, 2008USD ($)installment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2014tranche | Sep. 30, 2014USD ($) | Aug. 31, 2014USD ($) | Jun. 30, 2014USD ($) | |
Subordinated Borrowing [Line Items] | ||||||||||
Debenture outstanding | $ 40,962 | $ 40,962 | $ 9,239 | |||||||
Repayments of debt | 7,432 | $ 4,069 | ||||||||
2008 Debentures | ||||||||||
Subordinated Borrowing [Line Items] | ||||||||||
Debt issued | $ 550 | |||||||||
Conversion ratio | 0.0667 | |||||||||
Interest rate | 6.00% | |||||||||
Debenture outstanding | 225 | 225 | ||||||||
Repayments of debt | 119 | |||||||||
Number of equal principal installments | installment | 8 | |||||||||
2011 Debentures | ||||||||||
Subordinated Borrowing [Line Items] | ||||||||||
Debt issued | $ 1,400 | |||||||||
Conversion ratio | 0.0588 | |||||||||
Interest rate | 6.00% | |||||||||
Debenture outstanding | $ 809 | 809 | ||||||||
Repayments of debt | 116 | |||||||||
Number of equal principal installments | installment | 8 | |||||||||
2013 Debentures | ||||||||||
Subordinated Borrowing [Line Items] | ||||||||||
Debt issued | $ 1,400 | |||||||||
Conversion ratio | 0.0455 | |||||||||
Interest rate | 6.50% | |||||||||
Debenture outstanding | $ 870 | 870 | ||||||||
Repayments of debt | 0 | |||||||||
2014 Debentures | ||||||||||
Subordinated Borrowing [Line Items] | ||||||||||
Debt issued | $ 7,000 | $ 100 | $ 3,000 | |||||||
Interest rate | 7.25% | |||||||||
Repayments of debt | 7,100 | |||||||||
Number of tranches | tranche | 3 | |||||||||
2019 Debentures | ||||||||||
Subordinated Borrowing [Line Items] | ||||||||||
Debt issued | $ 40,000 | $ 40,000 | ||||||||
Interest rate | 5.375% |
Servicing Assets - Residential
Servicing Assets - Residential Mortgage Loans (Details) - Mortgage Servicing Rights - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Servicing Assets at Fair Value [Line Items] | ||
Loans serviced | $ 60,300 | $ 24,900 |
Servicing fee income | 372 | 241 |
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Balance at beginning of the period | 232 | |
Servicing rights capitalized | 372 | 241 |
Amortization of servicing rights | (60) | (9) |
Change in valuation allowance | (98) | |
Balance at end of the period | 446 | $ 232 |
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward] | ||
Impairment | (98) | |
Valuation allowance, end of the period | $ 98 |
Servicing Assets - MSR Sensitiv
Servicing Assets - MSR Sensitivity Analysis (Details) - Mortgage Servicing Rights - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||
Fair value of residential mortgage servicing rights | $ 446 | $ 213 |
Weighted average life (years) | 7 years 9 months 18 days | 3 years 4 months 24 days |
Prepayment speed | 13.08% | 11.78% |
Impact on fair value of a 10% adverse change in prepayment speed | $ (19) | $ (9) |
Impact on fair value of a 20% adverse change in prepayment speed | $ (37) | $ (17) |
Discount rate | 9.00% | 9.50% |
Impact on fair value of a 10% adverse change in the discount rate | $ (14) | $ (8) |
Impact on fair value of a 20% adverse change in the discount rate | $ (27) | $ (15) |
Servicing Assets - SBA Loans (D
Servicing Assets - SBA Loans (Details) - SBA Loan Servicing Rights - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Servicing Assets at Fair Value [Line Items] | ||
Loans serviced | $ 18,000 | $ 0 |
Servicing fee income | 25 | |
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Servicing rights capitalized | 383 | |
Amortization of servicing rights | (20) | |
Change in valuation allowance | (26) | |
Balance at end of the period | 337 | |
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward] | ||
Impairment | (26) | |
Valuation allowance, end of the period | $ (26) |
Servicing Assets - SBA Sensitiv
Servicing Assets - SBA Sensitivity Analysis (Details) - SBA Loan Servicing Rights $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | |
Fair value of SBA loan servicing rights | $ 337 |
Weighted average life (years) | 4 years 3 months 18 days |
Prepayment speed | 10.77% |
Impact on fair value of a 10% adverse change in prepayment speed | $ (12) |
Impact on fair value of a 20% adverse change in prepayment speed | $ (23) |
Discount rate | 11.28% |
Impact on fair value of a 10% adverse change in the discount rate | $ (9) |
Impact on fair value of a 20% adverse change in the discount rate | $ (18) |
Lease Commitments (Details)
Lease Commitments (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Lease Commitments | ||
Number of branch spaces leased | item | 17 | |
Operating Leases, Rent Expense | $ 1,300 | $ 1,400 |
Future minimum lease payments | ||
2020 | 1,133 | |
2021 | 1,027 | |
2022 | 857 | |
2023 | 750 | |
2024 | 764 | |
Thereafter | 3,319 | |
Total | $ 7,850 |
Stock-Based Compensation - 2016
Stock-Based Compensation - 2016 Plan (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-Based Compensation | ||
Granted | 73,000 | 79,450 |
2016 Plan | ||
Stock-Based Compensation | ||
Shares authorized | 686,900 | |
Stock dividend percentage | 5.00% | |
Granted | 128,450 | |
Term of award | 10 years | |
Vesting percentage | 25.00% | |
Vesting period | 3 years | |
2004 Plan | ||
Stock-Based Compensation | ||
Shares authorized | 446,091 | |
Stock dividend percentage | 5.00% | |
Number of shares available for future grants | 0 |
Stock-Based Compensation - Prov
Stock-Based Compensation - Provides information about options outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Shares | ||
Outstanding, at the beginning of the period | 274,070 | 211,915 |
Exercised | (689) | (14,508) |
Granted | 73,000 | 79,450 |
Forfeited | (2,787) | |
Outstanding, at the end of the period | 346,381 | 274,070 |
Exercisable at the end of the period | 240,208 | |
Nonvested at the end of the period | 106,173 | |
Weighted Average Exercise Price | ||
Outstanding, at the beginning of the period | $ 15.88 | $ 14.99 |
Exercised | 11.79 | 12.43 |
Granted | 17.03 | 17.70 |
Forfeited | 17.94 | |
Outstanding, at the end of the period | 16.13 | 15.88 |
Exercisable at the end of the period | 15.52 | |
Nonvested at the end of the period | 17.49 | |
Weighted Average Grant Date Fair Value | ||
Outstanding, at the beginning of the period | 4.46 | 4 |
Exercised | 3.89 | 3.44 |
Granted | 4.90 | 5.49 |
Forfeited | 4.27 | |
Outstanding, at the end of the period | 4.55 | $ 4.46 |
Exercisable at December 31, 2018 | 4.34 | |
Nonvested at December 31, 2018 | $ 5.03 | |
Weighted average remaining contractual life | 7 years 2 months 12 days | |
Range of exercise prices, lower limit | $ 9.88 | |
Range of exercise prices, upper limit | $ 19 | |
Aggregate intrinsic value of options outstanding | $ 240 | |
Aggregate intrinsic value of options exercisable | $ 240 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted average assumptions (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation fair value assumptions | ||
Weighted average fair value of options granted | $ 4.90 | $ 5.49 |
Proceeds from exercise of stock options | $ 128 | |
Forfeited | 2,787 | |
Employee stock option | ||
Stock-based compensation fair value assumptions | ||
Expected dividends | 0.00% | 0.00% |
Expected life | 5 years 9 months | 5 years 9 months |
Total stock compensation cost | $ 272 | $ 293 |
Tax benefits recognized related to stock compensation cost | 0 | |
Unrecognized compensation cost | $ 350 | |
Weighted average period in which the unrecognized compensation cost will be recognized | 1 year 1 month 21 days | |
Employee stock option | Minimum | ||
Stock-based compensation fair value assumptions | ||
Risk-free rate | 1.95% | 2.84% |
Expected volatility | 22.44% | 19.68% |
Weighted average fair value of options granted | $ 4.84 | $ 4.87 |
Employee stock option | Maximum | ||
Stock-based compensation fair value assumptions | ||
Risk-free rate | 2.61% | 3.06% |
Expected volatility | 22.48% | 26.11% |
Weighted average fair value of options granted | $ 5.30 | $ 5.52 |
Income Taxes - federal and stat
Income Taxes - federal and state (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Federal: | ||
Current | $ 3,287 | $ 2,413 |
Deferred | (489) | (288) |
Total | 2,798 | 2,125 |
State: | ||
Current | 249 | 207 |
Deferred | (14) | (5) |
Total | 235 | 202 |
Totals | $ 3,033 | $ 2,327 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||
Federal income tax at statutory rate | $ 2,838 | $ 2,203 |
State tax expense, net of federal benefit | 186 | 160 |
Tax exempt interest | (65) | (92) |
Bank owned life insurance | (61) | (63) |
Incentive stock options | 66 | 52 |
Other | 69 | 67 |
Totals | $ 3,033 | $ 2,327 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
Federal income tax at statutory rate (as a percent) | 21.00% | 21.00% |
State tax expense, net of federal benefit (as a percent) | 1.40% | 1.50% |
Tax exempt interest (as a percent) | (0.50%) | (0.90%) |
Bank owned life insurance (as a percent) | (0.50%) | (0.60%) |
Incentive stock options (as a percent) | 0.50% | 0.50% |
Other (as a percent) | 0.50% | 0.60% |
Effective income tax rate (as a percent) | 22.40% | 22.10% |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax asset (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred tax assets: | ||
Allowance for loan and lease losses | $ 2,111 | $ 1,802 |
Litigation reserve | 220 | |
Intangibles | 58 | 74 |
Accrued incentive compensation | 176 | |
Accrued retirement | 432 | 380 |
Unrealized loss on available for sale securities | 2 | 118 |
Deferred rent | 142 | 155 |
Mortgage repurchase reserve | 16 | 15 |
Other | 78 | 169 |
Total | 3,235 | 2,713 |
Deferred tax liabilities: | ||
Property and equipment | (388) | (524) |
Loan servicing rights | (183) | |
Mortgage pipeline fair-value adjustment | (77) | (80) |
Hedge instrument fair-value adjustment | (41) | (16) |
Prepaid expenses | (152) | (131) |
Deferred loan costs | (279) | (234) |
Total | (1,120) | (985) |
Total | $ 2,115 | $ 1,728 |
Effective income tax rate (as a percent) | 22.40% | 22.10% |
Investment in low income housing tax credits | $ 1,500 | |
Tax credit recognized | 224 | |
Tax credit, amortization | 245 | |
Tax benefit from losses | $ 33 |
Revenue from contracts with c_3
Revenue from contracts with customers (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Non-Interest Income: | ||
Mortgage banking income | $ 26,167 | $ 26,187 |
Wealth management income | 3,624 | 3,917 |
SBA income | 1,448 | |
Net change in fair values | 489 | (368) |
Earnings on investment in life insurance | 290 | 300 |
Gain on sale of securities | 165 | |
Dividends on FHLB stock | 430 | 168 |
Service charges on deposit accounts | 110 | 115 |
Other | 375 | 2,036 |
Total non-interest income | 33,098 | 32,355 |
Debit card commission ans title fee | 621 | 530 |
Bank | ||
Non-Interest Income: | ||
Mortgage banking income | 268 | 124 |
Wealth management income | 92 | 200 |
SBA income | 1,448 | |
Net change in fair values | (29) | |
Earnings on investment in life insurance | 290 | 300 |
Gain on sale of securities | 165 | |
Dividends on FHLB stock | 430 | 168 |
Service charges on deposit accounts | 110 | 115 |
Other | 819 | 1,058 |
Total non-interest income | 3,593 | 1,965 |
Wealth | ||
Non-Interest Income: | ||
Wealth management income | 3,532 | 3,717 |
Total non-interest income | 3,532 | 3,717 |
Mortgage | ||
Non-Interest Income: | ||
Mortgage banking income | 25,899 | 26,063 |
Net change in fair values | 518 | (368) |
Other | (444) | 978 |
Total non-interest income | $ 25,973 | $ 26,673 |
Transactions with Executive O_2
Transactions with Executive Officers, Directors and Principal Stockholders (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Transactions with Executive Officers, Directors and Principal Stockholders | ||
Loans receivable from related parties | $ 3,700 | $ 3,500 |
Payments for advances for related parties | 8,700 | 5,600 |
Proceeds repayments from related party | 8,500 | 3,500 |
Deposits of related parties | 20,200 | 17,800 |
Subordinated debt held by related parties | 519 | 616 |
Legal fees paid | $ 16 | $ 32 |
Financial Instruments with Of_2
Financial Instruments with Off Balance Sheet Risk, Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Notional Amount | $ 139,614,000 | $ 66,566,000 |
Indemnification or Repurchase of loan | 0 | |
Provision for loan losses | 71,000 | 68,000 |
Loan receivables repurchased | $ 0 | |
Minimum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Repurchase or Indemnification Term of Loan | 2 months | |
Delinquency period of loan | 6 months | |
Maximum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Repurchase or Indemnification Term of Loan | 3 months | |
Commitments to extend credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance sheet financial instruments | $ 327,788,000 | 290,614,000 |
Mortgage Loans Commitments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance sheet financial instruments | $ 72,900,000 | 33,400,000 |
Mortgage Loans Commitments | Minimum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitment term | 30 days | |
Mortgage Loans Commitments | Maximum | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitment term | 90 days | |
Letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance sheet financial instruments | $ 9,750,000 | 5,158,000 |
Commitment term | 12 months | |
Forward Commitments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitment term | 90 days | |
Notional Amount | $ 62,750,000 | 26,500,000 |
Forward Sale Of Mortgage Backed Securities | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Notional Amount | 62,800,000 | 26,500,000 |
Forward Best Effort Sale Commitment | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Notional Amount | $ 18,600,000 | $ 9,300,000 |
Recent Litigation (Details)
Recent Litigation (Details) $ in Thousands | Feb. 19, 2020USD ($) | Jul. 24, 2019USD ($) | Nov. 21, 2017employee | Sep. 30, 2019USD ($) |
Recent Litigation | ||||
Number of employees filed suit | employee | 3 | |||
Litigation reserve | $ 990 | |||
Litigation settlement agreed amount | $ 990 | |||
Payments for Legal Settlements | $ 1,000 |
Regulatory Matters (Details)
Regulatory Matters (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total capital (to risk-weighted assets) | ||
Actual, Amount | $ 166,471 | $ 122,262 |
For capital adequacy purpose, Amount | 108,576 | 71,585 |
To be well capitalized under prompt corrective action provisions, Amount | $ 103,405 | $ 89,481 |
Actual, Ratio | 16.10% | 13.66% |
For capital adequacy purpose, Ratio | 10.50% | 8.00% |
To be well capitalized under prompt corrective action provisions, Ratio | 10.00% | 10.00% |
Common equity tier 1 capital (to risk-weighted assets) | ||
Actual, Amount | $ 115,934 | $ 104,881 |
For capital adequacy purpose, Amount | 72,384 | 40,266 |
To be well capitalized under prompt corrective action provisions, Amount | $ 67,214 | $ 58,163 |
Actual, Ratio | 11.21% | 11.72% |
For capital adequacy purpose, Ratio | 7.00% | 4.50% |
To be well capitalized under prompt corrective action provisions, Ratio | 6.50% | 6.50% |
Tier 1 capital (to risk-weighted assets) | ||
Actual, Amount | $ 115,934 | $ 104,881 |
For capital adequacy purpose, Amount | 87,895 | 53,689 |
To be well capitalized under prompt corrective action provisions, Amount | $ 82,724 | $ 71,585 |
Actual, Ratio | 11.21% | 11.72% |
For capital adequacy purpose, Ratio | 8.50% | 6.00% |
To be well capitalized under prompt corrective action provisions, Ratio | 8.00% | 8.00% |
Tier 1 capital (to average assets) | ||
Actual, Amount | $ 115,934 | $ 104,881 |
For capital adequacy purpose, Amount | 43,973 | 37,581 |
To be well capitalized under prompt corrective action provisions, Amount | $ 54,966 | $ 46,977 |
Actual, Ratio | 10.55% | 11.16% |
For capital adequacy purpose, Ratio | 4.00% | 4.00% |
To be well capitalized under prompt corrective action provisions, Ratio | 5.00% | 5.00% |
Capital conservation buffer (as a percent) | 1.25% | 1.875% |
Meridian Bank | ||
Total capital (to risk-weighted assets) | ||
Actual, Amount | $ 166,360 | |
For capital adequacy purpose, Amount | 108,571 | |
To be well capitalized under prompt corrective action provisions, Amount | $ 103,401 | |
Actual, Ratio | 16.09% | |
For capital adequacy purpose, Ratio | 10.50% | |
To be well capitalized under prompt corrective action provisions, Ratio | 10.00% | |
Common equity tier 1 capital (to risk-weighted assets) | ||
Actual, Amount | $ 154,881 | |
For capital adequacy purpose, Amount | 72,381 | |
To be well capitalized under prompt corrective action provisions, Amount | $ 67,211 | |
Actual, Ratio | 14.98% | |
For capital adequacy purpose, Ratio | 7.00% | |
To be well capitalized under prompt corrective action provisions, Ratio | 6.50% | |
Tier 1 capital (to risk-weighted assets) | ||
Actual, Amount | $ 154,881 | |
For capital adequacy purpose, Amount | 87,891 | |
To be well capitalized under prompt corrective action provisions, Amount | $ 82,721 | |
Actual, Ratio | 14.98% | |
For capital adequacy purpose, Ratio | 8.50% | |
To be well capitalized under prompt corrective action provisions, Ratio | 8.00% | |
Tier 1 capital (to average assets) | ||
Actual, Amount | $ 154,881 | |
For capital adequacy purpose, Amount | 44,013 | |
To be well capitalized under prompt corrective action provisions, Amount | $ 55,017 | |
Actual, Ratio | 14.08% | |
For capital adequacy purpose, Ratio | 4.00% | |
To be well capitalized under prompt corrective action provisions, Ratio | 5.00% |
Fair Value Measurements and D_3
Fair Value Measurements and Disclosures - Financial assets measured at fair value on a recurring basis (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | $ 58,856 | $ 50,428 |
Mortgage loans held-for-investment | 10,546 | 11,422 |
U.S. asset backed securities | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 11,866 | |
U.S. government agency mortgage-backed securities | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 5,497 | 23,866 |
U.S. government agency collateralized mortgage obligations | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 35,223 | 14,664 |
State and municipal securities | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 6,270 | 10,919 |
Investments in mutual funds | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 1,000 | 979 |
Level 3 | Interest rate lock commitments | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | 504 | |
Recurring | ||
Fair Value Measurements and Disclosures | ||
Mortgage loans held-for-sale | 33,704 | 37,695 |
Mortgage loans held-for-investment | 10,546 | 11,422 |
Mortgage servicing rights | 446 | 213 |
SBA loan servicing rights | 337 | |
Total | 105,784 | 100,209 |
Recurring | U.S. asset backed securities | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 11,866 | |
Recurring | U.S. government agency mortgage-backed securities | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 5,497 | 23,866 |
Recurring | U.S. government agency collateralized mortgage obligations | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 35,223 | 14,664 |
Recurring | State and municipal securities | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 6,270 | 10,919 |
Recurring | Investments in mutual funds | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 1,009 | 979 |
Recurring | Interest rate lock commitments | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | 504 | 310 |
Recurring | Customer derivatives - Interest rate swaps | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | 382 | 141 |
Recurring | Level 2 | ||
Fair Value Measurements and Disclosures | ||
Mortgage loans held-for-sale | 33,704 | 37,695 |
Mortgage loans held-for-investment | 10,546 | 11,422 |
Total | 104,497 | 99,686 |
Recurring | Level 2 | U.S. asset backed securities | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 11,866 | |
Recurring | Level 2 | U.S. government agency mortgage-backed securities | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 5,497 | 23,866 |
Recurring | Level 2 | U.S. government agency collateralized mortgage obligations | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 35,223 | 14,664 |
Recurring | Level 2 | State and municipal securities | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 6,270 | 10,919 |
Recurring | Level 2 | Investments in mutual funds | ||
Fair Value Measurements and Disclosures | ||
Securities available-for-sale | 1,009 | 979 |
Recurring | Level 2 | Customer derivatives - Interest rate swaps | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | 382 | 141 |
Recurring | Level 3 | ||
Fair Value Measurements and Disclosures | ||
Mortgage servicing rights | 446 | 213 |
SBA loan servicing rights | 337 | |
Total | 1,287 | 523 |
Recurring | Level 3 | Interest rate lock commitments | ||
Fair Value Measurements and Disclosures | ||
Derivative assets, Fair value | $ 504 | $ 310 |
Fair Value Measurements and D_4
Fair Value Measurements and Disclosures - Financial assets measured at fair value on non-recurring basis (Details) - Nonrecurring - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Financial assets measured at fair value on a nonrecurring basis | ||
Impaired loans | $ 7,307 | $ 5,799 |
Other real estate owned | 120 | |
Total | 7,427 | 5,799 |
Level 3 | ||
Financial assets measured at fair value on a nonrecurring basis | ||
Impaired loans | 7,307 | 5,799 |
Other real estate owned | 120 | |
Total | $ 7,427 | $ 5,799 |
Fair Value Measurements and D_5
Fair Value Measurements and Disclosures - Estimated fair values of financial instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Financial assets: | ||
Securities available-for-sale | $ 58,856 | $ 50,428 |
Securities held-to-maturity | 9,003 | 12,655 |
Equity Securities, FV-NI | 1,009 | |
Mortgage loans held-for-investment | 10,546 | 11,422 |
Level 1 | Carrying amount | ||
Financial assets: | ||
Cash and cash equivalents | 39,371 | 23,952 |
Level 1 | Fair value | ||
Financial assets: | ||
Cash and cash equivalents | 39,371 | 23,952 |
Level 2 | Carrying amount | ||
Financial assets: | ||
Securities available-for-sale | 58,856 | 50,428 |
Securities held-to-maturity | 8,780 | 12,741 |
Equity Securities, FV-NI | 1,009 | |
Mortgage loans held-for-sale | 33,704 | 37,695 |
Mortgage loans held-for-investment | 10,546 | 11,422 |
Financial liabilities: | ||
Deposits | 851,168 | 752,130 |
Short-term borrowings | 123,676 | 114,300 |
Long-term debt | 3,123 | 6,238 |
Subordinated debentures | 40,962 | 9,239 |
Accrued interest payable | 1,088 | 305 |
Level 2 | Carrying amount | Forward Commitments | ||
Financial assets: | ||
Derivative asset | 6 | |
Financial liabilities: | ||
Derivatives | 119 | 176 |
Level 2 | Carrying amount | Customer derivatives - Interest rate swaps | ||
Financial assets: | ||
Derivative asset | 382 | 141 |
Financial liabilities: | ||
Derivatives | 431 | 161 |
Level 2 | Fair value | ||
Financial assets: | ||
Securities available-for-sale | 58,856 | 50,428 |
Securities held-to-maturity | 9,003 | 12,655 |
Equity Securities, FV-NI | 1,009 | |
Mortgage loans held-for-sale | 33,704 | 37,695 |
Mortgage loans held-for-investment | 10,546 | 11,422 |
Financial liabilities: | ||
Deposits | 880,400 | 744,300 |
Short-term borrowings | 123,678 | 114,300 |
Long-term debt | 3,123 | 6,240 |
Subordinated debentures | 40,962 | 9,396 |
Accrued interest payable | 1,088 | 305 |
Level 2 | Fair value | Forward Commitments | ||
Financial assets: | ||
Derivative asset | 6 | |
Financial liabilities: | ||
Derivatives | 119 | 176 |
Level 2 | Fair value | Customer derivatives - Interest rate swaps | ||
Financial assets: | ||
Derivative asset | 382 | 141 |
Financial liabilities: | ||
Derivatives | 431 | 161 |
Level 3 | Interest rate lock commitments | ||
Financial assets: | ||
Derivative asset | 504 | |
Level 3 | Carrying amount | ||
Financial assets: | ||
Loans receivable, net | 954,164 | 818,631 |
Restricted investment in bank stock | 8,072 | 7,002 |
Mortgage servicing rights | 446 | 232 |
SBA loan servicing rights | 337 | |
Accrued interest receivable | 3,148 | 2,889 |
Level 3 | Carrying amount | Interest rate lock commitments | ||
Financial assets: | ||
Derivative asset | 504 | 310 |
Financial liabilities: | ||
Derivatives | 157 | 40 |
Level 3 | Fair value | ||
Financial assets: | ||
Loans receivable, net | 973,057 | 820,512 |
Restricted investment in bank stock | 8,072 | 7,002 |
Mortgage servicing rights | 446 | 213 |
SBA loan servicing rights | 337 | |
Accrued interest receivable | 3,148 | 2,889 |
Level 3 | Fair value | Interest rate lock commitments | ||
Financial assets: | ||
Derivative asset | 504 | 310 |
Financial liabilities: | ||
Derivatives | $ 157 | $ 40 |
Fair Value Measurements and D_6
Fair Value Measurements and Disclosures - Off-balance sheet financial instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Commitments to extend credit | ||
Off-balance sheet financial instruments: | ||
Off-balance sheet financial instruments | $ 327,788 | $ 290,614 |
Letters of credit | ||
Off-balance sheet financial instruments: | ||
Off-balance sheet financial instruments | 9,750 | 5,158 |
Carrying amount | Level 2 | Commitments to extend credit | ||
Off-balance sheet financial instruments: | ||
Off-balance sheet financial instruments | 327,788 | 290,614 |
Carrying amount | Level 2 | Letters of credit | ||
Off-balance sheet financial instruments: | ||
Off-balance sheet financial instruments | 9,750 | 5,158 |
Fair value | Level 2 | Commitments to extend credit | ||
Off-balance sheet financial instruments: | ||
Off-balance sheet financial instruments | $ 504 | $ 310 |
Fair Value Measurements and D_7
Fair Value Measurements and Disclosures - Fair value on a recurring basis (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value Measurements and Disclosures | ||
Balance at beginning of the period | $ 310 | $ 344 |
(Decrease) increase in value | 194 | (34) |
Balance at end of the period | $ 504 | $ 310 |
Fair Value Measurements and D_8
Fair Value Measurements and Disclosures - Valuation Techniques for Level 3 interest rate lock (Details) - Interest rate lock commitments - Level 3 $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative asset | $ 504 | |
Valuation technique extensible list | us-gaap:ValuationTechniqueConsensusPricingModelMember | |
Measurement input extensible list | mrbk:LoanOriginationSucessRateMember | |
Loss (gain) in fair value of derivative assets | $ (78) | $ 40 |
Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input | 1 | |
Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input | 99 | |
Weighted Average | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input | 91.70 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Notional amounts and fair values of derivative financial instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Derivative Financial Instruments | ||
Notional Amount | $ 139,614 | $ 66,566 |
Asset (Liability) Fair Value | 185 | 74 |
Interest rate lock commitments | ||
Derivative Financial Instruments | ||
Notional Amount | 70,323 | 33,406 |
Asset (Liability) Fair Value | 347 | 270 |
Interest rate lock commitments | Other Assets | ||
Derivative Financial Instruments | ||
Notional Amount | 47,660 | 27,188 |
Asset (Liability) Fair Value | 504 | 310 |
Interest rate lock commitments | Other Liabilities | ||
Derivative Financial Instruments | ||
Notional Amount | 22,663 | 6,218 |
Asset (Liability) Fair Value | (157) | (40) |
Forward Commitments | ||
Derivative Financial Instruments | ||
Notional Amount | 62,750 | 26,500 |
Asset (Liability) Fair Value | (113) | (176) |
Forward Commitments | Other Assets | ||
Derivative Financial Instruments | ||
Notional Amount | 4,500 | |
Asset (Liability) Fair Value | 6 | |
Forward Commitments | Other Liabilities | ||
Derivative Financial Instruments | ||
Notional Amount | 58,250 | 26,500 |
Asset (Liability) Fair Value | (119) | (176) |
Customer derivatives - Interest rate swaps | ||
Derivative Financial Instruments | ||
Notional Amount | 6,541 | 6,660 |
Asset (Liability) Fair Value | (49) | (20) |
Customer derivatives - Interest rate swaps | Other Assets | ||
Derivative Financial Instruments | ||
Notional Amount | 3,271 | 3,330 |
Asset (Liability) Fair Value | 382 | 141 |
Customer derivatives - Interest rate swaps | Other Liabilities | ||
Derivative Financial Instruments | ||
Notional Amount | 3,271 | 3,330 |
Asset (Liability) Fair Value | $ (431) | $ (161) |
Derivative Financial Instrume_4
Derivative Financial Instruments - Fair value gains and losses on derivative financial instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of the fair value gains and losses on derivative financial instruments | ||
Net fair value gains (losses) on derivative financial instruments | $ 111 | $ (161) |
Realized gains/(losses) on derivatives | (816) | 627 |
Interest rate lock commitments | ||
Summary of the fair value gains and losses on derivative financial instruments | ||
Net fair value gains (losses) on derivative financial instruments | 77 | (40) |
Forward Commitments | ||
Summary of the fair value gains and losses on derivative financial instruments | ||
Net fair value gains (losses) on derivative financial instruments | 63 | (101) |
Customer derivatives - Interest rate swaps | ||
Summary of the fair value gains and losses on derivative financial instruments | ||
Net fair value gains (losses) on derivative financial instruments | $ (29) | $ (20) |
Segments (Details)
Segments (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)loanfacility | Dec. 31, 2018USD ($) | |
Segments | ||
Number of central loan production | loanfacility | 1 | |
Net-interest Income: | ||
Net interest income | $ 36,336 | $ 32,657 |
Provision for loan losses | 901 | 1,577 |
Net interest income after provision for loan losses | 35,435 | 31,080 |
Non-Interest Income: | ||
Mortgage banking income | 26,167 | 26,187 |
Wealth management income | 3,624 | 3,917 |
SBA income | 1,448 | |
Net change in fair values | 489 | (368) |
Other | 1,370 | 2,619 |
Total non-interest income | 33,098 | 32,355 |
Non-interest Expenses: | ||
Salaries and employee benefits | 35,157 | 34,794 |
Occupancy and equipment | 3,806 | 3,779 |
Professional fees | 2,614 | 2,162 |
Advertising and promotion | 2,475 | 2,355 |
Other | 10,967 | 9,855 |
Total non-interest expenses | 55,019 | 52,945 |
Operating Margin | 13,514 | 10,490 |
Total assets | 1,150,019 | 997,480 |
Bank | ||
Net-interest Income: | ||
Net interest income | 36,019 | 31,807 |
Provision for loan losses | 901 | 1,577 |
Net interest income after provision for loan losses | 35,118 | 30,230 |
Non-Interest Income: | ||
Mortgage banking income | 268 | 124 |
Wealth management income | 92 | 200 |
SBA income | 1,448 | |
Net change in fair values | (29) | |
Other | 1,814 | 1,641 |
Total non-interest income | 3,593 | 1,965 |
Non-interest Expenses: | ||
Salaries and employee benefits | 16,408 | 13,803 |
Occupancy and equipment | 2,166 | 2,114 |
Professional fees | 1,494 | 1,709 |
Advertising and promotion | 1,502 | 1,197 |
Other | 6,362 | 5,285 |
Total non-interest expenses | 27,932 | 24,108 |
Operating Margin | 10,780 | 8,087 |
Total assets | 1,112,862 | 951,224 |
Wealth | ||
Net-interest Income: | ||
Net interest income | 65 | 289 |
Net interest income after provision for loan losses | 65 | 289 |
Non-Interest Income: | ||
Wealth management income | 3,532 | 3,717 |
Total non-interest income | 3,532 | 3,717 |
Non-interest Expenses: | ||
Salaries and employee benefits | 2,194 | 1,897 |
Occupancy and equipment | 126 | 131 |
Professional fees | 18 | 21 |
Advertising and promotion | 347 | 432 |
Other | 580 | 752 |
Total non-interest expenses | 3,266 | 3,233 |
Operating Margin | 331 | 773 |
Total assets | 5,234 | 6,146 |
Mortgage | ||
Net-interest Income: | ||
Net interest income | 252 | 561 |
Net interest income after provision for loan losses | 252 | 561 |
Non-Interest Income: | ||
Mortgage banking income | 25,899 | 26,063 |
Net change in fair values | 518 | (368) |
Other | (444) | 978 |
Total non-interest income | 25,973 | 26,673 |
Non-interest Expenses: | ||
Salaries and employee benefits | 16,555 | 19,094 |
Occupancy and equipment | 1,514 | 1,534 |
Professional fees | 1,102 | 432 |
Advertising and promotion | 626 | 726 |
Other | 4,025 | 3,818 |
Total non-interest expenses | 23,822 | 25,604 |
Operating Margin | 2,403 | 1,630 |
Total assets | $ 31,923 | $ 40,110 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
ASU 2016-15 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Prepayment of Subordinated Debt | $ 98 |
Parent Company Financial Stat_3
Parent Company Financial Statements - Condensed Balance Sheets (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2018 |
Condensed Balance Sheet Statements, Captions [Line Items] | |||
Cash and due from banks | $ 19,106 | $ 23,159 | |
Other assets | 14,379 | 4,739 | |
Total assets | 1,150,019 | 997,480 | |
Liabilities: | |||
Subordinated debentures | 40,962 | 9,239 | |
Accrued interest payable | 1,088 | 305 | |
Total liabilities | 1,029,324 | 887,928 | |
Stockholders’ equity: | |||
Common stock, $1 par value. Authorized 10,000,000 shares; issued and outstanding 6,406,795 and 6,392,287 as of December 31, 2019 and December 31, 2018 | 6,408 | 6,407 | |
Surplus | 80,196 | 79,919 | |
Treasury Stock | (3) | ||
Retained earnings | 34,097 | 23,616 | $ 15,453 |
Accumulated other comprehensive loss | (3) | (390) | |
Total stockholders’ equity | 120,695 | 109,552 | |
Total liabilities and stockholders’ equity | $ 1,150,019 | $ 997,480 | |
Common stock, par value | $ 1 | $ 1 | |
Common stock, Authorized shares | 10,000,000 | 10,000,000 | |
Common Stock, Shares, Issued | 6,407,685 | 6,406,795 | |
Common Stock, Shares, Outstanding | 6,407,685 | 6,406,795 | |
Parent Company | Reportable Legal Entities | |||
Condensed Balance Sheet Statements, Captions [Line Items] | |||
Cash and due from banks | $ 148 | ||
Cash and cash equivalents | 148 | ||
Investment in subsidiaries | 159,643 | $ 109,867 | |
Other assets | 40 | ||
Total assets | 159,831 | 109,867 | |
Liabilities: | |||
Subordinated debentures | 39,058 | ||
Accrued interest payable | 78 | ||
Total liabilities | 39,136 | ||
Stockholders’ equity: | |||
Common stock, $1 par value. Authorized 10,000,000 shares; issued and outstanding 6,406,795 and 6,392,287 as of December 31, 2019 and December 31, 2018 | 6,408 | 6,407 | |
Surplus | 80,196 | 79,919 | |
Treasury Stock | (3) | ||
Retained earnings | 34,097 | 23,931 | |
Accumulated other comprehensive loss | (3) | (390) | |
Total stockholders’ equity | 120,695 | 109,867 | |
Total liabilities and stockholders’ equity | $ 159,831 | $ 109,867 | |
Common stock, par value | $ 1 | $ 1 | |
Common stock, Authorized shares | 10,000,000 | 10,000,000 | |
Common Stock, Shares, Issued | 6,406,795 | 6,392,287 | |
Common Stock, Shares, Outstanding | 6,406,795 | 6,392,287 |
Parent Company Financial Stat_4
Parent Company Financial Statements - Condensed Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Condensed Income Statements, Captions [Line Items] | ||
Total operating income | $ 52,863 | $ 44,064 |
Expenses | 16,527 | 11,407 |
Income before income taxes | 13,514 | 10,490 |
Income tax (benefit) expense | 3,033 | 2,327 |
Net income | 10,481 | 8,163 |
Total other comprehensive income | 387 | (92) |
Total comprehensive income | 10,868 | 8,071 |
Parent Company | Reportable Legal Entities | ||
Condensed Income Statements, Captions [Line Items] | ||
Expenses | 81 | |
Income before equity in undistributed income of subsidiaries | (81) | |
Equity in undistributed income of subsidiaries | 10,562 | 8,163 |
Income before income taxes | 10,481 | 8,163 |
Net income | 10,481 | 8,163 |
Total other comprehensive income | 387 | (92) |
Total comprehensive income | $ 10,868 | $ 8,071 |
Parent Company Financial Stat_5
Parent Company Financial Statements - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net income | $ 10,481 | $ 8,163 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Increase in accrued interest payable | 783 | 89 |
Increase in other assets | 276 | (402) |
Net cash provided by operating activities | 21,569 | 11,030 |
Cash flows from investing activities: | ||
Net cash used in investing activities | (143,077) | (155,601) |
Cash flows from financing activities: | ||
Issuance of long term subordinated debt | 40,000 | |
Share based awards and exercises | 6 | 140 |
Net cash provided by financing activities | 136,927 | 133,017 |
Net change in cash and cash equivalents | 15,419 | (11,554) |
Cash and cash equivalents at beginning of period | 23,952 | 35,506 |
Cash and cash equivalents at end of period | 39,371 | 23,952 |
Parent Company | Reportable Legal Entities | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net income | 10,481 | 8,163 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Equity in undistributed income of subsidiaries | (10,562) | $ (8,163) |
Increase in accrued interest payable | 78 | |
Increase in other assets | (40) | |
Net cash provided by operating activities | (43) | |
Cash flows from investing activities: | ||
Investment in subsidiaries | (38,804) | |
Net cash used in investing activities | (38,804) | |
Cash flows from financing activities: | ||
Issuance of long term subordinated debt | 39,051 | |
Notes repaid (received) for common stock | (59) | |
Net purchase of treasury stock through publicly announced plans | (3) | |
Share based awards and exercises | 6 | |
Net cash provided by financing activities | 38,995 | |
Net change in cash and cash equivalents | 148 | |
Cash and cash equivalents at end of period | $ 148 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event | 1 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Subsequent Event [Line Items] | |
Percentage of common stock authorized to be repurchased | 5.00% |
Shares repurchased | shares | 314,825 |
Shares repurchased average price | $ / shares | $ 18.17 |