DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
DOCUMENT AND ENTITY INFORMATION | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Entity Registrant Name | HBT Financial, Inc. | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,457,306 | |
Entity Central Index Key | 0000775215 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and due from banks | $ 22,347 | $ 22,112 |
Interest-bearing deposits with banks | 214,377 | 261,859 |
Cash and cash equivalents | 236,724 | 283,971 |
Interest-bearing time deposits with banks | 248 | |
Debt securities available-for-sale, at fair value | 814,798 | 592,404 |
Debt securities held-to-maturity (fair value of $78,891 in 2020 and $90,529 in 2019) | 74,510 | 88,477 |
Equity securities | 4,814 | 4,389 |
Restricted stock, at cost | 2,498 | 2,425 |
Loans held for sale | 23,723 | 4,531 |
Loans, net of allowance for loan losses of $31,654 in 2020 and $22,299 in 2019 | 2,247,985 | 2,141,527 |
Bank premises and equipment, net | 53,271 | 53,987 |
Bank premises held for sale | 121 | 121 |
Foreclosed assets | 3,857 | 5,099 |
Goodwill | 23,620 | 23,620 |
Core deposit intangible assets, net | 3,103 | 4,030 |
Mortgage servicing rights, at fair value | 5,571 | 8,518 |
Investments in unconsolidated subsidiaries | 1,165 | 1,165 |
Accrued interest receivable | 13,820 | 13,951 |
Other assets | 25,643 | 16,640 |
Total assets | 3,535,223 | 3,245,103 |
Deposits: | ||
Noninterest-bearing | 850,306 | 689,116 |
Interest-bearing | 2,166,355 | 2,087,739 |
Total deposits | 3,016,661 | 2,776,855 |
Securities sold under agreements to repurchase | 45,438 | 44,433 |
Subordinated notes | 39,218 | |
Junior subordinated debentures issued to capital trusts | 37,632 | 37,583 |
Other liabilities | 40,980 | 53,314 |
Total liabilities | 3,179,929 | 2,912,185 |
COMMITMENTS AND CONTINGENCIES (Notes 7 and 18) | ||
Stockholders' Equity | ||
Preferred stock, $0.01 par value, 25,000,000 shares authorized, none issued or outstanding | ||
Common stock, $0.01 par value; 125,000,000 shares authorized; 27,457,306 shares issued and outstanding | 275 | 275 |
Surplus | 190,787 | 190,524 |
Retained earnings | 146,101 | 134,287 |
Accumulated other comprehensive income | 18,131 | 7,832 |
Total stockholders’ equity | 355,294 | 332,918 |
Total liabilities and stockholders’ equity | $ 3,535,223 | $ 3,245,103 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Stockholders' Equity | ||
Debt securities held-to-maturity | $ 78,891 | $ 90,529 |
Allowance for loan losses | $ 31,654 | $ 22,299 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 27,457,306 | 27,457,306 |
Common stock, shares outstanding | 27,457,306 | 27,457,306 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Loans, including fees: | ||||
Taxable | $ 25,118 | $ 29,308 | $ 77,396 | $ 89,257 |
Federally tax exempt | 542 | 684 | 1,748 | 2,130 |
Securities: | ||||
Taxable | 3,266 | 3,572 | 9,772 | 11,295 |
Federally tax exempt | 1,233 | 1,395 | 3,488 | 4,459 |
Interest-bearing deposits in bank | 65 | 662 | 873 | 1,948 |
Other interest and dividend income | 14 | 15 | 42 | 46 |
Total interest and dividend income | 30,238 | 35,636 | 93,319 | 109,135 |
INTEREST EXPENSE | ||||
Deposits | 843 | 2,000 | 3,480 | 6,094 |
Securities sold under agreements to repurchase | 9 | 17 | 40 | 48 |
Borrowings | 1 | 2 | 7 | |
Subordinated notes | 147 | 147 | ||
Junior subordinated debentures issued to capital trusts | 367 | 478 | 1,209 | 1,462 |
Total interest expense | 1,367 | 2,495 | 4,878 | 7,611 |
Net interest income | 28,871 | 33,141 | 88,441 | 101,524 |
PROVISION FOR LOAN LOSSES | 2,174 | 684 | 10,102 | 3,266 |
Net interest income after provision for loan losses | 26,697 | 32,457 | 78,339 | 98,258 |
NONINTEREST INCOME | ||||
Mortgage servicing | 724 | 795 | 2,175 | 2,342 |
Mortgage servicing rights fair value adjustment | (268) | (860) | (2,947) | (2,982) |
Gains on sale of mortgage loans | 3,184 | 992 | 5,855 | 2,177 |
Gains (losses) on securities | (2) | (73) | 3 | 42 |
Gains (losses) on foreclosed assets | 27 | (20) | 120 | 132 |
Gains (losses) on other assets | 1 | (29) | (71) | 1,244 |
Other noninterest income | 1,101 | 1,005 | 2,866 | 2,759 |
Total noninterest income | 10,052 | 7,582 | 23,364 | 22,415 |
NONINTEREST EXPENSE | ||||
Salaries | 12,595 | 12,303 | 38,023 | 36,422 |
Employee benefits | 1,666 | 2,253 | 6,555 | 8,220 |
Occupancy of bank premises | 1,609 | 1,785 | 5,079 | 5,260 |
Furniture and equipment | 679 | 545 | 1,891 | 2,050 |
Data processing | 1,583 | 1,471 | 4,841 | 4,023 |
Marketing and customer relations | 690 | 801 | 2,551 | 2,837 |
Amortization of intangible assets | 305 | 335 | 927 | 1,087 |
FDIC insurance | 222 | 8 | 476 | 435 |
Loan collection and servicing | 450 | 547 | 1,292 | 1,901 |
Foreclosed assets | 226 | 196 | 403 | 525 |
Other noninterest expense | 2,460 | 2,059 | 7,253 | 6,316 |
Total noninterest expense | 22,485 | 22,303 | 69,291 | 69,076 |
INCOME BEFORE INCOME TAX EXPENSE | 14,264 | 17,736 | 32,412 | 51,597 |
INCOME TAX EXPENSE | 3,701 | 299 | 8,209 | 819 |
NET INCOME | $ 10,563 | $ 17,437 | $ 24,203 | $ 50,778 |
EARNINGS PER SHARE - BASIC | $ 0.38 | $ 0.97 | $ 0.88 | $ 2.82 |
EARNINGS PER SHARE - DILUTED | $ 0.38 | $ 0.97 | $ 0.88 | $ 2.82 |
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING | 27,457,306 | 18,027,512 | 27,457,306 | 18,027,512 |
Card income | ||||
NONINTEREST INCOME | ||||
Revenue | $ 2,146 | $ 1,985 | $ 5,936 | $ 5,813 |
Service charges on deposit accounts | ||||
NONINTEREST INCOME | ||||
Revenue | 1,493 | 2,111 | 4,460 | 5,805 |
Wealth management fees | ||||
NONINTEREST INCOME | ||||
Revenue | $ 1,646 | $ 1,676 | $ 4,967 | 4,916 |
Title insurance activity | ||||
NONINTEREST INCOME | ||||
Revenue | $ 167 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
UNAUDITED PRO FORMA C CORP EQUIVALENT INFORMATION (Note 1) | ||
Historical income before income tax expense | $ 17,736 | $ 51,597 |
Pro forma C Corp equivalent income tax expense | 299 | 819 |
NET INCOME | $ 17,437 | $ 50,778 |
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - BASIC | $ 0.97 | $ 2.82 |
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - DILUTED | $ 0.97 | $ 2.82 |
Pro Forma | ||
UNAUDITED PRO FORMA C CORP EQUIVALENT INFORMATION (Note 1) | ||
Historical income before income tax expense | $ 17,736 | $ 51,597 |
Pro forma C Corp equivalent income tax expense | 4,614 | 13,313 |
NET INCOME | $ 13,122 | $ 38,284 |
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - BASIC | $ 0.73 | $ 2.12 |
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - DILUTED | $ 0.73 | $ 2.12 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
NET INCOME | $ 10,563 | $ 17,437 | $ 24,203 | $ 50,778 |
OTHER COMPREHENSIVE INCOME | ||||
Unrealized gains on debt securities available-for-sale | 1,176 | 1,289 | 15,368 | 13,913 |
Reclassification adjustment for accretion of net unrealized gain on debt securities transferred to held-to-maturity | 8 | (62) | 5 | (221) |
Unrealized gains (losses) on derivative instruments | 5 | (208) | (1,098) | (897) |
Reclassification adjustment for net settlements on derivative instruments | 97 | (24) | 138 | (76) |
Total other comprehensive income, before tax | 1,286 | 995 | 14,413 | 12,719 |
Income tax expense | 366 | 4,114 | ||
Total other comprehensive income | 920 | 995 | 10,299 | 12,719 |
TOTAL COMPREHENSIVE INCOME | $ 11,483 | $ 18,432 | $ 34,502 | $ 63,497 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | VotingCommon Stock | Series A NonvotingCommon Stock | Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total |
Balance at Dec. 31, 2018 | $ 3 | $ 178 | $ 32,288 | $ 315,234 | $ (4,288) | $ (3,019) | $ 340,396 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 50,778 | 50,778 | |||||
Other comprehensive income | 12,719 | 12,719 | |||||
Cash dividends | (54,957) | (54,957) | |||||
Balance at Sep. 30, 2019 | 3 | 178 | 32,288 | 311,055 | 8,431 | (3,019) | 348,936 |
Balance at Jun. 30, 2019 | 3 | 178 | 32,288 | 302,984 | 7,436 | (3,019) | 339,870 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 17,437 | 17,437 | |||||
Other comprehensive income | 995 | 995 | |||||
Cash dividends | (9,366) | (9,366) | |||||
Balance at Sep. 30, 2019 | 3 | $ 178 | 32,288 | 311,055 | 8,431 | $ (3,019) | 348,936 |
Balance at Dec. 31, 2019 | 275 | 190,524 | 134,287 | 7,832 | 332,918 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 24,203 | 24,203 | |||||
Other comprehensive income | 10,299 | 10,299 | |||||
Stock-based compensation | 263 | 263 | |||||
Cash dividends | (12,389) | (12,389) | |||||
Balance at Sep. 30, 2020 | 275 | 190,787 | 146,101 | 18,131 | 355,294 | ||
Balance at Jun. 30, 2020 | 275 | 190,687 | 139,667 | 17,211 | 347,840 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 10,563 | 10,563 | |||||
Other comprehensive income | 920 | 920 | |||||
Stock-based compensation | 100 | 100 | |||||
Cash dividends | (4,129) | (4,129) | |||||
Balance at Sep. 30, 2020 | $ 275 | $ 190,787 | $ 146,101 | $ 18,131 | $ 355,294 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock Transactions, Parenthetical Disclosures [Abstract] | ||||
Cash dividends | $ 0.15 | $ 0.52 | $ 0.45 | $ 3.05 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 24,203 | $ 50,778 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 2,176 | 2,042 |
Provision for loan losses | 10,102 | 3,266 |
Net amortization of debt securities | 3,298 | 2,759 |
Amortization of unrealized gain on dedesignated cash flow hedge | (64) | (53) |
Deferred income tax benefit | (628) | |
Stock-based compensation | 263 | |
Net accretion of discount and deferred loan fees on loans | (3,459) | (3,150) |
Net unrealized loss (gain) on equity securities | (3) | (42) |
Net loss (gain) on sales of bank premises and equipment | 2 | (29) |
Net gain on sales of bank premises held for sale | (448) | |
Impairment losses on bank premises held for sale | 37 | |
Net gain on sales of foreclosed assets | (269) | (240) |
Write-down of foreclosed assets | 156 | 552 |
Amortization of intangibles | 927 | 1,087 |
Decrease in mortgage servicing rights | 2,947 | 2,982 |
Amortization of discount and issuance costs on subordinated notes and junior subordinated debentures | 56 | 49 |
Mortgage loans originated for sale | (271,903) | (106,885) |
Proceeds from sale of mortgage loans | 258,566 | 104,254 |
Net gain on sale of mortgage loans | (5,855) | (2,177) |
Gain on sale of First Community Title Services, Inc. | (498) | |
Decrease in accrued interest receivable | 131 | 484 |
Increase in other assets | 437 | (2,175) |
(Decrease) increase in other liabilities | (26,156) | 4,705 |
Net cash (used in) provided by operating activities | (5,073) | 57,298 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Net change in interest-bearing time deposits with banks | 248 | |
Proceeds from paydowns, maturities, and calls of debt securities | 147,561 | 134,347 |
Purchase of securities | (344,335) | (40,903) |
Net increase in loans | (113,533) | (26,049) |
Purchase of restricted stock | (73) | |
Proceeds from redemption of restricted stock | 294 | |
Purchases of bank premises and equipment | (1,463) | (1,558) |
Proceeds from sales of bank premises and equipment | 1 | 176 |
Proceeds from sales of bank premises held for sale | 1,039 | |
Proceeds from sales of foreclosed assets | 1,793 | 4,142 |
Capital improvements to foreclosed assets | (6) | (41) |
Cash received from sale of First Community Title Services, Inc. | 114 | |
Net cash used in investing activities | (309,807) | 71,561 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net increase (decrease) in deposits | 239,806 | (91,912) |
Net increase (decrease) in repurchase agreements | 1,005 | (13,928) |
Issuance of subordinated notes, net of issuance costs | 39,211 | |
Cash dividends paid | (12,389) | (54,957) |
Net cash provided by (used in) financing activities | 267,633 | (160,797) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (47,247) | (31,938) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 283,971 | 186,879 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 236,724 | 154,941 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid for interest | 5,191 | 7,646 |
Cash paid for income taxes | 14,308 | 880 |
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES | ||
Transfers of loans to foreclosed assets | 499 | 1,788 |
Sales of foreclosed assets through loan origination | $ 67 | $ 360 |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
ACCOUNTING POLICIES | |
ACCOUNTING POLICIES | NOTE 1 – ACCOUNTING POLICIES Basis of Presentation HBT Financial, Inc. (the Company) is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company (Heartland Bank) and State Bank of Lincoln. Heartland Bank and State Bank of Lincoln are collectively referred to as “the Banks”. The Banks provide a comprehensive suite of business, commercial, wealth management and retail banking products and services to individuals, businesses, and municipal entities throughout Central and Northeastern Illinois. The unaudited consolidated financial statements, including the notes thereto, have been prepared in accordance with generally accepted accounting principles (GAAP) interim reporting requirements. Certain information in footnote disclosures normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. These interim unaudited consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 27, 2020. The unaudited consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year. The Company qualifies as an "emerging growth company" as defined by the Jumpstart Our Business Startups Act (JOBS Act). The JOBS Act permits emerging growth companies an extended transition period for complying with new or revised accounting standards affecting public companies. The Company has elected to use the extended transition period until the Company is no longer an emerging growth company or until the Company chooses to affirmatively and irrevocably opt out of the extended transition period. As a result, the Company’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies. Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and the reported results of operations for the periods then ended. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for loan losses and income taxes. Income Taxes Through October 10, 2019, the Company, with the consent of its then current stockholders, elected to be taxed under sections of federal and state income tax law as an "S Corporation" which provides that, in lieu of Company income taxes, except for state replacement taxes, the stockholders separately account for their pro rata shares of the Company’s items of income, deductions, losses and credits. As a result of this election, no income taxes, other than state replacement taxes, have been recognized in the accompanying consolidated financial statements. No provision has been made for any amounts which were advanced or paid as dividends to the stockholders to assist them in paying their personal taxes on the income from the Company. Effective October 11, 2019, the Company voluntarily revoked its S Corporation status and became a taxable entity (C Corporation). As such, any periods prior to October 11, 2019 only reflect an effective state replacement tax rate. The Company files consolidated federal and state income tax returns. The Company is no longer subject to federal and state income tax examinations for years prior to 2017. Unaudited Pro Forma Income Statement Information The unaudited pro forma C Corp equivalent income tax expense information gives effect to the income tax expense had the Company been a C Corporation during the three and nine months ended September 30, 2019. The unaudited pro forma C Corp equivalent net income information, therefore, includes an adjustment for income tax expense as if the Company had been a C Corporation during the three and nine months ended September 30, 2019. The unaudited pro forma basic and diluted earnings per share information is computed using the unaudited pro forma C Corp equivalent net income and weighted average shares of common stock outstanding. There were no dilutive instruments outstanding during 2019, therefore, the unaudited pro forma C Corp equivalent basic and diluted earnings per share amounts are the same. Segment Reporting The Company’s operations consist of one reportable segment called community banking. While the Company’s management monitors both bank subsidiaries’ operations and profitability separately, these subsidiaries have been aggregated into one reportable segment due to the similarities in products and services, customer base, operations, profitability measures, and economic characteristics. Goodwill Goodwill represents the excess of the original cost over the fair value of assets acquired and liabilities assumed. Goodwill is not amortized but instead is subject to an annual impairment evaluation. The Company has selected December 31 as the date to perform the annual impairment test, and at December 31, 2019, the Company’s evaluation of goodwill indicated that goodwill was not impaired. Due to the economic weakness resulting from the COVID-19 pandemic, the Company completed a quantitative assessment of goodwill as of March 31, 2020 which indicated that goodwill was not impaired. Subsequently, the Company determined there were no adverse changes in criteria and key considerations to the previous assessment. Accordingly, the Company concluded that there is no impairment of goodwill as of September 30, 2020. Further goodwill impairment evaluations, which may result in goodwill impairment, may be necessary if events or circumstance changes would more likely than not reduce the fair value of a reporting unit below its carrying amount. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation without any impact on the reported amounts of net income or stockholders’ equity. Subsequent Events In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential of recognition or disclosure through the date the financial statements were issued. On October 20, 2020, Heartland Bank and State Bank of Lincoln, our two bank subsidiaries, entered into a Bank Merger Agreement providing for the merger of State Bank of Lincoln into Heartland Bank. If the merger is consummated, the resulting institution will be Heartland Bank, which will then be our sole bank subsidiary, and the branch locations of State Bank of Lincoln will operate as “State Bank of Lincoln, a division of Heartland Bank and Trust Company.” The proposed merger is subject to conditions, including, among others, approval by the FDIC and the Illinois Department of Financial and Professional Regulation. On November 2, 2020, the Company’s board of directors approved a stock repurchase program that authorizes the Company to repurchase up to $15 million of its common stock. The stock repurchase program will be in effect until December 31, 2021 with the timing of purchases and number of shares repurchased dependent upon a variety of factors including price, trading volume, corporate and regulatory requirements, and market conditions. The Company is not obligated to purchase any shares under the stock repurchase program, and the stock repurchase program may be suspended or discontinued at any time without notice. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016‑13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . ASU 2016‑13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016‑13 amends the accounting for credit losses on debt securities available-for-sale and purchased financial assets with credit deterioration. ASU 2016‑13 is effective for years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for years beginning after December 31, 2018, including interim periods within those years. The Company is currently evaluating the effect that this standard will have on the consolidated results of operations and financial position. In January 2017, the FASB issued ASU 2017‑04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This ASU simplifies measurement of goodwill and eliminates Step 2 from the goodwill impairment test. Under the ASU, a company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for annual or any interim goodwill impairment tests in years beginning after December 15, 2022, including interim periods within those years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. Entities may apply the provisions as of the beginning of the reporting period when the election is made and are available until December 31, 2022. The Company is currently evaluating the effect that this standard will have on the consolidated results of operations and financial position. |
SECURITIES
SECURITIES | 9 Months Ended |
Sep. 30, 2020 | |
SECURITIES | |
SECURITIES | NOTE 2 – SECURITIES The carrying balances of the securities were as follows: September 30, December 31, 2020 2019 (dollars in thousands) Debt securities available-for-sale $ 814,798 $ 592,404 Debt securities held-to-maturity 74,510 88,477 Equity securities: Readily determinable fair value 3,262 3,241 No readily determinable fair value 1,552 1,148 Total securities $ 894,122 $ 685,270 The Company has elected to measure the equity securities with no readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar securities of the same issuer. During the three and nine months ended September 30, 2020, there were no adjustments to the carrying balance of equity securities with no readily determinable fair value based on an observable price change of an identical investment. During the three and nine months ended September 30, 2019, there were downward adjustments of $128,000 to the carrying balance of equity securities with no readily determinable fair value based on an observable price change of an identical investment. As of September 30, 2020 and December 31, 2019, the carrying balance of equity securities with no readily determinable fair value reflect cumulative downward adjustments based on observable price changes of $165,000. There have been no impairments or upward adjustments based on observable price changes to the equity securities with no readily determinable fair value held at September 30, 2020 and December 31, 2019. The amortized cost and fair values of debt securities, with gross unrealized gains and losses, are as follows: September 30, 2020 Amortized Gross Gross Fair Value Available-for-sale: (dollars in thousands) U.S. government agency $ 100,462 $ 3,866 $ (2) $ 104,326 Municipal 232,795 7,962 (347) 240,410 Mortgage-backed: Agency residential 220,970 5,462 (115) 226,317 Agency commercial 166,444 4,831 (203) 171,072 Corporate 70,862 1,907 (96) 72,673 Total available-for-sale 791,533 24,028 (763) 814,798 Held-to-maturity: Municipal 26,830 1,480 — 28,310 Mortgage-backed: Agency residential 14,556 523 — 15,079 Agency commercial 33,124 2,378 — 35,502 Total held-to-maturity 74,510 4,381 — 78,891 Total debt securities $ 866,043 $ 28,409 $ (763) $ 893,689 December 31, 2019 Amortized Gross Gross Fair Value Available-for-sale: (dollars in thousands) U.S. government agency $ 49,113 $ 529 $ (27) $ 49,615 Municipal 131,241 2,503 (6) 133,738 Mortgage-backed: Agency residential 198,184 2,780 (286) 200,678 Agency commercial 133,730 1,516 (292) 134,954 Corporate 72,239 1,180 — 73,419 Total available-for-sale 584,507 8,508 (611) 592,404 Held-to-maturity: Municipal 45,239 1,340 — 46,579 Mortgage-backed: Agency residential 19,072 161 (170) 19,063 Agency commercial 24,166 775 (54) 24,887 Total held-to-maturity 88,477 2,276 (224) 90,529 Total debt securities $ 672,984 $ 10,784 $ (835) $ 682,933 As of September 30, 2020 and December 31, 2019, the Banks had debt securities with a carrying value of $349,412,000 and $284,895,000, respectively, which were pledged to secure public and trust deposits, securities sold under agreements to repurchase, and for other purposes required or permitted by law. The Company has no direct exposure to the State of Illinois, but approximately 41% of the obligations of local municipalities portfolio consists of debt securities issued by municipalities located in Illinois as of September 30, 2020. Approximately 87% of such debt securities were general obligation issues as of September 30, 2020. The amortized cost and fair value of debt securities by contractual maturity, as of September 30, 2020, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Available-for-Sale Held-to-Maturity Amortized Fair Value Amortized Fair Value (dollars in thousands) Due in 1 year or less $ 36,762 $ 37,033 $ 747 $ 749 Due after 1 year through 5 years 85,100 87,897 14,702 15,452 Due after 5 years through 10 years 183,944 191,538 10,490 11,186 Due after 10 years 98,313 100,941 891 923 Mortgage-backed: Agency residential 220,970 226,317 14,556 15,079 Agency commercial 166,444 171,072 33,124 35,502 Total $ 791,533 $ 814,798 $ 74,510 $ 78,891 There were no sales of securities during the three and nine months ended September 30, 2020 and 2019. Gains (losses) on securities were as follows during the three and nine months ended September 30: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Net realized gains (losses) on sales $ — $ — $ — $ — Net unrealized gains (losses) on equities: Readily determinable fair value (2) 55 3 170 No readily determinable fair value — (128) — (128) Gains (losses) on securities $ (2) $ (73) $ 3 $ 42 The following tables present gross unrealized losses and fair value of debt securities, aggregated by category and length of time that individual debt securities have been in a continuous unrealized loss position, as of September 30, 2020 and December 31, 2019: Investments in a Continuous Unrealized Loss Position Less than 12 Months 12 Months or More Total September 30, 2020 Unrealized Fair Value Unrealized Fair Value Unrealized Fair Value Available-for-sale: (dollars in thousands) U.S. government agency $ (2) $ 3,493 $ — $ — $ (2) $ 3,493 Municipal (347) 28,955 — — (347) 28,955 Mortgage-backed: Agency residential (101) 20,386 (14) 4,378 (115) 24,764 Agency commercial (177) 22,668 (26) 3,471 (203) 26,139 Corporate (96) 9,858 — — (96) 9,858 Total available-for-sale (723) 85,360 (40) 7,849 (763) 93,209 Total debt securities $ (723) $ 85,360 $ (40) $ 7,849 $ (763) $ 93,209 Investments in a Continuous Unrealized Loss Position Less than 12 Months 12 Months or More Total December 31, 2019 Unrealized Fair Value Unrealized Fair Value Unrealized Fair Value Available-for-sale: (dollars in thousands) U.S. government agency $ (26) $ 18,865 $ (1) $ 1,998 $ (27) $ 20,863 Municipal (6) 894 — — (6) 894 Mortgage-backed: Agency residential (108) 25,563 (178) 27,296 (286) 52,859 Agency commercial (100) 20,056 (192) 15,704 (292) 35,760 Total available-for-sale (240) 65,378 (371) 44,998 (611) 110,376 Held-to-maturity: Mortgage-backed: Agency residential (30) 2,516 (140) 9,002 (170) 11,518 Agency commercial (47) 7,016 (7) 599 (54) 7,615 Total held-to-maturity (77) 9,532 (147) 9,601 (224) 19,133 Total debt securities $ (317) $ 74,910 $ (518) $ 54,599 $ (835) $ 129,509 As of September 30, 2020, there were 7 debt securities in an unrealized loss position for a period of twelve months or more, and 58 debt securities in an unrealized loss position for a period of less than twelve months. These unrealized losses are primarily a result of fluctuations in market interest rates. In analyzing an issuer’s financial condition, management considers whether the debt securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports. Management believes that all declines in value of these debt securities are deemed to be temporary. |
LOANS AND THE ALLOWANCE FOR LOA
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | 9 Months Ended |
Sep. 30, 2020 | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | NOTE 3 – LOANS AND THE ALLOWANCE FOR LOAN LOSSES Major categories of loans are summarized as follows: September 30, December 31, 2020 2019 (dollars in thousands) Commercial and industrial $ 389,231 $ 307,175 Agricultural and farmland 235,597 207,776 Commercial real estate - owner occupied 225,345 231,162 Commercial real estate - non-owner occupied 532,454 579,757 Multi-family 199,441 179,073 Construction and land development 265,758 224,887 One-to-four family residential 308,365 313,580 Municipal, consumer, and other 123,448 120,416 Loans, before allowance for loan losses 2,279,639 2,163,826 Allowance for loan losses (31,654) (22,299) Loans, net of allowance for loan losses $ 2,247,985 $ 2,141,527 Paycheck Protection Program (PPP) loans (included above) Commercial and industrial $ 168,466 $ — Agricultural and farmland 4,179 — Municipal, consumer, and other 7,095 — Total PPP loans $ 179,740 $ — The following tables detail activity in the allowance for loan losses for the three and nine months ended September 30: Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and Three Months Ended September 30, 2020 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Allowance for loan losses: (dollars in thousands) Balance, June 30, 2020 $ 4,356 $ 2,890 $ 3,257 $ 6,767 $ 1,581 $ 3,366 $ 3,010 $ 4,496 $ 29,723 Provision for loan losses (98) (585) 86 2,496 614 179 138 (656) 2,174 Charge-offs (881) — (39) — — (26) (42) (90) (1,078) Recoveries 517 — — 5 — 198 46 69 835 Balance, September 30, 2020 $ 3,894 $ 2,305 $ 3,304 $ 9,268 $ 2,195 $ 3,717 $ 3,152 $ 3,819 $ 31,654 Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and Three Months Ended September 30, 2019 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Allowance for loan losses: (dollars in thousands) Balance, June 30, 2019 $ 5,187 $ 2,862 $ 2,487 $ 2,721 $ 1,153 $ 3,723 $ 3,569 $ 840 $ 22,542 Provision for loan losses (915) (133) (482) 521 (182) (601) (692) 3,168 684 Charge-offs (32) — (216) (111) (41) — (387) (150) (937) Recoveries 313 — 26 5 — 1 42 85 472 Balance, September 30, 2019 $ 4,553 $ 2,729 $ 1,815 $ 3,136 $ 930 $ 3,123 $ 2,532 $ 3,943 $ 22,761 Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and Nine Months Ended September 30, 2020 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Allowance for loan losses: (dollars in thousands) Balance, December 31, 2019 $ 4,441 $ 2,766 $ 1,779 $ 3,663 $ 1,024 $ 2,977 $ 2,540 $ 3,109 $ 22,299 Provision for loan losses 565 (434) 1,124 5,591 1,171 551 598 936 10,102 Charge-offs (1,690) (27) (39) (56) — (27) (154) (466) (2,459) Recoveries 578 — 440 70 — 216 168 240 1,712 Balance, September 30, 2020 $ 3,894 $ 2,305 $ 3,304 $ 9,268 $ 2,195 $ 3,717 $ 3,152 $ 3,819 $ 31,654 Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Consumer and and Owner Non-owner Construction Residential and Nine Months Ended September 30, 2019 Industrial Farmland Occupied Occupied Multi-Family and Land Real Estate Other Total Allowance for loan losses: (dollars in thousands) Balance, December 31, 2018 $ 3,748 $ 2,650 $ 2,506 $ 2,644 $ 912 $ 4,176 $ 2,782 $ 1,091 $ 20,509 Provision for loan losses 700 109 (356) 588 59 (1,478) 541 3,103 3,266 Charge-offs (315) (30) (382) (111) (41) (9) (1,026) (522) (2,436) Recoveries 420 — 47 15 — 434 235 271 1,422 Balance, September 30, 2019 $ 4,553 $ 2,729 $ 1,815 $ 3,136 $ 930 $ 3,123 $ 2,532 $ 3,943 $ 22,761 The following tables present the recorded investments in loans and the allowance for loan losses by category as of September 30, 2020 and December 31, 2019: Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and September 30, 2020 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Loan balances: (dollars in thousands) Collectively evaluated for impairment $ 382,617 $ 220,094 $ 204,200 $ 485,307 $ 197,277 $ 259,453 $ 287,849 $ 109,898 $ 2,146,695 Individually evaluated for impairment 5,558 14,555 13,167 32,600 889 3,628 11,219 13,485 95,101 Acquired with deteriorated credit quality 1,056 948 7,978 14,547 1,275 2,677 9,297 65 37,843 Total $ 389,231 $ 235,597 $ 225,345 $ 532,454 $ 199,441 $ 265,758 $ 308,365 $ 123,448 $ 2,279,639 Allowance for loan losses: Collectively evaluated for impairment $ 2,190 $ 2,270 $ 2,509 $ 7,896 $ 2,180 $ 3,290 $ 2,336 $ 979 $ 23,650 Individually evaluated for impairment 1,588 33 434 884 — 226 796 2,840 6,801 Acquired with deteriorated credit quality 116 2 361 488 15 201 20 — 1,203 Total $ 3,894 $ 2,305 $ 3,304 $ 9,268 $ 2,195 $ 3,717 $ 3,152 $ 3,819 $ 31,654 Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and December 31, 2019 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Loan balances: (dollars in thousands) Collectively evaluated for impairment $ 294,006 $ 192,722 $ 211,744 $ 561,277 $ 176,273 $ 217,708 $ 291,624 $ 106,448 $ 2,051,802 Individually evaluated for impairment 10,733 13,966 10,927 3,398 1,324 3,782 11,349 13,872 69,351 Acquired with deteriorated credit quality 2,436 1,088 8,491 15,082 1,476 3,397 10,607 96 42,673 Total $ 307,175 $ 207,776 $ 231,162 $ 579,757 $ 179,073 $ 224,887 $ 313,580 $ 120,416 $ 2,163,826 Allowance for loan losses: Collectively evaluated for impairment $ 1,926 $ 2,576 $ 1,486 $ 3,591 $ 1,019 $ 2,283 $ 1,684 $ 931 $ 15,496 Individually evaluated for impairment 2,170 105 270 70 — 567 822 2,176 6,180 Acquired with deteriorated credit quality 345 85 23 2 5 127 34 2 623 Total $ 4,441 $ 2,766 $ 1,779 $ 3,663 $ 1,024 $ 2,977 $ 2,540 $ 3,109 $ 22,299 The following tables present loans individually evaluated for impairment by category of loans as of September 30, 2020 and December 31, 2019: Unpaid Principal Recorded Related September 30, 2020 Balance Investment Allowance With an allowance recorded: (dollars in thousands) Commercial and industrial $ 2,781 $ 2,781 $ 1,588 Agricultural and farmland 173 172 33 Commercial real estate - owner occupied 1,440 1,441 434 Commercial real estate - non-owner occupied 4,203 4,201 884 Multi-family — — — Construction and land development 2,055 2,055 226 One-to-four family residential 3,614 3,596 796 Municipal, consumer, and other 8,790 8,764 2,840 Total $ 23,056 $ 23,010 $ 6,801 With no related allowance: Commercial and industrial $ 2,777 $ 2,777 $ — Agricultural and farmland 14,383 14,383 — Commercial real estate - owner occupied 11,728 11,726 — Commercial real estate - non-owner occupied 28,462 28,399 — Multi-family 889 889 — Construction and land development 1,575 1,573 — One-to-four family residential 7,672 7,623 — Municipal, consumer, and other 4,733 4,721 — Total $ 72,219 $ 72,091 $ — Total Commercial and industrial $ 5,558 $ 5,558 $ 1,588 Agricultural and farmland 14,556 14,555 33 Commercial real estate - owner occupied 13,168 13,167 434 Commercial real estate - non-owner occupied 32,665 32,600 884 Multi-family 889 889 — Construction and land development 3,630 3,628 226 One-to-four family residential 11,286 11,219 796 Municipal, consumer, and other 13,523 13,485 2,840 Total $ 95,275 $ 95,101 $ 6,801 Unpaid Principal Recorded Related December 31, 2019 Balance Investment Allowance With an allowance recorded: (dollars in thousands) Commercial and industrial $ 4,292 $ 4,292 $ 2,170 Agricultural and farmland 590 590 105 Commercial real estate - owner occupied 830 830 270 Commercial real estate - non-owner occupied 99 99 70 Multi-family — — — Construction and land development 3,679 3,679 567 One-to-four family residential 3,401 3,390 822 Municipal, consumer, and other 9,138 9,111 2,176 Total $ 22,029 $ 21,991 $ 6,180 With no related allowance: Commercial and industrial $ 6,438 $ 6,441 $ — Agricultural and farmland 13,369 13,376 — Commercial real estate - owner occupied 10,089 10,097 — Commercial real estate - non-owner occupied 3,297 3,299 — Multi-family 1,328 1,324 — Construction and land development 104 103 — One-to-four family residential 7,986 7,959 — Municipal, consumer, and other 4,775 4,761 — Total $ 47,386 $ 47,360 $ — Total Commercial and industrial $ 10,730 $ 10,733 $ 2,170 Agricultural and farmland 13,959 13,966 105 Commercial real estate - owner occupied 10,919 10,927 270 Commercial real estate - non-owner occupied 3,396 3,398 70 Multi-family 1,328 1,324 — Construction and land development 3,783 3,782 567 One-to-four family residential 11,387 11,349 822 Municipal, consumer, and other 13,913 13,872 2,176 Total $ 69,415 $ 69,351 $ 6,180 The following table presents the average recorded investment and interest income recognized for loans individually evaluated for impairment by category of loans during the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized With an allowance recorded: (dollars in thousands) Commercial and industrial $ 2,763 $ 41 $ 4,957 $ 26 Agricultural and farmland 174 2 491 5 Commercial real estate - owner occupied 1,281 18 1,970 11 Commercial real estate - non-owner occupied 4,216 2 101 5 Multi-family — — — — Construction and land development 2,080 25 2,754 42 One-to-four family residential 3,587 24 2,082 16 Municipal, consumer, and other 8,823 42 9,254 99 Total $ 22,924 $ 154 $ 21,609 $ 204 With no related allowance: Commercial and industrial $ 2,894 $ 61 $ 5,480 $ — Agricultural and farmland 10,220 144 15,384 10 Commercial real estate - owner occupied 11,766 150 10,555 28 Commercial real estate - non-owner occupied 28,544 282 3,853 57 Multi-family 889 — 1,339 — Construction and land development 1,476 1 106 1 One-to-four family residential 7,500 63 9,904 74 Municipal, consumer, and other 4,763 21 4,832 — Total $ 68,052 $ 722 $ 51,453 $ 170 Total Commercial and industrial $ 5,657 $ 102 $ 10,437 $ 26 Agricultural and farmland 10,394 146 15,875 15 Commercial real estate - owner occupied 13,047 168 12,525 39 Commercial real estate - non-owner occupied 32,760 284 3,954 62 Multi-family 889 — 1,339 — Construction and land development 3,556 26 2,860 43 One-to-four family residential 11,087 87 11,986 90 Municipal, consumer, and other 13,586 63 14,086 99 Total $ 90,976 $ 876 $ 73,062 $ 374 Nine Months Ended September 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized With an allowance recorded: (dollars in thousands) Commercial and industrial $ 3,124 $ 129 $ 5,081 $ 115 Agricultural and farmland 307 6 404 12 Commercial real estate - owner occupied 1,141 56 1,998 90 Commercial real estate - non-owner occupied 1,504 7 102 5 Multi-family — — — — Construction and land development 2,571 91 2,842 131 One-to-four family residential 3,240 84 2,091 65 Municipal, consumer, and other 10,069 230 9,202 103 Total $ 21,956 $ 603 $ 21,720 $ 521 With no related allowance: Commercial and industrial $ 4,637 $ 213 $ 5,681 $ 150 Agricultural and farmland 13,187 500 15,889 352 Commercial real estate - owner occupied 11,367 401 10,640 360 Commercial real estate - non-owner occupied 17,358 388 4,000 111 Multi-family 299 — 1,349 9 Construction and land development 637 3 107 3 One-to-four family residential 8,167 266 10,107 194 Municipal, consumer, and other 3,660 78 4,871 71 Total $ 59,312 $ 1,849 $ 52,644 $ 1,250 Total Commercial and industrial $ 7,761 $ 342 $ 10,762 $ 265 Agricultural and farmland 13,494 506 16,293 364 Commercial real estate - owner occupied 12,508 457 12,638 450 Commercial real estate - non-owner occupied 18,862 395 4,102 116 Multi-family 299 — 1,349 9 Construction and land development 3,208 94 2,949 134 One-to-four family residential 11,407 350 12,198 259 Municipal, consumer, and other 13,729 308 14,073 174 Total $ 81,268 $ 2,452 $ 74,364 $ 1,771 The following tables present the recorded investment in loans by category based on current payment and accrual status as of September 30, 2020 and December 31, 2019: Accruing Interest 30 - 89 Days 90+ Days Total September 30, 2020 Current Past Due Past Due Nonaccrual Loans (dollars in thousands) Commercial and industrial $ 388,158 $ 154 $ — $ 919 $ 389,231 Agricultural and farmland 231,349 — — 4,248 235,597 Commercial real estate - owner occupied 224,451 139 — 755 225,345 Commercial real estate - non-owner occupied 528,145 — — 4,309 532,454 Multi-family 198,552 889 — — 199,441 Construction and land development 263,803 1,410 — 545 265,758 One-to-four family residential 303,014 1,030 40 4,281 308,365 Municipal, consumer, and other 123,081 226 7 134 123,448 Total $ 2,260,553 $ 3,848 $ 47 $ 15,191 $ 2,279,639 Accruing Interest 30 - 89 Days 90+ Days Total December 31, 2019 Current Past Due Past Due Nonaccrual Loans (dollars in thousands) Commercial and industrial $ 301,975 $ 558 $ — $ 4,642 $ 307,175 Agricultural and farmland 201,519 — — 6,257 207,776 Commercial real estate - owner occupied 228,218 941 — 2,003 231,162 Commercial real estate - non-owner occupied 579,626 131 — — 579,757 Multi-family 177,696 — — 1,377 179,073 Construction and land development 224,716 140 — 31 224,887 One-to-four family residential 307,712 1,329 75 4,464 313,580 Municipal, consumer, and other 119,898 247 26 245 120,416 Total $ 2,141,360 $ 3,346 $ 101 $ 19,019 $ 2,163,826 The following tables present total loans by category based on their assigned risk ratings determined by management as of September 30, 2020 and December 31, 2019: September 30, 2020 Pass Pass-Watch Substandard Doubtful Total (dollars in thousands) Commercial and industrial $ 365,872 $ 16,828 $ 6,531 $ — $ 389,231 Agricultural and farmland 200,879 19,415 15,303 — 235,597 Commercial real estate - owner occupied 183,836 27,901 13,608 — 225,345 Commercial real estate - non-owner occupied 452,942 43,941 35,571 — 532,454 Multi-family 170,134 28,418 889 — 199,441 Construction and land development 228,126 33,600 4,032 — 265,758 One-to-four family residential 284,072 11,285 13,008 — 308,365 Municipal, consumer, and other 109,542 425 13,481 — 123,448 Total $ 1,995,403 $ 181,813 $ 102,423 $ — $ 2,279,639 December 31, 2019 Pass Pass-Watch Substandard Doubtful Total (dollars in thousands) Commercial and industrial $ 267,645 $ 27,114 $ 12,416 $ — $ 307,175 Agricultural and farmland 180,735 12,267 14,774 — 207,776 Commercial real estate - owner occupied 198,710 21,745 10,707 — 231,162 Commercial real estate - non-owner occupied 531,694 46,092 1,971 — 579,757 Multi-family 175,807 1,771 1,495 — 179,073 Construction and land development 217,120 3,582 4,185 — 224,887 One-to-four family residential 287,036 13,546 12,998 — 313,580 Municipal, consumer, and other 106,063 479 13,874 — 120,416 Total $ 1,964,810 $ 126,596 $ 72,420 $ — $ 2,163,826 The following tables present the financial effect of troubled debt restructurings for the three and nine months ended September 30, 2019 and 2020: Charge-offs Recorded Investment and Specific Three Months Ended September 30, 2020 Number Pre-Modification Post-Modification Reserves (dollars in thousands) Commercial real estate - owner occupied 1 $ 853 $ 853 $ — Total 1 $ 853 $ 853 $ — Charge-offs Recorded Investment and Specific Three Months Ended September 30, 2019 Number Pre-Modification Post-Modification Reserves (dollars in thousands) One-to-four family residential 1 $ 21 $ 21 $ — Total 1 $ 21 $ 21 $ — Charge-offs Recorded Investment and Specific Nine Months Ended September 30, 2020 Number Pre-Modification Post-Modification Reserves (dollars in thousands) Commercial real estate - owner occupied 1 $ 853 $ 853 $ — Total 1 $ 853 $ 853 $ — Charge-offs Recorded Investment and Specific Nine Months Ended September 30, 2019 Number Pre-Modification Post-Modification Reserves (dollars in thousands) Commercial and industrial 3 $ 516 $ 516 $ — Agricultural and farmland 2 392 392 — Commercial real estate - owner occupied 1 170 170 — One-to-four family residential 1 21 21 — Total 7 $ 1,099 $ 1,099 $ — During the three months ended September 30, 2020, the troubled debt restructuring was the result of a payment concession. During the three and nine months ended September 30, 2019, all troubled debt restructurings were the result of a payment concession. Of the troubled debt restructurings entered into during the last 12 months, there were none which had subsequent payment defaults during the three and nine months ended September 30, 2020 and 2019. For purposes of this disclosure, the Company considers “default” to mean 90 days or more past due as to interest or principal or were on nonaccrual status subsequent to restructuring. As of September 30, 2020 and December 31, 2019, the Company had $9,038,000 and $9,315,000 of troubled debt restructurings, respectively. Restructured loans are evaluated for impairment quarterly as part of the Company’s determination of the allowance for loan losses. There were no material commitments to lend additional funds to debtors owing receivables whose terms have been modified in troubled debt restructurings. Changes in the accretable yield for loans acquired with deteriorated credit quality were as follows for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Beginning balance $ 1,378 $ 1,633 $ 1,662 $ 2,101 Reclassification from non-accretable difference 116 129 162 536 Accretion income (111) (231) (441) (1,106) Ending balance $ 1,383 $ 1,531 $ 1,383 $ 1,531 |
LOAN SERVICING
LOAN SERVICING | 9 Months Ended |
Sep. 30, 2020 | |
LOAN SERVICING | |
LOAN SERVICING | NOTE 4 – LOAN SERVICING Mortgage loans serviced for others, which are not included in the accompanying consolidated balance sheets, amounted to $1,085,957,000 and $1,152,535,000 as of September 30, 2020 and December 31, 2019, respectively. Activity in mortgage servicing rights is as follows for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Beginning balance $ 5,839 $ 8,796 $ 8,518 $ 10,918 Capitalized servicing rights 658 344 1,432 720 Fair value adjustment: Attributable to payments and principal reductions (650) (483) (1,844) (1,227) Attributable to changes in valuation inputs and assumptions (276) (721) (2,535) (2,475) Total fair value adjustment (926) (1,204) (4,379) (3,702) Ending balance $ 5,571 $ 7,936 $ 5,571 $ 7,936 |
FORECLOSED ASSETS
FORECLOSED ASSETS | 9 Months Ended |
Sep. 30, 2020 | |
FORECLOSED ASSETS | |
FORECLOSED ASSETS | NOTE 5 – FORECLOSED ASSETS Foreclosed assets activity is as follows for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Beginning balance $ 4,450 $ 9,707 $ 5,099 $ 9,559 Transfers from loans 172 27 499 1,788 Capitalized improvements — 41 6 41 Proceeds from sales (792) (3,173) (1,793) (4,142) Sales through loan origination — — (67) (360) Net gain (loss) on sales 125 135 269 240 Direct write-downs (98) (163) (156) (552) Ending balance $ 3,857 $ 6,574 $ 3,857 $ 6,574 Gains (losses) on foreclosed assets includes the following for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Direct write-downs $ (98) $ (163) $ (156) $ (552) Net gain (loss) on sales 125 135 269 240 Guarantee reimbursements — 8 7 69 Gain on settlement — — — 375 Gains (losses) on foreclosed assets $ 27 $ (20) $ 120 $ 132 The carrying value of foreclosed one-to-four family residential real estate property as of September 30, 2020 and December 31, 2019, was $352,000 and $1,037,000, respectively. As of September 30, 2020, there were 7 one-to-four family residential real estate loans in the process of foreclosure totaling approximately $571,000. As of December 31, 2019, there were 10 residential real estate loans in the process of foreclosure totaling approximately $588,000. |
DEPOSITS
DEPOSITS | 9 Months Ended |
Sep. 30, 2020 | |
DEPOSITS | |
DEPOSITS | NOTE 6 – DEPOSITS The Company’s deposits are summarized below: September 30, 2020 December 31, 2019 (dollars in thousands) Noninterest-bearing deposits $ 850,306 $ 689,116 Interest-bearing deposits: Interest-bearing demand 885,719 814,639 Money market 475,047 477,765 Savings 497,682 438,927 Time 307,907 356,408 Total interest-bearing deposits 2,166,355 2,087,739 Total deposits $ 3,016,661 $ 2,776,855 Money market deposits include $7,407,000 and $14,309,000 of reciprocal transaction deposits as of September 30, 2020 and December 31, 2019, respectively. Time deposits include $3,540,000 and $3,538,000 of reciprocal time deposits as of September 30, 2020 and December 31, 2019, respectively. The aggregate amounts of time deposits in denominations of $250,000 or more amounted to $24,734,000 and $44,754,000 as of September 30, 2020 and December 31, 2019, respectively. The aggregate amounts of time deposits in denominations of $100,000 or more amounted to $102,115,000 and $130,293,000 as of September 30, 2020 and December 31, 2019, respectively. The components of interest expense on deposits are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Interest-bearing demand $ 123 $ 347 $ 536 $ 1,175 Money market 96 497 608 1,356 Savings 37 70 157 207 Time 587 1,086 2,179 3,356 Total interest expense on deposits $ 843 $ 2,000 $ 3,480 $ 6,094 |
BORROWINGS
BORROWINGS | 9 Months Ended |
Sep. 30, 2020 | |
BORROWINGS | |
BORROWINGS | NOTE 7 – BORROWINGS There were no Federal Home Loan Bank of Chicago (FHLB) borrowings outstanding as of September 30, 2020 and December 31, 2019. Available borrowings from the FHLB are secured by FHLB stock held by the Company and pledged security in the form of qualifying loans. The total amount of loans pledged as of September 30, 2020 and December 31, 2019 was $544,999,000 and $548,229,000, respectively. As of September 30, 2020 and December 31, 2019, loans pledged also served as collateral for credit exposure of approximately $355,000 associated with the Banks’ participation in the FHLB’s Mortgage Partnership Finance Program. The Banks also have available borrowings through the discount window of the Federal Reserve Bank of Chicago (FRB). Available borrowings are based on the collateral pledged. As of September 30, 2020 and December 31, 2019, the carrying value of debt securities pledged amounted to $511,000 and $515,000, respectively. There was no outstanding borrowings under the FRB discount window as of September 30, 2020 and December 31, 2019. |
SUBORDINATED DEBENTURES
SUBORDINATED DEBENTURES | 9 Months Ended |
Sep. 30, 2020 | |
SUBORDINATED NOTES | |
SUBORDINATED DEBENTURES | NOTE 8 – SUBORDINATED NOTES On September 3, 2020, the Company issued $40,000,000 of fixed-to-floating rate subordinated notes that mature on September 15, 2030. The subordinated notes, which are unsecured obligations of the Company, bear a fixed interest rate of 4.50% for the first five years after issuance and thereafter bear interest at a floating rate equal to three-month SOFR, as determined on the Floating Interest Determination Date, plus 4.37%. Interest is payable semi-annually during the five year fixed rate period and quarterly during the subsequent five year floating rate period. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after September 15, 2025. If the subordinated notes are redeemed before they mature, the redemption price will be the principal amount plus any accrued but unpaid interest. The transaction resulted in debt issuance costs of $789,000 which will be amortized over 10 years. As of September 30, 2020, 100% of the subordinated notes qualified as Tier 2 capital. The face value and carrying value of the subordinated notes are summarized below: September 30, 2020 December 31, 2019 (dollars in thousands) Subordinated notes, at face value $ 40,000 $ — Unamortized issuance costs (782) — Subordinated notes, at carrying value $ 39,218 $ — |
JUNIOR SUBORDINATED DEBENTURES
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | 9 Months Ended |
Sep. 30, 2020 | |
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | |
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | NOTE 9 – JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS Five subsidiary business trusts of the Company have issued floating rate capital securities (“capital securities”) which are guaranteed by the Company. The Company owns all of the outstanding stock of the five subsidiary business trusts. The trusts used the proceeds from the issuance of their capital securities to buy floating rate junior subordinated deferrable interest debentures (“junior subordinated debentures”) issued by the Company. These junior subordinated debentures are the only assets of the trusts and the interest payments from the junior subordinated debentures finance the distributions paid on the capital securities. The junior subordinated debentures are unsecured and rank junior and subordinate in the right of payment to all senior debt of the Company. The trusts are not consolidated in the Company’s financial statements. The face and carrying value of junior subordinated debentures are summarized below: September 30, 2020 December 31, 2019 (dollars in thousands) Heartland Bancorp, Inc. Capital Trust B $ 10,310 $ 10,310 Heartland Bancorp, Inc. Capital Trust C 10,310 10,310 Heartland Bancorp, Inc. Capital Trust D 5,155 5,155 FFBI Capital Trust I 7,217 7,217 National Bancorp Statutory Trust I 5,773 5,773 Total junior subordinated debentures, at face value 38,765 38,765 National Bancorp Statutory Trust I unamortized discount (1,133) (1,182) Total junior subordinated debentures, at carrying value $ 37,632 $ 37,583 The interest rates on the junior subordinated debentures are variable, reset quarterly, and are equal to the three-month LIBOR, as determined on the LIBOR Determination Date specific to each junior subordinated debenture, plus a fixed percentage. The interest rates and maturities of the junior subordinated debentures are summarized as follows: Interest Rate at Variable September 30, December 31, Maturity Interest Rate 2020 2019 Date Heartland Bancorp, Inc. Capital Trust B LIBOR plus 2.75 % 3.03 % 4.74 % April 6, 2034 Heartland Bancorp, Inc. Capital Trust C LIBOR plus 1.53 1.78 3.42 June 15, 2037 Heartland Bancorp, Inc. Capital Trust D LIBOR plus 1.35 1.60 3.24 September 15, 2037 FFBI Capital Trust I LIBOR plus 2.80 3.08 4.79 April 6, 2034 National Bancorp Statutory Trust I LIBOR plus 2.90 3.15 4.79 December 31, 2037 The distribution rate payable on the junior subordinated debentures is cumulative and payable quarterly in arrears. The Company has the right, subject to events in default, to defer payments of interest on the junior subordinated debentures at any time by extending the interest payment period for a period not exceeding 10 quarterly periods with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the junior subordinated debentures. The capital securities are subject to mandatory redemption upon payment of the junior subordinated debentures and carry an interest rate identical to that of the related junior subordinated debenture. The junior subordinated debentures maturity dates may be shortened if certain conditions are met, or at any time within 90 days following the occurrence and continuation of certain changes in either tax treatment or the capital treatment of the debentures or the capital securities. If the junior subordinated debentures are redeemed before they mature, the redemption price will be the principal amount plus any accrued but unpaid interest. The Company has the right to terminate each Capital Trust and cause the junior subordinated debentures to be distributed to the holders of the capital securities in liquidation of such trusts. Under current banking regulations, bank holding companies are allowed to include qualifying trust preferred securities in their Tier 1 Capital for regulatory capital purposes, subject to a 25% limitation to all core (Tier 1) capital elements, net of goodwill and other intangible assets less any associated deferred tax liability. As of September 30, 2020 and December 31, 2019, 100% of the trust preferred securities qualified as Tier 1 capital under the final rule adopted in March 2005. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | NOTE 10 – DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments are negotiated contracts entered into by two issuing counterparties containing specific agreement terms, including the underlying instrument, amount, exercise price, and maturities. The derivatives accounting guidance requires that the Company recognize all derivative financial instruments as either assets or liabilities at fair value in the consolidated balance sheets. The Company may utilize interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Interest Rate Swaps Designated as Cash Flow Hedges The Company designated certain interest rate swap agreements as cash flow hedges on variable-rate borrowings. For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on interest rate swaps designated as cash flow hedging instruments are reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. The interest rate swap agreements designated as cash flow hedges are summarized as follows: September 30, 2020 December 31, 2019 Notional Fair Notional Fair Amount Value Amount Value Designated as cash flow hedges: (dollars in thousands) Fair value recorded in other liabilities $ 17,000 $ (1,572) $ 17,000 $ (676) As of September 30, 2020, the interest rate swap agreements designated as cash flow hedges had contractual maturities between 2024 and 2025. As of September 30, 2020 and December 31, 2019, the Company had cash pledged and held on deposit at counterparties of $1,630,000 and $710,000, respectively. During the three months ended March 31, 2019, the Company had an interest rate swap contract with a notional amount of $10,000,000 designated as a cash flow hedge on variable-rate loans. Beginning April 1, 2019, this hedging relationship was no longer considered highly effective, and the Company discontinued hedge accounting. In accordance with hedge accounting guidance, the net unrealized gain associated with the discontinued hedging relationship, recorded within accumulated other comprehensive income, was reclassified into earnings through April 7, 2020, the period the hedged forecasted transactions affect earnings. For the three and nine months ended September 30, 2020 and 2019, the effect of interest rate swap agreements designated as cash flow hedges on the consolidated statements of income are summarized as follows: Location of gross gain (loss) reclassified Amounts of gross gain (loss) from accumulated other reclassified from accumulated comprehensive income to income other comprehensive income Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Designated as cash flow hedges: (dollars in thousands) Taxable loan interest income $ — $ 33 $ 64 $ 83 Junior subordinated debentures interest expense (97) (9) (202) (7) Total $ (97) $ 24 $ (138) $ 76 Interest Rate Swaps Not Designated as Hedging Instruments The Company may offer interest rate swap agreements to its commercial borrowers in connection with their risk management needs. The Company manages the risk associated with these contracts by entering into an equal and offsetting derivative with a third-party financial institution. While these interest rate swap agreements generally worked together as an economic interest rate hedge, the Company did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred. The interest rate swap agreements not designated as hedging instruments are summarized as follows: September 30, 2020 December 31, 2019 Notional Fair Notional Fair Amount Value Amount Value Not designated as hedging instruments: (dollars in thousands) Fair value recorded in other assets: Interest rate swaps with a commercial borrower counterparty $ 140,820 $ 21,568 $ 114,140 $ 8,532 Interest rate swaps with a financial institution counterparty — — 24,216 110 Total fair value recorded in other assets $ 140,820 $ 21,568 $ 138,356 $ 8,642 Fair value recorded in other liabilities: Interest rate swaps with a commercial borrower counterparty $ — $ — $ 24,216 $ (110) Interest rate swaps with a financial institution counterparty 140,820 (21,568) 114,140 (8,532) Total fair value recorded in other liabilities $ 140,820 $ (21,568) $ 138,356 $ (8,642) As of September 30, 2020, the interest rate swap agreements not designated as hedging instruments had contractual maturities between 2022 and 2042. As of September 30, 2020 and December 31, 2019, the Company had $22,280,000 and $8,713,000, respectively, of debt securities pledged and held in safekeeping at the financial institution counterparty. For the three and nine months ended September 30, 2020 and 2019, the effect of interest rate contracts not designated as hedging instruments recognized in other noninterest income on the consolidated statements of income are summarized as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Not designated as hedging instruments: (dollars in thousands) Gross gains $ 2,188 $ 4,151 $ 17,369 $ 10,196 Gross losses (2,188) (4,151) (17,369) (10,159) Net gains (losses) $ — $ — $ — $ 37 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 9 Months Ended |
Sep. 30, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | NOTE 11 – ACCUMULATED OTHER COMPREHENSIVE INCOME The following table presents the activity and accumulated balances for components of other comprehensive income (loss) for the three and nine months ended September 30, 2020 and 2019: Unrealized Gains (Losses) on Debt Securities Available-for-Sale Held-to-Maturity Derivatives Total (dollars in thousands) Three Months Ended September 30, 2020 Balance, June 30, 2020 $ 18,806 $ (133) $ (1,462) $ 17,211 Other comprehensive income before reclassifications 1,176 — 5 1,181 Reclassifications — 8 97 105 Other comprehensive income, before tax 1,176 8 102 1,286 Income tax expense 336 2 28 366 Other comprehensive income, after tax 840 6 74 920 Balance, September 30, 2020 $ 19,646 $ (127) $ (1,388) $ 18,131 Three Months Ended September 30, 2019 Balance, June 30, 2019 $ 8,063 $ (37) $ (590) $ 7,436 Other comprehensive income (loss) before reclassifications 1,289 — (208) 1,081 Reclassifications — (62) (24) (86) Other comprehensive income (loss) 1,289 (62) (232) 995 Balance, September 30, 2019 $ 9,352 $ (99) $ (822) $ 8,431 Nine Months Ended September 30, 2020 Balance, December 31, 2019 $ 8,659 $ (131) $ (696) $ 7,832 Other comprehensive income (loss) before reclassifications 15,368 — (1,098) 14,270 Reclassifications — 5 138 143 Other comprehensive income (loss), before tax 15,368 5 (960) 14,413 Income tax expense (benefit) 4,381 1 (268) 4,114 Other comprehensive income (loss), after tax 10,987 4 (692) 10,299 Balance, September 30, 2020 $ 19,646 $ (127) $ (1,388) $ 18,131 Nine Months Ended September 30, 2019 Balance, December 31, 2018 $ (4,561) $ 122 $ 151 $ (4,288) Other comprehensive income (loss) before reclassifications 13,913 — (897) 13,016 Reclassifications — (221) (76) (297) Other comprehensive income (loss) 13,913 (221) (973) 12,719 Balance, September 30, 2019 $ 9,352 $ (99) $ (822) $ 8,431 The amounts reclassified from accumulated other comprehensive income (loss) for unrealized gains (losses) on debt securities available-for-sale are included in gain (loss) on securities in the accompanying consolidated statements of income. The amounts reclassified from accumulated other comprehensive income (loss) for unrealized gains on debt securities held-to-maturity are included in securities interest income in the accompanying consolidated statements of income. The amounts reclassified from accumulated other comprehensive income (loss) for the fair value of derivative financial instruments represent net interest payments received or made on derivatives designated as cash flow hedges. See Note 10 for additional information. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | NOTE 12 – INCOME TAXES Effective October 11, 2019, the Company voluntarily revoked its S Corporation status and became a taxable entity (C Corporation). As such, any periods prior to October 11, 2019 will only reflect an effective state replacement tax rate. The consolidated statements of income present unaudited pro forma C Corp equivalent information for the three and nine months ended September 30, 2019. Allocation of income tax expense between current and deferred portions for the three and nine months ended September 30 is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 (dollars in thousands) Current Federal $ 2,921 $ — $ 5,619 $ — State 1,593 299 3,218 819 Total current 4,514 299 8,837 819 Deferred Federal (542) — (419) — State (271) — (209) — Total deferred (813) — (628) — Income tax expense $ 3,701 $ 299 $ 8,209 $ 819 Income tax expense differs from the statutory federal rate for the three and nine months ended September 30 due to the following: Three Months Ended September 30, 2020 2019 Amount Percentage Amount Percentage (dollars in thousands) Federal income tax, at statutory rate $ 2,995 21.0 % $ — — % Increase (decrease) resulting from: Federally tax exempt interest income (372) (2.6) — — State taxes, net of federal benefit 1,039 7.3 299 1.7 Other 39 0.2 — — Income tax expense $ 3,701 25.9 % $ 299 1.7 % Nine Months Ended September 30, 2020 2019 Amount Percentage Amount Percentage (dollars in thousands) Federal income tax, at statutory rate $ 6,806 21.0 % $ — — % Increase (decrease) resulting from: Federally tax exempt interest income (1,099) (3.4) — — State taxes, net of federal benefit 2,397 7.4 819 1.6 Other 105 0.3 — — Income tax expense $ 8,209 25.3 % $ 819 1.6 % The components of the net deferred tax asset as of September 30, 2020 and December 31, 2019 are as follows: September 30, December 31, 2020 2019 (dollars in thousands) Deferred tax assets Allowance for loan losses $ 8,927 $ 6,309 Compensation related 2,156 5,859 Deferred loan fees 1,937 497 Nonaccrual interest 617 858 Foreclosed assets 93 574 Goodwill 385 531 Other 1,084 785 Total deferred tax assets 15,199 15,413 Deferred tax liabilities Fixed asset depreciation 4,363 4,201 Mortgage servicing rights 1,588 2,428 Other purchase accounting adjustments 1,195 1,356 Intangible assets 645 841 Prepaid assets 475 504 Net unrealized gain on debt securities available-for-sale 6,632 2,251 Other 381 426 Total deferred tax liabilities 15,279 12,007 Net deferred tax asset (liability) $ (80) 3,406 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 13 – EARNINGS PER SHARE ASC 260, Earnings Per Share , requires unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings per share. The Company has granted restricted stock units that contain non-forfeitable rights to dividend equivalents. Such restricted stock units are considered participating securities. As such, we have included these restricted stock units in the calculation of basic earnings per share and calculate basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Diluted earnings per share is computed using the treasury stock method and reflects the potential dilution that could occur if the Company’s outstanding restricted stock units were vested. For the three and nine months ended September 30, 2020, the restricted stock units were considered anti-dilutive and excluded from the calculation of common stock equivalents. There were no restricted stock units outstanding during the three and nine months ended September 30, 2019. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Numerator: Net income $ 10,563 $ 17,437 $ 24,203 $ 50,778 Earnings allocated to unvested restricted stock units (28) — (62) — Numerator for earnings per share - basic and diluted $ 10,535 $ 17,437 $ 24,141 $ 50,778 Denominator: Weighted average common shares outstanding 27,457,306 18,027,512 27,457,306 18,027,512 Dilutive effect of outstanding restricted stock units — — — — Weighted average common shares outstanding, including all dilutive potential shares 27,457,306 18,027,512 27,457,306 18,027,512 Earnings per share - Basic $ 0.38 $ 0.97 $ 0.88 $ 2.82 Earnings per share - Diluted $ 0.38 $ 0.97 $ 0.88 $ 2.82 |
DEFERRED COMPENSATION
DEFERRED COMPENSATION | 9 Months Ended |
Sep. 30, 2020 | |
EMPLOYEE BENEFIT PLANS | |
DEFERRED COMPENSATION | NOTE 14 – DEFERRED COMPENSATION The Company maintained a supplemental executive retirement plan (the SERP) for certain key executive officers. The SERP benefit payments were scheduled to be paid in equal monthly installments over 30 years. In June 2019, the Company approved termination of the SERP agreements, and a lump sum payment was made in June 2020 to each participant equal to the present value of any remaining installment payments. As of September 30, 2020, there was no remaining deferred compensation liability for the SERP, and there was no deferred compensation expense recognized for the SERP during the three months ended September 30, 2020. During the three months ended September 30, 2019, the Company recognized deferred compensation expense for the SERP of $968,000. During the nine months ended September 30, 2020 and 2019, the Company recognized deferred compensation expense for the SERP of $1,660,000 and $4,533,000, respectively. As of December 31, 2019, the deferred compensation liability for the SERP was $12,789,000. |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2020 | |
STOCK-BASED COMPENSATION PLANS | |
STOCK-BASED COMPENSATION PLANS | NOTE 15 – STOCK-BASED COMPENSATION PLANS The Company has adopted the HBT Financial, Inc. Omnibus Incentive Plan (the “Omnibus Incentive Plan”). The Omnibus Incentive Plan provides for grants of (i) stock options, (ii) stock appreciation rights, (iii) restricted shares, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards and (vi) other cash-based awards to eligible employees, non-employee directors and consultants of the Company. The maximum number of shares of common stock available for issuance under the Omnibus Incentive Plan is 1,820,000 shares. The following is a summary of stock-based compensation expense (benefit): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Restricted stock units $ 100 $ — $ 263 $ — Stock appreciation rights (75) 64 (303) (51) Total stock-based compensation expense (benefit) $ 25 $ 64 $ (40) $ (51) Restricted Stock Units A restricted stock unit grants a participant the right to receive one share of common stock, following the completion of the requisite service period. Restricted stock units are classified as equity. Compensation cost is based on the Company’s stock price on the grant date and is recognized on a straight-line basis over the vesting period for the entire award. Non-forfeitable dividend equivalents are paid on non-vested restricted stock units and are classified as dividends charged to retained earnings. If restricted stock units are subsequently forfeited, the non-forfeitable dividends related to the forfeited restricted stock units are reclassified to compensation cost in the period the forfeiture occurs. On January 28, 2020, the Company granted 70,400 restricted stock units to certain key employees which vest in four equal annual installments beginning on February 1, 2021. On January 28, 2020, the Company also granted 2,750 restricted stock units to non-employee directors which vest on February 1, 2021. The total fair value of the restricted stock units granted on January 28, 2020 was $1,392,000, based on the grant date closing price of $19.03 per share. On June 24, 2020, the Company also granted 550 restricted stock units to a non-employee director which vest on February 1, 2021. The total fair value of the restricted stock units granted on June 24, 2020 was $7,000, based on the grant date closing price of $12.71 per share. The following is a summary of outstanding restricted stock unit activity: Three Months Ended September 30, 2020 2019 Weighted Weighted Restricted Average Restricted Average Stock Units Grant Date Stock Units Grant Date Outstanding Fair Value Outstanding Fair Value Beginning balance 73,700 $ 18.98 — $ — Granted — — — — Vested — — — — Forfeited — — — — Ending balance 73,700 $ 18.98 — $ — Nine Months Ended September 30, 2020 2019 Weighted Weighted Restricted Average Restricted Average Stock Units Grant Date Stock Units Grant Date Outstanding Fair Value Outstanding Fair Value Beginning balance — $ — — $ — Granted 73,700 18.98 — — Vested — — — — Forfeited — — — — Ending balance 73,700 $ 18.98 — $ — A further summary of outstanding restricted stock units as of September 30, 2020, is as follows: Weighted Average Remaining Range of Grant Date Fair Values Outstanding Contractual Term $ 12.71 550 0.3 years $ 19.03 73,150 3.2 years As of September 30, 2020, unrecognized compensation cost related to non-vested restricted stock units was $1,136,000. Stock Appreciation Rights A stock appreciation right grants a participant the right to receive an amount of cash, the value of which equals the appreciation in the Company’s stock price between the grant date and the exercise date. Stock appreciation rights units are classified as liabilities. Prior to becoming a public entity, the liability was based on the intrinsic value of the stock appreciation rights, calculated using the grant date assigned value and an independent appraisal of the Company’s stock price that was subject to approval by the Board of Directors. Since becoming a public entity on October 11, 2019, the liability was based on an option-pricing model used to estimate the fair value of the stock appreciation rights. Compensation cost for unvested stock appreciation rights is recognized on a straight line basis over the vesting period of the entire award. The unvested stock appreciation rights vest in four equal annual installments beginning on the first anniversary of the grant date. The following is a summary of outstanding stock appreciation rights activity: Three Months Ended September 30, 2020 2019 Stock Weighted Stock Weighted Beginning balance 110,160 $ 16.32 42,840 $ 7.46 Granted — — 110,160 16.32 Exercised — — (42,840) 7.46 Forfeited — — — — Ending balance 110,160 $ 16.32 110,160 $ 16.32 Nine Months Ended September 30, 2020 2019 Stock Weighted Stock Weighted Beginning balance 110,160 $ 16.32 91,800 $ 5.73 Granted — — 110,160 16.32 Exercised — — (91,800) 5.73 Forfeited — — — — Ending balance 110,160 $ 16.32 110,160 $ 16.32 A further summary of outstanding stock appreciation rights as of September 30, 2020, is as follows: Weighted Average Remaining Range of Grant Date Assigned Values Outstanding Exercisable Contractual Term $ 16.32 110,160 87,210 8.9 years As of September 30, 2020, unrecognized compensation cost related to non-vested stock appreciation rights was $27,000. As of September 30, 2020 and December 31, 2019, the liability recorded for outstanding stock appreciation rights was $106,000 and $409,000, respectively. As of September 30, 2020 and December 31, 2019, the Company used an option pricing model to value the stock appreciation rights, using the assumptions in the following table. Expected volatility is derived from the historical volatility of the Company’s stock price and a selected peer group of industry-related companies. September 30, December 31, 2020 2019 Risk-free interest rate 0.61 % 1.90 % Expected volatility 34.10 % 28.83 % Expected life (in years) 8.9 9.7 Expected dividend yield 5.35 % 3.16 % As of September 30, 2020, the liability recorded for previously exercised stock appreciation rights was $1,206,000, which will be paid in four remaining equal annual installments. As of December 31, 2019, the liability recorded for previously exercised units was $1,512,000. |
REGULATORY MATTERS
REGULATORY MATTERS | 9 Months Ended |
Sep. 30, 2020 | |
REGULATORY MATTERS | |
REGULATORY MATTERS | NOTE 16 – REGULATORY MATTERS The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. As allowed under the Basel III rules, the Banks and Company elected to exclude accumulated other comprehensive income, including unrealized gains and losses on debt securities, in the computation of regulatory capital. The ability of the Company to pay dividends to its stockholders is dependent upon the ability of the Banks to pay dividends to the Company. The Banks are subject to certain statutory and regulatory restrictions on the amount it may pay in dividends. Under the Basel III regulations, a capital conservation buffer calculation will phase in over five years which limits allowable bank dividends if regulatory capital ratios fall below specific thresholds. As of September 30, 2020 and December 31, 2019, the capital conservation buffer was 2.5%. HBT Financial, Inc. (on a consolidated basis) and the Banks are each subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the financial statements of HBT Financial, Inc. and the Banks. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, HBT Financial, Inc. (on a consolidated basis) and the Banks must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Management believes, as of September 30, 2020 and December 31, 2019, that HBT Financial, Inc. and the Banks each met all capital adequacy requirements to which they are subject. The actual and required capital amounts and ratios of HBT Financial, Inc. (on a consolidated basis) and the Banks are as follows: Actual For Capital To Be Well September 30, 2020 Amount Ratio Amount Ratio Amount Ratio (dollars in thousands) Total Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 417,844 % $ 198,827 8.00 % N/A N/A Heartland Bank 333,344 183,710 8.00 $ 229,638 10.00 % State Bank of Lincoln 35,955 15,013 8.00 18,766 10.00 Tier 1 Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 347,552 % $ 149,120 6.00 % N/A N/A Heartland Bank 304,639 137,783 6.00 $ 183,710 8.00 % State Bank of Lincoln 33,602 11,260 6.00 15,013 8.00 Common Equity Tier 1 Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 311,085 % $ 111,840 4.50 % N/A N/A Heartland Bank 304,639 103,337 4.50 $ 149,265 6.50 % State Bank of Lincoln 33,602 8,445 4.50 12,198 6.50 Tier 1 Capital (to Average Assets) Consolidated HBT Financial, Inc. $ 347,552 % $ 138,524 4.00 % N/A N/A Heartland Bank 304,639 124,701 4.00 $ 155,876 5.00 % State Bank of Lincoln 33,602 13,691 4.00 17,114 5.00 Actual For Capital To Be Well December 31, 2019 Amount Ratio Amount Ratio Amount Ratio (dollars in thousands) Total Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 356,994 % $ 196,358 8.00 % N/A N/A Heartland Bank 315,516 180,071 8.00 $ 225,088 10.00 % State Bank of Lincoln 35,390 16,104 8.00 20,130 10.00 Tier 1 Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 334,695 % $ 147,268 6.00 % N/A N/A Heartland Bank 295,385 135,053 6.00 $ 180,071 8.00 % State Bank of Lincoln 33,222 12,078 6.00 16,104 8.00 Common Equity Tier 1 Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 298,277 % $ 110,451 4.50 % N/A N/A Heartland Bank 295,385 101,290 4.50 $ 146,307 6.50 % State Bank of Lincoln 33,222 9,058 4.50 13,084 6.50 Tier 1 Capital (to Average Assets) Consolidated HBT Financial, Inc. $ 334,695 % $ 129,027 4.00 % N/A N/A Heartland Bank 295,385 115,281 4.00 $ 144,102 5.00 % State Bank of Lincoln 33,222 13,531 4.00 16,914 5.00 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 17 – FAIR VALUE OF FINANCIAL INSTRUMENTS Recurring Basis The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Additional information on fair value measurements are summarized in Note 1 to the Company’s annual consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC on March 27, 2020. There were no transfers between levels during the three and nine months ended September 30, 2020 and 2019. The Company’s policy for determining transfers between levels occurs at the end of the reporting period when circumstances in the underlying valuation criteria change and result in transfer between levels. The following tables present the balances of the assets measured at fair value on a recurring basis: September 30, 2020 Level 1 Level 2 Level 3 Total (dollars in thousands) Debt securities available-for-sale: U.S. government agency $ — $ 104,326 $ — $ 104,326 Municipal — 240,410 — 240,410 Mortgage-backed: Agency residential — 226,317 — 226,317 Agency commercial — 171,072 — 171,072 Corporate — 72,673 — 72,673 Equity securities with readily determinable fair values 3,262 — — 3,262 Mortgage servicing rights — — 5,571 5,571 Derivative financial assets — 21,568 — 21,568 Derivative financial liabilities — 23,140 — 23,140 December 31, 2019 Level 1 Level 2 Level 3 Total (dollars in thousands) Debt securities available-for-sale: U.S. government agency $ — $ 49,615 $ — $ 49,615 Municipal — 133,738 — 133,738 Mortgage-backed: Agency residential — 200,678 — 200,678 Agency commercial — 134,954 — 134,954 Corporate — 73,419 — 73,419 Equity securities with readily determinable fair values 3,241 — — 3,241 Mortgage servicing rights — — 8,518 8,518 Derivative financial assets — 8,642 — 8,642 Derivative financial liabilities — 9,318 — 9,318 The following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy. There were no changes to the valuation techniques from December 31, 2019 to September 30, 2020. Investment Securities When available, the Company uses quoted market prices to determine the fair value of securities; such items are classified in Level 1 of the fair value hierarchy. For the Company’s securities where quoted prices are not available for identical securities in an active market, the Company determines fair value utilizing vendors who apply matrix pricing for similar bonds where no price is observable or may compile prices from various sources. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace. Fair values from these models are verified, where possible, against quoted market prices for recent trading activity of assets with similar characteristics to the security being valued. Such methods are generally classified as Level 2. However, when prices from independent sources vary, cannot be obtained or cannot be corroborated, a security is generally classified as Level 3. The change in fair value of debt securities available-for-sale is recorded through an adjustment to the consolidated statement of comprehensive income. The change in fair value of equity securities with readily determinable fair values is recorded through an adjustment to the consolidated statement of income. Derivative Financial Instruments Interest rate swap agreements are carried at fair value as determined by dealer valuation models. Based on the inputs used, the derivative financial instruments subjected to recurring fair value adjustments are classified as Level 2. For derivative financial instruments designated as a hedging instruments, the change in fair value is recorded through an adjustment to the consolidated statement of comprehensive income. For derivative financial instruments not designated as a hedging instruments, the change in fair value is recorded through an adjustment to the consolidated statement of income. Mortgage Servicing Rights The Company has elected to record its mortgage servicing rights at fair value. Mortgage servicing rights do not trade in an active market with readily observable prices. Accordingly, the Company determines the fair value of mortgage servicing rights by estimating the fair value of the future cash flows associated with the mortgage loans being serviced as calculated by an independent third party. Key economic assumptions used in measuring the fair value of mortgage servicing rights include, but are not limited to, prepayment speeds and discount rates. Due to the nature of the valuation inputs, mortgage servicing rights are classified as Level 3. The change in fair value is recorded through an adjustment to the consolidated statement of income. The following tables present additional information about the unobservable inputs used in the fair value measurement of the mortgage servicing rights (dollars in thousands): September 30, 2020 Fair Value Valuation Technique Unobservable Inputs Range Mortgage servicing rights $ 5,571 Discounted cash flows Constant pre-payment rates (CPR) 7.0% to 85.0% (18.2%) Discount rate 9.0% to 11.0% (9.0%) December 31, 2019 Fair Value Valuation Technique Unobservable Inputs Range Mortgage servicing rights $ 8,518 Discounted cash flows Constant pre-payment rates (CPR) 7.0% to 68.5% (12.3%) Discount rate 9.0% to 11.0% (9.0%) Nonrecurring Basis Certain assets are measured at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as there is evidence of impairment or a change in the amount of previously recognized impairment. The following tables present the balances of the assets measured at fair value on a nonrecurring basis: September 30, 2020 Level 1 Level 2 Level 3 Total (dollars in thousands) Loans held for sale $ — $ 23,723 $ — $ 23,723 Collateral-dependent impaired loans — — 16,209 16,209 Bank premises held for sale — — 121 121 Foreclosed assets — — 3,857 3,857 December 31, 2019 Level 1 Level 2 Level 3 Total (dollars in thousands) Loans held for sale $ — $ 4,531 $ — $ 4,531 Collateral-dependent impaired loans — — 15,811 15,811 Bank premises held for sale — — 121 121 Foreclosed assets — — 5,099 5,099 Loans Held for Sale Mortgage loans originated and held for sale are carried at the lower of cost or estimated fair value. The Company obtains quotes or bids on these loans directly from purchasing financial institutions. Typically, these quotes include a premium on the sale and thus these quotes indicate fair value of the held for sale loans is greater than cost. Collateral-Dependent Impaired Loans In accordance with the provisions of the loan impairment guidance, impairment was measured for loans which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement. The fair value of collateral-dependent impaired loans is estimated based on the fair value of the underlying collateral supporting the loan. Collateral-dependent impaired loans require classification in the fair value hierarchy. Impaired loans include loans acquired with deteriorated credit quality. Collateral values are estimated using Level 3 inputs based on customized discounting criteria. Bank Premises Held for Sale Bank premises held for sale are recorded at the lower of cost or fair value, less estimated selling costs, at the date classified as held for sale. Values are estimated using Level 3 inputs based on appraisals and customized discounting criteria. The carrying value of bank premises held for sale is not re-measured to fair value on a recurring basis but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs. Foreclosed Assets Foreclosed assets are recorded at fair value based on property appraisals, less estimated selling costs, at the date of the transfer. Subsequent to the transfer, foreclosed assets are carried at the lower of cost or fair value, less estimated selling costs. Values are estimated using Level 3 inputs based on appraisals and customized discounting criteria. The carrying value of foreclosed assets is not re-measured to fair value on a recurring basis but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs. Collateral-Dependent Impaired Loans, Bank Premises Held for Sale, and Foreclosed Assets The estimated fair value of collateral-dependent impaired loans, bank premises held for sale, and foreclosed assets is based on the appraised fair value of the collateral, less estimated costs to sell. Collateral-dependent impaired loans, bank premises held for sale, and foreclosed assets are classified within Level 3 of the fair value hierarchy. The Company considers the appraisal or a similar evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals or a similar evaluation of the collateral underlying collateral-dependent loans and foreclosed assets are obtained at the time a loan is first considered impaired or a loan is transferred to foreclosed assets. Appraisals or a similar evaluation of bank premises held for sale are obtained when first classified as held for sale. Appraisals or similar evaluations are obtained subsequently as deemed necessary by management but at least annually on foreclosed assets and bank premises held for sale. Appraisals are reviewed for accuracy and consistency by management. Appraisals are performed by individuals selected from the list of approved appraisers maintained by management. The appraised values are reduced by estimated costs to sell. These discounts and estimates are developed by management by comparison to historical results. The following tables present quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements (dollars in thousands): September 30, 2020 Fair Valuation Unobservable Inputs Range Collateral-dependent impaired loans $ 16,209 Appraisal of collateral Appraisal adjustments Not meaningful Bank premises held for sale 121 Appraisal Appraisal adjustments 7% (7%) Foreclosed assets 3,857 Appraisal Appraisal adjustments 7% (7%) December 31, 2019 Fair Valuation Unobservable Inputs Range Collateral-dependent impaired loans $ 15,811 Appraisal of collateral Appraisal adjustments Not meaningful Bank premises held for sale 121 Appraisal Appraisal adjustments 7% (7%) Foreclosed assets 5,099 Appraisal Appraisal adjustments 7% (7%) Other Fair Value Methods The following methods and assumptions were used by the Company in estimating fair value disclosures of its other financial instruments. There were no changes in the methods and significant assumptions used to estimate the fair value of these financial instruments. Cash and Cash Equivalents The carrying amounts of these financial instruments approximate their fair values. Interest-bearing Time Deposits with Banks The carrying values of interest-bearing time deposits with banks approximate their fair values. Restricted Stock The carrying amount of FHLB stock approximates fair value based on the redemption provisions of the FHLB. Loans The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts the Company believes are consistent with discounts in the market place. Fair values are estimated for portfolios of loans with similar characteristics. Loans are segregated by type such as commercial and industrial, agricultural and farmland, commercial real estate - owner occupied, commercial real estate - non-owner occupied, multi-family, construction and land development, one-to-four family residential, and municipal, consumer, and other. The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for similar maturities. The fair value analysis also includes other assumptions to estimate fair value, intended to approximate those a market participant would use in an orderly transaction, with adjustments for discount rates, interest rates, liquidity, and credit spreads, as appropriate. Investments in Unconsolidated Subsidiaries The fair values of the Company’s investments in unconsolidated subsidiaries are presumed to approximate carrying amounts. Time Deposits Fair values of certificates of deposit with stated maturities have been estimated using the present value of estimated future cash flows discounted at rates currently offered for similar instruments. Time deposits also include public funds time deposits. Securities Sold Under Agreements to Repurchase The fair values of repurchase agreements with variable interest rates are presumed to approximate their recorded carrying amounts. Subordinated Notes The fair values of subordinated notes are estimated using discounted cash flow analyses based on rates observed on recent debt issuances by other financial institutions. Junior Subordinated Debentures The fair values of subordinated debentures are estimated using discounted cash flow analyses based on rates observed on recent debt issuances by other financial institutions. Accrued Interest The carrying amounts of accrued interest approximate fair value. Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair values have been estimated using data which management considered the best available and estimation methodologies deemed suitable for the pertinent category of financial instrument. The following table provides summary information on the carrying amounts and estimated fair values of the Company’s financial instruments: Fair Value September 30, 2020 December 31, 2019 Hierarchy Carrying Estimated Carrying Estimated Level Amount Fair Value Amount Fair Value (dollars in thousands) Financial assets: Cash and cash equivalents Level 1 $ 236,724 $ 236,724 $ 283,971 $ 283,971 Interest-bearing time deposits with banks Level 1 — — 248 248 Debt securities held-to-maturity Level 2 74,510 78,891 88,477 90,529 Restricted stock Level 3 2,498 2,498 2,425 2,425 Loans, net Level 3 2,247,985 2,269,402 2,141,527 2,181,103 Investments in unconsolidated subsidiaries Level 3 1,165 1,165 1,165 1,165 Accrued interest receivable Level 2 13,820 13,820 13,951 13,951 Financial liabilities: Time deposits Level 3 307,907 309,806 356,408 355,340 Securities sold under agreements to repurchase Level 2 45,438 45,438 44,433 44,433 Subordinated notes Level 3 39,218 39,999 — — Junior subordinated debentures Level 3 37,632 24,844 37,583 31,959 Accrued interest payable Level 2 819 819 1,132 1,132 The Company estimated the fair value of lending related commitments as described in Note 18 to be immaterial based on limited interest rate exposure due to their variable nature, short-term commitment periods and termination clauses provided in the agreements. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 18 – COMMITMENTS AND CONTINGENCIES Financial Instruments The Banks are party to credit-related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Banks’ exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Banks use the same credit policies in making commitments and conditional obligations as they do for on-balance sheet instruments. Such commitments and conditional obligations were as follows: Contractual Amount September 30, December 31, 2020 2019 (dollars in thousands) Commitments to extend credit $ 536,052 $ 542,705 Standby letters of credit 10,154 8,991 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Banks evaluate each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, by the Banks upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies, but may include real estate, accounts receivable, inventory, property, plant, and equipment, and income-producing properties. Standby letters of credit are conditional commitments issued by the Banks to guarantee the performance of a customer to a third party. Those standby letters of credit are primarily issued to support extensions of credit. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. The Banks secure the standby letters of credit with the same collateral used to secure the related loan. Legal Contingencies Various legal claims arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Company’s consolidated financial statements. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation HBT Financial, Inc. (the Company) is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company (Heartland Bank) and State Bank of Lincoln. Heartland Bank and State Bank of Lincoln are collectively referred to as “the Banks”. The Banks provide a comprehensive suite of business, commercial, wealth management and retail banking products and services to individuals, businesses, and municipal entities throughout Central and Northeastern Illinois. The unaudited consolidated financial statements, including the notes thereto, have been prepared in accordance with generally accepted accounting principles (GAAP) interim reporting requirements. Certain information in footnote disclosures normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. These interim unaudited consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 27, 2020. The unaudited consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year. The Company qualifies as an "emerging growth company" as defined by the Jumpstart Our Business Startups Act (JOBS Act). The JOBS Act permits emerging growth companies an extended transition period for complying with new or revised accounting standards affecting public companies. The Company has elected to use the extended transition period until the Company is no longer an emerging growth company or until the Company chooses to affirmatively and irrevocably opt out of the extended transition period. As a result, the Company’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies. |
Use of Estimates | Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and the reported results of operations for the periods then ended. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for loan losses and income taxes. |
Income Taxes | Income Taxes Through October 10, 2019, the Company, with the consent of its then current stockholders, elected to be taxed under sections of federal and state income tax law as an "S Corporation" which provides that, in lieu of Company income taxes, except for state replacement taxes, the stockholders separately account for their pro rata shares of the Company’s items of income, deductions, losses and credits. As a result of this election, no income taxes, other than state replacement taxes, have been recognized in the accompanying consolidated financial statements. No provision has been made for any amounts which were advanced or paid as dividends to the stockholders to assist them in paying their personal taxes on the income from the Company. Effective October 11, 2019, the Company voluntarily revoked its S Corporation status and became a taxable entity (C Corporation). As such, any periods prior to October 11, 2019 only reflect an effective state replacement tax rate. The Company files consolidated federal and state income tax returns. The Company is no longer subject to federal and state income tax examinations for years prior to 2017. |
Unaudited Pro Forma Income Statement Information | Unaudited Pro Forma Income Statement Information The unaudited pro forma C Corp equivalent income tax expense information gives effect to the income tax expense had the Company been a C Corporation during the three and nine months ended September 30, 2019. The unaudited pro forma C Corp equivalent net income information, therefore, includes an adjustment for income tax expense as if the Company had been a C Corporation during the three and nine months ended September 30, 2019. The unaudited pro forma basic and diluted earnings per share information is computed using the unaudited pro forma C Corp equivalent net income and weighted average shares of common stock outstanding. There were no dilutive instruments outstanding during 2019, therefore, the unaudited pro forma C Corp equivalent basic and diluted earnings per share amounts are the same. |
Segment Reporting | Segment Reporting The Company’s operations consist of one reportable segment called community banking. While the Company’s management monitors both bank subsidiaries’ operations and profitability separately, these subsidiaries have been aggregated into one reportable segment due to the similarities in products and services, customer base, operations, profitability measures, and economic characteristics. |
Goodwill | Goodwill Goodwill represents the excess of the original cost over the fair value of assets acquired and liabilities assumed. Goodwill is not amortized but instead is subject to an annual impairment evaluation. The Company has selected December 31 as the date to perform the annual impairment test, and at December 31, 2019, the Company’s evaluation of goodwill indicated that goodwill was not impaired. Due to the economic weakness resulting from the COVID-19 pandemic, the Company completed a quantitative assessment of goodwill as of March 31, 2020 which indicated that goodwill was not impaired. Subsequently, the Company determined there were no adverse changes in criteria and key considerations to the previous assessment. Accordingly, the Company concluded that there is no impairment of goodwill as of September 30, 2020. Further goodwill impairment evaluations, which may result in goodwill impairment, may be necessary if events or circumstance changes would more likely than not reduce the fair value of a reporting unit below its carrying amount. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation without any impact on the reported amounts of net income or stockholders’ equity. |
Subsequent Events | Subsequent Events In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential of recognition or disclosure through the date the financial statements were issued. On October 20, 2020, Heartland Bank and State Bank of Lincoln, our two bank subsidiaries, entered into a Bank Merger Agreement providing for the merger of State Bank of Lincoln into Heartland Bank. If the merger is consummated, the resulting institution will be Heartland Bank, which will then be our sole bank subsidiary, and the branch locations of State Bank of Lincoln will operate as “State Bank of Lincoln, a division of Heartland Bank and Trust Company.” The proposed merger is subject to conditions, including, among others, approval by the FDIC and the Illinois Department of Financial and Professional Regulation. On November 2, 2020, the Company’s board of directors approved a stock repurchase program that authorizes the Company to repurchase up to $15 million of its common stock. The stock repurchase program will be in effect until December 31, 2021 with the timing of purchases and number of shares repurchased dependent upon a variety of factors including price, trading volume, corporate and regulatory requirements, and market conditions. The Company is not obligated to purchase any shares under the stock repurchase program, and the stock repurchase program may be suspended or discontinued at any time without notice. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016‑13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . ASU 2016‑13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016‑13 amends the accounting for credit losses on debt securities available-for-sale and purchased financial assets with credit deterioration. ASU 2016‑13 is effective for years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for years beginning after December 31, 2018, including interim periods within those years. The Company is currently evaluating the effect that this standard will have on the consolidated results of operations and financial position. In January 2017, the FASB issued ASU 2017‑04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This ASU simplifies measurement of goodwill and eliminates Step 2 from the goodwill impairment test. Under the ASU, a company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for annual or any interim goodwill impairment tests in years beginning after December 15, 2022, including interim periods within those years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. Entities may apply the provisions as of the beginning of the reporting period when the election is made and are available until December 31, 2022. The Company is currently evaluating the effect that this standard will have on the consolidated results of operations and financial position |
SECURITIES (Tables)
SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
SECURITIES | |
Summary of carrying balances of securities | September 30, December 31, 2020 2019 (dollars in thousands) Debt securities available-for-sale $ 814,798 $ 592,404 Debt securities held-to-maturity 74,510 88,477 Equity securities: Readily determinable fair value 3,262 3,241 No readily determinable fair value 1,552 1,148 Total securities $ 894,122 $ 685,270 |
Schedule of amortized cost and fair values of debt securities, with gross unrealized gains and losses. | September 30, 2020 Amortized Gross Gross Fair Value Available-for-sale: (dollars in thousands) U.S. government agency $ 100,462 $ 3,866 $ (2) $ 104,326 Municipal 232,795 7,962 (347) 240,410 Mortgage-backed: Agency residential 220,970 5,462 (115) 226,317 Agency commercial 166,444 4,831 (203) 171,072 Corporate 70,862 1,907 (96) 72,673 Total available-for-sale 791,533 24,028 (763) 814,798 Held-to-maturity: Municipal 26,830 1,480 — 28,310 Mortgage-backed: Agency residential 14,556 523 — 15,079 Agency commercial 33,124 2,378 — 35,502 Total held-to-maturity 74,510 4,381 — 78,891 Total debt securities $ 866,043 $ 28,409 $ (763) $ 893,689 December 31, 2019 Amortized Gross Gross Fair Value Available-for-sale: (dollars in thousands) U.S. government agency $ 49,113 $ 529 $ (27) $ 49,615 Municipal 131,241 2,503 (6) 133,738 Mortgage-backed: Agency residential 198,184 2,780 (286) 200,678 Agency commercial 133,730 1,516 (292) 134,954 Corporate 72,239 1,180 — 73,419 Total available-for-sale 584,507 8,508 (611) 592,404 Held-to-maturity: Municipal 45,239 1,340 — 46,579 Mortgage-backed: Agency residential 19,072 161 (170) 19,063 Agency commercial 24,166 775 (54) 24,887 Total held-to-maturity 88,477 2,276 (224) 90,529 Total debt securities $ 672,984 $ 10,784 $ (835) $ 682,933 |
Schedule of amortized cost and fair value of securities by contractual maturity | Available-for-Sale Held-to-Maturity Amortized Fair Value Amortized Fair Value (dollars in thousands) Due in 1 year or less $ 36,762 $ 37,033 $ 747 $ 749 Due after 1 year through 5 years 85,100 87,897 14,702 15,452 Due after 5 years through 10 years 183,944 191,538 10,490 11,186 Due after 10 years 98,313 100,941 891 923 Mortgage-backed: Agency residential 220,970 226,317 14,556 15,079 Agency commercial 166,444 171,072 33,124 35,502 Total $ 791,533 $ 814,798 $ 74,510 $ 78,891 |
Schedule of gains (losses) on securities | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Net realized gains (losses) on sales $ — $ — $ — $ — Net unrealized gains (losses) on equities: Readily determinable fair value (2) 55 3 170 No readily determinable fair value — (128) — (128) Gains (losses) on securities $ (2) $ (73) $ 3 $ 42 |
Schedule of gross unrealized losses and fair value of investments | Investments in a Continuous Unrealized Loss Position Less than 12 Months 12 Months or More Total September 30, 2020 Unrealized Fair Value Unrealized Fair Value Unrealized Fair Value Available-for-sale: (dollars in thousands) U.S. government agency $ (2) $ 3,493 $ — $ — $ (2) $ 3,493 Municipal (347) 28,955 — — (347) 28,955 Mortgage-backed: Agency residential (101) 20,386 (14) 4,378 (115) 24,764 Agency commercial (177) 22,668 (26) 3,471 (203) 26,139 Corporate (96) 9,858 — — (96) 9,858 Total available-for-sale (723) 85,360 (40) 7,849 (763) 93,209 Total debt securities $ (723) $ 85,360 $ (40) $ 7,849 $ (763) $ 93,209 Investments in a Continuous Unrealized Loss Position Less than 12 Months 12 Months or More Total December 31, 2019 Unrealized Fair Value Unrealized Fair Value Unrealized Fair Value Available-for-sale: (dollars in thousands) U.S. government agency $ (26) $ 18,865 $ (1) $ 1,998 $ (27) $ 20,863 Municipal (6) 894 — — (6) 894 Mortgage-backed: Agency residential (108) 25,563 (178) 27,296 (286) 52,859 Agency commercial (100) 20,056 (192) 15,704 (292) 35,760 Total available-for-sale (240) 65,378 (371) 44,998 (611) 110,376 Held-to-maturity: Mortgage-backed: Agency residential (30) 2,516 (140) 9,002 (170) 11,518 Agency commercial (47) 7,016 (7) 599 (54) 7,615 Total held-to-maturity (77) 9,532 (147) 9,601 (224) 19,133 Total debt securities $ (317) $ 74,910 $ (518) $ 54,599 $ (835) $ 129,509 |
LOANS AND THE ALLOWANCE FOR L_2
LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | |
Summary of Loans | September 30, December 31, 2020 2019 (dollars in thousands) Commercial and industrial $ 389,231 $ 307,175 Agricultural and farmland 235,597 207,776 Commercial real estate - owner occupied 225,345 231,162 Commercial real estate - non-owner occupied 532,454 579,757 Multi-family 199,441 179,073 Construction and land development 265,758 224,887 One-to-four family residential 308,365 313,580 Municipal, consumer, and other 123,448 120,416 Loans, before allowance for loan losses 2,279,639 2,163,826 Allowance for loan losses (31,654) (22,299) Loans, net of allowance for loan losses $ 2,247,985 $ 2,141,527 Paycheck Protection Program (PPP) loans (included above) Commercial and industrial $ 168,466 $ — Agricultural and farmland 4,179 — Municipal, consumer, and other 7,095 — Total PPP loans $ 179,740 $ — |
Schedule of activity in allowance for loan losses | Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and Three Months Ended September 30, 2020 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Allowance for loan losses: (dollars in thousands) Balance, June 30, 2020 $ 4,356 $ 2,890 $ 3,257 $ 6,767 $ 1,581 $ 3,366 $ 3,010 $ 4,496 $ 29,723 Provision for loan losses (98) (585) 86 2,496 614 179 138 (656) 2,174 Charge-offs (881) — (39) — — (26) (42) (90) (1,078) Recoveries 517 — — 5 — 198 46 69 835 Balance, September 30, 2020 $ 3,894 $ 2,305 $ 3,304 $ 9,268 $ 2,195 $ 3,717 $ 3,152 $ 3,819 $ 31,654 Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and Three Months Ended September 30, 2019 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Allowance for loan losses: (dollars in thousands) Balance, June 30, 2019 $ 5,187 $ 2,862 $ 2,487 $ 2,721 $ 1,153 $ 3,723 $ 3,569 $ 840 $ 22,542 Provision for loan losses (915) (133) (482) 521 (182) (601) (692) 3,168 684 Charge-offs (32) — (216) (111) (41) — (387) (150) (937) Recoveries 313 — 26 5 — 1 42 85 472 Balance, September 30, 2019 $ 4,553 $ 2,729 $ 1,815 $ 3,136 $ 930 $ 3,123 $ 2,532 $ 3,943 $ 22,761 Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and Nine Months Ended September 30, 2020 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Allowance for loan losses: (dollars in thousands) Balance, December 31, 2019 $ 4,441 $ 2,766 $ 1,779 $ 3,663 $ 1,024 $ 2,977 $ 2,540 $ 3,109 $ 22,299 Provision for loan losses 565 (434) 1,124 5,591 1,171 551 598 936 10,102 Charge-offs (1,690) (27) (39) (56) — (27) (154) (466) (2,459) Recoveries 578 — 440 70 — 216 168 240 1,712 Balance, September 30, 2020 $ 3,894 $ 2,305 $ 3,304 $ 9,268 $ 2,195 $ 3,717 $ 3,152 $ 3,819 $ 31,654 Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Consumer and and Owner Non-owner Construction Residential and Nine Months Ended September 30, 2019 Industrial Farmland Occupied Occupied Multi-Family and Land Real Estate Other Total Allowance for loan losses: (dollars in thousands) Balance, December 31, 2018 $ 3,748 $ 2,650 $ 2,506 $ 2,644 $ 912 $ 4,176 $ 2,782 $ 1,091 $ 20,509 Provision for loan losses 700 109 (356) 588 59 (1,478) 541 3,103 3,266 Charge-offs (315) (30) (382) (111) (41) (9) (1,026) (522) (2,436) Recoveries 420 — 47 15 — 434 235 271 1,422 Balance, September 30, 2019 $ 4,553 $ 2,729 $ 1,815 $ 3,136 $ 930 $ 3,123 $ 2,532 $ 3,943 $ 22,761 Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and September 30, 2020 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Loan balances: (dollars in thousands) Collectively evaluated for impairment $ 382,617 $ 220,094 $ 204,200 $ 485,307 $ 197,277 $ 259,453 $ 287,849 $ 109,898 $ 2,146,695 Individually evaluated for impairment 5,558 14,555 13,167 32,600 889 3,628 11,219 13,485 95,101 Acquired with deteriorated credit quality 1,056 948 7,978 14,547 1,275 2,677 9,297 65 37,843 Total $ 389,231 $ 235,597 $ 225,345 $ 532,454 $ 199,441 $ 265,758 $ 308,365 $ 123,448 $ 2,279,639 Allowance for loan losses: Collectively evaluated for impairment $ 2,190 $ 2,270 $ 2,509 $ 7,896 $ 2,180 $ 3,290 $ 2,336 $ 979 $ 23,650 Individually evaluated for impairment 1,588 33 434 884 — 226 796 2,840 6,801 Acquired with deteriorated credit quality 116 2 361 488 15 201 20 — 1,203 Total $ 3,894 $ 2,305 $ 3,304 $ 9,268 $ 2,195 $ 3,717 $ 3,152 $ 3,819 $ 31,654 Commercial Commercial Municipal, Commercial Agricultural Real Estate Real Estate Construction One-to-four Consumer, and and Owner Non-owner and Land Family and December 31, 2019 Industrial Farmland Occupied Occupied Multi-Family Development Residential Other Total Loan balances: (dollars in thousands) Collectively evaluated for impairment $ 294,006 $ 192,722 $ 211,744 $ 561,277 $ 176,273 $ 217,708 $ 291,624 $ 106,448 $ 2,051,802 Individually evaluated for impairment 10,733 13,966 10,927 3,398 1,324 3,782 11,349 13,872 69,351 Acquired with deteriorated credit quality 2,436 1,088 8,491 15,082 1,476 3,397 10,607 96 42,673 Total $ 307,175 $ 207,776 $ 231,162 $ 579,757 $ 179,073 $ 224,887 $ 313,580 $ 120,416 $ 2,163,826 Allowance for loan losses: Collectively evaluated for impairment $ 1,926 $ 2,576 $ 1,486 $ 3,591 $ 1,019 $ 2,283 $ 1,684 $ 931 $ 15,496 Individually evaluated for impairment 2,170 105 270 70 — 567 822 2,176 6,180 Acquired with deteriorated credit quality 345 85 23 2 5 127 34 2 623 Total $ 4,441 $ 2,766 $ 1,779 $ 3,663 $ 1,024 $ 2,977 $ 2,540 $ 3,109 $ 22,299 |
Schedule of loans individually evaluated for impairment by category | The following tables present loans individually evaluated for impairment by category of loans as of September 30, 2020 and December 31, 2019: Unpaid Principal Recorded Related September 30, 2020 Balance Investment Allowance With an allowance recorded: (dollars in thousands) Commercial and industrial $ 2,781 $ 2,781 $ 1,588 Agricultural and farmland 173 172 33 Commercial real estate - owner occupied 1,440 1,441 434 Commercial real estate - non-owner occupied 4,203 4,201 884 Multi-family — — — Construction and land development 2,055 2,055 226 One-to-four family residential 3,614 3,596 796 Municipal, consumer, and other 8,790 8,764 2,840 Total $ 23,056 $ 23,010 $ 6,801 With no related allowance: Commercial and industrial $ 2,777 $ 2,777 $ — Agricultural and farmland 14,383 14,383 — Commercial real estate - owner occupied 11,728 11,726 — Commercial real estate - non-owner occupied 28,462 28,399 — Multi-family 889 889 — Construction and land development 1,575 1,573 — One-to-four family residential 7,672 7,623 — Municipal, consumer, and other 4,733 4,721 — Total $ 72,219 $ 72,091 $ — Total Commercial and industrial $ 5,558 $ 5,558 $ 1,588 Agricultural and farmland 14,556 14,555 33 Commercial real estate - owner occupied 13,168 13,167 434 Commercial real estate - non-owner occupied 32,665 32,600 884 Multi-family 889 889 — Construction and land development 3,630 3,628 226 One-to-four family residential 11,286 11,219 796 Municipal, consumer, and other 13,523 13,485 2,840 Total $ 95,275 $ 95,101 $ 6,801 Unpaid Principal Recorded Related December 31, 2019 Balance Investment Allowance With an allowance recorded: (dollars in thousands) Commercial and industrial $ 4,292 $ 4,292 $ 2,170 Agricultural and farmland 590 590 105 Commercial real estate - owner occupied 830 830 270 Commercial real estate - non-owner occupied 99 99 70 Multi-family — — — Construction and land development 3,679 3,679 567 One-to-four family residential 3,401 3,390 822 Municipal, consumer, and other 9,138 9,111 2,176 Total $ 22,029 $ 21,991 $ 6,180 With no related allowance: Commercial and industrial $ 6,438 $ 6,441 $ — Agricultural and farmland 13,369 13,376 — Commercial real estate - owner occupied 10,089 10,097 — Commercial real estate - non-owner occupied 3,297 3,299 — Multi-family 1,328 1,324 — Construction and land development 104 103 — One-to-four family residential 7,986 7,959 — Municipal, consumer, and other 4,775 4,761 — Total $ 47,386 $ 47,360 $ — Total Commercial and industrial $ 10,730 $ 10,733 $ 2,170 Agricultural and farmland 13,959 13,966 105 Commercial real estate - owner occupied 10,919 10,927 270 Commercial real estate - non-owner occupied 3,396 3,398 70 Multi-family 1,328 1,324 — Construction and land development 3,783 3,782 567 One-to-four family residential 11,387 11,349 822 Municipal, consumer, and other 13,913 13,872 2,176 Total $ 69,415 $ 69,351 $ 6,180 The following table presents the average recorded investment and interest income recognized for loans individually evaluated for impairment by category of loans during the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized With an allowance recorded: (dollars in thousands) Commercial and industrial $ 2,763 $ 41 $ 4,957 $ 26 Agricultural and farmland 174 2 491 5 Commercial real estate - owner occupied 1,281 18 1,970 11 Commercial real estate - non-owner occupied 4,216 2 101 5 Multi-family — — — — Construction and land development 2,080 25 2,754 42 One-to-four family residential 3,587 24 2,082 16 Municipal, consumer, and other 8,823 42 9,254 99 Total $ 22,924 $ 154 $ 21,609 $ 204 With no related allowance: Commercial and industrial $ 2,894 $ 61 $ 5,480 $ — Agricultural and farmland 10,220 144 15,384 10 Commercial real estate - owner occupied 11,766 150 10,555 28 Commercial real estate - non-owner occupied 28,544 282 3,853 57 Multi-family 889 — 1,339 — Construction and land development 1,476 1 106 1 One-to-four family residential 7,500 63 9,904 74 Municipal, consumer, and other 4,763 21 4,832 — Total $ 68,052 $ 722 $ 51,453 $ 170 Total Commercial and industrial $ 5,657 $ 102 $ 10,437 $ 26 Agricultural and farmland 10,394 146 15,875 15 Commercial real estate - owner occupied 13,047 168 12,525 39 Commercial real estate - non-owner occupied 32,760 284 3,954 62 Multi-family 889 — 1,339 — Construction and land development 3,556 26 2,860 43 One-to-four family residential 11,087 87 11,986 90 Municipal, consumer, and other 13,586 63 14,086 99 Total $ 90,976 $ 876 $ 73,062 $ 374 Nine Months Ended September 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized With an allowance recorded: (dollars in thousands) Commercial and industrial $ 3,124 $ 129 $ 5,081 $ 115 Agricultural and farmland 307 6 404 12 Commercial real estate - owner occupied 1,141 56 1,998 90 Commercial real estate - non-owner occupied 1,504 7 102 5 Multi-family — — — — Construction and land development 2,571 91 2,842 131 One-to-four family residential 3,240 84 2,091 65 Municipal, consumer, and other 10,069 230 9,202 103 Total $ 21,956 $ 603 $ 21,720 $ 521 With no related allowance: Commercial and industrial $ 4,637 $ 213 $ 5,681 $ 150 Agricultural and farmland 13,187 500 15,889 352 Commercial real estate - owner occupied 11,367 401 10,640 360 Commercial real estate - non-owner occupied 17,358 388 4,000 111 Multi-family 299 — 1,349 9 Construction and land development 637 3 107 3 One-to-four family residential 8,167 266 10,107 194 Municipal, consumer, and other 3,660 78 4,871 71 Total $ 59,312 $ 1,849 $ 52,644 $ 1,250 Total Commercial and industrial $ 7,761 $ 342 $ 10,762 $ 265 Agricultural and farmland 13,494 506 16,293 364 Commercial real estate - owner occupied 12,508 457 12,638 450 Commercial real estate - non-owner occupied 18,862 395 4,102 116 Multi-family 299 — 1,349 9 Construction and land development 3,208 94 2,949 134 One-to-four family residential 11,407 350 12,198 259 Municipal, consumer, and other 13,729 308 14,073 174 Total $ 81,268 $ 2,452 $ 74,364 $ 1,771 |
Schedule of recorded investment on past due basis | Accruing Interest 30 - 89 Days 90+ Days Total September 30, 2020 Current Past Due Past Due Nonaccrual Loans (dollars in thousands) Commercial and industrial $ 388,158 $ 154 $ — $ 919 $ 389,231 Agricultural and farmland 231,349 — — 4,248 235,597 Commercial real estate - owner occupied 224,451 139 — 755 225,345 Commercial real estate - non-owner occupied 528,145 — — 4,309 532,454 Multi-family 198,552 889 — — 199,441 Construction and land development 263,803 1,410 — 545 265,758 One-to-four family residential 303,014 1,030 40 4,281 308,365 Municipal, consumer, and other 123,081 226 7 134 123,448 Total $ 2,260,553 $ 3,848 $ 47 $ 15,191 $ 2,279,639 Accruing Interest 30 - 89 Days 90+ Days Total December 31, 2019 Current Past Due Past Due Nonaccrual Loans (dollars in thousands) Commercial and industrial $ 301,975 $ 558 $ — $ 4,642 $ 307,175 Agricultural and farmland 201,519 — — 6,257 207,776 Commercial real estate - owner occupied 228,218 941 — 2,003 231,162 Commercial real estate - non-owner occupied 579,626 131 — — 579,757 Multi-family 177,696 — — 1,377 179,073 Construction and land development 224,716 140 — 31 224,887 One-to-four family residential 307,712 1,329 75 4,464 313,580 Municipal, consumer, and other 119,898 247 26 245 120,416 Total $ 2,141,360 $ 3,346 $ 101 $ 19,019 $ 2,163,826 |
Schedule of loans by category risk ratings | September 30, 2020 Pass Pass-Watch Substandard Doubtful Total (dollars in thousands) Commercial and industrial $ 365,872 $ 16,828 $ 6,531 $ — $ 389,231 Agricultural and farmland 200,879 19,415 15,303 — 235,597 Commercial real estate - owner occupied 183,836 27,901 13,608 — 225,345 Commercial real estate - non-owner occupied 452,942 43,941 35,571 — 532,454 Multi-family 170,134 28,418 889 — 199,441 Construction and land development 228,126 33,600 4,032 — 265,758 One-to-four family residential 284,072 11,285 13,008 — 308,365 Municipal, consumer, and other 109,542 425 13,481 — 123,448 Total $ 1,995,403 $ 181,813 $ 102,423 $ — $ 2,279,639 December 31, 2019 Pass Pass-Watch Substandard Doubtful Total (dollars in thousands) Commercial and industrial $ 267,645 $ 27,114 $ 12,416 $ — $ 307,175 Agricultural and farmland 180,735 12,267 14,774 — 207,776 Commercial real estate - owner occupied 198,710 21,745 10,707 — 231,162 Commercial real estate - non-owner occupied 531,694 46,092 1,971 — 579,757 Multi-family 175,807 1,771 1,495 — 179,073 Construction and land development 217,120 3,582 4,185 — 224,887 One-to-four family residential 287,036 13,546 12,998 — 313,580 Municipal, consumer, and other 106,063 479 13,874 — 120,416 Total $ 1,964,810 $ 126,596 $ 72,420 $ — $ 2,163,826 |
Schedule of financial effect of troubled debt restructurings | Charge-offs Recorded Investment and Specific Three Months Ended September 30, 2020 Number Pre-Modification Post-Modification Reserves (dollars in thousands) Commercial real estate - owner occupied 1 $ 853 $ 853 $ — Total 1 $ 853 $ 853 $ — Charge-offs Recorded Investment and Specific Three Months Ended September 30, 2019 Number Pre-Modification Post-Modification Reserves (dollars in thousands) One-to-four family residential 1 $ 21 $ 21 $ — Total 1 $ 21 $ 21 $ — Charge-offs Recorded Investment and Specific Nine Months Ended September 30, 2020 Number Pre-Modification Post-Modification Reserves (dollars in thousands) Commercial real estate - owner occupied 1 $ 853 $ 853 $ — Total 1 $ 853 $ 853 $ — Charge-offs Recorded Investment and Specific Nine Months Ended September 30, 2019 Number Pre-Modification Post-Modification Reserves (dollars in thousands) Commercial and industrial 3 $ 516 $ 516 $ — Agricultural and farmland 2 392 392 — Commercial real estate - owner occupied 1 170 170 — One-to-four family residential 1 21 21 — Total 7 $ 1,099 $ 1,099 $ — |
Schedule of changes in the accretable yield for loans acquired with deteriorated credit quality | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Beginning balance $ 1,378 $ 1,633 $ 1,662 $ 2,101 Reclassification from non-accretable difference 116 129 162 536 Accretion income (111) (231) (441) (1,106) Ending balance $ 1,383 $ 1,531 $ 1,383 $ 1,531 |
LOAN SERVICING (Tables)
LOAN SERVICING (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
LOAN SERVICING | |
Schedule of activity in mortgage servicing rights | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Beginning balance $ 5,839 $ 8,796 $ 8,518 $ 10,918 Capitalized servicing rights 658 344 1,432 720 Fair value adjustment: Attributable to payments and principal reductions (650) (483) (1,844) (1,227) Attributable to changes in valuation inputs and assumptions (276) (721) (2,535) (2,475) Total fair value adjustment (926) (1,204) (4,379) (3,702) Ending balance $ 5,571 $ 7,936 $ 5,571 $ 7,936 |
FORECLOSED ASSETS (Tables)
FORECLOSED ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
FORECLOSED ASSETS | |
Schedule of foreclosed assets activity | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Beginning balance $ 4,450 $ 9,707 $ 5,099 $ 9,559 Transfers from loans 172 27 499 1,788 Capitalized improvements — 41 6 41 Proceeds from sales (792) (3,173) (1,793) (4,142) Sales through loan origination — — (67) (360) Net gain (loss) on sales 125 135 269 240 Direct write-downs (98) (163) (156) (552) Ending balance $ 3,857 $ 6,574 $ 3,857 $ 6,574 |
Schedule of gains (losses) on foreclosed assets | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Direct write-downs $ (98) $ (163) $ (156) $ (552) Net gain (loss) on sales 125 135 269 240 Guarantee reimbursements — 8 7 69 Gain on settlement — — — 375 Gains (losses) on foreclosed assets $ 27 $ (20) $ 120 $ 132 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
DEPOSITS | |
Schedule of Company’s interest-bearing deposits | September 30, 2020 December 31, 2019 (dollars in thousands) Noninterest-bearing deposits $ 850,306 $ 689,116 Interest-bearing deposits: Interest-bearing demand 885,719 814,639 Money market 475,047 477,765 Savings 497,682 438,927 Time 307,907 356,408 Total interest-bearing deposits 2,166,355 2,087,739 Total deposits $ 3,016,661 $ 2,776,855 |
Schedule of interest expense on deposits | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Interest-bearing demand $ 123 $ 347 $ 536 $ 1,175 Money market 96 497 608 1,356 Savings 37 70 157 207 Time 587 1,086 2,179 3,356 Total interest expense on deposits $ 843 $ 2,000 $ 3,480 $ 6,094 |
SUBORDINATED DEBENTURES (Tables
SUBORDINATED DEBENTURES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Subordinated Notes | |
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | |
Schedule of carrying value of subordinated debentures | September 30, 2020 December 31, 2019 (dollars in thousands) Subordinated notes, at face value $ 40,000 $ — Unamortized issuance costs (782) — Subordinated notes, at carrying value $ 39,218 $ — |
JUNIOR SUBORDINATED DEBENTURE_2
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS (Tables) - Junior Subordinated Debentures Issued | 9 Months Ended |
Sep. 30, 2020 | |
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | |
Schedule of carrying value of subordinated debentures | September 30, 2020 December 31, 2019 (dollars in thousands) Heartland Bancorp, Inc. Capital Trust B $ 10,310 $ 10,310 Heartland Bancorp, Inc. Capital Trust C 10,310 10,310 Heartland Bancorp, Inc. Capital Trust D 5,155 5,155 FFBI Capital Trust I 7,217 7,217 National Bancorp Statutory Trust I 5,773 5,773 Total junior subordinated debentures, at face value 38,765 38,765 National Bancorp Statutory Trust I unamortized discount (1,133) (1,182) Total junior subordinated debentures, at carrying value $ 37,632 $ 37,583 |
Schedule of interest rates and maturities of the junior subordinated debentures | Interest Rate at Variable September 30, December 31, Maturity Interest Rate 2020 2019 Date Heartland Bancorp, Inc. Capital Trust B LIBOR plus 2.75 % 3.03 % 4.74 % April 6, 2034 Heartland Bancorp, Inc. Capital Trust C LIBOR plus 1.53 1.78 3.42 June 15, 2037 Heartland Bancorp, Inc. Capital Trust D LIBOR plus 1.35 1.60 3.24 September 15, 2037 FFBI Capital Trust I LIBOR plus 2.80 3.08 4.79 April 6, 2034 National Bancorp Statutory Trust I LIBOR plus 2.90 3.15 4.79 December 31, 2037 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Summary of fair values of Company’s derivative instrument assets and liabilities related to interest rate swap contracts | September 30, 2020 December 31, 2019 Notional Fair Notional Fair Amount Value Amount Value Designated as cash flow hedges: (dollars in thousands) Fair value recorded in other liabilities $ 17,000 $ (1,572) $ 17,000 $ (676) |
Schedule of the effect of interest rate contracts designated as cash flow hedges on the consolidated statements of income | Location of gross gain (loss) reclassified Amounts of gross gain (loss) from accumulated other reclassified from accumulated comprehensive income to income other comprehensive income Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Designated as cash flow hedges: (dollars in thousands) Taxable loan interest income $ — $ 33 $ 64 $ 83 Junior subordinated debentures interest expense (97) (9) (202) (7) Total $ (97) $ 24 $ (138) $ 76 |
Summary of interest rate swap agreements not designated as hedging instruments | September 30, 2020 December 31, 2019 Notional Fair Notional Fair Amount Value Amount Value Not designated as hedging instruments: (dollars in thousands) Fair value recorded in other assets: Interest rate swaps with a commercial borrower counterparty $ 140,820 $ 21,568 $ 114,140 $ 8,532 Interest rate swaps with a financial institution counterparty — — 24,216 110 Total fair value recorded in other assets $ 140,820 $ 21,568 $ 138,356 $ 8,642 Fair value recorded in other liabilities: Interest rate swaps with a commercial borrower counterparty $ — $ — $ 24,216 $ (110) Interest rate swaps with a financial institution counterparty 140,820 (21,568) 114,140 (8,532) Total fair value recorded in other liabilities $ 140,820 $ (21,568) $ 138,356 $ (8,642) |
Summary of the effect of interest rate contracts not designated as hedging instruments recognized in other noninterest income | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Not designated as hedging instruments: (dollars in thousands) Gross gains $ 2,188 $ 4,151 $ 17,369 $ 10,196 Gross losses (2,188) (4,151) (17,369) (10,159) Net gains (losses) $ — $ — $ — $ 37 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
Schedule of the activity and accumulated balances for components of other comprehensive income (loss) | Unrealized Gains (Losses) on Debt Securities Available-for-Sale Held-to-Maturity Derivatives Total (dollars in thousands) Three Months Ended September 30, 2020 Balance, June 30, 2020 $ 18,806 $ (133) $ (1,462) $ 17,211 Other comprehensive income before reclassifications 1,176 — 5 1,181 Reclassifications — 8 97 105 Other comprehensive income, before tax 1,176 8 102 1,286 Income tax expense 336 2 28 366 Other comprehensive income, after tax 840 6 74 920 Balance, September 30, 2020 $ 19,646 $ (127) $ (1,388) $ 18,131 Three Months Ended September 30, 2019 Balance, June 30, 2019 $ 8,063 $ (37) $ (590) $ 7,436 Other comprehensive income (loss) before reclassifications 1,289 — (208) 1,081 Reclassifications — (62) (24) (86) Other comprehensive income (loss) 1,289 (62) (232) 995 Balance, September 30, 2019 $ 9,352 $ (99) $ (822) $ 8,431 Nine Months Ended September 30, 2020 Balance, December 31, 2019 $ 8,659 $ (131) $ (696) $ 7,832 Other comprehensive income (loss) before reclassifications 15,368 — (1,098) 14,270 Reclassifications — 5 138 143 Other comprehensive income (loss), before tax 15,368 5 (960) 14,413 Income tax expense (benefit) 4,381 1 (268) 4,114 Other comprehensive income (loss), after tax 10,987 4 (692) 10,299 Balance, September 30, 2020 $ 19,646 $ (127) $ (1,388) $ 18,131 Nine Months Ended September 30, 2019 Balance, December 31, 2018 $ (4,561) $ 122 $ 151 $ (4,288) Other comprehensive income (loss) before reclassifications 13,913 — (897) 13,016 Reclassifications — (221) (76) (297) Other comprehensive income (loss) 13,913 (221) (973) 12,719 Balance, September 30, 2019 $ 9,352 $ (99) $ (822) $ 8,431 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
Schedule of allocation of federal and state income taxes between current and deferred portions | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 (dollars in thousands) Current Federal $ 2,921 $ — $ 5,619 $ — State 1,593 299 3,218 819 Total current 4,514 299 8,837 819 Deferred Federal (542) — (419) — State (271) — (209) — Total deferred (813) — (628) — Income tax expense $ 3,701 $ 299 $ 8,209 $ 819 |
Schedule of effective income tax rate reconciliation | Three Months Ended September 30, 2020 2019 Amount Percentage Amount Percentage (dollars in thousands) Federal income tax, at statutory rate $ 2,995 21.0 % $ — — % Increase (decrease) resulting from: Federally tax exempt interest income (372) (2.6) — — State taxes, net of federal benefit 1,039 7.3 299 1.7 Other 39 0.2 — — Income tax expense $ 3,701 25.9 % $ 299 1.7 % Nine Months Ended September 30, 2020 2019 Amount Percentage Amount Percentage (dollars in thousands) Federal income tax, at statutory rate $ 6,806 21.0 % $ — — % Increase (decrease) resulting from: Federally tax exempt interest income (1,099) (3.4) — — State taxes, net of federal benefit 2,397 7.4 819 1.6 Other 105 0.3 — — Income tax expense $ 8,209 25.3 % $ 819 1.6 % |
Schedule of components of the net deferred tax asset | September 30, December 31, 2020 2019 (dollars in thousands) Deferred tax assets Allowance for loan losses $ 8,927 $ 6,309 Compensation related 2,156 5,859 Deferred loan fees 1,937 497 Nonaccrual interest 617 858 Foreclosed assets 93 574 Goodwill 385 531 Other 1,084 785 Total deferred tax assets 15,199 15,413 Deferred tax liabilities Fixed asset depreciation 4,363 4,201 Mortgage servicing rights 1,588 2,428 Other purchase accounting adjustments 1,195 1,356 Intangible assets 645 841 Prepaid assets 475 504 Net unrealized gain on debt securities available-for-sale 6,632 2,251 Other 381 426 Total deferred tax liabilities 15,279 12,007 Net deferred tax asset (liability) $ (80) 3,406 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS PER SHARE | |
Schedule of reconciliations of the numerators and denominators used to compute basic and diluted earnings | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Numerator: Net income $ 10,563 $ 17,437 $ 24,203 $ 50,778 Earnings allocated to unvested restricted stock units (28) — (62) — Numerator for earnings per share - basic and diluted $ 10,535 $ 17,437 $ 24,141 $ 50,778 Denominator: Weighted average common shares outstanding 27,457,306 18,027,512 27,457,306 18,027,512 Dilutive effect of outstanding restricted stock units — — — — Weighted average common shares outstanding, including all dilutive potential shares 27,457,306 18,027,512 27,457,306 18,027,512 Earnings per share - Basic $ 0.38 $ 0.97 $ 0.88 $ 2.82 Earnings per share - Diluted $ 0.38 $ 0.97 $ 0.88 $ 2.82 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
STOCK-BASED COMPENSATION PLANS | |
Summary of stock-based compensation expense | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (dollars in thousands) Restricted stock units $ 100 $ — $ 263 $ — Stock appreciation rights (75) 64 (303) (51) Total stock-based compensation expense (benefit) $ 25 $ 64 $ (40) $ (51) |
Schedule of the summary of outstanding restricted stock units | Three Months Ended September 30, 2020 2019 Weighted Weighted Restricted Average Restricted Average Stock Units Grant Date Stock Units Grant Date Outstanding Fair Value Outstanding Fair Value Beginning balance 73,700 $ 18.98 — $ — Granted — — — — Vested — — — — Forfeited — — — — Ending balance 73,700 $ 18.98 — $ — Nine Months Ended September 30, 2020 2019 Weighted Weighted Restricted Average Restricted Average Stock Units Grant Date Stock Units Grant Date Outstanding Fair Value Outstanding Fair Value Beginning balance — $ — — $ — Granted 73,700 18.98 — — Vested — — — — Forfeited — — — — Ending balance 73,700 $ 18.98 — $ — A further summary of outstanding restricted stock units as of September 30, 2020, is as follows: Weighted Average Remaining Range of Grant Date Fair Values Outstanding Contractual Term $ 12.71 550 0.3 years $ 19.03 73,150 3.2 years |
Schedule of the status of stock appreciation rights and changes | Three Months Ended September 30, 2020 2019 Stock Weighted Stock Weighted Beginning balance 110,160 $ 16.32 42,840 $ 7.46 Granted — — 110,160 16.32 Exercised — — (42,840) 7.46 Forfeited — — — — Ending balance 110,160 $ 16.32 110,160 $ 16.32 Nine Months Ended September 30, 2020 2019 Stock Weighted Stock Weighted Beginning balance 110,160 $ 16.32 91,800 $ 5.73 Granted — — 110,160 16.32 Exercised — — (91,800) 5.73 Forfeited — — — — Ending balance 110,160 $ 16.32 110,160 $ 16.32 A further summary of outstanding stock appreciation rights as of September 30, 2020, is as follows: Weighted Average Remaining Range of Grant Date Assigned Values Outstanding Exercisable Contractual Term $ 16.32 110,160 87,210 8.9 years |
Schedule of assumptions used in valuing stock appreciation rights | September 30, December 31, 2020 2019 Risk-free interest rate 0.61 % 1.90 % Expected volatility 34.10 % 28.83 % Expected life (in years) 8.9 9.7 Expected dividend yield 5.35 % 3.16 % |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
REGULATORY MATTERS | |
Schedule of the Company's and the bank subsidiaries' actual and required capital amounts and ratios | Actual For Capital To Be Well September 30, 2020 Amount Ratio Amount Ratio Amount Ratio (dollars in thousands) Total Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 417,844 % $ 198,827 8.00 % N/A N/A Heartland Bank 333,344 183,710 8.00 $ 229,638 10.00 % State Bank of Lincoln 35,955 15,013 8.00 18,766 10.00 Tier 1 Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 347,552 % $ 149,120 6.00 % N/A N/A Heartland Bank 304,639 137,783 6.00 $ 183,710 8.00 % State Bank of Lincoln 33,602 11,260 6.00 15,013 8.00 Common Equity Tier 1 Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 311,085 % $ 111,840 4.50 % N/A N/A Heartland Bank 304,639 103,337 4.50 $ 149,265 6.50 % State Bank of Lincoln 33,602 8,445 4.50 12,198 6.50 Tier 1 Capital (to Average Assets) Consolidated HBT Financial, Inc. $ 347,552 % $ 138,524 4.00 % N/A N/A Heartland Bank 304,639 124,701 4.00 $ 155,876 5.00 % State Bank of Lincoln 33,602 13,691 4.00 17,114 5.00 Actual For Capital To Be Well December 31, 2019 Amount Ratio Amount Ratio Amount Ratio (dollars in thousands) Total Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 356,994 % $ 196,358 8.00 % N/A N/A Heartland Bank 315,516 180,071 8.00 $ 225,088 10.00 % State Bank of Lincoln 35,390 16,104 8.00 20,130 10.00 Tier 1 Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 334,695 % $ 147,268 6.00 % N/A N/A Heartland Bank 295,385 135,053 6.00 $ 180,071 8.00 % State Bank of Lincoln 33,222 12,078 6.00 16,104 8.00 Common Equity Tier 1 Capital (to Risk Weighted Assets) Consolidated HBT Financial, Inc. $ 298,277 % $ 110,451 4.50 % N/A N/A Heartland Bank 295,385 101,290 4.50 $ 146,307 6.50 % State Bank of Lincoln 33,222 9,058 4.50 13,084 6.50 Tier 1 Capital (to Average Assets) Consolidated HBT Financial, Inc. $ 334,695 % $ 129,027 4.00 % N/A N/A Heartland Bank 295,385 115,281 4.00 $ 144,102 5.00 % State Bank of Lincoln 33,222 13,531 4.00 16,914 5.00 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Summary of assets measured at fair value on a recurring basis | September 30, 2020 Level 1 Level 2 Level 3 Total (dollars in thousands) Debt securities available-for-sale: U.S. government agency $ — $ 104,326 $ — $ 104,326 Municipal — 240,410 — 240,410 Mortgage-backed: Agency residential — 226,317 — 226,317 Agency commercial — 171,072 — 171,072 Corporate — 72,673 — 72,673 Equity securities with readily determinable fair values 3,262 — — 3,262 Mortgage servicing rights — — 5,571 5,571 Derivative financial assets — 21,568 — 21,568 Derivative financial liabilities — 23,140 — 23,140 December 31, 2019 Level 1 Level 2 Level 3 Total (dollars in thousands) Debt securities available-for-sale: U.S. government agency $ — $ 49,615 $ — $ 49,615 Municipal — 133,738 — 133,738 Mortgage-backed: Agency residential — 200,678 — 200,678 Agency commercial — 134,954 — 134,954 Corporate — 73,419 — 73,419 Equity securities with readily determinable fair values 3,241 — — 3,241 Mortgage servicing rights — — 8,518 8,518 Derivative financial assets — 8,642 — 8,642 Derivative financial liabilities — 9,318 — 9,318 |
Schedule of quantitative information about the unobservable inputs used in recurring Level 3 fair value measurements | The following tables present additional information about the unobservable inputs used in the fair value measurement of the mortgage servicing rights (dollars in thousands): September 30, 2020 Fair Value Valuation Technique Unobservable Inputs Range Mortgage servicing rights $ 5,571 Discounted cash flows Constant pre-payment rates (CPR) 7.0% to 85.0% (18.2%) Discount rate 9.0% to 11.0% (9.0%) December 31, 2019 Fair Value Valuation Technique Unobservable Inputs Range Mortgage servicing rights $ 8,518 Discounted cash flows Constant pre-payment rates (CPR) 7.0% to 68.5% (12.3%) Discount rate 9.0% to 11.0% (9.0%) |
Summary of assets measured at fair value on a nonrecurring basis | September 30, 2020 Level 1 Level 2 Level 3 Total (dollars in thousands) Loans held for sale $ — $ 23,723 $ — $ 23,723 Collateral-dependent impaired loans — — 16,209 16,209 Bank premises held for sale — — 121 121 Foreclosed assets — — 3,857 3,857 December 31, 2019 Level 1 Level 2 Level 3 Total (dollars in thousands) Loans held for sale $ — $ 4,531 $ — $ 4,531 Collateral-dependent impaired loans — — 15,811 15,811 Bank premises held for sale — — 121 121 Foreclosed assets — — 5,099 5,099 |
Schedule of quantitative information about the unobservable inputs used in non-recurring Level 3 fair value measurements | The following tables present quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements (dollars in thousands): September 30, 2020 Fair Valuation Unobservable Inputs Range Collateral-dependent impaired loans $ 16,209 Appraisal of collateral Appraisal adjustments Not meaningful Bank premises held for sale 121 Appraisal Appraisal adjustments 7% (7%) Foreclosed assets 3,857 Appraisal Appraisal adjustments 7% (7%) December 31, 2019 Fair Valuation Unobservable Inputs Range Collateral-dependent impaired loans $ 15,811 Appraisal of collateral Appraisal adjustments Not meaningful Bank premises held for sale 121 Appraisal Appraisal adjustments 7% (7%) Foreclosed assets 5,099 Appraisal Appraisal adjustments 7% (7%) |
Summary information on the carrying amounts and estimated fair values of the Company’s financial instruments | Fair Value September 30, 2020 December 31, 2019 Hierarchy Carrying Estimated Carrying Estimated Level Amount Fair Value Amount Fair Value (dollars in thousands) Financial assets: Cash and cash equivalents Level 1 $ 236,724 $ 236,724 $ 283,971 $ 283,971 Interest-bearing time deposits with banks Level 1 — — 248 248 Debt securities held-to-maturity Level 2 74,510 78,891 88,477 90,529 Restricted stock Level 3 2,498 2,498 2,425 2,425 Loans, net Level 3 2,247,985 2,269,402 2,141,527 2,181,103 Investments in unconsolidated subsidiaries Level 3 1,165 1,165 1,165 1,165 Accrued interest receivable Level 2 13,820 13,820 13,951 13,951 Financial liabilities: Time deposits Level 3 307,907 309,806 356,408 355,340 Securities sold under agreements to repurchase Level 2 45,438 45,438 44,433 44,433 Subordinated notes Level 3 39,218 39,999 — — Junior subordinated debentures Level 3 37,632 24,844 37,583 31,959 Accrued interest payable Level 2 819 819 1,132 1,132 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of commitments and conditional obligations | Contractual Amount September 30, December 31, 2020 2019 (dollars in thousands) Commitments to extend credit $ 536,052 $ 542,705 Standby letters of credit 10,154 8,991 |
ACCOUNTING POLICIES (Details)
ACCOUNTING POLICIES (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($)segment | Dec. 31, 2019shares | Nov. 02, 2020USD ($) | Oct. 20, 2020subsidiary | |
ACCOUNTING POLICIES | ||||
Pro forma dilutive instruments | shares | 0 | |||
Provision for prepaid dividend | $ 0 | |||
Number of segments | segment | 1 | |||
Impairment of goodwill | $ 0 | |||
Subsequent Event | ||||
ACCOUNTING POLICIES | ||||
Number of bank subsidiaries entering into a merger agreement | subsidiary | 2 | |||
Authorized stock repurchase amount | $ 15,000 |
SECURITIES - Narrative (Details
SECURITIES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
SECURITIES | |||||
Adjustment to carrying value of equity securities with no readily determinable fair value | $ 0 | $ 128 | $ 0 | $ 128 | |
Carrying value of securities pledged to secure public and trust deposits | $ 349,412 | $ 349,412 | $ 284,895 | ||
Illinois | |||||
SECURITIES | |||||
Percentage of obligations of local municipalities | 41.00% | ||||
Percentage of general obligations in local municipalities | 87.00% |
SECURITIES - Carrying balances
SECURITIES - Carrying balances of securities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
SECURITIES | ||
Debt securities available-for-sale, at fair value | $ 814,798 | $ 592,404 |
Securities held-to-maturity | 74,510 | 88,477 |
Equity securities: Readily determinable fair value | 3,262 | 3,241 |
Equity securities: No readily determinable fair value | 1,552 | 1,148 |
Total securities | 894,122 | 685,270 |
Downward adjustment on equity securities with no readily determinable fair value | 165 | 165 |
Impairment on equity securities with no readily determinable value | 0 | 0 |
Upward adjustment on equity securities with no readily determinable fair value | $ 0 | $ 0 |
SECURITIES - Amortized cost and
SECURITIES - Amortized cost and Fair values of securities with gross unrealized gains and losses (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Available-for-sale | ||
Amortized Cost | $ 791,533 | $ 584,507 |
Gross Unrealized Gains | 24,028 | 8,508 |
Gross Unrealized Losses | (763) | (611) |
Fair Value | 814,798 | 592,404 |
Held-to-maturity | ||
Amortized Cost | 74,510 | 88,477 |
Gross Unrealized Gains | 4,381 | 2,276 |
Gross Unrealized Losses | (224) | |
Fair Value | 78,891 | 90,529 |
Total Amortized Cost | 866,043 | 672,984 |
Total Gross Unrealized Gains | 28,409 | 10,784 |
Total Gross Unrealized Losses | (763) | (835) |
Total Fair Value | 893,689 | 682,933 |
U.S. government agency | ||
Available-for-sale | ||
Amortized Cost | 100,462 | 49,113 |
Gross Unrealized Gains | 3,866 | 529 |
Gross Unrealized Losses | (2) | (27) |
Fair Value | 104,326 | 49,615 |
Municipal securities | ||
Available-for-sale | ||
Amortized Cost | 232,795 | 131,241 |
Gross Unrealized Gains | 7,962 | 2,503 |
Gross Unrealized Losses | (347) | (6) |
Fair Value | 240,410 | 133,738 |
Held-to-maturity | ||
Amortized Cost | 26,830 | 45,239 |
Gross Unrealized Gains | 1,480 | 1,340 |
Fair Value | 28,310 | 46,579 |
Mortgage-backed: Agency residential | ||
Available-for-sale | ||
Amortized Cost | 220,970 | 198,184 |
Gross Unrealized Gains | 5,462 | 2,780 |
Gross Unrealized Losses | (115) | (286) |
Fair Value | 226,317 | 200,678 |
Held-to-maturity | ||
Amortized Cost | 14,556 | 19,072 |
Gross Unrealized Gains | 523 | 161 |
Gross Unrealized Losses | (170) | |
Fair Value | 15,079 | 19,063 |
Mortgage-backed: Agency commercial | ||
Available-for-sale | ||
Amortized Cost | 166,444 | 133,730 |
Gross Unrealized Gains | 4,831 | 1,516 |
Gross Unrealized Losses | (203) | (292) |
Fair Value | 171,072 | 134,954 |
Held-to-maturity | ||
Amortized Cost | 33,124 | 24,166 |
Gross Unrealized Gains | 2,378 | 775 |
Gross Unrealized Losses | (54) | |
Fair Value | 35,502 | 24,887 |
Corporate | ||
Available-for-sale | ||
Amortized Cost | 70,862 | 72,239 |
Gross Unrealized Gains | 1,907 | 1,180 |
Gross Unrealized Losses | (96) | |
Fair Value | $ 72,673 | $ 73,419 |
SECURITIES - Amortized cost a_2
SECURITIES - Amortized cost and Fair values of securities with maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Amortized Cost | $ 791,533 | $ 584,507 |
Fair Value | ||
Fair Value | 814,798 | 592,404 |
Amortized Cost | ||
Securities held-to-maturity | 74,510 | 88,477 |
Fair Value | ||
Fair Value | 78,891 | 90,529 |
Mortgage-backed: Agency residential | ||
Amortized Cost | ||
Amortized Cost | 220,970 | 198,184 |
Fair Value | ||
Fair Value | 226,317 | 200,678 |
Amortized Cost | ||
Securities held-to-maturity | 14,556 | 19,072 |
Fair Value | ||
Fair Value | 15,079 | 19,063 |
Mortgage-backed: Agency commercial | ||
Amortized Cost | ||
Amortized Cost | 166,444 | 133,730 |
Fair Value | ||
Fair Value | 171,072 | 134,954 |
Amortized Cost | ||
Securities held-to-maturity | 33,124 | 24,166 |
Fair Value | ||
Fair Value | 35,502 | $ 24,887 |
Available-for-sale | ||
Amortized Cost | ||
Due in 1 year or less | 36,762 | |
Due after 1 year through 5 years | 85,100 | |
Due after 5 years through 10 years | 183,944 | |
Due after 10 years | 98,313 | |
Amortized Cost | 791,533 | |
Fair Value | ||
Due in 1 year or less | 37,033 | |
Due after 1 year through 5 years | 87,897 | |
Due after 5 years through 10 years | 191,538 | |
Due after 10 years | 100,941 | |
Fair Value | 814,798 | |
Available-for-sale | Mortgage-backed: Agency residential | ||
Amortized Cost | ||
Amortized Cost | 220,970 | |
Fair Value | ||
Fair Value | 226,317 | |
Available-for-sale | Mortgage-backed: Agency commercial | ||
Amortized Cost | ||
Amortized Cost | 166,444 | |
Fair Value | ||
Fair Value | 171,072 | |
Held-to-maturity | ||
Amortized Cost | ||
Due in 1 year or less | 747 | |
Due after 1 year through 5 years | 14,702 | |
Due after 5 years through 10 years | 10,490 | |
Due after 10 years | 891 | |
Securities held-to-maturity | 74,510 | |
Fair Value | ||
Due in 1 year or less | 749 | |
Due after 1 year through 5 years | 15,452 | |
Due after 5 years through 10 years | 11,186 | |
Due after 10 years | 923 | |
Fair Value | 78,891 | |
Held-to-maturity | Mortgage-backed: Agency residential | ||
Amortized Cost | ||
Securities held-to-maturity | 14,556 | |
Fair Value | ||
Fair Value | 15,079 | |
Held-to-maturity | Mortgage-backed: Agency commercial | ||
Amortized Cost | ||
Securities held-to-maturity | 33,124 | |
Fair Value | ||
Fair Value | $ 35,502 |
SECURITIES - Sale and Gain (los
SECURITIES - Sale and Gain (loss) on securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net unrealized gains (losses) on equities: | ||||
Readily determinable fair value | $ (2) | $ 55 | $ 3 | $ 170 |
No readily determinable fair value | (128) | (128) | ||
Gains (losses) on securities | $ (2) | $ (73) | $ 3 | $ 42 |
SECURITIES - Investments in a C
SECURITIES - Investments in a Continuous Unrealized Loss Position (Details) $ in Thousands | Sep. 30, 2020USD ($)item | Dec. 31, 2019USD ($) |
Available-for-sale: Unrealized Loss | ||
Less than 12 Months | $ (723) | $ (240) |
12 Months or More | (40) | (371) |
Total Unrealized Loss of Available-for-sale securities | (763) | (611) |
Held-to-maturity: Unrealized Loss | ||
Less than 12 Months | (77) | |
12 Months or More | (147) | |
Total Unrealized Loss of Held-to-maturity securities | (224) | |
Available-for-sale: Fair Value | ||
Less than 12 Months | 85,360 | 65,378 |
12 Months or More | 7,849 | 44,998 |
Total Fair Value Available-for-sale securities | 93,209 | 110,376 |
Held-to-maturity: Fair value | ||
Less than 12 Months | 9,532 | |
12 Months or More | 9,601 | |
Total Fair Value Held-to-maturity securities | 19,133 | |
Total: Unrealized Losses | ||
Less Than 12 Months | (723) | (317) |
12 Months or More | (40) | (518) |
Total Unrealized Losses | (763) | (835) |
Total: Fair Value | ||
Less than 12 Months | 85,360 | 74,910 |
12 Months or More | 7,849 | 54,599 |
Total Fair Value | $ 93,209 | 129,509 |
Number of securities in an unrealized loss position for a period of twelve months or more | item | 7 | |
Number of securities in an unrealized loss position for a period of less than twelve months | item | 58 | |
U.S. government agency | ||
Available-for-sale: Unrealized Loss | ||
Less than 12 Months | $ (2) | (26) |
12 Months or More | (1) | |
Total Unrealized Loss of Available-for-sale securities | (2) | (27) |
Available-for-sale: Fair Value | ||
Less than 12 Months | 3,493 | 18,865 |
12 Months or More | 1,998 | |
Total Fair Value Available-for-sale securities | 3,493 | 20,863 |
Municipal securities | ||
Available-for-sale: Unrealized Loss | ||
Less than 12 Months | (347) | (6) |
Total Unrealized Loss of Available-for-sale securities | (347) | (6) |
Available-for-sale: Fair Value | ||
Less than 12 Months | 28,955 | 894 |
Total Fair Value Available-for-sale securities | 28,955 | 894 |
Mortgage-backed: Agency residential | ||
Available-for-sale: Unrealized Loss | ||
Less than 12 Months | (101) | (108) |
12 Months or More | (14) | (178) |
Total Unrealized Loss of Available-for-sale securities | (115) | (286) |
Held-to-maturity: Unrealized Loss | ||
Less than 12 Months | (30) | |
12 Months or More | (140) | |
Total Unrealized Loss of Held-to-maturity securities | (170) | |
Available-for-sale: Fair Value | ||
Less than 12 Months | 20,386 | 25,563 |
12 Months or More | 4,378 | 27,296 |
Total Fair Value Available-for-sale securities | 24,764 | 52,859 |
Held-to-maturity: Fair value | ||
Less than 12 Months | 2,516 | |
12 Months or More | 9,002 | |
Total Fair Value Held-to-maturity securities | 11,518 | |
Mortgage-backed: Agency commercial | ||
Available-for-sale: Unrealized Loss | ||
Less than 12 Months | (177) | (100) |
12 Months or More | (26) | (192) |
Total Unrealized Loss of Available-for-sale securities | (203) | (292) |
Held-to-maturity: Unrealized Loss | ||
Less than 12 Months | (47) | |
12 Months or More | (7) | |
Total Unrealized Loss of Held-to-maturity securities | (54) | |
Available-for-sale: Fair Value | ||
Less than 12 Months | 22,668 | 20,056 |
12 Months or More | 3,471 | 15,704 |
Total Fair Value Available-for-sale securities | 26,139 | 35,760 |
Held-to-maturity: Fair value | ||
Less than 12 Months | 7,016 | |
12 Months or More | 599 | |
Total Fair Value Held-to-maturity securities | $ 7,615 | |
Corporate | ||
Available-for-sale: Unrealized Loss | ||
Less than 12 Months | (96) | |
Total Unrealized Loss of Available-for-sale securities | (96) | |
Available-for-sale: Fair Value | ||
Less than 12 Months | 9,858 | |
Total Fair Value Available-for-sale securities | $ 9,858 |
LOANS AND THE ALLOWANCE FOR L_3
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Categories of loans (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | $ 2,279,639 | $ 2,163,826 | ||||
Allowance for loan losses | (31,654) | $ (29,723) | (22,299) | $ (22,761) | $ (22,542) | $ (20,509) |
Loans, net of allowance for loan losses | 2,247,985 | 2,141,527 | ||||
Paycheck Protection Program (PPP) Loans | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 179,740 | |||||
Commercial and industrial | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 389,231 | 307,175 | ||||
Allowance for loan losses | (3,894) | (4,356) | (4,441) | (4,553) | (5,187) | (3,748) |
Commercial and industrial | Paycheck Protection Program (PPP) Loans | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 168,466 | |||||
Agricultural and farmland | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 235,597 | 207,776 | ||||
Allowance for loan losses | (2,305) | (2,890) | (2,766) | (2,729) | (2,862) | (2,650) |
Agricultural and farmland | Paycheck Protection Program (PPP) Loans | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 4,179 | |||||
Commercial real estate - owner occupied | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 225,345 | 231,162 | ||||
Allowance for loan losses | (3,304) | (3,257) | (1,779) | (1,815) | (2,487) | (2,506) |
Commercial real estate - non-owner occupied | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 532,454 | 579,757 | ||||
Allowance for loan losses | (9,268) | (6,767) | (3,663) | (3,136) | (2,721) | (2,644) |
Multi-family | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 199,441 | 179,073 | ||||
Allowance for loan losses | (2,195) | (1,581) | (1,024) | (930) | (1,153) | (912) |
Construction and land development | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 265,758 | 224,887 | ||||
Allowance for loan losses | (3,717) | (3,366) | (2,977) | (3,123) | (3,723) | (4,176) |
One-to-four family residential | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 308,365 | 313,580 | ||||
Allowance for loan losses | (3,152) | (3,010) | (2,540) | (2,532) | (3,569) | (2,782) |
Municipal, consumer, and other | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | 123,448 | 120,416 | ||||
Allowance for loan losses | (3,819) | $ (4,496) | $ (3,109) | $ (3,943) | $ (840) | $ (1,091) |
Municipal, consumer, and other | Paycheck Protection Program (PPP) Loans | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Loans, before allowance for loan losses | $ 7,095 |
LOANS AND THE ALLOWANCE FOR L_4
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Activity in the allowance for loan losses | ||||
Allowance for loan losses at beginning of period | $ 29,723 | $ 22,542 | $ 22,299 | $ 20,509 |
Provision for loan losses | 2,174 | 684 | 10,102 | 3,266 |
Charge-offs | (1,078) | (937) | (2,459) | (2,436) |
Recoveries | 835 | 472 | 1,712 | 1,422 |
Allowance for loan losses at end of period | 31,654 | 22,761 | 31,654 | 22,761 |
Commercial and industrial | ||||
Activity in the allowance for loan losses | ||||
Allowance for loan losses at beginning of period | 4,356 | 5,187 | 4,441 | 3,748 |
Provision for loan losses | (98) | (915) | 565 | 700 |
Charge-offs | (881) | (32) | (1,690) | (315) |
Recoveries | 517 | 313 | 578 | 420 |
Allowance for loan losses at end of period | 3,894 | 4,553 | 3,894 | 4,553 |
Agricultural and farmland | ||||
Activity in the allowance for loan losses | ||||
Allowance for loan losses at beginning of period | 2,890 | 2,862 | 2,766 | 2,650 |
Provision for loan losses | (585) | (133) | (434) | 109 |
Charge-offs | (27) | (30) | ||
Allowance for loan losses at end of period | 2,305 | 2,729 | 2,305 | 2,729 |
Commercial real estate - owner occupied | ||||
Activity in the allowance for loan losses | ||||
Allowance for loan losses at beginning of period | 3,257 | 2,487 | 1,779 | 2,506 |
Provision for loan losses | 86 | (482) | 1,124 | (356) |
Charge-offs | (39) | (216) | (39) | (382) |
Recoveries | 26 | 440 | 47 | |
Allowance for loan losses at end of period | 3,304 | 1,815 | 3,304 | 1,815 |
Commercial real estate - non-owner occupied | ||||
Activity in the allowance for loan losses | ||||
Allowance for loan losses at beginning of period | 6,767 | 2,721 | 3,663 | 2,644 |
Provision for loan losses | 2,496 | 521 | 5,591 | 588 |
Charge-offs | (111) | (56) | (111) | |
Recoveries | 5 | 5 | 70 | 15 |
Allowance for loan losses at end of period | 9,268 | 3,136 | 9,268 | 3,136 |
Multi-family | ||||
Activity in the allowance for loan losses | ||||
Allowance for loan losses at beginning of period | 1,581 | 1,153 | 1,024 | 912 |
Provision for loan losses | 614 | (182) | 1,171 | 59 |
Charge-offs | (41) | (41) | ||
Allowance for loan losses at end of period | 2,195 | 930 | 2,195 | 930 |
Construction and land development | ||||
Activity in the allowance for loan losses | ||||
Allowance for loan losses at beginning of period | 3,366 | 3,723 | 2,977 | 4,176 |
Provision for loan losses | 179 | (601) | 551 | (1,478) |
Charge-offs | (26) | (27) | (9) | |
Recoveries | 198 | 1 | 216 | 434 |
Allowance for loan losses at end of period | 3,717 | 3,123 | 3,717 | 3,123 |
One-to-four family residential | ||||
Activity in the allowance for loan losses | ||||
Allowance for loan losses at beginning of period | 3,010 | 3,569 | 2,540 | 2,782 |
Provision for loan losses | 138 | (692) | 598 | 541 |
Charge-offs | (42) | (387) | (154) | (1,026) |
Recoveries | 46 | 42 | 168 | 235 |
Allowance for loan losses at end of period | 3,152 | 2,532 | 3,152 | 2,532 |
Municipal, consumer, and other | ||||
Activity in the allowance for loan losses | ||||
Allowance for loan losses at beginning of period | 4,496 | 840 | 3,109 | 1,091 |
Provision for loan losses | (656) | 3,168 | 936 | 3,103 |
Charge-offs | (90) | (150) | (466) | (522) |
Recoveries | 69 | 85 | 240 | 271 |
Allowance for loan losses at end of period | $ 3,819 | $ 3,943 | $ 3,819 | $ 3,943 |
LOANS AND THE ALLOWANCE FOR L_5
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Recorded investments in loans and the allowance for loan losses (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Collectively evaluated for impairment, Loans | $ 2,146,695 | $ 2,051,802 | ||||
Individually evaluated for impairment, Loans | 95,101 | 69,351 | ||||
Total | 2,279,639 | 2,163,826 | ||||
Collectively evaluated for impairment, Allowance for loan losses | 23,650 | 15,496 | ||||
Individually evaluated for impairment, Allowance for loan losses | 6,801 | 6,180 | ||||
Total investments in loans | 31,654 | $ 29,723 | 22,299 | $ 22,761 | $ 22,542 | $ 20,509 |
Loans acquired with deteriorated credit quality | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Total | 37,843 | 42,673 | ||||
Individually evaluated for impairment, Allowance for loan losses | 1,203 | 623 | ||||
Commercial and industrial | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Collectively evaluated for impairment, Loans | 382,617 | 294,006 | ||||
Individually evaluated for impairment, Loans | 5,558 | 10,733 | ||||
Total | 389,231 | 307,175 | ||||
Collectively evaluated for impairment, Allowance for loan losses | 2,190 | 1,926 | ||||
Individually evaluated for impairment, Allowance for loan losses | 1,588 | 2,170 | ||||
Total investments in loans | 3,894 | 4,356 | 4,441 | 4,553 | 5,187 | 3,748 |
Commercial and industrial | Loans acquired with deteriorated credit quality | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Total | 1,056 | 2,436 | ||||
Individually evaluated for impairment, Allowance for loan losses | 116 | 345 | ||||
Agricultural and farmland | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Collectively evaluated for impairment, Loans | 220,094 | 192,722 | ||||
Individually evaluated for impairment, Loans | 14,555 | 13,966 | ||||
Total | 235,597 | 207,776 | ||||
Collectively evaluated for impairment, Allowance for loan losses | 2,270 | 2,576 | ||||
Individually evaluated for impairment, Allowance for loan losses | 33 | 105 | ||||
Total investments in loans | 2,305 | 2,890 | 2,766 | 2,729 | 2,862 | 2,650 |
Agricultural and farmland | Loans acquired with deteriorated credit quality | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Total | 948 | 1,088 | ||||
Individually evaluated for impairment, Allowance for loan losses | 2 | 85 | ||||
Commercial real estate - owner occupied | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Collectively evaluated for impairment, Loans | 204,200 | 211,744 | ||||
Individually evaluated for impairment, Loans | 13,167 | 10,927 | ||||
Total | 225,345 | 231,162 | ||||
Collectively evaluated for impairment, Allowance for loan losses | 2,509 | 1,486 | ||||
Individually evaluated for impairment, Allowance for loan losses | 434 | 270 | ||||
Total investments in loans | 3,304 | 3,257 | 1,779 | 1,815 | 2,487 | 2,506 |
Commercial real estate - owner occupied | Loans acquired with deteriorated credit quality | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Total | 7,978 | 8,491 | ||||
Individually evaluated for impairment, Allowance for loan losses | 361 | 23 | ||||
Commercial real estate - non-owner occupied | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Collectively evaluated for impairment, Loans | 485,307 | 561,277 | ||||
Individually evaluated for impairment, Loans | 32,600 | 3,398 | ||||
Total | 532,454 | 579,757 | ||||
Collectively evaluated for impairment, Allowance for loan losses | 7,896 | 3,591 | ||||
Individually evaluated for impairment, Allowance for loan losses | 884 | 70 | ||||
Total investments in loans | 9,268 | 6,767 | 3,663 | 3,136 | 2,721 | 2,644 |
Commercial real estate - non-owner occupied | Loans acquired with deteriorated credit quality | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Total | 14,547 | 15,082 | ||||
Individually evaluated for impairment, Allowance for loan losses | 488 | 2 | ||||
Multi-family | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Collectively evaluated for impairment, Loans | 197,277 | 176,273 | ||||
Individually evaluated for impairment, Loans | 889 | 1,324 | ||||
Total | 199,441 | 179,073 | ||||
Collectively evaluated for impairment, Allowance for loan losses | 2,180 | 1,019 | ||||
Total investments in loans | 2,195 | 1,581 | 1,024 | 930 | 1,153 | 912 |
Multi-family | Loans acquired with deteriorated credit quality | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Total | 1,275 | 1,476 | ||||
Individually evaluated for impairment, Allowance for loan losses | 15 | 5 | ||||
Construction and land development | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Collectively evaluated for impairment, Loans | 259,453 | 217,708 | ||||
Individually evaluated for impairment, Loans | 3,628 | 3,782 | ||||
Total | 265,758 | 224,887 | ||||
Collectively evaluated for impairment, Allowance for loan losses | 3,290 | 2,283 | ||||
Individually evaluated for impairment, Allowance for loan losses | 226 | 567 | ||||
Total investments in loans | 3,717 | 3,366 | 2,977 | 3,123 | 3,723 | 4,176 |
Construction and land development | Loans acquired with deteriorated credit quality | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Total | 2,677 | 3,397 | ||||
Individually evaluated for impairment, Allowance for loan losses | 201 | 127 | ||||
One-to-four family residential | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Collectively evaluated for impairment, Loans | 287,849 | 291,624 | ||||
Individually evaluated for impairment, Loans | 11,219 | 11,349 | ||||
Total | 308,365 | 313,580 | ||||
Collectively evaluated for impairment, Allowance for loan losses | 2,336 | 1,684 | ||||
Individually evaluated for impairment, Allowance for loan losses | 796 | 822 | ||||
Total investments in loans | 3,152 | 3,010 | 2,540 | 2,532 | 3,569 | 2,782 |
One-to-four family residential | Loans acquired with deteriorated credit quality | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Total | 9,297 | 10,607 | ||||
Individually evaluated for impairment, Allowance for loan losses | 20 | 34 | ||||
Municipal, consumer, and other | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Collectively evaluated for impairment, Loans | 109,898 | 106,448 | ||||
Individually evaluated for impairment, Loans | 13,485 | 13,872 | ||||
Total | 123,448 | 120,416 | ||||
Collectively evaluated for impairment, Allowance for loan losses | 979 | 931 | ||||
Individually evaluated for impairment, Allowance for loan losses | 2,840 | 2,176 | ||||
Total investments in loans | 3,819 | $ 4,496 | 3,109 | $ 3,943 | $ 840 | $ 1,091 |
Municipal, consumer, and other | Loans acquired with deteriorated credit quality | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Total | $ 65 | 96 | ||||
Individually evaluated for impairment, Allowance for loan losses | $ 2 |
LOANS AND THE ALLOWANCE FOR L_6
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Individually evaluated for impairment by category of loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Unpaid Principal Balance | |||||
With an allowance recorded | $ 23,056 | $ 23,056 | $ 22,029 | ||
With no related allowance | 72,219 | 72,219 | 47,386 | ||
Total | 95,275 | 95,275 | 69,415 | ||
Recorded Investment | |||||
With an allowance recorded | 23,010 | 23,010 | 21,991 | ||
With no related allowance | 72,091 | 72,091 | 47,360 | ||
Total | 95,101 | 95,101 | 69,351 | ||
Related Allowance | 6,801 | 6,801 | 6,180 | ||
Average Recorded Investment | |||||
With an allowance recorded | 22,924 | $ 21,609 | 21,956 | $ 21,720 | |
With no related allowance | 68,052 | 51,453 | 59,312 | 52,644 | |
Total | 90,976 | 73,062 | 81,268 | 74,364 | |
Interest Income Recognized | |||||
With an allowance recorded | 154 | 204 | 603 | 521 | |
With no related allowance | 722 | 170 | 1,849 | 1,250 | |
Total | 876 | 374 | 2,452 | 1,771 | |
Commercial and industrial | |||||
Unpaid Principal Balance | |||||
With an allowance recorded | 2,781 | 2,781 | 4,292 | ||
With no related allowance | 2,777 | 2,777 | 6,438 | ||
Total | 5,558 | 5,558 | 10,730 | ||
Recorded Investment | |||||
With an allowance recorded | 2,781 | 2,781 | 4,292 | ||
With no related allowance | 2,777 | 2,777 | 6,441 | ||
Total | 5,558 | 5,558 | 10,733 | ||
Related Allowance | 1,588 | 1,588 | 2,170 | ||
Average Recorded Investment | |||||
With an allowance recorded | 2,763 | 4,957 | 3,124 | 5,081 | |
With no related allowance | 2,894 | 5,480 | 4,637 | 5,681 | |
Total | 5,657 | 10,437 | 7,761 | 10,762 | |
Interest Income Recognized | |||||
With an allowance recorded | 41 | 26 | 129 | 115 | |
With no related allowance | 61 | 213 | 150 | ||
Total | 102 | 26 | 342 | 265 | |
Agricultural and farmland | |||||
Unpaid Principal Balance | |||||
With an allowance recorded | 173 | 173 | 590 | ||
With no related allowance | 14,383 | 14,383 | 13,369 | ||
Total | 14,556 | 14,556 | 13,959 | ||
Recorded Investment | |||||
With an allowance recorded | 172 | 172 | 590 | ||
With no related allowance | 14,383 | 14,383 | 13,376 | ||
Total | 14,555 | 14,555 | 13,966 | ||
Related Allowance | 33 | 33 | 105 | ||
Average Recorded Investment | |||||
With an allowance recorded | 174 | 491 | 307 | 404 | |
With no related allowance | 10,220 | 15,384 | 13,187 | 15,889 | |
Total | 10,394 | 15,875 | 13,494 | 16,293 | |
Interest Income Recognized | |||||
With an allowance recorded | 2 | 5 | 6 | 12 | |
With no related allowance | 144 | 10 | 500 | 352 | |
Total | 146 | 15 | 506 | 364 | |
Commercial real estate - owner occupied | |||||
Unpaid Principal Balance | |||||
With an allowance recorded | 1,440 | 1,440 | 830 | ||
With no related allowance | 11,728 | 11,728 | 10,089 | ||
Total | 13,168 | 13,168 | 10,919 | ||
Recorded Investment | |||||
With an allowance recorded | 1,441 | 1,441 | 830 | ||
With no related allowance | 11,726 | 11,726 | 10,097 | ||
Total | 13,167 | 13,167 | 10,927 | ||
Related Allowance | 434 | 434 | 270 | ||
Average Recorded Investment | |||||
With an allowance recorded | 1,281 | 1,970 | 1,141 | 1,998 | |
With no related allowance | 11,766 | 10,555 | 11,367 | 10,640 | |
Total | 13,047 | 12,525 | 12,508 | 12,638 | |
Interest Income Recognized | |||||
With an allowance recorded | 18 | 11 | 56 | 90 | |
With no related allowance | 150 | 28 | 401 | 360 | |
Total | 168 | 39 | 457 | 450 | |
Commercial real estate - non-owner occupied | |||||
Unpaid Principal Balance | |||||
With an allowance recorded | 4,203 | 4,203 | 99 | ||
With no related allowance | 28,462 | 28,462 | 3,297 | ||
Total | 32,665 | 32,665 | 3,396 | ||
Recorded Investment | |||||
With an allowance recorded | 4,201 | 4,201 | 99 | ||
With no related allowance | 28,399 | 28,399 | 3,299 | ||
Total | 32,600 | 32,600 | 3,398 | ||
Related Allowance | 884 | 884 | 70 | ||
Average Recorded Investment | |||||
With an allowance recorded | 4,216 | 101 | 1,504 | 102 | |
With no related allowance | 28,544 | 3,853 | 17,358 | 4,000 | |
Total | 32,760 | 3,954 | 18,862 | 4,102 | |
Interest Income Recognized | |||||
With an allowance recorded | 2 | 5 | 7 | 5 | |
With no related allowance | 282 | 57 | 388 | 111 | |
Total | 284 | 62 | 395 | 116 | |
Multi-family | |||||
Unpaid Principal Balance | |||||
With no related allowance | 889 | 889 | 1,328 | ||
Total | 889 | 889 | 1,328 | ||
Recorded Investment | |||||
With no related allowance | 889 | 889 | 1,324 | ||
Total | 889 | 889 | 1,324 | ||
Average Recorded Investment | |||||
With no related allowance | 889 | 1,339 | 299 | 1,349 | |
Total | 889 | 1,339 | 299 | 1,349 | |
Interest Income Recognized | |||||
With no related allowance | 9 | ||||
Total | 9 | ||||
Construction and land development | |||||
Unpaid Principal Balance | |||||
With an allowance recorded | 2,055 | 2,055 | 3,679 | ||
With no related allowance | 1,575 | 1,575 | 104 | ||
Total | 3,630 | 3,630 | 3,783 | ||
Recorded Investment | |||||
With an allowance recorded | 2,055 | 2,055 | 3,679 | ||
With no related allowance | 1,573 | 1,573 | 103 | ||
Total | 3,628 | 3,628 | 3,782 | ||
Related Allowance | 226 | 226 | 567 | ||
Average Recorded Investment | |||||
With an allowance recorded | 2,080 | 2,754 | 2,571 | 2,842 | |
With no related allowance | 1,476 | 106 | 637 | 107 | |
Total | 3,556 | 2,860 | 3,208 | 2,949 | |
Interest Income Recognized | |||||
With an allowance recorded | 25 | 42 | 91 | 131 | |
With no related allowance | 1 | 1 | 3 | 3 | |
Total | 26 | 43 | 94 | 134 | |
One-to-four family residential | |||||
Unpaid Principal Balance | |||||
With an allowance recorded | 3,614 | 3,614 | 3,401 | ||
With no related allowance | 7,672 | 7,672 | 7,986 | ||
Total | 11,286 | 11,286 | 11,387 | ||
Recorded Investment | |||||
With an allowance recorded | 3,596 | 3,596 | 3,390 | ||
With no related allowance | 7,623 | 7,623 | 7,959 | ||
Total | 11,219 | 11,219 | 11,349 | ||
Related Allowance | 796 | 796 | 822 | ||
Average Recorded Investment | |||||
With an allowance recorded | 3,587 | 2,082 | 3,240 | 2,091 | |
With no related allowance | 7,500 | 9,904 | 8,167 | 10,107 | |
Total | 11,087 | 11,986 | 11,407 | 12,198 | |
Interest Income Recognized | |||||
With an allowance recorded | 24 | 16 | 84 | 65 | |
With no related allowance | 63 | 74 | 266 | 194 | |
Total | 87 | 90 | 350 | 259 | |
Municipal, consumer, and other | |||||
Unpaid Principal Balance | |||||
With an allowance recorded | 8,790 | 8,790 | 9,138 | ||
With no related allowance | 4,733 | 4,733 | 4,775 | ||
Total | 13,523 | 13,523 | 13,913 | ||
Recorded Investment | |||||
With an allowance recorded | 8,764 | 8,764 | 9,111 | ||
With no related allowance | 4,721 | 4,721 | 4,761 | ||
Total | 13,485 | 13,485 | 13,872 | ||
Related Allowance | 2,840 | 2,840 | $ 2,176 | ||
Average Recorded Investment | |||||
With an allowance recorded | 8,823 | 9,254 | 10,069 | 9,202 | |
With no related allowance | 4,763 | 4,832 | 3,660 | 4,871 | |
Total | 13,586 | 14,086 | 13,729 | 14,073 | |
Interest Income Recognized | |||||
With an allowance recorded | 42 | 99 | 230 | 103 | |
With no related allowance | 21 | 78 | 71 | ||
Total | $ 63 | $ 99 | $ 308 | $ 174 |
LOANS AND THE ALLOWANCE FOR L_7
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Past Due Status (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accruing Interest | ||
Current | $ 2,260,553 | $ 2,141,360 |
Nonaccrual | 15,191 | 19,019 |
Total | 2,279,639 | 2,163,826 |
30 - 89 Days Past Due | ||
Accruing Interest | ||
Past due | 3,848 | 3,346 |
90+ Days Past Due | ||
Accruing Interest | ||
Past due | 47 | 101 |
Commercial and industrial | ||
Accruing Interest | ||
Current | 388,158 | 301,975 |
Nonaccrual | 919 | 4,642 |
Total | 389,231 | 307,175 |
Commercial and industrial | 30 - 89 Days Past Due | ||
Accruing Interest | ||
Past due | 154 | 558 |
Agricultural and farmland | ||
Accruing Interest | ||
Current | 231,349 | 201,519 |
Nonaccrual | 4,248 | 6,257 |
Total | 235,597 | 207,776 |
Commercial real estate - owner occupied | ||
Accruing Interest | ||
Current | 224,451 | 228,218 |
Nonaccrual | 755 | 2,003 |
Total | 225,345 | 231,162 |
Commercial real estate - owner occupied | 30 - 89 Days Past Due | ||
Accruing Interest | ||
Past due | 139 | 941 |
Commercial real estate - non-owner occupied | ||
Accruing Interest | ||
Current | 528,145 | 579,626 |
Nonaccrual | 4,309 | |
Total | 532,454 | 579,757 |
Commercial real estate - non-owner occupied | 30 - 89 Days Past Due | ||
Accruing Interest | ||
Past due | 131 | |
Multi-family | ||
Accruing Interest | ||
Current | 198,552 | 177,696 |
Nonaccrual | 1,377 | |
Total | 199,441 | 179,073 |
Multi-family | 30 - 89 Days Past Due | ||
Accruing Interest | ||
Past due | 889 | |
Construction and land development | ||
Accruing Interest | ||
Current | 263,803 | 224,716 |
Nonaccrual | 545 | 31 |
Total | 265,758 | 224,887 |
Construction and land development | 30 - 89 Days Past Due | ||
Accruing Interest | ||
Past due | 1,410 | 140 |
One-to-four family residential | ||
Accruing Interest | ||
Current | 303,014 | 307,712 |
Nonaccrual | 4,281 | 4,464 |
Total | 308,365 | 313,580 |
One-to-four family residential | 30 - 89 Days Past Due | ||
Accruing Interest | ||
Past due | 1,030 | 1,329 |
One-to-four family residential | 90+ Days Past Due | ||
Accruing Interest | ||
Past due | 40 | 75 |
Municipal, consumer, and other | ||
Accruing Interest | ||
Current | 123,081 | 119,898 |
Nonaccrual | 134 | 245 |
Total | 123,448 | 120,416 |
Municipal, consumer, and other | 30 - 89 Days Past Due | ||
Accruing Interest | ||
Past due | 226 | 247 |
Municipal, consumer, and other | 90+ Days Past Due | ||
Accruing Interest | ||
Past due | $ 7 | $ 26 |
LOANS AND THE ALLOWANCE FOR L_8
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Assigned Risk Ratings (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | $ 2,279,639 | $ 2,163,826 |
Pass | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 1,995,403 | 1,964,810 |
Pass-Watch | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 181,813 | 126,596 |
Substandard | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 102,423 | 72,420 |
Commercial and industrial | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 389,231 | 307,175 |
Commercial and industrial | Pass | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 365,872 | 267,645 |
Commercial and industrial | Pass-Watch | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 16,828 | 27,114 |
Commercial and industrial | Substandard | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 6,531 | 12,416 |
Agricultural and farmland | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 235,597 | 207,776 |
Agricultural and farmland | Pass | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 200,879 | 180,735 |
Agricultural and farmland | Pass-Watch | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 19,415 | 12,267 |
Agricultural and farmland | Substandard | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 15,303 | 14,774 |
Commercial real estate - owner occupied | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 225,345 | 231,162 |
Commercial real estate - owner occupied | Pass | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 183,836 | 198,710 |
Commercial real estate - owner occupied | Pass-Watch | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 27,901 | 21,745 |
Commercial real estate - owner occupied | Substandard | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 13,608 | 10,707 |
Commercial real estate - non-owner occupied | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 532,454 | 579,757 |
Commercial real estate - non-owner occupied | Pass | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 452,942 | 531,694 |
Commercial real estate - non-owner occupied | Pass-Watch | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 43,941 | 46,092 |
Commercial real estate - non-owner occupied | Substandard | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 35,571 | 1,971 |
Multi-family | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 199,441 | 179,073 |
Multi-family | Pass | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 170,134 | 175,807 |
Multi-family | Pass-Watch | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 28,418 | 1,771 |
Multi-family | Substandard | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 889 | 1,495 |
Construction and land development | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 265,758 | 224,887 |
Construction and land development | Pass | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 228,126 | 217,120 |
Construction and land development | Pass-Watch | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 33,600 | 3,582 |
Construction and land development | Substandard | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 4,032 | 4,185 |
One-to-four family residential | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 308,365 | 313,580 |
One-to-four family residential | Pass | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 284,072 | 287,036 |
One-to-four family residential | Pass-Watch | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 11,285 | 13,546 |
One-to-four family residential | Substandard | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 13,008 | 12,998 |
Municipal, consumer, and other | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 123,448 | 120,416 |
Municipal, consumer, and other | Pass | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 109,542 | 106,063 |
Municipal, consumer, and other | Pass-Watch | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | 425 | 479 |
Municipal, consumer, and other | Substandard | ||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||
Total | $ 13,481 | $ 13,874 |
LOANS AND THE ALLOWANCE FOR L_9
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Financial Effect of Troubled Debt Restructurings (Details) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($)loan | Sep. 30, 2019USD ($)loan | Jun. 30, 2019USD ($) | Sep. 30, 2020USD ($)loan | Sep. 30, 2019USD ($)loan | Dec. 31, 2019USD ($) | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Number of Loans | loan | 1 | 1 | 1 | 7 | ||
Recorded Investment, Pre-Modification | $ 853,000 | $ 21,000 | $ 853,000 | $ 1,099,000 | ||
Recorded Investment, Post-Modification | 853,000 | 21,000 | 853,000 | $ 1,099,000 | ||
Troubled debt restructuring subsequent payment defaults within 12 months | 0 | $ 0 | $ 0 | 0 | ||
Troubled debt restructurings | $ 9,038,000 | $ 9,038,000 | $ 9,315,000 | |||
Commercial and industrial | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Number of Loans | loan | 3 | |||||
Recorded Investment, Pre-Modification | $ 516,000 | |||||
Recorded Investment, Post-Modification | $ 516,000 | |||||
Agricultural and farmland | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Number of Loans | loan | 2 | |||||
Recorded Investment, Pre-Modification | $ 392,000 | |||||
Recorded Investment, Post-Modification | $ 392,000 | |||||
Commercial real estate - owner occupied | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Number of Loans | loan | 1 | 1 | 1 | |||
Recorded Investment, Pre-Modification | $ 853,000 | $ 853,000 | $ 170,000 | |||
Recorded Investment, Post-Modification | $ 853,000 | $ 853,000 | $ 170,000 | |||
One-to-four family residential | ||||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | ||||||
Number of Loans | loan | 1 | 1 | ||||
Recorded Investment, Pre-Modification | $ 21,000 | $ 21,000 | ||||
Recorded Investment, Post-Modification | $ 21,000 | $ 21,000 |
LOANS AND THE ALLOWANCE FOR _10
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Accretable Yield For Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Changes in accretable yield for loans acquired with deteriorated credit quality | ||||
Beginning balance | $ 1,378 | $ 1,633 | $ 1,662 | $ 2,101 |
Reclassification from non-accretable difference | 116 | 129 | 162 | 536 |
Accretion income | (111) | (231) | (441) | (1,106) |
Ending balance | $ 1,383 | $ 1,531 | $ 1,383 | $ 1,531 |
LOAN SERVICING - Mortgage Servi
LOAN SERVICING - Mortgage Servicing Rights (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | |||||
Beginning balance | $ 5,839 | $ 8,796 | $ 8,518 | ||
Capitalized servicing rights | 658 | 344 | |||
Attributable to payments and principal reductions | (650) | (483) | |||
Attributable to changes in valuation inputs and assumptions | (276) | (721) | |||
Fair value adjustment | 926 | 1,204 | |||
Ending balance | 5,571 | 7,936 | 5,571 | $ 7,936 | $ 8,518 |
Mortgage Loans | |||||
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | |||||
Beginning balance | 8,518 | 10,918 | 10,918 | ||
Capitalized servicing rights | 1,432 | 720 | |||
Attributable to payments and principal reductions | (1,844) | (1,227) | |||
Attributable to changes in valuation inputs and assumptions | (2,535) | (2,475) | |||
Fair value adjustment | 4,379 | 3,702 | |||
Ending balance | $ 5,571 | $ 7,936 | 5,571 | $ 7,936 | 8,518 |
Mortgage loans serviced for others | $ 1,085,957 | $ 1,152,535 |
FORECLOSED ASSETS - Activity (D
FORECLOSED ASSETS - Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
FORECLOSED ASSETS | ||||
Beginning balance | $ 4,450 | $ 9,707 | $ 5,099 | $ 9,559 |
Transfers from loans | 172 | 27 | 499 | 1,788 |
Capitalized improvements | 41 | 6 | 41 | |
Proceeds from sales | (792) | (3,173) | (1,793) | (4,142) |
Sales through loan origination | (67) | (360) | ||
Net gain (loss) on sales | 125 | 135 | 269 | 240 |
Direct write-downs | (98) | (163) | (156) | (552) |
Ending balance | $ 3,857 | $ 6,574 | $ 3,857 | $ 6,574 |
FORECLOSED ASSETS - Gains (loss
FORECLOSED ASSETS - Gains (losses) on Foreclosed Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
FORECLOSED ASSETS | ||||
Direct write-downs | $ (98) | $ (163) | $ (156) | $ (552) |
Net gain (loss) on sales | 125 | 135 | 269 | 240 |
Guarantee reimbursements | 8 | 7 | 69 | |
Gain on settlement | 375 | |||
Gains (losses) on foreclosed assets | $ 27 | $ (20) | $ 120 | $ 132 |
FORECLOSED ASSETS - Additional
FORECLOSED ASSETS - Additional Information (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2020USD ($)loan | Dec. 31, 2019USD ($)loan | Jun. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
FORECLOSED ASSETS | ||||||
Carrying value of foreclosed asset | $ 3,857 | $ 5,099 | $ 4,450 | $ 6,574 | $ 9,707 | $ 9,559 |
One-to-four family residential real estate property | ||||||
FORECLOSED ASSETS | ||||||
Carrying value of foreclosed asset | $ 352 | $ 1,037 | ||||
Number of loans in the process of foreclosure | loan | 7 | 10 | ||||
Loan amount in the process of foreclosure | $ 571 | $ 588 |
DEPOSITS - Interest bearing Dep
DEPOSITS - Interest bearing Deposits (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
DEPOSITS | ||
Noninterest-bearing Deposit Liabilities | $ 850,306 | $ 689,116 |
Interest-bearing demand | 885,719 | 814,639 |
Money market | 475,047 | 477,765 |
Savings | 497,682 | 438,927 |
Time | 307,907 | 356,408 |
Total interest-bearing deposits | 2,166,355 | 2,087,739 |
Total deposits | $ 3,016,661 | $ 2,776,855 |
DEPOSITS - Interest bearing D_2
DEPOSITS - Interest bearing Deposits - Narrative (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
DEPOSITS | ||
Reciprocal transaction deposits, Money market deposits | $ 7,407 | $ 14,309 |
Reciprocal transaction deposits, Time deposits | 3,540 | 3,538 |
Time deposits in denominations of $250,000 or more | 24,734 | 44,754 |
Time deposits in denominations of $100,000 or more | $ 102,115 | $ 130,293 |
DEPOSITS - Interest expense on
DEPOSITS - Interest expense on Deposits (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
DEPOSITS | ||||
Interest-bearing demand | $ 123 | $ 347 | $ 536 | $ 1,175 |
Money market | 96 | 497 | 608 | 1,356 |
Savings | 37 | 70 | 157 | 207 |
Time | 587 | 1,086 | 2,179 | 3,356 |
Total interest expense on deposits | $ 843 | $ 2,000 | $ 3,480 | $ 6,094 |
BORROWINGS (Details)
BORROWINGS (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
BORROWINGS | ||
Borrowings | $ 0 | $ 0 |
Securities pledged, served as collateral | 544,999 | 548,229 |
Loans pledged in association with Mortgage Partnership Finance Program | 355 | 355 |
FRB Discount Window | ||
BORROWINGS | ||
Borrowings | 0 | 0 |
Securities pledged, served as collateral | $ 511 | $ 515 |
SUBORDINATED NOTES (Details)
SUBORDINATED NOTES (Details) - Subordinated Notes - USD ($) $ in Thousands | Sep. 03, 2020 | Sep. 30, 2020 |
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Face amount | $ 40,000 | $ 40,000 |
Debt issuance costs | $ 789 | |
Amortization period of debt issuance costs | 10 years | |
Qualifies as Tier 2 capital | 100.00% | |
First five years | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Fixed interest rate | 4.50% | |
Subsequent five years | SOFR | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Spread on interest rate basis | 4.37% |
SUBORDINATED DEBENTURES - Summa
SUBORDINATED DEBENTURES - Summary (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 03, 2020 |
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Subordinated notes, at carrying value | $ 39,218 | |
Subordinated Notes | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Face amount | 40,000 | $ 40,000 |
Unamortized issuance costs | (782) | |
Subordinated notes, at carrying value | $ 39,218 |
JUNIOR SUBORDINATED DEBENTURE_3
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS - Carrying Values (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($)subsidiary | Dec. 31, 2019USD ($) | |
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Number of subsidiary business trusts | subsidiary | 5 | |
Junior subordinated debentures issued to capital trusts | $ 37,632 | $ 37,583 |
Subordinated notes, at carrying value | 39,218 | |
Junior Subordinated Debentures Issued | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Face amount | 38,765 | 38,765 |
Junior subordinated debentures issued to capital trusts | 37,632 | 37,583 |
Junior Subordinated Debentures Issued | Heartland Bancorp, Inc. Capital Trust B | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Face amount | 10,310 | 10,310 |
Junior Subordinated Debentures Issued | Heartland Bancorp, Inc. Capital Trust C | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Face amount | 10,310 | 10,310 |
Junior Subordinated Debentures Issued | Heartland Bancorp, Inc. Capital Trust D | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Face amount | 5,155 | 5,155 |
Junior Subordinated Debentures Issued | FFBI Capital Trust I | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Face amount | 7,217 | 7,217 |
Junior Subordinated Debentures Issued | National Bancorp Statutory Trust I | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Face amount | 5,773 | 5,773 |
Unamortized discount | $ (1,133) | $ (1,182) |
JUNIOR SUBORDINATED DEBENTURE_4
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS - Interest rate and maturities (Details) - Junior Subordinated Debentures Issued | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Heartland Bancorp, Inc. Capital Trust B | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Interest Rate | 3.03% | 4.74% |
Heartland Bancorp, Inc. Capital Trust B | LIBOR | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Spread on interest rate basis | 2.75% | |
Heartland Bancorp, Inc. Capital Trust C | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Interest Rate | 1.78% | 3.42% |
Heartland Bancorp, Inc. Capital Trust C | LIBOR | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Spread on interest rate basis | 1.53% | |
Heartland Bancorp, Inc. Capital Trust D | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Interest Rate | 1.60% | 3.24% |
Heartland Bancorp, Inc. Capital Trust D | LIBOR | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Spread on interest rate basis | 1.35% | |
FFBI Capital Trust I | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Interest Rate | 3.08% | 4.79% |
FFBI Capital Trust I | LIBOR | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Spread on interest rate basis | 2.80% | |
National Bancorp Statutory Trust I | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Interest Rate | 3.15% | 4.79% |
National Bancorp Statutory Trust I | LIBOR | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Spread on interest rate basis | 2.90% |
JUNIOR SUBORDINATED DEBENTURE_5
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS - Narrative (Details) - period | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Trust preferred securities qualified as Tier 1 capital | 100.00% | 100.00% |
Junior Subordinated Debentures Issued | ||
JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS | ||
Maximum deferred interest period quarters | 10 | |
Period shorten the maturity date from the event | 90 days |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
DERIVATIVE FINANCIAL INSTRUMENTS | |||
Cash pledged | $ 1,630,000 | $ 710,000 | |
Securities pledged | $ 22,280,000 | $ 8,713,000 | |
Interest rate swap | Cash flow hedge | Variable-rate borrowings | |||
DERIVATIVE FINANCIAL INSTRUMENTS | |||
Notional amount | $ 10,000,000 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Derivative instrument assets and liabilities (Details) - Designated - Interest rate swap - Cash flow hedge - Other liabilities - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
DERIVATIVE FINANCIAL INSTRUMENTS | ||
Derivative financial liability fair value | $ (1,572) | $ (676) |
Derivative financial liability notional amount | $ 17,000 | $ 17,000 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Interest rate contracts designated as cash flow hedges (Details) - Cash flow hedge - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | ||||
Amounts of gross gain (loss) reclassified from accumulated other comprehensive income | $ (97) | $ 24 | $ (138) | $ 76 |
Taxable loan interest income | ||||
DERIVATIVE FINANCIAL INSTRUMENTS | ||||
Amounts of gross gain (loss) reclassified from accumulated other comprehensive income | 33 | 64 | 83 | |
Subordinated debentures interest expense | ||||
DERIVATIVE FINANCIAL INSTRUMENTS | ||||
Amounts of gross gain (loss) reclassified from accumulated other comprehensive income | $ (97) | $ (9) | $ (202) | $ (7) |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Interest rate contracts not designated as hedging instruments (Details) - Not designated - Interest rate swap - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |||||
Gross gains | $ 2,188 | $ 4,151 | $ 17,369 | $ 10,196 | |
Gross losses | (2,188) | $ (4,151) | (17,369) | (10,159) | |
Net gains (losses) | $ 37 | ||||
Other assets | |||||
DERIVATIVE FINANCIAL INSTRUMENTS | |||||
Derivative asset notional amount | 140,820 | 140,820 | $ 138,356 | ||
Derivative financial assets fair value | 21,568 | 21,568 | 8,642 | ||
Other assets | Commercial Borrower | |||||
DERIVATIVE FINANCIAL INSTRUMENTS | |||||
Derivative asset notional amount | 140,820 | 140,820 | 114,140 | ||
Derivative financial assets fair value | 21,568 | 21,568 | 8,532 | ||
Other assets | Financial Institutions Borrower | |||||
DERIVATIVE FINANCIAL INSTRUMENTS | |||||
Derivative asset notional amount | 24,216 | ||||
Derivative financial assets fair value | 110 | ||||
Other liabilities | |||||
DERIVATIVE FINANCIAL INSTRUMENTS | |||||
Derivative liability notional amount | 140,820 | 140,820 | 138,356 | ||
Derivative financial liabilities fair value | (21,568) | (21,568) | (8,642) | ||
Other liabilities | Commercial Borrower | |||||
DERIVATIVE FINANCIAL INSTRUMENTS | |||||
Derivative liability notional amount | 24,216 | ||||
Derivative financial liabilities fair value | (110) | ||||
Other liabilities | Financial Institutions Borrower | |||||
DERIVATIVE FINANCIAL INSTRUMENTS | |||||
Derivative liability notional amount | 140,820 | 140,820 | 114,140 | ||
Derivative financial liabilities fair value | $ (21,568) | $ (21,568) | $ (8,532) |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||
Balance | $ 347,840 | $ 339,870 | $ 332,918 | $ 340,396 |
Other comprehensive income (loss), before tax | 1,286 | 995 | 14,413 | 12,719 |
Income tax expense (benefit) | 366 | 4,114 | ||
Other comprehensive income (loss), after tax | 920 | 995 | 10,299 | 12,719 |
Balance | 355,294 | 348,936 | 355,294 | 348,936 |
Accumulated Other Comprehensive Income (Loss) | ||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||
Balance | 17,211 | 7,436 | 7,832 | (4,288) |
Other comprehensive income (loss) before reclassifications | 1,181 | 1,081 | 14,270 | 13,016 |
Reclassifications | 105 | (86) | 143 | (297) |
Other comprehensive income (loss), before tax | 1,286 | 14,413 | ||
Income tax expense (benefit) | 366 | 4,114 | ||
Other comprehensive income (loss), after tax | 920 | 995 | 10,299 | 12,719 |
Balance | 18,131 | 8,431 | 18,131 | 8,431 |
Unrealized gains (losses) on available-for-sale securities | ||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||
Balance | 18,806 | 8,063 | 8,659 | (4,561) |
Other comprehensive income (loss) before reclassifications | 1,176 | 1,289 | 15,368 | 13,913 |
Other comprehensive income (loss), before tax | 1,176 | 15,368 | ||
Income tax expense (benefit) | 336 | 4,381 | ||
Other comprehensive income (loss), after tax | 840 | 1,289 | 10,987 | 13,913 |
Balance | 19,646 | 9,352 | 19,646 | 9,352 |
Unrealized gains (losses) on held-to-maturity securities | ||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||
Balance | (133) | (37) | (131) | 122 |
Reclassifications | 8 | (62) | 5 | (221) |
Other comprehensive income (loss), before tax | 8 | 5 | ||
Income tax expense (benefit) | 2 | 1 | ||
Other comprehensive income (loss), after tax | 6 | (62) | 4 | (221) |
Balance | (127) | (99) | (127) | (99) |
Derivatives | ||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||
Balance | (1,462) | (590) | (696) | 151 |
Other comprehensive income (loss) before reclassifications | 5 | (208) | (1,098) | (897) |
Reclassifications | 97 | (24) | 138 | (76) |
Other comprehensive income (loss), before tax | 102 | (960) | ||
Income tax expense (benefit) | 28 | (268) | ||
Other comprehensive income (loss), after tax | 74 | (232) | (692) | (973) |
Balance | $ (1,388) | $ (822) | $ (1,388) | $ (822) |
INCOME TAXES - Allocation (Deta
INCOME TAXES - Allocation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Current | ||||
Federal | $ 2,921 | $ 5,619 | ||
State | 1,593 | $ 299 | 3,218 | $ 819 |
Total current | 4,514 | 299 | 8,837 | 819 |
Deferred | ||||
Federal | (542) | (419) | ||
State | (271) | (209) | ||
Total deferred | (813) | (628) | ||
Income tax expense | $ 3,701 | $ 299 | $ 8,209 | $ 819 |
INCOME TAXES - Federal income t
INCOME TAXES - Federal income tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Federal income tax expense: | ||||
Federal income tax, at statutory rate | $ 2,995 | $ 6,806 | ||
Federal income tax, at statutory rate (as a percent) | 21.00% | 21.00% | ||
Increase (decrease) resulting from: | ||||
Federally tax exempt interest income | $ (372) | $ (1,099) | ||
Federally tax exempt interest income (as a percent) | (2.60%) | (3.40%) | ||
State taxes, net of federal benefit | $ 1,039 | $ 299 | $ 2,397 | $ 819 |
State taxes, net of federal benefit (as a percent) | 7.30% | 1.70% | 7.40% | 1.60% |
Other | $ 39 | $ 105 | ||
Other (as a percent) | 0.20% | 0.30% | ||
Income tax expense | $ 3,701 | $ 299 | $ 8,209 | $ 819 |
Total (as a percent) | 25.90% | 1.70% | 25.30% | 1.60% |
INCOME TAXES - Components of ne
INCOME TAXES - Components of net deferred tax asset (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Deferred tax assets | ||
Allowance for loan losses | $ 8,927 | $ 6,309 |
Compensation related | 2,156 | 5,859 |
Deferred loan fees | 1,937 | 497 |
Nonaccrual interest | 617 | 858 |
Foreclosed assets | 93 | 574 |
Goodwill | 385 | 531 |
Other | 1,084 | 785 |
Total deferred tax assets | 15,199 | 15,413 |
Deferred tax liabilities | ||
Fixed asset depreciation | 4,363 | 4,201 |
Mortgage servicing rights | 1,588 | 2,428 |
Other purchase accounting adjustments | 1,195 | 1,356 |
Intangible assets | 645 | 841 |
Prepaid assets | 475 | 504 |
Net unrealized gain on debt securities available-for-sale | 6,632 | 2,251 |
Other | 381 | 426 |
Total deferred tax liabilities | 15,279 | 12,007 |
Net deferred tax asset (liability) | $ (80) | |
Net deferred tax asset (liability) | $ 3,406 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
EARNINGS PER SHARE | ||||
Antidilutive securities excluded from the computation of diluted earnings per share | 0 | 0 | ||
Numerator: | ||||
Net income | $ 10,563 | $ 17,437 | $ 24,203 | $ 50,778 |
Earnings allocated to unvested restricted stock units | (28) | (62) | ||
Numerator for earnings per share - basic | $ 10,535 | $ 17,437 | $ 24,141 | $ 50,778 |
Denominator: | ||||
Weighted average common shares outstanding | 27,457,306 | 18,027,512 | 27,457,306 | 18,027,512 |
Weighted average common shares outstanding, including all dilutive potential shares | 27,457,306 | 18,027,512 | 27,457,306 | 18,027,512 |
EARNINGS PER SHARE - BASIC | $ 0.38 | $ 0.97 | $ 0.88 | $ 2.82 |
EARNINGS PER SHARE - DILUTED | $ 0.38 | $ 0.97 | $ 0.88 | $ 2.82 |
DEFERRED COMPENSATION (Details)
DEFERRED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
DEFERRED COMPENSATION | ||||
Deferred compensation liability | $ 0 | |||
Deferred compensation expense | $ 1,660 | $ 4,533 | ||
SERP | ||||
DEFERRED COMPENSATION | ||||
Deferred compensation liability | $ 12,789 | |||
Deferred compensation expense | $ 968 | |||
Period over which SERP benefit payments to be paid | 30 years |
STOCK-BASED COMPENSATION PLAN_2
STOCK-BASED COMPENSATION PLANS (Details) $ / shares in Units, $ in Thousands | Jun. 24, 2020USD ($)$ / sharesshares | Jan. 28, 2020USD ($)$ / sharesshares | Sep. 30, 2020USD ($)item$ / sharesshares | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2020USD ($)iteminstallment$ / sharesshares | Sep. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2020$ / shares | Dec. 31, 2019USD ($)$ / shares | Oct. 09, 2019shares | Jun. 30, 2019$ / shares | Dec. 31, 2018$ / shares |
STOCK-BASED COMPENSATION PLANS | |||||||||||
Number of shares participant is entitled to receive | item | 1 | 1 | |||||||||
Total stock-based compensation expense (benefit) | $ 25 | $ 64 | $ (40) | $ (51) | |||||||
Stock appreciation rights plan liability recorded for the outstanding units | $ 0 | $ 0 | |||||||||
Restricted Stock Units | |||||||||||
STOCK-BASED COMPENSATION PLANS | |||||||||||
Granted (in units) | shares | 73,700 | ||||||||||
Granted (in dollars per unit) | $ / shares | $ 18.98 | ||||||||||
Total stock-based compensation expense (benefit) | $ 100 | $ 263 | |||||||||
Unrecognized compensation cost related to non-vested stock-based compensation agreements | $ 1,136 | $ 1,136 | |||||||||
Outstanding (in dollars per unit) | $ / shares | $ 18.98 | $ 18.98 | $ 18.98 | ||||||||
Restricted Stock Units | Key employees | |||||||||||
STOCK-BASED COMPENSATION PLANS | |||||||||||
Shares granted | shares | 70,400 | ||||||||||
Vesting period | 4 years | ||||||||||
Restricted Stock Units | Non employee directors | |||||||||||
STOCK-BASED COMPENSATION PLANS | |||||||||||
Shares granted | shares | 550 | 2,750 | |||||||||
Granted (in dollars per unit) | $ / shares | $ 12.71 | $ 19.03 | |||||||||
Fair value of units granted | $ 7 | $ 1,392 | |||||||||
Stock Appreciation Rights | |||||||||||
STOCK-BASED COMPENSATION PLANS | |||||||||||
Granted (in units) | shares | 110,160 | 110,160 | |||||||||
Granted (in dollars per unit) | $ / shares | $ 16.32 | $ 16.32 | |||||||||
Total stock-based compensation expense (benefit) | $ (75) | $ 64 | $ (303) | $ (51) | |||||||
Unrecognized compensation cost related to non-vested stock-based compensation agreements | 27 | $ 27 | |||||||||
Number of installments | installment | 4 | ||||||||||
Stock appreciation rights plan liability recorded for the outstanding units | 106 | $ 106 | $ 409 | ||||||||
Stock appreciation rights plan liability recorded for the previously exercised units | $ 1,206 | $ 1,206 | $ 1,512 | ||||||||
Number of equal annual instalments in which the liability recorded for previously exercised units will be paid | installment | 4 | ||||||||||
Outstanding (in dollars per unit) | $ / shares | $ 16.32 | $ 16.32 | $ 16.32 | $ 16.32 | $ 16.32 | $ 16.32 | $ 7.46 | $ 5.73 | |||
Omnibus Incentive Plan | |||||||||||
STOCK-BASED COMPENSATION PLANS | |||||||||||
Authorized number of shares | shares | 1,820,000 |
STOCK-BASED COMPENSATION PLAN_3
STOCK-BASED COMPENSATION PLANS - Summary (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restricted Stock Units | ||||
Stock Appreciation Rights | ||||
Outstanding (in units) | 73,700 | |||
Granted (in units) | 73,700 | |||
Outstanding (in units) | 73,700 | 73,700 | ||
Weighted Average Grant Date Assigned Value | ||||
Outstanding (in dollars per unit) | $ 18.98 | |||
Granted (in dollars per unit) | $ 18.98 | |||
Outstanding (in dollars per unit) | $ 18.98 | $ 18.98 | ||
Restricted Stock Units | $12.71 | ||||
Stock Appreciation Rights | ||||
Outstanding (in units) | 550 | 550 | ||
Weighted Average Grant Date Assigned Value | ||||
Outstanding (in dollars per unit) | $ 12.71 | $ 12.71 | ||
Weighted average remaining contractual term | 3 months 18 days | |||
Restricted Stock Units | $19.03 | ||||
Stock Appreciation Rights | ||||
Outstanding (in units) | 73,150 | 73,150 | ||
Weighted Average Grant Date Assigned Value | ||||
Outstanding (in dollars per unit) | $ 19.03 | $ 19.03 | ||
Weighted average remaining contractual term | 3 years 2 months 12 days | |||
Stock Appreciation Rights | ||||
Stock Appreciation Rights | ||||
Outstanding (in units) | 110,160 | 42,840 | 110,160 | 91,800 |
Granted (in units) | 110,160 | 110,160 | ||
Vested (in units) | (42,840) | (91,800) | ||
Outstanding (in units) | 110,160 | 110,160 | 110,160 | 110,160 |
Exercisable (in shares) | 87,210 | 87,210 | ||
Weighted Average Grant Date Assigned Value | ||||
Outstanding (in dollars per unit) | $ 16.32 | $ 7.46 | $ 16.32 | $ 5.73 |
Granted (in dollars per unit) | 16.32 | 16.32 | ||
Vested (in dollars per unit) | 7.46 | 5.73 | ||
Outstanding (in dollars per unit) | $ 16.32 | $ 16.32 | $ 16.32 | $ 16.32 |
Weighted average remaining contractual term | 8 years 10 months 24 days |
STOCK-BASED COMPENSATION PLAN_4
STOCK-BASED COMPENSATION PLANS - Summary of assumptions used (Details) - Stock Appreciation Rights | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 0.61% | 1.90% |
Expected volatility | 34.10% | 28.83% |
Expected life (in years) | 8 years 10 months 24 days | 9 years 8 months 12 days |
Expected dividend yield | 5.35% | 3.16% |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
REGULATORY MATTERS | ||
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 2.5 | 2.5 |
Heartland Bank | ||
REGULATORY MATTERS | ||
Total Capital (to Risk Weighted Assets), Actual Amount | $ 333,344 | $ 315,516 |
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount | 183,710 | 180,071 |
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | 229,638 | 225,088 |
Tier 1 Capital (to Risk Weighted Assets), Actual Amount | 304,639 | 295,385 |
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount | 137,783 | 135,053 |
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | 183,710 | 180,071 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Amount | 304,639 | 295,385 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount | 103,337 | 101,290 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | 149,265 | 146,307 |
Tier 1 Capital (to Average Assets), Actual Amount | 304,639 | 295,385 |
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount | 124,701 | 115,281 |
Tier 1 Capital (to Average Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 155,876 | $ 144,102 |
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent) | 14.52 | 14.02 |
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 8 | 8 |
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 10 | 10 |
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent) | 13.27 | 13.12 |
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 6 | 6 |
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 8 | 8 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent) | 13.27% | 13.12% |
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 4.50% | 4.50% |
Common Equity Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 6.50% | 6.50% |
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent) | 9.77 | 10.25 |
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent) | 4 | 4 |
Tier 1 Capital (to Average Assets), To Be well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 5 | 5 |
Lincoln Bank | ||
REGULATORY MATTERS | ||
Total Capital (to Risk Weighted Assets), Actual Amount | $ 35,955 | $ 35,390 |
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount | 15,013 | 16,104 |
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | 18,766 | 20,130 |
Tier 1 Capital (to Risk Weighted Assets), Actual Amount | 33,602 | 33,222 |
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount | 11,260 | 12,078 |
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | 15,013 | 16,104 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Amount | 33,602 | 33,222 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount | 8,445 | 9,058 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | 12,198 | 13,084 |
Tier 1 Capital (to Average Assets), Actual Amount | 33,602 | 33,222 |
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount | 13,691 | 13,531 |
Tier 1 Capital (to Average Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 17,114 | $ 16,914 |
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent) | 19.16 | 17.58 |
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 8 | 8 |
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 10 | 10 |
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent) | 17.91 | 16.50 |
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 6 | 6 |
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 8 | 8 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent) | 17.91% | 16.50% |
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 4.50% | 4.50% |
Common Equity Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 6.50% | 6.50% |
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent) | 9.82 | 9.82 |
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent) | 4 | 4 |
Tier 1 Capital (to Average Assets), To Be well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 5 | 5 |
Consolidated HBT | ||
REGULATORY MATTERS | ||
Total Capital (to Risk Weighted Assets), Actual Amount | $ 417,844 | $ 356,994 |
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount | 198,827 | 196,358 |
Tier 1 Capital (to Risk Weighted Assets), Actual Amount | 347,552 | 334,695 |
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount | 149,120 | 147,268 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Amount | 311,085 | 298,277 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount | 111,840 | 110,451 |
Tier 1 Capital (to Average Assets), Actual Amount | 347,552 | 334,695 |
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount | $ 138,524 | $ 129,027 |
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent) | 16.81 | 14.54 |
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 8 | 8 |
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent) | 13.98 | 13.64 |
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 6 | 6 |
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent) | 12.52% | 12.15% |
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent) | 4.50% | 4.50% |
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent) | 10.04 | 10.38 |
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent) | 4 | 4 |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Recurring basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Transfer of assets from level 1 to level 2 | $ 0 | $ 0 | $ 0 | $ 0 | |||
Transfer of assets from level 2 to level 1 | 0 | 0 | 0 | 0 | |||
Transfer of assets in to level 3 | 0 | 0 | 0 | 0 | |||
Transfer of assets out of level 3 | 0 | 0 | 0 | 0 | |||
Transfer of liabilities from level 1 to level 2 | 0 | 0 | 0 | 0 | |||
Transfer of liabilities from level 2 to level 1 | 0 | 0 | 0 | 0 | |||
Debt securities available-for-sale, at fair value | 814,798 | 814,798 | $ 592,404 | ||||
Equity securities | 3,262 | 3,262 | 3,241 | ||||
Fair value | 5,571 | $ 7,936 | 5,571 | $ 7,936 | $ 5,839 | 8,518 | $ 8,796 |
U.S. government agency | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 104,326 | 104,326 | 49,615 | ||||
Municipal securities | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 240,410 | 240,410 | 133,738 | ||||
Mortgage-backed: Agency residential | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 226,317 | 226,317 | 200,678 | ||||
Mortgage-backed: Agency commercial | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 171,072 | 171,072 | 134,954 | ||||
Corporate | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 72,673 | 72,673 | 73,419 | ||||
Recurring | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Equity securities | 3,262 | 3,262 | 3,241 | ||||
Fair value | 5,571 | 5,571 | 8,518 | ||||
Derivative financial assets fair value | 21,568 | 21,568 | 8,642 | ||||
Derivative financial liabilities fair value | 23,140 | 23,140 | 9,318 | ||||
Recurring | U.S. government agency | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 104,326 | 104,326 | 49,615 | ||||
Recurring | Municipal securities | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 240,410 | 240,410 | 133,738 | ||||
Recurring | Mortgage-backed: Agency residential | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 226,317 | 226,317 | 200,678 | ||||
Recurring | Mortgage-backed: Agency commercial | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 171,072 | 171,072 | 134,954 | ||||
Recurring | Corporate | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 72,673 | 72,673 | 73,419 | ||||
Recurring | Level 1 | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Equity securities | 3,262 | 3,262 | 3,241 | ||||
Recurring | Level 2 | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Derivative financial assets fair value | 21,568 | 21,568 | 8,642 | ||||
Derivative financial liabilities fair value | 23,140 | 23,140 | 9,318 | ||||
Recurring | Level 2 | U.S. government agency | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 104,326 | 104,326 | 49,615 | ||||
Recurring | Level 2 | Municipal securities | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 240,410 | 240,410 | 133,738 | ||||
Recurring | Level 2 | Mortgage-backed: Agency residential | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 226,317 | 226,317 | 200,678 | ||||
Recurring | Level 2 | Mortgage-backed: Agency commercial | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 171,072 | 171,072 | 134,954 | ||||
Recurring | Level 2 | Corporate | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Debt securities available-for-sale, at fair value | 72,673 | 72,673 | 73,419 | ||||
Recurring | Level 3 | |||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||
Fair value | $ 5,571 | $ 5,571 | $ 8,518 |
FAIR VALUE OF FINANCIAL INSTR_4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Mortgage Servicing Rights (Details) $ in Thousands | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Fair value | $ 5,571 | $ 5,839 | $ 8,518 | $ 7,936 | $ 8,796 |
Recurring | |||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Fair value | 5,571 | 8,518 | |||
Recurring | Level 3 | |||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Fair value | $ 5,571 | $ 8,518 | |||
Valuation Technique | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember | |||
Recurring | Level 3 | Constant pre-payment rates (CPR) | |||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Fair value | $ 5,571 | $ 8,518 | |||
Recurring | Level 3 | Constant pre-payment rates (CPR) | Minimum | |||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Measurement input | 7 | 7 | |||
Recurring | Level 3 | Constant pre-payment rates (CPR) | Maximum | |||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Measurement input | 85 | 68.5 | |||
Recurring | Level 3 | Constant pre-payment rates (CPR) | Weighted average | |||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Measurement input | 18.2 | 12.3 | |||
Recurring | Level 3 | Discount rate | Minimum | |||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Measurement input | 9 | 9 | |||
Recurring | Level 3 | Discount rate | Maximum | |||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Measurement input | 11 | 11 | |||
Recurring | Level 3 | Discount rate | Weighted average | |||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||
Measurement input | 9 | 9 |
FAIR VALUE OF FINANCIAL INSTR_5
FAIR VALUE OF FINANCIAL INSTRUMENTS - Nonrecurring Basis (Details) - Nonrecurring - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Loans held for sale | $ 23,723 | $ 4,531 |
Collateral-dependent impaired loans | 16,209 | 15,811 |
Bank premises held for sale | 121 | 121 |
Foreclosed assets | 3,857 | 5,099 |
Level 2 | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Loans held for sale | 23,723 | 4,531 |
Level 3 | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Collateral-dependent impaired loans | 16,209 | 15,811 |
Bank premises held for sale | 121 | 121 |
Foreclosed assets | $ 3,857 | $ 5,099 |
FAIR VALUE OF FINANCIAL INSTR_6
FAIR VALUE OF FINANCIAL INSTRUMENTS - Unobservable inputs used in nonrecurring measurements (Details) - Nonrecurring - Level 3 $ in Thousands | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Collateral-dependent impaired loans | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Alternative Investment, Measurement Input [Extensible List] | hbt:AppraisalAdjustmentsMember | hbt:AppraisalAdjustmentsMember |
Collateral-dependent impaired loans | Appraisal of collateral | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Fair Value | $ 16,209 | $ 15,811 |
Bank premises held for sale | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Alternative Investment, Measurement Input [Extensible List] | hbt:AppraisalAdjustmentsMember | hbt:AppraisalAdjustmentsMember |
Bank premises held for sale | Appraisal | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Fair Value | $ 121 | $ 121 |
Measurement input | 7 | 7 |
Bank premises held for sale | Appraisal | Weighted average | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Measurement input | 7 | 7 |
Foreclosed assets | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Alternative Investment, Measurement Input [Extensible List] | hbt:AppraisalAdjustmentsMember | hbt:AppraisalAdjustmentsMember |
Foreclosed assets | Appraisal | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Fair Value | $ 3,857 | $ 5,099 |
Measurement input | 7 | 7 |
Foreclosed assets | Appraisal | Weighted average | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Measurement input | 7 | 7 |
FAIR VALUE OF FINANCIAL INSTR_7
FAIR VALUE OF FINANCIAL INSTRUMENTS - Carrying amount and estimated fair value (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financial assets: | ||
Debt securities held-to-maturity | $ 78,891 | $ 90,529 |
Level 1 | Carrying Amount | ||
Financial assets: | ||
Cash and cash equivalents | 236,724 | 283,971 |
Interest-bearing time deposits with banks | 248 | |
Level 1 | Estimated Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 236,724 | 283,971 |
Interest-bearing time deposits with banks | 248 | |
Level 2 | Carrying Amount | ||
Financial assets: | ||
Debt securities held-to-maturity | 74,510 | 88,477 |
Accrued interest receivable | 13,820 | 13,951 |
Financial liabilities: | ||
Securities sold under agreements to repurchase | 45,438 | 44,433 |
Accrued interest payable | 819 | 1,132 |
Level 2 | Estimated Fair Value | ||
Financial assets: | ||
Debt securities held-to-maturity | 78,891 | 90,529 |
Accrued interest receivable | 13,820 | 13,951 |
Financial liabilities: | ||
Securities sold under agreements to repurchase | 45,438 | 44,433 |
Accrued interest payable | 819 | 1,132 |
Level 3 | Carrying Amount | ||
Financial assets: | ||
Restricted stock | 2,498 | 2,425 |
Loans, net | 2,247,985 | 2,141,527 |
Investments in unconsolidated subsidiaries | 1,165 | 1,165 |
Financial liabilities: | ||
Time deposits | 307,907 | 356,408 |
Level 3 | Estimated Fair Value | ||
Financial assets: | ||
Restricted stock | 2,498 | 2,425 |
Loans, net | 2,269,402 | 2,181,103 |
Investments in unconsolidated subsidiaries | 1,165 | 1,165 |
Financial liabilities: | ||
Time deposits | 309,806 | 355,340 |
Subordinated Notes | Level 3 | Carrying Amount | ||
Financial liabilities: | ||
Subordinated debt | 39,218 | |
Subordinated Notes | Level 3 | Estimated Fair Value | ||
Financial liabilities: | ||
Subordinated debt | 39,999 | |
Junior Subordinated Debentures Issued | Level 3 | Carrying Amount | ||
Financial liabilities: | ||
Subordinated debt | 37,632 | 37,583 |
Junior Subordinated Debentures Issued | Level 3 | Estimated Fair Value | ||
Financial liabilities: | ||
Subordinated debt | $ 24,844 | $ 31,959 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Standby letters of credit | ||
COMMITMENTS AND CONTINGENCIES | ||
Financial instruments off-balance sheet credit risks | $ 10,154 | $ 8,991 |
Commitments to extend credit | ||
COMMITMENTS AND CONTINGENCIES | ||
Financial instruments off-balance sheet credit risks | $ 536,052 | $ 542,705 |