Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 10, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-39285 | |
Document Period End Date | Sep. 30, 2022 | |
Entity Registrant Name | Partners Bancorp | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 52-1559535 | |
Entity Address, Address Line One | 2245 Northwood Drive | |
Entity Address, City or Town | Salisbury | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 21801 | |
City Area Code | 410 | |
Local Phone Number | 548-1100 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | PTRS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,961,699 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000832090 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | ||
ASSETS | ||||
Cash and due from banks | $ 12,784 | $ 12,887 | [1] | |
Interest bearing deposits in other financial institutions | 210,935 | 297,902 | [1] | |
Federal funds sold | 24,573 | 28,040 | [1] | |
Cash and cash equivalents | 248,292 | 338,829 | [1] | |
Securities available for sale, at fair value | 131,465 | 122,021 | [1] | |
Loans held for sale | 201 | 4,064 | [1] | |
Loans, less allowance for credit losses of $13,818 at September 30, 2022 and $14,656 at December 31, 2021 | 1,190,142 | 1,102,539 | [1] | |
Accrued interest receivable | 4,035 | 4,313 | [1] | |
Premises and equipment, less accumulated depreciation | 15,258 | 16,175 | [1] | |
Restricted stock | 4,889 | 4,869 | [1] | |
Operating lease right-of-use assets | 5,290 | 6,009 | [1] | |
Financing lease right-of-use assets | 1,584 | 1,687 | [1] | |
Other investments | 4,864 | 5,065 | [1] | |
Bank owned life insurance | 18,592 | 18,254 | [1] | |
Other real estate owned, net | [1] | 837 | ||
Core deposit intangible, net | 1,666 | 2,060 | [1] | |
Goodwill | 9,582 | 9,582 | [1] | |
Other assets | 14,850 | 8,675 | [1] | |
Total assets | 1,650,710 | 1,644,979 | [1] | |
Deposits: | ||||
Non-interest bearing demand | 568,113 | 493,913 | [1] | |
Interest bearing demand | 143,564 | 159,421 | [1] | |
Savings and money market | 441,230 | 410,286 | [1] | |
Time | 303,037 | 379,256 | [1] | |
Deposits, Total | 1,455,944 | 1,442,876 | [1] | |
Accrued interest payable on deposits | 189 | 280 | [1] | |
Long-term borrowings with the Federal Home Loan Bank | 25,819 | 26,313 | [1] | |
Subordinated notes payable, net | 22,203 | 22,168 | [1] | |
Other borrowings | 811 | 755 | [1] | |
Operating lease liabilities | 5,688 | 6,372 | [1] | |
Financing lease liabilities | 2,036 | 2,125 | [1] | |
Other liabilities | 4,261 | 2,722 | [1] | |
Total liabilities | 1,516,951 | 1,503,611 | [1] | |
COMMITMENTS, CONTINGENCIES & SUBSEQUENT EVENT | [1] | |||
STOCKHOLDERS' EQUITY | ||||
Common stock, par value $0.01, authorized 40,000,000 shares, issued and outstanding 17,961,699 as of September 30, 2022 and 17,941,604 as of December 31, 2021, including 18,669 nonvested shares as of September 30, 2022 and 28,000 nonvested shares as of December 31, 2021 | 179 | 179 | [1] | |
Surplus | 88,576 | 88,390 | [1] | |
Retained earnings | 59,356 | 51,305 | [1] | |
Noncontrolling interest in consolidated subsidiaries | 727 | 1,179 | [1] | |
Accumulated other comprehensive income (loss), net of tax | (15,079) | 315 | [1] | |
Total stockholders' equity | 133,759 | 141,368 | [1] | |
Total liabilities and stockholders' equity | $ 1,650,710 | $ 1,644,979 | [1] | |
[1] * Derived from audited consolidated financial statements. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for credit losses | $ 13,818 | $ 14,656 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 17,961,699 | 17,941,604 |
Common stock, shares outstanding | 17,961,699 | 17,941,604 |
Nonvested shares | 18,669 | 28,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
INTEREST INCOME ON: | ||||
Loans, including fees | $ 14,119 | $ 13,381 | $ 40,222 | $ 39,619 |
Investment securities: | ||||
Taxable | 607 | 310 | 1,519 | 757 |
Tax -Exempt | 180 | 216 | 545 | 661 |
Federal funds sold | 353 | 25 | 433 | 44 |
Other interest income | 1,198 | 149 | 1,914 | 404 |
TOTAL INTEREST INCOME | 16,457 | 14,081 | 44,633 | 41,485 |
INTEREST EXPENSE ON: | ||||
Deposits | 1,071 | 1,639 | 3,440 | 5,234 |
Borrowings | 511 | 538 | 1,524 | 1,723 |
TOTAL INTEREST EXPENSE | 1,582 | 2,177 | 4,964 | 6,957 |
NET INTEREST INCOME | 14,875 | 11,904 | 39,669 | 34,528 |
Provisions for credit losses | 419 | (30) | 803 | 2,568 |
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 14,456 | 11,934 | 38,866 | 31,960 |
OTHER INCOME: | ||||
Service charges on deposit accounts | 255 | 225 | 727 | 575 |
Gain on sales and calls of investment securities | (5) | 3 | (5) | 22 |
Mortgage banking income, net | 231 | 957 | 949 | 3,065 |
Gain on disposal of other assets, net | 1 | |||
Impairment (loss) on restricted stock | (1) | |||
Other income | 760 | 891 | 2,316 | 2,880 |
TOTAL OTHER INCOME | 1,241 | 2,076 | 3,986 | 6,543 |
OTHER EXPENSES: | ||||
Salaries and employee benefits | 5,688 | 5,837 | 16,767 | 16,783 |
Premises and equipment | 1,411 | 1,313 | 4,292 | 3,789 |
Amortization of core deposit intangible | 128 | 148 | 394 | 455 |
(Gains) losses and expenses on other real estate owned, net | 35 | (9) | 183 | |
Merger related expenses | 167 | 720 | ||
Other expenses | 2,953 | 3,026 | 8,484 | 9,074 |
TOTAL OTHER EXPENSES | 10,347 | 10,359 | 30,648 | 30,284 |
INCOME BEFORE TAXES ON INCOME | 5,350 | 3,651 | 12,204 | 8,219 |
Federal and state income taxes | 1,292 | 839 | 2,914 | 1,847 |
NET INCOME | 4,058 | 2,812 | 9,290 | 6,372 |
Net (income) loss attributable to noncontrolling interest | 52 | (116) | 108 | (426) |
NET INCOME ATTRIBUTABLE TO PARTNERS BANCORP | $ 4,110 | $ 2,696 | $ 9,398 | $ 5,946 |
Earnings per common share | ||||
Basic earnings per share | $ 0.229 | $ 0.152 | $ 0.523 | $ 0.335 |
Diluted earnings per share | $ 0.228 | $ 0.151 | $ 0.522 | $ 0.334 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
NET INCOME | $ 4,058 | $ 2,812 | $ 9,290 | $ 6,372 |
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX: | ||||
Unrealized holding losses on securities available for sale arising during the period | (5,690) | 287 | (20,131) | (1,818) |
Deferred income tax liabilities | 1,368 | (490) | 4,733 | 440 |
Other comprehensive (loss) income, net of tax | (4,322) | (203) | (15,398) | (1,378) |
Reclassification adjustment for gains included in net income | 5 | (3) | 5 | (22) |
Deferred income tax liabilities | (1) | 4 | (1) | 5 |
Other comprehensive (loss) income, net of tax | 4 | 1 | 4 | (17) |
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME | (4,318) | (202) | (15,394) | (1,395) |
TOTAL COMPREHENSIVE (LOSS) INCOME | (260) | 2,610 | (6,104) | 4,977 |
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST | 52 | (116) | 108 | (426) |
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO PARTNERS BANCORP | $ (208) | $ 2,494 | $ (5,996) | $ 4,551 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Surplus | Retained Earnings | Noncontrolling Interest | Accumulated Other Comprehensive Income (Loss) | Total | |
Balances at beginning of period at Dec. 31, 2020 | $ 178 | $ 87,200 | $ 45,673 | $ 1,346 | $ 2,298 | $ 136,695 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 5,946 | 426 | 6,372 | ||||
Other comprehensive loss, net of tax | (1,395) | (1,395) | |||||
TOTAL COMPREHENSIVE (LOSS) INCOME | 4,977 | ||||||
Cash dividends | (1,330) | (1,330) | |||||
Stock repurchases | (1) | (208) | (209) | ||||
Minority interest equity distribution | (651) | (651) | |||||
Stock-based compensation expense | 66 | 66 | |||||
Balances at end of period at Sep. 30, 2021 | 177 | 87,058 | 50,289 | 1,121 | 903 | 139,548 | |
Balances at beginning of period at Jun. 30, 2021 | 177 | 87,021 | 48,038 | 1,005 | 1,105 | 137,346 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 2,696 | 116 | 2,812 | ||||
Other comprehensive loss, net of tax | (202) | (202) | |||||
TOTAL COMPREHENSIVE (LOSS) INCOME | 2,610 | ||||||
Cash dividends | (445) | (445) | |||||
Stock-based compensation expense | 37 | 37 | |||||
Balances at end of period at Sep. 30, 2021 | 177 | 87,058 | 50,289 | 1,121 | 903 | 139,548 | |
Balances at beginning of period at Dec. 31, 2021 | 179 | 88,390 | 51,305 | 1,179 | 315 | 141,368 | [1] |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 9,398 | (108) | 9,290 | ||||
Other comprehensive loss, net of tax | (15,394) | (15,394) | |||||
TOTAL COMPREHENSIVE (LOSS) INCOME | (6,104) | ||||||
Cash dividends | (1,347) | (1,347) | |||||
Minority interest equity distribution | (344) | (344) | |||||
Stock option exercises, net | 115 | 115 | |||||
Stock-based compensation expense | 71 | 71 | |||||
Balances at end of period at Sep. 30, 2022 | 179 | 88,576 | 59,356 | 727 | (15,079) | 133,759 | |
Balances at beginning of period at Jun. 30, 2022 | 179 | 88,552 | 55,695 | 1,122 | (10,761) | 134,787 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 4,110 | (52) | 4,058 | ||||
Other comprehensive loss, net of tax | (4,318) | (4,318) | |||||
TOTAL COMPREHENSIVE (LOSS) INCOME | (260) | ||||||
Cash dividends | (449) | (449) | |||||
Minority interest equity distribution | (343) | (343) | |||||
Stock-based compensation expense | 24 | 24 | |||||
Balances at end of period at Sep. 30, 2022 | $ 179 | $ 88,576 | $ 59,356 | $ 727 | $ (15,079) | $ 133,759 | |
[1] * Derived from audited consolidated financial statements. |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | ||||
Cash dividends per share | $ 0.025 | $ 0.025 | $ 0.075 | $ 0.075 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net income | $ 4,110 | $ 2,696 | $ 9,398 | $ 5,946 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Provision for credit losses | 419 | (30) | 803 | 2,568 | $ 2,323 |
Depreciation | 1,404 | 1,209 | |||
Amortization and accretion | 347 | 847 | |||
Gain on sales and calls of investment securities | 5 | (22) | |||
Net gains on sales of assets | (1) | ||||
Loss on equity securities | 226 | 38 | |||
Gain on sale of loans held for sale, originated | (869) | (2,863) | |||
Net (gains) losses on other real estate owned, including writedowns | (5) | 118 | |||
Increase in bank owned life insurance cash surrender value | (338) | (300) | |||
Stock-based compensation expense, net of employee tax obligation | 71 | 66 | |||
Net accretion of certain acquisition related fair value adjustments | (163) | (679) | |||
Impairment loss on restricted stock | 1 | ||||
Changes in assets and liabilities: | |||||
Loans held for sale | 4,732 | 6,918 | |||
Accrued interest receivable | 278 | 821 | |||
Other assets | (621) | (3,447) | |||
Accrued interest payable on deposits | (91) | (91) | |||
Other liabilities | 855 | 3,819 | |||
Net cash provided by operating activities | 16,033 | 14,947 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of securities available for sale | (40,599) | (43,912) | |||
Purchases of other investments | (25) | (23) | |||
Purchases of bank owned life insurance | (3,000) | ||||
Purchase of Farmers Bank Stock | (49) | ||||
Proceeds from the sale of Farmers Bank Stock | 44 | ||||
Purchase of restricted stock | (90) | ||||
Proceeds from maturities and paydowns of securities available for sale | 10,717 | 24,477 | |||
Proceeds from sales of securities available for sale | 26,200 | ||||
Net increase in loans | (87,840) | (69,460) | |||
Proceeds from sale of assets | 174 | ||||
Purchases of premises and equipment | (487) | (2,116) | |||
Proceeds from the sales of foreclosed assets | 842 | 1,256 | |||
(Purchases) redemption of restricted stocks | (21) | 666 | |||
Net cash used in investing activities | (117,418) | (65,828) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Increase in demand, money market, and savings deposits, net | 89,287 | 186,603 | |||
Cash received for the exercise of stock options | 115 | ||||
Decrease in time deposits, net | (76,225) | (19,301) | |||
Decrease in borrowings, net | (441) | (50,239) | |||
Net decrease in minority interest contributed capital | (452) | (225) | |||
Decrease in finance lease liability | (89) | (87) | |||
Cash paid for stock repurchases | (209) | ||||
Dividends paid | (1,347) | (1,330) | |||
Net cash provided by financing activities | 10,848 | 115,212 | |||
Net (decrease) increase in cash and cash equivalents | (90,537) | 64,331 | |||
Cash and cash equivalents, beginning of period | 338,829 | 282,611 | 282,611 | ||
Cash and cash equivalents, ending of period | $ 248,292 | $ 346,942 | 248,292 | 346,942 | $ 338,829 |
Supplementary cash flow information: | |||||
Interest paid | 5,291 | 7,422 | |||
Income taxes paid | 2,416 | 2,400 | |||
Right of use assets and corresponding lease liabilities | 3,016 | ||||
Unrealized loss on securities available for sale | $ (20,131) | $ (1,840) |
Nature of Business and Its Sign
Nature of Business and Its Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Nature of Business and Its Significant Accounting Policies | |
Nature of Business and Its Significant Accounting Policies | Note 1. Nature of Business and Its Significant Accounting Policies Partners Bancorp (the “Company”) is a multi-bank holding company with two wholly owned subsidiaries (the “Subsidiaries”), The Bank of Delmarva (“Delmarva”), a commercial bank headquartered in Seaford, Delaware that operates primarily in Wicomico and Worcester counties in Maryland, Sussex County in Delaware, and Camden and Burlington counties in New Jersey, and Virginia Partners Bank (“Partners”), a commercial bank headquartered in Fredericksburg, Virginia that operates in and around the greater Fredericksburg, Virginia area (Stafford County, Spotsylvania County, King George County, Caroline County, and the City of Fredericksburg, Virginia), the Greater Washington area (the District of Columbia, Arlington County, Clarke County, Fairfax County, Fauquier County, Loudoun County, Prince William County, Warren County, and the Cities of Alexandria, Fairfax, Falls Church, Manassas, Manassas Park, and Reston, Virginia) and Anne Arundel County and the three counties of Southern Maryland (Charles County, Calvert County and St. Mary’s County) . The Subsidiaries engage in general banking business and provide a broad range of financial services to individual and corporate customers, and are subject to competition from other financial institutions. The Subsidiaries are also subject to the regulations of certain federal and state agencies and undergo periodic examinations by those regulatory authorities. The accounting and reporting policies of the Company and its Subsidiaries conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and practices within the banking industry. Significant accounting policies not disclosed elsewhere in the consolidated financial statements are as follows: Principles of Consolidation: The consolidated financial statements include the accounts of the Company; the Subsidiaries, along with their consolidated subsidiaries: Delmarva Real Estate Holdings, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; Davie Circle, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; Delmarva BK Holdings, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; DHB Development, LLC, of which Delmarva holds a 40.55% interest, and which is a real estate holding company; and FBW, LLC, of which Delmarva holds a 50% interest, and which is a real estate holding company; Bear Holdings, Inc., a wholly owned subsidiary of Partners, which is a real estate holding company; Johnson Mortgage Company, LLC (“JMC”), of which Partners owns a 51% interest, and which is a residential mortgage company; and 410 William Street, LLC, a wholly owned subsidiary of Partners, which holds investment property. During the second quarter of 2022, Delmarva sold its 10% interest in West Nithsdale Enterprises, LLC, which was a real estate holding company. The sale of this interest resulted in a loss of approximately $2 thousand, which is included in “Losses (gains) and expenses on other real estate owned, net” under “Other Expenses” in the Consolidated Statements of Income. All significant intercompany accounts and transactions have been eliminated in consolidation. Financial Statement Presentation: The unaudited interim consolidated financial statements do not include all information and notes necessary for a complete presentation of financial position, results of operations, changes in stockholder's equity, and cash flows in conformity with U.S. GAAP. In the opinion of management, the unaudited interim consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position at September 30, 2022 and December 31, 2021, the results of its operations for three months and nine months and its cash flows for the nine months ended September 30, 2022 and 2021 in conformity with U.S. GAAP. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or for any other period. Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain of the critical accounting estimates are more dependent on such judgment and in some cases may contribute to volatility in the Company’s reported financial performance should the assumptions and estimates used change over time due to changes in circumstances. Actual results could differ from those estimates. The more significant areas in which management of the Company applies critical assumptions and estimates that are most susceptible to change in the short term include the calculation of the allowance for credit losses, the valuation of impaired loans, and the unrealized gain or loss on investment securities available for sale. Securities Available for Sale: Marketable debt securities not classified as held to maturity are classified as available for sale. Securities available for sale are acquired as part of the Subsidiaries' asset/liability management strategy and may be sold in response to changes in interest rates, loan demand, changes in prepayment risk, and other factors. Securities available for sale are carried at fair value as determined by quoted market prices. Unrealized gains or losses based on the difference between amortized cost and fair value are reported in other comprehensive income (loss), net of deferred tax. Realized gains and losses, using the specific identification method, are included as a separate component of other income (expense) and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income (loss). Premiums and discounts are recognized in interest income using the interest method over the period to maturity, or for premiums, to the first call date. Additionally, declines in the fair value of individual investment securities below their cost that are other than temporary are reflected as realized losses in the consolidated statements of income. Impairment may result from credit deterioration of the issuer or collateral underlying the security. In performing an assessment of recoverability, all relevant information is considered, including the length of time and extent to which fair value has been less than the amortized cost basis, the cause of the price decline, credit performance of the issuer and underlying collateral, and recoveries or further declines in fair value subsequent to the balance sheet date. For debt securities, the Company measures and recognizes other-than-temporary impairment (“OTTI”) losses through earnings if (1) the Company has the intent to sell the security or (2) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. In these circumstances, the impairment loss is equal to the full difference between the amortized cost basis and the fair value of the security. For securities that are considered OTTI that the Company has the intent and ability to hold in an unrealized loss position, the OTTI write-down is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to other factors, which is recognized as a component of other comprehensive income (“OCI”). Restricted Stock, Equity Securities and Other Investments: Federal Reserve Bank (“FRB”) stock, at cost, Federal Home Loan Bank (“FHLB”) stock, at cost, Atlantic Central Bankers Bank (“ACBB”) stock, at cost, and Community Bankers Bank (“CBB”) stock, at cost, are equity interests in the FRB, FHLB, ACBB, and CBB, respectively. These securities do not have a readily determinable fair value for purposes of ASC 320-10 Investments-Debts and Equity Securities Equity securities with readily determinable fair values are carried at fair value, with changes in fair value reported in net income. Any equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. The entirety of any impairment on equity securities is recognized in earnings. Equity securities are included in “Other investments” on the Consolidated Balance Sheets. Other investments includes an equity ownership of Solomon Hess SBA Loan Fund LLC, for which the value is adjusted for its pro rata share of assets in the fund. Other investments also includes equity securities the Company holds with Community Capital Management in their Community Reinvestment Act (“CRA”) Qualified Investment Fund. Bank Owned Life Insurance: The Company has purchased life insurance policies on certain key executives. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other changes or amounts due that are probable at settlement. Loans and the Allowance for Credit Losses: Loans are generally carried at the amount of unpaid principal, adjusted for unearned loan fees and costs, which are amortized over the term of the loan using the effective interest rate method. Interest on loans is accrued based on the principal amounts outstanding. It is the Subsidiaries' policy to discontinue the accrual of interest when a loan is specifically determined to be impaired or when principal or interest is delinquent for ninety days or more. When a loan is placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Interest income generally is not recognized on specific impaired loans unless the likelihood of further loss is remote. Cash collections on such loans are applied as reductions of the loan principal balance and no interest income is recognized on those loans until the principal balance has been collected. As a general rule, a nonaccrual loan may be restored to accrual status when (1) none of its principal and interest is due and unpaid, and the Company expects repayment of the remaining contractual principal and interest, or (2) when it otherwise becomes well secured and in the process of collection. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. The carrying value of impaired loans is based on the present value of the loan's expected future cash flows or, alternatively, the observable market price of the loan or the fair value of the collateral securing the loan. The allowance for credit losses is maintained at a level believed to be adequate by management to absorb probable losses inherent in the loan portfolio and is based on the size and current risk characteristics of the loan portfolio, the concentration of credits within each pool, the effects of any changes in lending policies, procedures, including underwriting standards and collections, charge off and recovery practices, the effects of changes in the experience, depth and ability of management, the quality of the Company’s loan review system and the degree of oversight by the Company’s Board of Directors, an assessment of individual problem loans and actual loss experience, the value of the underlying collateral, the condition of various market segments, both locally and nationally, and current economic events in specific industries and geographical areas, including unemployment levels, and other pertinent factors, including regulatory guidance and general economic conditions, along with external factors such as competition and the legal environment. Determination of the allowance for credit losses is inherently subjective, as it requires significant estimates, including the amounts and timing on historical loss experience, and consideration of current economic trends, all of which may be susceptible to significant change. Loan losses are charged off against the allowance for credit losses, while recoveries of amounts previously charged off are credited to the allowance for credit losses. A provision for credit losses is charged to operations based on management's periodic evaluation of the factors previously mentioned, as well as other pertinent factors. Evaluations are conducted at least monthly and more often if deemed necessary. The allowance for credit losses typically consists of an allocated component and an unallocated component. The allocated component of the allowance for credit losses reflects expected losses resulting from analyses developed through specific credit allocations for individual loans and historical loss experience for each loan category. The specific credit allocations are based on regular analyses of all loans over a fixed-dollar amount where the internal credit rating is at or below a predetermined classification. The historical loan loss element is determined statistically using an informal loss migration analysis that examines loss experience and the related internal gradings of loans charged off over a current 3 year period. The loss migration analysis is performed quarterly and loss factors are updated regularly based on actual experience. The allocated component of the allowance for credit losses also includes consideration of concentrations and changes in portfolio mix and volume. Any unallocated portion of the allowance for credit losses reflects management's estimate of probable inherent but undetected losses within the loan portfolio due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower's financial condition, the difficulty in identifying triggering events that correlate perfectly to subsequent loss rates, and risk factors that have not yet manifested themselves in loss allocation factors. The historical losses used in the migration analysis may not be representative of actual unrealized losses inherent in the loan portfolio. It is management's intent to continually refine the methodology for the allowance for credit losses in an attempt to directly allocate potential losses in the loan portfolio under ASC Topic 310 and minimize the unallocated portion of the allowance for credit losses. Loan Charge-off Policies Loans are generally fully or partially charged down to the fair value of securing collateral when: ● management deems the asset to be uncollectible; ● repayment is deemed to be made beyond the reasonable time frames; ● the asset has been classified as a loss by internal or external review; and ● the borrower has filed bankruptcy and the loss becomes evident owing to a lack of assets. Acquired Loans Loans acquired in connection with business combinations are recorded at their acquisition-date fair value with no carryover of related allowance for credit losses. Any allowance for credit losses on these pools reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately are not expected to be received). Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considered a number of factors in evaluating the acquisition-date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment. Acquired loans that meet the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans, including the impact of any accretable yield. Loans acquired with deteriorated credit quality are accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality Under the ASC 310-30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow. The accretable yield is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated (the accretion method). If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used. The difference between the loan's total scheduled principal and interest payments over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non-accretable difference. The non-accretable difference represents contractually required principal and interest payments which the Company does not expect to collect. Over the life of the loan, management continues to estimate cash flows expected to be collected. Decreases in expected cash flows are recognized as impairments through a charge to the provision for credit losses resulting in an increase in the allowance for credit losses. Subsequent improvements in cash flows result in first, reversal of existing valuation allowances recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable yield to be subsequently recognized as interest income on a prospective basis over the loan's remaining life. Acquired loans that were not individually determined to be purchased with deteriorated credit quality are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs Troubled Debt Restructurings A loan is accounted for and reported as a troubled debt restructuring (“TDR”) when, for economic or legal reasons, we grant a concession to a borrower experiencing financial difficulty that we would not otherwise consider. Management strives to identify borrowers in financial difficulty early and works with them to modify to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. A restructuring that results in only an insignificant delay in payment is not considered a concession. A delay may be considered insignificant if the payments subject to the delay are insignificant relative to the unpaid principal or collateral value and the contractual amount due, or the delay in timing of the restructured payment period is insignificant relative to the frequency of the payments, the debt’s original contractual maturity or original expected duration. TDRs are designated as impaired loans because interest and principal payments will not be received in accordance with the original contract terms. TDRs that are performing and on accrual status as of the date of the modification remain on accrual status. TDRs that are nonperforming as of the date of modification generally remain as nonaccrual until the prospect of future payments in accordance with the modified loan agreement is reasonably assured, generally demonstrated when the borrower maintains compliance with the restructured terms for a predetermined period, normally at least six months. TDRs with temporary below-market concessions remain designated as a TDR and impaired regardless of the accrual or performance status until the loan is paid off. However, if the TDR has been modified in a subsequent restructure with market terms and the borrower is not currently experiencing financial difficulty, then the loan may be no longer designated as a TDR. Loans Held for Sale: These loans consist of loans made through Partners’ majority owned subsidiary JMC. JMC is engaged in the mortgage brokerage business in which JMC originates, closes, and immediately sells mortgage loans and related servicing rights to permanent investors in the secondary market. JMC has written commitments from several permanent investors (large financial institutions) and only closes loans that meet the lending requirements of the permanent investors. Loans are made in connection with the purchase or refinancing of existing and new family residences primarily in southeastern and northern Virginia. Loans are initially funded primarily by JMC’s lines of credit. With the concurrent sale and delivery of mortgage loans to the permanent investors, JMC records receivables for mortgage loans sold and recognizes the related gains and losses on such sales. The receivables for mortgage loans sold are usually satisfied within of sale, whereupon the related borrowings on the lines of credit are repaid. Because of the short holding period, these loans are carried at the lower of cost or market and market adjustments were deemed necessary in the first three quarters of 2022 or during 2021. JMC’s agreements with its permanent investors include provisions that could require JMC to repurchase loans under certain circumstances, and also provide for the assessment of fees if loans go into default or are refinanced within specified periods of time. JMC has never been required to repurchase a loan and 2022 or December 31, 2021 for possible repurchases. Management does not believe that a provision for early default or refinancing cost is necessary at September 30, 2022 or December 31, 2021. JMC enters into commitments with its customers to originate loans where the interest rate on the loans is determined (locked) prior to funding. While this subjects JMC to the risk that interest rates may change from the commitment date to the funding date, JMC simultaneously enters into financial agreements (best efforts forward sales commitments) with its permanent investors giving JMC the right to deliver (put) loans to the investors at specified yields, thus enabling JMC to manage its exposure to changes in interest rates such that JMC is not subject to fluctuations in fair values of these agreements due to changes in interest rates. However, a default by a permanent investor required to purchase loans under such an agreement would expose JMC to potential fluctuation in selling prices of loans due to changes in interest rate. The fair value of rate lock commitments and forward sales commitments was considered immaterial at September 30, 2022 and December 31, 2021 and an adjustment was not recorded. Gains and losses on the sale of mortgages as well as origination fees, brokerage fees, interest rate lock-in fees and other fees paid by mortgagors are included in “Mortgage banking income, net” on the Company’s Consolidated Statements of Income. Other Real Estate Owned (“OREO”): OREO comprises properties acquired in partial or total satisfaction of problem loans. The properties are recorded at the lower of cost or fair value, net of estimated selling costs, at the date acquired creating a new cost basis. Losses arising at the time of acquisition of such properties are charged against the allowance for credit losses. Subsequent write-downs that may be required, and expenses of operation and gains and losses realized from the sale of OREO are included in other expenses. At September 30, 2022 there were no properties included in OREO and at December 31, 2021, there were two properties with a combined value of $837 thousand included in OREO. At December 31, 2021, there were residential real estate properties included in OREO balances. Intangible Assets and Amortization: During the fourth quarter of 2019, the Company acquired Partners, and during the first quarter of 2018, the Company acquired Liberty Bell Bank (“Liberty”). ASC 350, Intangibles-Goodwill and Other Goodwill: The Company’s goodwill was recognized in connection with the acquisitions of Partners and Liberty. The Company reviews the carrying value of goodwill at least annually during the fourth quarter or more frequently if certain impairment indicators exist. In testing goodwill for impairment, the Company may first consider qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then no further testing is required and the goodwill of the reporting unit is not impaired. If the Company elects to bypass the qualitative assessment or if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the fair value of the reporting unit is compared with its carrying amount to determine whether an impairment exists. No impairment of goodwill was required for the nine months ended September 30, 2022 or for the year ended December 31, 2021 based on management’s assessment. Accounting for Stock Based Compensation: The Company follows ASC 718-10, Compensation—Stock Compensation Earnings Per Share: Basic earnings per common share are determined by dividing net income by the weighted average number of shares outstanding for each period, giving retroactive effect to stock splits and dividends. Weighted average common shares outstanding were |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2022 | |
Investment Securities | |
Investment Securities | Note 2. Investment Securities Investment securities available for sale are as follows: September 30, 2022 Dollars in Thousands Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of U.S. Government agencies and corporations $ 15,167 $ — $ 1,665 $ 13,502 Obligations of States and political subdivisions 29,094 — 3,475 25,619 Mortgage-backed securities 104,383 — 14,444 89,939 Subordinated debt investments 2,467 — 62 2,405 $ 151,111 $ — $ 19,646 $ 131,465 December 31, 2021 Dollars in Thousands Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of U.S. Government agencies and corporations $ 6,547 $ 46 $ 142 $ 6,451 Obligations of States and political subdivisions 29,792 1,397 63 31,126 Mortgage-backed securities 83,213 279 1,089 82,403 Subordinated debt investments 1,990 51 — 2,041 $ 121,542 $ 1,773 $ 1,294 $ 122,021 Gross unrealized losses and fair values, aggregated by investment category and length of time that individual investment securities have been in a continuous unrealized loss position, at September 30, 2022 and December 31, 2021, are as follows: September 30, 2022 Dollars in Thousands Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss Obligations of U.S. Government agencies and corporations $ 11,175 $ 988 $ 2,327 $ 677 $ 13,502 $ 1,665 Obligations of States and political subdivisions 24,728 3,085 891 390 25,619 3,475 Mortgage-backed securities 46,727 5,025 43,209 9,419 89,936 14,444 Subordinated debt investments 2,155 62 — — 2,155 62 Total investment securities with unrealized losses $ 84,785 $ 9,160 $ 46,427 $ 10,486 $ 131,212 $ 19,646 December 31, 2021 Dollars in Thousands Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss Obligations of U.S. Government agencies and corporations $ 1,289 $ 35 $ 2,397 $ 107 $ 3,686 $ 142 Obligations of States and political subdivisions 2,473 63 — — 2,473 63 Mortgage-backed securities 59,236 744 11,349 345 70,585 1,089 Total investment securities with unrealized losses $ 62,998 $ 842 $ 13,746 $ 452 $ 76,744 $ 1,294 For individual investment securities classified as either available for sale or held to maturity, the Company must determine whether a decline in fair value below the amortized cost basis is other than temporary. In estimating OTTI losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. If the decline in fair value is considered to be other than temporary, the cost basis of the individual investment security shall be written down to the fair value as a new cost basis and the amount of the write-down shall be included in earnings (that is, accounted for as a realized loss). At September 30, 2022, there were fifty-four mortgage-backed investment securities (“MBS”), thirteen agency investment securities, four subordinated debt investment securities and fifty-six municipal investment securities that have been in a continuous unrealized loss position for less than twelve months. At September 30, 2022, there were seventeen MBS investment securities, three agency investment securities and four municipal investment securities that had been in a continuous unrealized loss position for more than twelve months. Management found no evidence of OTTI on any of these investment securities and believes that the unrealized losses are due to fluctuations in fair values resulting from changes in market interest rates and are considered temporary. As of September 30, 2022, management also believes it has the ability and intent to hold the investment securities for a period of time sufficient for a recovery of cost. During the three and nine months ended September 30, 2022, the Company sold one investment security, resulting in a loss of $5 thousand. During the three and nine months ended September 30, 2021, the Company sold During the three months ended September 30, 2022, there were no calls or maturities on investment securities. During the nine months ended September 30, 2022, gain or loss for the period. During the three and nine months ended September 30, 2021, thousand, respectively. The Company has pledged certain investment securities as collateral for qualified customers’ deposit accounts at September 30, 2022 and December 31, 2021. The amortized cost and fair value of these pledged investment securities was 2022. The amortized cost and fair value of these pledged investment securities was The Company realized a loss of $75 thousand and $226 thousand on equity securities during the three and nine months ended September 30, 2022, respectively. The Company realized a loss of thousand on equity securities during the three and nine month periods ended September 30, 2021, respectively. These losses are included in “Other expenses” in the Consolidated Statements of Income. Contractual maturities of investment securities at September 30, 2022 are shown below. Actual maturities may differ from contractual maturities because debtors may have the right to call or prepay obligations with or without call or prepayment penalties. MBS primarily reflect investments in various Pass- through and Participation Certificates issued by the Federal National Mortgage Association and the Government National Mortgage Association. Repayment of MBS is affected by the contractual repayment terms of the underlying mortgages collateralizing these obligations and the current level of interest rates. The following is a summary of maturities, calls, or repricing of investment securities available for sale: September 30, 2022 Securities Available for Sale Dollars in Thousands Amortized Fair Cost Value Due in one year or less $ 1 $ 1 Due after one year through five years 11,076 10,743 Due after five years through ten years 46,869 42,922 Due after ten years or more 93,165 77,799 $ 151,111 $ 131,465 |
Loans, Allowance for Credit Los
Loans, Allowance for Credit Losses and Impaired Loans | 9 Months Ended |
Sep. 30, 2022 | |
Loans, Allowance for Credit Losses and Impaired Loans | |
Loans, Allowance for Credit Losses and Impaired Loans | Note 3. Loans, Allowance for Credit Losses and Impaired Loans Major categories of loans as of September 30, 2022 and December 31, 2021 are as follows: (Dollars in thousands) September 30, 2022 December 31, 2021 Originated Loans Real Estate Mortgage Construction and land development $ 119,172 $ 107,478 Residential real estate 196,772 159,701 Nonresidential 603,738 513,873 Home equity loans 21,769 19,246 Commercial 113,814 109,470 Consumer and other loans 3,159 3,546 1,058,424 913,314 Acquired Loans Real Estate Mortgage Construction and land development $ 39 $ 505 Residential real estate 27,549 41,529 Nonresidential 94,576 128,344 Home equity loans 9,000 11,149 Commercial 13,859 21,438 Consumer and other loans 513 916 145,536 203,881 Total Loans Real Estate Mortgage Construction and land development $ 119,211 $ 107,983 Residential real estate 224,321 201,230 Nonresidential 698,314 642,217 Home equity loans 30,769 30,395 Commercial 127,673 130,908 Consumer and other loans 3,672 4,462 1,203,960 1,117,195 Less: Allowance for credit losses (13,818) (14,656) $ 1,190,142 $ 1,102,539 Allowance for Credit Losses Management has an established methodology to determine the adequacy of the allowance for credit losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for credit losses, the Company has segmented the loan portfolio into the following classifications: ● Real Estate Mortgage (which includes Construction and Land Development, Residential Real Estate, Nonresidential Real Estate and Home Equity Loans) ● Commercial ● Consumer and other loans Each of these segments are reviewed and analyzed quarterly using historical charge-off experience for their respective segments as well as the following qualitative factors: ● Changes in the levels and trends in delinquencies, nonaccruals, classified assets and TDRs ● Changes in the value of underlying collateral ● Changes in the nature and volume of the portfolio ● Effects of any changes in lending policies, procedures, including underwriting standards and collections, charge off and recovery practices ● Changes in the experience, depth and ability of management ● Changes in the national and local economic conditions and developments, including the condition of various market segments ● Changes in the concentration of credits within each pool ● Changes in the quality of the Company’s loan review system and the degree of oversight by the Company’s Board of Directors ● Changes in external factors such as competition and the legal environment The above factors result in a Financial Accounting Standards Board (“FASB”) ASC 450-10-20 calculated reserve for environmental factors. All credit exposures graded at a rating of “non-pass” with outstanding balances less than or equal to $250 thousand and credit exposures graded at a rating of “pass” are reviewed and analyzed quarterly using historical charge-off experience for their respective segments as well as the qualitative factors discussed above. The historical charge-off experience is further adjusted based on delinquency risk trend assessments and concentration risk assessments. All credit exposures graded at a rating of “non-pass” with outstanding balances greater than $250 thousand, as well as any loans considered TDRs, are to be reviewed no less than quarterly for the purpose of determining if a specific allocation is needed for that credit. The determination for a specific reserve is measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling cost when foreclosure is probable, instead of discounted cash flows. If management determines that the value of the loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance for credit losses estimate or a charge-off to the allowance for credit losses. The establishment of a specific reserve does not necessarily mean that the credit with the specific reserve will definitely incur loss at the reserve level. It is only an estimation of potential loss based upon known events that are subject to change. A specific reserve will not be established unless loss elements can be determined and quantified based on known facts. The total allowance for credit losses reflects management's estimate of loan losses inherent in the loan portfolio as of September 30, 2022 and December 31, 2021. The following tables include impairment information relating to loans and the allowance for credit losses as of September 30, 2022 and December 31, 2021: Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Balance at September 30, 2022 Purchased credit impaired loans Balance in allowance $ — $ — $ — $ — $ — $ — $ — $ — Related loan balance — 715 353 — 18 — — 1,086 Individually evaluated for impairment: Balance in allowance $ — $ 21 $ — $ — $ 279 $ — $ — $ 300 Related loan balance 575 1,731 4,092 53 337 — — 6,788 Collectively evaluated for impairment: Balance in allowance $ 1,093 $ 1,962 $ 8,163 $ 248 $ 1,612 $ 86 $ 354 $ 13,518 Related loan balance 118,636 221,875 693,869 30,716 127,318 3,672 — 1,196,086 Note: The balances above include unamortized discounts on acquired loans of $1.8 million. Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Balance at December 31, 2021 Purchased credit impaired loans Balance in allowance $ — $ 9 $ — $ — $ — $ — $ — $ 9 Related loan balance 46 1,633 376 — 126 — — 2,181 Individually evaluated for impairment: Balance in allowance $ — $ 3 $ 1,000 $ — $ 452 $ — $ — $ 1,455 Related loan balance 598 2,082 9,901 53 584 — — 13,218 Collectively evaluated for impairment: Balance in allowance $ 1,143 $ 1,881 $ 8,239 $ 212 $ 1,433 $ 36 $ 248 $ 13,192 Related loan balance 107,339 197,515 631,940 30,342 130,198 4,462 — 1,101,796 Note: The balances above include unamortized discounts on acquired loans of The following tables provide a summary of the activity in the allowance for credit losses allocated by loan class for the three and nine months ended September 30, 2022 and for the year ended December 31, 2021. Allocation of a portion of the allowance for credit losses to one loan class does not preclude its availability to absorb losses in other loan classes. September 30, 2022 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Quarter Ended Beginning Balance $ 935 $ 1,869 $ 9,203 $ 234 $ 1,663 $ 31 $ 124 $ 14,059 Charge-offs — — (659) — (47) (16) — (722) Recoveries 1 16 6 — 2 37 — 62 Provision/(recovery) 157 98 (387) 14 273 34 230 419 Ending Balance $ 1,093 $ 1,983 $ 8,163 $ 248 $ 1,891 $ 86 $ 354 $ 13,818 Nine Months Ended Beginning Balance $ 1,143 $ 1,893 $ 9,239 $ 212 $ 1,885 $ 36 $ 248 $ 14,656 Charge-offs — — (1,545) (27) (167) (41) — (1,780) Recoveries — 56 22 6 13 42 — 139 Provision/(recovery) (50) 34 447 57 160 49 106 803 Ending Balance $ 1,093 $ 1,983 $ 8,163 $ 248 $ 1,891 $ 86 $ 354 $ 13,818 December 31, 2021 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Year Ended Beginning Balance $ 903 $ 2,351 $ 7,584 $ 271 $ 1,943 $ 37 $ 114 $ 13,203 Charge-offs — (39) (692) (7) (184) (66) — (988) Recoveries 1 23 53 3 16 22 — 118 Provision/(recovery) 239 (442) 2,294 (55) 110 43 134 2,323 Ending Balance $ 1,143 $ 1,893 $ 9,239 $ 212 $ 1,885 $ 36 $ 248 $ 14,656 On March 27, 2020, the CARES Act was signed into law, which established the Paycheck Protection Program (“PPP”) and allocated $349.0 billion of loans to be issued by financial institutions. Under the program, the Small Business Administration (“SBA”) will forgive loans, in whole or in part, made by approved lenders to eligible borrowers for paycheck and other permitted purposes in accordance with the requirements of the program. These loans carry a fixed rate of 1.00%, if not forgiven, in whole or in part. The loans are 100% guaranteed by the SBA and payments are deferred for the first six months of the loan. The Company received a processing fee ranging from 1% to 5% based on the size of the loan from the SBA. The Paycheck Protection Program and Health Care Enhancement Act (“PPP/ HCEA Act”) was signed into law on April 24, 2020. The PPP/HCEA Act authorized additional funding under the CARES Act of $310.0 billion for PPP loans to be issued by financial institutions through the SBA. The PPP loan funding program expired on May 31, 2021. The Company provided $95.1 million in funding to over 1,130 customers through the PPP, of which approximately $8.2 million remained outstanding as of December 31, 2021. There were loans outstanding under the PPP at September 30, 2022. Because these loans were 100% guaranteed by the SBA and did not undergo the Company’s typical underwriting process, they were not graded and did not have an associated allocation for credit losses at that time. Credit Quality Information The following tables represent credit exposures by creditworthiness category at September 30, 2022 and December 31, 2021. The use of creditworthiness categories to grade loans permits management to estimate a portion of credit risk. The Company’s internal creditworthiness is based on experience with similarly graded credits. The Company uses the definitions below for categorizing and managing its criticized loans. Loans categorized as “Pass” do not meet the criteria set forth below and are not considered criticized. Marginal — Loans in this category are presently protected from loss, but weaknesses are apparent which, if not corrected, could cause future problems. Loans in this category may not meet required underwriting criteria and have no mitigating factors. More than the ordinary amount of attention is warranted for these loans. Substandard — Loans in this category exhibit well-defined weaknesses that would typically bring normal repayment into jeopardy. These loans are no longer adequately protected due to well-defined weaknesses that affect the repayment capacity of the borrower. The possibility of loss is much more evident and above average supervision is required for these loans. Doubtful — Loans in this category have all the weaknesses inherent in a loan categorized as Substandard, with the characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss — Loans in this category are of little value and are not warranted as a bankable asset. Nonaccruals In general, a loan will be placed on nonaccrual status at the end of the reporting month in which the interest or principal is past due more than 90 days. Exceptions to the policy are those loans that are in the process of collection and are well-secured. A well-secured loan is secured by collateral with sufficient market value to repay principal and all accrued interest. A summary of loans by risk rating is as follows: Real Estate Mortgage Construction & Land Residential Consumer & September 30, 2022 Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Pass $ 118,636 $ 222,647 $ 691,287 $ 30,671 $ 126,214 $ 3,325 $ 1,192,780 Marginal — — 4,873 — 1,122 347 6,342 Substandard 575 1,674 2,154 98 337 — 4,838 TOTAL $ 119,211 $ 224,321 $ 698,314 $ 30,769 $ 127,673 $ 3,672 $ 1,203,960 Nonaccrual $ 576 $ 1,243 $ 1,894 $ — $ 337 $ — $ 4,050 Real Estate Mortgage Construction & Land Residential Consumer & December 31, 2021 Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Pass $ 107,339 $ 199,037 $ 622,648 $ 30,159 $ 128,949 $ 3,960 $ 1,092,092 Marginal 46 507 12,819 183 1,364 502 15,421 Substandard 598 1,686 6,750 53 595 — 9,682 TOTAL $ 107,983 $ 201,230 $ 642,217 $ 30,395 $ 130,908 $ 4,462 $ 1,117,195 Nonaccrual $ 598 $ 1,293 $ 6,486 $ — $ 584 $ — $ 8,961 No loans were modified as a TDR during the three months ended September 30, 2022. There was loan modified under the terms of a TDR during the nine months ended September 30, 2022. A summary of loans that were modified under the terms of a TDR during the three and nine months ended September 30, 2022 and 2021 is shown below by class. The post-modification recorded balance reflects the period end balances, inclusive of any interest capitalized to principal, partial principal pay-downs, and principal charge-offs since the modification date. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reported. Real Estate Mortgage Construction & Land Residential Consumer & Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Three months ended September 30, 2022 Number of loans modified during the period — — — — — — — Pre-modification recorded balance $ — $ — $ — $ — $ — $ — $ — Post- modification recorded balance — — — — — — — Nine months ended September 30, 2022 Number of loans modified during the period — 1 — — — — 1 Pre-modification recorded balance $ — $ 48 $ — $ — $ — $ — $ 48 Post- modification recorded balance — 48 — — — — 48 Three months ended September 30, 2021 Number of loans modified during the period — — 1 — — — 1 Pre-modification recorded balance $ — $ — $ 2,919 $ — $ — $ — $ 2,919 Post- modification recorded balance — — 2,907 — — — 2,907 Nine months ended September 30, 2021 Number of loans modified during the period — — 2 — — — 2 Pre-modification recorded balance $ — $ — $ 3,197 $ — $ — $ — $ 3,197 Post- modification recorded balance — — 2,907 — — — 2,907 During the nine months ended September 30, 2022 and 2021, there were no loans modified as a TDR that subsequently defaulted during the periods ended September 30, 2022 and September 30, 2021 which had been modified as a TDR during the twelve months prior to default. There were no loans secured by 1-4 family residential properties in the process of foreclosure at September 30, 2022. There were The following tables include an aging analysis of the recorded investment of past due financing receivables as of September 30, 2022 and December 31, 2021: Recorded Investment Greater than Total >90 Days 30 - 59 Days 60 - 89 Days 90 Days Total Current Financing Past Due At September 30, 2022 Past Due Past Due * Past Due** Past Due Balance*** Receivables and Accruing Dollars in Thousands Real Estate Mortgage Construction and land development $ — $ — $ 575 $ 575 $ 118,636 $ 119,211 $ — Residential real estate 207 1,081 380 1,668 222,653 224,321 230 Nonresidential 427 — 311 738 697,576 698,314 — Home equity loans — — 45 45 30,724 30,769 45 Commercial — 7 — 7 127,666 127,673 — Consumer and other loans 1 — — 1 3,671 3,672 — TOTAL $ 635 $ 1,088 $ 1,311 $ 3,034 $ 1,200,926 $ 1,203,960 $ 275 * Includes ** Includes *** Includes Recorded Investment Greater than Total >90 Days 30 - 59 Days 60 - 89 Days 90 Days Total Current Financing Past Due At December 31, 2021 Past Due* Past Due Past Due** Past Due Balance*** Receivables and Accruing Dollars in Thousands Real Estate Mortgage Construction and land development $ — $ — $ 598 $ 598 $ 107,385 $ 107,983 $ — Residential real estate 658 245 361 1,264 199,966 201,230 — Nonresidential — — 2,915 2,915 639,302 642,217 — Home equity loans 160 — — 160 30,235 30,395 — Commercial 46 — 77 123 130,785 130,908 — Consumer and other loans 15 — — 15 4,447 4,462 — TOTAL $ 879 $ 245 $ 3,951 $ 5,075 $ 1,112,120 $ 1,117,195 $ — * Includes $55 thousand of nonaccrual loans. ** Includes $4.0 million of nonaccrual loans. *** Includes $5.0 million of nonaccrual loans. Impaired Loans Impaired loans are defined as nonaccrual loans, TDRs, purchased credit impaired loans (“PCI”) and loans risk rated substandard or above. When management identifies a loan as impaired, the impairment is measured for potential loss based on the present value of expected future cash flows, discounted at the loan's effective interest rate, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling cost when foreclosure is probable, instead of discounted cash flows. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance for credit losses. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is on nonaccrual status, contractual interest is credited to interest income when received, under the cash basis method. The following tables include the recorded investment and unpaid principal balances for impaired financing receivables, excluding PCI, with the associated allowance amount, if applicable. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired. Unpaid Interest Average Recorded Principal Income Specific Recorded September 30, 2022 Investment Balance Recognized Reserve Investment Dollars in Thousands Impaired loans with specific reserves: Real Estate Mortgage Construction and land development $ — $ — $ — $ — $ — Residential real estate 24 24 1 21 25 Nonresidential — — — — — Home equity loans — — — — — Commercial 337 348 32 279 367 Consumer and other loans — — — — — Total impaired loans with specific reserves $ 361 $ 372 $ 33 $ 300 $ 392 Impaired loans with no specific reserve: Real Estate Mortgage Construction and land development $ 575 $ 575 $ 5 $ — $ 533 Residential real estate 1,707 1,707 30 — 1,742 Nonresidential 4,092 4,092 241 — 4,776 Home equity loans 53 53 1 — 53 Commercial — — — — — Consumer and other loans — — — — — Total impaired loans with no specific reserve $ 6,427 $ 6,427 $ 277 $ — $ 7,104 TOTAL $ 6,788 $ 6,799 $ 310 $ 300 $ 7,496 Total impaired loans of $6.8 million at September 30, 2022 do not include PCI loan balances of $1.1 million, which are net of a remaining purchase discount of $413 thousand. Unpaid Interest Average Recorded Principal Income Specific Recorded December 31, 2021 Investment Balance Recognized Reserve Investment Dollars in Thousands Impaired loans with specific reserves: Real Estate Mortgage Construction and land development $ — $ — $ — $ — $ — Residential real estate 426 426 22 3 433 Nonresidential 6,437 6,559 369 1,000 6,528 Home equity loans — — — — — Commercial 507 517 119 452 583 Consumer and other loans — — — — — Total impaired loans with specific reserves $ 7,370 $ 7,502 $ 510 $ 1,455 $ 7,544 Impaired loans with no specific reserve: Real Estate Mortgage Construction and land development $ 598 $ 598 $ 13 $ — $ 599 Residential real estate 1,656 1,687 26 — 1,698 Nonresidential 3,464 3,462 344 — 3,510 Home equity loans 53 53 1 — 53 Commercial 77 154 2 — 109 Consumer and other loans — — — — — Total impaired loans with no specific reserve $ 5,848 $ 5,954 $ 386 $ — $ 5,969 TOTAL $ 13,218 $ 13,456 $ 896 $ 1,455 $ 13,513 Total impaired loans of $13.2 million at December 31, 2021 do not include PCI loan balances of $2.2 million, which are net of a remaining purchase discount of $432 thousand. At December 31, 2021, there was $9 thousand in specific reserves related to PCI loans included in the allowance for credit losses. All acquired loans were initially recorded at fair value at the acquisition date. The outstanding balance and the carrying amount of acquired loans included in the consolidated balance sheets are as follows: Dollars in Thousands September 30, 2022 December 31, 2021 Accountable for under ASC 310-30 (PCI loans) Outstanding balance $ 1,499 $ 2,613 Carrying amount 1,086 2,181 Accountable for under ASC 310-20 (non-PCI loans) Outstanding balance $ 145,846 $ 203,596 Carrying amount 144,450 201,700 Total acquired loans Outstanding balance $ 147,345 $ 206,209 Carrying amount 145,536 203,881 The following table provides changes in accretable yield for all acquired loans accounted for under ASC 310-20 for the nine months ended September 30, 2022 and the year ended December 31, 2021: Dollars in Thousands September 30, 2022 December 31, 2021 Balance at beginning of period $ 1,896 $ 3,361 Accretion (500) (1,464) Other changes, net — (1) Balance at end of period $ 1,396 $ 1,896 During the three and nine months ended September 30, 2022, the Company recorded $12 thousand and $67 thousand, respectively, in accretion on acquired loans accounted for under ASC 310-30. During the three and nine months ended September 30, 2021, the Company recorded Non-accretable yield on PCI loans was $1.4 million at September 30, 2022 and December 31, 2021. The Company had no commitments to loan additional funds to the borrowers of restructured, impaired, or nonaccrual loans as of September 30, 2022 and December 31, 2021. Concentration of Risk: The Company makes loans to customers located primarily within Anne Arundel, Charles, Calvert, St. Mary’s, Wicomico and Worcester Counties, Maryland, Sussex County, Delaware, Camden and Burlington Counties, New Jersey, the Greater Fredericksburg, Virginia area (Stafford County, Spotsylvania County, King George County, Caroline County, and the City of Fredericksburg, Virginia) and the Greater Washington D.C. area (the District of Columbia, Arlington County, Clarke County, Fairfax County, Fauquier County, Loudoun County, Prince William County, Warren County, and the Cities of Alexandria, Fairfax, Falls Church, Manassas, Manassas Park, and Reston, Virginia) . A substantial portion of its loan portfolio consists of residential and commercial real estate mortgages. The ability of the Company’s debtors to honor their contracts is dependent upon the real estate and general economic conditions in these areas. |
Borrowings and Notes Payable
Borrowings and Notes Payable | 9 Months Ended |
Sep. 30, 2022 | |
Borrowings and Notes Payable | |
Borrowings and Notes Payable | Note 4. Borrowings and Notes Payable The Company owns capital stock of the FHLB as a condition for a $422.0 million convertible advance credit facility from the FHLB. As of September 30, 2022, the Company had remaining credit availability of $396.1 million under this facility. The following tables detail the advances the Company had outstanding with the FHLB at September 30, 2022 and December 31, 2021: September 30, 2022 Dollars in Thousands Outstanding Balance Interest Rate Maturity Date Interest Payment Fixed rate hybrid $ 5,000 3.15 % October 2022 Fixed, paid monthly Principal reducing credit 214 1.62 % March 2023 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Principal reducing credit 805 1.99 % March 2026 Fixed, paid quarterly Total advances $ 25,819 December 31, 2021 Dollars in Thousands Outstanding Balance Interest Rate Maturity Date Interest Payment Fixed rate hybrid $ 5,000 3.15 % October 2022 Fixed, paid monthly Principal reducing credit 536 1.62 % March 2023 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Principal reducing credit 977 1.99 % March 2026 Fixed, paid quarterly Total advances $ 26,313 The Company did not have any short-term borrowings from the FHLB for the three and nine month periods ended September 30, 2022 and 2021. Borrowings from the FHLB are considered short-term if they have an original maturity of less than a year. The Company has pledged a portion of its residential and commercial mortgage loan portfolio as collateral for these credit facilities. The lendable collateral value outstanding on these pledged loans totaled approximately $189.1 million and $181.8 million at September 30, 2022 and December 31, 2021, respectively. In addition to the FHLB credit facility, in October 2015, the Company entered into a subordinated loan agreement for an aggregate principal amount of $2.0 million, net of issuance costs. Interest-only payments were due quarterly at 6.710% per annum, and the outstanding principal balance would have matured in October 2025. During July 2021, the prepayment provisions in the subordinated debt agreement were exercised, and the principal balance and any remaining accrued interest of this subordinated debt were paid in full. In January 2018, the Company entered into a subordinated loan agreement for an aggregate principal amount of 2028. In June 2020, the Company entered into a subordinated loan agreement for an aggregate principal amount of million, net of issuance costs, to provide capital to support organic growth or growth through strategic acquisitions and capital expenditures. Partners owns a one-half undivided interest in 410 William Street, Fredericksburg, Virginia. Partners purchased a one-half interest in the land for cash, plus additional settlement costs, and assumption of one-half of the remaining deed of trust loan on December 14, 2012. Partners indemnified the indemnities, who are the personal guarantors of the deed of trust loan in the amount of thousand, which was one-half of the outstanding balance of the loan as of the purchase date. Partners has a remaining obligation under the note payable of thousand. The loan was refinanced on April 30, 2015 with a amortization. The interest rate is fixed at The Company provides JMC a warehouse line of credit, which is eliminated in consolidation. In addition, JMC has a warehouse line of credit with another financial institution in the amount of million. The interest rate is the weekly average of the 2022). The rate is subject to change the first of every month. Amounts borrowed are collateralized by a security interest in the mortgage loans financed under the line and are payable upon demand. The warehouse line of credit is set to renew or mature on November 30, 2022. The balance outstanding at September 30, 2022 and December 31, 2021 was thousand, respectively. Interest expense on the warehouse lines of credit was During the second quarter of 2020, in connection with the loans originated as part of the PPP, the Company borrowed under the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”). Under the terms of the PPPLF, the Company can borrow funds which are secured by the Company’s PPP loans. During the first quarter of 2021, the Company used a portion of its excess cash and cash equivalents to repay all borrowings that were previously outstanding under the PPPLF. As of September 30, 2022, the Company did no t have any outstanding advances under the PPPLF. The proceeds of these long-term borrowings were generally used to purchase higher yielding investment securities, fund additional loans, redeem preferred stock, or fund acquisitions. Additionally, the Company has secured credit availability of $5.0 million and unsecured credit availability of $117.0 million with various correspondent banks for short-term liquidity needs, if necessary. The secured facility must be collateralized by specific securities at the time of any usage. At September 30, 2022, there were no borrowings outstanding fair value thousand. At December 31, 2021, there were outstanding thousand, respectively. The Company has pledged investment securities available for sale with an amortized cost and fair value of $3.4 million and $2.8 million, respectively, with the FRB to secure Discount Window borrowings at September 30, 2022. The combined amortized cost and fair value of these pledged investment securities available for sale were million at December 31, 2021. At September 30, 2022 and December 31, 2021, there were Maturities of debt are as follows (dollars in thousands): 2022 $ 5,350 2023 314 2024 20,008 2025 210 2026 39 Thereafter 22,912 $ 48,833 |
Lease Commitments
Lease Commitments | 9 Months Ended |
Sep. 30, 2022 | |
Lease Commitments | |
Lease Commitments | Note 5. Lease Commitments The Company accounts for leases in accordance with Accounting Standards Update ASU 2016-02, Leases (Topic 842) Certain leases include options The following tables present information about the Company’s leases for the periods ended: Dollars in Thousands September 30, 2022 December 31, 2021 Balance Sheet Operating Lease Amounts Right-of-use asset $ 5,290 $ 6,009 Lease liability 5,688 6,372 Finance Lease Amounts Right-of-use asset $ 1,584 $ 1,687 Lease liability 2,036 2,125 Supplemental balance sheet information Weighted average lease term - Operating Leases (Yrs.) 7.46 7.99 Weighted average lease term - Finance Leases (Yrs.) 11.30 12.09 Weighted average discount rate - Operating Leases (1) 2.29 % 2.24 % Weighted average discount rate - Finance Leases (1) 2.84 % 2.84 % Income Statement Three Months Ended September 30, 2022 September 30, 2021 Operating lease cost classified as premises and equipment $ 286 $ 252 Finance lease cost classified as interest on borrowings 15 15 Nine Months Ended Operating lease cost classified as premises and equipment $ 858 $ 691 Finance lease cost classified as interest on borrowings 44 47 Operating outgoing cash flows from operating leases $ 787 $ 643 Operating outgoing cash flows from finance leases $ 134 $ 134 (1) The discount rate was developed by using the fixed rate credit advance borrowing rate at the FHLB of Atlanta for a term correlating to the remaining life of each lease. Management believes this rate closely mirrors its incremental borrowing rate for similar terms. Minimum lease payments at September 30, 2022, for the next five years and thereafter, assuming renewal options are exercised, are approximately as follows: Dollars in Thousands Operating Leases: One year or less $ 966 One to three years 1,470 Three to five years 1,060 Over 5 years 2,905 Total undiscounted cash flows 6,401 Less: Discount (713) Lease Liabilities $ 5,688 Finance Leases: One year or less $ 185 One to three years 393 Three to five years 407 Over 5 years 1,417 Total undiscounted cash flows 2,402 Less: Discount (366) Lease Liabilities $ 2,036 |
Stock Option Plans
Stock Option Plans | 9 Months Ended |
Sep. 30, 2022 | |
Stock Option Plans | |
Stock Option Plans | Note 6. Stock Option Plans Liberty Bell Bank Stock Option Plans In 2004, Liberty adopted the 2004 Incentive Stock Option Plan and the 2004 Non-Qualified Stock Option Plan, which were stock-based incentive compensation plans (the “Liberty Plans”). In February 2014, the Liberty Plans expired pursuant to their terms. Options under these plans had a 10 year life and vested over 5 years. Remaining options under these plans became fully vested with the signing of the Agreement of Merger with the Company in February 2018. In accordance with the terms of the Agreement of Merger between the Company and Liberty, the Liberty Plans were assumed by the Company, and the options were converted into and became an option to purchase an adjusted number of shares of the common stock of the Company at an adjusted exercise price per share. The number of shares was determined by multiplying the number of shares of Liberty common stock for which the option was exercisable by the number of shares of the Company’s common stock into which shares of Liberty common stock were convertible in the Merger, which was 0.2857 (the “Conversion Ratio”), rounded to the next lower whole share. The exercise price was determined by dividing the exercise price per share of Liberty common stock by the Conversion Ratio, rounded up to the nearest cent. At the effective time of the merger between the Company and Liberty in 2018 (the “Liberty Merger”) there were 48,225 options outstanding at an exercise price of $1.18. These shares were converted to 13,771 options outstanding at an exercise price of $4.14. A summary of stock option transactions with respect to such options for the nine months ended September 30, 2022 is as follows: September 30, 2022 Weighted Weighted Average Average Remaining Exercise Contractual Intrinsic Shares Price Life Value Outstanding at beginning of period 5,761 $ 4.14 1.23 Granted — — — Exercised (1,028) 4.14 — Forfeited — — — Outstanding at end of period 4,733 $ 4.14 0.48 $ 22,482 Options exercisable at September 30, 2022 4,733 $ 4.14 Virginia Partners Bank Stock Option Plan In 2015 Partners adopted the 2015 Stock Option Plan (the “2015 Partners Plan”), which allowed both incentive stock options and nonqualified stock options to be granted. The exercise price of each stock option equaled the market price of Partners' common stock on the date of grant and a stock option’s maximum term was . Stock options granted in the years ended December 31, 2018 and 2017 vested over . Partners’ previous stock compensation plan (the “2008 Partners Plan”) provided for the grant of share based awards in the form of incentive stock options and nonqualified stock options to Partners’ directors, officers and employees. In April 2015, the 2008 Partners Plan was terminated and replaced with the 2015 Partners Plan. Stock options outstanding prior to April 2015 were granted under the 2008 Partners Plan and became subject to the provisions of the 2015 Partners Plan. The 2008 Partners Plan also provided for stock options to be granted to seed investors as a reward for the contribution to organizational funds which were at risk if Partners’ organization had not been successful. Under the 2008 Partners Plan, Partners granted stock options to seed investors in 2008, which were fully vested upon the date of the grant. As a result of the acquisition of Partners in 2019 through an exchange of shares in an all stock transaction (the “Share Exchange”), each stock option (the "Partners Options"), whether vested or unvested, issued and outstanding immediately prior to the effective time under the 2008 Partners Plan or the 2015 Partners Plan and together with the 2008 Partners Plan, (the "Partners Stock Plans"), immediately 100% vested, to the extent not already vested, and converted into and became stock options to purchase Company common stock. In addition, the Company assumed each Partners Stock Plan, and assumed each Partners Option in accordance with the terms and conditions of the Partners Stock Plans pursuant to which it was issued. As such, Partners Options to acquire per share. The number of shares was determined by multiplying the number of shares of Partners’ common stock for which the option was exercisable by the number of shares of the Company common stock into which shares of Partners common stock were convertible in the Share Exchange, which was (the “Conversion Ratio”), rounded to the next lower whole share. The exercise price was determined by dividing the exercise price per share of Partners common stock by the Conversion Ratio, rounded up to the nearest cent. A summary of stock option transactions with respect to such options for the nine months ended September 30, 2022 is as follows: September 30, 2022 Weighted Weighted Average Average Remaining Exercise Contractual Intrinsic Shares Price Life Value Outstanding at beginning of period 128,147 $ 6.40 3.18 Granted — — — Exercised (19,067) 5.83 — Forfeited (8,588) 6.48 — Outstanding at end of period 100,492 $ 6.50 2.76 $ 240,168 Options exercisable at September 30, 2022 100,492 $ 6.50 The intrinsic value represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock options exceeds the exercise price) that would have been received by the holders had they exercised their stock options on September 30, 2022. As stated in Note 1 – Nature of Business and Its Significant Accounting Policies, the Company follows ASC 718-10 which requires that stock-based compensation to employees and directors be recognized as compensation cost in the income statement based on their fair values on the measurement date, which, for the Company, is the date of the grant. All stock option expenses had been fully recognized prior to 2020. As such, there was no expense recorded related to stock options during the three and nine months ended September 30, 2022 and 2021. |
Restricted Stock Plan
Restricted Stock Plan | 9 Months Ended |
Sep. 30, 2022 | |
Restricted Stock Plan | |
Restricted Stock Plan | Note 7. Restricted Stock Plan The Company had an employee and director restricted stock plan (the “Company Plan”) and reserved 405,805 shares of stock for issuance thereunder. The Company adopted the Company Plan, pursuant to which employee and directors of the Company could acquire shares of common stock. The Company Plan was adopted by the Company’s Board of Directors in April 2014, and subject to the right of the Board of Directors to terminate the Company Plan at any time, terminated on June 30, 2018. The termination of the Company Plan, either at the scheduled termination date or before such date, did not affect any award issued prior to termination. During the years ended December 31, 2017 and 2018, the Company awarded As of September 30, 2022, there were no remaining non-vested restricted stock awards under the Company Plan. As stated in Note 1 – Nature of Business and Its Significant Accounting Policies, the Company follows ASC 718-10 which requires that restricted stock- based compensation to employees and directors be recognized as compensation cost in the income statement based on their fair values on the measurement date. The fair value of restricted stock granted was equal to the underlying fair value of the stock. The Company did net of tax, related to the restricted stock awards under the Company Plan. restricted stock-based compensation expense was recognized during the three months ended September 30, 2021. |
Incentive Stock Plan
Incentive Stock Plan | 9 Months Ended |
Sep. 30, 2022 | |
Incentive Stock Plan | |
Incentive Stock Plan | Note 8. Incentive Stock Plan At the 2021 annual meeting of shareholders held on May 19, 2021 (the “2021 Annual Meeting”), the Company’s shareholders approved the Partners Bancorp 2021 Incentive Stock Plan (the “2021 Incentive Stock Plan”), which the Company’s Board of Directors had adopted, subject to shareholder approval, on January 27, 2021, based on the recommendation of the Compensation Committee of the Company’s Board of Directors (the “Committee”). The 2021 Incentive Stock Plan became effective upon shareholder approval at the 2021 Annual Meeting. The 2021 Incentive Stock Plan authorizes the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards and performance units to key employees and non-employee directors, including members of advisory boards, of the Company and certain of its subsidiaries, as determined by the Committee. Subject to the right of the Board of Directors to terminate the 2021 Incentive Stock Plan at any time, awards may be granted under the 2021 Incentive Stock Plan until May 18, 2031. Subject to adjustment in the event of certain changes in the Company’s capital structure, the maximum number of shares of the Company’s common stock that may be issued under the 2021 Incentive Stock Plan is 1,250,000. On April 28, 2021, the Company’s Board of Directors granted 58,824 shares of restricted stock to two senior officers of Partners in accordance with Nasdaq Listing Rule 5635(c)(4) as inducements material to each of them accepting employment with Partners. All of these shares were subject to time vesting in three equal annual installments beginning on April 28, 2022. On December 10, 2021, in accordance with the terms and conditions set forth in the definitive agreement and plan of merger with OceanFirst Financial Corp. (“OCFC”), the Company’s Board of Directors approved to immediately vest these outstanding and unvested awards. The accelerated vesting of these awards was not contingent upon the merger closing. Each grantee irrevocably and unconditionally covenanted and agreed to not transfer, convey or sell any share of Company common stock, along with certain other terms, in respect of such accelerated vesting of the restricted stock awards. On October 12, 2021, the Company’s Board of Directors granted 68,000 shares of restricted stock to employees of Partners under the 2021 Incentive Stock Plan. All of these shares were subject to time vesting in three equal annual installments beginning on June 1, 2022. On December 10, 2021, in accordance with the terms and conditions set forth in the definitive agreement and plan of merger with OCFC, the Company’s Board of Directors approved to immediately vest of these outstanding and unvested awards. The accelerated vesting of these awards was not contingent upon the merger closing. Each grantee of awards that were subject to the accelerated vesting provisions irrevocably and unconditionally covenanted and agreed to not transfer, convey or sell any share of Company common stock, along with certain other terms, in respect of such accelerated vesting of the restricted stock awards. On October 27, 2021, the Company’s Board of Directors granted 27,000 shares of restricted stock to a director of the Company and Partners under the 2021 Incentive Stock Plan. All of these shares were subject to time vesting in three equal annual installments beginning on June 1, 2022. On December 10, 2021, in accordance with the terms and conditions set forth in the definitive agreement and plan of merger with OCFC, the Company’s Board of Directors approved to immediately vest these outstanding and unvested awards. The accelerated vesting of these awards was not contingent upon the merger closing. The grantee irrevocably and unconditionally covenanted and agreed to not transfer, convey or sell any share of Company common stock, along with certain other terms, in respect of such accelerated vesting of the restricted stock awards. As of September 30, 2022, there were 18,669 non-vested shares related to restricted stock awards. A schedule of non-vested shares related to restricted stock awards as of September 30, 2022 is as follows: Employees Weighted Average Shares Fair Value Nonvested Awards December 31, 2021 28,000 $ 8.99 Awarded in 2022 — — Vested in 2022 (9,331) 8.99 Nonvested Awards September 30, 2022 18,669 $ 8.99 As a result of applying the provisions of ASC 718-10, during the three and nine months ended September 30, 2022, the Company recognized restricted stock-based compensation expense of $24 thousand, or $17 thousand net of tax, and $71 thousand, or $52 thousand net of tax, respectively, related to the restricted stock awards. As a result of applying the provisions of ASC 718-10, during the three and nine months ended September 30, 2021, the Company recognized restricted stock-based compensation expense of $37 thousand, or $28 thousand net of tax, and $62 thousand, or $46 thousand net of tax, respectively, related to the restricted stock awards. Restricted stock-based compensation expense is accounted for using the fair value of the Company’s common stock on the date the restricted shares were awarded, which was $7.65 for the awards granted on April 28, 2021, $8.99 for the awards granted on October 12, 2021, and $8.72 for the awards granted on October 27, 2021 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share | |
Earnings Per Share | Note 9. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income or loss by the weighted average number of shares outstanding during the period. Diluted EPS is computed using the weighted average number of shares outstanding during the period, including the effect of all potentially dilutive shares outstanding attributable to stock instruments. Applicable guidance requires that outstanding, unvested share-based payment awards that contain voting rights and rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. Accordingly, the weighted average number of shares of the Company’s common stock used in the calculation of basic and diluted net income per common share includes unvested shares of the Company’s outstanding restricted common stock. The following table presents basic and diluted EPS for the three and nine months ended September 30, 2022 and 2021: Net Income Applicable to Basic Earnings Weighted Average (Dollars in thousands, except per share data) Per Common Share Shares Outstanding For the three months ended September 30, 2022 Basic EPS $ 4,110 17,962 $ 0.229 Effect of dilutive stock awards — 32 — Diluted EPS $ 4,110 17,994 $ 0.228 For the nine months ended September 30, 2022 Basic EPS $ 9,398 17,961 $ 0.523 Effect of dilutive stock awards — 34 — Diluted EPS $ 9,398 17,995 $ 0.522 For the three months ended September 30, 2021 Basic EPS $ 2,696 17,788 $ 0.152 Effect of dilutive stock awards — 56 — Diluted EPS $ 2,696 17,844 $ 0.151 For the nine months ended September 30, 2021 Basic EPS $ 5,946 17,758 $ 0.335 Effect of dilutive stock awards — 42 — Diluted EPS $ 5,946 17,800 $ 0.334 |
Regulatory Capital Requirements
Regulatory Capital Requirements | 9 Months Ended |
Sep. 30, 2022 | |
Regulatory Capital Requirements | |
Regulatory Capital Requirements | Note 10. Regulatory Capital Requirements The Company’s Subsidiaries are subject to various regulatory capital requirements administered by Federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company’s Subsidiaries must meet specific capital adequacy guidelines that involve quantitative measures of the Company’s Subsidiaries’ assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s Subsidiaries’ capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weighting, and other factors. Federal banking regulations also impose regulatory capital requirements on bank holding companies. Under the small bank holding company policy statement of the Federal Reserve Board, which applies to certain bank holding companies with consolidated total assets of less than $3 billion, the Company is not subject to regulatory capital requirements. On September 17, 2019 the Federal Deposit Insurance Corporation (“FDIC”) finalized a rule that introduces an optional simplified measure of capital adequacy for qualifying community banking organizations (i.e., the community bank leverage ratio (CBLR) framework), as required by the Economic Growth, Regulatory Relief and Consumer Protection Act. The CBLR framework is designed to reduce burden by removing the requirements for calculating and reporting risk-based capital ratios for qualifying community banking organizations that opt into the framework. In order to qualify for the CBLR framework, a community banking organization must have a Tier 1 leverage ratio of at least 9 percent, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. A qualifying community banking organization that opts into the CBLR framework and meets all requirements under the framework will be considered to have met the well-capitalized ratio requirements under the Prompt Corrective Action regulations and will not be required to report or calculate risk-based capital. The Company has elected not to opt into the CBLR framework at this time. Quantitative measures established by regulation to ensure capital adequacy require the Company’s Subsidiaries to maintain minimum amounts and ratios (as defined in the regulations) of total and Tier 1 capital to risk-weighted assets, Tier 1 capital to average assets, and common equity Tier 1 capital to risk-weighted assets. Management believes as of September 30, 2022 that the Company’s Subsidiaries met all capital adequacy requirements to which they are subject. As of September 30, 2022, the most recent notification from the FDIC categorized the Company’s Subsidiaries as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Company’s Subsidiaries must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage and common equity Tier 1 risk-based ratios. There are no conditions or events since that notification that management believes have changed the Company’s Subsidiaries’ categories. The Common Equity Tier 1, Tier 1 and Total capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. Risk-weighted assets are calculated based on regulatory requirements and include total assets, with certain exclusions, allocated by risk weight category, and certain off-balance-sheet items, among other things. The leverage ratio is calculated by dividing Tier 1 capital by adjusted quarterly average total assets, which exclude goodwill and other intangible assets, among other things. The Basel III Capital Rules require the Company’s Subsidiaries to maintain (i) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% Common Equity Tier 1 capital ratio, effectively resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 7.0%), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio, effectively resulting in a minimum Tier 1 capital ratio of 8.5%), (iii) a minimum ratio of Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% Total capital ratio, effectively resulting in a minimum Total capital ratio of 10.5%) and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average quarterly assets. The implementation of the capital conservation buffer became fully phased in on January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress and, as detailed above, effectively increases the minimum required risk-weighted capital ratios. Banking institutions with a ratio of Common Equity Tier 1 capital to risk-weighted assets below the effective minimum (4.5% plus the capital conservation buffer and, if applicable, the countercyclical capital buffer) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The following table presents actual and required capital ratios as of September 30, 2022 and December 31, 2021 for the Company’s Subsidiaries under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of September 30, 2022 and December 31, 2021 based on the fully phased-in provisions of the Basel III Capital Rules. Capital levels required to be considered well capitalized are based on prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules. A comparison of the Company’s Subsidiaries’ capital amounts and ratios as of September 30, 2022 and December 31, 2021 with the minimum requirements are presented below. To Be Well Capitalized For Capital Under Prompt Adequacy Corrective Action In Thousands Actual Purposes Provisions Amount Ratio Amount Ratio Amount Ratio As of September 30, 2022 Total Capital Ratio (To Risk Weighted Assets) The Bank of Delmarva $ 95,924 13.0 % $ 77,304 10.5 % $ 73,623 10.0 % Virginia Partners Bank 62,076 11.4 % 57,233 10.5 % 54,508 10.0 % Tier 1 Capital Ratio (To Risk Weighted Assets) The Bank of Delmarva 86,715 11.8 % 62,580 8.5 % 58,898 8.0 % Virginia Partners Bank 57,718 10.6 % 46,332 8.5 % 43,606 8.0 % Common Equity Tier I Ratio (To Risk Weighted Assets) The Bank of Delmarva 86,715 11.8 % 51,536 7.0 % 47,855 6.5 % Virginia Partners Bank 57,718 10.6 % 38,156 7.0 % 35,430 6.5 % Tier 1 Leverage Ratio (To Average Assets) The Bank of Delmarva 86,715 8.7 % 39,916 4.0 % 49,895 5.0 % Virginia Partners Bank 57,718 8.6 % 26,772 4.0 % 33,465 5.0 % As of December 31, 2021 Total Capital Ratio (To Risk Weighted Assets) The Bank of Delmarva $ 91,928 12.9 % $ 74,963 10.5 % $ 71,394 10.0 % Virginia Partners Bank 56,192 12.0 % 49,103 10.5 % 46,765 10.0 % Tier 1 Capital Ratio (To Risk Weighted Assets) The Bank of Delmarva 82,972 11.6 % 60,684 8.5 % 57,115 8.0 % Virginia Partners Bank 52,844 11.3 % 39,750 8.5 % 37,412 8.0 % Common Equity Tier I Ratio (To Risk Weighted Assets) The Bank of Delmarva 82,972 11.6 % 49,975 7.0 % 46,406 6.5 % Virginia Partners Bank 52,844 11.3 % 32,735 7.0 % 30,397 6.5 % Tier 1 Leverage Ratio (To Average Assets) The Bank of Delmarva 82,972 8.1 % 40,926 4.0 % 51,158 5.0 % Virginia Partners Bank 52,844 8.5 % 25,009 4.0 % 31,261 5.0 % Banking regulations also limit the amount of dividends that may be paid without prior approval of the Company’s regulatory agencies. Regulatory approval is required to pay dividends, which exceed the Company’s and its Subsidiaries’ net profits for the current year plus its retained net profits for the preceding two years. At September 30, 2022 and December 31, 2021, approximately million, respectively, was available for the payment of dividends to stockholders by the Company without regulatory approval. Dividends from the Subsidiaries to the Company are also limited by the amount of retained net profits of the Subsidiaries in the current year and the preceding two years. At September 30, 2022 and December 31, 2021, approximately |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Fair Values of Financial Instruments | |
Fair Values of Financial Instruments | Note 11. Fair Values of Financial Instruments FASB ASC 825, Financial Instruments (“ASC 825”) requires disclosure about fair value of financial instruments, including those financial assets and financial liabilities that are not required to be measured and reported at fair value on a recurring or nonrecurring basis. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. Additionally, in accordance with ASU 2016-01, the Company uses the exit price notion, rather than the entry price notion, in calculating the fair values of financial instruments not measured at fair value on a recurring basis. The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows: Dollars are in thousands Fair Value Measurements at September 30, 2022 Quoted Prices in Significant Significant Active Markets for Other Unobservable Carrying Identical Assets Observable Inputs Inputs Amount (Level 1) (Level 2) (Level 3) Balance Financial assets: Cash and due from banks $ 12,784 $ 12,784 $ — $ — $ 12,784 Interest bearing deposits 210,935 210,935 — — 210,935 Federal funds sold 24,573 24,573 — — 24,573 Securities: Available for sale 131,465 — 131,465 — 131,465 Loans held for sale 201 — 201 — 201 Loans, net of allowance for credit losses 1,190,142 — — 1,119,240 1,119,240 Accrued interest receivable 4,035 — 4,035 — 4,035 Restricted stock 4,889 — 4,889 — 4,889 Other investments 4,864 — 4,864 — 4,864 Bank owned life insurance 18,592 — 18,592 — 18,592 Financial liabilities: Deposits $ 1,455,944 $ — $ 1,152,907 $ 294,000 $ 1,446,907 Accrued interest payable on deposits 189 — 189 — 189 FHLB advances 25,819 — 24,934 — 24,934 Subordinated notes payable 22,203 — 26,506 — 26,506 Other borrowings 811 — — 811 811 Dollars are in thousands Fair Value Measurements at December 31, 2021 Quoted Prices in Significant Significant Active Markets for Other Unobservable Carrying Identical Assets Observable Inputs Inputs Amount (Level 1) (Level 2) (Level 3) Balance Financial assets: Cash and due from banks $ 12,887 $ 12,887 $ — $ — $ 12,887 Interest bearing deposits 297,902 297,902 — — 297,902 Federal funds sold 28,040 28,040 — — 28,040 Securities: Available for sale 122,021 — 122,021 — 122,021 Loans held for sale 4,064 — 4,064 — 4,064 Loans, net of allowance for credit losses 1,102,539 — — 1,089,812 1,089,812 Accrued interest receivable 4,313 — 4,313 — 4,313 Restricted stock 4,869 — 4,869 — 4,869 Other investments 5,065 — 5,065 — 5,065 Bank owned life insurance 18,254 — 18,254 — 18,254 Other real estate owned 837 — — 837 837 Financial liabilities: Deposits $ 1,442,876 $ — $ 1,063,619 $ 380,245 $ 1,443,864 Accrued interest payable on deposits 280 — 280 — 280 FHLB advances 26,313 — 27,007 — 27,007 Subordinated notes payable 22,168 — 30,091 — 30,091 Other borrowings 755 — — 755 755 The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. However, borrowers with fixed rate obligations are less likely to repay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company's overall interest rate risk. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | Note 12. Fair Value Measurements The Company follows ASC 820-10 Fair Value Measurements and Disclosures ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value. Fair Value Hierarchy In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 - Level 2 - Level 3 - The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a recurring basis in the financial statements: Investment Securities Available for Sale: Investment securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2). In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of the Company’s investment securities available for sale are considered to be Level 2 securities. The following table presents the balances of financial assets measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021: Fair Dollars are in thousands Level 1 Level 2 Level 3 Value September 30, 2022 Securities available for sale: Obligations of U.S. Government agencies and corporations $ — $ 13,502 $ — $ 13,502 Obligations of States and political subdivisions — 25,619 — 25,619 Mortgage-backed securities — 89,939 — 89,939 Subordinated debt investments — 2,405 — 2,405 Total securities available for sale $ — $ 131,465 $ — $ 131,465 December 31, 2021 Securities available for sale: Obligations of U.S. Government agencies and corporations $ — $ 6,451 $ — $ 6,451 Obligations of States and political subdivisions — 31,126 — 31,126 Mortgage-backed securities — 82,403 — 82,403 Subordinated debt investments — 2,041 — 2,041 Total securities available for sale $ — $ 122,021 $ — $ 122,021 Certain financial assets are measured at fair value on a nonrecurring basis in accordance with U.S. GAAP. Adjustments to the fair value of these financial assets usually result from the application of lower of cost or market accounting or write-downs of individual assets. The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements: Loans Held for Sale: Loans held for sale are loans originated by JMC for sale in the secondary market. Loans originated for sale by JMC are recorded at lower of cost or market. No market adjustments were required at September 30, 2022; therefore, loans held for sale were carried at cost. Because of the short-term nature, the book value of these loans approximates fair value at September 30, 2022. Impaired Loans: Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected when due. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair value of the collateral. Fair value is measured based on the value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing a market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral is a house or building in the process of construction or if an appraisal of the real estate property is over two years old, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’s financial statements if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Impaired loans allocated to the allowance for credit losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as a provision for credit losses on the consolidated statement of income. Other Real Estate Owned: OREO is measured at fair value less cost to sell, based on an appraisal conducted by an independent, licensed appraiser outside of the Company. If the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Company because of marketability, then the fair value is considered Level 3. OREO is measured at fair value on a nonrecurring basis. Any initial fair value adjustment is charged against the allowance for credit losses. Subsequent fair value adjustments are recorded in the period incurred and included in other noninterest expense on the consolidated statement of income. Fair Dollars are in thousands Level 1 Level 2 Level 3 Value September 30, 2022 Impaired loans $ — $ — $ 3,216 $ 3,216 Total $ — $ — $ 3,216 $ 3,216 December 31, 2021 Impaired loans $ — $ — $ 4,653 $ 4,653 OREO — — 837 837 Total $ — $ — $ 5,490 $ 5,490 The following tables present additional quantitative information about financial assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value as of September 30, 2022 and December 31, 2021: September 30, 2022 Valuation Unobservable Range of Dollars are in thousands Fair Value Technique Inputs Inputs Impaired loans $ 3,216 Appraisals Discount to reflect current market conditions and estimated selling costs 8% Total $ 3,216 December 31, 2021 Valuation Unobservable Range of Dollars are in thousands Fair Value Technique Inputs Inputs Impaired loans $ 4,653 Appraisals Discount to reflect current market conditions and estimated selling costs 8% OREO 837 Appraisals or Listing Price Discount to reflect current market conditions and estimated selling costs 8-10% Total $ 5,490 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 13. Goodwill and Intangible Assets The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other Goodwill: The Company acquired goodwill in the purchases of Liberty, which was effective in 2018, and Partners, which was effective in 2019. There were Core Deposit Intangible: The Company acquired core deposit intangibles in the acquisitions of Liberty and Partners. For the core deposit intangible related to Liberty, the Company utilizes the double declining balance method of amortization, in which the straight line amortization rate is doubled and applied to the remaining unamortized portion of the intangible asset. The amortization method changes to the straight line method of amortization when the straight line amortization amount exceeds the amount that would be calculated under the double declining balance method. This core deposit intangible will be amortized over . The following table provides changes for the nine months ended September 30, 2022, and the year ended December 31, 2021: September 30, December 31, Dollars in Thousands 2022 2021 Balance at the beginning of the period $ 2,060 $ 2,660 Amortization (394) (600) Balance at the end of the period $ 1,666 $ 2,060 The following table provides the remaining amortization expense for the core deposit intangible over the years indicated below: September 30, Dollars in Thousands 2022 2022 $ 125 2023 467 2024 415 2025 246 2026 182 Thereafter 231 $ 1,666 Net Deposits Purchased Premium and Discount: The Company paid a deposit premium in the acquisition of Liberty and received a deposit discount in the acquisition of Partners, which are included in the balances of time deposits on the consolidated balance sheets. The deposit premium is amortized as a reduction in interest expense over the life of the acquired time deposits and the deposit discount is accreted as an increase in interest expense over the life of the acquired time deposits. The premium and discount on acquired time deposits will both be amortized and accreted over approximately The following table provides changes in the net deposit discount for the nine months ended September 30, 2022 and the year ended December 31, 2021: September 30, December 31, Dollars in Thousands 2022 2021 Balance at the beginning of the period $ (9) $ (23) Accretion, net 6 14 Balance at the end of the period $ (3) $ (9) The following table provides the remaining accretion for the net deposit discount over the years indicated below: September 30, Dollars in Thousands 2022 2022 $ 1 2023 2 $ 3 The net effect of the amortization of premiums and accretion of discounts associated with the Company’s acquisition accounting adjustments to assets acquired and liabilities assumed had the following impact on the consolidated statement of income for the periods indicated below: September 30, September 30, 2022 2021 Nine Months Ended Dollars in Thousands Adjustments to net income Loans (1) $ 566 $ 1,149 Time deposits (2) (6) (11) Core deposit intangible (3) (394) (455) Note Payable (4) (3) (4) Net impact to income before taxes $ 163 $ 679 (1) Loan discount accretion is included in the "Loans, including fees" section of "Interest Income" in the Consolidated Statements of Income. (2) Time deposit discount accretion is included in the "Deposits" section of "Interest Expense" in the Consolidated Statements of Income. (3) Core deposit intangible premium amortization is included in the "Other Expenses" section of "Non-interest Expense" in the Consolidated Statements of Income. (4) Note payable discount accretion is included in the "Borrowings" section of "Interest Expense" in the Consolidated Statements of Income. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2022 | |
Revenue Recognition | |
Revenue Recognition | Note 14. Revenue Recognition The Company follows ASU No. 2014-09 Revenue from Contracts with Customers (“Topic 606”) and all subsequent ASUs that modified Topic 606. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, interchange fees and merchant income. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams in-scope of Topic 606 are discussed below. Service Charges on Deposit Accounts Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or at the end of the month through a direct charge to customers’ accounts. Other Noninterest Income Other noninterest income consists of: fees, exchange, other service charges, safe deposit box rental fees, and other miscellaneous revenue streams. Fees and other service charges are primarily comprised of debit and credit card income, ATM fees, merchant services income, and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. Gain or loss on sale or disposal of other assets Gain or loss on sale of fixed assets is recorded when control of the property transfers to the buyer. Gain or loss on disposal of fixed assets is recorded when the asset is determined to no longer be in service. Gain or loss on sale of other real estate owned Gain or loss on sale of foreclosed properties is recorded when control of the property transfers to the buyer, which generally occurs at the time of transfer of the deed. If the Company finances the sale of a foreclosed property to the buyer, we assess whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed property is derecognized and the gain or loss on sale is recorded upon transfer of control of the property to the buyer. |
Transaction with OceanFirst Fin
Transaction with OceanFirst Financial Corporation | 9 Months Ended |
Sep. 30, 2022 | |
Business Combinations | |
Transaction with OceanFirst Financial Corporation | Note 15. Transaction with OceanFirst Financial Corporation On November 4, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with OCFC and Coastal Merger Sub Corp., a Maryland corporation and a direct wholly owned subsidiary of OCFC (“Merger Sub”). Pursuant to the Merger Agreement, the Company was to be acquired by OCFC in a transaction whereby each share of Company common stock issued and outstanding immediately prior to the effective time, other than Exception Shares (as defined in the Merger Agreement), would be converted into the right to receive either (a) 0.4512 shares of common stock, par value $0.01 per share, of OCFC or (b) $10.00, in each case, at the election of the holder of the Company’s common stock, subject to (x) a maximum of forty percent (40%) of the shares of the Company’s common stock being convertible into cash and (y) the allocation and proration provisions of the Merger Agreement. On November 9, 2022, the Company and OCFC entered into a Mutual Termination Agreement (the “Termination Agreement”) pursuant to which, among other things, the parties mutually agreed to terminate the Merger Agreement and transactions completed thereby. Each party will bear its own costs and expenses in connection with the terminated transaction, and neither party will pay a termination fee in connection with the termination of the Merger Agreement. The Termination Agreement also mutually releases the parties from any claims of liability to one another relating to the Merger Agreement and the terminated transaction. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2022 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses” (“Topic 326”): Measurement of Credit Losses on Financial Instruments” (“Topic 326”). The amendments in this ASU, among other things, require 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. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The FASB has issued multiple updates to ASU No. 2016-13 as codified in Topic 326, including ASUs 2019-04, 2019-05, 2019-10, 2019-11, 2020-02, and 2020-03. These ASU’s have provided for various minor technical corrections and improvements to the codification as well as other transition matters. Smaller reporting companies who file with the U.S. Securities and Exchange Commission (“SEC”) and all other entities who do not file with the SEC are required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently evaluating the potential impact of ASU No. 2016-13 on our consolidated financial statements. We are currently working through our implementation plan which includes assessment and documentation of processes, internal controls and data sources; model development and documentation; and systems configuration, among other things. We are also in the process of working with our third-party vendor to assist us in the application of the ASU No. 2016-13. The adoption of ASU No. 2016-13 could result in an increase in the allowance for credit losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. Furthermore, ASU No. 2016-13 will necessitate that we establish an allowance for expected credit losses for certain debt securities and other financial assets. While we are currently unable to reasonably estimate the impact of adopting ASU No. 2016-13, we expect that the impact of adoption will be significantly influenced by the composition, characteristics and quality of our loan and securities portfolios as well as the prevailing economic conditions and forecasts as of the adoption date. Effective November 25, 2019, the SEC adopted Staff Accounting Bulletin (“SAB”) 119. SAB 119 updated portions of SEC interpretative guidance to align with ASC Topic 326. It covers topics including (1) measuring current expected credit losses; (2) development, governance, and documentation of a systematic methodology; (3) documenting the results of a systematic methodology; and (4) validating a systematic methodology. In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” ASU No. 2021-01 “Reference Rate Reform (Topic 848): Scope” . This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. An entity may elect to apply ASU No. 2021-01 on contract modifications that change the interest rate used for margining, discounting, or contract price alignment retrospectively as of any date from the beginning of the interim period that includes March 12, 2020, or prospectively to new modifications from any date within the interim period that includes or is subsequent to January 7, 2021, up to the date that financial statements are available to be issued. An entity may elect to apply ASU No. 2021-01 to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020, and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. The Company is assessing ASU 2020-04 and its impact on the Company’s transition away from LIBOR for its loan and other financial instruments, and is currently evaluating the effect that ASU 2020-04 will have on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06 “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted EPS calculation in certain areas. In addition, the amendment updates the disclosure requirements for convertible instruments to increase the information transparency. For public business entities, excluding smaller reporting companies, the amendments in the ASU are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2020-06 to have a material impact on its consolidated financial statements. In May 2021, the FASB issued ASU No. 2021-04, “Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity – Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force).” In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” In March 2022, the FASB issued ASU No. 2022-01, “Derivatives and Hedging (Topic 815), Fair Value Hedging—Portfolio Layer Method” In March 2022, the FASB issued ASU No. 2022-02, “Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures” 13. An entity may elect to early adopt the amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. The Company does not expect the adoption of ASU 2022-02 to have a material impact on its consolidated financial statements. In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” |
Nature of Business and Its Si_2
Nature of Business and Its Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Nature of Business and Its Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation: The consolidated financial statements include the accounts of the Company; the Subsidiaries, along with their consolidated subsidiaries: Delmarva Real Estate Holdings, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; Davie Circle, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; Delmarva BK Holdings, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; DHB Development, LLC, of which Delmarva holds a 40.55% interest, and which is a real estate holding company; and FBW, LLC, of which Delmarva holds a 50% interest, and which is a real estate holding company; Bear Holdings, Inc., a wholly owned subsidiary of Partners, which is a real estate holding company; Johnson Mortgage Company, LLC (“JMC”), of which Partners owns a 51% interest, and which is a residential mortgage company; and 410 William Street, LLC, a wholly owned subsidiary of Partners, which holds investment property. During the second quarter of 2022, Delmarva sold its 10% interest in West Nithsdale Enterprises, LLC, which was a real estate holding company. The sale of this interest resulted in a loss of approximately $2 thousand, which is included in “Losses (gains) and expenses on other real estate owned, net” under “Other Expenses” in the Consolidated Statements of Income. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Financial Statement Presentation | Financial Statement Presentation: The unaudited interim consolidated financial statements do not include all information and notes necessary for a complete presentation of financial position, results of operations, changes in stockholder's equity, and cash flows in conformity with U.S. GAAP. In the opinion of management, the unaudited interim consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position at September 30, 2022 and December 31, 2021, the results of its operations for three months and nine months and its cash flows for the nine months ended September 30, 2022 and 2021 in conformity with U.S. GAAP. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or for any other period. |
Use of Estimates | Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain of the critical accounting estimates are more dependent on such judgment and in some cases may contribute to volatility in the Company’s reported financial performance should the assumptions and estimates used change over time due to changes in circumstances. Actual results could differ from those estimates. The more significant areas in which management of the Company applies critical assumptions and estimates that are most susceptible to change in the short term include the calculation of the allowance for credit losses, the valuation of impaired loans, and the unrealized gain or loss on investment securities available for sale. |
Securities Available for Sale | Securities Available for Sale: Marketable debt securities not classified as held to maturity are classified as available for sale. Securities available for sale are acquired as part of the Subsidiaries' asset/liability management strategy and may be sold in response to changes in interest rates, loan demand, changes in prepayment risk, and other factors. Securities available for sale are carried at fair value as determined by quoted market prices. Unrealized gains or losses based on the difference between amortized cost and fair value are reported in other comprehensive income (loss), net of deferred tax. Realized gains and losses, using the specific identification method, are included as a separate component of other income (expense) and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income (loss). Premiums and discounts are recognized in interest income using the interest method over the period to maturity, or for premiums, to the first call date. Additionally, declines in the fair value of individual investment securities below their cost that are other than temporary are reflected as realized losses in the consolidated statements of income. Impairment may result from credit deterioration of the issuer or collateral underlying the security. In performing an assessment of recoverability, all relevant information is considered, including the length of time and extent to which fair value has been less than the amortized cost basis, the cause of the price decline, credit performance of the issuer and underlying collateral, and recoveries or further declines in fair value subsequent to the balance sheet date. For debt securities, the Company measures and recognizes other-than-temporary impairment (“OTTI”) losses through earnings if (1) the Company has the intent to sell the security or (2) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. In these circumstances, the impairment loss is equal to the full difference between the amortized cost basis and the fair value of the security. For securities that are considered OTTI that the Company has the intent and ability to hold in an unrealized loss position, the OTTI write-down is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to other factors, which is recognized as a component of other comprehensive income (“OCI”). |
Restricted Stock, Equity Securities and Other Investment | Restricted Stock, Equity Securities and Other Investments: Federal Reserve Bank (“FRB”) stock, at cost, Federal Home Loan Bank (“FHLB”) stock, at cost, Atlantic Central Bankers Bank (“ACBB”) stock, at cost, and Community Bankers Bank (“CBB”) stock, at cost, are equity interests in the FRB, FHLB, ACBB, and CBB, respectively. These securities do not have a readily determinable fair value for purposes of ASC 320-10 Investments-Debts and Equity Securities Equity securities with readily determinable fair values are carried at fair value, with changes in fair value reported in net income. Any equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. The entirety of any impairment on equity securities is recognized in earnings. Equity securities are included in “Other investments” on the Consolidated Balance Sheets. Other investments includes an equity ownership of Solomon Hess SBA Loan Fund LLC, for which the value is adjusted for its pro rata share of assets in the fund. Other investments also includes equity securities the Company holds with Community Capital Management in their Community Reinvestment Act (“CRA”) Qualified Investment Fund. |
Bank Owned Life Insurance | Bank Owned Life Insurance: The Company has purchased life insurance policies on certain key executives. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other changes or amounts due that are probable at settlement. |
Loans and the Allowance for Credit Losses | Loans and the Allowance for Credit Losses: Loans are generally carried at the amount of unpaid principal, adjusted for unearned loan fees and costs, which are amortized over the term of the loan using the effective interest rate method. Interest on loans is accrued based on the principal amounts outstanding. It is the Subsidiaries' policy to discontinue the accrual of interest when a loan is specifically determined to be impaired or when principal or interest is delinquent for ninety days or more. When a loan is placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Interest income generally is not recognized on specific impaired loans unless the likelihood of further loss is remote. Cash collections on such loans are applied as reductions of the loan principal balance and no interest income is recognized on those loans until the principal balance has been collected. As a general rule, a nonaccrual loan may be restored to accrual status when (1) none of its principal and interest is due and unpaid, and the Company expects repayment of the remaining contractual principal and interest, or (2) when it otherwise becomes well secured and in the process of collection. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. The carrying value of impaired loans is based on the present value of the loan's expected future cash flows or, alternatively, the observable market price of the loan or the fair value of the collateral securing the loan. The allowance for credit losses is maintained at a level believed to be adequate by management to absorb probable losses inherent in the loan portfolio and is based on the size and current risk characteristics of the loan portfolio, the concentration of credits within each pool, the effects of any changes in lending policies, procedures, including underwriting standards and collections, charge off and recovery practices, the effects of changes in the experience, depth and ability of management, the quality of the Company’s loan review system and the degree of oversight by the Company’s Board of Directors, an assessment of individual problem loans and actual loss experience, the value of the underlying collateral, the condition of various market segments, both locally and nationally, and current economic events in specific industries and geographical areas, including unemployment levels, and other pertinent factors, including regulatory guidance and general economic conditions, along with external factors such as competition and the legal environment. Determination of the allowance for credit losses is inherently subjective, as it requires significant estimates, including the amounts and timing on historical loss experience, and consideration of current economic trends, all of which may be susceptible to significant change. Loan losses are charged off against the allowance for credit losses, while recoveries of amounts previously charged off are credited to the allowance for credit losses. A provision for credit losses is charged to operations based on management's periodic evaluation of the factors previously mentioned, as well as other pertinent factors. Evaluations are conducted at least monthly and more often if deemed necessary. The allowance for credit losses typically consists of an allocated component and an unallocated component. The allocated component of the allowance for credit losses reflects expected losses resulting from analyses developed through specific credit allocations for individual loans and historical loss experience for each loan category. The specific credit allocations are based on regular analyses of all loans over a fixed-dollar amount where the internal credit rating is at or below a predetermined classification. The historical loan loss element is determined statistically using an informal loss migration analysis that examines loss experience and the related internal gradings of loans charged off over a current 3 year period. The loss migration analysis is performed quarterly and loss factors are updated regularly based on actual experience. The allocated component of the allowance for credit losses also includes consideration of concentrations and changes in portfolio mix and volume. Any unallocated portion of the allowance for credit losses reflects management's estimate of probable inherent but undetected losses within the loan portfolio due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower's financial condition, the difficulty in identifying triggering events that correlate perfectly to subsequent loss rates, and risk factors that have not yet manifested themselves in loss allocation factors. The historical losses used in the migration analysis may not be representative of actual unrealized losses inherent in the loan portfolio. It is management's intent to continually refine the methodology for the allowance for credit losses in an attempt to directly allocate potential losses in the loan portfolio under ASC Topic 310 and minimize the unallocated portion of the allowance for credit losses. Loan Charge-off Policies Loans are generally fully or partially charged down to the fair value of securing collateral when: ● management deems the asset to be uncollectible; ● repayment is deemed to be made beyond the reasonable time frames; ● the asset has been classified as a loss by internal or external review; and ● the borrower has filed bankruptcy and the loss becomes evident owing to a lack of assets. Acquired Loans Loans acquired in connection with business combinations are recorded at their acquisition-date fair value with no carryover of related allowance for credit losses. Any allowance for credit losses on these pools reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately are not expected to be received). Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considered a number of factors in evaluating the acquisition-date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment. Acquired loans that meet the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans, including the impact of any accretable yield. Loans acquired with deteriorated credit quality are accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality Under the ASC 310-30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow. The accretable yield is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated (the accretion method). If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used. The difference between the loan's total scheduled principal and interest payments over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non-accretable difference. The non-accretable difference represents contractually required principal and interest payments which the Company does not expect to collect. Over the life of the loan, management continues to estimate cash flows expected to be collected. Decreases in expected cash flows are recognized as impairments through a charge to the provision for credit losses resulting in an increase in the allowance for credit losses. Subsequent improvements in cash flows result in first, reversal of existing valuation allowances recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable yield to be subsequently recognized as interest income on a prospective basis over the loan's remaining life. Acquired loans that were not individually determined to be purchased with deteriorated credit quality are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs Troubled Debt Restructurings A loan is accounted for and reported as a troubled debt restructuring (“TDR”) when, for economic or legal reasons, we grant a concession to a borrower experiencing financial difficulty that we would not otherwise consider. Management strives to identify borrowers in financial difficulty early and works with them to modify to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. A restructuring that results in only an insignificant delay in payment is not considered a concession. A delay may be considered insignificant if the payments subject to the delay are insignificant relative to the unpaid principal or collateral value and the contractual amount due, or the delay in timing of the restructured payment period is insignificant relative to the frequency of the payments, the debt’s original contractual maturity or original expected duration. TDRs are designated as impaired loans because interest and principal payments will not be received in accordance with the original contract terms. TDRs that are performing and on accrual status as of the date of the modification remain on accrual status. TDRs that are nonperforming as of the date of modification generally remain as nonaccrual until the prospect of future payments in accordance with the modified loan agreement is reasonably assured, generally demonstrated when the borrower maintains compliance with the restructured terms for a predetermined period, normally at least six months. TDRs with temporary below-market concessions remain designated as a TDR and impaired regardless of the accrual or performance status until the loan is paid off. However, if the TDR has been modified in a subsequent restructure with market terms and the borrower is not currently experiencing financial difficulty, then the loan may be no longer designated as a TDR. |
Loans Held for Sale | Loans Held for Sale: These loans consist of loans made through Partners’ majority owned subsidiary JMC. JMC is engaged in the mortgage brokerage business in which JMC originates, closes, and immediately sells mortgage loans and related servicing rights to permanent investors in the secondary market. JMC has written commitments from several permanent investors (large financial institutions) and only closes loans that meet the lending requirements of the permanent investors. Loans are made in connection with the purchase or refinancing of existing and new family residences primarily in southeastern and northern Virginia. Loans are initially funded primarily by JMC’s lines of credit. With the concurrent sale and delivery of mortgage loans to the permanent investors, JMC records receivables for mortgage loans sold and recognizes the related gains and losses on such sales. The receivables for mortgage loans sold are usually satisfied within of sale, whereupon the related borrowings on the lines of credit are repaid. Because of the short holding period, these loans are carried at the lower of cost or market and market adjustments were deemed necessary in the first three quarters of 2022 or during 2021. JMC’s agreements with its permanent investors include provisions that could require JMC to repurchase loans under certain circumstances, and also provide for the assessment of fees if loans go into default or are refinanced within specified periods of time. JMC has never been required to repurchase a loan and 2022 or December 31, 2021 for possible repurchases. Management does not believe that a provision for early default or refinancing cost is necessary at September 30, 2022 or December 31, 2021. JMC enters into commitments with its customers to originate loans where the interest rate on the loans is determined (locked) prior to funding. While this subjects JMC to the risk that interest rates may change from the commitment date to the funding date, JMC simultaneously enters into financial agreements (best efforts forward sales commitments) with its permanent investors giving JMC the right to deliver (put) loans to the investors at specified yields, thus enabling JMC to manage its exposure to changes in interest rates such that JMC is not subject to fluctuations in fair values of these agreements due to changes in interest rates. However, a default by a permanent investor required to purchase loans under such an agreement would expose JMC to potential fluctuation in selling prices of loans due to changes in interest rate. The fair value of rate lock commitments and forward sales commitments was considered immaterial at September 30, 2022 and December 31, 2021 and an adjustment was not recorded. Gains and losses on the sale of mortgages as well as origination fees, brokerage fees, interest rate lock-in fees and other fees paid by mortgagors are included in “Mortgage banking income, net” on the Company’s Consolidated Statements of Income. |
Other Real Estate Owned ("OREO"): | Other Real Estate Owned (“OREO”): OREO comprises properties acquired in partial or total satisfaction of problem loans. The properties are recorded at the lower of cost or fair value, net of estimated selling costs, at the date acquired creating a new cost basis. Losses arising at the time of acquisition of such properties are charged against the allowance for credit losses. Subsequent write-downs that may be required, and expenses of operation and gains and losses realized from the sale of OREO are included in other expenses. At September 30, 2022 there were no properties included in OREO and at December 31, 2021, there were two properties with a combined value of $837 thousand included in OREO. At December 31, 2021, there were residential real estate properties included in OREO balances. |
Intangible Assets and Amortization | Intangible Assets and Amortization: During the fourth quarter of 2019, the Company acquired Partners, and during the first quarter of 2018, the Company acquired Liberty Bell Bank (“Liberty”). ASC 350, Intangibles-Goodwill and Other |
Goodwill | Goodwill: The Company’s goodwill was recognized in connection with the acquisitions of Partners and Liberty. The Company reviews the carrying value of goodwill at least annually during the fourth quarter or more frequently if certain impairment indicators exist. In testing goodwill for impairment, the Company may first consider qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then no further testing is required and the goodwill of the reporting unit is not impaired. If the Company elects to bypass the qualitative assessment or if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the fair value of the reporting unit is compared with its carrying amount to determine whether an impairment exists. No impairment of goodwill was required for the nine months ended September 30, 2022 or for the year ended December 31, 2021 based on management’s assessment. |
Accounting for Stock Based Compensation | Accounting for Stock Based Compensation: The Company follows ASC 718-10, Compensation—Stock Compensation |
Earnings Per Share | Earnings Per Share: Basic earnings per common share are determined by dividing net income by the weighted average number of shares outstanding for each period, giving retroactive effect to stock splits and dividends. Weighted average common shares outstanding were |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investment Securities | |
Schedule of investment securities available for sale | September 30, 2022 Dollars in Thousands Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of U.S. Government agencies and corporations $ 15,167 $ — $ 1,665 $ 13,502 Obligations of States and political subdivisions 29,094 — 3,475 25,619 Mortgage-backed securities 104,383 — 14,444 89,939 Subordinated debt investments 2,467 — 62 2,405 $ 151,111 $ — $ 19,646 $ 131,465 December 31, 2021 Dollars in Thousands Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of U.S. Government agencies and corporations $ 6,547 $ 46 $ 142 $ 6,451 Obligations of States and political subdivisions 29,792 1,397 63 31,126 Mortgage-backed securities 83,213 279 1,089 82,403 Subordinated debt investments 1,990 51 — 2,041 $ 121,542 $ 1,773 $ 1,294 $ 122,021 |
Schedule of gross unrealized losses and fair values, aggregated by investment security category and length of time that individual securities have been in a continuous unrealized loss position | September 30, 2022 Dollars in Thousands Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss Obligations of U.S. Government agencies and corporations $ 11,175 $ 988 $ 2,327 $ 677 $ 13,502 $ 1,665 Obligations of States and political subdivisions 24,728 3,085 891 390 25,619 3,475 Mortgage-backed securities 46,727 5,025 43,209 9,419 89,936 14,444 Subordinated debt investments 2,155 62 — — 2,155 62 Total investment securities with unrealized losses $ 84,785 $ 9,160 $ 46,427 $ 10,486 $ 131,212 $ 19,646 December 31, 2021 Dollars in Thousands Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss Obligations of U.S. Government agencies and corporations $ 1,289 $ 35 $ 2,397 $ 107 $ 3,686 $ 142 Obligations of States and political subdivisions 2,473 63 — — 2,473 63 Mortgage-backed securities 59,236 744 11,349 345 70,585 1,089 Total investment securities with unrealized losses $ 62,998 $ 842 $ 13,746 $ 452 $ 76,744 $ 1,294 |
Schedule of maturities, calls, or repricing of securities available for sale | September 30, 2022 Securities Available for Sale Dollars in Thousands Amortized Fair Cost Value Due in one year or less $ 1 $ 1 Due after one year through five years 11,076 10,743 Due after five years through ten years 46,869 42,922 Due after ten years or more 93,165 77,799 $ 151,111 $ 131,465 |
Loans, Allowance for Credit L_2
Loans, Allowance for Credit Losses and Impaired Loans (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Loans, Allowance for Credit Losses and Impaired Loans | |
Schedule of major categories of loans | (Dollars in thousands) September 30, 2022 December 31, 2021 Originated Loans Real Estate Mortgage Construction and land development $ 119,172 $ 107,478 Residential real estate 196,772 159,701 Nonresidential 603,738 513,873 Home equity loans 21,769 19,246 Commercial 113,814 109,470 Consumer and other loans 3,159 3,546 1,058,424 913,314 Acquired Loans Real Estate Mortgage Construction and land development $ 39 $ 505 Residential real estate 27,549 41,529 Nonresidential 94,576 128,344 Home equity loans 9,000 11,149 Commercial 13,859 21,438 Consumer and other loans 513 916 145,536 203,881 Total Loans Real Estate Mortgage Construction and land development $ 119,211 $ 107,983 Residential real estate 224,321 201,230 Nonresidential 698,314 642,217 Home equity loans 30,769 30,395 Commercial 127,673 130,908 Consumer and other loans 3,672 4,462 1,203,960 1,117,195 Less: Allowance for credit losses (13,818) (14,656) $ 1,190,142 $ 1,102,539 |
Schedule of allowance for credit losses by loan category | Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Balance at September 30, 2022 Purchased credit impaired loans Balance in allowance $ — $ — $ — $ — $ — $ — $ — $ — Related loan balance — 715 353 — 18 — — 1,086 Individually evaluated for impairment: Balance in allowance $ — $ 21 $ — $ — $ 279 $ — $ — $ 300 Related loan balance 575 1,731 4,092 53 337 — — 6,788 Collectively evaluated for impairment: Balance in allowance $ 1,093 $ 1,962 $ 8,163 $ 248 $ 1,612 $ 86 $ 354 $ 13,518 Related loan balance 118,636 221,875 693,869 30,716 127,318 3,672 — 1,196,086 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Balance at December 31, 2021 Purchased credit impaired loans Balance in allowance $ — $ 9 $ — $ — $ — $ — $ — $ 9 Related loan balance 46 1,633 376 — 126 — — 2,181 Individually evaluated for impairment: Balance in allowance $ — $ 3 $ 1,000 $ — $ 452 $ — $ — $ 1,455 Related loan balance 598 2,082 9,901 53 584 — — 13,218 Collectively evaluated for impairment: Balance in allowance $ 1,143 $ 1,881 $ 8,239 $ 212 $ 1,433 $ 36 $ 248 $ 13,192 Related loan balance 107,339 197,515 631,940 30,342 130,198 4,462 — 1,101,796 September 30, 2022 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Quarter Ended Beginning Balance $ 935 $ 1,869 $ 9,203 $ 234 $ 1,663 $ 31 $ 124 $ 14,059 Charge-offs — — (659) — (47) (16) — (722) Recoveries 1 16 6 — 2 37 — 62 Provision/(recovery) 157 98 (387) 14 273 34 230 419 Ending Balance $ 1,093 $ 1,983 $ 8,163 $ 248 $ 1,891 $ 86 $ 354 $ 13,818 Nine Months Ended Beginning Balance $ 1,143 $ 1,893 $ 9,239 $ 212 $ 1,885 $ 36 $ 248 $ 14,656 Charge-offs — — (1,545) (27) (167) (41) — (1,780) Recoveries — 56 22 6 13 42 — 139 Provision/(recovery) (50) 34 447 57 160 49 106 803 Ending Balance $ 1,093 $ 1,983 $ 8,163 $ 248 $ 1,891 $ 86 $ 354 $ 13,818 December 31, 2021 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Year Ended Beginning Balance $ 903 $ 2,351 $ 7,584 $ 271 $ 1,943 $ 37 $ 114 $ 13,203 Charge-offs — (39) (692) (7) (184) (66) — (988) Recoveries 1 23 53 3 16 22 — 118 Provision/(recovery) 239 (442) 2,294 (55) 110 43 134 2,323 Ending Balance $ 1,143 $ 1,893 $ 9,239 $ 212 $ 1,885 $ 36 $ 248 $ 14,656 |
Schedule of loans by risk rating | Real Estate Mortgage Construction & Land Residential Consumer & September 30, 2022 Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Pass $ 118,636 $ 222,647 $ 691,287 $ 30,671 $ 126,214 $ 3,325 $ 1,192,780 Marginal — — 4,873 — 1,122 347 6,342 Substandard 575 1,674 2,154 98 337 — 4,838 TOTAL $ 119,211 $ 224,321 $ 698,314 $ 30,769 $ 127,673 $ 3,672 $ 1,203,960 Nonaccrual $ 576 $ 1,243 $ 1,894 $ — $ 337 $ — $ 4,050 Real Estate Mortgage Construction & Land Residential Consumer & December 31, 2021 Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Pass $ 107,339 $ 199,037 $ 622,648 $ 30,159 $ 128,949 $ 3,960 $ 1,092,092 Marginal 46 507 12,819 183 1,364 502 15,421 Substandard 598 1,686 6,750 53 595 — 9,682 TOTAL $ 107,983 $ 201,230 $ 642,217 $ 30,395 $ 130,908 $ 4,462 $ 1,117,195 Nonaccrual $ 598 $ 1,293 $ 6,486 $ — $ 584 $ — $ 8,961 |
Schedule of loans modified under the terms of a TDR by class | Real Estate Mortgage Construction & Land Residential Consumer & Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Three months ended September 30, 2022 Number of loans modified during the period — — — — — — — Pre-modification recorded balance $ — $ — $ — $ — $ — $ — $ — Post- modification recorded balance — — — — — — — Nine months ended September 30, 2022 Number of loans modified during the period — 1 — — — — 1 Pre-modification recorded balance $ — $ 48 $ — $ — $ — $ — $ 48 Post- modification recorded balance — 48 — — — — 48 Three months ended September 30, 2021 Number of loans modified during the period — — 1 — — — 1 Pre-modification recorded balance $ — $ — $ 2,919 $ — $ — $ — $ 2,919 Post- modification recorded balance — — 2,907 — — — 2,907 Nine months ended September 30, 2021 Number of loans modified during the period — — 2 — — — 2 Pre-modification recorded balance $ — $ — $ 3,197 $ — $ — $ — $ 3,197 Post- modification recorded balance — — 2,907 — — — 2,907 |
Schedule of aging analysis of the recorded investment of past due financing receivables | Recorded Investment Greater than Total >90 Days 30 - 59 Days 60 - 89 Days 90 Days Total Current Financing Past Due At September 30, 2022 Past Due Past Due * Past Due** Past Due Balance*** Receivables and Accruing Dollars in Thousands Real Estate Mortgage Construction and land development $ — $ — $ 575 $ 575 $ 118,636 $ 119,211 $ — Residential real estate 207 1,081 380 1,668 222,653 224,321 230 Nonresidential 427 — 311 738 697,576 698,314 — Home equity loans — — 45 45 30,724 30,769 45 Commercial — 7 — 7 127,666 127,673 — Consumer and other loans 1 — — 1 3,671 3,672 — TOTAL $ 635 $ 1,088 $ 1,311 $ 3,034 $ 1,200,926 $ 1,203,960 $ 275 * Includes ** Includes *** Includes Recorded Investment Greater than Total >90 Days 30 - 59 Days 60 - 89 Days 90 Days Total Current Financing Past Due At December 31, 2021 Past Due* Past Due Past Due** Past Due Balance*** Receivables and Accruing Dollars in Thousands Real Estate Mortgage Construction and land development $ — $ — $ 598 $ 598 $ 107,385 $ 107,983 $ — Residential real estate 658 245 361 1,264 199,966 201,230 — Nonresidential — — 2,915 2,915 639,302 642,217 — Home equity loans 160 — — 160 30,235 30,395 — Commercial 46 — 77 123 130,785 130,908 — Consumer and other loans 15 — — 15 4,447 4,462 — TOTAL $ 879 $ 245 $ 3,951 $ 5,075 $ 1,112,120 $ 1,117,195 $ — * Includes $55 thousand of nonaccrual loans. ** Includes $4.0 million of nonaccrual loans. *** Includes $5.0 million of nonaccrual loans. |
Schedule of impaired loans | Unpaid Interest Average Recorded Principal Income Specific Recorded September 30, 2022 Investment Balance Recognized Reserve Investment Dollars in Thousands Impaired loans with specific reserves: Real Estate Mortgage Construction and land development $ — $ — $ — $ — $ — Residential real estate 24 24 1 21 25 Nonresidential — — — — — Home equity loans — — — — — Commercial 337 348 32 279 367 Consumer and other loans — — — — — Total impaired loans with specific reserves $ 361 $ 372 $ 33 $ 300 $ 392 Impaired loans with no specific reserve: Real Estate Mortgage Construction and land development $ 575 $ 575 $ 5 $ — $ 533 Residential real estate 1,707 1,707 30 — 1,742 Nonresidential 4,092 4,092 241 — 4,776 Home equity loans 53 53 1 — 53 Commercial — — — — — Consumer and other loans — — — — — Total impaired loans with no specific reserve $ 6,427 $ 6,427 $ 277 $ — $ 7,104 TOTAL $ 6,788 $ 6,799 $ 310 $ 300 $ 7,496 Unpaid Interest Average Recorded Principal Income Specific Recorded December 31, 2021 Investment Balance Recognized Reserve Investment Dollars in Thousands Impaired loans with specific reserves: Real Estate Mortgage Construction and land development $ — $ — $ — $ — $ — Residential real estate 426 426 22 3 433 Nonresidential 6,437 6,559 369 1,000 6,528 Home equity loans — — — — — Commercial 507 517 119 452 583 Consumer and other loans — — — — — Total impaired loans with specific reserves $ 7,370 $ 7,502 $ 510 $ 1,455 $ 7,544 Impaired loans with no specific reserve: Real Estate Mortgage Construction and land development $ 598 $ 598 $ 13 $ — $ 599 Residential real estate 1,656 1,687 26 — 1,698 Nonresidential 3,464 3,462 344 — 3,510 Home equity loans 53 53 1 — 53 Commercial 77 154 2 — 109 Consumer and other loans — — — — — Total impaired loans with no specific reserve $ 5,848 $ 5,954 $ 386 $ — $ 5,969 TOTAL $ 13,218 $ 13,456 $ 896 $ 1,455 $ 13,513 |
Schedule of outstanding balance and carrying amount of acquired loans | Dollars in Thousands September 30, 2022 December 31, 2021 Accountable for under ASC 310-30 (PCI loans) Outstanding balance $ 1,499 $ 2,613 Carrying amount 1,086 2,181 Accountable for under ASC 310-20 (non-PCI loans) Outstanding balance $ 145,846 $ 203,596 Carrying amount 144,450 201,700 Total acquired loans Outstanding balance $ 147,345 $ 206,209 Carrying amount 145,536 203,881 |
Schedule of changes in accretable yield of acquired loans | Dollars in Thousands September 30, 2022 December 31, 2021 Balance at beginning of period $ 1,896 $ 3,361 Accretion (500) (1,464) Other changes, net — (1) Balance at end of period $ 1,396 $ 1,896 |
Borrowings and Notes Payable (T
Borrowings and Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Borrowings and Notes Payable | |
Schedule of advances outstanding with the Federal Home Loan Bank and outstanding lines of credit | September 30, 2022 Dollars in Thousands Outstanding Balance Interest Rate Maturity Date Interest Payment Fixed rate hybrid $ 5,000 3.15 % October 2022 Fixed, paid monthly Principal reducing credit 214 1.62 % March 2023 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Principal reducing credit 805 1.99 % March 2026 Fixed, paid quarterly Total advances $ 25,819 December 31, 2021 Dollars in Thousands Outstanding Balance Interest Rate Maturity Date Interest Payment Fixed rate hybrid $ 5,000 3.15 % October 2022 Fixed, paid monthly Principal reducing credit 536 1.62 % March 2023 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Principal reducing credit 977 1.99 % March 2026 Fixed, paid quarterly Total advances $ 26,313 |
Schedule of maturities of debt | 2022 $ 5,350 2023 314 2024 20,008 2025 210 2026 39 Thereafter 22,912 $ 48,833 |
Lease Commitment (Tables)
Lease Commitment (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Lease Commitments | |
Schedule of supplemental lease information | The following tables present information about the Company’s leases for the periods ended: Dollars in Thousands September 30, 2022 December 31, 2021 Balance Sheet Operating Lease Amounts Right-of-use asset $ 5,290 $ 6,009 Lease liability 5,688 6,372 Finance Lease Amounts Right-of-use asset $ 1,584 $ 1,687 Lease liability 2,036 2,125 Supplemental balance sheet information Weighted average lease term - Operating Leases (Yrs.) 7.46 7.99 Weighted average lease term - Finance Leases (Yrs.) 11.30 12.09 Weighted average discount rate - Operating Leases (1) 2.29 % 2.24 % Weighted average discount rate - Finance Leases (1) 2.84 % 2.84 % Income Statement Three Months Ended September 30, 2022 September 30, 2021 Operating lease cost classified as premises and equipment $ 286 $ 252 Finance lease cost classified as interest on borrowings 15 15 Nine Months Ended Operating lease cost classified as premises and equipment $ 858 $ 691 Finance lease cost classified as interest on borrowings 44 47 Operating outgoing cash flows from operating leases $ 787 $ 643 Operating outgoing cash flows from finance leases $ 134 $ 134 (1) The discount rate was developed by using the fixed rate credit advance borrowing rate at the FHLB of Atlanta for a term correlating to the remaining life of each lease. Management believes this rate closely mirrors its incremental borrowing rate for similar terms. |
Schedule of minimum operating lease payments | Dollars in Thousands Operating Leases: One year or less $ 966 One to three years 1,470 Three to five years 1,060 Over 5 years 2,905 Total undiscounted cash flows 6,401 Less: Discount (713) Lease Liabilities $ 5,688 Finance Leases: One year or less $ 185 One to three years 393 Three to five years 407 Over 5 years 1,417 Total undiscounted cash flows 2,402 Less: Discount (366) Lease Liabilities $ 2,036 |
Schedule of minimum finance lease payments | Dollars in Thousands Operating Leases: One year or less $ 966 One to three years 1,470 Three to five years 1,060 Over 5 years 2,905 Total undiscounted cash flows 6,401 Less: Discount (713) Lease Liabilities $ 5,688 Finance Leases: One year or less $ 185 One to three years 393 Three to five years 407 Over 5 years 1,417 Total undiscounted cash flows 2,402 Less: Discount (366) Lease Liabilities $ 2,036 |
Stock Option Plans (Tables)
Stock Option Plans (Tables) - Stock options | 9 Months Ended |
Sep. 30, 2022 | |
Liberty 2004 Stock Option Plan | |
Stock options | |
Summary of stock option activity | September 30, 2022 Weighted Weighted Average Average Remaining Exercise Contractual Intrinsic Shares Price Life Value Outstanding at beginning of period 5,761 $ 4.14 1.23 Granted — — — Exercised (1,028) 4.14 — Forfeited — — — Outstanding at end of period 4,733 $ 4.14 0.48 $ 22,482 Options exercisable at September 30, 2022 4,733 $ 4.14 |
Partners Stock Option Plan | |
Stock options | |
Summary of stock option activity | September 30, 2022 Weighted Weighted Average Average Remaining Exercise Contractual Intrinsic Shares Price Life Value Outstanding at beginning of period 128,147 $ 6.40 3.18 Granted — — — Exercised (19,067) 5.83 — Forfeited (8,588) 6.48 — Outstanding at end of period 100,492 $ 6.50 2.76 $ 240,168 Options exercisable at September 30, 2022 100,492 $ 6.50 |
Incentive Stock Plan (Tables)
Incentive Stock Plan (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
2021 Incentive Stock Plan | Restricted stock | |
Equity Compensation | |
Summary of non vested restricted stock awards | Employees Weighted Average Shares Fair Value Nonvested Awards December 31, 2021 28,000 $ 8.99 Awarded in 2022 — — Vested in 2022 (9,331) 8.99 Nonvested Awards September 30, 2022 18,669 $ 8.99 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share | |
Schedule of basic and diluted EPS | Net Income Applicable to Basic Earnings Weighted Average (Dollars in thousands, except per share data) Per Common Share Shares Outstanding For the three months ended September 30, 2022 Basic EPS $ 4,110 17,962 $ 0.229 Effect of dilutive stock awards — 32 — Diluted EPS $ 4,110 17,994 $ 0.228 For the nine months ended September 30, 2022 Basic EPS $ 9,398 17,961 $ 0.523 Effect of dilutive stock awards — 34 — Diluted EPS $ 9,398 17,995 $ 0.522 For the three months ended September 30, 2021 Basic EPS $ 2,696 17,788 $ 0.152 Effect of dilutive stock awards — 56 — Diluted EPS $ 2,696 17,844 $ 0.151 For the nine months ended September 30, 2021 Basic EPS $ 5,946 17,758 $ 0.335 Effect of dilutive stock awards — 42 — Diluted EPS $ 5,946 17,800 $ 0.334 |
Regulatory Capital Requiremen_2
Regulatory Capital Requirements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Regulatory Capital Requirements | |
Summary of comparison of the Company's and the Bank's capital amounts and ratios with the minimum requirements | To Be Well Capitalized For Capital Under Prompt Adequacy Corrective Action In Thousands Actual Purposes Provisions Amount Ratio Amount Ratio Amount Ratio As of September 30, 2022 Total Capital Ratio (To Risk Weighted Assets) The Bank of Delmarva $ 95,924 13.0 % $ 77,304 10.5 % $ 73,623 10.0 % Virginia Partners Bank 62,076 11.4 % 57,233 10.5 % 54,508 10.0 % Tier 1 Capital Ratio (To Risk Weighted Assets) The Bank of Delmarva 86,715 11.8 % 62,580 8.5 % 58,898 8.0 % Virginia Partners Bank 57,718 10.6 % 46,332 8.5 % 43,606 8.0 % Common Equity Tier I Ratio (To Risk Weighted Assets) The Bank of Delmarva 86,715 11.8 % 51,536 7.0 % 47,855 6.5 % Virginia Partners Bank 57,718 10.6 % 38,156 7.0 % 35,430 6.5 % Tier 1 Leverage Ratio (To Average Assets) The Bank of Delmarva 86,715 8.7 % 39,916 4.0 % 49,895 5.0 % Virginia Partners Bank 57,718 8.6 % 26,772 4.0 % 33,465 5.0 % As of December 31, 2021 Total Capital Ratio (To Risk Weighted Assets) The Bank of Delmarva $ 91,928 12.9 % $ 74,963 10.5 % $ 71,394 10.0 % Virginia Partners Bank 56,192 12.0 % 49,103 10.5 % 46,765 10.0 % Tier 1 Capital Ratio (To Risk Weighted Assets) The Bank of Delmarva 82,972 11.6 % 60,684 8.5 % 57,115 8.0 % Virginia Partners Bank 52,844 11.3 % 39,750 8.5 % 37,412 8.0 % Common Equity Tier I Ratio (To Risk Weighted Assets) The Bank of Delmarva 82,972 11.6 % 49,975 7.0 % 46,406 6.5 % Virginia Partners Bank 52,844 11.3 % 32,735 7.0 % 30,397 6.5 % Tier 1 Leverage Ratio (To Average Assets) The Bank of Delmarva 82,972 8.1 % 40,926 4.0 % 51,158 5.0 % Virginia Partners Bank 52,844 8.5 % 25,009 4.0 % 31,261 5.0 % |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Values of Financial Instruments | |
Summary of the estimated fair value and the related carrying values of the Company's financial instruments | Dollars are in thousands Fair Value Measurements at September 30, 2022 Quoted Prices in Significant Significant Active Markets for Other Unobservable Carrying Identical Assets Observable Inputs Inputs Amount (Level 1) (Level 2) (Level 3) Balance Financial assets: Cash and due from banks $ 12,784 $ 12,784 $ — $ — $ 12,784 Interest bearing deposits 210,935 210,935 — — 210,935 Federal funds sold 24,573 24,573 — — 24,573 Securities: Available for sale 131,465 — 131,465 — 131,465 Loans held for sale 201 — 201 — 201 Loans, net of allowance for credit losses 1,190,142 — — 1,119,240 1,119,240 Accrued interest receivable 4,035 — 4,035 — 4,035 Restricted stock 4,889 — 4,889 — 4,889 Other investments 4,864 — 4,864 — 4,864 Bank owned life insurance 18,592 — 18,592 — 18,592 Financial liabilities: Deposits $ 1,455,944 $ — $ 1,152,907 $ 294,000 $ 1,446,907 Accrued interest payable on deposits 189 — 189 — 189 FHLB advances 25,819 — 24,934 — 24,934 Subordinated notes payable 22,203 — 26,506 — 26,506 Other borrowings 811 — — 811 811 Dollars are in thousands Fair Value Measurements at December 31, 2021 Quoted Prices in Significant Significant Active Markets for Other Unobservable Carrying Identical Assets Observable Inputs Inputs Amount (Level 1) (Level 2) (Level 3) Balance Financial assets: Cash and due from banks $ 12,887 $ 12,887 $ — $ — $ 12,887 Interest bearing deposits 297,902 297,902 — — 297,902 Federal funds sold 28,040 28,040 — — 28,040 Securities: Available for sale 122,021 — 122,021 — 122,021 Loans held for sale 4,064 — 4,064 — 4,064 Loans, net of allowance for credit losses 1,102,539 — — 1,089,812 1,089,812 Accrued interest receivable 4,313 — 4,313 — 4,313 Restricted stock 4,869 — 4,869 — 4,869 Other investments 5,065 — 5,065 — 5,065 Bank owned life insurance 18,254 — 18,254 — 18,254 Other real estate owned 837 — — 837 837 Financial liabilities: Deposits $ 1,442,876 $ — $ 1,063,619 $ 380,245 $ 1,443,864 Accrued interest payable on deposits 280 — 280 — 280 FHLB advances 26,313 — 27,007 — 27,007 Subordinated notes payable 22,168 — 30,091 — 30,091 Other borrowings 755 — — 755 755 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements | |
Summary of fair value measurements on a recurring basis | Fair Dollars are in thousands Level 1 Level 2 Level 3 Value September 30, 2022 Securities available for sale: Obligations of U.S. Government agencies and corporations $ — $ 13,502 $ — $ 13,502 Obligations of States and political subdivisions — 25,619 — 25,619 Mortgage-backed securities — 89,939 — 89,939 Subordinated debt investments — 2,405 — 2,405 Total securities available for sale $ — $ 131,465 $ — $ 131,465 December 31, 2021 Securities available for sale: Obligations of U.S. Government agencies and corporations $ — $ 6,451 $ — $ 6,451 Obligations of States and political subdivisions — 31,126 — 31,126 Mortgage-backed securities — 82,403 — 82,403 Subordinated debt investments — 2,041 — 2,041 Total securities available for sale $ — $ 122,021 $ — $ 122,021 |
Summary of the balances of financial assets measured at fair value on a non-recurring basis | Fair Dollars are in thousands Level 1 Level 2 Level 3 Value September 30, 2022 Impaired loans $ — $ — $ 3,216 $ 3,216 Total $ — $ — $ 3,216 $ 3,216 December 31, 2021 Impaired loans $ — $ — $ 4,653 $ 4,653 OREO — — 837 837 Total $ — $ — $ 5,490 $ 5,490 |
Schedule of fair value financial assets measured on non-recurring basis valuation techniques | September 30, 2022 Valuation Unobservable Range of Dollars are in thousands Fair Value Technique Inputs Inputs Impaired loans $ 3,216 Appraisals Discount to reflect current market conditions and estimated selling costs 8% Total $ 3,216 December 31, 2021 Valuation Unobservable Range of Dollars are in thousands Fair Value Technique Inputs Inputs Impaired loans $ 4,653 Appraisals Discount to reflect current market conditions and estimated selling costs 8% OREO 837 Appraisals or Listing Price Discount to reflect current market conditions and estimated selling costs 8-10% Total $ 5,490 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Intangible assets | |
Schedule of the net effect of amortization of premiums and accretion of discounts associated with acquisition accounting adjustments to assets acquired and liabilities assumed | September 30, September 30, 2022 2021 Nine Months Ended Dollars in Thousands Adjustments to net income Loans (1) $ 566 $ 1,149 Time deposits (2) (6) (11) Core deposit intangible (3) (394) (455) Note Payable (4) (3) (4) Net impact to income before taxes $ 163 $ 679 (1) Loan discount accretion is included in the "Loans, including fees" section of "Interest Income" in the Consolidated Statements of Income. (2) Time deposit discount accretion is included in the "Deposits" section of "Interest Expense" in the Consolidated Statements of Income. (3) Core deposit intangible premium amortization is included in the "Other Expenses" section of "Non-interest Expense" in the Consolidated Statements of Income. (4) Note payable discount accretion is included in the "Borrowings" section of "Interest Expense" in the Consolidated Statements of Income. |
Core deposit intangible | |
Intangible assets | |
Summary of changes in the intangible assets | September 30, December 31, Dollars in Thousands 2022 2021 Balance at the beginning of the period $ 2,060 $ 2,660 Amortization (394) (600) Balance at the end of the period $ 1,666 $ 2,060 |
Schedule of future amortization | September 30, Dollars in Thousands 2022 2022 $ 125 2023 467 2024 415 2025 246 2026 182 Thereafter 231 $ 1,666 |
Deposits Purchased Premium (Discount) Net | |
Intangible assets | |
Summary of changes in the intangible assets | September 30, December 31, Dollars in Thousands 2022 2021 Balance at the beginning of the period $ (9) $ (23) Accretion, net 6 14 Balance at the end of the period $ (3) $ (9) |
Schedule of future accretion | September 30, Dollars in Thousands 2022 2022 $ 1 2023 2 $ 3 |
Nature of Business and Its Si_3
Nature of Business and Its Significant Accounting Policies - Consolidation (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) subsidiary | Sep. 30, 2021 USD ($) | |
Principles of Consolidation | ||||
Number of subsidiaries | subsidiary | 2 | |||
Loss on sale of ownership interest | $ 35 | $ (9) | $ 183 | |
West Nithsdale Enterprises LLC | ||||
Principles of Consolidation | ||||
Ownership interest sold | 10% | |||
Loss on sale of ownership interest | $ 2 | |||
The Bank of Delmarva | DHB Development LLC | ||||
Principles of Consolidation | ||||
Ownership interest (as a percent) | 40.55% | |||
The Bank of Delmarva | FBW LLC | ||||
Principles of Consolidation | ||||
Ownership interest (as a percent) | 50% | |||
Virginia Partners Bank | Johnson Mortgage Company LLC | ||||
Principles of Consolidation | ||||
Ownership interest (as a percent) | 51% |
Nature of Business and Its Si_4
Nature of Business and Its Significant Accounting Policies - Loans Held for Sale (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) item | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Loans held for sale | |||||
Provisions for credit losses | $ 419 | $ (30) | $ 803 | $ 2,568 | $ 2,323 |
Johnson Mortgage Company LLC | Real Estate | |||||
Loans held for sale | |||||
Receivable settlement period on mortgage loans sold | 30 days | ||||
Allowance for repurchase of loans sold | $ 0 | $ 0 | 0 | ||
Provisions for credit losses | $ 0 | $ 0 | |||
Johnson Mortgage Company LLC | Real Estate | Minimum | |||||
Loans held for sale | |||||
Number of family residences in structures for which mortgages are purchased or refinanced | item | 1 | ||||
Johnson Mortgage Company LLC | Real Estate | Maximum | |||||
Loans held for sale | |||||
Number of family residences in structures for which mortgages are purchased or refinanced | item | 4 |
Nature of Business and Its Si_5
Nature of Business and Its Significant Accounting Policies - OREO (Details) $ in Thousands | Sep. 30, 2022 property | Dec. 31, 2021 USD ($) property | |
Nature of Business and Its Significant Accounting Policies | |||
Number of properties in OREO | 0 | 2 | |
Other real estate owned, net | $ | [1] | $ 837 | |
Number of residential properties in OREO | 0 | ||
[1] * Derived from audited consolidated financial statements. |
Nature of Business and Its Si_6
Nature of Business and Its Significant Accounting Policies - Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Nature of Business and Its Significant Accounting Policies | ||
Goodwill, Impairment Loss | $ 0 | $ 0 |
Nature of Business and Its Si_7
Nature of Business and Its Significant Accounting Policies - Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Weighted average shares outstanding | ||||
Weighted average shares outstanding | 17,961,699 | 17,788,000 | 17,960,514 | 17,758,000 |
Investment Securities - Availab
Investment Securities - Available for sale (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | |
Marketable securities | |||
Amortized Cost | $ 151,111 | $ 121,542 | |
Gross Unrealized Gains | 1,773 | ||
Gross Unrealized Losses | 19,646 | 1,294 | |
Fair Value | 131,465 | 122,021 | [1] |
Obligations of U.S. Government agencies | |||
Debt securities | |||
Amortized Cost | 15,167 | 6,547 | |
Gross Unrealized Gains | 46 | ||
Gross Unrealized Losses | 1,665 | 142 | |
Fair Value | 13,502 | 6,451 | |
Obligations of States and political subdivisions | |||
Debt securities | |||
Amortized Cost | 29,094 | 29,792 | |
Gross Unrealized Gains | 1,397 | ||
Gross Unrealized Losses | 3,475 | 63 | |
Fair Value | 25,619 | 31,126 | |
Mortgage-backed securities | |||
Debt securities | |||
Amortized Cost | 104,383 | 83,213 | |
Gross Unrealized Gains | 279 | ||
Gross Unrealized Losses | 14,444 | 1,089 | |
Fair Value | 89,939 | 82,403 | |
Subordinated debt investments | |||
Debt securities | |||
Amortized Cost | 2,467 | 1,990 | |
Gross Unrealized Gains | 51 | ||
Gross Unrealized Losses | 62 | ||
Fair Value | $ 2,405 | $ 2,041 | |
[1] * Derived from audited consolidated financial statements. |
Investment Securities - Unreali
Investment Securities - Unrealized loss positions (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Marketable securities - Fair Value | ||
Less than 12 months | $ 84,785 | $ 62,998 |
12 months or more | 46,427 | 13,746 |
Total | 131,212 | 76,744 |
Marketable securities - Unrealized Loss | ||
Less than 12 months | 9,160 | 842 |
12 months or more | 10,486 | 452 |
Total | 19,646 | 1,294 |
Obligations of U.S. Government agencies | ||
Debt securities - Fair Value | ||
Less than 12 months | 11,175 | 1,289 |
12 months or more | 2,327 | 2,397 |
Total | 13,502 | 3,686 |
Debt securities - Unrealized Loss | ||
Less than 12 months | 988 | 35 |
12 months or more | 677 | 107 |
Total | 1,665 | 142 |
Obligations of States and political subdivisions | ||
Debt securities - Fair Value | ||
Less than 12 months | 24,728 | 2,473 |
12 months or more | 891 | |
Total | 25,619 | 2,473 |
Debt securities - Unrealized Loss | ||
Less than 12 months | 3,085 | 63 |
12 months or more | 390 | |
Total | 3,475 | 63 |
Mortgage-backed securities | ||
Debt securities - Fair Value | ||
Less than 12 months | 46,727 | 59,236 |
12 months or more | 43,209 | 11,349 |
Total | 89,936 | 70,585 |
Debt securities - Unrealized Loss | ||
Less than 12 months | 5,025 | 744 |
12 months or more | 9,419 | 345 |
Total | 14,444 | $ 1,089 |
Subordinated debt investments | ||
Debt securities - Fair Value | ||
Less than 12 months | 2,155 | |
Total | 2,155 | |
Debt securities - Unrealized Loss | ||
Less than 12 months | 62 | |
Total | $ 62 |
Investment Securities - Number
Investment Securities - Number of positions (Details) | Sep. 30, 2022 position |
Obligations of U.S. Government agencies | |
Investment Securities | |
Debt securities - Number of positions in unrealized loss position - less than 12 months | 13 |
Debt securities - Number of positions in unrealized loss position - 12 months or longer | 3 |
Mortgage-backed securities | |
Investment Securities | |
Debt securities - Number of positions in unrealized loss position - less than 12 months | 54 |
Debt securities - Number of positions in unrealized loss position - 12 months or longer | 17 |
Subordinated debt investments | |
Investment Securities | |
Debt securities - Number of positions in unrealized loss position - less than 12 months | 4 |
Obligations of States and political subdivisions | |
Investment Securities | |
Debt securities - Number of positions in unrealized loss position - less than 12 months | 56 |
Debt securities - Number of positions in unrealized loss position - 12 months or longer | 4 |
Investment Securities - Other i
Investment Securities - Other information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) security | Sep. 30, 2021 USD ($) security | Sep. 30, 2022 USD ($) security | Sep. 30, 2021 USD ($) security | Dec. 31, 2021 USD ($) | |
Investment holdings | |||||
Number of investment securities sold | security | 1 | 4 | 1 | 14 | |
Net gain (loss) on sale of investment securities | $ 5 | $ 3 | $ 5 | $ 17 | |
Number of securities either matured or called | security | 0 | 3 | 2 | 10 | |
Net gain (loss) on securities either matured or called | $ 0 | $ 0 | $ 5 | ||
Realized gain (loss) on equity securities | $ (75) | $ 9 | (226) | $ (38) | |
Secured Credit | |||||
Investment holdings | |||||
Amortized cost | 3 | 3 | $ 4 | ||
Fair value | 3 | 3 | 5 | ||
Secured Credit | Asset Pledged as Collateral | |||||
Investment holdings | |||||
Amortized cost | 10,600 | 10,600 | 11,100 | ||
Fair value | $ 8,900 | $ 8,900 | $ 11,200 |
Investment Securities - Maturit
Investment Securities - Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | |
Amortized Cost | |||
Due in one year or less | $ 1 | ||
Due after one year through five years | 11,076 | ||
Due after five years through ten years | 46,869 | ||
Due after ten years or more | 93,165 | ||
Amortized Cost | 151,111 | $ 121,542 | |
Fair Value | |||
Due in one year or less | 1 | ||
Due after one year through five years | 10,743 | ||
Due after five years through ten years | 42,922 | ||
Due after ten years or more | 77,799 | ||
Fair Value | $ 131,465 | $ 122,021 | [1] |
[1] * Derived from audited consolidated financial statements. |
Loans, Allowance for Credit L_3
Loans, Allowance for Credit Losses and Impaired Loans - Major Categories of Loans (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | $ 1,203,960 | $ 1,117,195 | |||
Less: Allowance for loan losses | (13,818) | $ (14,059) | (14,656) | $ (13,203) | |
Carrying amount | 1,190,142 | 1,102,539 | [1] | ||
Real Estate Mortgage | Construction and Land Development | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 119,211 | 107,983 | |||
Less: Allowance for loan losses | (1,093) | (935) | (1,143) | (903) | |
Real Estate Mortgage | Residential Real Estate | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 224,321 | 201,230 | |||
Less: Allowance for loan losses | (1,983) | (1,869) | (1,893) | (2,351) | |
Real Estate Mortgage | Nonresidential | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 698,314 | 642,217 | |||
Less: Allowance for loan losses | (8,163) | (9,203) | (9,239) | (7,584) | |
Real Estate Mortgage | Home Equity Loans | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 30,769 | 30,395 | |||
Less: Allowance for loan losses | (248) | (234) | (212) | (271) | |
Commercial | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 127,673 | 130,908 | |||
Less: Allowance for loan losses | (1,891) | (1,663) | (1,885) | (1,943) | |
Consumer and Other | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 3,672 | 4,462 | |||
Less: Allowance for loan losses | (86) | $ (31) | (36) | $ (37) | |
Originated Loans | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 1,058,424 | 913,314 | |||
Originated Loans | Real Estate Mortgage | Construction and Land Development | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 119,172 | 107,478 | |||
Originated Loans | Real Estate Mortgage | Residential Real Estate | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 196,772 | 159,701 | |||
Originated Loans | Real Estate Mortgage | Nonresidential | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 603,738 | 513,873 | |||
Originated Loans | Real Estate Mortgage | Home Equity Loans | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 21,769 | 19,246 | |||
Originated Loans | Commercial | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 113,814 | 109,470 | |||
Originated Loans | Consumer and Other | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 3,159 | 3,546 | |||
Acquired Loans | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 145,536 | 203,881 | |||
Acquired Loans | Real Estate Mortgage | Construction and Land Development | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 39 | 505 | |||
Acquired Loans | Real Estate Mortgage | Residential Real Estate | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 27,549 | 41,529 | |||
Acquired Loans | Real Estate Mortgage | Nonresidential | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 94,576 | 128,344 | |||
Acquired Loans | Real Estate Mortgage | Home Equity Loans | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 9,000 | 11,149 | |||
Acquired Loans | Commercial | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | 13,859 | 21,438 | |||
Acquired Loans | Consumer and Other | |||||
Investment Securities | |||||
Loans and leases receivable net of unamortized discount | $ 513 | $ 916 | |||
[1] * Derived from audited consolidated financial statements. |
Loans, Allowance for Credit L_4
Loans, Allowance for Credit Losses and Impaired Loans - Loan Impairment and Allowance for Credit Losses (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) customer | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) customer | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Allowance for credit losses | |||||
Beginning Balance | $ 14,059 | $ 14,656 | $ 13,203 | $ 13,203 | |
Charge-offs | (722) | (1,780) | (988) | ||
Recoveries | 62 | 139 | 118 | ||
Provisions for credit losses | 419 | $ (30) | 803 | 2,568 | 2,323 |
Ending Balance | 13,818 | 13,818 | 14,656 | ||
Purchased credit impaired loans: Balance in allowance | 9 | ||||
Purchased credit impaired loans: Related loan balance | 1,086 | 1,086 | 2,181 | ||
Individually evaluated for impairment: Balance in allowance | 300 | 300 | 1,455 | ||
Individually evaluated for impairment: Related loan balance | 6,788 | 6,788 | 13,218 | ||
Collectively evaluated for impairment: Balance in allowance | 13,518 | 13,518 | 13,192 | ||
Collectively evaluated for impairment: Related loan balance | 1,196,086 | 1,196,086 | 1,101,796 | ||
Unamortized discounts on acquired loans | 1,800 | 1,800 | 2,300 | ||
Nonaccrual loans | |||||
Loans past due 90 days or more still accruing interest | 275 | 275 | |||
Paycheck Protection Program | |||||
Carrying amount | 1,203,960 | 1,203,960 | 1,117,195 | ||
PPP Loans | |||||
Paycheck Protection Program | |||||
Loans funded | 95,100 | 95,100 | |||
Carrying amount | $ 0 | $ 0 | 8,200 | ||
PPP Loans | Minimum | |||||
Paycheck Protection Program | |||||
Number of customers through PPP | customer | 1,130 | 1,130 | |||
Real Estate Mortgage | Construction and Land Development | |||||
Allowance for credit losses | |||||
Beginning Balance | $ 935 | $ 1,143 | 903 | 903 | |
Recoveries | 1 | 1 | |||
Provisions for credit losses | 157 | (50) | 239 | ||
Ending Balance | 1,093 | 1,093 | 1,143 | ||
Purchased credit impaired loans: Related loan balance | 46 | ||||
Individually evaluated for impairment: Related loan balance | 575 | 575 | 598 | ||
Collectively evaluated for impairment: Balance in allowance | 1,093 | 1,093 | 1,143 | ||
Collectively evaluated for impairment: Related loan balance | 118,636 | 118,636 | 107,339 | ||
Paycheck Protection Program | |||||
Carrying amount | 119,211 | 119,211 | 107,983 | ||
Real Estate Mortgage | Residential Real Estate | |||||
Allowance for credit losses | |||||
Beginning Balance | 1,869 | 1,893 | 2,351 | 2,351 | |
Charge-offs | (39) | ||||
Recoveries | 16 | 56 | 23 | ||
Provisions for credit losses | 98 | 34 | (442) | ||
Ending Balance | 1,983 | 1,983 | 1,893 | ||
Purchased credit impaired loans: Balance in allowance | 9 | ||||
Purchased credit impaired loans: Related loan balance | 715 | 715 | 1,633 | ||
Individually evaluated for impairment: Balance in allowance | 21 | 21 | 3 | ||
Individually evaluated for impairment: Related loan balance | 1,731 | 1,731 | 2,082 | ||
Collectively evaluated for impairment: Balance in allowance | 1,962 | 1,962 | 1,881 | ||
Collectively evaluated for impairment: Related loan balance | 221,875 | 221,875 | 197,515 | ||
Nonaccrual loans | |||||
Loans past due 90 days or more still accruing interest | 230 | 230 | |||
Paycheck Protection Program | |||||
Carrying amount | 224,321 | 224,321 | 201,230 | ||
Real Estate Mortgage | Nonresidential | |||||
Allowance for credit losses | |||||
Beginning Balance | 9,203 | 9,239 | 7,584 | 7,584 | |
Charge-offs | (659) | (1,545) | (692) | ||
Recoveries | 6 | 22 | 53 | ||
Provisions for credit losses | (387) | 447 | 2,294 | ||
Ending Balance | 8,163 | 8,163 | 9,239 | ||
Purchased credit impaired loans: Related loan balance | 353 | 353 | 376 | ||
Individually evaluated for impairment: Balance in allowance | 1,000 | ||||
Individually evaluated for impairment: Related loan balance | 4,092 | 4,092 | 9,901 | ||
Collectively evaluated for impairment: Balance in allowance | 8,163 | 8,163 | 8,239 | ||
Collectively evaluated for impairment: Related loan balance | 693,869 | 693,869 | 631,940 | ||
Paycheck Protection Program | |||||
Carrying amount | 698,314 | 698,314 | 642,217 | ||
Real Estate Mortgage | Home Equity Loans | |||||
Allowance for credit losses | |||||
Beginning Balance | 234 | 212 | 271 | 271 | |
Charge-offs | (27) | (7) | |||
Recoveries | 6 | 3 | |||
Provisions for credit losses | 14 | 57 | (55) | ||
Ending Balance | 248 | 248 | 212 | ||
Individually evaluated for impairment: Related loan balance | 53 | 53 | 53 | ||
Collectively evaluated for impairment: Balance in allowance | 248 | 248 | 212 | ||
Collectively evaluated for impairment: Related loan balance | 30,716 | 30,716 | 30,342 | ||
Nonaccrual loans | |||||
Loans past due 90 days or more still accruing interest | 45 | 45 | |||
Paycheck Protection Program | |||||
Carrying amount | 30,769 | 30,769 | 30,395 | ||
Commercial | |||||
Allowance for credit losses | |||||
Beginning Balance | 1,663 | 1,885 | 1,943 | 1,943 | |
Charge-offs | (47) | (167) | (184) | ||
Recoveries | 2 | 13 | 16 | ||
Provisions for credit losses | 273 | 160 | 110 | ||
Ending Balance | 1,891 | 1,891 | 1,885 | ||
Purchased credit impaired loans: Related loan balance | 18 | 18 | 126 | ||
Individually evaluated for impairment: Balance in allowance | 279 | 279 | 452 | ||
Individually evaluated for impairment: Related loan balance | 337 | 337 | 584 | ||
Collectively evaluated for impairment: Balance in allowance | 1,612 | 1,612 | 1,433 | ||
Collectively evaluated for impairment: Related loan balance | 127,318 | 127,318 | 130,198 | ||
Paycheck Protection Program | |||||
Carrying amount | 127,673 | 127,673 | 130,908 | ||
Consumer and Other | |||||
Allowance for credit losses | |||||
Beginning Balance | 31 | 36 | 37 | 37 | |
Charge-offs | (16) | (41) | (66) | ||
Recoveries | 37 | 42 | 22 | ||
Provisions for credit losses | 34 | 49 | 43 | ||
Ending Balance | 86 | 86 | 36 | ||
Collectively evaluated for impairment: Balance in allowance | 86 | 86 | 36 | ||
Collectively evaluated for impairment: Related loan balance | 3,672 | 3,672 | 4,462 | ||
Paycheck Protection Program | |||||
Carrying amount | 3,672 | 3,672 | 4,462 | ||
Unallocated | |||||
Allowance for credit losses | |||||
Beginning Balance | 124 | 248 | $ 114 | 114 | |
Provisions for credit losses | 230 | 106 | 134 | ||
Ending Balance | 354 | 354 | 248 | ||
Collectively evaluated for impairment: Balance in allowance | 354 | 354 | 248 | ||
Originated Loans | |||||
Paycheck Protection Program | |||||
Carrying amount | 1,058,424 | 1,058,424 | 913,314 | ||
Originated Loans | Real Estate Mortgage | Construction and Land Development | |||||
Paycheck Protection Program | |||||
Carrying amount | 119,172 | 119,172 | 107,478 | ||
Originated Loans | Real Estate Mortgage | Residential Real Estate | |||||
Paycheck Protection Program | |||||
Carrying amount | 196,772 | 196,772 | 159,701 | ||
Originated Loans | Real Estate Mortgage | Nonresidential | |||||
Paycheck Protection Program | |||||
Carrying amount | 603,738 | 603,738 | 513,873 | ||
Originated Loans | Real Estate Mortgage | Home Equity Loans | |||||
Paycheck Protection Program | |||||
Carrying amount | 21,769 | 21,769 | 19,246 | ||
Originated Loans | Commercial | |||||
Paycheck Protection Program | |||||
Carrying amount | 113,814 | 113,814 | 109,470 | ||
Originated Loans | Consumer and Other | |||||
Paycheck Protection Program | |||||
Carrying amount | 3,159 | 3,159 | 3,546 | ||
Acquired Loans | |||||
Paycheck Protection Program | |||||
Carrying amount | 145,536 | 145,536 | 203,881 | ||
Acquired Loans | Real Estate Mortgage | Construction and Land Development | |||||
Paycheck Protection Program | |||||
Carrying amount | 39 | 39 | 505 | ||
Acquired Loans | Real Estate Mortgage | Residential Real Estate | |||||
Paycheck Protection Program | |||||
Carrying amount | 27,549 | 27,549 | 41,529 | ||
Acquired Loans | Real Estate Mortgage | Nonresidential | |||||
Paycheck Protection Program | |||||
Carrying amount | 94,576 | 94,576 | 128,344 | ||
Acquired Loans | Real Estate Mortgage | Home Equity Loans | |||||
Paycheck Protection Program | |||||
Carrying amount | 9,000 | 9,000 | 11,149 | ||
Acquired Loans | Commercial | |||||
Paycheck Protection Program | |||||
Carrying amount | 13,859 | 13,859 | 21,438 | ||
Acquired Loans | Consumer and Other | |||||
Paycheck Protection Program | |||||
Carrying amount | $ 513 | $ 513 | $ 916 |
Loans, Allowance for Credit L_5
Loans, Allowance for Credit Losses and Impaired Loans - Loan by Risk Rating (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) loan | Sep. 30, 2021 USD ($) loan | Sep. 30, 2022 USD ($) loan | Sep. 30, 2021 USD ($) loan | Dec. 31, 2021 USD ($) loan | |
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | $ 1,203,960 | $ 1,203,960 | $ 1,117,195 | ||
Nonaccrual | $ 4,050 | $ 4,050 | 8,961 | ||
Number of loans modified during the period | loan | 0 | 1 | 1 | 2 | |
Pre-modification recorded balance | $ 2,919 | $ 48 | $ 3,197 | ||
Post- modification recorded balance | $ 2,907 | $ 48 | $ 2,907 | ||
Number of loans modified as TDR that subsequently defaulted | loan | 0 | 0 | |||
Pass | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | $ 1,192,780 | $ 1,192,780 | 1,092,092 | ||
Marginal | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 6,342 | 6,342 | 15,421 | ||
Substandard | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 4,838 | 4,838 | 9,682 | ||
Real Estate Mortgage | Construction and Land Development | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 119,211 | 119,211 | 107,983 | ||
Nonaccrual | 576 | 576 | 598 | ||
Real Estate Mortgage | Construction and Land Development | Pass | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 118,636 | 118,636 | 107,339 | ||
Real Estate Mortgage | Construction and Land Development | Marginal | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 46 | ||||
Real Estate Mortgage | Construction and Land Development | Substandard | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 575 | 575 | 598 | ||
Real Estate Mortgage | Residential Real Estate | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 224,321 | 224,321 | 201,230 | ||
Nonaccrual | 1,243 | $ 1,243 | $ 1,293 | ||
Number of loans modified during the period | loan | 1 | ||||
Pre-modification recorded balance | $ 48 | ||||
Post- modification recorded balance | $ 48 | ||||
Number of loans in the process of foreclosure | loan | 0 | 2 | |||
Aggregate balances of loans in the process of foreclosure | $ 345 | ||||
Real Estate Mortgage | Residential Real Estate | Pass | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 222,647 | $ 222,647 | 199,037 | ||
Real Estate Mortgage | Residential Real Estate | Marginal | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 507 | ||||
Real Estate Mortgage | Residential Real Estate | Substandard | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 1,674 | 1,674 | 1,686 | ||
Real Estate Mortgage | Nonresidential | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 698,314 | 698,314 | 642,217 | ||
Nonaccrual | 1,894 | 1,894 | 6,486 | ||
Number of loans modified during the period | loan | 1 | 2 | |||
Pre-modification recorded balance | $ 2,919 | $ 3,197 | |||
Post- modification recorded balance | $ 2,907 | $ 2,907 | |||
Real Estate Mortgage | Nonresidential | Pass | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 691,287 | 691,287 | 622,648 | ||
Real Estate Mortgage | Nonresidential | Marginal | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 4,873 | 4,873 | 12,819 | ||
Real Estate Mortgage | Nonresidential | Substandard | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 2,154 | 2,154 | 6,750 | ||
Real Estate Mortgage | Home Equity Loans | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 30,769 | 30,769 | 30,395 | ||
Real Estate Mortgage | Home Equity Loans | Pass | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 30,671 | 30,671 | 30,159 | ||
Real Estate Mortgage | Home Equity Loans | Marginal | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 183 | ||||
Real Estate Mortgage | Home Equity Loans | Substandard | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 98 | 98 | 53 | ||
Commercial | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 127,673 | 127,673 | 130,908 | ||
Nonaccrual | 337 | 337 | 584 | ||
Commercial | Pass | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 126,214 | 126,214 | 128,949 | ||
Commercial | Marginal | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 1,122 | 1,122 | 1,364 | ||
Commercial | Substandard | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 337 | 337 | 595 | ||
Consumer and Other | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 3,672 | 3,672 | 4,462 | ||
Consumer and Other | Pass | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | 3,325 | 3,325 | 3,960 | ||
Consumer and Other | Marginal | |||||
Loans by risk rating | |||||
Loans and leases receivable net of unamortized discount | $ 347 | $ 347 | $ 502 |
Loans, Allowance for Credit L_6
Loans, Allowance for Credit Losses and Impaired Loans - Aging (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Past due financing receivables | ||
Total Financing Receivables | $ 1,203,960 | $ 1,117,195 |
Recorded Investment >90 Days Past Due and Accruing | 275 | |
Nonaccrual loans | 4,050 | 8,961 |
Unamortized discounts on acquired loans | 1,800 | 2,300 |
Current | ||
Past due financing receivables | ||
Current Balance | 1,200,926 | 1,112,120 |
Nonaccrual loans | 5,000 | |
Past Due | ||
Past due financing receivables | ||
Current Balance | 3,034 | 5,075 |
30-59 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 635 | 879 |
Nonaccrual loans | 223 | 55 |
60-89 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 1,088 | 245 |
Nonaccrual loans | 1,000 | |
Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 1,311 | 3,951 |
Nonaccrual loans | 2,800 | 4,000 |
Real Estate Mortgage | Construction and Land Development | ||
Past due financing receivables | ||
Total Financing Receivables | 119,211 | 107,983 |
Nonaccrual loans | 576 | 598 |
Real Estate Mortgage | Construction and Land Development | Current | ||
Past due financing receivables | ||
Current Balance | 118,636 | 107,385 |
Real Estate Mortgage | Construction and Land Development | Past Due | ||
Past due financing receivables | ||
Current Balance | 575 | 598 |
Real Estate Mortgage | Construction and Land Development | Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 575 | 598 |
Real Estate Mortgage | Residential Real Estate | ||
Past due financing receivables | ||
Total Financing Receivables | 224,321 | 201,230 |
Recorded Investment >90 Days Past Due and Accruing | 230 | |
Nonaccrual loans | 1,243 | 1,293 |
Real Estate Mortgage | Residential Real Estate | Current | ||
Past due financing receivables | ||
Current Balance | 222,653 | 199,966 |
Real Estate Mortgage | Residential Real Estate | Past Due | ||
Past due financing receivables | ||
Current Balance | 1,668 | 1,264 |
Real Estate Mortgage | Residential Real Estate | 30-59 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 207 | 658 |
Real Estate Mortgage | Residential Real Estate | 60-89 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 1,081 | 245 |
Real Estate Mortgage | Residential Real Estate | Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 380 | 361 |
Real Estate Mortgage | Nonresidential | ||
Past due financing receivables | ||
Total Financing Receivables | 698,314 | 642,217 |
Nonaccrual loans | 1,894 | 6,486 |
Real Estate Mortgage | Nonresidential | Current | ||
Past due financing receivables | ||
Current Balance | 697,576 | 639,302 |
Real Estate Mortgage | Nonresidential | Past Due | ||
Past due financing receivables | ||
Current Balance | 738 | 2,915 |
Real Estate Mortgage | Nonresidential | 30-59 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 427 | |
Real Estate Mortgage | Nonresidential | Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 311 | 2,915 |
Real Estate Mortgage | Home Equity Loans | ||
Past due financing receivables | ||
Total Financing Receivables | 30,769 | 30,395 |
Recorded Investment >90 Days Past Due and Accruing | 45 | |
Real Estate Mortgage | Home Equity Loans | Current | ||
Past due financing receivables | ||
Current Balance | 30,724 | 30,235 |
Real Estate Mortgage | Home Equity Loans | Past Due | ||
Past due financing receivables | ||
Current Balance | 45 | 160 |
Real Estate Mortgage | Home Equity Loans | 30-59 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 160 | |
Real Estate Mortgage | Home Equity Loans | Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 45 | |
Commercial | ||
Past due financing receivables | ||
Total Financing Receivables | 127,673 | 130,908 |
Nonaccrual loans | 337 | 584 |
Commercial | Current | ||
Past due financing receivables | ||
Current Balance | 127,666 | 130,785 |
Commercial | Past Due | ||
Past due financing receivables | ||
Current Balance | 7 | 123 |
Commercial | 30-59 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 46 | |
Commercial | 60-89 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 7 | |
Commercial | Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Current Balance | 77 | |
Consumer and Other | ||
Past due financing receivables | ||
Total Financing Receivables | 3,672 | 4,462 |
Consumer and Other | Current | ||
Past due financing receivables | ||
Current Balance | 3,671 | 4,447 |
Consumer and Other | Past Due | ||
Past due financing receivables | ||
Current Balance | 1 | 15 |
Consumer and Other | 30-59 Days Past Due | ||
Past due financing receivables | ||
Current Balance | $ 1 | $ 15 |
Loans, Allowance for Credit L_7
Loans, Allowance for Credit Losses and Impaired Loans - Impaired loans (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Impaired loans | ||
Impaired loans with specific reserves - Recorded Investment | $ 361 | $ 7,370 |
Impaired loans with specific reserves - Unpaid Principal Balance | 372 | 7,502 |
Impaired loans with specific reserves - Interest Income Recognized | 33 | 510 |
Impaired loans with specific reserves - Specific Reserve | 300 | 1,455 |
Impaired loans with specific reserves - Average Recorded Investment | 392 | 7,544 |
Impaired loans with no specific reserves - Recorded Investment | 6,427 | 5,848 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 6,427 | 5,954 |
Impaired loans with no specific reserves - Interest Income Recognized | 277 | 386 |
Impaired loans with no specific reserves - Average Recorded Investment | 7,104 | 5,969 |
Impaired loans specific reserves - Recorded Investment | 6,788 | 13,218 |
Impaired loans specific reserves - Unpaid Principal Balance | 6,799 | 13,456 |
Impaired loans specific reserves - Interest Income Recognized | 310 | 896 |
Impaired loans specific reserves - Average Recorded Investment | 7,496 | 13,513 |
Loans | ||
Carrying amount | 1,203,960 | 1,117,195 |
Unamortized discounts on acquired loans | 1,800 | 2,300 |
PCI loans | ||
Impaired loans | ||
Impaired loans with no specific reserves - Recorded Investment | 9 | |
Loans | ||
Carrying amount | 1,086 | 2,181 |
Unamortized discounts on acquired loans | 413 | 432 |
Real Estate Mortgage | Construction and Land Development | ||
Impaired loans | ||
Impaired loans with no specific reserves - Recorded Investment | 575 | 598 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 575 | 598 |
Impaired loans with no specific reserves - Interest Income Recognized | 5 | 13 |
Impaired loans with no specific reserves - Average Recorded Investment | 533 | 599 |
Loans | ||
Carrying amount | 119,211 | 107,983 |
Real Estate Mortgage | Residential Real Estate | ||
Impaired loans | ||
Impaired loans with specific reserves - Recorded Investment | 24 | 426 |
Impaired loans with specific reserves - Unpaid Principal Balance | 24 | 426 |
Impaired loans with specific reserves - Interest Income Recognized | 1 | 22 |
Impaired loans with specific reserves - Specific Reserve | 21 | 3 |
Impaired loans with specific reserves - Average Recorded Investment | 25 | 433 |
Impaired loans with no specific reserves - Recorded Investment | 1,707 | 1,656 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 1,707 | 1,687 |
Impaired loans with no specific reserves - Interest Income Recognized | 30 | 26 |
Impaired loans with no specific reserves - Average Recorded Investment | 1,742 | 1,698 |
Loans | ||
Carrying amount | 224,321 | 201,230 |
Real Estate Mortgage | Nonresidential | ||
Impaired loans | ||
Impaired loans with specific reserves - Recorded Investment | 6,437 | |
Impaired loans with specific reserves - Unpaid Principal Balance | 6,559 | |
Impaired loans with specific reserves - Interest Income Recognized | 369 | |
Impaired loans with specific reserves - Specific Reserve | 1,000 | |
Impaired loans with specific reserves - Average Recorded Investment | 6,528 | |
Impaired loans with no specific reserves - Recorded Investment | 4,092 | 3,464 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 4,092 | 3,462 |
Impaired loans with no specific reserves - Interest Income Recognized | 241 | 344 |
Impaired loans with no specific reserves - Average Recorded Investment | 4,776 | 3,510 |
Loans | ||
Carrying amount | 698,314 | 642,217 |
Real Estate Mortgage | Home Equity Loans | ||
Impaired loans | ||
Impaired loans with no specific reserves - Recorded Investment | 53 | 53 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 53 | 53 |
Impaired loans with no specific reserves - Interest Income Recognized | 1 | 1 |
Impaired loans with no specific reserves - Average Recorded Investment | 53 | 53 |
Loans | ||
Carrying amount | 30,769 | 30,395 |
Commercial | ||
Impaired loans | ||
Impaired loans with specific reserves - Recorded Investment | 337 | 507 |
Impaired loans with specific reserves - Unpaid Principal Balance | 348 | 517 |
Impaired loans with specific reserves - Interest Income Recognized | 32 | 119 |
Impaired loans with specific reserves - Specific Reserve | 279 | 452 |
Impaired loans with specific reserves - Average Recorded Investment | 367 | 583 |
Impaired loans with no specific reserves - Recorded Investment | 77 | |
Impaired loans with no specific reserves - Unpaid Principal Balance | 154 | |
Impaired loans with no specific reserves - Interest Income Recognized | 2 | |
Impaired loans with no specific reserves - Average Recorded Investment | 109 | |
Loans | ||
Carrying amount | 127,673 | 130,908 |
Consumer and Other | ||
Loans | ||
Carrying amount | $ 3,672 | $ 4,462 |
Loans, Allowance for Credit L_8
Loans, Allowance for Credit Losses and Impaired Loans - Acquired loans (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Acquired loans | ||
Carrying amount | $ 1,203,960 | $ 1,117,195 |
Acquired Loans | ||
Acquired loans | ||
Outstanding balance | 147,345 | 206,209 |
Carrying amount | 145,536 | 203,881 |
PCI loans | ||
Acquired loans | ||
Outstanding balance | 1,499 | 2,613 |
Carrying amount | 1,086 | 2,181 |
Non PCI loans | ||
Acquired loans | ||
Outstanding balance | 145,846 | 203,596 |
Carrying amount | $ 144,450 | $ 201,700 |
Loans, Allowance for Credit L_9
Loans, Allowance for Credit Losses and Impaired Loans - Accretable Yield (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Changes in accretable yield under ASC 310-20: | |||||
Commitments to loan additional funds to borrowers of restructured, impaired, or non-accrual loans | $ 0 | $ 0 | |||
PCI loans | |||||
Changes in accretable yield under ASC 310-20: | |||||
Accretion | $ (12) | $ (9) | (67) | $ (23) | |
Non-accretable yield on purchased credit impaired loans | 1,400 | 1,400 | 1,400 | ||
Non PCI loans | |||||
Changes in accretable yield under ASC 310-20: | |||||
Balance at beginning of period | 1,896 | $ 3,361 | 3,361 | ||
Accretion | (500) | (1,464) | |||
Other changes, net | (1) | ||||
Balance at end of period | $ 1,396 | $ 1,396 | $ 1,896 |
Borrowings and Notes Payable -
Borrowings and Notes Payable - Federal Home Loan Bank Advances (Details) - Federal Home Loan Bank of Atlanta - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Advances from Federal Home Loan Banks | |||||
Credit facility from FHLB | $ 422,000 | $ 422,000 | |||
Remaining credit availability | 396,100 | 396,100 | |||
Outstanding Balance | 25,819 | 25,819 | $ 26,313 | ||
Average short-term borrowings | 0 | $ 0 | 0 | $ 0 | |
Principal balances outstanding on pledged loans | 189,100 | 189,100 | 181,800 | ||
FHLB 3.15% Fixed Rate Hybrid Advance Maturing October 2022 | |||||
Advances from Federal Home Loan Banks | |||||
Outstanding Balance | $ 5,000 | $ 5,000 | $ 5,000 | ||
Interest rate | 3.15% | 3.15% | 3.15% | ||
FHLB 1.62% Principal Reducing Credit Advance Maturing March 2023 | |||||
Advances from Federal Home Loan Banks | |||||
Outstanding Balance | $ 214 | $ 214 | $ 536 | ||
Interest rate | 1.62% | 1.62% | 1.62% | ||
FHLB 1.29% Fixed Rate Hybrid Advance 1 Maturing March 2024 | |||||
Advances from Federal Home Loan Banks | |||||
Outstanding Balance | $ 9,900 | $ 9,900 | $ 9,900 | ||
Interest rate | 1.29% | 1.29% | 1.29% | ||
FHLB 1.29% Fixed Rate Hybrid Advance 2 Maturing March 2024 | |||||
Advances from Federal Home Loan Banks | |||||
Outstanding Balance | $ 9,900 | $ 9,900 | $ 9,900 | ||
Interest rate | 1.29% | 1.29% | 1.29% | ||
FHLB 1.99% Principal Reducing Credit Advance Maturing March 2026 | |||||
Advances from Federal Home Loan Banks | |||||
Outstanding Balance | $ 805 | $ 805 | $ 977 | ||
Interest rate | 1.99% | 1.99% | 1.99% |
Borrowings and Notes Payable _2
Borrowings and Notes Payable - Subordinated Loans (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Jun. 30, 2020 | Jan. 31, 2018 | Oct. 31, 2015 | |
Subordinated loan maturing October 2025 | |||
Long-Term Obligations | |||
Aggregate principal amount | $ 2 | ||
Interest rate | 6.71% | ||
Subordinated loan maturing April 2028 | |||
Long-Term Obligations | |||
Aggregate principal amount | $ 4.5 | ||
Interest rate | 6.875% | ||
Subordinated Loan Maturing July 2030 | |||
Long-Term Obligations | |||
Aggregate principal amount | $ 18.1 | ||
Interest rate | 6% | ||
Subordinated Loan Maturing July 2030 | 3-month SOFR | |||
Long-Term Obligations | |||
Basis spread on variable rate effective after July 1, 2025 | 5.90% |
Borrowings and Notes Payable _3
Borrowings and Notes Payable - Partners Bank Debt (Details) - Virginia Partners Bank - USD ($) $ in Thousands | 9 Months Ended | ||
Apr. 30, 2015 | Dec. 14, 2012 | Sep. 30, 2022 | |
Deed of Trust Loan | |||
Long-Term Obligations | |||
Amortization period | 25 years | ||
Interest rate | 3.60% | ||
Period contractual interest rate remains fixed | 10 years | ||
Deed of Trust Loan | 10 Year US Treasury (UST) Interest Rate | |||
Long-Term Obligations | |||
Basis spread on variable rate | 3% | ||
410 William Street, Fredericksburg, VA | |||
Long-Term Obligations | |||
Ownership percentage | 50% | ||
Ownership percentage acquired | 50% | ||
410 William Street, Fredericksburg, VA | Deed of Trust Loan | |||
Long-Term Obligations | |||
Indemnification of debt obligations | $ 886 | ||
Outstanding debt balance | $ 636 | ||
Loan discount | $ 17 |
Borrowings and Notes Payable _4
Borrowings and Notes Payable - Secured Credit Facility (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Credit Facilities | |||||
Interest expense | $ 1,582 | $ 2,177 | $ 4,964 | $ 6,957 | |
Secured Credit | |||||
Credit Facilities | |||||
Maximum borrowing capacity | 5,000 | 5,000 | |||
Borrowing outstanding | 0 | 0 | $ 0 | ||
Amortized cost | 3 | 3 | 4 | ||
Fair value | 3 | 3 | 5 | ||
Secured Credit | Asset Pledged as Collateral | |||||
Credit Facilities | |||||
Amortized cost | 10,600 | 10,600 | 11,100 | ||
Fair value | 8,900 | 8,900 | 11,200 | ||
Unsecured Credit | |||||
Credit Facilities | |||||
Maximum borrowing capacity | 117,000 | 117,000 | |||
Borrowing outstanding | 0 | 0 | 0 | ||
Federal Reserve Bank Discount Window | |||||
Credit Facilities | |||||
Borrowing outstanding | 0 | 0 | 0 | ||
Federal Reserve Bank Discount Window | Asset Pledged as Collateral | |||||
Credit Facilities | |||||
Amortized cost | 3,400 | 3,400 | |||
Fair value | 2,800 | 2,800 | |||
Combined amortized cost and fair value | 3,700 | ||||
Paycheck Protection Program Liquidity Fund (PPPLF) | |||||
Credit Facilities | |||||
Borrowing outstanding | 0 | 0 | |||
Johnson Mortgage Company LLC | Secured Credit | |||||
Credit Facilities | |||||
Maximum borrowing capacity | 3,000 | 3,000 | |||
Borrowing outstanding | 192 | 192 | $ 120 | ||
Interest expense | $ 18 | $ 21 | $ 42 | $ 77 | |
Johnson Mortgage Company LLC | Secured Credit | LIBOR | |||||
Credit Facilities | |||||
Variable rate basis | one month LIBOR | ||||
Basis spread on variable rate | 2.25% | ||||
Rounding factor for effective interest rate | 0.125% | ||||
Effective interest rate | 6% | 6% |
Borrowings and Notes Payable _5
Borrowings and Notes Payable - Maturities (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Maturities on debt | |
2022 | $ 5,350 |
2023 | 314 |
2024 | 20,008 |
2025 | 210 |
2026 | 39 |
Thereafter | 22,912 |
Total | $ 48,833 |
Lease Commitments - Lease Infor
Lease Commitments - Lease Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) lease | |
Leases | |
Number of lease locations | 19 |
Number of operating leases | 17 |
Number of finance leases | 2 |
Threshold of discounted present value of future cash flows below which a lease is not recorded on the balance sheet | $ | $ 25 |
Options to renew | true |
Renewal term of the lease | 5 years |
Maximum | |
Leases | |
Term of lease including available lease renewal options | 15 years |
Lease Commitments - Supplementa
Lease Commitments - Supplemental Lease Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | ||
Balance Sheet | ||||||
Right-of-use asset, operating lease | $ 5,290 | $ 5,290 | $ 6,009 | [1] | ||
Lease liability, operating lease | 5,688 | 5,688 | 6,372 | [1] | ||
Right-of-use asset, finance lease | 1,584 | 1,584 | 1,687 | [1] | ||
Lease Liabilities, finance lease | 2,036 | 2,036 | $ 2,125 | [1] | ||
Income Statement | ||||||
Operating lease cost classified as premises and equipment | 286 | $ 252 | 858 | $ 691 | ||
Finance lease cost classified as interest on borrowings | $ 15 | $ 15 | $ 44 | 47 | ||
Lease cost information | ||||||
Weighted average lease term - Operating Leases | 7 years 5 months 15 days | 7 years 5 months 15 days | 7 years 11 months 26 days | |||
Weighted average lease term - Finance Leases | 11 years 3 months 18 days | 11 years 3 months 18 days | 12 years 1 month 2 days | |||
Weighted average discount rate - Operating Leases | 2.29% | 2.29% | 2.24% | |||
Weighted average discount rate - Finance Leases | 2.84% | 2.84% | 2.84% | |||
Operating outgoing cash flows from operating leases | $ 787 | 643 | ||||
Operating outgoing cash flows from finance leases | $ 134 | $ 134 | ||||
[1] * Derived from audited consolidated financial statements. |
Lease Commitments - Maturities
Lease Commitments - Maturities of lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | [1] |
Operating Leases: | |||
One year or less | $ 966 | ||
One to three years | 1,470 | ||
Three to five years | 1,060 | ||
Over 5 years | 2,905 | ||
Total undiscounted cash flows | 6,401 | ||
Less: Discount | (713) | ||
Operating lease liabilities | 5,688 | $ 6,372 | |
Finance Leases: | |||
One year or less | 185 | ||
One to three years | 393 | ||
Three to five years | 407 | ||
Over 5 years | 1,417 | ||
Total undiscounted cash flows | 2,402 | ||
Less: Discount | (366) | ||
Lease Liabilities, finance lease | $ 2,036 | $ 2,125 | |
[1] * Derived from audited consolidated financial statements. |
Stock Option Plans - Liberty St
Stock Option Plans - Liberty Stock Option Plan (Details) - Liberty 2004 Stock Option Plan - Stock options $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Feb. 28, 2018 $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2021 $ / shares shares | |
Equity Compensation | |||
Contractual life | 10 years | ||
Vesting period (in years) | 5 years | ||
Conversion ratio, stock based compensation | 0.2857 | ||
Number of options converted | 48,225 | ||
Exercise price of option converted | $ / shares | $ 1.18 | ||
Number of options outstanding after conversion | 13,771 | ||
Shares | |||
Outstanding at the beginning of year | 5,761 | ||
Exercised | (1,028) | ||
Outstanding at the end of year | 4,733 | 5,761 | |
Options exercisable at end of year | 4,733 | ||
Weighted Average Exercise Price | |||
Balance at the beginning of year | $ / shares | $ 4.14 | ||
Exercised | $ / shares | 4.14 | ||
Balance at the end of year | $ / shares | $ 4.14 | 4.14 | $ 4.14 |
Options exercisable at end of year | $ / shares | $ 4.14 | ||
Weighted-Average Remaining Contractual Life | |||
Outstanding at beginning of year | 5 months 23 days | 1 year 2 months 23 days | |
Outstanding at end of year | 5 months 23 days | 1 year 2 months 23 days | |
Intrinsic Value | $ | $ 22,482 |
Stock Option Plans - Partners S
Stock Option Plans - Partners Stock Option Plan (Details) - Partners Stock Option Plan - Stock options - $ / shares | 12 Months Ended | |||||
Nov. 15, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | Sep. 30, 2022 | Dec. 31, 2021 | |
Equity Compensation | ||||||
Vesting period (in years) | 3 years | 3 years | ||||
Percentage of options vesting at the merger | 100% | |||||
Number of options converted | 149,200 | |||||
Exercise price of option converted | $ 10.52 | |||||
Number of options outstanding after conversion | 256,294 | |||||
Exercise price of option outstanding | $ 6.13 | $ 6.50 | $ 6.40 | |||
Conversion ratio, stock based compensation | 1.7179 | |||||
Maximum | ||||||
Equity Compensation | ||||||
Contractual life | 10 years |
Stock Option Plans - Partners_2
Stock Option Plans - Partners Stock Option Activity (Details) - Partners Stock Option Plan - Stock options - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Outstanding shares | ||
Outstanding at the beginning of year | 128,147 | |
Exercised | (19,067) | |
Forfeited | (8,588) | |
Outstanding at the end of year | 100,492 | 128,147 |
Options exercisable at end of year | 100,492 | |
Weighted Average Exercise Price | ||
Balance at the beginning of year | $ 6.40 | |
Exercised | 5.83 | |
Forfeited | 6.48 | |
Balance at the end of year | 6.50 | $ 6.40 |
Options exercisable at end of year | $ 6.50 | |
Weighted-Average Remaining Contractual Life | ||
Outstanding at beginning of year | 2 years 9 months 3 days | 3 years 2 months 4 days |
Outstanding at end of year | 2 years 9 months 3 days | 3 years 2 months 4 days |
Intrinsic Value | $ 240,168 |
Stock Option Plans - Valuation
Stock Option Plans - Valuation Assumptions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Stock options | ||||
Fair value assumptions | ||||
Stock-based compensation expense recognized in earnings | $ 0 | $ 0 | $ 0 | $ 0 |
Restricted Stock Plan (Details)
Restricted Stock Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2018 | Dec. 31, 2017 | |
Shares | |||||
Non-vested balance at beginning of period (in shares) | 28,000 | ||||
Non-vested balance at end of period (in shares) | 18,669 | ||||
Employees | Restricted stock | |||||
Shares | |||||
Granted (in shares) | 18,669 | ||||
Restricted Stock Plan | Restricted stock | |||||
Stock options | |||||
Shares reserved for issuance | 405,805 | ||||
Weighted Average Grant Date Fair Value | |||||
Stock-based compensation expense recognized in earnings | $ 0 | $ 4 | |||
Stock based compensation expense, net of tax | $ 3 | ||||
Total unrecognized compensation cost related to non-vested restricted stock units | $ 0 | ||||
Restricted Stock Plan | Employees | Restricted stock | |||||
Shares | |||||
Granted (in shares) | 9,000 | 5,000 | |||
Non-vested balance at end of period (in shares) | 0 | ||||
Restricted Stock Plan | Employees | Restricted stock | Minimum | |||||
Stock options | |||||
Vesting period (in years) | 2 years | 2 years | |||
Restricted Stock Plan | Employees | Restricted stock | Maximum | |||||
Stock options | |||||
Vesting period (in years) | 3 years | 3 years |
Incentive Stock Plan (Details)
Incentive Stock Plan (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||
Dec. 10, 2021 shares | Oct. 27, 2021 installment shares | Oct. 21, 2021 $ / shares | Oct. 12, 2021 installment $ / shares shares | Apr. 28, 2021 installment employee $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) | May 19, 2021 shares | |
Shares | ||||||||||
Non-vested balance at beginning of period (in shares) | 28,000 | |||||||||
Non-vested balance at end of period (in shares) | 18,669 | 18,669 | ||||||||
Restricted stock | Employees | ||||||||||
Shares | ||||||||||
Awarded (in shares) | 18,669 | |||||||||
2021 Incentive Stock Plan | Maximum | ||||||||||
Equity Compensation | ||||||||||
Shares authorized | 1,250,000 | |||||||||
2021 Incentive Stock Plan | Restricted stock | ||||||||||
Weighted Average Grant Date Fair Value | ||||||||||
Awarded (in dollars per share) | $ / shares | $ 8.72 | $ 8.99 | ||||||||
Stock-based compensation expense recognized in earnings | $ | $ 24 | $ 37 | $ 71 | $ 62 | ||||||
Stock based compensation expense, net of tax | $ | 17 | $ 28 | 52 | $ 46 | ||||||
Total unrecognized compensation cost related to non-vested restricted stock units | $ | $ 157 | $ 157 | ||||||||
Weighted-average period over which unrecognized compensation cost will be recognized | 1 year 8 months 12 days | |||||||||
2021 Incentive Stock Plan | Restricted stock | Directors | ||||||||||
Incentive Stock Plan | ||||||||||
Number of equal vesting installments | installment | 3 | |||||||||
Shares | ||||||||||
Awarded (in shares) | 27,000 | |||||||||
2021 Incentive Stock Plan | Restricted stock | Employees | ||||||||||
Incentive Stock Plan | ||||||||||
Number of equal vesting installments | installment | 3 | |||||||||
Shares | ||||||||||
Non-vested balance at beginning of period (in shares) | 28,000 | |||||||||
Awarded (in shares) | 68,000 | |||||||||
Vested (in shares) | (40,000) | (9,331) | ||||||||
Non-vested balance at end of period (in shares) | 18,669 | 18,669 | ||||||||
Weighted Average Grant Date Fair Value | ||||||||||
Non-vested balance at beginning of period (in dollars per share) | $ / shares | $ 8.99 | |||||||||
Vested (in dollars per share) | $ / shares | 8.99 | |||||||||
Non-vested balance at end of period (in dollars per share) | $ / shares | $ 8.99 | $ 8.99 | ||||||||
Employment Inducement | Restricted stock | ||||||||||
Weighted Average Grant Date Fair Value | ||||||||||
Awarded (in dollars per share) | $ / shares | $ 7.65 | |||||||||
Employment Inducement | Restricted stock | Employees | ||||||||||
Incentive Stock Plan | ||||||||||
Number of employees granted shares | employee | 2 | |||||||||
Number of equal vesting installments | installment | 3 | |||||||||
Shares | ||||||||||
Awarded (in shares) | 58,824 |
Earnings Per Share - Basic and
Earnings Per Share - Basic and Diluted Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Basic EPS | ||||
Net Income Applicable to Basic Earnings Per Common Share | $ 4,110 | $ 2,696 | $ 9,398 | $ 5,946 |
Weighted Average Shares Outstanding | 17,961,699 | 17,788,000 | 17,960,514 | 17,758,000 |
Basic EPS | $ 0.229 | $ 0.152 | $ 0.523 | $ 0.335 |
Effect of dilutive securities: | ||||
Effect of dilutive stock awards, shares | 32,000 | 56,000 | 34,000 | 42,000 |
Diluted EPS | ||||
Net Income Applicable to Basic Earnings Per Common Share | $ 4,110 | $ 2,696 | $ 9,398 | $ 5,946 |
Weighted Average Shares Outstanding | 17,994,000 | 17,844,000 | 17,995,000 | 17,800,000 |
Diluted EPS | $ 0.228 | $ 0.151 | $ 0.522 | $ 0.334 |
Regulatory Capital Requiremen_3
Regulatory Capital Requirements (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Minimum | FDIC | ||
Regulatory Capital Requirements | ||
Common Equity Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 0.045 | |
Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 0.060 | |
Total Capital (to risk weighted assets), ratio (as a percent) | 0.080 | |
Tier 1 Leverage ratio (as a percent) | 0.040 | |
Basel III Capital Rules | FDIC | ||
Regulatory Capital Requirements | ||
Capital conservation buffer ratio | 2.50% | |
Basel III Capital Rules | Minimum | FDIC | ||
Regulatory Capital Requirements | ||
Common Equity Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 0.070 | |
Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 0.085 | |
Total Capital (to risk weighted assets), ratio (as a percent) | 0.105 | |
Partners Bancorp | ||
Regulatory Capital Requirements | ||
Amount available for payment of dividends to stockholders without regulatory approval | $ 17.6 | $ 14.2 |
Subsidiaries | ||
Regulatory Capital Requirements | ||
Amount available for payment of dividends to stockholders without regulatory approval | $ 21 | $ 17.9 |
Regulatory Capital Requiremen_4
Regulatory Capital Requirements - Bank's capital amounts (Details) $ in Thousands | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
The Bank of Delmarva | ||
Total Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 95,924 | $ 91,928 |
Actual, ratio | 0.130 | 0.129 |
For Capital Adequacy Purposes | $ 77,304 | $ 74,963 |
For Capital Adequacy Purposes, ratio | 0.105 | 0.105 |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 73,623 | $ 71,394 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.100 | 0.100 |
Tier I Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 86,715 | $ 82,972 |
Actual, ratio | 0.118 | 0.116 |
For Capital Adequacy Purposes | $ 62,580 | $ 60,684 |
For Capital Adequacy Purposes, ratio | 0.085 | 0.085 |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 58,898 | $ 57,115 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.080 | 0.080 |
Common Equity Tier I Ratio (To Risk Weighted Assets) | ||
Actual | $ 86,715 | $ 82,972 |
Actual, ratio | 0.118 | 0.116 |
For Capital Adequacy Purposes | $ 51,536 | $ 49,975 |
For Capital Adequacy Purposes, ratio | 0.070 | 0.070 |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 47,855 | $ 46,406 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.065 | 0.065 |
Tier I Leverage Ratio (To Average Assets) | ||
Actual | $ 86,715 | $ 82,972 |
Actual, ratio | 0.087 | 0.081 |
For Capital Adequacy Purposes | $ 39,916 | $ 40,926 |
For Capital Adequacy Purposes, ratio | 0.040 | 0.040 |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 49,895 | $ 51,158 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.050 | 0.050 |
Virginia Partners Bank | ||
Total Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 62,076 | $ 56,192 |
Actual, ratio | 0.114 | 0.120 |
For Capital Adequacy Purposes | $ 57,233 | $ 49,103 |
For Capital Adequacy Purposes, ratio | 0.105 | 0.105 |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 54,508 | $ 46,765 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.100 | 0.100 |
Tier I Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 57,718 | $ 52,844 |
Actual, ratio | 0.106 | 0.113 |
For Capital Adequacy Purposes | $ 46,332 | $ 39,750 |
For Capital Adequacy Purposes, ratio | 0.085 | 0.085 |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 43,606 | $ 37,412 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.080 | 0.080 |
Common Equity Tier I Ratio (To Risk Weighted Assets) | ||
Actual | $ 57,718 | $ 52,844 |
Actual, ratio | 0.106 | 0.113 |
For Capital Adequacy Purposes | $ 38,156 | $ 32,735 |
For Capital Adequacy Purposes, ratio | 0.070 | 0.070 |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 35,430 | $ 30,397 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.065 | 0.065 |
Tier I Leverage Ratio (To Average Assets) | ||
Actual | $ 57,718 | $ 52,844 |
Actual, ratio | 0.086 | 0.085 |
For Capital Adequacy Purposes | $ 26,772 | $ 25,009 |
For Capital Adequacy Purposes, ratio | 0.040 | 0.040 |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 33,465 | $ 31,261 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.050 | 0.050 |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments - Estimated Fair Value and Related Carrying Values of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | ||
Financial assets: | ||||
Restricted stock | $ 4,889 | $ 4,869 | [1] | |
Bank owned life insurance | 18,592 | 18,254 | [1] | |
Other real estate owned | [1] | 837 | ||
Financial liabilities: | ||||
Subordinated notes payable | 22,203 | 22,168 | [1] | |
Other borrowings | 811 | 755 | [1] | |
Carrying Amount | ||||
Financial assets: | ||||
Cash and due from banks | 12,784 | 12,887 | ||
Interest bearing deposits | 210,935 | 297,902 | ||
Federal funds sold | 24,573 | 28,040 | ||
Available for sale | 131,465 | 122,021 | ||
Loans held for sale | 201 | 4,064 | ||
Loans, net of allowance for credit losses | 1,190,142 | 1,102,539 | ||
Accrued interest receivable | 4,035 | 4,313 | ||
Restricted stock | 4,889 | 4,869 | ||
Other investments | 4,864 | 5,065 | ||
Bank owned life insurance | 18,592 | 18,254 | ||
Other real estate owned | 837 | |||
Financial liabilities: | ||||
Deposits | 1,455,944 | 1,442,876 | ||
Accrued interest payable on deposits | 189 | 280 | ||
FHLB advances | 25,819 | 26,313 | ||
Subordinated notes payable | 22,203 | 22,168 | ||
Other borrowings | 811 | 755 | ||
Estimated Fair Value | ||||
Financial assets: | ||||
Cash and due from banks | 12,784 | 12,887 | ||
Interest bearing deposits | 210,935 | 297,902 | ||
Federal funds sold | 24,573 | 28,040 | ||
Available for sale | 131,465 | 122,021 | ||
Loans held for sale | 201 | 4,064 | ||
Loans, net of allowance for credit losses | 1,119,240 | 1,089,812 | ||
Accrued interest receivable | 4,035 | 4,313 | ||
Restricted stock | 4,889 | 4,869 | ||
Other investments | 4,864 | 5,065 | ||
Bank owned life insurance | 18,592 | 18,254 | ||
Other real estate owned | 837 | |||
Financial liabilities: | ||||
Deposits | 1,446,907 | 1,443,864 | ||
Accrued interest payable on deposits | 189 | 280 | ||
FHLB advances | 24,934 | 27,007 | ||
Subordinated notes payable | 26,506 | 30,091 | ||
Other borrowings | 811 | 755 | ||
Level 1 | Estimated Fair Value | ||||
Financial assets: | ||||
Cash and due from banks | 12,784 | 12,887 | ||
Interest bearing deposits | 210,935 | 297,902 | ||
Federal funds sold | 24,573 | 28,040 | ||
Level 2 | Estimated Fair Value | ||||
Financial assets: | ||||
Available for sale | 131,465 | 122,021 | ||
Loans held for sale | 201 | 4,064 | ||
Accrued interest receivable | 4,035 | 4,313 | ||
Restricted stock | 4,889 | 4,869 | ||
Other investments | 4,864 | 5,065 | ||
Bank owned life insurance | 18,592 | 18,254 | ||
Financial liabilities: | ||||
Deposits | 1,152,907 | 1,063,619 | ||
Accrued interest payable on deposits | 189 | 280 | ||
FHLB advances | 24,934 | 27,007 | ||
Subordinated notes payable | 26,506 | 30,091 | ||
Level 3 | Estimated Fair Value | ||||
Financial assets: | ||||
Loans, net of allowance for credit losses | 1,119,240 | 1,089,812 | ||
Other real estate owned | 837 | |||
Financial liabilities: | ||||
Deposits | 294,000 | 380,245 | ||
Other borrowings | $ 811 | $ 755 | ||
[1] * Derived from audited consolidated financial statements. |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis (Details) - Measured on a recurring basis - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Securities available for sale: | ||
Total securities available for sale | $ 131,465 | $ 122,021 |
Obligations of U.S. Government agencies | ||
Securities available for sale: | ||
Total securities available for sale | 13,502 | 6,451 |
Obligations of States and political subdivisions | ||
Securities available for sale: | ||
Total securities available for sale | 25,619 | 31,126 |
Mortgage-backed securities | ||
Securities available for sale: | ||
Total securities available for sale | 89,939 | 82,403 |
Subordinated debt investments | ||
Securities available for sale: | ||
Total securities available for sale | 2,405 | 2,041 |
Level 2 | ||
Securities available for sale: | ||
Total securities available for sale | 131,465 | 122,021 |
Level 2 | Obligations of U.S. Government agencies | ||
Securities available for sale: | ||
Total securities available for sale | 13,502 | 6,451 |
Level 2 | Obligations of States and political subdivisions | ||
Securities available for sale: | ||
Total securities available for sale | 25,619 | 31,126 |
Level 2 | Mortgage-backed securities | ||
Securities available for sale: | ||
Total securities available for sale | 89,939 | 82,403 |
Level 2 | Subordinated debt investments | ||
Securities available for sale: | ||
Total securities available for sale | $ 2,405 | $ 2,041 |
Fair Value Measurements - Non-r
Fair Value Measurements - Non-recurring Basis (Details) - Fair Value, Nonrecurring $ in Thousands | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Securities available for sale: | ||
Fair Value, assets | $ 3,216 | $ 5,490 |
Impaired Loans | ||
Securities available for sale: | ||
Fair Value, assets | 3,216 | 4,653 |
OREO | ||
Securities available for sale: | ||
Fair Value, assets | 837 | |
Level 3 | ||
Securities available for sale: | ||
Fair Value, assets | 3,216 | 5,490 |
Level 3 | Impaired Loans | ||
Securities available for sale: | ||
Fair Value, assets | $ 3,216 | $ 4,653 |
Debt Instrument, Measurement Input | 0.08 | 0.08 |
Debt Instrument, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueConsensusPricingModelMember | us-gaap:ValuationTechniqueConsensusPricingModelMember |
Debt Instrument, Measurement Input [Extensible List] | us-gaap:MeasurementInputDiscountRateMember | us-gaap:MeasurementInputDiscountRateMember |
Level 3 | OREO | ||
Securities available for sale: | ||
Fair Value, assets | $ 837 | |
Other Real Estate Owned, Valuation Technique [Extensible List] | us-gaap:MarketApproachValuationTechniqueMember | |
Other Real Estate Owned, Measurement Input [Extensible List] | us-gaap:MeasurementInputDiscountRateMember | |
Level 3 | OREO | Minimum | ||
Securities available for sale: | ||
Other Real Estate Owned, Measurement Input | 0.08 | |
Level 3 | OREO | Maximum | ||
Securities available for sale: | ||
Other Real Estate Owned, Measurement Input | 0.10 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Changes in goodwill | |||
Change in goodwill during the period | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Core Deposit Intangible (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |||
Changes in the core deposit intangible | |||||||
Balance at the beginning of the period | [1] | $ 2,060 | |||||
Amortization | $ (128) | $ (148) | (394) | $ (455) | |||
Balance at the end of the period | 1,666 | 1,666 | $ 2,060 | [1] | |||
Core deposit intangible | |||||||
Changes in the core deposit intangible | |||||||
Balance at the beginning of the period | 2,060 | $ 2,660 | 2,660 | ||||
Amortization | (394) | (600) | |||||
Balance at the end of the period | $ 1,666 | $ 1,666 | $ 2,060 | ||||
Liberty Bell Bank | Core deposit intangible | |||||||
Intangibles | |||||||
Amortization period | 7 years | ||||||
Virginia Partners Bank | Core deposit intangible | |||||||
Intangibles | |||||||
Amortization period | 120 months | ||||||
[1] * Derived from audited consolidated financial statements. |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Core Deposit Intangible Amortization (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Remaining amortization | ||||
Total | $ 1,666 | $ 2,060 | [1] | |
Core deposit intangible | ||||
Remaining amortization | ||||
2022 | 125 | |||
2023 | 467 | |||
2024 | 415 | |||
2025 | 246 | |||
2026 | 182 | |||
Thereafter | 231 | |||
Total | $ 1,666 | $ 2,060 | $ 2,660 | |
[1] * Derived from audited consolidated financial statements. |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Deposits Purchased Premium and Discount (Details) - Deposits Purchased Premium (Discount) Net - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Deposits Purchased Premium (Discount) | ||
Accretion period | 5 years | |
Balance at beginning of period | $ (9) | $ (23) |
Accretion, net | 6 | 14 |
Balance at end of period | $ (3) | $ (9) |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets - Deposits Purchased Premium and Discount, Amortization and Accretion (Details) - Deposits Purchased Premium (Discount) Net - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Remaining accretion | |||
2022 | $ 1 | ||
2023 | 2 | ||
Net deposit discount | $ 3 | $ 9 | $ 23 |
Goodwill and Intangible Asset_7
Goodwill and Intangible Assets - Effect of Acquisition Accounting Adjustments (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Intangibles | ||
Net impact of income before taxes | $ 163 | $ 679 |
Loans Payable | Interest expense - Borrowings | ||
Intangibles | ||
Net impact of income before taxes | (3) | (4) |
Core deposit intangible | Other Expenses | ||
Intangibles | ||
Net impact of income before taxes | (394) | (455) |
Loans | Interest Income - Loans including fees | ||
Intangibles | ||
Net impact of income before taxes | 566 | 1,149 |
Time Deposits | Interest expense - Deposits | ||
Intangibles | ||
Net impact of income before taxes | $ (6) | $ (11) |
Transaction with OceanFirst F_2
Transaction with OceanFirst Financial Corporation (Details) - $ / shares | Nov. 04, 2021 | Sep. 30, 2022 | Dec. 31, 2021 |
Pending merger transaction | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
OceanFirst Bank | Partners Bancorp | |||
Pending merger transaction | |||
Shares to be received by shareholders for each share exchanged under stock election | 0.4512 | ||
Common stock, par value (in dollars per share) | $ 0.01 | ||
Cash price per share to be received by shareholders if a cash exchange is elected | $ 10 | ||
OceanFirst Bank | Partners Bancorp | Maximum | |||
Pending merger transaction | |||
Percentage limit of common stock that can be exchanged for cash by shareholders | 40% |