Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 07, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Entity Registrant Name | ALERUS FINANCIAL CORPORATION | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,049,439 | |
Entity Central Index Key | 0000903419 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 61,174 | $ 40,651 |
Trading | 1,539 | |
Available-for-sale | 278,716 | 250,174 |
Equity | 2,675 | 3,165 |
Loans held for sale | 66,021 | 14,486 |
Loans held for branch sale | 32,031 | |
Loans | 1,686,087 | 1,701,850 |
Allowance for loan losses | (22,984) | (22,174) |
Net loans | 1,663,103 | 1,679,676 |
Land, premises and equipment, net | 21,150 | 21,743 |
Operating lease right-of-use assets | 8,877 | |
Accrued interest receivable | 7,412 | 7,645 |
Bank-owned life insurance | 31,364 | 30,763 |
Goodwill | 27,329 | 27,329 |
Other intangible assets | 19,382 | 22,473 |
Servicing rights | 4,146 | 4,623 |
Deferred income taxes, net | 7,695 | 10,085 |
Other assets | 29,267 | 32,687 |
Total assets | 2,228,311 | 2,179,070 |
Deposits | ||
Noninterest-bearing | 537,951 | 550,640 |
Interest-bearing | 1,295,162 | 1,224,456 |
Total deposits | 1,833,113 | 1,775,096 |
Deposits held for sale | 24,197 | |
Short‑term borrowings | 0 | 93,460 |
Long‑term debt | 58,775 | 58,824 |
Operating lease liabilities | 9,401 | |
Accrued expenses and other liabilities | 45,619 | 30,539 |
Total liabilities | 1,946,908 | 1,982,116 |
Commitments and contingent liabilities ESOP-owned shares | 34,494 | |
Stockholders’ equity | ||
Preferred stock, $1 par value, 2,000,000 shares authorized: 0 issued and outstanding | ||
Common stock, $1 par value, 30,000,000 shares authorized: 17,049,493 and 13,775,327 issued and outstanding | 17,049 | 13,775 |
Additional paid-in capital | 88,230 | 27,743 |
Retained earnings | 173,039 | 159,037 |
Accumulated other comprehensive income (loss) | 3,085 | (3,601) |
Total stockholders’ equity net ESOP-owned shares | 281,403 | 196,954 |
Less ESOP-owned shares | (34,494) | |
Total stockholders’ equity | 281,403 | 162,460 |
Total liabilities and stockholders’ equity | $ 2,228,311 | $ 2,179,070 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Consolidated Balance Sheets | ||
Preferred stock, par value | $ 1 | $ 1 |
Preferred Stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 17,049,493 | 13,775,327 |
Common stock, shares outstanding | 17,049,493 | 13,775,327 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Interest Income | ||||
Loans, including fees | $ 21,886 | $ 20,576 | $ 65,171 | $ 59,594 |
Investment securities - Taxable | 1,374 | 1,129 | 4,021 | 3,475 |
Investment securities -Exempt from federal income taxes | 163 | 301 | 618 | 927 |
Other | 202 | 191 | 603 | 475 |
Total interest income | 23,625 | 22,197 | 70,413 | 64,471 |
Interest Expense | ||||
Deposits | 3,506 | 1,790 | 9,802 | 4,481 |
Short-term borrowings | 539 | 575 | 1,805 | 1,331 |
Long-term debt | 899 | 903 | 2,714 | 2,688 |
Total interest expense | 4,944 | 3,268 | 14,321 | 8,500 |
Net interest income | 18,681 | 18,929 | 56,092 | 55,971 |
Provision for loan losses | 1,498 | 1,530 | 5,515 | 7,080 |
Net interest income after provision for loan losses | 17,183 | 17,399 | 50,577 | 48,891 |
Noninterest Income | ||||
Retirement and benefit services | 15,307 | 15,536 | 46,142 | 46,873 |
Wealth management | 3,896 | 3,685 | 11,385 | 10,948 |
Mortgage banking | 8,135 | 5,318 | 19,739 | 13,551 |
Service charges on deposit accounts | 447 | 442 | 1,321 | 1,333 |
Net gains (losses) on investment securities | 48 | 13 | 357 | 119 |
Other | 1,747 | 1,264 | 5,694 | 3,784 |
Total noninterest income | 29,580 | 26,258 | 84,638 | 76,608 |
Noninterest Expense | ||||
Compensation | 20,041 | 17,873 | 54,997 | 50,906 |
Employee benefits | 4,600 | 4,314 | 15,188 | 13,606 |
Occupancy and equipment expense | 2,700 | 2,698 | 8,086 | 8,215 |
Business services, software and technology expense | 4,224 | 3,731 | 12,044 | 10,467 |
Intangible amortization expense | 990 | 1,196 | 3,091 | 3,588 |
Professional fees and assessments | 1,051 | 1,628 | 3,146 | 3,734 |
Marketing and business development | 890 | 856 | 2,024 | 2,439 |
Supplies and postage | 631 | 611 | 2,027 | 1,902 |
Travel | 435 | 382 | 1,335 | 1,252 |
Mortgage and lending expenses | 751 | 437 | 1,966 | 1,597 |
Other | 1,014 | 610 | 2,198 | 2,708 |
Total noninterest expense | 37,327 | 34,336 | 106,102 | 100,414 |
Income before income taxes | 9,436 | 9,321 | 29,113 | 25,085 |
Income tax expense | 2,332 | 1,951 | 7,225 | 5,252 |
Net income | $ 7,104 | $ 7,370 | $ 21,888 | $ 19,833 |
Basic earnings per common share | $ 0.49 | $ 0.53 | $ 1.53 | $ 1.44 |
Diluted earnings per common share | 0.48 | 0.52 | 1.49 | 1.41 |
Dividends declared per common share | $ 0.14 | $ 0.13 | $ 0.42 | $ 0.39 |
Average common shares outstanding | 14,274 | 13,777 | 13,957 | 13,759 |
Diluted average common shares outstanding | 14,626 | 14,071 | 14,317 | 14,060 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Consolidated Statements of Comprehensive Income | ||||
Net Income | $ 7,104 | $ 7,370 | $ 21,888 | $ 19,833 |
Other Comprehensive Income, Net of Tax | ||||
Unrealized gains (losses) on available-for-sale securities | 2,187 | (1,351) | 9,307 | (5,978) |
Reclassification adjustment for losses (gains) realized in income | (49) | (13) | (379) | (135) |
Total other comprehensive income (loss), before tax | 2,138 | (1,364) | 8,928 | (6,113) |
Income tax expense (benefit) related to items of other comprehensive income | 538 | (342) | 2,242 | (1,534) |
Other comprehensive income (loss), net of tax | 1,600 | (1,022) | 6,686 | (4,579) |
Total comprehensive income | $ 8,704 | $ 6,348 | $ 28,574 | $ 15,254 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Equity - USD ($) $ in Thousands | Common Stock | Additional Paid in Capital. | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | ESOP – Owned Shares | Total |
Adjustment for adoption of ASU 2016‑01 | $ (71) | $ 71 | ||||
Beginning balance at Dec. 31, 2017 | $ 13,699 | $ 26,040 | 140,986 | (1,131) | $ (31,491) | $ 148,103 |
Net Income | 19,833 | 19,833 | ||||
Other comprehensive income (loss) | (4,579) | (4,579) | ||||
Common stock repurchased | (11) | (39) | (212) | (262) | ||
Common stock dividends | (5,486) | (5,486) | ||||
Net change in fair value of ESOP shares | (3,003) | (3,003) | ||||
Stock‑based compensation expense | 11 | 971 | 982 | |||
Vesting of restricted stock | 77 | (77) | ||||
Ending balance at Sep. 30, 2018 | 13,776 | 26,895 | 155,050 | (5,639) | (34,494) | 155,588 |
Beginning balance at Jun. 30, 2018 | 13,778 | 26,664 | 149,541 | (4,617) | (31,491) | 153,875 |
Net Income | 7,370 | 7,370 | ||||
Other comprehensive income (loss) | (1,022) | (1,022) | ||||
Common stock repurchased | (2) | (6) | (32) | (40) | ||
Common stock dividends | (1,829) | (1,829) | ||||
Net change in fair value of ESOP shares | (3,003) | (3,003) | ||||
Stock‑based compensation expense | 237 | 237 | ||||
Ending balance at Sep. 30, 2018 | 13,776 | 26,895 | 155,050 | (5,639) | (34,494) | 155,588 |
Beginning balance at Dec. 31, 2018 | 13,775 | 27,743 | 159,037 | (3,601) | (34,494) | 162,460 |
Net Income | 21,888 | 21,888 | ||||
Other comprehensive income (loss) | 6,686 | 6,686 | ||||
Common stock repurchased | (82) | (291) | (1,574) | (1,947) | ||
Common stock dividends | (6,312) | (6,312) | ||||
ESOP repurchase obligation termination | 34,494 | 34,494 | ||||
Initial public offering of 3,289,000 shares of common stock net of issuance costs | 3,289 | 59,515 | 62,804 | |||
Stock‑based compensation expense | 13 | 1,317 | 1,330 | |||
Vesting of restricted stock | 54 | (54) | ||||
Ending balance at Sep. 30, 2019 | 17,049 | 88,230 | 173,039 | 3,085 | 281,403 | |
Beginning balance at Jun. 30, 2019 | 13,816 | 28,676 | 169,788 | 1,485 | (34,494) | 179,271 |
Net Income | 7,104 | 7,104 | ||||
Other comprehensive income (loss) | 1,600 | 1,600 | ||||
Common stock repurchased | (77) | (275) | (1,489) | (1,841) | ||
Common stock dividends | (2,364) | (2,364) | ||||
ESOP repurchase obligation termination | $ 34,494 | 34,494 | ||||
Initial public offering of 3,289,000 shares of common stock net of issuance costs | 3,289 | 59,515 | 62,804 | |||
Stock‑based compensation expense | 335 | 335 | ||||
Vesting of restricted stock | 21 | (21) | ||||
Ending balance at Sep. 30, 2019 | $ 17,049 | $ 88,230 | $ 173,039 | $ 3,085 | $ 281,403 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders’ Equity (Parenthetical) - shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Consolidated Statements in Changes of Stockholders’ Equity | ||
IPO common stock net of issuance costs | 3,289,000 | 3,289,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating Activities | ||
Net income | $ 21,888 | $ 19,833 |
Adjustments to reconcile net income to net cash provided (used) by operating activities | ||
Deferred income taxes | 149 | (1,907) |
Provision for loan losses | 5,515 | 7,080 |
Depreciation and amortization | 6,503 | 6,591 |
Amortization and accretion of premiums/discounts on investment securities | 832 | 1,227 |
Stock-based compensation | 1,330 | 982 |
Increase in value of bank-owned life insurance | (601) | (602) |
Realized loss (gain) on sale of branch | (1,544) | |
Realized loss (gain) on sale of fixed assets | (541) | |
Realized loss (gain) on forward sale derivatives | (7) | |
Realized loss (gain) on rate lock commitments | 12 | (24) |
Realized loss (gain) on sale of foreclosed assets | (120) | 187 |
Realized loss (gain) on sale of investment securities | (379) | (135) |
Realized loss (gain) on servicing rights | (213) | (497) |
Net change in: | ||
Securities held for trading | 1,539 | 51 |
Loans held for sale | (51,535) | (9,734) |
Accrued interest receivable | 151 | (993) |
Other assets | 3,287 | 6,707 |
Accrued expenses and other liabilities | 15,666 | (1,417) |
Net cash provided (used) by operating activities | 1,932 | 27,349 |
Investing Activities | ||
Proceeds from sales of investment securities available-for-sale | 32,565 | 2,466 |
Proceeds from maturities of investment securities available-for-sale | 27,818 | 26,120 |
Purchases of investment securities available-for-sale | (80,450) | (10,493) |
Net (increase) decrease in equity securities | 490 | 2,698 |
Net (increase) decrease in loans | 14,213 | (153,475) |
Proceeds from sale of branch | 10,379 | |
Proceeds from sale of fixed assets | 875 | |
Purchases of premises and equipment | (2,450) | (2,314) |
Proceeds from sales of foreclosed assets | 1,006 | 687 |
Net cash provided (used) by investing activities | 4,446 | (134,311) |
Financing Activities | ||
Net increase (decrease) in deposits | 53,241 | (17,253) |
Net increase (decrease) in short-term borrowings | (93,460) | 43,930 |
Repayments of long-term debt | (181) | (128) |
Cash dividends paid on common stock | (6,312) | (5,486) |
Repurchase of common stock | (1,947) | (262) |
Proceeds from the issuance of common stock in initial public offering net of issuance costs | 62,804 | |
Net cash provided (used) by financing activities | 14,145 | 20,801 |
Net change in cash and cash equivalents | 20,523 | (86,161) |
Cash and cash equivalents at beginning of period | 40,651 | 121,998 |
Cash and cash equivalents at end of period | 61,174 | 35,837 |
Cash paid for: | ||
Interest | 13,162 | 7,692 |
Income taxes | 5,550 | 3,030 |
Non‑cash information | ||
Loan collateral transferred to foreclosed assets | 766 | 661 |
Unrealized gain (loss) on investment securities available-for-sale | 6,686 | (4,579) |
Initial recognition of operating lease right‑of‑use assets | 10,475 | |
Initial recognition of operating lease liabilities | 10,996 | |
Change in fair value of ESOP shares | $ (3,003) | |
ESOP repurchase obligation termination | $ 34,494 |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Significant Accounting Policies | |
Significant Accounting Policies | NOTE 1 Significant Accounting Policies Organization Alerus Financial Corporation is a financial holding company organized under the laws of the state of Delaware. Alerus Financial Corporation (the “Company”) and its subsidiaries is a diversified financial services company headquartered in Grand Forks, North Dakota. Through its subsidiary, Alerus Financial, National Association (the “Bank”), the Company provides innovative and comprehensive financial solutions to businesses and consumers through four distinct business lines—banking, retirement and benefit services, wealth management and mortgage. Initial Public Offering On September 17, 2019, the Company sold 2,860,000 shares of common stock in its initial public offering. On September 25, 2019, the Company sold an additional 429,000 shares of common stock pursuant to the exercise in full, by the underwriters, of their option to purchase additional shares. The aggregate offering price for the shares sold by the Company was $69.1 million, and after deducting $4.7 million of underwriting discounts and $1.6 million of offering expenses paid to third parties, the Company received total net proceeds of $62.8 million. Basis of Presentation The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and conform to practices within the banking industry and include all of the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting. The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results for the full year or any other period. These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2018, included in the Company’s prospectus filed with the SEC on September 13, 2019, pursuant to Rule 424(b)(4) under the Securities Act of 1933. Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s principal operating subsidiary is the Bank. In the normal course of business, the Company may enter into a transaction with a variable interest entity (“VIE”). VIE’s are legal entities whose investors lack the ability to make decisions about the entity’s activities, or whose equity investors do not have the right to receive the residual returns of the entity. The applicable accounting guidance requires the Company to perform ongoing quantitative and qualitative analysis to determine whether it must consolidate any VIE. The Company does not have any ownership interest in, or exert any control, over any VIE, and thus no VIE’s are included in the consolidated financial statements. Use of Estimates The preparation of consolidated financial statements in conformity with 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the valuation of investment securities, determination of the allowance for loan losses, valuation of reporting units for the purpose of testing goodwill and other intangible assets for impairment, valuation of deferred tax assets, and fair values of financial instruments. Emerging Growth Company The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, even if the Company complies with the greater obligations of public companies that are not emerging growth companies, the Company may avail itself of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as the Company is an emerging growth company. The Company will continue to be an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the date of the first sale of common equity securities under the Company’s Registration Statement on Form S-1, which was declared effective by the SEC on September 12, 2019; (2) the last day of the fiscal year in which the Company has $1.07 billion or more in annual revenues; (3) the date on which the Company is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); or (4) the date on which the Company has, during the previous three-year period, issued publicly or privately, more than $1.0 billion in non-convertible debt securities. Management cannot predict if investors will find the Company’s common stock less attractive because it will rely on these exemptions. If some investors find the Company’s common stock less attractive as a result, there may be a less active trading market for its common stock and the Company’s stock price may be more volatile. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the benefits of this extended transition period. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | NOTE 2 Recent Accounting Pronouncements The following FASB Accounting Standards Updates (“ASUs”) are divided into pronouncements which have been adopted by the Company since January 1, 2019, and those which are not yet effective and have been evaluated or are currently being evaluated by management as of September 30, 2019. Adopted Pronouncements In February 2016, the FASB issued ASU No. 2016‑02, “Leases.” Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short‑term leases): 1) a lease liability, which is the present value of a lessee’s obligation to make lease payments, and 2) a right‑of‑use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting under the new guidance remains largely unchanged as it is substantially equivalent to existing guidance for sales‑type leases, direct financing leases, and operating leases. Leveraged leases have been eliminated, although lessors can continue to account for existing leveraged leases using the current accounting guidance. Other limited changes were made to align lessor accounting with the lessee accounting model and the new revenue recognition standard. All entities will classify leases to determine how to recognize lease‑related revenue and expense. Quantitative and qualitative disclosures will be required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The intention is to require enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities. ASU No. 2016‑02 is effective for interim and annual reporting periods beginning after December 15, 2018. All entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. As the Company elected the transition option provided in ASU No. 2018‑11, the modified retrospective approach was applied on January 1, 2019. The Company also elected certain relief options offered in ASU 2016‑02 including the package of practical expedients, the option not to separate lease and non‑lease components and instead to account for them as a single lease component, and the option not to recognize right‑of‑use assets and lease liabilities that arise from short‑term leases (i.e., leases with terms of twelve months or less). The Company did not elect the hindsight practical expedient, which allows entities to use hindsight when determining lease term and impairment of right‑of‑use assets. The Company has several lease agreements, such as branch locations, which are considered operating leases, and therefore, were not previously recognized on the Company’s consolidated balance sheets. The new guidance requires these lease agreements to be recognized on the consolidated balance sheets as a right‑of‑use asset and a corresponding lease liability. The new guidance did not have a material impact on the consolidated statements of income or the consolidated statements of cash flows. See “NOTE 7 Leases” for more information. In March 2017, the FASB issued ASU No. 2017‑08, Premium Amortization on Purchased Callable Debt Securities. This ASU shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Currently, entities generally amortize the premium as an adjustment of yield over the contractual life of the security. ASU 2017‑08 does not change the accounting for purchased callable debt securities held at a discount as the discount will continue to be accreted to maturity. ASU 2017‑08 is effective for public business entities for the interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative‑effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which ASU 2017‑08 is adopted. The Company elected to early adopt this standard as of January 1, 2019, and has evaluated the provisions of ASU 2017‑08 and determined there is no impact on its consolidated financial statements. In August 2017, the FASB issued ASU No. 2017‑12, “Targeted Improvements to Accounting for Hedging Activities.” This ASU’s objectives are to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities; and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU No. 2017‑12 is effective for interim and annual reporting periods beginning after December 15, 2018. The Company currently does not designate any derivative financial instruments as formal hedging relationships, and therefore, does not currently utilize hedge accounting. As such, ASU No. 2017‑12 did not impact the Company’s consolidated financial statements. In September 2018, the FASB issued ASU No. 2018‑07, Compensation (Topic 718): Improvements to Nonemployee Share‑Based Payment Accounting. This ASU has been issued as part of a simplification initiative which will expand the scope of Topic 718 to include share‑based payment transactions for the acquiring of goods and services from non‑employees and expands the scope through the amendments to address and improve aspects of the accounting for non‑employee share‑based payment transactions. The amendments will be effective for public business entities for interim and annual reporting periods beginning after December 15, 2018. The Company elected to early adopt ASU 2018‑07 effective January 1, 2019, and has evaluated the provisions of ASU 2018‑07 and determined there was no significant impact on its consolidated financial statements. Pronouncements Not Yet Effective In September 2016, the FASB issued ASU No. 2016‑13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires a new impairment model known as the current expected credit loss (“CECL”) which significantly changes the way impairment of financial instruments is recognized by requiring immediate recognition of estimated credit losses expected to occur over the remaining life of financial instruments. The main provisions of ASU 2016‑13 include (1) replacing the “incurred cost” approach under GAAP with an “expected loss” model for instruments measured at amortized cost, (2) requiring entities to record an allowance for credit losses related to available‑for‑sale debt securities rather than a direct write‑down of the carrying amount of the investments, as is required by the other‑than‑temporary impairment model under current GAAP, and (3) a simplified accounting model for purchase credit‑impaired debt securities and loans. For public business entities that are U.S. Securities and Exchange Commission filers, ASU 2016‑13 is effective for interim and annual reporting periods beginning after December 15, 2019. For all other public business entities ASU 2016‑13 is effective for interim and annual reporting periods beginning after December 15, 2020. As an emerging growth company, ASU 2016‑13 is effective for interim and annual reporting periods beginning after December 15, 2021, although early adoption is permitted. The Company is currently evaluating the potential impact of ASU 2016‑13 on its consolidated financial statements. On July 17, 2019, the FASB voted to issue a proposal for public comment that would potentially result in a postponement of the required implementation date for ASU 2016‑13, and on October 16, 2019, the FASB approved delaying the implementation of this ASU for private companies and smaller reporting companies until 2023. As an emerging growth company, the Company can take advantage of this delay. Management will continue to monitor any new developments regarding this possible delay. In August 2018, the FASB issued ASU No. 2018‑13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This ASU eliminates, adds, and modifies certain disclosure requirements for estimated fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfer between Level 1 and Level 2 of the estimated fair value hierarchy, but will be required to disclose the range and weighted-average used to develop significant unobservable inputs for Level 3 estimated fair value measurements. ASU 2018‑13 is effective for all entities interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted. Entities are also allowed to elect for early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date. The revised disclosure requirements will not have a material impact on the Company’s consolidated financial statements. In April 2019, the FASB issued ASU 2019‑04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. This update is not expected to have a significant impact on the Company’s consolidated financial statements. In May 2019, the FASB issued ASU 2019‑05, Targeted Transition Relief to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible instruments. As an emerging growth company, these ASUs are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. This update is not expected to have a significant impact on the Company’s consolidated financial statements. |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2019 | |
Investment Securities | |
Investment Securities | NOTE 3 Investment Securities The following tables present amortized cost, gross unrealized gain and losses, and fair value of the available-for-sale investment securities as of September 30, 2019 and December 31, 2018: September 30, 2019 Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value U.S. Treasury and agencies $ 21,607 $ 29 $ (34) $ 21,602 Obligations of state and political agencies 47,227 703 (74) 47,856 Mortgage backed securities Residential agency 165,995 3,467 (125) 169,337 Commercial 32,546 139 (33) 32,652 Asset backed securities 152 5 — 157 Corporate bonds 7,069 43 — 7,112 Total available-for-sale investment securities $ 274,596 $ 4,386 $ (266) $ 278,716 December 31, 2018 Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value U.S. Treasury and agencies $ 19,364 $ — $ (222) $ 19,142 Obligations of state and political agencies 67,662 171 (1,446) 66,387 Mortgage backed securities Residential agency 129,906 210 (3,118) 126,998 Commercial 29,050 20 (303) 28,767 Asset backed securities 398 5 (4) 399 Corporate bonds 8,602 — (121) 8,481 Total available-for-sale investment securities $ 254,982 $ 406 $ (5,214) $ 250,174 The following tables present unrealized losses and fair values for available-for-sale investment securities as of September 30, 2019 and December 31, 2018, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: September 30, 2019 Less than 12 Months Over 12 Months Total Unrealized Fair Unrealized Fair Unrealized Fair (dollars in thousands) Losses Value Losses Value Losses Value U.S. Treasury and agencies $ (3) $ 1,757 $ (31) $ 9,969 $ (34) $ 11,726 Obligations of state and political agencies (23) 5,965 (51) 5,999 (74) 11,964 Mortgage backed securities Residential agency (44) 10,020 (81) 17,138 (125) 27,158 Commercial (18) 9,215 (15) 3,126 (33) 12,341 Asset backed securities — 2 — — — 2 Corporate bonds — — — — — — Total available-for-sale investment securities $ (88) $ 26,959 $ (178) $ 36,232 $ (266) $ 63,191 December 31, 2018 Less than 12 Months Over 12 Months Total Unrealized Fair Unrealized Fair Unrealized Fair (dollars in thousands) Losses Value Losses Value Losses Value U.S. Treasury and agencies $ (8) $ 5,288 $ (214) $ 11,598 $ (222) $ 16,886 Obligations of state and political agencies — 389 (1,446) 55,770 (1,446) 56,159 Mortgage backed securities Residential agency (44) 7,352 (3,074) 112,293 (3,118) 119,645 Commercial (39) 7,844 (264) 9,741 (303) 17,585 Asset backed securities — 2 (4) 155 (4) 157 Corporate bonds — — (121) 8,481 (121) 8,481 Total available-for-sale investment securities $ (91) $ 20,875 $ (5,123) $ 198,038 $ (5,214) $ 218,913 For all of the above investment securities, the unrealized losses are generally due to changes in interest rates and unrealized losses are considered to be temporary as the fair value is expected to recover as the securities approach maturity date. The Company evaluates securities for other-than-temporary impairment (“OTTI”) on a quarterly basis, at a minimum, and more frequently when economic or market concerns warrant such evaluation. In estimating OTTI losses, consideration is given to the severity and duration of the impairment; the financial condition and near-term prospects of the issuer, which for debt securities, considers external credit ratings and recent downgrades; and the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value. For the three and nine months ended September 30, 2019 and 2018, the Company did not recognize OTTI losses on its investment securities. The following table presents amortized cost and estimated fair value of the available-for-sale investment securities as of September 30, 2019, by contractual maturity: Amortized Fair (dollars in thousands) Cost Value Due within one year or less $ 3,016 $ 3,026 Due after one year through five years 35,948 35,989 Due after five years through ten years 78,983 80,405 Due after 10 years 156,649 159,296 Total available-for-sale investment securities $ 274,596 $ 278,716 Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Investment securities with carrying value of $141.1 million and $149.0 million were pledged as of September 30, 2019 and December 31, 2018, respectively, to secure public deposits and for other purposes required or permitted by law. Proceeds from the sale of available‑for‑sale investment securities, for the three and nine months ended September 30, 2019 and 2018, are displayed in the table below: Three months ended Nine months ended September 30, September 30, (dollars in thousands) 2019 2018 2019 2018 Proceeds $ 10,934 $ 2,021 $ 32,565 $ 2,466 Realized gains 59 — 357 105 Realized losses 11 — 22 5 As of September 30, 2019 and December 31, 2018, the carrying value of the Company’s Federal Reserve stock and Federal Home Loan Bank of Des Moines (“FHLB”) stock was as follows: September 30, December 31, (dollars in thousands) 2019 2018 Federal Reserve $ 2,675 $ 2,675 FHLB 3,121 6,875 These securities can only be redeemed or sold at their par value and only to the respective issuing institution or to another member institution. The Company records these non-marketable equity securities as a component of other assets and periodically evaluates these securities for impairment. Management considers these non-marketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. Visa Class B Restricted Shares In 2008, the Company received Visa Class B restricted shares as part of Visa’s initial public offering. These shares are transferable only under limited circumstances until they can be converted into the publicly traded Class A common shares. This conversion will not occur until the settlement of certain litigation which will be indemnified by Visa members, including the Company. Visa funded an escrow account from its initial public offering to settle these litigation claims. Should this escrow account be insufficient to cover these litigation claims, Visa is entitled to fund additional amounts to the escrow account by reducing each member bank’s Class B conversion ratio to unrestricted Class A shares. As of September 30, 2019, the conversion ratio was 1.6298. Based on the existing transfer restriction and the uncertainty of the outcome of the Visa litigation mentioned above, the 6,924 Class B shares (11,285 Class A equivalents) that the Company owns as of September 30, 2019 and December 31, 2018, are carried at a zero cost basis. |
Loans and Allowance for Loan Lo
Loans and Allowance for Loan Losses | 9 Months Ended |
Sep. 30, 2019 | |
Loans and Allowance for Loan Losses | |
Loans and Allowance for Loan Losses | NOTE 4 Loans and Allowance for Loan Losses The following table presents total loans outstanding, by portfolio segment, as of September 30, 2019 and December 31, 2018: September 30, December 31, (dollars in thousands) 2019 2018 Commercial Commercial and industrial $ 485,183 $ 510,706 Real estate construction 21,674 18,965 Commercial real estate 444,600 439,963 Total commercial 951,457 969,634 Consumer Residential real estate first mortgage 459,763 448,143 Residential real estate junior lien 182,516 188,855 Other revolving and installment 92,351 95,218 Total consumer 734,630 732,216 Total loans $ 1,686,087 $ 1,701,850 Total loans include net deferred loan fees and costs of $1.1 million and $1.7 million at September 30, 2019 and December 31, 2018, respectively. Management monitors the credit quality of its loan portfolio on an ongoing basis. Measurement of delinquency and past due status are based on the contractual terms of each loan. Past due loans are reviewed regularly to identify loans for nonaccrual status. The following tables present a past due aging analysis of total loans outstanding, by portfolio segment, as of September 30, 2019 and December 31, 2018: September 30, 2019 90 Days Accruing 30 - 89 Days or More Total (dollars in thousands) Current Past Due Past Due Nonperforming Loans Commercial Commercial and industrial $ 481,480 $ 1,561 $ 45 $ 2,097 $ 485,183 Real estate construction 21,224 450 — — 21,674 Commercial real estate 443,129 — — 1,471 444,600 Total commercial 945,833 2,011 45 3,568 951,457 Consumer Residential real estate first mortgage 456,981 2,105 — 677 459,763 Residential real estate junior lien 181,646 14 — 856 182,516 Other revolving and installment 92,176 169 — 6 92,351 Total consumer 730,803 2,288 — 1,539 734,630 Total loans $ 1,676,636 $ 4,299 $ 45 $ 5,107 $ 1,686,087 December 31, 2018 90 Days Accruing 30 - 89 Days or More Total (dollars in thousands) Current Past Due Past Due Nonperforming Loans Commercial Commercial and industrial $ 504,313 $ 2,815 $ — $ 3,578 $ 510,706 Real estate construction 18,965 — — — 18,965 Commercial real estate 438,446 — — 1,517 439,963 Total commercial 961,724 2,815 — 5,095 969,634 Consumer Residential real estate first mortgage 444,470 2,411 — 1,262 448,143 Residential real estate junior lien 187,502 769 — 584 188,855 Other revolving and installment 94,615 581 — 22 95,218 Total consumer 726,587 3,761 — 1,868 732,216 Total loans $ 1,688,311 $ 6,576 $ — $ 6,963 $ 1,701,850 The Company’s consumer loan portfolio is primarily comprised of both secured and unsecured loans that are relatively small and are evaluated at origination on a centralized basis against standardized underwriting criteria. The Company generally does not risk rate consumer loans unless a default event such as bankruptcy or extended nonperformance takes place. Credit quality for the consumer loan portfolio is measured by delinquency rates, nonaccrual amounts and actual losses incurred. The Company assigns a risk rating to all commercial loans, except pools of homogeneous loans, and periodically performs detailed internal and external reviews of risk rated loans over a certain threshold to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by the Company’s regulators. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the estimated fair values of collateral securing the loans. These credit quality indicators are used to assign a risk rating to each individual loan. The Company’s ratings are aligned to pass and criticized categories. The criticized category includes special mention, substandard, and doubtful risk ratings. The risk ratings are defined as follows: Pass: A pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention. Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, this potential weakness may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard: Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as substandard have a well‑defined weakness or weaknesses that jeopardize the repayment of the debt. Well‑defined weaknesses include a borrower’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss: Loans classified as loss are considered uncollectible and charged off immediately. The tables below present total loans outstanding, by loan portfolio segment, and risk category as of September 30, 2019 and December 31, 2018: September 30, 2019 Criticized Special (dollars in thousands) Pass Mention Substandard Doubtful Total Commercial Commercial and industrial $ 453,707 $ 10,439 $ 20,781 $ 256 $ 485,183 Real estate construction 20,396 284 994 — 21,674 Commercial real estate 420,060 673 23,867 — 444,600 Total commercial $ 894,163 $ 11,396 $ 45,642 $ 256 $ 951,457 Consumer Residential real estate first mortgage 459,086 — 677 — 459,763 Residential real estate junior lien 180,344 — 2,172 — 182,516 Other revolving and installment 92,345 — 6 — 92,351 Total consumer 731,775 — 2,855 — 734,630 Total loans $ 1,625,938 $ 11,396 $ 48,497 $ 256 $ 1,686,087 December 31, 2018 Criticized Special (dollars in thousands) Pass Mention Substandard Doubtful Total Commercial Commercial and industrial $ 459,565 $ 12,055 $ 37,523 $ 1,563 $ 510,706 Real estate construction 17,910 — 1,055 — 18,965 Commercial real estate 407,178 6,304 26,481 — 439,963 Total commercial $ 884,653 $ 18,359 $ 65,059 $ 1,563 $ 969,634 Consumer Residential real estate first mortgage 448,124 — 19 — 448,143 Residential real estate junior lien 186,370 — 2,485 — 188,855 Other revolving and installment 95,218 — — — 95,218 Total consumer 729,712 — 2,504 — 732,216 Total loans $ 1,614,365 $ 18,359 $ 67,563 $ 1,563 $ 1,701,850 The adequacy of the allowance for loan losses is assessed at the end of each quarter. The allowance for loan losses includes a specific component related to loans that are individually evaluated for impairment and a general component related to loans that are segregated into homogeneous pools and collectively evaluated for impairment. The factors applied to these pools are an estimate of probable incurred losses based on management’s evaluation of historical net losses from loans with similar characteristics, which are adjusted by management to reflect current events, trends, and conditions. The adjustments include consideration of the following: changes in lending policies and procedures, economic conditions, nature and volume of the portfolio, experience of lending management, volume and severity of past due loans, quality of the loan review system, value of underlying collateral for collateral dependent loans, concentrations, and other external factors. The following tables present, by loan portfolio segment, a summary of the changes in the allowance for loan losses for the three and nine months ended September 30, 2019 and 2018: Three months ended September 30, 2019 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 11,694 $ (962) $ (324) $ 538 $ 10,946 Real estate construction 323 25 — — 348 Commercial real estate 5,765 (4) — — 5,761 Total commercial 17,782 (941) (324) 538 17,055 Consumer Residential real estate first mortgage 1,155 (139) — — 1,016 Residential real estate junior lien 710 157 (20) 49 896 Other revolving and installment 380 1 (31) 28 378 Total consumer 2,245 19 (51) 77 2,290 Unallocated 1,219 2,420 — — 3,639 Total $ 21,246 $ 1,498 $ (375) $ 615 $ 22,984 Nine months ended September 30, 2019 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 12,127 $ 3,263 $ (5,275) $ 831 $ 10,946 Real estate construction 250 97 (1) 2 348 Commercial real estate 6,279 (668) — 150 5,761 Total commercial 18,656 2,692 (5,276) 983 17,055 Consumer Residential real estate first mortgage 1,156 (140) — — 1,016 Residential real estate junior lien 805 113 (154) 132 896 Other revolving and installment 380 388 (513) 123 378 Total consumer 2,341 361 (667) 255 2,290 Unallocated 1,177 2,462 — — 3,639 Total $ 22,174 $ 5,515 $ (5,943) $ 1,238 $ 22,984 Three months ended September 30, 2018 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 10,024 $ 1,452 $ (424) $ 126 $ 11,178 Real estate construction 395 (109) — — 286 Commercial real estate 6,478 (72) — 20 6,426 Total commercial 16,897 1,271 (424) 146 17,890 Consumer Residential real estate first mortgage 1,486 (142) — — 1,344 Residential real estate junior lien 830 20 (47) 11 814 Other revolving and installment 483 31 (99) 26 441 Total consumer 2,799 (91) (146) 37 2,599 Unallocated 173 350 — — 523 Total $ 19,869 $ 1,530 $ (570) $ 183 $ 21,012 Nine months ended September 30, 2018 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 7,589 $ 6,158 $ (3,078) $ 509 $ 11,178 Real estate construction 343 1 (60) 2 286 Commercial real estate 4,909 1,458 — 59 6,426 Total commercial 12,841 7,617 (3,138) 570 17,890 Consumer Residential real estate first mortgage 1,411 (38) (29) — 1,344 Residential real estate junior lien 902 (145) (133) 190 814 Other revolving and installment 499 34 (236) 144 441 Total consumer 2,812 (149) (398) 334 2,599 Unallocated 911 (388) — — 523 Total $ 16,564 $ 7,080 $ (3,536) $ 904 $ 21,012 The following tables present the recorded investment in loans and related allowance for loan losses, by loan portfolio segment, disaggregated on the basis of the Company’s impairment methodology, as of September 30, 2019 and December 31, 2018: September 30, 2019 Recorded Investment Allowance for Loan Losses Individually Collectively Individually Collectively (dollars in thousands) Evaluated Evaluated Total Evaluated Evaluated Unallocated Total Commercial Commercial and industrial $ 2,513 $ 482,670 $ 485,183 $ 1,429 $ 9,517 $ — $ 10,946 Real estate construction — 21,674 21,674 — 348 — 348 Commercial real estate 1,480 443,120 444,600 352 5,409 — 5,761 Total commercial 3,993 947,464 951,457 1,781 15,274 — 17,055 Consumer Residential real estate first mortgage 355 459,408 459,763 — 1,016 — 1,016 Residential real estate junior lien 804 181,712 182,516 324 572 — 896 Other revolving and installment 5 92,346 92,351 2 376 — 378 Total consumer 1,164 733,466 734,630 326 1,964 — 2,290 Total loans $ 5,157 $ 1,680,930 $ 1,686,087 $ 2,107 $ 17,238 $ 3,639 $ 22,984 December 31, 2018 Recorded Investment Allowance for Loan Losses Individually Collectively Individually Collectively (dollars in thousands) Evaluated Evaluated Total Evaluated Evaluated Unallocated Total Commercial Commercial and industrial $ 3,945 $ 506,761 $ 510,706 $ 2,059 $ 10,068 $ — $ 12,127 Real estate construction — 18,965 18,965 — 250 — 250 Commercial real estate 1,684 438,279 439,963 455 5,824 — 6,279 Total commercial 5,629 964,005 969,634 2,514 16,142 — 18,656 Consumer Residential real estate first mortgage 352 447,791 448,143 — 1,156 — 1,156 Residential real estate junior lien 559 188,296 188,855 4 801 — 805 Other revolving and installment 20 95,198 95,218 20 360 — 380 Total consumer 931 731,285 732,216 24 2,317 — 2,341 Total loans $ 6,560 $ 1,695,290 $ 1,701,850 $ 2,538 $ 18,459 $ 1,177 $ 22,174 The tables below summarize key information on impaired loans. These impaired loans may have estimated losses which are included in the allowance for loan losses. September 30, 2019 December 31, 2018 Recorded Unpaid Related Recorded Unpaid Related (dollars in thousands) Investment Principal Allowance Investment Principal Allowance Impaired loans with a valuation allowance Commercial and industrial $ 1,757 $ 1,900 $ 1,429 $ 2,660 $ 2,752 $ 2,059 Commercial real estate 1,480 1,595 352 1,499 1,517 455 Residential real estate first mortgage — — — — — — Residential real estate junior lien 536 619 324 4 4 4 Other revolving and installment 4 4 2 19 20 20 Total impaired loans with a valuation allowance 3,777 4,118 2,107 4,182 4,293 2,538 Impaired loans without a valuation allowance Commercial and industrial 756 1,077 — 1,285 1,422 — Commercial real estate — — — 185 218 — Residential real estate first mortgage 355 367 — 352 504 — Residential real estate junior lien 268 290 — 555 697 — Other revolving and installment 1 1 — 1 2 — Total impaired loans without a valuation allowance 1,380 1,735 — 2,378 2,843 — Total impaired loans Commercial and industrial 2,513 2,977 1,429 3,945 4,174 2,059 Commercial real estate 1,480 1,595 352 1,684 1,735 455 Residential real estate first mortgage 355 367 — 352 504 — Residential real estate junior lien 804 909 324 559 701 4 Other revolving and installment 5 5 2 20 22 20 Total impaired loans $ 5,157 $ 5,853 $ 2,107 $ 6,560 $ 7,136 $ 2,538 The table below presents the average recorded investment in impaired loans and interest income for the three and nine months ended September 30, 2019 and 2018: Three months ended September 30, 2019 2018 Average Average Recorded Interest Recorded Interest (dollars in thousands) Investment Income Investment Income Impaired loans with a valuation allowance Commercial and industrial $ 1,964 $ 4 $ 1,961 $ 9 Commercial real estate 1,623 2 1,767 2 Residential real estate first mortgage — — — — Residential real estate junior lien 619 1 63 1 Other revolving and installment 5 — 39 — Total impaired loans with a valuation allowance 4,211 7 3,830 12 Impaired loans without a valuation allowance Commercial and industrial 1,206 7 1,073 — Commercial real estate — — 842 — Residential real estate first mortgage 183 — 525 — Residential real estate junior lien 297 — 394 — Other revolving and installment 2 — 3 — Total impaired loans without a valuation allowance 1,688 7 2,837 — Total impaired loans Commercial and industrial 3,170 11 3,034 9 Commercial real estate 1,623 2 2,609 2 Residential real estate first mortgage 183 — 525 — Residential real estate junior lien 916 1 457 1 Other revolving and installment 7 — 42 — Total impaired loans $ 5,899 $ 14 $ 6,667 $ 12 Nine Months Ended September 30, 2019 2018 Average Average Recorded Interest Recorded Interest (dollars in thousands) Investment Income Investment Income Impaired loans with a valuation allowance Commercial and industrial $ 2,473 $ 12 $ 2,026 $ 27 Commercial real estate 1,668 6 1,793 7 Residential real estate first mortgage — — — — Residential real estate junior lien 621 3 63 2 Other revolving and installment 5 — 43 — Total impaired loans with a valuation allowance 4,767 21 3,925 36 Impaired loans without a valuation allowance Commercial and industrial 2,979 23 1,130 — Commercial real estate — — 747 — Residential real estate first mortgage 92 — 539 — Residential real estate junior lien 302 — 403 1 Other revolving and installment 4 — 3 — Total impaired loans without a valuation allowance 3,377 23 2,822 1 Total impaired loans Commercial and industrial 5,452 35 3,156 27 Commercial real estate 1,668 6 2,540 7 Residential real estate first mortgage 92 — 539 — Residential real estate junior lien 923 3 466 3 Other revolving and installment 9 — 46 — Total impaired loans $ 8,144 $ 44 $ 6,747 $ 37 Loans with a carrying value of $1.1 billion as of September 30, 2019 and December 31, 2018, were pledged to secure public deposits, and for other purposes required or permitted by law. Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt. During the first quarter of 2019 there was one loan that was modified as a troubled debt restructuring as a result of extending the amortization period. As of September 30, 2019, the carrying value of the restructured loan was $0.2 million. The loan is currently performing according to the modified terms and there was no specific reserve for the loan losses allocated to the loan modified as troubled debt restructuring. During the first quarter of 2018, there was one loan modified as a troubled debt restructuring as a result of adjusting the interest rate below current market levels. The balance at the time of restructuring was $1.0 million. As of December 31, 2018, the carrying value of the restructured loan was $0.2 million. The loan is currently performing according to the modified terms and there was no specific reserve for loan losses allocated to the loan modified as troubled debt restructuring. The Company does not have material commitments to lend additional funds to borrowers with loans whose terms have been modified in troubled debt restructurings or whose loans are on nonaccrual. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | NOTE 5 Goodwill and Other Intangible Assets As of September 30, 2019 and December 31, 2018, goodwill totaled $27.3 million. The following table summarizes the carrying amount of goodwill, by segment, as of September 30, 2019 and December 31, 2018: (dollars in thousands) Goodwill Banking $ 20,131 Retirement and benefit services 7,198 Total goodwill $ 27,329 The gross carrying amount and accumulated amortization for each type of identifiable intangible asset are as follows: September 30, 2019 December 31, 2018 (dollars in thousands) Gross Carrying Amount Accumulated Amortization Total Gross Carrying Amount Accumulated Amortization Total Identifiable customer intangibles $ 55,744 $ (37,374) $ 18,370 $ 55,744 $ (34,972) $ 20,772 Core deposit intangible assets 7,216 (6,204) 1,012 7,216 (5,515) 1,701 Total intangible assets $ 62,960 $ (43,578) $ 19,382 $ 62,960 $ (40,487) $ 22,473 Amortization of intangible assets was $1.0 million and $3.1 million for the three and nine months ended September 30, 2019, respectively, and $1.2 million and $3.6 million for the comparable periods in 2018, respectively. |
Loan Servicing
Loan Servicing | 9 Months Ended |
Sep. 30, 2019 | |
Loan Servicing | |
Loan Servicing | NOTE 6 Loan Servicing Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled $560.9 million and $591.6 million as of September 30, 2019 and December 31, 2018, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and collection and foreclosure processing. Loan servicing income is recorded on an accrual basis and includes servicing fees from investors and certain charges collected from borrowers, such as late payment fees, and is net of fair value adjustments to capitalized mortgage servicing rights. The following table summarizes the Company’s activity related to servicing rights for the three and nine months ended September 30, 2019 and 2018: Three months ended Nine months ended September 30, September 30, (dollars in thousands) 2019 2018 2019 2018 Balance, beginning of period $ 4,300 $ 4,676 $ 4,623 $ 4,686 Additions 179 152 279 431 Amortization (287) (165) (690) (512) (Impairment)/Recovery (46) 8 (66) 66 Balance, end of period $ 4,146 $ 4,671 $ 4,146 $ 4,671 The following is a summary of key data and assumptions used in the valuation of servicing rights as of September 30, 2019 and December 31, 2018. Increases or decreases in any one of these assumptions would result in lower or higher fair value measurements. September 30, December 31, (dollars in thousands) 2019 2018 Fair value of servicing rights $ 4,146 $ 4,623 Weighted-average remaining term, years 20.5 20.8 Prepayment speeds 11.6 % 7.8 % Discount rate 9.5 % 10.5 % |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Leases | NOTE 7 Leases Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches, and office equipment rentals with terms extending through 2032. Portions of certain properties are subleased for terms extending through 2024. Substantially all of the Company’s leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated financial statements. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated financial statements as a right‑of‑use (“ROU”) asset and a corresponding lease liability. The Company has one existing finance lease (previously referred to as a capital lease) for a portion of the Company’s headquarters building with a lease term through 2022. As this lease was previously required to be recorded on the Company’s consolidated financial statements, Topic 842 did not materially impact the accounting for this lease. The Company elected not to include short‑term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated financial statements. The following table presents the classification of the Company’s ROU assets and lease liabilities on the consolidated financial statements. September 30, (dollars in thousands) 2019 Lease Right-of-Use Assets Classification Operating lease right-of-use assets Operating lease right-of-use assets $ 8,877 Finance lease right-of-use assets Land, premises and equipment, net 347 Total lease right-of-use assets $ 9,224 Lease Liabilities Operating lease liabilities Operating lease liabilities $ 9,401 Finance lease liabilities Long-term debt 690 Total lease liabilities $ 10,091 The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used. For the Company’s only finance lease, the Company utilized its incremental borrowing rate at lease inception. September 30, 2019 Weighted-average remaining lease term, years Operating leases 6.5 Finance leases 3.1 Weighted-average discount rate Operating leases 3.2 % Finance leases 7.8 % As the Company elected, for all classes of underlying assets, not to separate lease and non‑lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. Variable lease cost also includes payments for usage or maintenance of those capitalized equipment operating leases. The following table presents lease costs and other lease information for the three and nine months ending September 30, 2019. Three months ended Nine months ended (dollars in thousands) September 30, 2019 September 30, 2019 Lease costs Operating lease cost $ 602 $ 1,772 Variable lease cost 222 633 Short-term lease cost 122 416 Finance lease cost Interest on lease liabilities 14 45 Amortization of right-of-use assets 29 87 Sublease income (65) (202) Net lease cost $ 924 $ 2,751 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 600 1,774 Right-of-use assets obtained in exchange for new operating lease liabilities — — Right-of-use assets obtained in exchange for new finance lease liabilities — — Future minimum payments for finance and operating leases with initial or remaining terms of one year or more as of September 30, 2019 were as follows: September 30, 2019 Finance Operating (dollars in thousands) Leases Leases 2020 $ 251 $ 2,291 2021 251 1,676 2022 251 1,579 2023 20 1,506 2024 — 1,061 Thereafter — 2,460 Total future minimum lease payments $ 773 $ 10,573 Amounts representing interest (83) (1,172) Total operating lease liabilities $ 690 $ 9,401 |
Deposits
Deposits | 9 Months Ended |
Sep. 30, 2019 | |
Deposits. | |
Deposits | NOTE 8 Deposits The components of deposits in the consolidated balance sheets as of September 30, 2019 and December 31, 2018 were as follows: September 30, December 31, (dollars in thousands) 2019 2018 Noninterest-bearing demand $ 537,951 $ 550,640 Interest-bearing Interest-bearing demand 424,249 401,078 Savings accounts 55,513 53,971 Money market savings 622,647 598,820 Time deposits 192,753 170,587 Total interest-bearing 1,295,162 1,224,456 Total deposits $ 1,833,113 $ 1,775,096 |
Short-Term Borrowings
Short-Term Borrowings | 9 Months Ended |
Sep. 30, 2019 | |
Short-Term Borrowings | |
Short-Term Borrowings | NOTE 9 Short‑Term Borrowings There were no short‑term borrowings outstanding as of September 30, 2019. Short-term borrowing as of December 31, 2018, were $93.5 million and consisted of Fed funds purchased. The following table presents information related to short-term borrowings for the three and nine months ending September 30, 2019 and September 30, 2018: Three months ended September 30, (dollars in thousands) 2019 2018 Fed funds purchased Balance as of end of period $ — $ 73,930 Average daily balance 61,386 103,171 Maximum month-end balance 124,250 94,410 Weighted-average rate During period 2.40 % 2.21 % End of period 2.30 % 2.30 % FHLB Short-term advances Balance as of end of period $ — $ — Average daily balance 25,815 — Maximum month-end balance — — Weighted-average rate During period 2.58 % — % End of period — % — % Nine months ended September 30, (dollars in thousands) 2019 2018 Fed funds purchased Balance as of end of period $ — $ 73,930 Average daily balance 82,504 87,391 Maximum month-end balance 139,605 112,260 Weighted-average rate During period 2.54 % 0.36 % End of period 2.30 % 2.30 % FHLB Short-term advances Balance as of end of period $ — $ — Average daily balance 12,985 110 Maximum month-end balance 135,000 — Weighted-average rate During period 2.44 % 2.43 % End of period — % — % |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt. | |
Long-Term Debt | NOTE 10 Long‑Term Debt Long‑term debt as of September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 Period End Face Carrying Interest Maturity (dollars in thousands) Value Value Interest Rate Rate Date Call Date Subordinated notes payable $ 50,000 $ 49,609 Fixed 5.75 % 12/30/2025 12/30/2020 Junior subordinated debenture (Trust I) 4,000 3,390 Three-month LIBOR + 3.10% 5.21 % 6/26/2033 6/26/2008 Junior subordinated debenture (Trust II) 6,000 5,086 Three-month LIBOR + 1.80% 3.92 % 9/15/2036 9/15/2011 Finance lease liability 2,700 690 Fixed 7.81 % 10/31/2022 N/A Total long-term debt $ 62,700 $ 58,775 December 31, 2018 Period End Face Carrying Interest Maturity (dollars in thousands) Value Value Interest Rate Rate Date Call Date Subordinated notes payable $ 50,000 $ 49,562 Fixed 5.75 % 12/30/2025 12/30/2020 Junior subordinated debenture (Trust I) 4,000 3,357 Three-month LIBOR + 3.10% 5.92 % 6/26/2033 6/26/2008 Junior subordinated debenture (Trust II) 6,000 5,035 Three-month LIBOR + 1.80% 4.59 % 9/15/2036 9/15/2011 Obligations under capital lease 2,700 870 Fixed 7.81 % 10/31/2022 N/A Total long-term debt $ 62,700 $ 58,824 The Company had a $150 thousand letter of credit with the Federal Home Loan Bank as of September 30, 2019 and December 31, 2018. Bank of North Dakota letters of credit are collateralized by loans pledged to the Bank of North Dakota in the amount of $244.8 million and $260.6 million as of September 30, 2019 and December 31, 2018, respectively. There were no outstanding letters of credit with the Bank of North Dakota as of September 30, 2019 and December 31, 2018, respectively. |
Financial Instruments with Off-
Financial Instruments with Off-Balance Sheet Risk | 9 Months Ended |
Sep. 30, 2019 | |
Financial Instruments with Off-Balance Sheet Risk | |
Financial Instruments with Off-Balance Sheet Risk | NOTE 11 Financial Instruments with Off‑Balance Sheet Risk In the normal course of business, the Bank has outstanding commitment and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not included in the accompanying consolidated financial statements. The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Bank uses the same credit policies in making such commitments as it does for instruments that are included in the statements of financial condition. As of September 30, 2019 and December 31, 2018, the following financial instruments whose contract amount represents credit risk were approximately as follows: September 30, December 31, (dollars in thousands) 2019 2018 Commitments to extend credit $ 570,220 $ 529,890 Standby letters of credit 8,023 8,852 Total $ 578,243 $ 538,742 Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each client’s creditworthiness on a case by case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property and equipment, and income producing commercial properties. The Company was not required to perform on any financial guarantees and did not incur any losses on its commitments during the past two years. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-Based Compensation | |
Share-Based Compensation | NOTE 12 Share-Based Compensation The Company has granted equity awards pursuant to the Alerus Financial Corporation 2009 Stock Plan. The awards can be in the form of restricted stock or restricted stock units and are considered to represent an element of employee compensation. Compensation expense for the award is based on the fair value of Alerus Financial Corporation common stock at the time of grant. The value of awards that are expected to vest, are amortized into expense over the vesting periods. The ability to grant awards under this plan have expired. Compensation expense relating to awards under this plan was $1.2 million and $702 thousand for the nine months ending September 30, 2019 and September 30, 2018, respectively. The following table presents the activity in the stock plan for the nine months ended September 30, 2019 and 2018: Nine months ended September 30, 2019 Nine months ended September 30, 2018 Weighted- Weighted- Average Grant Average Grant Awards Date Fair Value Awards Date Fair Value Restricted Stock Awards Outstanding at beginning of period 337,014 $ 18.36 336,397 $ 15.38 Granted 70,617 19.87 76,031 22.67 Vested (53,882) 18.69 (76,753) 10.56 Forfeited or cancelled (6,138) 17.34 — — Outstanding at end of period 347,611 $ 18.64 335,675 $ 18.13 As of September 30, 2019, there was $3.6 million of unrecognized compensation expense related to non-vested restricted stock awards granted under the plan. The expense is expected to be recognized over a weighted-average period of 3.29 years. On May 6, 2019, the Company’s stockholders approved the Alerus Financial Corporation 2019 Equity Incentive Plan. This plan allows the compensation committee the ability to grant a wide variety of equity awards, including stock options, stock appreciation rights, restricted stock, restricted stock units and cash incentive awards in such forms and amounts as it deems appropriate to accomplish the goals of the plan. Any shares subject to an award that is cancelled, forfeited, or expires prior to exercise or realization, either in full or in part, shall again become available for issuance under the plan. However, shares subject to an award shall not again be made available for issuance or delivery under the plan if such shares are (a) tendered in payment of the exercise price of a stock option, (b) delivered to, or withheld by, the Company to satisfy any tax withholding obligation, or (c) covered by a stock‑settled stock appreciation right or other awards that were not issued upon the settlement of the award. Shares vest, become exercisable and contain such other terms and conditions as determined by the compensation committee and set forth in individual agreements with the participant receiving the award. The plan is authorized to issue up to 1,100,000. As of September 30, 2019, no awards had been issued under the plan For the nine months ended September 30, 2019, the Company issued 13,144 shares of common stock pursuant to the Alerus Financial Corporation Stock Grant Plan for Non‑Employee Directors. Compensation expense relating to stock awards under this plan for the nine months ending September 30, 2019 and 2018, was $251 thousand and $2 45 thousand respectively. |
Noninterest Income
Noninterest Income | 9 Months Ended |
Sep. 30, 2019 | |
Noninterest Income. | |
Noninterest Income | NOTE 13 Noninterest Income All of the Company’s revenue from contracts with customers, within the scope of ASC 606, is recognized in noninterest income. The material groups of noninterest income are defined as follows: Retirement and benefit services: Retirement and benefit services income is primarily comprised of fees earned from the administration of retirement plans, record‑keeping, compliance services, payroll processing, health savings accounts, and flexible benefit plans. Fees are earned based on a combination of the market value of assets under administration and transaction based fees for services provided. Fees that are determined based on the market value of the assets under administration are generally billed monthly or quarterly in arrears and recognized monthly as the Company’s performance obligations are met. Other transaction based fees are recognized monthly as the performance obligation is satisfied. Wealth management: Wealth management income is earned from a variety of sources including trust administration and other related fiduciary services, custody, investment management and advisory services, and brokerage. Fees are based on the market value of the assets under management and are generally billed monthly in arrears and recognized monthly as the Company’s performance obligations are met. Commissions on transactions are recognized on a trade‑date basis as the performance obligation is satisfied at the point in time in which the trade is processed. Other related services are based on a fixed fee schedule and the revenue is recognized when the services are rendered, which is when the Company has satisfied its performance obligation. Service charges on deposit accounts: Service charges on deposit accounts primarily consist of account analysis fees, monthly maintenance fees, overdraft fees, and other deposit account related fees. Overdraft fees and certain service charges are fixed and the performance obligation is typically satisfied at the time of the related transaction. The consideration for analysis fees and monthly maintenance fees are variable as the fee can be reduced if the customer meets certain qualifying metrics. The Company’s performance obligations are satisfied at the time of the transaction or over the course of a month. Other noninterest income: Other noninterest income components include debit card interchange fees, bank‑owned life insurance income and miscellaneous transactional fees. Income earned from these revenue streams is generally recognized concurrently with the satisfaction of the performance obligation. The following table presents the Company’s noninterest income for the three and nine months ended September 30, 2019 and 2018. Three months ended Nine months ended September 30, September 30, (dollars in thousands) 2019 2018 2019 2018 Retirement and benefits $ 15,307 $ 15,536 $ 46,142 $ 46,873 Wealth management 3,896 3,685 11,385 10,948 Mortgage banking (1) 8,135 5,318 19,739 13,551 Service charges on deposit accounts 447 442 1,321 1,333 Net gains (losses) on investment securities (1) 48 13 357 119 Other Interchange fees 506 509 1,480 1,519 Bank-owned life insurance income (1) 205 202 601 602 Misc. transactional fees 312 272 881 784 Other noninterest income 724 281 2,732 879 Total noninterest income $ 29,580 $ 26,258 $ 84,638 $ 76,608 (1) Not within scope of ASC 606. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes | |
Income Taxes | NOTE 14 Income Taxes The components of income tax expense (benefit) for the three and nine months ended September 30, 2019 and 2018 are as follows: Three months ended September 30, 2019 2018 Percent of Percent of (dollars in thousands) Amount Pretax Income Amount Pretax Income Taxes at statutory federal income tax rate $ 1,982 21.0 % $ 1,957 21.0 % Tax effect of: Tax exempt income (107) (1.1) (132) (1.4) Other 457 4.8 126 1.3 Applicable income taxes $ 2,332 24.7 % $ 1,951 20.9 % Nine months ended September 30, 2019 2018 Percent of Percent of (dollars in thousands) Amount Pretax Income Amount Pretax Income Taxes at statutory federal income tax rate $ 6,114 21.0 % $ 5,268 21.0 % Tax effect of: Tax exempt income (329) (1.1) (402) (1.6) Other 1,440 4.9 386 1.5 Applicable income taxes $ 7,225 24.8 % $ 5,252 20.9 % It is the opinion of management that the Company has no significant uncertain tax positions that would be subject to change upon examination. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting | |
Segment Reporting | NOTE 15 Segment Reporting The Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to the Company’s financial statements, and management’s regular review of the operating results of those services. The Company operates through four operating segments: Banking, Retirement and Benefit Services, Wealth Management, and Mortgage. The financial information presented on each segment sets forth net interest income, provision for loan losses, direct noninterest income, and direct noninterest expense, before indirect allocations. Corporate Administration includes the indirect overhead and is set forth in the table below. The segment net income before taxes represents direct revenue and expense before indirect allocations and income taxes. The following table presents key metrics related to the Company’s segments for the periods presented: Three months ended September 30, 2019 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 19,193 $ — $ — $ 384 $ (896) $ 18,681 Provision for loan losses 1,498 — — — — 1,498 Noninterest income 1,695 15,307 3,896 8,135 547 29,580 Noninterest expense 10,800 8,551 1,835 7,256 8,885 37,327 Net income before taxes $ 8,590 $ 6,756 $ 2,061 $ 1,263 $ (9,234) $ 9,436 Nine months ended September 30, 2019 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 57,987 $ — $ — $ 818 $ (2,713) $ 56,092 Provision for loan losses 5,515 — — — — 5,515 Noninterest income 5,273 46,142 11,385 19,739 2,099 84,638 Noninterest expense 30,880 26,142 5,936 17,184 25,960 106,102 Net income before taxes $ 26,865 $ 20,000 $ 5,449 $ 3,373 $ (26,574) $ 29,113 Three months ended September 30, 2018 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 19,568 $ — $ 17 $ 248 $ (904) $ 18,929 Provision for loan losses 1,521 — — 9 — 1,530 Noninterest income 1,710 15,536 3,685 5,318 9 26,258 Noninterest expense 10,042 8,948 1,709 5,319 8,318 34,336 Net income before taxes $ 9,715 $ 6,588 $ 1,993 $ 238 $ (9,213) $ 9,321 Nine months ended September 30, 2018 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 57,960 $ — $ 47 $ 653 $ (2,689) $ 55,971 Provision for loan losses 7,071 — — 9 — 7,080 Noninterest income 5,159 46,873 10,948 13,551 77 76,608 Noninterest expense 29,416 27,338 5,702 14,273 23,685 100,414 Net income before taxes $ 26,632 $ 19,535 $ 5,293 $ (78) $ (26,297) $ 25,085 Banking The Banking division offers a complete line of loan, deposit, cash management, and treasury services through locations in North Dakota, Minnesota, and Arizona. These products and services are supported through web and mobile based applications. The majority of the Company’s assets and liabilities are in the Banking segment’s balance sheet. Retirement and Benefit Services Retirement and Benefit Services provides the following services nationally: recordkeeping and administration services to qualified retirement plans; ESOP trustee, recordkeeping, and administration; investment fiduciary services to retirement plans; health savings accounts, flex spending accounts, Cobra recordkeeping and administration services, and payroll to employers. Wealth Management The Wealth Management division provides advisory and planning services, investment management, and trust and fiduciary services to clients across the Company’s footprint. Mortgage The mortgage division offers first and second mortgage loans through a centralized mortgage unit in Minneapolis, Minnesota as well as through the Banking office locations. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share | |
Earnings Per Share | NOTE 16 Earnings Per Share Beginning in the third quarter of 2019, the Company has elected to prospectively use the two-class method in calculating earnings per share due to the restricted stock awards and restricted stock units qualifying as participating securities. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participating rights in undistributed earnings. Average shares of common stock for diluted net income per common share include shares to be issued upon the vesting of restricted stock awards and restricted stock units granted under the Company's share-based compensation plans. The calculation of basic and diluted earnings per share using the two-class method for the three and nine months ending September 30, 2019 is presented below: Three months ended Nine months ended September 30, September 30, (dollars and shares in thousands, except per share data) 2019 2019 Net income $ 7,104 $ 21,888 Dividends and undistributed earnings allocated to participating securities 154 514 Net income available to common shareholders $ 6,950 $ 21,374 Weighted-average common shares outstanding for basic earnings per share 14,274 13,957 Dilutive effect of stock-based awards 352 360 Weighted-average common shares outstanding for diluted earnings per share 14,626 14,317 Earnings per common share: Basic earnings per common share $ 0.49 $ 1.53 Diluted earnings per common share $ 0.48 $ 1.49 For the three and nine months ended September 30, 2018, the basic and diluted earnings per share were calculated using the treasury stock method, as presented in the table below. The Company determined that the impact to diluted earnings per share would be immaterial if calculated under the two-class method for the three and nine months ended September 30, 2018. The calculation of basic and diluted earnings per share using the treasury stock method for the three and nine months ending September 30, 2018 is presented below: Three months ended Nine months ended September 30, September 30, (dollars and shares in thousands, except per share data) 2018 2018 Basic: Net income attributable to common shareholders $ 7,370 $ 19,833 Weighted-average common shares outstanding 13,777 13,759 Basic earnings per common share $ 0.53 $ 1.44 Diluted: Net income attributable to common shareholders 7,370 19,833 Weighted-average common shares outstanding 13,777 13,759 Add: Dilutive effect of stock-based awards 294 301 Weighted-average common shares outstanding for diluted EPS 14,071 14,060 Diluted earnings per common share $ 0.52 $ 1.41 |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments | |
Derivative Instruments | NOTE 17 Derivative Instruments The Company did not have any derivatives designated as hedging instruments, as of September 30, 2019 and December 31, 2018. The following table presents the amounts recorded in the Company’s consolidated balance sheets, for derivatives not designated as hedging instruments, as of September 30, 2019 and December 31, 2018: September 30, 2019 December 31, 2018 Fair Notional Fair Notional (dollars in thousands) Value Amount Value Amount Asset Derivatives Consolidated Balance Sheet Location Interest rate lock commitments Other assets $ 2,036 $ 89,608 $ 12 $ 33,858 Forward loan sales commitments Other assets 447 17,662 — — TBA mortgage backed securities Other assets — — — — Total asset derivatives $ 2,483 $ 107,270 $ 12 $ 33,858 Liability Derivatives Interest rate lock commitments Accrued expenses and other liabilities $ — $ — $ — $ — Forward loan sales commitments Accrued expenses and other liabilities — — 7 2,956 TBA mortgage backed securities Accrued expenses and other liabilities 104 148,500 — — Total liability derivatives $ 104 $ 148,500 $ 7 $ 2,956 The gain (loss) recognized on derivative instruments for the three and nine months ended September 30, 2019 and 2018 was as follows: Gain/(loss) Three months ended Nine months ended September 30, September 30, September 30, September 30, (dollars in thousands) Consolidated Statements of Income Location 2019 2018 2019 2018 Interest rate lock commitments Mortgage banking $ (257) $ (29) $ 2,024 $ (11) Forward loan sales commitments Mortgage banking (199) 46 454 24 TBA mortgage backed securities Mortgage banking 680 — (104) — Total gain/(loss) from derivative instruments $ 224 $ 17 $ 2,374 $ 13 |
Regulatory Matters
Regulatory Matters | 9 Months Ended |
Sep. 30, 2019 | |
Regulatory Matters | |
Regulatory Matters | NOTE 18 Regulatory Matters The Bank is subject to various regulatory capital requirements administered by the 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 and the Bank’s consolidated financial statements. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of common equity tier 1, tier 1, and total capital (as defined in the regulations) to risk weighted assets (as defined) and of tier 1 capital (as defined) to average assets (as defined). Management believes as of September 30, 2019 and December 31, 2018, the Bank had met all of the capital adequacy requirements to which it is subject and would be considered well capitalized under the regulatory framework for prompt corrective action. The following table presents the Company’s and the Bank’s actual capital amounts and ratios as of September 30, 2019 and December 31, 2018: September 30, 2019 Minimum to be Requirements Well Capitalized for Capital Under Prompt Actual Adequacy Purposes Corrective Action (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk weighted assets Consolidated $ 233,030 12.38 % 84,705 4.50 % N/A N/A Bank 222,600 11.84 % 84,594 4.50 % 122,192 6.50 % Tier 1 capital to risk weighted assets . Consolidated 241,197 12.81 % 112,940 6.00 % N/A N/A Bank 222,600 11.84 % 112,792 6.00 % 150,390 8.00 % Total capital to risk weighted assets Consolidated 313,700 16.67 % 150,587 8.00 % N/A N/A Bank 245,585 13.06 % 150,390 8.00 % 187,987 10.00 % Tier 1 capital to average assets Consolidated 241,197 11.33 % 85,152 4.00 % N/A N/A Bank 222,600 10.47 % 85,009 4.00 % 106,261 5.00 % December 31, 2018 Minimum to be Requirements Well Capitalized for Capital Under Prompt Actual Adequacy Purposes Corrective Action (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk weighted assets Consolidated $ 151,745 8.43 % N/A N/A N/A N/A Bank 204,680 11.39 % 80,866 4.50 % 116,806 6.50 % Tier 1 capital to risk weighted assets Consolidated 159,774 8.87 % N/A N/A N/A N/A Bank 204,680 11.39 % 107,821 6.00 % 143,761 8.00 % Total capital to risk weighted assets Consolidated 231,510 12.86 % N/A N/A N/A N/A Bank 226,854 12.62 % 143,806 8.00 % 179,758 10.00 % Tier 1 capital to average assets Consolidated 159,774 7.51 % N/A N/A N/A N/A Bank 204,680 9.63 % 85,018 4.00 % 106,272 5.00 % The Bank is subject to certain restrictions on the amount of dividends that it may pay without prior regulatory approval. In addition, the Company must adhere to various U.S. Department of Housing and Urban Development (“HUD”) regulatory guidelines including required minimum capital and liquidity to maintain their Federal Housing Administration approval status. Failure to comply with the HUD guidelines could result in withdrawal of this certification. As of September 30, 2019, and December 31, 2018, the Company was in compliance with HUD guidelines. |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value of Assets and Liabilities | |
Fair Value of Assets and Liabilities | NOTE 19 Fair Value of Assets and Liabilities The Company categorizes its assets and liabilities measured at estimated fair value into a three level hierarchy based on the priority of the inputs to the valuation technique used to determine estimated fair value. The estimated fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the estimated fair value measurement fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the estimated fair value measurement. Assets and liabilities valued at estimated fair value are categorized based on the following inputs to the valuation techniques as follows: Level 1— Inputs that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that an entity has the ability to access. Level 2— Inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Estimated fair values for these instruments are estimated using pricing models, quoted prices of investment securities with similar characteristics, or discounted cash flows. Level 3— Inputs that are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. Subsequent to initial recognition, the Company may re‑measure the carrying value of assets and liabilities measured on a nonrecurring basis to estimated fair value. Adjustments to estimated fair value usually result when certain assets are impaired. Such assets are written down from their carrying amounts to their estimated fair value. Professional standards allow entities the irrevocable option to elect to measure certain financial instruments and other items at estimated fair value for the initial and subsequent measurement on an instrument‑by‑instrument basis. The Company adopted the policy to value certain financial instruments at estimated fair value. The Company has not elected to measure any existing financial instruments at estimated fair value; however, it may elect to measure newly acquired financial instruments at estimated fair value in the future. Recurring Basis The Company uses estimated fair value measurements to record estimated fair value adjustments to certain assets and liabilities and to determine estimated fair value disclosures. The following tables present the balances of the assets and liabilities measured at estimated fair value on a recurring basis as of September 30, 2019 and December 31, 2018: September 30, 2019 (dollars in thousands) Level 1 Level 2 Level 3 Total Trading securities U.S. treasury and government agencies $ — $ — $ — $ — Available-for-sale and equity securities U.S. treasury and government agencies $ — $ 21,602 $ — $ 21,602 Obligations of state and political agencies — 47,856 — 47,856 Mortgage backed securities Residential agency — 169,337 — 169,337 Commercial — 32,652 — 32,652 Asset backed securities — 157 — 157 Corporate bonds — 7,112 — 7,112 Equity securities 2,675 — — 2,675 Total available-for-sale and equity securities $ 2,675 $ 278,716 $ — $ 281,391 Other assets Derivatives $ — $ 2,483 $ — $ 2,483 Other liabilities Derivatives $ — $ 104 $ — $ 104 December 31, 2018 (dollars in thousands) Level 1 Level 2 Level 3 Total Trading securities U.S. treasury and government agencies $ — $ 1,539 $ — $ 1,539 Available-for-sale and equity securities U.S. treasury and government agencies $ — $ 19,142 $ — $ 19,142 Obligations of state and political agencies — 66,387 — 66,387 Mortgage backed securities Residential agency — 126,998 — 126,998 Commercial — 28,767 — 28,767 Asset backed securities — 399 — 399 Corporate bonds — 8,481 — 8,481 Equity securities 3,165 — — 3,165 Total available-for-sale and equity securities $ 3,165 $ 250,174 $ — $ 253,339 Other assets Derivatives $ — $ 12 $ — $ 12 Other liabilities Derivatives $ — $ 7 $ — $ 7 The following is a description of the valuation methodologies used for instruments measured at estimated fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy. Investment Securities When available, the Company uses quoted market prices to determine the estimated fair value of investment securities; such items are classified in Level 1 of the estimated fair value hierarchy. For the Company’s investment securities for which quoted prices are not available for identical investment securities in an active market, the Company determines estimated fair value utilizing vendors who apply matrix pricing for similar bonds for which no prices are observable or may compile prices from various sources. These models are primarily industry‑standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market, and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. Estimated fair values from these models are verified, where possible, against quoted prices for recent trading activity of assets with similar characteristics to the security being valued. Such methods are generally classified as Level 2. However, when prices from independent sources vary, cannot be obtained, or cannot be corroborated, a security is generally classified as Level 3. Derivatives All of the Company’s derivatives are traded in over‑the‑counter markets where quoted market prices are not readily available. For these derivatives, estimated fair value is measured using internally developed models that use primarily market observable inputs, such as yield curves and option volatilities, and accordingly, classify as Level 2. Examples of Level 2 derivatives are basic interest rate swaps and forward contracts. Any remaining derivative estimated fair value measurements using significant assumptions that are unobservable are classified as Level 3. Level 3 derivatives include interest rate lock commitments written for residential mortgage loans that are held for sale. Nonrecurring Basis Certain assets are measured at estimated fair value on a nonrecurring basis. These assets are not measured at estimated fair value on an ongoing basis; however, they are subject to estimated fair value adjustments in certain circumstances, such as when there is evidence of impairment or a change in the amount of previously recognized impairment. Net impairment related to nonrecurring estimated fair value measurements of certain assets as of September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 (dollars in thousands) Level 2 Level 3 Total Impairment Loans held for sale $ 66,021 $ — $ 66,021 $ — Loans held for branch sale — — — — Impaired loans — 3,050 3,050 2,107 Foreclosed assets — 84 84 — Servicing rights — 4,146 4,146 — December 31, 2018 (dollars in thousands) Level 2 Level 3 Total Impairment Loans held for sale $ 14,486 $ — $ 14,486 $ — Loans held for branch sale — 32,031 32,031 — Impaired loans — 4,022 4,022 2,538 Foreclosed assets — 204 204 245 Servicing rights — 4,623 4,623 — Loans Held for Sale Loans originated and held for sale are carried at the lower of cost or estimated fair value. The Company obtains quotes or bids on these loans directly from purchasing financial institutions. Typically these quotes include a premium on the sale and thus these quotes indicate estimated fair value of the held for sale loans is greater than cost. On January 15, 2019, the Bank entered into an agreement with a third party to sell the loans of two branch locations in Duluth, Minnesota, and on April 26, 2019, the Bank completed the sale. As of December 31, 2018, the loans were held for branch sale and totaled $32.0 million. The estimated fair value in the table above was based on the agreed upon purchase price in the sales contract. The measurements were classified as Level 3. Impairment losses for loans held for sale that are carried at the lower of cost or estimated fair value, represent additional net write‑downs during the period to record these loans at the lower of cost or estimated fair value, subsequent to their initial classification as loans held for sale. Impaired Loans In accordance with the provisions of the loan impairment guidance, loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms are measured for impairment. Allowable methods for estimating fair value include using the estimated fair value of the collateral for collateral dependent loans or, where a loan is determined not to be collateral dependent, using a discounted cash flow method. The estimated fair value method requires obtaining a current independent appraisal of the collateral and applying a discount factor, if necessary, to the appraised value and including costs to the sell. Because many of these inputs are not observable, the measurements are classified as Level 3. Foreclosed Assets Foreclosed assets are recorded at estimated fair value based on property appraisals, less estimated selling costs, at the date of the transfer with any impairment amount charged to the allowance for loan losses. Subsequent to the transfer, foreclosed assets are carried at the lower of cost or estimated fair value, less estimated selling costs with changes in the estimated fair value or any impairment amount recorded in other noninterest expense. Fair value measurements may be based upon appraisals, third‑party price opinions, or internally developed pricing methods. These measurements are classified as Level 3. Servicing Rights Servicing rights do not trade in an active market with readily observable prices. Accordingly, the estimated fair value of servicing rights is determined using a valuation model that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. Servicing rights are carried at lower of cost or market value, and therefore can be subject to estimated fair value measurements on a nonrecurring basis. Estimated fair value measurements of servicing rights use significant unobservable inputs and accordingly, are classified as Level 3. The Company obtains the estimated fair value of servicing rights from an independent third party pricing service and records the unadjusted estimated fair values in the financial statements. The valuation techniques and significant unobservable inputs used to measure Level 3 estimated fair values as of September 30, 2019, and December 31, 2018, were as follows: September 30, 2019 (dollars in thousands) Weighted Asset Type Valuation Technique Unobservable Input Fair Value Range Average Impaired loans Appraisal value Property specific adjustment 3,050 N/A N/A Foreclosed assets Appraisal value Property specific adjustment 84 N/A N/A Servicing rights Discounted cash flows Prepayment speed assumptions 4,146 154-270 194 Discount rate 9.5 % 9.5 % December 31, 2018 (dollars in thousands) Weighted Asset Type Valuation Technique Unobservable Input Fair Value Range Average Loans held for branch sale Discounted cash flows Sales agreement 32,031 N/A N/A Impaired loans Appraisal value Property specific adjustment 4,022 N/A N/A Foreclosed assets Appraisal value Property specific adjustment 204 N/A N/A Servicing rights Discounted cash flows Prepayment speed assumptions 4,623 104 - 211 130 Discount rate 10.5 % 10.5 % Disclosure of estimated fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the consolidated balance sheets. In cases in which quoted market prices are not available, estimated fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. In that regard, the derived estimated fair value estimates cannot be substantiated by comparison to independent markets and, in many cases could not be realized in immediate settlement of the instruments. Certain financial instruments, with an estimated fair value that is not practicable to estimate and all non‑financial instruments, are excluded from the disclosure requirements. Accordingly, the aggregate estimated fair value amounts presented do not necessarily represent the underlying value of the Company. The following disclosures represent financial instruments in which the ending balances, as of September 30, 2019 and December 31, 2018, were not carried at estimated fair value in their entirety on the consolidated balance sheets. Cash and Cash Equivalents and Accrued Interest The carrying amounts reported in the consolidated balance sheets approximate those assets and liabilities estimated fair values. Loans For variable‑rate loans that reprice frequently and with no significant change in credit risk, estimated fair values are based on carrying values. The estimated fair values of other loans are estimated using discounted cash flow analysis, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Bank‑Owned Life Insurance Bank‑owned life insurance is carried at the amount due upon surrender of the policy, which is also the estimated fair value. This amount was provided by the insurance companies based on the terms of the underlying insurance contract. Deposits The estimated fair values of demand deposits are, by definition, equal to the amount payable on demand at the consolidated balance sheet date. The estimated fair values of fixed‑rate certificates of deposit are estimated using a discounted cash flow calculation that applies current incremental interest rates being offered on certificates of deposit to a schedule of aggregated expected monthly maturities of the outstanding certificates of deposit. Deposits Held for Sale On January 15, 2019, the Bank entered into an agreement with a third party to sell the deposits of two branch locations in Duluth, Minnesota, and on April 26, 2019, the Bank completed the sale. As of December 31, 2018, the deposits were held for sale and totaled $24.2 million. The estimated fair value in the table below was based on the carrying value of the deposits, less the premium the Bank received, in accordance with the purchase agreement. Short‑Term Borrowings and Long‑Term Debt For variable‑rate borrowings that reprice frequently, estimated fair values are based on carrying values. The estimated fair value of fixed‑rate borrowings are estimated using discounted cash flow analysis, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. Off‑Balance Sheet Credit‑Related Commitments Off‑balance sheet credit related commitments are generally of short‑term nature. The contract amount of such commitments approximates their estimated fair value since the commitments are comprised primarily of unfunded loan commitments which are generally priced at market at the time of funding. The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments are as follows: September 30, 2019 Carrying Estimated Fair Value (dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents $ 61,174 $ 61,174 $ — $ — $ 61,174 Loans 1,663,103 — — 1,658,151 1,658,151 Accrued interest receivable 7,412 7,412 — — 7,412 Bank-owned life insurance 31,364 — 31,364 — 31,364 Financial Liabilities Noninterest-bearing transaction $ 537,951 $ — $ 537,951 $ — $ 537,951 Interest-bearing transaction 1,102,409 — 1,102,409 — 1,102,409 Time deposits 192,753 — — 192,869 192,869 Short-term borrowings — — — — — Long-term debt 58,775 — 58,285 — 58,285 Accrued interest payable 1,879 1,879 — — 1,879 December 31, 2018 Carrying Estimated Fair Value (dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents $ 40,651 $ 40,651 $ — $ — $ 40,651 Loans 1,679,676 — — 1,663,401 1,663,401 Accrued interest receivable 7,645 7,645 — — 7,645 Bank-owned life insurance 30,763 — 30,763 — 30,763 Financial Liabilities Noninterest-bearing transaction $ 550,640 $ — $ 550,640 $ — $ 550,640 Interest-bearing transaction 1,053,869 — 1,053,869 — 1,053,869 Time deposits 170,587 — — 172,616 172,616 Deposits held for sale 24,197 — — 22,019 22,019 Short-term borrowings 93,460 93,460 — — 93,460 Long-term debt 58,824 — 59,988 — 59,988 Accrued interest payable 720 720 — — 720 |
Branch Sale
Branch Sale | 9 Months Ended |
Sep. 30, 2019 | |
Branch Sale | |
Branch Sale | NOTE 20 Branch Sale On January 15, 2019, the Bank announced an agreement to sell the Bank’s branch offices located in Duluth, Minnesota, including loans and deposits attributable to those offices, to another financial institution. The Bank decided to exit the Duluth market to reallocate resources to the Minneapolis-St. Paul-Bloomington metropolitan statistical area, which is a higher growth market in the state, and its’ other core markets in the Phoenix-Mesa-Scottsdale metropolitan statistical area, and in Fargo and Grand Forks, North Dakota. The loans and deposits were classified as held for sale in the consolidated financial statements as of December 31, 2018. The transaction closed on April 26, 2019. The loans and deposits associated with this transaction totaled approximately $28.3 million and $19.4 million, respectively, as of the closing date. A pre‑tax gain on the sale was recognized in the amount of $1.5 million. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Significant Accounting Policies | |
Organization | Organization Alerus Financial Corporation is a financial holding company organized under the laws of the state of Delaware. Alerus Financial Corporation (the “Company”) and its subsidiaries is a diversified financial services company headquartered in Grand Forks, North Dakota. Through its subsidiary, Alerus Financial, National Association (the “Bank”), the Company provides innovative and comprehensive financial solutions to businesses and consumers through four distinct business lines—banking, retirement and benefit services, wealth management and mortgage. |
Initial Public Offering | Initial Public Offering On September 17, 2019, the Company sold 2,860,000 shares of common stock in its initial public offering. On September 25, 2019, the Company sold an additional 429,000 shares of common stock pursuant to the exercise in full, by the underwriters, of their option to purchase additional shares. The aggregate offering price for the shares sold by the Company was $69.1 million, and after deducting $4.7 million of underwriting discounts and $1.6 million of offering expenses paid to third parties, the Company received total net proceeds of $62.8 million. |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and conform to practices within the banking industry and include all of the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting. The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results for the full year or any other period. These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2018, included in the Company’s prospectus filed with the SEC on September 13, 2019, pursuant to Rule 424(b)(4) under the Securities Act of 1933. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s principal operating subsidiary is the Bank. In the normal course of business, the Company may enter into a transaction with a variable interest entity (“VIE”). VIE’s are legal entities whose investors lack the ability to make decisions about the entity’s activities, or whose equity investors do not have the right to receive the residual returns of the entity. The applicable accounting guidance requires the Company to perform ongoing quantitative and qualitative analysis to determine whether it must consolidate any VIE. The Company does not have any ownership interest in, or exert any control, over any VIE, and thus no VIE’s are included in the consolidated financial statements. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the valuation of investment securities, determination of the allowance for loan losses, valuation of reporting units for the purpose of testing goodwill and other intangible assets for impairment, valuation of deferred tax assets, and fair values of financial instruments. |
Emerging Growth Company | Emerging Growth Company The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, even if the Company complies with the greater obligations of public companies that are not emerging growth companies, the Company may avail itself of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as the Company is an emerging growth company. The Company will continue to be an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the date of the first sale of common equity securities under the Company’s Registration Statement on Form S-1, which was declared effective by the SEC on September 12, 2019; (2) the last day of the fiscal year in which the Company has $1.07 billion or more in annual revenues; (3) the date on which the Company is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); or (4) the date on which the Company has, during the previous three-year period, issued publicly or privately, more than $1.0 billion in non-convertible debt securities. Management cannot predict if investors will find the Company’s common stock less attractive because it will rely on these exemptions. If some investors find the Company’s common stock less attractive as a result, there may be a less active trading market for its common stock and the Company’s stock price may be more volatile. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the benefits of this extended transition period. |
Recent Accounting Pronouncements | Adopted Pronouncements In February 2016, the FASB issued ASU No. 2016‑02, “Leases.” Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short‑term leases): 1) a lease liability, which is the present value of a lessee’s obligation to make lease payments, and 2) a right‑of‑use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessor accounting under the new guidance remains largely unchanged as it is substantially equivalent to existing guidance for sales‑type leases, direct financing leases, and operating leases. Leveraged leases have been eliminated, although lessors can continue to account for existing leveraged leases using the current accounting guidance. Other limited changes were made to align lessor accounting with the lessee accounting model and the new revenue recognition standard. All entities will classify leases to determine how to recognize lease‑related revenue and expense. Quantitative and qualitative disclosures will be required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The intention is to require enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities. ASU No. 2016‑02 is effective for interim and annual reporting periods beginning after December 15, 2018. All entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. As the Company elected the transition option provided in ASU No. 2018‑11, the modified retrospective approach was applied on January 1, 2019. The Company also elected certain relief options offered in ASU 2016‑02 including the package of practical expedients, the option not to separate lease and non‑lease components and instead to account for them as a single lease component, and the option not to recognize right‑of‑use assets and lease liabilities that arise from short‑term leases (i.e., leases with terms of twelve months or less). The Company did not elect the hindsight practical expedient, which allows entities to use hindsight when determining lease term and impairment of right‑of‑use assets. The Company has several lease agreements, such as branch locations, which are considered operating leases, and therefore, were not previously recognized on the Company’s consolidated balance sheets. The new guidance requires these lease agreements to be recognized on the consolidated balance sheets as a right‑of‑use asset and a corresponding lease liability. The new guidance did not have a material impact on the consolidated statements of income or the consolidated statements of cash flows. See “NOTE 7 Leases” for more information. In March 2017, the FASB issued ASU No. 2017‑08, Premium Amortization on Purchased Callable Debt Securities. This ASU shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Currently, entities generally amortize the premium as an adjustment of yield over the contractual life of the security. ASU 2017‑08 does not change the accounting for purchased callable debt securities held at a discount as the discount will continue to be accreted to maturity. ASU 2017‑08 is effective for public business entities for the interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The guidance calls for a modified retrospective transition approach under which a cumulative‑effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which ASU 2017‑08 is adopted. The Company elected to early adopt this standard as of January 1, 2019, and has evaluated the provisions of ASU 2017‑08 and determined there is no impact on its consolidated financial statements. In August 2017, the FASB issued ASU No. 2017‑12, “Targeted Improvements to Accounting for Hedging Activities.” This ASU’s objectives are to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities; and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU No. 2017‑12 is effective for interim and annual reporting periods beginning after December 15, 2018. The Company currently does not designate any derivative financial instruments as formal hedging relationships, and therefore, does not currently utilize hedge accounting. As such, ASU No. 2017‑12 did not impact the Company’s consolidated financial statements. In September 2018, the FASB issued ASU No. 2018‑07, Compensation (Topic 718): Improvements to Nonemployee Share‑Based Payment Accounting. This ASU has been issued as part of a simplification initiative which will expand the scope of Topic 718 to include share‑based payment transactions for the acquiring of goods and services from non‑employees and expands the scope through the amendments to address and improve aspects of the accounting for non‑employee share‑based payment transactions. The amendments will be effective for public business entities for interim and annual reporting periods beginning after December 15, 2018. The Company elected to early adopt ASU 2018‑07 effective January 1, 2019, and has evaluated the provisions of ASU 2018‑07 and determined there was no significant impact on its consolidated financial statements. Pronouncements Not Yet Effective In September 2016, the FASB issued ASU No. 2016‑13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires a new impairment model known as the current expected credit loss (“CECL”) which significantly changes the way impairment of financial instruments is recognized by requiring immediate recognition of estimated credit losses expected to occur over the remaining life of financial instruments. The main provisions of ASU 2016‑13 include (1) replacing the “incurred cost” approach under GAAP with an “expected loss” model for instruments measured at amortized cost, (2) requiring entities to record an allowance for credit losses related to available‑for‑sale debt securities rather than a direct write‑down of the carrying amount of the investments, as is required by the other‑than‑temporary impairment model under current GAAP, and (3) a simplified accounting model for purchase credit‑impaired debt securities and loans. For public business entities that are U.S. Securities and Exchange Commission filers, ASU 2016‑13 is effective for interim and annual reporting periods beginning after December 15, 2019. For all other public business entities ASU 2016‑13 is effective for interim and annual reporting periods beginning after December 15, 2020. As an emerging growth company, ASU 2016‑13 is effective for interim and annual reporting periods beginning after December 15, 2021, although early adoption is permitted. The Company is currently evaluating the potential impact of ASU 2016‑13 on its consolidated financial statements. On July 17, 2019, the FASB voted to issue a proposal for public comment that would potentially result in a postponement of the required implementation date for ASU 2016‑13, and on October 16, 2019, the FASB approved delaying the implementation of this ASU for private companies and smaller reporting companies until 2023. As an emerging growth company, the Company can take advantage of this delay. Management will continue to monitor any new developments regarding this possible delay. In August 2018, the FASB issued ASU No. 2018‑13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This ASU eliminates, adds, and modifies certain disclosure requirements for estimated fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfer between Level 1 and Level 2 of the estimated fair value hierarchy, but will be required to disclose the range and weighted-average used to develop significant unobservable inputs for Level 3 estimated fair value measurements. ASU 2018‑13 is effective for all entities interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted. Entities are also allowed to elect for early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date. The revised disclosure requirements will not have a material impact on the Company’s consolidated financial statements. In April 2019, the FASB issued ASU 2019‑04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. This update is not expected to have a significant impact on the Company’s consolidated financial statements. In May 2019, the FASB issued ASU 2019‑05, Targeted Transition Relief to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible instruments. As an emerging growth company, these ASUs are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. This update is not expected to have a significant impact on the Company’s consolidated financial statements. |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Investment Securities | |
Schedule of amortized cost of investment securities to estimated fair values | September 30, 2019 Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value U.S. Treasury and agencies $ 21,607 $ 29 $ (34) $ 21,602 Obligations of state and political agencies 47,227 703 (74) 47,856 Mortgage backed securities Residential agency 165,995 3,467 (125) 169,337 Commercial 32,546 139 (33) 32,652 Asset backed securities 152 5 — 157 Corporate bonds 7,069 43 — 7,112 Total available-for-sale investment securities $ 274,596 $ 4,386 $ (266) $ 278,716 December 31, 2018 Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value U.S. Treasury and agencies $ 19,364 $ — $ (222) $ 19,142 Obligations of state and political agencies 67,662 171 (1,446) 66,387 Mortgage backed securities Residential agency 129,906 210 (3,118) 126,998 Commercial 29,050 20 (303) 28,767 Asset backed securities 398 5 (4) 399 Corporate bonds 8,602 — (121) 8,481 Total available-for-sale investment securities $ 254,982 $ 406 $ (5,214) $ 250,174 |
Schedule of investment securities with gross unrealized losses | September 30, 2019 Less than 12 Months Over 12 Months Total Unrealized Fair Unrealized Fair Unrealized Fair (dollars in thousands) Losses Value Losses Value Losses Value U.S. Treasury and agencies $ (3) $ 1,757 $ (31) $ 9,969 $ (34) $ 11,726 Obligations of state and political agencies (23) 5,965 (51) 5,999 (74) 11,964 Mortgage backed securities Residential agency (44) 10,020 (81) 17,138 (125) 27,158 Commercial (18) 9,215 (15) 3,126 (33) 12,341 Asset backed securities — 2 — — — 2 Corporate bonds — — — — — — Total available-for-sale investment securities $ (88) $ 26,959 $ (178) $ 36,232 $ (266) $ 63,191 December 31, 2018 Less than 12 Months Over 12 Months Total Unrealized Fair Unrealized Fair Unrealized Fair (dollars in thousands) Losses Value Losses Value Losses Value U.S. Treasury and agencies $ (8) $ 5,288 $ (214) $ 11,598 $ (222) $ 16,886 Obligations of state and political agencies — 389 (1,446) 55,770 (1,446) 56,159 Mortgage backed securities Residential agency (44) 7,352 (3,074) 112,293 (3,118) 119,645 Commercial (39) 7,844 (264) 9,741 (303) 17,585 Asset backed securities — 2 (4) 155 (4) 157 Corporate bonds — — (121) 8,481 (121) 8,481 Total available-for-sale investment securities $ (91) $ 20,875 $ (5,123) $ 198,038 $ (5,214) $ 218,913 |
Schedule of contractual maturity of amortized cost and estimated fair value | Amortized Fair (dollars in thousands) Cost Value Due within one year or less $ 3,016 $ 3,026 Due after one year through five years 35,948 35,989 Due after five years through ten years 78,983 80,405 Due after 10 years 156,649 159,296 Total available-for-sale investment securities $ 274,596 $ 278,716 |
Schedule of proceeds from the sale of available for sale securities | Three months ended Nine months ended September 30, September 30, (dollars in thousands) 2019 2018 2019 2018 Proceeds $ 10,934 $ 2,021 $ 32,565 $ 2,466 Realized gains 59 — 357 105 Realized losses 11 — 22 5 |
Schedule of federal home loan bank | September 30, December 31, (dollars in thousands) 2019 2018 Federal Reserve $ 2,675 $ 2,675 FHLB 3,121 6,875 |
Loans and Allowance for Loan _2
Loans and Allowance for Loan Losses (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Loans and Allowance for Loan Losses | |
Schedule of total loans outstanding by portfolio segment | September 30, December 31, (dollars in thousands) 2019 2018 Commercial Commercial and industrial $ 485,183 $ 510,706 Real estate construction 21,674 18,965 Commercial real estate 444,600 439,963 Total commercial 951,457 969,634 Consumer Residential real estate first mortgage 459,763 448,143 Residential real estate junior lien 182,516 188,855 Other revolving and installment 92,351 95,218 Total consumer 734,630 732,216 Total loans $ 1,686,087 $ 1,701,850 |
Schedule of past due aging analysis of the loan portfolio | September 30, 2019 90 Days Accruing 30 - 89 Days or More Total (dollars in thousands) Current Past Due Past Due Nonperforming Loans Commercial Commercial and industrial $ 481,480 $ 1,561 $ 45 $ 2,097 $ 485,183 Real estate construction 21,224 450 — — 21,674 Commercial real estate 443,129 — — 1,471 444,600 Total commercial 945,833 2,011 45 3,568 951,457 Consumer Residential real estate first mortgage 456,981 2,105 — 677 459,763 Residential real estate junior lien 181,646 14 — 856 182,516 Other revolving and installment 92,176 169 — 6 92,351 Total consumer 730,803 2,288 — 1,539 734,630 Total loans $ 1,676,636 $ 4,299 $ 45 $ 5,107 $ 1,686,087 December 31, 2018 90 Days Accruing 30 - 89 Days or More Total (dollars in thousands) Current Past Due Past Due Nonperforming Loans Commercial Commercial and industrial $ 504,313 $ 2,815 $ — $ 3,578 $ 510,706 Real estate construction 18,965 — — — 18,965 Commercial real estate 438,446 — — 1,517 439,963 Total commercial 961,724 2,815 — 5,095 969,634 Consumer Residential real estate first mortgage 444,470 2,411 — 1,262 448,143 Residential real estate junior lien 187,502 769 — 584 188,855 Other revolving and installment 94,615 581 — 22 95,218 Total consumer 726,587 3,761 — 1,868 732,216 Total loans $ 1,688,311 $ 6,576 $ — $ 6,963 $ 1,701,850 T |
Schedule of loans outstanding, by portfolio segment and risk category | September 30, 2019 Criticized Special (dollars in thousands) Pass Mention Substandard Doubtful Total Commercial Commercial and industrial $ 453,707 $ 10,439 $ 20,781 $ 256 $ 485,183 Real estate construction 20,396 284 994 — 21,674 Commercial real estate 420,060 673 23,867 — 444,600 Total commercial $ 894,163 $ 11,396 $ 45,642 $ 256 $ 951,457 Consumer Residential real estate first mortgage 459,086 — 677 — 459,763 Residential real estate junior lien 180,344 — 2,172 — 182,516 Other revolving and installment 92,345 — 6 — 92,351 Total consumer 731,775 — 2,855 — 734,630 Total loans $ 1,625,938 $ 11,396 $ 48,497 $ 256 $ 1,686,087 December 31, 2018 Criticized Special (dollars in thousands) Pass Mention Substandard Doubtful Total Commercial Commercial and industrial $ 459,565 $ 12,055 $ 37,523 $ 1,563 $ 510,706 Real estate construction 17,910 — 1,055 — 18,965 Commercial real estate 407,178 6,304 26,481 — 439,963 Total commercial $ 884,653 $ 18,359 $ 65,059 $ 1,563 $ 969,634 Consumer Residential real estate first mortgage 448,124 — 19 — 448,143 Residential real estate junior lien 186,370 — 2,485 — 188,855 Other revolving and installment 95,218 — — — 95,218 Total consumer 729,712 — 2,504 — 732,216 Total loans $ 1,614,365 $ 18,359 $ 67,563 $ 1,563 $ 1,701,850 |
Summary of changes in allowances | Three months ended September 30, 2019 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 11,694 $ (962) $ (324) $ 538 $ 10,946 Real estate construction 323 25 — — 348 Commercial real estate 5,765 (4) — — 5,761 Total commercial 17,782 (941) (324) 538 17,055 Consumer Residential real estate first mortgage 1,155 (139) — — 1,016 Residential real estate junior lien 710 157 (20) 49 896 Other revolving and installment 380 1 (31) 28 378 Total consumer 2,245 19 (51) 77 2,290 Unallocated 1,219 2,420 — — 3,639 Total $ 21,246 $ 1,498 $ (375) $ 615 $ 22,984 Nine months ended September 30, 2019 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 12,127 $ 3,263 $ (5,275) $ 831 $ 10,946 Real estate construction 250 97 (1) 2 348 Commercial real estate 6,279 (668) — 150 5,761 Total commercial 18,656 2,692 (5,276) 983 17,055 Consumer Residential real estate first mortgage 1,156 (140) — — 1,016 Residential real estate junior lien 805 113 (154) 132 896 Other revolving and installment 380 388 (513) 123 378 Total consumer 2,341 361 (667) 255 2,290 Unallocated 1,177 2,462 — — 3,639 Total $ 22,174 $ 5,515 $ (5,943) $ 1,238 $ 22,984 Three months ended September 30, 2018 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 10,024 $ 1,452 $ (424) $ 126 $ 11,178 Real estate construction 395 (109) — — 286 Commercial real estate 6,478 (72) — 20 6,426 Total commercial 16,897 1,271 (424) 146 17,890 Consumer Residential real estate first mortgage 1,486 (142) — — 1,344 Residential real estate junior lien 830 20 (47) 11 814 Other revolving and installment 483 31 (99) 26 441 Total consumer 2,799 (91) (146) 37 2,599 Unallocated 173 350 — — 523 Total $ 19,869 $ 1,530 $ (570) $ 183 $ 21,012 Nine months ended September 30, 2018 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 7,589 $ 6,158 $ (3,078) $ 509 $ 11,178 Real estate construction 343 1 (60) 2 286 Commercial real estate 4,909 1,458 — 59 6,426 Total commercial 12,841 7,617 (3,138) 570 17,890 Consumer Residential real estate first mortgage 1,411 (38) (29) — 1,344 Residential real estate junior lien 902 (145) (133) 190 814 Other revolving and installment 499 34 (236) 144 441 Total consumer 2,812 (149) (398) 334 2,599 Unallocated 911 (388) — — 523 Total $ 16,564 $ 7,080 $ (3,536) $ 904 $ 21,012 |
Schedule of loans distributed by portfolio segment and impairment methodology | September 30, 2019 Recorded Investment Allowance for Loan Losses Individually Collectively Individually Collectively (dollars in thousands) Evaluated Evaluated Total Evaluated Evaluated Unallocated Total Commercial Commercial and industrial $ 2,513 $ 482,670 $ 485,183 $ 1,429 $ 9,517 $ — $ 10,946 Real estate construction — 21,674 21,674 — 348 — 348 Commercial real estate 1,480 443,120 444,600 352 5,409 — 5,761 Total commercial 3,993 947,464 951,457 1,781 15,274 — 17,055 Consumer Residential real estate first mortgage 355 459,408 459,763 — 1,016 — 1,016 Residential real estate junior lien 804 181,712 182,516 324 572 — 896 Other revolving and installment 5 92,346 92,351 2 376 — 378 Total consumer 1,164 733,466 734,630 326 1,964 — 2,290 Total loans $ 5,157 $ 1,680,930 $ 1,686,087 $ 2,107 $ 17,238 $ 3,639 $ 22,984 December 31, 2018 Recorded Investment Allowance for Loan Losses Individually Collectively Individually Collectively (dollars in thousands) Evaluated Evaluated Total Evaluated Evaluated Unallocated Total Commercial Commercial and industrial $ 3,945 $ 506,761 $ 510,706 $ 2,059 $ 10,068 $ — $ 12,127 Real estate construction — 18,965 18,965 — 250 — 250 Commercial real estate 1,684 438,279 439,963 455 5,824 — 6,279 Total commercial 5,629 964,005 969,634 2,514 16,142 — 18,656 Consumer Residential real estate first mortgage 352 447,791 448,143 — 1,156 — 1,156 Residential real estate junior lien 559 188,296 188,855 4 801 — 805 Other revolving and installment 20 95,198 95,218 20 360 — 380 Total consumer 931 731,285 732,216 24 2,317 — 2,341 Total loans $ 6,560 $ 1,695,290 $ 1,701,850 $ 2,538 $ 18,459 $ 1,177 $ 22,174 |
Schedule of impaired loans | September 30, 2019 December 31, 2018 Recorded Unpaid Related Recorded Unpaid Related (dollars in thousands) Investment Principal Allowance Investment Principal Allowance Impaired loans with a valuation allowance Commercial and industrial $ 1,757 $ 1,900 $ 1,429 $ 2,660 $ 2,752 $ 2,059 Commercial real estate 1,480 1,595 352 1,499 1,517 455 Residential real estate first mortgage — — — — — — Residential real estate junior lien 536 619 324 4 4 4 Other revolving and installment 4 4 2 19 20 20 Total impaired loans with a valuation allowance 3,777 4,118 2,107 4,182 4,293 2,538 Impaired loans without a valuation allowance Commercial and industrial 756 1,077 — 1,285 1,422 — Commercial real estate — — — 185 218 — Residential real estate first mortgage 355 367 — 352 504 — Residential real estate junior lien 268 290 — 555 697 — Other revolving and installment 1 1 — 1 2 — Total impaired loans without a valuation allowance 1,380 1,735 — 2,378 2,843 — Total impaired loans Commercial and industrial 2,513 2,977 1,429 3,945 4,174 2,059 Commercial real estate 1,480 1,595 352 1,684 1,735 455 Residential real estate first mortgage 355 367 — 352 504 — Residential real estate junior lien 804 909 324 559 701 4 Other revolving and installment 5 5 2 20 22 20 Total impaired loans $ 5,157 $ 5,853 $ 2,107 $ 6,560 $ 7,136 $ 2,538 The table below presents the average recorded investment in impaired loans and interest income for the three and nine months ended September 30, 2019 and 2018: Three months ended September 30, 2019 2018 Average Average Recorded Interest Recorded Interest (dollars in thousands) Investment Income Investment Income Impaired loans with a valuation allowance Commercial and industrial $ 1,964 $ 4 $ 1,961 $ 9 Commercial real estate 1,623 2 1,767 2 Residential real estate first mortgage — — — — Residential real estate junior lien 619 1 63 1 Other revolving and installment 5 — 39 — Total impaired loans with a valuation allowance 4,211 7 3,830 12 Impaired loans without a valuation allowance Commercial and industrial 1,206 7 1,073 — Commercial real estate — — 842 — Residential real estate first mortgage 183 — 525 — Residential real estate junior lien 297 — 394 — Other revolving and installment 2 — 3 — Total impaired loans without a valuation allowance 1,688 7 2,837 — Total impaired loans Commercial and industrial 3,170 11 3,034 9 Commercial real estate 1,623 2 2,609 2 Residential real estate first mortgage 183 — 525 — Residential real estate junior lien 916 1 457 1 Other revolving and installment 7 — 42 — Total impaired loans $ 5,899 $ 14 $ 6,667 $ 12 Nine Months Ended September 30, 2019 2018 Average Average Recorded Interest Recorded Interest (dollars in thousands) Investment Income Investment Income Impaired loans with a valuation allowance Commercial and industrial $ 2,473 $ 12 $ 2,026 $ 27 Commercial real estate 1,668 6 1,793 7 Residential real estate first mortgage — — — — Residential real estate junior lien 621 3 63 2 Other revolving and installment 5 — 43 — Total impaired loans with a valuation allowance 4,767 21 3,925 36 Impaired loans without a valuation allowance Commercial and industrial 2,979 23 1,130 — Commercial real estate — — 747 — Residential real estate first mortgage 92 — 539 — Residential real estate junior lien 302 — 403 1 Other revolving and installment 4 — 3 — Total impaired loans without a valuation allowance 3,377 23 2,822 1 Total impaired loans Commercial and industrial 5,452 35 3,156 27 Commercial real estate 1,668 6 2,540 7 Residential real estate first mortgage 92 — 539 — Residential real estate junior lien 923 3 466 3 Other revolving and installment 9 — 46 — Total impaired loans $ 8,144 $ 44 $ 6,747 $ 37 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Other Intangible Assets | |
Schedule of goodwill by segment | The following table summarizes the carrying amount of goodwill, by segment, as of September 30, 2019 and December 31, 2018: (dollars in thousands) Goodwill Banking $ 20,131 Retirement and benefit services 7,198 Total goodwill $ 27,329 |
Schedule of identifiable intangible assets | September 30, 2019 December 31, 2018 (dollars in thousands) Gross Carrying Amount Accumulated Amortization Total Gross Carrying Amount Accumulated Amortization Total Identifiable customer intangibles $ 55,744 $ (37,374) $ 18,370 $ 55,744 $ (34,972) $ 20,772 Core deposit intangible assets 7,216 (6,204) 1,012 7,216 (5,515) 1,701 Total intangible assets $ 62,960 $ (43,578) $ 19,382 $ 62,960 $ (40,487) $ 22,473 |
Loan Servicing (Tables)
Loan Servicing (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Loan Servicing | |
Summary of activity related to loan servicing | Three months ended Nine months ended September 30, September 30, (dollars in thousands) 2019 2018 2019 2018 Balance, beginning of period $ 4,300 $ 4,676 $ 4,623 $ 4,686 Additions 179 152 279 431 Amortization (287) (165) (690) (512) (Impairment)/Recovery (46) 8 (66) 66 Balance, end of period $ 4,146 $ 4,671 $ 4,146 $ 4,671 |
Summary of key economic assumptions | September 30, December 31, (dollars in thousands) 2019 2018 Fair value of servicing rights $ 4,146 $ 4,623 Weighted-average remaining term, years 20.5 20.8 Prepayment speeds 11.6 % 7.8 % Discount rate 9.5 % 10.5 % |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Schedule of right-of-use assets and lease liabilities | September 30, (dollars in thousands) 2019 Lease Right-of-Use Assets Classification Operating lease right-of-use assets Operating lease right-of-use assets $ 8,877 Finance lease right-of-use assets Land, premises and equipment, net 347 Total lease right-of-use assets $ 9,224 Lease Liabilities Operating lease liabilities Operating lease liabilities $ 9,401 Finance lease liabilities Long-term debt 690 Total lease liabilities $ 10,091 |
Schedule of weighted average remaining lease term and average discount rate | September 30, 2019 Weighted-average remaining lease term, years Operating leases 6.5 Finance leases 3.1 Weighted-average discount rate Operating leases 3.2 % Finance leases 7.8 % |
Schedule of lease costs and other lease information | Three months ended Nine months ended (dollars in thousands) September 30, 2019 September 30, 2019 Lease costs Operating lease cost $ 602 $ 1,772 Variable lease cost 222 633 Short-term lease cost 122 416 Finance lease cost Interest on lease liabilities 14 45 Amortization of right-of-use assets 29 87 Sublease income (65) (202) Net lease cost $ 924 $ 2,751 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 600 1,774 Right-of-use assets obtained in exchange for new operating lease liabilities — — Right-of-use assets obtained in exchange for new finance lease liabilities — — |
Schedule of future minimum payments for finance leases | Future minimum payments for finance and operating leases with initial or remaining terms of one year or more as of September 30, 2019 were as follows: September 30, 2019 Finance Operating (dollars in thousands) Leases Leases 2020 $ 251 $ 2,291 2021 251 1,676 2022 251 1,579 2023 20 1,506 2024 — 1,061 Thereafter — 2,460 Total future minimum lease payments $ 773 $ 10,573 Amounts representing interest (83) (1,172) Total operating lease liabilities $ 690 $ 9,401 |
Schedule of future minimum payments for operating leases | September 30, 2019 Finance Operating (dollars in thousands) Leases Leases 2020 $ 251 $ 2,291 2021 251 1,676 2022 251 1,579 2023 20 1,506 2024 — 1,061 Thereafter — 2,460 Total future minimum lease payments $ 773 $ 10,573 Amounts representing interest (83) (1,172) Total operating lease liabilities $ 690 $ 9,401 |
Deposits (Tables)
Deposits (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Deposits. | |
Schedule of components of deposits | September 30, December 31, (dollars in thousands) 2019 2018 Noninterest-bearing demand $ 537,951 $ 550,640 Interest-bearing Interest-bearing demand 424,249 401,078 Savings accounts 55,513 53,971 Money market savings 622,647 598,820 Time deposits 192,753 170,587 Total interest-bearing 1,295,162 1,224,456 Total deposits $ 1,833,113 $ 1,775,096 |
Short-Term Borrowings (Tables)
Short-Term Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Short-Term Borrowings | |
Schedule of short-term borrowings | Three months ended September 30, (dollars in thousands) 2019 2018 Fed funds purchased Balance as of end of period $ — $ 73,930 Average daily balance 61,386 103,171 Maximum month-end balance 124,250 94,410 Weighted-average rate During period 2.40 % 2.21 % End of period 2.30 % 2.30 % FHLB Short-term advances Balance as of end of period $ — $ — Average daily balance 25,815 — Maximum month-end balance — — Weighted-average rate During period 2.58 % — % End of period — % — % Nine months ended September 30, (dollars in thousands) 2019 2018 Fed funds purchased Balance as of end of period $ — $ 73,930 Average daily balance 82,504 87,391 Maximum month-end balance 139,605 112,260 Weighted-average rate During period 2.54 % 0.36 % End of period 2.30 % 2.30 % FHLB Short-term advances Balance as of end of period $ — $ — Average daily balance 12,985 110 Maximum month-end balance 135,000 — Weighted-average rate During period 2.44 % 2.43 % End of period — % — % |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt. | |
Schedule of long-term debt | September 30, 2019 Period End Face Carrying Interest Maturity (dollars in thousands) Value Value Interest Rate Rate Date Call Date Subordinated notes payable $ 50,000 $ 49,609 Fixed 5.75 % 12/30/2025 12/30/2020 Junior subordinated debenture (Trust I) 4,000 3,390 Three-month LIBOR + 3.10% 5.21 % 6/26/2033 6/26/2008 Junior subordinated debenture (Trust II) 6,000 5,086 Three-month LIBOR + 1.80% 3.92 % 9/15/2036 9/15/2011 Finance lease liability 2,700 690 Fixed 7.81 % 10/31/2022 N/A Total long-term debt $ 62,700 $ 58,775 December 31, 2018 Period End Face Carrying Interest Maturity (dollars in thousands) Value Value Interest Rate Rate Date Call Date Subordinated notes payable $ 50,000 $ 49,562 Fixed 5.75 % 12/30/2025 12/30/2020 Junior subordinated debenture (Trust I) 4,000 3,357 Three-month LIBOR + 3.10% 5.92 % 6/26/2033 6/26/2008 Junior subordinated debenture (Trust II) 6,000 5,035 Three-month LIBOR + 1.80% 4.59 % 9/15/2036 9/15/2011 Obligations under capital lease 2,700 870 Fixed 7.81 % 10/31/2022 N/A Total long-term debt $ 62,700 $ 58,824 |
Financial Instruments with Of_2
Financial Instruments with Off-Balance Sheet Risk (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Financial Instruments with Off-Balance Sheet Risk | |
Schedule of financial instruments whose contract amount represents credit risk | September 30, December 31, (dollars in thousands) 2019 2018 Commitments to extend credit $ 570,220 $ 529,890 Standby letters of credit 8,023 8,852 Total $ 578,243 $ 538,742 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-Based Compensation | |
Schedule of stock plan activity | Nine months ended September 30, 2019 Nine months ended September 30, 2018 Weighted- Weighted- Average Grant Average Grant Awards Date Fair Value Awards Date Fair Value Restricted Stock Awards Outstanding at beginning of period 337,014 $ 18.36 336,397 $ 15.38 Granted 70,617 19.87 76,031 22.67 Vested (53,882) 18.69 (76,753) 10.56 Forfeited or cancelled (6,138) 17.34 — — Outstanding at end of period 347,611 $ 18.64 335,675 $ 18.13 |
Noninterest Income (Tables)
Noninterest Income (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Noninterest Income. | |
Schedule of Noninterest Income | Three months ended Nine months ended September 30, September 30, (dollars in thousands) 2019 2018 2019 2018 Retirement and benefits $ 15,307 $ 15,536 $ 46,142 $ 46,873 Wealth management 3,896 3,685 11,385 10,948 Mortgage banking (1) 8,135 5,318 19,739 13,551 Service charges on deposit accounts 447 442 1,321 1,333 Net gains (losses) on investment securities (1) 48 13 357 119 Other Interchange fees 506 509 1,480 1,519 Bank-owned life insurance income (1) 205 202 601 602 Misc. transactional fees 312 272 881 784 Other noninterest income 724 281 2,732 879 Total noninterest income $ 29,580 $ 26,258 $ 84,638 $ 76,608 (1) Not within scope of ASC 606. |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes | |
Schedule of components of income tax expense (benefit) | Three months ended September 30, 2019 2018 Percent of Percent of (dollars in thousands) Amount Pretax Income Amount Pretax Income Taxes at statutory federal income tax rate $ 1,982 21.0 % $ 1,957 21.0 % Tax effect of: Tax exempt income (107) (1.1) (132) (1.4) Other 457 4.8 126 1.3 Applicable income taxes $ 2,332 24.7 % $ 1,951 20.9 % Nine months ended September 30, 2019 2018 Percent of Percent of (dollars in thousands) Amount Pretax Income Amount Pretax Income Taxes at statutory federal income tax rate $ 6,114 21.0 % $ 5,268 21.0 % Tax effect of: Tax exempt income (329) (1.1) (402) (1.6) Other 1,440 4.9 386 1.5 Applicable income taxes $ 7,225 24.8 % $ 5,252 20.9 % |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting | |
Schedule of key metrics related to segments | Three months ended September 30, 2019 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 19,193 $ — $ — $ 384 $ (896) $ 18,681 Provision for loan losses 1,498 — — — — 1,498 Noninterest income 1,695 15,307 3,896 8,135 547 29,580 Noninterest expense 10,800 8,551 1,835 7,256 8,885 37,327 Net income before taxes $ 8,590 $ 6,756 $ 2,061 $ 1,263 $ (9,234) $ 9,436 Nine months ended September 30, 2019 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 57,987 $ — $ — $ 818 $ (2,713) $ 56,092 Provision for loan losses 5,515 — — — — 5,515 Noninterest income 5,273 46,142 11,385 19,739 2,099 84,638 Noninterest expense 30,880 26,142 5,936 17,184 25,960 106,102 Net income before taxes $ 26,865 $ 20,000 $ 5,449 $ 3,373 $ (26,574) $ 29,113 Three months ended September 30, 2018 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 19,568 $ — $ 17 $ 248 $ (904) $ 18,929 Provision for loan losses 1,521 — — 9 — 1,530 Noninterest income 1,710 15,536 3,685 5,318 9 26,258 Noninterest expense 10,042 8,948 1,709 5,319 8,318 34,336 Net income before taxes $ 9,715 $ 6,588 $ 1,993 $ 238 $ (9,213) $ 9,321 Nine months ended September 30, 2018 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 57,960 $ — $ 47 $ 653 $ (2,689) $ 55,971 Provision for loan losses 7,071 — — 9 — 7,080 Noninterest income 5,159 46,873 10,948 13,551 77 76,608 Noninterest expense 29,416 27,338 5,702 14,273 23,685 100,414 Net income before taxes $ 26,632 $ 19,535 $ 5,293 $ (78) $ (26,297) $ 25,085 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share | |
Schedule of basic and diluted earnings per share | The calculation of basic and diluted earnings per share using the two-class method for the three and nine months ending September 30, 2019 is presented below: Three months ended Nine months ended September 30, September 30, (dollars and shares in thousands, except per share data) 2019 2019 Net income $ 7,104 $ 21,888 Dividends and undistributed earnings allocated to participating securities 154 514 Net income available to common shareholders $ 6,950 $ 21,374 Weighted-average common shares outstanding for basic earnings per share 14,274 13,957 Dilutive effect of stock-based awards 352 360 Weighted-average common shares outstanding for diluted earnings per share 14,626 14,317 Earnings per common share: Basic earnings per common share $ 0.49 $ 1.53 Diluted earnings per common share $ 0.48 $ 1.49 For the three and nine months ended September 30, 2018, the basic and diluted earnings per share were calculated using the treasury stock method, as presented in the table below. The Company determined that the impact to diluted earnings per share would be immaterial if calculated under the two-class method for the three and nine months ended September 30, 2018. The calculation of basic and diluted earnings per share using the treasury stock method for the three and nine months ending September 30, 2018 is presented below: Three months ended Nine months ended September 30, September 30, (dollars and shares in thousands, except per share data) 2018 2018 Basic: Net income attributable to common shareholders $ 7,370 $ 19,833 Weighted-average common shares outstanding 13,777 13,759 Basic earnings per common share $ 0.53 $ 1.44 Diluted: Net income attributable to common shareholders 7,370 19,833 Weighted-average common shares outstanding 13,777 13,759 Add: Dilutive effect of stock-based awards 294 301 Weighted-average common shares outstanding for diluted EPS 14,071 14,060 Diluted earnings per common share $ 0.52 $ 1.41 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments | |
Schedule of amounts recorded in the Company’s consolidated balance sheets for derivatives not designated as hedging instruments | September 30, 2019 December 31, 2018 Fair Notional Fair Notional (dollars in thousands) Value Amount Value Amount Asset Derivatives Consolidated Balance Sheet Location Interest rate lock commitments Other assets $ 2,036 $ 89,608 $ 12 $ 33,858 Forward loan sales commitments Other assets 447 17,662 — — TBA mortgage backed securities Other assets — — — — Total asset derivatives $ 2,483 $ 107,270 $ 12 $ 33,858 Liability Derivatives Interest rate lock commitments Accrued expenses and other liabilities $ — $ — $ — $ — Forward loan sales commitments Accrued expenses and other liabilities — — 7 2,956 TBA mortgage backed securities Accrued expenses and other liabilities 104 148,500 — — Total liability derivatives $ 104 $ 148,500 $ 7 $ 2,956 |
Schedule of gain (loss) recognized on derivatives instruments | Gain/(loss) Three months ended Nine months ended September 30, September 30, September 30, September 30, (dollars in thousands) Consolidated Statements of Income Location 2019 2018 2019 2018 Interest rate lock commitments Mortgage banking $ (257) $ (29) $ 2,024 $ (11) Forward loan sales commitments Mortgage banking (199) 46 454 24 TBA mortgage backed securities Mortgage banking 680 — (104) — Total gain/(loss) from derivative instruments $ 224 $ 17 $ 2,374 $ 13 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Regulatory Matters | |
Schedule of Bank’s actual capital amounts and ratios | September 30, 2019 Minimum to be Requirements Well Capitalized for Capital Under Prompt Actual Adequacy Purposes Corrective Action (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk weighted assets Consolidated $ 233,030 12.38 % 84,705 4.50 % N/A N/A Bank 222,600 11.84 % 84,594 4.50 % 122,192 6.50 % Tier 1 capital to risk weighted assets . Consolidated 241,197 12.81 % 112,940 6.00 % N/A N/A Bank 222,600 11.84 % 112,792 6.00 % 150,390 8.00 % Total capital to risk weighted assets Consolidated 313,700 16.67 % 150,587 8.00 % N/A N/A Bank 245,585 13.06 % 150,390 8.00 % 187,987 10.00 % Tier 1 capital to average assets Consolidated 241,197 11.33 % 85,152 4.00 % N/A N/A Bank 222,600 10.47 % 85,009 4.00 % 106,261 5.00 % December 31, 2018 Minimum to be Requirements Well Capitalized for Capital Under Prompt Actual Adequacy Purposes Corrective Action (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk weighted assets Consolidated $ 151,745 8.43 % N/A N/A N/A N/A Bank 204,680 11.39 % 80,866 4.50 % 116,806 6.50 % Tier 1 capital to risk weighted assets Consolidated 159,774 8.87 % N/A N/A N/A N/A Bank 204,680 11.39 % 107,821 6.00 % 143,761 8.00 % Total capital to risk weighted assets Consolidated 231,510 12.86 % N/A N/A N/A N/A Bank 226,854 12.62 % 143,806 8.00 % 179,758 10.00 % Tier 1 capital to average assets Consolidated 159,774 7.51 % N/A N/A N/A N/A Bank 204,680 9.63 % 85,018 4.00 % 106,272 5.00 % |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value of Assets and Liabilities | |
Summary of balances of the assets and liabilities measured at estimated fair value on a recurring basis | September 30, 2019 (dollars in thousands) Level 1 Level 2 Level 3 Total Trading securities U.S. treasury and government agencies $ — $ — $ — $ — Available-for-sale and equity securities U.S. treasury and government agencies $ — $ 21,602 $ — $ 21,602 Obligations of state and political agencies — 47,856 — 47,856 Mortgage backed securities Residential agency — 169,337 — 169,337 Commercial — 32,652 — 32,652 Asset backed securities — 157 — 157 Corporate bonds — 7,112 — 7,112 Equity securities 2,675 — — 2,675 Total available-for-sale and equity securities $ 2,675 $ 278,716 $ — $ 281,391 Other assets Derivatives $ — $ 2,483 $ — $ 2,483 Other liabilities Derivatives $ — $ 104 $ — $ 104 December 31, 2018 (dollars in thousands) Level 1 Level 2 Level 3 Total Trading securities U.S. treasury and government agencies $ — $ 1,539 $ — $ 1,539 Available-for-sale and equity securities U.S. treasury and government agencies $ — $ 19,142 $ — $ 19,142 Obligations of state and political agencies — 66,387 — 66,387 Mortgage backed securities Residential agency — 126,998 — 126,998 Commercial — 28,767 — 28,767 Asset backed securities — 399 — 399 Corporate bonds — 8,481 — 8,481 Equity securities 3,165 — — 3,165 Total available-for-sale and equity securities $ 3,165 $ 250,174 $ — $ 253,339 Other assets Derivatives $ — $ 12 $ — $ 12 Other liabilities Derivatives $ — $ 7 $ — $ 7 |
Schedule of net impairment losses related to nonrecurring estimated fair value measurements of certain assets | September 30, 2019 (dollars in thousands) Level 2 Level 3 Total Impairment Loans held for sale $ 66,021 $ — $ 66,021 $ — Loans held for branch sale — — — — Impaired loans — 3,050 3,050 2,107 Foreclosed assets — 84 84 — Servicing rights — 4,146 4,146 — December 31, 2018 (dollars in thousands) Level 2 Level 3 Total Impairment Loans held for sale $ 14,486 $ — $ 14,486 $ — Loans held for branch sale — 32,031 32,031 — Impaired loans — 4,022 4,022 2,538 Foreclosed assets — 204 204 245 Servicing rights — 4,623 4,623 — |
Schedule of valuation techniques and significant unobservable inputs used to measure Level 3 estimated fair values | September 30, 2019 (dollars in thousands) Weighted Asset Type Valuation Technique Unobservable Input Fair Value Range Average Impaired loans Appraisal value Property specific adjustment 3,050 N/A N/A Foreclosed assets Appraisal value Property specific adjustment 84 N/A N/A Servicing rights Discounted cash flows Prepayment speed assumptions 4,146 154-270 194 Discount rate 9.5 % 9.5 % December 31, 2018 (dollars in thousands) Weighted Asset Type Valuation Technique Unobservable Input Fair Value Range Average Loans held for branch sale Discounted cash flows Sales agreement 32,031 N/A N/A Impaired loans Appraisal value Property specific adjustment 4,022 N/A N/A Foreclosed assets Appraisal value Property specific adjustment 204 N/A N/A Servicing rights Discounted cash flows Prepayment speed assumptions 4,623 104 - 211 130 Discount rate 10.5 % 10.5 % |
Summary of estimated fair values and related carrying or notional amounts, of the Company’s financial instruments | September 30, 2019 Carrying Estimated Fair Value (dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents $ 61,174 $ 61,174 $ — $ — $ 61,174 Loans 1,663,103 — — 1,658,151 1,658,151 Accrued interest receivable 7,412 7,412 — — 7,412 Bank-owned life insurance 31,364 — 31,364 — 31,364 Financial Liabilities Noninterest-bearing transaction $ 537,951 $ — $ 537,951 $ — $ 537,951 Interest-bearing transaction 1,102,409 — 1,102,409 — 1,102,409 Time deposits 192,753 — — 192,869 192,869 Short-term borrowings — — — — — Long-term debt 58,775 — 58,285 — 58,285 Accrued interest payable 1,879 1,879 — — 1,879 December 31, 2018 Carrying Estimated Fair Value (dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents $ 40,651 $ 40,651 $ — $ — $ 40,651 Loans 1,679,676 — — 1,663,401 1,663,401 Accrued interest receivable 7,645 7,645 — — 7,645 Bank-owned life insurance 30,763 — 30,763 — 30,763 Financial Liabilities Noninterest-bearing transaction $ 550,640 $ — $ 550,640 $ — $ 550,640 Interest-bearing transaction 1,053,869 — 1,053,869 — 1,053,869 Time deposits 170,587 — — 172,616 172,616 Deposits held for sale 24,197 — — 22,019 22,019 Short-term borrowings 93,460 93,460 — — 93,460 Long-term debt 58,824 — 59,988 — 59,988 Accrued interest payable 720 720 — — 720 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) $ in Thousands | Sep. 25, 2019USD ($) | Sep. 25, 2019shares | Sep. 17, 2019shares | Sep. 30, 2019USD ($)shares | Sep. 30, 2019USD ($)segmentshares |
Significant Accounting Policies | |||||
Number of Operating Segments | segment | 4 | ||||
Shares sold | shares | 3,289,000 | 3,289,000 | |||
Aggregate offering price | $ 69,100 | $ 62,804 | $ 62,804 | ||
Underwriting Discounts | 4,700 | ||||
Offering cost | 1,600 | ||||
Net proceeds | $ 62,800 | ||||
IPO | |||||
Significant Accounting Policies | |||||
Shares sold | shares | 2,860,000 | ||||
Underwriter | |||||
Significant Accounting Policies | |||||
Shares sold | shares | 429,000 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) | Jan. 01, 2019 |
Recent Accounting Pronouncements | |
Lease, Practical Expedients, Package [true false] | true |
Lease, Practical Expedient, Use of Hindsight [true false] | false |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Investment securities available-for-sale | ||
Amortized Cost | $ 274,596 | $ 254,982 |
Unrealized Gains | 4,386 | 406 |
Unrealized Losses | (266) | (5,214) |
Fair Value | 278,716 | 250,174 |
U.S. treasury and government agencies | ||
Investment securities available-for-sale | ||
Amortized Cost | 21,607 | 19,364 |
Unrealized Gains | 29 | |
Unrealized Losses | (34) | (222) |
Fair Value | 21,602 | 19,142 |
Obligations of state and political agencies | ||
Investment securities available-for-sale | ||
Amortized Cost | 47,227 | 67,662 |
Unrealized Gains | 703 | 171 |
Unrealized Losses | (74) | (1,446) |
Fair Value | 47,856 | 66,387 |
Mortgage backed securities - Residential Agency | ||
Investment securities available-for-sale | ||
Amortized Cost | 165,995 | 129,906 |
Unrealized Gains | 3,467 | 210 |
Unrealized Losses | (125) | (3,118) |
Fair Value | 169,337 | 126,998 |
Mortgage backed securities - Commercial | ||
Investment securities available-for-sale | ||
Amortized Cost | 32,546 | 29,050 |
Unrealized Gains | 139 | 20 |
Unrealized Losses | (33) | (303) |
Fair Value | 32,652 | 28,767 |
Asset backed securities | ||
Investment securities available-for-sale | ||
Amortized Cost | 152 | 398 |
Unrealized Gains | 5 | 5 |
Unrealized Losses | (4) | |
Fair Value | 157 | 399 |
Corporate bonds | ||
Investment securities available-for-sale | ||
Amortized Cost | 7,069 | 8,602 |
Unrealized Gains | 43 | |
Unrealized Losses | (121) | |
Fair Value | $ 7,112 | $ 8,481 |
Investment Securities - Gross u
Investment Securities - Gross unrealized losses (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | $ (88) | $ (91) |
Fair value less than 12 months | 26,959 | 20,875 |
Unrealized losses over 12 months | (178) | (5,123) |
Fair value over 12 months | 36,232 | 198,038 |
Total Unrealized losses | (266) | (5,214) |
Total Fair value | 63,191 | 218,913 |
U.S. treasury and government agencies | ||
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | (3) | (8) |
Fair value less than 12 months | 1,757 | 5,288 |
Unrealized losses over 12 months | (31) | (214) |
Fair value over 12 months | 9,969 | 11,598 |
Total Unrealized losses | (34) | (222) |
Total Fair value | 11,726 | 16,886 |
Obligations of state and political agencies | ||
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | (23) | |
Fair value less than 12 months | 5,965 | 389 |
Unrealized losses over 12 months | (51) | (1,446) |
Fair value over 12 months | 5,999 | 55,770 |
Total Unrealized losses | (74) | (1,446) |
Total Fair value | 11,964 | 56,159 |
Mortgage backed securities - Residential Agency | ||
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | (44) | (44) |
Fair value less than 12 months | 10,020 | 7,352 |
Unrealized losses over 12 months | (81) | (3,074) |
Fair value over 12 months | 17,138 | 112,293 |
Total Unrealized losses | (125) | (3,118) |
Total Fair value | 27,158 | 119,645 |
Mortgage backed securities - Commercial | ||
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | (18) | (39) |
Fair value less than 12 months | 9,215 | 7,844 |
Unrealized losses over 12 months | (15) | (264) |
Fair value over 12 months | 3,126 | 9,741 |
Total Unrealized losses | (33) | (303) |
Total Fair value | 12,341 | 17,585 |
Asset backed securities | ||
Investment securities available-for-sale | ||
Fair value less than 12 months | 2 | 2 |
Unrealized losses over 12 months | (4) | |
Fair value over 12 months | 155 | |
Total Unrealized losses | (4) | |
Total Fair value | $ 2 | 157 |
Corporate bonds | ||
Investment securities available-for-sale | ||
Unrealized losses over 12 months | (121) | |
Fair value over 12 months | 8,481 | |
Total Unrealized losses | (121) | |
Total Fair value | $ 8,481 |
Investment Securities - Amortiz
Investment Securities - Amortized cost and estimated fair value (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Amortized Cost | |
Due within one year or less | $ 3,016 |
Due after one year through five years | 35,948 |
Due after five years through ten years | 78,983 |
Due after 10 years | 156,649 |
Total investment securities available-for-sale | 274,596 |
Fair Value | |
Due within one year or less | 3,026 |
Due after one year through five years | 35,989 |
Due after five years through ten years | 80,405 |
Due after 10 years | 159,296 |
Total investment securities available-for-sale | $ 278,716 |
Investment Securities - Pledged
Investment Securities - Pledged (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Investment Securities | ||
Investment securities with carrying value | $ 141.1 | $ 149 |
Investment Securities - Proceed
Investment Securities - Proceeds from sale of available for sale securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Investment Securities | ||||
Proceeds | $ 10,934 | $ 2,021 | $ 32,565 | $ 2,466 |
Realized gains | 59 | 357 | 105 | |
Realized losses | $ 11 | $ 22 | $ 5 |
Investment Securities - Carryin
Investment Securities - Carrying value (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Investment Securities | ||
Federal Reserve | $ 2,675 | $ 2,675 |
FHLB | $ 3,121 | $ 6,875 |
Investment Securities - Visa Cl
Investment Securities - Visa Class B Restricted Shares (Details) - Visa $ in Thousands | 9 Months Ended | |
Sep. 30, 2019USD ($)shares | Dec. 31, 2018USD ($) | |
Common Class A | ||
Securities | ||
Investment shares owned, if converted | 11,285 | |
Common Class B | ||
Securities | ||
Conversion ratio | 1.6298 | |
Investment shares owned | 6,924 | |
Cost basis | $ | $ 0 | $ 0 |
Loans and Allowance for Loan _3
Loans and Allowance for Loan Losses - Loans outstanding by portfolio segment (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Loans and Allowance for Loan Losses | ||
Total loans | $ 1,686,087 | $ 1,701,850 |
Deferred loan fees and costs | 1,100 | 1,700 |
Pledged | ||
Loans and Allowance for Loan Losses | ||
Total loans | 1,100,000 | 1,100,000 |
Commercial | ||
Loans and Allowance for Loan Losses | ||
Total loans | 951,457 | 969,634 |
Consumer | ||
Loans and Allowance for Loan Losses | ||
Total loans | 734,630 | 732,216 |
Commercial and industrial | Commercial | ||
Loans and Allowance for Loan Losses | ||
Total loans | 485,183 | 510,706 |
Real estate construction | Commercial | ||
Loans and Allowance for Loan Losses | ||
Total loans | 21,674 | 18,965 |
Residential | Consumer | Real estate first mortgage | ||
Loans and Allowance for Loan Losses | ||
Total loans | 459,763 | 448,143 |
Residential | Consumer | Real estate junior lien | ||
Loans and Allowance for Loan Losses | ||
Total loans | 182,516 | 188,855 |
Commercial real estate | Commercial | ||
Loans and Allowance for Loan Losses | ||
Total loans | 444,600 | 439,963 |
Other revolving and installment | Consumer | ||
Loans and Allowance for Loan Losses | ||
Total loans | $ 92,351 | $ 95,218 |
Loans and Allowance for Loan _4
Loans and Allowance for Loan Losses - Past due aging analysis (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Past due aging analysis of loans | ||
Loans and Leases Receivable, Gross, Total | $ 1,686,087 | $ 1,701,850 |
Performing | ||
Past due aging analysis of loans | ||
Accruing Current | 1,676,636 | 1,688,311 |
Nonperforming | ||
Past due aging analysis of loans | ||
Nonperforming | 5,107 | 6,963 |
30 - 89 Days Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 4,299 | 6,576 |
90 Days or More Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 45 | |
Commercial | ||
Past due aging analysis of loans | ||
Loans and Leases Receivable, Gross, Total | 951,457 | 969,634 |
Commercial | Performing | ||
Past due aging analysis of loans | ||
Accruing Current | 945,833 | 961,724 |
Commercial | Nonperforming | ||
Past due aging analysis of loans | ||
Nonperforming | 3,568 | 5,095 |
Commercial | 30 - 89 Days Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 2,011 | 2,815 |
Commercial | 90 Days or More Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 45 | |
Commercial | Commercial and industrial | ||
Past due aging analysis of loans | ||
Loans and Leases Receivable, Gross, Total | 485,183 | 510,706 |
Commercial | Commercial and industrial | Performing | ||
Past due aging analysis of loans | ||
Accruing Current | 481,480 | 504,313 |
Commercial | Commercial and industrial | Nonperforming | ||
Past due aging analysis of loans | ||
Nonperforming | 2,097 | 3,578 |
Commercial | Commercial and industrial | 30 - 89 Days Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 1,561 | 2,815 |
Commercial | Commercial and industrial | 90 Days or More Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 45 | |
Commercial | Real estate construction | ||
Past due aging analysis of loans | ||
Loans and Leases Receivable, Gross, Total | 21,674 | 18,965 |
Commercial | Real estate construction | Performing | ||
Past due aging analysis of loans | ||
Accruing Current | 21,224 | 18,965 |
Commercial | Real estate construction | 30 - 89 Days Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 450 | |
Commercial | Commercial real estate | ||
Past due aging analysis of loans | ||
Loans and Leases Receivable, Gross, Total | 444,600 | 439,963 |
Commercial | Commercial real estate | Performing | ||
Past due aging analysis of loans | ||
Accruing Current | 443,129 | 438,446 |
Commercial | Commercial real estate | Nonperforming | ||
Past due aging analysis of loans | ||
Nonperforming | 1,471 | 1,517 |
Consumer | ||
Past due aging analysis of loans | ||
Loans and Leases Receivable, Gross, Total | 734,630 | 732,216 |
Consumer | Performing | ||
Past due aging analysis of loans | ||
Accruing Current | 730,803 | 726,587 |
Consumer | Nonperforming | ||
Past due aging analysis of loans | ||
Nonperforming | 1,539 | 1,868 |
Consumer | 30 - 89 Days Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 2,288 | 3,761 |
Consumer | Residential | Real estate first mortgage | ||
Past due aging analysis of loans | ||
Loans and Leases Receivable, Gross, Total | 459,763 | 448,143 |
Consumer | Residential | Real estate first mortgage | Performing | ||
Past due aging analysis of loans | ||
Accruing Current | 456,981 | 444,470 |
Consumer | Residential | Real estate first mortgage | Nonperforming | ||
Past due aging analysis of loans | ||
Nonperforming | 677 | 1,262 |
Consumer | Residential | Real estate first mortgage | 30 - 89 Days Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 2,105 | 2,411 |
Consumer | Residential | Real estate junior lien | ||
Past due aging analysis of loans | ||
Loans and Leases Receivable, Gross, Total | 182,516 | 188,855 |
Consumer | Residential | Real estate junior lien | Performing | ||
Past due aging analysis of loans | ||
Accruing Current | 181,646 | 187,502 |
Consumer | Residential | Real estate junior lien | Nonperforming | ||
Past due aging analysis of loans | ||
Nonperforming | 856 | 584 |
Consumer | Residential | Real estate junior lien | 30 - 89 Days Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | 14 | 769 |
Consumer | Other revolving and installment | ||
Past due aging analysis of loans | ||
Loans and Leases Receivable, Gross, Total | 92,351 | 95,218 |
Consumer | Other revolving and installment | Performing | ||
Past due aging analysis of loans | ||
Accruing Current | 92,176 | 94,615 |
Consumer | Other revolving and installment | Nonperforming | ||
Past due aging analysis of loans | ||
Nonperforming | 6 | 22 |
Consumer | Other revolving and installment | 30 - 89 Days Past Due | Performing | ||
Past due aging analysis of loans | ||
Past due | $ 169 | $ 581 |
Loans and Allowance for Loan _5
Loans and Allowance for Loan Losses - Loans by risk category (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Loans outstanding by loan portfolio segment and risk category | ||
Loans | $ 1,686,087 | $ 1,701,850 |
Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 1,625,938 | 1,614,365 |
Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 11,396 | 18,359 |
Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 48,497 | 67,563 |
Doubtful | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 256 | 1,563 |
Commercial | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 951,457 | 969,634 |
Commercial | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 894,163 | 884,653 |
Commercial | Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 11,396 | 18,359 |
Commercial | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 45,642 | 65,059 |
Commercial | Doubtful | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 256 | 1,563 |
Commercial | Commercial and industrial | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 485,183 | 510,706 |
Commercial | Commercial and industrial | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 453,707 | 459,565 |
Commercial | Commercial and industrial | Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 10,439 | 12,055 |
Commercial | Commercial and industrial | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 20,781 | 37,523 |
Commercial | Commercial and industrial | Doubtful | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 256 | 1,563 |
Commercial | Real estate construction | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 21,674 | 18,965 |
Commercial | Real estate construction | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 20,396 | 17,910 |
Commercial | Real estate construction | Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 284 | |
Commercial | Real estate construction | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 994 | 1,055 |
Commercial | Commercial real estate | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 444,600 | 439,963 |
Commercial | Commercial real estate | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 420,060 | 407,178 |
Commercial | Commercial real estate | Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 673 | 6,304 |
Commercial | Commercial real estate | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 23,867 | 26,481 |
Consumer | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 734,630 | 732,216 |
Consumer | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 731,775 | 729,712 |
Consumer | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 2,855 | 2,504 |
Consumer | Residential | Real estate first mortgage | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 459,763 | 448,143 |
Consumer | Residential | Real estate first mortgage | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 459,086 | 448,124 |
Consumer | Residential | Real estate first mortgage | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 677 | 19 |
Consumer | Residential | Real estate junior lien | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 182,516 | 188,855 |
Consumer | Residential | Real estate junior lien | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 180,344 | 186,370 |
Consumer | Residential | Real estate junior lien | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 2,172 | 2,485 |
Consumer | Other revolving and installment | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 92,351 | 95,218 |
Consumer | Other revolving and installment | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 92,345 | $ 95,218 |
Consumer | Other revolving and installment | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | $ 6 |
Loans and Allowance for Loan _6
Loans and Allowance for Loan Losses - Changes in allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Changes in the allowance | ||||
Beginning Balance | $ 21,246 | $ 19,869 | $ 22,174 | $ 16,564 |
Provision for loan losses | 1,498 | 1,530 | 5,515 | 7,080 |
Loan charge-offs | (375) | (570) | (5,943) | (3,536) |
Loan recoveries | 615 | 183 | 1,238 | 904 |
Ending Balance | 22,984 | 21,012 | 22,984 | 21,012 |
Unallocated | ||||
Changes in the allowance | ||||
Beginning Balance | 1,219 | 173 | 1,177 | 911 |
Provision for loan losses | 2,420 | 350 | 2,462 | (388) |
Ending Balance | 3,639 | 523 | 3,639 | 523 |
Commercial | ||||
Changes in the allowance | ||||
Beginning Balance | 17,782 | 16,897 | 18,656 | 12,841 |
Provision for loan losses | (941) | 1,271 | 2,692 | 7,617 |
Loan charge-offs | (324) | (424) | (5,276) | (3,138) |
Loan recoveries | 538 | 146 | 983 | 570 |
Ending Balance | 17,055 | 17,890 | 17,055 | 17,890 |
Commercial | Commercial and industrial | ||||
Changes in the allowance | ||||
Beginning Balance | 11,694 | 10,024 | 12,127 | 7,589 |
Provision for loan losses | (962) | 1,452 | 3,263 | 6,158 |
Loan charge-offs | (324) | (424) | (5,275) | (3,078) |
Loan recoveries | 538 | 126 | 831 | 509 |
Ending Balance | 10,946 | 11,178 | 10,946 | 11,178 |
Commercial | Real estate construction | ||||
Changes in the allowance | ||||
Beginning Balance | 323 | 395 | 250 | 343 |
Provision for loan losses | 25 | (109) | 97 | 1 |
Loan charge-offs | (1) | (60) | ||
Loan recoveries | 2 | 2 | ||
Ending Balance | 348 | 286 | 348 | 286 |
Commercial | Commercial real estate | ||||
Changes in the allowance | ||||
Beginning Balance | 5,765 | 6,478 | 6,279 | 4,909 |
Provision for loan losses | (4) | (72) | (668) | 1,458 |
Loan recoveries | 20 | 150 | 59 | |
Ending Balance | 5,761 | 6,426 | 5,761 | 6,426 |
Consumer | ||||
Changes in the allowance | ||||
Beginning Balance | 2,245 | 2,799 | 2,341 | 2,812 |
Provision for loan losses | 19 | (91) | 361 | (149) |
Loan charge-offs | (51) | (146) | (667) | (398) |
Loan recoveries | 77 | 37 | 255 | 334 |
Ending Balance | 2,290 | 2,599 | 2,290 | 2,599 |
Consumer | Residential | Real estate first mortgage | ||||
Changes in the allowance | ||||
Beginning Balance | 1,155 | 1,486 | 1,156 | 1,411 |
Provision for loan losses | (139) | (142) | (140) | (38) |
Loan charge-offs | (29) | |||
Ending Balance | 1,016 | 1,344 | 1,016 | 1,344 |
Consumer | Residential | Real estate junior lien | ||||
Changes in the allowance | ||||
Beginning Balance | 710 | 830 | 805 | 902 |
Provision for loan losses | 157 | 20 | 113 | (145) |
Loan charge-offs | (20) | (47) | (154) | (133) |
Loan recoveries | 49 | 11 | 132 | 190 |
Ending Balance | 896 | 814 | 896 | 814 |
Consumer | Other revolving and installment | ||||
Changes in the allowance | ||||
Beginning Balance | 380 | 483 | 380 | 499 |
Provision for loan losses | 1 | 31 | 388 | 34 |
Loan charge-offs | (31) | (99) | (513) | (236) |
Loan recoveries | 28 | 26 | 123 | 144 |
Ending Balance | $ 378 | $ 441 | $ 378 | $ 441 |
Loans and Allowance for Loan _7
Loans and Allowance for Loan Losses - Components of loans and associated allowance (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Loans and Allowance for Loan Losses | ||||||
Recorded Investment, Individually Evaluated | $ 5,157 | $ 6,560 | ||||
Recorded Investment, Collectively Evaluated | 1,680,930 | 1,695,290 | ||||
Loans and Leases Receivable, Gross, Total | 1,686,087 | 1,701,850 | ||||
Allowance Allocation, Individually Evaluated | 2,107 | 2,538 | ||||
Allowance Allocation, Collectively Evaluated | 17,238 | 18,459 | ||||
Allowance Allocation, Unallocated | 3,639 | 1,177 | ||||
Loans and Leases Receivable, Allowance, Total | 22,984 | $ 21,246 | 22,174 | $ 21,012 | $ 19,869 | $ 16,564 |
Commercial | ||||||
Loans and Allowance for Loan Losses | ||||||
Recorded Investment, Individually Evaluated | 3,993 | 5,629 | ||||
Recorded Investment, Collectively Evaluated | 947,464 | 964,005 | ||||
Loans and Leases Receivable, Gross, Total | 951,457 | 969,634 | ||||
Allowance Allocation, Individually Evaluated | 1,781 | 2,514 | ||||
Allowance Allocation, Collectively Evaluated | 15,274 | 16,142 | ||||
Loans and Leases Receivable, Allowance, Total | 17,055 | 17,782 | 18,656 | 17,890 | 16,897 | 12,841 |
Commercial | Commercial and industrial | ||||||
Loans and Allowance for Loan Losses | ||||||
Recorded Investment, Individually Evaluated | 2,513 | 3,945 | ||||
Recorded Investment, Collectively Evaluated | 482,670 | 506,761 | ||||
Loans and Leases Receivable, Gross, Total | 485,183 | 510,706 | ||||
Allowance Allocation, Individually Evaluated | 1,429 | 2,059 | ||||
Allowance Allocation, Collectively Evaluated | 9,517 | 10,068 | ||||
Loans and Leases Receivable, Allowance, Total | 10,946 | 11,694 | 12,127 | 11,178 | 10,024 | 7,589 |
Commercial | Real estate construction | ||||||
Loans and Allowance for Loan Losses | ||||||
Recorded Investment, Collectively Evaluated | 21,674 | 18,965 | ||||
Loans and Leases Receivable, Gross, Total | 21,674 | 18,965 | ||||
Allowance Allocation, Collectively Evaluated | 348 | 250 | ||||
Loans and Leases Receivable, Allowance, Total | 348 | 323 | 250 | 286 | 395 | 343 |
Commercial | Commercial real estate | ||||||
Loans and Allowance for Loan Losses | ||||||
Recorded Investment, Individually Evaluated | 1,480 | 1,684 | ||||
Recorded Investment, Collectively Evaluated | 443,120 | 438,279 | ||||
Loans and Leases Receivable, Gross, Total | 444,600 | 439,963 | ||||
Allowance Allocation, Individually Evaluated | 352 | 455 | ||||
Allowance Allocation, Collectively Evaluated | 5,409 | 5,824 | ||||
Loans and Leases Receivable, Allowance, Total | 5,761 | 5,765 | 6,279 | 6,426 | 6,478 | 4,909 |
Consumer | ||||||
Loans and Allowance for Loan Losses | ||||||
Recorded Investment, Individually Evaluated | 1,164 | 931 | ||||
Recorded Investment, Collectively Evaluated | 733,466 | 731,285 | ||||
Loans and Leases Receivable, Gross, Total | 734,630 | 732,216 | ||||
Allowance Allocation, Individually Evaluated | 326 | 24 | ||||
Allowance Allocation, Collectively Evaluated | 1,964 | 2,317 | ||||
Loans and Leases Receivable, Allowance, Total | 2,290 | 2,245 | 2,341 | 2,599 | 2,799 | 2,812 |
Consumer | Residential | Real estate first mortgage | ||||||
Loans and Allowance for Loan Losses | ||||||
Recorded Investment, Individually Evaluated | 355 | 352 | ||||
Recorded Investment, Collectively Evaluated | 459,408 | 447,791 | ||||
Loans and Leases Receivable, Gross, Total | 459,763 | 448,143 | ||||
Allowance Allocation, Collectively Evaluated | 1,016 | 1,156 | ||||
Loans and Leases Receivable, Allowance, Total | 1,016 | 1,155 | 1,156 | 1,344 | 1,486 | 1,411 |
Consumer | Residential | Real estate junior lien | ||||||
Loans and Allowance for Loan Losses | ||||||
Recorded Investment, Individually Evaluated | 804 | 559 | ||||
Recorded Investment, Collectively Evaluated | 181,712 | 188,296 | ||||
Loans and Leases Receivable, Gross, Total | 182,516 | 188,855 | ||||
Allowance Allocation, Individually Evaluated | 324 | 4 | ||||
Allowance Allocation, Collectively Evaluated | 572 | 801 | ||||
Loans and Leases Receivable, Allowance, Total | 896 | 710 | 805 | 814 | 830 | 902 |
Consumer | Other revolving and installment | ||||||
Loans and Allowance for Loan Losses | ||||||
Recorded Investment, Individually Evaluated | 5 | 20 | ||||
Recorded Investment, Collectively Evaluated | 92,346 | 95,198 | ||||
Loans and Leases Receivable, Gross, Total | 92,351 | 95,218 | ||||
Allowance Allocation, Individually Evaluated | 2 | 20 | ||||
Allowance Allocation, Collectively Evaluated | 376 | 360 | ||||
Loans and Leases Receivable, Allowance, Total | $ 378 | $ 380 | $ 380 | $ 441 | $ 483 | $ 499 |
Loans and Allowance for Loan _8
Loans and Allowance for Loan Losses - Impaired loans (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Impaired | ||
Loans with related allowance for loan losses, Recorded investment | $ 3,777 | $ 4,182 |
Loans with related allowance for loan losses, unpaid principal | 4,118 | 4,293 |
Loans with related allowance for loan losses, Related Allowance | 2,107 | 2,538 |
Loans with no related allowance for loan losses, Recorded investment | 1,380 | 2,378 |
Loans with no related allowance for loan losses, unpaid principal | 1,735 | 2,843 |
Recorded investment | 5,157 | 6,560 |
Unpaid principal balance | 5,853 | 7,136 |
Commercial | Commercial and industrial | ||
Impaired | ||
Loans with related allowance for loan losses, Recorded investment | 1,757 | 2,660 |
Loans with related allowance for loan losses, unpaid principal | 1,900 | 2,752 |
Loans with related allowance for loan losses, Related Allowance | 1,429 | 2,059 |
Loans with no related allowance for loan losses, Recorded investment | 756 | 1,285 |
Loans with no related allowance for loan losses, unpaid principal | 1,077 | 1,422 |
Recorded investment | 2,513 | 3,945 |
Unpaid principal balance | 2,977 | 4,174 |
Commercial | Commercial real estate | ||
Impaired | ||
Loans with related allowance for loan losses, Recorded investment | 1,480 | 1,499 |
Loans with related allowance for loan losses, unpaid principal | 1,595 | 1,517 |
Loans with related allowance for loan losses, Related Allowance | 352 | 455 |
Loans with no related allowance for loan losses, Recorded investment | 185 | |
Loans with no related allowance for loan losses, unpaid principal | 218 | |
Recorded investment | 1,480 | 1,684 |
Unpaid principal balance | 1,595 | 1,735 |
Consumer | Residential | Real estate first mortgage | ||
Impaired | ||
Loans with no related allowance for loan losses, Recorded investment | 355 | 352 |
Loans with no related allowance for loan losses, unpaid principal | 367 | 504 |
Recorded investment | 355 | 352 |
Unpaid principal balance | 367 | 504 |
Consumer | Residential | Real estate junior lien | ||
Impaired | ||
Loans with related allowance for loan losses, Recorded investment | 536 | 4 |
Loans with related allowance for loan losses, unpaid principal | 619 | 4 |
Loans with related allowance for loan losses, Related Allowance | 324 | 4 |
Loans with no related allowance for loan losses, Recorded investment | 268 | 555 |
Loans with no related allowance for loan losses, unpaid principal | 290 | 697 |
Recorded investment | 804 | 559 |
Unpaid principal balance | 909 | 701 |
Consumer | Other revolving and installment | ||
Impaired | ||
Loans with related allowance for loan losses, Recorded investment | 4 | 19 |
Loans with related allowance for loan losses, unpaid principal | 4 | 20 |
Loans with related allowance for loan losses, Related Allowance | 2 | 20 |
Loans with no related allowance for loan losses, Recorded investment | 1 | 1 |
Loans with no related allowance for loan losses, unpaid principal | 1 | 2 |
Recorded investment | 5 | 20 |
Unpaid principal balance | $ 5 | $ 22 |
Loans and Allowance for Loan _9
Loans and Allowance for Loan Losses - Interest Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Impaired | ||||
Loans with related allowance for loan losses, Average recorded investment | $ 4,211 | $ 3,830 | $ 4,767 | $ 3,925 |
Loans with no related allowance for loan losses, Average recorded investment | 1,688 | 2,837 | 3,377 | 2,822 |
Loans, Average recorded investment | 5,899 | 6,667 | 8,144 | 6,747 |
Loans with related allowance for loan losses, Interest income | 7 | 12 | 21 | 36 |
Loans with no related allowance for loan losses, Interest income | 7 | 23 | 1 | |
Loans, Interest income | 14 | 12 | 44 | 37 |
Commercial | Commercial and industrial | ||||
Impaired | ||||
Loans with related allowance for loan losses, Average recorded investment | 1,964 | 1,961 | 2,473 | 2,026 |
Loans with no related allowance for loan losses, Average recorded investment | 1,206 | 1,073 | 2,979 | 1,130 |
Loans, Average recorded investment | 3,170 | 3,034 | 5,452 | 3,156 |
Loans with related allowance for loan losses, Interest income | 4 | 9 | 12 | 27 |
Loans with no related allowance for loan losses, Interest income | 7 | 23 | ||
Loans, Interest income | 11 | 9 | 35 | 27 |
Commercial | Commercial real estate | ||||
Impaired | ||||
Loans with related allowance for loan losses, Average recorded investment | 1,623 | 1,767 | 1,668 | 1,793 |
Loans with no related allowance for loan losses, Average recorded investment | 842 | 747 | ||
Loans, Average recorded investment | 1,623 | 2,609 | 1,668 | 2,540 |
Loans with related allowance for loan losses, Interest income | 2 | 2 | 6 | 7 |
Loans, Interest income | 2 | 2 | 6 | 7 |
Consumer | Residential | Real estate first mortgage | ||||
Impaired | ||||
Loans with no related allowance for loan losses, Average recorded investment | 183 | 525 | 92 | 539 |
Loans, Average recorded investment | 183 | 525 | 92 | 539 |
Consumer | Residential | Real estate junior lien | ||||
Impaired | ||||
Loans with related allowance for loan losses, Average recorded investment | 619 | 63 | 621 | 63 |
Loans with no related allowance for loan losses, Average recorded investment | 297 | 394 | 302 | 403 |
Loans, Average recorded investment | 916 | 457 | 923 | 466 |
Loans with related allowance for loan losses, Interest income | 1 | 1 | 3 | 2 |
Loans with no related allowance for loan losses, Interest income | 1 | |||
Loans, Interest income | 1 | 1 | 3 | 3 |
Consumer | Other revolving and installment | ||||
Impaired | ||||
Loans with related allowance for loan losses, Average recorded investment | 5 | 39 | 5 | 43 |
Loans with no related allowance for loan losses, Average recorded investment | 2 | 3 | 4 | 3 |
Loans, Average recorded investment | $ 7 | $ 42 | $ 9 | $ 46 |
Loans and Allowance for Loan_10
Loans and Allowance for Loan Losses - Pledged (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Loans and Allowance for Loan Losses | ||
Total loans | $ 1,686,087 | $ 1,701,850 |
Pledged | ||
Loans and Allowance for Loan Losses | ||
Total loans | $ 1,100,000 | $ 1,100,000 |
Loans and Allowance for Loan_11
Loans and Allowance for Loan Losses - Troubled Debt Restructurings (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2019loan | Mar. 31, 2018USD ($)loan | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
Extending amortization period | ||||
Troubled debt restructuring | ||||
Number of loans modified as modified as a troubled debt restructuring | loan | 1 | |||
Carrying value of restructured loan | $ 0.2 | |||
Specific reserve for loan losses allocated | $ 0 | |||
Interest Rate Below Market Reduction | ||||
Troubled debt restructuring | ||||
Number of loans modified as modified as a troubled debt restructuring | loan | 1 | |||
Carrying value of pre-restructured loan | $ 1 | |||
Carrying value of restructured loan | $ 0.2 | |||
Specific reserve for loan losses allocated | $ 0 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Goodwill | ||
Goodwill | $ 27,329 | $ 27,329 |
Banking | ||
Goodwill | ||
Goodwill | 20,131 | |
Retirement and Benefit Services | ||
Goodwill | ||
Goodwill | $ 7,198 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Goodwill | |||||
Gross Carrying Amount | $ 62,960 | $ 62,960 | $ 62,960 | ||
Accumulated Amortization | (43,578) | (43,578) | (40,487) | ||
Total | 19,382 | 19,382 | 22,473 | ||
Intangible amortization expense | 990 | $ 1,196 | 3,091 | $ 3,588 | |
Identifiable customer intangibles | |||||
Goodwill | |||||
Gross Carrying Amount | 55,744 | 55,744 | 55,744 | ||
Accumulated Amortization | (37,374) | (37,374) | (34,972) | ||
Total | 18,370 | 18,370 | 20,772 | ||
Core deposit intangible assets | |||||
Goodwill | |||||
Gross Carrying Amount | 7,216 | 7,216 | 7,216 | ||
Accumulated Amortization | (6,204) | (6,204) | (5,515) | ||
Total | $ 1,012 | $ 1,012 | $ 1,701 |
Loan Servicing (Details)
Loan Servicing (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Loan Servicing | |||||
Loans serviced for others | $ 560,900 | $ 560,900 | $ 591,600 | ||
Servicing Asset at Fair Value, Amount | |||||
Balance, beginning of period | 4,300 | $ 4,676 | 4,623 | $ 4,686 | |
Additions | 179 | 152 | 279 | 431 | |
Amortization | (287) | (165) | (690) | (512) | |
(Impairment)/Recovery | (46) | 8 | (66) | 66 | |
Balance, end of period | $ 4,146 | $ 4,671 | $ 4,146 | $ 4,671 |
Loan Servicing - Key economic a
Loan Servicing - Key economic assumptions (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Loan Servicing | ||
Fair value of servicing rights | $ 4,146 | $ 4,623 |
Weighted average remaining term, years | 20 years 6 months | 20 years 9 months 18 days |
Prepayment speeds | 11.60% | 7.80% |
Discount rate | 9.50% | 10.50% |
Leases - Lease right-of-use ass
Leases - Lease right-of-use assets and liabilities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Lease Right-of-Use Assets | |
Operating lease right-of-use assets | $ 8,877 |
Finance lease right-of-use assets | 347 |
Lease right-of-use assets | 9,224 |
Operating lease liabilities | 9,401 |
Finance lease liabilities | 690 |
Lease liabilities | $ 10,091 |
Leases - Weighted-average remai
Leases - Weighted-average remaining lease term and average discount rate (Details) | Sep. 30, 2019 |
Leases | |
Weighted-average remaining lease term, Operating leases | 6 years 6 months |
Weighted-average remaining lease term, Finance leases | 3 years 1 month 6 days |
Weighted-average discount rate, Operating leases | 3.20% |
Weighted-average discount rate, Finance leases | 7.80% |
Leases - Lease costs and other
Leases - Lease costs and other lease information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Lease costs | ||
Operating lease cost | $ 602 | $ 1,772 |
Variable lease cost | 222 | 633 |
Short-term lease cost | 122 | 416 |
Finance lease cost | ||
Interest on lease liabilities | 14 | 45 |
Amortization of right-of-use assets | 29 | 87 |
Sublease Income | (65) | (202) |
Net lease cost | 924 | 2,751 |
Operating cash flows from operating leases | $ 600 | $ 1,774 |
Minimum | ||
Finance lease cost | ||
Initial or remaining lease term under operating lease | 1 year | 1 year |
Initial or remaining lease term under finance lease | 1 year | 1 year |
Leases - Future minimum payment
Leases - Future minimum payments for finance and operating leases (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Finance leases | |
2020 | $ 251 |
2021 | 251 |
2022 | 251 |
2023 | 20 |
Total future minimum lease payments | 773 |
Amounts representing interest | (83) |
Total operating lease liabilities | 690 |
Operating leases | |
2020 | 2,291 |
2021 | 1,676 |
2022 | 1,579 |
2023 | 1,506 |
2024 | 1,061 |
Thereafter | 2,460 |
Total future minimum lease payments | 10,573 |
Amounts representing interest | (1,172) |
Total operating lease liabilities | $ 9,401 |
Deposits (Details)
Deposits (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Deposits. | ||
Noninterest-bearing demand | $ 537,951 | $ 550,640 |
Interest-bearing demand | 424,249 | 401,078 |
Savings accounts | 55,513 | 53,971 |
Money market savings | 622,647 | 598,820 |
Time deposits | 192,753 | 170,587 |
Total interest-bearing | 1,295,162 | 1,224,456 |
Total deposits | $ 1,833,113 | $ 1,775,096 |
Short-Term Borrowings - Narrati
Short-Term Borrowings - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Short-term borrowings | |||
Short‑term borrowings | $ 0 | $ 93,460 | |
Federal Funds Purchased | |||
Short-term borrowings | |||
Short‑term borrowings | $ 93,500 | $ 73,930 |
Short-Term Borrowings - Tabular
Short-Term Borrowings - Tabular (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Short-term borrowings | |||||
Balance as of end of period | $ 0 | $ 0 | $ 93,460 | ||
Federal Funds Purchased | |||||
Short-term borrowings | |||||
Balance as of end of period | $ 73,930 | $ 73,930 | $ 93,500 | ||
Average daily balance | 61,386 | 103,171 | 82,504 | 87,391 | |
Maximum month-end balance | $ 124,250 | $ 94,410 | $ 139,605 | $ 112,260 | |
During period | 2.40% | 2.21% | 2.54% | 0.36% | |
End of period | 2.30% | 2.30% | 2.30% | 2.30% | |
Federal Home Loan Bank Advances | |||||
Short-term borrowings | |||||
Average daily balance | $ 25,815 | $ 12,985 | $ 110 | ||
Maximum month-end balance | $ 135,000 | ||||
During period | 2.58% | 2.44% | 2.43% |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Long-Term Debt | ||
Face Value | $ 62,700 | $ 62,700 |
Carrying Amount | 58,775 | 58,824 |
Letter of credit with FHLB | ||
Long-Term Debt | ||
Outstanding letters of credit | 150 | 150 |
Letter of credit with Bank of North Dakota | ||
Long-Term Debt | ||
Collateralized loans | 244,800 | 260,600 |
Outstanding letters of credit | 0 | 0 |
Subordinated notes payable | ||
Long-Term Debt | ||
Face Value | 50,000 | 50,000 |
Carrying Amount | $ 49,609 | $ 49,562 |
Fixed interest rate | 5.75% | 5.75% |
Junior subordinated debenture (Trust I) | ||
Long-Term Debt | ||
Face Value | $ 4,000 | $ 4,000 |
Carrying Amount | $ 3,390 | $ 3,357 |
Period End Interest Rate | 5.21% | 5.92% |
Junior subordinated debenture (Trust I) | Three - month LIBOR | ||
Long-Term Debt | ||
Interest Rate | 3.10% | 3.10% |
Junior subordinated debenture (Trust II) | ||
Long-Term Debt | ||
Face Value | $ 6,000 | $ 6,000 |
Carrying Amount | $ 5,086 | $ 5,035 |
Period End Interest Rate | 3.92% | 4.59% |
Junior subordinated debenture (Trust II) | Three - month LIBOR | ||
Long-Term Debt | ||
Interest Rate | 1.80% | 1.80% |
Finance lease liability | ||
Long-Term Debt | ||
Face Value | $ 2,700 | |
Carrying Amount | $ 690 | |
Fixed interest rate | 7.81% | |
Obligations under capital lease | ||
Long-Term Debt | ||
Face Value | $ 2,700 | |
Carrying Amount | $ 870 | |
Fixed interest rate | 7.81% |
Financial Instruments with Of_3
Financial Instruments with Off-Balance Sheet Risk (Detail) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Financial Instruments with Off Balance Sheet Risk | ||
Amount of credit risk | $ 578,243 | $ 538,742 |
Commitments to extend credit | ||
Financial Instruments with Off Balance Sheet Risk | ||
Amount of credit risk | 570,220 | 529,890 |
Standby letters of credit | ||
Financial Instruments with Off Balance Sheet Risk | ||
Amount of credit risk | $ 8,023 | $ 8,852 |
Share-Based Compensation - Expe
Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
2009 Plan | Restricted stock awards | ||
Share-Based Compensation | ||
Compensation expense | $ 1,200 | $ 702 |
Share-Based Compensation - Acti
Share-Based Compensation - Activity in stock plan (Details) - 2009 Plan - Restricted stock awards - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Restricted Stock Awards | ||
Outstanding at beginning of period | 337,014 | 336,397 |
Granted | 70,617 | 76,031 |
Vested | (53,882) | (76,753) |
Forfeited or cancelled | (6,138) | |
Outstanding at end of period | 347,611 | 335,675 |
Weighted Average Grant Date Fair Value | ||
Outstanding at beginning of period | $ 18.36 | $ 15.38 |
Granted | 19.87 | 22.67 |
Vested | 18.69 | 10.56 |
Forfeited or cancelled | 17.34 | |
Outstanding at end of period | $ 18.64 | $ 18.13 |
Additional disclosures | ||
Unrecognized compensation cost | $ 3.6 | |
Weighted average period | 3 years 3 months 15 days |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | May 06, 2019 | |
2019 Equity Incentive Plan | |||
Share-Based Compensation | |||
Awards authorized | 1,100,000 | ||
Awards issued | 0 | ||
Stock Grant Plan | Non Employee Director | |||
Share-Based Compensation | |||
Awards issued | 13,144 | ||
Stock Grant Plan | Non Employee Director | Restricted stock awards | |||
Share-Based Compensation | |||
Compensation expense | $ 251 | $ 245 |
Noninterest Income (Details)
Noninterest Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Noninterest Income. | ||||
Retirement and benefits | $ 15,307 | $ 15,536 | $ 46,142 | $ 46,873 |
Wealth management | 3,896 | 3,685 | 11,385 | 10,948 |
Mortgage banking | 8,135 | 5,318 | 19,739 | 13,551 |
Service charges on deposit accounts | 447 | 442 | 1,321 | 1,333 |
Net gains (losses) on investment securities | 48 | 13 | 357 | 119 |
Interchange fees | 506 | 509 | 1,480 | 1,519 |
Bank-owned life insurance income | 205 | 202 | 601 | 602 |
Misc. transactional fees | 312 | 272 | 881 | 784 |
Other Noninterest Income | 724 | 281 | 2,732 | 879 |
Total noninterest income | $ 29,580 | $ 26,258 | $ 84,638 | $ 76,608 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Tax amount | ||||
Taxes at statutory federal income tax rate | $ 1,982 | $ 1,957 | $ 6,114 | $ 5,268 |
Tax effect of tax exempt income | (107) | (132) | (329) | (402) |
Tax effect of other | 457 | 126 | 1,440 | 386 |
Applicable income taxes | $ 2,332 | $ 1,951 | $ 7,225 | $ 5,252 |
Percentage of pretax income | ||||
Taxes at statutory federal income tax rate (as percentage) | 21.00% | 21.00% | 21.00% | 21.00% |
Tax effect of tax exempt income (as percentage) | (1.10%) | (1.40%) | (1.10%) | (1.60%) |
Tax effect of other (as percentage) | 4.80% | 1.30% | 4.90% | 1.50% |
Applicable income taxes (as percentage) | 24.70% | 20.90% | 24.80% | 20.90% |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segment | Sep. 30, 2018USD ($) | |
Segment Reporting | ||||
Number of operating segments | segment | 4 | |||
Key metrics related to segments | ||||
Net interest income | $ 18,681 | $ 18,929 | $ 56,092 | $ 55,971 |
Provision for loan losses | 1,498 | 1,530 | 5,515 | 7,080 |
Noninterest income | 29,580 | 26,258 | 84,638 | 76,608 |
Noninterest expense | 37,327 | 34,336 | 106,102 | 100,414 |
Net income before taxes | 9,436 | 9,321 | 29,113 | 25,085 |
Corporate Administration | ||||
Key metrics related to segments | ||||
Net interest income | (896) | (904) | (2,713) | (2,689) |
Noninterest income | 547 | 9 | 2,099 | 77 |
Noninterest expense | 8,885 | 8,318 | 25,960 | 23,685 |
Net income before taxes | (9,234) | (9,213) | (26,574) | (26,297) |
Banking | Operating Segments | ||||
Key metrics related to segments | ||||
Net interest income | 19,193 | 19,568 | 57,987 | 57,960 |
Provision for loan losses | 1,498 | 1,521 | 5,515 | 7,071 |
Noninterest income | 1,695 | 1,710 | 5,273 | 5,159 |
Noninterest expense | 10,800 | 10,042 | 30,880 | 29,416 |
Net income before taxes | 8,590 | 9,715 | 26,865 | 26,632 |
Retirement and Benefit Services | Operating Segments | ||||
Key metrics related to segments | ||||
Noninterest income | 15,307 | 15,536 | 46,142 | 46,873 |
Noninterest expense | 8,551 | 8,948 | 26,142 | 27,338 |
Net income before taxes | 6,756 | 6,588 | 20,000 | 19,535 |
Wealth Management | Operating Segments | ||||
Key metrics related to segments | ||||
Net interest income | 17 | 47 | ||
Noninterest income | 3,896 | 3,685 | 11,385 | 10,948 |
Noninterest expense | 1,835 | 1,709 | 5,936 | 5,702 |
Net income before taxes | 2,061 | 1,993 | 5,449 | 5,293 |
Mortgage | Operating Segments | ||||
Key metrics related to segments | ||||
Net interest income | 384 | 248 | 818 | 653 |
Provision for loan losses | 9 | 9 | ||
Noninterest income | 8,135 | 5,318 | 19,739 | 13,551 |
Noninterest expense | 7,256 | 5,319 | 17,184 | 14,273 |
Net income before taxes | $ 1,263 | $ 238 | $ 3,373 | $ (78) |
Earnings Per Share - Two class
Earnings Per Share - Two class method (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share | ||||
Net Income | $ 7,104 | $ 7,370 | $ 21,888 | $ 19,833 |
Dividends and undistributed earnings allocated to participating securities | 154 | 514 | ||
Net income available to common shareholders | $ 6,950 | $ 21,374 | ||
Weighted-average common shares outstanding for basic earnings per share | 14,274 | 13,777 | 13,957 | 13,759 |
Dilutive effect of stock-based awards | 352 | 294 | 360 | 301 |
Weighted-average common shares outstanding for diluted earnings per share | 14,626 | 14,071 | 14,317 | 14,060 |
Earnings per common share: | ||||
Basic earnings per common share | $ 0.49 | $ 0.53 | $ 1.53 | $ 1.44 |
Diluted earnings per common share | $ 0.48 | $ 0.52 | $ 1.49 | $ 1.41 |
Earnings Per Share - Treasury s
Earnings Per Share - Treasury stock method (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share | ||||
Net income attributable to common shareholders | $ 7,104 | $ 7,370 | $ 21,888 | $ 19,833 |
Weighted-average common shares outstanding for basic earnings per share | 14,274 | 13,777 | 13,957 | 13,759 |
Basic earnings per common share | $ 0.49 | $ 0.53 | $ 1.53 | $ 1.44 |
Dilutive effect of stock-based awards | 352 | 294 | 360 | 301 |
Weighted-average common shares outstanding for diluted earnings per share | 14,626 | 14,071 | 14,317 | 14,060 |
Diluted earnings per common share | $ 0.48 | $ 0.52 | $ 1.49 | $ 1.41 |
Derivative Instruments (Details
Derivative Instruments (Details) - Not designated as hedging - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Derivative Instruments | ||
Fair Value, Derivative Assets | $ 2,483 | $ 12 |
Fair Value, Derivative Liabilities | 104 | 7 |
Notional Amount, Derivative Assets | 107,270 | 33,858 |
Notional Amount, Derivative Liabilities | 148,500 | 2,956 |
Interest rate lock commitments | Other assets. | ||
Derivative Instruments | ||
Fair Value, Derivative Assets | 2,036 | 12 |
Notional Amount, Derivative Assets | 89,608 | 33,858 |
Forward loan sales commitments | Other assets. | ||
Derivative Instruments | ||
Fair Value, Derivative Assets | 447 | |
Notional Amount, Derivative Assets | 17,662 | |
Forward loan sales commitments | Accrued expenses and other liabilities | ||
Derivative Instruments | ||
Fair Value, Derivative Liabilities | 7 | |
Notional Amount, Derivative Liabilities | $ 2,956 | |
TBA mortgage backed securities | Accrued expenses and other liabilities | ||
Derivative Instruments | ||
Fair Value, Derivative Liabilities | 104 | |
Notional Amount, Derivative Liabilities | $ 148,500 |
Derivative Instruments - Gain (
Derivative Instruments - Gain (loss) recognized on derivatives instruments (Details) - Not designated as hedging - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Gain (loss) recognized on derivative instruments | ||||
Gain (loss) recognized on derivatives instruments | $ 224 | $ 17 | $ 2,374 | $ 13 |
Interest rate lock commitments | Mortgage banking | ||||
Gain (loss) recognized on derivative instruments | ||||
Gain (loss) recognized on derivatives instruments | (257) | (29) | 2,024 | (11) |
Forward loan sales commitments | Mortgage banking | ||||
Gain (loss) recognized on derivative instruments | ||||
Gain (loss) recognized on derivatives instruments | (199) | $ 46 | 454 | $ 24 |
TBA mortgage backed securities | Mortgage banking | ||||
Gain (loss) recognized on derivative instruments | ||||
Gain (loss) recognized on derivatives instruments | $ 680 | $ (104) |
Regulatory Matters (Details)
Regulatory Matters (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Common equity tier 1 capital to risk weighted assets | ||
Actual | $ 233,030 | $ 151,745 |
Requirements for Capital Adequacy Purposes | $ 84,705 | |
Actual | 12.38% | 8.43% |
Requirements | 4.50% | |
Tier 1 capital to risk weighted assets | ||
Actual | $ 241,197 | $ 159,774 |
Requirements for Capital Adequacy Purposes | $ 112,940 | |
Actual | 12.81% | 8.87% |
Requirements | 6.00% | |
Total capital to risk weighted assets | ||
Actual | $ 313,700 | $ 231,510 |
Requirements for Capital Adequacy Purposes | $ 150,587 | |
Actual | 16.67% | 12.86% |
Requirements | 8.00% | |
Tier 1 capital to average assets | ||
Actual | $ 241,197 | $ 159,774 |
Requirements for Capital Adequacy Purposes | $ 85,152 | |
Actual | 11.33% | 7.51% |
Requirements | 4.00% | |
Bank | ||
Common equity tier 1 capital to risk weighted assets | ||
Actual | $ 222,600 | $ 204,680 |
Requirements for Capital Adequacy Purposes | 84,594 | 80,866 |
Minimum to be Well Capitalized Under Prompt Corrective Action | $ 122,192 | $ 116,806 |
Actual | 11.84% | 11.39% |
Requirements | 4.50% | 4.50% |
Minimum to be Well Capitalized Under Prompt Corrective Action | 6.50% | 6.50% |
Tier 1 capital to risk weighted assets | ||
Actual | $ 222,600 | $ 204,680 |
Requirements for Capital Adequacy Purposes | 112,792 | 107,821 |
Minimum to be Well Capitalized Under Prompt Corrective Action | $ 150,390 | $ 143,761 |
Actual | 11.84% | 11.39% |
Requirements | 6.00% | 6.00% |
Minimum to be Well Capitalized Under Prompt Corrective Action | 8.00% | 8.00% |
Total capital to risk weighted assets | ||
Actual | $ 245,585 | $ 226,854 |
Requirements for Capital Adequacy Purposes | 150,390 | 143,806 |
Minimum to be Well Capitalized Under Prompt Corrective Action | $ 187,987 | $ 179,758 |
Actual | 13.06% | 12.62% |
Requirements | 8.00% | 8.00% |
Minimum to be Well Capitalized Under Prompt Corrective Action | 10.00% | 10.00% |
Tier 1 capital to average assets | ||
Actual | $ 222,600 | $ 204,680 |
Requirements for Capital Adequacy Purposes | 85,009 | 85,018 |
Minimum to be Well Capitalized Under Prompt Corrective Action | $ 106,261 | $ 106,272 |
Actual | 10.47% | 9.63% |
Requirements | 4.00% | 4.00% |
Minimum to be Well Capitalized Under Prompt Corrective Action | 5.00% | 5.00% |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities - Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Trading securities | $ 1,539 | |
Available-for-sale | $ 278,716 | 250,174 |
Equity securities | 2,675 | 3,165 |
U.S. treasury and government agencies | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 21,602 | 19,142 |
Mortgage backed securities - Residential Agency | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 169,337 | 126,998 |
Mortgage backed securities - Commercial | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 32,652 | 28,767 |
Asset backed securities | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 157 | 399 |
Corporate bonds | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 7,112 | 8,481 |
Recurring | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Equity securities | 2,675 | 3,165 |
Total available-for-sale and equity securities | 281,391 | 253,339 |
Derivates assets | 2,483 | 12 |
Derivative liabilities | 104 | 7 |
Recurring | U.S. treasury and government agencies | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Trading securities | 1,539 | |
Available-for-sale | 21,602 | 19,142 |
Recurring | Obligations of state and political agencies | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 47,856 | 66,387 |
Recurring | Mortgage backed securities - Residential Agency | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 169,337 | 126,998 |
Recurring | Mortgage backed securities - Commercial | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 32,652 | 28,767 |
Recurring | Asset backed securities | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 157 | 399 |
Recurring | Corporate bonds | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 7,112 | 8,481 |
Recurring | Level 1 | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Equity securities | 2,675 | 3,165 |
Total available-for-sale and equity securities | 2,675 | 3,165 |
Recurring | Level 2 | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Total available-for-sale and equity securities | 278,716 | 250,174 |
Derivates assets | 2,483 | 12 |
Derivative liabilities | 104 | 7 |
Recurring | Level 2 | U.S. treasury and government agencies | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Trading securities | 1,539 | |
Available-for-sale | 21,602 | 19,142 |
Recurring | Level 2 | Obligations of state and political agencies | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 47,856 | 66,387 |
Recurring | Level 2 | Mortgage backed securities - Residential Agency | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 169,337 | 126,998 |
Recurring | Level 2 | Mortgage backed securities - Commercial | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 32,652 | 28,767 |
Recurring | Level 2 | Asset backed securities | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | 157 | 399 |
Recurring | Level 2 | Corporate bonds | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale | $ 7,112 | $ 8,481 |
Fair Value of Assets and Liab_4
Fair Value of Assets and Liabilities - Nonrecurring Basis (Details) - Non recurring - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Impaired loans | $ 3,050 | $ 4,022 |
Foreclosed assets | 84 | 204 |
Servicing rights | 4,146 | 4,623 |
Loans held for sale | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Loans held for sale | 66,021 | 14,486 |
Loans held for branch sale | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Loans held for sale | 32,031 | |
Impaired loans | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Net impairment | 2,107 | 2,538 |
Foreclosed assets | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Net impairment | 245 | |
Level 2 | Loans held for sale | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Loans held for sale | 66,021 | 14,486 |
Level 3 | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Impaired loans | 3,050 | 4,022 |
Foreclosed assets | 84 | 204 |
Servicing rights | $ 4,146 | 4,623 |
Level 3 | Loans held for branch sale | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Loans held for sale | $ 32,031 |
Fair Value of Assets and Liab_5
Fair Value of Assets and Liabilities - Loans Held for Sale (Details) $ in Thousands | Jan. 15, 2019item | Dec. 31, 2018USD ($) |
Fair Value of Assets and Liabilities | ||
Number of branches whose loans are to be sold | item | 2 | |
Loans held for branch sale | $ | $ 32,031 |
Fair Value of Assets and Liab_6
Fair Value of Assets and Liabilities - Valuation Technique (Details) - Level 3 $ in Thousands | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Loans held for branch sale | ||
Valuation techniques and significant unobservable inputs | ||
Loans Held-for-sale, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | |
Loans Held-for-sale, Measurement Input [Extensible List] | us-gaap:MeasurementInputQuotedPriceMember | |
Loans held for branch sale | Sales contract | ||
Valuation techniques and significant unobservable inputs | ||
Loans held for sale | $ 32,031 | |
Impaired loans | Appraisal value | Property specific adjustment | ||
Valuation techniques and significant unobservable inputs | ||
Impaired loans | $ 3,050 | 4,022 |
Foreclosed assets | Appraisal value | Property specific adjustment | ||
Valuation techniques and significant unobservable inputs | ||
Foreclosed assets | $ 84 | $ 204 |
Servicing rights | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Servicing rights | Prepayment speed assumptions | ||
Valuation techniques and significant unobservable inputs | ||
Servicing rights | $ 4,146 | $ 4,623 |
Servicing rights | Prepayment speed assumptions | Minimum | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 154 | 104 |
Servicing rights | Prepayment speed assumptions | Maximum | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 270 | 211 |
Servicing rights | Prepayment speed assumptions | Weighted average | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 194 | 130 |
Servicing rights | Discount rate | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 0.095 | 0.105 |
Servicing rights | Discount rate | Weighted average | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 0.095 | 0.105 |
Fair Value of Assets and Liab_7
Fair Value of Assets and Liabilities - Deposits held for sale (Details) $ in Thousands | Jan. 15, 2019item | Dec. 31, 2018USD ($) |
Fair Value of Assets and Liabilities | ||
Number of branches whose deposits are to be sold | item | 2 | |
Deposits held for sale | $ | $ 24,197 |
Fair Value of Assets and Liab_8
Fair Value of Assets and Liabilities - Off-Balance Sheet Credit-Related Commitments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Carrying amount | ||
Financial Assets | ||
Cash and cash equivalents | $ 61,174 | $ 40,651 |
Loans | 1,663,103 | 1,679,676 |
Accrued interest receivable | 7,412 | 7,645 |
Bank-owned life insurance | 31,364 | 30,763 |
Financial Liabilities | ||
Noninterest-bearing transaction | 537,951 | 550,640 |
Interest-bearing transaction | 1,102,409 | 1,053,869 |
Time deposits | 192,753 | 170,587 |
Deposits held for sale | 24,197 | |
Short-term borrowings | 93,460 | |
Long-term debt | 58,775 | 58,824 |
Accrued interest payable | 1,879 | 720 |
Estimated fair value | ||
Financial Assets | ||
Cash and cash equivalents | 61,174 | 40,651 |
Loans | 1,658,151 | 1,663,401 |
Accrued interest receivable | 7,412 | 7,645 |
Bank-owned life insurance | 31,364 | 30,763 |
Financial Liabilities | ||
Noninterest-bearing transaction | 537,951 | 550,640 |
Interest-bearing transaction | 1,102,409 | 1,053,869 |
Time deposits | 192,869 | 172,616 |
Deposits held for sale | 22,019 | |
Short-term borrowings | 93,460 | |
Long-term debt | 58,285 | 59,988 |
Accrued interest payable | 1,879 | 720 |
Level 1 | Estimated fair value | ||
Financial Assets | ||
Cash and cash equivalents | 61,174 | 40,651 |
Accrued interest receivable | 7,412 | 7,645 |
Financial Liabilities | ||
Short-term borrowings | 93,460 | |
Accrued interest payable | 1,879 | 720 |
Level 2 | Estimated fair value | ||
Financial Assets | ||
Bank-owned life insurance | 31,364 | 30,763 |
Financial Liabilities | ||
Noninterest-bearing transaction | 537,951 | 550,640 |
Interest-bearing transaction | 1,102,409 | 1,053,869 |
Long-term debt | 58,285 | 59,988 |
Level 3 | Estimated fair value | ||
Financial Assets | ||
Loans | 1,658,151 | 1,663,401 |
Financial Liabilities | ||
Time deposits | $ 192,869 | 172,616 |
Deposits held for sale | $ 22,019 |
Branch Sale (Details)
Branch Sale (Details) - USD ($) $ in Thousands | Apr. 26, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Branch Sale | |||
Loans and Leases Receivable, Net Amount | $ 1,663,103 | $ 1,679,676 | |
Deposits | $ 1,833,113 | $ 1,775,096 | |
Disposed of by Sale | Branch Offices in Duluth, MN | |||
Branch Sale | |||
Loans and Leases Receivable, Net Amount | $ 28,300 | ||
Deposits | 19,400 | ||
Pre-tax gain on sale of branch | $ 1,500 |