Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 31, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Entity File Number | 1-12431 | |
Entity Registrant Name | UNITY BANCORP INC /NJ/ | |
Entity Incorporation, State or Country Code | NJ | |
Entity Tax Identification Number | 22-3282551 | |
Entity Address, Address Line One | 64 Old Highway 22 | |
Entity Address, City or Town | Clinton | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 08809 | |
City Area Code | 908 | |
Local Phone Number | 730-7630 | |
Title of 12(b) Security | Common stock | |
Trading Symbol | UNTY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,369,513 | |
Entity Central Index Key | 0000920427 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
ASSETS | ||
Cash and due from banks | $ 24,527 | $ 22,750 |
Federal funds sold and interest-bearing deposits | 197,325 | 196,561 |
Cash and cash equivalents | 221,852 | 219,311 |
Securities: | ||
Debt securities available for sale (amortized cost of $32,888 in 2021 and $45,921 in 2020) | 32,810 | 45,617 |
Securities held to maturity (fair value of $2,000 in 2021) | 2,000 | 0 |
Equity securities with readily determinable fair values (amortized cost of $2,112 in 2021 and in 2020) | 2,244 | 1,954 |
Total securities | 37,054 | 47,571 |
Loans: | ||
SBA loans held for sale | 11,314 | 9,335 |
Loans | 1,642,674 | 1,618,482 |
Total loans | 1,653,988 | 1,627,817 |
Allowance for loan losses | (22,801) | (23,105) |
Net loans | 1,631,187 | 1,604,712 |
Premises and equipment, net | 19,799 | 20,226 |
Bank owned life insurance ("BOLI") | 26,560 | 26,514 |
Deferred tax assets | 9,377 | 9,183 |
Federal Home Loan Bank ("FHLB") stock | 9,060 | 10,594 |
Accrued interest receivable | 9,486 | 10,429 |
Goodwill | 1,516 | 1,516 |
Prepaid expenses and other assets | 7,420 | 8,858 |
Total assets | 1,973,311 | 1,958,914 |
Deposits: | ||
Noninterest-bearing demand | 489,700 | 459,677 |
Interest-bearing demand | 208,802 | 204,236 |
Savings | 518,405 | 455,449 |
Time, under $100,000 | 245,423 | 264,671 |
Time, $100,000 to $250,000 | 74,282 | 95,595 |
Time, $250,000 and over | 57,704 | 78,331 |
Total deposits | 1,594,316 | 1,557,959 |
Borrowed funds | 165,000 | 200,000 |
Subordinated debentures | 10,310 | 10,310 |
Accrued interest payable | 231 | 248 |
Accrued expenses and other liabilities | 14,698 | 16,486 |
Total liabilities | 1,784,555 | 1,785,003 |
Shareholders' equity: | ||
Common stock | 92,810 | 91,873 |
Retained earnings | 105,811 | 90,669 |
Treasury stock | (9,668) | (7,442) |
Accumulated other comprehensive loss | (197) | (1,189) |
Total shareholders' equity | 188,756 | 173,911 |
Total liabilities and shareholders' equity | 1,973,311 | 1,958,914 |
SBA loans held for investment | ||
Loans: | ||
Loans | 38,114 | 39,587 |
Allowance for loan losses | (1,686) | (1,301) |
SBA PPP loans | ||
Loans: | ||
Loans | 132,375 | 118,257 |
Commercial loans | ||
Loans: | ||
Loans | 885,566 | 839,788 |
Allowance for loan losses | (15,011) | (14,992) |
Residential mortgage loans | ||
Loans: | ||
Loans | 422,188 | 467,586 |
Allowance for loan losses | (4,604) | (5,318) |
Consumer loans | ||
Loans: | ||
Loans | 64,557 | 66,100 |
Allowance for loan losses | (601) | (681) |
Residential construction loans | ||
Loans: | ||
Loans | 99,874 | 87,164 |
Allowance for loan losses | $ (899) | $ (813) |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position | ||
Securities available for sale, amortized cost | $ 32,888 | $ 45,921 |
Held to maturity securities, fair value | 2,009 | |
Equity securities, amortized cost | $ 2,112 | $ 2,112 |
Common stock, shares issued (in shares) | 11,031 | 10,961 |
Common stock, shares outstanding (in shares) | 10,416 | 10,456 |
Treasury shares | 615 | 505 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
INTEREST INCOME | ||||
Federal funds sold and interest-bearing deposits | $ 33 | $ 23 | $ 57 | $ 212 |
FHLB stock | 53 | 79 | 116 | 188 |
Securities: | ||||
Taxable | 253 | 437 | 546 | 948 |
Tax-exempt | 9 | 17 | 18 | 39 |
Total securities | 262 | 454 | 564 | 987 |
Loans: | ||||
SBA loans | 776 | 709 | 1,559 | 1,694 |
SBA PPP loans | 1,748 | 723 | 3,477 | 723 |
Commercial loans | 10,734 | 9,815 | 21,210 | 19,748 |
Residential mortgage loans | 4,906 | 5,554 | 10,034 | 11,324 |
Consumer loans | 682 | 875 | 1,538 | 1,835 |
Residential construction loans | 1,486 | 1,046 | 2,701 | 2,153 |
Total loans | 20,332 | 18,722 | 40,519 | 37,477 |
Total interest income | 20,680 | 19,278 | 41,256 | 38,864 |
INTEREST EXPENSE | ||||
Interest-bearing demand deposits | 307 | 329 | 616 | 706 |
Savings deposits | 419 | 547 | 851 | 1,499 |
Time deposits | 1,171 | 2,454 | 2,634 | 4,900 |
Borrowed funds and subordinated debentures | 334 | 423 | 688 | 989 |
Total interest expense | 2,231 | 3,753 | 4,789 | 8,094 |
Net interest income | 18,449 | 15,525 | 36,467 | 30,770 |
Provision for loan losses | 2,500 | 500 | 4,000 | |
Net interest income after provision for loan losses | 18,449 | 13,025 | 35,967 | 26,770 |
NONINTEREST INCOME | ||||
Gain on sale of SBA loans held for sale, net | 496 | 92 | 741 | 565 |
Gain on sale of mortgage loans, net | 1,066 | 1,553 | 2,817 | 2,604 |
BOLI income | 133 | 154 | 261 | 327 |
Net security gains (losses) | 23 | 79 | 333 | (91) |
Other income | 399 | 336 | 772 | 662 |
Total noninterest income | 2,895 | 2,811 | 6,621 | 5,356 |
NONINTEREST EXPENSE | ||||
Compensation and benefits | 6,333 | 5,553 | 12,396 | 10,992 |
Processing and communications | 750 | 769 | 1,557 | 1,477 |
Occupancy | 631 | 630 | 1,337 | 1,253 |
Furniture and equipment | 659 | 641 | 1,308 | 1,296 |
Professional services | 339 | 261 | 720 | 531 |
Advertising | 403 | 207 | 671 | 497 |
Deposit insurance | 225 | 159 | 439 | 247 |
Director fees | 204 | 181 | 412 | 381 |
BSA expenses | 282 | 488 | 450 | 550 |
Other loan expenses | 165 | 168 | 308 | 257 |
Loan collection and OREO expenses | 54 | 1 | 5 | 187 |
Other expenses | 415 | 119 | 660 | 833 |
Total noninterest expense | 10,460 | 9,177 | 20,263 | 18,501 |
Income before provision for income taxes | 10,884 | 6,659 | 22,325 | 13,625 |
Provision for income taxes | 2,466 | 1,488 | 5,411 | 3,086 |
Net income | $ 8,418 | $ 5,171 | $ 16,914 | $ 10,539 |
Net income per common share - Basic | $ 0.81 | $ 0.48 | $ 1.62 | $ 0.97 |
Net income per common share - Diluted | $ 0.80 | $ 0.47 | $ 1.60 | $ 0.96 |
Weighted average common shares outstanding - Basic | 10,427 | 10,792 | 10,432 | 10,838 |
Weighted average common shares outstanding - Diluted | 10,569 | 10,888 | 10,567 | 10,962 |
Branch fee income | ||||
NONINTEREST INCOME | ||||
Noninterest income | $ 269 | $ 207 | $ 564 | $ 523 |
Service and loan fee income | ||||
NONINTEREST INCOME | ||||
Noninterest income | $ 509 | $ 390 | $ 1,133 | $ 766 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Comprehensive Income | ||||
Net income, before tax amount | $ 10,884 | $ 6,659 | $ 22,325 | $ 13,625 |
Income tax expense (benefit) | 2,466 | 1,488 | 5,411 | 3,086 |
Net income | 8,418 | 5,171 | 16,914 | 10,539 |
Debt securities available for sale | ||||
Unrealized holding gains on securities arising during the period, before tax | 164 | 497 | 559 | 331 |
Unrealized holding gains on securities arising during the period, tax | 45 | 135 | 134 | 100 |
Unrealized holding gains on securities arising during the period, net | 119 | 362 | 425 | 231 |
Less: reclassification adjustment for gains (losses) on securities included in net income, before tax | 23 | 79 | 333 | (91) |
Less: reclassification adjustment for gains (losses) on securities included in net income, tax | 5 | 17 | 70 | (19) |
Less: reclassification adjustment for gains (losses) on securities included in net income, net of tax | 18 | 62 | 263 | (72) |
Total unrealized gains on securities available for sale, before tax | 141 | 418 | 226 | 422 |
Total unrealized gains on securities available for sale, tax | 40 | 118 | 64 | 119 |
Total unrealized gains on securities available for sale, net of tax | 101 | 300 | 162 | 303 |
Adjustments related to defined benefit plan: | ||||
Adjustments related to defined benefit plan, Amortization of prior service cost, before tax | 311 | 21 | 332 | 42 |
Adjustments related to defined benefit plan, Amortization of prior service cost, tax | 88 | 6 | 94 | 12 |
Adjustments related to defined benefit plan, Amortization of prior service cost, net of tax | 223 | 15 | 238 | 30 |
Total adjustments related to defined benefit plan, before tax | 311 | 21 | 332 | 42 |
Total adjustments related to defined benefit plan, tax | 88 | 6 | 94 | 12 |
Total adjustments related to defined benefit plan, net of tax | 223 | 15 | 238 | 30 |
Net unrealized gains (losses) from cash flow hedges: | ||||
Unrealized holding gains (losses) on cash flow hedges arising during the period, before tax | 18 | (340) | 825 | (1,750) |
Unrealized holding gains (losses) on cash flow hedges arising during the period, tax | 5 | (99) | 233 | (505) |
Unrealized holding gains (losses) on cash flow hedges arising during the period, net of tax | 13 | (241) | 592 | (1,245) |
Total unrealized gains (losses) on cash flow hedges, before tax | 18 | (340) | 825 | (1,750) |
Total unrealized gains (losses) on cash flow hedges, tax | 5 | (99) | 233 | (505) |
Total unrealized gains (losses) on cash flow hedges, net of tax | 13 | (241) | 592 | (1,245) |
Total other comprehensive income (loss), before tax | 470 | 99 | 1,383 | (1,286) |
Total other comprehensive income (loss), tax | 133 | 25 | 391 | (374) |
Total other comprehensive income (loss), net of tax | 337 | 74 | 992 | (912) |
Total comprehensive income, before tax | 11,354 | 6,758 | 23,708 | 12,339 |
Total comprehensive income, tax | 2,599 | 1,513 | 5,802 | 2,712 |
Total comprehensive income, net of tax | $ 8,755 | $ 5,245 | $ 17,906 | $ 9,627 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common stock | Retained earnings | Accumulated other comprehensive (loss) income | Treasury stock | Total | |
Beginning Balance (in shares) at Dec. 31, 2019 | 10,881 | |||||
Beginning balance at Dec. 31, 2019 | $ 90,113 | $ 70,442 | $ 154 | $ 160,709 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 5,368 | 5,368 | ||||
Other comprehensive income (loss), net of tax | (986) | (986) | ||||
Dividends on common stock | $ 30 | (871) | (841) | |||
Common stock issued and related tax effects (in shares) | [1] | 13 | ||||
Common stock issued and related tax effects (1) | [1] | $ 227 | 227 | |||
Acquisition of treasury stock, at cost | $ (172) | (172) | ||||
Acquisition of treasury stock, at cost (in shares) | (11) | |||||
Ending Balance (in shares) at Mar. 31, 2020 | 10,883 | |||||
Ending balance at Mar. 31, 2020 | $ 90,370 | 74,939 | (832) | (172) | 164,305 | |
Beginning Balance (in shares) at Dec. 31, 2019 | 10,881 | |||||
Beginning balance at Dec. 31, 2019 | $ 90,113 | 70,442 | 154 | 160,709 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 10,539 | |||||
Other comprehensive income (loss), net of tax | (912) | (912) | ||||
Ending Balance (in shares) at Jun. 30, 2020 | 10,728 | |||||
Ending balance at Jun. 30, 2020 | $ 91,103 | 79,253 | (758) | (2,991) | 166,607 | |
Beginning Balance (in shares) at Mar. 31, 2020 | 10,883 | |||||
Beginning balance at Mar. 31, 2020 | $ 90,370 | 74,939 | (832) | (172) | 164,305 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 5,171 | 5,171 | ||||
Other comprehensive income (loss), net of tax | 74 | 74 | ||||
Dividends on common stock | $ 29 | (857) | (828) | |||
Common stock issued and related tax effects (in shares) | [1] | 45 | ||||
Common stock issued and related tax effects (1) | [1] | $ 704 | 704 | |||
Acquisition of treasury stock, at cost | (2,819) | (2,819) | ||||
Acquisition of treasury stock, at cost (in shares) | (200) | |||||
Ending Balance (in shares) at Jun. 30, 2020 | 10,728 | |||||
Ending balance at Jun. 30, 2020 | $ 91,103 | 79,253 | (758) | (2,991) | 166,607 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Retained earnings | $ 90,669 | |||||
Beginning Balance (in shares) at Dec. 31, 2020 | 10,456 | 10,456 | ||||
Beginning balance at Dec. 31, 2020 | $ 91,873 | 90,669 | (1,189) | (7,442) | $ 173,911 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 8,496 | 8,496 | ||||
Other comprehensive income (loss), net of tax | 655 | 655 | ||||
Dividends on common stock | $ 30 | (834) | (804) | |||
Common stock issued and related tax effects (in shares) | [1] | 36 | ||||
Common stock issued and related tax effects (1) | [1] | $ 277 | 277 | |||
Acquisition of treasury stock, at cost | (1,349) | (1,349) | ||||
Acquisition of treasury stock, at cost (in shares) | (70) | |||||
Ending Balance (in shares) at Mar. 31, 2021 | 10,422 | |||||
Ending balance at Mar. 31, 2021 | $ 92,180 | 98,331 | (534) | (8,791) | $ 181,186 | |
Beginning Balance (in shares) at Dec. 31, 2020 | 10,456 | 10,456 | ||||
Beginning balance at Dec. 31, 2020 | $ 91,873 | 90,669 | (1,189) | (7,442) | $ 173,911 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 16,914 | |||||
Other comprehensive income (loss), net of tax | 992 | $ 992 | ||||
Ending Balance (in shares) at Jun. 30, 2021 | 10,416 | 10,416 | ||||
Ending balance at Jun. 30, 2021 | $ 92,810 | 105,811 | (197) | (9,668) | $ 188,756 | |
Beginning Balance (in shares) at Mar. 31, 2021 | 10,422 | |||||
Beginning balance at Mar. 31, 2021 | $ 92,180 | 98,331 | (534) | (8,791) | 181,186 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 8,418 | 8,418 | ||||
Other comprehensive income (loss), net of tax | 337 | 337 | ||||
Dividends on common stock | $ 33 | (938) | (905) | |||
Common stock issued and related tax effects (in shares) | [1] | 34 | ||||
Common stock issued and related tax effects (1) | [1] | $ 597 | 597 | |||
Acquisition of treasury stock, at cost | (877) | $ (877) | ||||
Acquisition of treasury stock, at cost (in shares) | (40) | |||||
Ending Balance (in shares) at Jun. 30, 2021 | 10,416 | 10,416 | ||||
Ending balance at Jun. 30, 2021 | $ 92,810 | $ 105,811 | $ (197) | $ (9,668) | $ 188,756 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Retained earnings | $ 105,811 | |||||
[1] | Includes the issuance of common stock under employee benefit plans, which includes nonqualified stock options and restricted stock expense related entries, employee option exercises and the tax benefit of options exercised. |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | |
Statement of Stockholders' Equity | ||||
Common stock, dividends, per share, cash paid (in dollars per share) | $ 0.09 | $ 0.08 | $ 0.08 | $ 0.08 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
OPERATING ACTIVITIES: | ||
Net income | $ 16,914,000 | $ 10,539,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for loan losses | 500,000 | 4,000,000 |
Net amortization of purchase premiums and discounts on securities | 123,000 | 115,000 |
Depreciation and amortization | 583,000 | 791,000 |
PPP deferred fees and costs | 1,707,000 | 4,419,000 |
Deferred income tax benefit | (585,000) | (1,343,000) |
Net security gains | (43,000) | (306,000) |
Stock compensation expense | 784,000 | 707,000 |
Valuation write-downs on OREO | 0 | 200,000 |
Gain on sale of mortgage loans, net | (3,467,000) | (1,861,000) |
Gain on sale of SBA loans held for sale, net | (741,000) | (565,000) |
Origination of mortgage loans sold | (183,843,000) | (105,855,000) |
Origination of SBA loans held for sale | (7,178,000) | (3,150,000) |
Proceeds from sale of mortgage loans, net | 187,310,000 | 107,716,000 |
Proceeds from sale of SBA loans held for sale, net | 6,466,000 | 7,095,000 |
BOLI income | (261,000) | (327,000) |
Net change in other assets and liabilities | 1,446,000 | (2,746,000) |
Net cash provided by operating activities | 19,715,000 | 19,429,000 |
INVESTING ACTIVITIES | ||
Purchases of securities held to maturity | (5,836,000) | 0 |
Purchases of securities available for sale | (3,500,000) | (2,717,000) |
Purchases of FHLB stock, at cost | (29,741,000) | (39,430,000) |
Maturities and principal payments on securities held to maturity | 3,836,000 | 0 |
Maturities and principal payments on debt securities available for sale | 9,406,000 | 8,471,000 |
Proceeds from sales of debt securities available for sale | 7,048,000 | 6,029,000 |
Proceeds from sales of equity securities | 0 | 111,000 |
Proceeds from redemption of FHLB stock | 31,275,000 | 41,985,000 |
Proceeds from sale of OREO | 0 | 812,000 |
Net increase in SBA PPP loans | (15,962,000) | (140,516,000) |
Net increase in loans | (11,037,000) | (34,351,000) |
Proceeds from BOLI | 215,000 | 215,000 |
Proceeds from sale of premises and equipment | 20,000 | 0 |
Purchases of premises and equipment | (411,000) | (278,000) |
Net cash used in investing activities | (14,687,000) | (159,669,000) |
FINANCING ACTIVITIES | ||
Net increase in deposits | 36,357,000 | 233,343,000 |
Proceeds from new borrowings | 125,000,000 | 183,000,000 |
Repayments of borrowings | (160,000,000) | (243,000,000) |
Proceeds from exercise of stock options | 267,626 | 395,518 |
Fair market value of shares withheld to cover employee tax liability | (177,000) | (172,000) |
Dividends on common stock | (1,709,000) | (1,669,000) |
Purchase of treasury stock | (2,226,000) | (2,991,000) |
Net cash provided by financing activities | (2,487,000) | 168,907,000 |
Increase in cash and cash equivalents | 2,541,000 | 28,667,000 |
Cash and cash equivalents, beginning of period | 219,311,000 | 158,016,000 |
Cash and cash equivalents, end of period | 221,852,000 | 186,683,000 |
SUPPLEMENTAL DISCLOSURES | ||
Interest paid | 4,806,000 | 8,321,000 |
Income taxes paid | 6,780,000 | 3,632,000 |
Noncash investing activities: | ||
Transfer of SBA loans held for sale to held to maturity | 0 | 1,204,000 |
Capitalization of servicing rights | $ 125,000 | $ 578,000 |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Significant Accounting Policies | |
Significant Accounting Policies | NOTE 1. Significant Accounting Policies The accompanying Consolidated Financial Statements include the accounts of Unity Bancorp, Inc. (the "Parent Company") and its wholly-owned subsidiary, Unity Bank (the "Bank" or when consolidated with the Parent Company, the "Company"), and reflect all adjustments and disclosures which are generally routine and recurring in nature, and in the opinion of management, necessary for a fair presentation of interim results. The Bank has multiple subsidiaries used to hold part of its investment and loan portfolios. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period amounts to conform to the current year presentation, with no impact on current earnings or shareholders’ equity. The financial information has been prepared in accordance with U.S. generally accepted accounting principles and has not been audited. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the reporting periods. Actual results could differ from those estimates. Amounts requiring the use of significant estimates include the allowance for loan losses, valuation of deferred tax and servicing assets, the carrying value of loans held for sale and other real estate owned, the valuation of securities and the determination of other-than-temporary impairment for securities and fair value disclosures. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. The markets served by the Company were significantly impacted by the COVID-19 pandemic, which started during the first quarter of 2020. The Company continues to assess the financial impact of the COVID-19 pandemic. The interim unaudited Consolidated Financial Statements included herein have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the Securities and Exchange Commission (“SEC”) and consist of normal recurring adjustments necessary for the fair presentation of interim results. The results of operations for the six months ended June 30, 2021 are not necessarily indicative of the results which may be expected for the entire year. As used in this Form 10-Q, “we” and “us” and “our” refer to Unity Bancorp, Inc., and its consolidated subsidiary, Unity Bank, depending on the context. Certain information and financial disclosures required by U.S. generally accepted accounting principles have been condensed or omitted from interim reporting pursuant to SEC rules. Interim financial statements should be read in conjunction with the Company’s Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Risks and Uncertainties On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The COVID-19 pandemic has adversely affected local, national and global economic activity. Actions taken to help mitigate the spread of COVID-19 included restrictions on travel, localized quarantines, and government-mandated closures of certain businesses. The spread of the outbreak caused significant disruptions to the U.S. economy and disrupted banking and other financial activity in the areas in which the Company operates. On March 3, 2020, the Federal Open Market Committee reduced the targeted federal funds interest rate range by 50 basis points to 1.00 percent to 1.25 percent. This range was further reduced to 0 percent to 0.25 percent on March 16, 2020. On March 27, 2020, the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”) was enacted to, among other things, provide emergency assistance for individuals, families and businesses affected by the COVID-19 pandemic. These reductions in interest rates and other effects of the COVID-19 pandemic may materially and adversely affect the Company’s financial condition and results of operations in future periods. It is unknown how long the adverse conditions associated with the COVID-19 pandemic will last and what the complete financial effect will be to the Company. It is possible that estimates made in the financial statements could be materially and adversely impacted as a result of these conditions. On July 27, 2017, the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR to the LIBOR administration after 2021. The announcement also indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. Consequently, at this time, it is not possible to predict whether and to what extent banks will continue to provide LIBOR submissions to the LIBOR administrator or whether any additional reforms to LIBOR may be enacted in the United Kingdom or elsewhere. Similarly, it is not possible to predict whether LIBOR will continue to be viewed as an acceptable benchmark for certain loans and liabilities including our subordinated debentures, what rate or rates may become accepted alternatives to LIBOR or the effect of any changes in views or alternatives on the values of the loans and liabilities, whose interest rates are tied to LIBOR. Uncertainty as to the nature of such potential changes, alternative reference rates, the elimination or replacement of LIBOR, or other reforms may adversely affect the value of, and the return on our loans, and our investment securities. Other-Than-Temporary Impairment The Company has a process in place to identify securities that could potentially incur credit impairment that is other-than-temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concern warrants such evaluation. This evaluation considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other-than-temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for fixed maturity securities, the intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, our ability and intent to hold the security for a forecasted period of time that allows for the recovery in value. Management assesses its intent to sell or whether it is more likely than not that it will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired with no intent to sell and no requirement to sell prior to recovery of its amortized cost basis, the amount of the impairment is separated into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and is recognized in other comprehensive income. For debt securities where management has the intent to sell, the amount of the impairment is reflected in earnings as realized losses. The present value of expected future cash flows is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate bond cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances including timing, security interests and loss severity. Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Loans Loans Held for Sale Loans held for sale represent the guaranteed portion of Small Business Administration (“SBA”) loans, other than loans originated under the Paycheck Protection Program, and are reflected at the lower of aggregate cost or market value. The Company originates loans to customers under an SBA program that historically has provided for SBA guarantees of up to 90 percent of each loan. The Company generally sells the guaranteed portion of its SBA loans to a third party and retains the servicing, holding the nonguaranteed portion in its portfolio. The net amount of loan origination fees on loans sold is included in the carrying value and in the gain or loss on the sale. When sales of SBA loans do occur, the premium received on the sale and the present value of future cash flows of the servicing assets are recognized in income. All criteria for sale accounting must be met in order for the loan sales to occur; see details under the “Transfers of Financial Assets” heading above. Servicing assets represent the estimated fair value of retained servicing rights, net of servicing costs, at the time loans are sold. Servicing assets are amortized in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on stratifying the underlying financial assets by date of origination and term. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Any impairment, if temporary, would be reported as a valuation allowance. Serviced loans sold to others are not included in the accompanying Consolidated Balance Sheets. Income and fees collected for loan servicing are credited to noninterest income when earned, net of amortization on the related servicing assets. Loans Held for Investment Loans held for investment are stated at the unpaid principal balance, net of unearned discounts and deferred loan origination fees and costs. In accordance with the level yield method, loan origination fees, net of direct loan origination costs, are deferred and recognized over the estimated life of the related loans as an adjustment to the loan yield. Interest is credited to operations primarily based upon the principal balance outstanding. Loans are reported as past due when either interest or principal is unpaid in the following circumstances: fixed payment loans when the borrower is in arrears for two or more monthly payments; open end credit for two or more billing cycles; and single payment notes if interest or principal remains unpaid for 30 days or more. Nonperforming loans consist of loans that are not accruing interest as a result of principal or interest being in default for a period of 90 days or more or when the ability to collect principal and interest according to the contractual terms is in doubt (nonaccrual loans). When a loan is classified as nonaccrual, interest accruals are discontinued and all past due interest previously recognized as income is reversed and charged against current period earnings. Generally, until the loan becomes current, any payments received from the borrower are applied to outstanding principal until such time as management determines that the financial condition of the borrower and other factors merit recognition of a portion of such payments as interest income. Loans may be returned to an accrual status when the ability to collect is reasonably assured and when the loan is brought current as to principal and interest. Loans are charged off when collection is sufficiently questionable and when the Company can no longer justify maintaining the loan as an asset on the balance sheet. Loans qualify for charge-off when, after thorough analysis, all possible sources of repayment are insufficient. These include: 1) potential future cash flows, 2) value of collateral, and/or 3) strength of co-makers and guarantors. All unsecured loans are charged off upon the establishment of the loan’s nonaccrual status. Additionally, all loans classified as a loss or that portion of the loan classified as a loss is charged off. All loan charge-offs are approved by the Board of Directors. Troubled debt restructurings ("TDRs") occur when a creditor, for economic or legal reasons related to a debtor’s financial condition, grants a concession to the debtor that it would not otherwise consider. These concessions typically include reductions in interest rate, extending the maturity of a loan, or a combination of both. Interest income on accruing TDRs is credited to operations primarily based upon the principal amount outstanding, as stated in the paragraphs above. The Company evaluates its loans for impairment. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company has defined impaired loans to be all TDRs and nonperforming loans individually evaluated for impairment. Impairment is evaluated in total for smaller-balance loans of a similar nature (consumer and residential mortgage loans), and on an individual basis for all other loans. Impairment of a loan is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, or as a practical expedient, based on a loan’s observable market price or the fair value of collateral, net of estimated costs to sell, if the loan is collateral-dependent. If the value of the impaired loan is less than the recorded investment in the loan, the Company establishes a valuation allowance, or adjusts existing valuation allowances, with a corresponding charge to the provision for loan losses. For additional information on loans, see Note 8 to the Consolidated Financial Statements and the section titled "Loan Portfolio" under Item 2. Management’s Discussion and Analysis. Allowance for Loan Losses and Reserve for Unfunded Loan Commitments The allowance for loan losses is maintained at a level management considers adequate to provide for probable loan losses as of the balance sheet date. The allowance is increased by provisions charged to expense and is reduced by net charge-offs. The level of the allowance is based on management’s evaluation of probable losses in the loan portfolio, after consideration of prevailing economic conditions in the Company’s market area, the volume and composition of the loan portfolio, and historical loan loss experience. The allowance for loan losses consists of specific reserves for individually impaired credits and TDRs, reserves for nonimpaired loans based on historical loss factors and reserves based on general economic factors and other qualitative risk factors such as changes in delinquency trends, industry concentrations or local/national economic trends. This risk assessment process is performed at least quarterly, and, as adjustments become necessary, they are realized in the periods in which they become known. Although management attempts to maintain the allowance at a level deemed adequate to provide for probable losses, future additions to the allowance may be necessary based upon certain factors including changes in market conditions and underlying collateral values. In addition, various regulatory agencies periodically review the adequacy of the Company’s allowance for loan losses. These agencies may require the Company to make additional provisions based on their judgments about information available to them at the time of their examination. The Company maintains an allowance for unfunded loan commitments that is maintained at a level that management believes is adequate to absorb estimated probable losses. Adjustments to the allowance are made through other expenses and applied to the allowance which is maintained in other liabilities. For additional information on the allowance for loan losses and unfunded loan commitments, see Note 9 to the Consolidated Financial Statements and the sections titled "Asset Quality" and "Allowance for Loan Losses and Reserve for Unfunded Loan Commitments" under Item 2. Management’s Discussion and Analysis. Income Taxes The Company accounts for income taxes according to the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates applicable to taxable income for the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation reserves are established against certain deferred tax assets when it is more likely than not that the deferred tax assets will not be realized. Increases or decreases in the valuation reserve are charged or credited to the income tax provision. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that ultimately would be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits would be recognized in income tax expense on the income statement. |
Litigation
Litigation | 6 Months Ended |
Jun. 30, 2021 | |
Leases and Commitments | |
Litigation | NOTE 2. Litigation The Company may, in the ordinary course of business, become a party to litigation involving collection matters, contract claims and other legal proceedings relating to the conduct of its business. In the best judgment of management, based upon consultation with counsel, the consolidated financial position and results of operations of the Company will not be affected materially by the final outcome of any pending legal proceedings or other contingent liabilities and commitments. |
Net Income per Share
Net Income per Share | 6 Months Ended |
Jun. 30, 2021 | |
Net Income per Share | |
Net Income per Share | NOTE 3. Net Income per Share Basic net income per common share is calculated as net income divided by the weighted average common shares outstanding during the reporting period. Diluted net income per common share is computed similarly to that of basic net income per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, principally stock options, were issued during the reporting period utilizing the Treasury stock method. The following is a reconciliation of the calculation of basic and diluted income per share: For the three months ended June 30, For the six months ended June 30, (In thousands, except per share amounts) 2021 2020 2021 2020 Net income $ 8,418 $ 5,171 $ 16,914 $ 10,539 Weighted average common shares outstanding - Basic 10,427 10,792 10,432 10,838 Plus: Potential dilutive common stock equivalents 142 96 135 124 Weighted average common shares outstanding - Diluted 10,569 10,888 10,567 10,962 Net income per common share - Basic $ 0.81 $ 0.48 $ 1.62 $ 0.97 Net income per common share - Diluted 0.80 0.47 1.60 0.96 Stock options and common stock excluded from the income per share calculation as their effect would have been anti-dilutive 247 450 262 403 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Income Taxes | NOTE 4. Income Taxes The Company follows FASB ASC Topic 740, “Income Taxes,” On July 1, 2018, New Jersey’s Assembly Bill 4202 was signed into law. The bill, effective January 1, 2018, imposed a temporary surtax on corporations earning New Jersey allocated taxable income in excess of $1 million at a rate of 2.5 percent for tax years beginning on or after January 1, 2018, through December 31, 2019, and at 1.5 percent for tax years beginning on or after January 1, 2020, through December 31, 2021. In addition, New Jersey adopted mandatory unitary combined reporting for its Corporation Business Tax, which became effective for periods on or after January 1, 2019. On September 29, 2020, New Jersey’s Assembly Bill 4721 was signed into law. The bill, retroactively effective January 1, 2020, extends the 2.5% corporate income surtax until December 31, 2023. If the federal corporate tax rate is increased to a rate of at least 35% of taxable income, the surtax will be suspended. For the quarter ended June 30, 2021, the Company reported income tax expense of $2.5 million for an effective tax rate of 22.7 percent, compared to an income tax expense of $1.5 million and an effective tax rate of 22.3 percent for the prior year’s quarter. For the six months ended June 30, 2021, the Company reported income tax expense of $5.4 million for an effective tax rate of 24.2 percent, compared to an income tax expense of $3.1 million and an effective tax rate of 22.6 percent for the six months ended June 30, 2021. The Company did not recognize or accrue any interest or penalties related to income taxes during the three or the six months ended June 30, 2021 or 2020. The Company did not have an accrual for uncertain tax positions as of June 30, 2021 or December 31,2020, as deductions taken and benefits accrued are based on widely understood administrative practices and procedures and are based on clear and unambiguous tax law. Tax returns for all years 2016 and thereafter are subject to future examination by tax authorities. |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2021 | |
Other Comprehensive Income (Loss) | |
Other Comprehensive Income (Loss) | NOTE 5. Other Comprehensive Income (Loss) The following tables show the changes in other comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020, net of tax: For the three months ended June 30, 2021 Adjustments Net unrealized Accumulated Net unrealized related to (losses) gains other (losses) gains on defined benefit from cash flow comprehensive (In thousands) securities plan hedges (loss) income Balance, beginning of period $ (153) $ (223) $ (158) $ (534) Other comprehensive income before reclassifications 119 — 13 132 Less amounts reclassified from accumulated other comprehensive income (loss) 18 (223) — (205) Period change 101 223 13 337 Balance, end of period $ (52) $ — $ (145) $ (197) For the three months ended June 30, 2020 Adjustments Net unrealized Accumulated Net unrealized related to losses other gains on defined benefit from cash flow comprehensive (In thousands) securities plan hedges (loss) income Balance, beginning of period $ 284 $ (280) $ (836) $ (832) Other comprehensive income (loss) before reclassifications 362 — (241) 121 Less amounts reclassified from accumulated other comprehensive income (loss) 62 (15) — 47 Period change 300 15 (241) 74 Balance, end of period $ 584 $ (265) $ (1,077) $ (758) For the six months ended June 30, 2021 Adjustments Net unrealized Accumulated Net unrealized related to (losses) gains other (losses) gains on defined benefit from cash flow comprehensive (In thousands) securities plan hedges (loss) income Balance, beginning of period $ (214) $ (238) $ (737) $ (1,189) Other comprehensive income before reclassifications 425 — 592 1,017 Less amounts reclassified from accumulated other comprehensive income (loss) 263 (238) — 25 Period change 162 238 592 992 Balance, end of period $ (52) $ — $ (145) $ (197) For the six months ended June 30, 2020 Adjustments Net unrealized Accumulated Net unrealized related to gains (losses) other gains (loss) on defined benefit from cash flow comprehensive (In thousands) securities plan hedges income (loss) Balance, beginning of period $ 281 $ (295) $ 168 $ 154 Other comprehensive income (loss) before reclassifications 231 — (1,245) (1,014) Less amounts reclassified from accumulated other comprehensive loss (72) (30) — (102) Period change 303 30 (1,245) (912) Balance, end of period $ 584 $ (265) $ (1,077) $ (758) |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value | |
Fair Value | NOTE 6. Fair Value Fair Value Measurement The Company follows FASB ASC Topic 820, “Fair Value Measurement and Disclosures,” hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed as follows: Level 1 Inputs ● Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. ● Generally, this includes debt and equity securities and derivative contracts that are traded in an active exchange market (i.e. New York Stock Exchange), as well as certain U.S. Treasury, U.S. Government and sponsored entity agency mortgage-backed securities that are highly liquid and are actively traded in over-the-counter markets. Level 2 Inputs ● Quoted prices for similar assets or liabilities in active markets. ● Quoted prices for identical or similar assets or liabilities in inactive markets. ● Inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability (i.e., interest rates, yield curves, credit risks, prepayment speeds or volatilities) or “market corroborated inputs.” ● Generally, this includes U.S. Government and sponsored entity mortgage-backed securities, corporate debt securities and derivative contracts Level 3 Inputs ● Prices or valuation techniques that require inputs that are both unobservable (i.e. supported by little or no market activity) and that are significant to the fair value of the assets or liabilities. ● These assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Fair Value on a Recurring Basis The following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis: Debt Securities Available for Sale The fair value of available for sale ("AFS") debt securities is the market value based on quoted market prices, when available, or market prices provided by recognized broker dealers (Level 1). If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). As of June 30, 2021, the fair value of the Company’s AFS debt securities portfolio was $32.8 million. Approximately 39 percent of the portfolio was made up of residential mortgage-backed securities, which had a fair value of $12.9 million at June 30, 2021. Approximately $12.7 million of the residential mortgage-backed securities are guaranteed by the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association ("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC"). The underlying loans for these securities are residential mortgages that are geographically dispersed throughout the United States. Most of the Company’s AFS debt securities were classified as Level 2 assets at June 30, 2021. The valuation of AFS debt securities using Level 2 inputs was primarily determined using the market approach, which uses quoted prices for similar assets or liabilities in active markets and all other relevant information. It includes model pricing, defined as valuing securities based upon their relationship with other benchmark securities. Included in the Company’s AFS debt securities are two corporate bonds which are classified as Level 3 assets at June 30, 2021, which were previously classified as Level 2 assets. The valuation of these corporate bonds is determined using broker quotes, third-party vendor prices, or other valuation techniques, such as discounted cash flow techniques. Market inputs used in the other valuation techniques or underlying third-party vendor prices or broker quotes include benchmark and government bond yield curves, credit spreads, and trade execution data. The following table presents a reconciliation of the Level 3 available for sale debt securities measured at fair value on a recurring basis for the three and six months ended June 30, 2021 and 2020: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Balance at beginning of period (1) $ 4,538 $ 6,238 $ 4,400 $ 6,238 Purchases/additions — — — — Sales/reductions — — — — Realized gains (losses) — — — — Unrealized gains 137 5 275 5 Balance at end of period $ 4,675 $ 6,243 $ 4,675 $ 6,243 (1) Includes AFS debt securities classified as Level 2 at December 31, 2020, which were transferred to Level 3 during the three months ended June 30, 2021. Equity Securities with Readily Determinable Fair Values The fair value of equity securities is the market value based on quoted market prices, when available, or market prices provided by recognized broker dealers (Level 1). If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). As of June 30, 2021, the fair value of the Company’s equity securities portfolio was $2.2 million. All of the Company’s equity securities were classified as Level 2 assets at June 30, 2021. The valuation of equity securities using Level 2 inputs was primarily determined using the market approach, which uses quoted prices for similar assets or liabilities in active markets and all other relevant information. There were no changes in the inputs or methodologies used to determine fair value during the period ended June 30, 2021, as compared to the periods ended December 31, 2020 and June 30, 2020. Loans Held for Sale Fair Value for loans held for sale is derived from quoted market prices for similar loans, in which case they are characterized as Level 2 assets in the fair value hierarchy. Interest Rate Swap Agreements The fair value of interest rate swap agreements is the market value based on quoted market prices, when available, or market prices provided by recognized broker dealers (Level 1). If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). The Company’s derivative instruments are classified as Level 2 assets, as the readily observable market inputs to these models are validated to external sources, such as industry pricing services, or are corroborated through recent trades, dealer quotes, yield curves, implied volatility or other market-related data. The tables below present the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020: Fair Value Measurements at June 30, 2021 Using Quoted Prices in Assets/Liabilities Active Markets Significant Other Significant Measured at Fair for Identical Observable Unobservable (In thousands) Value Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Measured on a recurring basis: Assets: Debt securities available for sale: State and political subdivisions $ 1,312 $ — $ 1,312 $ — Residential mortgage-backed securities 12,883 — 12,883 — Corporate and other securities 18,615 — 13,940 4,675 Total debt securities available for sale $ 32,810 $ — $ 28,135 $ 4,675 Equity securities with readily determinable fair values 2,244 — 2,244 — Total equity securities $ 2,244 $ — $ 2,244 $ — Loans held for sale 13,396 — 13,396 — Total loans held for sale $ 13,396 $ — $ 13,396 $ — Interest rate swap agreements (202) — (202) — Total swap agreements $ (202) $ — $ (202) $ — Fair value Measurements at December 31, 2020 Using Quoted Prices in Assets/Liabilities Active Markets Significant Other Significant Measured at Fair for Identical Observable Unobservable (In thousands) Value Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Measured on a recurring basis: Assets: Debt securities available for sale: U.S. Government sponsored entities $ 2,003 $ — $ 2,003 $ — State and political subdivisions 2,969 — 2,969 — Residential mortgage-backed securities 17,410 — 17,410 — Corporate and other securities 23,235 — 18,835 4,400 Total debt securities available for sale $ 45,617 $ — $ 41,217 $ 4,400 Equity securities with readily determinable fair values 1,954 — 1,954 — Total equity securities $ 1,954 $ — $ 1,954 $ — Loans held for sale 10,712 — 10,712 — Total loans held for sale $ 10,712 $ — $ 10,712 $ — Interest rate swap agreements (1,026) — (1,026) — Total swap agreements $ (1,026) $ — $ (1,026) $ — Fair Value on a Nonrecurring Basis The following tables present the assets and liabilities subject to fair value adjustments (impairment) on a non-recurring basis carried on the balance sheet by caption and by level within the hierarchy (as described above): Fair Value Measurements at June 30, 2021 Using Quoted Prices Significant in Active Other Significant Assets/Liabilities Markets for Observable Unobservable Net Credit Measured at Fair Identical Assets Inputs Inputs During (In thousands) Value (Level 1) (Level 2) (Level 3) Period Measured on a non-recurring basis: Financial assets: Impaired collateral-dependent loans $ 10,478 $ — $ — $ 10,478 $ (716) Fair Value Measurements at December 31, 2020 Using Quoted Prices Significant in Active Other Significant Net (Credit) Assets/Liabilities Markets for Observable Unobservable Provision Measured at Fair Identical Assets Inputs Inputs During (In thousands) Value (Level 1) (Level 2) (Level 3) Period Financial assets: OREO $ — $ — $ — $ — $ (225) Impaired collateral-dependent loans 11,959 — — 11,959 3,693 Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following is a description of the valuation methodologies used for instruments measured at fair value on a nonrecurring basis: Appraisal Policy All appraisals must be performed in accordance with the Uniform Standards of Professional Appraisal Practice ("USPAP"). Appraisals are certified to the Company and performed by appraisers on the Company’s approved list of appraisers. Evaluations are completed by a person independent of Company management. The content of the appraisal depends on the complexity of the property. Appraisals are completed on a “retail value” and an “as is value.” OREO The fair value of OREO is determined using third party appraisals, which may be discounted based on management’s review and changes in market conditions (Level 3 Inputs). Impaired Collateral-Dependent Loans The fair value of impaired collateral-dependent loans is derived in accordance with FASB ASC Topic 310, “Receivables.” The valuation allowance for impaired loans is included in the allowance for loan losses in the consolidated balance sheets. At June 30, 2021, the valuation allowance for impaired loans was $3.4 thousand, a decrease of $716 thousand from $4.1 thousand at December 31, 2020. Fair Value of Financial Instruments FASB ASC Topic 825, “Financial Instruments,” Cash and Cash Equivalents For these short-term instruments, the carrying value is a reasonable estimate of fair value. Securities The fair value of securities is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). SBA Loans Held for Sale The fair value of SBA loans held for sale is estimated by using a market approach that includes significant other observable inputs. Loans The fair value of loans is estimated by discounting the future cash flows using current market rates that reflect the interest rate risk inherent in the loan, except for previously discussed impaired loans. FHLB Stock Federal Home Loan Bank stock is carried at cost. Carrying value approximates fair value based on the redemption provisions of the issues. Servicing Assets Servicing assets do not trade in an active, open market with readily observable prices. The Company estimates the fair value of servicing assets using discounted cash flow models incorporating numerous assumptions from the perspective of a market participant including market discount rates and prepayment speeds. Accrued Interest The carrying amounts of accrued interest approximate fair value. Deposit Liabilities The fair value of demand deposits and savings accounts is the amount payable on demand at the reporting date (i.e. carrying value). The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using current market rates. Borrowed Funds and Subordinated Debentures The fair value of borrowings is estimated by discounting the projected future cash flows using current market rates. Standby Letters of Credit At each of June 30, 2021 and Dember 31, 2020, the Bank had standby letters of credit outstanding of $4.5 million. The fair value of these commitments is nominal. The table below presents the carrying amount and estimated fair values of the Company’s financial instruments presented as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Fair value Carrying Estimated Carrying Estimated (In thousands) level amount fair value amount fair value Financial assets: Cash and cash equivalents Level 1 $ 221,852 $ 221,852 $ 219,311 $ 219,311 Securities (1) Level 2 37,054 35,054 47,571 47,571 SBA loans held for sale Level 2 11,314 13,396 9,335 10,712 Loans, net of allowance for loan losses (2) Level 2 1,619,873 1,634,039 1,595,377 1,613,593 FHLB stock Level 2 9,060 9,060 10,594 10,594 Servicing assets Level 3 1,476 1,476 1,857 1,857 Accrued interest receivable Level 2 9,486 9,486 10,429 10,429 Financial liabilities: Deposits Level 2 1,594,316 1,593,544 1,557,959 1,561,502 Borrowed funds and subordinated debentures Level 2 175,310 176,552 210 212,358 Accrued interest payable Level 2 231 231 248 248 (1) Includes corporate securities that are considered Level 3 and reported separately in the table under the “Fair Value on a Recurring Basis” heading. These securities had book values of $4.7 million and market values of $4.4 million. (2) Includes collateral-dependent impaired loans that are considered Level 3 and reported separately in the tables under the “Fair Value on a Nonrecurring Basis” heading. Collateral-dependent impaired loans, net of specific reserves totaled $10.5 million and $12.0 million at June 30, 2021 and December 31, 2020, respectively. Limitations Fair value estimates are made at a point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on- and off-statement of condition financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the effect of fair value estimates have not been considered in the above estimates. |
Securities
Securities | 6 Months Ended |
Jun. 30, 2021 | |
Securities | |
Securities | NOTE 7. Securities This table provides the major components of debt securities available for sale ("AFS"), held to maturity (“HTM”) and equity securities with readily determinable fair values ("equity securities") at amortized cost and estimated fair value at June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Gross Gross Gross Gross Amortized unrealized unrealized Estimated Amortized unrealized unrealized Estimated (In thousands) cost gains losses fair value cost gains losses fair value Available for sale: U.S. Government sponsored entities $ — $ — $ — $ — $ 2,000 $ 3 $ — $ 2,003 State and political subdivisions 1,293 19 — 1,312 2,935 34 — 2,969 Residential mortgage-backed securities 12,412 471 — 12,883 16,765 645 — 17,410 Corporate and other securities 19,183 196 (764) 18,615 24,221 132 (1,118) 23,235 Total debt securities available for sale $ 32,888 $ 686 $ (764) $ 32,810 $ 45,921 $ 814 $ (1,118) $ 45,617 Held to maturity: U.S. Government sponsored entities $ 2,000 $ 9 $ — $ 2,009 $ — $ — $ — $ — Total securities held to maturity $ 2,000 $ 9 $ — $ 2,009 $ — $ — $ — $ — Equity securities: Total equity securities $ 2,112 $ 205 $ (73) $ 2,244 $ 2,112 $ — $ (158) $ 1,954 This table provides the remaining contractual maturities and yields of securities within the investment portfolios. The carrying value of securities at June 30, 2021 is distributed by contractual maturity. Mortgage-backed securities and other securities, which may have principal prepayment provisions, are distributed based on contractual maturity. Expected maturities will differ materially from contractual maturities as a result of early prepayments and calls. After one through After five through Total carrying Within one year five years ten years After ten years value (In thousands, except percentages) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Available for sale at fair value: State and political subdivisions $ 201 3.85 % $ 627 3.23 % $ — — % $ 484 2.74 % $ 1,312 3.14 % Residential mortgage-backed securities 3 4.68 452 2.88 1,286 2.25 11,142 1.89 12,883 1.96 Corporate and other securities — — — — 12,440 4.56 6,175 2.79 18,615 3.70 Total debt securities available for sale $ 204 3.86 % $ 1,079 3.08 % $ 13,726 4.34 % $ 17,801 2.22 % $ 32,810 3.15 % Held to maturity at cost: U.S. Government sponsored entities $ — — % $ — — % $ — — % $ 2,000 2.49 % $ 2,000 2.49 % Total securities held to maturity $ — — % $ — — % $ — — % $ 2,000 2.49 % $ 2,000 2.49 % Equity Securities at fair value: Total equity securities $ — — % $ — — % $ — — % $ 2,244 2.35 % $ 2,244 2.35 % The fair value of securities with unrealized losses by length of time that the individual securities have been in a continuous unrealized loss position at June 30, 2021 and December 31, 2020 are as follows: June 30, 2021 Less than 12 months 12 months and greater Total Total number in a Estimated Unrealized Estimated Unrealized Estimated Unrealized (In thousands, except number in a loss position) loss position fair value loss fair value loss fair value loss Available for sale: Corporate and other securities 6 $ 2,396 $ (104) $ 7,892 $ (660) $ 10,288 $ (764) Total temporarily impaired securities 6 $ 2,396 $ (104) $ 7,892 $ (660) $ 10,288 $ (764) December 31, 2020 Less than 12 months 12 months and greater Total Total number in a Estimated Unrealized Estimated Unrealized Estimated Unrealized (In thousands, except number in a loss position) loss position fair value loss fair value loss fair value loss Available for sale: Corporate and other securities 9 $ 4,793 $ (20) $ 9,157 $ (1,098) $ 13,950 $ (1,118) Total temporarily impaired securities 9 $ 4,793 $ (20) $ 9,157 $ (1,098) $ 13,950 $ (1,118) Unrealized Losses The unrealized losses in each of the categories presented in the tables above are discussed in the paragraphs that follow: U.S. government sponsored entities and state and political subdivision securities: Residential and commercial mortgage-backed securities: Corporate and other securities: Realized Gains and Losses Gross realized gains and losses on securities for the three and six months ended June 30, 2021 and 2020 are detailed in the table below: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Available for sale: Realized gains $ — $ 5 $ 43 $ 301 Realized losses — — — — Total debt securities available for sale — 5 43 301 Net gains on sales of securities $ — $ 5 $ 43 $ 301 The net realized gains are included in noninterest income in the Consolidated Statements of Income as net security gains. There were no gross realized gains and $43 thousand of gross realized gains during the three and six months ended June 30, 2021, compared to $5 thousand and $301 thousand of gross realized gains during the same period a year ago. There were no gross realized losses for the three and six months ended June 30, 2021, or 2020. For the six months ended June 30, 2021, the net gain is attributed to: ● the sale of six corporate bonds with a total book value of $7.0 million and resulting gains of $39 thousand, and ● the call of one taxable municipal security with a book value of $496 thousand and resulting gains of $4 thousand. For the six months ended June 30, 2020, the net gain is attributed to: ● the sale of one corporate bond with a book value of $2.2 million and resulting gains of $61 thousand, ● three mortgage-backed securities with a total book value of $2.8 million and resulting gains of $57 thousand, ● one tax-exempt municipal security with a book value of $456 thousand and resulting gains of $140 thousand, and ● the call of three tax-exempt municipal securities with a total book value of $3.8 million and resulting gains of $16 thousand. Equity Securities Included in this category are Community Reinvestment Act ("CRA") investments and the Company’s current other equity holdings of financial institutions. Equity securities are defined to include (a) preferred, common and other ownership interests in entities including partnerships, joint ventures and limited liability companies and (b) rights to acquire or dispose of ownership interest in entities at fixed or determinable prices. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2021 and 2020: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Net gains (losses) recognized during the period on equity securities $ (100) $ 74 $ 290 $ (397) Net gains recognized during the period on equity securities sold during the period — — — 5 Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date $ (100) $ 74 $ 290 $ (392) Pledged Securities Securities with a carrying value of $1.4 million and $1.6 million at June 30, 2021 and December 31, 2020, respectively, were pledged to secure deposits, secure other borrowings and for other purposes required or permitted by law. |
Loans
Loans | 6 Months Ended |
Jun. 30, 2021 | |
Loans | |
Loans | NOTE 8. Loans The following table sets forth the classification of loans by class, including unearned fees, deferred costs and excluding the allowance for loan losses as of June 30, 2021 and December 31, 2020: (In thousands) June 30, 2021 December 31, 2020 SBA loans held for investment $ 38,114 $ 39,587 SBA PPP loans 132,375 118,257 Commercial loans SBA 504 loans 22,155 19,681 Commercial other 113,778 118,280 Commercial real estate 676,383 630,423 Commercial real estate construction 73,250 71,404 Residential mortgage loans 422,188 467,586 Consumer loans Home equity 63,390 62,549 Consumer other 1,167 3,551 Residential construction loans 99,874 87,164 Total loans held for investment $ 1,642,674 $ 1,618,482 SBA loans held for sale 11,314 9,335 Total loans $ 1,653,988 $ 1,627,817 Loans are made to individuals as well as commercial entities. Specific loan terms vary as to interest rate, repayment, and collateral requirements based on the type of loan requested and the credit worthiness of the prospective borrower. Credit risk tends to be geographically concentrated in that a majority of the loan customers are located in the markets serviced by the Bank. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and/or property type. A description of the Company’s different loan segments follows: SBA Loans: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. It contained substantial tax and spending provisions intended to address the impact of the COVID-19 pandemic. The CARES Act included a range of other provisions designed to support the U.S. economy and mitigate the impact of COVID-19 on financial institutions and their customers, including through the authorization of various relief programs and measures that the U.S. Department of the Treasury, the Small Business Administration, the Federal Reserve Board (“FRB”) and other federal banking agencies have implemented or may implement. The CARES Act provided assistance to small businesses through the establishment of the SBA Paycheck Protection Program ("PPP"). The PPP provided small businesses with funds to pay up to 24 weeks of payroll costs, including certain benefits. The funds were provided in the form of loans that may be fully or partially forgiven when used for payroll costs, interest on mortgages, rent, and utilities. The payments on these loans were deferred for up to six months. Loans made after June 5, 2020, mature in five years, and loans made prior to June 5, 2020, mature in two years but can be extended to five years if the lender agrees. Forgiveness of the PPP loans is based on the borrower maintaining or quickly rehiring employees and maintaining salary levels. Most small businesses with 500 or fewer employees were eligible. Applications for the PPP loans started on April 3, 2020 and was extended through August 8, 2020. As an existing SBA 7(a) lender, the Company opted to participate in the program. Applications for the Second Draw PPP loans started on January 13, 2021 and were available until March 31, 2021. Commercial Loans: Residential Mortgage, Consumer and Residential Construction Loans: Inherent in the lending function is credit risk, which is the possibility a borrower may not perform in accordance with the contractual terms of their loan. A borrower’s inability to pay their obligations according to the contractual terms can create the risk of past due loans and, ultimately, credit losses, especially on collateral deficient loans. The Company minimizes its credit risk by loan diversification and adhering to credit administration policies and procedures. Due diligence on loans begins when we initiate contact regarding a loan with a borrower. Documentation, including a borrower’s credit history, materials establishing the value and liquidity of potential collateral, the purpose of the loan, the source of funds for repayment of the loan, and other factors, are analyzed before a loan is submitted for approval. The loan portfolio is then subject to on-going internal reviews for credit quality which in part is derived from ongoing collection and review of borrowers’ financial information, as well as independent credit reviews by an outside firm. The Company’s extension of credit is governed by the Credit Risk Policy which was established to control the quality of the Company’s loans. This policy and the underlying procedures are reviewed and approved by the Board of Directors on a regular basis. Credit Ratings For SBA 7(a) and commercial loans, management uses internally assigned risk ratings as the best indicator of credit quality. A loan’s internal risk rating is updated at least annually and more frequently if circumstances warrant a change in risk rating. The Company uses a 1 through 10 loan grading system that follows regulatory accepted definitions. Pass: Special Mention: weaknesses which, if left uncorrected, may result in deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. This definition is intended to ensure that the “Special Mention” category is not used to identify assets that have as their sole weakness credit data exceptions or collateral documentation exceptions that are not material to the repayment of the asset. Substandard: A risk rating of 9 is used for borrowers that have all the weaknesses inherent in a loan with a risk rating of 8, with the added characteristic that the weaknesses make collection of debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely. The possibility of loss is extremely high, but because of certain important, reasonably specific pending factors that may work to strengthen the assets, the loans’ classification as estimated losses is deferred until a more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures; capital injection; perfecting liens on additional collateral; and refinancing plans. Partial charge-offs are likely. Loss: For residential mortgage, consumer and residential construction loans, management uses performing versus nonperforming as the best indicator of credit quality. Nonperforming loans consist of loans that are not accruing interest (nonaccrual loans) as a result of principal or interest being in default for a period of 90 days or more or when the ability to collect principal and interest according to the contractual terms is in doubt. These credit quality indicators are updated on an ongoing basis, as a loan is placed on nonaccrual status as soon as management believes there is sufficient doubt as to the ultimate ability to collect interest on a loan. At June 30, 2021, there were $2.4 million of residential consumer loans in the process of foreclosure, compared to $4.8 million at December 31, 2020. The tables below detail the Company’s loan portfolio by class according to their credit quality indicators discussed in the paragraphs above as of June 30, 2021: June 30, 2021 SBA & Commercial loans - Internal risk ratings (In thousands) Pass Special mention Substandard Total SBA loans held for investment $ 36,714 $ 524 $ 876 $ 38,114 SBA PPP loans 132,375 — — 132,375 Commercial loans SBA 504 loans 22,155 — — 22,155 Commercial other 102,994 7,582 3,202 113,778 Commercial real estate 648,520 22,285 5,578 676,383 Commercial real estate construction 73,250 — — 73,250 Total commercial loans 846,919 29,867 8,780 885,566 Total SBA and commercial loans $ 1,016,008 $ 30,391 $ 9,656 $ 1,056,055 Residential mortgage, Consumer & Residential construction loans - Performing/Nonperforming (In thousands) Performing Nonperforming Total Residential mortgage loans $ 418,145 $ 4,043 $ 422,188 Consumer loans Home equity 63,390 — 63,390 Consumer other 1,164 3 1,167 Total consumer loans 64,554 3 64,557 Residential construction loans 97,585 2,289 99,874 Total residential mortgage, consumer and residential construction loans $ 580,284 $ 6,335 $ 586,619 The tables below detail the Company’s loan portfolio by class according to their credit quality indicators discussed in the paragraphs above as of December 31, 2020: December 31, 2020 SBA & Commercial loans - Internal risk ratings (In thousands) Pass Special mention Substandard Total SBA loans held for investment $ 36,991 $ 525 $ 2,071 $ 39,587 SBA PPP loans 118,257 — — 118,257 Commercial loans SBA 504 loans 19,681 — — 19,681 Commercial other 109,672 5,533 3,075 118,280 Commercial real estate 603,482 25,206 1,735 630,423 Commercial real estate construction 71,404 — — 71,404 Total commercial loans 804,239 30,739 4,810 839,788 Total SBA and commercial loans $ 959,487 $ 31,264 $ 6,881 $ 997,632 Residential mortgage, Consumer & Residential construction loans - Performing/Nonperforming (In thousands) Performing Nonperforming Total Residential mortgage loans $ 462,369 $ 5,217 $ 467,586 Consumer loans Home equity 61,254 1,295 62,549 Consumer other 3,551 — 3,551 Total consumer loans 64,805 1,295 66,100 Residential construction loans 85,414 1,750 87,164 Total residential mortgage, consumer and residential construction loans $ 612,588 $ 8,262 $ 620,850 Nonperforming and Past Due Loans Nonperforming loans consist of loans that are not accruing interest (nonaccrual loans) as a result of principal or interest being in default for a period of 90 days or more or when the ability to collect principal and interest according to the contractual terms is in doubt. Loans past due 90 days or more and still accruing interest are not included in nonperforming loans and generally represent loans that are well collateralized and in the process of collection. The risk of loss is difficult to quantify and is subject to fluctuations in collateral values, general economic conditions and other factors. The Company values its collateral through the use of appraisals, broker price opinions, and knowledge of its local market. The following tables set forth an aging analysis of past due and nonaccrual loans as of June 30, 2021 and December 31, 2020: June 30, 2021 90+ days 30 ‑ 59 days 60 ‑ 89 days and still Nonaccrual Total past (In thousands) past due past due accruing (1) due Current Total loans SBA loans held for investment $ 962 $ — $ — $ 1,713 $ 2,675 $ 35,439 $ 38,114 SBA PPP loans — — — — — 132,375 132,375 Commercial loans SBA 504 loans — — — — — 22,155 22,155 Commercial other 201 71 — 132 404 113,374 113,778 Commercial real estate 625 572 — 1,505 2,702 673,681 676,383 Commercial real estate construction — — — — — 73,250 73,250 Residential mortgage loans 4,772 155 574 4,043 9,544 412,644 422,188 Consumer loans Home equity 1,325 178 — — 1,503 61,887 63,390 Consumer other — — — 3 3 1,164 1,167 Residential construction loans 1,435 — — 2,289 3,724 96,150 99,874 Total loans held for investment 9,320 976 574 9,685 20,555 1,622,119 1,642,674 SBA loans held for sale — — — — — 11,314 11,314 Total loans $ 9,320 $ 976 $ 574 $ 9,685 $ 20,555 $ 1,633,433 $ 1,653,988 (1) At June 30, 2021, nonaccrual loans included $139 thousand of loans guaranteed by the SBA. December 31, 2020 90+ days 30 ‑ 59 days 60 ‑ 89 days and still Nonaccrual Total past (In thousands) past due past due accruing (1) due Current Total loans SBA loans held for investment $ 792 $ 1,280 $ — $ 2,473 $ 4,545 $ 35,042 $ 39,587 SBA PPP loans — — — — 118,257 118,257 Commercial loans SBA 504 loans — — — — — 19,681 19,681 Commercial other 186 201 — 266 653 117,627 118,280 Commercial real estate 3,109 1,971 — 1,059 6,139 624,284 630,423 Commercial real estate construction 1,047 — — — 1,047 70,357 71,404 Residential mortgage loans 3,232 2,933 262 5,217 11,644 455,942 467,586 Consumer loans Home equity 393 — 187 1,295 1,875 60,674 62,549 Consumer other 3 1 — — 4 3,547 3,551 Residential construction loans 120 796 — 1,750 2,666 84,498 87,164 Total loans held for investment 8,882 7,182 449 12,060 28,573 1,589,909 1,618,482 SBA loans held for sale 448 — — — 448 8,887 9,335 Total loans $ 9,330 $ 7,182 $ 449 $ 12,060 $ 29,021 $ 1,598,796 $ 1,627,817 (1) At December 31, 2020, nonaccrual loans included $371 thousand of loans guaranteed by the SBA. Impaired Loans The Company has defined impaired loans to be all nonperforming loans individually evaluated for impairment and TDRs. Management considers a loan impaired when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract. Impairment is evaluated on an individual basis for SBA and commercial loans. The following table provides detail on the Company’s impaired loans that are individually evaluated for impairment with the associated allowance amount, if applicable, as of June 30, 2021: June 30, 2021 Unpaid principal Recorded Specific (In thousands) balance investment reserves With no related allowance: SBA loans held for investment (1) $ 739 $ 640 $ — Commercial loans Commercial real estate 2,641 2,642 — Total commercial loans 2,641 2,642 — Residential mortgage loans 3,831 3,756 — Consumer loans Home equity 427 427 — Residential construction loans 2,289 2,289 — Total impaired loans with no related allowance 9,927 9,754 — With an allowance: SBA loans held for investment (1) 1,404 934 467 Commercial loans Commercial other 2,745 2,745 2,745 Commercial real estate 994 146 146 Total commercial loans 3,739 2,891 2,891 Residential mortgage loans 287 287 30 Consumer loans Consumer other 3 3 3 Total impaired loans with a related allowance 5,433 4,115 3,391 Total individually evaluated impaired loans: SBA loans held for investment (1) 2,143 1,574 467 Commercial loans Commercial other 2,745 2,745 2,745 Commercial real estate 3,635 2,788 146 Total commercial loans 6,380 5,533 2,891 Residential mortgage loans 4,118 4,043 30 Consumer loans Home equity 427 427 — Consumer other 3 3 3 Residential construction loans 2,289 2,289 — Total individually evaluated impaired loans $ 15,360 $ 13,869 $ 3,391 (1) Balances are reduced by amount guaranteed by the SBA of $139 thousand at June 30, 2021. The following table provides detail on the Company’s impaired loans that are individually evaluated for impairment with the associated allowance amount, if applicable, as of December 31, 2020: December 31, 2020 Unpaid principal Recorded Specific (In thousands) balance investment reserves With no related allowance: SBA loans held for investment (1) $ 1,799 $ 1,698 $ — Commercial loans Commercial real estate 1,462 1,462 — Total commercial loans 1,462 1,462 — Residential mortgage loans 4,080 3,975 — Consumer loans Home equity 1,295 1,295 — Residential construction loans 1,750 1,750 — Total impaired loans with no related allowance 10,386 10,180 — With an allowance: SBA loans held for investment (1) 434 404 324 Commercial loans Commercial other 3,160 3,160 3,106 Commercial real estate 1,730 1,080 576 Total commercial loans 4,890 4,240 3,682 Residential mortgage loans 1,242 1,242 101 Total impaired loans with a related allowance 6,566 5,886 4,107 Total individually evaluated impaired loans: SBA loans held for investment (1) 2,233 2,102 324 Commercial loans Commercial other 3,160 3,160 3,106 Commercial real estate 3,192 2,542 576 Total commercial loans 6,352 5,702 3,682 Residential mortgage loans 5,322 5,217 101 Consumer loans Home equity 1,295 1,295 — Residential construction loans 1,750 1,750 — Total individually evaluated impaired loans $ 16,952 $ 16,066 $ 4,107 (1) Balances are reduced by amount guaranteed by the SBA of $371 thousand at December 31, 2020. The following table presents the average recorded investments in impaired loans and the related amount of interest recognized during the time period in which the loans were impaired for the three and six months ended June 30, 2021 and 2020. The average balances are calculated based on the month-end balances of impaired loans. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal under the cost recovery method, and therefore no interest income is recognized. The interest income recognized on impaired loans noted below represents primarily accruing TDRs and nominal amounts of income recognized on a cash basis for well-collateralized impaired loans. For the three months ended June 30, 2021 2020 Interest Interest income income Average recognized Average recognized recorded on impaired recorded on impaired (In thousands) investment loans investment loans SBA loans held for investment (1) $ 1,334 $ 64 $ 1,265 $ 3 Commercial loans Commercial other 271 6 99 12 Commercial real estate 2,121 30 1,282 33 Residential mortgage loans 4,983 — 6,054 52 Consumer loans Home equity 444 5 505 4 Residential construction loans 2,805 10 — — Total $ 11,958 $ 115 $ 9,205 $ 104 (1) Balances are reduced by the average amount guaranteed by the SBA of $139 thousand and $655 thousand for the three months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021 2020 Interest Interest income income Average recognized Average recognized recorded on impaired recorded on impaired (In thousands) investment loans investment loans SBA loans held for investment (1) $ 1,618 $ 81 $ 1,197 $ 6 Commercial loans SBA 504 loans — — 300 32 Commercial other 322 9 52 21 Commercial real estate 2,179 85 1,165 45 Residential mortgage loans 5,272 — 5,875 81 Consumer loans Home equity 644 23 424 9 Consumer other — — 38 — Residential construction loans 2,707 20 — — Total $ 12,742 $ 218 $ 9,051 $ 194 (1) Balances are reduced by the average amount guaranteed by the SBA of $216 thousand and $418 thousand for the six months ended June 30, 2021 and 2020, respectively. TDRs The Company’s loan portfolio also includes certain loans that have been modified as TDRs. TDRs occur when a creditor, for economic or legal reasons related to a debtor’s financial condition, grants a concession to the debtor that it would not otherwise consider, unless it results in a delay in payment that is insignificant. These concessions typically include reductions in interest rate, extending the maturity of a loan, or a combination of both. Under the CARES Act and regulatory guidance issued in regards to the COVID-19 pandemic, loan payment deferrals for periods of up to 180 days granted to borrowers adversely effected by the pandemic are not considered TDR’s if the borrower was current on its loan payments at year end 2019 or until the deferral was granted. When the Company modifies a loan, management evaluates for any possible impairment using either the discounted cash flows method, where the value of the modified loan is based on the present value of expected cash flows, discounted at the contractual interest rate of the original loan agreement, or by using the fair value of the collateral less selling costs if the loan is collateral-dependent. If management determines that the value of the modified loan is less than the recorded investment in the loan, impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or charge-off to the allowance. This process is used, regardless of loan type, and for loans modified as TDRs that subsequently default on their modified terms. TDRs of $1.1 million and $663 thousand are included in the impaired loan numbers as of June 30, 2021 and December 31, 2020, respectively. The increase in TDRs was due to the addition of two loans, partially offset by principal pay downs. At June 30, 2021 and December 31, 2020, there were no specific reserves on the TDRs. The TDRs are in accrual status since they are performing in accordance with the restructured terms. There are no commitments to lend additional funds on these loans. There were two loans modified as TDRs during the six months ended June 30, 2021. There were no loans modified during the six months ended June 30, 2020 that were deemed to be TDRs. The following table details loans modified during the six months ended June 30, 2021, including the number of modifications and the recorded investment at the time of the modification: For the six months ended June 30, 2021 Number of Recorded investment (In thousands, except number of contracts) contracts at time of modification Home equity 2 $ 427 Total 2 $ 427 To date, the Company’s TDRs consisted of principal reduction, interest only periods and maturity extensions. There were no loans modified as a TDR within the previous 12 months that subsequently defaulted at some point during the six months ended June 30, 2021. In this case, the subsequent default is defined as 90 days past due or transferred to nonaccrual status. |
Allowance for Loan Losses and R
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments | 6 Months Ended |
Jun. 30, 2021 | |
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments | |
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments | NOTE 9. Allowance for Loan Losses and Reserve for Unfunded Loan Commitments Allowance for Loan Losses The Company has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. At a minimum, the adequacy of the allowance for loan losses is reviewed by management on a quarterly basis. For purposes of determining the allowance for loan losses, the Company has segmented the loans in its portfolio by loan type. Loans are segmented into the following pools: SBA 7(a), commercial, residential mortgages, consumer, and residential construction loans. Certain portfolio segments are further broken down into classes based on the associated risks within those segments and the type of collateral underlying each loan. Commercial loans are divided into the following five classes: commercial real estate, commercial real estate construction, unsecured business line of credit, commercial other, and SBA 504. Consumer loans are divided into two classes as follows: home equity and other. The standardized methodology used to assess the adequacy of the allowance includes the allocation of specific and general reserves. The same standard methodology is used, regardless of loan type. Specific reserves are made to individual impaired loans and TDRs (see Note 1 for additional information on this term). The general reserve is set based upon a representative average historical net charge-off rate adjusted for the following environmental factors: delinquency and impairment trends, charge-off and recovery trends, volume and loan term trends, changes in risk and underwriting policy trends, staffing and experience changes, national and local economic trends, industry conditions and credit concentration changes. Within the five-year historical net charge-off rate, the Company weights the past three years more heavily as it believes it is more indicative of future charge-offs. All of the environmental factors are ranked and assigned a basis points value based on the following scale: low, low moderate, moderate, high moderate and high risk. Each environmental factor is evaluated separately for each class of loans and risk weighted based on its individual characteristics. ● For SBA 7(a) and commercial loans, the estimate of loss based on pools of loans with similar characteristics is made through the use of a standardized loan grading system that is applied on an individual loan level and updated on a continuous basis. The loan grading system incorporates reviews of the financial performance of the borrower, including cash flow, debt-service coverage ratio, earnings power, debt level and equity position, in conjunction with an assessment of the borrower’s industry and future prospects. It also incorporates analysis of the type of collateral and the relative loan to value ratio. ● For residential mortgage, consumer, and residential construction loans, the estimate of loss is based on pools of loans with similar characteristics. Factors such as credit score, delinquency status and type of collateral are evaluated. Factors are updated frequently to capture the recent behavioral characteristics of the subject portfolios, as well as any changes in loss mitigation or credit origination strategies, and adjustments to the reserve factors are made as needed. According to the Company’s policy, a loss (“charge-off”) is to be recognized and charged to the allowance for loan losses as soon as a loan is recognized as uncollectable. All credits which are 90 days past due must be analyzed for the Company’s ability to collect on the credit. Once a loss is known to exist, the charge-off approval process is immediately expedited. This charge-off policy is followed for all loan types. The allocated allowance is the total of identified specific and general reserves by loan category. The allocation is not necessarily indicative of the categories in which future losses may occur. The total allowance is available to absorb losses from any segment of the portfolio. The following tables detail the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2021 and 2020: For the three months ended June 30, 2021 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Balance, beginning of period $ 1,654 $ 14,727 $ 5,009 $ 549 $ 1,026 $ 22,965 Charge-offs (164) (20) — — — (184) Recoveries 19 1 — — — 20 Net charge-offs (145) (19) — — — (164) Provision for (credit to) loan losses charged to expense 177 303 (405) 52 (127) — Balance, end of period $ 1,686 $ 15,011 $ 4,604 $ 601 $ 899 $ 22,801 For the three months ended June 30, 2020 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Balance, beginning of period $ 1,005 $ 10,129 $ 4,763 $ 671 $ 808 $ 17,376 Charge-offs — (219) — — — (219) Recoveries 75 502 — — — 577 Net recoveries 75 283 — — — 358 Provision for (credit to) loan losses charged to expense (76) 1,924 676 (60) 36 2,500 Balance, end of period $ 1,004 $ 12,336 $ 5,439 $ 611 $ 844 $ 20,234 For the six months ended June 30, 2021 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Balance, beginning of period $ 1,301 $ 14,992 $ 5,318 $ 681 $ 813 $ 23,105 Charge-offs (446) (393) — (1) — (840) Recoveries 34 2 — — — 36 Net charge-offs (412) (391) — (1) — (804) Provision for (credit to) loan losses charged to expense 797 410 (714) (79) 86 500 Balance, end of period $ 1,686 $ 15,011 $ 4,604 $ 601 $ 899 $ 22,801 For the six months ended June 30, 2020 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Balance, beginning of period $ 1,079 $ 9,722 $ 4,254 $ 625 $ 715 $ 16,395 Charge-offs (25) (519) (200) — — (744) Recoveries 80 503 — — — 583 Net (charge-offs) recoveries 55 (16) (200) — — (161) Provision for (credit to) loan losses charged to expense (130) 2,630 1,385 (14) 129 4,000 Balance, end of period $ 1,004 $ 12,336 $ 5,439 $ 611 $ 844 $ 20,234 The following tables present loans and their related allowance for loan losses, by portfolio segment, as of June 30, 2021 and December 31, 2020: June 30, 2021 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Allowance for loan losses ending balance: Individually evaluated for impairment $ 467 $ 2,891 $ 30 $ 3 $ — $ 3,391 Collectively evaluated for impairment 1,219 12,120 4,574 598 899 19,410 Total $ 1,686 $ 15,011 $ 4,604 $ 601 $ 899 $ 22,801 Loan ending balances: Individually evaluated for impairment $ 1,574 $ 5,533 $ 4,043 $ 430 $ 2,289 $ 13,869 Collectively evaluated for impairment 168,915 880,033 418,145 64,127 97,585 1,628,805 Total $ 170,489 $ 885,566 $ 422,188 $ 64,557 $ 99,874 $ 1,642,674 December 31, 2020 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Allowance for loan losses ending balance: Individually evaluated for impairment $ 324 $ 3,682 $ 101 $ — $ — $ 4,107 Collectively evaluated for impairment 977 11,310 5,217 681 813 18,998 Total $ 1,301 $ 14,992 $ 5,318 $ 681 $ 813 $ 23,105 Loan ending balances: Individually evaluated for impairment $ 2,102 $ 5,702 $ 5,217 $ 1,295 $ 1,750 $ 16,066 Collectively evaluated for impairment 155,742 834,086 462,369 64,805 85,414 1,602,416 Total $ 157,844 $ 839,788 $ 467,586 $ 66,100 $ 87,164 $ 1,618,482 Changes in Methodology The Company did not make any changes to its allowance for loan losses methodology in the current period. Reserve for Unfunded Loan Commitments In addition to the allowance for loan losses, the Company maintains a reserve for unfunded loan commitments at a level that management believes is adequate to absorb estimated probable losses. Adjustments to the reserve are made through other expense and applied to the reserve which is classified as other liabilities. At June 30, 2021, a $346 thousand commitment reserve was reported on the balance sheet as an “other liability”, compared to a $288 thousand commitment reserve at December 31, 2020, due to a larger loan portfolio requiring a larger general reserve. |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2021 | |
New Accounting Pronouncements and Changes in Accounting Principles | |
New Accounting Pronouncements | NOTE 10. New Accounting Pronouncements ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 was issued to replace the incurred loss impairment methodology in current GAAP with an expected credit loss methodology and requires consideration of a broader range of information to determine credit loss estimates. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. Purchased credit impaired loans will receive an allowance account at the acquisition date that represents a component of the purchase price allocation. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses, with such allowance limited to the amount by which fair value is below amortized cost. In May 2019, FASB issued ASU 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief." ASU 2019-05 was issued to address concerns with the adoption of ASU 2016-13. ASU 2019-05 gives entities the ability to irrevocable elect the fair value option in Subtopic 825-10 for certain existing financial assets upon transition to ASU 2016-03. Financial assets that are eligible for this fair value election are those that qualify under Subtopic 825-10 and are within the scope of Subtopic 326-10, "Financial Instruments - Credit Losses - Measured at Amortized Costs." An exception to this is held-to-maturity debt securities, which do not qualify for this transition election. The effective date for the amendment is the same as the effective date in ASU 2016-03. In November 2019, FASB issued ASU 2019-10, "Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates." ASU 2019-10 was issued to defer the effective dates for certain guidance in its Accounting Standard Codification ("ASC") for certain entities. The amendments in this update amend the mandatory effective dates for ASC 326, "Financial Instruments - Credit Losses", for entities eligible to be smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2022, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements. In November 2019, FASB issued ASU 2019-11, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses." ASU 2019-11 was issued to address issues raise by stakeholders during the implementation of ASU 2016-13. ASU 2019-11 provides transition relief when adjusting the effective interest rate for troubled debt restructurings ("TDRs") that exist as of the adoption date, extends the disclosure relief in ASU 2019-04 to disclose accrued interest receivable balances separately from the amortized cost basis to additional disclosures involving amortized cost basis, and provides clarification regarding application of the guidance in paragraph 326-20-35-6 for financial assets secured by collateral maintenance provisions that provides a practical expedient to measure the estimate of expected credit losses by comparing the amortized cost basis of a financial asset and the fair value of collateral securing the financial asset as of the reporting date. The effective date and transition requirements for the amendment are the same as the effective date and transition requirements in ASU 2016-13. ASU 2019- 12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." ASU 2019-12 removes the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items and removes the exception to the interim period income tax accounting when a year-to-date loss exceeds the anticipated loss for the year. ASU 2019-12 also simplifies the accounting for income taxes by requiring that an entity recognize a franchise tax that is partially based on income as an income-based tax, that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill originally was recognized, and that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. For public business entities, ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020. The Company adopted this standard as of January 1, 2021. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. ASU 2020-01, "Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force)." ASU 2020-01 clarifies that the observable price changes in orderly transactions that should be considered when applying the measurement alternative in accordance with ASC 321 include transactions that require it to either apply or discontinue the equity method of accounting under ASC 323. ASU 2020-01 also addresses questions about how to apply the guidance in Topic 815, “Derivatives and Hedging,” for certain forward contracts and purchased options to purchase securities that, upon settlement or exercise, would be accounted for under the equity method of accounting. The ASU clarifies that, for the purpose of applying ASC 815-10-15- 141(a), an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method in ASC 323 or the fair value option in accordance with the financial instruments guidance in Topic 825, “Financial Instruments.” For public business entities, ASU 2020-01 is effective for interim and annual periods beginning after December 15, 2020. The Company adopted this standard as of January 1, 2021. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. ASU 2020- 03, "Codification Improvement to Financial Instruments." ASU 2020-03 clarifies that all entities are required to provide the fair value option disclosures in paragraphs 825-10-50-24 through 50-32 of the FASB’s Accounting Standards Codification (ASC). ASU 2020-03 also clarifies that the contractual term of a net investment in a lease determined in accordance with ASC 842, “Leases,” should be the contractual term used to measure expected credit losses under ASC 326, “Financial Instruments – Credit Losses.” ASU 2020-03 also addresses amendments to ASC 860-20, “Transfers and Servicing – Sales of Financial Assets,” clarify that when an entity regains control of financial assets sold, an allowance for credit losses should be recorded in accordance with ASC 326. The effective date and transition requirements for the amendment are the same as the effective date and transition requirements in ASU 2016-13. The Company is currently evaluating the impact of the adoption of ASU 2020-03 on its consolidated financial statements. ASU 2020- 04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides temporary optional guidance intended to ease the burden of reference rate reform on financial reporting. The guidance provides optional expedients and exceptions for applying existing guidance to contract modifications, hedging relationships and other transactions that are expected to be affected by reference rate reform and meet certain scope guidance. ASU 2020-04 provides various optional expedients, including the following, for hedging relationships affected by reference rate reform, if certain criteria are met: ● An entity can change certain critical terms of the hedging instrument or hedged item or transaction without having to dedesignate the relationship. ● For fair value hedging relationships in which the designated interest rate is LIBOR or another rate that is expected to be discontinued, an entity may change the hedged risk to another permitted benchmark rate without dedesignating the relationship. ● For cash flow hedging relationships in which the designated hedged risk is LIBOR or another rate that is expected to be discontinued, an entity may assert that the occurrence of the hedged forecasted transaction remains probable. ● Certain qualifying conditions for the shortcut method and other methods that assume perfect effectiveness may be disregarded. In addition, ASU 2020-04 permits an entity to make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that were classified as held to maturity before January 1, 2020. ASU 2020-04 was effective upon its issuance on March 12, 2020. However, it cannot be applied to contract modifications that occur after December 31, 2022. With certain exceptions, the ASU also cannot be applied to hedging relationships entered into or evaluated after that date. The Company is currently evaluating the various optional expedients as well as impact of the adoption of ASU 2020-04 on its consolidated financial statements. ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.” ASU 2020-06 was issued to address the complexities of its guidance for certain financial instruments with characteristics of liabilities and equity, including: ● Removing the accounting models that require beneficial conversion features or cash conversion features associated with convertible instruments to be recognized as a separate component of equity. ● Adding certain disclosure requirements for convertible instruments. ● Amending the guidance for the derivatives scope exception for contracts in an entity’s own equity. ● Simplifying the diluted earning per share calculation for certain situations. For public business entities, ASU 2020-06 is effective for interim and annual periods beginning after December 15, 2021. The Company is currently evaluating the impact of the adoption of ASU 2020-06 on its consolidated financial statements. ASU 2021-01, “Reference Rate Reform (Topic 848): Scope.” ASU 2021-01 was issued to clarify certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting applied to derivatives that are affected by the discounting transition. In addition, the ASU clarifies that a receive-variable-rate, pay-variable-rate cross-currency interest rate swap may be considered eligible as a hedging instrument in a net investment hedge if both legs of the swap do not have the same repricing intervals and dates as a result of the reference rate reform. ASU 2021-01 became effective January 7, 2021. |
Derivative Financial Instrument
Derivative Financial Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure | |
Derivative Financial Instruments and Hedging Activities | NOTE 11. Derivative Financial Instruments and Hedging Activities Derivative Financial Instruments The Company has derivative financial instruments in the form of interest rate swap agreements, which derive their value from underlying interest rates. These transactions involve both credit and market risk. The notional amounts are amounts on which calculations, payments, and the value of the derivatives are based. Notional amounts do not represent direct credit exposures. Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any. Such difference, which represents the fair value of the derivative instrument, is reflected on the Company’s balance sheet as other assets or other liabilities. The Company is exposed to credit-related losses in the event of nonperformance by the counterparties to any derivative agreement. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures, and does not expect any counterparties to fail their obligations. The Company deals only with primary dealers. Derivative instruments are generally either negotiated OTC contracts or standardized contracts executed on a recognized exchange. Negotiated OTC derivative contracts are generally entered into between two counterparties that negotiate specific agreement terms, including the underlying instrument, amount, exercise prices and maturity. Risk Management Policies – Hedging Instruments The primary focus of the Company’s asset/liability management program is to monitor the sensitivity of the Company’s net portfolio value and net income under varying interest rate scenarios to take steps to control its risks. On a quarterly basis, the Company evaluates the effectiveness of entering into any derivative agreement by measuring the cost of such an agreement in relation to the reduction in net portfolio value and net income volatility within an assumed range of interest rates. Interest Rate Risk Management – Cash Flow Hedging Instruments The Company has variable rate debt as a source of funds for use in the Company’s lending and investment activities and for other general business purposes. These debt obligations expose the Company to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense decreases. Management believes it is prudent to limit the variability of a portion of its interest payments and, therefore hedges its variable-rate interest payments. To meet this objective, management enters into interest rate swap agreements whereby the Company receives variable interest rate payments and makes fixed interest rate payments during the contract period. At June 30, 2021, the Company had 3 interest rate swaps designed as cash flow hedging instruments with notional amounts totaling $60.0 million, compared to 5 with notional amounts totaling $80.0 million at December 31, 2020. At June 30, 2021 and December 31, 2020, the Company had $1.5 million in cash collateral pledged for these derivatives which was included in federal funds sold and interest-bearing deposits. A summary of the Company’s outstanding interest rate swap agreements used to hedge variable rate debt at June 30, 2021 and December 31, 2020, respectively is as follows: (In thousands, except percentages and years) June 30, 2021 December 31, 2020 Notional amount $ 60,000 $ 80,000 Fair value $ (202) $ (1,026) Weighted average pay rate 1.05 % 1.19 % Weighted average receive rate 0.18 % 0.89 % Weighted average maturity in years 1.85 2.20 Number of contracts 3 5 During the three and six months ended June 30, 2021, the Company received variable rate London Interbank Offered Rate ("LIBOR") payments from and paid fixed rates in accordance with its interest rate swap agreements. At June 30, 2021 and December 31, 2020, the unrealized loss relating to interest rate swaps was recorded as a derivative liability. Changes in the fair value of the interest rate swaps designated as hedging instruments of the variability of cash flows associated with long-term debt are reported in other comprehensive income. The following table presents the net gains and losses recorded in other comprehensive income and the consolidated financial statements relating to the cash flow derivative instruments at June 30, 2021 and 2020, respectively: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Gain (loss) recognized in OCI on derivatives $ 17 $ (340) $ 824 $ (1,750) |
Employee Benefit Plans
Employee Benefit Plans | 6 Months Ended |
Jun. 30, 2021 | |
Employee Benefit Plans | |
Employee Benefit Plans | NOTE 12. Employee Benefit Plans Stock Option Plans The Company has incentive and nonqualified option plans, which allow for the grant of options to officers, employees and members of the Board of Directors. Grants under the Company’s incentive and nonqualified option plans generally vest over 3 years and must be exercised within 10 years of the date of grant. Transactions under the Company’s stock option plans for the six months ended June 30, 2021 are summarized in the following table: Weighted Weighted average average remaining Aggregate exercise contractual intrinsic Shares price life in years value Outstanding at December 31, 2020 672,800 $ 16.42 6.8 $ 1,952,568 Options granted 89,000 19.21 Options exercised (36,598) 7.31 Options forfeited (2,000) 18.64 Options expired — — Outstanding at June 30, 2021 723,202 $ 17.22 7.0 $ 3,539,123 Exercisable at June 30, 2021 447,048 $ 15.58 5.8 $ 2,905,420 On April 25, 2019, the Company adopted the 2019 Equity Compensation Plan providing for grants of up to 500,000 shares to be allocated between incentive and non-qualified stock options, restricted stock awards, performance units and deferred stock. The Plan replaced all previously approved and established equity plans then currently in effect. As of June 30, 2021, 281,500 options and 83,150 shares of restricted stock have been awarded from the plan. In addition, The fair values of the options granted during the three and six months ended June 30, 2021 and 2020 were estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions. There were For the six months ended June 30, 2021 2020 Number of options granted 89,000 101,000 Weighted average exercise price $ 19.21 $ 20.39 Weighted average fair value of options $ 7.72 $ 5.54 Expected life in years (1) 8.38 8.66 Expected volatility (2) 43.69 % 27.13 % Risk-free interest rate (3) 1.14 % 1.55 % Dividend yield (4) 1.68 % 1.61 % (1) The expected life of the options was estimated based on historical employee behavior and represents the period of time that options granted are expected to be outstanding. (2) The expected volatility of the Company’s stock price was based on the historical volatility over the period commensurate with the expected life of the options. (3) The risk-free interest rate is the U.S. Treasury rate commensurate with the expected life of the options on the date of grant. (4) The expected dividend yield is the projected annual yield based on the grant date stock price. Upon exercise, the Company issues shares from its authorized but unissued common stock to satisfy the options. The following table presents information about options exercised during the three and six months ended June 30, 2021 and 2020: For the three months ended June 30, For the six months ended June 30, 2021 2020 2021 2020 Number of options exercised 24,131 49,111 36,598 54,611 Total intrinsic value of options exercised $ 347,759 $ 388,981 $ 517,782 $ 475,222 Cash received from options exercised $ 187,513 $ 361,253 $ 267,626 $ 395,518 Tax deduction realized from options $ 61,462 $ 113,952 $ 112,613 $ 139,216 The following table summarizes information about stock options outstanding and exercisable at June 30, 2021: Options outstanding Options exercisable Weighted average Weighted Weighted Options remaining contractual average Options average Range of exercise prices outstanding life (in years) exercise price exercisable exercise price $0.00 - $6.00 19,869 1.6 $ 5.47 19,869 $ 5.47 $6.01 - $12.00 135,800 3.9 8.85 135,800 8.86 $12.01 - $18.00 132,533 7.6 16.37 69,201 15.72 $18.01 - $24.00 435,000 8.0 20.62 222,178 20.56 Total 723,202 7.0 $ 17.22 447,048 $ 15.58 Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") Topic 718, “Compensation - Stock Compensation,” For the three months ended June 30, For the six months ended June 30, 2021 2020 2021 2020 Compensation expense $ 222,545 $ 180,785 $ 430,147 $ 373,274 Income tax benefit $ 64,316 $ 52,247 $ 124,313 $ 107,876 As of June 30, 2021 unrecognized compensation costs related to nonvested share-based compensation arrangements granted under the Company’s stock option plans totaled approximately $1.5 million. That cost is expected to be recognized over a weighted average period of 2.1 years. Restricted Stock Awards Restricted stock is issued under the 2019 Equity Compensation Plan to reward employees and directors and to retain them by distributing stock over a period of time. Restricted stock awards granted to date vest over a period of 4 years and are recognized as compensation to the recipient over the vesting period. The awards are recorded at fair market value at the time of grant and amortized into salary expense on a straight line basis over the vesting period. The following table summarizes nonvested restricted stock activity for the six months ended June 30, 2021: Average grant Shares date fair value Nonvested restricted stock at December 31, 2020 87,972 $ 19.26 Granted 40,000 19.99 Cancelled (1,500) 15.09 Vested (26,633) 18.76 Nonvested restricted stock at June 30, 2021 99,839 $ 19.75 Restricted stock awards granted during the three and six months ended June 30, 2021 and 2020 were as follows: For the three months ended June 30, For the six months ended June 30, 2021 2020 2021 2020 Number of shares granted 10,000 — 40,000 15,000 Average grant date fair value $ 21.60 $ — $ 19.99 $ 16.63 Compensation expense related to restricted stock for the three and six months ended June 30, 2021 and 2020 is detailed in the following table: For the three months ended June 30, For the six months ended June 30, 2021 2020 2021 2020 Compensation expense $ 187,401 $ 161,173 $ 353,750 $ 334,078 Income tax benefit $ 54,159 $ 46,580 $ 102,234 $ 96,549 As of June 30, 2021, there was approximately $1.7 million of unrecognized compensation cost related to nonvested restricted stock awards granted under the Company’s stock incentive plans. That cost is expected to be recognized over a weighted average period of 2.8 years. 401(k) Savings Plan The Bank has a 401(k) savings plan covering substantially all employees. Under the Plan, an employee can contribute up to 75 percent of their salary on a tax deferred basis. The Bank may also make discretionary contributions to the Plan. The Bank contributed $199 thousand and $186 thousand to the Plan during the three months ended June 30, 2021 and 2020, respectively, and $459 thousand and $371 thousand during the six months ended June 30, 2021 and 2020, respectively. Deferred Compensation Plan The Company has a deferred fee plan for Directors and eligible management. Directors of the Company have the option to elect to defer up to 100 percent of their respective retainer and Board of Director fees, and each eligible member of management has the option to elect to defer up to 100 percent of their total compensation. Benefit Plans In addition to the 401(k) savings plan which covers substantially all employees, in 2015 the Company established an unfunded supplemental defined benefit plan to provide additional retirement benefits for the President and Chief Executive Officer (“CEO”) and unfunded, non-qualified deferred retirement plans for certain other key executives. On June 4, 2015, the Company approved the Supplemental Executive Retirement Plan (“SERP”) pursuant to which the President and CEO is entitled to receive certain supplemental nonqualified retirement benefits. The retirement benefit under the SERP is an amount equal to sixty percent ( 60% ) of the average of the President and CEO’s base salary for the thirty-six (36) months immediately preceding the executive’s separation from service after age 66, adjusted annually thereafter by two percent ( 2% ) . The total benefit is to be made payable in fifteen annual installments. The future payments are estimated to total $6.2 million. A discount rate of four percent ( 4% ) was used to calculate the present value of the benefit obligation. The President and CEO commenced vesting in this retirement benefit on January 1, 2014, and vests an additional three percent (3%) each year until fully vested on January 1, 2024. In the event that the President and CEO’s separation from service from the Company were to occur prior to full vesting, the President and CEO would be entitled to and shall be paid the vested portion of the retirement benefit calculated as of the date of separation from service. Notwithstanding the foregoing, upon a Change in Control, and provided that within 6 months following the Change in Control the President and CEO is involuntarily terminated for reasons other than “cause” or the President and CEO resigns for “good reason,” as such is defined in the SERP, or the President and CEO voluntarily terminates his employment after being offered continued employment in a position that is not a “Comparable Position,” as such is also defined in the SERP, the President and CEO shall become one hundred percent (100%) vested in the full retirement benefit. No contributions or payments have been made during the three and six months ended June 30, 2021. The following table summarizes the components of the net periodic pension cost of the defined benefit plan recognized during the three and six months ended June 30, 2021 and 2020: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Service cost (1) $ (35) $ 32 $ (69) $ 63 Interest cost 35 37 69 74 Amortization of prior service cost (2) 311 21 332 42 Net periodic benefit cost $ 311 $ 90 $ 332 $ 179 (1) Reduction in service cost totaling $137 thousand to be recognized over one year due to the recalculation of the President and CEO’s salary projection. (2) Prior service cost fully amortized as of June 30, 2021 The following table summarizes the changes in benefit obligations of the defined benefit plan during the six months ended June 30, 2021 and 2020: For the six months ended June 30, (In thousands) 2021 2020 Benefit obligation, beginning of year $ 3,845 $ 3,571 Service cost (1) (69) 63 Interest cost 69 74 Benefit obligation, end of period $ 3,845 $ 3,708 (1) Reduction in service cost totaling $137 thousand to be recognized over one year due to the recalculation of the President and CEO’s salary projection. On October 22, 2015, the Company entered into an Executive Incentive Retirement Plan (the “Plan”) with certain key executive officers other than the President and CEO. The Plan has an effective date of January 1, 2015. The Plan is an unfunded, nonqualified deferred compensation plan. For any Plan Year, a guaranteed annual Deferral Award percentage of seven and one half percent (7.5%) of the participant’s annual base salary will be credited to each Participant’s Deferred Benefit Account. A discretionary annual Deferral Award equal to seven and one half percent (7.5%) of the participant’s annual base salary may be credited to the Participant’s account in addition to the guaranteed Deferral Award, if the Bank exceeds the benchmarks set forth in the Annual Executive Bonus Matrix. The total Deferral Award shall never exceed fifteen percent (15%) of the participant’s base salary for any given Plan Year. Each Participant shall be one hundred percent (100%) vested in all Deferral Awards as of the date they are awarded. As of June 30, 2021, the Company had total year to date expenses of $60 thousand related to the Plan. The Plan is reflected on the Company’s balance sheet as accrued expenses. Certain members of management are also enrolled in a split-dollar life insurance plan with a post retirement death benefit of $250 thousand. Total expenses related to this plan were $1 thousand for the three months ended June 30, 2021 and 2020, and $3 thousand for the six months ended June 30, 2021 and 2020, respectively. |
Regulatory Capital
Regulatory Capital | 6 Months Ended |
Jun. 30, 2021 | |
Regulatory Capital | |
Regulatory Capital | NOTE 13. Regulatory Capital On September 17, 2019, the federal banking agencies issued a final rule providing simplified capital requirements for certain community banking organizations (banks and holding companies) with less than $10 billion in total consolidated assets, implementing provisions of The Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”). Under the proposal, a qualifying community banking organization would be eligible to elect the community bank leverage ratio framework, or continue to measure capital under the existing Basel III requirements. The new rule was effective beginning January 1, 2020, and qualifying community banking organizations may elect to opt into the new community bank leverage ratio (“CBLR”) in their call report beginning in the first quarter of 2020. A qualifying community banking organization (“QCBO”) is defined as a bank, a savings association, a bank holding company or a savings and loan holding company with: ● A leverage capital ratio of greater than 9.0%; ● Total consolidated assets of less than $10.0 billion; ● Total off-balance sheet exposures (excluding derivatives other than credit derivatives and unconditionally cancelable commitments) of 25% or less of total consolidated assets; and ● Total trading assets and trading liabilities of 5% or less of total consolidated assets. On April 6, 2020, the federal banking regulators, implemented the applicable provisions of the CARES Act, which modified the CBLR framework so that: (i) beginning in the second quarter 2020 and until the end of 2020, a banking organization that has a leverage ratio of 8% or greater and meets certain other criteria may elect to use the CBLR framework; and (ii) community banking organizations will have until January 1, 2022, before the CBLR requirement is re-established at greater than 9%. Under the interim rules, the minimum CBLR was 8% beginning in the second quarter and for the remainder of calendar year 2020, and will be 8.5% for calendar year 2021, and 9% thereafter. The numerator of the CBLR is Tier 1 capital, as calculated under the Basel III rules. The denominator of the CBLR is the QCBO’s average assets, calculated in accordance with the QCBO’s Call Report instructions less assets deducted from Tier 1 capital. The Bank has opted into the CBLR, and will therefore not be required to comply with the Basel III capital requirements. The following table shows the CBLR ratio for the Company and the Bank at June 30, 2021 and at December 31, 2020: At June 30, 2021 At December 31, 2020 Company Bank Company Bank CBLR 10.31 % 9.95 % 10.09 % 9.80 % |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Leases | NOTE 14. Leases The Company follows ASU 2016-02, "Leases (Topic 842)," Operating leases in which the Bank is the lessee are recorded as right-of-use ("ROU") assets and lease liabilities and are included in Prepaid expenses and other assets and Accrued expenses and other liabilities, respectively, on the Bank’s Consolidated Balance Sheets. The Bank does not currently have any finance leases in which it is the lessee. Operating lease ROU assets represent the Bank’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate. The incremental borrowing rate was calculated for each lease by taking a variable rate FHLB ARC product (based on Libor plus a spread) and then swapping it to a fixed rate borrowing by adding a fixed mid swap rate for the desired term. The borrowing rate for each lease is unique based on the lease term. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in Occupancy expense in the Consolidated Statements of Income. The Bank’s leases relate primarily to bank branches, office space and equipment with remaining lease terms of generally 1 to 10 years. Certain lease arrangements contain extension options which typically range from 1 to 5 years at the then fair market rental rates. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term. Certain real estate leases have lease payments that adjust based on annual changes in the Consumer Price Index ("CPI"). The leases that are dependent upon CPI are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability. Operating lease ROU assets totaled $2.1 million at June 30, 2021, compared to $2.4 million at December 31, 2020. As of June 30, 2021, operating lease liabilities totaled $2.2 million, compared to $2.4 million at December 31, 2020. The table below summarizes our net lease cost: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Operating lease cost $ 149 $ 148 $ 298 $ 295 Net lease cost $ 149 $ 148 $ 298 $ 295 The table below summarizes the cash and non-cash activities associated with our leases: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 145 $ 142 $ 290 $ 283 The table below summarizes other information related to our operating leases: (In thousands, except percentages and years) June 30, 2021 December 31, 2020 Weighted average remaining lease term in years 5.66 5.96 Weighted average discount rate 5.50 % 5.45 % Operating lease right-of-use assets $ 2,127 $ 2,365 The table below summarizes the maturity of remaining lease liabilities: (In thousands) June 30, 2021 2021 (excluding the six months ended June 30, 2021) $ 266 2022 477 2023 410 2024 361 2025 371 2026 and thereafter 664 Total lease payments $ 2,549 Less: Interest (362) Present value of lease liabilities $ 2,187 As of June 30, 2021, the Company had not entered into any material leases that have not yet commenced. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Significant Accounting Policies | |
Overview | The accompanying Consolidated Financial Statements include the accounts of Unity Bancorp, Inc. (the "Parent Company") and its wholly-owned subsidiary, Unity Bank (the "Bank" or when consolidated with the Parent Company, the "Company"), and reflect all adjustments and disclosures which are generally routine and recurring in nature, and in the opinion of management, necessary for a fair presentation of interim results. The Bank has multiple subsidiaries used to hold part of its investment and loan portfolios. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period amounts to conform to the current year presentation, with no impact on current earnings or shareholders’ equity. The financial information has been prepared in accordance with U.S. generally accepted accounting principles and has not been audited. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the reporting periods. Actual results could differ from those estimates. Amounts requiring the use of significant estimates include the allowance for loan losses, valuation of deferred tax and servicing assets, the carrying value of loans held for sale and other real estate owned, the valuation of securities and the determination of other-than-temporary impairment for securities and fair value disclosures. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. The markets served by the Company were significantly impacted by the COVID-19 pandemic, which started during the first quarter of 2020. The Company continues to assess the financial impact of the COVID-19 pandemic. The interim unaudited Consolidated Financial Statements included herein have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the Securities and Exchange Commission (“SEC”) and consist of normal recurring adjustments necessary for the fair presentation of interim results. The results of operations for the six months ended June 30, 2021 are not necessarily indicative of the results which may be expected for the entire year. As used in this Form 10-Q, “we” and “us” and “our” refer to Unity Bancorp, Inc., and its consolidated subsidiary, Unity Bank, depending on the context. Certain information and financial disclosures required by U.S. generally accepted accounting principles have been condensed or omitted from interim reporting pursuant to SEC rules. Interim financial statements should be read in conjunction with the Company’s Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. |
Risks and Uncertainties | Risks and Uncertainties On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The COVID-19 pandemic has adversely affected local, national and global economic activity. Actions taken to help mitigate the spread of COVID-19 included restrictions on travel, localized quarantines, and government-mandated closures of certain businesses. The spread of the outbreak caused significant disruptions to the U.S. economy and disrupted banking and other financial activity in the areas in which the Company operates. On March 3, 2020, the Federal Open Market Committee reduced the targeted federal funds interest rate range by 50 basis points to 1.00 percent to 1.25 percent. This range was further reduced to 0 percent to 0.25 percent on March 16, 2020. On March 27, 2020, the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”) was enacted to, among other things, provide emergency assistance for individuals, families and businesses affected by the COVID-19 pandemic. These reductions in interest rates and other effects of the COVID-19 pandemic may materially and adversely affect the Company’s financial condition and results of operations in future periods. It is unknown how long the adverse conditions associated with the COVID-19 pandemic will last and what the complete financial effect will be to the Company. It is possible that estimates made in the financial statements could be materially and adversely impacted as a result of these conditions. On July 27, 2017, the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR to the LIBOR administration after 2021. The announcement also indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. Consequently, at this time, it is not possible to predict whether and to what extent banks will continue to provide LIBOR submissions to the LIBOR administrator or whether any additional reforms to LIBOR may be enacted in the United Kingdom or elsewhere. Similarly, it is not possible to predict whether LIBOR will continue to be viewed as an acceptable benchmark for certain loans and liabilities including our subordinated debentures, what rate or rates may become accepted alternatives to LIBOR or the effect of any changes in views or alternatives on the values of the loans and liabilities, whose interest rates are tied to LIBOR. Uncertainty as to the nature of such potential changes, alternative reference rates, the elimination or replacement of LIBOR, or other reforms may adversely affect the value of, and the return on our loans, and our investment securities. |
Other-Than-Temporary Impairment | Other-Than-Temporary Impairment The Company has a process in place to identify securities that could potentially incur credit impairment that is other-than-temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concern warrants such evaluation. This evaluation considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other-than-temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for fixed maturity securities, the intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, our ability and intent to hold the security for a forecasted period of time that allows for the recovery in value. Management assesses its intent to sell or whether it is more likely than not that it will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired with no intent to sell and no requirement to sell prior to recovery of its amortized cost basis, the amount of the impairment is separated into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and is recognized in other comprehensive income. For debt securities where management has the intent to sell, the amount of the impairment is reflected in earnings as realized losses. The present value of expected future cash flows is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate bond cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances including timing, security interests and loss severity. |
Transfers of Financial Assets | Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
Loans Held for Sale | Loans Held for Sale Loans held for sale represent the guaranteed portion of Small Business Administration (“SBA”) loans, other than loans originated under the Paycheck Protection Program, and are reflected at the lower of aggregate cost or market value. The Company originates loans to customers under an SBA program that historically has provided for SBA guarantees of up to 90 percent of each loan. The Company generally sells the guaranteed portion of its SBA loans to a third party and retains the servicing, holding the nonguaranteed portion in its portfolio. The net amount of loan origination fees on loans sold is included in the carrying value and in the gain or loss on the sale. When sales of SBA loans do occur, the premium received on the sale and the present value of future cash flows of the servicing assets are recognized in income. All criteria for sale accounting must be met in order for the loan sales to occur; see details under the “Transfers of Financial Assets” heading above. Servicing assets represent the estimated fair value of retained servicing rights, net of servicing costs, at the time loans are sold. Servicing assets are amortized in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on stratifying the underlying financial assets by date of origination and term. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Any impairment, if temporary, would be reported as a valuation allowance. Serviced loans sold to others are not included in the accompanying Consolidated Balance Sheets. Income and fees collected for loan servicing are credited to noninterest income when earned, net of amortization on the related servicing assets. |
Loans Held for Investment | Loans Held for Investment Loans held for investment are stated at the unpaid principal balance, net of unearned discounts and deferred loan origination fees and costs. In accordance with the level yield method, loan origination fees, net of direct loan origination costs, are deferred and recognized over the estimated life of the related loans as an adjustment to the loan yield. Interest is credited to operations primarily based upon the principal balance outstanding. Loans are reported as past due when either interest or principal is unpaid in the following circumstances: fixed payment loans when the borrower is in arrears for two or more monthly payments; open end credit for two or more billing cycles; and single payment notes if interest or principal remains unpaid for 30 days or more. Nonperforming loans consist of loans that are not accruing interest as a result of principal or interest being in default for a period of 90 days or more or when the ability to collect principal and interest according to the contractual terms is in doubt (nonaccrual loans). When a loan is classified as nonaccrual, interest accruals are discontinued and all past due interest previously recognized as income is reversed and charged against current period earnings. Generally, until the loan becomes current, any payments received from the borrower are applied to outstanding principal until such time as management determines that the financial condition of the borrower and other factors merit recognition of a portion of such payments as interest income. Loans may be returned to an accrual status when the ability to collect is reasonably assured and when the loan is brought current as to principal and interest. Loans are charged off when collection is sufficiently questionable and when the Company can no longer justify maintaining the loan as an asset on the balance sheet. Loans qualify for charge-off when, after thorough analysis, all possible sources of repayment are insufficient. These include: 1) potential future cash flows, 2) value of collateral, and/or 3) strength of co-makers and guarantors. All unsecured loans are charged off upon the establishment of the loan’s nonaccrual status. Additionally, all loans classified as a loss or that portion of the loan classified as a loss is charged off. All loan charge-offs are approved by the Board of Directors. Troubled debt restructurings ("TDRs") occur when a creditor, for economic or legal reasons related to a debtor’s financial condition, grants a concession to the debtor that it would not otherwise consider. These concessions typically include reductions in interest rate, extending the maturity of a loan, or a combination of both. Interest income on accruing TDRs is credited to operations primarily based upon the principal amount outstanding, as stated in the paragraphs above. The Company evaluates its loans for impairment. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company has defined impaired loans to be all TDRs and nonperforming loans individually evaluated for impairment. Impairment is evaluated in total for smaller-balance loans of a similar nature (consumer and residential mortgage loans), and on an individual basis for all other loans. Impairment of a loan is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, or as a practical expedient, based on a loan’s observable market price or the fair value of collateral, net of estimated costs to sell, if the loan is collateral-dependent. If the value of the impaired loan is less than the recorded investment in the loan, the Company establishes a valuation allowance, or adjusts existing valuation allowances, with a corresponding charge to the provision for loan losses. For additional information on loans, see Note 8 to the Consolidated Financial Statements and the section titled "Loan Portfolio" under Item 2. Management’s Discussion and Analysis. |
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments | Allowance for Loan Losses and Reserve for Unfunded Loan Commitments The allowance for loan losses is maintained at a level management considers adequate to provide for probable loan losses as of the balance sheet date. The allowance is increased by provisions charged to expense and is reduced by net charge-offs. The level of the allowance is based on management’s evaluation of probable losses in the loan portfolio, after consideration of prevailing economic conditions in the Company’s market area, the volume and composition of the loan portfolio, and historical loan loss experience. The allowance for loan losses consists of specific reserves for individually impaired credits and TDRs, reserves for nonimpaired loans based on historical loss factors and reserves based on general economic factors and other qualitative risk factors such as changes in delinquency trends, industry concentrations or local/national economic trends. This risk assessment process is performed at least quarterly, and, as adjustments become necessary, they are realized in the periods in which they become known. Although management attempts to maintain the allowance at a level deemed adequate to provide for probable losses, future additions to the allowance may be necessary based upon certain factors including changes in market conditions and underlying collateral values. In addition, various regulatory agencies periodically review the adequacy of the Company’s allowance for loan losses. These agencies may require the Company to make additional provisions based on their judgments about information available to them at the time of their examination. The Company maintains an allowance for unfunded loan commitments that is maintained at a level that management believes is adequate to absorb estimated probable losses. Adjustments to the allowance are made through other expenses and applied to the allowance which is maintained in other liabilities. For additional information on the allowance for loan losses and unfunded loan commitments, see Note 9 to the Consolidated Financial Statements and the sections titled "Asset Quality" and "Allowance for Loan Losses and Reserve for Unfunded Loan Commitments" under Item 2. Management’s Discussion and Analysis. |
Income Taxes | Income Taxes The Company accounts for income taxes according to the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates applicable to taxable income for the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation reserves are established against certain deferred tax assets when it is more likely than not that the deferred tax assets will not be realized. Increases or decreases in the valuation reserve are charged or credited to the income tax provision. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that ultimately would be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits would be recognized in income tax expense on the income statement. |
New Accounting Pronouncements | New Accounting Pronouncements ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 was issued to replace the incurred loss impairment methodology in current GAAP with an expected credit loss methodology and requires consideration of a broader range of information to determine credit loss estimates. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. Purchased credit impaired loans will receive an allowance account at the acquisition date that represents a component of the purchase price allocation. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses, with such allowance limited to the amount by which fair value is below amortized cost. In May 2019, FASB issued ASU 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief." ASU 2019-05 was issued to address concerns with the adoption of ASU 2016-13. ASU 2019-05 gives entities the ability to irrevocable elect the fair value option in Subtopic 825-10 for certain existing financial assets upon transition to ASU 2016-03. Financial assets that are eligible for this fair value election are those that qualify under Subtopic 825-10 and are within the scope of Subtopic 326-10, "Financial Instruments - Credit Losses - Measured at Amortized Costs." An exception to this is held-to-maturity debt securities, which do not qualify for this transition election. The effective date for the amendment is the same as the effective date in ASU 2016-03. In November 2019, FASB issued ASU 2019-10, "Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates." ASU 2019-10 was issued to defer the effective dates for certain guidance in its Accounting Standard Codification ("ASC") for certain entities. The amendments in this update amend the mandatory effective dates for ASC 326, "Financial Instruments - Credit Losses", for entities eligible to be smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2022, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements. In November 2019, FASB issued ASU 2019-11, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses." ASU 2019-11 was issued to address issues raise by stakeholders during the implementation of ASU 2016-13. ASU 2019-11 provides transition relief when adjusting the effective interest rate for troubled debt restructurings ("TDRs") that exist as of the adoption date, extends the disclosure relief in ASU 2019-04 to disclose accrued interest receivable balances separately from the amortized cost basis to additional disclosures involving amortized cost basis, and provides clarification regarding application of the guidance in paragraph 326-20-35-6 for financial assets secured by collateral maintenance provisions that provides a practical expedient to measure the estimate of expected credit losses by comparing the amortized cost basis of a financial asset and the fair value of collateral securing the financial asset as of the reporting date. The effective date and transition requirements for the amendment are the same as the effective date and transition requirements in ASU 2016-13. ASU 2019- 12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." ASU 2019-12 removes the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items and removes the exception to the interim period income tax accounting when a year-to-date loss exceeds the anticipated loss for the year. ASU 2019-12 also simplifies the accounting for income taxes by requiring that an entity recognize a franchise tax that is partially based on income as an income-based tax, that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill originally was recognized, and that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. For public business entities, ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020. The Company adopted this standard as of January 1, 2021. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. ASU 2020-01, "Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force)." ASU 2020-01 clarifies that the observable price changes in orderly transactions that should be considered when applying the measurement alternative in accordance with ASC 321 include transactions that require it to either apply or discontinue the equity method of accounting under ASC 323. ASU 2020-01 also addresses questions about how to apply the guidance in Topic 815, “Derivatives and Hedging,” for certain forward contracts and purchased options to purchase securities that, upon settlement or exercise, would be accounted for under the equity method of accounting. The ASU clarifies that, for the purpose of applying ASC 815-10-15- 141(a), an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method in ASC 323 or the fair value option in accordance with the financial instruments guidance in Topic 825, “Financial Instruments.” For public business entities, ASU 2020-01 is effective for interim and annual periods beginning after December 15, 2020. The Company adopted this standard as of January 1, 2021. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. ASU 2020- 03, "Codification Improvement to Financial Instruments." ASU 2020-03 clarifies that all entities are required to provide the fair value option disclosures in paragraphs 825-10-50-24 through 50-32 of the FASB’s Accounting Standards Codification (ASC). ASU 2020-03 also clarifies that the contractual term of a net investment in a lease determined in accordance with ASC 842, “Leases,” should be the contractual term used to measure expected credit losses under ASC 326, “Financial Instruments – Credit Losses.” ASU 2020-03 also addresses amendments to ASC 860-20, “Transfers and Servicing – Sales of Financial Assets,” clarify that when an entity regains control of financial assets sold, an allowance for credit losses should be recorded in accordance with ASC 326. The effective date and transition requirements for the amendment are the same as the effective date and transition requirements in ASU 2016-13. The Company is currently evaluating the impact of the adoption of ASU 2020-03 on its consolidated financial statements. ASU 2020- 04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides temporary optional guidance intended to ease the burden of reference rate reform on financial reporting. The guidance provides optional expedients and exceptions for applying existing guidance to contract modifications, hedging relationships and other transactions that are expected to be affected by reference rate reform and meet certain scope guidance. ASU 2020-04 provides various optional expedients, including the following, for hedging relationships affected by reference rate reform, if certain criteria are met: ● An entity can change certain critical terms of the hedging instrument or hedged item or transaction without having to dedesignate the relationship. ● For fair value hedging relationships in which the designated interest rate is LIBOR or another rate that is expected to be discontinued, an entity may change the hedged risk to another permitted benchmark rate without dedesignating the relationship. ● For cash flow hedging relationships in which the designated hedged risk is LIBOR or another rate that is expected to be discontinued, an entity may assert that the occurrence of the hedged forecasted transaction remains probable. ● Certain qualifying conditions for the shortcut method and other methods that assume perfect effectiveness may be disregarded. In addition, ASU 2020-04 permits an entity to make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that were classified as held to maturity before January 1, 2020. ASU 2020-04 was effective upon its issuance on March 12, 2020. However, it cannot be applied to contract modifications that occur after December 31, 2022. With certain exceptions, the ASU also cannot be applied to hedging relationships entered into or evaluated after that date. The Company is currently evaluating the various optional expedients as well as impact of the adoption of ASU 2020-04 on its consolidated financial statements. ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.” ASU 2020-06 was issued to address the complexities of its guidance for certain financial instruments with characteristics of liabilities and equity, including: ● Removing the accounting models that require beneficial conversion features or cash conversion features associated with convertible instruments to be recognized as a separate component of equity. ● Adding certain disclosure requirements for convertible instruments. ● Amending the guidance for the derivatives scope exception for contracts in an entity’s own equity. ● Simplifying the diluted earning per share calculation for certain situations. For public business entities, ASU 2020-06 is effective for interim and annual periods beginning after December 15, 2021. The Company is currently evaluating the impact of the adoption of ASU 2020-06 on its consolidated financial statements. ASU 2021-01, “Reference Rate Reform (Topic 848): Scope.” ASU 2021-01 was issued to clarify certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting applied to derivatives that are affected by the discounting transition. In addition, the ASU clarifies that a receive-variable-rate, pay-variable-rate cross-currency interest rate swap may be considered eligible as a hedging instrument in a net investment hedge if both legs of the swap do not have the same repricing intervals and dates as a result of the reference rate reform. ASU 2021-01 became effective January 7, 2021. |
Benefit Plans | Benefit Plans In addition to the 401(k) savings plan which covers substantially all employees, in 2015 the Company established an unfunded supplemental defined benefit plan to provide additional retirement benefits for the President and Chief Executive Officer (“CEO”) and unfunded, non-qualified deferred retirement plans for certain other key executives. On June 4, 2015, the Company approved the Supplemental Executive Retirement Plan (“SERP”) pursuant to which the President and CEO is entitled to receive certain supplemental nonqualified retirement benefits. The retirement benefit under the SERP is an amount equal to sixty percent ( 60% ) of the average of the President and CEO’s base salary for the thirty-six (36) months immediately preceding the executive’s separation from service after age 66, adjusted annually thereafter by two percent ( 2% ) . The total benefit is to be made payable in fifteen annual installments. The future payments are estimated to total $6.2 million. A discount rate of four percent ( 4% ) was used to calculate the present value of the benefit obligation. The President and CEO commenced vesting in this retirement benefit on January 1, 2014, and vests an additional three percent (3%) each year until fully vested on January 1, 2024. In the event that the President and CEO’s separation from service from the Company were to occur prior to full vesting, the President and CEO would be entitled to and shall be paid the vested portion of the retirement benefit calculated as of the date of separation from service. Notwithstanding the foregoing, upon a Change in Control, and provided that within 6 months following the Change in Control the President and CEO is involuntarily terminated for reasons other than “cause” or the President and CEO resigns for “good reason,” as such is defined in the SERP, or the President and CEO voluntarily terminates his employment after being offered continued employment in a position that is not a “Comparable Position,” as such is also defined in the SERP, the President and CEO shall become one hundred percent (100%) vested in the full retirement benefit. |
Leases | Leases The Company follows ASU 2016-02, "Leases (Topic 842)," Operating leases in which the Bank is the lessee are recorded as right-of-use ("ROU") assets and lease liabilities and are included in Prepaid expenses and other assets and Accrued expenses and other liabilities, respectively, on the Bank’s Consolidated Balance Sheets. The Bank does not currently have any finance leases in which it is the lessee. Operating lease ROU assets represent the Bank’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate. The incremental borrowing rate was calculated for each lease by taking a variable rate FHLB ARC product (based on Libor plus a spread) and then swapping it to a fixed rate borrowing by adding a fixed mid swap rate for the desired term. The borrowing rate for each lease is unique based on the lease term. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in Occupancy expense in the Consolidated Statements of Income. The Bank’s leases relate primarily to bank branches, office space and equipment with remaining lease terms of generally 1 to 10 years. Certain lease arrangements contain extension options which typically range from 1 to 5 years at the then fair market rental rates. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term. Certain real estate leases have lease payments that adjust based on annual changes in the Consumer Price Index ("CPI"). The leases that are dependent upon CPI are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability. |
Net Income per Share (Tables)
Net Income per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Net Income per Share | |
Reconciliation of Calculation of Basic and Diluted Income Per Share | The following is a reconciliation of the calculation of basic and diluted income per share: For the three months ended June 30, For the six months ended June 30, (In thousands, except per share amounts) 2021 2020 2021 2020 Net income $ 8,418 $ 5,171 $ 16,914 $ 10,539 Weighted average common shares outstanding - Basic 10,427 10,792 10,432 10,838 Plus: Potential dilutive common stock equivalents 142 96 135 124 Weighted average common shares outstanding - Diluted 10,569 10,888 10,567 10,962 Net income per common share - Basic $ 0.81 $ 0.48 $ 1.62 $ 0.97 Net income per common share - Diluted 0.80 0.47 1.60 0.96 Stock options and common stock excluded from the income per share calculation as their effect would have been anti-dilutive 247 450 262 403 |
Other Comprehensive Income (L_2
Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Other Comprehensive Income (Loss) | |
Changes in Other Comprehensive Income (Loss) | The following tables show the changes in other comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020, net of tax: For the three months ended June 30, 2021 Adjustments Net unrealized Accumulated Net unrealized related to (losses) gains other (losses) gains on defined benefit from cash flow comprehensive (In thousands) securities plan hedges (loss) income Balance, beginning of period $ (153) $ (223) $ (158) $ (534) Other comprehensive income before reclassifications 119 — 13 132 Less amounts reclassified from accumulated other comprehensive income (loss) 18 (223) — (205) Period change 101 223 13 337 Balance, end of period $ (52) $ — $ (145) $ (197) For the three months ended June 30, 2020 Adjustments Net unrealized Accumulated Net unrealized related to losses other gains on defined benefit from cash flow comprehensive (In thousands) securities plan hedges (loss) income Balance, beginning of period $ 284 $ (280) $ (836) $ (832) Other comprehensive income (loss) before reclassifications 362 — (241) 121 Less amounts reclassified from accumulated other comprehensive income (loss) 62 (15) — 47 Period change 300 15 (241) 74 Balance, end of period $ 584 $ (265) $ (1,077) $ (758) For the six months ended June 30, 2021 Adjustments Net unrealized Accumulated Net unrealized related to (losses) gains other (losses) gains on defined benefit from cash flow comprehensive (In thousands) securities plan hedges (loss) income Balance, beginning of period $ (214) $ (238) $ (737) $ (1,189) Other comprehensive income before reclassifications 425 — 592 1,017 Less amounts reclassified from accumulated other comprehensive income (loss) 263 (238) — 25 Period change 162 238 592 992 Balance, end of period $ (52) $ — $ (145) $ (197) For the six months ended June 30, 2020 Adjustments Net unrealized Accumulated Net unrealized related to gains (losses) other gains (loss) on defined benefit from cash flow comprehensive (In thousands) securities plan hedges income (loss) Balance, beginning of period $ 281 $ (295) $ 168 $ 154 Other comprehensive income (loss) before reclassifications 231 — (1,245) (1,014) Less amounts reclassified from accumulated other comprehensive loss (72) (30) — (102) Period change 303 30 (1,245) (912) Balance, end of period $ 584 $ (265) $ (1,077) $ (758) |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value | |
Reconciliation of Level 3 Available for Sale Debt Securities Measured at Fair Value on Recurring Basis | The following table presents a reconciliation of the Level 3 available for sale debt securities measured at fair value on a recurring basis for the three and six months ended June 30, 2021 and 2020: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Balance at beginning of period (1) $ 4,538 $ 6,238 $ 4,400 $ 6,238 Purchases/additions — — — — Sales/reductions — — — — Realized gains (losses) — — — — Unrealized gains 137 5 275 5 Balance at end of period $ 4,675 $ 6,243 $ 4,675 $ 6,243 (1) Includes AFS debt securities classified as Level 2 at December 31, 2020, which were transferred to Level 3 during the three months ended June 30, 2021. |
Balances of Assets And Liabilities Measured at Fair Value on Recurring Basis | The tables below present the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020: Fair Value Measurements at June 30, 2021 Using Quoted Prices in Assets/Liabilities Active Markets Significant Other Significant Measured at Fair for Identical Observable Unobservable (In thousands) Value Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Measured on a recurring basis: Assets: Debt securities available for sale: State and political subdivisions $ 1,312 $ — $ 1,312 $ — Residential mortgage-backed securities 12,883 — 12,883 — Corporate and other securities 18,615 — 13,940 4,675 Total debt securities available for sale $ 32,810 $ — $ 28,135 $ 4,675 Equity securities with readily determinable fair values 2,244 — 2,244 — Total equity securities $ 2,244 $ — $ 2,244 $ — Loans held for sale 13,396 — 13,396 — Total loans held for sale $ 13,396 $ — $ 13,396 $ — Interest rate swap agreements (202) — (202) — Total swap agreements $ (202) $ — $ (202) $ — Fair value Measurements at December 31, 2020 Using Quoted Prices in Assets/Liabilities Active Markets Significant Other Significant Measured at Fair for Identical Observable Unobservable (In thousands) Value Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Measured on a recurring basis: Assets: Debt securities available for sale: U.S. Government sponsored entities $ 2,003 $ — $ 2,003 $ — State and political subdivisions 2,969 — 2,969 — Residential mortgage-backed securities 17,410 — 17,410 — Corporate and other securities 23,235 — 18,835 4,400 Total debt securities available for sale $ 45,617 $ — $ 41,217 $ 4,400 Equity securities with readily determinable fair values 1,954 — 1,954 — Total equity securities $ 1,954 $ — $ 1,954 $ — Loans held for sale 10,712 — 10,712 — Total loans held for sale $ 10,712 $ — $ 10,712 $ — Interest rate swap agreements (1,026) — (1,026) — Total swap agreements $ (1,026) $ — $ (1,026) $ — |
Assets and Liabilities Carried on the Balance Sheet by Caption And By Level Within The Hierarchy | The following tables present the assets and liabilities subject to fair value adjustments (impairment) on a non-recurring basis carried on the balance sheet by caption and by level within the hierarchy (as described above): Fair Value Measurements at June 30, 2021 Using Quoted Prices Significant in Active Other Significant Assets/Liabilities Markets for Observable Unobservable Net Credit Measured at Fair Identical Assets Inputs Inputs During (In thousands) Value (Level 1) (Level 2) (Level 3) Period Measured on a non-recurring basis: Financial assets: Impaired collateral-dependent loans $ 10,478 $ — $ — $ 10,478 $ (716) Fair Value Measurements at December 31, 2020 Using Quoted Prices Significant in Active Other Significant Net (Credit) Assets/Liabilities Markets for Observable Unobservable Provision Measured at Fair Identical Assets Inputs Inputs During (In thousands) Value (Level 1) (Level 2) (Level 3) Period Financial assets: OREO $ — $ — $ — $ — $ (225) Impaired collateral-dependent loans 11,959 — — 11,959 3,693 |
Carrying Amount and Estimated Fair Values of Financial Instruments | The table below presents the carrying amount and estimated fair values of the Company’s financial instruments presented as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Fair value Carrying Estimated Carrying Estimated (In thousands) level amount fair value amount fair value Financial assets: Cash and cash equivalents Level 1 $ 221,852 $ 221,852 $ 219,311 $ 219,311 Securities (1) Level 2 37,054 35,054 47,571 47,571 SBA loans held for sale Level 2 11,314 13,396 9,335 10,712 Loans, net of allowance for loan losses (2) Level 2 1,619,873 1,634,039 1,595,377 1,613,593 FHLB stock Level 2 9,060 9,060 10,594 10,594 Servicing assets Level 3 1,476 1,476 1,857 1,857 Accrued interest receivable Level 2 9,486 9,486 10,429 10,429 Financial liabilities: Deposits Level 2 1,594,316 1,593,544 1,557,959 1,561,502 Borrowed funds and subordinated debentures Level 2 175,310 176,552 210 212,358 Accrued interest payable Level 2 231 231 248 248 (1) Includes corporate securities that are considered Level 3 and reported separately in the table under the “Fair Value on a Recurring Basis” heading. These securities had book values of $4.7 million and market values of $4.4 million. (2) Includes collateral-dependent impaired loans that are considered Level 3 and reported separately in the tables under the “Fair Value on a Nonrecurring Basis” heading. Collateral-dependent impaired loans, net of specific reserves totaled $10.5 million and $12.0 million at June 30, 2021 and December 31, 2020, respectively. |
Securities (Tables)
Securities (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Securities | |
Reconciliation From Amortized Cost to Estimated Fair Value of Marketable Securities | This table provides the major components of debt securities available for sale ("AFS"), held to maturity (“HTM”) and equity securities with readily determinable fair values ("equity securities") at amortized cost and estimated fair value at June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Gross Gross Gross Gross Amortized unrealized unrealized Estimated Amortized unrealized unrealized Estimated (In thousands) cost gains losses fair value cost gains losses fair value Available for sale: U.S. Government sponsored entities $ — $ — $ — $ — $ 2,000 $ 3 $ — $ 2,003 State and political subdivisions 1,293 19 — 1,312 2,935 34 — 2,969 Residential mortgage-backed securities 12,412 471 — 12,883 16,765 645 — 17,410 Corporate and other securities 19,183 196 (764) 18,615 24,221 132 (1,118) 23,235 Total debt securities available for sale $ 32,888 $ 686 $ (764) $ 32,810 $ 45,921 $ 814 $ (1,118) $ 45,617 Held to maturity: U.S. Government sponsored entities $ 2,000 $ 9 $ — $ 2,009 $ — $ — $ — $ — Total securities held to maturity $ 2,000 $ 9 $ — $ 2,009 $ — $ — $ — $ — Equity securities: Total equity securities $ 2,112 $ 205 $ (73) $ 2,244 $ 2,112 $ — $ (158) $ 1,954 |
Schedule of Marketable Securities By Contractual Maturity | This table provides the remaining contractual maturities and yields of securities within the investment portfolios. The carrying value of securities at June 30, 2021 is distributed by contractual maturity. Mortgage-backed securities and other securities, which may have principal prepayment provisions, are distributed based on contractual maturity. Expected maturities will differ materially from contractual maturities as a result of early prepayments and calls. After one through After five through Total carrying Within one year five years ten years After ten years value (In thousands, except percentages) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Available for sale at fair value: State and political subdivisions $ 201 3.85 % $ 627 3.23 % $ — — % $ 484 2.74 % $ 1,312 3.14 % Residential mortgage-backed securities 3 4.68 452 2.88 1,286 2.25 11,142 1.89 12,883 1.96 Corporate and other securities — — — — 12,440 4.56 6,175 2.79 18,615 3.70 Total debt securities available for sale $ 204 3.86 % $ 1,079 3.08 % $ 13,726 4.34 % $ 17,801 2.22 % $ 32,810 3.15 % Held to maturity at cost: U.S. Government sponsored entities $ — — % $ — — % $ — — % $ 2,000 2.49 % $ 2,000 2.49 % Total securities held to maturity $ — — % $ — — % $ — — % $ 2,000 2.49 % $ 2,000 2.49 % Equity Securities at fair value: Total equity securities $ — — % $ — — % $ — — % $ 2,244 2.35 % $ 2,244 2.35 % |
Schedule of Marketable Securities In Unrealized Loss Position | The fair value of securities with unrealized losses by length of time that the individual securities have been in a continuous unrealized loss position at June 30, 2021 and December 31, 2020 are as follows: June 30, 2021 Less than 12 months 12 months and greater Total Total number in a Estimated Unrealized Estimated Unrealized Estimated Unrealized (In thousands, except number in a loss position) loss position fair value loss fair value loss fair value loss Available for sale: Corporate and other securities 6 $ 2,396 $ (104) $ 7,892 $ (660) $ 10,288 $ (764) Total temporarily impaired securities 6 $ 2,396 $ (104) $ 7,892 $ (660) $ 10,288 $ (764) December 31, 2020 Less than 12 months 12 months and greater Total Total number in a Estimated Unrealized Estimated Unrealized Estimated Unrealized (In thousands, except number in a loss position) loss position fair value loss fair value loss fair value loss Available for sale: Corporate and other securities 9 $ 4,793 $ (20) $ 9,157 $ (1,098) $ 13,950 $ (1,118) Total temporarily impaired securities 9 $ 4,793 $ (20) $ 9,157 $ (1,098) $ 13,950 $ (1,118) |
Schedule of Realized Gains (Losses) for Marketable Securities | Gross realized gains and losses on securities for the three and six months ended June 30, 2021 and 2020 are detailed in the table below: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Available for sale: Realized gains $ — $ 5 $ 43 $ 301 Realized losses — — — — Total debt securities available for sale — 5 43 301 Net gains on sales of securities $ — $ 5 $ 43 $ 301 |
Equity Securities, Gains and Losses | The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2021 and 2020: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Net gains (losses) recognized during the period on equity securities $ (100) $ 74 $ 290 $ (397) Net gains recognized during the period on equity securities sold during the period — — — 5 Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date $ (100) $ 74 $ 290 $ (392) |
Loans (Tables)
Loans (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Loans | |
Classification of Loans By Class | The following table sets forth the classification of loans by class, including unearned fees, deferred costs and excluding the allowance for loan losses as of June 30, 2021 and December 31, 2020: (In thousands) June 30, 2021 December 31, 2020 SBA loans held for investment $ 38,114 $ 39,587 SBA PPP loans 132,375 118,257 Commercial loans SBA 504 loans 22,155 19,681 Commercial other 113,778 118,280 Commercial real estate 676,383 630,423 Commercial real estate construction 73,250 71,404 Residential mortgage loans 422,188 467,586 Consumer loans Home equity 63,390 62,549 Consumer other 1,167 3,551 Residential construction loans 99,874 87,164 Total loans held for investment $ 1,642,674 $ 1,618,482 SBA loans held for sale 11,314 9,335 Total loans $ 1,653,988 $ 1,627,817 |
Loan Portfolio by Class According to Their Credit Quality Indicators | The tables below detail the Company’s loan portfolio by class according to their credit quality indicators discussed in the paragraphs above as of June 30, 2021: June 30, 2021 SBA & Commercial loans - Internal risk ratings (In thousands) Pass Special mention Substandard Total SBA loans held for investment $ 36,714 $ 524 $ 876 $ 38,114 SBA PPP loans 132,375 — — 132,375 Commercial loans SBA 504 loans 22,155 — — 22,155 Commercial other 102,994 7,582 3,202 113,778 Commercial real estate 648,520 22,285 5,578 676,383 Commercial real estate construction 73,250 — — 73,250 Total commercial loans 846,919 29,867 8,780 885,566 Total SBA and commercial loans $ 1,016,008 $ 30,391 $ 9,656 $ 1,056,055 Residential mortgage, Consumer & Residential construction loans - Performing/Nonperforming (In thousands) Performing Nonperforming Total Residential mortgage loans $ 418,145 $ 4,043 $ 422,188 Consumer loans Home equity 63,390 — 63,390 Consumer other 1,164 3 1,167 Total consumer loans 64,554 3 64,557 Residential construction loans 97,585 2,289 99,874 Total residential mortgage, consumer and residential construction loans $ 580,284 $ 6,335 $ 586,619 The tables below detail the Company’s loan portfolio by class according to their credit quality indicators discussed in the paragraphs above as of December 31, 2020: December 31, 2020 SBA & Commercial loans - Internal risk ratings (In thousands) Pass Special mention Substandard Total SBA loans held for investment $ 36,991 $ 525 $ 2,071 $ 39,587 SBA PPP loans 118,257 — — 118,257 Commercial loans SBA 504 loans 19,681 — — 19,681 Commercial other 109,672 5,533 3,075 118,280 Commercial real estate 603,482 25,206 1,735 630,423 Commercial real estate construction 71,404 — — 71,404 Total commercial loans 804,239 30,739 4,810 839,788 Total SBA and commercial loans $ 959,487 $ 31,264 $ 6,881 $ 997,632 Residential mortgage, Consumer & Residential construction loans - Performing/Nonperforming (In thousands) Performing Nonperforming Total Residential mortgage loans $ 462,369 $ 5,217 $ 467,586 Consumer loans Home equity 61,254 1,295 62,549 Consumer other 3,551 — 3,551 Total consumer loans 64,805 1,295 66,100 Residential construction loans 85,414 1,750 87,164 Total residential mortgage, consumer and residential construction loans $ 612,588 $ 8,262 $ 620,850 |
Aging Analysis of Past Due And Nonaccrual Loans by Loan Class | The following tables set forth an aging analysis of past due and nonaccrual loans as of June 30, 2021 and December 31, 2020: June 30, 2021 90+ days 30 ‑ 59 days 60 ‑ 89 days and still Nonaccrual Total past (In thousands) past due past due accruing (1) due Current Total loans SBA loans held for investment $ 962 $ — $ — $ 1,713 $ 2,675 $ 35,439 $ 38,114 SBA PPP loans — — — — — 132,375 132,375 Commercial loans SBA 504 loans — — — — — 22,155 22,155 Commercial other 201 71 — 132 404 113,374 113,778 Commercial real estate 625 572 — 1,505 2,702 673,681 676,383 Commercial real estate construction — — — — — 73,250 73,250 Residential mortgage loans 4,772 155 574 4,043 9,544 412,644 422,188 Consumer loans Home equity 1,325 178 — — 1,503 61,887 63,390 Consumer other — — — 3 3 1,164 1,167 Residential construction loans 1,435 — — 2,289 3,724 96,150 99,874 Total loans held for investment 9,320 976 574 9,685 20,555 1,622,119 1,642,674 SBA loans held for sale — — — — — 11,314 11,314 Total loans $ 9,320 $ 976 $ 574 $ 9,685 $ 20,555 $ 1,633,433 $ 1,653,988 (1) At June 30, 2021, nonaccrual loans included $139 thousand of loans guaranteed by the SBA. December 31, 2020 90+ days 30 ‑ 59 days 60 ‑ 89 days and still Nonaccrual Total past (In thousands) past due past due accruing (1) due Current Total loans SBA loans held for investment $ 792 $ 1,280 $ — $ 2,473 $ 4,545 $ 35,042 $ 39,587 SBA PPP loans — — — — 118,257 118,257 Commercial loans SBA 504 loans — — — — — 19,681 19,681 Commercial other 186 201 — 266 653 117,627 118,280 Commercial real estate 3,109 1,971 — 1,059 6,139 624,284 630,423 Commercial real estate construction 1,047 — — — 1,047 70,357 71,404 Residential mortgage loans 3,232 2,933 262 5,217 11,644 455,942 467,586 Consumer loans Home equity 393 — 187 1,295 1,875 60,674 62,549 Consumer other 3 1 — — 4 3,547 3,551 Residential construction loans 120 796 — 1,750 2,666 84,498 87,164 Total loans held for investment 8,882 7,182 449 12,060 28,573 1,589,909 1,618,482 SBA loans held for sale 448 — — — 448 8,887 9,335 Total loans $ 9,330 $ 7,182 $ 449 $ 12,060 $ 29,021 $ 1,598,796 $ 1,627,817 (1) At December 31, 2020, nonaccrual loans included $371 thousand of loans guaranteed by the SBA. |
Impaired Loans with Associated Allowance Amount | The following table provides detail on the Company’s impaired loans that are individually evaluated for impairment with the associated allowance amount, if applicable, as of June 30, 2021: June 30, 2021 Unpaid principal Recorded Specific (In thousands) balance investment reserves With no related allowance: SBA loans held for investment (1) $ 739 $ 640 $ — Commercial loans Commercial real estate 2,641 2,642 — Total commercial loans 2,641 2,642 — Residential mortgage loans 3,831 3,756 — Consumer loans Home equity 427 427 — Residential construction loans 2,289 2,289 — Total impaired loans with no related allowance 9,927 9,754 — With an allowance: SBA loans held for investment (1) 1,404 934 467 Commercial loans Commercial other 2,745 2,745 2,745 Commercial real estate 994 146 146 Total commercial loans 3,739 2,891 2,891 Residential mortgage loans 287 287 30 Consumer loans Consumer other 3 3 3 Total impaired loans with a related allowance 5,433 4,115 3,391 Total individually evaluated impaired loans: SBA loans held for investment (1) 2,143 1,574 467 Commercial loans Commercial other 2,745 2,745 2,745 Commercial real estate 3,635 2,788 146 Total commercial loans 6,380 5,533 2,891 Residential mortgage loans 4,118 4,043 30 Consumer loans Home equity 427 427 — Consumer other 3 3 3 Residential construction loans 2,289 2,289 — Total individually evaluated impaired loans $ 15,360 $ 13,869 $ 3,391 (1) Balances are reduced by amount guaranteed by the SBA of $139 thousand at June 30, 2021. The following table provides detail on the Company’s impaired loans that are individually evaluated for impairment with the associated allowance amount, if applicable, as of December 31, 2020: December 31, 2020 Unpaid principal Recorded Specific (In thousands) balance investment reserves With no related allowance: SBA loans held for investment (1) $ 1,799 $ 1,698 $ — Commercial loans Commercial real estate 1,462 1,462 — Total commercial loans 1,462 1,462 — Residential mortgage loans 4,080 3,975 — Consumer loans Home equity 1,295 1,295 — Residential construction loans 1,750 1,750 — Total impaired loans with no related allowance 10,386 10,180 — With an allowance: SBA loans held for investment (1) 434 404 324 Commercial loans Commercial other 3,160 3,160 3,106 Commercial real estate 1,730 1,080 576 Total commercial loans 4,890 4,240 3,682 Residential mortgage loans 1,242 1,242 101 Total impaired loans with a related allowance 6,566 5,886 4,107 Total individually evaluated impaired loans: SBA loans held for investment (1) 2,233 2,102 324 Commercial loans Commercial other 3,160 3,160 3,106 Commercial real estate 3,192 2,542 576 Total commercial loans 6,352 5,702 3,682 Residential mortgage loans 5,322 5,217 101 Consumer loans Home equity 1,295 1,295 — Residential construction loans 1,750 1,750 — Total individually evaluated impaired loans $ 16,952 $ 16,066 $ 4,107 (1) Balances are reduced by amount guaranteed by the SBA of $371 thousand at December 31, 2020. |
Average Recorded Investments in Impaired Loans and Related Amount of Interest Recognized | The following table presents the average recorded investments in impaired loans and the related amount of interest recognized during the time period in which the loans were impaired for the three and six months ended June 30, 2021 and 2020. The average balances are calculated based on the month-end balances of impaired loans. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal under the cost recovery method, and therefore no interest income is recognized. The interest income recognized on impaired loans noted below represents primarily accruing TDRs and nominal amounts of income recognized on a cash basis for well-collateralized impaired loans. For the three months ended June 30, 2021 2020 Interest Interest income income Average recognized Average recognized recorded on impaired recorded on impaired (In thousands) investment loans investment loans SBA loans held for investment (1) $ 1,334 $ 64 $ 1,265 $ 3 Commercial loans Commercial other 271 6 99 12 Commercial real estate 2,121 30 1,282 33 Residential mortgage loans 4,983 — 6,054 52 Consumer loans Home equity 444 5 505 4 Residential construction loans 2,805 10 — — Total $ 11,958 $ 115 $ 9,205 $ 104 (1) Balances are reduced by the average amount guaranteed by the SBA of $139 thousand and $655 thousand for the three months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021 2020 Interest Interest income income Average recognized Average recognized recorded on impaired recorded on impaired (In thousands) investment loans investment loans SBA loans held for investment (1) $ 1,618 $ 81 $ 1,197 $ 6 Commercial loans SBA 504 loans — — 300 32 Commercial other 322 9 52 21 Commercial real estate 2,179 85 1,165 45 Residential mortgage loans 5,272 — 5,875 81 Consumer loans Home equity 644 23 424 9 Consumer other — — 38 — Residential construction loans 2,707 20 — — Total $ 12,742 $ 218 $ 9,051 $ 194 (1) Balances are reduced by the average amount guaranteed by the SBA of $216 thousand and $418 thousand for the six months ended June 30, 2021 and 2020, respectively. |
Loans modified as TDRs including number of modifications and recorded investment | For the six months ended June 30, 2021 Number of Recorded investment (In thousands, except number of contracts) contracts at time of modification Home equity 2 $ 427 Total 2 $ 427 |
Allowance for Loan Losses and_2
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments | |
Activity in the Allowance for Loan Losses by Portfolio Segment | The following tables detail the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2021 and 2020: For the three months ended June 30, 2021 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Balance, beginning of period $ 1,654 $ 14,727 $ 5,009 $ 549 $ 1,026 $ 22,965 Charge-offs (164) (20) — — — (184) Recoveries 19 1 — — — 20 Net charge-offs (145) (19) — — — (164) Provision for (credit to) loan losses charged to expense 177 303 (405) 52 (127) — Balance, end of period $ 1,686 $ 15,011 $ 4,604 $ 601 $ 899 $ 22,801 For the three months ended June 30, 2020 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Balance, beginning of period $ 1,005 $ 10,129 $ 4,763 $ 671 $ 808 $ 17,376 Charge-offs — (219) — — — (219) Recoveries 75 502 — — — 577 Net recoveries 75 283 — — — 358 Provision for (credit to) loan losses charged to expense (76) 1,924 676 (60) 36 2,500 Balance, end of period $ 1,004 $ 12,336 $ 5,439 $ 611 $ 844 $ 20,234 For the six months ended June 30, 2021 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Balance, beginning of period $ 1,301 $ 14,992 $ 5,318 $ 681 $ 813 $ 23,105 Charge-offs (446) (393) — (1) — (840) Recoveries 34 2 — — — 36 Net charge-offs (412) (391) — (1) — (804) Provision for (credit to) loan losses charged to expense 797 410 (714) (79) 86 500 Balance, end of period $ 1,686 $ 15,011 $ 4,604 $ 601 $ 899 $ 22,801 For the six months ended June 30, 2020 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Balance, beginning of period $ 1,079 $ 9,722 $ 4,254 $ 625 $ 715 $ 16,395 Charge-offs (25) (519) (200) — — (744) Recoveries 80 503 — — — 583 Net (charge-offs) recoveries 55 (16) (200) — — (161) Provision for (credit to) loan losses charged to expense (130) 2,630 1,385 (14) 129 4,000 Balance, end of period $ 1,004 $ 12,336 $ 5,439 $ 611 $ 844 $ 20,234 |
Allowance for Credit Losses on Financing Receivables on Basis of Impairment Method | The following tables present loans and their related allowance for loan losses, by portfolio segment, as of June 30, 2021 and December 31, 2020: June 30, 2021 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Allowance for loan losses ending balance: Individually evaluated for impairment $ 467 $ 2,891 $ 30 $ 3 $ — $ 3,391 Collectively evaluated for impairment 1,219 12,120 4,574 598 899 19,410 Total $ 1,686 $ 15,011 $ 4,604 $ 601 $ 899 $ 22,801 Loan ending balances: Individually evaluated for impairment $ 1,574 $ 5,533 $ 4,043 $ 430 $ 2,289 $ 13,869 Collectively evaluated for impairment 168,915 880,033 418,145 64,127 97,585 1,628,805 Total $ 170,489 $ 885,566 $ 422,188 $ 64,557 $ 99,874 $ 1,642,674 December 31, 2020 SBA held for Residential (In thousands) investment Commercial Residential Consumer construction Total Allowance for loan losses ending balance: Individually evaluated for impairment $ 324 $ 3,682 $ 101 $ — $ — $ 4,107 Collectively evaluated for impairment 977 11,310 5,217 681 813 18,998 Total $ 1,301 $ 14,992 $ 5,318 $ 681 $ 813 $ 23,105 Loan ending balances: Individually evaluated for impairment $ 2,102 $ 5,702 $ 5,217 $ 1,295 $ 1,750 $ 16,066 Collectively evaluated for impairment 155,742 834,086 462,369 64,805 85,414 1,602,416 Total $ 157,844 $ 839,788 $ 467,586 $ 66,100 $ 87,164 $ 1,618,482 |
Derivative Financial Instrume_2
Derivative Financial Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure | |
Summary of Interest Rate Swaps | (In thousands, except percentages and years) June 30, 2021 December 31, 2020 Notional amount $ 60,000 $ 80,000 Fair value $ (202) $ (1,026) Weighted average pay rate 1.05 % 1.19 % Weighted average receive rate 0.18 % 0.89 % Weighted average maturity in years 1.85 2.20 Number of contracts 3 5 |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Gain (loss) recognized in OCI on derivatives $ 17 $ (340) $ 824 $ (1,750) |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Transactions under the Company's stock option plans | Weighted Weighted average average remaining Aggregate exercise contractual intrinsic Shares price life in years value Outstanding at December 31, 2020 672,800 $ 16.42 6.8 $ 1,952,568 Options granted 89,000 19.21 Options exercised (36,598) 7.31 Options forfeited (2,000) 18.64 Options expired — — Outstanding at June 30, 2021 723,202 $ 17.22 7.0 $ 3,539,123 Exercisable at June 30, 2021 447,048 $ 15.58 5.8 $ 2,905,420 |
Schedule of fair values of the options granted | The fair values of the options granted during the three and six months ended June 30, 2021 and 2020 were estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions. There were For the six months ended June 30, 2021 2020 Number of options granted 89,000 101,000 Weighted average exercise price $ 19.21 $ 20.39 Weighted average fair value of options $ 7.72 $ 5.54 Expected life in years (1) 8.38 8.66 Expected volatility (2) 43.69 % 27.13 % Risk-free interest rate (3) 1.14 % 1.55 % Dividend yield (4) 1.68 % 1.61 % (1) The expected life of the options was estimated based on historical employee behavior and represents the period of time that options granted are expected to be outstanding. (2) The expected volatility of the Company’s stock price was based on the historical volatility over the period commensurate with the expected life of the options. (3) The risk-free interest rate is the U.S. Treasury rate commensurate with the expected life of the options on the date of grant. (4) The expected dividend yield is the projected annual yield based on the grant date stock price. |
Schedule of Information About Options Exercised | Upon exercise, the Company issues shares from its authorized but unissued common stock to satisfy the options. The following table presents information about options exercised during the three and six months ended June 30, 2021 and 2020: For the three months ended June 30, For the six months ended June 30, 2021 2020 2021 2020 Number of options exercised 24,131 49,111 36,598 54,611 Total intrinsic value of options exercised $ 347,759 $ 388,981 $ 517,782 $ 475,222 Cash received from options exercised $ 187,513 $ 361,253 $ 267,626 $ 395,518 Tax deduction realized from options $ 61,462 $ 113,952 $ 112,613 $ 139,216 |
Schedule of Stock Options, by Exercise Price Range | The following table summarizes information about stock options outstanding and exercisable at June 30, 2021: Options outstanding Options exercisable Weighted average Weighted Weighted Options remaining contractual average Options average Range of exercise prices outstanding life (in years) exercise price exercisable exercise price $0.00 - $6.00 19,869 1.6 $ 5.47 19,869 $ 5.47 $6.01 - $12.00 135,800 3.9 8.85 135,800 8.86 $12.01 - $18.00 132,533 7.6 16.37 69,201 15.72 $18.01 - $24.00 435,000 8.0 20.62 222,178 20.56 Total 723,202 7.0 $ 17.22 447,048 $ 15.58 |
Allocation of Share-based Compensation Costs | Compensation expense related to stock options and the related income tax benefit for the three and six months ended June 30, 2021 and 2020 are detailed in the following table: For the three months ended June 30, For the six months ended June 30, 2021 2020 2021 2020 Compensation expense $ 222,545 $ 180,785 $ 430,147 $ 373,274 Income tax benefit $ 64,316 $ 52,247 $ 124,313 $ 107,876 |
Summary of Nonvested Restricted Stock Activity | Average grant Shares date fair value Nonvested restricted stock at December 31, 2020 87,972 $ 19.26 Granted 40,000 19.99 Cancelled (1,500) 15.09 Vested (26,633) 18.76 Nonvested restricted stock at June 30, 2021 99,839 $ 19.75 |
Restricted Stock Grants | Restricted stock awards granted during the three and six months ended June 30, 2021 and 2020 were as follows: For the three months ended June 30, For the six months ended June 30, 2021 2020 2021 2020 Number of shares granted 10,000 — 40,000 15,000 Average grant date fair value $ 21.60 $ — $ 19.99 $ 16.63 |
Summary of Components of Net Periodic Pension Cost of Defined Benefit Plan Recognized | For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Service cost (1) $ (35) $ 32 $ (69) $ 63 Interest cost 35 37 69 74 Amortization of prior service cost (2) 311 21 332 42 Net periodic benefit cost $ 311 $ 90 $ 332 $ 179 (1) Reduction in service cost totaling $137 thousand to be recognized over one year due to the recalculation of the President and CEO’s salary projection. (2) Prior service cost fully amortized as of June 30, 2021 |
Summary Of Changes In Benefit Obligations Of Defined Benefit Plan | The following table summarizes the changes in benefit obligations of the defined benefit plan during the six months ended June 30, 2021 and 2020: For the six months ended June 30, (In thousands) 2021 2020 Benefit obligation, beginning of year $ 3,845 $ 3,571 Service cost (1) (69) 63 Interest cost 69 74 Benefit obligation, end of period $ 3,845 $ 3,708 (1) Reduction in service cost totaling $137 thousand to be recognized over one year due to the recalculation of the President and CEO’s salary projection. |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Allocation of Share-based Compensation Costs | Compensation expense related to restricted stock for the three and six months ended June 30, 2021 and 2020 is detailed in the following table: For the three months ended June 30, For the six months ended June 30, 2021 2020 2021 2020 Compensation expense $ 187,401 $ 161,173 $ 353,750 $ 334,078 Income tax benefit $ 54,159 $ 46,580 $ 102,234 $ 96,549 |
Regulatory Capital (Tables)
Regulatory Capital (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Regulatory Capital | |
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations | The following table shows the CBLR ratio for the Company and the Bank at June 30, 2021 and at December 31, 2020: At June 30, 2021 At December 31, 2020 Company Bank Company Bank CBLR 10.31 % 9.95 % 10.09 % 9.80 % |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Net Lease Cost | The table below summarizes our net lease cost: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Operating lease cost $ 149 $ 148 $ 298 $ 295 Net lease cost $ 149 $ 148 $ 298 $ 295 The table below summarizes the cash and non-cash activities associated with our leases: For the three months ended June 30, For the six months ended June 30, (In thousands) 2021 2020 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 145 $ 142 $ 290 $ 283 |
Summary of Other Information for Operating Leases | The table below summarizes other information related to our operating leases: (In thousands, except percentages and years) June 30, 2021 December 31, 2020 Weighted average remaining lease term in years 5.66 5.96 Weighted average discount rate 5.50 % 5.45 % Operating lease right-of-use assets $ 2,127 $ 2,365 |
Summary of Maturity of Remaining Lease Liabilities | The table below summarizes the maturity of remaining lease liabilities: (In thousands) June 30, 2021 2021 (excluding the six months ended June 30, 2021) $ 266 2022 477 2023 410 2024 361 2025 371 2026 and thereafter 664 Total lease payments $ 2,549 Less: Interest (362) Present value of lease liabilities $ 2,187 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2021 | |
Significant Accounting Policies | |
Guarantee percentage of SBA Loan | 90.00% |
Net Income per Share (Details)
Net Income per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Net Income per Share | ||||||
Net income | $ 8,418 | $ 8,496 | $ 5,171 | $ 5,368 | $ 16,914 | $ 10,539 |
Weighted average common shares outstanding - Basic | 10,427 | 10,792 | 10,432 | 10,838 | ||
Plus: Potential dilutive common stock equivalents (in shares) | 142 | 96 | 135 | 124 | ||
Weighted average common shares outstanding - Diluted (in shares) | 10,569 | 10,888 | 10,567 | 10,962 | ||
Net income per common share - Basic | $ 0.81 | $ 0.48 | $ 1.62 | $ 0.97 | ||
Net income per common share - Diluted | $ 0.80 | $ 0.47 | $ 1.60 | $ 0.96 | ||
Stock options and common stock excluded from the income per share calculation as their effect would have been anti-dilutive (in shares) | 247 | 450 | 262 | 403 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Income Taxes | |||||
Income tax expense (benefit) | $ 2,466 | $ 1,488 | $ 5,411 | $ 3,086 | |
Effective tax rate | 22.70% | 22.30% | 24.20% | 22.60% | |
Unrecognized tax benefits, income tax penalties and interest expense | $ 0 | $ 0 | $ 0 | $ 0 | |
Unrecognized tax benefits, income tax penalties and interest accrued | $ 0 | $ 0 | $ 0 | ||
Income tax returns open tax years (2016 and thereafter) | 2016 |
Other Comprehensive Income (L_3
Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||||
Beginning balance | $ 181,186 | $ 173,911 | $ 164,305 | $ 160,709 | $ 173,911 | $ 160,709 | |
Total other comprehensive income (loss), net of tax | 337 | 655 | 74 | (986) | 992 | (912) | |
Ending balance | 188,756 | 181,186 | 166,607 | 164,305 | 188,756 | 166,607 | |
Reclassification to unappropriated retained earnings | 105,811 | 105,811 | $ 90,669 | ||||
Net unrealized (losses) gains on securities | |||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||||
Beginning balance | (153) | (214) | 284 | 281 | (214) | 281 | |
Other comprehensive income (loss) before reclassifications | 119 | 362 | 425 | 231 | |||
Less amounts reclassified from accumulated other comprehensive income (loss) | 18 | 62 | 263 | (72) | |||
Total other comprehensive income (loss), net of tax | 101 | 300 | 162 | 303 | |||
Ending balance | (52) | (153) | 584 | 284 | (52) | 584 | |
Adjustments related to defined benefit plan | |||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||||
Beginning balance | (223) | (238) | (280) | (295) | (238) | (295) | |
Less amounts reclassified from accumulated other comprehensive income (loss) | (223) | (15) | (238) | (30) | |||
Total other comprehensive income (loss), net of tax | 223 | 15 | 238 | 30 | |||
Ending balance | (223) | (265) | (280) | (265) | |||
Net unrealized (losses) gains from cash flow hedges | |||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||||
Beginning balance | (158) | (737) | (836) | 168 | (737) | 168 | |
Other comprehensive income (loss) before reclassifications | 13 | (241) | 592 | (1,245) | |||
Total other comprehensive income (loss), net of tax | 13 | (241) | 592 | (1,245) | |||
Ending balance | (145) | (158) | (1,077) | (836) | (145) | (1,077) | |
Accumulated other comprehensive (loss) income | |||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||||
Beginning balance | (534) | (1,189) | (832) | 154 | (1,189) | 154 | |
Other comprehensive income (loss) before reclassifications | 132 | 121 | 1,017 | (1,014) | |||
Less amounts reclassified from accumulated other comprehensive income (loss) | (205) | 47 | 25 | (102) | |||
Total other comprehensive income (loss), net of tax | 337 | 655 | 74 | (986) | 992 | (912) | |
Ending balance | $ (197) | $ (534) | $ (758) | $ (832) | $ (197) | $ (758) |
Fair Value - Fair Value on Recu
Fair Value - Fair Value on Recurring Basis - Narrative (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Securities available for sale | $ 32,810 | $ 45,617 |
Percentage of portfolio in residential mortgage backed securities | 39.00% | |
Residential mortgage backed securities guaranteed by Government National Mortgage Association or Federal National Mortgage Association or Federal Home Loan Mortgage Corporation | $ 12,700 | |
Equity securities | 2,244 | 1,954 |
Residential mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Securities available for sale | $ 12,883 | $ 17,410 |
Fair Value - Assets And Liabili
Fair Value - Assets And Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | $ 32,810 | $ 45,617 |
Equity securities | 2,244 | 1,954 |
Loans held for sale | 13,396 | 10,712 |
Swap agreements | (202) | (1,026) |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 28,135 | 41,217 |
Equity securities | 2,244 | 1,954 |
Loans held for sale | 13,396 | 10,712 |
Swap agreements | (202) | (1,026) |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 4,675 | 4,400 |
U.S. Government sponsored entities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 2,003 | |
U.S. Government sponsored entities | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 2,003 | |
State and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 1,312 | 2,969 |
State and political subdivisions | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 1,312 | 2,969 |
Residential mortgage backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 12,883 | 17,410 |
Residential mortgage backed securities | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 12,883 | 17,410 |
Corporate and other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 18,615 | 23,235 |
Corporate and other securities | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 13,940 | 18,835 |
Corporate and other securities | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Debt securities available-for-sale | 4,675 | 4,400 |
Interest rate swap agreements | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Swap agreements | (202) | (1,026) |
Interest rate swap agreements | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Swap agreements | $ (202) | $ (1,026) |
Fair Value - Assets and Liabi_2
Fair Value - Assets and Liabilities Subject to Fair Value Adjustments (Impairment) on a Nonrecurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Impaired collateral-dependent loans | $ 10,478 | $ 11,959 |
OREO, Net (Credit) Provision During Period | (225) | |
Impaired collateral-dependent loans, Net (Credit) Provision During Period | (716) | 3,693 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Impaired collateral-dependent loans | $ 10,478 | $ 11,959 |
Fair Value - Fair Value on a No
Fair Value - Fair Value on a Nonrecurring Basis Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Impaired financing receivable, related allowance | $ 3,391 | $ 4,107 |
Decrease in valuation allowance for impaired loans | (716) | |
Letters of Credit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Standby letter of credit | $ 4,500 | $ 4,500 |
Fair Value - Available for Sale
Fair Value - Available for Sale Debt Securities (Details) - Recurring - Significant Unobservable Inputs (Level 3) - Available for Sale Debt Securities - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Fair value on a recurring basis | ||||
Balance at beginning of period | $ 4,538 | $ 6,238 | $ 4,400 | $ 6,238 |
Unrealized gains | 137 | 5 | 275 | 5 |
Balance at end of period | $ 4,675 | $ 6,243 | $ 4,675 | $ 6,243 |
Fair Value - Carrying Amount an
Fair Value - Carrying Amount and Fair Values (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Carrying amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Financial assets: | ||
Cash and cash equivalents | $ 221,852 | $ 219,311 |
Carrying amount | Significant Other Observable Inputs (Level 2) | ||
Financial assets: | ||
Securities | 37,054 | 47,571 |
SBA loans held for sale | 11,314 | 9,335 |
Loans, net of allowance for loan losses | 1,619,873 | 1,595,377 |
Federal Home Loan Bank stock | 9,060 | 10,594 |
Accrued interest receivable | 9,486 | 10,429 |
Financial liabilities: | ||
Deposits | 1,594,316 | 1,557,959 |
Borrowed funds and subordinated debentures | 175,310 | 210 |
Accrued interest payable | 231 | 248 |
Carrying amount | Significant Unobservable Inputs (Level 3) | ||
Financial assets: | ||
Servicing assets | 1,476 | 1,857 |
Carrying amount | Significant Unobservable Inputs (Level 3) | Recurring | Corporate and other securities | ||
Financial assets: | ||
Securities | 4,700 | |
Estimated fair value | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Financial assets: | ||
Cash and cash equivalents | 221,852 | 219,311 |
Estimated fair value | Significant Other Observable Inputs (Level 2) | ||
Financial assets: | ||
Securities | 35,054 | 47,571 |
SBA loans held for sale | 13,396 | 10,712 |
Loans, net of allowance for loan losses | 1,634,039 | 1,613,593 |
Federal Home Loan Bank stock | 9,060 | 10,594 |
Accrued interest receivable | 9,486 | 10,429 |
Financial liabilities: | ||
Deposits | 1,593,544 | 1,561,502 |
Borrowed funds and subordinated debentures | 176,552 | 212,358 |
Accrued interest payable | 231 | 248 |
Estimated fair value | Significant Unobservable Inputs (Level 3) | ||
Financial assets: | ||
Servicing assets | 1,476 | $ 1,857 |
Estimated fair value | Significant Unobservable Inputs (Level 3) | Recurring | Corporate and other securities | ||
Financial assets: | ||
Securities | $ 4,400 |
Securities - Amortized Cost to
Securities - Amortized Cost to Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Available for sale: | ||
Amortized cost | $ 32,888 | $ 45,921 |
Gross unrealized gains | 686 | 814 |
Gross unrealized losses | (764) | (1,118) |
Securities available for sale | 32,810 | 45,617 |
Held to maturity: | ||
Amortized cost | 2,000 | 0 |
Gross unrealized gains | 9 | |
Estimated fair value | 2,009 | |
Equity securities: | ||
Amortized cost | 2,112 | 2,112 |
Gross unrealized gains | 205 | |
Gross unrealized losses | (73) | (158) |
Estimated fair value | 2,244 | 1,954 |
U.S. Government sponsored entities | ||
Available for sale: | ||
Amortized cost | 2,000 | |
Gross unrealized gains | 3 | |
Securities available for sale | 2,003 | |
Held to maturity: | ||
Amortized cost | 2,000 | |
Gross unrealized gains | 9 | |
Estimated fair value | 2,009 | |
State and political subdivisions | ||
Available for sale: | ||
Amortized cost | 1,293 | 2,935 |
Gross unrealized gains | 19 | 34 |
Securities available for sale | 1,312 | 2,969 |
Residential mortgage backed securities | ||
Available for sale: | ||
Amortized cost | 12,412 | 16,765 |
Gross unrealized gains | 471 | 645 |
Securities available for sale | 12,883 | 17,410 |
Corporate and other securities | ||
Available for sale: | ||
Amortized cost | 19,183 | 24,221 |
Gross unrealized gains | 196 | 132 |
Gross unrealized losses | (764) | (1,118) |
Securities available for sale | $ 18,615 | $ 23,235 |
Securities - Securities By Cont
Securities - Securities By Contractual Maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Available for sale at fair value: | ||
Within one year, Amount | $ 204 | |
After one through five years, Amount | 1,079 | |
After five through ten years, Amount | 13,726 | |
After ten years, Amount | 17,801 | |
Securities available for sale | $ 32,810 | $ 45,617 |
Rolling maturity, Yield | ||
Within one year, Yield | 3.86% | |
After one through five years, Yield | 3.08% | |
After five through ten years, Yield | 4.34% | |
After ten years, Yield | 2.22% | |
Total carrying value, Yield | 3.15 | |
Debt Securities, Held-to-maturity, Maturity, Fair Value, Rolling Maturity [Abstract] | ||
Debt Securities, Held-to-maturity, Maturity, Allocated and Single Maturity Date, Rolling after 10 Years, Fair Value | $ 2,000 | |
Debt Securities, Held-to-maturity, Maturity, Allocated and Single Maturity Date, Fair Value | $ 2,000 | |
Debt Securities, Held-to-maturity, Rolling Maturity, Weighted Average Yield [Abstract] | ||
Debt Securities, Held-to-maturity, Maturity, Rolling after Ten Years, Weighted Average Yield | 2.49% | |
Debt Securities Held To Maturity Rolling Maturity Weighted Average Yield | 2.49% | |
Equity securities at fair value: | ||
After ten years, Amount | $ 2,244 | |
Estimated fair value | $ 2,244 | 1,954 |
After ten years, Yield | 2.35% | |
Total carrying value, Yield | 2.35% | |
U.S. Government sponsored entities | ||
Available for sale at fair value: | ||
Securities available for sale | 2,003 | |
Debt Securities, Held-to-maturity, Maturity, Fair Value, Rolling Maturity [Abstract] | ||
Debt Securities, Held-to-maturity, Maturity, Allocated and Single Maturity Date, Rolling after 10 Years, Fair Value | $ 2,000 | |
Debt Securities, Held-to-maturity, Maturity, Allocated and Single Maturity Date, Fair Value | $ 2,000 | |
Debt Securities, Held-to-maturity, Rolling Maturity, Weighted Average Yield [Abstract] | ||
Debt Securities, Held-to-maturity, Maturity, Rolling after Ten Years, Weighted Average Yield | 2.49% | |
Debt Securities Held To Maturity Rolling Maturity Weighted Average Yield | 2.49% | |
State and political subdivisions | ||
Available for sale at fair value: | ||
Within one year, Amount | $ 201 | |
After one through five years, Amount | 627 | |
After ten years, Amount | 484 | |
Securities available for sale | $ 1,312 | 2,969 |
Rolling maturity, Yield | ||
Within one year, Yield | 3.85% | |
After one through five years, Yield | 3.23% | |
After ten years, Yield | 2.74% | |
Total carrying value, Yield | 3.14 | |
Residential mortgage backed securities | ||
Available for sale at fair value: | ||
Within one year, Amount | $ 3 | |
After one through five years, Amount | 452 | |
After five through ten years, Amount | 1,286 | |
After ten years, Amount | 11,142 | |
Securities available for sale | $ 12,883 | 17,410 |
Rolling maturity, Yield | ||
Within one year, Yield | 4.68% | |
After one through five years, Yield | 2.88% | |
After five through ten years, Yield | 2.25% | |
After ten years, Yield | 1.89% | |
Total carrying value, Yield | 1.96 | |
Corporate and other securities | ||
Available for sale at fair value: | ||
After five through ten years, Amount | $ 12,440 | |
After ten years, Amount | 6,175 | |
Securities available for sale | $ 18,615 | $ 23,235 |
Rolling maturity, Yield | ||
After five through ten years, Yield | 4.56% | |
After ten years, Yield | 2.79% | |
Total carrying value, Yield | 3.70 |
Securities - Securities in Unre
Securities - Securities in Unrealized Loss Position (Details) $ in Thousands | Jun. 30, 2021USD ($)security | Dec. 31, 2020USD ($)security |
Available for sale: | ||
Available for sale, Total number in a loss position | security | 6 | 9 |
Available for sale, Less than 12 months, Estimated fair value | $ 2,396 | $ 4,793 |
Available for sale, Less than 12 months, Unrealized loss | (104) | (20) |
Available for sale, 12 months and greater, Estimated fair value | 7,892 | 9,157 |
Available for sale, 12 Months and greater Unrealized loss | (660) | (1,098) |
Available for sale, Estimated fair value | 10,288 | 13,950 |
Available for sale, Unrealized loss | $ (764) | $ (1,118) |
Corporate and other securities | ||
Available for sale: | ||
Available for sale, Total number in a loss position | security | 6 | 9 |
Available for sale, Less than 12 months, Estimated fair value | $ 2,396 | $ 4,793 |
Available for sale, Less than 12 months, Unrealized loss | (104) | (20) |
Available for sale, 12 months and greater, Estimated fair value | 7,892 | 9,157 |
Available for sale, 12 Months and greater Unrealized loss | (660) | (1,098) |
Available for sale, Estimated fair value | 10,288 | 13,950 |
Available for sale, Unrealized loss | $ (764) | $ (1,118) |
Securities - Schedule Of Realiz
Securities - Schedule Of Realized Gains (Losses) For Marketable Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Available for sale: | ||||
Realized gains | $ 0 | $ 5 | $ 43 | $ 301 |
Realized losses | $ 0 | 0 | 0 | 0 |
Total debt securities available for sale | 5 | 43 | 301 | |
Net gains (losses) on sales of securities | $ 5 | $ 43 | $ 301 |
Securities - Realized Gains and
Securities - Realized Gains and Losses (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)security | Jun. 30, 2020USD ($)security | Dec. 31, 2020USD ($) | |
Schedule of Investments | |||||
Realized gains | $ 0 | $ 5 | $ 43 | $ 301 | |
Realized losses | 0 | 0 | 0 | 0 | |
Securities realized gain (loss) | 5 | 43 | $ 301 | ||
Available-for-sale securities pledged as collateral | 1,400 | $ 1,400 | $ 1,600 | ||
3 Mortgage Backed Securities | |||||
Schedule of Investments | |||||
Number of securities sold | security | 3 | ||||
Book value | 2,800 | $ 2,800 | |||
Securities realized gain (loss) | $ 57 | ||||
6 Corporate Bonds | Corporate Bond Securities | |||||
Schedule of Investments | |||||
Number of securities sold | security | 6 | ||||
Book value | 7,000 | $ 7,000 | |||
Securities realized gain (loss) | $ 39 | ||||
1 Corporate Bond | Corporate Bond Securities | |||||
Schedule of Investments | |||||
Number of securities sold | security | 1 | ||||
Book value | 2,200 | $ 2,200 | |||
Securities realized gain (loss) | $ 61 | ||||
1 Security Called | Taxable Municipal Securities | |||||
Schedule of Investments | |||||
Number of securities sold | security | 1 | ||||
Book value | $ 496 | $ 496 | |||
Securities realized gain (loss) | $ 4 | ||||
1 Security Called | Tax-exempt Municipal securities | |||||
Schedule of Investments | |||||
Number of securities sold | security | 1 | ||||
Book value | 456 | $ 456 | |||
Securities realized gain (loss) | $ 140 | ||||
3 Security call | Tax-exempt Municipal securities | |||||
Schedule of Investments | |||||
Number of securities sold | security | 3 | ||||
Book value | $ 3,800 | $ 3,800 | |||
Securities realized gain (loss) | $ 16 |
Securities - Realized Gains (Lo
Securities - Realized Gains (Losses) for Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Securities | ||||
Net (losses) gains recognized during the period on equity securities | $ (100) | $ 74 | $ 290 | $ (397) |
Net gains recognized during the period on equity securities sold during the period | 5 | |||
Unrealized (losses) gains recognized during the reporting period on equity securities still held at the reporting date | $ (100) | $ 74 | $ 290 | $ (392) |
Loans - Narrative (Details)
Loans - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Guarantee percentage of SBA Loan | 90.00% | |
Residential Consumer Properties | ||
Residential loans in process of foreclosure | $ 2.4 | $ 4.8 |
Loans - Classification of Loans
Loans - Classification of Loans By Class (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | $ 1,642,674 | $ 1,618,482 |
SBA loans held for sale | 11,314 | 9,335 |
Total loans | 1,653,988 | 1,627,817 |
SBA loans held for investment | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 38,114 | 39,587 |
SBA PPP loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 132,375 | 118,257 |
Commercial loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 885,566 | 839,788 |
Commercial loans | Commercial real estate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 676,383 | 630,423 |
Commercial loans | Construction | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 73,250 | 71,404 |
Commercial loans | Consumer other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 113,778 | 118,280 |
Residential mortgage loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 422,188 | 467,586 |
Consumer loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 64,557 | 66,100 |
Consumer loans | Home equity | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 63,390 | 62,549 |
Consumer loans | Consumer other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 1,167 | 3,551 |
Residential construction loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | $ 99,874 | $ 87,164 |
Loans - Credit Quality Indicato
Loans - Credit Quality Indicators (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | $ 1,642,674 | $ 1,618,482 |
SBA 504 loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 22,155 | 19,681 |
Pass | SBA 504 loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 22,155 | 19,681 |
SBA loans held for investment | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 38,114 | 39,587 |
SBA loans held for investment | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 36,714 | 36,991 |
SBA loans held for investment | Special mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 524 | 525 |
SBA loans held for investment | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 876 | 2,071 |
SBA and commercial loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 1,056,055 | 997,632 |
SBA and commercial loans | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 1,016,008 | 959,487 |
SBA and commercial loans | Special mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 30,391 | 31,264 |
SBA and commercial loans | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 9,656 | 6,881 |
SBA PPP loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 132,375 | 118,257 |
SBA PPP loans | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 132,375 | 118,257 |
Commercial loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 885,566 | 839,788 |
Commercial loans | Commercial real estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 676,383 | 630,423 |
Commercial loans | Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 73,250 | 71,404 |
Commercial loans | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 113,778 | 118,280 |
Commercial loans | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 846,919 | 804,239 |
Commercial loans | Pass | Commercial real estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 648,520 | 603,482 |
Commercial loans | Pass | Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 73,250 | 71,404 |
Commercial loans | Pass | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 102,994 | 109,672 |
Commercial loans | Special mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 29,867 | 30,739 |
Commercial loans | Special mention | Commercial real estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 22,285 | 25,206 |
Commercial loans | Special mention | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 7,582 | 5,533 |
Commercial loans | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 8,780 | 4,810 |
Commercial loans | Substandard | Commercial real estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 5,578 | 1,735 |
Commercial loans | Substandard | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 3,202 | 3,075 |
Residential mortgage loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 422,188 | 467,586 |
Residential mortgage loans | Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 418,145 | 462,369 |
Residential mortgage loans | Nonperforming | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 4,043 | 5,217 |
Consumer loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 64,557 | 66,100 |
Consumer loans | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 63,390 | 62,549 |
Consumer loans | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 1,167 | 3,551 |
Consumer loans | Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 64,554 | 64,805 |
Consumer loans | Performing | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 63,390 | 61,254 |
Consumer loans | Performing | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 1,164 | 3,551 |
Consumer loans | Nonperforming | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 3 | 1,295 |
Consumer loans | Nonperforming | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 1,295 | |
Consumer loans | Nonperforming | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 3 | |
Residential construction loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 99,874 | 87,164 |
Residential construction loans | Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 97,585 | 85,414 |
Residential construction loans | Nonperforming | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 2,289 | 1,750 |
Residential mortgage, consumer and residential construction loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 586,619 | 620,850 |
Residential mortgage, consumer and residential construction loans | Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 580,284 | 612,588 |
Residential mortgage, consumer and residential construction loans | Nonperforming | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | $ 6,335 | $ 8,262 |
Loans - Aging Analysis of Past
Loans - Aging Analysis of Past Due and Nonaccrual Loans by Class (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | $ 20,555 | $ 28,573 |
Financing receivable, nonaccrual status | 9,685 | 12,060 |
Current | 1,633,433 | 1,598,796 |
Total loans held for investment, current | 1,622,119 | 1,589,909 |
Total | 1,642,674 | 1,618,482 |
SBA loans held for sale | 11,314 | 9,335 |
Total loans | 1,653,988 | 1,627,817 |
Total loans | 20,555 | 29,021 |
SBA 504 loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Current | 22,155 | 19,681 |
Total | 22,155 | 19,681 |
30-59 days past due | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 9,320 | 8,882 |
Total loans | 9,320 | 9,330 |
60-89 days past due | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 976 | 7,182 |
90 days and still accruing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 574 | 449 |
SBA loans held for investment | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 2,675 | 4,545 |
Financing receivable, nonaccrual status | 1,713 | 2,473 |
Current | 35,439 | 35,042 |
Total | 38,114 | 39,587 |
SBA loans held for investment | 30-59 days past due | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 962 | 792 |
SBA loans held for investment | 60-89 days past due | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 1,280 | |
SBA PPP loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Current | 132,375 | 118,257 |
Total | 132,375 | 118,257 |
Commercial loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total | 885,566 | 839,788 |
Commercial loans | Commercial real estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 2,702 | 6,139 |
Financing receivable, nonaccrual status | 1,505 | 1,059 |
Current | 673,681 | 624,284 |
Total | 676,383 | 630,423 |
Commercial loans | Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 1,047 | |
Current | 73,250 | 70,357 |
Total | 73,250 | 71,404 |
Commercial loans | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 404 | 653 |
Financing receivable, nonaccrual status | 132 | 266 |
Current | 113,374 | 117,627 |
Total | 113,778 | 118,280 |
Commercial loans | 30-59 days past due | Commercial real estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 625 | 3,109 |
Commercial loans | 30-59 days past due | Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 1,047 | |
Commercial loans | 30-59 days past due | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 201 | 186 |
Commercial loans | 60-89 days past due | Commercial real estate | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 572 | 1,971 |
Commercial loans | 60-89 days past due | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 71 | 201 |
Residential mortgage loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 9,544 | 11,644 |
Financing receivable, nonaccrual status | 4,043 | 5,217 |
Current | 412,644 | 455,942 |
Total | 422,188 | 467,586 |
Residential mortgage loans | 30-59 days past due | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 4,772 | 3,232 |
Residential mortgage loans | 60-89 days past due | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 155 | 2,933 |
Residential mortgage loans | 90 days and still accruing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 574 | 262 |
Consumer loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total | 64,557 | 66,100 |
Consumer loans | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 1,503 | 1,875 |
Financing receivable, nonaccrual status | 1,295 | |
Current | 61,887 | 60,674 |
Total | 63,390 | 62,549 |
Consumer loans | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 3 | 4 |
Financing receivable, nonaccrual status | 3 | |
Current | 1,164 | 3,547 |
Total | 1,167 | 3,551 |
Consumer loans | 30-59 days past due | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 1,325 | 393 |
Consumer loans | 30-59 days past due | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 3 | |
Consumer loans | 60-89 days past due | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 178 | |
Consumer loans | 60-89 days past due | Consumer other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 1 | |
Consumer loans | 90 days and still accruing | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 187 | |
Residential construction loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 3,724 | 2,666 |
Financing receivable, nonaccrual status | 2,289 | 1,750 |
Current | 96,150 | 84,498 |
Total | 99,874 | 87,164 |
Residential construction loans | 30-59 days past due | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 1,435 | 120 |
Residential construction loans | 60-89 days past due | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 796 | |
SBA loans held for sale | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | 448 | |
Current | 11,314 | 8,887 |
SBA loans held for sale | $ 11,314 | 9,335 |
SBA loans held for sale | 30-59 days past due | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total past due | $ 448 |
Loans - Impaired Loans with Ass
Loans - Impaired Loans with Associated Allowance (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Unpaid principal balance | ||
With no related allowance | $ 9,927 | $ 10,386 |
With an allowance | 5,433 | 6,566 |
Total individually evaluated impaired loans | 15,360 | 16,952 |
Recorded investment | ||
With no related allowance | 9,754 | 10,180 |
With an allowance | 4,115 | 5,886 |
Total individually evaluated impaired loans | 13,869 | 16,066 |
Specific reserves | 3,391 | 4,107 |
Financing receivable, nonaccrual status | 9,685 | 12,060 |
SBA loans held for investment | ||
Unpaid principal balance | ||
With no related allowance | 739 | 1,799 |
With an allowance | 1,404 | 434 |
Total individually evaluated impaired loans | 2,143 | 2,233 |
Recorded investment | ||
With no related allowance | 640 | 1,698 |
With an allowance | 934 | 404 |
Total individually evaluated impaired loans | 1,574 | 2,102 |
Specific reserves | 467 | 324 |
Financing receivable, nonaccrual status | 1,713 | 2,473 |
Commercial loans | ||
Unpaid principal balance | ||
With no related allowance | 2,641 | 1,462 |
With an allowance | 3,739 | 4,890 |
Total individually evaluated impaired loans | 6,380 | 6,352 |
Recorded investment | ||
With no related allowance | 2,642 | 1,462 |
With an allowance | 2,891 | 4,240 |
Total individually evaluated impaired loans | 5,533 | 5,702 |
Specific reserves | 2,891 | 3,682 |
Commercial loans | Commercial real estate | ||
Unpaid principal balance | ||
With no related allowance | 2,641 | 1,462 |
With an allowance | 994 | 1,730 |
Total individually evaluated impaired loans | 3,635 | 3,192 |
Recorded investment | ||
With no related allowance | 2,642 | 1,462 |
With an allowance | 146 | 1,080 |
Total individually evaluated impaired loans | 2,788 | 2,542 |
Specific reserves | 146 | 576 |
Financing receivable, nonaccrual status | 1,505 | 1,059 |
Commercial loans | Consumer other | ||
Unpaid principal balance | ||
With an allowance | 2,745 | 3,160 |
Total individually evaluated impaired loans | 2,745 | 3,160 |
Recorded investment | ||
With an allowance | 2,745 | 3,160 |
Total individually evaluated impaired loans | 2,745 | 3,160 |
Specific reserves | 2,745 | 3,106 |
Financing receivable, nonaccrual status | 132 | 266 |
Residential mortgage loans | ||
Unpaid principal balance | ||
With no related allowance | 3,831 | 4,080 |
With an allowance | 287 | 1,242 |
Total individually evaluated impaired loans | 4,118 | 5,322 |
Recorded investment | ||
With no related allowance | 3,756 | 3,975 |
With an allowance | 287 | 1,242 |
Total individually evaluated impaired loans | 4,043 | 5,217 |
Specific reserves | 30 | 101 |
Financing receivable, nonaccrual status | 4,043 | 5,217 |
Consumer loans | ||
Recorded investment | ||
Total individually evaluated impaired loans | 427 | |
Consumer loans | Home equity | ||
Unpaid principal balance | ||
With no related allowance | 427 | 1,295 |
Total individually evaluated impaired loans | 427 | 1,295 |
Recorded investment | ||
With no related allowance | 427 | 1,295 |
Total individually evaluated impaired loans | 427 | 1,295 |
Financing receivable, nonaccrual status | 1,295 | |
Consumer loans | Consumer other | ||
Unpaid principal balance | ||
With an allowance | 3 | |
Total individually evaluated impaired loans | 3 | |
Recorded investment | ||
With an allowance | 3 | |
Total individually evaluated impaired loans | 3 | |
Specific reserves | 3 | |
Financing receivable, nonaccrual status | 3 | |
Residential construction loans | ||
Unpaid principal balance | ||
With no related allowance | 2,289 | 1,750 |
Total individually evaluated impaired loans | 2,289 | 1,750 |
Recorded investment | ||
With no related allowance | 2,289 | 1,750 |
Total individually evaluated impaired loans | 2,289 | 1,750 |
Financing receivable, nonaccrual status | 2,289 | 1,750 |
Collateral Pledged | Small Business Administration | ||
Recorded investment | ||
Financing receivable, nonaccrual status | $ 139 | $ 371 |
Loans - Average Recorded Invest
Loans - Average Recorded Investments and Interest Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Financing Receivable, Impaired [Line Items] | ||||
Average recorded investment | $ 11,958 | $ 9,205 | $ 12,742 | $ 9,051 |
Interest income recognized on impaired loans | 115 | 104 | 218 | 194 |
SBA 504 loans | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average recorded investment | 300 | |||
Interest income recognized on impaired loans | 32 | |||
SBA loans held for investment | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average recorded investment | 1,334 | 1,265 | 1,618 | 1,197 |
Interest income recognized on impaired loans | 64 | 3 | 81 | 6 |
Impaired financing receivable average recorded investment, guaranteed by Small Business Administration | 139 | 655 | 216 | 418 |
Commercial loans | Commercial real estate | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average recorded investment | 2,121 | 1,282 | 2,179 | 1,165 |
Interest income recognized on impaired loans | 30 | 33 | 85 | 45 |
Commercial loans | Consumer other | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average recorded investment | 271 | 99 | 322 | 52 |
Interest income recognized on impaired loans | 6 | 12 | 9 | 21 |
Residential mortgage loans | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average recorded investment | 4,983 | 6,054 | 5,272 | 5,875 |
Interest income recognized on impaired loans | 52 | 81 | ||
Consumer loans | Home equity | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average recorded investment | 444 | 505 | 644 | 424 |
Interest income recognized on impaired loans | 5 | $ 4 | 23 | 9 |
Consumer loans | Consumer other | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average recorded investment | $ 38 | |||
Residential construction loans | ||||
Financing Receivable, Impaired [Line Items] | ||||
Average recorded investment | 2,805 | 2,707 | ||
Interest income recognized on impaired loans | $ 10 | $ 20 |
Loans - Troubled Debt Restructu
Loans - Troubled Debt Restructuring (Narrative) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)loan | Jun. 30, 2020USD ($)loan | Dec. 31, 2020USD ($) | |
Financing Receivable, Impaired [Line Items] | |||||
Average recorded investment | $ | $ 11,958 | $ 9,205 | $ 12,742 | $ 9,051 | |
Number of loans modified as a TDR | loan | 2 | 0 | |||
Number of loans modified as TDR, subsequent default | loan | 0 | ||||
Number of loans modified as TDRs | loan | 2 | 0 | |||
Troubled Debt Restructuring (TDR) | |||||
Financing Receivable, Impaired [Line Items] | |||||
Impaired loan reserve | $ | $ 0 | $ 0 | $ 0 | ||
Troubled Debt Restructuring (TDR) | Performing | |||||
Financing Receivable, Impaired [Line Items] | |||||
Average recorded investment | $ | $ 1,100 | $ 663 |
Loans - Troubled Debt Restruc_2
Loans - Troubled Debt Restructuring Financing Receivable (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021USD ($)loan | Jun. 30, 2020loan | Dec. 31, 2020USD ($) | |
Financing Receivable, Troubled Debt Restructuring [Line Items] | |||
Number of loans modified as TDRs | loan | 2 | 0 | |
Recorded investment at time of modification | $ | $ 13,869 | $ 16,066 | |
Consumer loans | |||
Financing Receivable, Troubled Debt Restructuring [Line Items] | |||
Number of loans modified as TDRs | loan | 2 | ||
Recorded investment at time of modification | $ | $ 427 | ||
Home equity | Consumer loans | |||
Financing Receivable, Troubled Debt Restructuring [Line Items] | |||
Number of loans modified as TDRs | loan | 2 | ||
Recorded investment at time of modification | $ | $ 427 | $ 1,295 |
Allowance for Loan Losses and_3
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments - Activity in the Allowance for Loan Losses by Portfolio Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Balance, beginning of period | $ 22,965 | $ 17,376 | $ 23,105 | $ 16,395 |
Charge-offs | (184) | (219) | (840) | (744) |
Recoveries | 20 | 577 | 36 | 583 |
Net (charge-offs) recoveries | (164) | 358 | (804) | (161) |
Provision for (credit to) loan losses charged to expense | 2,500 | 500 | 4,000 | |
Balance, end of period | 22,801 | 20,234 | 22,801 | 20,234 |
SBA loans held for investment | ||||
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Balance, beginning of period | 1,654 | 1,005 | 1,301 | 1,079 |
Charge-offs | (164) | (446) | (25) | |
Recoveries | 19 | 75 | 34 | 80 |
Net (charge-offs) recoveries | (145) | 75 | (412) | 55 |
Provision for (credit to) loan losses charged to expense | 177 | (76) | 797 | (130) |
Balance, end of period | 1,686 | 1,004 | 1,686 | 1,004 |
Commercial loans | ||||
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Balance, beginning of period | 14,727 | 10,129 | 14,992 | 9,722 |
Charge-offs | (20) | (219) | (393) | (519) |
Recoveries | 1 | 502 | 2 | 503 |
Net (charge-offs) recoveries | (19) | 283 | (391) | (16) |
Provision for (credit to) loan losses charged to expense | 303 | 1,924 | 410 | 2,630 |
Balance, end of period | 15,011 | 12,336 | 15,011 | 12,336 |
Residential mortgage loans | ||||
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Balance, beginning of period | 5,009 | 4,763 | 5,318 | 4,254 |
Charge-offs | (200) | |||
Net (charge-offs) recoveries | (200) | |||
Provision for (credit to) loan losses charged to expense | (405) | 676 | (714) | 1,385 |
Balance, end of period | 4,604 | 5,439 | 4,604 | 5,439 |
Consumer loans | ||||
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Balance, beginning of period | 549 | 671 | 681 | 625 |
Charge-offs | (1) | |||
Net (charge-offs) recoveries | (1) | |||
Provision for (credit to) loan losses charged to expense | 52 | (60) | (79) | (14) |
Balance, end of period | 601 | 611 | 601 | 611 |
Residential construction loans | ||||
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Balance, beginning of period | 1,026 | 808 | 813 | 715 |
Provision for (credit to) loan losses charged to expense | (127) | 36 | 86 | 129 |
Balance, end of period | $ 899 | $ 844 | $ 899 | $ 844 |
Allowance for Loan Losses and_4
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments - Allowance for Credit Losses on Basis of Impairment Method (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Total | $ 22,801 | $ 22,965 | $ 23,105 | $ 20,234 | $ 17,376 | $ 16,395 |
Total | 1,642,674 | 1,618,482 | ||||
SBA including PPP loans held for investment | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Individually evaluated for impairment | 467 | 324 | ||||
Collectively evaluated for impairment | 1,219 | 977 | ||||
Total | 1,686 | 1,301 | ||||
Individually evaluated for impairment | 1,574 | 2,102 | ||||
Collectively evaluated for impairment | 168,915 | 155,742 | ||||
Total | 170,489 | 157,844 | ||||
Commercial loans | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Individually evaluated for impairment | 2,891 | 3,682 | ||||
Collectively evaluated for impairment | 12,120 | 11,310 | ||||
Total | 15,011 | 14,727 | 14,992 | 12,336 | 10,129 | 9,722 |
Individually evaluated for impairment | 5,533 | 5,702 | ||||
Collectively evaluated for impairment | 880,033 | 834,086 | ||||
Total | 885,566 | 839,788 | ||||
Residential mortgage loans | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Individually evaluated for impairment | 30 | 101 | ||||
Collectively evaluated for impairment | 4,574 | 5,217 | ||||
Total | 4,604 | 5,009 | 5,318 | 5,439 | 4,763 | 4,254 |
Individually evaluated for impairment | 4,043 | 5,217 | ||||
Collectively evaluated for impairment | 418,145 | 462,369 | ||||
Total | 422,188 | 467,586 | ||||
Consumer loans | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Individually evaluated for impairment | 3 | |||||
Collectively evaluated for impairment | 598 | 681 | ||||
Total | 601 | 549 | 681 | 611 | 671 | 625 |
Individually evaluated for impairment | 430 | 1,295 | ||||
Collectively evaluated for impairment | 64,127 | 64,805 | ||||
Total | 64,557 | 66,100 | ||||
Residential construction loans | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Collectively evaluated for impairment | 899 | 813 | ||||
Total | 899 | $ 1,026 | 813 | $ 844 | $ 808 | $ 715 |
Individually evaluated for impairment | 2,289 | 1,750 | ||||
Collectively evaluated for impairment | 97,585 | 85,414 | ||||
Total | 99,874 | 87,164 | ||||
Total | ||||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||||
Individually evaluated for impairment | 3,391 | 4,107 | ||||
Collectively evaluated for impairment | 19,410 | 18,998 | ||||
Total | 22,801 | 23,105 | ||||
Individually evaluated for impairment | 13,869 | 16,066 | ||||
Collectively evaluated for impairment | 1,628,805 | 1,602,416 | ||||
Total | $ 1,642,674 | $ 1,618,482 |
Allowance for Loan Losses and_5
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments - Narrative (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Allowance for Loan Losses and Reserve for Unfunded Loan Commitments | ||
Reserve for commitments | $ 346 | $ 288 |
Derivative Financial Instrume_3
Derivative Financial Instruments and Hedging Activities (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021USD ($)contract | Dec. 31, 2020USD ($)contract | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Cash Collateral Pledged | $ 1,500 | $ 1,500 |
Interest rate swap agreements | Designated as hedging instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount | 60,000 | 80,000 |
Fair value | $ (202) | $ (1,026) |
Weighted average pay rate | 1.05% | 1.19% |
Weighted average receive rate | 0.18% | 0.89% |
Weighted average maturity in years | 1 year 10 months 6 days | 2 years 2 months 12 days |
Number of contracts | contract | 3 | 5 |
Derivative Financial Instrume_4
Derivative Financial Instruments and Hedging Activities - Gain (Loss) in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
AOCI (loss) gain on cash flow derivative instruments | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain (loss) recognized in OCI on derivatives | $ 17 | $ (340) | $ 824 | $ (1,750) |
Employee Benefit Plans - Narrat
Employee Benefit Plans - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021USD ($)shares | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)installmentshares | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Options, outstanding (in shares) | shares | 723,202 | 723,202 | 672,800 | |||
Defined contribution plan, maximum annual contributions per employee, percent | 75.00% | |||||
Defined contribution plan employer discretionary contribution amount | $ 199 | $ 186 | $ 459 | $ 371 | ||
Deferred compensation | 388 | 30 | 516 | 522 | ||
Interest paid on deferred fees | 40 | 33 | 68 | 62 | ||
Deferred compensation arrangement with individual, distributions paid | 3 | 3 | 6 | 6 | ||
Contributions | 0 | 0 | ||||
Defined benefit plans future payments | $ 3,845 | 3,708 | $ 3,845 | 3,708 | $ 3,845 | $ 3,571 |
Director | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Deferred compensation arrangement guaranteed award percentage | 100.00% | |||||
Executive Management | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Deferred compensation arrangement guaranteed award percentage | 100.00% | |||||
SERP | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Description of defined contribution pension and other postretirement plans | The retirement benefit under the SERP is an amount equal to sixty percent (60%) of the average of the President and CEO’s base salary for the thirty-six (36) months immediately preceding the executive’s separation from service after age 66, adjusted annually thereafter by two percent (2%) | |||||
SERP | President and CEO | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Percent of average executive base salary | 60.00% | 60.00% | ||||
Payment term after separation | 36 months | |||||
Percent of average executive base salary, adjustment thereafter | 2.00% | 2.00% | ||||
Number of annual payments after separation | installment | 15 | |||||
Total estimated future payments | $ 6,200 | $ 6,200 | ||||
Discount rate used to calculate the present value of the benefit obligation | 4.00% | 4.00% | ||||
Annual vesting percentage | 3.00% | |||||
Award vesting rights, percentage | 100.00% | |||||
Other Postretirement Benefits Plan | Executive Management | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Deferred compensation arrangement guaranteed award percentage | 7.50% | |||||
Award vesting rights, percentage | 100.00% | |||||
Accrued expense under the plan | $ 60 | $ 60 | ||||
Life insurance plan with a post retirement death benefit | 250 | 250 | ||||
Life insurance plan aggregate expenses | 1 | $ 1 | $ 3 | $ 3 | ||
Other Postretirement Benefits Plan | Executive Management | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Deferred compensation arrangement guaranteed award percentage | 15.00% | |||||
Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Award vesting period | 10 years | |||||
Award expiration period | 3 years | |||||
Compensation cost not yet recognized | 1,500 | $ 1,500 | ||||
Compensation cost recognition weighted average period | 2 years 1 month 6 days | |||||
Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Award vesting period | 4 years | |||||
Canceled (in shares) | shares | (1,500) | |||||
Compensation cost recognition weighted average period | 2 years 9 months 18 days | |||||
Nonvested awards, compensation not yet recognized, awards other than options | $ 1,700 | $ 1,700 | ||||
2019 Equity Compensation Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Number of shares available for grant (in shares) | shares | 138,850 | 138,850 | ||||
2019 Equity Compensation Plan | Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Number of shares available for grant (in shares) | shares | 500,000 | 500,000 | ||||
Unvested options cancelled and returned | shares | (2,000) | |||||
2019 Equity Compensation Plan | Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||
Number of shares available for grant (in shares) | shares | 83,150 | 83,150 | ||||
Canceled (in shares) | shares | (1,500) |
Employee Benefit Plans - Stock
Employee Benefit Plans - Stock Transactions - Stock Option Plans (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Shares | |||||
Options Outstanding, beginning shares (in shares) | 672,800 | ||||
Options granted (in shares) | 0 | 0 | 89,000 | 101,000 | |
Options exercised (in shares) | (24,131) | (49,111) | (36,598) | (54,611) | |
Options forfeited, shares | (2,000) | ||||
Options Outstanding, ending shares (in shares) | 723,202 | 723,202 | 672,800 | ||
Shares Exercisable | 447,048 | 447,048 | |||
Weighted average exercise price | |||||
Weighted Average exercise Price: Options Outstanding, beginning (in usd per share) | $ 16.42 | ||||
Weighted Average Exercise Price: Options granted (in usd per share) | 19.21 | $ 20.39 | |||
Weighted Average Exercise Price: Options exercised (in usd per share) | 7.31 | ||||
Weighted Average Exercise Price: Options forfeited (in usd per share) | 18.64 | ||||
Weighted Average exercise Price: Options Outstanding, ending (in usd per share) | $ 17.22 | 17.22 | $ 16.42 | ||
Weighted average exercise price, Options Exercisable (in dollars per share) | $ 15.58 | $ 15.58 | |||
Weighted Average Remaining Contractual Life (in years): Options Outstanding | 7 years | 6 years 9 months 18 days | |||
Weighted Average Remaining Contractual Life (in years): Options Exercisable | 5 years 9 months 18 days | ||||
Aggregate Intrinsic Value: Options Outstanding | $ 3,539,123 | $ 3,539,123 | $ 1,952,568 | ||
Aggregate Intrinsic Value: Options Exercisable | $ 2,905,420 | $ 2,905,420 |
Employee Benefit Plans - Fair V
Employee Benefit Plans - Fair Value Assumptions (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Options granted (in shares) | 0 | 0 | 89,000 | 101,000 |
Weighted Average Exercise Price: Options granted (in usd per share) | $ 19.21 | $ 20.39 | ||
Weighted average fair value of options (in usd per share) | $ 7.72 | $ 5.54 | ||
Expected life in years | 8 years 4 months 17 days | 8 years 7 months 28 days | ||
Expected volatility | 43.69% | 27.13% | ||
Risk-free interest rate | 1.14% | 1.55% | ||
Dividend yield | 1.68% | 1.61% | ||
Stock Options | 2019 Equity Compensation Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Options granted (in shares) | 281,500 |
Employee Benefit Plans - Schedu
Employee Benefit Plans - Schedule of Information About Options Exercised (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Employee Benefit Plans | ||||
Number of options exercised (in shares) | 24,131 | 49,111 | 36,598 | 54,611 |
Total intrinsic value of options exercised | $ 347,759 | $ 388,981 | $ 517,782 | $ 475,222 |
Proceeds from exercise of stock options | 187,513 | 361,253 | 267,626 | 395,518 |
Tax deduction realized from options exercised | $ 61,462 | $ 113,952 | $ 112,613 | $ 139,216 |
Employee Benefit Plans - Stoc_2
Employee Benefit Plans - Stock Transactions - Stock Options Outstanding And Exercisable (Details) | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range | |
Options outstanding (in shares) | shares | 723,202 |
Options outstanding, Weighted average remaining contractual life (in years) | 7 years |
Options outstanding, Weighted average exercise price (in dollars per share) | $ 17.22 |
Options exercisable (in shares) | shares | 447,048 |
Options exercisable, Weighted average exercise price (in dollars per share) | $ 15.58 |
$0.00 - $6.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range | |
Range of exercise prices, lower | 0 |
Range of exercise prices, upper | $ 6 |
Options outstanding (in shares) | shares | 19,869 |
Options outstanding, Weighted average remaining contractual life (in years) | 1 year 7 months 6 days |
Options outstanding, Weighted average exercise price (in dollars per share) | $ 5.47 |
Options exercisable (in shares) | shares | 19,869 |
Options exercisable, Weighted average exercise price (in dollars per share) | $ 5.47 |
$6.01 - $12.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range | |
Range of exercise prices, lower | 6.01 |
Range of exercise prices, upper | $ 12 |
Options outstanding (in shares) | shares | 135,800 |
Options outstanding, Weighted average remaining contractual life (in years) | 3 years 10 months 24 days |
Options outstanding, Weighted average exercise price (in dollars per share) | $ 8.85 |
Options exercisable (in shares) | shares | 135,800 |
Options exercisable, Weighted average exercise price (in dollars per share) | $ 8.86 |
$12.01 - $18.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range | |
Range of exercise prices, lower | 12.01 |
Range of exercise prices, upper | $ 18 |
Options outstanding (in shares) | shares | 132,533 |
Options outstanding, Weighted average remaining contractual life (in years) | 7 years 7 months 6 days |
Options outstanding, Weighted average exercise price (in dollars per share) | $ 16.37 |
Options exercisable (in shares) | shares | 69,201 |
Options exercisable, Weighted average exercise price (in dollars per share) | $ 15.72 |
$18.01 - $24.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range | |
Range of exercise prices, lower | 18.01 |
Range of exercise prices, upper | $ 24 |
Options outstanding (in shares) | shares | 435,000 |
Options outstanding, Weighted average remaining contractual life (in years) | 8 years |
Options outstanding, Weighted average exercise price (in dollars per share) | $ 20.62 |
Options exercisable (in shares) | shares | 222,178 |
Options exercisable, Weighted average exercise price (in dollars per share) | $ 20.56 |
Employee Benefit Plans - Compen
Employee Benefit Plans - Compensation Expense Related To Stock Options (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Compensation expense | $ 222,545 | $ 180,785 | $ 430,147 | $ 373,274 |
Income tax benefit | 64,316 | 52,247 | 124,313 | 107,876 |
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Compensation expense | 187,401 | 161,173 | 353,750 | 334,078 |
Income tax benefit | $ 54,159 | $ 46,580 | $ 102,234 | $ 96,549 |
Employee Benefit Plans - Restri
Employee Benefit Plans - Restricted Stock Activity (Details) - Restricted Stock - $ / shares | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | |
Shares | |||
Nonvested restricted stock, beginning balance (in shares) | 87,972 | ||
Granted (in shares) | 10,000 | 40,000 | 15,000 |
Canceled (in shares) | (1,500) | ||
Vested (in shares) | (26,633) | ||
Nonvested restricted stock, ending balance (in shares) | 99,839 | 99,839 | |
Average grant date fair value | |||
Nonvested restricted stock, beginning balance (in dollars per share) | $ 19.26 | ||
Granted (in dollars per share) | $ 21.60 | 19.99 | $ 16.63 |
Vested (in dollars per share) | 18.76 | ||
Canceled (in dollars per share) | 15.09 | ||
Nonvested restricted stock, ending balance (in dollars per share) | $ 19.75 | $ 19.75 |
Employee Benefit Plans - Stoc_3
Employee Benefit Plans - Stock Transactions - Restricted Stock Awards (Details) - Restricted Stock - $ / shares | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Number of shares granted (in shares) | 10,000 | 40,000 | 15,000 |
Average grant date fair value (in usd per share) | $ 21.60 | $ 19.99 | $ 16.63 |
Employee Benefit Plans - SERP N
Employee Benefit Plans - SERP Narrative (Details) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2021USD ($)installment | Dec. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | |
Defined Benefit Plan Disclosure | ||||
Benefit obligation | $ 3,845 | $ 3,845 | $ 3,708 | $ 3,571 |
President and CEO | SERP | ||||
Defined Benefit Plan Disclosure | ||||
Percent of average executive base salary | 60.00% | |||
Payment term after separation | 36 months | |||
Percent of average executive base salary, adjustment thereafter | 2.00% | |||
Number of annual payments after separation | installment | 15 | |||
Total estimated future payments | $ 6,200 | |||
Assumptions used calculating benefit obligation, discount rate | 4.00% | |||
Annual vesting percentage | 3.00% | |||
Award vesting rights, percentage | 100.00% |
Employee Benefit Plans - Summar
Employee Benefit Plans - Summary of Components of Net Periodic Pension Cost of Defined Benefit Plan Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2021 | |
Employee Benefit Plans | |||||
Reduction in service cost | $ (35) | $ (69) | $ (137) | ||
Service cost | $ 32 | $ 63 | |||
Interest cost | 35 | 37 | 69 | 74 | |
Amortization of prior service cost | 311 | 21 | 332 | 42 | |
Net periodic benefit cost | $ 311 | $ 90 | $ 332 | $ 179 |
Employee Benefit Plans - Summ_2
Employee Benefit Plans - Summary of Changes in Benefit Obligations of Defined Benefit Plan Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2021 | |
Employee Benefit Plans | |||||
Benefit obligation, beginning of year | $ 3,845 | $ 3,571 | $ 3,845 | ||
Reduction in service cost | $ (35) | (69) | $ (137) | ||
Service cost | $ 32 | 63 | |||
Interest cost | 35 | 37 | 69 | 74 | |
Benefit obligation, end of year | $ 3,845 | $ 3,708 | $ 3,845 | $ 3,708 |
Employee Benefit Plans - Execut
Employee Benefit Plans - Executive Incentive Retirement Plan (Details) - Executive Management $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Deferred Compensation Arrangement with Individual, Postretirement Benefits | |
Deferred compensation arrangement, option to elect to defer fees and bonuses, percentage | 100.00% |
Other Postretirement Benefits Plan | |
Deferred Compensation Arrangement with Individual, Postretirement Benefits | |
Deferred compensation arrangement, option to elect to defer fees and bonuses, percentage | 7.50% |
Accrued employee benefits | $ 60 |
Regulatory Capital (Details)
Regulatory Capital (Details) | Jun. 30, 2021 | Dec. 31, 2020 |
Compliance with Regulatory Capital Requirements under Banking Regulations | ||
Leverage ratio | 0.1031 | 0.1009 |
Bank | ||
Compliance with Regulatory Capital Requirements under Banking Regulations | ||
Leverage ratio | 0.0995 | 0.0980 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle | ||
Operating lease right-of-use assets | $ 2,127 | $ 2,365 |
Present value of lease liabilities | $ 2,187 | $ 2,400 |
Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Operating lease, remaining contract term | 1 year | |
Operating Lease renewal term | 1 year | |
Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Operating lease, remaining contract term | 10 years | |
Operating Lease renewal term | 5 years |
Leases - Cost (Details)
Leases - Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Leases | |||||
Operating lease cost | $ 149 | $ 148 | $ 298 | $ 295 | |
Lease, Cost, Total | 149 | 148 | 298 | 295 | |
Operating cash flows from operating leases | $ 145 | $ 142 | $ 290 | $ 283 | |
Weighted average remaining lease term in years | 5 years 7 months 28 days | 5 years 7 months 28 days | 5 years 11 months 15 days | ||
Weighted average discount rate | 5.50% | 5.50% | 5.45% | ||
Operating lease right-of-use assets | $ 2,127 | $ 2,127 | $ 2,365 |
Leases - Maturity (Details)
Leases - Maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Leases | ||
2021 (excluding the six months ended June 30, 2021) | $ 266 | |
2022 | 477 | |
2023 | 410 | |
2024 | 361 | |
2025 | 371 | |
2026 and thereafter | 664 | |
Total lease payments | 2,549 | |
Less: Interest | (362) | |
Lease liabilities | $ 2,187 | $ 2,400 |