|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
None
|
Not Applicable
|
Not Applicable
|
Large accelerated filer ☐
|
|
Non-accelerated filer ☐
|
Smaller reporting company |
Emerging growth company |
PART I. - FINANCIAL INFORMATION
|
Page
|
||
|
|
|
|
|
Item 1 - Financial Statements
|
|
|
|
|
4
|
|
|
|
5
|
|
|
|
6
|
|
|
|
7
|
|
|
|
8
|
|
|
|
9
|
|
|
|
|
|
|
31
|
||
|
|
32
|
|
|
|
37
|
|
|
|
44
|
|
|
|
|
|
|
57
|
||
|
|
|
|
|
57
|
||
|
|
|
|
PART II. - OTHER INFORMATION
|
|
||
|
|
|
|
|
57
|
||
|
57
|
||
|
58
|
||
|
58
|
||
|
58
|
||
|
58
|
||
|
58
|
||
|
59
|
Item 1.
|
Financial Statements
|
(Dollars in thousands, except share and per share amounts)
|
September 30,
2022
|
December 31,
2021
|
||||||
ASSETS
|
||||||||
Cash and due from banks
|
$
|
|
$
|
|
||||
Interest bearing deposits with banks
|
|
|
||||||
Total cash and cash equivalents
|
|
|
||||||
Securities available-for-sale, at fair value
|
|
|
||||||
Securities held-to-maturity, fair
value $
|
|
|
||||||
Allowance for credit losses
|
( |
) | ||||||
Total investment securities
|
|
|
||||||
Non-marketable securities
|
|
|
||||||
Loans and leases held for investment
|
|
|
||||||
Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
Loans held for investment, net
|
|
|
||||||
Bank-owned life insurance
|
|
|
||||||
Premises and equipment, net
|
|
|
||||||
Deferred income tax assets
|
|
|
||||||
Accrued interest receivable
|
|
|
||||||
Goodwill
|
|
|
||||||
Other intangibles
|
|
|
||||||
Other real estate owned
|
|
|
||||||
Other assets
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Deposits:
|
||||||||
Non-interest bearing
|
$
|
|
$
|
|
||||
Interest bearing:
|
||||||||
Demand
|
|
|
||||||
Savings and money market
|
|
|
||||||
Certificates of deposit
|
|
|
||||||
Total interest bearing
|
|
|
||||||
Total deposits
|
|
|
||||||
Subordinated debentures
|
|
|
||||||
Interest payable and other liabilities
|
|
|
||||||
TOTAL LIABILITIES
|
|
|
||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Preferred shares,
|
|
|
||||||
Common shares, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive (loss) / income, net of taxes
|
(
|
)
|
(
|
)
|
||||
TOTAL SHAREHOLDERS’ EQUITY
|
|
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
|
$
|
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
(Dollars in thousands, except share and per share amounts) |
2022
|
2021
|
2022
|
2021
|
||||||||||||
Interest income
|
||||||||||||||||
Interest and fees on loans and leases
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Interest and dividends on investments
|
|
|
|
|
||||||||||||
Interest on deposits with others
|
||||||||||||||||
Total interest income
|
|
|
|
|
||||||||||||
Interest expense
|
||||||||||||||||
Deposits
|
|
|
|
|
||||||||||||
Subordinated debentures
|
|
|
|
|
||||||||||||
Total interest expense
|
|
|
|
|
||||||||||||
Net interest income
|
|
|
|
|
||||||||||||
Provision for credit losses
|
|
|
|
|
||||||||||||
Net interest income after provision for credit losses
|
|
|
|
|
||||||||||||
Non-interest income
|
||||||||||||||||
Card processing
|
||||||||||||||||
Service charges on deposit accounts
|
|
|
|
|
||||||||||||
Increase in cash surrender value of BOLI
|
|
|
|
|
||||||||||||
Net (loss)/gain on sale of investment securities available-for-sale
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Net gain/(loss) on deferred compensation benefits
|
|
|
(
|
)
|
|
|||||||||||
Other
|
|
|
|
|
||||||||||||
Total non-interest income
|
|
|
|
|
||||||||||||
Non-interest expense
|
||||||||||||||||
Salaries and employee benefits
|
|
|
|
|
||||||||||||
Net gain/(loss) on deferred compensation benefits
|
|
|
(
|
)
|
|
|||||||||||
Occupancy
|
|
|
|
|
||||||||||||
Data Processing
|
||||||||||||||||
FDIC insurance
|
||||||||||||||||
Marketing
|
|
|
|
|
||||||||||||
Legal
|
|
|
|
|
||||||||||||
Other
|
|
|
|
|
||||||||||||
Total non-interest expense
|
|
|
|
|
||||||||||||
INCOME BEFORE INCOME TAXES
|
|
|
|
|
||||||||||||
Income tax expense
|
|
|
|
|
||||||||||||
NET INCOME
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Earnings per common share:
|
||||||||||||||||
Basic
|
$ | $ | $ | $ | ||||||||||||
Diluted
|
$ | $ | $ | $ | ||||||||||||
Weighted average number of common shares | ||||||||||||||||
Basic
|
||||||||||||||||
Diluted
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
(Dollars in thousands) |
2022
|
2021
|
2022
|
2021
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other comprehensive income
|
||||||||||||||||
Unrealized holding (losses)/gains on securities available-for-sale
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Reclassification adjustment for (gains)/losses on available-for-sale securities
|
|
|
|
(
|
)
|
|||||||||||
Amortization of unrealized loss on securities transferred to held-to-maturity
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net unrealized holding (losses)/gains on securities available-for-sale
|
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income tax benefit/(expense)
|
|
|
|
|
||||||||||||
Other comprehensive (loss)/income, net of tax
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Total comprehensive income
|
$
|
|
$
|
|
$
|
|
$
|
|
(Dollars in thousands, except share and per share amounts)
|
Common
Shares
|
Amount |
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
(Loss)/Income
|
Total
|
||||||||||||||||||
Balance as of July 1, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income
|
- |
|
|
|
|
|||||||||||||||||||
Other comprehensive loss, net of tax
|
- |
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Repurchase of common stock | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance as of September 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Balance as of July 1, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||
Net income
|
- |
|
|
|
|
|||||||||||||||||||
Other comprehensive loss, net of tax
|
- |
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Balance as of September 30, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(Dollars in thousands, except share and per share amounts)
|
Common
Shares
|
Amount |
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
(Loss)/Income
|
Total
|
||||||||||||||||||
Balance as of January 1, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income
|
- |
|
|
|
|
|||||||||||||||||||
Other comprehensive loss, net of tax
|
- |
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Cash dividends declared ($
|
- | ( |
) | ( |
) | |||||||||||||||||||
Repurchase of common stock | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance as of September 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Balance as of January 1, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||
Net income
|
- |
|
|
|
|
|||||||||||||||||||
Other comprehensive loss, net of tax
|
- |
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Cash dividends declared ($
|
- | ( |
) | ( |
) | |||||||||||||||||||
Cash dividends returned |
- | |||||||||||||||||||||||
Balance as of September 30, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Nine Months Ended
September 30,
|
||||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provision for credit losses
|
|
|
||||||
Depreciation and amortization
|
|
|
||||||
Net amortization of securities premiums and discounts
|
|
|
||||||
Increase in cash surrender value of BOLI
|
(
|
)
|
(
|
)
|
||||
Decrease /(increase) in deferred income taxes, net
|
|
(
|
)
|
|||||
Loss/(gains) on sale of securities available-for-sale
|
|
(
|
)
|
|||||
Net changes in:
|
||||||||
Other assets
|
(
|
)
|
(
|
)
|
||||
Other liabilities
|
|
|
||||||
Net cash provided by operating activities
|
|
|
||||||
Cash flows from investing activities:
|
||||||||
Net change in loans held for investment
|
(
|
)
|
(
|
)
|
||||
Purchase of available-for-sale securities
|
(
|
)
|
(
|
)
|
||||
Purchase of held-to-maturity securities
|
(
|
)
|
(
|
)
|
||||
Proceeds from sales, maturities, calls and pay downs of available-for-sale securities
|
|
|
||||||
Proceeds from maturities, calls and pay downs of held-to-maturity securities
|
|
|
||||||
Purchase of premises and equipment
|
(
|
)
|
(
|
)
|
||||
Purchase of other investments
|
(
|
)
|
(
|
)
|
||||
Redemption of other investments | ||||||||
Proceeds from bank-owned life insurance | ||||||||
Proceeds from sale of assets
|
|
|
||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Net increase in deposits
|
|
|
||||||
Cash dividends paid
|
(
|
)
|
(
|
)
|
||||
Net cash used in share repurchase of common stock
|
(
|
)
|
|
|||||
Net provided by financing activities
|
|
|
||||||
Net change in cash and cash equivalents
|
|
|
||||||
Cash and cash equivalents, beginning of period
|
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
|
$
|
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
|
$
|
|
||||
Income taxes paid |
$ | $ | ||||||
Supplemental disclosures of non-cash transactions:
|
||||||||
Investment securities available-for-sale transferred to held-to-maturity
|
$
|
|
$
|
|
||||
Lease Liabilities Arising from Obtaining Right-of-Use Assets | $ | $ |
|
January-2022
|
|||||||||||
(Dollars in thousands)
|
Reported
under
ASC 326
|
Reported
Pre- Adoption
|
Impact of
ASC 326
Adoption
|
|||||||||
Allowance for credit losses:
|
||||||||||||
Real estate:
|
||||||||||||
Commercial
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Agricultural
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Residential and home equity
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Construction
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Total real estate
|
(
|
)
|
(
|
)
|
|
|||||||
Commercial & industrial
|
(
|
)
|
(
|
)
|
|
|||||||
Agricultural
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Commercial leases
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Consumer and other
|
(
|
)
|
(
|
)
|
|
|||||||
Total allowance for credit losses
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Available-for-Sale Securities
|
Gross Unrealized | |||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
Gains
|
Losses
|
Fair
Value
|
||||||||||||
As of September 30, 2022 | ||||||||||||||||
U.S. Treasury notes
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
U.S. Government-sponsored securities
|
|
|
|
|
||||||||||||
Mortgage-backed securities (1)
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations (1)
|
||||||||||||||||
Corporate securities
|
|
|
|
|
||||||||||||
Other
|
|
|
|
|
||||||||||||
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
Gross Unrealized
|
|
|||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
Gains
|
Losses
|
Fair
Value
|
||||||||||||
As of December 31, 2021
|
||||||||||||||||
U.S. Treasury notes
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
U.S. Government-sponsored securities
|
|
|
|
|
||||||||||||
Mortgage-backed securities (1)
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations (1)
|
||||||||||||||||
Other
|
|
|
|
|
||||||||||||
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
|
$
|
|
Held-to-Maturity Securities |
|
Gross Unrealized
|
|
|||||||||||||||||
(Dollars in thousands)
|
Amortized
Cost |
Gains
|
Losses
|
Fair
Value
|
Allowance
for Credit
Losses
|
|||||||||||||||
As of September 30, 2022 | ||||||||||||||||||||
Municipal securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | |||||||||||
Mortgage-backed securities (1)
|
|
|
|
|
||||||||||||||||
Collateralized mortgage obligations (1)
|
||||||||||||||||||||
Total held-to-maturity securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
|
Gross Unrealized
|
|||||||||||||||||||
(Dollars in thousands)
|
Amortized Cost
|
Gains
|
Losses
|
Fair
Value
|
Allowance
for Credit
Losses
|
|||||||||||||||
As of December 31, 2021
|
||||||||||||||||||||
Municipal securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Mortgage-backed securities(1)
|
|
|
|
|
|
|||||||||||||||
Collateralized mortgage obligations(1)
|
|
|
|
|
|
|||||||||||||||
Total held-to-maturity securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Available-for-Sale Securities |
As of September 30, 2022 | |||||||||||||||||||||||
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
As of September 30, 2022
|
||||||||||||||||||||||||
U.S. Treasury notes
|
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
U.S. Government-sponsored securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities (1)
|
|
|
|
|
|
|
||||||||||||||||||
Collateralized mortgage obligations (1)
|
||||||||||||||||||||||||
Corporate securities
|
||||||||||||||||||||||||
Total available-for-sale
securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
As of December 31, 2021 | ||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
As of December 31, 2021
|
||||||||||||||||||||||||
U.S. Government-sponsored securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Mortgage-backed securities (1)
|
|
|
|
|
|
|
||||||||||||||||||
Total available-for-sale
securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
For the Nine Months Ended September 30, 2022
|
||||||||||||||||
(Dollars in thousands)
|
Municipal securities
|
Mortgage-backed securities
|
Collateralized Mortgage obligations
|
Total
|
||||||||||||
Allowance for credit losses - securities
|
||||||||||||||||
Beginning Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Provision for credit losses
|
|
|
|
|
||||||||||||
Ending Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
Available-for-Sale
|
Held-to-Maturity
|
|||||||||||||||
(Dollars in thousands)
|
Amortized Cost
|
Fair Value
|
Amortized Cost
|
Fair Value
|
||||||||||||
Securities maturing in: |
||||||||||||||||
One year or less
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
After one year through five years
|
|
|
|
|
||||||||||||
After five years through ten years
|
|
|
|
|
||||||||||||
After ten years
|
|
|
|
|
||||||||||||
Total | $ |
|
$ |
|
$ |
|
$ |
|
Available-for-Sale | Held-to-Maturity | |||||||||||||||||||||||
Fair Value
|
Amortized Cost
|
|||||||||||||||||||||||
(Dollars in thousands)
|
AAA/AA/A
|
BBB/BB/B
|
Not Rated
|
AAA/AA/A
|
BBB/BB/B
|
Not Rated
|
||||||||||||||||||
September 30, 2022
|
||||||||||||||||||||||||
Breakdown by Category:
|
||||||||||||||||||||||||
U.S. Treasury notes
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
U.S. Government-sponsored securities
|
|
|
|
|
|
|
||||||||||||||||||
Mortgage-backed securities (1)
|
|
|
|
|
|
|
||||||||||||||||||
Collateralized mortgage obligations (1)
|
|
|
|
|
|
|
||||||||||||||||||
Municipal securities
|
||||||||||||||||||||||||
Corporate securities
|
|
|
|
|
|
|
||||||||||||||||||
Other
|
|
|
|
|
|
|
||||||||||||||||||
Total Investment Grade
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
(Dollars in thousands)
|
Gross Proceeds
|
Gross Gains
|
Gross Losses
|
|||||||||
Nine months ended September 30, 2022
|
$
|
|
$
|
|
$
|
|
||||||
Nine months ended September 30, 2021
|
$
|
|
$
|
|
$
|
|
(Dollars in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Loans and leases held for investment, net
|
||||||||
Real estate:
|
||||||||
Commercial
|
$
|
|
$
|
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|
||||||
Total real estate
|
|
|
||||||
Commercial & industrial
|
|
|
||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other(1)
|
|
|
||||||
Total gross loans and leases
|
|
|
||||||
Unearned income
|
(
|
)
|
(
|
)
|
||||
Total net loans and leases
|
|
|
||||||
Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
Total loans and leases held for investment, net
|
$
|
|
$
|
|
September 30, 2022
|
||||||||||||||||||||||||
(Dollars in thousands)
|
Current
|
30-89 Days
Past Due
|
90+ Days
Past Due
|
Non-
accrual
|
Total Past
Due
|
Total
|
||||||||||||||||||
Loans and leases held for investment, net
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Residential and home equity
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Total real estate
|
|
|
|
|
|
|
||||||||||||||||||
Commercial & industrial
|
|
|
|
|
|
|
||||||||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Commercial leases
|
|
|
|
|
|
|
||||||||||||||||||
Consumer and other
|
|
|
|
|
|
|
||||||||||||||||||
Total loans and leases, net
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
||||||||||||||||||||||||
(Dollars in thousands)
|
Current
|
30-89 Days
Past Due
|
90+ Days
Past Due
|
Non-
accrual
|
Total Past
Due
|
Total
|
||||||||||||||||||
Loans and leases held for investment, net
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Residential and home equity
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Total real estate
|
|
|
|
|
|
|
||||||||||||||||||
Commercial & industrial
|
|
|
|
|
|
|
||||||||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Commercial leases
|
|
|
|
|
|
|
||||||||||||||||||
Consumer and other
|
|
|
|
|
|
|
||||||||||||||||||
Total loans and leases, net
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
(Dollars in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Non-accrual loans and leases:
|
||||||||
Non-accrual loans and leases, not TDRs
|
||||||||
Real estate:
|
||||||||
Commercial
|
$
|
|
$
|
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|
||||||
Total real estate
|
|
|
||||||
Commercial & industrial
|
|
|
||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other
|
|
|
||||||
Subtotal
|
|
|
||||||
Non-accrual loans and leases, are TDRs
|
||||||||
Real estate:
|
||||||||
Commercial
|
$
|
|
$
|
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|
||||||
Total real estate
|
|
|
||||||
Commercial & industrial
|
|
|
||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other
|
|
|
||||||
Subtotal
|
|
|
||||||
Total non-accrual loans and leases
|
$
|
|
$
|
|
(Dollars in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Troubled debt restructured loans and leases:
|
||||||||
Accruing TDR loans and leases
|
||||||||
Real estate:
|
||||||||
Commercial
|
$
|
|
$
|
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|
||||||
Total real estate
|
|
|
||||||
Commercial & industrial
|
|
|
||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other
|
|
|
||||||
Subtotal
|
|
|
||||||
Non-accruing TDR loans and leases
|
||||||||
Real estate:
|
||||||||
Commercial
|
$ |
|
$ |
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|
||||||
Total real estate
|
|
|
||||||
Commercial & industrial
|
|
|
||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other
|
|
|
||||||
Subtotal
|
|
|
||||||
Total TDR loans and leases
|
$
|
|
$
|
|
September 30, 2022
|
||||||||||||||||||||||||
(Dollars in thousands)
|
# of Accruing
TDR
|
$ of Accruing
TDR
|
# of Non-
Accruing TDR
|
$ of Non-
Accruing TDR
|
# of Total TDR
|
$ of Total TDR
|
||||||||||||||||||
Loan and lease TDRs
|
||||||||||||||||||||||||
2022
|
|
$
|
|
|
$
|
|
|
$
|
|
|||||||||||||||
2021
|
|
|
|
|
|
|
||||||||||||||||||
2020
|
|
|
|
|
|
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
||||||||||||||||||
Prior
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
|
$
|
|
|
$
|
|
|
$
|
|
September 30, 2022
|
||||||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Special
Mention
|
Sub-
standard
|
Doubtful
|
Total Loans
& Leases
|
Total
Allowance
for Credit
Losses
|
||||||||||||||||||
Loans and leases held for investment, net
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Residential and home equity
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Total real estate
|
|
|
|
|
|
|
||||||||||||||||||
Commercial & industrial
|
|
|
|
|
|
|
||||||||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Commercial leases
|
|
|
|
|
|
|
||||||||||||||||||
Consumer and other
|
|
|
|
|
|
|
||||||||||||||||||
Total loans and leases, net
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
||||||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Special
Mention |
Sub-
standard
|
Doubtful
|
Total Loans
& Leases
|
Total
Allowance
for Credit
Losses
|
||||||||||||||||||
Loans and leases held for investment, net
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Residential and home equity
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Total real estate
|
|
|
|
|
|
|
||||||||||||||||||
Commercial & industrial
|
|
|
|
|
|
|
||||||||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Commercial leases
|
|
|
|
|
|
|
||||||||||||||||||
Consumer and other
|
|
|
|
|
|
|
||||||||||||||||||
Total loans and leases, net
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30, 2022
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
2020
|
2019
|
2018
|
Prior
|
Revolving
Loans
Amortized
Cost
|
Total
|
||||||||||||||||||||||||
Net loans and leases held for investment
|
||||||||||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||||||||||
Commercial
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Agricultural
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Agricultural
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Agricultural
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Residential and home equity
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Residential and home equity
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Residential and home equity
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Construction
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total construction
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Construction
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Total Real estate
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial & industrial
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Commercial & industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial & industrial
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$ |
$ | $ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Agricultural
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Agricultural
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Agricultural
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Commercial leases
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Commercial leases
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial leases
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$ |
$ | $ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Consumer and other
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Consumer and other
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Consumer and other
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Total net loans and leases
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30, 2022
|
||||||||||||
(Dollars in thousands)
|
Real Estate
|
Vehicles
and
Equipment
|
Total
|
|||||||||
Collateral dependent loans and leases
|
||||||||||||
Real estate:
|
||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
||||||
Agricultural
|
|
|
|
|||||||||
Residential and home equity
|
|
|
|
|||||||||
Construction
|
|
|
|
|||||||||
Total Real estate
|
|
|
|
|||||||||
Commercial & industrial
|
|
|
|
|||||||||
Agricultural
|
|
|
|
|||||||||
Commercial leases
|
|
|
|
|||||||||
Consumer and other
|
|
|
|
|||||||||
Total gross loans and leases
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
||||||||||||
(Dollars in thousands)
|
Real Estate
|
Vehicles
and
Equipment
|
Total
|
|||||||||
Collateral dependent loans and leases
|
||||||||||||
Real estate:
|
||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
||||||
Agricultural
|
|
|
|
|||||||||
Residential and home equity
|
|
|
|
|||||||||
Construction
|
|
|
|
|||||||||
Total Real estate
|
|
|
|
|||||||||
Commercial & industrial
|
|
|
|
|||||||||
Agricultural
|
|
|
|
|||||||||
Commercial leases
|
|
|
|
|||||||||
Consumer and other
|
|
|
|
|||||||||
Total gross loans and leases
|
$
|
|
$
|
|
$
|
|
For the three Months Ended September 30, 2022
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial &
Agricultural
R/E |
Construction
|
Residential &
Home Equity
|
Commercial
&
Agricultural
|
Commercial
Leases
|
Consumer
& Other |
Total
|
|||||||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||||||||||
Beginning balance
|
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Provision / (recapture) for credit losses
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Charge-offs
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Recoveries
|
||||||||||||||||||||||||||||
Net (charge-offs) / recoveries
|
( |
) | ||||||||||||||||||||||||||
Ending balance
|
$ | $ | $ | $ | $ | $ | $ |
For the Nine Months Ended September 30, 2022
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial &
Agricultural
R/E
|
Construction
|
Residential &
Home Equity
|
Commercial
&
Agricultural
|
Commercial
Leases
|
Consumer
& Other
|
Total
|
|||||||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||||||||||
Beginning balance
|
$ | $ | $ | $ | $ |
$
|
|
$
|
|
|||||||||||||||||||
Impact of Adopting ASC 326
|
||||||||||||||||||||||||||||
Provision / (recapture) for credit losses
|
( |
) | ( |
) |
|
|||||||||||||||||||||||
Charge-offs
|
( |
) | ( |
) |
(
|
)
|
||||||||||||||||||||||
Recoveries
|
|
|||||||||||||||||||||||||||
Net (charge-offs) / recoveries
|
( |
) | ( |
) |
|
|||||||||||||||||||||||
Ending balance
|
$ | $ | $ | $ | $ | $ | $ |
(Dollars in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Certificates of deposit:
|
||||||||
Certificates of deposit less than or equal to $250,000
|
$
|
|
$
|
|
||||
Certificates of deposit greater than $250,000
|
|
|
||||||
Total certificates of deposit
|
$
|
|
$
|
|
(Dollars in thousands)
|
Amount
|
|||
2022
|
$
|
|
||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
2026 and beyond
|
|
|||
Total certificates of deposit
|
$
|
|
September 30, 2022
|
||||||||||||||||||||||||
Actual
|
Minimum to be
Categorized as
“Adequately Capitalized”
|
Minimum to be
Categorized as
“Well Capitalized”
|
||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
Farmers & Merchants Bancorp
|
||||||||||||||||||||||||
CET1 capital to risk-weighted assets
|
$
|
|
|
%
|
$
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||
Tier 1 capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Risk-based capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Tier 1 leverage capital ratio
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Farmers & Merchants Bank
|
||||||||||||||||||||||||
CET1 capital to risk-weighted assets
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||||||
Tier 1 capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
|
|
%
|
|||||||||||||||
Risk-based capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
|
|
%
|
|||||||||||||||
Tier 1 leverage capital ratio
|
|
|
%
|
|
|
%
|
|
|
%
|
December 31, 2021
|
||||||||||||||||||||||||
Actual
|
Minimum to be
Categorized as
“Adequately Capitalized”
|
Minimum to be
Categorized as
“Well Capitalized”
|
||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
Farmers & Merchants Bancorp
|
||||||||||||||||||||||||
CET1 capital to risk-weighted assets
|
$
|
|
|
%
|
$
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||
Tier 1 capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Risk-based capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Tier 1 leverage capital ratio
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Farmers & Merchants Bank
|
||||||||||||||||||||||||
CET1 capital to risk-weighted assets
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||||||
Tier 1 capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
|
|
%
|
|||||||||||||||
Risk-based capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
|
|
%
|
|||||||||||||||
Tier 1 leverage capital ratio
|
|
|
%
|
|
|
%
|
|
|
%
|
Three Months Ended
September 30,
|
||||||||
(Dollars in thousands, except share and per share amounts)
|
2022
|
2021
|
||||||
Numerator
|
||||||||
Net income
|
$
|
|
$
|
|
||||
|
||||||||
Denominator | ||||||||
Weighted average number of common shares outstanding
|
|
|
||||||
Weighted average number of dilutive shares outstanding
|
|
|
||||||
Basic earnings per common share
|
$
|
|
$
|
|
||||
Diluted earnings per common share
|
$
|
|
$
|
|
Nine Months Ended
September 30,
|
||||||||
(Dollars in thousands, except share and per share amounts)
|
2022
|
2021
|
||||||
Numerator
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Denominator
|
||||||||
Weighted average number of common shares outstanding
|
|
|
||||||
Weighted average number of dilutive shares outstanding
|
|
|
||||||
Basic earnings per common share
|
$
|
|
$
|
|
||||
Diluted earnings per common share
|
$
|
|
$
|
|
September 30, 2022
|
Fair Value
|
|||||||||||||||||||
(Dollars in thousands)
|
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total Fair
Value
|
|||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Investment securities available-for-sale
|
|
|
|
|
|
|||||||||||||||
Investment securities held-to-maturity
|
|
|
|
|
|
|||||||||||||||
Non-marketable securities
|
|
|
|
|
|
|||||||||||||||
Loans and leases, net
|
|
|
|
|
|
|||||||||||||||
Bank-owned life insurance
|
|
|
|
|
|
|||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Total deposits
|
$ |
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Subordinated debentures
|
|
|
|
|
|
December 31, 2021
|
Fair Value
|
|||||||||||||||||||
(Dollars in thousands)
|
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total Fair
Value
|
|||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Investment securities available-for-sale
|
|
|
|
|
|
|||||||||||||||
Investment securities held-to-maturity
|
|
|
|
|
|
|||||||||||||||
Non-marketable securities
|
|
|
|
|
|
|||||||||||||||
Loans and leases, net
|
|
|
|
|
|
|||||||||||||||
Bank-owned life insurance
|
|
|
|
|
|
|||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Total deposits
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Subordinated debentures
|
|
|
|
|
|
September 30, 2022
|
Fair Value
|
|||||||||||||||||||
(Dollars in thousands)
|
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total Fair
Value
|
|||||||||||||||
Fair valued on a recurring basis:
|
||||||||||||||||||||
Investment securities available-for-sale
|
||||||||||||||||||||
U.S. Treasury notes
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
U.S. Government-sponsored securities
|
|
|
|
|
|
|||||||||||||||
Mortgage-backed securities
|
|
|
|
|
|
|||||||||||||||
Collateralized mortgage obligations
|
|
|
|
|
|
|||||||||||||||
Corporate securities
|
|
|
|
|
|
|||||||||||||||
Other
|
|
|
|
|
|
|||||||||||||||
Fair valued on a non-recurring basis:
|
||||||||||||||||||||
Other real estate
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
December 31, 2021 | Fair Value | |||||||||||||||||||
(Dollars in thousands)
|
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total Fair
Value
|
|||||||||||||||
Fair valued on a recurring basis:
|
||||||||||||||||||||
Investment securities available-for-sale
|
||||||||||||||||||||
U.S. Treasury notes
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
U.S. Government-sponsored securities
|
|
|
|
|
|
|||||||||||||||
Mortgage-backed securities
|
|
|
|
|
|
|||||||||||||||
Collateralized mortgage obligations
|
|
|
|
|
|
|||||||||||||||
Other
|
|
|
|
|
|
|||||||||||||||
Fair valued on a non-recurring basis:
|
||||||||||||||||||||
Individually evaluated loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Other real estate
|
|
|
|
|
|
(Dollars in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Commitments to extend credit, including unsecured commitments of $
|
$
|
|
$
|
|
||||
Stand-by letters of credit, including unsecured commitments of $
|
|
|
||||||
Performance guarantees under interest rate swap contracts entered into with our clients and third-parties
|
|
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
■ |
the pendency, duration, and impact of the COVID-19 pandemic;
|
■ |
changes in general economic conditions, either nationally, in California, or in our local markets;
|
■ |
inflation, changes in interest rates, securities market volatility and monetary fluctuations;
|
■ |
increases in competitive pressures among financial institutions and businesses offering similar products and services;
|
■ |
higher defaults in our loan portfolio than we expect;
|
■ |
changes in management’s estimate of the adequacy of the allowance for credit losses;
|
■ |
risks associated with our growth and expansion strategy and related costs;
|
■ |
increased lending risks associated with our high concentration of real estate loans;
|
■ |
legislative or regulatory changes or changes in accounting principles, policies or guidelines;
|
■ |
technological changes; and
|
■ |
regulatory or judicial proceedings.
|
■ |
Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.
|
■ |
Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.
|
■ |
Changes in the nature and volume of the portfolio and in the terms of loans.
|
■ |
Changes in the experience, ability, and depth of lending management and other relevant staff.
|
■ |
Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans.
|
■ |
Changes in the quality of the institution’s loan review system.
|
■ |
Changes in the value of underlying collateral for collateral-dependent loans.
|
■ |
The existence and effect of any concentrations of credit, and changes in the level of such concentrations.
|
■ |
The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio.
|
|
For the Three Months Ended September 30,
|
|||||||||||||||||||||||
|
2022
|
2021
|
||||||||||||||||||||||
(Dollars in thousands)
|
Average
Balance
|
Interest
Income /
Expense
|
Average
Yield /
Rate
|
Average
Balance
|
Interest
Income /
Expense
|
Average
Yield /
Rate
|
||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest earnings deposits in other banks and federal funds sold
|
$
|
718,794
|
$
|
4,159
|
2.30
|
%
|
$
|
856,159
|
$
|
328
|
0.15
|
%
|
||||||||||||
Securities:(1)
|
||||||||||||||||||||||||
Taxable securities
|
1,063,166
|
5,091
|
1.92
|
%
|
786,983
|
3,282
|
1.67
|
%
|
||||||||||||||||
Non-taxable securities(2)
|
47,005
|
386
|
3.28
|
%
|
49,616
|
399
|
3.22
|
%
|
||||||||||||||||
Total investment securities
|
1,110,171
|
5,477
|
1.96
|
%
|
836,599
|
3,681
|
1.76
|
%
|
||||||||||||||||
Loans:(3)
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
1,224,689
|
15,179
|
4.92
|
%
|
1,046,626
|
11,255
|
4.27
|
%
|
||||||||||||||||
Agricultural
|
715,286
|
9,243
|
5.13
|
%
|
640,330
|
8,301
|
5.14
|
%
|
||||||||||||||||
Residential and home equity
|
375,699
|
3,836
|
4.05
|
%
|
338,520
|
3,858
|
4.52
|
%
|
||||||||||||||||
Construction
|
164,664
|
2,468
|
5.95
|
%
|
175,906
|
2,300
|
5.19
|
%
|
||||||||||||||||
Total real estate
|
2,480,338
|
30,726
|
4.91
|
%
|
2,201,382
|
25,714
|
4.63
|
%
|
||||||||||||||||
Commercial & industrial
|
438,761
|
5,770
|
5.22
|
%
|
374,162
|
4,111
|
4.36
|
%
|
||||||||||||||||
Agricultural
|
259,345
|
3,607
|
5.52
|
%
|
236,071
|
2,637
|
4.43
|
%
|
||||||||||||||||
Commercial leases
|
93,051
|
1,365
|
5.82
|
%
|
96,690
|
1,363
|
5.59
|
%
|
||||||||||||||||
Consumer and other
|
8,929
|
400
|
17.77
|
%
|
155,182
|
2,263
|
5.79
|
%
|
||||||||||||||||
Total loans and leases
|
3,280,424
|
41,868
|
5.06
|
%
|
3,063,487
|
36,088
|
4.67
|
%
|
||||||||||||||||
Non-marketable securities
|
15,549
|
209
|
5.33
|
%
|
15,549
|
244
|
6.23
|
%
|
||||||||||||||||
Total interest earning assets
|
5,124,938
|
51,713
|
4.00
|
%
|
4,771,794
|
40,341
|
3.35
|
%
|
||||||||||||||||
Allowance for credit losses
|
(63,107
|
)
|
(60,268
|
)
|
||||||||||||||||||||
Non-interest earning assets
|
318,078
|
324,057
|
||||||||||||||||||||||
Total average assets
|
$
|
5,379,909
|
$
|
5,035,583
|
||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||||||||||||||||||
Interest bearing deposits:
|
||||||||||||||||||||||||
Demand
|
$
|
1,101,830
|
445
|
0.16
|
%
|
$
|
1,068,707
|
293
|
0.11
|
%
|
||||||||||||||
Savings and money market accounts
|
1,588,234
|
476
|
0.12
|
%
|
1,385,430
|
346
|
0.10
|
%
|
||||||||||||||||
Certificates of deposit greater than $250,000
|
156,110
|
96
|
0.24
|
%
|
168,714
|
143
|
0.34
|
%
|
||||||||||||||||
Certificates of deposit less than $250,000
|
212,036
|
105
|
0.20
|
%
|
230,532
|
147
|
0.25
|
%
|
||||||||||||||||
Total interest bearing deposits
|
3,058,210
|
1,122
|
0.15
|
%
|
2,853,383
|
929
|
0.13
|
%
|
||||||||||||||||
Short-term borrowings
|
-
|
-
|
0.00
|
%
|
-
|
-
|
0.00
|
%
|
||||||||||||||||
Subordinated debentures
|
10,310
|
134
|
5.16
|
%
|
10,310
|
78
|
3.00
|
%
|
||||||||||||||||
Total interest bearing liabilities
|
3,068,520
|
1,256
|
0.16
|
%
|
2,863,693
|
1,007
|
0.14
|
%
|
||||||||||||||||
Non-interest bearing deposits
|
1,764,266
|
1,655,738
|
||||||||||||||||||||||
Total funding
|
4,832,786
|
1,256
|
0.10
|
%
|
4,519,431
|
1,007
|
0.09
|
%
|
||||||||||||||||
Other non-interest bearing liabilities
|
77,389
|
68,564
|
||||||||||||||||||||||
Shareholders' equity
|
469,734
|
447,588
|
||||||||||||||||||||||
Total average liabilities and shareholders' equity
|
$
|
5,379,909
|
$
|
5,035,583
|
||||||||||||||||||||
Net interest income
|
$
|
50,457
|
$
|
39,334
|
||||||||||||||||||||
Interest rate spread
|
3.84
|
%
|
3.21
|
%
|
||||||||||||||||||||
Net interest margin(4)
|
3.95
|
%
|
3.26
|
%
|
|
For the Nine Months Ended September 30,
|
|||||||||||||||||||||||
|
2022
|
2021
|
||||||||||||||||||||||
(Dollars in thousands)
|
Average
Balance
|
Interest
Income /
Expense
|
Average
Yield / Rate
|
Average
Balance
|
Interest
Income /
Expense
|
Average
Yield / Rate
|
||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest earnings deposits in other banks and federal funds sold
|
$
|
720,692
|
$
|
5,934
|
1.10
|
%
|
$
|
620,757
|
$
|
595
|
0.13
|
%
|
||||||||||||
Securities:(1)
|
||||||||||||||||||||||||
Taxable securities
|
1,058,859
|
14,786
|
1.86
|
%
|
819,747
|
10,780
|
1.75
|
%
|
||||||||||||||||
Non-taxable securities(2)
|
48,436
|
1,179
|
3.25
|
%
|
52,816
|
1,238
|
3.13
|
%
|
||||||||||||||||
Total investment securities
|
1,107,295
|
15,965
|
1.92
|
%
|
872,563
|
12,018
|
1.84
|
%
|
||||||||||||||||
Loans:(3)
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
1,178,731
|
41,986
|
4.76
|
%
|
1,005,970
|
36,602
|
4.86
|
%
|
||||||||||||||||
Agricultural
|
699,205
|
25,545
|
4.88
|
%
|
633,874
|
22,884
|
4.83
|
%
|
||||||||||||||||
Residential and home equity
|
365,062
|
10,728
|
3.93
|
%
|
337,307
|
10,191
|
4.04
|
%
|
||||||||||||||||
Construction
|
187,181
|
7,075
|
5.05
|
%
|
186,337
|
6,447
|
4.63
|
%
|
||||||||||||||||
Total real estate
|
2,430,179
|
85,334
|
4.69
|
%
|
2,163,488
|
76,124
|
4.70
|
%
|
||||||||||||||||
Commercial & industrial
|
434,217
|
15,460
|
4.76
|
%
|
365,744
|
12,567
|
4.59
|
%
|
||||||||||||||||
Agricultural
|
257,555
|
9,350
|
4.85
|
%
|
229,862
|
7,758
|
4.51
|
%
|
||||||||||||||||
Commercial leases
|
92,914
|
4,158
|
5.98
|
%
|
100,347
|
4,135
|
5.51
|
%
|
||||||||||||||||
Consumer and other
|
27,330
|
3,569
|
17.46
|
%
|
203,683
|
9,255
|
6.08
|
%
|
||||||||||||||||
Total loans and leases
|
3,242,195
|
117,871
|
4.86
|
%
|
3,063,124
|
109,839
|
4.79
|
%
|
||||||||||||||||
Non-marketable securities
|
15,549
|
732
|
6.29
|
%
|
14,451
|
646
|
5.98
|
%
|
||||||||||||||||
Total interest earning assets
|
5,085,731
|
140,502
|
3.69
|
%
|
4,570,895
|
123,098
|
3.60
|
%
|
||||||||||||||||
Allowance for credit losses
|
(61,864
|
)
|
(59,971
|
)
|
||||||||||||||||||||
Non-interest earning assets
|
314,520
|
315,582
|
||||||||||||||||||||||
Total average assets
|
$
|
5,338,387
|
$
|
4,826,506
|
||||||||||||||||||||
|
||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||||||||||||||||||
Interest bearing deposits:
|
||||||||||||||||||||||||
Demand
|
$
|
1,111,513
|
1,023
|
0.12
|
%
|
$
|
1,002,267
|
869
|
0.12
|
%
|
||||||||||||||
Savings and money market accounts
|
1,550,334
|
1,179
|
0.10
|
%
|
1,336,826
|
1,136
|
0.11
|
%
|
||||||||||||||||
Certificates of deposit greater than $250,000
|
163,148
|
299
|
0.25
|
%
|
169,545
|
587
|
0.46
|
%
|
||||||||||||||||
Certificates of deposit less than $250,000
|
218,302
|
297
|
0.18
|
%
|
239,185
|
608
|
0.34
|
%
|
||||||||||||||||
Total interest bearing deposits
|
3,043,297
|
2,798
|
0.12
|
%
|
2,747,823
|
3,200
|
0.16
|
%
|
||||||||||||||||
Short-term borrowings
|
1
|
-
|
0.00
|
%
|
-
|
-
|
0.00
|
%
|
||||||||||||||||
Subordinated debentures
|
10,310
|
319
|
4.14
|
%
|
10,310
|
236
|
3.06
|
%
|
||||||||||||||||
Total interest bearing liabilities
|
3,053,608
|
3,117
|
0.14
|
%
|
2,758,133
|
3,436
|
0.17
|
%
|
||||||||||||||||
Non-interest bearing deposits
|
1,740,859
|
1,567,089
|
||||||||||||||||||||||
Total funding
|
4,794,467
|
3,117
|
0.09
|
%
|
4,325,222
|
3,436
|
0.11
|
%
|
||||||||||||||||
Other non-interest bearing liabilities
|
77,953
|
64,439
|
||||||||||||||||||||||
Shareholders' equity
|
465,967
|
436,845
|
||||||||||||||||||||||
Total average liabilities and shareholders' equity
|
$
|
5,338,387
|
$
|
4,826,506
|
||||||||||||||||||||
|
||||||||||||||||||||||||
Net interest income
|
$
|
137,385
|
$
|
119,662
|
||||||||||||||||||||
Interest rate spread
|
3.56
|
%
|
3.43
|
%
|
||||||||||||||||||||
Net interest margin(4)
|
3.61
|
%
|
3.50
|
%
|
|
Three Months Ended
September 30, 2022
compared with 2021
|
Nine Months Ended
September 30, 2022 compared with 2021 |
||||||||||||||||||||||
|
Increase (Decrease) Due to:
|
Increase (Decrease) Due to:
|
||||||||||||||||||||||
(Dollars in thousands)
|
Volume
|
Rate
|
Net
|
Volume
|
Rate
|
Net
|
||||||||||||||||||
Interest income:
|
||||||||||||||||||||||||
Interest earnings deposits in other banks and federal funds sold
|
$
|
(370
|
)
|
$
|
4,201
|
$
|
3,831
|
$
|
111
|
$
|
5,228
|
$
|
5,339
|
|||||||||||
Securities:
|
||||||||||||||||||||||||
Taxable securities
|
1,272
|
537
|
1,809
|
3,305
|
701
|
4,006
|
||||||||||||||||||
Non-taxable securities
|
(57
|
)
|
44
|
(13
|
)
|
(127
|
)
|
68
|
(59
|
)
|
||||||||||||||
Total securities
|
1,214
|
582
|
1,796
|
3,178
|
769
|
3,947
|
||||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
2,069
|
1,855
|
3,924
|
6,630
|
(1,246
|
)
|
5,384
|
|||||||||||||||||
Agricultural
|
1,122
|
(180
|
)
|
942
|
2,384
|
277
|
2,661
|
|||||||||||||||||
Residential and home equity
|
1,625
|
(1,647
|
)
|
(22
|
)
|
962
|
(425
|
)
|
537
|
|||||||||||||||
Construction
|
(761
|
)
|
929
|
168
|
29
|
599
|
628
|
|||||||||||||||||
Total real estate
|
4,055
|
957
|
5,012
|
10,006
|
(796
|
)
|
9,210
|
|||||||||||||||||
Commercial & industrial
|
775
|
884
|
1,659
|
2,424
|
469
|
2,893
|
||||||||||||||||||
Agricultural
|
278
|
692
|
970
|
978
|
614
|
1,592
|
||||||||||||||||||
Commercial leases
|
(210
|
)
|
212
|
2
|
(429
|
)
|
452
|
23
|
||||||||||||||||
Consumer and other
|
(12,215
|
)
|
10,352
|
(1,863
|
)
|
(16,453
|
)
|
10,767
|
(5,686
|
)
|
||||||||||||||
Total loans
|
(7,316
|
)
|
13,096
|
5,780
|
(3,474
|
)
|
11,506
|
8,032
|
||||||||||||||||
Non-marketable securities
|
0
|
(35
|
)
|
(35
|
)
|
51
|
35
|
86
|
||||||||||||||||
Total interest income
|
(6,472
|
)
|
17,844
|
11,372
|
(135
|
)
|
17,539
|
17,404
|
||||||||||||||||
|
||||||||||||||||||||||||
Interest expense:
|
||||||||||||||||||||||||
Interest bearing deposits:
|
||||||||||||||||||||||||
Demand
|
9
|
143
|
152
|
98
|
56
|
154
|
||||||||||||||||||
Savings and money market accounts
|
55
|
75
|
130
|
218
|
(175
|
)
|
43
|
|||||||||||||||||
Certificates of deposit greater than $250,000
|
(10
|
)
|
(37
|
)
|
(47
|
)
|
(21
|
)
|
(267
|
)
|
(288
|
)
|
||||||||||||
Certificates of deposit less than $250,000
|
(11
|
)
|
(31
|
)
|
(42
|
)
|
(49
|
)
|
(262
|
)
|
(311
|
)
|
||||||||||||
Total interest bearing deposits
|
43
|
150
|
193
|
246
|
(648
|
)
|
(402
|
)
|
||||||||||||||||
Short-term borrowings
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Subordinated debentures
|
-
|
56
|
56
|
-
|
83
|
83
|
||||||||||||||||||
Total interest expense
|
43
|
206
|
249
|
246
|
(565
|
)
|
(319
|
)
|
||||||||||||||||
Net interest income
|
$
|
(6,515
|
)
|
$
|
17,638
|
$
|
11,123
|
$
|
(381
|
)
|
$
|
18,104
|
$
|
17,723
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30, |
||||||||||||||||||||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
$ Better /
(Worse)
|
% Better /
(Worse)
|
2022
|
2021
|
$ Better /
(Worse)
|
% Better /
(Worse)
|
||||||||||||||||||||||||
Selected Income Statement Information:
|
||||||||||||||||||||||||||||||||
Interest income
|
$
|
51,713
|
$
|
40,341
|
$
|
11,372
|
28.19
|
%
|
$
|
140,502
|
$
|
123,098
|
$
|
17,404
|
14.14
|
%
|
||||||||||||||||
Interest expense
|
1,256
|
1,007
|
(249
|
) |
(24.73
|
%)
|
3,117
|
3,436
|
319
|
9.28
|
%
|
|||||||||||||||||||||
Net interest income
|
50,457
|
39,334
|
11,123
|
28.28
|
%
|
137,385
|
119,662
|
17,723
|
14.81
|
%
|
||||||||||||||||||||||
Provision for credit losses
|
1,500
|
-
|
(1,500
|
)
|
N/A
|
3,000
|
1,250
|
(1,750
|
)
|
(140.00
|
%)
|
|||||||||||||||||||||
Net interest income after provision for credit losses
|
48,957
|
39,334
|
9,623
|
24.46
|
%
|
134,385
|
118,412
|
15,973
|
13.49
|
%
|
||||||||||||||||||||||
Non-interest income
|
1,559
|
4,617
|
(3,058
|
)
|
(66.23
|
%)
|
9,383
|
16,292
|
(6,909
|
)
|
(42.41
|
%)
|
||||||||||||||||||||
Non-interest expense
|
24,375
|
20,585
|
(3,790
|
)
|
(18.41
|
%)
|
71,194
|
67,732
|
(3,462
|
)
|
(5.11
|
%)
|
||||||||||||||||||||
Income before income tax expense
|
26,141
|
23,366
|
2,775
|
11.88
|
%
|
72,574
|
66,972
|
5,602
|
8.36
|
%
|
||||||||||||||||||||||
Income tax expense
|
6,605
|
5,864
|
(741
|
)
|
(12.64
|
%)
|
17,537
|
16,604
|
(933
|
)
|
(5.62
|
%)
|
||||||||||||||||||||
Net income
|
$
|
19,536
|
$
|
17,502
|
$
|
2,034
|
11.62
|
%
|
$
|
55,037
|
$
|
50,368
|
$
|
4,669
|
9.27
|
%
|
(Dollars in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Available-for-Sale Securities
|
||||||||
U.S. Treasury notes
|
$
|
4,941
|
$
|
10,089
|
||||
U.S. Government-sponsored securities
|
4,698
|
6,374
|
||||||
Mortgage-backed securities(1)
|
156,453
|
251,120
|
||||||
Collateralized mortgage obligations(1)
|
1,458
|
2,436
|
||||||
Corporate securities
|
9,594
|
-
|
||||||
Other
|
310
|
435
|
||||||
Total available-for-sale securities
|
$
|
177,454
|
$
|
270,454
|
(Dollars in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Held-to-Maturity Securities
|
||||||||
Mortgage-backed securities(1)
|
$
|
709,541
|
$
|
596,775
|
||||
Collateralized mortgage obligations(1)
|
82,297
|
73,781
|
||||||
Municipal securities(2)
|
60,434
|
66,496
|
||||||
Total held-to-maturity securities
|
$
|
852,272
|
$
|
737,052
|
|
As of September 30, 2022
|
|||||||||||||||||||||||||||||||||||||||
|
Within One Year
|
After One but
Within Five Years
|
After Five but
Within Ten Years
|
After Ten Years
|
Total
|
|||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
||||||||||||||||||||||||||||||
Securities available-for-sale
|
||||||||||||||||||||||||||||||||||||||||
U.S. Treasury notes
|
$
|
4,941
|
2.38
|
%
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
4,941
|
2.38
|
%
|
||||||||||||||||||||
U.S. Government-sponsored securities
|
7
|
1.74
|
%
|
81
|
3.97
|
%
|
436
|
3.01
|
%
|
4,174
|
2.79
|
%
|
4,698
|
2.83
|
%
|
|||||||||||||||||||||||||
Mortgage-backed securities(1)
|
16
|
3.13
|
%
|
15,725
|
2.27
|
%
|
17,961
|
2.40
|
%
|
122,751
|
1.74
|
%
|
156,453
|
1.87
|
%
|
|||||||||||||||||||||||||
Collateralized mortgage obligations(1)
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
1,458
|
2.35
|
%
|
1,458
|
2.35
|
%
|
|||||||||||||||||||||||||
Corporate securities
|
-
|
0.00
|
%
|
4,795
|
1.59
|
%
|
4,799
|
1.72
|
%
|
-
|
0.00
|
%
|
9,594
|
1.65
|
%
|
|||||||||||||||||||||||||
Other
|
310
|
2.99
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
310
|
2.99
|
%
|
|||||||||||||||||||||||||
Total securities available-for-sale
|
$
|
5,274
|
2.42
|
%
|
$
|
20,601
|
2.12
|
%
|
$
|
23,196
|
2.27
|
%
|
$
|
128,383
|
1.78
|
%
|
$
|
177,454
|
1.90
|
%
|
|
As of September 30, 2022
|
|||||||||||||||||||||||||||||||||||||||
|
Within One Year
|
After One but
Within Five Years
|
After Five but
Within Ten Years
|
After Ten Years
|
Total
|
|||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
||||||||||||||||||||||||||||||
Securities held-to-maturity
|
||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities(1)
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
13,906
|
0.89
|
%
|
$
|
695,635
|
1.88
|
%
|
$
|
709,541
|
1.86
|
%
|
||||||||||||||||||||
Collateralized Mortgage Obligations(1)
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
82,297
|
1.80
|
%
|
82,297
|
1.80
|
%
|
|||||||||||||||||||||||||
Municipal securities
|
883
|
4.93
|
%
|
7,484
|
3.40
|
%
|
15,000
|
3.43
|
%
|
37,460
|
3.52
|
%
|
60,827
|
3.50
|
%
|
|||||||||||||||||||||||||
Total securities held-to-maturity
|
$
|
883
|
4.93
|
%
|
$
|
7,484
|
3.40
|
%
|
$
|
28,906
|
2.06
|
%
|
$
|
815,392
|
1.95
|
%
|
$
|
852,665
|
1.97
|
%
|
As of December 31, 2021
|
||||||||||||||||||||||||||||||||||||||||
Within One Year
|
After One but
Within Five Years
|
After Five but
Within Ten Years
|
After Ten Years
|
Total
|
||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
||||||||||||||||||||||||||||||
Securities available-for-sale
|
||||||||||||||||||||||||||||||||||||||||
U.S. Treasury notes
|
$
|
5,028
|
2.33
|
%
|
$
|
5,061
|
2.38
|
%
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
10,089
|
2.36
|
%
|
||||||||||||||||||||
U.S. Government-sponsored securities
|
2
|
1.80
|
%
|
148
|
2.29
|
%
|
512
|
1.55
|
%
|
5,712
|
1.26
|
%
|
6,374
|
1.30
|
%
|
|||||||||||||||||||||||||
Mortgage-backed securities(1)
|
13
|
1.50
|
%
|
21,155
|
2.36
|
%
|
50,554
|
2.36
|
%
|
179,398
|
1.61
|
%
|
251,120
|
1.83
|
%
|
|||||||||||||||||||||||||
Collateralized mortgage obligations(1)
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
2,436
|
2.30
|
%
|
2,436
|
2.30
|
%
|
|||||||||||||||||||||||||
Other
|
435
|
3.31
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
435
|
3.31
|
%
|
|||||||||||||||||||||||||
Total securities available-for-sale
|
$
|
5,478
|
2.41
|
%
|
$
|
26,364
|
2.36
|
%
|
$
|
51,066
|
2.35
|
%
|
$
|
187,546
|
1.61
|
%
|
$
|
270,454
|
1.84
|
%
|
As of December 31, 2021
|
||||||||||||||||||||||||||||||||||||||||
Within One Year
|
After One but
Within Five Years
|
After Five but
Within Ten Years
|
After Ten Years
|
Total
|
||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
||||||||||||||||||||||||||||||
Securities held-to-maturity
|
||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities(1)
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
10,641
|
0.41
|
%
|
$
|
586,134
|
1.72
|
%
|
$
|
596,775
|
1.70
|
%
|
||||||||||||||||||||
Collateralized Mortgage Obligations(1)
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
73,781
|
1.71
|
%
|
73,781
|
1.71
|
%
|
|||||||||||||||||||||||||
Municipal securities
|
308
|
1.10
|
%
|
8,487
|
2.19
|
%
|
18,433
|
3.42
|
%
|
39,268
|
4.52
|
%
|
66,496
|
3.90
|
%
|
|||||||||||||||||||||||||
Total securities held-to-maturity
|
$
|
308
|
1.10
|
%
|
$
|
8,487
|
2.19
|
%
|
$
|
29,074
|
2.32
|
%
|
$
|
699,183
|
1.88
|
%
|
$
|
737,052
|
1.90
|
%
|
|
September 30, 2022
|
December 31, 2021
|
||||||||||||||
(Dollars in thousands)
|
Dollars
|
Percent
of Total
|
Dollars
|
Percent
of Total
|
||||||||||||
Gross Loans and Leases
|
||||||||||||||||
Real estate:
|
||||||||||||||||
Commercial
|
$
|
1,246,805
|
37.41
|
%
|
$
|
1,167,516
|
35.95
|
%
|
||||||||
Agricultural
|
722,448
|
21.68
|
%
|
672,830
|
20.72
|
%
|
||||||||||
Residential and home equity
|
377,249
|
11.32
|
%
|
350,581
|
10.79
|
%
|
||||||||||
Construction
|
169,624
|
5.09
|
%
|
177,163
|
5.45
|
%
|
||||||||||
Total real estate
|
2,516,126
|
75.50
|
%
|
2,368,090
|
72.91
|
%
|
||||||||||
Commercial & industrial
|
454,185
|
13.63
|
%
|
427,799
|
13.17
|
%
|
||||||||||
Agricultural
|
260,296
|
7.81
|
%
|
276,684
|
8.52
|
%
|
||||||||||
Commercial leases
|
94,089
|
2.83
|
%
|
96,971
|
2.99
|
%
|
||||||||||
Consumer and other(1)
|
7,776
|
0.23
|
%
|
78,367
|
2.41
|
%
|
||||||||||
Total gross loans and leases
|
$
|
3,332,472
|
100.00
|
%
|
$
|
3,247,911
|
100.00
|
%
|
|
Loan Contractual Maturity
|
|||||||||||||||||||
(Dollars in thousands)
|
One Year or Less
|
After One But
Within Five
Years
|
After Five Years
But Within
Fifteen Years
|
After Fifteen
Years
|
Total
|
|||||||||||||||
Gross loan and leases:
|
||||||||||||||||||||
Real estate:
|
||||||||||||||||||||
Commercial
|
$
|
54,825
|
$
|
300,999
|
$
|
853,261
|
$
|
37,720
|
$
|
1,246,805
|
||||||||||
Agricultural
|
26,331
|
155,660
|
466,352
|
74,105
|
722,448
|
|||||||||||||||
Residential and home equity
|
407
|
4,616
|
117,436
|
254,790
|
377,249
|
|||||||||||||||
Construction
|
105,343
|
64,281
|
-
|
-
|
169,624
|
|||||||||||||||
Total real estate
|
186,906
|
525,556
|
1,437,049
|
366,615
|
2,516,126
|
|||||||||||||||
Commercial & industrial
|
180,294
|
206,003
|
61,714
|
6,174
|
454,185
|
|||||||||||||||
Agricultural
|
164,616
|
79,574
|
16,106
|
-
|
260,296
|
|||||||||||||||
Commercial leases
|
7,299
|
32,471
|
54,319
|
-
|
94,089
|
|||||||||||||||
Consumer and other(1)
|
707
|
5,639
|
1,430
|
-
|
7,776
|
|||||||||||||||
Total gross loans and leases
|
$
|
539,822
|
$
|
849,243
|
$
|
1,570,618
|
$
|
372,789
|
$
|
3,332,472
|
||||||||||
Rate Structure for Loans
|
||||||||||||||||||||
Fixed Rate
|
$
|
87,323
|
$
|
354,357
|
$
|
1,188,033
|
$
|
241,872
|
$
|
1,871,585
|
||||||||||
Adjustable Rate
|
452,499
|
494,886
|
382,585
|
130,917
|
1,460,887
|
|||||||||||||||
Total gross loans and leases
|
$
|
539,822
|
$
|
849,243
|
$
|
1,570,618
|
$
|
372,789
|
$
|
3,332,472
|
(Dollars in thousands)
|
September 30,
2022
|
December 31,
2021
|
||||||
Non-performing assets:
|
||||||||
Non-accrual loans and leases, not TDRs
|
||||||||
Real estate:
|
||||||||
Commercial
|
$
|
411
|
$
|
-
|
||||
Agricultural
|
-
|
18
|
||||||
Residential and home equity
|
-
|
-
|
||||||
Construction
|
-
|
-
|
||||||
Total real estate
|
411
|
18
|
||||||
Commercial & industrial
|
-
|
-
|
||||||
Agricultural
|
-
|
-
|
||||||
Commercial leases
|
-
|
-
|
||||||
Consumer and other
|
-
|
-
|
||||||
Subtotal
|
411
|
18
|
||||||
Non-accrual loans and leases, are TDRs
|
||||||||
Real estate:
|
||||||||
Commercial
|
-
|
-
|
||||||
Agricultural
|
-
|
498
|
||||||
Residential and home equity
|
-
|
-
|
||||||
Construction
|
-
|
-
|
||||||
Total real estate
|
-
|
498
|
||||||
Commercial & industrial
|
-
|
-
|
||||||
Agricultural
|
-
|
-
|
||||||
Commercial leases
|
-
|
-
|
||||||
Consumer and other
|
-
|
-
|
||||||
Subtotal
|
-
|
498
|
||||||
Total non-performing loans and leases
|
$
|
411
|
$
|
516
|
||||
Other real estate owned ("OREO")
|
$
|
873
|
$
|
873
|
||||
Total non-performing assets
|
$
|
1,284
|
$
|
1,389
|
||||
Performing TDRs
|
$
|
1,325
|
$
|
1,824
|
• |
The State of California experienced drought conditions from 2013 through most of 2016. After 2016, reasonable levels of rain and snow alleviated drought conditions in our primary service area, but the
winters of 2020-2021 and 2021-2022 were once again dry. Despite this, the availability of water in our primary service area was not an issue for the 2022 growing season. However, the weather patterns over the past eight years further
reinforce the fact that the long-term risks associated with the availability of water are significant.
|
• |
While tremendous strides have been made in fighting the COVID-19 virus, particularly with the development of a vaccine, the effects of COVID-19 are still with us, and it is impossible to predict the
ultimate impact on classified and non-performing loans and leases (see Part I. Note 2).
|
|
Nine Months Ended
September 30,
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Allowance for credit losses:
|
||||||||
Balance at beginning of year
|
$
|
61,007
|
$
|
58,862
|
||||
Provision / (recapture) for credit losses
|
2,606
|
1,250
|
||||||
Charge-offs:
|
||||||||
Real estate:
|
||||||||
Commercial
|
-
|
-
|
||||||
Agricultural
|
-
|
-
|
||||||
Residential and home equity
|
-
|
-
|
||||||
Construction
|
-
|
-
|
||||||
Total real estate
|
-
|
-
|
||||||
Commercial & industrial
|
(324
|
)
|
-
|
|||||
Agricultural
|
-
|
-
|
||||||
Commercial leases
|
-
|
-
|
||||||
Consumer and other
|
(38
|
)
|
(33
|
)
|
||||
Total charge-offs
|
(362
|
)
|
(33
|
)
|
||||
Recoveries:
|
||||||||
Real estate:
|
||||||||
Commercial
|
-
|
-
|
||||||
Agricultural
|
-
|
-
|
||||||
Residential and home equity
|
125
|
91
|
||||||
Construction
|
-
|
-
|
||||||
Total real estate
|
125
|
91
|
||||||
Commercial & industrial
|
176
|
83
|
||||||
Agricultural
|
51
|
29
|
||||||
Commercial leases
|
-
|
-
|
||||||
Consumer and other
|
14
|
21
|
||||||
Total recoveries
|
366
|
224
|
||||||
Net recoveries / charge-offs
|
4
|
191
|
||||||
|
||||||||
Balance at end of period
|
$
|
63,617
|
$
|
60,303
|
||||
|
||||||||
Selected financial information:
|
||||||||
Gross loans held for investment
|
$
|
3,332,472
|
$
|
3,151,508
|
||||
Average loans
|
3,242,195
|
3,063,124
|
||||||
Non-performing loans
|
411
|
516
|
||||||
Allowance for credit losses to non-performing loans
|
15478.59
|
%
|
11686.63
|
%
|
||||
Net (recoveries)/charge-offs to average loans
|
0.00
|
%
|
(0.01
|
)%
|
||||
Provision for credit losses to average loans
|
0.08
|
%
|
0.04
|
%
|
||||
Allowance for credit losses to loans held for investment
|
1.91
|
%
|
1.91
|
%
|
|
September 30, 2022
|
December 31, 2021
|
||||||||||||||
(Dollars in thousands)
|
Dollars
|
Percent of
Total
|
Dollars
|
Percent
of Total
|
||||||||||||
Allowance for credit losses:
|
||||||||||||||||
Real estate:
|
||||||||||||||||
Commercial
|
$
|
16,540
|
37.41
|
%
|
$
|
28,536
|
35.95
|
%
|
||||||||
Agricultural
|
16,560
|
21.68
|
%
|
9,613
|
20.72
|
%
|
||||||||||
Residential and home equity
|
6,865
|
11.32
|
%
|
2,847
|
10.79
|
%
|
||||||||||
Construction
|
2,995
|
5.09
|
%
|
1,456
|
5.45
|
%
|
||||||||||
Total real estate
|
42,960
|
75.50
|
%
|
42,452
|
72.91
|
%
|
||||||||||
Commercial & Industrial
|
10,392
|
13.63
|
%
|
11,489
|
13.17
|
%
|
||||||||||
Agricultural
|
8,523
|
7.81
|
%
|
5,465
|
8.52
|
%
|
||||||||||
Commercial leases
|
1,588
|
2.83
|
%
|
938
|
2.99
|
%
|
||||||||||
Consumer and other
|
154
|
0.23
|
%
|
663
|
2.41
|
%
|
||||||||||
Total allowance for credit losses
|
$
|
63,617
|
100.00
|
%
|
$
|
61,007
|
100.00
|
%
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||||||
|
2022
|
2021
|
||||||||||||||||||||||
(Dollars in thousands)
|
Average Balance
|
Interest Expense
|
Average
Rate
|
Average Balance
|
Interest Expense
|
Average
Rate
|
||||||||||||||||||
Total deposits:
|
||||||||||||||||||||||||
Interest bearing deposits:
|
||||||||||||||||||||||||
Demand
|
$
|
1,111,513
|
1,023
|
0.12
|
%
|
$
|
1,002,267
|
$
|
869
|
0.12
|
%
|
|||||||||||||
Savings and money market
|
1,550,334
|
1,179
|
0.10
|
%
|
1,336,826
|
1,136
|
0.11
|
%
|
||||||||||||||||
Certificates of deposit greater than $250,000
|
163,148
|
299
|
0.25
|
%
|
169,545
|
587
|
0.46
|
%
|
||||||||||||||||
Certificates of deposit less than $250,000
|
218,302
|
297
|
0.18
|
%
|
239,185
|
608
|
0.34
|
%
|
||||||||||||||||
Total interest-bearing deposits
|
3,043,297
|
2,798
|
0.12
|
%
|
2,747,823
|
3,200
|
0.16
|
%
|
||||||||||||||||
Non-interest bearing deposits
|
1,740,859
|
1,567,089
|
||||||||||||||||||||||
Total deposits
|
$
|
4,784,156
|
$
|
2,798
|
0.08
|
%
|
$
|
4,314,912
|
$
|
3,200
|
0.10
|
%
|
|
September 30,
|
December 31,
|
||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Deposits greater than $250,000
|
$
|
2,990,165
|
$
|
2,708,576
|
||||
Certificates of deposit greater than $250,000, by maturity:
|
||||||||
Less than 3 months
|
58,384
|
59,591
|
||||||
3 months to 6 months
|
38,722
|
37,182
|
||||||
6 months to 12 months
|
43,161
|
59,945
|
||||||
More than 12 months
|
11,875
|
12,147
|
||||||
Total certificates of deposit greater than $250,000
|
$
|
152,142
|
$
|
168,865
|
||||
Total deposits greater than $250,000
|
$
|
3,142,307
|
$
|
2,877,441
|
(Dollars in thousands)
|
Minimum to be
Categorized as
"Well Capitalized"
|
Minimum to be
Categorized as
"Adequately
Capitalized"
|
September 30,
2022
|
December 31,
2021
|
||||||||||||
Farmers & Merchants Bancorp
|
||||||||||||||||
CET1 capital to risk-weighted assets
|
N/A
|
4.50
|
%
|
11.82
|
%
|
11.68
|
%
|
|||||||||
Tier 1 capital to risk-weighted assets
|
N/A
|
6.00
|
%
|
12.06
|
%
|
11.94
|
%
|
|||||||||
Risk-based capital to risk-weighted assets
|
N/A
|
8.00
|
%
|
13.32
|
%
|
13.19
|
%
|
|||||||||
Tier 1 leverage capital ratio
|
N/A
|
4.00
|
%
|
9.12
|
%
|
8.92
|
%
|
|||||||||
|
||||||||||||||||
Farmers & Merchants Bank
|
||||||||||||||||
CET1 capital to risk-weighted assets
|
6.50
|
%
|
4.50
|
%
|
12.04
|
%
|
11.91
|
%
|
||||||||
Tier 1 capital to risk-weighted assets
|
8.00
|
%
|
6.00
|
%
|
12.04
|
%
|
11.91
|
%
|
||||||||
Risk-based capital to risk-weighted assets
|
10.00
|
%
|
8.00
|
%
|
13.30
|
%
|
13.17
|
%
|
||||||||
Tier 1 leverage capital ratio
|
5.00
|
%
|
4.00
|
%
|
9.12
|
%
|
8.91
|
%
|
|
Amount of Commitment Expiration per Period
|
|||||||||||||||||||
(Dollars in thousands)
|
Total
Committed
Amount |
Less than
One Year
|
One to
Three
Years
|
Three to
Five Years
|
After Five
Years
|
|||||||||||||||
Off-balance sheet commitments
|
||||||||||||||||||||
Commitments to extend credit
|
$
|
1,128,340
|
$
|
401,604
|
$
|
477,113
|
$
|
46,626
|
$
|
202,997
|
||||||||||
Standby letters of credit
|
16,629
|
10,403
|
4,326
|
1,470
|
430
|
|||||||||||||||
Total off-balance sheet commitments
|
$
|
1,144,969
|
$
|
412,007
|
$
|
481,439
|
$
|
48,096
|
$
|
203,427
|
September 30, 2022
|
||||||||||||||||||||
(Dollars in thousands)
|
Total Credit
Line Limit
|
Current
Credit Line
Available
|
Outstanding
Amount
|
Remaining
Credit Line
Available |
Value of
Collateral
Pledged
|
|||||||||||||||
Additional liquidity sources:
|
||||||||||||||||||||
Federal Home Loan Bank
|
$
|
766,011
|
$
|
766,011
|
$
|
-
|
$
|
766,011
|
$
|
1,183,540
|
||||||||||
Federal Reserve BIC
|
657,350
|
657,350
|
-
|
657,350
|
890,564
|
|||||||||||||||
FHLB Fed Funds
|
18,000
|
18,000
|
-
|
18,000
|
-
|
|||||||||||||||
US Bank Fed Funds
|
35,000
|
35,000
|
-
|
35,000
|
-
|
|||||||||||||||
MUFG Union Bank Fed Funds
|
15,000
|
15,000
|
-
|
15,000
|
-
|
|||||||||||||||
PCBB Fed Funds
|
50,000
|
50,000
|
-
|
50,000
|
-
|
|||||||||||||||
Total additional liquidity sources
|
$
|
1,541,361
|
$
|
1,541,361
|
$
|
-
|
$
|
1,541,361
|
$
|
2,074,104
|
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3. |
Defaults upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Item 6. |
Exhibits
|
Exhibit
Number
|
Description
|
Employment Agreement effective August 1, 2022, between Farmers & Merchants Bank of Central California and Kyle Koelbel, filed on Registrant’s Form 10-Q for the quarter ended September 30, 2022.
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
*
|
Filed herewith
|
FARMERS & MERCHANTS BANCORP
|
|
Date: November 7, 2022
|
/s/ Kent A. Steinwert
|
Kent A. Steinwert
|
|
Director, Chairman, President and Chief Executive Officer
(Principal Executive Officer)
|
Date: November 7, 2022
|
/s/ Stephen W. Haley
|
Stephen W. Haley
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|