QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . |
CALIFORNIA | ||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Large accelerated filer ☐ | Accelerated filer ☐ | |||||||
Smaller reporting company | Emerging growth company |
PART I. Financial Information | |||||||||||
Condensed Consolidated Statements of Changes in Shareholders’ Equity | |||||||||||
PART II. Other Information | |||||||||||
Item 1. | |||||||||||
Item 2. | |||||||||||
Item 6. | |||||||||||
(In thousands except shares) | September 30, 2023 | December 31, 2022 | ||||||||||||
Assets | ||||||||||||||
Cash and noninterest-bearing deposits in other banks | $ | $ | ||||||||||||
Due from Federal Reserve Bank (FRB) | ||||||||||||||
Cash and cash equivalents | ||||||||||||||
Investment securities (at fair value) | ||||||||||||||
Available-for-sale (AFS) securities, at fair value, net of allowance for credit losses of $ | ||||||||||||||
Marketable equity securities | ||||||||||||||
Total investment securities | ||||||||||||||
Loans | ||||||||||||||
Unearned fees and unamortized loan origination costs - net | ( | ( | ||||||||||||
Allowance for credit losses | ( | ( | ||||||||||||
Net loans | ||||||||||||||
Premises and equipment - net | ||||||||||||||
Accrued interest receivable | ||||||||||||||
Other real estate owned | ||||||||||||||
Goodwill | ||||||||||||||
Deferred tax assets - net | ||||||||||||||
Cash surrender value of life insurance, net | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities & Shareholders’ Equity | ||||||||||||||
Liabilities | ||||||||||||||
Deposits | ||||||||||||||
Non-interest-bearing | $ | $ | ||||||||||||
Interest-bearing | ||||||||||||||
Total deposits | ||||||||||||||
Short-term borrowings | ||||||||||||||
Operating lease liabilities | ||||||||||||||
Other liabilities | ||||||||||||||
Junior subordinated debentures (at fair value) | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies (Note 17) | ||||||||||||||
Shareholders’ Equity | ||||||||||||||
Common stock, | ||||||||||||||
Retained earnings | ||||||||||||||
Accumulated other comprehensive loss, net of tax | ( | ( | ||||||||||||
Total shareholders’ equity | ||||||||||||||
Total liabilities and shareholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands, except shares and EPS) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Interest Income: | ||||||||||||||||||||||||||
Interest and fees on loans | $ | $ | $ | $ | ||||||||||||||||||||||
Interest on investment securities | ||||||||||||||||||||||||||
Interest on deposits in FRB | ||||||||||||||||||||||||||
Total interest income | ||||||||||||||||||||||||||
Interest Expense: | ||||||||||||||||||||||||||
Interest on deposits | ||||||||||||||||||||||||||
Interest on other borrowed funds | ||||||||||||||||||||||||||
Total interest expense | ||||||||||||||||||||||||||
Net Interest Income | ||||||||||||||||||||||||||
Provision for Credit Losses | ||||||||||||||||||||||||||
Net Interest Income after Provision for Credit Losses | ||||||||||||||||||||||||||
Noninterest Income: | ||||||||||||||||||||||||||
Customer service fees | ||||||||||||||||||||||||||
Increase in cash surrender value of bank-owned life insurance | ||||||||||||||||||||||||||
Unrealized loss on fair value of marketable equity securities | ( | ( | ( | ( | ||||||||||||||||||||||
Loss on fair value of junior subordinated debentures | ( | ( | ( | ( | ||||||||||||||||||||||
Gain on sale of investment securities | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total noninterest income | ||||||||||||||||||||||||||
Noninterest Expense: | ||||||||||||||||||||||||||
Salaries and employee benefits | ||||||||||||||||||||||||||
Occupancy expense | ||||||||||||||||||||||||||
Data processing | ||||||||||||||||||||||||||
Professional fees | ||||||||||||||||||||||||||
Regulatory assessments | ||||||||||||||||||||||||||
Director fees | ||||||||||||||||||||||||||
Correspondent bank service charges | ||||||||||||||||||||||||||
Net cost of operation of OREO | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total noninterest expense | ||||||||||||||||||||||||||
Income before provision for taxes | ||||||||||||||||||||||||||
Provision for income taxes | ||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Net Income per common share | ||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted | $ | $ | $ | $ | ||||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Net Income | $ | $ | $ | $ | ||||||||||||||||||||||
Unrealized loss on debt securities | ( | ( | ( | ( | ||||||||||||||||||||||
Unrealized gain on unrecognized post-retirement costs | ||||||||||||||||||||||||||
Unrealized gain on junior subordinated debentures | ||||||||||||||||||||||||||
Other comprehensive loss, before tax | ( | ( | ( | ( | ||||||||||||||||||||||
Tax benefit related to debt securities | ||||||||||||||||||||||||||
Tax expense related to unrecognized post-retirement costs | ( | ( | ( | ( | ||||||||||||||||||||||
Tax expense related to junior subordinated debentures | ( | ( | ( | ( | ||||||||||||||||||||||
Total other comprehensive loss | ( | ( | ( | ( | ||||||||||||||||||||||
Comprehensive income (loss) | $ | $ | ( | $ | $ | ( |
Common Stock | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | ||||||||||||||||||||||||||||||
(Dollars in thousands) | Number of Shares | Amount | Total | |||||||||||||||||||||||||||||
Balance June 30, 2022 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ( | |||||||||||||||||||||||||||
Dividends payable ($ | — | — | ( | — | ( | |||||||||||||||||||||||||||
Restricted stock units released | — | — | — | — | ||||||||||||||||||||||||||||
Director stock grant | — | — | — | |||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | |||||||||||||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||||||
Balance September 30, 2022 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Balance June 30, 2023 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ( | |||||||||||||||||||||||||||
Dividends payable ($ | — | — | ( | — | ( | |||||||||||||||||||||||||||
Restricted stock units released | — | — | — | — | ||||||||||||||||||||||||||||
Director stock grant | — | — | — | |||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | |||||||||||||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||||||
Balance September 30, 2023 | $ | $ | $ | ( | $ |
Common Stock | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | ||||||||||||||||||||||||||||||
(Dollars in thousands) | Number of Shares | Amount | Total | |||||||||||||||||||||||||||||
Balance December 31, 2021 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ( | |||||||||||||||||||||||||||
Dividends paid and payable ($ | — | — | ( | — | ( | |||||||||||||||||||||||||||
Restricted stock units released | — | — | — | — | ||||||||||||||||||||||||||||
Tax benefit from restricted stock units released | — | ( | — | — | ( | |||||||||||||||||||||||||||
Director stock grant | — | — | — | |||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | |||||||||||||||||||||||||||||
Net income | — | — | ||||||||||||||||||||||||||||||
Balance September 30, 2022 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Balance December 31, 2022 | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ( | |||||||||||||||||||||||||||
Dividends paid ($ | — | — | ( | — | ( | |||||||||||||||||||||||||||
Dividends paid and payable ($ | — | — | ( | — | ( | |||||||||||||||||||||||||||
Restricted stock units released | — | — | — | — | ||||||||||||||||||||||||||||
Tax benefit from restricted stock units released | — | ( | — | — | ( | |||||||||||||||||||||||||||
Director stock grant | — | — | — | |||||||||||||||||||||||||||||
Stock options exercised | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | |||||||||||||||||||||||||||||
— | — | ( | — | ( | ||||||||||||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||||||
Balance September 30, 2023 | $ | $ | $ | ( | $ |
Nine months ended September 30, | ||||||||||||||
(In thousands) | 2023 | 2022 | ||||||||||||
Cash Flows From Operating Activities: | ||||||||||||||
Net Income | $ | $ | ||||||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||||
Provision for credit losses | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Noncash lease expense | ||||||||||||||
Amortization of premium/discount on investment securities, net | ||||||||||||||
Decrease (increase) in accrued interest receivable | ( | |||||||||||||
Increase in accrued interest payable | ||||||||||||||
Increase (decrease) in accounts payable and accrued liabilities | ||||||||||||||
(Decrease) increase in unearned fees and unamortized loan origination costs, net | ( | |||||||||||||
(Increase) decrease in income taxes receivable | ( | |||||||||||||
Loss on marketable equity securities | ||||||||||||||
Stock-based compensation expense | ||||||||||||||
(Benefit) provision for deferred income taxes | ( | |||||||||||||
Increase in cash surrender value of bank-owned life insurance | ( | ( | ||||||||||||
Loss on fair value option of junior subordinated debentures | ||||||||||||||
Gain on sale of investment securities | ( | |||||||||||||
Net increase in other assets | ( | ( | ||||||||||||
Net cash provided by operating activities | ||||||||||||||
Cash Flows From Investing Activities: | ||||||||||||||
Purchase of correspondent bank stock | ( | ( | ||||||||||||
Purchases of available-for-sale securities | ( | |||||||||||||
Maturities of available-for-sale securities | ||||||||||||||
Principal payments of available-for-sale securities | ||||||||||||||
Cash proceeds from sale of available-for-sale securities | ||||||||||||||
Net decrease (increase) in loans | ( | |||||||||||||
Investment in limited partnership | ( | ( | ||||||||||||
Capital expenditures of premises and equipment | ( | ( | ||||||||||||
Net cash provided by (used in) investing activities | ( | |||||||||||||
Cash Flows From Financing Activities: | ||||||||||||||
Net (decrease) increase in demand deposits and savings accounts | ( | |||||||||||||
Net increase in time deposits | ||||||||||||||
Proceeds from exercise of stock options | ||||||||||||||
Net change in short-term borrowings | ||||||||||||||
Dividends on common stock | ( | ( | ||||||||||||
Net cash (used in) provided by financing activities | ( | |||||||||||||
Net change in cash and cash equivalents | ( | ( | ||||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||||
Cash and cash equivalents at end of period | $ | $ |
(In thousands) | Allowance for credit losses as reported under ASU 2016-13 | Allowance before the adoption of ASU 2016-13 | Impact to allowance of adoption of ASU 2016-13 | |||||||||||||||||
Assets: | ||||||||||||||||||||
Commercial and industrial: | ||||||||||||||||||||
Commercial and business loans | $ | $ | $ | |||||||||||||||||
Government program loans | ||||||||||||||||||||
Total commercial and industrial | ||||||||||||||||||||
Real estate mortgage: | ||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||
Home improvement and home equity loans | ||||||||||||||||||||
Total real estate mortgage | ||||||||||||||||||||
Real estate construction and development | ||||||||||||||||||||
Agricultural | ||||||||||||||||||||
Installment and student loans | ||||||||||||||||||||
Unallocated | ( | |||||||||||||||||||
Allowance for credit losses for all loans | $ | $ | $ | |||||||||||||||||
Liabilities: | ||||||||||||||||||||
Allowance for credit losses on off-balance sheet exposures | $ | $ | $ |
September 30, 2023 | ||||||||||||||||||||||||||
(In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value (Carrying Amount) | ||||||||||||||||||||||
Securities available-for-sale: | ||||||||||||||||||||||||||
U.S. Government agencies | $ | $ | $ | ( | $ | |||||||||||||||||||||
U.S. Government sponsored entities & agencies collateralized by mortgage obligations | ( | |||||||||||||||||||||||||
U.S. Treasury securities | ( | |||||||||||||||||||||||||
Municipal bonds | ( | |||||||||||||||||||||||||
Corporate bonds | ( | |||||||||||||||||||||||||
Total securities available-for-sale | $ | $ | $ | ( | $ |
December 31, 2022 | ||||||||||||||||||||||||||
(In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value (Carrying Amount) | ||||||||||||||||||||||
Securities available-for-sale: | ||||||||||||||||||||||||||
U.S. Government agencies | $ | $ | $ | ( | $ | |||||||||||||||||||||
U.S. Government sponsored entities & agencies collateralized by mortgage obligations | ( | |||||||||||||||||||||||||
U.S. Treasury securities | ( | |||||||||||||||||||||||||
Municipal bonds | ( | |||||||||||||||||||||||||
Corporate bonds | ( | |||||||||||||||||||||||||
Total securities available-for-sale | $ | $ | $ | ( | $ |
September 30, 2023 | ||||||||||||||
(In thousands) | Amortized Cost | Fair Value (Carrying Amount) | ||||||||||||
Due in one year or less | $ | $ | ||||||||||||
Due after one year through five years | ||||||||||||||
Due after five years through ten years | ||||||||||||||
Due after ten years | ||||||||||||||
Collateralized mortgage obligations | ||||||||||||||
$ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
(In thousands) | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||
Proceeds from sales or calls | $ | $ | $ | $ | ||||||||||||||||||||||
Gross realized gains from sales or calls | $ | $ | $ | $ | ||||||||||||||||||||||
Gross realized losses from sales or calls | $ | $ | $ | $ | ( |
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||||||||||
(In thousands) | Fair Value (Carrying Amount) | Unrealized Losses | Fair Value (Carrying Amount) | Unrealized Losses | Fair Value (Carrying Amount) | Unrealized Losses | ||||||||||||||||||||||||||||||||
September 30, 2023 | ||||||||||||||||||||||||||||||||||||||
U.S. Government agencies | $ | $ | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||
U.S. Government sponsored entities and agencies collateralized by mortgage obligations | ( | ( | ( | |||||||||||||||||||||||||||||||||||
U.S. Treasury securities | ( | ( | ||||||||||||||||||||||||||||||||||||
Municipal bonds | ( | ( | ||||||||||||||||||||||||||||||||||||
Corporate bonds | ( | ( | ||||||||||||||||||||||||||||||||||||
Total available-for-sale | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||||||||
U.S. Government agencies | $ | $ | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||
U.S. Government sponsored entities and agencies collateralized by mortgage obligations | ( | ( | ( | |||||||||||||||||||||||||||||||||||
U.S. Treasury securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Municipal bonds | ( | ( | ||||||||||||||||||||||||||||||||||||
Corporate bonds | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Total available-for-sale | $ | $ | ( | $ | $ | ( | $ | $ | ( |
September 30, 2023 | December 31, 2022 | |||||||||||||
Securities available for sale: | ||||||||||||||
U.S. Government agencies | ||||||||||||||
U.S. Government sponsored entities and agencies collateralized by mortgage obligations | ||||||||||||||
Municipal bonds | ||||||||||||||
Corporate bonds | ||||||||||||||
U.S. Treasury securities | ||||||||||||||
Total available for sale |
(In thousands) | September 30, 2023 | December 31, 2022 | ||||||||||||
Commercial and industrial: | ||||||||||||||
Commercial and business loans | $ | $ | ||||||||||||
Government program loans | ||||||||||||||
Total commercial and industrial | ||||||||||||||
Real estate mortgage: | ||||||||||||||
Commercial real estate | ||||||||||||||
Residential mortgages | ||||||||||||||
Home improvement and home equity loans | ||||||||||||||
Total real estate mortgage | ||||||||||||||
Real estate construction and development | ||||||||||||||
Agricultural | ||||||||||||||
Installment and student loans | ||||||||||||||
Total loans | $ | $ |
(In thousands) | Loans 30-60 Days Past Due | Loans 61-89 Days Past Due | Loans 90 or More Days Past Due | Total Past Due Loans | Current Loans | Total Loans | Accruing Loans 90 or More Days Past Due | |||||||||||||||||||||||||||||||||||||
Commercial and business loans | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Government program loans | ||||||||||||||||||||||||||||||||||||||||||||
Total commercial and industrial | ||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate loans | ||||||||||||||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||||||||||||||
Home improvement and home equity loans | ||||||||||||||||||||||||||||||||||||||||||||
Total real estate mortgage | ||||||||||||||||||||||||||||||||||||||||||||
Real estate construction and development loans | ||||||||||||||||||||||||||||||||||||||||||||
Agricultural loans | ||||||||||||||||||||||||||||||||||||||||||||
Installment and student loans | ||||||||||||||||||||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ | $ | $ | $ |
(In thousands) | Loans 30-60 Days Past Due | Loans 61-89 Days Past Due | Loans 90 or More Days Past Due | Total Past Due Loans | Current Loans | Total Loans | Accruing Loans 90 or More Days Past Due | |||||||||||||||||||||||||||||||||||||
Commercial and business loans | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Government program loans | ||||||||||||||||||||||||||||||||||||||||||||
Total commercial and industrial | ||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate loans | ||||||||||||||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||||||||||||||
Home improvement and home equity loans | ||||||||||||||||||||||||||||||||||||||||||||
Total real estate mortgage | ||||||||||||||||||||||||||||||||||||||||||||
Real estate construction and development loans | ||||||||||||||||||||||||||||||||||||||||||||
Agricultural loans | ||||||||||||||||||||||||||||||||||||||||||||
Installment and student loans | ||||||||||||||||||||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
(In thousands) | Nonaccrual Loans With No Allowance For Credit Losses | Total Nonaccrual Loans | Loans past due over 89 Days Still Accruing | Nonaccrual Loans With No Allowance For Credit Losses | Total Nonaccrual Loans | Loans Past Due Over 89 Days Still Accruing | ||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||||||||
Real estate construction and development loans | ||||||||||||||||||||||||||||||||||||||
Agricultural loans | ||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Term Loans Amortized Cost Basis by Origination Year - As of September 30, 2023 | Revolving Loans Amortized Cost Basis | Revolving Loans Converted to Term Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and business | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government program | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgages | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Not graded | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home improvement and home equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Not graded | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass |
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate construction and development | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Agricultural | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Installment and student loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Not graded | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Loans | $ | $ | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||
(In thousands) | Commercial and Industrial | Real Estate Mortgage | Real Estate Construction Development | Agricultural | Installment and Student Loans | Total | ||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Provision (reversal) for credit losses (1) | ( | ( | ||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ||||||||||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||
Net charge-offs | ( | ( | ||||||||||||||||||||||||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Commercial and Industrial | Real Estate Mortgage | Real Estate Construction Development | Agricultural | Installment and Student Loans | Unallocated | Total | |||||||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Provision (reversal) for credit losses | ( | |||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||||||||
Net recoveries (charge-offs) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ | $ |
Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||
(In thousands) | Commercial and Industrial | Real Estate Mortgage | Real Estate Construction Development | Agricultural | Installment and Student Loans | Total | ||||||||||||||||||||||||||||||||
Beginning balance, prior to adoption of ASC 326 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Impact of ASC 326 adoption | ||||||||||||||||||||||||||||||||||||||
Provision (reversal) for credit losses (1) | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ||||||||||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||
Net recoveries (charge-offs) | ( | ( | ||||||||||||||||||||||||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ |
Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Commercial and Industrial | Real Estate Mortgage | Real Estate Construction Development | Agricultural | Installment and Student Loans | Unallocated | Total | |||||||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Provision (reversal) for credit losses | ( | |||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||||||||
Net recoveries (charge-offs) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||
(Dollars in thousands) | Amount | Number of Collateral-Dependent Loans | Amount | Number of Collateral-Dependent Loans | ||||||||||||||||||||||
Real estate construction and development loans | $ | $ | ||||||||||||||||||||||||
Agricultural loans | ||||||||||||||||||||||||||
Total | $ | $ |
Three months ended September 30, 2023 | ||||||||||||||||||||||||||||||||
(In thousands) | Principal Forgiveness | Term Extension | Interest Rate Reduction | Payment Delay | Total % of Loans Outstanding | |||||||||||||||||||||||||||
Real estate construction and development loans | % | |||||||||||||||||||||||||||||||
Nine months ended September 30, 2023 | ||||||||||||||||||||||||||||||||
(In thousands) | Principal Forgiveness | Term Extension | Interest Rate Reduction | Payment Delay | Total % of Loans Outstanding | |||||||||||||||||||||||||||
Real estate construction and development loans | % | |||||||||||||||||||||||||||||||
Three months ended September 30, 2023 | Nine months ended September 30, 2023 | |||||||||||||
(In thousands) | 24 months term extension | 24 months term extension | ||||||||||||
Real estate construction and development loans | ||||||||||||||
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Number of Loans | Principal Amount | Accrued Interest | Number of Loans | Principal Amount | Accrued Interest | ||||||||||||||||||||||||||||||||
School | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Grace | ||||||||||||||||||||||||||||||||||||||
Repayment | ||||||||||||||||||||||||||||||||||||||
Deferment | ||||||||||||||||||||||||||||||||||||||
Forbearance | ||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||
(Dollars in thousands) | Number of Borrowers | Amount | Number of Borrowers | Amount | ||||||||||||||||||||||
Current or less than 31 days | $ | $ | ||||||||||||||||||||||||
31 - 60 days | ||||||||||||||||||||||||||
61 - 90 days | ||||||||||||||||||||||||||
91 - 120 days | ||||||||||||||||||||||||||
Total | $ | $ |
(In thousands) | September 30, 2023 | December 31, 2022 | ||||||||||||
Noninterest-bearing deposits | $ | $ | ||||||||||||
Interest-bearing deposits: | ||||||||||||||
NOW and money market accounts | ||||||||||||||
Savings accounts | ||||||||||||||
Time deposits: | ||||||||||||||
Under $250,000 | ||||||||||||||
$250,000 and over | ||||||||||||||
Total interest-bearing deposits | ||||||||||||||
Total deposits | $ | $ | ||||||||||||
(In thousands) | September 30, 2023 | December 31, 2022 | ||||||||||||
Unsecured credit lines: | ||||||||||||||
Credit limit | $ | $ | ||||||||||||
Balance outstanding | ||||||||||||||
Federal Home Loan Bank: | ||||||||||||||
Credit limit | ||||||||||||||
Balance outstanding | ||||||||||||||
Collateral pledged | ||||||||||||||
Federal Reserve Bank: | ||||||||||||||
Credit limit | ||||||||||||||
Balance outstanding | ||||||||||||||
Collateral pledged | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
(In thousands) | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||
Operating lease expense | $ | $ | $ | $ | ||||||||||||||||||||||
Variable lease expense | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Nine Months Ended | ||||||||||||||
(Dollars in thousands) | September 30, 2023 | September 30, 2022 | ||||||||||||
Operating cash flows from operating leases | $ | $ | ||||||||||||
Weighted-average remaining lease term in years for operating leases | ||||||||||||||
Weighted-average discount rate for operating leases | % | % |
(In thousands) | September 30, 2023 | |||||||
2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total undiscounted cash flows | ||||||||
Less: present value discount | ( | |||||||
Present value of net future minimum lease payments | $ |
Nine Months Ended | ||||||||||||||
(In thousands) | September 30, 2023 | September 30, 2022 | ||||||||||||
Cash paid during the period for: | ||||||||||||||
Interest | $ | $ | ||||||||||||
Income taxes | ||||||||||||||
Noncash investing activities: | ||||||||||||||
Impact of ASC 326 CECL adoption | ||||||||||||||
Unrealized gain on unrecognized post retirement costs | ||||||||||||||
Unrealized loss on available for sale securities | ( | ( | ||||||||||||
Unrealized gain on junior subordinated debentures | ||||||||||||||
Cash dividend declared |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||
Net income (in thousands) | $ | $ | $ | $ | ||||||||||||||||||||||
Weighted average shares issued | ||||||||||||||||||||||||||
Add: dilutive effect of stock options | ||||||||||||||||||||||||||
Weighted average shares outstanding adjusted for potential dilution | ||||||||||||||||||||||||||
Basic earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
Anti-dilutive stock options excluded from earnings per share calculation |
September 30, 2023 | ||||||||||||||||||||||||||||||||
(In thousands) | Carrying Amount | Estimated Fair Value | Quoted Prices In Active Markets for Identical Assets Level 1 | Significant Other Observable Inputs Level 2 | Significant Unobservable Inputs Level 3 | |||||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||||||||
Investment securities | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||||||||||||||
Loans, net | ||||||||||||||||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||||||||||
Junior subordinated debt | ||||||||||||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||
(In thousands) | Carrying Amount | Estimated Fair Value | Quoted Prices In Active Markets for Identical Assets Level 1 | Significant Other Observable Inputs Level 2 | Significant Unobservable Inputs Level 3 | |||||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||||||||
Investment securities | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||||||||||||||
Loans, net | ||||||||||||||||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||||||||||
Junior subordinated debt | ||||||||||||||||||||||||||||||||
September 30, 2023 | ||||||||||||||||||||
(In thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Assets: | ||||||||||||||||||||
AFS Securities: | ||||||||||||||||||||
U.S. Government agencies | $ | $ | $ | |||||||||||||||||
U.S. Government collateralized mortgage obligations | ||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||
U.S. Treasury securities | ||||||||||||||||||||
Corporate bond | ||||||||||||||||||||
Total AFS securities | ||||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||
Total | $ | $ | $ |
Liabilities: | ||||||||||||||||||||
Junior subordinated debt | $ | |||||||||||||||||||
Total | $ |
December 31, 2022 | ||||||||||||||||||||
(In thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||
Assets: | ||||||||||||||||||||
AFS Securities: | ||||||||||||||||||||
U.S. Government agencies | $ | $ | $ | |||||||||||||||||
U.S. Government collateralized mortgage obligations | ||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||
Treasury securities | ||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||
Total AFS securities | ||||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||
Total | $ | $ | $ |
Liabilities: | ||||||||||||||||||||
Junior subordinated debt | $ | $ | $ | |||||||||||||||||
Total | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||
Financial Instrument | Valuation Technique | Unobservable Input | Weighted Average | Financial Instrument | Valuation Technique | Unobservable Input | Weighted Average | |||||||||||||||||||||||||||||||||||||
Junior Subordinated Debt | Discounted cash flow | Market credit risk adjusted spreads | Junior Subordinated Debt | Discounted cash flow | Market credit risk adjusted spreads |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
(In thousands) | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||
Junior Subordinated Debt: | ||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | ||||||||||||||||||||||
Gross loss included in earnings | ||||||||||||||||||||||||||
Gross gain related to changes in instrument specific credit risk | ( | ( | ( | ( | ||||||||||||||||||||||
Change in accrued interest | $ | |||||||||||||||||||||||||
Ending balance | $ | $ | $ | $ | ||||||||||||||||||||||
The amount of total loss for the period included in earnings attributable to the change in unrealized gains or losses relating to liabilities still held at the reporting date | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
(In thousands) | Net unrealized gain (loss) on available for sale securities | Unfunded status of the supplemental retirement plans | Net unrealized gain (loss) on junior subordinated debentures | Net unrealized gain (loss) on available for sale securities | Unfunded status of the supplemental retirement plans | Net unrealized gain (loss) on junior subordinated debentures | ||||||||||||||||||||||||||||||||
Beginning balance | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Current period comprehensive income (loss), net of tax | ( | ( | ||||||||||||||||||||||||||||||||||||
Ending balance | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Accumulated other comprehensive loss | $ | ( | $ | ( |
(In thousands) | September 30, 2023 | December 31, 2022 | ||||||||||||
Commitments to extend credit | $ | $ | ||||||||||||
Standby letters of credit | $ | $ |
September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest | Yield/Rate (2) | Average Balance | Interest | Yield/Rate (2) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||
Loans (1) | $ | 958,861 | $ | 13,763 | 5.69 | % | $ | 952,518 | $ | 11,514 | 4.80 | % | ||||||||||||||||||||||||||
Investment securities (3) | 203,516 | 1,491 | 2.91 | % | 215,416 | 1,322 | 2.43 | % | ||||||||||||||||||||||||||||||
Interest-bearing deposits in FRB | 5,876 | 74 | 5.00 | % | 111,704 | 683 | 2.43 | % | ||||||||||||||||||||||||||||||
Total interest-earning assets | 1,168,253 | $ | 15,328 | 5.21 | % | 1,279,638 | $ | 13,519 | 4.19 | % | ||||||||||||||||||||||||||||
Allowance for credit losses | (15,817) | (9,902) | ||||||||||||||||||||||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||||||||||||||||
Cash and due from banks | 33,172 | 37,547 | ||||||||||||||||||||||||||||||||||||
Premises and equipment, net | 9,318 | 9,401 | ||||||||||||||||||||||||||||||||||||
Accrued interest receivable | 7,046 | 7,853 | ||||||||||||||||||||||||||||||||||||
Other real estate owned | 4,582 | 4,582 | ||||||||||||||||||||||||||||||||||||
Other assets | 60,090 | 54,038 | ||||||||||||||||||||||||||||||||||||
Total average assets | $ | 1,266,644 | $ | 1,383,157 | ||||||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
NOW accounts | $ | 134,143 | $ | 101 | 0.30 | % | $ | 125,133 | $ | 35 | 0.11 | % | ||||||||||||||||||||||||||
Money market accounts | 254,964 | 854 | 1.33 | % | 395,665 | 511 | 0.51 | % | ||||||||||||||||||||||||||||||
Savings accounts | 114,513 | 225 | 0.78 | % | 124,962 | 35 | 0.11 | % | ||||||||||||||||||||||||||||||
Time deposits | 95,117 | 661 | 2.76 | % | 75,023 | 98 | 0.52 | % | ||||||||||||||||||||||||||||||
Other borrowings | 99,854 | 1,356 | 5.36 | % | — | — | 0.00 | % | ||||||||||||||||||||||||||||||
Junior subordinated debentures | 10,615 | 209 | 7.81 | % | 10,459 | 110 | 4.17 | % | ||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 709,206 | $ | 3,406 | 1.91 | % | 731,242 | $ | 789 | 0.43 | % | ||||||||||||||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
Noninterest-bearing checking | 423,180 | 528,033 | ||||||||||||||||||||||||||||||||||||
Accrued interest payable | 239 | 139 | ||||||||||||||||||||||||||||||||||||
Other liabilities | 16,618 | 9,915 | ||||||||||||||||||||||||||||||||||||
Total liabilities | 1,149,243 | 1,269,329 | ||||||||||||||||||||||||||||||||||||
Total shareholders’ equity | 117,401 | 113,828 | ||||||||||||||||||||||||||||||||||||
Total average liabilities and shareholders’ equity | $ | 1,266,644 | $ | 1,383,157 | ||||||||||||||||||||||||||||||||||
Interest income as a percentage of average earning assets | 5.21 | % | 4.19 | % | ||||||||||||||||||||||||||||||||||
Interest expense as a percentage of average earning assets | 1.16 | % | 0.24 | % | ||||||||||||||||||||||||||||||||||
Net interest margin | 4.05 | % | 3.95 | % |
September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest | Yield/Rate (2) | Average Balance | Interest | Yield/Rate (2) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||
Loans (1) | $ | 958,038 | $ | 40,292 | 5.62 | % | $ | 910,221 | $ | 30,363 | 4.46 | % | ||||||||||||||||||||||||||
Investment securities (3) | 207,530 | 4,492 | 2.89 | % | 198,658 | 3,117 | 2.10 | % | ||||||||||||||||||||||||||||||
Interest-bearing deposits in FRB | 5,016 | 187 | 4.98 | % | 141,708 | 1,023 | 0.97 | % | ||||||||||||||||||||||||||||||
Total interest-earning assets | 1,170,584 | $ | 44,971 | 5.14 | % | 1,250,587 | $ | 34,503 | 3.69 | % | ||||||||||||||||||||||||||||
Allowance for credit losses | (15,986) | (9,577) | ||||||||||||||||||||||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||||||||||||||||
Cash and due from banks | 35,111 | 36,581 | ||||||||||||||||||||||||||||||||||||
Premises and equipment, net | 9,466 | 9,134 | ||||||||||||||||||||||||||||||||||||
Accrued interest receivable | 7,364 | 7,513 | ||||||||||||||||||||||||||||||||||||
Other real estate owned | 4,582 | 4,582 | ||||||||||||||||||||||||||||||||||||
Other assets | 59,650 | 52,859 | ||||||||||||||||||||||||||||||||||||
Total average assets | $ | 1,270,771 | $ | 1,351,679 | ||||||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
NOW accounts | $ | 138,381 | $ | 219 | 0.21 | % | $ | 135,155 | $ | 119 | 0.12 | % | ||||||||||||||||||||||||||
Money market accounts | 332,361 | 3,450 | 1.39 | % | 400,154 | 1,255 | 0.42 | % | ||||||||||||||||||||||||||||||
Savings accounts | 118,468 | 98 | 0.11 | % | 122,183 | 101 | 0.11 | % | ||||||||||||||||||||||||||||||
Time deposits | 74,854 | 1,361 | 2.43 | % | 70,839 | 227 | 0.43 | % | ||||||||||||||||||||||||||||||
Other borrowings | 47,088 | 1,888 | 5.36 | % | — | — | — | % | ||||||||||||||||||||||||||||||
Junior subordinated debentures | 10,775 | 586 | 7.27 | % | 10,824 | 224 | 2.77 | % | ||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 721,927 | $ | 7,602 | 1.41 | % | 739,155 | $ | 1,926 | 0.35 | % | ||||||||||||||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
Noninterest-bearing checking | 419,808 | 486,983 | ||||||||||||||||||||||||||||||||||||
Accrued interest payable | 282 | 123 | ||||||||||||||||||||||||||||||||||||
Other liabilities | 12,748 | 9,745 | ||||||||||||||||||||||||||||||||||||
Total liabilities | 1,154,765 | 1,236,006 | ||||||||||||||||||||||||||||||||||||
Total shareholders’ equity | 116,006 | 115,673 | ||||||||||||||||||||||||||||||||||||
Total average liabilities and shareholders’ equity | $ | 1,270,771 | $ | 1,351,679 | ||||||||||||||||||||||||||||||||||
Interest income as a percentage of average earning assets | 5.14 | % | 3.69 | % | ||||||||||||||||||||||||||||||||||
Interest expense as a percentage of average earning assets | 0.87 | % | 0.21 | % | ||||||||||||||||||||||||||||||||||
Net interest margin | 4.27 | % | 3.48 | % |
Three Months Ended | ||||||||||||||||||||
September 30, 2023 compared to September 30, 2022 | ||||||||||||||||||||
(In thousands) | Total | Rate | Volume | |||||||||||||||||
Increase (decrease) in interest income: | ||||||||||||||||||||
Loans | $ | 2,249 | $ | 2,172 | $ | 77 | ||||||||||||||
Investment securities available for sale | 169 | 245 | (76) | |||||||||||||||||
Interest-bearing deposits in FRB | (609) | 1,047 | (1,656) | |||||||||||||||||
Total interest income | 1,809 | 3,464 | (1,655) | |||||||||||||||||
Increase (decrease) in interest expense: | ||||||||||||||||||||
Interest-bearing demand accounts | 909 | 1,079 | (170) | |||||||||||||||||
Savings and money market accounts | (3) | — | (3) | |||||||||||||||||
Time deposits | 257 | 223 | 34 | |||||||||||||||||
Other borrowings | 1,356 | — | 1,356 | |||||||||||||||||
Subordinated debentures | 99 | 97 | 2 | |||||||||||||||||
Total interest expense | 2,618 | 1,399 | 1,219 | |||||||||||||||||
Decrease in net interest income | $ | (809) | $ | 2,065 | $ | (2,874) |
Nine Months Ended | ||||||||||||||||||||
September 30, 2023 compared to September 30, 2022 | ||||||||||||||||||||
(In thousands) | Total | Rate | Volume | |||||||||||||||||
Increase (decrease) in interest income: | ||||||||||||||||||||
Loans | $ | 9,929 | $ | 8,264 | $ | 1,665 | ||||||||||||||
Investment securities available for sale | 1,375 | 1,230 | 145 | |||||||||||||||||
Interest-bearing deposits in FRB | (836) | 5,033 | (5,869) | |||||||||||||||||
Total interest income | 10,468 | 14,527 | (4,059) | |||||||||||||||||
Increase (decrease) in interest expense: | ||||||||||||||||||||
Interest-bearing demand accounts | 2,295 | 2,480 | (185) | |||||||||||||||||
Savings and money market accounts | (2) | — | (2) | |||||||||||||||||
Time deposits | 1,134 | 1,120 | 14 | |||||||||||||||||
Other borrowings | 1,888 | — | 1,888 | |||||||||||||||||
Subordinated debentures | 362 | 363 | (1) | |||||||||||||||||
Total interest expense | 5,677 | 3,963 | 1,714 | |||||||||||||||||
Increase (decrease) in net interest income | $ | 4,791 | $ | 10,564 | $ | (5,773) |
YTD Averages | ||||||||||||||||||||
September 30, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||||||||||
Loans | 81.84% | 74.02% | 72.79% | |||||||||||||||||
Investment securities available for sale | 17.73% | 16.16% | 15.89% | |||||||||||||||||
Interest-bearing deposits in FRB | 0.43% | 9.82% | 11.32% | |||||||||||||||||
Total interest-earning assets | 100.00% | 100.00% | 100.00% | |||||||||||||||||
NOW accounts | 19.17% | 18.49% | 18.28% | |||||||||||||||||
Money market accounts | 46.04% | 53.92% | 54.14% | |||||||||||||||||
Savings accounts | 16.41% | 16.70% | 16.53% | |||||||||||||||||
Time deposits | 10.37% | 9.44% | 9.58% | |||||||||||||||||
Other borrowings | 6.52% | 0.00% | 0.00% | |||||||||||||||||
Subordinated debentures | 1.49% | 1.45% | 1.47% | |||||||||||||||||
Total interest-bearing liabilities | 100.00% | 100.00% | 100.00% |
Three Months Ended | ||||||||||||||||||||||||||
(In thousands) | September 30, 2023 | September 30, 2022 | $ Change | % Change | ||||||||||||||||||||||
Customer service fees | $ | 686 | $ | 899 | $ | (213) | (23.7) | % | ||||||||||||||||||
Increase in cash surrender value of bank-owned life insurance | 102 | 89 | 13 | 14.6 | % | |||||||||||||||||||||
Loss on fair value of marketable equity securities | (92) | (149) | 57 | 38.3 | % | |||||||||||||||||||||
Loss on fair value of junior subordinated debentures | (811) | (600) | (211) | (35.2) | % | |||||||||||||||||||||
Other | 229 | 153 | 76 | 49.7 | % | |||||||||||||||||||||
Total noninterest income | $ | 114 | $ | 392 | $ | (278) | (70.9) | % |
Nine Months Ended | ||||||||||||||||||||||||||
(In thousands) | September 30, 2023 | September 30, 2022 | $ Change | % Change | ||||||||||||||||||||||
Customer service fees | $ | 2,187 | $ | 2,328 | $ | (141) | (6.1) | % | ||||||||||||||||||
Increase in cash surrender value of bank-owned life insurance | 406 | 343 | 63 | 18.4 | % | |||||||||||||||||||||
Loss on fair value of marketable equity securities | (99) | (458) | 359 | 78.4 | % | |||||||||||||||||||||
Loss on fair value of junior subordinated debentures | (553) | (2,469) | 1,916 | 77.6 | % | |||||||||||||||||||||
Gain on sale of investment securities | — | 30 | (30) | 100.0 | % | |||||||||||||||||||||
Other | 633 | 1,015 | (382) | (37.6) | % | |||||||||||||||||||||
Total noninterest income | $ | 2,574 | $ | 789 | $ | 1,785 | 226.2 | % |
Three Months Ended | ||||||||||||||||||||||||||
(In thousands) | September 30, 2023 | September 30, 2022 | $ Change | % Change | ||||||||||||||||||||||
Salaries and employee benefits | $ | 3,376 | $ | 2,965 | $ | 411 | 13.9 | % | ||||||||||||||||||
Occupancy expense | 984 | 923 | 61 | 6.6 | % | |||||||||||||||||||||
Data processing | 204 | 215 | (11) | (5.1) | % | |||||||||||||||||||||
Professional fees | 1,177 | 1,089 | 88 | 8.1 | % | |||||||||||||||||||||
Regulatory assessments | 169 | 212 | (43) | (20.3) | % | |||||||||||||||||||||
Director fees | 106 | 110 | (4) | (3.6) | % | |||||||||||||||||||||
Correspondent bank service charges | 20 | 23 | (3) | (13.0) | % | |||||||||||||||||||||
Net cost of operation of OREO | 30 | 33 | (3) | (9.1) | % | |||||||||||||||||||||
Other | 559 | 641 | (82) | (12.8) | % | |||||||||||||||||||||
Total expense | $ | 6,625 | $ | 6,211 | $ | 414 | 6.7 | % |
Nine Months Ended | ||||||||||||||||||||||||||
(In thousands) | September 30, 2023 | September 30, 2022 | $ Change | % Change | ||||||||||||||||||||||
Salaries and employee benefits | $ | 9,937 | $ | 8,791 | $ | 1,146 | 13.0 | % | ||||||||||||||||||
Occupancy expense | 2,804 | 2,551 | 253 | 9.9 | % | |||||||||||||||||||||
Data processing | 583 | 475 | 108 | 22.7 | % | |||||||||||||||||||||
Professional fees | 2,969 | 2,957 | 12 | 0.4 | % | |||||||||||||||||||||
Regulatory assessments | 554 | 630 | (76) | (12.1) | % | |||||||||||||||||||||
Director fees | 321 | 345 | (24) | (7.0) | % | |||||||||||||||||||||
Correspondent bank service charges | 57 | 74 | (17) | (23.0) | % | |||||||||||||||||||||
Net cost of operation of OREO | 126 | 27 | 99 | (366.7) | % | |||||||||||||||||||||
Other | 1,731 | 1,755 | (24) | (1.4) | % | |||||||||||||||||||||
Total expense | $ | 19,082 | $ | 17,605 | $ | 1,477 | 8.4 | % |
Year-to-Date | Prior Period Comparison | |||||||||||||||||||||||||||||||
(In thousands) | September 30, 2023 | December 31, 2022 | September 30, 2022 | $ Change | $ Change | |||||||||||||||||||||||||||
Due from Federal Reserve Bank (FRB) | $ | 968 | $ | 6,945 | $ | 88,060 | $ | (5,977) | $ | (87,092) | ||||||||||||||||||||||
Net loans | 957,222 | 969,996 | 952,103 | (12,774) | 5,119 | |||||||||||||||||||||||||||
Investment securities | 187,857 | 210,860 | 211,847 | (23,003) | (23,990) | |||||||||||||||||||||||||||
Total assets | 1,273,092 | 1,299,193 | 1,369,252 | (26,101) | (96,160) | |||||||||||||||||||||||||||
Total deposits | 987,631 | 1,165,484 | 1,240,818 | (177,853) | (253,187) | |||||||||||||||||||||||||||
Total liabilities | 1,158,064 | 1,186,730 | 1,262,173 | (28,666) | (104,109) | |||||||||||||||||||||||||||
Average interest-earning assets | 1,170,584 | 1,248,578 | 1,250,587 | (77,994) | (80,003) | |||||||||||||||||||||||||||
Average interest-bearing liabilities | 721,927 | 738,766 | 739,155 | (16,839) | (17,228) |
September 30, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||||||||||||||||||||||||||||
(In thousands) | Amount | % of Loans | Amount | % of Loans | Amount | % of Loans | ||||||||||||||||||||||||||||||||
Commercial and industrial | $ | 51,849 | 5.3 | % | $ | 57,902 | 5.9 | % | $ | 62,421 | 6.5 | % | ||||||||||||||||||||||||||
Real estate – mortgage | 682,376 | 70.1 | % | 671,521 | 68.5 | % | 632,750 | 65.9 | % | |||||||||||||||||||||||||||||
Real estate construction and development | 133,516 | 13.7 | % | 153,374 | 15.6 | % | 161,571 | 16.8 | % | |||||||||||||||||||||||||||||
Agricultural | 61,501 | 6.3 | % | 52,722 | 5.4 | % | 57,296 | 6.0 | % | |||||||||||||||||||||||||||||
Installment and student loans | 43,629 | 4.6 | % | 44,659 | 4.6 | % | 46,511 | 4.8 | % | |||||||||||||||||||||||||||||
Total gross loans | $ | 972,871 | 100.00 | % | $ | 980,178 | 100.00 | % | $ | 960,549 | 100.00 | % |
(In thousands) | Balance | |||||||
Student Loan Portfolio Balance as of December 31, 2022 | $ | 42,132 | ||||||
Capitalized Interest | 2,912 | |||||||
Loan Consolidations/Payoffs | (2,629) | |||||||
Payments Received | (1,213) | |||||||
Loans Charged-off | (1,588) | |||||||
Student Loan Portfolio Balance as of September 30, 2023 | $ | 39,614 |
(In thousands) | September 30, 2023 | December 31, 2022 | $ Change | % Change | ||||||||||||||||||||||
Noninterest-bearing deposits | $ | 386,258 | $ | 481,629 | $ | (95,371) | (19.8) | % | ||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||||||
NOW and money market accounts | 409,193 | 499,861 | (90,668) | (18.1) | % | |||||||||||||||||||||
Savings accounts | 120,353 | 125,946 | (5,593) | (4.4) | % | |||||||||||||||||||||
Time deposits: | ||||||||||||||||||||||||||
Under $250,000 | 69,875 | 42,933 | 26,942 | 62.8 | % | |||||||||||||||||||||
$250,000 and over | 1,952 | 15,115 | (13,163) | (87.1) | % | |||||||||||||||||||||
Total interest-bearing deposits | 601,373 | 683,855 | (82,482) | (12.1) | % | |||||||||||||||||||||
Total deposits | $ | 987,631 | $ | 1,165,484 | $ | (177,853) | (15.3) | % |
(In thousands) | September 30, 2023 | December 31, 2022 | ||||||||||||
Uninsured deposits (1) | $ | 511,426 | $ | 706,183 |
September 30, 2023 | ||||||||||||||||||||||||||||||||
(In thousands) | Three months or less | Over three months through six months | Over six months through twelve months | Over twelve months | Total | |||||||||||||||||||||||||||
Uninsured time deposits (1) | $ | 1,240 | $ | 1,841 | $ | 1,726 | $ | 6,714 | $ | 11,521 |
December 31, 2022 | ||||||||||||||||||||||||||||||||
(In thousands) | Three months or less | Over three months through six months | Over six months through twelve months | Over twelve months | Total | |||||||||||||||||||||||||||
Uninsured time deposits (1) | $ | 362 | $ | 412 | $ | 3,419 | $ | 1,173 | $ | 5,366 |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||
(In thousands) | Individually-Evaluated Loan Balances | Specific Reserve | Individually-Evaluated Loan Balances | Specific Reserve | ||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Real estate – mortgage | 72 | — | 141 | 4 | ||||||||||||||||||||||
Real estate construction and development | 13,130 | — | 14,436 | — | ||||||||||||||||||||||
Agricultural | 463 | 34 | 1,051 | 48 | ||||||||||||||||||||||
Installment and student loans | — | — | — | — | ||||||||||||||||||||||
Total individually-evaluated loans | $ | 13,665 | $ | 34 | $ | 15,628 | $ | 52 |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Number of Loans | Amount | Accrued Interest | Number of Loans | Amount | Accrued Interest | ||||||||||||||||||||||||||||||||
School | 46 | $ | 1,267 | $ | 722 | 70 | $ | 2,056 | $ | 908 | ||||||||||||||||||||||||||||
Grace | 23 | 735 | 358 | 27 | 667 | 348 | ||||||||||||||||||||||||||||||||
Repayment | 418 | 19,547 | 261 | 516 | 23,414 | 857 | ||||||||||||||||||||||||||||||||
Deferment | 257 | 11,227 | 1,959 | 268 | 10,974 | 1,732 | ||||||||||||||||||||||||||||||||
Forbearance | 128 | 6,838 | 229 | 91 | 5,019 | 237 | ||||||||||||||||||||||||||||||||
Total | 872 | $ | 39,614 | $ | 3,529 | 972 | $ | 42,130 | $ | 4,082 |
(In thousands) | September 30, 2023 | December 31, 2022 | ||||||||||||
Nonaccrual loans | $ | 14,165 | $ | 14,544 | ||||||||||
Loans past due 90 days or more, still accruing | — | 252 | ||||||||||||
Total nonperforming loans | 14,165 | 14,796 | ||||||||||||
Other real estate owned | 4,582 | 4,582 | ||||||||||||
Total nonperforming assets | $ | 18,747 | $ | 19,378 | ||||||||||
Nonperforming loans to total gross loans | 1.45 | % | 1.51 | % | ||||||||||
Nonperforming assets to total assets | 1.47 | % | 1.48 | % | ||||||||||
Allowance for loan losses to nonperforming loans | 110.48 | % | 68.82 | % |
(In thousands) | September 30, 2023 | December 31, 2022 | $ Change | |||||||||||||||||
Nonaccrual Loans: | ||||||||||||||||||||
Real estate construction and development | $ | 13,097 | $ | 14,436 | $ | (1,339) | ||||||||||||||
Agricultural | 60 | 108 | (48) | |||||||||||||||||
Total nonaccrual loans | $ | 14,165 | $ | 14,544 | $ | (379) |
(In thousands) | September 30, 2023 | December 31, 2022 | ||||||||||||
Commercial and industrial | $ | — | $ | 200 | ||||||||||
Commercial real estate mortgage | 12,696 | 26,019 | ||||||||||||
Agricultural | 869 | 1,017 | ||||||||||||
Total special mention loans | $ | 13,565 | $ | 27,236 |
(In thousands) | September 30, 2023 | September 30, 2022 | ||||||||||||
Total loans outstanding at end of period before deducting allowances for credit losses | $ | 972,871 | $ | 962,166 | ||||||||||
Average loans outstanding during period | 958,038 | 910,221 | ||||||||||||
Balance of allowance at beginning of period | $ | 10,182 | $ | 9,333 | ||||||||||
Impact of adoption of ASU 2016-13 | 6,367 | — | ||||||||||||
Loans charged-off: | ||||||||||||||
Installment and student loans | (1,587) | (828) | ||||||||||||
Total loans charged-off | (1,587) | (828) | ||||||||||||
Recoveries of loans previously charged-off: | ||||||||||||||
Real estate | 53 | 10 | ||||||||||||
Commercial and industrial | 1 | 305 | ||||||||||||
Installment and student loans | 181 | 25 | ||||||||||||
Total loan recoveries | 235 | 340 | ||||||||||||
Net loans charged-off | (1,352) | (488) | ||||||||||||
Provision charged to operating expense | 452 | 1,217 | ||||||||||||
Balance of allowance for credit losses at end of period | $ | 15,649 | $ | 10,062 | ||||||||||
Net loan charged-off to total average loans (annualized) | 0.19 | % | 0.07 | % | ||||||||||
Net loan charged-off to loans at end of period (annualized) | 0.56 | % | 0.20 | % | ||||||||||
Allowance for credit losses to total loans at end of period | 1.61 | % | 1.05 | % | ||||||||||
Net loan charged-off to allowance for credit losses (annualized) | 34.56 | % | 19.40 | % | ||||||||||
Provision for credit losses to net charged-off (annualized) | 44.58 | % | 499.18 | % |
September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||||||||||||||
(In thousands) | Net Charge-offs (Recoveries) | Average Loan Balance | Percentage | Net Charge-offs (Recoveries) | Average Loan Balance | Percentage | ||||||||||||||||||||||||||||||||
Commercial and industrial | $ | (1) | $ | 49,063 | <0.01% | $ | (269) | $ | 58,596 | (0.46) | % | |||||||||||||||||||||||||||
Real estate mortgages | (53) | 666,797 | <0.01% | (10) | 606,621 | <0.01% | ||||||||||||||||||||||||||||||||
RE construction and development | — | 144,205 | — | % | — | 183,934 | — | % | ||||||||||||||||||||||||||||||
Agricultural | — | 53,201 | — | % | (36) | 56,122 | (0.06) | % | ||||||||||||||||||||||||||||||
Installment and student loans | 1,406 | 44,772 | 3.14 | % | 803 | 47,245 | 1.70 | % | ||||||||||||||||||||||||||||||
Total | $ | 1,352 | $ | 958,038 | 0.14 | % | $ | 488 | $ | 952,518 | 0.05 | % |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||
(Dollars in thousands) | Balance | % Total Assets | Balance | % Total Assets | ||||||||||||||||||||||
Cash and cash equivalents | $ | 35,297 | 2.8 | % | $ | 38,595 | 3.0 | % | ||||||||||||||||||
Net loans | 957,222 | 75.2 | % | 969,996 | 74.7 | % | ||||||||||||||||||||
Investment securities | 187,857 | 14.8 | % | 210,860 | 16.2 | % | ||||||||||||||||||||
(In thousands) | Balance | |||||||
December 31, 2021 | $ | 219,219 | ||||||
September 30, 2022 | 126,032 | |||||||
December 31, 2022 | 38,595 | |||||||
September 30, 2023 | 35,297 |
September 30, 2023 | Ratios at December 31, 2022 | Minimum Requirement to be Well Capitalized | Minimum requirement for Community Bank Leverage Ratio (1) | |||||||||||||||||||||||
Tier 1 capital to adjusted average assets (Leverage Ratio) | ||||||||||||||||||||||||||
Company | 11.36% | 10.10% | 5.00% | 9.00% | ||||||||||||||||||||||
Bank | 11.42% | 10.11% | 5.00% | 9.00% |
11 | Computation of Earnings per Share* | ||||
31.1 | |||||
31.2 | |||||
32.1 | |||||
32.2 |
United Security Bancshares | ||||||||
Date: | November 15, 2023 | /S/ Dennis R. Woods | ||||||
Dennis R. Woods | ||||||||
President and Chief Executive Officer | ||||||||
/S/ David A. Kinross | ||||||||
David A. Kinross | ||||||||
Senior Vice President and Chief Financial Officer |
Date: November 15, 2023 | ||
/S/ Dennis R. Woods | ||
Dennis R. Woods | ||
President and Chief Executive Officer |
Date: November 15, 2023 | ||
/S/ David A. Kinross | ||
David A. Kinross | ||
Senior Vice President and Chief Financial Officer |
/s/ Dennis R. Woods | ||
Dennis R. Woods | ||
President and Chief Executive Officer |
/s/ David A. Kinross | ||
David A. Kinross | ||
Senior Vice President and Chief Financial Officer |
Condensed Consolidated Balance Sheets – (unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for credit losses | $ 0 | $ 0 |
Amortized cost | $ 214,645 | $ 234,610 |
Common stock, no par value (in usd per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares, issued (in shares) | 17,135,595 | 17,067,253 |
Common stock, shares, outstanding (in shares) | 17,135,595 | 17,067,253 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 3,853 | $ 4,467 | $ 14,395 | $ 10,345 |
Unrealized loss on debt securities | (4,178) | (8,799) | (2,939) | (29,232) |
Unrealized gain on unrecognized post-retirement costs | 23 | 22 | 66 | 67 |
Unrealized gain on junior subordinated debentures | 576 | 825 | 523 | 3,419 |
Other comprehensive loss, before tax | (3,579) | (7,952) | (2,350) | (25,746) |
Tax benefit related to debt securities | 1,236 | 2,601 | 869 | 8,641 |
Tax expense related to unrecognized post-retirement costs | (9) | (7) | (22) | (20) |
Tax expense related to junior subordinated debentures | (170) | (243) | (152) | (1,011) |
Total other comprehensive loss | (2,522) | (5,601) | (1,655) | (18,136) |
Comprehensive income (loss) | $ 1,331 | $ (1,134) | $ 12,740 | $ (7,791) |
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Sep. 30, 2022 |
---|---|---|
Dividends paid and payable (in usd per share) | $ 0.12 | $ 0.11 |
Dividends 1 | ||
Dividends paid and payable (in usd per share) | 0.11 | |
Dividends 2 | ||
Dividends paid and payable (in usd per share) | $ 0.12 |
Organization and Summary of Significant Accounting and Reporting Policies |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting and Reporting Policies | Organization and Summary of Significant Accounting and Reporting Policies The consolidated financial statements include the accounts of United Security Bancshares (“Company” or “USB”) and its wholly-owned subsidiary, United Security Bank (“Bank”). Intercompany accounts and transactions have been eliminated in consolidation. These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information on a basis consistent with the accounting policies reflected in the audited consolidated financial statements of the Company included in its 2022 Annual Report on Form 10-K. These interim consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments consisting of a normal, recurring nature and considered necessary for a fair presentation, have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for any other interim period or for the year as a whole. Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or shareholders’ equity. Impact of New Financial Accounting Standards: In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326). This update replaces the incurred loss methodology with a current expected loss methodology, commonly referred to as CECL, which seeks to improve financial reporting by requiring timelier recording of credit losses on assets measured at amortized cost, such as loan receivables, held-to-maturity securities, and off-balance sheet exposures. The Update requires enhanced disclosures and judgments in estimating credit losses and also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. On January 1, 2023, the Company adopted ASC 326, Financial Instruments-Credit Losses, using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for the reporting periods beginning after January 1, 2023, are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. The adoption of this new standard required a cumulative adjustment to the allowance for credit losses, leading to an increase in the credit loss balance of $6.4 million and an increase in the reserve for unfunded loan commitments of $273,000, resulting in a combined adjustment to retained earnings of $4.7 million, net of a $1.9 million tax adjustment. The following table summarized the impact of the adoption of ASU 2016-13 by loan category:
Available-for-sale debt securities in an unrealized loss position are evaluated when the amortized cost of a security exceeds its fair value. If it is determined that it will be necessary to sell a security before the fair value increases to the amortized cost, the amortized cost will be written down to fair value through income. At that point, any previously recorded allowance for credit loss (ACL) would be written off and any additional impairment would be recognized through earnings. If it is believed that the Company will not be required to sell a security before the fair value recovers, a determination will be made as to whether or not the decline in fair value is the result of a credit loss or noncredit factors such as changes in current market rates. If it is determined that the decline is due to a credit loss, the amount recognized as the credit loss will be determined using a discounted cash flow approach. Cash flows expected to be collected would be discounted at the effective interest rate established at acquisition. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses would be recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. This ASU was effective for all entities as of March 12, 2020, through December 31, 2022. However, the effective date was updated in ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the sunset date of Topic 848, and is currently set for December 31, 2024. The Company is in the process of evaluating the provisions of this ASU and its effects on our consolidated financial statements. The Company anticipates a minimal impact to junior subordinated debt and floating rate loans tied to LIBOR. In March 2022, FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures. This ASU provides new guidance on the treatment of troubled debt restructurings (TDRs) in relation to the adoption of the CECL model for the accounting for credit losses (see note above regarding ASU 2016-13). Previous accounting guidance related to troubled debt restructurings is eliminated and new disclosure requirements are adopted in regard to loan refinancing and restructurings made to borrowers experiencing financial difficulties under the assumption that the CECL model will capture credit losses related to troubled debt restructurings. New disclosures regarding gross write-offs for financing receivables by year of origination are also included in the update. This update has been adopted as of January 1, 2023. The Bank will no longer report troubled debt restructurings or classify loans as such. TDRs previously recognized have been incorporated into the CECL methodology as it applies to loan loss reserves as of January 1, 2023.
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Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities Following is a comparison of the amortized cost and fair value of securities available-for-sale, as of September 30, 2023 and December 31, 2022:
The amortized cost and fair value of securities available for sale at September 30, 2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay obligations with or without call or prepayment penalties. Contractual maturities on collateralized mortgage obligations cannot be anticipated due to allowed paydowns.
Proceeds and gross realized gains (losses) from sales of available-for-sale debt securities are shown below:
As market interest rates or risks associated with a security’s issuer continue to change and impact the actual or perceived values of investment securities, the Company may determine that selling these securities and using the proceeds to purchase securities that better fit with the Company’s current risk profile is appropriate and beneficial to the Company. There were no losses recorded due to credit-related factors for the three and nine month periods ended September 30, 2023 or September 30, 2022. At September 30, 2023, available-for-sale securities with an amortized cost of approximately $73.8 million and a fair value of $63.1 million were pledged as collateral for FHLB borrowings, securitized deposits, and public funds balances. At December 31, 2022, available-for-sale securities with an amortized cost of approximately $78.8 million and a fair value of $69.0 million were pledged as collateral for FHLB borrowings, securitized deposits, and public funds balances. The following summarizes available-for-sale debt securities in an unrealized loss position for which a credit loss has not been recorded:
The following summarizes the number of available-for-sale debt securities in an unrealized loss position for which a credit loss has not been recorded:
Management has evaluated each available-for-sale investment security in an unrealized loss position to determine if it would be required to sell the security before the fair value increases to amortized cost and whether any unrealized losses are due to credit losses or noncredit factors such as current market rates, which would not require the establishment of an allowance for credit losses. At September 30, 2023, the decline in fair value of the available-for-sale securities is attributed to changes in interest rates and not credit quality. These declines are primarily the result of the fast pace and large increases in interest rates during the last two years, which have led to decreases in bond prices and increases in yields. Because the Company does not intend to sell these securities, and because it is more likely than not that it will not be required to sell these securities before their anticipated recovery, the Company does not consider it necessary to provide an allowance for any available-for-sale security at September 30, 2023. During the nine months ended September 30, 2023 and 2022, the Company recognized $99,000 of unrealized losses and $458,000 of unrealized losses, respectively, related to marketable equity securities, related to one mutual fund, included in the marketable equity securities. During the quarters ended September 30, 2023 and 2022, the Company recognized $92,000 and $149,000 of unrealized losses related to the same mutual fund. The Company had no held-to-maturity or trading securities at September 30, 2023 or December 31, 2022.
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | Loans Loans, at amortized cost, are comprised the following:
The Company’s directly-originated loans are predominantly in the San Joaquin Valley and the greater Oakhurst/East Madera County area, as well as the Campbell area of Santa Clara County. The Company’s participation loans with other financial institutions are primarily in the state of California. Commercial and industrial loans, representing 5.3% of total loans at September 30, 2023 and 5.9% at December 31, 2022, are generally made to support the ongoing operations of small- to medium-sized commercial businesses. Commercial and industrial loans have a high degree of industry diversification and provide working capital, financing for the purchase of manufacturing plants and equipment, or funding for growth and general expansion of businesses. A substantial portion of commercial and industrial loans are secured by accounts receivable, inventory, leases, or other collateral including real estate; the remainder are unsecured. Extensions of credit are predicated upon the financial capacity of the borrower and repayment is generally from the cash flow of the borrower. Real estate mortgage loans, representing 70.1% of total loans at September 30, 2023 and 68.5% at December 31, 2022, are typically secured by either trust deeds on commercial property or single family residences. Repayment of real estate mortgage loans generally comes from the cash flow of the borrower and or guarantor(s). •Commercial real estate mortgage loans comprise the largest segment of this loan category and are available for both income-producing and non-income-producing commercial properties, including: office buildings, shopping centers, apartments and motels, owner occupied buildings, manufacturing facilities, and more. Commercial real estate mortgage loans can also be used to refinance existing debt. These loans are typically repaid from the borrower’s business operations, rental income associated with the real property, or personal assets. •Residential mortgage loans are provided to individuals to finance or refinance single-family residences. Residential mortgages are not a primary business line offered by the Company, and a majority are conventional mortgages that were purchased as a pool. •Home improvement and home equity loans comprise a relatively small portion of total real estate mortgage loans. Home equity loans are generally secured by junior trust deeds, but may be secured by 1st trust deeds. Real estate construction and development loans, representing 13.7% of total loans at September 30, 2023 and 15.5% at December 31, 2022, consist of loans for residential and commercial construction projects, as well as land acquisition and development, and land held for future development. Loans in this category are secured by real estate, including improved- and unimproved-land, as well as single-family residential, multi-family residential, and commercial properties in various stages of completion. All real estate loans have established equity requirements. Repayment on construction loans generally comes from long-term mortgages with other lending institutions obtained at completion of the project or from the sale of the constructed homes to individuals. Agricultural loans, representing 6.3% of total loans at September 30, 2023 and 5.4% at December 31, 2022, are generally secured by land, equipment, inventory, and receivables. Repayment is from the cash flow of the borrower. Installment loans, which represented 4.5% of total loans at September 30, 2023 and 4.6% at December 31, 2022, generally consist of student loans; loans to individuals for household, family and other personal expenditures; automobiles; or other consumer items. See Note 4 - Student Loans for specific information on the student loan portfolio. In the normal course of business, the Company is party to financial instruments with off-balance sheet risk to meet the financing needs of its customers. At September 30, 2023 and December 31, 2022, these financial instruments include commitments to extend credit of $193.3 million and $190.2 million, respectively, and standby letters of credit of $3.1 million and $1.6 million for the same period ends, respectively. These instruments involve elements of credit risk in excess of the amount recognized on the consolidated balance sheet. The contract amounts of these instruments reflect the extent of the involvement the Company has in off-balance sheet financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the counterparty to these financial instruments is represented by the contractual amounts of those instruments. The Company applies the same credit policies used for on-balance sheet instruments. Commitments to extend credit continue as long as there is no violation of any condition established in the customer’s contract. Substantially all of these commitments are at floating interest rates based on the prime rate and generally have fixed expiration dates. The Company evaluates each customer’s creditworthiness on a case-by-case basis and collateral may be required in some cases. Collateral held varies but includes accounts receivable, inventory, leases, property, plant and equipment, residential real estate, and income-producing properties. Standby letters of credit are generally unsecured and are issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Past Due Loans The following is a summary of the amortized cost of delinquent loans at September 30, 2023:
The following is a summary of the amortized cost of delinquent loans at December 31, 2022:
Nonaccrual Loans Loans are placed on nonaccrual status under the following circumstances: - When there is doubt regarding the full repayment of interest and principal. - When principal and/or interest on the loan has been in default for a period of 90 days or more, unless the asset is both well secured and in the process of collection that will result in repayment in the near future. - When the loan is identified as having loss elements and/or is risk rated grade 8 (doubtful). Loans on nonaccrual status are usually returned to accrual status when all delinquent principal and/or interest has been brought current, when there is no identified element of loss, and when current and continued satisfactory performance is expected. Return to accrual is generally demonstrated through the timely receipt of at least six monthly payments on a loan with monthly amortization. There was no interest income recognized on nonaccrual loans for the nine months ended September 30, 2023 and 2022. There were no remaining undisbursed commitments to extend credit on nonaccrual loans at September 30, 2023 or December 31, 2022. The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 89 days and still accruing:
Credit Quality Indicators As part of its credit monitoring program, the Company utilizes a risk rating system to quantify the risk the Company estimates it has assumed during the life of a loan. This system rates the strength of the borrower and the facility or transaction, and is designed to provide a program for risk management and early detection of problems. For each new credit approval, credit extension, renewal, or modification of existing credit facilities, the Company assigns risk ratings utilizing the rating scale identified in this policy. In addition, on an on-going basis, loans and credit facilities are reviewed for internal and external influences impacting the credit facility that would warrant a change in the risk rating. Each credit facility is given a risk rating that takes into account factors that materially affect credit quality. When assigning risk ratings, the Company evaluates two risk rating approaches, a facility rating and a borrower rating: Facility Rating: The facility rating is determined by the analysis of positive and negative factors that may indicate that the quality of a particular loan or credit arrangement requires a different risk rating than that assigned to the borrower. The Company assesses the risk impact of these factors: Collateral - The rating may be affected by the type and quality of the collateral, the degree of coverage, the economic life of the collateral, the liquidation value, and the Company's ability to dispose of the collateral. Guarantees - The value of third party support arrangements varies widely. Unconditional guaranties from persons with demonstrable ability to perform are more substantial than that of persons closely-related to the borrower who offer only modest support. Unusual Terms - Credit may be extended on terms that subject the Company to a higher level of risk than indicated in the rating of the borrower. Borrower Rating: The borrower rating is a measure of loss possibility based on the historical, current, and anticipated financial characteristics of the borrower in the current risk environment. To determine the rating, the Company considers the following factors: - Quality of management - Liquidity - Leverage/capitalization - Profit margins/earnings trend - Adequacy of financial records - Alternative funding sources - Geographic risk - Industry risk - Cash flow risk - Accounting practices - Asset protection - Extraordinary risks The Company assigns risk ratings to loans, other than consumer loans and other homogeneous loan pools, based on the following scale. The risk ratings are used when determining borrower ratings as well as facility ratings. The Company uses the following risk rating grades: Pass Ratings: - Grades 1 and 2 – These grades include loans to high quality borrowers with high credit quality and sound financial strength. Key financial ratios are generally above industry averages and the borrower has a strong earnings history or net worth. These may be secured by deposit accounts or high-grade investment securities. - Grade 3 – This grade includes loans to borrowers with solid credit quality and minimal risk. The borrower’s balance sheet and financial ratios are generally in line with industry averages, and the borrower has historically demonstrated the ability to manage economic adversity. Real estate and asset-based loans assigned this risk rating must have characteristics which place them well above the minimum underwriting requirements for those departments. Asset-based borrowers assigned this rating must exhibit extremely favorable leverage and cash flow characteristics, and consistently demonstrate a high level of unused borrowing capacity. - Grades 4 and 5 – These include pass grade loans to borrowers of acceptable credit quality and risk. The borrower’s balance sheet and financial ratios may be below industry averages, but above the lowest industry quartile. Leverage is above and liquidity is below industry averages. Inadequacies evident in financial performance and/or management sufficiency are offset by readily available features of support, such as adequate collateral, or good guarantors having the liquid assets and/or cash flow capacity to repay the debt. Although, the borrower may have recognized a loss over or four years, recent earnings trends, while perhaps somewhat cyclical, are improving and cash flows are adequate to cover debt service and fixed obligations. Real estate and asset borrowers who fully comply with all underwriting standards and are performing according to projections are assigned this rating. These also include grade 5 loans which are leveraged or on management’s watch list. While still considered pass loans, the borrower’s financial condition, cash flow, or operations evidence more than average risk and short term weaknesses. These loans warrant a higher than average level of monitoring, supervision, and attention from the Company, but do not reflect credit weakness trends that weaken or inadequately protect the Company’s credit position. Loans with a grade 5 rating are not normally acceptable as new credits unless they are adequately secured or carry substantial endorser/guarantors. Special Mention Rating: - Grade 6 – This grade includes loans that are currently protected but potentially weak. This is generally an interim classification and these loans will typically be upgraded to an acceptable rating or downgraded to a substandard rating within a reasonable time period. Weaknesses in special mention loans may, if not checked or corrected, weaken the asset or inadequately protect the Company’s credit position at some future date. Special mention loans are often loans with weaknesses inherent in the loan origination and loan servicing, and may have some technical deficiencies. This designation indicates a distinct probability that the classification will deteriorate to a more adverse class if the noted deficiencies are not addressed by the loan officer or loan management. Substandard Rating: - Grade 7 – This grade includes substandard loans which are inadequately supported by the current sound net worth and paying capacity of the borrower or the collateral pledged, if any. Substandard loans have a well-defined weakness, or weaknesses, that may impair the regular liquidation of the debt. When a loan has been downgraded to substandard, there exists a distinct possibility that the Company will sustain a loss if the deficiencies are not corrected. Doubtful Ratings: - Grade 8 – This grade includes doubtful loans that exhibit the same characteristics as substandard loans. Loan weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high but, due to pending factors which may work toward the strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include a proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans. - Grade 9 – This grade includes loans classified as loss which are considered uncollectible and of such little value that their continuance as bankable-assets is not warranted. This classification does not mean that the asset has no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the asset even though partial recovery may be achieved in the future. The following table presents loans by class, net of deferred fees, by risk rating and period indicated as of September 30, 2023:
Allowance for Credit Losses on Loans The Company adopted ASU 2016-13, Financial Instrument-Credit Losses (Topic 326), effective January 1, 2023. This loss measurement, which uses the current expected credit loss (CECL) cohort methodology analysis, relies on segmenting the loan portfolio into pools with similar risks, tracking the performance of the pools over time, and using the data to determine pool loss experience. Management estimates the allowance for credit loss balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company’s historical loss experience from 2006 to 2023. The Company expects that the markets in which it operates will experience a slight decline in economic conditions and an increase in unemployment rates and levels and trends of delinquencies over the next two years. Management has adjusted the historical loss experience for these expectations. The Company analyzes risk characteristics inherent in each loan portfolio segment as part of the quarterly review of the adequacy of the allowance for credit losses on loans. The following summarizes some of the key risk characteristics for the ten segments of the loan portfolio: Commercial and industrial loans – Commercial loans are subject to the effects of economic cycles and tend to exhibit increased risk as economic conditions deteriorate or economic downturn are prolonged. The Company considers this segment to be one of higher risk given the size of individual loans and the balances in the overall portfolio. Government program loans – This is a relatively small part of the Company’s loan portfolio, but has historically had a high percentage of loans that have migrated from pass to substandard given their vulnerability to economic cycles. Commercial real estate loans – This segment is considered to have more risk due to the vulnerability of commercial businesses to economic cycles as well as their exposure to fluctuations in real estate prices. Losses in this segment have been historically low because most loans are real estate-secured, and the Bank maintains appropriate loan-to-value ratios. Residential mortgages – This segment is considered to have low risk factors based on the past experienced of both the Company and peers. Loans in this category are secured by first deeds of trust. Home improvement and home equity loans – Because of their junior lien position, these loans have an inherently higher risk level. Real estate construction and development loans – This segment of loans is considered to have a higher risk profile due to construction issues and market value fluctuations in conjunction with normal credit risks. Agricultural loans – This segment is considered to have risks associated with weather, insects, marketing issues, and crop concentration. Additionally, California may experience severe droughts, which can significantly harm the business of customers and the credit quality of the loans to those customers. Water resources and related issues affecting customers are closely monitored. Signs of deterioration within this loan portfolio are closely monitored in an effort to manage credit quality and promote early efforts to work with borrowers in order to mitigate any potential losses. Installment, overdrafts, and overdraft protection lines – This segment is higher risk because most of the loans are unsecured. Additionally, in the case of student loans, there are increased risks associated with liquidity as there is a significant time lag between funding of a student loan and eventual repayment. The following summarizes the activity in the allowance for credit losses by loan category:
(1) There was no provision for unfunded loan commitments during the quarter.
(1) Includes a $135,000 provision for unfunded loan commitments.
Collateral-Dependent Loans A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table presents the recorded investment in collateral-dependent loans by type of loan:
Reserve for Unfunded Commitments The allowance for off-balance sheet credit exposure relates to commitments to extend credit, letters of credit, and undisbursed funds on lines of credit. The Company evaluates credit risk associated with the off-balance sheet loan commitments in the same manner as it evaluates credit risk within the loan portfolio. The adoption of CECL as of January 1, 2023, required a cumulative adjustment of $273,000 to the reserve for unfunded loan commitments, increasing the liability balance to $805,000, post adoption. There was no provision for unfunded loan commitments made during the quarter ended September 30, 2023. Year to date, the provision totaled $135,000, increasing the liability balance to $954,000. For the quarter ended September 30, 2022, a reversal of provision of $17,000 was made. For the nine months ended September 30, 2022, a reversal of provision of $210,000 was made, decreasing the liability balance to $474,000. The reserve for the unfunded loan commitments is a liability on the Company’s consolidated financial statements and is included in other liabilities. Loan Modifications Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, and other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged off against the allowance for credit losses. The following tables present loan modifications made to borrowers experiencing financial difficulties for the periods indicated:
The following table presents the financial effects of loan modifications made to borrower experiencing financial difficulties:
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Student Loans |
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Student Loans | Student Loans Included in the installment loan portfolio are $39.6 million and $42.1 million in student loans at September 30, 2023 and December 31, 2022, respectively, made to medical and pharmacy school students. Upon graduation the loan is automatically placed in a grace period of six months. This may be extended up to 48 months for graduates enrolling in internship, medical residency, or fellowship programs. As approved, the student may receive additional deferment for hardship or administrative reasons in the form of forbearance for a maximum of 36 months throughout the life of the loan. No new student loans were originated or purchased since April of 2019. As of September 30, 2023 and December 31, 2022, the reserve against the student loan portfolio was $5.6 million and $2.6 million, respectively. At September 30, 2023, there were no student loans in the substandard category. At December 31, 2022, there were $252,000 in student loans included in the substandard category. The following tables summarize the credit quality indicators for outstanding student loans:
School - The time in which the borrower is still actively in school at least half-time. No payments are expected during this stage, though the borrower may make payments during this time. Grace - A six-month period of time granted upon graduation, or end of active-student status, during which payment is not required but interest continues to accrue. Upon completion of the six month grace period, the loan is transferred to repayment status. This status may also represent an in-school borrower activated to military duty. The borrower must return to at least half-time status within six months of their active-duty end date in order to return to in-school status. Repayment - The time in which the borrower is no longer attending school at least half-time, and has not received an approved grace, deferment, or forbearance. Regular payment is expected from these borrowers under an allotted payment plan. Deferment - May be granted for up to 48 months for borrowers who have begun the repayment period on their loans but are either actively enrolled in an eligible school at least half-time or actively enrolled in an approved and verifiable medical residency, internship, or fellowship program. Forbearance - The period of time during which the borrower may postpone making principal and interest payments due to either hardship or administrative reasons. Interest will continue to accrue on loans during periods of authorized forbearance and will be capitalized at the end of the forbearance period. If the borrower is delinquent at the time the forbearance is granted, unpaid interest and interest accrued during the delinquency will also be capitalized. Loan terms will not change as a result of forbearance and payment amounts may be increased to allow the loan to pay off in the required time frame. A forbearance that results in an insignificant delay in payment, is not considered a concessionary change in terms, provided the borrower affirms the obligation. Forbearance is not an uncommon status designation and is considered standard industry practice, consistent with the succession of students migrating from school to career. However, additional risk is associated with this designation. Student Loan Aging Student loans are generally charged off at the end of the quarter during which the account becomes 120 days contractually past due. Accrued but unpaid interest related to charged-off student loans is reversed and charged against interest income. For the nine months ended September 30, 2023, $187,000 in accrued interest receivable was reversed, due to charge-offs of $1.6 million. For the nine months ended September 30, 2022, $100,000 in accrued interest receivable was reversed, due to charge-offs of $810,000. For the quarter ended September 30, 2023, $102,000 in accrued interest receivable was reversed, due to charge-offs of $603,000. For the quarter ended September 30, 2022, $86,000 in accrued interest receivable was reversed, due to charge-offs of $457,000. The following table summarize the amortized cost of student loan aging for loans in repayment and forbearance:
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Deposits |
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Deposits | Deposits Deposits include the following:
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Short-term Borrowings/Other Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term Borrowings/Other Borrowings | Short-term Borrowings/Other Borrowings The following table sets forth the Company’s credit lines, balances outstanding, and pledged collateral:
At September 30, 2023, pledged collateral at the Federal Home Loan Bank consisted of $2.1 million in available-for-sale investment securities and $236.3 million in loan balances. Pledged collateral at the Federal Reserve Bank consisted of $4.2 million in available-for-sale investment securities and $614.0 million in loan balances. At December 31, 2022, pledged collateral at the Federal Home Loan Bank consisted of $2.2 million in available-for-sale investment securities and pledged collateral at the Federal Reserve Bank consisted of $590.4 million in loan balances.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company leases land and premises for its branch banking-offices, administration facility, and ITMs. The initial terms of these leases expire at various dates through 2032. Under the provisions of most of these leases, the Company has the option to extend the leases beyond their original terms at rental rates adjusted to certain economic indices or market conditions. Lease terms may also include options for termination. Under guidance from Topic 842, the discount rate applied to the lease liability is calculated by determining the Bank’s incremental borrowing rate. Current rates for fully-secured loans with amounts and terms similar to the lease amount and term at inception are used to calculate the incremental borrowing rate. The liability is reduced at each reporting period based on the discounted present value of remaining payments. As of September 30, 2023, the Company had 13 operating leases and no financing leases. At September 30, 2022, the Company had 13 operating leases and no financing leases. The components of lease expense are as follows:
Supplemental information related to leases is as follows:
Maturities of lease liabilities are as follows:
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Supplemental Cash Flow Disclosures |
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Disclosures | Supplemental Cash Flow Disclosures
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Dividends on Common Stock |
9 Months Ended |
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Sep. 30, 2023 | |
Equity [Abstract] | |
Dividends on Common Stock | Dividends on Common Stock On September 26, 2023, the Company’s Board of Directors declared a cash dividend of $0.12 per share on the Company’s common stock. The dividend was payable on October 25, 2023, to shareholders of record as of October 10, 2023. Approximately $2.1 million was transferred from retained earnings to dividends payable as of September 30, 2023 to allow for distribution of the dividend to shareholders. The Company has a program to repurchase up to $3 million of its outstanding common stock. The timing of the purchases will depend on certain factors including, but not limited to, market conditions and prices, available funds, and alternative uses of capital. The stock repurchase program may be carried out through open-market purchases, block trades, or negotiated private transactions. For the three months and nine months ended September 30, 2023 and September 30, 2022, no shares have been repurchased.
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Net Income per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income per Common Share | Net Income per Common Share The following table provides a reconciliation of the numerator and the denominator of the basic EPS computation with the numerator and the denominator of the diluted EPS computation:
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Taxes on Income |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Taxes on Income | Taxes on Income The Company periodically reviews its tax positions under the accounting standards related to uncertainty in income taxes, which defines the criteria that an individual tax position would have to meet for some or all of the income tax benefit to be recognized in a taxable entity’s financial statements. Under the guidelines, an entity should recognize the financial statement benefit of a tax position if it determines that it is more likely than not that the position will be sustained on examination. The term “more likely than not” means a likelihood of more than 50 percent. In assessing whether the more-likely-than-not criterion is met, the entity should assume that the tax position will be reviewed by the applicable taxing authority and all available information is known to the taxing authority. The Company periodically evaluates its deferred tax assets to determine whether a valuation allowance is required based upon a determination that some or all of the deferred assets may not be ultimately realized. At September 30, 2023 and December 31, 2022, the Company had no recorded valuation allowance. The Company is no longer subject to examinations by taxing authorities for years before 2018 and 2017 for Federal and California jurisdictions, respectively. The Company’s policy is to recognize any interest or penalties related to uncertain tax positions in income tax expense. There were no interest or penalties recognized on uncertain tax positions during the periods ended September 30, 2023 and 2022. The Company recorded a provision for income taxes of $1.6 million for the three months ended September 30, 2023, and a provision of $1.8 million for the three months ended September 30, 2022. The Company reported a provision for income taxes of $5.9 million for the nine months ended September 30, 2023 compared to $4.2 million for the comparable period of 2022. The effective tax rate was 28.8% for the three months ended September 30, 2023, compared to 29.1% for the comparable period of 2022. The effective tax rate was 29.0% for the nine months ended September 30, 2023, compared to 28.9% for the comparable period of 2022.
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Junior Subordinated Debt/Trust Preferred Securities |
9 Months Ended |
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Sep. 30, 2023 | |
Junior Subordinated Debt/Trust Preferred Securities [Abstract] | |
Junior Subordinated Debt/Trust Preferred Securities | Junior Subordinated Debt/Trust Preferred Securities The contractual principal balance of the Company’s debentures relating to its trust preferred securities is $12.0 million as of September 30, 2023 and December 31, 2022. The Company may redeem the junior subordinated debentures at any time at par. The Company accounts for its junior subordinated debt issued under USB Capital Trust II at fair value. The Company believes the election of fair value accounting for the junior subordinated debentures better reflects the true economic value of the debt instrument on the consolidated balance sheet. As of September 30, 2023, the rate paid on the junior subordinated debt issued under USB Capital Trust II is the forward 3-month SOFR plus 129 basis points, and is adjusted quarterly. At September 30, 2023, the Company performed a fair value measurement analysis on its junior subordinated debt using a cash flow model approach to determine its present value. The cash flow model approach utilizes the forward three-month SOFR curve to estimate future quarterly interest payments due over the life of the debt instrument. Cash flows were discounted at a rate based on current market rates for similar-term debt instruments and adjusted for additional credit and liquidity risks associated with the junior subordinated debt. The 7.23% discount rate used represents an investor yield based on current market assumptions. At September 30, 2023, the total cumulative gain recorded on the debt was $1.70 million. The net fair value calculation performed as of September 30, 2023 resulted in a net pretax gain adjustment of $29,000 for the nine months ended September 30, 2023 compared to a net pretax gain adjustment of $950,000 for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, the net $29,000 fair value gain adjustment was separately presented as a $553,000 loss, $390,000, net of tax, recognized on the consolidated statements of income, and a $523,000 gain, $368,000, net of tax, associated with the instrument-specific credit risk recognized in other comprehensive income. For the nine months ended September 30, 2022, the net $950,000 fair value gain adjustment was separately presented as a $2.5 million loss, $1.7 million, net of tax, recognized on the consolidated statements of income, and a $3.4 million gain, $2.4 million, net of tax, associated with the instrument-specific credit risk recognized in other comprehensive income. The Company calculated the change in the discounted cash flows based on updated market credit spreads for the periods indicated. The net fair value calculation performed as of September 30, 2023 resulted in a net pretax loss adjustment of $234,000 for the quarter ended September 30, 2023 compared to a net pretax gain adjustment of $225,000 for the quarter ended September 30, 2022. For the quarter ended September 30, 2023, the net $234,000 fair value loss adjustment was separately presented as a $811,000 loss, $571,000, net of tax, recognized on the consolidated statements of income, and a $576,000 gain, $406,000, net of tax, associated with the instrument-specific credit risk recognized in other comprehensive income. For the quarter ended September 30, 2022, the net $225,000 fair value gain adjustment was separately presented as a $600,000 loss, $423,000, net of tax, recognized on the consolidated statements of income, and a $825,000 gain, $581,000, net of tax, associated with the instrument-specific credit risk recognized in other comprehensive income. The Company calculated the change in the discounted cash flows based on updated market credit spreads for the periods indicated.
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Fair Value Measurements and Disclosure |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Disclosure | Fair Value Measurements and Disclosure The following summary disclosures are made in accordance with the guidance provided by ASC Topic 825, Fair Value Measurements and Disclosures, which requires the disclosure of fair value information for both on- and off-balance sheet financial instruments where it is practicable to estimate that value. This guidance clarifies the definition of fair value, describes methods used to appropriately measure fair value, and expands fair value disclosure requirements. Additionally, it is applicable to other accounting pronouncements requiring or permitting fair value measurements. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: Level 1, Level 2, and Level 3. Level 1 inputs are unadjusted quoted prices in active markets (as defined) for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, and reflect the reporting entity’s assumptions regarding the pricing of an asset or liability by a market participant, including assumptions about risk. The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized at the periods indicated:
The Company performs fair value measurements on certain assets and liabilities as the result of the application of current accounting guidelines. Some fair value measurements, such as those on investment securities and junior subordinated debt are performed on a recurring basis, while others, such as evaluations of loans, other real estate owned, goodwill and other intangibles, are performed on a nonrecurring basis. •Level 1 financial assets consist of money market funds and highly liquid mutual funds for which fair values are based on quoted market prices. •Level 2 financial assets include highly liquid debt instruments of U.S. government agencies, collateralized mortgage obligations, and debt obligations of states and political subdivisions, whose fair values are obtained from readily-available pricing sources for the identical or similar underlying security that may, or may not, be actively traded. •Level 3 financial assets include certain instruments where the assumptions may be made by the Company or third parties about assumptions that market participants would use in pricing the asset or liability. The Company recognizes transfers between Levels 1, 2, and 3, when a change in circumstances warrants a transfer. There were no transfers between fair value measurement classifications during the nine months ended September 30, 2023 or the nine months ended September 30, 2022. The following methods and assumptions were used in estimating the fair values of financial instruments measured at fair value on a recurring and non-recurring basis: Investment Securities - Available-for-sale and marketable equity security values are based on open-market price quotes obtained from reputable third-party brokers. Market pricing is based upon specific CUSIP identification for each individual security. To the extent there are observable prices in the market, the mid-point of the bid/ask price is used to determine the fair value of individual securities. If that data is not available for the last 30 days, a Level 2-type matrix pricing-approach, based on comparable securities in the market, is utilized. Level 2 pricing may include the use of a forward spread from the last observable trade or may use a proxy bond, such as a TBA mortgage, to determine the price for the security being valued. Changes in fair market value are recorded through other-accumulated-comprehensive-income as an unrecognized gain or loss on fair value. Individually-Evaluated Loans - Fair value measurements for individually-evaluated loans are performed pursuant to authoritative accounting guidance and are based upon either collateral values supported by third party appraisals or observed market prices. Collateral-dependent loans are measured for impairment using the fair value of the collateral. There were no individually-evaluated loans measured at fair value as of September 30, 2023 or December 31, 2022. Other Real Estate Owned - Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (OREO) are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized. No OREO properties were measured at fair value as of September 30, 2023 or December 31, 2022. Junior Subordinated Debt - The fair value of the junior subordinated debt is based on a discounted cash flow model utilizing observable market rates and credit characteristics for similar debt instruments. In its analysis, the Company uses characteristics that market participants would generally use, and considers factors specific to the liability and the principal, or most advantageous, market for the liability. Cash flows are discounted at a rate which incorporates a current market rate for similar-term debt instruments, adjusted for credit and liquidity risks associated with similar junior subordinated debt and circumstances unique to the Company. The Company believes that the subjective nature of these inputs, credit concerns in the capital markets, and inactivity in the trust preferred markets, limit the observability of market spreads, requiring the junior subordinated debt to be classified at a Level 3 fair value. The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2023:
The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2022:
There were no non-recurring fair value adjustments at September 30, 2023 or December 31, 2022. The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022:
Management believes that the credit risk-adjusted spread utilized in the fair value measurement of the junior subordinated debentures is indicative of the nonperformance risk premium a willing market participant would require under current, inactive market conditions. Management attributes the change in fair value of the junior subordinated debentures to market changes in the nonperformance expectations and pricing of this type of debt. Generally, an increase in the credit risk adjusted spread and/or a decrease in the forward three-month SOFR curve will result in a positive fair value adjustment and a decrease in the fair value measurement. Conversely, a decrease in the credit risk adjusted spread and/or an increase in the forward three-month SOFR curve will result in a negative fair value adjustment and an increase in the fair value measurement. The increase in discount rate between the periods ended September 30, 2023 and December 31, 2022, is primarily due to increases in rates for similar debt instruments. The following table provides a reconciliation of liabilities at fair value using Level 3 significant, unobservable inputs on a recurring basis:
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Goodwill and Intangible Assets |
9 Months Ended |
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Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible AssetsAt September 30, 2023, the Company held goodwill in the amount of $4.5 million in connection with various business combinations and purchases. This amount was unchanged from the balance of $4.5 million at December 31, 2022. The Company conducts impairment analysis on goodwill both annually and in the event of triggering events, if any. The Company performed an analysis of goodwill impairment and concluded goodwill was not impaired as of December 31, 2022, with no triggering events occurring through the period ended September 30, 2023. |
Accumulated Other Comprehensive Income (Loss) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income included in shareholders’ equity are as follows:
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Investment in York Monterey Properties |
9 Months Ended |
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Sep. 30, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in York Monterey Properties | Investment in York Monterey PropertiesAs of September 30, 2023 and December 31, 2022, the Bank’s investment in York Monterey Properties, Inc., totaled $5.1 million. York Monterey Properties, Inc., is included within the consolidated financial statements of the Company, with $4.6 million of the total investment recognized within the balance of other-real-estate-owned on the consolidated balance sheets. |
Commitments and Contingent Liabilities |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities Financial Instruments with Off-Balance Sheet Risk: The Company is party to financial instruments with off-balance sheet risk which arise in the normal course of business. These instruments, which may contain elements of credit risk, interest rate risk, and liquidity risk, include commitments to extend credit and standby letters of credit. The credit risks associated with these instruments are essentially the same as those involved in extending credit to customers and are represented by the contractual amount indicated in the table below:
Commitments to extend credit are agreements to lend to a customer, as long as conditions established in the contract have not been violated. These commitments are floating-rate instruments based on the current prime rate, and, in most cases, have fixed expiration dates. The Company evaluates each customer’s creditworthiness on a case-by-case basis, and the amount of collateral obtained is based on management’s credit evaluation. Collateral held varies but includes accounts receivable, inventory, leases, property, plant and equipment, residential real estate, and income-producing properties. As many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements of the Company. Standby letters of credit are generally unsecured and are issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company’s letters of credit are short-term guarantees and generally have terms from one month to three years. In the ordinary course of business, the Company may become involved in litigation arising out of its normal business activities. Management, after consultation with legal counsel, believes that the ultimate liability, if any, resulting from the disposition of such claims would not be material to the financial position of the Company.
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Organization and Summary of Significant Accounting and Reporting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications | Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or shareholders’ equity.
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Impact of New Financial Accounting Standards | Impact of New Financial Accounting Standards: In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326). This update replaces the incurred loss methodology with a current expected loss methodology, commonly referred to as CECL, which seeks to improve financial reporting by requiring timelier recording of credit losses on assets measured at amortized cost, such as loan receivables, held-to-maturity securities, and off-balance sheet exposures. The Update requires enhanced disclosures and judgments in estimating credit losses and also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. On January 1, 2023, the Company adopted ASC 326, Financial Instruments-Credit Losses, using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for the reporting periods beginning after January 1, 2023, are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. The adoption of this new standard required a cumulative adjustment to the allowance for credit losses, leading to an increase in the credit loss balance of $6.4 million and an increase in the reserve for unfunded loan commitments of $273,000, resulting in a combined adjustment to retained earnings of $4.7 million, net of a $1.9 million tax adjustment. The following table summarized the impact of the adoption of ASU 2016-13 by loan category:
Available-for-sale debt securities in an unrealized loss position are evaluated when the amortized cost of a security exceeds its fair value. If it is determined that it will be necessary to sell a security before the fair value increases to the amortized cost, the amortized cost will be written down to fair value through income. At that point, any previously recorded allowance for credit loss (ACL) would be written off and any additional impairment would be recognized through earnings. If it is believed that the Company will not be required to sell a security before the fair value recovers, a determination will be made as to whether or not the decline in fair value is the result of a credit loss or noncredit factors such as changes in current market rates. If it is determined that the decline is due to a credit loss, the amount recognized as the credit loss will be determined using a discounted cash flow approach. Cash flows expected to be collected would be discounted at the effective interest rate established at acquisition. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses would be recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform. This ASU was effective for all entities as of March 12, 2020, through December 31, 2022. However, the effective date was updated in ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the sunset date of Topic 848, and is currently set for December 31, 2024. The Company is in the process of evaluating the provisions of this ASU and its effects on our consolidated financial statements. The Company anticipates a minimal impact to junior subordinated debt and floating rate loans tied to LIBOR. In March 2022, FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures. This ASU provides new guidance on the treatment of troubled debt restructurings (TDRs) in relation to the adoption of the CECL model for the accounting for credit losses (see note above regarding ASU 2016-13). Previous accounting guidance related to troubled debt restructurings is eliminated and new disclosure requirements are adopted in regard to loan refinancing and restructurings made to borrowers experiencing financial difficulties under the assumption that the CECL model will capture credit losses related to troubled debt restructurings. New disclosures regarding gross write-offs for financing receivables by year of origination are also included in the update. This update has been adopted as of January 1, 2023. The Bank will no longer report troubled debt restructurings or classify loans as such. TDRs previously recognized have been incorporated into the CECL methodology as it applies to loan loss reserves as of January 1, 2023.
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Organization and Summary of Significant Accounting and Reporting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Impact of the Adoption of ASU 2016-13 by Loan Category | The following table summarized the impact of the adoption of ASU 2016-13 by loan category:
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Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Comparison of Amortized Cost and Fair Value of Securities Available for Sale | Following is a comparison of the amortized cost and fair value of securities available-for-sale, as of September 30, 2023 and December 31, 2022:
Proceeds and gross realized gains (losses) from sales of available-for-sale debt securities are shown below:
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Schedule of Contractual Maturities on Collateralized Mortgage Obligations | The amortized cost and fair value of securities available for sale at September 30, 2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay obligations with or without call or prepayment penalties. Contractual maturities on collateralized mortgage obligations cannot be anticipated due to allowed paydowns.
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Schedule of Temporarily Impaired Investment Securities | The following summarizes available-for-sale debt securities in an unrealized loss position for which a credit loss has not been recorded:
The following summarizes the number of available-for-sale debt securities in an unrealized loss position for which a credit loss has not been recorded:
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Loans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans | Loans, at amortized cost, are comprised the following:
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Summary of Amortized Cost of Delinquent Loans | The following is a summary of the amortized cost of delinquent loans at September 30, 2023:
The following is a summary of the amortized cost of delinquent loans at December 31, 2022:
The following table summarize the amortized cost of student loan aging for loans in repayment and forbearance:
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Schedule of Non-Accrual Loan Status and Loans Past Due Over 89 days Still Accruing | The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 89 days and still accruing:
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Schedule of Credit Quality Indicators for Outstanding Student Loans | The following table presents loans by class, net of deferred fees, by risk rating and period indicated as of September 30, 2023:
The following tables summarize the credit quality indicators for outstanding student loans:
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Schedule of Allowance for Credit Loses by Loan Category | The following summarizes the activity in the allowance for credit losses by loan category:
(1) There was no provision for unfunded loan commitments during the quarter.
(1) Includes a $135,000 provision for unfunded loan commitments.
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Schedule of Financial Instruments Owned and Pledged as Collateral | The following table presents the recorded investment in collateral-dependent loans by type of loan:
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Schedule of Loan Modifications | The following tables present loan modifications made to borrowers experiencing financial difficulties for the periods indicated:
The following table presents the financial effects of loan modifications made to borrower experiencing financial difficulties:
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Student Loans (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Credit Quality Indicators for Outstanding Student Loans | The following table presents loans by class, net of deferred fees, by risk rating and period indicated as of September 30, 2023:
The following tables summarize the credit quality indicators for outstanding student loans:
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Summary of the Amortized Cost of Student Loan Aging | The following is a summary of the amortized cost of delinquent loans at September 30, 2023:
The following is a summary of the amortized cost of delinquent loans at December 31, 2022:
The following table summarize the amortized cost of student loan aging for loans in repayment and forbearance:
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Deposits (Tables) |
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Deposits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits Summary | Deposits include the following:
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Short-term Borrowings/Other Borrowings (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The following table sets forth the Company’s credit lines, balances outstanding, and pledged collateral:
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Lease Expense and Supplemental Balance Sheet Information | The components of lease expense are as follows:
Supplemental information related to leases is as follows:
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Schedule of Maturities of Lease Liabilities | Maturities of lease liabilities are as follows:
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Supplemental Cash Flow Disclosures (Tables) |
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Disclosures |
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Net Income per Common Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Income Per Common Share | The following table provides a reconciliation of the numerator and the denominator of the basic EPS computation with the numerator and the denominator of the diluted EPS computation:
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Fair Value Measurements and Disclosure (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Financial Instruments | The table below is a summary of fair value estimates for financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized at the periods indicated:
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Schedule of Assets and Liabilities Measured at Fair Value on Recurring and Non-recurring Basis | The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2023:
The following tables summarize the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2022:
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Schedule of Description of the Valuation Technique, Unobservable Input, and Qualitative Information about the Unobservable Inputs for the Company's Assets and Liabilities Classified as Level 3 and Measured at Fair Value on a Recurring Basis | The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022:
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Schedule of Significant Unobservable Inputs (Level 3) on a Recurring Basis | The following table provides a reconciliation of liabilities at fair value using Level 3 significant, unobservable inputs on a recurring basis:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income included in shareholders’ equity are as follows:
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Commitments and Contingent Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Off-Balance Sheet Risks | The credit risks associated with these instruments are essentially the same as those involved in extending credit to customers and are represented by the contractual amount indicated in the table below:
|
Investment Securities - Contractual Maturities on Collateralized Mortgage Obligations (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Amortized Cost | ||
Due in one year or less | $ 20,134 | |
Due after one year through five years | 28,967 | |
Due after five years through ten years | 60,141 | |
Due after ten years | 2,458 | |
Collateralized mortgage obligations | 102,945 | |
Amortized Cost | 214,645 | $ 234,610 |
Fair Value (Carrying Amount) | ||
Due in one year or less | 19,854 | |
Due after one year through five years | 27,129 | |
Due after five years through ten years | 48,998 | |
Due after ten years | 2,456 | |
Collateralized mortgage obligations | 86,204 | |
Fair Value (Carrying Amount) | $ 184,641 | $ 207,545 |
Investment Securities - Proceeds and Gross Realized (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds from sales or calls | $ 0 | $ 0 | $ 0 | $ 15,676 |
Gross realized gains from sales or calls | 0 | 0 | 0 | 78 |
Gross realized losses from sales or calls | $ 0 | $ 0 | $ 0 | $ (48) |
Investment Securities - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Debt Securities, Available-for-sale [Line Items] | |||||
Loss on marketable equity securities | $ 92,000 | $ 149,000 | $ 99,000 | $ 458,000 | |
Held-to-maturity securities | 0 | 0 | $ 0 | ||
Investment securities | 0 | 0 | 0 | ||
Carrying Amount | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Fair value of available-for-sale securities pledged as collateral for FHLB borrowings | 73,800,000 | 73,800,000 | 78,800,000 | ||
Investment securities | 184,641,000 | 184,641,000 | 207,545,000 | ||
Estimated Fair Value | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Fair value of available-for-sale securities pledged as collateral for FHLB borrowings | 63,100,000 | 63,100,000 | 69,000,000 | ||
Investment securities | $ 184,641,000 | $ 184,641,000 | $ 207,545,000 |
Loans - Schedule of Investment in Collateral-Dependent Loans By Type of Loan (Details) - Asset Pledged as Collateral loan in Thousands, $ in Thousands |
Sep. 30, 2023
USD ($)
loan
|
Dec. 31, 2022
USD ($)
loan
|
---|---|---|
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Total Loans | $ | $ 13,486 | $ 14,544 |
Number of Collateral-Dependent Loans | loan | 5 | 6 |
Real estate construction and development loans | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Total Loans | $ | $ 13,096 | $ 14,436 |
Number of Collateral-Dependent Loans | loan | 4 | 4 |
Agricultural loans | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Total Loans | $ | $ 390 | $ 108 |
Number of Collateral-Dependent Loans | loan | 1 | 2 |
Loans - Reserve for Unfunded Commitments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Jun. 30, 2023 |
Jan. 02, 2023 |
Jan. 01, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
|
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||||
Allowance for losses | $ 15,649 | $ 10,063 | $ 15,649 | $ 10,063 | $ 16,110 | $ 10,182 | $ 9,907 | $ 9,333 | ||
Provision for Credit Losses | 0 | 607 | 587 | 1,217 | ||||||
Unfunded Loan Commitment | ||||||||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||||
Allowance for losses | 954 | 474 | 954 | 474 | $ 805 | |||||
Provision for Credit Losses | $ 0 | $ (17) | $ 135 | $ (210) | ||||||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||||
Allowance for losses | $ 6,367 | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Unfunded Loan Commitment | ||||||||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||||||||
Allowance for losses | $ 273 |
Loans - Schedule of Loan Modifications (Details) - Real estate construction and development loans - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total % of Loans Outstanding (in percent) | 0.17% | 0.17% |
Principal Forgiveness | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing receivable, modified period | $ 0 | $ 0 |
Term Extension | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing receivable, modified period | 1,700 | 1,700 |
Interest Rate Reduction | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing receivable, modified period | 0 | 0 |
Payment Delay | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing receivable, modified period | $ 0 | $ 0 |
Loans - Financial Effects of Loan Modifications (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
|
Real estate construction and development loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loan modification amount | $ 1,700 | $ 1,700 |
Student Loans - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Jun. 30, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Total Loans | $ 972,871,000 | $ 972,871,000 | $ 980,178,000 | |||||
Allowance for losses | 15,649,000 | $ 10,063,000 | 15,649,000 | $ 10,063,000 | $ 16,110,000 | 10,182,000 | $ 9,907,000 | $ 9,333,000 |
Financing receivable | 957,222,000 | 957,222,000 | 969,996,000 | |||||
Reversal of receivable | (11,921,000) | (12,730,000) | (37,368,000) | (32,577,000) | ||||
Write-off's | 603,000 | 464,000 | 1,587,000 | 828,000 | ||||
Student loan | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Total Loans | 39,614,000 | 39,614,000 | 42,130,000 | |||||
Allowance for losses | 5,600,000 | 5,600,000 | 2,600,000 | |||||
Financing receivable | 0 | 0 | $ 252,000 | |||||
Reversal of receivable | 102,000 | 86,000,000 | 187,000 | 100,000 | ||||
Write-off's | $ 603,000 | $ 457,000 | $ 1,600,000 | $ 810,000 |
Deposits (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Deposits [Abstract] | ||
Noninterest-bearing deposits | $ 386,258 | $ 481,629 |
Interest-bearing deposits: | ||
NOW and money market accounts | 409,193 | 499,861 |
Savings accounts | 120,353 | 125,946 |
Time deposits: | ||
Under $250,000 | 69,875 | 42,933 |
$250,000 and over | 1,952 | 15,115 |
Total interest-bearing deposits | 601,373 | 683,855 |
Total deposits | $ 987,631 | $ 1,165,484 |
Short-term Borrowings/Other Borrowings - Schedule of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Short-term Debt [Line Items] | ||
Balance outstanding | $ 17,000 | $ 0 |
Unsecured credit lines: | ||
Short-term Debt [Line Items] | ||
Credit limit | 120,000 | 120,000 |
Federal Home Loan Bank: | ||
Short-term Debt [Line Items] | ||
Credit limit | 135,302 | 2,151 |
Balance outstanding | 125,000 | 0 |
Collateral pledged | 238,320 | 2,151 |
Federal Reserve Bank: | ||
Short-term Debt [Line Items] | ||
Credit limit | 463,556 | 435,599 |
Balance outstanding | 0 | 0 |
Collateral pledged | $ 618,147 | $ 590,427 |
Short-term Borrowings/Other Borrowings - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Federal Home Loan Bank: | ||
Short-term Debt [Line Items] | ||
Collateral pledged | $ 2.1 | $ 2.2 |
Loan balances | 236.3 | |
Federal Reserve Bank: | ||
Short-term Debt [Line Items] | ||
Collateral pledged | 4.2 | $ 590.4 |
Loan balances | $ 614.0 |
Leases - Narrative (Details) - contract |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Leases [Abstract] | ||
Operating lease, number of contracts | 13 | 13 |
Financing lease, number of contracts | 0 | 0 |
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Leases [Abstract] | ||||
Operating lease expense | $ 178 | $ 185 | $ 533 | $ 553 |
Variable lease expense | 0 | 0 | 0 | 0 |
Total | $ 178 | $ 185 | $ 533 | $ 553 |
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 533 | $ 553 |
Weighted-average remaining lease term in years for operating leases | 4 years 2 months 26 days | 4 years 7 months 2 days |
Weighted-average discount rate for operating leases | 5.10% | 5.12% |
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
2023 | $ 640 | |
2024 | 450 | |
2025 | 218 | |
2026 | 122 | |
2027 | 110 | |
Thereafter | 237 | |
Total undiscounted cash flows | 1,777 | |
Less: present value discount | (178) | |
Present value of net future minimum lease payments | $ 1,599 | $ 2,093 |
Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Cash paid during the period for: | ||||
Interest | $ 7,853 | $ 1,907 | ||
Income taxes | 0 | 4,825 | ||
Noncash investing activities: | ||||
Impact of ASC 326 CECL adoption | 6,367 | 0 | ||
Unrealized gain on unrecognized post retirement costs | 66 | 67 | ||
Unrealized loss on available for sale securities | (2,939) | (29,232) | ||
Unrealized gain on junior subordinated debentures | $ 406 | $ 581 | 523 | 3,419 |
Cash dividend declared | $ 2,056 | $ 1,874 |
Dividends on Common Stock (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 26, 2023 |
Sep. 30, 2023 |
|
Equity [Abstract] | ||
Dividends declared on common stock (in usd per share) | $ 0.12 | |
Transfer to dividends payable | $ 2,100,000 | |
Authorized repurchase amount, common stock | $ 3,000,000 |
Net Income per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 3,853 | $ 4,467 | $ 14,395 | $ 10,345 |
Weighted average shares issued (in shares) | 17,132,080 | 17,042,479 | 17,103,982 | 17,036,460 |
Add: dilutive effect of stock options (in shares) | 8,124 | 21,468 | 11,893 | 21,178 |
Weighted average shares outstanding adjusted for potential dilution (in shares) | 17,140,204 | 17,063,947 | 17,115,875 | 17,057,638 |
Basic earnings per share (in usd per share) | $ 0.22 | $ 0.26 | $ 0.84 | $ 0.61 |
Diluted earnings per share (in usd per share) | $ 0.22 | $ 0.26 | $ 0.84 | $ 0.61 |
Anti-dilutive stock options excluded from earnings per share calculation (in shares) | 90,000 | 93,000 | 98,000 | 93,000 |
Taxes on Income (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Income Tax Disclosure [Abstract] | |||||
Deferred tax assets, valuation allowance | $ 0 | $ 0 | $ 0 | ||
Provision for taxes on income | $ 1,557,000 | $ 1,837,000 | $ 5,878,000 | $ 4,199,000 | |
Effective income tax rate, percent | 28.80% | 29.10% | 29.00% | 28.90% |
Fair Value Measurements and Disclosure - Company's Assets Measured at Fair Value On a Recurring Basis (Details) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Discounted cash flow | Market credit risk adjusted spreads | Weighted average | Junior Subordinated Debt | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Weighted average inputs (percent) | 0.0723 | 0.0663 |
Fair Value Measurements and Disclosure - Reconciliation of Assets and Liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Junior Subordinated Debt: | ||||
Gross gain related to changes in instrument specific credit risk | $ 234 | $ (225) | $ (29) | $ (950) |
Junior Subordinated Debt: | ||||
Junior Subordinated Debt: | ||||
Beginning balance | 10,719 | 10,489 | 10,883 | 11,189 |
Gross loss included in earnings | 811 | 600 | 553 | 2,469 |
Gross gain related to changes in instrument specific credit risk | (576) | (825) | (523) | (3,419) |
Change in accrued interest | 12 | 41 | 53 | 66 |
Ending balance | 10,966 | 10,305 | 10,966 | 10,305 |
The amount of total loss for the period included in earnings attributable to the change in unrealized gains or losses relating to liabilities still held at the reporting date | $ 811 | $ 600 | $ 553 | $ 2,469 |
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 4,488 | $ 4,488 |
Investment in York Monterey Properties (Details) - York Monterey Properties Inc - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Real Estate Properties [Line Items] | ||
Investment in bank subsidiary | $ 5.1 | $ 5.1 |
Other real estate owned | ||
Real Estate Properties [Line Items] | ||
Investment in bank subsidiary | $ 4.6 | $ 4.6 |
Commitments and Contingent Liabilities (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Other Commitments [Line Items] | ||
Minimum term of guarantees | 1 month | |
Maximum term of guarantees | 3 years | |
Commitments to extend credit | ||
Other Commitments [Line Items] | ||
Fair value, concentration of risk, commitments | $ 193,269 | $ 190,183 |
Standby letters of credit | ||
Other Commitments [Line Items] | ||
Fair value, concentration of risk, commitments | $ 3,081 | $ 1,570 |
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