☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TWO RIVER BANCORP | ||
(Exact Name of Registrant as Specified in Its Charter) |
New Jersey | 20-3700861 | |
(State of Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
766 Shrewsbury Avenue, Tinton Falls, New Jersey | 07724 | |
(Address of Principal Executive Offices) | (Zip Code) |
(732) 389-8722 | ||
(Registrant’s Telephone Number, Including Area Code) |
(Former name, former address and former fiscal year, if changed since last report) |
Large accelerated filer | ☐ | Accelerated filer | ☒ |
Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
Emerging growth company | ☐ |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, no par value per share | TRCB | The NASDAQ Stock Market LLC |
Page | ||||
Consolidated Balance Sheets (unaudited) at March 31, 2019 and December 31, 2018 | ||||
Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2019 and 2018 | ||||
Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2019 and 2018 | ||||
Consolidated Statements of Shareholders' Equity (unaudited) for the three months ended March 31, 2019 and 2018 | ||||
Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2019 and 2018 | ||||
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Cash and due from banks | $ | 15,945 | $ | 24,067 | |||
Interest-bearing deposits in bank | 46,743 | 24,059 | |||||
Cash and cash equivalents | 62,688 | 48,126 | |||||
Securities available for sale, at fair value (amortized cost of $24,061 and $25,017 at March 31, 2019 and December 31, 2018, respectively) | 23,552 | 24,407 | |||||
Securities held to maturity, at amortized cost (fair value of $46,298 and $47,266 at March 31, 2019 and December 31, 2018, respectively) | 45,838 | 47,455 | |||||
Equity securities, at fair value | 2,497 | 2,451 | |||||
Restricted investments, at cost | 6,017 | 6,082 | |||||
Loans held for sale | 1,496 | 1,496 | |||||
Loans | 948,493 | 921,301 | |||||
Allowance for loan losses | (11,582 | ) | (11,398 | ) | |||
Net loans | 936,911 | 909,903 | |||||
Other real estate owned ("OREO") | 585 | 585 | |||||
Bank owned life insurance | 22,060 | 22,098 | |||||
Premises and equipment, net | 6,173 | 5,917 | |||||
Operating lease right-of-use assets | 4,997 | — | |||||
Accrued interest receivable | 2,793 | 2,583 | |||||
Goodwill | 18,109 | 18,109 | |||||
Other assets | 6,805 | 7,207 | |||||
Total Assets | $ | 1,140,521 | $ | 1,096,419 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deposits: | |||||||
Non-interest-bearing | $ | 177,938 | $ | 176,655 | |||
Interest-bearing | 781,717 | 740,699 | |||||
Total Deposits | 959,655 | 917,354 | |||||
Securities sold under agreements to repurchase | 15,185 | 19,402 | |||||
FHLB and other borrowings | 20,700 | 22,500 | |||||
Subordinated debt | 9,932 | 9,923 | |||||
Accrued interest payable | 153 | 119 | |||||
Operating lease liabilities | 5,127 | — | |||||
Other liabilities | 10,613 | 10,623 | |||||
Total Liabilities | 1,021,365 | 979,921 | |||||
Shareholders' Equity | |||||||
Preferred stock, no par value; 6,500,000 shares authorized, no shares issued and outstanding | — | — | |||||
Common stock, no par value; 25,000,000 shares authorized; | |||||||
Issued – 8,996,545 and 8,935,437 at March 31, 2019 and December 31, 2018, respectively | |||||||
Outstanding – 8,668,100 and 8,606,992 at March 31, 2019 and December 31, 2018, respectively | 80,759 | 80,481 | |||||
Retained earnings | 41,416 | 39,109 | |||||
Treasury stock, at cost; 328,445 shares at March 31, 2019 and December 31, 2018 | (2,647 | ) | (2,647 | ) | |||
Accumulated other comprehensive loss | (372 | ) | (445 | ) | |||
Total Shareholders' Equity | 119,156 | 116,498 | |||||
Total Liabilities and Shareholders’ Equity | $ | 1,140,521 | $ | 1,096,419 |
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Interest Income | ||||||||
Loans, including fees | $ | 11,312 | $ | 9,821 | ||||
Securities: | ||||||||
Taxable | 331 | 297 | ||||||
Tax-exempt | 239 | 282 | ||||||
Interest-bearing deposits | 187 | 67 | ||||||
Total Interest Income | 12,069 | 10,467 | ||||||
Interest Expense | ||||||||
Deposits | 2,418 | 1,358 | ||||||
Securities sold under agreements to repurchase | 11 | 14 | ||||||
FHLB and other borrowings | 132 | 130 | ||||||
Subordinated debt | 165 | 165 | ||||||
Total Interest Expense | 2,726 | 1,667 | ||||||
Net Interest Income | 9,343 | 8,800 | ||||||
Provision for Loan Losses | 425 | 400 | ||||||
Net Interest Income after Provision for Loan Losses | 8,918 | 8,400 | ||||||
Non-Interest Income | ||||||||
Service fees on deposit accounts | 166 | 238 | ||||||
Mortgage banking | 280 | 338 | ||||||
Other loan fees | 160 | 111 | ||||||
Earnings from investment in bank owned life insurance | 143 | 130 | ||||||
Gain on sale of SBA loans | 206 | 331 | ||||||
Other income | 202 | 162 | ||||||
Total Non-Interest Income | 1,157 | 1,310 | ||||||
Non-Interest Expenses | ||||||||
Salaries and employee benefits | 3,841 | 3,885 | ||||||
Occupancy and equipment | 1,042 | 1,090 | ||||||
Professional | 434 | 340 | ||||||
Insurance | 65 | 57 | ||||||
FDIC insurance and assessments | 124 | 123 | ||||||
Advertising | 70 | 60 | ||||||
Data processing | 188 | 152 | ||||||
Outside services fees | 54 | 81 | ||||||
OREO expenses, impairments and sales, net | 4 | (1 | ) | |||||
Loan workout expenses | (8 | ) | 51 | |||||
Other operating | 481 | 389 | ||||||
Total Non-Interest Expenses | 6,295 | 6,227 | ||||||
Income before Income Taxes | 3,780 | 3,483 | ||||||
Income tax expense | 997 | 807 | ||||||
Net Income | $ | 2,783 | $ | 2,676 | ||||
Earnings Per Common Share: | ||||||||
Basic | $ | 0.32 | $ | 0.32 | ||||
Diluted | $ | 0.32 | $ | 0.31 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 8,583 | 8,447 | ||||||
Diluted | 8,712 | 8,675 |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Net income | $ | 2,783 | $ | 2,676 | |||
Other comprehensive income (loss): | |||||||
Unrealized holdings gains (losses) on securities available for sale, net of income tax expense (benefit) 2019: $28, 2018: ($54) | 73 | (139 | ) | ||||
Other comprehensive income (loss) | 73 | (139 | ) | ||||
Total comprehensive income | $ | 2,856 | $ | 2,537 |
Common Stock | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||||||
Outstanding Shares | Amount | Retained Earnings | Treasury Stock | |||||||||||||||||||
Balance, January 1, 2019 | 8,606,992 | $ | 80,481 | $ | 39,109 | $ | (2,647 | ) | $ | (445 | ) | $ | 116,498 | |||||||||
Net income | — | — | 2,783 | — | — | 2,783 | ||||||||||||||||
Other comprehensive income | — | — | — | — | 73 | 73 | ||||||||||||||||
Stock-based compensation expense | — | 83 | — | — | — | 83 | ||||||||||||||||
Cash dividends on common stock ($0.055 per share) | — | — | (476 | ) | — | — | (476 | ) | ||||||||||||||
Options exercised | 47,952 | 179 | — | — | — | 179 | ||||||||||||||||
Employee stock purchase program | 1,006 | 16 | — | — | — | 16 | ||||||||||||||||
Restricted stock and other awards | 12,150 | — | — | — | — | — | ||||||||||||||||
Balance, March 31, 2019 | 8,668,100 | $ | 80,759 | $ | 41,416 | $ | (2,647 | ) | $ | (372 | ) | $ | 119,156 | |||||||||
Balance, January 1, 2018 | 8,470,030 | $ | 79,678 | $ | 29,593 | $ | (2,396 | ) | $ | (304 | ) | $ | 106,571 | |||||||||
Net income | — | — | 2,676 | — | — | 2,676 | ||||||||||||||||
Other comprehensive loss | — | — | — | — | (139 | ) | (139 | ) | ||||||||||||||
Stock-based compensation expense | — | 65 | — | — | — | 65 | ||||||||||||||||
Cash dividends on common stock ($0.045 per share) | — | — | (382 | ) | — | — | (382 | ) | ||||||||||||||
Options exercised | 45,730 | 172 | — | — | — | 172 | ||||||||||||||||
AOCI reclassification related to Tax Reform | — | — | 59 | — | (59 | ) | — | |||||||||||||||
AOCI reclassification due to adoption of ASU 2016-01 | — | — | (39 | ) | — | 39 | — | |||||||||||||||
Employee stock purchase program | 972 | 17 | — | — | — | 17 | ||||||||||||||||
Restricted stock and other awards | 8,400 | — | — | — | — | — | ||||||||||||||||
Shares forfeited | (500 | ) | — | — | — | — | — | |||||||||||||||
Balance, March 31, 2018 | 8,524,632 | $ | 79,932 | $ | 31,907 | $ | (2,396 | ) | $ | (463 | ) | $ | 108,980 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Cash Flows From Operating Activities | |||||||
Net income | $ | 2,783 | $ | 2,676 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 148 | 166 | |||||
Provision for loan losses | 425 | 400 | |||||
Amortization of subordinated debt issuance costs | 9 | 8 | |||||
Net amortization of securities premiums and discounts | 152 | 186 | |||||
Earnings from investment in bank owned life insurance | (126 | ) | (130 | ) | |||
Proceeds from sale of mortgage loans held for sale | 11,022 | 11,830 | |||||
Origination of mortgage loans held for sale | (10,819 | ) | (11,963 | ) | |||
Gain on sale of mortgage loans held for sale | (203 | ) | (201 | ) | |||
Gain on sale of loans transferred from held for investment to held for sale | (37 | ) | (100 | ) | |||
Stock-based compensation expense | 83 | 65 | |||||
Death benefit on bank owned life insurance | (17 | ) | — | ||||
Proceeds from sale of SBA loans held for sale | 3,319 | 1,412 | |||||
Origination of SBA loans held for sale | (3,113 | ) | — | ||||
Gain from sale of SBA loans held for sale | (206 | ) | (331 | ) | |||
Unrealized (gain) loss on equity securities | (31 | ) | 40 | ||||
Net non-cash operating lease right-of-use assets and lease liabilities | 130 | — | |||||
Decrease (increase) in assets: | |||||||
Accrued interest receivable | (210 | ) | 62 | ||||
Other assets | 359 | 25 | |||||
Increase (decrease) in liabilities: | |||||||
Accrued interest payable | 34 | (1 | ) | ||||
Other liabilities | (10 | ) | 614 | ||||
Net Cash Provided by Operating Activities | 3,692 | 4,758 | |||||
Cash Flows From Investing Activities | |||||||
Purchase of securities available for sale | — | (2,996 | ) | ||||
Purchase of securities held to maturity | — | (598 | ) | ||||
Proceeds from repayments, calls and maturities of securities available for sale | 919 | 1,048 | |||||
Proceeds from repayments, calls and maturities of securities held to maturity | 1,502 | 668 | |||||
Proceeds from sale of loans transferred from held for investment to held for sale | 1,973 | 5,080 | |||||
Net increase in loans | (29,369 | ) | (26,539 | ) | |||
Purchases of premises and equipment | (404 | ) | (84 | ) | |||
Purchase of restricted investments, net | 65 | (167 | ) | ||||
Proceeds from death benefit of bank owned life insurance | 181 | — | |||||
Net Cash Used In Investing Activities | (25,133 | ) | (23,588 | ) | |||
Cash Flows From Financing Activities | |||||||
Net increase in deposits | 42,301 | 9,347 | |||||
Net decrease in securities sold under agreements to repurchase | (4,217 | ) | (8,648 | ) | |||
Proceeds from FHLB and other borrowings | 20,000 | — | |||||
Repayment of FHLB and other borrowings | (21,800 | ) | (1,300 | ) | |||
Cash dividends paid – common stock | (476 | ) | (382 | ) | |||
Proceeds from employee stock purchase plan | 16 | 17 | |||||
Proceeds from exercise of stock options | 179 | 172 | |||||
Net Cash Provided by (Used In) Financing Activities | 36,003 | (794 | ) | ||||
Net Increase (Decrease) in Cash and Cash Equivalents | 14,562 | (19,624 | ) | ||||
Cash and Cash Equivalents – Beginning | 48,126 | 48,219 | |||||
Cash and Cash Equivalents - Ending | $ | 62,688 | $ | 28,595 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Supplementary cash flow information: | |||||||
Interest paid | $ | 2,692 | $ | 1,668 | |||
Income taxes paid | $ | 4 | $ | 7 | |||
Supplemental schedule of non-cash activities: | |||||||
Transfer of loans held for investment to loans held for sale | $ | 1,936 | $ | 4,980 |
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
(Dollars in Thousands) | ||||||||
Non-Interest Income | ||||||||
In-scope of Topic 606 | ||||||||
Service fees on deposit accounts | $ | 166 | $ | 238 | ||||
Other income | 145 | 133 | ||||||
Non-Interest Income (in-scope of Topic 606) | 311 | 371 | ||||||
Non-Interest Income (out-of-scope of Topic 606) | 846 | 939 | ||||||
Total Non-Interest Income | $ | 1,157 | $ | 1,310 |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
(In Thousands, Except Per Share Data) | |||||||
Net income | $ | 2,783 | $ | 2,676 | |||
Weighted average common shares outstanding – Basic | 8,583 | 8,447 | |||||
Effect of dilutive securities, stock options and restricted stock | 129 | 228 | |||||
Weighted average common shares outstanding – Diluted | 8,712 | 8,675 | |||||
Basic earnings per common share | $ | 0.32 | $ | 0.32 | |||
Diluted earnings per common share | $ | 0.32 | $ | 0.31 |
(In Thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
March 31, 2019: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agency securities | $ | 11,509 | $ | 8 | $ | (143 | ) | $ | 11,374 | |||||||
Municipal securities | 485 | 1 | — | 486 | ||||||||||||
U.S. Government-sponsored enterprises (“GSE”) – residential mortgage-backed securities | 5,704 | 1 | (136 | ) | 5,569 | |||||||||||
U.S. Government collateralized residential mortgage obligations | 4,364 | 7 | (170 | ) | 4,201 | |||||||||||
Corporate debt securities, primarily financial institutions | 1,999 | 1 | (78 | ) | 1,922 | |||||||||||
Total securities available for sale | $ | 24,061 | $ | 18 | $ | (527 | ) | $ | 23,552 | |||||||
Total equity securities | $ | 2,574 | $ | — | $ | (77 | ) | $ | 2,497 | |||||||
Securities held to maturity: | ||||||||||||||||
Municipal securities | $ | 35,203 | $ | 771 | $ | (3 | ) | $ | 35,971 | |||||||
GSE – Residential mortgage-backed securities | 7,130 | — | (125 | ) | 7,005 | |||||||||||
U.S. Government collateralized residential mortgage obligations | 1,677 | — | (55 | ) | 1,622 | |||||||||||
Corporate debt securities, primarily financial institutions | 1,828 | — | (128 | ) | 1,700 | |||||||||||
Total securities held to maturity | $ | 45,838 | $ | 771 | $ | (311 | ) | $ | 46,298 |
(In Thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
December 31, 2018: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agency securities | $ | 11,800 | $ | 5 | $ | (170 | ) | $ | 11,635 | |||||||
Municipal securities | 487 | — | — | 487 | ||||||||||||
GSE – residential mortgage-backed securities | 6,131 | 1 | (185 | ) | 5,947 | |||||||||||
U.S. Government collateralized residential mortgage obligations | 4,600 | 1 | (178 | ) | 4,423 | |||||||||||
Corporate debt securities, primarily financial institutions | 1,999 | 3 | (87 | ) | 1,915 | |||||||||||
Total securities available for sale | $ | 25,017 | $ | 10 | $ | (620 | ) | $ | 24,407 | |||||||
Total equity securities | $ | 2,559 | $ | — | $ | (108 | ) | $ | 2,451 | |||||||
Securities held to maturity: | ||||||||||||||||
Municipal securities | $ | 36,436 | $ | 389 | $ | (111 | ) | $ | 36,714 | |||||||
GSE – residential mortgage-backed securities | 7,423 | — | (211 | ) | 7,212 | |||||||||||
U.S. Government collateralized residential mortgage obligations | 1,769 | — | (57 | ) | 1,712 | |||||||||||
Corporate debt securities, primarily financial institutions | 1,827 | — | (199 | ) | 1,628 | |||||||||||
Total securities held to maturity | $ | 47,455 | $ | 389 | $ | (578 | ) | $ | 47,266 |
Available for Sale | Held to Maturity | |||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Due in one year or less | $ | 3,751 | $ | 3,739 | $ | 4,525 | $ | 4,537 | ||||||||
Due in one year through five years | 5,167 | 5,152 | 1,824 | 1,875 | ||||||||||||
Due in five years through ten years | 1,213 | 1,185 | 7,278 | 7,352 | ||||||||||||
Due after ten years | 3,862 | 3,706 | 23,404 | 23,907 | ||||||||||||
Sub-total | 13,993 | 13,782 | 37,031 | 37,671 | ||||||||||||
GSE – residential mortgage-backed securities | 5,704 | 5,569 | 7,130 | 7,005 | ||||||||||||
U.S. Government collateralized residential mortgage obligations | 4,364 | 4,201 | 1,677 | 1,622 | ||||||||||||
Total | $ | 24,061 | $ | 23,552 | $ | 45,838 | $ | 46,298 |
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
March 31, 2019: | (In Thousands) | |||||||||||||||||||||||
U.S. Government agency securities | $ | — | $ | — | $ | 9,930 | $ | (143 | ) | $ | 9,930 | $ | (143 | ) | ||||||||||
Municipal securities | — | — | 2,844 | (3 | ) | 2,844 | (3 | ) | ||||||||||||||||
GSE – residential mortgage-backed securities | 1,333 | (1 | ) | 11,114 | (260 | ) | 12,447 | (261 | ) | |||||||||||||||
U.S. Government collateralized residential mortgage obligations | 121 | — | 4,931 | (225 | ) | 5,052 | (225 | ) | ||||||||||||||||
Corporate debt securities, primarily financial institutions | 499 | (1 | ) | 2,622 | (205 | ) | 3,121 | (206 | ) | |||||||||||||||
Total temporarily impaired securities | $ | 1,953 | $ | (2 | ) | $ | 31,441 | $ | (836 | ) | $ | 33,394 | $ | (838 | ) |
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
December 31, 2018: | (In Thousands) | |||||||||||||||||||||||
U.S. Government agency securities | $ | 4,842 | $ | (72 | ) | $ | 5,470 | $ | (98 | ) | $ | 10,312 | $ | (170 | ) | |||||||||
Municipal securities | 5,227 | (24 | ) | 8,378 | (87 | ) | 13,605 | (111 | ) | |||||||||||||||
GSE – residential mortgage-backed securities | 1,330 | (10 | ) | 11,675 | (386 | ) | 13,005 | (396 | ) | |||||||||||||||
U.S. Government collateralized residential mortgage obligations | 146 | — | 5,938 | (235 | ) | 6,084 | (235 | ) | ||||||||||||||||
Corporate debt securities, primarily financial institutions | 493 | (8 | ) | 2,548 | (278 | ) | 3,041 | (286 | ) | |||||||||||||||
Total temporarily impaired securities | $ | 12,038 | $ | (114 | ) | $ | 34,009 | $ | (1,084 | ) | $ | 46,047 | $ | (1,198 | ) |
1. | The loan’s observable market price; |
2. | The fair value of the underlying collateral; or |
3. | The present value (PV) of expected future cash flows. |
1. | Changes in lending policy and procedures, including changes in underwriting standards and collection practices not previously considered in estimating credit losses. |
2. | Changes in relevant economic and business conditions. |
3. | Changes in nature and volume of the loan portfolio and in the terms of loans. |
4. | Changes in experience, ability and depth of lending management and staff. |
5. | Changes in the volume and severity of past due loans, the volume of non-accrual loans and the volume and severity of adversely classified loans. |
6. | Changes in the quality of the loan review system. |
7. | Changes in the value of underlying collateral for collateral-dependent loans. |
8. | The existence and effect of any concentration of credit and changes in the level of such concentrations. |
9. | The effect of other external forces such as competition, legal and regulatory requirements on the level of estimated credit losses in the existing portfolio. |
March 31, | December 31, | |||||||
2019 | 2018 | |||||||
(In Thousands) | ||||||||
Commercial and industrial | $ | 112,157 | $ | 109,362 | ||||
Real estate – construction | 140,279 | 144,865 | ||||||
Real estate – commercial | 577,270 | 552,549 | ||||||
Real estate – residential | 89,455 | 84,123 | ||||||
Consumer | 30,122 | 31,144 | ||||||
949,283 | 922,043 | |||||||
Allowance for loan losses | (11,582 | ) | (11,398 | ) | ||||
Net unearned fees | (790 | ) | (742 | ) | ||||
Net Loans | $ | 936,911 | $ | 909,903 |
30-59 Days Past Due | 60-89 Days Past Due | 90 Days & Greater | Total Past Due | Current | Total Loans Receivable | Loans Receivable >90 Days and Accruing | ||||||||||||||||||||||
March 31, 2019: | (In Thousands) | |||||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | 600 | $ | 600 | $ | 111,557 | $ | 112,157 | $ | — | ||||||||||||||
Real estate – construction | — | — | 2,833 | 2,833 | 137,446 | 140,279 | — | |||||||||||||||||||||
Real estate – commercial | — | — | 54 | 54 | 577,216 | 577,270 | — | |||||||||||||||||||||
Real estate – residential | 901 | — | 227 | 1,128 | 88,327 | 89,455 | — | |||||||||||||||||||||
Consumer | 117 | — | 194 | 311 | 29,811 | 30,122 | — | |||||||||||||||||||||
Total | $ | 1,018 | $ | — | $ | 3,908 | $ | 4,926 | $ | 944,357 | $ | 949,283 | $ | — |
30-59 Days Past Due | 60-89 Days Past Due | 90 Days & Greater | Total Past Due | Current | Total Loans Receivable | Loans Receivable >90 Days and Accruing | ||||||||||||||||||||||
December 31, 2018: | (In Thousands) | |||||||||||||||||||||||||||
Commercial and industrial | $ | 100 | $ | — | $ | 765 | $ | 865 | $ | 108,497 | $ | 109,362 | $ | — | ||||||||||||||
Real estate – construction | 3,575 | — | 150 | 3,725 | 141,140 | 144,865 | — | |||||||||||||||||||||
Real estate – commercial | 563 | — | 54 | 617 | 551,932 | 552,549 | — | |||||||||||||||||||||
Real estate – residential | — | 564 | 227 | 791 | 83,332 | 84,123 | — | |||||||||||||||||||||
Consumer | — | — | 194 | 194 | 30,950 | 31,144 | — | |||||||||||||||||||||
Total | $ | 4,238 | $ | 564 | $ | 1,390 | $ | 6,192 | $ | 915,851 | $ | 922,043 | $ | — |
March 31, | December 31, | |||||||
2019 | 2018 | |||||||
(In Thousands) | ||||||||
Commercial and industrial | $ | 600 | $ | 765 | ||||
Real estate – construction | 2,833 | 150 | ||||||
Real estate – commercial | 54 | 54 | ||||||
Real estate – residential | 227 | 227 | ||||||
Consumer | 194 | 194 | ||||||
Total | $ | 3,908 | $ | 1,390 |
As of March 31, 2019 | For the three months ended March 31, 2019 | |||||||||||||||||||
Recorded Investment, Net of Charge-offs | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||
Commercial and industrial | $ | 3,922 | $ | 3,922 | $ | — | $ | 3,862 | $ | 43 | ||||||||||
Real estate – construction | 5,765 | 6,007 | — | 5,884 | 34 | |||||||||||||||
Real estate – commercial | 166 | 166 | — | 167 | 1 | |||||||||||||||
Real estate – residential | 587 | 587 | — | 588 | 5 | |||||||||||||||
Consumer | 194 | 194 | — | 194 | — | |||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Real estate – construction | — | — | — | — | — | |||||||||||||||
Real estate – commercial | — | — | — | — | — | |||||||||||||||
Real estate – residential | — | — | — | — | — | |||||||||||||||
Consumer | — | — | — | — | — | |||||||||||||||
Total: | ||||||||||||||||||||
Commercial and industrial | $ | 3,922 | $ | 3,922 | $ | — | $ | 3,862 | $ | 43 | ||||||||||
Real estate – construction | 5,765 | 6,007 | — | 5,884 | 34 | |||||||||||||||
Real estate – commercial | 166 | 166 | — | 167 | 1 | |||||||||||||||
Real estate – residential | 587 | 587 | — | 588 | 5 | |||||||||||||||
Consumer | 194 | 194 | — | 194 | — | |||||||||||||||
Total | $ | 10,634 | $ | 10,876 | $ | — | $ | 10,695 | $ | 83 |
As of December 31, 2018 | For the three months ended March 31, 2018 | |||||||||||||||||||
Recorded Investment, Net of Charge-offs | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||
Commercial and industrial | $ | 4,200 | $ | 4,200 | $ | — | $ | 3,203 | $ | 33 | ||||||||||
Real estate – construction | 3,082 | 3,082 | — | 3,145 | 33 | |||||||||||||||
Real estate – commercial | 168 | 168 | — | 334 | 2 | |||||||||||||||
Real estate – residential | 589 | 589 | — | 1,085 | 5 | |||||||||||||||
Consumer | 194 | 194 | 234 | — | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Real estate – construction | — | — | — | — | — | |||||||||||||||
Real estate – commercial | — | — | — | — | — | |||||||||||||||
Real estate – residential | — | — | — | — | — | |||||||||||||||
Consumer | — | — | — | — | — | |||||||||||||||
Total: | ||||||||||||||||||||
Commercial and industrial | $ | 4,200 | $ | 4,200 | $ | — | $ | 3,203 | $ | 33 | ||||||||||
Real estate – construction | 3,082 | 3,082 | — | 3,145 | 33 | |||||||||||||||
Real estate – commercial | 168 | 168 | — | 334 | 2 | |||||||||||||||
Real estate – residential | 589 | 589 | — | 1,085 | 5 | |||||||||||||||
Consumer | 194 | 194 | 234 | — | ||||||||||||||||
Total | $ | 8,233 | $ | 8,233 | $ | — | $ | 8,001 | $ | 73 |
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
March 31, 2019: | ||||||||||||||||||||
Commercial and industrial | $ | 107,647 | $ | 116 | $ | 4,394 | $ | — | $ | 112,157 | ||||||||||
Real estate – construction | 134,514 | 1,569 | 4,196 | — | 140,279 | |||||||||||||||
Real estate – commercial | 573,886 | 2,656 | 728 | — | 577,270 | |||||||||||||||
Real estate – residential | 89,228 | — | 227 | — | 89,455 | |||||||||||||||
Consumer | 29,762 | — | 360 | — | 30,122 | |||||||||||||||
Total | $ | 935,037 | $ | 4,341 | $ | 9,905 | $ | — | $ | 949,283 |
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
December 31, 2018: | ||||||||||||||||||||
Commercial and industrial | $ | 104,557 | $ | 126 | $ | 4,679 | $ | — | $ | 109,362 | ||||||||||
Real estate – construction | 138,858 | 1,577 | 4,430 | — | 144,865 | |||||||||||||||
Real estate – commercial | 549,083 | 2,722 | 744 | — | 552,549 | |||||||||||||||
Real estate – residential | 83,896 | — | 227 | — | 84,123 | |||||||||||||||
Consumer | 30,782 | — | 362 | — | 31,144 | |||||||||||||||
Total | $ | 907,176 | $ | 4,425 | $ | 10,442 | $ | — | $ | 922,043 |
Allowance for Loan Losses | Loans Receivable | |||||||||||||||||||||||
Balance | Balance Related to Loans Individually Evaluated for Impairment | Balance Related to Loans Collectively Evaluated for Impairment | Balance | Balance Individually Evaluated for Impairment | Balance Collectively Evaluated for Impairment | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
March 31, 2019: | ||||||||||||||||||||||||
Commercial and industrial | $ | 773 | $ | — | $ | 773 | $ | 112,157 | $ | 3,922 | $ | 108,235 | ||||||||||||
Real estate – construction | 2,011 | — | 2,011 | 140,279 | 5,765 | 134,514 | ||||||||||||||||||
Real estate – commercial | 7,487 | — | 7,487 | 577,270 | 166 | 577,104 | ||||||||||||||||||
Real estate – residential | 711 | — | 711 | 89,455 | 587 | 88,868 | ||||||||||||||||||
Consumer | 135 | — | 135 | 30,122 | 194 | 29,928 | ||||||||||||||||||
Unallocated | 465 | — | 465 | — | — | — | ||||||||||||||||||
Total | $ | 11,582 | $ | — | $ | 11,582 | $ | 949,283 | $ | 10,634 | $ | 938,649 |
Allowance for Loan Losses | Loans Receivable | |||||||||||||||||||||||
Balance | Balance Related to Loans Individually Evaluated for Impairment | Balance Related to Loans Collectively Evaluated for Impairment | Balance | Balance Individually Evaluated for Impairment | Balance Collectively Evaluated for Impairment | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
December 31, 2018: | ||||||||||||||||||||||||
Commercial and industrial | $ | 745 | $ | — | $ | 745 | $ | 109,362 | $ | 4,200 | $ | 105,162 | ||||||||||||
Real estate – construction | 2,049 | — | 2,049 | 144,865 | 3,082 | 141,783 | ||||||||||||||||||
Real estate – commercial | 7,283 | — | 7,283 | 552,549 | 168 | 552,381 | ||||||||||||||||||
Real estate – residential | 668 | — | 668 | 84,123 | 589 | 83,534 | ||||||||||||||||||
Consumer | 147 | — | 147 | 31,144 | 194 | 30,950 | ||||||||||||||||||
Unallocated | 506 | — | 506 | — | — | — | ||||||||||||||||||
Total | $ | 11,398 | $ | — | $ | 11,398 | $ | 922,043 | $ | 8,233 | $ | 913,810 |
Allowance for Loan Losses | Commercial and Industrial | Real Estate - Construction | Real Estate - Commercial | Real Estate - Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
Beginning balance, January 1, 2019 | $ | 745 | $ | 2,049 | $ | 7,283 | $ | 668 | $ | 147 | $ | 506 | $ | 11,398 | ||||||||||||||
Charge-offs | — | (242 | ) | — | — | (5 | ) | — | (247 | ) | ||||||||||||||||||
Recoveries | — | — | 4 | — | 2 | — | 6 | |||||||||||||||||||||
Provision | 28 | 204 | 200 | 43 | (9 | ) | (41 | ) | 425 | |||||||||||||||||||
Ending balance, March 31, 2019 | $ | 773 | $ | 2,011 | $ | 7,487 | $ | 711 | $ | 135 | $ | 465 | $ | 11,582 |
Allowance for Loan Losses | Commercial and Industrial | Real Estate - Construction | Real Estate - Commercial | Real Estate - Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
Beginning balance, January 1, 2018 | $ | 930 | $ | 1,389 | $ | 7,325 | $ | 502 | $ | 174 | $ | 348 | $ | 10,668 | ||||||||||||||
Charge-offs | (115 | ) | — | — | — | — | — | (115 | ) | |||||||||||||||||||
Recoveries | — | 3 | 6 | — | — | — | 9 | |||||||||||||||||||||
Provision | 152 | 97 | 54 | (3 | ) | (18 | ) | 118 | 400 | |||||||||||||||||||
Ending balance, March 31, 2018 | $ | 967 | $ | 1,489 | $ | 7,385 | $ | 499 | $ | 156 | $ | 466 | $ | 10,962 |
(In thousands, except percentages and years) | March 31, 2019 | ||
Right-of-use asset | $ | 4,997 | |
Weighted remaining lease term in years | 4.5 | ||
Weighted average discount rate | 4.30 | % |
(In thousands) | Three months ended March 31, 2019 | ||
Operating cash flows from operating leases | $ | 370 | |
Variable lease costs (1) | $ | 85 |
(In thousands) | |||
Twelve months ended March 31, | |||
2020 | $ | 1,427 | |
2021 | 1,329 | ||
2022 | 1,175 | ||
2023 | 803 | ||
2024 | 410 | ||
Thereafter | 503 | ||
Total Lease Payments | $ | 5,647 | |
Interest | (520 | ) | |
Present Value of Lease Liabilities | $ | 5,127 |
Number of Shares | Weighted Average Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||
Options outstanding, December 31, 2018 | 242,533 | $ | 5.89 | ||||||||||
Options granted | — | — | |||||||||||
Options exercised | (47,952 | ) | 3.95 | ||||||||||
Options forfeited | — | — | |||||||||||
Options outstanding, March 31, 2019 | 194,581 | $ | 6.38 | 4.12 | $ | 1,842,241 | |||||||
Options exercisable, March 31, 2019 | 173,278 | $ | 6.05 | 3.83 | $ | 1,698,702 | |||||||
Option exercise price range at March 31, 2019 | $2.87 to $11.21 |
Number of Shares | Weighted Average Price | ||||||
Unvested at December 31, 2018 | 68,040 | $ | 15.61 | ||||
Restricted stock earned | (4,103 | ) | 10.65 | ||||
Granted | 12,150 | 15.86 | |||||
Awards forfeited | — | — | |||||
Unvested at September 30, 2018 | 76,087 | $ | 15.94 |
March 31, 2019 | December 31, 2018 | Rate | Original Term (Years) | Maturity | ||||||||||
(dollars in thousands) | ||||||||||||||
Fixed Rate Note | $ | — | $ | 1,800 | 1.59 | % | 4 | January 2019 | ||||||
Fixed Rate Note | 2,700 | 2,700 | 1.81 | % | 5 | January 2020 | ||||||||
Fixed Rate Note | 2,500 | 2,500 | 2.03 | % | 6 | January 2021 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.09 | % | 3 | July 2019 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.42 | % | 5 | July 2021 | ||||||||
Fixed Rate Note | 7,500 | 7,500 | 2.07 | % | 5 | August 2022 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.70 | % | 7 | July 2023 | ||||||||
Fixed Rate Note | 5,000 | 5,000 | 2.16 | % | 4 | October 2021 | ||||||||
Total FHLB borrowings | $ | 20,700 | $ | 22,500 |
Maturity of Repurchase Agreements | ||||||||||||||||||||
(dollars in thousands) | Overnight and Continuous | Up to 30 days | 30 to 90 days | Over 90 days | Total | |||||||||||||||
March 31, 2019 | ||||||||||||||||||||
Class of Collateral Pledged: | ||||||||||||||||||||
U.S. Government agency securities | $ | 8,938 | $ | — | $ | — | $ | — | $ | 8,938 | ||||||||||
GSE – residential mortgage-backed securities | 4,087 | — | — | — | 4,087 | |||||||||||||||
U.S. Government collateralized residential mortgage obligations | 7,772 | — | — | — | 7,772 | |||||||||||||||
Total | $ | 20,797 | $ | — | $ | — | $ | — | $ | 20,797 | ||||||||||
Gross amount of recognized liabilities for repurchase agreements and securities lending | $ | 15,185 | ||||||||||||||||||
Excess of collateral pledged over recognized liability | $ | 5,612 |
Maturity of Repurchase Agreements | ||||||||||||||||||||
(dollars in thousands) | Overnight and Continuous | Up to 30 days | 30 to 90 days | Over 90 days | Total | |||||||||||||||
December 31, 2018 | ||||||||||||||||||||
Class of Collateral Pledged: | ||||||||||||||||||||
U.S. Government agency securities | $ | 11,566 | $ | — | $ | — | $ | — | $ | 11,566 | ||||||||||
GSE – residential mortgage-backed securities | 4,289 | — | — | — | 4,289 | |||||||||||||||
U.S. Government collateralized residential mortgage obligations | 10,334 | — | — | — | 10,334 | |||||||||||||||
Total | $ | 26,189 | $ | — | $ | — | $ | — | $ | 26,189 | ||||||||||
Gross amount of recognized liabilities for repurchase agreements and securities lending | $ | 19,402 | ||||||||||||||||||
Excess of collateral pledged over recognized liability | $ | 6,787 |
Description | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | Total | ||||||||||||
(in thousands) | ||||||||||||||||
At March 31, 2019: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agency securities | $ | — | $ | 11,374 | $ | — | $ | 11,374 | ||||||||
Municipal securities | — | 486 | — | 486 | ||||||||||||
GSE – residential mortgage-backed securities | — | 5,569 | — | 5,569 | ||||||||||||
U.S. Government collateralized residential mortgage obligations | — | 4,201 | — | 4,201 | ||||||||||||
Corporate debt securities, primarily financial institutions | — | 1,922 | — | 1,922 | ||||||||||||
Total securities available for sale | $ | — | $ | 23,552 | $ | — | $ | 23,552 | ||||||||
Total equity securities | $ | 2,497 | $ | — | $ | — | $ | 2,497 |
Description | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | Total | ||||||||||||
(in thousands) | ||||||||||||||||
At December 31, 2018: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
U.S. Government agency securities | $ | — | $ | 11,635 | $ | — | $ | 11,635 | ||||||||
Municipal securities | — | 487 | — | 487 | ||||||||||||
GSE – residential mortgage-backed securities | — | 5,947 | — | 5,947 | ||||||||||||
U.S. Government collateralized residential mortgage obligations | — | 4,423 | — | 4,423 | ||||||||||||
Corporate debt securities, primarily financial institutions | — | 1,915 | — | 1,915 | ||||||||||||
Total securities available for sale | $ | — | $ | 24,407 | $ | — | $ | 24,407 | ||||||||
Total equity securities | $ | 2,451 | $ | — | $ | — | $ | 2,451 |
Description | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | Total | ||||||||||||
(in thousands) | ||||||||||||||||
At March 31, 2019: | ||||||||||||||||
Impaired loans, net of partial charge-offs | $ | — | $ | — | $ | 2,683 | $ | 2,683 | ||||||||
At December 31, 2018: | ||||||||||||||||
OREO | $ | — | $ | — | $ | 585 | $ | 585 | ||||||||
• | Impaired loans – Impaired loans measured at fair value are those loans in which the Company has measured impairment generally based on the fair value of the loan’s collateral. This method of fair value measurement is used on all of the Company’s impaired loans. Fair value is generally determined based upon either independent third party appraisals of the properties or discounted cash flows based upon the expected proceeds. The appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. At March 31, 2019, there was one impaired loan, which had no discount to its appraised value and had liquidation expenses of 6.7%. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. |
• | OREO – Real estate properties acquired through, or in lieu of, loan foreclosure are carried at fair value less cost to sell. Fair value is based upon the appraised value of the collateral, adjusted by management for factors such as economic conditions and other market factors. At December 31, 2018, the discount and liquidation expenses for collateral adjustments to our OREO was 9.5%. These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement. At March 31, 2019 and December 31, 2018, the Company initiated foreclosure proceedings on three loans secured by residential real estate in the amount of $598,000. |
Fair Value Measurements at March 31, 2019 | |||||||||||||||||||
(in thousands) | Carrying Amount | Estimated Fair Value | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | ||||||||||||||
Financial assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 62,688 | $ | 62,688 | $ | 62,688 | $ | — | $ | — | |||||||||
Securities available for sale | 23,552 | 23,552 | — | 23,552 | — | ||||||||||||||
Securities held to maturity | 45,838 | 46,298 | — | 46,298 | — | ||||||||||||||
Equity securities | 2,497 | 2,497 | 2,497 | — | — | ||||||||||||||
Restricted investments | 6,017 | 6,017 | — | — | 6,017 | ||||||||||||||
Loans held for sale | 1,496 | 1,515 | — | — | 1,515 | ||||||||||||||
Loans receivable, net | 936,911 | 931,740 | — | — | 931,740 | ||||||||||||||
Accrued interest receivable | 2,793 | 2,793 | — | 462 | 2,331 | ||||||||||||||
Financial liabilities: | |||||||||||||||||||
Deposits | 959,655 | 958,957 | — | 958,957 | — | ||||||||||||||
Securities sold under agreements to repurchase | 15,185 | 15,185 | — | 15,185 | — | ||||||||||||||
FHLB and other borrowings | 20,700 | 20,414 | — | 20,414 | — | ||||||||||||||
Subordinated debt | 9,932 | 10,150 | — | 10,150 | — | ||||||||||||||
Accrued interest payable | 153 | 153 | — | 153 | — |
Fair Value Measurements at December 31, 2018 | |||||||||||||||||||
(in thousands) | Carrying Amount | Estimated Fair Value | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | ||||||||||||||
Financial assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 48,126 | $ | 48,126 | $ | 48,126 | $ | — | $ | — | |||||||||
Securities available for sale | 24,407 | 24,407 | — | 24,407 | — | ||||||||||||||
Securities held to maturity | 47,455 | 47,266 | — | 47,266 | — | ||||||||||||||
Equity securities | 2,451 | 2,451 | 2,451 | — | — | ||||||||||||||
Restricted investments | 6,082 | 6,082 | — | — | 6,082 | ||||||||||||||
Loans held for sale | 1,496 | 1,525 | — | — | 1,525 | ||||||||||||||
Loans receivable, net | 909,903 | 887,374 | — | — | 887,374 | ||||||||||||||
Accrued interest receivable | 2,583 | 2,583 | — | 643 | 1,940 | ||||||||||||||
Financial liabilities: | |||||||||||||||||||
Deposits | 917,354 | 915,435 | — | 915,435 | — | ||||||||||||||
Securities sold under agreements to repurchase | 19,402 | 19,402 | — | 19,402 | — | ||||||||||||||
FHLB and other borrowings | 22,500 | 21,966 | — | 24,966 | — | ||||||||||||||
Subordinated debt | 9,923 | 9,999 | — | 9,999 | — | ||||||||||||||
Accrued interest payable | 119 | 119 | — | 119 | — |
For the Three Months Ended March 31, | |||||
2019 | 2018 | ||||
Return on average assets | 1.01 | % | 1.04 | % | |
Return on average tangible assets (1) | 1.02 | % | 1.06 | % | |
Return on average shareholders' equity | 9.59 | % | 10.08 | % | |
Return on average tangible shareholders' equity (1) | 11.33 | % | 12.12 | % | |
Net interest margin | 3.60 | % | 3.63 | % | |
Average equity to average assets | 10.52 | % | 10.29 | % | |
Average tangible equity to average tangible assets (1) | 9.05 | % | 8.71 | % |
(in thousands except per share data and percentages) | For the Three Months Ended March 31, | ||||||
2019 | 2018 | ||||||
Total shareholders' equity | $ | 119,156 | $ | 108,980 | |||
Less: goodwill and other intangible assets | (18,109 | ) | (18,109 | ) | |||
Tangible common shareholders’ equity | $ | 101,047 | $ | 90,871 | |||
Common shares outstanding (in thousands) | 8,668 | 8,525 | |||||
Book value per common share | $ | 13.75 | $ | 12.78 | |||
Book value per common share | $ | 13.75 | $ | 12.78 | |||
Effect of intangible assets | (2.09 | ) | (2.12 | ) | |||
Tangible book value per common share | $ | 11.66 | $ | 10.66 | |||
Return on average assets | 1.01 | % | 1.04 | % | |||
Effect of intangible assets | 0.01 | % | 0.02 | % | |||
Return on average tangible assets | 1.02 | % | 1.06 | % | |||
Return on average equity | 9.59 | % | 10.08 | % | |||
Effect of average intangible assets | 1.74 | % | 2.04 | % | |||
Return on average tangible equity | 11.33 | % | 12.12 | % | |||
Average equity to average assets | 10.52 | % | 10.29 | % | |||
Effect of average intangible assets | (1.47 | )% | (1.58 | )% | |||
Average tangible equity to average tangible assets | 9.05 | % | 8.71 | % |
Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | |||||||||||||||||||||
(dollars in thousands) | Average Balance | Interest Income/ Expense | Average Yield/ Rate | Average Balance | Interest Income/ Expense | Average Yield/ Rate | ||||||||||||||||
ASSETS | ||||||||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||||
Interest-bearing deposits in banks | $ | 30,370 | $ | 187 | 2.50 | % | $ | 18,135 | $ | 67 | 1.50 | % | ||||||||||
Investment securities | 79,234 | 570 | 2.88 | % | 97,625 | 579 | 2.37 | % | ||||||||||||||
Loans, net of unearned fees (1) (2) | 941,488 | 11,312 | 4.87 | % | 868,544 | 9,821 | 4.59 | % | ||||||||||||||
Total Interest-Earning Assets | 1,051,092 | 12,069 | 4.66 | % | 984,304 | 10,467 | 4.31 | % | ||||||||||||||
Non-Interest-Earning Assets: | ||||||||||||||||||||||
Allowance for loan losses | (11,434 | ) | (10,840 | ) | ||||||||||||||||||
All other assets | 79,742 | 72,889 | ||||||||||||||||||||
Total Assets | $ | 1,119,400 | $ | 1,046,353 | ||||||||||||||||||
LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||||||||||||||||
Interest-Bearing Liabilities: | ||||||||||||||||||||||
NOW deposits | $ | 205,693 | 413 | 0.81 | % | $ | 236,674 | 310 | 0.53 | % | ||||||||||||
Savings deposits | 255,687 | 592 | 0.94 | % | 248,488 | 354 | 0.58 | % | ||||||||||||||
Money market deposits | 41,580 | 23 | 0.22 | % | 58,348 | 25 | 0.17 | % | ||||||||||||||
Time deposits | 256,603 | 1,390 | 2.20 | % | 168,327 | 669 | 1.61 | % | ||||||||||||||
Securities sold under agreements to repurchase | 15,549 | 11 | 0.29 | % | 19,636 | 14 | 0.29 | % | ||||||||||||||
FHLB and other borrowings | 25,711 | 132 | 2.08 | % | 28,217 | 130 | 1.87 | % | ||||||||||||||
Subordinated debt | 9,929 | 165 | 6.65 | % | 9,893 | 165 | 6.67 | % | ||||||||||||||
Total Interest-Bearing Liabilities | 810,752 | 2,726 | 1.36 | % | 769,583 | 1,667 | 0.88 | % | ||||||||||||||
Non-Interest-Bearing Liabilities: | ||||||||||||||||||||||
Demand deposits | 174,822 | 160,060 | ||||||||||||||||||||
Other liabilities | 16,075 | 9,033 | ||||||||||||||||||||
Total Non-Interest-Bearing Liabilities | 190,897 | 169,093 | ||||||||||||||||||||
Shareholders' Equity | 117,751 | 107,677 | ||||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 1,119,400 | $ | 1,046,353 | ||||||||||||||||||
NET INTEREST INCOME | $ | 9,343 | $ | 8,800 | ||||||||||||||||||
NET INTEREST SPREAD (3) | 3.30 | % | 3.43 | % | ||||||||||||||||||
NET INTEREST MARGIN (4) | 3.60 | % | 3.63 | % |
(1) | Included in interest income on loans are net unearned loan fees. |
(2) | Includes non-performing loans. |
(3) | The interest rate spread is the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities. |
(4) | The interest rate margin is calculated by dividing annualized net interest income by average interest-earning assets. |
Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018 | ||||||||||||
Increase (decrease) due to change in | ||||||||||||
Volume | Rate | Net | ||||||||||
(in thousands) | ||||||||||||
Interest Earned On: | ||||||||||||
Interest-bearing deposits in banks | $ | 45 | $ | 75 | $ | 120 | ||||||
Investment securities | (110 | ) | 101 | (9 | ) | |||||||
Loans, net of unearned fees | 826 | 665 | 1,491 | |||||||||
Total Interest Income | 761 | 841 | 1,602 | |||||||||
Interest Paid On: | ||||||||||||
NOW deposits | (41 | ) | 144 | 103 | ||||||||
Savings deposits | 10 | 228 | 238 | |||||||||
Money market deposits | (7 | ) | 5 | (2 | ) | |||||||
Time deposits | 350 | 371 | 721 | |||||||||
Securities sold under agreements to repurchase | (3 | ) | — | (3 | ) | |||||||
FHLB and other borrowings | (11 | ) | 13 | 2 | ||||||||
Subordinated debt | 1 | (1 | ) | — | ||||||||
Total Interest Expense | 299 | 760 | 1,059 | |||||||||
Net Interest Income | $ | 462 | $ | 81 | $ | 543 |
March 31, 2019 | December 31, 2018 | |||||||||||||
Amount | Percent | Amount | Percent | |||||||||||
(in thousands, except for percentages) | ||||||||||||||
Commercial and industrial | $ | 112,157 | 11.8 | % | $ | 109,362 | 11.9 | % | ||||||
Real estate – construction | 140,279 | 14.8 | % | 144,865 | 15.7 | % | ||||||||
Real estate – commercial | 577,270 | 60.9 | % | 552,549 | 60.0 | % | ||||||||
Real estate – residential | 89,455 | 9.4 | % | 84,123 | 9.1 | % | ||||||||
Consumer | 30,122 | 3.2 | % | 31,144 | 3.4 | % | ||||||||
Unearned fees | (790 | ) | (0.1 | )% | (742 | ) | (0.1 | )% | ||||||
Total loans | $ | 948,493 | 100.0 | % | $ | 921,301 | 100.0 | % |
March 31, 2019 | December 31, 2018 | |||||||
(dollars in thousands) | ||||||||
Non-Performing Assets: | ||||||||
Non-Accrual Loans: | ||||||||
Commercial and industrial | $ | 600 | $ | 765 | ||||
Real estate-construction | 2,833 | 150 | ||||||
Real estate-commercial | 54 | 54 | ||||||
Real estate-residential | 227 | 227 | ||||||
Consumer | 194 | 194 | ||||||
Total Non-Performing Loans | 3,908 | 1,390 | ||||||
OREO | 585 | 585 | ||||||
Total Non-Performing Assets | $ | 4,493 | $ | 1,975 | ||||
Ratios: | ||||||||
Non-Performing loans to total loans | 0.41 | % | 0.15 | % | ||||
Non-Performing assets to total assets | 0.39 | % | 0.18 | % | ||||
Troubled Debt Restructured Loans: | ||||||||
Performing | $ | 6,726 | $ | 6,842 | ||||
Non-performing (included in non-performing assets above) | 711 | 877 |
March 31, | December 31, | ||||||||||
2019 | 2018 | 2018 | |||||||||
(in thousands, except percentages) | |||||||||||
Balance at beginning of year | $ | 11,398 | $ | 10,668 | $ | 10,668 | |||||
Provision charged to expense | 425 | 400 | 775 | ||||||||
Recoveries (charge-offs), net | (241 | ) | (106 | ) | $ | (45 | ) | ||||
Balance of allowance at end of period | $ | 11,582 | $ | 10,962 | $ | 11,398 | |||||
Ratio of net charge-offs to average loans outstanding (annualized) | 0.10 | % | 0.05 | % | 0.01 | % | |||||
Balance of allowance as a percent of loans at period-end | 1.22 | % | 1.26 | % | 1.24 | % | |||||
Ratio of allowance to non-performing loans at period-end | 296.37 | % | 555.88 | % | 820.00 | % |
March 31, 2019 | December 31, 2018 | Rate | Original Term (years) | Maturity | ||||||||||
(dollars in thousands) | ||||||||||||||
Fixed Rate Note | $ | — | $ | 1,800 | 1.59 | % | 4 | January 2019 | ||||||
Fixed Rate Note | 2,700 | 2,700 | 1.81 | % | 5 | January 2020 | ||||||||
Fixed Rate Note | 2,500 | 2,500 | 2.03 | % | 6 | January 2021 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.09 | % | 3 | July 2019 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.42 | % | 5 | July 2021 | ||||||||
Fixed Rate Note | 7,500 | 7,500 | 2.07 | % | 5 | August 2022 | ||||||||
Fixed Rate Note | 1,000 | 1,000 | 1.70 | % | 7 | July 2023 | ||||||||
Fixed Rate Note | 5,000 | 5,000 | 2.16 | % | 4 | October 2021 | ||||||||
Total FHLB borrowings | $ | 20,700 | $ | 22,500 |
March 31, | December 31, | ||||||
2019 | 2018 | ||||||
(dollars in thousands) | |||||||
Lines of credit secured by 1 - 4 family residential properties | $ | 28,806 | $ | 25,828 | |||
Commitments to fund commercial real estate and construction loans | 144,914 | 177,650 | |||||
Commitments to fund commercial and industrial loans and other loans | 58,419 | 60,579 | |||||
Commercial and financial letters of credit | 3,387 | 4,245 | |||||
Total off-balance sheet commitments | $ | 235,526 | $ | 268,302 |
Company | Bank | Minimum Required For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Regulations* | |||||||||
As of March 31, 2019 | ||||||||||||
Common Equity Tier 1 Capital to Risk Weighted Assets | 10.10 | % | 11.00 | % | 4.50 | % | 6.50 | % | ||||
Tier 1 Capital to Average Assets (Leverage Ratio) | 9.20 | % | 10.03 | % | 4.00 | % | 5.00 | % | ||||
Tier 1 Capital to Risk Weighted Assets | 10.10 | % | 11.00 | % | 6.00 | % | 8.00 | % | ||||
Total Capital to Risk Weighted Assets | 12.25 | % | 12.16 | % | 8.00 | % | 10.00 | % | ||||
As of December 31, 2018 | ||||||||||||
Common Equity Tier 1 Capital to Risk Weighted Assets | 10.14 | % | 11.09 | % | 4.50 | % | 6.50 | % | ||||
Tier 1 Capital to Average Assets (Leverage Ratio) | 9.10 | % | 9.95 | % | 4.00 | % | 5.00 | % | ||||
Tier 1 Capital to Risk Weighted Assets | 10.14 | % | 11.09 | % | 6.00 | % | 8.00 | % | ||||
Total Capital to Risk Weighted Assets | 12.34 | % | 12.26 | % | 8.00 | % | 10.00 | % |
i. | a common equity Tier 1 capital ratio of 7.00%; |
ii. | a Tier 1 Risk based capital ratio of 8.50%; and |
iii. | a Total Risk based capital ratio of 10.50%. |
* | Certification of principal executive officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) | |
* | Certification of principal financial officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) | |
* | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by the principal executive officer of the Company and the principal financial officer of the Company | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
TWO RIVER BANCORP | ||||
Date: | May 9, 2019 | By: | /s/ William D. Moss | |
William D. Moss | ||||
Chairman of the Board, President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
Date: | May 9, 2019 | By: | /s/ A. Richard Abrahamian | |
A. Richard Abrahamian | ||||
Executive Vice President and Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Two River Bancorp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ William D. Moss | |
Name: | William D. Moss |
Title: | Chairman of the Board, President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Two River Bancorp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ A. Richard Abrahamian | |
Name: | A. Richard Abrahamian |
Title: | Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ William D. Moss | |
Name: | William D. Moss |
Title: | Chairman of the Board, President and Chief Executive Officer |
Date: | May 9, 2019 |
/s/ A. Richard Abrahamian | |
Name: | A. Richard Abrahamian |
Title: | Executive Vice President and Chief Financial Officer |
Date: | May 9, 2019 |
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 06, 2019 |
|
Document And Entity Information | ||
Entity Registrant Name | Two River Bancorp | |
Entity Central Index Key | 0001343034 | |
Trading Symbol | trcb | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 8,669,262 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Securities available-for-sale, amortized cost | $ 24,061 | $ 25,017 |
Securities held to maturity, fair value | $ 46,298 | $ 47,266 |
Preferred stock, shares authorized (in shares) | 6,500,000 | 6,500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock, shares issued (in shares) | 8,996,545 | 8,935,437 |
Common stock, shares outstanding (in shares) | 8,668,100 | 8,606,992 |
Treasury stock, shares (in shares) | 328,445 | 328,445 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 2,783 | $ 2,676 |
Other comprehensive income (loss): | ||
Unrealized holdings (losses) on securities available for sale, net of income tax (benefit) | 73 | (139) |
Other comprehensive income (loss) | 73 | (139) |
Total comprehensive income | $ 2,856 | $ 2,537 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Unrealized holding gain on securities available for sale, income tax expense | $ 28 | $ (54) |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Common Stock | ||
Cash dividends on common stock, per share (in dollars per share) | $ 0.055 | $ 0.045 |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Two River Bancorp (the “Company”), a bank holding company, and its wholly-owned subsidiary, Two River Community Bank (“Two River” or the “Bank”); Two River’s wholly-owned subsidiaries, TRCB Investment Corporation and TRCB Holdings Eight LLC. All inter-company balances and transactions have been eliminated in the consolidated financial statements. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for full year financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2018 (the “2018 Form 10-K”). For a description of the Company’s significant accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements in the 2018 Form 10-K. The Company has evaluated events and transactions occurring subsequent to the balance sheet date of March 31, 2019 for items that should potentially be recognized or disclosed in these consolidated financial statements. |
New Accounting Standards |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
New Accounting Standards | NEW ACCOUNTING STANDARDS ASU 2016-02: In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize leases on-balance sheet, makes targeted changes to lessor accounting, and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. ASC 842 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2018. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) the effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company has elected to use the effective date, January 1, 2019, as the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. From the lessee's perspective, the new standard establishes a right-of-use ("ROU") model that requires a lessee to recognize a ROU asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months, subject to a policy election. The Company has elected the short-term lease recognition exemption such that the Company will not recognize ROU assets or lease liabilities for leases with a term of less than 12 months from the commencement date. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for a leasee. Additionally, the ASU expands quantitative and qualitative disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new leasing standard provides a number of optional practical expedients in transition. The Company has elected the "package of practical expedients," which permits the Company not to reassess prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the Company. ASC 842 also provides certain accounting policy elections for an entity's ongoing accounting. For operating leases wherein the Company is the lessee, the Company has elected the practical expedient to not separate lease and non-lease components. Under legacy lease accounting, all of the Company's leases, which primarily relate to office space and bank branches, were classified as operating leases and, as such, are not recognized on the Company's Consolidated Balance Sheet for periods prior to the adoption of ASC 842. The Company engaged a third-party vendor and used their software to assist in implementing this ASU. Due to the adoption of ASU 2016-02, the Company recognized an operating right-of-use asset of $5.0 million and a lease liability of $5.1 million on its balance sheet as of March 31, 2019. This negatively impacted the Company's capital ratios by approximately 5 basis points compared to December 31, 2018. See Note 8, Leases, for more information. ASU 2016-13: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This ASU requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. The ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. For public entities that are SEC filers, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has formed a CECL committee, which has assessed our data and system needs, and has engaged a third-party vendor to assist in analyzing our data and developing a CECL model. The Company, in conjunction with this vendor, has researched and analyzed modeling standards, loan segmentation, as well as potential external inputs to supplement our historical loss history. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the ASU is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the ASU on our consolidated financial statements. ASU 2017-04: In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350). ASU 2017-04 removes Step 2 from the goodwill impairment test. Under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. For public entities that are SEC filers, this ASU is effective for its annual, or any goodwill impairment tests in fiscal years, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the new guidance but has determined that this standard should not have a material impact on its consolidated financial statements. ASU 2017-08: In March 2017, the FASB issued ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 will be effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. We are currently evaluating this ASU to determine the impact on our consolidated financial statements. ASU 2018-13: In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 includes certain removals, modifications and additions to the disclosure requirements on fair value measurements in Topic 820. The updated guidance is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted. The Company is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. The impact on the consolidated financial statements of the Company will depend on the facts and circumstances of any specific future transactions. The Company has elected not to early adopt the additional disclosures required by the ASU until their effective date. ASU 2019-01: In March 2019, the FASB issued ASU No. 2019-01, Leases: Codification Improvements. This ASU (1) states that for lessors that are not manufacturers or dealers, the fair value of the underlying asset is its cost, less any volume or trade discounts, as long as there isn’t a significant amount of time between acquisition of the asset and lease commencement; (2) clarifies that lessors in the scope of ASC 942 (such as the Company) must classify principal payments received from sales-type and direct financing leases in investing activities in the statement of cash flows; and (3) clarifies the transition guidance related to certain interim disclosures provided in the year of adoption. To coincide with the adoption of ASU No. 2016-02, the Company elected to early adopt ASU 2019-01 on January 1, 2019. The adoption of this ASU did not have a material impact on its consolidated financial statements. |
Revenue Recognition |
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Revenue Recognition | REVENUE RECOGNITION On January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and all subsequent ASUs that modified Topic 606. As stated in Note 1, New Accounting Standards, the implementation of the new standard did not have a material impact on the measurement or recognition of revenue; as such, a cumulative effect adjustment to opening retained earnings was not deemed necessary. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain non-interest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not in scope of the new guidance. Topic 606 is applicable to non-interest revenue streams, such as deposit related fees, interchange fees, merchant income, and brokerage and investment advisory service commissions. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. Non-interest revenue streams in-scope of Topic 606 are discussed below. Service Fees on Deposit Accounts Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts. Other Income Other non-interest income consists of other recurring revenue streams such as debit card income, credit card income, ATM fees, merchant services income, commissions from sales of mutual funds and other investments provided through a third party brokerage and investment advisory service firm, safe deposit box rental fees, and other miscellaneous revenue streams. Debit card income is primarily comprised of interchange fees earned whenever the Company’s debit cards are processed through card payment networks, such as MasterCard. Credit card income is realized through a third party provider who issues credit cards as private label in the Company's name. ATM fees are primarily generated when a non-Company cardholder uses a Company ATM. The income is primarily comprised as a percentage of interchange fees earned whenever the issuer's card is processed through card payment networks, such as Visa and/or American Express. Merchant services income is realized through a third party service provider who is contracted by the Bank under a referral arrangement. Such fees represent fees charged to merchants to process their debit card transactions, in addition to account management fees. Other service charges include revenue from processing wire transfers, cashier’s checks, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. Commissions received from the third party brokerage and investment advisory service firm from the sale of mutual funds and other investments are recognized when the firm has satisfied its performance obligation. The Company also receives periodic service fees (i.e., trailers) from this advisory service firm typically based on a percentage of net asset value. Trailer revenue is recorded over time, usually monthly or quarterly, as net asset value is determined. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. The following presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31, 2019 and 2018.
Contract Balances A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s non-interest revenue streams are largely based on transactional activity, or standard month-end revenue accruals. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of March 31, 2019 and December 31, 2018, the Company did not have any significant contract balances. Contract Acquisition Costs In connection with the adoption of Topic 606, an entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. Upon adoption of Topic 606, the Company did not capitalize any contract acquisition cost. |
Goodwill |
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Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | GOODWILL The Company’s goodwill was recognized in connection with the acquisition of The Town Bank (“Town Bank”) in April 2006. GAAP requires that goodwill be tested for impairment annually or more frequently if impairment indicators arise utilizing a two-step methodology. However, a qualitative factor test can be performed to determine whether it is necessary to perform the two-step quantitative impairment test. If this qualitative test determines it is not likely (less than 50% probability) the fair value of the reporting unit is less than book value, then the Company does not have to perform a step one quantitative test and goodwill can be considered not impaired. The Company reviewed the requirements of ASU 350-20 and examples of qualitative assessments to determine whether the weight of evidence indicates greater than 50% likelihood exists that the carrying value of the reporting unit exceeds it's fair value. The nine qualitative assessments used are macroeconomic factors, banking industry conditions, banking industry merger and acquisition trends, bank historical performance, parent stock price, expected bank performance, change of control premium (parent), change of control premium (peer), and other factors. The Company performed its annual qualitative factor impairment test as of August 31, 2018. Based on the results of this analysis, the Company determined that there was no impairment on the current goodwill balance of $18,109,000. |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | EARNINGS PER COMMON SHARE Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding excluding restricted stock awards outstanding during the period. Diluted earnings per common share reflects additional shares of common stock that would have been outstanding if dilutive potential shares of common stock had been issued relating to outstanding stock options and restricted stock awards. Potential shares of common stock issuable upon the exercise of stock options are determined using the treasury stock method. The following table sets forth the computations of basic and diluted earnings per common share:
Dilutive securities in the table above exclude common stock options with exercise prices that exceed the average market price of the Company’s common stock during the periods presented. Inclusion of these common stock options would be anti-dilutive to the diluted earnings per common share calculation. There were no stock options that were anti-dilutive for the three months ended March 31, 2019 and 2018. |
Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | SECURITIES The amortized cost, gross unrealized gains and losses, and fair values of the Company’s securities are summarized as follows:
The amortized cost and fair value of the Company’s debt securities at March 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
The Company had no security sales for the three months ended March 31, 2019 or 2018. Investment securities with a carrying value of $30.1 million and $24.7 million at March 31, 2019 and December 31, 2018, respectively, were pledged as collateral to secure securities sold under agreements to repurchase and public deposits as required or permitted by law. The tables below indicate the length of time individual securities have been in a continuous unrealized loss position at March 31, 2019 and December 31, 2018:
The Company had 58 securities in an unrealized loss position at March 31, 2019. In management’s opinion, the unrealized losses in corporate debt, U.S. Government agencies, municipals, U.S. Government collateralized residential mortgage obligations and GSE residential mortgage-backed securities reflect changes in interest rates subsequent to the acquisition of specific securities. The unrealized loss for corporate debt securities also reflects a widening of spreads due to the liquidity and credit concerns in the financial markets. The Company may, if conditions warrant, elect to sell debt securities at a loss and redeploy the proceeds into other investments in an effort to improve returns, risk profile and overall portfolio diversification. The Company will recognize any losses when the decision is made. As of March 31, 2019, the Company did not intend to sell these debt securities prior to market recovery. Included in corporate debt securities are three individual trust preferred securities issued by large financial institutions, all with a Moody’s rating of Baa1. At March 31, 2019, all of these securities are current with their scheduled interest payments. These single issue securities are all from large money center banks. Management concluded that these securities were not other-than-temporarily impaired as of March 31, 2019. These three securities have an amortized cost value of $2.3 million and a fair value of $2.1 million at March 31, 2019. There were no other-than-temporary impairments recognized during the three months ended March 31, 2019 and 2018. Equity securities consist solely of the Community Reinvestment Act ("CRA") Mutual Fund. As a result of the adoption of ASU 2016-01 in January 2018, the Company determined that the CRA Mutual Fund falls under the provisions of ASU 2016-01and accordingly, this fund was transferred from available for sale and reclassified into equity securities on the balance sheet. These securities are measured at fair value with unrealized holding gains and losses reflected in net income. Effective January 1, 2018, the Company recorded a cumulative effect adjustment of $39,000 as a reclassification from accumulated other comprehensive loss to retained earnings. Additionally as noted above, all future unrealized gains and losses will be recognized in the Statements of Operations. As such, during the three months ended March 31, 2019 and 2018, an unrealized gain of $31,000 and an unrealized loss of $40,000, respectively, was recorded in Other Income. |
Loans Receivable And Allowance For Loan Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable And Allowance For Loan Losses | LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Loans receivable, which management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan. Loans held for sale are designated at time of origination. They generally consist of newly originated fixed rate residential mortgage loans and salable SBA loans and are recorded at the lower of aggregate cost or estimated fair value in the aggregate. The Company typically retains adjustable-rate mortgages ("ARM") loans in its portfolio, however occasionally, the Company may elect to sell a small pool of these loans as a part of its strategy to manage interest rate risk. During the three months ended March 31, 2019 and 2018, the Company transferred $1.9 million and $5.0 million, respectively, from held for investment to held for sale. Gains from such sales were $37,000 and $100,000 for the three months ended March 31, 2019 and 2018, respectively. Transfers from held for investment occur at the lower of cost or fair value, less costs to sell. Gains are recognized on a settlement-date basis and are determined by the difference between the net sales proceeds and the carrying value of the loans, including any net deferred fees or costs. Depending on the type of loan sold, servicing may or may not be retained. The loans receivable portfolio is segmented into five categories, those being a) Commercial and industrial, b) Real estate-construction (consisting of both residential and commercial construction), c) Real estate-commercial, d) Real estate-residential, and e) Consumer. For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest previously accrued on these loans is reversed from income. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses represents management’s estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded loan commitments and is recorded in other liabilities on the consolidated balance sheet, which at March 31, 2019 and December 31, 2018, the Company had no such reserves. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectable are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a monthly evaluation of the adequacy of the allowance. The allowance is based on the Company’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. The allowance consists of specific, general and unallocated components. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of the loan. The specific component relates to loans that are classified as impaired. When a loan is impaired, there are three acceptable methods under ASC 310-10-35 for measuring the impairment:
Loans that are considered “collateral-dependent” should be evaluated under the “Fair market value of collateral.” Loans that are still expected to be supported by repayment from the borrower should be evaluated under the “Present value of future cash flows.” For the most part, the Company measures impairment under the “Fair market value of collateral” for any loan that would rely on the value of collateral for recovery in the event of default. The individual impairment analysis for each loan is clearly documented as to the chosen valuation method. The general component covers pools of loans by loan class including commercial and industrial, real estate-construction and real estate-commercial not considered impaired as well as smaller balance homogeneous loans such as real estate-residential and consumer. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors. These qualitative risk factors include:
Each factor is assigned a risk value to reflect low, moderate or high risk assessments based on management’s best judgment using current market, macro and other relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation in each factor and accompany the allowance for loan loss calculation. During the fourth quarter of 2018, Management employed a more refined estimation in determining the risk levels assigned to each of its qualitative factors in the allowance for loan losses. While this did not result in a significant change to the allowance for loan losses as a whole, it did result in increasing or decreasing the provision for certain loan categories that the Company either had experienced more or less historical net charge-offs. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. A loan is considered impaired when it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and industrial, real estate-commercial, real estate-construction, real estate-residential and consumer loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. The estimated fair values of substantially all of the Company’s impaired loans are measured based on the estimated fair value of the loan’s collateral. For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property. For commercial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated annually for commercial loans or when credit deficiencies arise, such as delinquent loan payments, for commercial and consumer loans. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans classified special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristics that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectable and are charged to the allowance for loan losses. Loans not classified are rated pass. In addition, federal and state regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses and may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management’s comprehensive analysis of the loan portfolio, management believes the current level of the allowance for loan losses is adequate. The components of the loan portfolio held for investment at March 31, 2019 and December 31, 2018 are as follows:
The performance and credit quality of the loan portfolio is monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status as of March 31, 2019 and December 31, 2018:
The following table presents non-accrual loans by classes of the loan portfolio at March 31, 2019 and December 31, 2018:
There were no new troubled debt restructurings ("TDRs") that occurred during the three months ended March 31, 2019 or 2018. Loans whose terms are modified are classified as TDRs if the Company grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a TDR generally involve a temporary reduction in interest rate or a modification of a loan’s amortization schedule. Non-accrual TDRs are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after the modification is in place. Loans classified as TDRs, including those restored to accrual status, are designated as impaired. The Company’s TDR modifications are made on terms typically up to 12 months in order to aggressively monitor and track performance of the credit. The short-term modifications are monitored for continued performance for an additional period of time after the expiration of the concession. Balance reductions and annualized loss rates are also important metrics that are monitored. The main objective of the modification program is to reduce the payment burden for the borrower and to deleverage the Company’s exposure. Impaired loans are individually assessed to determine that the loan’s carrying value is not in excess of the estimated fair value of the collateral (less cost to sell), if the loan is collateral dependent, or the present value of the expected future cash flows, if the loan is not collateral dependent. Management performs a detailed evaluation of each impaired loan and generally obtains updated appraisals as part of the evaluation. In addition, management adjusts estimated fair value down to appropriately consider recent market conditions, our willingness to accept a lower sales price to effect a quick sale, and costs to dispose of any supporting collateral. At March 31, 2019, TDRs totaled $7.4 million, including $6.7 million that were current and five non-accrual loans totaling $711,000. As of December 31, 2018, TDRs totaled $7.7 million, including $6.8 million that were current and six non-accrual loans totaling $877,000. At both March 31, 2019 and December 31, 2018, the Company had no specific reserve against any loan relationship classified as TDR. There were no loans receivable modified as TDRs and with a payment default occurring within 12 months of the restructure date, and the payment default occurring during the three months ended March 31, 2019 and 2018, respectively. It is the Company’s policy to classify a TDR that is either 90 days or greater delinquent or that has been placed on a non-accrual status as a subsequently defaulted TDR. The following tables summarize information in regards to both the recorded investment balance information for impaired loans by loan portfolio class at March 31, 2019 and December 31, 2018, and the average recorded investment balance information for impaired loans by loan portfolio class for the three months ended March 31, 2019 and 2018, respectively:
The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of March 31, 2019 and December 31, 2018:
The following tables present the balance in the allowance for loan losses at March 31, 2019 and December 31, 2018 disaggregated on the basis of the Company’s impairment method by class of loans receivable along with the balance of loans receivable by class disaggregated on the basis of the Company’s impairment methodology:
During the fourth quarter of 2018, Management employed a more refined estimation in determining the risk levels assigned to each of its qualitative factors in the allowance for loan losses. While this did not result in a significant change to the allowance for loan losses as a whole, it did result in increasing or decreasing the provision for certain loan categories that the Company either had experienced more or less historical net charge-offs. The following table presents the change in the allowance for loan losses by classes of loans for the three months ended March 31, 2019 and 2018:
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Leases Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LEASES The Company follows ASU 2016-02, "Leases (Topic 842)," which revised certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. ASU 2016-02 requires that lessees recognize the assets and liabilities on its balance sheet that arise from all leases with a term greater than 12 months. The core principle requires the lessee to recognize a liability to make lease payments and a "right-of-use" asset. The Company adopted this standard as of January 1, 2019. We have elected to apply ASU 2016-02 as of the beginning of the period of adoption and will not restate comparative periods. Operating leases, in which we are the lessee, are recorded as Operating Right-of-Use ("ROU") Assets and Operating Lease Liabilities on our Consolidated Balance Sheets. We do not currently have any finance leases in which we are the lessee. Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our Incremental Borrowing Rate (“IBR”). The IBR was calculated for each lease by taking comparable term FHLB fixed rate borrowings based on the remaining terms of each respective lease and adding a proportionate market spread based on an unsecured borrowing. The IBR for each lease is unique based on the lease term. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in Occupancy and Equipment expense in the Consolidated Statements of Income. For the three months ended March 31, 2019 and 2018, operating lease expense amounted to $455,000 and $451,000, respectively. Our leases relate primarily to bank branches and equipment with remaining lease terms of generally one to ten years. Certain lease arrangements contain extension options which typically range from one to five years at the then fair market rental rates. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term. As of March 31, 2019, operating lease ROU assets and operating lease liabilities were $5.0 million and $5.1 million, respectively. The table below summarizes information related to our operating leases:
(1) Variable lease costs represents variable payments, such as common area maintenance and utilities. |
Stock-Based Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Plans | STOCK-BASED COMPENSATION PLANS The Two River Bancorp 2007 Equity Incentive Plan (the “Plan”) provides that the Compensation Committee of the Board of Directors (the “Committee”) may grant to those individuals who are eligible under the terms of the Plan stock options, shares of restricted stock, or such other equity incentive awards as the Committee may determine. As of March 31, 2019, the number of shares of Company common stock remaining and available for future issuance under the Plan is 99,269. Shares reserved under the Plan will be issued out of authorized and unissued shares, or treasury shares, or partly out of cash, as determined by the Board. From the adoption of the Plan until March 20, 2017, options awarded under the Plan were permitted to be either options that qualify as incentive stock options (“ISOs”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or options that do not, or cease to, qualify as incentive stock options under the Code (“nonqualified stock options” or “NQSOs”). However, after March 20, 2017, only NQSOs may be awarded under the Plan. Awards may be granted under the Plan to directors and employees, and to consultants and other persons who provide substantial services to the Company. The exercise price per share purchasable under an option awarded under the Plan may not be less than the fair market value of a share of stock on the date of grant of the option. The Committee determines the vesting period and term of each option, provided that no ISO is permitted to have a term in excess of ten years after the date of grant. Restricted stock is stock which is subject to certain transfer restrictions and to a risk of forfeiture. The Committee will determine the period over which any restricted stock which is issued under the Plan will vest, and will impose such restrictions on transferability, risk of forfeiture and other restrictions as the Committee may in its discretion determine. Unless restricted by the Committee, a participant granted restricted stock will have all of the rights of a shareholder (except for the aforesaid transfer restrictions and risk of forfeitures), including the right to vote the restricted stock and the right to receive dividends with respect to that stock. Unless otherwise provided by the Committee in the award document or subject to other applicable restrictions, in the event of a Change in Control (as defined in the Plan) all non-forfeited options and awards carrying a right to exercise that was not previously exercisable and vested will become fully exercisable and vested as of the time of the Change in Control, and all restricted stock and awards subject to risk of forfeiture will become fully vested. Stock Options For the three months ended March 31, 2019, there were no stock options granted. Stock-based compensation expense related to the vesting of stock options granted in prior periods was approximately $9,000 during the three month period ended March 31, 2019, as compared to $15,000 for the same three month period in 2018 and is included in salaries and employee benefits on the statement of operations. Total unrecognized compensation cost related to non-vested options granted under the Plan was $46,000 as of March 31, 2019 and will be recognized over the subsequent weighted average life of 1.6 years The following table presents information regarding the Company’s outstanding stock options at March 31, 2019:
The total intrinsic value of options exercised during the three months ended March 31, 2019 and 2018 was $574,000 and $631,000, respectively. Cash received from such exercises was $179,000 and $172,000, respectively. Income tax benefit of $41,000 and $88,000 was recognized in the three months ended March 31, 2019 and 2018, respectively, relating to the adoption of ASU 2016-09, Compensation-Stock Compensation, Improvements to Employee Share-Based Payment Accounting attributable to stock options. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Restricted Stock Restricted stock is valued at the market value on the date of grant and expense is attributed to the period in which the restrictions lapse. Compensation expense related to restricted stock was $74,000 for the three month period ended March 31, 2019, as compared to $50,000 for the three month period ended March 31, 2018 and is included in salaries and employee benefits on the statement of operations. There was no income tax benefit recognized in the three months ended March 31, 2019 relating to the adoption of ASU 2016-09 attributable to restricted stock awards compared to an income tax benefit of $2,000 during the three months ended March 31, 2018. Total unrecognized compensation cost related to restricted stock under the Plan as of March 31, 2019 was $984,000 and will be recognized over the subsequent weighted average life of 3.5 years. The following table summarizes information about restricted stock at March 31, 2019:
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Guarantees |
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Mar. 31, 2019 | |
Guarantees [Abstract] | |
Guarantees | GUARANTEES The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the financial statements. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment. The Company had commitments to extend credit, including unused lines of credit, of approximately $232.1 million and $264.1 million at March 31, 2019 and December 31, 2018, respectively. Standby letters of credit are conditional commitments issued by the Company to guarantee the financial performance of a customer to a third party. Those guarantees are primarily issued to support contracts entered into by customers. Most guarantees extend for one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company defines the fair value of these letters of credit as the fees paid by the customer or similar fees collected on similar instruments. The Company amortizes the fees collected over the life of the instrument. The Company generally obtains collateral, such as real estate or liens on customer assets for these types of commitments. The Company’s potential liability would be reduced by any proceeds obtained in liquidation of the collateral held. As of March 31, 2019 and December 31, 2018, the Company had $3.4 million and $4.2 million, respectively, of commercial and similar letters of credit. Management believes that the current amount of the liability as of March 31, 2019 and December 31, 2018 for guarantees under standby letters of credit issued is not material. |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FHLB And Other Borrowings | FHLB AND OTHER BORROWINGS The Bank utilizes its account relationship with Atlantic Community Bankers Bank to borrow funds through its Federal funds borrowing line in an aggregate amount up to $10.0 million. The Bank also has $36.0 million in unsecured credit facilities with three correspondent banks. These borrowings are priced on a daily basis. The Company had no borrowings outstanding on these lines at March 31, 2019 and December 31, 2018. The Bank also has a remaining borrowing capacity with the Federal Home Loan Bank of New York ("FHLB") of approximately $36.9 million based on the current loan collateral pledged of $135.4 million at March 31, 2019. At March 31, 2019 and December 31, 2018, FHLB and other borrowings consisted of advances from the FHLB, which amounted to $20.7 million and $22.5 million, respectively. These advances had an average interest rate of 1.96% and 1.93% at March 31, 2019 and December 31, 2018, respectively. These advances are contractually scheduled for repayment as follows:
As of March 31, 2019, the FHLB has issued $75.1 million in municipal deposit letters of credit in the name of the Bank naming the NJ Department of Banking and Insurance as beneficiary. This letter of credit will take the place of securities previously pledged to the State of New Jersey for the Bank’s various municipal deposits. |
Securities Sold Under Agreements to Repurchase |
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Offsetting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Sold Under Agreements to Repurchase | SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE The Bank enters into sweep account agreements with certain of its deposit account holders for repo sweep arrangements under which funds in excess of a predetermined amount are removed from each such depositor’s account at the end of each banking day, and the Bank’s obligation to restore those funds to the account at the beginning of the following banking day is evidenced by an integrated retail repurchase agreement (a “Repurchase Agreement”) secured by a collateral interest in favor of the depositor in certain government securities held by a third party custodian. The Bank’s obligation to restore the funds under the Repurchase Agreements is accounted for as a collateralized financing arrangement (i.e., secured borrowings), and not as a sale and subsequent repurchase of securities. The obligation to restore the funds to each account is reflected as a liability in the Company's consolidated balance sheets, while the securities underlying the repurchase agreements remain in the respective securities accounts. There is no offsetting or netting of the securities against the Repurchase Agreement obligation. The following table presents the contractual maturities of the Repurchase Agreements as of March 31, 2019 and December 31, 2018, disaggregated by the class of collateral pledged:
The potential risks associated with the Repurchase Agreements and related pledged collateral, including obligations arising from a decline in the fair value of the pledged collateral, are minimal due to the fact that the Repurchase Agreements pertain to overnight borrowings and therefore not subject to fluctuations in fair market value. |
Subordinated Debentures |
3 Months Ended |
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Mar. 31, 2019 | |
Brokers and Dealers [Abstract] | |
Subordinated Debentures | SUBORDINATED DEBENTURES In December 2015, the Company completed a private placement of $10 million in aggregate principal amount of fixed to floating rate subordinated debentures to certain institutional accredited investors. The subordinated debentures have a maturity date of December 31, 2025 and bear interest, payable quarterly, at the rate of 6.25% per annum until January 1, 2021. On that date, the interest rate will be adjusted to float at an annual rate equal to the prevailing three-month LIBOR rate plus 464 basis points (4.64%) until maturity. The debentures include a right of prepayment, without penalty, on or after December 14, 2020 and, in certain limited circumstances, before that date. The indebtedness evidenced by the subordinated debentures, including principal and interest, is unsecured and subordinate and junior in right to payment to general and secured creditors of the Company and depositors and all other creditors of the Bank. The subordinated debentures have been structured to qualify as Tier 2 capital for regulatory purposes. Subordinated debentures totaled $9.9 million at March 31, 2019 and December 31, 2018, respectively, which includes $68,000 and $77,000, respectively, of remaining unamortized debt issuance costs at March 31, 2019 and December 31, 2018. The debt issuance costs are being amortized over the expected life of the issue. The effective interest rate of the subordinated debentures is 6.67%. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS Accounting guidance establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity). An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2019 and December 31, 2018 are as follows:
As of March 31, 2019 and December 31, 2018, there were no securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3). For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2019 and December 31, 2018 are as follows:
The Company’s policy is to recognize transfers between levels as of the beginning of the period. There were no transfers between Levels 1, 2 and 3 for the three months ended March 31, 2019 and 2018. The following valuation techniques were used to measure fair value of assets in the tables above:
The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at March 31, 2019 and December 31, 2018: Securities: The fair value of securities available-for-sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). See Note 6, Securities, for more information regarding the CRA Mutual Fund. At March 31, 2019 and December 31, 2018, there were no Level 3 securities. The estimated fair values of the Company’s financial instruments at March 31, 2019 and December 31, 2018 were as follows:
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Income Taxes |
3 Months Ended |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The Company follows FASB ASC Topic 740, “Income Taxes,” which prescribes a threshold for the financial statement recognition of income taxes and provides criteria for the measurement of tax positions taken or expected to be taken in a tax return. ASC 740 also includes guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition of income taxes. On December 22, 2017, H.R.1 (originally known as the Tax Cuts and Jobs Act (the "Tax Act") was signed into law, lowering the corporate income tax rate from 34 percent to 21 percent. This provided significant tax benefits in 2018 by lowering the effective tax rate. On July 1, 2018, New Jersey's Assembly Bill 4202 was signed into law. The new Bill, effective January 1, 2018, imposed a temporary surtax on corporations earning New Jersey allocated income in excess of $1 million at a rate of 2.5% for tax years beginning on or after January 1, 2018, through December 31, 2019, and at 1.5% for tax years beginning on or after January 1, 2020, through December 31, 2021. In addition, effective for periods on or after January 1, 2019, New Jersey is adopting mandatory unitary combined reporting for its Corporation Business Tax. For the three months ended March 31, 2019, the Company reported income tax expense of $997,000 for an effective tax rate of 26.4%, compared to an income tax expense of $807,000 for an effective tax rate of 23.2% for the same period last year. This was due to a lower tax benefit related to the accounting treatment of equity-based compensation, in which a $41,000 benefit was recognized in the first quarter of 2019 compared to a $90,000 benefit from the same period last year. Additionally, New Jersey enacted a Corporation Business Tax surtax of 2.5%, which did not take effect until July 1, 2018 and, as such, negatively impacted income tax expense by approximately $75,000 in the first quarter of 2019 compared to the same period in 2018. The Company did not recognize or accrue any interest or penalties related to income taxes during the for the three months ended March 31, 2019 or 2018. The Company did not have an accrual for uncertain tax positions as of March 31, 2019 or December 31, 2018, as deductions taken and benefits accrued are based on widely understood administrative practices and procedures and are based on clear and unambiguous tax law. |
Shareholders' Equity |
3 Months Ended |
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Mar. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | SHAREHOLDERS’ EQUITY On January 24, 2019, the Company announced that its Board of Directors approved a new Share Repurchase Program. This new program allows for the Company to repurchase up to $2.0 million of its common stock from January 1, 2019 to December 31, 2019. During the three months ended March 31, 2019, the Company did not repurchase any shares of its common stock. |
Subsequent Event |
3 Months Ended |
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Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENT On April 17, 2019, the Board of Directors declared a quarterly cash dividend of $0.07 per share to common shareholders of record at the close of business on May 10, 2019, payable on May 30, 2019. |
Basis of Presentation (Policies) |
3 Months Ended |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Two River Bancorp (the “Company”), a bank holding company, and its wholly-owned subsidiary, Two River Community Bank (“Two River” or the “Bank”); Two River’s wholly-owned subsidiaries, TRCB Investment Corporation and TRCB Holdings Eight LLC. All inter-company balances and transactions have been eliminated in the consolidated financial statements. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for full year financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2018 (the “2018 Form 10-K”). For a description of the Company’s significant accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements in the 2018 Form 10-K. The Company has evaluated events and transactions occurring subsequent to the balance sheet date of March 31, 2019 for items that should potentially be recognized or disclosed in these consolidated financial statements. |
New Accounting Standards | NEW ACCOUNTING STANDARDS ASU 2016-02: In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize leases on-balance sheet, makes targeted changes to lessor accounting, and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. ASC 842 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2018. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) the effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company has elected to use the effective date, January 1, 2019, as the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. From the lessee's perspective, the new standard establishes a right-of-use ("ROU") model that requires a lessee to recognize a ROU asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months, subject to a policy election. The Company has elected the short-term lease recognition exemption such that the Company will not recognize ROU assets or lease liabilities for leases with a term of less than 12 months from the commencement date. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for a leasee. Additionally, the ASU expands quantitative and qualitative disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new leasing standard provides a number of optional practical expedients in transition. The Company has elected the "package of practical expedients," which permits the Company not to reassess prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the Company. ASC 842 also provides certain accounting policy elections for an entity's ongoing accounting. For operating leases wherein the Company is the lessee, the Company has elected the practical expedient to not separate lease and non-lease components. Under legacy lease accounting, all of the Company's leases, which primarily relate to office space and bank branches, were classified as operating leases and, as such, are not recognized on the Company's Consolidated Balance Sheet for periods prior to the adoption of ASC 842. The Company engaged a third-party vendor and used their software to assist in implementing this ASU. Due to the adoption of ASU 2016-02, the Company recognized an operating right-of-use asset of $5.0 million and a lease liability of $5.1 million on its balance sheet as of March 31, 2019. This negatively impacted the Company's capital ratios by approximately 5 basis points compared to December 31, 2018. See Note 8, Leases, for more information. ASU 2016-13: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This ASU requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. The ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. For public entities that are SEC filers, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has formed a CECL committee, which has assessed our data and system needs, and has engaged a third-party vendor to assist in analyzing our data and developing a CECL model. The Company, in conjunction with this vendor, has researched and analyzed modeling standards, loan segmentation, as well as potential external inputs to supplement our historical loss history. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the ASU is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the ASU on our consolidated financial statements. ASU 2017-04: In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350). ASU 2017-04 removes Step 2 from the goodwill impairment test. Under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. For public entities that are SEC filers, this ASU is effective for its annual, or any goodwill impairment tests in fiscal years, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the new guidance but has determined that this standard should not have a material impact on its consolidated financial statements. ASU 2017-08: In March 2017, the FASB issued ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 will be effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. We are currently evaluating this ASU to determine the impact on our consolidated financial statements. ASU 2018-13: In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 includes certain removals, modifications and additions to the disclosure requirements on fair value measurements in Topic 820. The updated guidance is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted. The Company is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. The impact on the consolidated financial statements of the Company will depend on the facts and circumstances of any specific future transactions. The Company has elected not to early adopt the additional disclosures required by the ASU until their effective date. ASU 2019-01: In March 2019, the FASB issued ASU No. 2019-01, Leases: Codification Improvements. This ASU (1) states that for lessors that are not manufacturers or dealers, the fair value of the underlying asset is its cost, less any volume or trade discounts, as long as there isn’t a significant amount of time between acquisition of the asset and lease commencement; (2) clarifies that lessors in the scope of ASC 942 (such as the Company) must classify principal payments received from sales-type and direct financing leases in investing activities in the statement of cash flows; and (3) clarifies the transition guidance related to certain interim disclosures provided in the year of adoption. To coincide with the adoption of ASU No. 2016-02, the Company elected to early adopt ASU 2019-01 on January 1, 2019. The adoption of this ASU did not have a material impact on its consolidated financial statements. |
Revenue Recognition (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31, 2019 and 2018.
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Earnings Per Common Share (Tables) |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computations of basic and diluted earnings per common share:
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Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gain (Loss) on Investments | The amortized cost, gross unrealized gains and losses, and fair values of the Company’s securities are summarized as follows:
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Investments Classified by Contractual Maturity Date | The amortized cost and fair value of the Company’s debt securities at March 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | The tables below indicate the length of time individual securities have been in a continuous unrealized loss position at March 31, 2019 and December 31, 2018:
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Loans Receivable And Allowance For Loan Losses (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of the Loan Portfolio Held for Investment | The components of the loan portfolio held for investment at March 31, 2019 and December 31, 2018 are as follows:
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Past Due Financing Receivables | The following tables present the classes of the loan portfolio summarized by the past due status as of March 31, 2019 and December 31, 2018:
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Non-Accrual Loans by Classes of the Loan Portfolio | The following table presents non-accrual loans by classes of the loan portfolio at March 31, 2019 and December 31, 2018:
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Summarized Information by Impaired Loans by Loan Portfolio Class | The following tables summarize information in regards to both the recorded investment balance information for impaired loans by loan portfolio class at March 31, 2019 and December 31, 2018, and the average recorded investment balance information for impaired loans by loan portfolio class for the three months ended March 31, 2019 and 2018, respectively:
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Classes of Loan Portfolio Summarized by Aggregate Pass Rating | The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of March 31, 2019 and December 31, 2018:
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Schedule of Allowance for Loan Losses | The following tables present the balance in the allowance for loan losses at March 31, 2019 and December 31, 2018 disaggregated on the basis of the Company’s impairment method by class of loans receivable along with the balance of loans receivable by class disaggregated on the basis of the Company’s impairment methodology:
The following table presents the change in the allowance for loan losses by classes of loans for the three months ended March 31, 2019 and 2018:
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Supplemental Information | The table below summarizes information related to our operating leases:
(1) Variable lease costs represents variable payments, such as common area maintenance and utilities. |
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Operating Lease Liability Maturity |
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Stock-Based Compensation Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The following table presents information regarding the Company’s outstanding stock options at March 31, 2019:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The following table summarizes information about restricted stock at March 31, 2019:
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FHLB And Other Borrowings (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | These advances are contractually scheduled for repayment as follows:
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Securities Sold Under Agreements to Repurchase (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Repurchase Agreements Maturities | The following table presents the contractual maturities of the Repurchase Agreements as of March 31, 2019 and December 31, 2018, disaggregated by the class of collateral pledged:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2019 and December 31, 2018 are as follows:
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Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques | For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2019 and December 31, 2018 are as follows:
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Fair Value, by Balance Sheet Grouping | The estimated fair values of the Company’s financial instruments at March 31, 2019 and December 31, 2018 were as follows:
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New Accounting Standards (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Jan. 01, 2019 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 4,997 | |
Operating lease liabilities | $ 5,127 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 5,000 | |
Operating lease liabilities | $ 5,100 | |
Reduction in capital ratio | 0.05% |
Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Disaggregation of Revenue [Line Items] | ||
Non-Interest Income (in-scope of Topic 606) | $ 311 | $ 371 |
Non-Interest Income (out-of-scope of Topic 606) | 846 | 939 |
Total Non-Interest Income | 1,157 | 1,310 |
Service fees on deposit accounts | ||
Disaggregation of Revenue [Line Items] | ||
Non-Interest Income (in-scope of Topic 606) | 166 | 238 |
Other income | ||
Disaggregation of Revenue [Line Items] | ||
Non-Interest Income (in-scope of Topic 606) | $ 145 | $ 133 |
Goodwill (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment loss | $ 0 | |
Goodwill | $ 18,109,000 | $ 18,109,000 |
Earnings Per Common Share (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Employee Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 |
Earnings Per Common Share - Basic and Diluted Earning Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 2,783 | $ 2,676 |
Weighted average common shares outstanding – Basic (in shares) | 8,583 | 8,447 |
Effect of dilutive stock options and restricted stock (in shares) | 129 | 228 |
Weighted average common shares outstanding – Diluted (in shares) | 8,712 | 8,675 |
Basic earnings per common share (in dollars per share) | $ 0.32 | $ 0.32 |
Diluted earnings per common share (in dollars per share) | $ 0.32 | $ 0.31 |
Loans Receivable And Allowance For Loan Losses (Details) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2019
USD ($)
segment
loan
|
Mar. 31, 2018
USD ($)
loan
|
Dec. 31, 2018
USD ($)
loan
|
|
Financing Receivable, Impaired [Line Items] | |||
Transfer of loans held for investment to loans held for sale | $ 1,936,000 | $ 4,980,000 | |
Gain on sale of loans transferred from held for investment to held for sale | $ 37,000 | $ 100,000 | |
Number loans receivable portfolio segments | segment | 5 | ||
Number of troubled debt restructured contracts | loan | 0 | 0 | |
Troubled debt restructuring, amount | $ 7,400,000 | $ 7,700,000 | |
Troubled debt restructuring current, amount | 6,700,000 | 6,800,000 | |
Trouble debt restructuring, non-accrual loans, amount | 711,000 | 877,000 | |
Trouble debt restructuring, specific reserve | $ 0 | $ 0 | |
Loans receivable modified as TDRs | loan | 0 | 0 | |
Non Accrual Loans | |||
Financing Receivable, Impaired [Line Items] | |||
Number of troubled debt restructured contracts | loan | 5 | 6 |
Loans Receivable And Allowance For Loan Losses - Financing Receivables, Non Accrual Status (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Non-accrual loans | $ 3,908 | $ 1,390 |
Commercial Portfolio Segment | Commercial and industrial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Non-accrual loans | 600 | 765 |
Commercial Portfolio Segment | Real estate – construction | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Non-accrual loans | 2,833 | 150 |
Commercial Portfolio Segment | Real estate – commercial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Non-accrual loans | 54 | 54 |
Consumer Portfolio Segment | Real estate – residential | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Non-accrual loans | 227 | 227 |
Consumer Portfolio Segment | Consumer | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Non-accrual loans | $ 194 | $ 194 |
Leases - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Lessee, Lease, Description [Line Items] | ||
Operating lease expense | $ 455 | |
Operating leases expense | $ 451 | |
Operating lease right-of-use assets | 4,997 | |
Operating lease liabilities | $ 5,127 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 1 year | |
Operating lease renewal term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 10 years | |
Operating lease renewal term | 5 years |
Leases - Operating Lease Supplemental Information (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Right-of-use asset | $ 4,997 |
Weighted remaining lease term in years | 4 years 6 months |
Weighted average discount rate | 4.30% |
Operating cash flows from operating leases | $ 370 |
Variable lease costs | $ 85 |
Leases - Operating Lease Liability Maturity (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
2020 | $ 1,427 |
2021 | 1,329 |
2022 | 1,175 |
2023 | 803 |
2024 | 410 |
Thereafter | 503 |
Total Lease Payments | 5,647 |
Interest | (520) |
Present Value of Lease Liabilities | $ 5,127 |
Stock-Based Compensation Plans - Summary of Restricted Stock (Details) - Restricted Stock |
3 Months Ended |
---|---|
Mar. 31, 2019
$ / shares
shares
| |
Number of Shares | |
Unvested period start (in shares) | shares | 68,040 |
Restricted stock earned (in shares) | shares | (4,103) |
Granted (in shares) | shares | 12,150 |
Awards forfeited (in shares) | shares | 0 |
Unvested period end (in shares) | shares | 76,087 |
Weighted Average Price | |
Unvested period start (in dollars per share) | $ / shares | $ 15.61 |
Restricted stock earned (in dollars per share) | $ / shares | 10.65 |
Granted (in dollars per share) | $ / shares | 15.86 |
Awards forfeited (in dollars per share) | $ / shares | 0.00 |
Unvested period end (in dollars per share) | $ / shares | $ 15.94 |
Guarantees (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Guarantees [Abstract] | ||
Unused commitments to extend credit | $ 232.1 | $ 264.1 |
Commercial and similar letters of credit | $ 3.4 | $ 4.2 |
FHLB And Other Borrowings (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
FHLB and other borrowings | $ 20,700,000 | $ 22,500,000 |
Municipal deposit letters issued by FHLB | 3,400,000 | 4,200,000 |
Federal Fund Borrowing Line | Atlantic Community Bankers Bank | ||
Debt Instrument [Line Items] | ||
Line of credit maximum borrowing capacity | 10,000,000.0 | |
Outstanding borrowings | 0 | 0 |
Federal Home Loan Bank | ||
Debt Instrument [Line Items] | ||
Line of credit remaining borrowing capacity | 36,900,000 | |
Current collateral pledged | 135,400,000 | |
FHLB and other borrowings | $ 20,700,000 | $ 22,500,000 |
FHLB advances weighted average interest rate | 1.96% | 1.93% |
Municipal deposit letters issued by FHLB | $ 75,100,000 | |
Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Line of credit maximum borrowing capacity | 36,000,000.0 | |
Outstanding borrowings | $ 0 | $ 0 |
Subordinated Debentures (Details) - USD ($) $ in Thousands |
1 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Subordinated Borrowing [Line Items] | |||
Proceeds from issuance of subordinated long-term debt | $ 10,000 | ||
Subordinated borrowing, interest rate | 6.25% | ||
Subordinated debt | $ 9,932 | $ 9,923 | |
Subordinated Debt | |||
Subordinated Borrowing [Line Items] | |||
Unamortized debt issuance expense | $ 68 | $ 77 | |
Fixed rate note interest rate | 6.67% | ||
Subordinated Debt | London Interbank Offered Rate (LIBOR) | |||
Subordinated Borrowing [Line Items] | |||
Variable interest rate | 4.64% |
Fair Value Measurements - Assets Measured on a Nonrecurring Basis (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net of partial charge-offs | $ 2,683 | |
OREO | $ 585 | |
(Level 1) Quoted Prices in Active Markets for Identical Assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net of partial charge-offs | 0 | |
OREO | 0 | |
(Level 2) Significant Other Observable Inputs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net of partial charge-offs | 0 | |
OREO | 0 | |
(Level 3) Significant Unobservable Inputs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired loans, net of partial charge-offs | $ 2,683 | |
OREO | $ 585 |
Fair Value Measurements- Narrative (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019
USD ($)
loan
|
Dec. 31, 2018
USD ($)
loan
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of impaired loans | 1 | |
Loans which received a discount | 0 | |
Liquidation expense percentage | 6.70% | |
Number of loans in foreclosure process | 3 | 3 |
Secured mortgage loan, real estate value | $ | $ 598,000 | $ 598,000 |
(Level 3) Significant Unobservable Inputs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Level 3 securities | $ | $ 0 | $ 0 |
Other Real Estate Owned | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liquidation expense percentage | 9.50% |
Income Taxes (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 997,000 | $ 807,000 |
Effective income tax rate | 26.40% | 23.20% |
Income tax benefit from equity-based compensation | $ 41,000 | $ 90,000 |
Income tax expense from Corporation Business Tax | 75,000 | |
Interest and penalties recognized | 0 | 0 |
Interest and penalties accrued | $ 0 | $ 0 |
Shareholders' Equity (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Jan. 24, 2019 |
|
Equity [Abstract] | ||
Stock repurchase program authorized amount | $ 2,000,000.0 | |
Common stock repurchased (in shares) | 0 |
Subsequent Event (Details) |
Apr. 17, 2019
$ / shares
|
---|---|
Subsequent Event | |
Subsequent Event [Line Items] | |
Cash dividends on common stock, per share (in dollars per share) | $ 0.07 |
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