California | 20-8859754 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) | |
504 Redwood Boulevard, Suite 100, Novato, CA | 94947 | |
(Address of principal executive office) | (Zip Code) |
Common Stock, No Par Value, | ||
and attached Share Purchase Rights | NASDAQ Capital Market | |
(Title of each class) | (Name of each exchange on which registered) |
Large accelerated filer o | Accelerated filer x | |
Non-accelerated filer o | (Do not check if a smaller reporting company) | Smaller reporting company x |
Emerging growth company o |
PART I | ||
Forward-Looking Statements | ||
ITEM 1. | BUSINESS | |
ITEM 1A. | RISK FACTORS | |
ITEM 1B. | UNRESOLVED STAFF COMMENTS | |
ITEM 2. | PROPERTIES | |
ITEM 3. | LEGAL PROCEEDINGS | |
ITEM 4. | MINE SAFETY DISCLOSURES | |
PART II | ||
ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | |
ITEM 6. | SELECTED FINANCIAL DATA | |
ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | |
Forward-Looking Statements | ||
Critical Accounting Policies | ||
Executive Summary | ||
RESULTS OF OPERATIONS | ||
Net Interest Income | ||
Provision for Loan Losses | ||
Non-Interest Income | ||
Non-Interest Expense | ||
Provision for Income Taxes | ||
FINANCIAL CONDITION | ||
Investment Securities | ||
Loans | ||
Allowance for Loan Losses | ||
Other Assets | ||
Deposits | ||
Borrowings | ||
Deferred Compensation Obligations | ||
Off Balance Sheet Arrangements and Commitments | ||
Capital Adequacy | ||
Liquidity | ||
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Note 1: Summary of Significant Accounting Policies | ||
Note 2: Investment Securities | ||
Note 3: Loans and Allowance for Loan Losses | ||
Note 4: Bank Premises and Equipment | ||
Note 5: Bank Owned Life Insurance | ||
Note 6: Deposits | ||
Note 7: Borrowings | ||
Note 8: Stockholders' Equity and Stock Plans | ||
Note 9: Fair Value of Assets and Liabilities | ||
Note 10: Benefit Plans | ||
Note 11: Income Taxes | ||
Note 12: Commitments and Contingencies | ||
Note 13: Concentrations of Credit Risk | ||
Note 14: Derivative Financial Instruments and Hedging Activities | ||
Note 15: Regulatory Matters | ||
Note 16: Financial Instruments with Off-Balance Sheet Risk | ||
Note 17: Condensed Bank of Marin Bancorp Parent Only Financial Statements | ||
Note 18: Acquisition | ||
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | |
ITEM 9A. | CONTROLS AND PROCEDURES | |
ITEM 9B. | OTHER INFORMATION | |
PART III | ||
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | |
ITEM 11. | EXECUTIVE COMPENSATION | |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | |
PART IV | ||
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | |
ITEM 16. | FORM 10-K SUMMARY | |
SIGNATURES |
• | unexpected problems with operations, personnel, technology or credit; |
• | loss of customers and employees of the acquiree; |
• | difficulty in working with the acquiree's employees and customers; |
• | the assimilation of the acquiree's operations, culture and personnel; |
• | instituting and maintaining uniform standards, controls, procedures and policies; and |
• | litigation risk not discovered during the due diligence period. |
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |||||||
Bank of Marin Bancorp (BMRC) | 100.00 | 123.34 | 127.50 | 169.97 | 168.53 | 207.70 | ||||||
Russell 2000 Index | 100.00 | 104.89 | 100.26 | 121.63 | 139.44 | 124.09 | ||||||
SNL Bank $1B - $5B Index 1 | 100.00 | 104.56 | 117.04 | 168.38 | 179.51 | 157.27 | ||||||
Source: S&P Global Market Intelligence |
Shares to be issued upon exercise of outstanding options1 | Weighted average exercise price of outstanding options | Shares remaining available for future issuance 2 | ||||
Equity compensation plans approved by shareholders | 425,700 | $ | 25.01 | 1,262,182 |
(in thousands, except per share data) | Total Number of Shares Purchased 1 | Average Price Paid per Share 1 | Total Number of Shares Purchased as Part of Publicly Announced Programs 1 | Approximate Dollar Value That May yet Be Purchased Under the Program | ||||||
Period | ||||||||||
April 23-30, 2018 | — | $ | — | — | $ | 25,000 | ||||
May 1-31, 2018 | 2,796 | 37.03 | 2,796 | 24,896 | ||||||
June 1-30, 2018 | — | — | — | 24,896 | ||||||
July 1-31, 2018 | — | — | — | 24,896 | ||||||
August 1-31, 2018 | 8,888 | 44.43 | 8,888 | 24,501 | ||||||
September 1-30, 2018 | 24,202 | 42.99 | 24,202 | 23,460 | ||||||
October 1-30, 2018 | 29,890 | 40.68 | 29,890 | 22,244 | ||||||
November 1-30, 2018 | 34,754 | 42.10 | 34,754 | 20,779 | ||||||
December 1-31, 2018 | 70,687 | 39.44 | 70,687 | 17,988 | ||||||
Total | 171,217 | $ | 40.92 | 171,217 |
At December 31, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||
Selected financial condition data: | |||||||||||||||
Total assets | $ | 2,520,892 | $ | 2,468,154 | $ | 2,023,493 | $ | 2,031,134 | $ | 1,787,130 | |||||
Loans, net | 1,748,043 | 1,663,246 | 1,471,174 | 1,436,299 | 1,348,252 | ||||||||||
Deposits | 2,174,840 | 2,148,670 | 1,772,700 | 1,728,226 | 1,551,619 | ||||||||||
Borrowings | 9,640 | 5,739 | 5,586 | 72,395 | 20,185 | ||||||||||
Stockholders' equity | 316,407 | 297,025 | 230,563 | 214,473 | 200,026 | ||||||||||
For the Years Ended December 31, | |||||||||||||||
(dollars in thousands, except per share data) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||
Selected operating data: | |||||||||||||||
Net interest income | $ | 91,544 | $ | 74,852 | $ | 73,161 | $ | 67,187 | $ | 70,441 | |||||
Provision for (reversal of) loan losses | — | 500 | (1,850 | ) | 500 | 750 | |||||||||
Non-interest income | 10,139 | 8,268 | 9,161 | 9,193 | 9,041 | ||||||||||
Non-interest expense 1 | 58,266 | 53,782 | 47,692 | 46,949 | 47,263 | ||||||||||
Net income 1 | 32,622 | 15,976 | 23,134 | 18,441 | 19,771 | ||||||||||
Net income per common share:6 | |||||||||||||||
Basic | $ | 2.35 | $ | 1.29 | $ | 1.90 | $ | 1.55 | $ | 1.68 | |||||
Diluted | $ | 2.33 | $ | 1.27 | $ | 1.89 | $ | 1.52 | $ | 1.65 | |||||
At or for the Years Ended December 31, | |||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||
Performance and other financial ratios: | |||||||||||||||
Return on average assets | 1.31 | % | 0.75 | % | 1.15 | % | 0.98 | % | 1.08 | % | |||||
Return on average equity | 10.73 | % | 6.49 | % | 10.23 | % | 8.84 | % | 10.31 | % | |||||
Tax-equivalent net interest margin 2 | 3.90 | % | 3.80 | % | 3.91 | % | 3.83 | % | 4.13 | % | |||||
Efficiency ratio | 57.30 | % | 64.70 | % | 57.93 | % | 61.47 | % | 59.46 | % | |||||
Loan-to-deposit ratio | 81.10 | % | 78.14 | % | 83.86 | % | 83.97 | % | 87.87 | % | |||||
Cash dividend payout ratio on common stock 3 | 27.23 | % | 43.41 | % | 26.84 | % | 29.03 | % | 23.81 | % | |||||
Cash dividends per common share 6 | $ | 0.64 | $ | 0.56 | $ | 0.51 | $ | 0.45 | $ | 0.40 | |||||
Asset quality ratios: | |||||||||||||||
Allowance for loan losses to total loans | 0.90 | % | 0.94 | % | 1.04 | % | 1.03 | % | 1.11 | % | |||||
Allowance for loan losses to non-performing loans 4 | 22.71x | 38.88x | 106.5x | 6.88x | 1.61x | ||||||||||
Non-performing loans to total loans 4 | 0.04 | % | 0.02 | % | 0.01 | % | 0.15 | % | 0.69 | % | |||||
Capital ratios: | |||||||||||||||
Equity to total assets ratio | 12.55 | % | 12.03 | % | 11.39 | % | 10.60 | % | 11.20 | % | |||||
Tangible common equity to tangible assets 5 | |||||||||||||||
Total capital (to risk-weighted assets) | 14.93 | % | 14.91 | % | 14.32 | % | 13.37 | % | 13.94 | % | |||||
Tier 1 capital (to risk-weighted assets) | 14.10 | % | 14.04 | % | 13.37 | % | 12.44 | % | 12.87 | % | |||||
Tier 1 capital (to average assets) | 11.54 | % | 12.13 | % | 11.39 | % | 10.67 | % | 10.62 | % | |||||
Common equity Tier 1 capital (to risk-weighted assets) | 13.98 | % | 13.75 | % | 13.07 | % | 12.16 | % | N/A | ||||||
Other data: | |||||||||||||||
Number of full service offices | 23 | 23 | 20 | 20 | 21 | ||||||||||
Full time equivalent employees | 290 | 291 | 262 | 259 | 260 |
• | In 2018, we expanded our footprint in the East Bay and strengthened our team in Sonoma County. We added key people to open a new commercial banking office in Walnut Creek and enhanced our presence in our Santa Rosa market. |
• | The Bank achieved loan growth of $84.9 million, or 5.1% in 2018, to $1,763.9 million at December 31, 2018, from $1,679.0 million at December 31, 2017. |
• | Strong credit quality remains a cornerstone of the Bank’s consistent performance. Non-accrual loans represented 0.04% of the Bank's loan portfolio as of December 31, 2018. There was no provision for loan losses recorded in 2018 due to continuing high credit quality. |
• | Deposits grew by $26.1 million to $2,174.8 million at December 31, 2018, compared to $2,148.7 million at December 31, 2017. Non-interest bearing deposits grew by $51.9 million in 2018 and made up 49% of total deposits at year-end. For the full year 2018, cost of total deposits remained low at 0.10% despite the higher interest rate environment, compared to 0.07% in 2017. |
• | Net interest income totaled $91.5 million and $74.9 million in 2018 and 2017, respectively. The increase of $16.6 million in 2018 was primarily due to a $337.7 million increase in average earning assets. Additionally, higher yields on loans, investment securities and interest-bearing cash positively impacted interest income. The tax-equivalent net interest margin increased to 3.90% in 2018 compared to 3.80% in 2017 for the same reasons, despite the 0.04% negative impact from the early redemption of a subordinated debenture. |
• | Pre-tax net income in 2018 was $43.4 million, up $14.6 million, or 50.6% over 2017 pretax net income of $28.8 million. Higher average balances and yields on both loans and investment securities favorably impacted earnings in the current year. |
• | The efficiency ratio was 57.3% in 2018, down from 64.7% in 2017. |
• | For the year ended December 31, 2018, return on assets was 1.31% and return on equity was 10.73%. |
• | All capital ratios exceed regulatory requirements. The total risk-based capital ratio for Bancorp was 14.9% at both December 31, 2018 and December 31, 2017. |
• | On April 23, 2018, Bancorp announced that its Board of Directors approved a Share Repurchase Program under which Bancorp may repurchase up to $25.0 million of its outstanding common stock through May 1, 2019. During 2018, Bancorp repurchased 171,217 shares for a total amount of $7.0 million. |
• | On October 22, 2018, Bancorp announced a two-for-one stock split, which occurred on November 27, 2018. |
• | The Board of Directors declared a cash dividend of $0.19 per share on January 25, 2019, a $0.015 increase from the prior quarter. This was the 55th consecutive quarterly dividend paid by Bank of Marin Bancorp. Since August 2005, Bancorp's average annual dividend growth rate has been 10.2%. The cash dividend was paid on February 15, 2019 to shareholders of record at the close of business on February 8, 2019. |
Table 1 Average Statements of Condition and Analysis of Net Interest Income | ||||||||||||||||||
Year ended | Year ended | |||||||||||||||||
December 31, 2018 | December 31, 2017 | |||||||||||||||||
Interest | Interest | |||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||
(dollars in thousands; unaudited) | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||
Assets | ||||||||||||||||||
Interest-bearing due from banks 1 | $ | 78,185 | $ | 1,461 | 1.84 | % | $ | 80,351 | $ | 995 | 1.22 | % | ||||||
Investment securities 2, 3 | 566,883 | 14,512 | 2.56 | % | 419,873 | 9,732 | 2.32 | % | ||||||||||
Loans 1, 3, 4 | 1,704,390 | 80,406 | 4.65 | % | 1,511,503 | 68,562 | 4.47 | % | ||||||||||
Total interest-earning assets 1 | 2,349,458 | 96,379 | 4.05 | % | 2,011,727 | 79,289 | 3.89 | % | ||||||||||
Cash and non-interest-bearing due from banks | 41,595 | 42,511 | ||||||||||||||||
Bank premises and equipment, net | 8,021 | 8,411 | ||||||||||||||||
Interest receivable and other assets, net | 86,709 | 63,301 | ||||||||||||||||
Total assets | $ | 2,485,783 | $ | 2,125,950 | ||||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||
Interest-bearing transaction accounts | $ | 143,706 | $ | 226 | 0.16 | % | $ | 105,544 | $ | 108 | 0.10 | % | ||||||
Savings accounts | 178,907 | 72 | 0.04 | % | 167,190 | 66 | 0.04 | % | ||||||||||
Money market accounts | 612,372 | 1,355 | 0.22 | % | 542,592 | 555 | 0.10 | % | ||||||||||
Time accounts, including CDARS | 137,339 | 542 | 0.39 | % | 146,069 | 576 | 0.39 | % | ||||||||||
FHLB and overnight borrowings 1 | 105 | 2 | 2.03 | % | 1 | — | 1.75 | % | ||||||||||
Subordinated debentures 1 | 5,025 | 1,339 | 26.29 | % | 5,664 | 439 | 7.65 | % | ||||||||||
Total interest-bearing liabilities | 1,077,454 | 3,536 | 0.33 | % | 967,060 | 1,744 | 0.18 | % | ||||||||||
Demand accounts | 1,085,870 | 899,289 | ||||||||||||||||
Interest payable and other liabilities | 18,514 | 13,506 | ||||||||||||||||
Stockholders' equity | 303,945 | 246,095 | ||||||||||||||||
Total liabilities & stockholders' equity | $ | 2,485,783 | $ | 2,125,950 | ||||||||||||||
Tax-equivalent net interest income/margin 1 | $ | 92,843 | 3.90 | % | $ | 77,545 | 3.80 | % | ||||||||||
Reported net interest income/margin 1 | $ | 91,544 | 3.84 | % | $ | 74,852 | 3.67 | % | ||||||||||
Tax-equivalent net interest rate spread | 3.72 | % | 3.71 | % | ||||||||||||||
1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable. | ||||||||||||||||||
2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity. Investment security interest is earned on 30/360 day basis monthly. | ||||||||||||||||||
3 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the federal statutory rate of 21% in 2018 and 35% in 2017. | ||||||||||||||||||
4 Average balances on loans outstanding include non-performing loans. The amortized portion of net loan origination fees is included in interest income on loans, representing an adjustment to the yield. |
2018 compared to 2017 | ||||||||||||
(in thousands, unaudited) | Volume | Yield/Rate | Mix | Total | ||||||||
Interest-bearing due from banks | $ | (27 | ) | $ | 507 | $ | (14 | ) | $ | 466 | ||
Investment securities 1 | 3,408 | 1,016 | 356 | 4,780 | ||||||||
Loans 1 | 8,749 | 2,745 | 350 | 11,844 | ||||||||
Total interest-earning assets | 12,130 | 4,268 | 692 | 17,090 | ||||||||
Interest-bearing transaction accounts | 39 | 58 | 21 | 118 | ||||||||
Savings accounts | 5 | 1 | — | 6 | ||||||||
Money market accounts | 71 | 645 | 84 | 800 | ||||||||
Time accounts, including CDARS | (34 | ) | 2 | (2 | ) | (34 | ) | |||||
FHLB borrowings and overnight borrowings | 2 | — | — | 2 | ||||||||
Subordinated debentures | (50 | ) | 1,070 | (120 | ) | 900 | ||||||
Total interest-bearing liabilities | 33 | 1,776 | (17 | ) | 1,792 | |||||||
$ | 12,097 | $ | 2,492 | $ | 709 | $ | 15,298 | |||||
1 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the federal statutory rate of 21% in 2018 and 35% in 2017. |
Years ended December 31, | |||||||||
2018 | 2017 | ||||||||
(dollars in thousands; unaudited) | Dollar Amount | Basis point affect on net interest margin | Dollar Amount | Basis point affect on net interest margin | |||||
Accretion on purchased credit impaired ("PCI") loans | $ | 320 | 1 bps | $ | 331 | 2 bps | |||
Accretion on non-PCI loans | $ | 487 | 2 bps | $ | 571 | 3 bps | |||
Gains on payoffs of PCI loans | $ | 135 | 1 bps | $ | 184 | 1 bps |
Table 3 Components of Non-Interest Income | |||||||||||
Years ended | 2018 compared to 2017 | ||||||||||
December 31, | Amount | Percent | |||||||||
(dollars in thousands; unaudited) | 2018 | 2017 | Increase (Decrease) | Increase (Decrease) | |||||||
Service charges on deposit accounts | $ | 1,891 | $ | 1,784 | $ | 107 | 6.0 | % | |||
Wealth Management and Trust Services | 1,919 | 2,090 | (171 | ) | (8.2 | )% | |||||
Debit card interchange fees | 1,561 | 1,531 | 30 | 2.0 | % | ||||||
Merchant interchange fees | 378 | 398 | (20 | ) | (5.0 | )% | |||||
Earnings on bank-owned life insurance | 913 | 845 | 68 | 8.0 | % | ||||||
Dividends on FHLB stock | 959 | 766 | 193 | 25.2 | % | ||||||
Gains (losses) on investment securities, net | 876 | (185 | ) | 1,061 | 573.5 | % | |||||
Other income | 1,642 | 1,039 | 603 | 58.0 | % | ||||||
Total non-interest income | $ | 10,139 | $ | 8,268 | $ | 1,871 | 22.6 | % |
Table 4 Components of Non-Interest Expense | |||||||||||
Years ended | 2018 compared to 2017 | ||||||||||
December 31, | Amount | Percent | |||||||||
(dollars in thousands; unaudited) | 2018 | 2017 | Increase (Decrease) | Increase (Decrease) | |||||||
Salaries and related benefits | $ | 33,335 | $ | 29,958 | $ | 3,377 | 11.3 | % | |||
Occupancy and equipment | 5,976 | 5,472 | 504 | 9.2 | % | ||||||
Depreciation and amortization | 2,143 | 1,941 | 202 | 10.4 | % | ||||||
FDIC insurance | 756 | 666 | 90 | 13.5 | % | ||||||
Data processing | 4,358 | 4,906 | (548 | ) | (11.2 | )% | |||||
Professional services | 3,317 | 2,858 | 459 | 16.1 | % | ||||||
Directors' expense | 700 | 720 | (20 | ) | (2.8 | )% | |||||
Information technology | 1,023 | 769 | 254 | 33.0 | % | ||||||
Provision for losses on off-balance sheet commitments | — | 57 | (57 | ) | (100.0 | )% | |||||
Other non-interest expense: | |||||||||||
Advertising | 666 | 567 | 99 | 17.5 | % | ||||||
Amortization of core deposit intangible | 921 | 528 | 393 | 74.4 | % | ||||||
Other expense | 5,071 | 5,340 | (269 | ) | (5.0 | )% | |||||
Total other non-interest expense | 6,658 | 6,435 | 223 | 3.5 | % | ||||||
Total non-interest expense | $ | 58,266 | $ | 53,782 | $ | 4,484 | 8.3 | % |
December 31, 2018 | Within 1 Year | 1-5 Years | 5-10 Years | After 10 Years | Total | |||||||||||||||||||||||||||
(dollars in thousands; unaudited) | AmortizedCost1 | Average Yield2 | AmortizedCost1 | Average Yield2 | AmortizedCost1 | Average Yield2 | AmortizedCost1 | Average Yield2 | AmortizedCost1 | Fair Value | Average Yield2 | |||||||||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||||||||||
State and municipal3 | $ | 7,557 | 3.78 | % | $ | 3,554 | 4.93 | % | $ | — | — | % | $ | — | — | % | $ | 11,111 | $ | 11,216 | 4.14 | % | ||||||||||
MBS/CMOs issued by U.S. government agencies | — | — | 39,929 | 2.16 | 83,461 | 2.53 | 22,705 | 2.51 | 146,095 | 142,678 | 2.43 | |||||||||||||||||||||
Total held-to-maturity | 7,557 | 3.78 | 43,483 | 2.38 | 83,461 | 2.53 | 22,705 | 2.51 | 157,206 | 153,894 | 2.55 | |||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
MBS/CMOs issued by U.S. government agencies | 5,927 | 1.73 | 135,077 | 2.51 | 139,882 | 3.10 | — | — | 280,886 | 278,403 | 2.79 | |||||||||||||||||||||
SBA-backed securities | — | — | 2,372 | 2.77 | 48,351 | 2.99 | — | — | 50,723 | 50,781 | 2.98 | |||||||||||||||||||||
State and municipal3 | 13,954 | 1.86 | 26,640 | 2.46 | 37,080 | 2.56 | 1,372 | 4.01 | 79,046 | 77,960 | 2.43 | |||||||||||||||||||||
Debentures of government sponsored agencies | — | — | 41,460 | 2.68 | 11,496 | 3.35 | — | — | 52,956 | 53,018 | 2.82 | |||||||||||||||||||||
Privately issued CMOs | 193 | 3.63 | 102 | 4.43 | — | — | — | — | 295 | 297 | 3.91 | |||||||||||||||||||||
Corporate bonds | 501 | 2.01 | 1,503 | 3.93 | — | — | — | — | 2,004 | 2,005 | 3.45 | |||||||||||||||||||||
Total available-for-sale | 20,575 | 1.85 | 207,154 | 2.55 | 236,809 | 3.01 | 1,372 | 4.01 | 465,910 | 462,464 | 2.76 | |||||||||||||||||||||
Total | $ | 28,132 | 2.36 | % | $ | 250,637 | 2.52 | % | $ | 320,270 | 2.88 | % | $ | 24,077 | 2.59 | % | $ | 623,116 | $ | 616,358 | 2.70 | % | ||||||||||
December 31, 2017 | Within 1 Year | 1-5 Years | 5-10 Years | After 10 Years | Total | |||||||||||||||||||||||||||
(dollars in thousands; unaudited) | AmortizedCost1 | Average Yield2 | AmortizedCost1 | Average Yield2 | AmortizedCost1 | Average Yield2 | AmortizedCost1 | Average Yield2 | AmortizedCost1 | Fair Value | Average Yield2 | |||||||||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||||||||||
State and municipal3 | $ | 7,606 | 4.64 | % | $ | 11,293 | 4.02 | % | $ | 747 | 5.18 | % | $ | — | — | % | $ | 19,646 | $ | 19,998 | 4.31 | % | ||||||||||
MBS/CMOs issued by U.S. government agencies | — | — | 26,245 | 2.18 | 101,291 | 2.26 | 3,850 | 2.64 | 131,386 | 131,034 | 2.26 | |||||||||||||||||||||
Total held-to-maturity | 7,606 | 4.64 | 37,538 | 2.74 | 102,038 | 2.28 | 3,850 | 2.64 | 151,032 | 151,032 | 2.52 | |||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
MBS/CMOs issued by U.S. government agencies | 800 | 1.81 | 118,125 | 2.19 | 45,739 | 2.54 | 24,702 | 2.75 | 189,366 | 188,061 | 2.34 | |||||||||||||||||||||
SBA-backed securities | 167 | 5.23 | 1,759 | 2.12 | 22,554 | 2.57 | 1,499 | 3.09 | 25,979 | 25,982 | 2.59 | |||||||||||||||||||||
State and municipal3 | 7,192 | 1.84 | 51,832 | 2.09 | 36,984 | 2.39 | 2,019 | 4.53 | 98,027 | 97,491 | 2.24 | |||||||||||||||||||||
Debentures of government sponsored agencies | 1,495 | 1.55 | 11,445 | 2.06 | — | — | — | — | 12,940 | 12,938 | 2.00 | |||||||||||||||||||||
Privately issued CMOs | 121 | 3.35 | 1,311 | 2.53 | — | — | — | — | 1,432 | 1,431 | 2.60 | |||||||||||||||||||||
Corporate bonds | 4,531 | 1.94 | 2,010 | 2.88 | — | — | — | — | 6,541 | 6,564 | 2.23 | |||||||||||||||||||||
Total available-for-sale | 14,306 | 1.89 | 186,482 | 2.16 | 105,277 | 2.50 | 28,220 | 2.90 | 334,285 | 332,467 | 2.32 | |||||||||||||||||||||
Total | $ | 21,912 | 2.84 | % | $ | 224,020 | 2.26 | % | $ | 207,315 | 2.39 | % | $ | 32,070 | 2.87 | % | $ | 485,317 | $ | 483,499 | 2.38 | % |
December 31, 2018 | December 31, 2017 | |||||||||||||||
(dollars in thousands; unaudited) | Amortized Cost | Fair Value | % of state and municipal securities | Amortized Cost | Fair Value | % of state and municipal securities | ||||||||||
Within California: | ||||||||||||||||
General obligation bonds | $ | 14,438 | $ | 14,418 | 16.0 | % | $ | 19,634 | $ | 19,678 | 16.7 | % | ||||
Revenue bonds | 7,109 | 7,108 | 7.9 | 11,660 | 11,776 | 9.9 | ||||||||||
Tax allocation bonds | 4,541 | 4,601 | 5.0 | 6,099 | 6,234 | 5.2 | ||||||||||
Total within California | 26,088 | 26,127 | 28.9 | 37,393 | 37,688 | 31.8 | ||||||||||
Outside California: | ||||||||||||||||
General obligation bonds | 56,186 | 55,199 | 62.3 | 68,890 | 68,454 | 58.5 | ||||||||||
Revenue bonds | 7,883 | 7,850 | 8.8 | 11,390 | 11,346 | 9.7 | ||||||||||
Total outside California | 64,069 | 63,049 | 71.1 | 80,280 | 79,800 | 68.2 | ||||||||||
Total obligations of state and political subdivisions | $ | 90,157 | $ | 89,176 | 100.0 | % | $ | 117,673 | $ | 117,488 | 100.0 | % |
• | The soundness of a municipality’s budgetary position and stability of its tax revenues |
• | Debt profile and level of unfunded liabilities, diversity of revenue sources, taxing authority of the issuer |
• | Local demographics/economics including unemployment data, largest local taxpayers and employers, income indices and home values |
• | For revenue bonds, the source and strength of revenue for municipal authorities including obligors' financial condition and reserve levels, annual debt service and debt coverage ratio, and credit enhancement (such as insurer’s strength) |
• | Credit ratings by major credit rating agencies |
(in thousands; unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||
Commercial loans | $ | 230,739 | $ | 235,835 | $ | 218,615 | $ | 219,452 | $ | 210,223 | |||||
Real estate | |||||||||||||||
Commercial owner-occupied | 313,277 | 300,963 | 247,713 | 242,309 | 230,605 | ||||||||||
Commercial investor | 873,410 | 822,984 | 724,228 | 715,879 | 673,499 | ||||||||||
Construction | 76,423 | 63,828 | 74,809 | 65,495 | 48,413 | ||||||||||
Home equity | 124,696 | 132,467 | 117,207 | 112,300 | 110,788 | ||||||||||
Other residential | 117,847 | 95,526 | 78,549 | 73,134 | 73,035 | ||||||||||
Installment and other consumer loans | 27,472 | 27,410 | 25,495 | 22,639 | 16,788 | ||||||||||
Total loans | 1,763,864 | 1,679,013 | 1,486,616 | 1,451,208 | 1,363,351 | ||||||||||
Allowance for loan losses | (15,821 | ) | (15,767 | ) | (15,442 | ) | (14,999 | ) | (15,099 | ) | |||||
Total net loans | $ | 1,748,043 | $ | 1,663,246 | $ | 1,471,174 | $ | 1,436,209 | $ | 1,348,252 |
December 31, 2018 | December 31, 2017 | ||||||||||
(dollars in thousands; unaudited) | Amount | % of Commercial real estate loans | Amount | % of Commercial real estate loans | |||||||
Marin | $ | 342,163 | 28.8 | % | $ | 341,827 | 30.4 | % | |||
Sonoma | 177,087 | 14.9 | 167,014 | 14.9 | |||||||
Napa | 168,394 | 14.2 | 151,778 | 13.5 | |||||||
Alameda | 167,170 | 14.1 | 143,939 | 12.8 | |||||||
San Francisco | 155,863 | 13.1 | 150,376 | 13.4 | |||||||
Contra Costa | 41,986 | 3.5 | 42,093 | 3.7 | |||||||
San Mateo | 23,919 | 2.0 | 20,481 | 1.8 | |||||||
Solano | 17,503 | 1.5 | 18,071 | 1.6 | |||||||
El Dorado | 13,274 | 1.1 | 13,860 | 1.2 | |||||||
Sacramento | 10,759 | 0.9 | 11,030 | 1.0 | |||||||
Other | 68,569 | 5.9 | 63,478 | 5.7 | |||||||
Total | $ | 1,186,687 | 100.0 | % | $ | 1,123,947 | 100.0 | % |
(dollars in thousands; unaudited) | December 31, 2018 | December 31, 2017 | |||||||||
Construction loans by type | Amount | % of Construction Loans | Amount | % of Construction Loans | |||||||
Commercial real estate | $ | 30,603 | 40.0 | % | $ | 20,935 | 32.8 | % | |||
Apartments and multifamily | 23,583 | 30.9 | 14,878 | 23.3 | |||||||
1-4 Single family residential | 15,760 | 20.6 | 22,780 | 35.7 | |||||||
Land - improved | 4,046 | 5.3 | 3,668 | 5.7 | |||||||
Land - unimproved | 2,431 | 3.2 | 1,567 | 2.5 | |||||||
Total | $ | 76,423 | 100.0 | % | $ | 63,828 | 100.0 | % | |||
(dollars in thousands; unaudited) | December 31, 2018 | December 31, 2017 | |||||||||
Construction loans by geographic location | Amount | % of Construction Loans | Amount | % of Construction Loans | |||||||
San Francisco | $ | 20,764 | 27.2 | % | $ | 21,664 | 33.9 | % | |||
Marin | 14,665 | 19.2 | 9,750 | 15.3 | |||||||
Sonoma | 14,241 | 18.6 | 4,683 | 7.3 | |||||||
Alameda | 11,411 | 14.9 | 7,783 | 12.2 | |||||||
San Mateo | 5,110 | 6.7 | 3,495 | 5.5 | |||||||
Napa | 3,988 | 5.2 | 12,072 | 18.9 | |||||||
Riverside | 2,688 | 3.5 | 2,969 | 4.7 | |||||||
Other | 3,556 | 4.7 | 1,412 | 2.2 | |||||||
Total | $ | 76,423 | 100.0 | % | $ | 63,828 | 100.0 | % |
Due within | Due after 1 but | Due after | ||||||||||
(in thousands; unaudited) | 1 year | within 5 years | 5 years | Total | ||||||||
Maturity distribution: | ||||||||||||
Commercial | $ | 69,335 | $ | 105,464 | $ | 55,940 | $ | 230,739 | ||||
Construction | 47,427 | 14,957 | 14,039 | 76,423 | ||||||||
Total | $ | 116,762 | $ | 120,421 | $ | 69,979 | $ | 307,162 |
(in thousands; unaudited) | Fixed | Variable | Total | ||||||
Commercial | $ | 116,796 | $ | 113,943 | $ | 230,739 | |||
Construction | 20,416 | 56,007 | 76,423 | ||||||
Total | $ | 137,212 | $ | 169,950 | $ | 307,162 |
December 31, 2018 | December 31, 2017 | December 31, 2016 | December 31, 2015 | December 31, 2014 | |||||||||||||||||||||||||
(dollars in thousands; unaudited) | Allowance balance allocation | Loans as a percent of total loans | Allowance balance allocation | Loans as a percent of total loans | Allowance balance allocation | Loans as a percent of total loans | Allowance balance allocation | Loans as a percent of total loans | Allowance balance allocation | Loans as a percent of total loans | |||||||||||||||||||
Commercial loans | $ | 2,436 | 13.1 | % | $ | 3,654 | 14.0 | % | $ | 3,248 | 14.7 | % | $ | 3,023 | 15.1 | % | $ | 2,837 | 15.4 | % | |||||||||
Real Estate: | |||||||||||||||||||||||||||||
Commercial, owner-occupied | 2,407 | 17.8 | 2,294 | 17.9 | 1,753 | 16.7 | 2,249 | 16.7 | 1,924 | 16.9 | |||||||||||||||||||
Commercial, investor | 7,703 | 49.5 | 6,475 | 49.1 | 6,320 | 48.7 | 6,178 | 49.4 | 6,672 | 49.4 | |||||||||||||||||||
Construction | 756 | 4.3 | 681 | 3.8 | 781 | 5.0 | 724 | 4.5 | 839 | 3.6 | |||||||||||||||||||
Home Equity | 915 | 7.1 | 1,031 | 7.9 | 973 | 7.9 | 910 | 7.7 | 859 | 8.1 | |||||||||||||||||||
Other residential | 800 | 6.7 | 536 | 5.7 | 454 | 5.3 | 394 | 5.0 | 433 | 5.4 | |||||||||||||||||||
Installment and other consumer | 310 | 1.5 | 378 | 1.6 | 372 | 1.7 | 425 | 1.6 | 566 | 1.2 | |||||||||||||||||||
Unallocated allowance | 494 | N/A | 718 | N/A | 1,541 | N/A | 1,096 | N/A | 969 | N/A | |||||||||||||||||||
Total allowance for loan losses | $ | 15,821 | $ | 15,767 | $ | 15,442 | $ | 14,999 | $ | 15,099 | |||||||||||||||||||
Total percent | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
(dollars in thousands; unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||
Beginning balance | $ | 15,767 | $ | 15,442 | $ | 14,999 | $ | 15,099 | $ | 14,224 | |||||
Provision for (reversal of) loan losses | — | 500 | (1,850 | ) | 500 | 750 | |||||||||
Loans charged-off: | |||||||||||||||
Commercial | (3 | ) | (289 | ) | (11 | ) | (5 | ) | (66 | ) | |||||
Real Estate: | |||||||||||||||
Commercial, owner occupied | — | — | (20 | ) | — | — | |||||||||
Commercial, investor | — | — | — | — | — | ||||||||||
Construction | — | — | — | (839 | ) | (204 | ) | ||||||||
Home equity | — | — | — | — | — | ||||||||||
Other residential | — | — | — | — | — | ||||||||||
Installment and other consumer | (2 | ) | (4 | ) | (5 | ) | (20 | ) | (7 | ) | |||||
Total loans charged-off | (5 | ) | (293 | ) | (36 | ) | (864 | ) | (277 | ) | |||||
Loans recovered: | |||||||||||||||
Commercial | 17 | 111 | 143 | 236 | 168 | ||||||||||
Real Estate: | |||||||||||||||
Commercial, owner occupied | — | — | — | — | 5 | ||||||||||
Commercial, investor | — | — | 2,156 | 23 | 45 | ||||||||||
Construction | — | — | — | — | 96 | ||||||||||
Home equity | — | — | 3 | 3 | 3 | ||||||||||
Other residential | — | — | — | — | — | ||||||||||
Installment and other consumer | 42 | 7 | 27 | 2 | 85 | ||||||||||
Total loans recovered | 59 | 118 | 2,329 | 264 | 402 | ||||||||||
Net loans recovered (charged-off) | 54 | (175 | ) | 2,293 | (600 | ) | 125 | ||||||||
Ending balance | $ | 15,821 | $ | 15,767 | $ | 15,442 | $ | 14,999 | $ | 15,099 | |||||
Total loans outstanding at end of year, before deducting allowance for loan losses | $ | 1,763,864 | $ | 1,679,013 | $ | 1,486,616 | $ | 1,451,208 | $ | 1,363,351 | |||||
Average total loans outstanding during year | $ | 1,704,390 | $ | 1,511,503 | $ | 1,452,357 | $ | 1,354,564 | $ | 1,317,794 | |||||
Ratio of allowance for loan losses to total loans at end of year | 0.90 | % | 0.94 | % | 1.04 | % | 1.03 | % | 1.11 | % | |||||
Net recoveries (charge-offs) to average loans | 0.003 | % | (0.01 | )% | 0.16 | % | (0.04 | )% | 0.01 | % | |||||
Ratio of allowance for loan losses to net recoveries (charge-offs) | 29,298.1 | % | (9,009.7 | )% | 673.4 | % | (2,499.8 | )% | 12,079.2 | % |
(dollars in thousands; unaudited) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||
Non-accrual loans: | |||||||||||||||
Commercial | $ | 319 | $ | — | $ | — | $ | 21 | $ | — | |||||
Real Estate: | |||||||||||||||
Commercial, owner-occupied | — | — | — | — | 1,403 | ||||||||||
Commercial, investor | — | — | — | 1,903 | 2,429 | ||||||||||
Construction | — | — | — | 1 | 5,134 | ||||||||||
Home equity | 313 | 406 | 91 | 171 | 280 | ||||||||||
Other residential | — | — | — | — | — | ||||||||||
Installment and other consumer | 65 | — | 54 | 83 | 104 | ||||||||||
Total non-accrual loans | 697 | 406 | 145 | 2,179 | 9,350 | ||||||||||
Other real estate owned1 | — | — | 408 | 421 | 461 | ||||||||||
Total non-performing assets | $ | 697 | $ | 406 | $ | 553 | $ | 2,600 | $ | 9,811 | |||||
Accruing restructured loans:2 | |||||||||||||||
Commercial | $ | 1,506 | $ | 2,165 | $ | 2,207 | $ | 4,562 | $ | 3,584 | |||||
Real Estate: | |||||||||||||||
Commercial, owner-occupied | 6,993 | 6,999 | 6,993 | 6,993 | 7,056 | ||||||||||
Commercial, investor | 1,821 | 2,171 | 2,256 | 513 | 524 | ||||||||||
Construction | 2,688 | 2,969 | 3,245 | 3,237 | 550 | ||||||||||
Home equity | 251 | 347 | 625 | 388 | 414 | ||||||||||
Other residential | 462 | 1,148 | 1,965 | 2,011 | 2,045 | ||||||||||
Installment and other consumer | 620 | 721 | 877 | 1,168 | 1,689 | ||||||||||
Total accruing restructured loans | 14,341 | 16,520 | 18,168 | 18,872 | 15,862 | ||||||||||
Accreting impaired PCI loans:3 | |||||||||||||||
Commercial real estate | — | — | — | — | — | ||||||||||
Commercial | — | — | — | 137 | — | ||||||||||
Construction | — | — | — | — | 11 | ||||||||||
Total accreting impaired PCI loans | — | — | — | 137 | 11 | ||||||||||
Total non-accrual loans (from above) | 697 | 406 | 145 | 2,179 | 9,350 | ||||||||||
Total impaired loans | $ | 15,038 | $ | 16,926 | $ | 18,313 | $ | 21,188 | $ | 25,223 | |||||
Allowance for loan losses to non-accrual loans at period end | 2,270 | % | 3,883 | % | 10,650 | % | 688 | % | 162 | % | |||||
Non-accrual loans to total loans | 0.04 | % | 0.02 | % | 0.01 | % | 0.15 | % | 0.69 | % | |||||
1 Other real estate owned decreased in 2017 from the sale of two properties obtained from a bank acquisition in 2013. | |||||||||||||||
2 Excludes TDR loans on non-accrual status. | |||||||||||||||
3 The expected cash flows on these PCI loans declined post-acquisition, but continued to accrete interest based on the expected cash flows. |
Years ended December 31, | |||||||||||
2018 | 2017 | ||||||||||
(dollars in thousands; unaudited) | Amount | Percent | Amount | Percent | |||||||
Non-interest bearing 1 | $ | 1,085,870 | 50.3 | % | $ | 899,289 | 48.3 | % | |||
Interest bearing transaction | 143,706 | 6.7 | 105,544 | 5.6 | |||||||
Savings | 178,907 | 8.3 | 167,190 | 9.0 | |||||||
Money market 1 | 612,372 | 28.4 | 542,592 | 29.2 | |||||||
Time deposits, including CDARS: | |||||||||||
Less than $100,000 | 37,468 | 1.7 | 35,136 | 1.9 | |||||||
$100,000 or more | 99,871 | 4.6 | 110,933 | 6.0 | |||||||
Total time deposits | 137,339 | 6.3 | 146,069 | 7.9 | |||||||
Total average deposits | $ | 2,158,194 | 100.0 | % | $ | 1,860,684 | 100.0 | % |
December 31, | ||||||
(in thousands; unaudited) | 2018 | 2017 | ||||
Three months or less | $ | 25,512 | $ | 36,669 | ||
Over three months through six months | 13,201 | 20,617 | ||||
Over six months through twelve months | 13,997 | 22,638 | ||||
Over twelve months | 29,834 | 40,481 | ||||
Total | $ | 82,544 | $ | 120,405 |
Payments due by period | |||||||||||||||
(in thousands; unaudited) | <1 year | 1-3 years | 4-5 years | >5 years | Total | ||||||||||
Operating leases | $ | 4,206 | $ | 5,807 | $ | 2,248 | $ | 1,938 | $ | 14,199 | |||||
Subordinated debentures | — | — | — | 4,124 | 4,124 | ||||||||||
Certificates of deposit | 76,880 | 28,077 | 12,202 | 23 | 117,182 | ||||||||||
Other long term liabilities (salary continuation payments)1 | 28 | 122 | 304 | 1,473 | 1,927 | ||||||||||
Total | $ | 81,114 | $ | 34,006 | $ | 14,754 | $ | 7,558 | $ | 137,432 |
Table 16 Effect of Interest Rate Change on Net Interest Income (NII) | ||
Immediate Changes in Interest Rates (in basis points) | Estimated Change in NII in Year 1 (as percent of NII) | Estimated Change in NII in Year 2 (as percent of NII) |
up 400 | (4.7)% | 3.8% |
up 300 | (3.3)% | 3.3% |
up 200 | (2.0)% | 2.6% |
up 100 | (0.8)% | 2.0% |
down 100 | (4.5)% | (8.2)% |
down 200 | (8.6)% | (17.1)% |
BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CONDITION |
December 31, 2018 and 2017 |
(in thousands, except share data) | 2018 | 2017 | ||||
Assets | ||||||
Cash and due from banks | $ | 34,221 | $ | 203,545 | ||
Investment securities | ||||||
Held-to-maturity, at amortized cost | 157,206 | 151,032 | ||||
Available-for-sale, at fair value | 462,464 | 332,467 | ||||
Total investment securities | 619,670 | 483,499 | ||||
Loans, net of allowance for loan losses of $15,821 and $15,767 at December 31, 2018 and 2017, respectively | 1,748,043 | 1,663,246 | ||||
Bank premises and equipment, net | 7,376 | 8,612 | ||||
Goodwill | 30,140 | 30,140 | ||||
Core deposit intangible | 5,571 | 6,492 | ||||
Interest receivable and other assets | 75,871 | 72,620 | ||||
Total assets | $ | 2,520,892 | $ | 2,468,154 | ||
Liabilities and Stockholders' Equity | ||||||
Liabilities | ||||||
Deposits | ||||||
Non-interest bearing | $ | 1,066,051 | $ | 1,014,103 | ||
Interest bearing | ||||||
Transaction accounts | 133,403 | 169,195 | ||||
Savings accounts | 178,429 | 178,473 | ||||
Money market accounts | 679,775 | 626,783 | ||||
Time accounts | 117,182 | 160,116 | ||||
Total deposits | 2,174,840 | 2,148,670 | ||||
Federal Home Loan Bank borrowing | 7,000 | — | ||||
Subordinated debentures | 2,640 | 5,739 | ||||
Interest payable and other liabilities | 20,005 | 16,720 | ||||
Total liabilities | 2,204,485 | 2,171,129 | ||||
Stockholders' Equity | ||||||
Preferred stock, no par value, Authorized - 5,000,000 shares, none issued | — | — | ||||
Common stock, no par value, Authorized - 30,000,000 shares; Issued and outstanding - 13,844,353 and 13,843,084 at December 31, 2018 and 2017, respectively | 140,565 | 143,967 | ||||
Retained earnings | 179,944 | 155,544 | ||||
Accumulated other comprehensive loss, net | (4,102 | ) | (2,486 | ) | ||
Total stockholders' equity | 316,407 | 297,025 | ||||
Total liabilities and stockholders' equity | $ | 2,520,892 | $ | 2,468,154 |
BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
Years ended December 31, 2018 and 2017 |
(in thousands, except per share amounts) | 2018 | 2017 | ||||
Interest income | ||||||
Interest and fees on loans | $ | 79,527 | $ | 66,799 | ||
Interest on investment securities | 14,092 | 8,802 | ||||
Interest on federal funds sold and due from banks | 1,461 | 995 | ||||
Total interest income | 95,080 | 76,596 | ||||
Interest expense | ||||||
Interest on interest-bearing transaction accounts | 226 | 108 | ||||
Interest on savings accounts | 72 | 66 | ||||
Interest on money market accounts | 1,355 | 555 | ||||
Interest on time accounts | 542 | 576 | ||||
Interest on FHLB and overnight borrowings | 2 | — | ||||
Interest on subordinated debentures | 1,339 | 439 | ||||
Total interest expense | 3,536 | 1,744 | ||||
Net interest income | 91,544 | 74,852 | ||||
Provision for loan losses | — | 500 | ||||
Net interest income after provision for loan losses | 91,544 | 74,352 | ||||
Non-interest income | ||||||
Service charges on deposit accounts | 1,891 | 1,784 | ||||
Wealth Management and Trust Services | 1,919 | 2,090 | ||||
Debit card interchange fees, net | 1,561 | 1,531 | ||||
Merchant interchange fees, net | 378 | 398 | ||||
Earnings on bank-owned life Insurance | 913 | 845 | ||||
Dividends on FHLB stock | 959 | 766 | ||||
Gains (losses) on investment securities, net | 876 | (185 | ) | |||
Other income | 1,642 | 1,039 | ||||
Total non-interest income | 10,139 | 8,268 | ||||
Non-interest expense | ||||||
Salaries and related benefits | 33,335 | 29,958 | ||||
Occupancy and equipment | 5,976 | 5,472 | ||||
Depreciation and amortization | 2,143 | 1,941 | ||||
Federal Deposit Insurance Corporation insurance | 756 | 666 | ||||
Data processing | 4,358 | 4,906 | ||||
Professional services | 3,317 | 2,858 | ||||
Directors' expense | 700 | 720 | ||||
Information technology | 1,023 | 769 | ||||
Provision for losses on off-balance sheet commitments | — | 57 | ||||
Other expense | 6,658 | 6,435 | ||||
Total non-interest expense | 58,266 | 53,782 | ||||
Income before provision for income taxes | 43,417 | 28,838 | ||||
Provision for income taxes | 10,795 | 12,862 | ||||
Net income | $ | 32,622 | $ | 15,976 | ||
Net income per common share:1 | ||||||
Basic | $ | 2.35 | $ | 1.29 | ||
Diluted | $ | 2.33 | $ | 1.27 | ||
Weighted average shares:1 | ||||||
Basic | 13,864 | 12,392 | ||||
Diluted | 14,029 | 12,545 | ||||
Comprehensive income: | ||||||
Net income | $ | 32,622 | $ | 15,976 | ||
Other comprehensive (loss) income: | ||||||
Change in net unrealized gain or loss on available-for-sale securities | (1,707 | ) | 3,671 | |||
Reclassification adjustment for losses on available-for-sale securities in net income | 79 | 185 | ||||
Net unrealized loss on securities transferred from available-for-sale to held-to-maturity | (278 | ) | (3,036 | ) | ||
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity | 516 | 426 | ||||
Subtotal | (1,390 | ) | 1,246 | |||
Deferred tax (benefit) expense | (412 | ) | 439 | |||
Other comprehensive (loss) income, net of tax | (978 | ) | 807 | |||
Comprehensive income | $ | 31,644 | $ | 16,783 |
BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY |
Years ended December 31, 2018 and 2017 |
(in thousands, except share data) | Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss ("AOCL"), Net of Taxes | Total | ||||||||||
Shares1 | Amount | |||||||||||||
Balance at December 31, 2016 | 12,254,628 | $ | 87,392 | $ | 146,464 | $ | (3,293 | ) | $ | 230,563 | ||||
Net income | — | — | 15,976 | — | 15,976 | |||||||||
Other comprehensive income | — | — | — | 807 | 807 | |||||||||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings | 18,532 | 28 | — | — | 28 | |||||||||
Stock issued under employee stock purchase plan | 1,024 | 32 | — | — | 32 | |||||||||
Stock issued under employee stock ownership plan (" ESOP") | 59,094 | 1,850 | — | — | 1,850 | |||||||||
Restricted stock granted | 32,460 | — | — | — | — | |||||||||
Stock-based compensation - stock options | — | 529 | — | — | 529 | |||||||||
Stock-based compensation - restricted stock | — | 742 | — | — | 742 | |||||||||
Cash dividends paid on common stock ($.56 per share1) | — | — | (6,896 | ) | — | (6,896 | ) | |||||||
Stock purchased by directors under director stock plan | 1,062 | 35 | — | — | 35 | |||||||||
Stock issued in payment of director fees | 5,756 | 188 | — | — | 188 | |||||||||
Stock and stock options issued to Bank of Napa shareholders (net of payment for fractional shares of $14 thousand) | 1,470,528 | 53,171 | — | — | 53,171 | |||||||||
Balance at December 31, 2017 | 13,843,084 | $ | 143,967 | $ | 155,544 | $ | (2,486 | ) | $ | 297,025 | ||||
Net income | — | — | 32,622 | — | 32,622 | |||||||||
Other comprehensive loss | — | — | — | (978 | ) | (978 | ) | |||||||
Reclassification of stranded tax effects in AOCI | — | — | 638 | (638 | ) | — | ||||||||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings | 111,714 | 538 | — | — | 538 | |||||||||
Stock issued under employee stock purchase plan | 1,036 | 39 | — | — | 39 | |||||||||
Stock issued under ESOP | 29,600 | 1,173 | — | — | 1,173 | |||||||||
Restricted stock granted | 37,040 | — | — | — | — | |||||||||
Restricted stock surrendered for tax withholdings upon vesting | (1,316 | ) | (45 | ) | — | — | (45 | ) | ||||||
Restricted stock forfeited / cancelled | (12,056 | ) | — | — | — | — | ||||||||
Stock-based compensation - stock options | — | 651 | — | — | 651 | |||||||||
Stock-based compensation - restricted stock | — | 1,013 | — | — | 1,013 | |||||||||
Cash dividends paid on common stock ($.64 per share1) | — | — | (8,860 | ) | — | (8,860 | ) | |||||||
Stock purchased by directors under director stock plan | 998 | 37 | — | — | 37 | |||||||||
Stock issued in payment of director fees | 5,470 | 204 | — | — | 204 | |||||||||
Stock repurchased, net of commissions | (171,217 | ) | (7,012 | ) | — | — | (7,012 | ) | ||||||
Balance at December 31, 2018 | 13,844,353 | $ | 140,565 | $ | 179,944 | $ | (4,102 | ) | $ | 316,407 |
BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS |
Years ended December 31, 2018 and 2017 |
(in thousands) | 2018 | 2017 | ||||
Cash Flows from Operating Activities: | ||||||
Net income | $ | 32,622 | $ | 15,976 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Provision for loan losses | — | 500 | ||||
Provision for losses on off-balance sheet commitments | — | 57 | ||||
Write-down of deferred tax assets, net | — | 3,017 | ||||
Noncash contribution expense to employee stock ownership plan | 1,173 | 1,152 | ||||
Noncash director compensation expense-common stock | 227 | 197 | ||||
Stock-based compensation expense | 1,664 | 1,271 | ||||
Amortization of core deposit intangible | 921 | 529 | ||||
Amortization of investment security premiums, net of accretion of discounts | 2,695 | 2,912 | ||||
Accretion of discount on acquired loans | (807 | ) | (902 | ) | ||
Accretion of discount on subordinated debentures | 1,025 | 153 | ||||
Net amortization of deferred loan origination costs/fees | 183 | 65 | ||||
Gain on sale of other real estate owned | — | (6 | ) | |||
(Gain) loss on sale of investment securities | (876 | ) | 185 | |||
Depreciation and amortization | 2,143 | 1,941 | ||||
Earnings on bank owned life insurance policies | (913 | ) | (845 | ) | ||
Net change in operating assets and liabilities: | ||||||
Deferred rent and other rent-related expenses | (382 | ) | (12 | ) | ||
Interest receivable and other assets | 1,148 | (278 | ) | |||
Interest payable and other liabilities | 1,284 | 1,035 | ||||
Net cash provided by operating activities | 42,107 | 26,947 | ||||
Cash Flows from Investing Activities: | ||||||
Purchase of held-to-maturity securities | (1,988 | ) | (4,497 | ) | ||
Purchase of available-for-sale securities | (235,873 | ) | (118,666 | ) | ||
Proceeds from sale of available-for-sale securities | 16,972 | 55,408 | ||||
Proceeds from paydowns/maturities of held-to-maturity securities | 22,891 | 26,333 | ||||
Proceeds from paydowns/maturities of available-for-sale securities | 57,662 | 48,559 | ||||
Proceeds from sale of Visa Inc. Class B restricted common stock | 956 | — | ||||
Loans originated and principal collected, net | (84,598 | ) | (57,181 | ) | ||
Purchase of premises and equipment | (907 | ) | (1,434 | ) | ||
Proceeds from sale of other real estate owned | — | 414 | ||||
Cash acquired from the Bank of Napa acquisition | — | 59,779 | ||||
Cash paid for low income housing investment | (418 | ) | (902 | ) | ||
Net cash (used in) provided by investing activities | (225,303 | ) | 7,813 | |||
Cash Flows from Financing Activities: | ||||||
Net increase in deposits | 26,170 | 126,084 | ||||
Proceeds from stock options exercised | 591 | 88 | ||||
Payment of tax withholding for stock options exercised and vesting of restricted stock | (99 | ) | (60 | ) | ||
Federal Home Loan Bank borrowings | 7,000 | — | ||||
Repayment of subordinated debenture including execution costs | (4,137 | ) | — | |||
Cash dividends paid on common stock | (8,860 | ) | (6,896 | ) | ||
Stock repurchased, net of commissions | (6,869 | ) | — | |||
Proceeds from stock issued under employee and director stock purchase plans and ESOP | 76 | 765 | ||||
Net cash provided by financing activities | 13,872 | 119,981 | ||||
Net (decrease) increase in cash and cash equivalents | (169,324 | ) | 154,741 | |||
Cash and cash equivalents at beginning of period | 203,545 | 48,804 | ||||
Cash and cash equivalents at end of period | $ | 34,221 | $ | 203,545 | ||
Supplemental disclosure of cash flow items, non-cash investing and financing activities: | ||||||
Cash paid in interest | $ | 2,599 | $ | 1,535 | ||
Cash paid in income taxes | $ | 8,380 | $ | 9,761 | ||
Change in unrealized gain on available-for-sale securities | $ | (1,707 | ) | $ | 3,671 | |
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity | $ | 516 | $ | 426 | ||
Stock issued to ESOP | $ | 1,173 | $ | 1,152 | ||
Stock issued in payment of director fees | $ | 204 | $ | 188 | ||
Subscription in low income housing tax credit investment | $ | 3,000 | $ | — | ||
Repurchase of stock not yet settled | $ | 143 | $ | — | ||
Securities transferred from available-for-sale to held-to-maturity | $ | 27,422 | $ | 128,965 | ||
Acquisition: Merger consideration - stock and stock options issued to the Bank of Napa shareholders | $ | — | $ | 53,185 | ||
Fair value of assets acquired, excluding cash acquired | $ | — | $ | 245,342 | ||
Fair value of liabilities assumed | $ | — | $ | 251,938 |
• | The borrower has resumed paying the full amount of the principal and interest and we are satisfied with the borrower's financial position. In order to meet this test, we must have received repayment of all past due principal and interest, unless the amounts contractually due are reasonably assured of repayment within a reasonable period of time, and there has been a sustained period of repayment performance (generally, six consecutive monthly payments), according to the original contractual terms or modified terms for loans whose contractual terms have been restructured in a manner which grants a concession to a borrower experiencing financial difficulties (“troubled debt restructuring”). |
• | The loan has become well secured and is in the process of collection. |
• | Changes in interest rate indices for variable rate loans – Expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected; |
• | Changes in prepayment assumptions – Prepayments affect the estimated life of the loans which may change the amount of interest income, and possibly principal, expected to be collected; and |
• | Changes in the expected principal and interest payments over the estimated life – Updates to expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected. |
• | Loans secured by real estate: |
• | Loans to finance agricultural production and other loans to farmers |
• | Commercial and industrial loans |
• | Loans to individuals for household, family and other personal expenditures (i.e., consumer loans) |
• | Other loans |
• | Changes in the nature and volume of the loan portfolio |
• | Changes in the volume and severity of past due loans, the volume of non-accruals loans, and the volume and severity of adversely classified or graded loans |
• | The existence and effect of individual loan and loan segment concentrations |
• | Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere |
• | Changes in the experience, ability, and depth of lending management and other relevant staff |
• | Changes in the quality of our systematic loan review processes |
• | Changes in economic and business conditions, and developments that affect the collectability of the portfolio |
• | Changes in the value of underlying collateral, where applicable |
• | The effect of other external factors such as legal and regulatory requirements on the level of estimated credit losses in the portfolio |
• | The effect of acquisitions of other loan portfolios on our infrastructure, including risk associated with entering new geographic areas as a result of such acquisitions |
• | The presence of specialized lending segments in the portfolio |
(in thousands) | 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | ||||||||||||||
Core deposit intangible amortization | $ | 887 | $ | 853 | $ | 818 | $ | 782 | $ | 719 | $ | 1,512 | $ | 5,571 |
(in thousands, except per share data)1 | 2018 | 2017 | ||||
Weighted average basic shares outstanding | 13,864 | 12,392 | ||||
Potentially dilutive common shares related to: | ||||||
Stock options | 136 | 123 | ||||
Unvested restricted stock awards | 29 | 30 | ||||
Weighted average diluted shares outstanding | 14,029 | 12,545 | ||||
Net income | $ | 32,622 | $ | 15,976 | ||
Basic EPS | $ | 2.35 | $ | 1.29 | ||
Diluted EPS | $ | 2.33 | $ | 1.27 | ||
Weighted average anti-dilutive shares not included in the calculation of diluted EPS | 44 | 42 |
• | Wealth Management & Trust ("WM&T") fees - WM&T services include, but are not limited to: customized investment advisory and management; administrative services such as bill pay and tax reporting; trust administration, estate settlement, custody and fiduciary services. Performance obligations for investment advisory and management services are generally satisfied over time. Revenue is recognized monthly according to a tiered fee schedule based on the client's month-end market value of assets under our management. WM&T does not earn revenue based on performance or incentives. Costs associated with WM&T revenue-generating activities, such as payments to sub-advisors, are recorded separately as part of professional service expenses when incurred. |
• | Deposit account service charges - Service charges on deposit accounts consist of monthly maintenance fees, business account analysis fees, business online banking fees, check order charges, and other deposit account-related fees. Performance obligations for monthly maintenance fees and account analysis fees are satisfied, and the related revenue recognized, when we complete our performance obligation each month. Performance obligations related to transaction-based services (such as check orders) are satisfied, and the related revenue recognized, at a point in time when completed, except for business accounts subject to analysis where the transaction-based fees are part of the monthly account analysis fees. |
• | Debit card interchange fees - We issue debit cards to our consumer and small business customers that allow them to purchase goods and services from merchants in person, online, or via mobile devices using funds held in their demand deposit accounts held with us. Debit cards issued to our customers are part of global electronic payment networks (such as Visa) who pass a portion of the merchant interchange fees to debit card-issuing member banks like us when our customers make purchases through their networks. Performance |
• | Requires equity investments, except for those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. |
• | Simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When impairment exists, an entity is required to measure the investment at fair value. |
• | Eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value required under current standards for financial instruments measured at amortized cost on the consolidated balance sheet. |
• | Requires public companies to use the exit price notion when measuring and disclosing the fair value of financial instruments. |
• | Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. |
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||
Amortized | Fair | Gross Unrealized | Amortized | Fair | Gross Unrealized | |||||||||||||||||||
(in thousands) | Cost | Value | Gains | (Losses) | Cost | Value | Gains | (Losses) | ||||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||
Securities of U.S. government agencies: | ||||||||||||||||||||||||
MBS pass-through securities issued by FHLMC and FNMA | $ | 88,606 | $ | 85,804 | $ | 7 | $ | (2,809 | ) | $ | 100,376 | $ | 100,096 | $ | 234 | $ | (514 | ) | ||||||
SBA-backed securities | 8,720 | 8,757 | 37 | — | — | — | — | — | ||||||||||||||||
CMOs issued by FNMA | 11,447 | 11,327 | — | (120 | ) | — | — | — | — | |||||||||||||||
CMOs issued by FHLMC | 33,583 | 33,021 | 8 | (570 | ) | 31,010 | 30,938 | 2 | (74 | ) | ||||||||||||||
CMOs issued by GNMA | 3,739 | 3,769 | 30 | — | — | — | — | — | ||||||||||||||||
Obligations of state and political subdivisions | 11,111 | 11,216 | 128 | (23 | ) | 19,646 | 19,998 | 383 | (31 | ) | ||||||||||||||
Total held-to-maturity | 157,206 | 153,894 | 210 | (3,522 | ) | 151,032 | 151,032 | 619 | (619 | ) | ||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||
Securities of U.S. government agencies: | ||||||||||||||||||||||||
MBS pass-through securities issued by FHLMC and FNMA | 95,339 | 94,467 | 358 | (1,230 | ) | 65,559 | 65,262 | 126 | (423 | ) | ||||||||||||||
SBA-backed securities | 50,722 | 50,781 | 465 | (406 | ) | 25,979 | 25,982 | 58 | (55 | ) | ||||||||||||||
CMOs issued by FNMA | 28,275 | 28,079 | 134 | (330 | ) | 35,340 | 35,125 | 33 | (248 | ) | ||||||||||||||
CMOs issued by FHLMC | 145,979 | 144,836 | 454 | (1,597 | ) | 70,514 | 69,889 | 3 | (628 | ) | ||||||||||||||
CMOs issued by GNMA | 11,294 | 11,021 | 1 | (274 | ) | 17,953 | 17,785 | 26 | (194 | ) | ||||||||||||||
Debentures of government- sponsored agencies | 52,956 | 53,018 | 185 | (123 | ) | 12,940 | 12,938 | 3 | (5 | ) | ||||||||||||||
Privately issued CMOs | 295 | 297 | 2 | — | 1,432 | 1,431 | 1 | (2 | ) | |||||||||||||||
Obligations of state and political subdivisions | 79,046 | 77,960 | 134 | (1,220 | ) | 98,027 | 97,491 | 298 | (834 | ) | ||||||||||||||
Corporate bonds | 2,004 | 2,005 | 15 | (14 | ) | 6,541 | 6,564 | 26 | (3 | ) | ||||||||||||||
Total available-for-sale | 465,910 | 462,464 | 1,748 | (5,194 | ) | 334,285 | 332,467 | 574 | (2,392 | ) | ||||||||||||||
Total investment securities | $ | 623,116 | $ | 616,358 | $ | 1,958 | $ | (8,716 | ) | $ | 485,317 | $ | 483,499 | $ | 1,193 | $ | (3,011 | ) |
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||
Held-to-Maturity | Available-for-Sale | Held-to-Maturity | Available-for-Sale | |||||||||||||||||||||
(in thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||
Within one year | $ | 6,194 | $ | 6,182 | $ | 9,863 | $ | 9,795 | $ | 2,151 | $ | 2,172 | $ | 10,268 | $ | 10,272 | ||||||||
After one but within five years | 5,481 | 5,492 | 84,871 | 84,435 | 15,577 | 15,791 | 71,576 | 71,237 | ||||||||||||||||
After five years through ten years | 59,231 | 58,120 | 252,274 | 250,055 | 54,641 | 54,554 | 129,723 | 128,954 | ||||||||||||||||
After ten years | 86,300 | 84,100 | 118,902 | 118,179 | 78,663 | 78,515 | 122,718 | 122,004 | ||||||||||||||||
Total | $ | 157,206 | $ | 153,894 | $ | 465,910 | $ | 462,464 | $ | 151,032 | $ | 151,032 | $ | 334,285 | $ | 332,467 |
(in thousands) | 2018 | 2017 | ||||
Available-for-sale: | ||||||
Sales proceeds | $ | 16,972 | $ | 55,408 | ||
Gross realized gains | $ | 27 | $ | 46 | ||
Gross realized losses | $ | (106 | ) | $ | (231 | ) |
(in thousands) | December 31, 2018 | December 31, 2017 | ||||
Pledged to the State of California: | ||||||
Secure public deposits in compliance with the Local Agency Security Program | $ | 125,696 | $ | 107,829 | ||
Collateral for trust deposits | 734 | 761 | ||||
Total investment securities pledged to the State of California | $ | 126,430 | $ | 108,590 | ||
Collateral for Wealth Management and Trust Services ("WMTS') checking account | $ | 2,000 | $ | 2,026 |
December 31, 2018 | < 12 continuous months | ≥ 12 continuous months | Total securities in a loss position | |||||||||||||||||
(in thousands) | Fair value | Unrealized loss | Fair value | Unrealized loss | Fair value | Unrealized loss | ||||||||||||||
Held-to-maturity: | ||||||||||||||||||||
MBS pass-through securities issued by FHLMC and FNMA | $ | 198 | $ | (9 | ) | $ | 83,990 | $ | (2,800 | ) | $ | 84,188 | $ | (2,809 | ) | |||||
CMOs issued by FNMA | — | — | 11,327 | (120 | ) | 11,327 | (120 | ) | ||||||||||||
CMOs issued by FHLMC | 2,880 | (3 | ) | 28,171 | (567 | ) | 31,051 | (570 | ) | |||||||||||
Obligations of state and political subdivisions | — | — | 3,565 | (23 | ) | 3,565 | (23 | ) | ||||||||||||
Total held-to-maturity | 3,078 | (12 | ) | 127,053 | (3,510 | ) | 130,131 | (3,522 | ) | |||||||||||
Available-for-sale: | ||||||||||||||||||||
MBS pass-through securities issued by FHLMC and FNMA | 19,971 | (128 | ) | 50,077 | (1,102 | ) | 70,048 | (1,230 | ) | |||||||||||
SBA-backed securities | 13,175 | (122 | ) | 20,123 | (284 | ) | 33,298 | (406 | ) | |||||||||||
CMOs issued by FNMA | 2,345 | (8 | ) | 16,138 | (322 | ) | 18,483 | (330 | ) | |||||||||||
CMOs issued by FHLMC | 24,094 | (330 | ) | 74,243 | (1,267 | ) | 98,337 | (1,597 | ) | |||||||||||
CMOs issued by GNMA | 1,666 | (7 | ) | 9,112 | (267 | ) | 10,778 | (274 | ) | |||||||||||
Debentures of government-sponsored agencies | 4,992 | (8 | ) | 11,349 | (115 | ) | 16,341 | (123 | ) | |||||||||||
Obligations of state and political subdivisions | 15,290 | (54 | ) | 52,804 | (1,166 | ) | 68,094 | (1,220 | ) | |||||||||||
Corporate bonds | — | — | 1,004 | (14 | ) | 1,004 | (14 | ) | ||||||||||||
Privately issued CMO's | — | — | ||||||||||||||||||
Total available-for-sale | 81,533 | (657 | ) | 234,850 | (4,537 | ) | 316,383 | (5,194 | ) | |||||||||||
Total temporarily impaired securities | $ | 84,611 | $ | (669 | ) | $ | 361,903 | $ | (8,047 | ) | $ | 446,514 | $ | (8,716 | ) |
December 31, 2017 | < 12 continuous months | > 12 continuous months | Total securities in a loss position | |||||||||||||||||
(in thousands) | Fair value | Unrealized loss | Fair value | Unrealized loss | Fair value | Unrealized loss | ||||||||||||||
Held-to-maturity: | ||||||||||||||||||||
MBS pass-through securities issued by FHLMC and FNMA | $ | 16,337 | $ | (143 | ) | $ | 46,845 | $ | (371 | ) | $ | 63,182 | $ | (514 | ) | |||||
CMOs issued by FHLMC | 11,066 | (31 | ) | 13,824 | (43 | ) | 24,890 | (74 | ) | |||||||||||
Obligations of state and political subdivisions | 3,648 | (31 | ) | — | — | 3,648 | (31 | ) | ||||||||||||
Total held-to-maturity | 31,051 | (205 | ) | 60,669 | (414 | ) | 91,720 | (619 | ) | |||||||||||
Available-for-sale: | ||||||||||||||||||||
MBS pass-through securities issued by FHLMC and FNMA | 32,189 | (121 | ) | 15,325 | (302 | ) | 47,514 | (423 | ) | |||||||||||
SBA-backed securities | 11,028 | (53 | ) | 165 | (2 | ) | 11,193 | (55 | ) | |||||||||||
CMOs issued by FNMA | 26,401 | (171 | ) | 5,440 | (77 | ) | 31,841 | (248 | ) | |||||||||||
CMOs issued by FHLMC | 69,276 | (628 | ) | — | — | 69,276 | (628 | ) | ||||||||||||
CMOs issued by GNMA | 14,230 | (194 | ) | — | — | 14,230 | (194 | ) | ||||||||||||
Debentures of government- sponsored agencies | 2,984 | (5 | ) | — | — | 2,984 | (5 | ) | ||||||||||||
Obligations of state and political subdivisions | 52,197 | (288 | ) | 19,548 | (546 | ) | 71,745 | (834 | ) | |||||||||||
Corporate bonds | 3,060 | (3 | ) | 3,060 | (3 | ) | ||||||||||||||
Privately issued CMO's | 1,310 | (2 | ) | — | — | 1,310 | (2 | ) | ||||||||||||
Total available-for-sale | 212,675 | (1,465 | ) | 40,478 | (927 | ) | 253,153 | (2,392 | ) | |||||||||||
Total temporarily impaired securities | $ | 243,726 | $ | (1,670 | ) | $ | 101,147 | $ | (1,341 | ) | $ | 344,873 | $ | (3,011 | ) |
Loan Aging Analysis by Class | ||||||||||||||||||||||||
(in thousands) | Commercial and industrial | Commercial real estate, owner-occupied | Commercial real estate, investor | Construction | Home equity | Other residential | Installment and other consumer | Total | ||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
30-59 days past due | $ | 5 | $ | — | $ | 1,004 | $ | — | $ | — | $ | 112 | $ | 1,121 | ||||||||||
60-89 days past due | — | — | — | — | — | — | — | — | ||||||||||||||||
90 days or more past due | — | — | — | — | — | — | — | — | ||||||||||||||||
Total past due | 5 | — | 1,004 | — | — | — | 112 | 1,121 | ||||||||||||||||
Current | 230,734 | 313,277 | 872,406 | 76,423 | 124,696 | 117,847 | 27,360 | 1,762,743 | ||||||||||||||||
Total loans 2 | $ | 230,739 | $ | 313,277 | $ | 873,410 | $ | 76,423 | $ | 124,696 | $ | 117,847 | $ | 27,472 | $ | 1,763,864 | ||||||||
Non-accrual loans 1 | $ | 319 | $ | — | $ | — | $ | — | $ | 313 | $ | — | $ | 65 | $ | 697 | ||||||||
December 31, 2017 | ||||||||||||||||||||||||
30-59 days past due | $ | — | $ | — | $ | — | $ | — | $ | 99 | $ | 255 | $ | 330 | $ | 684 | ||||||||
60-89 days past due | 1,340 | — | — | — | — | — | — | 1,340 | ||||||||||||||||
90 days or more past due | — | — | — | — | 307 | — | — | 307 | ||||||||||||||||
Total past due | 1,340 | — | — | — | 406 | 255 | 330 | 2,331 | ||||||||||||||||
Current | 234,495 | 300,963 | 822,984 | 63,828 | 132,061 | 95,271 | 27,080 | 1,676,682 | ||||||||||||||||
Total loans 2 | $ | 235,835 | $ | 300,963 | $ | 822,984 | $ | 63,828 | $ | 132,467 | $ | 95,526 | $ | 27,410 | $ | 1,679,013 | ||||||||
Non-accrual loans 1 | $ | — | $ | — | $ | — | $ | — | $ | 406 | $ | — | $ | — | $ | 406 |
Credit Risk Profile by Internally Assigned Risk Grade | |||||||||||||||||||||||||||
(in thousands) | Commercial and industrial | Commercial real estate, owner-occupied | Commercial real estate, investor | Construction | Home equity | Other residential | Installment and other consumer | Purchased credit-impaired | Total | ||||||||||||||||||
December 31, 2018 | |||||||||||||||||||||||||||
Pass | $ | 219,625 | $ | 299,998 | $ | 870,443 | $ | 73,735 | $ | 122,844 | $ | 117,847 | $ | 27,312 | $ | 2,112 | $ | 1,733,916 | |||||||||
Special Mention | 9,957 | 4,106 | 2,156 | — | 1,121 | — | — | — | 17,340 | ||||||||||||||||||
Substandard | 1,126 | 7,986 | — | 2,688 | 648 | — | 160 | — | 12,608 | ||||||||||||||||||
Total loans | $ | 230,708 | $ | 312,090 | $ | 872,599 | $ | 76,423 | $ | 124,613 | $ | 117,847 | $ | 27,472 | $ | 2,112 | $ | 1,763,864 | |||||||||
December 31, 2017 | |||||||||||||||||||||||||||
Pass | $ | 214,636 | $ | 281,104 | $ | 818,570 | $ | 60,859 | $ | 130,558 | $ | 95,526 | $ | 27,287 | $ | 1,325 | $ | 1,629,865 | |||||||||
Special Mention | 9,318 | 9,284 | 1,850 | — | — | — | — | 790 | 21,242 | ||||||||||||||||||
Substandard | 11,816 | 9,409 | 1,774 | 2,969 | 1,815 | — | 123 | — | 27,906 | ||||||||||||||||||
Total loans | $ | 235,770 | $ | 299,797 | $ | 822,194 | $ | 63,828 | $ | 132,373 | $ | 95,526 | $ | 27,410 | $ | 2,115 | $ | 1,679,013 |
• | The loan is subsequently refinanced or restructured at current market interest rates and the new terms are consistent with the treatment of creditworthy borrowers under regular underwriting standards; |
• | The borrower is no longer considered to be in financial difficulty; |
• | Performance on the loan is reasonably assured; and |
• | Existing loan did not have any forgiveness of principal or interest. |
(in thousands) | As of | |||||
Recorded investment in Troubled Debt Restructurings1 | December 31, 2018 | December 31, 2017 | ||||
Commercial and industrial | $ | 1,506 | $ | 2,165 | ||
Commercial real estate, owner-occupied | 6,993 | 6,999 | ||||
Commercial real estate, investor | 1,821 | 2,171 | ||||
Construction | 2,688 | 2,969 | ||||
Home equity | 251 | 347 | ||||
Other residential | 462 | 1,148 | ||||
Installment and other consumer2 | 685 | 721 | ||||
Total | $ | 14,406 | $ | 16,520 |
(dollars in thousands) | Number of Contracts Modified | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment at Period End | |||||||
TDRs modified during 2018: | |||||||||||
Commercial and industrial | 2 | $ | 254 | $ | 245 | $ | 172 | ||||
TDRs modified during 2017: | |||||||||||
Installment and other consumer | 1 | $ | 50 | $ | 50 | $ | 47 |
(in thousands) | Commercial and industrial | Commercial real estate, owner-occupied | Commercial real estate, investor | Construction | Home equity | Other residential | Installment and other consumer | Total | ||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Recorded investment in impaired loans: | ||||||||||||||||||||||||
With no specific allowance recorded | $ | 303 | $ | — | $ | — | $ | 2,688 | $ | 313 | $ | 462 | $ | 111 | $ | 3,877 | ||||||||
With a specific allowance recorded | 1,522 | 6,993 | 1,821 | — | 251 | — | 574 | 11,161 | ||||||||||||||||
Total recorded investment in impaired loans | $ | 1,825 | $ | 6,993 | $ | 1,821 | $ | 2,688 | $ | 564 | $ | 462 | $ | 685 | $ | 15,038 | ||||||||
Unpaid principal balance of impaired loans | $ | 1,813 | $ | 6,993 | $ | 1,812 | $ | 2,688 | $ | 562 | $ | 461 | $ | 684 | $ | 15,013 | ||||||||
Specific allowance | $ | 466 | $ | 189 | $ | 45 | $ | — | $ | 5 | $ | — | $ | 73 | $ | 778 | ||||||||
Average recorded investment in impaired loans during 2018 | $ | 1,980 | $ | 7,000 | $ | 1,904 | $ | 2,803 | $ | 671 | $ | 915 | $ | 704 | $ | 15,977 | ||||||||
Interest income recognized on impaired loans during 2018 1 | $ | 239 | $ | 266 | $ | 83 | $ | 156 | $ | 19 | $ | 45 | $ | 29 | $ | 837 | ||||||||
December 31, 2017 | ||||||||||||||||||||||||
Recorded investment in impaired loans: | ||||||||||||||||||||||||
With no specific allowance recorded | $ | 309 | $ | — | $ | — | $ | 2,689 | $ | 406 | $ | 995 | $ | 46 | $ | 4,445 | ||||||||
With a specific allowance recorded | 1,856 | 6,999 | 2,171 | 280 | 347 | 153 | 675 | 12,481 | ||||||||||||||||
Total recorded investment in impaired loans | $ | 2,165 | $ | 6,999 | $ | 2,171 | $ | 2,969 | $ | 753 | $ | 1,148 | $ | 721 | $ | 16,926 | ||||||||
Unpaid principal balance of impaired loans | $ | 2,278 | $ | 6,993 | $ | 2,168 | $ | 2,963 | $ | 750 | $ | 1,147 | $ | 720 | $ | 17,019 | ||||||||
Specific allowance | $ | 50 | $ | 188 | $ | 159 | $ | 7 | $ | 6 | $ | 1 | $ | 102 | $ | 513 | ||||||||
Average recorded investment in impaired loans during 2017 | $ | 2,113 | $ | 6,998 | $ | 2,842 | $ | 3,132 | $ | 679 | $ | 1,324 | $ | 841 | $ | 17,929 | ||||||||
Interest income recognized on impaired loans during 2017 1 | $ | 202 | $ | 266 | $ | 87 | $ | 147 | $ | 24 | $ | 62 | $ | 37 | $ | 825 | ||||||||
1 Interest income recognized on a cash basis totaled $135 thousand and $100 thousand in 2018 and 2017, respectively, and was primarily related to the payoff of non-accrual commercial PCI loans. |
Allowance for Loan Losses Rollforward for the Year Ended | |||||||||||||||||||||||||||
(in thousands) | Commercial and industrial | Commercial real estate, owner-occupied | Commercial real estate, investor | Construction | Home equity | Other residential | Installment and other consumer | Unallocated | Total | ||||||||||||||||||
Year ended December 31, 2018 | |||||||||||||||||||||||||||
Beginning balance | $ | 3,654 | $ | 2,294 | $ | 6,475 | $ | 681 | $ | 1,031 | $ | 536 | $ | 378 | $ | 718 | $ | 15,767 | |||||||||
Provision (reversal) | (1,232 | ) | 113 | 1,228 | 75 | (116 | ) | 264 | (108 | ) | (224 | ) | — | ||||||||||||||
Charge-offs | (3 | ) | — | — | — | — | — | (2 | ) | — | (5 | ) | |||||||||||||||
Recoveries | 17 | — | — | — | — | — | 42 | — | 59 | ||||||||||||||||||
Ending balance | $ | 2,436 | $ | 2,407 | $ | 7,703 | $ | 756 | $ | 915 | $ | 800 | $ | 310 | $ | 494 | $ | 15,821 | |||||||||
Year ended December 31, 2017 | |||||||||||||||||||||||||||
Beginning balance | $ | 3,248 | $ | 1,753 | $ | 6,320 | $ | 781 | $ | 973 | $ | 454 | $ | 372 | $ | 1,541 | $ | 15,442 | |||||||||
Provision (reversal) | 584 | 541 | 155 | (100 | ) | 58 | 82 | 3 | (823 | ) | 500 | ||||||||||||||||
Charge-offs | (289 | ) | — | — | — | — | — | (4 | ) | — | (293 | ) | |||||||||||||||
Recoveries | 111 | — | — | — | — | — | 7 | — | 118 | ||||||||||||||||||
Ending balance | $ | 3,654 | $ | 2,294 | $ | 6,475 | $ | 681 | $ | 1,031 | $ | 536 | $ | 378 | $ | 718 | $ | 15,767 |
Allowance for Loan Losses and Recorded Investment In Loans | |||||||||||||||||||||||||||
(dollars in thousands) | Commercial and industrial | Commercial real estate, owner-occupied | Commercial real estate, investor | Construction | Home equity | Other residential | Installment and other consumer | Unallocated | Total | ||||||||||||||||||
December 31, 2018 | |||||||||||||||||||||||||||
Ending ALLL related to loans collectively evaluated for impairment | $ | 1,970 | $ | 2,218 | $ | 7,658 | $ | 756 | $ | 910 | $ | 800 | $ | 237 | $ | 494 | $ | 15,043 | |||||||||
Ending ALLL related to loans individually evaluated for impairment | 466 | 189 | 45 | — | 5 | — | 73 | — | 778 | ||||||||||||||||||
Ending ALLL related to purchased credit-impaired loans | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Ending balance | $ | 2,436 | $ | 2,407 | $ | 7,703 | $ | 756 | $ | 915 | $ | 800 | $ | 310 | $ | 494 | $ | 15,821 | |||||||||
Recorded Investment: | |||||||||||||||||||||||||||
Collectively evaluated for impairment | $ | 228,883 | $ | 305,097 | $ | 870,778 | $ | 73,735 | $ | 124,049 | $ | 117,385 | $ | 26,787 | $ | — | $ | 1,746,714 | |||||||||
Individually evaluated for impairment | 1,825 | 6,993 | 1,821 | 2,688 | 564 | 462 | 685 | — | 15,038 | ||||||||||||||||||
Purchased credit-impaired | 31 | 1,187 | 811 | — | 83 | — | — | — | 2,112 | ||||||||||||||||||
Total | $ | 230,739 | $ | 313,277 | $ | 873,410 | $ | 76,423 | $ | 124,696 | $ | 117,847 | $ | 27,472 | $ | — | $ | 1,763,864 | |||||||||
Ratio of allowance for loan losses to total loans | 1.06 | % | 0.77 | % | 0.88 | % | 0.99 | % | 0.73 | % | 0.68 | % | 1.13 | % | NM | 0.90 | % | ||||||||||
Allowance for loan losses to non-accrual loans | 764 | % | NM | NM | NM | 292 | % | NM | 477 | % | NM | 2,270 | % |
Allowance for Loan Losses and Recorded Investment In Loans | |||||||||||||||||||||||||||
(dollars in thousands) | Commercial and industrial | Commercial real estate, owner-occupied | Commercial real estate, investor | Construction | Home equity | Other residential | Installment and other consumer | Unallocated | Total | ||||||||||||||||||
December 31, 2017 | |||||||||||||||||||||||||||
Ending ALLL related to loans collectively evaluated for impairment | $ | 3,604 | $ | 2,106 | $ | 6,316 | $ | 674 | $ | 1,025 | $ | 535 | $ | 276 | $ | 718 | $ | 15,254 | |||||||||
Ending ALLL related to loans individually evaluated for impairment | 50 | 188 | 159 | 7 | 6 | 1 | 102 | — | 513 | ||||||||||||||||||
Ending ALLL related to purchased credit-impaired loans | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Ending balance | $ | 3,654 | $ | 2,294 | $ | 6,475 | $ | 681 | $ | 1,031 | $ | 536 | $ | 378 | $ | 718 | $ | 15,767 | |||||||||
Loans outstanding: | |||||||||||||||||||||||||||
Collectively evaluated for impairment | $ | 233,605 | $ | 292,798 | $ | 820,023 | $ | 60,859 | $ | 131,620 | $ | 94,378 | $ | 26,689 | $ | — | $ | 1,659,972 | |||||||||
Individually evaluated for impairment | 2,165 | 6,999 | 2,171 | 2,969 | 753 | 1,148 | 721 | — | 16,926 | ||||||||||||||||||
Purchased credit-impaired | 65 | 1,166 | 790 | — | 94 | — | — | — | 2,115 | ||||||||||||||||||
Total | $ | 235,835 | $ | 300,963 | $ | 822,984 | $ | 63,828 | $ | 132,467 | $ | 95,526 | $ | 27,410 | $ | — | $ | 1,679,013 | |||||||||
Ratio of allowance for loan losses to total loans | 1.55 | % | 0.76 | % | 0.79 | % | 1.07 | % | 0.78 | % | 0.56 | % | 1.38 | % | NM | 0.94 | % | ||||||||||
Allowance for loan losses to non-accrual loans | NM | NM | NM | NM | 254 | % | NM | NM | NM | 3,883 | % |
PCI Loans | December 31, 2018 | December 31, 2017 | ||||||||||
(in thousands) | Unpaid Principal Balance | Carrying Value | Unpaid Principal Balance | Carrying Value | ||||||||
Commercial and industrial | $ | 89 | $ | 31 | $ | 276 | $ | 65 | ||||
Commercial real estate, owner occupied | 1,247 | 1,187 | 1,297 | 1,166 | ||||||||
Commercial real estate, investor | 1,033 | 811 | 1,064 | 790 | ||||||||
Home equity | 210 | 83 | 231 | 94 | ||||||||
Total purchased credit-impaired loans | $ | 2,579 | $ | 2,112 | $ | 2,868 | $ | 2,115 |
Accretable Yield | Years ended | |||||
(in thousands) | December 31, 2018 | December 31, 2017 | ||||
Balance at beginning of period | $ | 1,254 | $ | 1,476 | ||
Additions | — | 109 | ||||
Accretion | (320 | ) | (331 | ) | ||
Balance at end of period | $ | 934 | $ | 1,254 |
(in thousands) | 2018 | 2017 | ||||
Balance at beginning of year | $ | 11,852 | $ | 1,988 | ||
Additions | 863 | 3,186 | ||||
Advances | — | 74 | ||||
Repayments | (2,080 | ) | (128 | ) | ||
Reclassified due to a change in borrower status1 | — | 6,732 | ||||
Balance at end of year | $ | 10,635 | $ | 11,852 |
(in thousands) | 2018 | 2017 | ||||
Leasehold improvements | $ | 15,024 | $ | 14,937 | ||
Furniture and equipment | 10,839 | 11,113 | ||||
Subtotal | 25,863 | 26,050 | ||||
Accumulated depreciation and amortization | (18,487 | ) | (17,438 | ) | ||
Bank premises and equipment, net | $ | 7,376 | $ | 8,612 |
(in thousands) | December 31, 2018 | December 31, 2017 | ||||
Time deposits of less than $100 thousand | $ | 34,638 | $ | 39,361 | ||
Time deposits of $100 thousand to $250 thousand | 51,690 | 68,391 | ||||
Time deposits of more than $250 thousand | 30,854 | 52,364 | ||||
Total time deposits | $ | 117,182 | $ | 160,116 |
(in thousands) | 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | ||||||||||||||
Scheduled maturities of time deposits | $ | 76,880 | $ | 13,711 | $ | 14,366 | $ | 8,138 | $ | 4,064 | $ | 23 | $ | 117,182 |
(in thousands) | |||
Subordinated debentures due to NorCal Community Bancorp Trust II on March 15, 2036 with interest payable quarterly, based on 3-month LIBOR plus 1.40%, repricing quarterly (4.19% as of December 31, 2018), redeemable, in whole or in part, on any interest payment date | $ | 4,124 |
2018 | 2017 | ||||||||||||||||
(dollars in thousands) | Carrying Value | Average Balance | Average Rate | Carrying Value | Average Balance | Average Rate | |||||||||||
FHLB overnight borrowings | $ | 7,000 | $ | 105 | 2.03 | % | $ | — | $ | 1 | 1.75 | % | |||||
FHLB fixed-rate advances | $ | — | $ | — | — | % | $ | — | $ | — | — | % | |||||
Subordinated debentures | $ | 2,640 | $ | 5,025 | 26.29 | % | 1 | $ | 5,739 | $ | 5,664 | 7.65 | % |
Number of Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value (in thousands) | Weighted Average Grant-Date Fair Value | Weighted Average Remaining Contractual Term (in years) | ||||||||
Options outstanding at December 31, 2016 | 363,578 | $ | 20.60 | $ | 5,190 | 5.77 | ||||||
Granted 1 | 201,328 | 19.89 | $ | 16.31 | ||||||||
Cancelled, expired or forfeited | (4,022 | ) | 21.99 | |||||||||
Exercised | (42,948 | ) | 19.31 | 585 | ||||||||
Options outstanding at December 31, 2017 | 517,936 | 20.42 | 7,075 | 5.34 | ||||||||
Exercisable (vested) at December 31, 2017 | 384,344 | 17.85 | 6,212 | 4.42 | ||||||||
Options outstanding at December 31, 2017 | 517,936 | 20.42 | 7,075 | 5.34 | ||||||||
Granted | 74,096 | 33.97 | 7.17 | |||||||||
Cancelled, expired or forfeited | (9,140 | ) | 28.25 | |||||||||
Exercised | (157,192 | ) | 13.93 | 3,462 | ||||||||
Options outstanding at December 31, 2018 | 425,700 | 25.01 | 6,910 | 5.85 | ||||||||
Exercisable (vested) at December 31, 2018 | 311,050 | 22.57 | 5,809 | 4.94 |
Number of Shares | Weighted Average Grant-Date Fair Value | ||||
Non-vested awards at December 31, 2016 | 79,398 | $ | 24.08 | ||
Granted | 32,460 | 34.80 | |||
Vested | (20,642 | ) | 22.89 | ||
Non-vested awards at December 31, 2017 | 91,216 | 28.16 | |||
Granted | 37,040 | 33.58 | |||
Vested | (28,812 | ) | 26.06 | ||
Cancelled or forfeited | (12,056 | ) | 27.32 | ||
Non-vested awards at December 31, 2018 | 87,388 | 31.26 |
Stock Options Outstanding as of December 31, 2018 | Stock Options Exercisable as of December 31, 2018 | |||||||||||
Range of Exercise Prices | Stock Options Outstanding | Remaining Contractual Life (in years) | Weighted Average Exercise Price | Stock Options Exercisable | Weighted Average Exercise Price | |||||||
$0.00 - $10.00 | 4,604 | 3.1 | $ | 8.96 | 4,604 | $ | 8.96 | |||||
$10.01 - $20.00 | 110,394 | 2.3 | 16.94 | 110,394 | 16.94 | |||||||
$20.01 - $30.00 | 179,828 | 6.0 | 23.73 | 151,808 | 23.63 | |||||||
$30.01 - $40.00 | 127,040 | 8.8 | 33.94 | 40,410 | 33.78 | |||||||
$40.01 - $50.00 | 3,834 | 9.5 | 40.70 | 3,834 | 40.70 | |||||||
425,700 | 311,050 |
Years ended December 31, | ||||
2018 | 2017 | |||
Risk-free interest rate | 2.60 | % | 1.66 | % |
Expected dividend yield on common stock | 1.76 | % | 1.70 | % |
Expected life in years | 5.9 | 2.4 | ||
Expected price volatility | 22.47 | % | 25.58 | % |
Years ended December 31, | ||||||
(in thousands except per share data) | 2018 | 2017 | ||||
Cash dividends to common stockholders | $ | 8,860 | $ | 6,896 | ||
Cash dividends per common share | $ | 0.64 | $ | 0.56 |
(in thousands) Description of Financial Instruments | Carrying Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Measurement Categories: Changes in Fair Value Recorded In1 | ||||||||
December 31, 2018 | |||||||||||||
Securities available for sale: | |||||||||||||
Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government agencies | $ | 278,403 | $ | — | $ | 278,403 | $ | — | OCI | ||||
SBA-backed securities | $ | 50,781 | $ | — | $ | 50,781 | $ | — | OCI | ||||
Debentures of government sponsored agencies | $ | 53,018 | $ | — | $ | 53,018 | $ | — | OCI | ||||
Privately-issued collateralized mortgage obligations | $ | 297 | $ | — | $ | 297 | $ | — | OCI | ||||
Obligations of state and political subdivisions | $ | 77,960 | $ | — | $ | 77,960 | $ | — | OCI | ||||
Corporate bonds | $ | 2,005 | $ | — | $ | 2,005 | $ | — | OCI | ||||
Derivative financial assets (interest rate contracts) | $ | 161 | $ | — | $ | 161 | $ | — | NI | ||||
Derivative financial liabilities (interest rate contracts) | $ | 375 | $ | — | $ | 375 | $ | — | NI | ||||
December 31, 2017 | |||||||||||||
Securities available for sale: | |||||||||||||
Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government agencies | $ | 188,061 | $ | — | $ | 188,061 | $ | — | OCI | ||||
SBA-backed securities | $ | 25,982 | $ | — | $ | 25,817 | $ | 165 | OCI | ||||
Debentures of government sponsored agencies | $ | 12,938 | $ | — | $ | 12,938 | $ | — | OCI | ||||
Privately-issued collateralized mortgage obligations | $ | 1,431 | $ | — | $ | 1,431 | $ | — | OCI | ||||
Obligations of state and political subdivisions | $ | 97,491 | $ | — | $ | 97,491 | $ | — | OCI | ||||
Corporate bonds | $ | 6,564 | $ | — | $ | 6,564 | $ | — | OCI | ||||
Derivative financial assets (interest rate contracts) | $ | 74 | $ | — | $ | 74 | $ | — | NI | ||||
Derivative financial liabilities (interest rate contracts) | $ | 740 | $ | — | $ | 740 | $ | — | NI |
December 31, 2018 | December 31, 2017 | ||||||||||||||
(in thousands) | Carrying Amounts | Fair Value | Fair Value Hierarchy | Carrying Amounts | Fair Value | Fair Value Hierarchy | |||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 34,221 | $ | 34,221 | Level 1 | $ | 203,545 | $ | 203,545 | Level 1 | |||||
Investment securities held-to-maturity | 157,206 | 153,894 | Level 2 | 151,032 | 151,032 | Level 2 | |||||||||
Loans, net | 1,748,043 | 1,700,971 | Level 3 | 1,663,246 | 1,650,198 | Level 3 | |||||||||
Interest receivable | 8,292 | 8,292 | Level 2 | 7,501 | 7,501 | Level 2 | |||||||||
Financial liabilities: | |||||||||||||||
Time deposits | 117,182 | 116,584 | Level 2 | 160,116 | 159,540 | Level 2 | |||||||||
Subordinated debentures | 2,640 | 3,268 | Level 3 | 5,739 | 5,118 | Level 3 | |||||||||
Interest payable | 104 | 104 | Level 2 | 191 | 191 | Level 2 |
(in thousands) | 2018 | 2017 | ||||
Current tax provision | ||||||
Federal | $ | 7,289 | $ | 5,379 | ||
State | 4,722 | 2,623 | ||||
Total current | 12,011 | 8,002 | ||||
Deferred tax (benefit) provision | ||||||
Federal | (898 | ) | 4,444 | |||
State | (318 | ) | 416 | |||
Total deferred | (1,216 | ) | 4,860 | |||
Total income tax provision | $ | 10,795 | $ | 12,862 |
(in thousands) | 2018 | 2017 | ||||
Deferred tax assets: | ||||||
Allowance for loan losses and off-balance sheet credit commitments | $ | 4,960 | $ | 4,945 | ||
Net operating loss carryforwards | 2,271 | 2,629 | ||||
Net unrealized loss on securities available-for-sale | 1,800 | 1,405 | ||||
Deferred compensation plan and salary continuation plan | 1,940 | 1,744 | ||||
State franchise tax | 993 | 557 | ||||
Accrued but unpaid expenses | 1,153 | 212 | ||||
Fair value adjustment on acquired loans | 364 | 570 | ||||
Deferred rent and other lease incentives | 224 | 328 | ||||
Depreciation and disposals on premises and equipment | 584 | 632 | ||||
Stock-based compensation | 517 | 463 | ||||
Interest received on non-accrual loans | 114 | 130 | ||||
Other | 215 | 266 | ||||
Total gross deferred tax assets | 15,135 | 13,881 | ||||
Deferred tax liabilities: | ||||||
Deferred loan origination costs and fees | (2,360 | ) | (2,153 | ) | ||
Unaccreted discount on subordinated debentures | (439 | ) | (742 | ) | ||
Core deposit intangible assets | (1,647 | ) | (1,919 | ) | ||
Accretion on investment securities | (67 | ) | (56 | ) | ||
Other | (204 | ) | (221 | ) | ||
Total gross deferred tax liabilities | (4,717 | ) | (5,091 | ) | ||
Net deferred tax assets | $ | 10,418 | $ | 8,790 |
2018 | 2017 | |||
Federal statutory income tax rate | 21.0 | % | 35.0 | % |
Increase (decrease) due to: | ||||
California franchise tax, net of federal tax benefit | 8.0 | % | 6.9 | % |
Write down of federal deferred tax assets, net 1 | — | % | 10.5 | % |
Tax exempt interest on municipal securities and loans | (2.4 | )% | (6.1 | )% |
Tax exempt earnings on bank owned life insurance | (0.4 | )% | (1.0 | )% |
Non-deductible acquisition related expenses | — | % | 0.8 | % |
Low income housing and qualified zone academy bond tax credits | (0.5 | )% | (0.4 | )% |
Stock-based compensation excess tax benefit | (0.6 | )% | (0.3 | )% |
Other | (0.2 | )% | (0.8 | )% |
Effective Tax Rate | 24.9 | % | 44.6 | % |
(in thousands) | 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | ||||||||||||||
Operating leases | $ | 4,206 | $ | 3,760 | $ | 2,047 | $ | 1,282 | $ | 966 | $ | 1,938 | $ | 14,199 |
Asset derivatives | Liability derivatives | |||||||||||
(in thousands) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||
Fair value hedges: | ||||||||||||
Interest rate contracts notional amount | $ | 8,895 | $ | 4,019 | $ | 9,016 | $ | 14,810 | ||||
Interest rate contracts fair value 1 | $ | 161 | $ | 74 | $ | 375 | $ | 740 |
Carrying Amounts of Hedged Assets | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Loans | |||||||||||
(in thousands) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||
Loans | $ | 17,917 | $ | 19,260 | $ | 6 | $ | 431 |
Years ended December 31, | ||||||
(in thousands) | 2018 | 2017 | ||||
Interest and fees on loans 1 | $ | 79,527 | $ | 66,799 | ||
Increase in value of designated interest rate swaps due to LIBOR interest rate movements | $ | 452 | $ | 212 | ||
Payment on interest rate swaps | (149 | ) | (333 | ) | ||
Decrease in value of hedged loans | (425 | ) | (166 | ) | ||
Decrease in value of yield maintenance agreement | (14 | ) | (15 | ) | ||
Net loss on fair value hedging derivatives recognized against loan interest income 2 | $ | (136 | ) | $ | (302 | ) |
Offsetting of Financial Assets and Derivative Assets | ||||||||||||||||||
Gross Amounts Not Offset in the Statements of Condition | ||||||||||||||||||
Gross Amounts | Net Amounts | |||||||||||||||||
Gross Amounts | Offset in the | of Assets Presented | ||||||||||||||||
of Recognized | Statements of | in the Statements | Financial | Cash Collateral | ||||||||||||||
(in thousands) | Assets1 | Condition | of Condition1 | Instruments | Received | Net Amount | ||||||||||||
December 31, 2018 | ||||||||||||||||||
Derivatives by Counterparty: | ||||||||||||||||||
Counterparty A | $ | 161 | $ | — | $ | 161 | $ | (161 | ) | $ | — | $ | — | |||||
Total | $ | 161 | $ | — | $ | 161 | $ | (161 | ) | $ | — | $ | — | |||||
December 31, 2017 | ||||||||||||||||||
Derivatives by Counterparty: | ||||||||||||||||||
Counterparty A | $ | 74 | $ | — | $ | 74 | $ | (74 | ) | $ | — | $ | — | |||||
Total | $ | 74 | $ | — | $ | 74 | $ | (74 | ) | $ | — | $ | — |
Offsetting of Financial Liabilities and Derivative Liabilities | ||||||||||||||||||
Gross Amounts Not Offset in the Statements of Condition | ||||||||||||||||||
Gross Amounts | Net Amounts of | |||||||||||||||||
Gross Amounts | Offset in the | Liabilities Presented | ||||||||||||||||
of Recognized | Statements of | in the Statements of | Financial | Cash Collateral | ||||||||||||||
(in thousands) | Liabilities2 | Condition | Condition2 | Instruments | Pledged | Net Amount | ||||||||||||
December 31, 2018 | ||||||||||||||||||
Derivatives by Counterparty: | ||||||||||||||||||
Counterparty A | $ | 375 | $ | — | $ | 375 | $ | (161 | ) | — | $ | 214 | ||||||
Total | $ | 375 | $ | — | $ | 375 | $ | (161 | ) | $ | — | $ | 214 | |||||
December 31, 2017 | ||||||||||||||||||
Derivatives by Counterparty: | ||||||||||||||||||
Counterparty A | $ | 740 | $ | — | $ | 740 | $ | (74 | ) | (666 | ) | $ | — | |||||
Total | $ | 740 | $ | — | $ | 740 | $ | (74 | ) | $ | (666 | ) | $ | — |
Capital Ratios for Bancorp (dollars in thousands) | Actual Ratio | Adequately Capitalized Threshold 1 | Ratio to be a Well Capitalized Bank Holding Company | ||||||||||||||
December 31, 2018 | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||
Total Capital (to risk-weighted assets) | $ | 305,224 | 14.93 | % | ≥ $ | 201,943 | ≥ 9.875 | % | ≥ $ | 204,499 | ≥ 10.000 | % | |||||
Tier 1 Capital (to risk-weighted assets) | $ | 288,445 | 14.10 | % | ≥ $ | 161,043 | ≥ 7.875 | % | ≥ $ | 163,599 | ≥ 8.000 | % | |||||
Tier 1 Capital (to average assets) | $ | 288,445 | 11.54 | % | ≥ $ | 100,011 | ≥ 4.000 | % | ≥ $ | 125,013 | ≥ 5.000 | % | |||||
Common Equity Tier 1 (to risk-weighted assets) | $ | 285,805 | 13.98 | % | ≥ $ | 130,368 | ≥ 6.375 | % | ≥ $ | 132,925 | ≥ 6.500 | % | |||||
December 31, 2017 | |||||||||||||||||
Total Capital (to risk-weighted assets) | $ | 287,435 | 14.91 | % | ≥ $ | 178,323 | ≥ 9.250 | % | ≥ $ | 192,782 | ≥ 10.000 | % | |||||
Tier 1 Capital (to risk-weighted assets) | $ | 270,710 | 14.04 | % | ≥ $ | 139,767 | ≥ 7.250 | % | ≥ $ | 154,225 | ≥ 8.000 | % | |||||
Tier 1 Capital (to average assets) | $ | 270,710 | 12.13 | % | ≥ $ | 89,285 | ≥ 4.000 | % | ≥ $ | 111,607 | ≥ 5.000 | % | |||||
Common Equity Tier 1 (to risk-weighted assets) | $ | 265,119 | 13.75 | % | ≥ $ | 110,849 | ≥ 5.750 | % | ≥ $ | 125,308 | ≥ 6.500 | % | |||||
1 The adequately capitalized threshold includes the capital conservation buffer effective for 2018 and 2017. These ratios are not reflected on a fully phased-in basis, which was effective January 1, 2019. |
Capital Ratios for the Bank (dollars in thousands) | Actual Ratio | Adequately Capitalized Threshold 1 | Ratio to be Well Capitalized under Prompt Corrective Action Provisions | ||||||||||||||
December 31, 2018 | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||
Total Capital (to risk-weighted assets) | $ | 285,969 | 13.98 | % | ≥ $ | 201,927 | ≥ 9.875 | % | ≥ $ | 204,483 | ≥ 10.000 | % | |||||
Tier 1 Capital (to risk-weighted assets) | $ | 269,191 | 13.16 | % | ≥ $ | 161,031 | ≥ 7.875 | % | ≥ $ | 163,587 | ≥ 8.000 | % | |||||
Tier 1 Capital (to average assets) | $ | 269,191 | 10.77 | % | ≥ $ | 99,994 | ≥ 4.000 | % | ≥ $ | 124,992 | ≥ 5.000 | % | |||||
Common Equity Tier 1 (to risk-weighted assets) | $ | 269,191 | 13.16 | % | ≥ $ | 130,358 | ≥ 6.375 | % | ≥ $ | 132,914 | ≥ 6.500 | % | |||||
December 31, 2017 | |||||||||||||||||
Total Capital (to risk-weighted assets) | $ | 283,885 | 14.73 | % | ≥ $ | 178,281 | ≥ 9.250 | % | ≥ $ | 192,737 | ≥ 10.000 | % | |||||
Tier 1 Capital (to risk-weighted assets) | $ | 267,160 | 13.86 | % | ≥ $ | 139,734 | ≥ 7.250 | % | ≥ $ | 154,189 | ≥ 8.000 | % | |||||
Tier 1 Capital (to average assets) | $ | 267,160 | 11.97 | % | ≥ $ | 89,275 | ≥ 4.000 | % | ≥ $ | 111,593 | ≥ 5.000 | % | |||||
Common Equity Tier 1 (to risk-weighted assets) | $ | 267,160 | 13.86 | % | ≥ $ | 110,824 | ≥ 5.750 | % | ≥ $ | 125,279 | ≥ 6.500 | % | |||||
1 The adequately capitalized threshold includes the capital conservation buffer effective for 2018 and 2017. These ratios are not reflected on a fully phased-in basis, which was effective January 1, 2019. |
(in thousands) | December 31, 2018 | December 31, 2017 | ||||
Commercial lines of credit | $ | 238,361 | $ | 224,370 | ||
Revolving home equity lines | 189,971 | 177,678 | ||||
Undisbursed construction loans | 46,229 | 35,322 | ||||
Personal and other lines of credit | 14,109 | 11,758 | ||||
Standby letters of credit | 2,636 | 4,074 | ||||
Total commitments and standby letters of credit | $ | 491,306 | $ | 453,202 |
CONDENSED UNCONSOLIDATED STATEMENTS OF CONDITION | ||||||
December 31, 2018 and 2017 | ||||||
(in thousands) | 2018 | 2017 | ||||
Assets | ||||||
Cash and due from Bank of Marin | $ | 19,144 | $ | 3,246 | ||
Investment in bank subsidiary | 299,953 | 299,486 | ||||
Other assets | 331 | 586 | ||||
Total assets | $ | 319,428 | $ | 303,318 | ||
Liabilities and Stockholders' Equity | ||||||
Subordinated debentures | $ | 2,640 | $ | 5,739 | ||
Accrued expenses payable | 51 | 146 | ||||
Other liabilities | 330 | 408 | ||||
Total liabilities | 3,021 | 6,293 | ||||
Stockholders' equity | 316,407 | 297,025 | ||||
Total liabilities and stockholders' equity | $ | 319,428 | $ | 303,318 |
CONDENSED UNCONSOLIDATED STATEMENTS OF INCOME | ||||||
Years ended December 31, 2018 and 2017 | ||||||
(in thousands) | 2018 | 2017 | ||||
Income | ||||||
Dividends from bank subsidiary | $ | 36,700 | $ | 8,000 | ||
Miscellaneous Income | 9 | 8 | ||||
Total income | 36,709 | 8,008 | ||||
Expense | ||||||
Interest expense | 1,339 | 439 | ||||
Non-interest expense | 1,275 | 2,087 | ||||
Total expense | 2,614 | 2,526 | ||||
Income before income taxes and equity in undistributed net income of subsidiary | 34,095 | 5,482 | ||||
Income tax benefit | 770 | 876 | ||||
Income before equity in undistributed net income of subsidiary | 34,865 | 6,358 | ||||
Earnings of bank subsidiary (less) greater than dividends received from bank subsidiary | (2,243 | ) | 9,618 | |||
Net income | $ | 32,622 | $ | 15,976 |
CONDENSED UNCONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
Years ended December 31, 2018 and 2017 | ||||||
(in thousands) | 2018 | 2017 | ||||
Cash Flows from Operating Activities: | ||||||
Net income | $ | 32,622 | $ | 15,976 | ||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||
Earnings of bank subsidiary greater (less) than dividends received from bank subsidiary | 2,243 | (9,618 | ) | |||
Net change in operating assets and liabilities: | ||||||
Accretion of discount on subordinated debentures | 1,025 | 153 | ||||
Other assets | 36 | 92 | ||||
Intercompany receivable | — | (40 | ) | |||
Other liabilities | (86 | ) | 51 | |||
Noncash director compensation expense - common stock | 23 | 20 | ||||
Net cash provided by operating activities | 35,863 | 6,634 | ||||
Cash Flows from Investing Activities: | ||||||
Capital contribution to subsidiary | (667 | ) | (853 | ) | ||
Net cash used in investing activities | (667 | ) | (853 | ) | ||
Cash Flows from Financing Activities: | ||||||
Proceeds from stock options exercised and stock issued under employee and director stock purchase plans and ESPP | 667 | 853 | ||||
Repayment of subordinate debenture including execution costs | (4,137 | ) | — | |||
Payment of tax withholdings for stock options exercised | (99 | ) | (60 | ) | ||
Dividends paid on common stock | (8,860 | ) | (6,896 | ) | ||
Stock repurchased, net of commissions | (6,869 | ) | — | |||
Net cash used by financing activities | (19,298 | ) | (6,103 | ) | ||
Net increase (decrease) in cash and cash equivalents | 15,898 | (322 | ) | |||
Cash and cash equivalents at beginning of period | 3,246 | 3,568 | ||||
Cash and cash equivalents at end of period | $ | 19,144 | $ | 3,246 | ||
Supplemental schedule of non-cash investing and financing activities: | ||||||
Stock issued in payment of director fees | $ | 204 | $ | 188 | ||
Repurchase of stock not yet settled | $ | 143 | $ | — | ||
Stock issued to ESOP | $ | 1,173 | $ | 1,152 |
(in thousands) | Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||
Data processing1 | $ | 586 | $ | 1,108 | ||
Professional services | 191 | 952 | ||||
Personnel severance | 141 | 35 | ||||
Other | 44 | 114 | ||||
Total | $ | 962 | $ | 2,209 | ||
1 Primarily relates to Bank of Napa's core processing system contract termination and deconversion fees. |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File No. | Exhibit | Filing Date | Herewith |
2.01 | 8-K | 001-33572 | 2.1 | August 2, 2017 | ||
3.01 | 10-Q | 001-33572 | 3.01 | November 7, 2007 | ||
3.02 | 10-Q | 001-33572 | 3.02 | May 9, 2011 | ||
3.02a | 8-K | 001-33572 | 3.03 | July 6, 2015 | ||
4.01 | 8-A12B | 001-33572 | 4.1 | July 7, 2017 | ||
10.01 | S-8 | 333-218274 | 4.1 | May 26, 2017 | ||
10.02 | S-8 | 333-221219 | 4.1 | October 30, 2017 | ||
10.03 | S-8 | 333-227840 | 4.1 | October 15, 2018 | ||
10.04 | S-8 | 333-167639 | 4.1 | June 21, 2010 | ||
10.05 | 10-Q | 001-33572 | 10.06 | November 7, 2007 | ||
10.06 | 8-K | 001-33572 | 10.1 | January 26, 2009 | ||
10.07 | 8-K | 001-33572 | 99.1 | October 21, 2010 | ||
10.08 | 8-K | 001-33572 | 10.1 | January 6, 2011 | ||
10.09 | 8-K | 001-33572 | 10.4 | January 6, 2011 | ||
10.10 | 8-K | 001-33572 | 10.2 | November 4, 2014 | ||
10.11 | 8-K | 001-33572 | 10.3 | November 4, 2014 | ||
10.12 | 8-K | 001-33572 | 10.4 | June 2, 2015 | ||
10.13 | 8-K | 001-33572 | 10.1 | October 31, 2007 | ||
11.01 | Filed | |||||
14.02 | Filed | |||||
23.01 | Filed | |||||
31.01 | Filed | |||||
31.02 | Filed | |||||
32.01 | Filed | |||||
101.01* | XBRL Interactive Data File | Furnished |
Bank of Marin Bancorp (registrant) | |||
March 14, 2019 | /s/ Tani Girton | ||
Date | Tani Girton | ||
Executive Vice President & Chief Financial Officer | |||
(Principal Financial Officer) | |||
Dated: | March 14, 2019 | /s/ Russell A. Colombo | ||
Russell A. Colombo | ||||
President & Chief Executive Officer, Director | ||||
(Principal Executive Officer) | ||||
Dated: | March 14, 2019 | /s/ Tani Girton | ||
Tani Girton | ||||
Executive Vice President & Chief Financial Officer | ||||
(Principal Financial Officer) | ||||
Dated: | March 14, 2019 | /s/ Cecilia Situ | ||
Cecilia Situ | ||||
First Vice President & Manager of Finance & Treasury | ||||
(Principal Accounting Officer) |
Members of Bank of Marin Bancorp's Board of Directors | ||||
Dated: | March 14, 2019 | /s/ Brian M. Sobel | ||
Brian M. Sobel | ||||
Chairman of the Board | ||||
Dated: | March 14, 2019 | /s/ Steven I. Barlow | ||
Steven I. Barlow | ||||
Dated: | March 14, 2019 | /s/ James C. Hale | ||
James C. Hale | ||||
Dated: | March 14, 2019 | /s/ Robert Heller | ||
Robert Heller | ||||
Dated: | March 14, 2019 | /s/ Norma J. Howard | ||
Norma J. Howard | ||||
Dated: | March 14, 2019 | /s/ Kevin R. Kennedy | ||
Kevin R. Kennedy | ||||
Dated: | March 14, 2019 | /s/ William H. McDevitt, Jr. | ||
William H. McDevitt, Jr. | ||||
Dated: | March 14, 2019 | /s/ Leslie E. Murphy | ||
Leslie E. Murphy | ||||
Dated: | March 14, 2019 | /s/ Joel Sklar | ||
Joel Sklar, M.D. |
1. | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
2. | full, fair, accurate, timely, and understandable disclosure in reports and documents that a company files with, or submits to, the Commission and in other public communications made by the company; |
3. | compliance with applicable governmental laws, rules and regulations; |
4. | the prompt internal reporting of Code violations to an appropriate person or persons identified in the Code; and |
5. | accountability for adherence to the Code. |
1. | Not be a signer on any account over which you exercise control as a Company employee. |
2. | Not be a signer on any customer’s account, act as a co-tenant of a safe deposit box, or otherwise represent another customer in dealings with the Company, excluding accounts or boxes where the other customer is related to you by blood or marriage or where you act in official capacity as an officer of a nonprofit. You may not process your own transactions. |
3. | Not enter into any business relationship (e.g., partnerships, joint ventures, syndicates) with present or prospective customers or suppliers. |
4. | Unless prior approval of the Chief Credit Officer is obtained as well as any necessary Board approval under Regulation O, not extend credit to: (a) any customers, if the proceeds are to be given or loaned to you or used to pay a debt owed by you, or to benefit you, a family member or a close relative; (b) any customers, if the loan, in whole or in part, will enable them to purchase real or personal property from you, a family member or a close relative; (c) any company in which you have an interest as a director, officer, controlling person or partner, or in which a family member or close relative has such an interest; or (d) customers or vendors of the Company by way of loaning your own funds or personal credit by a guarantee or similar means. |
5. | Not make a loan to any public bank examiner who examines or has the authority to examine the Company. |
1. | Acceptance of gifts, gratuities, amenities or favors based on family relationships (e.g., from a parent, child or spouse of a Company employee) where the circumstances make it clear that it is those relationships, rather than the business of the Company, which are the motivating factors. |
2. | Acceptance of meals, refreshments, travel arrangements, accommodations, or entertainment, all of reasonable value and in the regular course of a meeting or other occasion, the purpose of which is to hold bona fide business discussions, provided the expenses would be paid for by the Company as a reasonable business expense, if not paid for by another party. |
3. | Acceptance of loans from other banks or financial institutions on customary terms to finance proper and usual activities, such as home mortgage loans, except where prohibited by law. |
4. | Acceptance of civic, charitable, educational or religious organization awards for recognition of service in an amount of $200 or less during any twelve month period. |
5. | Acceptance of advertising or promotional material of nominal value, such as pens, pencils, note pads, key chains, calendars and similar items. |
6. | Acceptance of discounts or rebates on merchandise or services that are offered by a third party to the general public. |
1. | All assets, liabilities and transactions of the Company should be accurately recorded in accordance with the Company’s record keeping procedures and generally accepted accounting principles; |
2. | No false or misleading entries are permitted to be knowingly made or caused to be made in the Company’s record books, even if such entries would not be material to the Company or its operations as a whole; |
3. | Any entries that are inaccurate should be reported to management. False or irregular entries should be promptly reported to a member of the Audit Committee for an immediate corrective action; and |
4. | All entries must be supported by documentation adequate to permit the books and records to be verified by audit. |
1. | Accepting anything of value (except an employee’s salary or other compensation paid or sanctioned by the Company) in connection with Company business (See “Gifts/the Bank Bribery Act” page 6); |
2. | Willfully making any false or untrue entry or willful omission in any book or record of the Company; |
4. | Willfully making any statement or rumor which is derogatory and untrue regarding the financial condition of any bank doing business in California; |
5. | Intentionally failing to make Currency Transaction Reports or other reports required under the Bank Secrecy Act (collectively referred to as “CTRs”), or assisting in the structuring of a transaction to avoid the filing of a CTR, as required by law; |
7. | Issuing unauthorized obligations (such as certificates of deposit, notes or mortgages); |
9. | Unless specifically permitted by law, making a loan or giving a gift to a regulator who has the authority to examine any Company affiliate; |
12. | Loaning funds to, or depositing funds with third parties with the understanding, express or implied, that the party receiving such funds will make a loan or pay any consideration to you. |
• | Familiarize himself or herself with the disclosure requirements applicable to the Company as well as the business and financial operations of the Company, to the extent relevant to his/her responsibilities. |
• | Not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company’s independent auditors, governmental regulators and self-regulatory organizations. |
• | Properly review and critically analyze proposed disclosure for accuracy and completeness (or, where appropriate, delegate this task to others.) |
• | Take appropriate steps, including consulting with other Company officers and employees, to assure that reports and disclosures they issue comply with the spirit as well as the actual federal law and SEC regulations regarding full and accurate disclosures. |
1. | Employment by a company or personally engaging in any activity that is competitive with the Company. |
2. | Employment which involves the use of the Company’s equipment, supplies or facilities. |
3. | Employment which involves the preparation, audit or certification of statements, tax returns or other documents upon which the Company may place reliance for lending or other purposes. If you prepare income tax returns for individuals or entities other than yourself, you must obtain confirmation from your potential client that the client does not intend to use your work product as part of any transaction with the Company. |
4. | Employment which involves the rendering of investment, legal or other advice, or exercising judgment which is based upon information, reports or analyses that are accessible primarily from or through your employment with the Company. |
5. | Employment under circumstances which may suggest the sponsorship or support of the Company on behalf of the outside employer or an outside organization. |
7. | Employment as a real estate salesperson, broker, agent or contractor (except with the prior written approval of the Human Resources Director). Prior written approval is required since there are a number of potential conflict of interest situations, as well as possible violations of banking laws, which must scrupulously be avoided in this area). |
1. | I have reviewed this annual report on Form 10-K of Bank of Marin Bancorp (the Registrant); |
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 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 subsidiary, 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 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 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 controls over financial reporting. |
March 14, 2019 | /s/ Russell A. Colombo | |
Date | Russell A. Colombo | |
Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Bank of Marin Bancorp (the Registrant); |
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 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 subsidiary, 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 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 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 controls over financial reporting. |
March 14, 2019 | /s/ Tani Girton | |
Date | Tani Girton | |
Chief Financial Officer |
March 14, 2019 | /s/ Russell A. Colombo | |
Date | Russell A. Colombo | |
President & | ||
Chief Executive Officer |
March 14, 2019 | /s/ Tani Girton | |
Date | Tani Girton | |
Executive Vice President & | ||
Chief Financial Officer |
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Document And Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Feb. 28, 2019 |
Jun. 29, 2018 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Bank of Marin Bancorp | ||
Entity Central Index Key | 0001403475 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Smaller Reporting Company | true | ||
Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 546 | ||
Entity Common Stock, Shares Outstanding (in shares) | 13,806,416 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 |
CONSOLIDATED STATEMENTS OF CONDITION (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Investment Securities | ||
Loans, allowance for loan losses | $ 15,821 | $ 15,767 |
Stockholders' Equity | ||
Preferred stock, no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, issued, (in shares) | 0 | 0 |
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, issued (in shares) | 13,844,353 | 13,843,084 |
Common stock, outstanding (in shares) | 13,844,353 | 13,843,084 |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands |
Total |
Common Stock |
Retained Earnings |
Accumulated Other Comprehensive Loss (AOCL), Net of Taxes |
||||
---|---|---|---|---|---|---|---|---|
Balance (in shares) at Dec. 31, 2016 | [1] | 12,254,628 | ||||||
Balance at Dec. 31, 2016 | $ 230,563 | $ 87,392 | $ 146,464 | $ (3,293) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 15,976 | 15,976 | ||||||
Other comprehensive income (loss) | $ 807 | 807 | ||||||
Stock options exercised (in shares) | 42,948 | 18,532 | [1] | |||||
Stock options exercised | $ 28 | $ 28 | ||||||
Stock issued under employee stock purchase plan (in shares) | [1] | 1,024 | ||||||
Stock issued under employee stock purchase plan | 32 | $ 32 | ||||||
Stock issued under employee stock ownership plan (ESOP) (in shares) | [1] | 59,094 | ||||||
Stock issued under ESOP | 1,850 | $ 1,850 | ||||||
Restricted stock granted (in shares) | [1] | 32,460 | ||||||
Restricted stock granted | $ 0 | |||||||
Restricted stock surrendered for tax withholdings upon vesting (in shares) | (24,416) | |||||||
Stock-based compensation - stock options | $ 529 | $ 529 | ||||||
Stock-based compensation - restricted stock | 742 | $ 742 | ||||||
Cash dividends paid on common stock | (6,896) | (6,896) | ||||||
Stock purchased by directors under director stock plan (in shares) | [1] | 1,062 | ||||||
Stock purchased by directors under director stock plan | 35 | $ 35 | ||||||
Stock issued in payment of director fees (in shares) | [1] | 5,756 | ||||||
Stock issued in payment of director fees | 188 | $ 188 | ||||||
Stock and stock options issued to Bank of Napa Shareholders (net of payment for fractional shares of $14 thousand) (in shares) | [1] | 1,470,528 | ||||||
Stock and stock options issued to Bank of Napa shareholders (net of payment for fractional shares of $14 thousand) | $ 53,171 | $ 53,171 | ||||||
Balance (in shares) at Dec. 31, 2017 | 13,843,084 | 13,843,084 | [1] | |||||
Balance at Dec. 31, 2017 | $ 297,025 | $ 143,967 | 155,544 | (2,486) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 32,622 | 32,622 | ||||||
Other comprehensive income (loss) | $ (978) | (978) | ||||||
Reclassification of stranded tax effects in AOCI | 638 | (638) | ||||||
Stock options exercised (in shares) | 157,192 | 111,714 | [1] | |||||
Stock options exercised | $ 538 | $ 538 | ||||||
Stock issued under employee stock purchase plan (in shares) | [1] | 1,036 | ||||||
Stock issued under employee stock purchase plan | 39 | $ 39 | ||||||
Stock issued under employee stock ownership plan (ESOP) (in shares) | [1] | 29,600 | ||||||
Stock issued under ESOP | 1,173 | $ 1,173 | ||||||
Restricted stock granted (in shares) | [1] | 37,040 | ||||||
Restricted stock granted | $ 0 | |||||||
Restricted stock surrendered for tax withholdings upon vesting (in shares) | (46,794) | (1,316) | [1] | |||||
Restricted stock surrendered for tax withholdings upon vesting | $ (45) | $ (45) | ||||||
Restricted stock forfeited/cancelled (in shares) | [1] | (12,056) | ||||||
Restricted stock forfeited / cancelled | 0 | |||||||
Stock-based compensation - stock options | 651 | $ 651 | ||||||
Stock-based compensation - restricted stock | 1,013 | $ 1,013 | ||||||
Cash dividends paid on common stock | (8,860) | (8,860) | ||||||
Stock purchased by directors under director stock plan (in shares) | [1] | 998 | ||||||
Stock purchased by directors under director stock plan | 37 | $ 37 | ||||||
Stock issued in payment of director fees (in shares) | [1] | 5,470 | ||||||
Stock issued in payment of director fees | $ 204 | $ 204 | ||||||
Stock repurchased, net of commissions (in shares) | (171,217) | (171,217) | [1] | |||||
Stock repurchased, net of commissions | $ (7,012) | $ (7,012) | ||||||
Balance (in shares) at Dec. 31, 2018 | 13,844,353 | 13,844,353 | [1] | |||||
Balance at Dec. 31, 2018 | $ 316,407 | $ 140,565 | $ 179,944 | $ (4,102) | ||||
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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
$ / shares
| |
Statement of Stockholders' Equity [Abstract] | |
Fractional shares issued in acquisition, payment | $ | $ 14 |
Cash dividends per common share (usd per share) | $ / shares | $ 0.56 |
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Cash Flows from Operating Activities: | ||
Net income | $ 32,622 | $ 15,976 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for loan losses | 0 | 500 |
Provision for losses on off-balance sheet commitments | 0 | 57 |
Write-down of deferred tax assets, net | 0 | 3,017 |
Noncash contribution expense to employee stock ownership plan | 1,173 | 1,152 |
Noncash director compensation expense-common stock | 227 | 197 |
Stock-based compensation expense | 1,664 | 1,271 |
Amortization of core deposit intangible | 921 | 529 |
Amortization of investment security premiums, net of accretion of discounts | 2,695 | 2,912 |
Accretion of discount on acquired loans | (807) | (902) |
Accretion of discount on subordinated debentures | 1,025 | 153 |
Net amortization of deferred loan origination costs/fees | 183 | 65 |
Gain on sale of other real estate owned | 0 | (6) |
(Gain) loss on sale of investment securities | (876) | 185 |
Depreciation and amortization | 2,143 | 1,941 |
Earnings on bank owned life insurance policies | (913) | (845) |
Net change in operating assets and liabilities: | ||
Deferred rent and other rent-related expenses | (382) | (12) |
Interest receivable and other assets | 1,148 | (278) |
Interest payable and other liabilities | 1,284 | 1,035 |
Net cash provided by operating activities | 42,107 | 26,947 |
Cash Flows from Investing Activities: | ||
Purchase of held-to-maturity securities | (1,988) | (4,497) |
Purchase of available-for-sale securities | (235,873) | (118,666) |
Proceeds from sale of available-for-sale securities | 16,972 | 55,408 |
Proceeds from paydowns/maturities of held-to-maturity securities | 22,891 | 26,333 |
Proceeds from paydowns/maturities of available-for-sale securities | 57,662 | 48,559 |
Proceeds from sale of Visa Inc. Class B restricted common stock | 956 | 0 |
Loans originated and principal collected, net | (84,598) | (57,181) |
Purchase of premises and equipment | (907) | (1,434) |
Proceeds from sale of other real estate owned | 0 | 414 |
Cash acquired from the Bank of Napa acquisition | 0 | 59,779 |
Cash paid for low income housing investment | (418) | (902) |
Net cash (used in) provided by investing activities | (225,303) | 7,813 |
Cash Flows from Financing Activities: | ||
Net increase in deposits | 26,170 | 126,084 |
Proceeds from stock options exercised | 591 | 88 |
Payment of tax withholding for stock options exercised and vesting of restricted stock | (99) | (60) |
Federal Home Loan Bank borrowings | 7,000 | 0 |
Repayment of subordinated debenture including execution costs | (4,137) | 0 |
Cash dividends paid on common stock | (8,860) | (6,896) |
Stock repurchased, net of commissions | (6,869) | 0 |
Proceeds from stock issued under employee and director stock purchase plans and ESOP | 76 | 765 |
Net cash provided by financing activities | 13,872 | 119,981 |
Net (decrease) increase in cash and cash equivalents | (169,324) | 154,741 |
Cash and cash equivalents at beginning of period | 203,545 | 48,804 |
Cash and cash equivalents at end of period | 34,221 | 203,545 |
Supplemental disclosure of cash flow items, non-cash investing and financing activities: | ||
Cash paid in interest | 2,599 | 1,535 |
Cash paid in income taxes | 8,380 | 9,761 |
Change in unrealized gain on available-for-sale securities | (1,707) | 3,671 |
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity | 516 | 426 |
Stock issued to ESOP | 1,173 | 1,152 |
Stock issued in payment of director fees | 204 | 188 |
Subscription in low income housing tax credit investment | 3,000 | 0 |
Repurchase of stock not yet settled | 143 | 0 |
Securities transferred from available-for-sale to held-to-maturity | 27,422 | 128,965 |
Acquisition: Merger consideration - stock and stock options issued to the Bank of Napa shareholders | 0 | 53,185 |
Fair value of assets acquired, excluding cash acquired | 0 | 245,342 |
Fair value of liabilities assumed | $ 0 | $ 251,938 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation: The consolidated financial statements include the accounts of Bank of Marin Bancorp (“Bancorp”), a bank holding company, and its wholly-owned bank subsidiary, Bank of Marin (the “Bank”), a California state-chartered commercial bank. References to “we,” “our,” “us” mean Bancorp and the Bank that are consolidated for financial reporting purposes. All material intercompany transactions have been eliminated. We evaluated subsequent events through the date of filing with the Securities and Exchange Commission (“SEC”) and determined that there were no subsequent events that require additional recognition or disclosure. The NorCal Community Bancorp Trusts I and II, respectively (the "Trusts"), were formed for the sole purpose of issuing trust preferred securities. Bancorp is not considered the primary beneficiary of the Trusts (variable interest entities), therefore the Trusts are not consolidated in our consolidated financial statements, but rather the subordinated debentures are shown as a liability on our consolidated statements of condition. Bancorp's investment in the securities of the Trusts is accounted for under the equity method and is included in interest receivable and other assets on the consolidated statements of condition. Refer to Note 7, Borrowings, for detail on the early redemption on October 7, 2018 of one subordinated debenture due to NorCal Community Bancorp Trust I. Nature of Operations: Bancorp, headquartered in Novato, CA, conducts business primarily through its wholly-owned subsidiary, the Bank, which provides a wide range of financial services to customers who are predominantly professionals, small and middle-market businesses, and individuals who work and/or reside in Marin, Sonoma, Napa, San Francisco and Alameda counties. Besides its headquarters located in Novato, CA, the Bank operates ten branches in Marin County, three in Napa County, one in San Francisco, six in Sonoma County and three in Alameda County. Our accounting and reporting policies conform to generally accepted accounting principles, general practice, and regulatory guidance within the banking industry. A summary of our significant policies follows. Cash and Cash Equivalents include cash, due from banks, federal funds sold and other short-term investments with maturities of less than three months at the time of purchase. Investment Securities are classified as "held-to-maturity," "trading securities" or "available-for-sale." Investments classified as held-to-maturity are those that we have the ability and intent to hold until maturity and are reported at cost, adjusted for the amortization or accretion of premiums or discounts. Investments held for resale in anticipation of short-term market movements are classified as trading securities and are reported at fair value, with unrealized gains and losses included in earnings. Investments that are neither held-to-maturity nor trading are classified as available-for-sale and are reported at fair value. Unrealized gains and losses for available-for-sale securities, net of related taxes, are reported as a separate component of comprehensive income and included in stockholders' equity until realized. For discussion of our methodology in determining fair value, see Note 9, Fair Value of Assets and Liabilities. Securities transferred from the available-for-sale category to the held-to-maturity category are recorded at fair value at the date of transfer. Unrealized holding gains or losses associated with the transfer of securities from available-for-sale to held-to-maturity are included in the balance of accumulated other comprehensive income (loss), net of tax, in the consolidated balance sheets. These unrealized holding gains or losses are amortized over the remaining life of the securities as yield adjustments in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. At each financial statement date, we assess whether declines in the fair values of held-to-maturity and available-for-sale securities below their costs are deemed to be other-than-temporary. We consider, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. Evidence evaluated includes, but is not limited to, the remaining payment terms of the instrument and economic factors that are relevant to the collectability of the instrument, such as: current prepayment speeds, the current financial condition of the issuer(s), industry analyst reports, credit ratings, credit default rates, interest rate trends, the quality of any credit enhancement and the value of any underlying collateral. For each security in an unrealized loss position ("impaired security"), we assess whether we intend to sell the security or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If we intend to sell the security or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis, the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date is recognized against earnings. For impaired securities that are not intended for sale and will not be required to be sold prior to recovery of our amortized cost basis, we determine if the impairment has a credit loss component. For both held-to-maturity and available-for-sale securities, if the amount of cash flows expected to be collected are less than the amortized cost, then other-than-temporary impairment shall be considered to have occurred and the credit loss component is recognized against earnings as the difference between present value of the expected future cash flows and the amortized cost. In determining the present value of the expected cash flows, we discount the expected cash flows at the effective interest rate implicit in the security at the date of purchase. The remaining difference between the fair value and the amortized basis is deemed to be due to factors that are not credit related and is recognized in other comprehensive income, net of applicable taxes. For held-to-maturity securities, if there is no credit loss component, no impairment is recognized. The portion of other-than-temporary impairment recognized in other comprehensive income for credit impaired debt securities classified as held-to-maturity is accreted from other comprehensive income to the amortized cost of the debt security over the remaining life of the debt security in a prospective manner on the basis of the amount and timing of future estimated cash flows. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the effective interest method. For certain callable debt securities purchased at a premium, we amortize the premium to the earliest call date. Dividend and interest income are recognized when earned. Realized gains and losses on the sale of securities and credit losses related to other-than-temporary impairment on available-for-sale and held-to-maturity securities are included in non-interest income as gains (losses) on investment securities, net. The specific identification method is used to calculate realized gains and losses on sales of securities. Originated Loans are reported at the principal amount outstanding net of deferred fees (costs), charge-offs and the allowance for loan losses (“ALLL”). Interest income is accrued daily using the simple interest method. Loan origination fees and commitment fees, offset by certain direct loan origination costs, are deferred and amortized as yield adjustments over the contractual lives of the related loans. Loans are placed on non-accrual status when Management believes that there is substantial doubt as to the collection of principal or interest, generally when they become contractually past due by ninety days or more with respect to principal or interest, except for loans that are well-secured and in the process of collection. When loans are placed on non-accrual status, any accrued but uncollected interest is reversed from current-period interest income. We may return non-accrual loans to accrual status when one of the following occurs:
Loan Charge-Off Policy: For all loan types excluding overdraft accounts, we generally make a charge-off determination at or before 90 days past due. A collateral-dependent loan is partially charged down to the fair value of collateral securing it if: (1) it is deemed uncollectable, or (2) it has been classified as a loss by either our internal loan review process or external examiners. A non-collateral-dependent loan is partially charged down to its net realizable value under the same circumstances. Overdraft accounts are generally charged off when they exceed 60 days past due. Acquired Loans: Acquired loans are recorded at their estimated fair values at the acquisition date in accordance with Accounting Standards Code ("ASC") 805, Business Combinations, factoring in credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for loan losses is not carried over or recorded for acquired loans as of the acquisition date. We estimated the fair value of acquired loans at the acquisition date based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, risk classification, fixed or variable interest rate, term of loan, whether or not the loan was amortizing, and current discount rates. Loans, except for purchased credit impaired ("PCI") loans, were grouped together according to similar risk characteristics and treated in the aggregate when applying various valuation techniques. Expected cash flows incorporated our best estimate of key assumptions at the time, such as property values, default rates, loss severity and prepayment speeds. Discount rates were based on market rates for new originations of comparable loans, where available, and included adjustments for liquidity factors. To the extent comparable market rates were not readily available, a discount rate was derived based on the assumptions of market participants' cost of funds, servicing costs and return requirements for comparable risk assets. In either case, the discount rate did not include a factor for credit losses, as that had been considered in estimating the cash flows. The process of calculating fair values of acquired loans, including estimates of losses expected to be incurred over the estimated remaining lives of the loans at acquisition date and ongoing updates to Management's expectation of future cash flows, requires significant subjective judgments and assumptions. The economic environment and lack of market liquidity and transparency are factors that have influenced, and may continue to affect, these assumptions and estimates. We acquired loans with evidence of significant credit quality deterioration subsequent to their origination and for which it was probable, at acquisition, that we would be unable to collect all contractually required payments. Management applied significant subjective judgment in determining which loans were PCI loans. Evidence of credit quality deterioration as of the purchase date may include data such as past due and non-accrual status, risk grades and charge-off history. The difference between the undiscounted expected cash flows expected to be collected and the fair value at the acquisition date ("accretable difference") is accreted into interest income at a level yield of return over the estimated remaining life of the PCI loan, provided that the timing and amount of future cash flows is reasonably estimable. The accretable yield is affected by:
The cash flows expected to be collected are updated each quarter based on current assumptions regarding default rates, loss severities, and other factors that are reflective of current financial conditions of the borrowers and the market conditions. Probable decreases in expected cash flows after acquisition result in impairment recorded as a specific allowance for loan losses or a charge-off to the allowance. Impairment is calculated as the present value of the expected future cash flows on the PCI loan, discounted at the loan's effective interest rate implicit in the loan. The nonaccretable difference on the date of acquisition is defined as the difference between the contractually required payments and the cash flows expected to be collected, considering the result of prepayments, and is not recorded. For purposes of accounting for the PCI loans from past business combinations, we elected not to apply the pooling method but to account for these loans individually. Disposals of loans, which may include sales of loans to third parties, receipt of payments in full by the borrower, or foreclosure of the collateral, result in removal of the loan from the PCI loan portfolio at its carrying amount. If a PCI loan pays off earlier than expected, a gain is recorded as interest income when the payoff amount exceeds the recorded investment. For acquired loans not considered credit impaired ("non-PCI"), we recognize the entire fair value discount accretion as interest income, based on contractual cash flows using an effective interest rate method for term loans, and on a straight line basis for revolving lines. When a non-PCI loan is placed on non-accrual status subsequent to acquisition, accretion stops until the loan is returned to accrual status. The level of accretion on non-PCI loans varies from period to period due to maturities and early payoffs of these loans during the reporting periods. Subsequent to acquisition, if the probable and estimable losses for non-PCI loans exceed the amount of the remaining unaccreted discount, the excess is established as an allowance for loan losses. For further information regarding our acquired loans, see Note 3, Loans and Allowance for Loan Losses. Allowance for Loan Losses is based upon estimates of loan losses and is maintained at a level considered adequate to provide for probable losses inherent in the loan portfolio. The allowance is increased by provisions for loan losses charged against earnings and reduced by charge-offs, net of recoveries. In periodic evaluations of the adequacy of the allowance balance, Management considers current economic conditions, 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, our past loan loss experience and other factors. The ALLL is based on estimates, and ultimate losses may vary from current estimates. Our Board of Directors' Asset/Liability Management Committee (“ALCO”) reviews the adequacy of the ALLL at least quarterly. The overall allowance consists of 1) specific allowances for individually identified impaired loans ("ASC 310-10") and 2) general allowances for pools of loans ("ASC 450-20"), which incorporate quantitative (e.g., historical loan loss rates) and qualitative risk factors (e.g., portfolio growth and trends, credit concentrations, economic and regulatory factors, etc.). The first component, specific allowances, results from the analysis of identified problem credits and the evaluation of sources of repayment including collateral, as applicable. Through Management's ongoing loan grading and credit monitoring process, individual loans are identified that have conditions indicating the borrower may be unable to pay all amounts due in accordance with the contractual terms. These loans are evaluated for impairment individually by Management. Management considers an originated loan to be impaired when it is probable we will be unable to collect all amounts due according to the contractual terms of the loan agreement. When the fair value of the impaired loan is less than the recorded investment in the loan, the difference is recorded as an impairment through the establishment of a specific allowance. For loans determined to be impaired, the extent of the impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate at origination (for originated loans), based on the loan's observable market price, or based on the fair value of the collateral if the loan is collateral dependent or if foreclosure is imminent. Generally, with problem credits that are collateral dependent, we obtain appraisals of the collateral at least annually. We may obtain appraisals more frequently if we believe the collateral value is subject to market volatility, if a specific event has occurred to the collateral, or if we believe foreclosure is imminent. The second component is an estimate of the probable inherent losses in each loan pool with similar characteristics. This analysis encompasses the entire loan portfolio, excluding individually identified impaired loans and acquired loans whose purchase discount has not been fully accreted. Under our allowance model, loans are evaluated on a pool basis by federal regulatory reporting codes ("CALL codes" or "segments"), which are further delineated by assigned credit risk ratings, as described in Note 3, Loans and Allowance for Loan Losses. Segments include the following:
- 1-4 family residential construction loans - Other construction loans and all land development and other land loans - Secured by farmland (including residential and other improvements) - Revolving, open-end loans secured by 1-4 family residential properties and extended under lines of credit - Closed-end loans secured by 1-4 family residential properties, secured by first liens - Closed-end loans secured by 1-4 family residential properties, secured by junior liens - Secured by multifamily (5 or more) residential properties - Loans secured by owner-occupied non-farm nonresidential properties - Loans secured by other non-farm nonresidential properties
The model determines general allowances by loan segment based on quantitative (loss history) and qualitative risk factors. The quantitative risk factor for each segment utilizes the greater result of either the historical loss method or migration analysis loss method based on loss history beginning March 2010. Qualitative internal and external risk factors include, but are not limited to, the following:
Under the historical loss method, quarterly loss rates are calculated for each segment by dividing annualized net charge-offs during each quarter by the quarter's average segment balances. The quarterly loss rates are averaged over the entire loss history period. Under the migration analysis method, loss rates are calculated at the risk grade and segment levels by dividing the net charge-off amount by the total segment balance at the beginning of each migration period where the charged-off loan in question was present. Migration loss rates are averaged for each risk grade and segment for the entire loss history period. For each segment, the loss rates that result in the larger of the migration loss reserves or segment historical loss reserves are applied to the current loan balances. Qualitative factors are combined with these quantitative factors at the segment level to arrive at the overall general allowances. We establish specific allowances to account for credit deterioration for probable decreases in cash flows for PCI loans subsequent to acquisition. The estimated cash flows expected to be collected on PCI loans are updated quarterly and require the use of key assumptions and estimates based on factors such as the current economic environment, changes in collateral values, loan workout plans, changes in the probability of default, loss severities, and prepayments. Probable decreases in expected cash flows after acquisition result in impairment recorded as a specific allowance for loan losses or a charge-off to the allowance. Impairment is calculated as the present value of the expected future cash flows on the PCI loan, discounted at the loan's effective interest rate implicit in the loan. While we believe we use the best information available to determine the allowance for loan losses, our results of operations could be significantly affected if circumstances differ substantially from the assumptions used in determining the allowance. A decline in local and national economic conditions, or significant changes in other assumptions, could result in a material increase in the allowance for loan losses and may adversely affect our financial condition and results of operations. In addition, the determination of the amount of the allowance for loan losses is subject to review by bank regulators as part of their routine examination process, which may result in the establishment of additional allowance for loan losses based upon their judgment of information available to them at the time of their examination. For further information regarding the allowance for loan losses, see Note 3, Loans and Allowance for Loan Losses. Allowance for Losses on Off-Balance Sheet Commitments: We make commitments to extend credit to meet the financing needs of our customers in the form of loans or standby letters of credit. We are exposed to credit loss in the event that a decline in credit quality of the borrower leads to nonperformance. We record an allowance for losses on these off-balance sheet commitments based on estimates of probability that these commitments will be drawn upon according to the historical utilization experience of different types of commitments and expected loss severity. This allowance is included in interest payable and other liabilities on the consolidated statements of condition. Transfers of Financial Assets: We have entered into certain loan participation agreements with other organizations. We account for these transfers of financial assets as sales when control over the transferred financial assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets and liabilities have been isolated from us, (2) the transferee has the right to pledge or exchange the assets (or beneficial interests) it received, free of conditions that constrain it from taking advantage of that right, beyond a trivial benefit and (3) we do not maintain effective control over the transferred financial assets or third-party beneficial interests related to those transferred assets. No gain or loss has been recognized by us on the sale of these participation interests in 2018 and 2017. Premises and Equipment: Premises and equipment consist of leasehold improvements, furniture, fixtures, software and equipment and are stated at cost, less accumulated depreciation and amortization, which are calculated on a straight-line basis. Furniture and fixtures are depreciated over eight years and equipment is generally depreciated over three to twenty years. Leasehold improvements are amortized over the lesser of their estimated useful lives or the terms of the leases. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to expense as incurred. Business Combinations: Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes the acquired assets and assumed liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including other identifiable assets, exceed the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed from contingencies must be recognized at fair value, if the fair value can be determined during the measurement period. Results of operations of an acquired business are included in the consolidated statements of operations from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments are intended to help companies evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses and provide a more robust framework to use in determining when a set of assets and activities is a business. The amendments should be applied prospectively and are effective for annual periods after December 31, 2017, including interim periods within those periods. We adopted the amendments effective January 1, 2018, which did not impact our financial condition, results of operations, or related financial statement disclosures for the periods presented. Goodwill and Other Intangible Assets: Goodwill is determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill that arises from a business combination is periodically evaluated for impairment at the reporting unit level, at least annually. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Core deposit intangible ("CDI") represents the estimated future benefit of deposits related to an acquisition and is booked separately from the related deposits and evaluated periodically for impairment. The CDI asset is amortized on an accelerated method over its estimated useful life of ten years. At December 31, 2018, the future estimated amortization expense for the CDI arising from our past acquisitions is as follows:
We make a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit where goodwill is assigned is less than its carrying amount. If we conclude that it is more likely than not that the fair value is more than its carrying amount, no impairment is recorded. Goodwill is tested for impairment on an interim basis if circumstances change or an event occurs between annual tests that would more likely than not reduce the fair value of the reporting unit below its carrying amount. The qualitative assessment includes adverse events or circumstances identified that could negatively affect the reporting units’ fair value as well as positive and mitigating events. Such indicators may include, among others, significant changes in legal factors or in the general business climate, significant changes in our stock price and market capitalization, unanticipated competition, and an action or assessment by a regulator. If the fair value of a reporting unit is less than its carrying amount, an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value is recognized. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Other Real Estate Owned ("OREO"): OREO is comprised of property acquired through foreclosure, in substance repossession or acceptance of deeds-in-lieu of foreclosure when the related loan receivable is de-recognized. OREO is recorded at fair value of the collateral less estimated costs to sell, establishing a new cost basis, and subsequently accounted for at the lower of cost or fair value less estimated costs to sell. Any shortfall of collateral value from the recorded investment of the related loan is recognized as loss at the time of foreclosure and is charged against the allowance for loan losses. Fair value of collateral is generally based on an independent appraisal of the property. Revenues and expenses associated with OREO, and subsequent adjustments to the fair value of the property and to the estimated costs of disposal, are realized and reported as a component of non-interest income and expense when incurred. Bank Owned Life Insurance ("BOLI"): The Bank owns life insurance policies on certain key current and former officers. BOLI is recorded in interest receivable and other assets on the consolidated statements of condition at the amount that can be realized under the insurance contract at period-end, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement. Federal Home Loan Bank of San Francisco ("FHLB") Stock: The Bank is a member of the FHLB. Members are required to own a certain amount of stock based on the level of borrowings and other factors. As of December 31, 2018, our investment in FHLB stock was carried at cost, as there was no impairment or changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. As of December 31, 2017, our investment in FHLB stock was carried at cost. We periodically evaluate FHLB stock for impairment based on ultimate recovery of par value. FHLB stock is included as part of interest receivable and other assets on the consolidated statements of condition. Both cash and stock dividends are reported as non-interest income. Investments in Low Income Housing Tax Credit Funds: We have invested in limited partnerships that were formed to develop and operate affordable housing projects for low or moderate-income tenants throughout California. Our ownership percentage in each limited partnership ranges from 1.0% to 3.5%. We account for the investments in qualified affordable housing tax credit funds using the proportional amortization method, where the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received and the net investment performance is recognized as part of income tax expense (benefit). Each of the partnerships must meet the regulatory minimum requirements for affordable housing for a minimum 15-year compliance period to fully utilize the tax credits. If the partnerships cease to qualify during the compliance period, the credit may be denied for any period in which the project is not in compliance and a portion of the credit previously taken is subject to recapture with interest. We record an impairment charge if the value of the future tax benefits is less than the carrying value of the investments. Employee Stock Ownership Plan (“ESOP”): We recognize compensation cost for ESOP contributions when funds become committed for the purchase of Bancorp's common shares into the ESOP in the year in which the employees render service entitling them to the contribution. If we contribute stock, the compensation cost is the fair value of the shares when they are committed to be released (i.e., when the number of shares becomes known and formally approved). In 2018 and 2017, the Bank only made stock contributions to the ESOP. Income Taxes: Income taxes reported in the consolidated financial statements are computed based on an asset and liability approach. We recognize the amount of taxes payable or refundable for the current year and we record deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. We record net deferred tax assets to the extent it is more likely than not that they will be realized. In evaluating our ability to recover the deferred tax assets and the need to establish a valuation allowance against the deferred tax assets, Management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. In projecting future taxable income, Management develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates being used to manage the underlying business. Bancorp files consolidated federal and combined state income tax returns. We recognize the financial statement effect of a tax position when it is more likely than not, based on the technical merits and all available evidence, that the position will be sustained upon examination, including the resolution through protests, appeals or litigation processes. For tax positions that meet the more likely than not threshold, we measure and record the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement with the taxing authority. The remainder of the benefits associated with tax positions taken is recorded as unrecognized tax benefits, along with any related interest and penalties. Interest and penalties related to unrecognized tax benefits are recorded in tax expense. In deciding whether or not our tax positions taken meet the more likely than not recognition threshold, we must make judgments and interpretations about the application of inherently complex state and federal tax laws. To the extent tax authorities disagree with tax positions taken by us, our effective tax rates could be materially affected in the period of settlement with the taxing authorities. Revision of our estimate of accrued income taxes also may result from our own income tax planning, which may affect effective tax rates and results of operations for any reporting period. We present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss ("NOL") carryforward, or similar tax loss or tax credit carryforward, rather than as a liability, when (1) the uncertain tax position would reduce the NOL or other carryforward under the tax law of the applicable jurisdiction and (2) we intend to and are able to use the deferred tax asset for that purpose. Otherwise, the unrecognized tax benefit is presented as a liability instead of being netted with deferred tax assets. Earnings per share (“EPS”) are based upon the weighted average number of common shares outstanding during each year. The following table shows: 1) weighted average basic shares, 2) potentially dilutive weighted average common shares related to stock options and unvested restricted stock awards, and 3) weighted average diluted shares. Basic EPS are calculated by dividing net income by the weighted average number of common shares outstanding during each annual period, excluding unvested restricted stock awards. Diluted EPS are calculated using the weighted average number of potentially dilutive common shares. The number of potentially dilutive common shares included in year-to-date diluted EPS is a year-to-date weighted average of potentially dilutive common shares included in each quarterly diluted EPS computation. In computing diluted EPS, we exclude anti-dilutive shares such as options whose exercise prices exceed the current common stock price, as they would not reduce EPS under the treasury method. We have two forms of outstanding common stock: common stock and unvested restricted stock awards. Holders of unvested restricted stock awards receive non-forfeitable dividends at the same rate as common shareholders and they both share equally in undistributed earnings. Under the two-class method, the difference in EPS is nominal for these participating securities.
1 Share and per share data have been adjusted to reflect the two-for-one stock split effective November 27, 2018. Share-Based Compensation: All share-based payments, including stock options and restricted stock, are recognized as stock-based compensation expense in the consolidated statements of comprehensive income based on the grant-date fair value of the award with a corresponding increase in common stock. The grant-date fair value of the award is amortized on a straight-line basis over the requisite service period, which is generally the vesting period. The stock-based compensation expense excludes stock grants to directors as compensation for their services, which are recognized as director expenses separately based on the grant-date value of the stock. We account for forfeitures as they occur. See Note 8, Stockholders' Equity and Stock Option Plans for further discussion. We determine the fair value of stock options at the grant date using a Black-Scholes pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of the option, the volatility of the underlying stock, the expected dividend yield and the risk-free interest rate over the expected life of the option. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatility is based on the historical volatility of the common stock over the most recent period that is generally commensurate with the expected life of the options. The Black-Scholes option valuation model requires the input of highly subjective assumptions, including the expected life of the stock-based award and stock price volatility. The assumptions used represent Management's best estimates based on historical information, but these estimates involve inherent uncertainties and the application of Management's judgment. As a result, if other assumptions had been used, the recorded stock-based compensation expense could have been materially different from that recorded in the consolidated financial statements. The fair value of restricted stock is based on the stock price on the grant date. We record excess tax benefits resulting from the exercise of non-qualified stock options, the disqualifying disposition of incentive stock options and vesting of restricted stock awards as tax benefits in the consolidated statements of comprehensive income with a corresponding decrease to current taxes payable. In addition, we reflect excess tax benefits as an operating activity in the consolidated statements of cash flows. Cash paid for tax withholdings when shares are surrendered in a cashless stock option exchange is classified as a financing activity in the consolidated statements of cash flows. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU applies to entities that change the terms or conditions of a share-based payment award. The FASB adopted this ASU to provide clarity in what constitutes a modification and to reduce diversity in practice in applying Topic 718. In order for a change to a share-based arrangement to not require Topic 718 modification accounting treatment, all of the following must be met: no change in fair value, no change in vesting conditions and no change in the balance sheet classification of the modified award. The ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively to an award modified on or after the adoption date. We adopted the requirements of this ASU effective January 1, 2018, which did not impact our financial condition, results of operation, or related financial statement disclosures. Derivative Financial Instruments and Hedging Activities - Fair Value Hedges: All of our interest rate swap contracts are designated and qualified as fair value hedges. The terms of our interest rate swap contracts are closely aligned to the terms of the designated fixed-rate loans. The hedging relationships are tested for effectiveness on a quarterly basis. The interest rate swaps are carried on the consolidated statements of condition at their fair value in other assets (when the fair value is positive) or in other liabilities (when the fair value is negative). The changes in the fair value of the interest rate swaps are recorded in interest income. The unrealized gains or losses due to changes in fair value of the hedged fixed-rate loans are recorded as an adjustment to the hedged loans and offset in interest income. For derivative instruments executed with the same counterparty under a master netting arrangement, we do not offset fair value amounts of interest rate swaps in liability positions with the ones in asset positions. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This amendment changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. It is intended to more closely align hedge accounting with companies' risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedging programs. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We early adopted the amendments of this ASU in the second quarter of 2018, and elected to perform hedge effectiveness assessments using a qualitative approach instead of quantitative regression analysis going forward. The adoption of this ASU had an immaterial impact to our financial results. The amendments also require additional disclosures, which are included in Note 14, Derivative Financial Instruments and Hedging Activities. From time to time, we make firm commitments to enter into long-term fixed-rate loans with borrowers backed by yield maintenance agreements and simultaneously enter into forward interest rate swap agreements with correspondent banks to mitigate the change in fair value of the yield maintenance agreement. Prior to loan funding, yield maintenance agreements with net settlement features that meet the definition of a derivative are considered as non-designated hedges and are carried on the consolidated statements of condition at their fair value in other assets (when the fair value is positive) or in other liabilities (when the fair value is negative). The offsetting changes in the fair value of the forward swap and the yield maintenance agreement are recorded in interest income. When the fixed-rate loans are originated, the forward swaps are designated to offset the change in fair value in the loans. Subsequent to the point of the swap designations, the fair value of the related yield maintenance agreements at the designation date was recorded in other assets and is amortized using the effective yield method over the life of the respective designated loans. The net effect of the change in fair value of interest rate swaps, the amortization of the yield maintenance agreement and the change in the fair value of the hedged loans result in an insignificant amount of hedge ineffectiveness recognized in interest income. For further detail, see Note 14, Derivative Financial Instruments and Hedging Activities. Revenue Recognition on Non-Financial Instruments: In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of this ASU (and all subsequent updates) is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This ASU establishes a five-step model that must be used to recognize revenue that requires the entity to identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the entity satisfies the performance obligation. The ASU does not apply to the majority of our revenue, including revenue associated with financial instruments, such as loans and investment securities, and certain non-interest income, such as earnings on bank owned life insurance, dividends on Federal Home Loan Bank ("FHLB") stock, gains or losses on sales of investment securities, and deposit overdraft charges. The standard allowed the use of either the full retrospective or modified retrospective transition method. We elected to apply the modified retrospective transition method to incomplete contracts as of the initial date of application on January 1, 2018. The adoption of the new standards did not have a material impact on our financial condition or results of operations as revenue recognition under the new standards did not change significantly from our current practice of recognizing the in-scope non-interest income. In addition, we did not retroactively revise prior period amounts or record a cumulative adjustment to retained earnings upon adoption. We considered the nature, amount, timing, and uncertainty of revenue from contracts with customers and determined that significant revenue streams are sufficiently disaggregated in the consolidated statements of comprehensive income. Descriptions of our significant revenue-generating transactions that are within the scope of the new revenue recognition standards, which are presented in the consolidated statements of comprehensive income as components of non-interest income, are as follows:
Advertising Costs are expensed as incurred. For the years ended December 31, 2018 and 2017, advertising costs totaled $666 thousand and $567 thousand, respectively. Comprehensive Income includes net income, changes in the unrealized gains or losses on available-for-sale investment securities, and amortization of net unrealized gains or losses on securities transferred from available-for-sale to held-to-maturity, net of related taxes, reported on the consolidated statements of comprehensive income and as components of stockholders' equity. Fair Value Measurements: We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Securities available-for-sale and derivatives are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record certain assets and liabilities at fair value on a non-recurring basis, such as purchased loans and acquired deposits recorded at acquisition date, certain impaired loans, other real estate owned and securities held-to-maturity that are other-than-temporarily impaired. These non-recurring fair value adjustments typically involve write-downs of individual assets due to application of lower-of-cost or market accounting. When we develop our fair value measurement process, we maximize the use of observable inputs. Whenever there is no readily available market data, we use our best estimates and assumptions in determining fair value, but these estimates involve inherent uncertainties and the application of Management's judgment. As a result, if other assumptions had been used, our recorded earnings or disclosures could have been materially different from those reflected in these consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this ASU make improvements to accounting standards related to financial instruments, including but not limited to the following:
The ASU required an entity to apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We adopted the requirements of this ASU effective January 1, 2018, which did not have a material impact on our financial condition and results of operations. Our disclosures of the fair value of our loans held for investment, which are recorded at amortized cost, now incorporate the exit price notion reflecting factors such as a liquidity premium. Additionally, at the date of adoption, FHLB stock and Visa Inc. Class B common stock were carried at cost, as there was no impairment or changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. For further information on our use of fair value measurements and our related valuation methodologies, see Note 9, Fair Value of Assets and Liabilities. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the consolidated financial statements include ALLL, other-than-temporary impairment of investment securities, accrued liabilities, accounting for income taxes and fair value measurements (including fair values of acquired assets and assumed liabilities at acquisition dates) as discussed in the Notes herein. Other Recently Adopted Accounting Standards In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU provides guidance on how to present and classify eight specific cash flow topics in the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented, if practical. We adopted the requirements of this ASU effective January 1, 2018, which did not have a significant impact on our consolidated statements of cash flows. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This amendment helps organizations address certain stranded income tax effects in accumulated other comprehensive income (AOCI) resulting from the enactment of the Tax Cuts and Jobs Act of 2017. The ASU requires financial statement preparers to disclose a description of the accounting policy for releasing income tax effects from AOCI, whether or not they elect to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act of 2017, and information about the other income tax effects that are reclassified. The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate tax rate in the Tax Cuts and Jobs Act of 2017 is recognized. We early adopted this ASU in the first quarter of 2018 by reclassifying $638 thousand from AOCI to retained earnings. This amount represents the stranded income tax effects related to the unrealized loss on available-for-sale securities in AOCI on the date of the enactment of the Tax Cuts and Jobs Act of 2017. Accounting Standards Not Yet Effective In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments in this ASU intend to increase transparency and comparability among organizations by recognizing an asset, which represents the right to use the asset for the lease term, and a lease liability, which is a lessee's obligation to make lease payments measured on a discounted basis. This ASU generally applies to leasing arrangements exceeding a twelve-month term. ASU 2016-02 is effective for annual periods, including interim periods within those annual periods beginning after December 15, 2018 and requires a modified retrospective method of adoption. In July 2018, the FASB issued two amendments to ASU 2016-02: ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which provides various corrections and clarifications to ASU 2016-02; and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides a new optional transition method and provides a lessor with practical expedients for separating lease and non-lease components of a lease. Entities will apply a modified retrospective approach at either the beginning of the earliest period presented or at the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings. We adopted this ASU effective January 1, 2019 as required using the latter approach. Upon adoption, we did not record a cumulative effect to retained earnings. We recorded a right-of-use asset of approximately $13.4 million and a lease liability of approximately $15.4 million. The difference between the asset and liability was attributed to the reclassification of deferred rent and unaccreted lease incentives, which were netted with the right-of-use asset at the adoption date. The right-of-use asset did not materially impact our financial condition as it would have represented only 0.5% of our consolidated assets and reduced our total risk-based capital ratio by only 10 basis points as of December 31, 2018. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard will replace today's "incurred loss" model with a "current expected credit loss" ("CECL") model. The CECL model will apply to estimated credit losses on loans receivable, held-to-maturity debt securities, unfunded loan commitments, and certain other financial assets measured at amortized cost. The CECL model is based on lifetime expected losses, rather than incurred losses, and requires the recognition of credit loss expense in the consolidated statement of income and a related allowance for credit losses on the consolidated statement of condition at the time of origination or purchase of a loan receivable or held-to-maturity debt security. Likewise, subsequent changes in this estimate are recorded through credit loss expense and related allowance. The CECL model requires the use of not only relevant historical experience and current conditions, but reasonable and supportable forecasts of future events and circumstances, incorporating a broad range of information in developing credit loss estimates, which could result in significant changes to both the timing and amount of credit loss expense and allowance. Under ASU 2016-13, available-for-sale debt securities are evaluated for impairment if fair value is less than amortized cost. Estimated credit losses are recorded through a credit loss expense and an allowance, rather than a write-down of the investment. Changes in fair value that are not credit-related will continue to be recorded in other comprehensive income. The ASU also expands the disclosure requirements regarding assumptions, models, and methods for estimating the allowance for loan losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Entities will apply a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. While we believe the change from an incurred loss model to a CECL model has the potential to increase the allowance for loan losses at the adoption date, we cannot reasonably quantify the impact of the adoption of the amendments to our financial condition or results of operations at this time due to the complexity and extensive changes from these amendments. We have formed an internal CECL committee and are working with our third-party vendor to identify data gaps and determine the appropriate methodologies and resources to utilize in preparation for transition to the new accounting standards, including but not limited to the use of certain tools to forecast future economic conditions that affect the cash flows of our loans over their lifetime. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This update simplifies the accounting for share-based payment transactions for acquiring goods and services from nonemployees, applying some of the same requirements as employee share-based payment transactions. The ASU will not affect the accounting for share-based payment awards to nonemployee directors, which will continue to be treated as employee share-based transactions under the current standards. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The requirements of the ASU will be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. We adopted the requirements of this ASU effective January 1, 2019, which did not have a material impact on our financial condition or results of operations, as it is not our practice to issue stock-based awards to pay for goods and services from nonemployees, other than nonemployee directors. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU remove, modify, and add disclosure requirements for the fair value reporting of assets and liabilities. The modifications and additions relate to Level 3 fair value measurements at the end of the reporting period. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities should disclose and describe the range and weighted-average of significant observable inputs used to develop Level 3 fair value measurements prospectively. Early adoption is permitted. Entities making this election are permitted to early adopt the eliminated or modified disclosure requirements and delay the adoption of all the new disclosure requirements until the ASU's effective date. As the ASU’s requirements only relate to disclosures, the amendments will not impact our financial condition or results of operations. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, regardless of whether they convey a license to the hosted software. The accounting for the service element of a hosting arrangement that is a service contract is not affected by this ASU. The amendments are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. An entity has the option to apply amendments in the ASU either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted, including adoption in an interim period. We do not expect that the ASU will have a material impact on our financial condition or results of operations. In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This update adds an alternative fifth permissible U.S. benchmark rate to be used for hedge accounting purposes. As we have already adopted the amendments in ASU 2017-12, which changed both the designation and measurement guidance for qualifying hedging relationships, the amendments in ASU 2018-16 are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The amendments should be adopted on a prospective basis for qualifying new or re-designated hedging relationships entered into on or after the date of adoption. Early adoption is permitted in any interim period upon issuance of this ASU if an entity already has adopted ASU 2017-12. We adopted this ASU effective January 1, 2019, and expect the amendment to affect the measurement of our hedging activities, but we do not expect it to have a material impact on our financial condition or results of operations. |
Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities Our investment securities portfolio consists of obligations of state and political subdivisions, corporate bonds, U.S. government agency securities, including residential and commercial mortgage-backed securities (“MBS”\"CMBS") and collateralized mortgage obligations (“CMOs”) issued or guaranteed by Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), or Government National Mortgage Association ("GNMA"), Small Business Administration ("SBA") backed securities, debentures issued by government-sponsored agencies such as FNMA, Federal Farm Credit Bureau, FHLB and FHLMC, as well as privately issued CMOs, as reflected in the table below:
The amortized cost and fair value of investment debt securities by contractual maturity at December 31, 2018 are shown below. Expected maturities may differ from contractual maturities if the issuers of the securities have the right to call or prepay obligations with or without call or prepayment penalties.
Sales of investment securities and gross gains and losses are shown in the following table.
Pledged investment securities are shown in the following table:
As part of our ongoing review of our investment securities portfolio, we reassessed the classification of certain securities issued by government sponsored agencies. During 2018 and 2017, we transferred $27.4 million and $129 million, respectively, from available-for-sale to held-to-maturity at fair value. We intend and have the ability to hold these securities to maturity. The net unrealized pre-tax loss of $278 thousand and $3.0 million, at the respective transfer dates, remained in accumulated other comprehensive income and are amortized over the remaining lives of the securities. Amortization of the net unrealized pre-tax losses totaled $516 thousand in 2018 and $426 thousand in 2017. There were 229 and 198 securities in unrealized loss positions at December 31, 2018 and 2017, respectively. Those securities are summarized and classified according to the duration of the loss period in the tables below:
As of December 31, 2018, 188 investment securities in our portfolio had been in a continuous loss position for twelve months or more and 41 investment securities had been in a loss position for less than twelve months. Securities issued by government-sponsored agencies, such as FNMA and FHLMC, usually have implicit credit support by the U.S. federal government. However, since 2008, FNMA and FHLMC have been under government conservatorship and, therefore, contractual cash flows for these investments carry explicit guarantees by the U.S. federal government. Securities issued by the SBA and GNMA have explicit credit guarantees by the U.S. federal government, which protects us from credit losses on the contractual cash flows of the securities. Other temporarily impaired securities, including obligations of state and political subdivisions and corporate bonds, were deemed credit worthy after our internal analysis of the issuers' latest financial information, credit ratings by major credit agencies, and/or credit enhancements. Based on our comprehensive analyses, we determined that the decline in the fair values of these securities was primarily driven by factors other than credit, such as changes in market interest rates and liquidity spreads subsequent to purchase. At December 31, 2018, Management determined that it did not intend to sell investment securities with unrealized losses, and it is more than likely than not that we will not have to sell any of the securities with unrealized losses before recovery of their amortized cost. Therefore, we do not consider these investment securities to be other-than-temporarily impaired at December 31, 2018. Non-Marketable Securities As a member of the FHLB, we are required to maintain a minimum investment in FHLB capital stock determined by the Board of Directors of the FHLB. The minimum investment requirements can increase in the event we increase our total asset size or borrowings with the FHLB. Shares cannot be purchased or sold except between the FHLB and its members at the $100 per share par value. We held $11.1 million of FHLB stock included in other assets on the consolidated statements of condition at both December 31, 2018 and 2017. The carrying amounts of these investments are reasonable estimates of fair value because the securities are restricted to member banks and they do not have a readily determinable market value. Based on our analysis of FHLB’s financial condition and certain qualitative factors, we determined that the FHLB stock was not impaired at December 31, 2018 and 2017. On February 21, 2019, FHLB announced a cash dividend for the fourth quarter of 2018 at an annualized dividend rate of 7.00% to be distributed in mid-March 2019. Cash dividends paid on FHLB capital stock are recorded as non-interest income. As a member bank of Visa U.S.A., we held 10,439 and 16,939 shares of Visa Inc. Class B common stock at December 31, 2018 and 2017, respectively. These shares have a carrying value of zero and are restricted from resale to non-member banks of Visa U.S.A. until their conversion into Class A (voting) shares upon the termination of Visa Inc.'s Covered Litigation escrow account. Because of the restriction and the uncertainty on the conversion rate to Class A shares, these shares lack a readily determinable fair value. When converting this Class B common stock to Class A common stock based on the conversion rate of 1.6298, as of December 31, 2018 and 1.6483 as of December 31, 2017, and the closing stock price of Class A shares at those respective dates, the converted value of our shares of Class B common stock would have been $2.2 million and $3.2 million at December 31, 2018 and 2017, respectively. The conversion rate is subject to further adjustment upon the final settlement of the covered litigation against Visa Inc. and its member banks. As such, the fair value of these Class B shares can differ significantly from their converted values. For further information, refer to Note 12, Commitments and Contingencies. In October 2018, we sold 6,500 shares of our holdings of Visa Inc. Class B common stock to a member bank of Visa U.S.A. The pre-tax gain from the sale, net of sales commission, was $956 thousand. We invest in low income housing tax credit funds as a limited partner, which totaled $4.6 million and $2.1 million recorded in other assets as of December 31, 2018 and 2017, respectively. In 2018, we recognized $597 thousand of low income housing tax credits and other tax benefits, net of $507 thousand of amortization expense of low income housing tax credit investment, as a component of income tax expense. As of December 31, 2018, our unfunded commitments for these low income housing tax credit funds totaled $3.1 million. We did not recognize any impairment losses on these low income housing tax credit investments during 2018 or 2017, as the value of the future tax benefits exceeds the carrying value of the investments. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law, which reduced the federal corporate income tax rate from 35% to 21% for tax years beginning 2018. Due to the tax rate change, we revised the amortization schedule according to the proportional amortization method for the tax deduction benefits on these low income housing tax credit investments starting in 2018 using the 21% federal tax rate and recorded a catch-up amortization expense of $67 thousand in 2017 as a component of income tax expense. |
Loans and Allowance for Loan Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Allowance for Loan Losses | Loans and Allowance for Loan Losses Credit Quality of Loans Virtually all of our loans are from customers located in California, primarily in Marin, Alameda, Sonoma, San Francisco, Napa, and Contra Costa counties. Approximately 88% and 87% of total loans were secured by real estate at December 31, 2018 and 2017, respectively. At December 31, 2018 and 2017, 67% of our loans were for commercial real estate, 85% of which were secured by real estate located in Marin, Sonoma, Alameda, San Francisco and Napa counties (California). The following table shows outstanding loans by class and payment aging as of December 31, 2018 and 2017.
1 Includes no purchased credit impaired ("PCI") loans at December 31, 2018. Three purchased credit impaired loans with unpaid balances totaling $131 thousand and no carrying values were not accreting interest at December 31, 2017. Amounts exclude accreting PCI loans of $2.1 million and December 31, 2018 and 2017, as we have a reasonable expectation about future cash flows to be collected and we continue to recognize accretable yield on these loans in interest income. There were no accruing loans past due more than ninety days at December 31, 2018 or 2017. 2 Amounts include net deferred loan origination costs of $635 thousand and $818 thousand at December 31, 2018 and 2017, respectively. Amounts are also net of unaccreted purchase discounts on non-PCI loans of $708 thousand and $1.2 million at December 31, 2018 and 2017, respectively. We generally make commercial loans to established small and mid-sized businesses to provide financing for their growth and working capital needs, equipment purchases and acquisitions. Management examines historical, current, and projected cash flows to determine the ability of the borrower to repay obligations as agreed. Commercial loans are made based primarily on the identified cash flows of the borrower and secondarily on the underlying collateral and guarantor support. The cash flows of borrowers, however, may not occur as expected, and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed, such as accounts receivable and inventory, and typically include personal guarantees. We target stable businesses with guarantors who provide additional sources of repayment and have proven to be resilient in periods of economic stress. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans discussed above. We underwrite these loans to be repaid from cash flow and to be supported by real property collateral. Underwriting standards for commercial real estate loans include, but are not limited to, debt coverage and loan-to-value ratios. Furthermore, substantially all of our loans are guaranteed by the owners of the properties. Conditions in the real estate markets or in the general economy may adversely affect our commercial real estate loans. In the event of a vacancy, we expect guarantors to carry the loans until they find a replacement tenant. The owner's substantial equity investment provides a strong economic incentive to continue to support the commercial real estate projects. As such, we have generally experienced a relatively low level of loss and delinquencies in this portfolio. Construction loans are generally made to developers and builders to finance construction, renovation and occasionally land acquisitions in anticipation of near-term development. Construction loans are structured with interest reserves that are used for the payment of interest during the development and marketing periods and capitalized as part of the loan balance. If we determine that a construction loan is impaired before the depletion of the interest reserve, then we apply the interest funded by the interest reserve against the loan's principal balance. These loans are underwritten after evaluation of the borrower's financial strength, reputation, prior track record, and independent appraisals. We monitor all construction projects to determine whether they are on schedule, completed as planned and in accordance with the approved construction budgets. Significant events can affect the construction industry, including: the inherent volatility of real estate markets and vulnerability to delays due to weather, change orders, inability to obtain construction permits, labor or material shortages, and price changes. Estimates of construction costs and value associated with the completed project may be inaccurate. Repayment of construction loans is largely dependent on the ultimate success of the project. Consumer loans primarily consist of home equity lines of credit, other residential loans, and floating homes along with a small number of installment loans. Our other residential loans include tenancy-in-common fractional interest loans ("TIC") located almost entirely in San Francisco County. We originate consumer loans utilizing credit score information, debt-to-income ratio and loan-to-value ratio analysis. Diversification among consumer loan types, coupled with relatively small loan amounts that are spread across many individual borrowers, mitigates risk. We do not originate sub-prime residential mortgage loans, nor is it our practice to underwrite loans commonly referred to as "Alt-A mortgages," the characteristics of which are reduced documentation, borrowers with low FICO scores or collateral with high loan-to-value ratios. We use a risk rating system to evaluate asset quality, and to identify and monitor credit risk in individual loans, and in the loan portfolio. Our definitions of “Special Mention” risk graded loans, or worse, are consistent with those used by the Federal Deposit Insurance Corporation ("FDIC"). Our internally assigned grades are as follows: Pass and Watch: Loans to borrowers of acceptable or better credit quality. Borrowers in this category demonstrate fundamentally sound financial positions, repayment capacity, credit history and management expertise. Loans in this category must have an identifiable and stable source of repayment and meet the Bank’s policy regarding debt service coverage ratios. These borrowers are capable of sustaining normal economic, market or operational setbacks without significant financial consequences. Negative external industry factors are generally not present. The loan may be secured, unsecured or supported by non-real estate collateral for which the value is more difficult to determine and/or marketability is more uncertain. This category also includes “Watch” loans, where the primary source of repayment has been delayed. “Watch” is intended to be a transitional grade, with either an upgrade or downgrade within a reasonable period. Special Mention: Potential weaknesses that deserve close attention. If left uncorrected, those potential weaknesses may result in deterioration of the payment prospects for the asset. Special Mention assets do not present sufficient risk to warrant adverse classification. Substandard: Inadequately protected by either the current sound worth and paying capacity of the obligor or the collateral pledged, if any. A Substandard asset has a well-defined weakness or weaknesses that jeopardize(s) the liquidation of the debt. Substandard assets are characterized by the distinct possibility that we will sustain some loss if such weaknesses or deficiencies are not corrected. Well-defined weaknesses include adverse trends or developments of the borrower’s financial condition, managerial weaknesses and/or significant collateral deficiencies. Doubtful: Critical weaknesses that make collection or liquidation in full improbable. There may be specific pending events that work to strengthen the asset; however, the amount or timing of the loss may not be determinable. Pending events generally occur within one year of the asset being classified as Doubtful. Examples include: merger, acquisition, or liquidation; capital injection; guarantee; perfecting liens on additional collateral; and refinancing. Such loans are placed on non-accrual status and usually are collateral-dependent. We regularly review our credits for accuracy of risk grades whenever we receive new information. Borrowers are generally required to submit financial information at regular intervals. Typically, commercial borrowers with lines of credit are required to submit financial information with reporting intervals ranging from monthly to annually depending on credit size, risk and complexity. In addition, investor commercial real estate borrowers are usually required to submit rent rolls or property income statements annually. We monitor construction loans monthly. We review home equity and other consumer loans based on delinquency. We also review loans graded “Watch” or worse, regardless of loan type, no less than quarterly. The following table represents an analysis of the carrying amount in loans, net of deferred fees and costs and purchase premiums or discounts, by internally assigned risk grades, including PCI loans, at December 31, 2018 and 2017.
Troubled Debt Restructuring Our loan portfolio includes certain loans modified in a troubled debt restructuring (“TDR”), where we have granted economic concessions to borrowers experiencing financial difficulties. These concessions typically result from our loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. TDRs on non-accrual status at the time of restructure may be returned to accruing status after Management considers the borrower’s sustained repayment performance for a reasonable period, generally six months, and obtains reasonable assurance of repayment and performance. We may remove a loan from TDR designation if it meets all of the following conditions:
The same Management level that approved the loan classification upgrade must approve the removal of TDR status. During 2018, one TIC loan and one home equity loan with recorded investments totaling $247 thousand were removed from TDR designation after meeting all of the conditions above. There were no loans removed from TDR designation during 2017. The following table summarizes the carrying amount of TDR loans by loan class as of December 31, 2018 and December 31, 2017.
1Includes no acquired TDR loans as of December 31, 2018 or December 31, 2017. 2 There were two TDR loans on non-accrual status with recorded investments totaling $65 thousand at December 31, 2018 and no TDR loans on non-accrual status at December 31, 2017. The following table presents information for loans modified in a TDR during the presented periods, including the number of modified contracts, the recorded investment in the loans prior to modification, and the recorded investment in the loans at period end after being restructured. The table excludes fully charged-off TDR loans and loans modified in a TDR and subsequently paid-off during the years presented.
The modifications during 2018 and 2017 primarily involved maturity or payment extensions, interest rate concessions, renewals, and other changes to loan terms. During 2018 and 2017, there were no defaults on loans that had been modified in a TDR within the prior twelve-month period. We report defaulted TDRs based on a payment default definition of more than ninety days past due. Impaired Loans The following tables summarize information by class on impaired loans and their related allowances. Total impaired loans include non-accrual loans, accruing TDR loans and accreting PCI loans that have experienced post-acquisition declines in cash flows expected to be collected.
Management monitors delinquent loans continuously and identifies problem loans, generally loans graded Substandard or worse, loans on non-accrual status and loans modified in a TDR, to be evaluated individually for impairment testing. Generally, the recorded investment in impaired loans is net of any charge-offs from estimated losses related to specifically-identified impaired loans when they are deemed uncollectible. There were no charged-off amounts on impaired loans at December 31, 2018 or 2017. In addition, the recorded investment in impaired loans is net of purchase discounts or premiums on acquired loans and deferred fees and costs. At December 31, 2018 and 2017, unused commitments to extend credit on impaired loans, including performing loans to borrowers whose terms have been modified in TDRs, totaled $1.1 million and $935 thousand, respectively. The following tables disclose activity in the allowance for loan losses ("ALLL") and the recorded investment in loans by class, as well as the related ALLL disaggregated by impairment evaluation method.
NM - Not Meaningful Purchased Credit-Impaired Loans Acquired loans are considered credit-impaired if there is evidence of significant deterioration of credit quality since origination and it is probable, at the acquisition date, that we will be unable to collect all contractually required payments receivable. Management has determined certain loans purchased in our three bank acquisitions to be PCI loans based on credit indicators such as non-accrual status, past due status, loan risk grade, loan-to-value ratio, etc. Revolving credit agreements (e.g., home equity lines of credit and revolving commercial loans) are not considered PCI loans as cash flows cannot be reasonably estimated. The following table reflects the unpaid principal balance and related carrying value of PCI loans:
The activities in the accretable yield, or income expected to be earned over the remaining lives of the PCI loans were as follows:
Pledged Loans Our FHLB line of credit is secured under terms of a blanket collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $1,027.4 million and $887.9 million at December 31, 2018 and 2017, respectively. In addition, we pledge eligible TIC loans, which totaled $94.5 million and $67.6 million at December 31, 2018 and 2017, respectively, to secure our borrowing capacity with the Federal Reserve Bank (“FRB”). Also, see Note 7, Borrowings. Related Party Loans The Bank has, and expects to have in the future, banking transactions in the ordinary course of its business with directors, officers, principal shareholders and their businesses or associates. These transactions, including loans, are granted on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons not related to us. Likewise, these transactions do not involve more than the normal risk of collectability or present other unfavorable features. The following table shows changes in net loans to related parties for each of the two years ended December 31, 2018 and 2017:
1During 2017, two new directors joined our Board of Directors resulting in the reclassification of existing loans to those directors and their businesses to related party status. Undisbursed commitments to related parties totaled $9.1 million as of both December 31, 2018 and 2017. |
Bank Premises and Equipment |
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Bank Premises and Equipment | Bank Premises and Equipment A summary of Bank premises and equipment at December 31 follows:
The amount of depreciation and amortization totaled $2.1 million and $1.9 million for the years ended December 31, 2018 and 2017, respectively. |
Bank Owned Life Insurance |
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Insurance [Abstract] | |
Bank Owned Life Insurance | Bank Owned Life Insurance We own life insurance policies on the lives of certain current and former officers designated by the Board of Directors to fund our employee benefit programs. Death benefits provided under the specific terms of these insurance policies are estimated to be $82.2 million at December 31, 2018. The benefits to employees' beneficiaries are limited to each employee's active service period. The investment in bank owned life insurance policies are reported in interest receivable and other assets at their cash surrender value of $39.0 million and $38.1 million at December 31, 2018 and 2017, respectively. The cash surrender value includes both the original premiums paid for the life insurance policies and the accumulated accretion of policy income since inception of the policies. Income of $913 thousand and $845 thousand was recognized on the life insurance policies in 2018 and 2017, respectively. We regularly monitor the credit ratings of our insurance carriers to ensure that they comply with our policy. |
Deposits |
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Banking and Thrift [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | Deposits A stratification of time deposits at December 31, 2018 and 2017 is presented in the following table:
Interest on time deposits was $542 thousand and $576 thousand in 2018 and 2017, respectively. Scheduled maturities of time deposits at December 31, 2018 are presented as follows:
As of December 31, 2018, $125.7 million in securities were pledged as collateral for our local agency deposits. Our deposit portfolio includes deposits offered through the Promontory Interfinancial Network that are comprised of Certificate of Deposit Account Registry Service® ("CDARS") balances included in time deposits and Insured Cash Sweep® ("ICS") balances included in money market deposits. In addition, we offer deposits through Reich & Tang Deposit Networks, LLC, comprised of Demand Deposit MarketplaceSM ("DDM") balances. Through these two networks we are able to offer our customers access to FDIC-insured deposit products in aggregate amounts exceeding current insurance limits. When we place funds through CDARS, ICS and DDM, on behalf of a customer, we have the option of receiving matching deposits through the network's reciprocal deposit program. We consider the reciprocal deposits to be in-market deposits as distinguished from traditional out-of-market brokered deposits. We had $7.7 million and $13.5 million in CDARS and $44.1 million and $41.0 million in ICS balances in the reciprocal deposit program at December 31, 2018 and 2017, respectively. In addition, we had $22.7 million and $29.2 million in DDM balances in the reciprocal deposit program at December 31, 2018 and 2017, respectively. We also have the ability to place deposits through the networks for which we receive no matching deposits ("one-way" deposits). One-way CDARS and ICS deposits totaled $15.2 million and $4.2 million at December 31, 2018 and 2017, respectively. The aggregate amount of deposit overdrafts that have been reclassified as loan balances was $131 thousand and $224 thousand at December 31, 2018 and 2017, respectively. Collectability of these overdrafts is subject to the same credit review process as other loans. The Bank accepts deposits from shareholders, directors and employees in the normal course of business, and the terms are comparable to those with non-affiliated parties. The total deposits from directors and their businesses, and executive officers were $33.3 million and $29.9 million at December 31, 2018 and 2017, respectively. |
Borrowings |
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Borrowings | Borrowings Federal Funds Purchased – The Bank had unsecured lines of credit with correspondent banks for overnight borrowings totaling $92.0 million at December 31, 2018 and $100.4 million at December 31, 2017. In general, interest rates on these lines approximate the federal funds target rate. We had no overnight borrowings under these credit facilities at December 31, 2018 and December 31, 2017. Federal Home Loan Bank Borrowings – As of December 31, 2018 and 2017, the Bank had lines of credit with the FHLB totaling $629.4 million and $538.9 million, respectively, based on eligible collateral of certain loans. FHLB overnight borrowings were $7.0 million at a rate of 2.56% on December 31, 2018. There were no borrowings at December 31, 2017. Federal Reserve Line of Credit – The Bank has a line of credit with the FRBSF secured by certain residential loans. At December 31, 2018 and 2017, the Bank had borrowing capacity under this line totaling $69.7 million and $52.1 million, respectively, and had no outstanding borrowings with the FRBSF. As part of an acquisition, Bancorp assumed two subordinated debentures due to NorCal Community Bancorp Trusts I and II, established for the sole purpose of issuing trust preferred securities on September 22, 2003 and December 29, 2005, respectively. The subordinated debentures were recorded at fair values totaling $4.95 million at acquisition date with contractual values totaling $8.2 million. The difference between the contractual balance and the fair value at acquisition date is accreted into interest expense over the lives of the debentures. On October 7, 2018, Bancorp redeemed in full the subordinated debentures due to NorCal Community Bancorp Trust I, resulting in $916 thousand accelerated accretion. Accretion on the subordinated debentures totaled $1,025 thousand and $153 thousand in 2018 and 2017, respectively. Bancorp has the option to defer payment of the interest on the subordinated debentures in Trust II for a period of up to five years, as long as there is no default on the subordinated debentures. In the event of interest deferral, dividends to Bancorp common stockholders are prohibited. The trust preferred securities were sold and issued in private transactions pursuant to an exemption from registration under the Securities Act of 1933, as amended. Bancorp has guaranteed, on a subordinated basis, distributions and other payments due on trust preferred securities totaling $4.0 million issued by Trust II, which have identical maturity, repricing and payment terms as the subordinated debentures. The following table summarizes the contractual terms of the subordinated debentures due to Trust II as of December 31, 2018:
Borrowings at December 31, 2018 and 2017 are summarized as follows:
1 Subordinated debentures average rate includes the impact of the $916 thousand accelerated accretion due to early redemption of subordinated debentures due to NorCal Community Bancorp Trust I. |
Stockholders' Equity and Stock Plans |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity and Stock Plans | Stockholders' Equity and Stock Plans Stock Split On October 22, 2018, Bancorp announced a two-for-one stock split, which occurred on November 27, 2018. All share and per share data have been adjusted to reflect the stock split effective November 27, 2018. Share-Based Awards On May 11, 2010, our shareholders approved the 2010 Director Stock Plan to pay director fees in shares of Bancorp common stock up to 300,000 shares. In addition to cash compensation, we issued 5,470 and 5,756 shares of common stock under the 2010 Director Stock Plan to directors in 2018 and 2017, respectively. As of December 31, 2018, 214,398 shares were available for future grants under this plan. On September 27, 2017, the Board of Directors adopted the 2017 Employee Stock Purchase Plan, effective July 1, 2017. Under the plan, our employees may purchase up to 400,000 of Bancorp's common shares through payroll deductions of between one percent and fifteen percent of pay in each pay period. Shares are purchased quarterly at a five percent discount from the closing market price on the last day of the quarter. As of December 31, 2018, 383,870 shares were available for future purchases under the plan. On March 17, 2017, the Board of Directors approved the 2017 Equity Plan, which was affirmed by Bancorp's shareholders on May 16, 2017 and replaced the 2007 Equity Plan. The Compensation Committee of the Board of Directors has the discretion to determine which employees, advisors and non-employee directors will receive an award, the timing of awards, the vesting schedule for each award, the type of award to be granted, the number of shares of Bancorp stock to be subject to each option and restricted stock award, and any other terms and conditions. As of December 31, 2018, there were 1,047,784 shares available for future grants to employees, advisors and non-employee directors. Options are issued at an exercise price equal to the fair value of the stock at the date of grant. Options and restricted stock awarded to officers and employees during 2007 through 2014 vest 20% on each anniversary of the grant date for five years and expire ten years from the grant date. In general, option awards granted after 2014 for employees generally vest by one-third on each anniversary of the grant for three years and expire ten years from the grant date. Options granted to non-employee directors prior to 2016 vest 20% immediately and 20% on each anniversary of the grant date for four years and expire seven years from the grant date. Options granted to non-employee directors in 2016 vest by one-third on each anniversary of the grant for three years and expire ten years from the grant date. Options granted to non-employee directors after 2016 vest immediately and expire ten years from the grant date. Options issued as replacement awards in connection with the Bank of Napa acquisition were for existing stock option agreements that became fully vested due to change in control provisions as part of the merger agreement. Stock options and restricted stock may be net settled in a cashless exercise by a reduction in the number of shares otherwise deliverable upon exercise or vesting in satisfaction of the exercise payment and/or applicable tax withholding requirements. During 2018, we withheld 46,794 shares totaling $1.7 million at a weighted-average price of $36.28 for cashless exercises. During 2017, we withheld 24,416 shares totaling $801 thousand at a weighted-average price of $32.82 for cashless exercises. Shares withheld under net settlement arrangements are available for future grants. Performance-based stock awards (restricted stock) are issued to a selected group of employees. Stock award vesting is contingent upon the achievement of pre-established long-term performance goals set by the Compensation Committee of the Board of Directors. Performance is measured over a three-year period and cliff vested. These performance-based stock awards were granted at a maximum opportunity level, and based on the achievement of the pre-established goals, the actual payouts can range from 0% to 200% of the target award. For performance-based stock awards, an estimate is made of the number of shares expected to vest based on the probability that the performance criteria will be achieved to determine the amount of compensation expense to be recognized. The estimate is re-evaluated quarterly and total compensation expense is adjusted for any change in the current period. A summary of stock option activity for the years ended December 31, 2018 and 2017 is presented in the following table. The intrinsic value of options outstanding and exercisable is calculated as the number of in-the-money options times the difference between the market price of our stock as of each year-end period presented and the exercise prices of the in-the-money options.
1 Includes 140,290 replacement stock option awards issued in the Acquisition with a $13.60 weighted average exercise price and a $20.36 weighted average grant-date fair value. See Note 18, Acquisition. The following table summarizes non-vested restricted stock awards and changes during the years ended December 31, 2018 and 2017.
A summary of the options outstanding and exercisable by price range as of December 31, 2018 is presented in the following table:
We determine the fair value of stock options at the grant date using the Black-Scholes pricing model that takes into account the stock price at the grant date, the exercise price, and the following assumptions (weighted-average shown).
The fair value of stock options as of the grant date is recorded as a stock-based compensation expense in the consolidated statements of comprehensive income over the requisite service period, which is generally the vesting period, with a corresponding increase in common stock. Stock-based compensation also includes compensation expense related to the issuance of restricted stock awards. The grant-date fair value of the restricted stock awards, which equals the intrinsic value, is recorded as compensation expense over the requisite service period with a corresponding increase in common stock as the shares vest. Stock option and restricted stock awards issued in 2018 include a retirement eligibility clause whereby the requisite service period is satisfied at the retirement eligibility date. For those awards, we accelerate stock-based compensation when the award holder is eligible to retire. However, retirement eligibility does not affect the exercisability of the award, which is based on the scheduled vesting period. Total compensation expense for stock options and restricted stock awards was $1.7 million and $1.3 million during 2018 and 2017, respectively, and the total recognized deferred tax benefits related thereto were $404 thousand and $293 thousand, respectively. As of December 31, 2018, there was $1.1 million of total unrecognized compensation expense related to non-vested stock options and restricted stock awards, which is expected to be recognized over a weighted-average period of approximately 1.9 years. The total grant-date fair value of stock options vested during the years ended December 31, 2018 and 2017 was $543 thousand and $449 thousand, respectively. The total grant-date fair value of restricted stock awards vested during 2018 and 2017 was $967 thousand and $473 thousand, respectively. We record excess tax benefits (deficiencies) resulting from the exercise of non-qualified stock options, the disqualifying disposition of incentive stock options and vesting of restricted stock awards as income tax benefits (expense) in the consolidated statements of comprehensive income with a corresponding decrease (increase) to current taxes payable. In 2018 and 2017, we recognized $484 thousand and $214 thousand, respectively, in excess tax benefits recorded as a reduction to income tax expense related to these types of transactions. The tax benefits realized from disqualifying dispositions of incentive stock options were recognized in tax expense to the extent of the book compensation cost recorded. Dividends Presented below is a summary of cash dividends paid in 2017 and 2018 to common shareholders, recorded as a reduction from retained earnings. On January 25, 2019, the Board of Directors declared a $0.19 per share cash dividend, paid February 15, 2019 to the shareholders of record at the close of business on February 8, 2019.
The holders of unvested restricted stock awards are entitled to dividends on the same per-share ratio as holders of common stock. Tax benefits for dividends paid on unvested restricted stock awards are recorded as tax benefits in the consolidated statements of comprehensive income with a corresponding decrease to current taxes payable. Dividends on forfeited awards are included in stock-based compensation expense. Under the California Corporations Code, payment of dividends by Bancorp to its shareholders is restricted to the amount of retained earnings immediately prior to the distribution or the amount of assets that exceeds the total liabilities immediately after the distribution. As of December 31, 2018, Bancorp's retained earnings and amount of total assets that exceeds total liabilities were $179.9 million and $316.4 million, respectively. Under the California Financial Code, payment of dividends by the Bank to Bancorp is restricted to the lesser of retained earnings or the amount of undistributed net profits of the Bank from the three most recent fiscal years. Under this restriction, approximately $24.9 million of the Bank's retained earnings balance was available for payment of dividends to Bancorp as of December 31, 2018. Bancorp held $19.1 million in cash at December 31, 2018. This cash, combined with the $24.9 million dividends available to be distributed from the Bank, is considered adequate to cover Bancorp's estimated operational needs, cash dividends to shareholders in 2019, and the Share Repurchase Program discussed below. Preferred Stock and Shareholder Rights Plan On July 6, 2017, Bancorp adopted a new shareholder rights agreement (“Rights Agreement”), which replaced the existing Rights Agreement that expired on July 23, 2017. The Rights Agreement, which expires on July 23, 2022, is designed to discourage takeovers that involve abusive tactics or do not provide fair value to shareholders. The Rights Agreement defines the percentage of share ownership of an "acquiring person" as 10% of the outstanding common shares. Currently, each right entitles the registered holder to purchase from Bancorp one two-hundredth of a share of Series A Junior Participating Preferred Stock, no par value, of Bancorp at an initial price of $90 per one one-hundredth of a preferred share, subject to adjustment upon the occurrence of certain events. As of December 31, 2018, Bancorp was authorized to issue five million shares of preferred stock with no par value, one million shares of which have been designated as Series A Junior Participating Preferred Stock, with no par value under the Rights Agreement. In the event of a proposed merger, tender offer or other attempt to gain control of Bancorp that the Board of Directors does not approve, the Board of Directors may authorize the issuance of shares of common or preferred stock that would impede the completion of such a transaction. An effect of the possible issuance of common or preferred stock, therefore, may be to deter a future takeover attempt. The Board of Directors has no present plans or understandings for the issuance of any common or preferred stock in connection with the Rights Agreement. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income We early adopted ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, in the first quarter of 2018 and reclassified $638 thousand from AOCI to retained earnings. This amount represents the stranded income tax effects related to the unrealized loss on available-for-sale securities in AOCI on the date of the enactment of the Tax Cuts and Jobs Act of 2017. For more information on ASU No. 2018-02, refer to Note 1, Summary of Significant Accounting Policies. Share Repurchase Program On April 23, 2018, Bancorp announced that its Board of Directors approved a Share Repurchase Program under which Bancorp may repurchase up to $25.0 million of its outstanding common stock through May 1, 2019. Under the Share Repurchase Program, Bancorp may purchase shares of its common stock through various means such as open market transactions, including block purchases, and privately negotiated transactions. The number of shares repurchased and the timing, manner, price and amount of any repurchases will be determined at Bancorp's discretion. Factors include, but are not limited to, stock price, trading volume and general market conditions, along with Bancorp’s general business conditions. The program may be suspended or discontinued at any time and does not obligate Bancorp to acquire any specific number of shares of its common stock. As part of the Share Repurchase Program, Bancorp entered into a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The 10b5-1 trading plan permits common stock to be repurchased at times that might otherwise be prohibited under insider trading laws or self-imposed trading restrictions. The 10b5-1 trading plan is administered by an independent broker and is subject to price, market volume and timing restrictions. During 2018, Bancorp repurchased 171,217 shares for a total amount of $7.0 million. |
Fair Value of Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities Fair Value Hierarchy and Fair Value Measurement We group our assets and liabilities that are measured at fair value into three levels within the fair value hierarchy, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1: Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations for which all significant assumptions are observable or can be corroborated by observable market data. Level 3: Valuations are based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Values are determined using pricing models and discounted cash flow models and may include significant Management judgment and estimation. Transfers between levels of the fair value hierarchy are recognized through our monthly and/or quarterly valuation process in the reporting period during which the event or circumstances that caused the transfer occurred. No such transfers occurred in the years presented. The following table summarizes our assets and liabilities that were required to be recorded at fair value on a recurring basis.
Securities available-for-sale are recorded at fair value on a recurring basis. When available, quoted market prices (Level 1) are used to determine the fair value of securities available-for-sale. If quoted market prices are not available, we obtain pricing information from a reputable third-party service provider, who may utilize valuation techniques that use current market-based or independently sourced parameters, such as bid/ask prices, dealer-quoted prices, interest rates, benchmark yield curves, prepayment speeds, probability of default, loss severity and credit spreads (Level 2). Level 2 securities include obligations of state and political subdivisions, U.S. agencies or government-sponsored agencies' debt securities, mortgage-backed securities, government agency-issued, privately-issued collateralized mortgage obligations and corporate bonds. As of December 31, 2018 and 2017, there were no securities that were considered Level 1 securities. As of December 31, 2017, we had one Level 3 available-for-sale U.S. government agency obligation, which was paid off in 2018. Securities held-to-maturity may be written down to fair value (determined using the same techniques discussed above for securities available-for-sale) as a result of an other-than-temporary impairment, and we did not record any write-downs during 2018 or 2017. On a recurring basis, derivative financial instruments are recorded at fair value, which is based on the income approach using observable Level 2 market inputs, reflecting market expectations of future interest rates as of the measurement date. Standard valuation techniques are used to calculate the present value of the future expected cash flows assuming an orderly transaction. Valuation adjustments may be made to reflect both our own credit risk and the counterparties’ credit risk in determining the fair value of the derivatives. Level 2 inputs for the valuations are limited to observable market prices for London Interbank Offered Rate (“LIBOR”) and Overnight Index Swap ("OIS") rates (for the very short term), quoted prices for LIBOR futures contracts, observable market prices for LIBOR and OIS swap rates, and one-month and three-month LIBOR basis spreads at commonly quoted intervals. Mid-market pricing of the inputs is used as a practical expedient in the fair value measurements. We project spot rates at reset days specified by each swap contract to determine future cash flows, then discount to present value using either LIBOR or OIS curves depending on whether the swap positions are fully collateralized as of the measurement date. When the value of any collateral placed with counterparties is less than the interest rate derivative liability, a credit valuation adjustment ("CVA") is applied to reflect the credit risk we pose to counterparties. We have used the spread between the Standard & Poor's BBB rated U.S. Bank Composite rate and LIBOR for the closest maturity term corresponding to the duration of the swaps to derive the CVA. A similar credit risk adjustment, correlated to the credit standing of the counterparty, is made when collateral posted by the counterparty does not fully cover their liability to the Bank. For further discussion on our methodology in valuing our derivative financial instruments, refer to Note 14, Derivative Financial Instruments and Hedging Activities. Certain financial assets may be measured at fair value on a non-recurring basis. These assets are subject to fair value adjustments that result from the application of the lower of cost or fair value accounting or write-downs of individual assets, such as impaired loans that are collateral dependent and other real estate owned ("OREO"). As of December 31, 2018 and 2017, we did not carry any assets measured at fair value on a non-recurring basis. Disclosures about Fair Value of Financial Instruments The table below is a summary of fair value estimates for financial instruments as of December 31, 2018 and 2017, excluding financial instruments recorded at fair value on a recurring basis (summarized in the first table in this note). The carrying amounts in the following table are recorded in the consolidated statements of condition under the indicated captions. Further, we have not disclosed the fair value of financial instruments specifically excluded from disclosure requirements such as bank-owned life insurance policies ("BOLI") and non-maturity deposit liabilities. Additionally, we held shares of FHLB stock and Visa Inc. Class B common stock, both recorded at cost, as there was no impairment or changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer as of December 31, 2018. Both FHLB stock and Visa Inc. Class B common stock were held at cost as of December 31, 2017, prior to adoption of ASU No. 2016-01. See further detail on the adoption of the ASU within Note 1, Summary of Significant Accounting Policies, and further discussion on values within Note 2, Investment Securities, above.
Commitments - The value of unrecognized financial instruments is estimated based on the fee income associated with the commitments which, in the absence of credit exposure, is considered to approximate their settlement value. The fair value of commitment fees was not material as of December 31, 2018 and 2017. |
Benefit Plans |
12 Months Ended |
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Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Benefit Plans In 2003, we established a Deferred Compensation Plan that allows certain key Management personnel designated by the Board of Directors of the Bank to defer up to 80% of their salary and 100% of their annual bonus. The plan was amended in 2007 in order to comply with changes to Internal Revenue Code Section 409A. Under the amended plan, amounts deferred earn interest that is equal to the prime rate as published in the Wall Street Journal, on the first business day of the year, which was 4.50% on January 1, 2018 and 3.75% on January 1, 2017. Our deferred compensation obligation totaled $3.8 million and $3.4 million at December 31, 2018 and 2017, respectively, and is included in interest payable and other liabilities. Our 401(k) Defined Contribution Plan (the “401(k) Plan”) commenced in May 1990 and is available to all regular employees at least eighteen years of age who complete ninety days of service, and enter the plan during one of the four open enrollment dates (January 1, April 1, July 1, and October 1) of each year. Under the 401(k) Plan, employees can defer between 1% and 50% of their eligible compensation, up to the maximum amount allowed by the Internal Revenue Code. Contributions to the 401(k) Plan for the employer match vest at a rate of 20% per year over five years, per plan provisions. Starting 2017, the Bank increased the employer match to 70% of each participant's contribution, with a maximum of $5 thousand of matching contribution per participant per year. Employer contributions totaled $851 thousand and $765 thousand for the years ended December 31, 2018 and 2017, respectively. In 1999, the 401(k) Plan was amended to include an employee stock ownership component and was renamed the Bank of Marin Employee Stock Ownership and Savings Plan (the “Plan”). Under the terms of the Plan, as amended, the Board of Directors determines a specific portion of the Bank's profits to be contributed to the employee stock ownership each year either in common stock or in cash for the purchase of Bancorp stock to be allocated to all eligible employees based on a percentage of their salaries, regardless of whether an employee is participating in the 401(k) plan or not. In January 2010, the Bank of Marin Employee Stock Ownership and Savings Plan was split into two plans: Bank of Marin 401(k) Plan and Bank of Marin Employee Stock Ownership Plan ("ESOP"). The same eligibility criteria apply under the ESOP, while employees' contributions are not permitted. For all participants, employer contributions vest over a five year service period, per plan provisions. After five years of service, all employer contributions vest immediately. The Bank of Marin 401(k) Plan was amended in early 2016 to incorporate recent changes in the pension laws, and was amended again in November 2016 to include a Roth 401(k) option. Starting 2017, Bancorp issued shares of common stock and contributed them to the ESOP and recognized $1.2 million in expense in both 2018 and 2017, based on the quoted market price on the date of contribution. Cash dividends paid on Bancorp stock held by the ESOP are used to purchase additional shares in the open market. All shares of Bancorp stock held by the ESOP are included in the calculations of basic and diluted earnings per share. The employer contributions to the ESOP and the 401(k) Plan are included in salaries and benefits expense. On January 1, 2011, we established a Salary Continuation Plan for a select group of Executive Management, who will receive twenty-five percent of their estimated salary at retirement as salary continuation benefit payments upon retirement. Each participant will need to participate in this plan for five years before vesting begins. After five years, the participant will vest ratably in the benefit over the remaining period until age 65. This Plan is unfunded and nonqualified for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974. As part of the acquisition of Bank of Napa in November 2017, we assumed the salary continuation agreements for four former executive officers of Bank of Napa. Under these agreements, fixed annual retirement benefit payments will be made for ten years beginning the first day of the month following the executive reaching the age of 65. At December 31, 2018 and 2017, respectively, our liability under the Salary Continuation Plan was $2.7 million and $2.5 million recorded in interest payable and other liabilities. |
Income Taxes |
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Income Taxes | Income Taxes The current and deferred components of the income tax provision for each of the two years ended December 31 are as follows:
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. The law reduced the federal corporate income tax rate to 21% for tax years beginning on or after January 1, 2018. Due to the enactment of the Tax Cuts and Jobs Act of 2017, the Bank has valued all of its federal deferred tax assets and liabilities at the 21% rate. As a result, a $3.0 million adjustment to the net deferred tax assets valuation as of December 22, 2017 was recorded in the provision for income taxes in 2017. The following table shows the tax effect of our cumulative temporary differences as of December 31:
As of December 31, 2018, federal and California net operating loss carryforwards ("NOLs") of $3.9 million and $16.9 million, respectively, corresponded to the total $2.3 million deferred tax asset above. If not fully utilized, the federal NOLs will begin to expire in 2031, and the California NOLs will begin to expire in 2028. Based upon the level of historical taxable income and projections for future taxable income over the periods during which the deferred tax assets are expected to be deductible, Management believes it is more likely than not we will realize the benefit of the remaining deferred tax assets. Accordingly, no valuation allowance has been established as of December 31, 2018 or 2017. The effective tax rate for 2018 and 2017 differs from the current federal statutory income tax rate as follows:
1 Due to the enactment of the Tax Cuts and Jobs Act of 2017, which reduced the federal corporate income tax rate to 21% for tax years beginning on or after January 1, 2018, we wrote down net deferred tax assets as of December 22, 2017 by $3.0 million recorded in income tax expense in 2017. Bancorp and the Bank have entered into a tax allocation agreement, which provides that income taxes shall be allocated between the parties on a separate entity basis. The intent of this agreement is that each member of the consolidated group will incur no greater tax liability than it would have incurred on a stand-alone basis. We file a consolidated return in the U.S. federal tax jurisdiction and a combined return in the State of California tax jurisdiction. There were no ongoing federal or state income tax examinations at the issuance of this report. We are no longer subject to examinations by tax authorities for years before 2015 for federal income tax and before 2014 for California. At December 31, 2018 and 2017, there were no unrecognized tax benefits, and neither the Bank nor Bancorp had accruals for interest and penalties related to unrecognized tax benefits. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies We rent certain premises under long-term, non-cancelable operating leases expiring at various dates through the year 2032. Most of the leases contain certain renewal options and escalation clauses. At December 31, 2018, the approximate minimum future commitments payable under non-cancelable contracts for leased premises are as follows:
Rent expense included in occupancy expense totaled $4.6 million in 2018 and $4.1 million in 2017. Litigation Matters Bancorp may be party to legal actions that arise from time to time as part of the normal course of business. Bancorp's Management is not aware of any pending legal proceedings to which either it or the Bank may be a party or has recently been a party that will have a material adverse effect on the financial condition or results of operations of Bancorp or the Bank. The Bank is responsible for a proportionate share of certain litigation indemnifications provided to Visa U.S.A. ("Visa") by its member banks in connection with Visa's lawsuits related to anti-trust charges and interchange fees ("Covered Litigation"). Our proportionate share of the litigation indemnification liability does not change or transfer upon the sale of our Class B Visa shares to member banks. Visa established an escrow account to pay for settlements or judgments in the Covered Litigation. Under the terms of the U.S. retrospective responsibility plan, when Visa funds the litigation escrow account, it triggers a conversion rate reduction of the Class B common stock to shares of Class A common stock, effectively reducing the aggregate value of the Class B common stock held by Visa's member banks like us. In 2012, Visa had reached a $4.0 billion interchange multidistrict litigation class settlement agreement with plaintiffs representing a class of U.S. retailers. On September 17, 2018, Visa signed an amended settlement agreement with the putative class action plaintiffs of the U.S. interchange multidistrict litigation that superseded the 2012 settlement agreement. Visa's share of the settlement amount under the amended class settlement agreement increased to $4.1 billion. Visa deposited $600 million into the litigation escrow account in June 2018, increasing the escrow account balance to $1.5 billion. The escrow balance, combined with funds previously deposited with the court, are expected to cover the settlement payment obligations. On January 24, 2019, the district court granted preliminary approval of the amended class settlement agreement. The outcome of the Covered Litigation affects the conversion rate of Visa Class B common stock held by us to Visa Class A common stock, as discussed above and in Note 2, Investment Securities. The final conversion rate might change depending on the final settlement payments, and the full effect on member banks is still uncertain. Litigation is ongoing and until the court approval process is complete, there is no assurance that Visa will resolve the claims as contemplated by the amended class settlement agreement, and additional lawsuits may arise from individual merchants who opted out of the class settlement. However, until the escrow account is fully depleted and the conversion rate of Class B to Class A common stock is reduced to zero, no future cash settlement payments are required by the member banks, such as us, on the Covered Litigation. Therefore, we are not required to record any indemnification liabilities related to the Covered Litigation. For further information, including a discussion of a reduction to our holdings of Class B Visa shares, refer to Note 2, Investment Securities. |
Concentrations of Credit Risk |
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Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Credit Risk | Concentrations of Credit Risk Concentration of credit risk is the risk associated with a lack of diversification, such as having substantial investments in a few individual issuers, thereby exposing us to greater risks resulting from adverse economic, political, regulatory, geographic, industrial or credit developments. Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investment securities and loans. Our cash in correspondent bank accounts, at times, may exceed FDIC insured limits. We place cash and cash equivalents with high quality financial institutions, periodically monitor their credit worthiness and limit the amount of credit exposure to any one institution according to regulations. Concentrations of credit risk with respect to investment securities are limited to the U.S. Government, its agencies and Government Sponsored Enterprises ("GSEs") and was $528.3 million, or 85% of our total investment portfolio at December 31, 2018 and $358.4 million, or 74% at December 31, 2017. We also manage our credit exposure related to our loan portfolio to avoid the risk of undue concentration of credits in a particular industry by reducing significant exposure to highly leveraged transactions or to any individual customer or counterparty, and by obtaining collateral as appropriate. No individual borrower accounts for more than 3% of loans held in the portfolio. The largest loan concentration group by industry of the borrowers is real estate, which accounts for 83% and 81% of our loan portfolio at December 31, 2018 and 2017, respectively. |
Derivative Financial Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments and Hedging Activities | Derivative Financial Instruments and Hedging Activities We entered into interest rate swap agreements, primarily as an asset/liability management strategy, in order to mitigate the changes in the fair value of specified long-term fixed-rate loans (or firm commitments to enter into long-term fixed-rate loans) caused by changes in interest rates. These hedges allow us to offer long-term fixed rate loans to customers without assuming the interest rate risk of a long-term asset. Converting our fixed-rate interest payments to floating-rate interest payments, generally benchmarked to the one-month U.S. dollar LIBOR index, protects us against changes in the fair value of our loans associated with fluctuating interest rates. Our credit exposure, if any, on interest rate swap asset positions is limited to the fair value (net of any collateral pledged to us) and interest payments of all swaps by each counterparty. Conversely, when an interest rate swap is in a liability position exceeding a certain threshold, we may be required to post collateral to the counterparty in an amount determined by the agreements. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap values. As of December 31, 2018, we had five interest rate swap agreements, which are scheduled to mature in June 2031, October 2031, July 2032, August 2037 and October 2037. All of our derivatives are accounted for as fair value hedges. The notional amounts of the interest rate contracts are equal to the notional amounts of the hedged loans. Our interest rate swap payments are settled monthly with counterparties. Accrued interest on the swaps totaled $3 thousand and $8 thousand as of December 31, 2018 and 2017, respectively. Information on our derivatives follows:
1 See Note 9, Fair Value of Assets and Liabilities for valuation methodology. The following table presents the carrying amount associated cumulative basis adjustment related to the application of fair value hedge accounting that is included in the carrying amount of hedged assets as of December 31, 2018 and 2017:
The following table presents the net gains (losses) recognized in interest income on loans on the consolidated statements of comprehensive income related to our derivatives designated as fair value hedges:
1 Represents the income line item in the statement of comprehensive income in which the effects of fair value hedges are recorded. 2 Includes hedge ineffectiveness gain of $13 thousand and $31 thousand for the years ended December 31, 2018, and 2017, respectively. Changes in value of swaps were included in the assessment of hedge effectiveness. Hedge ineffectiveness is the measure of the extent to which the change in the fair value of the hedging instruments does not exactly offset the change in the fair value of the hedged items from period to period. Our derivative transactions with counterparties are under International Swaps and Derivative Association (“ISDA”) master agreements that include “right of set-off” provisions. “Right of set-off” provisions are legally enforceable rights to offset recognized amounts and there may be an intention to settle such amounts on a net basis. We do not offset such financial instruments for financial reporting purposes. Information on financial instruments that are eligible for offset in the consolidated statements of condition follows:
1 Amounts exclude accrued interest totaling less than $1 thousand both at December 31, 2018 and 2017.
2 Amounts exclude accrued interest totaling $3 thousand and $8 thousand at December 31, 2018 and 2017, respectively. |
Regulatory Matters |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Matters | Regulatory Matters We are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements as set forth in the tables below can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material effect on our consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and the Bank’s prompt corrective action classification are also subject to qualitative judgments by the regulators about components of capital, risk weightings and other factors. Management reviews capital ratios on a regular basis to ensure that capital exceeds the prescribed regulatory minimums and is adequate to meet our anticipated future needs. For all periods presented, the Bank’s ratios exceed the regulatory definition of “well capitalized” under the regulatory framework for prompt corrective action and Bancorp’s ratios exceed the required minimum ratios to be considered a well capitalized bank holding company. In addition, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action as of December 31, 2018. There are no conditions or events since that notification that Management believes have changed the Bank’s categories and we expect the Bank to remain well capitalized for prompt corrective action purposes. In July 2013, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency ("Agencies") finalized regulatory capital rules known as “Basel III.” Fully phased in on January 1, 2019, Basel III required Bancorp and the Bank to maintain (i) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 8.5%, and (ii) a minimum ratio of common equity Tier 1 capital to risk-weighted assets of at least 7.0%, both inclusive of a 2.50% “capital conservation buffer." The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and was phased in over a four-year period (increasing by 0.625% each subsequent January 1, until it reached 2.50% on January 1, 2019). The Bancorp’s and Bank's capital adequacy ratios as of December 31, 2018 and 2017 are presented in the following tables. Bancorp's Tier 1 capital includes the subordinated debentures, which are not included at the Bank level.
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Financial Instruments with Off-Balance Sheet Risk |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments with Off-Balance Sheet Risk | Financial Instruments with Off-Balance Sheet Risk We make commitments to extend credit in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit in the form of loans or through standby letters of credit. 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. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because various commitments will expire without being fully drawn, the total commitment amount does not necessarily represent future cash requirements. Our credit loss exposure is equal to the contractual amount of the commitment in the event of nonperformance by the borrower. We use the same credit underwriting criteria for all credit exposure. The amount of collateral obtained, if deemed necessary by us, is based on Management's credit evaluation of the borrower. Collateral types pledged may include accounts receivable, inventory, other personal property and real property. The contractual amount of undrawn loan commitments and standby letters of credit not reflected in the consolidated statements of condition are as follows:
We record an allowance for losses on these off-balance sheet commitments based on an estimate of probabilities of the utilization of these commitments according to our historical experience on different types of commitments and expected loss. The allowance for losses on off-balance sheet commitments totaled $958 thousand as of December 31, 2018 and 2017, which is recorded in interest payable and other liabilities in the consolidated statements of condition. Approximately 35% of the commitments expire in 2019, approximately 51% expire between 2020 and 2026 and approximately 14% expire thereafter. |
Condensed Bank of Marin Bancorp Parent Only Financial Statements |
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Condensed Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Bank of Marin Bancorp Parent Only Financial Statements | Condensed Bank of Marin Bancorp Parent Only Financial Statements Presented below is financial information for Bank of Marin Bancorp, parent holding company only.
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Acquisition |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition | Acquisition On November 21, 2017, we completed the merger of Bank of Napa, N.A. (OTCQB: BNNP), to enhance our market presence in Napa, California. Bank of Napa was a national bank with two branch offices serving Napa. The acquisition added $134.7 million in loans, $249.9 million in deposits and $75.5 million in investment securities to Bank of Marin as of the acquisition date. Bank of Napa shareholders received 0.307 shares of Bancorp common stock for each share of Bank of Napa common stock outstanding. We accounted for the acquisition of Bank of Napa as a business combination under the acquisition method of accounting. The assets acquired and liabilities assumed, both tangible and intangible, were recorded at their fair values as of the acquisition date in accordance with ASC 805, Business Combinations. The acquisition was treated as a "reorganization" within the definition of section 368(a) of the Internal Revenue Code and is generally considered tax-free for U.S. federal income tax purposes. The Bank of Napa acquisition resulted in $23.7 million in goodwill, which represents the excess of the total purchase price paid over the fair value of the assets acquired, net of the fair values of liabilities assumed. Goodwill mainly reflects expected value created through the combined operations of Bank of Napa and Bank of Marin, which we evaluate for impairment annually. We determined that the fair value of our traditional community banking activities (provided through our branch network) exceeded the carrying amount of the Bank, which is the reporting unit to which the goodwill is assigned. The goodwill is not deductible for tax purposes. The core deposit intangible represents the estimated future benefits of acquired deposits and is booked separately from the related deposits. We recorded a core deposit intangible asset of $4.4 million from the Bank of Napa acquisition on November 21, 2017, of which $508 thousand and $56 thousand were amortized in 2018 and 2017, respectively. The core deposit intangible is amortized on an accelerated basis over an estimated ten-year life, and is evaluated periodically for impairment. No impairment loss was recognized in 2018 or 2017. Acquisition-related expenses are recognized as incurred. Bank of Marin Bancorp recognized acquisition-related expenses in the consolidated statements of comprehensive income in 2018 and 2017 for the Bank of Napa acquisition as follows:
On November 29, 2013, we acquired NorCal Community Bancorp, parent company of Bank of Alameda and recorded $6.4 million in goodwill and a $4.6 million core deposit intangible at acquisition. The core deposit intangible continues to be amortized on an accelerated basis over an estimated ten-year life. For information on the future amortization expenses on core deposit intangibles (from the acquisitions of Bank of Napa and Bank of Alameda combined), refer to Note 1, Summary of Significant Accounting Policies. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation: The consolidated financial statements include the accounts of Bank of Marin Bancorp (“Bancorp”), a bank holding company, and its wholly-owned bank subsidiary, Bank of Marin (the “Bank”), a California state-chartered commercial bank. References to “we,” “our,” “us” mean Bancorp and the Bank that are consolidated for financial reporting purposes. All material intercompany transactions have been eliminated. We evaluated subsequent events through the date of filing with the Securities and Exchange Commission (“SEC”) and determined that there were no subsequent events that require additional recognition or disclosure. The NorCal Community Bancorp Trusts I and II, respectively (the "Trusts"), were formed for the sole purpose of issuing trust preferred securities. Bancorp is not considered the primary beneficiary of the Trusts (variable interest entities), therefore the Trusts are not consolidated in our consolidated financial statements, but rather the subordinated debentures are shown as a liability on our consolidated statements of condition. Bancorp's investment in the securities of the Trusts is accounted for under the equity method and is included in interest receivable and other assets on the consolidated statements of condition. Refer to Note 7, Borrowings, for detail on the early redemption on October 7, 2018 of one subordinated debenture due to NorCal Community Bancorp Trust I. |
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Cash and Cash Equivalents | Cash and Cash Equivalents include cash, due from banks, federal funds sold and other short-term investments with maturities of less than three months at the time of purchase. |
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Investment Securities | Investment Securities are classified as "held-to-maturity," "trading securities" or "available-for-sale." Investments classified as held-to-maturity are those that we have the ability and intent to hold until maturity and are reported at cost, adjusted for the amortization or accretion of premiums or discounts. Investments held for resale in anticipation of short-term market movements are classified as trading securities and are reported at fair value, with unrealized gains and losses included in earnings. Investments that are neither held-to-maturity nor trading are classified as available-for-sale and are reported at fair value. Unrealized gains and losses for available-for-sale securities, net of related taxes, are reported as a separate component of comprehensive income and included in stockholders' equity until realized. For discussion of our methodology in determining fair value, see Note 9, Fair Value of Assets and Liabilities. Securities transferred from the available-for-sale category to the held-to-maturity category are recorded at fair value at the date of transfer. Unrealized holding gains or losses associated with the transfer of securities from available-for-sale to held-to-maturity are included in the balance of accumulated other comprehensive income (loss), net of tax, in the consolidated balance sheets. These unrealized holding gains or losses are amortized over the remaining life of the securities as yield adjustments in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. At each financial statement date, we assess whether declines in the fair values of held-to-maturity and available-for-sale securities below their costs are deemed to be other-than-temporary. We consider, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. Evidence evaluated includes, but is not limited to, the remaining payment terms of the instrument and economic factors that are relevant to the collectability of the instrument, such as: current prepayment speeds, the current financial condition of the issuer(s), industry analyst reports, credit ratings, credit default rates, interest rate trends, the quality of any credit enhancement and the value of any underlying collateral. For each security in an unrealized loss position ("impaired security"), we assess whether we intend to sell the security or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If we intend to sell the security or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis, the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date is recognized against earnings. For impaired securities that are not intended for sale and will not be required to be sold prior to recovery of our amortized cost basis, we determine if the impairment has a credit loss component. For both held-to-maturity and available-for-sale securities, if the amount of cash flows expected to be collected are less than the amortized cost, then other-than-temporary impairment shall be considered to have occurred and the credit loss component is recognized against earnings as the difference between present value of the expected future cash flows and the amortized cost. In determining the present value of the expected cash flows, we discount the expected cash flows at the effective interest rate implicit in the security at the date of purchase. The remaining difference between the fair value and the amortized basis is deemed to be due to factors that are not credit related and is recognized in other comprehensive income, net of applicable taxes. For held-to-maturity securities, if there is no credit loss component, no impairment is recognized. The portion of other-than-temporary impairment recognized in other comprehensive income for credit impaired debt securities classified as held-to-maturity is accreted from other comprehensive income to the amortized cost of the debt security over the remaining life of the debt security in a prospective manner on the basis of the amount and timing of future estimated cash flows. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the effective interest method. For certain callable debt securities purchased at a premium, we amortize the premium to the earliest call date. Dividend and interest income are recognized when earned. Realized gains and losses on the sale of securities and credit losses related to other-than-temporary impairment on available-for-sale and held-to-maturity securities are included in non-interest income as gains (losses) on investment securities, net. The specific identification method is used to calculate realized gains and losses on sales of securities. |
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Originated Loans | Originated Loans are reported at the principal amount outstanding net of deferred fees (costs), charge-offs and the allowance for loan losses (“ALLL”). Interest income is accrued daily using the simple interest method. Loan origination fees and commitment fees, offset by certain direct loan origination costs, are deferred and amortized as yield adjustments over the contractual lives of the related loans. Loans are placed on non-accrual status when Management believes that there is substantial doubt as to the collection of principal or interest, generally when they become contractually past due by ninety days or more with respect to principal or interest, except for loans that are well-secured and in the process of collection. When loans are placed on non-accrual status, any accrued but uncollected interest is reversed from current-period interest income. We may return non-accrual loans to accrual status when one of the following occurs:
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Loan Charge-Off Policy | Loan Charge-Off Policy: For all loan types excluding overdraft accounts, we generally make a charge-off determination at or before 90 days past due. A collateral-dependent loan is partially charged down to the fair value of collateral securing it if: (1) it is deemed uncollectable, or (2) it has been classified as a loss by either our internal loan review process or external examiners. A non-collateral-dependent loan is partially charged down to its net realizable value under the same circumstances. Overdraft accounts are generally charged off when they exceed 60 days past due. |
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Acquired Loans | Acquired Loans: Acquired loans are recorded at their estimated fair values at the acquisition date in accordance with Accounting Standards Code ("ASC") 805, Business Combinations, factoring in credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for loan losses is not carried over or recorded for acquired loans as of the acquisition date. We estimated the fair value of acquired loans at the acquisition date based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, risk classification, fixed or variable interest rate, term of loan, whether or not the loan was amortizing, and current discount rates. Loans, except for purchased credit impaired ("PCI") loans, were grouped together according to similar risk characteristics and treated in the aggregate when applying various valuation techniques. Expected cash flows incorporated our best estimate of key assumptions at the time, such as property values, default rates, loss severity and prepayment speeds. Discount rates were based on market rates for new originations of comparable loans, where available, and included adjustments for liquidity factors. To the extent comparable market rates were not readily available, a discount rate was derived based on the assumptions of market participants' cost of funds, servicing costs and return requirements for comparable risk assets. In either case, the discount rate did not include a factor for credit losses, as that had been considered in estimating the cash flows. The process of calculating fair values of acquired loans, including estimates of losses expected to be incurred over the estimated remaining lives of the loans at acquisition date and ongoing updates to Management's expectation of future cash flows, requires significant subjective judgments and assumptions. The economic environment and lack of market liquidity and transparency are factors that have influenced, and may continue to affect, these assumptions and estimates. We acquired loans with evidence of significant credit quality deterioration subsequent to their origination and for which it was probable, at acquisition, that we would be unable to collect all contractually required payments. Management applied significant subjective judgment in determining which loans were PCI loans. Evidence of credit quality deterioration as of the purchase date may include data such as past due and non-accrual status, risk grades and charge-off history. The difference between the undiscounted expected cash flows expected to be collected and the fair value at the acquisition date ("accretable difference") is accreted into interest income at a level yield of return over the estimated remaining life of the PCI loan, provided that the timing and amount of future cash flows is reasonably estimable. The accretable yield is affected by:
The cash flows expected to be collected are updated each quarter based on current assumptions regarding default rates, loss severities, and other factors that are reflective of current financial conditions of the borrowers and the market conditions. Probable decreases in expected cash flows after acquisition result in impairment recorded as a specific allowance for loan losses or a charge-off to the allowance. Impairment is calculated as the present value of the expected future cash flows on the PCI loan, discounted at the loan's effective interest rate implicit in the loan. The nonaccretable difference on the date of acquisition is defined as the difference between the contractually required payments and the cash flows expected to be collected, considering the result of prepayments, and is not recorded. For purposes of accounting for the PCI loans from past business combinations, we elected not to apply the pooling method but to account for these loans individually. Disposals of loans, which may include sales of loans to third parties, receipt of payments in full by the borrower, or foreclosure of the collateral, result in removal of the loan from the PCI loan portfolio at its carrying amount. If a PCI loan pays off earlier than expected, a gain is recorded as interest income when the payoff amount exceeds the recorded investment. For acquired loans not considered credit impaired ("non-PCI"), we recognize the entire fair value discount accretion as interest income, based on contractual cash flows using an effective interest rate method for term loans, and on a straight line basis for revolving lines. When a non-PCI loan is placed on non-accrual status subsequent to acquisition, accretion stops until the loan is returned to accrual status. The level of accretion on non-PCI loans varies from period to period due to maturities and early payoffs of these loans during the reporting periods. Subsequent to acquisition, if the probable and estimable losses for non-PCI loans exceed the amount of the remaining unaccreted discount, the excess is established as an allowance for loan losses. For further information regarding our acquired loans, see Note 3, Loans and Allowance for Loan Losses. |
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Allowance for Loan Losses | Allowance for Loan Losses is based upon estimates of loan losses and is maintained at a level considered adequate to provide for probable losses inherent in the loan portfolio. The allowance is increased by provisions for loan losses charged against earnings and reduced by charge-offs, net of recoveries. In periodic evaluations of the adequacy of the allowance balance, Management considers current economic conditions, 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, our past loan loss experience and other factors. The ALLL is based on estimates, and ultimate losses may vary from current estimates. Our Board of Directors' Asset/Liability Management Committee (“ALCO”) reviews the adequacy of the ALLL at least quarterly. The overall allowance consists of 1) specific allowances for individually identified impaired loans ("ASC 310-10") and 2) general allowances for pools of loans ("ASC 450-20"), which incorporate quantitative (e.g., historical loan loss rates) and qualitative risk factors (e.g., portfolio growth and trends, credit concentrations, economic and regulatory factors, etc.). The first component, specific allowances, results from the analysis of identified problem credits and the evaluation of sources of repayment including collateral, as applicable. Through Management's ongoing loan grading and credit monitoring process, individual loans are identified that have conditions indicating the borrower may be unable to pay all amounts due in accordance with the contractual terms. These loans are evaluated for impairment individually by Management. Management considers an originated loan to be impaired when it is probable we will be unable to collect all amounts due according to the contractual terms of the loan agreement. When the fair value of the impaired loan is less than the recorded investment in the loan, the difference is recorded as an impairment through the establishment of a specific allowance. For loans determined to be impaired, the extent of the impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate at origination (for originated loans), based on the loan's observable market price, or based on the fair value of the collateral if the loan is collateral dependent or if foreclosure is imminent. Generally, with problem credits that are collateral dependent, we obtain appraisals of the collateral at least annually. We may obtain appraisals more frequently if we believe the collateral value is subject to market volatility, if a specific event has occurred to the collateral, or if we believe foreclosure is imminent. The second component is an estimate of the probable inherent losses in each loan pool with similar characteristics. This analysis encompasses the entire loan portfolio, excluding individually identified impaired loans and acquired loans whose purchase discount has not been fully accreted. Under our allowance model, loans are evaluated on a pool basis by federal regulatory reporting codes ("CALL codes" or "segments"), which are further delineated by assigned credit risk ratings, as described in Note 3, Loans and Allowance for Loan Losses. Segments include the following:
- 1-4 family residential construction loans - Other construction loans and all land development and other land loans - Secured by farmland (including residential and other improvements) - Revolving, open-end loans secured by 1-4 family residential properties and extended under lines of credit - Closed-end loans secured by 1-4 family residential properties, secured by first liens - Closed-end loans secured by 1-4 family residential properties, secured by junior liens - Secured by multifamily (5 or more) residential properties - Loans secured by owner-occupied non-farm nonresidential properties - Loans secured by other non-farm nonresidential properties
The model determines general allowances by loan segment based on quantitative (loss history) and qualitative risk factors. The quantitative risk factor for each segment utilizes the greater result of either the historical loss method or migration analysis loss method based on loss history beginning March 2010. Qualitative internal and external risk factors include, but are not limited to, the following:
Under the historical loss method, quarterly loss rates are calculated for each segment by dividing annualized net charge-offs during each quarter by the quarter's average segment balances. The quarterly loss rates are averaged over the entire loss history period. Under the migration analysis method, loss rates are calculated at the risk grade and segment levels by dividing the net charge-off amount by the total segment balance at the beginning of each migration period where the charged-off loan in question was present. Migration loss rates are averaged for each risk grade and segment for the entire loss history period. For each segment, the loss rates that result in the larger of the migration loss reserves or segment historical loss reserves are applied to the current loan balances. Qualitative factors are combined with these quantitative factors at the segment level to arrive at the overall general allowances. We establish specific allowances to account for credit deterioration for probable decreases in cash flows for PCI loans subsequent to acquisition. The estimated cash flows expected to be collected on PCI loans are updated quarterly and require the use of key assumptions and estimates based on factors such as the current economic environment, changes in collateral values, loan workout plans, changes in the probability of default, loss severities, and prepayments. Probable decreases in expected cash flows after acquisition result in impairment recorded as a specific allowance for loan losses or a charge-off to the allowance. Impairment is calculated as the present value of the expected future cash flows on the PCI loan, discounted at the loan's effective interest rate implicit in the loan. While we believe we use the best information available to determine the allowance for loan losses, our results of operations could be significantly affected if circumstances differ substantially from the assumptions used in determining the allowance. A decline in local and national economic conditions, or significant changes in other assumptions, could result in a material increase in the allowance for loan losses and may adversely affect our financial condition and results of operations. In addition, the determination of the amount of the allowance for loan losses is subject to review by bank regulators as part of their routine examination process, which may result in the establishment of additional allowance for loan losses based upon their judgment of information available to them at the time of their examination. For further information regarding the allowance for loan losses, see Note 3, Loans and Allowance for Loan Losses. |
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Allowance for Losses on Off-Balance-Sheet Commitments | Allowance for Losses on Off-Balance Sheet Commitments: We make commitments to extend credit to meet the financing needs of our customers in the form of loans or standby letters of credit. We are exposed to credit loss in the event that a decline in credit quality of the borrower leads to nonperformance. We record an allowance for losses on these off-balance sheet commitments based on estimates of probability that these commitments will be drawn upon according to the historical utilization experience of different types of commitments and expected loss severity. This allowance is included in interest payable and other liabilities on the consolidated statements of condition. |
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Transfers of Financial Assets | Transfers of Financial Assets: We have entered into certain loan participation agreements with other organizations. We account for these transfers of financial assets as sales when control over the transferred financial assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets and liabilities have been isolated from us, (2) the transferee has the right to pledge or exchange the assets (or beneficial interests) it received, free of conditions that constrain it from taking advantage of that right, beyond a trivial benefit and (3) we do not maintain effective control over the transferred financial assets or third-party beneficial interests related to those transferred assets. |
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Premises and Equipment | Premises and Equipment: Premises and equipment consist of leasehold improvements, furniture, fixtures, software and equipment and are stated at cost, less accumulated depreciation and amortization, which are calculated on a straight-line basis. Furniture and fixtures are depreciated over eight years and equipment is generally depreciated over three to twenty years. Leasehold improvements are amortized over the lesser of their estimated useful lives or the terms of the leases. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to expense as incurred. |
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Business Combinations | Business Combinations: Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes the acquired assets and assumed liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including other identifiable assets, exceed the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed from contingencies must be recognized at fair value, if the fair value can be determined during the measurement period. Results of operations of an acquired business are included in the consolidated statements of operations from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments are intended to help companies evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses and provide a more robust framework to use in determining when a set of assets and activities is a business. The amendments should be applied prospectively and are effective for annual periods after December 31, 2017, including interim periods within those periods. We adopted the amendments effective January 1, 2018, which did not impact our financial condition, results of operations, or related financial statement disclosures for the periods presented. |
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Goodwill and Other Intangible Assets | We make a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit where goodwill is assigned is less than its carrying amount. If we conclude that it is more likely than not that the fair value is more than its carrying amount, no impairment is recorded. Goodwill is tested for impairment on an interim basis if circumstances change or an event occurs between annual tests that would more likely than not reduce the fair value of the reporting unit below its carrying amount. The qualitative assessment includes adverse events or circumstances identified that could negatively affect the reporting units’ fair value as well as positive and mitigating events. Such indicators may include, among others, significant changes in legal factors or in the general business climate, significant changes in our stock price and market capitalization, unanticipated competition, and an action or assessment by a regulator. If the fair value of a reporting unit is less than its carrying amount, an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value is recognized. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Goodwill and Other Intangible Assets: Goodwill is determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill that arises from a business combination is periodically evaluated for impairment at the reporting unit level, at least annually. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Core deposit intangible ("CDI") represents the estimated future benefit of deposits related to an acquisition and is booked separately from the related deposits and evaluated periodically for impairment. The CDI asset is amortized on an accelerated method over its estimated useful life of ten years. |
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Other Real Estate Owned (OREO) | Other Real Estate Owned ("OREO"): OREO is comprised of property acquired through foreclosure, in substance repossession or acceptance of deeds-in-lieu of foreclosure when the related loan receivable is de-recognized. OREO is recorded at fair value of the collateral less estimated costs to sell, establishing a new cost basis, and subsequently accounted for at the lower of cost or fair value less estimated costs to sell. Any shortfall of collateral value from the recorded investment of the related loan is recognized as loss at the time of foreclosure and is charged against the allowance for loan losses. Fair value of collateral is generally based on an independent appraisal of the property. Revenues and expenses associated with OREO, and subsequent adjustments to the fair value of the property and to the estimated costs of disposal, are realized and reported as a component of non-interest income and expense when incurred. |
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Bank Owned Life Insurance | Bank Owned Life Insurance ("BOLI"): The Bank owns life insurance policies on certain key current and former officers. BOLI is recorded in interest receivable and other assets on the consolidated statements of condition at the amount that can be realized under the insurance contract at period-end, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement. |
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Federal Home Loan Bank of San Francisco (FHLB) Stock | Federal Home Loan Bank of San Francisco ("FHLB") Stock: The Bank is a member of the FHLB. Members are required to own a certain amount of stock based on the level of borrowings and other factors. As of December 31, 2018, our investment in FHLB stock was carried at cost, as there was no impairment or changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. As of December 31, 2017, our investment in FHLB stock was carried at cost. We periodically evaluate FHLB stock for impairment based on ultimate recovery of par value. FHLB stock is included as part of interest receivable and other assets on the consolidated statements of condition. Both cash and stock dividends are reported as non-interest income. |
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Investments in Low Income Housing Tax Credit Funds | Investments in Low Income Housing Tax Credit Funds: We have invested in limited partnerships that were formed to develop and operate affordable housing projects for low or moderate-income tenants throughout California. Our ownership percentage in each limited partnership ranges from 1.0% to 3.5%. We account for the investments in qualified affordable housing tax credit funds using the proportional amortization method, where the initial cost of the investment is amortized in proportion to the tax credits and other tax benefits received and the net investment performance is recognized as part of income tax expense (benefit). Each of the partnerships must meet the regulatory minimum requirements for affordable housing for a minimum 15-year compliance period to fully utilize the tax credits. If the partnerships cease to qualify during the compliance period, the credit may be denied for any period in which the project is not in compliance and a portion of the credit previously taken is subject to recapture with interest. We record an impairment charge if the value of the future tax benefits is less than the carrying value of the investments. |
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Employee Stock Ownership Plan (ESOP) | Employee Stock Ownership Plan (“ESOP”): We recognize compensation cost for ESOP contributions when funds become committed for the purchase of Bancorp's common shares into the ESOP in the year in which the employees render service entitling them to the contribution. If we contribute stock, the compensation cost is the fair value of the shares when they are committed to be released (i.e., when the number of shares becomes known and formally approved). In 2018 and 2017, the Bank only made stock contributions to the ESOP. |
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Income Taxes | Income Taxes: Income taxes reported in the consolidated financial statements are computed based on an asset and liability approach. We recognize the amount of taxes payable or refundable for the current year and we record deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the temporary differences are expected to reverse. We record net deferred tax assets to the extent it is more likely than not that they will be realized. In evaluating our ability to recover the deferred tax assets and the need to establish a valuation allowance against the deferred tax assets, Management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. In projecting future taxable income, Management develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates being used to manage the underlying business. Bancorp files consolidated federal and combined state income tax returns. We recognize the financial statement effect of a tax position when it is more likely than not, based on the technical merits and all available evidence, that the position will be sustained upon examination, including the resolution through protests, appeals or litigation processes. For tax positions that meet the more likely than not threshold, we measure and record the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement with the taxing authority. The remainder of the benefits associated with tax positions taken is recorded as unrecognized tax benefits, along with any related interest and penalties. Interest and penalties related to unrecognized tax benefits are recorded in tax expense. In deciding whether or not our tax positions taken meet the more likely than not recognition threshold, we must make judgments and interpretations about the application of inherently complex state and federal tax laws. To the extent tax authorities disagree with tax positions taken by us, our effective tax rates could be materially affected in the period of settlement with the taxing authorities. Revision of our estimate of accrued income taxes also may result from our own income tax planning, which may affect effective tax rates and results of operations for any reporting period. We present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss ("NOL") carryforward, or similar tax loss or tax credit carryforward, rather than as a liability, when (1) the uncertain tax position would reduce the NOL or other carryforward under the tax law of the applicable jurisdiction and (2) we intend to and are able to use the deferred tax asset for that purpose. Otherwise, the unrecognized tax benefit is presented as a liability instead of being netted with deferred tax assets. |
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Earnings per share (EPS) | Earnings per share (“EPS”) are based upon the weighted average number of common shares outstanding during each year. The following table shows: 1) weighted average basic shares, 2) potentially dilutive weighted average common shares related to stock options and unvested restricted stock awards, and 3) weighted average diluted shares. Basic EPS are calculated by dividing net income by the weighted average number of common shares outstanding during each annual period, excluding unvested restricted stock awards. Diluted EPS are calculated using the weighted average number of potentially dilutive common shares. The number of potentially dilutive common shares included in year-to-date diluted EPS is a year-to-date weighted average of potentially dilutive common shares included in each quarterly diluted EPS computation. In computing diluted EPS, we exclude anti-dilutive shares such as options whose exercise prices exceed the current common stock price, as they would not reduce EPS under the treasury method. We have two forms of outstanding common stock: common stock and unvested restricted stock awards. Holders of unvested restricted stock awards receive non-forfeitable dividends at the same rate as common shareholders and they both share equally in undistributed earnings. Under the two-class method, the difference in EPS is nominal for these participating securities. |
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Share-Based Compensation | Share-Based Compensation: All share-based payments, including stock options and restricted stock, are recognized as stock-based compensation expense in the consolidated statements of comprehensive income based on the grant-date fair value of the award with a corresponding increase in common stock. The grant-date fair value of the award is amortized on a straight-line basis over the requisite service period, which is generally the vesting period. The stock-based compensation expense excludes stock grants to directors as compensation for their services, which are recognized as director expenses separately based on the grant-date value of the stock. We account for forfeitures as they occur. See Note 8, Stockholders' Equity and Stock Option Plans for further discussion. We determine the fair value of stock options at the grant date using a Black-Scholes pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of the option, the volatility of the underlying stock, the expected dividend yield and the risk-free interest rate over the expected life of the option. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatility is based on the historical volatility of the common stock over the most recent period that is generally commensurate with the expected life of the options. The Black-Scholes option valuation model requires the input of highly subjective assumptions, including the expected life of the stock-based award and stock price volatility. The assumptions used represent Management's best estimates based on historical information, but these estimates involve inherent uncertainties and the application of Management's judgment. As a result, if other assumptions had been used, the recorded stock-based compensation expense could have been materially different from that recorded in the consolidated financial statements. The fair value of restricted stock is based on the stock price on the grant date. We record excess tax benefits resulting from the exercise of non-qualified stock options, the disqualifying disposition of incentive stock options and vesting of restricted stock awards as tax benefits in the consolidated statements of comprehensive income with a corresponding decrease to current taxes payable. In addition, we reflect excess tax benefits as an operating activity in the consolidated statements of cash flows. Cash paid for tax withholdings when shares are surrendered in a cashless stock option exchange is classified as a financing activity in the consolidated statements of cash flows. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU applies to entities that change the terms or conditions of a share-based payment award. The FASB adopted this ASU to provide clarity in what constitutes a modification and to reduce diversity in practice in applying Topic 718. In order for a change to a share-based arrangement to not require Topic 718 modification accounting treatment, all of the following must be met: no change in fair value, no change in vesting conditions and no change in the balance sheet classification of the modified award. The ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively to an award modified on or after the adoption date. We adopted the requirements of this ASU effective January 1, 2018, which did not impact our financial condition, results of operation, or related financial statement disclosures. |
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Derivative Financial Instruments and Hedging Activities | Derivative Financial Instruments and Hedging Activities - Fair Value Hedges: All of our interest rate swap contracts are designated and qualified as fair value hedges. The terms of our interest rate swap contracts are closely aligned to the terms of the designated fixed-rate loans. The hedging relationships are tested for effectiveness on a quarterly basis. The interest rate swaps are carried on the consolidated statements of condition at their fair value in other assets (when the fair value is positive) or in other liabilities (when the fair value is negative). The changes in the fair value of the interest rate swaps are recorded in interest income. The unrealized gains or losses due to changes in fair value of the hedged fixed-rate loans are recorded as an adjustment to the hedged loans and offset in interest income. For derivative instruments executed with the same counterparty under a master netting arrangement, we do not offset fair value amounts of interest rate swaps in liability positions with the ones in asset positions. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This amendment changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. It is intended to more closely align hedge accounting with companies' risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedging programs. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We early adopted the amendments of this ASU in the second quarter of 2018, and elected to perform hedge effectiveness assessments using a qualitative approach instead of quantitative regression analysis going forward. The adoption of this ASU had an immaterial impact to our financial results. The amendments also require additional disclosures, which are included in Note 14, Derivative Financial Instruments and Hedging Activities. From time to time, we make firm commitments to enter into long-term fixed-rate loans with borrowers backed by yield maintenance agreements and simultaneously enter into forward interest rate swap agreements with correspondent banks to mitigate the change in fair value of the yield maintenance agreement. Prior to loan funding, yield maintenance agreements with net settlement features that meet the definition of a derivative are considered as non-designated hedges and are carried on the consolidated statements of condition at their fair value in other assets (when the fair value is positive) or in other liabilities (when the fair value is negative). The offsetting changes in the fair value of the forward swap and the yield maintenance agreement are recorded in interest income. When the fixed-rate loans are originated, the forward swaps are designated to offset the change in fair value in the loans. Subsequent to the point of the swap designations, the fair value of the related yield maintenance agreements at the designation date was recorded in other assets and is amortized using the effective yield method over the life of the respective designated loans. The net effect of the change in fair value of interest rate swaps, the amortization of the yield maintenance agreement and the change in the fair value of the hedged loans result in an insignificant amount of hedge ineffectiveness recognized in interest income. For further detail, see Note 14, Derivative Financial Instruments and Hedging Activities. |
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Revenue Recognition on Non-Financial Instruments | Revenue Recognition on Non-Financial Instruments: In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of this ASU (and all subsequent updates) is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This ASU establishes a five-step model that must be used to recognize revenue that requires the entity to identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the entity satisfies the performance obligation. The ASU does not apply to the majority of our revenue, including revenue associated with financial instruments, such as loans and investment securities, and certain non-interest income, such as earnings on bank owned life insurance, dividends on Federal Home Loan Bank ("FHLB") stock, gains or losses on sales of investment securities, and deposit overdraft charges. The standard allowed the use of either the full retrospective or modified retrospective transition method. We elected to apply the modified retrospective transition method to incomplete contracts as of the initial date of application on January 1, 2018. The adoption of the new standards did not have a material impact on our financial condition or results of operations as revenue recognition under the new standards did not change significantly from our current practice of recognizing the in-scope non-interest income. In addition, we did not retroactively revise prior period amounts or record a cumulative adjustment to retained earnings upon adoption. We considered the nature, amount, timing, and uncertainty of revenue from contracts with customers and determined that significant revenue streams are sufficiently disaggregated in the consolidated statements of comprehensive income. Descriptions of our significant revenue-generating transactions that are within the scope of the new revenue recognition standards, which are presented in the consolidated statements of comprehensive income as components of non-interest income, are as follows:
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Advertising Costs | Advertising Costs are expensed as incurred. |
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Comprehensive Income | Comprehensive Income includes net income, changes in the unrealized gains or losses on available-for-sale investment securities, and amortization of net unrealized gains or losses on securities transferred from available-for-sale to held-to-maturity, net of related taxes, reported on the consolidated statements of comprehensive income and as components of stockholders' equity. |
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Fair Value Measurements | Fair Value Measurements: We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Securities available-for-sale and derivatives are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record certain assets and liabilities at fair value on a non-recurring basis, such as purchased loans and acquired deposits recorded at acquisition date, certain impaired loans, other real estate owned and securities held-to-maturity that are other-than-temporarily impaired. These non-recurring fair value adjustments typically involve write-downs of individual assets due to application of lower-of-cost or market accounting. When we develop our fair value measurement process, we maximize the use of observable inputs. Whenever there is no readily available market data, we use our best estimates and assumptions in determining fair value, but these estimates involve inherent uncertainties and the application of Management's judgment. As a result, if other assumptions had been used, our recorded earnings or disclosures could have been materially different from those reflected in these consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this ASU make improvements to accounting standards related to financial instruments, including but not limited to the following:
The ASU required an entity to apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We adopted the requirements of this ASU effective January 1, 2018, which did not have a material impact on our financial condition and results of operations. Our disclosures of the fair value of our loans held for investment, which are recorded at amortized cost, now incorporate the exit price notion reflecting factors such as a liquidity premium. Additionally, at the date of adoption, FHLB stock and Visa Inc. Class B common stock were carried at cost, as there was no impairment or changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. For further information on our use of fair value measurements and our related valuation methodologies, see Note 9, Fair Value of Assets and Liabilities. |
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Use of Estimates | Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the consolidated financial statements include ALLL, other-than-temporary impairment of investment securities, accrued liabilities, accounting for income taxes and fair value measurements (including fair values of acquired assets and assumed liabilities at acquisition dates) as discussed in the Notes herein. |
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Other Recently Adopted and Issued Accounting Standards | Other Recently Adopted Accounting Standards In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU provides guidance on how to present and classify eight specific cash flow topics in the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented, if practical. We adopted the requirements of this ASU effective January 1, 2018, which did not have a significant impact on our consolidated statements of cash flows. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This amendment helps organizations address certain stranded income tax effects in accumulated other comprehensive income (AOCI) resulting from the enactment of the Tax Cuts and Jobs Act of 2017. The ASU requires financial statement preparers to disclose a description of the accounting policy for releasing income tax effects from AOCI, whether or not they elect to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act of 2017, and information about the other income tax effects that are reclassified. The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The amendments in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate tax rate in the Tax Cuts and Jobs Act of 2017 is recognized. We early adopted this ASU in the first quarter of 2018 by reclassifying $638 thousand from AOCI to retained earnings. This amount represents the stranded income tax effects related to the unrealized loss on available-for-sale securities in AOCI on the date of the enactment of the Tax Cuts and Jobs Act of 2017. Accounting Standards Not Yet Effective In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments in this ASU intend to increase transparency and comparability among organizations by recognizing an asset, which represents the right to use the asset for the lease term, and a lease liability, which is a lessee's obligation to make lease payments measured on a discounted basis. This ASU generally applies to leasing arrangements exceeding a twelve-month term. ASU 2016-02 is effective for annual periods, including interim periods within those annual periods beginning after December 15, 2018 and requires a modified retrospective method of adoption. In July 2018, the FASB issued two amendments to ASU 2016-02: ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which provides various corrections and clarifications to ASU 2016-02; and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides a new optional transition method and provides a lessor with practical expedients for separating lease and non-lease components of a lease. Entities will apply a modified retrospective approach at either the beginning of the earliest period presented or at the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings. We adopted this ASU effective January 1, 2019 as required using the latter approach. Upon adoption, we did not record a cumulative effect to retained earnings. We recorded a right-of-use asset of approximately $13.4 million and a lease liability of approximately $15.4 million. The difference between the asset and liability was attributed to the reclassification of deferred rent and unaccreted lease incentives, which were netted with the right-of-use asset at the adoption date. The right-of-use asset did not materially impact our financial condition as it would have represented only 0.5% of our consolidated assets and reduced our total risk-based capital ratio by only 10 basis points as of December 31, 2018. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard will replace today's "incurred loss" model with a "current expected credit loss" ("CECL") model. The CECL model will apply to estimated credit losses on loans receivable, held-to-maturity debt securities, unfunded loan commitments, and certain other financial assets measured at amortized cost. The CECL model is based on lifetime expected losses, rather than incurred losses, and requires the recognition of credit loss expense in the consolidated statement of income and a related allowance for credit losses on the consolidated statement of condition at the time of origination or purchase of a loan receivable or held-to-maturity debt security. Likewise, subsequent changes in this estimate are recorded through credit loss expense and related allowance. The CECL model requires the use of not only relevant historical experience and current conditions, but reasonable and supportable forecasts of future events and circumstances, incorporating a broad range of information in developing credit loss estimates, which could result in significant changes to both the timing and amount of credit loss expense and allowance. Under ASU 2016-13, available-for-sale debt securities are evaluated for impairment if fair value is less than amortized cost. Estimated credit losses are recorded through a credit loss expense and an allowance, rather than a write-down of the investment. Changes in fair value that are not credit-related will continue to be recorded in other comprehensive income. The ASU also expands the disclosure requirements regarding assumptions, models, and methods for estimating the allowance for loan losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Entities will apply a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. While we believe the change from an incurred loss model to a CECL model has the potential to increase the allowance for loan losses at the adoption date, we cannot reasonably quantify the impact of the adoption of the amendments to our financial condition or results of operations at this time due to the complexity and extensive changes from these amendments. We have formed an internal CECL committee and are working with our third-party vendor to identify data gaps and determine the appropriate methodologies and resources to utilize in preparation for transition to the new accounting standards, including but not limited to the use of certain tools to forecast future economic conditions that affect the cash flows of our loans over their lifetime. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This update simplifies the accounting for share-based payment transactions for acquiring goods and services from nonemployees, applying some of the same requirements as employee share-based payment transactions. The ASU will not affect the accounting for share-based payment awards to nonemployee directors, which will continue to be treated as employee share-based transactions under the current standards. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The requirements of the ASU will be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. We adopted the requirements of this ASU effective January 1, 2019, which did not have a material impact on our financial condition or results of operations, as it is not our practice to issue stock-based awards to pay for goods and services from nonemployees, other than nonemployee directors. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU remove, modify, and add disclosure requirements for the fair value reporting of assets and liabilities. The modifications and additions relate to Level 3 fair value measurements at the end of the reporting period. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities should disclose and describe the range and weighted-average of significant observable inputs used to develop Level 3 fair value measurements prospectively. Early adoption is permitted. Entities making this election are permitted to early adopt the eliminated or modified disclosure requirements and delay the adoption of all the new disclosure requirements until the ASU's effective date. As the ASU’s requirements only relate to disclosures, the amendments will not impact our financial condition or results of operations. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, regardless of whether they convey a license to the hosted software. The accounting for the service element of a hosting arrangement that is a service contract is not affected by this ASU. The amendments are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. An entity has the option to apply amendments in the ASU either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted, including adoption in an interim period. We do not expect that the ASU will have a material impact on our financial condition or results of operations. In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This update adds an alternative fifth permissible U.S. benchmark rate to be used for hedge accounting purposes. As we have already adopted the amendments in ASU 2017-12, which changed both the designation and measurement guidance for qualifying hedging relationships, the amendments in ASU 2018-16 are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The amendments should be adopted on a prospective basis for qualifying new or re-designated hedging relationships entered into on or after the date of adoption. Early adoption is permitted in any interim period upon issuance of this ASU if an entity already has adopted ASU 2017-12. We adopted this ASU effective January 1, 2019, and expect the amendment to affect the measurement of our hedging activities, but we do not expect it to have a material impact on our financial condition or results of operations. |
Summary of Significant Accounting Policies (Tables) |
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | At December 31, 2018, the future estimated amortization expense for the CDI arising from our past acquisitions is as follows:
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Schedule of Earnings Per Share Reconciliation | The following table shows: 1) weighted average basic shares, 2) potentially dilutive weighted average common shares related to stock options and unvested restricted stock awards, and 3) weighted average diluted shares. Basic EPS are calculated by dividing net income by the weighted average number of common shares outstanding during each annual period, excluding unvested restricted stock awards. Diluted EPS are calculated using the weighted average number of potentially dilutive common shares. The number of potentially dilutive common shares included in year-to-date diluted EPS is a year-to-date weighted average of potentially dilutive common shares included in each quarterly diluted EPS computation. In computing diluted EPS, we exclude anti-dilutive shares such as options whose exercise prices exceed the current common stock price, as they would not reduce EPS under the treasury method. We have two forms of outstanding common stock: common stock and unvested restricted stock awards. Holders of unvested restricted stock awards receive non-forfeitable dividends at the same rate as common shareholders and they both share equally in undistributed earnings. Under the two-class method, the difference in EPS is nominal for these participating securities.
1 Share and per share data have been adjusted to reflect the two-for-one stock split effective November 27, 2018. |
Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Held-to-maturity Securities Reconciliation | Our investment securities portfolio consists of obligations of state and political subdivisions, corporate bonds, U.S. government agency securities, including residential and commercial mortgage-backed securities (“MBS”\"CMBS") and collateralized mortgage obligations (“CMOs”) issued or guaranteed by Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), or Government National Mortgage Association ("GNMA"), Small Business Administration ("SBA") backed securities, debentures issued by government-sponsored agencies such as FNMA, Federal Farm Credit Bureau, FHLB and FHLMC, as well as privately issued CMOs, as reflected in the table below:
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Schedule of Available-for-sale Securities |
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Investments Classified by Contractual Maturity Date | The amortized cost and fair value of investment debt securities by contractual maturity at December 31, 2018 are shown below. Expected maturities may differ from contractual maturities if the issuers of the securities have the right to call or prepay obligations with or without call or prepayment penalties.
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Gain (Loss) on Investments | Sales of investment securities and gross gains and losses are shown in the following table.
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Schedule of Financial Instruments Owned and Pledged as Collateral | Pledged investment securities are shown in the following table:
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Schedule of Unrealized Loss on Investments | Those securities are summarized and classified according to the duration of the loss period in the tables below:
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Loans and Allowance for Loan Losses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Past Due Financing Receivables | The following table shows outstanding loans by class and payment aging as of December 31, 2018 and 2017.
1 Includes no purchased credit impaired ("PCI") loans at December 31, 2018. Three purchased credit impaired loans with unpaid balances totaling $131 thousand and no carrying values were not accreting interest at December 31, 2017. Amounts exclude accreting PCI loans of $2.1 million and December 31, 2018 and 2017, as we have a reasonable expectation about future cash flows to be collected and we continue to recognize accretable yield on these loans in interest income. There were no accruing loans past due more than ninety days at December 31, 2018 or 2017. 2 Amounts include net deferred loan origination costs of $635 thousand and $818 thousand at December 31, 2018 and 2017, respectively. Amounts are also net of unaccreted purchase discounts on non-PCI loans of $708 thousand and $1.2 million at December 31, 2018 and 2017, respectively. |
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Financing Receivable Credit Quality Indicators | The following table represents an analysis of the carrying amount in loans, net of deferred fees and costs and purchase premiums or discounts, by internally assigned risk grades, including PCI loans, at December 31, 2018 and 2017.
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Troubled Debt Restructurings on Financing Receivables | The following table summarizes the carrying amount of TDR loans by loan class as of December 31, 2018 and December 31, 2017.
1Includes no acquired TDR loans as of December 31, 2018 or December 31, 2017. 2 There were two TDR loans on non-accrual status with recorded investments totaling $65 thousand at December 31, 2018 and no TDR loans on non-accrual status at December 31, 2017. The following table presents information for loans modified in a TDR during the presented periods, including the number of modified contracts, the recorded investment in the loans prior to modification, and the recorded investment in the loans at period end after being restructured. The table excludes fully charged-off TDR loans and loans modified in a TDR and subsequently paid-off during the years presented.
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Impaired Financing Receivables | The following tables summarize information by class on impaired loans and their related allowances. Total impaired loans include non-accrual loans, accruing TDR loans and accreting PCI loans that have experienced post-acquisition declines in cash flows expected to be collected.
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Allowance for Credit Losses on Financing Receivables | The following tables disclose activity in the allowance for loan losses ("ALLL") and the recorded investment in loans by class, as well as the related ALLL disaggregated by impairment evaluation method.
NM - Not Meaningful |
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Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period | The following table reflects the unpaid principal balance and related carrying value of PCI loans:
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Accretable Yield Activity | The activities in the accretable yield, or income expected to be earned over the remaining lives of the PCI loans were as follows:
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Schedule of Related Party Transactions | The following table shows changes in net loans to related parties for each of the two years ended December 31, 2018 and 2017:
1During 2017, two new directors joined our Board of Directors resulting in the reclassification of existing loans to those directors and their businesses to related party status. |
Bank Premises and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Bank Premises and Equipment | A summary of Bank premises and equipment at December 31 follows:
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Deposits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Time Deposits | A stratification of time deposits at December 31, 2018 and 2017 is presented in the following table:
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Schedule of Maturities for Time Deposits | Scheduled maturities of time deposits at December 31, 2018 are presented as follows:
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Borrowings (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Subordinated Debentures | The following table summarizes the contractual terms of the subordinated debentures due to Trust II as of December 31, 2018:
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Schedule of Borrowings | Borrowings at December 31, 2018 and 2017 are summarized as follows:
1 Subordinated debentures average rate includes the impact of the $916 thousand accelerated accretion due to early redemption of subordinated debentures due to NorCal Community Bancorp Trust I. |
Stockholders' Equity and Stock Plans (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | A summary of stock option activity for the years ended December 31, 2018 and 2017 is presented in the following table. The intrinsic value of options outstanding and exercisable is calculated as the number of in-the-money options times the difference between the market price of our stock as of each year-end period presented and the exercise prices of the in-the-money options.
1 Includes 140,290 replacement stock option awards issued in the Acquisition with a $13.60 weighted average exercise price and a $20.36 weighted average grant-date fair value. See Note 18, Acquisition. |
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Schedule of Unrecognized Compensation Cost, Nonvested Awards | The following table summarizes non-vested restricted stock awards and changes during the years ended December 31, 2018 and 2017.
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Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range | A summary of the options outstanding and exercisable by price range as of December 31, 2018 is presented in the following table:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | We determine the fair value of stock options at the grant date using the Black-Scholes pricing model that takes into account the stock price at the grant date, the exercise price, and the following assumptions (weighted-average shown).
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Summary of Cash Dividends Paid to Common Shareholders | Presented below is a summary of cash dividends paid in 2017 and 2018 to common shareholders, recorded as a reduction from retained earnings. On January 25, 2019, the Board of Directors declared a $0.19 per share cash dividend, paid February 15, 2019 to the shareholders of record at the close of business on February 8, 2019.
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Fair Value of Assets and Liabilities (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes our assets and liabilities that were required to be recorded at fair value on a recurring basis.
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Fair Value, by Balance Sheet Grouping | The table below is a summary of fair value estimates for financial instruments as of December 31, 2018 and 2017, excluding financial instruments recorded at fair value on a recurring basis (summarized in the first table in this note). The carrying amounts in the following table are recorded in the consolidated statements of condition under the indicated captions. Further, we have not disclosed the fair value of financial instruments specifically excluded from disclosure requirements such as bank-owned life insurance policies ("BOLI") and non-maturity deposit liabilities. Additionally, we held shares of FHLB stock and Visa Inc. Class B common stock, both recorded at cost, as there was no impairment or changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer as of December 31, 2018. Both FHLB stock and Visa Inc. Class B common stock were held at cost as of December 31, 2017, prior to adoption of ASU No. 2016-01. See further detail on the adoption of the ASU within Note 1, Summary of Significant Accounting Policies, and further discussion on values within Note 2, Investment Securities, above.
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) | The current and deferred components of the income tax provision for each of the two years ended December 31 are as follows:
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Schedule of Deferred Tax Assets and Liabilities | The following table shows the tax effect of our cumulative temporary differences as of December 31:
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Schedule of Effective Income Tax Rate Reconciliation | The effective tax rate for 2018 and 2017 differs from the current federal statutory income tax rate as follows:
1 Due to the enactment of the Tax Cuts and Jobs Act of 2017, which reduced the federal corporate income tax rate to 21% for tax years beginning on or after January 1, 2018, we wrote down net deferred tax assets as of December 22, 2017 by $3.0 million recorded in income tax expense in 2017. |
Commitments and Contingencies (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | At December 31, 2018, the approximate minimum future commitments payable under non-cancelable contracts for leased premises are as follows:
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Derivative Financial Instruments and Hedging Activities (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | Information on our derivatives follows:
1 See Note 9, Fair Value of Assets and Liabilities for valuation methodology. The following table presents the carrying amount associated cumulative basis adjustment related to the application of fair value hedge accounting that is included in the carrying amount of hedged assets as of December 31, 2018 and 2017:
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The following table presents the net gains (losses) recognized in interest income on loans on the consolidated statements of comprehensive income related to our derivatives designated as fair value hedges:
1 Represents the income line item in the statement of comprehensive income in which the effects of fair value hedges are recorded. 2 Includes hedge ineffectiveness gain of $13 thousand and $31 thousand for the years ended December 31, 2018, and 2017, respectively. Changes in value of swaps were included in the assessment of hedge effectiveness. Hedge ineffectiveness is the measure of the extent to which the change in the fair value of the hedging instruments does not exactly offset the change in the fair value of the hedged items from period to period. |
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Offsetting Assets | Information on financial instruments that are eligible for offset in the consolidated statements of condition follows:
1 Amounts exclude accrued interest totaling less than $1 thousand both at December 31, 2018 and 2017.
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Offsetting Liabilities |
2 Amounts exclude accrued interest totaling $3 thousand and $8 thousand at December 31, 2018 and 2017, respectively. |
Regulatory Matters (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Capital Adequacy Ratios | The Bancorp’s and Bank's capital adequacy ratios as of December 31, 2018 and 2017 are presented in the following tables. Bancorp's Tier 1 capital includes the subordinated debentures, which are not included at the Bank level.
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Financial Instruments with Off-Balance Sheet Risk (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Contractual Amount, Off-Balance Sheet Risks | The contractual amount of undrawn loan commitments and standby letters of credit not reflected in the consolidated statements of condition are as follows:
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Condensed Bank of Marin Bancorp Parent Only Financial Statements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Balance Sheet | Presented below is financial information for Bank of Marin Bancorp, parent holding company only.
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Schedule of Condensed Income Statement |
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Schedule of Condensed Cash Flow Statement |
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Acquisition (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Acquisition-Related Expenses | Bancorp recognized acquisition-related expenses in the consolidated statements of comprehensive income in 2018 and 2017 for the Bank of Napa acquisition as follows:
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Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018
USD ($)
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Dec. 31, 2018
USD ($)
payment
branch
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Dec. 31, 2017
USD ($)
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Jan. 01, 2019
USD ($)
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Entity Location [Line Items] | ||||
Number of consecutive payments considered sustained repayment performance | payment | 6 | |||
Threshold period a past due loan is charged off | 90 days | |||
Threshold period a past due overdraft account is charged off | 60 days | |||
Advertising costs | $ | $ 666 | $ 567 | ||
Amount reclassified from AOCI to retained earnings representing stranded tax income effects | $ | $ 638 | |||
Marin County | ||||
Entity Location [Line Items] | ||||
Number of branches | 10 | |||
Napa County | ||||
Entity Location [Line Items] | ||||
Number of branches | 3 | |||
San Francisco | ||||
Entity Location [Line Items] | ||||
Number of branches | 1 | |||
Sonoma County | ||||
Entity Location [Line Items] | ||||
Number of branches | 6 | |||
Alameda County | ||||
Entity Location [Line Items] | ||||
Number of branches | 3 | |||
Accounting Standards Update 2016-02 | ||||
Entity Location [Line Items] | ||||
Effect of new accounting guidance, as a percent of consolidated assets | 0.50% | |||
Effect of new accounting guidance, risk-based capital ratio, reduction | 10.00% | |||
Accounting Standards Update 2016-02 | Subsequent event | ||||
Entity Location [Line Items] | ||||
Operating lease, right-of-use asset | $ | $ 13,400 | |||
Operating lease, liability | $ | $ 15,400 | |||
Minimum | ||||
Entity Location [Line Items] | ||||
Ownership percentage in limited partnerships related to Low Income Housing Tax Credits | 1.00% | |||
Maximum | ||||
Entity Location [Line Items] | ||||
Ownership percentage in limited partnerships related to Low Income Housing Tax Credits | 3.50% | |||
Core deposit intangible | ||||
Entity Location [Line Items] | ||||
Useful life of core deposit intangible asset | 10 years |
Summary of Significant Accounting Policies - Premises and Equipment (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Furniture and equipment | |
Property, Plant and Equipment [Line Items] | |
Premises and equipment useful life | 8 years |
Minimum | Equipment | |
Property, Plant and Equipment [Line Items] | |
Premises and equipment useful life | 3 years |
Maximum | Equipment | |
Property, Plant and Equipment [Line Items] | |
Premises and equipment useful life | 20 years |
Summary of Significant Accounting Policies - Future Amortization Expense of Core Deposits (Details) - Core deposit intangible $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Finite-Lived Intangible Assets [Line Items] | |
2019 | $ 887 |
2020 | 853 |
2021 | 818 |
2022 | 782 |
2023 | 719 |
Thereafter | 1,512 |
Total | $ 5,571 |
Summary of Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
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Earnings Per Share, Basic and Diluted [Abstract] | |||||
Weighted average basic shares outstanding (in shares) | [1] | 13,864 | 12,392 | ||
Potential common shares related to stock options (in shares) | 136 | 123 | |||
Potential common shares related to unvested restricted stock awards (in shares) | 29 | 30 | |||
Weighted average diluted shares outstanding (in shares) | [1] | 14,029 | 12,545 | ||
Net income | $ 32,622 | $ 15,976 | |||
Basic EPS (in dollars per share) | [1] | $ 2.35 | $ 1.29 | ||
Diluted EPS (in dollars per share) | [1] | $ 2.33 | $ 1.27 | ||
Weighted average anti-dilutive shares not included in the calculation of diluted EPS (in shares) | 44 | 42 | |||
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Investment Securities - Amortized Cost and Fair Value (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Securities, Held-to-maturity [Abstract] | ||
Held to maturity, Amortized Cost | $ 157,206 | $ 151,032 |
Held-to-maturity, Fair Value | 153,894 | 151,032 |
Held-to-maturity, Gross Unrealized Gains | 210 | 619 |
Held-to-maturity, Gross Unrealized (Losses) | (3,522) | (619) |
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 465,910 | 334,285 |
Available-for-sale, at fair value | 462,464 | 332,467 |
Available-for-sale, Gross Unrealized Gains | 1,748 | 574 |
Available-for-sale, Gross Unrealized (Losses) | (5,194) | (2,392) |
Total investment securities, Amortized Cost | 623,116 | 485,317 |
Total investment securities, Fair Value | 616,358 | 483,499 |
Total investment securities, Gross Unrealized Gains | 1,958 | 1,193 |
Total investment securities, Gross Unrealized (Losses) | (8,716) | (3,011) |
MBS pass-through securities issued by FHLMC and FNMA | ||
Debt Securities, Held-to-maturity [Abstract] | ||
Held to maturity, Amortized Cost | 88,606 | 100,376 |
Held-to-maturity, Fair Value | 85,804 | 100,096 |
Held-to-maturity, Gross Unrealized Gains | 7 | 234 |
Held-to-maturity, Gross Unrealized (Losses) | (2,809) | (514) |
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 95,339 | 65,559 |
Available-for-sale, at fair value | 94,467 | 65,262 |
Available-for-sale, Gross Unrealized Gains | 358 | 126 |
Available-for-sale, Gross Unrealized (Losses) | (1,230) | (423) |
SBA-backed securities | ||
Debt Securities, Held-to-maturity [Abstract] | ||
Held to maturity, Amortized Cost | 8,720 | 0 |
Held-to-maturity, Fair Value | 8,757 | 0 |
Held-to-maturity, Gross Unrealized Gains | 37 | 0 |
Held-to-maturity, Gross Unrealized (Losses) | 0 | 0 |
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 50,722 | 25,979 |
Available-for-sale, at fair value | 50,781 | 25,982 |
Available-for-sale, Gross Unrealized Gains | 465 | 58 |
Available-for-sale, Gross Unrealized (Losses) | (406) | (55) |
CMOs issued by FNMA | ||
Debt Securities, Held-to-maturity [Abstract] | ||
Held to maturity, Amortized Cost | 11,447 | 0 |
Held-to-maturity, Fair Value | 11,327 | 0 |
Held-to-maturity, Gross Unrealized Gains | 0 | 0 |
Held-to-maturity, Gross Unrealized (Losses) | (120) | 0 |
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 28,275 | 35,340 |
Available-for-sale, at fair value | 28,079 | 35,125 |
Available-for-sale, Gross Unrealized Gains | 134 | 33 |
Available-for-sale, Gross Unrealized (Losses) | (330) | (248) |
CMOs issued by FHLMC | ||
Debt Securities, Held-to-maturity [Abstract] | ||
Held to maturity, Amortized Cost | 33,583 | 31,010 |
Held-to-maturity, Fair Value | 33,021 | 30,938 |
Held-to-maturity, Gross Unrealized Gains | 8 | 2 |
Held-to-maturity, Gross Unrealized (Losses) | (570) | (74) |
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 145,979 | 70,514 |
Available-for-sale, at fair value | 144,836 | 69,889 |
Available-for-sale, Gross Unrealized Gains | 454 | 3 |
Available-for-sale, Gross Unrealized (Losses) | (1,597) | (628) |
CMOs issued by GNMA | ||
Debt Securities, Held-to-maturity [Abstract] | ||
Held to maturity, Amortized Cost | 3,739 | 0 |
Held-to-maturity, Fair Value | 3,769 | 0 |
Held-to-maturity, Gross Unrealized Gains | 30 | 0 |
Held-to-maturity, Gross Unrealized (Losses) | 0 | 0 |
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 11,294 | 17,953 |
Available-for-sale, at fair value | 11,021 | 17,785 |
Available-for-sale, Gross Unrealized Gains | 1 | 26 |
Available-for-sale, Gross Unrealized (Losses) | (274) | (194) |
Debentures of government- sponsored agencies | ||
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 52,956 | 12,940 |
Available-for-sale, at fair value | 53,018 | 12,938 |
Available-for-sale, Gross Unrealized Gains | 185 | 3 |
Available-for-sale, Gross Unrealized (Losses) | (123) | (5) |
Privately issued CMOs | ||
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 295 | 1,432 |
Available-for-sale, at fair value | 297 | 1,431 |
Available-for-sale, Gross Unrealized Gains | 2 | 1 |
Available-for-sale, Gross Unrealized (Losses) | 0 | (2) |
Obligations of state and political subdivisions | ||
Debt Securities, Held-to-maturity [Abstract] | ||
Held to maturity, Amortized Cost | 11,111 | 19,646 |
Held-to-maturity, Fair Value | 11,216 | 19,998 |
Held-to-maturity, Gross Unrealized Gains | 128 | 383 |
Held-to-maturity, Gross Unrealized (Losses) | (23) | (31) |
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 79,046 | 98,027 |
Available-for-sale, at fair value | 77,960 | 97,491 |
Available-for-sale, Gross Unrealized Gains | 134 | 298 |
Available-for-sale, Gross Unrealized (Losses) | (1,220) | (834) |
Corporate bonds | ||
Debt Securities, Available-for-sale [Abstract] | ||
Available for Sale, Amortized Cost, Total | 2,004 | 6,541 |
Available-for-sale, at fair value | 2,005 | 6,564 |
Available-for-sale, Gross Unrealized Gains | 15 | 26 |
Available-for-sale, Gross Unrealized (Losses) | $ (14) | $ (3) |
Investment Securities - Maturities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Held to Maturity, Amortized Cost, Within one year | $ 6,194 | $ 2,151 |
Held to Maturity, Amortized Cost, After one but within five years | 5,481 | 15,577 |
Held to Maturity, Amortized Cost, After five years through ten years | 59,231 | 54,641 |
Held to Maturity, Amortized Cost, After ten years | 86,300 | 78,663 |
Held to Maturity, Amortized Cost, Total | 157,206 | 151,032 |
Held to Maturity, Fair Value, Within one year | 6,182 | 2,172 |
Held to Maturity, Fair Value, After one but within five years | 5,492 | 15,791 |
Held to Maturity, Fair Value, After five years through ten years | 58,120 | 54,554 |
Held to Maturity, Fair Value, After ten years | 84,100 | 78,515 |
Held-to-Maturity, Fair Value, Total | 153,894 | 151,032 |
Available for Sale, Amortized Cost, Within one year | 9,863 | 10,268 |
Available for Sale, Amortized Cost, After one but within five years | 84,871 | 71,576 |
Available For Sale, Amortized Cost, After five years through ten years | 252,274 | 129,723 |
Available for Sale, Amortized Cost, After ten years | 118,902 | 122,718 |
Available for Sale, Amortized Cost, Total | 465,910 | 334,285 |
Available for Sale, Fair Value, Within one year | 9,795 | 10,272 |
Available for Sale, Fair Value, After one but within five years | 84,435 | 71,237 |
Available for Sale, Fair Value, After five years through ten years | 250,055 | 128,954 |
Available for Sale, Fair Value, After ten years | 118,179 | 122,004 |
Available for Sale, Fair Value, Total | $ 462,464 | $ 332,467 |
Investment Securities - Securities Sold, Pledged as Collateral and Transfers (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Available-for-sale: | ||
Sales proceeds | $ 16,972 | $ 55,408 |
Gross realized gains | 27 | 46 |
Gross realized losses | 106 | 231 |
Securities transferred from available-for-sale to held-to-maturity | 27,422 | 128,965 |
Unrealized pre-tax loss from transfer of available-for-sale securities to held-to-maturity | 278 | 3,000 |
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity | 516 | 426 |
Public Deposits | ||
Available-for-sale: | ||
Available-for-sale securities pledged as collateral | 125,696 | 107,829 |
Trust Deposits | ||
Available-for-sale: | ||
Available-for-sale securities pledged as collateral | 734 | 761 |
State of California | ||
Available-for-sale: | ||
Available-for-sale securities pledged as collateral | 126,430 | 108,590 |
Internal checking account | ||
Available-for-sale: | ||
Available-for-sale securities pledged as collateral | $ 2,000 | $ 2,026 |
Investment Securities - Other Than Temporarily Impaired Debt Securities (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
security
|
Dec. 31, 2017
USD ($)
security
|
---|---|---|
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Number of investment securities in unrealized loss positions | security | 229 | 198 |
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||
Held-to-maturity, Less than 12 continuous months, Fair value | $ 3,078 | $ 31,051 |
Held-to-maturity, Less than 12 continuous months, Unrealized loss | (12) | (205) |
Held-to-maturity, Greater than 12 continuous months, Fair value | 127,053 | 60,669 |
Held-to-maturity, Greater than 12 continuous months, Unrealized loss | (3,510) | (414) |
Held-to-maturity, Total securities in a loss position, Fair value | 130,131 | 91,720 |
Held-to-maturity, Total securities in a loss position, Unrealized loss | (3,522) | (619) |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 81,533 | 212,675 |
Available-for-sale, Less than 12 continuous months, Unrealized loss | (657) | (1,465) |
Available-for-sale, Greater than 12 continuous months, Fair value | 234,850 | 40,478 |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | (4,537) | (927) |
Available-for-sale, Unrealized loss position, Fair value | 316,383 | 253,153 |
Available-for-sale, Total securities in a loss position, Unrealized loss | (5,194) | (2,392) |
Available-for-sale and Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract] [Abstract] | ||
Total temporarily impaired securities, Less than 12 continuous months, Fair value | 84,611 | 243,726 |
Total temporarily impaired securities, Less than 12 continuous months, Unrealized loss | (669) | (1,670) |
Total temporarily impaired securities, Greater than 12 continuous months, Fair value | 361,903 | 101,147 |
Total temporarily impaired securities, Greater than 12 continuous months, Unrealized loss | (8,047) | (1,341) |
Total temporarily impaired securities, Total securities in a loss position, Fair value | 446,514 | 344,873 |
Total temporarily impaired securities, Total securities in a loss position, Unrealized loss | $ (8,716) | (3,011) |
Number of securities in continuous loss position for more than 12 months | security | 188 | |
Number of securities in continuous loss position for less than 12 months | security | 41 | |
MBS pass-through securities issued by FHLMC and FNMA | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||
Held-to-maturity, Less than 12 continuous months, Fair value | $ 198 | 16,337 |
Held-to-maturity, Less than 12 continuous months, Unrealized loss | (9) | (143) |
Held-to-maturity, Greater than 12 continuous months, Fair value | 83,990 | 46,845 |
Held-to-maturity, Greater than 12 continuous months, Unrealized loss | (2,800) | (371) |
Held-to-maturity, Total securities in a loss position, Fair value | 84,188 | 63,182 |
Held-to-maturity, Total securities in a loss position, Unrealized loss | (2,809) | (514) |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 19,971 | 32,189 |
Available-for-sale, Less than 12 continuous months, Unrealized loss | (128) | (121) |
Available-for-sale, Greater than 12 continuous months, Fair value | 50,077 | 15,325 |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | (1,102) | (302) |
Available-for-sale, Unrealized loss position, Fair value | 70,048 | 47,514 |
Available-for-sale, Total securities in a loss position, Unrealized loss | (1,230) | (423) |
CMOs issued by FNMA | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||
Held-to-maturity, Less than 12 continuous months, Fair value | 0 | |
Held-to-maturity, Less than 12 continuous months, Unrealized loss | 0 | |
Held-to-maturity, Greater than 12 continuous months, Fair value | 11,327 | |
Held-to-maturity, Greater than 12 continuous months, Unrealized loss | (120) | |
Held-to-maturity, Total securities in a loss position, Fair value | 11,327 | |
Held-to-maturity, Total securities in a loss position, Unrealized loss | (120) | 0 |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 2,345 | 26,401 |
Available-for-sale, Less than 12 continuous months, Unrealized loss | (8) | (171) |
Available-for-sale, Greater than 12 continuous months, Fair value | 16,138 | 5,440 |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | (322) | (77) |
Available-for-sale, Unrealized loss position, Fair value | 18,483 | 31,841 |
Available-for-sale, Total securities in a loss position, Unrealized loss | (330) | (248) |
Obligations of state and political subdivisions | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||
Held-to-maturity, Less than 12 continuous months, Fair value | 0 | 3,648 |
Held-to-maturity, Less than 12 continuous months, Unrealized loss | 0 | (31) |
Held-to-maturity, Greater than 12 continuous months, Fair value | 3,565 | 0 |
Held-to-maturity, Greater than 12 continuous months, Unrealized loss | (23) | 0 |
Held-to-maturity, Total securities in a loss position, Fair value | 3,565 | 3,648 |
Held-to-maturity, Total securities in a loss position, Unrealized loss | (23) | (31) |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 15,290 | 52,197 |
Available-for-sale, Less than 12 continuous months, Unrealized loss | (54) | (288) |
Available-for-sale, Greater than 12 continuous months, Fair value | 52,804 | 19,548 |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | (1,166) | (546) |
Available-for-sale, Unrealized loss position, Fair value | 68,094 | 71,745 |
Available-for-sale, Total securities in a loss position, Unrealized loss | (1,220) | (834) |
CMOs issued by FHLMC | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||
Held-to-maturity, Less than 12 continuous months, Fair value | 2,880 | 11,066 |
Held-to-maturity, Less than 12 continuous months, Unrealized loss | (3) | (31) |
Held-to-maturity, Greater than 12 continuous months, Fair value | 28,171 | 13,824 |
Held-to-maturity, Greater than 12 continuous months, Unrealized loss | (567) | (43) |
Held-to-maturity, Total securities in a loss position, Fair value | 31,051 | 24,890 |
Held-to-maturity, Total securities in a loss position, Unrealized loss | (570) | (74) |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 24,094 | 69,276 |
Available-for-sale, Less than 12 continuous months, Unrealized loss | (330) | (628) |
Available-for-sale, Greater than 12 continuous months, Fair value | 74,243 | 0 |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | (1,267) | 0 |
Available-for-sale, Unrealized loss position, Fair value | 98,337 | 69,276 |
Available-for-sale, Total securities in a loss position, Unrealized loss | (1,597) | (628) |
CMOs issued by GNMA | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||
Held-to-maturity, Total securities in a loss position, Unrealized loss | 0 | 0 |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 1,666 | 14,230 |
Available-for-sale, Less than 12 continuous months, Unrealized loss | (7) | (194) |
Available-for-sale, Greater than 12 continuous months, Fair value | 9,112 | 0 |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | (267) | 0 |
Available-for-sale, Unrealized loss position, Fair value | 10,778 | 14,230 |
Available-for-sale, Total securities in a loss position, Unrealized loss | (274) | (194) |
Corporate bonds | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 0 | 3,060 |
Available-for-sale, Less than 12 continuous months, Unrealized loss | 0 | (3) |
Available-for-sale, Greater than 12 continuous months, Fair value | 1,004 | |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | (14) | |
Available-for-sale, Unrealized loss position, Fair value | 1,004 | 3,060 |
Available-for-sale, Total securities in a loss position, Unrealized loss | (14) | (3) |
SBA-backed securities | ||
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract] | ||
Held-to-maturity, Total securities in a loss position, Unrealized loss | 0 | 0 |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 13,175 | 11,028 |
Available-for-sale, Less than 12 continuous months, Unrealized loss | (122) | (53) |
Available-for-sale, Greater than 12 continuous months, Fair value | 20,123 | 165 |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | (284) | (2) |
Available-for-sale, Unrealized loss position, Fair value | 33,298 | 11,193 |
Available-for-sale, Total securities in a loss position, Unrealized loss | (406) | (55) |
Debentures of government- sponsored agencies | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 4,992 | 2,984 |
Available-for-sale, Less than 12 continuous months, Unrealized loss | (8) | (5) |
Available-for-sale, Greater than 12 continuous months, Fair value | 11,349 | 0 |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | (115) | 0 |
Available-for-sale, Unrealized loss position, Fair value | 16,341 | 2,984 |
Available-for-sale, Total securities in a loss position, Unrealized loss | (123) | (5) |
Privately issued CMOs | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available-for-sale, Less than 12 continuous months, Fair value | 1,310 | |
Available-for-sale, Less than 12 continuous months, Unrealized loss | (2) | |
Available-for-sale, Greater than 12 continuous months, Fair value | 0 | |
Available-for-sale, Greater than 12 continuous months, Unrealized loss | 0 | |
Available-for-sale, Unrealized loss position, Fair value | 0 | 1,310 |
Available-for-sale, Total securities in a loss position, Unrealized loss | $ 0 | $ (2) |
Investment Securities - Non-marketable Securities (Details) |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Nov. 27, 2018 |
Oct. 31, 2018
USD ($)
shares
|
Dec. 31, 2018
USD ($)
$ / shares
shares
|
Dec. 31, 2017
USD ($)
shares
|
Feb. 21, 2019 |
|
Marketable Securities [Line Items] | |||||
Federal Home Loan Bank stock, par value (usd per share) | $ / shares | $ 100 | ||||
Stock split ratio | 2 | ||||
Investments in low income housing tax credit funds | $ 4,600,000 | $ 2,100,000 | |||
Low income housing tax credits and other tax benefits | 597,000 | ||||
Low income housing amortization expense | 507,000 | ||||
Unfunded commitments for low income housing tax credit funds | 3,100,000 | ||||
Catch-up amortization expense due to tax reduction | 67,000 | ||||
Other assets | |||||
Marketable Securities [Line Items] | |||||
Federal Home Loan Bank stock | $ 11,100,000 | $ 11,100,000 | |||
Visa Inc. Class B Common Stock | |||||
Marketable Securities [Line Items] | |||||
Number of shares of securities carried at cost (in shares) | shares | 10,439 | 16,939 | |||
Fair value of Class B common stock | $ 0 | ||||
Equity securities | $ 2,200,000 | $ 3,200,000 | |||
Shares of Visa Inc. Class B restricted common stock (in shares) | shares | 6,500 | ||||
Gain from sale of Visa Inc. Class B restricted common stock | $ 956,000 | ||||
Visa Inc. | Visa Inc. Class B common stock | |||||
Marketable Securities [Line Items] | |||||
Stock split ratio | 1.6298 | 1.6483 | |||
Subsequent event | |||||
Marketable Securities [Line Items] | |||||
Federal Home Loan Bank, dividend rate percentage | 7.00% |
Loans and Allowance for Loan Losses - Percentage of Loans Geographically and by Collateral (Details) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Commercial real estate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Percentage of loans by class to all loans | 67.00% | 67.00% |
Commercial real estate | California | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Percentage of loans by class and geographic location | 85.00% | 85.00% |
Loans secured by real estate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Percentage of loans by class to all loans | 88.00% | 87.00% |
Loans and Allowance for Loan Losses - Loans Outstanding and Aging Analysis (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017
USD ($)
loan
|
Dec. 31, 2018
USD ($)
|
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | $ 2,331,000 | $ 1,121,000 |
Current | 1,676,682,000 | 1,762,743,000 |
Total loans | 1,679,013,000 | 1,763,864,000 |
Non-accrual loans | $ 406,000 | 697,000 |
Number of purchase credit impaired (PCI) loans with unpaid balances | loan | 3 | |
Unpaid balances on purchase credit impaired (PCI) loans | $ 131,000 | |
Purchased Credit Impaired (PCI) loans no longer accreting interest | 0 | |
Purchased Credit-impaired (PCI) loans accreting interest | 2,100,000 | 2,100,000 |
Loans past due more than 90 days still accruing | 0 | 0 |
Deferred loan fees | 818,000 | 635,000 |
Unaccreted purchase discounts on non-PCI loans | 1,200,000 | 708,000 |
30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 684,000 | 1,121,000 |
60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 1,340,000 | 0 |
90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 307,000 | 0 |
Commercial | Commercial and industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 1,340,000 | 5,000 |
Current | 234,495,000 | 230,734,000 |
Total loans | 235,835,000 | 230,739,000 |
Non-accrual loans | 0 | 319,000 |
Commercial | Commercial and industrial | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 5,000 |
Commercial | Commercial and industrial | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 1,340,000 | 0 |
Commercial | Commercial and industrial | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Commercial real estate | Commercial real estate, owner-occupied | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Current | 300,963,000 | 313,277,000 |
Total loans | 300,963,000 | 313,277,000 |
Non-accrual loans | 0 | 0 |
Commercial real estate | Commercial real estate, owner-occupied | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Commercial real estate | Commercial real estate, owner-occupied | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Commercial real estate | Commercial real estate, owner-occupied | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Commercial real estate | Commercial real estate, investor | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 1,004,000 |
Current | 822,984,000 | 872,406,000 |
Total loans | 822,984,000 | 873,410,000 |
Non-accrual loans | 0 | 0 |
Commercial real estate | Commercial real estate, investor | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 1,004,000 |
Commercial real estate | Commercial real estate, investor | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Commercial real estate | Commercial real estate, investor | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Commercial real estate | Construction | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Current | 63,828,000 | 76,423,000 |
Total loans | 63,828,000 | 76,423,000 |
Non-accrual loans | 0 | 0 |
Commercial real estate | Construction | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Commercial real estate | Construction | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Commercial real estate | Construction | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Residential loans | Home equity | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 406,000 | 0 |
Current | 132,061,000 | 124,696,000 |
Total loans | 132,467,000 | 124,696,000 |
Non-accrual loans | 406,000 | 313,000 |
Residential loans | Home equity | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 99,000 | 0 |
Residential loans | Home equity | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Residential loans | Home equity | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 307,000 | 0 |
Residential loans | Other residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 255,000 | 0 |
Current | 95,271,000 | 117,847,000 |
Total loans | 95,526,000 | 117,847,000 |
Non-accrual loans | 0 | 0 |
Residential loans | Other residential | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 255,000 | |
Residential loans | Other residential | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Residential loans | Other residential | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Consumer loans | Installment and other consumer | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 330,000 | 112,000 |
Current | 27,080,000 | 27,360,000 |
Total loans | 27,410,000 | 27,472,000 |
Non-accrual loans | 0 | 65,000 |
Consumer loans | Installment and other consumer | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 330,000 | 112,000 |
Consumer loans | Installment and other consumer | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | 0 | 0 |
Consumer loans | Installment and other consumer | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total past due | $ 0 | $ 0 |
Loans and Allowance for Loan Losses - Credit Risk Profile by Internally Assigned Risk Grade (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | $ 1,763,864 | $ 1,679,013 |
Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 1,733,916 | 1,629,865 |
Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 17,340 | 21,242 |
Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 12,608 | 27,906 |
Commercial | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 230,708 | 235,770 |
Total loans | 230,739 | 235,835 |
Commercial | Pass | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 219,625 | 214,636 |
Commercial | Special Mention | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 9,957 | 9,318 |
Commercial | Substandard | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 1,126 | 11,816 |
Commercial real estate | Commercial real estate, owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 312,090 | 299,797 |
Total loans | 313,277 | 300,963 |
Commercial real estate | Commercial real estate, investor | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 872,599 | 822,194 |
Total loans | 873,410 | 822,984 |
Commercial real estate | Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 76,423 | 63,828 |
Total loans | 76,423 | 63,828 |
Commercial real estate | Pass | Commercial real estate, owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 299,998 | 281,104 |
Commercial real estate | Pass | Commercial real estate, investor | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 870,443 | 818,570 |
Commercial real estate | Pass | Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 73,735 | 60,859 |
Commercial real estate | Special Mention | Commercial real estate, owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 4,106 | 9,284 |
Commercial real estate | Special Mention | Commercial real estate, investor | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 2,156 | 1,850 |
Commercial real estate | Special Mention | Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 0 | 0 |
Commercial real estate | Substandard | Commercial real estate, owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 7,986 | 9,409 |
Commercial real estate | Substandard | Commercial real estate, investor | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 0 | 1,774 |
Commercial real estate | Substandard | Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 2,688 | 2,969 |
Residential loans | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 124,613 | 132,373 |
Total loans | 124,696 | 132,467 |
Residential loans | Other residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 117,847 | 95,526 |
Residential loans | Pass | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 122,844 | 130,558 |
Residential loans | Pass | Other residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 117,847 | 95,526 |
Residential loans | Special Mention | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 1,121 | 0 |
Residential loans | Special Mention | Other residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 0 | 0 |
Residential loans | Substandard | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans excluding purchased credit-impaired loans | 648 | 1,815 |
Residential loans | Substandard | Other residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 0 | 0 |
Consumer loans | Installment and other consumer | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 27,472 | 27,410 |
Consumer loans | Pass | Installment and other consumer | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 27,312 | 27,287 |
Consumer loans | Special Mention | Installment and other consumer | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 0 | 0 |
Consumer loans | Substandard | Installment and other consumer | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 160 | 123 |
Purchased credit-impaired | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 2,112 | 2,115 |
Purchased credit-impaired | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 2,112 | 1,325 |
Purchased credit-impaired | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 0 | 790 |
Purchased credit-impaired | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 0 | 0 |
Purchased credit-impaired | Commercial | Commercial and industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 31 | 65 |
Purchased credit-impaired | Commercial real estate | Commercial real estate, owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 1,187 | 1,166 |
Purchased credit-impaired | Commercial real estate | Commercial real estate, investor | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 811 | 790 |
Purchased credit-impaired | Commercial real estate | Construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 0 | 0 |
Purchased credit-impaired | Residential loans | Home equity | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 83 | 94 |
Purchased credit-impaired | Residential loans | Other residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | 0 | 0 |
Purchased credit-impaired | Consumer loans | Installment and other consumer | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Purchased credit-impaired | $ 0 | $ 0 |
Loans and Allowance for Loan Losses - Troubled Debt Restructuring by Class (Details) |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2018
loan
|
Dec. 31, 2018
USD ($)
loan
|
Dec. 31, 2017
USD ($)
loan
|
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Number of loans removed from TDR resignation | loan | 0 | ||
Recorded investment of loans removed from TDR resignation | $ 247,000 | ||
Recorded investment in Troubled Debt Restructurings | 14,406,000 | $ 16,520,000 | |
Acquired loans included in TDR | $ 0 | 0 | |
TDR loans on non-accrual status | loan | 2 | ||
TDR loans on non-accrual status, value | $ 65,000 | ||
TDR loans accruing interest as of period end | 0 | ||
Commercial | Commercial and industrial | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Recorded investment in Troubled Debt Restructurings | 1,506,000 | 2,165,000 | |
Commercial real estate | Commercial real estate, owner-occupied | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Recorded investment in Troubled Debt Restructurings | 6,993,000 | 6,999,000 | |
Commercial real estate | Commercial real estate, investor | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Recorded investment in Troubled Debt Restructurings | 1,821,000 | 2,171,000 | |
Commercial real estate | Construction | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Recorded investment in Troubled Debt Restructurings | 2,688,000 | 2,969,000 | |
Residential loans | Home equity | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Number of loans removed from TDR resignation | loan | 1 | ||
Recorded investment in Troubled Debt Restructurings | $ 251,000 | 347,000 | |
Residential loans | Other residential | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Number of loans removed from TDR resignation | loan | 1 | ||
Recorded investment in Troubled Debt Restructurings | $ 462,000 | 1,148,000 | |
Consumer loans | Installment and other consumer | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Recorded investment in Troubled Debt Restructurings | $ 685,000 | $ 721,000 |
Loans and Allowance for Loan Losses - Troubled Debt Restructuring Modifications (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
contract
|
Dec. 31, 2017
USD ($)
contract
|
|
Financing Receivable, Modifications [Line Items] | ||
Total of TDR loans charged-off within previous 12 months | $ 0 | $ 0 |
Consumer loans | Installment and other consumer | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts Modified | contract | 2 | 1 |
Pre-Modification Outstanding Recorded Investment | $ 254,000 | $ 50,000 |
Post-Modification Outstanding Recorded Investment | 245,000 | 50,000 |
Post-Modification Outstanding Recorded Investment at Period End | $ 172,000 | $ 47,000 |
Loans and Allowance for Loan Losses - Impaired Loans and Related Allowance (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Recorded investment in impaired loans: | ||
With no specific allowance recorded | $ 3,877,000 | $ 4,445,000 |
With a specific allowance recorded | 11,161,000 | 12,481,000 |
Total recorded investment in impaired loans | 15,038,000 | 16,926,000 |
Unpaid principal balance of impaired loans: | ||
Total unpaid principal balance of impaired loans | 15,013,000 | 17,019,000 |
Specific valuation | 778,000 | 513,000 |
Average recorded investment in impaired loans during the period | 15,977,000 | 17,929,000 |
Interest income recognized on impaired loans | 837,000 | 825,000 |
Charged-off portion of impaired loans | 0 | 0 |
Outstanding commitments to extend credit on impaired loans | 1,100,000 | 935,000 |
Interest income recognized on impaired loans during the period ended, cash basis | 135,000,000 | 100,000,000 |
Commercial | Commercial and industrial | ||
Recorded investment in impaired loans: | ||
With no specific allowance recorded | 303,000 | 309,000 |
With a specific allowance recorded | 1,522,000 | 1,856,000 |
Total recorded investment in impaired loans | 1,825,000 | 2,165,000 |
Unpaid principal balance of impaired loans: | ||
Total unpaid principal balance of impaired loans | 1,813,000 | 2,278,000 |
Specific valuation | 466,000 | 50,000 |
Average recorded investment in impaired loans during the period | 1,980,000 | 2,113,000 |
Interest income recognized on impaired loans | 239,000 | 202,000 |
Commercial real estate | Commercial real estate, owner-occupied | ||
Recorded investment in impaired loans: | ||
With no specific allowance recorded | 0 | 0 |
With a specific allowance recorded | 6,993,000 | 6,999,000 |
Total recorded investment in impaired loans | 6,993,000 | 6,999,000 |
Unpaid principal balance of impaired loans: | ||
Total unpaid principal balance of impaired loans | 6,993,000 | 6,993,000 |
Specific valuation | 189,000 | 188,000 |
Average recorded investment in impaired loans during the period | 7,000,000 | 6,998,000 |
Interest income recognized on impaired loans | 266,000 | 266,000 |
Commercial real estate | Commercial real estate, investor | ||
Recorded investment in impaired loans: | ||
With no specific allowance recorded | 0 | 0 |
With a specific allowance recorded | 1,821,000 | 2,171,000 |
Total recorded investment in impaired loans | 1,821,000 | 2,171,000 |
Unpaid principal balance of impaired loans: | ||
Total unpaid principal balance of impaired loans | 1,812,000 | 2,168,000 |
Specific valuation | 45,000 | 159,000 |
Average recorded investment in impaired loans during the period | 1,904,000 | 2,842,000 |
Interest income recognized on impaired loans | 83,000 | 87,000 |
Commercial real estate | Construction | ||
Recorded investment in impaired loans: | ||
With no specific allowance recorded | 2,688,000 | 2,689,000 |
With a specific allowance recorded | 0 | 280,000 |
Total recorded investment in impaired loans | 2,688,000 | 2,969,000 |
Unpaid principal balance of impaired loans: | ||
Total unpaid principal balance of impaired loans | 2,688,000 | 2,963,000 |
Specific valuation | 0 | 7,000 |
Average recorded investment in impaired loans during the period | 2,803,000 | 3,132,000 |
Interest income recognized on impaired loans | 156,000 | 147,000 |
Residential loans | Home equity | ||
Recorded investment in impaired loans: | ||
With no specific allowance recorded | 313,000 | 406,000 |
With a specific allowance recorded | 251,000 | 347,000 |
Total recorded investment in impaired loans | 564,000 | 753,000 |
Unpaid principal balance of impaired loans: | ||
Total unpaid principal balance of impaired loans | 562,000 | 750,000 |
Specific valuation | 5,000 | 6,000 |
Average recorded investment in impaired loans during the period | 671,000 | 679,000 |
Interest income recognized on impaired loans | 19,000 | 24,000 |
Residential loans | Other residential | ||
Recorded investment in impaired loans: | ||
With no specific allowance recorded | 462,000 | 995,000 |
With a specific allowance recorded | 0 | 153,000 |
Total recorded investment in impaired loans | 462,000 | 1,148,000 |
Unpaid principal balance of impaired loans: | ||
Total unpaid principal balance of impaired loans | 461,000 | 1,147,000 |
Specific valuation | 0 | 1,000 |
Average recorded investment in impaired loans during the period | 915,000 | 1,324,000 |
Interest income recognized on impaired loans | 45,000 | 62,000 |
Consumer loans | Installment and other consumer | ||
Recorded investment in impaired loans: | ||
With no specific allowance recorded | 111,000 | 46,000 |
With a specific allowance recorded | 574,000 | 675,000 |
Total recorded investment in impaired loans | 685,000 | 721,000 |
Unpaid principal balance of impaired loans: | ||
Total unpaid principal balance of impaired loans | 684,000 | 720,000 |
Specific valuation | 73,000 | 102,000 |
Average recorded investment in impaired loans during the period | 704,000 | 841,000 |
Interest income recognized on impaired loans | $ 29,000 | $ 37,000 |
Loans and Allowance for Loan Losses - Allowance for Loan Losses (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Allowance for Loan and Lease Losses [Roll Forward] | ||
Beginning balance | $ 15,767 | $ 15,442 |
Provision (reversal) | 0 | 500 |
Charge-offs | (5) | (293) |
Recoveries | 59 | 118 |
Ending balance | 15,821 | 15,767 |
Ending ALLL related to loans collectively evaluated for impairment | 15,043 | 15,254 |
Ending ALLL related to loans individually evaluated for impairment | 778 | 513 |
Ending ALLL related to purchased credit-impaired loans | 15,821 | 15,767 |
Recorded Investment: | ||
Collectively evaluated for impairment | 1,746,714 | 1,659,972 |
Individually evaluated for impairment | 15,038 | 16,926 |
Total loans | $ 1,763,864 | $ 1,679,013 |
Ratio of allowance for loan losses to total loans | 0.90% | 0.94% |
Allowance for loan losses to non-accrual loans | 2270.00% | 3883.00% |
Purchased credit-impaired | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Ending ALLL related to purchased credit-impaired loans | $ 0 | $ 0 |
Recorded Investment: | ||
Purchased credit-impaired | 2,112 | 2,115 |
Commercial | Commercial and industrial | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Beginning balance | 3,654 | 3,248 |
Provision (reversal) | (1,232) | 584 |
Charge-offs | (3) | (289) |
Recoveries | 17 | 111 |
Ending balance | 2,436 | 3,654 |
Ending ALLL related to loans collectively evaluated for impairment | 1,970 | 3,604 |
Ending ALLL related to loans individually evaluated for impairment | 466 | 50 |
Ending ALLL related to purchased credit-impaired loans | 2,436 | 3,654 |
Recorded Investment: | ||
Collectively evaluated for impairment | 228,883 | 233,605 |
Individually evaluated for impairment | 1,825 | 2,165 |
Total loans | $ 230,739 | $ 235,835 |
Ratio of allowance for loan losses to total loans | 1.06% | 1.55% |
Commercial | Commercial and industrial | Purchased credit-impaired | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Ending ALLL related to purchased credit-impaired loans | $ 0 | $ 0 |
Recorded Investment: | ||
Purchased credit-impaired | 31 | 65 |
Commercial real estate | Commercial real estate, owner-occupied | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Beginning balance | 2,294 | 1,753 |
Provision (reversal) | 113 | 541 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Ending balance | 2,407 | 2,294 |
Ending ALLL related to loans collectively evaluated for impairment | 2,218 | 2,106 |
Ending ALLL related to loans individually evaluated for impairment | 189 | 188 |
Ending ALLL related to purchased credit-impaired loans | 2,407 | 2,294 |
Recorded Investment: | ||
Collectively evaluated for impairment | 305,097 | 292,798 |
Individually evaluated for impairment | 6,993 | 6,999 |
Total loans | $ 313,277 | $ 300,963 |
Ratio of allowance for loan losses to total loans | 0.77% | 0.76% |
Commercial real estate | Commercial real estate, owner-occupied | Purchased credit-impaired | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Ending ALLL related to purchased credit-impaired loans | $ 0 | $ 0 |
Recorded Investment: | ||
Purchased credit-impaired | 1,187 | 1,166 |
Commercial real estate | Commercial real estate, investor | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Beginning balance | 6,475 | 6,320 |
Provision (reversal) | 1,228 | 155 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Ending balance | 7,703 | 6,475 |
Ending ALLL related to loans collectively evaluated for impairment | 7,658 | 6,316 |
Ending ALLL related to loans individually evaluated for impairment | 45 | 159 |
Ending ALLL related to purchased credit-impaired loans | 7,703 | 6,475 |
Recorded Investment: | ||
Collectively evaluated for impairment | 870,778 | 820,023 |
Individually evaluated for impairment | 1,821 | 2,171 |
Total loans | $ 873,410 | $ 822,984 |
Ratio of allowance for loan losses to total loans | 0.88% | 0.79% |
Commercial real estate | Commercial real estate, investor | Purchased credit-impaired | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Ending ALLL related to purchased credit-impaired loans | $ 0 | $ 0 |
Recorded Investment: | ||
Purchased credit-impaired | 811 | 790 |
Commercial real estate | Construction | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Beginning balance | 681 | 781 |
Provision (reversal) | 75 | (100) |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Ending balance | 756 | 681 |
Ending ALLL related to loans collectively evaluated for impairment | 756 | 674 |
Ending ALLL related to loans individually evaluated for impairment | 0 | 7 |
Ending ALLL related to purchased credit-impaired loans | 756 | 681 |
Recorded Investment: | ||
Collectively evaluated for impairment | 73,735 | 60,859 |
Individually evaluated for impairment | 2,688 | 2,969 |
Total loans | $ 76,423 | $ 63,828 |
Ratio of allowance for loan losses to total loans | 0.99% | 1.07% |
Commercial real estate | Construction | Purchased credit-impaired | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Ending ALLL related to purchased credit-impaired loans | $ 0 | $ 0 |
Recorded Investment: | ||
Purchased credit-impaired | 0 | 0 |
Residential loans | Home equity | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Beginning balance | 1,031 | 973 |
Provision (reversal) | (116) | 58 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Ending balance | 915 | 1,031 |
Ending ALLL related to loans collectively evaluated for impairment | 910 | 1,025 |
Ending ALLL related to loans individually evaluated for impairment | 5 | 6 |
Ending ALLL related to purchased credit-impaired loans | 915 | 1,031 |
Recorded Investment: | ||
Collectively evaluated for impairment | 124,049 | 131,620 |
Individually evaluated for impairment | 564 | 753 |
Total loans | $ 124,696 | $ 132,467 |
Ratio of allowance for loan losses to total loans | 0.73% | 0.78% |
Allowance for loan losses to non-accrual loans | 292.00% | 254.00% |
Residential loans | Home equity | Purchased credit-impaired | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Ending ALLL related to purchased credit-impaired loans | $ 0 | $ 0 |
Recorded Investment: | ||
Purchased credit-impaired | 83 | 94 |
Residential loans | Other residential | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Beginning balance | 536 | 454 |
Provision (reversal) | 264 | 82 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Ending balance | 800 | 536 |
Ending ALLL related to loans collectively evaluated for impairment | 800 | 535 |
Ending ALLL related to loans individually evaluated for impairment | 0 | 1 |
Ending ALLL related to purchased credit-impaired loans | 800 | 536 |
Recorded Investment: | ||
Collectively evaluated for impairment | 117,385 | 94,378 |
Individually evaluated for impairment | 462 | 1,148 |
Total loans | $ 117,847 | $ 95,526 |
Ratio of allowance for loan losses to total loans | 0.68% | 0.56% |
Residential loans | Other residential | Purchased credit-impaired | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Ending ALLL related to purchased credit-impaired loans | $ 0 | $ 0 |
Recorded Investment: | ||
Purchased credit-impaired | 0 | 0 |
Consumer loans | Installment and other consumer | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Beginning balance | 378 | 372 |
Provision (reversal) | (108) | 3 |
Charge-offs | (2) | (4) |
Recoveries | 42 | 7 |
Ending balance | 310 | 378 |
Ending ALLL related to loans collectively evaluated for impairment | 237 | 276 |
Ending ALLL related to loans individually evaluated for impairment | 73 | 102 |
Ending ALLL related to purchased credit-impaired loans | 310 | 378 |
Recorded Investment: | ||
Collectively evaluated for impairment | 26,787 | 26,689 |
Individually evaluated for impairment | 685 | 721 |
Total loans | $ 27,472 | $ 27,410 |
Ratio of allowance for loan losses to total loans | 1.13% | 1.38% |
Consumer loans | Installment and other consumer | Purchased credit-impaired | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Ending ALLL related to purchased credit-impaired loans | $ 0 | $ 0 |
Recorded Investment: | ||
Purchased credit-impaired | 0 | 0 |
Unallocated | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Beginning balance | 718 | 1,541 |
Provision (reversal) | (224) | (823) |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Ending balance | 494 | 718 |
Ending ALLL related to loans collectively evaluated for impairment | 494 | 718 |
Ending ALLL related to loans individually evaluated for impairment | 0 | 0 |
Ending ALLL related to purchased credit-impaired loans | 494 | 718 |
Recorded Investment: | ||
Collectively evaluated for impairment | 0 | 0 |
Individually evaluated for impairment | 0 | 0 |
Total loans | 0 | 0 |
Unallocated | Purchased credit-impaired | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Ending ALLL related to purchased credit-impaired loans | 0 | 0 |
Recorded Investment: | ||
Purchased credit-impaired | $ 0 | $ 0 |
Loans and Allowance for Loan Losses - Purchased Credit-Impaired Loans (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
acquisition
|
Dec. 31, 2017
USD ($)
|
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of Businesses Acquired | acquisition | 3 | |
PCI Loans, Carrying Value [Abstract] | ||
Unpaid Principal Balance | $ 2,579 | $ 2,868 |
Carrying Value | 2,112 | 2,115 |
Accretable Yield [Roll Forward] | ||
Balance at beginning of period | 1,254 | 1,476 |
Additions | 0 | 109 |
Accretion | (320) | (331) |
Balance at end of period | 934 | 1,254 |
Commercial | Commercial and industrial | ||
PCI Loans, Carrying Value [Abstract] | ||
Unpaid Principal Balance | 89 | 276 |
Carrying Value | 31 | 65 |
Commercial real estate | Commercial real estate, owner-occupied | ||
PCI Loans, Carrying Value [Abstract] | ||
Unpaid Principal Balance | 1,247 | 1,297 |
Carrying Value | 1,187 | 1,166 |
Commercial real estate | Commercial real estate, investor | ||
PCI Loans, Carrying Value [Abstract] | ||
Unpaid Principal Balance | 1,033 | 1,064 |
Carrying Value | 811 | 790 |
Residential loans | Home equity | ||
PCI Loans, Carrying Value [Abstract] | ||
Unpaid Principal Balance | 210 | 231 |
Carrying Value | $ 83 | $ 94 |
Loans and Allowance for Loan Losses - Pledged Loans (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Certain qualifying loans pledged for FHLB line of credit | $ 1,027.4 | $ 887.9 |
Other residential | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Residential loans pledged for FRB borrowings | $ 94.5 | $ 67.6 |
Loans and Allowance for Loan Losses - Related Party Loans (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
director
|
|
Loans and Leases Receivable, Related Parties [Roll Forward] | ||
Balance at beginning of year | $ 11,852 | $ 1,988 |
Additions | 863 | 3,186 |
Advances | 0 | 74 |
Repayments | (2,080) | (128) |
Reclassified due to a change in borrower status | 0 | 6,732 |
Balance at end of year | 10,635 | $ 11,852 |
Directors, Officers, Principal Shareholders and Associates | ||
Related Party Transaction [Line Items] | ||
Number of new board of directors | director | 2 | |
Undisbursed commitment to related parties | $ 9,100 | $ 9,100 |
Bank Premises and Equipment (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Line Items] | ||
Bank premises and equipment, Gross | $ 25,863 | $ 26,050 |
Accumulated depreciation and amortization | (18,487) | (17,438) |
Bank premises and equipment, net | 7,376 | 8,612 |
Depreciation and amortization | 2,100 | 1,900 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Bank premises and equipment, Gross | 15,024 | 14,937 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Bank premises and equipment, Gross | $ 10,839 | $ 11,113 |
Bank Owned Life Insurance (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Insurance [Abstract] | ||
Estimated death benefits | $ 82,200 | |
Death benefits provided under terms of the programs | 39,000 | $ 38,100 |
Earnings on bank-owned life Insurance | $ 913 | $ 845 |
Deposits - Stratification of Time Deposits (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Banking and Thrift [Abstract] | ||
Time deposits of less than $100 thousand | $ 34,638 | $ 39,361 |
Time deposits of $100 thousand to $250 thousand | 51,690 | 68,391 |
Time deposits of more than $250 thousand | 30,854 | 52,364 |
Total time deposits | $ 117,182 | $ 160,116 |
Deposits - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Banking and Thrift [Abstract] | ||
Interest on time accounts | $ 542 | $ 576 |
Held-to-maturity securities pledged as collateral | 125,700 | |
CDARS balance in reciprocal deposit program | 7,700 | 13,500 |
ICS balance in reciprocal deposit program | 44,100 | 41,000 |
DDM balance in reciprocal deposit program | 22,700 | 29,200 |
One-way CDARS deposits | 15,200 | 4,200 |
Deposit overdrafts reclassified as loan balances | 131 | 224 |
Related party deposit liabilities | $ 33,300 | $ 29,900 |
Deposits - Time Deposit Maturities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Scheduled maturities of time deposits | ||
2019 | $ 76,880 | |
2020 | 13,711 | |
2021 | 14,366 | |
2022 | 8,138 | |
2023 | 4,064 | |
Thereafter | 23 | |
Total time deposits | $ 117,182 | $ 160,116 |
Borrowings - Lines of Credit and Borrowing Agreements (Details) - Line of Credit - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
Feb. 05, 2008 |
---|---|---|---|
Federal Home Loan Bank Borrowings | |||
Line of Credit Facility [Line Items] | |||
Fixed interest rate of FHLB borrowing agreement | 2.56% | ||
Amount of FHLB borrowings outstanding | $ 0 | $ 0 | |
Federal Home Loan Bank | |||
Line of Credit Facility [Line Items] | |||
Lines of credit | 629,400,000 | 538,900,000 | |
Federal Home Loan Bank Overnight Borrowings | |||
Line of Credit Facility [Line Items] | |||
Amount of FHLB borrowings outstanding | 0 | ||
Federal Funds Purchased | |||
Line of Credit Facility [Line Items] | |||
Lines of credit | 92,000,000 | 100,400,000 | |
Short-term Debt | 0 | 0 | |
Federal Home Loan Bank Overnight Borrowings | |||
Line of Credit Facility [Line Items] | |||
Short-term Debt | 7,000,000 | ||
Federal Home Loan Bank Borrowings | |||
Line of Credit Facility [Line Items] | |||
Short-term Debt | 7,000,000 | 0 | |
Federal Reserve Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Lines of credit | 69,700,000 | $ 52,100,000 | |
Amount of FHLB borrowings outstanding | $ 0 |
Borrowings - Subordinated Debt (Details) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Oct. 07, 2018
USD ($)
|
Nov. 29, 2013
USD ($)
debenture
|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Debt Instrument [Line Items] | ||||
Number of subordinated debentures acquired | debenture | 2 | |||
Accretion of discount on subordinated debentures | $ 1,025 | $ 153 | ||
Amount guaranteed, on subordinated basis, distributions and other payments on trust preferred securities | 4,000 | |||
Subordinated debenture | ||||
Debt Instrument [Line Items] | ||||
Subordinated debenture | $ 4,950 | |||
Long-term debt | $ 8,200 | |||
Accretion of discount on subordinated debentures | $ 916 | 1,025 | $ 153 | |
Subordinated debenture | NorCal Community Bancorp Trust II | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 4,124 | |||
Basis spread on variable rate | 1.40% | |||
Interest rate, effective percentage | 4.19% | |||
Subordinated debenture | Maximum | ||||
Debt Instrument [Line Items] | ||||
Debenture distribution deferral period | 5 years |
Borrowings - Schedule of Borrowings (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Oct. 07, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Debt Instrument [Line Items] | |||
Subordinated debenture, Carrying Value | $ 2,640 | $ 5,739 | |
Accretion of discount on subordinated debentures | 1,025 | 153 | |
Subordinated debenture | |||
Debt Instrument [Line Items] | |||
Subordinated debenture, Carrying Value | 2,640 | 5,739 | |
Subordinated debenture, Average Balance | $ 5,025 | $ 5,664 | |
Borrowings, Average Rate | 26.29% | 7.65% | |
Accretion of discount on subordinated debentures | $ 916 | $ 1,025 | $ 153 |
Line of Credit | Federal Home Loan Bank Borrowings | |||
Debt Instrument [Line Items] | |||
FHLB overnight borrowings and advances, Carrying Value | 0 | 0 | |
FHLB overnight borrowings and advances, Average Balance | $ 0 | $ 0 | |
Borrowings, Average Rate | 0.00% | 0.00% | |
Federal Home Loan Bank Borrowings | Line of Credit | |||
Debt Instrument [Line Items] | |||
Short-term Debt | $ 7,000 | $ 0 | |
FHLB overnight borrowings and advances, Average Balance | $ 105 | $ 1 | |
Borrowings, Average Rate | 2.03% | 1.75% |
Stockholders' Equity and Stock Plans - Narrative (Details) |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 25, 2019
$ / shares
|
Nov. 27, 2018 |
Jul. 01, 2017
shares
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
$ / shares
shares
|
Dec. 31, 2017
USD ($)
$ / shares
shares
|
Apr. 23, 2018
USD ($)
|
Jul. 06, 2017
$ / shares
shares
|
May 11, 2010
shares
|
||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock split ratio | 2 | |||||||||||
Shares withheld for tax withholding and exercise of options (in shares) | 46,794 | 24,416 | ||||||||||
Adjustments related to tax withholding and exercise of options for share-based compensation | $ | $ 1,700,000 | $ 801,000 | ||||||||||
Shares withheld for tax withholding and exercise of options, weighted average price (usd per share) | $ / shares | $ 36.28 | $ 32.82 | ||||||||||
Total compensation cost for share-based payment arrangements | $ | $ 1,700,000 | $ 1,300,000 | ||||||||||
Share-based compensation income tax benefit recognized | $ | 404,000 | 293,000 | ||||||||||
Unrecognized compensation expense | $ | $ 1,100,000 | |||||||||||
Period for recognizing unrecognized compensation expense | 1 year 10 months 25 days | |||||||||||
Excess tax benefits recorded as a reduction to income tax expense | $ | $ 484,000 | $ 214,000 | ||||||||||
Percentage of share ownership defining an acquiring person | 10.00% | |||||||||||
Preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 | ||||||||||
Preferred stock, no par value (in dollars per share) | $ / shares | $ 0 | $ 0 | ||||||||||
Amount reclassified from AOCI to retained earnings representing stranded tax income effects | $ | $ 638,000 | |||||||||||
Stock repurchase program, authorized amount | $ | $ 25,000,000.0 | |||||||||||
Stock repurchased, net of commissions (in shares) | 171,217 | |||||||||||
Stock repurchased, net of commissions | $ | $ 7,012,000 | |||||||||||
Subsequent event | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Dividends declared per common share (usd per share) | $ / shares | $ 0.19 | |||||||||||
Restricted stock award | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Total grant-date fair value of option shares vested | $ | $ 967,000 | $ 473,000 | ||||||||||
Restricted stock award | During 2006 through 2014 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Award vesting period | 5 years | |||||||||||
Expiration period of grants | 10 years | |||||||||||
Restricted stock award | During 2006 through 2014 | Vesting Rate, Year One | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Restricted stock award | During 2006 through 2014 | Vesting Rate, Year Two | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Restricted stock award | During 2006 through 2014 | Vesting Rate Year Three | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Restricted stock award | During 2006 through 2014 | Vesting Rate Year Four | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Restricted stock award | During 2006 through 2014 | Vesting Rate Year Five | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Expiration period of grants | 10 years | |||||||||||
Total grant-date fair value of option shares vested | $ | $ 543,000 | $ 449,000 | ||||||||||
Stock options | During 2006 through 2014 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Award vesting period | 5 years | |||||||||||
Expiration period of grants | 10 years | |||||||||||
Stock options | During 2006 through 2014 | Vesting Rate, Year One | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | During 2006 through 2014 | Vesting Rate, Year Two | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | During 2006 through 2014 | Vesting Rate Year Three | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | During 2006 through 2014 | Vesting Rate Year Four | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | During 2006 through 2014 | Vesting Rate Year Five | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | Prior to 2016 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Award vesting period | 4 years | |||||||||||
Expiration period of grants | 7 years | |||||||||||
Stock options | Prior to 2016 | Vesting Rate, Year One | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | Prior to 2016 | Immediately Upon Grant | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | Prior to 2016 | Vesting Rate, Year Two | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | Prior to 2016 | Vesting Rate Year Three | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | Prior to 2016 | Vesting Rate Year Four | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 20.00% | |||||||||||
Stock options | Subsequent To January 1, 2015 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 33.00% | |||||||||||
Award vesting period | 3 years | |||||||||||
Expiration period of grants | 10 years | |||||||||||
Stock options | During 2016 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 33.00% | |||||||||||
Award vesting period | 3 years | |||||||||||
Expiration period of grants | 10 years | |||||||||||
Performance shares | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Award vesting period | 3 years | |||||||||||
Minimum | Performance shares | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 0.00% | |||||||||||
Maximum | Performance shares | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 200.00% | |||||||||||
Director Stock Plan, 2010 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Shares approved to be issued in common stock (in shares) | 300,000 | |||||||||||
Number of shares available for future grants under plan (in shares) | 214,398 | |||||||||||
Employee Stock Purchase Plan, 2007 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Shares approved to be issued in common stock (in shares) | 400,000 | |||||||||||
Number of shares available for future grants under plan (in shares) | 383,870 | |||||||||||
Discount from closing market price at end of each quarter | 500.00% | |||||||||||
Employee Stock Purchase Plan, 2007 | Minimum | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Approved payroll deduction to purchase shares, percentage | 100.00% | |||||||||||
Employee Stock Purchase Plan, 2007 | Maximum | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Approved payroll deduction to purchase shares, percentage | 1500.00% | |||||||||||
The 2017 Equity Plan | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Number of shares available for future grants under plan (in shares) | 1,047,784 | |||||||||||
Common Stock | Director Stock Plan, 2010 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Shares awarded in period from plan (in shares) | 5,470 | 5,756 | ||||||||||
Series A Junior Participating Preferred Stock | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Preferred stock, authorized (in shares) | 1,000,000 | |||||||||||
Preferred stock, no par value (in dollars per share) | $ / shares | $ 0 | |||||||||||
Retained Earnings | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Amount reclassified from AOCI to retained earnings representing stranded tax income effects | $ | $ 638,000 | $ 638,000 | ||||||||||
Common Stock | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Shares withheld for tax withholding and exercise of options (in shares) | [1] | 1,316 | ||||||||||
Stock repurchased, net of commissions (in shares) | [1] | 171,217 | ||||||||||
Stock repurchased, net of commissions | $ | $ 7,012,000 | |||||||||||
Series A Junior Participating Preferred Stock | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Exercise price of rights (in dollars per share) | $ / shares | $ 0.9 | |||||||||||
Number of securities called by each right (in shares) | 0.005 | |||||||||||
|
Stockholders' Equity and Stock Plans - Options Outstanding Rollforward (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Number of Shares | |||
Options outstanding, beginning balance (in shares) | 517,936 | 363,578 | |
Granted (in shares) | 74,096 | 201,328 | |
Cancelled, expired or forfeited (in shares) | (9,140) | (4,022) | |
Exercised (in shares) | (157,192) | (42,948) | |
Options outstanding, ending balance (in shares) | 425,700 | 517,936 | 363,578 |
Exercisable (vested), ending balance (in shares) | 311,050 | 384,344 | |
Weighted Average Exercise Price | |||
Options outstanding, beginning balance (usd per share) | $ 20.42 | $ 20.60 | |
Granted (usd per share) | 33.97 | 19.89 | |
Cancelled, expired or forfeited (usd per share) | 28.25 | 21.99 | |
Exercised (usd per share) | 13.93 | 19.31 | |
Options outstanding, ending balance (usd per share) | 25.01 | 20.42 | $ 20.60 |
Exercisable (vested), ending balance (usd per share) | $ 22.57 | $ 17.85 | |
Aggregate Intrinsic Value | |||
Options outstanding, beginning balance | $ 7,075 | $ 5,190 | |
Exercised | 3,462 | 585 | |
Options outstanding, ending balance | 6,910 | 7,075 | $ 5,190 |
Exercisable (vested) at year end | $ 5,809 | $ 6,212 | |
Weighted Average Grant-Date Fair Value | |||
Granted (usd per share) | $ 7.17 | $ 16.31 | |
Weighted Average Remaining Contractual Term | |||
Options outstanding | 5 years 10 months 6 days | 5 years 4 months 2 days | 5 years 9 months 7 days |
Exercisable (vested) | 4 years 11 months 8 days | 4 years 5 months 1 day | |
Bank of Napa, N.A. (Napa) | |||
Weighted Average Exercise Price | |||
Options outstanding, beginning balance (usd per share) | $ 13.60 | ||
Options outstanding, ending balance (usd per share) | $ 13.60 | ||
Weighted Average Grant-Date Fair Value | |||
Granted (usd per share) | $ 20.36 | ||
Weighted Average Remaining Contractual Term | |||
Number of options issued in merger | 140,290 |
Stockholders' Equity and Stock Plans - Non-vested Awards Activity (Details) - Restricted Stock Awards - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Number of Shares | ||
Non-vested awards, beginning balance (in shares) | 91,216 | 79,398 |
Granted (in shares) | 37,040 | 32,460 |
Vested (in shares) | (28,812) | (20,642) |
Forfeited (in shares) | (12,056) | |
Non-vested awards, ending balance (in shares) | 87,388 | 91,216 |
Weighted Average Grant-Date Fair Value | ||
Non-vested awards, beginning balance (usd per share) | $ 28.16 | $ 24.08 |
Granted (usd per share) | 33.58 | 34.80 |
Vested (usd per share) | 26.06 | 22.89 |
Forfeited (usd per share) | 27.32 | |
Non-vested awards, ending balance (usd per share) | $ 31.26 | $ 28.16 |
Stockholders' Equity and Stock Plans - Options Outstanding by Price Range (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Options Outstanding (in shares) | 425,700 | 517,936 | 363,578 |
Stock Options Outstanding, Remaining Contractual Life | 5 years 10 months 6 days | 5 years 4 months 2 days | 5 years 9 months 7 days |
Weighted Average Exercise Price (usd per share) | $ 25.01 | $ 20.42 | $ 20.60 |
$0.00 - $10.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Range of Exercise Prices, Lower Limit (usd per share) | 0.00 | ||
Range of Exercise Prices, Upper Limit (usd per share) | 10.00 | ||
$10.01 - $20.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Range of Exercise Prices, Lower Limit (usd per share) | 10.00 | ||
Range of Exercise Prices, Upper Limit (usd per share) | 20.00 | ||
$20.01 - $30.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Range of Exercise Prices, Lower Limit (usd per share) | 20.01 | ||
Range of Exercise Prices, Upper Limit (usd per share) | 30.00 | ||
$30.01 - $40.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Range of Exercise Prices, Lower Limit (usd per share) | 30.01 | ||
Range of Exercise Prices, Upper Limit (usd per share) | 40.00 | ||
$40.01 - $50.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Range of Exercise Prices, Lower Limit (usd per share) | 40.01 | ||
Range of Exercise Prices, Upper Limit (usd per share) | $ 50.00 | ||
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Options Outstanding (in shares) | 425,700 | ||
Stock Options Outstanding, Remaining Contractual Life | |||
Stock Options Exercisable (in shares) | 311,050 | ||
Stock options | $0.00 - $10.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Options Outstanding (in shares) | 4,604 | ||
Stock Options Outstanding, Remaining Contractual Life | 3 years 1 month 6 days | ||
Weighted Average Exercise Price (usd per share) | $ 8.96 | ||
Stock Options Exercisable (in shares) | 4,604 | ||
Stock Options Exercisable, Weighted Average Exercise Price (usd per share) | $ 8.96 | ||
Stock options | $10.01 - $20.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Options Outstanding (in shares) | 110,394 | ||
Stock Options Outstanding, Remaining Contractual Life | 2 years 3 months 18 days | ||
Weighted Average Exercise Price (usd per share) | $ 16.94 | ||
Stock Options Exercisable (in shares) | 110,394 | ||
Stock Options Exercisable, Weighted Average Exercise Price (usd per share) | $ 16.94 | ||
Stock options | $20.01 - $30.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Options Outstanding (in shares) | 179,828 | ||
Stock Options Outstanding, Remaining Contractual Life | 6 years | ||
Weighted Average Exercise Price (usd per share) | $ 23.73 | ||
Stock Options Exercisable (in shares) | 151,808 | ||
Stock Options Exercisable, Weighted Average Exercise Price (usd per share) | $ 23.63 | ||
Stock options | $30.01 - $40.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Options Outstanding (in shares) | 127,040 | ||
Stock Options Outstanding, Remaining Contractual Life | 8 years 9 months 18 days | ||
Weighted Average Exercise Price (usd per share) | $ 33.94 | ||
Stock Options Exercisable (in shares) | 40,410 | ||
Stock Options Exercisable, Weighted Average Exercise Price (usd per share) | $ 33.78 | ||
Stock options | $40.01 - $50.00 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock Options Outstanding (in shares) | 3,834 | ||
Stock Options Outstanding, Remaining Contractual Life | 9 years 6 months | ||
Weighted Average Exercise Price (usd per share) | $ 40.70 | ||
Stock Options Exercisable (in shares) | 3,834 | ||
Stock Options Exercisable, Weighted Average Exercise Price (usd per share) | $ 40.70 |
Stockholders' Equity and Stock Plans - Valuation Assumptions (Details) - Stock options |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 2.60% | 1.66% |
Expected dividend yield on common stock | 1.76% | 1.70% |
Expected life in years | 5 years 10 months 24 days | 2 years 4 months 24 days |
Expected price volatility | 22.47% | 25.58% |
Stockholders' Equity and Stock Plans - Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Equity [Abstract] | |||
Cash dividends to common stockholders | $ 8,860 | $ 6,896 | |
Cash dividends per common share (usd per share) | $ 0.64 | $ 0.56 | |
Retained earnings | $ 179,944 | $ 155,544 | |
Stockholders' equity | $ 316,407 | $ 297,025 | $ 230,563 |
Period used to determine amount available for payment of dividends based on restriction (in years) | 3 years | ||
Amount of retained earnings available for payment of dividends based on restriction | $ 24,900 | ||
Cash held | $ 19,100 |
Fair Value of Assets and Liabilities - Recorded on a Recurring Basis (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
security
|
Dec. 31, 2017
USD ($)
security
|
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | $ 462,464 | $ 332,467 |
Derivative financial assets (interest rate contracts) | 161 | 74 |
Derivative financial liabilities (interest rate contracts) | $ 375 | $ 740 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of securities | security | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of securities | security | 1 | |
Assets and liabilities at fair value measured on a recurring basis | Carrying Value | Interest rate contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial assets (interest rate contracts) | $ 161 | $ 74 |
Derivative financial liabilities (interest rate contracts) | 375 | 740 |
Assets and liabilities at fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial assets (interest rate contracts) | 0 | 0 |
Derivative financial liabilities (interest rate contracts) | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Interest rate contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial assets (interest rate contracts) | 161 | 74 |
Derivative financial liabilities (interest rate contracts) | 375 | 740 |
Assets and liabilities at fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Interest rate contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial assets (interest rate contracts) | 0 | 0 |
Derivative financial liabilities (interest rate contracts) | 0 | 0 |
Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government agencies | Assets and liabilities at fair value measured on a recurring basis | Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 278,403 | 188,061 |
Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government agencies | Assets and liabilities at fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government agencies | Assets and liabilities at fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 278,403 | 188,061 |
Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government agencies | Assets and liabilities at fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
SBA-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 50,781 | 25,982 |
SBA-backed securities | Assets and liabilities at fair value measured on a recurring basis | Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 50,781 | 25,982 |
SBA-backed securities | Assets and liabilities at fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
SBA-backed securities | Assets and liabilities at fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 50,781 | 25,817 |
SBA-backed securities | Assets and liabilities at fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 165 |
Debentures of government sponsored agencies | Assets and liabilities at fair value measured on a recurring basis | Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 53,018 | 12,938 |
Debentures of government sponsored agencies | Assets and liabilities at fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
Debentures of government sponsored agencies | Assets and liabilities at fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 53,018 | 12,938 |
Debentures of government sponsored agencies | Assets and liabilities at fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
Privately issued CMOs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 297 | 1,431 |
Privately issued CMOs | Assets and liabilities at fair value measured on a recurring basis | Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 297 | 1,431 |
Privately issued CMOs | Assets and liabilities at fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
Privately issued CMOs | Assets and liabilities at fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 297 | 1,431 |
Privately issued CMOs | Assets and liabilities at fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
Obligations of state and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 77,960 | 97,491 |
Obligations of state and political subdivisions | Assets and liabilities at fair value measured on a recurring basis | Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 77,960 | 97,491 |
Obligations of state and political subdivisions | Assets and liabilities at fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
Obligations of state and political subdivisions | Assets and liabilities at fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 77,960 | 97,491 |
Obligations of state and political subdivisions | Assets and liabilities at fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 2,005 | 6,564 |
Corporate bonds | Assets and liabilities at fair value measured on a recurring basis | Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 2,005 | 6,564 |
Corporate bonds | Assets and liabilities at fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 0 | 0 |
Corporate bonds | Assets and liabilities at fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | 2,005 | 6,564 |
Corporate bonds | Assets and liabilities at fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | $ 0 | $ 0 |
Fair Value of Assets and Liabilities - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Financial assets: | ||
Investment securities held-to-maturity | $ 153,894 | $ 151,032 |
Fair Value Hierarcy (Level 1) | Carrying Value | ||
Financial assets: | ||
Cash and cash equivalents | 34,221 | 203,545 |
Fair Value Hierarcy (Level 1) | Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 34,221 | 203,545 |
Fair Value Hierarchy (Level 2) | Carrying Value | ||
Financial assets: | ||
Investment securities held-to-maturity | 157,206 | 151,032 |
Interest receivable | 8,292 | 7,501 |
Financial liabilities: | ||
Time deposits | 117,182 | 160,116 |
Interest payable | 104 | 191 |
Fair Value Hierarchy (Level 2) | Fair Value | ||
Financial assets: | ||
Investment securities held-to-maturity | 153,894 | 151,032 |
Interest receivable | 8,292 | 7,501 |
Financial liabilities: | ||
Time deposits | 116,584 | 159,540 |
Interest payable | 104 | 191 |
Fair Value Hierarchy (Level 3) | Carrying Value | ||
Financial assets: | ||
Loans, net | 1,748,043 | 1,663,246 |
Financial liabilities: | ||
Subordinated debentures | 2,640 | 5,739 |
Fair Value Hierarchy (Level 3) | Fair Value | ||
Financial assets: | ||
Loans, net | 1,700,971 | 1,650,198 |
Financial liabilities: | ||
Subordinated debentures | $ 3,268 | $ 5,118 |
Benefit Plans - Deferred Compensation Plan (Details) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
Jan. 01, 2017 |
|
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Interest rate earned on deferred amounts, prime rate first business day of year | 4.50% | 3.75% | ||
Deferred compensation obligation | $ 3.8 | $ 3.4 | ||
Annual Salary | Management | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Maximum percentage of compensation allowed to be deferred | 80.00% | |||
Deferred Bonus | Management | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Maximum percentage of compensation allowed to be deferred | 100.00% |
Benefit Plans - Defined Contribution Plan (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
date
|
Dec. 31, 2017
USD ($)
|
|
Defined Contribution Plan (the 401k Plan) | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Minimum age of eligible employee for 401(k) plan | 18 years | |
Minimum employment period to qualify for 401(k) plan | 90 days | |
Number of open enrollment dates for 401(k) plan | date | 4 | |
Minimum annual contribution per employee, percent of eligible compensation | 1.00% | |
Maximum annual contribution per employee, percent of eligible compensation | 50.00% | |
Annual vesting percentage | 20.00% | |
Defined contribution plan, number of years to be fully vested | 5 years | |
Employer matching contribution percentage | 70.00% | |
Employer matching contribution maximum amount | $ 5 | |
Employer contributions | $ 851 | $ 765 |
Bank of Marin Employee Stock Ownership and Savings Plan (the Plan) | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Defined contribution plan, number of years to be fully vested | 5 years | |
Cash contributed to the ESOP | $ 1,200 | $ 1,200 |
Benefit Plans - Salary Continuation Plan (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Retirement Benefits [Abstract] | ||
Percentage of salary paid upon retirement | 25.00% | |
Period before ratable vesting begins | 5 years | |
Age ratable vesting ends | 65 years | |
Liability under the Salary Continuation Plan | $ 2.7 | $ 2.5 |
Income Taxes - Components of Income Tax Provision (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 22, 2017 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Current tax provision | ||||
Federal | $ 7,289 | $ 5,379 | ||
State | 4,722 | 2,623 | ||
Total current | 12,011 | 8,002 | ||
Deferred tax (benefit) provision | ||||
Federal | (898) | 4,444 | ||
State | (318) | 416 | ||
Total deferred | (1,216) | 4,860 | ||
Total income tax provision | $ 10,795 | $ 12,862 | ||
Write-down to net deferred tax assets recorded as income tax expense | $ 3,000 | $ 3,000 |
Income Taxes - Deferred Tax Asset and Liability (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets: | ||
Allowance for loan losses and off-balance sheet credit commitments | $ 4,960,000 | $ 4,945,000 |
Net operating loss carryforwards | 2,271,000 | 2,629,000 |
Net unrealized loss on securities available-for-sale | 1,800,000 | 1,405,000 |
Deferred compensation plan and salary continuation plan | 1,940,000 | 1,744,000 |
State franchise tax | 993,000 | 557,000 |
Accrued but unpaid expenses | 1,153,000 | 212,000 |
Fair value adjustment on acquired loans | 364,000 | 570,000 |
Deferred rent and other lease incentives | 224,000 | 328,000 |
Depreciation and disposals on premises and equipment | 584,000 | 632,000 |
Stock-based compensation | 517,000 | 463,000 |
Interest received on non-accrual loans | 114,000 | 130,000 |
Other | 215,000 | 266,000 |
Total gross deferred tax assets | 15,135,000 | 13,881,000 |
Deferred tax liabilities: | ||
Deferred loan origination costs and fees | (2,360,000) | (2,153,000) |
Unaccreted discount on subordinated debentures | (439,000) | (742,000) |
Core deposit intangible assets | (1,647,000) | (1,919,000) |
Accretion on investment securities | (67,000) | (56,000) |
Other | (204,000) | (221,000) |
Total gross deferred tax liabilities | (4,717,000) | (5,091,000) |
Net deferred tax assets | 10,418,000 | 8,790,000 |
Valuation allowance of deferred tax assets | 0 | $ 0 |
Federal | ||
Deferred tax liabilities: | ||
Net operating loss carryforwards expected to expire | 3,900,000 | |
California | ||
Deferred tax liabilities: | ||
Net operating loss carryforwards expected to expire | $ 16,900,000 |
Income Taxes - Effective Income Tax Reconciliation (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 22, 2017 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Effective Income Tax Rate Reconciliation, Percent | ||||
Federal statutory income tax rate | 21.00% | 35.00% | ||
California franchise tax, net of federal tax benefit | 8.00% | 6.90% | ||
Write down of federal deferred tax assets, net | 0.00% | 10.50% | ||
Tax exempt interest on municipal securities and loans | (2.40%) | (6.10%) | ||
Tax exempt earnings on bank owned life insurance | (0.40%) | (1.00%) | ||
Non-deductible acquisition related expenses | 0.00% | 0.80% | ||
Low income housing and qualified zone academy bond tax credits | (0.50%) | (0.40%) | ||
Stock-based compensation excess tax benefit | (0.60%) | (0.30%) | ||
Other | (0.20%) | (0.80%) | ||
Effective Tax Rate | 24.90% | 44.60% | ||
Write-down to net deferred tax assets recorded as income tax expense | $ 3.0 | $ 3.0 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Sep. 17, 2018 |
Jun. 30, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2012 |
|
Operating Leases | |||||
2019 | $ 4,206 | ||||
2020 | 3,760 | ||||
2021 | 2,047 | ||||
2022 | 1,282 | ||||
2023 | 966 | ||||
Thereafter | 1,938 | ||||
Total | 14,199 | ||||
Rent expense included in occupancy expense | 4,600 | $ 4,100 | |||
Visa Inc. | |||||
Loss Contingencies [Line Items] | |||||
Estimated amount due to class plaintiffs in Visa litigation | $ 4,000,000 | ||||
Amended amount due to class plaintiffs in Visa litigation | $ 4,100,000 | ||||
Visa deposit in escrow accounts | $ 600,000 | ||||
Balance of escrow account for legal settlements maintained by Visa | $ 1,500,000 |
Concentrations of Credit Risk (Details) - Credit concentration risk $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
customer
|
Dec. 31, 2017
USD ($)
|
|
U.S. Government, its agencies and Government Sponsored Enterprises (GSEs) | ||
Concentration Risk [Line Items] | ||
Concentration risk amount | $ | $ 528.3 | $ 358.4 |
Concentration risk percentage | 85.00% | 74.00% |
Loans portfolio | ||
Concentration Risk [Line Items] | ||
Number of major borrowers | customer | 0 | |
Concentration risk, threshold for major borrower, percentage | 3.00% | |
Loans on real estate | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 83.00% | 81.00% |
Derivative Financial Instruments and Hedging Activities - Information on Derivatives (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
derivative
|
Dec. 31, 2017
USD ($)
|
|
Fair value hedges: | ||
Interest rate contracts fair value, Asset derivatives | $ 161 | $ 74 |
Interest rate contracts fair value, Liability derivatives | 375 | 740 |
Carrying Amounts of Hedged Assets | 17,917 | 19,260 |
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Loans | 6 | 431 |
Interest and fees on loans | 79,527 | 66,799 |
Fair value hedge | ||
Fair value hedges: | ||
Net hedge ineffectiveness gain (loss), derivatives | 13 | 31 |
Fair value hedge | Interest income | ||
Fair value hedges: | ||
Increase in value of designated interest rate swaps due to LIBOR interest rate movements | 452 | 212 |
Payment on interest rate swaps | (149) | (333) |
Decrease in value of hedged loans | (425) | (166) |
Decrease in value of yield maintenance agreement | (14) | (15) |
Net loss on derivatives recognized against interest income | (136) | (302) |
Fair value hedge | Designated as hedging instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivatives, accrued interest, interest rate swaps | $ 3 | 8 |
Interest rate swap | Fair value hedge | Designated as hedging instrument | ||
Derivatives, Fair Value [Line Items] | ||
Number of derivative instruments | derivative | 5 | |
Interest rate swap | Fair value hedge | Designated as hedging instrument | Other assets | ||
Fair value hedges: | ||
Interest rate contracts notional amounts, Asset derivatives | $ 8,895 | 4,019 |
Interest rate swap | Fair value hedge | Designated as hedging instrument | Other liabilities | ||
Fair value hedges: | ||
Interest rate contracts notional amount, Liability derivatives | 9,016 | 14,810 |
Interest rate contract | Fair value hedge | Designated as hedging instrument | Other assets | ||
Fair value hedges: | ||
Interest rate contracts fair value, Asset derivatives | 161 | 74 |
Interest rate contract | Fair value hedge | Designated as hedging instrument | Other liabilities | ||
Fair value hedges: | ||
Interest rate contracts fair value, Liability derivatives | $ 375 | $ 740 |
Derivative Financial Instruments and Hedging Activities - Offsetting of Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Offsetting Assets [Line Items] | ||
Gross Amounts of Recognized Assets | $ 161 | $ 74 |
Offset in the Statements of Condition | 0 | 0 |
Net Amounts of Assets Presented in the Statements of Condition | 161 | 74 |
Derivative, Collateral, Obligation to Return Securities | (161) | (74) |
Gross Amounts Not Offset in the Statements of Condition, Cash Collateral Received | 0 | 0 |
Net Amount | 0 | 0 |
Other assets | Interest rate swap | ||
Offsetting Assets [Line Items] | ||
Derivative assets, accrued interest, interest rate swaps | 1 | 1 |
Counterparty A | ||
Offsetting Assets [Line Items] | ||
Gross Amounts of Recognized Assets | 161 | 74 |
Offset in the Statements of Condition | 0 | 0 |
Net Amounts of Assets Presented in the Statements of Condition | 161 | 74 |
Derivative, Collateral, Obligation to Return Securities | (161) | (74) |
Gross Amounts Not Offset in the Statements of Condition, Cash Collateral Received | 0 | 0 |
Net Amount | $ 0 | $ 0 |
Derivative Financial Instruments and Hedging Activities - Offsetting of Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Offsetting Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | $ 375 | $ 740 |
Gross Amounts Offset in the Statements of Condition | 0 | 0 |
Net Amounts of Liabilities Presented in the Statements of Condition | 375 | 740 |
Gross Amounts Not Offset in the Statements of Condition, Financial Instruments | (161) | (74) |
Gross Amounts Not Offset in the Statements of Condition, Cash Collateral Pledged | 0 | (666) |
Net Amount | 214 | 0 |
Other liabilities | Interest rate swap | ||
Offsetting Liabilities [Line Items] | ||
Derivative liabilities, accrued interest, interest rate swaps | 3 | 8 |
Counterparty A | ||
Offsetting Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 375 | 740 |
Gross Amounts Offset in the Statements of Condition | 0 | 0 |
Net Amounts of Liabilities Presented in the Statements of Condition | 375 | 740 |
Gross Amounts Not Offset in the Statements of Condition, Financial Instruments | (161) | (74) |
Gross Amounts Not Offset in the Statements of Condition, Cash Collateral Pledged | 0 | (666) |
Net Amount | $ 214 | $ 0 |
Regulatory Matters (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Bancorp | ||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||
Total Capital, Actual, Amount | $ 305,224 | $ 287,435 |
Total Capital (to risk-weighted assets), Actual, Ratio | 14.93% | 14.91% |
Total Capital, Minimum Capital for Capital Adequacy Purposes, Amount | $ 201,943 | $ 178,323 |
Total Capital (to risk-weighted assets), Minimum Capital for Capital Adequacy Purposes, Ratio | 9.875% | 9.25% |
Total Capital, Minimum Capital to be Well Capitalized, Amount | $ 204,499 | $ 192,782 |
Total Capital (to risk-weighted assets), Minimum to be Well Capitalized, Ratio | 10.00% | 10.00% |
Tier 1 Risk Based Capital, Actual, Amount | $ 288,445 | $ 270,710 |
Tier 1 Risk Based Capital (to risk-weighted assets), Actual, Ratio | 14.10% | 14.04% |
Tier 1 Capital, Minimum Capital for Capital Adequacy Purposes, Amount | $ 161,043 | $ 139,767 |
Tier 1 Risk Based Capital (to risk-weighted assets), Minimum Capital for Capital Adequacy Purposes, Ratio | 7.875% | 7.25% |
Tier 1 Risk Based Capital, Minimum Capital to be Well Capitalized, Amount | $ 163,599 | $ 154,225 |
Tier 1 Risk Based Capital (to risk-weighted assets), Minimum Capital to be Well Capitalized, Ratio | 8.00% | 8.00% |
Tier 1 Leverage Capital, Amount, Actual | $ 288,445 | $ 270,710 |
Tier 1 Leverage Capital (to average assets), Actual, Ratio | 11.54% | 12.13% |
Tier 1 Leverage Capital, Minimum Capital for Capital Adequacy Purposes, Amount | $ 100,011 | $ 89,285 |
Tier 1 Leverage Capital (to average assets), Minimum Capital for Capital Adequacy Purposes, Ratio | 4.00% | 4.00% |
Tier 1 Leverage Capital, Actual, Amount | $ 125,013 | $ 111,607 |
Tier 1 Leverage Capital (to average assets), Minimum Capital to be Well Capitalized, Ratio | 5.00% | 5.00% |
Tier 1 Common Equity | $ 285,805 | $ 265,119 |
Tier 1 Common Equity To Average Assets | 13.98% | 13.75% |
Tier 1 Common Equity Required for Capital Adequacy | $ 130,368 | $ 110,849 |
Tier 1 Common Equity Required for Capital Adequacy to Average Assets | 6.375% | 5.75% |
Tier 1 Common Equity Required to be Well Capitalized | $ 132,925 | $ 125,308 |
Tier 1 Common Equity Required to be Well Capitalized to Average Assets | 6.50% | 6.50% |
The Bank | ||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||
Total Capital, Actual, Amount | $ 285,969 | $ 283,885 |
Total Capital (to risk-weighted assets), Actual, Ratio | 13.98% | 14.73% |
Total Capital, Minimum Capital for Capital Adequacy Purposes, Amount | $ 201,927 | $ 178,281 |
Total Capital (to risk-weighted assets), Minimum Capital for Capital Adequacy Purposes, Ratio | 9.875% | 9.25% |
Total Capital, Minimum Capital to be Well Capitalized, Amount | $ 204,483 | $ 192,737 |
Total Capital (to risk-weighted assets), Minimum to be Well Capitalized, Ratio | 10.00% | 10.00% |
Tier 1 Risk Based Capital, Actual, Amount | $ 269,191 | $ 267,160 |
Tier 1 Risk Based Capital (to risk-weighted assets), Actual, Ratio | 13.16% | 13.86% |
Tier 1 Capital, Minimum Capital for Capital Adequacy Purposes, Amount | $ 161,031 | $ 139,734 |
Tier 1 Risk Based Capital (to risk-weighted assets), Minimum Capital for Capital Adequacy Purposes, Ratio | 7.875% | 7.25% |
Tier 1 Risk Based Capital, Minimum Capital to be Well Capitalized, Amount | $ 163,587 | $ 154,189 |
Tier 1 Risk Based Capital (to risk-weighted assets), Minimum Capital to be Well Capitalized, Ratio | 8.00% | 8.00% |
Tier 1 Leverage Capital, Amount, Actual | $ 269,191 | $ 267,160 |
Tier 1 Leverage Capital (to average assets), Actual, Ratio | 10.77% | 11.97% |
Tier 1 Leverage Capital, Minimum Capital for Capital Adequacy Purposes, Amount | $ 99,994 | $ 89,275 |
Tier 1 Leverage Capital (to average assets), Minimum Capital for Capital Adequacy Purposes, Ratio | 4.00% | 4.00% |
Tier 1 Leverage Capital, Actual, Amount | $ 124,992 | $ 111,593 |
Tier 1 Leverage Capital (to average assets), Minimum Capital to be Well Capitalized, Ratio | 5.00% | 5.00% |
Tier 1 Common Equity | $ 269,191 | $ 267,160 |
Tier 1 Common Equity To Average Assets | 13.16% | 13.86% |
Tier 1 Common Equity Required for Capital Adequacy | $ 130,358 | $ 110,824 |
Tier 1 Common Equity Required for Capital Adequacy to Average Assets | 6.375% | 5.75% |
Tier 1 Common Equity Required to be Well Capitalized | $ 132,914 | $ 125,279 |
Tier 1 Common Equity Required to be Well Capitalized to Average Assets | 6.50% | 6.50% |
Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Commercial lines of credit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loan commitments and standby letters of credit, off-balance sheet | $ 238,361 | $ 224,370 |
Revolving home equity lines | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loan commitments and standby letters of credit, off-balance sheet | 189,971 | 177,678 |
Undisbursed construction loans | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loan commitments and standby letters of credit, off-balance sheet | 46,229 | 35,322 |
Personal and other lines of credit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loan commitments and standby letters of credit, off-balance sheet | 14,109 | 11,758 |
Standby letters of credit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loan commitments and standby letters of credit, off-balance sheet | 2,636 | 4,074 |
Total commitments and standby letters of credit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loan commitments and standby letters of credit, off-balance sheet | $ 491,306 | 453,202 |
Percentage of commitments expiring in 2018 | 35.00% | |
Percentage of commitments expiring between 2019 and 2025 | 51.00% | |
Percentage of commitments expiring 2026 and thereafter | 14.00% | |
Total commitments and standby letters of credit | Interest Payable and Other Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Allowance for off-balance sheet commitments | $ 958 | $ 958 |
Condensed Bank of Marin Bancorp Parent Only Financial Statements - Condensed Uncosolidated Statements of Condition (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Condensed Financial Statements, Captions [Line Items] | |||
Other assets | $ 75,871 | $ 72,620 | |
Total assets | 2,520,892 | 2,468,154 | |
Subordinated debentures | 2,640 | 5,739 | |
Other liabilities | 20,005 | 16,720 | |
Total liabilities | 2,204,485 | 2,171,129 | |
Stockholders' equity | 316,407 | 297,025 | $ 230,563 |
Total liabilities and stockholders' equity | 2,520,892 | 2,468,154 | |
Bancorp | |||
Condensed Financial Statements, Captions [Line Items] | |||
Cash and due from Bank of Marin | 19,144 | 3,246 | |
Investment in bank subsidiary | 299,953 | 299,486 | |
Other assets | 331 | 586 | |
Total assets | 319,428 | 303,318 | |
Subordinated debentures | 2,640 | 5,739 | |
Accrued expenses payable | 51 | 146 | |
Other liabilities | 330 | 408 | |
Total liabilities | 3,021 | 6,293 | |
Stockholders' equity | 316,407 | 297,025 | |
Total liabilities and stockholders' equity | $ 319,428 | $ 303,318 |
Condensed Bank of Marin Bancorp Parent Only Financial Statements - Condensed Unconsolidated Statements of Income (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Condensed Financial Statements, Captions [Line Items] | ||
Interest expense | $ 3,536 | $ 1,744 |
Non-interest expense | 58,266 | 53,782 |
Income tax benefit | (10,795) | (12,862) |
Net income | 32,622 | 15,976 |
Bancorp | ||
Condensed Financial Statements, Captions [Line Items] | ||
Dividends from bank subsidiary | 36,700 | 8,000 |
Miscellaneous Income | 9 | 8 |
Total income | 36,709 | 8,008 |
Interest expense | 1,339 | 439 |
Non-interest expense | 1,275 | 2,087 |
Total expense | 2,614 | 2,526 |
Income before income taxes and equity in undistributed net income of subsidiary | 34,095 | 5,482 |
Income tax benefit | 770 | 876 |
Income before equity in undistributed net income of subsidiary | 34,865 | 6,358 |
Earnings of bank subsidiary (less) greater than dividends received from bank subsidiary | (2,243) | 9,618 |
Net income | $ 32,622 | $ 15,976 |
Condensed Bank of Marin Bancorp Parent Only Financial Statements - Condensed Unconsolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Cash Flows from Operating Activities: | ||
Net income | $ 32,622 | $ 15,976 |
Accretion of discount on subordinated debentures | 1,025 | 153 |
Other assets | 1,148 | (278) |
Other liabilities | 1,284 | 1,035 |
Noncash director compensation expense-common stock | 227 | 197 |
Net cash provided by operating activities | 42,107 | 26,947 |
Cash Flows from Investing Activities: | ||
Net cash (used in) provided by investing activities | (225,303) | 7,813 |
Cash Flows from Financing Activities: | ||
Repayment of subordinated debenture including execution costs | (4,137) | 0 |
Payment of tax withholding for stock options exercised and vesting of restricted stock | (99) | (60) |
Dividends paid on common stock | (8,860) | (6,896) |
Stock repurchased, net of commissions | (6,869) | 0 |
Net cash provided by financing activities | 13,872 | 119,981 |
Net (decrease) increase in cash and cash equivalents | (169,324) | 154,741 |
Stock issued in payment of director fees | 204 | 188 |
Repurchase of stock not yet settled | 143 | 0 |
Stock issued to ESOP | 1,173 | 1,152 |
Bancorp | ||
Cash Flows from Operating Activities: | ||
Net income | 32,622 | 15,976 |
Earnings of bank subsidiary greater (less) than dividends received from bank subsidiary | 2,243 | (9,618) |
Accretion of discount on subordinated debentures | 1,025 | 153 |
Other assets | 36 | 92 |
Intercompany receivable | 0 | (40) |
Other liabilities | (86) | 51 |
Noncash director compensation expense-common stock | 23 | 20 |
Net cash provided by operating activities | 35,863 | 6,634 |
Cash Flows from Investing Activities: | ||
Capital contribution to subsidiary | (667) | (853) |
Net cash (used in) provided by investing activities | (667) | (853) |
Cash Flows from Financing Activities: | ||
Proceeds from stock options exercised and stock issued under employee and director stock purchase plans and ESPP | 667 | 853 |
Repayment of subordinated debenture including execution costs | (4,137) | 0 |
Payment of tax withholding for stock options exercised and vesting of restricted stock | (99) | (60) |
Dividends paid on common stock | (8,860) | (6,896) |
Stock repurchased, net of commissions | (6,869) | 0 |
Net cash provided by financing activities | (19,298) | (6,103) |
Net (decrease) increase in cash and cash equivalents | 15,898 | (322) |
Cash and cash equivalents at beginning of period | 3,246 | 3,568 |
Cash and cash equivalents at end of period | 19,144 | 3,246 |
Stock issued in payment of director fees | 204 | 188 |
Repurchase of stock not yet settled | 143 | 0 |
Stock issued to ESOP | $ 1,173 | $ 1,152 |
Acquisition - Narrative (Details) |
12 Months Ended | |||
---|---|---|---|---|
Nov. 21, 2017
USD ($)
branch
|
Nov. 29, 2013
USD ($)
|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Business Acquisition [Line Items] | ||||
Goodwill | $ 30,140,000 | $ 30,140,000 | ||
Amortization of core deposit intangible | 921,000 | 529,000 | ||
Bank of Napa, N.A. (Napa) | ||||
Business Acquisition [Line Items] | ||||
Number of branch offices | branch | 2 | |||
Loans acquired | $ 134,700,000 | |||
Deposits assumed | 249,900,000 | |||
Investment securities acquired | $ 75,500,000 | |||
Shares received by Napa shareholders in merger per acquiree share | 0.307 | |||
Goodwill | $ 23,700,000 | |||
Goodwill impairment | 0 | 0 | ||
NorCal Community Bancorp | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 6,400,000 | |||
Core deposit intangible | ||||
Business Acquisition [Line Items] | ||||
Core deposit intangible asset | $ 5,571,000 | |||
Useful life of core deposit intangible asset | 10 years | |||
Core deposit intangible | Bank of Napa, N.A. (Napa) | ||||
Business Acquisition [Line Items] | ||||
Core deposit intangible asset | $ 4,400,000 | |||
Amortization of core deposit intangible | $ 508,000 | $ 56,000 | ||
Useful life of core deposit intangible asset | 10 years | |||
Core deposit intangible | NorCal Community Bancorp | ||||
Business Acquisition [Line Items] | ||||
Core deposit intangible asset | $ 4,600,000 | |||
Useful life of core deposit intangible asset | 10 years |
Acquisition - Acquisition-Related Expenses (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Business Acquisition [Line Items] | ||
Data processing | $ 4,358 | $ 4,906 |
Professional services | 3,317 | 2,858 |
Other | 6,658 | 6,435 |
Bank of Napa, N.A. (Napa) | ||
Business Acquisition [Line Items] | ||
Data processing | 586 | 1,108 |
Professional services | 191 | 952 |
Personnel severance | 141 | 35 |
Other | 44 | 114 |
Total | $ 962 | $ 2,209 |
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