(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Zip code) | |||||||||||
(Address of principal executive offices) |
Title of Each Class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | ☑ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page | |||||||||||
September 30, 2020 | December 31, 2019 | |||||||||||||
(Dollars in thousands) | (Unaudited) | |||||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Securities available-for-sale | ||||||||||||||
Other investments | ||||||||||||||
Mortgage loans held for sale, at fair value | ||||||||||||||
Loans: | ||||||||||||||
Originated loans | ||||||||||||||
Acquired loans | ||||||||||||||
Total loans | ||||||||||||||
Less: Allowance for loan losses | ( | ( | ||||||||||||
Net loans | ||||||||||||||
Premises and equipment, net | ||||||||||||||
Goodwill | ||||||||||||||
Other intangible assets, net | ||||||||||||||
Other real estate owned | ||||||||||||||
Bank-owned life insurance | ||||||||||||||
Income tax benefit | ||||||||||||||
Interest receivable and other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities | ||||||||||||||
Deposits: | ||||||||||||||
Noninterest-bearing demand deposits | $ | $ | ||||||||||||
Interest-bearing demand deposits | ||||||||||||||
Money market and savings deposits | ||||||||||||||
Time deposits | ||||||||||||||
Total deposits | ||||||||||||||
Borrowings | ||||||||||||||
Subordinated notes | ||||||||||||||
Other liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Shareholders' equity | ||||||||||||||
Preferred stock, no par value per share; authorized— | ||||||||||||||
Common stock, no par value per share; authorized— | ||||||||||||||
Retained earnings | ||||||||||||||
Accumulated other comprehensive income, net of tax | ||||||||||||||
Total shareholders' equity | ||||||||||||||
Total liabilities and shareholders' equity | $ | $ |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(In thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Originated loans, including fees | $ | $ | $ | $ | ||||||||||||||||||||||
Acquired loans, including fees | ||||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||||
Taxable | ||||||||||||||||||||||||||
Tax-exempt | ||||||||||||||||||||||||||
Federal funds sold and other investments | ||||||||||||||||||||||||||
Total interest income | ||||||||||||||||||||||||||
Interest Expense | ||||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||||
Borrowed funds | ||||||||||||||||||||||||||
Subordinated notes | ||||||||||||||||||||||||||
Total interest expense | ||||||||||||||||||||||||||
Net interest income | ||||||||||||||||||||||||||
Provision expense (benefit) for loan losses | ( | |||||||||||||||||||||||||
Net interest income after provision for loan losses | ||||||||||||||||||||||||||
Noninterest income | ||||||||||||||||||||||||||
Service charges on deposits | ||||||||||||||||||||||||||
Net gain on sales of securities | ||||||||||||||||||||||||||
Mortgage banking activities | ||||||||||||||||||||||||||
Other charges and fees | ||||||||||||||||||||||||||
Total noninterest income | ||||||||||||||||||||||||||
Noninterest expense | ||||||||||||||||||||||||||
Salary and employee benefits | ||||||||||||||||||||||||||
Occupancy and equipment expense | ||||||||||||||||||||||||||
Professional service fees | ||||||||||||||||||||||||||
Acquisition and due diligence fees | ||||||||||||||||||||||||||
Marketing expense | ||||||||||||||||||||||||||
Printing and supplies expense | ||||||||||||||||||||||||||
Data processing expense | ||||||||||||||||||||||||||
Core deposit premium amortization | ||||||||||||||||||||||||||
Other expense | ||||||||||||||||||||||||||
Total noninterest expense | ||||||||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||||||
Income tax provision | ||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Per common share data: | ||||||||||||||||||||||||||
Basic earnings per common share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted earnings per common share | $ | $ | $ | $ | ||||||||||||||||||||||
Cash dividends declared per common share | $ | $ | $ | $ | ||||||||||||||||||||||
Weighted average common shares outstanding—basic | ||||||||||||||||||||||||||
Weighted average common shares outstanding—diluted |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||
Unrealized gains on securities available-for-sale | ||||||||||||||||||||||||||
Reclassification adjustment for gains included in income | ( | ( | ||||||||||||||||||||||||
Tax effect(1) | ( | ( | ( | ( | ||||||||||||||||||||||
Net unrealized gains on securities available-for-sale, net of tax | ||||||||||||||||||||||||||
Total comprehensive income, net of tax | $ | $ | $ | $ |
For the three months ended September 30, 2020 | ||||||||||||||||||||||||||||||||
(Dollar in thousands) | Preferred Stock | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income | Total Shareholders' Equity | |||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | |||||||||||||||||||||||||||||
Preferred stock offering, net of issuance costs | — | — | — | |||||||||||||||||||||||||||||
Common stock dividends declared ($ | — | — | ( | — | ( | |||||||||||||||||||||||||||
Stock-based compensation expense, net of tax impact | — | — | — | |||||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
For the nine months ended September 30, 2020 | ||||||||||||||||||||||||||||||||
(Dollar in thousands) | Preferred Stock | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income | Total Shareholders' Equity | |||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | |||||||||||||||||||||||||||||
Redeemed stock ( | — | ( | — | — | ( | |||||||||||||||||||||||||||
Preferred stock offering, net of issuance costs | — | — | — | |||||||||||||||||||||||||||||
Common stock dividends declared ($ | — | — | ( | — | ( | |||||||||||||||||||||||||||
Exercise of stock options ( | — | — | — | |||||||||||||||||||||||||||||
Stock-based compensation expense, net of tax impact | — | — | — | |||||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | $ | $ | $ |
For the three months ended September 30, 2019 | ||||||||||||||||||||||||||
(Dollar in thousands) | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income | Total Shareholders' Equity | ||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ||||||||||||||||||||||
Net income | — | — | ||||||||||||||||||||||||
Other comprehensive income | — | — | ||||||||||||||||||||||||
Redeemed stock ( | ( | — | — | ( | ||||||||||||||||||||||
Common stock dividends declared ($ | — | ( | — | ( | ||||||||||||||||||||||
Exercise of stock options ( | — | — | ||||||||||||||||||||||||
Stock-based compensation expense | — | — | ||||||||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | $ | ||||||||||||||||||||||
For the nine months ended September 30, 2019 | ||||||||||||||||||||||||||
(Dollar in thousands) | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders' Equity | ||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | ( | $ | |||||||||||||||||||||
Net income | — | — | ||||||||||||||||||||||||
Other comprehensive income | — | — | ||||||||||||||||||||||||
Redeemed Stock ( | ( | — | — | ( | ||||||||||||||||||||||
Common stock dividends declared ($ | — | ( | — | ( | ||||||||||||||||||||||
Exercise of stock options ( | — | — | ||||||||||||||||||||||||
Stock-based compensation expense | — | — | ||||||||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | $ |
For the nine months ended September 30, | ||||||||||||||
(Dollars in thousands) | 2020 | 2019 | ||||||||||||
Cash flows from operating activities | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation of fixed assets | ||||||||||||||
Amortization of core deposit intangibles | ||||||||||||||
Stock-based compensation expense | ||||||||||||||
Provision expense for loan losses | ||||||||||||||
Net securities premium amortization | ||||||||||||||
Net gain on sales of securities | ( | ( | ||||||||||||
Originations of loans held for sale | ( | ( | ||||||||||||
Proceeds from sales of loans | ||||||||||||||
Net gain on sales of loans | ( | ( | ||||||||||||
Accretion on acquired purchase credit impaired loans | ( | ( | ||||||||||||
Gain on sale of other real estate owned and repossessed assets | ( | |||||||||||||
Increase in cash surrender value of life insurance | ( | ( | ||||||||||||
Amortization of debt issuance costs | ||||||||||||||
Deferred income tax benefit | ( | |||||||||||||
Net increase in accrued interest receivable and other assets | ( | ( | ||||||||||||
Net increase in accrued interest payable and other liabilities | ||||||||||||||
Net cash used by operating activities | ( | ( | ||||||||||||
Cash flows from investing activities | ||||||||||||||
Net increase in loans | ( | ( | ||||||||||||
Principal payments on securities available-for-sale | ||||||||||||||
Purchases of securities available-for-sale | ( | ( | ||||||||||||
Purchases of other investments | ( | |||||||||||||
Additions to premises and equipment | ( | ( | ||||||||||||
Proceeds from: | ||||||||||||||
Sale of securities available-for-sale | ||||||||||||||
Sale of other real estate owned and repossessed assets | ||||||||||||||
Net cash used in acquisition | ( | |||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities | ||||||||||||||
Net increase in deposits | ||||||||||||||
Change in short-term borrowings | ( | ( | ||||||||||||
Issuances of FRB borrowings related to Paycheck Protection Program | ||||||||||||||
Issuances of long-term FHLB advances | ||||||||||||||
Net proceeds from issuance of preferred stock | ||||||||||||||
Change in secured borrowing | ( | ( | ||||||||||||
Share buyback - redeemed stock | ( | ( | ||||||||||||
Common stock dividends paid | ( | ( | ||||||||||||
Proceeds from exercised stock options | ||||||||||||||
Payments related to tax-withholding for share based compensation awards | ( | ( | ||||||||||||
Net cash provided by financing activities | ||||||||||||||
Net change in cash and cash equivalents | ||||||||||||||
Beginning cash and cash equivalents | ||||||||||||||
Ending cash and cash equivalents | $ | $ | ||||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||
Interest paid | $ | $ | ||||||||||||
Taxes paid | ||||||||||||||
Transfer from loans held for sale to loans held for investment | ||||||||||||||
Transfer from loans to other real estate owned | ||||||||||||||
Increase in assets and liabilities in acquisitions: | ||||||||||||||
Assets acquired—Ann Arbor State Bank | $ | $ | — | |||||||||||
Liabilities assumed—Ann Arbor State Bank | — |
(Dollars in thousands) | ||||||||
Consideration paid: | ||||||||
Cash | $ | |||||||
Fair value of assets acquired: | ||||||||
Cash and cash equivalents | ||||||||
Investment securities | ||||||||
Federal Home Loan Bank stock | ||||||||
Loans held for sale | ||||||||
Loans held for investment | ||||||||
Premises and equipment | ||||||||
Core deposit intangibles | ||||||||
Other assets | ||||||||
Total assets acquired | ||||||||
Fair value of liabilities assumed: | ||||||||
Deposits | ||||||||
Federal Home Loan Bank advances | ||||||||
Other liabilities | ||||||||
Total liabilities assumed | ||||||||
Total identifiable net assets | ||||||||
Goodwill recognized in the acquisition | $ |
(Dollars in thousands) | ||||||||
Accounted for under ASC 310-30: | ||||||||
Contractual cash flows | $ | |||||||
Contractual cash flows not expected to be collected (nonaccretable difference) | ||||||||
Expected cash flows | ||||||||
Interest component of expected cash flows (accretable yield) | ||||||||
Fair value at acquisition | ||||||||
Accounted for under ASC 310-20: | ||||||||
Unpaid principal and interest balance | ||||||||
Fair value premium | ||||||||
Fair value at acquisition | ||||||||
Total fair value at acquisition | $ |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||
(Dollars in thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Net interest income | $ | $ | $ | $ | ||||||||||||||||
Noninterest income | ||||||||||||||||||||
Noninterest expense | ||||||||||||||||||||
Net income | ||||||||||||||||||||
Net income per diluted share |
(Dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||
U.S. government sponsored entities & agencies | $ | $ | $ | ( | $ | |||||||||||||||||||||
State and political subdivision | ( | |||||||||||||||||||||||||
Mortgage-backed securities: residential | ||||||||||||||||||||||||||
Mortgage-backed securities: commercial | ||||||||||||||||||||||||||
Collateralized mortgage obligations: residential | ( | |||||||||||||||||||||||||
Collateralized mortgage obligations: commercial | ||||||||||||||||||||||||||
U.S. Treasury | ||||||||||||||||||||||||||
SBA | ( | |||||||||||||||||||||||||
Asset backed securities | ( | |||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total available-for-sale | $ | $ | $ | ( | $ | |||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||
State and political subdivision | $ | $ | $ | ( | $ | |||||||||||||||||||||
Mortgage-backed securities: residential | ( | |||||||||||||||||||||||||
Mortgage-backed securities: commercial | ( | |||||||||||||||||||||||||
Collateralized mortgage obligations: residential | ( | |||||||||||||||||||||||||
Collateralized mortgage obligations: commercial | ( | |||||||||||||||||||||||||
U.S. Treasury | ||||||||||||||||||||||||||
SBA | ( | |||||||||||||||||||||||||
Asset backed securities | ( | |||||||||||||||||||||||||
Corporate bonds | ( | |||||||||||||||||||||||||
Total available-for-sale | $ | $ | $ | ( | $ |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Proceeds | $ | $ | $ | $ | |||||||||||||||||||
Gross gains | |||||||||||||||||||||||
Gross losses | ( | ( | ( |
September 30, 2020 | ||||||||||||||
(Dollars in thousands) | Amortized Cost | Fair Value | ||||||||||||
Within one year | $ | $ | ||||||||||||
One to five years | ||||||||||||||
Five to ten years | ||||||||||||||
Beyond ten years | ||||||||||||||
Total | $ | $ |
Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Fair value | Unrealized Losses | Fair value | Unrealized Losses | Fair value | Unrealized Losses | ||||||||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||||||||||||||
U.S. government sponsored entities & agencies | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
State and political subdivision | ( | ( | ||||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations: residential | ( | ( | ||||||||||||||||||||||||||||||||||||
SBA | ( | ( | ||||||||||||||||||||||||||||||||||||
Asset backed securities | ( | ( | ||||||||||||||||||||||||||||||||||||
Total available-for-sale | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||||||||||||||
State and political subdivision | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
Mortgage-backed securities: residential | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Mortgage-backed securities: commercial | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations: residential | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations: commercial | ( | ( | ||||||||||||||||||||||||||||||||||||
SBA | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Asset backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Corporate bonds | ( | ( | ||||||||||||||||||||||||||||||||||||
Total available-for-sale | $ | $ | ( | $ | $ | ( | $ | $ | ( |
(Dollars in thousands) | Originated | Acquired | Total | |||||||||||||||||
September 30, 2020 | ||||||||||||||||||||
Commercial real estate | $ | $ | $ | |||||||||||||||||
Commercial and industrial | ||||||||||||||||||||
Residential real estate | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Total | $ | $ | $ | |||||||||||||||||
December 31, 2019 | ||||||||||||||||||||
Commercial real estate | $ | $ | $ | |||||||||||||||||
Commercial and industrial | ||||||||||||||||||||
Residential real estate | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Total | $ | $ | $ |
(Dollars in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Nonaccrual loans: | ||||||||||||||
Commercial real estate | $ | $ | ||||||||||||
Commercial and industrial | ||||||||||||||
Residential real estate | ||||||||||||||
Consumer | ||||||||||||||
Total nonaccrual loans | ||||||||||||||
Other real estate owned | ||||||||||||||
Total nonperforming assets | $ | $ | ||||||||||||
Loans 90 days or more past due and still accruing | $ | $ |
(Dollars in thousands) | Current | 30 - 59 Days Past Due | 60 - 89 Days Past Due | 90+ Days Past Due | Total | |||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
(Dollars in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Nonaccrual loans | $ | $ | ||||||||||||
Performing troubled debt restructurings: | ||||||||||||||
Commercial and industrial | ||||||||||||||
Residential real estate | ||||||||||||||
Total performing troubled debt restructurings | ||||||||||||||
Total impaired loans, excluding purchase credit impaired loans | $ | $ |
Concession type | Financial effects of modification | |||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Principal deferral | Interest rate | Forbearance agreement | Total number of loans | Total recorded investment | Net charge-offs | Provision for loan losses | |||||||||||||||||||||||||||||||||||||
Three months ended September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Nine months ended September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Nine months ended September 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(Dollars in thousands) | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
(Dollars in thousands) | Performing | Nonperforming | Total | |||||||||||||||||
September 30, 2020 | ||||||||||||||||||||
Residential real estate | $ | $ | $ | |||||||||||||||||
Consumer | ||||||||||||||||||||
Total | $ | $ | $ | |||||||||||||||||
December 31, 2019 | ||||||||||||||||||||
Residential real estate | $ | $ | $ | |||||||||||||||||
Consumer | ||||||||||||||||||||
Total | $ | $ | $ |
(Dollars in thousand) | Unpaid Principal Balance | Recorded Investment | ||||||||||||
September 30, 2020 | ||||||||||||||
Commercial real estate | $ | $ | ||||||||||||
Commercial and industrial | ||||||||||||||
Residential real estate | ||||||||||||||
Total PCI loans | $ | $ | ||||||||||||
December 31, 2019 | ||||||||||||||
Commercial real estate | $ | $ | ||||||||||||
Commercial and industrial | ||||||||||||||
Residential real estate | ||||||||||||||
Total PCI loans | $ | $ |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Accretable yield at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
Additions due to acquisitions | |||||||||||||||||||||||
Accretion of income | ( | ( | ( | ( | |||||||||||||||||||
Adjustments to accretable yield | |||||||||||||||||||||||
Accretable yield at end of period | $ | $ | $ | $ |
(Dollars in thousands) | Recorded investment with no related allowance | Recorded investment with related allowance | Total recorded investment | Contractual principal balance | Related allowance | |||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||
Individually evaluated impaired loans: | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Individually evaluated impaired loans: | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
(Dollars in thousands) | Average Recorded Investment | Interest Income Recognized | Cash Basis Interest Recognized | |||||||||||||||||
For the three months ended September 30, 2020 | ||||||||||||||||||||
Individually evaluated impaired loans: | ||||||||||||||||||||
Commercial real estate | $ | $ | $ | |||||||||||||||||
Commercial and industrial | ||||||||||||||||||||
Residential real estate | ||||||||||||||||||||
Total | $ | $ | $ | |||||||||||||||||
For the nine months ended September 30, 2020 | ||||||||||||||||||||
Individually evaluated impaired loans: | ||||||||||||||||||||
Commercial real estate | $ | $ | $ | |||||||||||||||||
Commercial and industrial | ||||||||||||||||||||
Residential real estate | ||||||||||||||||||||
Total | $ | $ | $ | |||||||||||||||||
For the three months ended September 30, 2019 | ||||||||||||||||||||
Individually evaluated impaired loans: | ||||||||||||||||||||
Commercial real estate | $ | $ | $ | |||||||||||||||||
Commercial and industrial | ||||||||||||||||||||
Residential real estate | ||||||||||||||||||||
Total | $ | $ | $ | |||||||||||||||||
For the nine months ended September 30, 2019 | ||||||||||||||||||||
Individually evaluated impaired loans: | ||||||||||||||||||||
Commercial real estate | $ | $ | $ | |||||||||||||||||
Commercial and industrial | ||||||||||||||||||||
Residential real estate | ||||||||||||||||||||
Total | $ | $ | $ |
(Dollars in thousands) | Commercial Real Estate | Commercial and Industrial | Residential Real Estate | Consumer | Total | |||||||||||||||||||||||||||
For the three months ended September 30, 2020 | ||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Provision (benefit) for loan losses | ( | |||||||||||||||||||||||||||||||
Gross chargeoffs | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||
Net (chargeoffs) recoveries | ( | ( | ||||||||||||||||||||||||||||||
Ending allowance for loan losses | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
For the nine months ended September 30, 2020 | ||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Provision for loan losses | ||||||||||||||||||||||||||||||||
Gross chargeoffs | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||
Net (chargeoffs) recoveries | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Ending allowance for loan losses | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
For the three months ended September 30, 2019 | ||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Provision (benefit) for loan losses | ( | ( | ||||||||||||||||||||||||||||||
Gross chargeoffs | ( | ( | ( | |||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||
Net (chargeoffs) recoveries | ( | ( | ( | |||||||||||||||||||||||||||||
Ending allowance for loan losses | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
For the nine months ended September 30, 2019 | ||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Provision for loan losses | ||||||||||||||||||||||||||||||||
Gross chargeoffs | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||
Net (chargeoffs) recoveries | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Ending allowance for loan losses | $ | $ | $ | $ | $ |
(Dollars in thousands) | Commercial Real Estate | Commercial and Industrial | Residential Real Estate | Consumer | Total | |||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Collectively evaluated for impairment | ||||||||||||||||||||||||||||||||
Acquired with deteriorated credit quality | ||||||||||||||||||||||||||||||||
Ending allowance for loan losses | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Balance of loans: | ||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Collectively evaluated for impairment | ||||||||||||||||||||||||||||||||
Acquired with deteriorated credit quality | ||||||||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Collectively evaluated for impairment | ||||||||||||||||||||||||||||||||
Acquired with deteriorated credit quality | ||||||||||||||||||||||||||||||||
Ending allowance for loan losses | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Balance of loans: | ||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Collectively evaluated for impairment | ||||||||||||||||||||||||||||||||
Acquired with deteriorated credit quality | ||||||||||||||||||||||||||||||||
Total loans | $ | $ | $ | $ | $ |
(Dollars in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Land | $ | $ | ||||||||||||
Buildings | ||||||||||||||
Leasehold improvements | ||||||||||||||
Furniture, fixtures and equipment | ||||||||||||||
Total premises and equipment | $ | $ | ||||||||||||
Less: Accumulated depreciation | ||||||||||||||
Net premises and equipment | $ | $ |
(Dollars in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Gross carrying amount | $ | $ | ||||||||||||
Accumulated amortization | ( | ( | ||||||||||||
Net Intangible | $ | $ |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||
(Dollars in thousands) | 2020 | 2020 | ||||||||||||
Mortgage servicing rights: | ||||||||||||||
Balance, beginning of period | $ | $ | ||||||||||||
Originated servicing | ||||||||||||||
Amortization | ( | ( | ||||||||||||
Balance, end of period | ||||||||||||||
Fair value: | ||||||||||||||
At beginning of period | $ | $ | ||||||||||||
At end of period |
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||
(Dollars in thousands) | Amount | Weighted Average Rate(1) | Amount | Weighted Average Rate(1) | ||||||||||||||||||||||
Short-term borrowings: | ||||||||||||||||||||||||||
FHLB Advances | $ | % | $ | % | ||||||||||||||||||||||
Securities sold under agreements to repurchase | ||||||||||||||||||||||||||
Federal funds purchased | ||||||||||||||||||||||||||
Total short-term borrowings | ||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||
Secured borrowing due in 2022 | ||||||||||||||||||||||||||
FHLB advances due in 2022 to 2029(2) | ||||||||||||||||||||||||||
FRB borrowings (3) | ||||||||||||||||||||||||||
Subordinated notes due in 2025 and 2029(4) | ||||||||||||||||||||||||||
Total long-term debt | ||||||||||||||||||||||||||
Total short-term and long-term borrowings | $ | % | $ | % |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Income tax expense based on federal corporate tax rate | $ | $ | $ | $ | ||||||||||||||||||||||
Changes resulting from: | ||||||||||||||||||||||||||
Tax-exempt income | ( | ( | ( | ( | ||||||||||||||||||||||
Net operating loss carryback due to CARES Act | ( | |||||||||||||||||||||||||
Disqualified dispositions from stock options | ( | |||||||||||||||||||||||||
Other, net | ( | ( | ( | |||||||||||||||||||||||
Income tax expense | $ | $ | $ | $ |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||||||||||
Options outstanding, beginning of period | $ | |||||||||||||||||||
Exercised | ( | |||||||||||||||||||
Options outstanding, end of period | ||||||||||||||||||||
Options exercisable | $ |
Nonvested Shares | Shares | Weighted Average Grant-Date Fair Value | ||||||||||||
Nonvested at January 1, 2020 | $ | |||||||||||||
Granted | ||||||||||||||
Vested | ( | |||||||||||||
Forfeited | ( | |||||||||||||
Nonvested at September 30, 2020 | $ |
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||
(Dollars in thousands) | Fixed | Variable | Fixed | Variable | ||||||||||||||||||||||
Commitments to make loans | $ | $ | $ | $ | ||||||||||||||||||||||
Unused lines of credit | ||||||||||||||||||||||||||
Unused standby letters of credit and commercial letters of credit |
Actual | For Capital Adequacy Purposes | For Capital Adequacy Purposes + Capital Conservation Buffer(1) | Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 to risk-weighted assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank | % | % | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital to risk-weighted assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank | % | % | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
Total capital to risk-weighted assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank | % | % | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital to average assets (leverage ratio): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank | % | % | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 to risk-weighted assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank | % | % | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital to risk-weighted assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank | % | % | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
Total capital to risk-weighted assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank | % | % | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital to average assets (leverage ratio): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank | % | % | % | $ | % |
(Dollars in thousands) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||||
U.S. government sponsored entities and agencies | $ | $ | $ | $ | ||||||||||||||||||||||
State and political subdivision | ||||||||||||||||||||||||||
Mortgage-backed securities: residential | ||||||||||||||||||||||||||
Mortgage-backed securities: commercial | ||||||||||||||||||||||||||
Collateralized mortgage obligations: residential | ||||||||||||||||||||||||||
Collateralized mortgage obligations: commercial | ||||||||||||||||||||||||||
U.S. Treasury | ||||||||||||||||||||||||||
SBA | ||||||||||||||||||||||||||
Asset backed securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total securities available for sale | ||||||||||||||||||||||||||
Loans held for sale | ||||||||||||||||||||||||||
Loans measured at fair value: | ||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||
Derivative assets: | ||||||||||||||||||||||||||
Customer-initiated derivatives | ||||||||||||||||||||||||||
Forward contracts related to mortgage loans to be delivered for sale | ||||||||||||||||||||||||||
Interest rate lock commitments | ||||||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative liabilities: | ||||||||||||||||||||||||||
Customer-initiated derivatives | ||||||||||||||||||||||||||
Forward contracts related to mortgage loans to be delivered for sale | ||||||||||||||||||||||||||
Interest rate lock commitments | ||||||||||||||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
(Dollars in thousands) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||||
State and political subdivision | $ | $ | $ | $ | ||||||||||||||||||||||
Mortgage-backed securities: residential | ||||||||||||||||||||||||||
Mortgage-backed securities: commercial | ||||||||||||||||||||||||||
Collateralized mortgage obligations: residential | ||||||||||||||||||||||||||
Collateralized mortgage obligations: commercial | ||||||||||||||||||||||||||
U.S. Treasury | ||||||||||||||||||||||||||
SBA | ||||||||||||||||||||||||||
Asset backed securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total securities available for sale | $ | $ | $ | $ | ||||||||||||||||||||||
Loans held for sale | ||||||||||||||||||||||||||
Loans measured at fair value: | ||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||
Derivative assets: | ||||||||||||||||||||||||||
Customer-initiated derivatives | ||||||||||||||||||||||||||
Forward contracts related to mortgage loans to be delivered for sale | ||||||||||||||||||||||||||
Interest rate lock commitments | ||||||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative liabilities: | ||||||||||||||||||||||||||
Customer-initiated derivatives | ||||||||||||||||||||||||||
Forward contracts related to mortgage loans to be delivered for sale | ||||||||||||||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Loans held for investment | ||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | ||||||||||||||||||||||
Transfers from loans held for sale | ||||||||||||||||||||||||||
Gains (losses): | ||||||||||||||||||||||||||
Recorded in "Mortgage banking activities" | ( | |||||||||||||||||||||||||
Repayments | ( | ( | ( | ( | ||||||||||||||||||||||
Ending balance | $ | $ | $ | $ | ||||||||||||||||||||||
(Dollars in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Aggregate fair value | $ | $ | ||||||||||||
Contractual balance | ||||||||||||||
Unrealized gain |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Change in fair value | $ | $ | ( | $ | $ |
(Dollars in thousands) | Total | Significant Unobservable Inputs (Level 3) | ||||||||||||
September 30, 2020 | ||||||||||||||
Impaired loans: | ||||||||||||||
Residential real estate | $ | $ | ||||||||||||
Commercial and industrial | ||||||||||||||
Mortgage servicing rights | ||||||||||||||
Total | $ | $ | ||||||||||||
December 31, 2019 | ||||||||||||||
Impaired loans: | ||||||||||||||
Commercial real estate | $ | $ | ||||||||||||
Commercial and industrial | ||||||||||||||
Mortgage servicing rights | ||||||||||||||
Other real estate owned | ||||||||||||||
Total | $ | $ | ||||||||||||
(Dollars in thousands) | Fair value at September 30, 2020 | Valuation Technique(s) | Significant Unobservable Input(s) | Discount % Range/Amount | ||||||||||||||||||||||
Impaired loans | $ | Discounted appraisals; estimated net realizable value of collateral | Collateral discounts | |||||||||||||||||||||||
Mortgage servicing rights | Discounted cash flow | Prepayment speed | % | |||||||||||||||||||||||
Discount rate | % | |||||||||||||||||||||||||
(Dollars in thousands) | Fair value at December 31, 2019 | Valuation Technique(s) | Significant Unobservable Input(s) | Discount % Range/Amount | ||||||||||||||||||||||
Impaired loans | $ | Discounted appraisals; estimated net realizable value of collateral | Collateral discounts | |||||||||||||||||||||||
Mortgage servicing rights | Discounted cash flow | Prepayment speed | % | |||||||||||||||||||||||
Discount rate | % | |||||||||||||||||||||||||
Other real estate owned | Appraisal of property | Discounted appraisal value |
Estimated Fair Value | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | Carrying Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Other investments | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||
Net loans | ||||||||||||||||||||||||||||||||
Accrued interest receivable | ||||||||||||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||||
Subordinated notes | ||||||||||||||||||||||||||||||||
Accrued interest payable | ||||||||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Other investments | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||
Net loans | ||||||||||||||||||||||||||||||||
Accrued interest receivable | ||||||||||||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||||
Subordinated notes | ||||||||||||||||||||||||||||||||
Accrued interest payable |
September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
(Dollars in thousands) | Notional Amount | Fair Value | Notional Amount | Fair Value | |||||||||||||||||||
Included in other assets: | |||||||||||||||||||||||
Customer-initiated and mortgage banking derivatives: | |||||||||||||||||||||||
Customer-initiated derivatives | $ | $ | $ | $ | |||||||||||||||||||
Forward contracts related to mortgage loans to be delivered for sale | |||||||||||||||||||||||
Interest rate lock commitments | |||||||||||||||||||||||
Total derivatives included in other assets | $ | $ | $ | $ | |||||||||||||||||||
Included in other liabilities: | |||||||||||||||||||||||
Customer-initiated and mortgage banking derivatives: | |||||||||||||||||||||||
Customer-initiated derivatives | $ | $ | $ | $ | |||||||||||||||||||
Forward contracts related to mortgage loans to be delivered for sale | |||||||||||||||||||||||
Interest rate lock commitments | |||||||||||||||||||||||
Total derivatives included in other liabilities | $ | $ | $ | $ |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||||||||
(Dollars in thousands) | Location of Gain (Loss) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||
Forward contracts related to mortgage loans to be delivered for sale | Mortgage banking activities | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||
Interest rate lock commitments | Mortgage banking activities | ( | |||||||||||||||||||||||||||
Total loss recognized in income | $ | ( | $ | ( | $ | ( | $ | ( |
Gross amounts not offset in the statements of financial position | |||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Gross amounts recognized | Gross amounts offset in the statements of financial condition | Net amounts presented in the statements of financial condition | Financial instruments | Collateral (received)/posted | Net amount | |||||||||||||||||||||||||||||
September 30, 2020 | |||||||||||||||||||||||||||||||||||
Offsetting derivative assets: | |||||||||||||||||||||||||||||||||||
Customer initiated derivatives | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Offsetting derivative liabilities: | |||||||||||||||||||||||||||||||||||
Customer initiated derivatives | ( | ||||||||||||||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||||||||||||||
Offsetting derivative assets: | |||||||||||||||||||||||||||||||||||
Customer initiated derivatives | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Offsetting derivative liabilities: | |||||||||||||||||||||||||||||||||||
Customer initiated derivatives |
(Dollars in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Investment in banking subsidiary | ||||||||||||||
Investment in captive insurance subsidiary | ||||||||||||||
Income tax benefit | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities | ||||||||||||||
Subordinated notes | $ | $ | ||||||||||||
Accrued expenses and other liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Shareholders' equity | ||||||||||||||
Total liabilities and shareholders' equity | $ | $ |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Income | ||||||||||||||||||||||||||
Dividend income from bank subsidiary | $ | $ | $ | $ | ||||||||||||||||||||||
Total income | $ | $ | $ | $ | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Interest on borrowed funds | ||||||||||||||||||||||||||
Interest on subordinated notes | ||||||||||||||||||||||||||
Other expenses | ||||||||||||||||||||||||||
Total expenses | $ | $ | $ | $ | ||||||||||||||||||||||
Income (loss) before income taxes and equity in (overdistributed) undistributed net earnings of subsidiaries | ( | ( | ||||||||||||||||||||||||
Income tax benefit | ||||||||||||||||||||||||||
Equity in (overdistributed) undistributed earnings of subsidiaries | ( | |||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||
Total comprehensive income, net of tax | $ | $ | $ | $ |
For the nine months ended September 30, | ||||||||||||||
(Dollars in thousands) | 2020 | 2019 | ||||||||||||
Cash flows from operating activities | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Equity in over (under) distributed earnings of subsidiaries | ( | |||||||||||||
Stock based compensation expense | ||||||||||||||
(Increase) Decrease in other assets, net | ( | |||||||||||||
Increase in other liabilities, net | ||||||||||||||
Net cash provided by (used in) operating activities | ( | |||||||||||||
Cash flows from investing activities | ||||||||||||||
Cash used in acquisitions | ( | |||||||||||||
Net cash used in investing activities | ( | |||||||||||||
Cash flows from financing activities | ||||||||||||||
Preferred stock offering, net of issuance costs | ||||||||||||||
Share buyback - redeemed stock | ( | ( | ||||||||||||
Common stock dividends paid | ( | ( | ||||||||||||
Proceeds from exercised stock options | ||||||||||||||
Net cash provided by (used in) financing activities | ( | |||||||||||||
Net decrease in cash and cash equivalents | ( | ( | ||||||||||||
Beginning cash and cash equivalents | ||||||||||||||
Ending cash and cash equivalents | $ | $ |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(In thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Net income allocated to participating securities | ||||||||||||||||||||||||||
Net income allocated to common shareholders (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Weighted average common shares - issued | ||||||||||||||||||||||||||
Average unvested restricted share awards | ( | ( | ( | ( | ||||||||||||||||||||||
Weighted average common shares outstanding - basic | ||||||||||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Weighted average common stock equivalents | ||||||||||||||||||||||||||
Weighted average common shares outstanding - diluted | $ | |||||||||||||||||||||||||
EPS available to common shareholders | ||||||||||||||||||||||||||
Basic earnings per common share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted earnings per common share | $ | $ | $ | $ |
As of and for the three months ended | As of and for the nine months ended | ||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | September 30, 2020 | June 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | ||||||||||||||||||||||||
Earnings Summary | |||||||||||||||||||||||||||||
Interest income | $ | 20,245 | $ | 20,396 | $ | 17,983 | $ | 60,458 | $ | 53,082 | |||||||||||||||||||
Interest expense | 3,648 | 4,163 | 4,995 | 12,808 | 14,935 | ||||||||||||||||||||||||
Net interest income | 16,597 | 16,233 | 12,988 | 47,650 | 38,147 | ||||||||||||||||||||||||
Provision expense (benefit) for loan losses | 4,270 | 5,575 | (16) | 10,334 | 835 | ||||||||||||||||||||||||
Noninterest income | 9,125 | 7,789 | 3,858 | 21,604 | 9,621 | ||||||||||||||||||||||||
Noninterest expense | 15,126 | 15,083 | 11,539 | 44,771 | 33,074 | ||||||||||||||||||||||||
Income before income taxes | 6,326 | 3,364 | 5,323 | 14,149 | 13,859 | ||||||||||||||||||||||||
Income tax provision | 1,117 | 643 | 914 | 2,109 | 2,428 | ||||||||||||||||||||||||
Net income | 5,209 | 2,721 | 4,409 | 12,040 | 11,431 | ||||||||||||||||||||||||
Net income allocated to participating securities | 40 | 19 | 45 | 140 | 110 | ||||||||||||||||||||||||
Net income attributable to common shareholders | $ | 5,169 | $ | 2,702 | $ | 4,364 | $ | 11,900 | $ | 11,321 | |||||||||||||||||||
Per Share Data | |||||||||||||||||||||||||||||
Basic earnings per common share | $ | 0.68 | $ | 0.35 | $ | 0.57 | $ | 1.56 | $ | 1.48 | |||||||||||||||||||
Diluted earnings per common share | 0.67 | 0.35 | 0.56 | 1.55 | 1.46 | ||||||||||||||||||||||||
Diluted earnings per common share, excluding acquisition and due diligence fees (1) | 0.67 | 0.37 | 0.60 | 1.72 | 1.50 | ||||||||||||||||||||||||
Book value per common share | 24.06 | 23.31 | 21.77 | 27.08 | 21.77 | ||||||||||||||||||||||||
Tangible book value per common share (1) | 18.74 | 18.09 | 20.51 | 18.74 | 20.51 | ||||||||||||||||||||||||
Preferred shares outstanding (in thousands) | 10 | — | — | 10 | — | ||||||||||||||||||||||||
Common shares outstanding (in thousands) | 7,734 | 7,734 | 7,714 | 7,734 | 7,714 | ||||||||||||||||||||||||
Average basic common shares (in thousands) | 7,675 | 7,676 | 7,721 | 7,640 | 7,738 | ||||||||||||||||||||||||
Average diluted common shares (in thousands) | 7,712 | 7,721 | 7,752 | 7,701 | 7,776 | ||||||||||||||||||||||||
Selected Period End Balances | |||||||||||||||||||||||||||||
Total assets | $ | 2,446,447 | $ | 2,541,696 | $ | 1,509,463 | $ | 2,446,447 | $ | 1,509,463 | |||||||||||||||||||
Securities available-for-sale | 253,527 | 217,172 | 205,242 | 253,527 | 205,242 | ||||||||||||||||||||||||
Total loans | 1,843,888 | 1,815,353 | 1,168,923 | 1,843,888 | 1,168,923 | ||||||||||||||||||||||||
Total deposits | 1,943,435 | 1,821,351 | 1,194,542 | 1,943,435 | 1,194,542 | ||||||||||||||||||||||||
Total liabilities | 2,236,979 | 2,361,437 | 1,341,495 | 2,236,979 | 1,341,495 | ||||||||||||||||||||||||
Total shareholders' equity | 209,468 | 180,259 | 167,968 | 209,468 | 167,968 | ||||||||||||||||||||||||
Total common shareholders' equity | 186,098 | 180,259 | 167,968 | 186,098 | 167,968 | ||||||||||||||||||||||||
Tangible common shareholders' equity (1) | 144,963 | 139,913 | 158,250 | 144,963 | 158,250 | ||||||||||||||||||||||||
Performance and Capital Ratios | |||||||||||||||||||||||||||||
Return on average assets | 0.83 | % | 0.46 | % | 1.16 | % | 0.71 | % | 1.02 | % | |||||||||||||||||||
Return on average equity | 10.48 | 6.02 | 10.58 | 8.68 | 9.51 | ||||||||||||||||||||||||
Net interest margin (fully taxable equivalent) (2) | 2.80 | 2.98 | 3.59 | 3.04 | 3.61 | ||||||||||||||||||||||||
Efficiency ratio (noninterest expense/net interest income plus noninterest income) | 58.81 | 62.79 | 68.50 | 64.65 | 69.24 | ||||||||||||||||||||||||
Dividend payout ratio | 7.41 | 14.22 | 7.03 | 8.99 | 7.45 | ||||||||||||||||||||||||
Total shareholders' equity to total assets | 8.56 | 7.09 | 11.13 | 8.56 | 11.13 | ||||||||||||||||||||||||
Tangible common equity to tangible assets (1) | 6.03 | 5.59 | 10.55 | 6.03 | 10.55 | ||||||||||||||||||||||||
Common equity tier 1 to risk-weighted assets | 8.83 | 8.76 | 11.73 | 8.83 | 11.73 | ||||||||||||||||||||||||
Tier 1 capital to risk-weighted assets | 10.31 | 8.76 | 11.73 | 10.31 | 11.73 | ||||||||||||||||||||||||
Total capital to risk-weighted assets | 14.39 | 12.81 | 13.84 | 14.39 | 13.84 | ||||||||||||||||||||||||
Tier 1 capital to average assets (leverage ratio) | 7.17 | 6.21 | 10.12 | 7.17 | 10.12 | ||||||||||||||||||||||||
Asset Quality Ratios: | |||||||||||||||||||||||||||||
Net charge-offs to average loans | 0.02 | % | 0.34 | % | 0.01 | % | 0.14 | % | 0.03 | % | |||||||||||||||||||
Nonperforming assets as a percentage of total assets | 0.79 | 0.33 | 0.78 | 0.79 | 0.78 | ||||||||||||||||||||||||
Nonaccrual loans as a percent of total loans | 1.04 | 0.46 | 0.98 | 1.04 | 0.98 | ||||||||||||||||||||||||
Allowance for loan losses as a percentage of total loans | 1.15 | 0.94 | 1.05 | 1.15 | 1.05 | ||||||||||||||||||||||||
Allowance for loan losses as a percentage of nonaccrual loans | 110.32 | 206.37 | 107.46 | 110.32 | 107.46 | ||||||||||||||||||||||||
Allowance for loan losses as a percentage of nonaccrual loans, excluding allowance allocated to loans accounted for under ASC 310-30 | 105.46 | 195.04 | 100.52 | 105.46 | 100.52 |
Tangible Common Shareholders' Equity, Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share | |||||||||||||||||
As of | |||||||||||||||||
(Dollars in thousands, except per share data) | September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
Total shareholders' equity | $ | 209,468 | $ | 180,259 | $ | 167,968 | |||||||||||
Less: | |||||||||||||||||
Preferred stock | 23,370 | — | — | ||||||||||||||
Total common shareholders' equity | 186,098 | 180,259 | 167,968 | ||||||||||||||
Less: | |||||||||||||||||
Goodwill | 35,554 | 35,554 | 9,387 | ||||||||||||||
Other intangible assets, net | 5,581 | 4,792 | 331 | ||||||||||||||
Tangible common shareholders' equity | $ | 144,963 | $ | 139,913 | $ | 158,250 | |||||||||||
Common shares outstanding (in thousands) | 7,734 | 7,734 | 7,714 | ||||||||||||||
Tangible book value per common share | $ | 18.74 | $ | 18.09 | $ | 20.51 | |||||||||||
Total assets | $ | 2,446,447 | $ | 2,541,696 | $ | 1,509,463 | |||||||||||
Less: | |||||||||||||||||
Goodwill | 35,554 | 35,554 | 9,387 | ||||||||||||||
Other intangible assets, net | 5,581 | 4,792 | 331 | ||||||||||||||
Tangible assets | $ | 2,405,312 | $ | 2,501,350 | $ | 1,499,745 | |||||||||||
Tangible common equity to tangible assets | 6.03 | % | 5.59 | % | 10.55 | % |
Adjusted Income and Diluted Earnings Per Share | |||||||||||||||||||||||||||||
For the three months ended | For the nine months ended | ||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | September 30, 2020 | June 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | ||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
Net income, as reported | $ | 5,209 | $ | 2,721 | 4,409 | $ | 12,040 | 11,431 | |||||||||||||||||||||
Acquisition and due diligence fees | 17 | 176 | 319 | 1,664 | 319 | ||||||||||||||||||||||||
Income tax benefit (1) | (4) | (34) | (25) | (333) | (25) | ||||||||||||||||||||||||
Net income, excluding acquisition and due diligence fees | $ | 5,222 | $ | 2,863 | 4,703 | $ | 13,371 | 11,725 | |||||||||||||||||||||
Diluted earnings per share, as reported | $ | 0.67 | $ | 0.35 | $ | 0.56 | $ | 1.55 | $ | 1.46 | |||||||||||||||||||
Effect of acquisition and due diligence fees, net of income tax benefit | 0.00 | 0.02 | 0.04 | 0.17 | 0.04 | ||||||||||||||||||||||||
Diluted earnings per common share, excluding acquisition and due diligence fees | $ | 0.67 | $ | 0.37 | $ | 0.60 | $ | 1.72 | $ | 1.50 | |||||||||||||||||||
(1) Assumes income tax rate of 21% on deductible acquisition expenses. |
Allowance for Loan Loss as a Percentage of Total Loans, Excluding PPP Loans | |||||||||||||||||
As of | |||||||||||||||||
(Dollars in thousands, except per share data) | September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
Total loans | $ | 1,843,888 | $ | 1,815,353 | $ | 1,168,923 | |||||||||||
Less: | |||||||||||||||||
PPP loans | 392,521 | 388,264 | — | ||||||||||||||
Total loans, excluding PPP loans | $ | 1,451,367 | $ | 1,427,089 | $ | 1,168,923 | |||||||||||
Allowance for loan loss | 21,254 | 17,063 | 12,307 | ||||||||||||||
Allowance for loan loss as a percentage of total loans | 1.15 | % | 0.94 | % | 1.05 | % | |||||||||||
Allowance for loan loss as a percentage of total loans excluding PPP loans | 1.46 | % | 1.20 | % | 1.05 | % |
For the three months ended September 30, | ||||||||||||||||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Revenue/Expense (1) | Average Yield/Rate (2) | Average Balance | Interest Revenue/Expense (1) | Average Yield/Rate (2) | ||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||
Gross loans(3) | $ | 1,871,164 | $ | 18,730 | 3.98 | % | $ | 1,182,764 | $ | 16,134 | 5.41 | % | ||||||||||||||||||||||||||
Investment securities(4): | ||||||||||||||||||||||||||||||||||||||
Taxable | 139,237 | 652 | 1.86 | 121,473 | 857 | 2.80 | ||||||||||||||||||||||||||||||||
Tax-exempt | 94,526 | 613 | 3.19 | 85,332 | 588 | 3.28 | ||||||||||||||||||||||||||||||||
Interest-earning cash balances | 259,349 | 76 | 0.12 | 51,142 | 289 | 2.24 | ||||||||||||||||||||||||||||||||
Other investments | 12,419 | 174 | 5.57 | 8,325 | 115 | 5.48 | ||||||||||||||||||||||||||||||||
Total interest-earning assets | $ | 2,376,695 | $ | 20,245 | 3.41 | % | $ | 1,449,036 | $ | 17,983 | 4.96 | % | ||||||||||||||||||||||||||
Non-earning assets: | ||||||||||||||||||||||||||||||||||||||
Cash and due from banks | 27,571 | 23,103 | ||||||||||||||||||||||||||||||||||||
Premises and equipment | 15,791 | 13,228 | ||||||||||||||||||||||||||||||||||||
Goodwill | 35,554 | 9,387 | ||||||||||||||||||||||||||||||||||||
Other intangible assets, net | 4,980 | 347 | ||||||||||||||||||||||||||||||||||||
Bank-owned life insurance | 18,006 | 12,023 | ||||||||||||||||||||||||||||||||||||
Allowance for loan losses | (17,321) | (12,241) | ||||||||||||||||||||||||||||||||||||
Other non-earning assets | 55,899 | 27,145 | ||||||||||||||||||||||||||||||||||||
Total assets | $ | 2,517,175 | $ | 1,522,028 | ||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 116,285 | $ | 65 | 0.22 | % | $ | 51,963 | $ | 63 | 0.48 | % | ||||||||||||||||||||||||||
Money market and savings deposits | 513,420 | 556 | 0.43 | 320,363 | 1,170 | 1.45 | ||||||||||||||||||||||||||||||||
Time deposits | 575,179 | 1,702 | 1.18 | 543,765 | 3,245 | 2.37 | ||||||||||||||||||||||||||||||||
Borrowings | 394,020 | 693 | 0.70 | 70,766 | 261 | 1.46 | ||||||||||||||||||||||||||||||||
Subordinated notes | 44,468 | 632 | 5.65 | 14,925 | 256 | 6.81 | ||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 1,643,372 | $ | 3,648 | 0.88 | % | $ | 1,001,782 | $ | 4,995 | 1.98 | % | ||||||||||||||||||||||||||
Noninterest-bearing liabilities and shareholders' equity: | ||||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 640,095 | $ | 333,690 | ||||||||||||||||||||||||||||||||||
Other liabilities | 34,846 | 19,804 | ||||||||||||||||||||||||||||||||||||
Shareholders' equity | 198,862 | 166,752 | ||||||||||||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,517,175 | $ | 1,522,028 | ||||||||||||||||||||||||||||||||||
Net interest income | $ | 16,597 | $ | 12,988 | ||||||||||||||||||||||||||||||||||
Interest spread | 2.53 | % | 2.98 | % | ||||||||||||||||||||||||||||||||||
Net interest margin(5) | 2.78 | % | 3.56 | % | ||||||||||||||||||||||||||||||||||
Tax equivalent effect | 0.02 | % | 0.03 | % | ||||||||||||||||||||||||||||||||||
Net interest margin on a fully tax equivalent basis | 2.80 | % | 3.59 | % |
For the nine months ended September 30, | ||||||||||||||||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Revenue/Expense(1) | Average Yield/Rate(2) | Average Balance | Interest Revenue/Expense(1) | Average Yield/Rate(2) | ||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||
Gross loans(3) | $ | 1,696,073 | $ | 55,817 | 4.40 | % | $ | 1,157,837 | $ | 47,547 | 5.49 | % | ||||||||||||||||||||||||||
Investment securities(4): | ||||||||||||||||||||||||||||||||||||||
Taxable | 124,169 | 1,930 | 2.08 | 135,460 | 2,773 | 2.74 | ||||||||||||||||||||||||||||||||
Tax-exempt | 97,104 | 1,894 | 3.20 | 84,476 | 1,728 | 3.28 | ||||||||||||||||||||||||||||||||
Interest-earning cash balances | 188,179 | 400 | 0.28 | 37,359 | 670 | 2.40 | ||||||||||||||||||||||||||||||||
Other investments | 12,401 | 417 | 4.49 | 8,325 | 364 | 5.85 | ||||||||||||||||||||||||||||||||
Total interest-earning assets | $ | 2,117,926 | $ | 60,458 | 3.84 | % | $ | 1,423,457 | $ | 53,082 | 5.02 | % | ||||||||||||||||||||||||||
Non-earning assets: | ||||||||||||||||||||||||||||||||||||||
Cash and due from banks | 26,264 | 24,075 | ||||||||||||||||||||||||||||||||||||
Premises and equipment | 16,195 | 13,252 | ||||||||||||||||||||||||||||||||||||
Goodwill | 35,894 | 9,387 | ||||||||||||||||||||||||||||||||||||
Other intangible assets, net | 4,420 | 383 | ||||||||||||||||||||||||||||||||||||
Bank-owned life insurance | 17,868 | 11,955 | ||||||||||||||||||||||||||||||||||||
Allowance for loan losses | (14,387) | (11,950) | ||||||||||||||||||||||||||||||||||||
Other non-earning assets | 47,714 | 18,642 | ||||||||||||||||||||||||||||||||||||
Total assets | $ | 2,251,894 | $ | 1,489,201 | ||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 112,579 | $ | 262 | 0.31 | % | $ | 53,894 | $ | 180 | 0.45 | % | ||||||||||||||||||||||||||
Money market and savings deposits | 458,438 | 2,217 | 0.65 | 307,461 | 3,389 | 1.47 | ||||||||||||||||||||||||||||||||
Time deposits | 564,396 | 6,560 | 1.55 | 556,922 | 9,647 | 2.32 | ||||||||||||||||||||||||||||||||
Borrowings | 311,024 | 1,866 | 0.80 | 62,006 | 960 | 2.07 | ||||||||||||||||||||||||||||||||
Subordinated notes | 44,463 | 1,903 | 5.72 | 14,910 | 759 | 6.81 | ||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 1,490,900 | $ | 12,808 | 1.15 | % | $ | 995,193 | $ | 14,935 | 2.01 | % | ||||||||||||||||||||||||||
Noninterest-bearing liabilities and shareholders' equity: | ||||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 546,066 | $ | 316,754 | ||||||||||||||||||||||||||||||||||
Other liabilities | 30,047 | 17,048 | ||||||||||||||||||||||||||||||||||||
Shareholders' equity | 184,881 | 160,206 | ||||||||||||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,251,894 | $ | 1,489,201 | ||||||||||||||||||||||||||||||||||
Net interest income | $ | 47,650 | $ | 38,147 | ||||||||||||||||||||||||||||||||||
Interest spread | 2.69 | % | 3.01 | % | ||||||||||||||||||||||||||||||||||
Net interest margin(5) | 3.01 | % | 3.58 | % | ||||||||||||||||||||||||||||||||||
Tax equivalent effect | 0.03 | % | 0.03 | % | ||||||||||||||||||||||||||||||||||
Net interest margin on a fully tax equivalent basis | 3.04 | % | 3.61 | % |
For the three months ended September 30, 2020 vs. 2019 | ||||||||||||||||||||
Increase (Decrease) Due to: | ||||||||||||||||||||
(Dollars in thousands) | Rate | Volume | Net Increase (Decrease) | |||||||||||||||||
Interest-earning assets | ||||||||||||||||||||
Gross loans | $ | (5,085) | $ | 7,681 | $ | 2,596 | ||||||||||||||
Investment securities: | ||||||||||||||||||||
Taxable | (317) | 112 | (205) | |||||||||||||||||
Tax-exempt | (49) | 74 | 25 | |||||||||||||||||
Interest-earning cash balances | (486) | 273 | (213) | |||||||||||||||||
Other investments | 59 | — | 59 | |||||||||||||||||
Total interest income | (5,878) | 8,140 | 2,262 | |||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||
Interest-bearing demand deposits | (47) | 49 | 2 | |||||||||||||||||
Money market and savings deposits | (1,091) | 477 | (614) | |||||||||||||||||
Time deposits | (1,721) | 178 | (1,543) | |||||||||||||||||
Borrowings | (202) | 634 | 432 | |||||||||||||||||
Subordinated debt | (52) | 428 | 376 | |||||||||||||||||
Total interest expense | (3,113) | 1,766 | (1,347) | |||||||||||||||||
Change in net interest income | $ | (2,765) | $ | 6,374 | $ | 3,609 |
For the nine months ended September 30, 2020 vs. 2019 | ||||||||||||||||||||
Increase (Decrease) Due to: | ||||||||||||||||||||
(Dollars in thousands) | Rate | Volume | Net Increase (Decrease) | |||||||||||||||||
Interest-earning assets | ||||||||||||||||||||
Gross loans | $ | (10,773) | $ | 19,043 | $ | 8,270 | ||||||||||||||
Investment securities: | ||||||||||||||||||||
Taxable | (625) | (218) | (843) | |||||||||||||||||
Tax-exempt | (137) | 303 | 166 | |||||||||||||||||
Interest-earning cash balances | (1,016) | 746 | (270) | |||||||||||||||||
Other investments | (98) | 151 | 53 | |||||||||||||||||
Total interest income | (12,649) | 20,025 | 7,376 | |||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||
Interest-bearing demand deposits | (68) | 150 | 82 | |||||||||||||||||
Money market and savings deposits | (2,398) | 1,226 | (1,172) | |||||||||||||||||
Time deposits | (3,215) | 128 | (3,087) | |||||||||||||||||
Borrowings | (895) | 1,801 | 906 | |||||||||||||||||
Subordinated debt | (138) | 1,282 | 1,144 | |||||||||||||||||
Total interest expense | (6,714) | 4,587 | (2,127) | |||||||||||||||||
Change in net interest income | $ | (5,935) | $ | 15,438 | $ | 9,503 |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Noninterest income | ||||||||||||||||||||||||||
Service charges on deposits | $ | 616 | $ | 627 | $ | 1,798 | $ | 1,914 | ||||||||||||||||||
Net gain on sales of securities | 434 | 151 | 1,862 | 151 | ||||||||||||||||||||||
Mortgage banking activities | 7,108 | 2,352 | 15,380 | 5,788 | ||||||||||||||||||||||
Other charges and fees | 967 | 728 | 2,564 | 1,768 | ||||||||||||||||||||||
Total noninterest income | $ | 9,125 | $ | 3,858 | $ | 21,604 | $ | 9,621 |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Noninterest expense | ||||||||||||||||||||||||||
Salary and employee benefits | $ | 9,862 | $ | 7,536 | $ | 28,090 | $ | 21,642 | ||||||||||||||||||
Occupancy and equipment expense | 1,678 | 1,203 | 4,773 | 3,575 | ||||||||||||||||||||||
Professional service fees | 808 | 465 | 2,141 | 1,212 | ||||||||||||||||||||||
Acquisition and due diligence fees | 17 | 319 | 1,664 | 319 | ||||||||||||||||||||||
Marketing expense | 257 | 379 | 709 | 843 | ||||||||||||||||||||||
Printing and supplies expense | 89 | 78 | 398 | 250 | ||||||||||||||||||||||
Data processing expense | 844 | 661 | 2,601 | 1,862 | ||||||||||||||||||||||
Core deposit premium amortization | 192 | 29 | 576 | 117 | ||||||||||||||||||||||
Other expense | 1,379 | 869 | 3,819 | 3,254 | ||||||||||||||||||||||
Total noninterest expense | $ | 15,126 | $ | 11,539 | $ | 44,771 | $ | 33,074 |
(Dollars in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Securities available-for-sale: | ||||||||||||||
U.S. government sponsored entities and agencies | $ | 27,199 | $ | — | ||||||||||
State and political subdivision | 117,550 | 93,747 | ||||||||||||
Mortgage-backed securities: residential | 19,492 | 10,565 | ||||||||||||
Mortgage-backed securities: commercial | 8,655 | 8,779 | ||||||||||||
Collateralized mortgage obligations: residential | 14,333 | 8,529 | ||||||||||||
Collateralized mortgage obligations: commercial | 33,003 | 23,181 | ||||||||||||
U.S. Treasury | 1,003 | 1,999 | ||||||||||||
SBA | 18,808 | 21,984 | ||||||||||||
Asset backed securities | 9,954 | 10,084 | ||||||||||||
Corporate bonds | 3,530 | 2,037 | ||||||||||||
Total securities available-for-sale | $ | 253,527 | $ | 180,905 |
September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
One year or less | One to five years | Five to ten years | After ten years | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Amortized Cost | Average Yield | Amortized Cost | Average Yield | Amortized Cost | Average Yield | Amortized Cost | Average Yield | ||||||||||||||||||||||||||||||||||||||||||
Securities available-for-sale: | ||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. government sponsored agency obligations | $ | 2,520 | 1.61 | % | $ | 4,572 | 1.62 | % | $ | 15,000 | 1.22 | % | $ | 5,000 | 1.48 | % | ||||||||||||||||||||||||||||||||||
State and political subdivision | 2,267 | 2.08 | 9,942 | 2.39 | 29,081 | 2.87 | 68,208 | 3.18 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities: residential | — | — | 96 | 0.89 | 111 | 2.23 | 19,030 | 1.90 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities: commercial | 858 | 1.38 | 3,943 | 2.45 | 1,412 | 2.63 | 1,812 | 3.64 | ||||||||||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations: residential | — | — | 51 | 3.98 | 589 | 2.01 | 13,537 | 1.23 | ||||||||||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations: commercial | 1,005 | 1.51 | 8,926 | 3.08 | 13,678 | 1.66 | 8,050 | 2.44 | ||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury | 1,000 | 1.65 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
SBA | — | — | — | — | 10,388 | 1.36 | 8,481 | 1.22 | ||||||||||||||||||||||||||||||||||||||||||
Asset backed securities | — | — | — | — | — | — | 10,298 | 0.89 | ||||||||||||||||||||||||||||||||||||||||||
Corporate bonds | 3,491 | 3.09 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Total securities available-for-sale | $ | 11,141 | 2.15 | % | $ | 27,530 | 2.49 | % | $ | 70,259 | 2.04 | % | $ | 134,416 | 2.40 | % |
December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||
One year or less | One to five years | Five to ten years | After ten years | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Amortized Cost | Average Yield | Amortized Cost | Average Yield | Amortized Cost | Average Yield | Amortized Cost | Average Yield | ||||||||||||||||||||||||||||||||||||||||||
Securities available-for-sale: | ||||||||||||||||||||||||||||||||||||||||||||||||||
State and political subdivision | $ | 1,375 | 2.25 | % | $ | 3,747 | 2.24 | % | $ | 18,566 | 2.95 | % | $ | 65,616 | 3.38 | % | ||||||||||||||||||||||||||||||||||
Mortgage-backed securities: residential | — | — | 153 | 0.93 | 143 | 2.07 | 10,313 | 2.84 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities: commercial | 431 | 0.99 | 4,874 | 2.27 | 1,435 | 2.65 | 1,827 | 3.64 | ||||||||||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations: residential | — | — | — | — | 727 | 2.15 | 7,814 | 2.11 | ||||||||||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations: commercial | — | — | 9,031 | 2.87 | 4,371 | 2.83 | 9,489 | 2.39 | ||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury | — | — | 1,976 | 2.06 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
SBA | — | — | — | — | 8,706 | 2.59 | 13,345 | 2.49 | ||||||||||||||||||||||||||||||||||||||||||
Asset backed securities | — | — | — | — | — | — | 10,390 | 2.59 | ||||||||||||||||||||||||||||||||||||||||||
Corporate bonds | 1,006 | 2.44 | 1,024 | 4.43 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Total securities available-for-sale | $ | 2,812 | 2.13 | % | $ | 20,805 | 2.60 | % | $ | 33,948 | 2.81 | % | $ | 118,794 | 3.01 | % |
As of September 30, | As of December 31, | |||||||||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||
Non-owner occupied | $ | 460,708 | $ | 388,515 | $ | 367,671 | $ | 343,420 | $ | 322,354 | ||||||||||||||||||||||
Owner occupied | 269,481 | 216,131 | 194,422 | 168,342 | 169,348 | |||||||||||||||||||||||||||
Total commercial real estate | 730,189 | 604,646 | 562,093 | 511,762 | 491,702 | |||||||||||||||||||||||||||
Commercial and industrial | 807,923 | 410,228 | 383,455 | 377,686 | 342,069 | |||||||||||||||||||||||||||
Residential real estate | 304,088 | 211,839 | 180,018 | 144,439 | 118,730 | |||||||||||||||||||||||||||
Consumer | 1,688 | 896 | 999 | 1,036 | 892 | |||||||||||||||||||||||||||
Total loans | $ | 1,843,888 | $ | 1,227,609 | $ | 1,126,565 | $ | 1,034,923 | $ | 953,393 |
(Dollars in thousands) | One year or less | After one but within five years | After five years | Total | ||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||
Commercial real estate | $ | 93,069 | $ | 435,324 | $ | 201,796 | $ | 730,189 | ||||||||||||||||||
Commercial and industrial | 149,938 | 579,914 | 78,071 | 807,923 | ||||||||||||||||||||||
Residential real estate | 9,175 | 7,907 | 287,006 | 304,088 | ||||||||||||||||||||||
Consumer | 59 | 1,499 | 130 | 1,688 | ||||||||||||||||||||||
Total loans | $ | 252,241 | $ | 1,024,644 | $ | 567,003 | $ | 1,843,888 | ||||||||||||||||||
Sensitivity of loans to changes in interest rates: | ||||||||||||||||||||||||||
Fixed interest rates | $ | 905,028 | $ | 185,832 | ||||||||||||||||||||||
Floating interest rates | 119,616 | 381,171 | ||||||||||||||||||||||||
Total | $ | 1,024,644 | $ | 567,003 |
(Dollars in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Classified loans: | ||||||||||||||
Substandard | $ | 18,983 | $ | 20,569 | ||||||||||
Doubtful | 5,086 | 1,838 | ||||||||||||
Total classified loans | $ | 24,069 | $ | 22,407 | ||||||||||
Special mention | 37,560 | 17,292 | ||||||||||||
Total classified and criticized loans | $ | 61,629 | $ | 39,699 |
As of September 30, | As of December 31, | |||||||||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||||
Nonaccrual loans | ||||||||||||||||||||||||||||||||
Commercial real estate | $ | 7,022 | $ | 4,832 | $ | 5,927 | $ | 2,257 | $ | 147 | ||||||||||||||||||||||
Commercial and industrial | 8,078 | 11,112 | 9,605 | 9,024 | 13,389 | |||||||||||||||||||||||||||
Residential real estate | 4,151 | 2,569 | 2,915 | 2,767 | 1,498 | |||||||||||||||||||||||||||
Consumer | 15 | 16 | — | — | — | |||||||||||||||||||||||||||
Total nonaccrual loans(1) | 19,266 | 18,529 | 18,447 | 14,048 | 15,034 | |||||||||||||||||||||||||||
Other real estate owned | — | 921 | — | 652 | 258 | |||||||||||||||||||||||||||
Total nonperforming assets | 19,266 | 19,450 | 18,447 | 14,700 | 15,292 | |||||||||||||||||||||||||||
Performing troubled debt restructurings | ||||||||||||||||||||||||||||||||
Commercial real estate | — | — | — | — | 290 | |||||||||||||||||||||||||||
Commercial and industrial | 550 | 547 | 568 | 961 | 1,018 | |||||||||||||||||||||||||||
Residential real estate | 599 | 359 | 363 | 261 | 207 | |||||||||||||||||||||||||||
Total performing troubled debt restructurings | 1,149 | 906 | 931 | 1,222 | 1,515 | |||||||||||||||||||||||||||
Total impaired assets, excluding ASC 310-30 loans | $ | 20,415 | $ | 20,356 | $ | 19,378 | $ | 15,922 | $ | 16,807 | ||||||||||||||||||||||
Loans 90 days or more past due and still accruing | $ | 552 | $ | 157 | $ | 243 | $ | 440 | $ | 377 |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Balance at beginning of period | $ | 17,063 | $ | 12,353 | $ | 12,674 | $ | 11,566 | ||||||||||||||||||
Loan charge-offs: | ||||||||||||||||||||||||||
Commercial real estate | — | — | — | (74) | ||||||||||||||||||||||
Commercial and industrial | (10) | (49) | (1,729) | (164) | ||||||||||||||||||||||
Consumer | (4) | (34) | (47) | (48) | ||||||||||||||||||||||
Total loan charge-offs | (124) | (83) | (1,886) | (286) | ||||||||||||||||||||||
Recoveries of loans previously charged-off: | ||||||||||||||||||||||||||
Commercial real estate | 12 | 5 | 12 | 6 | ||||||||||||||||||||||
Commercial and industrial | 15 | 10 | 47 | 101 | ||||||||||||||||||||||
Residential real estate | 10 | 12 | 51 | 55 | ||||||||||||||||||||||
Consumer | 8 | 26 | 22 | 30 | ||||||||||||||||||||||
Total loan recoveries | 45 | 53 | 132 | 192 | ||||||||||||||||||||||
Net charge-offs | (79) | (30) | (1,754) | (94) | ||||||||||||||||||||||
Provision expense for loan losses | 4,270 | (16) | 10,334 | 835 | ||||||||||||||||||||||
Balance at end of period | $ | 21,254 | $ | 12,307 | $ | 21,254 | $ | 12,307 | ||||||||||||||||||
Allowance for loan losses as a percentage of period-end loans | 1.15 | % | 1.05 | % | 1.15 | % | 1.05 | % | ||||||||||||||||||
Net charge-offs to average loans | 0.02 | 0.01 | 0.14 | 0.03 |
(Dollars in thousands) | Allocated Allowance | Percentage of loans in each category to total loans | ||||||||||||
September 30, 2020 | ||||||||||||||
Balance at end of period applicable to: | ||||||||||||||
Commercial real estate | $ | 9,819 | 39.6 | % | ||||||||||
Commercial and industrial | 8,180 | 43.8 | ||||||||||||
Residential real estate | 3,246 | 16.5 | ||||||||||||
Consumer | 9 | 0.1 | ||||||||||||
Total loans | $ | 21,254 | 100.0 | % | ||||||||||
December 31, 2019 | ||||||||||||||
Balance at end of period applicable to: | ||||||||||||||
Commercial real estate | $ | 5,773 | 49.2 | % | ||||||||||
Commercial and industrial | 5,515 | 33.4 | ||||||||||||
Residential real estate | 1,384 | 17.3 | ||||||||||||
Consumer | 2 | 0.1 | ||||||||||||
Total loans | $ | 12,674 | 100.0 | % | ||||||||||
December 31, 2018 | ||||||||||||||
Balance at end of period applicable to: | ||||||||||||||
Commercial real estate | $ | 5,227 | 49.9 | % | ||||||||||
Commercial and industrial | 5,174 | 34.0 | ||||||||||||
Residential real estate | 1,164 | 16.0 | ||||||||||||
Consumer | 1 | 0.1 | ||||||||||||
Total loans | $ | 11,566 | 100.0 | % | ||||||||||
December 31, 2017 | ||||||||||||||
Balance at end of period applicable to: | ||||||||||||||
Commercial real estate | $ | 4,852 | 49.4 | % | ||||||||||
Commercial and industrial | 5,903 | 36.5 | ||||||||||||
Residential real estate | 950 | 14.0 | ||||||||||||
Consumer | 8 | 0.1 | ||||||||||||
Total loans | $ | 11,713 | 100.0 | % | ||||||||||
December 31, 2016 | ||||||||||||||
Balance at end of period applicable to: | ||||||||||||||
Commercial real estate | $ | 4,124 | 51.5 | % | ||||||||||
Commercial and industrial | 5,932 | 35.9 | ||||||||||||
Residential real estate | 1,030 | 12.5 | ||||||||||||
Consumer | 3 | 0.1 | ||||||||||||
Total loans | $ | 11,089 | 100.0 | % | ||||||||||
Three Months Ended September 30, 2020 | ||||||||||||||||||||
(Dollars in thousands) | Average Balance | Percent | Average Rate | |||||||||||||||||
Noninterest-bearing demand deposits | $ | 640,095 | 34.6 | % | — | % | ||||||||||||||
Interest-bearing demand deposits | 116,285 | 6.3 | 0.22 | |||||||||||||||||
Money market and savings deposits | 513,420 | 27.8 | 0.43 | |||||||||||||||||
Time deposits | 575,179 | 31.3 | 1.18 | |||||||||||||||||
Total deposits | $ | 1,844,979 | 100.0 | % | 0.50 | % | ||||||||||||||
Nine Months Ended September 30, 2020 | ||||||||||||||||||||
(Dollars in thousands) | Average Balance | Percent | Average Rate | |||||||||||||||||
Noninterest-bearing demand deposits | $ | 546,066 | 32.5 | % | — | % | ||||||||||||||
Interest-bearing demand deposits | 112,579 | 6.7 | 0.31 | |||||||||||||||||
Money market and savings deposits | 458,438 | 27.3 | 0.65 | |||||||||||||||||
Time deposits | 564,396 | 33.5 | 1.55 | |||||||||||||||||
Total deposits | $ | 1,681,479 | 100.0 | % | 0.72 | % |
(Dollars in thousands) | September 30, 2020 | |||||||
Maturing in: | ||||||||
3 months or less | $ | 5,232 | ||||||
3 months to 6 months | 140,383 | |||||||
6 months to 1 year | 130,872 | |||||||
1 year or greater | 243,354 | |||||||
Total | $ | 519,841 |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Securities sold under agreements to repurchase | ||||||||||||||||||||||||||
Average daily balance | $ | 163 | $ | 563 | $ | 330 | $ | 537 | ||||||||||||||||||
Weighted-average rate during period | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | ||||||||||||||||||
Amount outstanding at period end | $ | 187 | $ | 545 | $ | 187 | $ | 545 | ||||||||||||||||||
Weighted-average rate at period end | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | ||||||||||||||||||
Maximum month-end balance | $ | 187 | $ | 866 | $ | 936 | $ | 866 | ||||||||||||||||||
FHLB Advances | ||||||||||||||||||||||||||
Average daily balance | $ | — | $ | 6,630 | $ | 5,456 | $ | 27,903 | ||||||||||||||||||
Weighted-average rate during period | — | % | 2.57 | % | 0.99 | % | 2.49 | % | ||||||||||||||||||
Amount outstanding at period end | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Weighted-average rate at period end | — | % | — | % | — | % | — | % | ||||||||||||||||||
Maximum month-end balance | $ | — | $ | — | $ | 25,000 | $ | 95,000 | ||||||||||||||||||
FHLB Line of Credit | ||||||||||||||||||||||||||
Average daily balance | $ | 63 | $ | — | $ | 60 | $ | 111 | ||||||||||||||||||
Weighted-average rate during period | — | % | — | % | 1.29 | % | 2.92 | % | ||||||||||||||||||
Amount outstanding at period end | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Weighted-average rate at period end | — | % | — | % | — | % | — | % | ||||||||||||||||||
Maximum month-end balance | $ | — | $ | — | $ | — | $ | 895 | ||||||||||||||||||
Federal funds purchased | ||||||||||||||||||||||||||
Average daily balance | $ | — | $ | 109 | $ | 193 | $ | 2,044 | ||||||||||||||||||
Weighted-average rate during period | — | % | — | % | 2.73 | % | 2.74 | % | ||||||||||||||||||
Amount outstanding at period end | $ | — | $ | 10,000 | $ | — | $ | 10,000 | ||||||||||||||||||
Weighted-average rate at period end | — | % | 1.90 | % | — | % | 1.90 | % | ||||||||||||||||||
Maximum month-end balance | $ | — | $ | 10,000 | $ | — | $ | 15,000 |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Balance at beginning of period | $ | 180,259 | $ | 162,867 | $ | 170,703 | $ | 151,760 | ||||||||||||||||||
Net income | 5,209 | 4,409 | 12,040 | 11,431 | ||||||||||||||||||||||
Other comprehensive income | 783 | 1,238 | 4,451 | 7,120 | ||||||||||||||||||||||
Preferred stock offering, net of issuance costs | 23,370 | — | 23,370 | — | ||||||||||||||||||||||
Redeemed stock | — | (488) | (620) | (2,108) | ||||||||||||||||||||||
Common stock dividends declared | (387) | (310) | (1,160) | (928) | ||||||||||||||||||||||
Exercise of stock options | — | 63 | 95 | 219 | ||||||||||||||||||||||
Stock-based compensation expense | 234 | 189 | 589 | 474 | ||||||||||||||||||||||
Balance at end of period | $ | 209,468 | $ | 167,968 | $ | 209,468 | $ | 167,968 |
Actual Capital Ratio | Capital Adequacy Regulatory Requirement | Capital Adequacy Regulatory Requirement + Capital Conservation Buffer(1) | Well Capitalized Regulatory Requirement | |||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||
Common equity tier 1 to risk-weighted assets: | ||||||||||||||||||||||||||
Consolidated | 8.83 | % | 4.50 | % | 7.00 | % | ||||||||||||||||||||
Bank | 11.23 | % | 4.50 | % | 7.00 | % | 6.50 | % | ||||||||||||||||||
Tier 1 capital to risk-weighted assets: | ||||||||||||||||||||||||||
Consolidated | 10.31 | % | 6.00 | % | 8.50 | % | ||||||||||||||||||||
Bank | 11.23 | % | 6.00 | % | 8.50 | % | 8.00 | % | ||||||||||||||||||
Total capital to risk-weighted assets: | ||||||||||||||||||||||||||
Consolidated | 14.39 | % | 8.00 | % | 10.50 | % | ||||||||||||||||||||
Bank | 12.48 | % | 8.00 | % | 10.50 | % | 10.00 | % | ||||||||||||||||||
Tier 1 capital to average assets (leverage ratio): | ||||||||||||||||||||||||||
Consolidated | 7.17 | % | 4.00 | % | 4.00 | % | ||||||||||||||||||||
Bank | 7.83 | % | 4.00 | % | 4.00 | % | 5.00 | % | ||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||
Common equity tier 1 to risk-weighted assets: | ||||||||||||||||||||||||||
Consolidated | 11.72 | % | 4.50 | % | 7.00 | % | ||||||||||||||||||||
Bank | 12.27 | % | 4.50 | % | 7.00 | % | 6.50 | % | ||||||||||||||||||
Tier 1 capital to risk-weighted assets: | ||||||||||||||||||||||||||
Consolidated | 11.72 | % | 6.00 | % | 8.50 | % | ||||||||||||||||||||
Bank | 12.27 | % | 6.00 | % | 8.50 | % | 8.00 | % | ||||||||||||||||||
Total capital to risk-weighted assets: | ||||||||||||||||||||||||||
Consolidated | 15.99 | % | 8.00 | % | 10.50 | % | ||||||||||||||||||||
Bank | 13.24 | % | 8.00 | % | 10.50 | % | 10.00 | % | ||||||||||||||||||
Tier 1 capital to average assets (leverage ratio): | ||||||||||||||||||||||||||
Consolidated | 10.41 | % | 4.00 | % | 4.00 | % | ||||||||||||||||||||
Bank | 10.96 | % | 4.00 | % | 4.00 | % | 5.00 | % | ||||||||||||||||||
Contractual Maturities as of September 30, 2020 | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | Less Than One Year | One to Three Years | Three to Five Years | Over Five Years | Total | |||||||||||||||||||||||||||
Operating lease obligations | $ | 1,739 | $ | 3,507 | $ | 2,613 | $ | 4,074 | $ | 11,933 | ||||||||||||||||||||||
Short-term borrowings | 187 | — | — | — | 187 | |||||||||||||||||||||||||||
Long-term borrowings | 3,202 | 51,420 | 32,000 | 130,000 | 216,622 | |||||||||||||||||||||||||||
Subordinated notes | — | — | — | 44,555 | 44,555 | |||||||||||||||||||||||||||
Time deposits | 444,662 | 150,575 | 4,905 | — | 600,142 | |||||||||||||||||||||||||||
Total | $ | 449,790 | $ | 205,502 | $ | 39,518 | $ | 178,629 | $ | 873,439 |
Contractual Maturities as of December 31, 2019 | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | Less Than One Year | One to Three Years | Three to Five Years | Over Five Years | Total | |||||||||||||||||||||||||||
Operating lease obligations | $ | 1,341 | $ | 2,351 | $ | 2,149 | $ | 4,736 | $ | 10,577 | ||||||||||||||||||||||
Short-term borrowings | 65,851 | — | — | — | 65,851 | |||||||||||||||||||||||||||
Long-term borrowings | — | 11,375 | 30,000 | 105,000 | 146,375 | |||||||||||||||||||||||||||
Subordinated notes | — | — | — | 44,440 | 44,440 | |||||||||||||||||||||||||||
Time deposits | 392,839 | 39,855 | 378 | — | 433,072 | |||||||||||||||||||||||||||
Total | $ | 460,031 | $ | 53,581 | $ | 32,527 | $ | 154,176 | $ | 700,315 |
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||
(Dollars in thousands) | Fixed Rate | Variable Rate | Fixed Rate | Variable Rate | ||||||||||||||||||||||
Commitments to make loans | $ | 5,302 | $ | 5,295 | $ | 16,276 | $ | 20,128 | ||||||||||||||||||
Unused lines of credit | 30,496 | 361,749 | 28,723 | 288,086 | ||||||||||||||||||||||
Unused standby letters of credit and commercial letters of credit | 3,705 | 2,028 | 4,895 | — |
September 30, 2020 | December 31, 2019 | |||||||||||||
Investment securities available-for-sale to total assets | 10.36 | % | 11.41 | % | ||||||||||
Loans to total deposits | 94.88 | 108.12 | ||||||||||||
Interest-earning assets to total assets | 94.32 | 95.58 | ||||||||||||
Interest-bearing deposits to total deposits | 67.46 | 71.30 |
September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Change in rates | Following 12 months | Following 24 months | Following 12 months | Following 24 months | |||||||||||||||||||
+400 basis points | (2.6) | % | 4.8 | % | 5.8 | % | 1.9 | % | |||||||||||||||
+300 basis points | 1.2 | 7.0 | 5.2 | 2.6 | |||||||||||||||||||
+200 basis points | 3.2 | 8.3 | 4.2 | 2.7 | |||||||||||||||||||
+100 basis points | 3.9 | 7.9 | 2.7 | 2.1 | |||||||||||||||||||
-100 basis points | (2.8) | (4.2) | (4.0) | (3.9) |
Change in rates | September 30, 2020 | December 31, 2019 | |||||||||
+400 basis points | 24.0 | % | (39.4) | % | |||||||
+300 basis points | 27.0 | (28.4) | |||||||||
+200 basis points | 26.0 | (17.8) | |||||||||
+100 basis points | 19.0 | (8.1) | |||||||||
-100 basis points | (30.0) | 6.6 |
(Dollars in thousands, except per share amounts) | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet be Purchased under the Plans or Programs | |||||||||||||||||||
July 1-31, 2020 | — | $ | — | — | $ | 2,215 | |||||||||||||||||
August 1-31, 2020 | — | — | — | 2,215 | |||||||||||||||||||
September 1-30, 2020 | — | — | — | 2,215 | |||||||||||||||||||
Total | — | $ | — | — |
Exhibit No. | Description | |||||||
1.1 | ||||||||
3.1 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101 | Financial information from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020, formatted in iXBRL interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Changes in Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements – filed herewith. | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Level One Bancorp, Inc. | |||||||||||
Date: November 6, 2020 | By: | /s/ | Patrick J. Fehring | ||||||||
Patrick J. Fehring | |||||||||||
President and Chief Executive Officer | |||||||||||
(principal executive officer) | |||||||||||
Date: November 6, 2020 | By: | /s/ | David C. Walker | ||||||||
David C. Walker | |||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(principal financial officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q (the “Report”) of Level One Bancorp, Inc. (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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the Registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and |
d) | Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Level One Bancorp, Inc. | |||||||||||
Dated as of: November 6, 2020 | By: | /s/ | Patrick J. Fehring | ||||||||
Patrick J. Fehring | |||||||||||
President and Chief Executive Officer | |||||||||||
(principal executive officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q (the “Report”) of Level One Bancorp, Inc. (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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the Registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and |
d) | Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Level One Bancorp, Inc. | |||||||||||
Dated as of: November 6, 2020 | By: | /s/ | David C. Walker | ||||||||
David C. Walker | |||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(principal financial officer) |
(1) | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2020 (the “Report”) fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Level One Bancorp, Inc. | |||||||||||
Dated as of: November 6, 2020 | By: | /s/ | Patrick J. Fehring | ||||||||
Patrick J. Fehring | |||||||||||
President and Chief Executive Officer | |||||||||||
(principal executive officer) |
(1) | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2020 (the “Report”) fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Level One Bancorp, Inc. | |||||||||||
Dated as of: November 6, 2020 | By: | /s/ | David C. Walker | ||||||||
David C. Walker | |||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(principal financial officer) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized (in shares) | 50,000 | 50,000 |
Preferred stock, shares issued (in shares) | 10,000 | 0 |
Preferred stock, shares outstanding (in shares) | 10,000 | 0 |
Preferred stock, liquidation preference (in dollars per share) | $ 2,500 | |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 7,734,322 | 7,715,491 |
Common stock, shares outstanding (in shares) | 7,734,322 | 7,715,491 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|||
Statement of Comprehensive Income [Abstract] | ||||||
Net income | $ 5,209 | $ 4,409 | $ 12,040 | $ 11,431 | ||
Other comprehensive income: | ||||||
Unrealized gains on securities available-for-sale | 1,425 | 1,414 | 7,497 | 8,861 | ||
Reclassification adjustment for gains included in income | (434) | 151 | (1,862) | 151 | ||
Tax effect | [1] | (208) | (327) | (1,184) | (1,892) | |
Net unrealized gains on securities available-for-sale, net of tax | 783 | 1,238 | 4,451 | 7,120 | ||
Total comprehensive income, net of tax | 5,992 | 5,647 | 16,491 | 18,551 | ||
Tax expense (benefit) related to reclassification | $ (91) | $ 32 | $ (391) | $ 32 | ||
|
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - (UNAUDITED) (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Statement of Stockholders' Equity [Abstract] | |||
Redeemed stock (in shares) | 20,530 | 25,256 | 88,457 |
Cash dividend declared (in dollars per share) | $ 0.04 | $ 0.15 | $ 0.12 |
Exercise of stock options (in shares) | 6,250 | 10,000 | 21,550 |
Basis of Presentation and Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations: Level One Bancorp, Inc. (the “Company,” “Level One,” “we,” “our,” or “us”) is a financial holding company headquartered in Farmington Hills, Michigan. In addition to the Company headquarters, as of September 30, 2020, its wholly owned bank subsidiary, Level One Bank (the "Bank"), had 17 offices, including 11 banking centers (our full service branches) in Metro Detroit, one banking center in Grand Rapids, one banking center in Jackson, three banking centers in Ann Arbor and one mortgage loan production office in Ann Arbor. The Bank is a Michigan banking corporation with depository accounts insured by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (the "FDIC"). The Bank provides a wide range of business and consumer financial services in southeastern Michigan and west Michigan. Its primary deposit products are checking, interest-bearing demand, money market and savings, and term certificate accounts, and its primary lending products are commercial real estate, commercial and industrial, residential real estate, and consumer loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Other financial instruments, which potentially represent concentrations of credit risk, include federal funds sold. The Company's subsidiary, Hamilton Court Insurance Company ("Hamilton Court"), is a wholly owned insurance subsidiary of the Company that provides property and casualty insurance coverage to the Company and the Bank and reinsurance to ten other third party insurance captives for which insurance may not be currently available or economically feasible in the insurance marketplace. Hamilton Court was designed to insure the risks of the Company and the Bank by providing additional insurance coverage for deductibles, excess limits and uninsured exposures. Hamilton Court is incorporated in Nevada. During the third quarter of 2020, it was determined that Hamilton Court Insurance Company will exit the pool resources relationship to which it was previously a member and will dissolve, which is expected to occur in the fourth quarter of 2020 or the first quarter of 2021. Preferred Stock Public Offering: On August 10, 2020, the Company sold 1,000,000 depositary shares, each representing 1/100th interest in a share of 7.50% Non-Cumulative Perpetual Preferred Stock, Series B, with a liquidation preference of $2,500 per share of Preferred Stock (equivalent to $25 per depositary share). The aggregate offering price for the shares sold by the Company was $25.0 million, and after deducting $1.6 million of underwriting discounts and offering expenses paid to third parties, the Company received total net proceeds of $23.4 million. Merger with Ann Arbor Bancorp, Inc.: On January 2, 2020, the Company completed its previously announced acquisition of Ann Arbor Bancorp, Inc. (“AAB”) and its wholly owned subsidiary, Ann Arbor State Bank. The transaction was completed pursuant to a merger of the Company’s wholly owned merger subsidiary (“Merger Sub”) with and into AAB, pursuant to the Agreement and Plan of Merger, dated as of August 12, 2019, among the Company, Merger Sub and AAB. The Company paid aggregate consideration of approximately $67.9 million in cash. See "Note 2 - Business Combinations" for more information. Basis of Presentation and Principles of Consolidation: The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and conform to practices within the banking industry and include all of the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting. The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results for the full year or any other period. These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2019, included in our Annual Form 10-K, filed with the SEC on March 13, 2020. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, the Bank and Hamilton Court, after elimination of significant intercompany transactions and accounts. Use of Estimates: To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided; therefore, future results could differ. These estimates and assumptions are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, the effects of the Coronavirus Disease 2019 (“COVID-19”) pandemic, its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic. The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020, which provides a variety of provisions, including, among other things, a small business lending program to originate paycheck protection loans, temporary relief for the community bank leverage ratio, and temporary relief for financial institutions related to troubled debt restructurings. Actual results may differ from those estimates. Emerging Growth Company Status: The Company is an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). Section 107 of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period when complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period, which means these financial statements, as well as financial statements we file in the future for as long as we remain an emerging growth company, will be subject to all new or revised accounting standards generally applicable to private companies. Impact of Recently Adopted Accounting Standards: Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 "Revenue from Contracts with Customers (Topic 606)," which provides a framework for revenue recognition that replaces the existing industry and transaction specific requirements under the existing standards. ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount. The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount in which the entity expects to be entitled. Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity's performance, or at a point in time, when control of the goods or services are transferred to the customer. The amendments of ASU 2014-09 may be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company adopted ASU 2014-09 and related issuances on January 1, 2019, with no cumulative effect adjustment to opening retained earnings required upon implementation of this standard. The adoption of this guidance does not result in changes to how revenue is recognized or the timing of recognition from our method prior to adoption. Revenue is recognized when obligations, under the terms of a contract with our customer, are satisfied, which generally occurs when services are performed. Revenue is measured as the amount of consideration we expect to receive in exchange for providing services. The Company performed an analysis of the impact of adoption of this ASU, reviewing revenue recorded from service charges on deposit accounts, gains (losses) on other real estate owned and other assets, debit card interchange fees, and merchant processing fees. Service fees on deposit accounts - The fees are generated from a depositor’s option to purchase services offered under the contract and are only considered a contract when the depositor exercises their option to purchase these services. Therefore we deem the term of our contracts with depositors to be day-to-day and do not extend beyond the services already provided. Debit card interchange fees - We collect interchange fee income when debit cards that we have issued to our customers are used in merchant transactions. Our performance obligation is satisfied and revenue is recognized at the point we initiate the payment of funds from a customer’s account to a merchant account. Merchant processing fees - We receive referral fees for referring our customers to a merchant servicer. Fees are immaterial and recognized as received. Gain (loss) on sale of other real estate owned - The Company records income or expense only upon consummation of the sale of the real estate. Financial Instruments 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," to improve the accounting for financial instruments. This ASU requires equity investments with readily determinable fair values to be measured at fair value with changes recognized in net income regardless of classification. For equity investments without a readily determinable fair value, the value of the investment would be measured 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 instead of fair value, unless a qualitative assessment indicates impairment. Additionally, this ASU requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements, as well as the required use of exit pricing when measuring the fair value of financial instruments for disclosure purposes. The guidance became effective for the Company for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, and was to be applied prospectively with a cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company adopted ASU 2016-01 and related issues on January 1, 2019 and determined that the implementation of this standard did not have a material impact to our consolidated financial statements. Impact of Recently Issued Accounting Standards: Leases In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," to improve transparency and comparability across entities regarding leasing arrangements. This ASU requires the recognition of a separate lease liability representing the required discounted lease payments over the lease term and a separate lease asset representing the right to use the underlying asset during the same lease term. Additionally, this ASU provides clarification regarding the identification of certain components of contracts that would represent a lease as well as requires additional disclosures to the notes of the financial statements. The guidance is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, and is to be applied under an optional transition method. The Company is planning to adopt this new guidance within the time frame noted above. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements but does not expect that the adoption will have a material impact. Additionally, the Company does not expect to significantly change operating lease agreements prior to adoption. Allowance for Credit Losses In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," to replace the current incurred loss methodology for recognizing credit losses, which delays recognition until it is probable a loss has been incurred, with a methodology that reflects an estimate of all expected credit losses and considers additional reasonable and supportable forecasted information when determining credit loss estimates. This impacts the calculation of the allowance for credit losses for all financial assets measured under the amortized cost basis, including PCI loans at the time of and subsequent to acquisition. Additionally, credit losses related to available-for-sale debt securities would be recorded through the allowance for credit losses and not as a direct adjustment to the amortized cost of the securities. The guidance is effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements, current systems and processes. At this time, the Company is reviewing potential methodologies for estimating expected credit losses using reasonable and supportable forecast information and has identified certain data and system requirements. Once adopted, we expect our allowance for loan losses to increase through a one-time adjustment to retained earnings; however, until our evaluation is complete, the estimated increase in allowance will be unknown. The Company is planning to adopt this new guidance within the time frame noted above.
|
Business Combinations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | BUSINESS COMBINATIONS On January 2, 2020, the Company completed its previously announced acquisition of Ann Arbor Bancorp, Inc. and its wholly owned subsidiary, Ann Arbor State Bank. The Company paid an aggregate consideration of approximately $67.9 million in cash. AAB's results of operations were included in the Company’s results beginning January 2, 2020. Acquisition-related costs of $1.7 million are included in the Company’s income statement for the nine months ended September 30, 2020. Goodwill of $26.2 million arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies. The goodwill arising from the acquisition of AAB is not deductible for tax purposes. The following table summarizes the amounts of assets acquired and liabilities assumed recognized at the acquisition date.
Loans acquired in the acquisition were initially recorded at fair value with no separate allowance for loan losses. The Company reviewed the loans at acquisition to determine which should be considered purchased credit impaired loans (i.e. loans accounted for under ASC 310-30) defining impaired loans as those that were either not accruing interest or exhibited credit risk factors consistent with nonaccrual loans at the acquisition date. Fair values for purchased loans are based on a discounted cash flow methodology that considers various factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of the loan and whether or not the loan was amortizing, and a discount rate reflecting the Company's assessment of risk inherent in the cash flow estimates. The Company accounts for purchased credit impaired loans in accordance with the provisions of ASC 310-30. The cash flows expected to be collected on purchased loans are estimated based upon the expected remaining life of the underlying loans, which includes the effects of estimated prepayments. Purchased loans are considered credit impaired if there is evidence of credit deterioration at the date of purchase and if it is probable that not all contractually required payments will be collected. Interest income, through accretion of the difference between the carrying value of the loans and the expected cash flows is recognized on the acquired loans accounted for under ASC 310-30. Purchased loans outside the scope of ASC 310-30 are accounted for under ASC 310-20. Premiums and discounts created when the loans were recorded at their fair values at acquisition are amortized over the remaining terms of the loans as an adjustment to the related loan's yield.
The pro forma table below presents information as if the acquisition had occurred on January 1, 2019. The pro forma information includes adjustments to give the effects to any changes in interest income due to the accretion (amortization) of the discount (premium) associated with the fair value adjustments to acquired loans, any changes in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustments to acquired time deposits and borrowings and other debt, amortization of core deposit intangibles that would have resulted had the deposits been acquired as of January 1, 2019, and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed date. Due diligence, professional fees, and other expenses related to the merger were incurred by the Company and AAB during the three and nine months ended September 30, 2020, but the pro forma condensed combined statement of income is not adjusted to exclude these costs.
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Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | SECURITIES The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at September 30, 2020 and December 31, 2019 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss).
The proceeds from sales of securities and the associated gains and losses for the periods below are as follows:
The amortized cost and fair value of securities are shown in the table below by contractual maturity. Actual timing may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
Securities pledged at September 30, 2020 and December 31, 2019 had a carrying amount of $97.2 million and $27.3 million, respectively, and were pledged to secure Federal Home Loan Bank ("FHLB") advances, a Federal Reserve Bank line of credit, repurchase agreements, deposits and mortgage derivatives. As of September 30, 2020, the Bank held 66 tax-exempt state and local municipal securities totaling $48.9 million backed by the Michigan School Bond Loan Fund. Other than the aforementioned investments, at September 30, 2020 and December 31, 2019, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of shareholders' equity. The following table summarizes securities with unrealized losses at September 30, 2020 and December 31, 2019 aggregated by security type and length of time in a continuous unrealized loss position:
As of September 30, 2020, the Company's investment portfolio consisted of 306 securities, 29 of which were in an unrealized loss position. The unrealized losses for these securities resulted primarily from changes in interest rates since purchased. The Company expects full recovery of the carrying amount of these securities and does not intend to sell the securities in an unrealized loss position nor does it believe it will be required to sell securities in an unrealized loss position before the value is recovered. The Company does not consider these securities to be other-than-temporarily impaired at September 30, 2020.
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Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | LOANS The following table presents the recorded investment in loans at September 30, 2020 and December 31, 2019. The recorded investment in loans excludes accrued interest receivable.
At September 30, 2020 and December 31, 2019, the Company had residential loans held for sale, which were originated with the intent to sell, totaling $60.6 million and $13.9 million, respectively. During the three months ended September 30, 2020 and 2019, the Company sold residential real estate loans with proceeds totaling $157.2 million and $86.4 million, respectively, and $377.2 million and $179.4 million, during the nine months ended September 30, 2020 and 2019, respectively. Nonperforming Assets Nonperforming assets consist of loans for which the accrual of interest has been discontinued and other real estate owned obtained through foreclosure and other repossessed assets. Loans outside of those accounted for under ASC 310-30 are classified as nonaccrual when, in the opinion of management, it is probable that the Company will be unable to collect all the contractual interest and principal payments as scheduled in the loan agreement. The accrual of interest is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments is no longer doubtful. Acquired loans that are not performing in accordance with contractual terms are not reported as nonperforming because these loans are recorded at their net realizable value based on the principal and interest the Company expects to collect on these loans. There were $6 thousand and $1.2 million in commitments to lend additional funds to borrowers whose loans were classified as nonaccrual as of September 30, 2020 and December 31, 2019, respectively. Information as to nonperforming assets was as follows:
At September 30, 2020 and December 31, 2019, the loans that were 90 days or more past due and still accruing comprised of either PCI loans or loans that were well-secured and in the process of collection. Loan delinquency as of the dates presented below was as follows:
Impaired Loans: Information as to impaired loans, excluding purchased credit impaired loans, was as follows:
Troubled Debt Restructurings: The Company assesses loan modifications to determine whether a modification constitutes a troubled debt restructuring ("TDR"). This applies to all loan modifications except for modifications to loans accounted for in pools under ASC 310-30, which are not subject to TDR accounting/classification. For loans excluded from ASC 310-30 accounting, a modification is considered a TDR when a borrower is experiencing financial difficulties and the Company grants a concession to the borrower. For loans accounted for individually under ASC 310-30, a modification is considered a TDR when a borrower is experiencing financial difficulties and the effective yield after the modification is less than the effective yield at the time the loan was acquired or less than the effective yield of any re-estimation of cash flows subsequent to acquisition in association with consideration of qualitative factors included within ASC 310-40. All TDRs are considered impaired loans. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, are considered in the determination of an appropriate level of allowance for loan losses. The CARES Act was signed into law on March 27, 2020, which provides a variety of provisions, including, among other things, a small business lending program to originate paycheck protection loans, temporary relief for the community bank leverage ratio, and temporary relief for financial institutions related to troubled debt restructurings. As a result of the COVID-19 pandemic, the Company is currently working with borrowers to provide short-term payment modifications. Any short-term modifications made on a good-faith basis in response to the COVID-19 pandemic to borrowers who were current prior to any relief are not considered TDRs based on interagency guidance. This includes short-term modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program was implemented. The Company’s modification programs are designed to provide temporary relief for current borrowers affected by the COVID-19 pandemic. The Company has presumed that borrowers that are current on payments are not experiencing financial difficulties at the time of the modification for purposes of determining TDR status, and thus no further TDR analysis is required for each loan modification in the program. As of September 30, 2020 and December 31, 2019, the Company had a recorded investment in troubled debt restructurings of $3.6 million and $3.9 million, respectively. The Company allocated a specific reserve of $235 thousand for those loans at September 30, 2020 and a specific reserve of $384 thousand for those loans at December 31, 2019. The Company has not committed to lend additional amounts to borrowers whose loans have been modified. As of September 30, 2020, there were $2.4 million of nonperforming TDRs and $1.2 million of performing TDRs included in impaired loans. As of December 31, 2019, there were $3.0 million of nonperforming TDRs and $906 thousand of performing TDRs included in impaired loans. All TDRs are considered impaired loans in the calendar year of their restructuring. A loan that has been modified can return to performing status if it satisfies a six-month performance requirement; however, it will continue to be reported as a TDR and considered impaired. The following table presents the recorded investment of loans modified as TDRs during the three and nine months ended September 30, 2020 and nine months ended September 30, 2019, by type of concession granted. There were no loans modified as TDRs during the three months ended September 30, 2019. In cases where more than one type of concession was granted, the loans were categorized based on the most significant concession.
On an ongoing basis, the Company monitors the performance of TDRs to their modified terms. There were no loans modified as TDRs during the twelve months ending September 30, 2020 and 2019, for which there was a subsequent default. A payment on a TDR is considered to be in default once it is greater than 30 days past due. Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes commercial and industrial and commercial real estate loans and is performed on an annual basis. The Company uses the following definitions for risk ratings: Pass. Loans classified as pass are higher quality loans that do not fit any of the other categories described below. This category includes loans risk rated with the following ratings: cash/stock secured, excellent credit risk, superior credit risk, good credit risk, satisfactory credit risk, and marginal credit risk. Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company's credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Based on the most recent analysis performed, the risk category of loans by class of loans was as follows:
For residential real estate loans and consumer loans, the Company evaluates credit quality based on the aging status of the loan and by payment activity. Residential real estate loans and consumer loans are considered nonperforming if they are 90 days or more past due. Consumer loan types are continuously monitored for changes in delinquency trends and other asset quality indicators. The following presents residential real estate and consumer loans by credit quality:
Purchased Credit Impaired Loans: As part of the Company's previous five acquisitions, the Company acquired purchase credit impaired ("PCI") loans for which there was evidence of credit quality deterioration since origination, and we determined that it was probable that the Company would be unable to collect all contractually required principal and interest payments. The total balance of all PCI loans from these acquisitions was as follows:
The following table reflects the activity in the accretable yield of PCI loans from past acquisitions, which includes total expected cash flows, including interest, in excess of the recorded investment.
In the normal course of business, the Company offers a variety of financial instruments with off-balance sheet risk to meet the financing needs of its customers. These financial instruments include outstanding commitments to extend credit, credit lines, commercial letters of credit and standby letters of credit. Commitments to extend credit are agreements to provide credit to a customer, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used and the total commitment amounts do not necessarily represent future cash flow requirements. Standby letters of credit and commercial letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, while commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party. These financial standby letters of credit irrevocably obligate the Company to pay a third-party beneficiary when a customer fails to repay an outstanding loan or debt instrument. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies used for loans are used to make such commitments, including obtaining collateral at exercise of the commitment. We maintain an allowance to cover probable losses inherent in our financial instruments with off-balance sheet risk. At September 30, 2020, the allowance for off-balance sheet risk was $498 thousand, compared to $318 thousand at December 31, 2019, and was included in "Other liabilities" on our consolidated balance sheets. A summary of the contractual amounts of the Company's exposure to off-balance sheet risk is as follows:
Commitments to make loans are generally made for periods of or less. The fixed rate loan commitments of $5.3 million as of September 30, 2020, had interest rates ranging from 3.0% to 5.5% and maturities ranging from 3 months to .
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Allowance for Loan Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses | ALLOWANCE FOR LOAN LOSSES An allowance for loan losses is maintained to absorb probable incurred losses from the loan portfolio. The allowance for loan losses is based on management's continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonaccrual loans. The Company established an allowance for loan losses associated with PCI loans (accounted for under ASC 310-30) based on credit deterioration subsequent to the acquisition date. As of September 30, 2020, the Company had six PCI loan pools and 13 non-pooled PCI loans. The Company re-estimates cash flows expected to be collected for PCI loans on a semi-annual basis, with any decline in expected cash flows recorded as provision for loan losses on a discounted basis during the period. For any increases in cash flows expected to be collected, the Company adjusts the amount of accretable yield to be recognized on a prospective basis over the loan's remaining life. For loans not accounted for under ASC 310-30, the Company individually evaluates certain impaired loans on a quarterly basis and establishes specific allowances for such loans, if required. A loan is considered impaired when it is probable that interest or principal payments will not be made in accordance with the contractual terms of the loan agreement. Consistent with this definition, all loans for which the accrual of interest has been discontinued (nonaccrual loans) and all TDRs are considered impaired. The Company individually evaluates nonaccrual loans with book balances of $250 thousand or more, all loans whose terms have been modified in a TDR, and certain other loans. The threshold for individual evaluation is revised on an infrequent basis, generally when economic circumstances significantly change. Specific allowances for impaired loans are estimated using one of several methods, including the estimated fair value of underlying collateral, observable market value of similar debt or discounted expected future cash flows. All other impaired loans are individually evaluated by identifying its risk characteristics and applying the standard reserve factor for the corresponding loan pool. Loans which do not meet the criteria to be individually evaluated are evaluated in pools of loans with similar risk characteristics. Business loans are assigned to pools based on the Company's internal risk rating system. Internal risk ratings are assigned to each business loan at the time of approval and are subjected to subsequent periodic reviews by the Company's senior management, generally at least annually or more frequently upon the occurrence of a circumstance that affects the credit risk of the loan. For business loans not individually evaluated, losses inherent to the pool are estimated by applying standard reserve factors to outstanding principal balances. The allowance for loans not individually evaluated is determined by applying estimated loss rates to various pools of loans within the portfolios with similar risk characteristics. Estimated loss rates for all pools are updated quarterly, incorporating quantitative and qualitative factors such as recent charge-off experience, current economic conditions and trends, changes in collateral values of properties securing loans (using index-based estimates), and trends with respect to past due and nonaccrual amounts. Loans acquired in business combinations are initially recorded at fair value, which includes an estimate of credit losses expected to be realized over the remaining lives of the loans, and therefore no corresponding allowance for loan losses is recorded for these loans at acquisition. Methods utilized to estimate any subsequently required allowance for loan losses for acquired loans not deemed credit-impaired at acquisition are similar to originated loans; however, the estimate of loss is based on the unpaid principal balance less any remaining purchase discount. Loans individually evaluated for impairment are presented below.
Activity in the allowance for loan losses is presented below:
Allocation of the allowance for loan losses is presented below:
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Premises and Equipment |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premises and Equipment | PREMISES AND EQUIPMENT Premises and equipment were as follows at September 30, 2020 and December 31, 2019:
Depreciation expense was $426 thousand and $326 thousand for the three months ended September 30, 2020 and 2019, and $1.3 million and $986 thousand for the nine months ended September 30, 2020 and 2019, respectively. Most of the Company's branch facilities are rented under non-cancelable operating lease agreements. Total rent expense was $450 thousand and $307 thousand for the three months ended September 30, 2020 and 2019, and $1.4 million and $840 thousand for the nine months ended September 30, 2020 and 2019, respectively.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill: The Company has acquired three banks, Lotus Bank in March 2015, Bank of Michigan in March 2016, and Ann Arbor State Bank in January 2020, which resulted in the recognition of goodwill of $4.6 million, $4.8 million, and $26.2 million, respectively. Total goodwill was $35.6 million at September 30, 2020 and $9.4 million at December 31, 2019. Goodwill is not amortized but is evaluated annually for impairment and on an interim basis if events or changes in circumstances indicate that goodwill might be impaired. The goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge would be recognized for any amount by which the carrying amount exceeds the reporting unit's fair value. The Company's most recent annual goodwill impairment review as of October 1, 2019 did not indicate that an impairment existed. As a result of the unprecedented decline in economic conditions triggered by the COVID-19 pandemic, the market valuations, including our stock price, saw a significant decline in March 2020, which then continued into second quarter of 2020. These events indicated that goodwill may be impaired and resulted in management performing a qualitative goodwill impairment assessment in the second quarter of 2020. As a result of the analysis, we concluded that it was more-likely-than-not that the fair value of the reporting unit could be greater than its carrying amount. Since the price of our stock did not fully recover during the third quarter of 2020, the Company concluded to engage a reputable, third-party valuation firm to perform a quantitative analysis of goodwill as of August 31, 2020 ("the valuation date"). In deriving at the fair value of the reporting unit (the Bank), the third-party firm assessed general economic conditions and outlook; industry and market considerations and outlook; the impact of recent events to financial performance; the market price of our common stock and other relevant events. In addition, the valuation relied on financial projections through 2023 and growth rates prepared by management. Based on the valuation prepared, it was determined that the Company's estimated fair value of the reporting unit at August 31, 2020 was greater than its book value and impairment of goodwill was not required. Furthermore, management noted that despite the market capitalization declining from December 2019 to September 2020 as a result of the COVID-19 pandemic, the Bank’s financial performance has remained positive. This is evidenced by the strong financial indicators for the Bank, solid credit quality ratios, as well as the strong capital position of the Bank. In addition, third quarter 2020 revenue reflected significant and continuing growth in our residential mortgage banking business, as well as net SBA fees related to Paycheck Protection Program ("PPP") loans funded during second and third quarters of 2020. Management concurred with the conclusion derived from the quantitative goodwill analysis as of August 31, 2020 and determined that there were no material changes between the valuation date and September 30, 2020. As such, management concluded that it is more likely than not that there was no goodwill impairment as of September 30, 2020. Intangible Assets: The Company recorded core deposit intangibles ("CDIs") associated with each of its acquisitions. CDIs are amortized on an accelerated basis over their estimated useful lives. The table below presents the Company's net carrying amount of CDIs:
Amortization expense for the CDIs was $191 thousand and $29 thousand for the three months ended September 30, 2020 and 2019, and $576 thousand and $117 thousand for the nine months ended September 30, 2020 and 2019, respectively. Mortgage Servicing Rights ("MSRs"): The Company has recorded MSRs for loans that are sold with servicing retained. MSRs are carried at the lower of the initial capitalized amount, net of accumulated amortization or estimated fair value. MSRs are amortized in proportion to and over the period of estimated net servicing income. The Company serviced residential mortgage loans for others with unpaid principal balances of approximately $211.0 million and $9.0 million as of September 30, 2020 and December 31, 2019, respectively. Changes in our mortgage servicing rights were as follows for the three and nine months ended September 30, 2020 . The Company had $1 thousand in mortgage servicing rights as of September 30, 2019:
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Borrowings and Subordinated Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings and Subordinated Debt | BORROWINGS AND SUBORDINATED DEBT The following table presents the components of our short-term borrowings and long-term debt.
_______________________________________________________________________________ (1) Weighted average rate presented is the contractual rate which excludes premiums and discounts related to purchase accounting. (2) At September 30, 2020, the long-term FHLB advances consisted of 0.42% - 2.93% fixed rate notes and can be called through 2024 without penalty by the issuer. The September 30, 2020 balance includes FHLB advances of $181.0 million and purchase accounting premiums of $202 thousand. (3) The September 30, 2020 balance of FRB borrowings consisted of 0.35% fixed rate notes utilized to fund the PPP loans. The FRB borrowings have a maturity date equal to the maturity date of the respective PPP loans pledged to secure the borrowings, which is two years after the origination date of the PPP loans. (4) The September 30, 2020 balance includes subordinated notes of $45.0 million and debt issuance costs of $445 thousand. The December 31, 2019 balance includes subordinated notes of $45.0 million and debt issuance costs of $560 thousand. At September 30, 2020, the Company had $34.1 million of debt outstanding with the Federal Reserve Bank. These borrowings reflected the Company's efforts to help facilitate the funding of the PPP loans that were approved by the SBA during the quarter ended September 30, 2020. The FRB borrowings bear a 0.35% fixed interest rate and mature two years after the origination date of the respective PPP loans that have been pledged to secure them. The Bank is a member of the FHLB of Indianapolis, which provides short- and long-term funding collateralized by mortgage-related assets to its members. FHLB short-term borrowings bear interest at variable rates based on LIBOR. The $181.0 million of long-term FHLB advances as of September 30, 2020 were secured by a blanket lien on $510.6 million of real estate-related loans. Based on this collateral and the Company's holdings of FHLB stock, the Company was eligible to borrow up to an additional $211.1 million from the FHLB at September 30, 2020. In addition, the Bank can borrow up to $122.5 million through the unsecured lines of credit it has established with other correspondent banks, as well as $5.3 million through a secured line with the Federal Reserve Bank. The Bank had no outstanding federal funds purchased as of September 30, 2020 and $5.0 million outstanding federal funds purchased as of December 31, 2019. At September 30, 2020, the Company had $187 thousand of securities sold under agreements to repurchase with customers, which mature overnight. These borrowings were secured by residential collateralized mortgage obligation securities with a fair value of $1.9 million at September 30, 2020. The Company had a secured borrowing of $1.3 million as of September 30, 2020 relating to certain loan participations sold by the Company that did not qualify for sales treatment. The secured borrowing bears a fixed rate of 1.00% and matures on September 15, 2022. At September 30, 2020, the Company had $45.0 million outstanding subordinated notes and $445 thousand of debt issuance costs. The debt issuance costs are netted against the balance of the subordinated notes and recognized as expense over the expected term of the notes. The $15.0 million of subordinated notes issued on December 21, 2015 bear a fixed interest rate of 6.375% per annum, payable semiannually through December 15, 2020. The notes will bear a floating interest rate of three-month LIBOR plus 477 basis points payable quarterly after December 15, 2020 through maturity. The notes mature no later than December 15, 2025, and the Company has the option to redeem or prepay any or all of the subordinated notes without premium or penalty any time after December 15, 2020 or upon an occurrence of a Tier 2 capital event or tax event. The $30.0 million of subordinated notes issued on December 18, 2019 bear a fixed interest rate of 4.75% per annum, payable semiannually through December 18, 2024. The notes will bear a floating interest rate of three-month secured overnight financing rate (SOFR) plus 311 basis points payable quarterly after December 18, 2024 through maturity. The notes mature no later than December 18, 2029, and the Company has the option to redeem any or all of the subordinated notes without premium or penalty any time after December 18, 2024 or upon the occurrence of a Tier 2 capital event or tax event.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES The Company and its subsidiaries are subject to U.S. federal income tax. In the ordinary course of business, we are routinely subject to audit by Internal Revenue Service. Currently, the Company is subject to examination by taxing authorities for the 2016 tax return year and forward. A reconciliation of expected income tax expense using the federal statutory rate of 21% as of September 30, 2020 and 2019 and actual income tax expense is as follows:
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Stock Based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Based Compensation | STOCK BASED COMPENSATION On March 15, 2018, the Company’s Board of Directors approved the 2018 Equity Incentive Plan ("2018 Plan"). The 2018 Plan became effective upon shareholder approval at the annual shareholders meeting held on April 17, 2018. Under the 2018 Plan, the Company can grant incentive and non-qualified stock options, stock awards, stock appreciation rights, and other incentive awards to directors and employees of, and certain service providers to, the Company and its subsidiaries. Once the 2018 Plan became effective, no further awards could be granted from the 2007 Stock Option Plan ("Stock Option Plan") or the 2014 Equity Incentive Plan ("2014 Plan"). However, any outstanding equity awards granted under the Stock Option Plan or the 2014 Plan will remain subject to the terms of such plans until the time such awards are no longer outstanding. The Company has reserved 250,000 shares of common stock for issuance under the 2018 Plan. During the nine months ended September 30, 2020 and 2019, the Company issued 38,170 and 35,633 restricted stock awards, respectively, under the 2018 Plan. There were 165,597 shares available for issuance as of September 30, 2020. Stock Options As of September 30, 2020, all of the Company's outstanding options were granted under the Stock Option Plan. The term of these options is ten years, and they vest one-third each year, over a three years period. The Company will use authorized, but unissued shares to satisfy share option exercises. The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model. Expected volatilities are based on historical volatilities of the Company's common stock. The Company assumes all awards will vest. The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. There were no stock options granted during the nine months ended September 30, 2020 or September 30, 2019. The summary of our stock option activity for the nine months ended September 30, 2020 is as follows:
The aggregate intrinsic value was $516 thousand for both options outstanding and exercisable as of September 30, 2020. As of September 30, 2020, there was $17 thousand of total unrecognized compensation cost related to stock options granted under the Stock Option Plan. The cost is expected to be recognized over a weighted-average period of 0.38 years. Share-based compensation expense charged against income was $11 thousand and $12 thousand for the three months ended September 30, 2020 and 2019, respectively, and $33 thousand and $43 thousand for the nine months ended September 30, 2020 and 2019, respectively. Restricted Stock Awards A summary of changes in the Company's nonvested shares for the nine months ended September 30, 2020 is as follows:
As of September 30, 2020, there was $1.2 million of total unrecognized compensation cost related to nonvested shares granted under the 2014 Plan and 2018 Plan. The cost is expected to be recognized over a weighted average period of 1.88 years. The total fair value of shares vested during the nine months ended September 30, 2020 was $459 thousand. Total expense for restricted stock awards totaled $223 thousand and $177 thousand for the three months ended September 30, 2020 and 2019, respectively, and $620 thousand and $474 thousand for the nine months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, there was $64 thousand and $43 thousand, respectively, of restricted stock redeemed to cover the payroll taxes due at the time of vesting.
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Off- Balance Sheet Activities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Off- Balance Sheet Activities | LOANS The following table presents the recorded investment in loans at September 30, 2020 and December 31, 2019. The recorded investment in loans excludes accrued interest receivable.
At September 30, 2020 and December 31, 2019, the Company had residential loans held for sale, which were originated with the intent to sell, totaling $60.6 million and $13.9 million, respectively. During the three months ended September 30, 2020 and 2019, the Company sold residential real estate loans with proceeds totaling $157.2 million and $86.4 million, respectively, and $377.2 million and $179.4 million, during the nine months ended September 30, 2020 and 2019, respectively. Nonperforming Assets Nonperforming assets consist of loans for which the accrual of interest has been discontinued and other real estate owned obtained through foreclosure and other repossessed assets. Loans outside of those accounted for under ASC 310-30 are classified as nonaccrual when, in the opinion of management, it is probable that the Company will be unable to collect all the contractual interest and principal payments as scheduled in the loan agreement. The accrual of interest is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments is no longer doubtful. Acquired loans that are not performing in accordance with contractual terms are not reported as nonperforming because these loans are recorded at their net realizable value based on the principal and interest the Company expects to collect on these loans. There were $6 thousand and $1.2 million in commitments to lend additional funds to borrowers whose loans were classified as nonaccrual as of September 30, 2020 and December 31, 2019, respectively. Information as to nonperforming assets was as follows:
At September 30, 2020 and December 31, 2019, the loans that were 90 days or more past due and still accruing comprised of either PCI loans or loans that were well-secured and in the process of collection. Loan delinquency as of the dates presented below was as follows:
Impaired Loans: Information as to impaired loans, excluding purchased credit impaired loans, was as follows:
Troubled Debt Restructurings: The Company assesses loan modifications to determine whether a modification constitutes a troubled debt restructuring ("TDR"). This applies to all loan modifications except for modifications to loans accounted for in pools under ASC 310-30, which are not subject to TDR accounting/classification. For loans excluded from ASC 310-30 accounting, a modification is considered a TDR when a borrower is experiencing financial difficulties and the Company grants a concession to the borrower. For loans accounted for individually under ASC 310-30, a modification is considered a TDR when a borrower is experiencing financial difficulties and the effective yield after the modification is less than the effective yield at the time the loan was acquired or less than the effective yield of any re-estimation of cash flows subsequent to acquisition in association with consideration of qualitative factors included within ASC 310-40. All TDRs are considered impaired loans. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, are considered in the determination of an appropriate level of allowance for loan losses. The CARES Act was signed into law on March 27, 2020, which provides a variety of provisions, including, among other things, a small business lending program to originate paycheck protection loans, temporary relief for the community bank leverage ratio, and temporary relief for financial institutions related to troubled debt restructurings. As a result of the COVID-19 pandemic, the Company is currently working with borrowers to provide short-term payment modifications. Any short-term modifications made on a good-faith basis in response to the COVID-19 pandemic to borrowers who were current prior to any relief are not considered TDRs based on interagency guidance. This includes short-term modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program was implemented. The Company’s modification programs are designed to provide temporary relief for current borrowers affected by the COVID-19 pandemic. The Company has presumed that borrowers that are current on payments are not experiencing financial difficulties at the time of the modification for purposes of determining TDR status, and thus no further TDR analysis is required for each loan modification in the program. As of September 30, 2020 and December 31, 2019, the Company had a recorded investment in troubled debt restructurings of $3.6 million and $3.9 million, respectively. The Company allocated a specific reserve of $235 thousand for those loans at September 30, 2020 and a specific reserve of $384 thousand for those loans at December 31, 2019. The Company has not committed to lend additional amounts to borrowers whose loans have been modified. As of September 30, 2020, there were $2.4 million of nonperforming TDRs and $1.2 million of performing TDRs included in impaired loans. As of December 31, 2019, there were $3.0 million of nonperforming TDRs and $906 thousand of performing TDRs included in impaired loans. All TDRs are considered impaired loans in the calendar year of their restructuring. A loan that has been modified can return to performing status if it satisfies a six-month performance requirement; however, it will continue to be reported as a TDR and considered impaired. The following table presents the recorded investment of loans modified as TDRs during the three and nine months ended September 30, 2020 and nine months ended September 30, 2019, by type of concession granted. There were no loans modified as TDRs during the three months ended September 30, 2019. In cases where more than one type of concession was granted, the loans were categorized based on the most significant concession.
On an ongoing basis, the Company monitors the performance of TDRs to their modified terms. There were no loans modified as TDRs during the twelve months ending September 30, 2020 and 2019, for which there was a subsequent default. A payment on a TDR is considered to be in default once it is greater than 30 days past due. Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes commercial and industrial and commercial real estate loans and is performed on an annual basis. The Company uses the following definitions for risk ratings: Pass. Loans classified as pass are higher quality loans that do not fit any of the other categories described below. This category includes loans risk rated with the following ratings: cash/stock secured, excellent credit risk, superior credit risk, good credit risk, satisfactory credit risk, and marginal credit risk. Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company's credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Based on the most recent analysis performed, the risk category of loans by class of loans was as follows:
For residential real estate loans and consumer loans, the Company evaluates credit quality based on the aging status of the loan and by payment activity. Residential real estate loans and consumer loans are considered nonperforming if they are 90 days or more past due. Consumer loan types are continuously monitored for changes in delinquency trends and other asset quality indicators. The following presents residential real estate and consumer loans by credit quality:
Purchased Credit Impaired Loans: As part of the Company's previous five acquisitions, the Company acquired purchase credit impaired ("PCI") loans for which there was evidence of credit quality deterioration since origination, and we determined that it was probable that the Company would be unable to collect all contractually required principal and interest payments. The total balance of all PCI loans from these acquisitions was as follows:
The following table reflects the activity in the accretable yield of PCI loans from past acquisitions, which includes total expected cash flows, including interest, in excess of the recorded investment.
In the normal course of business, the Company offers a variety of financial instruments with off-balance sheet risk to meet the financing needs of its customers. These financial instruments include outstanding commitments to extend credit, credit lines, commercial letters of credit and standby letters of credit. Commitments to extend credit are agreements to provide credit to a customer, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used and the total commitment amounts do not necessarily represent future cash flow requirements. Standby letters of credit and commercial letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, while commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party. These financial standby letters of credit irrevocably obligate the Company to pay a third-party beneficiary when a customer fails to repay an outstanding loan or debt instrument. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies used for loans are used to make such commitments, including obtaining collateral at exercise of the commitment. We maintain an allowance to cover probable losses inherent in our financial instruments with off-balance sheet risk. At September 30, 2020, the allowance for off-balance sheet risk was $498 thousand, compared to $318 thousand at December 31, 2019, and was included in "Other liabilities" on our consolidated balance sheets. A summary of the contractual amounts of the Company's exposure to off-balance sheet risk is as follows:
Commitments to make loans are generally made for periods of or less. The fixed rate loan commitments of $5.3 million as of September 30, 2020, had interest rates ranging from 3.0% to 5.5% and maturities ranging from 3 months to .
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Regulatory Capital Matters |
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Matters | REGULATORY CAPITAL MATTERS Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believed that as of September 30, 2020, the Company and Bank met all capital adequacy requirements to which they were subject. The Basel III rules require the Company to maintain a capital conservation buffer of common equity capital of greater than 2.5% above the minimum risk-weighted assets ratios, which is the fully phased-in amount of the capital conservation buffer. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At September 30, 2020 and December 31, 2019, the Bank's capital ratios were in excess of the requirement to be "well capitalized" under the regulatory framework for prompt corrective action. There are no conditions or events that management believes have changed the Bank's category. Actual and required capital amounts and ratios are presented below:
_______________________________________________________________________________ (1) Reflects the capital conservation buffer of 2.5%. Dividend Restrictions - The Company’s primary source of cash is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. As of September 30, 2020, the Bank had the capacity to pay the Company a dividend of up to $42.9 million without the need to obtain prior regulatory approval.
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1—Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3—Significant unobservable inputs that reflect a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument: Investment Securities: Securities available for sale are recorded at fair value on a recurring basis as follows: the fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where pricing on similar securities is not available, a third party is engaged to calculate the fair value using the Municipal Market Data curve (Level 3). Loans Held for Sale, at Fair Value: The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan (Level 2). Loans Measured at Fair Value: During the normal course of business, loans originated with the initial intention to sell but not ultimately sold, are transferred from held for sale to our portfolio of loans held for investment at fair value as the Company adopted the fair value option at origination. The fair value of these loans is determined by obtaining fair value pricing from a third-party software, and then layering an additional adjustment, ranging from 5 to 75 basis points, as determined by management, depending on the reason for the transfer from loans held for sale. Due to the adjustments made, the Company classifies the loans transferred from loans held for sale as recurring Level 3. Mortgage Servicing Rights ("MSRs"): In accordance with GAAP, the Company must record impairment charges on mortgage servicing rights on a non-recurring basis when the carrying value exceeds the estimated fair value. The fair value of our MSRs is obtained from a third-party valuation company that uses a discounted cash flow valuation model which calculates the present value of estimated future net servicing cash flows, taking into consideration expected mortgage loan prepayment rates, discount rates, costs to service, contractual servicing fee income, ancillary income, late fees, replacement reserves and other economic factors that are determined based on current market conditions. The reliance on Level 3 inputs to derive at the fair value of MSRs results in a Level 3 classification. Impaired Loans: Impaired loans are measured and recorded at fair value on a non-recurring basis. All of our nonaccrual loans and trouble debt restructured loans are considered impaired and are reviewed individually for the amount of impairment, if any. The fair value of impaired loans is estimated using one of several methods, including the fair value of the collateral or the present value of the expected future cash flows discounted at the loan's effective interest rate. For loans that are collateral dependent, the fair value of each loan’s collateral is generally based on estimated market prices from an independently prepared appraisal. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Non-real estate collateral may be valued using an appraisal, net book value per the borrower's financial statements, or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation, and management's expertise and knowledge of the client and client's business. Such adjustments are considered unobservable and the fair value measurement is categorized as a Level 3 measurement. Other Real Estate Owned: Other real estate owned assets are recorded at the lower of cost or fair value upon the transfer of a loan to other real estate owned and, subsequently, continue to be measured and carried at the lower of cost or fair value. The fair value of other real estate owned is based on recent real estate appraisals which are generally updated annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales, cost, and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Other real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Appraisals for both collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by either the Company or the Company's appraisal services vendor. Once received, management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Management monitors the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value. Derivatives: Customer-initiated derivatives are traded in over-the counter markets where quoted market prices are not readily available. Fair value of customer-initiated derivatives is measured on a recurring basis using valuation models that use market observable inputs (Level 2). Mortgage banking related derivatives including commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are recorded at fair value on a recurring basis. The fair value of these commitments is based on the fair value of related mortgage loans determined using observable market data (Level 2). Interest rate lock commitments are adjusted for expectations of exercise and funding. This adjustment is not considered to be material input. Assets and liabilities measured at fair value on a recurring basis are summarized below:
There were no transfers between levels within the fair value hierarchy, within a specific category, during the nine months ended September 30, 2020 or during the year ended December 31, 2019. The level 3 investment securities disclosed as of September 30, 2020 were acquired from Ann Arbor State Bank during the first quarter of 2020. The following table summarizes the changes in Level 3 assets measured at fair value on a recurring basis.
The Company has elected the fair value option for loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company's policy on loans held for investment. There were no loans held for sale that were on nonaccrual status or 90 days past due as of September 30, 2020 or December 31, 2019. As of September 30, 2020 and December 31, 2019, the aggregate fair value, contractual balance (including accrued interest), and gain or loss for loans held for sale carried at fair value was as follows:
The total amount of gains as a result of changes in fair value of loans held for sale included in "Mortgage banking activities" for three and nine months ended September 30, 2020 and 2019 were as follows:
Assets measured at fair value on a non-recurring basis are summarized below:
The Company recorded specific reserves of $91 thousand and $161 thousand to reduce the value of these loans at September 30, 2020 and December 31, 2019, respectively, based on the estimated fair value of the underlying collateral. The Company also recorded chargeoffs of $364 thousand during the nine months ended September 30, 2020 related to the impaired loans at fair value. There were chargeoffs of $298 thousand related to impaired loans at fair value during the year ended December 31, 2019. The Company recorded a valuation allowance of $17 thousand related to mortgage servicing rights during the first quarter of 2020, which was then reversed during the second quarter of 2020 as a result of the fair value at June 30, 2020 being higher than book value, and the fair value remained higher as of September 30, 2020. There was no valuation allowance related to mortgage servicing rights during the year ended December 31, 2019. There were no write downs recorded in other real estate owned during the three and nine months ended September 30, 2020 or the year ended December 31, 2019. The table below presents quantitative information about the significant unobservable inputs for assets measured at fair value on a nonrecurring basis at September 30, 2020 and December 31, 2019:
The carrying amounts and estimated fair values of financial instruments, excluding those previously presented unless otherwise noted, at September 30, 2020 and December 31, 2019 are noted in the table below.
The methods and assumptions, not previously presented, used to estimate fair value are described as follows: (a)Cash and Cash Equivalents The carrying amounts of cash on hand and non-interest due from bank accounts approximate fair values and are classified as Level 1. The carrying amounts of fed funds sold and interest bearing due from bank accounts approximate fair values and are classified as Level 2. (b)Other Investments It is not practical to determine the fair value of FHLB stock and Arctaris investment bond due to restrictions placed on its transferability. (c)Loans Fair value of loans, excluding loans held for sale, are estimated as follows: Fair values for all loans are estimated using present value of future estimated cash flows, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality, resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. (d)Deposits The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 2 classification. Fair values for fixed and variable rate certificates of deposit are estimated using a present value of future estimated cash flows calculation that applies interest rates currently being offered on certificates of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification. (e) Borrowings The fair values of the Company's short-term and long-term borrowings are estimated using present value of future estimated cash flows using current interest rates offered to the Company for similar types of borrowing arrangements, resulting in a Level 2 classification. (f)Subordinated Notes The fair value of the Company's subordinated notes is calculated based on present value of future estimated cash flows using current interest rates offered to the Company for similar types of borrowing arrangements, resulting in a Level 2 classification. (g) Accrued Interest Receivable/Payable The carrying amounts of accrued interest approximate fair value resulting in a Level 3 classification for receivable and a Level 2 classification for payable, consistent with their associated assets/liabilities.
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Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | DERIVATIVES The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. These interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions with approved, reputable, independent counterparties with substantially matching terms. The agreements are considered standalone derivatives, and changes in the fair value of derivatives are reported in earnings as non-interest income. Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. The Company's exposure is limited to the replacement value of the contracts rather than the notional, principal or contract amounts. There are provisions in the agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold. Exposures in excess of the agreed thresholds are collateralized. In addition, the Company minimizes credit risk through credit approvals, limits, and monitoring procedures. Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the Company's practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. Fair values were estimated based on changes in mortgage interest rates from the date of the commitments. Changes in the fair values of these mortgage-banking derivatives are included in mortgage banking activities. The following table presents the notional amount and fair value of the Company's derivative instruments held or issued in connection with customer initiated and mortgage banking activities:
In the normal course of business, the Company may decide to settle a forward contract rather than fulfill the contract. Cash received or paid in this settlement manner is included in "Mortgage banking activities" in the consolidated statements of income and is considered a cost of executing a forward contract. The following table presents the gains (losses) related to derivative instruments reflecting the changes in fair value:
Balance Sheet Offsetting: Certain financial instruments, including customer-initiated derivatives and interest rate swaps, may be eligible for offset in the consolidated balance sheets and/or subject to master netting arrangements or similar agreements. The Company is a party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes based on an accounting policy election. The table below presents information about the Company's financial instruments that are eligible for offset.
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Parent Company Financial Statements |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parent Company Financial Statements | PARENT COMPANY FINANCIAL STATEMENTS Balance Sheets—Parent Company
Statements of Income and Comprehensive Income—Parent Company
Statements of Cash Flows—Parent Company
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Earnings Per Common Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | EARNINGS PER COMMON SHARE The two-class method is used in the calculation of basic and diluted earnings per common share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participating rights in undistributed earnings. Average shares of common stock for diluted net income per common share include shares to be issued upon the exercise of stock options granted under the Company's share-based compensation plans and restricted stock awards. The calculation of basic and diluted earnings per share using the two-class method for the periods noted below was as follows:
(1) Net income allocated to common shareholders for basic and diluted earnings per share may differ under the two-class method as a result of adding common share equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate net income to common shareholders and participating securities for the purposes of calculating diluted earnings per share. Stock options for 214,668 and 30,000 shares of common stock were not considered in computing diluted earnings per common share for the three months ended September 30, 2020 and 2019, respectively, and 117,334 and 30,000 of common stock were not considered in computing diluted earnings per common share for the nine months ended September 30, 2020 and 2019, respectively, because they were antidilutive.
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Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and conform to practices within the banking industry and include all of the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting. The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results for the full year or any other period. These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2019, included in our Annual Form 10-K, filed with the SEC on March 13, 2020.The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, the Bank and Hamilton Court, after elimination of significant intercompany transactions and accounts. |
Principles of Consolidation | The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and conform to practices within the banking industry and include all of the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting. The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results for the full year or any other period. These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2019, included in our Annual Form 10-K, filed with the SEC on March 13, 2020.The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, the Bank and Hamilton Court, after elimination of significant intercompany transactions and accounts. |
Use of Estimates | Use of Estimates: To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided; therefore, future results could differ. |
Impact of Recently Adopted Accounting Standards and Impact of Recently Issued Accounting Standards | Impact of Recently Adopted Accounting Standards: Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 "Revenue from Contracts with Customers (Topic 606)," which provides a framework for revenue recognition that replaces the existing industry and transaction specific requirements under the existing standards. ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount. The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount in which the entity expects to be entitled. Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity's performance, or at a point in time, when control of the goods or services are transferred to the customer. The amendments of ASU 2014-09 may be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. The Company adopted ASU 2014-09 and related issuances on January 1, 2019, with no cumulative effect adjustment to opening retained earnings required upon implementation of this standard. The adoption of this guidance does not result in changes to how revenue is recognized or the timing of recognition from our method prior to adoption. Revenue is recognized when obligations, under the terms of a contract with our customer, are satisfied, which generally occurs when services are performed. Revenue is measured as the amount of consideration we expect to receive in exchange for providing services. The Company performed an analysis of the impact of adoption of this ASU, reviewing revenue recorded from service charges on deposit accounts, gains (losses) on other real estate owned and other assets, debit card interchange fees, and merchant processing fees. Service fees on deposit accounts - The fees are generated from a depositor’s option to purchase services offered under the contract and are only considered a contract when the depositor exercises their option to purchase these services. Therefore we deem the term of our contracts with depositors to be day-to-day and do not extend beyond the services already provided. Debit card interchange fees - We collect interchange fee income when debit cards that we have issued to our customers are used in merchant transactions. Our performance obligation is satisfied and revenue is recognized at the point we initiate the payment of funds from a customer’s account to a merchant account. Merchant processing fees - We receive referral fees for referring our customers to a merchant servicer. Fees are immaterial and recognized as received. Gain (loss) on sale of other real estate owned - The Company records income or expense only upon consummation of the sale of the real estate. Financial Instruments 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," to improve the accounting for financial instruments. This ASU requires equity investments with readily determinable fair values to be measured at fair value with changes recognized in net income regardless of classification. For equity investments without a readily determinable fair value, the value of the investment would be measured 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 instead of fair value, unless a qualitative assessment indicates impairment. Additionally, this ASU requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements, as well as the required use of exit pricing when measuring the fair value of financial instruments for disclosure purposes. The guidance became effective for the Company for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, and was to be applied prospectively with a cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company adopted ASU 2016-01 and related issues on January 1, 2019 and determined that the implementation of this standard did not have a material impact to our consolidated financial statements. Impact of Recently Issued Accounting Standards: Leases In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," to improve transparency and comparability across entities regarding leasing arrangements. This ASU requires the recognition of a separate lease liability representing the required discounted lease payments over the lease term and a separate lease asset representing the right to use the underlying asset during the same lease term. Additionally, this ASU provides clarification regarding the identification of certain components of contracts that would represent a lease as well as requires additional disclosures to the notes of the financial statements. The guidance is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, and is to be applied under an optional transition method. The Company is planning to adopt this new guidance within the time frame noted above. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements but does not expect that the adoption will have a material impact. Additionally, the Company does not expect to significantly change operating lease agreements prior to adoption. Allowance for Credit Losses In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," to replace the current incurred loss methodology for recognizing credit losses, which delays recognition until it is probable a loss has been incurred, with a methodology that reflects an estimate of all expected credit losses and considers additional reasonable and supportable forecasted information when determining credit loss estimates. This impacts the calculation of the allowance for credit losses for all financial assets measured under the amortized cost basis, including PCI loans at the time of and subsequent to acquisition. Additionally, credit losses related to available-for-sale debt securities would be recorded through the allowance for credit losses and not as a direct adjustment to the amortized cost of the securities. The guidance is effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements, current systems and processes. At this time, the Company is reviewing potential methodologies for estimating expected credit losses using reasonable and supportable forecast information and has identified certain data and system requirements. Once adopted, we expect our allowance for loan losses to increase through a one-time adjustment to retained earnings; however, until our evaluation is complete, the estimated increase in allowance will be unknown. The Company is planning to adopt this new guidance within the time frame noted above.
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Business Combinations (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identifiable Assets Acquired and Liabilities Assumed | The following table summarizes the amounts of assets acquired and liabilities assumed recognized at the acquisition date.
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Purchased Loans Accounted for Under and Excluded from ASC 310-30 | Purchased loans outside the scope of ASC 310-30 are accounted for under ASC 310-20. Premiums and discounts created when the loans were recorded at their fair values at acquisition are amortized over the remaining terms of the loans as an adjustment to the related loan's yield.
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Business Acquisition, Pro Forma Information | The pro forma table below presents information as if the acquisition had occurred on January 1, 2019. The pro forma information includes adjustments to give the effects to any changes in interest income due to the accretion (amortization) of the discount (premium) associated with the fair value adjustments to acquired loans, any changes in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustments to acquired time deposits and borrowings and other debt, amortization of core deposit intangibles that would have resulted had the deposits been acquired as of January 1, 2019, and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed date. Due diligence, professional fees, and other expenses related to the merger were incurred by the Company and AAB during the three and nine months ended September 30, 2020, but the pro forma condensed combined statement of income is not adjusted to exclude these costs.
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Securities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale Securities | The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at September 30, 2020 and December 31, 2019 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss).
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Proceeds from Sales of Securities and Associated Gains and Losses | The proceeds from sales of securities and the associated gains and losses for the periods below are as follows:
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Securities by Contractual Maturity | The amortized cost and fair value of securities are shown in the table below by contractual maturity. Actual timing may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
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Securities with Unrealized Losses | The following table summarizes securities with unrealized losses at September 30, 2020 and December 31, 2019 aggregated by security type and length of time in a continuous unrealized loss position:
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Loans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recorded Investment in Loans | The following table presents the recorded investment in loans at September 30, 2020 and December 31, 2019. The recorded investment in loans excludes accrued interest receivable.
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Information as to Nonperforming Assets | Information as to nonperforming assets was as follows:
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Summary of Loan Delinquency | Loan delinquency as of the dates presented below was as follows:
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Information as to Impaired Loans, Excluding PCI Loans | Information as to impaired loans, excluding purchased credit impaired loans, was as follows:
Loans individually evaluated for impairment are presented below.
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Summary of Recorded Investment of Loans Modified in TDRs | The following table presents the recorded investment of loans modified as TDRs during the three and nine months ended September 30, 2020 and nine months ended September 30, 2019, by type of concession granted. There were no loans modified as TDRs during the three months ended September 30, 2019. In cases where more than one type of concession was granted, the loans were categorized based on the most significant concession.
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Risk Category of Loans by Class of Loans | Based on the most recent analysis performed, the risk category of loans by class of loans was as follows:
The following presents residential real estate and consumer loans by credit quality:
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Total Balance of PCI Loans and Activity in Accretable Yield | The following table reflects the activity in the accretable yield of PCI loans from past acquisitions, which includes total expected cash flows, including interest, in excess of the recorded investment.
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Allowance for Loan Losses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information as to Impaired Loans, including PCI Loans | Information as to impaired loans, excluding purchased credit impaired loans, was as follows:
Loans individually evaluated for impairment are presented below.
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Activity in the Allowance for Loan Losses and Allocation of the Allowance for Loans | Activity in the allowance for loan losses is presented below:
Allocation of the allowance for loan losses is presented below:
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Premises and Equipment (Tables) |
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Premises and Equipment | Premises and equipment were as follows at September 30, 2020 and December 31, 2019:
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Goodwill and Intangible Assets (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Core Deposit Intangibles | The table below presents the Company's net carrying amount of CDIs:
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Schedule of Changes in Mortgage Servicing Rights | Changes in our mortgage servicing rights were as follows for the three and nine months ended September 30, 2020 . The Company had $1 thousand in mortgage servicing rights as of September 30, 2019:
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Borrowings and Subordinated Debt (Tables) |
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Long-term Debt and Short-term Borrowings | The following table presents the components of our short-term borrowings and long-term debt.
_______________________________________________________________________________ (1) Weighted average rate presented is the contractual rate which excludes premiums and discounts related to purchase accounting. (2) At September 30, 2020, the long-term FHLB advances consisted of 0.42% - 2.93% fixed rate notes and can be called through 2024 without penalty by the issuer. The September 30, 2020 balance includes FHLB advances of $181.0 million and purchase accounting premiums of $202 thousand. (3) The September 30, 2020 balance of FRB borrowings consisted of 0.35% fixed rate notes utilized to fund the PPP loans. The FRB borrowings have a maturity date equal to the maturity date of the respective PPP loans pledged to secure the borrowings, which is two years after the origination date of the PPP loans. (4) The September 30, 2020 balance includes subordinated notes of $45.0 million and debt issuance costs of $445 thousand. The December 31, 2019 balance includes subordinated notes of $45.0 million and debt issuance costs of $560 thousand.
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Income Taxes (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Expected Income Tax Expense | A reconciliation of expected income tax expense using the federal statutory rate of 21% as of September 30, 2020 and 2019 and actual income tax expense is as follows:
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Stock Based Compensation (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Employee Stock Option Activity | The summary of our stock option activity for the nine months ended September 30, 2020 is as follows:
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Summary of Changes in Nonvested Shares | A summary of changes in the Company's nonvested shares for the nine months ended September 30, 2020 is as follows:
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Off- Balance Sheet Activities (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exposure to Off-balance Sheet Risk | A summary of the contractual amounts of the Company's exposure to off-balance sheet risk is as follows:
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Regulatory Capital Matters (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of actual and required capital amounts and ratios | Actual and required capital amounts and ratios are presented below:
_______________________________________________________________________________ (1) Reflects the capital conservation buffer of 2.5%.
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Fair Value (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities measured at fair value on a recurring basis are summarized below:
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Level 3 Rollforward | The following table summarizes the changes in Level 3 assets measured at fair value on a recurring basis.
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Information for Loans Held for Sale Carried at Fair Value | As of September 30, 2020 and December 31, 2019, the aggregate fair value, contractual balance (including accrued interest), and gain or loss for loans held for sale carried at fair value was as follows:
The total amount of gains as a result of changes in fair value of loans held for sale included in "Mortgage banking activities" for three and nine months ended September 30, 2020 and 2019 were as follows:
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Assets Measured at Fair Value on a Non-recurring Basis | Assets measured at fair value on a non-recurring basis are summarized below:
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Inputs for Assets Measured at Fair Value on a Nonrecurring Basis | The table below presents quantitative information about the significant unobservable inputs for assets measured at fair value on a nonrecurring basis at September 30, 2020 and December 31, 2019:
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Carrying Amounts and Estimated Fair Values of Financial Instruments | The carrying amounts and estimated fair values of financial instruments, excluding those previously presented unless otherwise noted, at September 30, 2020 and December 31, 2019 are noted in the table below.
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Derivatives (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Hedges Included in the Consolidated Balance Sheets | The following table presents the notional amount and fair value of the Company's derivative instruments held or issued in connection with customer initiated and mortgage banking activities:
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Gains (Losses) Related to Derivative Instruments | The following table presents the gains (losses) related to derivative instruments reflecting the changes in fair value:
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Offsetting Assets | The table below presents information about the Company's financial instruments that are eligible for offset.
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Offsetting Liabilities | The table below presents information about the Company's financial instruments that are eligible for offset.
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Parent Company Financial Statements (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Balance Sheet | Balance Sheets—Parent Company
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Schedule of Condensed Income Statement and Comprehensive Income | Statements of Income and Comprehensive Income—Parent Company
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Schedule of Condensed Statements of Cash Flows | Statements of Cash Flows—Parent Company
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Earnings Per Common Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Earnings Per Share | The calculation of basic and diluted earnings per share using the two-class method for the periods noted below was as follows:
(1) Net income allocated to common shareholders for basic and diluted earnings per share may differ under the two-class method as a result of adding common share equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate net income to common shareholders and participating securities for the purposes of calculating diluted earnings per share.
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Business Combinations (Additional Information) (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
Jan. 02, 2020 |
Jan. 31, 2020 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Business Acquisition [Line Items] | ||||||
Acquisition and due diligence fees | $ 17 | $ 319 | $ 1,664 | $ 319 | ||
Ann Arbor Bancorp, Inc | ||||||
Business Acquisition [Line Items] | ||||||
Total cash consideration | $ 67,900 | |||||
Acquisition and due diligence fees | $ 1,700 | |||||
Goodwill acquired | $ 26,200 | $ 26,200 |
Business Combinations (Identifiable Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jan. 02, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill recognized in the acquisition | $ 35,554 | $ 9,387 | |
Ann Arbor Bancorp, Inc | |||
Business Acquisition [Line Items] | |||
Total cash consideration | $ 67,944 | ||
Cash and cash equivalents | 38,480 | ||
Investment securities | 47,416 | ||
Federal Home Loan Bank stock | 923 | ||
Loans held for sale | 1,703 | ||
Loans held for investment | 222,356 | ||
Premises and equipment | 2,404 | ||
Core deposit intangibles | 3,663 | ||
Other assets | 8,358 | ||
Total assets acquired | 325,303 | 325,303 | |
Deposits | 264,820 | ||
Federal Home Loan Bank advances | 15,279 | ||
Other liabilities | 3,427 | ||
Total liabilities assumed | $ 283,526 | 283,526 | |
Total identifiable net assets | 41,777 | ||
Goodwill recognized in the acquisition | $ 26,167 |
Business Combinations (Purchased Loans) (Details) - Ann Arbor Bancorp, Inc $ in Thousands |
Jan. 02, 2020
USD ($)
|
---|---|
Accounted for under ASC 310-30: | |
Contractual cash flows | $ 1,018 |
Contractual cash flows not expected to be collected (nonaccretable difference) | 82 |
Expected cash flows | 936 |
Interest component of expected cash flows (accretable yield) | 35 |
Fair value at acquisition | 901 |
Accounted for under ASC 310-20: | |
Unpaid principal and interest balance | 221,061 |
Fair value premium | 394 |
Fair value at acquisition | 221,455 |
Total fair value at acquisition | $ 222,356 |
Business Combinations (Pro Forma Information) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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Business Combinations [Abstract] | ||||
Net interest income | $ 16,593 | $ 16,036 | $ 47,709 | $ 46,217 |
Noninterest income | 9,125 | 4,486 | 21,604 | 11,228 |
Noninterest expense | 15,143 | 13,742 | 44,822 | 38,879 |
Net income | $ 5,211 | $ 4,865 | $ 12,062 | $ 13,188 |
Net income per diluted share (in dollars per share) | $ 0.67 | $ 0.62 | $ 1.55 | $ 1.68 |
Securities (Proceeds from Sales of Securities and Gains and Losses) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds | $ 5,051 | $ 11,080 | $ 42,640 | $ 46,545 |
Gross gains | 434 | 202 | 1,871 | 543 |
Gross losses | $ 0 | $ (51) | $ (9) | $ (392) |
Securities (Maturity) (Details) $ in Thousands |
Sep. 30, 2020
USD ($)
|
---|---|
Amortized Cost | |
Within one year | $ 11,141 |
One to five years | 27,530 |
Five to ten years | 70,259 |
Beyond ten years | 134,416 |
Amortized Cost | 243,346 |
Fair Value | |
Within one year | 11,228 |
One to five years | 28,494 |
Five to ten years | 73,165 |
Beyond ten years | 140,640 |
Fair Value | $ 253,527 |
Securities (Additional Information) (Details) $ in Thousands |
Sep. 30, 2020
USD ($)
security
|
Dec. 31, 2019
USD ($)
|
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Securities available-for-sale | $ | $ 253,527 | $ 180,905 |
Number of securities | security | 306 | |
Number of securities in an unrealized loss position | security | 29 | |
Credit Concentration Risk | Securities | Tax-exempt securities backed by the Michigan School Bond Loan Fund | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of securities | security | 66 | |
Securities available-for-sale | $ | $ 48,900 | |
Collateral pledged | ||
Debt Securities, Available-for-sale [Line Items] | ||
Securities pledged | $ | $ 97,200 | $ 27,300 |
Loans (Nonperforming Assets) (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Receivables [Abstract] | ||
Loan commitment non accrual | $ 6 | $ 1,200 |
Financing Receivable, Past Due [Line Items] | ||
Other real estate owned | 0 | 921 |
Loans 90 days or more past due and still accruing | 552 | 157 |
Nonperforming | ||
Financing Receivable, Past Due [Line Items] | ||
Total nonaccrual loans | 19,266 | 18,529 |
Other real estate owned | 0 | 921 |
Total nonperforming assets | 19,266 | 19,450 |
Nonperforming | Commercial real estate | ||
Financing Receivable, Past Due [Line Items] | ||
Total nonaccrual loans | 7,022 | 4,832 |
Nonperforming | Commercial and industrial | ||
Financing Receivable, Past Due [Line Items] | ||
Total nonaccrual loans | 8,078 | 11,112 |
Nonperforming | Residential real estate | ||
Financing Receivable, Past Due [Line Items] | ||
Total nonaccrual loans | 4,151 | 2,569 |
Nonperforming | Consumer | ||
Financing Receivable, Past Due [Line Items] | ||
Total nonaccrual loans | $ 15 | $ 16 |
Loans (Troubled Debt Restructuring Additional Information) (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2020
USD ($)
loan
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Sep. 30, 2019
loan
|
Dec. 31, 2019
USD ($)
|
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Financing Receivable, Troubled Debt Restructuring [Line Items] | |||
Recorded investment in troubled debt restructurings | $ 3,600 | $ 3,900 | |
Recorded investment in troubled debt restructurings, reserve | $ 235 | 384 | |
Number of loans modified as TDRs subdequent default | loan | 0 | 0 | |
Nonperforming | |||
Financing Receivable, Troubled Debt Restructuring [Line Items] | |||
Recorded investment in troubled debt restructurings | $ 2,400 | 3,000 | |
Performing | |||
Financing Receivable, Troubled Debt Restructuring [Line Items] | |||
Recorded investment in troubled debt restructurings | $ 1,200 | $ 906 |
Loans (Purchased Credit Impaired Loans Additional Information) (Details) |
Sep. 30, 2020
acquisition
|
---|---|
Receivables [Abstract] | |
Number of previous acquisitions | 5 |
Loans (Activity in the Accretable Yield of PCI Loans) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Accretable yield at beginning of period | $ 8,374 | $ 10,194 | $ 9,141 | $ 10,947 |
Additions due to acquisitions | 0 | 0 | 35 | 0 |
Accretion of income | (482) | (597) | (1,350) | (1,772) |
Adjustments to accretable yield | 0 | 0 | 66 | 422 |
Accretable yield at end of period | $ 7,892 | $ 9,597 | $ 7,892 | $ 9,597 |
Allowance for Loan Losses (Additional Information) (Details) |
Sep. 30, 2020
loan_pool
loan
|
---|---|
Receivables [Abstract] | |
Number of purchase credit impaired loan pools | loan_pool | 6 |
Number of non-pooled purchase credit impaired loans | loan | 13 |
Premises and Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Property, Plant and Equipment [Line Items] | |||||
Total premises and equipment | $ 24,394 | $ 24,394 | $ 21,332 | ||
Less: Accumulated depreciation | 8,748 | 8,748 | 7,494 | ||
Net premises and equipment | 15,646 | 15,646 | 13,838 | ||
Depreciation expenses | 426 | $ 326 | 1,259 | $ 986 | |
Operating lease, rent expense | 450 | $ 307 | 1,400 | $ 840 | |
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Total premises and equipment | 3,514 | 3,514 | 2,254 | ||
Buildings | |||||
Property, Plant and Equipment [Line Items] | |||||
Total premises and equipment | 10,656 | 10,656 | 9,825 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total premises and equipment | 2,993 | 2,993 | 2,714 | ||
Furniture, fixtures and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total premises and equipment | $ 7,231 | $ 7,231 | $ 6,539 |
Goodwill and Intangible Assets (Additional Information) (Details) |
1 Months Ended | 3 Months Ended | 9 Months Ended | 59 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Jan. 02, 2020
USD ($)
|
Jan. 31, 2020
USD ($)
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2019
USD ($)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2019
USD ($)
|
Jan. 31, 2020
acquisition
|
Dec. 31, 2019
USD ($)
|
|
Goodwill [Line Items] | ||||||||||
Number of banks acquired | acquisition | 3 | |||||||||
Goodwill recognized in the acquisition | $ 35,554,000 | $ 35,554,000 | $ 9,387,000 | |||||||
Goodwill impairment | 0 | |||||||||
Amortization of core deposit intangibles | 576,000 | $ 117,000 | ||||||||
Serviced mortgage loans, unpaid principal balance | 211,000,000.0 | 211,000,000.0 | $ 9,000,000.0 | |||||||
Lotus Bank | ||||||||||
Goodwill [Line Items] | ||||||||||
Goodwill acquired | $ 4,600,000 | |||||||||
Bank of Michigan | ||||||||||
Goodwill [Line Items] | ||||||||||
Goodwill acquired | $ 4,800,000 | |||||||||
Ann Arbor Bancorp, Inc | ||||||||||
Goodwill [Line Items] | ||||||||||
Goodwill acquired | $ 26,200,000 | $ 26,200,000 | ||||||||
Goodwill recognized in the acquisition | $ 26,167,000 | |||||||||
Core Deposits | ||||||||||
Goodwill [Line Items] | ||||||||||
Amortization of core deposit intangibles | $ 191,000 | $ 29,000 | $ 576,000 | $ 117,000 |
Goodwill and Intangible Assets (Acquired Intangible Assets) (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Net Intangible | $ 5,581 | $ 383 |
Core Deposits | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 5,708 | 2,045 |
Accumulated amortization | (2,320) | (1,744) |
Net Intangible | $ 3,388 | $ 301 |
Goodwill and Intangible Assets (Schedule of Changes in Mortgage Servicing Rights) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Mortgage servicing rights: | ||||
Balance, beginning of period | $ 1,213 | $ 76 | ||
Originated servicing | 1,073 | 2,250 | ||
Amortization | (93) | (133) | ||
Balance, end of period | 2,193 | 2,193 | ||
Mortgage servicing rights, fair value | $ 2,567 | $ 2,567 | $ 1,256 | $ 87 |
Income Taxes (Reconciliation of Expected Income Tax Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Tax Disclosure [Abstract] | |||||
Income tax expense based on federal corporate tax rate | $ 1,328 | $ 1,118 | $ 2,970 | $ 2,911 | |
Changes resulting from: | |||||
Tax-exempt income | (154) | (142) | (469) | (398) | |
Net operating loss carryback due to CARES Act | 0 | $ (290) | 0 | (290) | 0 |
Disqualified dispositions from stock options | 0 | $ (175) | 0 | (175) | 0 |
Other, net | (57) | (62) | 73 | (85) | |
Total | $ 1,117 | $ 914 | $ 2,109 | $ 2,428 |
Income Taxes (Additional Information) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Tax Disclosure [Abstract] | |||||
Operating loss carryforwards | $ 2,200 | ||||
Tax benefit from net operating loss carryback due to CARES Act | $ 0 | 290 | $ 0 | $ 290 | $ 0 |
Tax benefit from disqualified dispositions from stock options | $ 0 | $ 175 | $ 0 | $ 175 | $ 0 |
Stock Based Compensation (2018 Equity Incentive Plan) (Details) - shares |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Apr. 17, 2018 |
|
Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock awards granted (in shares) | 38,170 | ||
2018 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares of common stock reserved for issuance (in shares) | 250,000 | ||
Share available to be granted (in shares) | 165,597 | ||
2018 Plan | Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock awards granted (in shares) | 38,170 | 35,633 |
Stock Based Compensation (Summary of Stock Option Activity) (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Shares | ||||
Options outstanding, beginning of year (in shares) | 355,218 | 355,218 | ||
Exercised (in shares) | (6,250) | (10,000) | (21,550) | |
Options outstanding, end of year (in shares) | 345,218 | |||
Options Exercisable (in shares) | 335,216 | |||
Weighted Average Exercise Price | ||||
Options outstanding, beginning of year (in dollars per share) | $ 16.63 | $ 16.63 | ||
Exercised (in dollars per share) | 9.57 | |||
Options outstanding, end of year (in dollars per share) | 16.83 | |||
Options exercisable (in dollars per share) | $ 16.59 | |||
Weighted Average Remaining Contractual Term | ||||
Options outstanding | 5 years | 4 years 4 months 24 days | ||
Options exercisable | 4 years 3 months 18 days |
Stock Based Compensation (Restricted Stock Awards - Changes in Nonvested Shares) (Details) - Restricted Stock Awards |
9 Months Ended |
---|---|
Sep. 30, 2020
$ / shares
shares
| |
Shares | |
Nonvested at January 1, 2020 (in shares) | shares | 80,370 |
Granted (in shares) | shares | 38,170 |
Vested (in shares) | shares | (19,850) |
Forfeited (in shares) | shares | (1,400) |
Nonvested at September 30, 2020 (in shares) | shares | 97,290 |
Weighted Average Grant-Date Fair Value | |
Nonvested at January 1, 2020 (in dollars per share) | $ / shares | $ 24.28 |
Granted (in dollars per share) | $ / shares | 24.90 |
Vested (in dollars per share) | $ / shares | 23.10 |
Forfeited (in dollars per share) | $ / shares | 24.46 |
Nonvested at September 30, 2020 (in dollars per share) | $ / shares | $ 24.76 |
Fair Value (Level 3 Assets Rollforward) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Beginning balance | $ 4,056 | $ 5,624 | $ 4,063 | $ 4,571 |
Transfers from loans held for sale | 1,468 | 466 | 2,284 | 1,895 |
Gains (losses): | ||||
Recorded in "Mortgage banking activities" | 65 | (9) | 62 | 151 |
Repayments | (509) | (1,191) | (1,329) | (1,727) |
Ending balance | $ 5,080 | $ 4,890 | $ 5,080 | $ 4,890 |
Fair Value (Contractual Obligations (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Aggregate fair value | $ 60,635 | $ 13,889 |
Contractual balance | 59,055 | 13,510 |
Unrealized gain | $ 1,580 | $ 379 |
Fair Value (Total Amount of Gains (Losses) from Changes in Fair Value of Loans Held For Sale) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Fair Value Disclosures [Abstract] | ||||
Change in fair value | $ 556 | $ (98) | $ 1,201 | $ 352 |
Derivatives (Gains (Losses) Related to Derivative Instruments) (Details) - Mortgage banking activities - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total loss recognized in income | $ (816) | $ (74) | $ (2,188) | $ (261) |
Forward contracts related to mortgage loans to be delivered for sale | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total loss recognized in income | (1,207) | (26) | (3,996) | (417) |
Interest rate lock commitments | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total loss recognized in income | $ 391 | $ (48) | $ 1,808 | $ 156 |
Derivatives (Financial Instruments Eligible for Offset) (Details) - Customer-initiated derivatives - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Offsetting derivative assets: | ||
Gross amounts recognized | $ 14,422 | $ 4,684 |
Gross amounts offset in the statements of financial condition | 0 | 0 |
Net amounts presented in the statements of financial condition | 14,422 | 4,684 |
Gross amounts not offset in the statements of financial position | ||
Financial instruments | 0 | 0 |
Collateral (received)/posted | 0 | 0 |
Net amount | 14,422 | 4,684 |
Offsetting derivative liabilities: | ||
Gross amounts recognized | 14,422 | 4,684 |
Gross amounts offset in the statements of financial condition | 0 | 0 |
Net amounts presented in the statements of financial condition | 14,422 | 4,684 |
Gross amounts not offset in the statements of financial position | ||
Financial instruments | 0 | 0 |
Collateral (received)/posted | 15,383 | 4,375 |
Net amount | $ (961) | $ 309 |
Parent Company Financial Statements (Balance Sheets - Parent Company) (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|---|---|
Assets | ||||||
Cash and cash equivalents | $ 176,486 | $ 103,930 | ||||
Income tax benefit | 3,791 | 1,217 | ||||
Total assets | 2,446,447 | 1,584,899 | ||||
Liabilities | ||||||
Subordinated notes | 44,555 | 44,440 | ||||
Total liabilities | 2,236,979 | 1,414,196 | ||||
Shareholders' equity | 209,468 | $ 180,259 | 170,703 | $ 167,968 | $ 162,867 | $ 151,760 |
Total liabilities and shareholders' equity | 2,446,447 | 1,584,899 | ||||
Parent Company | ||||||
Assets | ||||||
Cash and cash equivalents | 29,105 | 35,210 | ||||
Investment in banking subsidiary | 223,624 | 178,240 | ||||
Investment in captive insurance subsidiary | 2,306 | 1,668 | ||||
Income tax benefit | 158 | 520 | ||||
Other assets | 41 | 99 | ||||
Total assets | 255,234 | 215,737 | ||||
Liabilities | ||||||
Subordinated notes | 44,555 | 44,440 | ||||
Accrued expenses and other liabilities | 1,211 | 594 | ||||
Total liabilities | 45,766 | 45,034 | ||||
Shareholders' equity | 209,468 | 170,703 | ||||
Total liabilities and shareholders' equity | $ 255,234 | $ 215,737 |
Parent Company Financial Statements (Statements of Income and Comprehensive Income - Parent Company) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Expenses | ||||
Interest on borrowed funds | $ 693 | $ 261 | $ 1,866 | $ 960 |
Interest on subordinated notes | 632 | 256 | 1,903 | 759 |
Income tax benefit | (1,117) | (914) | (2,109) | (2,428) |
Net income | 5,209 | 4,409 | 12,040 | 11,431 |
Other comprehensive income | 783 | 1,238 | 4,451 | 7,120 |
Total comprehensive income, net of tax | 5,992 | 5,647 | 16,491 | 18,551 |
Parent Company | ||||
Income | ||||
Dividend income from bank subsidiary | 5,000 | 0 | 41,500 | 0 |
Total income | 5,000 | 0 | 41,500 | 0 |
Expenses | ||||
Interest on borrowed funds | 11 | 0 | 33 | 0 |
Interest on subordinated notes | 632 | 256 | 1,903 | 759 |
Other expenses | 302 | 516 | 1,017 | 902 |
Total expenses | 945 | 772 | 2,953 | 1,661 |
Income (loss) before income taxes and equity in (overdistributed) undistributed net earnings of subsidiaries | 4,055 | (772) | 38,547 | (1,661) |
Income tax benefit | 228 | 181 | 383 | 272 |
Equity in (overdistributed) undistributed earnings of subsidiaries | 926 | 5,000 | (26,890) | 12,820 |
Net income | 5,209 | 4,409 | 12,040 | 11,431 |
Other comprehensive income | 783 | 1,238 | 4,451 | 7,120 |
Total comprehensive income, net of tax | $ 5,992 | $ 5,647 | $ 16,491 | $ 18,551 |
Earnings Per Common Share (Additional Information) (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares excluded from diluted earnings per share calculation (in shares) | 214,668 | 30,000 | 117,334 | 30,000 |
Label | Element | Value |
---|---|---|
Mortgage Servicing Rights, Gross | levl_MortgageServicingRightsGross | $ 1,000 |
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