10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File No. 001-38282

Metropolitan Bank Holding Corp.

(Exact Name of Registrant as Specified in Its Charter)

New York	13-4042724
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
99 Park Avenue, New York, New York	10016
(Address of Principal Executive Offices)	(Zip Code)

(212) 659-0600

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	MCB	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.

YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging Growth Company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐     NO ☒

There were 10,644,192 shares of the Registrant’s common stock, par value $0.01 per share, outstanding as of November 1, 2021.

METROPOLITAN BANK HOLDING CORP.

Form 10-Q

Table of Contents

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Statements of Financial Condition as of September 30, 2021 and December 31, 2020	5
Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2021 and 2020	6
Consolidated Statements of Comprehensive Income for the Three and Nine Months ended September 30, 2021 and 2020	7
Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months ended September 30, 2021 and 2020	8
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2021 and 2020	10
Notes to Unaudited Consolidated Financial Statements	11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3. Quantitative and Qualitative Disclosures About Market Risk	48
Item 4. Controls and Procedures	50
PART II. OTHER INFORMATION	51
Item 1. Legal Proceedings	51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3. Defaults Upon Senior Securities	51
Item 4. Mine Safety Disclosures	51
Item 5. Other Information	51
Item 6. Exhibits	52
Signatures	53

2

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “consider,” “should,” “plan,” “estimate,” “predict,” “continue,” “probable,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Metropolitan Bank Holding Corp. (the “Company”) and its wholly-owned subsidiary Metropolitan Commercial Bank (the “Bank”), and the Company’s strategies, plans, objectives, expectations and intentions, and other statements contained in this Quarterly Report on Form 10-Q that are not historical facts. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Factors that may cause actual results to differ from those results expressed or implied include those factors listed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2021, and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q. In addition, these factors include but are not limited to:

● increases in competitive pressures among financial institutions or from non-financial institutions;

● changes in the interest rate environment, including the impact of interest rate reform that applies to transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued, may reduce interest margins or affect the value of the Company’s investments;

● changes in deposit flows or loan demand may adversely affect the Company’s business;

● changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be reported or perceived differently;

● general economic conditions, including unemployment rates, either nationally or locally in some or all of the areas in which the Company does business, or conditions in the securities markets or the banking industry may be less favorable than currently anticipated;

● declines in real estate values in the Company’s market area may adversely affect its loan production;

● legislative or regulatory changes or actions may adversely affect the Company’s business;

● applicable technological changes may be more difficult or expensive than anticipated;

● system failures or cyber-security breaches of our information technology infrastructure or those of the Company’s third-party service providers;

● the failure to maintain current technologies and to successfully implement future information technology enhancements;

● the ability to retain key employees;

● successful implementation or consummation of new business initiatives may be more difficult or expensive than anticipated;

● the risks associated with adverse changes to credit quality, including changes in the level of loan delinquencies non-performing assets and charge-offs and changes in the estimates of the adequacy of the allowance for loan losses;

● difficulties associated with achieving or predicting expected future financial results; and

3

● the potential impact on the Company’s operations and customers resulting from natural or man-made disasters, wars, acts of terrorism, cyber-attacks and pandemics such as the Coronavirus (“COVID-19”), as discussed below.

Further, given its ongoing and dynamic nature, including the rate of vaccine acceptance and the development of new variants, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and whether the continued reopening of businesses will result in a meaningful increase in economic activity. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen, and higher levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; our cyber security risks may increase if a significant number of our employees are forced to work remotely; and FDIC premiums may increase if the agency experiences additional resolution costs.

The Company’s ability to predict results or the actual effects of its plans or strategies is inherently uncertain. As such, forward-looking statements can be affected by inaccurate assumptions made or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect conditions only as of the date of this filing. Forward-looking statements speak only as of the date of this document. The Company undertakes no obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements, except as required by the law.

4

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

(in thousands, except share data)

	September 30,		December 31,
	2021		2020
Assets
Cash and due from banks	$	32,660	$	8,692
Overnight deposits		1,824,820		855,613
Total cash and cash equivalents		1,857,480		864,305
Investment securities available for sale, at fair value		603,168		266,096
Investment securities held to maturity (estimated fair value of $2,074 and $2,827 at September 30, 2021 and December 31, 2020 respectively)		2,017		2,760
Equity investment securities, at fair value		2,289		2,313
Total securities		607,474		271,169
Other investments		11,998		11,597
Loans, net of deferred fees and unamortized costs		3,603,288		3,137,053
Allowance for loan losses		(38,121)		(35,407)
Net loans		3,565,167		3,101,646
Receivable from global payments business, net		48,302		27,259
Accrued interest receivable		13,504		13,249
Premises and equipment, net		14,031		13,475
Prepaid expenses and other assets		13,565		18,388
Goodwill		9,733		9,733
Total assets	$	6,141,254	$	4,330,821
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing demand deposits	$	2,803,823	$	1,726,135
Interest-bearing deposits		2,653,746		2,103,471
Total deposits		5,457,569		3,829,606
Trust preferred securities		20,620		20,620
Subordinated debt, net of issuance cost		24,698		24,657
Secured borrowing		35,559		36,964
Accounts payable, accrued expenses and other liabilities		38,129		61,645
Accrued interest payable		448		712
Prepaid third-party debit cardholder balances		21,577		15,830
Total liabilities	$	5,598,600	$	3,990,034
Class B preferred stock, $0.01 par value, authorized 2,000,000 shares, 272,636 shares issued and outstanding at September 30, 2021 and December 31, 2020	$	3	$	3
Common stock, $0.01 par value, 25,000,000 shares authorized, 10,644,192 and 8,295,272 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		106		82
Additional paid in capital		382,922		218,899
Retained earnings		162,498		120,830
Accumulated other comprehensive income (loss), net of tax		(2,875)		973
Total stockholders’ equity	$	542,654	$	340,787
Total liabilities and stockholders’ equity	$	6,141,254	$	4,330,821

See accompanying notes to unaudited consolidated financial statements

5

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF Operations (unaudited)

(in thousands, except per share data)

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Interest and dividend income:
Loans, including fees	$	42,730	$	34,844	$	118,803	$	100,655
Securities:
Taxable		1,418		606		3,322		2,615
Tax-exempt		51		—		138		—
Money market funds		—		—		—		34
Overnight deposits		666		299		1,453		2,266
Other interest and dividends		153		196		457		666
Total interest income		45,018		35,945		124,173		106,236
Interest expense:
Deposits		3,716		2,681		10,452		11,364
Borrowed funds		—		423		—		1,742
Trust preferred securities		105		112		320		461
Subordinated debt		405		405		1,214		1,214
Total interest expense		4,226		3,621		11,986		14,781
Net interest income		40,792		32,324		112,187		91,455
Provision for loan losses		490		1,137		3,315		7,693
Net interest income after provision for loan losses		40,302		31,187		108,872		83,762
Non-interest income:
Service charges on deposit accounts		1,671		863		4,085		2,747
Global Payments Group revenue		3,615		2,572		10,509		6,301
Other service charges and fees		614		202		1,484		1,238
Unrealized gain (loss) on equity securities		(9)		—		(45)		55
Gain on sale of securities		—		—		609		3,286
Total non-interest income		5,891		3,637		16,642		13,627
Non-interest expense:
Compensation and benefits		11,269		9,944		33,907		29,962
Bank premises and equipment		2,038		2,111		6,063		6,498
Professional fees		1,877		1,221		5,183		3,058
Licensing fees and technology costs		3,291		2,960		9,806		10,226
Other expenses		3,509		2,694		9,036		6,984
Total non-interest expense		21,984		18,930		63,995		56,728
Net income before income tax expense		24,209		15,894		61,519		40,661
Income tax expense		7,994		5,111		19,851		12,971
Net income	$	16,215	$	10,783	$	41,668	$	27,690
Earnings per common share:
Basic earnings	$	1.82	$	1.30	$	4.89	$	3.34
Diluted earnings	$	1.77	$	1.27	$	4.76	$	3.27

See accompanying notes to unaudited consolidated financial statements

6

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(in thousands)

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Net Income	$	16,215	$	10,783	$	41,668	$	27,690
Other comprehensive income:
Unrealized gain (loss) on securities available for sale:
Unrealized holding gain (loss) arising during the period	$	(1,321)	$	100		(6,587)		5,210
Reclassification adjustment for gains included in net income		—		—		(609)		(3,286)
Tax effect		415		(43)		2,279		(620)
Net of tax	$	(906)	$	57	$	(4,917)	$	1,304
Unrealized gain (loss) on cash flow hedges:
Unrealized holding gain (loss) arising during the period	$	(143)	$	(218)		1,572		(2,095)
Tax effect		46		76		(503)		668
Net of tax	$	(97)	$	(142)		1,069		(1,427)
Total other comprehensive income (loss)	$	(1,003)	$	(85)	$	(3,848)	$	(123)
Comprehensive Income	$	15,212	$	10,698	$	37,820	$	27,567

See accompanying notes to unaudited consolidated financial statements

7

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

For three months ended September 30, 2021 and 2020

(in thousands, except share data)

	Preferred						Additional				AOCI
	Stock,			Common			Paid-in		Retained		(Loss),
	Class B			Stock			Capital		Earnings		Net		Total
	Shares		Amount	Shares		Amount
Balance at July 1, 2021	272,636	$	3	8,344,192	$	83	$	219,098	$	146,283	$	(1,872)	$	363,595
Issuance of common stock	—		—	2,300,000		23		162,664		—		—		162,687
Stock based compensation	—		—	—		—		1,160		—		—		1,160
Net income	—		—	—		—		—		16,215		—		16,215
Other comprehensive income (loss)	—		—	—		—		—		—		(1,003)		(1,003)
Balance at September 30, 2021	272,636	$	3	10,644,192	$	106	$	382,922	$	162,498	$	(2,875)	$	542,654
	Preferred						Additional				AOCI
	Stock,			Common			Paid-in		Retained		(Loss),
	Class B			Stock			Capital		Earnings		Net		Total
	Shares		Amount	Shares		Amount
Balance at July 1, 2020	272,636	$	3	8,294,801	$	82	$	217,643	$	98,272	$	1,169	$	317,169
Restricted stock, net of forfeiture	—		—	(4,732)		—		735		—		—		735
Stock based compensation	—		—	(590)		—		(18)		—		—		(18)
Net income	—		—	—		—		—		10,783		—		10,783
Other comprehensive income (loss)	—		—	—		—		—		—		(85)		(85)
Balance at September 30, 2020	272,636	$	3	8,289,479	$	82	$	218,360	$	109,055	$	1,084	$	328,584

See accompanying notes to unaudited consolidated financial statements

8

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

For the nine months ended September 30, 2021 and 2020

(in thousands, except share data)

	Preferred						Additional				AOCI
	Stock,			Common			Paid-in		Retained		(Loss),
	Class B			Stock			Capital		Earnings		Net		Total
	Shares		Amount	Shares		Amount
Balance at January 1, 2021	272,636	$	3	8,295,272	$	82	$	218,899	$	120,830	$	973	$	340,787
Issuance of common stock	—		—	2,300,000		23		162,664		—		—		162,687
Restricted stock, net of forfeiture	—		—	93,090		1		—		—		—		1
Stock based compensation	—		—	—		—		3,605		—		—		3,605
Impact of shares for tax withholding for restricted stock vesting	—		—	(44,170)		—		(2,246)		—		—		(2,246)
Net income	—		—	—		—		—		41,668		—		41,668
Other comprehensive income (loss)	—		—	—		—		—		—		(3,848)		(3,848)
Balance at September 30, 2021	272,636	$	3	10,644,192	$	106	$	382,922	$	162,498	$	(2,875)	$	542,654
	Preferred						Additional				AOCI
	Stock,			Common			Paid-in		Retained		(Loss),
	Class B			Stock			Capital		Earnings		Net		Total
	Shares		Amount	Shares		Amount
Balance at January 1, 2020	272,636	$	3	8,312,918	$	82	$	216,468	$	81,364	$	1,207	$	299,124
Restricted stock, net of forfeiture	—		—	(16,976)		—		—		1		—		1
Stock based compensation	—		—	—		—		2,489		—		—		2,489
Impact of shares for tax withholding for restricted stock vesting	—		—	(6,463)		—		(597)		—		—		(597)
Net income	—		—	—		—		—		27,690		—		27,690
Other comprehensive income (loss)	—		—	—		—		—		—		(123)		(123)
Balance at September 30, 2020	272,636	$	3	8,289,479	$	82	$	218,360	$	109,055	$	1,084	$	328,584

See accompanying notes to unaudited consolidated financial statements

9

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

(in thousands)

	Nine months ended September 30,
	2021		2020
Cash flows from operating activities:
Net income	$	41,668	$	27,690
Adjustments to reconcile net income to net cash:
Net depreciation amortization and accretion		3,327		4,178
Provision for loan losses		3,315		7,693
Net change in deferred loan fees		1,855		278
Income tax expense (benefit)		1,029		43
Gain on sale of available-for-sale securities		(609)		(3,286)
Stock-based compensation expense		3,605		2,489
Gain on sale of loans		—		(18)
Dividends earned on CRA fund		(21)		(32)
Unrealized (gain) loss on equity securities		45		(55)
Net change in:
Accrued interest receivable		(255)		(3,662)
Accounts payable, accrued expenses and other liabilities		(23,516)		13,458
Change in global payments balances		5,747		19,873
Accrued interest payable		(264)		(750)
Receivable from global payments, net		(20,542)		(19,656)
Prepaid expenses and other assets		6,408		8,239
Net cash provided by (used in) operating activities		21,792		56,482
Cash flows from investing activities:
Loan originations, purchases and payments, net of recoveries		(468,691)		(327,194)
Proceeds from loans sold		—		9,968
Redemptions of other investments		5		11,480
Purchases of other investments		(405)		(1,140)
Purchases of securities available for sale		(475,777)		(127,730)
Proceeds from calls of securities available for sale		—		30,000
Proceeds from sales of securities available for sale		43,241		111,422
Proceeds from paydowns and maturities of securities available for sale		87,151		43,069
Proceeds from paydowns and maturities of securities held to maturity		725		650
Purchase of derivative contract		—		(2,980)
Purchase of premises and equipment, net		(1,842)		(6,850)
Net cash provided by (used in) investing activities		(815,593)		(259,305)
Cash flows from financing activities:
Issuance of Common Stock		162,664		—
Proceeds from FHLB advances		100		—
Repayments of FHLB advances		(100)		(144,000)
Impact of common stock for tax withholdings for restricted stock vesting		(2,246)		(597)
Repayments of secured borrowings		(1,405)		(10,748)
Net increase in deposits		1,627,963		736,852
Net cash provided by (used in) financing activities		1,786,976		581,507
Increase (decrease) in cash and cash equivalents		993,175		378,684
Cash and cash equivalents at the beginning of the period		864,305		389,220
Cash and cash equivalents at the end of the period	$	1,857,480	$	767,904
Supplemental information:
Cash paid for:
Interest	$	12,250	$	15,531
Income Taxes	$	15,015	$	7,235

See accompanying notes to unaudited consolidated financial statements

10

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION

Metropolitan Bank Holding Corp., a New York corporation (the “Company”), is a bank holding company whose principal activity is the ownership and management of Metropolitan Commercial Bank (the “Bank”), its wholly-owned subsidiary. The Company’s primary market is the New York metropolitan area. The Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals.

The Company’s primary lending products are commercial real estate loans, multi-family loans and commercial and industrial 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 flows from operations of businesses.

The Company’s primary deposit products are checking, savings, and term deposit accounts, and its deposit accounts are insured by the FDIC under the maximum amounts allowed by law. In addition to traditional commercial banking products, the Company offers corporate cash management and retail banking services and, through its Global Payments Group (“global payments business”), provides Banking-as-a-Service to its fintech partners, which includes serving as an issuing bank for third-party managed debit card programs nationwide and providing other financial infrastructure, including cash settlement and custodian deposit services.

The Company and the Bank are subject to the regulations of certain state and federal agencies and, accordingly, are periodically examined by those regulatory authorities. The Company’s business is affected by state and federal legislation and regulations.

NOTE 2 – BASIS OF PRESENTATION

The accounting and reporting policies of the Company conform with U.S. generally accepted accounting principles (“GAAP”) and predominant practices within the U.S. banking industry. All intercompany balances and transactions have been eliminated. The Unaudited Consolidated Financial Statements, which include the accounts of the Company and the Bank, have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q, Article 8 of Regulation S-X and predominant practices within the U.S. banking industry. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The Unaudited Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements in conformity with GAAP, management has made estimates and assumptions based on available information. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods, and actual results could differ from those estimated. Information available which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy, and changes in the financial condition of borrowers.

Some items in the prior year financial statements were reclassified to conform to the current presentation.  Reclassifications had no effect on prior-year net income or shareholders’ equity.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year or for any other period.

The unaudited consolidated financial statements presented in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC.  

11

NOTE 3 – SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

Pursuant to the Tax Cuts and Jobs Act (“JOBS Act”), an Emerging Growth Company (“EGC”) is provided the option to adopt new or revised accounting standards that may be issued by the FASB or the Securities and Exchange Commission either (i) within the same periods as those otherwise applicable to non-EGCs or (ii) within the same time periods as private companies. The Company elected delayed effective dates of recently issued accounting standards. As permitted by the JOBS Act, so long as it qualifies as an EGC, the Company will take advantage of some of the reduced regulatory and reporting requirements that are available to it, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.

The Company is likely to lose its EGC status on December 31, 2022, since that would be the last day of the fiscal year of the Company following the fifth anniversary of the date of the first sale of common equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires companies that lease assets to recognize on their balance sheets the assets and liabilities generated by contracts longer than a year. Under ASU 2016-02, the Company will recognize a right-of-use asset and a lease obligation liability on the consolidated statement of financial condition, which will increase the Company’s assets and liabilities. The Company is required to implement ASU 2016-02 by December 31, 2022, and is currently evaluating the potential impact on its consolidated financial statements.

The Company has not yet adopted ASU No. 2016-13, Financial Instruments – Credit Losses, which requires the measurement of all current expected credit losses (“CECL”) for financial assets. The Company is required to implement CECL by December 31, 2022. The Company is currently developing CECL models and evaluating its potential impact on the Company’s Allowance for Loan and Lease Losses (“ALLL”).

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard was effective for the Company beginning January 1, 2021, and did not have a material impact on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications at the instrument level as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. In January 2021 the FASB issued ASU 2021-01. The amendments in this ASU clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. Management has established a working group to evaluate the impact of the transition from LIBOR on the Company and its consolidated financial statements. The working group has developed an inventory of impacted contracts and client relationships and is in the process of assessing LIBOR alternatives and how such alternatives may be implemented.

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NOTE 4 - INVESTMENT SECURITIES

The following tables summarize the amortized cost and fair value of debt securities available for sale (“AFS”), debt securities held to maturity (“HTM”) and equity investments at September 30, 2021 and December 31, 2020 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses (in thousands):

			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At September 30, 2021	Cost		Gains		Losses		Fair Value
Debt securities available for sale:
Residential mortgage securities	$	504,167	$	1,123	$	(3,859)	$	501,431
Commercial mortgage securities		18,270		249		(263)		18,256
Asset-backed securities		4,750		—		(17)		4,733
U.S. Government agency		67,994		—		(763)		67,231
Securities issued by states and political subdivisions in the U.S		11,836		—		(319)		11,517
Total securities available-for-sale	$	607,017	$	1,372	$	(5,221)	$	603,168
Held-to-maturity securities:
Residential mortgage securities	$	2,017		57		—		2,074
Total securities held-to-maturity	$	2,017	$	57	$	—	$	2,074
Equity investments:
CRA Mutual Fund	$	2,320		—		(31)		2,289
Total non-trading equity investment securities	$	2,320	$	—	$	(31)	$	2,289

			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At December 31, 2020	Cost		Gains		Losses		Fair Value
Debt securities available for sale:
Residential mortgage securities	$	192,163	$	2,599	$	(74)	$	194,688
Commercial mortgage securities		32,589		997		(94)		33,492
U.S. Government agency		37,997		—		(81)		37,916
Total securities available-for-sale	$	262,749	$	3,596	$	(249)	$	266,096
Held-to-maturity securities:
Residential mortgage securities		2,760		67		—		2,827
Total securities held-to-maturity	$	2,760	$	67	$	—	$	2,827
Equity investments:
CRA Mutual Fund		2,299		14		—		2,313
Total non-trading equity investment securities	$	2,299	$	14	$	—	$	2,313

For the three months ended September 30, 2021, there were no sales of AFS securities. For the nine months ended September 30, 2021, there were sales of $42.6 million, at amortized cost, of AFS securities. For the three months ended September 30, 2020, there were calls of $25.0 million, at amortized cost of AFS securities. There were sales and calls of $108.1 million and $30.0 million, at amortized cost, respectively, for the nine months ended September 30, 2020. The

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proceeds from sales and calls of AFS securities and associated gains for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Proceeds	$	—	$	25,000	$	43,241	$	141,422
Gross gains	$	—	$	—	$	609	$	3,286
Tax impact	$	—	$	—	$	(195)	$	(1,036)

The tables below summarize, by contractual maturity, the amortized cost and fair value of debt securities at September 30, 2021 and December 31, 2020. The table does not include the effect of principal repayments. Equity securities, primarily investment in mutual funds, have been excluded from the table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately (in thousands):

	Held-to-Maturity				Available-for-Sale
At September 30, 2021	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	—	$	—	$	—	$	—
One to five years		—		—		47,994		47,475
Five to ten years		—		—		15,000		14,832
After ten years		—		—		16,836		16,441
Total	$	—	$	—	$	79,830	$	78,748
Residential mortgage securities	$	2,017	$	2,074		504,167		501,431
Commercial mortgage securities		—		—		18,270		18,256
Asset-backed securities		—		—		4,750		4,733
Total Securities	$	2,017	$	2,074	$	607,017	$	603,168

	Held-to-Maturity				Available-for-Sale
At December 31, 2020	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	—	$	—	$	—	$	—
One to five years		—		—		37,997		37,916
Five to ten years		—		—		—		—
Due after ten years		—		—		—		—
Total	$	—	$	—	$	37,997	$	37,916
Residential mortgage securities	$	2,760	$	2,827	$	192,163	$	194,688
Commercial mortgage securities		—		—		32,589		33,492
Total Securities	$	2,760	$	2,827	$	262,749	$	266,096

There were no securities pledged as collateral at September 30, 2021 or December 31, 2020.

At September 30, 2021 and December 31, 2020, all of the residential mortgage securities and commercial mortgage securities held by the Company were issued by U.S. Government-sponsored entities and agencies.

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Debt securities with unrealized/unrecognized losses at September 30, 2021 and December 31, 2020, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

	Less than 12 Months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
At September 30, 2021	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Debt securities available for sale:
Residential mortgage securities	$	315,184	$	(3,859)	$	—	$	—	$	315,184	$	(3,859)
Commercial mortgage securities		14,919		(263)		379		—		15,298		(263)
Asset-backed securities		4,733		(17)		—		—		4,733		(17)
U.S. Government agency securities		39,546		(451)		27,685		(312)		67,231		(763)
Securities issued by states and political subdivisions in the U.S		11,517		(319)		—		—		11,517		(319)
Total securities available for sale	$	385,899	$	(4,909)	$	28,064	$	(312)	$	413,963	$	(5,221)

	Less than 12 Months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
At December 31, 2020	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Debt securities available for sale:
Residential mortgage securities	$	33,734		(74)		-		-		33,734		(74)
Commercial mortgage securities		12,314		(93)		385		(1)		12,699		(94)
U.S. Government agency securities		37,916		(81)		—		—		37,916		(81)
Total securities available-for-sale	$	83,964	$	(248)	$	385	$	(1)	$	84,349	$	(249)

The unrealized losses on securities are primarily due to the changes in market interest rates subsequent to purchase. The Company did not consider these securities to be other-than-temporarily impaired at September 30, 2021 or December 31, 2020 since the decline in market value was attributable to changes in interest rates and not credit quality. In addition, the Company does not intend to sell and does not believe that it is more likely than not that it will be required to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, no impairment loss was recognized during the nine months ended September 30, 2021 or for the year ended December 31, 2020.

At September 30, 2021 and December 31, 2020, 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 stockholders’ equity.

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NOTE 5 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans, net of deferred costs and fees, consist of the following as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Real estate
Commercial	$	2,378,074	$	1,887,505
Construction		150,144		112,290
Multifamily		374,555		433,239
One-to-four family		61,266		71,354
Total real estate loans		2,964,039		2,504,388
Commercial and industrial		611,303		591,500
Consumer		35,067		46,431
Total loans		3,610,409		3,142,319
Deferred fees		(7,121)		(5,266)
Loans, net of deferred fees and unamortized costs		3,603,288		3,137,053
Allowance for loan losses		(38,121)		(35,407)
Balance at the end of the period	$	3,565,167	$	3,101,646

Included in commercial and industrial loans at September 30, 2021 and December 31, 2020 are $2.5 million and $3.8 million, respectively, of Paycheck Protection Program (“PPP”) loans.

The following tables present the activity in the ALLL by segment for the three and nine months ended September 30, 2021 and 2020. The portfolio segments represent the categories that the Company uses to determine its ALLL (in thousands):

	Commercial		Commercial				Multi		One-to-four
Three months ended September 30, 2021	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	20,299	$	10,545	$	1,972	$	2,618	$	169	$	1,774	$	37,377
Provision/(credit) for loan losses		1,169		(440)		129		(331)		(13)		(24)		490
Loans charged-off		—		—		—		—		—		(54)		(54)
Recoveries		—		308		—		—		—		—		308
Total ending allowance balance	$	21,468	$	10,413	$	2,101	$	2,287	$	156	$	1,696	$	38,121

	Commercial		Commercial				Multi		One-to-four
Three months ended September 30, 2020	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	18,690		9,132		741		2,739		242		961		32,505
Provision/(credit) for loan losses		(1,611)		2,104		706		(215)		(61)		214		1,137
Loans charged-off		—		(82)		—		—		—		—		(82)
Recoveries		—		54		—		—		—		—		54
Total ending allowance balance	$	17,079	$	11,208	$	1,447	$	2,524	$	181	$	1,175	$	33,614

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	Commercial		Commercial				Multi		One-to-four
Nine months ended September 30, 2021	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	17,243	$	12,123	$	1,593	$	2,661	$	206	$	1,581	$	35,407
Provision/(credit) for loan losses		4,225		(1,163)		508		(374)		(50)		169		3,315
Loans charged-off		—		(855)		—		—		—		(54)		(909)
Recoveries		—		308		—		—		—		—		308
Total ending allowance balance	$	21,468	$	10,413	$	2,101	$	2,287	$	156	$	1,696	$	38,121

	Commercial		Commercial				Multi		One-to-four
Nine months ended September 30, 2020	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	15,317	$	7,070	$	411	$	2,453	$	267	$	754	$	26,272
Provision/(credit) for loan losses		1,762		4,278		1,036		71		(86)		632		7,693
Loans charged-off		—		(254)		—		—		—		(221)		(475)
Recoveries		—		114		—		—		—		10		124
Total ending allowance balance	$	17,079	$	11,208	$	1,447	$	2,524	$	181	$	1,175	$	33,614

Net recoveries for the three months ended September 30, 2021 were $254,000. Net charge-offs for the three months ended September 30, 2020 were $28,000.  Net charge-offs for the nine months ended September 30, 2021 and 2020 were $601,000 and $351,000, respectively.

The following tables present the balance in the ALLL and the recorded investment in loans by portfolio segment based on impairment method as of September 30, 2021 and December 31, 2020 (in thousands):

	Commercial		Commercial				Multi		One-to-four
At September 30, 2021	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	2,814	$	—	$	—	$	33	$	1,430	$	4,277
Collectively evaluated for impairment		21,468		7,599		2,101		2,287		123		266		33,844
Total ending allowance balance	$	21,468	$	10,413	$	2,101	$	2,287	$	156	$	1,696	$	38,121
Loans:
Individually evaluated for impairment	$	10,333	$	3,145	$	—	$	—	$	958	$	2,125	$	16,561
Collectively evaluated for impairment		2,367,741		608,158		150,144		374,555		60,308		32,942		3,593,848
Total ending loan balance	$	2,378,074	$	611,303	$	150,144	$	374,555	$	61,266	$	35,067	$	3,610,409

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	Commercial		Commercial				Multi		One-to-four
At December 31, 2020	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	3,662	$	—	$	—	$	53	$	1,203	$	4,918
Collectively evaluated for impairment		17,243		8,461		1,593		2,661		153		378		30,489
Total ending allowance balance	$	17,243	$	12,123	$	1,593	$	2,661	$	206	$	1,581	$	35,407
Loans:
Individually evaluated for impairment	$	10,345	$	4,192	$	—	$	—	$	999	$	2,197	$	17,733
Collectively evaluated for impairment		1,877,160		587,308		112,290		433,239		70,355		44,234		3,124,586
Total ending loan balance	$	1,887,505	$	591,500	$	112,290	$	433,239	$	71,354	$	46,431	$	3,142,319

The following tables present loans individually evaluated for impairment recognized as of September 30, 2021 and December 31, 2020 (in thousands):

	Unpaid Principal				Allowance for Loan
At September 30, 2021	Balance		Recorded Investment		Losses Allocated
With an allowance recorded:
One-to-four family	$	584	$	454	$	33
Consumer		2,125		2,125		1,430
Commercial & industrial		3,145		3,145		2,814
Total	$	5,854	$	5,724	$	4,277
Without an allowance recorded:
One-to-four family	$	651	$	504	$	—
Commercial real estate		10,333		10,333		—
Commercial & industrial		—		—		—
Total	$	10,984	$	10,837	$	—

	Unpaid Principal				Allowance for Loan
At December 31, 2020	Balance		Recorded Investment		Losses Allocated
With an allowance recorded:
One-to-four family	$	610	$	480	$	53
Consumer		2,197		2,197		1,203
Commercial & industrial		4,192		4,192		3,662
Total	$	6,999	$	6,869	$	4,918
Without an allowance recorded:
One-to-four family	$	666	$	519	$	—
Commercial real estate		10,345		10,345		—
Commercial & industrial		—		—		—
Total	$	11,011	$	10,864	$	—

The recorded investment in loans excludes accrued interest receivable and loan origination fees.

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The following tables present the average recorded investment and interest income of loans individually evaluated for impairment recognized by class of loans for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Average Recorded		Interest Income
Three months ended September 30, 2021	Investment		Recognized
With an allowance recorded:
One-to-four family	$	458	$	4
Consumer		2,103		26
Commercial & industrial		3,145		—
Total	$	5,706	$	30
Without an allowance recorded:
One-to-four family	$	506	$	7
Commercial real estate		10,335		2
Commercial & industrial		96		—
Total	$	10,937	$	9

	Average Recorded		Interest Income
Three months ended September 30, 2020	Investment		Recognized
With an allowance recorded:
One-to-four family	$	488	$	5
Consumer		2,112		27
Commercial & industrial		5,497		—
Total	$	8,097	$	32
Without an allowance recorded:
One-to-four family	$	524	$	3
Commercial real estate		363		-
Total	$	887	$	3

	Average Recorded		Interest Income
Nine months ended September 30, 2021	Investment		Recognized
With an allowance recorded:
One-to-four family	$	466	$	16
Consumer		2,132		84
Commercial & industrial		3,407		-
Total	$	6,005	$	100
Without an allowance recorded:
One-to-four family	$	511	$	20
Commercial real estate		10,339		207
Commercial & industrial		96		-
Total	$	10,946	$	227

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	Average Recorded		Interest Income
Nine months ended September 30, 2020	Investment		Recognized
With an allowance recorded:
One-to-four family	$	494	$	13
Consumer		1,330		58
Commercial & industrial		3,272		—
Total	$	5,096	$	71
Without an allowance recorded:
One-to-four family	$	1,115	$	13
Commercial real estate		364		4
Commercial and industrial		1,188		—
Total	$	2,667	$	17

For a loan to be considered impaired, management determines whether it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. Management applies its normal loan review procedures in making these judgments. Impaired loans include individually classified non-accrual loans and troubled debt restructurings (“TDRs”). Impairment is determined based on the present value of expected future cash flows discounted at the loan’s effective interest rate. For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of the collateral or present value of expected cash flows is compared to the carrying value to determine if any write-down or specific loan loss allowance allocation is required.

For discussion on modification of loans to borrowers impacted by COVID-19, refer to the “COVID-19 Loan Modifications” section herein.

The following tables present the recorded investment in non-accrual loans and loans past due over 90 days and still accruing, by class of loans, as of September 30, 2021 and December 31, 2020 (in thousands):

At September 30, 2021	Non-accrual		Loans Past Due Over 90 Days Still Accruing
Commercial real estate	$	9,984	$	—
Commercial & industrial		3,145		—
Consumer		1,674		573
Total	$	14,803	$	573

At December 31, 2020	Non-accrual			Loans Past Due Over 90 Days Still Accruing
Commercial & industrial	$	4,192	$	—
Consumer		1,428		769
Total	$	5,620	$	769

Interest income that would have been recorded for the three and nine months ended September 30, 2021 and 2020 had non-accrual loans been current according to their original terms was immaterial.

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The following tables present the aging of the recorded investment in past due loans by class of loans as of September 30, 2021 and December 31, 2020 (in thousands):

					90
	30-59		60-89		Days and		Total past		Current
At September 30, 2021	Days		Days		Greater		due		loans		Total
Commercial real estate	$	—	$	—	$	9,984	$	9,984	$	2,368,090	$	2,378,074
Commercial & industrial		92		—		3,145		3,237		608,066		611,303
Construction		—		—		—		—		150,144		150,144
Multifamily		—		—		—		—		374,555		374,555
One-to-four family		—		—		—		—		61,266		61,266
Consumer		43		—		2,247		2,290		32,777		35,067
Total	$	135	$	—	$	15,376	$	15,511	$	3,594,898	$	3,610,409

					90
	30-59		60-89		Days and		Total past		Current
At December 31, 2020	Days		Days		Greater		due		loans		Total
Commercial real estate	$	40	$	9,984	$	—	$	10,024	$	1,877,481	$	1,887,505
Commercial & industrial		4,429		6,400		4,192		15,021		576,479		591,500
Construction		—		—		—		—		112,290		112,290
Multifamily		—		—		—		—		433,239		433,239
One-to-four family		2,908		—		—		2,908		68,446		71,354
Consumer		112		32		2,197		2,341		44,090		46,431
Total	$	7,489	$	16,416	$	6,389	$	30,294	$	3,112,025	$	3,142,319

Troubled Debt Restructurings

Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered TDRs and classified as impaired.

Included in impaired loans at September 30, 2021 and December 31, 2020 were $1.3 million and $1.4 million, respectively, of loans modified as TDRs. The Company allocated specific reserves amounting to $33,000 and $53,000 for TDRs as of September 30, 2021 and December 31, 2020, respectively. There were no loans modified as a TDR during the three and nine months ended September 30, 2021 or 2020. The Company has not committed to lend additional amounts as of September 30, 2021 to customers with outstanding loans that are classified as TDRs. During the nine months ended September 30, 2021 and September 30, 2020 there were no payment defaults on any loans previously identified as TDRs. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed pursuant to the Company’s internal underwriting policy.

The following tables present the recorded investment in TDRs by class of loans as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Troubled debt restructurings:
Real Estate:
Commercial real estate	$	349	$	361
One-to-four family		958		999
Total troubled debt restructurings	$	1,307	$	1,360

All TDRs at September 30, 2021 and December 31, 2020 were performing in accordance with their restructured terms.

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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. Except for one-to-four family loans and consumer loans, the Company analyzes loans individually by classifying the loans as to credit risk at least annually. For one-to-four family loans and consumer loans, the Company evaluates credit quality based on the aging status of the loan, which was previously presented. An analysis is performed on a quarterly basis for loans classified as special mention, substandard or doubtful. The Company uses the following definitions for risk ratings:

Special Mention - Loans classified as special mention have a potential weakness that deserves management’s 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.

Loans not meeting the criteria above are considered to be pass-rated loans. Based on the most recent analysis performed, the risk category of loans by class of loans as of September 30, 2021 and December 31, 2020 is as follows (in thousands):

			Special
At September 30, 2021	Pass		Mention		Substandard		Doubtful			Total
Commercial real estate	$	2,367,741	$	349	$	9,984	$	—	$	2,378,074
Commercial & industrial		603,963		4,195		—		3,145		611,303
Construction		150,144		—		—		—		150,144
Multifamily		374,555		—		—		—		374,555
Total	$	3,496,403	$	4,544	$	9,984	$	3,145	$	3,514,076

			Special
At December 31, 2020	Pass		Mention		Substandard		Doubtful			Total
Commercial real estate	$	1,877,160	$	361	$	9,984	$	—	$	1,887,505
Commercial & industrial		583,809		3,499		—		4,192		591,500
Construction		112,290		—		—		—		112,290
Multi-family		433,239		—		—		—		433,239
Total	$	3,006,498	$	3,860	$	9,984	$	4,192	$	3,024,534

COVID-19 Loan Modifications

On March 22, 2020, the banking regulators and the FASB issued guidance to financial institutions who were working with borrowers affected by COVID-19 (“COVID-19 Guidance”). The COVID-19 Guidance indicated that regulatory agencies will not criticize institutions for working with borrowers and will not direct banks to automatically categorize all COVID-19 related loan modifications as TDRs. In addition, the COVID-19 Guidance noted that modification or deferral programs mandated by the federal or a state government related to COVID-19 would not be in the scope of Accounting Standards Codification Subtopic 310-40 – Receivables – Troubled Debt Restructurings by Creditors (“ASC 310-40”), such as state programs that require all institutions within that state to suspend mortgage payments for a specified period.  

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. Section 4013 of the CARES Act, “Temporary Relief from Troubled Debt Restructurings,” allows banks to temporarily

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suspend certain requirements under GAAP related to TDRs for a limited period to account for the effects of COVID-19. A bank may elect to account for modifications on certain loans under Section 4013 of the CARES Act or, if a loan modification is not eligible under Section 4013, a bank may use the criteria in the COVID-19 Guidance to determine when a loan modification is not a TDR in accordance with ASC 310-40.

As of September 30, 2021, the Company had 10 loans amounting to $49.1 million, or 1.4% of total loans, that were modified in accordance with the COVID-19 Guidance and the CARES Act. As of September 30, 2021, principal payment deferrals were $39.2 million, or 1.1% of total loans, while full payment deferrals were $10.0 million, or 0.3% of total loans.

NOTE 6  — STOCKHOLDERS’ EQUITY

During the quarter ended September 30, 2021, the Company raised $172.5 million of capital through the issuance of 2.3 million shares of its common stock at a price of $75 per share, resulting in net proceeds of $162.7 million. The offering increased the Company’s shares of common stock outstanding from 8.3 million shares to 10.6 million shares.

At September 30, 2021, the Company also has outstanding 272,636 shares of its Series F, Class B non-voting preferred stock, par value, $0.01 per share. The stock is subordinate and junior to all indebtedness of the Company and to all other series of preferred stock of the Company. The holder of the Series F, Class B preferred stock is entitled to receive ratable dividends only if and when dividends are concurrently declared and payable on the shares of common shares. In connection with the issuance of additional shares of common stock of the Company, the holder of the Series F, Class B Preferred Stock has the right to exchange shares of Series F, Class B preferred stock for shares of the Company’s common stock to allow it to maintain the percent ownership of the outstanding common stock of the Company it owned immediately prior to the issuance of the additional shares of common stock by the Company.

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NOTE 7 – EARNINGS PER SHARE

The computation of basic and diluted earnings per share is shown below (dollars in thousands, except share data):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Basic
Net income per consolidated statements of income	$	16,215	$	10,783	$	41,668	$	27,690
Less: Earnings allocated to participating securities		(508)		(89)		(568)		(255)
Net income available to common stockholders	$	15,707	$	10,694	$	41,100	$	27,435
Weighted average common shares outstanding including participating securities		8,897,910		8,291,068		8,518,639		8,296,701
Less: Weighted average participating securities		(278,937)		(68,198)		(116,045)		(76,499)
Weighted average common shares outstanding		8,618,973		8,222,870		8,402,594		8,220,202
Basic earnings per common share	$	1.82	$	1.30	$	4.89	$	3.34
Diluted
Net income allocated to common stockholders	$	15,707	$	10,694	$	41,100	$	27,435
Weighted average common shares outstanding for basic earnings per common share		8,618,973		8,222,870		8,402,594		8,220,202
Add: Dilutive effects of assumed exercise of stock options		173,909		92,269		161,932		103,737
Add: Dilutive effects of assumed vesting of performance based restricted stock units		53,571		78,072		41,932		68,116
Add: Dilutive effects of assumed vesting of restricted stock units		46,651		—		29,939		—
Average shares and dilutive potential common shares		8,893,104		8,393,211		8,636,397		8,392,055
Dilutive earnings per common share	$	1.77	$	1.27	$	4.76	$	3.27

All stock options and performance based restricted stock units were considered in computing diluted earnings per common share for the three and nine months ended September 30, 2021 and 2020. 188,906 restricted stock units were not considered in the calculation of diluted earnings per share as their inclusion would be anti-dilutive for the three and nine months ended September 30, 2021.

The Company began treating the Class B preferred stock as a participating security during the third quarter of 2021 and the impact was immaterial.

NOTE 8 - STOCK COMPENSATION PLAN

Equity Incentive Plan

On May 28, 2019, the Company’s 2019 Equity Incentive Plan (the “2019 EIP”) was approved by stockholders of the Company. Under the 2019 EIP, the maximum number of shares of stock that may be delivered to participants in the form of restricted stock, restricted stock units and stock options, including incentive stock options (“ISO”) and non-qualified stock options, is 340,000, plus any awards that are forfeited under the 2009 Equity Incentive Plan (the “2009 Plan”) after the effective date of the 2019 EIP, which was May 28, 2019. Under the 2009 Plan, there are 468,382 shares that are subject to outstanding and/or unexercised awards that have been granted and, if forfeited after May 28, 2019, such shares will be available to be granted under the 2019 EIP. The 628,719 shares that were unauthorized and unissued under the 2009 Plan have expired and may not be granted (and such shares of stock did not roll over to the 2019 EIP).  

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Stock Options

Under the terms of the 2019 EIP, a stock option cannot have an exercise price that is less than 100% of the fair market value of the shares covered by the stock option on the date of grant. In the case of an ISO granted to a 10% stockholder, the exercise price shall not be less than 110% of the fair market value of the shares covered by the stock option on the date of grant.  In no event shall the exercise period exceed ten years from the date of grant of the option, except, in the case of an ISO granted to a 10% stockholder, the exercise period shall not exceed five years from the date of grant. The 2019 EIP contains a double trigger change in control feature, providing for an acceleration of vesting upon an involuntary termination of employment simultaneous with or following a change in control.

The fair value of each stock option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model. Expected volatilities based on historical volatilities of the Company’s common stock are not significant. The expected term of options granted is based on historical data and 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.

A summary of the status of the Company’s stock options and the changes during the nine months ended September 30, 2021 is presented below:

	Nine Months Ended September 30, 2021
	Number of	Weighted Average
	Options	Exercise Price
Outstanding, beginning of period	231,000	$	18.00
Granted	—		—
Exercised	—		—
Cancelled/forfeited	—		—
Outstanding, end of period	231,000	$	18.00
Options vested and exercisable at end of period	231,000	$	18.00
Weighted average remaining contractual life (years)			2.63

There was no unrecognized compensation cost related to stock options at September 30, 2021 or December 31, 2020.

There was no compensation cost related to stock options for the nine months ended September 30, 2021 or 2020.

The following table summarizes information about stock options outstanding at September 30, 2021:

	At September 30, 2021
Range of Average		Weighted Average	Weighted Average		Weighted Average
Exercise Prices	Number Outstanding	Remaining Contractual Life	Exercise Price		Intrinsic Price per Share
$10 – 30	231,000	2.63	$	18.00	$	66.30

Restricted Stock Awards and Restricted Stock Units

The Company issued restricted stock awards under the 2009 Plan and restricted stock units under the 2019 EIP (collectively, “restricted stock grants”) to certain key personnel. Each restricted stock grant vests based on the vesting schedule outlined in the restricted stock grant agreement. Restricted stock grants are subject to forfeiture if the holder is not employed by the Company on the vesting date.

In the first quarter of 2021, 78,582 restricted stock units were issued to certain key personnel. One-third of these shares vest each year for three years beginning on March 1, 2022. In the second and third quarters of 2021, no restricted stock units were issued.

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Total compensation cost that has been charged against income for restricted stock grants was $1.1 million and $277,000 for the three months ended September 30, 2021 and 2020, respectively. Total compensation cost that has been charged against income for restricted stock grants was $2.3 million and $1.1 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, there was $3.9 million of total unrecognized compensation expense related to the restricted stock awards. The cost is expected to be recognized over a weighted-average period of 2.07 years.

On January 1, 2019, 38,900 restricted shares were granted to members of the Board of Directors in lieu of retainer fees for three years of service. One-third of these shares vest each year for three years from December 31, 2019. In the fourth quarter of 2020, 1,785 shares were granted to a new member of the Board of Directors, all of which will vest in the fourth quarter of 2021. Total expense for these awards was $100,000 for both the three months ended September 30, 2021 and 2020. Total expense for these awards was $300,000 for the nine months ended September 30, 2021 and 2020. As of September 30, 2021 there was $100,000 of unrecognized expense related to these grants. The remaining unamortized cost is expected to be recognized over a weighted-average period of 0.25 years.

The following table summarizes the changes in the Company’s restricted stock grants for the nine months ended September 30, 2021:

	Nine Months Ended September 30, 2021
		Weighted Average
	Number of Shares	Grant Date Fair Value
Outstanding, beginning of period	76,289	$	38.66
Granted	168,582		57.23
Forfeited	(10,200)		48.09
Vested	(14,489)		30.45
Outstanding at end of period	220,182	$	52.98

The total fair value of shares vested was approximately $441,197 for the nine months ended September 30, 2021.

Performance Based Stock Units

During the first quarter of 2018, the Company established a long-term incentive award program under the 2009 Plan. For each award, Performance Restricted Share Units (“PRSUs”) were eligible to be earned over a three-year performance period based on personal performance and the Company’s relative performance, in each case, as compared to certain measurement goals that were established at the onset of the performance period. These awards were accounted for in accordance with guidance prescribed in ASC Topic 718, Compensation – Stock Compensation. 90,000 PRSUs were awarded under the program. These PRSUs were earned at the end of the three-year period and vested in the first quarter of 2021.

During the second quarter of 2021, the Company established a long-term incentive award program under the 2019 Plan. The PRSUs are earned ratably over a three-year performance period based on personal performance and the Company’s relative performance, in each case, as compared to certain measurement goals that were established at the onset of the performance period. These awards are accounted for in accordance with the guidance prescribed in ASC Topic 718. 90,000 PRSUs were awarded under the program.

	September 30, 2021
Weighted average service inception date fair value of award shares	$	5,721,300
Minimum aggregate share payout		9,000
Maximum aggregate share payout		90,000
Likely aggregate share payout		90,000

Total compensation cost that has been charged against income for these programs was $481,000 and $358,000 for the three months ended September 30, 2021 and 2020, respectively. Total compensation cost that has been charged against income

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for these programs was $1.4 million and $1.1 million for the nine months ended September 30, 2021 and 2020, respectively.

NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. The Company did not have any liabilities that were measured at fair value at September 30, 2021 and December 31, 2020. AFS securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as certain impaired loans. These non-recurring fair value adjustments generally involve the write-down of individual assets due to impairment losses.

Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

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 reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Assets and Liabilities Measured on a Recurring Basis

Assets measured on a recurring basis are limited to the Company’s AFS securities portfolio, equity investments and an interest rate cap derivative contract. The AFS portfolio is carried at estimated fair value with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss in shareholders’ equity. Equity investments are carried at estimated fair value with changes in fair value reported as “unrealized gain/(loss)” on the statements of operations. The interest rate cap derivative contract is carried at estimated fair value with changes in fair value reported as accumulated other comprehensive income or loss in shareholders’ equity. The fair values for substantially all of these assets are obtained monthly from an independent nationally recognized pricing service. On a quarterly basis, the Company assesses the reasonableness of the fair values obtained for the AFS portfolio by reference to a second independent nationally recognized pricing service. Based on the nature of these securities, the Company’s independent pricing service provides prices which are categorized as Level 2 since quoted prices in active markets for identical assets are generally not available for the majority of securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for the Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. On an annual basis, the Company obtains the models, inputs and assumptions utilized by its pricing service and reviews them for reasonableness.

There are no liabilities that are measured on a recurring basis.

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Assets measured at fair value on a recurring basis are summarized below (in thousands):

	Fair Value Measurement using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable
	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
At September 30, 2021
Residential mortgage-backed securities	$	501,431	$	—	$	501,431	$	—
Commercial mortgage-backed securities		18,256		—		18,256		—
Asset-backed securities		4,733		—		4,733
U.S. Government agency		67,231		—		67,231
Securities issued by states and political subdivisions in the U.S		11,517		—		11,517
CRA Mutual Fund		2,289		2,289		—		—
Derivative assets - interest rate cap		2,086		—		2,086		—
	Fair Value Measurement using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable
	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
At December 31, 2020
Residential mortgage securities	$	194,688	$	—	$	194,688	$	—
Commercial mortgage securities		33,492		—		33,492		—
U.S. Government agency securities		37,916		—		37,916		—
CRA Mutual Fund		2,313		2,313		—		—
Derivative assets - interest rate cap		770		—		770		—

There were no transfers between Level 1 and Level 2 during the three months ended September 30, 2021 and 2020.

There were no material assets measured at fair value on a non-recurring basis at September 30, 2021 or December 31, 2020.

The Company has engaged an independent pricing service provider to provide the fair values of its financial assets and liabilities measured at amortized cost. This provider follows FASB’s exit pricing guidelines, as required by

ASU 2016-01, when calculating fair market values.

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Carrying amounts and estimated fair values of financial instruments carried at amortized cost at September 30, 2021 and December 31, 2020 were as follows (in thousands):

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable		Total Fair
At September 30, 2021	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Value
Financial Assets:
Cash and due from banks	$	32,660	$	32,660	$	—	$	—	$	32,660
Overnight deposits		1,824,820		1,824,820		—		—		1,824,820
Securities available for sale		603,168		—		603,168		—		603,168
Securities held to maturity		2,017		—		2,074		—		2,074
Equity investments		2,289		2,289		—		—		2,289
Loans, net		3,565,167		—		—		3,592,347		3,592,347
Other investments
FRB Stock		7,430		N/A		N/A		N/A		N/A
FHLB Stock		3,070		N/A		N/A		N/A		N/A
Disability Fund		1,000		—		1,000		—		1,000
Time deposits at banks		498		498		—		—		498
Interest rate cap derivative		2,086		—		2,086		—		2,086
Accrued interest receivable		13,504		—		717		12,787		13,504
Financial liabilities:
Non-interest-bearing demand deposits	$	2,803,823	$	2,803,823	$	—	$	—	$	2,803,823
Money market and savings deposits		2,571,707		2,571,707		—		—		2,571,707
Time deposits		82,039		—		82,610		—		82,610
Trust preferred securities payable		20,620		—		—		20,002		20,002
Subordinated debt, net of issuance cost		24,698		—		25,438		—		25,438
Accrued interest payable		448		3		337		108		448
Secured Borrowings		35,559		0		35,559		0		35,559

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			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable		Total Fair
At December 31, 2020	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Value
Financial Assets:
Cash and due from banks	$	8,692	$	8,692	$	—	$	—	$	8,692
Overnight deposits		855,613		855,613		—		—		855,613
Securities available for sale		266,096		—		266,096		—		266,096
Securities held to maturity		2,760		—		2,827		—		2,827
Equity investments		2,313		2,313		—		—		2,313
Loans, net		3,101,646		—		—		3,094,998		3,094,998
Other investments
FRB Stock		7,381		N/A		N/A		N/A		N/A
FHLB Stock		2,718		N/A		N/A		N/A		N/A
Disability Fund		1,000		—		1,000		—		1,000
CRA - CD		498		498		—		—		498
Interest rate cap derivative		770		—		770		—		770
Accrued interest receivable		13,249		—		414		12,835		13,429
Financial liabilities:
Non-interest-bearing demand deposits	$	1,726,135	$	1,726,135	$	—	$	—	$	1,726,135
Money market and savings deposits		2,011,409		2,011,409		—		—		2,011,409
Time deposits		92,062		—		93,157		—		93,157
Trust preferred securities payable		20,620		—		—		20,011		20,011
Subordinated debt, net of issuance cost		24,657		—		25,375		—		25,375
Accrued interest payable		712		7		591		114		712
Secured borrowing		36,964		—		36,964		—		36,964

NOTE 10 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table shows the amounts reclassified out of each component of accumulated other comprehensive income for the gain on the sale and calls of securities during the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Proceeds	$	—	$	25,000	$	43,241	$	141,422
Gross gains	$	—	$	—	$	609	$	3,286
Tax impact	$	—	$	—	$	(195)	$	(1,036)

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NOTE 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

The following off-balance-sheet financial instruments, whose contract amounts represent credit risk, are outstanding at September 30, 2021 and December 31, 2020 (in thousands):

	At September 30, 2021				At December 31, 2020
			Variable				Variable
	Fixed Rate		Rate		Fixed Rate		Rate
Undrawn lines of credit	$	41,217	$	316,594	$	19,024	$	266,696
Letters of credit		51,534		—		34,264		—
Total	$	92,751	$	316,594	$	53,288	$	266,696

A commitment to extend credit is a legally binding agreement to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally expire within two years. At September 30, 2021, the Company’s fixed rate loan commitments had interest rates ranging from 3.0% to 5.6% and the Company’s variable rate loan commitments had interest rates ranging from 1.8% to 7.3%, with a maturity of one year or more. At December 31, 2020, the Company’s fixed rate loan commitments had interest rates ranging from 3.0% to 5.6% and the Company’s variable rate loan commitments had interest rates ranging from 2.0% to 8.3%, with a maturity of one year or more. The amount of collateral obtained, if any, by the Company upon extension of credit is based on management’s credit evaluation of the borrower. Collateral held varies but may include mortgages on commercial and residential real estate, security interests in business assets, equipment, deposit accounts with the Company or other financial institutions and securities.

The Company’s stand-by letters of credit amounted to $51.5 million and $34.3 million as of September 30, 2021 and December 31, 2020, respectively. The Company’s stand-by letters of credit are collateralized by interest-bearing accounts of $37.3 million and $26.9 million as of September 30, 2021 and December 31, 2020, respectively. The stand-by letters of credit mature within one year.

NOTE 12 – REVENUE FROM CONTRACTS WITH CUSTOMERS

All of the Company’s revenue from contracts with customers that are in the scope of ASU 2014-09, Revenue from Contracts with Customers are recognized in non-interest income. The following table presents the Company’s revenue from contracts with customers for the nine months ended September 30, 2021 and September 30, 2020 (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Service charges on deposit accounts	$	1,671	$	863	$	4,085	$	2,747
Global Payments Group revenue		3,615		2,572		10,509		6,301
Other service charges and fees		614		202		1,484		1,238
Total	$	5,900	$	3,637	$	16,078	$	10,286

A description of the Company’s revenue streams accounted for under the accounting guidance is as follows:

Global payment group revenue: The Company offers corporate cash management and retail banking services and, through its global payments business, provides Banking-as-a-Service to its fintech partners. The Company earns initial set-up fees

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for these programs as well as fees for transactions processed. The Company receives transaction data at the end of each month for services rendered, at which time revenue is recognized.

Service charges on deposit accounts: The Company offers business and personal retail products and services, which include, but are not limited to, online banking, mobile banking, ACH, and remote deposit capture. A standard deposit contract exists between the Company and all deposit customers. The Company earns fees from its deposit customers for transaction-based services (such as ATM use fees, stop payment charges, statement rendering, and ACH fees), account maintenance, and overdraft services. Transaction-based fees are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Other service charges: The primary component of other service charges relates to foreign exchange (“FX”) conversion fees. The Company outsources FX conversion for foreign currency transactions to correspondent banks. The Company earns a portion of an FX conversion fee that the customer charges to process an FX conversion transaction. Revenue is recognized at the end of the month, once the customer has remitted the transaction information to the Company.

NOTE 13 – DERIVATIVES

In the first quarter of 2020, the Company entered into an interest rate cap derivative contract (“interest rate cap” or “contract”) as a part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate cap does not represent the amount exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the contract. The interest rate subject to the cap is 30-day LIBOR.

The interest rate cap had a notional amount of $300.0 million as of September 30, 2021 and was designated as a cash flow hedge of certain deposit liabilities of the Company. The hedge was determined to be highly effective during the three and nine months ended September 30, 2021. The Company expects the hedge to remain highly effective during the remaining term of the contract.

The following table reflects the notional amount and fair value (included in the “Prepaid expenses and other assets” line item on the statements of financial condition) at September 30, 2021 (in thousands):

		Notional Amount		Fair Value
Derivatives designated as hedges:
Interest rate caps related to customer deposits	$	300,000	$	2,086

The effect of cash flow hedge accounting on accumulated other comprehensive income for the nine months ended September 30, 2021, is as follows (in thousands):

		Amount of Loss Recognized in OCI, net of tax		Location of Gain (Loss) Reclassified from OCI into Income		Amount of Gain (Loss) Reclassified from OCI into Income
Interest rate caps related to customer deposits	$	1,069	$	N/A	$	—

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Company Background

The Company is a bank holding company headquartered in New York, New York and registered under the Bank Holding Company Act of 1956, as amended. Through its wholly owned bank subsidiary, Metropolitan Commercial Bank (the “Bank”), a New York state chartered bank, the Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals in the New York metropolitan area.

The Company’s primary lending products are commercial real estate loans, multi-family loans and commercial and industrial 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 flows from operations of commercial enterprises. The Company’s primary deposit products are checking, savings, and term deposit accounts, and its deposit accounts are insured by the FDIC under the maximum amounts allowed by law. In addition to traditional commercial banking products, the Company offers corporate cash management and retail banking services and, through its global payments business, provides Banking-as-a-Service to its fintech partners, which includes serving as an issuing bank for third-party managed debit card programs nationwide and providing other financial infrastructure, including cash settlement and custodian deposit services. The Company has developed various deposit gathering strategies, which generate the funding necessary to operate without a large branch network. These activities, together with six strategically located banking centers, generate a stable source of deposits and a diverse loan portfolio with attractive risk-adjusted yields.

The Company is focused on organically growing and expanding its position in the New York metropolitan area and the growth of its New York based customers and their businesses as they expand in other states. Through an experienced team of commercial relationship managers and its integrated, client-centric approach, the Company has successfully demonstrated its ability to consistently grow market share by deepening existing client relationships and continually expanding its client base through referrals and seeking out alternatives to traditional retail banking products. The Company has maintained a goal of converting many of its commercial lending clients into full retail relationship banking clients. Given the size of the market in which the Company operates and its differentiated approach to client service, there is significant opportunity to continue its loan and deposit growth trajectory. By combining the high-tech service and relationship-based focus of a community bank with an extensive suite of financial products and services, the Company is well-positioned to continue to capitalize on the significant growth opportunities available in the New York metropolitan area.

Recent Events

In April 2019, the Company executed a lease agreement to expand the space occupied at its headquarters at 99 Park Ave., New York, New York. The Company took possession of the new space during the first quarter of 2020 and commenced renovations, which were completed during the first quarter of 2021. When the Company took possession of the new space, rent expense increased by $615,000 a quarter. The Company vacated its previous space in July 2020. As a result, beginning in August 2020, the Company ceased rent payments on the former space resulting in a reduction of rent expense of approximately $195,000 per quarter.

During the quarter ended September 30, 2021 the ompany raised $172.5 million of capital through the issuance of 2.3 million shares of its common stock at a price of $75 per share, resulting in net proceeds of $162.7 million.

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The Coronavirus

The COVID-19 pandemic caused significant economic dislocation in the United States as many state and local governments ordered non-essential businesses to close and residents to shelter in place at home beginning in March 2020. While many regions in the United States have reopened in varying degrees, this process has been protracted, especially in New York City, the Company’s primary market area and is uneven across different states and industries. In response to the COVID-19 outbreak, the Federal Reserve reduced the benchmark fed funds rate to a target range of 0% to 0.25%. Various state governments and federal agencies are requiring lenders to provide forbearance and other relief to borrowers (e.g., waiving late payment and other fees). The federal banking agencies have encouraged financial institutions to prudently work with affected borrowers and passed legislation that provided relief from reporting loan classifications due to modifications related to the COVID-19 outbreak. Certain industries have been particularly hard-hit, including the travel and hospitality industry, the restaurant industry and the retail industry. See “Cautionary Note Regarding Forward-Looking Statements” and risk factors listed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and SEC on March 8, 2021.

Critical Accounting Policies

Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. Management believes that the most critical accounting policy, which involves the most complex or subjective decisions or assessments, is as follows:

Allowance for Loan Losses (“ALLL”)

The ALLL has been determined in accordance with U.S. generally accepted accounting principles. The Company is responsible for the timely and periodic determination of the amount of the allowance required. Management believes that the ALLL is adequate to cover specifically identifiable loan losses, as well as estimated losses inherent in the Company’s portfolio for which certain losses are probable but not specifically identifiable.

Although management evaluates available information to determine the adequacy of the ALLL, the level of allowance is an estimate which is subject to significant judgment and short-term change. Because of uncertainties associated with local economic, operating, regulatory and other conditions, the impact of the COVID-19 pandemic, collateral values and future cash flows of the loan portfolio, it is possible that a material change could occur in the ALLL in the near term. The evaluation of the adequacy of loan collateral is often based upon estimates and appraisals. Because of changing economic conditions, the valuations determined from such estimates and appraisals may also change. Accordingly, the Company may ultimately incur losses that vary from management’s current estimates. Adjustments to the ALLL will be reported in the period such adjustments become known and can be reasonably estimated. All loan losses are charged to the ALLL when the loss actually occurs or when the collectability of the principal is unlikely. Recoveries are credited to the allowance at the time of recovery. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ALLL. As a result of such examinations the Company may need to recognize additions to the ALLL based on their judgments about information available to them at the time of such examination.

For more information regarding the change in the ALLL due to COVID-19, see “Impact of COVID-19 on the Company – Financial Impact – Loan Portfolio and Modifications  – Allowance for Loan Losses.”

Emerging Growth Company

Pursuant to the JOBS Act, an EGC is provided the option to adopt new or revised accounting standards that may be issued by the FASB or the Securities and Exchange Commission either (i) within the same periods as those otherwise applicable to non-EGCs or (ii) within the same time periods as private companies. The Company elected delayed effective dates of recently issued accounting standards. As permitted by the JOBS Act, so long as it qualifies as an EGC, the Company will take advantage of some of the reduced regulatory and reporting requirements that are available to it, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley

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Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.

The Company will lose its EGC status on December 31, 2022 since that would be the last day of the fiscal year of the Company following the fifth anniversary of the date of the first sale of the common equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933. The Company is preparing for the transition in status and compliance with the applicable regulations and accounting pronouncements.

Impact of COVID-19 on the Company

Operational Readiness

The Company identified the potential threat of COVID-19 in February 2020, activated its Pandemic Plan in March 2020, and had a fully remote workforce for its corporate office by early April 2020 as COVID-19 began to affect New York City, the Company’s primary market. The activation of the established Pandemic Plan allowed the Company to react in a disciplined manner to a rapidly changing situation.  

On September 7, 2020, the Company implemented its Return-to-Work Plan, which allowed for up to 50% of employees to return to work, at which time the Company had made available, at no cost to employees, on-site COVID-19 testing on a two week schedule. Based on the success of the on-site testing program, the Company revised its Return-to-work Plan to allow 100% of employees to return to work as of March 1, 2021 and increased the frequency of the on-site testing schedule to weekly. The Company continues to monitor conditions and guidance in New York City and the surrounding areas and will revise its Return-to-Work Plan if necessary, in accordance with its Pandemic Plan. The Company encourages its employees to be fully vaccinated.

The Company’s actions ensured, and continue to ensure, the Company’s uninterrupted operational effectiveness, while safeguarding the health and safety of its customers and employees. The Pandemic Plan and Return-to-Work Plan incorporate guidance from the regulatory and health communities, as implemented and monitored by the Company’s Business Continuity Response Team. The Bank’s branch network continues to serve the local community and its online platforms facilitate alternate methods for its customers to meet their financial needs. While COVID-19 has resulted in widespread disruption to the lives and businesses of the Company’s customers and employees, the Company’s Pandemic Plan has enabled the Company to remain focused on assisting customers and ensuring that the Company remains fully operational.

Financial Impact

Loan Portfolio and Modifications

The Company has taken several steps to assess the financial impact of COVID-19 on its business, including contacting customers to determine how their business was being affected and analyzing the impact of the virus on the different industries that the Company serves.

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Loan Portfolio: As of September 30, 2021, total loans consisted primarily of commercial real estate loans (“CRE”), commercial and industrial loans (“C&I”) and multi-family mortgage loans. At September 30, 2021, the Company’s commercial loan portfolio includes loans to the following industries (dollars in thousands):

	September 30, 2021
		Balance	% of Total Loans
CRE (1)
Skilled Nursing Facilities	$	762,316	21.2%
Multi-family		374,555	10.4%
Retail		235,447	6.5%
Mixed use		282,381	7.8%
Office		192,042	5.3%
Hospitality		164,011	4.6%
Construction		150,144	4.2%
Other		706,318	19.6%
Total CRE	$	2,867,214	79.6%
C&I (2)
Healthcare	$	111,359	3.1%
Skilled Nursing Facilities		98,489	2.7%
Finance & Insurance		165,910	4.6%
Wholesale		28,315	0.8%
Manufacturing		14,496	0.4%
Transportation		4,203	0.1%
Retail		75,952	2.1%
Recreation & Restaurants		5,903	0.2%
Other		90,641	2.5%
Total C&I	$	595,268	16.5%

(1) Commercial real estate, not including participations

(2) Net of PPP loans, premiums and overdraft adjustments

The largest concentration in the loan portfolio is to the healthcare industry, which amounted to $972.2 million, or 26.9% of total loans at September 30, 2021, including $860.8 million in loans to skilled nursing facilities (“SNF”). Approximately 88.6% of the SNF loans are in the CRE portfolio, which have an average LTV of 64.8%, and the borrowers are primarily in “certificate of need” states, which limits the supply of beds and supports stable occupancy rates. The Company is working closely with SNF’s and has not noted any significant impact on our SNF loans because of COVID-19 as the demand for nursing home beds remains strong and cash flows have not been significantly affected.

Loan Deferrals: The Company has been working with customers to address their needs during the pandemic. The following is a summary of loan modifications requested and that remain on deferral as of September 30, 2021 (dollars in thousands):

	CRE			Consumer			Total
			Number of			Number of			Number of
Type of Modification	Balance		Loans	Balance		Loans	Balance		Loans
Defer monthly principal payments	$	39,153	6	$	—	—	$	39,153	6
Full payment deferral		9,747	1		238	3		9,985	4
	$	48,900	7	$	238	3	$	49,138	10

Full payment deferrals were $10.0 million, or 0.3% of total loans as of September 30, 2021. Principal only deferrals were $39.2 million, or 1.1% of total loans, as of September 30, 2021.

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The following is a summary of the weighted average loan-to-value ratio (“LTV”) for CRE loan modifications requested and that remain in process as of September 30, 2021 (dollars in thousands):

Industry		Total Modifications	Weighted Average LTV
CRE:
Retail	$	—	0.0%
Hospitality		30,568	61.1%
Office		—	0.0%
Mixed-Use		11,881	68.3%
Multifamily		—	0.0%
Warehouse		—	0.0%
Other		6,451	75.8%
Total	$	48,900	64.8%

Allowance for Loan Losses:  Management continues to monitor the impact of COVID-19, particularly as the term of loan modifications expire and borrowers return to a normal debt service schedule, as well as the commencement of a repayment schedule for payments that were deferred.  As such, significant adjustments to the ALLL may be required if COVID-19 further impacts the Company’s borrowers.

The Company has not yet adopted ASU No. 2016-13, Financial Instruments – Credit Losses, which requires the measurement of all current expected credit losses (“CECL”) for financial assets. The Company is required to implement CECL by December 31, 2022. The Company is currently developing CECL models and evaluating its potential impact on the Company’s ALLL.

Comparison of Financial Condition at September 30, 2021 and December 31, 2020

The Company had total assets of $6.1 billion at September 30, 2021, an increase of 41.8% from $4.3 billion at December 31, 2020. Total loans, net of deferred fees, increased to $3.6 billion at September 30, 2021, as compared to $3.1 billion at December 31, 2020. The increase in total loans from December 31, 2020 was due primarily to an increase of $459.7 million in commercial real estate (“CRE”) loans and $19.8 million in commercial and industrial (“C&I”) loans due to new loan production.

Total cash and cash equivalents were $1.9 billion at September 30, 2021, an increase of 114.9% from $864.3 million at December 31, 2020. The increase in cash and cash equivalents reflected the growth in deposits of $1.6 billion that exceeded growth in loans of $466.2 million for the nine months ended September 30, 2021.

Loans were $3.6 billion at September 30, 2021, an increase of $466.2 million from $3.1 billion at December 31, 2020 driven primarily by loan production of approximately $814.1 million, offset by payoffs of approximately $333.1 million.

Total securities, primarily those classified as AFS, were $607.5 million at September 30, 2021, an increase of 124.0% from December 31, 2020. At September 30, 2021 and December 31, 2020, the Company’s securities portfolio primarily consisted of investment grade securities. There were no securities pledged as collateral at September 30, 2021.

Total deposits increased to $5.5 billion at September 30, 2021, up 42.5% from $3.8 billion at December 31, 2020. The increase in deposits for the third quarter was due to increases of $1.1 billion in non-interest-bearing deposits and $550.3 million in interest-bearing deposits. Interest-bearing deposits were comprised of $2.5 billion of money market accounts, which increased by $556.1 million, and $82.0 million of time deposits, which decreased by $10.0 million. Non-interest-bearing deposits were 51.4% of total deposits at September 30, 2021, as compared to 45.1% at December 31, 2020.

Total stockholders’ equity increased $201.9 million to $542.7 million at September 30, 2021, as compared to $340.8 million at December 31, 2020. The increase was primarily due to net proceeds from the secondary offering of $162.7

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million and net income of $41.7 million for the nine months ended September 30, 2021, offset by a net decrease in accumulated other comprehensive income of $3.8 million due to a net unrealized loss related to AFS securities and derivatives.

The Company and the Bank meet all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines.  At September 30, 2021, total CRE loans were 349.1% of risk-based capital, as compared to 412.5% at December 31, 2020.

Asset Quality

Non-Performing Assets

Non-performing assets consist of non-accrual loans, accruing loans that are 90 days or more past due, consumer loans placed in forbearance with payments past due over 90 days and still accruing, non-accrual TDRs, and other real estate owned that has been acquired in partial or full satisfaction of loan obligations or upon foreclosure. Non-performing loans exclude TDRs that are accruing and have been performing in accordance with the terms of their restructure agreement for at least six months.  In accordance with the COVID-19 Guidance, non-performing loans do not include loan modifications that are due over 90 days due to COVID-19. See “Note 5 – Loans and Allowance for Loan Losses – COVID-19 Loan Deferrals.”

At September 30, 2021 and December 31, 2020, the Company had no non-performing TDRs and no foreclosed real estate. The past due status on all loans is based on the contractual terms of the loan. It is generally the Company’s policy that a loan 90 days past due be placed on non-accrual status unless factors exist that would eliminate the need to place a loan on this status. A loan may also be designated as non-accrual at any time if payment of principal or interest in full is not expected due to deterioration in the financial condition of the borrower. At the time loans are placed on non-accrual status, the accrual of interest is discontinued and previously accrued interest is reversed. All payments received on non-accrual loans are generally applied to principal. Loans are considered for return to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Company expects to receive all of its original principal and interest. In the case of non-accrual loans where a portion of the loan has been charged off, the remaining balance is kept on non-accrual status until the entire principal balance has been recovered.

Interest income that would have been recorded for the three months ended September 30, 2021 and 2020, had non-accrual and TDR loans been current according to their original terms, was immaterial.

The table below sets forth key asset quality ratios as of September 30, 2021 and December 31, 2020:

	September 30, 2021			December 31, 2020
Asset quality ratios:
Non-Performing loans to total loans		0.43	%		0.20	%
Allowance for loan losses to total loans		1.06			1.13
Non-performing loans to total assets		0.25			0.15
Allowance for loan losses to non-performing loans		247.92			554.19
Allowance for loan losses to non-accrual loans		257.51			630.02
Non-accrual loans to total loans		0.41			0.18
Ratio of year-to-date net charge-offs (recoveries) to average loans outstanding in aggregate		0.02			0.01

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Non-Performing Loans

Non-performing loans were $15.4 million at September 30, 2021, an increase of $9.0 from $6.4 million at December 31, 2020. The increase was primarily due to a CRE loan with a balance of $10.0 million becoming 90 days past due during the period.

Non-performing loans were 0.43% of total loans at September 30, 2021, as compared to 0.20% of total loans at December 31, 2020.

Troubled Debt Restructurings

The Company works closely with borrowers that have financial difficulties to identify viable solutions that minimize the potential for loss. In that regard, the Company has modified the terms of select loans to maximize their collectability. The modified loans are considered TDRs under current accounting guidance unless the loan was modified pursuant to the COVID-19 Guidance or the CARES Act (see “Note 5 – Loans and Allowance for Loan Losses – COVID-19 Loan Modifications”).

Modifications generally involve short-term deferrals of principal and/or interest payments, reductions of scheduled payment amounts, interest rates or principal of the loan, and forgiveness of accrued interest. The Company had no non-performing TDRs at September 30, 2021 or December 31, 2020. The Company had $1.3 million and $1.4 million of TDRs as of September 30, 2021 and December 31, 2020, respectively. These loans were performing in accordance with their restructured terms.

Impaired Loans

A loan is classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect both the principal and interest due under the contractual terms of the loan agreement.

The majority of the Company’s impaired loans are secured and measured for impairment based on collateral evaluations. It is the Company’s policy to obtain updated appraisals, by independent third parties, on loans secured by real estate at the time a loan is determined to be impaired. An impairment measurement is performed based upon the most recent appraisal on file to determine the amount of any specific allowance or charge-off. In determining the amount of any specific allowance or charge-off, the Company will make adjustments to reflect the estimated costs to sell the property. Upon receipt and review of the updated appraisal, an additional measurement is performed to determine if any further adjustments to the ALLL are necessary. Impaired loans are reviewed on a quarterly basis to determine if any changes in credit quality or market conditions would require any additional allowance or recognition of additional charge-offs. Non-real estate collateral may be valued using (i) an appraisal, (ii) net book value of the collateral per the borrower’s financial statements, or (iii) accounts receivable aging reports, that may be adjusted based on management’s knowledge of the client and client’s business. If market conditions warrant, future appraisals are obtained for both real estate and non-real estate collateral.

Allowance for Loan Losses

The ALLL is an amount that management believes is adequate to absorb probable incurred losses on existing loans. The ALLL is established based on management’s evaluation of the probable incurred losses inherent in the Company’s portfolio in accordance with GAAP, and is comprised of both specific valuation allowances and general valuation allowances.

The ALLL was $38.1 million at September 30, 2021, as compared to $35.4 million at December 31, 2020. The ratio of ALLL to total loans was 1.06% at September 30, 2021, as compared to 1.13% at December 31, 2020. The increase in the ALLL was primarily due to loan growth .

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Net recoveries for the three months ended September 30, 2021 were $254,000. Net charge-offs for the three months ended September 30, 2020 were $28,000. Net charge-offs for the nine months ended September 30, 2021 and 2020 were $601,000 and $351,000, respectively.

Deposits

The tables below summarize the Company’s deposit composition by segment for the periods indicated, and the dollar and percent change from December 31, 2020 to September 30, 2021 (dollars in thousands):

	At September 30, 2021		At December 31, 2020		Dollar Change		Percentage Change
Non-interest-bearing demand deposits	$	2,803,823	$	1,726,135	$	1,077,688	62.4	%
Money market		2,549,622		1,993,514		556,108	27.9
Savings accounts		22,085		17,895		4,190	23.4
Time deposits		82,039		92,062		(10,023)	(10.9)
Total	$	5,457,569	$	3,829,606	$	1,627,963	42.5

As of September 30, 2021, the aggregate amount of uninsured deposits (deposits in amounts greater than or equal to $250,000, which is the maximum amount for federal deposit insurance) was $2.70 billion. In addition, as of September 30, 2021, the aggregate amount of the Company’s uninsured time deposits was $40.2 million. The following table presents the scheduled maturities of time deposits greater than $250,000 as of September 30, 2021 (in thousands):

	At September 30, 2021
Three months or less	$	3,663
Over three months through six months		6,802
Over six months through one year		20,144
Over one year		9,547
Total time deposits greater than $250,000	$	40,156

The Company’s primary deposit strategy is to fund the Company with stable deposits. The increase in deposits for the third quarter of 2021 was due to increases of $1.1 billion in non-interest-bearing deposits and $550.3 million in interest-bearing deposits, resulting from increases across most deposit verticals. Interest-bearing deposits comprised of $2.5 billion of money market accounts, which increased by $556.1 million, $82.0 million of time deposits, which decreased by $10.0 million and $22.1 million of savings accounts which increased $4 million. Non-interest-bearing deposits were 51.4% of total deposits at September 30, 2021, as compared to 45.1% at December 31, 2020.

The strength of the Company’s deposit franchise comes from its long-standing relationships with clients and the strong ties it has in its market area. The Company provides commercial clients with convenient solutions such as remote deposit capture, business online banking and various other retail services and products. The Company has also developed a diversified funding strategy, which affords it the opportunity to be less reliant on branches. Deposit verticals include borrowing clients, non-borrowing clients, global payment business deposits and corporate cash management clients.

Borrowings

At September 30, 2021, the Company had available borrowing capacity of $528.9 million from the FHLB and an available line of credit of $116.9 million with the Federal Reserve Bank of New York (“FRBNY”). At December 31, 2020, the Company had an available borrowing capacity of $499.8 million from the FHLB and an available line of credit of $123.8 million with the FRBNY. The Company had no borrowings outstanding from the FHLB or FRBNY at September 30, 2021 or December 31, 2020.

On December 7, 2005, the Company established MetBank Capital Trust I, a Delaware statutory trust (“Trust I”). The Company owns all of the common capital securities of Trust I in exchange for contributed capital of $310,000. Trust I

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issued $10 million of preferred securities to investors in a private transaction and invested the proceeds, combined with the proceeds from the sale of Trust I’s common capital securities, in the Company through the purchase of $10.3 million aggregate principal amount of Floating Rate Junior Subordinated Debentures (the “Debentures”) issued by the Company. The Debentures, the sole assets of Trust I, mature on December 9, 2035 and bear interest at a floating rate of three-month LIBOR plus 1.85%. The Debentures became callable after five years of issuance. At September 30, 2021, the Debentures bore an interest rate of 1.98%.

On July 14, 2006, the Company established MetBank Capital Trust II, a Delaware statutory trust (“Trust II”). The Company owns all of the common securities of Trust II in exchange for contributed capital of $310,000. Trust II issued $10 million of preferred capital securities to investors in a private transaction and invested the proceeds, combined with the proceeds from the sale of Trust II’s common capital securities, in the Company through the purchase of $10.3 million aggregate principal amount of Floating Rate Junior Subordinated Debentures (the “Debentures II”) issued by the Company. The Debentures II, the sole assets of Trust II, mature on October 7, 2036, and bear interest at a floating rate of three-month LIBOR plus 2.00%. The Debentures II became callable after five years of issuance. At September 30, 2021, the Debentures II bore an interest rate of 2.13%.

On March 8, 2017, the Company issued $25 million of subordinated notes to accredited institutional investors. The notes mature on March 15, 2027 and bear an interest rate of 6.25% per annum. The interest is paid semi-annually each year through March 15, 2022 and quarterly thereafter.

The Company may redeem the subordinated notes beginning with the interest payment date of March 15, 2022 and on any scheduled interest payment date thereafter. The subordinated notes may be redeemed in whole or in part, at a redemption price equal to 100% of the principal amount of the subordinated notes plus any accrued and unpaid interest.

The terms of the trust preferred securities and subordinated notes payable will be impacted by the transition from LIBOR to an alternative U.S. dollar reference interest rate, potentially the Secured Overnight Borrowing Rate (“SOFR”), in 2022. In March 2021, an announcement by LIBOR’s administrator, the ICE Benchmark Administration, signaled to the market that USD LIBOR for the most liquid maturities is now likely to continue to be published until June 30, 2023; however, no definitive announcement has been made on this delay. Management is currently evaluating the impact of the transition on the trust preferred securities payable.

Secured Borrowings

The Company has loan participation agreements with counterparties. The Company is generally the servicer for these loans. If the transfer of the participation interest does not qualify for sale treatment under current accounting guidance, the amount of the loan transferred is recorded as a secured borrowing. There were $35.6 million and $37.0 million in secured borrowings as of September 30, 2021 and December 31, 2020, respectively.

Results of Operations

Net income increased $5.4 million to $16.2 million for the third quarter of 2021, as compared to $10.8 million for the third quarter of 2020. This increase was due primarily to an increase of $9.1 million in net interest income after provision for loan losses. This was offset by an increase in non-interest expense of $3.1 million driven by an increase in compensation and benefits costs due to additional full-time employees and increases in professional fees, technology and licensing costs in line with business and volume growth, partially offset by reduced licensing fees given the LIBOR rate reduction.

Net income increased $14.0 million to $41.7 million for the nine months ended September 30, 2021, as compared to $27.7 million for the nine months ended September 30, 2020. This increase was primarily due to an increase of $25.1 million in net interest income after provision for loan losses and a $3.0 million increase in non-interest income, offset by a $7.3 million increase in non-interest expense and a $6.9 million increase in income tax expense

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Net Interest Income

Net interest income increased $8.5 million for the third quarter of 2021 to $40.8 million, as compared to $32.3 million for the third quarter of 2020. This increase was primarily due to an increase of $1.9 billion in the average balances of interest-earning assets for the third quarter of 2021 as compared to the third quarter of 2020. This was partially offset by a $587.7 million increase in the average balance of interest-bearing liabilities for the third quarter of 2021, as compared to the third quarter of 2020.

Net interest income increased $20.7 million for the nine months ended September 30, 2021 to $112.2 million, as compared to $91.5 million for the nine months ended September 30, 2020. The increase was primarily due to an increase of $1.6 billion in the average balances of interest-earning assets for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. This was partially offset by a $423.8 million increase in the average balances of interest-bearing liabilities for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.

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	Three months ended September 30,
	2021						2020
(dollars in thousands)	Average Outstanding Balance		Interest		Yield/Rate (annualized)		Average Outstanding Balance		Interest		Yield/Rate (annualized)
Assets:
Interest-earning assets:
Loans (1)	$	3,566,852	$	42,730	4.65%		$	2,946,359	$	34,844	4.66%
Available-for-sale securities		538,115		1,454	1.06%			180,698		582	1.26%
Held-to-maturity securities		2,120		9	1.66%			3,181		14	1.71%
Equity investments - non-trading		2,316		6	1.01%			2,284		10	1.63%
Overnight deposits		1,738,102		666	0.15%			854,737		299	0.14%
Other interest-earning assets		11,991		153	5.06%			14,680		196	5.22%
Total interest-earning assets		5,859,496		45,018	2.99%			4,001,939		35,945	3.54%
Non-interest-earning assets		95,181						57,545
Allowance for loan and lease losses		(38,129)						(33,118)
Total assets	$	5,916,548					$	4,026,366
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market, savings and other interest-bearing accounts	$	2,501,757	$	3,524	0.56%		$	1,818,436	$	2,258	0.49%
Certificates of deposit		82,628		192	0.92%			97,685		423	1.72%
Total interest-bearing deposits		2,584,385		3,716	0.57%			1,916,121		2,681	0.56%
Borrowed funds		45,309		510	4.40%			125,841		940	2.92%
Total interest-bearing liabilities		2,629,694		4,226	0.64%			2,041,962		3,621	0.71%
Non-interest-bearing liabilities:
Non-interest-bearing deposits		2,814,335						1,583,037
Other non-interest-bearing liabilities		77,732						76,491
Total liabilities		5,521,761						3,701,490
Stockholders' Equity		394,787						324,876
Total liabilities and equity	$	5,916,548					$	4,026,366
Net interest income			$	40,792					$	32,324
Net interest rate spread (2)					2.35%						2.83%
Net interest-earning assets	$	3,229,802					$	1,959,977
Net interest margin (3)					2.70%						3.18%
Ratio of interest earning assets to interest bearing liabilities					2.23	x					1.96	x

(1) Amount includes deferred loan fees and non-performing loans.

(2) Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest-earning assets.

(3) Determined by dividing annualized net interest income by total average interest-earning assets.

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	Nine months ended September 30,
	2021						2020
(dollars in thousands)	Average Outstanding Balance		Interest		Yield/Rate (annualized)		Average Outstanding Balance		Interest		Yield/Rate (annualized)
Assets:
Interest-earning assets:
Loans (1)	$	3,365,602	$	118,803	4.70%		$	2,826,845	$	100,655	4.75%
Available-for-sale securities		453,105		3,409	0.99%			179,845		2,536	1.85%
Held-to-maturity securities		2,362		30	1.67%			3,408		47	1.81%
Equity investments - non-trading		2,309		21	1.20%			2,274		32	1.85%
Overnight deposits		1,485,994		1,453	0.13%			707,125		2,266	0.43%
Other interest-earning assets		11,864		457	5.15%			18,189		700	5.06%
Total interest-earning assets		5,321,236		124,173	3.11%			3,737,686		106,236	3.79%
Non-interest-earning assets		83,582						58,040
Allowance for loan and lease losses		(36,820)						(30,461)
Total assets	$	5,367,998					$	3,765,265
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market, savings and other interest-bearing accounts	$	2,294,311	$	9,779	0.57%		$	1,742,611	$	9,867	0.76%
Certificates of deposit		84,363		673	1.07%			99,805		1,497	2.00%
Total interest-bearing deposits		2,378,674		10,452	0.59%			1,842,416		11,364	0.82%
Borrowed funds		45,296		1,534	4.47%			157,729		3,417	2.85%
Total interest-bearing liabilities		2,423,970		11,986	0.66%			2,000,145		14,781	0.99%
Non-interest-bearing liabilities:
Non-interest-bearing deposits		2,496,791						1,378,512
Other non-interest-bearing liabilities		80,838						71,210
Total liabilities		5,001,599						3,449,867
Stockholders' Equity		366,399						315,398
Total liabilities and equity	$	5,367,998					$	3,765,265
Net interest income			$	112,187					$	91,455
Net interest rate spread (2)					2.45%						2.80%
Net interest-earning assets	$	2,897,266					$	1,737,541
Net interest margin (3)					2.81%						3.26%
Ratio of interest earning assets to interest bearing liabilities					2.20	x					1.87	x

(1) Amount includes deferred loan fees and non-performing loans.

(2) Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest-earning assets.

(3) Determined by dividing annualized net interest income by total average interest-earning assets.

Net Interest Margin

Net interest margin decreased by 48 basis points to 2.70% for the third quarter of 2021, as compared to 3.18% for the third quarter of 2020, primarily due to increased low yielding overnight deposits driven by deposit growth and lower yields on securities; partially offset by a decrease of 7 basis points in the average cost of interest-bearing liabilities driven by the lower rate environment.

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Net interest margin decreased by 45 basis points to 2.81% for the nine months ended September 30, 2021, as compared to 3.26% for the nine months ended September 30, 2020, primarily due to increased low-yielding overnight deposits driven by deposit growth; partially offset by a decrease of 33 basis points in the average cost of interest-bearing liabilities driven by the lower rate environment.

Interest Income

Interest income increased $9.1 million to $45.0 million for the third quarter of 2021, as compared to $35.9 million for the third quarter of 2020. This increase was due primarily to an increase of $7.9 million in interest income on loans.

The increase in interest income on loans was due to a $620.5 million increase in the average balance of loans to $3.57 billion for the third quarter of 2021, as compared to an average balance of $2.95 billion for the third quarter of 2020; partially offset by a decrease of 1 basis point in average loan yield to 4.65% for the third quarter of 2021, as compared to 4.66% for the third quarter of 2020.

The increase in interest on overnight deposits was due to an increase of $883.4 million in the average balance of overnight deposits to $1.74 billion for the third quarter of 2021, as compared to $854.7 million for the third quarter of 2020 and an increase of 1 basis point in the average yield on overnight deposits to 15 basis points for the third quarter of 2021, as compared to 0.14% for the third quarter of 2020.

Interest income increased $17.9 million to $124.2 million for the nine months ended September 30, 2021, as compared to $106.2 million for the nine months ended September 30, 2020. This increase was due primarily to an increase of $18.1 million in interest income on loans.

The increase in interest income on loans was due to a $538.7 million increase in the average balance of loans to $3.37 billion for the nine months ended September 30, 2021, as compared to an average balance of $2.83 billion for the nine months ended September 30, 2020. The impact of the increase in the average balance of loans was partially offset by a decrease of 5 basis points in the average loan yield to 4.70% for the nine months ended September 30, 2021, as compared to 4.75% for the nine months ended September 30, 2020.

The decrease in interest on overnight deposits was due a decrease of 30 basis points in the average yield on overnight deposits to 13 basis points for the nine months ended September 30, 2021, as compared to 43 basis points for the nine months ended September 30, 2020. This was offset by an increase of $778.9 million in the average balance of overnight funds to $1.49 billion for the nine months ended September 30, 2021, as compared to $707.1 million for the nine months ended September 30, 2020.

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Interest Expense

Interest expense increased $605,000 to $4.2 million for the third quarter of 2021 as compared to the third quarter of 2020. Interest on deposits increased $1.0 million offset by a $430,000 decrease in interest on borrowings.

The increase in interest on deposits was primarily due to a $668.3 million increase in the average balance of interest-bearing deposits to $2.58 billion for the third quarter of 2021, as compared to an average balance of $1.92 billion for the third quarter of 2020, and an increase of 1 basis point in the average cost of deposits to 57 basis points for the third quarter of 2021, as compared to 56 basis points for the third quarter of 2020. The decrease in interest expense on borrowings was primarily due to a $80.5 million decrease in the average balance of borrowings to $45.3 million for the third quarter of 2021, as compared to $125.8 million for the third quarter of 2020, driven by repayment of $144 million of FHLB advances in 2020.

Interest expense decreased $2.8 million to $12.0 million for the nine months ended September 30, 2021, as compared to $14.8 million for the nine months ended September 30, 2020. The decrease was due to a decrease of $912,000 in interest on deposits and a $1.9 million decrease in interest on borrowings. The decrease in interest expense on deposits was primarily due to a decrease of 23 basis points in the average cost of deposits to 59 basis points for the nine months ended September 30, 2021, as compared to 82 basis points for the nine months ended September 30, 2020. The impact of this decrease was partially offset by a $536.3 million increase in the average balance of interest-bearing deposits to $2.38 billion for the nine months ended September 30, 2021, as compared to an average balance of $1.84 billion for the nine months ended September 30, 2020. Interest expense on borrowings decreased primarily due to a $112.4 million decrease in the average balance of borrowed funds to $45.3 million for the nine months ended September 30, 2021, as compared to $157.7 million for the nine months ended September 30, 2020. This decrease was partially offset by an increase of 1.62% in the average cost of borrowings to 4.47% for the nine months ended September 30, 2021, as compared to 2.85% for the nine months ended September 30, 2020.

Provision for Loan Losses

The provision for loan losses for the third quarter of 2021 was $490,000, a decrease of $647,000 from the third quarter of 2020 which reflected the impact of net recoveries during the current quarter and improving economic conditions, offset by loan growth. The provision for loan losses for the nine months ended September 30, 2021 was $3.3 million, a decrease of $4.4 million from the nine months ended September 30, 2020 primarily due to additional provision in the nine months ended September 30, 2020 in consideration of the potential economic impact of COVID-19.

Non-Interest Income

Non-interest income for the third quarter of 2021 increased by $2.3 million, as compared to the third quarter of 2020. The increase was primarily due to an increase of $1.0 million of Global Payments Group revenue and an increase of $1.2 million in service charges and fees.

Non-interest income for the nine months ended September 30, 2021 increased by $3.0 million, as compared to the nine months ended September 30, 2020. The increase was primarily due to an increase of $4.2 million of Global Payments Group revenue and an increase of $1.6 million in service charges and fees, offset by a $2.7 million decrease in gain on sale of securities.

Non-Interest Expense

Non-interest expense increased $3.1 million, as compared to the third quarter of 2020. Non-interest expense increased $7.3 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020.  Drivers for both the three and nine months ended September 30^, 2021 included an increase in compensation and benefits cost due to additional full-time employees along with annual salary adjustments and increases in professional fees in line with business and volume growth, partially offset by reduced licensing fees given the LIBOR rate reduction.

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Off-Balance Sheet Arrangements

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Company’s exposure to credit loss is represented by the contractual amount of the instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.

At September 30, 2021, the Company had $357.8 million in loan commitments in the form of unused lines of credit. It also had $51.5 million in standby letters of credit at September 30, 2021. At December 31, 2020, the Company had $285.7 million in loan commitments outstanding and $34.3 million in standby letters of credit.

Liquidity and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short-term nature. The Company’s primary sources of funds consist of deposit inflows, loan repayments and maturities and sales of securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, mortgage prepayments and security sales are greatly influenced by general interest rates, economic conditions and competition.

The Company regularly reviews the need to adjust its investments in liquid assets based upon its assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, and (4) the objectives of its asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits and short- and intermediate-term securities.

The Company’s most liquid assets are cash and cash equivalents. The levels of these assets are dependent on its operating, financing, lending and investing activities during any given period. At September 30, 2021 and December 31, 2020, cash and cash equivalents totaled $1.9 billion and $864.3 million, respectively.  Securities classified as AFS and equity investments, which provide additional sources of liquidity, totaled $605.5 million at September 30, 2021 and $268.4 million at December 31, 2020. There were no securities pledged as collateral at September 30, 2021 or December 31, 2020.

During the quarter ended September 30, 2021, the Company raised $172.5 million of capital through the issuance of 2.3 million shares of its common stock at a price of $75 per share, resulting in net proceeds of $162.7 million.

The Company has no material commitments or demands that are likely to affect its liquidity other than set forth below. In the event loan demand were to increase faster than expected, or any unforeseen demand or commitment were to occur, the Company could access its borrowing capacity with the FHLB or obtain additional funds through brokered certificates of deposit.

Time deposits due within one year of September 30, 2021 totaled $30.6 million, or 0.6% of total deposits. Total time deposits were $82.0 million, or 1.5% of total deposits, at September 30, 2021. Time deposits due within one year of December 31, 2020 totaled $51.3 million, or 1.3% of total deposits. Total time deposits were $92.1 million, or 2.4%, of total deposits, at December 31, 2020.

The Company’s primary investing activities are the origination, and to a lesser extent, purchase, of loans and the purchase of securities. For the third quarter of 2021, the Company’s loan production was $313 million, as compared to $183.3 million for the third quarter of 2020.

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Financing activities consisted primarily of activity in deposit accounts. Total deposits increased to $5.5 billion at September 30, 2021, up 42.5% from $3.8 billion at December 31, 2020. The increase in deposits for the nine months ended September 30, 2021 was due to increases of $1.1 billion in non-interest-bearing deposits and $550.2 million in interest-bearing deposits, resulting from increases across most deposit verticals. Interest-bearing deposits were comprised of $2.5 billion of money market accounts, which increased by $556.1 million, and $82.0 million of time deposits, which decreased by $10.0 million. Non-interest-bearing deposits were 51.4% of total deposits at September 30, 2021, as compared to 45.1% at December 31, 2020.

Regulation

The Company and the Bank are subject to various regulatory capital requirements administered by the Federal banking agencies. At September 30, 2021 and December 31, 2020, the Company and the Bank met all applicable regulatory capital requirements to be considered “well capitalized” under regulatory guidelines. The Company and the Bank manage their capital to comply with their internal planning targets and regulatory capital standards administered by federal banking agencies. The Company and the Bank review capital levels on a monthly basis.

	At September 30, 2021	At December 31, 2020	Minimum Ratio to be “Well Capitalized”	Minimum Ratio Required for Capital Adequacy Purposes
The Company:
Tier 1 leverage ratio	9.4%	8.5%	N/A	4.0%
Common equity tier 1	14.1%	10.1%	N/A	4.5%
Tier 1 risk-based capital ratio	14.8%	10.9%	N/A	8.0%
Total risk-based capital ratio	16.5%	12.7%	N/A	6.0%
The Bank
Tier 1 leverage ratio	9.3%	9.0%	5.0%	4.0%
Common equity tier 1	14.6%	11.6%	6.5%	4.5%
Tier 1 risk-based capital ratio	14.6%	11.6%	8.0%	6.0%
Total risk-based capital ratio	15.6%	12.7%	10.0%	8.0%

At September 30, 2021, total commercial real estate loans were 349.1% of risk-based capital, as compared to 412.5% at December 31, 2020.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General. The principal objective of the Company’s asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of interest rate risk while maximizing net income and preserving adequate levels of liquidity and capital. The Board of Directors has oversight of the Company’s asset and liability management function, which is managed by the Company’s Asset/Liability Management Committee (“ALCO”). The ALCO meets regularly to review, among other things, the sensitivity of assets and liabilities to market interest rate changes, local and national market conditions and market interest rates. That group also reviews liquidity, capital, deposit mix, loan mix and investment positions.

Interest Rate Risk. As a financial institution, the Company’s primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most assets and liabilities, and the fair value of all interest-earning assets and interest-bearing liabilities, other than those which have a short term to maturity. Interest rate risk is the potential of economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair values. The objective

48

is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.

The Company manages its exposure to interest rates primarily by structuring its balance sheet in the ordinary course of business. Based upon the nature of operations, the Company is not subject to foreign exchange or commodity price risk and does not own any trading assets.

Income At-Risk. The Company analyzes its sensitivity to changes in interest rates through a net interest income simulation model. It estimates what net interest income would be for a one-year period based on current interest rates, and then calculates what the net interest income would be for the same period under different interest rate assumptions. For modeling purposes, the Company reclassifies licensing fees on corporate cash management accounts from non-interest expense to interest expense since the fees are indexed to certain market interest rates. In the first quarter of 2020, the Company entered into an interest rate cap derivative contract as part of its interest rate risk management strategy. The interest rate cap has a notional amount of $300 million and was designated as a cash flow hedge of certain deposits. The interest rate subject to the cap is 30-day LIBOR.

The following table shows the estimated impact on net interest income for the one-year period beginning September 30, 2021 resulting from potential changes in interest rates, expressed in basis points. These estimates require certain assumptions to be made, including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain. As a result, no simulation model can precisely predict the impact of changes in interest rates on net interest income.

Although the net interest income table below provides an indication of interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on net interest income and will differ from actual results. The following table indicates the sensitivity of projected annualized net interest income to the interest rate movements described above at September 30, 2021 (dollars in thousands):

At September 30, 2021
Change in Interest Rates (basis points)	Net Interest Income Year 1 Forecast		Year 1 Change from Forecast
400	$	212,924	38.19	%
300		194,724	26.38
200		176,802	14.74
100		162,234	5.29
—		154,084	—
-100		148,478	(3.64)

Given the low market interest rates, the Company did not model a 200 basis point decrease in interest rates at September 30, 2021.

The table above indicates that at September 30, 2021, in the event of a 200 basis points increase in interest rates, the Company would experience a 14.74% increase in net interest income. In the event of a 100 basis points decrease in interest rates, it would experience a 3.64% decrease in net interest income.

Economic Value of Equity Analysis

The Company analyzes the sensitivity of its financial condition to changes in interest rates through an economic value of equity model. This analysis measures the difference between predicted changes in the fair value of assets and predicted changes in the present value of liabilities assuming various changes in current interest rates.

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The table below represents an analysis of interest rate risk as measured by the estimated changes in economic value of equity, resulting from an instantaneous and sustained parallel shift in the yield curve (+100, +200, +300 and +400 basis points and -100 basis points) at September 30, 2021 (dollars in thousands):

			Estimated Increase (Decrease) in				EVE as a Percentage of Fair
			EVE				Value of Assets (3)
Change in								Increase
Interest Rates								(Decrease)
(basis points) (1)	Estimated EVE (2)		Dollars		Percent		EVE Ratio (4)	(basis points)
+400	$	788,807	$	137,053	21.03	%	13.51	298
+300		763,463		111,709	17.14		12.89	236
+200		732,462		80,708	12.38		12.19	166
+100		698,637		46,883	7.19		11.45	92
—		651,754		—	—		10.54	—
-100		487,553		(164,201)	(25.19)		7.83	(271)

(1) Assumes an immediate uniform change in interest rates at all maturities.

(2) EVE is the fair value of expected cash flows from assets, less the fair value of the expected cash flows arising from the Company’s liabilities adjusted for the value of off-balance sheet contracts.

(3) Fair value of assets represents the amount at which an asset could be exchanged between knowledgeable and willing parties in an arms-length transaction.

(4) EVE Ratio represents EVE divided by the fair value of assets.

Given the low market interest rates, the Company did not model a 200 basis point decrease in interest rates at September 30, 2021.

The table above indicates that at September 30, 2021, in the event of a 100 basis point decrease in interest rates, the Company would experience a 271 basis point decrease in its economic value of equity. In the event of a 200 basis point increase in interest rates, it would experience an increase of 166 basis points in economic value of equity.

The preceding simulation analyses do not represent a forecast of actual results and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions, which are subject to change, including: the nature and timing of interest rate levels including the yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. Also, as market conditions vary, prepayment/refinancing levels, the varying impact of interest rate changes on caps and floors embedded in adjustable-rate loans, early withdrawal of deposits, changes in product preferences, and other internal/external variables will likely deviate from those assumed.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer, who is the Company’s principal executive officer, and the Chief Financial Officer, who is the Company’s principal financial officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2021 pursuant to Rule 13a-15 of the Exchange Act, as amended. Based upon that evaluation, the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective as of September 30, 2021. In addition, there have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in reports filed by the Company under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to management,

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including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is subject to various pending and threatened legal actions relating to the conduct of its normal business activities. In the opinion of management, as of September 30, 2021, the ultimate aggregate liability, if any, arising out of any such pending or threatened legal actions will not be material to the Company’s financial condition, results of operations, and liquidity.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

3.1	Certificate of Incorporation of Metropolitan Bank Holding Corp, as amended (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 4, 2017 (File No. 333-220805).
3.2	Certificate of Amendment to the Certificate of Incorporation of Metropolitan Bank Holding Corp. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-3 filed with the Securities and Exchange Commission on March 12, 2021 (File No. 333-254197)).
3.3	Amended and Restated Bylaws of Metropolitan Bank Holding Corp. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 5, 2021 (File No. 001-38282)).
31.1	Certification of the Principal Executive Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).
31.2	Certification of the Principal Financial Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Principal Executive Officer of the Corporation and the Principal Financial Officer of the Corporation.
101	INS XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101	SCH XBRL Taxonomy Extension Schema
101	CAL XBRL Taxonomy Extension Calculation Linkbase
101	DEF XBRL Taxonomy Extension Definition Linkbase
101	LAB XBRL Taxonomy Extension Label Linkbase
101	PRE XBRL Taxonomy Extension Presentation Linkbase
104	The cover page from Metropolitan Bank Holding Corp.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL

52

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Metropolitan Bank Holding Corp.
Date: November 3, 2021	By:	/s/ Mark R. DeFazio
	Mark R. DeFazio
	President and Chief Executive Officer
Date: November 3, 2021	By:	/s/ Gregory A. Sigrist
	Gregory A. Sigrist
	Executive Vice President and Chief Financial Officer

53

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark R. DeFazio, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Metropolitan Bank Holding Corp.;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined Exchange Act Rules l3a-15(f) and 15d-15(f)):

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 and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Examining 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.

Date: November 3, 2021	/s/ Mark R. DeFazio
	Mark R. DeFazio
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Gregory A. Sigrist, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of Metropolitan Bank Holding Corp.;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined Exchange Act Rules l3a-15(f) and 15d-15(f)):

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 and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Examining 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.

Date: November 3, 2021	/s/ Gregory A. Sigrist
	Gregory A. Sigrist
	Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

Certification of Chief Executive Officer and Chief Financial Officer
Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Metropolitan Bank Holding Corp. (the “Company”) for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Mark R. DeFazio, as President and Chief Executive Officer of the Company, and Gregory A. Sigrist, as Executive Vice President and Chief Financial Officer of the Company, each hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)       The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 3, 2021	/s/ Mark R. DeFazio
	Mark R. DeFazio
	President and Chief Executive Office
	/s/ Gregory A. Sigrist
	Gregory A. Sigrist
	Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Nov. 01, 2021
Document And Entity Information (Abstract)
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2021
Entity Registrant Name	Metropolitan Bank Holding Corp.
Entity File Number	001-38282
Entity Incorporation, State or Country Code	NY
Entity Tax Identification Number	13-4042724
Entity Address, Address Line One	99 Park Avenue
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10016
City Area Code	212
Local Phone Number	659-0600
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	MCB
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,644,192
Entity Central Index Key	0001476034
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets
Cash and due from banks	$ 32,660	$ 8,692
Overnight deposits	1,824,820	855,613
Total cash and cash equivalents	1,857,480	864,305
Investment securities available for sale, at fair value	603,168	266,096
Investment securities held to maturity (estimated fair value of $2,074 and $2,827 at September 30, 2021 and December 31, 2020 respectively)	2,017	2,760
Equity investment securities, at fair value	2,289	2,313
Total securities	607,474	271,169
Other investments	11,998	11,597
Loans, net of deferred fees and unamortized costs	3,603,288	3,137,053
Allowance for loan losses	(38,121)	(35,407)
Net loans	3,565,167	3,101,646
Receivable from global payments business, net	48,302	27,259
Accrued interest receivable	13,504	13,249
Premises and equipment, net	14,031	13,475
Prepaid expenses and other assets	13,565	18,388
Goodwill	9,733	9,733
Total assets	6,141,254	4,330,821
Deposits:
Noninterest-bearing demand deposits	2,803,823	1,726,135
Interest-bearing deposits	2,653,746	2,103,471
Total deposits	5,457,569	3,829,606
Trust preferred securities	20,620	20,620
Subordinated debt, net of issuance cost	24,698	24,657
Secured borrowing	35,559	36,964
Accounts payable, accrued expenses and other liabilities	38,129	61,645
Accrued interest payable	448	712
Prepaid third-party debit cardholder balances	21,577	15,830
Total liabilities	5,598,600	3,990,034
Stockholders' equity:
Common stock, $0.01 par value, 25,000,000 shares authorized, 10,644,192 and 8,295,272 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	106	82
Additional paid in capital	382,922	218,899
Retained earnings	162,498	120,830
Accumulated other comprehensive income (loss), net of tax	(2,875)	973
Total stockholders' equity	542,654	340,787
Total liabilities and stockholders' equity	6,141,254	4,330,821
Class B Preferred Stock
Stockholders' equity:
Class B preferred stock, $0.01 par value, authorized 2,000,000 shares, 272,636 shares issued and outstanding at September 30, 2021 and December 31, 2020	$ 3	$ 3

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Securities held to maturity	$ 2,074	$ 2,827
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	10,644,192	8,295,272
Common stock, shares outstanding	10,644,192	8,295,272
Class B Preferred Stock
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	272,636	272,636
Preferred stock, shares outstanding	272,636	272,636

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Interest and dividend income:
Loans, including fees	$ 42,730	$ 34,844	$ 118,803	$ 100,655
Securities:
Taxable	1,418	606	3,322	2,615
Tax-exempt	51		138
Money market funds				34
Overnight deposits	666	299	1,453	2,266
Other interest and dividends	153	196	457	666
Total interest income	45,018	35,945	124,173	106,236
Interest expense:
Deposits	3,716	2,681	10,452	11,364
Borrowed funds		423		1,742
Trust preferred securities	105	112	320	461
Subordinated debt interest expense	405	405	1,214	1,214
Total interest expense	4,226	3,621	11,986	14,781
Net interest income	40,792	32,324	112,187	91,455
Provision for loan losses	490	1,137	3,315	7,693
Net interest income after provision for loan losses	40,302	31,187	108,872	83,762
Non-interest income:
Unrealized gain on equity securities	(9)		(45)	55
Gain on sale of securities			609	3,286
Total non-interest income	5,891	3,637	16,642	13,627
Non-interest expense:
Compensation and benefits	11,269	9,944	33,907	29,962
Bank premises and equipment	2,038	2,111	6,063	6,498
Professional fees	1,877	1,221	5,183	3,058
Licensing fees and technology costs	3,291	2,960	9,806	10,226
Other expenses	3,509	2,694	9,036	6,984
Total non-interest expense	21,984	18,930	63,995	56,728
Net income before income tax expense	24,209	15,894	61,519	40,661
Income tax expense	7,994	5,111	19,851	12,971
Net income	$ 16,215	$ 10,783	$ 41,668	$ 27,690
Earnings per common share:
Basic earnings per common share (in dollars per share)	$ 1.82	$ 1.30	$ 4.89	$ 3.34
Diluted earnings per common share (in dollars per share)	$ 1.77	$ 1.27	$ 4.76	$ 3.27
Service charges on deposit accounts
Non-interest income:
Non-interest income	$ 1,671	$ 863	$ 4,085	$ 2,747
Revenue, Product and Service [Extensible List]	Service charges on deposit accounts	Service charges on deposit accounts	Service charges on deposit accounts	Service charges on deposit accounts
Prepaid third-party debit card income.
Non-interest income:
Non-interest income	$ 3,615	$ 2,572	$ 10,509	$ 6,301
Revenue, Product and Service [Extensible List]	Prepaid third-party debit card income.	Prepaid third-party debit card income.	Prepaid third-party debit card income.	Prepaid third-party debit card income.
Other service charges and fees
Non-interest income:
Non-interest income	$ 614	$ 202	$ 1,484	$ 1,238
Revenue, Product and Service [Extensible List]	Other service charges and fees	Other service charges and fees	Other service charges and fees	Other service charges and fees

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 16,215	$ 10,783	$ 41,668	$ 27,690
Other comprehensive income:
Unrealized holding gain (loss) arising during the period	(1,321)	100	(6,587)	5,210
Reclassification adjustment for gains included in net income			(609)	(3,286)
Tax effect	415	(43)	2,279	(620)
Net of tax	(906)	57	(4,917)	1,304
Unrealized gain (loss) on cash flow hedges:
Unrealized holding gain (loss) arising during the period	(143)	(218)	1,572	(2,095)
Tax effect	46	76	(503)	668
Net of tax	(97)	(142)	1,069	(1,427)
Total other comprehensive income (loss)	(1,003)	(85)	(3,848)	(123)
Comprehensive Income	$ 15,212	$ 10,698	$ 37,820	$ 27,567

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Class B Preferred Stock Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	AOCI (Loss), Net	Total
Balance at Dec. 31, 2019	$ 3	$ 82	$ 216,468	$ 81,364	$ 1,207	$ 299,124
Balance (in shares) at Dec. 31, 2019	272,636	8,312,918
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock, net of forfeiture				1		1
Restricted stock, net of forfeiture (in shares)		(16,976)
Stock-based compensation			2,489			2,489
Impact of shares for tax withholding for restricted stock vesting			(597)			(597)
Impact of shares for tax withholding for restricted stock vesting (in shares)		(6,463)
Net income				27,690		27,690
Other comprehensive income (loss)					(123)	(123)
Balance at Sep. 30, 2020	$ 3	$ 82	218,360	109,055	1,084	328,584
Balance (in shares) at Sep. 30, 2020	272,636	8,289,479
Balance at Jun. 30, 2020	$ 3	$ 82	217,643	98,272	1,169	317,169
Balance (in shares) at Jun. 30, 2020	272,636	8,294,801
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock, net of forfeiture			735			735
Restricted stock, net of forfeiture (in shares)		(4,732)
Stock-based compensation			(18)			(18)
Stock-based compensation (in shares)		(590)
Net income				10,783		10,783
Other comprehensive income (loss)					(85)	(85)
Balance at Sep. 30, 2020	$ 3	$ 82	218,360	109,055	1,084	328,584
Balance (in shares) at Sep. 30, 2020	272,636	8,289,479
Balance at Dec. 31, 2020	$ 3	$ 82	218,899	120,830	973	340,787
Balance (in shares) at Dec. 31, 2020	272,636	8,295,272
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		$ 23	162,664			162,687
Issuance of common stock (in shares)		2,300,000
Restricted stock, net of forfeiture		$ 1				1
Restricted stock, net of forfeiture (in shares)		93,090
Stock-based compensation			3,605			3,605
Impact of shares for tax withholding for restricted stock vesting			(2,246)			(2,246)
Impact of shares for tax withholding for restricted stock vesting (in shares)		(44,170)
Net income				41,668		41,668
Other comprehensive income (loss)					(3,848)	(3,848)
Balance at Sep. 30, 2021	$ 3	$ 106	382,922	162,498	(2,875)	542,654
Balance (in shares) at Sep. 30, 2021	272,636	10,644,192
Balance at Jun. 30, 2021	$ 3	$ 83	219,098	146,283	(1,872)	363,595
Balance (in shares) at Jun. 30, 2021	272,636	8,344,192
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		$ 23	162,664			162,687
Issuance of common stock (in shares)		2,300,000
Stock-based compensation			1,160			1,160
Net income				16,215		16,215
Other comprehensive income (loss)					(1,003)	(1,003)
Balance at Sep. 30, 2021	$ 3	$ 106	$ 382,922	$ 162,498	$ (2,875)	$ 542,654
Balance (in shares) at Sep. 30, 2021	272,636	10,644,192

XML

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net income	$ 41,668	$ 27,690
Adjustments to reconcile net income to net cash:
Net depreciation amortization and accretion	3,327	4,178
Provision for loan losses	3,315	7,693
Net change in deferred loan fees	1,855	278
Income tax expense (benefit)	1,029	43
Gain on sale of available-for-sale securities	(609)	(3,286)
Stock-based compensation expense	3,605	2,489
Gain on sale of loans		(18)
Dividends earned on CRA fund	(21)	(32)
Unrealized (gain) loss on equity securities	45	(55)
Net change in:
Accrued interest receivable	(255)	(3,662)
Accounts payable, accrued expenses and other liabilities	(23,516)	13,458
Change in global payments balances	5,747	19,873
Accrued interest payable	(264)	(750)
Receivable from global payments, net	(20,542)	(19,656)
Prepaid expenses and other assets	6,408	8,239
Net cash provided by (used in) operating activities	21,792	56,482
Cash flows from investing activities:
Loan originations, purchases and payments, net of recoveries	(468,691)	(327,194)
Proceeds from loans sold		9,968
Redemptions of other investments	5	11,480
Purchases of other investments	(405)	(1,140)
Purchases of securities available for sale	(475,777)	(127,730)
Proceeds from calls of securities available for sale		30,000
Proceeds from sales of securities available for sale	43,241	111,422
Proceeds from paydowns and maturities of securities available for sale	87,151	43,069
Proceeds from paydowns and maturities of securities held to maturity	725	650
Purchase of derivative contract		(2,980)
Purchase of premises and equipment, net	(1,842)	(6,850)
Net cash provided by (used in) investing activities	(815,593)	(259,305)
Cash flows from financing activities:
Issuance of common stock	162,664
Proceeds from FHLB advances	100
Repayments of FHLB advances	(100)	(144,000)
Impact of common stock for tax withholdings for restricted stock vesting	(2,246)	(597)
Repayments of secured borrowings	(1,405)	(10,748)
Net increase in deposits	1,627,963	736,852
Net cash provided by (used in) financing activities	1,786,976	581,507
Increase (decrease) in cash and cash equivalents	993,175	378,684
Cash and cash equivalents at the beginning of the period	864,305	389,220
Cash and cash equivalents at the end of the period	1,857,480	767,904
Cash paid for:
Interest	12,250	15,531
Income Taxes	$ 15,015	$ 7,235

XML

ORGANIZATION

9 Months Ended

Sep. 30, 2021

ORGANIZATION

ORGANIZATION

NOTE 1 - ORGANIZATION

Metropolitan Bank Holding Corp., a New York corporation (the “Company”), is a bank holding company whose principal activity is the ownership and management of Metropolitan Commercial Bank (the “Bank”), its wholly-owned subsidiary. The Company’s primary market is the New York metropolitan area. The Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals.

The Company’s primary lending products are commercial real estate loans, multi-family loans and commercial and industrial 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 flows from operations of businesses.

The Company’s primary deposit products are checking, savings, and term deposit accounts, and its deposit accounts are insured by the FDIC under the maximum amounts allowed by law. In addition to traditional commercial banking products, the Company offers corporate cash management and retail banking services and, through its Global Payments Group (“global payments business”), provides Banking-as-a-Service to its fintech partners, which includes serving as an issuing bank for third-party managed debit card programs nationwide and providing other financial infrastructure, including cash settlement and custodian deposit services.

The Company and the Bank are subject to the regulations of certain state and federal agencies and, accordingly, are periodically examined by those regulatory authorities. The Company’s business is affected by state and federal legislation and regulations.

XML

BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2021

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 2 – BASIS OF PRESENTATION

The accounting and reporting policies of the Company conform with U.S. generally accepted accounting principles (“GAAP”) and predominant practices within the U.S. banking industry. All intercompany balances and transactions have been eliminated. The Unaudited Consolidated Financial Statements, which include the accounts of the Company and the Bank, have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q, Article 8 of Regulation S-X and predominant practices within the U.S. banking industry. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The Unaudited Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements in conformity with GAAP, management has made estimates and assumptions based on available information. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods, and actual results could differ from those estimated. Information available which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy, and changes in the financial condition of borrowers.

Some items in the prior year financial statements were reclassified to conform to the current presentation.  Reclassifications had no effect on prior-year net income or shareholders’ equity.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year or for any other period.

The unaudited consolidated financial statements presented in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC.  

XML

SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2021

SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 3 – SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

Pursuant to the Tax Cuts and Jobs Act (“JOBS Act”), an Emerging Growth Company (“EGC”) is provided the option to adopt new or revised accounting standards that may be issued by the FASB or the Securities and Exchange Commission either (i) within the same periods as those otherwise applicable to non-EGCs or (ii) within the same time periods as private companies. The Company elected delayed effective dates of recently issued accounting standards. As permitted by the JOBS Act, so long as it qualifies as an EGC, the Company will take advantage of some of the reduced regulatory and reporting requirements that are available to it, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.

The Company is likely to lose its EGC status on December 31, 2022, since that would be the last day of the fiscal year of the Company following the fifth anniversary of the date of the first sale of common equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires companies that lease assets to recognize on their balance sheets the assets and liabilities generated by contracts longer than a year. Under ASU 2016-02, the Company will recognize a right-of-use asset and a lease obligation liability on the consolidated statement of financial condition, which will increase the Company’s assets and liabilities. The Company is required to implement ASU 2016-02 by December 31, 2022, and is currently evaluating the potential impact on its consolidated financial statements.

The Company has not yet adopted ASU No. 2016-13, Financial Instruments – Credit Losses, which requires the measurement of all current expected credit losses (“CECL”) for financial assets. The Company is required to implement CECL by December 31, 2022. The Company is currently developing CECL models and evaluating its potential impact on the Company’s Allowance for Loan and Lease Losses (“ALLL”).

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard was effective for the Company beginning January 1, 2021, and did not have a material impact on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications at the instrument level as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. In January 2021 the FASB issued ASU 2021-01. The amendments in this ASU clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. Management has established a working group to evaluate the impact of the transition from LIBOR on the Company and its consolidated financial statements. The working group has developed an inventory of impacted contracts and client relationships and is in the process of assessing LIBOR alternatives and how such alternatives may be implemented.

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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2021

INVESTMENT SECURITIES

INVESTMENT SECURITIES

NOTE 4 - INVESTMENT SECURITIES

The following tables summarize the amortized cost and fair value of debt securities available for sale (“AFS”), debt securities held to maturity (“HTM”) and equity investments at September 30, 2021 and December 31, 2020 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses (in thousands):

			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At September 30, 2021	Cost		Gains		Losses		Fair Value
Debt securities available for sale:
Residential mortgage securities	$	504,167	$	1,123	$	(3,859)	$	501,431
Commercial mortgage securities		18,270		249		(263)		18,256
Asset-backed securities		4,750		—		(17)		4,733
U.S. Government agency		67,994		—		(763)		67,231
Securities issued by states and political subdivisions in the U.S		11,836		—		(319)		11,517
Total securities available-for-sale	$	607,017	$	1,372	$	(5,221)	$	603,168
Held-to-maturity securities:
Residential mortgage securities	$	2,017		57		—		2,074
Total securities held-to-maturity	$	2,017	$	57	$	—	$	2,074
Equity investments:
CRA Mutual Fund	$	2,320		—		(31)		2,289
Total non-trading equity investment securities	$	2,320	$	—	$	(31)	$	2,289

			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At December 31, 2020	Cost		Gains		Losses		Fair Value
Debt securities available for sale:
Residential mortgage securities	$	192,163	$	2,599	$	(74)	$	194,688
Commercial mortgage securities		32,589		997		(94)		33,492
U.S. Government agency		37,997		—		(81)		37,916
Total securities available-for-sale	$	262,749	$	3,596	$	(249)	$	266,096
Held-to-maturity securities:
Residential mortgage securities		2,760		67		—		2,827
Total securities held-to-maturity	$	2,760	$	67	$	—	$	2,827
Equity investments:
CRA Mutual Fund		2,299		14		—		2,313
Total non-trading equity investment securities	$	2,299	$	14	$	—	$	2,313

For the three months ended September 30, 2021, there were no sales of AFS securities. For the nine months ended September 30, 2021, there were sales of $42.6 million, at amortized cost, of AFS securities. For the three months ended September 30, 2020, there were calls of $25.0 million, at amortized cost of AFS securities. There were sales and calls of $108.1 million and $30.0 million, at amortized cost, respectively, for the nine months ended September 30, 2020. The

proceeds from sales and calls of AFS securities and associated gains for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Proceeds	$	—	$	25,000	$	43,241	$	141,422
Gross gains	$	—	$	—	$	609	$	3,286
Tax impact	$	—	$	—	$	(195)	$	(1,036)

The tables below summarize, by contractual maturity, the amortized cost and fair value of debt securities at September 30, 2021 and December 31, 2020. The table does not include the effect of principal repayments. Equity securities, primarily investment in mutual funds, have been excluded from the table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately (in thousands):

	Held-to-Maturity				Available-for-Sale
At September 30, 2021	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	—	$	—	$	—	$	—
One to five years		—		—		47,994		47,475
Five to ten years		—		—		15,000		14,832
After ten years		—		—		16,836		16,441
Total	$	—	$	—	$	79,830	$	78,748
Residential mortgage securities	$	2,017	$	2,074		504,167		501,431
Commercial mortgage securities		—		—		18,270		18,256
Asset-backed securities		—		—		4,750		4,733
Total Securities	$	2,017	$	2,074	$	607,017	$	603,168

	Held-to-Maturity				Available-for-Sale
At December 31, 2020	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	—	$	—	$	—	$	—
One to five years		—		—		37,997		37,916
Five to ten years		—		—		—		—
Due after ten years		—		—		—		—
Total	$	—	$	—	$	37,997	$	37,916
Residential mortgage securities	$	2,760	$	2,827	$	192,163	$	194,688
Commercial mortgage securities		—		—		32,589		33,492
Total Securities	$	2,760	$	2,827	$	262,749	$	266,096

There were no securities pledged as collateral at September 30, 2021 or December 31, 2020.

At September 30, 2021 and December 31, 2020, all of the residential mortgage securities and commercial mortgage securities held by the Company were issued by U.S. Government-sponsored entities and agencies.

Debt securities with unrealized/unrecognized losses at September 30, 2021 and December 31, 2020, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

	Less than 12 Months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
At September 30, 2021	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Debt securities available for sale:
Residential mortgage securities	$	315,184	$	(3,859)	$	—	$	—	$	315,184	$	(3,859)
Commercial mortgage securities		14,919		(263)		379		—		15,298		(263)
Asset-backed securities		4,733		(17)		—		—		4,733		(17)
U.S. Government agency securities		39,546		(451)		27,685		(312)		67,231		(763)
Securities issued by states and political subdivisions in the U.S		11,517		(319)		—		—		11,517		(319)
Total securities available for sale	$	385,899	$	(4,909)	$	28,064	$	(312)	$	413,963	$	(5,221)

	Less than 12 Months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
At December 31, 2020	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Debt securities available for sale:
Residential mortgage securities	$	33,734		(74)		-		-		33,734		(74)
Commercial mortgage securities		12,314		(93)		385		(1)		12,699		(94)
U.S. Government agency securities		37,916		(81)		—		—		37,916		(81)
Total securities available-for-sale	$	83,964	$	(248)	$	385	$	(1)	$	84,349	$	(249)

The unrealized losses on securities are primarily due to the changes in market interest rates subsequent to purchase. The Company did not consider these securities to be other-than-temporarily impaired at September 30, 2021 or December 31, 2020 since the decline in market value was attributable to changes in interest rates and not credit quality. In addition, the Company does not intend to sell and does not believe that it is more likely than not that it will be required to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, no impairment loss was recognized during the nine months ended September 30, 2021 or for the year ended December 31, 2020.

At September 30, 2021 and December 31, 2020, 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 stockholders’ equity.

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LOANS AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2021

LOANS AND ALLOWANCE FOR LOAN LOSSES

LOANS AND ALLOWANCE FOR LOAN LOSSES

NOTE 5 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans, net of deferred costs and fees, consist of the following as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Real estate
Commercial	$	2,378,074	$	1,887,505
Construction		150,144		112,290
Multifamily		374,555		433,239
One-to-four family		61,266		71,354
Total real estate loans		2,964,039		2,504,388
Commercial and industrial		611,303		591,500
Consumer		35,067		46,431
Total loans		3,610,409		3,142,319
Deferred fees		(7,121)		(5,266)
Loans, net of deferred fees and unamortized costs		3,603,288		3,137,053
Allowance for loan losses		(38,121)		(35,407)
Balance at the end of the period	$	3,565,167	$	3,101,646

Included in commercial and industrial loans at September 30, 2021 and December 31, 2020 are $2.5 million and $3.8 million, respectively, of Paycheck Protection Program (“PPP”) loans.

The following tables present the activity in the ALLL by segment for the three and nine months ended September 30, 2021 and 2020. The portfolio segments represent the categories that the Company uses to determine its ALLL (in thousands):

	Commercial		Commercial				Multi		One-to-four
Three months ended September 30, 2021	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	20,299	$	10,545	$	1,972	$	2,618	$	169	$	1,774	$	37,377
Provision/(credit) for loan losses		1,169		(440)		129		(331)		(13)		(24)		490
Loans charged-off		—		—		—		—		—		(54)		(54)
Recoveries		—		308		—		—		—		—		308
Total ending allowance balance	$	21,468	$	10,413	$	2,101	$	2,287	$	156	$	1,696	$	38,121

	Commercial		Commercial				Multi		One-to-four
Three months ended September 30, 2020	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	18,690		9,132		741		2,739		242		961		32,505
Provision/(credit) for loan losses		(1,611)		2,104		706		(215)		(61)		214		1,137
Loans charged-off		—		(82)		—		—		—		—		(82)
Recoveries		—		54		—		—		—		—		54
Total ending allowance balance	$	17,079	$	11,208	$	1,447	$	2,524	$	181	$	1,175	$	33,614

	Commercial		Commercial				Multi		One-to-four
Nine months ended September 30, 2021	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	17,243	$	12,123	$	1,593	$	2,661	$	206	$	1,581	$	35,407
Provision/(credit) for loan losses		4,225		(1,163)		508		(374)		(50)		169		3,315
Loans charged-off		—		(855)		—		—		—		(54)		(909)
Recoveries		—		308		—		—		—		—		308
Total ending allowance balance	$	21,468	$	10,413	$	2,101	$	2,287	$	156	$	1,696	$	38,121

	Commercial		Commercial				Multi		One-to-four
Nine months ended September 30, 2020	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	15,317	$	7,070	$	411	$	2,453	$	267	$	754	$	26,272
Provision/(credit) for loan losses		1,762		4,278		1,036		71		(86)		632		7,693
Loans charged-off		—		(254)		—		—		—		(221)		(475)
Recoveries		—		114		—		—		—		10		124
Total ending allowance balance	$	17,079	$	11,208	$	1,447	$	2,524	$	181	$	1,175	$	33,614

Net recoveries for the three months ended September 30, 2021 were $254,000. Net charge-offs for the three months ended September 30, 2020 were $28,000.  Net charge-offs for the nine months ended September 30, 2021 and 2020 were $601,000 and $351,000, respectively.

The following tables present the balance in the ALLL and the recorded investment in loans by portfolio segment based on impairment method as of September 30, 2021 and December 31, 2020 (in thousands):

	Commercial		Commercial				Multi		One-to-four
At September 30, 2021	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	2,814	$	—	$	—	$	33	$	1,430	$	4,277
Collectively evaluated for impairment		21,468		7,599		2,101		2,287		123		266		33,844
Total ending allowance balance	$	21,468	$	10,413	$	2,101	$	2,287	$	156	$	1,696	$	38,121
Loans:
Individually evaluated for impairment	$	10,333	$	3,145	$	—	$	—	$	958	$	2,125	$	16,561
Collectively evaluated for impairment		2,367,741		608,158		150,144		374,555		60,308		32,942		3,593,848
Total ending loan balance	$	2,378,074	$	611,303	$	150,144	$	374,555	$	61,266	$	35,067	$	3,610,409

	Commercial		Commercial				Multi		One-to-four
At December 31, 2020	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	3,662	$	—	$	—	$	53	$	1,203	$	4,918
Collectively evaluated for impairment		17,243		8,461		1,593		2,661		153		378		30,489
Total ending allowance balance	$	17,243	$	12,123	$	1,593	$	2,661	$	206	$	1,581	$	35,407
Loans:
Individually evaluated for impairment	$	10,345	$	4,192	$	—	$	—	$	999	$	2,197	$	17,733
Collectively evaluated for impairment		1,877,160		587,308		112,290		433,239		70,355		44,234		3,124,586
Total ending loan balance	$	1,887,505	$	591,500	$	112,290	$	433,239	$	71,354	$	46,431	$	3,142,319

The following tables present loans individually evaluated for impairment recognized as of September 30, 2021 and December 31, 2020 (in thousands):

	Unpaid Principal				Allowance for Loan
At September 30, 2021	Balance		Recorded Investment		Losses Allocated
With an allowance recorded:
One-to-four family	$	584	$	454	$	33
Consumer		2,125		2,125		1,430
Commercial & industrial		3,145		3,145		2,814
Total	$	5,854	$	5,724	$	4,277
Without an allowance recorded:
One-to-four family	$	651	$	504	$	—
Commercial real estate		10,333		10,333		—
Commercial & industrial		—		—		—
Total	$	10,984	$	10,837	$	—

	Unpaid Principal				Allowance for Loan
At December 31, 2020	Balance		Recorded Investment		Losses Allocated
With an allowance recorded:
One-to-four family	$	610	$	480	$	53
Consumer		2,197		2,197		1,203
Commercial & industrial		4,192		4,192		3,662
Total	$	6,999	$	6,869	$	4,918
Without an allowance recorded:
One-to-four family	$	666	$	519	$	—
Commercial real estate		10,345		10,345		—
Commercial & industrial		—		—		—
Total	$	11,011	$	10,864	$	—

The recorded investment in loans excludes accrued interest receivable and loan origination fees.

The following tables present the average recorded investment and interest income of loans individually evaluated for impairment recognized by class of loans for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Average Recorded		Interest Income
Three months ended September 30, 2021	Investment		Recognized
With an allowance recorded:
One-to-four family	$	458	$	4
Consumer		2,103		26
Commercial & industrial		3,145		—
Total	$	5,706	$	30
Without an allowance recorded:
One-to-four family	$	506	$	7
Commercial real estate		10,335		2
Commercial & industrial		96		—
Total	$	10,937	$	9

	Average Recorded		Interest Income
Three months ended September 30, 2020	Investment		Recognized
With an allowance recorded:
One-to-four family	$	488	$	5
Consumer		2,112		27
Commercial & industrial		5,497		—
Total	$	8,097	$	32
Without an allowance recorded:
One-to-four family	$	524	$	3
Commercial real estate		363		-
Total	$	887	$	3

	Average Recorded		Interest Income
Nine months ended September 30, 2021	Investment		Recognized
With an allowance recorded:
One-to-four family	$	466	$	16
Consumer		2,132		84
Commercial & industrial		3,407		-
Total	$	6,005	$	100
Without an allowance recorded:
One-to-four family	$	511	$	20
Commercial real estate		10,339		207
Commercial & industrial		96		-
Total	$	10,946	$	227

	Average Recorded		Interest Income
Nine months ended September 30, 2020	Investment		Recognized
With an allowance recorded:
One-to-four family	$	494	$	13
Consumer		1,330		58
Commercial & industrial		3,272		—
Total	$	5,096	$	71
Without an allowance recorded:
One-to-four family	$	1,115	$	13
Commercial real estate		364		4
Commercial and industrial		1,188		—
Total	$	2,667	$	17

For a loan to be considered impaired, management determines whether it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. Management applies its normal loan review procedures in making these judgments. Impaired loans include individually classified non-accrual loans and troubled debt restructurings (“TDRs”). Impairment is determined based on the present value of expected future cash flows discounted at the loan’s effective interest rate. For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of the collateral or present value of expected cash flows is compared to the carrying value to determine if any write-down or specific loan loss allowance allocation is required.

For discussion on modification of loans to borrowers impacted by COVID-19, refer to the “COVID-19 Loan Modifications” section herein.

The following tables present the recorded investment in non-accrual loans and loans past due over 90 days and still accruing, by class of loans, as of September 30, 2021 and December 31, 2020 (in thousands):

At September 30, 2021	Non-accrual		Loans Past Due Over 90 Days Still Accruing
Commercial real estate	$	9,984	$	—
Commercial & industrial		3,145		—
Consumer		1,674		573
Total	$	14,803	$	573

At December 31, 2020	Non-accrual			Loans Past Due Over 90 Days Still Accruing
Commercial & industrial	$	4,192	$	—
Consumer		1,428		769
Total	$	5,620	$	769

Interest income that would have been recorded for the three and nine months ended September 30, 2021 and 2020 had non-accrual loans been current according to their original terms was immaterial.

The following tables present the aging of the recorded investment in past due loans by class of loans as of September 30, 2021 and December 31, 2020 (in thousands):

					90
	30-59		60-89		Days and		Total past		Current
At September 30, 2021	Days		Days		Greater		due		loans		Total
Commercial real estate	$	—	$	—	$	9,984	$	9,984	$	2,368,090	$	2,378,074
Commercial & industrial		92		—		3,145		3,237		608,066		611,303
Construction		—		—		—		—		150,144		150,144
Multifamily		—		—		—		—		374,555		374,555
One-to-four family		—		—		—		—		61,266		61,266
Consumer		43		—		2,247		2,290		32,777		35,067
Total	$	135	$	—	$	15,376	$	15,511	$	3,594,898	$	3,610,409

					90
	30-59		60-89		Days and		Total past		Current
At December 31, 2020	Days		Days		Greater		due		loans		Total
Commercial real estate	$	40	$	9,984	$	—	$	10,024	$	1,877,481	$	1,887,505
Commercial & industrial		4,429		6,400		4,192		15,021		576,479		591,500
Construction		—		—		—		—		112,290		112,290
Multifamily		—		—		—		—		433,239		433,239
One-to-four family		2,908		—		—		2,908		68,446		71,354
Consumer		112		32		2,197		2,341		44,090		46,431
Total	$	7,489	$	16,416	$	6,389	$	30,294	$	3,112,025	$	3,142,319

Troubled Debt Restructurings

Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered TDRs and classified as impaired.

Included in impaired loans at September 30, 2021 and December 31, 2020 were $1.3 million and $1.4 million, respectively, of loans modified as TDRs. The Company allocated specific reserves amounting to $33,000 and $53,000 for TDRs as of September 30, 2021 and December 31, 2020, respectively. There were no loans modified as a TDR during the three and nine months ended September 30, 2021 or 2020. The Company has not committed to lend additional amounts as of September 30, 2021 to customers with outstanding loans that are classified as TDRs. During the nine months ended September 30, 2021 and September 30, 2020 there were no payment defaults on any loans previously identified as TDRs. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed pursuant to the Company’s internal underwriting policy.

The following tables present the recorded investment in TDRs by class of loans as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Troubled debt restructurings:
Real Estate:
Commercial real estate	$	349	$	361
One-to-four family		958		999
Total troubled debt restructurings	$	1,307	$	1,360

All TDRs at September 30, 2021 and December 31, 2020 were performing in accordance with their restructured terms.

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. Except for one-to-four family loans and consumer loans, the Company analyzes loans individually by classifying the loans as to credit risk at least annually. For one-to-four family loans and consumer loans, the Company evaluates credit quality based on the aging status of the loan, which was previously presented. An analysis is performed on a quarterly basis for loans classified as special mention, substandard or doubtful. The Company uses the following definitions for risk ratings:

Special Mention - Loans classified as special mention have a potential weakness that deserves management’s 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.

Loans not meeting the criteria above are considered to be pass-rated loans. Based on the most recent analysis performed, the risk category of loans by class of loans as of September 30, 2021 and December 31, 2020 is as follows (in thousands):

			Special
At September 30, 2021	Pass		Mention		Substandard		Doubtful			Total
Commercial real estate	$	2,367,741	$	349	$	9,984	$	—	$	2,378,074
Commercial & industrial		603,963		4,195		—		3,145		611,303
Construction		150,144		—		—		—		150,144
Multifamily		374,555		—		—		—		374,555
Total	$	3,496,403	$	4,544	$	9,984	$	3,145	$	3,514,076

			Special
At December 31, 2020	Pass		Mention		Substandard		Doubtful			Total
Commercial real estate	$	1,877,160	$	361	$	9,984	$	—	$	1,887,505
Commercial & industrial		583,809		3,499		—		4,192		591,500
Construction		112,290		—		—		—		112,290
Multi-family		433,239		—		—		—		433,239
Total	$	3,006,498	$	3,860	$	9,984	$	4,192	$	3,024,534

COVID-19 Loan Modifications

On March 22, 2020, the banking regulators and the FASB issued guidance to financial institutions who were working with borrowers affected by COVID-19 (“COVID-19 Guidance”). The COVID-19 Guidance indicated that regulatory agencies will not criticize institutions for working with borrowers and will not direct banks to automatically categorize all COVID-19 related loan modifications as TDRs. In addition, the COVID-19 Guidance noted that modification or deferral programs mandated by the federal or a state government related to COVID-19 would not be in the scope of Accounting Standards Codification Subtopic 310-40 – Receivables – Troubled Debt Restructurings by Creditors (“ASC 310-40”), such as state programs that require all institutions within that state to suspend mortgage payments for a specified period.  

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. Section 4013 of the CARES Act, “Temporary Relief from Troubled Debt Restructurings,” allows banks to temporarily

suspend certain requirements under GAAP related to TDRs for a limited period to account for the effects of COVID-19. A bank may elect to account for modifications on certain loans under Section 4013 of the CARES Act or, if a loan modification is not eligible under Section 4013, a bank may use the criteria in the COVID-19 Guidance to determine when a loan modification is not a TDR in accordance with ASC 310-40.

As of September 30, 2021, the Company had 10 loans amounting to $49.1 million, or 1.4% of total loans, that were modified in accordance with the COVID-19 Guidance and the CARES Act. As of September 30, 2021, principal payment deferrals were $39.2 million, or 1.1% of total loans, while full payment deferrals were $10.0 million, or 0.3% of total loans.

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2021

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 6  — STOCKHOLDERS’ EQUITY

During the quarter ended September 30, 2021, the Company raised $172.5 million of capital through the issuance of 2.3 million shares of its common stock at a price of $75 per share, resulting in net proceeds of $162.7 million. The offering increased the Company’s shares of common stock outstanding from 8.3 million shares to 10.6 million shares.

At September 30, 2021, the Company also has outstanding 272,636 shares of its Series F, Class B non-voting preferred stock, par value, $0.01 per share. The stock is subordinate and junior to all indebtedness of the Company and to all other series of preferred stock of the Company. The holder of the Series F, Class B preferred stock is entitled to receive ratable dividends only if and when dividends are concurrently declared and payable on the shares of common shares. In connection with the issuance of additional shares of common stock of the Company, the holder of the Series F, Class B Preferred Stock has the right to exchange shares of Series F, Class B preferred stock for shares of the Company’s common stock to allow it to maintain the percent ownership of the outstanding common stock of the Company it owned immediately prior to the issuance of the additional shares of common stock by the Company.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2021

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 7 – EARNINGS PER SHARE

The computation of basic and diluted earnings per share is shown below (dollars in thousands, except share data):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Basic
Net income per consolidated statements of income	$	16,215	$	10,783	$	41,668	$	27,690
Less: Earnings allocated to participating securities		(508)		(89)		(568)		(255)
Net income available to common stockholders	$	15,707	$	10,694	$	41,100	$	27,435
Weighted average common shares outstanding including participating securities		8,897,910		8,291,068		8,518,639		8,296,701
Less: Weighted average participating securities		(278,937)		(68,198)		(116,045)		(76,499)
Weighted average common shares outstanding		8,618,973		8,222,870		8,402,594		8,220,202
Basic earnings per common share	$	1.82	$	1.30	$	4.89	$	3.34
Diluted
Net income allocated to common stockholders	$	15,707	$	10,694	$	41,100	$	27,435
Weighted average common shares outstanding for basic earnings per common share		8,618,973		8,222,870		8,402,594		8,220,202
Add: Dilutive effects of assumed exercise of stock options		173,909		92,269		161,932		103,737
Add: Dilutive effects of assumed vesting of performance based restricted stock units		53,571		78,072		41,932		68,116
Add: Dilutive effects of assumed vesting of restricted stock units		46,651		—		29,939		—
Average shares and dilutive potential common shares		8,893,104		8,393,211		8,636,397		8,392,055
Dilutive earnings per common share	$	1.77	$	1.27	$	4.76	$	3.27

All stock options and performance based restricted stock units were considered in computing diluted earnings per common share for the three and nine months ended September 30, 2021 and 2020. 188,906 restricted stock units were not considered in the calculation of diluted earnings per share as their inclusion would be anti-dilutive for the three and nine months ended September 30, 2021.

The Company began treating the Class B preferred stock as a participating security during the third quarter of 2021 and the impact was immaterial.

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STOCK COMPENSATION PLAN

9 Months Ended

Sep. 30, 2021

STOCK COMPENSATION PLAN

STOCK COMPENSATION PLAN

NOTE 8 - STOCK COMPENSATION PLAN

Equity Incentive Plan

On May 28, 2019, the Company’s 2019 Equity Incentive Plan (the “2019 EIP”) was approved by stockholders of the Company. Under the 2019 EIP, the maximum number of shares of stock that may be delivered to participants in the form of restricted stock, restricted stock units and stock options, including incentive stock options (“ISO”) and non-qualified stock options, is 340,000, plus any awards that are forfeited under the 2009 Equity Incentive Plan (the “2009 Plan”) after the effective date of the 2019 EIP, which was May 28, 2019. Under the 2009 Plan, there are 468,382 shares that are subject to outstanding and/or unexercised awards that have been granted and, if forfeited after May 28, 2019, such shares will be available to be granted under the 2019 EIP. The 628,719 shares that were unauthorized and unissued under the 2009 Plan have expired and may not be granted (and such shares of stock did not roll over to the 2019 EIP).  

Stock Options

Under the terms of the 2019 EIP, a stock option cannot have an exercise price that is less than 100% of the fair market value of the shares covered by the stock option on the date of grant. In the case of an ISO granted to a 10% stockholder, the exercise price shall not be less than 110% of the fair market value of the shares covered by the stock option on the date of grant.  In no event shall the exercise period exceed ten years from the date of grant of the option, except, in the case of an ISO granted to a 10% stockholder, the exercise period shall not exceed five years from the date of grant. The 2019 EIP contains a double trigger change in control feature, providing for an acceleration of vesting upon an involuntary termination of employment simultaneous with or following a change in control.

The fair value of each stock option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model. Expected volatilities based on historical volatilities of the Company’s common stock are not significant. The expected term of options granted is based on historical data and 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.

A summary of the status of the Company’s stock options and the changes during the nine months ended September 30, 2021 is presented below:

	Nine Months Ended September 30, 2021
	Number of	Weighted Average
	Options	Exercise Price
Outstanding, beginning of period	231,000	$	18.00
Granted	—		—
Exercised	—		—
Cancelled/forfeited	—		—
Outstanding, end of period	231,000	$	18.00
Options vested and exercisable at end of period	231,000	$	18.00
Weighted average remaining contractual life (years)			2.63

There was no unrecognized compensation cost related to stock options at September 30, 2021 or December 31, 2020.

There was no compensation cost related to stock options for the nine months ended September 30, 2021 or 2020.

The following table summarizes information about stock options outstanding at September 30, 2021:

	At September 30, 2021
Range of Average		Weighted Average	Weighted Average		Weighted Average
Exercise Prices	Number Outstanding	Remaining Contractual Life	Exercise Price		Intrinsic Price per Share
$10 – 30	231,000	2.63	$	18.00	$	66.30

Restricted Stock Awards and Restricted Stock Units

The Company issued restricted stock awards under the 2009 Plan and restricted stock units under the 2019 EIP (collectively, “restricted stock grants”) to certain key personnel. Each restricted stock grant vests based on the vesting schedule outlined in the restricted stock grant agreement. Restricted stock grants are subject to forfeiture if the holder is not employed by the Company on the vesting date.

In the first quarter of 2021, 78,582 restricted stock units were issued to certain key personnel. One-third of these shares vest each year for three years beginning on March 1, 2022. In the second and third quarters of 2021, no restricted stock units were issued.

Total compensation cost that has been charged against income for restricted stock grants was $1.1 million and $277,000 for the three months ended September 30, 2021 and 2020, respectively. Total compensation cost that has been charged against income for restricted stock grants was $2.3 million and $1.1 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, there was $3.9 million of total unrecognized compensation expense related to the restricted stock awards. The cost is expected to be recognized over a weighted-average period of 2.07 years.

On January 1, 2019, 38,900 restricted shares were granted to members of the Board of Directors in lieu of retainer fees for three years of service. One-third of these shares vest each year for three years from December 31, 2019. In the fourth quarter of 2020, 1,785 shares were granted to a new member of the Board of Directors, all of which will vest in the fourth quarter of 2021. Total expense for these awards was $100,000 for both the three months ended September 30, 2021 and 2020. Total expense for these awards was $300,000 for the nine months ended September 30, 2021 and 2020. As of September 30, 2021 there was $100,000 of unrecognized expense related to these grants. The remaining unamortized cost is expected to be recognized over a weighted-average period of 0.25 years.

The following table summarizes the changes in the Company’s restricted stock grants for the nine months ended September 30, 2021:

	Nine Months Ended September 30, 2021
		Weighted Average
	Number of Shares	Grant Date Fair Value
Outstanding, beginning of period	76,289	$	38.66
Granted	168,582		57.23
Forfeited	(10,200)		48.09
Vested	(14,489)		30.45
Outstanding at end of period	220,182	$	52.98

The total fair value of shares vested was approximately $441,197 for the nine months ended September 30, 2021.

Performance Based Stock Units

During the first quarter of 2018, the Company established a long-term incentive award program under the 2009 Plan. For each award, Performance Restricted Share Units (“PRSUs”) were eligible to be earned over a three-year performance period based on personal performance and the Company’s relative performance, in each case, as compared to certain measurement goals that were established at the onset of the performance period. These awards were accounted for in accordance with guidance prescribed in ASC Topic 718, Compensation – Stock Compensation. 90,000 PRSUs were awarded under the program. These PRSUs were earned at the end of the three-year period and vested in the first quarter of 2021.

During the second quarter of 2021, the Company established a long-term incentive award program under the 2019 Plan. The PRSUs are earned ratably over a three-year performance period based on personal performance and the Company’s relative performance, in each case, as compared to certain measurement goals that were established at the onset of the performance period. These awards are accounted for in accordance with the guidance prescribed in ASC Topic 718. 90,000 PRSUs were awarded under the program.

	September 30, 2021
Weighted average service inception date fair value of award shares	$	5,721,300
Minimum aggregate share payout		9,000
Maximum aggregate share payout		90,000
Likely aggregate share payout		90,000

Total compensation cost that has been charged against income for these programs was $481,000 and $358,000 for the three months ended September 30, 2021 and 2020, respectively. Total compensation cost that has been charged against income

for these programs was $1.4 million and $1.1 million for the nine months ended September 30, 2021 and 2020, respectively.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2021

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. The Company did not have any liabilities that were measured at fair value at September 30, 2021 and December 31, 2020. AFS securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as certain impaired loans. These non-recurring fair value adjustments generally involve the write-down of individual assets due to impairment losses.

Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

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 reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Assets and Liabilities Measured on a Recurring Basis

Assets measured on a recurring basis are limited to the Company’s AFS securities portfolio, equity investments and an interest rate cap derivative contract. The AFS portfolio is carried at estimated fair value with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss in shareholders’ equity. Equity investments are carried at estimated fair value with changes in fair value reported as “unrealized gain/(loss)” on the statements of operations. The interest rate cap derivative contract is carried at estimated fair value with changes in fair value reported as accumulated other comprehensive income or loss in shareholders’ equity. The fair values for substantially all of these assets are obtained monthly from an independent nationally recognized pricing service. On a quarterly basis, the Company assesses the reasonableness of the fair values obtained for the AFS portfolio by reference to a second independent nationally recognized pricing service. Based on the nature of these securities, the Company’s independent pricing service provides prices which are categorized as Level 2 since quoted prices in active markets for identical assets are generally not available for the majority of securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for the Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. On an annual basis, the Company obtains the models, inputs and assumptions utilized by its pricing service and reviews them for reasonableness.

There are no liabilities that are measured on a recurring basis.

Assets measured at fair value on a recurring basis are summarized below (in thousands):

	Fair Value Measurement using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable
	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
At September 30, 2021
Residential mortgage-backed securities	$	501,431	$	—	$	501,431	$	—
Commercial mortgage-backed securities		18,256		—		18,256		—
Asset-backed securities		4,733		—		4,733
U.S. Government agency		67,231		—		67,231
Securities issued by states and political subdivisions in the U.S		11,517		—		11,517
CRA Mutual Fund		2,289		2,289		—		—
Derivative assets - interest rate cap		2,086		—		2,086		—
	Fair Value Measurement using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable
	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
At December 31, 2020
Residential mortgage securities	$	194,688	$	—	$	194,688	$	—
Commercial mortgage securities		33,492		—		33,492		—
U.S. Government agency securities		37,916		—		37,916		—
CRA Mutual Fund		2,313		2,313		—		—
Derivative assets - interest rate cap		770		—		770		—

There were no transfers between Level 1 and Level 2 during the three months ended September 30, 2021 and 2020.

There were no material assets measured at fair value on a non-recurring basis at September 30, 2021 or December 31, 2020.

The Company has engaged an independent pricing service provider to provide the fair values of its financial assets and liabilities measured at amortized cost. This provider follows FASB’s exit pricing guidelines, as required by

ASU 2016-01, when calculating fair market values.

Carrying amounts and estimated fair values of financial instruments carried at amortized cost at September 30, 2021 and December 31, 2020 were as follows (in thousands):

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable		Total Fair
At September 30, 2021	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Value
Financial Assets:
Cash and due from banks	$	32,660	$	32,660	$	—	$	—	$	32,660
Overnight deposits		1,824,820		1,824,820		—		—		1,824,820
Securities available for sale		603,168		—		603,168		—		603,168
Securities held to maturity		2,017		—		2,074		—		2,074
Equity investments		2,289		2,289		—		—		2,289
Loans, net		3,565,167		—		—		3,592,347		3,592,347
Other investments
FRB Stock		7,430		N/A		N/A		N/A		N/A
FHLB Stock		3,070		N/A		N/A		N/A		N/A
Disability Fund		1,000		—		1,000		—		1,000
Time deposits at banks		498		498		—		—		498
Interest rate cap derivative		2,086		—		2,086		—		2,086
Accrued interest receivable		13,504		—		717		12,787		13,504
Financial liabilities:
Non-interest-bearing demand deposits	$	2,803,823	$	2,803,823	$	—	$	—	$	2,803,823
Money market and savings deposits		2,571,707		2,571,707		—		—		2,571,707
Time deposits		82,039		—		82,610		—		82,610
Trust preferred securities payable		20,620		—		—		20,002		20,002
Subordinated debt, net of issuance cost		24,698		—		25,438		—		25,438
Accrued interest payable		448		3		337		108		448
Secured Borrowings		35,559		0		35,559		0		35,559

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable		Total Fair
At December 31, 2020	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Value
Financial Assets:
Cash and due from banks	$	8,692	$	8,692	$	—	$	—	$	8,692
Overnight deposits		855,613		855,613		—		—		855,613
Securities available for sale		266,096		—		266,096		—		266,096
Securities held to maturity		2,760		—		2,827		—		2,827
Equity investments		2,313		2,313		—		—		2,313
Loans, net		3,101,646		—		—		3,094,998		3,094,998
Other investments
FRB Stock		7,381		N/A		N/A		N/A		N/A
FHLB Stock		2,718		N/A		N/A		N/A		N/A
Disability Fund		1,000		—		1,000		—		1,000
CRA - CD		498		498		—		—		498
Interest rate cap derivative		770		—		770		—		770
Accrued interest receivable		13,249		—		414		12,835		13,429
Financial liabilities:
Non-interest-bearing demand deposits	$	1,726,135	$	1,726,135	$	—	$	—	$	1,726,135
Money market and savings deposits		2,011,409		2,011,409		—		—		2,011,409
Time deposits		92,062		—		93,157		—		93,157
Trust preferred securities payable		20,620		—		—		20,011		20,011
Subordinated debt, net of issuance cost		24,657		—		25,375		—		25,375
Accrued interest payable		712		7		591		114		712
Secured borrowing		36,964		—		36,964		—		36,964

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Sep. 30, 2021

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 10 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table shows the amounts reclassified out of each component of accumulated other comprehensive income for the gain on the sale and calls of securities during the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Proceeds	$	—	$	25,000	$	43,241	$	141,422
Gross gains	$	—	$	—	$	609	$	3,286
Tax impact	$	—	$	—	$	(195)	$	(1,036)

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

9 Months Ended

Sep. 30, 2021

FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

NOTE 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

The following off-balance-sheet financial instruments, whose contract amounts represent credit risk, are outstanding at September 30, 2021 and December 31, 2020 (in thousands):

	At September 30, 2021				At December 31, 2020
			Variable				Variable
	Fixed Rate		Rate		Fixed Rate		Rate
Undrawn lines of credit	$	41,217	$	316,594	$	19,024	$	266,696
Letters of credit		51,534		—		34,264		—
Total	$	92,751	$	316,594	$	53,288	$	266,696

A commitment to extend credit is a legally binding agreement to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally expire within two years. At September 30, 2021, the Company’s fixed rate loan commitments had interest rates ranging from 3.0% to 5.6% and the Company’s variable rate loan commitments had interest rates ranging from 1.8% to 7.3%, with a maturity of one year or more. At December 31, 2020, the Company’s fixed rate loan commitments had interest rates ranging from 3.0% to 5.6% and the Company’s variable rate loan commitments had interest rates ranging from 2.0% to 8.3%, with a maturity of one year or more. The amount of collateral obtained, if any, by the Company upon extension of credit is based on management’s credit evaluation of the borrower. Collateral held varies but may include mortgages on commercial and residential real estate, security interests in business assets, equipment, deposit accounts with the Company or other financial institutions and securities.

The Company’s stand-by letters of credit amounted to $51.5 million and $34.3 million as of September 30, 2021 and December 31, 2020, respectively. The Company’s stand-by letters of credit are collateralized by interest-bearing accounts of $37.3 million and $26.9 million as of September 30, 2021 and December 31, 2020, respectively. The stand-by letters of credit mature within one year.

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REVENUE FROM CONTRACTS WITH CUSTOMERS

9 Months Ended

Sep. 30, 2021

REVENUE FROM CONTRACTS WITH CUSTOMERS

REVENUE FROM CONTRACTS WITH CUSTOMERS

NOTE 12 – REVENUE FROM CONTRACTS WITH CUSTOMERS

All of the Company’s revenue from contracts with customers that are in the scope of ASU 2014-09, Revenue from Contracts with Customers are recognized in non-interest income. The following table presents the Company’s revenue from contracts with customers for the nine months ended September 30, 2021 and September 30, 2020 (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Service charges on deposit accounts	$	1,671	$	863	$	4,085	$	2,747
Global Payments Group revenue		3,615		2,572		10,509		6,301
Other service charges and fees		614		202		1,484		1,238
Total	$	5,900	$	3,637	$	16,078	$	10,286

A description of the Company’s revenue streams accounted for under the accounting guidance is as follows:

Global payment group revenue: The Company offers corporate cash management and retail banking services and, through its global payments business, provides Banking-as-a-Service to its fintech partners. The Company earns initial set-up fees

for these programs as well as fees for transactions processed. The Company receives transaction data at the end of each month for services rendered, at which time revenue is recognized.

Service charges on deposit accounts: The Company offers business and personal retail products and services, which include, but are not limited to, online banking, mobile banking, ACH, and remote deposit capture. A standard deposit contract exists between the Company and all deposit customers. The Company earns fees from its deposit customers for transaction-based services (such as ATM use fees, stop payment charges, statement rendering, and ACH fees), account maintenance, and overdraft services. Transaction-based fees are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Other service charges: The primary component of other service charges relates to foreign exchange (“FX”) conversion fees. The Company outsources FX conversion for foreign currency transactions to correspondent banks. The Company earns a portion of an FX conversion fee that the customer charges to process an FX conversion transaction. Revenue is recognized at the end of the month, once the customer has remitted the transaction information to the Company.

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DERIVATIVES

9 Months Ended

Sep. 30, 2021

DERIVATIVES

DERIVATIVES

NOTE 13 – DERIVATIVES

In the first quarter of 2020, the Company entered into an interest rate cap derivative contract (“interest rate cap” or “contract”) as a part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate cap does not represent the amount exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the contract. The interest rate subject to the cap is 30-day LIBOR.

The interest rate cap had a notional amount of $300.0 million as of September 30, 2021 and was designated as a cash flow hedge of certain deposit liabilities of the Company. The hedge was determined to be highly effective during the three and nine months ended September 30, 2021. The Company expects the hedge to remain highly effective during the remaining term of the contract.

The following table reflects the notional amount and fair value (included in the “Prepaid expenses and other assets” line item on the statements of financial condition) at September 30, 2021 (in thousands):

		Notional Amount		Fair Value
Derivatives designated as hedges:
Interest rate caps related to customer deposits	$	300,000	$	2,086

The effect of cash flow hedge accounting on accumulated other comprehensive income for the nine months ended September 30, 2021, is as follows (in thousands):

		Amount of Loss Recognized in OCI, net of tax		Location of Gain (Loss) Reclassified from OCI into Income		Amount of Gain (Loss) Reclassified from OCI into Income
Interest rate caps related to customer deposits	$	1,069	$	N/A	$	—

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SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS (Policies)

9 Months Ended

Sep. 30, 2021

SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

ORGANIZATION

Metropolitan Bank Holding Corp., a New York corporation (the “Company”), is a bank holding company whose principal activity is the ownership and management of Metropolitan Commercial Bank (the “Bank”), its wholly-owned subsidiary. The Company’s primary market is the New York metropolitan area. The Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals.

The Company’s primary lending products are commercial real estate loans, multi-family loans and commercial and industrial 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 flows from operations of businesses.

The Company’s primary deposit products are checking, savings, and term deposit accounts, and its deposit accounts are insured by the FDIC under the maximum amounts allowed by law. In addition to traditional commercial banking products, the Company offers corporate cash management and retail banking services and, through its Global Payments Group (“global payments business”), provides Banking-as-a-Service to its fintech partners, which includes serving as an issuing bank for third-party managed debit card programs nationwide and providing other financial infrastructure, including cash settlement and custodian deposit services.

The Company and the Bank are subject to the regulations of certain state and federal agencies and, accordingly, are periodically examined by those regulatory authorities. The Company’s business is affected by state and federal legislation and regulations.

BASIS OF PRESENTATION

The accounting and reporting policies of the Company conform with U.S. generally accepted accounting principles (“GAAP”) and predominant practices within the U.S. banking industry. All intercompany balances and transactions have been eliminated. The Unaudited Consolidated Financial Statements, which include the accounts of the Company and the Bank, have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q, Article 8 of Regulation S-X and predominant practices within the U.S. banking industry. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The Unaudited Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements in conformity with GAAP, management has made estimates and assumptions based on available information. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods, and actual results could differ from those estimated. Information available which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy, and changes in the financial condition of borrowers.

Some items in the prior year financial statements were reclassified to conform to the current presentation.  Reclassifications had no effect on prior-year net income or shareholders’ equity.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year or for any other period.

The unaudited consolidated financial statements presented in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC.  

SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

Pursuant to the Tax Cuts and Jobs Act (“JOBS Act”), an Emerging Growth Company (“EGC”) is provided the option to adopt new or revised accounting standards that may be issued by the FASB or the Securities and Exchange Commission either (i) within the same periods as those otherwise applicable to non-EGCs or (ii) within the same time periods as private companies. The Company elected delayed effective dates of recently issued accounting standards. As permitted by the JOBS Act, so long as it qualifies as an EGC, the Company will take advantage of some of the reduced regulatory and reporting requirements that are available to it, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.

The Company is likely to lose its EGC status on December 31, 2022, since that would be the last day of the fiscal year of the Company following the fifth anniversary of the date of the first sale of common equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires companies that lease assets to recognize on their balance sheets the assets and liabilities generated by contracts longer than a year. Under ASU 2016-02, the Company will recognize a right-of-use asset and a lease obligation liability on the consolidated statement of financial condition, which will increase the Company’s assets and liabilities. The Company is required to implement ASU 2016-02 by December 31, 2022, and is currently evaluating the potential impact on its consolidated financial statements.

The Company has not yet adopted ASU No. 2016-13, Financial Instruments – Credit Losses, which requires the measurement of all current expected credit losses (“CECL”) for financial assets. The Company is required to implement CECL by December 31, 2022. The Company is currently developing CECL models and evaluating its potential impact on the Company’s Allowance for Loan and Lease Losses (“ALLL”).

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard was effective for the Company beginning January 1, 2021, and did not have a material impact on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications at the instrument level as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. In January 2021 the FASB issued ASU 2021-01. The amendments in this ASU clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. Management has established a working group to evaluate the impact of the transition from LIBOR on the Company and its consolidated financial statements. The working group has developed an inventory of impacted contracts and client relationships and is in the process of assessing LIBOR alternatives and how such alternatives may be implemented.

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INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2021

INVESTMENT SECURITIES

Schedule of amortized cost and fair value of securities available-for-sale and securities held-to-maturity

			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At September 30, 2021	Cost		Gains		Losses		Fair Value
Debt securities available for sale:
Residential mortgage securities	$	504,167	$	1,123	$	(3,859)	$	501,431
Commercial mortgage securities		18,270		249		(263)		18,256
Asset-backed securities		4,750		—		(17)		4,733
U.S. Government agency		67,994		—		(763)		67,231
Securities issued by states and political subdivisions in the U.S		11,836		—		(319)		11,517
Total securities available-for-sale	$	607,017	$	1,372	$	(5,221)	$	603,168
Held-to-maturity securities:
Residential mortgage securities	$	2,017		57		—		2,074
Total securities held-to-maturity	$	2,017	$	57	$	—	$	2,074
Equity investments:
CRA Mutual Fund	$	2,320		—		(31)		2,289
Total non-trading equity investment securities	$	2,320	$	—	$	(31)	$	2,289

			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At December 31, 2020	Cost		Gains		Losses		Fair Value
Debt securities available for sale:
Residential mortgage securities	$	192,163	$	2,599	$	(74)	$	194,688
Commercial mortgage securities		32,589		997		(94)		33,492
U.S. Government agency		37,997		—		(81)		37,916
Total securities available-for-sale	$	262,749	$	3,596	$	(249)	$	266,096
Held-to-maturity securities:
Residential mortgage securities		2,760		67		—		2,827
Total securities held-to-maturity	$	2,760	$	67	$	—	$	2,827
Equity investments:
CRA Mutual Fund		2,299		14		—		2,313
Total non-trading equity investment securities	$	2,299	$	14	$	—	$	2,313

Schedule of proceeds from sales and calls of securities and associated gains

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Proceeds	$	—	$	25,000	$	43,241	$	141,422
Gross gains	$	—	$	—	$	609	$	3,286
Tax impact	$	—	$	—	$	(195)	$	(1,036)

Schedule of amortized cost and fair value of debt securities classified by contractual maturity

	Held-to-Maturity				Available-for-Sale
At September 30, 2021	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	—	$	—	$	—	$	—
One to five years		—		—		47,994		47,475
Five to ten years		—		—		15,000		14,832
After ten years		—		—		16,836		16,441
Total	$	—	$	—	$	79,830	$	78,748
Residential mortgage securities	$	2,017	$	2,074		504,167		501,431
Commercial mortgage securities		—		—		18,270		18,256
Asset-backed securities		—		—		4,750		4,733
Total Securities	$	2,017	$	2,074	$	607,017	$	603,168

	Held-to-Maturity				Available-for-Sale
At December 31, 2020	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	—	$	—	$	—	$	—
One to five years		—		—		37,997		37,916
Five to ten years		—		—		—		—
Due after ten years		—		—		—		—
Total	$	—	$	—	$	37,997	$	37,916
Residential mortgage securities	$	2,760	$	2,827	$	192,163	$	194,688
Commercial mortgage securities		—		—		32,589		33,492
Total Securities	$	2,760	$	2,827	$	262,749	$	266,096

Schedule of securities with unrealized/unrecognized losses

	Less than 12 Months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
At September 30, 2021	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Debt securities available for sale:
Residential mortgage securities	$	315,184	$	(3,859)	$	—	$	—	$	315,184	$	(3,859)
Commercial mortgage securities		14,919		(263)		379		—		15,298		(263)
Asset-backed securities		4,733		(17)		—		—		4,733		(17)
U.S. Government agency securities		39,546		(451)		27,685		(312)		67,231		(763)
Securities issued by states and political subdivisions in the U.S		11,517		(319)		—		—		11,517		(319)
Total securities available for sale	$	385,899	$	(4,909)	$	28,064	$	(312)	$	413,963	$	(5,221)

	Less than 12 Months				12 months or more				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
At December 31, 2020	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Debt securities available for sale:
Residential mortgage securities	$	33,734		(74)		-		-		33,734		(74)
Commercial mortgage securities		12,314		(93)		385		(1)		12,699		(94)
U.S. Government agency securities		37,916		(81)		—		—		37,916		(81)
Total securities available-for-sale	$	83,964	$	(248)	$	385	$	(1)	$	84,349	$	(249)

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2021

LOANS AND ALLOWANCE FOR LOAN LOSSES

Schedule of Net loans

	September 30, 2021		December 31, 2020
Real estate
Commercial	$	2,378,074	$	1,887,505
Construction		150,144		112,290
Multifamily		374,555		433,239
One-to-four family		61,266		71,354
Total real estate loans		2,964,039		2,504,388
Commercial and industrial		611,303		591,500
Consumer		35,067		46,431
Total loans		3,610,409		3,142,319
Deferred fees		(7,121)		(5,266)
Loans, net of deferred fees and unamortized costs		3,603,288		3,137,053
Allowance for loan losses		(38,121)		(35,407)
Balance at the end of the period	$	3,565,167	$	3,101,646

Schedule of changes in the allowance for loan losses by portfolio segment

	Commercial		Commercial				Multi		One-to-four
Three months ended September 30, 2021	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	20,299	$	10,545	$	1,972	$	2,618	$	169	$	1,774	$	37,377
Provision/(credit) for loan losses		1,169		(440)		129		(331)		(13)		(24)		490
Loans charged-off		—		—		—		—		—		(54)		(54)
Recoveries		—		308		—		—		—		—		308
Total ending allowance balance	$	21,468	$	10,413	$	2,101	$	2,287	$	156	$	1,696	$	38,121

	Commercial		Commercial				Multi		One-to-four
Three months ended September 30, 2020	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	18,690		9,132		741		2,739		242		961		32,505
Provision/(credit) for loan losses		(1,611)		2,104		706		(215)		(61)		214		1,137
Loans charged-off		—		(82)		—		—		—		—		(82)
Recoveries		—		54		—		—		—		—		54
Total ending allowance balance	$	17,079	$	11,208	$	1,447	$	2,524	$	181	$	1,175	$	33,614

	Commercial		Commercial				Multi		One-to-four
Nine months ended September 30, 2021	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	17,243	$	12,123	$	1,593	$	2,661	$	206	$	1,581	$	35,407
Provision/(credit) for loan losses		4,225		(1,163)		508		(374)		(50)		169		3,315
Loans charged-off		—		(855)		—		—		—		(54)		(909)
Recoveries		—		308		—		—		—		—		308
Total ending allowance balance	$	21,468	$	10,413	$	2,101	$	2,287	$	156	$	1,696	$	38,121

	Commercial		Commercial				Multi		One-to-four
Nine months ended September 30, 2020	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Beginning balance	$	15,317	$	7,070	$	411	$	2,453	$	267	$	754	$	26,272
Provision/(credit) for loan losses		1,762		4,278		1,036		71		(86)		632		7,693
Loans charged-off		—		(254)		—		—		—		(221)		(475)
Recoveries		—		114		—		—		—		10		124
Total ending allowance balance	$	17,079	$	11,208	$	1,447	$	2,524	$	181	$	1,175	$	33,614

Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment

	Commercial		Commercial				Multi		One-to-four
At September 30, 2021	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	2,814	$	—	$	—	$	33	$	1,430	$	4,277
Collectively evaluated for impairment		21,468		7,599		2,101		2,287		123		266		33,844
Total ending allowance balance	$	21,468	$	10,413	$	2,101	$	2,287	$	156	$	1,696	$	38,121
Loans:
Individually evaluated for impairment	$	10,333	$	3,145	$	—	$	—	$	958	$	2,125	$	16,561
Collectively evaluated for impairment		2,367,741		608,158		150,144		374,555		60,308		32,942		3,593,848
Total ending loan balance	$	2,378,074	$	611,303	$	150,144	$	374,555	$	61,266	$	35,067	$	3,610,409

	Commercial		Commercial				Multi		One-to-four
At December 31, 2020	Real Estate		& Industrial		Construction		Family		Family		Consumer		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	3,662	$	—	$	—	$	53	$	1,203	$	4,918
Collectively evaluated for impairment		17,243		8,461		1,593		2,661		153		378		30,489
Total ending allowance balance	$	17,243	$	12,123	$	1,593	$	2,661	$	206	$	1,581	$	35,407
Loans:
Individually evaluated for impairment	$	10,345	$	4,192	$	—	$	—	$	999	$	2,197	$	17,733
Collectively evaluated for impairment		1,877,160		587,308		112,290		433,239		70,355		44,234		3,124,586
Total ending loan balance	$	1,887,505	$	591,500	$	112,290	$	433,239	$	71,354	$	46,431	$	3,142,319

Schedule of loans determined to be impaired by class of loans

	Unpaid Principal				Allowance for Loan
At September 30, 2021	Balance		Recorded Investment		Losses Allocated
With an allowance recorded:
One-to-four family	$	584	$	454	$	33
Consumer		2,125		2,125		1,430
Commercial & industrial		3,145		3,145		2,814
Total	$	5,854	$	5,724	$	4,277
Without an allowance recorded:
One-to-four family	$	651	$	504	$	—
Commercial real estate		10,333		10,333		—
Commercial & industrial		—		—		—
Total	$	10,984	$	10,837	$	—

	Unpaid Principal				Allowance for Loan
At December 31, 2020	Balance		Recorded Investment		Losses Allocated
With an allowance recorded:
One-to-four family	$	610	$	480	$	53
Consumer		2,197		2,197		1,203
Commercial & industrial		4,192		4,192		3,662
Total	$	6,999	$	6,869	$	4,918
Without an allowance recorded:
One-to-four family	$	666	$	519	$	—
Commercial real estate		10,345		10,345		—
Commercial & industrial		—		—		—
Total	$	11,011	$	10,864	$	—

Schedule of average recorded investment and interest income of loans

	Average Recorded		Interest Income
Three months ended September 30, 2021	Investment		Recognized
With an allowance recorded:
One-to-four family	$	458	$	4
Consumer		2,103		26
Commercial & industrial		3,145		—
Total	$	5,706	$	30
Without an allowance recorded:
One-to-four family	$	506	$	7
Commercial real estate		10,335		2
Commercial & industrial		96		—
Total	$	10,937	$	9

	Average Recorded		Interest Income
Three months ended September 30, 2020	Investment		Recognized
With an allowance recorded:
One-to-four family	$	488	$	5
Consumer		2,112		27
Commercial & industrial		5,497		—
Total	$	8,097	$	32
Without an allowance recorded:
One-to-four family	$	524	$	3
Commercial real estate		363		-
Total	$	887	$	3

	Average Recorded		Interest Income
Nine months ended September 30, 2021	Investment		Recognized
With an allowance recorded:
One-to-four family	$	466	$	16
Consumer		2,132		84
Commercial & industrial		3,407		-
Total	$	6,005	$	100
Without an allowance recorded:
One-to-four family	$	511	$	20
Commercial real estate		10,339		207
Commercial & industrial		96		-
Total	$	10,946	$	227

	Average Recorded		Interest Income
Nine months ended September 30, 2020	Investment		Recognized
With an allowance recorded:
One-to-four family	$	494	$	13
Consumer		1,330		58
Commercial & industrial		3,272		—
Total	$	5,096	$	71
Without an allowance recorded:
One-to-four family	$	1,115	$	13
Commercial real estate		364		4
Commercial and industrial		1,188		—
Total	$	2,667	$	17

Schedule of recorded investment in non-accrual loans, loans past due over 90 days and still accruing by class of loans

At September 30, 2021	Non-accrual		Loans Past Due Over 90 Days Still Accruing
Commercial real estate	$	9,984	$	—
Commercial & industrial		3,145		—
Consumer		1,674		573
Total	$	14,803	$	573

At December 31, 2020	Non-accrual			Loans Past Due Over 90 Days Still Accruing
Commercial & industrial	$	4,192	$	—
Consumer		1,428		769
Total	$	5,620	$	769

Schedule of aging of the recorded investment in past due loans by class of loans

					90
	30-59		60-89		Days and		Total past		Current
At September 30, 2021	Days		Days		Greater		due		loans		Total
Commercial real estate	$	—	$	—	$	9,984	$	9,984	$	2,368,090	$	2,378,074
Commercial & industrial		92		—		3,145		3,237		608,066		611,303
Construction		—		—		—		—		150,144		150,144
Multifamily		—		—		—		—		374,555		374,555
One-to-four family		—		—		—		—		61,266		61,266
Consumer		43		—		2,247		2,290		32,777		35,067
Total	$	135	$	—	$	15,376	$	15,511	$	3,594,898	$	3,610,409

					90
	30-59		60-89		Days and		Total past		Current
At December 31, 2020	Days		Days		Greater		due		loans		Total
Commercial real estate	$	40	$	9,984	$	—	$	10,024	$	1,877,481	$	1,887,505
Commercial & industrial		4,429		6,400		4,192		15,021		576,479		591,500
Construction		—		—		—		—		112,290		112,290
Multifamily		—		—		—		—		433,239		433,239
One-to-four family		2,908		—		—		2,908		68,446		71,354
Consumer		112		32		2,197		2,341		44,090		46,431
Total	$	7,489	$	16,416	$	6,389	$	30,294	$	3,112,025	$	3,142,319

Schedule of recorded investment in TDRs by class of loans

	September 30, 2021		December 31, 2020
Troubled debt restructurings:
Real Estate:
Commercial real estate	$	349	$	361
One-to-four family		958		999
Total troubled debt restructurings	$	1,307	$	1,360

Schedule of risk category of loans by class of loans

			Special
At September 30, 2021	Pass		Mention		Substandard		Doubtful			Total
Commercial real estate	$	2,367,741	$	349	$	9,984	$	—	$	2,378,074
Commercial & industrial		603,963		4,195		—		3,145		611,303
Construction		150,144		—		—		—		150,144
Multifamily		374,555		—		—		—		374,555
Total	$	3,496,403	$	4,544	$	9,984	$	3,145	$	3,514,076

			Special
At December 31, 2020	Pass		Mention		Substandard		Doubtful			Total
Commercial real estate	$	1,877,160	$	361	$	9,984	$	—	$	1,887,505
Commercial & industrial		583,809		3,499		—		4,192		591,500
Construction		112,290		—		—		—		112,290
Multi-family		433,239		—		—		—		433,239
Total	$	3,006,498	$	3,860	$	9,984	$	4,192	$	3,024,534

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2021

EARNINGS PER SHARE

Schedule of earnings per common share

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Basic
Net income per consolidated statements of income	$	16,215	$	10,783	$	41,668	$	27,690
Less: Earnings allocated to participating securities		(508)		(89)		(568)		(255)
Net income available to common stockholders	$	15,707	$	10,694	$	41,100	$	27,435
Weighted average common shares outstanding including participating securities		8,897,910		8,291,068		8,518,639		8,296,701
Less: Weighted average participating securities		(278,937)		(68,198)		(116,045)		(76,499)
Weighted average common shares outstanding		8,618,973		8,222,870		8,402,594		8,220,202
Basic earnings per common share	$	1.82	$	1.30	$	4.89	$	3.34
Diluted
Net income allocated to common stockholders	$	15,707	$	10,694	$	41,100	$	27,435
Weighted average common shares outstanding for basic earnings per common share		8,618,973		8,222,870		8,402,594		8,220,202
Add: Dilutive effects of assumed exercise of stock options		173,909		92,269		161,932		103,737
Add: Dilutive effects of assumed vesting of performance based restricted stock units		53,571		78,072		41,932		68,116
Add: Dilutive effects of assumed vesting of restricted stock units		46,651		—		29,939		—
Average shares and dilutive potential common shares		8,893,104		8,393,211		8,636,397		8,392,055
Dilutive earnings per common share	$	1.77	$	1.27	$	4.76	$	3.27

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STOCK COMPENSATION PLAN (Tables)

9 Months Ended

Sep. 30, 2021

STOCK COMPENSATION PLAN

Schedule of status of the stock option plan

	Nine Months Ended September 30, 2021
	Number of	Weighted Average
	Options	Exercise Price
Outstanding, beginning of period	231,000	$	18.00
Granted	—		—
Exercised	—		—
Cancelled/forfeited	—		—
Outstanding, end of period	231,000	$	18.00
Options vested and exercisable at end of period	231,000	$	18.00
Weighted average remaining contractual life (years)			2.63

Schedule of summary of stock options outstanding

	At September 30, 2021
Range of Average		Weighted Average	Weighted Average		Weighted Average
Exercise Prices	Number Outstanding	Remaining Contractual Life	Exercise Price		Intrinsic Price per Share
$10 – 30	231,000	2.63	$	18.00	$	66.30

Schedule of changes in the non-vested restricted stock awards

	Nine Months Ended September 30, 2021
		Weighted Average
	Number of Shares	Grant Date Fair Value
Outstanding, beginning of period	76,289	$	38.66
Granted	168,582		57.23
Forfeited	(10,200)		48.09
Vested	(14,489)		30.45
Outstanding at end of period	220,182	$	52.98

Summary of performance restricted share units (PRSUs) awards

	September 30, 2021
Weighted average service inception date fair value of award shares	$	5,721,300
Minimum aggregate share payout		9,000
Maximum aggregate share payout		90,000
Likely aggregate share payout		90,000

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2021

FAIR VALUE OF FINANCIAL INSTRUMENTS

Schedule of Assets and Liabilities measured at fair value on a recurring basis

	Fair Value Measurement using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable
	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
At September 30, 2021
Residential mortgage-backed securities	$	501,431	$	—	$	501,431	$	—
Commercial mortgage-backed securities		18,256		—		18,256		—
Asset-backed securities		4,733		—		4,733
U.S. Government agency		67,231		—		67,231
Securities issued by states and political subdivisions in the U.S		11,517		—		11,517
CRA Mutual Fund		2,289		2,289		—		—
Derivative assets - interest rate cap		2,086		—		2,086		—
	Fair Value Measurement using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable
	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
At December 31, 2020
Residential mortgage securities	$	194,688	$	—	$	194,688	$	—
Commercial mortgage securities		33,492		—		33,492		—
U.S. Government agency securities		37,916		—		37,916		—
CRA Mutual Fund		2,313		2,313		—		—
Derivative assets - interest rate cap		770		—		770		—

Schedule of carrying amount and estimated fair values of financial instruments

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable		Total Fair
At September 30, 2021	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Value
Financial Assets:
Cash and due from banks	$	32,660	$	32,660	$	—	$	—	$	32,660
Overnight deposits		1,824,820		1,824,820		—		—		1,824,820
Securities available for sale		603,168		—		603,168		—		603,168
Securities held to maturity		2,017		—		2,074		—		2,074
Equity investments		2,289		2,289		—		—		2,289
Loans, net		3,565,167		—		—		3,592,347		3,592,347
Other investments
FRB Stock		7,430		N/A		N/A		N/A		N/A
FHLB Stock		3,070		N/A		N/A		N/A		N/A
Disability Fund		1,000		—		1,000		—		1,000
Time deposits at banks		498		498		—		—		498
Interest rate cap derivative		2,086		—		2,086		—		2,086
Accrued interest receivable		13,504		—		717		12,787		13,504
Financial liabilities:
Non-interest-bearing demand deposits	$	2,803,823	$	2,803,823	$	—	$	—	$	2,803,823
Money market and savings deposits		2,571,707		2,571,707		—		—		2,571,707
Time deposits		82,039		—		82,610		—		82,610
Trust preferred securities payable		20,620		—		—		20,002		20,002
Subordinated debt, net of issuance cost		24,698		—		25,438		—		25,438
Accrued interest payable		448		3		337		108		448
Secured Borrowings		35,559		0		35,559		0		35,559

			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable		Total Fair
At December 31, 2020	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Value
Financial Assets:
Cash and due from banks	$	8,692	$	8,692	$	—	$	—	$	8,692
Overnight deposits		855,613		855,613		—		—		855,613
Securities available for sale		266,096		—		266,096		—		266,096
Securities held to maturity		2,760		—		2,827		—		2,827
Equity investments		2,313		2,313		—		—		2,313
Loans, net		3,101,646		—		—		3,094,998		3,094,998
Other investments
FRB Stock		7,381		N/A		N/A		N/A		N/A
FHLB Stock		2,718		N/A		N/A		N/A		N/A
Disability Fund		1,000		—		1,000		—		1,000
CRA - CD		498		498		—		—		498
Interest rate cap derivative		770		—		770		—		770
Accrued interest receivable		13,249		—		414		12,835		13,429
Financial liabilities:
Non-interest-bearing demand deposits	$	1,726,135	$	1,726,135	$	—	$	—	$	1,726,135
Money market and savings deposits		2,011,409		2,011,409		—		—		2,011,409
Time deposits		92,062		—		93,157		—		93,157
Trust preferred securities payable		20,620		—		—		20,011		20,011
Subordinated debt, net of issuance cost		24,657		—		25,375		—		25,375
Accrued interest payable		712		7		591		114		712
Secured borrowing		36,964		—		36,964		—		36,964

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ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS) (Tables)

9 Months Ended

Sep. 30, 2021

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Schedule of reclassifications out of accumulated other comprehensive income

The following table shows the amounts reclassified out of each component of accumulated other comprehensive income for the gain on the sale and calls of securities during the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Proceeds	$	—	$	25,000	$	43,241	$	141,422
Gross gains	$	—	$	—	$	609	$	3,286
Tax impact	$	—	$	—	$	(195)	$	(1,036)

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Tables)

9 Months Ended

Sep. 30, 2021

FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

Schedule of off-balance-sheet financial instruments

	At September 30, 2021				At December 31, 2020
			Variable				Variable
	Fixed Rate		Rate		Fixed Rate		Rate
Undrawn lines of credit	$	41,217	$	316,594	$	19,024	$	266,696
Letters of credit		51,534		—		34,264		—
Total	$	92,751	$	316,594	$	53,288	$	266,696

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

9 Months Ended

Sep. 30, 2021

REVENUE FROM CONTRACTS WITH CUSTOMERS

Schedule of Company's sources of non-interest income

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Service charges on deposit accounts	$	1,671	$	863	$	4,085	$	2,747
Global Payments Group revenue		3,615		2,572		10,509		6,301
Other service charges and fees		614		202		1,484		1,238
Total	$	5,900	$	3,637	$	16,078	$	10,286

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DERIVATIVES (Tables)

9 Months Ended

Sep. 30, 2021

DERIVATIVES

Schedule of notional amount and fair value

		Notional Amount		Fair Value
Derivatives designated as hedges:
Interest rate caps related to customer deposits	$	300,000	$	2,086

Schedule of effect of cash flow hedge accounting on accumulated other comprehensive income

		Amount of Loss Recognized in OCI, net of tax		Location of Gain (Loss) Reclassified from OCI into Income		Amount of Gain (Loss) Reclassified from OCI into Income
Interest rate caps related to customer deposits	$	1,069	$	N/A	$	—

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ORGANIZATION (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
ORGANIZATION
Net proceeds from issuance of common stock	$ 162,664

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SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS
Cumulative effect of adopting new accounting standard	$ 162,498	$ 120,830

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INVESTMENT SECURITIES (Schedule of amortized cost and fair value of securities available-for-sale) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Schedule of Available-for-sale Securities [Line Items]
Investment securities available for sale, at fair value	$ 603,168	$ 266,096
Available-for-sale Securities.
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	607,017	262,749
Gross Unrealized/Unrecognized Gains	1,372	3,596
Gross Unrealized/Unrecognized Losses	(5,221)	(249)
Investment securities available for sale, at fair value	603,168	266,096
Available-for-sale Securities. | Residential mortgage securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	504,167	192,163
Gross Unrealized/Unrecognized Gains	1,123	2,599
Gross Unrealized/Unrecognized Losses	(3,859)	(74)
Investment securities available for sale, at fair value	501,431	194,688
Available-for-sale Securities. | Commercial mortgage securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	18,270	32,589
Gross Unrealized/Unrecognized Gains	249	997
Gross Unrealized/Unrecognized Losses	(263)	(94)
Investment securities available for sale, at fair value	18,256	33,492
Available-for-sale Securities. | Asset-backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,750
Gross Unrealized/Unrecognized Gains	0
Gross Unrealized/Unrecognized Losses	(17)
Investment securities available for sale, at fair value	4,733
Available-for-sale Securities. | U.S. Government agency securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	67,994	37,997
Gross Unrealized/Unrecognized Gains	0	0
Gross Unrealized/Unrecognized Losses	(763)	(81)
Investment securities available for sale, at fair value	67,231	$ 37,916
Available-for-sale Securities. | Securities issued by states and political subdivisions in the U.S
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	11,836
Gross Unrealized/Unrecognized Gains	0
Gross Unrealized/Unrecognized Losses	(319)
Investment securities available for sale, at fair value	$ 11,517

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INVESTMENT SECURITIES (Schedule of amortized cost and fair value of securities held-to-maturity) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 2,017	$ 2,760
Total Securities	2,074	2,827
Held-to-maturity Securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	2,017	2,760
Gross Unrealized/Unrecognized Gains	57	67
Gross Unrealized/Unrecognized Losses		0
Total Securities	2,074	2,827
Held-to-maturity Securities | Residential mortgage securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	2,017	2,760
Gross Unrealized/Unrecognized Gains	57	67
Gross Unrealized/Unrecognized Losses		0
Total Securities	$ 2,074	$ 2,827

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INVESTMENT SECURITIES (Schedule of amortized cost and fair value of marketable equity securities) (Details) - Equity securities - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Marketable Securities [Line Items]
Amortized Cost - CRA Mutual Fund	$ 2,320	$ 2,299
Gross Unrealized/Unrecognized Gains	0	14
Gross Unrealized/Unrecognized Losses	(31)	0
Fair Value CRA Mutual Fund	2,289	2,313
CRA mutual fund
Marketable Securities [Line Items]
Amortized Cost - CRA Mutual Fund	2,320	2,299
Gross Unrealized/Unrecognized Gains	0	14
Gross Unrealized/Unrecognized Losses	(31)	0
Fair Value CRA Mutual Fund	$ 2,289	$ 2,313

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INVESTMENT SECURITIES (Proceeds from sales and calls of securities and associated gains and losses) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
INVESTMENT SECURITIES
Proceeds from sale of securities available for sale, amortized cost	$ 0	$ 25,000	$ 42,600
Sale of available for sale securities, at amortized cost				$ 108,100
Proceeds from calls of securities available for sale, at amortized cost				30,000
Proceeds		$ 25,000	43,241	141,422
Gross gains			609	3,286
Tax impact			$ (195)	$ (1,036)

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INVESTMENT SECURITIES (Schedule of Amortized Cost and Fair Value of Securities Classified by Contractual Maturity) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Amortized Cost
Amortized Cost, Held to maturity	$ 2,017	$ 2,760
Fair Value
Fair Value, Held to maturity	2,074	2,827
Amortized Cost
One to five years	47,994	37,997
Five to ten years	15,000
After ten years	16,836
Amortized Cost, total	79,830	37,997
Amortized Cost, Available-for-sale Securities	607,017	262,749
Fair Value
One to five years	47,475	37,916
Five to ten years	14,832
After ten years	16,441
Fair Value, total	78,748	37,916
Fair Value, Available-for-sale Securities	603,168	266,096
AFS securities pledged to secure customer deposit	0	0
Residential mortgage securities
Amortized Cost
Amortized Cost, Held to maturity	2,017	2,760
Fair Value
Fair Value, Held to maturity	2,074	2,827
Amortized Cost
Amortized Cost, Available-for-sale Securities	504,167	192,163
Fair Value
Fair Value, Available-for-sale Securities	501,431	194,688
Commercial mortgage securities
Amortized Cost
Amortized Cost, Available-for-sale Securities	18,270	32,589
Fair Value
Fair Value, Available-for-sale Securities	18,256	$ 33,492
Asset-backed Securities
Amortized Cost
Amortized Cost, Available-for-sale Securities	4,750
Fair Value
Fair Value, Available-for-sale Securities	$ 4,733

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INVESTMENT SECURITIES (Schedule of Securities with Unrealized Losses) (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021 USD ($) item	Dec. 31, 2020 USD ($) item
Available-for-sale Securities
Less than 12 Months, Estimated Fair Value		$ 37,916
Less than 12 Months, Unrealized/Unrecognized Losses		(81)
Total, Estimated Fair Value		37,916
Total, Unrealized/Unrecognized Losses		$ (81)
Number of securities of one issuer | item	0	0
Impairment loss	$ 0	$ 0
Available-for-sale Securities.
Available-for-sale Securities
Less than 12 Months, Estimated Fair Value	385,899	83,964
Less than 12 Months, Unrealized/Unrecognized Losses	(4,909)	(248)
12 months or more, Estimated Fair Value	28,064	385
12 months or more, Unrealized/Unrecognized Losses	(312)	(1)
Total, Estimated Fair Value	413,963	84,349
Total, Unrealized/Unrecognized Losses	(5,221)	(249)
Residential mortgage securities | Available-for-sale Securities.
Available-for-sale Securities
Less than 12 Months, Estimated Fair Value	315,184	33,734
Less than 12 Months, Unrealized/Unrecognized Losses	(3,859)	(74)
Total, Estimated Fair Value	315,184	33,734
Total, Unrealized/Unrecognized Losses	(3,859)	(74)
Commercial mortgage securities | Available-for-sale Securities.
Available-for-sale Securities
Less than 12 Months, Estimated Fair Value	14,919	12,314
Less than 12 Months, Unrealized/Unrecognized Losses	(263)	(93)
12 months or more, Estimated Fair Value	379	385
12 months or more, Unrealized/Unrecognized Losses		(1)
Total, Estimated Fair Value	15,298	12,699
Total, Unrealized/Unrecognized Losses	(263)	$ (94)
Asset-backed Securities | Available-for-sale Securities.
Available-for-sale Securities
Less than 12 Months, Estimated Fair Value	4,733
Less than 12 Months, Unrealized/Unrecognized Losses	(17)
Total, Estimated Fair Value	4,733
Total, Unrealized/Unrecognized Losses	(17)
U.S. Government agency securities | Available-for-sale Securities.
Available-for-sale Securities
Less than 12 Months, Estimated Fair Value	39,546
Less than 12 Months, Unrealized/Unrecognized Losses	(451)
12 months or more, Estimated Fair Value	27,685
12 months or more, Unrealized/Unrecognized Losses	(312)
Total, Estimated Fair Value	67,231
Total, Unrealized/Unrecognized Losses	(763)
Securities issued by states and political subdivisions in the U.S | Available-for-sale Securities.
Available-for-sale Securities
Less than 12 Months, Estimated Fair Value	11,517
Less than 12 Months, Unrealized/Unrecognized Losses	(319)
Total, Estimated Fair Value	11,517
Total, Unrealized/Unrecognized Losses	$ (319)

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of Loan Receivables) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Loans and Leases Receivable Disclosure [Line Items]
Total loans	$ 3,610,409		$ 3,142,319
Deferred fees	(7,121)		(5,266)
Loans, net of deferred fees and unamortized costs	3,603,288		3,137,053
Allowance for loan losses	(38,121)	$ (37,377)	(35,407)	$ (33,614)	$ (32,505)	$ (26,272)
Net loans	3,565,167		3,101,646
Real estate
Loans and Leases Receivable Disclosure [Line Items]
Total loans	2,964,039		2,504,388
Commercial and industrial
Loans and Leases Receivable Disclosure [Line Items]
Total loans	611,303		591,500
Allowance for loan losses	(10,413)	(10,545)	(12,123)	(11,208)		(7,070)
Commercial and industrial | Paycheck Protection Program loans
Loans and Leases Receivable Disclosure [Line Items]
Net loans	2,500		3,800
Consumer.
Loans and Leases Receivable Disclosure [Line Items]
Total loans	35,067		46,431
Allowance for loan losses	(1,696)	(1,774)	(1,581)	(1,175)	(961)	(754)
Commercial | Real estate
Loans and Leases Receivable Disclosure [Line Items]
Total loans	2,378,074		1,887,505
Allowance for loan losses	(21,468)	(20,299)	(17,243)	(17,079)	(18,690)	(15,317)
Construction | Real estate
Loans and Leases Receivable Disclosure [Line Items]
Total loans	150,144		112,290
Allowance for loan losses	(2,101)	(1,972)	(1,593)	(1,447)	(741)	(411)
Multi-family | Real estate
Loans and Leases Receivable Disclosure [Line Items]
Total loans	374,555		433,239
Allowance for loan losses	(2,287)	(2,618)	(2,661)	(2,524)	(2,739)	(2,453)
One to four family | Real estate
Loans and Leases Receivable Disclosure [Line Items]
Total loans	61,266		71,354
Allowance for loan losses	$ (156)	$ (169)	$ (206)	$ (181)	$ (242)	$ (267)

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of Activity in the Allowance for Loan Losses by Segment) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 37,377	$ 32,505	$ 35,407	$ 26,272
Provision /(credit) for loan losses	490	1,137	3,315	7,693
Loans charged-off	(54)	(82)	(909)	(475)
Recoveries	308	54	308	124
Total ending allowance balance	38,121	33,614	38,121	33,614
Net charge-offs	254,000	28,000	601,000	351,000
Commercial And Industrial
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance		9,132	12,123
Provision /(credit) for loan losses		2,104	(1,163)
Loans charged-off		(82)	(855)
Recoveries		54	308
Total ending allowance balance	10,413	11,208	10,413	11,208
Real estate | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	20,299	18,690	17,243	15,317
Provision /(credit) for loan losses	1,169	(1,611)	4,225	1,762
Total ending allowance balance	21,468	17,079	21,468	17,079
Real estate | Construction
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,972	741	1,593	411
Provision /(credit) for loan losses	129	706	508	1,036
Total ending allowance balance	2,101	1,447	2,101	1,447
Real estate | Multi-family
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	2,618	2,739	2,661	2,453
Provision /(credit) for loan losses	(331)	(215)	(374)	71
Total ending allowance balance	2,287	2,524	2,287	2,524
Real estate | One to four family
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	169	242	206	267
Provision /(credit) for loan losses	(13)	(61)	(50)	(86)
Total ending allowance balance	156	181	156	181
Commercial and industrial
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	10,545		12,123	7,070
Provision /(credit) for loan losses	(440)			4,278
Loans charged-off				(254)
Recoveries	308			114
Total ending allowance balance	10,413	11,208	10,413	11,208
Consumer.
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,774	961	1,581	754
Provision /(credit) for loan losses	(24)	214	169	632
Loans charged-off	(54)		(54)	(221)
Recoveries				10
Total ending allowance balance	$ 1,696	$ 1,175	$ 1,696	$ 1,175

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of Loans by Impairment Method) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Loans and Leases Receivable Disclosure [Line Items]
Individually evaluated for impairment, Allowance for loan losses	$ 4,277		$ 4,918
Collectively evaluated for impairment, Allowance for loan losses	33,844		30,489
Total ending allowance balance	38,121	$ 37,377	35,407	$ 33,614	$ 32,505	$ 26,272
Individually evaluated for impairment, Loans	16,561		17,733
Collectively evaluated for impairment, Loans	3,593,848		3,124,586
Total ending loan balance	3,610,409		3,142,319
Real estate
Loans and Leases Receivable Disclosure [Line Items]
Total ending loan balance	2,964,039		2,504,388
Real estate | Commercial
Loans and Leases Receivable Disclosure [Line Items]
Collectively evaluated for impairment, Allowance for loan losses	21,468		17,243
Total ending allowance balance	21,468	20,299	17,243	17,079	18,690	15,317
Individually evaluated for impairment, Loans	10,333		10,345
Collectively evaluated for impairment, Loans	2,367,741		1,877,160
Total ending loan balance	2,378,074		1,887,505
Real estate | Construction
Loans and Leases Receivable Disclosure [Line Items]
Collectively evaluated for impairment, Allowance for loan losses	2,101		1,593
Total ending allowance balance	2,101	1,972	1,593	1,447	741	411
Collectively evaluated for impairment, Loans	150,144		112,290
Total ending loan balance	150,144		112,290
Real estate | Multi-family
Loans and Leases Receivable Disclosure [Line Items]
Collectively evaluated for impairment, Allowance for loan losses	2,287		2,661
Total ending allowance balance	2,287	2,618	2,661	2,524	2,739	2,453
Collectively evaluated for impairment, Loans	374,555		433,239
Total ending loan balance	374,555		433,239
Real estate | One to four family
Loans and Leases Receivable Disclosure [Line Items]
Individually evaluated for impairment, Allowance for loan losses	33		53
Collectively evaluated for impairment, Allowance for loan losses	123		153
Total ending allowance balance	156	169	206	181	242	267
Individually evaluated for impairment, Loans	958		999
Collectively evaluated for impairment, Loans	60,308		70,355
Total ending loan balance	61,266		71,354
Commercial and industrial
Loans and Leases Receivable Disclosure [Line Items]
Individually evaluated for impairment, Allowance for loan losses	2,814		3,662
Collectively evaluated for impairment, Allowance for loan losses	7,599		8,461
Total ending allowance balance	10,413	10,545	12,123	11,208		7,070
Individually evaluated for impairment, Loans	3,145		4,192
Collectively evaluated for impairment, Loans	608,158		587,308
Total ending loan balance	611,303		591,500
Consumer.
Loans and Leases Receivable Disclosure [Line Items]
Individually evaluated for impairment, Allowance for loan losses	1,430		1,203
Collectively evaluated for impairment, Allowance for loan losses	266		378
Total ending allowance balance	1,696	$ 1,774	1,581	$ 1,175	$ 961	$ 754
Individually evaluated for impairment, Loans	2,125		2,197
Collectively evaluated for impairment, Loans	32,942		44,234
Total ending loan balance	$ 35,067		$ 46,431

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of Impaired by Class of Loans) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
With an allowance recorded:
Unpaid Principal Balance	$ 5,854		$ 5,854		$ 6,999
Recorded Investment	5,724		5,724		6,869
Allowance for Loan Losses Allocated	4,277		4,277		4,918
Average Recorded Investment	5,706	$ 8,097	6,005	$ 5,096
Interest Income Recognized	30	32	100	71
Without an allowance recorded:
Unpaid Principal Balance	10,984		10,984		11,011
Recorded Investment	10,837		10,837		10,864
Average Recorded Investment	10,937	887	10,946	2,667
Interest Income Recognized	9	3	227	17
Real estate | Commercial
Without an allowance recorded:
Unpaid Principal Balance	10,333		10,333		10,345
Recorded Investment	10,333		10,333		10,345
Average Recorded Investment	10,335	363	10,339	364
Interest Income Recognized	2		207	4
Real estate | One to four family
With an allowance recorded:
Unpaid Principal Balance	584		584		610
Recorded Investment	454		454		480
Allowance for Loan Losses Allocated	33		33		53
Average Recorded Investment	458	488	466	494
Interest Income Recognized	4	5	16	13
Without an allowance recorded:
Unpaid Principal Balance	651		651		666
Recorded Investment	504		504		519
Average Recorded Investment	506	524	511	1,115
Interest Income Recognized	7	3	20	13
Commercial and industrial
With an allowance recorded:
Unpaid Principal Balance	3,145		3,145		4,192
Recorded Investment	3,145		3,145		4,192
Allowance for Loan Losses Allocated	2,814		2,814		3,662
Average Recorded Investment	3,145	5,497	3,407	3,272
Without an allowance recorded:
Average Recorded Investment	96		96	1,188
Consumer.
With an allowance recorded:
Unpaid Principal Balance	2,125		2,125		2,197
Recorded Investment	2,125		2,125		2,197
Allowance for Loan Losses Allocated	1,430		1,430		$ 1,203
Average Recorded Investment	2,103	2,112	2,132	1,330
Interest Income Recognized	$ 26	$ 27	$ 84	$ 58

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of Non-accrual Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Loans and Leases Receivable Disclosure [Line Items]
Nonaccrual	$ 14,803	$ 5,620
Loans Past Due Over 90 Days Still Accruing	573	769
Real estate | Commercial
Loans and Leases Receivable Disclosure [Line Items]
Nonaccrual	9,984
Loans Past Due Over 90 Days Still Accruing	0
Commercial and industrial
Loans and Leases Receivable Disclosure [Line Items]
Nonaccrual	3,145	4,192
Loans Past Due Over 90 Days Still Accruing	0	0
Consumer.
Loans and Leases Receivable Disclosure [Line Items]
Nonaccrual	1,674	1,428
Loans Past Due Over 90 Days Still Accruing	$ 573	$ 769

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of Past Due Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 15,511	$ 30,294
Loans not Past Due	3,594,898	3,112,025
Total loans	3,610,409	3,142,319
30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	135	7,489
60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		16,416
Greater than 90 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	15,376	6,389
Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	2,964,039	2,504,388
Real estate | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	9,984	10,024
Loans not Past Due	2,368,090	1,877,481
Total loans	2,378,074	1,887,505
Real estate | Commercial | 30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		40
Real estate | Commercial | 60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		9,984
Real estate | Commercial | Greater than 90 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	9,984
Real estate | Construction
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans not Past Due	150,144	112,290
Total loans	150,144	112,290
Real estate | Multi-family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans not Past Due	374,555	433,239
Total loans	374,555	433,239
Real estate | One to four family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2,908
Loans not Past Due	61,266	68,446
Total loans	61,266	71,354
Real estate | One to four family | 30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2,908
Commercial and industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,237	15,021
Loans not Past Due	608,066	576,479
Total loans	611,303	591,500
Commercial and industrial | 30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	92	4,429
Commercial and industrial | 60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		6,400
Commercial and industrial | Greater than 90 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,145	4,192
Consumer.
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,290	2,341
Loans not Past Due	32,777	44,090
Total loans	35,067	46,431
Consumer. | 30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	43	112
Consumer. | 60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		32
Consumer. | Greater than 90 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 2,247	$ 2,197

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Troubled Debt Restructurings) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) loan	Sep. 30, 2020 loan	Sep. 30, 2021 USD ($) item loan	Sep. 30, 2020 loan item	Dec. 31, 2020 USD ($)
Loans and Leases Receivable Disclosure [Line Items]
Loans modified in troubled debt restructurings	$ 1,307		$ 1,307		$ 1,360
Number of TDR loans during the period | loan	0	0	0	0
Specific reserves modified as TDRs	$ 33,000		$ 33,000		53,000
Number of contracts financing receivable modifications | item			0	0
Real estate | Commercial
Loans and Leases Receivable Disclosure [Line Items]
Loans modified in troubled debt restructurings	349		$ 349		361
Real estate | One to four family
Loans and Leases Receivable Disclosure [Line Items]
Loans modified in troubled debt restructurings	$ 958		$ 958		$ 999

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of Loans by Risk Category) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	$ 3,610,409	$ 3,142,319
Commercial Construction and Multifamily Real Estate Loans [Member]
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	3,514,076	3,024,534
Commercial Construction and Multifamily Real Estate Loans [Member] | Pass
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	3,496,403	3,006,498
Commercial Construction and Multifamily Real Estate Loans [Member] | Special Mention
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	4,544	3,860
Commercial Construction and Multifamily Real Estate Loans [Member] | Substandard
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	9,984	9,984
Commercial Construction and Multifamily Real Estate Loans [Member] | Doubtful
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	3,145	4,192
Real estate
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	2,964,039	2,504,388
Real estate | Commercial
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	2,378,074	1,887,505
Real estate | Commercial | Pass
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	2,367,741	1,877,160
Real estate | Commercial | Special Mention
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	349	361
Real estate | Commercial | Substandard
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	9,984	9,984
Real estate | Construction
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	150,144	112,290
Real estate | Construction | Pass
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	150,144	112,290
Real estate | Multi-family
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	374,555	433,239
Real estate | Multi-family | Pass
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	374,555	433,239
Commercial and industrial
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	611,303	591,500
Commercial and industrial | Pass
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	603,963	583,809
Commercial and industrial | Special Mention
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	4,195	3,499
Commercial and industrial | Doubtful
Loans and Leases Receivable Disclosure [Line Items]
Loans and Leases Receivable, Gross	$ 3,145	$ 4,192

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LOANS AND ALLOWANCE FOR LOAN LOSSES (COVID-19 Loan Modifications) (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021 loan	Sep. 30, 2020 loan	Sep. 30, 2021 USD ($) loan	Sep. 30, 2020 loan
Financing Receivable, Impaired [Line Items]
Financing Receivable, Modifications, Number of Contracts | loan	0	0	0	0
COVID 19 - Impact
Financing Receivable, Impaired [Line Items]
Financing Receivable, Modifications, Number of Contracts | loan			10
Loan Restructuring, Trial Modifications, Amount			$ 49.1
Percentage of Loans and Leases Receivable, Modified			1.40%
COVID 19 - Impact | Principal Payment Deferrals
Financing Receivable, Impaired [Line Items]
Loan Restructuring, Trial Modifications, Amount			$ 39.2
Percentage of Loans and Leases Receivable, Modified			1.10%
COVID 19 - Impact | Full Payment Deferrals
Financing Receivable, Impaired [Line Items]
Loan Restructuring, Trial Modifications, Amount			$ 10.0
Percentage of Loans and Leases Receivable, Modified			0.30%

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STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020
Stockholders Equity Note [Line Items]
Issuance of common stock	$ 162,687	$ 162,687
Net proceeds from issuance of common stock		$ 162,664
Common stock, shares outstanding	10,644,192	10,644,192		8,295,272
Class B Preferred Stock
Stockholders Equity Note [Line Items]
Preferred stock, shares outstanding	272,636	272,636		272,636
Preferred stock, par value	$ 0.01	$ 0.01		$ 0.01
Common Stock
Stockholders Equity Note [Line Items]
Issuance of common stock	$ 23	$ 23
Issuance of common stock (in shares)	2,300,000	2,300,000
Stock price	$ 75,000,000	$ 75,000,000
Gross proceed		$ 172,500
Net proceeds from issuance of common stock		$ 162,700
Common stock, shares outstanding	10,600,000	10,600,000	8,300,000

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EARNINGS PER SHARE (Computation of Basic and Diluted Earnings per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Basic
Net income per consolidated statements of income	$ 16,215	$ 10,783	$ 41,668	$ 27,690
Less: Earnings allocated to participating securities	(508)	(89)	(568)	(255)
Net income available to common stockholders	$ 15,707	$ 10,694	$ 41,100	$ 27,435
Weighted average common shares outstanding including participating securities	8,897,910	8,291,068	8,518,639	8,296,701
Less: Weighted average participating securities	(278,937)	(68,198)	(116,045)	(76,499)
Weighted average common shares outstanding	8,618,973	8,222,870	8,402,594	8,220,202
Basic earnings per common share (in dollars per share)	$ 1.82	$ 1.30	$ 4.89	$ 3.34
Diluted
Net income allocated to common shareholders	$ 15,707	$ 10,694	$ 41,100	$ 27,435
Weighted average common shares outstanding for basic earnings per common share	8,618,973	8,222,870	8,402,594	8,220,202
Average shares and dilutive potential common shares	8,893,104	8,393,211	8,636,397	8,392,055
Diluted earnings per common share (in dollars per share)	$ 1.77	$ 1.27	$ 4.76	$ 3.27
Stock Option
Diluted
Add: Dilutive effects of assumed exercise of stock options	173,909	92,269	161,932	103,737
Performance-Based Restricted Stock Units (PRSUs)
Diluted
Dilutive effects of assumed vesting units	53,571	78,072	41,932	68,116
Restricted stock
Calculations of basic and diluted earnings per share
Number of antidilutive shares not considered in computing diluted earnings per share	188,906		188,906
Diluted
Dilutive effects of assumed vesting units	46,651		29,939

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STOCK COMPENSATION PLAN (Summary of the Status of the Stock Option Plan) (Details)	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Number of Options
Outstanding, beginning of period | shares	231,000
Outstanding, end of period | shares	231,000
Options vested and exercisable at end of period | shares	231,000
Weighted Average Exercise Price
Outstanding, beginning of period | $ / shares	$ 18.00
Outstanding, end of period | $ / shares	18.00
Options vested and exercisable at end of period | $ / shares	$ 18.00
Weighted average remaining contractual life (years)	2 years 7 months 17 days

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STOCK COMPENSATION PLAN (Summary of Stock Options Outstanding) (Details) - $10 - 30	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Average Exercise Prices, Lower Limit	$ 10
Range of Average Exercise Prices, Upper Limit	$ 30
Number of Options Outstanding | shares	231,000
Weighted Average Remaining Contractual Life	2 years 7 months 17 days
Weighted Average Exercise Price	$ 18.00
Weighted Average Intrinsic Price	$ 66.30

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STOCK COMPENSATION PLAN (Summary of Non-Vested Restricted Stock Awards) (Details) - Restricted stock - $ / shares	3 Months Ended				9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Number of shares, Outstanding, beginning of period			76,289		76,289
Number of shares, Granted	0	0	78,582	1,785	168,582
Number of shares, Forfeited					(10,200)
Number of shares, Vested					(14,489)
Number of shares, Outstanding at end of period	220,182			76,289	220,182
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted Average Grant Date fair Value, beginning of period			$ 38.66		$ 38.66
Weighted Average Grant Date fair Value, Granted					57.23
Weighted Average Grant Date fair Value, Forfeited					48.09
Weighted Average Grant Date fair Value, Vested					30.45
Weighted Average Grant Date fair Value, at end of period	$ 52.98			$ 38.66	$ 52.98

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STOCK COMPENSATION PLAN (Summary of Performance Based Stock Awards) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average service inception date fair value of award shares			$ 5,721,300
Likely aggregate share payout			90,000
Compensation expense recognized	$ 1,100,000	$ 277,000
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate share payout			9,000
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate share payout			90,000
Performance-Based Restricted Stock Units (PRSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period (in years)			3 years
Compensation expense recognized	$ 481,000	$ 358,000	$ 1,400,000	$ 1,100,000

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STOCK COMPENSATION PLAN (Details) - USD ($)			3 Months Ended					9 Months Ended
	May 28, 2019	Jan. 01, 2019	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding shares			231,000			231,000		231,000
Compensation expense recognized			$ 1,100,000				$ 277,000
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested stock options			$ 3,900,000					$ 3,900,000
Number of shares, Granted			0	0	78,582	1,785		168,582
Remaining unrecognized compensation expense recognition period								2 years 25 days
Fair value of shares vested								$ 441,197
Compensation expense recognized								$ 2,300,000	$ 1,100,000
Restricted stock | Key Personnel
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period								3 years
Restricted stock | Non-employee directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested stock options			$ 100,000					$ 100,000
Compensation cost related to stock awards			100,000				100,000	$ 300,000	300,000
Number of shares, Granted		38,900
Service period (in years)								3 years
Vesting period								3 years
Remaining unrecognized compensation expense recognition period								3 months
Performance-Based Restricted Stock Units (PRSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period (in years)								3 years
Number of PRSUs awarded								90,000
Compensation expense recognized			481,000				$ 358,000	$ 1,400,000	1,100,000
Equity Incentive Plan 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment award, shares authorized, maximum	340,000
Equity Incentive Plan 2019 | Stock Option | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of exercise price to the fair market value								100.00%
Equity Incentive Plan 2019 | Incentive stock options granted to any 10% stockholder | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of the exercise price to the fair market value of the shares covered by the stock option on the date of grant in the case of an ISO granted to 10% stockholder								110.00%
Equity Incentive Plan 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding shares	468,382
Number of shares expired	628,719
Compensation cost related to stock awards								$ 0	$ 0
Equity Incentive Plan 2009 | Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested stock options			$ 0			$ 0		$ 0
Equity Incentive Plan 2009 | Equity Incentive Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment award, exercise period from the grant date								10 years
Equity Incentive Plan 2009 | Incentive stock options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment award, exercise period from the grant date								5 years

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020	Sep. 30, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	$ 607,474	$ 271,169
Amount of transfers of assets measured on a recurring basis out of Level 1 of the fair value hierarchy into Level 2	0		$ 0
Amount of transfers of assets measured on a recurring basis out of Level 2 of the fair value hierarchy into Level 1	0		$ 0
Fair value assets measured at fair value on a non-recurring basis	0	0
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value liability	0
Carrying Amount | Residential mortgage securities | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	501,431	194,688
Carrying Amount | Commercial mortgage securities | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	18,256	33,492
Carrying Amount | CRA mutual fund | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	2,289	2,313
Carrying Amount | Derivative assets - interest rate cap | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	2,086	770
Carrying Amount | Asset-backed Securities | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	4,733
Carrying Amount | U.S. Government agency securities | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	67,231	37,916
Carrying Amount | Securities issued by states and political subdivisions in the U.S | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	11,517
Fair Value, Inputs, Level 1 | CRA mutual fund | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	2,289	2,313
Fair Value, Inputs, Level 2 | Residential mortgage securities | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	501,431	194,688
Fair Value, Inputs, Level 2 | Commercial mortgage securities | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	18,256	33,492
Fair Value, Inputs, Level 2 | Derivative assets - interest rate cap | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	2,086	770
Fair Value, Inputs, Level 2 | Asset-backed Securities | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	4,733
Fair Value, Inputs, Level 2 | U.S. Government agency securities | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	67,231	$ 37,916
Fair Value, Inputs, Level 2 | Securities issued by states and political subdivisions in the U.S | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	$ 11,517

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Carrying Amount and Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financial assets:
Debt securities available for sale	$ 603,168	$ 266,096
Securities held to maturity	2,074	2,827
Other investments
Other Investments	11,998	11,597
Financial liabilities:
Noninterest-bearing demand deposits	2,803,823	1,726,135
Carrying Amount
Financial assets:
Cash and due from banks	32,660	8,692
Overnight deposits	1,824,820	855,613
Debt securities available for sale	603,168	266,096
Securities held to maturity	2,017	2,760
Equity investments	2,289	2,313
Loans, net	3,565,167	3,101,646
Other investments
FRB Stock	7,430	7,381
FHLB Stock	3,070	2,718
Disability Fund	1,000	1,000
Time deposits at banks	498
CRA - CD		498
Accrued interest receivable	13,504	13,249
Financial liabilities:
Noninterest-bearing demand deposits	2,803,823	1,726,135
Money market and savings deposits	2,571,707	2,011,409
Time deposits	82,039	92,062
Trust preferred securities payable	20,620	20,620
Subordinated debt, net of issuance cost	24,698	24,657
Accrued interest payable	448	712
Secured Borrowings	35,559	36,964
Total Fair Value
Financial assets:
Cash and due from banks	32,660	8,692
Overnight deposits	1,824,820	855,613
Debt securities available for sale	603,168	266,096
Securities held to maturity	2,074	2,827
Equity investments	2,289	2,313
Loans, net	3,592,347	3,094,998
Other investments
Disability Fund	1,000	1,000
Time deposits at banks	498
CRA - CD		498
Accrued interest receivable	13,504	13,429
Financial liabilities:
Noninterest-bearing demand deposits	2,803,823	1,726,135
Money market and savings deposits	2,571,707	2,011,409
Time deposits	82,610	93,157
Trust preferred securities payable	20,002	20,011
Subordinated debt, net of issuance cost	25,438	25,375
Accrued interest payable	448	712
Secured Borrowings	35,559	36,964
Interest Rate Cap | Carrying Amount
Other investments
Derivative Asset	2,086
Interest rate cap derivative		770
Interest Rate Cap | Total Fair Value
Other investments
Derivative Asset	2,086
Interest rate cap derivative		770
Fair Value, Inputs, Level 1
Financial assets:
Cash and due from banks	32,660	8,692
Overnight deposits	1,824,820	855,613
Equity investments	2,289	2,313
Other investments
Time deposits at banks	498
CRA - CD		498
Financial liabilities:
Noninterest-bearing demand deposits	2,803,823	1,726,135
Money market and savings deposits	2,571,707	2,011,409
Accrued interest payable	3	7
Secured Borrowings	0
Fair Value, Inputs, Level 2
Financial assets:
Debt securities available for sale	603,168	266,096
Securities held to maturity	2,074	2,827
Other investments
Disability Fund	1,000	1,000
Accrued interest receivable	717	414
Financial liabilities:
Time deposits	82,610	93,157
Subordinated debt, net of issuance cost	25,438	25,375
Accrued interest payable	337	591
Secured Borrowings	35,559	36,964
Fair Value, Inputs, Level 2 | Interest Rate Cap
Other investments
Derivative Asset	2,086
Interest rate cap derivative		770
Fair Value, Inputs, Level 3
Financial assets:
Loans, net	3,592,347	3,094,998
Other investments
Accrued interest receivable	12,787	12,835
Financial liabilities:
Trust preferred securities payable	20,002	20,011
Accrued interest payable	108	$ 114
Secured Borrowings	$ 0

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ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS) (Proceeds from sales and calls of securities and associated gains and losses) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Proceeds	$ 25,000	$ 43,241	$ 141,422
Gross gains		609	3,286
Tax impact		$ (195)	$ (1,036)

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Outstanding following off-balance-sheet financial instruments) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fixed Rate	$ 92,751	$ 53,288
Variable Rate	316,594	266,696
Undrawn lines of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fixed Rate	41,217	19,024
Variable Rate	316,594	266,696
Letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fixed Rate	51,534	34,264
Variable Rate	$ 0	$ 0

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Amount of off-balance-sheet financial instruments	$ 92,751	$ 53,288
Maturity of stand by letters of credit and time deposits	one year
Minimum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fixed interest rate off-balance-sheet financial instruments	3.00%	3.00%
Variable interest rate off-balance-sheet financial instrument	1.80%	2.00%
Commitments term	1 year	1 year
Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fixed interest rate off-balance-sheet financial instruments	5.60%	5.60%
Variable interest rate off-balance-sheet financial instrument	7.30%	8.30%
Commitments term	2 years
Letters of credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Amount of off-balance-sheet financial instruments	$ 51,534	$ 34,264
Amount of off-balance-sheet financial instruments collateral received	$ 37,300	$ 26,900

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Schedule of non-interest income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Total non-interest income	$ 5,900	$ 3,637	$ 16,078	$ 10,286
Service charges on deposit accounts
Non-interest income	1,671	863	4,085	2,747
Prepaid third-party debit card income.
Non-interest income	3,615	2,572	10,509	6,301
Other service charges and fees
Non-interest income	$ 614	$ 202	$ 1,484	$ 1,238

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DERIVATIVES - Derivative position (Details) - Derivatives designated as hedging instruments - Interest rate caps related to customer deposits $ in Thousands	Sep. 30, 2021 USD ($)
Prepaid Expenses and Other Current Assets
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount, derivative asset	$ 300,000
Fair value	2,086
Deposit liability
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount, derivative liability	$ 300,000

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DERIVATIVES - Cash flow hedge accounting (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
Derivatives designated as hedging instruments | Interest rate caps related to customer deposits | Cash flow hedge
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Loss Recognized in OCI on Derivative	$ 1,069