Washington | 45-4585178 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Large accelerated filer [ ] | Accelerated filer [ ] | |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ X ] |
Page Number | |||
PART I | FINANCIAL INFORMATION | ||
Item 1. | Financial Statements | ||
Consolidated Balance Sheets at September 30, 2016 and December 31, 2015 (Unaudited) | 2 | ||
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited) | 3 | ||
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited) | 4 | ||
Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2016 and 2015 (Unaudited) | 5 | ||
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (Unaudited) | 6 - 7 | ||
Notes to Consolidated Financial Statements | 8 - 37 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 38 - 47 | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 47 | |
Item 4. | Controls and Procedures | 47 | |
PART II | OTHER INFORMATION | 48 | |
Item 1. | Legal Proceedings | 48 | |
Item 1A. | Risk Factors | 48 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 48 - 49 | |
Item 3. | Defaults Upon Senior Securities | 49 | |
Item 4. | Mine Safety Disclosures | 49 | |
Item 5. | Other Information | 49 | |
Item 6. | Exhibits | 49 - 50 | |
SIGNATURES | 51 |
ASSETS | September 30, 2016 | December 31, 2015 | |||||
Cash and due from banks | $ | 3,445 | $ | 1,708 | |||
Interest-bearing deposits at other financial institutions | 13,068 | 22,747 | |||||
Total cash and cash equivalents | 16,513 | 24,455 | |||||
Certificates of deposit at other financial institutions | 14,009 | 12,421 | |||||
Securities available-for-sale, at fair value | 80,762 | 55,217 | |||||
Loans held for sale, at fair value | 77,129 | 44,925 | |||||
Loans receivable, net | 592,800 | 502,535 | |||||
Accrued interest receivable | 2,557 | 2,107 | |||||
Premises and equipment, net | 15,071 | 13,856 | |||||
Federal Home Loan Bank (“FHLB”) stock, at cost | 2,004 | 4,551 | |||||
Bank owned life insurance (“BOLI”), net | 9,983 | 9,772 | |||||
Servicing rights, held at the lower of cost or fair value | 7,654 | 5,811 | |||||
Goodwill | 2,312 | — | |||||
Core deposit intangible, net | 1,857 | — | |||||
Other assets | 4,835 | 1,911 | |||||
TOTAL ASSETS | $ | 827,486 | $ | 677,561 | |||
LIABILITIES | |||||||
Deposits: | |||||||
Noninterest-bearing accounts | $ | 153,095 | $ | 72,247 | |||
Interest-bearing accounts | 550,069 | 412,931 | |||||
Total deposits | 703,164 | 485,178 | |||||
Borrowings | 21,030 | 98,769 | |||||
Subordinated note: | |||||||
Principal amount | 10,000 | 10,000 | |||||
Unamortized debt issuance costs | (180 | ) | (195 | ) | |||
Total subordinated note less unamortized debt issuance costs | 9,820 | 9,805 | |||||
Other liabilities | 13,915 | 8,469 | |||||
Total liabilities | 747,929 | 602,221 | |||||
COMMITMENTS AND CONTINGENCIES (NOTE 9) | |||||||
STOCKHOLDERS’ EQUITY | |||||||
Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued or outstanding | — | — | |||||
Common stock, $.01 par value; 45,000,000 shares authorized; 3,057,753 and 3,242,120 shares issued and outstanding at September 30, 2016, and December 31, 2015, respectively | 31 | 32 | |||||
Additional paid-in capital | 26,866 | 30,692 | |||||
Retained earnings | 53,326 | 46,175 | |||||
Accumulated other comprehensive income, net of tax | 773 | 78 | |||||
Unearned shares - Employee Stock Ownership Plan (“ESOP”) | (1,439 | ) | (1,637 | ) | |||
Total stockholders’ equity | 79,557 | 75,340 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 827,486 | $ | 677,561 |
2 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
INTEREST INCOME | |||||||||||||||
Loans receivable including fees | $ | 9,241 | $ | 7,730 | $ | 26,014 | $ | 22,042 | |||||||
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions | 538 | 329 | 1,751 | 874 | |||||||||||
Total interest and dividend income | 9,779 | 8,059 | 27,765 | 22,916 | |||||||||||
INTEREST EXPENSE | |||||||||||||||
Deposits | 808 | 866 | 2,411 | 2,425 | |||||||||||
Borrowings | 50 | 56 | 177 | 195 | |||||||||||
Subordinated note | 171 | — | 512 | — | |||||||||||
Total interest expense | 1,029 | 922 | 3,100 | 2,620 | |||||||||||
NET INTEREST INCOME | 8,750 | 7,137 | 24,665 | 20,296 | |||||||||||
PROVISION FOR LOAN LOSSES | 600 | 600 | 1,800 | 1,800 | |||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 8,150 | 6,537 | 22,865 | 18,496 | |||||||||||
NONINTEREST INCOME | |||||||||||||||
Service charges and fee income | 899 | 528 | 2,489 | 1,452 | |||||||||||
Gain on sale of loans | 5,922 | 3,632 | 14,722 | 11,565 | |||||||||||
Gain on sale of investment securities | 146 | — | 146 | 76 | |||||||||||
Earnings on cash surrender value of BOLI | 71 | 51 | 211 | 146 | |||||||||||
Other noninterest income | 210 | 165 | 557 | 486 | |||||||||||
Total noninterest income | 7,248 | 4,376 | 18,125 | 13,725 | |||||||||||
NONINTEREST EXPENSE | |||||||||||||||
Salaries and benefits | 6,287 | 4,295 | 16,510 | 12,461 | |||||||||||
Operations | 1,450 | 1,118 | 4,221 | 3,209 | |||||||||||
Occupancy | 597 | 497 | 1,775 | 1,388 | |||||||||||
Data processing | 537 | 380 | 1,576 | 1,132 | |||||||||||
Gain on sale of other real estate owned (“OREO”) | — | — | (150 | ) | — | ||||||||||
Loan costs | 715 | 379 | 1,789 | 1,129 | |||||||||||
Professional and board fees | 502 | 479 | 1,490 | 1,268 | |||||||||||
Federal Deposit Insurance Corporation (“FDIC”) insurance | 98 | 69 | 306 | 229 | |||||||||||
Marketing and advertising | 202 | 183 | 553 | 458 | |||||||||||
Acquisition costs | — | 432 | 389 | 432 | |||||||||||
Amortization of core deposit intangible | 140 | — | 382 | — | |||||||||||
Recovery on servicing rights | (216 | ) | — | (2 | ) | — | |||||||||
Total noninterest expense | 10,312 | 7,832 | 28,839 | 21,706 | |||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 5,086 | 3,081 | 12,151 | 10,515 | |||||||||||
PROVISION FOR INCOME TAXES | 1,629 | 1,086 | 4,198 | 3,656 | |||||||||||
NET INCOME | $ | 3,457 | $ | 1,995 | $ | 7,953 | $ | 6,859 | |||||||
Basic earnings per share | $ | 1.21 | $ | 0.67 | $ | 2.74 | $ | 2.31 | |||||||
Diluted earnings per share | $ | 1.18 | $ | 0.66 | $ | 2.66 | $ | 2.28 |
3 |
(In thousands) (Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net Income | $ | 3,457 | $ | 1,995 | $ | 7,953 | $ | 6,859 | |||||||
Other comprehensive income, before tax: | |||||||||||||||
Securities available-for-sale: | |||||||||||||||
Unrealized holding gain during period | 29 | 391 | 1,224 | 253 | |||||||||||
Income tax provision related to unrealized holding gain | (8 | ) | (133 | ) | (433 | ) | (86 | ) | |||||||
Reclassification adjustment for realized gain included in net income | (146 | ) | — | (146 | ) | (76 | ) | ||||||||
Income tax provision related to reclassification for realized gain | 50 | — | 50 | 26 | |||||||||||
Other comprehensive (loss) income, net of tax | (75 | ) | 258 | 695 | 117 | ||||||||||
COMPREHENSIVE INCOME | $ | 3,382 | $ | 2,253 | $ | 8,648 | $ | 6,976 |
4 |
(Dollars in thousands, except share amounts) (Unaudited) | ||||||||||||||||||||||||||
Common Stock | Accumulated | |||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Retained Earnings | Other Comprehensive Income, Net of Tax | Unearned ESOP Shares | Total Stockholders’ Equity | ||||||||||||||||||||
BALANCE, January 1, 2015 | 3,235,625 | $ | 32 | $ | 29,450 | $ | 38,125 | $ | 117 | $ | (1,888 | ) | $ | 65,836 | ||||||||||||
Net income | — | — | — | 6,859 | — | — | 6,859 | |||||||||||||||||||
Dividends paid ($0.19 per share) | — | — | — | (611 | ) | — | — | (611 | ) | |||||||||||||||||
Share-based compensation | — | — | 560 | — | — | — | 560 | |||||||||||||||||||
Common stock repurchased | (4,605 | ) | — | (101 | ) | — | — | — | (101 | ) | ||||||||||||||||
Stock options exercised | 10,100 | — | 170 | — | — | — | 170 | |||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 117 | — | 117 | |||||||||||||||||||
ESOP shares allocated | — | — | 210 | — | — | 198 | 408 | |||||||||||||||||||
BALANCE, September 30, 2015 | 3,241,120 | $ | 32 | $ | 30,289 | $ | 44,373 | $ | 234 | $ | (1,690 | ) | $ | 73,238 | ||||||||||||
BALANCE, January 1, 2016 | 3,242,120 | $ | 32 | $ | 30,692 | $ | 46,175 | $ | 78 | $ | (1,637 | ) | $ | 75,340 | ||||||||||||
Net income | — | — | — | 7,953 | — | — | 7,953 | |||||||||||||||||||
Dividends paid ($0.26 per share) | — | — | — | (802 | ) | — | — | (802 | ) | |||||||||||||||||
Share-based compensation | — | — | 588 | — | — | — | 588 | |||||||||||||||||||
Restricted stock awards | 4,500 | — | — | — | — | — | — | |||||||||||||||||||
Common stock repurchased | (198,167 | ) | (1 | ) | (4,902 | ) | — | — | — | (4,903 | ) | |||||||||||||||
Stock options exercised | 9,300 | — | 157 | — | — | — | 157 | |||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | 695 | — | 695 | |||||||||||||||||||
ESOP shares allocated | — | — | 331 | — | — | 198 | 529 | |||||||||||||||||||
BALANCE, September 30, 2016 | 3,057,753 | $ | 31 | $ | 26,866 | $ | 53,326 | $ | 773 | $ | (1,439 | ) | $ | 79,557 |
5 |
(In thousands) (Unaudited) | |||||||
Nine Months Ended September 30, | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | 2016 | 2015 | |||||
Net income | $ | 7,953 | $ | 6,859 | |||
Adjustments to reconcile net income to net cash from operating activities | |||||||
Provision for loan losses | 1,800 | 1,800 | |||||
Depreciation, amortization and accretion | 3,779 | 1,598 | |||||
Compensation expense related to stock options and restricted stock awards | 588 | 560 | |||||
ESOP compensation expense for allocated shares | 529 | 408 | |||||
Increase in cash surrender value of BOLI | (211 | ) | (146 | ) | |||
Gain on sale of loans held for sale | (14,722 | ) | (11,565 | ) | |||
Origination of loans held for sale | (584,073 | ) | (447,964 | ) | |||
Proceeds from sale of loans held for sale | 564,218 | 429,411 | |||||
Gain on sale of investment securities | (146 | ) | (76 | ) | |||
Recovery of servicing rights | (2 | ) | — | ||||
Gain on sale of OREO | (150 | ) | — | ||||
Changes in operating assets and liabilities | |||||||
Accrued interest receivable | (450 | ) | (499 | ) | |||
Other assets | (7,481 | ) | (725 | ) | |||
Other liabilities | 5,063 | 3,091 | |||||
Net cash used by operating activities | (23,305 | ) | (17,248 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Activity in securities available-for-sale: | |||||||
Proceeds from sale of investment securities | 13,577 | 4,178 | |||||
Maturities, prepayments, sales, and calls | 9,039 | 4,574 | |||||
Purchases | (47,432 | ) | (13,729 | ) | |||
Maturities of interest-bearing time deposits | 292 | 496 | |||||
Purchase of interest-bearing time deposits | (1,882 | ) | (7,136 | ) | |||
Loan originations and principal collections, net | (93,871 | ) | (80,887 | ) | |||
Purchase of portfolio loans | — | (16,113 | ) | ||||
Purchase of BOLI | — | (3,000 | ) | ||||
Proceeds from sale of other real estate owned, net | 682 | — | |||||
Purchase of premises and equipment, net | (2,287 | ) | (1,068 | ) | |||
FHLB stock purchased | (7,743 | ) | (5,468 | ) | |||
FHLB stock redeemed | 10,290 | 4,146 | |||||
Net cash received from acquisition | 180,356 | — | |||||
Net cash from (used by) investing activities | 61,021 | (114,007 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Net increase in deposits | 37,630 | 79,439 | |||||
Proceeds from borrowings | 259,500 | 305,837 | |||||
Repayments of borrowings | (337,240 | ) | (263,602 | ) | |||
Dividends paid | (802 | ) | (611 | ) | |||
Proceeds from stock options exercised | 157 | 170 | |||||
Common stock repurchased | (4,903 | ) | (101 | ) | |||
Net cash (used by) from financing activities | (45,658 | ) | 121,132 |
6 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (7,942 | ) | (10,123 | ) | |||
CASH AND CASH EQUIVALENTS, beginning of period | 24,455 | 15,555 | |||||
CASH AND CASH EQUIVALENTS, end of period | $ | 16,513 | $ | 5,432 | |||
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 2,931 | $ | 2,623 | |||
Income taxes | $ | 4,420 | $ | 3,666 | |||
Assets acquired in acquisition of branches | $ | 181,575 | $ | — | |||
Liabilities assumed in acquisition of branches | $ | 186,393 | $ | — | |||
SUPPLEMENTARY DISCLOSURES OF NONCASH OPERATING, INVESTING AND FINANCING ACTIVITIES | |||||||
Change in unrealized gain on investment securities | $ | 1,079 | $ | 177 | |||
Property received in settlement of loans | $ | 525 | $ | — | |||
Retention of mortgage servicing rights from loan sales | $ | 2,927 | $ | 2,823 |
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FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
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FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
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FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
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FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
January 22, 2016 | Acquired Book Value | Fair Value Adjustments | Amount Recorded | |||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 180,356 | $ | — | $ | 180,356 | ||||||
Loans receivable | 417 | — | 417 | |||||||||
Premises and equipment, net | 697 | 267 | (1) | 964 | ||||||||
Accrued interest receivable | 2 | — | 2 | |||||||||
Core deposit intangible | — | 2,239 | (2) | 2,239 | ||||||||
Goodwill | — | 2,312 | (3) | 2,312 | ||||||||
Other assets | 103 | — | 103 | |||||||||
Total assets acquired | $ | 181,575 | $ | 4,818 | $ | 186,393 | ||||||
Liabilities | ||||||||||||
Deposits: | ||||||||||||
Noninterest-bearing accounts | $ | 79,966 | $ | — | $ | 79,966 | ||||||
Interest-bearing accounts | 106,398 | — | 106,398 | |||||||||
Total deposits | 186,364 | — | 186,364 | |||||||||
Accrued interest payable | 7 | — | 7 | |||||||||
Other liabilities | 22 | — | 22 | |||||||||
Total liabilities assumed | $ | 186,393 | $ | — | $ | 186,393 |
11 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
At January 22, 2016 | ||||
Purchase price (1) | $ | 6,015 | ||
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value: | ||||
Cash and cash equivalents | 186,371 | |||
Acquired loans | 417 | |||
Premises and equipment, net | 964 | |||
Accrued interest receivable | 2 | |||
Core deposit intangible | 2,239 | |||
Other assets | 103 | |||
Deposits | (186,364 | ) | ||
Accrued interest payable | (7 | ) | ||
Other liabilities | (22 | ) | ||
Total fair value of identifiable net assets | 3,703 | |||
Goodwill | $ | 2,312 |
2016 | $ | 140 | |
2017 | 400 | ||
2018 | 307 | ||
2019 | 235 | ||
2020 | 181 | ||
Thereafter | 594 | ||
Total | $ | 1,857 |
12 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
September 30, 2016 | |||||||||||||||
SECURITIES AVAILABLE-FOR-SALE | Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Values | |||||||||||
U.S. agency securities | $ | 8,158 | $ | 115 | $ | — | $ | 8,273 | |||||||
Municipal bonds | 17,452 | 499 | (2 | ) | 17,949 | ||||||||||
Corporate securities | 7,664 | 44 | (95 | ) | 7,613 | ||||||||||
U.S. Small Business Administration securities | 5,863 | 147 | — | 6,010 | |||||||||||
Mortgage-backed securities | 40,426 | 492 | (1 | ) | 40,917 | ||||||||||
Total securities available-for-sale | $ | 79,563 | $ | 1,297 | $ | (98 | ) | $ | 80,762 | ||||||
December 31, 2015 | |||||||||||||||
SECURITIES AVAILABLE-FOR-SALE | Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Values | |||||||||||
U.S. agency securities | $ | 6,134 | $ | — | $ | (99 | ) | $ | 6,035 | ||||||
Municipal bonds | 18,531 | 373 | (13 | ) | 18,891 | ||||||||||
Corporate securities | 3,495 | 5 | (67 | ) | 3,433 | ||||||||||
U.S. Small Business Administration securities | 4,011 | 23 | (11 | ) | 4,023 | ||||||||||
Mortgage-backed securities | 22,926 | 72 | (163 | ) | 22,835 | ||||||||||
Total securities available-for-sale | $ | 55,097 | $ | 473 | $ | (353 | ) | $ | 55,217 |
September 30, 2016 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
SECURITIES AVAILABLE-FOR-SALE | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Municipal bonds | $ | 176 | $ | (2 | ) | $ | — | $ | — | $ | 176 | $ | (2 | ) | |||||||||
Corporate securities | 965 | (30 | ) | 1,435 | (65 | ) | 2,400 | (95 | ) | ||||||||||||||
Mortgage-backed securities | 1,272 | (1 | ) | — | — | 1,272 | (1 | ) | |||||||||||||||
Total | $ | 2,413 | $ | (33 | ) | $ | 1,435 | $ | (65 | ) | $ | 3,848 | $ | (98 | ) |
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FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2015 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
SECURITIES AVAILABLE-FOR-SALE | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
U.S. agency securities | $ | 2,107 | $ | (31 | ) | $ | 3,928 | $ | (68 | ) | $ | 6,035 | $ | (99 | ) | ||||||||
Municipal bonds | 956 | (1 | ) | 293 | (12 | ) | 1,249 | (13 | ) | ||||||||||||||
Corporate securities | 994 | (6 | ) | 1,439 | (61 | ) | 2,433 | (67 | ) | ||||||||||||||
U.S. Small Business Administration securities | 990 | (11 | ) | — | — | 990 | (11 | ) | |||||||||||||||
Mortgage-backed securities | 15,642 | (112 | ) | 2,119 | (51 | ) | 17,761 | (163 | ) | ||||||||||||||
Total | $ | 20,689 | $ | (161 | ) | $ | 7,779 | $ | (192 | ) | $ | 28,468 | $ | (353 | ) |
September 30, 2016 | December 31, 2015 | ||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
U.S. agency securities | |||||||||||||||
Due after one year through five years | $ | 4,000 | $ | 4,003 | $ | — | $ | — | |||||||
Due after five years through ten years | 4,158 | 4,270 | 6,134 | 6,035 | |||||||||||
Subtotal | 8,158 | 8,273 | 6,134 | 6,035 | |||||||||||
Municipal bonds | |||||||||||||||
Due in one year or less | 978 | 979 | 991 | 997 | |||||||||||
Due after one year through five years | 5,578 | 5,718 | 3,904 | 3,954 | |||||||||||
Due after five years through ten years | 8,499 | 8,784 | 7,807 | 7,981 | |||||||||||
Due after ten years | 2,397 | 2,468 | 5,829 | 5,959 | |||||||||||
Subtotal | 17,452 | 17,949 | 18,531 | 18,891 | |||||||||||
Corporate securities | |||||||||||||||
Due after one year through five years | 5,669 | 5,700 | 1,500 | 1,490 | |||||||||||
Due after five years through ten years | 1,995 | 1,913 | 1,995 | 1,943 | |||||||||||
Subtotal | 7,664 | 7,613 | 3,495 | 3,433 | |||||||||||
U.S. Small Business Administration securities | |||||||||||||||
Due after five years through ten years | 5,863 | 6,010 | 4,011 | 4,023 | |||||||||||
Mortgage-backed securities | |||||||||||||||
Federal National Mortgage Association (“FNMA”) | 18,646 | 18,866 | 12,515 | 12,466 | |||||||||||
Federal Home Loan Mortgage Corporation (“FHLMC”) | 14,069 | 14,239 | 4,524 | 4,501 | |||||||||||
Government National Mortgage Association (“GNMA”) | 7,711 | 7,812 | 5,887 | 5,868 | |||||||||||
Subtotal | 40,426 | 40,917 | 22,926 | 22,835 | |||||||||||
Total | $ | 79,563 | $ | 80,762 | $ | 55,097 | $ | 55,217 |
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FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | ||||||||||||||||||||||
Proceeds | Gross Gains | Gross (Losses) | Proceeds | Gross Gains | Gross (Losses) | ||||||||||||||||||
Securities available-for-sale | $ | 13,577 | $ | 149 | $ | (3 | ) | $ | 13,577 | $ | 149 | $ | (3 | ) | |||||||||
Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2015 | ||||||||||||||||||||||
Proceeds | Gross Gains | Gross (Losses) | Proceeds | Gross Gains | Gross (Losses) | ||||||||||||||||||
Securities available-for-sale | $ | — | $ | — | $ | — | $ | 4,178 | $ | 76 | $ | — |
September 30, | December 31, | ||||||
REAL ESTATE LOANS | 2016 | 2015 | |||||
Commercial | $ | 55,794 | $ | 50,034 | |||
Construction and development | 90,201 | 80,806 | |||||
Home equity | 19,649 | 16,540 | |||||
One-to-four-family (excludes loans held for sale) | 116,886 | 102,921 | |||||
Multi-family | 33,988 | 22,223 | |||||
Total real estate loans | 316,518 | 272,524 | |||||
CONSUMER LOANS | |||||||
Indirect home improvement | 104,524 | 103,064 | |||||
Solar | 34,806 | 29,226 | |||||
Marine | 29,268 | 23,851 | |||||
Other consumer | 1,978 | 2,181 | |||||
Total consumer loans | 170,576 | 158,322 | |||||
COMMERCIAL BUSINESS LOANS | |||||||
Commercial and industrial | 68,526 | 59,619 | |||||
Warehouse lending | 48,598 | 20,817 | |||||
Total commercial business loans | 117,124 | 80,436 | |||||
Total loans receivable, gross | 604,218 | 511,282 | |||||
Allowance for loan losses | (9,586 | ) | (7,785 | ) | |||
Deferred costs, fees, and discounts, net | (1,832 | ) | (962 | ) | |||
Total loans receivable, net | $ | 592,800 | $ | 502,535 |
15 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
16 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
At or For the Three Months Ended September 30, 2016 | |||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES | Real Estate | Consumer | Commercial Business | Unallocated | Total | ||||||||||||||
Beginning balance | $ | 3,477 | $ | 2,039 | $ | 1,823 | $ | 1,612 | $ | 8,951 | |||||||||
Provision for loan losses | 242 | 1 | 252 | 105 | 600 | ||||||||||||||
Charge-offs | (65 | ) | (232 | ) | — | — | (297 | ) | |||||||||||
Recoveries | 64 | 262 | 6 | — | 332 | ||||||||||||||
Net (charge-offs) recoveries | (1 | ) | 30 | 6 | — | 35 | |||||||||||||
Ending balance | $ | 3,718 | $ | 2,070 | $ | 2,081 | $ | 1,717 | $ | 9,586 | |||||||||
Period end amount allocated to: | |||||||||||||||||||
Loans individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Loans collectively evaluated for impairment | 3,718 | 2,070 | 2,081 | 1,717 | 9,586 | ||||||||||||||
Ending balance | $ | 3,718 | $ | 2,070 | $ | 2,081 | $ | 1,717 | $ | 9,586 | |||||||||
LOANS RECEIVABLE | |||||||||||||||||||
Loans individually evaluated for impairment | $ | 209 | $ | — | $ | — | $ | — | $ | 209 | |||||||||
Loans collectively evaluated for impairment | 316,309 | 170,576 | 117,124 | — | 604,009 | ||||||||||||||
Ending balance | $ | 316,518 | $ | 170,576 | $ | 117,124 | $ | — | $ | 604,218 |
At or For the Nine Months Ended September 30, 2016 | |||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES | Real Estate | Consumer | Commercial Business | Unallocated | Total | ||||||||||||||
Beginning balance | $ | 2,874 | $ | 1,681 | $ | 1,396 | $ | 1,834 | 7,785 | ||||||||||
Provision for loan losses | 794 | 519 | 604 | (117 | ) | 1,800 | |||||||||||||
Charge-offs | (65 | ) | (801 | ) | — | — | (866 | ) | |||||||||||
Recoveries | 115 | 671 | 81 | — | 867 | ||||||||||||||
Net recoveries (charge-offs) | 50 | (130 | ) | 81 | — | 1 | |||||||||||||
Ending balance | $ | 3,718 | $ | 2,070 | $ | 2,081 | $ | 1,717 | $ | 9,586 | |||||||||
Period end amount allocated to: | |||||||||||||||||||
Loans individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Loans collectively evaluated for impairment | 3,718 | 2,070 | 2,081 | 1,717 | 9,586 | ||||||||||||||
Ending balance | $ | 3,718 | $ | 2,070 | $ | 2,081 | $ | 1,717 | $ | 9,586 | |||||||||
LOANS RECEIVABLE | |||||||||||||||||||
Loans individually evaluated for impairment | $ | 209 | $ | — | $ | — | $ | — | $ | 209 | |||||||||
Loans collectively evaluated for impairment | 316,309 | 170,576 | 117,124 | — | 604,009 | ||||||||||||||
Ending balance | $ | 316,518 | $ | 170,576 | $ | 117,124 | $ | — | $ | 604,218 |
17 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
At or For the Three Months Ended September 30, 2015 | |||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES | Real Estate | Consumer | Commercial Business | Unallocated | Total | ||||||||||||||
Beginning balance | $ | 2,378 | $ | 1,444 | $ | 2,148 | $ | 957 | $ | 6,927 | |||||||||
Provision for loan losses | 328 | 225 | (591 | ) | 638 | 600 | |||||||||||||
Charge-offs | — | (350 | ) | — | — | (350 | ) | ||||||||||||
Recoveries | 1 | 204 | 6 | — | 211 | ||||||||||||||
Net recoveries (charge-offs) | 1 | (146 | ) | 6 | — | (139 | ) | ||||||||||||
Ending balance | $ | 2,707 | $ | 1,523 | $ | 1,563 | $ | 1,595 | $ | 7,388 | |||||||||
Period end amount allocated to: | |||||||||||||||||||
Loans individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Loans collectively evaluated for impairment | 2,707 | 1,523 | 1,563 | 1,595 | 7,388 | ||||||||||||||
Ending balance | $ | 2,707 | $ | 1,523 | $ | 1,563 | $ | 1,595 | $ | 7,388 | |||||||||
LOANS RECEIVABLE | |||||||||||||||||||
Loans individually evaluated for impairment | $ | 736 | $ | — | $ | — | $ | — | $ | 736 | |||||||||
Loans collectively evaluated for impairment | 251,653 | 154,504 | 83,816 | — | 489,973 | ||||||||||||||
Ending balance | $ | 252,389 | $ | 154,504 | $ | 83,816 | $ | — | $ | 490,709 |
At or For the Nine Months Ended September 30, 2015 | |||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES | Real Estate | Consumer | Commercial Business | Unallocated | Total | ||||||||||||||
Beginning balance | $ | 1,872 | $ | 1,431 | $ | 1,184 | $ | 1,603 | $ | 6,090 | |||||||||
Provision for loan losses | 891 | 515 | 402 | (8 | ) | 1,800 | |||||||||||||
Charge-offs | (248 | ) | (1,095 | ) | (34 | ) | — | (1,377 | ) | ||||||||||
Recoveries | 192 | 672 | 11 | — | 875 | ||||||||||||||
Net charge-offs | (56 | ) | (423 | ) | (23 | ) | — | (502 | ) | ||||||||||
Ending balance | $ | 2,707 | $ | 1,523 | $ | 1,563 | $ | 1,595 | $ | 7,388 | |||||||||
Period end amount allocated to: | |||||||||||||||||||
Loans individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Loans collectively evaluated for impairment | 2,707 | 1,523 | 1,563 | 1,595 | 7,388 | ||||||||||||||
Ending balance | $ | 2,707 | $ | 1,523 | $ | 1,563 | $ | 1,595 | $ | 7,388 | |||||||||
LOANS RECEIVABLE | |||||||||||||||||||
Loans individually evaluated for impairment | $ | 736 | $ | — | $ | — | $ | — | $ | 736 | |||||||||
Loans collectively evaluated for impairment | 251,653 | 154,504 | 83,816 | — | 489,973 | ||||||||||||||
Ending balance | $ | 252,389 | $ | 154,504 | $ | 83,816 | $ | — | $ | 490,709 |
18 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
September 30, 2016 | ||||||||||||||||||||||||||
REAL ESTATE LOANS | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due | Total Past Due | Current | Total Loans Receivable | Non-Accrual | |||||||||||||||||||
Commercial | $ | — | $ | — | $ | — | $ | — | $ | 55,794 | $ | 55,794 | $ | — | ||||||||||||
Construction and development | — | — | — | — | 90,201 | 90,201 | — | |||||||||||||||||||
Home equity | 141 | 7 | 108 | 256 | 19,393 | 19,649 | 171 | |||||||||||||||||||
One-to-four-family | — | — | — | — | 116,886 | 116,886 | — | |||||||||||||||||||
Multi-family | — | — | — | — | 33,988 | 33,988 | — | |||||||||||||||||||
Total real estate loans | 141 | 7 | 108 | 256 | 316,262 | 316,518 | 171 | |||||||||||||||||||
CONSUMER LOANS | ||||||||||||||||||||||||||
Indirect home improvement | 307 | 185 | 183 | 675 | 103,849 | 104,524 | 387 | |||||||||||||||||||
Solar | 59 | 71 | — | 130 | 34,676 | 34,806 | 36 | |||||||||||||||||||
Marine | — | — | — | — | 29,268 | 29,268 | — | |||||||||||||||||||
Other consumer | 5 | 1 | — | 6 | 1,972 | 1,978 | — | |||||||||||||||||||
Total consumer loans | 371 | 257 | 183 | 811 | 169,765 | 170,576 | 423 | |||||||||||||||||||
COMMERCIAL BUSINESS LOANS | ||||||||||||||||||||||||||
Commercial and industrial | — | — | — | — | 68,526 | 68,526 | — | |||||||||||||||||||
Warehouse lending | — | — | — | — | 48,598 | 48,598 | — | |||||||||||||||||||
Total commercial business loans | — | — | — | — | 117,124 | 117,124 | — | |||||||||||||||||||
Total loans | $ | 512 | $ | 264 | $ | 291 | $ | 1,067 | $ | 603,151 | $ | 604,218 | $ | 594 |
December 31, 2015 | ||||||||||||||||||||||||||
REAL ESTATE LOANS | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due | Total Past Due | Current | Total Loans Receivable | Non-Accrual | |||||||||||||||||||
Commercial | $ | — | $ | — | $ | — | $ | — | $ | 50,034 | $ | 50,034 | $ | — | ||||||||||||
Construction and development | — | — | — | — | 80,806 | 80,806 | — | |||||||||||||||||||
Home equity | 157 | 20 | 47 | 224 | 16,316 | 16,540 | 47 | |||||||||||||||||||
One-to-four-family | 48 | — | 525 | 573 | 102,348 | 102,921 | 525 | |||||||||||||||||||
Multi-family | — | — | — | — | 22,223 | 22,223 | — | |||||||||||||||||||
Total real estate loans | 205 | 20 | 572 | 797 | 271,727 | 272,524 | 572 | |||||||||||||||||||
CONSUMER LOANS | ||||||||||||||||||||||||||
Indirect home improvement | 307 | 243 | 157 | 707 | 102,357 | 103,064 | 408 | |||||||||||||||||||
Solar | 69 | — | 37 | 106 | 29,120 | 29,226 | 37 | |||||||||||||||||||
Marine | 28 | — | — | 28 | 23,823 | 23,851 | — | |||||||||||||||||||
Other consumer | — | — | — | — | 2,181 | 2,181 | — | |||||||||||||||||||
Total consumer loans | 404 | 243 | 194 | 841 | 157,481 | 158,322 | 445 | |||||||||||||||||||
COMMERCIAL BUSINESS LOANS | ||||||||||||||||||||||||||
Commercial and industrial | — | — | — | — | 59,619 | 59,619 | — | |||||||||||||||||||
Warehouse lending | — | — | — | — | 20,817 | 20,817 | — | |||||||||||||||||||
Total commercial business loans | — | — | — | — | 80,436 | 80,436 | — | |||||||||||||||||||
Total loans | $ | 609 | $ | 263 | $ | 766 | $ | 1,638 | $ | 509,644 | $ | 511,282 | $ | 1,017 |
19 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
September 30, 2016 | |||||||||||||||||||
WITH NO RELATED ALLOWANCE RECORDED | Unpaid Principal Balance | Write- downs | Recorded Investment | Related Allowance | Adjusted Recorded Investment | ||||||||||||||
Home equity | $ | 152 | $ | — | $ | 152 | $ | — | $ | 152 | |||||||||
One-to-four-family | 69 | (12 | ) | 57 | — | 57 | |||||||||||||
Total | $ | 221 | $ | (12 | ) | $ | 209 | $ | — | $ | 209 | ||||||||
December 31, 2015 | |||||||||||||||||||
WITH NO RELATED ALLOWANCE RECORDED | Unpaid Principal Balance | Write- downs | Recorded Investment | Related Allowance | Adjusted Recorded Investment | ||||||||||||||
One-to-four-family | $ | 801 | $ | (67 | ) | $ | 734 | $ | — | $ | 734 |
Three Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | ||||||||||||||
WITH NO RELATED ALLOWANCE RECORDED | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||
Commercial | $ | — | $ | — | $ | 363 | $ | 38 | |||||||
Home equity | 152 | — | 33 | 2 | |||||||||||
One-to-four-family | 58 | 1 | 736 | 1 | |||||||||||
Total | $ | 210 | $ | 1 | $ | 1,132 | $ | 41 |
Nine Months Ended | |||||||||||||||
September 30, 2016 | September 30, 2015 | ||||||||||||||
WITH NO RELATED ALLOWANCE RECORDED | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||
Commercial | $ | — | $ | — | $ | 734 | $ | 76 | |||||||
Home equity | 154 | 2 | 64 | 7 | |||||||||||
One-to-four-family | 58 | 2 | 778 | 26 | |||||||||||
212 | 4 | 1,576 | 109 | ||||||||||||
WITH AN ALLOWANCE RECORDED | |||||||||||||||
Commercial and industrial | — | — | 16 | — | |||||||||||
Total | $ | 212 | $ | 4 | $ | 1,592 | $ | 109 |
20 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
• | Grades 1 and 2 - These grades include loans to very high quality borrowers with excellent or desirable business credit. |
• | Grade 3 - This grade includes loans to borrowers of good business credit with moderate risk. |
• | Grades 4 and 5 - These grades include “Pass” grade loans to borrowers of average credit quality and risk. |
• | Grade 6 - This grade includes loans on management’s “Watch” list and is intended to be utilized on a temporary basis for “Pass” grade borrowers where frequent and thorough monitoring is required due to credit weaknesses and where significant risk-modifying action is anticipated in the near term. |
• | Grade 7 - This grade is for “Other Assets Especially Mentioned” ( “OAEM”) in accordance with regulatory guidelines and includes borrowers where performance is poor or significantly less than expected. |
• | Grade 8 - This grade includes “Substandard” loans in accordance with regulatory guidelines which represent an unacceptable business credit where a loss is possible if loan weakness is not corrected. |
• | Grade 9 - This grade includes “Doubtful” loans in accordance with regulatory guidelines where a loss is highly probable. |
• | Grade 10 - This grade includes “Loss” loans in accordance with regulatory guidelines for which total loss is expected and when identified are charged off. |
21 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
September 30, 2016 | |||||||||||||||||||||||||||
REAL ESTATE LOANS | Pass (1 - 5) | Watch (6) | Special Mention (7) | Substandard (8) | Doubtful(9) | Loss (10) | Total | ||||||||||||||||||||
Commercial | $ | 52,613 | $ | 3,181 | $ | — | $ | — | $ | — | $ | — | $ | 55,794 | |||||||||||||
Construction and development | 90,201 | — | — | — | — | — | 90,201 | ||||||||||||||||||||
Home equity | 19,478 | — | — | 171 | — | — | 19,649 | ||||||||||||||||||||
One-to-four-family | 116,886 | — | — | — | — | — | 116,886 | ||||||||||||||||||||
Multi-family | 33,988 | — | — | — | — | — | 33,988 | ||||||||||||||||||||
Total real estate loans | 313,166 | 3,181 | — | 171 | — | — | 316,518 | ||||||||||||||||||||
CONSUMER LOANS | |||||||||||||||||||||||||||
Indirect home improvement | 104,137 | — | — | 387 | — | — | 104,524 | ||||||||||||||||||||
Solar | 34,770 | — | — | 36 | — | — | 34,806 | ||||||||||||||||||||
Marine | 29,268 | — | — | — | — | — | 29,268 | ||||||||||||||||||||
Other consumer | 1,978 | — | — | — | — | — | 1,978 | ||||||||||||||||||||
Total consumer loans | 170,153 | — | — | 423 | — | — | 170,576 | ||||||||||||||||||||
COMMERCIAL BUSINESS LOANS | |||||||||||||||||||||||||||
Commercial and industrial | 64,889 | 515 | — | 3,122 | — | — | 68,526 | ||||||||||||||||||||
Warehouse lending | 48,598 | — | — | — | — | — | 48,598 | ||||||||||||||||||||
Total commercial business loans | 113,487 | 515 | — | 3,122 | — | — | 117,124 | ||||||||||||||||||||
Total loans | $ | 596,806 | $ | 3,696 | $ | — | $ | 3,716 | $ | — | $ | — | $ | 604,218 |
December 31, 2015 | |||||||||||||||||||||||||||
REAL ESTATE LOANS | Pass (1 - 5) | Watch (6) | Special Mention (7) | Substandard (8) | Doubtful(9) | Loss (10) | Total | ||||||||||||||||||||
Commercial | $ | 50,034 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 50,034 | |||||||||||||
Construction and development | 79,100 | 1,706 | — | — | — | — | 80,806 | ||||||||||||||||||||
Home equity | 16,493 | — | — | 47 | — | — | 16,540 | ||||||||||||||||||||
One-to-four-family | 102,396 | — | — | 525 | — | — | 102,921 | ||||||||||||||||||||
Multi-family | 22,223 | — | — | — | — | — | 22,223 | ||||||||||||||||||||
Total real estate loans | 270,246 | 1,706 | — | 572 | — | — | 272,524 | ||||||||||||||||||||
CONSUMER LOANS | |||||||||||||||||||||||||||
Indirect home improvement | 102,656 | — | — | 408 | — | — | 103,064 | ||||||||||||||||||||
Solar | 29,189 | — | — | 37 | — | — | 29,226 | ||||||||||||||||||||
Marine | 23,851 | — | — | — | — | — | 23,851 | ||||||||||||||||||||
Other consumer | 2,181 | — | — | — | — | — | 2,181 | ||||||||||||||||||||
Total consumer loans | 157,877 | — | — | 445 | — | — | 158,322 | ||||||||||||||||||||
COMMERCIAL BUSINESS LOANS | |||||||||||||||||||||||||||
Commercial and industrial | 54,977 | 2,352 | 335 | 1,955 | — | — | 59,619 | ||||||||||||||||||||
Warehouse lending | 20,817 | — | — | — | — | — | 20,817 | ||||||||||||||||||||
Total commercial business loans | 75,794 | 2,352 | 335 | 1,955 | — | — | 80,436 | ||||||||||||||||||||
Total loans | $ | 503,917 | $ | 4,058 | $ | 335 | $ | 2,972 | $ | — | $ | — | $ | 511,282 |
22 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
September 30, | December 31, | ||||||
2016 | 2015 | ||||||
TDR loans on accrual | $ | 57 | $ | 209 | |||
TDR loans on non-accrual | — | 525 | |||||
Total TDR loan balances | $ | 57 | $ | 734 |
At or For the Three Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Beginning balance | $ | 6,751 | $ | 4,569 | |||
Additions | 1,095 | 920 | |||||
Servicing rights amortized | (408 | ) | (263 | ) | |||
Recovery on servicing rights | 216 | — | |||||
Ending balance | $ | 7,654 | $ | 5,226 |
23 |
At or For the Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Beginning balance | $ | 5,811 | $ | 3,061 | |||
Additions | 2,927 | 2,823 | |||||
Servicing rights amortized | (1,086 | ) | (658 | ) | |||
Recovery on servicing rights | 2 | — | |||||
Ending balance | $ | 7,654 | $ | 5,226 |
At September 30, | ||||||
Key assumptions: | 2016 | 2015 | ||||
Weighted average discount rate | 9.5 | % | 8.5 | % | ||
Conditional prepayment rate (“CPR”) | 16.4 | % | 12.5 | % | ||
Weighted average life in years | 5.2 | 6.4 |
September 30, 2016 | December 31, 2015 | |||||||||||
Aggregate portfolio principal balance | $ | 877,427 | $ | 631,812 | ||||||||
Weighted average rate of note | 3.9 | % | 4.0 | % | ||||||||
At September 30, 2016 | Base | 0.5% Adverse Rate Change | 1.0% Adverse Rate Change | |||||||||
Conditional prepayment rate | 16.4 | % | 25.3 | % | 35.2 | % | ||||||
Fair value MSR | $ | 7,811 | $ | 6,044 | $ | 4,859 | ||||||
Percentage of MSR | 0.9 | % | 0.7 | % | 0.6 | % | ||||||
Discount rate | 9.5 | % | 10.0 | % | 10.5 | % | ||||||
Fair value MSR | $ | 7,811 | $ | 7,685 | $ | 7,562 | ||||||
Percentage of MSR | 0.9 | % | 0.9 | % | 0.9 | % | ||||||
At December 31, 2015 | Base | 0.5% Adverse Rate Change | 1.0% Adverse Rate Change | |||||||||
Conditional prepayment rate | 12.2 | % | 17.8 | % | 25.3 | % | ||||||
Fair value MSR | $ | 6,813 | $ | 5,660 | $ | 4,557 | ||||||
Percentage of MSR | 1.1 | % | 0.9 | % | 0.7 | % | ||||||
Discount rate | 8.5 | % | 9.0 | % | 9.5 | % | ||||||
Fair value MSR | $ | 6,813 | $ | 6,678 | $ | 6,548 | ||||||
Percentage of MSR | 1.1 | % | 1.1 | % | 1.0 | % |
24 |
September 30, 2016 | ||||||||||||
Fair Value | ||||||||||||
Notional | Asset | Liability | ||||||||||
Fallout adjusted interest rate lock commitments with customers | $ | 65,259 | $ | 1,850 | $ | — | ||||||
Mandatory and best effort forward commitments with investors | 29,824 | — | 40 | |||||||||
Forward TBA mortgage-backed securities | 99,500 | — | 385 | |||||||||
TBA mortgage-backed securities forward sales paired off with investors | 30,000 | — | 189 |
December 31, 2015 | ||||||||||||
Fair Value | ||||||||||||
Notional | Asset | Liability | ||||||||||
Fallout adjusted interest rate lock commitments with customers | $ | 34,154 | $ | 698 | $ | — | ||||||
Mandatory and best effort forward commitments with investors | 24,135 | 74 | — | |||||||||
Forward TBA mortgage-backed securities | 49,000 | 3 | — | |||||||||
TBA mortgage-backed securities forward sales paired off with investors | 28,500 | 30 | — |
25 |
At or For the Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Beginning balance | $ | — | $ | — | |||
Net loans transferred to OREO | 525 | — | |||||
Capitalized costs | 7 | — | |||||
Gross proceeds from sale of OREO | (682 | ) | — | ||||
Gain on sale of OREO | 150 | — | |||||
Ending balance | $ | — | $ | — |
September 30, | December 31, | ||||||
2016(3) | 2015 | ||||||
Noninterest-bearing checking | $ | 143,251 | $ | 66,676 | |||
Interest-bearing checking | 63,682 | 34,098 | |||||
Savings | 50,348 | 30,126 | |||||
Money market | 238,321 | 159,605 | |||||
Certificates of deposit less than $100,000(1) | 93,953 | 65,175 | |||||
Certificates of deposit of $100,000 through $250,000 | 76,855 | 91,317 | |||||
Certificates of deposit of $250,000 and over(2) | 26,910 | 32,610 | |||||
Escrow accounts related to mortgages serviced | 9,844 | 5,571 | |||||
Total | $ | 703,164 | $ | 485,178 |
At September 30, 2016 | ||||
2016 | $ | 21,580 | ||
2017 | 76,878 | |||
2018 | 54,256 | |||
2019 | 17,151 | |||
2020 | 13,625 | |||
Thereafter | 14,228 | |||
Total | $ | 197,718 |
26 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Interest-bearing checking | $ | 7 | $ | 8 | $ | 20 | $ | 21 | |||||||
Savings and money market | 257 | 262 | 757 | 760 | |||||||||||
Certificates of deposit | 544 | 596 | 1,634 | 1,644 | |||||||||||
Total | $ | 808 | $ | 866 | $ | 2,411 | $ | 2,425 |
COMMITMENTS TO EXTEND CREDIT | September 30, | December 31, | |||||
REAL ESTATE LOANS | 2016 | 2015 | |||||
Commercial | $ | 232 | $ | 1,988 | |||
Construction and development | 58,279 | 44,109 | |||||
One-to-four-family (includes held for sale) | 134,454 | 76,013 | |||||
Home equity | 25,023 | 18,089 | |||||
Multi-family | 425 | 429 | |||||
Total real estate loans | 218,413 | 140,628 | |||||
CONSUMER LOANS | 8,490 | 5,754 | |||||
COMMERCIAL BUSINESS LOANS | |||||||
Commercial and industrial | 33,233 | 39,537 | |||||
Warehouse lending | 34,402 | 27,601 | |||||
Total commercial business loans | 67,635 | 67,138 | |||||
Total commitments to extend credit | $ | 294,538 | $ | 213,520 |
27 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
28 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Securities Available-for-Sale | |||||||||||||||
At September 30, 2016 | Level 1 | Level 2 | Level 3 | Total | |||||||||||
U.S. agency securities | $ | — | $ | 8,273 | $ | — | $ | 8,273 | |||||||
Municipal bonds | — | 17,949 | — | 17,949 | |||||||||||
Corporate securities | — | 7,613 | — | 7,613 | |||||||||||
U.S. Small Business Administration securities | — | 6,010 | — | 6,010 | |||||||||||
Mortgage-backed securities | — | 40,917 | — | 40,917 | |||||||||||
Total | $ | — | $ | 80,762 | $ | — | $ | 80,762 |
29 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Securities Available-for-Sale | |||||||||||||||
At December 31, 2015 | Level 1 | Level 2 | Level 3 | Total | |||||||||||
U.S. agency securities | $ | — | $ | 6,035 | $ | — | $ | 6,035 | |||||||
Municipal bonds | — | 18,891 | — | 18,891 | |||||||||||
Corporate securities | — | 3,433 | — | 3,433 | |||||||||||
U.S. Small Business Administration securities | — | 4,023 | — | 4,023 | |||||||||||
Mortgage-backed securities | — | 22,835 | — | 22,835 | |||||||||||
Total | $ | — | $ | 55,217 | $ | — | $ | 55,217 |
Mortgage Loans Held for Sale | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
September 30, 2016 | $ | — | $ | 77,129 | $ | — | $ | 77,129 | |||||||
December 31, 2015 | $ | — | $ | 44,925 | $ | — | $ | 44,925 |
Interest Rate Lock Commitments with Customers | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
September 30, 2016 | $ | — | $ | — | $ | 1,850 | $ | 1,850 | |||||||
December 31, 2015 | $ | — | $ | — | $ | 698 | $ | 698 |
Individual Forward Sale Commitments with Investors | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
September 30, 2016 | $ | — | $ | (385 | ) | $ | (40 | ) | $ | (425 | ) | ||||
December 31, 2015 | $ | — | $ | 3 | $ | 74 | $ | 77 |
Paired Off Commitments with Investors | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
September 30, 2016 | $ | — | $ | (189 | ) | $ | — | $ | (189 | ) | |||||
December 31, 2015 | $ | — | $ | 30 | $ | — | $ | 30 |
Impaired Loans | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
September 30, 2016 | $ | — | $ | — | $ | 209 | $ | 209 | |||||||
December 31, 2015 | $ | — | $ | — | $ | 734 | $ | 734 |
30 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Level 3 Fair Value Instrument | Valuation Technique | Significant Unobservable Inputs | Range (Weighted Average) | Weighted Average |
RECURRING | ||||
Interest rate lock commitments with customers | Quoted market prices | Pull-through expectations | 80% - 99% | 93.4% |
Individual forward sale commitments with investors | Quoted market prices | Pull-through expectations | 80% - 99% | 93.4% |
NONRECURRING | ||||
Impaired loans | Fair value of underlying collateral | Discount applied to the obtained appraisal | 0% - 18.0% | 0.0% |
Three Months Ended September 30, | Beginning Balance | Purchases and Issuances | Sales and Settlements | Ending Balance | Net change in fair value for gains/(losses) relating to items held at end of period | |||||||||||||||
2016 | ||||||||||||||||||||
Interest rate lock commitments with customers | $ | 2,058 | $ | 5,763 | $ | (5,971 | ) | $ | 1,850 | $ | (208 | ) | ||||||||
Individual forward sale commitments with investors | (3 | ) | (60 | ) | 23 | (40 | ) | (37 | ) | |||||||||||
2015 | ||||||||||||||||||||
Interest rate lock commitments with customers | $ | 934 | $ | 2,720 | $ | (2,797 | ) | $ | 857 | $ | (77 | ) | ||||||||
Individual forward sale commitments with investors | 110 | (66 | ) | (6 | ) | 38 | (72 | ) |
Nine Months Ended September 30, | Beginning Balance | Purchases and Issuances | Sales and Settlements | Ending Balance | Net change in fair value for gains/(losses) relating to items held at end of period | |||||||||||||||
2016 | ||||||||||||||||||||
Interest rate lock commitments with customers | $ | 698 | $ | 14,039 | $ | (12,887 | ) | $ | 1,850 | $ | 1,152 | |||||||||
Individual forward sale commitments with investors | 74 | (267 | ) | 153 | (40 | ) | (114 | ) | ||||||||||||
2015 | ||||||||||||||||||||
Interest rate lock commitments with customers | $ | 396 | $ | 8,683 | $ | (8,222 | ) | $ | 857 | $ | 461 | |||||||||
Individual forward sale commitments with investors | 12 | 21 | 5 | 38 | 26 |
31 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
32 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
September 30, | December 31, | ||||||||||||||
2016 | 2015 | ||||||||||||||
Financial Assets | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||
Level 1 inputs: | |||||||||||||||
Cash and cash equivalents | $ | 16,513 | $ | 16,513 | $ | 24,455 | $ | 24,455 | |||||||
Certificates of deposit at other financial institutions | 14,009 | 14,009 | 12,421 | 12,421 | |||||||||||
Level 2 inputs: | |||||||||||||||
Securities available-for-sale, at fair value | 80,762 | 80,762 | 55,217 | 55,217 | |||||||||||
Loans held for sale, at fair value | 77,129 | 77,129 | 44,925 | 44,925 | |||||||||||
FHLB stock, at cost | 2,004 | 2,004 | 4,551 | 4,551 | |||||||||||
Accrued interest receivable | 2,557 | 2,557 | 2,107 | 2,107 | |||||||||||
Individual forward sale commitments with investors | — | — | 3 | 3 | |||||||||||
Paired off commitments with investors | — | — | 30 | 30 | |||||||||||
Level 3 inputs: | |||||||||||||||
Loans receivable, net | 592,800 | 621,772 | 502,535 | 566,209 | |||||||||||
Servicing rights, held at lower of cost or fair value | 7,654 | 7,816 | 5,811 | 6,848 | |||||||||||
Fair value interest rate locks with customers | 1,850 | 1,850 | 698 | 698 | |||||||||||
Individual forward sale commitments with investors | — | — | 74 | 74 | |||||||||||
Financial Liabilities | |||||||||||||||
Level 2 inputs: | |||||||||||||||
Deposits | 703,164 | 710,140 | 485,178 | 494,871 | |||||||||||
Borrowings | 21,030 | 21,104 | 98,769 | 98,739 | |||||||||||
Subordinated note | 10,000 | 9,550 | 10,000 | 9,550 | |||||||||||
Accrued interest payable | 191 | 191 | 22 | 22 | |||||||||||
Individual forward sale commitments with investors | 385 | 385 | — | — | |||||||||||
Paired off commitments with investors | 189 | 189 | — | — | |||||||||||
Level 3 inputs: | |||||||||||||||
Individual forward sale commitments with investors | 40 | 40 | — | — |
33 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Balances | |||
Allocated shares | 102,359 | ||
Committed to be released shares | 19,441 | ||
Unallocated shares | 136,085 | ||
Total ESOP shares | 257,885 | ||
Fair value of unallocated shares (in thousands) | $ | 3,703 |
At or For the Three Months Ended September 30, | At or For the Nine Months Ended September 30, | ||||||||||||||
Numerator: | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net income (in thousands) | $ | 3,457 | $ | 1,995 | $ | 7,953 | $ | 6,859 | |||||||
Denominator: | |||||||||||||||
Basic weighted average common shares outstanding | 2,851,147 | 2,984,164 | 2,901,572 | 2,967,284 | |||||||||||
Dilutive shares | 87,292 | 55,843 | 84,102 | 42,108 | |||||||||||
Diluted weighted average common shares outstanding | 2,938,439 | 3,040,007 | 2,985,674 | 3,009,392 | |||||||||||
Basic earnings per share | $ | 1.21 | $ | 0.67 | $ | 2.74 | $ | 2.31 | |||||||
Diluted earnings per share | $ | 1.18 | $ | 0.66 | $ | 2.66 | $ | 2.28 |
34 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term In Years | Aggregate Intrinsic Value | ||||||||||
Outstanding at January 1, 2016 | 306,900 | $ | 16.89 | 8.36 | $ | 2,794,570 | |||||||
Granted | — | — | — | — | |||||||||
Less exercised | 9,300 | 16.89 | — | 81,942 | |||||||||
Forfeited or expired | — | — | — | — | |||||||||
Outstanding at September 30, 2016 | 297,600 | $ | 16.89 | 7.61 | $ | 3,660,480 | |||||||
Expected to vest, assuming a 0.31% annual forfeiture rate | 296,655 | $ | 16.89 | 7.61 | $ | 3,648,855 | |||||||
Exercisable at September 30, 2016 | 107,400 | $ | 16.89 | 7.61 | $ | 1,321,020 |
35 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | ||
Nonvested Shares | Shares | Weighted-Average Grant-Date Fair Value Per Share | Weighted-Average Grant-Date Fair Value | ||||||||
Nonvested at January 1, 2016 | 94,684 | $ | 16.89 | $ | 1,599,212 | ||||||
Granted | 4,500 | 26.00 | 117,000 | ||||||||
Less vested | 30,421 | 16.89 | 513,811 | ||||||||
Forfeited or expired | — | — | — | ||||||||
Nonvested at September 30, 2016 | 68,763 | $ | 17.49 | $ | 1,202,401 |
36 |
FS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
To be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||
For Capital Adequacy Purposes | ||||||||||||||||||||
Bank Only | Actual | |||||||||||||||||||
At September 30, 2016 | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
Total risk-based capital | ||||||||||||||||||||
(to risk-weighted assets) | $ | 91,077 | 13.46 | % | $ | 54,127 | 8.00 | % | $ | 67,659 | 10.00 | % | ||||||||
Tier 1 risk-based capital | ||||||||||||||||||||
(to risk-weighted assets) | $ | 82,604 | 12.21 | % | $ | 40,595 | 6.00 | % | $ | 54,127 | 8.00 | % | ||||||||
Tier 1 leverage capital | ||||||||||||||||||||
(to average assets) | $ | 82,604 | 10.33 | % | $ | 31,994 | 4.00 | % | $ | 39,992 | 5.00 | % | ||||||||
CET 1 capital | ||||||||||||||||||||
(to risk-weighted assets) | $ | 82,604 | 12.21 | % | $ | 30,446 | 4.50 | % | $ | 43,978 | 6.50 | % | ||||||||
At December 31, 2015 | ||||||||||||||||||||
Total risk-based capital | ||||||||||||||||||||
(to risk-weighted assets) | $ | 85,570 | 15.51 | % | $ | 44,132 | 8.00 | % | $ | 55,164 | 10.00 | % | ||||||||
Tier 1 risk-based capital | ||||||||||||||||||||
(to risk-weighted assets) | $ | 78,662 | 14.26 | % | $ | 33,099 | 6.00 | % | $ | 44,132 | 8.00 | % | ||||||||
Tier 1 leverage capital | ||||||||||||||||||||
(to average assets) | $ | 78,662 | 12.14 | % | $ | 25,924 | 4.00 | % | $ | 32,406 | 5.00 | % | ||||||||
CET 1 capital | ||||||||||||||||||||
(to risk-weighted assets) | $ | 78,662 | 14.26 | % | $ | 24,824 | 4.50 | % | $ | 35,857 | 6.50 | % |
37 |
• | statements of our goals, intentions, and expectations; |
• | statements regarding our business plans, prospects, growth, and operating strategies; |
• | statements regarding the quality of our loan and investment portfolios; and |
• | estimates of our risks and future costs and benefits. |
• | general economic conditions, either nationally or in our market area, that are worse than expected; |
• | the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets; |
• | secondary market conditions and our ability to sell loans in the secondary market; |
• | fluctuations in the demand for loans, the number of unsold homes, land and other properties, and fluctuations in real estate values in our market area; |
• | increases in premiums for deposit insurance; |
• | the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; |
• | changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments; |
• | increased competitive pressures among financial services companies; |
• | our ability to execute our plans to grow our residential construction lending, our mortgage banking operations, our warehouse lending, and the geographic expansion of our indirect home improvement lending; |
• | our ability to attract and retain deposits; |
• | our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may acquire into our operations and our ability to realize related revenue synergies and expected cost savings and other benefits within the anticipated time frames or at all including in particular, our recent Branch Purchase; |
• | our ability to control operating costs and expenses; |
• | changes in consumer spending, borrowing, and savings habits; |
• | our ability to successfully manage our growth; |
• | legislative or regulatory changes that adversely affect our business, or increase capital requirements, including the effect of the Dodd-Frank Wall Street Reform and Consumer Protection Act, changes in regulation policies and principles, or the interpretation of regulatory capital or other rules, including as a result of Basel III; |
• | adverse changes in the securities markets; |
• | changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board; |
• | costs and effects of litigation, including settlements and judgments; |
• | our ability to implement our branch expansion strategy; |
• | inability of key third-party vendors to perform their obligations to us; and |
• | other economic, competitive, governmental, regulatory, and technical factors affecting our operations, pricing, products, and services and other risks described elsewhere in this Form 10-Q and our other reports filed with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2015. |
▪ | Growing and diversifying our loan portfolio; |
▪ | Maintaining strong asset quality; |
▪ | Emphasizing lower cost core deposits to reduce the costs of funding our loan growth; |
▪ | Capturing our customers’ full relationship by offering a wide range of products and services by leveraging our well-established involvement in our communities and by selectively emphasizing products and services designed to meet our customers’ banking needs. |
Average Balances | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||
Assets | 2016 | 2015 | 2016 | 2015 | |||||||||||
Loans receivable (1) | $ | 643,989 | $ | 501,852 | $ | 600,343 | $ | 471,333 | |||||||
Securities available-for-sale, at fair value | 83,643 | 50,518 | 80,214 | 47,416 | |||||||||||
Interest-bearing deposits and certificates of deposit at other financial institutions | 36,744 | 17,060 | 74,573 | 17,000 | |||||||||||
Total interest-earning assets | 764,376 | 569,430 | 755,130 | 535,749 | |||||||||||
Noninterest-earning assets (2) | 39,081 | 26,847 | 35,026 | 26,064 | |||||||||||
Total assets | $ | 803,457 | $ | 596,277 | $ | 790,156 | $ | 561,813 | |||||||
Liabilities and stockholders’ equity | |||||||||||||||
Interest-bearing accounts | $ | 532,069 | $ | 417,798 | $ | 517,625 | $ | 392,141 | |||||||
Borrowings | 20,239 | 28,232 | 28,660 | 29,105 | |||||||||||
Subordinated note | 9,817 | — | 9,812 | — | |||||||||||
Total interest-bearing liabilities | 562,125 | 446,030 | 556,097 | 421,246 | |||||||||||
Noninterest-bearing accounts | 153,209 | 71,815 | 147,848 | 65,029 | |||||||||||
Other noninterest-bearing liabilities | 12,048 | 7,620 | 11,222 | 7,011 | |||||||||||
Stockholders’ equity | 76,075 | 70,812 | 74,989 | 68,527 | |||||||||||
Total liabilities and stockholders’ equity | $ | 803,457 | $ | 596,277 | $ | 790,156 | $ | 561,813 | |||||||
(1) Includes loans held for sale | |||||||||||||||
(2) Includes BOLI, goodwill, and CDI |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Repurchased as Part of Publicly Announced Plan | Maximum Number of Shares that May Yet Be Repurchased Under the Plan | |||||||||
July 1, 2016 - July 31, 2016 | 1,354 | $ | 25.21 | 1,354 | 132,388 | ||||||||
August 1, 2016 - August 31, 2016 | — | — | — | 132,388 | |||||||||
September 1, 2016 - September 30, 2016 | — | — | — | — | |||||||||
Total | 1,354 | $ | 25.21 | 1,354 | — |
10.8 | Subordinated Loan Agreement dated September 30, 2015 by and among Community Funding CLO, Ltd. and the Company (5) |
10.9 | Form of change of control agreement with Donn C. Costa and Debbie L. Steck (6) |
31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in Extensible Business Reporting Language (XBRL): (1) Consolidated Balance Sheets; (2) Consolidated Statements of Income; (3) Consolidated Statements of Comprehensive Income; (4) Consolidated Statements of Changes in Stockholders’ Equity; (5) Consolidated Statements of Cash Flows; and (6) Notes to Consolidated Financial Statements. |
(4) | Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on September 2, 2015 (File No. 001-35589). |
(5) | Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on October 19, 2015 (File No. 001-35589). |
(6) | Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on February 1, 2016 (File No. 001-35589). |
FS BANCORP, INC. | ||
Date: November 9, 2016 | By: | /s/Joseph C. Adams |
Joseph C. Adams, | ||
Chief Executive Officer | ||
(Duly Authorized Officer) | ||
Date: November 9, 2016 | By: | /s/Matthew D. Mullet |
Matthew D. Mullet | ||
Secretary, Treasurer and | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
Exhibit No. | Description | |||
31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
32.1 | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
32.2 | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
101 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in Extensible Business Reporting Language (XBRL): (1) Consolidated Balance Sheets; (2) Consolidated Statements of Income; (3) Consolidated Statements of Comprehensive Income; (4) Consolidated Statements of Changes in Stockholders’ Equity; (5) Consolidated Statements of Cash Flows; and (6) Notes to Consolidated Financial Statements. |
1. | I have reviewed this Quarterly Report on Form 10-Q of FS Bancorp, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15-(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 9, 2016 | /s/Joseph C. Adams | |
Joseph C. Adams Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of FS Bancorp, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15-(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | November 9, 2016 | /s/Matthew D. Mullet | |
Matthew D. Mullet Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in the Report. |
Date: | November 9, 2016 | /s/Joseph C. Adams | |
Joseph C. Adams Chief Executive Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in the Report. |
Date: | November 9, 2016 | /s/Matthew D. Mullet | |
Matthew D. Mullet Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 04, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | FS Bancorp, Inc. | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Entity Central Index Key | 0001530249 | |
Current Fiscal Year End Date | --09-30 | |
Entity Common Stock, Shares Outstanding | 3,057,753 | |
Entity Filer Category | Smaller Reporting Company | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets (Parentheticals) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Items Included in Consolidated Statement of Financial Condition [Abstract] | ||
Preferred stock par value, in dollars per share | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock par value, in dollars per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 3,057,753 | 3,242,120 |
Common stock, shares outstanding | 3,057,753 | 3,242,120 |
Consolidated Statements of Income - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||||
Loans receivable including fees | $ 9,241,000 | $ 7,730,000 | $ 26,014,000 | $ 22,042,000 |
Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions | 538,000 | 329,000 | 1,751,000 | 874,000 |
Total interest and dividend income | 9,779,000 | 8,059,000 | 27,765,000 | 22,916,000 |
Deposits | 808,000 | 866,000 | 2,411,000 | 2,425,000 |
Borrowings | 50,000 | 56,000 | 177,000 | 195,000 |
Subordinated note | 171,000 | 0 | 512,000 | 0 |
Total interest expense | 1,029,000 | 922,000 | 3,100,000 | 2,620,000 |
NET INTEREST INCOME | 8,750,000 | 7,137,000 | 24,665,000 | 20,296,000 |
PROVISION FOR LOAN LOSSES | 600,000 | 600,000 | 1,800,000 | 1,800,000 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 8,150,000 | 6,537,000 | 22,865,000 | 18,496,000 |
Service charges and fee income | 899,000 | 528,000 | 2,489,000 | 1,452,000 |
Gain on sale of loans | 5,922,000 | 3,632,000 | 14,722,000 | 11,565,000 |
Gain on sale of investment securities | 146,000 | 0 | 146,000 | 76,000 |
Earnings on cash surrender value of BOLI | 71,000 | 51,000 | 211,000 | 146,000 |
Other noninterest income | 210,000 | 165,000 | 557,000 | 486,000 |
Total noninterest income | 7,248,000 | 4,376,000 | 18,125,000 | 13,725,000 |
Salaries and benefits | 6,287,000 | 4,295,000 | 16,510,000 | 12,461,000 |
Operations | 1,450,000 | 1,118,000 | 4,221,000 | 3,209,000 |
Occupancy | 597,000 | 497,000 | 1,775,000 | 1,388,000 |
Data processing | 537,000 | 380,000 | 1,576,000 | 1,132,000 |
Gain on sale of other real estate owned (“OREO”) | 0 | 0 | (150,000) | 0 |
Loan costs | 715,000 | 379,000 | 1,789,000 | 1,129,000 |
Professional and board fees | 502,000 | 479,000 | 1,490,000 | 1,268,000 |
Federal Deposit Insurance Corporation (“FDIC”) insurance | 98,000 | 69,000 | 306,000 | 229,000 |
Marketing and advertising | 202,000 | 183,000 | 553,000 | 458,000 |
Acquisition costs | 0 | 432,000 | 389,000 | 432,000 |
Amortization of core deposit intangible | 140,000 | 0 | 382,000 | 0 |
Recovery on servicing rights | (216,000) | 0 | (2,000) | 0 |
Total noninterest expense | 10,312,000 | 7,832,000 | 28,839,000 | 21,706,000 |
INCOME BEFORE PROVISION FOR INCOME TAXES | 5,086,000 | 3,081,000 | 12,151,000 | 10,515,000 |
PROVISION FOR INCOME TAXES | 1,629,000 | 1,086,000 | 4,198,000 | 3,656,000 |
NET INCOME | $ 3,457,000 | $ 1,995,000 | $ 7,953,000 | $ 6,859,000 |
Basic earnings per share (in dollars per share) | $ 1.21 | $ 0.67 | $ 2.74 | $ 2.31 |
Diluted earnings per share (in dollars per share) | $ 1.18 | $ 0.66 | $ 2.66 | $ 2.28 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,457 | $ 1,995 | $ 7,953 | $ 6,859 |
Securities available-for-sale: | ||||
Unrealized holding gain during period | 29 | 391 | 1,224 | 253 |
Income tax provision related to unrealized holding gain | (8) | (133) | (433) | (86) |
Reclassification adjustment for realized gain included in net income | (146) | 0 | (146) | (76) |
Income tax provision related to reclassification for realized gain | 50 | 0 | 50 | 26 |
Other comprehensive (loss) income, net of tax | (75) | 258 | 695 | 117 |
COMPREHENSIVE INCOME | $ 3,382 | $ 2,253 | $ 8,648 | $ 6,976 |
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares |
9 Months Ended | |
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Sep. 30, 2016 |
Sep. 30, 2015 |
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Statement of Stockholders' Equity [Abstract] | ||
Dividends paid (in dollars per share) | $ 0.26 | $ 0.19 |
Basis of Presentation and Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations - FS Bancorp, Inc. (the “Company”) was incorporated in September 2011 as the proposed holding company for 1st Security Bank of Washington (the “Bank” or “1st Security Bank”) in connection with the Bank’s conversion from the mutual to stock form of ownership which was completed on July 9, 2012. The Bank is a community-based savings bank with 11 branches and four loan production offices in suburban communities in the greater Puget Sound area which includes Snohomish, King, Pierce, Jefferson, Kitsap, and Clallam counties, and one loan production office in the market area of the Tri-Cities, Washington. The Bank provides loan and deposit services to customers who are predominantly small and middle-market businesses and individuals. The Bank acquired four retail bank branches from Bank of America (two in Clallam and two in Jefferson counties) on January 22, 2016, and these branches opened as 1st Security Bank branches on January 25, 2016. The Company and its subsidiary are subject to regulation by certain federal and state agencies and undergo periodic examination by these regulatory agencies. Pursuant to the Plan of Conversion (the “Plan”), the Company’s Board of Directors adopted an employee stock ownership plan (“ESOP”) which purchased 8% of the common stock in the open market or 259,210 shares. As provided for in the Plan, the Bank also established a liquidation account in the amount of retained earnings at December 31, 2011. The liquidation account is maintained for the benefit of eligible savings account holders at June 30, 2007, and supplemental eligible account holders as of March 31, 2012, who maintain deposit accounts at the Bank after the conversion. The conversion was accounted for as a change in corporate form with the historic basis of the Company’s assets, liabilities, and equity unchanged as a result. Financial Statement Presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). It is recommended that these unaudited interim consolidated financial statements be read in conjunction with the Company’s Annual Report on Form 10-K with all of the audited information and footnotes required by U.S. GAAP for complete financial statements for the year ended December 31, 2015, as filed with the SEC on March 25, 2016. In the opinion of management, all normal adjustments and recurring accruals considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. The results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016, or any other future period. The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect amounts reported in the financial statements. Actual results could differ from these estimates. Material estimates that are particularly susceptible to change in the near term are allowances for loan losses, fair value of measurements, and servicing assets. Amounts presented in the consolidated financial statements and footnote tables are rounded and presented in thousands of dollars except per share amounts. In the narrative footnote discussion, amounts are rounded and presented in millions of dollars to one decimal point if the amounts are above $1.0 million. Amounts below $1.0 million are rounded and presented in dollars to the nearest thousands. Certain prior year amounts have been reclassified to conform to the 2016 presentation with no change to consolidated net income or stockholders’ equity previously reported. Principles of Consolidation - The consolidated financial statements include the accounts of FS Bancorp, Inc. and its wholly owned subsidiary, 1st Security Bank of Washington. All material intercompany accounts have been eliminated in consolidation. Segment Reporting - The Company’s major line of business is community banking. Management has determined that the Company operates as a single operating segment based on U.S. GAAP. Subsequent Events - The Company has evaluated events and transactions subsequent to September 30, 2016, for potential recognition or disclosure. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which creates Topic 606 and supersedes Topic 605, Revenue Recognition. In August 2015, FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606), which postponed the effective date of 2014-09. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net, which amended the principal versus agent implementation guidance set for in ASU 2014-09. Among other things, ASU 2016-08 clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The ASU amends certain aspects of the guidance set forth in the FASB's new revenue standard related to identifying performance obligations and licensing implementation. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In general, the new guidance requires companies to use more judgment and make more estimates than under current guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and adds some practical expedients, but does not change the core revenue recognition principle in Topic 606. The standard is effective for public entities for interim and annual periods beginning after December 15, 2017; early adoption is not permitted. For financial reporting purposes, the standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period presented in the financial statements with the cumulative effect of initially applying the standard recognized at the date of initial application. The Company is currently evaluating the provisions to determine the potential impact the new standard will have on the Company's consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU is intended to improve the recognition and measurement of financial instruments. This ASU requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. In addition, the amendments in this ASU require the exit price notion be used when measuring the fair value of financial instruments for disclosure purposes and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. This ASU also eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. The ASU also requires a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU No. 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for certain provisions. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU No. 2016-02 requires lessees to recognize on the balance sheet the assets and liabilities arising from operating leases. A lessee should recognize a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. A lessee should include payments to be made in an optional period only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. For a finance lease, interest payments should be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income. For operating leases, the lease cost should be allocated over the lease term on a generally straight-line basis. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in the ASU is permitted. The adoption of ASU 2016-02 is projected to increase our balance sheet by no more than 5% and not have a material impact on our capital ratios. In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments. The ASU simplifies the embedded derivative analysis for debt instruments containing contingent call or put options by removing the requirement to assess whether a contingent event is related to interest rates or credit risks. The ASU is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The ASU eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an adjustment must be made to the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The ASU is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update seek to simplify several aspects of the accounting for employee share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 will be effective for the Company for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating early adoption of this ASU and the impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Receipts and Cash Payments, a consensus of the FASB’s Emerging Issues Task Force. The ASU is intended to reduce diversity in practice in how certain transactions are presented and classified in the statement of cash flows. The standard will take effect for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of ASU No. 2016-15 is being reviewed for any material impact there may be on the Company's consolidated financial statements. . |
Business Combination |
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Business Combination [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination | BUSINESS COMBINATION On January 22, 2016, the Company’s wholly-owned subsidiary, 1st Security Bank, completed the purchase of four branches (“Branch Purchase”) from Bank of America, National Association (“Bank of America”). The Branch Purchase included four retail bank branches located in the communities of Port Angeles, Sequim, Port Townsend, and Hadlock, Washington. In accordance with the Purchase and Assumption Agreement, dated as of September 1, 2015, between Bank of America and 1st Security Bank, 1st Security Bank acquired $186.4 million of deposits, a small portfolio of performing loans, two owned bank branches, three leases associated with the bank branches and parking facilities and certain other assets of the branches. As of September 30, 2016, approximately $171.0 million of the acquired deposits remain at 1st Security Bank. In consideration of the purchased assets and transferred liabilities, 1st Security Bank paid (a) the unpaid principal balance and accrued interest of $419,000 for the loans acquired, (b) the net book value, or approximately $778,000, for the bank facilities and certain other assets associated with the acquired branches, and (c) a deposit premium of 2.50% on substantially all of the deposits assumed, which equated to approximately $4.8 million. The transaction was settled with Bank of America paying cash of $180.4 million to 1st Security Bank for the difference between these amounts and the total deposits assumed. The Branch Purchase was accounted for under the acquisition method of accounting and accordingly, the assets and liabilities were recorded at their fair values on January 22, 2016, the date of acquisition. Determining the fair value of assets and liabilities is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as information relative to closing date fair values become available. During the second quarter of 2016, the Company completed a re-evaluation of the core deposit intangible because a portion of the core deposits were excluded from the original valuation. The updated valuation of the core deposit intangible increased the fair value adjustment by $100,000 to $2.2 million from $2.1 million resulting in a decrease of $100,000 to the fair value adjustment of goodwill. The impact to consolidated net income was an increase in the amortization of the core deposit intangible for the six months ended June 30, 2016 of $6,000 and was not considered material to the consolidated financial statements. The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of acquisition:
Explanation of Fair Value Adjustments (1) The fair value adjustment represents the difference between the fair value of the acquired branches and the book value of the assets acquired. The Company utilized third-party valuations but did not receive appraisals to assist in the determination of fair value. (2) The fair value adjustment represents the value of the core deposit base assumed in the Branch Purchase based on a study performed by an independent consulting firm. This amount was recorded by the Company as an identifiable intangible asset and will be amortized as an expense on an accelerated basis over the average life of the core deposit base, which is estimated to be nine years. (3) The fair value adjustment represents the value of the goodwill calculated from the purchase based on the purchase price, less the fair value of assets acquired net of liabilities assumed. Goodwill - The acquired goodwill represents the excess purchase price over the estimated fair value of the net assets acquired and was recorded at $2.3 million on January 22, 2016. The table below summarizes the aggregate amount recognized for each major class of assets acquired and liabilities assumed by 1st Security Bank in the Branch Purchase on January 22, 2016:
(1) Purchase price includes premium paid on the deposits, the aggregate net book value of all assets acquired, and the unpaid principal and accrued interest on loans acquired. Core deposit intangible The core deposit intangible represents the fair value of the acquired core deposit base. The core deposit intangible will be amortized on an accelerated basis over approximately nine years. Total amortization expense was $140,000 and $382,000 for the three and nine months ended September 30, 2016, and none for the same periods in 2015. Amortization expense for core deposit intangible is expected to be as follows:
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Securities Available-for-sale |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | SECURITIES AVAILABLE-FOR-SALE The following tables present the amortized costs, unrealized gains, unrealized losses, and estimated fair values of securities available-for-sale at September 30, 2016 and December 31, 2015:
Investment securities that were in an unrealized loss position at September 30, 2016 and December 31, 2015 are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position. Management considers that these securities are only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral.
There were four investments with unrealized losses of less than one year, and two investments with unrealized losses of more than one year at September 30, 2016. There were 17 investments with unrealized losses of less than one year, and eight investments with unrealized losses of more than one year at December 31, 2015. The unrealized losses associated with these investments are believed to be caused by changes in market interest rates that are considered to be temporary and the Company does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity. No other-than-temporary impairment was recorded for the nine months ended September 30, 2016 or for the year ended December 31, 2015. The contractual maturities of securities available-for-sale at September 30, 2016 and December 31, 2015 are listed below. Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay the obligations; therefore, these securities are classified separately with no specific maturity date.
The proceeds and resulting gains and losses, computed using specific identification, from sales of securities available-for-sale for the three and nine months ended September 30, 2016 and 2015 were as follows:
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Loans Receivable and Allowance For Loan Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable and Allowance For Loan Losses | LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES The composition of the loan portfolio at September 30, 2016 and December 31, 2015 was as follows:
The Company’s lending business activity is concentrated in the greater Puget Sound area and one loan production office located in the Tri-Cities, Washington. Most of the Company’s lending is to customers located in the greater Puget Sound area, however, indirect home improvement loans are originated through a network of home improvement contractors and dealers located throughout Washington, Oregon, Idaho, and California. The Company also originates solar loans through contractors and dealers in the state of California. Generally, loans are secured by real estate, liens on receivables and/or equipment, personal property, and/or deposit accounts. Rights to collateral vary and are legally documented to the extent practicable. Local economic conditions may affect borrowers’ ability to meet the stated repayment terms. The Company has defined its loan portfolio into three segments that reflect the structure of the lending function, the Company’s strategic plan and the manner in which management monitors performance and credit quality. The three loan portfolio segments are: (a) Real Estate Loans, (b) Consumer Loans and (c) Commercial Business Loans. Each of these segments is disaggregated into classes based on the risk characteristics of the borrower and/or the collateral type securing the loan. The following is a summary of each of the Company’s loan portfolio segments and classes: Real Estate Loans Commercial Lending. Loans originated by the Company primarily secured by income producing properties, including retail centers, warehouses, and office buildings located in our market areas. Construction and Development Lending. Loans originated by the Company for the construction of, and secured by, commercial real estate, one-to-four-family, and multi-family residences and tracts of land for development that are not pre-sold. Home Equity Lending. Loans originated by the Company secured by second mortgages on one-to-four-family residences in our market areas. One-to-Four-Family Real Estate Lending. Commercial and consumer loans originated by the Company secured by first mortgages on one-to-four-family residences in our market areas that the Company intends to hold (excludes loans held for sale). Multi-Family Lending. Apartment term lending (five or more units) to current banking customers and community reinvestment loans for low to moderate income individuals in the Company’s footprint. Consumer Loans Indirect Home Improvement. Fixture secured loans are originated by the Company for home improvement and are secured by the personal property installed in, on, or at the borrower’s real property, and may be perfected with a UCC-2 financing statement filed in the county of the borrower’s residence. These indirect home improvement loans include replacement windows, siding, roofing, and other home fixture installations. Solar. Fixture secured loans are originated by the Company for home improvement and are secured by the personal property installed in, on, or at the borrower’s real property, and may be perfected with a UCC-2 financing statement filed in the county of the borrower’s residence. Marine. Loans originated by the Company secured by boats to borrowers primarily located in its market areas. Other Consumer. Loans originated by the Company, including automobiles, recreational vehicles, direct home improvement loans, loans on deposits, and other consumer loans, primarily consisting of personal lines of credit. Commercial Business Loans Commercial and Industrial Lending. Loans originated by the Company to local small and mid-sized businesses in our Puget Sound market area are secured primarily by accounts receivable, inventory, or personal property, plant and equipment. Commercial and industrial loans are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. Warehouse Lending. Loans originated by the Company’s mortgage and construction warehouse lending program through which the Company funds third-party finance companies originating residential mortgage loans for sale into the secondary market and speculative construction loans for sale to single family households. These loans are secured by the notes and assigned deeds of trust associated with the residential mortgage and construction loans on properties primarily located in the Company’s market areas. The following tables detail activity in the allowance for loan losses by loan categories at or for the three and nine months ended September 30, 2016 and 2015:
Nonaccrual and Past Due Loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are automatically placed on nonaccrual once the loan is 90 days past due or sooner if, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, or as required by regulatory authorities. The following tables provide information pertaining to the aging analysis of contractually past due loans and nonaccrual loans at September 30, 2016 and December 31, 2015:
There were no loans 90 days or more past due and still accruing at September 30, 2016 and December 31, 2015. The following tables provide additional information about our impaired loans that have been segregated to reflect loans for which an allowance for credit losses has been provided and loans for which no allowance has been provided at September 30, 2016 and December 31, 2015:
The following tables present the average recorded investment in loans individually evaluated for impairment and the interest income recognized and received for the three and nine months ended September 30, 2016 and 2015:
Credit Quality Indicators As part of the Company’s on-going monitoring of credit quality of the loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk grading of loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) non-performing loans and (v) the general economic conditions in the Company’s markets. The Company utilizes a risk grading matrix to assign a risk grade to its real estate and commercial business loans. Loans are graded on a scale of 1 to 10, with loans in risk grades 1 to 6 considered “Pass” and loans in risk grades 7 to 10 are reported as classified loans in the Company’s allowance for loan loss analysis. A description of the 10 risk grades is as follows:
Consumer, Home Equity and One-to-Four-Family Real Estate Loans Homogeneous loans are risk rated based upon the FDIC’s Uniform Retail Credit Classification and Account Management Policy. Loans classified under this policy at the Company are consumer loans which include indirect home improvement, solar, marine, other consumer, and one-to-four-family first and second liens. Under the Uniform Retail Credit Classification Policy, loans that are current or less than 90 days past due are graded “Pass” and risk rated “4” or “5” internally. Loans that are past due more than 90 days are classified “Substandard” and risk rated “8” internally until the loan has demonstrated consistent performance, typically six months of contractual payments. Closed-end loans that are 120 days past due and open-end loans that are 180 days past due are charged off based on the value of the collateral less cost to sell. The following tables summarize risk rated loan balances by category at September 30, 2016 and December 31, 2015:
Troubled Debt Restructured Loans Troubled debt restructured (“TDR”) loans are loans for which the Company, for economic or legal reasons related to the borrower’s financial condition, has granted a significant concession to the borrower that it would otherwise not consider. The loan terms which have been modified or restructured due to a borrower’s financial difficulty include but are not limited to: a reduction in the stated interest rate; an extension of the maturity at an interest rate below current market; a reduction in the face amount of the debt; a reduction in the accrued interest; or re-aging, extensions, deferrals and renewals. TDR loans are considered impaired loans and are individually evaluated for impairment. TDR loans can be classified as either accrual or non-accrual. TDR loans are classified as non-performing loans unless they have been performing in accordance with their modified terms for a period of at least six months in which case they are placed on accrual status. The Company had one TDR loan with a balance of $57,000 at September 30, 2016, which was still on accrual and included in impaired loans at September 30, 2016, and two TDR loans totaling $734,000 at December 31, 2015, of which one TDR loan with a balance of $525,000 was on non-accrual, and one TDR loan of $209,000 was still on accrual. The Company had no commitments to lend additional funds on these TDR loans at September 30, 2016. The following table summarizes TDR loan balances at the dates indicated:
For the three and nine months ended September 30, 2016 and 2015 there were no TDR loans that were modified in the previous 12 months that subsequently defaulted in the reporting period. |
Servicing Rights |
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Fair Value, Off-balance Sheet Risk [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicing Rights | SERVICING RIGHTS Loans serviced for others are not included on the Consolidated Balance Sheets. The unpaid principal balances of mortgage, commercial, and consumer loans serviced for others were $882.2 million and $636.1 million at September 30, 2016 and December 31, 2015, respectively and are carried at the lower of cost or market. At September 30, 2016 and December 31, 2015, mortgage, commercial, and consumer servicing rights’ (“servicing rights”) assets are recorded on the Consolidated Balance Sheets at a book value of $7.7 million and $5.8 million, respectively. The fair market value of the servicing rights’ assets was $7.8 million and $6.8 million at September 30, 2016 and December 31, 2015, respectively. The following tables summarize servicing rights activity for the three and nine months ended September 30, 2016 and 2015:
Fair value adjustments to mortgage, commercial, and consumer servicing rights were mainly due to market based assumptions associated with discounted cash flows, loan prepayment speeds, and changes in interest rates. A significant change in prepayments of the loans in the servicing portfolio could result in significant changes in the valuation adjustments, thus creating potential volatility in the carrying amount of servicing rights. The following provides valuation assumptions used in determining the fair value of mortgage servicing rights (“MSR”) at the dates indicated:
Key economic assumptions and the sensitivity of the current fair value for single family mortgage servicing rights to immediate adverse changes in those assumptions at September 30, 2016 and December 31, 2015 were as follows:
The above tables show the sensitivity to market rate changes for the par rate coupon for a conventional one-to-four-family FNMA/FHLMC/GNMA serviced home loan. The above tables reference a 50 basis point and 100 basis point decrease in note rates. These sensitivities are hypothetical and should be used with caution as the tables above demonstrate the Company’s methodology for estimating the fair value of MSR is highly sensitive to changes in key assumptions. For example, actual prepayment experience may differ and any difference may have a material effect on MSR fair value. Changes in fair value resulting from changes in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in fair value may not be linear. Also, in these tables, the effects of a variation in a particular assumption on the fair value of the MSR is calculated without changing any other assumption; in reality, changes in one factor may be associated with changes in another (for example, decreases in market interest rates may provide an incentive to refinance; however, this may also indicate a slowing economy and an increase in the unemployment rate, which reduces the number of borrowers who qualify for refinancing), which may magnify or counteract the sensitivities. Thus, any measurement of MSR fair value is limited by the conditions existing and assumptions made at a particular point in time. Those assumptions may not be appropriate if they are applied to a different point in time. The Company recorded $534,000 and $343,000 of contractually specified servicing fees, late fees, and other ancillary fees resulting from servicing of mortgage, commercial and consumer loans for the three months ended September 30, 2016 and 2015, respectively, and $1.4 million and $857,000 for the nine months ended September 30, 2016 and 2015, respectively. The income, net of amortization, is reported in noninterest income. |
Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | DERIVATIVES The Company regularly enters into commitments to originate and sell loans held for sale. The Company has established a hedging strategy to protect itself against the risk of loss associated with interest rate movements on loan commitments. The Company enters into contracts to sell forward To-Be-Announced (“TBA”) mortgage-backed securities. These commitments and contracts are considered derivatives but have not been designated as hedging instruments. Rather, they are accounted for as free-standing derivatives, or economic hedges, with changes in the fair value of the derivatives reported in noninterest income. The Company recognizes all derivative instruments as either other assets or other liabilities on the Consolidated Balance Sheets and measures those instruments at fair value. The following tables summarize the Company’s derivative instruments at the dates indicated:
Changes in the fair value of the derivatives recognized in other noninterest income on the Consolidated Statements of Income and included in gain on sale of loans resulted in a net gain of $697,000 and a net loss of $346,000 for the three months ended September 30, 2016 and 2015, respectively, and a net gain of $1.7 million and $1.1 million for the nine months ended September 30, 2016 and 2015, respectively. |
Other Real Estate Owned |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Real Estate Owned | OTHER REAL ESTATE OWNED There was no OREO activity for the three months ended September 30, 2016 and 2015. The following table presents the activity related to OREO for the nine months ended September 30, 2016 and 2015:
There were no OREO properties at September 30, 2016 and 2015. For the three months ended September 30, 2016 and 2015, the Company recorded no net gain or loss on the disposals of OREO, respectively. There were no holding costs associated with OREO for the three and nine months ended September 30, 2016 and 2015. |
Deposits |
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Deposits | DEPOSITS Deposits are summarized as follows at September 30, 2016 and December 31, 2015:
(1) Includes $47.1 million of brokered deposits at September 30, 2016 and $27.9 million at December 31, 2015. (2) Time deposits that meet or exceed the FDIC insurance limit. (3) Includes $171.0 million of deposits acquired in the Branch Purchase. Scheduled maturities of time deposits at September 30, 2016 for future periods ending are as follows:
The Bank pledged 13 securities held at the FHLB of Des Moines with a fair value of $15.7 million to secure Washington State public deposits of $6.6 million with a $746,000 collateral requirement by the Washington Public Deposit Protection Commission at September 30, 2016. Federal Reserve regulations require that the Bank maintain reserves in the form of cash on hand and deposit balances with the Federal Reserve Bank, based on a percentage of deposits. The amounts of such balances at September 30, 2016 and December 31, 2015 were $12.6 million and $3.0 million, respectively, and were in compliance with Federal Reserve regulations. Interest expense by deposit category for the three and nine months ended September 30, 2016 and 2015 is as follows:
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Commitments and Contingencies |
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Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Commitments - The Company is 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 risk in excess of the amount recognized on the balance sheet. The Company’s exposure to credit loss in the event of nonperformance 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 table provides a summary of the Company’s commitments at September 30, 2016 and December 31, 2015:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the amount of the total commitments do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon an extension of credit, is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate, and income-producing commercial properties. Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit are uncollateralized and usually do not contain a specified maturity date and ultimately may not be drawn upon to the total extent to which the Company is committed. The Company has established reserves for estimated losses from unfunded commitments of $166,000 at September 30, 2016 and $147,000 at December 31, 2015. One-to-four-family commitments included in the table above are accounted for as fair value derivatives and do not carry an associated loss reserve. The Company has entered into a severance agreement with its Chief Executive Officer. The severance agreement, subject to certain requirements, generally includes a lump sum payment to the Chief Executive Officer equal to 24 months of base compensation in the event his employment is involuntarily terminated, other than for cause or the executive terminates his employment with good reason, as defined in the severance agreement. The Company has entered into change of control agreements with its Chief Financial Officer, Chief Operating Officer, Chief Lending Officer, and two Executive Vice Presidents of Home Lending. The change of control agreements, subject to certain requirements, generally remain in effect until canceled by either party upon at least 24 months prior written notice. Under the change of control agreements the executive generally will be entitled to a change of control payment from the Company if the executive is involuntarily terminated within six months preceding or 12 months after a change in control (as defined in the change of control agreements). In such an event, the executives would each be entitled to receive a cash payment in an amount equal to 12 months of their then current salary, subject to certain requirements in the change of control agreements. Because of the nature of our activities, the Company is subject to various pending and threatened legal actions, which arise in the ordinary course of business. From time to time, subordination liens may create litigation which requires us to defend our lien rights. In the opinion of management, liabilities arising from these claims, if any, will not have a material effect on our financial position. The Company had no material pending legal actions at September 30, 2016. Contingent liabilities for loans held for sale - In the ordinary course of business, the Company sells loans without recourse that may have to subsequently be repurchased due to defects that occurred during the origination of the loan. The defects are categorized as documentation errors, underwriting errors, early payoff, early payment defaults, breach of representation or warranty, servicing errors, and/or fraud. When a loan sold to an investor without recourse fails to perform according to its contractual terms, the investor will typically review the loan file to determine whether defects in the origination process occurred. If a defect is identified, the Company may be required to either repurchase the loan or indemnify the investor for losses sustained. If there are no such defects, the Company has no commitment to repurchase the loan. The Company has recorded reserves of $825,000 and $561,000 to cover loss exposure related to these guarantees for one-to-four-family loans sold into the secondary market at September 30, 2016 and December 31, 2015, respectively, which is included in other liabilities in the Consolidated Balance Sheets. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. Consequently, the fair value of the Company’s consolidated financial instruments will change when interest rate levels change and that change may either be favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. However, borrowers with fixed interest rate obligations are less likely to prepay in a rising interest rate environment and more likely to prepay in a falling interest rate environment. Conversely, depositors who are receiving fixed interest rates are more likely to withdraw funds before maturity in a rising interest rate environment and less likely to do so in a falling interest rate environment. Management monitors interest rates and maturities of assets and liabilities, and attempts to minimize interest rate risk by adjusting terms of new loans, and deposits, and by investing in securities with terms that mitigate the Company’s overall interest rate risk. Accounting guidance regarding fair value measurements defines fair value and establishes a framework for measuring fair value in accordance with U.S. GAAP. Fair value is the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The following definitions describe the levels of inputs that may be used to measure fair value: Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Determination of Fair Market Values: Securities - Securities available-for-sale are recorded at fair value on a recurring basis. The fair value of investments and mortgage-backed securities are provided by a third-party pricing service. These valuations are based on market data using pricing models that vary by asset class and incorporate available current trade, bid, and other market information, and for structured securities, cash flow, and loan performance data. The pricing processes utilize benchmark curves, benchmarking of similar securities, sector groupings, and matrix pricing. Option adjusted spread models are also used to assess the impact of changes in interest rates and to develop prepayment scenarios. Transfers between the fair value hierarchy are determined through the third-party service provider which, from time to time will transfer between levels based on market conditions per the related security. All models and processes used, take into account market convention (Level 2). Mortgage Loans Held for Sale - The fair value of loans held for sale reflects the value of commitments with investors and/or the relative price as delivered into a TBA mortgage-backed security (Level 2). Derivative Instruments - The fair value of the interest rate lock commitments and forward sales commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. TBA mortgage-backed securities are fair valued on similar contracts in active markets (Level 2) while locks and forwards with customers and investors are valued using similar contracts in the market and changes in the market interest rates (Levels 2 and 3). Impaired Loans - Fair value adjustments to impaired collateral dependent loans are recorded to reflect partial write-downs based on the current appraised value of the collateral or internally developed models, which contain management’s assumptions (Level 3). The following tables present securities available-for-sale measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:
The following table presents mortgage loans held for sale measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:
The following tables present the fair value of interest rate lock commitments with customers, individual forward sale commitments with investors, and paired off commitments with investors measured at their fair value on a recurring basis at September 30, 2016 and December 31, 2015:
The following table presents impaired loans measured at fair value on a nonrecurring basis for which a nonrecurring change in fair value has been recorded during the reporting period. The amounts disclosed below represent the fair values at the time the nonrecurring fair value measurements were made, and not necessarily the fair value as of the dates reported upon.
Quantitative Information about Level 3 Fair Value Measurements - Shown below is the fair value of financial instruments measured under a Level 3 unobservable input on a recurring and nonrecurring basis at September 30, 2016 table:
An increase in the pull-through rate utilized in the fair value measurement of the interest rate lock commitments with customers and forward sale commitments with investors will result in positive fair value adjustments (and an increase in the fair value measurement). Conversely, a decrease in the pull-through rate will result in a negative fair value adjustment (and a decrease in the fair value measurement). The following tables provide a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and nine months ended September 30, 2016 and 2015:
Gains (losses) on interest rate lock commitments carried at fair value are recorded in other noninterest income. Gains (losses) on forward sale commitments with investors carried at fair value are recorded within other noninterest income. Fair Values of Financial Instruments - The following methods and assumptions were used by the Company in estimating the fair values of financial instruments disclosed in these financial statements: Cash, and Cash Equivalents and Certificates of Deposit at Other Financial Institutions - The carrying amounts of cash and short-term instruments approximates their fair value (Level 1). Federal Home Loan Bank stock - The par value of FHLB stock approximates its fair value (Level 2). Accrued Interest - The carrying amounts of accrued interest approximates its fair value (Level 2). Loans Receivable, Net - For variable rate loans that re-price frequently and have no significant change in credit risk, fair values are based on carrying values. Fair values for fixed rate loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers or similar credit quality (Level 3). Servicing Rights - The fair value of mortgage, commercial and consumer servicing rights are estimated using net present value of expected cash flows using a third party model that incorporates assumptions used in the industry to value such rights, adjusted for factors such as weighted average prepayments speeds based on historical information, where appropriate (Level 3). Deposits - The fair value of deposits with no stated maturity date is included at the amount payable on demand. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flow calculation on interest rates currently offered on similar certificates (Level 2). Borrowings - The carrying amounts of advances maturing within 90 days approximate their fair values. The fair values of long-term advances are estimated using discounted cash flow analyses based on the Bank’s current incremental borrowing rates for similar types of borrowing arrangements (Level 2). Subordinated Note - The fair value of the Subordinated Note is based upon the average yield of debt issuances in the third quarter of 2016 for similarly sized issuances (Level 2). Off-Balance Sheet Instruments - The fair value of commitments to extend credit are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and the present creditworthiness of the customers. The majority of the Company’s off-balance sheet instruments consist of non-fee producing, variable-rate commitments, the Company has determined they do not have a distinguishable fair value. The fair value of loan lock commitments with customers and investors reflect an estimate of value based upon the interest rate lock date, the expected pull through percentage for the commitment, and the interest rate at year end (Levels 2 and 3). The following table provides estimated fair values of the Company’s financial instruments at September 30, 2016 and December 31, 2015:
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Employee Benefits |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | EMPLOYEE BENEFITS Employee Stock Ownership Plan On January 1, 2012, the Company established an ESOP for eligible employees of the Company and the Bank. Employees of the Company and the Bank who have been credited with at least 1,000 hours of service during a 12-month period are eligible to participate in the ESOP. The ESOP borrowed $2.6 million from FS Bancorp, Inc. and used those funds to acquire 259,210 shares of FS Bancorp, Inc. common stock in the open market at an average price of $10.17 per share during the second half of 2012. It is anticipated that the Bank will make contributions to the ESOP in amounts necessary to amortize the ESOP loan payable to FS Bancorp, Inc. over a period of 10 years, bearing interest at 2.30%. Intercompany expenses associated with the ESOP are eliminated in consolidation. Shares purchased by the ESOP with the loan proceeds are held in a suspense account and allocated to ESOP participants on a pro rata basis as principal and interest payments are made by the ESOP to FS Bancorp, Inc. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Bank’s discretionary contributions to the ESOP and earnings on the ESOP assets. Payments of principal and interest are due annually on December 31, the Company’s fiscal year end. On December 31, 2015, the ESOP paid the fourth annual installment of principal in the amount of $251,000, plus accrued interest of $44,000 pursuant to the ESOP loan agreement. As shares are committed to be released from collateral, the Company reports compensation expense equal to the average daily market prices of the shares at September 30, 2016 for the prior 90 days. These shares become outstanding for earnings per share computations. The compensation expense is accrued monthly throughout the year. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings; dividends on unallocated ESOP shares are recorded as a reduction of debt and accrued interest. Compensation expense related to the ESOP was $204,000 and $148,000 for the three months ended September 30, 2016 and 2015, respectively, and $529,000 and $408,000 for the nine months ended September 30, 2016 and 2015, respectively. Shares held by the ESOP at September 30, 2016 were as follows (shown as actual):
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share are computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. For earnings per share calculations, the ESOP shares committed to be released are included as outstanding shares for both basic and diluted earnings per share. The following table presents a reconciliation of the components used to compute basic and diluted earnings per share for the three and nine months ended September 30, 2016 and 2015:
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Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | STOCK-BASED COMPENSATION Stock Options and Restricted Stock In September 2013, the shareholders of FS Bancorp, Inc. approved the FS Bancorp, Inc. 2013 Equity Incentive Plan (“Plan”). The Plan provides for the grant of stock options and restricted stock awards. Total share-based compensation expense for the Plan was $195,000 and $588,000 for the three and nine months ended September 30, 2016, respectively, and $186,000 and $560,000 for the three and nine months ended September 30, 2015, respectively. Stock Options The Plan authorizes the grant of stock options totaling 324,013 shares to Company directors and employees. Option awards were granted with an exercise price equal to the market price of FS Bancorp’s common stock at the grant date, May 8, 2014, of $16.89 per share. These option awards were granted as non-qualified stock options, having a vesting period of five years, with 20% vesting on the anniversary date of each grant date, and a contractual life of 10 years. Any unexercised stock options will expire 10 years after the grant date or sooner in the event of the award recipient’s termination of service with the Company or the Bank. The fair value of each option award is estimated on the grant date using a Black-Scholes Option pricing model that uses the following assumptions. The dividend yield is based on the current quarterly dividend in effect at the time of the grant. Historical employment data is used to estimate the forfeiture rate. The Company became a publicly held company in July 2012, therefore historical data was not available to calculate the volatility for FS Bancorp stock. Given this limitation, management utilized a proxy to determine the expected volatility of FS Bancorp’s stock. The proxy chosen was the NASDAQ Bank Index, or NASDAQ Bank (NASDAQ symbol: BANK). This index provides the volatility of the banking sector for NASDAQ traded banks. The majority of smaller banks are traded on the NASDAQ given the costs and daily interaction required with trading on the New York Stock Exchange. The Company utilized the comparable Treasury rate for the discount rate associated with the stock options granted. The Company elected to use Staff Accounting Bulletin 107, simplified expected term calculation for the “Share-Based Payments” method permitted by the SEC to calculate the expected term. This method uses the vesting term of an option along with the contractual term, setting the expected life at 6.5 years. The following table presents a summary of the Company’s stock option plan awards during the nine months ended September 30, 2016 (shown as actual):
At September 30, 2016, there was $597,000 of total unrecognized compensation cost related to nonvested stock options granted under the Plan. The cost is expected to be recognized over the remaining weighted-average vesting period of 2.6 years. Restricted Stock Awards The Plan authorizes the grant of restricted stock awards totaling 129,605 shares to Company directors and employees, and all but 4,500 shares were granted on May 8, 2014 at a grant date fair value of $16.89 per share. The remaining 4,500 restricted stock awards were granted January 1, 2016 at a grant date fair value of $26.00 per share. Compensation expense is recognized over the vesting period of the awards based on the fair value of the restricted stock. The restricted stock awards’ fair value is equal to the value on the grant date. Shares awarded as restricted stock vest ratably over a three-year period for directors and a five-year period for employees, beginning at the grant date. Any unexercised restricted stock awards will expire after vesting or sooner in the event of the award recipient’s termination of service with the Company or the Bank. The following table presents a summary of the Company’s nonvested awards during the nine months ended September 30, 2016 (shown as actual):
At September 30, 2016, there was $970,000 of total unrecognized compensation costs related to nonvested shares granted as restricted stock awards. The cost is expected to be recognized over the remaining weighted-average vesting period of 2.3 years. |
Regulatory Capital |
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Regulatory Capital Requirements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital | REGULATORY CAPITAL The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines of the regulatory framework for prompt corrective action, the Bank must meet specific capital adequacy guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital classification is also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Tier 1 capital (as defined in the regulations) to total average assets (as defined), and minimum ratios of Tier 1 total capital (as defined) and common equity Tier 1 (“CET 1”) capital to risk-weighted assets (as defined). The Bank must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below to be categorized as well capitalized. At September 30, 2016 and December 31, 2015, the Bank was categorized as well capitalized under applicable regulatory requirements. There are no conditions or events since that notification that management believes have changed the Bank’s category. The following tables compare the Bank’s actual capital amounts and ratios at September 30, 2016 and December 31, 2015 to their minimum regulatory capital requirements and well capitalized regulatory capital at those dates (dollars in thousands):
In addition to the minimum CET 1, Tier 1 and total capital ratios, the Bank has to maintain a capital conservation buffer consisting of additional CET 1 capital above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. This new capital conservation buffer requirement began to be phased in starting in January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented to an amount equal to 2.5% of risk-weighted assets in January 2019. FS Bancorp, Inc. is a bank holding company subject to the capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve. For a bank holding company with less than $1.0 billion in assets, the capital guidelines apply on a bank only basis and the Federal Reserve expects the holding company’s subsidiary banks to be well capitalized under the prompt corrective action regulations. If FS Bancorp, Inc. was subject to regulatory guidelines for bank holding companies with $1.0 billion or more in assets, at September 30, 2016, the Company would have exceeded all regulatory capital requirements. The regulatory capital ratios calculated for FS Bancorp, Inc. at September 30, 2016 were 9.4% for Tier 1 leverage-based capital, 11.1% for Tier 1 risk-based capital, 12.4% for total risk-based capital, and 11.1% for CET 1 capital ratio. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||
Financial Statement Presentation | Financial Statement Presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). It is recommended that these unaudited interim consolidated financial statements be read in conjunction with the Company’s Annual Report on Form 10-K with all of the audited information and footnotes required by U.S. GAAP for complete financial statements for the year ended December 31, 2015, as filed with the SEC on March 25, 2016. In the opinion of management, all normal adjustments and recurring accruals considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. The results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016, or any other future period. The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect amounts reported in the financial statements. Actual results could differ from these estimates. Material estimates that are particularly susceptible to change in the near term are allowances for loan losses, fair value of measurements, and servicing assets. Amounts presented in the consolidated financial statements and footnote tables are rounded and presented in thousands of dollars except per share amounts. In the narrative footnote discussion, amounts are rounded and presented in millions of dollars to one decimal point if the amounts are above $1.0 million. Amounts below $1.0 million are rounded and presented in dollars to the nearest thousands. Certain prior year amounts have been reclassified to conform to the 2016 presentation with no change to consolidated net income or stockholders’ equity previously reported. |
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Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the accounts of FS Bancorp, Inc. and its wholly owned subsidiary, 1st Security Bank of Washington. All material intercompany accounts have been eliminated in consolidation. |
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Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which creates Topic 606 and supersedes Topic 605, Revenue Recognition. In August 2015, FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606), which postponed the effective date of 2014-09. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net, which amended the principal versus agent implementation guidance set for in ASU 2014-09. Among other things, ASU 2016-08 clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The ASU amends certain aspects of the guidance set forth in the FASB's new revenue standard related to identifying performance obligations and licensing implementation. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In general, the new guidance requires companies to use more judgment and make more estimates than under current guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and adds some practical expedients, but does not change the core revenue recognition principle in Topic 606. The standard is effective for public entities for interim and annual periods beginning after December 15, 2017; early adoption is not permitted. For financial reporting purposes, the standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period presented in the financial statements with the cumulative effect of initially applying the standard recognized at the date of initial application. The Company is currently evaluating the provisions to determine the potential impact the new standard will have on the Company's consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU is intended to improve the recognition and measurement of financial instruments. This ASU requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. In addition, the amendments in this ASU require the exit price notion be used when measuring the fair value of financial instruments for disclosure purposes and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. This ASU also eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. The ASU also requires a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU No. 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for certain provisions. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU No. 2016-02 requires lessees to recognize on the balance sheet the assets and liabilities arising from operating leases. A lessee should recognize a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. A lessee should include payments to be made in an optional period only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. For a finance lease, interest payments should be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income. For operating leases, the lease cost should be allocated over the lease term on a generally straight-line basis. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in the ASU is permitted. The adoption of ASU 2016-02 is projected to increase our balance sheet by no more than 5% and not have a material impact on our capital ratios. In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments. The ASU simplifies the embedded derivative analysis for debt instruments containing contingent call or put options by removing the requirement to assess whether a contingent event is related to interest rates or credit risks. The ASU is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The ASU eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an adjustment must be made to the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The ASU is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update seek to simplify several aspects of the accounting for employee share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 will be effective for the Company for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating early adoption of this ASU and the impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of this ASU on the Company's consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Receipts and Cash Payments, a consensus of the FASB’s Emerging Issues Task Force. The ASU is intended to reduce diversity in practice in how certain transactions are presented and classified in the statement of cash flows. The standard will take effect for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of ASU No. 2016-15 is being reviewed for any material impact there may be on the Company's consolidated financial statements. . |
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Loan Portfolio Segment | The Company has defined its loan portfolio into three segments that reflect the structure of the lending function, the Company’s strategic plan and the manner in which management monitors performance and credit quality. The three loan portfolio segments are: (a) Real Estate Loans, (b) Consumer Loans and (c) Commercial Business Loans. Each of these segments is disaggregated into classes based on the risk characteristics of the borrower and/or the collateral type securing the loan. The following is a summary of each of the Company’s loan portfolio segments and classes: Real Estate Loans Commercial Lending. Loans originated by the Company primarily secured by income producing properties, including retail centers, warehouses, and office buildings located in our market areas. Construction and Development Lending. Loans originated by the Company for the construction of, and secured by, commercial real estate, one-to-four-family, and multi-family residences and tracts of land for development that are not pre-sold. Home Equity Lending. Loans originated by the Company secured by second mortgages on one-to-four-family residences in our market areas. One-to-Four-Family Real Estate Lending. Commercial and consumer loans originated by the Company secured by first mortgages on one-to-four-family residences in our market areas that the Company intends to hold (excludes loans held for sale). Multi-Family Lending. Apartment term lending (five or more units) to current banking customers and community reinvestment loans for low to moderate income individuals in the Company’s footprint. Consumer Loans Indirect Home Improvement. Fixture secured loans are originated by the Company for home improvement and are secured by the personal property installed in, on, or at the borrower’s real property, and may be perfected with a UCC-2 financing statement filed in the county of the borrower’s residence. These indirect home improvement loans include replacement windows, siding, roofing, and other home fixture installations. Solar. Fixture secured loans are originated by the Company for home improvement and are secured by the personal property installed in, on, or at the borrower’s real property, and may be perfected with a UCC-2 financing statement filed in the county of the borrower’s residence. Marine. Loans originated by the Company secured by boats to borrowers primarily located in its market areas. Other Consumer. Loans originated by the Company, including automobiles, recreational vehicles, direct home improvement loans, loans on deposits, and other consumer loans, primarily consisting of personal lines of credit. Commercial Business Loans Commercial and Industrial Lending. Loans originated by the Company to local small and mid-sized businesses in our Puget Sound market area are secured primarily by accounts receivable, inventory, or personal property, plant and equipment. Commercial and industrial loans are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. Warehouse Lending. Loans originated by the Company’s mortgage and construction warehouse lending program through which the Company funds third-party finance companies originating residential mortgage loans for sale into the secondary market and speculative construction loans for sale to single family households. These loans are secured by the notes and assigned deeds of trust associated with the residential mortgage and construction loans on properties primarily located in the Company’s market areas. |
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Nonaccrual and Past Due Loans | Nonaccrual and Past Due Loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are automatically placed on nonaccrual once the loan is 90 days past due or sooner if, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, or as required by regulatory authorities. |
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Credit Quality Indicators | The Company utilizes a risk grading matrix to assign a risk grade to its real estate and commercial business loans. Loans are graded on a scale of 1 to 10, with loans in risk grades 1 to 6 considered “Pass” and loans in risk grades 7 to 10 are reported as classified loans in the Company’s allowance for loan loss analysis. A description of the 10 risk grades is as follows:
Consumer, Home Equity and One-to-Four-Family Real Estate Loans Homogeneous loans are risk rated based upon the FDIC’s Uniform Retail Credit Classification and Account Management Policy. Loans classified under this policy at the Company are consumer loans which include indirect home improvement, solar, marine, other consumer, and one-to-four-family first and second liens. Under the Uniform Retail Credit Classification Policy, loans that are current or less than 90 days past due are graded “Pass” and risk rated “4” or “5” internally. Loans that are past due more than 90 days are classified “Substandard” and risk rated “8” internally until the loan has demonstrated consistent performance, typically six months of contractual payments. Closed-end loans that are 120 days past due and open-end loans that are 180 days past due are charged off based on the value of the collateral less cost to sell. |
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Troubled Debt Restructured Loans | TDR loans are considered impaired loans and are individually evaluated for impairment. TDR loans can be classified as either accrual or non-accrual. TDR loans are classified as non-performing loans unless they have been performing in accordance with their modified terms for a period of at least six months in which case they are placed on accrual status. |
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Derivatives | The Company regularly enters into commitments to originate and sell loans held for sale. The Company has established a hedging strategy to protect itself against the risk of loss associated with interest rate movements on loan commitments. The Company enters into contracts to sell forward To-Be-Announced (“TBA”) mortgage-backed securities. These commitments and contracts are considered derivatives but have not been designated as hedging instruments. Rather, they are accounted for as free-standing derivatives, or economic hedges, with changes in the fair value of the derivatives reported in noninterest income. The Company recognizes all derivative instruments as either other assets or other liabilities on the Consolidated Balance Sheets and measures those instruments at fair value. |
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Loan Commitments | The Company’s exposure to credit loss in the event of nonperformance 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. |
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Determination of Fair Market Values | Determination of Fair Market Values: Securities - Securities available-for-sale are recorded at fair value on a recurring basis. The fair value of investments and mortgage-backed securities are provided by a third-party pricing service. These valuations are based on market data using pricing models that vary by asset class and incorporate available current trade, bid, and other market information, and for structured securities, cash flow, and loan performance data. The pricing processes utilize benchmark curves, benchmarking of similar securities, sector groupings, and matrix pricing. Option adjusted spread models are also used to assess the impact of changes in interest rates and to develop prepayment scenarios. Transfers between the fair value hierarchy are determined through the third-party service provider which, from time to time will transfer between levels based on market conditions per the related security. All models and processes used, take into account market convention (Level 2). Mortgage Loans Held for Sale - The fair value of loans held for sale reflects the value of commitments with investors and/or the relative price as delivered into a TBA mortgage-backed security (Level 2). Derivative Instruments - The fair value of the interest rate lock commitments and forward sales commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. TBA mortgage-backed securities are fair valued on similar contracts in active markets (Level 2) while locks and forwards with customers and investors are valued using similar contracts in the market and changes in the market interest rates (Levels 2 and 3). Impaired Loans - Fair value adjustments to impaired collateral dependent loans are recorded to reflect partial write-downs based on the current appraised value of the collateral or internally developed models, which contain management’s assumptions (Level 3). |
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Employee Stock Ownership Plan | Employees of the Company and the Bank who have been credited with at least 1,000 hours of service during a 12-month period are eligible to participate in the ESOP. |
Business Combination (Tables) |
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Business Combination [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed at Acquisition | The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of acquisition:
Explanation of Fair Value Adjustments (1) The fair value adjustment represents the difference between the fair value of the acquired branches and the book value of the assets acquired. The Company utilized third-party valuations but did not receive appraisals to assist in the determination of fair value. (2) The fair value adjustment represents the value of the core deposit base assumed in the Branch Purchase based on a study performed by an independent consulting firm. This amount was recorded by the Company as an identifiable intangible asset and will be amortized as an expense on an accelerated basis over the average life of the core deposit base, which is estimated to be nine years. (3) The fair value adjustment represents the value of the goodwill calculated from the purchase based on the purchase price, less the fair value of assets acquired net of liabilities assumed. Goodwill - The acquired goodwill represents the excess purchase price over the estimated fair value of the net assets acquired and was recorded at $2.3 million on January 22, 2016. The table below summarizes the aggregate amount recognized for each major class of assets acquired and liabilities assumed by 1st Security Bank in the Branch Purchase on January 22, 2016:
(1) Purchase price includes premium paid on the deposits, the aggregate net book value of all assets acquired, and the unpaid principal and accrued interest on loans acquired. Core deposit intangible The core deposit intangible represents the fair value of the acquired core deposit base. The core deposit intangible will be amortized on an accelerated basis over approximately nine years. Total amortization expense was $140,000 and $382,000 for the three and nine months ended September 30, 2016, and none for the same periods in 2015. Amortization expense for core deposit intangible is expected to be as follows:
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Securities Available-for-sale (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-sale Securities Reconciliation | The following tables present the amortized costs, unrealized gains, unrealized losses, and estimated fair values of securities available-for-sale at September 30, 2016 and December 31, 2015:
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Schedule of Unrealized Loss on Investments | Investment securities that were in an unrealized loss position at September 30, 2016 and December 31, 2015 are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position. Management considers that these securities are only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral.
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Schedule of Available for Sale Securities by Contractual Mataurity | The contractual maturities of securities available-for-sale at September 30, 2016 and December 31, 2015 are listed below. Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay the obligations; therefore, these securities are classified separately with no specific maturity date.
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Schedule of Proceeds and Realized Gain (Loss) | The proceeds and resulting gains and losses, computed using specific identification, from sales of securities available-for-sale for the three and nine months ended September 30, 2016 and 2015 were as follows:
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Loans Receivable and Allowance For Loan Losses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable | The composition of the loan portfolio at September 30, 2016 and December 31, 2015 was as follows:
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Allowance for Credit Losses on Financing Receivables | The following tables detail activity in the allowance for loan losses by loan categories at or for the three and nine months ended September 30, 2016 and 2015:
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Past Due Financing Receivables | The following tables provide information pertaining to the aging analysis of contractually past due loans and nonaccrual loans at September 30, 2016 and December 31, 2015:
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Impaired Financing Receivables | The following tables present the average recorded investment in loans individually evaluated for impairment and the interest income recognized and received for the three and nine months ended September 30, 2016 and 2015:
The following tables provide additional information about our impaired loans that have been segregated to reflect loans for which an allowance for credit losses has been provided and loans for which no allowance has been provided at September 30, 2016 and December 31, 2015:
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Financing Receivable Credit Quality Indicators | The following tables summarize risk rated loan balances by category at September 30, 2016 and December 31, 2015:
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Troubled Debt Restructurings on Financing Receivables | The following table summarizes TDR loan balances at the dates indicated:
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Servicing Rights (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Off-balance Sheet Risk [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Mortgage Servicing Rights | The following tables summarize servicing rights activity for the three and nine months ended September 30, 2016 and 2015:
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Valuation assumptions used in determining the fair value of servicing rights | The following provides valuation assumptions used in determining the fair value of mortgage servicing rights (“MSR”) at the dates indicated:
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Key economic assumptions and the sensitivity of the current fair value for single family mortgage servicing rights | Key economic assumptions and the sensitivity of the current fair value for single family mortgage servicing rights to immediate adverse changes in those assumptions at September 30, 2016 and December 31, 2015 were as follows:
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Derivatives (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | The following tables summarize the Company’s derivative instruments at the dates indicated:
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Other Real Estate Owned (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Real Estate Owned | The following table presents the activity related to OREO for the nine months ended September 30, 2016 and 2015:
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Deposits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deposit Liabilities | Deposits are summarized as follows at September 30, 2016 and December 31, 2015:
(1) Includes $47.1 million of brokered deposits at September 30, 2016 and $27.9 million at December 31, 2015. (2) Time deposits that meet or exceed the FDIC insurance limit. (3) Includes $171.0 million of deposits acquired in the Branch Purchase. |
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Schedule of Maturities of Time Deposits for Future Periods | Scheduled maturities of time deposits at September 30, 2016 for future periods ending are as follows:
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Schedule of Interest Expense by Deposit Category | Interest expense by deposit category for the three and nine months ended September 30, 2016 and 2015 is as follows:
|
Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Commitments to Extend Credit | The following table provides a summary of the Company’s commitments at September 30, 2016 and December 31, 2015:
|
Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Available For Sale Securities Measured At Fair Value On A Recurring Basis | The following tables present securities available-for-sale measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:
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Fair Value, Mortgage Loans Held for Sale | The following table presents mortgage loans held for sale measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:
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Schedule of Interest Rate Lock Commitments Measured at Fair Value on Recurring Basis | The following tables present the fair value of interest rate lock commitments with customers, individual forward sale commitments with investors, and paired off commitments with investors measured at their fair value on a recurring basis at September 30, 2016 and December 31, 2015:
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Forward Sale Commitments with Investors Measured at Fair Value On A Recurring Basis |
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Paired Off Commitments with Investors Measured at Fair Value On A Recurring Basis |
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Schedule of Impaired Loans and Other Real Estate Owned | The following table presents impaired loans measured at fair value on a nonrecurring basis for which a nonrecurring change in fair value has been recorded during the reporting period. The amounts disclosed below represent the fair values at the time the nonrecurring fair value measurements were made, and not necessarily the fair value as of the dates reported upon.
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Schedule of Fair Value of Financial Instruments Measured under a Level 3 Unobservable Input | Quantitative Information about Level 3 Fair Value Measurements - Shown below is the fair value of financial instruments measured under a Level 3 unobservable input on a recurring and nonrecurring basis at September 30, 2016 table:
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Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation | The following tables provide a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and nine months ended September 30, 2016 and 2015:
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Fair Value, by Balance Sheet Grouping | The following table provides estimated fair values of the Company’s financial instruments at September 30, 2016 and December 31, 2015:
|
Employee Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Shares Under ESOP | Shares held by the ESOP at September 30, 2016 were as follows (shown as actual):
|
Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents a reconciliation of the components used to compute basic and diluted earnings per share for the three and nine months ended September 30, 2016 and 2015:
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Awards | The following table presents a summary of the Company’s stock option plan awards during the nine months ended September 30, 2016 (shown as actual):
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Summary of Nonvested Awards | The following table presents a summary of the Company’s nonvested awards during the nine months ended September 30, 2016 (shown as actual):
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Regulatory Capital (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations | The following tables compare the Bank’s actual capital amounts and ratios at September 30, 2016 and December 31, 2015 to their minimum regulatory capital requirements and well capitalized regulatory capital at those dates (dollars in thousands):
|
Basis of Presentation and Summary of Significant Accounting Policies (Details) |
Sep. 30, 2016
branch
shares
|
Jan. 22, 2016 |
Jul. 09, 2012
shares
|
---|---|---|---|
Schedule of Accounting Policies [Line Items] | |||
Number of bank branches | 4 | ||
Percentage of common shares purchased under ESOP | 8.00% | ||
Total ESOP shares (in shares) | shares | 257,885 | 259,210 | |
Puget Sound [Member] | |||
Schedule of Accounting Policies [Line Items] | |||
Number of bank branches | 11 | ||
Number of Loan Production Facilities | 4 | ||
Tri-Cities, Washington [Member] | |||
Schedule of Accounting Policies [Line Items] | |||
Number of Loan Production Facilities | 1 |
Business Combination - Amount Recognized for Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jan. 22, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Core deposit intangible | $ 1,857 | $ 0 | |
Goodwill | $ 2,312 | $ 0 | |
Bank of America | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 6,015 | ||
Cash and cash equivalents | 186,371 | ||
Acquired loans | 417 | ||
Premises and equipment, net | 964 | ||
Accrued interest receivable | 2 | ||
Core deposit intangible | 2,239 | ||
Other assets | 103 | ||
Deposits | (186,364) | ||
Accrued interest payable | (7) | ||
Other liabilities | (22) | ||
Total fair value of identifiable net assets | 3,703 | ||
Goodwill | $ 2,312 |
Business Combination - Expected Amortization Expense (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Business Combinations [Abstract] | |
2016 | $ 140 |
2017 | 400 |
2018 | 307 |
2019 | 235 |
2020 | 181 |
Thereafter | 594 |
Total | $ 1,857 |
Securities Available-for-sale - Schedule of Sales of Available for Sale Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds | $ 13,577 | $ 0 | $ 13,577 | $ 4,178 |
Gross Gains | 149 | 0 | 149 | 76 |
Gross (Losses) | $ (3) | $ 0 | $ (3) | $ 0 |
Loans Receivable and Allowance For Loan Losses - Schedule of Troubled Debt Restructurings Accrual and Non-accrual (Details) $ in Thousands |
9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016
USD ($)
loan
|
Sep. 30, 2016
USD ($)
contract
|
Dec. 31, 2015
USD ($)
loan
|
Sep. 30, 2015
contract
|
|
Financing Receivable, Modifications [Line Items] | ||||
Number of TDR loans modified in previous 12 months | contract | 0 | 0 | ||
Total TDR loan balance | $ | $ 57 | $ 57 | $ 734 | |
TDR loans on accrual | loan | 2 | |||
TDR loans on accrual | ||||
Financing Receivable, Modifications [Line Items] | ||||
Total TDR loan balance | $ | $ 57 | 57 | $ 209 | |
TDR loans on accrual | loan | 1 | 1 | ||
TDR loans on non-accrual | ||||
Financing Receivable, Modifications [Line Items] | ||||
Total TDR loan balance | $ | $ 0 | $ 0 | $ 525 | |
TDR loans on accrual | loan | 1 |
Servicing Rights - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Off-balance Sheet Risks, Disclosure Information [Line Items] | |||||
Servicing Asset | $ 7,654,000 | $ 7,654,000 | $ 5,811,000 | ||
Contractually specific servicing fees, late fees, and other ancillary fees | 534,000 | $ 343,000 | 1,411,000 | $ 857,000 | |
Mortgage, commercial and consumer servicing rIghts | |||||
Off-balance Sheet Risks, Disclosure Information [Line Items] | |||||
The unpaid principal balances of mortgage loans serviced | 882,200,000 | 882,200,000 | 636,100,000 | ||
Fair market value of the mortgage servicing rights’ asset | $ 7,800,000 | $ 7,800,000 | $ 6,800,000 |
Servicing Rights - Schedule of Servicing Rights (Details) - Mortgage, commercial and consumer servicing rIghts - Carrying Amount - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Fair Value Disclosure, Off-balance Sheet Risks, Amount, Asset [Roll Forward] | ||||
Beginning balance | $ 6,751 | $ 4,569 | $ 5,811 | $ 3,061 |
Additions | 1,095 | 920 | 2,927 | 2,823 |
Servicing rights amortized | (408) | (263) | (1,086) | (658) |
Recovery on servicing rights | 216 | 0 | 2 | 0 |
Ending balance | $ 7,654 | $ 5,226 | $ 7,654 | $ 5,226 |
Servicing Rights - Valuation Assumptions (Details) - Mortgage, commercial and consumer servicing rIghts |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Off-balance Sheet Risks, Disclosure Information [Line Items] | |||
Weighted average discount rate | 9.50% | 8.50% | 8.50% |
Conditional prepayment rate (“CPR”) | 16.40% | 12.50% | 12.20% |
Weighted average life in years | 5 years 2 months 1 day | 6 years 5 months 1 day |
Other Real Estate Owned (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Other Real Estate [Roll Forward] | ||||
Beginning balance | $ 0 | $ 0 | ||
Net loans transferred to OREO | 525,000 | 0 | ||
Capitalized costs | 7,000 | 0 | ||
Gross proceeds from sale of OREO | (682,000) | 0 | ||
Ending balance | $ 0 | $ 0 | 0 | 0 |
Gains (Losses) on Sales of Investment Real Estate | $ 0 | $ 0 | $ 150,000 | $ 0 |
Other Real Estate Owned - Narrative (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016
USD ($)
property
|
Sep. 30, 2015
USD ($)
property
|
Sep. 30, 2016
USD ($)
property
|
Sep. 30, 2015
USD ($)
property
|
|
Banking and Thrift [Abstract] | ||||
Number of other real estate owned properties | property | 0 | 0 | 0 | 0 |
Loss on sale of OREO | $ 0 | $ 0 | $ 150,000 | $ 0 |
Other real estate owned holding costs (recovery) | $ 0 | $ 0 | $ 0 | $ 0 |
Deposits - Schedule of Deposit Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jan. 22, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Banking and Thrift [Abstract] | |||
Noninterest-bearing checking | $ 143,251 | $ 66,676 | |
Interest-bearing checking | 63,682 | 34,098 | |
Savings | 50,348 | 30,126 | |
Money market | 238,321 | 159,605 | |
Certificates of deposit less than $100,000 | 93,953 | 65,175 | |
Certificates of deposit of $100,000 through $250,000 | 76,855 | 91,317 | |
Certificates of deposit of $250,000 and over | 26,910 | 32,610 | |
Escrow accounts related to mortgages serviced | 9,844 | 5,571 | |
Total deposits | 703,164 | $ 171,000 | 485,178 |
Brokered deposits | $ 47,100 | $ 27,900 |
Deposits - Schedule of Maturities of Time Deposits for Future Periods (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Banking and Thrift [Abstract] | |
2016 | $ 21,580 |
2017 | 76,878 |
2018 | 54,256 |
2019 | 17,151 |
2020 | 13,625 |
Thereafter | 14,228 |
Total | $ 197,718 |
Deposits - Securities Pledged as Collateral Policy (Details) |
Sep. 30, 2016
USD ($)
security
|
Dec. 31, 2015
USD ($)
|
---|---|---|
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Number of securities pledged (in securities) | security | 13 | |
Securities pledged as collateral for public deposits, fair value | $ 15,700,000 | |
Deposits held at Federal Reserve Bank | 12,600,000 | $ 3,000,000 |
Washington State | ||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||
Washington State public deposits | 6,600,000 | |
Collateral requirement | $ 746,000 |
Deposits - Schedule of Interest Expense by Deposit Category (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Banking and Thrift [Abstract] | ||||
Interest-bearing checking | $ 7 | $ 8 | $ 20 | $ 21 |
Savings and money market | 257 | 262 | 757 | 760 |
Certificates of deposit | 544 | 596 | 1,634 | 1,644 |
Total | $ 808 | $ 866 | $ 2,411 | $ 2,425 |
Commitments and Contingencies - Narrative (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Loss Contingencies [Line Items] | ||
Severance agreement, period of base compensation disbursed as lump sum payment (in months) | 24 months | |
Change of control agreement, notice required to cancel agreement (in months) | 24 months | |
Change of control agreement, period of base compensation disbursed as lump sum payment (in months) | 12 months | |
Pending material legal actions | 0 | |
Maximum | ||
Loss Contingencies [Line Items] | ||
Change of control agreement, executive payment, period prior to change in control (in months) | 6 months | |
Change of control agreement, executive payment, period following change in control (in months) | 12 months | |
Commitments to Extend Credit | ||
Loss Contingencies [Line Items] | ||
Reserve for estimated losses | $ 166,000 | $ 147,000 |
Guarantee on loans sold | ||
Loss Contingencies [Line Items] | ||
Reserve for estimated losses | $ 825,000 | $ 561,000 |
Fair Value of Financial Instruments - Schedule of Mortgage loans held for sale (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for sale, at fair value | $ 77,129 | $ 44,925 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for sale, at fair value | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for sale, at fair value | 77,129 | 44,925 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for sale, at fair value | $ 0 | $ 0 |
Fair Value of Financial Instruments - Schedule of Interest Rate Lock Commitments Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - Interest Rate Lock Commitments - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest Rate Lock Commitments with Customers | $ 1,850 | $ 698 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest Rate Lock Commitments with Customers | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest Rate Lock Commitments with Customers | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest Rate Lock Commitments with Customers | $ 1,850 | $ 698 |
Fair Value of Financial Instruments - Forward Sale Commitments with Investors (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Individual Forward Sale Commitments with Investors | $ (425) | $ 77 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Individual Forward Sale Commitments with Investors | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Individual Forward Sale Commitments with Investors | (385) | 3 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Individual Forward Sale Commitments with Investors | $ (40) | $ 74 |
Fair Value of Financial Instruments - Paired Off Commitments with Investors (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Paired Off Commitments with Investors | $ (189) | $ 30 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Paired Off Commitments with Investors | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Paired Off Commitments with Investors | (189) | 30 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Paired Off Commitments with Investors | $ 0 | $ 0 |
Fair Value of Financial Instruments - Schedule of Impaired Loans and OREO (Details) - Carrying Value, Measurements, Nonrecurring - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired Loans | $ 209 | $ 734 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired Loans | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired Loans | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impaired Loans | $ 209 | $ 734 |
Employee Benefits - Schedule of Shares Under ESOP (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jul. 09, 2012 |
---|---|---|
Employee Stock Ownership Plan (ESOP), Shares in ESOP [Abstract] | ||
Allocated shares | 102,359 | |
Committed to be released shares | 19,441 | |
Unallocated shares | 136,085 | |
Total ESOP shares | 257,885 | 259,210 |
Fair value of unallocated shares (in thousands) | $ 3,703 |
Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 3,457 | $ 1,995 | $ 7,953 | $ 6,859 |
Denominator for basic earnings per share- weighted average common shares outstanding (shares) | 2,851,147 | 2,984,164 | 2,901,572 | 2,967,284 |
Dilutive shares (in shares) | 87,292 | 55,843 | 84,102 | 42,108 |
Denominator for diluted earnings per share- weighted average common shares outstanding (shares) | 2,938,439 | 3,040,007 | 2,985,674 | 3,009,392 |
Basic earnings per share (in dollars per share) | $ 1.21 | $ 0.67 | $ 2.74 | $ 2.31 |
Diluted earnings per share (in dollars per share) | $ 1.18 | $ 0.66 | $ 2.66 | $ 2.28 |
Stock-Based Compensation - Restricted Stock Awards (Details) - Restricted stock awards |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
$ / shares
shares
| |
Shares | |
Nonvested, Beginning balance (in shares) | shares | 94,684 |
Granted (shares) | shares | 4,500 |
Less vested (in shares) | shares | 30,421 |
Nonvested, Ending balance (in shares) | shares | 68,763 |
Weighted-Average Grant-Date Fair Value Per Share | |
Nonvested, Beginning balance (in dollars per share) | $ / shares | $ 16.89 |
Granted (in dollars per share) | $ / shares | 26.00 |
Less vested (in dollars per share) | $ / shares | 16.89 |
Nonvested, Ending balance (in dollars per share) | $ / shares | $ 17.49 |
Weighted-Average Grant-Date Fair Value | |
Nonvested, Beginning balance | $ | $ 1,599,212 |
Granted | $ | 117,000 |
Less vested | $ | 513,811 |
Nonvested, Endng balance | $ | $ 1,202,401 |
Regulatory Capital - Regulatory Capital Ratios Policy (Details) |
Sep. 30, 2016 |
---|---|
Regulatory Capital Requirements [Abstract] | |
CET 1 capital conversion buffer phased in | 0.625% |
Tier 1 leverage capital, Ratio | 9.40% |
Tier 1 risk-based capital, Ratio | 11.10% |
Total risk-based capital, Ratio | 12.40% |
CET 1 capital, Ratio | 11.10% |
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