STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2020

STOCKHOLDERS’ EQUITY

Preferred Stock

The Company’s Articles of Incorporation give the Company’s board of directors the authority to issue up to 5,000,000 shares of preferred stock. At December 31, 2020, there were no preferred shares outstanding. The preferred shares are considered “blank check” preferred stock. This type of preferred stock allows the board of directors to fix the designations, preferences and relative, participating, optional or other special rights, and qualifications and limitations or restrictions of any series of preferred stock without further shareholder approval.

Common Stock

The Company’s Articles of Incorporation give the Company’s board of directors the authority to issue up to 40,000,000 shares of common stock. At December 31, 2020, there were 10,608,869 common shares outstanding compared to 11,228,775 and 9,484,219 at December 31, 2019 and 2018, respectively.

On March 1, 2019, the Company issued 763,849 shares of its common stock as consideration for the acquisition of Mainland. On December 20, 2019 the Company completed a private placement of 1,290,323 shares of its common stock at a price of $23.25 per share. The private offering generated net proceeds of $28.5 million.

In addition, the Company repurchased 661,504 and 359,906 shares of its common stock through its stock repurchase program at an average price of $16.75 and $23.09 during the years ended December 31, 2020 and 2019, respectively.

Dividend Restrictions. In the ordinary course of business, the Company is dependent upon dividends from the Bank to provide funds for the payment of dividends to shareholders and to provide for other cash requirements. Banking regulations may limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. Approval is also required if dividends declared exceed the net profits for that year combined with the retained net profits for the preceding two years. Under the foregoing dividend restrictions and while maintaining its “well capitalized” status, at December 31, 2020, the Bank could pay aggregate dividends of up to $44.3 million to the Company without prior regulatory approval.

Under the terms of the junior subordinated debentures, assumed through acquisition, the Company has the right at any time during the term of the debentures to defer the payment of interest. In the event that the Company elects to defer interest on the debentures, it may not, with certain exceptions, declare or pay any dividends or distributions on its common stock or purchase or acquire any of its common stock.

Under the terms of the Company’s 5.125% Fixed -to-Floating Rate Subordinated Notes due 2029, the Company may not pay a dividend if either the parent company or the Bank, both immediately prior to the declaration of the dividend and after giving effect to the payment of the dividend, would not maintain regulatory capital ratios that are at “well capitalized” levels for regulatory purposes (but with respect to the parent company, only if it is required to measure and report such ratios on a consolidated basis under applicable law). The Company is also prohibited from paying dividends upon and during the continuance of any Event of Default under such notes.

These restrictions do not, and are not expected in the future to, materially limit the Company’s ability to pay dividends to its shareholders in an amount consistent with the Company’s history of paying dividends.

Accumulated Other Comprehensive Income (Loss)

Activity within the balances in accumulated other comprehensive income (loss), net is shown in the tables below (dollars in thousands).


	For the years ended December 31,
	2020						2019						2018
	Beginning of Period		Net Change		End of Period		Beginning of Period		Net Change		End of Period		Beginning of Period		Net Change		End of Period
Unrealized gain (loss), available for sale, net	$	3,476	$	4,017	$	7,493	$	(1,647)	$	5,123	$	3,476	$	(71)	$	(1,576)	$	(1,647)
Reclassification of realized gain, net	(2,131)		(1,808)		(3,939)		(1,925)		(206)		(2,131)		(1,914)		(11)		(1,925)
Unrealized loss, transfer from available for sale to held to maturity, net	4		(1)		3		5		(1)		4		7		(2)		5
Change in fair value of interest rate swap designated as a cash flow hedge, net	542		(2,294)		(1,752)		491		51		542		407		84		491
Accumulated other comprehensive income (loss)	$	1,891	$	(86)	$	1,805	$	(3,076)	$	4,967	$	1,891	$	(1,571)	$	(1,505)	$	(3,076)