(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of Each Class | Trading Symbol(s) | Name of Exchange on Which Registered | ||||||
Large accelerated filer | ☐ | ☒ | Non-accelerated filer | ☐ | |||||||||||||
Smaller reporting company | Emerging growth company |
Page | ||||||||
Acronym | Description | ||||
ACH | Automated clearing house | ||||
ACL | Allowance for credit losses | ||||
AFS | Available-for-sale | ||||
AI | Artificial intelligence | ||||
ALCO | Asset/Liability Committee | ||||
ALM | Asset / liability management | ||||
AOCI | Accumulated other comprehensive income | ||||
ASC | Accounting Standards Codification | ||||
ASU | Accounting Standards Update | ||||
BHC Act | Bank Holding Company Act of 1956 | ||||
BOLI | Bank owned life insurance | ||||
BSA-AML | Bank Secrecy Act - Anti-Money Laundering | ||||
CBCA | Change in Bank Control Act | ||||
CBLR | Community Bank Leverage Ratio | ||||
CDARS | Certificate of Deposit Account Registry Service | ||||
CECL | Current expected credit losses | ||||
CET1 | Common equity tier 1 | ||||
CFPB | Consumer Financial Protection Bureau | ||||
CMO | Collateralized mortgage obligation | ||||
COVID-19 | Coronavirus Disease 2019 | ||||
CRE | Commercial real estate | ||||
DIF | FDIC’s deposit insurance fund | ||||
ECOA | Equal Credit Opportunity Act | ||||
ESOP | Employee Stock Ownership Plan | ||||
FASB | Financial Accounting Standards Board | ||||
FDIA | Federal Deposit Insurance Act | ||||
FDIC | Federal Deposit Insurance Corporation | ||||
FFIEC | Federal Financial Institutions Examination Council | ||||
FHA | Federal Housing Authority | ||||
FHFA | Federal Housing Finance Agency | ||||
FHLB | Federal Home Loan Bank of Pittsburgh | ||||
FHLMC | Federal Home Loan Mortgage Corporation or Freddie Mac | ||||
FICO | Financing Corporation | ||||
FNMA | Federal National Mortgage Association or Fannie Mae | ||||
FRB | Federal Reserve Bank of Philadelphia | ||||
FTE | Fully taxable equivalent | ||||
GAAP | U.S. generally accepted accounting principles | ||||
GLB Act | Gramm-Leach-Bliley Act | ||||
GNMA | Government National Mortgage Association or Ginnie Mae | ||||
GSE | Government-sponsored entities | ||||
HTM | Held-to-maturity | ||||
ICBA | Independent Community Bankers of America | ||||
JOBS Act | Jumpstart Our Business Startups Act of 2012 | ||||
LBP | Look-back period | ||||
LEP | Loss emergence period | ||||
LIBOR | London Inter-bank Offering Rate | ||||
MBS | Mortgage-backed securities | ||||
MSLP | Main Street Lending Programs | ||||
MSR | Mortgage servicing rights |
NSFR | Net stable funding ratio | ||||
OFAC | Office of Foreign Assets Control | ||||
OREO | Other real estate owned | ||||
PCAOB | Public Company Accounting Oversight Board | ||||
PDBS | Pennsylvania Department of Banking and Securities | ||||
ROU | Right-of-use | ||||
SBA | Small Business Administration | ||||
SEC | Securities and Exchange Commission | ||||
SERP | Supplemental Executive Retirement Plan | ||||
SNC | Shared national credit | ||||
TILA | Truth in Lending Act | ||||
TDR | Troubled debt restructuring | ||||
USDA | U.S. Department of Agriculture | ||||
VA | U.S. Department of Veteran’s Affairs |
(dollars in thousands / population actual) | United States | Pennsylvania | Maryland | ||||||||
Population (1) | 308,449,281 | 13,002,700 | 6,177,224 | ||||||||
Median household income (1) | $ | 63 | $ | 62 | $ | 85 | |||||
Unemployment rate (2) | 3.70 | % | 3.50 | % | 2.00 | % |
Philadelphia Metropolitan Area Counties | ||||||||||||||||||||
(dollars in thousands / population actual) | Bucks County | Montgomery County | Delaware County | Chester County | Philadelphia County | Total | ||||||||||||||
Population (1) | 645,054 | 864,683 | 575,182 | 545,823 | 1,567,258 | 4,198,000 | ||||||||||||||
Median household income (1) | $ | 99 | $ | 99 | $ | 80 | $ | 110 | $ | 53 | $ | 88 | ||||||||
Unemployment rate (2) | 2.50 | % | 2.40 | % | 2.70 | % | 2.10 | % | 3.70 | % | ||||||||||
Baltimore Metropolitan Area Counties | ||||||||||||||||||||
(dollars in thousands / population actual) | Howard County | Montgomery County | Anne Arundel County | Prince George's County | Baltimore County | Total | ||||||||||||||
Population (1) | 335,411 | 1,052,521 | 593,286 | 946,971 | 846,161 | 3,774,350 | ||||||||||||||
Median household income (1) | $ | 130 | $ | 117 | $ | 108 | $ | 91 | $ | 82 | $ | 106 | ||||||||
Unemployment rate (2) | 1.60 | % | 1.80 | % | 1.70 | % | 2.10 | % | 2.10 | % | ||||||||||
Delaware Counties | Florida County | |||||||||||||||||||
(dollars in thousands / population actual) | Kent County | Sussex County | New Castle County | Total | Lee County | |||||||||||||||
Population (1) | 188,946 | 255,956 | 575,494 | 1,020,396 | 822,453 | |||||||||||||||
Median household income (1) | $ | 64 | $ | 69 | $ | 78 | $ | 70 | $ | 63 | ||||||||||
Unemployment rate (2) | 4.1 | % | 3.9 | % | 3.5 | % | 3.7 | % | 3.0 | % | ||||||||||
(1) Source: U.S. Census Data – 2020 | ||||||||||||||||||||
(2) Source: U.S. Bureau of Labor Statistics – December 2023 |
Date Declared | Date of Record | Date Paid | Quarterly Dividend $ | Special Dividend $ | ||||||||||||||||||||||
January 27, 2022 | February 14, 2022 | February 21, 2022 | $ | — | $ | 0.50 | ||||||||||||||||||||
April 28, 2022 | May 16, 2022 | May 23, 2022 | $ | 0.10 | $ | — | ||||||||||||||||||||
July 28, 2022 | August 15, 2022 | August 22, 2022 | $ | 0.10 | $ | — | ||||||||||||||||||||
October 27, 2022 | November 14, 2022 | November 21, 2022 | $ | 0.10 | $ | — | ||||||||||||||||||||
January 26, 2023 | February 14, 2023 | February 21, 2023 | $ | 0.125 | $ | — | ||||||||||||||||||||
April 27, 2023 | May 15, 2023 | May 22, 2023 | $ | 0.125 | $ | — | ||||||||||||||||||||
July 27, 2023 | August 14, 2023 | August 21 2023 | $ | 0.125 | $ | — | ||||||||||||||||||||
October 26, 2023 | November 13, 2023 | November 20, 2023 | $ | 0.125 | $ | — | ||||||||||||||||||||
The following table presents key financial performance ratios for the periods indicated: | Year Ended December 31, | ||||||||||
2023 | 2022 | ||||||||||
Return on average assets | 0.61 | % | 1.18 | % | |||||||
Return on average equity | 8.53 | % | 13.87 | % | |||||||
Net interest margin (tax effected yield) | 3.35 | % | 3.98 | % | |||||||
Basic earnings per share | $ | 1.19 | $ | 1.85 | |||||||
Diluted earnings per share | $ | 1.16 | $ | 1.79 |
(dollars in thousands, except per share amounts) | December 31, 2023 | December 31, 2022 | |||||||||
Book value per common share | $ | 14.13 | $ | 13.37 | |||||||
Tangible book value per common share (1) | $ | 13.78 | $ | 13.01 | |||||||
Allowance as a percentage of loans and leases held for investment | 1.17 | % | 1.08 | % | |||||||
Allowance as a percentage of loans and leases held for investment (excl. loans at fair value) (1) | 1.17 | % | 1.09 | % | |||||||
Tier I capital to risk weighted assets | 7.9 | % | 8.8 | % | |||||||
Tangible common equity to tangible assets ratio (1) | 6.9 | % | 8.1 | % | |||||||
Loans and other finance receivables, net of fees and costs | $ | 1,895,806 | $ | 1,743,682 | |||||||
Total assets | $ | 2,246,193 | $ | 2,062,228 | |||||||
Total stockholders’ equity | $ | 158,022 | $ | 153,280 |
For the Year Ended December 31, | |||||||||||||||||||||||||||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||||||||||||||||||||||||||
Average Balance | Interest Income/ Expense | Yields/ Rates | Average Balance | Interest Income/ Expense | Yields/ Rates | ||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 24,218 | $ | 1,259 | 5.20 | % | $ | 21,045 | $ | 279 | 1.33 | % | |||||||||||||||||||||||
Federal funds sold | 136 | 7 | 5.15 | 1,160 | 7 | 0.60 | |||||||||||||||||||||||||||||
Investment securities - taxable | 112,045 | 3,873 | 3.46 | 106,246 | 2,420 | 2.28 | |||||||||||||||||||||||||||||
Investment securities - tax exempt (1) | 59,147 | 1,669 | 2.82 | 63,425 | 1,691 | 2.67 | |||||||||||||||||||||||||||||
Loans held for sale | 23,202 | 1,480 | 6.38 | 44,238 | 1,872 | 4.23 | |||||||||||||||||||||||||||||
Loans held for investment (1) | 1,850,088 | 128,609 | 6.95 | 1,535,943 | 82,764 | 5.39 | |||||||||||||||||||||||||||||
Total loans | 1,873,290 | 130,089 | 6.94 | 1,580,181 | 84,636 | 5.36 | |||||||||||||||||||||||||||||
Total interest-earning assets | 2,068,836 | 136,897 | 6.62 | % | 1,772,057 | 89,033 | 5.02 | % | |||||||||||||||||||||||||||
Noninterest earning assets | 95,979 | 76,983 | |||||||||||||||||||||||||||||||||
Total assets | $ | 2,164,815 | $ | 1,849,040 | |||||||||||||||||||||||||||||||
Liabilities and stockholders' equity: | |||||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 187,404 | $ | 6,659 | 3.55 | % | $ | 237,554 | $ | 2,570 | 1.08 | % | |||||||||||||||||||||||
Money market and savings deposits | 692,933 | 23,987 | 3.46 | 703,561 | 7,854 | 1.12 | |||||||||||||||||||||||||||||
Time deposits | 636,843 | 27,173 | 4.27 | 354,822 | 4,972 | 1.40 | |||||||||||||||||||||||||||||
Total deposits | 1,517,180 | 57,819 | 3.81 | 1,295,937 | 15,396 | 1.19 | |||||||||||||||||||||||||||||
Borrowings | 145,545 | 7,266 | 4.99 | 27,637 | 830 | 3.00 | |||||||||||||||||||||||||||||
Subordinated debentures | 43,035 | 2,562 | 5.95 | 40,560 | 2,366 | 5.83 | |||||||||||||||||||||||||||||
Total interest-bearing liabilities | 1,705,760 | 67,647 | 3.97 | 1,364,134 | 18,592 | 1.36 | |||||||||||||||||||||||||||||
Noninterest-bearing deposits | 267,402 | 296,563 | |||||||||||||||||||||||||||||||||
Other noninterest-bearing liabilities | 36,421 | 30,929 | |||||||||||||||||||||||||||||||||
Total liabilities | 2,009,583 | 1,691,626 | |||||||||||||||||||||||||||||||||
Total stockholders' equity | 155,232 | 157,414 | |||||||||||||||||||||||||||||||||
Total stockholders' equity and liabilities | $ | 2,164,815 | $ | 1,849,040 | |||||||||||||||||||||||||||||||
Net interest income and spread (1) | $ | 69,250 | 2.65 | $ | 70,441 | 3.66 | |||||||||||||||||||||||||||||
Net interest margin (1) | 3.35 | % | 3.98 | % |
2023 Compared to 2022 | |||||||||||||||||
(dollars in thousands) | Rate | Volume | Total | ||||||||||||||
Interest income: | |||||||||||||||||
Cash and cash equivalents | $ | 932 | $ | 45 | $ | 977 | |||||||||||
Federal funds sold | 11 | (8) | 3 | ||||||||||||||
Investment securities - taxable | 1,314 | 139 | 1,453 | ||||||||||||||
Investment securities - tax exempt (1) | 97 | (118) | (22) | ||||||||||||||
Loans held for sale | 717 | (1,109) | (392) | ||||||||||||||
Loans held for investment (1) | 26,887 | 18,958 | 45,845 | ||||||||||||||
Total loans | 27,604 | 17,849 | 45,453 | ||||||||||||||
Total interest income | $ | 29,958 | $ | 17,907 | $ | 47,864 | |||||||||||
Interest expense: | |||||||||||||||||
Interest-bearing demand deposits | $ | 4,736 | $ | (647) | $ | 4,089 | |||||||||||
Money market and savings deposits | 16,253 | (120) | 16,133 | ||||||||||||||
Time deposits | 15,987 | 6,214 | 22,201 | ||||||||||||||
Total deposits | 36,976 | 5,447 | 42,423 | ||||||||||||||
Borrowings | 865 | 5,571 | 6,436 | ||||||||||||||
Subordinated debentures | 49 | 147 | 196 | ||||||||||||||
Total interest expense | 37,890 | 11,165 | 49,055 | ||||||||||||||
Interest differential | $ | (7,932) | $ | 6,742 | $ | (1,190) |
Year Ended December 31, | |||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | $ Change | % Change | |||||||||||||||||||
Mortgage banking income | $ | 16,537 | $ | 25,325 | $ | (8,788) | (34.7) | % | |||||||||||||||
Wealth management income | 4,928 | 4,733 | 195 | 4.1 | % | ||||||||||||||||||
SBA loan income | 4,485 | 4,467 | 18 | 0.4 | % | ||||||||||||||||||
Earnings on investment in life insurance | 789 | 553 | 236 | 42.7 | % | ||||||||||||||||||
Net change in the fair value of derivative instruments | 91 | (703) | 794 | (112.9) | % | ||||||||||||||||||
Net change in the fair value of loans held-for-sale | 32 | (844) | 876 | (103.8) | % | ||||||||||||||||||
Net change in the fair value of loans held-for-investment | 132 | (2,408) | 2,540 | (105.5) | % | ||||||||||||||||||
Net gain on hedging activity | 28 | 5,439 | (5,411) | (99.5) | % | ||||||||||||||||||
Net loss on sale of investment securities available-for-sale | (58) | — | (58) | (100.0) | % | ||||||||||||||||||
Other | 5,001 | 5,162 | (161) | (3.1) | % | ||||||||||||||||||
Total non-interest income | $ | 31,965 | $ | 41,724 | $ | (9,759) | (23.4) | % |
Year Ended December 31, | |||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | $ Change | % Change | |||||||||||||||||||
Salaries and employee benefits | $ | 47,377 | $ | 54,378 | $ | (7,001) | (12.9) | % | |||||||||||||||
Occupancy and equipment | 4,842 | 4,837 | 5 | 0.1 | % | ||||||||||||||||||
Professional fees | 4,312 | 3,635 | 677 | 18.6 | % | ||||||||||||||||||
Advertising and promotion | 3,730 | 4,336 | (606) | (14.0) | % | ||||||||||||||||||
Data processing and software | 6,415 | 5,451 | 964 | 17.7 | % | ||||||||||||||||||
FDIC premiums | 2,929 | 1,247 | 1,682 | 134.9 | % | ||||||||||||||||||
Other | 7,520 | 7,560 | (40) | (0.5) | % | ||||||||||||||||||
Total non-interest expense | $ | 77,125 | $ | 81,444 | $ | (4,319) | (5.3) | % |
Year Ended December 31, | |||||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | $ Change | % Change | |||||||||||||||||||
Income before income taxes | $ | 16,967 | $ | 27,920 | $ | (10,953) | (39.2) | % | |||||||||||||||
Income tax expense | $ | 3,724 | $ | 6,091 | $ | (2,367) | (38.9) | % | |||||||||||||||
Effective tax rate | 21.95 | % | 21.81 | % | 0.14 | % | 0.6 | % |
(Dollars in thousands) | December 31, 2023 | December 31, 2022 | $ Change | % Change | |||||||||||||||||||
Mortgage loans held for sale | $ | 24,816 | $ | 22,243 | $ | 2,573 | 11.6 | % | |||||||||||||||
Real estate loans: | |||||||||||||||||||||||
Commercial mortgage | 737,863 | 565,400 | 172,463 | 30.5 | % | ||||||||||||||||||
Home equity lines and loans | 76,287 | 59,399 | 16,888 | 28.4 | % | ||||||||||||||||||
Residential mortgage | 260,604 | 221,837 | 38,767 | 17.5 | % | ||||||||||||||||||
Construction | 246,440 | 271,955 | (25,515) | (9.4) | % | ||||||||||||||||||
Total real estate loans | 1,321,194 | 1,118,591 | 202,603 | 18.1 | % | ||||||||||||||||||
Commercial and industrial | 302,891 | 341,378 | (38,487) | (11.3) | % | ||||||||||||||||||
Small business loans | 142,342 | 136,155 | 6,187 | 4.5 | % | ||||||||||||||||||
Consumer | 389 | 488 | (99) | (20.3) | % | ||||||||||||||||||
Leases, net | 121,632 | 138,986 | (17,354) | (12.5) | % | ||||||||||||||||||
Total portfolio loans and leases | $ | 1,888,448 | $ | 1,735,598 | $ | 152,850 | 8.8 | % | |||||||||||||||
Total loans and leases | $ | 1,913,264 | $ | 1,757,841 | $ | 155,423 | 8.8 | % |
(dollars in thousands) | 12 months or Less | 1 - 5 years | 5 - 15 years | After 15 years | Total | ||||||||||||||||||||||||
Commercial mortgage | $ | 39,903 | $ | 205,960 | $ | 484,840 | $ | 7,160 | $ | 737,863 | |||||||||||||||||||
Home equity lines and loans | 1,467 | 3,779 | 66,441 | 4,600 | 76,287 | ||||||||||||||||||||||||
Residential mortgage | — | 1,251 | 1,605 | 257,748 | 260,604 | ||||||||||||||||||||||||
Construction | 129,116 | 62,500 | 54,824 | — | 246,440 | ||||||||||||||||||||||||
Commercial and industrial | 31,171 | 138,982 | 25,612 | 107,126 | 302,891 | ||||||||||||||||||||||||
Small business loans | — | 8,775 | 85,314 | 48,253 | 142,342 | ||||||||||||||||||||||||
Consumer | 26 | 100 | 240 | 23 | 389 | ||||||||||||||||||||||||
Leases, net | 1,219 | 116,184 | 4,229 | — | 121,632 | ||||||||||||||||||||||||
Total | $ | 202,902 | $ | 537,531 | $ | 723,105 | $ | 424,910 | $ | 1,888,448 |
(dollars in thousands) | Fixed Rate | Variable Rate | Total | ||||||||||||||
Commercial mortgage | $ | 143,798 | $ | 594,065 | $ | 737,863 | |||||||||||
Home equity lines and loans | 5,656 | 70,631 | 76,287 | ||||||||||||||
Residential mortgage | 53,271 | 207,333 | 260,604 | ||||||||||||||
Construction | 23,394 | 223,046 | 246,440 | ||||||||||||||
Commercial and industrial | 54,429 | 248,462 | 302,891 | ||||||||||||||
Small business loans | 2,977 | 139,365 | 142,342 | ||||||||||||||
Consumer | 340 | 49 | 389 | ||||||||||||||
Leases, net | 121,632 | — | 121,632 | ||||||||||||||
Total | $ | 405,497 | $ | 1,482,951 | $ | 1,888,448 |
December 31, 2023 | |||||||||||||||||||||||||||||||||||
(dollars in thousands) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Allowance for Credit Losses | Fair value | # of Securities in unrealized loss position | |||||||||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||||||||
U.S. asset backed securities | $ | 17,012 | $ | 25 | $ | (213) | $ | — | $ | 16,824 | 11 | ||||||||||||||||||||||||
U.S. government agency MBS | 22,750 | 364 | (480) | — | 22,634 | 14 | |||||||||||||||||||||||||||||
U.S. government agency CMO | 21,850 | — | (2,277) | — | 19,573 | 30 | |||||||||||||||||||||||||||||
State and municipal securities | 40,093 | — | (3,877) | — | 36,216 | 31 | |||||||||||||||||||||||||||||
U.S. Treasuries | 32,982 | — | (2,560) | — | 30,422 | 25 | |||||||||||||||||||||||||||||
Non-U.S. government agency CMO | 13,605 | 102 | (552) | — | 13,155 | 9 | |||||||||||||||||||||||||||||
Corporate bonds | 8,200 | — | (1,005) | — | 7,195 | 13 | |||||||||||||||||||||||||||||
Total securities available-for-sale | $ | 156,492 | $ | 491 | $ | (10,964) | $ | — | $ | 146,019 | 133 | ||||||||||||||||||||||||
Amortized cost | Gross unrecognized gains | Gross unrecognized losses | Allowance for Credit Losses | Fair value | # of Securities in unrecognized loss position | ||||||||||||||||||||||||||||||
Securities held to maturity: | |||||||||||||||||||||||||||||||||||
State and municipal securities | $ | 35,781 | $ | 52 | $ | (3,103) | $ | — | $ | 32,730 | 21 | ||||||||||||||||||||||||
Total securities held-to-maturity | $ | 35,781 | $ | 52 | $ | (3,103) | $ | — | $ | 32,730 | 21 | ||||||||||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||||||||
(dollars in thousands) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair Value | # of Securities in unrealized loss position | ||||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||
U.S. asset backed securities | $ | 15,581 | $ | 14 | $ | (314) | $ | 15,281 | 12 | ||||||||||||||||||||
U.S. government agency MBS | 12,272 | 5 | (538) | 11,739 | 12 | ||||||||||||||||||||||||
U.S. government agency CMO | 25,520 | 40 | (2,242) | 23,318 | 29 | ||||||||||||||||||||||||
State and municipal securities | 44,700 | — | (5,862) | 38,838 | 34 | ||||||||||||||||||||||||
U.S. Treasuries | 32,980 | — | (3,457) | 29,523 | 25 | ||||||||||||||||||||||||
Non-U.S. government agency CMO | 9,722 | — | (633) | 9,089 | 11 | ||||||||||||||||||||||||
Corporate bonds | 8,201 | — | (643) | 7,558 | 12 | ||||||||||||||||||||||||
Total securities available-for-sale | $ | 148,976 | $ | 59 | $ | (13,689) | $ | 135,346 | 135 | ||||||||||||||||||||
Amortized cost | Gross unrecognized gains | Gross unrecognized losses | Fair value | # of Securities in unrecognized loss position | |||||||||||||||||||||||||
Securities held to maturity: | |||||||||||||||||||||||||||||
State and municipal securities | $ | 37,479 | $ | — | $ | (4,394) | $ | 33,085 | 25 | ||||||||||||||||||||
Total securities held-to-maturity | $ | 37,479 | $ | — | $ | (4,394) | $ | 33,085 | 25 | ||||||||||||||||||||
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Non-performing assets: | |||||||||||
Nonaccrual loans: | |||||||||||
Real estate loans: | |||||||||||
Commercial mortgage | $ | — | $ | 140 | |||||||
Home equity lines and loans | 1,037 | 1,097 | |||||||||
Residential mortgage | 4,536 | 2,085 | |||||||||
Construction | 1,206 | — | |||||||||
Total real estate loans | 6,779 | 3,322 |
Commercial and industrial | 15,413 | 12,547 | |||||||||
Small business loans | 9,440 | 4,465 | |||||||||
Leases | 2,131 | 902 | |||||||||
Total nonaccrual loans | 33,763 | 21,236 | |||||||||
Other real estate owned | 1,703 | 1,703 | |||||||||
Total non-performing assets | $ | 35,466 | $ | 22,939 | |||||||
Asset quality ratios: | |||||||||||
Non-performing assets to total assets | 1.58 | % | 1.11 | % | |||||||
Non-performing loans to: | |||||||||||
Total loans and leases | 1.76 | % | 1.20 | % | |||||||
Total loans held-for-investment | 1.78 | % | 1.22 | % | |||||||
Total loans held-for-investment (excluding loans at fair value) (1) | 1.79 | % | 1.23 | % | |||||||
Allowance for credit losses to: (2) | |||||||||||
Total loans and leases | 1.15 | % | 1.07 | % | |||||||
Total loans held-for-investment | 1.17 | % | 1.08 | % | |||||||
Total loans held-for-investment (excluding loans at fair value) (1) | 1.17 | % | 1.09 | % | |||||||
Non-performing loans | 65.48 | % | 88.66 | % | |||||||
Total loans and leases | $ | 1,920,622 | $ | 1,765,925 | |||||||
Total loans and leases held-for-investment | $ | 1,895,806 | $ | 1,743,682 | |||||||
Total loans and leases held-for-investment (excluding loans at fair value) | $ | 1,882,080 | $ | 1,729,180 | |||||||
Allowance for credit losses (2) | $ | 22,107 | $ | 18,828 |
(dollars in thousands) | December 31, 2023 | % of Loan Type to Total Loans | December 31, 2022 | % of Loan Type to Total Loans | |||||||||||||||||||
Commercial mortgage | $ | 4,375 | 39% | $ | 4,095 | 33% | |||||||||||||||||
Home equity lines and loans | 998 | 4% | 188 | 3% | |||||||||||||||||||
Residential mortgage | 1,020 | 14% | 948 | 13% | |||||||||||||||||||
Construction | 485 | 13% | 3,075 | 16% | |||||||||||||||||||
Commercial and industrial | 4,518 | 16% | 4,012 | 19% | |||||||||||||||||||
Small business loans | 7,005 | 8% | 4,909 | 8% | |||||||||||||||||||
Consumer | — | —% | 3 | —% | |||||||||||||||||||
Leases | 3,706 | 6% | 1,598 | 8% | |||||||||||||||||||
Total | $ | 22,107 | 100% | $ | 18,828 | 100% | |||||||||||||||||
(1) The allowance for credit losses for the year ended December 31, 2023 was calculated under the current expected credit loss model, while the allowance for the year ended December 21, 2022 was calculated under the incurred loss model. |
December 31, 2023 | December 31, 2022 | ||||||||||
Home equity lines and loans | $ | (82) | $ | 31 | |||||||
Residential mortgage | — | 2 | |||||||||
Commercial and industrial | (209) | 97 | |||||||||
Small business loans | (1,483) | — | |||||||||
Consumer | 2 | 4 | |||||||||
Leases | (3,779) | (2,552) | |||||||||
Total Net Charge-offs | $ | (5,551) | $ | (2,418) |
(Dollars in thousands) | December 31, 2023 | December 31, 2022 | $ Change | % Change | |||||||||||||||||||
Noninterest-bearing deposits | $ | 239,289 | $ | 301,727 | $ | (62,438) | (20.7) | % | |||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||
Interest-bearing demand deposits | 150,898 | 219,838 | (68,940) | (31.4) | % | ||||||||||||||||||
Money market and savings deposits | 747,803 | 697,564 | 50,239 | 7.2 | % | ||||||||||||||||||
Time deposits | 685,472 | 493,350 | 192,122 | 38.9 | % | ||||||||||||||||||
Total interest-bearing deposits | 1,584,173 | 1,410,752 | 173,421 | 12.3 | % | ||||||||||||||||||
Total deposits | $ | 1,823,462 | $ | 1,712,479 | $ | 110,983 | 6.5 | % |
Year Ended December 31, 2023 | |||||||||||
(Dollars in thousands) | Amount | % | |||||||||
3 months or less | $ | 101,332 | 22.1% | ||||||||
Over 3 months through 6 months | 73,971 | 16.1% | |||||||||
Over 6 months through 12 months | 158,321 | 34.5% | |||||||||
Over 12 months | 125,164 | 27.3% | |||||||||
Total | $ | 458,788 | 100.0% |
Year Ended | |||||||||||
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Income before income tax expense | $ | 16,967 | $ | 27,920 | |||||||
Provision for credit losses | 6,815 | 2,488 | |||||||||
Pre-tax, pre-provision income | $ | 23,782 | $ | 30,408 |
Year Ended | |||||||||||
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Bank | $ | 27,751 | $ | 31,004 | |||||||
Wealth | 1,240 | 2,030 | |||||||||
Mortgage | (5,209) | (2,626) | |||||||||
Pre-tax, pre-provision income | $ | 23,782 | $ | 30,408 |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Total stockholders' equity (GAAP) | $ | 158,022 | $ | 153,280 | |||||||
Less: Goodwill and intangible assets | 3,870 | 4,074 | |||||||||
Tangible common equity (non-GAAP) | 154,152 | 149,206 | |||||||||
Total assets (GAAP) | 2,246,193 | 2,062,228 | |||||||||
Less: Goodwill and intangible assets | 3,870 | 4,074 | |||||||||
Tangible assets (non-GAAP) | $ | 2,242,323 | $ | 2,058,154 | |||||||
Stockholders' equity to total assets (GAAP) | 7.04 | % | 7.43 | % | |||||||
Tangible common equity to tangible assets (non-GAAP) | 6.87 | % | 7.25 | % | |||||||
Shares outstanding | 11,183 | 11,466 | |||||||||
Book value per share (GAAP) | $ | 14.13 | $ | 13.37 | |||||||
Tangible book value per share (non-GAAP) | $ | 13.78 | $ | 13.01 |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Allowance for credit losses (GAAP) | $ | 22,107 | $ | 18,828 | |||||||
Loans, net of fees and costs (GAAP) | 1,895,806 | 1,743,682 | |||||||||
Less: Loans fair valued | (13,726) | (14,502) | |||||||||
Loans, net of fees and costs, excluding loans at fair value (non-GAAP) | $ | 1,882,080 | $ | 1,729,180 | |||||||
Allowance for credit losses to loans, net of fees and costs (GAAP) | 1.17 | % | 1.08 | % | |||||||
Allowance for credit losses to loans, net of fees and costs, excluding loans at fair value (non-GAAP) | 1.17 | % | 1.09 | % |
Changes in Market Interest Rates | December 31, 2023 | December 31, 2022 | |||||||||
+300 basis points over next 12 months | 0.01 | % | (0.56) | % | |||||||
+200 basis points over next 12 months | 0.19 | % | (0.27) | % | |||||||
+100 basis points over next 12 months | 0.15 | % | (0.06) | % | |||||||
No Change | |||||||||||
-100 basis points over next 12 months | (1.37) | % | (1.06) | % | |||||||
-200 basis points over next 12 months | (2.28) | % | (2.04) | % | |||||||
-300 basis points over next 12 months | (3.07) | % | NA | ||||||||
NA - Downward 300 basis point scenario not considered necessary for period ended December 31, 2022 |
Changes in Market Interest Rates | December 31, 2023 | December 31, 2022 | |||||||||
+300 basis points over next 12 months | (7) | % | 2 | % | |||||||
+200 basis points over next 12 months | (3) | % | 3 | % | |||||||
+100 basis points over next 12 months | — | % | 3 | % | |||||||
No Change | |||||||||||
-100 basis points over next 12 months | (3) | % | (8) | % | |||||||
-200 basis points over next 12 months | (13) | % | (23) | % | |||||||
-300 basis points over next 12 months | (31) | % | NA | ||||||||
NA - Downward 300 basis point scenario not considered necessary for period ended December 31, 2022 |
(dollars in thousands, except shares and per share data) | December 31, 2023 | December 31, 2022 | |||||||||
Assets: | |||||||||||
Cash and due from banks | $ | $ | |||||||||
Interest-bearing deposits at other banks | |||||||||||
Cash and cash equivalents | |||||||||||
Securities available-for-sale, at fair value (amortized cost of $ | |||||||||||
Securities held-to-maturity, at amortized cost (fair value of $ | |||||||||||
Equity investments | |||||||||||
Mortgage loans held for sale | |||||||||||
Loans and other finance receivables, net of fees and costs | |||||||||||
Allowance for credit losses | ( | ( | |||||||||
Loans and other finance receivables, net of the allowance for credit losses | |||||||||||
Restricted investment in bank stock | |||||||||||
Bank premises and equipment, net | |||||||||||
Bank owned life insurance | |||||||||||
Accrued interest receivable | |||||||||||
Other real estate owned | |||||||||||
Deferred income taxes | |||||||||||
Servicing assets | |||||||||||
Goodwill | |||||||||||
Intangible assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities: | |||||||||||
Deposits: | |||||||||||
Non-interest bearing | $ | $ | |||||||||
Interest bearing | |||||||||||
Total deposits | |||||||||||
Borrowings | |||||||||||
Subordinated debentures | |||||||||||
Accrued interest payable | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
Surplus | |||||||||||
Treasury stock - | ( | ( | |||||||||
Unearned common stock held by employee stock ownership plan | ( | ( | |||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands, except shares and per share data) | 2023 | 2022 | |||||||||
Interest income: | |||||||||||
Loans and other finance receivables, including fees | $ | $ | |||||||||
Securities - taxable | |||||||||||
Securities - tax-exempt | |||||||||||
Cash and cash equivalents | |||||||||||
Total interest income | |||||||||||
Interest expense: | |||||||||||
Deposits | |||||||||||
Borrowings | |||||||||||
Total interest expense | |||||||||||
Net interest income | |||||||||||
Provision for credit losses | |||||||||||
Net interest income after provision for credit losses | |||||||||||
Non-interest income: | |||||||||||
Mortgage banking income | |||||||||||
SBA loan income | |||||||||||
Earnings on investment in life insurance | |||||||||||
Net change in the fair value of derivative instruments | ( | ||||||||||
Net change in the fair value of loans held-for-sale | ( | ||||||||||
Net change in the fair value of loans held-for-investment | ( | ||||||||||
Net gain on hedging activity | |||||||||||
Net loss on sale of investment securities available-for-sale | ( | ||||||||||
Other | |||||||||||
Total non-interest income | |||||||||||
Non-interest expense: | |||||||||||
Salaries and employee benefits | |||||||||||
Occupancy and equipment | |||||||||||
Professional fees | |||||||||||
Advertising and promotion | |||||||||||
Data processing and software | |||||||||||
FDIC premiums | |||||||||||
Other | |||||||||||
Total non-interest expense | |||||||||||
Income before income taxes | |||||||||||
Income tax expense | |||||||||||
Net income | $ | $ | |||||||||
Basic earnings per common share | $ | $ | |||||||||
Diluted earnings per common share | $ | $ | |||||||||
Basic weighted average shares outstanding | |||||||||||
Diluted weighted average shares outstanding |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Net income: | $ | $ | |||||||||
Other comprehensive income (loss): | |||||||||||
Net change in unrealized losses on investment securities available for sale: | |||||||||||
Change in fair value of investment securities available for sale, net of tax of $ | ( | ||||||||||
Reclassification adjustment for net losses (gains) realized in net income, net of tax effect of $13, and $ | |||||||||||
Reclassification adjustment for securities transferred from available-for-sale to held-to-maturity, net of tax effect of $ | ( | ||||||||||
Unrealized investment losses, net of tax effect of $ | ( | ||||||||||
Net change in unrealized gains (losses) on interest rate swaps used in cash flow hedges, net of tax effect of $ | ( | ||||||||||
Total other comprehensive income (loss) | ( | ||||||||||
Total comprehensive income | $ | $ |
(dollars in thousands, except per share data) | Common Stock | Surplus | Treasury Stock | Unearned ESOP | Retained Earnings | AOCI | Total | ||||||||||||||||||||||||||||||||||
Balance at January 1, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Net purchase of treasury stock through publicly announced plans ( | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
Common stock issued through share-based awards and exercises ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||
ESOP shares committed to be released ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Stock based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
— | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other Comprehensive income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Dividends declared, $ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Net purchase of treasury stock through publicly announced plans ( | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
Common stock issued through share-based awards and exercises ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||
ESOP shares committed to be released ( | |||||||||||||||||||||||||||||||||||||||||
Stock based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Loss on sale of investment securities | |||||||||||
Net amortization of investment premiums and discounts and change in fair value of equity securities | |||||||||||
Depreciation and amortization (accretion), net | ( | ||||||||||
Provision for credit losses | |||||||||||
Amortization of issuance costs on subordinated debt | |||||||||||
Stock based compensation | |||||||||||
Net change in fair value of derivative instruments | ( | ||||||||||
Net change in fair value of loans held for sale | ( | ||||||||||
Net change in fair value of loans held for investment | ( | ||||||||||
Amortization and net impairment of servicing rights | |||||||||||
SBA loan income | ( | ( | |||||||||
Proceeds from sale of loans | |||||||||||
Loans originated for sale | ( | ( | |||||||||
Mortgage banking income | ( | ( | |||||||||
Increase in accrued interest receivable | ( | ( | |||||||||
Increase in other assets | ( | ( | |||||||||
Earnings from investment in bank owned life insurance | ( | ( | |||||||||
(Increase) decrease in deferred income tax | ( | ||||||||||
Increase in accrued interest payable | |||||||||||
Decrease in other liabilities | ( | ( | |||||||||
Net cash provided by operating activities | $ | $ | |||||||||
Cash flows used in investing activities: | |||||||||||
Activity in available-for-sale securities: | |||||||||||
Maturities, repayments and calls | |||||||||||
Sales | |||||||||||
Purchases | ( | ( | |||||||||
Activity in held-to-maturity securities: | |||||||||||
Maturities, repayments and calls | |||||||||||
Purchases | ( | ||||||||||
Increase in restricted stock | ( | ( | |||||||||
Net increase in loans | ( | ( | |||||||||
Purchases of premises and equipment | ( | ( | |||||||||
Purchase of bank owned life insurance | ( | ||||||||||
Net cash used in investing activities | $ | ( | $ | ( | |||||||
Cash flows provided by financing activities: | |||||||||||
Net increase in deposits | |||||||||||
Increase in short-term borrowings | |||||||||||
Increase in long-term debt | |||||||||||
Repayment of subordinated debt | ( | ( | |||||||||
Proceeds from issuance of subordinated debt |
Issuance costs on subordinated debt | ( | ||||||||||
Net purchase of treasury stock | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Share based awards and exercises | |||||||||||
Net cash provided by financing activities | $ | $ | |||||||||
Net change in cash and cash equivalents | |||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | $ | |||||||||
Income taxes | |||||||||||
Transfers from loans held for sale to loans held for investment | |||||||||||
Transfers from loans held for investment to loans held for sale | |||||||||||
Non-cash transfers from loans receivable to OREO | |||||||||||
Transfer of securities from AFS to HTM | |||||||||||
January 1, 2023 | ||||||||||||||||||||
(dollars in thousands) | Pre-adoption | Adoption Impact | As Reported | |||||||||||||||||
Assets: | ||||||||||||||||||||
ACL on loans and leases: | ||||||||||||||||||||
Commercial mortgage | $ | $ | ( | $ | ||||||||||||||||
Home equity lines and loans | ||||||||||||||||||||
Residential mortgage | ||||||||||||||||||||
Construction | ( | |||||||||||||||||||
Commercial and industrial | ( | |||||||||||||||||||
Small business loans | ||||||||||||||||||||
Consumer | ( | |||||||||||||||||||
Leases, net | ||||||||||||||||||||
Total ACL on loans and leases | $ | $ | $ | |||||||||||||||||
Liabilities: | ||||||||||||||||||||
Reserve for unfunded commitments | $ | $ | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands, except per share data) | 2023 | 2022 | |||||||||
Numerator for earnings per share: | |||||||||||
Net income available to common stockholders | $ | $ | |||||||||
Denominators for earnings per share: | |||||||||||
Weighted average shares outstanding | |||||||||||
Average unearned ESOP shares | ( | ( | |||||||||
Basic weighted average shares outstanding | |||||||||||
Dilutive effects of assumed exercises of stock options | |||||||||||
Dilutive effects of SERP shares | |||||||||||
Diluted weighted average shares outstanding | |||||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | $ | $ | |||||||||
Antidilutive shares excluded from computation of average dilutive earnings per share |
(dollars in thousands) | December 31, 2022 | Amortization Expense | December 31, 2023 | Amortization Period (in years) | |||||||||||||||||||
Goodwill | $ | $ | — | $ | Indefinite | ||||||||||||||||||
Intangible assets - customer relationships | — | Indefinite | |||||||||||||||||||||
Intangible assets - non competition agreements | ( | ||||||||||||||||||||||
Total Intangible Assets | $ | $ | ( | $ | |||||||||||||||||||
Total | $ | $ | ( | $ |
2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total | $ |
December 31, 2023 | |||||||||||||||||||||||||||||||||||
(dollars in thousands) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Allowance for Credit Losses | Fair value | # of Securities in unrealized loss position | |||||||||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||||||||
U.S. asset backed securities | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
U.S. government agency MBS | ( | ||||||||||||||||||||||||||||||||||
U.S. government agency CMO | ( | ||||||||||||||||||||||||||||||||||
State and municipal securities | ( | ||||||||||||||||||||||||||||||||||
U.S. Treasuries | ( | ||||||||||||||||||||||||||||||||||
Non-U.S. government agency CMO | ( | ||||||||||||||||||||||||||||||||||
Corporate bonds | ( | ||||||||||||||||||||||||||||||||||
Total securities available-for-sale | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
Amortized cost | Gross unrecognized gains | Gross unrecognized losses | Allowance for Credit Losses | Fair value | # of Securities in unrecognized loss position | ||||||||||||||||||||||||||||||
Securities held-to-maturity: | |||||||||||||||||||||||||||||||||||
State and municipal securities | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
Total securities held-to-maturity | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||||||||
(dollars in thousands) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | # of Securities in unrealized loss position | ||||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||
U.S. asset backed securities | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
U.S. government agency MBS | ( | ||||||||||||||||||||||||||||
U.S. government agency CMO | ( | ||||||||||||||||||||||||||||
State and municipal securities | ( | ||||||||||||||||||||||||||||
U.S. Treasuries | ( | ||||||||||||||||||||||||||||
Non-U.S. government agency CMO | ( | ||||||||||||||||||||||||||||
Corporate bonds | ( | ||||||||||||||||||||||||||||
Total securities available-for-sale | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Amortized cost | Gross unrecognized gains | Gross unrecognized losses | Fair value | # of Securities in unrecognized loss position | |||||||||||||||||||||||||
Securities held-to-maturity: | |||||||||||||||||||||||||||||
State and municipal securities | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Total securities held-to-maturity | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or more | Total | |||||||||||||||||||||||||||||||||
(dollars in thousands) | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||||||||
U.S. asset backed securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
U.S. government agency MBS | ( | ( | ( | ||||||||||||||||||||||||||||||||
U.S. government agency CMO | ( | ( | ( | ||||||||||||||||||||||||||||||||
State and municipal securities | ( | ( | |||||||||||||||||||||||||||||||||
U.S. Treasuries | ( | ( | |||||||||||||||||||||||||||||||||
Non-U.S. government agency CMO | ( | ( | ( | ||||||||||||||||||||||||||||||||
Corporate bonds | ( | ( | ( | ||||||||||||||||||||||||||||||||
Total securities available-for-sale | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Less than 12 Months | 12 Months or more | Total | |||||||||||||||||||||||||||||||||
Fair value | Unrecognized losses | Fair value | Unrecognized losses | Fair value | Unrecognized losses | ||||||||||||||||||||||||||||||
Securities held-to-maturity: | |||||||||||||||||||||||||||||||||||
State and municipal securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Total securities held-to-maturity | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or more | Total | |||||||||||||||||||||||||||||||||
(dollars in thousands) | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||||||||
U.S. asset backed securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
U.S. government agency MBS | ( | ( | ( | ||||||||||||||||||||||||||||||||
U.S. government agency CMO | ( | ( | ( | ||||||||||||||||||||||||||||||||
State and municipal securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
U.S. Treasuries | ( | ( | ( | ||||||||||||||||||||||||||||||||
Non-U.S. government agency CMO | ( | ( | ( | ||||||||||||||||||||||||||||||||
Corporate bonds | ( | ( | ( | ||||||||||||||||||||||||||||||||
Total securities available-for-sale | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Less than 12 Months | 12 Months or more | Total | |||||||||||||||||||||||||||||||||
Fair value | Unrecognized losses | Fair value | Unrecognized losses | Fair value | Unrecognized losses | ||||||||||||||||||||||||||||||
Securities held-to-maturity: | |||||||||||||||||||||||||||||||||||
State and municipal securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Total securities held-to-maturity | $ | $ | ( | $ | $ | ( | $ | $ | ( |
December 31, 2023 | |||||||||||||||||||||||
Available-for-sale | Held-to-maturity | ||||||||||||||||||||||
(dollars in thousands) | Amortized cost | Fair value | Amortized cost | Fair value | |||||||||||||||||||
Due in one year or less | $ | $ | $ | $ | |||||||||||||||||||
Due after one year through five years | |||||||||||||||||||||||
Due after five years through ten years | |||||||||||||||||||||||
Due after ten years | |||||||||||||||||||||||
Subtotal | |||||||||||||||||||||||
Mortgage-related securities | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Proceeds from sale of investment securities | $ | $ | |||||||||
Gross loss on sale of available for sale investments |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Real estate loans: | |||||||||||
Commercial mortgage | $ | $ | |||||||||
Home equity lines and loans | |||||||||||
Residential mortgage | |||||||||||
Construction |
Total real estate loans | |||||||||||
Commercial and industrial | |||||||||||
Small business loans | |||||||||||
Consumer | |||||||||||
Leases, net | |||||||||||
Loans and other finance receivables, net of fees and costs | $ | $ | |||||||||
Balances included in loans, net of fees and costs: | |||||||||||
Residential mortgage real estate loans accounted under fair value option, at fair value | $ | $ | |||||||||
Residential mortgage real estate loans accounted under fair value option, at amortized cost | |||||||||||
Unearned lease income included in leases, net | ( | ( | |||||||||
Unamortized net deferred loan origination costs | |||||||||||
December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | 30-89 days past due | 90+ days past due and still accruing | Total past due | Current | Total Accruing Loans and leases | Nonaccrual loans and leases | Total loans, net of fees and costs | % Delinquent | |||||||||||||||||||||||||||||||||||||||
Commercial mortgage | $ | $ | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||
Home equity lines and loans | |||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage (1) | |||||||||||||||||||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
Small business loans | |||||||||||||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
Leases, net | % | ||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | % |
December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | 30-89 days past due | 90+ days past due and still accruing | Total past due | Current | Total Accruing Loans and leases | Nonaccrual loans and leases | Total loans, net of fees and costs | % Delinquent | |||||||||||||||||||||||||||||||||||||||
Commercial mortgage | $ | $ | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||
Home equity lines and loans | |||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage (1) | |||||||||||||||||||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||
Small business loans | |||||||||||||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
Leases, net | % | ||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | % |
December 31, 2023 | |||||||||||||||||
(dollars in thousands) | Nonaccrual Without ACL | Nonaccrual With ACL | Total Nonaccrual | ||||||||||||||
Home equity lines and loans | $ | $ | $ | ||||||||||||||
Residential mortgage | |||||||||||||||||
Construction | |||||||||||||||||
Commercial and industrial | |||||||||||||||||
Small business loans | |||||||||||||||||
Leases, net | |||||||||||||||||
Total | $ | $ | $ |
December 31, 2023 | |||||||||||||||||
(dollars in thousands) | Real Estate | Equipment and Other | Total | ||||||||||||||
Home equity lines and loans | $ | $ | $ | ||||||||||||||
Residential mortgage | |||||||||||||||||
Construction | |||||||||||||||||
Commercial and industrial | |||||||||||||||||
Small business loans | |||||||||||||||||
Leases, net | |||||||||||||||||
Total | $ | $ | $ |
Year Ended December 31, 2023 | |||||||||||||||||||||||||||||||||||
(dollars in thousands) | Beginning Balance, prior to adoption of ASU No. 2016-13 for CECL | Adjustment to initially apply ASU No. 2016-13 for CECL | Charge-offs | Recoveries | Provision (recovery of provision) for credit losses | Ending Balance | |||||||||||||||||||||||||||||
Commercial mortgage | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Home equity lines and loans | ( | ||||||||||||||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||||||||||||||
Construction | ( | ( | |||||||||||||||||||||||||||||||||
Commercial and industrial | ( | ( | |||||||||||||||||||||||||||||||||
Small business loans | ( | ||||||||||||||||||||||||||||||||||
Consumer | ( | ( | ( | ||||||||||||||||||||||||||||||||
Leases | ( | ||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ | $ | $ |
Year Ended December 31, 2022 | |||||||||||||||||||||||||||||
(dollars in thousands) | Beginning Balance | Charge-offs | Recoveries | Provision (Credit) | Ending Balance | ||||||||||||||||||||||||
Commercial mortgage | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Home equity lines and loans | ( | ( | |||||||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||
Commercial and industrial | ( | ||||||||||||||||||||||||||||
Small business loans | |||||||||||||||||||||||||||||
Consumer | ( | ||||||||||||||||||||||||||||
Leases | ( | ||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Provision for credit losses - funded | $ | $ | |||||||||
Recovery of provision for credit losses - unfunded | ( | ||||||||||
Total provision for credit losses | $ | $ |
December 31, 2023 | |||||||||||||||||||||||||||||||||||
Allowance for credit losses | Carrying value of loans and leases | ||||||||||||||||||||||||||||||||||
(dollars in thousands) | Individually evaluated | Collectively evaluated | Total | Individually evaluated | Collectively evaluated | Total | |||||||||||||||||||||||||||||
Commercial mortgage | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Home equity lines and loans | |||||||||||||||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||
Small business loans | |||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||
Leases, net | |||||||||||||||||||||||||||||||||||
Total (1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
1) Excludes deferred fees and loans carried at fair value. |
December 31, 2022 | |||||||||||||||||||||||||||||||||||
Allowance on loans and leases | Carrying value of loans and leases | ||||||||||||||||||||||||||||||||||
(dollars in thousands) | Individually evaluated for impairment | Collectively evaluated for impairment | Total | Individually evaluated for impairment | Collectively evaluated for impairment | Total | |||||||||||||||||||||||||||||
Commercial mortgage | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Home equity lines and loans | |||||||||||||||||||||||||||||||||||
Residential mortgage | |||||||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||
Small business loans | |||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||
Leases | |||||||||||||||||||||||||||||||||||
Total (1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
1) Excludes deferred fees and loans carried at fair value. |
December 31, 2023 | Revolving Loans Converted to Term Loans | Revolving Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Term Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | 2020 | 2019 | Prior | ||||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Current period gross charge-offs | $ | ( | $ | ( | $ | $ | ( | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||
Small business loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Current period gross charge-offs | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
Total by risk rating | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Total current period gross charge-offs | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( |
December 31, 2023 | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||
Term Loans | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | 2020 | 2019 | Prior | ||||||||||||||||||||||||||||||||||||||||||
Home equity lines and loans | |||||||||||||||||||||||||||||||||||||||||||||||
Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | 0 | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Current period gross charge-offs | $ | $ | $ | $ | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
Residential mortgage (2) | |||||||||||||||||||||||||||||||||||||||||||||||
Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||||||||
Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||
Leases, net | |||||||||||||||||||||||||||||||||||||||||||||||
Performing | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Current period gross charge-offs | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||
Total by Payment Performance | |||||||||||||||||||||||||||||||||||||||||||||||
Performing | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Nonperforming | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Total current period gross charge-offs | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||
(1) Excludes $ |
December 31, 2022 | |||||||||||||||||||||||||||||
(dollars in thousands) | Pass | Special mention | Substandard | Doubtful | Total | ||||||||||||||||||||||||
Commercial mortgage | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Home equity lines and loans | |||||||||||||||||||||||||||||
Construction | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||
Small business loans | |||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
December 31, 2022 | |||||||||||||||||
(dollars in thousands) | Performing | Non- performing | Total | ||||||||||||||
Residential mortgage (1) | $ | $ | $ | ||||||||||||||
Consumer | |||||||||||||||||
Leases, net | |||||||||||||||||
Total | $ | $ | $ |
December 31, 2022 | |||||||||||||||||
(dollars in thousands) | Recorded investment | Principal balance | Related allowance | ||||||||||||||
Impaired loans with related allowance: | |||||||||||||||||
Commercial and industrial | $ | $ | $ | ||||||||||||||
Small business loans | |||||||||||||||||
Total | $ | $ | $ | ||||||||||||||
Impaired loans without related allowance: | |||||||||||||||||
Commercial mortgage | $ | $ | $ | — | |||||||||||||
Commercial and industrial | — | ||||||||||||||||
Small business loans | — | ||||||||||||||||
Home equity lines and loans | — | ||||||||||||||||
Residential mortgage | — | ||||||||||||||||
Construction | — | ||||||||||||||||
Leases | — | ||||||||||||||||
Total | $ | $ | $ | — | |||||||||||||
Grand Total | $ | $ | $ |
(dollars in thousands) | December 31, 2022 | |||||||
TDRs included in nonperforming loans and leases | $ | |||||||
TDRs in compliance with modified terms | ||||||||
Total TDRs | $ |
Year Ended December 31, 2023 | |||||||||||||||||||||||
Number of Loans | Amortized Cost Basis | % of Total Class of Financing Receivable | Related Reserve | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty: | |||||||||||||||||||||||
Small business loans | $ | $ | |||||||||||||||||||||
Commercial & industrial | |||||||||||||||||||||||
Total | $ | $ | |||||||||||||||||||||
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty: | |||||||||||||||||||||||
Small business loans | $ | $ | |||||||||||||||||||||
Commercial & industrial | |||||||||||||||||||||||
Total | $ | $ |
Year Ended December 31, 2023 | |||||||||||
Number of Loans | |||||||||||
Financial Effect | |||||||||||
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty: | |||||||||||
Small business loans | Extend maturity date | ||||||||||
Commercial & industrial | Extend maturity date | ||||||||||
Total | |||||||||||
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty: | |||||||||||
Small business loans | Extend term and allow additional lender funding | ||||||||||
Commercial & industrial | Extend term and allow additional lender funding | ||||||||||
Total |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Buildings | $ | $ | |||||||||
Leasehold improvements | |||||||||||
Land | |||||||||||
Land Improvements | |||||||||||
Furniture, fixtures and equipment | |||||||||||
Computer equipment and data processing software | |||||||||||
Construction in process | |||||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Total | $ | $ |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Demand, non-interest bearing | $ | $ | |||||||||
Demand, interest bearing | |||||||||||
Savings accounts | |||||||||||
Money market accounts | |||||||||||
Time deposits | |||||||||||
Total | $ | $ |
2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Total | $ |
(dollars in thousands) | Maturity date | Interest rate | December 31, 2023 | December 31, 2022 | |||||||||||||||||||
FHLB Open Repo Plus Weekly | 6/10/2024 | $ | $ | ||||||||||||||||||||
FRB BTFP Advances | 3/29/2024 | ||||||||||||||||||||||
FHLB Mid-term Repo Fixed | 9/30/2024 | ||||||||||||||||||||||
Total Short-Term Borrowings | $ | $ |
(dollars in thousands) | Maturity date | Interest rate | December 31, 2023 | December 31, 2022 | |||||||||||||||||||
FHLB Mid-term Repo Fixed | 12/22/2025 | $ | $ | ||||||||||||||||||||
FHLB Mid-term Repo Fixed | 7/14/2026 | ||||||||||||||||||||||
FHLB Mid-term Repo Fixed | 10/14/2025 | ||||||||||||||||||||||
Total Long-Term Borrowings | $ | $ |
Maturity date | Interest rate | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
2023 Debentures | 08/31/2033 | $ | $ | ||||||||||||||||||||
2019 Debentures | 12/30/2029 | ||||||||||||||||||||||
2013 Debentures | 12/31/2028 | ||||||||||||||||||||||
2011 Debentures | 12/31/2026 | ||||||||||||||||||||||
2008 Debentures | 12/18/2023 | ||||||||||||||||||||||
Debt Origination Costs | ( | ( | |||||||||||||||||||||
Total Subordinated Debentures | $ | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Balance at beginning of the period | $ | $ | |||||||||
Servicing rights capitalized | |||||||||||
Amortization of servicing rights | ( | ( | |||||||||
Change in valuation allowance | |||||||||||
Balance at end of the period | $ | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Valuation allowance, beginning of period | $ | ( | $ | ( | |||||||
Impairment | ( | ||||||||||
Recovery | |||||||||||
Valuation allowance, end of period | $ | $ | ( |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Fair value of residential mortgage servicing rights | $ | $ | |||||||||
Weighted average life (months) | |||||||||||
Prepayment speed | % | % | |||||||||
Impact on fair value: | |||||||||||
10% adverse change | $ | ( | $ | ( | |||||||
20% adverse change | ( | ( | |||||||||
Discount rate | % | % | |||||||||
Impact on fair value: | |||||||||||
10% adverse change | $ | ( | $ | ( | |||||||
20% adverse change | ( | ( |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Balance at beginning of the period | $ | $ | |||||||||
Servicing rights capitalized | |||||||||||
Amortization of servicing rights | ( | ( | |||||||||
Change in valuation allowance | ( | ||||||||||
Balance at end of the period | $ | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Valuation allowance, beginning of period | $ | ( | $ | ( | |||||||
Impairment | ( | ( | |||||||||
Recovery | |||||||||||
Valuation allowance, end of period | $ | ( | $ | ( |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Fair value of SBA loan servicing rights | $ | $ | |||||||||
Weighted average life (years) | |||||||||||
Prepayment speed | % | % | |||||||||
Impact on fair value: | |||||||||||
10% adverse change | $ | ( | $ | ( | |||||||
20% adverse change | ( | ( | |||||||||
Discount rate | % | % | |||||||||
Impact on fair value: | |||||||||||
10% adverse change | $ | ( | $ | ( | |||||||
20% adverse change | ( | ( |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Operating lease expense | $ | $ | |||||||||
Short term lease expense | |||||||||||
Variable lease expense | |||||||||||
Total lease expense | $ | $ |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Cash paid for amounts included in the measurement of lease liabilities | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
ROU asset obtained in exchange for lease liabilities |
(dollars in thousands) | December 31, 2023 | ||||
2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
$ | |||||
Less: Present value discount | ( | ||||
Total operating lease liabilities | $ |
Shares | Weighted average exercise price | Weighted average grant date fair value | |||||||||||||||
Outstanding at December 31, 2021 | $ | $ | |||||||||||||||
Exercised | ( | ||||||||||||||||
Granted | |||||||||||||||||
Forfeited | ( | ||||||||||||||||
Outstanding at December 31, 2022 | $ | $ | |||||||||||||||
Exercised | ( | ||||||||||||||||
Granted | |||||||||||||||||
Forfeited | ( | ||||||||||||||||
Outstanding at December 31, 2023 | $ | $ | |||||||||||||||
Exercisable at December 31, 2023 | |||||||||||||||||
Nonvested at December 31, 2023 |
Shares | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding at December 31, 2022 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Outstanding / nonvested at December 31, 2022 | $ | ||||||||||
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Federal: | |||||||||||
Current | $ | $ | |||||||||
Deferred | ( | ||||||||||
Total federal income tax expense | $ | $ | |||||||||
State: | |||||||||||
Current | $ | $ | |||||||||
Deferred | ( | ||||||||||
Total state income tax expense | $ | $ | |||||||||
Total income tax expense | $ | $ |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||
Federal income tax at statutory rate | $ | % | $ | % | |||||||||||||||||||
State tax expense, net of federal benefit | |||||||||||||||||||||||
Tax exempt interest | ( | ( | ( | ( | |||||||||||||||||||
Bank owned life insurance | ( | ( | ( | ( |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||
Stock based compensation | |||||||||||||||||||||||
ESOP | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Effective income tax rate | $ | % | $ | % |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Deferred tax assets: | |||||||||||
Allowance for credit losses | $ | $ | |||||||||
Unrealized loss on available for sale securities | |||||||||||
Accrued retirement | |||||||||||
Mortgage pipeline fair-value adjustment | |||||||||||
Deferred rent | |||||||||||
Mortgage repurchase reserve | |||||||||||
Unfunded commitment reserve | |||||||||||
Other | |||||||||||
Total deferred tax asset | $ | $ | |||||||||
Deferred tax liabilities: | |||||||||||
Property and equipment | $ | ( | $ | ( | |||||||
Loan servicing rights | ( | ( | |||||||||
Intangibles | ( | ( | |||||||||
Hedge instrument fair-value adjustment | ( | ( | |||||||||
Prepaid expenses | ( | ( | |||||||||
Deferred loan costs | ( | ( | |||||||||
Total deferred tax liability | $ | ( | $ | ( | |||||||
Net deferred tax asset | $ | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Loans receivable from related parties - beginning at end of period | $ | $ | |||||||||
Advances for related parties | |||||||||||
Proceeds repayments from related party | ( | ( | |||||||||
Effect of changes in composition of related parties | ( | ( | |||||||||
Loans receivable from related parties - balance at end of period | $ | $ |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Commitments to fund loans and commitments under lines of credit | $ | $ | |||||||||
Letters of credit |
Actual | For Capital Adequacy Purposes (includes applicable capital conservation buffer) | To Be Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||||||||||||||||||||||
(dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||||||||||||||
Tier 1 leverage ratio: | |||||||||||||||||||||||||||||||||||
Meridian Bank | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||
Common tier 1 risk-based capital ratio: | |||||||||||||||||||||||||||||||||||
Meridian Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 risk-based capital ratio: | |||||||||||||||||||||||||||||||||||
Meridian Bank | % | % | % | ||||||||||||||||||||||||||||||||
Total risk-based capital ratio: | |||||||||||||||||||||||||||||||||||
Meridian Bank | % | % | % | ||||||||||||||||||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||||||||||||||
Tier 1 leverage ratio: | |||||||||||||||||||||||||||||||||||
Meridian Bank | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||
Common tier 1 risk-based capital ratio: | |||||||||||||||||||||||||||||||||||
Meridian Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 risk-based capital ratio: | |||||||||||||||||||||||||||||||||||
Meridian Bank | % | % | % | ||||||||||||||||||||||||||||||||
Total risk-based capital ratio: | |||||||||||||||||||||||||||||||||||
Meridian Bank | % | % | % |
December 31, 2023 | |||||||||||||||||||||||
(dollars in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. asset backed securities | $ | $ | $ | $ | |||||||||||||||||||
U.S. government agency MBS | |||||||||||||||||||||||
U.S. government agency CMO | |||||||||||||||||||||||
State and municipal securities | |||||||||||||||||||||||
U.S. Treasuries | |||||||||||||||||||||||
Non-U.S. government agency CMO | |||||||||||||||||||||||
Corporate bonds | |||||||||||||||||||||||
Equity investments | |||||||||||||||||||||||
Mortgage loans held for sale | |||||||||||||||||||||||
Mortgage loans held for investment | |||||||||||||||||||||||
Interest rate lock commitments | |||||||||||||||||||||||
Customer derivatives - interest rate swaps | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Interest rate lock commitments | $ | $ | $ | $ | |||||||||||||||||||
Forward commitments | |||||||||||||||||||||||
Customer derivatives - interest rate swaps | |||||||||||||||||||||||
Risk Participation Agreements | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
December 31, 2022 | |||||||||||||||||||||||
(dollars in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. asset backed securities | $ | $ | $ | $ | |||||||||||||||||||
U.S. government agency MBS | |||||||||||||||||||||||
U.S. government agency CMO | |||||||||||||||||||||||
State and municipal securities | |||||||||||||||||||||||
U.S. Treasuries | |||||||||||||||||||||||
Non-U.S. government agency CMO |
Corporate bonds | |||||||||||||||||||||||
Equity investments | |||||||||||||||||||||||
Mortgage loans held for sale | |||||||||||||||||||||||
Mortgage loans held for investment | |||||||||||||||||||||||
Interest rate lock commitments | |||||||||||||||||||||||
Forward commitments | |||||||||||||||||||||||
Customer derivatives - interest rate swaps | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Interest rate lock commitments | $ | $ | $ | $ | |||||||||||||||||||
Customer derivatives - interest rate swaps | |||||||||||||||||||||||
Risk Participation Agreements | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
(dollars in thousands) | December 31, 2023 | December 31, 2022 | |||||||||
Mortgage servicing rights | $ | $ | |||||||||
SBA loan servicing rights | |||||||||||
Individually evaluated loans (1) | |||||||||||
Commercial and industrial | |||||||||||
Small business loans | |||||||||||
Total | $ | $ |
(dollars in thousands) | Fair Value | Valuation Technique | Significant Unobservable Input | Range of Inputs | |||||||||||||||||||||||||
December 31, 2023 | $ | Appraisal of collateral | Management adjustments on appraisals for property type and recent activity | ||||||||||||||||||||||||||
December 31, 2022 | Appraisal of collateral | Management adjustments on appraisals for property type and recent activity |
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||
(dollars in thousands) | Fair Value Hierarchy Level | Carrying amount | Fair value | Carrying amount | Fair value | ||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||||||
Cash and cash equivalents | Level 1 | $ | $ | $ | $ | ||||||||||||||||||||||||
Mortgage loans held for sale | Level 2 | ||||||||||||||||||||||||||||
Loans receivable, net of the allowance for credit losses | Level 3 | ||||||||||||||||||||||||||||
Mortgage loans held for investment | Level 2 | ||||||||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||||||
Deposits | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Borrowings | Level 2 | ||||||||||||||||||||||||||||
Subordinated debentures | Level 2 | ||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Balance at beginning of the period | $ | $ | |||||||||
Decrease in value | ( | ||||||||||
Balance at end of the period | $ | $ |
(dollars in thousands) | Fair Value | Valuation Technique | Significant Unobservable Input | Range of Inputs | Weighted Average | ||||||||||||||||||||||||
December 31, 2023 | $ | Market comparable pricing | Pull through | ||||||||||||||||||||||||||
December 31, 2022 | Market comparable pricing | Pull through |
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||
(dollars in thousands) | Balance Sheet Line Item | Notional Amount | Asset (Liability) Fair Value | Notional Amount | Asset (Liability) Fair Value | ||||||||||||||||||||||||
Interest Rate Lock Commitments | |||||||||||||||||||||||||||||
Positive fair values | Other assets | $ | $ | $ | $ | ||||||||||||||||||||||||
Negative fair values | Other liabilities | ( | ( | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||||||||
Forward Commitments | |||||||||||||||||||||||||||||
Positive fair values | Other assets | $ | $ | $ | $ | ||||||||||||||||||||||||
Negative fair values | Other liabilities | ( | |||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
Customer Derivatives - Interest Rate Swaps | |||||||||||||||||||||||||||||
Positive fair values | Other assets | $ | $ | $ | $ | ||||||||||||||||||||||||
Negative fair values | Other liabilities | ( | ( | ||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
Risk Participation Agreements | |||||||||||||||||||||||||||||
Positive fair values | Other assets | $ | $ | $ | $ | ||||||||||||||||||||||||
Negative fair values | Other liabilities | ( | ( | ||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
Interest Rate Swaps | |||||||||||||||||||||||||||||
Positive fair values | Other assets | $ | $ | $ | $ | ||||||||||||||||||||||||
Negative fair values | Other liabilities | ( | |||||||||||||||||||||||||||
$ | $ | ( | $ | $ | |||||||||||||||||||||||||
Total derivative financial instruments | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Interest Rate Lock Commitments | $ | $ | ( | ||||||||
Forward Commitments | ( | ||||||||||
Customer Derivatives - Interest Rate Swaps | ( | ||||||||||
Risk Participation Agreements | |||||||||||
Interest Rate Swaps | ( | ||||||||||
Net fair value gains (losses) on derivative financial instruments | $ | ( | $ | ( |
Segment Information | |||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2023 | Year Ended December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Bank | Wealth | Mortgage | Total | Bank | Wealth | Mortgage | Total | |||||||||||||||||||||||||||||||||||||||
Net interest income | $ | $ | ( | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Provision for loan losses | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income after provision | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Non-interest Income | |||||||||||||||||||||||||||||||||||||||||||||||
Mortgage banking income | |||||||||||||||||||||||||||||||||||||||||||||||
Wealth management income | |||||||||||||||||||||||||||||||||||||||||||||||
SBA income | |||||||||||||||||||||||||||||||||||||||||||||||
Net change in fair values | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Net gain on hedging activity | |||||||||||||||||||||||||||||||||||||||||||||||
Other | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Non-interest income | |||||||||||||||||||||||||||||||||||||||||||||||
Non-interest expense | |||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | $ | $ | $ | ( | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Total Assets | $ | $ | $ | $ | $ | $ | $ | $ |
(dollars in thousands, except share data) | December 31, 2023 | December 31, 2022 | |||||||||
Assets: | |||||||||||
Cash and due from banks | $ | $ | |||||||||
Investments in subsidiaries | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities: | |||||||||||
Subordinated debentures | $ | $ | |||||||||
Accrued interest payable | |||||||||||
Other liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
Surplus | |||||||||||
Treasury Stock - | ( | ( | |||||||||
Unearned common stock held by employee stock ownership plan | ( | ( | |||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income | ( | ( | |||||||||
Total stockholders’ equity | $ | $ | |||||||||
Total liabilities and stockholders’ equity | $ | $ |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Dividends from Bank | $ | $ | |||||||||
Interest income | |||||||||||
Other income | |||||||||||
Total operating income | |||||||||||
Interest expense | |||||||||||
Other expenses | |||||||||||
Income before equity in undistributed income of subsidiaries | |||||||||||
Equity in undistributed income of subsidiaries | ( | ||||||||||
Income before income taxes | |||||||||||
Income tax benefit | ( | ( | |||||||||
Net income | |||||||||||
Total other comprehensive income (loss) | ( | ||||||||||
Total comprehensive income | $ | $ | |||||||||
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Cash flows from operating activities: | |||||||||||
Net Income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Equity in undistributed income of subsidiaries | ( |
Year Ended December 31, | |||||||||||
(dollars in thousands) | 2023 | 2022 | |||||||||
Share-based compensation | |||||||||||
Amortization of issuance costs on subordinated debt | |||||||||||
Other, net | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Investment in subsidiaries | ( | ||||||||||
Net cash (used in) investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Net activity from subordinated debt issuance | |||||||||||
Net purchase of treasury stock | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Share based awards and exercises | |||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Net change in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ |
Exhibit Number | Description | |||||||
2.1 | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
4.3 | ||||||||
10.1 | ||||||||
10.2 | ||||||||
10.3 | ||||||||
10.4 | ||||||||
10.5 | ||||||||
10.6 | ||||||||
21.1 | ||||||||
23.1 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32 | ||||||||
97 | ||||||||
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* | |||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document.* | |||||||
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document.* | |||||||
101.LAB | Inline XBRL Taxonomy Label Linkbase Document.* | |||||||
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document.* | |||||||
101.DEF | Inline XBRL Taxonomy Definition Document.* | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).* |
Date: | March 15, 2024 | Meridian Corporation | |||||||||
By: | /s/ Christopher J. Annas | ||||||||||
Christopher J. Annas President and Chief Executive Officer (Principal Executive Officer) | |||||||||||
Signature | Title | Date | ||||||
/s/ Christopher J. Annas | Chairman of the Board | March 15, 2024 | ||||||
Christopher J. Annas | ||||||||
/s/ Denise Lindsay | Director, Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | March 15, 2024 | ||||||
Denise Lindsay | ||||||||
/s/ Robert M. Casciato | Director | March 15, 2024 | ||||||
Robert M. Casciato | ||||||||
/s/ George C. Collier | Director | March 15, 2024 | ||||||
George C. Collier | ||||||||
/s/ Robert T. Holland | Director | March 15, 2024 | ||||||
Robert T. Holland | ||||||||
/s/ Edward J. Hollin | Director | March 15, 2024 | ||||||
Edward J. Hollin | ||||||||
/s/ Anthony M. Imbesi | Director | March 15, 2024 | ||||||
Anthony M. Imbesi | ||||||||
/s/ Christine M. Helmig | Director | March 15, 2024 | ||||||
Christine M. Helmig |
Meridian Bank | Pennsylvania |
Date: March 15, 2024 | /s/ Christopher J. Annas | ||||
Christopher J. Annas | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) |
Date: March 15, 2024 | /s/ Denise Lindsay | ||||
Denise Lindsay | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |
/s/ Christopher J. Annas | |||||
Christopher J. Annas | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
/s/ Denise Lindsay | |||||
Denise Lindsay | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) | |||||
Date: March 15, 2024 |
Audit Information |
12 Months Ended |
---|---|
Dec. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Name | Crowe LLP |
Auditor Location | Washington, D.C. |
Auditor Firm ID | 173 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Securities available-for-sale, amortized cost | $ 156,492 | $ 148,976 |
Securities held-to-maturity | $ 32,730 | $ 33,085 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock, issued (in shares) | 13,186,198 | 13,156,308 |
Common stock, outstanding (in shares) | 11,183,015 | 11,465,572 |
Treasury stock (in shares) | 2,003,183 | 1,690,736 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||
Tax expense (benefit) on unrealized gains arising during the period | $ 682 | $ (3,059) |
Tax expense (benefit) on reclassification adjustment for net gains on sales realized in net income | 0 | |
Tax expense (benefit) on reclassification adjustment for transfer to held-to-maturity | 19 | (293) |
Tax expense (benefit) on unrealized investment gains (losses) | 714 | (3,352) |
Tax expense on interest rate swaps in cash flow hedges | $ 22 | $ 0 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands |
Total |
Cumulative Effect, Period of Adoption, Adjustment |
[1] | Common Stock |
Surplus |
Treasury Stock |
Unearned ESOP |
Retained Earnings |
Retained Earnings
Cumulative Effect, Period of Adoption, Adjustment
|
[1] | AOCI |
||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance beginning of the period at Dec. 31, 2021 | $ 165,360 | $ 13,070 | $ 77,128 | $ (8,860) | $ (1,602) | $ 84,916 | $ 708 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Accounting Standards Update [Extensible Enumeration] | [1] | Accounting Standards Update 2016-13 [Member] | |||||||||||
Net income | $ 21,829 | 21,829 | |||||||||||
Other comprehensive income (loss) | (12,247) | (12,247) | |||||||||||
Dividends paid or accrued | (10,930) | (10,930) | |||||||||||
Net purchase of treasury stock through publicly announced plans | (12,961) | (12,961) | |||||||||||
Common stock issued through share-based awards and exercises | 754 | 43 | 711 | ||||||||||
ESOP shares committed to be released | 427 | 228 | 199 | ||||||||||
Stock based compensation expense | 1,048 | 1,048 | |||||||||||
Balance ending of the period at Dec. 31, 2022 | 153,280 | $ (2,228) | 13,156 | 79,072 | (21,821) | (1,403) | 95,815 | $ (2,228) | (11,539) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net income | 13,243 | 13,243 | |||||||||||
Other comprehensive income (loss) | 2,117 | 2,117 | |||||||||||
Dividends paid or accrued | (5,614) | (5,614) | |||||||||||
Net purchase of treasury stock through publicly announced plans | (4,258) | (4,258) | |||||||||||
Common stock issued through share-based awards and exercises | 309 | 30 | 279 | ||||||||||
ESOP shares committed to be released | 523 | 324 | 199 | ||||||||||
Stock based compensation expense | 650 | 650 | |||||||||||
Balance ending of the period at Dec. 31, 2023 | $ 158,022 | $ 13,186 | $ 80,325 | $ (26,079) | $ (1,204) | $ 101,216 | $ (9,422) | ||||||
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares |
12 Months Ended | |
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Dec. 31, 2023 |
Dec. 31, 2022 |
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Statement of Stockholders' Equity [Abstract] | ||
Dividends declared (in dollars per share) | $ 0.50 | $ 0.90 |
Treasury stock (in shares) | 312,447 | 836,490 |
Shares issued through share-based awards (in shares) | 29,500 | 158,042 |
ESOP shares committed to be released (in shares) | 26,656 | 26,656 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Nature of Operations Meridian Corporation (“Meridian” or the “Corporation”) is a bank holding company engaged in banking activities through its wholly-owned subsidiary, Meridian Bank (the “Bank”), a full-service, state-chartered commercial bank with offices in the Delaware Valley tri-state market, which includes Pennsylvania, New Jersey and Delaware, as well as the Central Maryland market area, and Florida. We have a financial services business model with significant noninterest income streams from mortgage banking, SBA lending and wealth management services. We provide services to small and middle market businesses, professionals and retail customers throughout our market area. We have a modern, progressive, consultative approach to creating innovative solutions for our customers. We are technology driven, with a culture that incorporates significant use of customer preferred alternative delivery channels, such as mobile banking, remote deposit capture and bank-to-bank ACH. Our ‘Meridian everywhere’ philosophy of community presence, along with our strategic business footprint, allows us to provide the high degree of service, convenience and products our customers need to achieve their financial objectives. We provide this service through three principal business line distribution channels, described further below. The Corporation operates in highly competitive market areas that includes local, regional, and national banks as competitors along with savings banks, credit unions, fintech companies, insurance companies, trust companies and registered investment advisors. The Corporation and its subsidiaries are regulated by many regulatory agencies including the SEC, FDIC, the FRB and the PDBS. The Bank was incorporated on March 16, 2004 under the laws of the Commonwealth of Pennsylvania and is a Pennsylvania state-chartered bank. The Bank commenced operations on July 8, 2004 and is a full-service bank providing personal and business lending and deposit services through 6 full-service banking offices in Pennsylvania, 6 mortgage loan production offices throughout the Delaware Valley, and 4 mortgage loan production offices in Maryland, and a lending office in Florida. The Bank and Corporation are headquartered in Malvern, Pennsylvania, located in the western suburbs of Philadelphia. Basis of Presentation The accounting policies of the Corporation conform to U.S. GAAP. The consolidated financial statements include accounts of the Corporation and its wholly owned subsidiary, the Bank, and the wholly owned subsidiaries of the Bank: Meridian Land Settlement Services LLC (“MLSS”); APEX Realty LLC (“APEX”); Meridian Wealth Partners LLC (“MWP”); and Meridian Equipment Finance LLC (“MEF”). All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year’s presentation. Reclassifications had no effect on prior year net income or total stockholders’ equity. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Concentrations of Credit Risk Most of the Corporation’s activities are with customers located in the Delaware Valley tri-state market and the central Maryland market area. Note 4 discusses the types of securities that the Corporation invests in, and Note 5 discusses types of lending that the Corporation engages in. Although the Corporation has a diversified loan portfolio, its debtors’ ability to honor their contracts is influenced by the region’s economy. The Corporation does not have any significant concentrations to any one industry or customer, however there is significant concentration of commercial real estate-backed loans, amounting to 39% and 34% of total loans held for investment, as of December 31, 2023 and December 31, 2022, respectively. Presentation of Cash Flows For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold. Generally, federal funds are purchased or sold for one day periods. The FRB removed cash minimum reserve requirements in March 2020. Net cash flows are reported for customer loan and deposit transactions, interest bearing deposits in other financial institutions, and the federal funds purchased and repurchased agreements. Securities Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Securities classified as available-for-sale are those securities that the Corporation intends to hold for an indefinite period of time but not necessarily to maturity. Securities available-for-sale are carried at fair value. Unrealized gains and losses are reported as increases or decreases in other comprehensive income. Gains or losses on disposition are based on the net proceeds and cost of the securities sold, adjusted for the amortization of premiums and accretion of discounts, using the specific identification method. Securities classified as held to maturity are those debt securities the Corporation has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs or changes in general economic conditions. These securities are carried at cost adjusted for the amortization of premium and accretion of discount, computed on a level yield basis. Investments in equity securities are recorded in accordance with ASC 321-10, Investments - Equity Securities. Equity securities are carried at fair value, with changes in fair value reported in net income. At December 31, 2023 and 2022, investments in equity securities consisted of an investment in mutual funds with a fair value of $2.1 million, and $2.1 million, respectively. Allowance for Credit Losses - Held-to-Maturity Debt Securities We follow Accounting Standards Codification (ASC) 326-20, Financial Instruments - Credit Loss - Measured at Amortized Cost, to measure expected credit losses on held-to-maturity debt securities on a collective basis by security investment grade. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation classifies the held-to-maturity debt securities into the following major security types: state and municipal securities. These securities are highly rated with a history of no credit losses, and are assigned ratings based on the most recent data from ratings agencies depending on the availability of data for the security. Credit ratings of held-to-maturity debt securities, which are a significant input in calculating the expected credit loss, are reviewed on a quarterly basis. Accrued interest receivable on held-to-maturity debt securities is excluded from the estimate of credit losses and is included in Accrued interest receivable on the Consolidated Balance Sheets. Allowance for Credit Losses - Available-for-Sale Debt Securities We follow ASC 326-30, Financial Instruments - Credit Loss - Available-for-Sale Debt Securities, which provides guidance related to the recognition of and expanded disclosure requirements for expected credit losses on available-for-sale debt securities. For available-for-sale debt securities in an unrealized loss position, the Corporation first evaluates whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria is met, the security's amortized cost basis is reduced to fair value and recognized as a reduction to Noninterest income in the Consolidated Statements of Income. For debt securities available-for-sale which the Corporation does not intend to sell, or it is not likely the security would be required to be sold before recovery, we evaluate whether a decline in fair value has resulted from credit losses or other adverse factors, such as a change in the security's credit rating. In assessing whether a credit loss exists, the Corporation compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance is recorded, limited to the fair value of the security. Management performs this analysis on a quarterly basis to review the conditions and risks associated with the individual securities. Credit losses on an impaired security shall continue to be measured using the present value of expected future cash flows. Any impairment not recorded through an allowance for credit loss is included in other comprehensive income (loss), net of the tax effect. We are required to use our judgment in determining impairment in certain circumstances. For additional detail regarding debt securities, see Note 4. Loans and Other Finance Receivables Loans and other finance receivables that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for credit losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Corporation generally amortizes these amounts over the contractual life of the loan. Loans that were originated by the Corporation and intended for sale in the secondary market to permanent investors, but were either repurchased or unsalable due to defect, are held for the foreseeable future or until maturity or payoff, are carried at fair value. Past Due and Nonaccrual Loans Past due loans and leases are defined as loans and leases contractually past due 30 - 89 days as to principal or interest payments but which remain in accrual status, or loans delinquent 90 days or more but are considered well secured and in the process of collection. Nonaccruing loans and leases are those on which the accrual of interest has ceased. Loans are placed on nonaccrual status immediately if, in the opinion of management, collection is doubtful, or when principal or interest is past due 90 days or more and the loan is not well secured and in the process of collection. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed and charged against interest income. A loan that is not past due more than 90 days could be classified as nonaccrual if management comes to the conclusion that we will not be in a position to collect all principal and interest. In addition, the amortization of net deferred loan fees is suspended when a loan is placed on nonaccrual status. Subsequent cash receipts are applied either to the outstanding principal balance or recorded as interest income, depending on management’s assessment of the ultimate collectability of principal and interest. Loans are returned to accrual status when it is determined that the borrower has the ability to make all principal and interest payments in accordance with the terms of the loan (i.e. a consistent repayment record, generally six consecutive payments, has been demonstrated). Unless loans are well-secured and collection is imminent, for loans greater than 90 days past due their respective reserves are generally charged off once the loss has been confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. Allowance for Credit Losses - Loans and Leases On January 1, 2023, the Corporation adopted ASU 2016-13, Financial Instruments-Credit Losses ("Topic 326"), which replaced the incurred loss impairment model with an expected loss methodology that is referred to as the CECL methodology. Prior to January 1, 2023, the Corporation calculated the Allowance based on a probable incurred credit loss model. The Corporation now establishes an ACL in accordance with Topic 326. The ACL includes quantitative and qualitative factors that comprise management's current estimate of expected credit losses, including portfolio mix and segmentation, modeling methodology, historical loss experience, relevant available information from internal and external sources relating to reasonable and supportable forecasts about future economic conditions, prepayment speeds, and qualitative adjustment factors. The Corporation's portfolio segments, established based on similar risk characteristics and loss behaviors, are: • Commercial mortgage, commercial and industrial, construction, SBA loans, and commercial small business leases (commercial loans), and • Residential, equity secured lines and loans, and installment loans (retail loans). Commercial mortgage – Our commercial real estate loans are secured by real estate that is both owner-occupied and investor owned. Owner-occupied commercial real estate loans generally involve less risk than an investment property and are distinctly reported from non-owner occupied commercial real estate loans for measuring loan concentrations for regulatory purposes. Repayment of commercial real estate loans depends on the cash flow of the borrower and the net operating income of the property, the borrower’s profitability, and the value of the underlying property. Of primary concern in commercial real estate lending is the borrower’s creditworthiness and the cash flows from the property. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy. Commercial real estate is also subject to adverse market conditions that cause a decrease in market value or lease rates, obsolescence in location or function and market conditions associated with oversupply of units in a specific region. Commercial and Industrial – We provide a variety of variable and fixed rate commercial business loans, lines of credit, and other finance receivables. These credit facilities are made to small and medium-sized manufacturers and wholesale, retail and service-related businesses. Commercial business loans generally include lines of credit and term loans with a maturity of 5 years or less. The primary source of repayment for commercial business loans and other finance receivables is generally operating cash flows of the business and may also include collateralization of inventory, accounts receivable, equipment and/or personal guarantees. As a result, the availability of funds for repayment may depend substantially on the success of the business itself. Furthermore, any collateral may depreciate over time, may be difficult to appraise, and may fluctuate in value. Construction – Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost of construction. During the construction phase, a number of factors could result in delays and cost overruns. If the estimate of construction costs proves to be inaccurate, additional funds may be required to be advanced in excess of the amount originally committed to permit completion of the building. Leases – Meridian Equipment Finance specializes in small ticket equipment leases for small and mid-sized businesses nationally and through a broad range of industries. The Bank’s credit risk generally results from the potential default of borrowers which may be driven by customer specific or broader industry related conditions. Residential mortgage – Residential loans held in portfolio are primarily secured by single-family homes located in our market areas. Residential loans are generally made on the basis of the borrower’s ability to make repayment from employment income or other income, and are secured by real property whose value tends to be more easily ascertainable. Repayment of single-family loans are subject to adverse employment conditions in the local economy leading to increased default rates and decreased market values, including from oversupply in a geographic area. In general, these loans depend on the borrower’s continuing financial stability and, therefore, are likely to be adversely affected by various factors, including job loss, divorce, illness, or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans. Consumer, including home equity – Our consumer-lending department principally originates home equity based products for our clients and prospects. These loans typically fund completely at closing. Additional products include smaller dollar personal loans and our student loan refinance product, designed to provide additional flexibility in repayment terms desired in the marketplace. Most consumer loans are originated in Meridian’s primary market and surrounding areas. The largest component of Meridian’s consumer loan portfolio consists of fixed rate home equity loans and variable rate home equity lines of credit. Substantially all home equity loans and lines of credit are secured by junior lien mortgages on principal residences. The Bank will lend amounts, which, together with all prior liens, typically may be up to 90% of the appraised value of the property securing the loan. Home equity term loans may have maximum terms up to 20 years, while home equity lines of credit generally have maximum terms of 15 years . Credit risk on such loans is mitigated through prudent underwriting standards, including evaluation of the creditworthiness of the borrower through credit scores and debt-to-income ratios and, if secured, the collateral value of the assets Expected credit losses are estimated over the contractual term, adjusted for expected prepayments and recoveries. The contractual term excludes any extensions, renewals and modifications unless the Corporation has reasonable expectations at the reporting date that it will result in a modification, or they are not unconditionally cancellable. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The allowance includes two primary components: (i) an allowance established on loans which share similar risk characteristics collectively evaluated for credit losses (collective basis) and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and are individually evaluated for credit losses (individual basis). Loans that share similar risk characteristics are collectively reviewed for credit loss and are evaluated based on the Corporation’s historical loss experience and peer loss rate data, adjusted for current economic conditions and future economic forecasts. Estimated losses are determined differently for commercial and consumer loans, and each portfolio segment is further segmented by internally assessed risk ratings. Management uses a third-party economic forecast to modify the calculated historical loss rates of the portfolio segments. The Corporation's economic forecast extends out 4 quarters (the forecast period) and reverts to the historical loss rates on a straight-line basis over 1 quarter (the reversion period) as we believe this to be reasonable and supportable in the current environment. The economic forecast and reversion periods will be evaluated periodically by management and updated as appropriate. The historical loss rates for commercial loans are estimated by determining the PD and expected LGD. The PD is calculated based on the historical rate of migration to an event of credit loss during the look-back period. The historical loss rates for retail loans is calculated based solely on average net loss rates over the same look-back period. The Corporation's current look-back period is 36 quarters which helps to ensure that historical loss rates are adequately considering losses over a full economic cycle. Loans that do not share similar risk characteristics with any loan segments are evaluated on an individual basis. These loans, which may include borrowers experiencing financial difficulties, are not included in the collective basis evaluation. When it is probable that collection of all principal and interest due according to their contractual terms is not likely, which is assessed based on the credit characteristics of the loan and/or payment status, these loans are individually reviewed and measured for potential credit loss. The amount of the potential credit loss is measured using one of three methods: (i) the present value of expected future cash flows discounted at the loan’s effective interest rate; (ii) the fair value of collateral, if the loan is collateral dependent; or (iii) the loan’s observable market price. If the measured fair value of the loan is less than the amortized cost basis of the loan, an allowance for credit loss is recorded. For collateral dependent loans, the expected credit losses at the individual asset level is the difference between the collateral's fair value (less cost to sell) and the amortized cost. Qualitative adjustment factors consider various internal and external conditions which are allocated among loan segments and take into consideration: • Current underwriting policies, staff and portfolio concentrations, • Risk rating accuracy, credit and administration, • Internal risk emergence (including internal trends of delinquency, portfolio growth, and collateral value), and • , Competitive environment, as it could impact loan structure and underwriting. These factors are based on their relative standing compared to the period in which historical losses are used in quantitative reserve estimates and current directional trends, and reasonable and supportable forecasts. Qualitative factors in the model can add to or subtract from quantitative reserves. Loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with individual problem loans. In addition, various regulatory agencies periodically review our loan ratings and allowance for credit losses and the Bank’s internal loan review department performs loan reviews. Accrued interest receivable on loans is excluded from the estimate of credit losses and is included in accrued interest receivable on the Consolidated Balance Sheets. For additional detail regarding the allowance for credit losses and the provision for credit losses, see Note 6. Mortgage Banking Activities and Mortgage Loans Held for Sale The Corporation’s mortgage banking division operates 6 offices in the tri-state area of Pennsylvania, Delaware and New Jersey and another 4 offices in Maryland. The mortgage banking division originates conventional mortgages, FHA, VA, USDA, and other state insured mortgages. The loans are generally sold to various investors in the secondary market. Mortgage loans originated by the Corporation and intended for sale in the secondary market to permanent investors are classified as mortgage loans held for sale on the balance sheet as the Corporation has elected to measure loans held for sale at fair value. Fair value is based on outstanding investor commitments or, in the absence of such commitments, on current investor yield requirements based on third party models. Gains and losses on sales of these loans, as well as loan origination costs, are recorded as a component of non-interest income in the consolidated statements of income. The Corporation’s current practice is to sell residential mortgage loans and retain the servicing rights, as discussed further below. Interest on loans held for sale is credited to income based on the principal amounts outstanding. The Corporation enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (interest rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Time elapsing between the issuance of a loan commitment and closing and sale of the loan generally ranges from 30 days to 120 days. The Corporation protects itself from changes in interest rates through the use of best efforts forward sale contracts, whereby the Corporation commits to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed interest rate risk on the loan. The Corporation may also commit to loan sales through a mandatory sales channel which are economically hedged by the future sale of mortgage-backed securities to third-party counterparties to mitigate the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. By entering into best efforts commitments and economically hedging the mandatory commitments, the Corporation limits its exposure to loss and its realization of significant gains related to its rate lock commitments due to changes in interest rates. The Corporation utilizes a third-party model to determine the fair value of rate lock commitments or forward sale contracts. This model uses investor quotes while taking into consideration the probability that the rate lock commitments will close. Net derivative assets and liabilities are recorded within other assets or other liabilities, respectively, on the consolidated balance sheets, with changes in fair value during the period recorded within net change in the fair value of derivative instruments on the consolidated statements of income. Loan Servicing Rights The Corporation sells substantially all of the residential mortgage loans originated for sale in the secondary market; however, the Corporation may retain the servicing rights related to some of these loans. A fee, usually based on a percentage of the outstanding principal balance of the loan, is received in return for these services. MSRs are recognized when a loan’s servicing rights are retained upon sale of a loan. When mortgage loans are sold with servicing retained, MSRs are initially recorded at fair value with the income effect recorded in non-interest income. The Corporation also sells the guaranteed portion of certain SBA loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. These servicing assets amortize in proportion to, and over the period of, the estimated future net servicing life of the underlying loans. The servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the servicing assets. Other Real Estate Owned OREO is comprised of property acquired through a foreclosure proceeding or acceptance of a deed-in-lieu of foreclosure. The Corporation acquires OREO through the wholly owned subsidiary of the Bank, Apex Realty. OREO is recorded at the lower of cost or fair value, or the loan amount net of estimated selling costs, at the date of foreclosure. The cost basis of OREO is its recorded value at the time of acquisition. After acquisition, valuations are periodically performed by management and subsequent changes in the valuation allowance are charged to OREO expense. Revenues, such as rental income, and holding expenses, as applicable, are included in other income and other expenses, respectively. The Corporation had one property of $1.7 million in OREO at December 31, 2023 and December 31, 2022. Restricted Investment in Bank Stock Restricted bank stock is principally comprised of stock in the FHLB. Federal law requires a member institution of the FHLB to hold stock according to a predetermined formula. As of December 31, 2023, and 2022, the Corporation had an investment of $8.1 million and $6.9 million, respectively, related to the FHLB stock. Also included in restricted stock is secondary stock from a correspondent bank in the amount of $50 thousand as of December 31, 2023 and 2022. All restricted stock is carried at cost. Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) significance of the decline in net assets of the banks as compared to the capital stock amount and the length of time this situation has persisted, (2) commitments by the banks to make payments required by law or regulation and the level of such payments in relation to the operating performance of the banks, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the banks. Management believes no impairment charge is necessary related to these bank restricted stocks as of December 31, 2023 or 2022. Transfers of Financial Assets Transfers of financial assets, including loan and loan participation sales, are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 12 to 40 years Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 7 years and 3 to 5 years for computer software and hardware, respectively. Leasehold improvements are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter. The costs of maintenance and repairs are expensed as incurred; while major replacements, improvements and additions are capitalized. Lease Liabilities and Right of Use Assets The Corporation is obligated under non-cancelable operating leases for premises for various retail branch locations and loan production offices. The Corporation determines if an arrangement is a lease at inception by assessing whether a contract contains a right to control an identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease right-of-use assets and operating lease liabilities in the consolidated balance sheets. For purposes of calculating operating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Corporation will exercise that option and begins when the Corporation has control and possession of the leased property, which may be before rental payments are due under the lease. Right-of use assets and operating lease liabilities are recognized based on the present value of lease payments, discounted using the Corporation's incremental borrowing rate, over the lease term at the possession date. The Corporation determines its incremental borrowing rate using publicly available information available for debt issuers with similar credit ratings as the Bank, as the substantial majority of the Corporation's leases are related to properties of the Bank. The Corporation separately accounts for lease and non-lease components such as property taxes, insurance, and maintenance costs. Operating lease expense for the Corporation's leases, which generally have escalating rental payments over the term of the lease, is recognized on a straight-line basis over the lease term. At December 31, 2023, the Corporation's leases have remaining terms of 2 months to 12 years. Bank-Owned Life Insurance The Corporation invests in BOLI as a source of funding for employee benefit expenses. BOLI involves the purchasing of life insurance by the Corporation on a chosen group of employees. The Corporation is the owner and beneficiary of the policies. This life insurance investment is carried at the cash surrender value of the underlying policies. Earnings from the increase in cash surrender value of the policies are included in non-interest income on the consolidated statements of income. Advertising Costs The Corporation follows the policy of charging the costs of advertising to expense as incurred. Employee Benefit Plans The Corporation has a 401(k) Plan (the Plan) and an ESOP. All employees are eligible to participate in the Plan and ESOP after they have attained the age of 21 and have also completed three months consecutively of service. Employees must participate in the Plan to be eligible for participation in the ESOP. The employees may contribute to the Plan up to the maximum percentage allowable by law of their compensation. The Corporation may make a discretionary matching contribution to the Plan and the ESOP. Full vesting in the Corporation’s contribution to the Plan and ESOP is over a three-year period. The Corporation recorded expense for the Plan and ESOP of $1.0 million and $858 thousand, respectively for the year ended December 31, 2023 and $1.0 million and $1.1 million, respectively for the year ended December 31, 2022. The expense recorded by the Corporation for the ESOP for the year ended December 31, 2023 included a $536 thousand employer contribution, in addition to $523 thousand in stock compensation related expense. The expense recorded by the Corporation for the ESOP for the year ended December 31, 2022 included a $671 thousand employer contribution, in addition to $426 thousand in stock compensation related expense. During the year ended December 31, 2023, 81,316 shares were purchased by the ESOP, while for the year ended December 31, 2022, 0 shares were purchased by the ESOP. Shares in the ESOP that are committed to be released to employees are treated as outstanding shares in the Corporation’s computation of earnings per share. As of December 31, 2023, 93,296 of these common shares were released to the ESOP leaving 173,264 unallocated shares. There were 610,735 shares in the ESOP as of December 31, 2023. Shares in the ESOP would be impacted by any stock dividends and stock splits in the same manner as all other outstanding common shares of the Corporation. Income Taxes Deferred income taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and net operating losses and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and net operating loss carry-forwards and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Corporation follows accounting guidance related to accounting for uncertainty in income taxes. Under the “more likely than not” threshold guidelines, the Corporation believes no significant uncertain tax positions exist, either individually or in the aggregate, that would give rise to the non-recognition of an existing tax benefit. As of December 31, 2023, and 2022, the Corporation had no material unrecognized tax benefits or accrued interest and penalties. The Corporation’s policy is to account for interest as a component of interest expense and penalties as a component of other expense. The Corporation is no longer subject to examination by federal, state and local taxing authorities for years before January 1, 2020. Stock Split On February 28, 2023, the Corporation approved and declared a two-for-one stock split in the form of a stock dividend, payable March 20, 2023, to shareholders of record as of March 14, 2023. Under the terms of the stock split, the Corporation’s shareholders will receive a dividend of one share for every share held on the record date. The dividend will be paid in authorized but unissued shares of common stock of the Corporation. The par value of the Corporation's stock was not affected by the split and remained at $1.00 per share. All share and per share amounts reported in the consolidated financial statements have been adjusted to reflect the two-for-one stock split effective February 28, 2023. Stock Compensation Plans Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options and restricted share plans. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. All stock compensation issued has been adjusted for the two-for-one stock split effective February 28, 2023, as discussed further in Note 13. Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. The components of other comprehensive income (loss) for the years ended December 31, 2023 and 2022 consist of unrealized holding gains and (losses) arising during the year on available-for-sale securities, unrealized gains and (losses) arising during the year on interest rate swaps used in cash flow hedges. Off-Balance Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off-balance sheet financial instruments consisting of commitments to extend credit and letters of credit. Such financial instruments are recorded in the balance sheet when they are funded. Unfunded Lending Commitments For unfunded lending commitments, the Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation. The estimate includes consideration of the probability of default and utilization rate at default to calculate expected credit losses on commitments expected to be funded over its estimated life of one year, based on historical losses, and qualitative adjustment factors. The allowance for credit losses for off-balance sheet exposures is included in Other liabilities on the Consolidated Balance Sheets and the provision for credit losses for off-balance sheet exposure is included in the provision for credit losses on the Consolidated Statements of Income for the periods ended December 31, 2023, and in other non-interest expense for periods prior to the adoption of ASU-2016-13 on January 1, 2023. The allowance for credit losses for off-balance sheet exposures was $1.0 million and $173 thousand as of December 31, 2023 and December 31, 2022, respectively. Derivative Financial Instruments The Corporation recognizes all derivative financial instruments related to its mortgage banking activities on its balance sheet at fair value. The Corporation utilizes investor quotes to determine the fair value of interest rate lock commitment derivatives and market pricing to determine the fair value of forward security purchase commitment derivatives. All changes in fair value of derivative instruments are recognized in earnings. The Corporation enters into interest rate swaps that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. The interest rate swaps are recognized on the Corporation’s balance sheet at fair value. Under these agreements, the Corporation originates variable-rate loans with customers in addition to interest rate swap agreements, which serve to effectively swap the customers’ variable-rate loans into fixed-rate loans. The Corporation then enters into corresponding swap agreements with swap dealer counterparties to economically hedge its exposure on the variable and fixed components of the customer agreements. The interest rate swaps with both the customers and third parties are not designated as hedges under ASC 815 and are marked to market through earnings. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820. Cash flow hedges are used to mitigate the variability in the cash flows of borrowings, caused by interest rate fluctuations. The changes in the fair value of cash flow hedges are initially reported in other comprehensive income. Amounts are subsequently reclassified from accumulated other comprehensive income to earnings when the hedged transactions occur, specifically within the same line item as the hedged item. Earnings per Common Share Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period reduced by unearned ESOP Plan shares and treasury stock. Diluted earnings per common share takes into account the potential dilution that would occur if in the-money stock options were exercised and converted into shares of common stock and restricted stock awards and performance-based stock awards were vested. Proceeds assumed to have been received on options exercises are assumed to be used to purchase shares of the Corporation’s common stock at the average market price during the period, as required by the treasury stock method of accounting. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive. Revenue Recognition The Corporation recognizes all sources of income on the accrual method, with the exception of nonaccrual loans and leases. In addition to lending and related activities, the Corporation offers various services that generate revenue, certain of which are in the scope of FASB ASU 2014-09 (Topic 606), “Revenue for Contracts with Customers” (ASC 606) is recognized within non-interest income and include wealth management fees, and transaction based and fees. Revenue is recognized when the transactions occur or as services as performed over primarily monthly or quarterly periods. Payment is typically received in the period the transactions occur. Fees may be fixed or, where applicable based on a percentage of transaction size. Wealth management income for the years ended December 31, 2023 and 2022 is $4.9 million and $4.7 million. Within other non-interest income is $750 thousand and $1.1 million for the years ended December 31, 2023 and 2022, respectively, which are in the scope of ASC 606. These amounts include wire transfer fees, ATM/debit card commissions, title fee income. The Corporation earns wealth management fee income from investment advisory services provided to individual and 401k customers. Fees that are determined based on the market value of the assets held in their accounts are generally billed quarterly, in advance, based on the market value of assets at the end of the previous billing period. Other related services that are based on a fixed fee schedule are recognized when the services are rendered. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e. the trade date. Included in other assets on the balance sheet is a receivable for wealth management fees that have been earned but not yet collected. The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance. Other sources of the Corporation’s non-interest income that are not within the scope of ASC 606 include mortgage banking income, SBA loan income, net changes in fair values, hedging gains and losses, earnings on investments in life insurance, gains or losses on sale of investment securities, and dividends on FHLB stock. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe such matters will have a material effect on the financial statements. Operating Segments While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. The Corporation has identified three segments: a banking segment, a wealth management segment and a mortgage banking segment, as more fully disclosed in Note 20 - Segments. Fair Value of Financial Instruments Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 18 - Fair Value Measurements and Disclosures. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. Recent Accounting Pronouncements As an “emerging growth company” under the JOBS Act until December 31, 2022, the Bank was permitted an extended transition period for complying with new or revised accounting standards affecting public companies up to this date. We were classified as an emerging growth company until the end of the fiscal year following the fifth anniversary of the completion of our initial public offering, which took place on November 7, 2022. While an emerging growth company we had elected to take advantage of this extended transition period, which means that the financial statements included herein, as well as any financial statements that we filed in the past, are not subject to all new or revised accounting standards generally applicable to public companies for the transition period. Pronouncements Adopted in 2023 FASB ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments” The Corporation adopted ASU 2016-13, as amended, on January 1, 2023, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans, net of fees and costs, securities HTM, unfunded lending commitments (including loan commitments on loans held for investment, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842. In addition, ASC 326 made changes to the accounting for securities AFS which now requires credit losses to be presented as an allowance rather than as an other-than-temporary impairment on securities AFS management does not intend to sell or believes that it is more likely than not they will be required to sell. The Corporation applied the modified retrospective method for all financial assets measured at amortized cost and securities AFS. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Corporation recorded a one-time decrease to retained earnings of $2.2 million on January 1, 2023 for the cumulative effect of adopting ASC 326, net of tax. The transition adjustment includes $1.2 million and $974 thousand post-tax impacts for loans, net of fees and costs and unfunded loan commitments, respectively, due to higher expected credit losses compared to the incurred loss methodology primarily driven by small ticket equipment leases and longer duration commercial and consumer real estate loans. The impact of the change from the incurred loss model to the current expected credit loss model is detailed below.
FASB ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” Issued in April 2019, ASU 2019-04 clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments (addressed by ASUs 2016-13, 2017-12, and 2016-01, respectively). The amendments to estimating expected credit losses (ASU 2016-13), in particular, how a company considers recoveries and extension options when estimating expected credit losses, are the most relevant to the Corporation. The ASU clarifies that (1) the estimate of expected credit losses should include expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off, and (2) that contractual extension or renewal options that are not unconditionally cancellable by the lender are considered when determining the contractual term over which expected credit losses are measured. The Corporation adopted ASU 2019-04 at the same time ASU 2016-13 was adopted. FASB ASU 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." In March 2022, the FASB issued ASU No. 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted CECL and enhance the disclosure requirements for modifications of receivables made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current period gross write-offs by year of origination for financing receivables and net investment in leases in the existing vintage disclosures. The Corporation adopted ASU 2022-02 at the same time ASU 2016-13 was adopted, as of January 1, 2023. The adoption of this ASU resulted in updated disclosures within our financial statements but otherwise did not have a material impact on the Corporation's financial statements. Pronouncements Not Effective as of December 31, 2023: FASB ASU 2020-04 (Topic 848), “Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” Issued in March 2020, ASU 2020-04 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The Corporation does not have a significant concentration of loans, derivative contracts, borrowings or other financial instruments with attributes that are either directly or indirectly dependent on LIBOR. The Corporation expects to adopt the LIBOR transition relief allowed under this standard. FASB ASU 2020-06, “Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” This ASU clarifies the accounting for certain financial instruments with characteristics of liabilities and equity. The amendments in this update reduce the number of accounting models for convertible debt instruments and convertible preferred stock by removing the cash conversion model and the beneficial conversion feature models. For public business entities that meet the definition of an SEC filer (excluding smaller reporting entities), the amendments are effective for fiscal years beginning after Dec. 15, 2021, and interim periods within. For all other entities, the amendments are effective for fiscal years beginning after Dec. 15, 2023, and interim periods within. The Corporation does not expect this to have a material impact on our consolidated financial statements. FASB ASU 2023-02, "Investments Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method" In March 2023, the FASB issued ASU 2023-02, Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method to allow reporting entities to consistently account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits. If certain conditions are met, a reporting entity may elect to account for its tax equity investments by using the proportional amortization method regardless of the program from which it receives income tax credits, instead of only LIHTC structures. This amendment also eliminates certain LIHTC specific guidance aligning the accounting with other equity investments in tax credit structures. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Corporation does not expect this to have a material impact on our consolidated financial statements. FASB ASU 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures” The amendments in this update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Corporation is currently evaluating the impact on its results of operation, financial position, liquidity, and disclosures. FAS ASU 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures” The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. Early adoption is permitted.The Corporation is currently evaluating the impact on its disclosures.
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Earnings per Common Share | Earnings per Common Share Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period reduced by unearned ESOP Plan shares and treasury shares. Diluted earnings per common share takes into account the potential dilution, computed pursuant to the treasury stock method, that could occur if stock options were exercised and converted into common stock; if restricted stock awards were vested; and SERP plan liabilities were satisfied with common shares. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be anti-dilutive. All share and per share amounts have been adjusted to reflect the two-for-one stock split effective February 28, 2023.
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Goodwill and Other Intangibles | Goodwill and Other Intangibles The Corporation’s goodwill and intangible assets are detailed below:
Accumulated amortization of intangible assets was $1.6 million and $1.4 million as of December 31, 2023 and 2022, respectively. In accordance with ASC Topic 350, the Corporation performed a qualitative assessment of goodwill and identifiable intangible assets as of December 31, 2023 and determined it was more likely than not that the fair value of the Corporation was more than its carrying amount. At December 31, 2023, the schedule of future intangible asset amortization is as follows (in thousands):
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | Securities The following table presents the amortized cost and fair value of securities at the dates indicated:
Although the Corporation’s investment portfolio overall is in a net unrealized loss position at December 31, 2023, the temporary impairment in the above noted securities is primarily the result of changes in market interest rates subsequent to purchase and it is more likely than not that the Corporation will not be required to sell these securities prior to recovery to satisfy liquidity needs, and therefore, no securities are deemed to be other-than-temporarily impaired. ACL on Securities AFS and HTM We use credit ratings quarterly and the most recent financial information of securities' issuers annually to help evaluate the credit quality of our securities AFS and HTM portfolios on a quarterly basis. The securities portfolio consists primarily of U.S. government treasuries and U.S. government agency asset backed securities which have no probability of default. The remaining portfolio consists of highly rated municipal bonds, non-agency CMO, and corporate bonds that have a low probability of default. For the year ended December 31, 2023, we had no significant ACL or provision expense and no charge-offs or recoveries on AFS or HTM securities. The following table shows the Corporation’s investment gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at the dates indicated:
The amortized cost and carrying value of securities are shown below by contractual maturities at the dates indicated. Actual maturities may differ from contractual maturities as issuers may have the right to call or repay obligations with or without call or prepayment penalties.
The following table presents the gross gain on sale of investment securities available for sale on the dates indicated:
Pledged Securities As of December 31, 2023 and December 31, 2022, securities having an amortized cost of $60.1 million and $89.0 million, respectively, were specifically pledged as collateral for public funds, the FRB discount window program, FHLB borrowings and other purposes. The FHLB has a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB.
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Loans and Other Finance Receivables |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Other Finance Receivables | Loans and Other Finance Receivables The following table presents loans and other finance receivables, net of fees and costs detailed by category at the dates indicated:
Fair Value Option for Residential Mortgage Real Estate Loans Residential mortgage real estate loans that were originated by the Corporation and intended for sale in the secondary market to permanent investors, but in prior years were either repurchased or unsalable due to defect and that the Corporation has the ability and intent to hold for the foreseeable future or until maturity or payoff are carried at fair value pursuant to the Corporation's election of the fair value option for these loans. The remaining loans, net of fees and costs are stated at their outstanding unpaid principal balances, net of deferred fees or costs since the original intent for these loans was to hold them until payoff or maturity. Nonaccrual and Past Due Loans, Net of Fees and Costs The following tables present an aging of the Corporation’s loans, net of fees and costs at the dates indicated:
(1) Includes $13.7 million of loans at fair value of which $12.9 million are current, $0 are 30-89 days past due, and $786 thousand are nonaccrual.
(1) Includes $14.5 million of loans at fair value of which $13.8 million are current, $184 thousand are 30-89 days past due and $558 thousand are nonaccrual. Foreclosed and Repossessed Assets At December 31, 2023, there were 4 consumer mortgage loans totaling $937 thousand, secured by residential real estate properties (included in loans, net of fees and costs on the Consolidated Balance Sheets) for which formal foreclosure proceedings were in process. Risks and Uncertainties We have no particular credit concentration. Our commercial loans have been proactively managed in an effort to achieve a balanced portfolio with no unusual exposure to one industry. Additionally, most of our lending activity occurs within our primary market areas which are concentrated in southeastern Pennsylvania, Delaware, New Jersey, Maryland, and Florida, as well as other contiguous markets and represents a geographic concentration. Additionally, our loan portfolio is concentrated in commercial loans. Commercial loans are generally viewed as having more inherent risk of default than residential real estate loans or other consumer loans. Also, the commercial loan balance per borrower is typically larger than that for residential real estate loans and consumer loans, implying higher potential losses on an individual loan basis. Past Due and Nonaccrual Status The following table presents the amortized costs basis of loans and leases on nonaccrual status, net of fees and costs as of December 31, 2023. As of this date here were no loans 90 days or more past due and still accruing.
Collateral-dependent Loans The following table presents the amortized cost basis of non-accruing collateral-dependent loans by class of loans and type of collateral identified as of December 31, 2023 under the current expected credit loss model:
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Allowance for Credit Losses (the Allowance) |
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Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Credit Losses (the Allowance) | Allowance for Credit Losses (the Allowance) The ACL is maintained at a level considered adequate to provide for estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers our historical loss experience, current conditions and forecasts of future economic conditions as of the balance sheet date. Management’s periodic evaluation of the adequacy of the ACL is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is subjective as it requires material estimates that may be susceptible to significant revisions as more information becomes available. Roll-Forward of Allowance by Portfolio Segment The following tables provide the activity of our allowance for credit losses for the year ended December 31, 2023 under the CECL model in accordance with ASC 326 (as adopted on January 1, 2023):
Reconciliation of Provision for Credit Losses The following table provides a reconciliation of the provision for credit losses on the consolidated statements of income between the funded and unfunded components at the dates indicated:
Allowance Allocated by Portfolio Segment The following tables detail the allocation of the ACL and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases at the dates indicated:
The following table details the pre-CECL allocation of the allowance for loan and lease losses and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment at:
Credit Quality Indicators As part of the process of determining the ACL to the different segments of the loan and lease portfolio, Management considers certain credit quality indicators. For the commercial mortgage, construction and commercial and industrial loan segments, periodic reviews of the individual loans are performed by Management. The results of these reviews are reflected in the risk grade assigned to each loan. These internally assigned grades are as follows: •Pass – Loans considered to be satisfactory with no indications of deterioration. •Special mention – Loans classified as special mention have a potential weakness that deserves Management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. •Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. •Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loan balances classified as doubtful have been reduced by partial charge-offs and are carried at their net realizable values. The following tables detail the carrying value of loans and leases by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses at the dates indicated:
The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at December 31, 2023. In addition to credit quality indicators as shown in the above tables, allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status at the dates indicated:
In addition to credit quality indicators as shown in the above tables, allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status at the dates indicated:
(1) There were four nonperforming residential mortgage loans at December 31, 2022 with a combined outstanding principal balance of $558 thousand, which were carried at fair value and not included in the table above. Impaired Loans The following tables detail the recorded investment and principal balance of impaired loans by portfolio segment, their related Allowance and interest income recognized at the dates indicated.
Troubled Debt Restructuring As result of the adoption of guidance related to CECL effective as of January 1, 2023, the Corporation had no reportable balances related to TDRs as of and for the year ended December 31, 2023. See Note 1 - Summary of Significant Accounting Policies for additional information. The following table presents information about TDRs at the dates indicated:
There was 1 modification granted during the year ended December 31, 2022 on commercial mortgages for $684 thousand. No modifications granted during the twelve months ended December 31, 2022 subsequently defaulted during the same time period. Modifications to Borrowers Experiencing Financial Difficulty An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the ACL on loans and leases, a change to the allowance for credit losses is generally not recorded upon modification. However, when principal forgiveness is provided, the amortized cost basis of the asset is written off against the ACL on loans and leases. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the year ended December 31, 2023.
The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the year ended December 31, 2023.
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Bank Premises and Equipment |
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Bank Premises and Equipment | Bank Premises and Equipment The components of premises and equipment at December 31, 2023 and 2022 are as follows:
Total depreciation expense for the years ended December 31, 2023 and 2022 totaled $1.6 million and $1.4 million, respectively.
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Deposits |
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Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | Deposits The components of deposits at December 31, 2023 and 2022 are as follows:
Included in time deposits as of December 31, 2023, and December 31, 2022, are $429.9 million and $375.3 million of brokered deposits, respectively. The aggregate amount of time deposits in denominations over $250 thousand were $458.8 million and $394.3 million as of December 31, 2023 and 2022, respectively. At December 31, 2023, the scheduled maturities of time deposits are as follows (in thousands):
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Short-Term Borrowings and Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Borrowings and Long-Term Debt | Short-Term Borrowings and Long-Term Debt The Corporation’s short-term borrowings generally consist of Federal funds purchased and short-term borrowings extended under agreements with the FHLB and one unsecured Federal funds borrowing facilities with correspondent banks of $15 million. Federal funds purchased generally represent one-day borrowings. The Corporation had $0 in Federal funds purchased at December 31, 2023 and December 31, 2022. The Corporation also has a facility with the Federal Reserve Bank discount window of $7.8 million. This facility is fully secured by investment securities. There were no borrowings under this at December 31, 2023 and December 31, 2022. Additionally, the Corporation has a facility with the Federal Reserve’s BTFP of $33 million. This facility was created by the Federal Reserve in March 2023 and is fully secured by United States Treasury Bonds. There were $33 million in borrowings under this facility at December 31, 2023. The following table presents short-term borrowings at the dates indicated:
The following table presents long-term borrowings at the dates indicated:
The FHLB has also issued $104.3 million of letters of credit to the Corporation for the benefit of the Corporation’s public deposit funds and loan customers. These letters of credit expire throughout 2024. The Corporation has a maximum borrowing capacity with the FHLB of $626.8 million as of December 31, 2023 and $561.7 million as of December 31, 2022. All advances and letters of credit from the FHLB are secured by a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB.
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Subordinated Debentures |
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Subordinated Borrowings [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated Debentures | Subordinated Debentures The following table presents subordinated debentures at the dates indicated:
The Corporation issued the 2023 and 2019 Debentures, while the Bank issued the 2013, 2011 and 2008 Debentures. Upon formation of the bank holding company, the Corporation assumed the 2013, 2011 and 2008 Debentures. Interest is paid semi-annually on the 2023 and 2019 Debentures, and paid quarterly on the 2013, 2011 and 2008 debentures. The 2013, 2011 and 2008 Debentures are includable as Tier 2 capital for determining the Bank’s compliance with regulatory capital requirements. The 2019 and 2023 Debentures are included as Tier 2 capital for the Corporation and as Tier 1 capital for the Bank. The debt issuance costs are included as a direct deduction from the debt liability and these costs are amortized to interest expense using the effective yield method.
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Servicing Assets |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicing Assets | Servicing Assets The Corporation sells certain residential mortgage loans and the guaranteed portion of certain SBA loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. When the Corporation sells a residential mortgage loan, it does not retain any portion of that loan and its continuing involvement in such transfers is limited to certain servicing responsibilities. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. When the contractual servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing, a capitalized servicing asset is recognized. Residential Mortgage Loans The related MSR asset is amortized over the period of the estimated future net servicing life of the underlying assets. MSRs are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the MSR. The Corporation serviced $945.2 million of residential mortgage loans as of December 31, 2023 and $1.0 billion as of December 31, 2022. During the year ended December 31, 2023 the Corporation recognized servicing fee income of $2.5 million compared to $2.6 million, during the year ended December 31, 2022. Changes in the MSR balance are summarized as follows:
Activity in the valuation allowance for MSRs was as follows:
The Corporation uses assumptions and estimates in determining the fair value of MSRs. These assumptions include prepayment speeds and discount rates. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At December 31, 2023, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 8.57% and a discount rate equal to 9.50%. At December 31, 2022, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 8.05% and a discount rate equal to 9.50%. As interest rates increased and the number of mortgage refinancings have declined, model inputs have been adjusted to align the MSRs fair value with market conditions. The sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table.
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change. SBA Loans SBA loan servicing assets are amortized over the period of the estimated future net servicing life of the underlying assets. SBA loan servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the SBA loan servicing asset. The Corporation serviced $225.8 million and $166.1 million of SBA loans, as of December 31, 2023 and December 31, 2022, respectively. Changes in the SBA loan servicing asset balance are summarized as follows:
Activity in the valuation allowance for SBA loan servicing assets was as follows:
The Corporation uses assumptions and estimates in determining the fair value of SBA loan servicing rights. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At December 31, 2023, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 14.70% and a discount rate equal to 14.66%. At December 31, 2022, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 12.73% and a discount rate equal to 18.96%. The change in valuation allowance due to impairment noted in the tables above, was largely due to the decrease in discount rate partially offset by the increase in prepayment speed as a result of the rising interest rate environment. The sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table.
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the SBA servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.
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Lease Commitments |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Commitments | Lease Commitments On January 1, 2022, the Corporation adopted ASU 2016-02 (Topic 842), “Leases”, as further explained in Note 1, Summary of Significant Accounting Policies. The Corporation’s operating leases consist of various retail branch locations and loan production offices. As of December 31, 2023, the Corporation’s leases have remaining lease terms ranging from 2 months to 12 years, including extension options. The Corporation’s leases include fixed rental payments, and certain of our leases also include variable rental payments where lease payments may increase at pre-determined dates based on the change in the consumer price index. The Corporation’s lease agreements include gross leases as well as leases in which we make separate payments to the lessor for items such as the property taxes assessed on the property or a portion of the common area maintenance associated with the property. We have elected the practical expedient not to separate lease and non-lease components for all of our building leases. The Corporation also elected to not recognize ROU assets and lease liabilities for short-term leases. As of December 31, 2023, the Corporation’s ROU assets and related lease liabilities were $9.4 million and $9.4 million, respectively. As of December 31, 2022 and the Corporation’s ROU assets and related lease liabilities were $9.0 million and $8.9 million, respectively. These amounts are included within and , respectively. The components of lease expense were as follows:
Supplemental cash flow information related to leases was as follows:
Maturities of operating lease liabilities were as follows for the period indicated:
As of December 31, 2023, the weighted-average remaining lease term for all operating leases, including extension options that the Corporation is reasonably certain will be exercised for retail branch locations, is 6.2 years. Because we generally do not have access to the rate implicit in the lease, we utilize our incremental borrowing rate as the discount rate. The weighted average discount rate associated with operating leases as of December 31, 2023 is 3.23%.
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation The Corporation has issued stock options under the Meridian Bank 2004 Stock Option Plan (2004 Plan). The 2004 Plan authorized the Board of Directors to grant options up to an aggregate of 892,182 shares, as adjusted for the 5% stock dividends in 2012, 2014 and 2016, and the two-for-one stock split effective February 28, 2023, to officers, other employees and directors of the Corporation. No additional shares are available for future grants. The shares granted under the 2004 Plan to directors are nonqualified options. The shares granted under the 2004 Plan to officers and other employees are incentive stock options, and are subject to the limitations under Section 422 of the Internal Revenue Code. The Meridian Bank 2016 Equity Incentive Plan (2016 Plan) was amended on March 25, 2023 to authorize the Board of Directors to grant up to an aggregate of 1,673,800 stock awards that can take different forms. A total of 1,222,000 stock options and 86,416 shares of restricted stock have been granted under the 2016 Plan through December 31, 2023, including the impact of the two-for-one stock split. As of December 31, 2023 there were 119,540 stock awards remaining to be issued. Options granted under the 2016 Plan to directors are nonqualified options, while options granted to officers and other employees are incentive stock options, and are subject to the limitations under Section 422 of the Internal Revenue Code. Stock Options Stock-based compensation cost is measured at the grant date, based on the fair value of the award and the cost is recognized as an expense over the vesting period. The fair value of stock option grants is determined using the Black-Scholes pricing model. The assumptions necessary for the calculation of the fair value are expected life of options, annual volatility of stock price, risk-free interest rate and annual dividend yield. Stock option awards granted under the 2016 Plan have a term that does not exceed 10 years and vest according to each award’s specific vesting schedule. Currently, all option awards granted to date vest 25% upon grant and become fully exercisable after 3 years of service from the grant date. The following table provides information about stock options outstanding as of December 31, 2023 and 2022:
The weighted average remaining contractual life of the outstanding stock options at December 31, 2023 is 7.4 years. At December 31, 2023 the range of exercise prices is $5.90 to $17.76. The aggregate intrinsic value of options outstanding and exercisable was $3.1 million and $2.8 million, respectively, as of December 31, 2023. The fair value of each option granted in 2023 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 3.6%, risk-free interest rate of 4.73%, expected life of 5.75 years, and volatility of 33.42% based on an average of the Corporation’s share price since going public. The weighted average fair value of options granted in 2023 was $2.37 to per share. The fair value of each option granted in 2022 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 2.6%, risk-free interest rate of 2.93%, expected life of 5.75 years, and volatility of 37.73% based on an average of the Corporation’s share price since going public. The weighted average fair value of options granted in 2022 was $5.38 to per share. Total stock option compensation cost for the years ended December 31, 2023 and 2022 was $650 thousand and $1.0 million, respectively. During the year ended December 31, 2023 and 2022, the Corporation received $279 thousand and $711 thousand from the exercise of stock options, respectively. The Corporation recognized and $3 thousand and $116 thousand in excess tax benefits related to stock compensation cost for the twelve months ended December 31, 2023 and 2022. In accordance with ASU 2016-09 – Compensation – Stock Compensation (ASU 2016-09), forfeitures are recognized as they occur instead of applying an estimated forfeiture rate to each grant. For purposes of the determination of stock-based compensation expense for the years ended December 31, 2023, and 2022, we recognized the forfeiture of 22,000, and 29,606 of shares of stock options that were previously granted to officers and other employees, respectively. As of December 31, 2023, there was $1.1 million of unrecognized compensation cost related to nonvested stock options. This cost will be recognized over a weighted average period of 7.4 years. During 2023, the intrinsic value of options exercised was $179 thousand. Restricted Stock The restricted stock awards granted under the 2016 Plan vest according to each award’s specific vesting schedule. No awards were granted in 2023 and 2022. All awards granted in 2022 vested 100% one year from the grant date. The grant date fair value of the restricted stock is based on the closing price on the date prior to the grant.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The following table presents the components of federal and state income tax expense for the periods indicated:
A reconciliation of the statutory income tax at 21% to the income tax expense included in the statement of operations is as follows for 2023 and 2022, respectively:
The components of the net deferred tax asset at December 31, 2023 and 2022 are as follows:
The effective tax rates for the twelve-month periods ended December 31, 2023 and 2022 were 22.0% and 21.8% respectively. The increase in rate between 2022 and 2023 was primarily related to the impact of additional nondeductible stock compensation expense in 2023 partially offset by an increase in tax-free bank owned life insurance income. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Corporation will realize the benefits of these deferred tax assets. As of December 31, 2023, the Corporation had an investment in low-income housing tax credits of $4.9 million on which it recognized tax credits of $343 thousand, amortization of $340 thousand and tax benefits from losses of $168 thousand during the year ended December 31, 2023. As of December 31, 2022, the Corporation had an investment in low-income housing tax credits of $5.3 million on which it recognized tax credits of $294 thousand, amortization of $381 thousand and tax benefits from losses of $131 thousand during the year ended December 31, 2022. The tax benefits are included within other in the statutory rate reconciliation above.
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Transactions with Executive Officers, Directors and Principal Stockholders |
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Nonmonetary Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions with Executive Officers, Directors and Principal Stockholders | Transactions with Executive Officers, Directors and Principal Stockholders The Corporation has had, and may be expected to have in the future, banking transactions in the ordinary course of business with its executive officers, directors, principal stockholders, their immediate families and affiliated companies (commonly referred to as related parties)
Deposits of related parties totaled $30.6 million and $32.6 million at December 31, 2023 and 2022, respectively. Subordinated debt held by related parties totaled $1.1 million and $208 thousand at December 31, 2023 and 2022, respectively. The Corporation paid legal fees of $14 thousand to a law firm of a director for the year ended December 31, 2022. The director retired from the law firm in 2022.
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Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
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Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies | Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The Corporation’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 Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. A summary of the Corporation’s financial instrument commitments at the dates indicated:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Corporation evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment. Outstanding letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. The majority of these are standby letters of credit that expire within the next twelve months. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Corporation requires collateral supporting these letters of credit as deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees. Loans sold under FHA or investor programs are subject to indemnification or repurchase if they fail to meet the origination criteria of those programs or if the loan is two or three months delinquent during a set period that usually varies from the first six months to a year after the loan is sold. There was 3 indemnifications signed for the year ended December 31, 2023 for $860 thousand, and 2 indemnification signed for the year ended December 31, 2022 for $734 thousand. A repurchase reserve of $508 thousand was recorded at December 31, 2023, as compared to $858 thousand as of December 31, 2022. There were 5 loans repurchased for the year ended December 31, 2023 with a total unpaid principal balance of $1.3 million, as compared to 8 loans repurchased for the year ended December 31, 2022 with an unpaid principal balance of $1.8 million.
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Regulatory Matters |
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Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Matters | Regulatory Matters The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the 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 Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are 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 below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of December 31, 2023, that the Bank met all capital adequacy requirements to which it is subject. Community banks have long raised concerns with bank regulators about the regulatory burden, complexity, and costs associated with certain provisions of the Basel III Rule. In response, Congress provided an “off-ramp” for institutions, like us, with total consolidated assets of less than $10 billion. Section 201 of the Regulatory Relief Act instructed the federal banking regulators to establish a single CBLR of between 8 and 10%. Under the final rule, a community banking organization is eligible to elect the new framework if it has: less than $10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a CBLR greater than 9%. The Bank’s CBLR ratio was 9.46% at December 31, 2023. As of December 31, 2023, the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category. The Bank is subject to certain restrictions on the amount of dividends that it may declare and pay to the Corporation due to regulatory considerations. The Pennsylvania Banking Code provides that cash dividends may be declared and paid only out of accumulated net earnings. The Banks’s actual and required capital amounts and ratios under the CBLR rules at December 31, 2023 and 2022 are presented below.
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Fair Value Measurements and Disclosures |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Disclosures | Fair Value Measurements and Disclosures The Corporation uses fair value measurements to record fair value adjustments to certain assets and liabilities. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Corporation’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation techniques or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Corporation groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation. Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis. Securities The fair value of securities available-for-sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. Mortgage Loans Held for Sale The fair value of loans held for sale is based on secondary market prices. Mortgage Loans Held for Investment The fair value of mortgage loans held for investment is based on the price secondary markets are currently offering for similar loans using observable market data. Derivative Financial Instruments The fair values of forward commitments and interest rate swaps are based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement. The following table presents the fair value of financial assets measured at fair value on a recurring basis by level within the fair value hierarchy at the dates indicated:
The following table presents assets measured at fair value on a nonrecurring basis at the dates indicated:
(1) Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. The following table details the valuation techniques for Level 3 impaired loans.
Below is management’s estimate of the fair value of all financial instruments, whether carried at cost or fair value on the Corporation’s balance sheet. The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair value of the Corporation’s financial instruments: Cash and Cash Equivalents The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values. Loans Receivable The fair value of loans receivable is estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair value below is reflective of an exit price. Servicing Assets The Corporation estimates the fair value of mortgage servicing rights and SBA loan servicing rights using discounted cash flow models that calculate the present value of estimated future net servicing income. The model uses readily available prepayment speed assumptions for the interest rates of the portfolios serviced. These servicing rights are classified within Level 3 in the fair value hierarchy based upon management’s assessment of the inputs. The Corporation reviews the servicing rights portfolios on a quarterly basis for impairment. Individually Evaluated Loans Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third‑party appraisals of the properties, or discounted cash flows based upon the expected proceeds. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the Allowance policy. Accrued Interest Receivable and Payable The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value. Deposit Liabilities The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. Short-Term Borrowings The carrying amounts of short-term borrowings approximate their fair values. Long-Term Debt Fair values of FHLB advances and the acquisition purchase note payable are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party. Subordinated Debt Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity. Off-Balance Sheet Financial Instruments Off-balance sheet instruments are primarily comprised of loan commitments, which are generally priced at market at the time of funding. Fees on commitments to extend credit and stand-by letters of credit are deemed to be immaterial and these instruments are expected to be settled at face value or expire unused. It is impractical to assign any fair value to these instruments and as a result they are not included in the table below. Fair values assigned to the notional value of interest rate lock commitments and forward sale contracts are based on market quotes. Derivative Financial Instruments The fair value of forward commitments and interest rate swaps is based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement. The following table presents the estimated fair values of the Corporation’s financial instruments at the dates indicated:
The following table includes a rollforward of interest rate lock commitments for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the periods indicated.
The following table details the valuation techniques for Level 3 interest rate lock commitments.
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments Risk Management Objective of Using Derivatives The Corporation is exposed to certain risk arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash receipts and its known or expected cash payments principally related to the Corporation’s loan portfolio. Interest Rate Swaps The Corporation uses interest rate swap agreements to modify interest rate characteristics from variable to fixed or fixed to variable in order to reduce the impact of interest rate changes on future net interest income. The Corporation’s credit exposure on interest rate swaps includes changes in fair value and any collateral that is held by a third party. In June 2023, the Corporation entered into three interest rate swaps classified as cash flow hedges with notional amounts of $25 million each, to hedge the interest payments received on short term borrowings. Under the terms of the three swap agreements, the Corporation pays average fixed rates of 4.070%, 4.027% and 4.117%, and receives variable rates in return indexed to SOFR. The swaps mature between May, June, and December 2026. The Corporation performed an assessment of the hedge for effectiveness at the inception of the hedge and performs an assessment on a recurring basis and determined that the derivative currently is and is expected to be highly effective in offsetting changes in cash flows of the hedged item. For the year ended December 31, 2023, $412 thousand, net of tax, is recorded in total comprehensive income as unrealized gains. This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to December 31, 2023. As of December 31, 2023, the combined notional amount of the interest rate swaps was $75 million and the fair value was an liability of $539 thousand. Mortgage Banking Derivatives In connection with its mortgage banking activities, the Corporation enters into commitments to originate certain fixed rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, the Corporation enters into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may also be in the form of commitments to sell individual mortgage loans or interest rate locks at a fixed price at a future date. The amount necessary to settle each interest rate lock is based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Interest rate lock commitments and forward commitments are recorded within other assets/liabilities on the consolidated balance sheets, with changes in fair values during the period recorded within net change in the fair value of derivative instruments on the consolidated statements of income. Customer Derivatives – Interest Rate Swaps Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers to swap a fixed rate product for a variable rate product, or vice versa. The Corporation executes interest rate derivatives with commercial banking customers to facilitate their respective risk management strategies. Those interest rate derivatives are simultaneously hedged by offsetting derivatives that the Corporation executes with a third party, such that the Corporation minimizes its net interest rate risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. The following table presents a summary of notional amounts and fair values of derivative financial instruments at the dates indicated:
Interest rate lock commitments are considered Level 3 in the fair value hierarchy, while the forward commitments and interest rate swaps are considered Level 2 in the fair value hierarchy. The following table presents a summary of the fair value (losses) gains on derivative financial instruments:
Net realized gains on derivative hedging activities were $28 thousand and $5.4 million for the year ended December 31, 2023 and 2022, respectively, and are included in non-interest income in the consolidated statements of income.
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Segments | Segments ASC Topic 280 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Corporation’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to allocate resources and assess performance. The Corporation has applied the aggregation criterion set forth in this codification to the results of its operations. Our Banking segment (“Bank”) consists of commercial and retail banking. The Banking segment generates interest income from its lending (including leasing) and investing activities and is dependent on the gathering of lower cost deposits from its branch network or borrowed funds from other sources for funding its loans, resulting in the generation of net interest income. The Banking segment also derives revenues from other sources including gains on the sale of SBA loans, sales of available for sale investment securities, service charges on deposit accounts, cash sweep fees, overdraft fees, BOLI income, title insurance fees, and other less significant non-interest income. Meridian Wealth (“Wealth”), a registered investment advisor and wholly-owned subsidiary of the Bank, provides a comprehensive array of wealth management services and products and the trusted guidance to help its clients and our banking customers prepare for the future. The unit generates non-interest income through advisory fees. Meridian’s mortgage banking segment (“Mortgage”) consists of 8 loan production offices throughout suburban Philadelphia and Maryland. The Mortgage segment originates 1 – 4 family residential mortgages and sells nearly all of its production to third party investors. The unit generates net interest income on the loans it originates and holds temporarily, then earns fee income (primarily gain on sales) at the time of the sale. The unit also recognizes income from document preparation fees, changes in portfolio pipeline fair values and related net hedging gains (losses). The table below summarizes income and expenses, directly attributable to each business line, which has been included in the statement of operations. Total assets for each segment is also provided.
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parent Company Financial Statements | Parent Company Financial Statements The condensed financial statements of the Corporation (parent company only) are presented below. These statements should be read in conjunction with the notes to the consolidated financial statements. All share amounts have been adjusted to reflect the two-for-one stock split effective February 28, 2023. A. Condensed Balance Sheets
B. Condensed Statements of Income
C. Condensed Statements of Cash Flows
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations | Nature of Operations Meridian Corporation (“Meridian” or the “Corporation”) is a bank holding company engaged in banking activities through its wholly-owned subsidiary, Meridian Bank (the “Bank”), a full-service, state-chartered commercial bank with offices in the Delaware Valley tri-state market, which includes Pennsylvania, New Jersey and Delaware, as well as the Central Maryland market area, and Florida. We have a financial services business model with significant noninterest income streams from mortgage banking, SBA lending and wealth management services. We provide services to small and middle market businesses, professionals and retail customers throughout our market area. We have a modern, progressive, consultative approach to creating innovative solutions for our customers. We are technology driven, with a culture that incorporates significant use of customer preferred alternative delivery channels, such as mobile banking, remote deposit capture and bank-to-bank ACH. Our ‘Meridian everywhere’ philosophy of community presence, along with our strategic business footprint, allows us to provide the high degree of service, convenience and products our customers need to achieve their financial objectives. We provide this service through three principal business line distribution channels, described further below. The Corporation operates in highly competitive market areas that includes local, regional, and national banks as competitors along with savings banks, credit unions, fintech companies, insurance companies, trust companies and registered investment advisors. The Corporation and its subsidiaries are regulated by many regulatory agencies including the SEC, FDIC, the FRB and the PDBS. The Bank was incorporated on March 16, 2004 under the laws of the Commonwealth of Pennsylvania and is a Pennsylvania state-chartered bank. The Bank commenced operations on July 8, 2004 and is a full-service bank providing personal and business lending and deposit services through 6 full-service banking offices in Pennsylvania, 6 mortgage loan production offices throughout the Delaware Valley, and 4 mortgage loan production offices in Maryland, and a lending office in Florida. The Bank and Corporation are headquartered in Malvern, Pennsylvania, located in the western suburbs of Philadelphia.
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Basis of Presentation | Basis of Presentation The accounting policies of the Corporation conform to U.S. GAAP. The consolidated financial statements include accounts of the Corporation and its wholly owned subsidiary, the Bank, and the wholly owned subsidiaries of the Bank: Meridian Land Settlement Services LLC (“MLSS”); APEX Realty LLC (“APEX”); Meridian Wealth Partners LLC (“MWP”); and Meridian Equipment Finance LLC (“MEF”). All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year’s presentation. Reclassifications had no effect on prior year net income or total stockholders’ equity. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Significant Concentrations of Credit Risk | Significant Concentrations of Credit Risk Most of the Corporation’s activities are with customers located in the Delaware Valley tri-state market and the central Maryland market area. Note 4 discusses the types of securities that the Corporation invests in, and Note 5 discusses types of lending that the Corporation engages in. Although the Corporation has a diversified loan portfolio, its debtors’ ability to honor their contracts is influenced by the region’s economy. The Corporation does not have any significant concentrations to any one industry or customer, however there is significant concentration of commercial real estate-backed loans, amounting to 39% and 34% of total loans held for investment, as of December 31, 2023 and December 31, 2022, respectively.
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Presentation of Cash Flows | Presentation of Cash Flows For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold. Generally, federal funds are purchased or sold for one day periods. The FRB removed cash minimum reserve requirements in March 2020. Net cash flows are reported for customer loan and deposit transactions, interest bearing deposits in other financial institutions, and the federal funds purchased and repurchased agreements.
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Securities | Securities Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Securities classified as available-for-sale are those securities that the Corporation intends to hold for an indefinite period of time but not necessarily to maturity. Securities available-for-sale are carried at fair value. Unrealized gains and losses are reported as increases or decreases in other comprehensive income. Gains or losses on disposition are based on the net proceeds and cost of the securities sold, adjusted for the amortization of premiums and accretion of discounts, using the specific identification method. Securities classified as held to maturity are those debt securities the Corporation has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs or changes in general economic conditions. These securities are carried at cost adjusted for the amortization of premium and accretion of discount, computed on a level yield basis. Investments in equity securities are recorded in accordance with ASC 321-10, Investments - Equity Securities. Equity securities are carried at fair value, with changes in fair value reported in net income. At December 31, 2023 and 2022, investments in equity securities consisted of an investment in mutual funds with a fair value of $2.1 million, and $2.1 million, respectively. Allowance for Credit Losses - Held-to-Maturity Debt Securities We follow Accounting Standards Codification (ASC) 326-20, Financial Instruments - Credit Loss - Measured at Amortized Cost, to measure expected credit losses on held-to-maturity debt securities on a collective basis by security investment grade. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation classifies the held-to-maturity debt securities into the following major security types: state and municipal securities. These securities are highly rated with a history of no credit losses, and are assigned ratings based on the most recent data from ratings agencies depending on the availability of data for the security. Credit ratings of held-to-maturity debt securities, which are a significant input in calculating the expected credit loss, are reviewed on a quarterly basis. Accrued interest receivable on held-to-maturity debt securities is excluded from the estimate of credit losses and is included in Accrued interest receivable on the Consolidated Balance Sheets. Allowance for Credit Losses - Available-for-Sale Debt Securities We follow ASC 326-30, Financial Instruments - Credit Loss - Available-for-Sale Debt Securities, which provides guidance related to the recognition of and expanded disclosure requirements for expected credit losses on available-for-sale debt securities. For available-for-sale debt securities in an unrealized loss position, the Corporation first evaluates whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria is met, the security's amortized cost basis is reduced to fair value and recognized as a reduction to Noninterest income in the Consolidated Statements of Income. For debt securities available-for-sale which the Corporation does not intend to sell, or it is not likely the security would be required to be sold before recovery, we evaluate whether a decline in fair value has resulted from credit losses or other adverse factors, such as a change in the security's credit rating. In assessing whether a credit loss exists, the Corporation compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance is recorded, limited to the fair value of the security. Management performs this analysis on a quarterly basis to review the conditions and risks associated with the individual securities. Credit losses on an impaired security shall continue to be measured using the present value of expected future cash flows. Any impairment not recorded through an allowance for credit loss is included in other comprehensive income (loss), net of the tax effect. We are required to use our judgment in determining impairment in certain circumstances. For additional detail regarding debt securities, see Note 4.
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Loans Receivable | Loans and Other Finance Receivables Loans and other finance receivables that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for credit losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Corporation generally amortizes these amounts over the contractual life of the loan. Loans that were originated by the Corporation and intended for sale in the secondary market to permanent investors, but were either repurchased or unsalable due to defect, are held for the foreseeable future or until maturity or payoff, are carried at fair value. Past Due and Nonaccrual Loans Past due loans and leases are defined as loans and leases contractually past due 30 - 89 days as to principal or interest payments but which remain in accrual status, or loans delinquent 90 days or more but are considered well secured and in the process of collection. Nonaccruing loans and leases are those on which the accrual of interest has ceased. Loans are placed on nonaccrual status immediately if, in the opinion of management, collection is doubtful, or when principal or interest is past due 90 days or more and the loan is not well secured and in the process of collection. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed and charged against interest income. A loan that is not past due more than 90 days could be classified as nonaccrual if management comes to the conclusion that we will not be in a position to collect all principal and interest. In addition, the amortization of net deferred loan fees is suspended when a loan is placed on nonaccrual status. Subsequent cash receipts are applied either to the outstanding principal balance or recorded as interest income, depending on management’s assessment of the ultimate collectability of principal and interest. Loans are returned to accrual status when it is determined that the borrower has the ability to make all principal and interest payments in accordance with the terms of the loan (i.e. a consistent repayment record, generally six consecutive payments, has been demonstrated). Unless loans are well-secured and collection is imminent, for loans greater than 90 days past due their respective reserves are generally charged off once the loss has been confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off.
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Allowance for Loan and Lease Losses | Allowance for Credit Losses - Loans and Leases On January 1, 2023, the Corporation adopted ASU 2016-13, Financial Instruments-Credit Losses ("Topic 326"), which replaced the incurred loss impairment model with an expected loss methodology that is referred to as the CECL methodology. Prior to January 1, 2023, the Corporation calculated the Allowance based on a probable incurred credit loss model. The Corporation now establishes an ACL in accordance with Topic 326. The ACL includes quantitative and qualitative factors that comprise management's current estimate of expected credit losses, including portfolio mix and segmentation, modeling methodology, historical loss experience, relevant available information from internal and external sources relating to reasonable and supportable forecasts about future economic conditions, prepayment speeds, and qualitative adjustment factors. The Corporation's portfolio segments, established based on similar risk characteristics and loss behaviors, are: • Commercial mortgage, commercial and industrial, construction, SBA loans, and commercial small business leases (commercial loans), and • Residential, equity secured lines and loans, and installment loans (retail loans). Commercial mortgage – Our commercial real estate loans are secured by real estate that is both owner-occupied and investor owned. Owner-occupied commercial real estate loans generally involve less risk than an investment property and are distinctly reported from non-owner occupied commercial real estate loans for measuring loan concentrations for regulatory purposes. Repayment of commercial real estate loans depends on the cash flow of the borrower and the net operating income of the property, the borrower’s profitability, and the value of the underlying property. Of primary concern in commercial real estate lending is the borrower’s creditworthiness and the cash flows from the property. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy. Commercial real estate is also subject to adverse market conditions that cause a decrease in market value or lease rates, obsolescence in location or function and market conditions associated with oversupply of units in a specific region. Commercial and Industrial – We provide a variety of variable and fixed rate commercial business loans, lines of credit, and other finance receivables. These credit facilities are made to small and medium-sized manufacturers and wholesale, retail and service-related businesses. Commercial business loans generally include lines of credit and term loans with a maturity of 5 years or less. The primary source of repayment for commercial business loans and other finance receivables is generally operating cash flows of the business and may also include collateralization of inventory, accounts receivable, equipment and/or personal guarantees. As a result, the availability of funds for repayment may depend substantially on the success of the business itself. Furthermore, any collateral may depreciate over time, may be difficult to appraise, and may fluctuate in value. Construction – Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost of construction. During the construction phase, a number of factors could result in delays and cost overruns. If the estimate of construction costs proves to be inaccurate, additional funds may be required to be advanced in excess of the amount originally committed to permit completion of the building. Leases – Meridian Equipment Finance specializes in small ticket equipment leases for small and mid-sized businesses nationally and through a broad range of industries. The Bank’s credit risk generally results from the potential default of borrowers which may be driven by customer specific or broader industry related conditions. Residential mortgage – Residential loans held in portfolio are primarily secured by single-family homes located in our market areas. Residential loans are generally made on the basis of the borrower’s ability to make repayment from employment income or other income, and are secured by real property whose value tends to be more easily ascertainable. Repayment of single-family loans are subject to adverse employment conditions in the local economy leading to increased default rates and decreased market values, including from oversupply in a geographic area. In general, these loans depend on the borrower’s continuing financial stability and, therefore, are likely to be adversely affected by various factors, including job loss, divorce, illness, or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans. Consumer, including home equity – Our consumer-lending department principally originates home equity based products for our clients and prospects. These loans typically fund completely at closing. Additional products include smaller dollar personal loans and our student loan refinance product, designed to provide additional flexibility in repayment terms desired in the marketplace. Most consumer loans are originated in Meridian’s primary market and surrounding areas. The largest component of Meridian’s consumer loan portfolio consists of fixed rate home equity loans and variable rate home equity lines of credit. Substantially all home equity loans and lines of credit are secured by junior lien mortgages on principal residences. The Bank will lend amounts, which, together with all prior liens, typically may be up to 90% of the appraised value of the property securing the loan. Home equity term loans may have maximum terms up to 20 years, while home equity lines of credit generally have maximum terms of 15 years . Credit risk on such loans is mitigated through prudent underwriting standards, including evaluation of the creditworthiness of the borrower through credit scores and debt-to-income ratios and, if secured, the collateral value of the assets Expected credit losses are estimated over the contractual term, adjusted for expected prepayments and recoveries. The contractual term excludes any extensions, renewals and modifications unless the Corporation has reasonable expectations at the reporting date that it will result in a modification, or they are not unconditionally cancellable. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The allowance includes two primary components: (i) an allowance established on loans which share similar risk characteristics collectively evaluated for credit losses (collective basis) and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and are individually evaluated for credit losses (individual basis). Loans that share similar risk characteristics are collectively reviewed for credit loss and are evaluated based on the Corporation’s historical loss experience and peer loss rate data, adjusted for current economic conditions and future economic forecasts. Estimated losses are determined differently for commercial and consumer loans, and each portfolio segment is further segmented by internally assessed risk ratings. Management uses a third-party economic forecast to modify the calculated historical loss rates of the portfolio segments. The Corporation's economic forecast extends out 4 quarters (the forecast period) and reverts to the historical loss rates on a straight-line basis over 1 quarter (the reversion period) as we believe this to be reasonable and supportable in the current environment. The economic forecast and reversion periods will be evaluated periodically by management and updated as appropriate. The historical loss rates for commercial loans are estimated by determining the PD and expected LGD. The PD is calculated based on the historical rate of migration to an event of credit loss during the look-back period. The historical loss rates for retail loans is calculated based solely on average net loss rates over the same look-back period. The Corporation's current look-back period is 36 quarters which helps to ensure that historical loss rates are adequately considering losses over a full economic cycle. Loans that do not share similar risk characteristics with any loan segments are evaluated on an individual basis. These loans, which may include borrowers experiencing financial difficulties, are not included in the collective basis evaluation. When it is probable that collection of all principal and interest due according to their contractual terms is not likely, which is assessed based on the credit characteristics of the loan and/or payment status, these loans are individually reviewed and measured for potential credit loss. The amount of the potential credit loss is measured using one of three methods: (i) the present value of expected future cash flows discounted at the loan’s effective interest rate; (ii) the fair value of collateral, if the loan is collateral dependent; or (iii) the loan’s observable market price. If the measured fair value of the loan is less than the amortized cost basis of the loan, an allowance for credit loss is recorded. For collateral dependent loans, the expected credit losses at the individual asset level is the difference between the collateral's fair value (less cost to sell) and the amortized cost. Qualitative adjustment factors consider various internal and external conditions which are allocated among loan segments and take into consideration: • Current underwriting policies, staff and portfolio concentrations, • Risk rating accuracy, credit and administration, • Internal risk emergence (including internal trends of delinquency, portfolio growth, and collateral value), and • , Competitive environment, as it could impact loan structure and underwriting. These factors are based on their relative standing compared to the period in which historical losses are used in quantitative reserve estimates and current directional trends, and reasonable and supportable forecasts. Qualitative factors in the model can add to or subtract from quantitative reserves. Loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with individual problem loans. In addition, various regulatory agencies periodically review our loan ratings and allowance for credit losses and the Bank’s internal loan review department performs loan reviews. Accrued interest receivable on loans is excluded from the estimate of credit losses and is included in accrued interest receivable on the Consolidated Balance Sheets. For additional detail regarding the allowance for credit losses and the provision for credit losses, see Note 6.
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Mortgage Banking Activities and Mortgage Loans Held for Sale | Mortgage Banking Activities and Mortgage Loans Held for Sale The Corporation’s mortgage banking division operates 6 offices in the tri-state area of Pennsylvania, Delaware and New Jersey and another 4 offices in Maryland. The mortgage banking division originates conventional mortgages, FHA, VA, USDA, and other state insured mortgages. The loans are generally sold to various investors in the secondary market. Mortgage loans originated by the Corporation and intended for sale in the secondary market to permanent investors are classified as mortgage loans held for sale on the balance sheet as the Corporation has elected to measure loans held for sale at fair value. Fair value is based on outstanding investor commitments or, in the absence of such commitments, on current investor yield requirements based on third party models. Gains and losses on sales of these loans, as well as loan origination costs, are recorded as a component of non-interest income in the consolidated statements of income. The Corporation’s current practice is to sell residential mortgage loans and retain the servicing rights, as discussed further below. Interest on loans held for sale is credited to income based on the principal amounts outstanding. The Corporation enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (interest rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Time elapsing between the issuance of a loan commitment and closing and sale of the loan generally ranges from 30 days to 120 days. The Corporation protects itself from changes in interest rates through the use of best efforts forward sale contracts, whereby the Corporation commits to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed interest rate risk on the loan. The Corporation may also commit to loan sales through a mandatory sales channel which are economically hedged by the future sale of mortgage-backed securities to third-party counterparties to mitigate the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. By entering into best efforts commitments and economically hedging the mandatory commitments, the Corporation limits its exposure to loss and its realization of significant gains related to its rate lock commitments due to changes in interest rates. The Corporation utilizes a third-party model to determine the fair value of rate lock commitments or forward sale contracts. This model uses investor quotes while taking into consideration the probability that the rate lock commitments will close. Net derivative assets and liabilities are recorded within other assets or other liabilities, respectively, on the consolidated balance sheets, with changes in fair value during the period recorded within net change in the fair value of derivative instruments on the consolidated statements of income.
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Loan Servicing Rights | Loan Servicing Rights The Corporation sells substantially all of the residential mortgage loans originated for sale in the secondary market; however, the Corporation may retain the servicing rights related to some of these loans. A fee, usually based on a percentage of the outstanding principal balance of the loan, is received in return for these services. MSRs are recognized when a loan’s servicing rights are retained upon sale of a loan. When mortgage loans are sold with servicing retained, MSRs are initially recorded at fair value with the income effect recorded in non-interest income. The Corporation also sells the guaranteed portion of certain SBA loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. These servicing assets amortize in proportion to, and over the period of, the estimated future net servicing life of the underlying loans. The servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the servicing assets.
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Other Real Estate Owned | Other Real Estate Owned OREO is comprised of property acquired through a foreclosure proceeding or acceptance of a deed-in-lieu of foreclosure. The Corporation acquires OREO through the wholly owned subsidiary of the Bank, Apex Realty. OREO is recorded at the lower of cost or fair value, or the loan amount net of estimated selling costs, at the date of foreclosure. The cost basis of OREO is its recorded value at the time of acquisition. After acquisition, valuations are periodically performed by management and subsequent changes in the valuation allowance are charged to OREO expense. Revenues, such as rental income, and holding expenses, as applicable, are included in other income and other expenses, respectively. The Corporation had one property of $1.7 million in OREO at December 31, 2023 and December 31, 2022.
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Restricted Investment in Bank Stock | Restricted Investment in Bank Stock Restricted bank stock is principally comprised of stock in the FHLB. Federal law requires a member institution of the FHLB to hold stock according to a predetermined formula. As of December 31, 2023, and 2022, the Corporation had an investment of $8.1 million and $6.9 million, respectively, related to the FHLB stock. Also included in restricted stock is secondary stock from a correspondent bank in the amount of $50 thousand as of December 31, 2023 and 2022. All restricted stock is carried at cost. Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) significance of the decline in net assets of the banks as compared to the capital stock amount and the length of time this situation has persisted, (2) commitments by the banks to make payments required by law or regulation and the level of such payments in relation to the operating performance of the banks, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the banks. Management believes no impairment charge is necessary related to these bank restricted stocks as of December 31, 2023 or 2022.
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Transfers of Financial Assets | Transfers of Financial Assets Transfers of financial assets, including loan and loan participation sales, are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
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Bank Premises and Equipment | Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 12 to 40 years Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 7 years and 3 to 5 years for computer software and hardware, respectively. Leasehold improvements are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter. The costs of maintenance and repairs are expensed as incurred; while major replacements, improvements and additions are capitalized.
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Lease Liabilities and Right of Use Assets | Lease Liabilities and Right of Use Assets The Corporation is obligated under non-cancelable operating leases for premises for various retail branch locations and loan production offices. The Corporation determines if an arrangement is a lease at inception by assessing whether a contract contains a right to control an identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease right-of-use assets and operating lease liabilities in the consolidated balance sheets. For purposes of calculating operating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Corporation will exercise that option and begins when the Corporation has control and possession of the leased property, which may be before rental payments are due under the lease. Right-of use assets and operating lease liabilities are recognized based on the present value of lease payments, discounted using the Corporation's incremental borrowing rate, over the lease term at the possession date. The Corporation determines its incremental borrowing rate using publicly available information available for debt issuers with similar credit ratings as the Bank, as the substantial majority of the Corporation's leases are related to properties of the Bank. The Corporation separately accounts for lease and non-lease components such as property taxes, insurance, and maintenance costs. Operating lease expense for the Corporation's leases, which generally have escalating rental payments over the term of the lease, is recognized on a straight-line basis over the lease term. At December 31, 2023, the Corporation's leases have remaining terms of 2 months to 12 years.
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Bank-Owned Life Insurance | Bank-Owned Life Insurance The Corporation invests in BOLI as a source of funding for employee benefit expenses. BOLI involves the purchasing of life insurance by the Corporation on a chosen group of employees. The Corporation is the owner and beneficiary of the policies. This life insurance investment is carried at the cash surrender value of the underlying policies. Earnings from the increase in cash surrender value of the policies are included in non-interest income on the consolidated statements of income.
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Advertising Costs | Advertising Costs The Corporation follows the policy of charging the costs of advertising to expense as incurred.
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Employee Benefit Plans | Employee Benefit Plans The Corporation has a 401(k) Plan (the Plan) and an ESOP. All employees are eligible to participate in the Plan and ESOP after they have attained the age of 21 and have also completed three months consecutively of service. Employees must participate in the Plan to be eligible for participation in the ESOP. The employees may contribute to the Plan up to the maximum percentage allowable by law of their compensation. The Corporation may make a discretionary matching contribution to the Plan and the ESOP. Full vesting in the Corporation’s contribution to the Plan and ESOP is over a three-year period. The Corporation recorded expense for the Plan and ESOP of $1.0 million and $858 thousand, respectively for the year ended December 31, 2023 and $1.0 million and $1.1 million, respectively for the year ended December 31, 2022. The expense recorded by the Corporation for the ESOP for the year ended December 31, 2023 included a $536 thousand employer contribution, in addition to $523 thousand in stock compensation related expense. The expense recorded by the Corporation for the ESOP for the year ended December 31, 2022 included a $671 thousand employer contribution, in addition to $426 thousand in stock compensation related expense. During the year ended December 31, 2023, 81,316 shares were purchased by the ESOP, while for the year ended December 31, 2022, 0 shares were purchased by the ESOP. Shares in the ESOP that are committed to be released to employees are treated as outstanding shares in the Corporation’s computation of earnings per share. As of December 31, 2023, 93,296 of these common shares were released to the ESOP leaving 173,264 unallocated shares. There were 610,735 shares in the ESOP as of December 31, 2023. Shares in the ESOP would be impacted by any stock dividends and stock splits in the same manner as all other outstanding common shares of the Corporation.
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Income Taxes | Income Taxes Deferred income taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and net operating losses and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and net operating loss carry-forwards and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Corporation follows accounting guidance related to accounting for uncertainty in income taxes. Under the “more likely than not” threshold guidelines, the Corporation believes no significant uncertain tax positions exist, either individually or in the aggregate, that would give rise to the non-recognition of an existing tax benefit. As of December 31, 2023, and 2022, the Corporation had no material unrecognized tax benefits or accrued interest and penalties. The Corporation’s policy is to account for interest as a component of interest expense and penalties as a component of other expense. The Corporation is no longer subject to examination by federal, state and local taxing authorities for years before January 1, 2020.
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Stock Compensation Plans | Stock Compensation Plans Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options and restricted share plans. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. All stock compensation issued has been adjusted for the two-for-one stock split effective February 28, 2023, as discussed further in Note 13.
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Comprehensive Income | Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. The components of other comprehensive income (loss) for the years ended December 31, 2023 and 2022 consist of unrealized holding gains and (losses) arising during the year on available-for-sale securities, unrealized gains and (losses) arising during the year on interest rate swaps used in cash flow hedges.
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Off Balance Sheet Financial Instruments | Off-Balance Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off-balance sheet financial instruments consisting of commitments to extend credit and letters of credit. Such financial instruments are recorded in the balance sheet when they are funded. Unfunded Lending Commitments For unfunded lending commitments, the Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation. The estimate includes consideration of the probability of default and utilization rate at default to calculate expected credit losses on commitments expected to be funded over its estimated life of one year, based on historical losses, and qualitative adjustment factors. The allowance for credit losses for off-balance sheet exposures is included in Other liabilities on the Consolidated Balance Sheets and the provision for credit losses for off-balance sheet exposure is included in the provision for credit losses on the Consolidated Statements of Income for the periods ended December 31, 2023, and in other non-interest expense for periods prior to the adoption of ASU-2016-13 on January 1, 2023. The allowance for credit losses for off-balance sheet exposures was $1.0 million and $173 thousand as of December 31, 2023 and December 31, 2022, respectively.
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Derivative Financial Instruments | Derivative Financial Instruments The Corporation recognizes all derivative financial instruments related to its mortgage banking activities on its balance sheet at fair value. The Corporation utilizes investor quotes to determine the fair value of interest rate lock commitment derivatives and market pricing to determine the fair value of forward security purchase commitment derivatives. All changes in fair value of derivative instruments are recognized in earnings. The Corporation enters into interest rate swaps that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. The interest rate swaps are recognized on the Corporation’s balance sheet at fair value. Under these agreements, the Corporation originates variable-rate loans with customers in addition to interest rate swap agreements, which serve to effectively swap the customers’ variable-rate loans into fixed-rate loans. The Corporation then enters into corresponding swap agreements with swap dealer counterparties to economically hedge its exposure on the variable and fixed components of the customer agreements. The interest rate swaps with both the customers and third parties are not designated as hedges under ASC 815 and are marked to market through earnings. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820. Cash flow hedges are used to mitigate the variability in the cash flows of borrowings, caused by interest rate fluctuations. The changes in the fair value of cash flow hedges are initially reported in other comprehensive income. Amounts are subsequently reclassified from accumulated other comprehensive income to earnings when the hedged transactions occur, specifically within the same line item as the hedged item.
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Earnings per Common Share | Earnings per Common Share Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period reduced by unearned ESOP Plan shares and treasury stock. Diluted earnings per common share takes into account the potential dilution that would occur if in the-money stock options were exercised and converted into shares of common stock and restricted stock awards and performance-based stock awards were vested. Proceeds assumed to have been received on options exercises are assumed to be used to purchase shares of the Corporation’s common stock at the average market price during the period, as required by the treasury stock method of accounting. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive.
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Revenue Recognition | Revenue Recognition The Corporation recognizes all sources of income on the accrual method, with the exception of nonaccrual loans and leases. In addition to lending and related activities, the Corporation offers various services that generate revenue, certain of which are in the scope of FASB ASU 2014-09 (Topic 606), “Revenue for Contracts with Customers” (ASC 606) is recognized within non-interest income and include wealth management fees, and transaction based and fees. Revenue is recognized when the transactions occur or as services as performed over primarily monthly or quarterly periods. Payment is typically received in the period the transactions occur. Fees may be fixed or, where applicable based on a percentage of transaction size. Wealth management income for the years ended December 31, 2023 and 2022 is $4.9 million and $4.7 million. Within other non-interest income is $750 thousand and $1.1 million for the years ended December 31, 2023 and 2022, respectively, which are in the scope of ASC 606. These amounts include wire transfer fees, ATM/debit card commissions, title fee income. The Corporation earns wealth management fee income from investment advisory services provided to individual and 401k customers. Fees that are determined based on the market value of the assets held in their accounts are generally billed quarterly, in advance, based on the market value of assets at the end of the previous billing period. Other related services that are based on a fixed fee schedule are recognized when the services are rendered. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e. the trade date. Included in other assets on the balance sheet is a receivable for wealth management fees that have been earned but not yet collected. The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance. Other sources of the Corporation’s non-interest income that are not within the scope of ASC 606 include mortgage banking income, SBA loan income, net changes in fair values, hedging gains and losses, earnings on investments in life insurance, gains or losses on sale of investment securities, and dividends on FHLB stock.
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Loss Contingencies | Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe such matters will have a material effect on the financial statements.
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Operating Segments | Operating Segments While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. The Corporation has identified three segments: a banking segment, a wealth management segment and a mortgage banking segment, as more fully disclosed in Note 20 - Segments.
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 18 - Fair Value Measurements and Disclosures. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.
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Recent Accounting Pronouncements and Pronouncements Adopted in 2023 | Recent Accounting Pronouncements As an “emerging growth company” under the JOBS Act until December 31, 2022, the Bank was permitted an extended transition period for complying with new or revised accounting standards affecting public companies up to this date. We were classified as an emerging growth company until the end of the fiscal year following the fifth anniversary of the completion of our initial public offering, which took place on November 7, 2022. While an emerging growth company we had elected to take advantage of this extended transition period, which means that the financial statements included herein, as well as any financial statements that we filed in the past, are not subject to all new or revised accounting standards generally applicable to public companies for the transition period. Pronouncements Adopted in 2023 FASB ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments” The Corporation adopted ASU 2016-13, as amended, on January 1, 2023, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans, net of fees and costs, securities HTM, unfunded lending commitments (including loan commitments on loans held for investment, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842. In addition, ASC 326 made changes to the accounting for securities AFS which now requires credit losses to be presented as an allowance rather than as an other-than-temporary impairment on securities AFS management does not intend to sell or believes that it is more likely than not they will be required to sell. The Corporation applied the modified retrospective method for all financial assets measured at amortized cost and securities AFS. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Corporation recorded a one-time decrease to retained earnings of $2.2 million on January 1, 2023 for the cumulative effect of adopting ASC 326, net of tax. The transition adjustment includes $1.2 million and $974 thousand post-tax impacts for loans, net of fees and costs and unfunded loan commitments, respectively, due to higher expected credit losses compared to the incurred loss methodology primarily driven by small ticket equipment leases and longer duration commercial and consumer real estate loans. The impact of the change from the incurred loss model to the current expected credit loss model is detailed below.
FASB ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” Issued in April 2019, ASU 2019-04 clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments (addressed by ASUs 2016-13, 2017-12, and 2016-01, respectively). The amendments to estimating expected credit losses (ASU 2016-13), in particular, how a company considers recoveries and extension options when estimating expected credit losses, are the most relevant to the Corporation. The ASU clarifies that (1) the estimate of expected credit losses should include expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off, and (2) that contractual extension or renewal options that are not unconditionally cancellable by the lender are considered when determining the contractual term over which expected credit losses are measured. The Corporation adopted ASU 2019-04 at the same time ASU 2016-13 was adopted. FASB ASU 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." In March 2022, the FASB issued ASU No. 2022-02, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted CECL and enhance the disclosure requirements for modifications of receivables made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current period gross write-offs by year of origination for financing receivables and net investment in leases in the existing vintage disclosures. The Corporation adopted ASU 2022-02 at the same time ASU 2016-13 was adopted, as of January 1, 2023. The adoption of this ASU resulted in updated disclosures within our financial statements but otherwise did not have a material impact on the Corporation's financial statements. Pronouncements Not Effective as of December 31, 2023: FASB ASU 2020-04 (Topic 848), “Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” Issued in March 2020, ASU 2020-04 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The Corporation does not have a significant concentration of loans, derivative contracts, borrowings or other financial instruments with attributes that are either directly or indirectly dependent on LIBOR. The Corporation expects to adopt the LIBOR transition relief allowed under this standard. FASB ASU 2020-06, “Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” This ASU clarifies the accounting for certain financial instruments with characteristics of liabilities and equity. The amendments in this update reduce the number of accounting models for convertible debt instruments and convertible preferred stock by removing the cash conversion model and the beneficial conversion feature models. For public business entities that meet the definition of an SEC filer (excluding smaller reporting entities), the amendments are effective for fiscal years beginning after Dec. 15, 2021, and interim periods within. For all other entities, the amendments are effective for fiscal years beginning after Dec. 15, 2023, and interim periods within. The Corporation does not expect this to have a material impact on our consolidated financial statements. FASB ASU 2023-02, "Investments Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method" In March 2023, the FASB issued ASU 2023-02, Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method to allow reporting entities to consistently account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits. If certain conditions are met, a reporting entity may elect to account for its tax equity investments by using the proportional amortization method regardless of the program from which it receives income tax credits, instead of only LIHTC structures. This amendment also eliminates certain LIHTC specific guidance aligning the accounting with other equity investments in tax credit structures. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Corporation does not expect this to have a material impact on our consolidated financial statements. FASB ASU 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures” The amendments in this update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Corporation is currently evaluating the impact on its results of operation, financial position, liquidity, and disclosures. FAS ASU 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures” The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. Early adoption is permitted.The Corporation is currently evaluating the impact on its disclosures.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Standards Update and Change in Accounting Principle | The impact of the change from the incurred loss model to the current expected credit loss model is detailed below.
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Earnings per Common Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of basic and diluted earnings per common share |
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Goodwill and Other Intangibles (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill and intangibles assets related to acquisition | The Corporation’s goodwill and intangible assets are detailed below:
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Schedule of future amortization | At December 31, 2023, the schedule of future intangible asset amortization is as follows (in thousands):
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Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of amortized cost and fair value of securities | The following table presents the amortized cost and fair value of securities at the dates indicated:
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Schedule of investment gross unrealized loss in continuous unrealized loss position | The following table shows the Corporation’s investment gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at the dates indicated:
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Schedule of amortized cost and carrying value of held-to-maturity securities and available-for-sale securities by contractual maturity | The amortized cost and carrying value of securities are shown below by contractual maturities at the dates indicated. Actual maturities may differ from contractual maturities as issuers may have the right to call or repay obligations with or without call or prepayment penalties.
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Gross gain and (loss) on sale of investment securities available for sale | The following table presents the gross gain on sale of investment securities available for sale on the dates indicated:
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Loans and Other Finance Receivables (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of loans and leases outstanding | The following table presents loans and other finance receivables, net of fees and costs detailed by category at the dates indicated:
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Schedule of age analysis of past due loans and leases | The following tables present an aging of the Corporation’s loans, net of fees and costs at the dates indicated:
(1) Includes $13.7 million of loans at fair value of which $12.9 million are current, $0 are 30-89 days past due, and $786 thousand are nonaccrual.
(1) Includes $14.5 million of loans at fair value of which $13.8 million are current, $184 thousand are 30-89 days past due and $558 thousand are nonaccrual.
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Financing Receivable, Nonaccrual | The following table presents the amortized costs basis of loans and leases on nonaccrual status, net of fees and costs as of December 31, 2023. As of this date here were no loans 90 days or more past due and still accruing.
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Schedule of Non-Accruing Collateral Dependent Loans By Class Or Loans | The following table presents the amortized cost basis of non-accruing collateral-dependent loans by class of loans and type of collateral identified as of December 31, 2023 under the current expected credit loss model:
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Allowance for Credit Losses (the Allowance) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allowance by portfolio segment | The following tables provide the activity of our allowance for credit losses for the year ended December 31, 2023 under the CECL model in accordance with ASC 326 (as adopted on January 1, 2023):
The following tables detail the allocation of the ACL and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases at the dates indicated:
The following table details the pre-CECL allocation of the allowance for loan and lease losses and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment at:
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Financing receivables provision for credit losses | The following table provides a reconciliation of the provision for credit losses on the consolidated statements of income between the funded and unfunded components at the dates indicated:
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Schedule of carrying value of loans and leases by portfolio segment based on the credit quality indicators | The following tables detail the carrying value of loans and leases by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses at the dates indicated:
The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at December 31, 2023. In addition to credit quality indicators as shown in the above tables, allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status at the dates indicated:
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Schedule of allocations based on the credit quality indicators | In addition to credit quality indicators as shown in the above tables, allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status at the dates indicated:
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Schedule of recorded investment and principal balance of impaired loans | The following tables detail the recorded investment and principal balance of impaired loans by portfolio segment, their related Allowance and interest income recognized at the dates indicated.
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Schedule of TDRs | The following table presents information about TDRs at the dates indicated:
The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the year ended December 31, 2023.
The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the year ended December 31, 2023.
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Bank Premises and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of premises and equipment, net of depreciation | The components of premises and equipment at December 31, 2023 and 2022 are as follows:
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Deposits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of components of deposits | The components of deposits at December 31, 2023 and 2022 are as follows:
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Scheduled maturities of time deposits | At December 31, 2023, the scheduled maturities of time deposits are as follows (in thousands):
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Short-Term Borrowings and Long-Term Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of short term borrowings | The following table presents short-term borrowings at the dates indicated:
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Schedule of long term debt | The following table presents long-term borrowings at the dates indicated:
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Subordinated Debentures (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated Borrowings [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Subordinated Borrowing | The following table presents subordinated debentures at the dates indicated:
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Servicing Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Servicing Rights | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicing Assets at Fair Value [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of servicing assets | Changes in the MSR balance are summarized as follows:
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Schedule of valuation allowance for servicing assets | Activity in the valuation allowance for MSRs was as follows:
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Schedule of sensitivity of fair value of servicing assets | The sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table.
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SBA Loan Servicing Rights | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicing Assets at Fair Value [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of servicing assets | Changes in the SBA loan servicing asset balance are summarized as follows:
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Schedule of valuation allowance for servicing assets | Activity in the valuation allowance for SBA loan servicing assets was as follows:
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Schedule of sensitivity of fair value of servicing assets | The sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table.
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Lease Commitments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of lease cost | The components of lease expense were as follows:
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Supplemental cash flow information | Supplemental cash flow information related to leases was as follows:
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Schedule of maturity - ASC842 | Maturities of operating lease liabilities were as follows for the period indicated:
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Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock option activity | The following table provides information about stock options outstanding as of December 31, 2023 and 2022:
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Summary of restricted stock activity |
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of components of the federal and state income tax expense | The following table presents the components of federal and state income tax expense for the periods indicated:
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Schedule of reconciliation of the statutory income tax | A reconciliation of the statutory income tax at 21% to the income tax expense included in the statement of operations is as follows for 2023 and 2022, respectively:
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Summary of net deferred tax assets | The components of the net deferred tax asset at December 31, 2023 and 2022 are as follows:
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Transactions with Executive Officers, Directors and Principal Stockholders (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonmonetary Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions |
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Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments with Off-Balance Sheet, Risk, Commitments and Contingencies | A summary of the Corporation’s financial instrument commitments at the dates indicated:
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Regulatory Matters (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of corporation's actual capital amounts and ratios. | The Banks’s actual and required capital amounts and ratios under the CBLR rules at December 31, 2023 and 2022 are presented below.
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Fair Value Measurements and Disclosures (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial assets measured at fair value on a recurring basis | The following table presents the fair value of financial assets measured at fair value on a recurring basis by level within the fair value hierarchy at the dates indicated:
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Schedule of financial assets measured at fair value on non-recurring basis | The following table presents assets measured at fair value on a nonrecurring basis at the dates indicated:
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Schedule of measurement inputs | The following table details the valuation techniques for Level 3 impaired loans.
The following table details the valuation techniques for Level 3 interest rate lock commitments.
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Schedule of estimated fair values of financial instruments | The following table presents the estimated fair values of the Corporation’s financial instruments at the dates indicated:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of level 3 inputs reconciliation | The following table includes a rollforward of interest rate lock commitments for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the periods indicated.
|
Derivative Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the notional amounts and fair values of derivative financial instruments | The following table presents a summary of notional amounts and fair values of derivative financial instruments at the dates indicated:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the fair value gains and losses on derivative financial instruments | The following table presents a summary of the fair value (losses) gains on derivative financial instruments:
|
Segments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of business segment financial information | The table below summarizes income and expenses, directly attributable to each business line, which has been included in the statement of operations. Total assets for each segment is also provided.
|
Parent Company Financial Statements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of parent only consolidated balance sheets |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of parent only consolidated statements of operations |
|
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Schedule of parent only consolidated statements of cash flows |
|
Summary of Significant Accounting Policies - Nature of Operations (Details) |
12 Months Ended |
---|---|
Dec. 31, 2023
office
| |
Pennsylvania, Delaware and New Jersey | |
Business Acquisition [Line Items] | |
Number of mortgage loan production offices | 6 |
Maryland | |
Business Acquisition [Line Items] | |
Number of mortgage loan production offices | 4 |
PENNSYLVANIA | |
Business Acquisition [Line Items] | |
Number of full-service offices | 6 |
Summary of Significant Accounting Policies - Significant Concentrations of Credit Risk (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Loans Receivable | Credit Concentration Risk | Commercial mortgage | ||
Concentration Risk [Line Items] | ||
Total loans (as a percent) | 39.00% | 34.00% |
Summary of Significant Accounting Policies - Restricted Investment in Bank Stock (Details) $ in Thousands |
Dec. 31, 2023
USD ($)
property
|
Dec. 31, 2022
USD ($)
property
|
---|---|---|
Restricted Investment in Bank Stock | ||
Number of properties | property | 1 | 1 |
Other real estate owned | $ 1,703 | $ 1,703 |
Federal Home Loan Bank (FHLB) | ||
Restricted Investment in Bank Stock | ||
FHLB stock | 8,100 | 6,900 |
Atlantic Central Bankers Bank | ||
Restricted Investment in Bank Stock | ||
Investment | $ 50 | $ 50 |
Summary of Significant Accounting Policies - Bank Premises and Equipment (Details) |
Dec. 31, 2023 |
---|---|
Buildings | Minimum | |
Bank Premises and Equipment | |
Property, plant and equipment useful life | 12 years |
Buildings | Maximum | |
Bank Premises and Equipment | |
Property, plant and equipment useful life | 40 years |
Furniture, fixtures and equipment | Minimum | |
Bank Premises and Equipment | |
Property, plant and equipment useful life | 3 years |
Furniture, fixtures and equipment | Maximum | |
Bank Premises and Equipment | |
Property, plant and equipment useful life | 7 years |
Computer software and hardware | Minimum | |
Bank Premises and Equipment | |
Property, plant and equipment useful life | 3 years |
Computer software and hardware | Maximum | |
Bank Premises and Equipment | |
Property, plant and equipment useful life | 5 years |
Summary of Significant Accounting Policies - Lease Liabilities and Right of Use Assets (Details) |
Dec. 31, 2023 |
---|---|
Minimum | |
Bank Premises and Equipment | |
Remaining lease term | 2 months |
Maximum | |
Bank Premises and Equipment | |
Remaining lease term | 12 years |
Summary of Significant Accounting Policies - Employee Benefit Plans, Stock Split and Off-Balance Sheet Financial Instruments (Details) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 28, 2023 |
Dec. 31, 2023
USD ($)
$ / shares
shares
|
Dec. 31, 2022
USD ($)
$ / shares
shares
|
|
Accounting Policies [Abstract] | |||
Age | 21 years | ||
Minimum service term | 3 months | ||
Vesting period | 3 years | ||
Employer contribution under 401(k) plan | $ 1,000 | $ 1,000 | |
Employer contribution under ESOP | 858 | 1,100 | |
One-time contribution under ESOP | 536 | 671 | |
Stock compensation related expenses under ESOP | $ 523 | $ 426 | |
Shares purchased under ESOP (in shares) | shares | 81,316 | 0 | |
Shares committed to be released (in shares) | shares | 93,296 | ||
Unallocated shares (in shares) | shares | 173,264 | ||
Shares held by ESOP (in shares) | shares | 610,735 | ||
Stock split, conversion ratio | 2 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 1 | $ 1 | |
Reserve for unfunded commitments | $ 1,000 | $ 173 |
Summary of Significant Accounting Policies - Revenue Recognition and Operating Segments (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023
USD ($)
segment
|
Dec. 31, 2022
USD ($)
|
|
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Wealth management income | $ 4,928 | $ 4,733 |
Number of operating segments | segment | 3 | |
Wealth management income | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Wealth management income | $ 4,928 | 4,733 |
Wire Transfer Fees, ATM/Debit Card Commissions, And Title Fees | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Wealth management income | $ 750 | $ 1,100 |
Goodwill and Other Intangibles (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 899 | |
Goodwill, ending balance | 899 | |
Amortization expense | (204) | |
Finite lived, intangible assets, ending balance | 2,705 | |
Total Intangible Assets | 2,971 | $ 3,175 |
Total | 3,870 | 4,074 |
Accumulated Amortization | 1,600 | $ 1,400 |
Customer relationships | ||
Goodwill [Roll Forward] | ||
Indefinite-lived intangible assets (excluding goodwill), beginning balance | 266 | |
Indefinite-lived intangible assets (excluding goodwill), ending balance | 266 | |
Non competition agreements | ||
Goodwill [Roll Forward] | ||
Finite lived, intangible assets, beginning balance | 2,909 | |
Amortization expense | (204) | |
Finite lived, intangible assets, ending balance | $ 2,705 | |
Amortization Period | 20 years |
Goodwill and Other Intangibles - Future Amortization (Details) $ in Thousands |
Dec. 31, 2023
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 | $ 204 |
2025 | 204 |
2026 | 204 |
2027 | 204 |
2028 | 204 |
Thereafter | 1,685 |
Total future amortization | $ 2,705 |
Securities - Additional Information (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Securities | ||
Securities available-for-sale, amortized cost | $ 156,492 | $ 148,976 |
Asset Pledged as Collateral | ||
Securities | ||
Securities available-for-sale, amortized cost | $ 60,100 | $ 89,000 |
Securities - Sale of Investment Securities, Available for Sale (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Sales | $ 13,514 | $ 0 |
Gross loss on sale of available for sale investments | $ 58 | $ 0 |
Allowance for Credit Losses (the Allowance) - Provision for credit losses (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Text Block [Abstract] | |||
Provision (recovery of provision) for credit losses | $ 7,234 | $ 7,234 | $ 2,488 |
Recovery of provision for credit losses - unfunded | (419) | 0 | |
Provision (recovery of provision) for credit losses | $ 6,815 | $ 6,815 | $ 2,488 |
Allowance for Credit Losses (the Allowance) - Troubled Debt Restructuring (Details) $ in Thousands |
Dec. 31, 2022
USD ($)
|
---|---|
Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract] | |
TDRs included in nonperforming loans and leases | $ 207 |
TDRs in compliance with modified terms | 3,573 |
Total TDRs | $ 3,780 |
Allowance for Credit Losses (the Allowance) - Loan Modifications Granted Categorized as TDRs (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023
loan
|
Dec. 31, 2022
USD ($)
loan
|
|
Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract] | ||
Number of loan modifications | loan | 8 | 1 |
Commercial mortgage loan value | $ | $ 684 |
Bank Premises and Equipment (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Bank Premises and Equipment | ||
Less: accumulated depreciation | $ (13,766) | $ (12,825) |
Total | 13,557 | 13,349 |
Depreciation | 1,600 | 1,400 |
Buildings | ||
Bank Premises and Equipment | ||
Property, plant and equipment, gross | 9,287 | 9,150 |
Leasehold improvements | ||
Bank Premises and Equipment | ||
Property, plant and equipment, gross | 4,234 | 3,347 |
Land | ||
Bank Premises and Equipment | ||
Property, plant and equipment, gross | 600 | 600 |
Land Improvements | ||
Bank Premises and Equipment | ||
Property, plant and equipment, gross | 218 | 218 |
Furniture, fixtures and equipment | ||
Bank Premises and Equipment | ||
Property, plant and equipment, gross | 3,587 | 3,577 |
Computer equipment and data processing software | ||
Bank Premises and Equipment | ||
Property, plant and equipment, gross | 9,397 | 9,242 |
Construction in process | ||
Bank Premises and Equipment | ||
Property, plant and equipment, gross | $ 0 | $ 40 |
Deposits - Components of Deposits (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Deposits [Abstract] | ||
Demand, non-interest bearing | $ 239,289 | $ 301,727 |
Demand, interest bearing | 150,898 | 219,838 |
Savings accounts | 14,469 | 36,125 |
Money market accounts | 733,334 | 661,439 |
Time deposits | 685,472 | 493,350 |
Total deposits | 1,823,462 | 1,712,479 |
Brokered time deposits | 429,900 | 375,300 |
Time deposits over FDIC insurance limit | $ 458,800 | $ 394,300 |
Deposits - Scheduled Maturities (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Scheduled maturities | ||
2024 | $ 533,161 | |
2025 | 101,912 | |
2026 | 50,084 | |
2027 | 15 | |
2028 | 300 | |
Total | $ 685,472 | $ 493,350 |
Short-Term Borrowings and Long-Term Debt - Additional Information (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023
USD ($)
item
|
Dec. 31, 2022
USD ($)
|
|
Short-Term Borrowings | ||
Borrowings | $ 141,224,000 | $ 113,147,000 |
Letters of credit | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 626,800,000 | 561,700,000 |
Proceeds from long term debt | $ 104,300,000 | |
Federal funds purchased | ||
Short-Term Borrowings | ||
Number of borrowing facilities | item | 1 | |
Maximum borrowing capacity | $ 0 | |
Federal funds purchased, facility two | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 15,000,000 | |
Federal Reserve discount window | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 7,800,000 | |
Borrowings | 0 | 0 |
BTFP Advances | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | 33,000,000 | |
Borrowings | $ 33,000,000 | $ 0 |
Short-Term Borrowings and Long-Term Debt - Short-Term Borrowings (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Short-Term Borrowings | ||
Short term borrowings | $ 141,224 | $ 113,147 |
Open Repo Plus Weekly Maturing 06/10/2024 | ||
Short-Term Borrowings | ||
Interest rate | 5.68% | |
Short term borrowings | $ 104,792 | 113,147 |
BTFP Advances | ||
Short-Term Borrowings | ||
Interest rate | 4.76% | |
Short term borrowings | $ 33,000 | 0 |
Mid-term Repo Fixed Maturing On 09/30/2024 | ||
Short-Term Borrowings | ||
Interest rate | 4.60% | |
Short term borrowings | $ 3,432 | $ 0 |
Short-Term Borrowings and Long-Term Debt - Long-Term Debt (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Mid-term Repo Fixed Maturing On 12/22/2025 | ||
Long Term Debt | ||
Interest rate (as a percent) | 4.23% | |
Long term debt | $ 8,935 | $ 8,935 |
Mid Term Repo Fixed Maturing On 07/14/2023 | ||
Long Term Debt | ||
Interest rate (as a percent) | 4.57% | |
Long term debt | $ 15,245 | 0 |
Mid Term Repo Fixed Maturing On 10/14/2025 | ||
Long Term Debt | ||
Interest rate (as a percent) | 5.16% | |
Long term debt | $ 9,492 | 0 |
FHLB, Mid-term Repo Fixed | ||
Long Term Debt | ||
Long term debt | $ 33,672 | $ 8,935 |
Servicing Assets - Residential Mortgage Loans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Balance at beginning of the period | $ 12,346 | |
Balance at end of the period | 11,748 | $ 12,346 |
Mortgage Servicing Rights | ||
Servicing Assets at Fair Value [Line Items] | ||
Loans serviced | 945,200 | 1,000,000 |
Servicing fee income | 2,500 | 2,600 |
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Balance at beginning of the period | 9,942 | 10,756 |
Servicing rights capitalized | 20 | 668 |
Amortization of servicing rights | (1,343) | (1,488) |
Change in valuation allowance | 2 | 6 |
Balance at end of the period | 8,621 | 9,942 |
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward] | ||
Valuation allowance, beginning of period | (2) | (8) |
Impairment | 0 | (4) |
Recovery | 2 | 10 |
Valuation allowance, end of period | $ 0 | $ (2) |
Servicing Assets - MSR Sensitivity Analysis (Details) - Mortgage Servicing Rights - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||
Fair value of residential mortgage servicing rights | $ 11,221 | $ 11,567 |
Weighted average life (months) | 28 months | 22 months |
Prepayment speed | 8.57% | 8.05% |
10% adverse change | $ (506) | $ (268) |
20% adverse change | $ (973) | $ (525) |
Discount rate | 9.50% | 9.50% |
10% adverse change | $ (415) | $ (404) |
20% adverse change | $ (799) | $ (777) |
Servicing Assets - SBA Loans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Balance at beginning of the period | $ 12,346 | |
Balance at end of the period | 11,748 | $ 12,346 |
SBA Loan Servicing Rights | ||
Servicing Assets at Fair Value [Line Items] | ||
Loans serviced | 225,800 | 166,100 |
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Balance at beginning of the period | 2,404 | 2,009 |
Servicing rights capitalized | 1,525 | 1,395 |
Amortization of servicing rights | (898) | (732) |
Change in valuation allowance | 96 | (268) |
Balance at end of the period | 3,127 | 2,404 |
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward] | ||
Valuation allowance, beginning of period | (364) | (96) |
Impairment | (178) | (408) |
Recovery | 274 | 140 |
Valuation allowance, end of period | $ (268) | $ (364) |
Servicing Assets - SBA Sensitivity Analysis (Details) - SBA Loan Servicing Rights - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||
Fair value of SBA loan servicing rights | $ 3,376 | $ 2,422 |
Weighted average life (months) | 3 years 6 months | 3 years 9 months 18 days |
Prepayment speed | 14.70% | 12.73% |
10% adverse change | $ (125) | $ (73) |
20% adverse change | $ (241) | $ (141) |
Discount rate | 14.66% | 18.96% |
10% adverse change | $ (74) | $ (53) |
20% adverse change | $ (145) | $ (104) |
Lease Commitments - Narrative (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Lessee, Lease, Description [Line Items] | ||
ROU assets | $ 9,400 | $ 9,000 |
Total operating lease liabilities | $ 9,442 | $ 8,900 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities |
Weighted average remaining lease term (in years) | 6 years 2 months 12 days | |
Weighted average discount rate | 3.23% | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 2 months | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 12 years |
Lease Commitments - Lease Cost (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Leases [Abstract] | ||
Operating lease expense | $ 2,319 | $ 2,242 |
Short term lease expense | 8 | 13 |
Variable lease expense | 52 | 0 |
Total lease expense | $ 2,379 | $ 2,255 |
Lease Commitments - Cash Flow Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 2,131 | $ 2,150 |
Lease liabilities arising from obtaining right-of-use assets | $ 2,476 | $ 10,936 |
Lease Commitments - Maturity of Lease Liabilities Under ASC 842 (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
2024 | $ 2,167 | |
2025 | 1,736 | |
2026 | 1,649 | |
2027 | 1,493 | |
2028 | 741 | |
Thereafter | 3,029 | |
Total | 10,815 | |
Less: Present value discount | (1,373) | |
Total operating lease liabilities | $ 9,442 | $ 8,900 |
Stock-Based Compensation - Restricted Stock Outstanding (Details) - Restricted Stock - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Shares | ||
Outstanding, at the beginning of the period (in shares) | 53,210 | |
Granted (in shares) | 0 | |
Vested (in shares) | (53,210) | |
Outstanding, at the end of the period (in shares) | 0 | 53,210 |
Weighted Average Grant Date Fair Value | ||
Outstanding, at the beginning of the period (in dollars per share) | $ 9.33 | |
Granted (in dollars per share) | $ 0 | |
Vested (in dollars per share) | 9.33 | |
Outstanding, at the end of the period (in dollars per share) | $ 0 | $ 9.33 |
Income Taxes - Federal and State (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Federal: | ||
Current | $ 3,594 | $ 4,580 |
Deferred | (217) | 903 |
Total | 3,377 | 5,483 |
State: | ||
Current | 364 | 494 |
Deferred | (17) | 114 |
Total | 347 | 608 |
Effective income tax rate | $ 3,724 | $ 6,091 |
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||
Federal income tax at statutory rate | $ 3,563 | $ 5,863 |
State tax expense, net of federal benefit | 274 | 480 |
Tax exempt interest | (219) | (276) |
Bank owned life insurance | (166) | (116) |
Stock based compensation | 123 | 36 |
ESOP | 26 | 48 |
Other | 123 | 56 |
Effective income tax rate | $ 3,724 | $ 6,091 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
Federal income tax at statutory rate (as a percent) | 21.00% | 21.00% |
State tax expense, net of federal benefit (as a percent) | 1.60% | 1.70% |
Tax exempt interest (as a percent) | (1.30%) | (1.00%) |
Bank owned life insurance (as a percent) | (1.00%) | (0.40%) |
Stock based compensation (as a percent) | 0.70% | 0.10% |
ESOP (as a percent) | 0.20% | 0.20% |
Other (as a percent) | 0.80% | 0.20% |
Effective income tax rate (as a percent) | 22.00% | 21.80% |
Income Taxes - Deferred Tax Assets and Deferred Tax Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred tax assets: | ||
Allowance for credit losses | $ 4,949 | $ 4,212 |
Unrealized loss on available for sale securities | 2,718 | 3,327 |
Accrued retirement | 826 | 891 |
Mortgage pipeline fair-value adjustment | 538 | 535 |
Deferred rent | 81 | 96 |
Mortgage repurchase reserve | 114 | 192 |
Unfunded commitment reserve | 226 | 0 |
Other | 153 | 179 |
Total deferred tax asset | 9,605 | 9,432 |
Deferred tax liabilities: | ||
Property and equipment | (752) | (948) |
Loan servicing rights | (2,630) | (2,762) |
Intangibles | (106) | (23) |
Hedge instrument fair-value adjustment | (42) | (12) |
Prepaid expenses | (237) | (341) |
Deferred loan costs | (1,637) | (1,410) |
Total deferred tax liability | (5,404) | (5,496) |
Net deferred tax asset | $ 4,201 | $ 3,936 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (as a percent) | 22.00% | 21.80% |
Investment in low income housing tax credits | $ 4,900 | $ 5,300 |
Tax credit recognized | 343 | 294 |
Tax credit, amortization | 340 | 381 |
Tax benefit from losses | $ 168 | $ 131 |
Transactions with Executive Officers, Directors and Principal Stockholders (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Related Party Transactions [Roll Forward] | ||
Loans receivable from related parties - beginning at end of period | $ 2,046 | $ 5,098 |
Advances for related parties | 447 | 5,196 |
Proceeds repayments from related party | (415) | (6,070) |
Effect of changes in composition of related parties | (499) | (2,178) |
Loans receivable from related parties - balance at end of period | $ 1,579 | $ 2,046 |
Transactions with Executive Officers, Directors and Principal Stockholders - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2023 |
|
Related Party Transaction [Line Items] | ||
Deposits | $ 1,712,479 | $ 1,823,462 |
Subordinated debentures | 40,346 | 49,836 |
Amounts of transactions | 14 | |
Related Party | ||
Related Party Transaction [Line Items] | ||
Deposits | 32,600 | 30,600 |
Subordinated debentures | $ 208 | $ 1,100 |
Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies - Summary of Financial Instrument Commitments (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Commitments to fund loans and commitments under lines of credit | ||
Other Commitments [Line Items] | ||
Off-balance sheet financial instruments | $ 517,743 | $ 506,203 |
Letters of credit | ||
Other Commitments [Line Items] | ||
Off-balance sheet financial instruments | $ 10,924 | $ 19,042 |
Financial Instruments with Off0Balance Sheet Risk, Commitments and Contingencies - Narrative (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023
USD ($)
loan
|
Dec. 31, 2022
USD ($)
loan
|
|
Text Block [Abstract] | ||
Indemnification or repurchase of loan | $ 860 | $ 734 |
Repurchase reverse | $ 508 | $ 858 |
Number of loans repurchased | loan | 5 | 8 |
Unpaid principal balance for loans repurchased | $ 1,300 | $ 1,800 |
Fair Value Measurements and Disclosures - Financial Assets Measured At Fair Value on Non-Recurring Basis (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Financial assets measured at fair value on a nonrecurring basis | ||
Total | $ 190,424 | $ 178,110 |
Nonrecurring | Level 3 | ||
Financial assets measured at fair value on a nonrecurring basis | ||
Mortgage servicing rights | 8,621 | 9,942 |
SBA loan servicing rights | 3,127 | 2,404 |
Total | 24,700 | 14,627 |
Nonrecurring | Level 3 | Commercial and industrial | ||
Financial assets measured at fair value on a nonrecurring basis | ||
Individually evaluated loans | 9,818 | 0 |
Nonrecurring | Level 3 | Small business loans | ||
Financial assets measured at fair value on a nonrecurring basis | ||
Individually evaluated loans | $ 3,134 | $ 2,281 |
Fair Value Measurements and Disclosures - Level 3 Valuation (Details) - Level 3 - Valuation, Income Approach - Measurement Input, Appraised Value $ in Thousands |
Dec. 31, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
---|---|---|
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Individually evaluated loans | $ 12,952 | $ 2,281 |
Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Impaired loans, measurement input (as a percent) | 0.02 | 0.02 |
Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Impaired loans, measurement input (as a percent) | 0.33 | 0.15 |
Fair Value Measurements and Disclosures - Fair Value on a Recurring Basis (Details) - Interest rate lock commitments - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Balance at beginning of the period | $ 87 | $ 1,122 |
Decrease in value | 127 | (1,035) |
Balance at end of the period | $ 214 | $ 87 |
Fair Value Measurements and Disclosures - Valuation Techniques for Level 3 Interest Rate Lock (Details) - Interest rate lock commitments - Level 3 - Valuation Technique, Consensus Pricing Model $ in Thousands |
Dec. 31, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
---|---|---|
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative asset | $ 214 | $ 87 |
Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative asset, measurement input | 0.01 | 0.01 |
Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative asset, measurement input | 0.99 | 0.99 |
Weighted Average | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative asset, measurement input | 0.7948 | 0.8405 |
Segments - Narrative (Details) |
12 Months Ended |
---|---|
Dec. 31, 2023
office
| |
Mortgage | |
Segments | |
Number of loan production offices | 8 |
Parent Company Financial Statements - Condensed Statements of Income (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Condensed Income Statements, Captions [Line Items] | ||
Other income | $ 122 | $ 0 |
Total interest income | 136,589 | 88,721 |
Interest expense | 67,647 | 18,593 |
Income before income taxes | 16,967 | 27,920 |
Income tax benefit | 3,724 | 6,091 |
Net income | 13,243 | 21,829 |
Total comprehensive income | 15,360 | 9,582 |
Parent Company | Reportable Legal Entities | ||
Condensed Income Statements, Captions [Line Items] | ||
Dividends from Bank | 9,655 | 27,813 |
Interest income | 2 | 8 |
Total interest income | 9,779 | 27,821 |
Interest expense | 2,484 | 2,268 |
Other expenses | 1,168 | 1,412 |
Income before equity in undistributed income of subsidiaries | 6,127 | 24,141 |
Equity in undistributed income of subsidiaries | 6,376 | (3,084) |
Income before income taxes | 12,503 | 21,057 |
Income tax benefit | (740) | (772) |
Net income | 13,243 | 21,829 |
Total other comprehensive income (loss) | 2,117 | (12,247) |
Total comprehensive income | $ 15,360 | $ 9,582 |
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