UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from _______________ to _______________
Commission File No.
(Exact Name of Registrant as Specified in Its Charter)
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(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
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(Registrant’s Telephone Number, Including Area Code)
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
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The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer |
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Accelerated filer |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
1895 Bancorp of Wisconsin, Inc.
Form 10-Q
Table of Contents
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PART I. FINANCIAL INFORMATION |
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Item 1. |
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1 |
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Consolidated Balance Sheets at March 31, 2023 (unaudited) and December 31, 2022 |
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1 |
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Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022 (unaudited) |
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Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (unaudited) |
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6 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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36 |
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Item 3. |
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45 |
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Item 4. |
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45 |
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PART II. OTHER INFORMATION |
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Item 1. |
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45 |
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Item 1A. |
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45 |
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Item 2. |
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46 |
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Item 3. |
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46 |
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Item 4. |
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46 |
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Item 5. |
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46 |
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Item 6. |
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47 |
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48 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
1895 Bancorp of Wisconsin, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
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March 31, |
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December 31, |
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(unaudited) |
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Assets |
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Cash and due from banks |
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$ |
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$ |
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Fed funds sold |
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Cash and cash equivalents |
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Marketable equity securities, stated at fair value |
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Available-for-sale securities, stated at fair value |
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Loans held for sale |
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— |
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Loans, net of deferred costs |
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Allowance for credit losses for loans |
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Total loans, net of deferred loan costs and allowance for credit losses |
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Premises and equipment, net |
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Mortgage servicing rights, net |
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Federal Home Loan Bank (FHLB) stock, at cost |
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Accrued interest receivable |
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Cash value of life insurance |
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Other assets |
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TOTAL ASSETS |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Deposits |
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$ |
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$ |
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Advance payments by borrowers for taxes and insurance |
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FHLB advances |
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Accrued interest payable |
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Other liabilities |
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TOTAL LIABILITIES |
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Preferred stock, $ |
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Common stock (par value $ |
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Additional paid-in capital |
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Unallocated common stock of Employee Stock Ownership Plan (ESOP), |
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Less treasury stock at cost, |
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Retained earnings |
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Accumulated other comprehensive (loss) income, net of income taxes |
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Total stockholders’ equity |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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$ |
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$ |
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See accompanying notes to the unaudited consolidated financial statements.
1
1895 BANCORP OF WISCONSIN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) – Unaudited
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Three months ended |
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2023 |
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2022 |
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Interest and dividend income: |
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Loans, including fees |
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$ |
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$ |
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Securities, taxable |
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Other |
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Total interest and dividend income |
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Interest expense: |
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Interest-bearing deposits |
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Borrowed funds |
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Other interest-bearing funds |
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Total interest expense |
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Net interest income |
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Provision for credit losses |
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Net interest income after provision for credit losses |
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Noninterest income: |
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Service charges and other fees |
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Loan servicing, net |
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Net gain on sale of loans |
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Increase in cash surrender value of insurance |
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Unrealized gain (loss) on marketable equity securities |
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Other |
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Total noninterest income |
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Noninterest expense: |
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Salaries and employee benefits |
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Advertising and promotions |
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Data processing |
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Occupancy and equipment |
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FDIC assessment |
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Other |
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Total noninterest expense |
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Loss before income taxes |
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Income tax (benefit) |
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Net loss |
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$ |
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$ |
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Loss per share: |
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Basic |
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$ |
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$ |
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Diluted(1) |
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$ |
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$ |
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Average common shares outstanding: |
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Basic |
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Diluted(1) |
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See accompanying notes to the unaudited consolidated financial statements.
(1)
2
1895 Bancorp of Wisconsin, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands) - Unaudited
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Three months ended |
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2023 |
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2022 |
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Net loss |
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$ |
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$ |
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Other comprehensive income (loss): |
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Unrealized holding gains (losses) arising during the |
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Other comprehensive income (loss) before tax effect |
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Tax effect of other comprehensive income (loss) items |
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Other comprehensive income (loss), net of tax |
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Comprehensive income (loss) |
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$ |
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$ |
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See accompanying notes to the unaudited consolidated financial statements.
3
1895 Bancorp of Wisconsin, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands) - Unaudited
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Common Stock |
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Additional Paid-In Capital |
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Unallocated Common Stock of ESOP |
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Treasury Stock |
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Retained Earnings |
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Accumulated Other Comprehensive Income (Loss) |
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Total Stockholders' Equity |
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Balance as of January 1, 2022 |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive (loss) |
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— |
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— |
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— |
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— |
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— |
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( |
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Reimbursement of stock offering costs |
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— |
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— |
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— |
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— |
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— |
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Purchase of |
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— |
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— |
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— |
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— |
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— |
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ESOP shares committed to be released ( |
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— |
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— |
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— |
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— |
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Retirement of common stock |
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— |
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— |
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— |
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— |
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— |
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Stock compensation expense |
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— |
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— |
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— |
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— |
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— |
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Balance as of March 31, 2022 |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Balance as of January 1, 2023 |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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ESOP shares committed to be released ( |
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— |
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— |
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— |
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— |
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— |
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Repurchase and retirement of shares-stock repurchase program ( |
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Retirement of common stock |
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— |
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— |
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— |
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— |
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— |
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Stock compensation expense |
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— |
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— |
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— |
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— |
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— |
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Balance as of March 31, 2023 |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to the unaudited consolidated financial statements.
4
1895 BANCORP OF WISCONSIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) - Unaudited
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Three months ended March 31, |
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2023 |
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2022 |
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Cash flows from operating activities |
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Net loss |
$ |
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$ |
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Adjustments to reconcile net loss to net cash from operating activities |
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Net amortization of investment securities |
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Depreciation |
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Provision for credit losses |
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Net change in fair value of marketable equity securities |
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Stock compensation expense |
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(Benefit from) deferred income tax |
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Originations of mortgage loans held for sale |
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Proceeds from sales of mortgage loans held for sale |
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Net gain on sale of mortgage loans held for sale |
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ESOP compensation |
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Net change in cash value of life insurance |
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Changes in operating assets and liabilities |
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Net change in mortgage servicing rights |
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Accrued interest receivable and other assets |
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Accrued interest payable and other liabilities |
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( |
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( |
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Net cash used in operating activities |
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Cash flows from investing activities |
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Maturities, prepayments, and calls of available-for-sale securities |
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Purchases of available-for-sale securities |
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— |
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Purchase of marketable equity securities |
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Net (increase) in loans |
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Net (increase) in FHLB stock, net |
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( |
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— |
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Net capital expenditures for premises and equipment |
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( |
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Net cash used in investing activities |
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Cash flows from financing activities |
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Net (decrease) increase in deposits |
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Net increase in advance payments by borrowers for taxes and insurance |
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Proceeds from the issuance of Federal Home Loan Bank advances |
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Principal payments on Federal Home Loan Bank advances |
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( |
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( |
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Reimbursement of stock offering costs |
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— |
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Repurchase of common stock for cancellation |
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( |
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— |
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Retirement of common stock |
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( |
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( |
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Purchases of ESOP shares |
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— |
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( |
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Net cash provided by financing activities |
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Net increase (decrease) in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
$ |
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$ |
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Supplemental cash flow information |
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Cash paid during the year for interest |
$ |
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$ |
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See accompanying notes to the unaudited consolidated financial statements.
5
1895 BANCORP OF WISCONSIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
1895 Bancorp of Wisconsin, Inc., a Maryland corporation (the “Company” or “New 1895 Bancorp”) was formed to serve as the stock holding company for PyraMax Bank, FSB (the “Bank”) as part of the mutual-to-stock conversion of 1895 Bancorp of Wisconsin, MHC. Upon completion of the conversion, which occurred on July 14, 2021, 1895 Bancorp of Wisconsin, MHC and 1895 Bancorp of Wisconsin, a federal corporation (“Old 1895 Bancorp”), ceased to exist and New 1895 Bancorp became the successor corporation to Old 1895 Bancorp. The conversion was accomplished by the merger of 1895 Bancorp of Wisconsin, MHC with and into Old 1895 Bancorp followed by the merger of Old 1895 Bancorp with and into New 1895 Bancorp. The shares of New 1895 Bancorp common stock that were offered for sale in connection with the conversion represented the majority ownership interest in Old 1895 Bancorp owned by 1895 Bancorp of Wisconsin, MHC. On July 14, 2021, public stockholders of Old 1895 Bancorp received 1.3163 shares of common stock of New 1895 Bancorp in exchange for each of their shares of Old 1895 Bancorp common stock. The shares of Old 1895 Bancorp common stock owned by 1895 Bancorp of Wisconsin, MHC were canceled at that time. The conversion and offering were completed on July 14, 2021, and New 1895 Bancorp was organized as a fully public stock holding company, with
The cost of the reorganization and the issuing of the common stock totaling $
PyraMax Bank is a stock savings bank headquartered in Greenfield, Wisconsin. PyraMax Bank operates as a full-service financial institution, providing a full range of financial services, including the granting of commercial, residential, and consumer loans and acceptance of deposits from individual customers and small businesses in the metropolitan Milwaukee, Wisconsin area. PyraMax Bank is subject to competition from other financial and nonfinancial institutions providing financial products. In addition, PyraMax Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.
The accompanying unaudited interim consolidated financial statements and the notes thereto have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, results of operations, changes in stockholders' equity and cash flows as of and for the periods presented. Certain amounts from prior periods have been reclassified to conform with current period presentation.
The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the audited annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on March 30, 2023.
In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet, and reported amounts of revenues and expenses during the reporting period. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the fair value of investment securities, financial instruments and mortgage servicing rights, and the valuation of deferred income tax assets. Actual results could differ from those estimates.
On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies and define an “emerging growth company.” As an emerging growth company, the Company may delay adoption of new or revised financial accounting standards until such date that the standards are required to be adopted by non-issuer companies. If such standards would not apply to non-issuer companies, no deferral would be applicable. The Company intends to take advantage of the benefits of the extended transition periods allowed under the JOBS Act.
Accordingly, the Company’s financial statements may not be comparable to those of public companies that adopt new or revised financial accounting standards as of an earlier date. The effective dates of the recent accounting standards in Note 2 reflect those that relate to non-issuer companies.
6
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION (continued)
Subsequent Events
Management has reviewed the Company's operations for potential disclosure or financial statement impacts related to events occurring after March 31, 2023, but prior to the release of the unaudited consolidated financial statements contained in this quarterly report on Form 10-Q were issued.
On May 4, 2023, the Company announced that it had adopted its second stock repurchase program to be implemented upon completion of its existing stock repurchase program. Under the new repurchase program, which is subject to regulatory non-objection, the Company may repurchase up to
There were no additional subsequent event disclosures or financial statement impacts related to events occurring after March 31, 2023 that warranted adjustment to or disclosure in these unaudited consolidated financial statements.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
On January 1, 2023, we adopted ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), using the modified retrospective approach, as further described in the section below titled Recently Adopted Accounting Standards. Adoption of the standard resulted in changes to our available-for-sale securities and allowance for credit losses policies, as presented below. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K regarding additional significant accounting policies, including accounting policies in effect prior to the adoption of ASU 2016-13.
Credit Losses for Available-for-Sale Debt Securities
For available-for-sale ("AFS") debt securities where fair value is less than amortized cost, the security is considered impaired when amounts are deemed uncollectible or when the Company intends, or more likely than not will be required, to sell the AFS debt security before recovery of the amortized cost basis.
On a quarterly basis the Company evaluates the AFS debt securities for impairment. Securities that are in an unrealized loss position are reviewed to determine if a securities credit loss exists based on certain quantitative and qualitative factors. The primary factors considered in evaluating whether an impairment exists include: (a) the extent to which the fair value is less than the amortized cost basis, (b) the financial condition, credit rating and future prospects of the issuer, (c) whether the debtor is current on contractually obligated interest and principal payments, and (d) whether the Company intends to sell the security and whether it is more likely than not that the Company will not be required to sell the security.
If a determination is made that an AFS debt security is impaired, the Company will estimate the amount of the unrealized loss that is attributable to credit and all other non-credit related factors. The credit related component will be recognized as a provision for credit losses on securities through an allowance for credit losses. The provision for credit losses on securities will be limited to the difference between the security’s amortized cost basis and fair value. Any future changes may be reversed, limited to the amount previously expensed, in the period they occur. The non-credit related component will be recorded as an adjustment to accumulated other comprehensive income, net of tax.
Allowance for Credit Losses
Under the current expected credit loss (“CECL”) model, the allowance for credit losses ("ACL") on financial assets is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from the financial assets’ amortized cost basis to present the net amount expected to be collected on the financial assets. The CECL model also applies to certain off-balance sheet credit exposures.
The Company estimates the allowance for credit losses on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to write-off accrued interest receivable by reversing interest income at the time of this determination. Therefore, the Company has made a policy election to exclude accrued interest from the amortized cost basis and therefore excludes it from the measurement of the allowance for credit losses.
7
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Expected credit losses are reflected in the allowance for credit losses through a charge to provision for credit losses. The Company’s estimate of the allowance for credit losses reflects credit losses currently expected over the remaining contractual life of the assets. When the Company deems all or a portion of a financial asset to be uncollectible, the appropriate amount is written off and the allowance for credit losses is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible. When available information confirms that specific financial assets, or portions thereof, are uncollectible, these amounts are charged off against the allowance for credit losses. Subsequent recoveries, if any, are credited to the allowance for credit losses when received.
The Company measures the allowance for credit losses of financial assets on a collective portfolio segment basis when the financial assets share similar risk characteristics. The Company has identified the following portfolio segments of financial assets with similar risk characteristics for measuring expected credit losses: commercial real estate, residential real estate – first mortgage, residential real estate – construction, consumer – home equity and lines of credit and other consumer loans. The Company further segments the commercial loan portfolios by risk rating and the residential and consumer loan portfolios by delinquency.
The Company utilizes the weighted average maturity (WARM) methodology to measure the ACL. This methodology incorporates both quantitative and qualitative information to assess lifetime expected credit losses at the portfolio segment level. The quantitative component includes the calculation of loss rates that are based on historical lookback periods. The Company calculates a loss rate based on historical loan level loss experience for portfolio segments with similar risk characteristics. The historical loss rate is adjusted for select macroeconomic variables that consider both historical trends as well as forecasted trends. The Company measures expected credit losses of these financial assets by applying loss rates to the amortized cost basis of each asset taking into consideration amortization, prepayment and default assumptions.
The Company considers qualitative adjustments to expected credit loss estimates for information not already captured in the loss estimation process. Qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Adjustments will not be made for information that has already been considered and included in the quantitative component. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data, changes in loan composition, performance trends, regulatory changes, uncertainty of macroeconomic forecasts, and other asset specific risk characteristics.
Collateral Dependent Financial Assets
For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable and where the borrower is experiencing financial difficulty, the allowance for credit losses is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. Fair value is generally calculated based on the value of the underlying collateral less estimated costs to sell.
Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
Financial assets include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to loan credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.
The Company records an allowance for credit losses on off-balance sheet credit exposures through a charge to provision for loan losses for off-balance sheet credit exposures. The allowance for credit losses on off-balance sheet credit exposures is estimated by portfolio segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, taking into consideration management’s assumption of the likelihood that funding will occur, and is included in other liabilities on the Company’s Consolidated Balance Sheets.
8
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Recently Adopted Accounting Standards
ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for troubled debt restructurings by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. In addition, ASU 2022-02 requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses. The Company
9
NOTE 3 – AVAILABLE-FOR-SALE SECURITIES
The amortized costs and fair values of securities available-for-sale were as follows:
|
|
March 31, 2023 |
|
|||||||||||||
|
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||
|
|
(in thousands) |
|
|||||||||||||
U.S. Treasury notes |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Obligations of states and political subdivisions |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Government-sponsored mortgage-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Asset-backed securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Certificates of deposit |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
December 31, 2022 |
|
|||||||||||||
|
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||
|
|
(in thousands) |
|
|||||||||||||
U.S. Treasury notes |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Obligations of states and political subdivisions |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Government-sponsored mortgage-backed securities |
|
|
|
|
$ |
|
|
|
( |
) |
|
|
|
|||
Asset-backed securities |
|
|
|
|
$ |
|
|
|
( |
) |
|
|
|
|||
Certificates of deposit |
|
|
|
|
$ |
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
The fair value of available-for-sale securities that were pledged as collateral at March 31, 2023 and December 31, 2022, were $
The amortized costs and fair values of available-for-sale securities, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. In addition, expected maturities will differ from contractual maturities for mortgage-backed securities and asset-backed securities, as the expected repayment terms may be less than the underlying mortgage pool contractual maturities. Therefore, these securities are not included in the maturity categories in the maturity summary below.
|
|
March 31, 2023 |
|
|||||
|
|
Amortized Cost |
|
|
Fair Value |
|
||
|
|
(in thousands) |
|
|||||
Debt and other securities: |
|
|
|
|
|
|
||
Due in one year or less |
|
$ |
|
|
$ |
|
||
Due after one through 5 years |
|
|
|
|
|
|
||
Due after 5 through 10 years |
|
|
|
|
|
|
||
Due after 10 years |
|
|
|
|
|
|
||
Total debt and other securities |
|
|
|
|
|
|
||
Mortgage-related securities |
|
|
|
|
|
|
||
Asset-backed securities |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
10
NOTE 3 – AVAILABLE-FOR-SALE SECURITIES (continued)
Gross unrealized losses on securities available-for-sale and the fair values of the related securities, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position were as follows:
|
|
March 31, 2023 |
|
|||||||||||||||||||||
|
|
Less than 12 months |
|
|
12 months or longer |
|
|
Total |
|
|||||||||||||||
|
|
Fair Value |
|
|
Unrealized Loss |
|
|
Fair Value |
|
|
Unrealized Loss |
|
|
Fair Value |
|
|
Unrealized Loss |
|
||||||
|
|
(in thousands) |
|
|||||||||||||||||||||
U.S. Treasury notes |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Obligations of states and political |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Government-sponsored mortgage-backed |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Asset-backed securities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Certificates of deposit |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
December 31, 2022 |
|
|||||||||||||||||||||
|
|
Less than 12 months |
|
|
12 months or longer |
|
|
Total |
|
|||||||||||||||
|
|
Fair Value |
|
|
Unrealized Loss |
|
|
Fair Value |
|
|
Unrealized Loss |
|
|
Fair Value |
|
|
Unrealized Loss |
|
||||||
|
|
(in thousands) |
|
|||||||||||||||||||||
U.S. Treasury notes |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Obligations of states and political |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Government-sponsored mortgage-backed |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Asset-backed securities |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
Certificates of deposit |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
At March 31, 2023 and December 31, 2022, respectively, the Company had
11
NOTE 4 – LOANS
Major classifications of loans, reported at amortized cost, are summarized as follows:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
(in thousands) |
|
|||||
Commercial: |
|
|
|
|
|
|
||
Real estate |
|
$ |
|
|
$ |
|
||
Land development |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Residential real estate: |
|
|
|
|
|
|
||
First mortgage |
|
|
|
|
|
|
||
Construction |
|
|
|
|
|
|
||
Consumer: |
|
|
|
|
|
|
||
Home equity and lines of credit |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Subtotal (1) |
|
|
|
|
|
|
||
Net deferred loan costs |
|
|
|
|
|
|
||
Allowance for credit losses for loans |
|
|
( |
) |
|
|
( |
) |
Loans, net |
|
$ |
|
|
$ |
|
(1)
Deposit accounts in an overdrawn position and reclassified as loans totaled $
The Company provides several types of loans to its customers, including commercial, residential, construction and consumer loans. Significant loan concentrations are considered to exist for a financial institution when there are amounts loaned to one borrower or to multiple borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. While the Company’s credit risks are geographically concentrated within the metropolitan Milwaukee, Wisconsin area, there are no concentrations with individual borrowers or groups of related borrowers.
During the normal course of business, the Company may transfer a portion of a loan as a participation loan to another financial institution in order to manage portfolio risk. In order to be eligible for sales treatment, all cash flows from the loan must be divided proportionately, and rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties, and no loan holder can have the right to pledge or exchange the entire loan. As of March 31, 2023 and December 31, 2022, respectively, the Company had transferred $
12
NOTE 4 – LOANS (continued)
A summary of activity in the allowance for credit losses for loans and the allowance for credit losses for unfunded loan commitments for the three months ended March 31, 2023 and in the allowance for loan losses for the three months ended March 31, 2022, is presented below:
|
|
Commercial |
|
|
Residential |
|
|
Consumer |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Three months ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allowance for credit losses for loans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Provision for credit losses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CECL Adoption Adjustment(1) |
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|||
Loans charged-off |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allowance for credit losses for unfunded loan commitments(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Provision for credit losses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
CECL Adoption Adjustment(1) |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Loans charged-off |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Allowance for credit losses for loans and unfunded loan commitments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three months ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allowance for loan losses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Provision for loan losses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans charged-off |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
(1)
(2)
13
NOTE 4 – LOANS (continued)
The provision for credit losses is determined by the Company as the amount that is to be added to the ACL accounts to bring the ACL to a level that, in management's judgment, is necessary to absorb expected credit losses over the lives of the respective financial instruments.
|
|
Three months ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(in thousands) |
|
|||||
Provision for credit losses for: |
|
|
|
|
|
|
||
Loans |
|
$ |
|
|
$ |
|
||
Unfunded loan commitments |
|
|
|
|
N/A |
|
||
Total |
|
$ |
|
|
$ |
|
The Company regularly evaluates various attributes of loans to determine the appropriateness of the allowance for credit losses. The credit quality indicators monitored differ depending on the class of loan. The credit quality indicators for commercial real estate and other commercial loans are based on the following ratings:
Residential real estate and consumer loans are generally evaluated based on whether or not the loan is performing or in nonaccrual status. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K, filed with the SEC on March 30, 2023, for additional information on our nonaccrual policy.
14
NOTE 4 – LOANS (continued)
The following table presents the amortized cost basis of our loans by credit quality indicator and origination year, at March 31, 2023:
|
|
March 31, 2023 |
|
|||||||||||||||||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2018 and Prior |
|
|
Revolving Lines of Credit |
|
|
Revolving Lines of Credit Converted to Term Loans |
|
|
Total Loans |
|
|||||||||
|
|
(in thousands) |
|
|||||||||||||||||||||||||||||||||
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||||||||
Watch and special mention |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Substandard |
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
||||||
Total commercial real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other commercial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Pass |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||||||
Watch and special mention |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Substandard |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||||||
Total other commercial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||||||
Total commercial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Residential real estate - first mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nonaccrual |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total residential real estate - first mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Residential real estate - construction: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nonaccrual |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total residential real estate - construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total residential real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Consumer - home equity and lines of credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nonaccrual |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total consumer - home equity and lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Consumer - other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nonaccrual |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total consumer - other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
15
NOTE 4 – LOANS (continued)
A summary of the credit quality indicators, at amortized cost, prior to the adoption of CECL is presented below:
|
|
December 31, 2022 |
|
|||||||||||||
|
|
Pass |
|
|
Watch and Special Mention |
|
|
Substandard |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Land development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
There were
|
|
December 31, 2022 |
|
|||||||||
|
|
Performing |
|
|
Non-Performing |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Residential real estate: |
|
|
|
|
|
|
|
|
|
|||
First mortgage |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Construction |
|
|
|
|
|
|
|
|
|
|||
Consumer: |
|
|
|
|
|
|
|
|
|
|||
Home equity and lines of credit |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
The following table presents gross charge-offs of our loans for each portfolio class, by origination year, that occurred during the three months ended March 31, 2023. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K for additional information on our charge-off policy.
|
|
March 31, 2023 |
|
|||||||||||||||||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2018 and Prior |
|
|
Revolving Lines of Credit |
|
|
Revolving Lines of Credit Converted to Term Loans |
|
|
Total Loans |
|
|||||||||
|
|
(in thousands) |
|
|||||||||||||||||||||||||||||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Real estate |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total commercial loans |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
First mortgage |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Construction |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total residential real estate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Home equity and lines of credit |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Total consumer |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Total current period charge-offs |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
16
NOTE 4 – LOANS (continued)
An analysis of past due loans, net of amortized costs, is presented below:
|
|
March 31, 2023 |
|
|||||||||||||||||
|
|
Loans Past Due 30-89 Days |
|
|
Loans Past Due 90+ Days |
|
|
Total Past Due |
|
|
Current Loans |
|
|
Total Loans |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Real estate |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Land development |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Construction |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Home equity and lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
December 31, 2022 |
|
|||||||||||||||||
|
|
Loans Past Due 30-89 Days |
|
|
Loans Past Due 90+ Days |
|
|
Total Past Due |
|
|
Current Loans |
|
|
Total Loans |
|
|||||
|
|
(in thousands) |
|
|||||||||||||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Real estate |
|
|
|
|
|
— |
|
|
|
|
|
$ |
|
|
$ |
|
||||
Land development |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Construction |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Home equity and lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
There were
17
NOTE 4 – LOANS (continued)
The following table presents the amortized cost of our loans on nonaccrual status as of March 31, 2023 and December 31, 2022. All loans that were 90 days or more past due were on nonaccrual status as of March 31, 2023 and December 31, 2022.
|
|
March 31, |
|
|
December 31, |
|
||
|
|
(in thousands) |
|
|||||
Commercial: |
|
|
|
|
|
|
||
Real estate |
|
$ |
— |
|
|
$ |
— |
|
Land development |
|
|
— |
|
|
|
— |
|
Other |
|
|
— |
|
|
|
— |
|
Residential real estate: |
|
|
|
|
|
|
||
First mortgage |
|
|
|
|
|
|
||
Construction |
|
|
— |
|
|
|
— |
|
Consumer: |
|
|
|
|
|
|
||
Home equity and lines of credit |
|
|
|
|
|
|
||
Other |
|
|
— |
|
|
|
— |
|
Total nonaccrual loans |
|
$ |
|
|
$ |
|
||
Total nonaccrual loans to total loans |
|
|
% |
|
|
% |
||
Total nonaccrual loans to total assets |
|
|
% |
|
|
% |
The Company had $
At March 31, 2023, the Company held loans that were individually evaluated for impairment due to financial difficulties experienced by the borrower and for which the repayment, on the basis of our assessment, is expected to be provided substantially through the sale or operation of the collateral. The ACL for these collateral dependent loans is primarily based on the fair value of the underlying collateral at the reporting date. The following describes the type of collateral that secure collateral dependent loans:
The table below summarizes collateral dependent loans and the related ACL at March 31, 2023 for which the borrower is experiencing financial difficulty:
|
|
Loans |
|
|
ACL |
|
||
|
|
(in thousands) |
|
|||||
Commercial: |
|
|
|
|
|
|
||
Real estate |
|
|
|
|
|
— |
|
|
Land development |
|
|
— |
|
|
|
— |
|
Other |
|
|
|
|
|
— |
|
|
Residential real estate: |
|
|
|
|
|
|
||
First mortgage |
|
|
|
|
|
— |
|
|
Construction |
|
|
— |
|
|
|
— |
|
Consumer: |
|
|
|
|
|
|
||
Home equity and lines of credit |
|
|
|
|
|
— |
|
|
Other |
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
|
— |
|
18
NOTE 4 – LOANS (continued)
A summary of the allowance for loan losses for loans evaluated individually and collectively for impairment, at amortized cost, prior to the adoption of CECL is presented below:
|
|
December 31, 2022 |
|
|||||||||||||
|
|
Commercial |
|
|
Residential |
|
|
Consumer |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Individually evaluated for impairment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Collectively evaluated for impairment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Individually evaluated for impairment |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Collectively evaluated for impairment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total allowance for loan losses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
19
NOTE 4 – LOANS (continued)
Information regarding impaired loans, at amortized cost, prior to the adoption of CECL is presented below:
|
|
As of and for the Year Ended December 31, 2022 |
|
|||||||||||||||||||
|
|
Recorded Investment |
|
|
|
Unpaid Principal |
|
|
Reserve |
|
|
Average Investment |
|
|
Interest Recognized |
|
||||||
|
|
(in thousands) |
|
|||||||||||||||||||
Impaired loans with reserve: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Real estate |
|
$ |
— |
|
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Land development |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
First mortgage |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Construction |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Home equity and lines of credit |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total impaired loans |
|
$ |
— |
|
|
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Impaired loans with no reserve: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Real estate |
|
$ |
|
|
|
$ |
|
|
NA |
|
|
$ |
|
|
$ |
|
||||||
Land development |
|
|
— |
|
|
|
|
— |
|
|
NA |
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
NA |
|
|
|
|
|
|
|
||||||
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
First mortgage |
|
|
|
|
|
|
|
|
NA |
|
|
|
|
|
|
|
||||||
Construction |
|
|
— |
|
|
|
|
— |
|
|
NA |
|
|
|
— |
|
|
|
— |
|
||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Home equity and lines of credit |
|
|
|
|
|
|
|
|
NA |
|
|
|
|
|
|
|
||||||
Other |
|
|
— |
|
|
|
|
— |
|
|
NA |
|
|
|
— |
|
|
|
— |
|
||
Total impaired loans |
|
|
|
|
|
|
|
|
NA |
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total impaired loans |
|
$ |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
The adoption of ASU 2022-02 eliminated troubled debt restructurings (TDR's) recognition and measurement guidance, as well as all TDR related disclosures. Refer to Note 2 for additional information. TDRs were loan modifications where concessions were granted to borrowers experiencing financial difficulties. The Company did not modify any loans for borrowers that are experiencing financial difficulty and did not have any previous modifications that were made during the past 12 months that experienced a payment default during the three months ended March 31, 2023. At December 31, 2022, the Company had $
20
NOTE 5 – MORTGAGE SERVICING RIGHTS
Loans serviced for others are not included in the Company’s consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others was $
A summary of activity in the Company’s mortgage servicing rights is presented below:
|
|
Three Months Ended March 31, 2023 |
|
|
Three Months Ended March 31, 2022 |
|
||
|
|
(in thousands) |
|
|||||
Mortgage servicing rights beginning balance |
|
$ |
|
|
$ |
|
||
Additions |
|
|
|
|
|
|
||
Amortization |
|
|
( |
) |
|
|
( |
) |
Mortgage servicing rights ending balance |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Fair value at beginning of period |
|
$ |
|
|
$ |
|
||
Fair value at end of period |
|
$ |
|
|
$ |
|
The estimated fair value of mortgage servicing rights was determined using a valuation model that calculates the present value of expected future servicing and ancillary income, net of expected servicing costs. The model incorporates various assumptions such as discount rates, prepayment speeds and ancillary income and servicing costs. As of March 31, 2023, the model used discount rates ranging from
The following table summarizes the estimated future amortization expense for mortgage servicing rights for the annual periods indicated. The projections of amortization expense are based on existing asset balances as of March 31, 2023. The actual amortization expense the Company recognizes in any given period may vary significantly depending on changes in interest rates, market conditions and regulatory requirements.
Estimated future amortization as of March 31, 2023: |
|
(in thousands) |
|
|
2023 |
|
$ |
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
21
NOTE 6 – DEPOSITS
The composition of deposits is summarized below:
|
|
March 31, |
|
|
December 31, 2022 |
|
||
|
|
(in thousands) |
|
|||||
Non-interest bearing checking |
|
$ |
|
|
$ |
|
||
Interest bearing checking |
|
|
|
|
|
|
||
Money market |
|
|
|
|
|
|
||
Statement savings |
|
|
|
|
|
|
||
Certificates of deposit |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
Certificates of deposit that met or exceeded the FDIC insurance limit of $
As of March 31, 2023, the scheduled maturities of certificates of deposit for the annual periods are presented below:
|
|
(in thousands) |
|
|
2023 |
|
$ |
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
22
NOTE 7 – FEDERAL HOME LOAN BANK ADVANCES
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||||||||||
|
|
Rate |
|
|
Amount |
|
|
Rate |
|
|
Amount |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed rate, fixed term advance, maturing Feb 2023 |
|
|
— |
|
|
|
— |
|
|
|
% |
|
|
|
||
Fixed rate, fixed term advance, maturing April 2023 |
|
|
% |
|
|
|
|
|
— |
|
|
|
— |
|
||
Fixed rate, fixed term advance, maturing April 2023 |
|
|
% |
|
|
|
|
|
— |
|
|
|
— |
|
||
Fixed rate, fixed term advance, maturing July 2027 |
|
|
% |
|
|
|
|
|
% |
|
|
|
||||
Putable advance, maturing July 2029, first option date January 2023 |
|
|
|
|
|
— |
|
|
|
% |
|
|
|
|||
Putable advance, maturing February 2030, first option date February 2023 |
|
|
|
|
|
— |
|
|
|
% |
|
|
|
|||
Putable advance, maturing October 2029, first put option date April 2023 |
|
|
% |
|
|
|
|
|
% |
|
|
|
||||
Putable advance, maturing January 2028, first option date July 2023 |
|
|
% |
|
|
|
|
|
— |
|
|
|
— |
|
||
Putable advance, maturing January 2028, first option date July 2023 |
|
|
% |
|
|
|
|
|
— |
|
|
|
— |
|
||
Putable advance, maturing February 2028, first option date August 2023 |
|
|
% |
|
|
|
|
|
— |
|
|
|
— |
|
||
Putable advance, maturing February 2028, first option date November 2023 |
|
|
% |
|
|
|
|
|
— |
|
|
|
— |
|
||
Putable advance, maturing January 2028, first option date January 2024 |
|
|
% |
|
|
|
|
|
— |
|
|
|
— |
|
||
Putable advance, maturing February 2028, first option date February 2024 |
|
|
% |
|
|
|
|
|
— |
|
|
|
— |
|
||
Putable advance, maturing March 2028, first option date March 2024 |
|
|
% |
|
|
|
|
|
— |
|
|
|
— |
|
||
Putable advance, maturing Mar 2030, first put option date Mar 2025 |
|
|
% |
|
|
|
|
|
% |
|
|
|
||||
Putable advance, maturing Mar 2032, first put option date Mar 2027 |
|
|
% |
|
|
|
|
|
% |
|
|
|
||||
Advance structured note, payments due monthly, maturing April 2030 |
|
|
% |
|
|
|
|
|
% |
|
|
|
||||
Advance structured note, payments due monthly, maturing May 2030 |
|
|
% |
|
|
|
|
|
% |
|
|
|
||||
SOFR Floater advance, maturing October 2023 |
|
|
% |
|
|
|
|
|
% |
|
|
|
||||
SOFR Floater advance, maturing October 2024 |
|
|
% |
|
|
|
|
|
% |
|
|
|
||||
Total |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
The scheduled maturities and required principal payments of Federal Home Loan Bank advances are presented below:
|
|
March 31, 2023 |
|
|||||
|
|
Weighted Average Rate |
|
|
Amount |
|
||
|
|
(dollars in thousands) |
|
|||||
2023 |
|
|
% |
|
$ |
|
||
2024 |
|
|
% |
|
|
|
||
2025 |
|
|
% |
|
|
|
||
2026 |
|
|
% |
|
|
|
||
2027 |
|
|
% |
|
|
|
||
Thereafter |
|
|
% |
|
|
|
||
Total |
|
|
% |
|
$ |
|
Actual maturities may differ from scheduled maturities due to call options on various FHLB advances.
Additionally, at March 31, 2023 we had a $
23
NOTE 8 – INCOME TAXES
Income tax (benefit) was ($
Deferred tax assets are deferred tax consequences attributable to deductible temporary differences and carryforwards. After the deferred tax asset has been measured using the applicable enacted tax rate and provisions of the enacted tax law, it is then necessary to assess the need for a valuation allowance. A valuation allowance is needed when, based on the weight of the available evidence, it is more likely than not that some portion of the deferred asset will not be realized. As required by generally accepted accounting principles, available evidence is weighted heavily on cumulative losses, with less weight placed on future projected profitability. The realization of deferred tax assets is dependent on the existence of taxable income of the appropriate character (e.g., ordinary or capital) within the carry-back and carry-forward periods available under tax law, which would consider future reversals of existing taxable temporary differences and available tax planning strategies. As of March 31, 2023, and December 31, 2022, the deferred tax valuation allowance was $
The board and management continue to assess the deferred tax assets in light of recent changes in market conditions, forecasted future projected income and available tax planning strategies. As such, there may be additional deferred tax asset impairment in subsequent periods.
24
NOTE 9 – COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company may be involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the Company’s financial statements. No material legal proceedings existed at March 31, 2023.
In the normal course of business, the Company is party to financial instruments with off-balance-sheet risk to meet the financing needs of its customers. These instruments include commitments to extend credit and commitments to sell loans. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the balance sheets.
The Company’s exposure to credit losses is represented by the contractual, or notional, amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments. As some of the commitments are expected to expire without being drawn upon, and some of the commitments may not be drawn upon to the total extent of the commitment, the notional amount of these commitments does not necessarily represent future cash requirements of the Company.
ASU 2016-13 requires that we establish an allowance for credit losses for off-balance sheet credit exposures, including unfunded loan commitments, that meet certain requirements. The allowance for credit losses for off-balance sheet credit exposures is estimated by portfolio segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, also taking into consideration management’s assumption of the likelihood that funding will occur. The allowance for credit losses for off-balance sheet credit exposures is included in other liabilities on the Company’s Consolidated Balance Sheets. Additional provisions for expected losses occur through a charge to the provision for credit losses. The adoption of the ASU 2016-13 resulted in the establishment of a $
The contractual amounts of off-balance-sheet credit-related financial instruments are summarized below:
|
|
March 31, 2023 |
|
|||||||||
|
|
Fixed Rate |
|
|
Variable Rate |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Commitments to extend credit |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Standby letters of credit |
|
|
— |
|
|
|
|
|
|
|
||
Credit enhancement under the FHLB of Chicago Mortgage Partnership Finance Program |
|
|
|
|
|
— |
|
|
|
|
||
Commitments to sell loans |
|
|
|
|
|
— |
|
|
|
|
||
Overdraft protection program commitments |
|
|
|
|
|
— |
|
|
|
|
|
|
December 31, 2022 |
|
|||||||||
|
|
Fixed Rate |
|
|
Variable Rate |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Commitments to extend credit |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Standby letters of credit |
|
|
— |
|
|
|
|
|
|
|
||
Credit enhancement under the FHLB of Chicago Mortgage Partnership Finance Program |
|
|
|
|
|
— |
|
|
|
|
||
Commitments to sell loans |
|
|
|
|
|
— |
|
|
|
|
||
Overdraft protection program commitments |
|
|
|
|
|
— |
|
|
|
|
25
NOTE 9 – COMMITMENTS AND CONTINGENCIES (continued)
Commitments to extend credit are agreements to lend to a customer at fixed or variable rates, 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 amount of collateral obtained upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable; inventory; property, plant and equipment; real estate; and stocks and bonds. Commitments to sell loans represent commitments obtained by the Company from a secondary market agency to purchase mortgages from the Company at specified interest rates and within specified periods of time.
Standby letters of credit are conditional lending commitments issued by the Company to guarantee the performance of a customer to a third party. Generally, all standby letters of credit have expiration dates within one year. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company generally holds collateral supporting these commitments. Standby letters of credit are not reflected in the financial statements, since recording the fair value of these guarantees would not have a significant impact on the financial statements.
The Company participates in the Federal Home Loan Bank of Chicago Mortgage Partnership Finance Program (the “Program”). In addition to entering into forward commitments to sell mortgage loans to a secondary market agency, the Company enters into firm commitments to deliver loans to the Federal Home Loan Bank of Chicago through the Program. Under the Program, loans are funded by the Federal Home Loan Bank of Chicago, and the Company receives an agency fee reported as a component of gain on sale of loans. The Company had $
Unfunded commitments under overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit may or may not require collateral and may or may not contain a specific maturity date.
26
NOTE 10 – EMPLOYEE STOCK OWNERSHIP PLAN
The Company established a tax qualified Employee Stock Ownership Plan (“ESOP”) for the benefit of its employees, in conjunction with the reorganization. Eligible employees become
On January 8, 2019, the ESOP purchased
As part of the mutual-to-stock conversion and stock offering completed on July 14, 2021, the ESOP refinanced the aforementioned loan with New 1895 Bancorp, enabling the ESOP to purchase an aggregate of
Compensation expense for the ESOP is recorded at an amount equal to the shares allocated by the ESOP multiplied by the average fair market value of the shares during the period. The Company recognizes compensation expense ratably over the year based upon the Company’s estimate of the number of shares expected to be allocated by the ESOP. Unearned compensation applicable to the ESOP is reflected as a reduction of stockholders’ equity in the consolidated balance sheet. The difference between the average fair market value and the cost of the shares allocated by the ESOP is recorded as an adjustment to stockholders’ equity. The Company recognized $
The following table provides the allocated and unallocated shares of common stock associated with the ESOP.
|
|
March 31, |
|
|
December 31, |
|
||
|
|
(dollars in thousands) |
|
|||||
Shares committed to be released |
|
|
|
|
|
|
||
Total allocated shares |
|
|
|
|
|
|
||
Total unallocated shares |
|
|
|
|
|
|
||
Total ESOP shares |
|
|
|
|
|
|
||
Fair value of unallocated shares (based on $ |
|
$ |
|
|
$ |
|
27
NOTE 11 – RELATED PARTY TRANSACTIONS
A summary of loans to directors, executive officers, and their affiliates follows:
|
|
March 31, |
|
|
December 31, 2022 |
|
||
|
|
(in thousands) |
|
|||||
Beginning balance |
|
$ |
|
|
$ |
|
||
Adjustments due to changes in directors, executive officers, and/or principal |
|
|
|
|
|
|
||
New loans |
|
|
|
|
|
|
||
Repayments |
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
Deposits from directors, executive officers, and their affiliates totaled $
The Company utilizes the services of law firms in which certain of the Company’s directors are partners. Fees paid to the firms for these services were immaterial for the three months ended March 31, 2023 and 2022, respectively.
NOTE 12 – FAIR VALUE MEASUREMENTS
ASC Topic 820, Fair Value Measurements and Disclosures defines fair values, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This accounting standard applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements. The standard also emphasizes that fair value (i.e., the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date), among other things, is based on exit price versus entry price, should include assumptions about risk such as nonperformance risk in liability fair values, and is a market-based measurement, not an entity-specific measurement. When considering the assumptions that market participants would use in pricing an asset or liability, this accounting standard establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
The fair value hierarchy prioritizes inputs used to measure fair value into three broad levels.
Level 1 inputs – In general, fair values determined by Level 1 inputs use quoted market prices in active markets for identical assets or liabilities that we have the ability to access.
Level 2 inputs – Fair values determined by Level 2 inputs use inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets where there are few transactions and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 inputs – Level 3 inputs are unobservable inputs for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Some assets and liabilities, such as securities available-for-sale, are measured at fair value on a recurring basis under GAAP. Other assets and liabilities, such as collateral dependent loans, may be measured at fair value on a nonrecurring basis.
28
NOTE 12 – FAIR VALUE MEASUREMENTS (continued)
Following is a description of the Company’s valuation methodology and significant inputs used for each asset and liability measured at fair value on a recurring or nonrecurring basis.
Securities – Marketable equity securities and securities available-for-sale may be classified as Level 1 or Level 2 measurements within the fair value hierarchy. Level 1 securities include equity securities traded on a national exchange. The fair value measurements of Level 1 securities are based on the quoted market price of those securities. Level 2 securities include U.S. Treasury notes, U.S. government and agency securities, obligations of states and political subdivisions, corporate debt securities and mortgage-related securities. The fair value measurements of Level 2 securities are obtained from independent pricing services and are based on recent sales of similar securities and other observable market data.
Collateral dependent loans – The Company does not record loans at fair value on a recurring basis. However, individually evaluated loans are reported at the fair value of the underlying collateral, less estimated costs to sell, if repayment is expected solely from the collateral. Independent appraisals are obtained to determine the fair values of underlying collateral, and generally utilize one or more valuation methodologies, which typically include comparable sales and income approaches. Management routinely evaluates the fair value measurements of independent appraisers and adjusts those valuations based on differences noted between actual selling prices of collateral and the most recently appraised value. Such adjustments are usually significant, which results in a Level 3 classification.
Rate lock commitments – Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value in other assets or liabilities, with changes in fair value recorded in the net gain or loss on sale of mortgage loans. Fair value is based on fees currently charged to enter into similar agreements for fixed-rate commitments and also considers the difference between current levels of interest rates and the committed rates. While there are Level 2 and 3 inputs used in the valuation models, the Company has determined that one or more of the inputs significant in the valuation of both of the mortgage banking derivatives fall within Level 3 of the fair value hierarchy. The change in fair value is recorded through an adjustment to the statement of operations, within mortgage banking income.
Mortgage servicing rights – The Company utilizes an independent valuation from a third party which uses a discounted cash flow model to estimate the fair value of mortgage servicing rights. The model utilizes prepayment assumptions to project cash flows related to the mortgage servicing rights based upon the current interest rate environment, which is then discounted to estimate an expected fair value of the mortgage servicing rights. The model considers characteristics specific to the underlying mortgage portfolio, such as: contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges and costs to service. Given the significance of the unobservable inputs utilized in the estimation process, mortgage servicing rights are classified as Level 3 within the fair value hierarchy. The Company records the mortgage servicing rights at the lower of amortized cost or fair value.
Assets measured at fair value on a recurring basis are summarized below, along with the level of the fair value hierarchy of the inputs utilized to determine such fair value.
|
|
|
|
|
Recurring Fair Value Measurements Using |
|
||||||||||
|
|
March 31, |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Marketable equity securities |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury notes |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Obligations of states and political subdivisions |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Government-sponsored mortgage-backed securities |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Asset-backed securities |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Certificates of deposit |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
29
NOTE 12 – FAIR VALUE MEASUREMENTS (continued)
|
|
|
|
|
Recurring Fair Value Measurements Using |
|
||||||||||
|
|
December 31, |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Marketable equity securities |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury notes |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Obligations of states and political subdivisions |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Government-sponsored mortgage-backed securities |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Asset-backed securities |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Certificates of deposit |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
Individually evaluated collateral dependent loans are measured at fair value on a non-recurring basis. There were
Mortgage servicing rights are measured at fair value on a non-recurring basis. There was
The carrying values and estimated fair values of financial instruments are presented below:
|
|
March 31, 2023 |
|
|||||||||||||
|
|
Carrying Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Available-for-sale securities |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Marketable equity securities |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Loans, net |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Rate lock commitments |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Accrued interest receivable |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Federal Home Loan Bank Stock |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Cash value of life insurance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposits |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Advance payments by borrowers for taxes and insurance |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Federal Home Loan Bank advances |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Accrued interest payable |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
30
NOTE 12 – FAIR VALUE MEASUREMENTS (continued)
|
|
December 31, 2022 |
|
|||||||||||||
|
|
Carrying Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Available-for-sale securities |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Marketable equity securities |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Loans held for sale |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Loans, net |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Rate lock commitments |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Accrued interest receivable |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Federal Home Loan Bank Stock |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Cash value of life insurance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposits |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Advance payments by borrowers for taxes and insurance |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Federal Home Loan Bank advances |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Accrued interest payable |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
The fair value of a financial instrument is the current amount that would be exchanged between market participants, other than in a forced liquidation. Fair value is best determined based on quoted market prices. However, in many instances, there are no quoted market prices for the Company’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. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business.
Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts, nor is it recorded as an intangible asset on the balance sheets. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
31
NOTE 13 – EQUITY AND REGULATORY MATTERS
PyraMax Bank is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance-sheet items, as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about their components, risk weightings and other factors. The Company is exempt from consolidated capital requirements as those requirements do not apply to certain small bank holding companies with consolidated assets under $
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Common Equity Tier 1, Tier 1 and Total capital to risk-weighted assets, and of Tier 1 capital to average assets. The Bank met all applicable capital adequacy requirements as of March 31, 2023 and December 31, 2022.
As of March 31, 2023, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum regulatory capital ratios as set forth in the table below. There are no conditions or events since March 31, 2023 that management believes have changed the capital category of the Bank.
The Bank’s actual and required capital amounts and ratios are presented below:
|
|
March 31, 2023 |
|
|||||||||||||||||||||
|
|
Actual |
|
|
For Capital Adequacy Purposes |
|
|
To Be Well Capitalized Under Prompt Corrective Action Provisions |
|
|||||||||||||||
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
||||||
|
|
(dollars in thousands) |
|
|||||||||||||||||||||
PyraMax Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Leverage (Tier 1) |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk-based: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common Equity Tier 1 |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Tier 1 |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Total |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
December 31, 2022 |
|
|||||||||||||||||||||
|
|
Actual |
|
|
For Capital Adequacy Purposes |
|
|
To Be Well Capitalized Under Prompt Corrective Action Provisions |
|
|||||||||||||||
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
||||||
|
|
(dollars in thousands) |
|
|||||||||||||||||||||
PyraMax Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Leverage (Tier 1) |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk-based: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common Equity Tier 1 |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Tier 1 |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Total |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
On July 29, 2022, the Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to
32
NOTE 14 – EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding, adjusted for weighted average unallocated ESOP shares, during the applicable period. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. Antidilutive options are disregarded in earnings per share calculations. For the three months ended March 31, 2023,
Earnings (loss) per common share for the three months ended March 31, 2023 and 2022 are presented in the following table.
|
|
Three months ended March 31, |
|||||||
|
|
2023 |
|
|
2022 |
|
|
||
|
|
(In thousands, except per share amounts) |
|||||||
|
|
|
|
|
|
|
|
||
Net (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
||
Weighted shares outstanding for basic EPS |
|
|
|
|
|
|
|
||
Weighted average shares outstanding |
|
|
|
|
|
|
|
||
Less: Weighted average unallocated ESOP shares |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
Weighted average shares outstanding for basic EPS |
|
|
|
|
|
|
|
||
Additional dilutive shares(1) |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
Weighted average shares outstanding for dilutive EPS |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
Basic (loss) per share |
|
$ |
( |
) |
|
$ |
( |
) |
|
Diluted (loss) per share(1) |
|
$ |
( |
) |
|
$ |
( |
) |
|
(1)
33
NOTE 15 – STOCK BASED COMPENSATION
Stock-Based Compensation Plans
On March 27, 2020, the Company’s stockholders approved the 1895 Bancorp of Wisconsin, Inc. 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan”). A total of
On August 26, 2022, the Company’s shareholders approved the 1895 Bancorp of Wisconsin, Inc. 2022 Equity Incentive Plan (the “2022 Equity Incentive Plan”). A total of
Accounting for Stock-Based Compensation Plan
The fair value of stock options granted is estimated on the grant date using a Black-Scholes pricing model. The fair value of restricted shares is equal to the quoted NASDAQ market closing price on the date of grant. The fair value of stock grants is recognized as compensation expense on a straight-line basis over the vesting period of the grants. Compensation expense is included in salaries and employee benefits in the consolidated statements of operations.
Assumptions are used in estimating the fair value of stock options granted. The weighted average expected life of the stock options represent the period of time that the options are expected to be outstanding and is based on the historical results from the previous awards. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on the actual volatility of 1895 Bancorp of Wisconsin, Inc. stock for the weighted average life time period prior to issuance date.
|
|
For the Three Months Ended |
||||
|
|
March 31, |
|
|
March 31, |
|
|
|
|
|
|
|
|
Dividend yield |
|
|
% |
|
N/A (1) |
|
Risk-free interest rate |
|
|
% |
|
N/A (1) |
|
Expected volatility |
|
|
% |
|
N/A (1) |
|
Weighted average expected life (years) |
|
|
|
|
N/A (1) |
|
Weighted average per share value of options |
|
$ |
|
|
N/A (1) |
(1) There were no stock options granted during the three months ended March 31, 2022.
34
NOTE 15 – STOCK BASED COMPENSATION (continued)
A summary of the Company’s stock option activity for the three months ended March 31, 2023 is presented below.
Stock Options |
|
Shares |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining in Contractual Term (Years) |
|
|
Aggregate Intrinsic Value |
|
||||
Outstanding December 31, 2022 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|||||
Granted |
|
|
|
|
|
|
|
|
|
|
— |
|
||||
Exercised |
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
||
Forfeited |
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
N/A |
|
||
Outstanding March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
||||||
Options exercisable at March 31, 2023 |
|
|
|
|
|
|
|
|
|
The following table summarizes information about the Company’s nonvested stock option activity for the three months ended March 31, 2023:
Stock Options |
|
Shares |
|
|
Weighted Average Grant Date Fair Value |
|
||
Nonvested at December 31, 2022 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|||
Vested(1) |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
— |
|
|
|
— |
|
Nonvested at March 31, 2023 |
|
|
|
|
$ |
|
The Company amortizes the expense related to stock options as compensation expense over the vesting period. The Company recognized $
At March 31, 2023, the Company had $
The following table summarizes information about the Company’s restricted stock activity for the three months ended March 31, 2023:
Restricted Stock |
|
Shares |
|
|
Weighted Average Grant Date Fair Value |
|
||
Nonvested at December 31, 2022 |
|
|
|
$ |
|
|||
Granted |
|
|
— |
|
|
|
— |
|
Vested(1)(2) |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
— |
|
|
|
— |
|
Nonvested at March 31, 2023 |
|
|
|
|
$ |
|
The Company amortizes the expense related to restricted stock awards as compensation expense over the vesting period. The Company recognized $
35
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Management’s discussion and analysis of financial condition and results of operations at March 31, 2023 and for the three months ended March 31, 2023 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q.
Cautionary Note Regarding Forward-Looking Statements
This report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:
These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this Quarterly Report.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
36
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Additional factors that may affect our results are discussed under the heading "Risk Factors" in our most recent Annual Report on Form 10-K (fiscal year ended December 31, 2022) filed with the Securities and Exchange Commission (“SEC”) on March 30, 2023, and in this Quarterly Report on Form 10-Q. Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events. Accordingly, you should not place undue reliance on forward-looking statements.
Critical Accounting Policies
As a result of the complex and dynamic nature of the Company’s business, management must exercise judgment in selecting and applying the most appropriate accounting policies for its various areas of operations. The policy decision process not only ensures compliance with the current accounting principles generally accepted in the United States of America (“GAAP”), but also reflects management’s discretion with regard to choosing the most suitable methodology for reporting the Company’s financial performance. It is management’s opinion that the accounting estimates covering certain aspects of the business have more significance than others due to the relative importance of those areas to overall performance, or the level of subjectivity in the selection process. These estimates affect the reported amounts of assets and liabilities as well as disclosures of revenues and expenses during the reporting period. Actual results could meaningfully differ from these estimates. Management believes that the critical accounting estimates include the allowance for credit losses, determination of fair value for financial instruments, and valuation of deferred income taxes.
A summary of the accounting policies used by management is disclosed in Note 1, “Summary of Significant Accounting Policies” in the Company's most recent Form 10-K (fiscal year ended December 31, 2022) filed with the Securities and Exchange Commission (“SEC”) on March 30, 2023.
On January 1, 2023 we adopted ASU 2016-13, Financial Instruments - Credit Losses. This guidance replaced the incurred loss methodology, which was used to calculate the allowance for loan losses as described in the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K, with an expected lifetime loss methodology, as described in Note 2 to the Consolidated Financial Statements.
During 2023, we did not substantively change any material aspect of our overall methodologies and processes used in developing the remaining critical accounting estimates from those described in the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K, other than those related to the adoption of ASU 2016-13.
Comparison of Financial Condition at March 31, 2023 and December 31, 2022
Total Assets. Total assets increased $8.6 million, or 1.6%, to $551.6 million at March 31, 2023 from $543.0 million at December 31, 2022. This increase was primarily due to a $7.9 million net increase in loans.
Cash and Cash Equivalents. Cash and cash equivalents increased $0.7 million, or 2.5%, to $29.0 million at March 31, 2023 from $28.3 million at December 31, 2022. This increase was primarily due to $64.5 million of additional FHLB advances, $3.3 million from maturities, payments and calls of available-for-sale securities, a $3.0 million net increase in advance payments by borrowers for taxes and insurance and $2.5 million from the sale of mortgage loans held for sale. These increases were partially offset by $44.0 million in principal payments on FHLB advances, a $15.7 million decrease in deposits, a $7.6 million net increase in loans and $2.3 million in originations of loans held for sale.
37
Available-for-Sale Securities. Available-for-sale securities decreased $1.1 million, or 1.0%, to $113.4 million at March 31, 2023, from $114.5 million at December 31, 2022. This decrease was primarily due to maturities, payments and calls of securities totaling $3.3 million, partially offset by a $2.2 million reduction in the net unrealized losses on securities held within the portfolio. The net unrealized loss was $13.5 million at March 31, 2023.
Loans Held for Sale. Loans held for sale decreased $125,000, to zero at March 31, 2023. This decrease was due primarily to a decrease in the volume of first mortgage residential real estate loan originations sold into the secondary market as a result of the changing interest rate environment and lower inventory of housing available in our market. Mortgage loan originations and sales were $2.3 million and $2.5 million, respectively, during the first three months of 2023 compared to $6.5 million and $6.8 million, respectively, for the same period in 2022.
Loans. Loans held for investment, net of deferred costs, increased $7.6 million, or 2.1%, to $370.4 million at March 31, 2023, from $362.8 million at December 31, 2022. The majority of this growth was in commercial real estate loans which increased $4.1 million during the first quarter to $215.0 million. Also contributing to this growth was an increase in non-real estate commercial loans which grew $1.6 million during this period to $45.3 million. The growth in these types of loans is consistent with the Company’s long-term loan strategy to increase the level of commercial and commercial real estate loans within our portfolio. First mortgage residential real estate loans also increased $3.4 million during the first quarter of 2023 to $88.8 million.
Allowance for Credit Losses. On January 1, 2023, the Company adopted ASU 2016-13 which replaced the incurred loss methodology, which was previously used to calculate the allowance for loan losses, with an expected lifetime loss methodology ("CECL"), as described in Note 2 to the Consolidated Financial Statements. The adoption of ASU 2016-13 resulted in an initial increase of $412,000 to the allowance for credit losses for loans ("ACL for loans") and the establishment of a $665,000 allowance for credit losses for unfunded loan commitments ("ACL for unfunded loan commitments"). The ACL for loans is included as a separate line item on the Company's Consolidated Balance Sheets and the ACL for unfunded loan commitments is included in other liabilities. The total allowance for credit losses was $4.4 million at March 31, 2023.
The ACL for loans was $3.7 million, or 1.00%, of loans, net of deferred costs, at March 31, 2023 compared to an allowance for loan losses of $3.2 million, or 0.88% of loans, net of deferred costs, at December 31, 2022. The increase in the ACL for loans was primarily the result of the $412,000 increase related to the adoption of ASU 2016-13 and a $75,000 provision for credit losses for loans. The ACL for unfunded loan commitments was $665,000 at March 31, 2023. Nonaccrual loans represented 0.20% of total loans at March 31, 2023, compared to 0.21% of total loans at December 31, 2022. Net recoveries for the three months ended March 31, 2023 were $3,000 compared to net recoveries of $54,000 for the three months ended March 31, 2022.
FHLB Stock. FHLB stock increased $1.4 million, or 41.2%, from $3.4 million at December 31, 2022 to $4.8 million at March 31, 2023. This increase was primarily due to the net increase in FHLB advances and the requirement of FHLB to hold additional stock as a result of the increased advances.
Deposits. Deposits decreased $15.7 million, or 4.0%, to $372.0 million at March 31, 2023, from $387.7 million at December 31, 2022. This decrease was primarily due to a $9.1 million decrease in money market accounts, a $7.9 million decrease in noninterest bearing checking accounts and a $6.4 million decrease in savings accounts. These decreases were partially offset by an $8.1 million increase in certificates of deposit. The decrease in deposits was partially due to customers who transferred some or all of their deposits to higher rate investment alternatives, including treasury securities and higher rate deposit accounts at other financial institutions. Based on the relatively higher rates of interest being offered by other financial institutions in our market and the higher cost of other funding alternatives, the Company determined that it was more cost effective to replace a portion of these deposits, many of which were with customers that had no other banking relationships with the Company, with FHLB advances. The Company continues to build upon its banking relationships with its core customers, including deposits, and in attracting new relationships. The decrease in deposits was also partially due to the use of deposit funds by our commercial customers who utilized their noninterest and lower rate deposit balances to fund their operations, as their borrowing cost has increased during the current interest rate environment. As market rates have increased, we have also seen a shift in our deposit mix from noninterest bearing checking accounts and lower interest NOW and savings accounts into money market accounts and certificates of deposits.
Advance Payments by Borrowers for Taxes and Insurance. Advance payments by borrowers for taxes and insurance increased $3.0 million to $4.0 million at March 31, 2023 from $1.0 million at December 31, 2022. The increase was due to normal seasonal activity.
FHLB Advances. FHLB advances, increased $20.5 million, or 28.7%, to $92.0 million at March 31, 2023, from $71.5 million at December 31, 2022. The increase in FHLB advances was primarily used to partially fund outgoing cash flows from the decrease in deposits and the increase in net loans.
38
Total Stockholders’ Equity. Total stockholders’ equity increased $0.5 million to $75.9 million at March 31, 2023, from $75.4 million at December 31, 2022. The increase was primarily due to a $2.2 million decrease in net unrealized losses on available-for-sale securities, which net of taxes, resulted in a $1.6 million increase in stockholders’ equity. The increase in net unrealized losses on available-for-sale securities was the result of changes in market interest rates. This increase was partially offset by a $1.1 million decrease in retained earnings. The decrease in retained earnings was primarily the result of a net loss of $361,000 for the first quarter of 2023 and the adoption of ASU 2016-13 on January 1, 2023, which had a $783,000 negative impact on retained earnings. The Company also purchased 12,903 shares of its common stock during the first quarter of 2023 under its stock repurchase plan which resulted in a $129,000 reduction in stockholders' equity.
Average Balances and Yields
The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated using daily balances. Nonaccrual loans are included in average balances only. Loan fees are included in interest income on loans and are not material.
|
|
Three Months Ended March 31, |
|
|||||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest and |
|
|
Yield/Cost |
|
|
Average |
|
|
Interest and |
|
|
Yield/Cost |
|
||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans(1) |
|
$ |
364,331 |
|
|
$ |
3,826 |
|
|
|
4.26 |
% |
|
$ |
329,775 |
|
|
$ |
3,290 |
|
|
|
4.05 |
% |
Securities available-for-sale |
|
|
113,864 |
|
|
|
602 |
|
|
|
2.15 |
% |
|
|
133,975 |
|
|
|
548 |
|
|
|
1.66 |
% |
Other interest-earning assets |
|
|
19,619 |
|
|
|
284 |
|
|
|
5.87 |
% |
|
|
40,690 |
|
|
|
48 |
|
|
|
0.48 |
% |
Total interest-earning |
|
|
497,814 |
|
|
|
4,712 |
|
|
|
3.84 |
% |
|
|
504,440 |
|
|
|
3,886 |
|
|
|
3.12 |
% |
Non-interest-earning assets |
|
|
36,969 |
|
|
|
|
|
|
|
|
|
33,622 |
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
534,783 |
|
|
|
|
|
|
|
|
$ |
538,062 |
|
|
|
|
|
|
|
||||
Interest-earning liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
NOW accounts |
|
$ |
31,429 |
|
|
$ |
52 |
|
|
|
0.67 |
% |
|
$ |
36,494 |
|
|
$ |
8 |
|
|
|
0.08 |
% |
Money market accounts |
|
|
115,328 |
|
|
|
542 |
|
|
|
1.91 |
% |
|
|
96,711 |
|
|
|
71 |
|
|
|
0.30 |
% |
Savings accounts |
|
|
58,805 |
|
|
|
7 |
|
|
|
0.05 |
% |
|
|
66,407 |
|
|
|
8 |
|
|
|
0.05 |
% |
Certificates of deposit |
|
|
82,878 |
|
|
|
381 |
|
|
|
1.86 |
% |
|
|
80,986 |
|
|
|
82 |
|
|
|
0.41 |
% |
Total interest-bearing deposits |
|
|
288,440 |
|
|
|
982 |
|
|
|
1.38 |
% |
|
|
280,598 |
|
|
|
169 |
|
|
|
0.24 |
% |
Federal Home Loan Bank advances |
|
|
80,028 |
|
|
|
493 |
|
|
|
2.50 |
% |
|
|
54,784 |
|
|
|
170 |
|
|
|
1.25 |
% |
Other interest-bearing liabilities |
|
|
3,946 |
|
|
|
2 |
|
|
|
0.22 |
% |
|
|
3,875 |
|
|
|
2 |
|
|
|
0.24 |
% |
Total interest-bearing |
|
|
372,414 |
|
|
|
1,477 |
|
|
|
1.61 |
% |
|
|
339,257 |
|
|
|
341 |
|
|
|
0.41 |
% |
Non-interest-bearing deposits |
|
|
82,531 |
|
|
|
|
|
|
|
|
|
105,970 |
|
|
|
|
|
|
|
||||
Other non-interest-bearing liabilities |
|
|
6,482 |
|
|
|
|
|
|
|
|
|
6,454 |
|
|
|
|
|
|
|
||||
Total liabilities |
|
|
461,427 |
|
|
|
|
|
|
|
|
|
451,681 |
|
|
|
|
|
|
|
||||
Total stockholders’ equity |
|
|
73,356 |
|
|
|
|
|
|
|
|
|
86,381 |
|
|
|
|
|
|
|
||||
Total liabilities and |
|
$ |
534,783 |
|
|
|
|
|
|
|
|
$ |
538,062 |
|
|
|
|
|
|
|
||||
Net interest income |
|
|
|
|
$ |
3,235 |
|
|
|
|
|
|
|
|
$ |
3,545 |
|
|
|
|
||||
Net interest-earning assets |
|
$ |
125,400 |
|
|
|
|
|
|
|
|
$ |
165,183 |
|
|
|
|
|
|
|
||||
Interest rate spread(2) |
|
|
|
|
|
|
|
|
2.23 |
% |
|
|
|
|
|
|
|
|
2.71 |
% |
||||
Net interest margin(3) |
|
|
|
|
|
|
|
|
2.64 |
% |
|
|
|
|
|
|
|
|
2.85 |
% |
||||
Average interest-earning assets to |
|
|
133.67 |
% |
|
|
|
|
|
|
|
|
148.69 |
% |
|
|
|
|
|
|
39
Rate/Volume Analysis
The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in average rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior period average rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments included within the following table.
|
|
Three Months Ended March 31, |
|
|||||||||
|
|
Increase (Decrease) Due to |
|
|
|
|
||||||
|
|
Volume |
|
|
Rate |
|
|
Total |
|
|||
|
|
(Dollars in thousands) |
|
|||||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|||
Loans |
|
$ |
357 |
|
|
$ |
179 |
|
|
$ |
536 |
|
Securities |
|
|
(57 |
) |
|
|
111 |
|
|
|
54 |
|
Other |
|
|
(11 |
) |
|
|
247 |
|
|
|
236 |
|
Total interest-earning assets |
|
|
289 |
|
|
|
537 |
|
|
|
826 |
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|||
NOW |
|
|
1 |
|
|
|
(45 |
) |
|
|
(44 |
) |
Money market deposits |
|
|
(16 |
) |
|
|
(455 |
) |
|
|
(471 |
) |
Savings |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
Certificates of deposit |
|
|
(2 |
) |
|
|
(297 |
) |
|
|
(299 |
) |
Total interest-bearing deposits |
|
|
(16 |
) |
|
|
(797 |
) |
|
|
(813 |
) |
Borrowings |
|
|
(102 |
) |
|
|
(221 |
) |
|
|
(323 |
) |
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total interest-bearing liabilities |
|
|
(118 |
) |
|
|
(1,018 |
) |
|
|
(1,136 |
) |
Change in net interest income |
|
$ |
171 |
|
|
$ |
(481 |
) |
|
$ |
(310 |
) |
Comparison of Operating Results for the Three Months Ended March 31, 2023 and 2022
Net Income (Loss). We recorded a net loss of $361,000 for the three months ended March 31, 2023, compared to a net loss of $55,000 for the three months ended March 31, 2022. The increased loss was primarily due to a $280,000 decrease in net interest income after provision for credit losses and a $496,000 increase in noninterest expense, partially offset by a $379,000 increase in noninterest income and a $91,000 increase in income tax benefit.
Interest and Dividend Income. Interest and dividend income increased $826,000, or 21.2%, to $4.7 million for the three months ended March 31, 2023, from $3.9 million for the three months ended March 31, 2022. The increase was due primarily to a $536,000 increase in interest and fees on loans, a $236,000 increase in interest on other interest earning assets and a $54,000 increase in interest earned on taxable securities. The increase in interest and fees earned on loans was primarily due to a $34.5 million increase in the average amount of loans outstanding, from $329.8 million in the first quarter of 2022 to $364.3 million in the first quarter of 2023, and a 21 basis point increase in the yield earned on loans, from 4.05% for the first quarter of 2022 to 4.26% in the first quarter of 2023. The increase in the yield earned on loans during the first quarter of 2023 was primarily due to increases in market rates. The increase in loans was consistent with the Company's strategy to grow the loan portfolio. The increase in interest earned on other interest earning assets, the majority of which is comprised of fed funds sold and FHLB stock, was primarily due to a 539 basis point increase in yield, from 0.48% for the first quarter of 2022 to 5.87% in the first quarter of 2023, partially offset by a $21.1 million decrease in the average balance outstanding, from $40.7 million in the first quarter of 2022 to $19.6 million in the first quarter of 2023. The increase in interest on taxable securities was primarily due to a 49 basis point increase in the yield, from 1.66% for the first quarter of 2022 to 2.15% in the first quarter of 2023. This increase was partially offset by a $20.1 million decrease in the average amount of securities outstanding, from $134.0 million in the first quarter of 2022 to $113.9 million in the first quarter of 2023.
Interest Expense. Interest expense increased $1.1 million, or 322.6%, to $1.5 million for the three months ended March 31, 2023, from $341,000 for the three months ended March 31, 2022. This increase was primarily due to an $813,000 increase in interest expense on deposits and a $323,000 increase in interest expense on FHLB advances. The increase in interest expense on deposits was
40
primarily due to a 114 basis point increase in the average rate paid on deposits and a $7.8 million increase in average deposits outstanding from the first quarter of 2022 to the first quarter of 2023. The increase in interest expense on deposits was primarily due to the increase in market rates of interest and also a shift in our deposit mix. As market rates increased, many of our deposit customers transferred funds from noninterest bearing checking accounts and low interest NOW and savings accounts into higher rate products, including money market accounts and certificates of deposit. The average balance of noninterest bearing checking accounts decreased $23.4 million, or 22.1%, while NOW and savings accounts decreased $5.1 million, or 13.9%, and $7.6 million, or 11.4%, respectively, from the first quarter of 2022 to the first quarter of 2023. During the same period, the average balance of money market accounts and certificates of deposits increased $18.6 million, or 19.2%, and $1.9 million, or 2.3%, respectively. Interest expense on money market accounts increased $471,000, or 663.4%, from the first quarter of 2022 to the first quarter of 2023 as a result of the increase in average balances outstanding and also a 161 basis point increase in the average rate paid on these accounts. Interest expense on certificates of deposit increased $299,000, or 364.6%, from the first quarter of 2022 to the first quarter of 2023 as a result of the increase in average balances outstanding and also a 145 basis point increase in the average rate paid on these accounts.
Interest expense on FHLB advances increased $323,000, or 190.0%, from $170,000 for the first quarter of 2022 to $493,000 for the first quarter of 2023. This increase was primarily due to a 125 basis point increase in the average rate paid on the advances from 1.25% in the first quarter of 2022 to 2.50% in the first quarter of 2023 and a $25.2 million, or 46.0%, increase in the average balance outstanding, from $54.8 million in the first quarter of 2022 to $80.0 million in the first quarter of 2023. The increase in the average rate paid on FHLB advances was primarily due to the changes in market interest rates.
Net Interest Income. Net interest income decreased $310,000, or 8.9%, to $3.2 million for the three months ended March 31, 2023, from $3.5 million for the three months ended March 31, 2022. This decrease was primarily due to a $1.1 million increase in interest expense partially offset by an $826,000 increase in interest and dividend income. Our net interest rate spread decreased 48 basis points to 2.23% for the three months ended March 31, 2023, from 2.71% for the three months ended March 31, 2022. Our net interest margin decreased 21 basis points to 2.64%, from 2.85% over the same period.
Provision for Credit Losses. The provision for credit losses was $75,000 for the three months ended March 31, 2023, compared to a $105,000 provision for the three months ended March 31, 2022.
Noninterest Income. Noninterest income increased $379,000, or 96.9%, to $770,000 for the three months ended March 31, 2023, from $391,000 for the three months ended March 31, 2022. The increase was primarily the result of a $430,000 increase in income associated with changes in the market value of equity securities, partially offset by a $40,000 decrease in net gain on sale of loans. The increase in the market value of marketable equity securities was due to an increase in the market value of mutual funds held in our deferred compensation plan. We record an offsetting amount for the $430,000 change in the market of equity securities in noninterest expense. The decrease in the net gain on sale of loans was primarily due to the decrease in the sale of mortgage loans held for sale, which decreased $4.3 million, from $6.8 million in the first quarter of 2022 to $2.5 million in the first quarter of 2023. This decrease was primarily the result of the changing interest rate environment and lower inventory of housing available in our market.
Noninterest Expense. Noninterest expense increased $496,000, or 12.7%, to $4.4 million for the three months ended March 31, 2023 from $3.9 million for the three months ended March 31, 2022. This increase was primarily due to a $628,000 increase in salaries and benefits expense, partially offset by $185,000 decrease in other noninterest expenses. The increase in salaries and benefits expense was primarily due to a $430,000 increase in the market value of mutual funds held in our deferred compensation plan. We record an offsetting amount for the change in the market of equity securities in noninterest income. Also contributing to the increase in salaries and benefits expense was a $129,000 increase stock option expense, which was primarily related to the issuance of stock options and awards under the 2022 Equity Incentive Plan. The decrease in other noninterest expenses was primarily due to a $117,000 decrease in professional and consulting fees, which includes accounting, tax and attorney services. The Company has taken various actions to reduce noninterest expense and the decrease in professional and consulting fees is partially due to these actions. In addition, the Company has taken various steps to reduce salaries and benefits expenses. These actions include evaluating all open positions prior to rehiring and also a reduction-in-force implemented in April 2023. As a result of these actions, the number of of full-time equivalent employees has been reduced by 15 since March 2022. The costs associated with these actions will partially offset their expected benefits during 2023.
Income Tax (Benefit) Expense. We recorded an income tax benefit of $151,000 for the three months ended March 31, 2023, compared to an income tax benefit of $60,000 for the three months ended March 31, 2022. The increase in income tax benefit was primarily due to an increase in the loss before taxes during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.
Management of Market Risk
General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate
41
risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset/Liability Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors.
Our asset/liability management strategy attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings. Among the techniques we use to manage interest rate risk are:
Our board of directors is responsible for the review and oversight of our executive management team and other essential operational staff which are responsible for our asset/liability analysis. These officers act as an asset/liability committee and are charged with developing and implementing an asset/liability management plan, and they meet at least quarterly to review pricing and liquidity needs and assess our interest rate risk. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.
We do not engage in hedging activities, such as engaging in futures, options or swap transactions, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage-backed securities.
The table below sets forth, as of March 31, 2023, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve.
Change in Interest |
|
Net Interest Income |
|
|
Year 1 Change |
|
||
|
|
(Dollars in thousands) |
|
|
|
|
||
+400 |
|
$ |
17,790 |
|
|
|
29.02 |
% |
+300 |
|
|
16,795 |
|
|
|
21.81 |
% |
+200 |
|
|
15,792 |
|
|
|
14.53 |
% |
+100 |
|
|
14,794 |
|
|
|
7.29 |
% |
Level |
|
|
13,788 |
|
|
|
— |
% |
-100 |
|
|
13,173 |
|
|
|
(4.47 |
)% |
-200 |
|
|
12,495 |
|
|
|
(9.38 |
)% |
-300 |
|
|
11,938 |
|
|
|
(13.42 |
)% |
-400 |
|
|
11,090 |
|
|
|
(19.57 |
)% |
Economic Value of Equity. We also monitor interest rate risk through the use of a simulation model that estimates the amounts by which the fair value of our assets and liabilities (our economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. The quarterly reports developed in the simulation model assist us in identifying, measuring, monitoring and controlling interest rate risk to ensure compliance within our policy guidelines.
The table below sets forth, as of March 31, 2023, the estimated changes in our EVE that would result from the designated instantaneous changes in market interest rates. Computations of prospective effects of hypothetical interest rate changes are based on
42
numerous assumptions including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.
|
|
|
|
|
Estimated Increase (Decrease) in EVE |
|
||||||
Basis Point (“bp”) Change in Interest Rates(1) |
|
Estimated EVE(2) |
|
|
Amount |
|
|
Percent |
|
|||
|
|
(Dollars in thousands) |
|
|||||||||
+400 |
|
$ |
81,970 |
|
|
$ |
3,717 |
|
|
|
4.75 |
% |
+300 |
|
|
81,085 |
|
|
|
2,832 |
|
|
|
3.62 |
% |
+200 |
|
|
80,217 |
|
|
|
1,964 |
|
|
|
2.51 |
% |
+100 |
|
|
79,317 |
|
|
|
1,064 |
|
|
|
1.36 |
% |
Level |
|
|
78,253 |
|
|
|
— |
|
|
|
— |
|
-100 |
|
|
78,054 |
|
|
|
(199 |
) |
|
|
(0.25 |
)% |
-200 |
|
|
76,900 |
|
|
|
(1,353 |
) |
|
|
(1.73 |
)% |
-300 |
|
|
72,805 |
|
|
|
(5,448 |
) |
|
|
(6.96 |
)% |
-400 |
|
|
69,353 |
|
|
|
(8,900 |
) |
|
|
(11.37 |
)% |
The table above indicates that at March 31, 2023, in the event of a 100-basis point increase in interest rates, we would have experienced a 1.35% increase in our EVE and in the event of a 100-basis point decrease in interest rates, we would have experienced a 0.25% decrease in our EVE. In the event of a 200-basis point increase in interest rates at March 31, 2023, we would have experienced a 2.50% increase in our EVE and in the event of a 200-basis point decrease in interest rates, we would have experienced a 1.72% decrease in our EVE.
Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in EVE require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the EVE table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the EVE table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on EVE and will differ from actual results.
EVE calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.
Liquidity and Capital Resources
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, FHLB advances, principal and interest payments on loans and securities, proceeds from the sale of loans, and proceeds from maturities of securities. At March 31, 2023, we had $92.0 million outstanding in advances from the FHLB. At March 31, 2023, we had $71.2 million in additional borrowing capacity at the Federal Home Loan Bank of Chicago, based on the level of qualifying real estate loans currently pledged to the FHLB. Additionally, at March 31, 2023, we had a $15.0 million federal funds line of credit with the BMO Harris Bank, none of which was drawn at March 31, 2023. The Company also had an $8.8 million line of credit at the Federal Reserve based on pledged commercial real estate loans of approximately $11.8 million at March 31, 2023. The Company had not drawn on the Federal Reserve line as of March 31, 2023. We also have the ability to participate in the Federal Reserve's new Bank Term Funding Program as needed.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and cash equivalents and available-for-sale investment securities. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash used in operating activities was $1.1 million for the three months ended March 31, 2023, as compared to
43
$418,000 for the three months ended March 31, 2022. Net cash used in investing activities was $5.8 million for the three months ended March 31, 2023, as compared to $27.6 million for the three months ended March 31, 2022. Net cash used in investment activities during the first quarter of 2023 consisted primarily of a $7.6 million net increase in loans and a $1.4 million increase in FHLB stock, partially offset by $3.3 million from maturities, calls and payments on available-for-sale securities. Net cash used in investment activities during the first quarter of 2022 consisted primarily of the purchase of $31.2 million of available-for-sale securities, partially offset by $3.7 million from maturities, calls and payments on available-for-sale securities. Net cash provided by financing activities was $7.6 million for the three months ended March 31, 2023, as compared to $11.8 million for the three months ended March 31, 2022. Net cash provided by financing activities for the first quarter of 2023 primarily resulted from borrowings of $64.5 million of FHLB advances and a $3.0 million increase in advance payments by borrowers for taxes and insurance, partially offset by $44.0 million in principal payments on FHLB advances and a $15.8 million decrease in deposits. Net cash provided by financing activities for the first quarter of 2022 primarily resulted from borrowings of $10.0 million of FHLB advances, a $6.5 million increase in deposits and a $2.9 million increase in advance payments by borrowers for taxes and insurance, partially offset by $7.0 million in principal payments on FHLB advances.
We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments based on our current strategy to increase core deposits, along with the continued use of FHLB advances as well as brokered certificates of deposit as needed, to fund loan growth.
Capital
At March 31, 2023, PyraMax Bank exceeded all of its regulatory capital requirements with a Tier 1 leverage capital level of $64.7 million, or 11.8% of adjusted total assets, which is above the well-capitalized required level of $27.5 million, or 5.0%. The Bank had total risk-based capital of $69.1 million, or 17.4% of risk-weighted assets, which is above the well-capitalized required level of $39.8 million, or 10.0%. Management is not aware of any conditions or events since the most recent notification that would change our category. For additional information, see Note 13 of the Notes to Financial Statements.
Off-Balance Sheet Arrangements and Contractual Obligations
Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our potential future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process as the loans we make. For additional information, see Note 9 of the Notes to Financial Statements.
Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include operating leases for premises and equipment, agreements with respect to borrowings and deposits, and agreements with respect to securities.
Impact of Inflation and Changing Prices
The financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.
44
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2023. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.
Except for changes in controls relating to the adoption of the CECL accounting standard, there were no changes in the Company’s internal control over financial reporting in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the fiscal quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not involved in any pending legal proceedings as a plaintiff or defendant other than routine legal proceedings occurring in the ordinary course of business, and at March 31, 2023, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.
Item 1A. Risk Factors
In addition to the other information set forth in the Form 10-Q, you should carefully consider the risk factors that appeared under Item 1A “Risk Factors” disclosed in the Company’s December 31, 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Further, the following risk factors represent material updates and additions to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The risk factors set forth below also identify important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of us.
Recent banking industry events may adversely affect our business and the market price of our common stock.
Recent developments and events in the financial services industry, including the failures of Silicon Valley Bank, Signature Bank and First Republic Bank and the voluntary liquidation of Silvergate Bank, have resulted in decreased confidence in banks among depositors, other counterparties and investors, as well as significant disruption, volatility and reduced valuations of equity and other securities of banks in the capital markets. These events have occurred against the backdrop of a rapidly rising interest rate environment which, among other things, has resulted in unrealized losses in longer duration securities and loans held by banks, more competition for bank deposits and may increase the risk of a potential recession. These events and developments could materially and adversely impact our business or financial condition, including through potential liquidity pressures, reduced net interest margins, and potential increased credit losses. These recent events and developments have, and could continue to, adversely impact the market price and volatility of our common stock. These recent events may also result in changes to laws or regulations governing banks and bank holding companies, increased regulatory scrutiny, or the imposition of restrictions through supervisory or enforcement activities, including higher capital requirements, which could have a material impact on our businesses. The cost of resolving the recent failures may prompt the FDIC to increase its premiums above the recently increased levels or to issue additional special assessments.
The premiums of the FDIC’s deposit insurance program are expected to increase, and banking regulators have signaled further review of regulatory requirements and the potential for changes to laws or regulations governing banks and bank holding companies. Changes resulting from these events could include increased regulatory oversight, higher capital requirements or changes in the way regulatory capital is calculated, and the impositions of additional restrictions through regulatory changes or supervisory or enforcement activities, each of which could have a material impact on our business.
A failure to address the federal debt ceiling in a timely manner, downgrades of the U.S. credit rating and uncertain credit and financial market conditions may affect the stability of securities issued or guaranteed by the federal government, which may affect the valuation or liquidity of our investment securities portfolio and increase future borrowing costs.
As a result of uncertain political, credit and financial market conditions, including the potential consequences of the federal government defaulting on its obligations for a period of time due to federal debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government pose credit default and liquidity risks. Given that future
45
deterioration in the U.S. credit and financial markets is a possibility, no assurance can be made that losses or significant deterioration in the fair value of our U.S. government issued or guaranteed investments will not occur. At March 31, 2023, the fair value of U.S. Treasury notes and government-sponsored mortgage-backed securities held in our securities portfolio totaled $27.1 million and $62.9 million, respectively. Downgrades to the U.S. credit rating could affect the stability of securities issued or guaranteed by the federal government and the valuation or liquidity of our portfolio of such investment securities, and could result in our counterparties requiring additional collateral for our borrowings. Further, unless and until U.S. political, credit and financial market conditions have been sufficiently resolved or stabilized, it may increase our future borrowing costs.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Common Stock Repurchases. The following table presents information regarding shares of our common stock repurchased during the three months ended March 31, 2023.
Period |
|
Total Number of Shares (or Units) Purchases (1) |
|
|
Weighted Average Price Paid per Share (or Unit) |
|
|
Total Number of Shares (or Units) Purchased as Part of a Publicly Announced Plans or Programs |
|
|
Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
|
||||
|
|
|
|
|
|
|
|
|
|
|||||||
January 1 to January 31, 2023 |
|
|
6,639 |
|
|
|
10.03 |
|
|
|
6,639 |
|
|
|
16,209 |
|
February 1 to February 28, 2023 |
|
|
6,264 |
|
|
|
9.96 |
|
|
|
6,264 |
|
|
|
9,945 |
|
March 1 to March 31, 2023 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,945 |
|
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
46
Item 6. Exhibits
Exhibit |
|
|
Number |
|
Description |
|
|
|
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
|
31.1 |
|
Certification of Chief Executive Officer Pursuant to Section 312 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2 |
|
Certification of Chief Financial Officer Pursuant to Section 312 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.1 |
|
|
101.0 |
|
The following materials for the quarter ended March 31, 2023, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements * |
104.0 |
|
The cover page of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, formatted in iXBRL (contained in Exhibit 101.0) * |
_____________
* Furnished, not filed.
47
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
1895 BANCORP OF WISCONSIN, INC. |
|
|
|
|
|
|
Date: May 12, 2023 |
|
/s/ David R. Ball |
|
|
David R. Ball |
|
|
President and Chief Executive Officer |
|
|
|
|
|
|
Date: May 12, 2023 |
|
/s/ Steven T. Klitzing |
|
|
Steven T. Klitzing |
|
|
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
48
Exhibit 31.1
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 312 of the Sarbanes-Oxley Act of 2002
I, David R. Ball, certify that:
Date: May 12, 2023 |
|
/s/ David R. Ball |
|
|
David R. Ball |
|
|
President and Chief Executive Officer |
Exhibit 31.2
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 312 of the Sarbanes-Oxley Act of 2002
I, Steven T. Klitzing, certify that:
Date: May 12, 2023 |
|
/s/ Steven T. Klitzing |
|
|
Steven T. Klitzing |
|
|
Executive Vice President and Chief Financial Officer |
Exhibit 32.1
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
David R. Ball, President and Chief Executive Officer of 1895 Bancorp of Wisconsin, Inc. (the “Company”), and Steven T. Klitzing, Executive Vice President and Chief Financial Officer of the Company, each certifies in his capacity as an executive officer of the Company that he has reviewed the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “Report”) and that, to the best of his knowledge:
Date: May 12, 2023 |
|
/s/ David R. Ball |
|
|
David R. Ball |
|
|
President and Chief Executive Officer |
Date: May 12, 2023 |
|
/s/ Steven T. Klitzing |
|
|
Steven T. Klitzing |
|
|
Executive Vice President and Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|||||
Interest and dividend income: | ||||||
Loans, including fees | $ 3,826 | $ 3,290 | ||||
Securities, taxable | 602 | 548 | ||||
Other | 284 | 48 | ||||
Total interest and dividend income | 4,712 | 3,886 | ||||
Interest expense: | ||||||
Interest-bearing deposits | 982 | 169 | ||||
Borrowed funds | 493 | 170 | ||||
Other interest-bearing funds | 2 | 2 | ||||
Total interest expense | 1,477 | 341 | ||||
Net interest income | 3,235 | 3,545 | ||||
Provision for credit losses | 75 | 105 | ||||
Net interest income after provision for credit losses | 3,160 | 3,440 | ||||
Noninterest income: | ||||||
Service charges and other fees | 224 | 236 | ||||
Loan servicing, net | 174 | 177 | ||||
Net gain on sale of loans | 38 | 78 | ||||
Increase in cash surrender value of insurance | 108 | 104 | ||||
Unrealized gain (loss) on marketable equity securities | 220 | (210) | ||||
Other | 6 | 6 | ||||
Total noninterest income | 770 | 391 | ||||
Noninterest expense: | ||||||
Salaries and employee benefits | 2,913 | 2,285 | ||||
Advertising and promotions | 49 | 14 | ||||
Data processing | 225 | 201 | ||||
Occupancy and equipment | 338 | 354 | ||||
FDIC assessment | 37 | 27 | ||||
Other | 880 | 1,065 | ||||
Total noninterest expense | 4,442 | 3,946 | ||||
Loss before income taxes | (512) | (115) | ||||
Income tax (benefit) | (151) | (60) | ||||
Net loss | $ (361) | $ (55) | ||||
Loss per share: | ||||||
Basic | $ (0.07) | $ (0.01) | ||||
Diluted | [1],[2] | $ (0.07) | $ (0.01) | |||
Average common shares outstanding: | ||||||
Basic | 5,535,489 | 5,873,964 | ||||
Diluted | [1] | 5,535,489 | 5,873,964 | |||
|
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (361) | $ (55) |
Other comprehensive income (loss): | ||
Unrealized holding gains (losses) arising during the period on available-for-sale securities | 2,230 | (7,144) |
Other comprehensive income (loss) before tax effect | 2,230 | (7,144) |
Tax effect of other comprehensive income (loss) items | (602) | 1,929 |
Other comprehensive income (loss), net of tax | 1,628 | (5,215) |
Comprehensive income (loss) | $ 1,267 | $ (5,270) |
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands |
Total |
Common stock |
Additional paid-in capital |
Treasury Stock |
Unallocated common stock of ESOP |
Retained earnings |
Accumulated other comprehensive income (loss) |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2021 | $ 90,893 | $ 64 | $ 52,805 | $ (301) | $ (3,432) | $ 41,615 | $ 142 |
Net loss | (55) | (55) | |||||
Other comprehensive income (loss) | (5,215) | (5,215) | |||||
Reimbursement of stock offering costs | 1 | 1 | |||||
Purchase of shares by ESOP | (517) | (517) | |||||
ESOP shares committed to be released | 51 | 2 | 49 | ||||
Retirement of common stock | (15) | (15) | |||||
Stock compensation expense | 59 | 59 | |||||
Balance at Mar. 31, 2022 | 85,202 | 64 | 52,852 | (301) | (3,900) | 41,560 | (5,073) |
Balance at Dec. 31, 2022 | 75,362 | 62 | 49,931 | (301) | (4,307) | 41,468 | (11,491) |
Balance (ASU 2016-13) at Dec. 31, 2022 | (783) | (783) | |||||
Net loss | (361) | (361) | |||||
Other comprehensive income (loss) | $ 1,628 | 1,628 | |||||
Accounting Standards Update [Extensible List] | ASU 2016-13 | ||||||
ESOP shares committed to be released | $ 47 | 47 | |||||
Repurchase and retirement of shares-stock repurchase program | (129) | (129) | |||||
Retirement of common stock | (13) | (13) | |||||
Stock compensation expense | 188 | 188 | |||||
Balance at Mar. 31, 2023 | $ 75,939 | $ 62 | $ 49,977 | $ (301) | $ (4,260) | $ 40,324 | $ (9,863) |
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
ESOP shares committed to be released | 4,864 | 4,933 |
Repurchase and retirement of shares-stock repurchase program | 12,903 | |
Purchase of shares by ESOP | 45,212 |
Nature of Operations and Basis of Presentation |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Basis of Presentation | NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
1895 Bancorp of Wisconsin, Inc., a Maryland corporation (the “Company” or “New 1895 Bancorp”) was formed to serve as the stock holding company for PyraMax Bank, FSB (the “Bank”) as part of the mutual-to-stock conversion of 1895 Bancorp of Wisconsin, MHC. Upon completion of the conversion, which occurred on July 14, 2021, 1895 Bancorp of Wisconsin, MHC and 1895 Bancorp of Wisconsin, a federal corporation (“Old 1895 Bancorp”), ceased to exist and New 1895 Bancorp became the successor corporation to Old 1895 Bancorp. The conversion was accomplished by the merger of 1895 Bancorp of Wisconsin, MHC with and into Old 1895 Bancorp followed by the merger of Old 1895 Bancorp with and into New 1895 Bancorp. The shares of New 1895 Bancorp common stock that were offered for sale in connection with the conversion represented the majority ownership interest in Old 1895 Bancorp owned by 1895 Bancorp of Wisconsin, MHC. On July 14, 2021, public stockholders of Old 1895 Bancorp received 1.3163 shares of common stock of New 1895 Bancorp in exchange for each of their shares of Old 1895 Bancorp common stock. The shares of Old 1895 Bancorp common stock owned by 1895 Bancorp of Wisconsin, MHC were canceled at that time. The conversion and offering were completed on July 14, 2021, and New 1895 Bancorp was organized as a fully public stock holding company, with 100% of the common stock being held by the public. The consolidated financial statements and other financial information contained in these consolidated financial statements are for New 1895 Bancorp.
The cost of the reorganization and the issuing of the common stock totaling $2.0 million were deferred and deducted from the sales proceeds of the offering.
PyraMax Bank is a stock savings bank headquartered in Greenfield, Wisconsin. PyraMax Bank operates as a full-service financial institution, providing a full range of financial services, including the granting of commercial, residential, and consumer loans and acceptance of deposits from individual customers and small businesses in the metropolitan Milwaukee, Wisconsin area. PyraMax Bank is subject to competition from other financial and nonfinancial institutions providing financial products. In addition, PyraMax Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.
The accompanying unaudited interim consolidated financial statements and the notes thereto have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, results of operations, changes in stockholders' equity and cash flows as of and for the periods presented. Certain amounts from prior periods have been reclassified to conform with current period presentation.
The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the audited annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on March 30, 2023.
In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet, and reported amounts of revenues and expenses during the reporting period. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the fair value of investment securities, financial instruments and mortgage servicing rights, and the valuation of deferred income tax assets. Actual results could differ from those estimates.
On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies and define an “emerging growth company.” As an emerging growth company, the Company may delay adoption of new or revised financial accounting standards until such date that the standards are required to be adopted by non-issuer companies. If such standards would not apply to non-issuer companies, no deferral would be applicable. The Company intends to take advantage of the benefits of the extended transition periods allowed under the JOBS Act.
Accordingly, the Company’s financial statements may not be comparable to those of public companies that adopt new or revised financial accounting standards as of an earlier date. The effective dates of the recent accounting standards in Note 2 reflect those that relate to non-issuer companies.
NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION (continued)
Subsequent Events
Management has reviewed the Company's operations for potential disclosure or financial statement impacts related to events occurring after March 31, 2023, but prior to the release of the unaudited consolidated financial statements contained in this quarterly report on Form 10-Q were issued.
On May 4, 2023, the Company announced that it had adopted its second stock repurchase program to be implemented upon completion of its existing stock repurchase program. Under the new repurchase program, which is subject to regulatory non-objection, the Company may repurchase up to 10% of its current outstanding shares. Following receipt of regulatory non-objection, repurchases are expected to commence upon completion of the existing stock repurchase program, which has 9,945 shares remaining to be repurchased. For additional information, refer to Form 8-K filed by the Company on May 4, 2023.
There were no additional subsequent event disclosures or financial statement impacts related to events occurring after March 31, 2023 that warranted adjustment to or disclosure in these unaudited consolidated financial statements. |
Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
On January 1, 2023, we adopted ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), using the modified retrospective approach, as further described in the section below titled Recently Adopted Accounting Standards. Adoption of the standard resulted in changes to our available-for-sale securities and allowance for credit losses policies, as presented below. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K regarding additional significant accounting policies, including accounting policies in effect prior to the adoption of ASU 2016-13.
Credit Losses for Available-for-Sale Debt Securities For available-for-sale ("AFS") debt securities where fair value is less than amortized cost, the security is considered impaired when amounts are deemed uncollectible or when the Company intends, or more likely than not will be required, to sell the AFS debt security before recovery of the amortized cost basis.
On a quarterly basis the Company evaluates the AFS debt securities for impairment. Securities that are in an unrealized loss position are reviewed to determine if a securities credit loss exists based on certain quantitative and qualitative factors. The primary factors considered in evaluating whether an impairment exists include: (a) the extent to which the fair value is less than the amortized cost basis, (b) the financial condition, credit rating and future prospects of the issuer, (c) whether the debtor is current on contractually obligated interest and principal payments, and (d) whether the Company intends to sell the security and whether it is more likely than not that the Company will not be required to sell the security.
If a determination is made that an AFS debt security is impaired, the Company will estimate the amount of the unrealized loss that is attributable to credit and all other non-credit related factors. The credit related component will be recognized as a provision for credit losses on securities through an allowance for credit losses. The provision for credit losses on securities will be limited to the difference between the security’s amortized cost basis and fair value. Any future changes may be reversed, limited to the amount previously expensed, in the period they occur. The non-credit related component will be recorded as an adjustment to accumulated other comprehensive income, net of tax.
Allowance for Credit Losses Under the current expected credit loss (“CECL”) model, the allowance for credit losses ("ACL") on financial assets is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from the financial assets’ amortized cost basis to present the net amount expected to be collected on the financial assets. The CECL model also applies to certain off-balance sheet credit exposures.
The Company estimates the allowance for credit losses on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to write-off accrued interest receivable by reversing interest income at the time of this determination. Therefore, the Company has made a policy election to exclude accrued interest from the amortized cost basis and therefore excludes it from the measurement of the allowance for credit losses. NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Expected credit losses are reflected in the allowance for credit losses through a charge to provision for credit losses. The Company’s estimate of the allowance for credit losses reflects credit losses currently expected over the remaining contractual life of the assets. When the Company deems all or a portion of a financial asset to be uncollectible, the appropriate amount is written off and the allowance for credit losses is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible. When available information confirms that specific financial assets, or portions thereof, are uncollectible, these amounts are charged off against the allowance for credit losses. Subsequent recoveries, if any, are credited to the allowance for credit losses when received.
The Company measures the allowance for credit losses of financial assets on a collective portfolio segment basis when the financial assets share similar risk characteristics. The Company has identified the following portfolio segments of financial assets with similar risk characteristics for measuring expected credit losses: commercial real estate, residential real estate – first mortgage, residential real estate – construction, consumer – home equity and lines of credit and other consumer loans. The Company further segments the commercial loan portfolios by risk rating and the residential and consumer loan portfolios by delinquency.
The Company utilizes the weighted average maturity (WARM) methodology to measure the ACL. This methodology incorporates both quantitative and qualitative information to assess lifetime expected credit losses at the portfolio segment level. The quantitative component includes the calculation of loss rates that are based on historical lookback periods. The Company calculates a loss rate based on historical loan level loss experience for portfolio segments with similar risk characteristics. The historical loss rate is adjusted for select macroeconomic variables that consider both historical trends as well as forecasted trends. The Company measures expected credit losses of these financial assets by applying loss rates to the amortized cost basis of each asset taking into consideration amortization, prepayment and default assumptions.
The Company considers qualitative adjustments to expected credit loss estimates for information not already captured in the loss estimation process. Qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Adjustments will not be made for information that has already been considered and included in the quantitative component. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data, changes in loan composition, performance trends, regulatory changes, uncertainty of macroeconomic forecasts, and other asset specific risk characteristics.
Collateral Dependent Financial Assets For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable and where the borrower is experiencing financial difficulty, the allowance for credit losses is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. Fair value is generally calculated based on the value of the underlying collateral less estimated costs to sell.
Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures Financial assets include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to loan credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.
The Company records an allowance for credit losses on off-balance sheet credit exposures through a charge to provision for loan losses for off-balance sheet credit exposures. The allowance for credit losses on off-balance sheet credit exposures is estimated by portfolio segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, taking into consideration management’s assumption of the likelihood that funding will occur, and is included in other liabilities on the Company’s Consolidated Balance Sheets. NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Recently Adopted Accounting Standards
ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for troubled debt restructurings by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. In addition, ASU 2022-02 requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses. The Company adopted ASU 2016-13 and ASU 2022-02 as of January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. The adoption of ASU 2016-13 resulted in an initial increase of $412,000 to the allowance for credit losses for loans and the establishment of a $665,000 allowance for credit losses for unfunded loan commitments. The allowance for credit losses for unfunded loan commitments is included in other liabilities on the Company's Consolidated Balance Sheets. The after-tax cumulative-effect adjustment of $783,000 was recorded in retained earnings as of January 1, 2023. |
Available for Sale Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available for Sale Securities | NOTE 3 – AVAILABLE-FOR-SALE SECURITIES
The amortized costs and fair values of securities available-for-sale were as follows:
The fair value of available-for-sale securities that were pledged as collateral at March 31, 2023 and December 31, 2022, were $9.4 million and $3.6 million, respectively.
The amortized costs and fair values of available-for-sale securities, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. In addition, expected maturities will differ from contractual maturities for mortgage-backed securities and asset-backed securities, as the expected repayment terms may be less than the underlying mortgage pool contractual maturities. Therefore, these securities are not included in the maturity categories in the maturity summary below.
NOTE 3 – AVAILABLE-FOR-SALE SECURITIES (continued)
Gross unrealized losses on securities available-for-sale and the fair values of the related securities, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position were as follows:
At March 31, 2023 and December 31, 2022, respectively, the Company had 89 and 92 debt securities with unrealized losses representing aggregate depreciation of approximately 10.7% and 12.1%, respectively, from their respective amortized cost basis. These unrealized losses relate principally to changes in interest rates and were not caused by changes in the financial condition of the issuers, the quality of any underlying assets or applicable credit enhancements. In analyzing whether unrealized losses on debt securities are other-than-temporary, management considers whether the securities are issued by a government body or agency, whether a rating agency has downgraded the securities, industry analysts’ reports, the financial condition and performance of the issuer and the quality of any underlying assets or credit enhancements. As management has the intent and ability to hold these debt securities to projected recovery, none of these declines are deemed to be other-than-temporary. |
Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | NOTE 4 – LOANS
Major classifications of loans, reported at amortized cost, are summarized as follows:
(1) Totals do not include accrued interest receivable, which were $894,000 and $874,000 at March 31, 2023 and December 31, 2022, respectively, which are recorded separately on the Company’s Consolidated Balance Sheets.
Deposit accounts in an overdrawn position and reclassified as loans totaled $30,000 and $98,000 at March 31, 2023 and December 31, 2022, respectively.
The Company provides several types of loans to its customers, including commercial, residential, construction and consumer loans. Significant loan concentrations are considered to exist for a financial institution when there are amounts loaned to one borrower or to multiple borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. While the Company’s credit risks are geographically concentrated within the metropolitan Milwaukee, Wisconsin area, there are no concentrations with individual borrowers or groups of related borrowers.
During the normal course of business, the Company may transfer a portion of a loan as a participation loan to another financial institution in order to manage portfolio risk. In order to be eligible for sales treatment, all cash flows from the loan must be divided proportionately, and rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties, and no loan holder can have the right to pledge or exchange the entire loan. As of March 31, 2023 and December 31, 2022, respectively, the Company had transferred $30.1 million and $30.3 million in participation loans which were eligible for sales treatment to other financial institutions, all of which continue to be serviced by the Company. NOTE 4 – LOANS (continued)
A summary of activity in the allowance for credit losses for loans and the allowance for credit losses for unfunded loan commitments for the three months ended March 31, 2023 and in the allowance for loan losses for the three months ended March 31, 2022, is presented below:
(1) On January 1, 2023, the Company adopted ASU 2016-13 ("CECL"). See Note 2 for additional information regarding the adoption of ASU 2016-13. (2) The allowance for credit losses for unfunded loan commitments is included in other liabilities on the Company's Consolidated Balance Sheets. NOTE 4 – LOANS (continued)
The provision for credit losses is determined by the Company as the amount that is to be added to the ACL accounts to bring the ACL to a level that, in management's judgment, is necessary to absorb expected credit losses over the lives of the respective financial instruments. The following table presents the components of the provision for credit losses:
The Company regularly evaluates various attributes of loans to determine the appropriateness of the allowance for credit losses. The credit quality indicators monitored differ depending on the class of loan. The credit quality indicators for commercial real estate and other commercial loans are based on the following ratings:
• Pass ratings are assigned to loans with adequate collateral and debt service ability such that collectability of the contractual loan payments is highly probable.
• Watch and Special Mention ratings are assigned to loans where management has some concern that the collateral or debt service ability may not be adequate, though the collectability of the contractual loan payments is still probable.
• Substandard ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is no longer probable.
• Doubtful ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is unlikely.
Residential real estate and consumer loans are generally evaluated based on whether or not the loan is performing or in nonaccrual status. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K, filed with the SEC on March 30, 2023, for additional information on our nonaccrual policy. NOTE 4 – LOANS (continued)
The following table presents the amortized cost basis of our loans by credit quality indicator and origination year, at March 31, 2023:
NOTE 4 – LOANS (continued)
A summary of the credit quality indicators, at amortized cost, prior to the adoption of CECL is presented below:
There were no commercial loans rated Doubtful or Loss as of March 31, 2023 or December 31, 2022.
The following table presents gross charge-offs of our loans for each portfolio class, by origination year, that occurred during the three months ended March 31, 2023. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K for additional information on our charge-off policy.
NOTE 4 – LOANS (continued)
An analysis of past due loans, net of amortized costs, is presented below:
There were no loans 90 days or more past due and accruing interest as of March 31, 2023 or December 31, 2022, respectively.
NOTE 4 – LOANS (continued)
The following table presents the amortized cost of our loans on nonaccrual status as of March 31, 2023 and December 31, 2022. All loans that were 90 days or more past due were on nonaccrual status as of March 31, 2023 and December 31, 2022.
The Company had $732,000 of loans that were in nonaccrual status as of March 31, 2023, with no related allowance for credit losses. During the three months ended March 31, 2023, there was no interest earned on nonaccrual loans and no accrued interest was reversed on nonaccrual loans.
At March 31, 2023, the Company held loans that were individually evaluated for impairment due to financial difficulties experienced by the borrower and for which the repayment, on the basis of our assessment, is expected to be provided substantially through the sale or operation of the collateral. The ACL for these collateral dependent loans is primarily based on the fair value of the underlying collateral at the reporting date. The following describes the type of collateral that secure collateral dependent loans: • Commercial real estate loans are primarily secured by office and industrial buildings and warehouses. • Commercial and industrial loans are primarily secured by accounts receivable, inventory and equipment. • One-to-four-family mortgages are primarily secured by first liens on residential real estate. • Home equity loans are primarily secured by first and junior loans on residential real estate.
The table below summarizes collateral dependent loans and the related ACL at March 31, 2023 for which the borrower is experiencing financial difficulty:
NOTE 4 – LOANS (continued)
A summary of the allowance for loan losses for loans evaluated individually and collectively for impairment, at amortized cost, prior to the adoption of CECL is presented below:
NOTE 4 – LOANS (continued)
Information regarding impaired loans, at amortized cost, prior to the adoption of CECL is presented below:
The adoption of ASU 2022-02 eliminated troubled debt restructurings (TDR's) recognition and measurement guidance, as well as all TDR related disclosures. Refer to Note 2 for additional information. TDRs were loan modifications where concessions were granted to borrowers experiencing financial difficulties. The Company did not modify any loans for borrowers that are experiencing financial difficulty and did not have any previous modifications that were made during the past 12 months that experienced a payment default during the three months ended March 31, 2023. At December 31, 2022, the Company had $538,000 of TDR's, of which $183,000 was on nonaccrual. There were no loan modifications that were classified as a TDR during the year ended December 31, 2022. Further, there were no TDR's within the past twelve months for which there was a default during the three months ended March 31, 2022. |
Mortgage Servicing Rights |
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Mortgage Servicing Rights | NOTE 5 – MORTGAGE SERVICING RIGHTS
Loans serviced for others are not included in the Company’s consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others was $298.9 million and $304.3 million as of March 31, 2023 and December 31, 2022, respectively.
A summary of activity in the Company’s mortgage servicing rights is presented below:
The estimated fair value of mortgage servicing rights was determined using a valuation model that calculates the present value of expected future servicing and ancillary income, net of expected servicing costs. The model incorporates various assumptions such as discount rates, prepayment speeds and ancillary income and servicing costs. As of March 31, 2023, the model used discount rates ranging from 10.1% to 13%, and prepayment speeds ranging from 7.0% to 38.8%, both of which were based on market data from independent organizations. As of March 31, 2022 the model used discount rates ranging from 10% to 13.5%, and prepayment speeds ranging from 9.6% to 35.8%.
The following table summarizes the estimated future amortization expense for mortgage servicing rights for the annual periods indicated. The projections of amortization expense are based on existing asset balances as of March 31, 2023. The actual amortization expense the Company recognizes in any given period may vary significantly depending on changes in interest rates, market conditions and regulatory requirements.
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Deposits | NOTE 6 – DEPOSITS
The composition of deposits is summarized below:
Certificates of deposit that met or exceeded the FDIC insurance limit of $250,000 totaled $13.8 million and $8.9 million as of March 31, 2023 and December 31, 2022, respectively. The Company did not hold any brokered deposits as of March 31, 2023 or December 31, 2022.
As of March 31, 2023, the scheduled maturities of certificates of deposit for the annual periods are presented below:
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Federal Home Loan Bank Advances |
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Federal Home Loan Bank Advances | NOTE 7 – FEDERAL HOME LOAN BANK ADVANCES
A summary of Federal Home Loan Bank advances follows:
The scheduled maturities and required principal payments of Federal Home Loan Bank advances are presented below:
Actual maturities may differ from scheduled maturities due to call options on various FHLB advances. The Company maintains a master contract agreement with the FHLB, which provides for borrowing up to the lesser of 22.22 times the value of the FHLB stock owned, a determined percentage of the book value of the Company’s qualifying real estate loans, or a determined percentage of the Company’s assets. The FHLB provides both fixed and floating rate advances. Floating rates are tied to short-term market rates of interest such as the Secured Overnight Financing Rate ("SOFR"), federal funds or Treasury bill rates. FHLB advances are subject to a prepayment penalty if they are repaid prior to maturity. The Company has pledged qualifying real estate and commercial and industrial loans with collateral values of approximately $164.1 million at March 31, 2023 and $172.4 million at December 31, 2022. FHLB advances were also secured by approximately $4.8 million and $3.4 million of FHLB stock held by the Company as of March 31, 2023 and December 31, 2022, respectively. The Company’s available and unused portion of this borrowing agreement totaled $71.2 million and $100.0 million as of March 31, 2023 and December 31, 2022, respectively. Additional borrowing would require additional stock purchase. Additionally, at March 31, 2023 we had a $15.0 million federal funds rate line of credit with the BMO Harris Bank, none of which was drawn at March 31, 2023. The Company also had an $8.8 million line of credit at the Federal Reserve based on pledged commercial real estate loans of approximately $11.8 million at March 31, 2023. The Company had not drawn on the Federal Reserve line as of March 31, 2023. We also have the ability to participate in the Federal Reserve's new Bank Term Funding Program as needed. |
Income Taxes |
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Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8 – INCOME TAXES
Income tax (benefit) was ($151,000) and ($60,000) for the three months ended March 31, 2023 and 2022, respectively.
Deferred tax assets are deferred tax consequences attributable to deductible temporary differences and carryforwards. After the deferred tax asset has been measured using the applicable enacted tax rate and provisions of the enacted tax law, it is then necessary to assess the need for a valuation allowance. A valuation allowance is needed when, based on the weight of the available evidence, it is more likely than not that some portion of the deferred asset will not be realized. As required by generally accepted accounting principles, available evidence is weighted heavily on cumulative losses, with less weight placed on future projected profitability. The realization of deferred tax assets is dependent on the existence of taxable income of the appropriate character (e.g., ordinary or capital) within the carry-back and carry-forward periods available under tax law, which would consider future reversals of existing taxable temporary differences and available tax planning strategies. As of March 31, 2023, and December 31, 2022, the deferred tax valuation allowance was $934,000, reducing our net deferred tax asset to $8.1 million and $8.3 million at each respective date.
The board and management continue to assess the deferred tax assets in light of recent changes in market conditions, forecasted future projected income and available tax planning strategies. As such, there may be additional deferred tax asset impairment in subsequent periods. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | NOTE 9 – COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company may be involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the Company’s financial statements. No material legal proceedings existed at March 31, 2023.
In the normal course of business, the Company is party to financial instruments with off-balance-sheet risk to meet the financing needs of its customers. These instruments include commitments to extend credit and commitments to sell loans. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the balance sheets.
The Company’s exposure to credit losses is represented by the contractual, or notional, amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments. As some of the commitments are expected to expire without being drawn upon, and some of the commitments may not be drawn upon to the total extent of the commitment, the notional amount of these commitments does not necessarily represent future cash requirements of the Company.
ASU 2016-13 requires that we establish an allowance for credit losses for off-balance sheet credit exposures, including unfunded loan commitments, that meet certain requirements. The allowance for credit losses for off-balance sheet credit exposures is estimated by portfolio segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, also taking into consideration management’s assumption of the likelihood that funding will occur. The allowance for credit losses for off-balance sheet credit exposures is included in other liabilities on the Company’s Consolidated Balance Sheets. Additional provisions for expected losses occur through a charge to the provision for credit losses. The adoption of the ASU 2016-13 resulted in the establishment of a $665,000 allowance for credit losses for unfunded loan commitments, based on $41.1 million in outstanding loan commitments that are expected to fund. At March 31, 2023, the allowance for credit losses for unfunded commitments was $665,000 and there were $36.9 million in outstanding commitments to extend credit were expected to fund.
The contractual amounts of off-balance-sheet credit-related financial instruments are summarized below:
NOTE 9 – COMMITMENTS AND CONTINGENCIES (continued)
Commitments to extend credit are agreements to lend to a customer at fixed or variable rates, 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 amount of collateral obtained upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable; inventory; property, plant and equipment; real estate; and stocks and bonds. Commitments to sell loans represent commitments obtained by the Company from a secondary market agency to purchase mortgages from the Company at specified interest rates and within specified periods of time.
Standby letters of credit are conditional lending commitments issued by the Company to guarantee the performance of a customer to a third party. Generally, all standby letters of credit have expiration dates within one year. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company generally holds collateral supporting these commitments. Standby letters of credit are not reflected in the financial statements, since recording the fair value of these guarantees would not have a significant impact on the financial statements.
The Company participates in the Federal Home Loan Bank of Chicago Mortgage Partnership Finance Program (the “Program”). In addition to entering into forward commitments to sell mortgage loans to a secondary market agency, the Company enters into firm commitments to deliver loans to the Federal Home Loan Bank of Chicago through the Program. Under the Program, loans are funded by the Federal Home Loan Bank of Chicago, and the Company receives an agency fee reported as a component of gain on sale of loans. The Company had $431,000 of commitments to deliver loans through the Program as of March 31, 2023. Once delivered to the Program, the Company provides a contractually agreed-upon credit enhancement and performs servicing of the loans. Under the credit enhancement, the Company is liable for losses on loans delivered through the Program after application of any mortgage insurance and a contractually agreed-upon credit enhancement provided by the Program, subject to an agreed-upon maximum. The Company receives a fee for this credit enhancement. The Company records a liability for expected losses in excess of anticipated credit enhancement fees. As of March 31, 2023, and December 31, 2022, the Company had no liability outstanding related to the Program.
Unfunded commitments under overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit may or may not require collateral and may or may not contain a specific maturity date. |
Employee Stock Ownership Plan |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Stock Ownership Plan | NOTE 10 – EMPLOYEE STOCK OWNERSHIP PLAN
The Company established a tax qualified Employee Stock Ownership Plan (“ESOP”) for the benefit of its employees, in conjunction with the reorganization. Eligible employees become 20% vested in their accounts after 1 year of service, 40% vested after 2 years of service, 60% vested after 3 years of service, 80% vested after 4 years of service, and 100% vested after 5 or more years of service, or earlier, upon death, disability or attainment of normal retirement age.
On January 8, 2019, the ESOP purchased 175,528 shares (231,047 shares adjusted for the conversion) of the Company’s common stock, which was funded by a loan from Old 1895 Bancorp. Unreleased ESOP shares collateralize the loan payable, and the cost of the shares is recorded as contra-equity account in the stockholders’ equity of the Company. Shares are to be released as debt payments are made by the ESOP to the loan. The ESOP’s sources of repayment of the loan can include dividends, if any, on the unallocated stock held by the ESOP, and discretionary contributions from the Company to the ESOP and earnings thereon.
As part of the mutual-to-stock conversion and stock offering completed on July 14, 2021, the ESOP refinanced the aforementioned loan with New 1895 Bancorp, enabling the ESOP to purchase an aggregate of 283,360 additional shares of common stock. The ESOP completed the purchase of all the additional 283,360 shares at an average price of $10.90 in the second quarter of 2022.
Compensation expense for the ESOP is recorded at an amount equal to the shares allocated by the ESOP multiplied by the average fair market value of the shares during the period. The Company recognizes compensation expense ratably over the year based upon the Company’s estimate of the number of shares expected to be allocated by the ESOP. Unearned compensation applicable to the ESOP is reflected as a reduction of stockholders’ equity in the consolidated balance sheet. The difference between the average fair market value and the cost of the shares allocated by the ESOP is recorded as an adjustment to stockholders’ equity. The Company recognized $47,000 and $51,000 in compensation expense for the three months ended March 31, 2023 and March 31, 2022, respectively.
The following table provides the allocated and unallocated shares of common stock associated with the ESOP.
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | NOTE 11 – RELATED PARTY TRANSACTIONS
A summary of loans to directors, executive officers, and their affiliates follows:
Deposits from directors, executive officers, and their affiliates totaled $670,000 and $583,000 at March 31, 2023 and December 31, 2022, respectively.
The Company utilizes the services of law firms in which certain of the Company’s directors are partners. Fees paid to the firms for these services were immaterial for the three months ended March 31, 2023 and 2022, respectively. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | NOTE 12 – FAIR VALUE MEASUREMENTS ASC Topic 820, Fair Value Measurements and Disclosures defines fair values, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This accounting standard applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements. The standard also emphasizes that fair value (i.e., the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date), among other things, is based on exit price versus entry price, should include assumptions about risk such as nonperformance risk in liability fair values, and is a market-based measurement, not an entity-specific measurement. When considering the assumptions that market participants would use in pricing an asset or liability, this accounting standard establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
The fair value hierarchy prioritizes inputs used to measure fair value into three broad levels.
Level 1 inputs – In general, fair values determined by Level 1 inputs use quoted market prices in active markets for identical assets or liabilities that we have the ability to access.
Level 2 inputs – Fair values determined by Level 2 inputs use inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets where there are few transactions and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 inputs – Level 3 inputs are unobservable inputs for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
Some assets and liabilities, such as securities available-for-sale, are measured at fair value on a recurring basis under GAAP. Other assets and liabilities, such as collateral dependent loans, may be measured at fair value on a nonrecurring basis.
NOTE 12 – FAIR VALUE MEASUREMENTS (continued)
Following is a description of the Company’s valuation methodology and significant inputs used for each asset and liability measured at fair value on a recurring or nonrecurring basis.
Securities – Marketable equity securities and securities available-for-sale may be classified as Level 1 or Level 2 measurements within the fair value hierarchy. Level 1 securities include equity securities traded on a national exchange. The fair value measurements of Level 1 securities are based on the quoted market price of those securities. Level 2 securities include U.S. Treasury notes, U.S. government and agency securities, obligations of states and political subdivisions, corporate debt securities and mortgage-related securities. The fair value measurements of Level 2 securities are obtained from independent pricing services and are based on recent sales of similar securities and other observable market data.
Collateral dependent loans – The Company does not record loans at fair value on a recurring basis. However, individually evaluated loans are reported at the fair value of the underlying collateral, less estimated costs to sell, if repayment is expected solely from the collateral. Independent appraisals are obtained to determine the fair values of underlying collateral, and generally utilize one or more valuation methodologies, which typically include comparable sales and income approaches. Management routinely evaluates the fair value measurements of independent appraisers and adjusts those valuations based on differences noted between actual selling prices of collateral and the most recently appraised value. Such adjustments are usually significant, which results in a Level 3 classification.
Rate lock commitments – Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value in other assets or liabilities, with changes in fair value recorded in the net gain or loss on sale of mortgage loans. Fair value is based on fees currently charged to enter into similar agreements for fixed-rate commitments and also considers the difference between current levels of interest rates and the committed rates. While there are Level 2 and 3 inputs used in the valuation models, the Company has determined that one or more of the inputs significant in the valuation of both of the mortgage banking derivatives fall within Level 3 of the fair value hierarchy. The change in fair value is recorded through an adjustment to the statement of operations, within mortgage banking income.
Mortgage servicing rights – The Company utilizes an independent valuation from a third party which uses a discounted cash flow model to estimate the fair value of mortgage servicing rights. The model utilizes prepayment assumptions to project cash flows related to the mortgage servicing rights based upon the current interest rate environment, which is then discounted to estimate an expected fair value of the mortgage servicing rights. The model considers characteristics specific to the underlying mortgage portfolio, such as: contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges and costs to service. Given the significance of the unobservable inputs utilized in the estimation process, mortgage servicing rights are classified as Level 3 within the fair value hierarchy. The Company records the mortgage servicing rights at the lower of amortized cost or fair value.
Assets measured at fair value on a recurring basis are summarized below, along with the level of the fair value hierarchy of the inputs utilized to determine such fair value.
NOTE 12 – FAIR VALUE MEASUREMENTS (continued)
Individually evaluated collateral dependent loans are measured at fair value on a non-recurring basis. There were no individually evaluated collateral dependent loans with a specific valuation allowance as of March 31, 2023 and December 31, 2022.
Mortgage servicing rights are measured at fair value on a non-recurring basis. There was no impairment on mortgage servicing rights as of March 31, 2023 and December 31, 2022.
The carrying values and estimated fair values of financial instruments are presented below:
NOTE 12 – FAIR VALUE MEASUREMENTS (continued)
The fair value of a financial instrument is the current amount that would be exchanged between market participants, other than in a forced liquidation. Fair value is best determined based on quoted market prices. However, in many instances, there are no quoted market prices for the Company’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. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business.
Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts, nor is it recorded as an intangible asset on the balance sheets. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. |
Equity and Regulatory Matters |
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Equity and Regulatory Matters | NOTE 13 – EQUITY AND REGULATORY MATTERS
PyraMax Bank is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance-sheet items, as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about their components, risk weightings and other factors. The Company is exempt from consolidated capital requirements as those requirements do not apply to certain small bank holding companies with consolidated assets under $3 billion.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Common Equity Tier 1, Tier 1 and Total capital to risk-weighted assets, and of Tier 1 capital to average assets. The Bank met all applicable capital adequacy requirements as of March 31, 2023 and December 31, 2022.
As of March 31, 2023, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum regulatory capital ratios as set forth in the table below. There are no conditions or events since March 31, 2023 that management believes have changed the capital category of the Bank.
The Bank’s actual and required capital amounts and ratios are presented below:
On July 29, 2022, the Company adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 5% of the current outstanding shares. On August 26, 2022, the Company received a non-objection letter from the Federal Reserve Bank of Chicago ("FRB") to repurchase 319,766 shares, which represented 5% of the shares outstanding at the time discussions were held with the FRB. The Company began purchasing shares on September 1, 2022 and as of March 31, 2023, the Company had repurchased 309,821 shares for a total purchase price of $3.3 million. |
Earnings (Loss) Per Share |
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Earnings (Loss) Per Share | NOTE 14 – EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding, adjusted for weighted average unallocated ESOP shares, during the applicable period. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. Antidilutive options are disregarded in earnings per share calculations. For the three months ended March 31, 2023, 131,093 average shares were excluded from the computation of diluted EPS because the effect would be antidilutive. For the three months ended March 31, 2022, 189,715 average shares were excluded from the computation of diluted EPS because the effect would be antidilutive.
Earnings (loss) per common share for the three months ended March 31, 2023 and 2022 are presented in the following table.
(1) For the three months ended March 31, 2023 and March 31, 2022, the effect of stock options was anti-dilutive and therefore no dilutive shares are included in the weighted average shares outstanding or diluted loss calculations. |
Stock Based Compensation |
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Stock Based Compensation | NOTE 15 – STOCK BASED COMPENSATION
Stock-Based Compensation Plans
On March 27, 2020, the Company’s stockholders approved the 1895 Bancorp of Wisconsin, Inc. 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan”). A total of 238,467 stock options and 95,387 restricted shares were approved for award. As of March 31, 2023, no shares of common stock remained available for grant as stock options, restricted stock or restricted stock units under the 2020 Equity Incentive Plan. The stock options granted to employees and non-employee directors under this plan vest in five installments with the first installment vesting on the first anniversary of the date of grant. The exercise price for all stock options granted is equal to the quoted NASDAQ market close price on the date that the awards were granted and expire ten years after the grant date, if not exercised. The restricted stock awards granted to employees and non-employee directors under this plan vest in five installments with the first installment vesting on the first anniversary of the date of grant.
On August 26, 2022, the Company’s shareholders approved the 1895 Bancorp of Wisconsin, Inc. 2022 Equity Incentive Plan (the “2022 Equity Incentive Plan”). A total of 354,200 stock options and 141,680 restricted shares were approved for award. As of March 31, 2023, 14,745 shares of common stock remain available for grant as stock options and 11,298 shares remain available for grant as restricted stock or stock units under the 2022 Equity Incentive Plan. The stock options granted to employees and non-employee directors under this plan vest in five installments with the first installment vesting on the first anniversary of the date of grant. The exercise price for all stock options granted is equal to the quoted NASDAQ market close price on the date that the awards were granted and expire ten years after the grant date, if not exercised. The restricted stock awards granted to employees and non-employee directors under this plan vest in five installments with the first installment vesting on the first anniversary of the date of grant.
Accounting for Stock-Based Compensation Plan
The fair value of stock options granted is estimated on the grant date using a Black-Scholes pricing model. The fair value of restricted shares is equal to the quoted NASDAQ market closing price on the date of grant. The fair value of stock grants is recognized as compensation expense on a straight-line basis over the vesting period of the grants. Compensation expense is included in salaries and employee benefits in the consolidated statements of operations.
Assumptions are used in estimating the fair value of stock options granted. The weighted average expected life of the stock options represent the period of time that the options are expected to be outstanding and is based on the historical results from the previous awards. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on the actual volatility of 1895 Bancorp of Wisconsin, Inc. stock for the weighted average life time period prior to issuance date. The following assumptions were used in estimating the fair value of options granted during the three months ended March 31, 2023 and March 31, 2022, respectively:
(1) There were no stock options granted during the three months ended March 31, 2022.
NOTE 15 – STOCK BASED COMPENSATION (continued)
A summary of the Company’s stock option activity for the three months ended March 31, 2023 is presented below.
The following table summarizes information about the Company’s nonvested stock option activity for the three months ended March 31, 2023:
(1) Includes 2,106 shares vested under a nonqualified stock option inducement award to the Company’s President and Chief Operating Officer.
The Company amortizes the expense related to stock options as compensation expense over the vesting period. The Company recognized $84,000 and $23,000 in stock option expense during the three months ended March 31, 2023 and 2022, respectively.
At March 31, 2023, the Company had $1.3 million in estimated unrecognized compensation costs related to outstanding stock options that is expected to be recognized over a weighted average period of 4.2 years.
The following table summarizes information about the Company’s restricted stock activity for the three months ended March 31, 2023:
(1) Includes 263 shares vested under a restricted stock inducement award to the Company’s President and Chief Executive Officer. (2) Includes 1,335 shares surrendered by employees to cover payroll tax costs related to the vested shares.
The Company amortizes the expense related to restricted stock awards as compensation expense over the vesting period. The Company recognized $104,000 and $36,000 in restricted stock expense during the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, the Company had $1.6 million of unrecognized compensation expense related to restricted stock shares that is expected to be recognized over a weighted average period of 4.1 years. |
Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Credit Losses for Available-for-Sale Debt Securities | Credit Losses for Available-for-Sale Debt Securities For available-for-sale ("AFS") debt securities where fair value is less than amortized cost, the security is considered impaired when amounts are deemed uncollectible or when the Company intends, or more likely than not will be required, to sell the AFS debt security before recovery of the amortized cost basis.
On a quarterly basis the Company evaluates the AFS debt securities for impairment. Securities that are in an unrealized loss position are reviewed to determine if a securities credit loss exists based on certain quantitative and qualitative factors. The primary factors considered in evaluating whether an impairment exists include: (a) the extent to which the fair value is less than the amortized cost basis, (b) the financial condition, credit rating and future prospects of the issuer, (c) whether the debtor is current on contractually obligated interest and principal payments, and (d) whether the Company intends to sell the security and whether it is more likely than not that the Company will not be required to sell the security.
If a determination is made that an AFS debt security is impaired, the Company will estimate the amount of the unrealized loss that is attributable to credit and all other non-credit related factors. The credit related component will be recognized as a provision for credit losses on securities through an allowance for credit losses. The provision for credit losses on securities will be limited to the difference between the security’s amortized cost basis and fair value. Any future changes may be reversed, limited to the amount previously expensed, in the period they occur. The non-credit related component will be recorded as an adjustment to accumulated other comprehensive income, net of tax. |
Allowance for Credit Losses | Allowance for Credit Losses Under the current expected credit loss (“CECL”) model, the allowance for credit losses ("ACL") on financial assets is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from the financial assets’ amortized cost basis to present the net amount expected to be collected on the financial assets. The CECL model also applies to certain off-balance sheet credit exposures.
The Company estimates the allowance for credit losses on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to write-off accrued interest receivable by reversing interest income at the time of this determination. Therefore, the Company has made a policy election to exclude accrued interest from the amortized cost basis and therefore excludes it from the measurement of the allowance for credit losses. NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Expected credit losses are reflected in the allowance for credit losses through a charge to provision for credit losses. The Company’s estimate of the allowance for credit losses reflects credit losses currently expected over the remaining contractual life of the assets. When the Company deems all or a portion of a financial asset to be uncollectible, the appropriate amount is written off and the allowance for credit losses is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible. When available information confirms that specific financial assets, or portions thereof, are uncollectible, these amounts are charged off against the allowance for credit losses. Subsequent recoveries, if any, are credited to the allowance for credit losses when received.
The Company measures the allowance for credit losses of financial assets on a collective portfolio segment basis when the financial assets share similar risk characteristics. The Company has identified the following portfolio segments of financial assets with similar risk characteristics for measuring expected credit losses: commercial real estate, residential real estate – first mortgage, residential real estate – construction, consumer – home equity and lines of credit and other consumer loans. The Company further segments the commercial loan portfolios by risk rating and the residential and consumer loan portfolios by delinquency.
The Company utilizes the weighted average maturity (WARM) methodology to measure the ACL. This methodology incorporates both quantitative and qualitative information to assess lifetime expected credit losses at the portfolio segment level. The quantitative component includes the calculation of loss rates that are based on historical lookback periods. The Company calculates a loss rate based on historical loan level loss experience for portfolio segments with similar risk characteristics. The historical loss rate is adjusted for select macroeconomic variables that consider both historical trends as well as forecasted trends. The Company measures expected credit losses of these financial assets by applying loss rates to the amortized cost basis of each asset taking into consideration amortization, prepayment and default assumptions.
The Company considers qualitative adjustments to expected credit loss estimates for information not already captured in the loss estimation process. Qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Adjustments will not be made for information that has already been considered and included in the quantitative component. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data, changes in loan composition, performance trends, regulatory changes, uncertainty of macroeconomic forecasts, and other asset specific risk characteristics. |
Collateral Dependent Financial Assets | Collateral Dependent Financial Assets For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable and where the borrower is experiencing financial difficulty, the allowance for credit losses is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. Fair value is generally calculated based on the value of the underlying collateral less estimated costs to sell. |
Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures | Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures Financial assets include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to loan credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards
ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for troubled debt restructurings by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. In addition, ASU 2022-02 requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses. The Company adopted ASU 2016-13 and ASU 2022-02 as of January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. The adoption of ASU 2016-13 resulted in an initial increase of $412,000 to the allowance for credit losses for loans and the establishment of a $665,000 allowance for credit losses for unfunded loan commitments. The allowance for credit losses for unfunded loan commitments is included in other liabilities on the Company's Consolidated Balance Sheets. The after-tax cumulative-effect adjustment of $783,000 was recorded in retained earnings as of January 1, 2023. |
Available for Sale Securities (Tables) |
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Summary of Amortized Costs and Fair Value of Securities Available for Sale | The amortized costs and fair values of securities available-for-sale were as follows:
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Summary of Amortized Costs and Fair Values of Securities Available-for-sale, by Contractual Maturity | The amortized costs and fair values of available-for-sale securities, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. In addition, expected maturities will differ from contractual maturities for mortgage-backed securities and asset-backed securities, as the expected repayment terms may be less than the underlying mortgage pool contractual maturities. Therefore, these securities are not included in the maturity categories in the maturity summary below.
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Summary of Gross Unrealized Losses on Securities Available-for-sale and Fair Values | Gross unrealized losses on securities available-for-sale and the fair values of the related securities, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position were as follows:
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Loans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Major Classifications of Loans | Major classifications of loans, reported at amortized cost, are summarized as follows:
(1) Totals do not include accrued interest receivable, which were $894,000 and $874,000 at March 31, 2023 and December 31, 2022, respectively, which are recorded separately on the Company’s Consolidated Balance Sheets. |
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Summary of Activity in Allowance for Loan and Lease Losses and Allowance for Credit Losses for Unfunded Loan Commitments | A summary of activity in the allowance for credit losses for loans and the allowance for credit losses for unfunded loan commitments for the three months ended March 31, 2023 and in the allowance for loan losses for the three months ended March 31, 2022, is presented below:
(1) On January 1, 2023, the Company adopted ASU 2016-13 ("CECL"). See Note 2 for additional information regarding the adoption of ASU 2016-13. (2) The allowance for credit losses for unfunded loan commitments is included in other liabilities on the Company's Consolidated Balance Sheets. The following table presents the components of the provision for credit losses:
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Summary of Amortized Cost Basis of Loans By Credit Quality Indicator and Origination Year | The following table presents the amortized cost basis of our loans by credit quality indicator and origination year, at March 31, 2023:
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Summary of Internal Risk Ratings of Loans | A summary of the credit quality indicators, at amortized cost, prior to the adoption of CECL is presented below:
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Summary of Information Regarding the Credit Quality Indicators for Residential Real Estate and Consumer Loans |
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Summary of Gross Charge-offs of Loans for Portfolio Class By Origination Year | The following table presents gross charge-offs of our loans for each portfolio class, by origination year, that occurred during the three months ended March 31, 2023. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K for additional information on our charge-off policy.
NOTE 4 – LOANS (continued) |
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Schedule of Analysis of Past due Loans | An analysis of past due loans, net of amortized costs, is presented below:
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Summary of Information Regarding Non-accrual Loans | The following table presents the amortized cost of our loans on nonaccrual status as of March 31, 2023 and December 31, 2022. All loans that were 90 days or more past due were on nonaccrual status as of March 31, 2023 and December 31, 2022.
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Summary of Collateral Dependent Loans and Related ACL | The table below summarizes collateral dependent loans and the related ACL at March 31, 2023 for which the borrower is experiencing financial difficulty:
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Summary of Allowance for Loan and Lease Losses for Loans Evaluated Individually and Collectively for Impairment | A summary of the allowance for loan losses for loans evaluated individually and collectively for impairment, at amortized cost, prior to the adoption of CECL is presented below:
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Summary of Information Regarding Impaired Loans | Information regarding impaired loans, at amortized cost, prior to the adoption of CECL is presented below:
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Mortgage Servicing Rights (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity in Mortgage Servicing Rights | A summary of activity in the Company’s mortgage servicing rights is presented below:
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Summary of Estimated Future Amortization Expense for Mortgage Servicing Rights | The following table summarizes the estimated future amortization expense for mortgage servicing rights for the annual periods indicated. The projections of amortization expense are based on existing asset balances as of March 31, 2023. The actual amortization expense the Company recognizes in any given period may vary significantly depending on changes in interest rates, market conditions and regulatory requirements.
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Deposits (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Deposits | The composition of deposits is summarized below:
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Scheduled Maturities of Certificates of Deposit | As of March 31, 2023, the scheduled maturities of certificates of deposit for the annual periods are presented below:
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Federal Home Loan Bank Advances (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal Home Loan Banks [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Federal Home Loan Bank Advances | A summary ofFederal Home Loan Bank advances follows:
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Schedule of Maturities of Federal Home Loan Bank Advances | The scheduled maturities and required principal payments of Federal Home Loan Bank advances are presented below:
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Contract Amounts of Credit-related Financial Instruments | The contractual amounts of off-balance-sheet credit-related financial instruments are summarized below:
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Employee Stock Ownership Plan (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Stock Ownership Plan (ESOP) Disclosures | The following table provides the allocated and unallocated shares of common stock associated with the ESOP.
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Related Party Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Loans to Directors, Executive Officers and Affiliates | A summary of loans to directors, executive officers, and their affiliates follows:
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Fair Value Measurements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets Measured at Fair Value on a Recurring Basis | Assets measured at fair value on a recurring basis are summarized below, along with the level of the fair value hierarchy of the inputs utilized to determine such fair value.
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Summary of Carrying Values and Estimated Fair Values of Financial Instruments | The carrying values and estimated fair values of financial instruments are presented below:
NOTE 12 – FAIR VALUE MEASUREMENTS (continued)
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Equity and Regulatory Matters (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Banks Actual and Required Capital Amounts and Ratios | The Bank’s actual and required capital amounts and ratios are presented below:
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Earnings (Loss) Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings (Loss) Per Share, Basic and Diluted | Earnings (loss) per common share for the three months ended March 31, 2023 and 2022 are presented in the following table.
(1) For the three months ended March 31, 2023 and March 31, 2022, the effect of stock options was anti-dilutive and therefore no dilutive shares are included in the weighted average shares outstanding or diluted loss calculations. |
Stock Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assumptions Used in Estimating the Fair Value of Options Granted | The following assumptions were used in estimating the fair value of options granted during the three months ended March 31, 2023 and March 31, 2022, respectively:
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Summary of Stock Option Activity | A summary of the Company’s stock option activity for the three months ended March 31, 2023 is presented below.
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Summary of Nonvested Stock option Activity | The following table summarizes information about the Company’s nonvested stock option activity for the three months ended March 31, 2023:
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Summary of Restricted Stock Unit Activity | The following table summarizes information about the Company’s restricted stock activity for the three months ended March 31, 2023:
|
Nature of Operations and Basis of Presentation - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
May 04, 2023 |
Aug. 26, 2022 |
Jul. 29, 2022 |
|
Equity, Class of Treasury Stock [Line Items] | ||||
Common Stock Held By Public | 100.00% | |||
Reorganization Cost And Issuing Of Common Stock Deferred | $ 2.0 | |||
Percentage of repurchase of outstanding shares | 5.00% | 5.00% | ||
Subsequent Event | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Percentage of repurchase of outstanding shares | 10.00% | |||
Shares remaining to be repurchased | 9,945 |
Significant Accounting Policies - Additional Information (Detail) - ASU 2016-13 - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Jan. 01, 2023 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 01, 2023 | |
Establishment of allowance for credit losses unfunded loan commitment | $ 665,000 | |
Cumulative effect on adjustment of retained earnings after tax | $ 783,000 | |
Minimum [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Amount of incrase in credit loss for loans allowance | $ 412,000 |
Available for Sale Securities - Additional Information (Detail) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023
USD ($)
Debtinstrument
|
Dec. 31, 2022
USD ($)
Debtinstrument
|
|
Investments, Debt and Equity Securities [Abstract] | ||
Number of debt securities with unrealized losses | Debtinstrument | 89 | 92 |
Percentage of depreciation from amortized cost bases | 10.70% | 12.10% |
Collateral to secure customer deposit accounts | $ | $ 9.4 | $ 3.6 |
Loans - Summary of Major Classifications of Loans (Parenthetical) (Details) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Receivables [Abstract] | ||
Interest receivable | $ 894,000 | $ 874,000 |
Loans - Additional Information (Detail) - USD ($) |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|||
Loans and Leases Receivable Disclosure [Line Items] | |||||
Additional Loans Receivable | [1] | $ 369,542,000 | $ 361,947,000 | ||
Loans modified as troubled debt restructurings | 0 | ||||
Troubled debt restructurings within past twelve months for which there was a default | $ 0 | ||||
Overdrawn deposit account reclassified as loan | 30,000 | 98,000 | |||
Loans 90 days or more past due and accruing interest | 0 | 0 | |||
Nonaccrual Loans | 732,000 | 769,000 | |||
Interest earned on nonaccrual loans | 0 | ||||
Troubled debt restructurings amount | 538,000 | ||||
Troubled debt restructurings nonaccrual amount | 183,000 | ||||
Commercial [Member] | |||||
Loans and Leases Receivable Disclosure [Line Items] | |||||
Additional Loans Receivable | 0 | 0 | |||
Other Financial Institutions [Member] | |||||
Loans and Leases Receivable Disclosure [Line Items] | |||||
Participation loans transferred | $ 30,100,000 | $ 30,300,000 | |||
|
Loans - Summary of Activity in Allowance for Loan and Lease Losses and Allowance for Credit Losses for Unfunded Loan Commitments (Detail) - USD ($) $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Beginning balance | $ 3,203 | $ 2,858 | ||||
Provision for credit losses | 75 | 105 | ||||
CECL Adoption Adjustment | [1] | 412 | ||||
Loans charged-off | (6) | (3) | ||||
Recoveries of loans previously charged off | 9 | 57 | ||||
Ending balance | 3,693 | 3,017 | ||||
Total Allowance for credit losses for loans and unfunded loan commitments | 4,358 | |||||
Unfunded Loan Commitments [Member] | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Beginning balance | [2] | 0 | ||||
Provision for credit losses | [2] | 0 | ||||
CECL Adoption Adjustment | [1],[2] | 665 | ||||
Loans charged-off | [2] | 0 | ||||
Recoveries of loans previously charged off | [2] | 0 | ||||
Ending balance | [2] | 665 | ||||
Commercial [Member] | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Beginning balance | 1,944 | 1,657 | ||||
Provision for credit losses | 54 | 105 | ||||
CECL Adoption Adjustment | [1] | 666 | ||||
Loans charged-off | 0 | 0 | ||||
Recoveries of loans previously charged off | 5 | 52 | ||||
Ending balance | 2,669 | 1,814 | ||||
Total Allowance for credit losses for loans and unfunded loan commitments | 3,309 | |||||
Commercial [Member] | Unfunded Loan Commitments [Member] | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Beginning balance | [2] | 0 | ||||
Provision for credit losses | [2] | 0 | ||||
CECL Adoption Adjustment | [1],[2] | 640 | ||||
Loans charged-off | [2] | 0 | ||||
Recoveries of loans previously charged off | [2] | 0 | ||||
Ending balance | [2] | 640 | ||||
Residential [Member] | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Beginning balance | 752 | 745 | ||||
Provision for credit losses | 21 | 0 | ||||
CECL Adoption Adjustment | [1] | 75 | ||||
Loans charged-off | 0 | 0 | ||||
Recoveries of loans previously charged off | 0 | 0 | ||||
Ending balance | 848 | 745 | ||||
Total Allowance for credit losses for loans and unfunded loan commitments | 873 | |||||
Residential [Member] | Unfunded Loan Commitments [Member] | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Beginning balance | [2] | 0 | ||||
Provision for credit losses | [2] | 0 | ||||
CECL Adoption Adjustment | [1],[2] | 25 | ||||
Loans charged-off | [2] | 0 | ||||
Recoveries of loans previously charged off | [2] | 0 | ||||
Ending balance | [2] | 25 | ||||
Consumer [Member] | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Beginning balance | 507 | 456 | ||||
Provision for credit losses | 0 | 0 | ||||
CECL Adoption Adjustment | [1] | (329) | ||||
Loans charged-off | (6) | (3) | ||||
Recoveries of loans previously charged off | 4 | 5 | ||||
Ending balance | 176 | $ 458 | ||||
Total Allowance for credit losses for loans and unfunded loan commitments | 176 | |||||
Consumer [Member] | Unfunded Loan Commitments [Member] | ||||||
Loans and Leases Receivable Disclosure [Line Items] | ||||||
Beginning balance | [2] | 0 | ||||
Provision for credit losses | [2] | 0 | ||||
CECL Adoption Adjustment | [1],[2] | 0 | ||||
Loans charged-off | [2] | 0 | ||||
Recoveries of loans previously charged off | [2] | 0 | ||||
Ending balance | [2] | $ 0 | ||||
|
Loans - Schedule of Components of Provision For Credit Losses (Detail) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Provision for credit losses | $ 75 | $ 105 | ||
Loans [Member] | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Provision for credit losses | 75 | $ 105 | ||
Unfunded Loan Commitments [Member] | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Provision for credit losses | [1] | $ 0 | ||
|
Loans - Summary of Amortized Cost Basis of Loans By Credit Quality Indicator and Origination Year (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Financing Receivable, Recorded Investment [Line Items] | |
2023 | $ 9,536 |
2022 | 100,210 |
2021 | 94,804 |
2020 | 61,031 |
2019 | 15,111 |
2018 and Prior | 62,597 |
Revolving Lines of Credit | 25,564 |
Revolving Lines of Credit Converted to Term Loans | 689 |
Total Loans | 369,542 |
Commercial [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 7,232 |
2022 | 85,190 |
2021 | 60,073 |
2020 | 44,394 |
2019 | 11,476 |
2018 and Prior | 41,732 |
Revolving Lines of Credit | 10,068 |
Revolving Lines of Credit Converted to Term Loans | 149 |
Total Loans | 260,314 |
Residential Real Estate [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 2,304 |
2022 | 14,892 |
2021 | 34,574 |
2020 | 16,511 |
2019 | 3,448 |
2018 and Prior | 19,324 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 91,053 |
Consumer Loan [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 128 |
2021 | 157 |
2020 | 126 |
2019 | 187 |
2018 and Prior | 1,541 |
Revolving Lines of Credit | 15,496 |
Revolving Lines of Credit Converted to Term Loans | 540 |
Total Loans | 18,175 |
Commercial Real Estate Portfolio Segment [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 2,055 |
2022 | 68,665 |
2021 | 51,643 |
2020 | 42,137 |
2019 | 11,065 |
2018 and Prior | 39,243 |
Revolving Lines of Credit | 69 |
Revolving Lines of Credit Converted to Term Loans | 149 |
Total Loans | 215,026 |
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 2,055 |
2022 | 68,500 |
2021 | 51,027 |
2020 | 42,137 |
2019 | 9,921 |
2018 and Prior | 37,656 |
Revolving Lines of Credit | 69 |
Total Loans | 211,365 |
Commercial Real Estate Portfolio Segment [Member] | Watch and Special Mention [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2019 | 848 |
2018 and Prior | 248 |
Total Loans | 1,096 |
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2022 | 165 |
2021 | 616 |
2019 | 296 |
2018 and Prior | 1,339 |
Revolving Lines of Credit Converted to Term Loans | 149 |
Total Loans | 2,565 |
Other Commercial Loans Portfolio Segment [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 5,177 |
2022 | 16,525 |
2021 | 8,430 |
2020 | 2,257 |
2019 | 411 |
2018 and Prior | 2,489 |
Revolving Lines of Credit | 9,999 |
Total Loans | 45,288 |
Other Commercial Loans Portfolio Segment [Member] | Pass [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 5,177 |
2022 | 16,242 |
2021 | 8,101 |
2020 | 2,079 |
2019 | 366 |
2018 and Prior | 2,261 |
Revolving Lines of Credit | 8,292 |
Total Loans | 42,518 |
Other Commercial Loans Portfolio Segment [Member] | Watch and Special Mention [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2019 | 28 |
2018 and Prior | 72 |
Total Loans | 100 |
Other Commercial Loans Portfolio Segment [Member] | Substandard [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2022 | 283 |
2021 | 329 |
2020 | 178 |
2019 | 17 |
2018 and Prior | 156 |
Revolving Lines of Credit | 1,707 |
Total Loans | 2,670 |
Residential Real Estate First Mortgages [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 2,304 |
2022 | 14,167 |
2021 | 33,038 |
2020 | 16,511 |
2019 | 3,448 |
2018 and Prior | 19,324 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 88,792 |
Residential Real Estate First Mortgages [Member] | Performing Financial Instruments [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 2,304 |
2022 | 14,167 |
2021 | 33,038 |
2020 | 16,511 |
2019 | 3,448 |
2018 and Prior | 18,625 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 88,093 |
Residential Real Estate First Mortgages [Member] | Nonaccrual Financing Receivable [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 0 |
2021 | 0 |
2020 | 0 |
2019 | 0 |
2018 and Prior | 699 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 699 |
Residential Real Estate Construction [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 725 |
2021 | 1,536 |
2020 | 0 |
2019 | 0 |
2018 and Prior | 0 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 2,261 |
Residential Real Estate Construction [Member] | Performing Financial Instruments [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 725 |
2021 | 1,536 |
2020 | 0 |
2019 | 0 |
2018 and Prior | 0 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 2,261 |
Residential Real Estate Construction [Member] | Nonaccrual Financing Receivable [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 0 |
2021 | 0 |
2020 | 0 |
2019 | 0 |
2018 and Prior | 0 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 0 |
Consumer Home equity and lines of credit [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 72 |
2021 | 156 |
2020 | 116 |
2019 | 182 |
2018 and Prior | 1,529 |
Revolving Lines of Credit | 15,496 |
Revolving Lines of Credit Converted to Term Loans | 540 |
Total Loans | 18,091 |
Consumer Home equity and lines of credit [Member] | Performing Financial Instruments [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 72 |
2021 | 156 |
2020 | 116 |
2019 | 182 |
2018 and Prior | 1,496 |
Revolving Lines of Credit | 15,496 |
Revolving Lines of Credit Converted to Term Loans | 540 |
Total Loans | 18,058 |
Consumer Home equity and lines of credit [Member] | Nonaccrual Financing Receivable [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 0 |
2021 | 0 |
2020 | 0 |
2019 | 0 |
2018 and Prior | 33 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 33 |
Consumer Other [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 56 |
2021 | 1 |
2020 | 10 |
2019 | 5 |
2018 and Prior | 12 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 84 |
Consumer Other [Member] | Performing Financial Instruments [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 56 |
2021 | 1 |
2020 | 10 |
2019 | 5 |
2018 and Prior | 12 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | 84 |
Consumer Other [Member] | Nonaccrual Financing Receivable [Member] | |
Financing Receivable, Recorded Investment [Line Items] | |
2023 | 0 |
2022 | 0 |
2021 | 0 |
2020 | 0 |
2019 | 0 |
2018 and Prior | 0 |
Revolving Lines of Credit | 0 |
Revolving Lines of Credit Converted to Term Loans | 0 |
Total Loans | $ 0 |
Loans - Summary of Internal Risk Ratings of Loans (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
||
---|---|---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | [1] | $ 369,542 | $ 361,947 | |
Commercial Real Estate [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 215,026 | 210,858 | ||
Commercial Land Development [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 0 | 0 | ||
Commercial Other [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | $ 45,288 | 43,708 | ||
Internal Credit Risk Rating [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 254,566 | |||
Internal Credit Risk Rating [Member] | Commercial Real Estate [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 210,858 | |||
Internal Credit Risk Rating [Member] | Commercial Land Development [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 0 | |||
Internal Credit Risk Rating [Member] | Commercial Other [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 43,708 | |||
Pass [Member] | Internal Credit Risk Rating [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 248,224 | |||
Pass [Member] | Internal Credit Risk Rating [Member] | Commercial Real Estate [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 206,655 | |||
Pass [Member] | Internal Credit Risk Rating [Member] | Commercial Land Development [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 0 | |||
Pass [Member] | Internal Credit Risk Rating [Member] | Commercial Other [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 41,569 | |||
Watch and Special Mention [Member] | Internal Credit Risk Rating [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 2,967 | |||
Watch and Special Mention [Member] | Internal Credit Risk Rating [Member] | Commercial Real Estate [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 2,932 | |||
Watch and Special Mention [Member] | Internal Credit Risk Rating [Member] | Commercial Land Development [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 0 | |||
Watch and Special Mention [Member] | Internal Credit Risk Rating [Member] | Commercial Other [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 35 | |||
Substandard [Member] | Internal Credit Risk Rating [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 3,375 | |||
Substandard [Member] | Internal Credit Risk Rating [Member] | Commercial Real Estate [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 1,271 | |||
Substandard [Member] | Internal Credit Risk Rating [Member] | Commercial Land Development [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 0 | |||
Substandard [Member] | Internal Credit Risk Rating [Member] | Commercial Other [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | $ 2,104 | |||
|
Loans - Summary of Information Regarding the Credit Quality Indicators for Residential Real Estate and Consumer Loans (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
||
---|---|---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | [1] | $ 369,542 | $ 361,947 | |
Credit Quality [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 107,381 | |||
Credit Quality [Member] | Residential First Mortgages [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 85,444 | |||
Credit Quality [Member] | Residential Construction [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 3,248 | |||
Credit Quality [Member] | Consumer Home Equity and Lines of Credit [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 18,590 | |||
Credit Quality [Member] | Consumer Other [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 99 | |||
Performing [Member] | Credit Quality [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 106,612 | |||
Performing [Member] | Credit Quality [Member] | Residential First Mortgages [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 84,730 | |||
Performing [Member] | Credit Quality [Member] | Residential Construction [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 3,248 | |||
Performing [Member] | Credit Quality [Member] | Consumer Home Equity and Lines of Credit [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 18,535 | |||
Performing [Member] | Credit Quality [Member] | Consumer Other [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 99 | |||
Non Performing [Member] | Credit Quality [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 769 | |||
Non Performing [Member] | Credit Quality [Member] | Residential First Mortgages [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 714 | |||
Non Performing [Member] | Credit Quality [Member] | Residential Construction [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 0 | |||
Non Performing [Member] | Credit Quality [Member] | Consumer Home Equity and Lines of Credit [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | 55 | |||
Non Performing [Member] | Credit Quality [Member] | Consumer Other [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans and leases receivable gross carrying amount | $ 0 | |||
|
Loans - Summary of Gross Charge-offs of Loans for Portfolio Class By Origination Year (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Financing Receivable, Recorded Investment [Line Items] | ||
2022 | $ 100,210 | |
2018 and Prior | 62,597 | |
Total Loans, charge-offs | 6 | $ 3 |
Loan Charge-offs [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
2022 | 4 | |
2018 and Prior | 2 | |
Total Loans, charge-offs | 6 | |
Consumer [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
2022 | 128 | |
2018 and Prior | 1,541 | |
Total Loans, charge-offs | 6 | $ 3 |
Consumer [Member] | Loan Charge-offs [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
2022 | 4 | |
2018 and Prior | 2 | |
Total Loans, charge-offs | 6 | |
Consumer Other [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
2022 | 56 | |
2018 and Prior | 12 | |
Consumer Other [Member] | Loan Charge-offs [Member] | ||
Financing Receivable, Recorded Investment [Line Items] | ||
2022 | 4 | |
2018 and Prior | 2 | |
Total Loans, charge-offs | $ 6 |
Loans - Schedule of Analysis of Past due Loans (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
||
---|---|---|---|---|
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | $ 369,295 | $ 359,876 | ||
Loans, gross | [1] | 369,542 | 361,947 | |
Commercial Real Estate [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 215,026 | 209,126 | ||
Loans, gross | 215,026 | 210,858 | ||
Commercial Land Development [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 0 | 0 | ||
Loans, gross | 0 | 0 | ||
Commercial Other [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 45,288 | 43,708 | ||
Loans, gross | 45,288 | 43,708 | ||
Residential Real Estate First Mortgages [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 88,585 | 85,200 | ||
Loans, gross | 88,792 | 85,444 | ||
Residential Real Estate Construction [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 2,261 | 3,248 | ||
Loans, gross | 2,261 | 3,248 | ||
Consumer Home Equity and Lines of Credit [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 18,051 | 18,497 | ||
Loans, gross | 18,091 | 18,590 | ||
Consumer Other [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 84 | 97 | ||
Loans, gross | 84 | 99 | ||
Loans Past Due 30-89 Days [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 247 | 1,987 | ||
Loans Past Due 30-89 Days [Member] | Commercial Real Estate [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 0 | 1,732 | ||
Loans Past Due 30-89 Days [Member] | Commercial Other [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 0 | 0 | ||
Loans Past Due 30-89 Days [Member] | Residential Real Estate First Mortgages [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 207 | 181 | ||
Loans Past Due 30-89 Days [Member] | Consumer Home Equity and Lines of Credit [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 40 | 72 | ||
Loans Past Due 30-89 Days [Member] | Consumer Other [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 0 | 2 | ||
Loans Past Due 90+ Days [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 0 | 84 | ||
Loans Past Due 90+ Days [Member] | Residential Real Estate First Mortgages [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 0 | 63 | ||
Loans Past Due 90+ Days [Member] | Consumer Home Equity and Lines of Credit [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 0 | 21 | ||
Total Past Due [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 247 | 2,071 | ||
Total Past Due [Member] | Commercial Real Estate [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 0 | 1,732 | ||
Total Past Due [Member] | Commercial Other [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 0 | 0 | ||
Total Past Due [Member] | Residential Real Estate First Mortgages [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 207 | 244 | ||
Total Past Due [Member] | Consumer Home Equity and Lines of Credit [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | 40 | 93 | ||
Total Past Due [Member] | Consumer Other [Member] | ||||
Loans, Notes and Certificates, and Loan Servicing Rights [Line Items] | ||||
Past Due / Current Loans | $ 0 | $ 2 | ||
|
Loans - Summary of Information on Non-accrual Loans (Detail) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Non Performing Loans [Line Items] | ||
Total nonaccrual loans | $ 732,000 | $ 769,000 |
Total nonaccrual loans to total loans | 0.20% | 0.21% |
Total nonaccrual loans to total assets | 0.13% | 0.14% |
Residential Real Estate First Mortgages [Member] | ||
Non Performing Loans [Line Items] | ||
Total nonaccrual loans | $ 699,000 | $ 714,000 |
Consumer Home Equity and Lines of Credit [Member] | ||
Non Performing Loans [Line Items] | ||
Total nonaccrual loans | $ 33,000 | $ 55,000 |
Loans - Summary of Collateral Dependent Loans and Related ACL (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Loans and Leases Receivable Disclosure [Line Items] | |
Loans | $ 6,364 |
Commercial Real Estate [Member] | |
Loans and Leases Receivable Disclosure [Line Items] | |
Loans | 2,594 |
Commercial Other [Member] | |
Loans and Leases Receivable Disclosure [Line Items] | |
Loans | 2,836 |
Residential Real Estate First Mortgages [Member] | |
Loans and Leases Receivable Disclosure [Line Items] | |
Loans | 901 |
Consumer Home Equity and Lines of Credit [Member] | |
Loans and Leases Receivable Disclosure [Line Items] | |
Loans | $ 33 |
Loans - Summary of Allowance for Loan and Lease Losses for Loans Evaluated Individually and Collectively for Impairment (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Loans and Leases Receivable Disclosure [Line Items] | ||||
Individually evaluated for impairment | $ 4,497 | |||
Collectively evaluated for impairment | 357,450 | |||
Total loans | 361,947 | |||
Collectively evaluated for impairment | 3,203 | |||
Total allowance for loan losses | $ 3,693 | 3,203 | $ 3,017 | $ 2,858 |
Commercial [Member] | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Individually evaluated for impairment | 3,525 | |||
Collectively evaluated for impairment | 251,041 | |||
Total loans | 254,566 | |||
Collectively evaluated for impairment | 1,944 | |||
Total allowance for loan losses | 2,669 | 1,944 | 1,814 | 1,657 |
Residential [Member] | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Individually evaluated for impairment | 917 | |||
Collectively evaluated for impairment | 87,775 | |||
Total loans | 88,692 | |||
Collectively evaluated for impairment | 752 | |||
Total allowance for loan losses | 848 | 752 | 745 | 745 |
Consumer [Member] | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Individually evaluated for impairment | 55 | |||
Collectively evaluated for impairment | 18,634 | |||
Total loans | 18,689 | |||
Collectively evaluated for impairment | 507 | |||
Total allowance for loan losses | $ 176 | $ 507 | $ 458 | $ 456 |
Loans - Summary of Information Regarding Impaired Loans (Detail) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2022
USD ($)
| |
Financing Receivable, Impaired [Line Items] | |
Recorded Investment | $ 4,497 |
Reserve | 0 |
Average Investment | 6,325 |
Interest Recognized | 344 |
Recorded Investment | 4,497 |
Principal Balance | 4,771 |
Average Investment | 6,325 |
Interest Recognized | 344 |
Commercial Real Estate [Member] | |
Financing Receivable, Impaired [Line Items] | |
Recorded Investment | 1,422 |
Principal Balance | 1,470 |
Average Investment | 3,952 |
Interest Recognized | 177 |
Commercial Land Development [Member] | |
Financing Receivable, Impaired [Line Items] | |
Average Investment | 0 |
Interest Recognized | 0 |
Commercial Other [Member] | |
Financing Receivable, Impaired [Line Items] | |
Recorded Investment | 2,103 |
Principal Balance | 2,103 |
Average Investment | 1,325 |
Interest Recognized | 110 |
Residential real estate and consumer First mortgage [Member] | |
Financing Receivable, Impaired [Line Items] | |
Recorded Investment | 917 |
Principal Balance | 1,138 |
Average Investment | 1,011 |
Interest Recognized | 55 |
Residential real estate and consumer Home equity and lines of credit [Member] | |
Financing Receivable, Impaired [Line Items] | |
Recorded Investment | 55 |
Principal Balance | 60 |
Average Investment | 37 |
Interest Recognized | $ 2 |
Mortgage Servicing Rights - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Risks Inherent in Servicing Assets and Servicing Liabilities [Line Items] | |||
Unpaid principal balance of mortgage loans serviced for others | $ 298.9 | $ 304.3 | |
Minimum [Member] | |||
Risks Inherent in Servicing Assets and Servicing Liabilities [Line Items] | |||
Discount rates used in valuation model | 10.10% | 10.00% | |
Prepayment speeds used in valuation model | 7.00% | 9.60% | |
Maximum [Member] | |||
Risks Inherent in Servicing Assets and Servicing Liabilities [Line Items] | |||
Discount rates used in valuation model | 13.00% | 13.50% | |
Prepayment speeds used in valuation model | 38.80% | 35.80% |
Mortgage Servicing Rights - Summary of Activity in Mortgage Servicing Rights (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Mortgage servicing rights beginning balance | $ 1,860 | $ 2,036 |
Additions | 9 | 27 |
Amortization | (46) | (75) |
Mortgage servicing rights ending balance | 1,823 | 1,988 |
Fair value at beginning of period | 3,376 | 2,477 |
Fair value at end of period | $ 3,488 | $ 2,811 |
Mortgage Servicing Rights - Summary of Estimated Future Amortization Expense for Mortgage Servicing Rights (Detail) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2023 | $ 147 |
2024 | 204 |
2025 | 186 |
2026 | 167 |
2027 | 147 |
Thereafter | 972 |
Total | $ 1,823 |
Deposits - Composition of Deposits (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Deposits [Abstract] | ||
Non-interest bearing checking | $ 84,613 | $ 92,465 |
Interest bearing checking | 31,978 | 32,514 |
Money market | 112,161 | 121,215 |
Statement savings | 55,567 | 61,969 |
Certificates of deposit | 87,647 | 79,558 |
Total | $ 371,966 | $ 387,721 |
Deposits - Scheduled Maturities of Certificates of Deposit (Detail) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Time Deposits, Fiscal Year Maturity [Abstract] | |
2023 | $ 38,754 |
2024 | 28,156 |
2025 | 9,304 |
2026 | 11,091 |
2027 | 280 |
Thereafter | 62 |
Total | $ 87,647 |
Deposits - Additional Information (Detail) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Deposits [Abstract] | ||
Certificates of deposit with balances of $250 or more | $ 13,800,000 | $ 8,900,000 |
Certificates of deposit federally insured | 250,000 | 250,000 |
Brokered deposits | $ 0 | $ 0 |
Federal Home Loan Bank Advances - Summary of Federal Home Loan Bank Advances (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB Advances, total | $ 91,978 | $ 71,464 |
Fixed rate, fixed term advance, maturing February 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 1.62% | |
FHLB Advances, total | $ 6,500 | |
Fixed rate, fixed term advance, maturing April 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 4.84% | |
FHLB Advances, total | $ 5,000 | |
Fixed rate, fixed term advance, maturing April 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 4.92% | |
FHLB Advances, total | $ 5,000 | |
Fixed rate, fixed term advance, maturing July 2027 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 2.90% | 2.90% |
FHLB Advances, total | $ 5,000 | $ 5,000 |
Putable advance, maturing July 2029 first option date January 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 1.68% | |
FHLB Advances, total | $ 5,000 | |
Putable advance, maturing February 2030, first option date February 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 0.98% | |
FHLB Advances, total | $ 5,000 | |
Putable advance, maturing October 2029, first put option date April 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 2.96% | 2.96% |
FHLB Advances, total | $ 5,000 | $ 5,000 |
Putable advance, maturing January 2028, first option date July 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 3.34% | |
FHLB Advances, total | $ 2,500 | |
Putable advance, maturing January 2028, first option date July 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 3.22% | |
FHLB Advances, total | $ 2,500 | |
Putable advance, maturing February 2028, first option date August 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 3.37% | |
FHLB Advances, total | $ 2,500 | |
Putable advance, maturing February 2028, first option date November 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 3.82% | |
FHLB Advances, total | $ 5,000 | |
Putable advance, maturing January 2028, first option date January 2024 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 3.44% | |
FHLB Advances, total | $ 5,000 | |
Putable advance, maturing February 2028, first option date February 2024 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 3.63% | |
FHLB Advances, total | $ 5,000 | |
Putable advance, maturing March 2028, first option date March 2024 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 3.47% | |
FHLB Advances, total | $ 5,000 | |
Putable advance, maturing March 2030 first option date March 2025 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 0.89% | 0.89% |
FHLB Advances, total | $ 10,000 | $ 10,000 |
Putable advance, maturing Mar 2032 first put option date Mar 2027 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 1.74% | 1.74% |
FHLB Advances, total | $ 10,000 | $ 10,000 |
Advance structured note, payments due monthly, maturing April 2030 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 1.05% | 1.05% |
FHLB Advances, total | $ 7,191 | $ 7,435 |
Advance structured note, payments due monthly, maturing May 2030 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 1.19% | 1.19% |
FHLB Advances, total | $ 7,287 | $ 7,529 |
SOFR Floater advance, maturing October 2023 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 5.07% | 4.54% |
FHLB Advances, total | $ 5,000 | $ 5,000 |
SOFR Floater advance, maturing October 2024 [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
FHLB advances, interest rate | 5.12% | 4.59% |
FHLB Advances, total | $ 5,000 | $ 5,000 |
Federal Home Loan Bank Advances - Schedule of Maturities of Federal Home Loan Bank Advances (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Federal Home Loan Bank, Advances, Maturity, Rolling Year, Par Value [Abstract] | ||
2023 | 4.50% | |
2024 | 3.99% | |
2025 | 1.12% | |
2026 | 1.12% | |
2027 | 2.38% | |
Thereafter | 2.49% | |
Total | 2.90% | |
2023 | $ 16,470 | |
2024 | 6,979 | |
2025 | 2,002 | |
2026 | 2,024 | |
2027 | 7,047 | |
Thereafter | 57,456 | |
Total | $ 91,978 | $ 71,464 |
Federal Home Loan Bank Advances - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Federal Home Loan Bank, Advances [Line Items] | ||
Federal Home Loan Bank stock to maximum borrowing capacity | The Company maintains a master contract agreement with the FHLB, which provides for borrowing up to the lesser of 22.22 times the value of the FHLB stock owned, a determined percentage of the book value of the Company’s qualifying real estate loans, or a determined percentage of the Company’s assets. | |
Qualifying loans pledged as collateral | $ 361,947 | |
Federal Home Loan Bank stock held | $ 4,811 | 3,429 |
Available and unused funds under borrowing agreement | 71,200 | 100,000 |
Asset Pledged as Collateral without Right [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
Qualifying loans pledged as collateral | 164,100 | $ 172,400 |
Fed Funds Effective Rate Overnight Index Swap Rate [Member] | BMO Harris Bank [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
Federal funds rate line of credit | 15,000 | |
Federal Fund Rate [Member] | BMO Harris Bank [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
Line Of Credit At Federal Reserve | 8,800 | |
Available Borrowing Capacity | 0 | |
Federal Fund Rate [Member] | BMO Harris Bank [Member] | Asset Pledged as Collateral without Right [Member] | ||
Federal Home Loan Bank, Advances [Line Items] | ||
Qualifying loans pledged as collateral | $ 11,800 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Income Tax Disclosure [Abstract] | |||
Valuation allowance | $ 934 | $ 934 | |
Income tax expense (benefit) | (151) | $ (60) | |
Deferred tax asset net of valuation allowance | $ 8,100 | $ 8,300 |
Commitments and Contingencies - Summary of Contractual Amounts of Off-balance Sheet Credit Related Financial Instruments (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Commitments to Extend Credit [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | $ 78,681 | $ 84,022 |
Credit Enhancement Under FHLB of Chicago Mortgage Partnership Finance Program [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | 904 | 894 |
Commitments to Sell Loans [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | 853 | 1,292 |
Overdraft Protection Program Commitments [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | 3,845 | 3,881 |
Standby Letters of Credit [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | 150 | 150 |
Fixed Rate [Member] | Commitments to Extend Credit [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | 4,191 | 3,391 |
Fixed Rate [Member] | Credit Enhancement Under FHLB of Chicago Mortgage Partnership Finance Program [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | 904 | 894 |
Fixed Rate [Member] | Commitments to Sell Loans [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | 853 | 1,292 |
Fixed Rate [Member] | Overdraft Protection Program Commitments [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | 3,845 | 3,881 |
Variable Rate [Member] | Commitments to Extend Credit [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | 74,490 | 80,631 |
Variable Rate [Member] | Standby Letters of Credit [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fixed Rate | $ 150 | $ 150 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Accounting Standards Update 2016-13 [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding loan commitments expected to fund | $ 41,100,000 | |
Establishment of allowance for credit losses unfunded loan commitment | 665,000 | |
Commitments to Extend Credit [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding commitments | 78,681,000 | $ 84,022,000 |
Commitments to Extend Credit [Member] | Accounting Standards Update 2016-13 [Member] | ||
Loss Contingencies [Line Items] | ||
Outstanding commitments | 36,900,000 | |
Establishment of allowance for credit losses unfunded loan commitment | 665,000 | |
Mortgage Partnership Finance Program [Member] | ||
Loss Contingencies [Line Items] | ||
Commitments | 431,000 | |
Other commitments | $ 0 | $ 0 |
Employee Stock Ownership Plan - Employee Stock Ownership Plan (ESOP) Disclosures (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Share-based Payment Arrangement [Abstract] | ||
Shares committed to be released | 4,864 | 19,730 |
Total allocated shares | 55,900 | 36,170 |
Total unallocated shares | 448,928 | 453,792 |
Total ESOP shares | 509,692 | 509,692 |
Fair value of unallocated shares (based on $8.04 and $10.00 share price as of March 31, 2023 and December 31, 2022, respectively) | $ 3,609 | $ 4,538 |
Employee Stock Ownership Plan - Employee Stock Ownership Plan (ESOP) Disclosures (Parenthetical) (Detail) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Share-based Payment Arrangement [Abstract] | ||
Common stock shares conversion ratio as part of offering pursuant to share based scheme | 8.04 | 10.00 |
Employee Stock Ownership Plan - Additional Information (Detail) - USD ($) |
3 Months Ended | ||||
---|---|---|---|---|---|
Jul. 14, 2021 |
Jan. 08, 2019 |
Mar. 31, 2023 |
Mar. 31, 2022 |
Jun. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
ESOP Purchased | 45,212 | ||||
ESOP additional shares purchased | 283,360 | ||||
ESOP Purchased shares adjusted for the conversion | 231,047 | ||||
Employee stock ownership plan weighted average price of additional shares purchased | $ 10.90 | ||||
Compensation Expense | $ 47,000 | $ 51,000 | |||
Number of shares to be contributed to the employee stock owership plan | 283,360 | ||||
Previously Reported [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
ESOP Purchased | 175,528 | ||||
Share-based Compensation Award, Tranche One [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vested Percentage | 20.00% | ||||
Vested Years Of Service | 1 year | ||||
Share-based Compensation Award, Tranche Two [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vested Percentage | 40.00% | ||||
Vested Years Of Service | 2 years | ||||
Share-based Compensation Award, Tranche Three [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vested Percentage | 60.00% | ||||
Vested Years Of Service | 3 years | ||||
Share-based Compensation Award Tranche Four [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vested Percentage | 80.00% | ||||
Vested Years Of Service | 4 years | ||||
Share-based Compensation Award Tranche Five [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vested Percentage | 100.00% | ||||
Vested Years Of Service | 5 years |
Related Party Transactions - Summary of Loans to Directors, Executive Officers and Affiliates (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Related Party Transactions [Abstract] | ||
Beginning balance | $ 1,015 | $ 932 |
Adjustments due to changes in directors, executive officers, and/or principal stockholders | 0 | 0 |
New loans | 0 | 169 |
Repayments | (14) | (86) |
Ending balance | $ 1,001 | $ 1,015 |
Related Party Transactions - Additional Information (Detail) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Directors, Executive Officers and Affiliates [Member] | ||
Related Party Transaction [Line Items] | ||
Deposits from directors, executive officers and affiliates | $ 670,000 | $ 583,000 |
Fair Value Measurements - Summary of Assets Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | $ 113,414 | $ 114,492 |
Marketable equity securities | 3,170 | 2,924 |
Total | 116,584 | 117,416 |
U.S. Treasury notes [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 27,116 | 26,627 |
US States and Political Subdivisions Debt Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 18,066 | 17,656 |
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 62,875 | 64,267 |
Asset-backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 4,149 | 4,517 |
Certificates of Deposit [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 1,208 | 1,425 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 113,414 | 114,492 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable equity securities | 3,170 | 2,924 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 113,414 | 114,492 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | U.S. Treasury notes [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 27,116 | 26,627 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 18,066 | 17,656 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 62,875 | 64,267 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Asset-backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 4,149 | 4,517 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Certificates of Deposit [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available-for-sale | 1,208 | 1,425 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable equity securities | 3,170 | 2,924 |
Total | $ 3,170 | $ 2,924 |
Fair Value Measurements - Summary of Carrying Values and Estimated Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Financial assets: | ||
Available for sale securities | $ 113,414 | $ 114,492 |
Loans, net | 366,702 | 359,574 |
Accrued interest receivable | 1,246 | 1,257 |
Cash value of life insurance | 14,424 | 14,316 |
FHLB Stock | 4,811 | 3,429 |
Marketable securities | 3,170 | 2,924 |
Financial liabilities: | ||
Deposits | 371,966 | 387,721 |
Advance payments by borrowers for taxes and insurance | 3,986 | 1,029 |
FHLB advances | 91,978 | 71,464 |
Fair Value, Inputs, Level 1 [Member] | ||
Financial assets: | ||
Cash and cash equivalents | 29,015 | 28,344 |
Accrued interest receivable | 1,246 | 1,257 |
Marketable securities | 3,170 | 2,924 |
Financial liabilities: | ||
Deposits | 284,319 | 308,162 |
Advance payments by borrowers for taxes and insurance | 3,986 | 1,029 |
Accrued interest payable | 490 | 291 |
Fair Value, Inputs, Level 2 [Member] | ||
Financial assets: | ||
Available for sale securities | 113,414 | 114,492 |
Loans held for sale | 125 | |
Fair Value, Inputs, Level 3 [Member] | ||
Financial assets: | ||
Loans, net | 345,540 | 335,987 |
Rate lock commitments | 5 | 6 |
Cash value of life insurance | 14,424 | 14,316 |
FHLB Stock | 4,811 | 3,429 |
Financial liabilities: | ||
Deposits | 87,036 | 78,418 |
FHLB advances | 87,072 | 69,633 |
Reported Value Measurement [Member] | ||
Financial assets: | ||
Cash and cash equivalents | 29,015 | 28,344 |
Available for sale securities | 113,414 | 114,492 |
Loans held for sale | 125 | |
Loans, net | 366,702 | 359,574 |
Rate lock commitments | 5 | 6 |
Accrued interest receivable | 1,246 | 1,257 |
Cash value of life insurance | 14,424 | 14,316 |
FHLB Stock | 4,811 | 3,429 |
Marketable securities | 3,170 | 2,924 |
Financial liabilities: | ||
Deposits | 371,966 | 387,721 |
Advance payments by borrowers for taxes and insurance | 3,986 | 1,029 |
FHLB advances | 91,978 | 71,464 |
Accrued interest payable | $ 490 | $ 291 |
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Impairment Loan on mortgage servicing rights | $ 0 | $ 0 |
Equity and Regulatory Matters - Schedule of Banks Actual and Required Capital Amounts and Ratios (Detail) $ in Thousands |
Mar. 31, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
---|---|---|
Text Block [Abstract] | ||
Leverage tier 1 capital actual amount | $ 64,703 | $ 65,497 |
Common Equity Tier 1 risk based capital actual amount | 64,703 | 65,497 |
Tier 1 risk based capital actual amount | 64,703 | 65,497 |
Total risk based capital actual amount | $ 69,061 | $ 68,700 |
Leverage tier 1 capital actual ratio | 0.118 | 0.119 |
Common Equity Tier 1 risk based capital actual ratio | 0.163 | 0.166 |
Tier 1 risk based capital actual ratio | 0.163 | 0.166 |
Total risk based capital actual ratio | 0.174 | 0.175 |
Leverage tier 1 capital for capital adequacy purposes amount | $ 21,994 | $ 22,086 |
Common Equity Tier 1 risk based capital for capital adequacy purposes amount | 17,896 | 17,711 |
Tier 1 risk based capital for capital adequacy purposes amount | 23,861 | 23,615 |
Total risk based capital for capital adequacy purposes amount | $ 31,815 | $ 31,486 |
Leverage tier 1 capital for capital adequacy purposes ratio | 4.00% | 4.00% |
Common Equity Tier 1 risk based capital for capital adequacy purposes ratio | 0.045 | 0.045 |
Tier 1 risk based capital for capital adequacy purposes ratio | 0.060 | 0.060 |
Total risk based capital for capital adequacy purposes ratio | 0.080 | 0.080 |
Leverage tier 1 capital to be well capitalized under prompt corrective action provisions amount | $ 27,492 | $ 27,608 |
Common Equity Tier 1 risk based capital to be well capitalized under prompt corrective action provisions amount | 25,849 | 25,583 |
Tier 1 risk based capital to be well capitalized under prompt corrective action provisions amount | 31,815 | 31,486 |
Total risk based capital to be well capitalized under prompt corrective action provisions amount | $ 39,768 | $ 39,358 |
Leverage tier 1 capital to be well capitalized under prompt corrective action provisions ratio | 5.00% | 5.00% |
Common Equity Tier 1 risk based capital to be well capitalized under prompt corrective action provisions ratio | 0.065 | 0.065 |
Tier 1 risk based capital to be well capitalized under prompt corrective action provisions ratio | 0.080 | 0.080 |
Total risk based capital to be well capitalized under prompt corrective action provisions ratio | 0.100 | 0.100 |
Equity and Regulatory Matters - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 7 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2023 |
Aug. 26, 2022 |
Jul. 29, 2022 |
|
Text Block [Abstract] | ||||
Consolidated assets | $ 3,000,000 | $ 3,000,000 | ||
Percentage of repurchase of outstanding shares | 5.00% | 5.00% | ||
Shares authorized to repurchase | 319,766 | |||
Shares repurchased | 12,903 | 309,821 | ||
Purchase price of repurchased shares | $ (129) | $ 3,300 |
Earnings (Loss) Per Share - Additional Information (Detail) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Earnings Per Share [Abstract] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 131,093 | 189,715 |
Earnings (Loss) Per Share - Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|||||
Earnings Per Share [Abstract] | ||||||
Net loss | $ (361) | $ (55) | ||||
Weighted shares outstanding for basic EPS | ||||||
Weighted average shares outstanding | 5,986,822,000 | 6,275,850,000 | ||||
Less: Weighted average unallocated ESOP shares | 451,333,000 | 401,886,000 | ||||
Weighted average shares outstanding for basic EPS | 5,535,489 | 5,873,964 | ||||
Additional dilutive shares | [1] | 0 | 0 | |||
Weighted average shares outstanding for dilutive EPS | [2] | 5,535,489 | 5,873,964 | |||
Basic (loss) per share | $ (0.07) | $ (0.01) | ||||
Diluted (loss) per share | [1],[2] | $ (0.07) | $ (0.01) | |||
|
Earnings (Loss) Per Share - Schedule of Earnings Per Share, Basic and Diluted (Parenthetical) (Details) - shares |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|||
Earnings Per Share [Abstract] | ||||
Dilutive shares | [1] | 0 | 0 | |
|
Stock Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Aug. 26, 2022 |
Mar. 27, 2020 |
|
Share-based compensation arrangement by share-based payment award [Line Items] | ||||
Unrecognized compensation expense related to stock compensation plans | $ 1,300 | |||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 4 years 2 months 12 days | |||
Restricted Stock [Member] | ||||
Share-based compensation arrangement by share-based payment award [Line Items] | ||||
Unrecognized compensation expense related to stock compensation plans | $ 1,600 | |||
Share-based payment arrangement, nonvested award, cost not yet recognized, period for recognition | 4 years 1 month 6 days | |||
Stock option expense recognised | $ 104,000 | $ 36,000 | ||
Employee Stock Option [Member] | ||||
Share-based compensation arrangement by share-based payment award [Line Items] | ||||
Stock option expense recognised | $ 84,000 | $ 23,000 | ||
2020 Equity Incentive Plan [Member] | Restricted Stock [Member] | ||||
Share-based compensation arrangement by share-based payment award [Line Items] | ||||
Stock based compensation number of shares authorized | 95,387 | |||
2020 Equity Incentive Plan [Member] | Employee Stock Option [Member] | ||||
Share-based compensation arrangement by share-based payment award [Line Items] | ||||
Stock based compensation number of shares authorized | 238,467 | |||
2022 Equity Incentive Plan [Member] | Restricted Stock [Member] | ||||
Share-based compensation arrangement by share-based payment award [Line Items] | ||||
Stock based compensation number of shares authorized | 141,680 | |||
Common stock available for grant | 11,298 | |||
2022 Equity Incentive Plan [Member] | Employee Stock Option [Member] | ||||
Share-based compensation arrangement by share-based payment award [Line Items] | ||||
Stock based compensation number of shares authorized | 354,200 | |||
Common stock available for grant | 14,745 |
Stock Based Compensation - Summary of Assumptions Used in Estimating the Fair Value of Options Granted (Detail) |
3 Months Ended |
---|---|
Mar. 31, 2023
$ / shares
| |
Share-based Payment Arrangement [Abstract] | |
Dividend yield | 0.00% |
Risk-free interest rate | 3.59% |
Expected volatility | 24.64% |
Weighted average expected life | 6 years 6 months |
Weighted average per share value of options | $ 3.37 |
Stock Based Compensation - Summary of Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Schedule of share based compensation stock options activity [Line Items] | ||
Stock options - Beginning | 656,130 | |
Stock options - Shares granted | 3,000 | |
Stock options - Ending | 659,130 | 656,130 |
Stock options - Options exercisable | 135,983 | |
Weighted Average Exercise Price - Beginning | $ 8.27 | |
Weighted Average Exercise Price - Granted | 9.94 | |
Weighted Average Exercise Price - Ending | 8.27 | $ 8.27 |
Weighted Average Exercise Price - Options exercisable | $ 6.17 | |
Weighted Average Remaining Contractual Term (Years) | 8 years 5 months 12 days | 8 years 8 months 8 days |
Weighted Average Remaining Contractual Term (Years) - Options granted | 6 years 6 months | |
Weighted Average Remaining Contractual Term (Years) - Options exercisable | 7 years 1 month 20 days | |
Aggregate Intrinsic Value - Beginning | $ 1,122,214 | |
Aggregate Intrinsic Value - Ending | 661,227 | $ 1,122,214 |
Aggregate Intrinsic Value - Options exercisable | $ 302,158 |
Stock Based Compensation - Summary of Nonvested Stock option Activity (Detail) |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023
$ / shares
shares
| ||||
Share-based Payment Arrangement [Abstract] | ||||
Nonvested | shares | 543,306 | |||
Granted | shares | 3,000 | |||
Vested | shares | (23,159) | [1] | ||
Nonvested | shares | 523,147 | |||
Nonvested | $ / shares | $ 2.82 | |||
Granted | $ / shares | 3.37 | |||
Vested | $ / shares | 1.61 | [1] | ||
Nonvested | $ / shares | $ 2.87 | |||
|
Stock Based Compensation - Summary of Nonvested Stock option Activity (Parenthetical) (Detail) |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2023
shares
| ||||||
Shares vested under a nonqualified stock option inducement award | 9,286 | [1],[2] | ||||
President and Chief Executive Officer [Member] | ||||||
Shares vested under a nonqualified stock option inducement award | 2,106 | |||||
|
Stock Based Compensation - Summary of Restricted Stock Unit Activity (Detail) |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2023
$ / shares
shares
| ||||||
Schedule Of Share Based Compensation Restricted Stock Units Award Activity [Abstract] | ||||||
Nonvested | shares | 211,349 | |||||
Vested | shares | (9,286) | [1],[2] | ||||
Nonvested | shares | 202,063 | |||||
Nonvested | $ / shares | $ 8.71 | |||||
Vested | $ / shares | 6.56 | [1],[2] | ||||
Nonvested | $ / shares | $ 8.81 | |||||
|
Stock Based Compensation - Summary of Restricted Stock Unit Activity (Parenthetical) (Detail) |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2023
shares
| ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares vested under a nonqualified stock option inducement award | 9,286 | [1],[2] | ||||
Restrcited shares vested related to shares surrenders to cover payroll taxes | 1,335 | |||||
President and Chief Executive Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares vested under a nonqualified stock option inducement award | 2,106 | |||||
President and Chief Executive Officer [Member] | Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares vested under a nonqualified stock option inducement award | 263 | |||||
|
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