QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Large accelerated filer
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☐
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Accelerated filer
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☐
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☒
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Smaller reporting company
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Emerging growth company
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Page
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PART I.
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5
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Item 1.
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5
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5
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6
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7
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8
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||
9
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||
Item 2.
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31
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Item 3.
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54 |
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Item 4.
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54
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PART II.
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55 |
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Item 1.
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55 |
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Item 1A.
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55 |
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Item 2.
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56 |
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Item 3.
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56 |
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Item 4.
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56 |
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Item 5.
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56 |
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Item 6.
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57 |
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58 |
• |
conditions relating to the Covid-19 pandemic, including the severity and duration of the associated economic slowdown either nationally or in our market areas, and the response of governmental authorities
to the Covid-19 pandemic and our participation in Covid-19-related government programs such as the Paycheck Protection Program (“PPP”);
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• |
system failure or cybersecurity breaches of our network security;
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• |
the success of the financial technology industry, the development and acceptance of which is subject to a high degree of uncertainty, as well as the continued evolution of the regulation of this industry;
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• |
our ability to keep pace with rapid technological changes in the industry or implement new technology effectively;
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• |
our reliance on third-party service providers for core systems support, informational website hosting, internet services, online account opening and other processing services;
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• |
general economic conditions, either nationally or in our market areas (including interest rate environment, government economic and monetary policies, the strength of global financial markets and
inflation and deflation), that impact the financial services industry and/or our business;
|
• |
increased competition in the financial services industry, particularly from regional and national institutions and other companies that offer banking services;
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• |
our ability to measure and manage our credit risk effectively and the potential deterioration of the business and economic conditions in our primary market areas;
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• |
the adequacy of our risk management framework;
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• |
the adequacy of our allowance for loan losses (“ALL”);
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• |
the financial soundness of other financial institutions;
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• |
new lines of business or new products and services;
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• |
changes in Small Business Administration (“SBA”) rules, regulations and loan products, including specifically the Section 7(a) program, changes in SBA standard operating procedures or changes to the
status of the Bank as an SBA Preferred Lender;
|
• |
changes in the value of collateral securing our loans;
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• |
possible increases in our levels of nonperforming assets;
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• |
potential losses from loan defaults and nonperformance on loans;
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• |
our ability to protect our intellectual property and the risks we face with respect to claims and litigation initiated against us;
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• |
the inability of small- and medium-sized businesses to whom we lend to weather adverse business conditions and repay loans;
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• |
our ability to implement aspects of our growth strategy and to sustain our historic rate of growth;
|
• |
our ability to continue to originate, sell and retain loans, including through our Strategic Programs;
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• |
the concentration of our lending and depositor relationships through Strategic Programs in the financial technology industry generally;
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• |
our ability to attract additional merchants and retain and grow our existing merchant relationships;
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• |
interest rate risk associated with our business, including sensitivity of our interest earning assets and interest bearing liabilities to interest rates, and the impact to our earnings from changes in
interest rates;
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• |
the effectiveness of our internal control over financial reporting and our ability to remediate any future material weakness in our internal control over financial reporting;
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• |
potential exposure to fraud, negligence, computer theft and cyber-crime and other disruptions in our computer systems relating to our development and use of new technology platforms;
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• |
our dependence on our management team and changes in management composition;
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• |
the sufficiency of our capital, including sources of capital and the extent to which we may be required to raise additional capital to meet our goals;
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• |
compliance with laws and regulations, supervisory actions, the Dodd-Frank Act, capital requirements, the Bank Secrecy Act, anti-money laundering laws, predatory lending laws, and other statutes and
regulations;
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• |
changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters, including the application of interest rate
caps or maximums;
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• |
our ability to maintain a strong core deposit base or other low-cost funding sources;
|
• |
results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our ALL or to write-down assets;
|
• |
our involvement from time to time in legal proceedings, examinations and remedial actions by regulators;
|
• |
further government intervention in the U.S. financial system;
|
• |
the ability of our Strategic Program service providers to comply with regulatory regimes, including laws and regulations applicable to consumer credit transactions, and our ability to adequately oversee
and monitor our Strategic Program service providers;
|
• |
our ability to maintain and grow our relationships with our Strategic Program service providers;
|
• |
natural disasters and adverse weather, acts of terrorism, pandemics, an outbreak of hostilities or other international or domestic calamities, and other matters beyond our control;
|
• |
compliance with requirements associated with being a public company;
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• |
level of coverage of our business by securities analysts;
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• |
future equity and debt issuances; and
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• |
other factors listed from time to time in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including, without limitation, this Report, the Company’s Annual Report on Form
10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) and subsequent reports on Form 10-Q and Form 8-K.
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June 30,
|
December 31,
|
||||||
2022 | 2021 | |||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
||||||||
Cash and due from banks
|
$
|
|
$
|
|
||||
Interest-bearing deposits
|
|
|
||||||
Total cash and cash equivalents
|
|
|
||||||
Investment securities held-to-maturity, at cost
|
|
|
||||||
Investment in Federal Home Loan Bank (FHLB) stock, at cost
|
|
|
||||||
Strategic Program loans held-for-sale, at lower of cost or fair value
|
||||||||
Loans receivable, net
|
|
|
||||||
Premises and equipment, net
|
|
|
||||||
Accrued interest receivable
|
|
|
||||||
Deferred taxes, net
|
|
|
||||||
SBA servicing asset, net
|
|
|
||||||
Investment in Business Funding Group (BFG), at fair value
|
|
|
||||||
Investment in FinWise Investments, LLC
|
|
|
||||||
Operating lease right-of-use (“ROU”) assets
|
|
|
||||||
Income tax receivable, net
|
||||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
|
||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Liabilities
|
||||||||
Deposits
|
||||||||
Noninterest-bearing
|
$
|
|
$
|
|
||||
Interest-bearing
|
|
|
||||||
Total deposits
|
|
|
||||||
Accrued interest payable
|
|
|
||||||
Income taxes payable, net
|
|
|
||||||
PPP Liquidity Facility
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
|
||||||||
Commitments and contingencies (Note 8)
|
||||||||
|
||||||||
Shareholders’ equity
|
||||||||
Preferred stock, $
|
|
|
||||||
Common stock, $
|
|
|
||||||
Additional paid-in-capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
For the Three Months
Ended June 30,
|
For the Six Months
Ended June 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Interest income
|
||||||||||||||||
Interest and fees on loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Interest on securities
|
|
|
|
|
||||||||||||
Other interest income
|
|
|
|
|
||||||||||||
Total interest income
|
|
|
|
|
||||||||||||
Interest expense
|
||||||||||||||||
Interest on deposits
|
|
|
|
|
||||||||||||
Interest on PPP Liquidity Facility
|
|
|
|
|
||||||||||||
Total interest expense
|
|
|
|
|
||||||||||||
Net interest income
|
|
|
|
|
||||||||||||
Provision for loan losses
|
|
|
|
|
||||||||||||
Net interest income after provision for loan losses
|
|
|
|
|
||||||||||||
Non-interest income
|
||||||||||||||||
Strategic Program fees
|
|
|
|
|
||||||||||||
Gain on sale of loans, net
|
|
|
|
|
||||||||||||
SBA loan servicing fees
|
|
|
|
|
||||||||||||
Change in fair value on investment in BFG
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Other miscellaneous income
|
|
|
|
|
||||||||||||
Total non-interest income
|
|
|
|
|
||||||||||||
Non-interest expense
|
||||||||||||||||
Salaries and employee benefits
|
|
|
|
|
||||||||||||
Occupancy and equipment expenses
|
|
|
|
|
||||||||||||
(Recovery) impairment of SBA servicing asset
|
|
|
|
|
||||||||||||
Other operating expenses
|
|
|
|
|
||||||||||||
Total non-interest expense
|
|
|
|
|
||||||||||||
Income before income tax expense
|
|
|
|
|
||||||||||||
Provision for income taxes
|
|
|
|
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Earnings per share, basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Earnings per share, diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Weighted average shares outstanding, basic
|
|
|
|
|
||||||||||||
Weighted average shares outstanding, diluted
|
|
|
|
|
Common Stock
|
||||||||||||||||||||
|
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Total
Shareholders’
Equity
|
|||||||||||||||
Balance at March 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|||||||||||||||
Net Income
|
—
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Common Stock
|
||||||||||||||||||||
|
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Total
Shareholders’
Equity
|
|||||||||||||||
Balance at January 1, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|||||||||||||||
Stock options exercised
|
|
|
|
|
|
|||||||||||||||
Net Income
|
—
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Common Stock
|
||||||||||||||||||||
|
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Total
Shareholders’
Equity
|
|||||||||||||||
Balance at March 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|||||||||||||||
Net Income
|
—
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Common Stock
|
||||||||||||||||||||
|
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Total
Shareholders’
Equity
|
|||||||||||||||
Balance at January 1, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|||||||||||||||
Stock options exercised
|
|
|
|
|
|
|||||||||||||||
Net Income
|
—
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
For the Six Months
Ended June 30,
|
||||||||
2022
|
2021
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash from operating activities
|
||||||||
Depreciation and amortization
|
|
|
||||||
Provision for loan losses
|
|
|
||||||
Amortization of operating lease ROU asset
|
|
|
||||||
Net amortization in securities discounts and premiums
|
|
|
||||||
Capitalized servicing assets
|
(
|
)
|
(
|
)
|
||||
Gain on sale of SBA loans, net
|
(
|
)
|
(
|
)
|
||||
Originations of Strategic Program loans held-for-sale
|
(
|
)
|
(
|
)
|
||||
Proceeds on Strategic Program loans held-for-sale
|
|
|
||||||
Change in fair value of BFG
|
|
(
|
)
|
|||||
Impairment of SBA servicing asset
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
Deferred income tax benefit
|
(
|
)
|
(
|
)
|
||||
Net changes in:
|
||||||||
Accrued interest receivable
|
|
|
||||||
Accrued interest payable
|
(
|
)
|
(
|
)
|
||||
Other assets
|
(
|
)
|
(
|
)
|
||||
Operating lease liabilities
|
|
|
||||||
Other liabilities
|
(
|
)
|
|
|||||
Net cash provided by (used in) operating activities
|
|
(
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Net decrease in loans receivable
|
|
|
||||||
Distributions from BFG
|
|
|
||||||
Purchase of bank premises and equipment
|
(
|
)
|
(
|
)
|
||||
Proceeds from maturities and paydowns of securities held-to-maturity
|
|
|
||||||
Purchases of securities held to maturity
|
(
|
)
|
|
|||||
Purchase of FHLB stock
|
(
|
)
|
(
|
)
|
||||
Net cash provided by investing activities
|
|
|
||||||
Cash flows from financing activities:
|
||||||||
Net increase (decrease) in deposits
|
(
|
)
|
|
|||||
Proceeds from exercise of stock options
|
|
|
||||||
Proceeds from PPP Liquidity Facility
|
|
|
||||||
Repayment of PPP Liquidity Facility
|
(
|
)
|
(
|
)
|
||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
||||
Net change in cash and cash equivalents
|
|
(
|
)
|
|||||
Cash and cash equivalents, beginning of the period
|
|
|
||||||
Cash and cash equivalents, end of the period
|
$
|
|
$
|
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the period
|
||||||||
Income taxes
|
$
|
|
$
|
|
||||
Interest
|
$
|
|
$
|
|
||||
Supplemental disclosures of noncash operating activities:
|
||||||||
Right-of-use assets obtained in exchange for operating lease liabilities (ASC 842 adoption
effective January 1, 2022)
|
$
|
|
$
|
|
|
June 30, 2022
|
|||||||||||||||
($ in thousands)
|
Amortized
Cost
|
Unrealized
Gain
|
Unrealized
Loss
|
Estimated
Fair Value
|
||||||||||||
Mortgage-backed securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
December 31, 2021
|
|||||||||||||||
($ in thousands)
|
Amortized
Cost
|
Unrealized
Gain
|
Unrealized
Loss
|
Estimated
Fair Value
|
||||||||||||
Mortgage-backed securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
June 30, 2022
|
|||||||||||||||||||||||
Less than 12 months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
($ in thousands)
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
Mortgage-backed securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
|
December 31, 2021
|
|||||||||||||||||||||||
Less than 12 months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
($ in thousands)
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
Mortgage-backed securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
June 30, 2022
|
December 31, 2021
|
|||||||||||||||
($ in thousands)
|
Amortized
Cost
|
Estimated
Fair Value
|
Amortized
Cost
|
Estimated
Fair Value
|
||||||||||||
Securities held-to-maturity
|
||||||||||||||||
Due in one year or less
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Due after one year through five years
|
|
|
|
|
||||||||||||
Due after five years through ten years
|
|
|
|
|
||||||||||||
Due after ten years
|
|
|
|
|
||||||||||||
Total Securities held-to-maturity
|
$
|
|
$
|
|
$
|
|
$
|
|
|
June 30,
|
December 31,
|
||||||
|
2022
|
2021
|
||||||
($ in thousands)
|
||||||||
SBA
|
$
|
|
$
|
|
||||
Commercial, non-real estate
|
|
|
||||||
Residential real estate
|
|
|
||||||
Strategic Program loans
|
|
|
||||||
Commercial real estate
|
|
|
||||||
Consumer
|
|
|
||||||
Total loans
|
$
|
|
$
|
|
||||
Loans held-for-sale
|
(
|
)
|
(
|
)
|
||||
Total loans held for investment
|
$
|
|
$
|
|
||||
Deferred loan costs (fees), net
|
(
|
)
|
|
|||||
Allowance for loan losses
|
(
|
)
|
(
|
)
|
||||
Net loans
|
$
|
|
$
|
|
|
June 30,
|
December 31,
|
||||||
|
2022
|
2021
|
||||||
($ in thousands)
|
||||||||
Retained Strategic Program loans
|
$
|
|
$
|
|
||||
Strategic Program loans held-for-sale
|
|
|
||||||
Total Strategic Program loans
|
$
|
|
$
|
|
Three Months Ended
June 30, 2022
|
||||||||||||||||||||||||||||
($ in thousands)
|
SBA
|
Commercial,
Non-Real
Estate
|
Residential
Real
Estate
|
Strategic
Program
Loans
|
Commercial
Real Estate
|
Consumer
|
Total
|
|||||||||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Charge-offs
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Provision for loan losses
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Ending balance individually evaluated for impairment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ending balance collectively evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Loans receivable
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Ending balance individually evaluated for impairment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ending balance collectively evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Six Months Ended
June 30, 2022
|
||||||||||||||||||||||||||||
($ in thousands)
|
SBA
|
Commercial,
Non-Real
Estate
|
Residential
Real
Estate
|
Strategic
Program
Loans
|
Commercial
Real Estate
|
Consumer
|
Total
|
|||||||||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Charge-offs
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Provision for loan losses
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Ending balance individually evaluated for impairment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ending balance collectively evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Loans receivable
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Ending balance individually evaluated for impairment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ending balance collectively evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
June 30,
2021
|
||||||||||||||||||||||||||||
($ in thousands)
|
SBA
|
Commercial,
Non-Real
Estate
|
Residential
Real
Estate
|
Strategic
Program
Loans
|
Commercial
Real Estate
|
Consumer
|
Total
|
|||||||||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Charge-offs
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Provision for loan losses
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at end of period
|
$
|
|
|
|
|
|
|
|
||||||||||||||||||||
Ending balance individually evaluated for impairment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ending balance collectively evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Loans receivable
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Ending balance individually evaluated for impairment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ending balance collectively evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Six Months Ended
June 30,
2021
|
||||||||||||||||||||||||||||
($ in thousands)
|
SBA
|
Commercial,
Non-Real
Estate
|
Residential
Real
Estate
|
Strategic
Program
Loans
|
Commercial
Real Estate
|
Consumer
|
Total
|
|||||||||||||||||||||
Beginning balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Charge-offs
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Provision for loan losses
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Ending balance individually evaluated for impairment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ending balance collectively evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Loans receivable
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Ending balance individually evaluated for impairment
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ending balance collectively evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
June 30, 2022
|
||||||||||||||||||||
|
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
($ in thousands)
|
||||||||||||||||||||
With no related allowance recorded
|
||||||||||||||||||||
SBA
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Commercial, non-real estate
|
|
|
|
|
|
|||||||||||||||
Residential real estate
|
|
|
|
|
|
|||||||||||||||
Strategic Program loans
|
|
|
|
|
|
|||||||||||||||
Commercial real estate
|
|
|
|
|
|
|||||||||||||||
Consumer
|
|
|
|
|
|
|||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
||||||||||||||||||||
|
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||
($ in thousands)
|
||||||||||||||||||||
With no related allowance recorded
|
||||||||||||||||||||
SBA
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Commercial, non-real estate
|
|
|
|
|
|
|||||||||||||||
Residential real estate
|
|
|
|
|
|
|||||||||||||||
Strategic Program loans
|
|
|
|
|
|
|||||||||||||||
Commercial real estate
|
|
|
|
|
|
|||||||||||||||
Consumer
|
|
|
|
|
|
|||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
June 30, 2022
|
||||||||||||||||||||||||||||
($ in thousands)
|
Current
|
30-59
Days
Past
Due |
60-89
Days
Past
Due
|
90+ Days
Past Due
&
Still
Accruing
|
Total
Past
Due
|
Non-
Accrual |
Total
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
SBA
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Commercial, non-real estate
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Residential real estate
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Strategic Program loans
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Commercial real estate
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Consumer
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
||||||||||||||||||||||||||||
($ in thousands)
|
Current
|
30-59
Days
Past
Due
|
60-89
Days
Past
Due
|
90+ Days
Past Due
&
Still
Accruing
|
Total
Past
Due
|
Non-
Accrual
|
Total
|
|||||||||||||||||||||
SBA
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Commercial, non-real estate
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Residential real estate
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Strategic Program loans
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Commercial real estate
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Consumer
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
June 30, 2022
|
||||||||||||||||
($ in thousands)
|
Pass
Grade 1-4
|
Special
Mention
Grade 5
|
Classified/
Doubtful/Loss
Grade 6-8
|
Total
|
||||||||||||
SBA
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Commercial, non-real estate
|
|
|
|
|
||||||||||||
Residential real estate
|
|
|
|
|
||||||||||||
Commercial real estate
|
|
|
|
|
||||||||||||
Consumer
|
|
|
|
|
||||||||||||
Not Risk Graded
|
||||||||||||||||
Strategic Program loans
|
|
|||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2021
|
||||||||||||||||
($ in thousands)
|
Pass
Grade 1-4
|
Special
Mention
Grade 5
|
Classified/
Doubtful/Loss
Grade 6-8
|
Total
|
||||||||||||
SBA
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Commercial, non-real estate
|
|
|
|
|
||||||||||||
Residential real estate
|
|
|
|
|
||||||||||||
Commercial real estate
|
|
|
|
|
||||||||||||
Consumer
|
|
|
|
|
||||||||||||
Not Risk Graded
|
||||||||||||||||
Strategic Program loans
|
|
|||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
($ in thousands)
|
Number
of
Contracts
|
Pre-
Modification
Outstanding
Recorded
Investment
|
Post-
Modification
Outstanding
Recorded
Investment
|
|||||||||
June 30, 2022
|
||||||||||||
SBA
|
|
$
|
|
$
|
|
|||||||
Total at June 30, 2022
|
|
$
|
|
$
|
|
|||||||
December 31, 2021
|
||||||||||||
SBA
|
|
$
|
|
$
|
|
|||||||
Total at December 31, 2021
|
|
$
|
|
$
|
|
|||||||
Non-Accrual
|
||||||||||||
SBA
|
|
$
|
|
$
|
|
June 30, | December 31, | |||||||
|
2022
|
2021
|
||||||
($ in thousands)
|
||||||||
Leasehold improvements
|
$
|
|
$
|
|
||||
Furniture, fixtures, and equipment
|
|
|
||||||
Construction in progress
|
|
|
||||||
Total premises and equipment
|
$
|
|
$
|
|
||||
Less accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
Premises and equipment, net
|
$
|
|
$
|
|
Six Months Ended December 31, 2022
|
$
|
|
||
Year Ended December 31, 2023
|
|
|||
Year Ended December 31, 2024
|
|
|||
Year Ended December 31, 2025
|
|
|||
Year Ended December 31, 2026
|
|
|||
Thereafter
|
|
|||
Total
|
|
|||
Less present value discount
|
(
|
)
|
||
Operating lease liabilities
|
$
|
|
|
Six Months Ended
|
|||
|
June 30, 2022
|
|||
Weighted-average remaining lease term – operating leases (in years)
|
|
|||
Weighted-average discount rate – operating leases
|
|
%
|
|
Three Months
Ended June 30,
|
Six Months
Ended June 30,
|
||||||
|
2022
|
2022
|
||||||
($ in thousands)
|
||||||||
Operating cash flows from operating leases
|
$
|
|
$
|
|
||||
Right-of-use assets obtained in exchange for operating lease liabilities
|
|
|
|
Three Months Ended
June 30, 2022
|
Six Months Ended
June 30, 2022
|
||||||
(in thousands)
|
||||||||
Operating leases
|
||||||||
Operating lease cost
|
$
|
|
$ |
|||||
Variable lease cost
|
|
|||||||
Operating lease expense
|
|
|||||||
Short-term lease rent expense
|
|
|||||||
Net rent expense
|
$
|
|
$ |
|
June 30,
|
December 31,
|
||||||
|
2022
|
2021
|
||||||
($ in thousands)
|
||||||||
Demand
|
$
|
|
$
|
|
||||
Savings
|
|
|
||||||
Money markets
|
|
|
||||||
Time certificates of deposit
|
|
|
||||||
Total deposits
|
$
|
|
$
|
|
Year Ended December 31, 2022
|
$
|
|
||
Year Ended December 31, 2023
|
|
|||
Year Ended December 31, 2024
|
|
|||
Year Ended December 31, 2025
|
|
|||
Year Ended December 31, 2026
|
|
|||
Thereafter
|
|
|||
Total
|
|
|
For the Six Months
Ended June 30,
|
|||||||
($ in thousands)
|
2022 |
2021 |
||||||
Beginning balance
|
$ | $ | ||||||
Additions to servicing asset
|
||||||||
Impairment of SBA servicing asset
|
( |
) | ||||||
Amortization of servicing asset
|
( |
) | ( |
) | ||||
Ending balance
|
$ | $ |
|
Actual
|
Well-Capitalized
Requirement
|
||||||||||||||
($ in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||
June 30, 2022
|
||||||||||||||||
Leverage ratio (CBLR election)
|
$
|
|
|
%
|
$
|
|
*
|
|
%
|
|||||||
December 31, 2021
|
||||||||||||||||
Leverage ratio (CBLR election)
|
$
|
|
|
%
|
$
|
|
*
|
|
%
|
|
June 30,
|
December 31,
|
||||||
($ in thousands)
|
2022
|
2021
|
||||||
Revolving, open-end lines of credit
|
$
|
|
$
|
|
||||
Commercial real estate
|
|
|
||||||
Other unused commitments
|
|
|
||||||
|
$
|
|
$
|
|
|
For the Six Months Ended June 30,
|
|||||||
2022 |
2021 |
|||||||
Risk-free interest rate
|
|
%
|
|
%
|
||||
Expected term in years
|
|
|
||||||
Expected volatility
|
|
%
|
|
%
|
||||
Expected dividend yield
|
|
|
|
Stock
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life (in
years)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding at March 31, 2022
|
|
$
|
|
|
$
|
|
||||||||||
Options granted
|
|
|
|
|
||||||||||||
Options forfeited
|
(
|
)
|
|
—
|
|
|||||||||||
Outstanding at June 30, 2022
|
|
$
|
|
|
$
|
|
||||||||||
Options vested and exercisable at June 30, 2022
|
|
$
|
|
|
$
|
|
|
Stock
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life (in
years)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding at December 31, 2021
|
$ |
$
|
|
|||||||||||||
Options granted
|
||||||||||||||||
Options exercised
|
(
|
)
|
|
— |
|
|||||||||||
Options forfeited
|
(
|
)
|
|
— |
|
|||||||||||
Outstanding at June 30, 2022
|
|
$
|
|
$
|
|
|||||||||||
Options vested and exercisable at June 30, 2022
|
|
$
|
|
$
|
|
|
For the Three Months Ended
June 30,
|
For the Six Months
Ended June 30,
|
||||||||||||||
($ in thousands)
|
2022
|
2021
|
2022 | 2021 |
||||||||||||
Pre-tax
|
||||||||||||||||
Stock options
|
$
|
|
$
|
|
$ | $ | ||||||||||
Restricted shares
|
|
|
||||||||||||||
Total
|
$
|
|
$
|
|
$ | $ | ||||||||||
After-tax
|
||||||||||||||||
Stock options
|
$
|
|
$
|
|
$ | $ | ||||||||||
Restricted shares
|
|
|
||||||||||||||
Total
|
$
|
|
$
|
|
$ | $ |
|
For the Six Months
Ended June 30,
|
|||||||
($ in thousands)
|
2022
|
2021
|
||||||
Beginning balance
|
$
|
|
$
|
|
||||
Distributions from BFG
|
(
|
)
|
(
|
)
|
||||
Change in fair value of BFG
|
(
|
)
|
|
|||||
Ending balance
|
$
|
|
$
|
|
|
June 30, 2022
|
December 31, 2021
|
||||||||||||||||||
($ in thousands)
|
Level
|
Carrying
Amount
|
Estimated
Fair Value
|
Carrying
Amount
|
Estimated
Fair Value
|
|||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
1
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Investment securities held-to-maturity
|
2
|
|
|
|
|
|||||||||||||||
Investment in FHLB stock
|
2
|
|
|
|
|
|||||||||||||||
Loans held for investment
|
3
|
|
|
|
|
|||||||||||||||
Loans held-for-sale
|
2
|
|
|
|
|
|||||||||||||||
Accrued interest receivable
|
2
|
|
|
|
|
|||||||||||||||
SBA servicing asset
|
2
|
|
|
|
|
|||||||||||||||
Investment in BFG
|
3
|
|
|
|
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Total deposits
|
2
|
|
|
|
|
|||||||||||||||
Accrued interest payable
|
2
|
|
|
|
|
|||||||||||||||
PPP Liquidity Facility
|
2
|
|
|
|
|
($ in thousands)
|
Fair Value Measurements Using
|
|||||||||||||||
Description of Financial Instrument
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
June 30, 2022
|
||||||||||||||||
Nonrecurring assets
|
||||||||||||||||
Impaired loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
December 31, 2021
|
||||||||||||||||
Nonrecurring assets
|
||||||||||||||||
Impaired loans
|
$
|
|
$
|
|
$
|
|
$
|
|
($ in thousands)
|
Fair Value
|
Valuation
Technique
|
Unobservable
Input
|
Range
(Weighted Average)
|
||||||
June 30, 2022
|
||||||||||
Impaired loans
|
$
|
|
Market
comparable
|
Adjustment to
appraisal value
|
|
%
|
||||
|
||||||||||
December 31, 2021
|
||||||||||
Impaired loans
|
$
|
|
Market
comparable
|
Adjustment to
appraisal value
|
|
%
|
June 30, 2022
|
December 31, 2021
|
|||||||
($ in thousands)
|
Range
(Weighted Average)
|
Range
(Weighted Average)
|
||||||
Discounted Cash Flows
|
||||||||
Revenue growth rate
|
|
%
|
|
%
|
||||
Expense growth rate
|
|
%
|
|
%
|
||||
Discount rate
|
|
%
|
|
%
|
||||
Guideline Public Company
|
||||||||
Multiples of enterprise value
|
|
|
|
For the Three Months
Ended June 30,
|
For the Six Months
Ended June 30,
|
||||||||||||||
($ in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Numerator:
|
||||||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Amount allocated to participating common shareholders(1)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net income allocate to common shareholders
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Denominator:
|
||||||||||||||||
Weighted average shares outstanding, basic
|
|
|
$
|
|
|
|||||||||||
Weighted average effect of dilutive securities:
|
||||||||||||||||
Stock options
|
|
|
|
|
||||||||||||
Warrants
|
|
|
|
|
||||||||||||
Weighted average shares outstanding, diluted
|
|
|
|
|
||||||||||||
Earnings per share, basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Earnings per share, diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
|
For the Three Months
Ended June 30,
|
For the Six Months
Ended June 30,
|
||||||||||||||
($ in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Interest income
|
||||||||||||||||
Interest income, not-in-scope
|
||||||||||||||||
Interest and fees on loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Interest on securities
|
|
|
|
|
||||||||||||
Other interest income
|
|
|
|
|
||||||||||||
Total interest income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Non-interest income
|
||||||||||||||||
Non-interest income, in-scope
|
||||||||||||||||
Service charges on deposit accounts
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Strategic Program set up fees
|
|
|
|
|
||||||||||||
Non-interest income, not in-scope
|
||||||||||||||||
Strategic Program fees
|
|
|
|
|
||||||||||||
Gain on sale of loans
|
|
|
|
|
||||||||||||
SBA loan servicing fees
|
|
|
|
|
||||||||||||
Change in fair value on investment in BFG
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Other miscellaneous income
|
|
|
|
|
||||||||||||
Strategic Program service charges
|
|
|
|
|
||||||||||||
Total non-interest income
|
$
|
|
$
|
|
$
|
|
$
|
|
Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
For the Three Months
Ended June 30,
|
For the Six Months
Ended June 30,
|
||||||||||||||
($ in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Interest income
|
$
|
13,013
|
$
|
11,135
|
$
|
26,236
|
$
|
19,941
|
||||||||
Interest expense
|
(244
|
)
|
(333
|
)
|
(506
|
)
|
(705
|
)
|
||||||||
Provision for loan losses
|
(2,913
|
)
|
(1,536
|
)
|
(5,860
|
)
|
(2,169
|
)
|
||||||||
Non-interest income
|
8,431
|
8,161
|
20,113
|
14,240
|
||||||||||||
Non-interest expense
|
(11,019
|
)
|
(7,079
|
)
|
(20,067
|
)
|
(13,742
|
)
|
||||||||
Provision for income taxes
|
(1,786
|
)
|
(2,609
|
)
|
(5,000
|
)
|
(4,535
|
)
|
||||||||
Net income
|
5,482
|
7,739
|
14,916
|
13,030
|
|
Three Months Ended June 30,
|
|||||||||||||||||||||||
|
2022
|
2021
|
||||||||||||||||||||||
($ in thousands)
|
Average
Balance
|
Interest
|
Average
Yield/Rate
|
Average
Balance
|
Interest
|
Average
Yield/Rate
|
||||||||||||||||||
Interest earning assets:
|
||||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve, non-
|
||||||||||||||||||||||||
U.S. central banks and other banks
|
$
|
82,046
|
$
|
105
|
0.51
|
%
|
$
|
49,682
|
$
|
10
|
0.08
|
%
|
||||||||||||
Investment securities
|
11,837
|
44
|
1.49
|
%
|
1,622
|
6
|
1.48
|
%
|
||||||||||||||||
Loans held for sale
|
74,800
|
5,949
|
31.81
|
%
|
49,684
|
5,049
|
40.65
|
%
|
||||||||||||||||
Loans held for investment
|
204,501
|
6,915
|
13.53
|
%
|
200,062
|
6,070
|
12.14
|
%
|
||||||||||||||||
Total interest earning assets
|
373,184
|
13,013
|
13.95
|
%
|
301,050
|
11,135
|
14.79
|
%
|
||||||||||||||||
Less: ALL
|
(10,425
|
)
|
(6,334
|
)
|
||||||||||||||||||||
Non-interest earning assets
|
32,558
|
13,214
|
||||||||||||||||||||||
Total assets
|
$
|
395,317
|
$
|
307,930
|
||||||||||||||||||||
Interest bearing liabilities:
|
||||||||||||||||||||||||
Demand
|
$
|
7,587
|
$
|
27
|
1.42
|
%
|
$
|
5,533
|
$
|
13
|
0.94
|
%
|
||||||||||||
Savings
|
7,430
|
1
|
0.05
|
%
|
8,328
|
3
|
0.14
|
%
|
||||||||||||||||
Money market accounts
|
29,318
|
21
|
0.29
|
%
|
18,872
|
18
|
0.38
|
%
|
||||||||||||||||
Certificates of deposit
|
82,870
|
195
|
0.94
|
%
|
57,468
|
257
|
1.79
|
%
|
||||||||||||||||
Total deposits
|
127,205
|
244
|
0.77
|
%
|
90,201
|
291
|
1.29
|
%
|
||||||||||||||||
Other borrowings
|
601
|
—
|
0.35
|
%
|
48,621
|
42
|
0.35
|
%
|
||||||||||||||||
Total interest bearing liabilities
|
127,806
|
244
|
0.76
|
%
|
138,822
|
333
|
0.96
|
%
|
||||||||||||||||
Non-interest bearing deposits
|
120,359
|
105,459
|
||||||||||||||||||||||
Non-interest bearing liabilities
|
19,429
|
9,464
|
||||||||||||||||||||||
Shareholders’ equity
|
127,723
|
54,185
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
395,317
|
$
|
307,930
|
||||||||||||||||||||
Net interest income and interest rate spread
|
$
|
12,769
|
13.19
|
%
|
$
|
10,802
|
13.83
|
%
|
||||||||||||||||
Net interest margin
|
13.69
|
%
|
14.35
|
%
|
||||||||||||||||||||
Ratio of average interest-earning assets to average interest- bearing liabilities
|
291.99
|
%
|
216.86
|
%
|
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
|
2022
|
2021
|
||||||||||||||||||||||
($ in thousands)
|
Average
Balance
|
Interest
|
Average
Yield/Rate
|
Average
Balance
|
Interest
|
Average
Yield/Rate
|
||||||||||||||||||
Interest earning assets:
|
||||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve, non-
|
||||||||||||||||||||||||
U.S. central banks and other banks
|
$
|
80,962
|
$
|
133
|
0.33
|
%
|
$
|
48,291
|
$
|
20
|
0.08
|
%
|
||||||||||||
Investment securities
|
11,552
|
83
|
1.44
|
%
|
1,685
|
12
|
1.42
|
%
|
||||||||||||||||
Loans held for sale
|
84,650
|
12,714
|
30.04
|
%
|
42,556
|
8,615
|
40.49
|
%
|
||||||||||||||||
Loans held for investment
|
203,282
|
13,306
|
13.09
|
%
|
211,830
|
11,294
|
10.66
|
%
|
||||||||||||||||
Total interest earning assets
|
380,446
|
26,236
|
13.79
|
%
|
304,362
|
19,941
|
13.10
|
%
|
||||||||||||||||
Less: ALL
|
(10,391
|
)
|
(6,311
|
)
|
||||||||||||||||||||
Non-interest earning assets
|
28,874
|
12,302
|
||||||||||||||||||||||
Total assets
|
$
|
398,929
|
$
|
310,353
|
||||||||||||||||||||
Interest bearing liabilities:
|
||||||||||||||||||||||||
Demand
|
$
|
6,969
|
$
|
41
|
1.18
|
%
|
$
|
5,908
|
$
|
27
|
0.91
|
%
|
||||||||||||
Savings
|
7,056
|
2
|
0.06
|
%
|
7,594
|
6
|
0.16
|
%
|
||||||||||||||||
Money market accounts
|
30,596
|
43
|
0.28
|
%
|
18,303
|
34
|
0.37
|
%
|
||||||||||||||||
Certificates of deposit
|
85,235
|
419
|
0.98
|
%
|
54,196
|
521
|
1.92
|
%
|
||||||||||||||||
Total deposits
|
129,856
|
505
|
0.78
|
%
|
86,001
|
588
|
1.37
|
%
|
||||||||||||||||
Other borrowings
|
792
|
1
|
0.35
|
%
|
67,837
|
117
|
0.35
|
%
|
||||||||||||||||
Total interest bearing liabilities
|
130,648
|
506
|
0.77
|
%
|
153,838
|
705
|
0.92
|
%
|
||||||||||||||||
Non-interest bearing deposits
|
129,014
|
97,330
|
||||||||||||||||||||||
Non-interest bearing liabilities
|
15,630
|
8,032
|
||||||||||||||||||||||
Shareholders’ equity
|
123,637
|
51,153
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
398,929
|
$
|
310,353
|
||||||||||||||||||||
Net interest income and interest rate spread
|
$
|
25,730
|
13.02
|
%
|
$
|
19,236
|
12.18
|
%
|
||||||||||||||||
Net interest margin
|
13.53
|
%
|
12.64
|
%
|
||||||||||||||||||||
Ratio of average interest-earning assets to average interest- bearing liabilities
|
291.20
|
%
|
197.85
|
%
|
($ in thousands)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||||||||||
2022 vs 2021
|
2022 vs 2021
|
|||||||||||||||||||||||
Increase (Decrease) Due to
Change in:
|
Increase (Decrease) Due to
Change in:
|
|||||||||||||||||||||||
($ in thousands)
|
Rate
|
Volume
|
Total
|
Rate
|
Volume
|
Total
|
||||||||||||||||||
Interest income:
|
||||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks
|
$
|
85
|
$
|
10
|
$
|
95
|
$
|
92
|
$
|
21
|
$
|
113
|
||||||||||||
Investment securities
|
—
|
38
|
38
|
—
|
71
|
71
|
||||||||||||||||||
Loans held-for-sale
|
(679
|
)
|
1,579
|
900
|
(1,447
|
)
|
5,546
|
4,099
|
||||||||||||||||
Loans held for investment
|
708
|
137
|
845
|
2,445
|
(433
|
)
|
2,012
|
|||||||||||||||||
Total interest income
|
114
|
1,764
|
1,878
|
1,090
|
5,205
|
6,295
|
||||||||||||||||||
Interest expense:
|
||||||||||||||||||||||||
Demand
|
8
|
6
|
14
|
9
|
5
|
14
|
||||||||||||||||||
Savings
|
(2
|
)
|
—
|
(2
|
)
|
(4
|
)
|
—
|
(4
|
)
|
||||||||||||||
Money market accounts
|
(2
|
)
|
5
|
3
|
(5
|
)
|
14
|
9
|
||||||||||||||||
Certificates of deposit
|
(924
|
)
|
862
|
(62
|
)
|
593
|
(695
|
)
|
(102
|
)
|
||||||||||||||
Other borrowings
|
—
|
(42
|
)
|
(42
|
)
|
—
|
(116
|
)
|
(116
|
)
|
||||||||||||||
Total interest bearing liabilities
|
(920
|
)
|
831
|
(89
|
)
|
593
|
(792
|
)
|
(199
|
)
|
||||||||||||||
Change in net interest income
|
$
|
1,034
|
$
|
933
|
$
|
1,967
|
$
|
497
|
$
|
5,997
|
$
|
6,494
|
|
For the Three Months
Ended
June 30,
|
Change
|
||||||||||||||
($ in thousands)
|
2022
|
2021
|
$ |
|
%
|
|||||||||||
Noninterest income:
|
||||||||||||||||
Strategic Program fees
|
$
|
6,221
|
$
|
3,942
|
$
|
2,279
|
57.8
|
%
|
||||||||
Gain on sale of loans
|
2,412
|
2,397
|
15
|
0.6
|
%
|
|||||||||||
SBA loan servicing fees
|
342
|
311
|
31
|
10.0
|
%
|
|||||||||||
Change in fair value on investment in BFG
|
(575
|
)
|
1,501
|
(2,076
|
)
|
(138.3
|
%)
|
|||||||||
Other miscellaneous income
|
31
|
10
|
21
|
210.0
|
%
|
|||||||||||
Total noninterest income
|
$
|
8,431
|
$
|
8,161
|
$
|
270
|
3.3
|
%
|
|
For the Six Months
Ended
June 30,
|
Change
|
||||||||||||||
($ in thousands)
|
2022
|
2021
|
$ |
|
%
|
|||||||||||
Noninterest income:
|
||||||||||||||||
Strategic Program fees
|
$
|
12,844
|
$
|
6,895
|
$
|
5,949
|
86.3
|
%
|
||||||||
Gain on sale of loans
|
7,464
|
5,000
|
2,464
|
49.3
|
%
|
|||||||||||
SBA loan servicing fees
|
729
|
463
|
266
|
57.4
|
%
|
|||||||||||
Change in fair value on investment in BFG
|
(973
|
)
|
1,861
|
(2,834
|
)
|
(152.3
|
%)
|
|||||||||
Other miscellaneous income
|
49
|
21
|
28
|
133.5
|
%
|
|||||||||||
Total noninterest income
|
$
|
20,113
|
$
|
14,240
|
$
|
5,873
|
41.2
|
%
|
($ in thousands)
|
For the Three Months
Ended
June 30,
|
Change
|
||||||||||||||
|
2022
|
2021
|
$ |
|
%
|
|||||||||||
Noninterest expense:
|
||||||||||||||||
Salaries and employee benefits
|
$
|
7,182
|
$
|
5,488
|
$
|
1,694
|
30.9
|
%
|
||||||||
Occupancy and equipment expenses
|
419
|
203
|
216
|
106.4
|
%
|
|||||||||||
Impairment of SBA servicing asset
|
1,135
|
—
|
1,135
|
100.0
|
%
|
|||||||||||
Other operating expenses
|
2,283
|
1,388
|
895
|
64.5
|
%
|
|||||||||||
Total noninterest expense
|
$
|
11,019
|
$
|
7,079
|
$
|
3,940
|
55.7
|
%
|
($ in thousands)
|
For the Six Months
Ended
June 30,
|
Change
|
||||||||||||||
|
2022
|
2021
|
$ |
|
%
|
|||||||||||
Noninterest expense:
|
||||||||||||||||
Salaries and employee benefits
|
$
|
14,274
|
$
|
10,383
|
$
|
3,891
|
37.5
|
%
|
||||||||
Occupancy and equipment expenses
|
721
|
397
|
324
|
81.5
|
%
|
|||||||||||
Impairment of SBA servicing asset
|
1,076
|
—
|
1,076
|
100.0
|
%
|
|||||||||||
Other operating expenses
|
3,996
|
2,962
|
1,034
|
34.9
|
%
|
|||||||||||
Total noninterest expense
|
$
|
20,067
|
$
|
13,742
|
$
|
6,325
|
46.0
|
%
|
|
As of June 30,
2022
|
As of December 31,
2021
|
||||||||||||||||
|
Amount
|
% of
total
loans
|
Amount
|
% of
total
loans
|
||||||||||||||
SBA(1)
|
$
|
124,477
|
53.6
|
%
|
$
|
142,392
|
53.6
|
%
|
||||||||||
Commercial, non real estate
|
7,847
|
3.4
|
%
|
3,428
|
1.3
|
%
|
||||||||||||
Residential real estate
|
30,965
|
13.3
|
%
|
27,108
|
10.2
|
%
|
||||||||||||
Strategic Program loans
|
59,066
|
25.5
|
%
|
85,850
|
32.3
|
%
|
||||||||||||
Commercial real estate
|
4,722
|
2.0
|
%
|
2,436
|
0.9
|
%
|
||||||||||||
Consumer
|
5,062
|
2.2
|
%
|
4,574
|
1.7
|
%
|
||||||||||||
Total
|
$
|
232,139
|
100.0
|
%
|
$
|
265,788
|
100.0
|
%
|
At June 30, 2022
|
Remaining Contractual Maturity Held for Investment
|
||||||||||||||||||||
($ in thousands)
|
One Year
or Less
|
After One
Year and
Through
Five Years
|
After Five
Years and
Through
Fifteen
Years
|
After
Fifteen
Years
|
Total
|
||||||||||||||||
Fixed rate loans:
|
|||||||||||||||||||||
SBA(1)
|
$
|
322
|
$
|
692
|
$
|
246
|
$
|
107
|
$
|
1,367
|
|||||||||||
Commercial, non-real estate
|
2,044
|
5,493
|
286
|
24
|
7,847
|
||||||||||||||||
Residential real estate
|
3,909
|
1,850
|
—
|
—
|
5,759
|
||||||||||||||||
Strategic Program loans
|
17,830
|
9,636
|
1
|
—
|
27,467
|
||||||||||||||||
Commercial real estate
|
1,732
|
377
|
10
|
—
|
2,119
|
||||||||||||||||
Consumer
|
1,601
|
3,084
|
64
|
—
|
4,749
|
||||||||||||||||
|
|||||||||||||||||||||
Variable rate loans:
|
|||||||||||||||||||||
SBA
|
7,887
|
30,031
|
51,927
|
33,265
|
123,110
|
||||||||||||||||
Commercial, non-real estate
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||
Residential real estate
|
24,723
|
291
|
192
|
—
|
25,206
|
||||||||||||||||
Strategic Program loans
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||
Commercial real estate
|
1,441
|
533
|
629
|
—
|
2,603
|
||||||||||||||||
Consumer
|
83
|
230
|
—
|
—
|
313
|
||||||||||||||||
Total
|
$
|
61,572
|
$
|
52,217
|
$
|
53,355
|
$
|
33,396
|
$
|
200,540
|
At December 31, 2021
|
Remaining Contractual Maturity Held for Investment
|
||||||||||||||||||||
($ in thousands)
|
One Year
or Less
|
After One
Year and
Through
Five Years
|
After Five
Years and
Through
Fifteen
Years
|
After
Fifteen
Years
|
Total
|
||||||||||||||||
Fixed rate loans:
|
|||||||||||||||||||||
SBA(1)
|
$
|
644
|
$
|
732
|
$
|
259
|
$
|
114
|
$
|
1,749
|
|||||||||||
Commercial, non-real estate
|
1,168
|
2,112
|
142
|
6
|
3,428
|
||||||||||||||||
Residential real estate
|
2,876
|
1,519
|
—
|
—
|
4,395
|
||||||||||||||||
Strategic Program loans
|
18,121
|
6,981
|
—
|
—
|
25,102
|
||||||||||||||||
Commercial real estate
|
1,565
|
639
|
7
|
1
|
2,212
|
||||||||||||||||
Consumer
|
1,500
|
2,793
|
66
|
—
|
4,359
|
||||||||||||||||
|
|||||||||||||||||||||
Variable rate loans:
|
|||||||||||||||||||||
SBA
|
7,920
|
31,598
|
58,493
|
42,632
|
140,643
|
||||||||||||||||
Commercial, non-real estate
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||
Residential real estate
|
22,234
|
291
|
188
|
—
|
22,713
|
||||||||||||||||
Strategic Program loans
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||
Commercial real estate
|
224
|
—
|
—
|
—
|
224
|
||||||||||||||||
Consumer
|
62
|
153
|
—
|
—
|
215
|
||||||||||||||||
Total
|
|
$
|
56,314
|
$
|
46,818
|
$
|
59,155
|
$
|
42,753
|
$
|
205,040
|
|
As of
|
|||||||
($ in thousands)
|
June 30, 2022
|
December 31, 2021
|
||||||
Nonaccrual loans:
|
||||||||
SBA
|
$
|
633
|
$
|
657
|
||||
Commercial, non real estate
|
—
|
—
|
||||||
Residential real estate
|
—
|
—
|
||||||
Strategic Program loans
|
—
|
—
|
||||||
Total nonperforming loans
|
$
|
633
|
$
|
657
|
||||
|
||||||||
Total accruing loans past due 90 days or more
|
$
|
175
|
$
|
54
|
||||
Nonaccrual troubled debt restructuring
|
$
|
—
|
$
|
25
|
||||
Total troubled debt restructurings
|
95
|
106
|
||||||
Other Real Estate Owned
|
—
|
—
|
||||||
Less nonaccrual troubled debt restructurings
|
—
|
(25
|
)
|
|||||
Total nonperforming assets and troubled debt restructurings
|
$
|
728
|
$
|
763
|
||||
Total nonperforming loans to total loans
|
0.3
|
%
|
0.2
|
%
|
||||
Total nonperforming loans to total assets
|
0.2
|
%
|
0.2
|
%
|
||||
Total nonperforming assets and troubled debt restructurings to total loans
|
0.3
|
%
|
0.3
|
%
|
||||
Total nonperforming assets and troubled debt restructurings to total assets
|
0.2
|
%
|
0.2
|
%
|
||||
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans) (1)
|
0.2
|
%
|
0.2
|
%
|
|
As of June 30, 2022
|
|||||||||||||||||||
($ in thousands)
|
Pass
Grade 1-4
|
Special
Mention
Grade 5
|
Classified/
Doubtful
Grade 6-7
|
Loss
Grade 8
|
Total
|
|||||||||||||||
SBA
|
$
|
122,338
|
$
|
1,411
|
$
|
728
|
$
|
—
|
$
|
124,477
|
||||||||||
Commercial, non real estate
|
7,847
|
—
|
—
|
—
|
7,847
|
|||||||||||||||
Residential real estate
|
30,965
|
—
|
—
|
—
|
30,965
|
|||||||||||||||
Commercial real estate
|
4,722
|
—
|
—
|
—
|
4,722
|
|||||||||||||||
Consumer
|
5,062
|
—
|
—
|
—
|
5,062
|
|||||||||||||||
Not Risk Graded
|
||||||||||||||||||||
Strategic Program loans(1)
|
59,066
|
|||||||||||||||||||
Total
|
$
|
170,934
|
$
|
1,411
|
$
|
728
|
$
|
—
|
$
|
232,139
|
|
As of December 31, 2021
|
|||||||||||||||||||
($ in thousands)
|
Pass
Grade 1-4
|
Special
Mention
Grade 5
|
Classified/
Doubtful
Grade 6-7
|
Loss
Grade 8
|
Total
|
|||||||||||||||
SBA
|
$
|
139,985
|
$
|
1,435
|
$
|
972
|
$
|
—
|
$
|
142,392
|
||||||||||
Commercial, non real estate
|
3,382
|
46
|
—
|
—
|
3,428
|
|||||||||||||||
Residential real estate
|
27,108
|
—
|
—
|
—
|
27,108
|
|||||||||||||||
Commercial real estate
|
2,436
|
—
|
—
|
—
|
2,436
|
|||||||||||||||
Consumer
|
4,574
|
—
|
—
|
—
|
4,574
|
|||||||||||||||
Not Risk Graded
|
||||||||||||||||||||
Strategic Program loans(1)
|
85,850
|
|||||||||||||||||||
Total
|
$
|
177,485
|
$
|
1,481
|
$
|
972
|
$
|
—
|
$
|
265,788
|
● |
Specific allowance for identified impaired loans. For such loans that are identified as impaired, an allowance is established when the discounted cash flows (or collateral
value if the loan is collateral dependent) or observable market price of the impaired loan are lower than the carrying value of that loan.
|
Independent appraisals are obtained for all collateral dependent loans deemed impaired when collateral value is expected to exceed $5 thousand net of actual and/or anticipated
liquidation-related expenses. After initially measured for impairment, new appraisals are ordered on at least an annual basis for all real estate secured loans deemed impaired. Non-real estate secured loan appraisal values are reevaluated
and assessed throughout the year based upon interim changes in collateral and market conditions.
|
● |
General valuation allowance. This component represents a valuation allowance on the remainder of the loan portfolio, after excluding impaired loans. For this portion of the
allowance, loans are reviewed based on industry, stage and structure and are assigned allowance percentages based on historical loan loss experience for similar loans with similar characteristics and trends adjusted for qualitative factors.
Qualitative factors that, in management’s judgment, affect the collectability of the portfolio as of the evaluation date, may include changes in lending policies and procedures; changes in national and local economic and business
conditions, including the condition of various market sectors; changes in the nature and volume of the portfolio; changes in the experience, ability and depth of lending management and staff; changes in the volume and severity of past due
and classified loans and in the volume of nonaccruals, troubled debt restructurings, and other loan modifications; the existence and effect of any concentrations of credit and changes in the level of such concentrations; and the effect of
external factors, such as competition and legal and regulatory requirements, on the level of estimated and inherent credit losses in our current portfolio.
|
For the Three Months
Ended
June 30,
|
For the Six Months
Ended
June 30,
|
|||||||||||||||
($ in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
ALL:
|
||||||||||||||||
Beginning balance
|
$
|
9,987
|
$
|
6,184
|
$
|
9,855
|
$
|
6,199
|
||||||||
Provision for loan losses
|
2,913
|
1,536
|
5,860
|
2,169
|
||||||||||||
Charge offs
|
||||||||||||||||
SBA
|
(102
|
)
|
(47
|
)
|
(133
|
)
|
(54
|
)
|
||||||||
Commercial, non-real estate
|
—
|
(22
|
)
|
—
|
(63
|
)
|
||||||||||
Residential real estate
|
—
|
—
|
—
|
—
|
||||||||||||
Strategic Program loans
|
(2,560
|
)
|
(541
|
)
|
(5,438
|
)
|
(1,199
|
)
|
||||||||
Commercial real estate
|
—
|
—
|
—
|
—
|
||||||||||||
Consumer
|
—
|
(1
|
)
|
—
|
(3
|
)
|
||||||||||
Recoveries
|
||||||||||||||||
SBA
|
48
|
—
|
48
|
11
|
||||||||||||
Commercial, non-real estate
|
1
|
81
|
2
|
81
|
||||||||||||
Residential real estate
|
—
|
—
|
—
|
—
|
||||||||||||
Strategic Program loans
|
315
|
48
|
408
|
97
|
||||||||||||
Commercial real estate
|
—
|
—
|
—
|
—
|
||||||||||||
Consumer
|
—
|
1
|
—
|
1
|
||||||||||||
Ending balance
|
10,602
|
7,239
|
10,602
|
7,239
|
|
June 30, 2022
|
|||||||||||||||
($ in thousands)
|
Amount
|
Total
Loans
|
% of
Total
Allowance
|
% of
Loans in
Category
of
Total
Loans
|
||||||||||||
SBA
|
$
|
3,384
|
$
|
124,477
|
31.9
|
%
|
53.6
|
%
|
||||||||
Commercial, non real estate
|
274
|
7,847
|
2.6
|
%
|
3.4
|
%
|
||||||||||
Residential real estate
|
415
|
30,965
|
3.9
|
%
|
13.3
|
%
|
||||||||||
Strategic Program loans
|
6,442
|
59,066
|
60.8
|
%
|
25.5
|
%
|
||||||||||
Commercial real estate
|
22
|
4,722
|
0.2
|
%
|
2.0
|
%
|
||||||||||
Consumer
|
65
|
5,062
|
0.6
|
%
|
2.2
|
%
|
||||||||||
Total
|
$
|
10,602
|
$
|
232,139
|
100.0
|
%
|
100.0
|
%
|
|
December 31, 2021
|
|||||||||||||||
($ in thousands)
|
Amount
|
Total Loans
|
% of
Total
Allowance
|
% of
Loans in
Category
of
Total
Loans
|
||||||||||||
SBA
|
$
|
2,739
|
$
|
142,392
|
27.8
|
%
|
53.6
|
%
|
||||||||
Commercial, non real estate
|
132
|
3,428
|
1.3
|
%
|
1.3
|
%
|
||||||||||
Residential real estate
|
352
|
27,108
|
3.6
|
%
|
10.2
|
%
|
||||||||||
Strategic Program loans
|
6,549
|
85,850
|
66.5
|
%
|
32.3
|
%
|
||||||||||
Commercial real estate
|
21
|
2,436
|
0.2
|
%
|
0.9
|
%
|
||||||||||
Consumer
|
62
|
4,574
|
0.6
|
%
|
1.7
|
%
|
||||||||||
Total
|
$
|
9,855
|
$
|
265,788
|
100.0
|
%
|
100.0
|
%
|
For the Three Months
Ended
June 30,
|
For the Six Months
Ended
June 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Net charge-offs to average loans outstanding by loan category
|
||||||||||||||||
SBA
|
0.2
|
%
|
0.1
|
%
|
0.1
|
%
|
0.1
|
%
|
||||||||
Commercial, non-real estate
|
(0.1
|
%)
|
(6.0
|
%)
|
(0.1
|
%)
|
(0.9
|
%)
|
||||||||
Residential real estate
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
||||||||
Strategic Program loans
|
8.7
|
%
|
3.3
|
%
|
9.0
|
%
|
4.3
|
%
|
||||||||
Commercial real estate
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
||||||||
Consumer
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
0.1
|
%
|
|
As of
|
|||||||
|
June 30,
2022
|
December
31,
2021
|
||||||
ALL to nonperforming loans
|
1,674.9
|
%
|
1,499.1
|
%
|
|
At June 30, 2022
|
|||||||||||||||
|
One Year or Less
|
After One to Five Years
|
||||||||||||||
($ in thousands)
|
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
||||||||||||
Mortgage-backed securities
|
$
|
—
|
—
|
$
|
—
|
—
|
|
At June 30, 2022
|
|||||||||||||||||||
|
After Five to Ten Years Weighted
|
After Ten Years
Weighted
|
||||||||||||||||||
($ in thousands)
|
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
Total
Amortized
Cost
|
|||||||||||||||
Mortgage-backed securities
|
$
|
2,328
|
2.1
|
%
|
$
|
10,135
|
1.6
|
%
|
$
|
12,463
|
|
June 30, 2022
|
December 31, 2021
|
||||||||||||||
($ in thousands)
|
Total
|
Percent
|
Total
|
Percent
|
||||||||||||
Period end:
|
||||||||||||||||
Noninterest-bearing demand deposits
|
$
|
83,490
|
38.1
|
%
|
$
|
110,548
|
43.9
|
%
|
||||||||
Interest-bearing deposits:
|
||||||||||||||||
Demand
|
11,360
|
5.1
|
%
|
5,399
|
2.1
|
%
|
||||||||||
Savings
|
7,462
|
3.4
|
%
|
6,685
|
2.7
|
%
|
||||||||||
Money markets
|
48,273
|
22.0
|
%
|
31,076
|
12.3
|
%
|
||||||||||
Time certificates of deposit
|
68,774
|
31.4
|
%
|
98,184
|
39.0
|
%
|
||||||||||
Total period end deposits
|
$
|
219,359
|
100.0
|
%
|
$
|
251,892
|
100.0
|
%
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||||
|
June 30, 2022
|
December 31, 2021
|
June 30, 2021
|
|||||||||||||||||||||||||||||||||
($ in thousands)
|
Total
|
Weighted
Average
rate paid
|
Percent
of total
|
Total
|
Weighted
Average
rate paid
|
Percent
of total
|
Total
|
Weighted
Average
rate paid
|
Percent
of total
|
|||||||||||||||||||||||||||
Average:
|
||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits
|
$
|
120,359
|
0.00
|
%
|
48.6
|
%
|
$
|
127,590
|
0.00
|
%
|
46.3
|
%
|
$
|
105,459
|
0.00
|
%
|
53.9
|
%
|
||||||||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||||||||||||||
Demand
|
7,587
|
1.42
|
%
|
3.1
|
%
|
7,411
|
0.81
|
%
|
2.7
|
%
|
5,533
|
0.94
|
%
|
2.8
|
%
|
|||||||||||||||||||||
Savings
|
7,430
|
0.05
|
%
|
3.0
|
%
|
7,573
|
0.05
|
%
|
2.7
|
%
|
8,328
|
0.14
|
%
|
4.3
|
%
|
|||||||||||||||||||||
Money market
|
29,318
|
0.29
|
%
|
11.8
|
%
|
28,859
|
0.29
|
%
|
10.5
|
%
|
18,872
|
0.38
|
%
|
9.6
|
%
|
|||||||||||||||||||||
Time certificates of deposit
|
82,870
|
0.94
|
%
|
33.5
|
%
|
104,134
|
0.93
|
%
|
37.8
|
%
|
57,468
|
1.79
|
%
|
29.4
|
%
|
|||||||||||||||||||||
Total average deposits
|
$
|
247,564
|
0.39
|
%
|
100.0
|
%
|
$
|
275,567
|
0.40
|
%
|
100.0
|
%
|
$
|
195,660
|
0.59
|
%
|
100.0
|
%
|
|
Six Months Ended
|
|||||||||||||||||||||||
|
June 30, 2022
|
June 30, 2021
|
||||||||||||||||||||||
($ in thousands)
|
Total
|
Weighted
average
rate paid
|
Percent
of total
|
Total
|
Weighted
average
rate paid
|
Percent
of total
|
||||||||||||||||||
Average:
|
||||||||||||||||||||||||
Noninterest-bearing demand deposits
|
$
|
129,014
|
0.00
|
%
|
49.9
|
%
|
$
|
97,330
|
0.00
|
%
|
53.1
|
%
|
||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||
Demand
|
6,969
|
1.18
|
%
|
2.7
|
%
|
5,908
|
0.91
|
%
|
3.2
|
%
|
||||||||||||||
Savings
|
7,056
|
0.06
|
%
|
2.7
|
%
|
7,594
|
0.16
|
%
|
4.1
|
%
|
||||||||||||||
Money market
|
30,596
|
0.28
|
%
|
11.8
|
%
|
18,303
|
0.37
|
%
|
10.0
|
%
|
||||||||||||||
Time certificates of deposit
|
85,235
|
0.98
|
%
|
32.9
|
%
|
54,196
|
1.92
|
%
|
29.6
|
%
|
||||||||||||||
Total average deposits
|
$
|
258,870
|
0.39
|
%
|
100.0
|
%
|
$
|
183,331
|
0.64
|
%
|
100.0
|
%
|
June 30, 2022
|
||||||||||||||||||||
($ in thousands)
|
Three
months
or less
|
More than
three
months
to six
months
|
More than
six months
to twelve
months
|
More than
twelve
months
|
Total
|
|||||||||||||||
Time deposits, uninsured
|
$
|
—
|
$
|
—
|
$
|
631
|
$
|
148
|
$
|
779
|
|
June 30,
|
December 31,
|
2022
|
2021
|
|||||||||||||
Capital Ratios
|
2022
|
2021
|
Well-
Capitalized
Requirement
|
Well-
Capitalized
Requirement
|
|||||||||||||
Leverage Ratio (under CBLR)
|
21.4
|
%
|
17.7
|
%
|
9.0
|
%(1)
|
8.5
|
%(1)
|
(1)
|
The Well-Capitalized Requirement for years 2022 and 2021 were 9.0% and 8.5%, respectively.
|
($ in thousands)
|
Total
|
Less than
One Year
|
One to
Three
Years
|
Three to
Five Years
|
More
Than Five
Years
|
||||||||||||||||
Contractual Obligations
|
|||||||||||||||||||||
Deposits without stated maturity
|
$
|
94,850
|
$
|
94,850
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||||
Time deposits
|
68,774
|
12,666
|
37,643
|
17,581
|
884
|
||||||||||||||||
Long term borrowings(1)
|
376
|
—
|
376
|
—
|
—
|
||||||||||||||||
Operating lease obligations
|
7,954
|
733
|
2,201
|
2,237
|
2,783
|
||||||||||||||||
Total
|
$
|
171,954
|
$
|
108,249
|
$
|
40,220
|
$
|
19,818
|
$
|
3,667
|
(1)
|
Balances in this category pertain to the PPPLF and are fully-collateralized with PPP loans
|
($ in thousands)
|
As of June 30,
2022
|
As of December 31,
2021
|
||||||
Revolving, open-end lines of credit
|
$
|
1,290
|
$
|
1,259
|
||||
Commercial real estate
|
23,830
|
15,402
|
||||||
Other unused commitments
|
644
|
377
|
||||||
Total commitments
|
$
|
25,764
|
$
|
17,038
|
• |
“Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)” is defined as the sum of nonperforming assets and troubled debt restructurings divided by total assets minus PPP loans.
The most directly comparable GAAP financial measure is the sum of nonperforming assets and troubled debt restructurings to total assets. We believe this measure is important because we believe that PPP loans will not be included in
nonperforming assets or troubled debt restructurings since PPP loans are 100% guaranteed by the SBA. We believe that the non-GAAP measure more accurately discloses the proportion of nonperforming assets and troubled debt restructurings to
total assets consistently with periods prior to the presence of PPP loans.
|
As of
|
||||||||
($ in thousands)
|
June 30, 2022
|
December 31, 2021
|
||||||
Total nonperforming assets and troubled debt restructuring
|
$
|
728
|
$
|
763
|
||||
Total assets
|
$
|
365,987
|
$
|
380,214
|
||||
PPP loans
|
$
|
734
|
$
|
1,091
|
||||
Total assets less PPP loans
|
$
|
365,253
|
$
|
379,123
|
||||
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)
|
0.2
|
%
|
0.2
|
%
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3. |
Defaults Upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Item 6. |
Exhibits
|
Number
|
Description
|
|
Fourth Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on July 30, 2021 (File No. 333-257929)).
|
||
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 30, 2021
(File No. 333-257929)).
|
||
Specimen common stock certificate (incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 15,
2021 (File No. 333-257929)).
|
||
Fourth Amendment to Employment Agreement, dated May 16, 2022, by and between David Tilis and FinWise Bancorp
|
||
Fifth Amendment to Employment Agreement, dated May 27, 2022, by and between David Tilis and FinWise Bancorp
|
||
Separation and Consulting Agreement, dated June 16, 2022, by and among FinWise Bancorp, FinWise Bank and David Tilis (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed
with the Securities and Exchange Commission on June 22, 2022).
|
||
Letter Agreement, dated May 17, 2022, by and between FinWise Bank and James Noone (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 23, 2022).
|
||
FinWise Bancorp 2019 Stock Option Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 14, 2022).
|
||
Rule 13a-14(a) Certification of the Principal Executive Officer.
|
||
Rule 13a-14(a) Certification of the Principal Financial Officer.
|
||
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer.
|
||
101.INS*
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
101.SCH*
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
101.CAL*
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF*
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB*
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE*
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
104*
|
Cover Page Interactive Data File (embedded within the Inline XBRL document in Exhibit 101).
|
* |
Filed herewith.
|
FinWise Bancorp
|
||
Date: August 15, 2022
|
By:
|
/s/ Kent Landvatter
|
Kent Landvatter
|
||
President, Chief Executive Officer and Director
|
||
(Principal Executive Officer)
|
||
Date: August 15, 2022
|
By:
|
/s/ Javvis Jacobson
|
Javvis Jacobson
|
||
Executive Vice President and Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|