QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | o | Accelerated filer | o | |||||||||||
x | Smaller reporting company | |||||||||||||
Emerging growth company |
Page | ||||||||
June 30, | December 31, | ||||||||||
2024 | 2023 | ||||||||||
ASSETS | (Unaudited) | ||||||||||
Cash and cash equivalents | |||||||||||
Cash and due from banks | $ | $ | |||||||||
Interest-bearing deposits in other banks | |||||||||||
Total cash and cash equivalents | |||||||||||
Investment securities held-to-maturity, net of allowance for credit losses of $ | |||||||||||
Investment in Federal Home Loan Bank ("FHLB") stock, at cost | |||||||||||
Strategic Program loans held-for-sale, at lower of cost or fair value | |||||||||||
Loans held for investment, net of allowance for credit losses of $ | |||||||||||
Premises and equipment, net | |||||||||||
Accrued interest receivable | |||||||||||
Small Business Administration (“SBA”) servicing asset, net | |||||||||||
Investment in Business Funding Group ("BFG"), at fair value | |||||||||||
Operating lease right-of-use (“ROU”) assets | |||||||||||
Income taxes 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 | |||||||||||
Deferred income taxes, net | |||||||||||
Paycheck Protection Program Liquidity Facility | |||||||||||
Operating lease liabilities | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 7) | |||||||||||
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, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Interest income | |||||||||||||||||||||||
Interest and fees on loans | $ | $ | $ | $ | |||||||||||||||||||
Interest on securities | |||||||||||||||||||||||
Other interest income | |||||||||||||||||||||||
Total interest income | |||||||||||||||||||||||
Interest expense | |||||||||||||||||||||||
Interest on deposits | |||||||||||||||||||||||
Total interest expense | |||||||||||||||||||||||
Net interest income | |||||||||||||||||||||||
Provision for credit losses | |||||||||||||||||||||||
Net interest income after provision for credit losses | |||||||||||||||||||||||
Non-interest income | |||||||||||||||||||||||
Strategic Program fees | |||||||||||||||||||||||
Gain on sale of loans, net | |||||||||||||||||||||||
SBA loan servicing fees and servicing asset amortization | ( | ||||||||||||||||||||||
Change in fair value on investment in BFG | ( | ( | ( | ||||||||||||||||||||
Other miscellaneous income | |||||||||||||||||||||||
Total non-interest income | |||||||||||||||||||||||
Non-interest expense | |||||||||||||||||||||||
Salaries and employee benefits | |||||||||||||||||||||||
Professional services | |||||||||||||||||||||||
Occupancy and equipment expenses | |||||||||||||||||||||||
Recovery of SBA servicing asset | ( | ( | ( | ( | |||||||||||||||||||
Other operating expenses | |||||||||||||||||||||||
Total non-interest expense | |||||||||||||||||||||||
Income before provision for income taxes | |||||||||||||||||||||||
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, 2024 | $ | $ | $ | $ | |||||||||||||||||||||||||
Stock-based compensation expense | — | — | |||||||||||||||||||||||||||
Common stock repurchased and retired | ( | — | ( | ( | ( | ||||||||||||||||||||||||
Stock options exercised, net | — | — | — | — | |||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
Balance at June 30, 2024 | $ | $ | $ | $ |
Common Stock | |||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Retained Earnings | Total Shareholders’ Equity | |||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | $ | |||||||||||||||||||||||||
Stock-based compensation expense | — | — | |||||||||||||||||||||||||||
Stock options exercised, net | — | — | |||||||||||||||||||||||||||
Common stock repurchased and retired | ( | — | ( | ( | |||||||||||||||||||||||||
BFG ownership purchase | — | ||||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
Balance at June 30, 2024 | $ | $ | $ | $ |
Common Stock | |||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Retained Earnings | Total Shareholders’ Equity | |||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | $ | |||||||||||||||||||||||||
Stock-based compensation expense | — | — | |||||||||||||||||||||||||||
Common stock repurchased and retired | ( | — | ( | ( | |||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | $ |
Common Stock | |||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Retained Earnings | Total Shareholders’ Equity | |||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | |||||||||||||||||||||||||
— | — | — | ( | ( | |||||||||||||||||||||||||
Stock-based compensation expense | — | — | |||||||||||||||||||||||||||
Common stock repurchased and retired | ( | — | ( | ( | |||||||||||||||||||||||||
Stock options exercised, net | — | — | |||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | $ |
For the Six Months Ended June 30, 2024 | |||||||||||
2024 | 2023 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash used in operating activities | |||||||||||
Depreciation and amortization | |||||||||||
Provision for credit losses | |||||||||||
Noncash operating lease cost | |||||||||||
Net (accretion) amortization in securities discounts and premiums | ( | ||||||||||
Additions to servicing asset | ( | ||||||||||
Gain on sale of loans, net | ( | ( | |||||||||
Originations of Strategic Program loans held-for-sale | ( | ( | |||||||||
Proceeds from sale of Strategic Program loans held-for-sale | |||||||||||
Change in fair value of BFG | |||||||||||
Recovery of SBA servicing asset | ( | ( | |||||||||
Stock-based compensation expense | |||||||||||
Deferred income tax expense | |||||||||||
Net changes in: | |||||||||||
Accrued interest receivable | ( | ||||||||||
Accrued interest payable | ( | ||||||||||
Other assets | ( | ||||||||||
Operating lease liabilities | ( | ( | |||||||||
Other liabilities | ( | ( | |||||||||
Net cash used in operating activities | ( | ( | |||||||||
Cash flows from investing activities: | |||||||||||
Net increase in loans receivable | ( | ( | |||||||||
Purchase of lease pools | ( | ( | |||||||||
Investment in equity securities | ( | ||||||||||
Purchase of bank premises and equipment, net | ( | ( | |||||||||
Proceeds from maturities and paydowns of securities held-to-maturity | |||||||||||
Purchases of securities held-to-maturity | ( | ||||||||||
Purchase of FHLB stock | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Net increase in deposits | |||||||||||
Common stock repurchased | ( | ( | |||||||||
Proceeds from exercise of stock options | |||||||||||
Repayment of PPP Liquidity Facility | ( | ( | |||||||||
Net cash provided by 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 investing and financing activities: | |||||||||||
Increase in BFG investment in exchange for shares of the Company’s common stock | $ | $ | |||||||||
June 30, 2024 | |||||||||||||||||||||||||||||
($ in thousands) | Amortized Cost | Allowance for Credit Losses | Unrealized Gain | Unrealized Loss | Estimated Fair Value | ||||||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Collateralized mortgage obligations | ( | ||||||||||||||||||||||||||||
Total securities held-to-maturity | $ | $ | $ | $ | ( | $ |
December 31, 2023 | |||||||||||||||||||||||||||||
($ in thousands) | Amortized Cost | Allowance for Credit Losses | Unrealized Gain | Unrealized Loss | Estimated Fair Value | ||||||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Collateralized mortgage obligations | ( | ||||||||||||||||||||||||||||
Total securities held-to-maturity | $ | $ | $ | $ | ( | $ |
June 30, 2024 | |||||||||||||||||||||||||||||||||||
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 | $ | $ | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||
Collateralized mortgage obligations | ( | ( | ( | ||||||||||||||||||||||||||||||||
Total securities held-to-maturity | $ | $ | ( | $ | $ | ( | $ | $ | ( |
December 31, 2023 | |||||||||||||||||||||||||||||||||||
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 | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Collateralized mortgage obligations | ( | ( | ( | ||||||||||||||||||||||||||||||||
Total securities held-to-maturity | $ | $ | ( | $ | $ | ( | $ | $ | ( |
June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
($ 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, | ||||||||||
2024 | 2023 | ||||||||||
($ in thousands) | |||||||||||
SBA(1) | $ | $ | |||||||||
Commercial leases | |||||||||||
Commercial, non-real estate | |||||||||||
Residential real estate | |||||||||||
Strategic Program loans | |||||||||||
Commercial real estate: | |||||||||||
Owner occupied | |||||||||||
Non-owner occupied | |||||||||||
Consumer | |||||||||||
Total loans held for investment, gross | $ | $ | |||||||||
Deferred loan fees, net | ( | ( | |||||||||
Allowance for credit losses | ( | ( | |||||||||
Net loans | $ | $ | |||||||||
(1) Included in the SBA loans held for investment above are $ |
June 30, 2024 | December 31, 2023 | ||||||||||
($ in thousands) | |||||||||||
Retained Strategic Program loans | $ | $ | |||||||||
Strategic Program loans held-for-sale | |||||||||||
Total Strategic Program loans | $ | $ |
June 30, 2024 | December 31, 2023 | ||||||||||
($ in thousands) | |||||||||||
Construction and land development | $ | $ | |||||||||
Residential real estate | |||||||||||
Residential real estate multifamily | |||||||||||
Commercial real estate: | |||||||||||
Owner occupied | |||||||||||
Non-owner occupied | |||||||||||
Commercial and industrial | |||||||||||
Consumer | |||||||||||
Lease financing receivables | |||||||||||
Retained Strategic Program loans | |||||||||||
Total loans held for investment, gross | $ | $ |
Three Months Ended June 30, 2024 | |||||||||||||||||||||||||||||
($ in thousands) | Beginning Balance | Provision for (Reversal of) Credit Losses | Charge-Offs | Recoveries | Ending Balance | ||||||||||||||||||||||||
Construction and land development | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||
Residential real estate multifamily | |||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Owner occupied | |||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||
Commercial and industrial | ( | ||||||||||||||||||||||||||||
Consumer | ( | ||||||||||||||||||||||||||||
Lease financing receivables | ( | ||||||||||||||||||||||||||||
Retained Strategic Program loans | ( | ||||||||||||||||||||||||||||
Total allowance for credit losses | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Unfunded lending commitments | ( | ||||||||||||||||||||||||||||
Total allowance for credit losses | $ | $ | $ | ( | $ | $ |
Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||
($ in thousands) | Beginning Balance | Provision for Credit Losses | Charge-Offs | Recoveries | Ending Balance | ||||||||||||||||||||||||
Construction and land development | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Residential real estate | ( | ||||||||||||||||||||||||||||
Residential real estate multifamily | |||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Owner occupied | ( | ||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||
Commercial and industrial | ( | ||||||||||||||||||||||||||||
Consumer | ( | ||||||||||||||||||||||||||||
Lease financing receivables | ( | ||||||||||||||||||||||||||||
Retained Strategic Program loans | ( | ||||||||||||||||||||||||||||
Total allowance for credit losses | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Unfunded lending commitments | |||||||||||||||||||||||||||||
Total allowance for credit losses | $ | $ | $ | ( | $ | $ |
Three Months Ended June 30, 2023 | |||||||||||||||||||||||||||||
($ in thousands) | Beginning Balance | Provision for (Reversal of) Credit Losses | Charge-Offs | Recoveries | Ending Balance | ||||||||||||||||||||||||
Construction and land development | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||
Residential real estate | ( | ( | |||||||||||||||||||||||||||
Residential real estate multifamily | |||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Owner occupied | |||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||
Commercial and industrial | ( | ||||||||||||||||||||||||||||
Consumer | ( | ||||||||||||||||||||||||||||
Lease financing receivables | |||||||||||||||||||||||||||||
Retained Strategic Program loans | ( | ||||||||||||||||||||||||||||
Total allowance for credit losses | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||
Unfunded lending commitments | |||||||||||||||||||||||||||||
Total allowance for credit losses | $ | $ | $ | ( | $ | $ |
Six Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||
($ in thousands) | Beginning Balance | Impact of ASU 2016-13 Adoption | Provision for (Reversal of) Credit Losses | Charge-Offs | Recoveries | Ending Balance | |||||||||||||||||||||||||||||
Construction and land development | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||
Residential real estate | ( | ( | ( | ||||||||||||||||||||||||||||||||
Residential real estate multifamily | |||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||
Owner occupied | ( | ( | |||||||||||||||||||||||||||||||||
Non-owner occupied | ( | ||||||||||||||||||||||||||||||||||
Commercial and industrial | ( | ( | |||||||||||||||||||||||||||||||||
Consumer | ( | ||||||||||||||||||||||||||||||||||
Lease financing receivables | ( | ||||||||||||||||||||||||||||||||||
Retained Strategic Program loans | ( | ||||||||||||||||||||||||||||||||||
Total allowance for credit losses | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
Unfunded lending commitments | |||||||||||||||||||||||||||||||||||
Total allowance for credit losses | $ | $ | $ | $ | ( | $ | $ |
June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||
Loans Past Due and Still Accruing | |||||||||||||||||||||||||||||||||||||||||
($ in thousands) | 30-89 Days Past Due | 90 Days and Greater | Total | Non- Accrual Loans with no ACL(1) | Non-Accrual Loans with ACL | Current Loans | Total Loans | ||||||||||||||||||||||||||||||||||
Construction and land development | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||||||||
Residential real estate multifamily | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||
Commercial leases | |||||||||||||||||||||||||||||||||||||||||
Retained Strategic Program loans | |||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
(1) Included in the nonaccrual loan balances are $ |
December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||
Loans Past Due and Still Accruing | |||||||||||||||||||||||||||||||||||||||||
($ in thousands) | 30-89 Days Past Due | 90 Days and Greater | Total | Non- Accrual Loans with no ACL(1) | Non-Accrual Loans with ACL | Current Loans | Total Loans | ||||||||||||||||||||||||||||||||||
Construction and land development | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||||||||
Residential real estate multifamily | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||
Commercial leases | |||||||||||||||||||||||||||||||||||||||||
Retained Strategic Program loans | |||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
(1) Included in the nonaccrual loan balances are $ |
June 30, 2024 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Loans | Total | ||||||||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||||||||
Construction and land development | |||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Current period gross writeoff | |||||||||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Current period gross writeoff | ( | ( | |||||||||||||||||||||||||||||||||||||||
Residential real estate multifamily | |||||||||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Current period gross writeoff | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate - owner occupied | |||||||||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Current period gross writeoff | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
Commercial real estate - non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||
Substandard |
Total | |||||||||||||||||||||||||||||||||||||||||
Current period gross writeoff | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Current period gross writeoff | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Current period gross writeoff | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
Lease financing receivables | |||||||||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Current-period gross writeoffs | ( | ( | |||||||||||||||||||||||||||||||||||||||
Retained Strategic Program loans | |||||||||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||||||||
Not Rated | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Current-period gross writeoffs | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
Total portfolio loans receivable, gross | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Total current-period gross writeoffs | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( |
December 31, 2023 | 2023 | 2022 | 2021 | Prior | Revolving Loans | Total | |||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||
Construction and land development | |||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Current period gross writeoff | |||||||||||||||||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Current period gross writeoff | ( | ( | ( | ||||||||||||||||||||||||||||||||
Residential real estate multifamily | |||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Current period gross writeoff | |||||||||||||||||||||||||||||||||||
Commercial real estate - owner occupied | |||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Current period gross writeoff | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Commercial real estate - non-owner occupied | |||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||
Watch |
Special Mention | |||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Current period gross writeoff | |||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Current period gross writeoff | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Current period gross writeoff | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Lease financing receivables | |||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Current-period gross writeoffs | |||||||||||||||||||||||||||||||||||
Retained Strategic Program loans | |||||||||||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||||||||||
Watch | |||||||||||||||||||||||||||||||||||
Special Mention | |||||||||||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||||||||||
Not Rated | |||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Current-period gross writeoffs | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
Total portfolio loans receivable, gross | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Total current-period gross writeoffs | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( |
($ in thousands) | Principal deferment (Months) | Outstanding Balance | % of Total Loan Type | ||||||||||||||
Commercial real estate: | |||||||||||||||||
Owner occupied | $ | % | |||||||||||||||
Non owner occupied | % | ||||||||||||||||
Residential | % | ||||||||||||||||
Total | $ |
($ in thousands) | Collateral Type | ||||||||||||||||||||||
As of June 30, 2024 | Allowance for Credit Losses | Real Estate | Personal Property | Total | |||||||||||||||||||
Construction and land development | $ | $ | $ | $ | |||||||||||||||||||
Residential real estate | |||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner occupied | |||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||
Commercial leases | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
($ in thousands) | Collateral Type | ||||||||||||||||||||||
As of December 31, 2023 | Allowance for Credit Losses | Real Estate | Personal Property | Total | |||||||||||||||||||
Construction and land development | $ | $ | $ | $ | |||||||||||||||||||
Residential real estate | |||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner occupied | |||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Operating leases | |||||||||||||||||||||||
Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
Variable lease cost | |||||||||||||||||||||||
Operating lease expense | |||||||||||||||||||||||
Short-term lease rent expense | |||||||||||||||||||||||
Total rent expense | $ | $ | $ | $ |
Six Months Ended December 31, 2024 | $ | ||||
Year Ended December 31, 2025 | |||||
Year Ended December 31, 2026 | |||||
Year Ended December 31, 2027 | |||||
Year Ended December 31, 2028 | |||||
Year Ended December 31, 2029 | |||||
Total future minimum lease payments | |||||
Less present value discount | ( | ||||
Total operating lease liabilities | $ |
As of | |||||||||||
June 30, 2024 | December 31, 2023 | ||||||||||
Weighted-average remaining lease term – operating leases (in years) | |||||||||||
Weighted-average discount rate – operating leases | % | % |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||
Operating cash flows from operating leases | $ | $ | $ | $ | |||||||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
($ in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Beginning balance | $ | $ | $ | $ | |||||||||||||||||||
Additions to servicing asset | |||||||||||||||||||||||
Recovery of SBA servicing asset | |||||||||||||||||||||||
Amortization of servicing asset | ( | ( | ( | ( | |||||||||||||||||||
Ending balance | $ | $ | $ | $ |
Actual | Well-Capitalized Requirement | ||||||||||||||||||||||
($ in thousands) | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
June 30, 2024 | |||||||||||||||||||||||
Leverage ratio (CBLR election) | $ | % | $ | % | |||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||
Leverage ratio (CBLR election) | $ | % | $ | % |
June 30, | December 31, | ||||||||||
($ in thousands) | 2024 | 2023 | |||||||||
Revolving, open-end lines of credit | $ | $ | |||||||||
Commercial real estate | |||||||||||
Other unused commitments | |||||||||||
$ | $ |
For the Six Months Ended June 30, | |||||
2023 | |||||
Risk-free interest rate | |||||
Expected term in years | |||||
Expected volatility |
Stock Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding at December 31, 2023 | $ | ||||||||||||||||||||||
Options exercised | ( | $ | |||||||||||||||||||||
Options forfeited | ( | $ | |||||||||||||||||||||
Outstanding at June 30, 2024 | $ | $ | |||||||||||||||||||||
Options vested and exercisable at June 30, 2024 | $ | $ |
Stock Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding at December 31, 2022 | $ | ||||||||||||||||||||||
Options granted | $ | ||||||||||||||||||||||
Options exercised | ( | $ | |||||||||||||||||||||
Options forfeited | ( | $ | |||||||||||||||||||||
Outstanding at June 30, 2023 | $ | $ | |||||||||||||||||||||
Options vested and exercisable at June 30, 2023 | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
($ in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Pre-tax | |||||||||||||||||||||||
Stock options | $ | $ | $ | $ | |||||||||||||||||||
Restricted shares | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
After-tax | |||||||||||||||||||||||
Stock options | $ | $ | $ | $ | |||||||||||||||||||
Restricted shares | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
For the Six Months Ended June 30, | |||||||||||
($ in thousands) | 2024 | 2023 | |||||||||
Beginning balance | $ | $ | |||||||||
Purchase of BFG ownership interest | |||||||||||
Change in fair value of BFG | ( | ( | |||||||||
Ending balance | $ | $ |
June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||
($ 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, net | 3 | ||||||||||||||||||||||||||||
Loans held-for-sale | 2 | ||||||||||||||||||||||||||||
Accrued interest receivable | 2 | ||||||||||||||||||||||||||||
SBA servicing asset, net | 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, 2024 | ||||||||||||||||||||||||||
Nonrecurring assets: | ||||||||||||||||||||||||||
Individually evaluated loans | $ | $ | $ | $ | ||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||
Nonrecurring assets: | ||||||||||||||||||||||||||
Individually evaluated loans | $ | $ | $ | $ |
($ in thousands) | Fair Value | Valuation Technique | Unobservable Input | Range (Weighted Average) | ||||||||||||||||
June 30, 2024 | ||||||||||||||||||||
Individually evaluated loans | $ | Market comparable | Adjustment to appraisal value | % | ||||||||||||||||
December 31, 2023 | ||||||||||||||||||||
Individually evaluated loans | $ | Market comparable | Adjustment to appraisal value | % |
($ in thousands) | June 30, 2024 Range (Weighted Average) | December 31, 2023 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, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Amount allocated to participating common shareholders(1) | ( | ( | ( | ( | |||||||||||||||||||
Net income allocated 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 | $ | $ | $ | $ | |||||||||||||||||||
Anti-dilutive stock options excluded from the calculation of diluted earnings per share |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
($ in thousands) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
Interest income | $ | 18,422 | $ | 15,869 | 16.1 | % | $ | 36,067 | $ | 29,270 | 23.2 | % | |||||||||||||||||||||||
Interest expense | (3,807) | (2,194) | 73.5 | % | (7,446) | (3,489) | 113.4 | % | |||||||||||||||||||||||||||
Provision for credit losses | (2,385) | (2,688) | (11.3) | % | (5,539) | (5,359) | 3.4 | % | |||||||||||||||||||||||||||
Non-interest income | 4,838 | 5,288 | (8.5) | % | 10,302 | 9,815 | 5.0 | % | |||||||||||||||||||||||||||
Non-interest expense | (12,890) | (9,999) | 28.9 | % | (24,697) | (18,736) | 31.8 | % | |||||||||||||||||||||||||||
Provision for income taxes | (998) | (1,638) | (39.0) | % | (2,192) | (3,002) | (27.0) | % | |||||||||||||||||||||||||||
Net income | $ | 3,180 | $ | 4,638 | (31.4) | % | $ | 6,495 | $ | 8,499 | (23.6) | % |
Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||||||||
($ in thousands) | Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | |||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 105,563 | $ | 1,444 | 5.50 | % | $ | 113,721 | $ | 1,437 | 5.07 | % | |||||||||||||||||||||||
Investment securities | 14,795 | 97 | 2.65 | % | 14,137 | 77 | 2.19 | % | |||||||||||||||||||||||||||
Loans held-for-sale | 49,000 | 4,020 | 33.00 | % | 41,390 | 3,860 | 37.41 | % | |||||||||||||||||||||||||||
Loans held for investment | 400,930 | 12,861 | 12.90 | % | 282,686 | 10,495 | 14.89 | % | |||||||||||||||||||||||||||
Total interest-earning assets | 570,287 | 18,422 | 12.99 | % | 451,934 | 15,869 | 14.08 | % | |||||||||||||||||||||||||||
Noninterest-earning assets | 46,531 | 21,825 | |||||||||||||||||||||||||||||||||
Total assets | $ | 616,818 | $ | 473,759 | |||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
Demand | $ | 47,900 | $ | 441 | 3.70 | % | $ | 44,097 | $ | 426 | 3.88 | % | |||||||||||||||||||||||
Savings | 10,270 | 19 | 0.75 | % | 7,334 | 10 | 0.56 | % | |||||||||||||||||||||||||||
Money market accounts | 9,565 | 112 | 4.71 | % | 13,982 | 109 | 3.12 | % | |||||||||||||||||||||||||||
Certificates of deposit | 251,142 | 3,235 | 5.18 | % | 153,662 | 1,649 | 4.30 | % | |||||||||||||||||||||||||||
Total deposits | 318,877 | 3,807 | 4.80 | % | 219,075 | 2,194 | 4.02 | % | |||||||||||||||||||||||||||
Other borrowings | 142 | — | 0.35 | % | 267 | — | 0.35 | % | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 319,019 | 3,807 | 4.80 | % | 219,342 | 2,194 | 4.01 | % | |||||||||||||||||||||||||||
Noninterest-bearing deposits | 108,519 | 95,257 | |||||||||||||||||||||||||||||||||
Noninterest-bearing liabilities | 27,700 | 14,206 | |||||||||||||||||||||||||||||||||
Shareholders’ equity | 161,580 | 144,954 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 616,818 | $ | 473,759 | |||||||||||||||||||||||||||||||
Net interest income and interest rate spread | $ | 14,615 | 8.19 | % | $ | 13,675 | 10.07 | % | |||||||||||||||||||||||||||
Net interest margin | 10.31 | % | 12.14 | % | |||||||||||||||||||||||||||||||
Ratio of average interest-earning assets to average interest- bearing liabilities | 178.76 | % | 206.04 | % |
Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||||||||
($ in thousands) | Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | |||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 108,737 | $ | 2,953 | 5.46 | % | $ | 100,951 | $ | 2,424 | 4.84 | % | |||||||||||||||||||||||
Investment securities | 14,840 | 198 | 2.69 | % | 14,139 | 149 | 2.13 | % | |||||||||||||||||||||||||||
Loans held-for-sale | 48,778 | 7,746 | 31.93 | % | 36,244 | 6,922 | 38.51 | % | |||||||||||||||||||||||||||
Loans held for investment | 392,561 | 25,170 | 12.89 | % | 271,095 | 19,775 | 14.71 | % | |||||||||||||||||||||||||||
Total interest-earning assets | 564,916 | 36,067 | 12.84 | % | 422,429 | 29,270 | 13.97 | % | |||||||||||||||||||||||||||
Noninterest-earning assets | 43,597 | 22,392 | |||||||||||||||||||||||||||||||||
Total assets | $ | 608,513 | $ | 444,821 | |||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
Demand | $ | 49,752 | $ | 944 | 3.82 | % | $ | 42,822 | $ | 812 | 3.82 | % | |||||||||||||||||||||||
Savings | 9,785 | 38 | 0.79 | % | 7,821 | 20 | 0.53 | % | |||||||||||||||||||||||||||
Money market accounts | 9,883 | 178 | 3.62 | % | 13,040 | 167 | 2.59 | % | |||||||||||||||||||||||||||
Certificates of deposit | 245,359 | 6,286 | 5.15 | % | 128,583 | 2,489 | 3.90 | % | |||||||||||||||||||||||||||
Total deposits | 314,779 | 7,446 | 4.76 | % | 192,266 | 3,489 | 3.66 | % | |||||||||||||||||||||||||||
Other borrowings | 157 | — | 0.35 | % | 282 | — | 0.35 | % | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 314,936 | 7,446 | 4.75 | % | 192,548 | 3,489 | 3.65 | % | |||||||||||||||||||||||||||
Noninterest-bearing deposits | 104,372 | 93,489 | |||||||||||||||||||||||||||||||||
Noninterest-bearing liabilities | 27,933 | 15,387 | |||||||||||||||||||||||||||||||||
Shareholders’ equity | 161,272 | 143,396 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 608,513 | $ | 444,821 | |||||||||||||||||||||||||||||||
Net interest income and interest rate spread | $ | 28,621 | 8.08 | % | $ | 25,781 | 10.32 | % | |||||||||||||||||||||||||||
Net interest margin | 10.19 | % | 12.31 | % | |||||||||||||||||||||||||||||||
Ratio of average interest-earning assets to average interest- bearing liabilities | 179.37 | % | 219.39 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2024 vs 2023 | 2024 vs 2023 | ||||||||||||||||||||||||||||||||||
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 | $ | 45 | $ | (38) | $ | 7 | $ | 331 | $ | 198 | $ | 529 | |||||||||||||||||||||||
Investment securities | 17 | 4 | 21 | 41 | 8 | 49 | |||||||||||||||||||||||||||||
Loans held-for-sale | (286) | 445 | 159 | (804) | 1,628 | 824 | |||||||||||||||||||||||||||||
Loans held for investment | (1,110) | 3,476 | 2,366 | (2,052) | 7,447 | 5,395 | |||||||||||||||||||||||||||||
Total interest income | (1,334) | 3,887 | 2,553 | (2,484) | 9,281 | 6,797 | |||||||||||||||||||||||||||||
Interest expense: | |||||||||||||||||||||||||||||||||||
Demand | (16) | 31 | 15 | (1) | 133 | 132 | |||||||||||||||||||||||||||||
Savings | 4 | 5 | 9 | 12 | 6 | 18 | |||||||||||||||||||||||||||||
Money market accounts | 8 | (5) | 3 | 27 | (16) | 11 | |||||||||||||||||||||||||||||
Certificates of deposit | 387 | 1,199 | 1,586 | 992 | 2,805 | 3,797 | |||||||||||||||||||||||||||||
Other borrowings | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Total interest-bearing liabilities | 383 | 1,230 | 1,613 | 1,030 | 2,928 | 3,958 | |||||||||||||||||||||||||||||
Change in net interest income | $ | (1,717) | $ | 2,657 | $ | 940 | $ | (3,514) | $ | 6,353 | $ | 2,839 |
Three Months Ended June 30, | Change | ||||||||||||||||||||||
($ in thousands) | 2024 | 2023 | $ | % | |||||||||||||||||||
Non-interest income: | |||||||||||||||||||||||
Strategic Program fees | $ | 4,035 | $ | 4,054 | $ | (19) | (0.5 | %) | |||||||||||||||
Gain on sale of loans | 356 | 700 | (344) | (49.1 | %) | ||||||||||||||||||
SBA loan servicing fees and servicing asset amortization | (124) | 226 | (350) | (154.9 | %) | ||||||||||||||||||
Change in fair value on investment in BFG | (200) | — | (200) | — | % | ||||||||||||||||||
Other miscellaneous income | 771 | 308 | 463 | 150.3 | % | ||||||||||||||||||
Total non-interest income | $ | 4,838 | $ | 5,288 | $ | (450) | (8.5 | %) |
Six Months Ended June 30, | Change | ||||||||||||||||||||||
($ in thousands) | 2024 | 2023 | $ | % | |||||||||||||||||||
Non-interest income: | |||||||||||||||||||||||
Strategic Program fees | $ | 8,000 | $ | 7,739 | $ | 261 | 3.4 | % | |||||||||||||||
Gain on sale of loans | 771 | 887 | (116) | (13.1 | %) | ||||||||||||||||||
SBA loan servicing fees and servicing asset amortization | 342 | 817 | (475) | (58.1 | %) | ||||||||||||||||||
Change in fair value on investment in BFG | (325) | (300) | (24) | 8.0 | % | ||||||||||||||||||
Other miscellaneous income | 1,512 | 672 | 841 | 125.1 | % | ||||||||||||||||||
Total non-interest income | $ | 10,302 | $ | 9,815 | $ | 487 | 5.0 | % |
($ in thousands) | For the Three Months Ended June 30, | Change | |||||||||||||||||||||
2024 | 2023 | $ | % | ||||||||||||||||||||
Non-interest expense: | |||||||||||||||||||||||
Salaries and employee benefits | $ | 8,609 | $ | 6,681 | $ | 1,928 | 28.9 | % | |||||||||||||||
Professional Services | 1,282 | 1,305 | (23) | (1.8 | %) | ||||||||||||||||||
Occupancy and equipment expenses | 1,121 | 718 | 403 | 56.1 | % | ||||||||||||||||||
Recovery of SBA servicing asset | (328) | (339) | 11 | (3.2 | %) | ||||||||||||||||||
Other operating expenses | 2,206 | 1,634 | 572 | 35.0 | % | ||||||||||||||||||
Total non-interest expense | $ | 12,890 | $ | 9,999 | $ | 2,891 | 28.9 | % |
($ in thousands) | Six Months Ended June 30, | Change | |||||||||||||||||||||
2024 | 2023 | $ | % | ||||||||||||||||||||
Non-interest expense: | |||||||||||||||||||||||
Salaries and employee benefits | $ | 16,171 | $ | 11,938 | $ | 4,233 | 35.5 | % | |||||||||||||||
Professional Services | 2,849 | 2,779 | 70 | 2.5 | % | ||||||||||||||||||
Occupancy and equipment expenses | 2,101 | 1,430 | 671 | 46.9 | % | ||||||||||||||||||
Recovery of SBA servicing asset | (526) | (592) | 66 | (11.1 | %) | ||||||||||||||||||
Other operating expenses | 4,102 | 3,181 | 921 | 29.0 | % | ||||||||||||||||||
Total non-interest expense | $ | 24,697 | $ | 18,736 | $ | 5,961 | 31.8 | % |
As of | Change | ||||||||||||||||||||||
($ in thousands) | June 30, 2024 | December 31, 2023 | $ | % | |||||||||||||||||||
Interest-bearing deposits in other banks | $ | 83,851 | $ | 116,564 | $ | (32,714) | (28.1) | % | |||||||||||||||
Investment securities held-to-maturity, at cost | $ | 13,942 | $ | 15,388 | $ | (1,446) | (9.4) | % | |||||||||||||||
Loans held for investment, net | $ | 398,512 | $ | 358,560 | $ | 39,952 | 11.1 | % | |||||||||||||||
Total assets | $ | 617,820 | $ | 586,221 | $ | 31,599 | 5.4 | % | |||||||||||||||
Deposits | $ | 429,195 | $ | 404,833 | $ | 24,362 | 6.0 | % | |||||||||||||||
Total liabilities | $ | 452,024 | $ | 431,165 | $ | 20,859 | 4.8 | % | |||||||||||||||
Total shareholders' equity | $ | 165,796 | $ | 155,056 | $ | 10,740 | 6.9 | % | |||||||||||||||
Total equity to total assets | 26.8 | % | 26.5 | % | 1.5 | % |
As of June 30, 2024 | |||||||||||||||||||||||
One Year or Less | After One to Five Years | ||||||||||||||||||||||
($ in thousands) | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | |||||||||||||||||||
Mortgage-backed securities | $ | — | — | $ | — | — | |||||||||||||||||
Collateralized mortgage obligations | — | — | — | — | |||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — |
As of June 30, 2024 | |||||||||||||||||||||||||||||
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 | $ | 1,737 | 1.3 | % | $ | 4,691 | 0.9 | % | $ | 6,428 | |||||||||||||||||||
Collateralized mortgage obligations | 725 | 1.6 | % | 6,789 | 1.8 | % | 7,514 | ||||||||||||||||||||||
Total | $ | 2,462 | 1.4 | % | $ | 11,480 | 1.5 | % | $ | 13,942 |
As of June 30, 2024 | As of December 31, 2023 | ||||||||||||||||||||||
($ in thousands) | Amount | % of total loans | Amount | % of total loans | |||||||||||||||||||
SBA(1) | $ | 249,281 | 60.2 | % | $ | 239,922 | 64.5 | % | |||||||||||||||
Commercial leases | 56,529 | 13.7 | % | 38,110 | 10.2 | % | |||||||||||||||||
Commercial, non-real estate | 1,999 | 0.5 | % | 2,457 | 0.7 | % | |||||||||||||||||
Residential real estate | 42,317 | 10.2 | % | 38,123 | 10.2 | % | |||||||||||||||||
Strategic Program loans | 17,861 | 4.3 | % | 19,408 | 5.2 | % | |||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner occupied | 28,340 | 6.8 | % | 20,798 | 5.6 | % | |||||||||||||||||
Non-owner occupied | 2,134 | 0.5 | % | 2,025 | 0.5 | % | |||||||||||||||||
Consumer | 15,880 | 3.8 | % | 11,372 | 3.1 | % | |||||||||||||||||
Total loans held for investment, gross | $ | 414,341 | 100.1 | % | $ | 372,215 | 100.0 | % |
As of June 30, 2024 | Remaining Contractual Maturity Held for Investment | ||||||||||||||||||||||||||||||||||
($ in thousands) | One Year or Less | Average Yield/Rate | After One Year and Through Five Years | Average Yield/Rate | After Five Years and Through Fifteen Years | Average Yield/Rate | |||||||||||||||||||||||||||||
Fixed rate loans: | |||||||||||||||||||||||||||||||||||
SBA(1) | $ | 483 | 4.29 | % | $ | 670 | 10.49 | % | $ | 1,606 | 10.45 | % | |||||||||||||||||||||||
Commercial leases | 14,774 | 6.99 | % | 39,575 | 7.13 | % | 2,180 | 6.11 | % | ||||||||||||||||||||||||||
Commercial, non-real estate | 606 | 5.91 | % | 1,207 | 6.26 | % | 176 | 5.43 | % | ||||||||||||||||||||||||||
Residential real estate | 7,137 | 7.16 | % | 4,386 | 7.99 | % | 268 | 4.21 | % | ||||||||||||||||||||||||||
Strategic Program loans | 13,525 | 127.41 | % | 4,331 | 88.12 | % | 6 | 10.09 | % | ||||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||||||||
Owner occupied | 2,548 | 7.00 | % | 1,070 | 8.44 | % | — | — | % | ||||||||||||||||||||||||||
Non-owner occupied | 115 | 5.41 | % | 158 | 4.76 | % | 294 | 3.54 | % | ||||||||||||||||||||||||||
Consumer | 4,340 | 5.97 | % | 10,611 | 5.79 | % | 929 | 9.08 | % | ||||||||||||||||||||||||||
Subtotal fixed rate loans | 43,528 | 44.28 | % | 62,008 | 12.65 | % | 5,459 | 7.64 | % | ||||||||||||||||||||||||||
Variable rate loans: | |||||||||||||||||||||||||||||||||||
SBA | 17,424 | 10.91 | % | 69,140 | 10.91 | % | 104,995 | 10.73 | % | ||||||||||||||||||||||||||
Commercial leases | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Commercial, non-real estate | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Residential real estate | 27,199 | 9.25 | % | 1,740 | 10.03 | % | 1,565 | 9.95 | % | ||||||||||||||||||||||||||
Strategic Program loans | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||||||||
Owner occupied | 1,757 | 8.02 | % | 7,035 | 8.02 | % | 11,195 | 9 | % | ||||||||||||||||||||||||||
Non-owner occupied | 1,220 | 10.50 | % | 321 | 10.50 | % | — | — | % | ||||||||||||||||||||||||||
Consumer | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Subtotal variable rate loans | 47,600 | 9.84 | % | 78,236 | 10.63 | % | 117,755 | 10.52 | % | ||||||||||||||||||||||||||
Total | $ | 91,128 | 26.29 | % | $ | 140,244 | 11.52 | % | $ | 123,214 | 10.39 | % |
As of June 30, 2024 | Remaining Contractual Maturity Held for Investment | ||||||||||||||||||||||
($ in thousands) | After Fifteen Years | Average Yield/Rate | Total | Average Yield/Rate | |||||||||||||||||||
Fixed rate loans: | |||||||||||||||||||||||
SBA(1) | $ | 1,028 | 10.41 | % | $ | 3,787 | 9.66 | % | |||||||||||||||
Commercial leases | — | — | % | 56,529 | 7.05 | % | |||||||||||||||||
Commercial, non-real estate | 10 | 3.77 | % | 1,999 | 6.07 | % | |||||||||||||||||
Residential real estate | 22 | 4.52 | % | 11,813 | 7.40 | % | |||||||||||||||||
Strategic Program loans | — | — | % | 17,862 | 117.84 | % | |||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Owner occupied | — | — | % | 3,618 | 7.43 | % | |||||||||||||||||
Non-owner occupied | 27 | 3.75 | % | 594 | 4.23 | % | |||||||||||||||||
Consumer | — | — | % | 15,880 | 6.03 | % | |||||||||||||||||
Subtotal fixed rate loans | 1,087 | 10.07 | % | 112,082 | 24.67 | % | |||||||||||||||||
Variable rate loans: | |||||||||||||||||||||||
SBA | 53,934 | 10.47 | % | 245,493 | 10.74 | % | |||||||||||||||||
Commercial leases | — | — | % | — | — | % | |||||||||||||||||
Commercial, non-real estate | — | — | % | — | — | % | |||||||||||||||||
Residential real estate | — | — | % | 30,504 | 9.33 | % | |||||||||||||||||
Strategic Program loans | — | — | % | — | — | % | |||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Owner occupied | 4,734 | 10.23 | % | 24,721 | 8.71 | % | |||||||||||||||||
Non-owner occupied | — | — | % | 1,541 | 10.50 | % | |||||||||||||||||
Consumer | — | — | % | — | — | % | |||||||||||||||||
Subtotal variable rate loans | 58,668 | 10.45 | % | 302,259 | 10.43 | % | |||||||||||||||||
Total | $ | 59,755 | 10.44 | % | $ | 414,341 | 14.28 | % |
As of December 31, 2023 | Remaining Contractual Maturity Held for Investment | ||||||||||||||||||||||||||||||||||
($ in thousands) | One Year or Less | Average Yield/Rate | After One Year and Through Five Years | Average Yield/Rate | After Five Years and Through Fifteen Years | Average Yield/Rate | |||||||||||||||||||||||||||||
Fixed rate loans: | |||||||||||||||||||||||||||||||||||
SBA(1) | $ | 493 | 4.39 | % | $ | 796 | 9.23 | % | $ | 1,606 | 10.45 | % | |||||||||||||||||||||||
Commercial leases | 10,073 | 6.83 | % | 27,413 | 7.16 | % | 624 | 7.56 | % | ||||||||||||||||||||||||||
Commercial, non-real estate | 703 | 5.68 | % | 1,621 | 5.82 | % | 123 | 3.76 | % | ||||||||||||||||||||||||||
Residential real estate | 6,230 | 7.07 | % | 4,653 | 7.65 | % | 60 | 4.29 | % | ||||||||||||||||||||||||||
Strategic Program loans | 14,305 | 125.05 | % | 5,103 | 82.20 | % | — | — | % | ||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||
Owner occupied | 1,976 | 7.04 | % | 1,725 | 7.85 | % | — | — | % | ||||||||||||||||||||||||||
Non-owner occupied | 101 | 4.60 | % | 108 | 3.51 | % | 244 | 3.48 | % | ||||||||||||||||||||||||||
Consumer | 3,051 | 6.40 | % | 7,668 | 5.79 | % | 653 | 9.17 | % | ||||||||||||||||||||||||||
Subtotal fixed rate loans | 36,932 | 52.58 | % | 49,087 | 14.80 | % | 3,310 | 8.78 | % | ||||||||||||||||||||||||||
Variable rate loans: | |||||||||||||||||||||||||||||||||||
SBA | 15,720 | 10.87 | % | 62,367 | 10.87 | % | 100,880 | 10.70 | % | ||||||||||||||||||||||||||
Commercial leases | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Commercial, non-real estate | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Residential real estate | 23,718 | 9.02 | % | 1,941 | 5.85 | % | 1,521 | 4.55 | % | ||||||||||||||||||||||||||
Strategic Program loans | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||
Owner occupied | 943 | 8.91 | % | 3,766 | 8.91 | % | 7,384 | 9.43 | % | ||||||||||||||||||||||||||
Non-owner occupied | 1,541 | 10.50 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Consumer | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Subtotal variable rate loans | 41,922 | 9.77 | % | 68,074 | 10.62 | % | 109,785 | 10.53 | % | ||||||||||||||||||||||||||
Total | $ | 78,853 | 29.82 | % | $ | 117,162 | 12.37 | % | $ | 113,095 | 10.48 | % |
As of December 31, 2023 | Remaining Contractual Maturity Held for Investment | ||||||||||||||||||||||
($ in thousands) | After Fifteen Years | Average Yield/Rate | Total | Average Yield/Rate | |||||||||||||||||||
Fixed rate loans: | |||||||||||||||||||||||
SBA(1) | $ | 1,143 | 10 | % | $ | 4,038 | 9.46 | % | |||||||||||||||
Commercial leases | — | — | % | 38,110 | 7.08 | % | |||||||||||||||||
Commercial, non-real estate | 10 | 3.77 | % | 2,457 | 5.67 | % | |||||||||||||||||
Residential real estate | — | — | % | 10,943 | 7.30 | % | |||||||||||||||||
Strategic Program loans | — | — | % | 19,408 | 113.78 | % | |||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner occupied | — | — | % | 3,701 | 7.42 | % | |||||||||||||||||
Non-owner occupied | 31 | 4 | % | 484 | 3.73 | % | |||||||||||||||||
Consumer | — | — | % | 11,372 | 6.15 | % | |||||||||||||||||
Subtotal fixed rate loans | 1,184 | 10.18 | % | 90,513 | 29.93 | % | |||||||||||||||||
Variable rate loans: | |||||||||||||||||||||||
SBA | 56,917 | 10.45 | % | 235,884 | 10.70 | % | |||||||||||||||||
Commercial leases | — | — | % | — | — | % | |||||||||||||||||
Commercial, non-real estate | — | — | % | — | — | % | |||||||||||||||||
Residential real estate | — | — | % | 27,180 | 8.54 | % | |||||||||||||||||
Strategic Program loans | — | — | % | — | — | % | |||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner occupied | 5,004 | 10 | % | 17,097 | 9.52 | % | |||||||||||||||||
Non-owner occupied | — | — | % | 1,541 | 10.50 | % | |||||||||||||||||
Consumer | — | — | % | — | — | % | |||||||||||||||||
Subtotal variable rate loans | 61,921 | 10.43 | % | 281,702 | 10.42 | % | |||||||||||||||||
Total | $ | 63,105 | 10.43 | % | $ | 372,215 | 15.16 | % |
($ in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |||||||||||||||||||
ACL: | |||||||||||||||||||||||
Beginning balance | $ | 12,632 | $ | 12,034 | $ | 12,888 | $ | 11,985 | |||||||||||||||
Impact of ASU 2016-13 adoption(1) | — | — | — | 257 | |||||||||||||||||||
Adjusted beginning balance | 12,632 | 12,034 | 12,888 | 12,242 | |||||||||||||||||||
Provision for credit losses | 2,393 | 2,675 | 5,538 | 5,343 | |||||||||||||||||||
Charge-offs | |||||||||||||||||||||||
Construction and land development | — | — | — | — | |||||||||||||||||||
Residential real estate | — | (121) | (64) | (121) | |||||||||||||||||||
Residential real estate multifamily | — | — | — | — | |||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Owner occupied | — | — | (525) | (122) | |||||||||||||||||||
Non-owner occupied | — | — | — | — | |||||||||||||||||||
Commercial and industrial | (184) | (66) | (238) | (84) | |||||||||||||||||||
Consumer | (18) | (19) | (59) | (19) | |||||||||||||||||||
Lease financing receivables | (69) | — | (180) | — | |||||||||||||||||||
Strategic Program loans | (1,962) | (2,516) | (4,908) | (5,541) | |||||||||||||||||||
Recoveries | |||||||||||||||||||||||
Construction and land development | — | — | — | — | |||||||||||||||||||
Residential real estate | 3 | 81 | 56 | 84 | |||||||||||||||||||
Residential real estate multifamily | — | — | — | — | |||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Owner occupied | — | — | 3 | — | |||||||||||||||||||
Non-owner occupied | — | — | — | — | |||||||||||||||||||
Commercial and industrial | 15 | 1 | 15 | 3 | |||||||||||||||||||
Consumer | 1 | — | 1 | — | |||||||||||||||||||
Lease financing receivables | 7 | — | 7 | — | |||||||||||||||||||
Strategic Program loans | 309 | 252 | 593 | 536 | |||||||||||||||||||
Ending balance | $ | 13,127 | $ | 12,321 | $ | 13,127 | $ | 12,321 |
June 30, 2024 | |||||||||||
($ in thousands) | Amount | % of Total Allowance | |||||||||
Construction and land development | $ | 330 | 2.5 | % | |||||||
Residential real estate | 1,029 | 7.8 | % | ||||||||
Residential real estate multifamily | 11 | 0.1 | % | ||||||||
Commercial real estate | |||||||||||
Owner occupied | 4,094 | 31.2 | % | ||||||||
Non-owner occupied | 380 | 2.9 | % | ||||||||
Commercial and industrial | 423 | 3.2 | % | ||||||||
Consumer | 261 | 2.0 | % | ||||||||
Lease financing receivables | 650 | 5.0 | % | ||||||||
Strategic Program loans | 5,949 | 45.3 | % | ||||||||
Total | $ | 13,127 | 100.0 | % |
December 31, 2023 | |||||||||||
($ in thousands) | Amount | % of Total Allowance | |||||||||
Construction and land development | $ | 316 | 2.4 | % | |||||||
Residential real estate | 956 | 7.4 | % | ||||||||
Residential real estate multifamily | 6 | 0.1 | % | ||||||||
Commercial real estate | |||||||||||
Owner occupied | 3,336 | 25.9 | % | ||||||||
Non-owner occupied | 282 | 2.2 | % | ||||||||
Commercial and industrial | 361 | 2.8 | % | ||||||||
Consumer | 211 | 1.6 | % | ||||||||
Commercial leases | 355 | 2.8 | % | ||||||||
Strategic Program loans | 7,065 | 54.8 | % | ||||||||
Total | $ | 12,888 | 100.0 | % |
ACL to Total LHFI | Nonaccrual Loans to Total LHFI | ACL to Nonaccrual Loans | |||||||||||||||
Construction and land development | 1.1 | % | — | % | — | % | |||||||||||
Residential real estate | 1.8 | % | 2.4 | % | 72.2 | % | |||||||||||
Residential real estate multifamily | 0.9 | % | — | % | — | % | |||||||||||
Commercial real estate | |||||||||||||||||
Owner occupied | 2.2 | % | 11.3 | % | 19.0 | % | |||||||||||
Non-owner occupied | 2.1 | % | 18.4 | % | 11.2 | % | |||||||||||
Commercial and industrial | 1.6 | % | 2.4 | % | 67.3 | % | |||||||||||
Consumer | 1.6 | % | — | % | — | % | |||||||||||
Lease financing receivables | 1.2 | % | 0.3 | % | 368.5 | % | |||||||||||
Strategic Program loans | 33.3 | % | — | % | — | % | |||||||||||
Total | 3.2 | % | 6.5 | % | 48.4 | % |
($ in thousands) | ACL to Total LHFI | Nonaccrual Loans to Total LHFI | ACL to Nonaccrual Loans | ||||||||||||||
Construction and land development | 1.1 | % | — | % | — | % | |||||||||||
Residential real estate | 1.9 | % | 3.1 | % | 60.3 | % | |||||||||||
Residential real estate multifamily | 1.0 | % | — | % | — | % | |||||||||||
Commercial real estate | |||||||||||||||||
Owner occupied | 1.8 | % | 11.6 | % | 15.4 | % | |||||||||||
Non-owner occupied | 1.8 | % | 15.4 | % | 12.0 | % | |||||||||||
Commercial and industrial | 1.7 | % | 1.3 | % | 128.2 | % | |||||||||||
Consumer | 1.9 | % | — | % | — | % | |||||||||||
Lease financing receivables | 0.9 | % | — | % | — | % | |||||||||||
Strategic Program loans | 36.4 | % | — | % | — | % | |||||||||||
Total | 3.5 | % | 7.0 | % | 49.8 | % |
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||||
($ in thousands) | Net Charge- Offs | Average Loans | NCO to Average Loans | Net Charge- Offs | Average Loans | NCO to Average Loans | |||||||||||||||||||||||||||||
Construction and land development | $ | — | $ | 30,179 | — | % | $ | — | $ | 25,350 | — | % | |||||||||||||||||||||||
Residential real estate | (3) | 55,129 | — | % | 40 | 30,781 | 0.5 | % | |||||||||||||||||||||||||||
Residential real estate multifamily | — | 1,134 | — | % | — | 524 | — | % | |||||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||||||||
Owner occupied | — | 189,391 | — | % | — | 152,566 | — | % | |||||||||||||||||||||||||||
Non-owner occupied | — | 16,643 | — | % | — | 10,727 | — | % | |||||||||||||||||||||||||||
Commercial and industrial | 169 | 23,870 | 2.8 | % | 65 | 16,660 | 1.6 | % | |||||||||||||||||||||||||||
Consumer | 17 | 15,209 | 0.4 | % | 19 | 5,964 | 1.3 | % | |||||||||||||||||||||||||||
Lease financing receivables | 62 | 51,928 | 0.5 | % | — | 18,977 | — | % | |||||||||||||||||||||||||||
Strategic Program loans | 1,653 | 17,446 | 38.1 | % | 2,264 | 21,137 | 43.4 | % | |||||||||||||||||||||||||||
Total | $ | 1,898 | $ | 400,929 | 1.9 | % | $ | 2,388 | $ | 282,686 | 3.4 | % |
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||||
($ in thousands) | Net Charge- Offs | Average Loans | NCO to Average Loans | Net Charge- Offs | Average Loans | NCO to Average Loans | |||||||||||||||||||||||||||||
Construction and land development | $ | — | $ | 29,728 | — | % | $ | — | $ | 26,925 | — | % | |||||||||||||||||||||||
Residential real estate | 8 | 53,959 | — | % | 37 | 30,711 | 0.2 | % | |||||||||||||||||||||||||||
Residential real estate multifamily | — | 970 | — | % | — | 488 | — | % | |||||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||||||||
Owner occupied | 522 | 188,653 | 0.6 | % | 122 | 142,189 | 0.2 | % | |||||||||||||||||||||||||||
Non-owner occupied | — | 16,074 | — | % | — | 11,535 | — | % | |||||||||||||||||||||||||||
Commercial and industrial | 223 | 23,108 | 1.9 | % | 81 | 15,657 | 1.0 | % | |||||||||||||||||||||||||||
Consumer | 59 | 13,966 | 0.8 | % | 19 | 5,773 | 0.7 | % | |||||||||||||||||||||||||||
Lease financing receivables | 173 | 48,148 | 0.7 | % | — | 15,699 | — | % | |||||||||||||||||||||||||||
Strategic Program loans | 4,315 | 17,955 | 48.3 | % | 5,005 | 22,118 | 45.6 | % | |||||||||||||||||||||||||||
Total | $ | 5,300 | $ | 392,561 | 2.7 | % | $ | 5,264 | $ | 271,095 | 3.9 | % |
June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
($ in thousands) | Total | Percent | Total | Percent | |||||||||||||||||||
Period end: | |||||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 107,083 | 24.9 | % | $ | 95,486 | 23.6 | % | |||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||
Demand | 48,319 | 11.3 | % | 50,058 | 12.4 | % | |||||||||||||||||
Savings | 9,746 | 2.4 | % | 8,633 | 2.1 | % | |||||||||||||||||
Money markets | 9,788 | 2.3 | % | 11,661 | 2.9 | % | |||||||||||||||||
Time certificates of deposit | 254,259 | 59.2 | % | 238,995 | 59.0 | % | |||||||||||||||||
Total period end deposits | $ | 429,195 | 100.1 | % | $ | 404,833 | 100.0 | % |
Three Months Ended | |||||||||||||||||||||||||||||||||||
June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
($ in thousands) | Total | Weighted Average rate paid | Percent of total | Total | Weighted Average rate paid | Percent of total | |||||||||||||||||||||||||||||
Average: | |||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 108,519 | — | % | 25.4 | % | $ | 92,767 | — | % | 23.4 | % | |||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||||||||||||||
Demand | 47,900 | 3.70 | % | 11.2 | % | 47,784 | 4.67 | % | 12.1 | % | |||||||||||||||||||||||||
Savings | 10,270 | 0.75 | % | 2.4 | % | 8,096 | 0.65 | % | 2.0 | % | |||||||||||||||||||||||||
Money market | 9,565 | 4.71 | % | 2.2 | % | 13,419 | 1.55 | % | 3.4 | % | |||||||||||||||||||||||||
Time certificates of deposit | 251,142 | 5.18 | % | 58.8 | % | 234,088 | 5.18 | % | 59.1 | % | |||||||||||||||||||||||||
Total average deposits | $ | 427,396 | 3.58 | % | 100.0 | % | $ | 396,154 | 3.69 | % | 100.0 | % |
June 30, 2024 | |||||||||||||||||||||||||||||
($ 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 | $ | 66 | $ | 204 | $ | 1159 | $ | 1,645 | $ | 3,075 |
As of | |||||||||||||||||
Capital Ratios | June 30, 2024 | December 31, 2023 | Well- Capitalized Requirement | ||||||||||||||
Leverage Ratio (under CBLR) | 20.8 | % | 20.7 | % | 9.0 | % |
($ 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 | $ | 155,402 | $ | 155,402 | $ | — | $ | — | $ | — | |||||||||||||||||||
Time deposits | 247,600 | 27,603 | 94,533 | 124,925 | 539 | ||||||||||||||||||||||||
Long term borrowings(1) | 127 | — | 127 | — | — | ||||||||||||||||||||||||
Operating lease obligations | 6,384 | 1,091 | 2,220 | 2,355 | 718 | ||||||||||||||||||||||||
Total | $ | 409,513 | $ | 184,096 | $ | 96,880 | $ | 127,280 | $ | 1,257 |
($ in thousands) | As of June 30, 2024 | As of December 31, 2023 | |||||||||
Revolving, open-end lines of credit | $ | 2,055 | $ | 1,630 | |||||||
Commercial real estate | 16,388 | 17,421 | |||||||||
Other unused commitments | 326 | 724 | |||||||||
Total commitments | $ | 18,769 | $ | 19,775 |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) | |||||||||||||||||||
April 1, 2024 - April 30, 2024 | — | — | — | 624,135 | |||||||||||||||||||
May 1, 2024 - May 31, 2024 | 15,279 | 10.37 | 15,279 | 608,856 | |||||||||||||||||||
June 1, 2024 - June 30, 2024 | 11,632 | $10.32 | 11,632 | 597,224 | |||||||||||||||||||
Total | 26,911 | $10.35 | 26,911 | 597,224 |
Number | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
10.1 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
101.INS* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104* | Cover Page Interactive Data File (embedded within the Inline XBRL document in Exhibit 101). |
FinWise Bancorp | ||||||||
Date: August 13, 2024 | By: | /s/ Kent Landvatter | ||||||
Kent Landvatter | ||||||||
Chief Executive Officer and Chairman | ||||||||
(Principal Executive Officer) | ||||||||
Date: August 13, 2024 | By: | /s/ Robert Wahlman | ||||||
Robert Wahlman | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
FINWISE BANCORP | |||||||||||
Date: | August 13, 2024 | By: | /s/ Kent Landvatter | ||||||||
Kent Landvatter | |||||||||||
Chief Executive Officer |
FINWISE BANCORP | |||||||||||
Date: | August 13, 2024 | By: | /s/ Robert Wahlman | ||||||||
Robert Wahlman | |||||||||||
Executive Vice President and Chief Financial Officer |
FINWISE BANCORP | |||||||||||
Date: | August 13, 2024 | By: | /s/ Kent Landvatter | ||||||||
Kent Landvatter | |||||||||||
Chief Executive Officer | |||||||||||
Date: | August 13, 2024 | By: | /s/ Robert Wahlman | ||||||||
Robert Wahlman | |||||||||||
Executive Vice President and Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for credit losses related to HTM securities | $ 0 | $ 0 |
Estimated Fair Value | 12,397,000 | 13,809,000 |
Allowance for Credit Losses | $ 13,127,000 | $ 12,888,000 |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 4,000,000 | 4,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par or stated value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares, issued (in shares) | 13,143,560 | 12,493,565 |
Common stock, shares, outstanding (in shares) | 13,143,560 | 12,493,565 |
Business, Basis of Presentation, and Summary of Significant Accounting Policies |
6 Months Ended |
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Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Business, Basis of Presentation, and Summary of Significant Accounting Policies | Business, Basis of Presentation, and Summary of Significant Accounting Policies Nature of Business and Organization – FinWise Bancorp is a Utah Corporation headquartered in Murray, Utah and operates all business activities through its wholly-owned subsidiaries FinWise Bank and FinWise Investment, LLC. FinWise Bank was incorporated in the state of Utah on May 7, 1999. FinWise Bancorp was incorporated in the state of Utah on October 22, 2002 after which it acquired 100% of FinWise Bank. As of March 4, 2016, FinWise Bank’s articles of incorporation were amended to rename the entity FinWise Bank. As of March 15, 2021, FinWise Bancorp’s articles of incorporation were amended and restated to rename the entity FinWise Bancorp. References herein to “FinWise Bancorp,” “Bancorp” or the “holding company,” refer to FinWise Bancorp on a standalone basis. The word “Company” refers to FinWise Bancorp, FinWise Investment, LLC, and FinWise Bank collectively and on a consolidated basis. References to the “Bank” refer to FinWise Bank on a standalone basis. The Bank provides a full range of banking services to individual and commercial customers. The Bank’s primary source of revenue is from loans including Small Business Administration ("SBA"), commercial leases, residential real estate, and commercial real estate. The Bank also has established Strategic Programs with various third-party loan origination platforms that use technology to streamline the origination of unsecured consumer and secured or unsecured business loans to borrowers within certain approved credit profiles. The Bank earns monthly program fees based on the volume of loans originated in these Strategic Programs, as well as interest during the time the Bank holds the loans. The Company is subject to competition from other financial institutions and to the regulations of certain federal and state agencies and undergoes periodic examinations by those agencies. Basis of Presentation – The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with rules and regulations of the Securities and Exchange Commission (“SEC”) and include the activity of the Company and its wholly owned subsidiaries, FinWise Investment, LLC and the Bank. The statements do not include all of the information and footnotes required by GAAP for complete financial statements. All significant inter-company transactions have been eliminated in consolidation. In the opinion of management, all the adjustments (consisting of normal and recurring adjustments) necessary for the fair statement of the consolidated financial condition and the consolidated results of operations for the periods presented have been included. The results of operations and other data presented for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations that may be expected for subsequent periods or the full year results. The consolidated balance sheet data as of December 31, 2023 was derived from audited financial statements; however, the accompanying notes to the unaudited consolidated financial statements do not include all of the annual disclosures required by GAAP and should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Certain prior period amounts have been reclassified to conform to the current period presentation. Stock Repurchase Program – On March 7, 2024, the Company announced that its Board of Directors (the “Board”) had authorized, effective March 6, 2024, a common stock repurchase program to purchase up to 641,832 shares of the Company’s common stock in the aggregate. The repurchase program authorizes the repurchase by the Company of its common stock in open market transactions, including pursuant to a trading plan in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or privately negotiated transactions. The authorization permits management to repurchase shares of the Company’s common stock from time to time at management’s discretion. Repurchases could also be made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The actual means and timing of any shares purchased under the program will depend on a variety of factors, including the market price of the Company’s common stock, general market and economic conditions, and applicable legal and regulatory requirements. The repurchase program does not obligate the Company to purchase any particular number of shares. Since commencement of the repurchase program, the Company has repurchased and subsequently retired a total of 44,608 shares for $0.5 million as of June 30, 2024. Recent Accounting Pronouncements In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. ASU 2023-09 improves the transparency of income tax disclosures by requiring entities to provide greater disaggregation of information on income taxes paid and on the rate reconciliation disclosures. This pronouncement also requires qualitative discussion of the primary state and local jurisdictions for income taxes and the type of reconciling categories. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which requires disclosure, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Entities must adopt this ASU on a retrospective basis. Early adoption is permitted. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements.
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Investment Securities Held-to-Maturity, at Cost The Company's held-to-maturity (“HTM”) investment portfolio consists of agency mortgage-backed securities and agency collateralized mortgage obligations. The Company reports HTM debt securities on the Company's consolidated balance sheets at carrying value which is amortized cost. The amortized cost, unrealized gains and losses, and estimated fair values of the Company’s HTM debt securities at June 30, 2024 and December 31, 2023, are summarized as follows:
Credit Quality Indicators & Allowance for Credit Losses - HTM On January 1, 2023, the Company adopted ASU 2016-13, which replaced the legacy GAAP other-than-temporary impairment (“OTTI”) model with an expected credit loss model (“CECL”). ASU 2016-13 requires an allowance on lifetime expected credit losses on HTM debt securities but retains the concept from the OTTI model that credit losses are recognized once securities become impaired. For HTM debt securities, the Company evaluates the credit risk of its securities on at least a quarterly basis. The Company estimates expected credit losses on HTM debt securities on a collective basis by major security type. Accrued interest receivable on HTM debt securities is excluded from the estimate of credit losses. At June 30, 2024 and at adoption of CECL on January 1, 2023, there was no ACL related to HTM debt securities due to the composition of the portfolio which is generally considered not to have credit risk given the United States government guarantee associated with these agency securities. The Company had twenty securities, consisting of ten collateralized mortgage obligations and ten mortgage-backed securities, in an unrealized loss position at June 30, 2024 and nineteen securities, consisting of nine collateralized mortgage obligations and ten mortgage-backed securities, in an unrealized loss position at December 31, 2023. The following table presents the estimated fair value and gross unrealized losses of HTM debt securities, aggregated by category and length of time in a continuous unrealized loss position at June 30, 2024 and and December 31, 2023:
The amortized cost and estimated market value of debt securities at June 30, 2024 and December 31, 2023, by contractual maturity are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
At June 30, 2024, HTM debt securities in the amount of $12.4 million were pledged as collateral for a credit line held by the Bank. There were no sales or transfers of investment securities and no realized gains or losses on these securities during the three and six months ended June 30, 2024 or 2023. FHLB Stock The Bank is a member of the FHLB system. Members are required to own FHLB stock of at least the greater of 0.06% of FHLB membership asset value or 4.50% of outstanding FHLB advances. At June 30, 2024 and December 31, 2023, the Bank owned $0.3 million and $0.2 million, respectively, of FHLB stock, which is carried at cost. The Company evaluated the carrying value of its FHLB stock investment at June 30, 2024 and determined that it was not impaired. This evaluation considered the long-term nature of the investment, the current financial and liquidity position of the FHLB, repurchase activity of excess stock by the FHLB at its carrying value, the return on the investment from recurring and special dividends, and the Company’s intent and ability to hold this investment for a period of time sufficient to recover its recorded investment.
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Loans Held for Investment and Allowance for Credit Losses |
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Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Held for Investment and Allowance for Credit Losses | Loans Held for Investment and Allowance for Credit Losses Loans held for investment outstanding by general ledger classification as of June 30, 2024 and December 31, 2023, consisted of the following:
The Bank sells participation interests in some loans it originates and may acquire a participation interest in loans originated by others. All reported amounts reflect only the Bank’s ownership interest in the loans. Strategic Program Loans – In 2016, the Company began originating loans with various third-party loan origination platforms that use technology and other innovative systems to streamline the origination of unsecured consumer and secured or unsecured business loans to a wide array of borrowers within certain approved credit profiles. Loans issued by the Company through these programs follow and are limited to specific predetermined underwriting criteria. The Company earns monthly minimum program fees from these third parties. Based on the volume of loans originated by the Company related to each Strategic Program, an additional fee equal to a percentage of the loans generated under the Strategic Program may be collected. The program fee is included within non-interest income on the consolidated statements of income. The Company generally retains the loans and/or receivables for a number of business days after origination before selling the loans and/or receivables to the Strategic Program platform or another investor. Interest income is earned by the Company while holding the loans. These loans are classified as held-for-sale on the balance sheet. The Company may also hold loans or a portion of the loans or receivables and sell the remainder directly to the Strategic Programs or other investors. The Company generally services the loans originated through the Strategic Programs in consideration of servicing fees equal to a percentage of the loans generated under the Strategic Programs. In turn, the Strategic Program service providers, subject to the Company’s approval and oversight, typically serve as sub-servicer and perform typical primary servicing duties including loan collections, modifications, charging-off, reporting and monitoring. Each Strategic Program establishes a “reserve” deposit account with the Company to reasonably ensure the strategic programs will have sufficient funds available to purchase the loans. The agreements generally require that the reserve account deposit balance does not fall below an agreed upon dollar or percentage threshold related to the total loans currently outstanding as held-for-sale by the Company for the specific Strategic Program. If necessary, the Company has the right to withdraw amounts from the reserve account to fulfill loan purchaser obligations created under the program agreements. Total cash held in reserve by Strategic Programs at the Company at June 30, 2024 and December 31, 2023, was $34.8 million and $29.8 million, respectively. Strategic Program loans retained and held-for-sale as of June 30, 2024 and December 31, 2023, are summarized as follows:
Allowance for Credit Losses: In determining an appropriate amount for the allowance, the Bank segmented and aggregated the loan portfolio based on the Federal Deposit Insurance Corporation (“FDIC”) Consolidated Reports of Condition and Income (“Call Report”) codes. These classifications, which in general are based upon the nature of the collateral and type of borrower, are different than the classifications adopted for other financial reporting purposes, which are based upon the proposed use of the loan proceeds. The following pool segments identified as of June 30, 2024 and December 31, 2023 are based on the CECL methodology:
Activity in the ACL by common characteristic loan pools based on the CECL methodology was as follows:
Nonaccrual and past due loans are summarized below as of June 30, 2024 and December 31, 2023:
There was no interest income for the three and six months ended June 30, 2024 and 2023, recognized on nonaccrual loans. The allowance for credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Bank measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. Generally, collectively assessed loans are grouped by Call Report code and then risk grade grouping. In addition to past due and nonaccrual status criteria, the Company also evaluates loans using a loan grading system. Internal loan grades are based on current financial information, historical payment experience, and credit documentation, among other factors. Performance-based grades are summarized below: Pass – A Pass asset is higher quality and does not fit any of the other categories described below. The likelihood of loss is believed to be remote. Watch – A Watch asset may be a larger loan or one that places a heavier reliance on collateral due to the relative financial strength of the borrower. The assets may be maintenance intensive requiring closer monitoring. The obligor is believed to have an adequate primary source of repayment. Special Mention – A Special Mention asset has potential weaknesses that may be temporary or, if left uncorrected, may result in a loss. While concerns exist, the Company believes that it is currently protected against a default and loss is considered unlikely and not imminent. Substandard – A Substandard asset is believed to be inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have identified weaknesses and are characterized by the possibility that the Company may sustain some loss if deficiencies are not corrected. Not Rated – For certain Strategic Program and consumer loans, the Company does not evaluate and risk rate the loans in the same manner as other loans in the Company’s portfolio. The Not Rated loans are typically homogenous, smaller dollar balances approved using abridged underwriting methods that allow the Company to streamline the loan approval process and increase efficiency. Credit quality for Strategic Program loans is highly correlated with delinquency levels. The following table presents the ending balances of the Company's loan and lease portfolio including nonperforming loans by CECL segment of receivable and originating year and considering certain credit quality indicators as of the date indicated along with gross charge-offs for the six months ended June 30, 2024:
The following table presents the ending balances of the Company's loan and lease portfolio including nonperforming loans by class of receivable and originating year and considering certain credit quality indicators as of the date indicated along with gross charge-offs for the year ended December 31, 2023:
During the three and six months ended June 30, 2024 there were two and three loan modifications with principal totaling $0.4 million and $0.6 million, respectively. The loan modifications deferred payments of principal and interest for six months or more. No concessions were made related to principal or interest reductions or to maturity dates on these loans. The table below reflects the current principal balance outstanding as of June 30, 2024 along with the concession granted for loans that were modified during the three and six months ended June 30, 2024. During the three and six months ended June 30, 2023 there were no material loan modifications.
Collateral-Dependent Financial Loans A collateral-dependent financial loan relies substantially on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with a loan, the Company considers (1) character, overall financial condition and resources, and payment record of the borrower; (2) the prospects for support from any financially responsible guarantors; and (3) the nature and degree of protection provided by the cash flow and value of any underlying collateral. The loan may become collateral-dependent when foreclosure is probable or the borrower is experiencing financial difficulty and its sources of repayment become inadequate over time. At such time, the Company develops an expectation that repayment will be provided substantially through the operation or sale of the collateral. The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of the dates indicated:
The amount of collateral-dependent loans as of June 30, 2024 include $15.8 million of SBA 7(a) loan balances that are guaranteed by the SBA.
The amount of collateral-dependent loans as of December 31, 2023 include $15.0 million of SBA 7(a) loan balances that are guaranteed by the SBA.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Leasing as a Lessor The Company includes commercial operating leases within premises and equipment. The net book value of the commercial operating leases was $8.7 million and $8.2 million as of June 30, 2024 and December 31, 2023, respectively. Rental income from commercial operating leases for the three and six months ended June 30, 2024 and 2023 was $0.5 million, $0.2 million, $1.1 million and $0.3 million, respectively. Depreciation expense for the related premises and equipment was $0.4 million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively, and $0.8 million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively. Leasing as a Lessee The Company leases its facilities under noncancelable operating leases. Rent expense was as follows:
Future minimum annual undiscounted rental payments for the Company’s operating leases are as follows as of June 30, 2024 ($ in thousands):
The weighted-average lease term and discount rate used are as follows:.
Supplemental cash flow information related to leases were as follows (in thousands):
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Leases | Leases Leasing as a Lessor The Company includes commercial operating leases within premises and equipment. The net book value of the commercial operating leases was $8.7 million and $8.2 million as of June 30, 2024 and December 31, 2023, respectively. Rental income from commercial operating leases for the three and six months ended June 30, 2024 and 2023 was $0.5 million, $0.2 million, $1.1 million and $0.3 million, respectively. Depreciation expense for the related premises and equipment was $0.4 million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively, and $0.8 million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively. Leasing as a Lessee The Company leases its facilities under noncancelable operating leases. Rent expense was as follows:
Future minimum annual undiscounted rental payments for the Company’s operating leases are as follows as of June 30, 2024 ($ in thousands):
The weighted-average lease term and discount rate used are as follows:.
Supplemental cash flow information related to leases were as follows (in thousands):
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SBA Servicing Asset, Net |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SBA Servicing Asset, Net | SBA Servicing Asset, Net The Company periodically sells portions of SBA loans and retains rights to service the loans. Loans serviced for others are not included in the accompanying balance sheet. The unpaid principal balances of SBA loans serviced for others was $240.7 million and $275.2 million at June 30, 2024 and December 31, 2023, respectively. The following table summarizes SBA servicing asset, net activity for the periods indicated:
The fair market value of the SBA servicing asset as of June 30, 2024 and December 31, 2023, was $3.7 million and $4.2 million, respectively. Recovery or impairment adjustments to servicing rights are mainly due to market-based assumptions associated with discounted cash flows, loan prepayment speeds, and changes in interest rates. A significant change in prepayments of the loans in the servicing portfolio could result in significant changes in the valuation adjustments, thus creating potential volatility in the carrying amount of servicing rights. The Company assumed a weighted average prepayment rate of 20.4%, weighted average term of 3.36 years, and a weighted average discount rate of 12.6% at June 30, 2024. The Company assumed a weighted average prepayment rate of 18.2%, weighted average term of 3.72 years, and a weighted average discount rate of 15.4% at December 31, 2023.
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Capital Requirements |
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Capital Requirements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Requirements | Capital Requirements The Bank is subject to various regulatory capital requirements administered by federal and State of Utah banking agencies (the regulators). 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 Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off -balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk -weighting, and other factors. Prompt corrective action provisions are not applicable to the bank holding company. Beginning January 1, 2020, the bank qualified and elected to use the community bank leverage ratio (“CBLR”) framework for quantitative measures which requires the Bank to maintain minimum amounts and ratios of Tier 1 capital to average total consolidated assets. Management believes, as of June 30, 2024 and December 31, 2023, that the Bank’s capital levels exceed the regulatory floors required to be classified as a well-capitalized bank. As of June 30, 2024 and December 31, 2023, the most recent notification from the FDIC categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action (there are no conditions or events since that notification that management believes have changed the Bank’s category). The following table sets forth the actual capital amounts and ratios for the Bank and the minimum amount and ratio of capital required to be categorized as well-capitalized as of the dates indicated:
Federal Reserve Board Regulations can require maintenance of certain minimum reserve balances based on certain average deposits. The Bank had no reserve requirements as of June 30, 2024 and December 31, 2023. The Federal Reserve’s policy statement and supervisory guidance on the payment of cash dividends by a Bank Holding Company (“BHC”), such as FinWise Bancorp, expresses the view that a BHC should generally pay cash dividends on common stock only to the extent that (1) the BHC’s net income available over the past year is sufficient to cover the cash dividend, (2) the rate of earnings retention is consistent with the organization’s expected future needs and financial condition, and (3) the regulatory capital adequacy ratios are met. Should an insured depository institution controlled by a bank holding company be “significantly undercapitalized” under the applicable federal bank capital ratios, or if the bank subsidiary is “undercapitalized” and has failed to submit an acceptable capital restoration plan or has materially failed to implement such a plan, federal banking regulators (in the case of the Bank, the FDIC) may choose to require prior Federal Reserve approval for any capital distribution by the BHC. In addition, since FinWise Bancorp is a legal entity separate and distinct from the Bank and does not conduct stand-alone operations, an ability to pay dividends depends on the ability of the Bank to pay dividends to FinWise Bancorp. The FDIC and the Utah Department of Financial Institutions (“UDFI”) may, under certain circumstances, prohibit the payment of dividends to FinWise Bancorp from the Bank. Utah corporate law also requires that dividends can only be paid out of funds legally available. The Company has not paid any cash dividends on its common stock since inception and it currently has no plans to pay cash dividends in the foreseeable future. However, the Company’s Board of Directors may declare a cash or stock dividend out of retained earnings provided the regulatory capital ratio requirements are met. The Company plans to maintain capital ratios that meet or exceed the well-capitalized standards per the regulations and, therefore, would limit dividends to amounts that are appropriate to maintain those well-capitalized regulatory capital ratios.
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Commitments and Contingent Liabilities |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities Federal Home Loan Bank Secured Line of Credit As of June 30, 2024 and December 31, 2023, the Bank’s available line of credit with the FHLB to borrow in overnight funds was $21.2 million and $30.5 million, respectively. All borrowings are short-term and the interest rate is equal to the correspondent bank’s daily federal funds purchase rate. As of June 30, 2024 and December 31, 2023, no amounts were outstanding under the line of credit. Loans totaling $32.6 million and $46.9 million were pledged to secure the FHLB line of credit as of June 30, 2024 and December 31, 2023, respectively. Lines of Credit At June 30, 2024 and December 31, 2023, the Bank had the ability to access $10.6 million and $11.4 million, respectively, from the Federal Reserve Bank’s Discount Window on a collateralized basis. At June 30, 2024, the Federal Reserve Bank’s Bank Term Funding Program was no longer active. At December 31, 2023, the Bank had the ability to access $0.8 million from the Federal Reserve Bank’s Bank Term Funding Program on a collateralized basis. Through Zions Bank, the Bank had an available unsecured line of credit of $5.0 million at June 30, 2024 and December 31, 2023. The Bank had an available line of credit with Bankers’ Bank of the West to borrow up to $1.1 million in overnight funds at June 30, 2024 and December 31, 2023. The Bank had no outstanding balances on such unsecured or secured lines of credit as of June 30, 2024 and December 31, 2023. Paycheck Protection Program Liquidity Facility On April 20, 2020, the Bank was approved by the Federal Reserve to access its SBA Paycheck Protection Program Liquidity Facility (“PPPLF”) through the discount window. The PPPLF enables the Company to fund Paycheck Protection Program (“PPP”) loans without taking on additional liquidity or funding risks because the Company is able to pledge PPP loans as collateral to secure extensions of credit under the PPPLF on a non-recourse basis. Borrowings under the PPPLF have a fixed-rate of 0.35%, with a term that matches the underlying loans. The Bank pledged $0.1 million and $0.2 million of PPP loans as eligible collateral under the PPPLF borrowing arrangement at June 30, 2024 and December 31, 2023, respectively. The average outstanding borrowings were $0.2 million during the six months ended June 30, 2024 and $0.3 million during the six months ended June 30, 2023. Commitments to Extend Credit In the ordinary course of business, the Bank has entered into commitments to extend credit to customers which have not yet been exercised. These financial instruments include commitments to extend credit in the form of loans. Those instruments involve to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. At June 30, 2024 and December 31, 2023, financial instruments with off-balance-sheet risk were as follows:
Allowance for Credit Losses on Unfunded Commitments The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancelable by the Company. The allowance for credit losses on unfunded commitments is included in other liabilities on the consolidated balance sheets and is adjusted through a charge to provision for credit loss expense on the consolidated statements of income. The allowance for credit losses on unfunded commitments estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The allowance for credit losses on unfunded commitments was $0.1 million as of June 30, 2024 and December 31, 2023.
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Investment in Business Funding Group, LLC |
6 Months Ended |
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Jun. 30, 2024 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in Business Funding Group, LLC | Investment in Business Funding Group, LLC On December 31, 2019, the Company purchased from certain members of BFG a 10% membership interest in exchange for an aggregate of 950,784 shares of the Company’s common stock The exchange was accounted for at fair value based on the fair value of the Company’s shares of approximately $3.5 million. On July 25, 2023 the Company entered into a definitive agreement, as amended, to purchase from certain members of BFG an additional 10% membership interest in exchange for shares of common stock of the Company. On February 5, 2024, the transaction was consummated and the Company issued in the aggregate 339,176 shares of common stock of the Company in a private placement to the sellers in exchange for the additional membership interest in BFG. The second transaction increased the Company’s total ownership interest in BFG to 20%. The ownership interest consists of Class A Voting Units representing 4.7% of the aggregate membership interests of BFG and Class B Non-Voting Unites representing 15.3% of the aggregate membership interests of BFG. The other existing members of BFG jointly own the remaining 80% of the outstanding membership interests, on a fully-diluted basis – all of which membership interests are Class A Voting Units. Based on the Company’s accounting policy with respect to investments in limited liability companies, the Company concluded that its level of ownership was indicative of significant influence and, as a result, the investment would be accounted for using the equity method. However, the Company elected the fair value option for its investment due to cost-benefit considerations. The Company received distributions from BFG in the amounts of $0.2 million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively, and $0.4 million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively. These distributions were recorded in the consolidated statements of income in other miscellaneous income. On March 31, 2020, the Company entered into a right of first refusal and option agreement with the members of BFG whereby the Company has the right of first refusal to purchase additional interests in BFG from any selling members and the option to purchase all, but not less than all, of the interests in BFG from the remaining members. The purchase price for the remaining members’ interests is based on an earnings multiple between 10 times and 15 times BFG’s net profit for the fiscal year ended immediately prior to the exercise of the option. The option period begins on January 1, 2021 and expires on January 1, 2028. The Company issued an aggregate 270,000 warrants to the BFG members as consideration for entering into the agreement. The warrants have an exercise price of $6.67 per share and the warrants expire on March 31, 2028. The warrants are free-standing equity instruments and, as a result, are classified within equity at the fair value on the issuance date. The fair value of the warrants was determined by our board of directors with input from management, relying in part upon valuation reports prepared by a third-party valuation firm using a Black-Scholes option pricing model adjusted for a lack of marketability since the Company’s stock was not publicly traded at that time. The resulting fair value of the warrants was $0.19 per share. For further discussion on the Company’s investment in BFG, see Note 12 Related Party Transactions.
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Stock Option Plans The Company utilizes stock-based compensation plans, as well as discretionary grants, for employees, directors and consultants to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives and to promote the success of the Company’s business. The 2019 Stock Option Plan (“2019 Plan”) was adopted on June 20, 2019 following approval by the Company’s Board of Directors and shareholders. The 2019 Plan will terminate as to future awards 10 years from the later of the effective date or the earlier of the most recent Board or stockholder approval of an increase in the number of shares reserved for issuance under the 2019 Plan. On June 27, 2024, the shareholders of the Company approved an amendment to the 2019 Plan increasing the number of shares of common stock reserved for issuance under the plan by an additional 500,000 shares to 1,780,000. At June 30, 2024, 509,880 shares under the 2019 Plan were available for future issuance. The 2016 Stock Option Plan (“2016 Plan”) was adopted on April 20, 2017 following approval by the Company’s Board of Directors and shareholders. The 2016 Plan authorizes the issuance of 299,628 common shares. The 2016 Plan will terminate as to future awards 10 years from the later of the effective date or the earlier of the most recent Board or stockholder approval of an increase in the number of shares reserved for issuance under the 2016 Plan. No shares were granted under the 2016 Plan prior to 2018. At June 30, 2024, 2,189 shares under the 2016 Plan were available for future issuance. The 2019 Plan and the 2016 Plan (collectively, the “Plans”) provide for the issuance of non-statutory stock options and restricted stock to employees, directors and consultants. The Plans also provide for the issuance of incentive stock options only to employees. The stock-based incentive awards for the Plans are granted at an exercise price not less than the fair market value of the Company’s common stock on the date of grant in the case of stock options. Restricted stock is valued based on the fair market value of the Company’s common stock on the grant date. Vesting of the options vary by employee or director and can have a term no more than 10 years, with the options generally having vesting periods ranging from 1 to 5 years. Under the Plans, if an award expires or becomes un-exercisable without having been exercised in full, or is surrendered pursuant to an exchange program, the unpurchased shares that were subject thereto shall become available for future grant or sale under the Plans. However, shares that have actually been issued under the Plans, upon exercise of an award, shall not be returned to the Plans and shall not become available for future distribution under the Plans, except that if unvested shares of restricted stock are repurchased by the Company at their original purchase price, such shares shall become available for future grant under the Plans. Stock Options The grant date fair value is determined using the Black-Scholes option valuation model. The assumptions for expected life reflected management’s judgment and include consideration of historical experience. Expected volatility is based on data from comparable public companies for the expected option term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. Management believes that the assumptions used in the option-pricing model are highly subjective and represent only one estimate of possible value, as there is no active market for the options granted. No options were granted during the first six months of 2024. The table below summarizes the assumptions used for the options granted during the six months ended June 30, 2023.
The following summarizes stock option activity for the six months ended June 30, 2024 and 2023:
The weighted average grant-date fair value of options granted during the six months ended June 30, 2023 was $9.46 The total intrinsic value of options exercised during the three and six months ended June 30, 2024 was $0.2 million and $0.3 million, respectively, and was de minimis for the three and six months ended June 30, 2023. During the three and six months ended June 30, 2024 and the three and six months ended June 30, 2023, the Company received de minimis proceeds from the exercise of stock options and recognized a de minimis actual tax benefit for the tax deductions from the exercise of stock options. Upon exercise of the stock options, the Company will issue new authorized shares. Stock-based Compensation Expense The following tables present pre-tax and after-tax stock-based compensation expense recognized:
During the three and six months ended June 30, 2024 and the three and six months ended June 30, 2023, the Company recognized a de minimis income tax benefit for stock-based compensation. As of June 30, 2024, the Company had unrecognized stock-based compensation expense related to stock options and restricted stock of approximately $0.2 million and $3.8 million, respectively, which is expected to be recognized over the remaining weighted average recognition period of 1.4 years and 1.9 years, respectively.
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures and discloses certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, not a forced liquidation or distressed sale). GAAP establishes a consistent framework for measuring fair value and disclosure requirements about fair value measurements. Among other things, the standard requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s estimates for market assumptions. These two types of inputs create the following fair value hierarchy. Level 1 – Quoted prices in active markets for identical instruments. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available. Level 2 – Observable inputs other than Level 1 including quoted prices in active markets for similar instruments, quoted prices in less active markets for identical or similar instruments, or other observable inputs that can be corroborated by observable market data. Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation also includes observable inputs from nonbinding single dealer quotes not corroborated by observable market data. In developing Level 3 measurements, management incorporates whatever market data might be available and uses discounted cash flow models where appropriate. These calculations include projections of future cash flows, including appropriate default and loss assumptions, and market-based discount rates. The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize at a future date. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period. There were no transfers between fair value levels for the three and six months ended June 20, 2024 and 2023. The following methods were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents: The carrying amount of these items is a reasonable estimate of their fair value. Investment securities held-to-maturity: The estimated fair values of investment securities are priced using current active market quotes, if available, which are considered Level 1 measurements. For most of the portfolio, matrix pricing based on the securities’ relationship to other benchmark quoted prices is used to establish the fair value. These measurements are considered Level 2. Investment in Federal Home Loan Bank stock: The fair value is based upon the redemption value of the stock, which equates to the carrying value. Strategic Program loans held-for-sale: The carrying amount of these items is a reasonable estimate of their fair value. Loans held for investment, net: The fair value is estimated by discounting the future cash flows and estimated prepayments using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term. Some loan types’ fair value approximated carrying value because of their floating rate or expected maturity characteristics. SBA servicing asset, net: The fair value of servicing assets is based on, in part, third-party valuations that project estimated future cash inflows that include servicing fees and outflows that include market rates for costs of servicing. The present value of the future cash flows are calculated utilizing market-based discount rates. The market-based discount rates represent risk spreads based on secondary market transactions utilizing calculated prepayment curves. Because observable loan transactions are used to determine the risk spreads, the Company considers the measurement to be Level 2. Investment in BFG: The Company’s valuation technique utilized the average of the discounted cash flow method and the Guideline Public Company method. The valuation was also adjusted using a Guideline Transaction method based on the transaction announced on July 25, 2023 and the share price on September 30, 2023. A 20% lack of marketability discount was applied to the valuation as well as a 4.5% discount to non-voting shares to arrive at fair value as of June 30, 2024 and December 31, 2023. The calculation of fair value utilized significant unobservable inputs, including projected cash flows, growth rates, and discount rates. The fair value of the investment in BFG was $8.0 million and $4.2 million as of June 30, 2024 and December 31, 2023, respectively. The following table summarizes investment in BFG activity for the periods indicated:
Deposits: The carrying amount of deposits with no stated maturity, such as savings and checking accounts, is a reasonable estimate of their fair value. The market value of certificates of deposit is based upon the discounted value of contractual cash flows. The discount rate is determined using the rates currently offered on comparable instruments. Accrued interest receivable and payable: The fair value of accrued interest receivable and payable approximates their carrying amount. PPP Liquidity Facility: The fair value of PPPLF is estimated using a discounted cash flow based on the remaining contractual term and current borrowing rates for similar terms. The table below presents the carrying amount and fair value of the Company's financial instruments:
Assets measured at fair value on a nonrecurring basis are summarized as follows:
Individually evaluated loans – The loan amount above represents loans individually evaluated that have been adjusted to the lower of cost or fair value. When collateral dependent loans are individually evaluated, they are measured using the current fair value of the collateral securing these loans, less selling costs. The fair value of real estate collateral is determined using collateral valuations or a discounted cash flow analysis using inputs such as discount rates, sale prices of similar assets, and term of expected disposition. Some appraised values are adjusted based on management’s review and analysis, which may include historical knowledge, changes in market conditions, estimated selling and other anticipated costs, and/or expertise and knowledge. The loss, if any, represents charge-offs on loans when the fair value of the collateral is less than the carrying amount of the loan. Quantitative information for Level 3 fair value measurements – The range and weighted average of the significant unobservable inputs used to fair value Level 3 nonrecurring assets as of June 30, 2024 and as of December 31, 2023, along with the valuation techniques used, are shown in the following table:
The range and weighted average of the significant unobservable inputs used to fair value the investment in BFG Level 3 recurring asset as of June 30, 2024 and as of December 31, 2023 are shown in the following table:
The valuation as of December 31, 2023 was adjusted using a Guideline Transaction method based on the potential transaction announced on July 25, 2023 and the share price on December 31, 2023.
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Income Taxes |
6 Months Ended |
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Jun. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the three months ended June 30, 2024 and 2023, income tax expense was $1.0 million and $1.6 million, respectively, resulting in an effective income tax rate of 23.9% and 26.1%, respectively. For the six months ended June 30, 2024 and 2023, income tax expense was $2.2 million and $3.0 million, respectively, resulting in an effective income tax rate of 25.2% and 26.1%, respectively. The effective tax rate differs from the statutory rate of 21.0% during the three and six months ended June 30, 2024 due primarily to the resolution of state tax matters, state taxes and the tax effect of stock-based compensation. The effective tax rate differs from the statutory rate of 21.0% during the three and six months ended June 30, 2023 due primarily to state taxes, the tax effect of nondeductible wages and stock-based compensation.
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Related Party Transactions |
6 Months Ended |
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Jun. 30, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions In the ordinary course of business, the Bank may grant loans to certain executive officers and directors and the companies with which they are associated. The Company had de minimis loans outstanding to related parties as of June 30, 2024 and December 31, 2023. Total deposits from certain executive officers and directors and the companies with which they are associated were $1.9 million and $1.5 million as of June 30, 2024 and December 31, 2023, respectively. BFG is a small business loan broker, primarily under the SBA’s 7(a) loan program. As noted in Note 8 Investment in Business Funding Group, the Company has a 20% ownership in the outstanding membership units of BFG. The Company underwrites loans sourced by BFG in its normal course of business. If approved and funded, the Company pays BFG a commission fee based on the amount funded. There is no guarantee or commitment made by the Company to BFG to approve or fund loans referred by BFG. The Company is able to use its sole discretion in deciding to approve and fund loans referred by BFG.
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Earnings per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | Earnings per Share The following table is a reconciliation of the components used to derive basic and diluted earnings per share for the three and six months ended June 30, 2024 and 2023 (in thousands, except share and per share amounts):
(1)Represents earnings attributable to holders of unvested restricted stock issued to the Company’s directors and employees.
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsSubsequent to June 30, 2024, three SBA loans with aggregate outstanding principal of $6.3 million were placed into nonaccrual status. $4.4 million of the outstanding principal is guaranteed by the SBA. Two loans totaling $4.1 million were accruing interest and categorized as 30-89 days past due at June 30, 2024 (see Note 3 – Loans Held for Investment and Allowance for Credit Losses). The third loan in the amount of $2.3 million was performing as of June 30, 2024. The pledge of other collateral also secures each of these loans. |
Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
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Pay vs Performance Disclosure | ||||
Net income | $ 3,180 | $ 4,638 | $ 6,495 | $ 8,499 |
Insider Trading Arrangements |
3 Months Ended |
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Jun. 30, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Business, Basis of Presentation, and Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation – The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with rules and regulations of the Securities and Exchange Commission (“SEC”) and include the activity of the Company and its wholly owned subsidiaries, FinWise Investment, LLC and the Bank. The statements do not include all of the information and footnotes required by GAAP for complete financial statements. All significant inter-company transactions have been eliminated in consolidation. In the opinion of management, all the adjustments (consisting of normal and recurring adjustments) necessary for the fair statement of the consolidated financial condition and the consolidated results of operations for the periods presented have been included. The results of operations and other data presented for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations that may be expected for subsequent periods or the full year results. The consolidated balance sheet data as of December 31, 2023 was derived from audited financial statements; however, the accompanying notes to the unaudited consolidated financial statements do not include all of the annual disclosures required by GAAP and should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Certain prior period amounts have been reclassified to conform to the current period presentation. |
Recent accounting pronouncements | Recent Accounting Pronouncements In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. ASU 2023-09 improves the transparency of income tax disclosures by requiring entities to provide greater disaggregation of information on income taxes paid and on the rate reconciliation disclosures. This pronouncement also requires qualitative discussion of the primary state and local jurisdictions for income taxes and the type of reconciling categories. For public business entities, this ASU is effective for fiscal years beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which requires disclosure, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Entities must adopt this ASU on a retrospective basis. Early adoption is permitted. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements.
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Fair Value of Financial Instruments | The Company measures and discloses certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, not a forced liquidation or distressed sale). GAAP establishes a consistent framework for measuring fair value and disclosure requirements about fair value measurements. Among other things, the standard requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s estimates for market assumptions. These two types of inputs create the following fair value hierarchy. Level 1 – Quoted prices in active markets for identical instruments. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available. Level 2 – Observable inputs other than Level 1 including quoted prices in active markets for similar instruments, quoted prices in less active markets for identical or similar instruments, or other observable inputs that can be corroborated by observable market data. Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation also includes observable inputs from nonbinding single dealer quotes not corroborated by observable market data. In developing Level 3 measurements, management incorporates whatever market data might be available and uses discounted cash flow models where appropriate. These calculations include projections of future cash flows, including appropriate default and loss assumptions, and market-based discount rates. The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize at a future date. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period. There were no transfers between fair value levels for the three and six months ended June 20, 2024 and 2023. The following methods were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents: The carrying amount of these items is a reasonable estimate of their fair value. Investment securities held-to-maturity: The estimated fair values of investment securities are priced using current active market quotes, if available, which are considered Level 1 measurements. For most of the portfolio, matrix pricing based on the securities’ relationship to other benchmark quoted prices is used to establish the fair value. These measurements are considered Level 2. Investment in Federal Home Loan Bank stock: The fair value is based upon the redemption value of the stock, which equates to the carrying value. Strategic Program loans held-for-sale: The carrying amount of these items is a reasonable estimate of their fair value. Loans held for investment, net: The fair value is estimated by discounting the future cash flows and estimated prepayments using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term. Some loan types’ fair value approximated carrying value because of their floating rate or expected maturity characteristics. SBA servicing asset, net: The fair value of servicing assets is based on, in part, third-party valuations that project estimated future cash inflows that include servicing fees and outflows that include market rates for costs of servicing. The present value of the future cash flows are calculated utilizing market-based discount rates. The market-based discount rates represent risk spreads based on secondary market transactions utilizing calculated prepayment curves. Because observable loan transactions are used to determine the risk spreads, the Company considers the measurement to be Level 2. Deposits: The carrying amount of deposits with no stated maturity, such as savings and checking accounts, is a reasonable estimate of their fair value. The market value of certificates of deposit is based upon the discounted value of contractual cash flows. The discount rate is determined using the rates currently offered on comparable instruments. Accrued interest receivable and payable: The fair value of accrued interest receivable and payable approximates their carrying amount. Individually evaluated loans – The loan amount above represents loans individually evaluated that have been adjusted to the lower of cost or fair value. When collateral dependent loans are individually evaluated, they are measured using the current fair value of the collateral securing these loans, less selling costs. The fair value of real estate collateral is determined using collateral valuations or a discounted cash flow analysis using inputs such as discount rates, sale prices of similar assets, and term of expected disposition. Some appraised values are adjusted based on management’s review and analysis, which may include historical knowledge, changes in market conditions, estimated selling and other anticipated costs, and/or expertise and knowledge. The loss, if any, represents charge-offs on loans when the fair value of the collateral is less than the carrying amount of the loan.
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amortized Cost, Unrealized Gains and Losses, and Estimated Fair Values of Held-to-Maturity Securities | The amortized cost, unrealized gains and losses, and estimated fair values of the Company’s HTM debt securities at June 30, 2024 and December 31, 2023, are summarized as follows:
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Schedule of Fair Value and Unrealized Losses of Securities in Unrealized Loss Position | The following table presents the estimated fair value and gross unrealized losses of HTM debt securities, aggregated by category and length of time in a continuous unrealized loss position at June 30, 2024 and and December 31, 2023:
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Schedule of Amortized Cost and Estimated Market Value of Debt Securities | The amortized cost and estimated market value of debt securities at June 30, 2024 and December 31, 2023, by contractual maturity are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Loans Held for Investment and Allowance for Credit Losses (Tables) |
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Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Outstanding by General Ledger Classification | Loans held for investment outstanding by general ledger classification as of June 30, 2024 and December 31, 2023, consisted of the following:
The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of the dates indicated:
The amount of collateral-dependent loans as of June 30, 2024 include $15.8 million of SBA 7(a) loan balances that are guaranteed by the SBA.
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Schedule of Strategic Program Loans Retained and Held-for-sale | Strategic Program loans retained and held-for-sale as of June 30, 2024 and December 31, 2023, are summarized as follows:
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Schedule of Changes in Allowance for Loan Losses | Activity in the ACL by common characteristic loan pools based on the CECL methodology was as follows:
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Schedule of Nonaccrual and Past Due Loans | Nonaccrual and past due loans are summarized below as of June 30, 2024 and December 31, 2023:
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Schedule of Outstanding Loan Balances Categorized by Credit Quality Indicators | The following table presents the ending balances of the Company's loan and lease portfolio including nonperforming loans by CECL segment of receivable and originating year and considering certain credit quality indicators as of the date indicated along with gross charge-offs for the six months ended June 30, 2024:
The following table presents the ending balances of the Company's loan and lease portfolio including nonperforming loans by class of receivable and originating year and considering certain credit quality indicators as of the date indicated along with gross charge-offs for the year ended December 31, 2023:
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Schedule of Loans Modified and Recorded as TDR's | The table below reflects the current principal balance outstanding as of June 30, 2024 along with the concession granted for loans that were modified during the three and six months ended June 30, 2024. During the three and six months ended June 30, 2023 there were no material loan modifications.
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Cost | The Company leases its facilities under noncancelable operating leases. Rent expense was as follows:
The weighted-average lease term and discount rate used are as follows:.
Supplemental cash flow information related to leases were as follows (in thousands):
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Schedule of Future Minimum Annual Undiscounted Rental Payments for Operating Leases | Future minimum annual undiscounted rental payments for the Company’s operating leases are as follows as of June 30, 2024 ($ in thousands):
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SBA Servicing Asset, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of SBA Servicing Asset Activity | The following table summarizes SBA servicing asset, net activity for the periods indicated:
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Capital Requirements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Requirements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Capital Amounts and Ratios | The following table sets forth the actual capital amounts and ratios for the Bank and the minimum amount and ratio of capital required to be categorized as well-capitalized as of the dates indicated:
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Commitments and Contingent Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Instruments with Off-Balance Sheet Risk | At June 30, 2024 and December 31, 2023, financial instruments with off-balance-sheet risk were as follows:
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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assumptions Used | The table below summarizes the assumptions used for the options granted during the six months ended June 30, 2023.
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Schedule of Stock Option Activity | The following summarizes stock option activity for the six months ended June 30, 2024 and 2023:
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Schedule of Pre-Tax and After-Tax Stock-Based Compensation Expense | The following tables present pre-tax and after-tax stock-based compensation expense recognized:
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Fair Value of Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investment in BFG Activity | The following table summarizes investment in BFG activity for the periods indicated:
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Schedule of Estimated Fair Value and Carrying Value of Financial Instrument | The table below presents the carrying amount and fair value of the Company's financial instruments:
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Schedule of Assets Measured at Fair Value on a Nonrecurring Basis | Assets measured at fair value on a nonrecurring basis are summarized as follows:
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Schedule of Quantitative Information for Level 3 Fair Value Measurements | The range and weighted average of the significant unobservable inputs used to fair value Level 3 nonrecurring assets as of June 30, 2024 and as of December 31, 2023, along with the valuation techniques used, are shown in the following table:
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Schedule of Significant Unobservable Inputs Used to Fair Value Investment in BFG on Recurring Asset | The range and weighted average of the significant unobservable inputs used to fair value the investment in BFG Level 3 recurring asset as of June 30, 2024 and as of December 31, 2023 are shown in the following table:
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Earnings per Share (Tables) |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted EPS | The following table is a reconciliation of the components used to derive basic and diluted earnings per share for the three and six months ended June 30, 2024 and 2023 (in thousands, except share and per share amounts):
(1)Represents earnings attributable to holders of unvested restricted stock issued to the Company’s directors and employees.
|
Business, Basis of Presentation, and Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions |
4 Months Ended | |
---|---|---|
Jun. 30, 2024 |
Mar. 06, 2024 |
|
Subsidiary, Sale of Stock [Line Items] | ||
Common stock repurchase program, shares authorized to be purchased (in shares) | 641,832 | |
Stock repurchases (in shares) | 44,608 | |
Common stock repurchased, value | $ 0.5 | |
FinWise Bank | ||
Subsidiary, Sale of Stock [Line Items] | ||
Percentage of business acquired | 100.00% |
Investments - Held-to-Maturity Securities (Details) - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
Jan. 01, 2023 |
---|---|---|---|
Schedule of Held-to-Maturity Securities [Line Items] | |||
Amortized Cost | $ 13,942,000 | $ 15,388,000 | |
Allowance for Credit Losses | 0 | 0 | $ 0 |
Unrealized Gain | 1,000 | 4,000 | |
Unrealized Loss | (1,546,000) | (1,583,000) | |
Estimated Fair Value | 12,397,000 | 13,809,000 | |
Mortgage-backed securities | |||
Schedule of Held-to-Maturity Securities [Line Items] | |||
Amortized Cost | 6,428,000 | 6,959,000 | |
Allowance for Credit Losses | 0 | 0 | |
Unrealized Gain | 0 | 0 | |
Unrealized Loss | (774,000) | (817,000) | |
Estimated Fair Value | 5,654,000 | 6,142,000 | |
Collateralized mortgage obligations | |||
Schedule of Held-to-Maturity Securities [Line Items] | |||
Amortized Cost | 7,514,000 | 8,429,000 | |
Allowance for Credit Losses | 0 | 0 | |
Unrealized Gain | 1,000 | 4,000 | |
Unrealized Loss | (772,000) | (766,000) | |
Estimated Fair Value | $ 6,743,000 | $ 7,667,000 |
Investments - Amortized Cost and Estimated Market Value of Debt Securities (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Amortized Cost | ||
Due in one year or less | $ 0 | $ 0 |
Due after one year through five years | 0 | 0 |
Due after five years through ten years | 2,462 | 2,745 |
Due after ten years | 11,480 | 12,643 |
Amortized Cost | 13,942 | 15,388 |
Estimated Fair Value | ||
Due in one year or less | 0 | 0 |
Due after one year through five years | 0 | 0 |
Due after five years through ten years | 2,298 | 2,577 |
Due after ten years | 10,099 | 11,232 |
Estimated fair value | $ 12,397 | $ 13,809 |
Investments - FHLB Stock (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Investment in Federal Home Loan Bank ("FHLB") stock, at cost | $ 349 | $ 238 |
Loans Held for Investment and Allowance for Credit Losses - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Dec. 31, 2023 |
|
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | |||||
Interest income | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 | |
Strategic Program loans | |||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | |||||
Cash held in reserve by strategic programs | $ 34.8 | $ 34.8 | $ 29.8 |
Loans Held for Investment and Allowance for Credit Losses - Strategic Program Loans (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Retained Strategic Program loans | $ 414,341 | $ 372,215 |
Retained Strategic Program loans | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Retained Strategic Program loans | 17,861 | 19,408 |
Strategic Program loans held-for-sale | 66,542 | 47,514 |
Total Strategic Program loans | $ 84,403 | $ 66,922 |
Leases - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Dec. 31, 2023 |
|
Lessee, Lease, Description [Line Items] | |||||
Rental income | $ 0.5 | $ 0.2 | $ 1.1 | $ 0.3 | |
Depreciation | 0.4 | $ 0.1 | 0.8 | $ 0.3 | |
Commercial Operating Leases | |||||
Lessee, Lease, Description [Line Items] | |||||
Net book value | $ 8.7 | $ 8.7 | $ 8.2 |
Leases - Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Operating leases | ||||
Operating lease cost | $ 219 | $ 219 | $ 438 | $ 438 |
Variable lease cost | 21 | 9 | 42 | 18 |
Operating lease expense | 240 | 228 | 480 | 456 |
Short-term lease rent expense | 0 | 0 | 0 | 0 |
Total rent expense | $ 240 | $ 228 | $ 480 | $ 456 |
Leases - Minimum Future Rental Payments (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Leases [Abstract] | ||
Six Months Ended December 31, 2024 | $ 538 | |
Year Ended December 31, 2025 | 1,086 | |
Year Ended December 31, 2026 | 1,118 | |
Year Ended December 31, 2027 | 1,152 | |
Year Ended December 31, 2028 | 1,186 | |
Year Ended December 31, 2029 | 1,017 | |
Total future minimum lease payments | 6,097 | |
Less present value discount | (309) | |
Operating lease liabilities | $ 5,788 | $ 6,296 |
Leases - Lease Assets and Liabilities (Details) |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Leases [Abstract] | ||
Weighted-average remaining lease term – operating leases (in years) | 5 years 3 months 18 days | 5 years 9 months 18 days |
Weighted-average discount rate – operating leases | 1.90% | 1.90% |
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Leases [Abstract] | ||||
Operating cash flows from operating leases | $ 287 | $ 21 | $ 566 | $ 292 |
SBA Servicing Asset, Net - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
Transfers and Servicing [Abstract] | ||
SBA loans serviced for others | $ 240.7 | $ 275.2 |
SBA servicing asset, net | $ 3.7 | $ 4.2 |
Weighted average prepayment rate | 20.40% | 18.20% |
Weighted average term (in years) | 3 years 4 months 9 days | 3 years 8 months 19 days |
Weighted average discount rate | 12.60% | 15.40% |
SBA Servicing Asset, Net - SBA Servicing Asset Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Servicing Asset at Fair Value, Amount [Roll Forward] | ||||
Beginning balance | $ 4,072 | $ 5,284 | $ 4,231 | $ 5,210 |
Additions to servicing asset | 0 | 150 | 0 | 150 |
Recovery of SBA servicing asset | 328 | 339 | 526 | 592 |
Amortization of servicing asset | (711) | (540) | (1,068) | (719) |
Ending balance | $ 3,689 | $ 5,233 | $ 3,689 | $ 5,233 |
Capital Requirements - Actual Capital Amounts and Ratios (Details) $ in Thousands |
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
USD ($)
|
---|---|---|
Amount | ||
Actual | $ 125,904 | $ 116,108 |
Well-Capitalized Requirement | $ 52,787 | $ 50,441 |
Ratio | ||
Actual | 0.208 | 0.207 |
Well-Capitalized Requirement | 0.090 | 0.090 |
Capital Requirements - Narrative (Details) - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Capital Requirements [Abstract] | ||
Minimum bank reserve balance | $ 0 | $ 0 |
Commitments and Contingent Liabilities - Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Fair Value, off-Balance-Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance-sheet risk | $ 18,769 | $ 19,775 |
Revolving, open-end lines of credit | ||
Fair Value, off-Balance-Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance-sheet risk | 2,055 | 1,630 |
Commercial real estate | ||
Fair Value, off-Balance-Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance-sheet risk | 16,388 | 17,421 |
Other unused commitments | ||
Fair Value, off-Balance-Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance-sheet risk | $ 326 | $ 724 |
Stock-Based Compensation - Assumptions Used in Option-Pricing Model for Stock Options (Details) - Stock options |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Minimum | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Risk-free interest rate | 3.90% |
Expected term in years | 5 years 6 months |
Expected volatility | 44.00% |
Maximum | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Risk-free interest rate | 4.00% |
Expected term in years | 7 years 6 months |
Expected volatility | 44.90% |
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Pre-tax stock-based compensation expense | $ 419 | $ 629 | $ 570 | $ 1,050 |
After-tax stock-based compensation expense | 332 | 503 | 455 | 840 |
Stock options | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Pre-tax stock-based compensation expense | 75 | 142 | 131 | 237 |
After-tax stock-based compensation expense | 74 | 137 | 125 | 230 |
Restricted shares | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Pre-tax stock-based compensation expense | 344 | 487 | 439 | 813 |
After-tax stock-based compensation expense | $ 258 | $ 366 | $ 330 | $ 610 |
Fair Value of Financial Instruments - Narrative (Details) $ in Thousands |
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
USD ($)
|
Jun. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
---|---|---|---|---|
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Investment in BFG | $ 8,000 | $ 4,200 | $ 4,500 | $ 4,800 |
Measurement Input, Discount for Lack of Marketability | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Investment, measurement input | 0.20 | 0.20 | ||
Discount rate | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Investment, measurement input | 0.045 | 0.045 |
Fair Value of Financial Instruments - Investment in BFG Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Investments in and Advances to Affiliates, at Fair Value [Roll Forward] | ||||
Beginning balance | $ 4,200 | $ 4,800 | ||
Purchase of BFG ownership interest | 4,125 | 0 | ||
Change in fair value of BFG | $ (200) | $ 0 | (325) | (300) |
Ending balance | $ 8,000 | $ 4,500 | $ 8,000 | $ 4,500 |
Fair Value of Financial Instruments - Assets Measured on Non-recurring Basis (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Level 3 | ||
Nonrecurring assets: | ||
Individually evaluated loans | $ 27,138 | $ 27,127 |
Fair Value | ||
Nonrecurring assets: | ||
Individually evaluated loans | 27,138 | 27,127 |
Fair Value | Level 1 | ||
Nonrecurring assets: | ||
Individually evaluated loans | 0 | 0 |
Fair Value | Level 2 | ||
Nonrecurring assets: | ||
Individually evaluated loans | 0 | 0 |
Fair Value | Level 3 | ||
Nonrecurring assets: | ||
Individually evaluated loans | $ 27,138 | $ 27,127 |
Fair Value of Financial Instruments - Quantitative Information for Level 3 Fair Value Measurements (Details) - Level 3 $ in Thousands |
Jun. 30, 2024
USD ($)
|
Dec. 31, 2023
USD ($)
|
---|---|---|
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Individually evaluated loans | $ 27,138 | $ 27,127 |
Market comparable | Adjustment to appraisal value | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Individually evaluated loans, measurement input | 0.1140 | 0.0757 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 998 | $ 1,638 | $ 2,192 | $ 3,002 |
Effective income tax rate | 23.90% | 26.10% | 25.20% | 26.10% |
Related Party Transactions (Details) - USD ($) $ in Millions |
Jun. 30, 2024 |
Feb. 05, 2024 |
Dec. 31, 2023 |
Dec. 31, 2019 |
---|---|---|---|---|
Schedule of Equity Method Investments [Line Items] | ||||
Deposits | $ 1.9 | $ 1.5 | ||
BFG | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Membership interest | 20.00% | 20.00% | 10.00% |
Label | Element | Value |
---|---|---|
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2016-13 [Member] |
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