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) | ||||||||||||||||
Registrant’s Telephone Number, Including Area Code: |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ¨ | ☒ | ||||||||||||||||||
Non-accelerated filer | ¨ | Smaller reporting company | ||||||||||||||||||
Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | o |
Page | ||||||||
Item 1. | ||||||||
Item 2 | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
Term | Definition | ||||
ALL | Allowance for loan losses | ||||
AFS | Available for sale | ||||
AOCI | Accumulated other comprehensive income | ||||
ASC | Accounting Standards Codification | ||||
ASU | Accounting Standards Update | ||||
Bank | Orrstown Bank, the commercial banking subsidiary of Orrstown Financial Services, Inc. | ||||
CDI | Core deposit intangible | ||||
CMO | Collateralized mortgage obligation | ||||
ERM | Enterprise risk management | ||||
Exchange Act | Securities Exchange Act of 1934, as amended | ||||
FASB | Financial Accounting Standards Board | ||||
FDIC | Federal Deposit Insurance Corporation | ||||
FHLB | Federal Home Loan Bank | ||||
FRB | Board of Governors of the Federal Reserve System | ||||
GAAP | Accounting principles generally accepted in the United States of America | ||||
GDP | Gross Domestic Deposit | ||||
GSE | U.S. government-sponsored enterprise | ||||
IRC | Internal Revenue Code of 1986, as amended | ||||
LHFS | Loans held for sale | ||||
LIBOR | London Interbank Offered Rate | ||||
MBS | Mortgage-backed securities | ||||
MSR | Mortgage servicing right | ||||
NIM | Net interest margin | ||||
OCI | Other comprehensive income | ||||
OREO | Other real estate owned | ||||
OTTI | Other-than-temporary impairment | ||||
2011 Plan | 2011 Orrstown Financial Services, Inc. Incentive Stock Plan | ||||
PCI loans | Purchased credit impaired loans | ||||
PACE | Property Assessed Clean Energy loans | ||||
PPP | Paycheck Protection Program | ||||
Repurchase Agreements | Securities sold under agreements to repurchase | ||||
ReRemic | Re-securitization of Real Estate Mortgage Investment Conduits | ||||
ROU | Right of use (leases) | ||||
SBA | U.S. Small Business Administration | ||||
SEC | Securities and Exchange Commission | ||||
Securities Act | Securities Act of 1933, as amended | ||||
SOFR | Secured Overnight Financing Rate | ||||
TDR | Troubled debt restructuring | ||||
Unless the context otherwise requires, the terms “Orrstown,” “we,” “us,” “our,” and “Company” refer to Orrstown Financial Services, Inc. and its subsidiaries. | |||||
(Dollars in thousands, except per share amounts) | March 31, 2022 | December 31, 2021 | |||||||||
Assets | |||||||||||
Cash and due from banks | $ | $ | |||||||||
Interest-bearing deposits with banks | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted investments in bank stocks | |||||||||||
Securities available for sale (amortized cost of $ | |||||||||||
Loans held for sale, at fair value | |||||||||||
Loans | |||||||||||
Less: Allowance for loan losses | ( | ( | |||||||||
Net loans | |||||||||||
Premises and equipment, net | |||||||||||
Cash surrender value of life insurance | |||||||||||
Goodwill | |||||||||||
Other intangible assets, net | |||||||||||
Accrued interest receivable | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Deposits: | |||||||||||
Noninterest-bearing | $ | $ | |||||||||
Interest-bearing | |||||||||||
Total deposits | |||||||||||
Securities sold under agreements to repurchase | |||||||||||
FHLB advances and other borrowings | |||||||||||
Subordinated notes | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Shareholders’ Equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, no par value—$ | |||||||||||
Additional paid - in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive (loss) income | ( | ||||||||||
Treasury stock— | ( | ( | |||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
Three Months Ended | ||||||||||||||
(Dollars in thousands, except per share amounts) | March 31, 2022 | March 31, 2021 | ||||||||||||
Interest income | ||||||||||||||
Loans | $ | $ | ||||||||||||
Investment securities - taxable | ||||||||||||||
Investment securities - tax-exempt | ||||||||||||||
Short-term investments | ||||||||||||||
Total interest income | ||||||||||||||
Interest expense | ||||||||||||||
Deposits | ||||||||||||||
Securities sold under agreements to repurchase | ||||||||||||||
FHLB advances and other borrowings | ||||||||||||||
Subordinated notes | ||||||||||||||
Total interest expense | ||||||||||||||
Net interest income | ||||||||||||||
Provision for loan losses | ( | |||||||||||||
Net interest income after provision for loan losses | ||||||||||||||
Noninterest income | ||||||||||||||
Service charges on deposit accounts | ||||||||||||||
Interchange income | ||||||||||||||
Other service charges and fees | ||||||||||||||
Swap fee income | ||||||||||||||
Trust and investment management income | ||||||||||||||
Brokerage income | ||||||||||||||
Mortgage banking activities | ||||||||||||||
Income from life insurance | ||||||||||||||
Investment securities (losses) gains | ( | |||||||||||||
Other income | ||||||||||||||
Total noninterest income | ||||||||||||||
Noninterest expenses | ||||||||||||||
Salaries and employee benefits | ||||||||||||||
Occupancy | ||||||||||||||
Furniture and equipment | ||||||||||||||
Data processing | ||||||||||||||
Automated teller and interchange fees | ||||||||||||||
Advertising and bank promotions | ||||||||||||||
FDIC insurance | ||||||||||||||
Professional services | ||||||||||||||
Directors' compensation | ||||||||||||||
Taxes other than income | ||||||||||||||
Intangible asset amortization | ||||||||||||||
Other operating expenses | ||||||||||||||
Total noninterest expenses | ||||||||||||||
Income before income tax expense | ||||||||||||||
Income tax expense | ||||||||||||||
Net income | $ | $ | ||||||||||||
Per share information: | ||||||||||||||
Basic earnings per share | $ | $ | ||||||||||||
Diluted earnings per share | ||||||||||||||
Dividends paid per share |
Three Months Ended | ||||||||||||||
(Dollars in thousands) | March 31, 2022 | March 31, 2021 | ||||||||||||
Net income | $ | $ | ||||||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||
Unrealized losses on securities available for sale arising during the period | ( | ( | ||||||||||||
Reclassification adjustment for losses (gains) realized in net income | ( | |||||||||||||
Net unrealized losses on securities available for sale | ( | ( | ||||||||||||
Tax effect | ||||||||||||||
Total other comprehensive loss, net of tax and reclassification adjustments on securities available for sale | ( | ( | ||||||||||||
Unrealized gains on interest rate swaps used in cash flow hedges | ||||||||||||||
Reclassification adjustment for losses realized in net income | ||||||||||||||
Net unrealized gains on interest rate swaps used in cash flow hedges | ||||||||||||||
Tax effect | ( | |||||||||||||
Total other comprehensive gains, net of tax and reclassification adjustments on interest rate swaps used in cash flow hedges | ||||||||||||||
Total other comprehensive loss, net of tax and reclassification adjustments | ( | ( | ||||||||||||
Total comprehensive (loss) income | $ | ( | $ |
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Shareholders’ Equity | |||||||||||||||||||||||||||||
Balance, January 1, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Total other comprehensive loss, net of taxes | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Cash dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Share-based compensation plans: | |||||||||||||||||||||||||||||||||||
( | ( | — | — | ( | ( | ||||||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Treasury Stock | Total Shareholders’ Equity | |||||||||||||||||||||||||||||
Balance, January 1, 2021 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Total other comprehensive loss, net of taxes | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Cash dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Share-based compensation plans: | |||||||||||||||||||||||||||||||||||
( | — | — | |||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Three Months Ended | |||||||||||
(Dollars in thousands) | March 31, 2022 | March 31, 2021 | |||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Net premium amortization / (discount accretion) | ( | ||||||||||
Depreciation and amortization expense | |||||||||||
Provision for loan losses | ( | ||||||||||
Share-based compensation | |||||||||||
Gains on sales of loans originated for sale | ( | ( | |||||||||
Mortgage loans originated for sale | ( | ( | |||||||||
Proceeds from sales of loans originated for sale | |||||||||||
Gains on sale of portfolio loans | ( | ||||||||||
Net loss on disposal of premises and equipment | |||||||||||
Deferred income taxes | ( | ||||||||||
Investment securities (losses) gains | ( | ||||||||||
Income from life insurance | ( | ( | |||||||||
Increase in accrued interest receivable | ( | ( | |||||||||
Increase in accrued interest payable and other liabilities | |||||||||||
Other, net | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities | |||||||||||
Proceeds from sales of AFS securities | |||||||||||
Maturities, repayments and calls of AFS securities | |||||||||||
Purchases of AFS securities | ( | ( | |||||||||
Net redemptions of restricted investments in bank stocks | |||||||||||
Distributions from investments in limited partnerships | |||||||||||
Net decrease (increase) in loans | ( | ||||||||||
Proceeds from sales of portfolio loans | |||||||||||
Purchases of bank premises and equipment | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Net increase in deposits | |||||||||||
Net increase in borrowings with original maturities less than 90 days | |||||||||||
Payments on FHLB advances and other borrowings | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Acquisition of treasury stock | ( | ||||||||||
Shares repurchased as treasury stock for employee taxes associated with restricted stock vesting | ( | ( | |||||||||
Proceeds from issuance of employee stock purchase plan shares | |||||||||||
Net cash provided by financing activities | |||||||||||
Net increase in cash and cash equivalents | |||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | $ | |||||||||
Supplemental schedule of noncash activities: | |||||||||||
Loans transferred from LHFS to portfolio loans | |||||||||||
Securities purchases not yet settled | |||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | |||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Totals | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | |||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Totals | $ | $ | $ | $ |
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||
# of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | |||||||||||||||||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | $ |
Amortized Cost | Fair Value | ||||||||||
Due in one year or less | $ | $ | |||||||||
Due after one year through five years | |||||||||||
Due after five years through ten years | |||||||||||
Due after ten years | |||||||||||
CMOs and MBSs | |||||||||||
Asset-backed | |||||||||||
Totals | $ | $ |
Three months ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Proceeds from sale of investment securities | $ | $ | |||||||||
Gross gains | |||||||||||
Gross losses |
March 31, 2022 | December 31, 2021 | ||||||||||
Commercial real estate: | |||||||||||
Owner occupied | $ | $ | |||||||||
Non-owner occupied | |||||||||||
Multi-family | |||||||||||
Non-owner occupied residential | |||||||||||
Acquisition and development: | |||||||||||
1-4 family residential construction | |||||||||||
Commercial and land development | |||||||||||
Commercial and industrial (1) | |||||||||||
Municipal | |||||||||||
Residential mortgage: | |||||||||||
First lien | |||||||||||
Home equity - term | |||||||||||
Home equity - lines of credit | |||||||||||
Installment and other loans | |||||||||||
Total loans | $ | $ |
Pass | Special Mention | Non-Impaired Substandard | Impaired - Substandard | Doubtful | PCI Loans | Total | |||||||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity - term | |||||||||||||||||||||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity - term | |||||||||||||||||||||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ |
Impaired Loans with a Specific Allowance | Impaired Loans with No Specific Allowance | ||||||||||||||||||||||||||||
Recorded Investment (Book Balance) | Unpaid Principal Balance (Legal Balance) | Related Allowance | Recorded Investment (Book Balance) | Unpaid Principal Balance (Legal Balance) | |||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||
Home equity—term | |||||||||||||||||||||||||||||
Home equity—lines of credit | |||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | |||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||
Home equity—term | |||||||||||||||||||||||||||||
Home equity—lines of credit | |||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||
$ | $ | $ | $ | $ |
2022 | 2021 | ||||||||||||||||||||||
Average Impaired Balance | Interest Income Recognized | Average Impaired Balance | Interest Income Recognized | ||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner occupied | $ | $ | $ | $ | |||||||||||||||||||
Multi-family | |||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||
First lien | |||||||||||||||||||||||
Home equity - term | |||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||
$ | $ | $ | $ |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Number of Contracts | Recorded Investment | Number of Contracts | Recorded Investment | ||||||||||||||||||||
Accruing: | |||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||
First lien | $ | $ | |||||||||||||||||||||
Nonaccruing: | |||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||
First lien | |||||||||||||||||||||||
$ | $ |
Days Past Due | |||||||||||||||||||||||||||||||||||||||||
Current | 30-59 | 60-89 | 90+ (still accruing) | Total Past Due | Non- Accrual | Total Loans | |||||||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity - term | |||||||||||||||||||||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
Subtotal | |||||||||||||||||||||||||||||||||||||||||
Loans acquired with credit deterioration: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity - term | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
Subtotal | |||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Days Past Due | |||||||||||||||||||||||||||||||||||||||||
Current | 30-59 | 60-89 | 90+ (still accruing) | Total Past Due | Non- Accrual | Total Loans | |||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity - term | |||||||||||||||||||||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
Subtotal | |||||||||||||||||||||||||||||||||||||||||
Loans acquired with credit deterioration: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity - term | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
Subtotal | |||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Commercial | Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | Acquisition and Development | Commercial and Industrial | Municipal | Total | Residential Mortgage | Installment and Other | Total | Unallocated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Provision for loan losses | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Provision for loan losses | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
Commercial | Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | Acquisition and Development | Commercial and Industrial | Municipal | Total | Residential Mortgage | Installment and Other | Total | Unallocated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
ALL allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
ALL allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended | ||||||||||||||
March 31, 2022 | March 31, 2021 | |||||||||||||
Accretable yield, beginning of period | $ | $ | ||||||||||||
Accretion of income | ( | ( | ||||||||||||
Reclassifications from nonaccretable difference due to improvement in expected cash flows | ||||||||||||||
Other changes, net | ( | |||||||||||||
Accretable yield, end of period | $ | $ | ||||||||||||
March 31, 2022 | December 31, 2021 | ||||||||||
Operating lease ROU assets | $ | $ | |||||||||
Operating lease ROU liabilities | |||||||||||
Weighted-average remaining lease term (in years) | |||||||||||
Weighted-average discount rate | % | % |
Three Months Ended | |||||||||||
March 31, 2022 | March 31, 2021 | ||||||||||
Cash paid for operating lease liabilities | $ | $ | |||||||||
Operating lease expense |
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Less: imputed interest | |||||
Total lease liabilities | $ |
March 31, 2022 | March 31, 2021 | ||||||||||
Balance, beginning of year | $ | $ | |||||||||
Balance, end of period | $ | $ |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Beginning of period | $ | $ | |||||||||
Amortization expense | ( | ( | |||||||||
Balance, end of period | $ | $ |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Gross Amount | Accumulated Amortization | ||||||||||||||||||||
Amortized intangible assets: | |||||||||||||||||||||||
Core deposit intangibles | $ | $ | $ | $ | |||||||||||||||||||
Other customer relationship intangibles | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
$ |
Shares | Weighted Average Grant Date Fair Value | ||||||||||
Nonvested shares, beginning of year | $ | ||||||||||
Granted | |||||||||||
Forfeited | ( | ||||||||||
Vested | ( | ||||||||||
Nonvested shares, at period end | $ |
Three months ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Restricted share award expense | $ | $ | ||||||||||||
Restricted share award tax benefit | ||||||||||||||
Fair value of shares vested |
Three months ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Shares purchased | ||||||||||||||
Weighted average price of shares purchased | $ | $ | ||||||||||||
Compensation expense recognized | ||||||||||||||
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Notional Amount | Balance Sheet Location | Fair Value | Notional Amount | Balance Sheet Location | Fair Value | ||||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Interest rate swaps | $ | Other assets | $ | $ | Other assets | $ | |||||||||||||||||||||||||||||
Interest rate swaps | Other liabilities | ( | Other liabilities | ( | |||||||||||||||||||||||||||||||
Risk participation | Other liabilities | ( | Other liabilities | ( | |||||||||||||||||||||||||||||||
Interest rate lock commitments with customers | Other assets | Other assets | |||||||||||||||||||||||||||||||||
Forward sale commitment | Other assets | Other assets | |||||||||||||||||||||||||||||||||
Total derivatives not designated as hedging instruments | $ | $ |
Amount of Gain Recognized in OCI on Derivative | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Derivatives in cash flow hedging relationships: | ||||||||||||||
Interest rate products | $ | $ | ||||||||||||
Total | $ | $ |
Amount of Loss Reclassified from AOCI into Income | Location of Loss Recognized from AOCI into Income | |||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||
Derivatives in cash flow hedging relationships: | ||||||||||||||||||||
Interest rate products | $ | $ | ( | Interest expense | ||||||||||||||||
Total | $ | $ | ( |
Amount of Gain (Loss) Recognized in Income | Location of Gain (Loss) Recognized in Income | |||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Interest rate products | $ | $ | Other operating expenses | |||||||||||||||||
Risk participation agreement | Other operating expenses | |||||||||||||||||||
Interest rate lock commitments with customers | ( | ( | Mortgage banking activities | |||||||||||||||||
Forward sale commitment | Mortgage banking activities | |||||||||||||||||||
Total | $ | $ |
Actual | For Capital Adequacy Purposes (includes applicable capital conservation buffer) | To Be Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||
Total risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | $ | % | $ | % | n/a | n/a | |||||||||||||||||||||||||||||
Orrstown Bank | % | % | $ | % | |||||||||||||||||||||||||||||||
Tier 1 risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 common equity risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 leverage capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||
Total risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | $ | % | $ | % | n/a | n/a | |||||||||||||||||||||||||||||
Orrstown Bank | % | % | $ | % | |||||||||||||||||||||||||||||||
Tier 1 risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 common equity risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 leverage capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net income | $ | $ | ||||||||||||
Weighted average shares outstanding - basic | ||||||||||||||
Dilutive effect of share-based compensation | ||||||||||||||
Weighted average shares outstanding - diluted | ||||||||||||||
Per share information: | ||||||||||||||
Basic earnings per share | $ | $ | ||||||||||||
Diluted earnings per share |
Contractual or Notional Amount | |||||||||||
March 31, 2022 | December 31, 2021 | ||||||||||
Commitments to fund: | |||||||||||
Home equity lines of credit | $ | $ | |||||||||
1-4 family residential construction loans | |||||||||||
Commercial real estate, construction and land development loans | |||||||||||
Commercial, industrial and other loans | |||||||||||
Standby letters of credit |
Level 1 | Level 2 | Level 3 | Total Fair Value Measurements | ||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | |||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||
Nonagency CMOs | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||
Totals | $ | $ | $ | $ | |||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Derivatives | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | |||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||
Nonagency CMOs | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||
Totals | $ | $ | $ | $ | |||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Derivatives | $ | $ | $ | $ | |||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Balance, beginning of period | $ | $ | ||||||||||||
Unrealized loss included in OCI | ( | ( | ||||||||||||
Net discount accretion | ||||||||||||||
Principal payments and other | ( | |||||||||||||
Sales | ( | ( | ||||||||||||
OTTI | ( | |||||||||||||
Balance, end of period | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Balance, beginning of period | $ | $ | ||||||||||||
Total losses | ||||||||||||||
Included in earnings | ( | ( | ||||||||||||
Balance, end of period | $ | $ |
Level 1 | Level 2 | Level 3 | Total Fair Value Measurements | ||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||
Impaired Loans | |||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner occupied | $ | $ | $ | $ | |||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||
First lien | |||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||
Total impaired loans | $ | $ | $ | $ | |||||||||||||||||||
Mortgage servicing rights | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Impaired Loans | |||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner occupied | $ | $ | $ | $ | |||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||
First lien | |||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||
Total impaired loans | $ | $ | $ | $ | |||||||||||||||||||
Mortgage servicing rights | $ | $ | $ | $ |
Fair Value Estimate | Valuation Techniques | Unobservable Input | Range | ||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||
Impaired loans | $ | Appraisal of collateral | Management adjustments on appraisals for property type and recent activity | ||||||||||||||||||||
- Management adjustments for liquidation expenses | |||||||||||||||||||||||
Mortgage servicing rights | $ | Discounted cash flows | Weighted average CPR | ||||||||||||||||||||
- Weighted average discount rate | |||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Impaired loans | $ | Appraisal of collateral | Management adjustments on appraisals for property type and recent activity | ||||||||||||||||||||
- Management adjustments for liquidation expenses | |||||||||||||||||||||||
Mortgage servicing rights | $ | Discounted cash flows | Weighted average CPR | ||||||||||||||||||||
- Weighted average discount rate |
Carrying Amount | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||||||||
Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Interest-bearing deposits with banks | |||||||||||||||||||||||||||||
Restricted investments in bank stock | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||
Investment securities | |||||||||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||||||||
Loans, net of allowance for loan losses | |||||||||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||||||||
Accrued interest receivable | |||||||||||||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||
Securities sold under agreements to repurchase | |||||||||||||||||||||||||||||
FHLB advances and other borrowings | |||||||||||||||||||||||||||||
Subordinated notes | |||||||||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||||||||
Accrued interest payable | |||||||||||||||||||||||||||||
Off-balance sheet instruments | |||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||||||||
Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Interest-bearing deposits with banks | |||||||||||||||||||||||||||||
Restricted investments in bank stock | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||
Investment securities | |||||||||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||||||||
Loans, net of allowance for loan losses | |||||||||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||||||||
Accrued interest receivable | |||||||||||||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||
Securities sold under agreements to repurchase | |||||||||||||||||||||||||||||
FHLB advances and other borrowings | |||||||||||||||||||||||||||||
Subordinated notes | |||||||||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||||||||
Accrued interest payable | |||||||||||||||||||||||||||||
Off-balance sheet instruments |
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||
Average Balance | Taxable- Equivalent Interest | Taxable- Equivalent Rate | Average Balance | Taxable- Equivalent Interest | Taxable- Equivalent Rate | ||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||
Federal funds sold & interest-bearing bank balances | $ | 199,788 | $ | 101 | 0.20 | % | $ | 145,595 | $ | 39 | 0.11 | % | |||||||||||||||||||||||
Investment securities (1) | 472,195 | 2,512 | 2.13 | 468,273 | 2,512 | 2.18 | |||||||||||||||||||||||||||||
Loans (1)(2)(3) | 1,974,804 | 21,429 | 4.39 | 2,033,219 | 21,574 | 4.30 | |||||||||||||||||||||||||||||
Total interest-earning assets | 2,646,787 | 24,042 | 3.67 | 2,647,087 | 24,125 | 3.70 | |||||||||||||||||||||||||||||
Other assets | 184,300 | 182,737 | |||||||||||||||||||||||||||||||||
Total | $ | 2,831,087 | $ | 2,829,824 | |||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity | |||||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 1,398,182 | 256 | 0.07 | $ | 1,334,219 | 438 | 0.13 | |||||||||||||||||||||||||||
Savings deposits | 227,676 | 57 | 0.10 | 183,576 | 45 | 0.10 | |||||||||||||||||||||||||||||
Time deposits | 298,618 | 372 | 0.51 | 397,271 | 909 | 0.93 | |||||||||||||||||||||||||||||
Total interest-bearing deposits | 1,924,476 | 685 | 0.14 | 1,915,066 | 1,392 | 0.29 | |||||||||||||||||||||||||||||
Securities sold under agreements to repurchase | 23,530 | 7 | 0.12 | 21,452 | 9 | 0.17 | |||||||||||||||||||||||||||||
FHLB Advances and other borrowings | 1,850 | 22 | 4.74 | 58,000 | 171 | 1.20 | |||||||||||||||||||||||||||||
Subordinated notes | 31,969 | 503 | 6.29 | 31,909 | 502 | 6.29 | |||||||||||||||||||||||||||||
Total interest-bearing liabilities | 1,981,825 | 1,217 | 0.25 | 2,026,427 | 2,074 | 0.42 | |||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | 540,139 | 516,849 | |||||||||||||||||||||||||||||||||
Other | 40,919 | 36,244 | |||||||||||||||||||||||||||||||||
Total liabilities | 2,562,883 | 2,579,520 | |||||||||||||||||||||||||||||||||
Shareholders’ equity | 268,204 | 250,304 | |||||||||||||||||||||||||||||||||
Total | $ | 2,831,087 | $ | 2,829,824 | |||||||||||||||||||||||||||||||
Taxable-equivalent net interest income /net interest spread | 22,825 | 3.42 | % | 22,051 | 3.28 | % | |||||||||||||||||||||||||||||
Taxable-equivalent net interest margin | 3.49 | % | 3.38 | % | |||||||||||||||||||||||||||||||
Taxable-equivalent adjustment | (252) | (196) | |||||||||||||||||||||||||||||||||
Net interest income | $ | 22,573 | $ | 21,855 |
NOTES TO ANALYSIS OF NET INTEREST INCOME: | |||||
(1) | Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate. | ||||
(2) | Average balances include nonaccrual loans. | ||||
(3) | Interest income on loans includes prepayment and late fees, where applicable. |
Three Months Ended March 31, | $ Change | % Change | |||||||||||||||||||||
2022 | 2021 | 2022-2021 | 2022-2021 | ||||||||||||||||||||
Service charges on deposit accounts | $ | 920 | $ | 737 | $ | 183 | 25 | % | |||||||||||||||
Interchange income | 981 | 955 | 26 | 3 | % | ||||||||||||||||||
Other service charges and fees | 153 | 148 | 5 | 3 | % | ||||||||||||||||||
Swap fee income | 953 | 53 | 900 | 1,698 | % | ||||||||||||||||||
Trust and investment management income | 1,941 | 1,912 | 29 | 2 | % | ||||||||||||||||||
Brokerage income | 928 | 811 | 117 | 14 | % | ||||||||||||||||||
Mortgage banking activities | 721 | 2,189 | (1,468) | (67) | % | ||||||||||||||||||
Income from life insurance | 566 | 557 | 9 | 2 | % | ||||||||||||||||||
Other income | 457 | 37 | 420 | 1,135 | % | ||||||||||||||||||
Investment securities (losses) gains | (146) | 145 | (291) | (201) | % | ||||||||||||||||||
Total noninterest income | $ | 7,474 | $ | 7,544 | $ | (70) | (1) | % | |||||||||||||||
Three Months Ended March 31, | $ Change | % Change | |||||||||||||||||||||
2022 | 2021 | 2022-2021 | 2022-2021 | ||||||||||||||||||||
Salaries and employee benefits | $ | 11,337 | $ | 10,197 | $ | 1,140 | 11.2 | % | |||||||||||||||
Occupancy | 1,288 | 1,240 | 48 | 3.9 | % | ||||||||||||||||||
Furniture and equipment | 1,279 | 1,278 | 1 | 0.1 | % | ||||||||||||||||||
Data processing | 1,053 | 1,019 | 34 | 3.3 | % | ||||||||||||||||||
Automated teller machine and interchange fees | 305 | 249 | 56 | 22.5 | % | ||||||||||||||||||
Advertising and bank promotions | 355 | 425 | (70) | (16.5) | % | ||||||||||||||||||
FDIC insurance | 283 | 194 | 89 | 45.9 | % | ||||||||||||||||||
Professional services | 808 | 721 | 87 | 12.1 | % | ||||||||||||||||||
Directors' compensation | 231 | 234 | (3) | (1.3) | % | ||||||||||||||||||
Taxes other than income | 564 | 451 | 113 | 25.1 | % | ||||||||||||||||||
Intangible asset amortization | 292 | 334 | (42) | (12.6) | % | ||||||||||||||||||
Other operating expenses | 1,569 | 1,441 | 128 | 8.9 | % | ||||||||||||||||||
Total noninterest expenses | $ | 19,364 | $ | 17,783 | $ | 1,581 | 8.9 | % | |||||||||||||||
Sector | Portfolio Mix | Amortized Book | Fair Value | Credit Enhancement | AAA | AA | A | BBB | NR | Collateral Type | ||||||||||||||||||||||
Unsecured ABS | 1 | % | $ | 6,548 | $ | 6,549 | 33 | % | — | % | — | % | — | % | — | % | 100 | % | Unsecured Consumer Debt | |||||||||||||
Student Loan ABS | 1 | 8,228 | 8,124 | 26 | — | — | — | — | 100 | Seasoned Student Loans | ||||||||||||||||||||||
Federal Family Education Loan ABS | 18 | 97,140 | 95,572 | 6 | 85 | 15 | — | — | — | Federal Family Education Loan (1) | ||||||||||||||||||||||
PACE Loan ABS | 1 | 3,350 | 3,267 | 5 | 100 | — | — | — | — | PACE Loans | ||||||||||||||||||||||
Non-Agency RMBS | 5 | 25,135 | 22,303 | 31 | 44 | — | — | — | 56 | Reverse Mortgages (2) | ||||||||||||||||||||||
Municipal - General Obligation | 20 | 112,387 | 109,100 | 6 | 88 | 6 | — | — | ||||||||||||||||||||||||
Municipal - Revenue | 24 | 132,534 | 128,460 | — | 83 | 12 | — | 5 | ||||||||||||||||||||||||
SBA ReRemic | 1 | 7,237 | 7,157 | — | 100 | — | — | — | SBA Guarantee (3) | |||||||||||||||||||||||
Agency MBS | 25 | 135,262 | 130,257 | — | 100 | — | — | — | Residential Mortgages (3) | |||||||||||||||||||||||
U.S. Treasury securities | 4 | 20,081 | 18,538 | — | 100 | — | — | — | ||||||||||||||||||||||||
Bank CDs | — | 249 | 249 | — | — | — | — | 100 | FDIC Insured CD | |||||||||||||||||||||||
100 | % | $ | 548,151 | $ | 529,576 | 19 | % | 70 | % | 4 | % | — | % | 7 | % | |||||||||||||||||
(1) Minimum of 18% guaranteed by U.S. government | ||||||||||||||||||||||||||||||||
(2) Reverse mortgages fund over time, credit enhancement is estimated based on prior experience | ||||||||||||||||||||||||||||||||
(3) 74% guaranteed by U.S. government agencies | ||||||||||||||||||||||||||||||||
Note : Ratings in table are the lowest of the six rating agencies (Standard & Poor's, Moody's, Morningstar, DBRS, KBRA and Fitch). Standard & Poor's rates U.S. government obligations at AA+ |
March 31, 2022 | December 31, 2021 | ||||||||||
Commercial real estate: | |||||||||||
Owner occupied | $ | 256,526 | $ | 238,668 | |||||||
Non-owner occupied | 558,999 | 551,783 | |||||||||
Multi-family | 93,158 | 93,255 | |||||||||
Non-owner occupied residential | 102,269 | 106,112 | |||||||||
Acquisition and development: | |||||||||||
1-4 family residential construction | 15,115 | 12,279 | |||||||||
Commercial and land development | 105,204 | 93,925 | |||||||||
Commercial and industrial (1) | 443,170 | 485,728 | |||||||||
Municipal | 14,626 | 14,989 | |||||||||
Residential mortgage: | |||||||||||
First lien | 203,231 | 198,831 | |||||||||
Home equity - term | 5,820 | 6,081 | |||||||||
Home equity - lines of credit | 164,818 | 160,705 | |||||||||
Installment and other loans | 15,371 | 17,630 | |||||||||
$ | 1,978,307 | $ | 1,979,986 |
March 31, 2022 | December 31, 2021 | ||||||||||
Nonaccrual loans | $ | 5,510 | $ | 6,449 | |||||||
OREO | — | — | |||||||||
Total nonperforming assets | 5,510 | 6,449 | |||||||||
Restructured loans still accruing | 575 | 804 | |||||||||
Loans past due 90 days or more and still accruing | 238 | 1,201 | |||||||||
Total nonperforming and other risk assets (total risk assets) | $ | 6,323 | $ | 8,454 | |||||||
Loans 30-89 days past due | $ | 4,953 | $ | 5,925 | |||||||
Asset quality ratios: | |||||||||||
Total nonperforming loans to total loans | 0.28 | % | 0.33 | % | |||||||
Total nonperforming assets to total assets | 0.19 | % | 0.23 | % | |||||||
Total nonperforming assets to total loans and OREO | 0.28 | % | 0.33 | % | |||||||
Total risk assets to total loans and OREO | 0.32 | % | 0.43 | % | |||||||
Total risk assets to total assets | 0.22 | % | 0.30 | % | |||||||
ALL to total loans | 1.09 | % | 1.07 | % | |||||||
ALL to nonperforming loans | 390.34 | % | 328.42 | % | |||||||
ALL to nonperforming loans and restructured loans still accruing | 353.46 | % | 292.02 | % |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Nonaccrual Loans | Restructured Loans Still Accruing | Total | Nonaccrual Loans | Restructured Loans Still Accruing | Total | ||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||
Owner occupied | $ | 3,062 | $ | — | $ | 3,062 | $ | 3,763 | $ | — | $ | 3,763 | |||||||||||||||||||||||
Non-owner occupied residential | 100 | — | 100 | 122 | — | 122 | |||||||||||||||||||||||||||||
Commercial and industrial | 161 | — | 161 | 250 | — | 250 | |||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||
First lien | 1,703 | 575 | 2,278 | 1,831 | 804 | 2,635 | |||||||||||||||||||||||||||||
Home equity - term | 6 | — | 6 | 7 | — | 7 | |||||||||||||||||||||||||||||
Home equity - lines of credit | 426 | — | 426 | 436 | — | 436 | |||||||||||||||||||||||||||||
Installment and other loans | 52 | — | 52 | 40 | — | 40 | |||||||||||||||||||||||||||||
$ | 5,510 | $ | 575 | $ | 6,085 | $ | 6,449 | $ | 804 | $ | 7,253 |
# of Relationships | Recorded Investment | Partial Charge-offs to Date | Specific Reserves | ||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||
Relationships greater than $1,000,000 | 1 | $ | 2,492 | $ | — | $ | — | ||||||||||||||||
Relationships greater than $500,000 but less than $1,000,000 | — | — | — | — | |||||||||||||||||||
Relationships greater than $250,000 but less than $500,000 | 2 | 595 | — | — | |||||||||||||||||||
Relationships less than $250,000 | 59 | 2,998 | 280 | 29 | |||||||||||||||||||
62 | $ | 6,085 | $ | 280 | $ | 29 | |||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Relationships greater than $1,000,000 | 1 | $ | 2,535 | $ | — | $ | — | ||||||||||||||||
Relationships greater than $500,000 but less than $1,000,000 | 1 | 602 | 17 | — | |||||||||||||||||||
Relationships greater than $250,000 but less than $500,000 | 2 | 601 | — | — | |||||||||||||||||||
Relationships less than $250,000 | 63 | 3,515 | 303 | 28 | |||||||||||||||||||
67 | $ | 7,253 | $ | 320 | $ | 28 |
Pass | Special Mention | Non-Impaired Substandard | Impaired - Substandard | Doubtful | PCI Loans | Total | |||||||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | $ | 242,529 | $ | 6,360 | $ | 2,277 | $ | 3,062 | $ | — | $ | 2,298 | $ | 256,526 | |||||||||||||||||||||||||||
Non-owner occupied | 537,505 | 18,771 | 2,419 | — | — | 304 | 558,999 | ||||||||||||||||||||||||||||||||||
Multi-family | 84,541 | 8,158 | 459 | — | — | — | 93,158 | ||||||||||||||||||||||||||||||||||
Non-owner occupied residential | 99,545 | 1,005 | 1,014 | 100 | — | 605 | 102,269 | ||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | 15,115 | — | — | — | — | — | 15,115 | ||||||||||||||||||||||||||||||||||
Commercial and land development | 103,486 | 1,236 | 482 | — | — | — | 105,204 | ||||||||||||||||||||||||||||||||||
Commercial and industrial | 424,425 | 7,642 | 8,792 | 161 | — | 2,150 | 443,170 | ||||||||||||||||||||||||||||||||||
Municipal | 14,626 | — | — | — | — | — | 14,626 | ||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | 196,217 | — | 221 | 2,278 | — | 4,515 | 203,231 | ||||||||||||||||||||||||||||||||||
Home equity - term | 5,798 | — | — | 6 | — | 16 | 5,820 | ||||||||||||||||||||||||||||||||||
Home equity - lines of credit | 164,327 | 19 | 46 | 426 | — | — | 164,818 | ||||||||||||||||||||||||||||||||||
Installment and other loans | 15,314 | — | — | 52 | — | 5 | 15,371 | ||||||||||||||||||||||||||||||||||
$ | 1,903,428 | $ | 43,191 | $ | 15,710 | $ | 6,085 | $ | — | $ | 9,893 | $ | 1,978,307 | ||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner occupied | $ | 219,250 | $ | 7,239 | $ | 6,087 | $ | 3,763 | $ | — | $ | 2,329 | $ | 238,668 | |||||||||||||||||||||||||||
Non-owner occupied | 528,010 | 23,297 | 166 | — | — | 310 | 551,783 | ||||||||||||||||||||||||||||||||||
Multi-family | 84,414 | 8,238 | 603 | — | — | — | 93,255 | ||||||||||||||||||||||||||||||||||
Non-owner occupied residential | 102,588 | 1,065 | 1,153 | 122 | — | 1,184 | 106,112 | ||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | 12,279 | — | — | — | — | — | 12,279 | ||||||||||||||||||||||||||||||||||
Commercial and land development | 92,049 | 1,385 | 491 | — | — | — | 93,925 | ||||||||||||||||||||||||||||||||||
Commercial and industrial | 470,579 | 7,917 | 4,720 | 250 | — | 2,262 | 485,728 | ||||||||||||||||||||||||||||||||||
Municipal | 14,989 | — | — | — | — | — | 14,989 | ||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | 191,386 | — | 225 | 2,635 | — | 4,585 | 198,831 | ||||||||||||||||||||||||||||||||||
Home equity - term | 6,058 | — | — | 7 | — | 16 | 6,081 | ||||||||||||||||||||||||||||||||||
Home equity - lines of credit | 160,203 | 20 | 46 | 436 | — | — | 160,705 | ||||||||||||||||||||||||||||||||||
Installment and other loans | 17,584 | — | — | 40 | — | 6 | 17,630 | ||||||||||||||||||||||||||||||||||
$ | 1,899,389 | $ | 49,161 | $ | 13,491 | $ | 7,253 | $ | — | $ | 10,692 | $ | 1,979,986 |
Commercial | Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | Acquisition and Development | Commercial and Industrial | Municipal | Total | Residential Mortgage | Installment and Other | Total | Unallocated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of period | $ | 12,037 | $ | 2,062 | $ | 3,814 | $ | 30 | $ | 17,943 | $ | 2,785 | $ | 215 | $ | 3,000 | $ | 237 | $ | 21,180 | |||||||||||||||||||||||||||||||||||||||
Provision for loan losses | (523) | 258 | 500 | (1) | 234 | 72 | (6) | 66 | — | 300 | |||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | — | — | (61) | — | (61) | (10) | (13) | (23) | — | (84) | |||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | 32 | 1 | 48 | — | 81 | 26 | 5 | 31 | — | 112 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of period | $ | 11,546 | $ | 2,321 | $ | 4,301 | $ | 29 | $ | 18,197 | $ | 2,873 | $ | 201 | $ | 3,074 | $ | 237 | $ | 21,508 | |||||||||||||||||||||||||||||||||||||||
March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of period | $ | 11,151 | $ | 1,114 | $ | 3,942 | $ | 40 | $ | 16,247 | $ | 3,362 | $ | 324 | $ | 3,686 | $ | 218 | $ | 20,151 | |||||||||||||||||||||||||||||||||||||||
Provision for loan losses | (494) | (69) | (54) | (2) | (619) | (289) | (106) | (395) | 14 | (1,000) | |||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | — | — | (454) | — | (454) | (21) | (20) | (41) | — | (495) | |||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | 14 | 1 | 280 | — | 295 | 6 | 10 | 16 | — | 311 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of period | $ | 10,671 | $ | 1,046 | $ | 3,714 | $ | 38 | $ | 15,469 | $ | 3,058 | $ | 208 | $ | 3,266 | $ | 232 | $ | 18,967 |
Commercial | Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | Acquisition and Development | Commercial and Industrial | Municipal | Total | Residential Mortgage | Installment and Other | Total | Unallocated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 3,162 | $ | — | $ | 161 | $ | — | $ | 3,323 | $ | 2,710 | $ | 52 | $ | 2,762 | $ | — | $ | 6,085 | |||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 1,007,790 | 120,319 | 443,009 | 14,626 | 1,585,744 | 371,159 | 15,319 | 386,478 | — | 1,972,222 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | 1,010,952 | $ | 120,319 | $ | 443,170 | $ | 14,626 | $ | 1,589,067 | $ | 373,869 | $ | 15,371 | $ | 389,240 | $ | — | $ | 1,978,307 | ||||||||||||||||||||||||||||||||||||||||
ALL allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 29 | $ | — | $ | 29 | $ | — | $ | 29 | |||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 11,546 | 2,321 | 4,301 | 29 | 18,197 | 2,844 | 201 | 3,045 | 237 | 21,479 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | 11,546 | $ | 2,321 | $ | 4,301 | $ | 29 | $ | 18,197 | $ | 2,873 | $ | 201 | $ | 3,074 | $ | 237 | $ | 21,508 | ||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 3,885 | $ | — | $ | 250 | $ | — | $ | 4,135 | $ | 3,078 | $ | 40 | $ | 3,118 | $ | — | $ | 7,253 | |||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 985,933 | 106,204 | 485,478 | 14,989 | 1,592,604 | 362,539 | 17,590 | 380,129 | — | 1,972,733 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | 989,818 | $ | 106,204 | $ | 485,728 | $ | 14,989 | $ | 1,596,739 | $ | 365,617 | $ | 17,630 | $ | 383,247 | $ | — | $ | 1,979,986 | ||||||||||||||||||||||||||||||||||||||||
ALL allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 28 | $ | — | $ | 28 | $ | — | $ | 28 | |||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 12,037 | 2,062 | 3,814 | 30 | 17,943 | 2,757 | 215 | 2,972 | 237 | 21,152 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | 12,037 | $ | 2,062 | $ | 3,814 | $ | 30 | $ | 17,943 | $ | 2,785 | $ | 215 | $ | 3,000 | $ | 237 | $ | 21,180 |
March 31, 2022 | December 31, 2021 | |||||||||||||
Tangible Book Value per Common Share | ||||||||||||||
Shareholders' equity | $ | 254,804 | $ | 271,656 | ||||||||||
Less: Goodwill | 18,724 | 18,724 | ||||||||||||
Other intangible assets | 3,891 | 4,183 | ||||||||||||
Related tax effect | (817) | (878) | ||||||||||||
Tangible common equity (non-GAAP) | $ | 233,006 | $ | 249,627 | ||||||||||
Common shares outstanding | 11,079 | 11,183 | ||||||||||||
Book value per share (most directly comparable GAAP based measure) | $ | 23.00 | $ | 24.29 | ||||||||||
Intangible assets per share | 1.97 | 1.97 | ||||||||||||
Tangible book value per share (non-GAAP) | $ | 21.03 | $ | 22.32 |
March 31, 2022 | December 31, 2021 | ||||||||||
Allowance for Loan Losses to Non-SBA Guaranteed Loans: | |||||||||||
Allowance for loan losses | $ | 21,508 | $ | 21,180 | |||||||
Gross loans | $ | 1,978,307 | $ | 1,979,986 | |||||||
less: SBA guaranteed loans | (124,545) | (195,585) | |||||||||
Non-SBA guaranteed loans | $ | 1,853,762 | $ | 1,784,401 | |||||||
Allowance for loan losses to non-SBA guaranteed loans | 1.2 | % | 1.2 | % |
Net Interest Income | Economic Value | |||||||||||||||||||||||||||||||
% Change in Net Interest Income | % Change in Market Value | |||||||||||||||||||||||||||||||
Change in Market Interest Rates (basis points) | March 31, 2022 | December 31, 2021 | Change in Market Interest Rates (basis points) | March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||
(100) | (6.0) | % | (1.4) | % | (100) | (24.3) | % | (43.8) | % | |||||||||||||||||||||||
100 | 3.3 | % | 3.7 | % | 100 | 14.4 | % | 25.8 | % | |||||||||||||||||||||||
200 | 4.9 | % | 6.7 | % | 200 | 21.3 | % | 41.2 | % | |||||||||||||||||||||||
300 | 3.7 | % | 6.7 | % | 300 | 23.9 | % | 49.3 | % |
(a) | (b) | (c) | (d) | ||||||||||||||||||||
Period | Total number of shares (or units) purchased | Average price paid per share (or unit) | Total number of shares (or units) purchased as part of publicly announced plans or programs | Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs | |||||||||||||||||||
January 1, 2022 to January 31, 2022 | 30,250 | $ | 24.84 | 30,250 | 713,580 | ||||||||||||||||||
February 1, 2022 to February 28, 2022 | 68,961 | 24.65 | 68,961 | 644,619 | |||||||||||||||||||
March 1, 2022 to March 31, 2022 | 82,424 | 23.76 | 82,424 | 562,195 | |||||||||||||||||||
Total | 181,635 | $ | 24.27 | 181,635 |
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
10.1 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |||||||
101.INS | XBRL Instance Document | |||||||
101.SCH | XBRL Taxonomy Extension Schema | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
/s/ Thomas R. Quinn, Jr. | |||||
Thomas R. Quinn, Jr. | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
/s/ Neelesh Kalani | |||||
Neelesh Kalani | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) | |||||
Date: May 5, 2022 |
Date: May 5, 2022 | By: | /s/ Thomas R. Quinn, Jr. | |||||||||
Thomas R. Quinn, Jr. | |||||||||||
President and Chief Executive Officer | |||||||||||
(Principal Executive Officer) |
Date: May 5, 2022 | By: | /s/ Neelesh Kalani | |||||||||
Neelesh Kalani | |||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(Principal Financial Officer) |
Date: May 5, 2022 | By: | /s/ Thomas R. Quinn, Jr. | ||||||
Thomas R. Quinn, Jr. | ||||||||
President and Chief Executive Officer | ||||||||
(Principal Executive Officer) |
Date: May 5, 2022 | By: | /s/ Neelesh Kalani | ||||||
Neelesh Kalani | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer) |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Securities available for sale amortized cost | $ 548,305 | $ 466,806 |
Preferred stock, par value (usd per share) | $ 1.25 | $ 1.25 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, stated value (usd per share) | $ 0.05205 | $ 0.05205 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 11,247,545 | 11,258,167 |
Common stock, shares outstanding (in shares) | 11,078,990 | 11,183,050 |
Treasury stock - common - shares (in shares) | 168,555 | 75,117 |
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2020 | $ 246,249 | $ 586 | $ 189,066 | $ 54,099 | $ 3,346 | $ (848) |
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 10,207 | 10,207 | ||||
Total other comprehensive income (loss) net of taxes | (31) | (31) | ||||
Cash dividends | (2,004) | (2,004) | ||||
Shares-based compensation plans: | ||||||
Shares issued, shares acquired including compensation expense | 27 | 0 | (555) | 582 | ||
Ending balance at Mar. 31, 2021 | 254,448 | 586 | 188,511 | 62,302 | 3,315 | (266) |
Beginning balance at Dec. 31, 2021 | 271,656 | 586 | 189,689 | 78,700 | 4,449 | (1,768) |
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 8,368 | 8,368 | ||||
Total other comprehensive income (loss) net of taxes | (19,123) | (19,123) | ||||
Cash dividends | (2,125) | (2,125) | ||||
Shares-based compensation plans: | ||||||
Shares issued, shares acquired including compensation expense | (3,972) | (1) | (1,656) | (2,315) | ||
Ending balance at Mar. 31, 2022 | $ 254,804 | $ 585 | $ 188,033 | $ 84,943 | $ (14,674) | $ (4,083) |
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends per share (in usd per share) | $ 0.19 | $ 0.18 |
Common shares issued during the period (in shares) | 10,622 | 8,671 |
Treasury stock, shares issued/acquired (in shares) | 93,438 | 40,970 |
Compensation expense, issuance of stock | $ 338 | $ 467 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES See the Glossary of Defined Terms at the beginning of this Report for terms used throughout the unaudited condensed consolidated financial statements and related notes of this Form 10-Q. Nature of Operations – Orrstown Financial Services, Inc. is a financial holding company that operates Orrstown Bank, a commercial bank providing banking and financial advisory services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania, and in Anne Arundel, Baltimore, Howard and Washington Counties, Maryland. The Company operates in the community banking segment and engages in lending activities, including commercial, residential, commercial mortgages, construction, municipal, and various forms of consumer lending, and deposit services, including checking, savings, time, and money market deposits. The Company also provides fiduciary, investment advisory, insurance and brokerage services. The Company and the Bank are subject to regulation by certain federal and state agencies and undergo periodic examinations by such regulatory authorities. Basis of Presentation – The accompanying unaudited condensed consolidated financial statements include the accounts of Orrstown Financial Services, Inc. and its wholly owned subsidiary, the Bank. The Company has prepared these unaudited condensed consolidated financial statements in accordance with GAAP for interim financial information, SEC rules that permit reduced disclosure for interim periods, and Article 10 of Regulation S-X. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in the unaudited condensed consolidated financial statements. The December 31, 2021 consolidated balance sheet information contained in this Quarterly Report on Form 10-Q was derived from the Company's 2021 audited consolidated financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. All significant intercompany transactions and accounts have been eliminated. The Company's management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company's unaudited condensed consolidated financial statements and notes as required by GAAP. To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. Derivatives - FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes to the fair value of derivatives designated and that qualify as cash flow hedges are recorded in AOCI and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The Company discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period due to circumstances, such as the impact of the COVID-19 pandemic. Upon discontinuance, the associated gains and losses deferred in AOCI are reclassified immediately into earnings and subsequent changes in the fair value of the cash flow hedge are recognized in earnings. At March 31, 2022 and December 31, 2021, the Company had no interest rate derivative designated as a hedging instrument. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. At March 31, 2022 and December 31, 2021, the Company had interest rate swaps not designated as hedges with a total notional value of $120.6 million and $75.8 million, respectively. Leases - The Company evaluates its contracts at inception to determine if an arrangement either is a lease or contains one. Operating lease ROU assets are included in other assets and operating lease liabilities in accrued interest payable and other liabilities in the unaudited condensed consolidated balance sheets. The Company had no finance leases at March 31, 2022. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company's leases do not provide an implicit rate, so the Company's incremental borrowing rate is used, which approximates its fully collateralized borrowing rate, based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is reevaluated upon lease modification. The operating lease ROU asset also includes any initial direct costs and prepaid lease payments made less any lease incentives. In calculating the present value of lease payments, the Company may include options to extend the lease when it is reasonably certain that it will exercise that option. In accordance with ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), the Company keeps leases with an initial term of 12 months or less off of the balance sheet. The Company recognizes these lease payments in the unaudited condensed consolidated statements of income on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to account for them as a single lease component. The Company's operating leases relate primarily to bank branches and office space. The difference between the lease asset and lease liabilities primarily consists of deferred rent liabilities reclassified upon adoption to reduce the measurement of the lease assets. The standard does not materially impact the Company's unaudited condensed consolidated statements of income. Recent Accounting Pronouncements - ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The amendments in this update require an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the amendments in this update amend the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For certain public companies, this update was effective for interim and annual periods beginning after December 15, 2019. The implementation deadline of ASU 2016-13 was extended for smaller reporting and other companies until the fiscal year and interim periods beginning after December 15, 2022. The Company will implement ASU 2016-13 effective January 1, 2023. ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ("ASU 2019-10"), extended the implementation deadline of ASU 2016-13 for smaller reporting and other companies until the fiscal year and interim periods beginning after December 15, 2022. The Company meets the requirements to be considered a smaller reporting company under SEC Regulation S-K and SEC Rule 405, and will adopt ASU 2016-13 effective January 1, 2023. The Company is evaluating the impact of the adoption of ASU 2016-13, and is working with a third-party vendor solution to assist with the application of ASU 2016-13 and finalizing the loss estimation models to be used. Once management determines which methods will be utilized, another third party vendor will be contracted to perform a model validation prior to adoption. The Company expects to recognize a one-time cumulative-effect adjustment to the allowance for credit losses as of the date of adoption of the new standard. While the Company anticipates the allowance for loan losses will increase under its current assumptions, it expects the impact of adopting ASU 2016-13 will be influenced by the composition, characteristics and quality of its loan and investment securities portfolios, as well as general economic conditions and forecasts at the adoption date. The other provisions of ASU 2019-10 were not applicable to the Company. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The optional expedients apply consistently to all contracts or transactions within the scope of this topic, while the optional expedients for hedging relationships can be elected on an individual basis. The Company has formed a cross-functional working group to lead the transition from LIBOR to a planned adoption of an alternate index. The Company currently plans to replace LIBOR with the 30-Day Average SOFR or Term SOFR in its loan agreements. The Company implemented fallback language for loans with maturities after 2021. The Company expects to adopt the LIBOR transition relief allowed under this standard, and is currently evaluating the potential impact of this guidance on its financial statements. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates the troubled debt restructuring accounting model. This change will require all loan modifications to be accounted for under the general loan modification guidance in Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs, and subject entities to new disclosure requirements on loan modifications to borrowers experiencing financial difficulty. For entities that have adopted Topic 326, ASU 2022-02 is effective for periods beginning after December 15, 2022. For entities adopting Topic 326 in periods after December 15, 2022, ASU 2022-02 is effective when the company adopts Topic 326. The Company will implement ASU 2022-02 effective January 1, 2023, and is evaluating the impact.
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INVESTMENT SECURITIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES | INVESTMENT SECURITIESAt March 31, 2022 and December 31, 2021, all investment securities were classified as AFS. The following table summarizes amortized cost and fair value of investment securities, and the corresponding amounts of gross unrealized gains and losses recognized in AOCI, at March 31, 2022 and December 31, 2021:
The following table summarizes investment securities with unrealized losses at March 31, 2022 and December 31, 2021, aggregated by major investment security type and the length of time in a continuous unrealized loss position.
The Company determines whether unrealized losses are temporary in nature in accordance with FASB ASC 320-10, Investments - Overall, (“FASB ASC 320-10”) and FASB ASC 325-40, Investments – Beneficial Interests in Securitized Financial Assets, when applicable. The evaluation is based upon factors such as the creditworthiness of the underlying borrowers, performance of the underlying collateral, if applicable, and the level of credit support in the security structure. Management also evaluates other factors and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost and near-term prospects of the issuer. FASB ASC 320-10 requires the Company to assess if an OTTI exists by considering whether the Company has the intent to sell the security or it is more likely than not that it will be required to sell the security before recovery. If either of these situations applies, the guidance requires the Company to record an OTTI charge to earnings on debt securities for the difference between the amortized cost basis of the security and the fair value of the security. If neither of these situations applies, the Company is required to assess whether it is expected to recover the entire amortized cost basis of the security. If the Company is not expected to recover the entire amortized cost basis of the security, the guidance requires the Company to bifurcate the identified OTTI into a credit loss component and a component representing loss related to other factors. A discount rate is applied which equals the effective yield of the security. The difference between the present value of the expected flows and the amortized book value is considered a credit loss, which would be recorded through earnings as an OTTI charge. When a market price is not readily available, the market value of the security is determined using the same expected cash flows; the discount rate is a rate the Company determines from the open market and other sources as appropriate for the security. The difference between the market value and the present value of cash flows expected to be collected is recognized in AOCI on the unaudited condensed consolidated statements of financial condition. U.S. Treasury Securities. The unrealized losses presented in the table above have been caused by an increase in rates from the time these securities were purchased. Management considers the full faith and credit of the U.S. government in determining whether a security is OTTI. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at March 31, 2022 or December 31, 2021. States and Political Subdivisions. The unrealized losses presented in the table above have been caused by a rise in interest rates from the time these securities were purchased. Management considers the investment rating, the state of the issuer of the security and other credit support in determining whether the security is OTTI. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at March 31, 2022 or December 31, 2021. GSE Residential CMOs and GSE Residential MBS. The unrealized losses presented in the table above have been caused by a widening of spreads and a rise in interest rates from the time these securities were purchased. The contractual terms of these securities do not permit the issuer to settle the securities at a price less than its par value basis. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at March 31, 2022 or December 31, 2021. Non-Agency CMOs. The unrealized losses presented in the table above were caused by a widening of spreads and a rise in interest rates from the time the securities were purchased. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at March 31, 2022 or December 31, 2021, except for one $14.7 million par value non-agency CMO security. For the three months ended March 31, 2022, the Company had $171 thousand in cumulative OTTI on this non-agency CMO security, which was included in securities gains and losses in the unaudited condensed consolidated statements of income. This security is expected to be called by the issuer in the second quarter of 2022 due to an anticipated default caused by increased prepayment speeds on the underlying collateral. Asset-backed. The unrealized losses presented in the table above were caused by a widening of spreads from the time the securities were purchased. Management considers the investment rating and other credit support in determining whether a security is OTTI. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at March 31, 2022 or December 31, 2021. The following table summarizes amortized cost and fair value of investment securities by contractual maturity at March 31, 2022. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
The following table summarizes proceeds from sales of investment securities and gross gains and gross losses for the three months ended March 31, 2022 and 2021:
During the three months ended March 31, 2022, net investment security gains, excluding the OTTI charge noted above, of $25 thousand were recorded, compared to net gains of $145 thousand for the three months ended March 31, 2021. During the three months ended March 31, 2022, a partial sale of one security with a principal balance of $3.1 million was sold for proceeds of $3.1 million compared to 14 securities with a principal balance of $75.6 million were sold for proceeds of $75.7 million during the three months ended March 31, 2021. Investment securities with a fair value of $291.0 million and $295.6 million at March 31, 2022 and December 31, 2021, respectively, were pledged to secure public funds and for other purposes as required or permitted by law.
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LOANS AND ALLOWANCE FOR LOAN LOSSES | LOANS AND ALLOWANCE FOR LOAN LOSSES Consistent with ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Loan Losses, the Company’s loan portfolio is grouped into segments which are further broken down into classes to allow management to monitor the performance by the borrower and to monitor the yield on the portfolio. The risks associated with lending activities differ among the various loan classes and are subject to the impact of changes in interest rates, market conditions of collateral securing the loans, and general economic conditions. All of these factors may adversely impact both the borrower’s ability to repay its loans and associated collateral. The Company has various types of commercial real estate loans, which have differing levels of credit risk. Owner occupied commercial real estate loans are generally dependent upon the successful operation of the borrower’s business, with the cash flows generated from the business being the primary source of repayment of the loan. If the business suffers a downturn in sales or profitability, the borrower’s ability to repay the loan could be in jeopardy. Non-owner occupied and multi-family commercial real estate loans and non-owner occupied residential loans present a different credit risk to the Company than owner occupied commercial real estate loans, as the repayment of the loan is dependent upon the borrower’s ability to generate a sufficient level of occupancy to produce rental income that exceeds debt service requirements and operating expenses. Lower occupancy or lease rates may result in a reduction in cash flows, which hinders the ability of the borrower to meet debt service requirements, and may result in lower collateral values. The Company generally recognizes that greater risk is inherent in these credit relationships compared to owner occupied loans mentioned above. Acquisition and development loans consist of 1-4 family residential construction and commercial and land development loans. The risk of loss on these loans is largely dependent on the Company’s ability to assess the property’s value at the completion of the project, which should exceed the property’s construction costs. During the construction phase, a number of factors could potentially negatively impact the collateral value, including cost overruns, delays in completing the project, competition, and real estate market conditions, which may change based on the supply of similar properties in the area. In the event the collateral value at the completion of the project is not sufficient to cover the outstanding loan balance, the Company must rely upon other repayment sources, if any, including the guarantors of the project or other collateral securing the loan. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted. The CARES Act established the SBA PPP. The SBA PPP is intended to provide economic relief to small businesses nationwide adversely impacted under the COVID-19 Emergency Declaration issued on March 13, 2020. The SBA PPP, which began on April 3, 2020, provided small businesses with funds to cover up to 24 weeks of payroll costs and other expenses, including benefits. It also provides for forgiveness of up to the full principal amount of qualifying loans. In total, the Bank closed and funded almost 6,500 loans for a total gross loan amount of $699.4 million through December 31, 2021. Commercial and industrial loans include advances to local and regional businesses for general commercial purposes and include permanent and short-term working capital, machinery and equipment financing, and may be either in the form of lines of credit or term loans. Although commercial and industrial loans may be unsecured to our highest-rated borrowers, the majority of these loans are secured by the borrower’s accounts receivable, inventory and machinery and equipment. In a significant number of these loans, the collateral also includes the business real estate or the business owner’s personal real estate or assets. Commercial and industrial loans present credit exposure to the Company, as they are more susceptible to risk of loss during a downturn in the economy as borrowers may have greater difficulty in meeting their debt service requirements and the value of the collateral may decline. The Company attempts to mitigate this risk through its underwriting standards, including evaluating the creditworthiness of the borrower and, to the extent available, credit ratings on the business. Additionally, monitoring of the loans through annual renewals and meetings with the borrowers are typical. However, these procedures cannot eliminate the risk of loss associated with commercial and industrial lending. At March 31, 2022 and December 31, 2021, commercial and industrial loans include $122.5 million and $189.9 million, respectively, of loans, net of deferred fees and costs, originated through the SBA PPP. At March 31, 2022, the Bank has $2.4 million of net deferred SBA PPP fees remaining to be recognized through net interest income over the life of the loans, which is between and five years. The timing of the recognition of these fees is dependent upon the loan forgiveness process established by the SBA. As these loans are 100% guaranteed by the SBA, there is no associated ALL at March 31, 2022. Municipal loans consist of extensions of credit to municipalities and school districts within the Company’s market area. These loans generally present a lower risk than commercial and industrial loans, as they are generally secured by the municipality’s full taxing authority, by revenue obligations, or by its ability to raise assessments on its clients for a specific utility. The Company originates loans to its retail clients, including fixed-rate and adjustable first lien mortgage loans, with the underlying 1-4 family owner occupied residential property securing the loan. The Company’s risk exposure is minimized in these types of loans through the evaluation of the creditworthiness of the borrower, including credit scores and debt-to-income ratios, and underwriting standards, which limit the loan-to-value ratio to generally no more than 80% upon loan origination, unless the borrower obtains private mortgage insurance. Home equity loans, including term loans and lines of credit, present a slightly higher risk to the Company than 1-4 family first liens, as these loans can be first or second liens on 1-4 family owner occupied residential property, but can have loan-to-value ratios of no greater than 85% of the value of the real estate taken as collateral. The creditworthiness of the borrower is also considered, including credit scores and debt-to-income ratios. Installment and other loans’ credit risk is mitigated through prudent underwriting standards, including evaluation of the creditworthiness of the borrower through credit scores and debt-to-income ratios and, if secured, the collateral value of the assets. These loans can be unsecured or secured by assets the value of which may depreciate quickly or may fluctuate, and may present a greater risk to the Company than 1-4 family residential loans. In an effort to assist clients that were negatively impacted by the COVID-19 pandemic, the Bank offered various mitigation options, including a loan payment deferral program. Under this program, most commercial deferrals were for a 90-day period, while most consumer deferrals were for a 180-day period. In accordance with the revised Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus issued by the federal bank regulatory agencies on April 7, 2020, these deferrals are exempt from TDR status as they meet the specified requirements. At March 31, 2022 and December 31, 2021, the remaining loan deferral balances were inconsequential. The following table presents the loan portfolio by segment and class, excluding residential mortgage LHFS, at March 31, 2022 and December 31, 2021:
(1) This balance includes $122.5 million and $189.9 million of SBA PPP loans, net of deferred fees and costs, at March 31, 2022 and December 31, 2021, respectively. In order to monitor ongoing risk associated with its loan portfolio and specific loans within the segments, management uses an internal grading system. The first several rating categories, representing the lowest risk to the Bank, are combined and given a “Pass” rating. Management generally follows regulatory definitions in assigning criticized ratings to loans, including "Special Mention," "Substandard," "Doubtful" or "Loss." The Special Mention category includes loans that have potential weaknesses that may, if not monitored or corrected, weaken the asset or inadequately protect the Bank's position at some future date. These assets pose elevated risk, but their weakness does not yet justify a more severe, or classified rating. Substandard loans are classified as they have a well-defined weakness, or weaknesses that jeopardize liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Substandard loans include loans that management has determined not to be impaired, as well as loans considered to be impaired. A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as Loss is deferred. Loss loans are considered uncollectible, as the borrowers are often in bankruptcy, have suspended debt repayments, or have ceased business operations. Once a loan is classified as Loss, there is little prospect of collecting the loan’s principal or interest and it is charged-off. The Company has a loan review policy and program, which is designed to identify and monitor risk in the lending function. The Management ERM Committee, comprised of executive officers, senior officers and loan department personnel, is charged with the oversight of overall credit quality and risk exposure of the Company's loan portfolio. This includes the monitoring of the lending activities of all Company personnel with respect to underwriting and processing new loans and the timely follow-up and corrective action for loans showing signs of deterioration in quality. A loan review program provides the Company with an independent review of the commercial loan portfolio on an ongoing basis. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as extended delinquencies, bankruptcy, repossession or death of the borrower occurs, which heightens awareness as to a possible credit event. Internal loan reviews are completed annually on all commercial relationships with a committed loan balance in excess of $1.0 million, which includes confirmation of risk rating by an independent credit officer. In addition, all commercial relationships greater than $500 thousand rated Substandard, Doubtful or Loss are reviewed quarterly and corresponding risk ratings are reaffirmed by the Company's Problem Loan Committee, with subsequent reporting to the Management ERM Committee and the Board of Directors. The following table summarizes the Company’s loan portfolio ratings based on its internal risk rating system at March 31, 2022 and December 31, 2021:
For commercial real estate, acquisition and development and commercial and industrial loans, a loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Generally, loans that are more than 90 days past due are deemed impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed to determine if the loan should be placed on nonaccrual status. Nonaccrual loans in the commercial and commercial real estate portfolios and any TDRs are, by definition, deemed to be impaired. Impairment is measured on a loan-by-loan basis for commercial, construction and restructured loans by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is collateral dependent if the repayment of the loan is expected to be provided solely by the underlying collateral. For loans that are deemed to be impaired for extended periods of time, periodic updates on fair values are obtained, which may include updated appraisals. Updated fair values are incorporated into the impairment analysis in the next reporting period. Loan charge-offs, which may include partial charge-offs, are taken on an impaired loan that is collateral dependent if the loan’s carrying balance exceeds its collateral’s appraised value, the loan has been identified as uncollectible, and it is deemed to be a confirmed loss. Typically, impaired loans with a charge-off or partial charge-off will continue to be considered impaired, unless the note is split into two, and management expects the performing note to continue to perform and is adequately secured. The second, or non-performing note, would be charged-off. Generally, an impaired loan with a partial charge-off may continue to have an impairment reserve on it after the partial charge-off, if factors warrant. At March 31, 2022 and December 31, 2021, nearly all of the Company’s loan impairments were measured based on the estimated fair value of the collateral securing the loan, except for TDRs. By definition, TDRs are considered impaired. All TDR impairment analyses are initially based on discounted cash flows for those loans. For real estate loans, collateral generally consists of commercial real estate, but in the case of commercial and industrial loans, it could also consist of accounts receivable, inventory, equipment or other business assets. Commercial and industrial loans may also have real estate collateral. Updated appraisals are generally required every 18 months for classified commercial loans in excess of $250 thousand. The “as is" value provided in the appraisal is often used as the fair value of the collateral in determining impairment, unless circumstances, such as subsequent improvements, approvals, or other circumstances, dictate that another value than that provided by the appraiser is more appropriate. Generally, impaired commercial loans secured by real estate, other than performing TDRs, are measured at fair value using certified real estate appraisals that had been completed within the last 18 months. Appraised values are discounted for estimated costs to sell the property and other selling considerations to arrive at the property’s fair value. In those situations in which it is determined an updated appraisal is not required for loans individually evaluated for impairment, fair values are based on either an existing appraisal or a discounted cash flow analysis as determined by management. The approaches are discussed below: •Existing appraisal – if the existing appraisal provides a strong loan-to-value ratio (generally 70% or lower) and, after consideration of market conditions and knowledge of the property and area, it is determined by the Credit Administration staff that there has not been a significant deterioration in the collateral value, the existing certified appraised value may be used. Discounts to the appraised value, as deemed appropriate for selling costs, are factored into the fair value. •Discounted cash flows – in limited cases, discounted cash flows may be used on projects in which the collateral is liquidated to reduce the borrowings outstanding, and is used to validate collateral values derived from other approaches. Collateral on certain impaired loans is not limited to real estate, and may consist of accounts receivable, inventory, equipment or other business assets. Estimated fair values are determined based on borrowers’ financial statements, inventory ledgers, accounts receivable aging or appraisals from individuals with knowledge in the business. Stated balances are generally discounted for the age of the financial information or the quality of the assets. In determining fair value, liquidation discounts are applied to this collateral based on existing loan evaluation policies. The Company distinguishes substandard loans on both an impaired and non-impaired basis, as it places less emphasis on a loan’s classification, and increased reliance on whether the loan was performing in accordance with the contractual terms. A substandard classification does not automatically meet the definition of impaired. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual extensions of credit classified as substandard. As a result, the Company’s methodology includes an evaluation of certain accruing commercial real estate, acquisition and development, and commercial and industrial loans rated substandard to be collectively evaluated for impairment. Although the Company believes these loans meet the definition of substandard, they are generally performing and management has concluded that it is likely the Company will be able to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Larger groups of smaller balance homogeneous loans are collectively evaluated for impairment. Generally, the Company does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower. The following table, which excludes accruing PCI loans, summarizes impaired loans by segment and class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at March 31, 2022 and December 31, 2021. The recorded investment in loans excludes accrued interest receivable due to insignificance. Related allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending, and any partial charge-off will be recorded when final information is received.
The following table, which excludes accruing PCI loans, summarizes the average recorded investment in impaired loans and related recognized interest income for the three months ended March 31, 2022 and 2021:
The following table presents impaired loans that are TDRs, with the recorded investment at March 31, 2022 and December 31, 2021:
There was one new first lien residential mortgage TDR on non-accrual status for the three months ended March 31, 2022 of $4 thousand. There were no new TDRs in 2021. Management further monitors the performance and credit quality of the loan portfolio by analyzing the length of time a portfolio is past due, by aggregating loans based on its delinquencies. The following table presents the classes of loan portfolio summarized by aging categories of performing loans and nonaccrual loans at March 31, 2022 and December 31, 2021:
The Company maintains its ALL at a level management believes adequate for probable incurred credit losses. The ALL is established and maintained through a provision for loan losses charged to earnings. On a quarterly basis, management assesses the adequacy of the ALL utilizing a defined methodology, which considers specific credit evaluation of impaired loans as discussed above, historical loan loss experience, and qualitative factors. Management believes its approach properly addresses relevant accounting guidance for loans individually identified as impaired and for loans collectively evaluated for impairment, and other bank regulatory guidance. In connection with its quarterly evaluation of the adequacy of the ALL, management reviews its methodology to determine if it properly addresses the current risk in the loan portfolio. For each loan class, general allowances based on quantitative factors, principally historical loss trends, are provided for loans that are collectively evaluated for impairment. An adjustment to historical loss factors may be incorporated for delinquency and other potential risk not elsewhere defined within the ALL methodology. In addition to this quantitative analysis, adjustments to the ALL requirements are allocated on loans collectively evaluated for impairment based on additional qualitative factors, including: Nature and Volume of Loans – including loan growth in the current and subsequent quarters based on the Company’s targeted growth and strategic plan, coupled with the types of loans booked based on risk management and credit culture; the number of exceptions to loan policy; and supervisory loan to value exceptions. Concentrations of Credit and Changes within Credit Concentrations – including the composition of the Company’s overall portfolio makeup and management's evaluation related to concentration risk management and the inherent risk associated with the concentrations identified. Underwriting Standards and Recovery Practices – including changes to underwriting standards and perceived impact on anticipated losses; trends in the number of exceptions to loan policy; supervisory loan to value exceptions; and administration of loan recovery practices. Delinquency Trends – including delinquency percentages noted in the portfolio relative to economic conditions; severity of the delinquencies; and whether the ratios are trending upwards or downwards. Classified Loans Trends – including internal loan ratings of the portfolio; severity of the ratings; whether the loan segment’s ratings show a more favorable or less favorable trend; and underlying market conditions and impact on the collateral values securing the loans. Experience, Ability and Depth of Management/Lending staff – including the level of experience of senior and middle management and the lending staff; turnover of the staff; and instances of repeat criticisms. Quality of Loan Review – including the level of experience of the loan review staff; in-house versus outsourced provider of review; turnover of the staff; and instances of repeat criticisms. National and Local Economic Conditions – including trends in the consumer price index, unemployment rates, the housing price index, housing statistics compared to the prior year, bankruptcy rates, regulatory and legal environment risks and competition. All factors noted above were deemed appropriate at March 31, 2022 and were unchanged for the three months ended March 31, 2022, except for a reduction in the National and Local Economic Conditions. This factor had been previously increased to account for economic concerns in the commercial real estate portfolio associated with the COVID-19 pandemic. The additional allocation was removed at March 31, 2022 as these concerns have subsided. The following table presents the activity in the ALL for the three months ended March 31, 2022 and 2021:
The following table summarizes the ending loan balance individually evaluated for impairment based upon loan segment, as well as the related ALL loss allocation for each at March 31, 2022 and December 31, 2021. Accruing PCI loans are excluded from loans individually evaluated for impairment. The following table provides activity for the accretable yield of purchased impaired loans for the three months ended March 31, 2022 and 2021:
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has primarily entered into operating leases for branches and office space. Most of the Company's leases contain renewal options, which the Company is reasonably certain to exercise. Including renewal options, the Company's leases range from 6 to 31 years. Operating lease right-of-use assets and lease liabilities are included in other assets and accrued interest and other liabilities on the Company's unaudited condensed consolidated balance sheets. The Company uses its incremental borrowing rate to determine the present value of the lease payments, as the rate implicit in the Company's leases is not readily determinable. Lease agreements that contain non-lease components are generally accounted for as a single lease component, while variable costs, such as common area maintenance expenses and property taxes, are expensed as incurred. The following table summarizes the Company's operating leases at March 31, 2022 and December 31, 2021:
The following table presents information related to the Company's operating leases for the three months ended March 31, 2022 and 2021:
The following table presents expected future maturities of the Company's lease liabilities as of March 31, 2022:
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GOODWILL AND OTHER INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS The following table presents changes in goodwill for the three months ended March 31, 2022 and 2021:
Goodwill is not amortized but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit. The Company conducted its last annual goodwill impairment test as of November 30, 2021 using generally accepted valuation methods. As a result of that impairment test, no goodwill impairment was identified. No changes occurred that would impact the results of that analysis through March 31, 2022. The following table presents changes in and components of other intangible assets for the three months ended March 31, 2022 and 2021:
No impairment charges were recorded in the three months ended March 31, 2022 and March 31, 2021. The following table presents the components of other identifiable intangible assets at March 31, 2022 and December 31, 2021:
The following table presents future estimated aggregate amortization expense for intangible assets remaining at March 31, 2022:
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SHARE-BASED COMPENSATION PLANS |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION PLANS | SHARE-BASED COMPENSATION PLANS The Company maintains share-based compensation plans under the shareholder-approved 2011 Plan. The purpose of the share-based compensation plans is to provide officers, employees, and non-employee members of the Board of Directors of the Company with additional incentive to further the success of the Company. At March 31, 2022, 881,920 shares of the common stock of the Company were reserved, of which 137,443 shares are available to be issued. At the Company's 2022 Annual Meeting of Shareholders held on April 26, 2022, the Company's shareholders approved an amendment to the 2011 Plan increasing the number of shares available for issuance under the 2011 Plan by 400,000. The 2011 Plan incentive awards may consist of grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, deferred stock units and performance shares. All employees and members of the Board of Directors of the Company and its subsidiaries, are eligible to participate in the 2011 Plan. The 2011 Plan allows for the Compensation Committee of the Board of Directors to determine the type of incentive to be awarded, its term, manner of exercise, vesting and restrictions on shares. Generally, awards are nonqualified under the IRC, unless the awards are deemed to be incentive awards to employees at the Compensation Committee’s discretion. The following table presents a summary of nonvested restricted shares activity for the three months ended March 31, 2022:
The following table presents restricted shares compensation expense, with tax benefit information, and fair value of shares vested, for the three months ended March 31, 2022 and 2021:
The unrecognized compensation expense related to the share awards totaled $4.6 million at March 31, 2022 and $2.3 million at December 31, 2021. The unrecognized compensation expense at March 31, 2022 is expected to be recognized over a weighted-average period of 2.3 years. The Company maintains an employee stock purchase plan to provide its employees with an opportunity to purchase Company common stock. Eligible employees may purchase shares in an amount that does not exceed 10% of their annual salary, at the lower of 95% of the fair market value of the shares on the semi-annual offering date or related purchase date. The purchases occur in March and September of each year. The Company reserved 350,000 shares of its common stock to be issued under the employee stock purchase plan. At March 31, 2022, 147,527 shares were available to be issued under the employee stock purchase plan. The following table presents information for the employee stock purchase plan for the three months ended March 31, 2022 and 2021:
The Company issues new shares or treasury shares, depending on market conditions, in its share-based compensation plans.
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DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used as risk management tools by the Company to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings and are not used for trading or speculative purposes. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company, however, discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period due to circumstances, such as the impact of the COVID-19 pandemic. Upon discontinuance, the associated gains and losses deferred in AOCI are reclassified immediately into earnings and subsequent changes in the fair value of the cash flow hedge are recognized in earnings. At March 31, 2022 and December 31, 2021, the Company had no interest rate derivative designated as a hedging instrument. The Company enters into interest rate swaps that allow its commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. Under these agreements, the Company enters into a variable-rate loan agreement with a customer in addition to an interest rate swap agreement, which serves to effectively swap the customer’s variable-rate loan into a fixed-rate loan. The Company then enters into a corresponding swap agreement with a third party in order to economically hedge its exposure through the customer agreement. The interest rate swaps with both the customers and third parties are not designated as hedges and are marked through earnings. At March 31, 2022, the Company had 14 customer and 14 corresponding third-party broker interest rate derivatives not designated as a hedging instrument with an aggregate notional amount of $120.6 million. The Company had $75.8 million in notional amount of such derivative instruments at December 31, 2021. During the three months ended March 31, 2022 and 2021, the Company entered into new interest rate swaps with its commercial loan customers and recognized swap fee income of $953 thousand and zero, respectively, which is included in noninterest income in the unaudited condensed consolidated statements of income. At March 31, 2022 and December 31, 2021, the Company provided cash collateral of zero and $260 thousand to the counterparties for these derivatives, respectively. At March 31, 2022 and December 31, 2021, the Company was holding cash collateral of $2.6 million and $490 thousand from the counterparties for these derivatives, respectively. The Company entered into a risk participation agreement with a financial institution counterparty (the “Agent Bank”) for an interest rate derivative contract related to a loan in which the Company is a participant. The risk participation agreement provides credit protection to the Agent Bank should the borrower fail to perform on its interest rate derivative contracts with the Agent Bank. The Company received an upfront fee of $53 thousand upon entry into the risk participation agreement during the three months ended March 31, 2021, and is included in noninterest income in the unaudited condensed consolidated statements of income. The Company manages its credit risk on the risk participation agreement by monitoring the creditworthiness of the borrower, which is based on the same credit review process as though the Company had entered into the derivative instruments directly with the borrower. The notional amount of such risk participation agreement reflects the Company’s pro-rata share of the derivative instrument, consistent with its share of the related participated loan. The total notional amount of the risk participation agreement was $15.9 million at both March 31, 2022 and December 31, 2021. As a part of its normal residential mortgage operations, the Company will enter into an interest rate lock commitment with a potential borrower. The Company will enter into a corresponding commitment with an investor to sell that loan at a specific price shortly after origination. In accordance with FASB ASC 820, adjustments are recorded through earnings to account for the net change in fair value of these transactions for the held for sale pipeline. The following table summarizes the fair value of the Company's derivative instruments at March 31, 2022 and December 31, 2021:
The following tables summarize the effect of the Company's derivative financial instruments on OCI and net income for the three months ended March 31, 2022 and 2021:
During the three months ended September 30, 2021, the Company terminated its interest rate swap designated as a hedging instrument of $50.0 million.
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SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL | SHAREHOLDERS’ EQUITY AND REGULATORY CAPITALBanks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under the Basel Committee on Banking Supervision's capital guidelines for U.S. Banks ("Basel III rules"), an entity must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The Company and the Bank have elected not to include net unrealized gains or losses included in AOCI in computing regulatory capital. The consolidated asset limit on small bank holding companies is $3.0 billion and a company with assets under that limit is not subject to the FRB consolidated capital rules, but may file reports that include capital amounts and ratios. The Company has elected to file those reports. Management believes that the Company and the Bank met all capital adequacy requirements to which they are subject at March 31, 2022 and December 31, 2021. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2022, the most recent regulatory notifications 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 classification. The following table presents capital amounts and ratios at March 31, 2022 and December 31, 2021:
In September 2015, the Board of Directors of the Company authorized a share repurchase program under which the Company may repurchase up to 5% of the Company's outstanding shares of common stock, or approximately 416,000 shares, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act of 1934, as amended. On April 19, 2021, the Board of Directors authorized the additional future repurchase of up to 562,000 shares of its outstanding common stock. When and if appropriate, repurchases may be made in the open market or privately negotiated transactions, depending on market conditions, regulatory requirements and other corporate considerations, as determined by management. Share repurchases may not occur and may be discontinued at any time. At March 31, 2022, 415,805 shares had been repurchased at a total cost of $8.9 million, or $21.35 per share. Common stock available for future repurchase totals approximately 562,195 shares, or 5% of the Company's outstanding common stock at March 31, 2022. On April 18, 2022, the Board declared a cash dividend of $0.19 per common share, which will be paid on May 9, 2022 to shareholders of record at May 2, 2022.
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE The following table presents earnings per share for the three months ended March 31, 2022 and 2021:
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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its clients. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the unaudited condensed consolidated balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The following table presents these contractual, or notional, amounts:
Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each client’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the client. Collateral varies but may include accounts receivable, inventory, equipment, residential real estate, and income-producing commercial properties. Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a client to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to clients. The Company holds collateral supporting those commitments when deemed necessary by management. The liability at March 31, 2022 and December 31, 2021 for guarantees under standby letters of credit issued was not considered to be material. The Company maintains a reserve, based on historical loss experience of the related loan class and utilization assumptions, for off-balance sheet credit exposures that currently are not funded, in other liabilities on the unaudited condensed consolidated balance sheets. This reserve totaled approximately $1.6 million at both March 31, 2022 and December 31, 2021.
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FAIR VALUE |
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FAIR VALUE | FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Certain financial instruments and all non-financial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are: Level 1 – quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date. Level 2 – significant other observable inputs other than Level 1 prices such as prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – at least one significant unobservable input that reflects a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability. In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company used the following methods and significant assumptions to estimate fair value for instruments measured on a recurring basis: Where quoted prices are available in an active market, investment securities are classified within Level 1 of the valuation hierarchy. Level 1 investment securities include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, investment securities are classified within Level 2 and fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flow. Level 2 investment securities include U.S. agency securities, MBS, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, investment securities are classified within Level 3 of the valuation hierarchy. The Company’s investment securities are classified as available for sale. The fair values of interest rate swaps and risk participation derivatives are determined using models that incorporate readily observable market data into a market standard methodology. This methodology nets the discounted future cash receipts and the discounted expected cash payments. The discounted variable cash receipts and payments are based on expectations of future interest rates derived from observable market interest rate curves. In addition, fair value is adjusted for the effect of nonperformance risk by incorporating credit valuation adjustments for the Company and its counterparties. These assets and liabilities are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021:
The Company had one municipal bond and one CMO measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at both March 31, 2022 and December 31, 2021. The Level 3 valuation is based on a non-executable broker quote, which is considered a significant unobservable input. Such quotes are updated as available and may remain constant for a period of time for certain broker-quoted securities that do not move with the market or that are not interest rate sensitive as a result of their structure or overall attributes. The Company’s residential mortgage LHFS are recorded at fair value utilizing Level 2 measurements. This fair value measurement is determined based upon third party quotes obtained on similar loans. For LHFS, for which the fair value option has been elected, the aggregate fair value declined below the aggregate principal balance by $195 thousand as of March 31, 2022, and exceeded the aggregate principal balance by $150 thousand as of December 31, 2021. The determination of the fair value of interest rate lock commitments on residential mortgages is based on agreed upon pricing with the respective investor on each loan and includes a pull through percentage. The pull through percentage represents an estimate of loans in the pipeline to be delivered to an investor versus the total loans committed for delivery. Significant changes in this input could result in a significantly higher or lower fair value measurement. As the pull through percentage is a significant unobservable input, this is deemed a Level 3 valuation input. The average pull through percentage, which is based upon historical experience, was 93% as of March 31, 2022. An increase or decrease of 5% in the pull through assumption would result in a positive or negative change of $6 thousand in the fair value of interest rate lock commitments at March 31, 2022. The following provides details of the Level 3 fair value measurement activity for the periods ended March 31, 2022 and 2021: Investment securities:
Interest rate lock commitments on residential mortgages:
Certain financial assets are measured at fair value on a nonrecurring basis. Adjustments to the fair value of these assets usually results from the application of lower of cost or market accounting or write-downs of individual assets. The Company used the following methods and significant assumptions to estimate fair value for these financial assets. Impaired Loans Loans are designated as impaired when, in the judgment of management and based on current information and events, it is probable that all amounts due, according to the contractual terms of the loan agreement, will not be collected. The measurement of loss associated with impaired loans for all loan classes can be based on either the observable market price of the loan, the fair value of the collateral, or discounted cash flows using the rate of return implicit in the original loan for TDRs. For collateral-dependent loans, fair value is measured based on the value of the collateral securing the loan, less estimated costs to sell. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The value of the real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral is a house or building in the process of construction, or if management adjusts the appraisal value, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal, if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports (Level 3). Impaired loans with an allocation to the ALL are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the unaudited condensed consolidated statements of income. Any changes in the fair value of impaired loans still held were not material for the three months ended March 31, 2022 and 2021. Foreclosed Real Estate OREO property acquired through foreclosure is initially recorded at the fair value of the property at the transfer date less estimated selling cost. Subsequently, OREO is carried at the lower of its carrying value or the fair value less estimated selling cost. Fair value is usually determined based upon an independent third-party appraisal of the property or occasionally upon a recent sales offer. The Company had no OREO balances at March 31, 2022 and December 31, 2021. Mortgage Servicing Rights The MSR fair value is estimated to be equal to its carrying value, unless the quarterly valuation model calculates the present value of the estimated net servicing income is less than its carrying value, in which case an impairment charge is taken. At March 31, 2022 and December 31, 2021, an impairment reserve of $47 thousand and $79 thousand, respectively, existed on the MSR portfolio. For the three months ended March 31, 2022 and 2021, impairment valuation allowance reversals of $32 thousand and $606 thousand were included, respectively, in mortgage banking activities on the unaudited condensed consolidated statements of income. The reversals in the three months ended March 31, 2022 and 2021 were due to subsequent increases in market rates. The following table summarizes assets measured at fair value on a nonrecurring basis at March 31, 2022 and December 31, 2021: The following table presents additional qualitative information about assets measured on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:
Fair values of financial instruments GAAP requires disclosure of the fair value of financial assets and liabilities, including those that are not measured and reported at fair value on a recurring or nonrecurring basis. The following table presents carrying amounts and estimated fair values of the financial assets and liabilities at March 31, 2022 and December 31, 2021:
In accordance with the Company's adoption of ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, the methods utilized to measure the fair value of financial instruments at March 31, 2022 and December 31, 2021 represent an approximation of exit price; however, an actual exit price may differ.
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CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES The nature of the Company’s business generates a certain amount of litigation involving matters arising out of the ordinary course of business. Except as described below, in the opinion of management, there are no legal proceedings that might have a material effect on the results of operations, liquidity, or the financial position of the Company at this time. On May 25, 2012, SEPTA filed a putative class action complaint in the U.S. District Court for the Middle District of Pennsylvania against the Company, the Bank and certain current and former directors and officers (collectively, the “Orrstown Defendants”). The complaint alleged, among other things, that (i) in connection with the Company’s Registration Statement on Form S-3 dated February 23, 2010 and its Prospectus Supplement dated March 23, 2010, and (ii) during the purported class period of March 24, 2010 through October 27, 2011, the Company issued materially false and misleading statements regarding the Company’s lending practices and financial results, including misleading statements concerning the stringent nature of the Bank’s credit practices and underwriting standards, the quality of its loan portfolio, and the intended use of the proceeds from the Company’s March 2010 public offering of common stock. The complaint asserted claims under Sections 11, 12(a) and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and sought class certification, unspecified money damages, interest, costs, fees and equitable or injunctive relief. Under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), the Court appointed SEPTA Lead Plaintiff on August 20, 2012. On March 4, 2013, SEPTA filed an amended complaint. The amended complaint expanded the list of defendants in the action to include the Company’s former independent registered public accounting firm, Smith Elliott Kearns & Company, LLC (“SEK”), and the underwriters of the Company’s March 2010 public offering of common stock. In addition, among other things, the amended complaint extended the purported 1934 Exchange Act class period from March 15, 2010 through April 5, 2012. On June 22, 2015, in a 96-page Memorandum, the Court dismissed without prejudice SEPTA’s amended complaint against all defendants, finding that SEPTA failed to state a claim under either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. On February 8, 2016, the Court granted SEPTA’s motion for leave to amend again and SEPTA filed its second amended complaint that same day. On December 7, 2016, the Court issued an Order and Memorandum granting in part and denying in part defendants’ motions to dismiss SEPTA’s second amended complaint. The Court granted the motions to dismiss the Securities Act claims against all defendants, and granted the motions to dismiss the Exchange Act Section 10(b) and Rule 10b-5 claims against all defendants except Orrstown Financial Services, Inc., Orrstown Bank, Thomas R. Quinn, Jr., Bradley S. Everly, and Jeffrey W. Embly. The Court also denied the motions to dismiss the Exchange Act Section 20(a) claims against Quinn, Everly, and Embly. On December 15, 2017, the Orrstown Defendants and SEPTA exchanged expert reports in opposition to and in support of class certification, respectively. On January 15, 2018, the parties exchanged expert rebuttal reports. SEPTA has not yet filed a motion for class certification. On August 9, 2018, SEPTA filed a motion to compel the production of Confidential Supervisory Information (CSI) of non-parties the Board of Governors of the FRB and the Pennsylvania Department of Banking and Securities, in the possession of Orrstown and third parties. On August 30, 2018, the FRB filed an unopposed motion to intervene in the Action for the purpose of opposing SEPTA’s motion to compel. On February 12, 2019, the Court denied SEPTA’s motion to compel the production of CSI on the ground that SEPTA had failed to exhaust its administrative remedies. On April 11, 2019, SEPTA filed a motion for leave to file a third amended complaint. The proposed third amended complaint seeks to reassert the Securities Act claims that the Court dismissed as to all defendants on December 7, 2016, when the Court granted in part and denied in part defendants’ motions to dismiss SEPTA’s second amended complaint. The proposed third amended complaint also seeks to reassert the Exchange Act claims against those defendants that the Court dismissed from the case on December 7, 2016. On June 13, 2019, Orrstown filed a motion for protective order to stay discovery pending resolution of SEPTA’s motion for leave to file a third amended complaint. On July 17, 2019, the Court entered an Order partially granting Orrstown’s motion for protective order, ruling that all deposition discovery in the case was stayed pending a decision on SEPTA’s motion for leave to file a third amended complaint. Party and non-party document discovery in the case has largely been completed. On February 14, 2020, the Court issued an Order and Memorandum granting SEPTA’s motion for leave to file a third amended complaint. The third amended complaint is now the operative complaint. It reinstates the Orrstown Defendants, as well as SEK and the underwriter defendants, previously dismissed from the case on December 7, 2016. The third amended complaint also revives the previously dismissed Securities Act claim against the Orrstown Defendants, SEK, and the underwriter defendants. Defendants filed their motions to dismiss the third amended complaint on April 24, 2020. SEPTA’s opposition was filed on July 8, 2020, and Orrstown’s reply brief was filed on August 12, 2020. Additionally, on February 24, 2020, the Orrstown Defendants, and the underwriter defendants and SEK, separately filed motions under 28 U.S.C. § 1292(b) asking the District Court to certify its February 14, 2020 Order granting leave to file the third amended complaint for interlocutory appeal to the Third Circuit Court of Appeals. The District Court granted those motions on July 17, 2020, and defendants filed their Petition for Permission to Appeal with the Third Circuit on July 27, 2020. The Third Circuit granted permission to appeal the Order pursuant to 28 U.S.C. § 1292(b) on August 13, 2020. Defendants filed their joint Opening Brief in the Third Circuit on November 2, 2020, asking the Court to reverse the district court’s Order. SEPTA filed its responsive brief on December 2, 2020 and defendants filed their reply brief on December 23, 2020. Oral argument was held on February 10, 2021. On September 2, 2021, the Third Circuit affirmed the District Court's February 14, 2020 Order granting SEPTA leave to file a third amended complaint. Defendants' motions to dismiss the third amended complaint are still pending in the District Court. The Company believes that SEPTA’s allegations and claims against the defendants are without merit, and the Company intends to defend itself vigorously against those claims. It is not possible at this time to reasonably estimate possible losses, or even a range of reasonably possible losses, in connection with the litigation. On March 25, 2022, a customer of the Bank filed a putative class action complaint against the Bank in the Court of Common Pleas of Cumberland County, Pennsylvania in a case captioned Alleman, on behalf of himself and all others similarly situated, v. Orrstown Bank. The complaint alleges, among other things, that the Bank breached its account agreements by charging certain overdraft fees. The complaint seeks a refund of all allegedly improper fees, damages in an amount to be proven at trial, attorneys’ fees and costs, and an injunction against the Bank’s allegedly improper overdraft practices. This lawsuit is similar to lawsuits recently filed against other financial institutions pertaining to overdraft fee disclosures. Based on information available at present, it is not possible at this time to reasonably estimate possible losses, or even a range of reasonably possible losses, in connection with the litigation. Accordingly, the Company has not recognized any liability associated with this action. The Bank believes that the allegations and claims against the Bank are without merit, and intends to defend itself vigorously against those claims.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
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Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations – Orrstown Financial Services, Inc. is a financial holding company that operates Orrstown Bank, a commercial bank providing banking and financial advisory services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania, and in Anne Arundel, Baltimore, Howard and Washington Counties, Maryland. The Company operates in the community banking segment and engages in lending activities, including commercial, residential, commercial mortgages, construction, municipal, and various forms of consumer lending, and deposit services, including checking, savings, time, and money market deposits. The Company also provides fiduciary, investment advisory, insurance and brokerage services. The Company and the Bank are subject to regulation by certain federal and state agencies and undergo periodic examinations by such regulatory authorities. |
Basis of Presentation | Basis of Presentation – The accompanying unaudited condensed consolidated financial statements include the accounts of Orrstown Financial Services, Inc. and its wholly owned subsidiary, the Bank. The Company has prepared these unaudited condensed consolidated financial statements in accordance with GAAP for interim financial information, SEC rules that permit reduced disclosure for interim periods, and Article 10 of Regulation S-X. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in the unaudited condensed consolidated financial statements. The December 31, 2021 consolidated balance sheet information contained in this Quarterly Report on Form 10-Q was derived from the Company's 2021 audited consolidated financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. All significant intercompany transactions and accounts have been eliminated. The Company's management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company's unaudited condensed consolidated financial statements and notes as required by GAAP. To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.
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Derivatives | Derivatives - FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes to the fair value of derivatives designated and that qualify as cash flow hedges are recorded in AOCI and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The Company discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period due to circumstances, such as the impact of the COVID-19 pandemic. Upon discontinuance, the associated gains and losses deferred in AOCI are reclassified immediately into earnings and subsequent changes in the fair value of the cash flow hedge are recognized in earnings. At March 31, 2022 and December 31, 2021, the Company had no interest rate derivative designated as a hedging instrument.Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.
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Leases | Leases - The Company evaluates its contracts at inception to determine if an arrangement either is a lease or contains one. Operating lease ROU assets are included in other assets and operating lease liabilities in accrued interest payable and other liabilities in the unaudited condensed consolidated balance sheets. The Company had no finance leases at March 31, 2022. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company's leases do not provide an implicit rate, so the Company's incremental borrowing rate is used, which approximates its fully collateralized borrowing rate, based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is reevaluated upon lease modification. The operating lease ROU asset also includes any initial direct costs and prepaid lease payments made less any lease incentives. In calculating the present value of lease payments, the Company may include options to extend the lease when it is reasonably certain that it will exercise that option. In accordance with ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), the Company keeps leases with an initial term of 12 months or less off of the balance sheet. The Company recognizes these lease payments in the unaudited condensed consolidated statements of income on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to account for them as a single lease component. The Company's operating leases relate primarily to bank branches and office space. The difference between the lease asset and lease liabilities primarily consists of deferred rent liabilities reclassified upon adoption to reduce the measurement of the lease assets. The standard does not materially impact the Company's unaudited condensed consolidated statements of income.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements - ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The amendments in this update require an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the amendments in this update amend the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For certain public companies, this update was effective for interim and annual periods beginning after December 15, 2019. The implementation deadline of ASU 2016-13 was extended for smaller reporting and other companies until the fiscal year and interim periods beginning after December 15, 2022. The Company will implement ASU 2016-13 effective January 1, 2023. ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ("ASU 2019-10"), extended the implementation deadline of ASU 2016-13 for smaller reporting and other companies until the fiscal year and interim periods beginning after December 15, 2022. The Company meets the requirements to be considered a smaller reporting company under SEC Regulation S-K and SEC Rule 405, and will adopt ASU 2016-13 effective January 1, 2023. The Company is evaluating the impact of the adoption of ASU 2016-13, and is working with a third-party vendor solution to assist with the application of ASU 2016-13 and finalizing the loss estimation models to be used. Once management determines which methods will be utilized, another third party vendor will be contracted to perform a model validation prior to adoption. The Company expects to recognize a one-time cumulative-effect adjustment to the allowance for credit losses as of the date of adoption of the new standard. While the Company anticipates the allowance for loan losses will increase under its current assumptions, it expects the impact of adopting ASU 2016-13 will be influenced by the composition, characteristics and quality of its loan and investment securities portfolios, as well as general economic conditions and forecasts at the adoption date. The other provisions of ASU 2019-10 were not applicable to the Company. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The optional expedients apply consistently to all contracts or transactions within the scope of this topic, while the optional expedients for hedging relationships can be elected on an individual basis. The Company has formed a cross-functional working group to lead the transition from LIBOR to a planned adoption of an alternate index. The Company currently plans to replace LIBOR with the 30-Day Average SOFR or Term SOFR in its loan agreements. The Company implemented fallback language for loans with maturities after 2021. The Company expects to adopt the LIBOR transition relief allowed under this standard, and is currently evaluating the potential impact of this guidance on its financial statements. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates the troubled debt restructuring accounting model. This change will require all loan modifications to be accounted for under the general loan modification guidance in Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs, and subject entities to new disclosure requirements on loan modifications to borrowers experiencing financial difficulty. For entities that have adopted Topic 326, ASU 2022-02 is effective for periods beginning after December 15, 2022. For entities adopting Topic 326 in periods after December 15, 2022, ASU 2022-02 is effective when the company adopts Topic 326. The Company will implement ASU 2022-02 effective January 1, 2023, and is evaluating the impact.
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost and Fair Values of AFS Securities | At March 31, 2022 and December 31, 2021, all investment securities were classified as AFS. The following table summarizes amortized cost and fair value of investment securities, and the corresponding amounts of gross unrealized gains and losses recognized in AOCI, at March 31, 2022 and December 31, 2021:
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Summary of AFS Securities with Unrealized Losses | The following table summarizes investment securities with unrealized losses at March 31, 2022 and December 31, 2021, aggregated by major investment security type and the length of time in a continuous unrealized loss position.
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Schedule of Amortized Cost and Fair Values of AFS Securities by Contractual Maturity | The following table summarizes amortized cost and fair value of investment securities by contractual maturity at March 31, 2022. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
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Proceeds From Sale of AFS Securities and Gross Gains and Gross Losses | The following table summarizes proceeds from sales of investment securities and gross gains and gross losses for the three months ended March 31, 2022 and 2021:
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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Loan Portfolio, Excluding Residential Loans Held for Sale, Broken Out by Classes | The following table presents the loan portfolio by segment and class, excluding residential mortgage LHFS, at March 31, 2022 and December 31, 2021:
(1) This balance includes $122.5 million and $189.9 million of SBA PPP loans, net of deferred fees and costs, at March 31, 2022 and December 31, 2021, respectively.
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Loan Portfolio Ratings Based on Internal Risk Rating System | The following table summarizes the Company’s loan portfolio ratings based on its internal risk rating system at March 31, 2022 and December 31, 2021:
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Impaired Loans by Segment and Class | The following table, which excludes accruing PCI loans, summarizes impaired loans by segment and class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at March 31, 2022 and December 31, 2021. The recorded investment in loans excludes accrued interest receivable due to insignificance. Related allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending, and any partial charge-off will be recorded when final information is received.
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Average Recorded Investment in Impaired Loans and Related Interest Income | The following table, which excludes accruing PCI loans, summarizes the average recorded investment in impaired loans and related recognized interest income for the three months ended March 31, 2022 and 2021:
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Troubled Debt Restructurings | The following table presents impaired loans that are TDRs, with the recorded investment at March 31, 2022 and December 31, 2021:
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Loan Portfolio Summarized by Aging Categories of Performing Loans and Nonaccrual Loans | The following table presents the classes of loan portfolio summarized by aging categories of performing loans and nonaccrual loans at March 31, 2022 and December 31, 2021:
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Summary of Activity in the ALL and Ending Loan Balances Individually Evaluated for Impairment Based on Loan Segment | The following table presents the activity in the ALL for the three months ended March 31, 2022 and 2021:
The following table summarizes the ending loan balance individually evaluated for impairment based upon loan segment, as well as the related ALL loss allocation for each at March 31, 2022 and December 31, 2021. Accruing PCI loans are excluded from loans individually evaluated for impairment.
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Schedule of Activity for the Accretable Yield of Purchased Impaired Loans | The following table provides activity for the accretable yield of purchased impaired loans for the three months ended March 31, 2022 and 2021:
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LEASES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of ROU Assets and Related Lease Liabilities | The following table summarizes the Company's operating leases at March 31, 2022 and December 31, 2021:
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Information Related to Operating Leases | The following table presents information related to the Company's operating leases for the three months ended March 31, 2022 and 2021:
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Schedule of Maturities of Lease Liabilities | The following table presents expected future maturities of the Company's lease liabilities as of March 31, 2022:
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of in Changes in Goodwill | The following table presents changes in goodwill for the three months ended March 31, 2022 and 2021:
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Schedule of Changes in Other Intangible Assets | The following table presents changes in and components of other intangible assets for the three months ended March 31, 2022 and 2021:
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Schedule of Components of Other Intangible Assets | The following table presents the components of other identifiable intangible assets at March 31, 2022 and December 31, 2021:
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Schedule of Estimated Aggregated Amortization Expense | The following table presents future estimated aggregate amortization expense for intangible assets remaining at March 31, 2022:
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SHARE-BASED COMPENSATION PLANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Nonvested Restricted Shares Activity | The following table presents a summary of nonvested restricted shares activity for the three months ended March 31, 2022:
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Schedule of Restricted Shares Compensation Expense | The following table presents restricted shares compensation expense, with tax benefit information, and fair value of shares vested, for the three months ended March 31, 2022 and 2021:
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Schedule of Employee Stock Purchase Plan | The following table presents information for the employee stock purchase plan for the three months ended March 31, 2022 and 2021:
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Instruments | The following table summarizes the fair value of the Company's derivative instruments at March 31, 2022 and December 31, 2021:
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Effect of Derivative Financial Instruments on OCI and Net Income | The following tables summarize the effect of the Company's derivative financial instruments on OCI and net income for the three months ended March 31, 2022 and 2021:
During the three months ended September 30, 2021, the Company terminated its interest rate swap designated as a hedging instrument of $50.0 million.
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SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Amounts and Ratios | The following table presents capital amounts and ratios at March 31, 2022 and December 31, 2021:
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EARNINGS PER SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | The following table presents earnings per share for the three months ended March 31, 2022 and 2021:
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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual or Notional Amounts, Commitments to Fund | The following table presents these contractual, or notional, amounts:
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FAIR VALUE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets Measured at Fair Value on Recurring Basis | The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021:
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Level 3 Fair Value Measurement Activity | The following provides details of the Level 3 fair value measurement activity for the periods ended March 31, 2022 and 2021: Investment securities:
Interest rate lock commitments on residential mortgages:
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Summary of Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes assets measured at fair value on a nonrecurring basis at March 31, 2022 and December 31, 2021:
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Summary of Additional Qualitative Information | The following table presents additional qualitative information about assets measured on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:
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Carrying Amounts and Estimated Fair Values of Financial Instruments | The following table presents carrying amounts and estimated fair values of the financial assets and liabilities at March 31, 2022 and December 31, 2021:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Derivatives (Details) - Interest rate products $ in Millions |
Mar. 31, 2022
USD ($)
bank
|
Dec. 31, 2021
USD ($)
bank
|
---|---|---|
Derivative [Line Items] | ||
Number of derivatives | bank | 0 | 0 |
Derivatives not designated as hedging instruments | ||
Derivative [Line Items] | ||
Derivative, notional amount | $ | $ 120.6 | $ 75.8 |
INVESTMENT SECURITIES - Narrative (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022
USD ($)
security
|
Mar. 31, 2021
USD ($)
security
|
Dec. 31, 2021
USD ($)
|
|
Debt Securities, Available-for-sale [Line Items] | |||
Number of securities with OTTI charges | security | 1 | ||
Gain on investments | $ 25 | $ 145 | |
Number of investments securities, partially sold | security | 1 | ||
Investment securities | $ 529,730 | $ 472,438 | |
Proceeds from sale of investment securities | 3,075 | $ 75,736 | |
Number of investment securities sold | security | 14 | ||
Debt Securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment securities | 3,100 | $ 75,600 | |
Proceeds from sale of investment securities | 3,100 | $ 75,736 | |
Non-agency CMOs | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment security, OTTI | 14,700 | ||
Cumulative OTTI recognized in earnings | 171 | ||
Investment securities | 27,003 | 29,698 | |
Collateral Pledged | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment securities pledged to secure public funds, fair value | $ 291,000 | $ 295,600 |
INVESTMENT SECURITIES - Schedule of Amortized Cost and Fair Values of AFS Securities by Contractual Maturity (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
---|---|
Amortized Cost | |
Due in one year or less | $ 0 |
Due after one year through five years | 3,376 |
Due after five years through ten years | 79,079 |
Due after ten years | 182,951 |
CMOs and MBSs | 165,094 |
Asset-backed | 117,805 |
Total Amortized Cost | 548,305 |
Fair Value | |
Due in one year or less | 0 |
Due after one year through five years | 3,509 |
Due after five years through ten years | 75,367 |
Due after ten years | 177,625 |
CMOs and MBSs | 157,259 |
Asset-backed | 115,970 |
Total Fair Value | $ 529,730 |
INVESTMENT SECURITIES - Proceeds from Sales of AFS Securities and Gross Gains and Gross Losses (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Proceeds from sale of investment securities | $ 3,075 | $ 75,736 |
Gross gains | 25 | 1,351 |
Gross losses | $ 0 | $ 1,206 |
LOANS AND ALLOWANCE FOR LOAN LOSSES - Troubled Debt Restructurings (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022
USD ($)
contract
|
Mar. 31, 2021
contract
|
Dec. 31, 2021
USD ($)
contract
|
|
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 13 | 13 | |
Recorded Investment | $ | $ 851 | $ 1,089 | |
Number of new contracts | contract | 1 | 0 | |
Accruing | Residential mortgage | First lien | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 7 | 8 | |
Recorded Investment | $ | $ 575 | $ 804 | |
Nonaccruing | Residential mortgage | First lien | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 6 | 5 | |
Recorded Investment | $ | $ 276 | $ 285 | |
Increase in TDR investment | $ | $ 4 |
LOANS AND ALLOWANCE FOR LOAN LOSSES - Schedule of Accretable Yield of Purchased Impaired Loans (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Accretable Yield Movement Schedule [Roll Forward] | ||
Accretable yield, beginning of period | $ 2,661 | $ 3,438 |
Accretion of income | (314) | (466) |
Reclassifications from nonaccretable difference due to improvement in expected cash flows | 243 | 44 |
Other changes, net | (73) | 56 |
Accretable yield, end of period | $ 2,517 | $ 3,072 |
LEASES - Narrative (Details) |
Mar. 31, 2022 |
---|---|
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease terms | 6 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease terms | 31 years |
LEASES - Summary of Information Related to Operating Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Leases [Abstract] | |||
Operating lease ROU assets | $ 10,305 | $ 10,515 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other assets | Other assets | |
Operating lease ROU liabilities | $ 10,937 | $ 11,119 | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other Liabilities | Other Liabilities | |
Weighted-average remaining lease term (in years) | 14 years 4 months 24 days | 14 years 7 months 6 days | |
Weighted-average discount rate | 4.10% | 4.10% | |
Cash paid for operating lease liabilities | $ 294 | $ 343 | |
Operating lease expense | $ 394 | $ 403 |
LEASES - Schedule of Maturities of Leases Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Leases [Abstract] | ||
2022 | $ 868 | |
2023 | 1,216 | |
2024 | 1,246 | |
2025 | 1,269 | |
2026 | 1,302 | |
Thereafter | 9,687 | |
Total | 15,588 | |
Less: imputed interest | 4,651 | |
Total lease liabilities | $ 10,937 | $ 11,119 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in Goodwill (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Mar. 31, 2021 |
---|---|---|---|
Goodwill [Roll Forward] | |||
Balance, beginning of year | $ 18,724 | $ 18,724 | $ 18,724 |
Balance, end of period | $ 18,724 | $ 18,724 | $ 18,724 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Nov. 30, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Impairments | $ 0 | ||
Impairment of intangibles | $ 0 | $ 0 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in Other Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Finite-lived Intangible Assets [Roll Forward] | ||
Beginning of period | $ 4,183 | $ 5,458 |
Amortization expense | (292) | (334) |
Balance, end of period | $ 3,891 | $ 5,124 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Components of Other Identifiable Intangible Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | $ 8,415 | $ 8,415 |
Accumulated Amortization | 4,524 | 4,232 |
Core deposit intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 8,390 | 8,390 |
Accumulated Amortization | 4,500 | 4,208 |
Other customer relationship intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 25 | 25 |
Accumulated Amortization | $ 24 | $ 24 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Estimated Aggregate Amortization Expense (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||||
2022 | $ 813 | |||
2023 | 935 | |||
2024 | 766 | |||
2025 | 596 | |||
2026 | 427 | |||
Thereafter | 354 | |||
Total | $ 3,891 | $ 4,183 | $ 5,124 | $ 5,458 |
SHARE-BASED COMPENSATION PLANS - Summary of Nonvested Restricted Shares Activity (Details) - Orrstown 2011 Incentive Stock Plan - Restricted Stock |
3 Months Ended |
---|---|
Mar. 31, 2022
$ / shares
shares
| |
Shares | |
Nonvested shares, beginning of year (in shares) | shares | 274,697 |
Granted (in shares) | shares | 121,949 |
Forfeited (in shares) | shares | (10,622) |
Vested (in usd per share) | shares | (54,054) |
Nonvested shares, at period end (in shares) | shares | 331,970 |
Weighted Average Grant Date Fair Value | |
Nonvested shares, beginning of year (in usd per share) | $ / shares | $ 20.05 |
Granted (in usd per share) | $ / shares | 25.02 |
Forfeited (in usd per share) | $ / shares | 20.02 |
Vested (in usd per share) | $ / shares | 19.31 |
Nonvested shares, at period end (in usd per share) | $ / shares | $ 22.00 |
SHARE-BASED COMPENSATION PLANS - Schedule of Restricted Shares Compensation Expense (Details) - Orrstown 2011 Incentive Stock Plan - Restricted Stock - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted share award expense | $ 330 | $ 434 |
Restricted share award tax benefit | 69 | 91 |
Fair value of shares vested | $ 1,324 | $ 1,028 |
SHARE-BASED COMPENSATION PLANS - Schedule of Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||
Shares purchased (in shares) | 3,953 | 5,484 |
Weighted average price of shares purchased (in usd per share) | $ 22.46 | $ 13.44 |
Compensation expense recognized | $ 8 | $ 33 |
SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Apr. 18, 2022 |
Mar. 31, 2022 |
Apr. 19, 2021 |
Sep. 30, 2015 |
|
Equity, Class of Treasury Stock [Line Items] | ||||
Number of shares authorized to be repurchased (in shares) | 416,000 | |||
Stock repurchase program, additional number of shares authorized to be repurchased | 562,000 | |||
Acquisition of treasury stock (in shares) | 415,805 | |||
Acquisition of treasury stock | $ 8.9 | |||
Acquisition of treasury stock (in usd per share) | $ 21.35 | |||
Stock repurchase program, shares available for future repurchase | 562,195 | |||
Stock repurchase program percentage of outstanding shares of common stock available for future purchase | 5.00% | |||
Subsequent Event | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Dividends declared per share (in usd per share) | $ 0.19 | |||
Maximum | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Stock repurchase program authorized, maximum percentage of outstanding shares of common stock | 5.00% |
EARNINGS PER SHARE - Calculation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 8,368 | $ 10,207 |
Weighted average shares outstanding - basic (in shares) | 10,860 | 10,975 |
Dilutive effect of share-based compensation (in shares) | 147 | 99 |
Weighted average shares outstanding - diluted (in shares) | 11,007 | 11,074 |
Per share information: | ||
Basic earnings per share (in usd per share) | $ 0.77 | $ 0.93 |
Diluted earnings per share (in usd per share) | $ 0.76 | $ 0.92 |
EARNINGS PER SHARE - Narrative (Detail) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Earnings Per Share [Abstract] | ||
Average outstanding options excluded from diluted earnings per share (in shares) | 112,223 | 0 |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Reserve for off-balance sheet credit exposures | $ 1,600 | $ 1,600 |
Home equity lines of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 273,734 | 261,580 |
1-4 family residential construction loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 56,330 | 40,348 |
Commercial real estate, construction and land development loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 142,301 | 124,488 |
Commercial, industrial and other loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 368,199 | 378,996 |
Standby letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | $ 20,772 | $ 19,724 |
FAIR VALUE - Level 3 Fair Value Measurement Activity (Details) - Level 3 - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Interest rate lock commitments on residential mortgages | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of period | $ 353 | $ 673 |
OTTI/losses included in earnings | (53) | (1) |
Balance, end of period | 300 | 672 |
Collateralized Mortgage Obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of period | 23,147 | 31,503 |
Unrealized loss included in OCI | (1,360) | (665) |
Net discount accretion | 71 | 129 |
Principal payments and other | 0 | (1,858) |
Sales | (3,053) | (3,545) |
OTTI/losses included in earnings | (171) | 0 |
Balance, end of period | $ 18,634 | $ 25,564 |
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