☒ | 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 |
Pennsylvania | 38-3917371 | |
(State of incorporation) | (IRS Employer Identification Number) | |
3901 North Front Street, Harrisburg, PA | 17110 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock | RIVE | Nasdaq Global Market |
Contents | |||||||||
Page No. | |||||||||
PART I. | FINANCIAL INFORMATION: | ||||||||
Item 1. | Financial Statements (Unaudited) | ||||||||
3 | |||||||||
4 | |||||||||
5 | |||||||||
6 | |||||||||
7 | |||||||||
Item 2. | 26 | ||||||||
Item 3. | |||||||||
42 | |||||||||
Item 4. | Controls and Procedures | 42 | |||||||
PART II | OTHER INFORMATION: | ||||||||
Item 1. | 42 | ||||||||
Item 1A. | 42 | ||||||||
Item 2. | 42 | ||||||||
Item 3. | 42 | ||||||||
Item 4. | 42 | ||||||||
Item 5. | 42 | ||||||||
Item 6. | 43 | ||||||||
44 |
June 30, 2020 | December 31, 2019 | |||||||
Assets: | ||||||||
Cash and due from banks | $ | 10,195 | $ | 11,838 | ||||
Interest-bearing deposits in other banks | 33,033 | 38,510 | ||||||
Investment securities available-for-sale | 74,134 | 91,247 | ||||||
Loans held for sale | 4,252 | 81 | ||||||
Loans, net | 1,165,453 | 852,109 | ||||||
Less: allowance for loan losses | 9,736 | 7,516 | ||||||
Net loans | 1,155,717 | 844,593 | ||||||
Premises and equipment, net | 18,668 | 17,852 | ||||||
Accrued interest receivable | 1,826 | 2,414 | ||||||
Goodwill | 24,754 | |||||||
Intangible assets | 2,397 | 2,736 | ||||||
Other assets | 46,578 | 45,929 | ||||||
Total assets | $ | 1,346,800 | $ | 1,079,954 | ||||
Liabilities: | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 173,567 | $ | 147,405 | ||||
Interest-bearing | 849,586 | 793,075 | ||||||
Total deposits | 1,023,153 | 940,480 | ||||||
Short-term borrowings | ||||||||
Long-term debt | 217,010 | 6,971 | ||||||
Accrued interest payable | 457 | 435 | ||||||
Other liabilities | 11,728 | 13,958 | ||||||
Total liabilities | 1,252,348 | 961,844 | ||||||
Stockholders’ equity: | ||||||||
Common stock: 0 par value, authorized 20,000,000 shares; June 30, 2020, issued and outstanding 9,263,697 shares; December 31, 2019, issued and outstanding 9,216,616 shares | 102,552 | 102,206 | ||||||
Capital surplus | 161 | 112 | ||||||
Retained earnings (accumulated deficit) | (8,735 | ) | 16,140 | |||||
Accumulated other comprehensive income ( loss) | 474 | (348 | ) | |||||
Total stockholders’ equity | 94,452 | 118,110 | ||||||
Total liabilities and stockholders’ equity | $ | 1,346,800 | $ | 1,079,954 | ||||
September 30, 2020 | December 31, 2019 | |||||||
Assets: | ||||||||
Cash and due from banks | $ | 10,646 | $ | 11,838 | ||||
Interest-bearing deposits in other banks | 21,312 | 38,510 | ||||||
Investment securities available-for-sale | 98,846 | 91,247 | ||||||
Loans held for sale | 4,547 | 81 | ||||||
Loans, net | 1,163,442 | 852,109 | ||||||
Less: allowance for loan losses | 11,624 | 7,516 | ||||||
Net loans | 1,151,818 | 844,593 | ||||||
Premises and equipment, net | 18,419 | 17,852 | ||||||
Accrued interest receivable | 3,218 | 2,414 | ||||||
Goodwill | 24,754 | |||||||
Intangible assets | 2,227 | 2,736 | ||||||
Other assets | 45,739 | 45,929 | ||||||
Total assets | $ | 1,356,772 | $ | 1,079,954 | ||||
Liabilities: | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 178,168 | $ | 147,405 | ||||
Interest-bearing | 853,145 | 793,075 | ||||||
Total deposits | 1,031,313 | 940,480 | ||||||
Short-term borrowings | ||||||||
Long-term debt | 217,031 | 6,971 | ||||||
Accrued interest payable | 591 | 435 | ||||||
Other liabilities | 12,413 | 13,958 | ||||||
Total liabilities | 1,261,348 | 961,844 | ||||||
Stockholders’ equity: | ||||||||
Common stock: 0 par value, authorized 20,000,000 shares; September 30, 2020, issued and outstanding 9,279,503 shares; December 31, 2019, issued and outstanding 9,216,616 shares | 102,672 | 102,206 | ||||||
Capital surplus | 190 | 112 | ||||||
Retained earnings (accumulated deficit) | (8,040 | ) | 16,140 | |||||
Accumulated other comprehensive income (loss) | 602 | (348 | ) | |||||
Total stockholders’ equity | 95,424 | 118,110 | ||||||
Total liabilities and stockholders’ equity | $ | 1,356,772 | $ | 1,079,954 | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Interest income: | ||||||||||||||||
Interest and fees on loans: | ||||||||||||||||
Taxable | $ | 10,602 | $ | 11,680 | $ | 20,384 | $ | 22,368 | ||||||||
Tax-exempt | 236 | 233 | 481 | 463 | ||||||||||||
Interest and dividends on investment securities available-for-sale: | ||||||||||||||||
Taxable | 396 | 732 | 931 | 1,472 | ||||||||||||
Tax-exempt | 68 | 47 | 105 | 116 | ||||||||||||
Interest on interest-bearing deposits in other banks | 12 | 216 | 101 | 447 | ||||||||||||
Total interest income | 11,314 | 12,908 | 22,002 | 24,866 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on deposits | 1,395 | 2,099 | 3,184 | 4,172 | ||||||||||||
Interest on short-term borrowings | 23 | 28 | ||||||||||||||
Interest on long-term debt | 225 | 131 | 348 | 265 | ||||||||||||
Total interest expense | 1,643 | 2,230 | 3,560 | 4,437 | ||||||||||||
Net interest income | 9,671 | 10,678 | 18,442 | 20,429 | ||||||||||||
Provision for loan losses | 2,012 | 618 | 3,812 | 1,201 | ||||||||||||
Net interest income after provision for loan losses | 7,659 | 10,060 | 14,630 | 19,228 | ||||||||||||
Noninterest income: | ||||||||||||||||
Service charges, fees and commissions | 1,011 | 1,315 | 2,392 | 2,368 | ||||||||||||
Commission and fees on fiduciary activities | 210 | 281 | 423 | 541 | ||||||||||||
Wealth management income | 196 | 236 | 416 | 483 | ||||||||||||
Mortgage banking income | 391 | 100 | 499 | 206 | ||||||||||||
Bank owned life insurance investment income | 193 | 194 | 386 | 381 | ||||||||||||
Net gain (loss) on sale of investment securities available-for-sale | 815 | (42 | ) | |||||||||||||
Total noninterest income | 2,001 | 2,126 | 4,931 | 3,937 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits expense | 4,985 | 5,830 | 10,041 | 13,340 | ||||||||||||
Net occupancy and equipment expense | 1,068 | 1,044 | 2,248 | 2,133 | ||||||||||||
Amortization of intangible assets | 169 | 194 | 339 | 388 | ||||||||||||
Goodwill impairment | 24,754 | 24,754 | ||||||||||||||
Net cost (benefit) of operation of other real estate owned | (92 | ) | (11 | ) | 35 | |||||||||||
Other expenses | 2,978 | 3,508 | 5,795 | 6,552 | ||||||||||||
Total noninterest expense | 33,954 | 10,484 | 43,166 | 22,448 | ||||||||||||
Income before income taxes | (24,294 | ) | 1,702 | (23,605 | ) | 717 | ||||||||||
Income tax expense (benefit) | (172 | ) | 268 | (116 | ) | (30 | ) | |||||||||
Net income (loss) | (24,122 | ) | 1,434 | (23,489 | ) | 747 | ||||||||||
Other comprehensive income: | ||||||||||||||||
Unrealized gain on investment securities available-for-sale | 840 | 1,936 | 1,893 | 2,959 | ||||||||||||
Reclassification adjustment for net (gain) loss on sale of investment securities available-for-sale | (815 | ) | 42 | |||||||||||||
Net change in derivative fair value | (38 | ) | (38 | ) | ||||||||||||
Other comprehensive income | 802 | 1,936 | 1,040 | 3,001 | ||||||||||||
Income tax expense related to other comprehensive income | 168 | 406 | 218 | 630 | ||||||||||||
Other comprehensive income, net of income taxes | 634 | 1,530 | 822 | 2,371 | ||||||||||||
Comprehensive income (loss) | $ | (23,488 | ) | $ | 2,964 | $ | (22,667 | ) | $ | 3,118 | ||||||
Per share data: | ||||||||||||||||
Net income (loss): | ||||||||||||||||
Basic | $ | (2.61 | ) | $ | 0.16 | $ | (2.54 | ) | $ | 0.08 | ||||||
Diluted | $ | (2.61 | ) | $ | 0.16 | $ | (2.54 | ) | $ | 0.08 | ||||||
Average common shares outstanding: | ||||||||||||||||
Basic | 9,249,184 | 9,160,290 | 9,236,314 | 9,151,850 | ||||||||||||
Diluted | 9,249,184 | 9,172,992 | 9,236,314 | 9,167,409 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Interest income: | ||||||||||||||||
Interest and fees on loans: | ||||||||||||||||
Taxable | $ | 11,265 | $ | 12,283 | $ | 31,649 | $ | 34,651 | ||||||||
Tax-exempt | 223 | 259 | 704 | 722 | ||||||||||||
Interest and dividends on investment securities available-for-sale: | ||||||||||||||||
Taxable | 360 | 641 | 1,291 | 2,113 | ||||||||||||
Tax-exempt | 71 | 43 | 176 | 159 | ||||||||||||
Interest on interest-bearing deposits in other banks | 11 | 200 | 112 | 647 | ||||||||||||
Total interest income | 11,930 | 13,426 | 33,932 | 38,292 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on deposits | 1,200 | 2,027 | 4,384 | 6,199 | ||||||||||||
Interest on short-term borrowings | 28 | |||||||||||||||
Interest on long-term debt | 304 | 127 | 652 | 392 | ||||||||||||
Total interest expense | 1,504 | 2,154 | 5,064 | 6,591 | ||||||||||||
Net interest income | 10,426 | 11,272 | 28,868 | 31,701 | ||||||||||||
Provision for loan losses | 1,844 | 1,049 | 5,656 | 2,250 | ||||||||||||
Net interest income after provision for loan losses | 8,582 | 10,223 | 23,212 | 29,451 | ||||||||||||
Noninterest income: | ||||||||||||||||
Service charges, fees and commissions | 1,099 | 1,129 | 3,491 | 3,497 | ||||||||||||
Commission and fees on fiduciary activities | 246 | 314 | 669 | 855 | ||||||||||||
Wealth management income | 220 | 226 | 636 | 709 | ||||||||||||
Mortgage banking income | 401 | 151 | 900 | 357 | ||||||||||||
Bank owned life insurance investment income | 192 | 193 | 578 | 574 | ||||||||||||
Net gain (loss) on sale of investment securities available-for-sale | (53 | ) | 815 | (95 | ) | |||||||||||
Total noninterest income | 2,158 | 1,960 | 7,089 | 5,897 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits expense | 5,411 | 5,232 | 15,452 | 18,572 | ||||||||||||
Net occupancy and equipment expense | 1,428 | 1,041 | 3,676 | 3,174 | ||||||||||||
Amortization of intangible assets | 170 | 194 | 509 | 582 | ||||||||||||
Goodwill impairment | 24,754 | |||||||||||||||
Net cost (benefit) of operation of other real estate owned | 51 | (15 | ) | 40 | 20 | |||||||||||
Other expenses | 2,918 | 2,979 | 8,713 | 9,531 | ||||||||||||
Total noninterest expense | 9,978 | 9,431 | 53,144 | 31,879 | ||||||||||||
Income (loss) before income taxes | 762 | 2,752 | (22,843 | ) | 3,469 | |||||||||||
Income tax expense (benefit) | 67 | 486 | (49 | ) | 456 | |||||||||||
Net income (loss) | 695 | 2,266 | (22,794 | ) | 3,013 | |||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized (gain) loss on investment securities available-for-sale | 114 | (256 | ) | 2,007 | 2,703 | |||||||||||
Reclassification adjustment for net (gain) loss on sale of investment securities available-for-sale | 53 | (815 | ) | 95 | ||||||||||||
Net change in derivative fair value | 49 | 11 | ||||||||||||||
Other comprehensive income (loss) | 163 | (203 | ) | 1,203 | 2,798 | |||||||||||
Income tax expense (benefit) related to other comprehensive income | 35 | (42 | ) | 253 | 588 | |||||||||||
Other comprehensive income (loss), net of income taxes | 128 | (161 | ) | 950 | 2,210 | |||||||||||
Comprehensive income (loss) | $ | 823 | $ | 2,105 | $ | (21,844 | ) | $ | 5,223 | |||||||
Per share data: | ||||||||||||||||
Net income (loss): | ||||||||||||||||
Basic | $ | 0.08 | $ | 0.25 | $ | (2.46 | ) | $ | 0.33 | |||||||
Diluted | $ | 0.08 | $ | 0.25 | $ | (2.46 | ) | $ | 0.33 | |||||||
Average common shares outstanding: | ||||||||||||||||
Basic | 9,273,666 | 9,173,901 | 9,248,856 | 9,159,281 | ||||||||||||
Diluted | 9,273,666 | 9,181,076 | 9,248,856 | 9,172,015 |
For the six months ended June 30, | Common Stock | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||
Balance, January 1, 2020 | $ | 102,206 | $ | 112 | $ | 16,140 | $ | (348 | ) | $ | 118,110 | |||||||||
Net income | (23,489 | ) | (23,489 | ) | ||||||||||||||||
Other comprehensive income, net of income taxes | 822 | 822 | ||||||||||||||||||
Compensation cost of option grants | ||||||||||||||||||||
Issuance under ESPP, 401k and Dividend Reinvestment plans: 47,081 shares | 346 | 346 | ||||||||||||||||||
Exercise of stock options | ||||||||||||||||||||
Stock based compensation | 49 | 49 | ||||||||||||||||||
Dividends declared, $0.15 per share | (1,386 | ) | (1,386 | ) | ||||||||||||||||
Balance, June 30, 2020 | $ | 102,552 | $ | 161 | $ | (8,735 | ) | $ | 474 | $ | 94,452 | |||||||||
Balance, January 1, 2019 | $ | 101,134 | $ | 332 | $ | 15,063 | $ | (2,619 | ) | $ | 113,910 | |||||||||
Net income | 747 | 747 | ||||||||||||||||||
Other comprehensive income (loss), net of income taxes | 2,371 | 2,371 | ||||||||||||||||||
Compensation cost of option grants | ||||||||||||||||||||
Issuance under ESPP, 401k and Dividend Reinvestment plans: 27,984 shares | 316 | 316 | ||||||||||||||||||
Exercise of stock options: 18,131 shares | 194 | (28 | ) | 166 | ||||||||||||||||
Dividends declared, $0.20 per shares | (1,832 | ) | (1,832 | ) | ||||||||||||||||
Balance, June 30, 2019 | $ | 101,644 | $ | 304 | $ | 13,978 | $ | (248 | ) | $ | 115,678 | |||||||||
For the three months ended June 30, | Common Stock | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||
Balance, April 1, 2020 | $ | 102,386 | $ | 134 | $ | 16,081 | $ | (160 | ) | $ | 118,441 | |||||||||
Net income | (24,122 | ) | (24,122 | ) | ||||||||||||||||
Other comprehensive income, net of income taxes | 634 | 634 | ||||||||||||||||||
Compensation cost of option grants | ||||||||||||||||||||
I ssuance under ESPP, 401k and Dividend Reinvestment plans:27,658 shares | 166 | 166 | ||||||||||||||||||
Exercise of stock options | ||||||||||||||||||||
Stock based compensation | 27 | 27 | ||||||||||||||||||
Dividends declared, $0.08 per share | (694 | ) | (694 | ) | ||||||||||||||||
Balance, June 30, 2020 | $ | 102,552 | $ | 161 | $ | (8,735 | ) | $ | 474 | $ | 94,452 | |||||||||
Balance, April 1, 2019 | $ | 101,500 | $ | 307 | $ | 13,461 | $ | (1,778 | ) | $ | 113,490 | |||||||||
Net income | 1,434 | 1,434 | ||||||||||||||||||
Other comprehensive income (loss), net of income taxes | 1,530 | 1,530 | ||||||||||||||||||
Compensation cost of option grants | ||||||||||||||||||||
Issuance under ESPP, 401k and Dividend Reinvestment plans: 12,761 shares | 141 | 141 | ||||||||||||||||||
Exercise of stock options: 310 shares | 3 | (3 | ) | |||||||||||||||||
Dividends declared, $0.10 per shares | (917 | ) | (917 | ) | ||||||||||||||||
Balance, June 30, 2019 | $ | 101,644 | $ | 304 | $ | 13,978 | $ | (248 | ) | $ | 115,678 | |||||||||
For the nine months ended September 30, | Common Stock | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||
Balance, January 1, 2020 | $ | 102,206 | $ | 112 | $ | 16,140 | $ | (348 | ) | $ | 118,110 | |||||||||
Net income (loss) | (22,794 | ) | (22,794 | ) | ||||||||||||||||
Other comprehensive income (loss) net of income taxes, | 950 | 950 | ||||||||||||||||||
Issuance under ESPP, 401k and Dividend Reinvestment plans: 62,887 shares | 466 | 466 | ||||||||||||||||||
Stock based compensation | 78 | 78 | ||||||||||||||||||
Dividends declared, $0.15 per share | (1,386 | ) | (1,386 | ) | ||||||||||||||||
Balance, September 30, 2020 | $ | 102,672 | $ | 190 | $ | (8,040 | ) | $ | 602 | $ | 95,424 | |||||||||
Balance, January 1, 2019 | $ | 101,134 | $ | 332 | $ | 15,063 | $ | (2,619 | ) | $ | 113,910 | |||||||||
Net income (loss) | 3,013 | 3,013 | ||||||||||||||||||
Other comprehensive income (loss), net of income taxes | 2,210 | 2,210 | ||||||||||||||||||
Issuance under ESPP, 401k and Dividend Reinvestment plans: 42,518 shares | 474 | 474 | ||||||||||||||||||
Exercise of stock options: 18,492 shares | 199 | (32 | ) | 167 | ||||||||||||||||
Dividends declared, $0.28 per shares | (2,519 | ) | (2,519 | ) | ||||||||||||||||
Balance, September 30, 2019 | $ | 101,807 | $ | 300 | $ | 15,557 | $ | (409 | ) | $ | 117,255 | |||||||||
For the three months ended September 30, | Common Stock | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||
Balance, July 1, 2020 | $ | 102,552 | $ | 161 | $ | (8,735 | ) | $ | 474 | $ | 94,452 | |||||||||
Net income (loss) | 695 | 695 | ||||||||||||||||||
Other comprehensive income (loss) net of income taxes, | 128 | 128 | ||||||||||||||||||
Issuance under ESPP, 401k and Dividend Reinvestment plans: 15,806 shares | 120 | 120 | ||||||||||||||||||
Stock based compensation | 29 | 29 | ||||||||||||||||||
Dividends declared, $0.00 per share | ||||||||||||||||||||
Balance, September 30, 2020 | $ | 102,672 | $ | 190 | $ | (8,040 | ) | $ | 602 | $ | 95,424 | |||||||||
Balance, July 1, 2019 | $ | 101,644 | $ | 304 | $ | 13,978 | $ | (248 | ) | $ | 115,678 | |||||||||
Net income (loss) | 2,266 | 2,266 | ||||||||||||||||||
Other comprehensive income (loss), net of income taxes | (161 | ) | (161 | ) | ||||||||||||||||
Issuance under ESPP, 401k and Dividend Reinvestment plans: 14,534 shares | 159 | 159 | ||||||||||||||||||
Exercise of stock options: 361 shares | 4 | (4 | ) | |||||||||||||||||
Dividends declared, $0.08 per shares | (687 | ) | (687 | ) | ||||||||||||||||
Balance, September 30, 2019 | $ | 101,807 | $ | 300 | $ | 15,557 | $ | (409 | ) | $ | 117,255 | |||||||||
For the Six Months Ended June 30, | 2020 | 2019 | ||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (23,489 | ) | $ | 747 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization of premises and equipment | 640 | 589 | ||||||
Provision for loan losses | 3,812 | 1,201 | ||||||
Stock based compensation | 49 | |||||||
Net amortization of investment securities available-for-sale | 312 | 399 | ||||||
Net cost (benefit) of operation of other real estate owned | (11 | ) | 35 | |||||
Net (gain) loss on sale of investment securities available-for-sale | (815 | ) | 42 | |||||
Amortization of purchase adjustment on loans | (292 | ) | (1,495 | ) | ||||
Amortization of intangible assets | 339 | 388 | ||||||
Amortization of assumed discount on long-term debt | 42 | 40 | ||||||
Impairment of goodwill | 24,754 | |||||||
Deferred income taxes | (465 | ) | (111 | ) | ||||
Proceeds from sale of loans originated for sale | 13,557 | 7,599 | ||||||
Net gain on sale of loans originated for sale | (499 | ) | (206 | ) | ||||
Loans originated for sale | (17,229 | ) | (6,926 | ) | ||||
Bank owned life insurance investment income | (386 | ) | (381 | ) | ||||
Net change in: | ||||||||
Accrued interest receivable | 588 | 140 | ||||||
Other assets | 1,028 | (1,169 | ) | |||||
Accrued interest payable | 22 | (39 | ) | |||||
Other liabilities | (2,230 | ) | 1,107 | |||||
Net cash provided by (used in) operating activities | (273 | ) | 1,960 | |||||
Cash flows from investing activities: | ||||||||
Investment securities available-for-sale: | ||||||||
Purchases | (14,215 | ) | (10,485 | ) | ||||
Proceeds from repayments | 5,741 | 8,728 | ||||||
Proceeds from sales | 27,168 | 8,740 | ||||||
Proceeds from the sale of other real estate owned | 68 | 627 | ||||||
Net (increase) decrease in restricted equity securities | (779 | ) | 119 | |||||
Net (increase) decrease in loans | (314,982 | ) | 4,800 | |||||
Purchases of premises and equipment | (1,456 | ) | (1,065 | ) | ||||
Premium paid on bank owned life insurance | (22 | ) | (22 | ) | ||||
Net cash provided by (used in) investing activities | (298,477 | ) | 11,442 | |||||
Cash flows from financing activities: | ||||||||
Net increase (decrease) in deposits | 82,673 | (24,893 | ) | |||||
Proceeds from long-term debt | 209,997 | |||||||
Issuance under ESPP, 401k and DRP plans | 346 | 316 | ||||||
Proceeds from exercise of stock options | 166 | |||||||
Cash dividends paid | (1,386 | ) | (1,832 | ) | ||||
Net cash provided by (used in) financing activities | 291,630 | (26,243 | ) | |||||
Net increase in cash and cash equivalents | (7,120 | ) | (12,841 | ) | ||||
Cash and cash equivalents—beginning | 50,348 | 53,816 | ||||||
Cash and cash equivalents—ending | $ | 43,228 | $ | 40,975 | ||||
Supplemental disclosures: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 3,538 | $ | 4,476 | ||||
Noncash items from operating activities: | ||||||||
Operating lease right-of-use | $ | 4,612 | ||||||
Noncash items from investing activities: | ||||||||
Transfer of owned properties to available for sale | $ | 540 | ||||||
Supplemental schedule of noncash investing and financing activities: | ||||||||
Other real estate acquired in settlement of loans | $ | 338 | $ | 27 | ||||
For the Nine Months Ended September 30, | 2020 | 2019 | ||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (22,794 | ) | $ | 3,013 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization of premises and equipment | 952 | 874 | ||||||
Provision for loan losses | 5,656 | 2,250 | ||||||
Stock based compensation | 78 | |||||||
Net amortization of investment securities available-for-sale | 559 | 576 | ||||||
Net cost (benefit) of operation of other real estate owned | 40 | 20 | ||||||
Net (gain) loss on sale of investment securities available-for-sale | (815 | ) | 95 | |||||
Amortization of purchase adjustment on loans | (592 | ) | (2,868 | ) | ||||
Amortization of intangible assets | 509 | 582 | ||||||
Amortization of assumed discount on long-term debt | 63 | 59 | ||||||
Impairment of goodwill | 24,754 | |||||||
Deferred income taxes | (779 | ) | 273 | |||||
Proceeds from sale of loans originated for sale | 26,921 | 10,335 | ||||||
Net gain on sale of loans originated for sale | (900 | ) | (357 | ) | ||||
Loans originated for sale | (30,487 | ) | (9,677 | ) | ||||
Bank owned life insurance investment income | (578 | ) | (574 | ) | ||||
Net change in: | ||||||||
Accrued interest receivable | (804 | ) | 259 | |||||
Other assets | 2,107 | (1,651 | ) | |||||
Accrued interest payable | 156 | (52 | ) | |||||
Other liabilities | (1,545 | ) | (715 | ) | ||||
Net cash provided by (used in) operating activities | 2,501 | 2,442 | ||||||
Cash flows from investing activities: | ||||||||
Investment securities available-for-sale: | ||||||||
Purchases | (42,151 | ) | (32,058 | ) | ||||
Proceeds from repayments | 8,832 | 12,458 | ||||||
Proceeds from sales | 27,168 | 19,767 | ||||||
Proceeds from the sale of other real estate owned | 355 | 728 | ||||||
Net (increase) decrease in restricted equity securities | (837 | ) | (12 | ) | ||||
Net (increase) decrease in loans | (312,627 | ) | 10,931 | |||||
Purchases of premises and equipment | (1,519 | ) | (1,321 | ) | ||||
Premium paid on bank owned life insurance | (22 | ) | (22 | ) | ||||
Net cash provided by (used in) investing activities | (320,801 | ) | 10,471 | |||||
Cash flows from financing activities: | ||||||||
Net increase (decrease) in deposits | 90,833 | (35,010 | ) | |||||
Proceeds from long-term debt | 209,997 | |||||||
Issuance under ESPP, 401k and DRP plans | 466 | 474 | ||||||
Proceeds from exercise of stock options | 167 | |||||||
Cash dividends paid | (1,386 | ) | (2,519 | ) | ||||
Net cash provided by (used in) financing activities | 299,910 | (36,888 | ) | |||||
Net increase in cash and cash equivalents | (18,390 | ) | (23,975 | ) | ||||
Cash and cash equivalents—beginning | 50,348 | 53,816 | ||||||
Cash and cash equivalents—ending | $ | 31,958 | $ | 29,841 | ||||
Supplemental disclosures: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 4,908 | $ | 6,643 | ||||
Noncash items from operating activities: | ||||||||
Operating lease right-of-use | $ | 4,529 | ||||||
Noncash items from investing activities: | ||||||||
Transfer of owned properties to available for sale | $ | 540 | ||||||
Supplemental schedule of noncash investing and financing activities: | ||||||||
Other real estate acquired in settlement of loans | $ | 338 | $ | 114 | ||||
June 30, 2020 | December 31, 2019 | |||||||
Net unrealized loss on investment securities available-for-sale | $ | 1,754 | $ | 676 | ||||
Income tax expense | 368 | 142 | ||||||
Net of income taxes | 1,386 | 534 | ||||||
Benefit plan adjustments | (1,117 | ) | (1,117 | ) | ||||
Income tax benefit | (235 | ) | (235 | ) | ||||
Net of income taxes | (882 | ) | (882 | ) | ||||
Derivative fair value adjustment | (38 | ) | ||||||
Income tax benefit | (8 | ) | ||||||
Net of income taxes | (30 | ) | ||||||
Accumulated other comprehensive income (loss) | $ | 474 | $ | (348 | ) | |||
September 30, 2020 | December 31, 2019 | |||||||
Net unrealized gain ( loss) on investment securitiesavailable-for-sale | $ | 1,868 | $ | 676 | ||||
Income tax expense | 392 | 142 | ||||||
Net of income taxes | 1,476 | 534 | ||||||
Benefit plan adjustments | (1,117 | ) | (1,117 | ) | ||||
Income tax benefit | (235 | ) | (235 | ) | ||||
Net of income taxes | (882 | ) | (882 | ) | ||||
Derivative fair value adjustment | 11 | |||||||
Income tax benefit | 3 | |||||||
Net of income taxes | 8 | |||||||
Accumulated other comprehensive income (loss) | $ | 602 | $ | (348 | ) | |||
Three months ended June 30, | 2020 | 2019 | ||||||
Unrealized gain (loss) on investment securities available-for-sale | $ | 840 | $ | 1,936 | ||||
Net (gain) loss on the sale of investment securities available-for-sale (1) | ||||||||
Net change in derivative fair value | (38 | ) | ||||||
Other comprehensive income before taxes | 802 | 1,936 | ||||||
Income tax expense | 168 | 406 | ||||||
Other comprehensive income | $ | 634 | $ | 1,530 | ||||
Three months ended September 30, | 2020 | 2019 | ||||||
Unrealized gain (loss) on investment securities available-for-sale | $ | 114 | $ | (256 | ) | |||
Net (gain) loss on the sale of investment securities available-for-sale (1) | 53 | |||||||
Net change in derivative fair value | 49 | |||||||
Other comprehensive income (loss) before taxes | 163 | (203 | ) | |||||
Income tax expense (benefit) | 35 | (42 | ) | |||||
Other comprehensive income (loss) | $ | 128 | $ | (161 | ) | |||
Six months ended June 30, | 2020 | 2019 | ||||||
Unrealized gain (loss) on investment securities available-for-sale | $ | 1,893 | $ | 2,959 | ||||
Net (gain) loss on the sale of investment securities available-for-sale (1) | (815 | ) | 42 | |||||
Net change in derivative fair value | (38 | ) | ||||||
Other comprehensive income before taxes | 1,040 | 3,001 | ||||||
Income tax expense | 218 | 630 | ||||||
Other comprehensive income | $ | 822 | $ | 2,371 | ||||
Nine months ended September 30, | 2020 | 2019 | ||||||
Unrealized gain on investment securities available-for-sale | $ | 2,007 | $ | 2,703 | ||||
Net (gain) loss on the sale of investment securities available-for-sale (1) | (815 | ) | 95 | |||||
Net change in derivative fair value | 11 | |||||||
Other comprehensive income before taxes | 1,203 | 2,798 | ||||||
Income tax expense | 253 | 588 | ||||||
Other comprehensive income | $ | 950 | $ | 2,210 | ||||
(1) | Represents amounts reclassified out of accumulated other comprehensive income and included in gains on sale of investment securities on the consolidated statements of income and comprehensive income. |
Three months ended June 30, | 2020 | 2019 | ||||||
Numerator: | ||||||||
Net income (loss) | $ | (24,122) | $ | 1,434 | ||||
Denominator: | ||||||||
Basic | 9,249,184 | 9,160,290 | ||||||
Dilutive options | 12,702 | |||||||
Diluted | 9,249,184 | 9,172,992 | ||||||
Earnings per share: | ||||||||
Basic | $ | (2.61 | ) | $ | 0.16 | |||
Diluted | $ | (2.61 | ) | $ | 0.16 |
Three months ended September 30, | 2020 | 2019 | ||||||
Numerator: | ||||||||
Net income | $ | 695 | $ | 2,266 | ||||
Denominator: | ||||||||
Basic | 9,273,666 | 9,173,901 | ||||||
Dilutive options | 7,175 | |||||||
Diluted | 9,273,666 | 9,181,076 | ||||||
Earnings per share: | ||||||||
Basic | $ | 0.08 | $ | 0.25 | ||||
Diluted | $ | 0.08 | $ | 0.25 |
Six months ended June 30, | 2020 | 2019 | ||||||
Numerator: | ||||||||
Net income (loss) | $ | (23,489 | ) | $ | 747 | |||
Denominator: | ||||||||
Basic | 9,236,314 | 9,151,850 | ||||||
Dilutive options | 15,559 | |||||||
Diluted | 9,236,314 | 9,167,409 | ||||||
Earnings per share: | ||||||||
Basic | $ | (2.54 | ) | $ | 0.08 | |||
Diluted | $ | (2.54 | ) | $ | 0.08 |
Nine months ended September 30, | 2020 | 2019 | ||||||
Numerator: | ||||||||
Net income (loss) | $ | (22,794 | ) | $ | 3,013 | |||
Denominator: | ||||||||
Basic | 9,248,856 | 9,159,281 | ||||||
Dilutive options | 12,734 | |||||||
Diluted | 9,248,856 | 9,172,015 | ||||||
Earnings per share: | ||||||||
Basic | $ | (2.46 | ) | $ | 0.33 | |||
Diluted | $ | (2.46 | ) | $ | 0.33 |
June 30, 2020 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
State and municipals: | ||||||||||||||||
Taxable | $ | 9,491 | $ | 288 | $ | 6 | $ | 9,773 | ||||||||
Tax-exempt | 8,430 | 361 | 8,791 | |||||||||||||
Mortgage-backed securities: | ||||||||||||||||
U.S. Government agencies | 27,740 | 755 | 28,495 | |||||||||||||
U.S. Government-sponsored enterprises | 23,219 | 584 | 23,803 | |||||||||||||
Corporate debt obligations | 3,500 | 228 | 3,272 | |||||||||||||
Total | $ | 72,380 | $ | 1,988 | $ | 234 | $ | 74,134 | ||||||||
September 30, 2020 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
State and municipals: | ||||||||||||||||
Taxable | $ | 20,483 | $ | 392 | $ | 34 | $ | 20,841 | ||||||||
Tax-exempt | 20,523 | 358 | 44 | 20,837 | ||||||||||||
Mortgage-backed securities: | ||||||||||||||||
U.S. Government agencies | 26,792 | 835 | 27,627 | |||||||||||||
U.S. Government-sponsored enterprises | 23,180 | 505 | 20 | 23,665 | ||||||||||||
Corporate debt obligations | 6,000 | 9 | 133 | 5,876 | ||||||||||||
Total | $ | 96,978 | $ | 2,099 | $ | 231 | $ | 98,846 | ||||||||
December 31, 2019 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
State and municipals: | ||||||||||||||||
Taxable | $ | 24,365 | $ | 466 | $ | 7 | $ | 24,824 | ||||||||
Tax-exempt | 4,260 | 73 | 4,333 | |||||||||||||
Mortgage-backed securities: | ||||||||||||||||
U.S. Government agencies | 36,024 | 294 | 184 | 36,134 | ||||||||||||
U.S. Government-sponsored enterprises | 22,422 | 265 | 42 | 22,645 | ||||||||||||
Corporate debt obligations | 3,500 | 189 | 3,311 | |||||||||||||
Total | $ | 90,571 | $ | 1,098 | $ | 422 | $ | 91,247 |
June 30, 2020 | Fair Value | |||
Within one year | $ | 251 | ||
After one but within five years | 5,734 | |||
After five but within ten years | 6,909 | |||
After ten years | 8,942 | |||
21,836 | ||||
Mortgage-backed securities | 52,298 | |||
Total | $ | 74,134 | ||
September 30, 2020 | Fair Value | |||
Within one year | $ | 543 | ||
After one but within five years | 5,623 | |||
After five but within ten years | 11,290 | |||
After ten years | 30,099 | |||
47,555 | ||||
Mortgage-backed securities | 51,291 | |||
Total | $ | 98,846 | ||
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
June 30, 2020 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
State and municipals: | ||||||||||||||||||||||||
Taxable | $ | 1,347 | $ | 6 | $ | $ | $ | 1,347 | $ | 6 | ||||||||||||||
Tax-exempt | ||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
U.S. Government agencies | ||||||||||||||||||||||||
U.S. Government-sponsored enterprises | ||||||||||||||||||||||||
Corporate debt obligation | 3,273 | 228 | 3,273 | 228 | ||||||||||||||||||||
Total | $ | 1,347 | $ | 6 | $ | 3,273 | $ | 228 | $ | 4,619 | $ | 234 | ||||||||||||
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
September 30, 2020 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
State and municipals: | ||||||||||||||||||||||||
Taxable | $ | 6,082 | $ | 33 | $ | 280 | $ | 1 | $ | 6,362 | $ | 34 | ||||||||||||
Tax-exempt | 9,040 | 44 | 9,040 | 44 | ||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
U.S. Government agencies | ||||||||||||||||||||||||
U.S. Government-sponsored enterprises | 5,312 | 20 | 5,312 | 20 | ||||||||||||||||||||
Corporate debt obligations | 3,367 | 133 | 3,367 | 133 | ||||||||||||||||||||
Total | $ | 20,434 | $ | 97 | $ | 3,647 | $ | 134 | $ | 24,081 | $ | 231 | ||||||||||||
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
December 31, 2019 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
State and municipals: | ||||||||||||||||||||||||
Taxable | $ | 1,280 | $ | 7 | $ | $ | $ | 1,280 | $ | 7 | ||||||||||||||
Tax-exempt | ||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
U.S. Government agencies | 15,799 | 184 | 15,799 | 184 | ||||||||||||||||||||
U.S. Government-sponsored enterprises | 3,245 | 42 | 3,245 | 42 | ||||||||||||||||||||
Corporate debt obligations | 3,311 | 189 | 3,311 | 189 | ||||||||||||||||||||
Total | $ | 17,079 | $ | 191 | $ | 6,556 | $ | 231 | $ | 23,635 | $ | 422 | ||||||||||||
June 30, 2020 | December 31, 2019 | September 30, 2020 | December 31, 2019 | |||||||||||||
Commercial | $ | 380,998 | $ | 118,658 | $ | 382,518 | $ | 118,658 | ||||||||
Real estate: | ||||||||||||||||
Construction | 79,299 | 61,831 | 64,322 | 61,831 | ||||||||||||
Commercial | 494,642 | 455,901 | 507,795 | 455,901 | ||||||||||||
Residential | 203,752 | 207,354 | 202,132 | 207,354 | ||||||||||||
Consumer | 6,762 | 8,365 | 6,675 | 8,365 | ||||||||||||
Total | $ | 1,165,453 | $ | 852,109 | $ | 1,163,442 | $ | 852,109 | ||||||||
Real Estate | Real Estate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2020 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2020 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning Balance, April 1, 2020 | $ | 1,671 | $ | 695 | $ | 3,917 | $ | 1,713 | $ | 152 | $ | 103 | $ | 8,251 | ||||||||||||||||||||||||||||||||||||||||||
Beginning Balance, July 1, 2020 | $ | 1,685 | $ | 741 | $ | 5,078 | $ | 2,070 | $ | 162 | $ | $ | 9,736 | |||||||||||||||||||||||||||||||||||||||||||
Charge-offs | (501 | ) | (2 | ) | (71 | ) | (574 | ) | (42 | ) | (42 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Recoveries | 7 | 2 | 1 | 37 | 47 | 2 | 57 | 27 | 86 | |||||||||||||||||||||||||||||||||||||||||||||||
Provisions | 7 | 46 | 1,660 | 358 | 44 | (103 | ) | 2,012 | 173 | 145 | 1,015 | 490 | 21 | 1,844 | ||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 1,685 | $ | 741 | $ | 5,078 | $ | 2,070 | $ | 162 | $ | $ | 9,736 | $ | 1,860 | $ | 886 | $ | 6,150 | $ | 2,560 | $ | 168 | $ | $ | 11,624 | ||||||||||||||||||||||||||||||
Real Estate | Real Estate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2020 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2020 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning Balance, January 1, 2020 | $ | 1,953 | $ | 473 | $ | 3,115 | $ | 1,820 | $ | 155 | $ | $ | 7,516 | $ | 1,953 | $ | 473 | $ | 3,115 | $ | 1,820 | $ | 155 | $ | $ | 7,516 | ||||||||||||||||||||||||||||||
Charge-offs | (899 | ) | (595 | ) | (2 | ) | (201 | ) | (1,697 | ) | (899 | ) | (595 | ) | (2 | ) | (243 | ) | (1,739 | ) | ||||||||||||||||||||||||||||||||||||
Recoveries | 9 | 2 | 1 | 93 | 105 | 11 | 59 | 1 | 120 | 191 | ||||||||||||||||||||||||||||||||||||||||||||||
Provisions | 622 | 268 | 2,556 | 251 | 115 | 3,812 | 795 | 413 | 3,571 | 741 | 136 | 5,656 | ||||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 1,685 | $ | 741 | $ | 5,078 | $ | 2,070 | $ | 162 | $ | $ | 9,736 | $ | 1,860 | $ | 886 | $ | 6,150 | $ | 2,560 | $ | 168 | $ | $ | 11,624 | ||||||||||||||||||||||||||||||
Real Estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2019 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning Balance, April 1, 2019 | $ | 1,023 | $ | 281 | $ | 3,459 | $ | 1,566 | $ | 157 | $ | $ | 6,486 | |||||||||||||||||||||||||||||||||||||||||||
Charge-off | (13 | ) | (20 | ) | (109 | ) | (142 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | 6 | 1 | 2 | 31 | 40 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Provisions | 101 | 210 | 131 | 101 | 75 | 618 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 1,117 | $ | 491 | $ | 3,591 | $ | 1,649 | $ | 154 | $ | $ | 7,002 | |||||||||||||||||||||||||||||||||||||||||||
Real Estate | ||||||||||||||||||||||||||||
September 30, 2019 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||
Beginning Balance, July 1, 2019 | $ | 1,117 | $ | 491 | $ | 3,591 | $ | 1,649 | $ | 154 | $ | $ | 7,002 | |||||||||||||||
Charge-off | (759 | ) | (110 | ) | (5 | ) | (111 | ) | (985 | ) | ||||||||||||||||||
Recoveries | 1 | 2 | 28 | 31 | ||||||||||||||||||||||||
Provisions | 876 | 30 | 95 | (28 | ) | 74 | 2 | 1,049 | ||||||||||||||||||||
Ending balance | $ | 1,235 | $ | 521 | $ | 3,578 | $ | 1,616 | $ | 145 | $ | 2 | $ | 7,097 | ||||||||||||||
Real Estate | ||||||||||||||||||||||||||||
September 30, 2019 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||
Beginning Balance, January 1, 2019 | $ | 1,162 | $ | 404 | $ | 3,298 | $ | 1,286 | $ | 50 | $ | 148 | $ | 6,348 | ||||||||||||||
Charge-offs | (1,148 | ) | (110 | ) | (25 | ) | (364 | ) | (1,647 | ) | ||||||||||||||||||
Recoveries | 12 | 4 | 4 | 126 | 146 | |||||||||||||||||||||||
Provisions | 1,209 | 117 | 386 | 351 | 333 | (146 | ) | 2,250 | ||||||||||||||||||||
Ending balance | $ | 1,235 | $ | 521 | $ | 3,578 | $ | 1,616 | $ | 145 | $ | 2 | $ | 7,097 | ||||||||||||||
Real Estate | ||||||||||||||||||||||||||||
June 30, 2019 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||
Beginning Balance, January 1, 2019 | $ | 1,162 | $ | 404 | $ | 3,298 | $ | 1,286 | $ | 50 | $ | 148 | $ | 6,348 | ||||||||||||||
Charge-offs | (389 | ) | (20 | ) | (253 | ) | (662 | ) | ||||||||||||||||||||
Recoveries | 11 | 2 | 3 | 99 | 115 | |||||||||||||||||||||||
Provisions | 333 | 87 | 291 | 380 | 258 | (148 | ) | 1,201 | ||||||||||||||||||||
Ending balance | $ | 1,117 | $ | 491 | $ | 3,591 | $ | 1,649 | $ | 154 | $ | $ | 7,002 |
Real Estate | ||||||||||||||||||||||||||||
June 30, 2020 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||
Ending balance | $ | 1,685 | $ | 741 | $ | 5,078 | $ | 2,070 | $ | 162 | $ | $ | 9,736 | |||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
individually evaluated for impairment | 29 | 29 | ||||||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
collectively evaluated for impairment | 1,656 | 741 | 5,078 | 2,070 | 162 | 9,707 | ||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
purchased credit impaired loans | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Loans receivable: | ||||||||||||||||||||||||||||
Ending balance | $ | 380,998 | $ | 79,299 | $ | 494,642 | $ | 203,752 | $ | 6,762 | $ | $ | 1,165,453 | |||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
individually evaluated for impairment | 2,180 | 7,761 | 2,568 | 12,509 | ||||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
collectively evaluated for impairment | 378,818 | 79,299 | 485,484 | 201,004 | 6,762 | 1,151,367 | ||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
purchased credit impaired loans | $ | $ | $ | 1,397 | $ | 180 | $ | $ | $ | 1,577 | ||||||||||||||||||
Real Estate | ||||||||||||||||||||||||||||
September 30, 2020 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||
Ending balance | $ | 1,860 | $ | 886 | $ | 6,150 | $ | 2,560 | $ | 168 | $ | $ | 11,624 | |||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
individually evaluated for impairment | 32 | 1 | 33 | |||||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
collectively evaluated for impairment | 1,828 | 886 | 6,149 | 2,560 | 168 | 11,591 | ||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
purchased credit impaired loans | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Loans receivable: | ||||||||||||||||||||||||||||
Ending balance | $ | 382,518 | $ | 64,322 | $ | 507,795 | $ | 202,132 | $ | 6,675 | $ | $ | 1,163,442 | |||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
individually evaluated for impairment | 1,853 | 7,545 | 2,480 | 11,878 | ||||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
collectively evaluated for impairment | 380,665 | 64,322 | 498,902 | 199,480 | 6,675 | 1,150,044 | ||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
purchased credit impaired loans | $ | $ | $ | 1,348 | $ | 172 | $ | $ | $ | 1,520 | ||||||||||||||||||
Real Estate | ||||||||||||||||||||||||||||
December 31, 2019 | Commercial | Construction | Commercial | Residential | Consumer | Unallocated | Total | |||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||
Ending balance | $ | 1,953 | $ | 473 | $ | 3,115 | $ | 1,820 | $ | 155 | $ | $ | 7,516 | |||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
individually evaluated for impairment | 712 | 218 | 930 | |||||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
collectively evaluated for impairment | 1,241 | 473 | 2,897 | 1,820 | 155 | 6,586 | ||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
purchased credit impaired loans | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Loans receivable: | ||||||||||||||||||||||||||||
Ending balance | $ | 118,658 | $ | 61,831 | $ | 455,901 | $ | 207,354 | $ | 8,365 | $ | $ | 852,109 | |||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
individually evaluated for impairment | 2,260 | 1,224 | 2,085 | 5,569 | ||||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
collectively evaluated for impairment | 116,390 | 61,831 | 453,156 | 205,026 | 8,365 | 844,768 | ||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||
purchased credit impaired loans | $ | 8 | $ | $ | 1,521 | $ | 243 | $ | $ | $ | 1,772 | |||||||||||||||||
• | Pass—A loan to borrowers with acceptable credit quality and risk that is not adversely classified as Substandard, Doubtful, Loss or designated as Special Mention. |
• | Special Mention—A loan that has potential weaknesses that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date. Special Mention loans are not adversely classified since they do not expose the Company to sufficient risk to warrant adverse classification. |
• | Substandard—A loan that is inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. |
• | Doubtful—A loan classified as Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristic that the weaknesses make the collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. |
• | Loss—A loan classified as Loss is considered uncollectible and of such little value that its continuance as a bankable loan is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may occur in the future. Homogeneous loans not meeting the criteria above are considered pass rated loans and evaluated based on delinquency performance. |
June 30, 2020 | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | $ | 369,429 | $ | 5,411 | $ | 6,158 | $ | $ | 380,998 | |||||||||||
Real estate: | ||||||||||||||||||||
Construction | 78,153 | 1,146 | 79,299 | |||||||||||||||||
Commercial | 453,072 | 26,775 | 14,795 | 494,642 | ||||||||||||||||
Residential | 198,363 | 2,182 | 3,207 | 203,752 | ||||||||||||||||
Consumer | 6,762 | 6,762 | ||||||||||||||||||
Total | $ | 1,105,779 | $ | 35,514 | $ | 24,160 | $ | $ | 1,165,453 | |||||||||||
December 31, 2019 | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | $ | 109,190 | $ | 5,992 | $ | 3,476 | $ | $ | 118,658 | |||||||||||
Real estate: | ||||||||||||||||||||
Construction | 61,678 | 153 | 61,831 | |||||||||||||||||
Commercial | 430,771 | 9,271 | 15,859 | 455,901 | ||||||||||||||||
Residential | 203,381 | 1,437 | 2,536 | 207,354 | ||||||||||||||||
Consumer | 8,365 | 8,365 | ||||||||||||||||||
Total | $ | 813,385 | $ | 16,853 | $ | 21,871 | $ | $ | 852,109 | |||||||||||
September 30, 2020 | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | $ | 374,721 | $ | 3,319 | $ | 4,478 | $ | $ | 382,518 | |||||||||||
Real estate: | ||||||||||||||||||||
Construction | 55,072 | 8,252 | 998 | 64,322 | ||||||||||||||||
Commercial | 452,958 | 30,048 | 24,789 | 507,795 | ||||||||||||||||
Residential | 197,405 | 1,570 | 3,157 | 202,132 | ||||||||||||||||
Consumer | 6,675 | 6,675 | ||||||||||||||||||
Total | $ | 1,086,831 | $ | 43,189 | $ | 33,422 | $ | $ | 1,163,442 | |||||||||||
December 31, 2019 | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | $ | 109,190 | $ | 5,992 | $ | 3,476 | $ | $ | 118,658 | |||||||||||
Real estate: | ||||||||||||||||||||
Construction | 61,678 | 153 | 61,831 | |||||||||||||||||
Commercial | 430,771 | 9,271 | 15,859 | 455,901 | ||||||||||||||||
Residential | 203,381 | 1,437 | 2,536 | 207,354 | ||||||||||||||||
Consumer | 8,365 | 8,365 | ||||||||||||||||||
Total | $ | 813,385 | $ | 16,853 | $ | 21,871 | $ | $ | 852,109 | |||||||||||
Accrual Loans | Accrual Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2020 | 30-59 Days Past Due | 60-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Nonaccrual Loans | Total Loans | |||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2020 | 30-59 Days Past Due | 60-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Nonaccrual Loans | Total Loans | |||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 77 | $ | 25 | $ | $ | 102 | $ | 380,077 | $ | 819 | $ | 380,998 | $ | 20 | $ | 78 | $ | 108 | $ | 206 | $ | 381,521 | $ | 791 | $ | 382,518 | |||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Construction | 79,299 | 79,299 | 208 | 208 | 64,114 | 64,322 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | 160 | 160 | 491,778 | 1,307 | 493,245 | 505,216 | 1,231 | 506,447 | ||||||||||||||||||||||||||||||||||||||||||||||||
Residential | 363 | 448 | 170 | 981 | 201,476 | 1,115 | 203,572 | 650 | 219 | 869 | 199,888 | 1,203 | 201,960 | |||||||||||||||||||||||||||||||||||||||||||
Consumer | 33 | 21 | 13 | 67 | 6,695 | 6,762 | 20 | 1 | 21 | 6,654 | 6,675 | |||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 633 | $ | 494 | $ | 183 | $ | 1,310 | $ | 1,159,325 | $ | 3,241 | $ | 1,163,876 | $ | 690 | $ | 506 | $ | 108 | $ | 1,304 | $ | 1,157,393 | $ | 3,225 | $ | 1,161,922 | ||||||||||||||||||||||||||||
Purchased credit impaired loans | 1,577 | 1,520 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Loans | $ | 1,165,453 | $ | 1,163,442 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrual Loans | Nonaccrual Loans | Total Loans | Accrual Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2019 | 30-59 Days Past Due | 60-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | 30-59 Days Past Due | 60-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Nonaccrual Loans | Total Loans | ||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 137 | $ | $ | $ | 137 | $ | 117,354 | $ | 1,159 | $ | 118,650 | $ | 137 | $ | $ | $ | 137 | $ | 117,354 | $ | 1,159 | $ | 118,650 | ||||||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Construction | 9 | 9 | 61,822 | 61,831 | 9 | 9 | 61,822 | 61,831 | ||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | 147 | 147 | 453,774 | 459 | 454,380 | 147 | 147 | 453,774 | 459 | 454,380 | ||||||||||||||||||||||||||||||||||||||||||||||
Residential | 3,402 | 820 | 18 | 4,240 | 202,202 | 669 | 207,111 | 3,402 | 820 | 18 | 4,240 | 202,202 | 669 | 207,111 | ||||||||||||||||||||||||||||||||||||||||||
Consumer | 84 | 14 | 27 | 125 | 8,240 | 8,365 | 84 | 14 | 27 | 125 | 8,240 | 8,365 | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,779 | $ | 834 | $ | 45 | $ | 4,658 | $ | 843,392 | $ | 2,287 | $ | 850,337 | $ | 3,779 | $ | 834 | $ | 45 | $ | 4,658 | $ | 843,392 | $ | 2,287 | $ | 850,337 | ||||||||||||||||||||||||||||
Purchased credit impaired loans | 1,772 | 1,772 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Loans | $ | 852,109 | $ | 852,109 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
This Quarter | Year-to-Date | |||||||||||||||||||||||||||
June 30, 2020 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||
With no related allowance: | ||||||||||||||||||||||||||||
Commercial | $ | 2,059 | $ | 2,169 | $ | $ | 1,579 | $ | 132 | $ | 1,603 | $ | 200 | |||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | ||||||||||||||||||||||||||||
Commercial | 9,158 | 9,659 | 5,854 | 19 | 5,561 | 66 | ||||||||||||||||||||||
Residential | 2,748 | 2,878 | 2,520 | 81 | 2,539 | 106 | ||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | 13,965 | 14,706 | 9,953 | 232 | 9,703 | 372 | ||||||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||||||
Commercial | 121 | 121 | 29 | 121 | 621 | |||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | ||||||||||||||||||||||||||||
Commercial | 184 | 391 | 4 | |||||||||||||||||||||||||
Residential | ||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | 121 | 121 | 29 | 305 | 1,012 | 4 | ||||||||||||||||||||||
Commercial | 2,180 | 2,290 | 29 | 1,700 | 132 | 2,224 | 200 | |||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | ||||||||||||||||||||||||||||
Commercial | 9,158 | 9,659 | 6,038 | 19 | 5,952 | 70 | ||||||||||||||||||||||
R esidential | 2,748 | 2,878 | 2,520 | 81 | 2,539 | 106 | ||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | 14,086 | $ | 14,827 | $ | 29 | $ | 10,258 | $ | 232 | $ | 10,715 | $ | 376 | |||||||||||||||
This Quarter | Year-to-Date | |||||||||||||||||||||||||||
September 30, 2020 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||
With no related allowance: | ||||||||||||||||||||||||||||
Commercial | $ | 1,732 | $ | 1,842 | $ | 1,896 | $ | 154 | $ | 1,630 | $ | 354 | ||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | ||||||||||||||||||||||||||||
Commercial | 3,124 | 3,510 | 6,141 | 10 | 4,944 | 76 | ||||||||||||||||||||||
Residential | 2,652 | 2,782 | 2,700 | 12 | 2,564 | 118 | ||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | 7,508 | 8,134 | 10,737 | 176 | 9,138 | 548 | ||||||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||||||
Commercial | 121 | 121 | $ | 32 | 121 | 121 | ||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | ||||||||||||||||||||||||||||
Commercial | 5,769 | 5,769 | 1 | 2,885 | 61 | 2,045 | 65 | |||||||||||||||||||||
Residential | ||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | 5,890 | 5,890 | 33 | 3,006 | 61 | 2,166 | 65 | |||||||||||||||||||||
Commercial | 1,853 | 1,963 | 32 | 2,017 | 154 | 1,751 | 354 | |||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | ||||||||||||||||||||||||||||
Commercial | 8,893 | 9,279 | 1 | 9,026 | 71 | 6,989 | 141 | |||||||||||||||||||||
Residential | 2,652 | 2,782 | 2,700 | 12 | 2,564 | 118 | ||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | $ | 13,398 | $ | 14,024 | $ | 33 | $ | 13,743 | $ | 237 | $ | 11,304 | $ | 613 | ||||||||||||||
Recorded Investment | Unpaid Principal Balance | Related Allowance | For the Year Ended | |||||||||||||||||
December 31, 2019 | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||||
With no related allowance: | ||||||||||||||||||||
Commercial | $ | 1,147 | $ | 1,257 | $ | 648 | $ | 660 | ||||||||||||
Real estate: | ||||||||||||||||||||
Construction | ||||||||||||||||||||
Commercial | 1,963 | 1,963 | 3,124 | 1,456 | ||||||||||||||||
Residential | 2,329 | 2,467 | 2,397 | 173 | ||||||||||||||||
Consumer | ||||||||||||||||||||
Total | 5,439 | 5,687 | 6,169 | 2,289 | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Commercial | 1,121 | 1,121 | $ | 712 | 685 | |||||||||||||||
Real estate: | ||||||||||||||||||||
Construction | ||||||||||||||||||||
Commercial | 782 | 936 | 218 | 658 | 17 | |||||||||||||||
Residential | 91 | |||||||||||||||||||
Consumer | ||||||||||||||||||||
Total | 1,903 | 2,057 | 930 | 1,434 | 17 | |||||||||||||||
Commercial | 2,268 | 2,378 | 712 | 1,333 | 660 | |||||||||||||||
Real estate: | ||||||||||||||||||||
Construction | ||||||||||||||||||||
Commercial | 2,745 | 2,899 | 218 | 3,782 | 1,473 | |||||||||||||||
Residential | 2,329 | 2,467 | 2,488 | 173 | ||||||||||||||||
Consumer | ||||||||||||||||||||
Total | $ | 7,342 | $ | 7,744 | $ | 930 | $ | 7,603 | $ | 2,306 | ||||||||||
This Quarter | Year-to-Date | |||||||||||||||||||||||||||
June 30, 2019 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||
With no related allowance: | ||||||||||||||||||||||||||||
Commercial | $ | 125 | $ | 125 | $ | $ | 157 | $ | 485 | $ | 163 | $ | 508 | |||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | 43 | 43 | ||||||||||||||||||||||||||
Commercial | 4,222 | 4,222 | 4,240 | 104 | 4,255 | 204 | ||||||||||||||||||||||
Residential | 2,201 | 2,201 | 2,209 | 34 | 2,276 | 125 | ||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | 6,548 | 6,548 | 6,649 | 623 | 6,737 | 837 | ||||||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||||||
Commercial | 774 | 774 | 103 | 808 | 926 | |||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | ||||||||||||||||||||||||||||
Commercial | 373 | 373 | 92 | 372 | 4 | 413 | 8 | |||||||||||||||||||||
Residential | 178 | 316 | 50 | 179 | 2 | 180 | 3 | |||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | 1,325 | 1,463 | 245 | 1,359 | 6 | 1,519 | 11 | |||||||||||||||||||||
Commercial | 899 | 899 | 103 | 965 | 485 | 1,089 | 508 | |||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | 43 | 43 | ||||||||||||||||||||||||||
Commercial | 4,595 | 4,595 | 92 | 4,612 | 108 | 4,668 | 212 | |||||||||||||||||||||
Residential | 2,379 | 2,517 | 50 | 2,388 | 36 | 2,456 | 128 | |||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | $ | 7,873 | $ | 8,011 | $ | 245 | $ | 8,008 | $ | 629 | $ | 8,256 | $ | 848 | ||||||||||||||
This Quarter | Year-to-Date | |||||||||||||||||||||||||||
September 30, 2019 | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||
With no related allowance: | ||||||||||||||||||||||||||||
Commercial | $ | 1,617 | $ | 2,256 | $ | 871 | $ | 96 | $ | 399 | $ | 604 | ||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | 29 | |||||||||||||||||||||||||||
Commercial | 2,048 | 2,048 | 3,135 | 1,204 | 3,882 | 1,408 | ||||||||||||||||||||||
Residential | 2,178 | 2,178 | 2,189 | 33 | 2,247 | 158 | ||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | 5,843 | 6,482 | 6,195 | 1,333 | 6,557 | 2,170 | ||||||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||||||
Commercial | 121 | 121 | $ | 29 | 448 | 767 | ||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | ||||||||||||||||||||||||||||
Commercial | 785 | 939 | 251 | 579 | 4 | 468 | 12 | |||||||||||||||||||||
Residential | 177 | 315 | 45 | 178 | 2 | 179 | 5 | |||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | 1,083 | 1,375 | 325 | 1,205 | 6 | 1,414 | 17 | |||||||||||||||||||||
Commercial | 1,738 | 2,377 | 29 | 1,319 | 96 | 1,166 | 604 | |||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||
Construction | 29 | |||||||||||||||||||||||||||
Commercial | 2,833 | 2,987 | 251 | 3,714 | 1,208 | 4,350 | 1,420 | |||||||||||||||||||||
Residential | 2,355 | 2,493 | 45 | 2,367 | 35 | 2,426 | 163 | |||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||
Total | $ | 6,926 | $ | 7,857 | $ | 325 | $ | 7,400 | $ | 1,339 | $ | 7,971 | $ | 2,187 | ||||||||||||||
June 30, 2020 | December 31, 2019 | |||||||
Unused portions of lines of credit | $ | 89,916 | $ | 81,665 | ||||
Construction loans | 28,764 | 41,168 | ||||||
Commitments to extend credit | 20,841 | 24,954 | ||||||
Deposit overdraft protection | 23,964 | 23,730 | ||||||
Standby and performance letters of credit | 4,743 | 4,726 | ||||||
Total | $ | 168,228 | $ | 176,243 | ||||
September 30, 2020 | December 31, 2019 | |||||||
Unused portions of lines of credit | $ | 93,694 | $ | 81,665 | ||||
Construction loans | 26,216 | 41,168 | ||||||
Commitments to extend credit | 13,086 | 24,954 | ||||||
Deposit overdraft protection | 22,231 | 23,730 | ||||||
Standby and performance letters of credit | 3,973 | 4,726 | ||||||
Total | $ | 159,200 | $ | 176,243 | ||||
June 30, 2020 | December 31, 2019 | |||||||
Other real estate owned | $ | 363 | $ | 82 | ||||
Bank owned life insurance | 31,055 | 30,647 | ||||||
Restricted equity securities | 1,769 | 990 | ||||||
Deferred tax assets | 4,519 | 4,272 | ||||||
Lease right-of-use | 3,508 | 3,856 | ||||||
Other assets | 5,364 | 6,082 | ||||||
Total | $ | 46,578 | $ | 45,929 | ||||
September 30, 2020 | December 31, 2019 | |||||||
Other real estate owned | $ | 25 | $ | 82 | ||||
Bank owned life insurance | 31,247 | 30,647 | ||||||
Restricted equity securities | 1,827 | 990 | ||||||
Deferred tax assets | 4,798 | 4,272 | ||||||
Lease right-of-use | 3,336 | 3,856 | ||||||
Other assets | 4,506 | 6,082 | ||||||
Total | $ | 45,739 | $ | 45,929 | ||||
Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | |||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | 391 | $ | 273 | ||||
ROU assets obtained in exchange for lease liabilities | $ | $ | 4,612 | |||||
Weighted average remaining lease term—operating leases, in years | 9.11 | 10.65 | ||||||
Weighted average discount rate—operating leases | 3.02 | % | 3.07 | % |
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | 584 | $ | 465 | ||||
ROU assets obtained in exchange for lease liabilities | $ | 4,529 | ||||||
Weighted average remaining lease term—operating leases, in years | 9.12 | 10.46 | ||||||
Weighted average discount rate—operating leases | 3.04 | % | 3.06 | % |
2020 | $ | 380 | ||
2021 | 754 | |||
2022 | 697 | |||
2023 | 485 | |||
2024 | 317 | |||
Thereafter | 1568 | |||
Total lease payments | 4,201 | |||
Less imputed interest | 639 | |||
$ | 3,562 | |||
2020 | $ | 187 | ||
2021 | 754 | |||
2022 | 697 | |||
2023 | 485 | |||
2024 | 317 | |||
Thereafter | 1,568 | |||
Total lease payments | 4,008 | |||
Less imputed interest | 611 | |||
$3,397 | ||||
Fair Value Measurement Using | ||||||||||||||||
June 30, 2020 | Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
State and Municipals: | ||||||||||||||||
Taxable | $ | 9,773 | $ | 9,773 | ||||||||||||
Tax-exempt | 8,791 | 8,791 | ||||||||||||||
Mortgage-backed securities: | ||||||||||||||||
U.S. Government agencies | 28,495 | 28,495 | ||||||||||||||
U.S. Government-sponsored enterprises | 23,803 | 23,803 | ||||||||||||||
Corporate debt obligations | 3,272 | 3,272 | ||||||||||||||
Total | $ | 74,134 | $ | 74,134 | ||||||||||||
Fair Value Measurement Using | ||||||||||||||||
September 30, 2020 | Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
State and Municipals: | ||||||||||||||||
Taxable | $ | 20,841 | $ | 20,841 | ||||||||||||
Tax-exempt | 20,837 | 20,837 | ||||||||||||||
Mortgage-backed securities: | ||||||||||||||||
U.S. Government agencies | 27,627 | 27,627 | ||||||||||||||
U.S. Government-sponsored enterprises | 23,665 | 23,665 | ||||||||||||||
Corporate debt obligations | 5,876 | 3,876 | $ | 2,000 | ||||||||||||
Total | $ | 98,846 | $ | 96,846 | $ | 2,000 | ||||||||||
Fair Value Measurement Using | ||||||||||||||||
December 31, 2019 | Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
State and municipals: | ||||||||||||||||
Taxable | $ | 24,824 | $ | 24,824 | ||||||||||||
Tax-exempt | 4,333 | 4,333 | ||||||||||||||
Mortgage-backed securities: | ||||||||||||||||
U.S. Government agencies | 36,134 | 36,134 | ||||||||||||||
U.S. Government-sponsored enterprises | 22,645 | 22,645 | ||||||||||||||
Corporate debt obligations | 3,311 | 3,311 | ||||||||||||||
Total | $ | 91,247 | $ | 91,247 | ||||||||||||
Fair Value Measurement Using | ||||||||||||||||
December 31, 2019 | Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
State and municipals: | ||||||||||||||||
Taxable | $ | 24,824 | $ | 24,824 | ||||||||||||
Tax-exempt | 4,333 | 4,333 | ||||||||||||||
Mortgage-backed securities: | ||||||||||||||||
U.S. Government agencies | 36,134 | 36,134 | ||||||||||||||
U.S. Government-sponsored enterprises | 22,645 | 22,645 | ||||||||||||||
Corporate debt obligations | 3,311 | 3,311 | ||||||||||||||
Total | $ | 91,247 | $ | 91,247 | ||||||||||||
Fair Value Measurement Using | ||||||||||||||||
June 30, 2020 | Amount | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | ||||||||||||
Other real estate owned | $ | 363 | $ | 363 | ||||||||||||
Impaired loans, net of related allowance | 92 | 92 | ||||||||||||||
Total | $ | 455 | $ | 455 | ||||||||||||
Fair Value Measurement Using | ||||||||||||||||
December 31, 2019 | Amount | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | ||||||||||||
Other real estate owned | $ | 82 | $ | 82 | ||||||||||||
Impaired loans, net of related allowance | 973 | 973 | ||||||||||||||
Total | $ | 1,055 | $ | 1,055 | ||||||||||||
Fair Value Measurement Using | ||||||||||||||||
September 30, 2020 | Amount | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | ||||||||||||
Other real estate owned | $ | 25 | $ | 25 | ||||||||||||
Impaired loans, net of related allowance | 5,857 | 5,857 | ||||||||||||||
Total | $ | 5,882 | $ | 5,882 | ||||||||||||
Fair Value Measurement Using | ||||||||||||||||
December 31, 2019 | Amount | (Level 1) Quoted Prices in Active Markets for Identical Assets | (Level 2) Significant Other Observable Inputs | (Level 3) Significant Unobservable Inputs | ||||||||||||
Other real estate owned | $ | 82 | $ | 82 | ||||||||||||
Impaired loans, net of related allowance | 973 | 973 | ||||||||||||||
Total | $ | 1,055 | $ | 1,055 | ||||||||||||
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||
June 30, 2020 | Fair Value Estimate | Valuation Techniques | Unobservable Input | Range (Weighted Average) | ||||||||||||
Other real estate owned | $ | 363 | Appraisal of collateral | Appraisal adjustments | 22.0% to 60.0% | (47.0)% | ||||||||||
Liquidation expenses | 10.0% to 10.0% | (10.0)% | ||||||||||||||
Impaired loans | $ | 92 | Appraisal of collateral | Appraisal adjustments | 50.0% to 50.0% | (50.0)% | ||||||||||
Liquidation expenses | 0.0% to 0.0% | (0.0)% |
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||
September 30, 2020 | Fair Value Estimate | Valuation Techniques | Unobservable Input | Range (Weighted Average) | ||||||||||||
Other real estate owned | $ | 25 | Appraisal of collateral | Appraisal adjustments | 60.0% to 60.0% (60.0)% | |||||||||||
Liquidation expenses | 10.0% to 10.0% (10.0)% | |||||||||||||||
Impaired loans | $ | 5,857 | Appraisal of collateral | Appraisal adjustments | 15.0% to 20.0% (15.0)% | |||||||||||
Liquidation expenses | 7.0% to 7.0% (7.0)% |
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||
December 31, 2019 | Fair Value Estimate | Valuation Techniques | Unobservable Input | Range (Weighted Average) | ||||||||||||
Other real estate owned | $ | 82 | Appraisal of collateral | Appraisal adjustments | 42.0% to 60.0% | (52.0)% | ||||||||||
Liquidation expenses | 10.0% to 10.0% | (10.0)% | ||||||||||||||
Impaired loans | $ | 973 | Appraisal of collateral | Appraisal adjustments | 10.0% to 50.0% | (22.0)% | ||||||||||
Liquidation expenses | 9.5% to 12.3% | (8.8)% |
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||
December 31, 2019 | Fair Value Estimate | Valuation Techniques | Unobservable Input | Range (Weighted Average) | ||||||||||||
Other real estate owned | $ | 82 | Appraisal of collateral | Appraisal adjustments | 42.0% to 60.0% (52.0)% | |||||||||||
Liquidation expenses | 10.0% to 10.0% (10.0)% | |||||||||||||||
Impaired loans | $ | 973 | Appraisal of collateral | Appraisal adjustments | 10.0% to 50.0% (22.0)% | |||||||||||
Liquidation expenses | 9.5% to 12.3% (8.8)% |
Fair Value Hierarchy | ||||||||||||||||||||
June 30, 2020 | Carrying Amount | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 43,228 | $ | 43,228 | $ | 43,228 | ||||||||||||||
Investment securities | 74,134 | 74,134 | $ | 74,134 | ||||||||||||||||
Loans held for sale | 4,252 | 4,252 | 4,252 | |||||||||||||||||
Net loans (1) | 1,155,717 | 1,146,533 | $ | 1,146,533 | ||||||||||||||||
Accrued interest receivable | 1,826 | 1,826 | 356 | 1,470 | ||||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | $ | 1,023,153 | $ | 980,672 | ||||||||||||||||
Long-term debt | 217,010 | 216,810 | ||||||||||||||||||
Accrued interest payable | 457 | 457 | 457 |
Carrying Amount | Fair Value Hierarchy | |||||||||||||||||||
September 30, 2020 | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 31,958 | $ | 31,958 | $ | 31,958 | ||||||||||||||
Investment securities | 98,846 | 98,846 | $ | 96,846 | $ | 2,000 | ||||||||||||||
Loans held for sale | 4,547 | 4,547 | 4,547 | |||||||||||||||||
Net loans (1) | 1,151,818 | 1,142,187 | 1,142,187 | |||||||||||||||||
Accrued interest receivable | 3,218 | 3,218 | 406 | 2,812 | ||||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | $ | 1,031,313 | $ | 989,122 | $ | 989,122 | ||||||||||||||
Long-term debt | 217,031 | 218,150 | 218,150 | |||||||||||||||||
Accrued interest payable | 591 | 591 | 591 |
Fair Value Hierarchy | ||||||||||||||||||||
December 31, 2019 | Carrying Amount | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 50,348 | $ | 50,348 | $ | 50,348 | ||||||||||||||
Investment securities available-for-sale | 91,247 | 91,247 | $ | 91,247 | ||||||||||||||||
Loans held for sale | 81 | 81 | 81 | |||||||||||||||||
Net loans (1) | 844,593 | 836,074 | $ | 836,074 | ||||||||||||||||
Accrued interest receivable | 2,414 | 2,414 | 461 | 1,953 | ||||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | $ | 940,480 | $ | 940,546 | $ | 940,546 | ||||||||||||||
Long-term debt | 6,971 | 6,971 | 6,971 | |||||||||||||||||
Accrued interest payable | 435 | 435 | 435 |
9. Goodwill The following table summarizes activity related to the carrying value of goodwill for the
Accounting guidance requires the Company to test its goodwill impairment at least annually, or more frequently, if an event occurs or circumstances change which are considered to be a triggering event that would more likely than not reduce the fair value of its goodwill below the carrying value of the reporting unit, Riverview Bank. The Company noted that at the end of the first quarter of 2020, as a result of the onset of the COVID-19 pandemic, the market price of its common shares decreased significantly below the carrying value of its equity per share and that it did not recover during the second quarter. This decrease prompted the Company to assess its goodwill utilizing a quantitative test to determine whether it wasmore-likely-than-not the fair value of the Company was less than the carrying amount as of the end of the second quarter of 2020.The Company utilized multiple valuations approaches, 24 weight to arrive at the fair value of the reporting unit. Based on the results of the quantitative test, it was determined the carrying amount of a reporting unit exceeded its fair value and that an impairment loss must be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Based on the results of the quantitative test, the Company recognized an impairment charge equal to the entire amount of its recorded goodwill on the balance sheet at June 30, 2020 totaling $24,754. 10. Subsequent Events: On October 6, 2020, the Company announced the completion of its private placement of 25 million of$ its 5.75%October 15, 2025 . Commencing on 563 basis points , payable quarterly until maturity. The Company may redeem the Notes at par, in 25 Riverview Financial Corporation MANAGEMENT’S DISCUSSION AND ANALYSIS (Dollars in thousands, except per share data)
The following discussion and analysis should be read in conjunction with the unaudited consolidated interim financial statements contained in Part I, Item 1 of this report, and with our audited consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” presented in our Annual Report on Form 10-K for the year ended December 31, 2019.Cautionary Note Regarding Forward-Looking Statements: This report contains forward-looking statements within the meaning of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to risks and uncertainties. These statements are based on assumptions and may describe future plans, strategies and expectations of Riverview Financial Corporation and its direct and indirect subsidiaries. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. All statements in this report, other than statements of historical facts, are forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Important factors that could cause our actual results to differ materially from those in the forward-looking statements include, but are not limited to: our ability to achieve the intended benefits of acquisitions and integration of previously acquired businesses; restructuring initiatives; changes in interest rates; economic conditions, particularly in our market area; legislative and regulatory changes and the ability to comply with the significant laws and regulations governing the banking and financial services business; monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of Treasury and the Federal Reserve System; credit risk associated with lending activities and changes in the quality and composition of our loan and investment portfolios; demand for loan and other products; deposit flows; competition; changes in the values of real estate and other collateral securing the loan portfolio, particularly in our market area; changes in relevant accounting principles and guidelines; and inability of third party service providers to perform. Most recently, the risk factors associated with the onset of COVID-19 could have a material adverse effect on significant estimates, operations and business results of Riverview. For a discussion of the risks and potential impacts of theCOVID-19 refer to Note 1 entitled “Summary of Significant Accounting Policies-Basis of presentation” in the Notes to Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report.These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, Riverview Financial Corporation does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events. Notes to the Consolidated Financial Statements referred to in the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are incorporated by reference into the MD&A. Certain prior period amounts have been reclassified to conform with the current year’s presentation and did not have any effect on the operating results or financial position of the Company. Critical Accounting Policies: Disclosure of our significant accounting policies are included in Note 1 to the Consolidated Financial Statements of the Annual Report on Form 10-K for the year ended December 31, 2019. Some of these policies are particularly sensitive requiring significant judgments, estimates and assumptions. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions. We believe that the most critical accounting policies upon which our financial condition and results of operation depend, and which involve the most complex subjective decisions or assessments, are included in Note 1 to the consolidated financial statements in the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2019, Operating Environment: Economic growth measured as gross domestic product (“GDP”), the value of all goods and services produced in the United States, increased at an annualized rate of 33.1% in the third quarter of 2020. This more than offset the decline in the second quarter when the economy decreased at an annualized rate of 26 expected. The strongest rebounds were in business equipment spending, residential investment and consumer spending, while government spending and nonresidential structures investment declined. A cessation of inventory reduction resulted in a strong addition to output growth, while overall growth was tempered by a deterioration in the The impact of the virus has been felt nationally and within our primary market area as unemployment rates have Inflationary pressure has (“CPI-U”) increased CPI-U increased 50-basis point reduction on March 3, 2020 and an additional 100 basis point reduction on March 15, 2020. Accordingly, these monetary policy actions have already adversely impacted and may continue to impact our net interest margin if we are unable to reduce fund costs at the same magnitude or pace as repricing earning assets. Based on the aforementioned economic conditions, we believe that we may experience a material adverse effect in our business, results of operations and financial condition as a result of theCOVID-19 pandemic for an indefinite period.Review of Financial Position: Total assets increased 315,754 , retail lending, including residential mortgages and consumer loans, decreased 2,491 during the year-end 2019. The decrease in stockholders’ equity was caused primarily by the recognition of a goodwill impairment charge of $24,754 at the end of the second quarter 2020. For the Investment Portfolio: The Company’s entire investment portfolio is held as available-for-sale, available-for-sale COVID-19 caused a marked reduction in general market rates which increased the value of fixed rate securities and lowered the yield on adjustable rate securities. This provided the opportunity to aid in funding loan demand and reduce exposure to falling interest rates through the sale of investment securities at a net gain. Accordingly, we sold $27,168 in investment securitiesavailable-for-sale in the 27 recognized for the same period last year. In order to employ excess funds and meet pledging requirements, we purchased $42,151 in investment securities available-for-sale tax-exempt state and municipal obligations, $2,500 of corporate debt obligations and $11,220 of U.S. Government agencies and U.S. Government-sponsored enterprise mortgage-backed securities. The weighted averagetax-equivalent yield was 2.06% on these purchases.For the tax-equivalent yield on the investment portfolio decreased Securities available-for-sale Loan Portfolio: Loans, net, increased to For the tax-equivalent yield on the loan portfolio was 150-basis points in the first half of 2020. Loan accretion included in loan interest income in the first The economic slowdown associated with COVID-19 may have an adverse impact on the growth and asset quality of our loan portfolio, especially those industry segments being severely impacted by the pandemic. Specifically, we have identified the following industries, by the amount of aggregate loans and percentage of total loans as of
There have been a number of initiatives recently instituted by the Federal Government that may help offset the adverse impact on the growth and asset quality of our loan portfolio. In response to the economic slowdown caused by COVID-19, President Donald Trump signed into law the CARES Act on March 27, 2020, which included numerous provisions including the institution of the establishment28 of the PPP. The PPP was created to provide funding to small business owners who may have had to temporarily close or scale back production due to the COVID-19 pandemic. The PPP provides borrower guarantees for lenders, as well as loan forgiveness incentivesfor borrowers that utilize the loan proceeds to cover employment-sustaining payroll costs and benefits, as well as other significant costs including the small businesses’ rent, mortgage, and utilities. There has been considerable demand for PPP loans implemented by the CARES Act. As a U.S. Small Business Administration (“SBA”) lender, we have been participating in the PPP and non-essential businesses as well as enforcing social distancing. The longer these restrictions are in place the more severe the effects of the economic slowdown will be and the greater the negative consequences for our loan customers which, in turn, could adversely affect the Company’s financial condition, liquidity and results of operations.In addition to the risks inherent in our loan portfolio in the normal course of business, we are also a party to financial instruments with off-balance sheet risk to meet the financing needs of our customers. These instruments include legally binding commitments to extend credit, unused portions of lines of credit and commercial letters of credit made under the same underwriting standards ason-balance sheet instruments, and may involve, to varying degrees, elements of credit risk and interest rate risk (“IRR”) in excess of the amount recognized in the consolidated financial statements. With the onset of theCOVID-19 pandemic, we are continually monitoring draws on unused portions of lines of credit and construction loans.The contractual amounts of off-balance sheet commitments at
Asset Quality: National, Pennsylvania and our market area unemployment rates at
Employment conditions deteriorated in 2020 for the Nation, Commonwealth of Pennsylvania and within every county in which we have branch locations. The average unemployment rate for all our counties increased to 29 Our asset quality deteriorated in the Loans on nonaccrual status increased In response to the COVID-19 pandemic and its economic impact to our customers, we implemented short-term modification programs that comply with regulatory and accounting guidance to provide temporary payment relief to those borrowers directly impacted byCOVID-19 who were not more than 30 days past due at the time we implemented our modification programs. These programs allow for a deferral of principal, or principal and interest payments for a maximum of 180 days on a cumulative and successive basis. The deferred payments, including interest accrued during the deferral period, if applicable, result in the extension of the loan due date by the number of months deferred.In March 2020, a joint statement was issued by federal and state regulatory agencies to clarify that short-term loan modifications are not troubled debt restructurings (“TDR”) if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to the implementation of our deferral programs. Under this guidance, six months is provided as an example of short-term, and current is defined as less than 30 days past due at the time the modification programs were implemented. The guidance also provides that these modified loans generally will not be classified as nonaccrual during the term of the modification. For all borrowers who enroll in these loan modification programs offered as a result ofCOVID-19, the delinquency status of the borrowers is frozen, resulting in a static delinquency metric during the deferral period. Upon exiting the deferral program, the measurement of loan delinquency will resume where it had left off upon entry into the program, and the modifications will not impact a borrower’s repayment history for credit repayment reporting purposes. The Company reevaluates these 30 As of
31 The following table summarizes information concerning loan modifications
We maintain the allowance for loan losses at a level we believe adequate to absorb probable credit losses related to specifically identified loans, as well as probable incurred loan losses inherent in the remainder of the loan portfolio as of the balance sheet date. The allowance for loan losses is based on past events and current economic conditions. We employ the Federal Financial Institutions Examination Council Interagency Policy Statement, as amended, and GAAP in assessing the adequacy of the allowance account. Under GAAP, the adequacy of the allowance account is determined based on the provisions of FASB Accounting Standards Codification (“ASC”) 310, “Receivables”, for loans specifically identified to be individually evaluated for impairment and the requirements of FASB ASC 450, “Contingencies”, for large groups of smaller-balance homogeneous loans to be collectively evaluated for impairment. We follow our systematic methodology in accordance with procedural discipline by applying it in the same manner regardless of whether the allowance is being determined at a high point or a low point in the economic cycle. Each quarter, the Chief Credit Officer identifies those loans to be individually evaluated for impairment and those loans collectively evaluated for impairment utilizing standard criteria. Grades are assigned quarterly to loans identified to be individually evaluated. A loan’s grade may differ from period to period based on current conditions and events. However, we consistently utilize the same grading system each quarter. We consistently use loss experience from the latest eight quarters in determining the historical loss factor for each pool collectively evaluated for impairment. Qualitative factors are evaluated in the same manner each quarter and are adjusted within a relevant range of values based on current conditions. We continue to evaluate risks which may impact our loan portfolios. As a result of the coronavirus pandemic and resultant business shutdowns and unemployment spikes, we reviewed our loan portfolio segments, assessing the likely impact of COVID-19 on each segment and established specific qualitative adjustment factors. As we weigh additional information on the potential impact of this event on our overall economic prospects coupled with our loan officers’ further assessments of the impact on individual borrowers, our delinquencies and loss estimates will be revised as needed, and these revisions could have a material impact on future provisions to the allowance for loan losses and results of operations. For additional disclosure related to the allowance for loan losses refer to the note entitled, “Loans, net and Allowance for Loan Losses”, in the Notes to Consolidated Financial Statements to this Quarterly Report.The allowance for loan losses increased 2019. The increase in the provision for loan losses was the combined result of loan growth, increases in historical loss factors and changes in qualitative factors related to the reserve build associated with the effects of COVID-19 as of the balance sheet date. For the 32 Deposits: We attract the majority of our deposits from within our 14-county market area by offering various deposit products including demand deposit accounts, NOW accounts, business checking accounts, money market deposit accounts, savings accounts, club accounts and time deposits, including certificates of deposit and IRA’s. For the For the COVID-19, we also took Borrowings: The Bank utilizes borrowings as a secondary source of liquidity for its asset/liability management. Advances are available from the Federal Home Loan Bank of Pittsburgh (“FHLB”) provided certain standards related to credit worthiness have been met. Repurchase and term agreements are also available from the FHLB. Short-term borrowings are generally used to meet temporary funding needs and consist of federal funds purchased, securities sold under agreements to repurchase, and overnight and short-term borrowings from Long-term debt totaled As a result of the significant reduction in market rates during the first 10-year weighted average rate of 2.99%.On October 6, 2020, the Company announced the completion of its private placement of $25 million of its 5.75% Fixed to pandemic and to support growth, for general corporate purposes and to take advantage of potential strategic opportunities.COVID-19 33 Market Risk Sensitivity: Market risk is the risk to our earnings or financial position resulting from adverse changes in market rates or prices, such as interest rates, foreign exchange rates or equity prices. Our exposure to market risk is primarily interest rate risk (“IRR”) associated with our lending, investing and deposit-gathering activities. During the normal course of business, we are not exposed to foreign exchange risk or commodity price risk. Our exposure to IRR can be explained as the potential for change in our reported earnings and/or the market value of our net worth. Variations in interest rates affect earnings by changing net interest income and the level of other interest-sensitive income and operating expenses. Interest rate changes also affect the underlying economic value of our assets, liabilities and off-balance sheet items. These changes arise because the present value of future cash flows, and often the cash flows themselves change with interest rates. The effects of the changes in these present values reflect the change in our underlying economic value and provide a basis for the expected change in future earnings related to interest rates. IRR is inherent in the role of banks as financial intermediaries. However, a bank with a high degree of IRR may experience lower earnings, impaired liquidity and capital positions, and most likely, a greater risk of insolvency. Therefore, banks must carefully evaluate IRR to promote safety and soundness in their activities.As a result of the FOMC’s recent actions to lower short-term interest rates in order to mitigate the impact of the COVID-19 pandemic on the economy, it has become increasing more challenging to manage IRR. IRR and effectively managing it are very important to both The Asset Liability Committee (“ALCO”), comprised of members of our senior management and other appropriate officers, oversees our IRR management program. Specifically, ALCO analyzes economic data and market interest rate trends, as well as competitive pressures, and utilizes computerized modeling techniques to reveal potential exposure to IRR. This allows us to monitor and attempt to control the influence these factors may have on our rate-sensitive assets (“RSA”) and rate-sensitive liabilities (“RSL”), and overall operating results and financial position. One such technique utilizes a static gap model that considers repricing frequencies of RSA and RSL in order to monitor IRR. Gap analysis attempts to measure our interest rate exposure by calculating the net amount of RSA and RSL that reprice within specific time intervals. A positive gap occurs when the amount of RSA repricing in a specific period is greater than the amount of RSL repricing within that same time frame and is indicated by a RSA/RSL ratio greater than 1.0. Conversely, a negative gap occurs when the amount of RSL repricing is greater than the amount of RSA and is indicated by a RSA/RSL ratio of less than 1.0. A positive gap implies that earnings will be impacted favorably if interest rates rise and adversely if interest rates fall during the period. A negative gap tends to indicate that earnings will be affected inversely to interest rate changes. Our cumulative one-year RSA/RSL ratio equaled The current position at Static gap analysis, although a standard measuring tool, does not fully illustrate the impact of interest rate changes on future earnings. First, market rate changes normally do not equally or simultaneously affect all categories of assets and liabilities. Second, assets and liabilities that can contractually reprice within the same period may not do so at the same time or to the same magnitude. Third, the interest rate sensitivity table presents a one-day position. Variations occur daily as we adjust our rate sensitivity throughout the year. Finally, assumptions must be made in constructing such a table.As the static gap report fails to address the dynamic changes in the balance sheet composition or prevailing interest rates, we utilize a simulation model to enhance our asset/liability management. This model is used to create pro forma net interest income scenarios under various interest rate shocks. Given an instantaneous and parallel shift in interest rates of plus and minus 100 basis points, our projected net interest income for the 12 months ending Financial institutions are affected differently by inflation than commercial and industrial companies that have significant investments in fixed assets and inventories. Most of our assets are monetary in nature and change correspondingly with variations in the inflation rate. It is difficult to precisely measure the impact inflation has on us, however we believe that our exposure to inflation can be mitigated through asset/liability management. 34 Liquidity: Liquidity management is essential to our continuing operations and enables us to meet financial obligations as they come due, as well as to take advantage of new business opportunities as they arise. Financial obligations include, but are not limited to, the following: Funding new and existing loan commitments; Payment of deposits on demand or at their contractual maturity; Repayment of borrowings as they mature; Payment of lease obligations; and Payment of operating expenses. These obligations are managed daily, thus enabling us to effectively monitor fluctuations in our liquidity position and to adapt that position according to market influences and balance sheet trends. Future liquidity needs are forecasted, and strategies are developed to ensure adequate liquidity at all times. Historically, core deposits have been the primary source of liquidity because of their stability and lower cost, in general, when compared to other types of funding sources. Providing additional sources of funds are loan and investment payments and prepayments and the ability to sell both available for sale securities and mortgage loans held for sale. We believe liquidity is adequate to meet both present and future financial obligations and commitments on a timely basis. As a result of the onset of the COVID-19 pandemic, we have placed increased emphasis on solidifying, monitoring and managing our liquidity position. We believe our liquidity position is strong. At available-for-sale With respect to monitoring and managing our liquidity, in addition to our normal quarterly liquidity reporting to the Risk Committee that includes stress testing under moderate, severe and extreme scenarios, we have instituted a formalized monthly presentation COVID-19, we have focused on maintaining greater liquidity. We believe liquidity needs should be greater during this volatile time within the industry and markets. Based upon this volatility, we took steps to maintain a greater balance of cash and cash equivalents on the balance sheet through the sale of investment securitiesavailable-for-sale We employ several analytical techniques in assessing the adequacy of our liquidity position. One such technique is the use of ratio analysis to determine the extent of our reliance on noncore funds to fund our investments and loans maturing after one-year, less short-term investments to assets equaled year-end. The increase in the net noncore funding dependence ratio is associated with borrowing to fund investment in PPP loans and is anticipated to reduce substantially as these loans enter the forgiveness stage. In addition, as compared to peer levels, our reliance on short-term noncore funds remains low.The Consolidated Statements of Cash Flows present the changes in cash and cash equivalents from operating, investing and financing activities. Cash and cash equivalents, consisting of cash on hand, cash items in the process of collection, deposit balances with other banks and federal funds sold, decreased 35 Operating activities Investing activities primarily include transactions related to our lending activities and investment portfolio. Investing activities used net cash of Financing activities provided net cash of We believe that our future liquidity needs will be satisfied through maintaining an adequate level of cash and cash equivalents, by maintaining readily available access to traditional funding sources, and through proceeds received from the investment and loan portfolios. The current sources of funds are expected to enable us to meet all cash obligations as they come due. Capital: Stockholders’ equity totaled Bank regulatory agencies consider capital to be a significant factor in ensuring the safety of a depositor’s accounts. These agencies have adopted minimum capital adequacy requirements that include mandatory and discretionary supervisory actions for noncompliance. The Bank’s capital ratios and the minimum ratios required for capital adequacy purposes and to be considered well capitalized under the prompt corrective action provisions are summarized below for the periods ended
36 In light of the recent pandemic crisis and its potential adverse impact on capital adequacy within the financial industry, maintaining a high level of capital is of extreme importance to federal regulators as well as our management and Board of Directors. Our asset liability committee continually reviews our capital position. As part of its review, the ALCO considers: The current and expected capital requirements, including the maintenance of capital ratios in excess of minimum regulatory guidelines; The market value of our securities and the resulting effect on capital; Nonperforming asset levels and the effect deterioration in asset quality will have on capital; Any planned asset growth; The anticipated level of net earnings and capital position, taking into account the projected asset/liability position and exposure to changes in interest rates; The source and timing of additional funds to fulfill future capital requirements. Based on the heightened level of stress on capital caused by the recent events, management maintains a capital plan approved by the Board of Directors. Our capital plan consists of the following areas of focus, among others: Comprehensive risk assessment including consideration of the following risk elements, among others: credit; liquidity; earnings; economic value of equity; concentration; and economic, both national and local; Assessing current regulatory capital adequacy levels; Monitoring procedures consisting of stress testing, using both scenarios of previous historic data of financial crisis periods and the Federal Reserve Board’s Supervisory Capital Assessment Program (“SCAP”), and certain triggering events that would call into question the need to raise additional capital; Identifying realistic and readily available alternative sources for augmenting capital if higher capital levels are required; Evaluating dividend levels, and; Providing a ten-year financial projection for analyzing capital adequacy.as-needed basis. Subsequent to the issuance in the fourth quarter of 2020, management determined to downstream $15 million of the available $25 million from the bank holding company to the Bank in the form of additional capital.Based on the most recent notification from the FDIC, the Bank was categorized as well capitalized at Review of Financial Performance: We reported a net loss of The major factor impacting earnings in Also impacting net income for the COVID-19 pandemic as of 37 Partially offsetting the impact of these reductions to income was the recognition of an $815 net gain on the sale of investment securities in order to provide liquidity to fund loan demand and limit exposure to falling rates through the disposition of adjustable rate securities. The Company also recognized interest and fees on origination of loans pursuant to the PPP of $2,776 during the nine months ended September 30, 2020. The Company began implemented cost reduction strategies beginning in 2019, and those efforts continued subsequent to the end of the second quarter of 2020 by implementing additional efficiency initiatives aimed at substantially lowering operating costs. This action implemented on September 1, 2020 is expected to lower salaries and benefits expense by $3.4 million annually on a pre-tax basis. The results for the If the COVID-19 pandemic persists, it will continue to have a severe effect on economic activity and Net Interest Income: Net interest income is the fundamental source of earnings for commercial banks. Fluctuations in the level of net interest income can have the greatest impact on net profits. Net interest income is defined as the difference between interest revenue, comprised of interest and fees earned on interest-earning assets, and interest expense, the cost of interest-bearing liabilities supporting those assets. The primary sources of earning assets are loans and investment securities, while interest-bearing deposits, short-term and long-term borrowings comprise interest-bearing liabilities. Net interest income is impacted by: Variations in the volume, rate and composition of earning assets and interest-bearing liabilities; Changes in general market rates; and The level of nonperforming assets. Changes in net interest income are measured by the net interest spread and net interest margin. Net interest spread, the difference between the average yield earned on earning assets and the average rate incurred on interest-bearing liabilities, illustrates the effects changing interest rates have on profitability. Net interest margin, which is net interest income as a percentage of earning assets, is a more comprehensive ratio, as it reflects not only the spread, but also the change in the composition of interest-earning assets and interest-bearing liabilities. Tax-exempt loans and investments carrypre-tax yields lower than their taxable counterparts. Therefore, in order to make the analysis of net interest income more comparable,tax-exempt income and yields are reported herein on atax-equivalent basis using the prevailing federal statutory tax rate of 21% in 2020 and 2019, respectively.For the tax-equivalent net interest income decreased tax-equivalent net interest income was primarily attributable to a decline in thetax-equivalent loan yield due to reductions in market rates,tax-equivalent net interest margin for the tax-equivalent yield on the loan portfolio decreased to For the tax-equivalent interest income decreased tax-equivalent basis, decreased for the Tax-equivalent loan income decreased tax-equivalent interest income on investments.38 Total interest expense decreased For the three months ended tax-equivalent net interest income decreased tax-equivalent net interest income was attributable to a decline in net accretion from purchased assets and assumed liabilities and reduced earnings from general market rates, partially offset by increased net earnings from PPP loans. Average earning assets increased tax-equivalent net interest margin for the three months ended For the three months ended tax-equivalent interest income decreased tax-equivalent basis, decreased 158 basis points for the three months ended tax-equivalent yield on the loan portfolio was tax-equivalent interest income of tax-equivalent interest earned on investments was Total interest expense decreased 39 The average balances of assets and liabilities, corresponding interest income and expense and resulting average yields or rates paid are summarized as follows. Average balances were calculated using average daily balances. Averages for earning assets include nonaccrual loans. Loan fees are included in interest income on loans. Investment averages include available-for-sale
Provision for Loan Losses: We evaluate the adequacy of the allowance for loan losses account on a quarterly basis utilizing our systematic analysis in accordance with procedural discipline. We take into consideration certain factors such as composition of the loan portfolio, volumes of nonperforming loans, volumes of net charge-offs, prevailing economic conditions and other relevant factors when determining the adequacy of the allowance for loan losses account. We make monthly provisions to the allowance for loan losses account in order to maintain the allowance at the appropriate level indicated by our evaluations. Based on our most current evaluation, we believe that the allowance is adequate to absorb any known and inherent losses in the portfolio as of The provision for loan losses totaled $5,656 for the nine months ended September 30, 2020, compared to $2,250 in 2019. For the quarter ended September 30, the provision for loan losses was $1,844 in 2020 compared to $1,049 in 2019. The increase in the 40 provision for loan losses COVID-19 pandemic as of COVID-19 pandemic related financial stress.Noninterest Income: For the COVID-19 induced suspensions and reductions to service charges along with reductions in customer activity. Specifically, the Company experienced reductions in overdraft fee income, ATM income, and reduced late charge fee income as it proactively worked with customers and noncustomers alike in an effort to minimize the financial impact ofCOVID-19 within the communities served. Trust and wealth management income declined for the For the quarter ended Noninterest Expenses: In general, noninterest expense is categorized into three main groups: employee-related expenses, occupancy and equipment expenses and other expenses. Employee-related expenses are costs associated with providing salaries, including payroll taxes and benefits, to our employees. Occupancy and equipment expenses, the costs related to the maintenance of facilities and equipment, include depreciation, general maintenance and repairs, real estate taxes, lease expense and utility costs. Other expenses include general operating expenses such as advertising, contractual services, insurance, FDIC assessments, other taxes, and supplies. Several of these costs and expenses are variable, while the remainder are fixed. We utilize budgets and other related strategies to control the variable expenses. Noninterest expense increased one-time charges of $2,218 taken in 2019 related to a separation agreement. Net occupancy expense increased one-time charge for the For the three months ended Income Taxes: We recorded an income tax benefit of 41 Riverview Financial Corporation
Not applicable to a smaller reporting company.
(a) Evaluation of disclosure controls and procedures. At 10-Q, the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) evaluated the effectiveness of the Company’s disclosure controls and procedures as defined inRule 13a-15(e) under the Exchange Act. Based upon that evaluation, the CEO and CFO concluded that the disclosure controls and procedures, at (b) Changes in internal control. There were no changes made in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. PART II—OTHER INFORMATION
In the opinion of the Company, after review with legal counsel, there are no proceedings pending to which the Company is a party or to which its property is subject, which, if determined adversely to the Company, would have a material effect on the consolidated results of operations or financial condition. There are no proceedings pending other than ordinary, routine litigation incident to the business of the Company. In addition, no material proceedings are pending or are known to be threatened or contemplated against the Company by governmental authorities.
Not required for smaller reporting companies.
None.
Not applicable.
Not applicable.
Not applicable. 42
The following Exhibits are incorporated by reference hereto:
43 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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