Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 06, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Transition Report. | false | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Entity File Number | 001-38290 | |
Entity Registrant Name | Sterling Bancorp, Inc. | |
Entity Incorporation, State or Country Code | MI | |
Entity Tax Identification Number | 38-3163775 | |
Entity Address, Address Line One | One Towne Square | |
Entity Address, Address Line Two | Suite 1900 | |
Entity Address, City or Town | Southfield | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48076 | |
City Area Code | 248 | |
Local Phone Number | 355-2400 | |
Title of 12(b) Security | Common stock | |
Trading Symbol | SBT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 50,475,181 | |
Entity Central Index Key | 0001680379 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and due from banks | $ 774,478 | $ 998,497 |
Interest-bearing time deposits with other banks | 805 | 7,021 |
Investment securities | 195,974 | 304,958 |
Mortgage loans held for sale | 15,107 | 22,284 |
Loans, net of allowance for loan losses of $70,669 and $72,387 | 2,287,857 | 2,434,356 |
Accrued interest receivable | 9,660 | 10,990 |
Mortgage servicing rights, net | 3,232 | 5,688 |
Leasehold improvements and equipment, net | 9,423 | 8,512 |
Operating lease right-of-use assets | 19,817 | 19,232 |
Federal Home Loan Bank stock, at cost | 22,950 | 22,950 |
Cash surrender value of bank-owned life insurance | 32,766 | 32,495 |
Deferred tax asset, net | 23,749 | 24,326 |
Other assets | 21,634 | 22,736 |
Total assets | 3,417,452 | 3,914,045 |
Liabilities: | ||
Noninterest-bearing deposits | 55,721 | 58,458 |
Interest-bearing deposits | 2,481,198 | 3,040,508 |
Deposits held for sale | 73,383 | |
Total deposits | 2,610,302 | 3,098,966 |
Federal Home Loan Bank borrowings | 318,000 | 318,000 |
Subordinated notes, net | 65,377 | 65,341 |
Operating lease liabilities | 21,085 | 20,497 |
Accrued expenses and other liabilities | 75,646 | 91,650 |
Total liabilities | 3,090,410 | 3,594,454 |
Shareholders' equity: | ||
Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 50,475,181 shares at June 30, 2021 and 49,981,861 shares at December 31, 2020, respectively | 82,157 | 80,807 |
Additional paid-in capital | 13,796 | 13,544 |
Retained earnings | 230,630 | 224,853 |
Accumulated other comprehensive income | 459 | 387 |
Total shareholders' equity | 327,042 | 319,591 |
Total liabilities and shareholders' equity | $ 3,417,452 | $ 3,914,045 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Condensed Consolidated Balance Sheets | ||
Allowance for loan losses | $ 70,669 | $ 72,387 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, issued (in shares) | 50,475,181 | 49,981,861 |
Common stock, outstanding (in shares) | 50,475,181 | 49,981,861 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Interest income | ||||
Interest and fees on loans | $ 30,074 | $ 37,501 | $ 61,368 | $ 77,026 |
Interest and dividends on investment securities and restricted stock | 385 | 1,037 | 775 | 2,071 |
Other interest | 227 | 141 | 490 | 575 |
Total interest income | 30,686 | 38,679 | 62,633 | 79,672 |
Interest expense | ||||
Interest on deposits | 5,236 | 9,576 | 11,938 | 19,940 |
Interest on Federal Home Loan Bank borrowings | 847 | 877 | 1,685 | 1,687 |
Interest on subordinated notes | 1,005 | 1,178 | 2,185 | 2,355 |
Total interest expense | 7,088 | 11,631 | 15,808 | 23,982 |
Net interest income | 23,598 | 27,048 | 46,825 | 55,690 |
Provision (recovery) for loan losses | (1,806) | 4,297 | (2,543) | 25,150 |
Net interest income after provision (recovery) for loan losses | 25,404 | 22,751 | 49,368 | 30,540 |
Non-interest income | ||||
Non-interest income | $ 144 | $ 95 | $ 303 | $ 212 |
Revenue, Product and Service [Extensible List] | sbt:ServiceChargesAndFeesMember | sbt:ServiceChargesAndFeesMember | sbt:ServiceChargesAndFeesMember | sbt:ServiceChargesAndFeesMember |
Gain (loss) on sale of investment securities | $ (34) | $ 199 | ||
Gain on sale of mortgage loans held for sale | $ 70 | 751 | $ 468 | 1,020 |
Unrealized gains (losses) on equity securities | 15 | 43 | (75) | 123 |
Net servicing loss | (908) | (207) | (1,338) | (1,118) |
Income on cash surrender value of bank-owned life insurance | 322 | 317 | 635 | 645 |
Other | 88 | 358 | 191 | 771 |
Total non-interest income | (269) | 1,323 | 184 | 1,852 |
Non-interest expense | ||||
Salaries and employee benefits | 8,678 | 7,336 | 16,526 | 14,089 |
Occupancy and equipment | 2,249 | 2,208 | 4,445 | 4,326 |
Professional fees | 5,721 | 8,268 | 14,476 | 11,580 |
FDIC assessments | 500 | 240 | 1,219 | 259 |
Data processing | 440 | 351 | 786 | 686 |
Net provision (recovery) of mortgage repurchase liability | (512) | 25 | (665) | 25 |
Other | 2,868 | 1,619 | 4,491 | 3,317 |
Total non-interest expense | 19,944 | 20,047 | 41,278 | 34,282 |
Income (loss) before income taxes | 5,191 | 4,027 | 8,274 | (1,890) |
Income tax expense (benefit) | 1,739 | 1,160 | 2,497 | (727) |
Net income (loss) | $ 3,452 | $ 2,867 | $ 5,777 | $ (1,163) |
Income (loss) per share, basic and diluted (in dollars per share) | $ 0.07 | $ 0.06 | $ 0.12 | $ (0.02) |
Weighted average common shares outstanding: | ||||
Basic | 50,009,053 | 49,837,948 | 49,930,563 | 49,837,805 |
Diluted | 50,060,775 | 49,841,741 | 49,987,253 | 49,837,805 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Net income (loss) | $ 3,452 | $ 2,867 | $ 5,777 | $ (1,163) |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gains (losses) on investment securities, arising during the period, net of tax effect of $51, $(66), $28, and $218, respectively | 131 | (171) | 72 | 560 |
Reclassification adjustment for (gains) losses included in net income of $-, $34, $-, and $(199), respectively, included in gain (loss) on sale of investment securities, net of tax effect of $-, $(10), $-, and $56, respectively | 25 | (143) | ||
Total other comprehensive income (loss) | 131 | (146) | 72 | 417 |
Comprehensive income (loss) | $ 3,583 | $ 2,721 | $ 5,849 | $ (746) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Unrealized gains on investment securities, arising during the period, tax effect | $ 51 | $ (66) | $ 28 | $ 218 |
Reclassification adjustment for gains (losses) included in net income on sale of investment securities, before tax | 34 | (199) | ||
Reclassification adjustment for gains included in net income on sale of investment securities, tax effect | $ (10) | $ 56 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) | Common stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total |
Balance at beginning of the period at Dec. 31, 2019 | $ 80,889,000 | $ 13,210,000 | $ 238,319,000 | $ 196,000 | $ 332,614,000 |
Balance at beginning of the period (in shares) at Dec. 31, 2019 | 49,944,473 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | (4,030,000) | (4,030,000) | |||
Repurchases of shares of common stock | $ (82,000) | (82,000) | |||
Repurchases of shares of common stock (in shares) | (10,912) | ||||
Stock-based compensation | 109,000 | 109,000 | |||
Stock-based compensation (in shares) | 134,177 | ||||
Other comprehensive income (loss) | 563,000 | 563,000 | |||
Dividends distributed ($0.01 per share) | (499,000) | (499,000) | |||
Balance at end of the period at Mar. 31, 2020 | $ 80,807,000 | 13,319,000 | 233,790,000 | 759,000 | 328,675,000 |
Balance at end of the period (in shares) at Mar. 31, 2020 | 50,067,738 | ||||
Balance at beginning of the period at Dec. 31, 2019 | $ 80,889,000 | 13,210,000 | 238,319,000 | 196,000 | 332,614,000 |
Balance at beginning of the period (in shares) at Dec. 31, 2019 | 49,944,473 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | (1,163,000) | ||||
Other comprehensive income (loss) | 417,000 | ||||
Balance at end of the period at Jun. 30, 2020 | $ 80,807,000 | 13,328,000 | 236,657,000 | 613,000 | 331,405,000 |
Balance at end of the period (in shares) at Jun. 30, 2020 | 50,007,415 | ||||
Balance at beginning of the period at Mar. 31, 2020 | $ 80,807,000 | 13,319,000 | 233,790,000 | 759,000 | 328,675,000 |
Balance at beginning of the period (in shares) at Mar. 31, 2020 | 50,067,738 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 2,867,000 | 2,867,000 | |||
Stock-based compensation | 9,000 | 9,000 | |||
Stock-based compensation (in shares) | (60,323) | ||||
Other comprehensive income (loss) | (146,000) | (146,000) | |||
Balance at end of the period at Jun. 30, 2020 | $ 80,807,000 | 13,328,000 | 236,657,000 | 613,000 | 331,405,000 |
Balance at end of the period (in shares) at Jun. 30, 2020 | 50,007,415 | ||||
Balance at beginning of the period at Dec. 31, 2020 | $ 80,807,000 | 13,544,000 | 224,853,000 | 387,000 | 319,591,000 |
Balance at beginning of the period (in shares) at Dec. 31, 2020 | 49,981,861 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 2,325,000 | 2,325,000 | |||
Issuance of shares of common stock for cash ($4.50 per share) (in shares) | 300,000 | ||||
Repurchase of restricted shares to pay employee tax liability | $ (8,536) | (46,000) | (46,000) | ||
Stock-based compensation | 105,000 | 105,000 | |||
Stock-based compensation (in shares) | 36,082 | ||||
Other comprehensive income (loss) | (59,000) | (59,000) | |||
Balance at end of the period at Mar. 31, 2021 | $ 80,807,000 | 13,603,000 | 227,178,000 | 328,000 | 321,916,000 |
Balance at end of the period (in shares) at Mar. 31, 2021 | 50,009,407 | ||||
Balance at beginning of the period at Dec. 31, 2020 | $ 80,807,000 | 13,544,000 | 224,853,000 | 387,000 | 319,591,000 |
Balance at beginning of the period (in shares) at Dec. 31, 2020 | 49,981,861 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 5,777,000 | ||||
Repurchases of shares of common stock | $ (82,000) | ||||
Repurchases of shares of common stock (in shares) | (10,912) | ||||
Other comprehensive income (loss) | 72,000 | ||||
Balance at end of the period at Jun. 30, 2021 | $ 82,157,000 | 13,796,000 | 230,630,000 | 459,000 | 327,042,000 |
Balance at end of the period (in shares) at Jun. 30, 2021 | 50,475,181 | ||||
Balance at beginning of the period at Mar. 31, 2021 | $ 80,807,000 | 13,603,000 | 227,178,000 | 328,000 | 321,916,000 |
Balance at beginning of the period (in shares) at Mar. 31, 2021 | 50,009,407 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 3,452,000 | 3,452,000 | |||
Issuance of shares of common stock for cash ($4.50 per share) | $ 1,350,000 | 1,350,000 | |||
Stock-based compensation | 193,000 | 193,000 | |||
Stock-based compensation (in shares) | 165,774 | ||||
Other comprehensive income (loss) | 131,000 | 131,000 | |||
Balance at end of the period at Jun. 30, 2021 | $ 82,157,000 | $ 13,796,000 | $ 230,630,000 | $ 459,000 | $ 327,042,000 |
Balance at end of the period (in shares) at Jun. 30, 2021 | 50,475,181 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Jun. 30, 2021 | Mar. 31, 2020 | |
Condensed Consolidated Statements of Changes in Shareholders' Equity | ||
Dividends paid per common share (in dollars per share) | $ 0.01 | |
Issuance of common stock | $ 4.50 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash Flows From Operating Activities | ||
Net income (loss) | $ 5,777 | $ (1,163) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Provision (recovery) for loan losses | (2,543) | 25,150 |
Deferred income tax expense (benefit) | 549 | (8,159) |
Gain on sale of investment securities | (199) | |
Unrealized (gains) losses on equity securities | 75 | (123) |
Amortization (accretion), net, on investment securities | 964 | (127) |
Depreciation and amortization on leasehold improvements and equipment | 813 | 801 |
Origination, net of principal payments, mortgage loans held for sale | (7,599) | (103,713) |
Proceeds from sale of mortgage loans held for sale | 14,904 | 102,396 |
Gain on sale of mortgage loans held for sale | (468) | (1,020) |
Net provision (recovery) of mortgage repurchase liability | (665) | 25 |
Increase in cash surrender value of bank-owned life insurance, net of premiums | (271) | (298) |
Valuation allowance adjustments and amortization of mortgage servicing rights | 2,555 | 2,989 |
Stock-based compensation | 298 | 118 |
Other | 492 | 80 |
Change in operating assets and liabilities: | ||
Accrued interest receivable | 1,330 | (146) |
Other assets | 2,862 | 2,010 |
Accrued expenses and other liabilities | (12,520) | (4,964) |
Net cash provided by operating activities | 6,553 | 13,657 |
Cash Flows From Investing Activities | ||
Maturities of interest-bearing time deposits with other banks | 6,216 | |
Purchases of interest-bearing time deposits with other banks | (8,706) | |
Maturities and principal receipts of investment securities | 108,045 | 83,231 |
Sales of investment securities | 0 | 59,359 |
Purchases of investment securities | (246,749) | |
Net decrease in loans | 316,804 | 186,902 |
Purchases of portfolio loans | (172,505) | (37,746) |
Purchase of leasehold improvements and equipment | (1,772) | (452) |
Net cash provided by investing activities | 256,788 | 35,839 |
Cash Flows From Financing Activities | ||
Net increase (decrease) in deposits | (488,664) | 396,642 |
Proceeds from advances from Federal Home Loan Bank | 100,000 | |
Proceeds from issuance of shares of common stock | 1,350 | |
Repurchase of restricted shares to pay employee tax liability | (46) | |
Repurchases of shares of common stock | (82) | |
Dividends paid to shareholders | (499) | |
Net cash provided by (used in) financing activities | (487,360) | 496,061 |
Net change in cash and due from banks | (224,019) | 545,557 |
Cash and due from banks at beginning of period | 998,497 | 77,819 |
Cash and due from banks at end of period | 774,478 | 623,376 |
Cash paid: | ||
Interest | 25,432 | 30,589 |
Income taxes | 838 | |
Noncash investing and financing activities: | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 2,512 | $ 3,009 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 6 Months Ended |
Jun. 30, 2021 | |
Nature of Operations and Basis of Presentation | |
Nature of Operations and Basis of Presentation | Note 1—Nature of Operations and Basis of Presentation Nature of Operations Sterling Bancorp, Inc. (the “Company”) is a unitary thrift holding company that was incorporated in 1989 and the parent company of its wholly owned subsidiary, Sterling Bank and Trust, F.S.B. (the “Bank”). The Company’s business is conducted through the Bank, which was formed in 1984. The Bank originates residential and commercial real estate loans, construction loans, commercial lines of credit and other consumer loans and provides deposit products, consisting primarily of checking, savings and term certificate accounts. The Bank operates through a network of 29 branches of which 26 branches are located in San Francisco and Los Angeles, California with the remaining branches located in New York, New York and Southfield, Michigan. The Company is headquartered in Southfield, Michigan, and its operations are in the financial services industry. Management evaluates the performance of the Company’s business based on one reportable segment, community banking. On March 19, 2021, the Bank entered into an agreement with First Federal Savings & Loan Association of Port Angeles, a Washington state chartered bank, to sell the Bank’s Bellevue, Washington branch office. The sale includes the transfer of all deposit accounts located at the branch, as well as the transfer of all branch premises and equipment. Subsequent to June 30, 2021, the Bank completed the sale of the branch office. Refer to Note 17—Subsequent Events for further details. The Company is subject to regulation, examination and supervision by the Board of Governors of the Federal Reserve System (the “FRB” or “Federal Reserve”). The Bank is a federally chartered stock savings bank that is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (“OCC”) of the U.S. Department of Treasury and the Federal Deposit Insurance Corporation (“FDIC”) and is a member of the Federal Home Loan Bank (“FHLB”) system. Basis of Presentation The condensed consolidated balance sheet as of June 30, 2021 and the condensed consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity and cash flows for the three and six months ended June 30, 2021 and 2020 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, in the opinion of management, of a normal recurring nature that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The financial data and other financial information disclosed in these notes to the condensed consolidated financial statements related to these periods are also unaudited. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021 or for any future annual or interim period. The consolidated balance sheet at December 31, 2020 included herein was derived from the audited financial statements as of that date. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 26, 2021 (the “2020 Form 10-K”). |
New Accounting Standards
New Accounting Standards | 6 Months Ended |
Jun. 30, 2021 | |
New Accounting Standards | |
New Accounting Standards | Note 2—New Accounting Standards Recently Issued Accounting Guidance Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief. Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates At this time, the Company has formed a cross-functional implementation team consisting of individuals from credit, finance and information systems. The implementation team has been working with a software vendor to assist in implementing required changes to credit loss estimation models and processes. The historical data set for model development has been finalized, and the credit loss estimation models are in the process of being developed and tested. The Company expects to recognize a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the first reporting period in which ASU No. 2016-13 is effective. The Company has not yet determined the magnitude of any such one-time cumulative adjustment or of the overall impact of ASU No. 2016-13 on its consolidated financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3—Summary of Significant Accounting Policies Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the results of the Company and its wholly-owned subsidiary. On December 21, 2020, QCM, LLC, doing business as Quantum Capital Management, a wholly-owned subsidiary of Quantum Fund, LLC and an indirect wholly-owned subsidiary of the Bank, completed the sale of substantially all of its assets, which consisted primarily of client advisory agreements for aggregate consideration of $250 . The operations of Quantum Capital Management were not significant. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates. Concentration of Credit Risk The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At June 30, 2021 and December 31, 2020, residential real estate loans accounted for 83% and 81%, respectively, of the loan portfolio. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At June 30, 2021 and December 31, 2020, approximately 87% of the loan portfolio was originated with respect to properties or businesses located in California. Starting December 9, 2019, the Bank suspended its Advantage Loan Program and announced on March 6, 2020 that it permanently discontinued this program. Loans originated under this Program comprised a significant component of the Bank’s total loan originations. Advantage Loan Program loans (including nonaccrual residential real estate loans held for sale of $14,867 and $19,375 at June 30, 2021 and December 31, 2020, respectively) totaled $1,427,467 and $1,515,248, or 73% and 74%, of the residential loan portfolio at June 30, 2021 and December 31, 2020, respectively. Refer to Note 16 – Risks and Uncertainties – COVID-19 The coronavirus disease 2019 (“COVID-19”) pandemic, and related efforts to contain it, have caused significant disruptions in the functioning of the financial markets, resulted in an unprecedented slowdown in economic activity and a related increase in unemployment, and have increased economic and market uncertainty and volatility. The Company’s primary market areas of California and New York City have been hit particularly hard by the COVID-19 pandemic. Federal and state governments have taken, and continue to take, unprecedented actions to contain the spread of the disease, including vaccine distribution, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief for businesses and individuals impacted by the pandemic. During the first half of 2021, the COVID-19 pandemic continued to create and exacerbate significant risks and uncertainties for the markets that the Bank serves. As the Bank’s residential and commercial customers are facing various levels of financial stress, the Bank continues to experience an elevated level of delinquent and nonaccrual loans, primarily in residential real estate, office, lodging, retail and construction loans. The duration and severity of the effect of the COVID-19 pandemic on economic, market and business conditions remain uncertain. The Company continues to be subject to heightened business, operational, market, credit and other risks related to the COVID-19 pandemic, which may have an adverse effect on its business, financial condition, liquidity, results of operations, risk-weighted assets and regulatory capital. |
Investment Securities
Investment Securities | 6 Months Ended |
Jun. 30, 2021 | |
Investment Securities | |
Investment Securities | Note 4—Investment Securities Debt Securities The following tables summarize the amortized cost and fair value of debt securities available for sale at June 30, 2021 and December 31, 2020 and the corresponding amounts of gross unrealized gains and losses: June 30, 2021 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury & Agency securities $ 73,540 $ 90 $ — $ 73,630 Mortgage-backed securities 29,408 91 (264) 29,235 Collateralized mortgage obligations 86,888 742 — 87,630 Collateralized debt obligations 212 — (22) 190 Total $ 190,048 $ 923 $ (286) $ 190,685 December 31, 2020 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury & Agency securities $ 138,742 $ 255 $ — $ 138,997 Mortgage-backed securities 33,743 72 (1) 33,814 Collateralized mortgage obligations 126,359 628 (391) 126,596 Collateralized debt obligations 214 — (27) 187 Total $ 299,058 $ 955 $ (419) $ 299,594 Securities with a fair value of $73,630 were pledged as collateral on FHLB borrowings at June 30, 2021. All of the Company’s mortgage-backed securities, and a majority of the Company’s collateralized mortgage obligations are issued and/or guaranteed by a U.S. government agency (Government National Mortgage Association) or a U.S. government-sponsored enterprise (Federal Home Loan Mortgage Corporation (“Freddie Mac”) or Federal National Mortgage Association (“Fannie Mae”)). The fair value of the private-label collateralized mortgage obligations was $705 and $816 at June 30, 2021 and December 31, 2020, respectively. No securities of any single issuer, other than debt securities issued by the U.S. government, government agency and government-sponsored enterprises, were in excess of 10% of total shareholders’ equity as of June 30, 2021 and December 31, 2020. For the three and six months ended June 30, 2020, the proceeds from sales of debt securities available for sale were $36,315 and $59,359, respectively. The Company recorded gross realized gains of $44 and gross realized losses of $78 during the three months ended June 30, 2020 and gross realized gains of $279 and gross realized losses of $80 during the six months ended June 30, 2020. There were no debt securities sold during the six months ended June 30, 2021. The amortized cost and fair value of the U.S. Treasury and Agency securities at June 30, 2021 are shown by contractual maturity in the table below. Mortgage-backed securities, collateralized mortgage obligations and collateralized debt obligations are disclosed separately as the expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Fair Cost Value U.S. Treasury & Agency securities Due after one year through five years $ 73,540 $ 73,630 Mortgage-backed securities 29,408 29,235 Collateralized mortgage obligations 86,888 87,630 Collateralized debt obligations 212 190 Total $ 190,048 $ 190,685 The following table summarizes debt securities available for sale, at fair value, with unrealized losses at June 30, 2021 and December 31, 2020 aggregated by major security type and length of time the individual securities have been in a continuous unrealized loss position: June 30, 2021 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses Mortgage-backed securities $ 9,972 $ (264) $ — $ — $ 9,972 $ (264) Collateralized debt obligations — — 190 (22) 190 (22) Total $ 9,972 $ (264) $ 190 $ (22) $ 10,162 $ (286) December 31, 2020 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses Mortgage-backed securities $ 5,694 $ (1) $ — $ — $ 5,694 $ (1) Collateralized mortgage obligations 75,740 (391) — — 75,740 (391) Collateralized debt obligations — — 187 (27) 187 (27) Total $ 81,434 $ (392) $ 187 $ (27) $ 81,621 $ (419) As of June 30, 2021, the debt securities portfolio consisted of 19 debt securities, with three debt securities in an unrealized loss position. For debt securities in an unrealized loss position, management has both the intent and ability to hold these investments until the recovery of the decline. The fair value is expected to increase as these securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of June 30, 2021, the unrealized losses in these securities are due to non-credit-related factors, including changes in interest rates and other market conditions; thus, the impairment was determined to be temporary. All interest and dividends are considered taxable. A collateralized debt obligation with a carrying value of $190 and $187 at June 30, 2021 and December 31, 2020, respectively, was rated high quality at inception, but it was subsequently rated by Moody’s as Ba1, which is defined as “speculative.” The issuers of the underlying investments (the collateral) of the collateralized debt obligation are primarily banks. Management uses in-house and third-party other-than-temporary impairment evaluation models to compare the present value of expected cash flows to the previous estimate to ensure there are no adverse changes in cash flows during the period. The other-than-temporary impairment model considers the structure and term of the collateralized debt obligations and the financial condition of the underlying issuers. Assumptions used in the model include expected future default rates and prepayments. The collateralized debt obligation remained classified as available for sale and represented $22 and $27 of the unrealized losses reported at June 30, 2021 and December 31, 2020, respectively. Equity Securities Equity securities consist of an investment in a qualified community reinvestment act investment fund, which is a publicly-traded mutual fund and an investment in the common equity of Pacific Coast Banker’s Bank, a thinly traded restricted stock. At June 30, 2021 and December 31, 2020, equity securities totaled $5,289 and $5,364, respectively, and are included in investment securities in the condensed consolidated balance sheets. Equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in income. At June 30, 2021 and December 31, 2020, equity securities with readily determinable fair values were $5,043 and $5,118 , respectively. The following is a summary of unrealized and realized gains and losses recognized in the condensed consolidated statements of operations during the three and six months ended June 30, 2021 and 2020: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net gains (losses) recorded during the period on equity securities $ 15 $ 43 $ (75) $ 123 Less: net gains (losses) recorded during the period on equity securities sold during the period — — — — Unrealized gains (losses) recorded during the period on equity securities held at the reporting date $ 15 $ 43 $ (75) $ 123 The Company has elected to account for its investment in a thinly traded, restricted stock using the measurement alternative for equity securities without readily determinable fair values , resulting in the investment carried at cost based on no evidence of impairment or observable trading activity during the six months ended June 30, 2021 and 2020. The investment was reported at $246 at June 30, 2021 and December 31, 2020. |
Loans
Loans | 6 Months Ended |
Jun. 30, 2021 | |
Loans | |
Loans | Note 5—Loans Major categories of loans were as follows: June 30, December 31, 2021 2020 Residential real estate $ 1,948,892 $ 2,033,526 Commercial real estate 263,278 259,958 Construction 144,385 206,581 Commercial lines of credit 1,971 6,671 Other consumer — 7 Total loans 2,358,526 2,506,743 Less: allowance for loan losses (70,669) (72,387) Loans, net $ 2,287,857 $ 2,434,356 Loans totaling $521,218 and $630,197 were pledged as collateral on FHLB borrowings at June 30, 2021 and December 31, 2020, respectively. The following tables present the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2021 and 2020: Commercial Residential Commercial Lines of Other Three Months Ended June 30, 2021 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Beginning balance $ 33,056 $ 22,763 $ 15,966 $ 86 $ — $ — $ 71,871 Provision (recovery) for loan losses (579) (287) (912) (28) — — (1,806) Charge offs — — — — — — — Recoveries 587 15 2 — — — 604 Total ending balance $ 33,064 $ 22,491 $ 15,056 $ 58 $ — $ — $ 70,669 Commercial Residential Commercial Lines of Other Six Months Ended June 30, 2021 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Beginning balance $ 32,366 $ 21,942 $ 17,988 $ 91 $ — $ — $ 72,387 Provision (recovery) for loan losses (93) 518 (2,935) (33) — — (2,543) Charge offs — — — — — — — Recoveries 791 31 3 — — — 825 Total ending balance $ 33,064 $ 22,491 $ 15,056 $ 58 $ — $ — $ 70,669 Commercial Residential Commercial Lines of Other Three Months Ended June 30, 2020 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Beginning balance $ 19,154 $ 11,261 $ 11,439 $ 368 $ 1 $ 390 $ 42,613 Provision (recovery) for loan losses (344) 4,492 557 (18) — (390) 4,297 Charge offs — — — — — — — Recoveries 2 17 2 — — — 21 Total ending balance $ 18,812 $ 15,770 $ 11,998 $ 350 $ 1 $ — $ 46,931 Commercial Residential Commercial Lines of Other Six Months Ended June 30, 2020 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Beginning balance $ 12,336 $ 5,243 $ 3,822 $ 328 $ 1 $ — $ 21,730 Provision for loan losses 6,464 10,491 8,173 22 — — 25,150 Charge offs — — — — — — — Recoveries 12 36 3 — — — 51 Total ending balance $ 18,812 $ 15,770 $ 11,998 $ 350 $ 1 $ — $ 46,931 The following tables present the balance in the allowance for loan losses and the recorded investment by portfolio segment and based on impairment evaluation method as of June 30, 2021 and December 31, 2020: Commercial Residential Commercial Lines of Other June 30, 2021 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 160 $ — $ 3,011 $ — $ — $ — $ 3,171 Collectively evaluated for impairment 32,904 22,491 12,045 58 — — 67,498 Total ending allowance balance $ 33,064 $ 22,491 $ 15,056 $ 58 $ — $ — $ 70,669 Loans: Loans individually evaluated for impairment $ 358 $ 18,981 $ 33,779 $ 120 $ — $ — $ 53,238 Loans collectively evaluated for impairment 1,948,534 244,297 110,606 1,851 — — 2,305,288 Total ending loans balance $ 1,948,892 $ 263,278 $ 144,385 $ 1,971 $ — $ — $ 2,358,526 Commercial Residential Commercial Lines of Other December 31, 2020 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 41 $ 287 $ 1,905 $ 4 $ — $ — $ 2,237 Collectively evaluated for impairment 32,325 21,655 16,083 87 — — 70,150 Total ending allowance balance $ 32,366 $ 21,942 $ 17,988 $ 91 $ — $ — $ 72,387 Loans: Loans individually evaluated for impairment $ 208 $ 20,974 $ 48,871 $ 3,981 $ — $ — $ 74,034 Loans collectively evaluated for impairment 2,033,318 238,984 157,710 2,690 7 — 2,432,709 Total ending loans balance $ 2,033,526 $ 259,958 $ 206,581 $ 6,671 $ 7 $ — $ 2,506,743 The following tables present information related to impaired loans by class of loans as of and for the periods indicated: At June 30, 2021 At December 31, 2020 Unpaid Allowance Unpaid Allowance Principal Recorded for Loan Principal Recorded for Loan Balance Investment Losses Balance Investment Losses With no related allowance for loan losses recorded: Residential real estate, first mortgage $ 108 $ 82 $ — $ 116 $ 94 $ — Commercial real estate: — Retail 1,239 1,010 — 1,247 1,029 — Hotels/Single-room occupancy hotels 17,869 17,835 — 11,428 11,419 — Other 136 136 — — — — Construction 23,327 22,422 — 42,669 41,951 — Commercial lines of credit, private banking 120 120 — 3,857 3,857 — Subtotal 42,799 41,605 — 59,317 58,350 — With an allowance for loan losses recorded: Residential real estate, first mortgage 275 276 160 114 114 41 Commercial real estate, hotels/single-room occupancy hotels — — — 8,645 8,526 287 Construction 11,400 11,357 3,011 6,920 6,920 1,905 Commercial lines of credit, private banking — — — 124 124 4 Subtotal 11,675 11,633 3,171 15,803 15,684 2,237 Total $ 54,474 $ 53,238 $ 3,171 $ 75,120 $ 74,034 $ 2,237 Three Months Ended June 30, 2021 2020 Average Interest Cash Basis Average Interest Cash Basis Recorded Income Interest Recorded Income Interest Investment Recognized Recognized Investment Recognized Recognized With no related allowance for loan losses recorded: Residential real estate, first mortgage $ 86 $ — $ — $ 94 $ — $ — Commercial real estate: Retail 1,013 — — 1,070 14 10 Hotels/Single-room occupancy hotels 17,926 — — 3,502 — — Other 136 — — — — — Construction 22,801 43 29 32,047 344 190 Commercial lines of credit: Private banking 122 2 1 1,243 21 14 C&I lending — — — 1,284 — — Subtotal 42,084 45 30 39,240 379 214 With an allowance for loan losses recorded: Residential real estate, first mortgage 277 1 1 116 2 1 Construction 11,104 55 37 — — — Commercial lines of credit, private banking — — — 129 1 1 Subtotal 11,381 56 38 245 3 2 Total $ 53,465 $ 101 $ 68 $ 39,485 $ 382 $ 216 Six Months Ended June 30, 2021 2020 Average Interest Cash Basis Average Interest Cash Basis Recorded Income Interest Recorded Income Interest Investment Recognized Recognized Investment Recognized Recognized With no related allowance for loan losses recorded: Residential real estate, first mortgage $ 88 $ — $ — $ 97 $ — $ — Commercial real estate: Retail 1,020 — — 1,089 29 24 Hotels/Single-room occupancy hotels 17,914 — — 3,502 — — Other 136 — — — — — Construction 30,207 138 124 30,394 810 597 Commercial lines of credit: Private banking 1,645 3 3 1,245 42 35 C&I lending — — — 1,284 — — Subtotal 51,010 141 127 37,611 881 656 With an allowance for loan losses recorded: Residential real estate, first mortgage 277 1 1 116 3 2 Construction 10,721 107 89 — — — Commercial lines of credit, private banking — — — 130 3 3 Subtotal 10,998 108 90 246 6 5 Total $ 62,008 $ 249 $ 217 $ 37,857 $ 887 $ 661 In the tables above, the unpaid principal balance is not reduced for partial charge offs. Also, the recorded investment excludes accrued interest receivable on loans, which was not significant. Also presented in the table above is the average recorded investment of the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is on nonaccrual status, contractual interest is credited to interest income when received under the cash basis method. The average balances are calculated based on the month-end balances of the loans for the period reported. The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Loans Past Loans Past Due Over Due Over 90 Days Still 90 Days Still Nonaccrual Accruing Nonaccrual Accruing Residential real estate: Residential first mortgage $ 27,157 $ 44 $ 20,043 $ 46 Residential second mortgage 714 — 686 — Commercial real estate: Retail 1,011 — 20 — Hotels/Single-room occupancy hotels 17,945 — 19,945 — Other 136 — Construction 27,803 — 41,873 — Commercial lines of credit: Private banking — — 2,285 — C&I lending — — 1,572 — Total $ 74,766 $ 44 $ 86,424 $ 46 The following tables present the aging of the recorded investment in past due loans as of June 30, 2021 and December 31, 2020 by class of loans: Greater 30 - 59 60 - 89 than Days Days 89 Days Total Loans Not June 30, 2021 Past Due Past Due Past Due Past Due Past Due Total Residential real estate: Residential first mortgage $ 33,222 $ 16,802 $ 27,201 $ 77,225 $ 1,855,556 $ 1,932,781 Residential second mortgage — 108 714 822 15,289 16,111 Commercial real estate: Retail — — 1,011 1,011 14,981 15,992 Multifamily 3,661 — — 3,661 94,381 98,042 Offices 2,769 — — 2,769 20,773 23,542 Hotels/Single-room occupancy hotels — — 17,945 17,945 60,344 78,289 Industrial — 4,000 — 4,000 1,851 5,851 Other 1,471 — 136 1,607 39,955 41,562 Construction — 3,323 27,803 31,126 113,259 144,385 Commercial lines of credit: Private banking — — — — 120 120 C&I lending — — — — 1,851 1,851 Total $ 41,123 $ 24,233 $ 74,810 $ 140,166 $ 2,218,360 $ 2,358,526 Greater 30 - 59 60 - 89 than Days Days 89 Days Total Loans Not December 31, 2020 Past Due Past Due Past Due Past Due Past Due Total Residential real estate: Residential first mortgage $ 37,819 $ 14,524 $ 20,089 $ 72,432 $ 1,943,602 $ 2,016,034 Residential second mortgage 362 134 686 1,182 16,310 17,492 Commercial real estate: Retail 1,010 — 20 1,030 15,170 16,200 Multifamily 3,835 — — 3,835 75,374 79,209 Offices — — — — 27,061 27,061 Hotels/Single-room occupancy hotels — — 19,945 19,945 47,690 67,635 Industrial — — — — 13,186 13,186 Other — — — — 56,667 56,667 Construction 8,593 2,514 41,873 52,980 153,601 206,581 Commercial lines of credit: Private banking — — 2,285 2,285 124 2,409 C&I lending — — 1,572 1,572 2,690 4,262 Other consumer — — — — 7 7 Total $ 51,619 $ 17,172 $ 86,470 $ 155,261 $ 2,351,482 $ 2,506,743 The aging of the loans in the table above as of June 30, 2021 has not been adjusted for customers granted a payment deferral in response to COVID-19. These loans remain in the aging category that was applicable at the time of payment deferral. Interest continues to accrue on these loans. Refer to — Forbearance Loans for further information. The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential real estate and other consumer loans, the Company also evaluates credit quality based on the aging status of the loan, which is presented above, and by payment activity. The Company reviews the status of nonperforming loans, which include loans 90 days past due and still accruing and nonaccrual loans. Troubled Debt Restructurings At June 30, 2021 and December 31, 2020, the balance of outstanding loans identified as troubled debt restructurings, along with the allocated portion of the allowance for loan losses with respect to these loans, was as follows: June 30, 2021 December 31, 2020 Recorded Allowance for Recorded Allowance for Investment Loan Losses Investment Loan Losses Residential real estate, first mortgage $ 200 $ 40 $ 209 $ 41 Commercial real estate, retail 1,011 — 1,029 — Construction 23,843 1,965 26,985 1,906 Commercial lines of credit, private banking 120 — 124 4 Total $ 25,174 $ 2,005 $ 28,347 $ 1,951 During the six months ended June 30, 2021, the Bank modified the terms of two construction loans and one private banking loan with an extension of the maturity dates at the contracts’ existing rates of interest, which are presently lower than the current market rate for a new loan with similar risk. The total outstanding recorded investments were $10,863 both before and after modification. During the six months ended June 30, 2021, there were $14,183 troubled debt restructurings that had defaulted for which the payment default occurred within one year of modification. Eight loans totaling $22,234 modified as troubled debt restructurings were in default under their modified terms as of June 30, 2021. During the six months ended June 30, 2020, the Bank modified the terms of three construction loans and one private banking loan with an extension of the maturity dates at the contracts’ existing rates of interest, which were lower than the current market rate for a new loan with similar risk. The total outstanding recorded investments were $13,777 both before and after modification. During the six months ended June 30, 2020, there was one construction loan of $5,263 identified as a troubled debt restructuring that had defaulted for which the payment default occurred within one year of modification. The terms of certain other loans have been modified during the six months ended June 30, 2021 and 2020 that did not meet the definition of a troubled debt restructuring. These other loans that were modified were not considered significant. Forbearance Loans As a response to the COVID-19 pandemic, the Company has offered forbearance under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to customers facing COVID-19-related financial difficulties. The CARES Act created a forbearance program for impacted borrowers and imposed a temporary 60-day moratorium on foreclosures and foreclosure-related evictions related to federally backed mortgage loans, which include loans secured by a first or subordinate lien on residential one-to-four family real property that have been purchased by Fannie Mae or Freddie Mac, are insured by HUD or are insured or guaranteed by other listed agencies. Borrowers of such federally backed mortgage loans experiencing a financial hardship as a result of COVID-19 may request forbearance, regardless of delinquency status, for up to 360 days. Subsequently, the federal agencies as well as the state of California announced extensions of their moratoria on single-family foreclosures and evictions and Federal Housing Administration insured loans through June 30, 2021. On August 3, 2021, the U.S. Centers for Disease and Control issued a temporary extension of the moratoria on evictions of certain covered persons in counties with heightened levels of community transmission of COVID-19 through October 3, 2021. Certain provisions of the CARES Act, as amended in December 2020 by the Consolidated Appropriations Act of 2021, encourage financial institutions to practice prudent efforts to work with borrowers impacted by the COVID-19 pandemic. Under these provisions, a modification deemed to be COVID-19-related would not be considered a troubled debt restructuring if the loan was not more than 30 days past due as of December 31, 2019 and the deferral was executed between March 1, 2020 and the earlier of 60 days after the date of termination of the COVID-19 national emergency or January 1, 2022. The banking regulators issued similar guidance, which also clarified that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not troubled debt restructurings. In this context, the Company implemented a COVID-19 forbearance program that generally provided for principal and interest forbearance for 120 days to residential borrowers with extensions available to qualified borrowers available for up to a maximum deferral period of twelve months, and these loans were not considered troubled debt restructurings. Under the forbearance program, interest continues to accrue at the note rate. At the end of the forbearance period, the borrower’s accrued but unpaid interest will be added to their outstanding principal balance while keeping the principal and interest payment at the amount determined in accordance with the terms of the note, thus extending the loan’s maturity date. The terms of commercial loan forbearances are reviewed and determined on a case-by-case basis, and these loans were not considered troubled debt restructurings. Forbearance loans under the CARES program totaled $11,775 and $15,785 at June 30, 2021 and December 31, 2020, respectively. Total accrued interest receivables on these loans were $188 and $146 at June 30, 2021 and December 31, 2020, respectively. As applications for the forbearance program continued to decrease in July 2021, the Bank terminated the forbearance program, effective July 31, 2021. Foreclosure Proceedings At June 30, 2021 and December 31, 2020, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $4,694 and $5,320, respectively. Of the loans in formal foreclosure proceedings, $4,683 and $3,209 were included in mortgage loans held for sale in the condensed consolidated balance sheets at June 30, 2021 and December 31, 2020, respectively, and were carried at the lower of amortized cost or fair value. The balance of loans are classified as held for investment and receive an allocation of the allowance for loan losses consistent with a substandard loan loss allocation rate as these loans were classified as substandard at June 30, 2021 and December 31, 2020, respectively. Credit Quality The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes homogeneous loans, such as residential real estate and other consumer loans, and non-homogeneous loans, such as commercial lines of credit, construction and commercial real estate loans. This analysis is performed at least quarterly. The Company uses the following definitions for risk ratings: Pass: Loans are of satisfactory quality. Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the loan. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. At June 30, 2021 and December 31, 2020, the risk rating of loans by class of loans was as follows: Special June 30, 2021 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,905,579 $ — $ 26,944 $ 258 $ 1,932,781 Residential second mortgage 15,397 — 714 — 16,111 Commercial real estate: Retail 13,432 1,549 1,011 — 15,992 Multifamily 61,860 10,176 26,006 — 98,042 Offices 9,600 1,602 12,340 — 23,542 Hotels/ Single-room occupancy hotels 12,113 20,538 45,638 — 78,289 Industrial 5,851 — — — 5,851 Other 30,107 5,868 5,587 — 41,562 Construction 81,593 25,477 29,444 7,871 144,385 Commercial lines of credit: Private banking 120 — — — 120 C&I lending 1,824 27 — — 1,851 Total $ 2,137,476 $ 65,237 $ 147,684 $ 8,129 $ 2,358,526 Special December 31, 2020 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,995,945 $ — $ 19,995 $ 94 $ 2,016,034 Residential second mortgage 16,806 — 686 — 17,492 Commercial real estate: Retail 13,599 1,572 1,029 — 16,200 Multifamily 55,772 14,238 9,199 — 79,209 Offices 12,014 1,623 13,424 — 27,061 Hotels/ Single-room occupancy hotels 9,115 17,984 40,536 — 67,635 Industrial 5,867 — 7,319 — 13,186 Other 43,193 7,732 5,742 — 56,667 Construction 152,577 14,234 32,850 6,920 206,581 Commercial lines of credit: Private banking 124 2,285 — — 2,409 C&I lending 3,573 — 689 — 4,262 Other consumer 7 — — — 7 Total $ 2,308,592 $ 59,668 $ 131,469 $ 7,014 $ 2,506,743 During the three and six months ended June 30, 2021, the Bank repurchased pools of Advantage Loan Program loans with a total outstanding principal balance of $79,818 and $167,762, respectively. During the three and six months ended June 30, 2020, the Bank repurchased pools of Advantage Loan Program loans with a total outstanding principal balance of $38,704. The repurchased Advantage Loan Program loans are recorded in loans held for investment. Any loss on the repurchase of the Advantage Loan Program loans is charged against the mortgage repurchase liability. The disposition of the mortgage servicing rights related to servicing the respective loans (as mortgage servicing of these loans was retained at the time of sale) is recorded in net servicing loss in non-interest income in the condensed consolidated statements of operations. The Advantage Loan Program loans that have been repurchased and included in the loan portfolio had an outstanding principal balance of $205,505 and $57,039 at June 30, 2021 and December 31, 2020, respectively. For more information on the repurchases of mortgage loans, refer to Note 16—Commitments and Contingencies. |
Mortgage Servicing Rights, net
Mortgage Servicing Rights, net | 6 Months Ended |
Jun. 30, 2021 | |
Mortgage Servicing Rights, net | |
Mortgage Servicing Rights, net | Note 6—Mortgage Servicing Rights, net The Bank records servicing assets from the sale of residential real estate mortgage loans to the secondary market for which servicing has been retained. Residential real estate mortgage loans serviced for others are not included in the condensed consolidated balance sheets. The principal balance of these loans at June 30, 2021 and December 31, 2020 are as follows: June 30, December 31, 2021 2020 Residential real estate mortgage loan portfolios serviced for: FNMA $ 143,354 $ 171,553 FHLB 47,712 64,661 Private investors 190,097 429,816 Total $ 381,163 $ 666,030 Custodial escrow balances maintained with these serviced loans were $2,509 and $6,051 at June 30, 2021 and December 31, 2020, respectively. Activity for mortgage servicing rights and the related valuation allowance are as follows: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Mortgage servicing rights: Beginning of period $ 5,855 $ 10,302 $ 7,853 $ 10,845 Additions 25 383 99 490 Amortization (1,680) (1,116) (3,752) (1,766) End of period 4,200 9,569 4,200 9,569 Valuation allowance at beginning of period 1,229 2,326 2,165 1,080 Additions (recoveries) (261) (23) (1,197) 1,223 Valuation allowance at end of period 968 2,303 968 2,303 Mortgage servicing rights, net $ 3,232 $ 7,266 $ 3,232 $ 7,266 Servicing fee income, net of amortization of servicing rights and changes in the valuation allowance, was $(908) $(1,338) The fair value of mortgage servicing rights was $3,404 and $5,841 at June 30, 2021 and December 31, 2020, respectively. The fair value of mortgage servicing rights is highly sensitive to changes in underlying assumptions. Changes in prepayment speed assumptions have the most significant impact on the estimate of the fair value of mortgage servicing rights. The fair value at June 30, 2021 was determined using discount rates ranging from 9.5% to 12.0%, prepayment speeds with a weighted average of 19.7% (depending on the stratification of the specific right), a weighted average life of the mortgage servicing right of 49 months and a weighted average default rate of 0.2%.The fair value at December 31, 2020 was determined using discount rates ranging from 9.5% to 12.0%, prepayment speeds with a weighted average of 22.5% (depending on the stratification of the specific right), a weighted average life of the mortgage servicing right of 43 months and a weighted average default rate of 0.2%. Impairment is determined by stratifying the mortgage servicing rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. At June 30, 2021 and December 31, 2020, the carrying amount of certain individual groupings exceeded their fair values, resulting in write-downs to fair value. Refer to Note 13 — |
Deposits
Deposits | 6 Months Ended |
Jun. 30, 2021 | |
Deposits | |
Deposits | Note 7—Deposits Time deposits, included in interest-bearing deposits, were $1,191,895 and $1,646,523 at June 30, 2021 and December 31, 2020, respectively. Time deposits included brokered deposits of $35,000 and $42,751 at June 30, 2021 and December 31, 2020, respectively. Time deposits that meet or exceed the FDIC insurance limit of $250 were $333,192 and $487,340 at June 30, 2021 and December 31, 2020, respectively. |
FHLB Borrowings
FHLB Borrowings | 6 Months Ended |
Jun. 30, 2021 | |
FHLB Borrowings | |
FHLB Borrowings | Note 8—FHLB Borrowings FHLB borrowings at June 30, 2021 and December 31, 2020 consist of the following: June 30, December 31, 2021 Interest Rates 2020 Interest Rates Long-term fixed rate advances $ 318,000 0.43%-1.96% $ 318,000 0.43%-1.96% FHLB Advances The long-term fixed rate advances have maturity dates ranging from July 2021 to February 2030. Interest on these advances is payable monthly, and each advance is payable at its maturity date and may contain a prepayment penalty if paid before maturity. At June 30, 2021, advances totaling $307,000 were callable by the FHLB as follows: $100,000 in August 2021; $67,000 in September 2021; $90,000 in October 2021; and $50,000 in May 2024. At June 30, 2021, the Bank had additional borrowing capacity of $53,238 from the FHLB. FHLB Overdraft Line of Credit and Letter of Credit The Bank has established an overdraft line of credit agreement with the FHLB providing maximum borrowings of $50,000. The overdraft line of credit has not been drawn upon in 2021. The average amount outstanding during the six months ended June 30, 2020 was $3 . Borrowings accrue interest based on a variable rate based on the FHLB’s overnight cost of funds rate, which was 0.43% and 0.46% at June 30, 2021 and December 31, 2020, respectively. At June 30, 2021 and December 31, 2020, there were no outstanding borrowings under this agreement. The agreement has a one-year term and terminates in October 2021. The Bank also has a $7,500 standby letter of credit with the FHLB to provide credit support for certain of its obligations related to its commitment to repurchase certain pools of Advantage Loan Program loans. This letter of credit has a 16-month The FHLB advances, the overdraft line of credit and letter of credit are collateralized by pledged securities and loans. Refer to Note 4—Investment Securities for further information on securities pledged and Note 5—Loans for further information on loans pledged. Other Borrowings The Bank had available unsecured credit lines with other banks totaling $80,000 and $100,000 at June 30, 2021 and December 31, 2020, respectively. There were no borrowings under these credit lines during the six months ended June 30, 2021 and 2020. |
Subordinated Notes, net
Subordinated Notes, net | 6 Months Ended |
Jun. 30, 2021 | |
Subordinated Notes, net | |
Subordinated Notes, net | Note 9—Subordinated Notes, net The subordinated notes (the “Notes”) were as follows: June 30, December 31, 2021 2020 Subordinated notes (principal amount) $ 65,000 $ 65,000 Unamortized note premium 377 411 Unamortized debt issuance costs — (70) Total $ 65,377 $ 65,341 The Notes bore interest at 7% per annum, payable semi-annually on April 15 and October 15 in arrears, through April 2021, after which the Notes have a variable interest rate of the three-month LIBOR rate plus a margin of 5.82%. The interest rate was 6.0% and 7.0 % at June 30, 2021 and December 31, 2020, respectively. Premiums and debt issuance costs are amortized over the contractual term of the Notes into interest expense using the effective interest method. Interest expense on these Notes was $1,005 and $1,178 for the three months ended June 30, 2021 and 2020, respectively, and $2,185 and 2,355 for the six months ended June 30, 2021 and 2020, respectively. The Notes mature in April 2026. On or after April 14, 2021, the Company may redeem the Notes, in whole or in part, at an amount equal to 100% of the outstanding principal amount being redeemed plus accrued interest, in a principal amount with integral multiples of $1. There have been no redemptions of the Notes. The Notes are not subject to redemption by the noteholders. The Notes are unsecured obligations and are subordinated in right of payment to all existing and future indebtedness, deposits and other liabilities of the Company’s current and future subsidiaries, including the Bank’s deposits as well as the Company’s subsidiaries’ liabilities to general creditors and liabilities arising during the ordinary course of business. The Notes may be included in Tier 2 capital for the Company under current regulatory guidelines and interpretations. As long as the Notes are outstanding, the Company is permitted to pay dividends if prior to such dividends, the Bank is considered well capitalized, as defined by regulatory guidelines. The Company currently may not issue new debt without the prior approval of the FRB. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2021 | |
Shareholders' Equity | |
Shareholders' Equity | Note 10— Shareholders’ Equity Issuance of Shares of Common Stock In May 2021, the Company issued and sold 300,000 unregistered shares of common stock to its chief executive officer pursuant to the terms of a stock purchase agreement entered into at the time of the chief executive officer’s employment for cash consideration of $1,350 or $4.50 per share, the fair market value on date of sale. Stock Repurchase Program The board of directors previously approved the repurchase of up to $50,000 of the Company’s outstanding shares of common stock. The stock repurchase program permits the Company to purchase shares of its common stock from time to time in the open market or in privately negotiated transactions. The program does not have an expiration date. Under this program, the Company is not obligated to repurchase shares of its common stock. The repurchased shares will be canceled and returned to authorized but unissued status. In March 2020, the Company suspended the stock repurchase program for at least the near term in connection with the issues related to the Advantage Loan Program. Refer to Note 16─Commitments and Contingencies for further information regarding the internal review of the Advantage Loan Program (the “Internal Review” During the six months ended June 30, 2020, the Company repurchased and cancelled 10,912 shares of its common stock for $82, including commissions and fees (average repurchase price of $7.57 per share). Such repurchases of common stock were funded through cash generated from operations. As of June 30, 2021, the Company had $19,568 of common stock purchases remaining that may be made under the program. |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
Stock-based Compensation | |
Stock-based Compensation | Note 11—Stock-based Compensation The board of directors established the 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which was approved by the shareholders in December 2020. The 2020 Plan provides for the grant of up to 3,979,661 shares of common stock for stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares for issuance to employees, consultants and the board of directors of the Company. The stock-based awards are issued at no less than the market price on the date the awards are granted. Previously, the board of directors had established a 2017 Omnibus Equity Incentive Plan (the “2017 Plan”) which was approved by the shareholders. The 2017 Plan initially provided for the grant of up to 4,237,100 shares of common stock for stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards for issuance to employees, consultants and board of directors of the Company. The stock-based awards were issued at no less than the market price on the date the awards are granted. Due to the adoption of the 2020 Plan, no further grants will be issued under the 2017 Plan. Stock Options Stock option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of grant. Starting in 2020, stock option awards vest ratably over three years ( one - third per year ) after the date of grant, while stock option awards granted prior to 2020 generally vest in installments of 50% in each of the third and fourth year after the date of grant. All stock option awards have a maximum term of ten years . The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted below. Estimating the grant date fair values for employee stock options requires management to make assumptions regarding expected volatility of the value of those underlying shares, the risk-free rate over the expected life of the stock options and the date on which share-based payments will be settled. Expected volatilities are based on a weighted average of the Company’s historic volatility and an implied volatility for a group of industry-relevant bank holding companies as of the measurement date. The expected term of options granted is calculated using the simplified method (the midpoint between the end of the vesting period and the end of the maximum term). The risk-free rate for the expected term of the option is based upon U.S. Treasury yield curve in effect at the time of grant. Expected dividend yield represents what the Company anticipates will be declared during the expected term of the options. A summary of the Company’s stock option activity as of and for the six months ended June 30, 2021 is as follows: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term Value (Years) Outstanding at January 1, 2021 377,882 $ 5.61 9.09 $ — Granted — — Exercised — — Forfeited/expired (10,115) 12.62 Outstanding at June 30, 2021 367,767 $ 5.41 8.13 $ 165 Exercisable at June 30, 2021 226,550 $ 4.98 8.22 $ 110 The Company recorded stock-based compensation expense associated with stock options of $46 and $29 for the three months ended June 30, 2021 and 2020, respectively, and $103 and $55 for the six months ended June 30, 2021 and 2020, respectively. At June 30, 2021, there was $101 of total unrecognized compensation cost related to nonvested stock options. The unrecognized compensation cost related to nonvested stock options is expected to be recognized over a weighted-average period of 0.83 years. Restricted Stock Awards During the six months ended June 30, 2021, the Company awarded 45,000 shares of restricted stock to non-employee independent directors and awarded 182,702 shares of restricted stock to certain key employees. The restricted stock awards generally vest ratably over three years ( one - third per year ) after the date of grant. Upon a change in control, as defined in the Plan, the outstanding restricted stock awards will immediately vest. The value of a restricted stock award is based on the market value of the Company’s common stock at the date of grant. A summary of the Company’s restricted stock awards activity for the six months ended June 30, 2021 is as follows: Weighted Average Number Grant Date Fair of Shares Value Nonvested at January 1, 2021 137,936 $ 7.90 Granted 227,702 4.97 Vested (31,906) 7.67 Forfeited (25,846) 6.25 Nonvested at June 30, 2021 307,886 $ 5.89 During the six months ended June 30, 2021, the Company withheld 8,536 shares of common stock representing a portion of the restricted stock awards that vested during the period in order to satisfy certain related employee tax withholding liabilities of $46 associated with vesting. These withheld shares are treated the same as repurchased shares for accounting purposes. The fair value of the award is recorded as compensation expense on a straight-line basis over the vesting period. The Company recorded stock-based compensation expense associated with restricted stock awards of $147 and $(20) for the three months ended June 30, 2021 and 2020, respectively, and $195 and $63 for the six months ended June 30, 2021 and 2020, respectively. At June 30, 2021, there was $1,460 of total unrecognized compensation cost related to the nonvested restricted stock. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.94 years. The total fair value of restricted shares that vested during the six months ended June 30, 2021 was $173. |
Income (Loss) Per Share
Income (Loss) Per Share | 6 Months Ended |
Jun. 30, 2021 | |
Income (Loss) Per Share | |
Income (Loss) Per Share | Note 12—Income (Loss) Per Share Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share further includes any common shares available to be issued upon the exercise of outstanding stock options and restricted stock awards if such inclusions would be dilutive. In periods of a net loss, basic and diluted per share information are the same. The Company determines the potentially dilutive common shares using the treasury stock method. The following table presents the computation of income (loss) per share, basic and diluted: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Numerator: Net income (loss) $ 3,452 $ 2,867 $ 5,777 $ (1,163) Denominator: Weighted average common shares outstanding, basic 50,009,053 49,837,948 49,930,563 49,837,805 Weighted average effect of potentially dilutive common shares: Stock options 41,055 — 45,423 — Restricted stock 10,667 3,793 11,267 — Weighted average common shares outstanding, diluted 50,060,775 49,841,741 49,987,253 49,837,805 Income (loss) per share, basic and diluted $ 0.07 $ 0.06 $ 0.12 $ (0.02) The weighted average effect of certain stock options and nonvested restricted stock that were excluded from the computation of weighted average diluted shares outstanding, as inclusion of such items would be anti-dilutive, are summarized as follows: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Stock options 67,767 460,068 71,325 330,617 Restricted stock 241,732 163,490 153,190 198,882 Total 309,499 623,558 224,515 529,499 |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 6 Months Ended |
Jun. 30, 2021 | |
Fair Values of Financial Instruments | |
Fair Values of Financial Instruments | Note 13—Fair Values of Financial Instruments Financial instruments include assets carried at fair value, as well as certain assets and liabilities carried at cost or amortized cost but disclosed at fair value in these condensed consolidated financial statements. Fair value is defined as the exit price, the price that would be received for an asset or paid to transfer a liability in the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date under current market conditions. The inputs to valuation techniques used to measure fair value are prioritized into a three-level hierarchy. The hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The following methods and significant assumptions are used to estimate fair value: Investment Securities The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar investment securities (Level 2). For investment securities where quoted prices or market prices of similar investment securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted cash flows are calculated using spread to LIBOR curves that are updated to incorporate loss severities, volatility, credit spread and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the analysis. Rating agency and industry research reports as well as defaults and deferrals on individual investment securities are reviewed and incorporated into the calculations. Mortgage Loans Held for Sale Mortgage loans held for sale are carried at lower of amortized cost or fair value. Mortgage loans held for sale may be carried at fair value on a nonrecurring basis when fair value is less than cost. The fair value is based on outstanding commitments from investors or quoted prices for loans with similar characteristics (Level 2). Impaired Loans The fair value of collateral-dependent impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach, such as comparable sales or the income approach, or a combination of both. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Appraisals for collateral-dependent impaired loans are performed by certified general appraisers whose qualifications and licenses have been reviewed and verified by us. Once received, an appraisal compliance review is completed in accordance with regulatory guidelines. Mortgage Servicing Rights Fair value of mortgage servicing rights is initially determined at the individual grouping level based on an internal valuation model that calculates the present value of estimated future net servicing income. On a quarterly basis, mortgage servicing rights are evaluated for impairment based upon third party valuations obtained. As disclosed in Note 6—Mortgage Servicing Rights, net, the valuation model utilizes interest rate, prepayment speed, and default rate assumptions that market participants would use in estimating future net servicing income (Level 3). Assets Measured at Fair Value on a Recurring Basis The table below presents the assets measured at fair value on a recurring basis categorized by the level of inputs used in the valuation of each asset at June 30, 2021 and December 31, 2020: Fair Value Measurements at June 30, 2021 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Financial Assets Available for sale debt securities: U.S. Treasury & Agency securities $ 73,630 $ — $ 73,630 $ — Mortgage-backed securities 29,235 — 29,235 — Collateralized mortgage obligations 87,630 — 87,630 — Collateralized debt obligations 190 — — 190 Equity securities 5,043 5,043 — — Fair Value Measurements at December 31, 2020 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Financial Assets Available-for-sale debt securities: U.S. Treasury & Agency securities $ 138,997 $ 40,192 $ 98,805 $ — Mortgage-backed securities 33,814 — 33,814 — Collateralized mortgage obligations 126,596 — 126,596 — Collateralized debt obligations 187 — — 187 Equity securities 5,118 5,118 — — The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2021 and 2020: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Collateralized Debt Obligations June 30, 2021 June 30, 2020 Balance of recurring Level 3 assets at beginning of period $ 187 $ 199 Total gains or losses (realized/unrealized): Included in income-realized — — Included in other comprehensive income (loss) 4 (14) Principal maturities/settlements (1) (1) Sales — — Transfers in and/or out of Level 3 — — Balance of recurring Level 3 assets at end of period $ 190 $ 184 Unrealized losses on Level 3 investments for collateralized debt obligations was $22 and $27 at June 30, 2021 and December 31, 2020, respectively. In addition to the amounts included in income as presented in the table above, interest income recorded on collateralized debt obligations was $3 and $4 for the six months ended June 30, 2021 and 2020, respectively. The fair value of the collateralized debt obligations is obtained from third party pricing information. It is determined by calculating discounted cash flows using LIBOR curves plus spreads that adjust for credit risk and illiquidity. The Company also performs an internal analysis that considers the structure and term of the collateralized debt obligations and the financial condition of the underlying issuers to corroborate the information used from the independent third party. Assets Measured at Fair Value on a Non-Recurring Basis From time to time, the Bank may be required to measure certain other assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. For assets measured at fair value on a nonrecurring basis that were recorded in the condensed consolidated balance sheet at June 30, 2021 and December 31, 2020, the following table provides the level of valuation assumptions used to determine each adjustment and the related carrying value: Fair Value Measurements at June 30, 2021 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Impaired loans: Residential real estate $ 43 $ — $ — $ 43 Construction 5,906 — — 5,906 Mortgage servicing rights 2,438 — — 2,438 Fair Value Measurements at December 31, 2020 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Impaired loans: Commercial real estate $ 8,240 $ — $ — $ 8,240 Construction 5,015 — — 5,015 Mortgage loans held for sale 19,375 — 19,375 — Mortgage servicing rights 5,175 — — 5,175 As discussed above, the fair values of collateral-dependent impaired loans carried at fair value are determined by third-party appraisals. Management adjusts these appraised values based on the age of the appraisal and the type of the property. The following tables present quantitative information about Level 3 fair value measurements at June 30, 2021 and December 31, 2020: Quantitative Information about Level 3 Fair Value Measurements at June 30, 2021 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Impaired loans: Residential real estate $ 43 Sales comparison approach Adjustments for differences between the comparable sales N/A Construction $ 5,906 Hybrid of sales comparison and income capitalization approaches Adjustments for differences between the comparable sales and income data for similar loans and collateral underlying such loans N/A Mortgage servicing rights $ 2,438 Discounted cash flow Discount rate 9.5% - 12.0% Prepayment speed 11.6% - 38.8% Default rate 0.1% - 0.2% (1) The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment. Quantitative Information about Level 3 Fair Value Measurements at December 31, 2020 Valuation Range Fair Value Technique Unobservable Inputs (Weighted Average) (1) Impaired loans: Commercial real estate $ 8,240 Sales comparison approach/Income capitalization approach Adjustments for differences between the comparable sales and income data for similar loans and collateral underlying such loans N/A Construction $ 5,015 Hybrid of sales comparison and income capitalization approaches Adjustments for differences between the comparable sales and income data for similar loans and collateral underlying such loans N/A Mortgage servicing rights $ 5,175 Discounted cash flow Discount rate 9.5% - 12.0% Prepayment speed 10.5% - 37.0% Default rate 0.1% - 0.2% (1) The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment. Fair Value of Financial Instruments The carrying amounts and estimated fair values of financial instruments not carried at fair value at June 30, 2021 and December 31, 2020, are as follows: Fair Value Measurements at June 30, 2021 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 774,478 $ 774,478 $ 774,478 $ — $ — Interest-bearing time deposits with other banks 805 810 — 810 — Mortgage loans held for sale 15,107 15,613 — 15,613 — Loans, net (1) 2,280,659 2,401,320 — — 2,401,320 Financial Liabilities Time deposits (2) 1,191,895 1,196,803 — 1,196,803 — Federal Home Loan Bank borrowings 318,000 321,930 — 321,930 — Subordinated notes, net 65,377 65,431 — 65,431 — (1) Excludes impaired loans measured at fair value on a nonrecurring basis at June 30, 2021. (2) Includes time deposits held for sale with a carrying value of $20,678 and a fair value of $20,799 (Level 2). Fair Value Measurements at December 31, 2020 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 998,497 $ 998,497 $ 998,497 $ — $ — Interest-bearing time deposits with other banks 7,021 7,021 7,021 — — Mortgage loans held for sale 2,909 3,052 — 3,052 — Loans, net 2,434,356 2,521,874 — — 2,521,874 Financial Liabilities Time deposits 1,646,523 1,658,020 — 1,658,020 — Federal Home Loan Bank borrowings 318,000 328,150 — 328,150 — Subordinated notes, net 65,341 65,753 — 65,753 — |
Regulatory Capital Requirements
Regulatory Capital Requirements | 6 Months Ended |
Jun. 30, 2021 | |
Regulatory Capital Requirements | |
Regulatory Capital Requirements | Note 14—Regulatory Capital Requirements The Bank is subject to the capital adequacy requirements of the OCC. The Company, as a thrift holding company, is subject to the capital adequacy requirements of the Federal Reserve. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors, and the regulators, in their discretion, can require the Company to lower classifications in certain cases. Prompt corrective action provisions are not applicable to thrift holding companies. Failure to meet minimum capital requirements can initiate regulatory action that could have a direct material effect on our business, financial condition and results of operations. Prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. Under the Basel III capital rules, the Company and the Bank must hold a capital conservation buffer (“CCB”) over the adequately capitalized risk-based capital ratios. At present, in order to avoid the imposition of restrictions on capital distributions and discretionary bonus payments, the Company is required to maintain a CCB of at least 2.50%. The net unrealized gain or loss on investment securities is not included in regulatory capital. Banking organizations are required to maintain a minimum total capital ratio of 10.5%, a minimum Tier 1 capital ratio of 8.5% and a minimum common equity Tier 1 capital ratio of 7.0% (in each case accounting for the required CCB). Management believes that at June 30, 2021, the Company and the Bank meet all regulatory capital requirements to which they are subject. At June 30, 2021 and December 31, 2020, the Bank exceeded all capital requirements to be categorized as well capitalized, and the Company exceeded applicable capital adequacy requirements as presented below. The Company’s consolidated and the Bank’s actual and minimum required capital amounts and ratios, with such regulatory minimums not including the CCB as discussed above, at June 30, 2021 and December 31, 2020 are as follows: For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio June 30, 2021 Total adjusted capital to risk-weighted assets Consolidated $ 399,367 24.61 % $ 129,837 8.00 % N/A N/A Bank 393,962 24.50 128,624 8.00 160,780 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 326,081 20.09 97,378 6.00 N/A N/A Bank 373,241 23.21 96,468 6.00 128,624 8.00 Common Equity Tier 1 (CET1) Consolidated 326,081 20.09 73,033 4.50 N/A N/A Bank 373,241 23.21 72,351 4.50 104,507 6.50 Tier 1 (core) capital to adjusted tangible assets Consolidated 326,081 9.16 142,369 4.00 N/A N/A Bank 373,241 10.53 141,766 4.00 177,207 5.00 For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio December 31, 2020 Total adjusted capital to risk-weighted assets Consolidated $ 407,733 22.58 % $ 144,466 8.00 % N/A N/A Bank 386,237 21.56 143,339 8.00 179,174 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 319,204 17.68 108,350 6.00 N/A N/A Bank 363,224 20.27 107,504 6.00 143,339 8.00 Common Equity Tier 1 (CET1) Consolidated 319,204 17.68 81,262 4.50 N/A N/A Bank 363,224 20.27 80,628 4.50 116,463 6.50 Tier 1 (core) capital to adjusted tangible assets Consolidated 319,204 8.08 158,067 4.00 N/A N/A Bank 363,224 9.20 157,954 4.00 197,442 5.00 Dividend Restrictions As noted above, banking regulations require the Bank to maintain certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to its shareholders. The Company’s principal source of funds for dividend payments is dividends received from the Bank, and banking regulations limit the dividends that may be paid. Approval by regulatory authorities is required if (i) the total capital distributions for the applicable calendar year exceed the sum of the Bank’s net income for that year to date plus the Bank’s retained net income for the preceding two years or (ii) the Bank would not be at least adequately capitalized following the distribution. The Qualified Thrift Lender (“QTL”) test requires that a minimum of 65% of assets be maintained in qualified thrift investments, including mortgage loans, housing- and real estate-related finance and other specified areas. If the QTL test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends, or the Bank must convert to a commercial bank charter. Management believes that the QTL test has been met. Also, pursuant to the terms of the subordinated note agreements, the Company may pay dividends if it is well capitalized as defined by regulatory guidelines. The Bank is currently required to obtain the prior approval of the OCC in order to pay dividends to the Company due to the existence of a formal agreement with the OCC. Refer to Note 16—Commitments and Contingencies. In addition, the Company currently is required to obtain the prior approval of the FRB in order to pay dividends to the Company’s shareholders. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions | |
Related Party Transactions | Note 15—Related Party Transactions From time to time, the Company had made charitable contributions to a foundation for which certain members of the boards of directors of the Company and Bank, and who are also related to the Company’s controlling shareholders, serve as trustees. The Company paid $150 and $375 to the foundation during the three and six months ended June 30, 2020, respectively. The Company ceased making charitable contributions beginning in the second quarter of 2020. In May 2021, the Company issued and sold unregistered shares of common stock to its Chief Executive Officer in exchange for cash consideration. Refer to Note 10—Shareholders’ Equity. The Bank had provided monthly data processing and programming services to entities controlled by the Company’s controlling shareholders. Aggregate fees received for such services amounted to $23 and $50 during the three and six months ended June 30, 2020, respectively. The Bank terminated such data processing agreement, effective as of November 2020. The Company historically had leased certain storage and office space from entities owned by the Company’s controlling shareholders. Amounts paid under such leases totaled $60 and $120 during the three and six months ended June 30, 2020, respectively. The Company terminated such leases as of December 31, 2020. The Company subleases certain office space to entities owned by the Company’s controlling shareholders. Amounts received under such subleases totaled $97 and $69 during the three months ended June 30, 2021 and 2020, respectively, and $192 and $138 during the six months ended June 30, 2021 and 2020, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | Financial Instruments with Off-Balance Sheet Risk The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit, which are not reflected in the condensed consolidated financial statements. Unfunded Commitments to Extend Credit A commitment to extend credit, such as a loan commitment, credit line and overdraft protection, is a legally binding agreement to lend funds to a customer, usually at a stated interest rate and for a specific purpose. Such commitments have fixed expiration dates and generally require a fee. The extension of a commitment gives rise to credit risk. The actual liquidity requirements or credit risk that the Bank will experience is expected to be lower than the contractual amount of commitments to extend credit because a significant portion of those commitments are expected to expire without being drawn upon. Certain commitments are subject to loan agreements containing covenants regarding the financial performance of the customer that must be met before the Bank is required to fund the commitment. The Bank uses the same credit policies in making commitments to extend credit as it does in making loans. The commitments outstanding to make loans include primarily residential real estate loans that are made for a period of 90 days or less. At June 30, 2021, outstanding commitments to make loans consisted of fixed rate loans of $264 with interest rates ranging from 2.5% to 2.625% and maturities of 15 years and variable rate loans of $9,150 with varying interest rates (ranging from 3.375% to 3.875% at June 30, 2021) and maturities ranging from 15 years to 30 years. Unused Lines of Credit The Bank also issues unused lines of credit to meet customer financing needs. At June 30, 2021, the unused lines of credit include residential second mortgages of $14,081 and construction loans of $66,491, totaling $80,572. These unused lines of credit are associated with variable rate commitments with interest rates ranging from 3.25% to 7.50% and maturities ranging from 1 month to 14 years . Standby Letters of Credit Standby letters of credit are issued on behalf of customers in connection with construction contracts between the customers and third parties. Under standby letters of credit, the Bank assures that the third parties will receive specified funds if customers fail to meet their contractual obligations. The credit risk to the Bank arises from its obligation to make payment in the event of a customer’s contractual default. The maximum amount of potential future payments guaranteed by the Bank is limited to the contractual amount of these letters. Collateral may be obtained at exercise of the commitment. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The following is a summary of the total amount of unfunded commitments to extend credit and standby letters of credit outstanding at June 30, 2021 and December 31, 2020: June 30, December 31, 2021 2020 Commitments to make loans $ 9,414 $ 40,331 Unused lines of credit 80,572 140,665 Standby letters of credit 24 24 Legal Proceedings The Company and its subsidiaries may be subject to legal actions and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened legal proceedings, except as described below, that are considered other than routine legal proceedings. The Company believes that the ultimate disposition or resolution of its routine legal proceedings, in the aggregate, are immaterial to its financial position, results of operations or liquidity. The Bank is currently under formal investigation by the OCC and continues to be subject to a publicly available formal agreement with the OCC, dated June 18, 2019 (the “OCC Agreement”), relating primarily to certain aspects of its Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) compliance program as well as the Bank’s credit administration. The OCC Agreement generally requires that the Bank enhance its policies and procedures to ensure compliance with BSA/AML laws and regulations and ensure effective controls over residential loan underwriting. Specifically, the OCC Agreement requires the Bank to: (i) establish a compliance committee to monitor and oversee the Bank’s compliance with the provisions of OCC Agreement; (ii) develop a revised customer due diligence and enhanced due diligence program; (iii) develop a revised suspicious activity monitoring program; (iv) engage an independent, third-party consultant to review and provide a written report on the Bank’s suspicious activity monitoring; (v) develop revised policies and procedures to ensure effective BSA/AML model risk management for the Bank’s automated suspicious activity monitoring system, which must be validated by a qualified, independent third party; (vi) ensure that the Bank’s BSA Department maintains sufficient personnel; and (vii) develop revised policies and procedures to ensure effective controls over loan underwriting. In addition to these requirements, while the OCC Agreement remains in effect, the Bank is subject to certain restrictions on expansion activities, such as growth through acquisition or branching to supplement organic growth of the Bank. Further, any failure to comply with the requirements of the OCC Agreement could result in further enforcement actions, the imposition of material restrictions on the activities of the Bank, or the assessment of fines or penalties. The Bank established a Compliance Committee to monitor and assure compliance with the OCC Agreement, oversee the completion of an independent review of account and transaction activity to be conducted by a third-party vendor and engage a third party to conduct a model validation for its BSA/AML monitoring software. The Bank is fully cooperating with the OCC investigation and implementing the items necessary to achieve compliance with the obligations in the OCC Agreement. A finding by the OCC that the Bank failed to comply with the OCC Agreement or adverse findings in the OCC investigation could result in additional regulatory scrutiny, constraints on the Bank’s business, or other formal enforcement action. Any of those events could have a material adverse effect on our future operations, financial condition, growth, or other aspects of our business. The Bank has incurred and expects to continue to incur significant costs in its efforts to comply with the OCC Agreement and respond to the OCC investigation, which are reflected in the Company’s results of operations for the three and six months ended June 30, 2021 and 2020. The Bank also has received grand jury subpoenas from the U.S. Department of Justice (the “DOJ”) beginning in 2020 requesting the production of documents and information in connection with an investigation that appears to be focused on the Bank’s Advantage Loan Program and related issues, including residential lending practices and public disclosures about that program. During 2021, the DOJ charged by criminal information the former managing director of residential lending of the Bank and two other former loan officers with conspiracy to commit bank and wire fraud in connection with the Advantage Loan Program, and each individual has pled guilty to that charge. The criminal information and plea agreement with respect to the former managing director of residential lending asserts that the individual acted with the knowledge and encouragement of certain former members of senior management. The Bank is fully cooperating with this ongoing investigation. Adverse findings in the DOJ investigation could result in material losses due to damages, penalties, costs, and/or expenses imposed on the Company, which could have a material adverse effect on our future operations, financial condition, growth, or other aspects of our business. The Bank has and expects to continue to incur significant costs in its efforts to comply with the DOJ investigation in 2021. In the first quarter of 2021, the Company learned of a formal investigation recently initiated by the SEC. This investigation appears to be focused on accounting, financial reporting and disclosure matters, as well as the Company’s internal controls, related to the Advantage Loan Program. The Company has received document and information requests from the SEC and is fully cooperating with this investigation. Adverse findings in the SEC investigation could result in material losses due to penalties, disgorgement, costs and/or expenses imposed on the Company, which could have a material adverse effect on the Company’s future operations, financial condition, growth or other aspects of its business. The Company expects to incur significant costs in its efforts to comply with the SEC investigation in 2021. In addition, the Company, certain of its current and former officers and directors and other parties were named as defendants in a shareholder class action captioned Oklahoma Police Pension and Retirement System v. Sterling Bancorp, Inc., et al., Case No. 5:20-cv-10490-JEL-EAS, filed on February 26, 2020 in the U.S. District Court for the Eastern District of Michigan. The plaintiffs filed an amended complaint on July 2, 2020, seeking damages and reimbursement of fees and expenses. This action alleges violations of the federal securities laws, primarily with respect to disclosures concerning the Bank’s residential lending practices that were made in the Company’s registration statement and prospectus for its initial public offering, in subsequent press releases, in periodic and other filings with the SEC and during earnings calls. On September 22, 2020, the Company filed with the court a motion to dismiss the amended complaint. In February 2021, the Company, each individual defendant and the plaintiff reached an agreement in principle to settle the securities class action lawsuit. On April 19, 2021, the plaintiff, the Company and each of the other defendants entered into the final settlement agreement and submitted it to the court. Preliminary approval was granted by the court on April 28, 2021, and a final approval hearing is scheduled to be held before the court on September 16, 2021. The final agreement provides for a single $12,500 cash payment in exchange for the release of all of the defendants from all alleged claims therein and remains subject to final documentation, court approval and other conditions. This $12,500 liability has been accrued for as of June 30, 2021 and December 31, 2020. The full amount of the settlement will be paid by the Company’s insurance carriers under applicable insurance policies and has been recorded as a receivable in other assets in the condensed consolidated balance sheet. In the event final court approval is not received, or the settlement is not finalized for any other reason, the Company intends to vigorously defend this action. The Company maintained a liability of $27,500 for contingent losses at June 30, 2021 and December 31, 2020. The outcome of the pending investigations and litigation is uncertain. There can be no assurance (i) that the Company will not incur material losses due to damages, penalties, costs and/or expenses as a result of such investigations and litigation, (ii) that the accrual for contingent losses will be sufficient to cover such losses, or (iii) that such losses will not materially exceed such accrual and have a material impact on the Company’s business, financial condition or results of operations. In addition, on July 28, 2020, the Company received a demand letter from two law firms representing a purported shareholder of the Company alleging facts and claims substantially the same as many of the alleged facts and claims in the class action lawsuit. The demand letter requests that the board of directors take action to (1) recover damages the Company has purportedly sustained as a result of alleged breaches of fiduciary duties by certain of its officers and directors; (2) recover for the benefit of the Company the amounts by which certain of its officers and directors purportedly were unjustly enriched; and (3) correct alleged deficiencies in the Company’s internal controls. The demand letter states that, if the board of directors has not taken the actions demanded within 90 days after the receipt of the letter, or in the event the board of directors refuses to take the actions demanded, the purported shareholder would commence a shareholder derivative action on behalf of the Company seeking appropriate relief. The board of directors established a demand review committee to evaluate the matters raised in the demand letter and to determine the actions, if any, that should be taken by the Company with respect to those matters. The Company responded to the demand letter advising the purported shareholder of the appointment of the demand review committee. The demand review committee’s investigation is ongoing; accordingly, no additional actions with respect to this matter have been taken by the board of directors. Further, legal action has not yet been brought by the purported shareholder. Nevertheless, expenses related to the evaluation by the demand review committee have been significant. There can be no assurance as to whether any litigation will be commenced by or against the Company with respect to the demand letter or that, if any such litigation is commenced, the Company will not incur material losses due to damages, penalties, costs and/or expenses as a result of such litigation or that any such losses will not have a material impact on the Company’s financial condition or results of operations. Mortgage Repurchase Liability During the period 2015 through 2019, the Company sold portfolio loans originated under the Advantage Loan Program to private investors in the secondary market. The Company also sells conventional residential real estate loans (which excludes Advantage Loan Program loans) in the secondary market primarily to Fannie Mae on an ongoing basis. In connection with these loans sold, the Company makes customary representations and warranties about various characteristics of each loan. The Company may be required pursuant to the terms of the applicable mortgage loan purchase and sale agreements to repurchase any previously sold loan or indemnify (make whole) the investor for which the representation or warranty of the Company proves to be inaccurate, incomplete or misleading. In the event of a repurchase, the Company is typically required to pay the unpaid principal balance, the proportionate premium received when selling the loans and certain expenses. As of June 30, 2021 and December 31, 2020, the Bank maintained a mortgage repurchase liability in connection with the above mentioned investigations stemming from the Advantage Loan Program totaling $4,292 and $9,699, respectively, which is included in accrued expenses and other liabilities in the condensed consolidated balance sheets. The unpaid principal balance of residential real estate loans sold that were subject to potential repurchase obligations for breach of representations and warranties totaled $303,747 and $562,139 at June 30, 2021 and December 31, 2020, respectively, including Advantage Loan Program loans totaling $190,097 and $429,816 at June 30, 2021 and December 31, 2020, respectively. The mortgage repurchase liability reflects management’s estimate of losses based on a combination of factors. The Company’s estimation process requires management to make subjective and complex judgements about matters that are inherently uncertain, such as future repurchase demand expectations, economic factors and findings from the Internal Review. The actual repurchase losses could vary significantly from the recorded mortgage repurchase liability, depending on the outcome of various factors, including those previously discussed. To avoid the uncertainty of audits and inquiries by third-party investors in the Advantage Loan Program, beginning at the end of the second quarter of 2020, the Company commenced making offers to each of those investors to repurchase 100% of the previously sold Advantage Loan Program loans. In March 2021, the Company repurchased a pool of Advantage Loan Program loans with an outstanding principal balance of $87,944 from a third-party investor. These loans were previously sold to such third-party investor with servicing retained and were considered to be performing at the repurchase date. In connection with this repurchase during the first quarter of 2021, the Company recognized a disposition of $1,255 mortgage servicing rights and charged a loss of $2,917 against the mortgage repurchase liability. In addition, the Company entered into another agreement with the same investor to repurchase an additional pool prior to July 22, 2023, with the specific timing for the repurchase at the discretion of the investor. The aggregate principal balance of the loans in this pool at June 30, 2021 was $35,124 . In June 2021, the Company repurchased a pool of Advantage Loan Program loans with an outstanding principal balance of $79,818 from another third-party investor. These loans were previously sold to such third-party investor with servicing retained and were considered to be performing at the repurchase date. In connection with this repurchase during the second quarter of 2021, the Company recognized a disposition of $1,054 mortgage servicing rights and charged a loss of $1,825 against the mortgage repurchase liability. In addition, the Company entered into another agreement with the same investor to repurchase additional pools prior to various dates in 2023, with the specific timing for the repurchases at the discretion of the investor. The aggregate principal balance of the loans in these pools at June 30, 2021 was $58,714. Activity in the mortgage repurchase liability was as follows: Six Months Ended June 30, 2021 2020 Balance, beginning of period $ 9,699 $ 7,823 Net provision (recovery) (665) 25 Loss on loan repurchases (4,742) — Balance, end of the period $ 4,292 $ 7,848 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events | |
Subsequent Events | Note 17—Subsequent Events Sale of Bellevue, Washington Branch Office On July 23, 2021, the Bank completed the sale of the Bellevue, Washington branch office to First Federal Savings & Loan Association of Port Angeles. The sale included the transfer of customer deposit accounts of $65,437 as well as the transfer of all premises and equipment. The Company recorded a gain of $1,417 on the sale. Repurchases of Residential Real Estate Mortgage Loans In July 2021, the Company repurchased from a third-party investor a pool of Advantage Loan Program loans with an outstanding principal balance of $4,944. These loans were previously sold to such third-party investor with servicing retained and were considered to be performing at the acquisition date. Letter of Credit In July 2021, the Bank obtained an additional $4,000 irrevocable standby letter of credit from the FHLB to provide credit support for certain of its obligations related to its commitment to repurchase certain pools of Advantage Loan Program loans. This letter of credit expires in July 2024 and is collateralized by certain investment securities and loans. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the results of the Company and its wholly-owned subsidiary. On December 21, 2020, QCM, LLC, doing business as Quantum Capital Management, a wholly-owned subsidiary of Quantum Fund, LLC and an indirect wholly-owned subsidiary of the Bank, completed the sale of substantially all of its assets, which consisted primarily of client advisory agreements for aggregate consideration of $250 . The operations of Quantum Capital Management were not significant. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates. |
Concentration of Credit Risk | Concentration of Credit Risk The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At June 30, 2021 and December 31, 2020, residential real estate loans accounted for 83% and 81%, respectively, of the loan portfolio. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At June 30, 2021 and December 31, 2020, approximately 87% of the loan portfolio was originated with respect to properties or businesses located in California. Starting December 9, 2019, the Bank suspended its Advantage Loan Program and announced on March 6, 2020 that it permanently discontinued this program. Loans originated under this Program comprised a significant component of the Bank’s total loan originations. Advantage Loan Program loans (including nonaccrual residential real estate loans held for sale of $14,867 and $19,375 at June 30, 2021 and December 31, 2020, respectively) totaled $1,427,467 and $1,515,248, or 73% and 74%, of the residential loan portfolio at June 30, 2021 and December 31, 2020, respectively. Refer to Note 16 – |
Risks and Uncertainties - COVID-19 | Risks and Uncertainties – COVID-19 The coronavirus disease 2019 (“COVID-19”) pandemic, and related efforts to contain it, have caused significant disruptions in the functioning of the financial markets, resulted in an unprecedented slowdown in economic activity and a related increase in unemployment, and have increased economic and market uncertainty and volatility. The Company’s primary market areas of California and New York City have been hit particularly hard by the COVID-19 pandemic. Federal and state governments have taken, and continue to take, unprecedented actions to contain the spread of the disease, including vaccine distribution, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief for businesses and individuals impacted by the pandemic. During the first half of 2021, the COVID-19 pandemic continued to create and exacerbate significant risks and uncertainties for the markets that the Bank serves. As the Bank’s residential and commercial customers are facing various levels of financial stress, the Bank continues to experience an elevated level of delinquent and nonaccrual loans, primarily in residential real estate, office, lodging, retail and construction loans. The duration and severity of the effect of the COVID-19 pandemic on economic, market and business conditions remain uncertain. The Company continues to be subject to heightened business, operational, market, credit and other risks related to the COVID-19 pandemic, which may have an adverse effect on its business, financial condition, liquidity, results of operations, risk-weighted assets and regulatory capital. |
Investment Securities (Tables)
Investment Securities (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Investment Securities | |
Schedule of amortized cost and fair value of debt securities available for sale | June 30, 2021 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury & Agency securities $ 73,540 $ 90 $ — $ 73,630 Mortgage-backed securities 29,408 91 (264) 29,235 Collateralized mortgage obligations 86,888 742 — 87,630 Collateralized debt obligations 212 — (22) 190 Total $ 190,048 $ 923 $ (286) $ 190,685 December 31, 2020 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury & Agency securities $ 138,742 $ 255 $ — $ 138,997 Mortgage-backed securities 33,743 72 (1) 33,814 Collateralized mortgage obligations 126,359 628 (391) 126,596 Collateralized debt obligations 214 — (27) 187 Total $ 299,058 $ 955 $ (419) $ 299,594 |
Schedule of amortized cost and fair value of debt securities available for sale, shown by contractual maturity | Amortized Fair Cost Value U.S. Treasury & Agency securities Due after one year through five years $ 73,540 $ 73,630 Mortgage-backed securities 29,408 29,235 Collateralized mortgage obligations 86,888 87,630 Collateralized debt obligations 212 190 Total $ 190,048 $ 190,685 |
Schedule of debt securities available for sale, at fair value, continuous unrealized losses position | June 30, 2021 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses Mortgage-backed securities $ 9,972 $ (264) $ — $ — $ 9,972 $ (264) Collateralized debt obligations — — 190 (22) 190 (22) Total $ 9,972 $ (264) $ 190 $ (22) $ 10,162 $ (286) December 31, 2020 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses Mortgage-backed securities $ 5,694 $ (1) $ — $ — $ 5,694 $ (1) Collateralized mortgage obligations 75,740 (391) — — 75,740 (391) Collateralized debt obligations — — 187 (27) 187 (27) Total $ 81,434 $ (392) $ 187 $ (27) $ 81,621 $ (419) |
Schedule of equity securities with readily determinable fair values | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net gains (losses) recorded during the period on equity securities $ 15 $ 43 $ (75) $ 123 Less: net gains (losses) recorded during the period on equity securities sold during the period — — — — Unrealized gains (losses) recorded during the period on equity securities held at the reporting date $ 15 $ 43 $ (75) $ 123 |
Loans (Tables)
Loans (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Loans | |
Schedule of major categories of loans | June 30, December 31, 2021 2020 Residential real estate $ 1,948,892 $ 2,033,526 Commercial real estate 263,278 259,958 Construction 144,385 206,581 Commercial lines of credit 1,971 6,671 Other consumer — 7 Total loans 2,358,526 2,506,743 Less: allowance for loan losses (70,669) (72,387) Loans, net $ 2,287,857 $ 2,434,356 |
Schedule of activity in allowance for loan losses and recorded investment by portfolio segment | The following tables present the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2021 and 2020: Commercial Residential Commercial Lines of Other Three Months Ended June 30, 2021 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Beginning balance $ 33,056 $ 22,763 $ 15,966 $ 86 $ — $ — $ 71,871 Provision (recovery) for loan losses (579) (287) (912) (28) — — (1,806) Charge offs — — — — — — — Recoveries 587 15 2 — — — 604 Total ending balance $ 33,064 $ 22,491 $ 15,056 $ 58 $ — $ — $ 70,669 Commercial Residential Commercial Lines of Other Six Months Ended June 30, 2021 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Beginning balance $ 32,366 $ 21,942 $ 17,988 $ 91 $ — $ — $ 72,387 Provision (recovery) for loan losses (93) 518 (2,935) (33) — — (2,543) Charge offs — — — — — — — Recoveries 791 31 3 — — — 825 Total ending balance $ 33,064 $ 22,491 $ 15,056 $ 58 $ — $ — $ 70,669 Commercial Residential Commercial Lines of Other Three Months Ended June 30, 2020 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Beginning balance $ 19,154 $ 11,261 $ 11,439 $ 368 $ 1 $ 390 $ 42,613 Provision (recovery) for loan losses (344) 4,492 557 (18) — (390) 4,297 Charge offs — — — — — — — Recoveries 2 17 2 — — — 21 Total ending balance $ 18,812 $ 15,770 $ 11,998 $ 350 $ 1 $ — $ 46,931 Commercial Residential Commercial Lines of Other Six Months Ended June 30, 2020 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Beginning balance $ 12,336 $ 5,243 $ 3,822 $ 328 $ 1 $ — $ 21,730 Provision for loan losses 6,464 10,491 8,173 22 — — 25,150 Charge offs — — — — — — — Recoveries 12 36 3 — — — 51 Total ending balance $ 18,812 $ 15,770 $ 11,998 $ 350 $ 1 $ — $ 46,931 The following tables present the balance in the allowance for loan losses and the recorded investment by portfolio segment and based on impairment evaluation method as of June 30, 2021 and December 31, 2020: Commercial Residential Commercial Lines of Other June 30, 2021 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 160 $ — $ 3,011 $ — $ — $ — $ 3,171 Collectively evaluated for impairment 32,904 22,491 12,045 58 — — 67,498 Total ending allowance balance $ 33,064 $ 22,491 $ 15,056 $ 58 $ — $ — $ 70,669 Loans: Loans individually evaluated for impairment $ 358 $ 18,981 $ 33,779 $ 120 $ — $ — $ 53,238 Loans collectively evaluated for impairment 1,948,534 244,297 110,606 1,851 — — 2,305,288 Total ending loans balance $ 1,948,892 $ 263,278 $ 144,385 $ 1,971 $ — $ — $ 2,358,526 Commercial Residential Commercial Lines of Other December 31, 2020 Real Estate Real Estate Construction Credit Consumer Unallocated Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 41 $ 287 $ 1,905 $ 4 $ — $ — $ 2,237 Collectively evaluated for impairment 32,325 21,655 16,083 87 — — 70,150 Total ending allowance balance $ 32,366 $ 21,942 $ 17,988 $ 91 $ — $ — $ 72,387 Loans: Loans individually evaluated for impairment $ 208 $ 20,974 $ 48,871 $ 3,981 $ — $ — $ 74,034 Loans collectively evaluated for impairment 2,033,318 238,984 157,710 2,690 7 — 2,432,709 Total ending loans balance $ 2,033,526 $ 259,958 $ 206,581 $ 6,671 $ 7 $ — $ 2,506,743 |
Schedule of information related to impaired loans by class of loans | At June 30, 2021 At December 31, 2020 Unpaid Allowance Unpaid Allowance Principal Recorded for Loan Principal Recorded for Loan Balance Investment Losses Balance Investment Losses With no related allowance for loan losses recorded: Residential real estate, first mortgage $ 108 $ 82 $ — $ 116 $ 94 $ — Commercial real estate: — Retail 1,239 1,010 — 1,247 1,029 — Hotels/Single-room occupancy hotels 17,869 17,835 — 11,428 11,419 — Other 136 136 — — — — Construction 23,327 22,422 — 42,669 41,951 — Commercial lines of credit, private banking 120 120 — 3,857 3,857 — Subtotal 42,799 41,605 — 59,317 58,350 — With an allowance for loan losses recorded: Residential real estate, first mortgage 275 276 160 114 114 41 Commercial real estate, hotels/single-room occupancy hotels — — — 8,645 8,526 287 Construction 11,400 11,357 3,011 6,920 6,920 1,905 Commercial lines of credit, private banking — — — 124 124 4 Subtotal 11,675 11,633 3,171 15,803 15,684 2,237 Total $ 54,474 $ 53,238 $ 3,171 $ 75,120 $ 74,034 $ 2,237 Three Months Ended June 30, 2021 2020 Average Interest Cash Basis Average Interest Cash Basis Recorded Income Interest Recorded Income Interest Investment Recognized Recognized Investment Recognized Recognized With no related allowance for loan losses recorded: Residential real estate, first mortgage $ 86 $ — $ — $ 94 $ — $ — Commercial real estate: Retail 1,013 — — 1,070 14 10 Hotels/Single-room occupancy hotels 17,926 — — 3,502 — — Other 136 — — — — — Construction 22,801 43 29 32,047 344 190 Commercial lines of credit: Private banking 122 2 1 1,243 21 14 C&I lending — — — 1,284 — — Subtotal 42,084 45 30 39,240 379 214 With an allowance for loan losses recorded: Residential real estate, first mortgage 277 1 1 116 2 1 Construction 11,104 55 37 — — — Commercial lines of credit, private banking — — — 129 1 1 Subtotal 11,381 56 38 245 3 2 Total $ 53,465 $ 101 $ 68 $ 39,485 $ 382 $ 216 Six Months Ended June 30, 2021 2020 Average Interest Cash Basis Average Interest Cash Basis Recorded Income Interest Recorded Income Interest Investment Recognized Recognized Investment Recognized Recognized With no related allowance for loan losses recorded: Residential real estate, first mortgage $ 88 $ — $ — $ 97 $ — $ — Commercial real estate: Retail 1,020 — — 1,089 29 24 Hotels/Single-room occupancy hotels 17,914 — — 3,502 — — Other 136 — — — — — Construction 30,207 138 124 30,394 810 597 Commercial lines of credit: Private banking 1,645 3 3 1,245 42 35 C&I lending — — — 1,284 — — Subtotal 51,010 141 127 37,611 881 656 With an allowance for loan losses recorded: Residential real estate, first mortgage 277 1 1 116 3 2 Construction 10,721 107 89 — — — Commercial lines of credit, private banking — — — 130 3 3 Subtotal 10,998 108 90 246 6 5 Total $ 62,008 $ 249 $ 217 $ 37,857 $ 887 $ 661 |
Schedule of recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans and aging of the recorded investment in past due loans | The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Loans Past Loans Past Due Over Due Over 90 Days Still 90 Days Still Nonaccrual Accruing Nonaccrual Accruing Residential real estate: Residential first mortgage $ 27,157 $ 44 $ 20,043 $ 46 Residential second mortgage 714 — 686 — Commercial real estate: Retail 1,011 — 20 — Hotels/Single-room occupancy hotels 17,945 — 19,945 — Other 136 — Construction 27,803 — 41,873 — Commercial lines of credit: Private banking — — 2,285 — C&I lending — — 1,572 — Total $ 74,766 $ 44 $ 86,424 $ 46 The following tables present the aging of the recorded investment in past due loans as of June 30, 2021 and December 31, 2020 by class of loans: Greater 30 - 59 60 - 89 than Days Days 89 Days Total Loans Not June 30, 2021 Past Due Past Due Past Due Past Due Past Due Total Residential real estate: Residential first mortgage $ 33,222 $ 16,802 $ 27,201 $ 77,225 $ 1,855,556 $ 1,932,781 Residential second mortgage — 108 714 822 15,289 16,111 Commercial real estate: Retail — — 1,011 1,011 14,981 15,992 Multifamily 3,661 — — 3,661 94,381 98,042 Offices 2,769 — — 2,769 20,773 23,542 Hotels/Single-room occupancy hotels — — 17,945 17,945 60,344 78,289 Industrial — 4,000 — 4,000 1,851 5,851 Other 1,471 — 136 1,607 39,955 41,562 Construction — 3,323 27,803 31,126 113,259 144,385 Commercial lines of credit: Private banking — — — — 120 120 C&I lending — — — — 1,851 1,851 Total $ 41,123 $ 24,233 $ 74,810 $ 140,166 $ 2,218,360 $ 2,358,526 Greater 30 - 59 60 - 89 than Days Days 89 Days Total Loans Not December 31, 2020 Past Due Past Due Past Due Past Due Past Due Total Residential real estate: Residential first mortgage $ 37,819 $ 14,524 $ 20,089 $ 72,432 $ 1,943,602 $ 2,016,034 Residential second mortgage 362 134 686 1,182 16,310 17,492 Commercial real estate: Retail 1,010 — 20 1,030 15,170 16,200 Multifamily 3,835 — — 3,835 75,374 79,209 Offices — — — — 27,061 27,061 Hotels/Single-room occupancy hotels — — 19,945 19,945 47,690 67,635 Industrial — — — — 13,186 13,186 Other — — — — 56,667 56,667 Construction 8,593 2,514 41,873 52,980 153,601 206,581 Commercial lines of credit: Private banking — — 2,285 2,285 124 2,409 C&I lending — — 1,572 1,572 2,690 4,262 Other consumer — — — — 7 7 Total $ 51,619 $ 17,172 $ 86,470 $ 155,261 $ 2,351,482 $ 2,506,743 |
Schedule of troubled debt restructurings | June 30, 2021 December 31, 2020 Recorded Allowance for Recorded Allowance for Investment Loan Losses Investment Loan Losses Residential real estate, first mortgage $ 200 $ 40 $ 209 $ 41 Commercial real estate, retail 1,011 — 1,029 — Construction 23,843 1,965 26,985 1,906 Commercial lines of credit, private banking 120 — 124 4 Total $ 25,174 $ 2,005 $ 28,347 $ 1,951 |
Schedule of risk rating of loans by class of loans | At June 30, 2021 and December 31, 2020, the risk rating of loans by class of loans was as follows: Special June 30, 2021 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,905,579 $ — $ 26,944 $ 258 $ 1,932,781 Residential second mortgage 15,397 — 714 — 16,111 Commercial real estate: Retail 13,432 1,549 1,011 — 15,992 Multifamily 61,860 10,176 26,006 — 98,042 Offices 9,600 1,602 12,340 — 23,542 Hotels/ Single-room occupancy hotels 12,113 20,538 45,638 — 78,289 Industrial 5,851 — — — 5,851 Other 30,107 5,868 5,587 — 41,562 Construction 81,593 25,477 29,444 7,871 144,385 Commercial lines of credit: Private banking 120 — — — 120 C&I lending 1,824 27 — — 1,851 Total $ 2,137,476 $ 65,237 $ 147,684 $ 8,129 $ 2,358,526 Special December 31, 2020 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,995,945 $ — $ 19,995 $ 94 $ 2,016,034 Residential second mortgage 16,806 — 686 — 17,492 Commercial real estate: Retail 13,599 1,572 1,029 — 16,200 Multifamily 55,772 14,238 9,199 — 79,209 Offices 12,014 1,623 13,424 — 27,061 Hotels/ Single-room occupancy hotels 9,115 17,984 40,536 — 67,635 Industrial 5,867 — 7,319 — 13,186 Other 43,193 7,732 5,742 — 56,667 Construction 152,577 14,234 32,850 6,920 206,581 Commercial lines of credit: Private banking 124 2,285 — — 2,409 C&I lending 3,573 — 689 — 4,262 Other consumer 7 — — — 7 Total $ 2,308,592 $ 59,668 $ 131,469 $ 7,014 $ 2,506,743 |
Mortgage Servicing Rights, net
Mortgage Servicing Rights, net (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Mortgage Servicing Rights, net | |
Schedule of principal balance of mortgage loans serviced for others | June 30, December 31, 2021 2020 Residential real estate mortgage loan portfolios serviced for: FNMA $ 143,354 $ 171,553 FHLB 47,712 64,661 Private investors 190,097 429,816 Total $ 381,163 $ 666,030 |
Schedule of activity for mortgage servicing rights and related valuation allowance | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Mortgage servicing rights: Beginning of period $ 5,855 $ 10,302 $ 7,853 $ 10,845 Additions 25 383 99 490 Amortization (1,680) (1,116) (3,752) (1,766) End of period 4,200 9,569 4,200 9,569 Valuation allowance at beginning of period 1,229 2,326 2,165 1,080 Additions (recoveries) (261) (23) (1,197) 1,223 Valuation allowance at end of period 968 2,303 968 2,303 Mortgage servicing rights, net $ 3,232 $ 7,266 $ 3,232 $ 7,266 |
FHLB Borrowings (Tables)
FHLB Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
FHLB Borrowings | |
Schedule of FHLB borrowings | June 30, December 31, 2021 Interest Rates 2020 Interest Rates Long-term fixed rate advances $ 318,000 0.43%-1.96% $ 318,000 0.43%-1.96% |
Subordinated Notes, net (Tables
Subordinated Notes, net (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Subordinated Notes, net | |
Schedule of subordinated notes | June 30, December 31, 2021 2020 Subordinated notes (principal amount) $ 65,000 $ 65,000 Unamortized note premium 377 411 Unamortized debt issuance costs — (70) Total $ 65,377 $ 65,341 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Stock-based Compensation | |
Summary of the company's stock option activity | Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term Value (Years) Outstanding at January 1, 2021 377,882 $ 5.61 9.09 $ — Granted — — Exercised — — Forfeited/expired (10,115) 12.62 Outstanding at June 30, 2021 367,767 $ 5.41 8.13 $ 165 Exercisable at June 30, 2021 226,550 $ 4.98 8.22 $ 110 |
Summary of the company's restricted stock awards activity | Weighted Average Number Grant Date Fair of Shares Value Nonvested at January 1, 2021 137,936 $ 7.90 Granted 227,702 4.97 Vested (31,906) 7.67 Forfeited (25,846) 6.25 Nonvested at June 30, 2021 307,886 $ 5.89 |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Income (Loss) Per Share | |
Schedule of computation of income (loss) per share, basic and diluted | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Numerator: Net income (loss) $ 3,452 $ 2,867 $ 5,777 $ (1,163) Denominator: Weighted average common shares outstanding, basic 50,009,053 49,837,948 49,930,563 49,837,805 Weighted average effect of potentially dilutive common shares: Stock options 41,055 — 45,423 — Restricted stock 10,667 3,793 11,267 — Weighted average common shares outstanding, diluted 50,060,775 49,841,741 49,987,253 49,837,805 Income (loss) per share, basic and diluted $ 0.07 $ 0.06 $ 0.12 $ (0.02) |
Schedule of anti-dilutive shares that were excluded from the computation of weighted average diluted shares outstanding | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Stock options 67,767 460,068 71,325 330,617 Restricted stock 241,732 163,490 153,190 198,882 Total 309,499 623,558 224,515 529,499 |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Values of Financial Instruments | |
Schedule of assets measured at fair value on a recurring basis categorized by level of inputs | Fair Value Measurements at June 30, 2021 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Financial Assets Available for sale debt securities: U.S. Treasury & Agency securities $ 73,630 $ — $ 73,630 $ — Mortgage-backed securities 29,235 — 29,235 — Collateralized mortgage obligations 87,630 — 87,630 — Collateralized debt obligations 190 — — 190 Equity securities 5,043 5,043 — — Fair Value Measurements at December 31, 2020 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Financial Assets Available-for-sale debt securities: U.S. Treasury & Agency securities $ 138,997 $ 40,192 $ 98,805 $ — Mortgage-backed securities 33,814 — 33,814 — Collateralized mortgage obligations 126,596 — 126,596 — Collateralized debt obligations 187 — — 187 Equity securities 5,118 5,118 — — |
Summary of reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Collateralized Debt Obligations June 30, 2021 June 30, 2020 Balance of recurring Level 3 assets at beginning of period $ 187 $ 199 Total gains or losses (realized/unrealized): Included in income-realized — — Included in other comprehensive income (loss) 4 (14) Principal maturities/settlements (1) (1) Sales — — Transfers in and/or out of Level 3 — — Balance of recurring Level 3 assets at end of period $ 190 $ 184 |
Schedule of assets measured at fair value on a nonrecurring basis categorized by level of inputs | Fair Value Measurements at June 30, 2021 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Impaired loans: Residential real estate $ 43 $ — $ — $ 43 Construction 5,906 — — 5,906 Mortgage servicing rights 2,438 — — 2,438 Fair Value Measurements at December 31, 2020 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Impaired loans: Commercial real estate $ 8,240 $ — $ — $ 8,240 Construction 5,015 — — 5,015 Mortgage loans held for sale 19,375 — 19,375 — Mortgage servicing rights 5,175 — — 5,175 |
Schedule of quantitative information about nonrecurring Level 3 fair value measurements | Quantitative Information about Level 3 Fair Value Measurements at June 30, 2021 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Impaired loans: Residential real estate $ 43 Sales comparison approach Adjustments for differences between the comparable sales N/A Construction $ 5,906 Hybrid of sales comparison and income capitalization approaches Adjustments for differences between the comparable sales and income data for similar loans and collateral underlying such loans N/A Mortgage servicing rights $ 2,438 Discounted cash flow Discount rate 9.5% - 12.0% Prepayment speed 11.6% - 38.8% Default rate 0.1% - 0.2% (1) The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment. Quantitative Information about Level 3 Fair Value Measurements at December 31, 2020 Valuation Range Fair Value Technique Unobservable Inputs (Weighted Average) (1) Impaired loans: Commercial real estate $ 8,240 Sales comparison approach/Income capitalization approach Adjustments for differences between the comparable sales and income data for similar loans and collateral underlying such loans N/A Construction $ 5,015 Hybrid of sales comparison and income capitalization approaches Adjustments for differences between the comparable sales and income data for similar loans and collateral underlying such loans N/A Mortgage servicing rights $ 5,175 Discounted cash flow Discount rate 9.5% - 12.0% Prepayment speed 10.5% - 37.0% Default rate 0.1% - 0.2% (1) The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment. |
Schedule of carrying amounts and estimated fair values of financial instruments not carried at fair value | Fair Value Measurements at June 30, 2021 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 774,478 $ 774,478 $ 774,478 $ — $ — Interest-bearing time deposits with other banks 805 810 — 810 — Mortgage loans held for sale 15,107 15,613 — 15,613 — Loans, net (1) 2,280,659 2,401,320 — — 2,401,320 Financial Liabilities Time deposits (2) 1,191,895 1,196,803 — 1,196,803 — Federal Home Loan Bank borrowings 318,000 321,930 — 321,930 — Subordinated notes, net 65,377 65,431 — 65,431 — (1) Excludes impaired loans measured at fair value on a nonrecurring basis at June 30, 2021. (2) Includes time deposits held for sale with a carrying value of $20,678 and a fair value of $20,799 (Level 2). Fair Value Measurements at December 31, 2020 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 998,497 $ 998,497 $ 998,497 $ — $ — Interest-bearing time deposits with other banks 7,021 7,021 7,021 — — Mortgage loans held for sale 2,909 3,052 — 3,052 — Loans, net 2,434,356 2,521,874 — — 2,521,874 Financial Liabilities Time deposits 1,646,523 1,658,020 — 1,658,020 — Federal Home Loan Bank borrowings 318,000 328,150 — 328,150 — Subordinated notes, net 65,341 65,753 — 65,753 — |
Regulatory Capital Requiremen_2
Regulatory Capital Requirements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Regulatory Capital Requirements | |
Schedule of actual and minimum required capital amounts and ratios | For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio June 30, 2021 Total adjusted capital to risk-weighted assets Consolidated $ 399,367 24.61 % $ 129,837 8.00 % N/A N/A Bank 393,962 24.50 128,624 8.00 160,780 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 326,081 20.09 97,378 6.00 N/A N/A Bank 373,241 23.21 96,468 6.00 128,624 8.00 Common Equity Tier 1 (CET1) Consolidated 326,081 20.09 73,033 4.50 N/A N/A Bank 373,241 23.21 72,351 4.50 104,507 6.50 Tier 1 (core) capital to adjusted tangible assets Consolidated 326,081 9.16 142,369 4.00 N/A N/A Bank 373,241 10.53 141,766 4.00 177,207 5.00 For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio December 31, 2020 Total adjusted capital to risk-weighted assets Consolidated $ 407,733 22.58 % $ 144,466 8.00 % N/A N/A Bank 386,237 21.56 143,339 8.00 179,174 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 319,204 17.68 108,350 6.00 N/A N/A Bank 363,224 20.27 107,504 6.00 143,339 8.00 Common Equity Tier 1 (CET1) Consolidated 319,204 17.68 81,262 4.50 N/A N/A Bank 363,224 20.27 80,628 4.50 116,463 6.50 Tier 1 (core) capital to adjusted tangible assets Consolidated 319,204 8.08 158,067 4.00 N/A N/A Bank 363,224 9.20 157,954 4.00 197,442 5.00 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Summary of total amount of unfunded commitments to extend credit and standby letters of credit outstanding | June 30, December 31, 2021 2020 Commitments to make loans $ 9,414 $ 40,331 Unused lines of credit 80,572 140,665 Standby letters of credit 24 24 |
Schedule of activity in the mortgage repurchase liability | Six Months Ended June 30, 2021 2020 Balance, beginning of period $ 9,699 $ 7,823 Net provision (recovery) (665) 25 Loss on loan repurchases (4,742) — Balance, end of the period $ 4,292 $ 7,848 |
Nature of Operations and Basi_2
Nature of Operations and Basis of Presentation (Details) | 6 Months Ended |
Jun. 30, 2021itemsegment | |
Nature of Operations and Basis of Presentation | |
Number of branches | 29 |
Number of reportable segments | segment | 1 |
San Francisco and Los Angeles, California | |
Nature of Operations and Basis of Presentation | |
Number of branches | 26 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | Dec. 21, 2020 | |
Concentration of Credit Risk | |||
Disposal Group, Including Discontinued Operation, Consideration | $ 250 | ||
Loans Receivable | $ 2,358,526 | $ 2,506,743 | |
Mortgage loans held for sale | 15,107 | 22,284 | |
Residential real estate | |||
Concentration of Credit Risk | |||
Loans Receivable | $ 1,948,892 | $ 2,033,526 | |
Residential real estate loans | Loans receivables | Residential real estate | |||
Concentration of Credit Risk | |||
Concentration of credit risk | 83.00% | 81.00% | |
California | Loans receivables | Residential real estate | |||
Concentration of Credit Risk | |||
Concentration of credit risk | 87.00% | 87.00% | |
Advantage loan program | Loans receivables | Residential real estate | |||
Concentration of Credit Risk | |||
Concentration of credit risk | 73.00% | 74.00% | |
Loans Receivable | $ 1,427,467 | $ 1,515,248 | |
Mortgage loans held for sale | $ 14,867 | $ 19,375 |
Investment Securities - Amortiz
Investment Securities - Amortized Cost and Fair Value Corresponding Gross Unrealized Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Available for sale: | ||||
Available for sale, Amortized Cost | $ 190,048 | $ 299,058 | ||
Available for sale, Gross Unrealized Gain | 923 | 955 | ||
Available for sale, Gross Unrealized Loss | (286) | (419) | ||
Investment securities available for sale, at fair value | 190,685 | 299,594 | ||
Securities pledged as collateral on FHLB borrowings | 521,218 | 630,197 | ||
Carrying value of debt securities held of any single issuer in excess of 10% of shareholders equity | $ 0 | $ 0 | ||
Threshold percentage of total shareholders' equity above which securities of any single issuer exceed | 10.00% | 10.00% | ||
Sales of investment securities | $ 36,315 | $ 0 | $ 59,359 | |
Gross realized gains | 44 | 279 | ||
Gross realized losses | $ 78 | $ 80 | ||
Collateralized mortgage obligations | US Government Corporations and Agencies Securities | ||||
Available for sale: | ||||
Investment securities available for sale, at fair value | 705 | $ 816 | ||
Debt securities | ||||
Available for sale: | ||||
Securities pledged as collateral on FHLB borrowings | 73,630 | |||
U.S. Treasury & Agency securities | ||||
Available for sale: | ||||
Available for sale, Amortized Cost | 73,540 | 138,742 | ||
Available for sale, Gross Unrealized Gain | 90 | 255 | ||
Investment securities available for sale, at fair value | 73,630 | 138,997 | ||
Mortgage-backed securities | ||||
Available for sale: | ||||
Available for sale, Amortized Cost | 29,408 | 33,743 | ||
Available for sale, Gross Unrealized Gain | 91 | 72 | ||
Available for sale, Gross Unrealized Loss | (264) | (1) | ||
Investment securities available for sale, at fair value | 29,235 | 33,814 | ||
Collateralized mortgage obligations | ||||
Available for sale: | ||||
Available for sale, Amortized Cost | 86,888 | 126,359 | ||
Available for sale, Gross Unrealized Gain | 742 | 628 | ||
Available for sale, Gross Unrealized Loss | (391) | |||
Investment securities available for sale, at fair value | 87,630 | 126,596 | ||
Collateralized debt obligations | ||||
Available for sale: | ||||
Available for sale, Amortized Cost | 212 | 214 | ||
Available for sale, Gross Unrealized Loss | (22) | (27) | ||
Investment securities available for sale, at fair value | $ 190 | $ 187 |
Investment Securities - Amort_2
Investment Securities - Amortized Cost and Fair Value By Contractual Maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | $ 190,048 | $ 299,058 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | 190,685 | 299,594 |
U.S. Treasury & Agency securities | ||
Available for sale, Amortized Cost | ||
Due after one year through five years | 73,540 | |
Available for sale, Amortized Cost | 73,540 | 138,742 |
Available for sale, Fair Value | ||
Due after one year through five years | 73,630 | |
Available for sale, Fair Value | 73,630 | 138,997 |
Mortgage-backed securities | ||
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | 29,408 | 33,743 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | 29,235 | 33,814 |
Collateralized mortgage obligations | ||
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | 86,888 | 126,359 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | 87,630 | 126,596 |
Collateralized debt obligations | ||
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | 212 | 214 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | $ 190 | $ 187 |
Investment Securities - Aggrega
Investment Securities - Aggregated by Major Security Type and Length of Time in a Continuous Unrealized Loss Position (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021USD ($)security | Dec. 31, 2020USD ($) | Jun. 30, 2020USD ($) | |
Fair Value | |||
Less than 12 Months, Fair value | $ 9,972 | $ 81,434 | |
12 Months or More, Fair Value | 190 | 187 | |
Available for sale, Continuous unrealized loss position, Fair Value | 10,162 | 81,621 | |
Unrealized Losses | |||
Less than 12 Months, Unrealized Losses | (264) | (392) | |
12 Months or More, Unrealized Losses | (22) | (27) | |
Available for sale, Continuous unrealized loss position, Unrealized Losses | $ (286) | (419) | |
Number of debt securities in portfolio | security | 19 | ||
Number of debt securities in an unrealized loss position | security | 3 | ||
Mortgage-backed securities | |||
Fair Value | |||
Less than 12 Months, Fair value | $ 9,972 | 5,694 | |
Available for sale, Continuous unrealized loss position, Fair Value | 9,972 | 5,694 | |
Unrealized Losses | |||
Less than 12 Months, Unrealized Losses | (264) | (1) | |
Available for sale, Continuous unrealized loss position, Unrealized Losses | (264) | (1) | |
Collateralized mortgage obligations | |||
Fair Value | |||
Less than 12 Months, Fair value | 75,740 | ||
Available for sale, Continuous unrealized loss position, Fair Value | 75,740 | ||
Unrealized Losses | |||
Less than 12 Months, Unrealized Losses | (391) | ||
Available for sale, Continuous unrealized loss position, Unrealized Losses | (391) | ||
Collateralized debt obligations | |||
Fair Value | |||
12 Months or More, Fair Value | 190 | 187 | |
Available for sale, Continuous unrealized loss position, Fair Value | 190 | 187 | $ 190 |
Unrealized Losses | |||
12 Months or More, Unrealized Losses | (22) | (27) | |
Available for sale, Continuous unrealized loss position, Unrealized Losses | $ (22) | $ (27) |
Investment Securities - Equity
Investment Securities - Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Equity Securities | |||||
Fair value of equity securities | $ 5,289 | $ 5,289 | $ 5,364 | ||
Equity securities with readily determinable fair values | 5,043 | 5,043 | 5,118 | ||
Equity securities with readily determinable fair values | |||||
Net gains (losses) recorded during the period on equity securities | 15 | $ 43 | (75) | $ 123 | |
Unrealized gains (losses) recorded during the period on equity securities held at the reporting date | 15 | $ 43 | (75) | $ 123 | |
Level 3 | |||||
Equity Securities | |||||
Investment in equity securities without readily determinable fair value | $ 246 | $ 246 | $ 246 |
Loans - Major Categories of Loa
Loans - Major Categories of Loans (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Apr. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Major categories of loans | |||||||
Total loans | $ 2,358,526 | $ 2,506,743 | |||||
Less: allowance for loan losses | (70,669) | $ (71,871) | (72,387) | $ (46,931) | $ (42,613) | $ (21,730) | |
Loans, net | 2,287,857 | 2,434,356 | |||||
Carrying value of loans pledged as collateral on FHLB borrowings | 521,218 | 630,197 | |||||
Residential real estate | |||||||
Major categories of loans | |||||||
Total loans | 1,948,892 | 2,033,526 | |||||
Less: allowance for loan losses | (33,064) | (33,056) | (32,366) | (18,812) | $ (19,154) | (12,336) | |
Loans, net | 303,747 | 562,139 | |||||
Commercial real estate | |||||||
Major categories of loans | |||||||
Total loans | 263,278 | 259,958 | |||||
Less: allowance for loan losses | (22,491) | (22,763) | (21,942) | (15,770) | (11,261) | (5,243) | |
Construction | |||||||
Major categories of loans | |||||||
Total loans | 144,385 | 206,581 | |||||
Less: allowance for loan losses | (15,056) | (15,966) | (17,988) | (11,998) | (11,439) | (3,822) | |
Commercial lines of credit | |||||||
Major categories of loans | |||||||
Total loans | 1,971 | 6,671 | |||||
Less: allowance for loan losses | $ (58) | $ (86) | (91) | (350) | $ (368) | (328) | |
Other consumer | |||||||
Major categories of loans | |||||||
Total loans | $ 7 | ||||||
Less: allowance for loan losses | $ (1) | $ (1) | $ (1) |
Loans - Activity in the Allowan
Loans - Activity in the Allowance For Loan Losses by Portfolio Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Allowance for loan losses | ||||
Beginning balance | $ 71,871 | $ 72,387 | $ 21,730 | |
Provision (recovery) for loan losses | (1,806) | $ 4,297 | (2,543) | 25,150 |
Recoveries | 604 | 21 | 825 | 51 |
Total ending balance | 70,669 | 46,931 | 70,669 | 46,931 |
Residential real estate | ||||
Allowance for loan losses | ||||
Beginning balance | 33,056 | 19,154 | 32,366 | 12,336 |
Provision (recovery) for loan losses | (579) | (344) | (93) | 6,464 |
Recoveries | 587 | 2 | 791 | 12 |
Total ending balance | 33,064 | 18,812 | 33,064 | 18,812 |
Commercial real estate | ||||
Allowance for loan losses | ||||
Beginning balance | 22,763 | 11,261 | 21,942 | 5,243 |
Provision (recovery) for loan losses | (287) | 4,492 | 518 | 10,491 |
Recoveries | 15 | 17 | 31 | 36 |
Total ending balance | 22,491 | 15,770 | 22,491 | 15,770 |
Construction | ||||
Allowance for loan losses | ||||
Beginning balance | 15,966 | 11,439 | 17,988 | 3,822 |
Provision (recovery) for loan losses | (912) | 557 | (2,935) | 8,173 |
Recoveries | 2 | 2 | 3 | 3 |
Total ending balance | 15,056 | 11,998 | 15,056 | 11,998 |
Commercial lines of credit | ||||
Allowance for loan losses | ||||
Beginning balance | 86 | 91 | 328 | |
Provision (recovery) for loan losses | (28) | (18) | (33) | 22 |
Total ending balance | $ 58 | 350 | $ 58 | 350 |
Other consumer | ||||
Allowance for loan losses | ||||
Beginning balance | 1 | 1 | ||
Total ending balance | 1 | $ 1 | ||
Unallocated | ||||
Allowance for loan losses | ||||
Beginning balance | 390 | |||
Provision (recovery) for loan losses | $ (390) |
Loans - Activity in the Allow_2
Loans - Activity in the Allowance For Loan Losses by Portfolio Segment And Based On Impairment Evaluation Method (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Apr. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Ending allowance balance attributable to loans: | |||||||
Individually evaluated for impairment | $ 3,171 | $ 2,237 | |||||
Collectively evaluated for impairment | 67,498 | 70,150 | |||||
Total ending allowance balance | 70,669 | $ 71,871 | 72,387 | $ 46,931 | $ 42,613 | $ 21,730 | |
Loans: | |||||||
Loans individually evaluated for impairment | 53,238 | 74,034 | |||||
Loans collectively evaluated for impairment | 2,305,288 | 2,432,709 | |||||
Total loans | 2,358,526 | 2,506,743 | |||||
Residential real estate | |||||||
Ending allowance balance attributable to loans: | |||||||
Individually evaluated for impairment | 160 | 41 | |||||
Collectively evaluated for impairment | 32,904 | 32,325 | |||||
Total ending allowance balance | 33,064 | 33,056 | 32,366 | 18,812 | $ 19,154 | 12,336 | |
Loans: | |||||||
Loans individually evaluated for impairment | 358 | 208 | |||||
Loans collectively evaluated for impairment | 1,948,534 | 2,033,318 | |||||
Total loans | 1,948,892 | 2,033,526 | |||||
Commercial real estate | |||||||
Ending allowance balance attributable to loans: | |||||||
Individually evaluated for impairment | 287 | ||||||
Collectively evaluated for impairment | 22,491 | 21,655 | |||||
Total ending allowance balance | 22,491 | 22,763 | 21,942 | 15,770 | 11,261 | 5,243 | |
Loans: | |||||||
Loans individually evaluated for impairment | 18,981 | 20,974 | |||||
Loans collectively evaluated for impairment | 244,297 | 238,984 | |||||
Total loans | 263,278 | 259,958 | |||||
Construction | |||||||
Ending allowance balance attributable to loans: | |||||||
Individually evaluated for impairment | 3,011 | 1,905 | |||||
Collectively evaluated for impairment | 12,045 | 16,083 | |||||
Total ending allowance balance | 15,056 | 15,966 | 17,988 | 11,998 | 11,439 | 3,822 | |
Loans: | |||||||
Loans individually evaluated for impairment | 33,779 | 48,871 | |||||
Loans collectively evaluated for impairment | 110,606 | 157,710 | |||||
Total loans | 144,385 | 206,581 | |||||
Commercial lines of credit | |||||||
Ending allowance balance attributable to loans: | |||||||
Individually evaluated for impairment | 4 | ||||||
Collectively evaluated for impairment | 58 | 87 | |||||
Total ending allowance balance | 58 | $ 86 | 91 | 350 | $ 368 | 328 | |
Loans: | |||||||
Loans individually evaluated for impairment | 120 | 3,981 | |||||
Loans collectively evaluated for impairment | 1,851 | 2,690 | |||||
Total loans | $ 1,971 | 6,671 | |||||
Other consumer | |||||||
Ending allowance balance attributable to loans: | |||||||
Total ending allowance balance | $ 1 | 1 | $ 1 | ||||
Loans: | |||||||
Loans collectively evaluated for impairment | 7 | ||||||
Total loans | $ 7 | ||||||
Unallocated | |||||||
Ending allowance balance attributable to loans: | |||||||
Total ending allowance balance | $ 390 |
Loans - Impaired Loans by Class
Loans - Impaired Loans by Class of Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | $ 42,799 | $ 42,799 | $ 59,317 | ||
Unpaid principal balance, with an allowance for loan losses recorded | 11,675 | 11,675 | 15,803 | ||
Total Unpaid Principal Balance | 54,474 | 54,474 | 75,120 | ||
Recorded investment, with no related allowance for loan losses recorded | 41,605 | 41,605 | 58,350 | ||
Recorded investment, with an allowance for loan losses recorded | 11,633 | 11,633 | 15,684 | ||
Total Recorded Investment | 53,238 | 53,238 | 74,034 | ||
Allowance for Loan Losses | 3,171 | 3,171 | 2,237 | ||
Average recorded investment, with no related allowance for loan losses recorded | 42,084 | $ 39,240 | 51,010 | $ 37,611 | |
Average recorded investment, with an allowance for loan losses recorded | 11,381 | 245 | 10,998 | 246 | |
Total Average Recorded Investment | 53,465 | 39,485 | 62,008 | 37,857 | |
Interest Income Recognized, with no related allowance for loan losses recorded | 45 | 379 | 141 | 881 | |
Interest Income Recognized, with an allowance for loan losses recorded | 56 | 3 | 108 | 6 | |
Total Interest Income Recognized | 101 | 382 | 249 | 887 | |
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | 30 | 214 | 127 | 656 | |
Cash Basis Interest Recognized, with an allowance for loan losses recorded | 38 | 2 | 90 | 5 | |
Total Cash Basis Interest Recognized | 68 | 216 | 217 | 661 | |
Residential real estate | Real estate loan, first mortgage | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 108 | 108 | 116 | ||
Unpaid principal balance, with an allowance for loan losses recorded | 275 | 275 | 114 | ||
Recorded investment, with no related allowance for loan losses recorded | 82 | 82 | 94 | ||
Recorded investment, with an allowance for loan losses recorded | 276 | 276 | 114 | ||
Allowance for Loan Losses | 160 | 160 | 41 | ||
Average recorded investment, with no related allowance for loan losses recorded | 86 | 94 | 88 | 97 | |
Average recorded investment, with an allowance for loan losses recorded | 277 | 116 | 277 | 116 | |
Interest Income Recognized, with an allowance for loan losses recorded | 1 | 2 | 1 | 3 | |
Cash Basis Interest Recognized, with an allowance for loan losses recorded | 1 | 1 | 1 | 2 | |
Commercial real estate | Real estate loan, Retail | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 1,239 | 1,239 | 1,247 | ||
Recorded investment, with no related allowance for loan losses recorded | 1,010 | 1,010 | 1,029 | ||
Average recorded investment, with no related allowance for loan losses recorded | 1,013 | 1,070 | 1,020 | 1,089 | |
Interest Income Recognized, with no related allowance for loan losses recorded | 14 | 29 | |||
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | 10 | 24 | |||
Commercial real estate | Real estate loan, Hotels/Single-room occupancy hotels | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 17,869 | 17,869 | 11,428 | ||
Unpaid principal balance, with an allowance for loan losses recorded | 8,645 | ||||
Recorded investment, with no related allowance for loan losses recorded | 17,835 | 17,835 | 11,419 | ||
Recorded investment, with an allowance for loan losses recorded | 8,526 | ||||
Allowance for Loan Losses | 287 | ||||
Average recorded investment, with no related allowance for loan losses recorded | 17,926 | 3,502 | 17,914 | 3,502 | |
Commercial real estate | Real Estate Loan, Other | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 136 | 136 | |||
Recorded investment, with no related allowance for loan losses recorded | 136 | 136 | |||
Average recorded investment, with no related allowance for loan losses recorded | 136 | 136 | |||
Construction | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 23,327 | 23,327 | 42,669 | ||
Unpaid principal balance, with an allowance for loan losses recorded | 11,400 | 11,400 | 6,920 | ||
Recorded investment, with no related allowance for loan losses recorded | 22,422 | 22,422 | 41,951 | ||
Recorded investment, with an allowance for loan losses recorded | 11,357 | 11,357 | 6,920 | ||
Allowance for Loan Losses | 3,011 | 3,011 | 1,905 | ||
Average recorded investment, with no related allowance for loan losses recorded | 22,801 | 32,047 | 30,207 | 30,394 | |
Average recorded investment, with an allowance for loan losses recorded | 11,104 | 10,721 | |||
Interest Income Recognized, with no related allowance for loan losses recorded | 43 | 344 | 138 | 810 | |
Interest Income Recognized, with an allowance for loan losses recorded | 55 | 107 | |||
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | 29 | 190 | 124 | 597 | |
Cash Basis Interest Recognized, with an allowance for loan losses recorded | 37 | 89 | |||
Commercial lines of credit | Private banking | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 120 | 120 | 3,857 | ||
Unpaid principal balance, with an allowance for loan losses recorded | 124 | ||||
Recorded investment, with no related allowance for loan losses recorded | 120 | 120 | 3,857 | ||
Recorded investment, with an allowance for loan losses recorded | 124 | ||||
Allowance for Loan Losses | $ 4 | ||||
Average recorded investment, with no related allowance for loan losses recorded | 122 | 1,243 | 1,645 | 1,245 | |
Average recorded investment, with an allowance for loan losses recorded | 129 | 130 | |||
Interest Income Recognized, with no related allowance for loan losses recorded | 2 | 21 | 3 | 42 | |
Interest Income Recognized, with an allowance for loan losses recorded | 1 | 3 | |||
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | $ 1 | 14 | $ 3 | 35 | |
Cash Basis Interest Recognized, with an allowance for loan losses recorded | 1 | 3 | |||
Commercial lines of credit | C&I lending | |||||
Impaired loans by class of loans | |||||
Average recorded investment, with no related allowance for loan losses recorded | $ 1,284 | $ 1,284 |
Loans - Investment in Nonaccrua
Loans - Investment in Nonaccrual and Loans Past Due Still Accruing by Class of Loans (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | $ 74,766 | $ 86,424 |
Loans Past Due Over 90 Days Still Accruing | 44 | 46 |
Total Past Due | 140,166 | 155,261 |
Loans Not Past Due | 2,218,360 | 2,351,482 |
Total loans | 2,358,526 | 2,506,743 |
30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 41,123 | 51,619 |
60 - 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 24,233 | 17,172 |
Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 74,810 | 86,470 |
Residential real estate | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total loans | 1,948,892 | 2,033,526 |
Residential real estate | Real estate loan, first mortgage | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 27,157 | 20,043 |
Loans Past Due Over 90 Days Still Accruing | 44 | 46 |
Total Past Due | 77,225 | 72,432 |
Loans Not Past Due | 1,855,556 | 1,943,602 |
Total loans | 1,932,781 | 2,016,034 |
Residential real estate | Real estate loan, first mortgage | 30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 33,222 | 37,819 |
Residential real estate | Real estate loan, first mortgage | 60 - 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 16,802 | 14,524 |
Residential real estate | Real estate loan, first mortgage | Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 27,201 | 20,089 |
Residential real estate | Real estate loan, second mortgage | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 714 | 686 |
Total Past Due | 822 | 1,182 |
Loans Not Past Due | 15,289 | 16,310 |
Total loans | 16,111 | 17,492 |
Residential real estate | Real estate loan, second mortgage | 30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 362 | |
Residential real estate | Real estate loan, second mortgage | 60 - 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 108 | 134 |
Residential real estate | Real estate loan, second mortgage | Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 714 | 686 |
Commercial real estate | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total loans | 263,278 | 259,958 |
Commercial real estate | Real estate loan, Retail | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 1,011 | 20 |
Total Past Due | 1,011 | 1,030 |
Loans Not Past Due | 14,981 | 15,170 |
Total loans | 15,992 | 16,200 |
Commercial real estate | Real estate loan, Retail | 30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 1,010 | |
Commercial real estate | Real estate loan, Retail | Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 1,011 | 20 |
Commercial real estate | Real estate loan, Multifamily | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 3,661 | 3,835 |
Loans Not Past Due | 94,381 | 75,374 |
Total loans | 98,042 | 79,209 |
Commercial real estate | Real estate loan, Multifamily | 30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 3,661 | 3,835 |
Commercial real estate | Real estate loan, Offices | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 2,769 | |
Loans Not Past Due | 20,773 | 27,061 |
Total loans | 23,542 | 27,061 |
Commercial real estate | Real estate loan, Offices | 30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 2,769 | |
Commercial real estate | Real estate loan, Hotels/Single-room occupancy hotels | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 17,945 | 19,945 |
Total Past Due | 17,945 | 19,945 |
Loans Not Past Due | 60,344 | 47,690 |
Total loans | 78,289 | 67,635 |
Commercial real estate | Real estate loan, Hotels/Single-room occupancy hotels | Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 17,945 | 19,945 |
Commercial real estate | Real estate loan, Industrial | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 4,000 | |
Loans Not Past Due | 1,851 | 13,186 |
Total loans | 5,851 | 13,186 |
Commercial real estate | Real estate loan, Industrial | 60 - 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 4,000 | |
Commercial real estate | Real estate loan, Other | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 136 | |
Total Past Due | 1,607 | |
Loans Not Past Due | 39,955 | 56,667 |
Total loans | 41,562 | 56,667 |
Commercial real estate | Real estate loan, Other | 30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 1,471 | |
Commercial real estate | Real estate loan, Other | Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 136 | |
Construction | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 27,803 | 41,873 |
Total Past Due | 31,126 | 52,980 |
Loans Not Past Due | 113,259 | 153,601 |
Total loans | 144,385 | 206,581 |
Construction | 30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 8,593 | |
Construction | 60 - 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 3,323 | 2,514 |
Construction | Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 27,803 | 41,873 |
Commercial lines of credit | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total loans | 1,971 | 6,671 |
Commercial lines of credit | Private banking | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 2,285 | |
Total Past Due | 2,285 | |
Loans Not Past Due | 120 | 124 |
Total loans | 120 | 2,409 |
Commercial lines of credit | Private banking | Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 2,285 | |
Commercial lines of credit | C&I lending | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 1,572 | |
Total Past Due | 1,572 | |
Loans Not Past Due | 1,851 | 2,690 |
Total loans | $ 1,851 | 4,262 |
Commercial lines of credit | C&I lending | Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total Past Due | 1,572 | |
Other consumer | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Loans Not Past Due | 7 | |
Total loans | $ 7 |
Loans - Troubled Debt Restructu
Loans - Troubled Debt Restructurings (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021USD ($)loan | Jun. 30, 2020USD ($)loan | Dec. 31, 2020USD ($) | |
Troubled Debt Restructurings | |||
Loans classified as troubled debt restructurings | $ 25,174 | $ 28,347 | |
Allowance for outstanding loan losses classified as troubled debt restructurings | 2,005 | 1,951 | |
Value of loans subsequently defaulted | 14,183 | ||
Troubled debt restructuring that defaulted within one year of modification | 14,183 | ||
Accrued interest receivable under the CARES Act COVID-19 forbearance program | $ 188 | $ 146 | |
Loans that remain in payment deferral under the CARES Act COVID-19 forbearance program | 11,775 | 15,785 | |
Number of TDRs subsequently defaulted | loan | 8 | ||
Loans modified as TDRs that are in default | $ 22,234 | ||
Private banking | |||
Troubled Debt Restructurings | |||
Number of loans modified during the period, that were considered as TDRs | loan | 1 | 1 | |
Real estate loan, first mortgage | |||
Troubled Debt Restructurings | |||
Loans classified as troubled debt restructurings | $ 200 | $ 209 | |
Allowance for outstanding loan losses classified as troubled debt restructurings | 40 | 41 | |
Real estate loan, Retail | |||
Troubled Debt Restructurings | |||
Loans classified as troubled debt restructurings | 1,011 | 1,029 | |
Residential real estate | |||
Troubled Debt Restructurings | |||
Loans secured by residential real estate properties in the process of foreclosure | 4,694 | 5,320 | |
Construction | |||
Troubled Debt Restructurings | |||
Loans classified as troubled debt restructurings | 23,843 | 26,985 | |
Allowance for outstanding loan losses classified as troubled debt restructurings | $ 1,965 | 1,906 | |
Value of loans subsequently defaulted | $ 5,263 | ||
Number of loans modified during the period, that were considered as TDRs | loan | 2 | 3 | |
Troubled debt restructuring that defaulted within one year of modification | $ 5,263 | ||
Number of TDRs subsequently defaulted | loan | 1 | ||
Construction loans and private banking loan | Pre and Post Modification | |||
Troubled Debt Restructurings | |||
Loans classified as troubled debt restructurings | $ 10,863 | $ 13,777 | |
Commercial lines of credit and private banking | |||
Troubled Debt Restructurings | |||
Loans classified as troubled debt restructurings | 120 | 124 | |
Allowance for outstanding loan losses classified as troubled debt restructurings | 4 | ||
Mortgage loans held for sale | Residential real estate | |||
Troubled Debt Restructurings | |||
Loans secured by residential real estate properties in the process of foreclosure | $ 4,683 | $ 3,209 |
Loans - Risk Rating of Loans by
Loans - Risk Rating of Loans by Class of Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Recorded investment in loans | |||||
Total | $ 2,358,526 | $ 2,358,526 | $ 2,506,743 | ||
Advantage Loan Program | |||||
Recorded investment in loans | |||||
Total | 205,505 | 205,505 | 57,039 | ||
Outstanding principal balance of loans repurchased | 79,818 | $ 38,704 | 167,762 | $ 38,704 | |
Pass | |||||
Recorded investment in loans | |||||
Total | 2,137,476 | 2,137,476 | 2,308,592 | ||
Special Mention | |||||
Recorded investment in loans | |||||
Total | 65,237 | 65,237 | 59,668 | ||
Substandard | |||||
Recorded investment in loans | |||||
Total | 147,684 | 147,684 | 131,469 | ||
Doubtful | |||||
Recorded investment in loans | |||||
Total | 8,129 | 8,129 | 7,014 | ||
Residential real estate | |||||
Recorded investment in loans | |||||
Total | 1,948,892 | 1,948,892 | 2,033,526 | ||
Residential real estate | Real estate loan, first mortgage | |||||
Recorded investment in loans | |||||
Total | 1,932,781 | 1,932,781 | 2,016,034 | ||
Residential real estate | Real estate loan, second mortgage | |||||
Recorded investment in loans | |||||
Total | 16,111 | 16,111 | 17,492 | ||
Residential real estate | Pass | Real estate loan, first mortgage | |||||
Recorded investment in loans | |||||
Total | 1,905,579 | 1,905,579 | 1,995,945 | ||
Residential real estate | Pass | Real estate loan, second mortgage | |||||
Recorded investment in loans | |||||
Total | 15,397 | 15,397 | 16,806 | ||
Residential real estate | Substandard | Real estate loan, first mortgage | |||||
Recorded investment in loans | |||||
Total | 26,944 | 26,944 | 19,995 | ||
Residential real estate | Substandard | Real estate loan, second mortgage | |||||
Recorded investment in loans | |||||
Total | 714 | 714 | 686 | ||
Residential real estate | Doubtful | Real estate loan, first mortgage | |||||
Recorded investment in loans | |||||
Total | 258 | 258 | 94 | ||
Commercial real estate | |||||
Recorded investment in loans | |||||
Total | 263,278 | 263,278 | 259,958 | ||
Commercial real estate | Real estate loan, Retail | |||||
Recorded investment in loans | |||||
Total | 15,992 | 15,992 | 16,200 | ||
Commercial real estate | Real estate loan, Multifamily | |||||
Recorded investment in loans | |||||
Total | 98,042 | 98,042 | 79,209 | ||
Commercial real estate | Real estate loan, Offices | |||||
Recorded investment in loans | |||||
Total | 23,542 | 23,542 | 27,061 | ||
Commercial real estate | Real estate loan, Hotels/Single-room occupancy hotels | |||||
Recorded investment in loans | |||||
Total | 78,289 | 78,289 | 67,635 | ||
Commercial real estate | Real estate loan, Industrial | |||||
Recorded investment in loans | |||||
Total | 5,851 | 5,851 | 13,186 | ||
Commercial real estate | Real estate loan, Other | |||||
Recorded investment in loans | |||||
Total | 41,562 | 41,562 | 56,667 | ||
Commercial real estate | Pass | Real estate loan, Retail | |||||
Recorded investment in loans | |||||
Total | 13,432 | 13,432 | 13,599 | ||
Commercial real estate | Pass | Real estate loan, Multifamily | |||||
Recorded investment in loans | |||||
Total | 61,860 | 61,860 | 55,772 | ||
Commercial real estate | Pass | Real estate loan, Offices | |||||
Recorded investment in loans | |||||
Total | 9,600 | 9,600 | 12,014 | ||
Commercial real estate | Pass | Real estate loan, Hotels/Single-room occupancy hotels | |||||
Recorded investment in loans | |||||
Total | 12,113 | 12,113 | 9,115 | ||
Commercial real estate | Pass | Real estate loan, Industrial | |||||
Recorded investment in loans | |||||
Total | 5,851 | 5,851 | 5,867 | ||
Commercial real estate | Pass | Real estate loan, Other | |||||
Recorded investment in loans | |||||
Total | 30,107 | 30,107 | 43,193 | ||
Commercial real estate | Special Mention | Real estate loan, Retail | |||||
Recorded investment in loans | |||||
Total | 1,549 | 1,549 | 1,572 | ||
Commercial real estate | Special Mention | Real estate loan, Multifamily | |||||
Recorded investment in loans | |||||
Total | 10,176 | 10,176 | 14,238 | ||
Commercial real estate | Special Mention | Real estate loan, Offices | |||||
Recorded investment in loans | |||||
Total | 1,602 | 1,602 | 1,623 | ||
Commercial real estate | Special Mention | Real estate loan, Hotels/Single-room occupancy hotels | |||||
Recorded investment in loans | |||||
Total | 20,538 | 20,538 | 17,984 | ||
Commercial real estate | Special Mention | Real estate loan, Other | |||||
Recorded investment in loans | |||||
Total | 5,868 | 5,868 | 7,732 | ||
Commercial real estate | Substandard | Real estate loan, Retail | |||||
Recorded investment in loans | |||||
Total | 1,011 | 1,011 | 1,029 | ||
Commercial real estate | Substandard | Real estate loan, Multifamily | |||||
Recorded investment in loans | |||||
Total | 26,006 | 26,006 | 9,199 | ||
Commercial real estate | Substandard | Real estate loan, Offices | |||||
Recorded investment in loans | |||||
Total | 12,340 | 12,340 | 13,424 | ||
Commercial real estate | Substandard | Real estate loan, Hotels/Single-room occupancy hotels | |||||
Recorded investment in loans | |||||
Total | 45,638 | 45,638 | 40,536 | ||
Commercial real estate | Substandard | Real estate loan, Industrial | |||||
Recorded investment in loans | |||||
Total | 7,319 | ||||
Commercial real estate | Substandard | Real estate loan, Other | |||||
Recorded investment in loans | |||||
Total | 5,587 | 5,587 | 5,742 | ||
Construction | |||||
Recorded investment in loans | |||||
Total | 144,385 | 144,385 | 206,581 | ||
Construction | Pass | |||||
Recorded investment in loans | |||||
Total | 81,593 | 81,593 | 152,577 | ||
Construction | Special Mention | |||||
Recorded investment in loans | |||||
Total | 25,477 | 25,477 | 14,234 | ||
Construction | Substandard | |||||
Recorded investment in loans | |||||
Total | 29,444 | 29,444 | 32,850 | ||
Construction | Doubtful | |||||
Recorded investment in loans | |||||
Total | 7,871 | 7,871 | 6,920 | ||
Commercial lines of credit | |||||
Recorded investment in loans | |||||
Total | 1,971 | 1,971 | 6,671 | ||
Commercial lines of credit | Private banking | |||||
Recorded investment in loans | |||||
Total | 120 | 120 | 2,409 | ||
Commercial lines of credit | C&I lending | |||||
Recorded investment in loans | |||||
Total | 1,851 | 1,851 | 4,262 | ||
Commercial lines of credit | Pass | Private banking | |||||
Recorded investment in loans | |||||
Total | 120 | 120 | 124 | ||
Commercial lines of credit | Pass | C&I lending | |||||
Recorded investment in loans | |||||
Total | 1,824 | 1,824 | 3,573 | ||
Commercial lines of credit | Special Mention | Private banking | |||||
Recorded investment in loans | |||||
Total | 2,285 | ||||
Commercial lines of credit | Special Mention | C&I lending | |||||
Recorded investment in loans | |||||
Total | $ 27 | $ 27 | |||
Commercial lines of credit | Substandard | C&I lending | |||||
Recorded investment in loans | |||||
Total | 689 | ||||
Other consumer | |||||
Recorded investment in loans | |||||
Total | 7 | ||||
Other consumer | Pass | |||||
Recorded investment in loans | |||||
Total | $ 7 |
Mortgage Servicing Rights, ne_2
Mortgage Servicing Rights, net - Principle Balance by Category (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Mortgage Servicing Rights | ||
Total | $ 381,163 | $ 666,030 |
Custodial escrow balances maintained on serviced loans | 2,509 | 6,051 |
FNMA | ||
Mortgage Servicing Rights | ||
Total | 143,354 | 171,553 |
FHLB | ||
Mortgage Servicing Rights | ||
Total | 47,712 | 64,661 |
Private investors | ||
Mortgage Servicing Rights | ||
Total | $ 190,097 | $ 429,816 |
Mortgage Servicing Rights net -
Mortgage Servicing Rights net - Activity and Related Valuation Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Mortgage servicing rights activity | |||||
Mortgage servicing rights Beginning of year | $ 5,855 | $ 10,302 | $ 7,853 | $ 10,845 | |
Additions | 25 | 383 | 99 | 490 | |
Amortization | (1,680) | (1,116) | (3,752) | (1,766) | |
Mortgage servicing rights End of year | 4,200 | 9,569 | 4,200 | 9,569 | |
Valuation allowance at beginning of year | 1,229 | 2,326 | 2,165 | 1,080 | |
Additions (recoveries) | (261) | (23) | (1,197) | 1,223 | |
Valuation allowance at end of year | 968 | 2,303 | 968 | 2,303 | |
Mortgage servicing rights, net | 3,232 | 7,266 | 3,232 | 7,266 | $ 5,688 |
Servicing fee income (loss), net of amortization of servicing rights and changes in valuation allowance | $ (908) | $ (207) | $ (1,338) | $ (1,118) |
Mortgage Servicing Rights, ne_3
Mortgage Servicing Rights, net - Valuation techniques (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Mortgage Servicing Rights | ||
Fair value of mortgage servicing rights | $ 3,404 | $ 5,841 |
Prepayment speed range | 19.70% | 22.50% |
Weighted average life of the mortgage servicing right | 49 months | 43 months |
Weighted average default rate | 0.20% | 0.20% |
Minimum | ||
Mortgage Servicing Rights | ||
Discount rate range | 9.50% | 9.50% |
Maximum | ||
Mortgage Servicing Rights | ||
Discount rate range | 12.00% | 12.00% |
Deposits - Time deposits (Detai
Deposits - Time deposits (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Deposits | ||
Interest-bearing time deposits | $ 1,191,895 | $ 1,646,523 |
Brokered time deposits | 35,000 | 42,751 |
Time deposits that meet or exceed the FDIC insurance limit of $250 | $ 333,192 | $ 487,340 |
FHLB Borrowings (Details)
FHLB Borrowings (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Federal Home Loan Bank Borrowings | ||
Long-term fixed rate advances | $ 318,000 | $ 318,000 |
Minimum | Long term | ||
Federal Home Loan Bank Borrowings | ||
FHLB interest rates (as a percent) | 0.43% | 0.43% |
Maximum | Long term | ||
Federal Home Loan Bank Borrowings | ||
FHLB interest rates (as a percent) | 1.96% | 1.96% |
FHLB Borrowings - FHLB Advances
FHLB Borrowings - FHLB Advances (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Federal Home Loan Bank Borrowings | |
Additional borrowing capacity | $ 53,238 |
Callable Option | |
Federal Home Loan Bank Borrowings | |
Total FHLB advances | 307,000 |
Callable Option August, 2021 | |
Federal Home Loan Bank Borrowings | |
Total FHLB advances | 100,000 |
Callable Option September, 2021 | |
Federal Home Loan Bank Borrowings | |
Total FHLB advances | 67,000 |
Callable Option October, 2021 | |
Federal Home Loan Bank Borrowings | |
Total FHLB advances | 90,000 |
Callable Option May, 2024 | |
Federal Home Loan Bank Borrowings | |
Total FHLB advances | $ 50,000 |
FHLB Borrowings - FHLB Overdraf
FHLB Borrowings - FHLB Overdraft Line of Credit and Letter of Credit (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
FHLB Overdraft Line of Credit and Letter of Credit | ||
FHLB line of credit agreement maximum borrowing limit | $ 50,000 | |
FHLB overdraft line of credit average borrowings outstanding | 3 | |
FHLB overdraft line of credit outstanding borrowings | $ 0 | $ 0 |
FHLB overdraft line of credit (as percent) | 0.43% | 0.46% |
FHLB letter of credit term | 16 months | |
FHLB, agreement term | 1 year | |
Standby letter of credit expiring July, 2022 | ||
FHLB Overdraft Line of Credit and Letter of Credit | ||
FHLB overdraft line of credit outstanding borrowings | $ 0 | |
FHLB letter of credit | $ 7,500 |
FHLB Borrowings - Other Borrowi
FHLB Borrowings - Other Borrowings (Details) - Other Banks - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 |
Other Borrowings | |||
Maximum borrowing capacity | $ 80,000 | $ 100,000 | |
Outstanding balance | $ 0 | $ 0 |
Subordinated Notes, net (Detail
Subordinated Notes, net (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Apr. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Subordinated Notes | |||||||
Total | $ 65,377 | $ 65,377 | $ 65,377 | $ 65,341 | |||
Interest expense | 1,005 | $ 1,178 | 2,185 | $ 2,355 | |||
Subordinated notes | |||||||
Subordinated Notes | |||||||
Subordinated notes (principal amount) | 65,000 | 65,000 | 65,000 | 65,000 | |||
Unamortized note premium | 377 | 377 | 377 | 411 | |||
Unamortized debt issuance costs | 0 | 0 | 0 | (70) | |||
Total | $ 65,377 | 65,377 | $ 65,377 | $ 65,341 | |||
Interest rate (as a percent) | 7.00% | 6.00% | 7.00% | ||||
Interest expense | $ 1,005 | $ 1,178 | $ 2,185 | $ 2,355 | |||
Redemption price percentage of outstanding principal amount | 100.00% | ||||||
LIBOR | Subordinated notes | |||||||
Subordinated Notes | |||||||
Variable interest rate on subordinate notes (in percent) | 5.82% |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
May 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2021 | Dec. 31, 2018 | |
Stock Repurchase Program | |||||
Shares repurchased and cancelled, value | $ 82 | ||||
Proceeds from Issuance of Common Stock | $ 1,350 | ||||
Common stock | |||||
Stock Repurchase Program | |||||
Shares repurchased and canceled | 10,912 | 10,912 | |||
Shares repurchased and cancelled, value | $ 82 | $ 82 | |||
Average repurchase price (in dollars per share) | $ 7.57 | ||||
Common stock authorized repurchase amount remaining | $ 19,568 | ||||
Number of shares of stock issued and sold | 300,000 | ||||
Chief Executive Officer | Common stock | |||||
Stock Repurchase Program | |||||
Number of shares of stock issued and sold | 300,000 | ||||
Proceeds from Issuance of Common Stock | $ 1,350 | ||||
Offering price (in dollars per share) | $ 4.50 | ||||
Maximum | Common stock | |||||
Stock Repurchase Program | |||||
Stock repurchase program authorized amount | $ 50,000 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Stock options | |||||
Stock-based Compensation | |||||
Maximum term of stock awards granted | 10 years | ||||
2017 Omnibus Equity Incentive Plan | |||||
Stock-based Compensation | |||||
Number of shares authorized | 4,237,100 | 4,237,100 | |||
Weighted Average Remaining Contractual Term | |||||
Shares withheld in order to pay employee tax liabilities on vested awards | 8,536 | ||||
Employee tax liability associated with restricted stock awards the vested during the period | $ 46 | ||||
2017 Omnibus Equity Incentive Plan | Stock options | |||||
Number of Shares | |||||
Outstanding at January 1, 2021 | 377,882 | ||||
Forfeited/expired | (10,115) | ||||
Outstanding at March 31, 2021 | 367,767 | 367,767 | 377,882 | ||
Exercisable at March 31, 2021 | 226,550 | 226,550 | |||
Weighted Average Exercise Price | |||||
Outstanding at January 1, 2021 | $ 5.61 | ||||
Forfeited/expired | 12.62 | ||||
Outstanding at March 31, 2021 | $ 5.41 | 5.41 | $ 5.61 | ||
Exercisable at March 31, 2021ble at March 31, 2021 | $ 4.98 | $ 4.98 | |||
Weighted Average Remaining Contractual Term | |||||
Weighted Average Remaining Contractual Term (Years) | 8 years 1 month 17 days | 9 years 1 month 2 days | |||
Weighted Average Remaining Contractual Term, Exercisable | 8 years 2 months 19 days | ||||
Aggregate Intrinsic Value Exercisable | $ 110 | $ 110 | |||
Aggregate Intrinsic Value | 165 | 165 | |||
Stock-based compensation costs recognized | 46 | $ 29 | 103 | $ 55 | |
Total unrecognized compensation cost - stock options | 101 | $ 101 | |||
Unrecognized compensation cost related to nonvested awards, expected to be recognized over a weighted-average period | 9 months 29 days | ||||
2017 Omnibus Equity Incentive Plan | Stock options | Awards vesting at the end of the third year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 50.00% | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted prior to 2020 | Awards vesting at the end of the third year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 50.00% | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted prior to 2020 | Awards vesting at the end of the fourth year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 50.00% | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted starting in 2020 | |||||
Stock-based Compensation | |||||
Vesting period | 3 years | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted starting in 2020 | Awards vesting on the first anniversary of the grant date | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted starting in 2020 | Awards vesting at the end of the second year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted starting in 2020 | Awards vesting at the end of the third year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2017 Omnibus Equity Incentive Plan | Restricted stock | |||||
Weighted Average Remaining Contractual Term | |||||
Stock-based compensation costs recognized | 147 | $ (20) | $ 195 | $ 63 | |
Total unrecognized compensation cost - restricted stock awards | $ 1,460 | $ 1,460 | |||
Unrecognized compensation cost related to nonvested awards, expected to be recognized over a weighted-average period | 1 year 11 months 8 days | ||||
Number of Shares | |||||
Nonvested, Opening balance | 137,936 | ||||
Granted | 227,702 | ||||
Vested | (31,906) | ||||
Forfeited | (25,846) | ||||
Nonvested, Ending balance | 307,886 | 307,886 | 137,936 | ||
Weighted Average Grant Date Fair Value | |||||
Nonvested, Opening balance | $ 7.90 | ||||
Granted | 4.97 | ||||
Vested | 7.67 | ||||
Forfeited | 6.25 | ||||
Nonvested, Ending balance | $ 5.89 | $ 5.89 | $ 7.90 | ||
Grant Date Fair Value of Restricted Stock that Vested During the year | |||||
Fair value of restricted stock awards vested | $ 173 | ||||
2020 Omnibus Equity Incentive Plan | |||||
Stock-based Compensation | |||||
Number of shares authorized | 3,979,661 | 3,979,661 | |||
2020 Omnibus Equity Incentive Plan | Restricted stock | |||||
Stock-based Compensation | |||||
Vesting period | 3 years | ||||
2020 Omnibus Equity Incentive Plan | Restricted stock | Awards vesting on the first anniversary of the grant date | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2020 Omnibus Equity Incentive Plan | Restricted stock | Awards vesting at the end of the second year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2020 Omnibus Equity Incentive Plan | Restricted stock | Awards vesting at the end of the third year | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 33.33% | ||||
2020 Omnibus Equity Incentive Plan | Restricted stock | Key employee | |||||
Number of Shares | |||||
Granted | 182,702 | ||||
2020 Omnibus Equity Incentive Plan | Restricted stock | Non-employee directors Restricted Stock Awards | |||||
Number of Shares | |||||
Granted | 45,000 |
Income (Loss) Per Share (Detail
Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Numerator: | ||||||
Net loss | $ 3,452 | $ 2,325 | $ 2,867 | $ (4,030) | $ 5,777 | $ (1,163) |
Denominator: | ||||||
Weighted average common shares outstanding, basic | 50,009,053 | 49,837,948 | 49,930,563 | 49,837,805 | ||
Weighted average effect of potentially dilutive common shares: | ||||||
Weighted average common shares outstanding, diluted | 50,060,775 | 49,841,741 | 49,987,253 | 49,837,805 | ||
Income (loss) per share: | ||||||
Income (loss) per share, basic and diluted (in dollars per share) | $ 0.07 | $ 0.06 | $ 0.12 | $ (0.02) | ||
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive | 309,499 | 623,558 | 224,515 | 529,499 | ||
Stock options | ||||||
Income (loss) per share: | ||||||
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive | 67,767 | 460,068 | 71,325 | 330,617 | ||
Restricted stock | ||||||
Income (loss) per share: | ||||||
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive | 241,732 | 163,490 | 153,190 | 198,882 | ||
Common stock | Stock options | ||||||
Weighted average effect of potentially dilutive common shares: | ||||||
Incremental shares from share-based compensation | 41,055 | 45,423 | ||||
Common stock | Restricted stock | ||||||
Weighted average effect of potentially dilutive common shares: | ||||||
Incremental shares from share-based compensation | 10,667 | 3,793 | 11,267 |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments - Assets measured at fair value on a recurring basis (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | $ 190,685 | $ 299,594 |
Equity securities | ||
Equity securities | 5,043 | 5,118 |
U.S. Treasury & Agency securities | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 73,630 | 138,997 |
U.S. Treasury & Agency securities | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 73,630 | 138,997 |
U.S. Treasury & Agency securities | Level 1 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 40,192 | |
U.S. Treasury & Agency securities | Level 2 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 73,630 | 98,805 |
Mortgage-backed securities | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 29,235 | 33,814 |
Mortgage-backed securities | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 29,235 | 33,814 |
Mortgage-backed securities | Level 2 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 29,235 | 33,814 |
Collateralized mortgage obligations | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 87,630 | 126,596 |
Collateralized mortgage obligations | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 87,630 | 126,596 |
Collateralized mortgage obligations | Level 2 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 87,630 | 126,596 |
Collateralized debt obligations | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 190 | 187 |
Collateralized debt obligations | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 190 | 187 |
Collateralized debt obligations | Level 3 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 190 | 187 |
Equity securities | Recurring | ||
Equity securities | ||
Equity securities | 5,043 | 5,118 |
Equity securities | Level 1 | Recurring | ||
Equity securities | ||
Equity securities | $ 5,043 | $ 5,118 |
Fair Values of Financial Inst_4
Fair Values of Financial Instruments - Reconciliation and income statement classification using Level 3 inputs (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Investment income | |||
Unrealized losses on investments | $ 286 | $ 419 | |
Collateralized debt obligations | |||
Investment income | |||
Unrealized losses on investments | 22 | 27 | |
Collateralized debt obligations | Recurring | Level 3 | |||
Reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) | |||
Balance of recurring Level 3 assets at beginning of period | 187 | $ 199 | 199 |
Included in other comprehensive income (loss) | 4 | (14) | |
Principal maturities/settlements | (1) | (1) | |
Balance of recurring Level 3 assets at end of period | 190 | 184 | 187 |
Investment income | |||
Unrealized losses on investments | 22 | $ 27 | |
Interest income | $ 3 | $ 4 |
Fair Values of Financial Inst_5
Fair Values of Financial Instruments - Assets Measured at Fair Value on a Non Recurring Basis and Fair Value of Financial Instruments (Details) $ in Thousands | Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) |
Financial Assets | ||
Interest-bearing time deposits with other banks | $ 805 | $ 7,021 |
Nonrecurring | Impaired loans, Residential real estate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | 43 | |
Nonrecurring | Impaired loans, Residential real estate | Level 3 | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | 43 | |
Nonrecurring | Impaired loans, Residential real estate | Level 3 | Sales comparison approach | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | $ 43 | |
Nonrecurring | Impaired loans, Residential real estate | Weighted Average | Level 3 | Sales comparison approach | Adjustments for differences between the comparable sales | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.15 | |
Nonrecurring | Impaired loans, Commercial real estate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | 8,240 | |
Nonrecurring | Impaired loans, Commercial real estate | Level 3 | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | 8,240 | |
Nonrecurring | Impaired loans, Commercial real estate | Level 3 | Sales comparison approach/Income capitalization approach | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | $ 8,240 | |
Nonrecurring | Impaired loans, Commercial real estate | Weighted Average | Level 3 | Sales comparison approach/Income capitalization approach | Adjustments for differences between the comparable sales and income data for similar loans and collateral underlying such loans | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.36 | |
Nonrecurring | Impaired loans, Construction | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | $ 5,906 | $ 5,015 |
Nonrecurring | Impaired loans, Construction | Level 3 | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | 5,906 | 5,015 |
Nonrecurring | Impaired loans, Construction | Level 3 | Hybrid of sales comparison and income capitalization approaches | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | $ 5,906 | $ 5,015 |
Nonrecurring | Impaired loans, Construction | Weighted Average | Level 3 | Hybrid of sales comparison and income capitalization approaches | Adjustments for differences between the comparable sales and income data for similar loans and collateral underlying such loans | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.15 | 0.15 |
Nonrecurring | Mortgage loans held for sale | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | $ 19,375 | |
Nonrecurring | Mortgage loans held for sale | Level 2 | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | 19,375 | |
Nonrecurring | Mortgage servicing rights | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | $ 2,438 | 5,175 |
Nonrecurring | Mortgage servicing rights | Level 3 | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | 2,438 | 5,175 |
Nonrecurring | Mortgage servicing rights | Level 3 | Discounted cash flow | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a non-recurring basis | $ 2,438 | $ 5,175 |
Nonrecurring | Mortgage servicing rights | Maximum | Level 3 | Discounted cash flow | Discount rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.120 | 0.120 |
Nonrecurring | Mortgage servicing rights | Maximum | Level 3 | Discounted cash flow | Prepayment speed | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.388 | 0.370 |
Nonrecurring | Mortgage servicing rights | Maximum | Level 3 | Discounted cash flow | Default rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.002 | 0.002 |
Nonrecurring | Mortgage servicing rights | Minimum | Level 3 | Discounted cash flow | Discount rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.095 | 0.095 |
Nonrecurring | Mortgage servicing rights | Minimum | Level 3 | Discounted cash flow | Prepayment speed | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.116 | 0.105 |
Nonrecurring | Mortgage servicing rights | Minimum | Level 3 | Discounted cash flow | Default rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.001 | 0.001 |
Nonrecurring | Mortgage servicing rights | Weighted Average | Level 3 | Discounted cash flow | Discount rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.113 | 0.116 |
Nonrecurring | Mortgage servicing rights | Weighted Average | Level 3 | Discounted cash flow | Prepayment speed | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.222 | 0.237 |
Nonrecurring | Mortgage servicing rights | Weighted Average | Level 3 | Discounted cash flow | Default rate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value, measurement input | 0.002 | 0.002 |
Carrying value per balance sheet | ||
Financial Assets | ||
Cash and due from banks | $ 774,478 | $ 998,497 |
Interest-bearing time deposits with other banks | 805 | 7,021 |
Mortgage loans held for sale | 15,107 | 2,909 |
Loans, net | 2,280,659 | 2,434,356 |
Financial Liabilities | ||
Time deposits | 1,191,895 | 1,646,523 |
Federal Home Loan Bank borrowings | 318,000 | 318,000 |
Subordinated notes, net | 65,377 | 65,341 |
Time deposits held for sale | 20,678 | |
Estimated fair value | ||
Financial Assets | ||
Cash and due from banks | 774,478 | 998,497 |
Interest-bearing time deposits with other banks | 810 | 7,021 |
Mortgage loans held for sale | 15,613 | 3,052 |
Loans, net | 2,401,320 | 2,521,874 |
Financial Liabilities | ||
Time deposits | 1,196,803 | 1,658,020 |
Federal Home Loan Bank borrowings | 321,930 | 328,150 |
Subordinated notes, net | 65,431 | 65,753 |
Time deposits held for sale | 20,799 | |
Estimated fair value | Level 1 | ||
Financial Assets | ||
Cash and due from banks | 774,478 | 998,497 |
Interest-bearing time deposits with other banks | 7,021 | |
Estimated fair value | Level 2 | ||
Financial Assets | ||
Interest-bearing time deposits with other banks | 810 | |
Mortgage loans held for sale | 15,613 | 3,052 |
Financial Liabilities | ||
Time deposits | 1,196,803 | 1,658,020 |
Federal Home Loan Bank borrowings | 321,930 | 328,150 |
Subordinated notes, net | 65,431 | 65,753 |
Estimated fair value | Level 3 | ||
Financial Assets | ||
Loans, net | $ 2,401,320 | $ 2,521,874 |
Regulatory Capital Requiremen_3
Regulatory Capital Requirements - Capital adequacy requirements (Details) | Jun. 30, 2021 |
Regulatory Capital Requirements | |
Capital conservation buffer (as a percent) | 2.50% |
Regulatory Capital Requiremen_4
Regulatory Capital Requirements - Actual and minimum required capital amounts and ratios and Dividend Restrictions (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) | |
Regulatory Capital Requirements | ||
Required Total capital adequacy with capital conservation buffer | 10.5 | |
Required Tier 1 capital adequacy with capital conservation buffer | 8.5 | |
Required Common Equity capital adequacy with capital conservation buffer | 7 | |
Total adjusted capital to risk-weighted assets, Amount | ||
Actual | $ 399,367 | $ 407,733 |
For Capital Adequacy Purposes | $ 129,837 | $ 144,466 |
Total adjusted capital to risk-weighted assets, Ratio | ||
Actual | 24.61 | 22.58 |
For Capital Adequacy Purposes | 8 | 8 |
Tier 1 (core) capital to risk-weighted assets, Amount | ||
Actual | $ 326,081 | $ 319,204 |
For Capital Adequacy Purposes | $ 97,378 | $ 108,350 |
Tier 1 (core) capital to risk-weighted assets, Ratio | ||
Actual | 20.09 | 17.68 |
For Capital Adequacy Purposes | 6 | 6 |
Common Equity Tier 1 (CET1), Amount | ||
Actual | $ 326,081 | $ 319,204 |
For Capital Adequacy Purposes | $ 73,033 | $ 81,262 |
Common Equity Tier 1 (CET1), Ratio | ||
Actual | 20.09 | 17.68 |
For Capital Adequacy Purposes | 4.50 | 4.50 |
Tier 1 (core) capital to adjusted tangible assets, Amount | ||
Actual | $ 326,081 | $ 319,204 |
For Capital Adequacy Purposes | $ 142,369 | $ 158,067 |
Tier 1 (core) capital to adjusted tangible assets, Ratio | ||
Actual | 9.16 | 8.08 |
For Capital Adequacy Purposes | 4 | 4 |
Dividend Restrictions | ||
Minimum percentage of assets be maintained as per Qualified Thrift Lender ("QTL") test | 65.00% | |
Bank | ||
Total adjusted capital to risk-weighted assets, Amount | ||
Actual | $ 393,962 | $ 386,237 |
For Capital Adequacy Purposes | 128,624 | 143,339 |
To be Well Capitalized | $ 160,780 | $ 179,174 |
Total adjusted capital to risk-weighted assets, Ratio | ||
Actual | 24.50 | 21.56 |
For Capital Adequacy Purposes | 8 | 8 |
To be Well Capitalized | 10 | 10 |
Tier 1 (core) capital to risk-weighted assets, Amount | ||
Actual | $ 373,241 | $ 363,224 |
For Capital Adequacy Purposes | 96,468 | 107,504 |
To be Well Capitalized | $ 128,624 | $ 143,339 |
Tier 1 (core) capital to risk-weighted assets, Ratio | ||
Actual | 23.21 | 20.27 |
For Capital Adequacy Purposes | 6 | 6 |
To be Well Capitalized | 8 | 8 |
Common Equity Tier 1 (CET1), Amount | ||
Actual | $ 373,241 | $ 363,224 |
For Capital Adequacy Purposes | 72,351 | 80,628 |
To be Well Capitalized | $ 104,507 | $ 116,463 |
Common Equity Tier 1 (CET1), Ratio | ||
Actual | 23.21 | 20.27 |
For Capital Adequacy Purposes | 4.50 | 4.50 |
To be Well Capitalized | 6.50 | 6.50 |
Tier 1 (core) capital to adjusted tangible assets, Amount | ||
Actual | $ 373,241 | $ 363,224 |
For Capital Adequacy Purposes | 141,766 | 157,954 |
To be Well Capitalized | $ 177,207 | $ 197,442 |
Tier 1 (core) capital to adjusted tangible assets, Ratio | ||
Actual | 10.53 | 9.20 |
For Capital Adequacy Purposes | 4 | 4 |
To be Well Capitalized | 5 | 5 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Board of Directors | Charitable donation to foundation | ||||
Related party transactions | ||||
Amount of related party transaction, expense | $ 150 | $ 375 | ||
Controlling Shareholders | ||||
Related party transactions | ||||
Payments under leases | 60 | 120 | ||
Sublease income | $ 97 | 69 | $ 192 | 138 |
Controlling Shareholders | Data processing and programming services provided | ||||
Related party transactions | ||||
Amount of related party transaction, revenue | $ 23 | $ 50 |
Commitments and Contingencies -
Commitments and Contingencies - Unfunded Commitments to Extend Credit and Standby Letters of Credit (Details) $ in Thousands | Jul. 28, 2020item | Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) |
Loss contingency from legal proceedings | |||
Commitments and Contingencies | |||
Liability for contingent losses | $ 27,500 | ||
Loss contingency from class action lawsuit | |||
Commitments and Contingencies | |||
Full amount of the settlement covered by the Company's applicable insurance policies | 12,500 | ||
Liability for contingent losses | 12,500 | $ 12,500 | |
Demand letter from purported stockholders | |||
Commitments and Contingencies | |||
Number of law firms | item | 2 | ||
Threshold period for responding to Demand letter | 90 days | ||
Unfunded Commitments to Extend Credit | Residential real estate | |||
Commitments and Contingencies | |||
Outstanding commitments regarding fixed rate loans | $ 264 | ||
Maturity period | 15 years | ||
Outstanding commitments with varying interest rates | $ 9,150 | ||
Unfunded Commitments to Extend Credit | Residential real estate | Minimum | |||
Commitments and Contingencies | |||
Fixed interest rate (as a percent) | 2.50% | ||
Variable interest rate (as a percentage) | 3.375% | ||
Maturity period for variable interest loans | 15 years | ||
Unfunded Commitments to Extend Credit | Residential real estate | Maximum | |||
Commitments and Contingencies | |||
Fixed interest rate (as a percent) | 2.625% | ||
Variable interest rate (as a percentage) | 3.875% | ||
Maturity period for variable interest loans | 30 years | ||
Unfunded Commitments to Extend Credit | Residential real estate | Maximum | Demand letter from purported stockholders | |||
Commitments and Contingencies | |||
Maturity period | 90 days | ||
Commitments to make loans | |||
Commitments and Contingencies | |||
Commitments to make loans | $ 9,414 | 40,331 | |
Unused lines of credit | |||
Commitments and Contingencies | |||
Unused lines of credit | $ 80,572 | 140,665 | |
Unused lines of credit | Minimum | |||
Commitments and Contingencies | |||
Variable interest rate (as a percentage) | 3.25% | ||
Maturity period for variable interest loans | 1 month | ||
Unused lines of credit | Maximum | |||
Commitments and Contingencies | |||
Variable interest rate (as a percentage) | 7.50% | ||
Maturity period for variable interest loans | 14 years | ||
Unused lines of credit | Residential real estate | |||
Commitments and Contingencies | |||
Unused lines of credit | $ 14,081 | ||
Unused lines of credit | Construction | |||
Commitments and Contingencies | |||
Unused lines of credit | 66,491 | ||
Standby letters of credit | |||
Commitments and Contingencies | |||
Unused lines of credit | $ 24 | $ 24 |
Commitments and Contingencies_2
Commitments and Contingencies - Advantage Loan Program Loans Sold (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies | |||||||||
Unpaid principal balance | $ 2,287,857 | $ 2,287,857 | $ 2,287,857 | $ 2,434,356 | |||||
Advantage Loan Program | |||||||||
Commitments and Contingencies | |||||||||
Mortgage loan repurchase liability | 4,292 | 4,292 | $ 7,848 | 4,292 | $ 7,848 | 9,699 | $ 7,823 | ||
Unpaid principal balance | $ 190,097 | 190,097 | 190,097 | 429,816 | |||||
Outstanding principal balance of loans repurchased | $ 79,818 | $ 38,704 | $ 167,762 | $ 38,704 | |||||
Percentage of loans offered to each of investors to repurchase | 100.00% | 100.00% | 100.00% | ||||||
Advantage Loan Program loans repurchased | |||||||||
Commitments and Contingencies | |||||||||
Outstanding principal balance of loans repurchased | $ 79,818 | $ 87,944 | |||||||
Disposition of mortgage servicing rights | 1,054 | $ 1,255 | |||||||
Loss charged against mortgage repurchase liability | (1,825) | $ 2,917 | |||||||
Advantage Loan Program pool of loans that will be repurchased prior to July 2023 | |||||||||
Commitments and Contingencies | |||||||||
Unpaid principal balance | 35,124 | $ 35,124 | $ 35,124 | ||||||
Advantage Loan Program pool of loans that will be repurchased prior to various dates in 2023 | |||||||||
Commitments and Contingencies | |||||||||
Unpaid principal balance | 58,714 | 58,714 | 58,714 | ||||||
Residential real estate | |||||||||
Commitments and Contingencies | |||||||||
Mortgage loan repurchase liability | 4,292 | 4,292 | 4,292 | 9,699 | |||||
Unpaid principal balance | $ 303,747 | $ 303,747 | $ 303,747 | $ 562,139 |
Commitments and Contingencies_3
Commitments and Contingencies - Mortgage Repurchase Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Mortgage repurchase liability: | ||||
Net provision (recovery) | $ (512) | $ 25 | $ (665) | $ 25 |
Advantage Loan Program | ||||
Mortgage repurchase liability: | ||||
Balance, beginning of period | 9,699 | 7,823 | ||
Net provision (recovery) | (665) | 25 | ||
Loss on loan repurchases | 4,742 | |||
Balance, end of the period | $ 4,292 | $ 7,848 | $ 4,292 | $ 7,848 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Jul. 23, 2021 | Jul. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Sale of business | ||||
FHLB line of credit agreement maximum borrowing limit | $ 50,000 | |||
Unpaid principal balance | $ 2,287,857 | $ 2,434,356 | ||
Subsequent event | Repurchased Residential Real Estate Mortgage Loans | ||||
Sale of business | ||||
Unpaid principal balance | $ 4,944 | |||
Subsequent event | Standby letter of credit expiring July 2024 | ||||
Sale of business | ||||
Unused lines of credit | $ 4,000 | |||
Bellevue, Washington branch office | Subsequent event | ||||
Sale of business | ||||
Deposits transferred | $ 65,437 | |||
Gain on sale of branch transaction | $ 1,417 |