Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 04, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
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 | 50,800,012 | |
Entity Central Index Key | 0001680379 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and due from banks | $ 352,404 | $ 411,676 |
Interest-bearing time deposits with other banks | 1,183 | 1,183 |
Investment securities | 353,219 | 313,879 |
Loans held for sale | 8,833 | 64,987 |
Loans, net of allowance for loan losses of $45,362 and $56,548 | 1,636,266 | 1,956,266 |
Accrued interest receivable | 7,061 | 7,696 |
Mortgage servicing rights, net | 1,842 | 2,722 |
Leasehold improvements and equipment, net | 6,585 | 7,421 |
Operating lease right-of-use assets | 15,467 | 18,184 |
Federal Home Loan Bank stock, at cost | 20,288 | 22,950 |
Cash surrender value of bank-owned life insurance | 8,448 | 33,033 |
Deferred tax asset, net | 23,907 | 21,426 |
Other assets | 12,401 | 15,407 |
Total assets | 2,447,904 | 2,876,830 |
Liabilities | ||
Noninterest-bearing deposits | 70,063 | 63,760 |
Interest-bearing deposits | 1,880,951 | 2,197,975 |
Total deposits | 1,951,014 | 2,261,735 |
Federal Home Loan Bank borrowings | 50,000 | 150,000 |
Subordinated notes, net | 65,290 | 65,343 |
Operating lease liabilities | 16,664 | 19,400 |
Accrued expenses and other liabilities | 35,335 | 36,725 |
Total liabilities | 2,118,303 | 2,533,203 |
Shareholders' Equity | ||
Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding | ||
Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 50,800,012 shares at September 30, 2022 and 50,460,932 shares at December 31, 2021 | 83,295 | 82,157 |
Additional paid-in capital | 14,560 | 14,124 |
Retained earnings | 252,482 | 248,243 |
Accumulated other comprehensive loss | (20,736) | (897) |
Total shareholders' equity | 329,601 | 343,627 |
Total liabilities and shareholders' equity | $ 2,447,904 | $ 2,876,830 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets | ||
Allowance for loan losses | $ 45,362 | $ 56,548 |
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) | 50,800,012 | 50,460,932 |
Common stock, outstanding (in shares) | 50,800,012 | 50,460,932 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Interest income | ||||
Interest and fees on loans | $ 20,975 | $ 27,348 | $ 65,589 | $ 88,716 |
Interest and dividends on investment securities and restricted stock | 1,945 | 375 | 4,133 | 1,150 |
Other interest | 1,925 | 253 | 2,931 | 743 |
Total interest income | 24,845 | 27,976 | 72,653 | 90,609 |
Interest expense | ||||
Interest on deposits | 3,724 | 3,541 | 8,070 | 15,479 |
Interest on Federal Home Loan Bank borrowings | 253 | 826 | 919 | 2,511 |
Interest on subordinated notes | 1,329 | 972 | 3,383 | 3,157 |
Total interest expense | 5,306 | 5,339 | 12,372 | 21,147 |
Net interest income | 19,539 | 22,637 | 60,281 | 69,462 |
Provision (recovery) for loan losses | (4,357) | 397 | (9,755) | (2,146) |
Net interest income after provision (recovery) for loan losses | 23,896 | 22,240 | 70,036 | 71,608 |
Non-interest income | ||||
Service charges and fees | $ 124 | $ 120 | $ 351 | $ 423 |
Revenue, Product and Service [Extensible List] | sbt:ServiceChargesAndFeesMember | sbt:ServiceChargesAndFeesMember | sbt:ServiceChargesAndFeesMember | sbt:ServiceChargesAndFeesMember |
Gain on sale of mortgage loans held for sale | $ 151 | $ 200 | $ 619 | |
Unrealized losses on equity securities | $ (184) | (24) | (590) | (99) |
Gain on sale of branch office | 1,417 | 1,417 | ||
Net servicing loss | (384) | (31) | (118) | (1,369) |
Income on cash surrender value of bank-owned life insurance | 87 | 325 | 670 | 960 |
Other | 100 | 586 | 291 | |
Total non-interest income | (357) | 2,058 | 1,099 | 2,242 |
Non-interest expense | ||||
Salaries and employee benefits | 9,336 | 2,774 | 24,522 | 19,300 |
Occupancy and equipment | 2,112 | 2,395 | 6,441 | 6,840 |
Professional fees | 5,756 | 4,024 | 17,979 | 18,500 |
FDIC assessments | 316 | 417 | 1,031 | 1,636 |
Data processing | 725 | 403 | 2,292 | 1,189 |
Net recovery of mortgage repurchase liability | (145) | (298) | (670) | (963) |
Other | 3,521 | 1,361 | 8,943 | 5,852 |
Total non-interest expense | 21,621 | 11,076 | 60,538 | 52,354 |
Income before income taxes | 1,918 | 13,222 | 10,597 | 21,496 |
Income tax expense | 742 | 3,665 | 6,358 | 6,162 |
Net income | $ 1,176 | $ 9,557 | $ 4,239 | $ 15,334 |
Income (loss) per share, basic | $ 0.02 | $ 0.19 | $ 0.08 | $ 0.31 |
Income (loss) per share, diluted | $ 0.02 | $ 0.19 | $ 0.08 | $ 0.31 |
Weighted average common shares outstanding: | ||||
Basic | 50,400,412 | 50,167,295 | 50,326,951 | 50,010,341 |
Diluted | 50,572,931 | 50,262,686 | 50,523,076 | 50,079,931 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Net income | $ 1,176 | $ 9,557 | $ 4,239 | $ 15,334 |
Other comprehensive loss, net of tax: | ||||
Unrealized losses on investment securities, arising during the period, net of tax effect of $(2,632), $(89), $(7,515) and $(61), respectively | (7,154) | (230) | (19,839) | (158) |
Comprehensive income (loss) | $ (5,978) | $ 9,327 | $ (15,600) | $ 15,176 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Unrealized gains (losses) on investment securities, arising during the period, tax effect | $ (2,632) | $ (89) | $ (7,515) | $ (61) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Common stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at beginning of the period at Dec. 31, 2020 | $ 80,807 | $ 13,544 | $ 224,853 | $ 387 | $ 319,591 |
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 | 2,325 | |||
Repurchase of restricted shares to pay employee tax liability | (46) | (46) | |||
Repurchase of restricted shares to pay employee tax liability (in shares) | (8,536) | ||||
Stock-based compensation | 105 | 105 | |||
Stock-based compensation (in shares) | 36,082 | ||||
Other comprehensive income (loss) | (59) | (59) | |||
Balance at end of the period at Mar. 31, 2021 | $ 80,807 | 13,603 | 227,178 | 328 | 321,916 |
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 | 13,544 | 224,853 | 387 | 319,591 |
Balance at beginning of the period (in shares) at Dec. 31, 2020 | 49,981,861 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 15,334 | ||||
Balance at end of the period at Sep. 30, 2021 | $ 82,157 | 13,992 | 240,187 | 229 | 336,565 |
Balance at end of the period (in shares) at Sep. 30, 2021 | 50,475,064 | ||||
Balance at beginning of the period at Mar. 31, 2021 | $ 80,807 | 13,603 | 227,178 | 328 | 321,916 |
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 | 3,452 | |||
Issuance of shares of common stock for cash ($4.50 per share) | $ 1,350 | 1,350 | |||
Issuance of shares of common stock for cash ($4.50 per share) (in shares) | 300,000 | ||||
Stock-based compensation | 193 | 193 | |||
Stock-based compensation (in shares) | 165,774 | ||||
Other comprehensive income (loss) | 131 | 131 | |||
Balance at end of the period at Jun. 30, 2021 | $ 82,157 | 13,796 | 230,630 | 459 | 327,042 |
Balance at end of the period (in shares) at Jun. 30, 2021 | 50,475,181 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 9,557 | 9,557 | |||
Stock-based compensation | 196 | 196 | |||
Stock-based compensation (in shares) | (117) | ||||
Other comprehensive income (loss) | (230) | (230) | |||
Balance at end of the period at Sep. 30, 2021 | $ 82,157 | 13,992 | 240,187 | 229 | 336,565 |
Balance at end of the period (in shares) at Sep. 30, 2021 | 50,475,064 | ||||
Balance at beginning of the period at Dec. 31, 2021 | $ 82,157 | 14,124 | 248,243 | (897) | 343,627 |
Balance at beginning of the period (in shares) at Dec. 31, 2021 | 50,460,932 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 5,260 | 5,260 | |||
Repurchase of restricted shares to pay employee tax liability | (84) | (84) | |||
Repurchase of restricted shares to pay employee tax liability (in shares) | (13,383) | ||||
Stock-based compensation | 146 | 146 | |||
Stock-based compensation (in shares) | 49,284 | ||||
Other comprehensive income (loss) | (7,543) | (7,543) | |||
Balance at end of the period at Mar. 31, 2022 | $ 82,157 | 14,186 | 253,503 | (8,440) | 341,406 |
Balance at end of the period (in shares) at Mar. 31, 2022 | 50,496,833 | ||||
Balance at beginning of the period at Dec. 31, 2021 | $ 82,157 | 14,124 | 248,243 | (897) | 343,627 |
Balance at beginning of the period (in shares) at Dec. 31, 2021 | 50,460,932 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 4,239 | ||||
Balance at end of the period at Sep. 30, 2022 | $ 83,295 | 14,560 | 252,482 | (20,736) | 329,601 |
Balance at end of the period (in shares) at Sep. 30, 2022 | 50,800,012 | ||||
Balance at beginning of the period at Mar. 31, 2022 | $ 82,157 | 14,186 | 253,503 | (8,440) | 341,406 |
Balance at beginning of the period (in shares) at Mar. 31, 2022 | 50,496,833 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | (2,197) | (2,197) | |||
Repurchase of restricted shares to pay employee tax liability | (112) | (112) | |||
Repurchases of shares of common stock (Note 10) (in shares) | (16,345) | ||||
Issuance of shares of common stock to defined contribution retirement plan | $ 1,138 | 1,138 | |||
Issuance of shares of common stock to defined contribution retirement plan (in shares) | 160,978 | ||||
Stock-based compensation | 239 | 239 | |||
Stock-based compensation (in shares) | 176,746 | ||||
Other comprehensive income (loss) | (5,142) | (5,142) | |||
Balance at end of the period at Jun. 30, 2022 | $ 83,295 | 14,313 | 251,306 | (13,582) | 335,332 |
Balance at end of the period (in shares) at Jun. 30, 2022 | 50,818,212 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income (loss) | 1,176 | 1,176 | |||
Repurchase of restricted shares to pay employee tax liability | (8) | (8) | |||
Repurchase of restricted shares to pay employee tax liability (in shares) | (1,299) | ||||
Stock-based compensation | 255 | 255 | |||
Stock-based compensation (in shares) | (16,901) | ||||
Other comprehensive income (loss) | (7,154) | (7,154) | |||
Balance at end of the period at Sep. 30, 2022 | $ 83,295 | $ 14,560 | $ 252,482 | $ (20,736) | $ 329,601 |
Balance at end of the period (in shares) at Sep. 30, 2022 | 50,800,012 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) | Jun. 30, 2021 $ / shares |
Condensed Consolidated Statements of Changes in Shareholders' Equity | |
Issue price per share | $ 4.50 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash Flows From Operating Activities | ||
Net income | $ 4,239 | $ 15,334 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision (recovery) for loan losses | (9,755) | (2,146) |
Deferred income taxes | 5,034 | 1,009 |
Gain on sale of branch office | (1,417) | |
Unrealized losses on equity securities | 590 | 99 |
Net amortization (acrretion) on investment securities | (342) | 1,229 |
Depreciation and amortization on leasehold improvements and equipment | 1,162 | 1,395 |
Net principal payments (originations) of loans held for sale | 2,284 | (9,385) |
Proceeds from sale of mortgage loans held for sale | 1,831 | 19,179 |
Gain on sale of loans held for sale | (200) | (619) |
Net recovery of mortgage repurchase liability | (670) | (963) |
Increase in cash surrender value of bank-owned life insurance, net of premiums | (292) | (404) |
Valuation allowance adjustments and amortization of mortgage servicing rights | 891 | 2,939 |
Stock-based compensation | 640 | 494 |
Other | 82 | 475 |
Change in operating assets and liabilities: | ||
Accrued interest receivable | 635 | 2,635 |
Other assets | 2,214 | 1,588 |
Accrued expenses and other liabilities | (812) | 4,549 |
Net cash provided by operating activities | 7,531 | 35,991 |
Cash Flows From Investing Activities | ||
Maturities of interest-bearing time deposits with other banks | 6,216 | |
Maturities and principal receipts of investment securities | 80,551 | 121,958 |
Purchases of investment securities | (147,493) | (23,237) |
Proceeds received from redemption of Federal Home Loan Bank stock | 2,662 | |
Net decrease in loans | 380,865 | 441,787 |
Purchases of portfolio loans | (67,127) | (179,341) |
Principal payments received on commercial real estate loans held for sale | 2,529 | |
Proceeds from the sale of commercial real estate loans originated for investment | 67,584 | |
Proceeds received from settlement of bank-owned life insurance policies | 24,877 | |
Cash paid on sale of branch office | (63,545) | |
Purchases of leasehold improvements and equipment | (326) | (2,321) |
Net cash provided by investing activities | 344,122 | 301,517 |
Cash Flows From Financing Activities | ||
Net decrease in deposits | (310,721) | (716,897) |
Proceeds from FHLB advances | 35,000 | |
Repayment of FHLB advances | (135,000) | (11,000) |
Proceeds from issuance of shares of common stock | 1,350 | |
Cash paid for surrender of vested shares to satisfy employee tax liability | (204) | (46) |
Net cash used in financing activities | (410,925) | (726,593) |
Net change in cash and due from banks | (59,272) | (389,085) |
Cash and due from banks at beginning of period | 411,676 | 998,497 |
Cash and due from banks at end of period | 352,404 | 609,412 |
Cash paid for: | ||
Interest | 11,872 | 38,156 |
Income taxes | 1,779 | 11 |
Noncash investing and financing activities: | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 3,186 | |
Shares of common stock issued in satisfaction of Company's matching contribution in defined contribution retirement plan | $ 1,138 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 9 Months Ended |
Sep. 30, 2022 | |
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. (unless stated otherwise or the context otherwise requires, together with its subsidiaries, 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 28 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. 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. In July 2021, the Company completed the sale of the Bellevue, Washington branch office to First Federal Savings & Loan Association of Port Angeles (“First Federal”), a Washington state chartered bank. The sale included the transfer of customer deposit accounts of $65,437 located at the branch, as well as the transfer of all branch premises and equipment. The transaction resulted in a net cash payment to First Federal of $63,545. The Company recorded a gain on the sale of $1,417 during the three and nine months ended September 30, 2021. Basis of Presentation The condensed consolidated balance sheet as of September 30, 2022, and the condensed consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity and cash flows for the three and nine months ended September 30, 2022 and 2021 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 nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2022 or for any future annual or interim period. The condensed consolidated balance sheet at December 31, 2021 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, 2021, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2022 (the “2021 Form 10-K”). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2— 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 Sterling Bancorp, Inc. and its wholly-owned subsidiaries. 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 periods. Due to the inherent uncertainty involved in making estimates, actual results reported in 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 September 30, 2022 and December 31, 2021, residential real estate loans accounted for 85% and 83%, respectively, of total gross loans. 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 September 30, 2022 and December 31, 2021, approximately 83% and 85%, respectively, of gross loans was originated with respect to properties or businesses located in the state of California. In March 2020, the Bank permanently discontinued its Advantage Loan program. Loans originated under this program comprised a significant component of the Bank’s total loan originations. Advantage Loan Program loans (including residential real estate loans held for sale of $7,279 and $11,359 at September 30, 2022 and December 31, 2021, respectively, of which $3,657 and $8,671 were on nonaccrual status as of those respective dates) totaled $937,225 and $1,185,458, or 65% and 69% of gross residential loans, at September 30, 2022 and December 31, 2021, respectively. Refer to Note 16—Commitments and Contingencies. Employee Retention Credits Under the Cares Act The Company evaluated its eligibility for the employee retention credits (“ERC”) offered under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in the third quarter of 2021 and determined it qualified for the ERC for the first three quarters of 2021. The Company qualified for the ERC because its gross receipts (which consisted of total interest income and other fees from banking activities and services) decreased more than 20% in 2021 from each of the respective quarters of 2019. The ERC was a refundable tax credit against certain employment taxes. The Company accounted for the ERC by analogy to International Accounting Standards 20 (“IAS 20”). Under IAS 20, the credit is recognized on a systematic basis over the periods in which the entity recognizes the payroll expenses for which the grant (tax credit) is intended to compensate when there is reasonable assurance that the entity will comply with any conditions attached to the grant and the grant will be received. The Company has made an accounting policy election to record the ERC benefit as a reduction to payroll expenses. During the three and nine months ended September 30, 2021, the Company recorded a benefit of $6,529 resulting in a net reduction of salaries and employee benefits expense in the condensed consolidated statements of income. The Company initially recorded a grant receivable of $6,529 and has received refunds or credits of $886, with a remaining receivable of $5,643 which is recorded in other assets in the condensed consolidated balance sheet at September 30, 2022. The Company expects to receive the balance of the refunds within the near term. Recently Issued Accounting Guidance Not Yet Adopted In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“2016-13”) In June 2016, the FASB issued ASU No. 2016-13, which is intended to improve financial reporting by requiring recording of credit losses on loans and other financial instruments on a more timely basis. The guidance will replace the current incurred loss accounting model with an expected loss approach and requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In April 2019, the FASB issued ASU No. 2019-04, 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, a cross-functional implementation team consisting of individuals from accounting, finance, servicing and information systems is working with the Company’s loan system vendor and consultants, and an application to create credit loss estimation models and processes has been developed. The historical data set for model development has been finalized, and the credit loss estimation models have been developed and tested. The Company is working to finalize the assessment and documentation of processes and internal controls as well as adjustments to qualitative factors. In addition, the Company has engaged a third party to perform a model validation. The Company will run the new credit loss estimation models under the new internal controls in parallel with the current allowance for loan losses model to understand the differences in the models and assess the impact of the change. The Company expects to recognize a cumulative effect adjustment to the opening balance of retained earnings as of January 1, 2023, 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 condensed consolidated financial statements. |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2022 | |
Investment Securities | |
Investment Securities | Note 3—Investment Securities Debt Securities The following tables summarize the amortized cost and fair value of debt securities available for sale at September 30, 2022 and December 31, 2021 and the corresponding amounts of gross unrealized gains and losses: September 30, 2022 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury and Agency securities $ 175,433 $ 27 $ (7,998) $ 167,462 Mortgage-backed securities 43,183 — (5,557) 37,626 Collateralized mortgage obligations 158,414 60 (15,128) 143,346 Collateralized debt obligations 158 — (5) 153 Total $ 377,188 $ 87 $ (28,688) $ 348,587 December 31, 2021 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury and Agency securities $ 122,291 $ 106 $ (229) $ 122,168 Mortgage-backed securities 49,739 84 (386) 49,437 Collateralized mortgage obligations 137,662 530 (1,343) 136,849 Collateralized debt obligations 211 — (8) 203 Total $ 309,903 $ 720 $ (1,966) $ 308,657 Securities with a fair value of All of the mortgage-backed securities, and a majority of the 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 $438 and $529 at September 30, 2022 and December 31, 2021, 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 September 30, 2022 and December 31, 2021. The amortized cost and fair value of U.S. Treasury and Agency securities at September 30, 2022 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 and Agency securities Due less than one year $ 24,277 $ 24,125 Due after one year through five years 151,156 143,337 Mortgage-backed securities 43,183 37,626 Collateralized mortgage obligations 158,414 143,346 Collateralized debt obligations 158 153 Total $ 377,188 $ 348,587 The following table summarizes debt securities available for sale, at fair value, with unrealized losses at September 30, 2022 and December 31, 2021 aggregated by major security type and length of time the individual securities have been in a continuous unrealized loss position: September 30, 2022 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses U.S Treasury and Agency securities $ 122,428 $ (5,191) $ 22,008 $ (2,807) $ 144,436 $ (7,998) Mortgage-backed securities 34,553 (4,722) 3,073 (835) 37,626 (5,557) Collateralized mortgage obligations 107,001 (14,440) 15,398 (688) 122,399 (15,128) Collateralized debt obligations — — 153 (5) 153 (5) Total $ 263,982 $ (24,353) $ 40,632 $ (4,335) $ 304,614 $ (28,688) December 31, 2021 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses U.S Treasury and Agency securities $ 49,865 $ (229) $ — $ — $ 49,865 $ (229) Mortgage-backed securities 7,878 (36) 8,729 (350) 16,607 (386) Collateralized mortgage obligations 86,354 (1,342) 2,413 (1) 88,767 (1,343) Collateralized debt obligations — — 203 (8) 203 (8) Total $ 144,097 $ (1,607) $ 11,345 $ (359) $ 155,442 $ (1,966) As of September 30, 2022, the debt securities portfolio consisted of 35 debt securities, with 28 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 September 30, 2022, 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. 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 September 30, 2022 and December 31, 2021, equity securities totaled $4,632 and $5,222, 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 non-interest income in the condensed consolidated statements of income. At September 30, 2022 and December 31, 2021, equity securities with readily determinable fair values were $4,386 and $4,976, respectively. The following is a summary of unrealized and realized gains and losses recognized in the condensed consolidated statements of income: Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net losses recorded during the period on equity securities $ (184) $ (24) $ (590) $ (99) Less: net gains (losses) recorded during the period on equity securities sold during the period — — — — Unrealized losses recorded during the period on equity securities held at the reporting date $ (184) $ (24) $ (590) $ (99) 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 nine months ended September 30, 2022 and 2021. The investment was reported at $246 at September 30, 2022 and December 31, 2021. |
Loans
Loans | 9 Months Ended |
Sep. 30, 2022 | |
Loans | |
Loans | Note 4—Loans Loans Held for Sale The major categories of loans held for sale were as follows: September 30, December 31, 2022 2021 Residential real estate $ 7,279 $ 11,359 Commercial real estate 1,554 53,628 Total loans held for sale $ 8,833 $ 64,987 At September 30, 2022, loans held for sale includes nonaccrual residential real estate loans of $3,657. Also, a commercial real estate loan with a recorded investment of $1,554 included as held for sale has been classified in the Special Mention category. At December 31, 2021, loans held for sale includes nonaccrual loans of $18,026, consisting of residential real estate loans of $8,671 and commercial real estate loans of $9,355, of which one commercial real estate loan of $2,059 was considered a troubled debt restructuring. In February 2022, the Company sold substantially all of its commercial real estate loans held for sale, which loans had a carrying value of $49,455 on the date of sale, to a third party for cash proceeds of $49,610. Loans Held for Investment and Allowance for Loan Losses The major categories of loans held for investment and the allowance for loan losses were as follows: September 30, December 31, 2022 2021 Residential real estate $ 1,430,472 $ 1,704,231 Commercial real estate 199,446 201,240 Construction 50,320 106,759 Commercial lines of credit 1,389 363 Other consumer 1 221 Total loans 1,681,628 2,012,814 Less: allowance for loan losses (45,362) (56,548) Loans, net $ 1,636,266 $ 1,956,266 Loans totaling $446,153 and $557,410 were pledged as collateral on FHLB borrowings at September 30, 2022 and December 31, 2021, respectively. The following tables present the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2022 and 2021: Commercial Residential Commercial Lines of Other Three Months Ended September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 29,982 $ 15,035 $ 6,708 $ 36 $ 5 $ 51,766 Provision (recovery) for loan losses (1,841) (209) (2,304) 2 (5) (4,357) Charge offs — (4,064) — — — (4,064) Recoveries 46 5 1,966 — — 2,017 Total ending balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Commercial Residential Commercial Lines of Other Nine Months Ended September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 32,202 $ 12,608 $ 11,730 $ 8 $ — $ 56,548 Provision (recovery) for loan losses (4,594) 2,138 (7,329) 30 — (9,755) Charge offs (197) (4,064) — — — (4,261) Recoveries 776 85 1,969 — — 2,830 Total ending balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Commercial Residential Commercial Lines of Other Three Months Ended September 30, 2021 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 33,064 $ 22,491 $ 15,056 $ 58 $ — $ 70,669 Provision (recovery) for loan losses 109 1,486 (1,194) (4) — 397 Charge offs — — (1,965) — — (1,965) Recoveries 530 605 2 — — 1,137 Total ending balance $ 33,703 $ 24,582 $ 11,899 $ 54 $ — $ 70,238 Commercial Residential Commercial Lines of Other Nine Months Ended September 30, 2021 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 32,366 $ 21,942 $ 17,988 $ 91 $ — $ 72,387 Provision (recovery) for loan losses 16 2,004 (4,129) (37) — (2,146) Charge offs — — (1,965) — — (1,965) Recoveries 1,321 636 5 — — 1,962 Total ending balance $ 33,703 $ 24,582 $ 11,899 $ 54 $ — $ 70,238 The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment by impairment methodology as of September 30, 2022 and December 31, 2021: Commercial Residential Commercial Lines of Other September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 12 $ — $ — $ — $ — $ 12 Collectively evaluated for impairment 28,175 10,767 6,370 38 — 45,350 Total ending allowance balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Loans: Loans individually evaluated for impairment $ 48 $ — $ 2,485 $ 110 $ — $ 2,643 Loans collectively evaluated for impairment 1,430,424 199,446 47,835 1,279 1 1,678,985 Total ending loans balance $ 1,430,472 $ 199,446 $ 50,320 $ 1,389 $ 1 $ 1,681,628 Commercial Residential Commercial Lines of Other December 31, 2021 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 159 $ — $ — $ — $ — $ 159 Collectively evaluated for impairment 32,043 12,608 11,730 8 — 56,389 Total ending allowance balance $ 32,202 $ 12,608 $ 11,730 $ 8 $ — $ 56,548 Loans: Loans individually evaluated for impairment $ 350 $ 4,441 $ 14,984 $ 116 $ — $ 19,891 Loans collectively evaluated for impairment 1,703,881 196,799 91,775 247 221 1,992,923 Total ending loans balance $ 1,704,231 $ 201,240 $ 106,759 $ 363 $ 221 $ 2,012,814 The following tables present information related to impaired loans by class of loans as of and for the periods indicated: At September 30, 2022 At December 31, 2021 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 $ — $ — $ — $ 91 $ 65 $ — Commercial real estate: Retail 229 — — — — — Hotels/Single-room occupancy hotels — — — 4,459 4,441 — Construction 2,485 2,485 — 15,004 14,984 — Commercial lines of credit: Private banking 110 110 — 116 116 — Subtotal 2,824 2,595 — 19,670 19,606 — With an allowance for loan losses recorded: Residential real estate: First mortgage 82 48 12 273 285 159 Total $ 2,906 $ 2,643 $ 12 $ 19,943 $ 19,891 $ 159 Three Months Ended at September 30, 2022 2021 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 $ — $ — $ — $ 82 $ — $ — Commercial real estate: Retail — — — 7 — — Hotels/Single-room occupancy hotels — — — 10,862 — — Office — — — 2,769 — — Construction 5,375 40 27 18,820 40 27 Commercial lines of credit: Private banking 111 2 1 119 2 1 Subtotal 5,486 42 28 32,659 42 28 With an allowance for loan losses recorded: Residential real estate: First mortgage 48 2 2 279 1 1 Construction — — — 10,387 56 38 Subtotal 48 2 2 10,666 57 39 Total $ 5,534 $ 44 $ 30 $ 43,325 $ 99 $ 67 Nine Months Ended at September 30, 2022 2021 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 $ — $ — Commercial real estate: Retail — — — 765 — — Hotels/Single-room occupancy hotels — — — 17,948 — — Office — — — 2,768 — — Other — — — 91 — — Construction 6,885 118 105 27,387 192 179 Commercial lines of credit: Private banking 113 5 4 1,264 7 7 Subtotal 6,998 123 109 50,311 199 186 With an allowance for loan losses recorded: Residential real estate: First mortgage 198 3 3 280 3 3 Construction — — — 9,751 181 163 Subtotal 198 3 3 10,031 184 166 Total $ 7,196 $ 126 $ 112 $ 60,342 $ 383 $ 352 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, excluding nonaccrual loans held for sale, by class of loans as of September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 Loans Past Loans Past Due Over Due Over 90 Days Still 90 Days Still Nonaccrual Accruing Nonaccrual Accruing Residential real estate: Residential first mortgage $ 35,654 $ 36 $ 45,439 $ 39 Residential second mortgage 189 — 236 — Commercial real estate: Hotels/Single-room occupancy hotels — — 4,441 — Construction — — 12,499 — Total $ 35,843 $ 36 $ 62,615 $ 39 The following tables present the aging of the recorded investment in past due loans as of September 30, 2022 and December 31, 2021 by class of loans: Greater 30 - 59 60 - 89 than Days Days 89 Days Total Loans Not September 30, 2022 Past Due Past Due Past Due Past Due Past Due Total Residential real estate: Residential first mortgage $ 20,839 $ 3,284 $ 35,690 $ 59,813 $ 1,360,315 $ 1,420,128 Residential second mortgage — — 189 189 10,155 10,344 Commercial real estate: Retail — — — — 26,026 26,026 Multifamily — — — — 81,723 81,723 Office — — — — 18,216 18,216 Hotels/ Single-room occupancy hotels — — — — 5,240 5,240 Industrial — — — — 30,372 30,372 Other — — — — 37,869 37,869 Construction — — — — 50,320 50,320 Commercial lines of credit: Private banking — — — — 110 110 C&I lending — — — — 1,279 1,279 Other consumer — — — — 1 1 Total $ 20,839 $ 3,284 $ 35,879 $ 60,002 $ 1,621,626 $ 1,681,628 Greater 30 - 59 60 - 89 than Days Days 89 Days Total Loans Not December 31, 2021 Past Due Past Due Past Due Past Due Past Due Total Residential real estate: Residential first mortgage $ 24,044 $ 3,425 $ 45,478 $ 72,947 $ 1,617,509 $ 1,690,456 Residential second mortgage 107 — 236 343 13,432 13,775 Commercial real estate: Retail — — — — 19,574 19,574 Multifamily — — — — 96,960 96,960 Office — — — — 12,382 12,382 Hotels/Single-room occupancy hotels — — 4,441 4,441 9,780 14,221 Industrial — — — — 7,320 7,320 Other — — — — 50,783 50,783 Construction 10,500 — 12,499 22,999 83,760 106,759 Commercial lines of credit: Private banking — — — — 116 116 C&I lending — — — — 247 247 Other consumer — — — — 221 221 Total $ 34,651 $ 3,425 $ 62,654 $ 100,730 $ 1,912,084 $ 2,012,814 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 As of September 30, 2022 and December 31, 2021, the Company has a recorded investment in troubled debt restructurings (“TDR”) of $2,643 and $18,416, respectively. The Company has allocated a specific allowance for loan losses for these loans of $12 as of September 30, 2022 and has allocated $39 of specific allowance for loan loss for these loans as of December 31, 2021. There are no commitments to lend additional amounts. There were no loans modified as TDRs during the three or nine months ended September 30, 2022 or 2021. There were no TDRs for which there was a payment default within twelve months following the modification during the three or nine months ended September 30, 2022 or 2021. At September 30, 2022, there were no loans in default. At December 31, 2021, five loans totaling $15,752 were in default. The terms of certain other loans have been modified during the three and nine months ended September 30, 2022 that did not meet the definition of a TDR. These other loans that were modified were not considered significant. Foreclosure Proceedings At September 30, 2022 and December 31, 2021, the recorded investment of residential mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $7,266 and $2,780, respectively. Of the loans in formal foreclosure proceedings, $2,755 and $2,770 were included in loans held for sale in the condensed consolidated balance sheets at September 30, 2022 and December 31, 2021, respectively, and were carried at the lower of amortized cost or fair value. The balance of loans is classified as held for investment and receives an allocation of the allowance for loan losses consistent with a substandard loan loss allocation rate as these loans were classified as substandard at September 30, 2022 and December 31, 2021, 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 September 30, 2022 and December 31, 2021, the risk rating of loans by class of loans was as follows: Special September 30, 2022 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,384,438 $ — $ 35,690 $ — $ 1,420,128 Residential second mortgage 10,155 — 189 — 10,344 Commercial real estate: Retail 26,026 — — — 26,026 Multifamily 69,369 12,354 — — 81,723 Office 18,216 — — — 18,216 Hotels/ Single-room occupancy hotels — 3,692 1,548 — 5,240 Industrial 30,372 — — — 30,372 Other 22,703 15,166 — — 37,869 Construction 37,617 4,648 8,055 — 50,320 Commercial lines of credit: Private banking 110 — — — 110 C&I lending 1,279 — — — 1,279 Other consumer 1 — — — 1 Total $ 1,600,286 $ 35,860 $ 45,482 $ — $ 1,681,628 Special December 31, 2021 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,644,974 $ — $ 45,249 $ 233 $ 1,690,456 Residential second mortgage 13,539 — 236 — 13,775 Commercial real estate: Retail 18,846 728 — — 19,574 Multifamily 75,543 8,104 13,313 — 96,960 Office 10,413 — 1,969 — 12,382 Hotels/ Single-room occupancy hotels 8,205 — 6,016 — 14,221 Industrial 7,320 — — — 7,320 Other 48,996 1,692 95 — 50,783 Construction 67,254 17,226 16,348 5,931 106,759 Commercial lines of credit: Private banking 116 — — — 116 C&I lending 236 11 — — 247 Other consumer 221 — — — 221 Total $ 1,895,663 $ 27,761 $ 83,226 $ 6,164 $ 2,012,814 During the three and nine months ended September 30, 2022, the Company repurchased a pool of Advantage Loan Program loans with a total outstanding principal balance of $35,241 and $65,621. During the three and nine months ended September 30, 2021, the Company repurchased pools of Advantage Loan Program loans with a total outstanding principal balance of $6,067 and $173,829, respectively. The Advantage Loan Program loans that have been repurchased and included in the loan portfolio have an outstanding principal balance of $190,467 and $171,185 at September 30, 2022 and December 31, 2021, respectively. For more information on the repurchases of Advantage Loan Program loans, refer to Note 16—Commitments and Contingencies. During the three months ended September 30, 2022, the Company charged off $4,064 of its recorded investment in certain higher risk commercial real estate loans held in its portfolio. These commercial real estate loans were then sold to a third-party investor for net cash proceeds of $17,794. No gain or loss was recorded on the sale of the commercial real estate loans. |
Mortgage Servicing Rights, net
Mortgage Servicing Rights, net | 9 Months Ended |
Sep. 30, 2022 | |
Mortgage Servicing Rights, net | |
Mortgage Servicing Rights, net | Note 5—Mortgage Servicing Rights, net The Company 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 September 30, 2022 and December 31, 2021 are as follows: September 30, December 31, 2022 2021 Residential real estate mortgage loan portfolios serviced for: FNMA $ 115,446 $ 124,764 FHLB 35,357 40,209 Private investors 44,955 142,810 Total $ 195,758 $ 307,783 Custodial escrow balances maintained with these serviced loans were $1,528 and $5,501 at September 30, 2022 and December 31, 2021, respectively. These balances are included in noninterest-bearing deposits in the condensed consolidated balance sheets. Activity for mortgage servicing rights and the related valuation allowance are as follows: Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Mortgage servicing rights: Beginning of period $ 2,542 $ 4,200 $ 3,332 $ 7,853 Additions — 25 11 124 Amortization (657) (550) (1,458) (4,302) End of period 1,885 3,675 1,885 3,675 Valuation allowance at beginning of period 89 968 610 2,165 Additions (recoveries) (46) (166) (567) (1,363) Valuation allowance at end of period 43 802 43 802 Mortgage servicing rights, net $ 1,842 $ 2,873 $ 1,842 $ 2,873 Servicing fee loss, net of amortization of servicing rights and changes in the valuation allowance, was $(384) and $(31) for the three months ended September 30, 2022 and 2021, respectively, and $(118) and $(1,369) for the nine months ended September 30, 2022 and 2021, respectively. The fair value of mortgage servicing rights was $2,265 and $2,916 at September 30, 2022 and December 31, 2021, 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 September 30, 2022 was determined using discount rates ranging from 9.5% to 12.0%, prepayment speeds with a weighted average of 10.2% (depending on the stratification of the specific right), a weighted average life of the mortgage servicing right of 77 months and a weighted average default rate of 0.2%. The fair value at December 31, 2021 was determined using discount rates ranging from 9.5% to 12.0%, prepayment speeds with a weighted average of 17.6% (depending on the stratification of the specific right), a weighted average life of the mortgage servicing right of 52 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 September 30, 2022 and December 31, 2021, the carrying amount of certain individual groupings exceeded their fair values, resulting in write-downs to fair value. Refer to Note 14 — |
Deposits
Deposits | 9 Months Ended |
Sep. 30, 2022 | |
Deposits | |
Deposits | Note 6—Deposits Time deposits, included in interest-bearing deposits, were $757,576 and $891,820 at September 30, 2022 and December 31, 2021, respectively. Time deposits included brokered deposits of $20,109 at December 31, 2021. There were no brokered deposits at September 30, 2022. Time deposits that meet or exceed the FDIC insurance limit of $250 were $222,630 and $244,868 at September 30, 2022 and December 31, 2021, respectively. |
FHLB Borrowings
FHLB Borrowings | 9 Months Ended |
Sep. 30, 2022 | |
FHLB Borrowings | |
FHLB Borrowings | Note 7—FHLB Borrowings FHLB Advances FHLB borrowings at September 30, 2022 and December 31, 2021 consist of the following: September 30, December 31, 2022 Interest Rates 2021 Interest Rates Long-term fixed rate-advances $ 50,000 1.96 % $ 150,000 0.43% - 1.96 % At September 30, 2022, the Company has a long-term fixed-rate advance of $50,000 with a maturity date of May 2029. The advance requires monthly interest-only payments with the principal amount due on the maturity date and may contain a prepayment penalty if paid before maturity. The advance is callable by the FHLB in May 2024. The Company utilized its excess liquidity to repay $ 100,000 in long-term fixed rate advances that were called by the FHLB in May 2022. Additionally, in September 2022, the Company entered into a short-term variable-rate advance for $35,000 with a maturity date of March 2023 which was then repaid during the month. At September 30, 2022, the Company had additional borrowing capacity of $354,479 from the FHLB. FHLB Overdraft Line of Credit and Letters of Credit The Company has established a short-term overdraft line of credit agreement with the FHLB, which provides for maximum borrowings of $20,000. The overdraft line of credit was not used during the nine months ended September 30, 2022. At September 30, 2022 and December 31, 2021, there were no outstanding borrowings under this agreement. Borrowings accrue interest based on a variable rate based on the FHLB’s overnight cost of funds rate, which was 3.45% and 0.43% at September 30, 2022 and December 31, 2021, respectively. The overdraft line of credit has a one-year term and was automatically renewed in October 2022 on substantially the same terms through October 2023. The Company has entered into irrevocable standby letters of credit arrangements 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. An irrevocable standby letter of credit of $7,500 had a 16-month term and expired in July 2022. An irrevocable standby letter of credit originally of $4,000 has a 36-month term and expires in July 2024. This letter was reduced to $2,000 during the second quarter of 2022; thereby, the Company has total available letters of credit of $2,000 and $11,500 at September 30, 2022 and December 31, 2021, respectively. There were no borrowings outstanding on these standby letters of credit during the nine months ended September 30, 2022 and 2021. The long-term fixed-rate advances and the overdraft line of credit are collateralized by certain investment securities and loans. Refer to Note 3—Investment Securities for further information on securities pledged as collateral and Note 4—Loans for further information on loans pledged as collateral. Other Borrowings The Company had available unsecured credit lines with other banks totaling $80,000 at September 30, 2022 and December 31, 2021. There were no borrowings under these unsecured credit lines during the nine months ended September 30, 2022 and 2021. |
Subordinated Notes, net
Subordinated Notes, net | 9 Months Ended |
Sep. 30, 2022 | |
Subordinated Notes, net | |
Subordinated Notes, net | Note 8—Subordinated Notes, net The subordinated notes (the “Notes”) were as follows: September 30, December 31, 2022 2021 Subordinated notes $ 65,000 $ 65,000 Unamortized note premium 290 343 Total $ 65,290 $ 65,343 The Notes bore interest at 7.0% 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 8.33% and 5.94% at September 30, 2022 and December 31, 2021, respectively. Note premium costs are amortized over the contractual term of the Notes into interest expense using the effective interest method. Interest expense on these Notes was $1,329 and $972 for the three months ended September 30, 2022 and 2021, respectively, and $3,383 and $3,157 for the nine months ended September 30, 2022 and 2021, respectively. The Notes mature in April 2026. 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 Company’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 | 9 Months Ended |
Sep. 30, 2022 | |
Shareholders' Equity. | |
Shareholders' Equity | Note 9 – Shareholders’ Equity In April 2022, the Company issued and contributed 160,978 shares of common stock to fund the matching contribution made under the Company’s defined contribution retirement plan. The contribution amount of $1,138 was valued using the closing market price of the stock on the date contributed or $7.07 per share. 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-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Stock-based Compensation | |
Stock-based Compensation | Note 10—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 the board of directors of the Company. The stock-based awards were issued at no less than the market price on the date the awards were 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. Beginning with grants 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 . No stock option awards were granted during the nine months ended September 30, 2022 and 2021. A summary of the Company’s stock option activity as of and for the nine months ended September 30, 2022 is as follows: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term Value (Years) Outstanding at January 1, 2022 367,767 $ 5.41 8.13 $ 525 Granted — Exercised — Forfeited/expired (18,222) 9.67 Outstanding at September 30, 2022 349,545 $ 5.19 7.43 $ 609 Exercisable at September 30, 2022 344,506 $ 5.14 7.43 $ 609 The Company recorded stock-based compensation expense associated with stock options of $3 and $34 for the three months ended September 30, 2022 and 2021, respectively, and $(8) and $137 for the nine months ended September 30, 2022 and 2021, respectively. At September 30, 2022, there was $3 of total unrecognized compensation cost related to nonvested stock options which is expected to be recognized over a weighted-average period of less than one year. Restricted Stock Awards Restricted stock awards are issued to independent directors and certain key employees. The restricted stock awards generally vest ratably over three years ( one third year During the nine months ended September 30, 2022, the board of directors approved the issuance of 231,842 shares of restricted stock, of which 45,000 shares were awarded to independent directors and 186,842 shares were awarded to key employees. During the nine months ended September 30, 2021, the board of directors approved the issuance of 234,996 shares of restricted stock, of which 45,000 shares were awarded to independent directors and 189,996 shares were awarded to key employees. During the nine months ended September 30, 2022 and 2021, the Company withheld 31,027 shares and 8,536 shares, respectively, 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 $204 and $46, respectively, associated with vesting. These withheld shares are treated the same as repurchased shares for accounting purposes. A summary of the restricted stock awards activity for the nine months ended September 30, 2022 is as follows: Weighted Average Number Grant Date of Shares Fair Value Nonvested at January 1, 2022 293,637 $ 5.81 Granted 231,842 6.57 Vested (104,739) 6.21 Forfeited (22,713) 5.70 Nonvested at September 30, 2022 398,027 $ 6.16 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 $252 and $162 for the three months ended September 30, 2022 and 2021, respectively, and $648 and $357 for the nine months ended September 30, 2022 and 2021, respectively. At September 30, 2022, there was $2,017 of total unrecognized compensation cost related to the nonvested stock granted which is expected to be recognized over a weighted-average period of 2.17 years. The total fair value of shares vested during the nine months ended September 30, 2022 and 2021 was $644 and $173, respectively. |
Regulatory Capital Requirements
Regulatory Capital Requirements | 9 Months Ended |
Sep. 30, 2022 | |
Regulatory Capital Requirements | |
Regulatory Capital Requirements | Note 11—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. Prompt corrective action regulations provide five classifications for depository institutions like the Bank, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. 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. Failure to meet minimum capital requirements can initiate regulatory action that could have a direct material effect on the Company’s business, financial condition and results of operations. The Bank, after consultation with the OCC, determined that a risk-weighting of 100% should be applied to its Advantage Loan Program loans under the risk weighting requirements for first-lien residential mortgage exposures set forth under the Basel III capital rules. Previously, the Company and the Bank generally applied a 50% risk weight to the Advantage Loan Program loans. The table below presents the Company’s and the Bank’s regulatory capital amounts and ratios applying the 100% risk weight as of September 30, 2022 and December 31, 2021 for the Company’s and Bank’s total adjusted capital to risk-weighted assets, Tier 1 (core) capital to risk-weighted assets and CET1 to risk weighted assets. Under the Basel III capital rules, both the Company and the Bank must hold a capital conservation buffer (“CCB”) consisting of at least 2.5% above the minimum risk-based capital ratios, or 7.0% for common equity Tier 1 (“CET1”) capital ratio, 8.5% for Tier 1 capital ratio and 10.5% for total capital ratio, in order to avoid limitations on capital distributions and discretionary bonus payments to executive officers and similar employees. At September 30, 2022 and December 31, 2021, the Company and the Bank had met all regulatory capital requirements to which they are subject and held capital in excess of the CCB, and the Bank’s regulatory capital ratios exceeded the requirements to be considered well capitalized for all regulatory purposes. The following tables present the Company’s consolidated and the Bank’s actual and minimum required capital amounts and ratios at September 30, 2022 and December 31, 2021, applying the 100% risk weight to Advantage Loan Program loans: For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio September 30, 2022 Total adjusted capital to risk-weighted assets Consolidated $ 409,170 26.21 % $ 124,357 8.00 % N/A N/A Bank 413,262 26.60 124,275 8.00 $ 155,344 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 350,162 22.43 93,268 6.00 N/A N/A Bank 393,524 25.33 93,206 6.00 124,275 8.00 Common Equity Tier 1 (CET1) Consolidated 350,162 22.43 69,951 4.50 N/A N/A Bank 393,524 25.33 69,905 4.50 100,974 6.50 Tier 1 (core) capital to adjusted tangible assets (leverage ratio) Consolidated 350,162 14.09 99,151 4.00 N/A N/A Bank 393,524 15.88 99,103 4.00 123,879 5.00 For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio December 31, 2021 Total adjusted capital to risk-weighted assets Consolidated $ 421,732 21.24 % $ 158,851 8.00 % N/A N/A Bank 407,699 20.55 158,707 8.00 $ 198,384 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 344,247 17.34 119,138 6.00 N/A N/A Bank 382,509 19.28 119,030 6.00 158,707 8.00 Common Equity Tier 1 (CET1) Consolidated 344,247 17.34 89,354 4.50 N/A N/A Bank 382,509 19.28 89,273 4.50 128,950 6.50 Tier 1 (core) capital to adjusted tangible assets (leverage ratio) Consolidated 344,247 11.47 120,039 4.00 N/A N/A Bank 382,509 12.77 119,859 4.00 149,824 5.00 In order to provide a comparable trend analysis for the Bank’s and the Company’s risk based capital ratios applying the 100% risk weight to Advantage Loan Program loans, the tables below present the regulatory capital ratios applying the 100% risk weight at December 31 for each of the past five years. At each of the year-end dates reported, the Company and the Bank had met all minimum regulatory capital requirements and applicable capital cushions to which they are subject and held capital in excess of the CCB, and the Bank would have been considered well capitalized for all regulatory purposes. The CCB requirement was phased in beginning on January 1, 2016 at the 0.625% level and increased by 0.625% on each subsequent January 1, until the buffer was implemented in full at 2.5% on January 1, 2019. Accordingly, the CCB at December 31, 2018 and 2017 was 1.875% and 1.25%, respectively. Company at December 31, 2021 2020 2019 2018 2017 Total adjusted capital to risk-weighted assets 21.24 % 16.51 % 14.58 % 14.82 % 13.49 % Tier 1 (core) capital to risk-weighted assets 17.34 % 12.65 % 11.56 % 11.77 % 10.33 % Common Equity Tier 1 (CET1) 17.34 % 12.65 % 11.56 % 11.77 % 10.33 % Tier 1 (core) capital to adjusted tangible assets (leverage ratio) 11.47 % 8.08 % 10.11 % 10.42 % 9.83 % Bank at December 31, 2021 2020 2019 2018 2017 Total adjusted capital to risk-weighted assets 20.55 % 15.74 % 12.08 % 11.43 % 10.06 % Tier 1 (core) capital to risk-weighted assets 19.28 % 14.47 % 11.32 % 10.66 % 9.12 % Common Equity Tier 1 (CET1) 19.28 % 14.47 % 11.32 % 10.66 % 9.12 % Tier 1 (core) capital to adjusted tangible assets (leverage ratio) 12.77 % 9.20 % 9.90 % 9.44 % 8.68 % In comparison to the above tables, the tables below present the Bank’s and the Company’s regulatory capital ratios applying the 50% risk weight to Advantage Loan Program loans at December 31 for each of the past five years, as previously reported. Company at December 31, 2021 2020 2019 2018 2017 Total adjusted capital to risk-weighted assets 29.02 % 22.58 % 21.49 % 21.98 % 20.28 % Tier 1 (core) capital to risk-weighted assets 24.08 % 17.68 % 17.04 % 17.45 % 15.53 % Common Equity Tier 1 (CET1) 24.08 % 17.68 % 17.04 % 17.45 % 15.53 % Tier 1 (core) capital to adjusted tangible assets (leverage ratio) 11.47 % 8.08 % 10.11 % 10.42 % 9.83 % Bank at December 31, 2021 2020 2019 2018 2017 Total adjusted capital to risk-weighted assets 28.07 % 21.56 % 17.82 % 16.94 % 14.76 % Tier 1 (core) capital to risk-weighted assets 26.79 % 20.27 % 16.70 % 15.80 % 13.71 % Common Equity Tier 1 (CET1) 26.79 % 20.27 % 16.70 % 15.80 % 13.71 % Tier 1 (core) capital to adjusted tangible assets (leverage ratio) 12.77 % 9.20 % 9.90 % 9.44 % 8.68 % 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. 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. |
Income Per Share
Income Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Income Per Share | |
Income Per Share | Note 12—Income Per Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted income 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. The Company determines the potentially dilutive common shares using the treasury stock method. The following table presents the computation of income per share, basic and diluted: Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Numerator: Net income $ 1,176 $ 9,557 $ 4,239 $ 15,334 Denominator: Weighted average common shares outstanding, basic 50,400,412 50,167,295 50,326,951 50,010,341 Weighted average effect of potentially dilutive common shares: Stock options 97,884 55,131 107,671 48,659 Restricted stock 74,635 40,260 88,454 20,931 Weighted average common shares outstanding, diluted 50,572,931 50,262,686 50,523,076 50,079,931 Income per share, basic and diluted $ 0.02 $ 0.19 $ 0.08 $ 0.31 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 would be anti-dilutive, are summarized as follows: Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Stock options 49,545 67,767 49,897 70,139 Restricted stock 176,707 7,294 99,784 104,558 Total 226,252 75,061 149,681 174,697 |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2022 | |
Employee Benefit Plans | |
Employee Benefit Plans | Note 13—Employee Benefit Plans In May 2022, the Company surrendered a large split-dollar life program and a few smaller bank-owned life insurance (“BOLI”) policies related to former executives and a controlling shareholder with a cash surrender value of $24,877. The $13,142 increase in value over the duration of the ownership of the policies has moved from non-taxable income to taxable income, resulting in a $3,614 million increase in income tax expense for the nine months ended September 30, 2022. Additional taxes of $1,314 relating to this surrender are included in other expense within non-interest expense during the nine months ended September 30, 2022. In connection with the surrender, the Company also cancelled certain deferred compensation and the split dollar life insurance agreement with its controlling shareholder which resulted in the reversal of the related liabilities of $4,514 which are included as a reduction in salaries and employee benefits expense in the condensed consolidated statement of income for the nine months ended September 30, 2022. |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Fair Values of Financial Instruments | |
Fair Values of Financial Instruments | Note 14—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. Loans Held for Sale Loans held for sale are carried at the lower of amortized cost or fair value. Fair value is determined 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 management. 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 5—Mortgage Servicing Rights, net, the valuation model utilizes interest rate, prepayment speed and default rate assumptions that are specific to loans serviced by the Company and 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 September 30, 2022 and December 31, 2021: Fair Value Measurements at September 30, 2022 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 and Agency securities $ 167,462 $ 115,484 $ 51,978 $ — Mortgage-backed securities 37,626 — 37,626 — Collateralized mortgage obligations 143,346 — 143,346 — Collateralized debt obligations 153 — — 153 Equity securities 4,386 4,386 — — Fair Value Measurements at December 31, 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 and Agency securities $ 122,168 $ 48,827 $ 73,341 $ — Mortgage-backed securities 49,437 — 49,437 — Collateralized mortgage obligations 136,849 — 136,849 — Collateralized debt obligations 203 — — 203 Equity securities 4,976 4,976 — — The table below presents a reconciliation for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2022 and 2021: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Collateralized Debt Obligations Nine Months Ended September 30, 2022 2021 Balance of recurring Level 3 assets at beginning of period $ 203 $ 187 Total gains or losses (realized/unrealized): Included in income-realized — — Included in other comprehensive loss 3 7 Principal maturities/settlements (53) (3) Sales — — Transfers in and/or out of Level 3 — — Balance of recurring Level 3 assets at end of period $ 153 $ 191 Unrealized losses on Level 3 investments for collateralized debt obligations was $5 and $8 at September 30, 2022 and December 31, 2021, respectively. In addition to the amounts included in income as presented in the table above, interest income recorded on collateralized debt obligations was $5 and $4 for the nine months ended September 30, 2022 and 2021, 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 Company 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 sheets at September 30, 2022 and December 31, 2021, the following table provides the level of valuation assumptions used to determine each adjustment and the related carrying value: Fair Value Measurements at September 30, 2022 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Commercial real estate loans held for sale $ 1,554 $ — $ 1,554 $ — Mortgage servicing rights 311 — — 311 Fair Value Measurements at December 31, 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 $ 86 $ — $ — $ 86 Commercial real estate loans held for sale 53,628 — 53,628 — Mortgage servicing rights 2,052 — — 2,052 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 September 30, 2022 and December 31, 2021: Quantitative Information about Level 3 Fair Value Measurements at September 30, 2022 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Mortgage servicing rights $ 311 Discounted cash flow Discount rate 9.5% - 12.0% Prepayment speed 7.5% - 22.5% 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, 2021 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Impaired loans: Residential real estate $ 86 Sales comparison approach Adjustments for differences between the comparable sales N/A Mortgage servicing rights $ 2,052 Discounted cash flow Discount rate 9.5% - 12.0% Prepayment speed 10.5% - 37.1% 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 September 30, 2022 and December 31, 2021, are as follows: Fair Value Measurements at September 30, 2022 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 352,404 $ 352,404 $ 352,404 $ — $ — Interest-bearing time deposits with other banks 1,183 1,183 1,183 — — Loans held for sale (1) 7,279 7,719 — 7,719 — Loans, net 1,636,266 1,676,322 — — 1,676,322 Financial Liabilities Time deposits 757,576 752,286 — 752,286 — Federal Home Loan Bank borrowings 50,000 48,260 — 48,260 — Subordinated notes, net 65,290 65,056 — 65,056 — Fair Value Measurements at December 31, 2021 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 411,676 $ 411,676 $ 411,676 $ — $ — Interest-bearing time deposits with other banks 1,183 1,183 1,183 — — Loans held for sale 11,359 11,809 — 11,809 — Loans, net (1) 1,956,180 2,025,409 — — 2,025,409 Financial Liabilities Time deposits 891,820 894,049 — 894,049 — Federal Home Loan Bank borrowings 150,000 152,560 — 152,560 — Subordinated notes, net 65,343 65,073 — 65,073 — (1) |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions | |
Related Party Transactions | Note 15—Related Party Transactions 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 9 – Shareholders’ Equity. The Company subleased certain office space to entities owned by the Company’s controlling shareholders. Amounts received under such subleases totaled $97 for the three months ended September 30, 2021, and $112 and $289 during the nine months ended September 30, 2022 and 2021, respectively. The sublease agreements ended on March 31, 2022. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 16—Commitments and Contingencies Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the 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 Company 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 Company is required to fund the commitment. The Company 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 September 30, 2022, outstanding commitments to make loans consisted of variable-rate loans of $2,560 at varying interest rates ranging from 4.50% to 5.125% at September 30, 2022 with maturities of 30 years and fixed-rate loans of $113 at an interest rate of 4.875% with maturities of 15 years. Unused Lines of Credit The Company also issues unused lines of credit to meet customer financing needs. At September 30, 2022, the unused lines of credit include residential second mortgages of $10,874 and construction loans of $9,736 totaling $20,610. These unused lines of credit are associated with variable-rate commitments at interest rates ranging from 5.50% to 8.50% at September 30, 2022 with maturities ranging from one month to 23 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 Company assures that the third parties will receive specified funds if customers fail to meet their contractual obligations. The credit risk to the Company 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 Company 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 September 30, 2022 and December 31, 2021: September 30, December 31, 2022 2021 Commitments to make loans $ 2,673 $ 23,610 Unused lines of credit 20,610 45,805 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. On September 27, 2022, the Company entered into a Consent Order with the OCC, resolving the formal investigation by the OCC relating to the Bank’s former residential loan product, marketed as the Advantage Loan Program, and related matters (the “OCC Investigation”). Pursuant to the Consent Order, the Bank has paid a civil money penalty of $6,000. The civil money penalty has been applied against the previously accrued liability for contingent losses reflected on the Company’s condensed consolidated balance sheet. The Consent Order represents a full and final settlement of the OCC Investigation with respect to the Bank. Concurrent with the Consent Order, the OCC notified the Bank that the formal agreement between the Bank and the OCC entered on June 18, 2019 (the “OCC Agreement “) was terminated, which primarily related to certain aspects of the Bank’s Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) compliance program and the Bank’s credit administration. The Bank 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 contained in the Company’s filings with the SEC. The Bank is fully cooperating with this investigation. Adverse findings in the DOJ investigation could result in material losses due to damages, restitution, penalties, 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 the business. The Company is currently under a formal investigation 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 has fully cooperated 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 Bank has incurred and expects to continue to incur significant costs in its efforts to respond to the government investigations, which are reflected in the Company’s results of operations for the three and nine months ended September 30, 2022 and 2021. Adverse findings in any of the aforementioned government investigations could also have collateral consequences for the Company and the Bank, such as creating breaches of representation in certain third-party agreements and loss of eligibility to participate in certain government programs and programs of government sponsored entities. In 2019, the Company commenced an internal review of the Advantage Loan Program and related matters (the “Internal Review”). The primary focus of the Internal Review, which has been led by outside legal counsel at the direction of a special committee of independent directors (the “Special Committee”), has involved the origination of residential real estate loans under the Advantage Loan Program and related matters. Results from the Special Committee’s Internal Review have indicated that certain employees engaged in misconduct in connection with the origination of a significant number of such loans, including with respect to verification of income, the amount of income reported for borrowers, reliance on third parties, and related documentation. As a result, the Company permanently discontinued the Advantage Loan Program. While the Internal Review is substantially complete, the Company expects the Internal Review to remain open during the pendency of the government investigations discussed herein, and it is possible additional work will be required in connection with the Internal Review. At September 30, 2022 and December 31, 2021, the Company has a liability for contingent losses of $9,000 and $15,000, respectively, for the outcome of the pending investigations. 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, (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 (the “Shareholder Demand”) which was later reflected in a shareholder derivative complaint that was filed against us and certain of our current and former directors, styled Cahnman v. Allen et al. 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 loan and certain expenses. As a result, the Company may incur a loss with respect to each repurchased loan. In 2019, in connection with the above mentioned investigations stemming from the Advantage Loan Program, the Company recorded a mortgage repurchase liability of $7,823, primarily related to probable losses on the previously sold Advantage Loan Program portfolio. The Company determined that these losses became probable in the latter part of the fourth quarter of 2019, taking into account the results of the Internal Review. 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. Since this time, certain third-party investors have accepted this offer. In May 2022, the Company repurchased a pool of Advantage Loan Program loans with a total outstanding unpaid principal balance of $30,380, which was not subject to an existing written agreement to repurchase. In connection with this repurchase, the Company recognized a loss of $695 related to a fair value discount in other non-interest expense and a disposition of $376 of mortgage servicing rights, and charged a loss of $622 against the mortgage repurchase liability. In September 2022, the Company repurchased pools of Advantage Loan Program loans with a total outstanding unpaid principal balance of $35,241. In connection with this repurchase, the Company recognized a loss of $1,608 related to a fair value discount in other non-interest expense and a disposition of $487 of mortgage servicing rights, and charged a loss of $884 against the mortgage repurchase liability. Pursuant to the existing agreements with such investors, the Company also agreed to repurchase additional pools of Advantage Loan Program loans at the predetermined repurchase prices as stated in the agreements. The Company has entered into an agreement to repurchase an additional pool of Advantage Loan Program loans with an outstanding principal balance of $21,392 at September 30, 2022, with the final decision to effect any such repurchase and the specific date of repurchase, as determined by the applicable investor. The last date on which the investor has the right to cause the repurchase of this pool of loans is July 22, 2023. Losses expected to be incurred upon the repurchase of such loans are reflected in the mortgage repurchase liability. As of September 30, 2022 and December 31, 2021, the mortgage repurchase liability was $778 and $2,954, 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 in the event of breach of representations and warranties totaled $160,401 and $237,049 at September 30, 2022 and December 31, 2021, respectively, including Advantage Loan Program loans totaling $44,955 and $142,810 at September 30, 2022 and December 31, 2021, 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. Activity in the mortgage repurchase liability was as follows: Nine Months Ended September 30, 2022 2021 Balance, beginning of period $ 2,954 $ 9,699 Net recovery (670) (963) Loss on loan repurchases (1,506) (5,511) Balance, end of the period $ 778 $ 3,225 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events | |
Subsequent Events | Note 17—Subsequent Events During the second quarter of 2022, the Company outsourced its residential loan origination function to Promontory MortgagePath, which provides community banks with an outsourced residential lending service for mortgage loan production. In November 2022, Promontory MortgagePath advised the Company of its intent to cease conducting business. Promontory MortgagePath and the Company will continue to accept loan applications through November 30, 2022, and will use commercially reasonable efforts to evaluate and originate pending loan applications by February 28, 2023. At that time, the Company will suspend the origination of residential loans pending further evaluation of its alternatives, which may include discontinuing the origination of residential loans. However, the Company may purchase residential loans from the secondary market in the future. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
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 Sterling Bancorp, Inc. and its wholly-owned subsidiaries. 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 periods. Due to the inherent uncertainty involved in making estimates, actual results reported in 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 September 30, 2022 and December 31, 2021, residential real estate loans accounted for 85% and 83%, respectively, of total gross loans. 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 September 30, 2022 and December 31, 2021, approximately 83% and 85%, respectively, of gross loans was originated with respect to properties or businesses located in the state of California. In March 2020, the Bank permanently discontinued its Advantage Loan program. Loans originated under this program comprised a significant component of the Bank’s total loan originations. Advantage Loan Program loans (including residential real estate loans held for sale of $7,279 and $11,359 at September 30, 2022 and December 31, 2021, respectively, of which $3,657 and $8,671 were on nonaccrual status as of those respective dates) totaled $937,225 and $1,185,458, or 65% and 69% of gross residential loans, at September 30, 2022 and December 31, 2021, respectively. Refer to Note 16—Commitments and Contingencies. |
Employee Retention Credits Under the Cares Act | Employee Retention Credits Under the Cares Act The Company evaluated its eligibility for the employee retention credits (“ERC”) offered under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in the third quarter of 2021 and determined it qualified for the ERC for the first three quarters of 2021. The Company qualified for the ERC because its gross receipts (which consisted of total interest income and other fees from banking activities and services) decreased more than 20% in 2021 from each of the respective quarters of 2019. The ERC was a refundable tax credit against certain employment taxes. The Company accounted for the ERC by analogy to International Accounting Standards 20 (“IAS 20”). Under IAS 20, the credit is recognized on a systematic basis over the periods in which the entity recognizes the payroll expenses for which the grant (tax credit) is intended to compensate when there is reasonable assurance that the entity will comply with any conditions attached to the grant and the grant will be received. The Company has made an accounting policy election to record the ERC benefit as a reduction to payroll expenses. During the three and nine months ended September 30, 2021, the Company recorded a benefit of $6,529 resulting in a net reduction of salaries and employee benefits expense in the condensed consolidated statements of income. The Company initially recorded a grant receivable of $6,529 and has received refunds or credits of $886, with a remaining receivable of $5,643 which is recorded in other assets in the condensed consolidated balance sheet at September 30, 2022. The Company expects to receive the balance of the refunds within the near term. |
Recently Issued Accounting Guidance Not Yet Adopted | Recently Issued Accounting Guidance Not Yet Adopted In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“2016-13”) In June 2016, the FASB issued ASU No. 2016-13, which is intended to improve financial reporting by requiring recording of credit losses on loans and other financial instruments on a more timely basis. The guidance will replace the current incurred loss accounting model with an expected loss approach and requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In April 2019, the FASB issued ASU No. 2019-04, 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, a cross-functional implementation team consisting of individuals from accounting, finance, servicing and information systems is working with the Company’s loan system vendor and consultants, and an application to create credit loss estimation models and processes has been developed. The historical data set for model development has been finalized, and the credit loss estimation models have been developed and tested. The Company is working to finalize the assessment and documentation of processes and internal controls as well as adjustments to qualitative factors. In addition, the Company has engaged a third party to perform a model validation. The Company will run the new credit loss estimation models under the new internal controls in parallel with the current allowance for loan losses model to understand the differences in the models and assess the impact of the change. The Company expects to recognize a cumulative effect adjustment to the opening balance of retained earnings as of January 1, 2023, 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 condensed consolidated financial statements. |
Investment Securities (Tables)
Investment Securities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investment Securities | |
Schedule of amortized cost and fair value of debt securities available for sale | September 30, 2022 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury and Agency securities $ 175,433 $ 27 $ (7,998) $ 167,462 Mortgage-backed securities 43,183 — (5,557) 37,626 Collateralized mortgage obligations 158,414 60 (15,128) 143,346 Collateralized debt obligations 158 — (5) 153 Total $ 377,188 $ 87 $ (28,688) $ 348,587 December 31, 2021 Amortized Gross Unrealized Fair Cost Gain Loss Value Available for sale: U.S. Treasury and Agency securities $ 122,291 $ 106 $ (229) $ 122,168 Mortgage-backed securities 49,739 84 (386) 49,437 Collateralized mortgage obligations 137,662 530 (1,343) 136,849 Collateralized debt obligations 211 — (8) 203 Total $ 309,903 $ 720 $ (1,966) $ 308,657 |
Schedule of amortized cost and fair value of debt securities available for sale, shown by contractual maturity | Amortized Fair Cost Value U.S. Treasury and Agency securities Due less than one year $ 24,277 $ 24,125 Due after one year through five years 151,156 143,337 Mortgage-backed securities 43,183 37,626 Collateralized mortgage obligations 158,414 143,346 Collateralized debt obligations 158 153 Total $ 377,188 $ 348,587 |
Schedule of debt securities available for sale, at fair value, continuous unrealized loss position | September 30, 2022 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses U.S Treasury and Agency securities $ 122,428 $ (5,191) $ 22,008 $ (2,807) $ 144,436 $ (7,998) Mortgage-backed securities 34,553 (4,722) 3,073 (835) 37,626 (5,557) Collateralized mortgage obligations 107,001 (14,440) 15,398 (688) 122,399 (15,128) Collateralized debt obligations — — 153 (5) 153 (5) Total $ 263,982 $ (24,353) $ 40,632 $ (4,335) $ 304,614 $ (28,688) December 31, 2021 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses U.S Treasury and Agency securities $ 49,865 $ (229) $ — $ — $ 49,865 $ (229) Mortgage-backed securities 7,878 (36) 8,729 (350) 16,607 (386) Collateralized mortgage obligations 86,354 (1,342) 2,413 (1) 88,767 (1,343) Collateralized debt obligations — — 203 (8) 203 (8) Total $ 144,097 $ (1,607) $ 11,345 $ (359) $ 155,442 $ (1,966) |
Schedule of unrealized and realized gains and losses recognized in the condensed consolidated statements of income | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net losses recorded during the period on equity securities $ (184) $ (24) $ (590) $ (99) Less: net gains (losses) recorded during the period on equity securities sold during the period — — — — Unrealized losses recorded during the period on equity securities held at the reporting date $ (184) $ (24) $ (590) $ (99) |
Loans (Tables)
Loans (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Loans | |
Schedule of major categories of loans | The major categories of loans held for sale were as follows: September 30, December 31, 2022 2021 Residential real estate $ 7,279 $ 11,359 Commercial real estate 1,554 53,628 Total loans held for sale $ 8,833 $ 64,987 The major categories of loans held for investment and the allowance for loan losses were as follows: September 30, December 31, 2022 2021 Residential real estate $ 1,430,472 $ 1,704,231 Commercial real estate 199,446 201,240 Construction 50,320 106,759 Commercial lines of credit 1,389 363 Other consumer 1 221 Total loans 1,681,628 2,012,814 Less: allowance for loan losses (45,362) (56,548) Loans, net $ 1,636,266 $ 1,956,266 |
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 nine months ended September 30, 2022 and 2021: Commercial Residential Commercial Lines of Other Three Months Ended September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 29,982 $ 15,035 $ 6,708 $ 36 $ 5 $ 51,766 Provision (recovery) for loan losses (1,841) (209) (2,304) 2 (5) (4,357) Charge offs — (4,064) — — — (4,064) Recoveries 46 5 1,966 — — 2,017 Total ending balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Commercial Residential Commercial Lines of Other Nine Months Ended September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 32,202 $ 12,608 $ 11,730 $ 8 $ — $ 56,548 Provision (recovery) for loan losses (4,594) 2,138 (7,329) 30 — (9,755) Charge offs (197) (4,064) — — — (4,261) Recoveries 776 85 1,969 — — 2,830 Total ending balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Commercial Residential Commercial Lines of Other Three Months Ended September 30, 2021 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 33,064 $ 22,491 $ 15,056 $ 58 $ — $ 70,669 Provision (recovery) for loan losses 109 1,486 (1,194) (4) — 397 Charge offs — — (1,965) — — (1,965) Recoveries 530 605 2 — — 1,137 Total ending balance $ 33,703 $ 24,582 $ 11,899 $ 54 $ — $ 70,238 Commercial Residential Commercial Lines of Other Nine Months Ended September 30, 2021 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Beginning balance $ 32,366 $ 21,942 $ 17,988 $ 91 $ — $ 72,387 Provision (recovery) for loan losses 16 2,004 (4,129) (37) — (2,146) Charge offs — — (1,965) — — (1,965) Recoveries 1,321 636 5 — — 1,962 Total ending balance $ 33,703 $ 24,582 $ 11,899 $ 54 $ — $ 70,238 The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment by impairment methodology as of September 30, 2022 and December 31, 2021: Commercial Residential Commercial Lines of Other September 30, 2022 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 12 $ — $ — $ — $ — $ 12 Collectively evaluated for impairment 28,175 10,767 6,370 38 — 45,350 Total ending allowance balance $ 28,187 $ 10,767 $ 6,370 $ 38 $ — $ 45,362 Loans: Loans individually evaluated for impairment $ 48 $ — $ 2,485 $ 110 $ — $ 2,643 Loans collectively evaluated for impairment 1,430,424 199,446 47,835 1,279 1 1,678,985 Total ending loans balance $ 1,430,472 $ 199,446 $ 50,320 $ 1,389 $ 1 $ 1,681,628 Commercial Residential Commercial Lines of Other December 31, 2021 Real Estate Real Estate Construction Credit Consumer Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 159 $ — $ — $ — $ — $ 159 Collectively evaluated for impairment 32,043 12,608 11,730 8 — 56,389 Total ending allowance balance $ 32,202 $ 12,608 $ 11,730 $ 8 $ — $ 56,548 Loans: Loans individually evaluated for impairment $ 350 $ 4,441 $ 14,984 $ 116 $ — $ 19,891 Loans collectively evaluated for impairment 1,703,881 196,799 91,775 247 221 1,992,923 Total ending loans balance $ 1,704,231 $ 201,240 $ 106,759 $ 363 $ 221 $ 2,012,814 |
Schedule of information related to impaired loans by class of loans | At September 30, 2022 At December 31, 2021 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 $ — $ — $ — $ 91 $ 65 $ — Commercial real estate: Retail 229 — — — — — Hotels/Single-room occupancy hotels — — — 4,459 4,441 — Construction 2,485 2,485 — 15,004 14,984 — Commercial lines of credit: Private banking 110 110 — 116 116 — Subtotal 2,824 2,595 — 19,670 19,606 — With an allowance for loan losses recorded: Residential real estate: First mortgage 82 48 12 273 285 159 Total $ 2,906 $ 2,643 $ 12 $ 19,943 $ 19,891 $ 159 Three Months Ended at September 30, 2022 2021 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 $ — $ — $ — $ 82 $ — $ — Commercial real estate: Retail — — — 7 — — Hotels/Single-room occupancy hotels — — — 10,862 — — Office — — — 2,769 — — Construction 5,375 40 27 18,820 40 27 Commercial lines of credit: Private banking 111 2 1 119 2 1 Subtotal 5,486 42 28 32,659 42 28 With an allowance for loan losses recorded: Residential real estate: First mortgage 48 2 2 279 1 1 Construction — — — 10,387 56 38 Subtotal 48 2 2 10,666 57 39 Total $ 5,534 $ 44 $ 30 $ 43,325 $ 99 $ 67 Nine Months Ended at September 30, 2022 2021 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 $ — $ — Commercial real estate: Retail — — — 765 — — Hotels/Single-room occupancy hotels — — — 17,948 — — Office — — — 2,768 — — Other — — — 91 — — Construction 6,885 118 105 27,387 192 179 Commercial lines of credit: Private banking 113 5 4 1,264 7 7 Subtotal 6,998 123 109 50,311 199 186 With an allowance for loan losses recorded: Residential real estate: First mortgage 198 3 3 280 3 3 Construction — — — 9,751 181 163 Subtotal 198 3 3 10,031 184 166 Total $ 7,196 $ 126 $ 112 $ 60,342 $ 383 $ 352 |
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, excluding nonaccrual loans held for sale, by class of loans as of September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 Loans Past Loans Past Due Over Due Over 90 Days Still 90 Days Still Nonaccrual Accruing Nonaccrual Accruing Residential real estate: Residential first mortgage $ 35,654 $ 36 $ 45,439 $ 39 Residential second mortgage 189 — 236 — Commercial real estate: Hotels/Single-room occupancy hotels — — 4,441 — Construction — — 12,499 — Total $ 35,843 $ 36 $ 62,615 $ 39 The following tables present the aging of the recorded investment in past due loans as of September 30, 2022 and December 31, 2021 by class of loans: Greater 30 - 59 60 - 89 than Days Days 89 Days Total Loans Not September 30, 2022 Past Due Past Due Past Due Past Due Past Due Total Residential real estate: Residential first mortgage $ 20,839 $ 3,284 $ 35,690 $ 59,813 $ 1,360,315 $ 1,420,128 Residential second mortgage — — 189 189 10,155 10,344 Commercial real estate: Retail — — — — 26,026 26,026 Multifamily — — — — 81,723 81,723 Office — — — — 18,216 18,216 Hotels/ Single-room occupancy hotels — — — — 5,240 5,240 Industrial — — — — 30,372 30,372 Other — — — — 37,869 37,869 Construction — — — — 50,320 50,320 Commercial lines of credit: Private banking — — — — 110 110 C&I lending — — — — 1,279 1,279 Other consumer — — — — 1 1 Total $ 20,839 $ 3,284 $ 35,879 $ 60,002 $ 1,621,626 $ 1,681,628 Greater 30 - 59 60 - 89 than Days Days 89 Days Total Loans Not December 31, 2021 Past Due Past Due Past Due Past Due Past Due Total Residential real estate: Residential first mortgage $ 24,044 $ 3,425 $ 45,478 $ 72,947 $ 1,617,509 $ 1,690,456 Residential second mortgage 107 — 236 343 13,432 13,775 Commercial real estate: Retail — — — — 19,574 19,574 Multifamily — — — — 96,960 96,960 Office — — — — 12,382 12,382 Hotels/Single-room occupancy hotels — — 4,441 4,441 9,780 14,221 Industrial — — — — 7,320 7,320 Other — — — — 50,783 50,783 Construction 10,500 — 12,499 22,999 83,760 106,759 Commercial lines of credit: Private banking — — — — 116 116 C&I lending — — — — 247 247 Other consumer — — — — 221 221 Total $ 34,651 $ 3,425 $ 62,654 $ 100,730 $ 1,912,084 $ 2,012,814 |
Schedule of risk rating of loans by class of loans | At September 30, 2022 and December 31, 2021, the risk rating of loans by class of loans was as follows: Special September 30, 2022 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,384,438 $ — $ 35,690 $ — $ 1,420,128 Residential second mortgage 10,155 — 189 — 10,344 Commercial real estate: Retail 26,026 — — — 26,026 Multifamily 69,369 12,354 — — 81,723 Office 18,216 — — — 18,216 Hotels/ Single-room occupancy hotels — 3,692 1,548 — 5,240 Industrial 30,372 — — — 30,372 Other 22,703 15,166 — — 37,869 Construction 37,617 4,648 8,055 — 50,320 Commercial lines of credit: Private banking 110 — — — 110 C&I lending 1,279 — — — 1,279 Other consumer 1 — — — 1 Total $ 1,600,286 $ 35,860 $ 45,482 $ — $ 1,681,628 Special December 31, 2021 Pass Mention Substandard Doubtful Total Residential real estate: Residential first mortgage $ 1,644,974 $ — $ 45,249 $ 233 $ 1,690,456 Residential second mortgage 13,539 — 236 — 13,775 Commercial real estate: Retail 18,846 728 — — 19,574 Multifamily 75,543 8,104 13,313 — 96,960 Office 10,413 — 1,969 — 12,382 Hotels/ Single-room occupancy hotels 8,205 — 6,016 — 14,221 Industrial 7,320 — — — 7,320 Other 48,996 1,692 95 — 50,783 Construction 67,254 17,226 16,348 5,931 106,759 Commercial lines of credit: Private banking 116 — — — 116 C&I lending 236 11 — — 247 Other consumer 221 — — — 221 Total $ 1,895,663 $ 27,761 $ 83,226 $ 6,164 $ 2,012,814 |
Mortgage Servicing Rights, net
Mortgage Servicing Rights, net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Mortgage Servicing Rights, net | |
Schedule of principal balance of mortgage loans serviced for others | September 30, December 31, 2022 2021 Residential real estate mortgage loan portfolios serviced for: FNMA $ 115,446 $ 124,764 FHLB 35,357 40,209 Private investors 44,955 142,810 Total $ 195,758 $ 307,783 |
Schedule of activity for mortgage servicing rights and related valuation allowance | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Mortgage servicing rights: Beginning of period $ 2,542 $ 4,200 $ 3,332 $ 7,853 Additions — 25 11 124 Amortization (657) (550) (1,458) (4,302) End of period 1,885 3,675 1,885 3,675 Valuation allowance at beginning of period 89 968 610 2,165 Additions (recoveries) (46) (166) (567) (1,363) Valuation allowance at end of period 43 802 43 802 Mortgage servicing rights, net $ 1,842 $ 2,873 $ 1,842 $ 2,873 |
FHLB Borrowings (Tables)
FHLB Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
FHLB Borrowings | |
Schedule of FHLB borrowings | FHLB borrowings at September 30, 2022 and December 31, 2021 consist of the following: September 30, December 31, 2022 Interest Rates 2021 Interest Rates Long-term fixed rate-advances $ 50,000 1.96 % $ 150,000 0.43% - 1.96 % |
Subordinated Notes, net (Tables
Subordinated Notes, net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Subordinated Notes, net | |
Schedule of subordinated notes | September 30, December 31, 2022 2021 Subordinated notes $ 65,000 $ 65,000 Unamortized note premium 290 343 Total $ 65,290 $ 65,343 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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, 2022 367,767 $ 5.41 8.13 $ 525 Granted — Exercised — Forfeited/expired (18,222) 9.67 Outstanding at September 30, 2022 349,545 $ 5.19 7.43 $ 609 Exercisable at September 30, 2022 344,506 $ 5.14 7.43 $ 609 |
Summary of the company's restricted stock awards activity | Weighted Average Number Grant Date of Shares Fair Value Nonvested at January 1, 2022 293,637 $ 5.81 Granted 231,842 6.57 Vested (104,739) 6.21 Forfeited (22,713) 5.70 Nonvested at September 30, 2022 398,027 $ 6.16 |
Regulatory Capital Requiremen_2
Regulatory Capital Requirements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Regulatory Capital Requirements | |
Schedule of minimum requirements under prompt corrective action regulations classifications | For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio September 30, 2022 Total adjusted capital to risk-weighted assets Consolidated $ 409,170 26.21 % $ 124,357 8.00 % N/A N/A Bank 413,262 26.60 124,275 8.00 $ 155,344 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 350,162 22.43 93,268 6.00 N/A N/A Bank 393,524 25.33 93,206 6.00 124,275 8.00 Common Equity Tier 1 (CET1) Consolidated 350,162 22.43 69,951 4.50 N/A N/A Bank 393,524 25.33 69,905 4.50 100,974 6.50 Tier 1 (core) capital to adjusted tangible assets (leverage ratio) Consolidated 350,162 14.09 99,151 4.00 N/A N/A Bank 393,524 15.88 99,103 4.00 123,879 5.00 For Capital To be Well Actual Adequacy Purposes Capitalized Amount Ratio Amount Ratio Amount Ratio December 31, 2021 Total adjusted capital to risk-weighted assets Consolidated $ 421,732 21.24 % $ 158,851 8.00 % N/A N/A Bank 407,699 20.55 158,707 8.00 $ 198,384 10.00 % Tier 1 (core) capital to risk-weighted assets Consolidated 344,247 17.34 119,138 6.00 N/A N/A Bank 382,509 19.28 119,030 6.00 158,707 8.00 Common Equity Tier 1 (CET1) Consolidated 344,247 17.34 89,354 4.50 N/A N/A Bank 382,509 19.28 89,273 4.50 128,950 6.50 Tier 1 (core) capital to adjusted tangible assets (leverage ratio) Consolidated 344,247 11.47 120,039 4.00 N/A N/A Bank 382,509 12.77 119,859 4.00 149,824 5.00 |
Schedule of actual and minimum required capital amounts and ratios | Company at December 31, 2021 2020 2019 2018 2017 Total adjusted capital to risk-weighted assets 21.24 % 16.51 % 14.58 % 14.82 % 13.49 % Tier 1 (core) capital to risk-weighted assets 17.34 % 12.65 % 11.56 % 11.77 % 10.33 % Common Equity Tier 1 (CET1) 17.34 % 12.65 % 11.56 % 11.77 % 10.33 % Tier 1 (core) capital to adjusted tangible assets (leverage ratio) 11.47 % 8.08 % 10.11 % 10.42 % 9.83 % Bank at December 31, 2021 2020 2019 2018 2017 Total adjusted capital to risk-weighted assets 20.55 % 15.74 % 12.08 % 11.43 % 10.06 % Tier 1 (core) capital to risk-weighted assets 19.28 % 14.47 % 11.32 % 10.66 % 9.12 % Common Equity Tier 1 (CET1) 19.28 % 14.47 % 11.32 % 10.66 % 9.12 % Tier 1 (core) capital to adjusted tangible assets (leverage ratio) 12.77 % 9.20 % 9.90 % 9.44 % 8.68 % In comparison to the above tables, the tables below present the Bank’s and the Company’s regulatory capital ratios applying the 50% risk weight to Advantage Loan Program loans at December 31 for each of the past five years, as previously reported. Company at December 31, 2021 2020 2019 2018 2017 Total adjusted capital to risk-weighted assets 29.02 % 22.58 % 21.49 % 21.98 % 20.28 % Tier 1 (core) capital to risk-weighted assets 24.08 % 17.68 % 17.04 % 17.45 % 15.53 % Common Equity Tier 1 (CET1) 24.08 % 17.68 % 17.04 % 17.45 % 15.53 % Tier 1 (core) capital to adjusted tangible assets (leverage ratio) 11.47 % 8.08 % 10.11 % 10.42 % 9.83 % Bank at December 31, 2021 2020 2019 2018 2017 Total adjusted capital to risk-weighted assets 28.07 % 21.56 % 17.82 % 16.94 % 14.76 % Tier 1 (core) capital to risk-weighted assets 26.79 % 20.27 % 16.70 % 15.80 % 13.71 % Common Equity Tier 1 (CET1) 26.79 % 20.27 % 16.70 % 15.80 % 13.71 % Tier 1 (core) capital to adjusted tangible assets (leverage ratio) 12.77 % 9.20 % 9.90 % 9.44 % 8.68 % |
Income Per Share (Tables)
Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Per Share | |
Schedule of computation of income per share, basic and diluted | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Numerator: Net income $ 1,176 $ 9,557 $ 4,239 $ 15,334 Denominator: Weighted average common shares outstanding, basic 50,400,412 50,167,295 50,326,951 50,010,341 Weighted average effect of potentially dilutive common shares: Stock options 97,884 55,131 107,671 48,659 Restricted stock 74,635 40,260 88,454 20,931 Weighted average common shares outstanding, diluted 50,572,931 50,262,686 50,523,076 50,079,931 Income per share, basic and diluted $ 0.02 $ 0.19 $ 0.08 $ 0.31 |
Schedule of anti-dilutive shares that were excluded from the computation of weighted average diluted shares outstanding | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Stock options 49,545 67,767 49,897 70,139 Restricted stock 176,707 7,294 99,784 104,558 Total 226,252 75,061 149,681 174,697 |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 September 30, 2022 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 and Agency securities $ 167,462 $ 115,484 $ 51,978 $ — Mortgage-backed securities 37,626 — 37,626 — Collateralized mortgage obligations 143,346 — 143,346 — Collateralized debt obligations 153 — — 153 Equity securities 4,386 4,386 — — Fair Value Measurements at December 31, 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 and Agency securities $ 122,168 $ 48,827 $ 73,341 $ — Mortgage-backed securities 49,437 — 49,437 — Collateralized mortgage obligations 136,849 — 136,849 — Collateralized debt obligations 203 — — 203 Equity securities 4,976 4,976 — — |
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 Nine Months Ended September 30, 2022 2021 Balance of recurring Level 3 assets at beginning of period $ 203 $ 187 Total gains or losses (realized/unrealized): Included in income-realized — — Included in other comprehensive loss 3 7 Principal maturities/settlements (53) (3) Sales — — Transfers in and/or out of Level 3 — — Balance of recurring Level 3 assets at end of period $ 153 $ 191 |
Schedule of assets measured at fair value on a nonrecurring basis categorized by level of inputs | Fair Value Measurements at September 30, 2022 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Commercial real estate loans held for sale $ 1,554 $ — $ 1,554 $ — Mortgage servicing rights 311 — — 311 Fair Value Measurements at December 31, 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 $ 86 $ — $ — $ 86 Commercial real estate loans held for sale 53,628 — 53,628 — Mortgage servicing rights 2,052 — — 2,052 |
Schedule of quantitative information about nonrecurring Level 3 fair value measurements | Quantitative Information about Level 3 Fair Value Measurements at September 30, 2022 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Mortgage servicing rights $ 311 Discounted cash flow Discount rate 9.5% - 12.0% Prepayment speed 7.5% - 22.5% 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, 2021 Range Fair Value Valuation Technique Unobservable Inputs (Weighted Average) (1) Impaired loans: Residential real estate $ 86 Sales comparison approach Adjustments for differences between the comparable sales N/A Mortgage servicing rights $ 2,052 Discounted cash flow Discount rate 9.5% - 12.0% Prepayment speed 10.5% - 37.1% 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 September 30, 2022 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 352,404 $ 352,404 $ 352,404 $ — $ — Interest-bearing time deposits with other banks 1,183 1,183 1,183 — — Loans held for sale (1) 7,279 7,719 — 7,719 — Loans, net 1,636,266 1,676,322 — — 1,676,322 Financial Liabilities Time deposits 757,576 752,286 — 752,286 — Federal Home Loan Bank borrowings 50,000 48,260 — 48,260 — Subordinated notes, net 65,290 65,056 — 65,056 — Fair Value Measurements at December 31, 2021 Carrying Fair Amount Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 411,676 $ 411,676 $ 411,676 $ — $ — Interest-bearing time deposits with other banks 1,183 1,183 1,183 — — Loans held for sale 11,359 11,809 — 11,809 — Loans, net (1) 1,956,180 2,025,409 — — 2,025,409 Financial Liabilities Time deposits 891,820 894,049 — 894,049 — Federal Home Loan Bank borrowings 150,000 152,560 — 152,560 — Subordinated notes, net 65,343 65,073 — 65,073 — (1) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Summary of total amount of unfunded commitments to extend credit and standby letters of credit outstanding | September 30, December 31, 2022 2021 Commitments to make loans $ 2,673 $ 23,610 Unused lines of credit 20,610 45,805 Standby letters of credit 24 24 |
Schedule of activity in the mortgage repurchase liability | Nine Months Ended September 30, 2022 2021 Balance, beginning of period $ 2,954 $ 9,699 Net recovery (670) (963) Loss on loan repurchases (1,506) (5,511) Balance, end of the period $ 778 $ 3,225 |
Nature of Operations and Basi_2
Nature of Operations and Basis of Presentation (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Jul. 31, 2021 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 segment item | Sep. 30, 2021 USD ($) | |
Nature of Operations and Basis of Presentation | ||||
Number of branches | item | 28 | |||
Number of reportable segments | segment | 1 | |||
Net cash paid on sale of branch office | $ 63,545 | |||
Gain on sale of branch office | $ 1,417 | 1,417 | ||
Bellevue, Washington branch office | ||||
Nature of Operations and Basis of Presentation | ||||
Transfer amount to customer deposits | $ 65,437 | |||
Net cash paid on sale of branch office | $ 63,545 | |||
Gain on sale of branch office | $ 1,417 | $ 1,417 | ||
San Francisco and Los Angeles, California | ||||
Nature of Operations and Basis of Presentation | ||||
Number of branches | item | 26 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Concentration of Credit Risk | ||
Loans Receivable | $ 1,681,628 | $ 2,012,814 |
Loans held for sale | 8,833 | 64,987 |
Nonaccrual loans held for sale | 3,657 | 18,026 |
Residential real estate | ||
Concentration of Credit Risk | ||
Loans Receivable | $ 1,430,472 | 1,704,231 |
Nonaccrual loans held for sale | $ 8,671 | |
Residential real estate loans | Loans receivables | Residential real estate | ||
Concentration of Credit Risk | ||
Concentration of credit risk | 85% | 83% |
California | Loans receivables | Residential real estate | ||
Concentration of Credit Risk | ||
Concentration of credit risk | 83% | 85% |
Advantage loan program | Loans receivables | Residential real estate | ||
Concentration of Credit Risk | ||
Concentration of credit risk | 65% | 69% |
Loans Receivable | $ 937,225 | $ 1,185,458 |
Loans held for sale | 7,279 | 11,359 |
Nonaccrual loans held for sale | $ 3,657 | $ 8,671 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Employee Retention Credits under CARES Act (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 USD ($) | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | |
Summary of Significant Accounting Policies | |||||
CARES Act ERC tax credit benefit recorded | $ 6,529 | $ 6,529 | |||
CARES Act ERC tax credit receivable | $ 6,529 | $ 6,529 | |||
CARES Act ERC tax refunds or credits received | $ 886 | ||||
CARES Act ERC tax remaining receivable | $ 5,643 | ||||
Minimum | |||||
Summary of Significant Accounting Policies | |||||
Decrease in gross receipts (percentage) | 0.20 | 0.20 | 0.20 |
Investment Securities - Amortiz
Investment Securities - Amortized Cost and Fair Value Corresponding Gross Unrealized Gains and Losses (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Available for sale: | ||
Available for sale, Amortized Cost | $ 377,188 | $ 309,903 |
Available for sale, Gross Unrealized Gain | 87 | 720 |
Available for sale, Gross Unrealized Loss | (28,688) | (1,966) |
Investment securities available for sale, at fair value | 348,587 | 308,657 |
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% | 10% |
Collateralized mortgage obligations | US Government Corporations and Agencies Securities | ||
Available for sale: | ||
Investment securities available for sale, at fair value | $ 438 | $ 529 |
Debt securities | Pledged as collateral | FHLB borrowings. | ||
Available for sale: | ||
Investment securities available for sale, at fair value | 106,049 | |
U.S. Treasury and Agency securities | ||
Available for sale: | ||
Available for sale, Amortized Cost | 175,433 | 122,291 |
Available for sale, Gross Unrealized Gain | 27 | 106 |
Available for sale, Gross Unrealized Loss | (7,998) | (229) |
Investment securities available for sale, at fair value | 167,462 | 122,168 |
Mortgage-backed securities | ||
Available for sale: | ||
Available for sale, Amortized Cost | 43,183 | 49,739 |
Available for sale, Gross Unrealized Gain | 84 | |
Available for sale, Gross Unrealized Loss | (5,557) | (386) |
Investment securities available for sale, at fair value | 37,626 | 49,437 |
Collateralized mortgage obligations | ||
Available for sale: | ||
Available for sale, Amortized Cost | 158,414 | 137,662 |
Available for sale, Gross Unrealized Gain | 60 | 530 |
Available for sale, Gross Unrealized Loss | (15,128) | (1,343) |
Investment securities available for sale, at fair value | 143,346 | 136,849 |
Collateralized debt obligations | ||
Available for sale: | ||
Available for sale, Amortized Cost | 158 | 211 |
Available for sale, Gross Unrealized Loss | (5) | (8) |
Investment securities available for sale, at fair value | $ 153 | $ 203 |
Investment Securities - Amort_2
Investment Securities - Amortized Cost and Fair Value By Contractual Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | $ 377,188 | $ 309,903 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | 348,587 | 308,657 |
U.S. Treasury and Agency securities | ||
Available for sale, Amortized Cost | ||
Due less than one year | 24,277 | |
Due after one year through five years | 151,156 | |
Available for sale, Amortized Cost | 175,433 | 122,291 |
Available for sale, Fair Value | ||
Due less than one year | 24,125 | |
Due after one year through five years | 143,337 | |
Available for sale, Fair Value | 167,462 | 122,168 |
Mortgage-backed securities | ||
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | 43,183 | 49,739 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | 37,626 | 49,437 |
Collateralized mortgage obligations | ||
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | 158,414 | 137,662 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | 143,346 | 136,849 |
Collateralized debt obligations | ||
Available for sale, Amortized Cost | ||
Available for sale, Amortized Cost | 158 | 211 |
Available for sale, Fair Value | ||
Available for sale, Fair Value | $ 153 | $ 203 |
Investment Securities - Aggrega
Investment Securities - Aggregated by Major Security Type and Length of Time in a Continuous Unrealized Loss Position (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 USD ($) security | Dec. 31, 2021 USD ($) | |
Fair Value | ||
Less than 12 Months, Fair value | $ 263,982 | $ 144,097 |
12 Months or More, Fair Value | 40,632 | 11,345 |
Available for sale, Continuous unrealized loss position, Fair Value | 304,614 | 155,442 |
Unrealized Losses | ||
Less than 12 Months, Unrealized Losses | (24,353) | (1,607) |
12 Months or More, Unrealized Losses | (4,335) | (359) |
Available for sale, Continuous unrealized loss position, Unrealized Losses | $ (28,688) | (1,966) |
Number of debt securities in portfolio | security | 35 | |
Number of debt securities in an unrealized loss position | security | 28 | |
U.S. Treasury and Agency securities | ||
Fair Value | ||
Less than 12 Months, Fair value | $ 122,428 | 49,865 |
12 Months or More, Fair Value | 22,008 | |
Available for sale, Continuous unrealized loss position, Fair Value | 144,436 | 49,865 |
Unrealized Losses | ||
Less than 12 Months, Unrealized Losses | (5,191) | (229) |
12 Months or More, Unrealized Losses | (2,807) | |
Available for sale, Continuous unrealized loss position, Unrealized Losses | (7,998) | (229) |
Mortgage-backed securities | ||
Fair Value | ||
Less than 12 Months, Fair value | 34,553 | 7,878 |
12 Months or More, Fair Value | 3,073 | 8,729 |
Available for sale, Continuous unrealized loss position, Fair Value | 37,626 | 16,607 |
Unrealized Losses | ||
Less than 12 Months, Unrealized Losses | (4,722) | (36) |
12 Months or More, Unrealized Losses | (835) | (350) |
Available for sale, Continuous unrealized loss position, Unrealized Losses | (5,557) | (386) |
Collateralized mortgage obligations | ||
Fair Value | ||
Less than 12 Months, Fair value | 107,001 | 86,354 |
12 Months or More, Fair Value | 15,398 | 2,413 |
Available for sale, Continuous unrealized loss position, Fair Value | 122,399 | 88,767 |
Unrealized Losses | ||
Less than 12 Months, Unrealized Losses | (14,440) | (1,342) |
12 Months or More, Unrealized Losses | (688) | (1) |
Available for sale, Continuous unrealized loss position, Unrealized Losses | (15,128) | (1,343) |
Collateralized debt obligations | ||
Fair Value | ||
12 Months or More, Fair Value | 153 | 203 |
Available for sale, Continuous unrealized loss position, Fair Value | 153 | 203 |
Unrealized Losses | ||
12 Months or More, Unrealized Losses | (5) | (8) |
Available for sale, Continuous unrealized loss position, Unrealized Losses | $ (5) | $ (8) |
Investment Securities - Equity
Investment Securities - Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Equity Securities | |||||
Fair value of equity securities | $ 4,632 | $ 4,632 | $ 5,222 | ||
Equity securities with readily determinable fair values | 4,386 | 4,386 | 4,976 | ||
Equity securities with readily determinable fair values | |||||
Net losses recorded during the period on equity securities | (184) | $ (24) | (590) | $ (99) | |
Unrealized losses recorded during the period on equity securities held at the reporting date | (184) | $ (24) | (590) | $ (99) | |
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 Held for Sale (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Feb. 28, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Major categories of loans | |||
Total loans held for sale | $ 8,833 | $ 64,987 | |
Nonaccrual loans held for sale | 3,657 | 18,026 | |
Modified troubled debt restructuring | 2,643 | 18,416 | |
Residential real estate | |||
Major categories of loans | |||
Total loans held for sale | 7,279 | 11,359 | |
Nonaccrual loans held for sale | 8,671 | ||
Nonaccrual residential real estate loans | |||
Major categories of loans | |||
Modified troubled debt restructuring | 2,059 | ||
Commercial real estate | |||
Major categories of loans | |||
Total loans held for sale | 1,554 | 53,628 | |
Nonaccrual loans held for sale | $ 9,355 | ||
Proceeds from sale of loans held for sale | $ 49,610 | ||
Loans carrying value on date of sale | $ 49,455 | ||
Commercial real estate | Special Mention | |||
Major categories of loans | |||
Total loans held for sale | $ 1,554 |
Loans - Major Categories of L_2
Loans - Major Categories of Loans Held for Investment and the Allowance for Loan Losses (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Major categories of loans held for investment and the allowance for loan losses | ||||||
Total loans | $ 1,681,628 | $ 2,012,814 | ||||
Less: allowance for loan losses | (45,362) | $ (51,766) | (56,548) | $ (70,238) | $ (70,669) | $ (72,387) |
Loans, net | 1,636,266 | 1,956,266 | ||||
Pledged as collateral | FHLB borrowings. | ||||||
Major categories of loans held for investment and the allowance for loan losses | ||||||
Loans, net | 446,153 | 557,410 | ||||
Residential real estate | ||||||
Major categories of loans held for investment and the allowance for loan losses | ||||||
Total loans | 1,430,472 | 1,704,231 | ||||
Less: allowance for loan losses | (28,187) | (29,982) | (32,202) | (33,703) | (33,064) | (32,366) |
Commercial real estate | ||||||
Major categories of loans held for investment and the allowance for loan losses | ||||||
Total loans | 199,446 | 201,240 | ||||
Less: allowance for loan losses | (10,767) | (15,035) | (12,608) | (24,582) | (22,491) | (21,942) |
Construction | ||||||
Major categories of loans held for investment and the allowance for loan losses | ||||||
Total loans | 50,320 | 106,759 | ||||
Less: allowance for loan losses | (6,370) | (6,708) | (11,730) | (11,899) | (15,056) | (17,988) |
Commercial lines of credit | ||||||
Major categories of loans held for investment and the allowance for loan losses | ||||||
Total loans | 1,389 | 363 | ||||
Less: allowance for loan losses | (38) | (36) | (8) | $ (54) | $ (58) | $ (91) |
Other consumer | ||||||
Major categories of loans held for investment and the allowance for loan losses | ||||||
Total loans | $ 1 | $ 221 | ||||
Less: allowance for loan losses | $ (5) |
Loans - Activity in the Allowan
Loans - Activity in the Allowance For Loan Losses by Portfolio Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Allowance for loan losses | ||||
Beginning balance | $ 51,766 | $ 70,669 | $ 56,548 | $ 72,387 |
Provision (recovery) for loan losses | (4,357) | 397 | (9,755) | (2,146) |
Charge offs | (4,064) | (1,965) | (4,261) | (1,965) |
Recoveries | 2,017 | 1,137 | 2,830 | 1,962 |
Total ending balance | 45,362 | 70,238 | 45,362 | 70,238 |
Residential real estate | ||||
Allowance for loan losses | ||||
Beginning balance | 29,982 | 33,064 | 32,202 | 32,366 |
Provision (recovery) for loan losses | (1,841) | 109 | (4,594) | 16 |
Charge offs | (197) | |||
Recoveries | 46 | 530 | 776 | 1,321 |
Total ending balance | 28,187 | 33,703 | 28,187 | 33,703 |
Commercial real estate | ||||
Allowance for loan losses | ||||
Beginning balance | 15,035 | 22,491 | 12,608 | 21,942 |
Provision (recovery) for loan losses | (209) | 1,486 | 2,138 | 2,004 |
Charge offs | (4,064) | (4,064) | ||
Recoveries | 5 | 605 | 85 | 636 |
Total ending balance | 10,767 | 24,582 | 10,767 | 24,582 |
Construction | ||||
Allowance for loan losses | ||||
Beginning balance | 6,708 | 15,056 | 11,730 | 17,988 |
Provision (recovery) for loan losses | (2,304) | (1,194) | (7,329) | (4,129) |
Charge offs | (1,965) | (1,965) | ||
Recoveries | 1,966 | 2 | 1,969 | 5 |
Total ending balance | 6,370 | 11,899 | 6,370 | 11,899 |
Commercial lines of credit | ||||
Allowance for loan losses | ||||
Beginning balance | 36 | 58 | 8 | 91 |
Provision (recovery) for loan losses | 2 | (4) | 30 | (37) |
Total ending balance | 38 | $ 54 | $ 38 | $ 54 |
Other consumer | ||||
Allowance for loan losses | ||||
Beginning balance | 5 | |||
Provision (recovery) for loan losses | $ (5) |
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 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Ending allowance balance attributable to loans: | ||||||
Individually evaluated for impairment | $ 12 | $ 159 | ||||
Collectively evaluated for impairment | 45,350 | 56,389 | ||||
Total ending allowance balance | 45,362 | $ 51,766 | 56,548 | $ 70,238 | $ 70,669 | $ 72,387 |
Loans: | ||||||
Loans individually evaluated for impairment | 2,643 | 19,891 | ||||
Loans collectively evaluated for impairment | 1,678,985 | 1,992,923 | ||||
Total loans | 1,681,628 | 2,012,814 | ||||
Residential real estate | ||||||
Ending allowance balance attributable to loans: | ||||||
Individually evaluated for impairment | 12 | 159 | ||||
Collectively evaluated for impairment | 28,175 | 32,043 | ||||
Total ending allowance balance | 28,187 | 29,982 | 32,202 | 33,703 | 33,064 | 32,366 |
Loans: | ||||||
Loans individually evaluated for impairment | 48 | 350 | ||||
Loans collectively evaluated for impairment | 1,430,424 | 1,703,881 | ||||
Total loans | 1,430,472 | 1,704,231 | ||||
Commercial real estate | ||||||
Ending allowance balance attributable to loans: | ||||||
Collectively evaluated for impairment | 10,767 | 12,608 | ||||
Total ending allowance balance | 10,767 | 15,035 | 12,608 | 24,582 | 22,491 | 21,942 |
Loans: | ||||||
Loans individually evaluated for impairment | 4,441 | |||||
Loans collectively evaluated for impairment | 199,446 | 196,799 | ||||
Total loans | 199,446 | 201,240 | ||||
Construction | ||||||
Ending allowance balance attributable to loans: | ||||||
Collectively evaluated for impairment | 6,370 | 11,730 | ||||
Total ending allowance balance | 6,370 | 6,708 | 11,730 | 11,899 | 15,056 | 17,988 |
Loans: | ||||||
Loans individually evaluated for impairment | 2,485 | 14,984 | ||||
Loans collectively evaluated for impairment | 47,835 | 91,775 | ||||
Total loans | 50,320 | 106,759 | ||||
Commercial lines of credit | ||||||
Ending allowance balance attributable to loans: | ||||||
Collectively evaluated for impairment | 38 | 8 | ||||
Total ending allowance balance | 38 | 36 | 8 | $ 54 | $ 58 | $ 91 |
Loans: | ||||||
Loans individually evaluated for impairment | 110 | 116 | ||||
Loans collectively evaluated for impairment | 1,279 | 247 | ||||
Total loans | 1,389 | 363 | ||||
Other consumer | ||||||
Ending allowance balance attributable to loans: | ||||||
Total ending allowance balance | $ 5 | |||||
Loans: | ||||||
Loans collectively evaluated for impairment | 1 | 221 | ||||
Total loans | $ 1 | $ 221 |
Loans - Impaired Loans by Class
Loans - Impaired Loans by Class of Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | $ 2,824 | $ 2,824 | $ 19,670 | ||
Total Unpaid Principal Balance | 2,906 | 2,906 | 19,943 | ||
Recorded investment, with no related allowance for loan losses recorded | 2,595 | 2,595 | 19,606 | ||
Total Recorded Investment | 2,643 | 2,643 | 19,891 | ||
Allowance for Loan Losses | 12 | 12 | 159 | ||
Average recorded investment, with no related allowance for loan losses recorded | 5,486 | $ 32,659 | 6,998 | $ 50,311 | |
Average recorded investment, with an allowance for loan losses recorded | 48 | 10,666 | 198 | 10,031 | |
Total Average Recorded Investment | 5,534 | 43,325 | 7,196 | 60,342 | |
Interest Income Recognized, with no related allowance for loan losses recorded | 42 | 42 | 123 | 199 | |
Interest Income Recognized, with an allowance for loan losses recorded | 2 | 57 | 3 | 184 | |
Total Interest Income Recognized | 44 | 99 | 126 | 383 | |
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | 28 | 28 | 109 | 186 | |
Cash Basis Interest Recognized, with an allowance for loan losses recorded | 2 | 39 | 3 | 166 | |
Total Cash Basis Interest Recognized | 30 | 67 | 112 | 352 | |
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 | 91 | ||||
Unpaid principal balance, with an allowance for loan losses recorded | 82 | 82 | 273 | ||
Recorded investment, with no related allowance for loan losses recorded | 65 | ||||
Recorded investment, with an allowance for loan losses recorded | 48 | 48 | 285 | ||
Allowance for Loan Losses | 12 | 12 | 159 | ||
Average recorded investment, with no related allowance for loan losses recorded | 82 | 88 | |||
Average recorded investment, with an allowance for loan losses recorded | 48 | 279 | 198 | 280 | |
Interest Income Recognized, with an allowance for loan losses recorded | 2 | 1 | 3 | 3 | |
Cash Basis Interest Recognized, with an allowance for loan losses recorded | 2 | 1 | 3 | 3 | |
Commercial real estate | Real estate loan, Retail | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 229 | 229 | |||
Average recorded investment, with no related allowance for loan losses recorded | 7 | 765 | |||
Commercial real estate | Real estate loan, Office | |||||
Impaired loans by class of loans | |||||
Average recorded investment, with no related allowance for loan losses recorded | 2,769 | 2,768 | |||
Commercial real estate | Hotels/Single-room occupancy hotels | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 4,459 | ||||
Recorded investment, with no related allowance for loan losses recorded | 4,441 | ||||
Average recorded investment, with no related allowance for loan losses recorded | 10,862 | 17,948 | |||
Commercial real estate | Real Estate Loan, Other | |||||
Impaired loans by class of loans | |||||
Average recorded investment, with no related allowance for loan losses recorded | 91 | ||||
Construction | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 2,485 | 2,485 | 15,004 | ||
Recorded investment, with no related allowance for loan losses recorded | 2,485 | 2,485 | 14,984 | ||
Average recorded investment, with no related allowance for loan losses recorded | 5,375 | 18,820 | 6,885 | 27,387 | |
Average recorded investment, with an allowance for loan losses recorded | 10,387 | 9,751 | |||
Interest Income Recognized, with no related allowance for loan losses recorded | 40 | 40 | 118 | 192 | |
Interest Income Recognized, with an allowance for loan losses recorded | 56 | 181 | |||
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | 27 | 27 | 105 | 179 | |
Cash Basis Interest Recognized, with an allowance for loan losses recorded | 38 | 163 | |||
Commercial lines of credit | Private banking | |||||
Impaired loans by class of loans | |||||
Unpaid principal balance, with no related allowance for loan losses recorded | 110 | 110 | 116 | ||
Recorded investment, with no related allowance for loan losses recorded | 110 | 110 | $ 116 | ||
Average recorded investment, with no related allowance for loan losses recorded | 111 | 119 | 113 | 1,264 | |
Interest Income Recognized, with no related allowance for loan losses recorded | 2 | 2 | 5 | 7 | |
Cash Basis Interest Recognized, with no related allowance for loan losses recorded | $ 1 | $ 1 | $ 4 | $ 7 |
Loans - Investment in Nonaccrua
Loans - Investment in Nonaccrual and Loans Past Due Still Accruing by Class of Loans (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | $ 35,843 | $ 62,615 |
Loans Past Due Over 90 Days Still Accruing | 36 | 39 |
Total | 1,681,628 | 2,012,814 |
Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 1,621,626 | 1,912,084 |
Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 60,002 | 100,730 |
30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 20,839 | 34,651 |
60 - 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 3,284 | 3,425 |
Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 35,879 | 62,654 |
Residential real estate | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 1,430,472 | 1,704,231 |
Residential real estate | Real estate loan, first mortgage | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 35,654 | 45,439 |
Loans Past Due Over 90 Days Still Accruing | 36 | 39 |
Total | 1,420,128 | 1,690,456 |
Residential real estate | Real estate loan, first mortgage | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 1,360,315 | 1,617,509 |
Residential real estate | Real estate loan, first mortgage | Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 59,813 | 72,947 |
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 | 20,839 | 24,044 |
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 | 3,284 | 3,425 |
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 | 35,690 | 45,478 |
Residential real estate | Real estate loan, second mortgage | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 189 | 236 |
Total | 10,344 | 13,775 |
Residential real estate | Real estate loan, second mortgage | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 10,155 | 13,432 |
Residential real estate | Real estate loan, second mortgage | Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 189 | 343 |
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 | 107 | |
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 | 189 | 236 |
Commercial real estate | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 199,446 | 201,240 |
Commercial real estate | Real estate loan, Retail | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 26,026 | 19,574 |
Commercial real estate | Real estate loan, Retail | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 26,026 | 19,574 |
Commercial real estate | Real estate loan, Multifamily | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 81,723 | 96,960 |
Commercial real estate | Real estate loan, Multifamily | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 81,723 | 96,960 |
Commercial real estate | Real estate loan, Office | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 18,216 | 12,382 |
Commercial real estate | Real estate loan, Office | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 18,216 | 12,382 |
Commercial real estate | Hotels/Single-room occupancy hotels | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 4,441 | |
Total | 5,240 | 14,221 |
Commercial real estate | Hotels/Single-room occupancy hotels | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 5,240 | 9,780 |
Commercial real estate | Hotels/Single-room occupancy hotels | Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 4,441 | |
Commercial real estate | 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 | 4,441 | |
Commercial real estate | Real estate loan, Industrial | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 30,372 | 7,320 |
Commercial real estate | Real estate loan, Industrial | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 30,372 | 7,320 |
Commercial real estate | Real estate loan, Other | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 37,869 | 50,783 |
Commercial real estate | Real estate loan, Other | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 37,869 | 50,783 |
Construction | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Nonaccrual | 12,499 | |
Total | 50,320 | 106,759 |
Construction | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 50,320 | 83,760 |
Construction | Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 22,999 | |
Construction | 30 - 59 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 10,500 | |
Construction | Greater than 89 Days Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 12,499 | |
Commercial lines of credit | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 1,389 | 363 |
Commercial lines of credit | Private banking | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 110 | 116 |
Commercial lines of credit | Private banking | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 110 | 116 |
Commercial lines of credit | C&I lending | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 1,279 | 247 |
Commercial lines of credit | C&I lending | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 1,279 | 247 |
Other consumer | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | 1 | 221 |
Other consumer | Not Past Due | ||
Investment in nonaccrual and loans past due still accruing by class of loans | ||
Total | $ 1 | $ 221 |
Loans - Troubled Debt Restructu
Loans - Troubled Debt Restructurings (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) loan | |
Troubled Debt Restructurings | |||||
Loans classified as troubled debt restructurings | $ 2,643 | $ 2,643 | $ 18,416 | ||
Allowance for outstanding loan losses classified as troubled debt restructurings | $ 12 | $ 12 | $ 39 | ||
Number of TDRs subsequently defaulted | loan | 5 | ||||
Number of loans modified during the period, that were considered as TDRs | 0 | 0 | 0 | 0 | |
Troubled debt restructuring that defaulted within twelve months of modification | $ 0 | $ 0 | $ 0 | $ 0 | |
Loans modified as TDRs that are in default | $ 15,752 | ||||
Residential real estate | |||||
Troubled Debt Restructurings | |||||
Loans secured by residential real estate properties in the process of foreclosure | 7,266 | 7,266 | 2,780 | ||
Mortgage loans held for sale | Residential real estate | |||||
Troubled Debt Restructurings | |||||
Loans secured by residential real estate properties in the process of foreclosure | $ 2,755 | $ 2,755 | $ 2,770 |
Loans - Risk Rating of Loans by
Loans - Risk Rating of Loans by Class of Loans (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | May 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Recorded investment in loans | |||||||
Total | $ 1,681,628 | $ 1,681,628 | $ 1,681,628 | $ 2,012,814 | |||
Charge offs | 4,064 | $ 1,965 | 4,261 | $ 1,965 | |||
Advantage Loan Program | |||||||
Recorded investment in loans | |||||||
Total | 190,467 | 190,467 | 190,467 | 171,185 | |||
Loans repurchased during the period | 35,241 | $ 30,380 | 35,241 | 6,067 | 65,621 | 173,829 | |
Pass | |||||||
Recorded investment in loans | |||||||
Total | 1,600,286 | 1,600,286 | 1,600,286 | 1,895,663 | |||
Special Mention | |||||||
Recorded investment in loans | |||||||
Total | 35,860 | 35,860 | 35,860 | 27,761 | |||
Substandard | |||||||
Recorded investment in loans | |||||||
Total | 45,482 | 45,482 | 45,482 | 83,226 | |||
Doubtful | |||||||
Recorded investment in loans | |||||||
Total | 6,164 | ||||||
Residential real estate | |||||||
Recorded investment in loans | |||||||
Total | 1,430,472 | 1,430,472 | 1,430,472 | 1,704,231 | |||
Charge offs | 197 | ||||||
Residential real estate | Real estate loan, first mortgage | |||||||
Recorded investment in loans | |||||||
Total | 1,420,128 | 1,420,128 | 1,420,128 | 1,690,456 | |||
Residential real estate | Real estate loan, second mortgage | |||||||
Recorded investment in loans | |||||||
Total | 10,344 | 10,344 | 10,344 | 13,775 | |||
Residential real estate | Pass | Real estate loan, first mortgage | |||||||
Recorded investment in loans | |||||||
Total | 1,384,438 | 1,384,438 | 1,384,438 | 1,644,974 | |||
Residential real estate | Pass | Real estate loan, second mortgage | |||||||
Recorded investment in loans | |||||||
Total | 10,155 | 10,155 | 10,155 | 13,539 | |||
Residential real estate | Substandard | Real estate loan, first mortgage | |||||||
Recorded investment in loans | |||||||
Total | 35,690 | 35,690 | 35,690 | 45,249 | |||
Residential real estate | Substandard | Real estate loan, second mortgage | |||||||
Recorded investment in loans | |||||||
Total | 189 | 189 | 189 | 236 | |||
Residential real estate | Doubtful | Real estate loan, first mortgage | |||||||
Recorded investment in loans | |||||||
Total | 233 | ||||||
Commercial real estate | |||||||
Recorded investment in loans | |||||||
Total | 199,446 | 199,446 | 199,446 | 201,240 | |||
Gain on sale of portfolio loans | 0 | ||||||
Charge offs | 4,064 | 4,064 | |||||
Net cash proceeds from sale of commercial real estate loans to third party investor | 17,794 | ||||||
Commercial real estate | Real estate loan, Retail | |||||||
Recorded investment in loans | |||||||
Total | 26,026 | 26,026 | 26,026 | 19,574 | |||
Commercial real estate | Real estate loan, Multifamily | |||||||
Recorded investment in loans | |||||||
Total | 81,723 | 81,723 | 81,723 | 96,960 | |||
Commercial real estate | Real estate loan, Office | |||||||
Recorded investment in loans | |||||||
Total | 18,216 | 18,216 | 18,216 | 12,382 | |||
Commercial real estate | Hotels/Single-room occupancy hotels | |||||||
Recorded investment in loans | |||||||
Total | 5,240 | 5,240 | 5,240 | 14,221 | |||
Commercial real estate | Real estate loan, Industrial | |||||||
Recorded investment in loans | |||||||
Total | 30,372 | 30,372 | 30,372 | 7,320 | |||
Commercial real estate | Real estate loan, Other | |||||||
Recorded investment in loans | |||||||
Total | 37,869 | 37,869 | 37,869 | 50,783 | |||
Commercial real estate | Pass | Real estate loan, Retail | |||||||
Recorded investment in loans | |||||||
Total | 26,026 | 26,026 | 26,026 | 18,846 | |||
Commercial real estate | Pass | Real estate loan, Multifamily | |||||||
Recorded investment in loans | |||||||
Total | 69,369 | 69,369 | 69,369 | 75,543 | |||
Commercial real estate | Pass | Real estate loan, Office | |||||||
Recorded investment in loans | |||||||
Total | 18,216 | 18,216 | 18,216 | 10,413 | |||
Commercial real estate | Pass | Hotels/Single-room occupancy hotels | |||||||
Recorded investment in loans | |||||||
Total | 8,205 | ||||||
Commercial real estate | Pass | Real estate loan, Industrial | |||||||
Recorded investment in loans | |||||||
Total | 30,372 | 30,372 | 30,372 | 7,320 | |||
Commercial real estate | Pass | Real estate loan, Other | |||||||
Recorded investment in loans | |||||||
Total | 22,703 | 22,703 | 22,703 | 48,996 | |||
Commercial real estate | Special Mention | Real estate loan, Retail | |||||||
Recorded investment in loans | |||||||
Total | 728 | ||||||
Commercial real estate | Special Mention | Real estate loan, Multifamily | |||||||
Recorded investment in loans | |||||||
Total | 12,354 | 12,354 | 12,354 | 8,104 | |||
Commercial real estate | Special Mention | Hotels/Single-room occupancy hotels | |||||||
Recorded investment in loans | |||||||
Total | 3,692 | 3,692 | 3,692 | ||||
Commercial real estate | Special Mention | Real estate loan, Other | |||||||
Recorded investment in loans | |||||||
Total | 15,166 | 15,166 | 15,166 | 1,692 | |||
Commercial real estate | Substandard | Real estate loan, Multifamily | |||||||
Recorded investment in loans | |||||||
Total | 13,313 | ||||||
Commercial real estate | Substandard | Real estate loan, Office | |||||||
Recorded investment in loans | |||||||
Total | 1,969 | ||||||
Commercial real estate | Substandard | Hotels/Single-room occupancy hotels | |||||||
Recorded investment in loans | |||||||
Total | 1,548 | 1,548 | 1,548 | 6,016 | |||
Commercial real estate | Substandard | Real estate loan, Other | |||||||
Recorded investment in loans | |||||||
Total | 95 | ||||||
Construction | |||||||
Recorded investment in loans | |||||||
Total | 50,320 | 50,320 | 50,320 | 106,759 | |||
Charge offs | $ 1,965 | $ 1,965 | |||||
Construction | Pass | |||||||
Recorded investment in loans | |||||||
Total | 37,617 | 37,617 | 37,617 | 67,254 | |||
Construction | Special Mention | |||||||
Recorded investment in loans | |||||||
Total | 4,648 | 4,648 | 4,648 | 17,226 | |||
Construction | Substandard | |||||||
Recorded investment in loans | |||||||
Total | 8,055 | 8,055 | 8,055 | 16,348 | |||
Construction | Doubtful | |||||||
Recorded investment in loans | |||||||
Total | 5,931 | ||||||
Commercial lines of credit | |||||||
Recorded investment in loans | |||||||
Total | 1,389 | 1,389 | 1,389 | 363 | |||
Commercial lines of credit | Private banking | |||||||
Recorded investment in loans | |||||||
Total | 110 | 110 | 110 | 116 | |||
Commercial lines of credit | C&I lending | |||||||
Recorded investment in loans | |||||||
Total | 1,279 | 1,279 | 1,279 | 247 | |||
Commercial lines of credit | Pass | Private banking | |||||||
Recorded investment in loans | |||||||
Total | 110 | 110 | 110 | 116 | |||
Commercial lines of credit | Pass | C&I lending | |||||||
Recorded investment in loans | |||||||
Total | 1,279 | 1,279 | 1,279 | 236 | |||
Commercial lines of credit | Special Mention | C&I lending | |||||||
Recorded investment in loans | |||||||
Total | 11 | ||||||
Other consumer | |||||||
Recorded investment in loans | |||||||
Total | 1 | 1 | 1 | 221 | |||
Other consumer | Pass | |||||||
Recorded investment in loans | |||||||
Total | $ 1 | $ 1 | $ 1 | $ 221 |
Mortgage Servicing Rights, ne_2
Mortgage Servicing Rights, net - Principle Balance by Category (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Mortgage Servicing Rights | ||
Total | $ 195,758 | $ 307,783 |
Custodial escrow balances maintained on serviced loans | 1,528 | 5,501 |
FNMA | ||
Mortgage Servicing Rights | ||
Total | 115,446 | 124,764 |
FHLB | ||
Mortgage Servicing Rights | ||
Total | 35,357 | 40,209 |
Private investors | ||
Mortgage Servicing Rights | ||
Total | $ 44,955 | $ 142,810 |
Mortgage Servicing Rights net -
Mortgage Servicing Rights net - Activity and Related Valuation Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Mortgage servicing rights activity | |||||
Mortgage servicing rights Beginning of period | $ 2,542 | $ 4,200 | $ 3,332 | $ 7,853 | |
Additions | 25 | 11 | 124 | ||
Amortization | (657) | (550) | (1,458) | (4,302) | |
Mortgage servicing rights End of period | 1,885 | 3,675 | 1,885 | 3,675 | |
Valuation allowance at beginning of period | 89 | 968 | 610 | 2,165 | |
Additions (recoveries) | (46) | (166) | (567) | (1,363) | |
Valuation allowance at end of period | 43 | 802 | 43 | 802 | |
Mortgage servicing rights, net | 1,842 | 2,873 | 1,842 | 2,873 | $ 2,722 |
Servicing fee loss, net of amortization of servicing rights and changes in valuation allowance | $ (384) | $ (31) | $ (118) | $ (1,369) |
Mortgage Servicing Rights, ne_3
Mortgage Servicing Rights, net - Valuation techniques (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Mortgage Servicing Rights | ||
Fair value of mortgage servicing rights | $ 2,265 | $ 2,916 |
Prepayment speed range | 10.20% | 17.60% |
Weighted average life of the mortgage servicing right | 77 months | 52 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% | 12% |
Deposits - Time deposits (Detai
Deposits - Time deposits (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Deposits | ||
Interest-bearing time deposits | $ 757,576 | $ 891,820 |
Brokered time deposits | 0 | 20,109 |
Time deposits that meet or exceed the FDIC insurance limit of $250 | $ 222,630 | $ 244,868 |
FHLB Borrowings (Details)
FHLB Borrowings (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Federal Home Loan Bank Borrowings | ||
Long-term fixed-rate FHLBNY advances | $ 50,000 | $ 150,000 |
Minimum | Long term | ||
Federal Home Loan Bank Borrowings | ||
FHLB interest rates (as a percent) | 1.96% | 0.43% |
Maximum | Long term | ||
Federal Home Loan Bank Borrowings | ||
FHLB interest rates (as a percent) | 1.96% |
FHLB Borrowings - FHLB Advances
FHLB Borrowings - FHLB Advances (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | May 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Federal Home Loan Bank Borrowings | ||||
Long-term fixed-rate FHLBNY advances | $ 50,000 | $ 50,000 | $ 150,000 | |
Additional borrowing capacity | 354,479 | 354,479 | ||
Callable Option May, 2022 | ||||
Federal Home Loan Bank Borrowings | ||||
Repayment of advance | $ 100,000 | |||
Callable Option March, 2023 | ||||
Federal Home Loan Bank Borrowings | ||||
Proceeds from FHLB advances | $ 35,000 | |||
Repayment of advance | $ 35,000 |
FHLB Borrowings - FHLB Overdraf
FHLB Borrowings - FHLB Overdraft Line of Credit and Letters of Credit (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | Sep. 30, 2021 | |
FHLB Overdraft Line of Credit and Letters of Credit | ||||
FHLB line of credit agreement maximum borrowing limit | $ 20,000 | |||
FHLB overdraft line of credit outstanding borrowings | $ 0 | |||
FHLB overdraft line of credit (as percent) | 3.45% | 0.43% | ||
FHLB letter of credit | $ 2,000 | $ 11,500 | ||
Borrowings outstanding on FHLB standby letters of credit | $ 0 | $ 0 | ||
FHLB, overdraft line of credit term | 1 year | |||
Standby letter of credit 1 expiring July, 2022 | ||||
FHLB Overdraft Line of Credit and Letters of Credit | ||||
FHLB overdraft line of credit outstanding borrowings | $ 0 | $ 0 | ||
FHLB letter of credit | $ 7,500 | |||
FHLB letter of credit term | 16 months | |||
Standby letters of credit expiring July 2024 | ||||
FHLB Overdraft Line of Credit and Letters of Credit | ||||
FHLB letter of credit | $ 4,000 | $ 2,000 | ||
FHLB letter of credit term | 36 months |
FHLB Borrowings - Other Borrowi
FHLB Borrowings - Other Borrowings (Details) - Other Banks - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Other Borrowings | |||
Maximum borrowing capacity | $ 80,000 | $ 80,000 | |
Outstanding balance | $ 0 | $ 0 |
Subordinated Notes, net (Detail
Subordinated Notes, net (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Apr. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Subordinated Notes | ||||||
Total | $ 65,290 | $ 65,290 | $ 65,343 | |||
Interest expense | 1,329 | $ 972 | 3,383 | $ 3,157 | ||
Subordinated notes | ||||||
Subordinated Notes | ||||||
Subordinated notes | 65,000 | 65,000 | 65,000 | |||
Unamortized note premium | 290 | 290 | 343 | |||
Total | 65,290 | $ 65,290 | $ 65,343 | |||
Interest rate (as a percent) | 7% | 8.33% | 5.94% | |||
Interest expense | $ 1,329 | $ 972 | $ 3,383 | |||
Redemption price percentage of outstanding principal amount | 100% | |||||
Integral multiple | $ 1 | |||||
LIBOR | Subordinated notes | ||||||
Subordinated Notes | ||||||
Variable interest rate on subordinate notes (in percent) | 5.82% | |||||
Interest expense | $ 3,157 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Apr. 30, 2022 | May 31, 2021 | Jun. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | |
Shareholders' Equity | |||||||
Issuance of shares of common stock to defined contribution retirement plan | $ 1,138 | ||||||
Issue price per share | $ 4.50 | ||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | |||||
Proceeds from issuance of shares of common stock | $ 1,350 | ||||||
Common stock, par value (in dollars per share) | $ 0 | $ 0 | |||||
Common stock | |||||||
Shareholders' Equity | |||||||
Issuance of shares of common stock to defined contribution retirement plan (in shares) | 160,978 | ||||||
Issuance of shares of common stock to defined contribution retirement plan | $ 1,138 | ||||||
Common stock | Annual matching contribution | |||||||
Shareholders' Equity | |||||||
Issuance of shares of common stock to defined contribution retirement plan (in shares) | 160,978 | ||||||
Issuance of shares of common stock to defined contribution retirement plan | $ 1,138 | ||||||
Issue price per share | $ 7.07 | ||||||
Common stock | Chief Executive Officer | |||||||
Shareholders' Equity | |||||||
Issue price per share | $ 4.50 | ||||||
Common stock, shares authorized | 300,000 | ||||||
Proceeds from issuance of shares of common stock | $ 1,350 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Stock options | |||||
Stock-based Compensation | |||||
Maximum term of stock awards granted | 10 years | ||||
Restricted Stock | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 231,842 | 234,996 | |||
Restricted Stock | Key employee | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 186,842 | ||||
Restricted Stock | Non-employee directors Restricted Stock Awards | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 45,000 | ||||
2017 Omnibus Equity Incentive Plan | |||||
Stock-based Compensation | |||||
Number of shares authorized | 4,237,100 | 4,237,100 | |||
2017 Omnibus Equity Incentive Plan | Stock options | |||||
Number of Shares | |||||
Outstanding at January 1, 2022 | 367,767 | ||||
Forfeited/expired | (18,222) | ||||
Outstanding at September 30, 2022 | 349,545 | 349,545 | 367,767 | ||
Exercisable at September 30, 2022 | 344,506 | 344,506 | |||
Weighted Average Exercise Price | |||||
Outstanding at January 1, 2022 | $ 5.41 | ||||
Forfeited/expired | 9.67 | ||||
Outstanding at September 30, 2022 | $ 5.19 | 5.19 | $ 5.41 | ||
Exercisable at September 30, 2022 | $ 5.14 | $ 5.14 | |||
Weighted Average Remaining Contractual Term | |||||
Weighted Average Remaining Contractual Term (Years) | 7 years 5 months 4 days | 8 years 1 month 17 days | |||
Weighted Average Remaining Contractual Term, Exercisable | 7 years 5 months 4 days | ||||
Aggregate Intrinsic Value | $ 609 | $ 609 | $ 525 | ||
Aggregate Intrinsic Value Exercisable | 609 | 609 | |||
Stock-based compensation costs recognized, net | 3 | $ 34 | (8) | $ 137 | |
Total unrecognized compensation cost - stock options | 3 | $ 3 | |||
2017 Omnibus Equity Incentive Plan | Stock options | Maximum | |||||
Weighted Average Remaining Contractual Term | |||||
Unrecognized compensation cost related to nonvested awards, expected to be recognized over a weighted-average period | 1 year | ||||
2017 Omnibus Equity Incentive Plan | Stock Options granted prior to 2020 | |||||
Stock-based Compensation | |||||
Percentage of awards vesting | 50% | ||||
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% | ||||
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% | ||||
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 | |||||
Shares withheld in order to pay employee tax liabilities on vested awards | 31,027 | 8,536 | |||
Stock-based compensation costs recognized | 252 | $ 162 | $ 648 | $ 357 | |
Employee tax liability associated with restricted stock awards the vested during the period | 204 | 46 | |||
Total unrecognized compensation cost - restricted stock awards | $ 2,017 | $ 2,017 | |||
Unrecognized compensation cost related to nonvested awards, expected to be recognized over a weighted-average period | 2 years 2 months 1 day | ||||
Number of Shares | |||||
Nonvested, Opening balance | 293,637 | ||||
Granted | 231,842 | ||||
Vested | (104,739) | ||||
Forfeited | (22,713) | ||||
Nonvested, Ending balance | 398,027 | 398,027 | 293,637 | ||
Weighted Average Grant Date Fair Value | |||||
Nonvested, Opening balance | $ 5.81 | ||||
Granted | 6.57 | ||||
Vested | 6.21 | ||||
Forfeited | 5.70 | ||||
Nonvested, Ending balance | $ 6.16 | $ 6.16 | $ 5.81 | ||
Grant Date Fair Value of Restricted Stock that Vested During the year | |||||
Fair value of restricted stock awards vested | $ 644 | $ 173 | |||
2020 Omnibus Equity Incentive Plan | |||||
Stock-based Compensation | |||||
Number of shares authorized | 3,979,661 | 3,979,661 | |||
2020 Omnibus Equity Incentive Plan | Stock Options granted starting in 2020 | |||||
Stock-based Compensation | |||||
Number of stock options granted | 0 | 0 | |||
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 | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 189,996 | ||||
2020 Omnibus Equity Incentive Plan | Restricted Stock | Non-employee directors Restricted Stock Awards | |||||
Stock-based Compensation | |||||
Number of share instruments issued | 45,000 |
Regulatory Capital Requiremen_3
Regulatory Capital Requirements - Actual and minimum required capital amounts and ratios and Dividend Restrictions (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2016 | |
Regulatory Capital Requirements | ||||||||
Capital conservation buffer (as a percent) | 2.50% | 2.50% | 1.875% | 1.25% | 0.625% | |||
Capital conservation buffer increase (as a percent) | 0.625% | |||||||
Risk Weighted Percentage | 100% | 100% | ||||||
Required Common Equity capital adequacy with capital conservation buffer | 0.070 | |||||||
Required Tier 1 capital adequacy with capital conservation buffer | 0.085 | |||||||
Required Total capital adequacy with capital conservation buffer | 0.105 | |||||||
Dividend Restrictions | ||||||||
Minimum percentage of assets be maintained as per Qualified Thrift Lender ("QTL") test | 65% | |||||||
Risk-weighting 100% Scenario | Advantage Loan Program | ||||||||
Regulatory Capital Requirements | ||||||||
Risk Weighted Percentage | 100% | |||||||
Total adjusted capital to risk-weighted assets, Amount | ||||||||
Actual | $ 409,170 | $ 421,732 | ||||||
For Capital Adequacy Purposes | $ 124,357 | $ 158,851 | ||||||
Total adjusted capital to risk-weighted assets, Ratio | ||||||||
Actual | 0.2621 | 0.2124 | ||||||
For Capital Adequacy Purposes | 0.0800 | 0.0800 | ||||||
Tier 1 (core) capital to risk-weighted assets, Amount | ||||||||
Actual | $ 350,162 | $ 344,247 | ||||||
For Capital Adequacy Purposes | $ 93,268 | $ 119,138 | ||||||
Tier 1 (core) capital to risk-weighted assets, Ratio | ||||||||
Actual | 0.2243 | 0.1734 | ||||||
For Capital Adequacy Purposes | 0.0600 | 0.0600 | ||||||
Common Equity Tier 1 (CET1), Amount | ||||||||
Actual | $ 350,162 | $ 344,247 | ||||||
For Capital Adequacy Purposes | $ 69,951 | $ 89,354 | ||||||
Common Equity Tier 1 (CET1), Ratio | ||||||||
Actual | 0.2243 | 0.1734 | ||||||
For Capital Adequacy Purposes | 0.0450 | 0.0450 | ||||||
Tier 1 (core) capital to adjusted tangible assets, Amount | ||||||||
Actual | $ 350,162 | $ 344,247 | ||||||
For Capital Adequacy Purposes | $ 99,151 | $ 120,039 | ||||||
Tier 1 (core) capital to adjusted tangible assets, Leverage Ratio | ||||||||
Actual | 0.1409 | 0.1147 | ||||||
For Capital Adequacy Purposes | 0.0400 | 0.0400 | ||||||
Risk-weighting 50% Scenario | Advantage Loan Program | ||||||||
Regulatory Capital Requirements | ||||||||
Risk Weighted Percentage | 50% | |||||||
Bank | Risk-weighting 100% Scenario | Advantage Loan Program | ||||||||
Total adjusted capital to risk-weighted assets, Amount | ||||||||
Actual | $ 413,262 | $ 407,699 | ||||||
For Capital Adequacy Purposes | 124,275 | 158,707 | ||||||
To be Well Capitalized | $ 155,344 | $ 198,384 | ||||||
Total adjusted capital to risk-weighted assets, Ratio | ||||||||
Actual | 0.2660 | 0.2055 | 0.1574 | 0.1208 | 0.1143 | 0.1006 | ||
For Capital Adequacy Purposes | 0.0800 | 0.0800 | ||||||
To be Well Capitalized | 0.1000 | 0.1000 | ||||||
Tier 1 (core) capital to risk-weighted assets, Amount | ||||||||
Actual | $ 393,524 | $ 382,509 | ||||||
For Capital Adequacy Purposes | 93,206 | 119,030 | ||||||
To be Well Capitalized | $ 124,275 | $ 158,707 | ||||||
Tier 1 (core) capital to risk-weighted assets, Ratio | ||||||||
Actual | 0.2533 | 0.1928 | 0.1447 | 0.1132 | 0.1066 | 0.0912 | ||
For Capital Adequacy Purposes | 0.0600 | 0.0600 | ||||||
To be Well Capitalized | 0.0800 | 0.0800 | ||||||
Common Equity Tier 1 (CET1), Amount | ||||||||
Actual | $ 393,524 | $ 382,509 | ||||||
For Capital Adequacy Purposes | 69,905 | 89,273 | ||||||
To be Well Capitalized | $ 100,974 | $ 128,950 | ||||||
Common Equity Tier 1 (CET1), Ratio | ||||||||
Actual | 0.2533 | 0.1928 | 0.1447 | 0.1132 | 0.1066 | 0.0912 | ||
For Capital Adequacy Purposes | 0.0450 | 0.0450 | ||||||
To be Well Capitalized | 0.0650 | 0.0650 | ||||||
Tier 1 (core) capital to adjusted tangible assets, Amount | ||||||||
Actual | $ 393,524 | $ 382,509 | ||||||
For Capital Adequacy Purposes | 99,103 | 119,859 | ||||||
To be Well Capitalized | $ 123,879 | $ 149,824 | ||||||
Tier 1 (core) capital to adjusted tangible assets, Leverage Ratio | ||||||||
Actual | 0.1588 | 0.1277 | 0.0920 | 0.0990 | 0.0944 | 0.0868 | ||
For Capital Adequacy Purposes | 0.0400 | 0.0400 | ||||||
To be Well Capitalized | 0.0500 | 0.0500 | ||||||
Bank | Risk-weighting 50% Scenario | Advantage Loan Program | ||||||||
Total adjusted capital to risk-weighted assets, Ratio | ||||||||
Actual | 0.2807 | 0.2156 | 0.1782 | 0.1694 | 0.1476 | |||
Tier 1 (core) capital to risk-weighted assets, Ratio | ||||||||
Actual | 0.2679 | 0.2027 | 0.1670 | 0.1580 | 0.1371 | |||
Common Equity Tier 1 (CET1), Ratio | ||||||||
Actual | 0.2679 | 0.2027 | 0.1670 | 0.1580 | 0.1371 | |||
Tier 1 (core) capital to adjusted tangible assets, Leverage Ratio | ||||||||
Actual | 0.1277 | 0.0920 | 0.0990 | 0.0944 | 0.0868 |
Regulatory Capital Requiremen_4
Regulatory Capital Requirements - Actual ratios of Company and Bank (Details) - Advantage Loan Program | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Risk-weighting 100% Scenario | ||||||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||||||
Total adjusted capital to risk weighted assets, Actual, Ratio | 0.2621 | 0.2124 | ||||
Tier 1 (core) capital to risk weighted assets, Actual, Ratio | 0.2243 | 0.1734 | ||||
Common Tier 1 (CET1), Actual, Ratio | 0.2243 | 0.1734 | ||||
Tier 1 (core) capital to adjusted tangible assets (leverage ratio) | 0.1409 | 0.1147 | ||||
Bank | Risk-weighting 100% Scenario | ||||||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||||||
Total adjusted capital to risk weighted assets, Actual, Ratio | 0.2660 | 0.2055 | 0.1574 | 0.1208 | 0.1143 | 0.1006 |
Tier 1 (core) capital to risk weighted assets, Actual, Ratio | 0.2533 | 0.1928 | 0.1447 | 0.1132 | 0.1066 | 0.0912 |
Common Tier 1 (CET1), Actual, Ratio | 0.2533 | 0.1928 | 0.1447 | 0.1132 | 0.1066 | 0.0912 |
Tier 1 (core) capital to adjusted tangible assets (leverage ratio) | 0.1588 | 0.1277 | 0.0920 | 0.0990 | 0.0944 | 0.0868 |
Bank | Risk-weighting 50% Scenario | ||||||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||||||
Total adjusted capital to risk weighted assets, Actual, Ratio | 0.2807 | 0.2156 | 0.1782 | 0.1694 | 0.1476 | |
Tier 1 (core) capital to risk weighted assets, Actual, Ratio | 0.2679 | 0.2027 | 0.1670 | 0.1580 | 0.1371 | |
Common Tier 1 (CET1), Actual, Ratio | 0.2679 | 0.2027 | 0.1670 | 0.1580 | 0.1371 | |
Tier 1 (core) capital to adjusted tangible assets (leverage ratio) | 0.1277 | 0.0920 | 0.0990 | 0.0944 | 0.0868 | |
Company | Risk-weighting 100% Scenario | ||||||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||||||
Total adjusted capital to risk weighted assets, Actual, Ratio | 0.2124 | 0.1651 | 0.1458 | 0.1482 | 0.1349 | |
Tier 1 (core) capital to risk weighted assets, Actual, Ratio | 0.1734 | 0.1265 | 0.1156 | 0.1177 | 0.1033 | |
Common Tier 1 (CET1), Actual, Ratio | 0.1734 | 0.1265 | 0.1156 | 0.1177 | 0.1033 | |
Tier 1 (core) capital to adjusted tangible assets (leverage ratio) | 0.1147 | 0.0808 | 0.1011 | 0.1042 | 0.0983 | |
Company | Risk-weighting 50% Scenario | ||||||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||||||
Total adjusted capital to risk weighted assets, Actual, Ratio | 0.2902 | 0.2258 | 0.2149 | 0.2198 | 0.2028 | |
Tier 1 (core) capital to risk weighted assets, Actual, Ratio | 0.2408 | 0.1768 | 0.1704 | 0.1745 | 0.1553 | |
Common Tier 1 (CET1), Actual, Ratio | 0.2408 | 0.1768 | 0.1704 | 0.1745 | 0.1553 | |
Tier 1 (core) capital to adjusted tangible assets (leverage ratio) | 0.1147 | 0.0808 | 0.1011 | 0.1042 | 0.0983 |
Income Per Share (Details)
Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||||||
Net income (loss) | $ 1,176 | $ (2,197) | $ 5,260 | $ 9,557 | $ 3,452 | $ 2,325 | $ 4,239 | $ 15,334 |
Denominator: | ||||||||
Weighted average common shares outstanding, basic | 50,400,412 | 50,167,295 | 50,326,951 | 50,010,341 | ||||
Weighted average effect of potentially dilutive common shares: | ||||||||
Weighted average common shares outstanding, diluted | 50,572,931 | 50,262,686 | 50,523,076 | 50,079,931 | ||||
Income per share: | ||||||||
Income (loss) per share, basic | $ 0.02 | $ 0.19 | $ 0.08 | $ 0.31 | ||||
Income (loss) per share, diluted | $ 0.02 | $ 0.19 | $ 0.08 | $ 0.31 | ||||
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive | 226,252 | 75,061 | 149,681 | 174,697 | ||||
Stock options | ||||||||
Income per share: | ||||||||
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive | 49,545 | 67,767 | 49,897 | 70,139 | ||||
Restricted Stock | ||||||||
Income per share: | ||||||||
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive | 176,707 | 7,294 | 99,784 | 104,558 | ||||
Common stock | Stock options | ||||||||
Weighted average effect of potentially dilutive common shares: | ||||||||
Incremental shares from share-based compensation | 97,884 | 55,131 | 107,671 | 48,659 | ||||
Common stock | Restricted Stock | ||||||||
Weighted average effect of potentially dilutive common shares: | ||||||||
Incremental shares from share-based compensation | 74,635 | 40,260 | 88,454 | 20,931 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended |
May 31, 2022 | Sep. 30, 2022 | |
Employee Benefit Plans | ||
Reversal of liabilities and expenses due to bank-owned life insurance surrendered | $ 4,514 | |
Income tax expense | ||
Employee Benefit Plans | ||
Tax expense due to surrender of bank-owned life insurance policies | 3,614 | |
Other expense | ||
Employee Benefit Plans | ||
Tax expense due to surrender of bank-owned life insurance policies | $ 1,314 | |
BOLI cash surrender value | ||
Employee Benefit Plans | ||
Cash surrender value | $ 24,877 | |
Increase in value of bank-owned life insurance surrendered | $ 13,142 |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments - Assets measured at fair value on a recurring basis (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | $ 348,587 | $ 308,657 |
Equity securities | ||
Equity securities | 4,386 | 4,976 |
U.S. Treasury and Agency securities | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 167,462 | 122,168 |
U.S. Treasury and Agency securities | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 167,462 | 122,168 |
U.S. Treasury and Agency securities | Level 1 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 115,484 | 48,827 |
U.S. Treasury and Agency securities | Level 2 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 51,978 | 73,341 |
Mortgage-backed securities | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 37,626 | 49,437 |
Mortgage-backed securities | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 37,626 | 49,437 |
Mortgage-backed securities | Level 2 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 37,626 | 49,437 |
Collateralized mortgage obligations | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 143,346 | 136,849 |
Collateralized mortgage obligations | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 143,346 | 136,849 |
Collateralized mortgage obligations | Level 2 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 143,346 | 136,849 |
Collateralized debt obligations | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 153 | 203 |
Collateralized debt obligations | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 153 | 203 |
Collateralized debt obligations | Level 3 | Recurring | ||
Available for sale debt securities: | ||
Available for sale debt securities, at fair value | 153 | 203 |
Equity securities | Recurring | ||
Equity securities | ||
Equity securities | 4,386 | 4,976 |
Equity securities | Level 1 | Recurring | ||
Equity securities | ||
Equity securities | $ 4,386 | $ 4,976 |
Fair Values of Financial Inst_4
Fair Values of Financial Instruments - Reconciliation and income statement classification using Level 3 inputs (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
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) | |||
Fair Value, Asset, Recurring Basis, Unobservable Input Reconciliation, Asset, Gain (Loss), Statement of Other Comprehensive Income or Comprehensive Income [Extensible Enumeration] | Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax | Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax | |
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 | $ 203 | $ 187 | $ 187 |
Included in other comprehensive income (loss) | 3 | 7 | |
Principal maturities/settlements | (53) | (3) | |
Balance of recurring Level 3 assets at end of period | 153 | 191 | 203 |
Investment income | |||
Unrealized losses on investments | (5) | $ (8) | |
Interest income | $ 5 | $ 4 |
Fair Values of Financial Inst_5
Fair Values of Financial Instruments - Assets Measured at Fair Value on a Nonrecurring Basis and Fair Value of Financial Instruments (Details) $ in Thousands | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Financial Assets | ||
Interest-bearing time deposits with other banks | $ 1,183 | $ 1,183 |
Loans held for sale | 8,833 | 64,987 |
Nonrecurring | Residential real estate | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | 86 | |
Nonrecurring | Residential real estate | Level 3 | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | 86 | |
Nonrecurring | Residential real estate | Level 3 | Sales comparison approach | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | $ 86 | |
Nonrecurring | 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 | Commercial real estate loans held for sale | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | 1,554 | $ 53,628 |
Nonrecurring | Commercial real estate loans held for sale | Level 2 | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | 1,554 | 53,628 |
Nonrecurring | Mortgage servicing rights | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | 311 | 2,052 |
Nonrecurring | Mortgage servicing rights | Level 3 | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | 311 | 2,052 |
Nonrecurring | Mortgage servicing rights | Level 3 | Discounted cash flow | ||
Fair value of financial assets and liabilities | ||
Assets measured at fair value on a nonrecurring basis | $ 311 | $ 2,052 |
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 | 0.225 | 0.371 |
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 | 0.075 | 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 | 0.118 | 0.110 |
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 | 0.195 | 0.197 |
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 | $ 352,404 | $ 411,676 |
Interest-bearing time deposits with other banks | 1,183 | 1,183 |
Loans held for sale | 7,279 | 11,359 |
Loans, net | 1,636,266 | 1,956,180 |
Financial Liabilities | ||
Time deposits | 757,576 | 891,820 |
Federal Home Loan Bank borrowings | 50,000 | 150,000 |
Subordinated notes, net | 65,290 | 65,343 |
Estimated fair value | ||
Financial Assets | ||
Cash and due from banks | 352,404 | 411,676 |
Interest-bearing time deposits with other banks | 1,183 | 1,183 |
Loans held for sale | 7,719 | 11,809 |
Loans, net | 1,676,322 | 2,025,409 |
Financial Liabilities | ||
Time deposits | 752,286 | 894,049 |
Federal Home Loan Bank borrowings | 48,260 | 152,560 |
Subordinated notes, net | 65,056 | 65,073 |
Estimated fair value | Level 1 | ||
Financial Assets | ||
Cash and due from banks | 352,404 | 411,676 |
Interest-bearing time deposits with other banks | 1,183 | 1,183 |
Estimated fair value | Level 2 | ||
Financial Assets | ||
Loans held for sale | 7,719 | 11,809 |
Financial Liabilities | ||
Time deposits | 752,286 | 894,049 |
Federal Home Loan Bank borrowings | 48,260 | 152,560 |
Subordinated notes, net | 65,056 | 65,073 |
Estimated fair value | Level 3 | ||
Financial Assets | ||
Loans, net | $ 1,676,322 | $ 2,025,409 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Controlling Shareholders | |||
Related party transactions | |||
Sublease income | $ 97 | $ 112 | $ 289 |
Commitments and Contingencies -
Commitments and Contingencies - Unfunded Commitments and Litigation (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 27, 2022 | Jan. 21, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies | ||||
OCC civil money penalty | $ 6,000 | |||
Loss contingency from Internal review of Advantage Loan Program | ||||
Commitments and Contingencies | ||||
Liability for contingent losses | $ 9,000 | $ 15,000 | ||
Demand letter from purported stockholders | ||||
Commitments and Contingencies | ||||
Plaintiff attorney's fee and expenses | $ 650 | |||
Insurance reimbursement receivable | $ 650 | |||
Unfunded Commitments to Extend Credit | Residential real estate | ||||
Commitments and Contingencies | ||||
Outstanding commitments with varying interest rates | $ 2,560 | |||
Maturity period for variable interest loans | 30 years | |||
Outstanding commitments with fixed interest rates | $ 113 | |||
Fixed interest rate (as a percentage) | 4.875% | |||
Maturity period for Fixed interest loans | 15 years | |||
Unfunded Commitments to Extend Credit | Residential real estate | Minimum | ||||
Commitments and Contingencies | ||||
Variable interest rate (as a percentage) | 4.50% | |||
Unfunded Commitments to Extend Credit | Residential real estate | Maximum | ||||
Commitments and Contingencies | ||||
Variable interest rate (as a percentage) | 5.125% | |||
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 | $ 2,673 | 23,610 | ||
Unused lines of credit | ||||
Commitments and Contingencies | ||||
Unused lines of credit | $ 20,610 | 45,805 | ||
Unused lines of credit | Minimum | ||||
Commitments and Contingencies | ||||
Variable interest rate (as a percentage) | 5.50% | |||
Maturity period for variable interest loans | 1 month | |||
Unused lines of credit | Maximum | ||||
Commitments and Contingencies | ||||
Variable interest rate (as a percentage) | 8.50% | |||
Maturity period for variable interest loans | 23 years | |||
Unused lines of credit | Residential real estate | ||||
Commitments and Contingencies | ||||
Unused lines of credit | $ 10,874 | |||
Unused lines of credit | Construction | ||||
Commitments and Contingencies | ||||
Unused lines of credit | 9,736 | |||
Standby letters of credit | ||||
Commitments and Contingencies | ||||
Unused lines of credit | $ 24 | $ 24 |
Commitments and Contingencies_2
Commitments and Contingencies - Mortgage Repurchase Liability and Offers (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | May 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies | |||||||||
Mortgage loan repurchase liability | $ 778 | $ 778 | $ 778 | $ 2,954 | |||||
Loss | 3,521 | $ 1,361 | 8,943 | $ 5,852 | |||||
Loss charged against mortgage repurchase liability | (884) | ||||||||
Advantage Loan Program | |||||||||
Commitments and Contingencies | |||||||||
Mortgage loan repurchase liability | $ 778 | $ 778 | 3,225 | $ 778 | 3,225 | $ 2,954 | $ 9,699 | $ 7,823 | |
Percentage of loans offered to each of investors to repurchase | 100% | 100% | 100% | ||||||
Loans repurchased during the period | $ 35,241 | $ 30,380 | $ 35,241 | $ 6,067 | $ 65,621 | $ 173,829 | |||
Loss | 1,608 | 695 | |||||||
Disposition of mortgage servicing rights | 487 | $ 376 | |||||||
Present - July 22, 2023 | |||||||||
Commitments and Contingencies | |||||||||
Outstanding principal balance | $ 21,392 | $ 21,392 | $ 21,392 |
Commitments and Contingencies_3
Commitments and Contingencies - Mortgage Repurchase Liability Activity and Balances (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
May 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Commitments and Contingencies | ||||
Unpaid principal balance | $ 1,636,266 | $ 1,956,266 | ||
Mortgage repurchase liability: | ||||
Balance, beginning of period | 2,954 | |||
Balance, end of the period | 778 | |||
Obligation to repurchase receivables sold member | Residential real estate | ||||
Commitments and Contingencies | ||||
Unpaid principal balance | 160,401 | 237,049 | ||
Advantage Loan Program | ||||
Mortgage repurchase liability: | ||||
Balance, beginning of period | 2,954 | $ 9,699 | ||
Net recovery | $ (622) | (670) | (963) | |
Loss on loan repurchases | 1,506 | 5,511 | ||
Balance, end of the period | 778 | $ 3,225 | ||
Advantage Loan Program | Obligation to repurchase receivables sold member | Residential real estate | ||||
Commitments and Contingencies | ||||
Unpaid principal balance | $ 44,955 | $ 142,810 |