Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 13, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | METROCITY BANKSHARES, INC. | ||
Entity Central Index Key | 0001747068 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 25,529,891 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Interactive Data Current | Yes | ||
Entity Shell Company | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Cash and due from banks | $ 270,496 | $ 130,263 |
Federal funds sold | 5,917 | 8,164 |
Cash and cash equivalents | 276,413 | 138,427 |
Securities purchased under agreements to resell | 15,000 | 15,000 |
Securities available for sale (at fair value) | 15,695 | 18,888 |
Loans held for sale | 85,793 | 56,865 |
Loans, less allowance for loan losses of $6,839 and $6,645, respectively | 1,154,323 | 1,136,930 |
Accrued interest receivable | 5,101 | 4,957 |
Federal Home Loan Bank stock | 3,842 | 1,163 |
Premises and equipment, net | 14,460 | 14,391 |
Operating lease right-of-use asset | 11,957 | |
Foreclosed real estate, net | 423 | |
SBA servicing asset, net | 8,188 | 8,446 |
Mortgage servicing asset, net | 18,068 | 14,934 |
Bank owned life insurance | 20,219 | 19,749 |
Other assets | 2,376 | 2,900 |
Total assets | 1,631,858 | 1,432,650 |
Deposits: | ||
Non interest-bearing demand | 292,008 | 299,182 |
Interest-bearing | 1,015,369 | 945,050 |
Total deposits | 1,307,377 | 1,244,232 |
Federal Home Loan Bank advances | 60,000 | |
Other borrowings | 3,129 | 4,257 |
Operating lease liability | 12,476 | |
Accrued interest payable | 890 | 1,251 |
Other liabilities | 31,262 | 14,302 |
Total liabilities | 1,415,134 | 1,264,042 |
Shareholders' Equity: | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding | ||
Common stock, $0.01 par value, 40,000,000 shares authorized, 25,529,891 and 24,258,062 shares issued and outstanding | 255 | 242 |
Additional paid-in capital | 53,854 | 39,915 |
Retained earnings | 162,616 | 128,555 |
Accumulated other comprehensive loss | (1) | (104) |
Total shareholders' equity | 216,724 | 168,608 |
Total liabilities and shareholders' equity | $ 1,631,858 | $ 1,432,650 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for loan losses | $ 6,839 | $ 6,645 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 25,529,891 | 24,258,062 |
Common stock, shares outstanding | 25,529,891 | 24,258,062 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Interest and dividend income: | |||
Loans, including fees | $ 79,338 | $ 70,246 | $ 59,110 |
Other investment income | 3,294 | 2,169 | 1,190 |
Federal funds sold | 581 | 464 | 214 |
Total interest income | 83,213 | 72,879 | 60,514 |
Interest expense: | |||
Deposits | 21,951 | 14,011 | 7,729 |
FHLB advances and other borrowings | 287 | 664 | 890 |
Total interest expense | 22,238 | 14,675 | 8,619 |
Net interest income | 60,975 | 58,204 | 51,895 |
Provision for loan losses | 1,237 | 3,058 | |
Net interest income after provision for loan losses | 60,975 | 56,967 | 48,837 |
Noninterest income: | |||
Service charges on deposit accounts | 1,107 | 1,036 | 1,274 |
Other service charges, commissions and fees | 10,384 | 10,395 | 8,237 |
Gain on sale of residential mortgage loans | 9,141 | 5,679 | 3,035 |
Mortgage servicing income, net | 9,294 | 11,994 | 8,168 |
Gain on sale of SBA loans | 5,444 | 4,616 | 6,347 |
SBA servicing income, net | 3,745 | 3,119 | 4,527 |
Other income | 778 | 770 | 817 |
Total noninterest income | 39,893 | 37,609 | 32,405 |
Noninterest expense: | |||
Salaries and employee benefits | 24,923 | 23,569 | 17,956 |
Occupancy and equipment | 4,749 | 4,086 | 2,968 |
Data processing | 1,029 | 842 | 801 |
Advertising | 649 | 613 | 634 |
Other expenses | 8,650 | 9,465 | 8,833 |
Total noninterest expense | 40,000 | 38,575 | 31,192 |
Income before provision for income taxes | 60,868 | 56,001 | 50,050 |
Provision for income taxes | 16,150 | 14,667 | 18,153 |
Net income | $ 44,718 | $ 41,334 | $ 31,897 |
Earnings per share: | |||
Basic (in dollars per share) | $ 1.82 | $ 1.71 | $ 1.34 |
Diluted (in dollars per share) | $ 1.81 | $ 1.69 | $ 1.32 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 44,718 | $ 41,334 | $ 31,897 |
Other comprehensive income (loss): | |||
Unrealized holding gains (losses) on securities available for sale arising during the period | 148 | (46) | (10) |
Tax effect | (45) | (3) | 3 |
Other comprehensive income (loss) | 103 | (49) | (7) |
Comprehensive income | $ 44,821 | $ 41,285 | $ 31,890 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning Balance at Dec. 31, 2016 | $ 236 | $ 37,019 | $ 70,067 | $ (61) | $ 107,261 |
Beginning Balance (in shares) at Dec. 31, 2016 | 23,642,510 | ||||
Stockholders' Equity | |||||
Net income | 31,897 | 31,897 | |||
Stock based compensation expense | 718 | 718 | |||
Vesting of restricted stock | $ 2 | (2) | |||
Vesting of restricted stock (in shares) | 172,372 | ||||
Stock option exercise | $ 2 | 683 | 685 | ||
Stock option exercise (in shares) | 260,000 | ||||
Other comprehensive income (loss) | (7) | (7) | |||
Dividends on common stock | (5,439) | (5,439) | |||
Ending Balance at Dec. 31, 2017 | $ 240 | 38,418 | 96,525 | (68) | 135,115 |
Ending Balance (in shares) at Dec. 31, 2017 | 24,074,882 | ||||
Stockholders' Equity | |||||
Net income | 41,334 | 41,334 | |||
Stock based compensation expense | 1,499 | 1,499 | |||
Vesting of restricted stock | $ 2 | (2) | |||
Vesting of restricted stock (in shares) | 183,180 | ||||
Impact of adoption of new accounting standard | 2018-02 | (13) | 13 | |||
Other comprehensive income (loss) | (49) | (49) | |||
Dividends on common stock | (9,291) | (9,291) | |||
Ending Balance at Dec. 31, 2018 | $ 242 | 39,915 | 128,555 | (104) | 168,608 |
Ending Balance (in shares) at Dec. 31, 2018 | 24,258,062 | ||||
Stockholders' Equity | |||||
Net income | 44,718 | 44,718 | |||
Stock based compensation expense | 1,526 | 1,526 | |||
Vesting of restricted stock | $ 2 | (2) | |||
Vesting of restricted stock (in shares) | 157,316 | ||||
Repurchase and retirement of common stock | $ (1) | (1,484) | (1,485) | ||
Repurchase and retirement of common stock (in shares) | (110,000) | ||||
Issuance of common stock through IPO, net of expenses of $1.6 million | $ 12 | 13,899 | 13,911 | ||
Issuance of common stock through IPO, net of expenses of $1.6 million (in shares) | 1,224,513 | ||||
Impact of adoption of new accounting standard | 2016-02 | (255) | (255) | |||
Other comprehensive income (loss) | 103 | 103 | |||
Dividends on common stock | (10,402) | (10,402) | |||
Ending Balance at Dec. 31, 2019 | $ 255 | $ 53,854 | $ 162,616 | $ (1) | $ 216,724 |
Ending Balance (in shares) at Dec. 31, 2019 | 25,529,891 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Initial public offering issuance costs | $ 1.6 | ||
Common Stock | |||
Dividend on common stock declared (in dollars per share) | $ 0.42 | $ 0.38 | $ 0.23 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flow from operating activities: | |||
Net income | $ 44,718 | $ 41,334 | $ 31,897 |
Adjustments to reconcile net income to net cash provided (used) by operating activities: | |||
Depreciation, amortization and accretion | 2,718 | 899 | 593 |
Provision for loan losses | 1,237 | 3,058 | |
Stock based compensation expense | 1,526 | 1,499 | 718 |
Write-down of abandoned leasehold improvements | 289 | ||
Gain on sale of foreclosed real estate | (36) | 8 | |
Deferred income tax expense (benefit) | 1,088 | 355 | (134) |
Origination of residential real estate loans held for sale | (549,185) | (716,140) | (235,119) |
Proceeds from sales of residential real estate loans | 529,398 | 541,690 | 365,044 |
Gain on sale of residential mortgages | (9,141) | (5,679) | (3,035) |
Origination of SBA loans held for sale | (121,347) | (121,009) | (85,932) |
Proceeds from sales of SBA loans held for sale | 126,791 | 97,957 | 92,278 |
Gain on sale of SBA loans | (5,444) | (4,616) | (6,347) |
Increase in cash value of bank owned life insurance | (470) | (478) | (510) |
Increase in accrued interest receivable | (144) | (201) | (988) |
Decrease (increase) in SBA servicing rights | 258 | 920 | (512) |
Increase in mortgage servicing rights | (3,134) | (8,091) | (6,843) |
Decrease (increase) in other assets | 480 | 2,644 | (3,687) |
(Decrease) increase in accrued interest payable | (361) | 850 | 45 |
Increase in other liabilities | 14,448 | 5,874 | 989 |
Net cash flow provided (used) by operating activities | 32,199 | (160,991) | 151,812 |
Cash flow from investing activities: | |||
Purchases of securities under resell agreements | (15,000) | ||
Purchases of securities available for sale | (1,250) | ||
Proceeds from maturities, calls or paydowns of securities available for sale | 3,304 | 2,075 | 8,040 |
(Purchase) redemption of Federal Home Loan Bank stock | (2,679) | 4,929 | (867) |
(Increase) decrease in loans, net | (17,816) | 104,354 | (263,086) |
Purchases of premises and equipment | (1,098) | (2,855) | (5,912) |
Proceeds from sales of foreclosed real estate owned | 907 | 133 | |
Net cash flow (used) provided by investing activities | (18,289) | 109,410 | (277,942) |
Cash flow from financing activities: | |||
Increase in deposits, net | 63,145 | 224,248 | 149,117 |
Proceeds (repayments) from Federal Home Loan Bank advances | 60,000 | (120,000) | 11,300 |
Decrease in other borrowings, net | (1,128) | (782) | (302) |
Exercise of stock options | 685 | ||
Issuance of common stock, net of expenses | 13,911 | ||
Repurchase of common stock | (1,485) | ||
Dividends paid on common stock | (10,367) | (9,291) | (5,401) |
Net cash flow provided by financing activities | 124,076 | 94,175 | 155,399 |
Net change in cash and cash equivalents | 137,986 | 42,594 | 29,269 |
Cash and cash equivalents at beginning of period | 138,427 | 95,833 | 66,564 |
Cash and cash equivalents at end of period | 276,413 | 138,427 | 95,833 |
Supplemental schedule of noncash investing and financing activities: | |||
Transfer of loan principal to foreclosed real estate, net of write-downs | 423 | 261 | 387 |
Initial recognition of operating lease right-of-use assets | 13,610 | ||
Initial recognition of operating lease liabilities | 14,011 | ||
Supplemental disclosures of cash flow information-Cash paid during the year for: | |||
Interest | 22,599 | 13,825 | 8,575 |
Income taxes | $ 12,490 | $ 10,400 | $ 20,087 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES Nature of Operations MetroCity Bankshares, Inc. (the “Company”) was formed for the sole purpose of owning and operating its wholly owned subsidiary, Metro City Bank (the “Bank”). The Company acquired all of the outstanding common stock of the Bank in a holding company formation transaction on December 31, 2014. The Bank is a Georgia state chartered bank and commenced operations in 2006. The Bank’s main office is located in Doraville, Georgia, and it operates branches in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia. The main emphasis of the Bank is on commercial banking and it offers such customary banking services as consumer and commercial checking accounts, savings accounts, certificates of deposit, commercial and consumer loans, including single family residential loans, money transfers and a variety of other banking services. The Company is subject to the regulations of Federal and State banking agencies and is periodically examined by them. In October 2019, the Company completed the initial public offering of its common stock pursuant to a registration statement on Form S-1 (File No. 333-233625), which was declared effective by the SEC on October 2, 2019. The Company sold 1,224,513 shares of its common stock at a public offering price of $13.50 per share in the offering, including 224,513 shares sold pursuant to the exercise of the underwriters’ option to purchase additional shares on October 30, 2019, for an aggregate price of approximately $16.5 million and certain selling stockholders sold 939,000 shares in the offering. The Company received net proceeds of approximately $13.9 million, after deducting underwriting discounts and commissions of approximately $1.1 million and expenses of approximately $1.6 million. Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and with general practices within the financial services industry. Certain prior period amounts have been reclassified to conform to the current year presentation. The Company has evaluated subsequent events for recognition and disclosure through the date these consolidated financial statements were issued. On August 30, 2019, the Company effected a 2-for-1 common stock split, as approved by the Company’s Board of Directors. Common stock and per share data included in these financial statements have been restated to reflect this stock split. Use of Estimates The preparation of financial statements in conformity with 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Significant Group Concentrations of Credit Risk A substantial portion of the Company’s loan portfolio is to customers in the Atlanta, Georgia and New York, New York metropolitan areas. The ultimate collectability of a substantial portion of the portfolio is therefore susceptible to changes in the economic and market condition in and around this area. The nature of the Company’s business requires that it maintain amounts due from banks, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. Cash and Cash Equivalents For purposes of presentation in the statement of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption “cash and due from banks,” which includes cash on hand, cash items in process of collection, and amounts due from banks. Cash flows from loans, federal funds sold, other borrowings, and deposits are reported net. Cash on hand or on deposit with the Federal Reserve Bank was required to meet regulatory reserve and clearing requirements. These amounts were $ 16.4 million and $14.4 million as of December 31, 2019 and 2018, respectively and are included in Cash and Due from Banks. Securities Purchased Under Agreements to Resell The Company enters into purchases of securities under agreements to resell substantially identical securities. Securities purchased under agreements to resell consist of U.S. Treasury securities. The amounts advanced under these agreements are reflected as assets. It is the Company’s policy to take possession of securities purchased under agreements to resell. Agreements with third parties specify the Company’s rights to request additional collateral, based on its monitoring of the fair value of the underlying securities on a daily basis. The securities are delivered by appropriate entry into the Company’s account maintained at the Federal Reserve Bank or into a third-party custodian’s account designated under a written custodial agreement that explicitly recognizes the Company’s interest in the securities. These agreements renew monthly until cancelled. Investment Securities Debt securities that management has the intent and ability to hold to maturity are classified as securities held to maturity and are recorded at amortized cost. Securities not classified as securities held to maturity, including equity securities with readily, determinable fair values, are securities available for sale and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss), net of the related tax effect. There were no held to maturity or trading securities at December 31, 2019 and 2018. Purchase premiums and discounts are recognized in interest income using methods approximating the interest method over the terms of the securities. A decline in the market value of any available for sale or held to maturity security below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security. The general standards of accounting for other than temporary impairment (OTTI) losses requires the recognition of an OTTI loss in earnings only when an entity (1) intends to sell the debt security; (2) more likely than not will be required to sell the security before recovery of its amortized cost basis or (3) does not expect to recover the entire amortized cost basis of the security. Realized gains and losses for securities classified as available for sale and held to maturity are included in earnings and are derived using the specific identification method for determining the amortized cost of securities sold. Federal Home Loan Bank Stock Federal Home Loan Bank (FHLB) stock represents an equity interest in a FHLB. It does not have a readily determinable fair value because its ownership is restricted and it lacks a market. The amount of FHLB stock held by the Company is required by the FHLB to be maintained and is based on membership requirements and terms of advance agreements. Such restricted equity securities without a readily determinable fair value are recorded at cost. The Company believes its holdings in the stock is ultimately recoverable at par value and therefore determined that FHLB stock was not other-than-temporarily impaired. In addition, the Company has ample liquidity and does not require redemption of its FHLB stock in the foreseeable future. Loans Held for Sale Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Loans transferred to the held-for-sale category are transferred at the lower of cost or fair value, with charges made recognized as a realized loss on sale of loans. Increases in fair value are not recognized until the loans are sold. Realized gains and losses on sales of loans are based upon specific identification of the loan sold and included in noninterest income. Loans held for sale are generally sold with servicing rights retained and recorded at fair value at sale as servicing assets. The Company typically sells the guaranteed portion of SBA loans and retains the unguaranteed portion (“retained interest”). A portion of the premium on sale of SBA loans is recognized as gain on sale of loans at the time of the sale by allocating the carrying amount between the asset sold and the retained interest, including these servicing assets, based on their relative fair values. The remaining portion of the premium is recorded as a discount on the retained interest and is amortized over the remaining life of the loan as an adjustment to yield. The retained interest, net of any discount, are included in loans, less allowance for loan losses in the accompanying consolidated balance sheets. Loans Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal, adjusted for any charge-offs, the allowance for loan losses, any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. Interest on commercial, real estate loans and installment loans is credited to income on a daily basis based upon the principal amount outstanding. Loan origination fees and certain direct origination costs, less the costs associated with closing the loan, are capitalized and recognized as an adjustment of the yield of the related loan. Interest income on mortgage and commercial loans is discontinued and placed on non-accrual status at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Mortgage loans are charged off at 180 days past due, and commercial loans are charged off to the extent principal or interest is deemed uncollectible. Consumer loans continue to accrue interest until they are charged off no later than 120 days past due unless the loan is in the process of collection. Past-due status is based on the contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Non-accrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. When interest accrual is discontinued, all unpaid accrued interest is reversed against current interest income. Interest income is subsequently recognized only to the extent cash payments are received. Loans are returned to accrual status when all the principal and interest amounts contractually due are reasonably assured of repayment within a reasonable time frame. A loan is considered impaired when, based on current information and events, it is probable the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impaired loans are measured by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the estimated fair value of the collateral if the loan is collateral dependent. The amount of impairment, if any, and any subsequent changes are included in the allowance for loan losses. The Company has sold guaranteed portions of Small Business Administration (SBA) loans in the SBA secondary market and continues to service these loans. Gains or losses on guaranteed portions of SBA loans which are sold are recorded in other income, based on the net proceeds received and the basis in the portion of the loan sold. The basis in the portion of the loan sold is determined by allocating a portion of the loan carrying value to the portion sold based on its fair value, relative to the fair value of the portion of the loan retained and the estimated servicing asset. Purchased Loans Purchased loans having evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments, are accounted for under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality . ASC 310-30 requires that acquired credit-impaired loans to be recorded at fair value and prohibits carryover of the related allowance for loan losses. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the non-accretable discount. The Company must estimate expected cash flows at each reporting date. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior provisions and adjust accretable discount if no prior provisions have been made. This increase in accretable discount will have a positive impact on interest income. In addition, purchased loans without evidence of credit deterioration are also handled under this method. Loans acquired that do not have evidence of credit deterioration since origination are accounted for under ASC 310-20, Nonrefundable Fees and Other Costs . Interest is recognized using the simple interest method. Allowance for Loan Losses The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to expense. The allowance for loan losses is increased by provision charges to income and decreased by charge-offs (net of recoveries). Loans are charged against the allowance for loan losses when management believes the collection of the principal is unlikely. The allowance for loan losses is maintained at a level believed adequate by management to absorb estimated probable inherent loan losses and estimated losses relating to specifically identified loans. Management’s periodic evaluation of the adequacy of the allowance is based upon many factors, including loan growth, net charge-offs, changes in the composition of the loan portfolio, delinquencies, management’s assessment of the quality of the loan portfolio, the valuation of problem loans and the general economic conditions in our market areas. This evaluation is inherently subjective as it requires material estimates that are susceptible to significant change including the amounts and timing of future cash flows expected to be received on impaired loans. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for losses on loans. Such agencies may require the Company to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated. The allowance for loan losses may consist of specific, general, and unallocated components. The specific component relates to loans that are classified as impaired. A loan is considered impaired when, based on current information and events, it is probable the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (TDRs) and classified as impaired. Impaired loans are measured by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the estimated fair value of the collateral if the loan is collateral dependent. The amount of the impairment, if any, and any subsequent changes are included in the allowance for loan losses. General allowances are established for non-impaired loans. These loans are assigned a risk rating, and the allocated allowance for loan losses is determined based upon the loss percentage factors that correspond to each risk rating. Loss percentage factors are based on both historical loss experience and peer data, adjusted for qualitative factors. The qualitative factors consider credit concentrations, recent levels and trends in delinquencies and nonaccrual loans, and growth in the loan portfolio. The occurrence of certain events could result in changes to the loss factors. Accordingly, these loss factors are reviewed periodically and modified by management. General allowances are established for loans that can be pooled into pools based on similar characteristics. Loss percentage factors applied to these pools are based on an analysis of historical charge-off experience and expected losses given default derived from the Company’s internal risk rating process. These factors are developed and applied to the portfolio in terms of loan type and line of business. Adjustments are also made to the allowance for the pools after an assessment of internal and external influences on credit quality that have not yet been reflected in the historical loss or risk rating data. The general allowances are determined based on consideration of historical loss data, the various risk characteristics of each loan segment, and whether the loans are within or outside the Company’s general market area. Risk characteristics relevant to each portfolio segment are as follows: Construction and development – Loans in this segment primarily include real estate development loans for which payment is derived from the sale of the property as well as construction projects in which the property will ultimately be used by the borrower. Credit risk is affected by cost overruns, time to sell at an adequate price, and market conditions. Commercial real estate – Loans in this segment are primarily income-producing properties. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Management monitors the cash flows of these loans. Commercial and industrial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased customer spending, will have an effect on the credit quality in this segment. Single family residential mortgages – Loans in this segment include loans for residential real estate. Loans in this segment are dependent on credit quality of the individual borrower. The overall health of the economy, including unemployment rates will have an effect on the credit quality of this segment. Consumer and other – Loans in this segment are made to individuals and are secured by personal assets, as well as loans for farmland and other loans. Loans in this segment are dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates will have an effect on the credit quality in this segment. Foreclosed Real Estate Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and are initially recorded at the lesser of the investment in the property or fair value less selling costs at the date of foreclosure establishing a new cost basis. Any write down to fair value at the time of foreclosure is charged to the allowance for loan losses. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of carrying amount or fair value less cost to sell. Costs of improvements are capitalized, whereas costs relating to holding foreclosed real estate and subsequent adjustment to the value are expensed. Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation, computed principally on the straight-line method over the estimated useful lives of the assets. Leasehold improvements have a useful life equal to the shorter of useful life or lease term. Maintenance and repairs that do not extend the useful life of the premises and equipment are charged to expense. The useful lives of premises and equipment are as follows: Asset Type Useful Life Building 40 years Leasehold improvements 3-20 years Furniture, fixtures, and equipment 5-7 years Computer equipment 4-5 years Computer software 3 years Intangible Assets Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. SBA and USDA Loan Servicing Rights SBA and USDA Loan servicing rights on originated loans that have been sold are capitalized by allocating the total cost of the loans between the loan servicing rights and the loans based on their relative fair values. Capitalized servicing rights are measured at fair value at each reporting date and changes in fair value are reported in earnings in the period they occur. Fair values are estimated using either an independent valuation or by discounted cash flows based on a current market interest rate. Residential Mortgage Servicing Rights When residential mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. Residential mortgage servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Residential mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Residential mortgage servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal; or a fixed amount per loan and are recorded as income when earned. The amortization of residential mortgage servicing rights is netted against loan servicing fee income. Bank Owned Life Insurance (BOLI) The Company has purchased life insurance on the lives of certain key officers of the Company. The Company purchased these life insurance policies to generate income to offset the Company’s cost of providing various employee benefits. BOLI is recorded at its cash surrender value, net of surrender charges and/or early termination charges that are probable at settlement. The increase in cash value is recorded as other income. Stock Based Compensation Plan The Company follows Financial Accounting Standards Board (FASB) ASC 718, Compensation - Stock Compensation , which requires all share-based payments to employees, including grants of employee stock options and restricted stock, to be recognized as compensation expense in the financial statements based on fair value. FASB ASC 718 requires recognition of expense equal to the fair value of the option or restricted stock share, determined using the calculated value method, over the vesting period of the option. As of December 31, 2019, there was $714,000 of unrecognized compensation cost related to stock options and $1. 1 million of unrecognized compensation cost for restricted stock outstanding. The compensation cost for stock options and restricted stock recognized in net income was $1.5 million for the years ended December 31, 2019 and 2018, respectively. The fair value of stock options and warrants used to compute the recognized expense is estimated using the Black-Scholes option pricing model. This model requires input of subjective assumptions, including the expected price volatility of the underlying stock. Projected data related to the expected volatility and expected life of the stock option is based upon historical and other information. Changes in these subjective assumptions can materially affect the fair value estimates. Prior to becoming a public company in October 2019, FASB ASC 718 allowed non-public companies to use calculated value to determine the expected price volatility of underlying stock for use in the model. For options granted prior to 2019, the calculated value for the Company was obtained by determining the historical volatility of public companies in the Company’s industry sector. Income Taxes The provision for income taxes is based on income and expense reported for financial statement purposes after the adjustment for permanent differences such as tax-exempt income. Deferred income tax assets and liabilities are determined using the balance sheet method, reflecting a net deferred tax asset or liability based on the tax effects of the temporary differences between the book and tax bases of assets and liabilities, giving recognition to changes in tax rates and laws. A net deferred tax asset is evaluated for realization, and reduced by a valuation allowance when determined it is more likely than not that the asset will not be fully realized. In accordance with ASC 740-10 Income Taxes it is the Company’s policy to recognize interest and penalties associated with uncertain tax positions as components of income taxes and to disclose the recognized interest and penalties, if material. Management has evaluated all tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain tax positions at December 31, 2019 and 2018. Further, all years subsequent to 2016 remain subject to evaluation. Earnings Per Share Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. All outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements. Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. Loan Commitments and Related Financial Instruments In the ordinary course of business, the Company has entered into off balance sheet financial instruments, which are not reflected in the financial statements and consist of commitments to extend credit, commercial letters of credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable. The Company uses the same credit policies for these off-balance-sheet financial instruments as it does for other instruments that are recorded in the financial statements. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Quoted market prices, if available, are utilized as estimates of the fair values of financial instruments. Since no quoted market prices exist for a significant part of the Company's financial instruments, the fair values of such instruments have been derived based on management's assumptions, the estimated amount and timing of future cash flows and estimated discount rates. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters which will have a material effect on the financial statements. Fair Value of Financial Instruments Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 15. Fair value estimates involve uncertainties and matters of significant judgement regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates. Operating Segments While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment. Reclassifications Some items in the prior year financial statements were reclassified to conform to current presentation. Reclassifications had no effect on prior years net income or shareholders’ equity. Recently Adopted Accounting Pronouncements In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) to provide guidance on the treatment of the income tax effects of items in other comprehensive income resulting from the recently enacted Tax Cuts and Jobs Act. Under previous guidance, when revaluing any deferred tax assets or liabilities to the newly enacted rate, any associated items in accumulated other comprehensive income would not have been revalued reflecting the appropriate tax rate and would have been instead left in accumulated other comprehensive income as a stranded tax effect. The new standard allows for |
SECURITIES AVAILABLE FOR SALE
SECURITIES AVAILABLE FOR SALE | 12 Months Ended |
Dec. 31, 2019 | |
SECURITIES AVAILABLE FOR SALE. | |
SECURITIES AVAILABLE FOR SALE | NOTE 2 – SECURITIES AVAILABLE FOR SALE The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale as of December 31, 2019 and 2018 are summarized as follows: December 31, 2019 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 12,436 $ — $ — $ 12,436 States and political subdivisions 1,246 33 — 1,279 Mortgage-backed GSE residential 2,015 — (35) 1,980 Total $ 15,697 $ 33 $ (35) $ 15,695 December 31, 2018 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 15,183 $ — $ — $ 15,183 States and political subdivisions 1,248 — (35) 1,213 Mortgage-backed GSE residential 2,607 — (115) 2,492 Total $ 19,038 $ — $ (150) $ 18,888 The amortized costs and estimated fair values of investment securities available for sale at December 31, 2019, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities Available for Sale Amortized Estimated (Dollars in thousands) Cost Fair Value Due in one year or less $ 810 $ 810 Due after one year but less than five years 2,324 2,324 Due after five years but less than ten years 4,241 4,274 Due in more than ten years 6,307 6,307 Mortgage-backed GSE residential 2,015 1,980 Total $ 15,697 $ 15,695 There were no securities pledged as of December 31, 2019 and 2018 to secure public deposits and repurchase agreements. There were no securities sold during 2019, 2018 and 2017. Information pertaining to securities with gross unrealized losses at December 31, 2019 and 2018 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows: December 31, 2019 Twelve Months or Less Over Twelve Months Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair (Dollars in thousands) Losses Value Losses Value Mortgage-backed GSE residential — — (35) 1,975 Total $ — $ — $ (35) $ 1,975 December 31, 2018 Twelve Months or Less Over Twelve Months Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair (Dollars in thousands) Losses Value Losses Value States and political subdivisions $ (35) $ 1,213 $ — $ — Mortgage-backed GSE residential — — (115) 2,492 Total $ (35) $ 1,213 $ (115) $ 2,492 Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. At December 31, 2019, the three debt securities with unrealized losses have depreciated 1.72% from the Company’s amortized cost basis and have been in a loss position for greater than twelve months. Mortgage-backed GSE residential. The Company’s unrealized loss on three investments in residential GSE mortgage-backed securities was caused by interest rate increases. The contractual cash flows of the investment are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the security would not be settled at a price less than the amortized cost base of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has no immediate plans to sell the investment, and because it is not more likely than not that the Company will be required to sell the investment before recovery of their amortized cost base, which may be maturity, management does not consider this investment to be other-than-temporarily impaired at December 31, 2019. |
LOANS AND ALLOWANCE FOR LOAN LO
LOANS AND ALLOWANCE FOR LOAN LOSSES | 12 Months Ended |
Dec. 31, 2019 | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES Major classifications of loans at December 31, 2019 and 2018 are summarized as follows: December 31, (Dollars in thousands) 2019 2018 Construction and development $ 31,739 $ 42,718 Commercial real estate 424,950 396,598 Commercial and industrial 53,105 33,100 Residential real estate 651,645 670,341 Consumer and other 1,768 2,957 Total loans receivable 1,163,207 1,145,714 Unearned income (2,045) (2,139) Allowance for loan losses (6,839) (6,645) Loans, net $ 1,154,323 $ 1,136,930 In the normal course of business, the Company may sell and purchase loan participations to and from other financial institutions and related parties. Loan participations are typically sold to comply with the legal lending limits per borrower as imposed by regulatory authorities. The participations are sold without recourse and the Company imposes no transfer or ownership restrictions on the purchaser. A summary of changes in the allowance for loan losses by portfolio segment for years ended December 31, 2019, 2018 and 2017 is as follows: Year Ended December 31, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Charge-offs — (237) (14) — (525) — (776) Recoveries — 752 — — 218 — 970 Provision (104) (796) 82 415 11 392 — Ending balance $ 131 $ 2,320 $ 448 $ 3,457 $ 91 $ 392 $ 6,839 Year Ended December 31, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 127 $ 2,135 $ 261 $ 3,048 $ 1,170 $ 184 $ 6,925 Charge-offs — (88) (39) — (1,939) — (2,066) Recoveries — 22 — — 527 — 549 Provision 108 532 158 (6) 629 (184) 1,237 Ending balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Year Ended December 31, 2017 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 116 $ 2,854 $ 257 $ 1,656 $ 5 $ 582 $ 5,470 Charge-offs — (131) — — (1,513) — (1,644) Recoveries — 41 — — — — 41 Provision 11 (629) 4 1,392 2,678 (398) 3,058 Ending balance $ 127 $ 2,135 $ 261 $ 3,048 $ 1,170 $ 184 $ 6,925 The following tables present, by portfolio segment, the balance in the allowance for loan losses disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans as of December 31, 2019 and 2018. December 31, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Individually evaluated for impairment $ — $ 716 $ 30 $ — $ — $ — $ 746 Collectively evaluated for impairment 131 1,604 418 3,457 9 392 6,011 Acquired with deteriorated credit quality — — — — 82 — 82 Total ending allowance balance $ 131 $ 2,320 $ 448 $ 3,457 $ 91 $ 392 $ 6,839 Loans: Individually evaluated for impairment $ 1,360 $ 7,527 $ 957 $ 7,936 $ — $ — $ 17,780 Collectively evaluated for impairment 30,076 415,773 52,056 643,709 958 — 1,142,572 Acquired with deteriorated credit quality — — — — 810 — 810 Total ending loans balance $ 31,436 $ 423,300 $ 53,013 $ 651,645 $ 1,768 $ — $ 1,161,162 December 31, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Individually evaluated for impairment $ 117 $ 872 $ 110 $ — $ — $ — $ 1,099 Collectively evaluated for impairment 118 1,729 270 3,042 3 — 5,162 Acquired with deteriorated credit quality — — — — 384 — 384 Total ending allowance balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Loans: Individually evaluated for impairment $ 1,360 $ 8,144 $ 986 $ 1,722 $ — $ — $ 12,212 Collectively evaluated for impairment 40,928 386,819 32,040 668,619 316 — 1,128,722 Acquired with deteriorated credit quality — — — — 2,641 — 2,641 Total ending loans balance $ 42,288 $ 394,963 $ 33,026 $ 670,341 $ 2,957 $ — $ 1,143,575 Impaired loans as of December 31, 2019 and 2018, by portfolio segment, are as follows: Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2019 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ 1,360 $ — $ 1,360 $ — Commercial real estate 7,527 4,716 2,882 7,598 716 Commercial and industrial 957 925 39 964 30 Residential real estate 7,936 7,936 — 7,936 — Total $ 17,780 $ 14,937 $ 2,921 $ 17,858 $ 746 Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2018 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ — $ 1,360 $ 1,360 $ 117 Commercial real estate 8,144 5,312 2,967 8,279 872 Commercial and industrial 986 302 684 986 110 Residential real estate 1,722 1,722 — 1,722 — Total $ 12,212 $ 7,336 $ 5,011 $ 12,347 $ 1,099 The average recorded investment in impaired loans and interest income recognized on the cash and accrual basis for the years ended December 31, 2019, 2018 and 2017, by portfolio segment, are summarized in the tables below. Years Ended December 31, 2019 2018 2017 Average Interest Average Interest Average Interest Recorded Income Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Investment Recognized Construction and development $ 1,360 $ 6 $ 1,922 $ 68 $ 2,610 $ 95 Commercial real estate 8,057 629 7,474 653 6,972 431 Commercial and industrial 966 33 1,165 25 900 34 Residential real estate 6,278 104 1,705 99 — — Total $ 16,661 $ 772 $ 12,266 $ 845 $ 10,482 $ 560 A primary credit quality indicator for financial institutions is delinquent balances. Delinquencies are updated on a daily basis and are continuously monitored. Loans are placed on nonaccrual status as needed based on repayment status and consideration of accounting and regulatory guidelines. Nonaccrual balances are updated and reported on a daily basis. Following are the delinquent amounts, by portfolio segment, as of December 31, 2019 and 2018: Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2019 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 30,076 $ — $ — $ — $ 1,360 $ 31,436 Commercial real estate 419,406 973 — 973 2,921 423,300 Commercial and industrial 52,936 58 — 58 19 53,013 Residential real estate 625,222 18,487 — 18,487 7,936 651,645 Consumer and other 1,768 — — — — 1,768 Total $ 1,129,408 $ 19,518 $ — $ 19,518 $ 12,236 $ 1,161,162 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2018 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 42,288 $ — $ — $ — $ — $ 42,288 Commercial real estate 390,601 1,102 — 1,102 3,260 394,963 Commercial and industrial 32,315 26 — 26 685 33,026 Residential real estate 651,439 17,180 — 17,180 1,722 670,341 Consumer and other 2,957 — — — — 2,957 Total $ 1,119,600 $ 18,308 $ — $ 18,308 $ 5,667 $ 1,143,575 The Company utilizes a ten grade loan rating system for its loan portfolio as follows: · Loans rated Pass – Loans in these categories have low to average risk. · Loans rated Special Mention – Loans do not presently expose the Company to a sufficient degree of risk to warrant adverse classification, but does possess deficiencies deserving close attention. · Loans rated Substandard – Loans are inadequately protected by the current sound worth and paying capability of the obligor or of the collateral pledged, if any. · Loans rated Doubtful – Loans which have all the weaknesses inherent in loans classified Substandard, with the added characteristic that the weaknesses make collections or liquidation in full, or on the basis of currently known facts, conditions and values, highly questionable or improbable. · Loans rated Loss – Loans classified Loss are considered uncollectible and such little value that there continuance as bankable assets is not warranted. Loan grades are monitored regularly and updated as necessary based upon review of repayment status and consideration of periodic updates regarding the borrower’s financial condition and capacity to meet contractual requirements. The following presents the Company’s loans, included purchased loans, by risk rating based on the most recent information available: Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2019 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 30,076 $ 416,183 $ 52,033 $ 641,544 $ 1,768 $ 1,141,604 Special Mention — 800 — — — 800 Substandard 1,360 6,317 980 10,101 — 18,758 Doubtful — — — — — — Loss — — — — — — Total $ 31,436 $ 423,300 $ 53,013 $ 651,645 $ 1,768 $ 1,161,162 Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2018 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 40,928 $ 383,857 $ 32,040 $ 667,249 $ 2,957 $ 1,127,031 Special Mention — 5,112 — — — 5,112 Substandard 1,360 5,994 986 3,092 — 11,432 Doubtful — — — — — — Loss — — — — — — Total $ 42,288 $ 394,963 $ 33,026 $ 670,341 $ 2,957 $ 1,143,575 Purchased Credit Impaired Loans: The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. Loans are recorded under the scope of ASC 310‑30 when it is deemed probable at acquisition that all contractually required payments will not be collected. Loans within the scope of ASC 310‑30 are initially recorded at fair value and are evaluated for impairment on an ongoing basis. As of December 31, 2019 and 2018, the Company had auto loan pools included within the consumer segment of loans outstanding that are accounted for under ASC 310‑30 with a carrying value of $810,000 and $2.6 million, respectively. At December 31, 2019 and 2018, there was no remaining accretable yield for these loans. At December 31, 2019 and 2018, the allowance for loan losses allocated on these loans was $82,000 and $384,000, respectively, as these loans are collectively evaluated for impairment. Interest income recognized on these loans was $118,000, $509,000 and $2.1 million for the year ended December 31, 2019, 2018 and 2017, respectively. Troubled Debt Restructures: In this current real estate environment it has become more common to restructure or modify the terms of certain loans under certain conditions (i.e. troubled debt restructures or “TDRs”). In those circumstances it may be beneficial to restructure the terms of a loan and work with the borrower for the benefit of both parties, versus forcing the property into foreclosure and having to dispose of it in an unfavorable real estate market. When we have modified the terms of a loan, we usually either reduce or defer payments for a period of time. We have not forgiven any material principal amounts on any loan modifications to date. Nonperforming TDRs are generally placed on non-accrual under the same criteria as all other loans. TDRs as of December 31, 2019 and 2018 quantified by loan type classified separately as accrual and nonaccrual are presented in the table below. (Dollars in thousands) December 31, 2019 Accruing Nonaccrual Total Commercial real estate $ 2,437 $ 482 $ 2,919 Commercial and industrial 22 5 27 Total $ 2,459 $ 487 $ 2,946 (Dollars in thousands) December 31, 2018 Accruing Nonaccrual Total Commercial real estate $ 3,298 $ — $ 3,298 Commercial and industrial — 13 13 Total $ 3,298 $ 13 $ 3,311 Our policy is to return nonaccrual TDR loans to accrual status when all the principal and interest amounts contractually due, pursuant to its modified terms, are brought current and future payments are reasonably assured. Our policy also considers payment history of the borrower, but is not dependent upon a specific number of payments. The Company recorded a specific reserve of $344,000 and $523,000, as of December 31, 2019 and 2018, respectively, and recognized no partial charge offs on the TDR loans presented above during the years ended December 31, 2019 and 2018. TDR commercial real estate loans totaling $482,000 defaulted during the year ended December 31, 2019. These defaults did not have a material impact on the Company’s allowance for loan loss. There were no TDRs which defaulted during the year ended December 31, 2018. During year ended December 31, 2019, we modified one commercial and industrial loan. The total recorded investment in this modified loan was $25,000 as of December 31, 2019. During the year ended December 31, 2018, we modified one commercial real estate loan. The total recorded investment in the modified loan as of December 31, 2018 was $503,000. The modification of these loans did not result in a permanent reduction of the recorded investment in the loan, but did result in a payment deferment period on the loans. At December 31, 2019 and 2018, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings. Loans are modified to minimize loan losses when we believe the modification will improve the borrower’s financial condition and ability to repay the loan. We typically do not forgive principal. We generally either defer, or decrease monthly payments for a temporary period of time. A summary of the types of concessions for loans classified as troubled debt restructurings are presented in the table below: (Dollars in thousands) December 31, December 31, Type of Concession 2019 2018 Deferral of payments $ 22 $ 482 Extension of maturity date 2,924 2,829 Total TDR loans $ 2,946 $ 3,311 The following table presents loans by portfolio segment modified as TDRs and the corresponding recorded investment, which includes accrued interest and fees, as of December 31, 2019 and 2018: December 31, 2019 December 31, 2018 (Dollars in thousands) Number of Recorded Number of Recorded Type Loans Investment Loans Investment Commercial real estate 4 $ 2,923 6 $ 3,527 Commercial and industrial 2 31 1 116 Total 6 $ 2,954 7 $ 3,643 Related Party Loans: The Company conducts transactions with its directors and executive officers, including companies in which such officers or directors have beneficial interests. None of the related party loans were classified as nonaccrual, past due, restructured, or potential problem loans at December 31, 2019 or 2018. The following table summarizes aggregate loan transactions with related parties for the years ended December 31, 2019 and 2018: December 31, (Dollars in thousands) 2019 2018 Beginning balance $ 5,540 $ 5,970 New loans and principal advances 1,925 54 Repayments (1,083) (484) Transactions due to changes in related parties — — Ending balance $ 6,382 $ 5,540 |
PREMISES AND EQUIPMENT
PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
PREMISES AND EQUIPMENT | |
PREMISES AND EQUIPMENT | NOTE 4 – PREMISES AND EQUIPMENT Premises and equipment are summarized as follows: December 31, (Dollars in thousands) 2019 2018 Land $ 2,604 $ 2,604 Building 7,698 7,691 Leasehold improvements 3,944 2,849 Furniture, fixtures and equipment 3,589 3,306 Computer equipment 1,553 1,413 Computer software 563 371 Construction in process 53 725 Premises and equipment, gross 20,004 18,959 Accumulated depreciation (5,544) (4,568) Premises and equipment, net $ 14,460 $ 14,391 Depreciation expense for premises and equipment totaled $1.0 million, $848,000 and $545,000 for the years ended December 31, 2019, 2018 and 2017, respectively. |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Dec. 31, 2019 | |
OPERATING LEASES | |
OPERATING LEASES | NOTE 5 – OPERATING LEASES The Company has entered into various operating leases for certain branch locations with terms extending through July 2028. Generally, these leases have initial lease terms of ten years or less. Many of the leases have one or more renewal options which typically are for five years at the then fair market rental rates. We assessed these renewal options using a threshold of reasonably certain. For leases where we were reasonably certain to renew, those option periods were included within the lease term, and therefore, the measurement of the right-of-use (ROU) asset and lease liability. None of our leases included options to terminate the lease and none had initial terms of 12 months or less (i.e. short-term leases). Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities on the Consolidated Balance Sheets. The Company currently does not have any finance leases. Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental collateralized borrowing rate provided by the FHLB at the lease commencement date. ROU assets are further adjusted for lease incentives, if any. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in occupancy expense in the Consolidated Statements of Income. The components of lease cost for the year ended December 31, 2019 were as follows: Year Ended (Dollars in thousands) December 31, 2019 Operating lease cost $ 2,169 Variable lease cost 190 Short-term lease cost — Sublease income — Total net lease cost $ 2,359 Future maturities of the Company’s operating lease liabilities are summarized as follows: (Dollars in thousands) Year Ended : Lease Liability December 31, 2020 $ 2,030 December 31, 2021 1,875 December 31, 2022 1,899 December 31, 2023 1,900 December 31, 2024 1,789 After December 31, 2024 4,517 Total lease payments 14,010 Less: interest discount (1,534) Present value of lease liabilities $ 12,476 (Dollars in thousands) Supplemental Lease Information December 31, 2019 Weighted-average remaining lease term (years) 7.3 Weighted-average discount rate 3.14 % Year Ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 1,964 Operating cash flows from operating leases (lease liability reduction) $ 1,555 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ 13,610 The Company signed an agreement to lease space in Norcross, Georgia with an entity in which the Chairman of the Company serves as a managing member. The lease is a ten year non-cancellable lease which expires in October 2023. During the years ended December 31, 2019, 2018 and 2017, $140,000 , $142,000 and $137,000, respectively, in rents were paid under this lease. Management believes the terms of this lease are no less favorable to the Company than would have been achieved with an unaffiliated third party. |
SBA AND USDA LOAN SERVICING
SBA AND USDA LOAN SERVICING | 12 Months Ended |
Dec. 31, 2019 | |
SBA AND USDA LOAN SERVICING | |
SBA AND USDA LOAN SERVICING | NOTE 6 – SBA AND USDA LOAN SERVICING The Company sells the guaranteed portion of certain SBA and USDA loans it originates and continues to service the sold portion of the loan. The portion of the loans sold are not included in the financial statements of the Company. As of December 31, 2019 and 2018, the unpaid principal balances of serviced loans totaled $441.6 million and $431.2 million, respectively. Activity for SBA loan servicing rights are as follows: For the Year Ended December 31, (Dollars in thousands) 2019 2018 2017 Beginning of period $ 8,419 $ 9,329 $ 8,823 Change in fair value (257) (910) 506 End of period, fair value $ 8,162 $ 8,419 $ 9,329 Fair value at December 31, 2019 and 2018 was determined using discount rates ranging from 5.80% to 12.06% and 8.78% to 14.56%, and prepayment speeds ranging from 10.82% to 16.54% and 6.82% to 12.87%, depending on the stratification of the specific right. Average default rates are based on the industry average for the applicable NAICS/SIC code. The aggregate fair market value of the interest only strips included in SBA servicing assets was $26,000 and $27,000 at December 31, 2019 and 2018, respectively. Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value. |
RESIDENTIAL MORTGAGE LOAN SERVI
RESIDENTIAL MORTGAGE LOAN SERVICING | 12 Months Ended |
Dec. 31, 2019 | |
RESIDENTIAL MORTGAGE LOAN SERVICING | |
RESIDENTIAL MORTGAGE LOAN SERVICING | NOTE 7 – RESIDENTIAL MORTGAGE LOAN SERVICING Residential mortgage loans serviced for others are not reported as assets. The outstanding principal of these loans at December 31, 2019 and 2018 was $1.17 billion and $804.2 million, respectively. Activity for mortgage loan servicing rights are as follows: Years Ended December 31, (Dollars in thousands) 2019 2018 2017 Beginning of period $ 14,934 $ 6,843 $ — Additions 6,921 10,253 7,500 Disposals — — — Amortization expense (3,787) (2,162) (657) End of period, carrying value $ 18,068 $ 14,934 $ 6,843 The fair value of servicing rights was $19.0 million and $16.5 million at December 31, 2019 and 2018, respectively. Fair value at December 31, 2019 was determined by using a discount rate of 14%, prepayment speeds of 16%, and a weighted average default rate of 0.98%. Fair value at December 31, 2018 was determined using discount rates ranging from 11% to 14%, prepayment speeds of 15%, and a weighted average default rate of 0.88%. |
DEPOSITS
DEPOSITS | 12 Months Ended |
Dec. 31, 2019 | |
DEPOSITS. | |
DEPOSITS | NOTE 8 – DEPOSITS Deposit account balances as of December 31, 2019 and 2018 are summarized as follows: December 31, (Dollars in thousands) 2019 2018 Noninterest-bearing demand deposits $ 292,008 $ 299,182 NOW accounts and savings 54,550 58,903 Money market 179,159 62,358 Brokered time deposits — 53,477 Time deposits less than $250,000 582,964 554,279 Time deposits $250,000 or greater 198,696 216,033 Total deposits $ 1,307,377 $ 1,244,232 Maturities of time deposits at December 31, 2019 are summarized as follows: (Dollars in thousands) Year Ended December 31, 2020 $ 770,765 2021 5,045 2022 3,861 2023 918 2024 1,071 Total time deposits $ 781,660 At December 31, 2019 and 2018, overdraft demand deposits reclassified to loans totaled $355,000 and $127,000, respectively. The Company held related party deposits of approximately $5.0 million and $3.2 million at December 31, 2019 and 2018, respectively. |
FEDERAL HOME LOAN BANK ADVANCES
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | 12 Months Ended |
Dec. 31, 2019 | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | NOTE 9 – FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS Advances from the Federal Home Loan Bank (FHLB) at December 31, 2019 and 2018 are summarized as follows: December 31, (Dollars in thousands) 2019 2018 Convertible advance with Bermudan option maturing August 6, 2029; fixed rate of 0.85% $ 20,000 $ — Convertible advances with Bermudan option maturing November 7, 2029; fixed rate of 0.68% 30,000 — Convertible advance with Bermudan option maturing December 5, 2029; fixed rate of 0.75% 10,000 — Total FHLB advances $ 60,000 $ — At December 31, 2019 and 2018, the Company had a line of credit with the FHLB, set as a percentage of total assets, with maximum borrowing capacity of $494.3 million and $433.0 million at December 31, 2019 and 2018, respectively. The available borrowing amounts are collateralized by the Company’s FHLB stock and pledged commercial and residential real estate loans, which totaled $716.9 million and $723.2 million at December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, the Company had unsecured federal funds lines available with various financial institutions of approximately $47.5 million. These lines have various terms, rates and maturities. There were no advances outstanding on these lines at December 31, 2019 or 2018. As of December 31, 2019 and 2018, the Company had Federal Reserve Discount Window funds available of approximately $10.0 million, with no amounts outstanding at either date. The funds are collateralized by a pool of commercial real estate and commercial and industrial loans totaling $27.3 million and $14.0 million as of December 31, 2019 and 2018, respectively. The Company sells the guaranteed portion of certain SBA loans it originates and continues to service the sold portion of the loan. The Company sometimes retains an interest only strip or servicing fee that is considered to be more than customary market rates. An interest rate strip can result from a transaction when the market rate of the transaction differs from the stated rate on the portion of the loan sold. The sold portion of SBA loans that satisfies at least one of the above provisions are considered secured borrowings and are included in other borrowings. Secured borrowings at December 31, 2019 and 2018 were $3.1 million and $4.3 million, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | NOTE 10 – INCOME TAXES The components of income tax expense for the periods indicated were as follows: Years Ended December 31, (Dollars in thousands) 2019 2018 2017 Current tax provision: Federal $ 11,028 $ 12,210 $ 15,781 State 4,034 2,102 2,506 Total current tax provision 15,062 14,312 18,287 Deferred tax provision: Federal 793 308 (56) Deferred tax adjustment for enacted change in Federal tax rate — — (176) State 295 47 98 Total deferred tax provision (benefit) 1,088 355 (134) Total provision for income taxes $ 16,150 $ 14,667 $ 18,153 The following table presents a reconciliation of the recorded provision for income taxes to the amount of taxes computed by applying the applicable statutory Federal income tax rate for the periods indicated: Years Ended December 31, 2019 2018 2017 (Dollars in thousands) Amount % Amount % Amount % Federal statutory tax rate $ 12,782 21.0 % $ 11,775 21.0 % $ 17,517 35.0 % Differences resulting from: State income taxes, net of federal benefit 3,420 5.6 1,660 3.0 1,139 2.3 Permanent book to tax differences (135) (0.2) — — — — Deferred tax writedown for enacted tax rate changes — — — — (176) (0.3) Other items, net 83 0.1 1,232 2.2 (327) (0.7) Provision for income taxes $ 16,150 26.5 % $ 14,667 26.2 % $ 18,153 36.3 % At December 31, 2019 and 2018, the Company’s deferred tax assets and liabilities consisted of the following: December 31, (Dollars in thousands) 2019 2018 Deferred tax assets: Allowance for loan losses $ 1,919 $ 1,692 Nonaccrual interest 221 175 Deferred loan fees 119 — Lease liabilities under operating leases 3,501 — Unrealized losses on securities available for sale 1 46 Other 277 — Total gross deferred tax assets 6,038 1,913 Deferred tax liabilities: Deferred mortgage servicing fees (2,535) (1,389) Deferred SBA servicing fees (2,206) (2,069) Premises and equipment (599) (368) Right-of-use assets under operating leases (3,355) — Other (254) (16) Total gross deferred tax liabilities (8,949) (3,842) Net deferred tax liabilities $ (2,911) $ (1,929) On December 22, 2017, new federal tax reform legislation was enacted in the United States (the “2017 Tax Act”), resulting in significant changes from previous tax law. The 2017 Tax Act reduces the federal corporate income tax rate to 21% from 35% effective January 1, 2018. The rate change, along with certain immaterial changes in tax basis resulting from the 2017 Tax Act, resulted in a reduction of our net deferred tax liabilities of $176,000 and a corresponding deferred income tax benefit in 2017. Our federal income tax expense for periods beginning in 2018 is based on the new rate. The adjustments to deferred tax assets and liabilities and the liability related to the transition tax are amounts estimated based on information available at December 31, 2017. We recognized any changes to the amounts as we refined our estimates of our cumulative temporary differences, including those related to the immediate deduction for qualified property, and our interpretations of the application of the 2017 Tax Act. The effects of other provisions of the 2017 Tax Act did not have a material impact on our consolidated financial statements. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Management believes no valuation allowance is necessary against deferred tax assets as of December 31, 2019. For the years ended December 31, 2019 and 2018, management believes there are no material amounts of uncertain tax position. Additionally, there were no amounts of interest and penalties recognized in the consolidated balance sheets as of December 31, 2019 or 2018 or on the consolidated statements of income for the years ended December 31, 2019, 2018 or 2017. The Company and its subsidiary are subject to U.S. federal income tax as well as various other state income taxes. The Company is no longer subject to examination by taxing authorities for years before 2016. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
STOCK BASED COMPENSATION | |
STOCK BASED COMPENSATION | NOTE 11 – STOCK BASED COMPENSATION The Company adopted the MetroCity Bankshares, Inc. 2018 Stock Option Plan (the “Prior Option Plan”) effective as of April 18, 2018, and the Prior Option Plan was approved by the Company’s shareholders on May 30, 2018. The Prior Option Plan provided for awards of stock options to officers, employees and directors of the Company. The Board of Directors of the Company determined that it was in the best interests of the Company and its shareholders to amend and restate the Prior Option Plan to provide for the grant of additional types of awards. Acting pursuant to its authority under the Prior Option Plan, the Board of Directors approved and adopted the MetroCity Bankshares, Inc. 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”), which constitutes the amended and restated version of the Prior Option Plan. The Board of Directors has reserved 2,400,000 shares of Company common stock for issuance pursuant to awards granted under the 2018 Incentive Plan, any or all of which may be granted as nonqualified stock options, incentive stock options, restricted stock, restricted stock units, performance awards and other stock-based awards. In the event all or a portion of a stock award is forfeited, cancelled, expires, or is terminated before becoming vested, paid, exercised, converted, or otherwise settled in full, any unissued or forfeited shares again become available for issuance pursuant to awards granted under the 2018 Incentive Plan and do not count against the maximum number of reserved shares. In addition, shares of common stock deducted or withheld to satisfy tax withholding obligations will be added back to the share reserve and will again be available for issuance pursuant to awards granted under the plan. The 2018 Incentive Plan is administered by the Compensation Committee of our Board of Directors (the “Committee”). The determination of award recipients under the 2018 Incentive Plan, and the terms of those awards, will be made by the Committee. At December 31, 2019, 240,000 stock options had been granted and no shares of restricted stock had been issued under the 2018 Incentive Plan. Stock Options The fair value of stock options issued during 2018 was determined at their grant date using a Black-Scholes valuation model that utilized the following variables: expected volatility of 21.3%, an expected term of 6.5 years, a 3.0% dividend yield, and risk free rate of 2.9%. The weighted average fair value of each option granted during 2018 was $11.90. The Company did not grant any stock options during the years ended December 31, 2019 and 2017. A summary of stock option activity for the years ended December 31, 2019, 2018 and 2017 is presented below: Weighted Average Aggregate Weighted Remaining Intrinsic Average Contractual Value Shares Exercise Price Term (in years) (in thousands) Outstanding at January 1, 2017 260,000 $ 2.64 Granted — — Exercised (260,000) 2.64 $ 708 Forfeited — — Outstanding at December 31, 2017 — $ — Granted 240,000 12.70 Exercised — — Forfeited — — Outstanding at December 31, 2018 240,000 $ 12.70 2.50 $ 912 Granted — — Exercised — — Forfeited — — Outstanding at December 31, 2019 240,000 $ 12.70 1.50 $ 1,154 During the years ended December 31, 2019, 2018 and 2017, the Company recognized compensation expense for stock options of $476,000, $238,000 and $0, respectively. As of December 31, 2019 and 2018, there was $714,000 and $1.2 million of total unrecognized compensation cost related to options granted under the Plan. As of December 31, 2019, the cost is expected to be recognized over a weighted-average period of 1.5 years. Restricted Stock The Company has periodically issued restricted stock to its directors, executive officers and certain employees under the 2018 Incentive Plan. Compensation expense for restricted stock is based upon the grant date fair value of the shares and is recognized over the vesting period of the awards. Shares of restricted stock issued to officers and employees vest in equal annual installments on the first three anniversaries of the grant date. Shares of restricted stock issued to directors vest 25% on the grant date and 25% on each of the first three anniversaries of the grant date. A summary of restricted stock activity for the years ended December 31, 2019, 2018 and 2017 is presented below: Years Ended December 31, 2019 2018 2017 Weighted Weighted Weighted Average Grant- Average Grant- Average Grant- Shares Date Fair Value Shares Date Fair Value Shares Date Fair Value Nonvested shares at beginning of year 278,202 $ 7.07 280,310 $ 4.39 251,428 $ 3.10 Granted 48,724 13.75 181,072 9.85 203,254 5.36 Vested (157,316) 6.68 (183,180) 5.72 (174,372) 3.67 Forfeited (406) 9.85 — — — — Nonvested shares at end of year 169,204 $ 9.35 278,202 $ 7.07 280,310 $ 4.39 During the years ended December 31, 2019, 2018 and 2017, the Company recognized compensation expense for restricted stock of $ 1.0 million, $1.3 million and $718,000, respectively. As of December 31, 2019 and 2018, there was $1.1 million and $1.5 million of total unrecognized compensation cost related to nonvested shares granted under the Plan. As of December 31, 2019, the unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.8 years. The grant date fair value of shares vested during the years ended December 31, 2019 and 2018 was $1.1 million. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 12 – EARNINGS PER SHARE The following table presents the calculation of basic and diluted earnings per common share for the periods indicated: Year Ended December 31, (Dollars in thousands except per share data) 2019 2018 2017 Basic earnings per share Net Income $ 44,718 $ 41,334 $ 31,897 Weighted average common shares outstanding 24,533,180 24,184,790 23,858,696 Basic earnings per common share $ 1.82 $ 1.71 $ 1.34 Diluted earnings per share Net Income $ 44,718 $ 41,334 $ 31,897 Weighted average common shares outstanding for basic earnings per common share 24,533,180 24,184,790 23,858,696 Add: Dilutive effects of restricted stock and options 196,355 290,908 280,310 Average shares and dilutive potential common shares 24,729,535 24,475,698 24,139,006 Diluted earnings per common share $ 1.81 $ 1.69 $ 1.32 There were no stock options or restricted stock excluded from the computation of diluted earnings per common share since they were antidilutive for 2019, 2018 and 2017. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2019 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 13 – REVENUE RECOGNITION Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. The implementation of the new guidance did not have a material impact on the measurement or recognition of revenue. The Company did not record a cumulative effect adjustment to opening retained earnings. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit, and investment securities, as well as revenue related to our loan servicing activities and revenue on bank owned life insurance, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our income statements as components of noninterest income are as follows: Service charges on deposits: Income from service charges on deposits is within the scope of ASC 606. These include general service fees for monthly account maintenance and activity or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue on these types of fees are recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed. Payment for such performance obligations are generally received at the time the performance obligations are satisfied. Service charges on deposits also include overdraft and nonsufficient funds fees. Overdraft fees are charged when a depositor has a draw on their account that has inadequate funds. All services charges on deposit accounts represent less than 1% of total revenues in the years ended December 31, 2019 and 2018. Other Service Charges, Commissions and Fees: Other service charges, commissions and fees are primarily comprised of mortgage origination related income, wire fees, interchange fees, and other service charges and fees. Mortgage origination related income, which makes up the majority of the other service charges, commissions and fees line item amounts reported on the Consolidated Statements of Income, consists of mortgage loan origination fees, underwriting fees, processing fees, and application fees. The Company’s performance obligations for other service charges, commissions and fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. Gain or loss on sale of OREO : This revenue stream is recorded when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain or loss on sale if a significant financing component is present. This revenue stream is within the scope of ASC 606 and is included in other income in noninterest income, but no significant revenues were generated from gains and losses on the sale and financing of OREO for the years ended December 31, 2019 and 2018. Other revenue streams that are recorded in other income in noninterest income include revenue generated from letters of credit and income on bank owned life insurance. These revenue streams are either not material or out of scope of ASC 606. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 – COMMITMENTS AND CONTINGENCIES In the normal course of business, the Company makes various commitments and incurs certain contingent liabilities that are not reflected in the Company’s financial statements. These commitments and contingent liabilities include various guarantees, commitments to extend credit and standby letters of credit. The Company does not anticipate any material losses as a result of these commitments and contingent liabilities. Credit Related Commitments The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Financial instruments where contract amounts represent credit risk as of and December 31, 2019 and 2018 include: December 31, (Dollars in thousands) 2019 2018 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 64,243 $ 65,283 Standby letters of credit $ 5,213 $ 4,250 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments to extend credit includes $64.2 million of unused lines of credit and $5.2 million to make loans as of December 31, 2019. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty. Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan commitments to customers. The Company maintains cash deposits with a financial institution that during the year are in excess of the insured limitation of the Federal Deposit Insurance Corporation. If the financial institution were not to honor its contractual liability, the Company could incur losses. Management is of the opinion that there is not material risk because of the financial strength of the institution. Other Commitments The Bank has entered into employment agreements with its Executive Chairman, Chief Executive Officer/Chief Financial Officer, and President/Chief Lending Officer/Chief Operations Officer. Each employment agreement provides for a base salary, an incentive bonus based upon the Company’s profitability, stock awards and other benefits commensurate with employment. The Bank may be obligated to make payments to each employee upon termination, with the timing and amount of the payment dependent upon the cause of termination. The agreements contain a contract term of 36 months, which is extended one year annually unless notice is given by the employee or the Board of Directors. Contingencies The Company's nature of business is such that it ordinarily results in a certain amount of litigation. In the opinion of management for the Company, there is no litigation in which the outcome will have a material effect on the financial statements. |
FAIR VALUE
FAIR VALUE | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE | |
FAIR VALUE | NOTE 15 – FAIR VALUE Financial Instruments Measured at Fair Value Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The following presents the assets and liabilities as of December 31, 2019 and 2018 which are measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, and the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy, for which a nonrecurring change in fair value has been recorded: December 31, 2019 Total Gains (Dollars in thousands) Total Level 1 Level 2 Level 3 (Losses) Assets Recurring fair value measurements: Securities available for sale: Obligations of U.S. Government entities and agencies $ 12,436 $ — $ — $ 12,436 States and political subdivisions 1,279 — 1,279 — Mortgage-backed GSE residential 1,980 — 1,980 — Total securities available for sale 15,695 — 3,259 12,436 SBA servicing asset 8,162 — — 8,162 Interest only strip 26 — — 26 $ 23,883 $ — $ 3,259 $ 20,624 Non-recurring fair value measurements: Impaired loans $ 4,523 $ — $ — $ 4,523 $ 338 December 31, 2018 Total Gains (Dollars in thousands) Total Level 1 Level 2 Level 3 (Losses) Assets Recurring fair value measurements: Securities available for sale: Obligations of U.S. Government entities and agencies $ 15,183 $ — $ — $ 15,183 States and political subdivisions 1,213 — 1,213 — Mortgage-backed GSE residential 2,492 — 2,492 — Total securities available for sale 18,888 — 3,705 15,183 SBA servicing asset 8,419 — — 8,419 Interest only strip 27 — — 27 $ 27,334 $ — $ 3,705 $ 23,629 Non-recurring fair value measurements: Impaired loans $ 3,472 $ — $ — $ 3,472 $ 169 The Company used the following methods and significant assumptions to estimate fair value: Securities, Available for Sales: The Company carries securities available for sale at fair value. For securities where quoted prices are not available (Level 2), the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The investments in the Company’s portfolio are generally not quoted on an exchange but are actively traded in the secondary institutional markets. The Company owns certain SBA investments that for which the fair value is determined using Level 3 hierarchy inputs and assumptions as the trading market for such securities was determined to be “not active.” This determination was based on the limited number of trades or, in certain cases, the existence of no reported trades. Discounted cash flows are calculated by a third party using interest rate curves that are updated to incorporate current market conditions, including prepayment vectors and credit risk. During time when trading is more liquid, broker quotes are used to validate the model. SBA Servicing Assets and Interest Only Strip : The fair values of the Company’s servicing assets are determined using Level 3 inputs. All separately recognized servicing assets and servicing liabilities are initially measured at fair value initially and at each reporting date and changes in fair value are reported in earnings in the period in which they occur. The fair values of the Company’s interest-only strips are determined using Level 3 inputs. When the Company sells loans to others, it may hold interest-only strips, which is an interest that continues to be held by the transferor in the securitized receivable. It may also obtain servicing assets or assume servicing liabilities that are initially measured at fair value. Gain or loss on sale of the receivables depends in part on both (a) the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the interests that continue to be held by the transferor based on their relative fair value at the date of transfer, and (b) the proceeds received. To obtain fair values, quoted market prices are used if available. However, quotes are generally not available for interests that continue to be held by the transferor, so the Company generally estimates fair value based on the future expected cash flows estimated using management’s best estimates of the key assumptions — credit losses and discount rates commensurate with the risks involved. Under certain circumstances we make adjustments to fair value for our assets and liabilities although they are not measured at fair value on an ongoing basis. Impaired loans : Impaired loans are evaluated and valued at the time the loan is identified as impaired, at the lower of cost or fair value. Fair value is measured based on the value of the collateral securing these loans and is classified at a Level 3 in the fair value hierarchy. Collateral may include real estate, or business assets including equipment, inventory and accounts receivable. The value of real estate collateral is determined based on an appraisal by qualified licensed appraisers hired by the Company. The value of business equipment is based on an appraisal by qualified licensed appraisers hired by the Company if significant, or the equipment’s net book value on the business’ financial statements. Inventory and accounts receivable collateral are valued based on independent field examiner review or aging reports. Appraisals may utilize a single valuation approach or a combination or approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Appraised values are reviewed by management using historical knowledge, market considerations, and knowledge of the client and client’s business. Foreclosed real estate : Foreclosed real estate is adjusted to fair value upon transfer of the loans to foreclosed real estate. Subsequently, foreclosed real estate is carried at the lower of carrying value or fair value. Fair value is based upon independent market prices or appraised values of the collateral and is classified as nonrecurring Level 3. Adjustments are routinely made in the appraisal process by the independent appraisers engaged by the Company to adjust for differences between the comparable sales. Appraised values are reviewed by management using our market knowledge and historical experience. Changes in level 3 fair value measurements The table below presents a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2019, 2018 and 2017: Obligations of SBA U.S. Government Servicing Interest Only (Dollars in thousands) Entities and Agencies Asset Strip Liabilities Fair value, January 1, 2019 $ 15,183 $ 8,419 $ 27 $ — Total loss included in income — (257) (1) — Settlements — — — — Prepayments/paydowns (2,747) — — — Transfers in and/or out of level 3 — — — — Fair value, December 31, 2019 $ 12,436 $ 8,162 $ 26 $ — Fair value, January 1, 2018 $ 16,661 $ 9,329 $ 36 $ — Total loss included in income — (910) (9) — Settlements — — — — Prepayments/paydowns (1,478) — — — Transfers in and/or out of level 3 — — — — Fair value, December 31, 2018 $ 15,183 $ 8,419 $ 27 $ — Fair value, January 1, 2017 $ 23,916 $ 8,823 $ 30 $ — Total gain included in income — 506 6 — Settlements — — — — Prepayments/paydowns (7,255) — — — Transfers in and/or out of level 3 — — — — Fair value, December 31, 2017 $ 16,661 $ 9,329 $ 36 $ — There were no gains or losses included in earnings for securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods presented above. The only activity for these securities were prepayments. There were no purchases, sales, or transfers into and out of Level 3. The following table presents quantitative information about recurring Level 3 fair value measures at December 31, 2019 and 2018: Valuation Unobservable General Technique Input Range December 31, 2019 Obligations of U.S. Government entities and agencies Discounted Cash Flows Discount Rate 0%-3% SBA servicing asset and interest only strip Discounted Cash Flows Prepayment speed 10.82%-16.54% Discount rate 5.80%-12.06% December 31, 2018 Obligations of U.S. Government entities and agencies Discounted Cash Flows Discount Rate 0%-3% SBA servicing asset and interest only strip Discounted Cash Flows Prepayment speed 6.82%-12.87% Discount rate 8.78%-14.56% The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2019 and 2018 are as follows: Carrying Estimated Fair Value at December 31, 2019 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 276,413 $ — $ 276,413 $ — $ 276,413 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 15,695 — 3,259 12,436 15,695 FHLB stock 3,842 — — — N/A Loans, net 1,154,323 — — 1,169,214 1,169,214 Loans held for sale 85,793 — 88,178 — 88,178 Accrued interest receivable 5,101 — — 5,101 5,101 SBA servicing assets 8,162 — — 8,162 8,162 Mortgage servicing assets 18,068 — — 19,035 19,035 Interest only strips 26 — — 26 26 Financial Liabilities: Deposits 1,307,377 — 1,308,946 — 1,308,946 Federal Home Loan Bank advances 60,000 — 60,000 — 60,000 Other borrowings 3,129 — 3,129 — 3,129 Accrued interest payable 890 — 890 — 890 Carrying Estimated Fair Value at December 31, 2018 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 138,427 $ — $ 138,427 $ — $ 138,427 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 18,888 — 3,705 15,183 18,888 FHLB stock 1,163 — — — N/A Loans, net 1,136,930 — — 1,166,945 1,166,945 Loans held for sale 56,865 — 56,865 — 56,865 Accrued interest receivable 4,957 — — 4,957 4,957 SBA servicing asset 8,419 — — 8,419 8,419 Mortgage servicing assets 14,934 — — 16,460 16,460 Interest only strips 27 — — 27 27 Financial Liabilities: Deposits 1,244,232 — 1,242,863 — 1,242,863 Other borrowings 4,257 — 4,257 — 4,257 Accrued interest payable 1,251 — 1,251 — 1,251 |
REGULATORY MATTERS
REGULATORY MATTERS | 12 Months Ended |
Dec. 31, 2019 | |
REGULATORY MATTERS | |
REGULATORY MATTERS | NOTE 16 – REGULATORY MATTERS Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Bank on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2019 and 2018 was 2.50% and 1.875%, respectively. The net unrealized gain or loss on available for sale securities, if any, is not included in computing regulatory capital. Management believes as of December 31, 2019, the Company and Bank meets all capital adequacy requirements to which they are subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At December 31, 2019 and 2018, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category. The actual capital amounts (in thousands) and ratios of the Company and Bank are presented in the following table: To Be Well Capitalized For Capital Under Prompt Corrective (Dollars in thousands) Actual Adequacy Purposes: Action Provisions: Amount Ratio Amount ≥ Ratio ≥ Amount ≥ Ratio ≥ As of December 31, 2019 Total Capital (to Risk Weighted Assets) Consolidated $ 215,377 22.01 % N/A * N/A * N/A N/A Bank 199,539 20.40 % 78,251 8.0 % 97,814 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 208,538 21.31 % N/A * N/A * N/A N/A Bank 192,700 19.70 % 58,688 6.0 % 78,251 8.0 % Common Tier 1 (CET1) Consolidated 208,538 21.31 % N/A * N/A * N/A N/A Bank 192,700 19.70 % 44,016 4.5 % 63,579 6.5 % Tier 1 Capital (to Average Assets) Consolidated 208,538 12.70 % N/A * N/A * N/A N/A Bank 192,700 11.74 % 65,655 4.0 % 82,069 5.0 % As of December 31, 2018 Total Capital (to Risk Weighted Assets) Consolidated $ 166,851 18.16 % N/A * N/A * N/A N/A Bank 163,339 17.80 % 73,392 8.0 % 91,740 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 160,207 17.44 % N/A * N/A * N/A N/A Bank 156,696 17.08 % 55,044 6.0 % 73,392 8.0 % Common Tier 1 (CET1) Consolidated 160,207 17.44 % N/A * N/A * N/A N/A Bank 156,696 17.08 % 41,283 4.5 % 59,631 6.5 % Tier 1 Capital (to Average Assets) Consolidated 160,207 11.14 % N/A * N/A * N/A N/A Bank 156,696 10.91 % 57,455 4.0 % 71,819 5.0 % * The Board of Governors of the Federal Reserve raised the threshold for determining applicable of the Small Bank Holding Company and Savings and Loan Company Policy Statement in August 2018 from $1 Billion to $3 Billion in consolidated total assets to provide regulatory burden relief, therefore, the Company is no longer subject to the minimum capital requirements. The sole source of funds available to pay stockholder dividends is from the Company’s earnings. Bank regulatory authorities impose restrictions on the amount of dividends that may be declared by the Company. Further restrictions could result from a review by regulatory authorities of the Company’s capital adequacy. For the years ended December 31, 2019, 2018 and 2017, $10.4 million, $9.3 million and $5.4 million in common dividends were declared and paid, respectively. During 2019, the Bank could without prior approval, declare dividends of approximately $22.4. million. |
OTHER OPERATING EXPENSES
OTHER OPERATING EXPENSES | 12 Months Ended |
Dec. 31, 2019 | |
OTHER OPERATING EXPENSES. | |
OTHER OPERATING EXPENSES | NOTE 17 – OTHER OPERATING EXEPENSES Significant components of other operating expenses for the years ended December 31, 2019 and 2018 are as follows: December 31, (Dollars in thousands) 2019 2018 Professional fees $ 1,168 $ 1,029 Miscellaneous loan related 2,187 3,503 Bank security 1,283 1,003 Phone and data service 678 617 Director fees 366 333 Other 2,968 2,980 Total other operating expenses $ 8,650 $ 9,465 |
CONDENSED PARENT COMPANY ONLY F
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2019 | |
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS | |
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS | NOTE 18 – CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS Financial statements of MetroCity Bankshares, Inc. (parent company only) are as follows: Condensed Balance Sheets December 31, (Dollars in thousands) 2019 2018 Assets: Cash and due from banks* $ 15,991 $ 2,600 Investment in bank subsidiary* 200,886 165,096 Other assets 367 1,305 Total assets $ 217,244 $ 169,001 Liabilities: Accrued expenses and other liabilities $ 520 $ 393 Total liabilities 520 393 Shareholders' equity: Preferred stock — — Common stock 255 242 Additional paid-in-capital 53,854 39,915 Retained earnings 162,616 128,555 Accumulated other comprehensive loss (1) (104) Total shareholders' equity 216,724 168,608 Total liabilities shareholders' equity $ 217,244 $ 169,001 * Eliminated in consolidation Condensed Statements of Income Years Ended December 31, (Dollars in thousands) 2019 2018 2017 Income: Dividends receive from bank subsidiary* $ 10,402 $ 9,291 $ 5,439 Interest income* 48 24 25 Total income 10,450 9,315 5,464 Expenses: Other expense 174 96 35 Total expenses 174 96 35 Income before taxes and equity in undistributed income of subsidiary 10,276 9,219 5,429 Income tax benefit 26 29 24 Income before equity in undistributed income of subsidiary 10,302 9,248 5,453 Equity in undistributed income of subsidiary* 34,416 32,086 26,444 Net Income $ 44,718 $ 41,334 $ 31,897 * Eliminated in consolidation Condensed Statements of Cash Flows Years Ended December 31, (Dollars in thousands) 2019 2018 2017 Cash flows from operating activities: Net income $ 44,718 $ 41,334 $ 31,897 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed net income of subsidiary (34,416) (32,086) (26,444) Decrease (increase) in other assets 938 (924) (135) Increase in accrued expenses and other liabilities 92 42 (68) Net cash provided by operating activities 11,332 8,366 5,250 Cash flows from operating activities: Net cash (used in) provided by investing activities — — — Cash flows from financing activities: Issuance of common stock, net of expenses 13,911 — — Exercise of stock options — — 685 Repurchase of common stock (1,485) — — Dividends paid on common stock (10,367) (9,224) (5,401) Net cash provided by (used by) financing activities 2,059 (9,224) (4,716) Net increase (decrease) in cash and cash equivalents 13,391 (858) 534 Cash and cash equivalents, beginning of year 2,600 3,458 2,924 Cash and cash equivalents, end of year $ 15,991 $ 2,600 $ 3,458 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Nature Of Operations | Nature of Operations MetroCity Bankshares, Inc. (the “Company”) was formed for the sole purpose of owning and operating its wholly owned subsidiary, Metro City Bank (the “Bank”). The Company acquired all of the outstanding common stock of the Bank in a holding company formation transaction on December 31, 2014. The Bank is a Georgia state chartered bank and commenced operations in 2006. The Bank’s main office is located in Doraville, Georgia, and it operates branches in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia. The main emphasis of the Bank is on commercial banking and it offers such customary banking services as consumer and commercial checking accounts, savings accounts, certificates of deposit, commercial and consumer loans, including single family residential loans, money transfers and a variety of other banking services. The Company is subject to the regulations of Federal and State banking agencies and is periodically examined by them. In October 2019, the Company completed the initial public offering of its common stock pursuant to a registration statement on Form S-1 (File No. 333-233625), which was declared effective by the SEC on October 2, 2019. The Company sold 1,224,513 shares of its common stock at a public offering price of $13.50 per share in the offering, including 224,513 shares sold pursuant to the exercise of the underwriters’ option to purchase additional shares on October 30, 2019, for an aggregate price of approximately $16.5 million and certain selling stockholders sold 939,000 shares in the offering. The Company received net proceeds of approximately $13.9 million, after deducting underwriting discounts and commissions of approximately $1.1 million and expenses of approximately $1.6 million. |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and with general practices within the financial services industry. Certain prior period amounts have been reclassified to conform to the current year presentation. The Company has evaluated subsequent events for recognition and disclosure through the date these consolidated financial statements were issued. On August 30, 2019, the Company effected a 2-for-1 common stock split, as approved by the Company’s Board of Directors. Common stock and per share data included in these financial statements have been restated to reflect this stock split. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. |
Significant Group Concentrations of Credit Risk | Significant Group Concentrations of Credit Risk A substantial portion of the Company’s loan portfolio is to customers in the Atlanta, Georgia and New York, New York metropolitan areas. The ultimate collectability of a substantial portion of the portfolio is therefore susceptible to changes in the economic and market condition in and around this area. The nature of the Company’s business requires that it maintain amounts due from banks, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of presentation in the statement of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption “cash and due from banks,” which includes cash on hand, cash items in process of collection, and amounts due from banks. Cash flows from loans, federal funds sold, other borrowings, and deposits are reported net. Cash on hand or on deposit with the Federal Reserve Bank was required to meet regulatory reserve and clearing requirements. These amounts were $ 16.4 million and $14.4 million as of December 31, 2019 and 2018, respectively and are included in Cash and Due from Banks. |
Securities Purchased Under Agreements to Resell | Securities Purchased Under Agreements to Resell The Company enters into purchases of securities under agreements to resell substantially identical securities. Securities purchased under agreements to resell consist of U.S. Treasury securities. The amounts advanced under these agreements are reflected as assets. It is the Company’s policy to take possession of securities purchased under agreements to resell. Agreements with third parties specify the Company’s rights to request additional collateral, based on its monitoring of the fair value of the underlying securities on a daily basis. The securities are delivered by appropriate entry into the Company’s account maintained at the Federal Reserve Bank or into a third-party custodian’s account designated under a written custodial agreement that explicitly recognizes the Company’s interest in the securities. These agreements renew monthly until cancelled. |
Investment Securities | Investment Securities Debt securities that management has the intent and ability to hold to maturity are classified as securities held to maturity and are recorded at amortized cost. Securities not classified as securities held to maturity, including equity securities with readily, determinable fair values, are securities available for sale and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss), net of the related tax effect. There were no held to maturity or trading securities at December 31, 2019 and 2018. Purchase premiums and discounts are recognized in interest income using methods approximating the interest method over the terms of the securities. A decline in the market value of any available for sale or held to maturity security below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security. The general standards of accounting for other than temporary impairment (OTTI) losses requires the recognition of an OTTI loss in earnings only when an entity (1) intends to sell the debt security; (2) more likely than not will be required to sell the security before recovery of its amortized cost basis or (3) does not expect to recover the entire amortized cost basis of the security. Realized gains and losses for securities classified as available for sale and held to maturity are included in earnings and are derived using the specific identification method for determining the amortized cost of securities sold. |
Federal Home Loan Bank Stock | Federal Home Loan Bank Stock Federal Home Loan Bank (FHLB) stock represents an equity interest in a FHLB. It does not have a readily determinable fair value because its ownership is restricted and it lacks a market. The amount of FHLB stock held by the Company is required by the FHLB to be maintained and is based on membership requirements and terms of advance agreements. Such restricted equity securities without a readily determinable fair value are recorded at cost. The Company believes its holdings in the stock is ultimately recoverable at par value and therefore determined that FHLB stock was not other-than-temporarily impaired. In addition, the Company has ample liquidity and does not require redemption of its FHLB stock in the foreseeable future. |
Loans Held for Sale | Loans Held for Sale Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Loans transferred to the held-for-sale category are transferred at the lower of cost or fair value, with charges made recognized as a realized loss on sale of loans. Increases in fair value are not recognized until the loans are sold. Realized gains and losses on sales of loans are based upon specific identification of the loan sold and included in noninterest income. Loans held for sale are generally sold with servicing rights retained and recorded at fair value at sale as servicing assets. The Company typically sells the guaranteed portion of SBA loans and retains the unguaranteed portion (“retained interest”). A portion of the premium on sale of SBA loans is recognized as gain on sale of loans at the time of the sale by allocating the carrying amount between the asset sold and the retained interest, including these servicing assets, based on their relative fair values. The remaining portion of the premium is recorded as a discount on the retained interest and is amortized over the remaining life of the loan as an adjustment to yield. The retained interest, net of any discount, are included in loans, less allowance for loan losses in the accompanying consolidated balance sheets. |
Loans | Loans Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal, adjusted for any charge-offs, the allowance for loan losses, any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. Interest on commercial, real estate loans and installment loans is credited to income on a daily basis based upon the principal amount outstanding. Loan origination fees and certain direct origination costs, less the costs associated with closing the loan, are capitalized and recognized as an adjustment of the yield of the related loan. Interest income on mortgage and commercial loans is discontinued and placed on non-accrual status at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Mortgage loans are charged off at 180 days past due, and commercial loans are charged off to the extent principal or interest is deemed uncollectible. Consumer loans continue to accrue interest until they are charged off no later than 120 days past due unless the loan is in the process of collection. Past-due status is based on the contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Non-accrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. When interest accrual is discontinued, all unpaid accrued interest is reversed against current interest income. Interest income is subsequently recognized only to the extent cash payments are received. Loans are returned to accrual status when all the principal and interest amounts contractually due are reasonably assured of repayment within a reasonable time frame. A loan is considered impaired when, based on current information and events, it is probable the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impaired loans are measured by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the estimated fair value of the collateral if the loan is collateral dependent. The amount of impairment, if any, and any subsequent changes are included in the allowance for loan losses. The Company has sold guaranteed portions of Small Business Administration (SBA) loans in the SBA secondary market and continues to service these loans. Gains or losses on guaranteed portions of SBA loans which are sold are recorded in other income, based on the net proceeds received and the basis in the portion of the loan sold. The basis in the portion of the loan sold is determined by allocating a portion of the loan carrying value to the portion sold based on its fair value, relative to the fair value of the portion of the loan retained and the estimated servicing asset. |
Purchased Loans | Purchased Loans Purchased loans having evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments, are accounted for under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality . ASC 310-30 requires that acquired credit-impaired loans to be recorded at fair value and prohibits carryover of the related allowance for loan losses. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the non-accretable discount. The Company must estimate expected cash flows at each reporting date. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior provisions and adjust accretable discount if no prior provisions have been made. This increase in accretable discount will have a positive impact on interest income. In addition, purchased loans without evidence of credit deterioration are also handled under this method. Loans acquired that do not have evidence of credit deterioration since origination are accounted for under ASC 310-20, Nonrefundable Fees and Other Costs . Interest is recognized using the simple interest method. |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to expense. The allowance for loan losses is increased by provision charges to income and decreased by charge-offs (net of recoveries). Loans are charged against the allowance for loan losses when management believes the collection of the principal is unlikely. The allowance for loan losses is maintained at a level believed adequate by management to absorb estimated probable inherent loan losses and estimated losses relating to specifically identified loans. Management’s periodic evaluation of the adequacy of the allowance is based upon many factors, including loan growth, net charge-offs, changes in the composition of the loan portfolio, delinquencies, management’s assessment of the quality of the loan portfolio, the valuation of problem loans and the general economic conditions in our market areas. This evaluation is inherently subjective as it requires material estimates that are susceptible to significant change including the amounts and timing of future cash flows expected to be received on impaired loans. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for losses on loans. Such agencies may require the Company to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated. The allowance for loan losses may consist of specific, general, and unallocated components. The specific component relates to loans that are classified as impaired. A loan is considered impaired when, based on current information and events, it is probable the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (TDRs) and classified as impaired. Impaired loans are measured by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the estimated fair value of the collateral if the loan is collateral dependent. The amount of the impairment, if any, and any subsequent changes are included in the allowance for loan losses. General allowances are established for non-impaired loans. These loans are assigned a risk rating, and the allocated allowance for loan losses is determined based upon the loss percentage factors that correspond to each risk rating. Loss percentage factors are based on both historical loss experience and peer data, adjusted for qualitative factors. The qualitative factors consider credit concentrations, recent levels and trends in delinquencies and nonaccrual loans, and growth in the loan portfolio. The occurrence of certain events could result in changes to the loss factors. Accordingly, these loss factors are reviewed periodically and modified by management. General allowances are established for loans that can be pooled into pools based on similar characteristics. Loss percentage factors applied to these pools are based on an analysis of historical charge-off experience and expected losses given default derived from the Company’s internal risk rating process. These factors are developed and applied to the portfolio in terms of loan type and line of business. Adjustments are also made to the allowance for the pools after an assessment of internal and external influences on credit quality that have not yet been reflected in the historical loss or risk rating data. The general allowances are determined based on consideration of historical loss data, the various risk characteristics of each loan segment, and whether the loans are within or outside the Company’s general market area. Risk characteristics relevant to each portfolio segment are as follows: Construction and development – Loans in this segment primarily include real estate development loans for which payment is derived from the sale of the property as well as construction projects in which the property will ultimately be used by the borrower. Credit risk is affected by cost overruns, time to sell at an adequate price, and market conditions. Commercial real estate – Loans in this segment are primarily income-producing properties. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Management monitors the cash flows of these loans. Commercial and industrial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased customer spending, will have an effect on the credit quality in this segment. Single family residential mortgages – Loans in this segment include loans for residential real estate. Loans in this segment are dependent on credit quality of the individual borrower. The overall health of the economy, including unemployment rates will have an effect on the credit quality of this segment. Consumer and other – Loans in this segment are made to individuals and are secured by personal assets, as well as loans for farmland and other loans. Loans in this segment are dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates will have an effect on the credit quality in this segment. |
Foreclosed Real Estate | Foreclosed Real Estate Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and are initially recorded at the lesser of the investment in the property or fair value less selling costs at the date of foreclosure establishing a new cost basis. Any write down to fair value at the time of foreclosure is charged to the allowance for loan losses. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of carrying amount or fair value less cost to sell. Costs of improvements are capitalized, whereas costs relating to holding foreclosed real estate and subsequent adjustment to the value are expensed. |
Premises and Equipment | Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation, computed principally on the straight-line method over the estimated useful lives of the assets. Leasehold improvements have a useful life equal to the shorter of useful life or lease term. Maintenance and repairs that do not extend the useful life of the premises and equipment are charged to expense. The useful lives of premises and equipment are as follows: Asset Type Useful Life Building 40 years Leasehold improvements 3-20 years Furniture, fixtures, and equipment 5-7 years Computer equipment 4-5 years Computer software 3 years |
Intangible Assets | Intangible Assets Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. |
SBA and USDA Loan Servicing Rights | SBA and USDA Loan Servicing Rights SBA and USDA Loan servicing rights on originated loans that have been sold are capitalized by allocating the total cost of the loans between the loan servicing rights and the loans based on their relative fair values. Capitalized servicing rights are measured at fair value at each reporting date and changes in fair value are reported in earnings in the period they occur. Fair values are estimated using either an independent valuation or by discounted cash flows based on a current market interest rate. |
Residential Mortgage Servicing Rights | Residential Mortgage Servicing Rights When residential mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. Residential mortgage servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Residential mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Residential mortgage servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal; or a fixed amount per loan and are recorded as income when earned. The amortization of residential mortgage servicing rights is netted against loan servicing fee income. |
Bank Owned Life Insurance (BOLI) | Bank Owned Life Insurance (BOLI) The Company has purchased life insurance on the lives of certain key officers of the Company. The Company purchased these life insurance policies to generate income to offset the Company’s cost of providing various employee benefits. BOLI is recorded at its cash surrender value, net of surrender charges and/or early termination charges that are probable at settlement. The increase in cash value is recorded as other income. |
Stock Based Compensation Plan | Stock Based Compensation Plan The Company follows Financial Accounting Standards Board (FASB) ASC 718, Compensation - Stock Compensation , which requires all share-based payments to employees, including grants of employee stock options and restricted stock, to be recognized as compensation expense in the financial statements based on fair value. FASB ASC 718 requires recognition of expense equal to the fair value of the option or restricted stock share, determined using the calculated value method, over the vesting period of the option. As of December 31, 2019, there was $714,000 of unrecognized compensation cost related to stock options and $1. 1 million of unrecognized compensation cost for restricted stock outstanding. The compensation cost for stock options and restricted stock recognized in net income was $1.5 million for the years ended December 31, 2019 and 2018, respectively. The fair value of stock options and warrants used to compute the recognized expense is estimated using the Black-Scholes option pricing model. This model requires input of subjective assumptions, including the expected price volatility of the underlying stock. Projected data related to the expected volatility and expected life of the stock option is based upon historical and other information. Changes in these subjective assumptions can materially affect the fair value estimates. Prior to becoming a public company in October 2019, FASB ASC 718 allowed non-public companies to use calculated value to determine the expected price volatility of underlying stock for use in the model. For options granted prior to 2019, the calculated value for the Company was obtained by determining the historical volatility of public companies in the Company’s industry sector. |
Income Taxes | Income Taxes The provision for income taxes is based on income and expense reported for financial statement purposes after the adjustment for permanent differences such as tax-exempt income. Deferred income tax assets and liabilities are determined using the balance sheet method, reflecting a net deferred tax asset or liability based on the tax effects of the temporary differences between the book and tax bases of assets and liabilities, giving recognition to changes in tax rates and laws. A net deferred tax asset is evaluated for realization, and reduced by a valuation allowance when determined it is more likely than not that the asset will not be fully realized. In accordance with ASC 740-10 Income Taxes it is the Company’s policy to recognize interest and penalties associated with uncertain tax positions as components of income taxes and to disclose the recognized interest and penalties, if material. Management has evaluated all tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain tax positions at December 31, 2019 and 2018. Further, all years subsequent to 2016 remain subject to evaluation. |
Earnings Per Share | Earnings Per Share Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. All outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements. |
Comprehensive Income | Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. |
Loan Commitments and Related Financial Instruments | Loan Commitments and Related Financial Instruments In the ordinary course of business, the Company has entered into off balance sheet financial instruments, which are not reflected in the financial statements and consist of commitments to extend credit, commercial letters of credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable. The Company uses the same credit policies for these off-balance-sheet financial instruments as it does for other instruments that are recorded in the financial statements. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Quoted market prices, if available, are utilized as estimates of the fair values of financial instruments. Since no quoted market prices exist for a significant part of the Company's financial instruments, the fair values of such instruments have been derived based on management's assumptions, the estimated amount and timing of future cash flows and estimated discount rates. |
Loss Contingencies | Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters which will have a material effect on the financial statements. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 15. Fair value estimates involve uncertainties and matters of significant judgement regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates. |
Operating Segments | Operating Segments While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment. |
Reclassifications | Reclassifications Some items in the prior year financial statements were reclassified to conform to current presentation. Reclassifications had no effect on prior years net income or shareholders’ equity. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) to provide guidance on the treatment of the income tax effects of items in other comprehensive income resulting from the recently enacted Tax Cuts and Jobs Act. Under previous guidance, when revaluing any deferred tax assets or liabilities to the newly enacted rate, any associated items in accumulated other comprehensive income would not have been revalued reflecting the appropriate tax rate and would have been instead left in accumulated other comprehensive income as a stranded tax effect. The new standard allows for the stranded tax effects resulting from the Act to be reclassified from accumulated other comprehensive income to retained earnings. Adoption was effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within the fiscal year with early adoption permitted. The Company adopted this guidance during the first quarter of 2018, which resulted in a reclassification adjustment of $13,000 from accumulated other comprehensive loss to retained earnings. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718) to provide clarity, reduce diversity in practice, and reduce cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, regarding a change to the terms or conditions of a share-based payment award. ASU 2017-09 provides guidance concerning which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Specifically, an entity is to account for the effects of a modification, unless all of the following are satisfied: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified; (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or as a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this ASU. The amendments of ASU 2017-09 became effective for the Company on January 1, 2018 and had no impact on the Company’s consolidated financial statements. However, should the Company modify the terms or conditions of any share-based payment awards in the future, this modification would be evaluated and disclosed as appropriate based on the amendments of ASU 2017-09. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 amends the existing standards for lease accounting effectively requiring that most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability. ASU 2016-02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of an entity’s leasing activities. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted ASU 2016-02 during the first quarter of 2019 and elected the optional transition method. The Company also elected the package of practical expedients provided in the guidance which permits the Company to not reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the hindsight practical expedient to determine lease term and in assessing impairment of the Company’s right-of-use asset. The adoption of ASU 2016-02 resulted in the recognition of a right-of-use asset of $13.6 million, a lease liability of $14.0 million, and a cumulative effect decrease to retained earnings of $255,000. See Note 5 - Operating Leases for additional information. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer, as well as enhanced disclosure requirements. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 to fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2017. In March 2016, the FASB issued ASU 2016-08 which clarified the revenue recognition implementation guidance on principal versus agent considerations and is effective during the same period as ASU 2014-09. In April 2016, the FASB issued ASU 2016-10 which clarified the revenue recognition guidance regarding the identification of performance obligations and the licensing implementation and is effective during the same period as ASU 2014-09. In May 2016, the FASB issued ASU 2016-12 which narrowly amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition. ASU 2016-12 is effective during the same period as ASU 2014-09. The majority of the Company’s revenue consists of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09. The Company adopted the new standard beginning January 1, 2018. The Company completed its analysis for determining the extent ASU 2014-09 will affect its noninterest income, primarily in the area of fees and service charges on deposit accounts and trade finance activities. Based on the analysis performed, the Company did not have a material change in the timing or measurement of revenues related to noninterest income. This guidance did not have a material impact on the Company’s consolidated financial statements. See Note 13 - Revenue Recognition for further details. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The update is effective for interim and annual periods in fiscal years beginning after December 31, 2019, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2020 permitted for new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The adoption of this standard is not expected to have a material effect on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and similar instruments) and net investments in leases recognized by a lessor. For debt securities with other-than-temporary impairment (OTTI), the guidance will be applied prospectively. Existing purchased credit impaired (PCI) assets will be grandfathered and classified as purchased credit deteriorated (PCD) assets at the date of adoption. The assets will be grossed up for the allowance of expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance. Adoption is effective for interim and annual reporting periods beginning after December 15, 2022. The Company has selected a software solution supported by a third-party vendor to be used in developing an expected credit loss model compliant with ASU 2016-13. We will continue to evaluate the impact of this new accounting standard through its effective date. The Company has further evaluated other Accounting Standards Updates issued during 2019 but does not expect updates other than those summarized above to have a material impact on the consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of useful lives of premises and equipment | Asset Type Useful Life Building 40 years Leasehold improvements 3-20 years Furniture, fixtures, and equipment 5-7 years Computer equipment 4-5 years Computer software 3 years |
SECURITIES AVAILABLE FOR SALE (
SECURITIES AVAILABLE FOR SALE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SECURITIES AVAILABLE FOR SALE. | |
Schedule of available for sale securities | December 31, 2019 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 12,436 $ — $ — $ 12,436 States and political subdivisions 1,246 33 — 1,279 Mortgage-backed GSE residential 2,015 — (35) 1,980 Total $ 15,697 $ 33 $ (35) $ 15,695 December 31, 2018 Gross Gross Gross Estimated Amortized Unrealized Unrealized Fair (Dollars in thousands) Cost Gains Losses Value Obligations of U.S. Government entities and agencies $ 15,183 $ — $ — $ 15,183 States and political subdivisions 1,248 — (35) 1,213 Mortgage-backed GSE residential 2,607 — (115) 2,492 Total $ 19,038 $ — $ (150) $ 18,888 |
Schedule of available for sale securities by contractual maturities | Securities Available for Sale Amortized Estimated (Dollars in thousands) Cost Fair Value Due in one year or less $ 810 $ 810 Due after one year but less than five years 2,324 2,324 Due after five years but less than ten years 4,241 4,274 Due in more than ten years 6,307 6,307 Mortgage-backed GSE residential 2,015 1,980 Total $ 15,697 $ 15,695 |
Schedule of available for sale securities by investment category and length of time | December 31, 2019 Twelve Months or Less Over Twelve Months Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair (Dollars in thousands) Losses Value Losses Value Mortgage-backed GSE residential — — (35) 1,975 Total $ — $ — $ (35) $ 1,975 December 31, 2018 Twelve Months or Less Over Twelve Months Gross Estimated Gross Estimated Unrealized Fair Unrealized Fair (Dollars in thousands) Losses Value Losses Value States and political subdivisions $ (35) $ 1,213 $ — $ — Mortgage-backed GSE residential — — (115) 2,492 Total $ (35) $ 1,213 $ (115) $ 2,492 |
LOANS AND ALLOWANCE FOR LOAN _2
LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | |
Summary of major classifications of loans | December 31, (Dollars in thousands) 2019 2018 Construction and development $ 31,739 $ 42,718 Commercial real estate 424,950 396,598 Commercial and industrial 53,105 33,100 Residential real estate 651,645 670,341 Consumer and other 1,768 2,957 Total loans receivable 1,163,207 1,145,714 Unearned income (2,045) (2,139) Allowance for loan losses (6,839) (6,645) Loans, net $ 1,154,323 $ 1,136,930 |
Schedule of allowance for loan losses by portfolio segment | Year Ended December 31, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Charge-offs — (237) (14) — (525) — (776) Recoveries — 752 — — 218 — 970 Provision (104) (796) 82 415 11 392 — Ending balance $ 131 $ 2,320 $ 448 $ 3,457 $ 91 $ 392 $ 6,839 Year Ended December 31, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 127 $ 2,135 $ 261 $ 3,048 $ 1,170 $ 184 $ 6,925 Charge-offs — (88) (39) — (1,939) — (2,066) Recoveries — 22 — — 527 — 549 Provision 108 532 158 (6) 629 (184) 1,237 Ending balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Year Ended December 31, 2017 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Beginning balance $ 116 $ 2,854 $ 257 $ 1,656 $ 5 $ 582 $ 5,470 Charge-offs — (131) — — (1,513) — (1,644) Recoveries — 41 — — — — 41 Provision 11 (629) 4 1,392 2,678 (398) 3,058 Ending balance $ 127 $ 2,135 $ 261 $ 3,048 $ 1,170 $ 184 $ 6,925 The following tables present, by portfolio segment, the balance in the allowance for loan losses disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans as of December 31, 2019 and 2018. December 31, 2019 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Individually evaluated for impairment $ — $ 716 $ 30 $ — $ — $ — $ 746 Collectively evaluated for impairment 131 1,604 418 3,457 9 392 6,011 Acquired with deteriorated credit quality — — — — 82 — 82 Total ending allowance balance $ 131 $ 2,320 $ 448 $ 3,457 $ 91 $ 392 $ 6,839 Loans: Individually evaluated for impairment $ 1,360 $ 7,527 $ 957 $ 7,936 $ — $ — $ 17,780 Collectively evaluated for impairment 30,076 415,773 52,056 643,709 958 — 1,142,572 Acquired with deteriorated credit quality — — — — 810 — 810 Total ending loans balance $ 31,436 $ 423,300 $ 53,013 $ 651,645 $ 1,768 $ — $ 1,161,162 December 31, 2018 Construction and Commercial Commercial Residential Consumer (Dollars in thousands) Development Real Estate and Industrial Real Estate and Other Unallocated Total Allowance for loan losses: Individually evaluated for impairment $ 117 $ 872 $ 110 $ — $ — $ — $ 1,099 Collectively evaluated for impairment 118 1,729 270 3,042 3 — 5,162 Acquired with deteriorated credit quality — — — — 384 — 384 Total ending allowance balance $ 235 $ 2,601 $ 380 $ 3,042 $ 387 $ — $ 6,645 Loans: Individually evaluated for impairment $ 1,360 $ 8,144 $ 986 $ 1,722 $ — $ — $ 12,212 Collectively evaluated for impairment 40,928 386,819 32,040 668,619 316 — 1,128,722 Acquired with deteriorated credit quality — — — — 2,641 — 2,641 Total ending loans balance $ 42,288 $ 394,963 $ 33,026 $ 670,341 $ 2,957 $ — $ 1,143,575 |
Summary of impaired loans by portfolio segment | Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2019 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ 1,360 $ — $ 1,360 $ — Commercial real estate 7,527 4,716 2,882 7,598 716 Commercial and industrial 957 925 39 964 30 Residential real estate 7,936 7,936 — 7,936 — Total $ 17,780 $ 14,937 $ 2,921 $ 17,858 $ 746 Unpaid Recorded Recorded Total Investment Investment Total (Dollars in thousands) Principal With No With Recorded Related December 31, 2018 Balance Allowance Allowance Investment Allowance Construction and development $ 1,360 $ — $ 1,360 $ 1,360 $ 117 Commercial real estate 8,144 5,312 2,967 8,279 872 Commercial and industrial 986 302 684 986 110 Residential real estate 1,722 1,722 — 1,722 — Total $ 12,212 $ 7,336 $ 5,011 $ 12,347 $ 1,099 |
Summary of average recorded investment in impaired loans | Years Ended December 31, 2019 2018 2017 Average Interest Average Interest Average Interest Recorded Income Recorded Income Recorded Income (Dollars in thousands) Investment Recognized Investment Recognized Investment Recognized Construction and development $ 1,360 $ 6 $ 1,922 $ 68 $ 2,610 $ 95 Commercial real estate 8,057 629 7,474 653 6,972 431 Commercial and industrial 966 33 1,165 25 900 34 Residential real estate 6,278 104 1,705 99 — — Total $ 16,661 $ 772 $ 12,266 $ 845 $ 10,482 $ 560 |
Schedule of delinquent amounts by portfolio segment | Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2019 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 30,076 $ — $ — $ — $ 1,360 $ 31,436 Commercial real estate 419,406 973 — 973 2,921 423,300 Commercial and industrial 52,936 58 — 58 19 53,013 Residential real estate 625,222 18,487 — 18,487 7,936 651,645 Consumer and other 1,768 — — — — 1,768 Total $ 1,129,408 $ 19,518 $ — $ 19,518 $ 12,236 $ 1,161,162 Accruing Total Total (Dollars in thousands) Greater than Accruing Financing December 31, 2018 Current 30-89 Days 90 Days Past Due Nonaccrual Receivables Construction and development $ 42,288 $ — $ — $ — $ — $ 42,288 Commercial real estate 390,601 1,102 — 1,102 3,260 394,963 Commercial and industrial 32,315 26 — 26 685 33,026 Residential real estate 651,439 17,180 — 17,180 1,722 670,341 Consumer and other 2,957 — — — — 2,957 Total $ 1,119,600 $ 18,308 $ — $ 18,308 $ 5,667 $ 1,143,575 |
Summary of purchased loans by risk rating | Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2019 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 30,076 $ 416,183 $ 52,033 $ 641,544 $ 1,768 $ 1,141,604 Special Mention — 800 — — — 800 Substandard 1,360 6,317 980 10,101 — 18,758 Doubtful — — — — — — Loss — — — — — — Total $ 31,436 $ 423,300 $ 53,013 $ 651,645 $ 1,768 $ 1,161,162 Construction (Dollars in thousands) and Commercial Commercial Residential Consumer December 31, 2018 Development Real Estate and Industrial Real Estate and Other Total Rating: Pass $ 40,928 $ 383,857 $ 32,040 $ 667,249 $ 2,957 $ 1,127,031 Special Mention — 5,112 — — — 5,112 Substandard 1,360 5,994 986 3,092 — 11,432 Doubtful — — — — — — Loss — — — — — — Total $ 42,288 $ 394,963 $ 33,026 $ 670,341 $ 2,957 $ 1,143,575 |
Schedule of TDRs classified separately as accrual and non-accrual | (Dollars in thousands) December 31, 2019 Accruing Nonaccrual Total Commercial real estate $ 2,437 $ 482 $ 2,919 Commercial and industrial 22 5 27 Total $ 2,459 $ 487 $ 2,946 (Dollars in thousands) December 31, 2018 Accruing Nonaccrual Total Commercial real estate $ 3,298 $ — $ 3,298 Commercial and industrial — 13 13 Total $ 3,298 $ 13 $ 3,311 |
Summary of the types of concessions for loans classified as troubled debt restructurings | (Dollars in thousands) December 31, December 31, Type of Concession 2019 2018 Deferral of payments $ 22 $ 482 Extension of maturity date 2,924 2,829 Total TDR loans $ 2,946 $ 3,311 |
Summary of loans by portfolio segment modified as TDRs and the corresponding recorded investment | December 31, 2019 December 31, 2018 (Dollars in thousands) Number of Recorded Number of Recorded Type Loans Investment Loans Investment Commercial real estate 4 $ 2,923 6 $ 3,527 Commercial and industrial 2 31 1 116 Total 6 $ 2,954 7 $ 3,643 |
Schedule of aggregate loan transactions with related parties | December 31, (Dollars in thousands) 2019 2018 Beginning balance $ 5,540 $ 5,970 New loans and principal advances 1,925 54 Repayments (1,083) (484) Transactions due to changes in related parties — — Ending balance $ 6,382 $ 5,540 |
PREMISES AND EQUIPMENT (Tables)
PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PREMISES AND EQUIPMENT | |
Schedule of premises and equipment | December 31, (Dollars in thousands) 2019 2018 Land $ 2,604 $ 2,604 Building 7,698 7,691 Leasehold improvements 3,944 2,849 Furniture, fixtures and equipment 3,589 3,306 Computer equipment 1,553 1,413 Computer software 563 371 Construction in process 53 725 Premises and equipment, gross 20,004 18,959 Accumulated depreciation (5,544) (4,568) Premises and equipment, net $ 14,460 $ 14,391 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OPERATING LEASES | |
Schedule of components of lease cost | Year Ended (Dollars in thousands) December 31, 2019 Operating lease cost $ 2,169 Variable lease cost 190 Short-term lease cost — Sublease income — Total net lease cost $ 2,359 |
Schedule of Future maturities of the Company’s operating lease liabilities | (Dollars in thousands) Year Ended : Lease Liability December 31, 2020 $ 2,030 December 31, 2021 1,875 December 31, 2022 1,899 December 31, 2023 1,900 December 31, 2024 1,789 After December 31, 2024 4,517 Total lease payments 14,010 Less: interest discount (1,534) Present value of lease liabilities $ 12,476 |
Schedule Of Supplemental Lease Information | (Dollars in thousands) Supplemental Lease Information December 31, 2019 Weighted-average remaining lease term (years) 7.3 Weighted-average discount rate 3.14 % Year Ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases (cash payments) $ 1,964 Operating cash flows from operating leases (lease liability reduction) $ 1,555 Operating lease right-of-use assets obtained in exchange for leases entered into during the period $ 13,610 |
SBA AND USDA LOAN SERVICING (Ta
SBA AND USDA LOAN SERVICING (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SBA AND USDA LOAN SERVICING | |
Activity for SBA loan servicing rights | For the Year Ended December 31, (Dollars in thousands) 2019 2018 2017 Beginning of period $ 8,419 $ 9,329 $ 8,823 Change in fair value (257) (910) 506 End of period, fair value $ 8,162 $ 8,419 $ 9,329 |
RESIDENTIAL MORTGAGE LOAN SER_2
RESIDENTIAL MORTGAGE LOAN SERVICING (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
RESIDENTIAL MORTGAGE LOAN SERVICING | |
Schedule of activity for mortgage loan servicing rights | Years Ended December 31, (Dollars in thousands) 2019 2018 2017 Beginning of period $ 14,934 $ 6,843 $ — Additions 6,921 10,253 7,500 Disposals — — — Amortization expense (3,787) (2,162) (657) End of period, carrying value $ 18,068 $ 14,934 $ 6,843 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
DEPOSITS. | |
Schedule of Deposit account balances | December 31, (Dollars in thousands) 2019 2018 Noninterest-bearing demand deposits $ 292,008 $ 299,182 NOW accounts and savings 54,550 58,903 Money market 179,159 62,358 Brokered time deposits — 53,477 Time deposits less than $250,000 582,964 554,279 Time deposits $250,000 or greater 198,696 216,033 Total deposits $ 1,307,377 $ 1,244,232 |
Schedule of Maturities of time deposits | (Dollars in thousands) Year Ended December 31, 2020 $ 770,765 2021 5,045 2022 3,861 2023 918 2024 1,071 Total time deposits $ 781,660 |
FEDERAL HOME LOAN BANK ADVANC_2
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
Schedule of advances from the Federal Home Loan Bank | December 31, (Dollars in thousands) 2019 2018 Convertible advance with Bermudan option maturing August 6, 2029; fixed rate of 0.85% $ 20,000 $ — Convertible advances with Bermudan option maturing November 7, 2029; fixed rate of 0.68% 30,000 — Convertible advance with Bermudan option maturing December 5, 2029; fixed rate of 0.75% 10,000 — Total FHLB advances $ 60,000 $ — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of components of income tax expense | Years Ended December 31, (Dollars in thousands) 2019 2018 2017 Current tax provision: Federal $ 11,028 $ 12,210 $ 15,781 State 4,034 2,102 2,506 Total current tax provision 15,062 14,312 18,287 Deferred tax provision: Federal 793 308 (56) Deferred tax adjustment for enacted change in Federal tax rate — — (176) State 295 47 98 Total deferred tax provision (benefit) 1,088 355 (134) Total provision for income taxes $ 16,150 $ 14,667 $ 18,153 |
Schedule of reconciliation of the recorded provision for income taxes to amount of statutory Federal income tax rate | Years Ended December 31, 2019 2018 2017 (Dollars in thousands) Amount % Amount % Amount % Federal statutory tax rate $ 12,782 21.0 % $ 11,775 21.0 % $ 17,517 35.0 % Differences resulting from: State income taxes, net of federal benefit 3,420 5.6 1,660 3.0 1,139 2.3 Permanent book to tax differences (135) (0.2) — — — — Deferred tax writedown for enacted tax rate changes — — — — (176) (0.3) Other items, net 83 0.1 1,232 2.2 (327) (0.7) Provision for income taxes $ 16,150 26.5 % $ 14,667 26.2 % $ 18,153 36.3 % |
Schedule of deferred tax assets and liabilities | December 31, (Dollars in thousands) 2019 2018 Deferred tax assets: Allowance for loan losses $ 1,919 $ 1,692 Nonaccrual interest 221 175 Deferred loan fees 119 — Lease liabilities under operating leases 3,501 — Unrealized losses on securities available for sale 1 46 Other 277 — Total gross deferred tax assets 6,038 1,913 Deferred tax liabilities: Deferred mortgage servicing fees (2,535) (1,389) Deferred SBA servicing fees (2,206) (2,069) Premises and equipment (599) (368) Right-of-use assets under operating leases (3,355) — Other (254) (16) Total gross deferred tax liabilities (8,949) (3,842) Net deferred tax liabilities $ (2,911) $ (1,929) |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
STOCK BASED COMPENSATION | |
Summary of stock option activity | Weighted Average Aggregate Weighted Remaining Intrinsic Average Contractual Value Shares Exercise Price Term (in years) (in thousands) Outstanding at January 1, 2017 260,000 $ 2.64 Granted — — Exercised (260,000) 2.64 $ 708 Forfeited — — Outstanding at December 31, 2017 — $ — Granted 240,000 12.70 Exercised — — Forfeited — — Outstanding at December 31, 2018 240,000 $ 12.70 2.50 $ 912 Granted — — Exercised — — Forfeited — — Outstanding at December 31, 2019 240,000 $ 12.70 1.50 $ 1,154 |
Summary of restricted stock activity | Years Ended December 31, 2019 2018 2017 Weighted Weighted Weighted Average Grant- Average Grant- Average Grant- Shares Date Fair Value Shares Date Fair Value Shares Date Fair Value Nonvested shares at beginning of year 278,202 $ 7.07 280,310 $ 4.39 251,428 $ 3.10 Granted 48,724 13.75 181,072 9.85 203,254 5.36 Vested (157,316) 6.68 (183,180) 5.72 (174,372) 3.67 Forfeited (406) 9.85 — — — — Nonvested shares at end of year 169,204 $ 9.35 278,202 $ 7.07 280,310 $ 4.39 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | |
Schedule of earnings per share computation | Year Ended December 31, (Dollars in thousands except per share data) 2019 2018 2017 Basic earnings per share Net Income $ 44,718 $ 41,334 $ 31,897 Weighted average common shares outstanding 24,533,180 24,184,790 23,858,696 Basic earnings per common share $ 1.82 $ 1.71 $ 1.34 Diluted earnings per share Net Income $ 44,718 $ 41,334 $ 31,897 Weighted average common shares outstanding for basic earnings per common share 24,533,180 24,184,790 23,858,696 Add: Dilutive effects of restricted stock and options 196,355 290,908 280,310 Average shares and dilutive potential common shares 24,729,535 24,475,698 24,139,006 Diluted earnings per common share $ 1.81 $ 1.69 $ 1.32 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of financial instruments whose contract amounts represent credit risk | December 31, (Dollars in thousands) 2019 2018 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 64,243 $ 65,283 Standby letters of credit $ 5,213 $ 4,250 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE | |
Schedule of fair values of assets and liabilities measured on recurring and non-recurring basis | December 31, 2019 Total Gains (Dollars in thousands) Total Level 1 Level 2 Level 3 (Losses) Assets Recurring fair value measurements: Securities available for sale: Obligations of U.S. Government entities and agencies $ 12,436 $ — $ — $ 12,436 States and political subdivisions 1,279 — 1,279 — Mortgage-backed GSE residential 1,980 — 1,980 — Total securities available for sale 15,695 — 3,259 12,436 SBA servicing asset 8,162 — — 8,162 Interest only strip 26 — — 26 $ 23,883 $ — $ 3,259 $ 20,624 Non-recurring fair value measurements: Impaired loans $ 4,523 $ — $ — $ 4,523 $ 338 December 31, 2018 Total Gains (Dollars in thousands) Total Level 1 Level 2 Level 3 (Losses) Assets Recurring fair value measurements: Securities available for sale: Obligations of U.S. Government entities and agencies $ 15,183 $ — $ — $ 15,183 States and political subdivisions 1,213 — 1,213 — Mortgage-backed GSE residential 2,492 — 2,492 — Total securities available for sale 18,888 — 3,705 15,183 SBA servicing asset 8,419 — — 8,419 Interest only strip 27 — — 27 $ 27,334 $ — $ 3,705 $ 23,629 Non-recurring fair value measurements: Impaired loans $ 3,472 $ — $ — $ 3,472 $ 169 |
Schedule of reconciliation of fair values of assets and liabilities measured on recurring basis using unobservable inputs | Obligations of SBA U.S. Government Servicing Interest Only (Dollars in thousands) Entities and Agencies Asset Strip Liabilities Fair value, January 1, 2019 $ 15,183 $ 8,419 $ 27 $ — Total loss included in income — (257) (1) — Settlements — — — — Prepayments/paydowns (2,747) — — — Transfers in and/or out of level 3 — — — — Fair value, December 31, 2019 $ 12,436 $ 8,162 $ 26 $ — Fair value, January 1, 2018 $ 16,661 $ 9,329 $ 36 $ — Total loss included in income — (910) (9) — Settlements — — — — Prepayments/paydowns (1,478) — — — Transfers in and/or out of level 3 — — — — Fair value, December 31, 2018 $ 15,183 $ 8,419 $ 27 $ — Fair value, January 1, 2017 $ 23,916 $ 8,823 $ 30 $ — Total gain included in income — 506 6 — Settlements — — — — Prepayments/paydowns (7,255) — — — Transfers in and/or out of level 3 — — — — Fair value, December 31, 2017 $ 16,661 $ 9,329 $ 36 $ — |
Schedule of quantitative information about recurring Level 3 fair value measures | Valuation Unobservable General Technique Input Range December 31, 2019 Obligations of U.S. Government entities and agencies Discounted Cash Flows Discount Rate 0%-3% SBA servicing asset and interest only strip Discounted Cash Flows Prepayment speed 10.82%-16.54% Discount rate 5.80%-12.06% December 31, 2018 Obligations of U.S. Government entities and agencies Discounted Cash Flows Discount Rate 0%-3% SBA servicing asset and interest only strip Discounted Cash Flows Prepayment speed 6.82%-12.87% Discount rate 8.78%-14.56% |
Schedule of carrying amounts and estimated fair values of Company's financial instruments | Carrying Estimated Fair Value at December 31, 2019 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 276,413 $ — $ 276,413 $ — $ 276,413 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 15,695 — 3,259 12,436 15,695 FHLB stock 3,842 — — — N/A Loans, net 1,154,323 — — 1,169,214 1,169,214 Loans held for sale 85,793 — 88,178 — 88,178 Accrued interest receivable 5,101 — — 5,101 5,101 SBA servicing assets 8,162 — — 8,162 8,162 Mortgage servicing assets 18,068 — — 19,035 19,035 Interest only strips 26 — — 26 26 Financial Liabilities: Deposits 1,307,377 — 1,308,946 — 1,308,946 Federal Home Loan Bank advances 60,000 — 60,000 — 60,000 Other borrowings 3,129 — 3,129 — 3,129 Accrued interest payable 890 — 890 — 890 Carrying Estimated Fair Value at December 31, 2018 (Dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets: Cash, due from banks, and federal funds sold $ 138,427 $ — $ 138,427 $ — $ 138,427 Securities purchased under agreements to resell 15,000 — 15,000 — 15,000 Investment securities 18,888 — 3,705 15,183 18,888 FHLB stock 1,163 — — — N/A Loans, net 1,136,930 — — 1,166,945 1,166,945 Loans held for sale 56,865 — 56,865 — 56,865 Accrued interest receivable 4,957 — — 4,957 4,957 SBA servicing asset 8,419 — — 8,419 8,419 Mortgage servicing assets 14,934 — — 16,460 16,460 Interest only strips 27 — — 27 27 Financial Liabilities: Deposits 1,244,232 — 1,242,863 — 1,242,863 Other borrowings 4,257 — 4,257 — 4,257 Accrued interest payable 1,251 — 1,251 — 1,251 |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
REGULATORY MATTERS | |
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations | The actual capital amounts (in thousands) and ratios of the Company and Bank are presented in the following table: To Be Well Capitalized For Capital Under Prompt Corrective (Dollars in thousands) Actual Adequacy Purposes: Action Provisions: Amount Ratio Amount ≥ Ratio ≥ Amount ≥ Ratio ≥ As of December 31, 2019 Total Capital (to Risk Weighted Assets) Consolidated $ 215,377 22.01 % N/A * N/A * N/A N/A Bank 199,539 20.40 % 78,251 8.0 % 97,814 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 208,538 21.31 % N/A * N/A * N/A N/A Bank 192,700 19.70 % 58,688 6.0 % 78,251 8.0 % Common Tier 1 (CET1) Consolidated 208,538 21.31 % N/A * N/A * N/A N/A Bank 192,700 19.70 % 44,016 4.5 % 63,579 6.5 % Tier 1 Capital (to Average Assets) Consolidated 208,538 12.70 % N/A * N/A * N/A N/A Bank 192,700 11.74 % 65,655 4.0 % 82,069 5.0 % As of December 31, 2018 Total Capital (to Risk Weighted Assets) Consolidated $ 166,851 18.16 % N/A * N/A * N/A N/A Bank 163,339 17.80 % 73,392 8.0 % 91,740 10.0 % Tier I Capital (to Risk Weighted Assets) Consolidated 160,207 17.44 % N/A * N/A * N/A N/A Bank 156,696 17.08 % 55,044 6.0 % 73,392 8.0 % Common Tier 1 (CET1) Consolidated 160,207 17.44 % N/A * N/A * N/A N/A Bank 156,696 17.08 % 41,283 4.5 % 59,631 6.5 % Tier 1 Capital (to Average Assets) Consolidated 160,207 11.14 % N/A * N/A * N/A N/A Bank 156,696 10.91 % 57,455 4.0 % 71,819 5.0 % * The Board of Governors of the Federal Reserve raised the threshold for determining applicable of the Small Bank Holding Company and Savings and Loan Company Policy Statement in August 2018 from $1 Billion to $3 Billion in consolidated total assets to provide regulatory burden relief, therefore, the Company is no longer subject to the minimum capital requirements. |
OTHER OPERATING EXPENSES (Table
OTHER OPERATING EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER OPERATING EXPENSES. | |
Schedule of components of other operating expenses | December 31, (Dollars in thousands) 2019 2018 Professional fees $ 1,168 $ 1,029 Miscellaneous loan related 2,187 3,503 Bank security 1,283 1,003 Phone and data service 678 617 Director fees 366 333 Other 2,968 2,980 Total other operating expenses $ 8,650 $ 9,465 |
CONDENSED PARENT COMPANY ONLY_2
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS | |
Schedule of Condensed Balance Sheets | December 31, (Dollars in thousands) 2019 2018 Assets: Cash and due from banks* $ 15,991 $ 2,600 Investment in bank subsidiary* 200,886 165,096 Other assets 367 1,305 Total assets $ 217,244 $ 169,001 Liabilities: Accrued expenses and other liabilities $ 520 $ 393 Total liabilities 520 393 Shareholders' equity: Preferred stock — — Common stock 255 242 Additional paid-in-capital 53,854 39,915 Retained earnings 162,616 128,555 Accumulated other comprehensive loss (1) (104) Total shareholders' equity 216,724 168,608 Total liabilities shareholders' equity $ 217,244 $ 169,001 * Eliminated in consolidation |
Schedule of Condensed Statements of Income | Years Ended December 31, (Dollars in thousands) 2019 2018 2017 Income: Dividends receive from bank subsidiary* $ 10,402 $ 9,291 $ 5,439 Interest income* 48 24 25 Total income 10,450 9,315 5,464 Expenses: Other expense 174 96 35 Total expenses 174 96 35 Income before taxes and equity in undistributed income of subsidiary 10,276 9,219 5,429 Income tax benefit 26 29 24 Income before equity in undistributed income of subsidiary 10,302 9,248 5,453 Equity in undistributed income of subsidiary* 34,416 32,086 26,444 Net Income $ 44,718 $ 41,334 $ 31,897 * Eliminated in consolidation |
Schedule of Condensed Statements of Cash Flows | Years Ended December 31, (Dollars in thousands) 2019 2018 2017 Cash flows from operating activities: Net income $ 44,718 $ 41,334 $ 31,897 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed net income of subsidiary (34,416) (32,086) (26,444) Decrease (increase) in other assets 938 (924) (135) Increase in accrued expenses and other liabilities 92 42 (68) Net cash provided by operating activities 11,332 8,366 5,250 Cash flows from operating activities: Net cash (used in) provided by investing activities — — — Cash flows from financing activities: Issuance of common stock, net of expenses 13,911 — — Exercise of stock options — — 685 Repurchase of common stock (1,485) — — Dividends paid on common stock (10,367) (9,224) (5,401) Net cash provided by (used by) financing activities 2,059 (9,224) (4,716) Net increase (decrease) in cash and cash equivalents 13,391 (858) 534 Cash and cash equivalents, beginning of year 2,600 3,458 2,924 Cash and cash equivalents, end of year $ 15,991 $ 2,600 $ 3,458 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Other Information (Details) | Aug. 30, 2019 | Oct. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Shares sold | $ 13,911,000 | ||||
Proceeds received, before expenses | $ 13,900,000 | 13,911,000 | |||
Underwriting discounts and commission | 1,100,000 | ||||
Expenses of stock issuance | $ 1,600,000 | ||||
Public price offering | $ / shares | $ 13.50 | ||||
Common stock split ratio | 2 | ||||
Cash and due from banks | 270,496,000 | $ 130,263,000 | |||
Compensation cost | 1,526,000 | 1,499,000 | $ 718,000 | ||
Stock Options | |||||
Total unrecognized compensation cost | 714,000 | 1,200,000 | |||
Compensation cost | 476,000 | 238,000 | 0 | ||
Restricted Stock | |||||
Total unrecognized compensation cost | 1,100,000 | 1,500,000 | |||
Compensation cost | 1,000,000 | 1,300,000 | $ 718,000 | ||
Cash and Due From Banks | |||||
Cash and due from banks | $ 16,400,000 | $ 14,400,000 | |||
IPO | |||||
IPO Shares issued (in shares) | shares | 1,224,513 | ||||
Over-Allotment Option | |||||
IPO Shares issued (in shares) | shares | 224,513 | ||||
Proceeds received, before expenses | $ 16,500,000 | ||||
Shares sold in offering | shares | 939,000 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Premises (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Computer software | |
Premises and Equipment | |
Useful life, Finite lived intangible assets | 3 years |
Building | |
Premises and Equipment | |
Useful life, Property plant and equipment | 40 years |
Leasehold improvements | Minimum | |
Premises and Equipment | |
Useful life, Property plant and equipment | 3 years |
Leasehold improvements | Maximum | |
Premises and Equipment | |
Useful life, Property plant and equipment | 20 years |
Furniture, fixtures, and equipment | Minimum | |
Premises and Equipment | |
Useful life, Property plant and equipment | 5 years |
Furniture, fixtures, and equipment | Maximum | |
Premises and Equipment | |
Useful life, Property plant and equipment | 7 years |
Computer equipment | Minimum | |
Premises and Equipment | |
Useful life, Property plant and equipment | 4 years |
Computer equipment | Maximum | |
Premises and Equipment | |
Useful life, Property plant and equipment | 5 years |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Segments (Details) | 12 Months Ended |
Dec. 31, 2019segment | |
SIGNIFICANT ACCOUNTING POLICIES | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Recently Adopted Accounting Pronouncements (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle | ||||
Accumulated other comprehensive loss | $ (1,000) | $ (104,000) | ||
Retained earnings | 162,616,000 | $ 128,555,000 | ||
Right-of-use assets | 11,957,000 | |||
Operating lease liability | 12,476,000 | |||
2016-02 | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Right-of-use assets | $ 13,600,000 | |||
Operating lease liability | 14,000,000 | |||
Cumulative effect decrease to retained earnings | $ 255,000 | $ 255,000 | ||
2018-02 | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Accumulated other comprehensive loss | $ (13,000,000) | |||
Retained earnings | $ 13,000,000 |
SECURITIES AVAILABLE FOR SALE -
SECURITIES AVAILABLE FOR SALE - Amortized cost, gross unrealized gains and losses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Securities Available-for-sale | ||
Gross Amortized Cost | $ 15,697 | $ 19,038 |
Gross Unrealized Gains | 33 | |
Gross Unrealized Losses | (35) | (150) |
Total securities available for sale | 15,695 | 18,888 |
Obligations of U.S. Government entities and agencies. | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 12,436 | 15,183 |
Total securities available for sale | 12,436 | 15,183 |
States and political subdivisions | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 1,246 | 1,248 |
Gross Unrealized Gains | 33 | |
Gross Unrealized Losses | (35) | |
Total securities available for sale | 1,279 | 1,213 |
Mortgage-backed GSE residential | ||
Debt Securities Available-for-sale | ||
Gross Amortized Cost | 2,015 | 2,607 |
Gross Unrealized Losses | (35) | (115) |
Total securities available for sale | $ 1,980 | $ 2,492 |
SECURITIES AVAILABLE FOR SALE_2
SECURITIES AVAILABLE FOR SALE - Expected maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due in one year or less | $ 810 | |
Due after one year but less than five years | 2,324 | |
Due after five years but less than ten years | 4,241 | |
Due in more than ten years | 6,307 | |
Mortgage-backed GSE residential | 2,015 | |
Total | 15,697 | $ 19,038 |
Estimated Fair Value | ||
Due in one year or less | 810 | |
Due after one year but less than five years | 2,324 | |
Due after five years but less than ten years | 4,274 | |
Due in more than ten years | 6,307 | |
Mortgage-backed GSE residential | 1,980 | |
Total | $ 15,695 | $ 18,888 |
SECURITIES AVAILABLE FOR SALE_3
SECURITIES AVAILABLE FOR SALE - Aggregated by investment category and length of time (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)security | Dec. 31, 2018USD ($)security | Dec. 31, 2017security | |
Debt Securities Available-for-sale, Unrealized Loss Position | |||
Twelve Months or Less - Gross Unrealized Losses | $ (35) | ||
Twelve Months or Less - Estimated Fair Value | 1,213 | ||
Over Twelve Months - Gross Unrealized Losses | $ (35) | (115) | |
Over Twelve Months - Estimated Fair Value | $ 1,975 | $ 2,492 | |
Number of securities pledged | security | 0 | 0 | |
Number of securities sold | security | 0 | 0 | 0 |
Number of securities with unrealized losses | security | 3 | ||
Rate of depreciation | 1.72% | ||
States and political subdivisions | |||
Debt Securities Available-for-sale, Unrealized Loss Position | |||
Twelve Months or Less - Gross Unrealized Losses | $ (35) | ||
Twelve Months or Less - Estimated Fair Value | 1,213 | ||
Mortgage-backed GSE residential | |||
Debt Securities Available-for-sale, Unrealized Loss Position | |||
Over Twelve Months - Gross Unrealized Losses | $ (35) | (115) | |
Over Twelve Months - Estimated Fair Value | $ 1,975 | $ 2,492 | |
Number of securities with unrealized losses | security | 3 |
LOANS AND ALLOWANCE FOR LOAN _3
LOANS AND ALLOWANCE FOR LOAN LOSSES - Major classifications of loans (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Loans and allowance for loan losses | ||||
Total loans receivable | $ 1,163,207 | $ 1,145,714 | ||
Unearned income | (2,045) | (2,139) | ||
Allowance for loan losses | (6,839) | (6,645) | $ (6,925) | $ (5,470) |
Loans, net | 1,154,323 | 1,136,930 | ||
Construction and development | ||||
Loans and allowance for loan losses | ||||
Total loans receivable | 31,739 | 42,718 | ||
Allowance for loan losses | (131) | (235) | (127) | (116) |
Commercial real estate | ||||
Loans and allowance for loan losses | ||||
Total loans receivable | 424,950 | 396,598 | ||
Allowance for loan losses | (2,320) | (2,601) | (2,135) | (2,854) |
Commercial and industrial | ||||
Loans and allowance for loan losses | ||||
Total loans receivable | 53,105 | 33,100 | ||
Allowance for loan losses | (448) | (380) | (261) | (257) |
Residential real estate | ||||
Loans and allowance for loan losses | ||||
Total loans receivable | 651,645 | 670,341 | ||
Allowance for loan losses | (3,457) | (3,042) | (3,048) | (1,656) |
Consumer and Other | ||||
Loans and allowance for loan losses | ||||
Total loans receivable | 1,768 | 2,957 | ||
Allowance for loan losses | $ (91) | $ (387) | $ (1,170) | $ (5) |
LOANS AND ALLOWANCE FOR LOAN _4
LOANS AND ALLOWANCE FOR LOAN LOSSES - Allowance for loan losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Allowance for loan losses: | |||
Beginning balance | $ 6,645 | $ 6,925 | $ 5,470 |
Charge-offs | (776) | (2,066) | (1,644) |
Recoveries | 970 | 549 | 41 |
Provision | 1,237 | 3,058 | |
Ending balance | 6,839 | 6,645 | 6,925 |
Construction and development | |||
Allowance for loan losses: | |||
Beginning balance | 235 | 127 | 116 |
Provision | (104) | 108 | 11 |
Ending balance | 131 | 235 | 127 |
Commercial real estate | |||
Allowance for loan losses: | |||
Beginning balance | 2,601 | 2,135 | 2,854 |
Charge-offs | (237) | (88) | (131) |
Recoveries | 752 | 22 | 41 |
Provision | (796) | 532 | (629) |
Ending balance | 2,320 | 2,601 | 2,135 |
Commercial and industrial | |||
Allowance for loan losses: | |||
Beginning balance | 380 | 261 | 257 |
Charge-offs | (14) | (39) | |
Provision | 82 | 158 | 4 |
Ending balance | 448 | 380 | 261 |
Residential real estate | |||
Allowance for loan losses: | |||
Beginning balance | 3,042 | 3,048 | 1,656 |
Provision | 415 | (6) | 1,392 |
Ending balance | 3,457 | 3,042 | 3,048 |
Consumer and Other | |||
Allowance for loan losses: | |||
Beginning balance | 387 | 1,170 | 5 |
Charge-offs | (525) | (1,939) | (1,513) |
Recoveries | 218 | 527 | |
Provision | 11 | 629 | 2,678 |
Ending balance | 91 | 387 | 1,170 |
Unallocated | |||
Allowance for loan losses: | |||
Beginning balance | 184 | 582 | |
Provision | 392 | $ (184) | (398) |
Ending balance | $ 392 | $ 184 |
LOANS AND ALLOWANCE FOR LOAN _5
LOANS AND ALLOWANCE FOR LOAN LOSSES - Allowance for loan losses disaggregated (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Allowance for loan losses: | ||||
Individually evaluated for impairment | $ 746 | $ 1,099 | ||
Collectively evaluated for impairment | 6,011 | 5,162 | ||
Total ending allowance balance | 6,839 | 6,645 | $ 6,925 | $ 5,470 |
Loans: | ||||
Individually evaluated for impairment | 17,780 | 12,212 | ||
Collectively evaluated for impairment | 1,142,572 | 1,128,722 | ||
Total ending loans balance | 1,161,162 | 1,143,575 | ||
Acquired with deteriorated credit quality | ||||
Allowance for loan losses: | ||||
Total ending allowance balance | 82 | 384 | ||
Loans: | ||||
Total ending loans balance | 810 | 2,641 | ||
Construction and development | ||||
Allowance for loan losses: | ||||
Individually evaluated for impairment | 117 | |||
Collectively evaluated for impairment | 131 | 118 | ||
Total ending allowance balance | 131 | 235 | 127 | 116 |
Loans: | ||||
Individually evaluated for impairment | 1,360 | 1,360 | ||
Collectively evaluated for impairment | 30,076 | 40,928 | ||
Total ending loans balance | 31,436 | 42,288 | ||
Commercial real estate | ||||
Allowance for loan losses: | ||||
Individually evaluated for impairment | 716 | 872 | ||
Collectively evaluated for impairment | 1,604 | 1,729 | ||
Total ending allowance balance | 2,320 | 2,601 | 2,135 | 2,854 |
Loans: | ||||
Individually evaluated for impairment | 7,527 | 8,144 | ||
Collectively evaluated for impairment | 415,773 | 386,819 | ||
Total ending loans balance | 423,300 | 394,963 | ||
Commercial and industrial | ||||
Allowance for loan losses: | ||||
Individually evaluated for impairment | 30 | 110 | ||
Collectively evaluated for impairment | 418 | 270 | ||
Total ending allowance balance | 448 | 380 | 261 | 257 |
Loans: | ||||
Individually evaluated for impairment | 957 | 986 | ||
Collectively evaluated for impairment | 52,056 | 32,040 | ||
Total ending loans balance | 53,013 | 33,026 | ||
Residential real estate | ||||
Allowance for loan losses: | ||||
Collectively evaluated for impairment | 3,457 | 3,042 | ||
Total ending allowance balance | 3,457 | 3,042 | 3,048 | 1,656 |
Loans: | ||||
Individually evaluated for impairment | 7,936 | 1,722 | ||
Collectively evaluated for impairment | 643,709 | 668,619 | ||
Total ending loans balance | 651,645 | 670,341 | ||
Consumer and Other | ||||
Allowance for loan losses: | ||||
Collectively evaluated for impairment | 9 | 3 | ||
Total ending allowance balance | 91 | 387 | 1,170 | 5 |
Loans: | ||||
Collectively evaluated for impairment | 958 | 316 | ||
Total ending loans balance | 1,768 | 2,957 | ||
Consumer and Other | Acquired with deteriorated credit quality | ||||
Allowance for loan losses: | ||||
Total ending allowance balance | 82 | 384 | ||
Loans: | ||||
Total ending loans balance | 810 | $ 2,641 | ||
Unallocated | ||||
Allowance for loan losses: | ||||
Collectively evaluated for impairment | 392 | |||
Total ending allowance balance | $ 392 | $ 184 | $ 582 |
LOANS AND ALLOWANCE FOR LOAN _6
LOANS AND ALLOWANCE FOR LOAN LOSSES - Impaired loans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Loans impaired | |||
Unpaid Total Principal Balance | $ 17,780 | $ 12,212 | |
Recorded Investment With No Allowance | 14,937 | 7,336 | |
Recorded Investment With Allowance | 2,921 | 5,011 | |
Total Recorded Investment | 17,858 | 12,347 | |
Related Allowance | 746 | 1,099 | |
Average Recorded Investment | 16,661 | 12,266 | $ 10,482 |
Interest income recognized | 772 | 845 | 560 |
Construction and development | |||
Loans impaired | |||
Unpaid Total Principal Balance | 1,360 | 1,360 | |
Recorded Investment With No Allowance | 1,360 | ||
Recorded Investment With Allowance | 1,360 | ||
Total Recorded Investment | 1,360 | 1,360 | |
Related Allowance | 117 | ||
Average Recorded Investment | 1,360 | 1,922 | 2,610 |
Interest income recognized | 6 | 68 | 95 |
Commercial real estate | |||
Loans impaired | |||
Unpaid Total Principal Balance | 7,527 | 8,144 | |
Recorded Investment With No Allowance | 4,716 | 5,312 | |
Recorded Investment With Allowance | 2,882 | 2,967 | |
Total Recorded Investment | 7,598 | 8,279 | |
Related Allowance | 716 | 872 | |
Average Recorded Investment | 8,057 | 7,474 | 6,972 |
Interest income recognized | 629 | 653 | 431 |
Commercial and industrial | |||
Loans impaired | |||
Unpaid Total Principal Balance | 957 | 986 | |
Recorded Investment With No Allowance | 925 | 302 | |
Recorded Investment With Allowance | 39 | 684 | |
Total Recorded Investment | 964 | 986 | |
Related Allowance | 30 | 110 | |
Average Recorded Investment | 966 | 1,165 | 900 |
Interest income recognized | 33 | 25 | $ 34 |
Residential real estate | |||
Loans impaired | |||
Unpaid Total Principal Balance | 7,936 | 1,722 | |
Recorded Investment With No Allowance | 7,936 | 1,722 | |
Total Recorded Investment | 7,936 | 1,722 | |
Average Recorded Investment | 6,278 | 1,705 | |
Interest income recognized | $ 104 | $ 99 |
LOANS AND ALLOWANCE FOR LOAN _7
LOANS AND ALLOWANCE FOR LOAN LOSSES - Loan delinquencies (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Loans past due | ||
Current | $ 1,129,408 | $ 1,119,600 |
Total Accruing Past Due | 19,518 | 18,308 |
Non-accrual | 12,236 | 5,667 |
Total Financing Receivables | 1,161,162 | 1,143,575 |
30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 19,518 | 18,308 |
Construction and development | ||
Loans past due | ||
Current | 30,076 | 42,288 |
Non-accrual | 1,360 | |
Total Financing Receivables | 31,436 | 42,288 |
Commercial real estate | ||
Loans past due | ||
Current | 419,406 | 390,601 |
Total Accruing Past Due | 973 | 1,102 |
Non-accrual | 2,921 | 3,260 |
Total Financing Receivables | 423,300 | 394,963 |
Commercial real estate | 30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 973 | 1,102 |
Commercial and industrial | ||
Loans past due | ||
Current | 52,936 | 32,315 |
Total Accruing Past Due | 58 | 26 |
Non-accrual | 19 | 685 |
Total Financing Receivables | 53,013 | 33,026 |
Commercial and industrial | 30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 58 | 26 |
Residential real estate | ||
Loans past due | ||
Current | 625,222 | 651,439 |
Total Accruing Past Due | 18,487 | 17,180 |
Non-accrual | 7,936 | 1,722 |
Total Financing Receivables | 651,645 | 670,341 |
Residential real estate | 30-89 Days | ||
Loans past due | ||
Total Accruing Past Due | 18,487 | 17,180 |
Consumer and Other | ||
Loans past due | ||
Current | 1,768 | 2,957 |
Total Financing Receivables | $ 1,768 | $ 2,957 |
LOANS AND ALLOWANCE FOR LOAN _8
LOANS AND ALLOWANCE FOR LOAN LOSSES - Risk ratings (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | $ 1,161,162 | $ 1,143,575 |
Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 1,141,604 | 1,127,031 |
Special Mention | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 800 | 5,112 |
Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 18,758 | 11,432 |
Construction and development | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 31,436 | 42,288 |
Construction and development | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 30,076 | 40,928 |
Construction and development | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 1,360 | 1,360 |
Commercial real estate | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 423,300 | 394,963 |
Commercial real estate | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 416,183 | 383,857 |
Commercial real estate | Special Mention | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 800 | 5,112 |
Commercial real estate | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 6,317 | 5,994 |
Commercial and industrial | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 53,013 | 33,026 |
Commercial and industrial | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 52,033 | 32,040 |
Commercial and industrial | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 980 | 986 |
Residential real estate | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 651,645 | 670,341 |
Residential real estate | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 641,544 | 667,249 |
Residential real estate | Substandard | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 10,101 | 3,092 |
Consumer and Other | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | 1,768 | 2,957 |
Consumer and Other | Pass | ||
Loans credit quality indicator | ||
Loans and Leases Receivable, Net of Deferred Income | $ 1,768 | $ 2,957 |
LOANS AND ALLOWANCE FOR LOAN _9
LOANS AND ALLOWANCE FOR LOAN LOSSES - Purchased Credit Impaired Loans (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Purchase credit impaired loans | |||
Carrying value of the loan | $ 1,161,162,000 | $ 1,143,575,000 | |
Allowance for loan losses, collectively evaluated for impairment | 6,011,000 | 5,162,000 | |
Acquired with deteriorated credit quality | |||
Purchase credit impaired loans | |||
Carrying value of the loan | 810,000 | 2,641,000 | |
Acquired with deteriorated credit quality | Consumer | |||
Purchase credit impaired loans | |||
Carrying value of the loan | 810,000 | 2,600,000 | |
Accretable yield | 0 | 0 | |
Allowance for loan losses, collectively evaluated for impairment | 82,000 | 384,000 | |
Interest income recognized | $ 118,000 | $ 509,000 | $ 2,100,000 |
LOANS AND ALLOWANCE FOR LOAN_10
LOANS AND ALLOWANCE FOR LOAN LOSSES - Troubled Debt Restructures (Details) | 12 Months Ended | |
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($)item | |
Loans past due | ||
Accruing | $ 2,459,000 | $ 3,298,000 |
Nonaccrual | 487,000 | 13,000 |
Total | 2,946,000 | 3,311,000 |
Specific reserve | 344,000 | 523,000 |
Charge offs | 0 | 0 |
Commercial real estate | ||
Loans past due | ||
Accruing | 2,437,000 | 3,298,000 |
Nonaccrual | 482,000 | |
Total | 2,919,000 | 3,298,000 |
Amount of loan defaulted | 482,000 | $ 0 |
Number of loans modified | item | 1 | |
Total recorded investment | 25,000 | $ 503,000 |
Commercial and industrial | ||
Loans past due | ||
Accruing | 22,000 | |
Nonaccrual | 5,000 | 13,000 |
Total | $ 27,000 | $ 13,000 |
Number of loans modified | item | 1 | |
Total recorded investment | $ 0 |
LOANS AND ALLOWANCE FOR LOAN_11
LOANS AND ALLOWANCE FOR LOAN LOSSES - Types of concessions for TDR loans (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Loans troubled debt restructuring | ||
Total TDR loans | $ 2,946 | $ 3,311 |
Deferral of payments | ||
Loans troubled debt restructuring | ||
Total TDR loans | 22 | 482 |
Extension of maturity date | ||
Loans troubled debt restructuring | ||
Total TDR loans | $ 2,924 | $ 2,829 |
LOANS AND ALLOWANCE FOR LOAN_12
LOANS AND ALLOWANCE FOR LOAN LOSSES - Loans modified as TDRs (Details) $ in Thousands | Dec. 31, 2019USD ($)loan | Dec. 31, 2018USD ($)loan |
Loans troubled debt restructuring | ||
Number of Loans | 6 | 7 |
Recorded Investment | $ 2,954 | $ 3,643 |
Commercial real estate | ||
Loans troubled debt restructuring | ||
Number of Loans | loan | 4 | 6 |
Recorded Investment | $ 2,923 | $ 3,527 |
Commercial and industrial | ||
Loans troubled debt restructuring | ||
Number of Loans | loan | 2 | 1 |
Recorded Investment | $ 31 | $ 116 |
LOANS AND ALLOWANCE FOR LOAN_13
LOANS AND ALLOWANCE FOR LOAN LOSSES - Related Party Loans (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | ||
Beginning Balance | $ 5,540 | $ 5,970 |
New loans and principal advances | 1,925 | 54 |
Repayments | (1,083) | (484) |
Ending Balance | $ 6,382 | $ 5,540 |
PREMISES AND EQUIPMENT (Details
PREMISES AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Premises and equipment, gross | $ 20,004,000 | $ 18,959,000 | |
Accumulated depreciation | (5,544,000) | (4,568,000) | |
Premises and equipment, net | 14,460,000 | 14,391,000 | |
Depreciation | 1,000,000 | 848,000 | $ 545,000 |
Computer software | |||
Property, Plant and Equipment [Line Items] | |||
Premises and equipment, gross | 563,000 | 371,000 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Premises and equipment, gross | 2,604,000 | 2,604,000 | |
Building | |||
Property, Plant and Equipment [Line Items] | |||
Premises and equipment, gross | 7,698,000 | 7,691,000 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Premises and equipment, gross | 3,944,000 | 2,849,000 | |
Furniture, fixtures, and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Premises and equipment, gross | 3,589,000 | 3,306,000 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Premises and equipment, gross | 1,553,000 | 1,413,000 | |
Construction in process | |||
Property, Plant and Equipment [Line Items] | |||
Premises and equipment, gross | $ 53,000 | $ 725,000 |
OPERATING LEASES - Other inform
OPERATING LEASES - Other information (Details) | 12 Months Ended |
Dec. 31, 2019leaseitem | |
Lessee Lease Description | |
Option to extend | true |
Lessee operating lease renewal term | 5 years |
Option to terminate | false |
Number of short term leases | lease | 0 |
Minimum | |
Lessee Lease Description | |
Number of renewal options | item | 1 |
Maximum | |
Lessee Lease Description | |
Lessee operating lease term of contract | 10 years |
OPERATING LEASES - Lease cost (
OPERATING LEASES - Lease cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
OPERATING LEASES | |
Operating lease cost | $ 2,169 |
Variable lease cost | 190 |
Total net lease cost | $ 2,359 |
OPERATING LEASES - Maturities (
OPERATING LEASES - Maturities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Lessee Operating Lease Maturity | |
December 31, 2020 | $ 2,030 |
December 31, 2021 | 1,875 |
December 31, 2022 | 1,899 |
December 31, 2023 | 1,900 |
December 31, 2024 | 1,789 |
After December 31, 2024 | 4,517 |
Total lease payments | 14,010 |
Less: interest discount | (1,534) |
Present value of lease liabilities | $ 12,476 |
OPERATING LEASES - Supplemental
OPERATING LEASES - Supplemental Lease Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
OPERATING LEASES | |
Weighted-average remaining lease term | 7 years 3 months 18 days |
Weighted-average discount rate (as a percent) | 3.14% |
Operating cash flows from operating leases (cash payments) | $ 1,964 |
Operating cash flows from operating leases (lease liability reduction) | 1,555 |
Operating lease right-of-use assets obtained in exchange for leases entered into during the period | $ 13,610 |
OPERATING LEASES - Lease (Detai
OPERATING LEASES - Lease (Details) - Norcross, Georgia lease - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating leases | |||
Lease Term | 10 years | ||
Lease and rent expense | $ 140,000 | $ 142,000 | $ 137,000 |
SBA AND USDA LOAN SERVICING - O
SBA AND USDA LOAN SERVICING - Other information (Details) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Unpaid principal balances of serviced loans | $ 441,600,000 | $ 431,200,000 |
Aggregate fair market value of the interest only strips included in SBA servicing assets | $ 26,000 | $ 27,000 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 16 | 15 |
Minimum | Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 11 | |
Minimum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 5.80 | 8.78 |
Minimum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 10.82 | 6.82 |
Maximum | Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | |
Maximum | Discount Rate | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 12.06 | 14.56 |
Maximum | Prepayment speed | SBA And USDA Loan | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 16.54 | 12.87 |
SBA AND USDA LOAN SERVICING - A
SBA AND USDA LOAN SERVICING - Activity for SBA loan servicing rights (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Servicing Asset at Fair Value Roll Forward | |||
Beginning of period | $ 16,500 | ||
End of period, fair value | 19,000 | $ 16,500 | |
SBA And USDA Loan | |||
Servicing Asset at Fair Value Roll Forward | |||
Beginning of period | 8,419 | 9,329 | $ 8,823 |
Change in fair value | (257) | (910) | 506 |
End of period, fair value | $ 8,162 | $ 8,419 | $ 9,329 |
RESIDENTIAL MORTGAGE LOAN SER_3
RESIDENTIAL MORTGAGE LOAN SERVICING - Other information (Details) $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
SBA AND USDA LOAN SERVICING | ||
Fair value of servicing rights | $ 19,000 | $ 16,500 |
Loans, less allowance for loan losses | $ 1,154,323 | $ 1,136,930 |
Discount Rate | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | |
Discount Rate | Minimum | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 11 | |
Discount Rate | Maximum | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 14 | |
Prepayment speed | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 16 | 15 |
Default rate | Weighted average | ||
SBA AND USDA LOAN SERVICING | ||
Measurement input of servicing rights | 0.98 | 0.88 |
Residential Mortgage | ||
SBA AND USDA LOAN SERVICING | ||
Loans, less allowance for loan losses | $ 1,170,000 | $ 804,200 |
RESIDENTIAL MORTGAGE LOAN SER_4
RESIDENTIAL MORTGAGE LOAN SERVICING - Activity for mortgage loan servicing rights (Details) - Residential Mortgage - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Servicing Asset at Amortized Cost Roll Forward | |||
Beginning of period | $ 14,934 | $ 6,843 | |
Additions | 6,921 | 10,253 | $ 7,500 |
Amortization expense | (3,787) | (2,162) | (657) |
End of period, carrying value | $ 18,068 | $ 14,934 | $ 6,843 |
DEPOSITS - Deposit Account (Det
DEPOSITS - Deposit Account (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
DEPOSITS. | ||
Noninterest-bearing demand deposits | $ 292,008 | $ 299,182 |
NOW accounts and savings | 54,550 | 58,903 |
Money market | 179,159 | 62,358 |
Brokered time deposits | 53,477 | |
Time deposits less than $250,000 | 582,964 | 554,279 |
Time deposits $250,000 or greater | 198,696 | 216,033 |
Total deposits | $ 1,307,377 | $ 1,244,232 |
DEPOSITS - Maturities of Time d
DEPOSITS - Maturities of Time deposits (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Maturities of time deposits | ||
2020 | $ 770,765,000 | |
2021 | 5,045,000 | |
2022 | 3,861,000 | |
2023 | 918,000 | |
2024 | 1,071,000 | |
Total time deposits | 781,660,000 | |
Overdraft demand deposits | 355,000 | $ 127,000 |
Related party deposits | $ 5,000,000 | $ 3,200,000 |
FEDERAL HOME LOAN BANK ADVANC_3
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Tabular (Details) $ in Thousands | Dec. 31, 2019USD ($) |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FHLB advances | $ 60,000 |
Convertible advance with Bermudan option maturing August 6, 2029; fixed rate of 0.85% | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FHLB advances | $ 20,000 |
Interest Rate | 0.85% |
Convertible advances with Bermudan option maturing November 7, 2029, fixed rate of 0.68% | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FHLB advances | $ 30,000 |
Interest Rate | 0.68% |
Convertible advances with Bermudan option maturing December 5, 2029, with fixed rate of 0.75% | |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | |
FHLB advances | $ 10,000 |
Interest Rate | 0.75% |
FEDERAL HOME LOAN BANK ADVANC_4
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS - Other (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
Maximum borrowing capacity | $ 494,300 | $ 433,000 |
FHLB advances | 60,000 | |
Collateralized pledged | 716,900 | 723,200 |
Secured borrowings | 3,100 | 4,300 |
Unsecured federal funds lines | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
Unsecured federal funds lines available | 47,500 | 47,500 |
FHLB advances | 0 | 0 |
Federal Reserve Discount Window funds | ||
FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS | ||
Maximum borrowing capacity | 10,000 | 10,000 |
FHLB advances | 0 | 0 |
Collateralized pledged | $ 27,300 | $ 14,000 |
INCOME TAXES - Components (Deta
INCOME TAXES - Components (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current tax provision: | |||
Federal | $ 11,028 | $ 12,210 | $ 15,781 |
State | 4,034 | 2,102 | 2,506 |
Total current tax provision | 15,062 | 14,312 | 18,287 |
Deferred tax provision: | |||
Federal | 793 | 308 | (56) |
Deferred tax adjustment for enacted change in Federal tax rate | (176) | ||
State | 295 | 47 | 98 |
Total deferred tax provision (benefit) | 1,088 | 355 | (134) |
Total provision for income taxes | $ 16,150 | $ 14,667 | $ 18,153 |
INCOME TAXES - Reconciliation t
INCOME TAXES - Reconciliation to statutory Federal income tax rate (Details) - USD ($) $ in Thousands | Dec. 22, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Reconciliation to statutory Federal income tax rate (Amount) | ||||
Federal statutory tax rate | $ 12,782 | $ 11,775 | $ 17,517 | |
Differences resulting from: | ||||
State income taxes, net of federal benefit | 3,420 | 1,660 | 1,139 | |
Permanent book to tax differences | (135) | |||
Deferred tax writedown for enacted tax rate changes | (176) | |||
Other items, net | 83 | 1,232 | (327) | |
Total provision for income taxes | $ 16,150 | $ 14,667 | $ 18,153 | |
Reconciliation to statutory Federal income tax rate (Percentage) | ||||
Federal statutory tax rate | 35.00% | 21.00% | 21.00% | 35.00% |
Differences resulting from: | ||||
State income taxes, net of federal benefit | 5.60% | 3.00% | 2.30% | |
Permanent book to tax differences | (0.20%) | |||
Deferred tax writedown for enacted tax rate changes | 0.30% | |||
Other items, net | 0.10% | 2.20% | (0.70%) | |
Total provision for income taxes | 26.50% | 26.20% | 36.30% |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Allowance for loan losses | $ 1,919 | $ 1,692 |
Nonaccrual interest | 221 | 175 |
Deferred loan fees | 119 | |
Lease liabilities under operating leases | 3,501 | |
Unrealized losses on securities available for sale | 1 | 46 |
Other | 277 | |
Total gross deferred tax assets | 6,038 | 1,913 |
Deferred tax liabilities: | ||
Deferred mortgage servicing fees | (2,535) | (1,389) |
Deferred SBA servicing fees | (2,206) | (2,069) |
Premises and equipment | (599) | (368) |
Right-of-use assets under operating leases | (3,355) | |
Other | (254) | (16) |
Total gross deferred tax liabilities | (8,949) | (3,842) |
Net deferred tax liabilities | $ (2,911) | $ (1,929) |
INCOME TAXES - Others (Details)
INCOME TAXES - Others (Details) - USD ($) | Dec. 22, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
INCOME TAXES | ||||
Effective tax rate | 35.00% | 21.00% | 21.00% | 35.00% |
Reduction in deferred tax liability due to 2017 Tax Act | $ 176,000 | |||
Interest and penalties | $ 0 | $ 0 |
STOCK BASED COMPENSATION - 2018
STOCK BASED COMPENSATION - 2018 Incentive Plan (Details) - shares | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Apr. 18, 2018 | |
Stock Options | |||||
STOCK BASED COMPENSATION | |||||
Stock options granted | 240,000 | ||||
Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Restricted stock issued | 48,724 | 181,072 | 203,254 | ||
2018 Incentive Plan | |||||
STOCK BASED COMPENSATION | |||||
Shares reserved for future issuance | 2,400,000 | ||||
2018 Incentive Plan | Stock Options | |||||
STOCK BASED COMPENSATION | |||||
Stock options granted | 240,000 | ||||
2018 Incentive Plan | Restricted Stock | |||||
STOCK BASED COMPENSATION | |||||
Restricted stock issued | 0 |
STOCK BASED COMPENSATION - Stoc
STOCK BASED COMPENSATION - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Options | |||
Shares | |||
Outstanding at beginning of the period (in shares) | 240,000 | 260,000 | |
Granted (in shares) | 240,000 | ||
Exercised (in shares) | (260,000) | ||
Forfeited (in shares) | |||
Outstanding at ending of the period (in shares) | 240,000 | 240,000 | |
Weighted Average Exercise Price | |||
Outstanding at beginning of the period (in dollars per share) | $ 12.70 | $ 2.64 | |
Granted (in dollars per share) | $ 12.70 | ||
Exercised (in dollars per share) | $ 2.64 | ||
Forfeited (in dollars per share) | |||
Outstanding at ending of the period (in dollars per share) | $ 12.70 | $ 12.70 | |
Additional Disclosures | |||
Aggregate Intrinsic value, Outstanding | $ 1,154 | $ 912 | |
Aggregate Intrinsic value, Exercised | $ 708 | ||
The Stock Plan | |||
Additional Disclosures | |||
Weighted Average Remaining Contractual Term | 1 year 6 months | 2 years 6 months |
STOCK BASED COMPENSATION - Rest
STOCK BASED COMPENSATION - Restricted Stock (Details) - Restricted Stock - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Nonvested Shares | |||
Outstanding at beginning of the period (in shares) | 278,202 | 280,310 | 251,428 |
Granted (in shares) | 48,724 | 181,072 | 203,254 |
Vested (in shares) | (157,316) | (183,180) | (174,372) |
Forfeited (in shares) | (406) | ||
Outstanding at ending of the period (in shares) | 169,204 | 278,202 | 280,310 |
Weighted-Average Grant-Date Fair Value | |||
Outstanding at beginning of the period (in dollars per share) | $ 7.07 | $ 4.39 | $ 3.10 |
Granted (in dollars per share) | 13.75 | 9.85 | 5.36 |
Vested (in dollars per share) | 6.68 | 5.72 | 3.67 |
Forfeited (in dollars per share) | 9.85 | ||
Outstanding at ending of the period (in dollars per share) | $ 9.35 | $ 7.07 | $ 4.39 |
STOCK BASED COMPENSATION - Othe
STOCK BASED COMPENSATION - Other (Details) | 12 Months Ended | ||
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)shares | |
STOCK BASED COMPENSATION | |||
Compensation cost | $ 1,526,000 | $ 1,499,000 | $ 718,000 |
Stock Options | |||
STOCK BASED COMPENSATION | |||
Expected volatility | 21.30% | ||
Expected term | 6 years 6 months | ||
Dividend yield | 3.00% | ||
Risk free rate | 2.90% | ||
Weighted average fair value of each option granted | $ / shares | $ 11.90 | ||
Compensation cost | 476,000 | $ 238,000 | 0 |
Total unrecognized compensation cost | $ 714,000 | 1,200,000 | |
Cost is expected to be recognized over a weighted-average period | 1 year 6 months | ||
Aggregate Intrinsic value, Outstanding | $ 1,154,000 | 912,000 | |
Aggregate Intrinsic value, Exercised | $ 708,000 | ||
Stock options exercised | shares | 260,000 | ||
Restricted Stock | |||
STOCK BASED COMPENSATION | |||
Compensation cost | 1,000,000 | 1,300,000 | $ 718,000 |
Total unrecognized compensation cost | $ 1,100,000 | 1,500,000 | |
Cost is expected to be recognized over a weighted-average period | 1 year 9 months 18 days | ||
Grant date fair value of shares vested during period | $ 1,100,000 | $ 1,100,000 | |
Officers and employees | Restricted Stock | |||
STOCK BASED COMPENSATION | |||
Vesting Percentage | 33.00% | ||
Number of anniversaries of the grant date | item | 3 | ||
Directors | Vest on grant date | Restricted Stock | |||
STOCK BASED COMPENSATION | |||
Vesting Percentage | 25.00% | ||
Directors | Vest on each of the first three anniversaries of the grant date | Restricted Stock | |||
STOCK BASED COMPENSATION | |||
Vesting Percentage | 25.00% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Basic earnings per share | |||
Net income | $ 44,718 | $ 41,334 | $ 31,897 |
Weighted average common shares outstanding (in shares) | 24,533,180 | 24,184,790 | 23,858,696 |
Basic earnings per common share (in dollars per share) | $ 1.82 | $ 1.71 | $ 1.34 |
Diluted earnings per share | |||
Net income | $ 44,718 | $ 41,334 | $ 31,897 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 24,533,180 | 24,184,790 | 23,858,696 |
Add: Dilutive effects of restricted stock and options (in shares) | 196,355 | 290,908 | 280,310 |
Average shares and dilutive potential common shares (in shares) | 24,729,535 | 24,475,698 | 24,139,006 |
Diluted earnings per common share (in dollars per share) | $ 1.81 | $ 1.69 | $ 1.32 |
Securities excluded from the computation of diluted earnings per common share | 0 | 0 | 0 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Maximum | ||
Percentage of all services charges on deposit accounts to total revenue | 1.00% | 1.00% |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other Commitments | ||
Term of employment agreements | 36 months | |
Annual extension of employment agreements term | 1 year | |
Commitments to extend credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 64,243 | $ 65,283 |
Standby letters of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | 5,213 | $ 4,250 |
Unused lines of credit | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | 64,200 | |
Loans | ||
Fair Value Disclosure Information | ||
Financial instruments whose contract amounts represent credit risk | $ 5,200 |
FAIR VALUE - Assets and liabili
FAIR VALUE - Assets and liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | $ 15,695 | $ 18,888 |
SBA servicing assets | 19,000 | 16,500 |
States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,279 | 1,213 |
Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,980 | 2,492 |
Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 15,695 | 18,888 |
SBA servicing assets | 8,162 | 8,419 |
Interest only strip | 26 | 27 |
Assets | 23,883 | 27,334 |
Recurring | Obligations of U.S. Government entities and agencies | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 12,436 | 15,183 |
Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,279 | 1,213 |
Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,980 | 2,492 |
Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Impaired loans | 4,523 | 3,472 |
Total Gains (Losses) | 338 | 169 |
Level 2 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 3,259 | 3,705 |
Assets | 3,259 | 3,705 |
Level 2 | Recurring | States and political subdivisions | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,279 | 1,213 |
Level 2 | Recurring | Mortgage-backed GSE residential | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 1,980 | 2,492 |
Level 3 | Recurring | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 12,436 | 15,183 |
SBA servicing assets | 8,162 | 8,419 |
Interest only strip | 26 | 27 |
Assets | 20,624 | 23,629 |
Level 3 | Recurring | Obligations of U.S. Government entities and agencies | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Total securities available for sale | 12,436 | 15,183 |
Level 3 | Non-recurring fair value measurements | ||
Fair value assets and liabilities measured on recurring and nonrecurring basis | ||
Impaired loans | $ 4,523 | $ 3,472 |
FAIR VALUE - Level 3 reconcilia
FAIR VALUE - Level 3 reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Fair value assets and liabilities measured on recurring basis unobservable input reconciliation | |||
Purchases, sales, or transfers into and out of Level 3 | $ 0 | $ 0 | $ 0 |
Gain or Losses included in earnings for securities at fair value | 0 | 0 | 0 |
Obligations of U.S. Government entities and agencies | |||
Fair value assets measured on recurring basis unobservable input reconciliation | |||
Fair value | 15,183 | 16,661 | 23,916 |
Prepayments/paydowns | (2,747) | (1,478) | (7,255) |
Fair value | 12,436 | 15,183 | 16,661 |
SBA servicing assets | |||
Fair value assets measured on recurring basis unobservable input reconciliation | |||
Fair value | 8,419 | 9,329 | 8,823 |
Total gain (loss) included in income | (257) | 910 | (506) |
Fair value | 8,162 | 8,419 | 9,329 |
Interest only strip | |||
Fair value assets measured on recurring basis unobservable input reconciliation | |||
Fair value | 27 | 36 | 30 |
Total gain (loss) included in income | (1) | 9 | (6) |
Fair value | $ 26 | $ 27 | $ 36 |
FAIR VALUE - Inputs and Valuati
FAIR VALUE - Inputs and Valuation technique (Details) | Dec. 31, 2019 | Dec. 31, 2018 |
Fair value measurement inputs and valuation techniques | ||
Valuation technique of available for sale securities | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Valuation technique of servicing asset | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Discount Rate | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 14 | |
Discount Rate | Minimum | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 11 | |
Discount Rate | Minimum | Obligations of U.S. Government entities and agencies | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 0 | 0 |
Discount Rate | Minimum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 5.80 | |
Servicing asset measurement input | 8.78 | |
Discount Rate | Maximum | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 14 | |
Discount Rate | Maximum | Obligations of U.S. Government entities and agencies | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 3 | 3 |
Discount Rate | Maximum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 12.06 | 14.56 |
Prepayment speed | ||
Fair value measurement inputs and valuation techniques | ||
Servicing asset measurement input | 16 | 15 |
Prepayment speed | Minimum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 10.82 | |
Servicing asset measurement input | 6.82 | |
Prepayment speed | Maximum | SBA servicing assets and Interest only strip | ||
Fair value measurement inputs and valuation techniques | ||
Available for sale securities measurement input | 16.54 | 12.87 |
FAIR VALUE - Carrying amounts a
FAIR VALUE - Carrying amounts and Estimated fair values (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Financial Assets: | ||
SBA servicing assets | $ 19,000 | $ 16,500 |
Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,162 | 8,419 |
Interest only strips | 26 | 27 |
Recurring | Carrying Amount | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 276,413 | 138,427 |
Securities purchased under agreements to resell | 15,000 | 15,000 |
Investment securities | 15,695 | 18,888 |
FHLB stock | 3,842 | 1,163 |
Loans, net | 1,154,323 | 1,136,930 |
Loans held for sale | 85,793 | 56,865 |
Accrued interest receivable | 5,101 | 4,957 |
SBA servicing assets | 8,162 | 8,419 |
Mortgage servicing assets | 18,068 | 14,934 |
Interest only strips | 26 | 27 |
Financial Liabilities: | ||
Deposits | 1,307,377 | 1,244,232 |
Federal Home Loan Bank advances | 60,000 | |
Other borrowings | 3,129 | 4,257 |
Accrued interest payable | 890 | 1,251 |
Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 276,413 | 138,427 |
Securities purchased under agreements to resell | 15,000 | 15,000 |
Investment securities | 15,695 | 18,888 |
Loans, net | 1,169,214 | 1,166,945 |
Loans held for sale | 88,178 | 56,865 |
Accrued interest receivable | 5,101 | 4,957 |
SBA servicing assets | 8,162 | 8,419 |
Mortgage servicing assets | 19,035 | 16,460 |
Interest only strips | 26 | 27 |
Financial Liabilities: | ||
Deposits | 1,308,946 | 1,242,863 |
Federal Home Loan Bank advances | 60,000 | |
Other borrowings | 3,129 | 4,257 |
Accrued interest payable | 890 | 1,251 |
Level 2 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Cash, due from banks, and federal funds sold | 276,413 | 138,427 |
Securities purchased under agreements to resell | 15,000 | 15,000 |
Investment securities | 3,259 | 3,705 |
Loans held for sale | 88,178 | 56,865 |
Financial Liabilities: | ||
Deposits | 1,308,946 | 1,242,863 |
Federal Home Loan Bank advances | 60,000 | |
Other borrowings | 3,129 | 4,257 |
Accrued interest payable | 890 | 1,251 |
Level 3 | Recurring | ||
Financial Assets: | ||
SBA servicing assets | 8,162 | 8,419 |
Interest only strips | 26 | 27 |
Level 3 | Recurring | Estimated Fair Value | ||
Financial Assets: | ||
Investment securities | 12,436 | 15,183 |
Loans, net | 1,169,214 | 1,166,945 |
Accrued interest receivable | 5,101 | 4,957 |
SBA servicing assets | 8,162 | 8,419 |
Mortgage servicing assets | 19,035 | 16,460 |
Interest only strips | $ 26 | $ 27 |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | |
Regulatory matters | ||||
Capital conservation buffer percentage (as a percent) | 2.50% | 1.875% | 0.00% | |
Total Capital (to Risk Weighted Assets) | ||||
Actual amount | $ 215,377 | $ 166,851 | ||
Actual ratio (as a percent) | 22.01% | 18.16% | ||
Tier I Capital (to Risk Weighted Assets) | ||||
Actual amount | $ 208,538 | $ 160,207 | ||
Actual ratio (as a percent) | 21.31% | 17.44% | ||
Common Tier 1 (CET1) | ||||
Actual amount | $ 208,538 | $ 160,207 | ||
Actual ratio (as a percent) | 21.31% | 17.44% | ||
Tier 1 Capital (to Average Assets) | ||||
Actual amount | $ 208,538 | $ 160,207 | ||
Actual ratio (as a percent) | 12.70% | 11.14% | ||
Common dividends | $ 10,402 | $ 9,291 | $ 5,439 | |
Bank | ||||
Total Capital (to Risk Weighted Assets) | ||||
Actual amount | $ 199,539 | $ 163,339 | ||
Actual ratio (as a percent) | 20.40% | 17.80% | ||
Capital Adequacy Purposes, amount | $ 78,251 | $ 73,392 | ||
Capital Adequacy Purposes, ratio (as a percent) | 8.00% | 8.00% | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 97,814 | $ 91,740 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 10.00% | 10.00% | ||
Tier I Capital (to Risk Weighted Assets) | ||||
Actual amount | $ 192,700 | $ 156,696 | ||
Actual ratio (as a percent) | 19.70% | 17.08% | ||
Capital Adequacy Purposes, amount | $ 58,688 | $ 55,044 | ||
Capital Adequacy Purposes, ratio (as a percent) | 6.00% | 6.00% | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 78,251 | $ 73,392 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 8.00% | 8.00% | ||
Common Tier 1 (CET1) | ||||
Actual amount | $ 192,700 | $ 156,696 | ||
Actual ratio (as a percent) | 19.70% | 17.08% | ||
Capital Adequacy Purposes, amount | $ 44,016 | $ 41,283 | ||
Capital Adequacy Purposes, ratio (as a percent) | 4.50% | 4.50% | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 63,579 | $ 59,631 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 6.50% | 6.50% | ||
Tier 1 Capital (to Average Assets) | ||||
Actual amount | $ 192,700 | $ 156,696 | ||
Actual ratio (as a percent) | 11.74% | 10.91% | ||
Capital Adequacy Purposes, amount | $ 65,655 | $ 57,455 | ||
Capital Adequacy Purposes, ratio (as a percent) | 4.00% | 4.00% | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, amount | $ 82,069 | $ 71,819 | ||
To be Well Capitalized Under Prompt Corrective Action Provisions, ratio (as a percent) | 5.00% | 5.00% | ||
Maximum | ||||
Tier 1 Capital (to Average Assets) | ||||
Common dividends | $ 22,400 |
OTHER OPERATING EXPENSES (Detai
OTHER OPERATING EXPENSES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
OTHER OPERATING EXPENSES. | ||
Professional Fees | $ 1,168 | $ 1,029 |
Miscellaneous loan related | 2,187 | 3,503 |
Bank security | 1,283 | 1,003 |
Phone and data service | 678 | 617 |
Director fees | 366 | 333 |
Other | 2,968 | 2,980 |
Total other operating expenses | $ 8,650 | $ 9,465 |
CONDENSED PARENT COMPANY ONLY_3
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS - Condensed Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Assets: | ||||
Cash and due from banks | $ 270,496 | $ 130,263 | ||
Other assets | 2,376 | 2,900 | ||
Total assets | 1,631,858 | 1,432,650 | ||
Liabilities: | ||||
Total liabilities | 1,415,134 | 1,264,042 | ||
Shareholders' Equity: | ||||
Preferred stock | ||||
Common stock | 255 | 242 | ||
Additional paid-in capital | 53,854 | 39,915 | ||
Retained earnings | 162,616 | 128,555 | ||
Accumulated other comprehensive loss | (1) | (104) | ||
Total shareholders' equity | 216,724 | 168,608 | $ 135,115 | $ 107,261 |
Total liabilities and shareholders' equity | 1,631,858 | 1,432,650 | ||
Parent company | ||||
Assets: | ||||
Cash and due from banks | 15,991 | 2,600 | ||
Investment in bank subsidiary | 200,886 | 165,096 | ||
Other assets | 367 | 1,305 | ||
Total assets | 217,244 | 169,001 | ||
Liabilities: | ||||
Accrued expenses and other liabilities | 520 | 393 | ||
Total liabilities | 520 | 393 | ||
Shareholders' Equity: | ||||
Preferred stock | ||||
Common stock | 255 | 242 | ||
Additional paid-in capital | 53,854 | 39,915 | ||
Retained earnings | 162,616 | 128,555 | ||
Accumulated other comprehensive loss | (1) | (104) | ||
Total shareholders' equity | 216,724 | 168,608 | ||
Total liabilities and shareholders' equity | $ 217,244 | $ 169,001 |
CONDENSED PARENT COMPANY ONLY_4
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS - Condensed Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income: | |||
Interest income | $ 83,213 | $ 72,879 | $ 60,514 |
Expenses: | |||
Other expenses | 8,650 | 9,465 | 8,833 |
Total noninterest expense | 40,000 | 38,575 | 31,192 |
Income tax benefit | (16,150) | (14,667) | (18,153) |
Net income | 44,718 | 41,334 | 31,897 |
Parent company | |||
Income: | |||
Dividends receive from bank subsidiary | 10,402 | 9,291 | 5,439 |
Interest income | 48 | 24 | 25 |
Total income | 10,450 | 9,315 | 5,464 |
Expenses: | |||
Other expenses | 174 | 96 | 35 |
Total noninterest expense | 174 | 96 | 35 |
Income before taxes and equity in undistributed income of subsidiary | 10,276 | 9,219 | 5,429 |
Income tax benefit | 26 | 29 | 24 |
Income before equity in undistributed income of subsidiary | 10,302 | 9,248 | 5,453 |
Equity in undistributed income of subsidiary | 34,416 | 32,086 | 26,444 |
Net income | $ 44,718 | $ 41,334 | $ 31,897 |
CONDENSED PARENT COMPANY ONLY_5
CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | ||||
Net income | $ 44,718 | $ 41,334 | $ 31,897 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Increase in other assets | 480 | 2,644 | (3,687) | |
Net cash flow provided (used) by operating activities | 32,199 | (160,991) | 151,812 | |
Cash flow froms investing activities: | ||||
Net cash flow (used) provided by investing activities | (18,289) | 109,410 | (277,942) | |
Cash flows from financing activities: | ||||
Issuance of common stock, net of expenses | $ 13,900 | 13,911 | ||
Exercise of stock options | 685 | |||
Repurchase of common stock | (1,485) | |||
Dividends paid on common stock | (10,367) | (9,291) | (5,401) | |
Net cash flow provided by financing activities | 124,076 | 94,175 | 155,399 | |
Net change in cash and cash equivalents | 137,986 | 42,594 | 29,269 | |
Cash and cash equivalents at beginning of period | 138,427 | 95,833 | 66,564 | |
Cash and cash equivalents at end of period | 276,413 | 138,427 | 95,833 | |
Parent company | ||||
Cash flows from operating activities: | ||||
Net income | 44,718 | 41,334 | 31,897 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Equity in undistributed net income of subsidiary | (34,416) | (32,086) | (26,444) | |
Increase in other assets | 938 | (924) | (135) | |
Decrease in accrued expenses and other liabilities | 92 | 42 | (68) | |
Net cash flow provided (used) by operating activities | 11,332 | 8,366 | 5,250 | |
Cash flows from financing activities: | ||||
Issuance of common stock, net of expenses | 13,911 | |||
Exercise of stock options | 685 | |||
Repurchase of common stock | (1,485) | |||
Dividends paid on common stock | (10,367) | (9,224) | (5,401) | |
Net cash flow provided by financing activities | 2,059 | (9,224) | (4,716) | |
Net change in cash and cash equivalents | 13,391 | (858) | 534 | |
Cash and cash equivalents at beginning of period | 2,600 | 3,458 | 2,924 | |
Cash and cash equivalents at end of period | $ 15,991 | $ 2,600 | $ 3,458 |