Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 09, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-34292 | ||
Entity Registrant Name | ORRSTOWN FINANCIAL SERVICES, INC. | ||
Entity Incorporation, State or Country Code | PA | ||
Entity Tax Identification Number | 23-2530374 | ||
Entity Address, Address Line One | 77 East King Street | ||
Entity Address, Address Line Two | P. O. Box 250 | ||
Entity Address, City or Town | Shippensburg | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 17257 | ||
City Area Code | (717) | ||
Local Phone Number | 532-6114 | ||
Title of 12(b) Security | Common Stock, no par value | ||
Trading Symbol | ORRF | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 245.1 | ||
Entity Common Stock, Shares Outstanding (in shares) | 10,725,745 | ||
Documents Incorporated by Reference | Portions of the Proxy Statement for the 2023 Annual Meeting of Shareholders are incorporated by reference in Part III of this Form 10-K. | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Central Index Key | 0000826154 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Firm ID | 173 |
Auditor Name | Crowe LLP |
Auditor Location | Washington, D.C. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and due from banks | $ 28,477 | $ 21,217 |
Interest-bearing deposits with banks | 32,346 | 187,493 |
Cash and cash equivalents | 60,823 | 208,710 |
Restricted investments in bank stocks | 10,642 | 7,252 |
Securities available-for-sale (amortized cost of $563,278 and $466,806 at December 31, 2022 and 2021, respectively) | 513,728 | 472,438 |
Loans held for sale, at fair value | 10,880 | 8,868 |
Loans | 2,151,232 | 1,979,986 |
Less: Allowance for loan losses | (25,178) | (21,180) |
Net loans | 2,126,054 | 1,958,806 |
Premises and equipment, net | 29,328 | 34,045 |
Cash surrender value of life insurance | 71,760 | 70,217 |
Goodwill | 18,724 | 18,724 |
Other intangible assets, net | 3,078 | 4,183 |
Accrued interest receivable | 11,027 | 8,234 |
Deferred tax asset, net | 24,031 | 11,648 |
Other assets | 42,333 | 31,440 |
Total assets | 2,922,408 | 2,834,565 |
Deposits: | ||
Noninterest-bearing | 494,131 | 553,238 |
Interest-bearing | 1,950,807 | 1,911,691 |
Deposits held for assumption in connection with sale of bank branch | 31,307 | 0 |
Total deposits | 2,476,246 | 2,464,929 |
Securities sold under agreements to repurchase | 17,251 | 23,301 |
FHLB advances and other | 106,139 | 1,896 |
Subordinated notes | 32,026 | 31,963 |
Other liabilities | 61,850 | 40,820 |
Total liabilities | 2,693,512 | 2,562,909 |
Shareholders’ Equity | ||
Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, no par value—$0.05205 stated value per share 50,000,000 shares authorized; 11,229,242 shares issued and 10,671,413 outstanding at December 31, 2022; 11,258,167 shares issued and 11,183,050 outstanding at December 31, 2021 | 584 | 586 |
Additional paid—in capital | 189,264 | 189,689 |
Retained earnings | 92,473 | 78,700 |
Accumulated other comprehensive (loss) income | (39,913) | 4,449 |
Treasury stock— 557,829 and 75,117 shares, at cost, at December 31, 2022 and 2021, respectively | (13,512) | (1,768) |
Total shareholders’ equity | 228,896 | 271,656 |
Total liabilities and shareholders’ equity | $ 2,922,408 | $ 2,834,565 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Securities available-for-sale, amortized cost | $ 563,278 | $ 466,806 |
Preferred stock, par value (in dollars per share) | $ 1.25 | $ 1.25 |
Preferred stock authorized (in shares) | 500,000 | 500,000 |
Preferred stock issued (in shares) | 0 | 0 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock, stated value (in dollars per share) | $ 0.05205 | $ 0.05205 |
Common stock authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock issued (in shares) | 11,229,242 | 11,258,167 |
Common stock outstanding (in shares) | 10,671,413 | 11,183,050 |
Treasury stock (in shares) | 557,829 | 75,117 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Interest income | |||
Loans | $ 93,528 | $ 84,227 | $ 87,492 |
Investment securities - taxable | 10,237 | 6,622 | 10,458 |
Investment securities - tax-exempt | 4,115 | 2,493 | 1,566 |
Short term investments | 774 | 353 | 115 |
Total interest income | 108,654 | 93,695 | 99,631 |
Interest expense | |||
Deposits | 6,337 | 4,199 | 12,009 |
Securities sold under agreements to repurchase | 44 | 31 | 85 |
FHLB advances and other borrowings | 630 | 482 | 1,924 |
Subordinated notes | 2,013 | 2,009 | 2,006 |
Total interest expense | 9,024 | 6,721 | 16,024 |
Net interest income | 99,630 | 86,974 | 83,607 |
Provision for loan losses | 4,160 | 1,090 | 5,325 |
Net interest income after provision for loan losses | 95,470 | 85,884 | 78,282 |
Noninterest income | |||
Service charges on deposit accounts | 3,826 | 3,047 | 2,874 |
Interchange income | 4,055 | 4,129 | 3,423 |
Other service charges and fees | 788 | 646 | 683 |
Swap fee income | 2,632 | 293 | 847 |
Trust and investment management income | 7,631 | 7,896 | 6,912 |
Brokerage income | 3,620 | 3,571 | 2,821 |
Mortgage banking activities | 407 | 5,909 | 5,274 |
Gain on sale of portfolio loans | 0 | 0 | 2,803 |
Income from life insurance | 2,339 | 2,273 | 2,261 |
Investment securities (losses) gains | (160) | 638 | (16) |
Other income | 1,814 | 750 | 427 |
Total noninterest income | 26,952 | 29,152 | 28,309 |
Noninterest expenses | |||
Salaries and employee benefits | 48,004 | 44,002 | 43,350 |
Occupancy | 4,729 | 4,731 | 4,760 |
Furniture and equipment | 5,083 | 5,115 | 4,756 |
Data processing | 4,560 | 4,061 | 3,574 |
Automated teller and interchange fees | 1,287 | 1,202 | 1,057 |
Advertising and bank promotions | 2,264 | 2,178 | 1,660 |
FDIC insurance | 1,083 | 816 | 686 |
Professional services | 3,254 | 2,555 | 3,120 |
Directors' compensation | 938 | 865 | 921 |
Taxes other than income | 1,391 | 1,321 | 1,144 |
Intangible asset amortization | 1,105 | 1,275 | 1,569 |
Provision for legal settlement | 13,000 | 0 | 0 |
Restructuring expenses | 3,155 | 0 | 1,310 |
Insurance claim recovery | 0 | 0 | (486) |
Other operating expenses | 5,953 | 6,020 | 6,659 |
Total noninterest expenses | 95,806 | 74,141 | 74,080 |
Income before income tax expense | 26,616 | 40,895 | 32,511 |
Income tax expense | 4,579 | 8,014 | 6,048 |
Net income | $ 22,037 | $ 32,881 | $ 26,463 |
Per share information: | |||
Basic earnings per share (in dollars per share) | $ 2.09 | $ 3 | $ 2.42 |
Diluted earnings per share (in dollars per share) | 2.06 | 2.96 | 2.40 |
Dividends per share (in dollars per share) | $ 0.76 | $ 0.74 | $ 0.68 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 22,037 | $ 32,881 | $ 26,463 |
Other comprehensive (loss) income, net of tax: | |||
Unrealized (losses) gains on securities available-for-sale arising during the period | (55,342) | 804 | 6,057 |
Reclassification adjustment for losses (gains) realized in net income | 160 | (638) | 16 |
Net unrealized (losses) gains on securities available-for-sale | (55,182) | 166 | 6,073 |
Tax effect | 11,588 | (35) | (1,275) |
Total other comprehensive (loss) income, net of tax and reclassification adjustments on securities available-for-sale | (43,594) | 131 | 4,798 |
Unrealized (losses) gains on interest rate swaps used in cash flow hedges | (972) | 473 | (1,347) |
Reclassification adjustment for losses realized in net income | 0 | 757 | 117 |
Net unrealized (losses) gains on interest rate swaps used in cash flow hedges | (972) | 1,230 | (1,230) |
Tax effect | 204 | (258) | 258 |
Total other comprehensive (loss) gain, net of tax and reclassification adjustments on interest rate swaps used in cash flow hedges | (768) | 972 | (972) |
Total other comprehensive (loss) income, net of tax and reclassification adjustments | (44,362) | 1,103 | 3,826 |
Total comprehensive (loss) income | $ (22,325) | $ 33,984 | $ 30,289 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Treasury Stock |
Beginning balance at Dec. 31, 2019 | $ 223,249 | $ 584 | $ 188,365 | $ 35,246 | $ (480) | $ (466) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 26,463 | 26,463 | ||||
Total other comprehensive income (loss), net of taxes | 3,826 | 3,826 | ||||
Cash dividends | (7,610) | (7,610) | ||||
Share-based compensation plans: | ||||||
Shares issued, shares acquired including compensation expense | 321 | 2 | 701 | (382) | ||
Ending balance at Dec. 31, 2020 | 246,249 | 586 | 189,066 | 54,099 | 3,346 | (848) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 32,881 | 32,881 | ||||
Total other comprehensive income (loss), net of taxes | 1,103 | 1,103 | ||||
Cash dividends | (8,280) | (8,280) | ||||
Share-based compensation plans: | ||||||
Shares issued, shares acquired including compensation expense | (297) | 623 | (920) | |||
Ending balance at Dec. 31, 2021 | 271,656 | 586 | 189,689 | 78,700 | 4,449 | (1,768) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 22,037 | 22,037 | ||||
Total other comprehensive income (loss), net of taxes | (44,362) | (44,362) | ||||
Cash dividends | (8,264) | (8,264) | ||||
Share-based compensation plans: | ||||||
Shares issued, shares acquired including compensation expense | (12,171) | (2) | (425) | (11,744) | ||
Ending balance at Dec. 31, 2022 | $ 228,896 | $ 584 | $ 189,264 | $ 92,473 | $ (39,913) | $ (13,512) |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends per share (in usd per share) | $ 0.76 | $ 0.74 | $ 0.68 |
Issuance of stock including compensation expense (in shares) | 28,925 | 1,121 | 36,442 |
Acquisition of treasury stock (in shares) | 482,712 | 19,388 | 34,999 |
Issuance of stock, compensation expense | $ 2,154 | $ 1,949 | $ 2,092 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | |||
Net income | $ 22,037,000 | $ 32,881,000 | $ 26,463,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Net premium amortization (discount accretion) | 1,893,000 | (436,000) | (4,481,000) |
Depreciation and amortization expense | 4,620,000 | 5,305,000 | 6,573,000 |
Impairment of intangibles | 0 | 0 | 153,000 |
Provision for loan losses | 4,160,000 | 1,090,000 | 5,325,000 |
Share-based compensation | 2,154,000 | 1,949,000 | 2,092,000 |
Gains on sales of loans originated for sale | (1,283,000) | (5,222,000) | (5,631,000) |
Fair value adjustment on loans held for sale | 1,373,000 | 255,000 | (436,000) |
Mortgage loans originated for sale | (82,708,000) | (197,167,000) | (207,051,000) |
Proceeds from sales of loans originated for sale | 77,291,000 | 204,102,000 | 208,987,000 |
Gains on sale of portfolio loans | (306,000) | 0 | (2,803,000) |
Net (gain) loss on disposal of OREO and premises held for sale | 0 | (327,000) | 152,000 |
Writedown of premises held for sale | 1,297,000 | 0 | 544,000 |
Net loss on disposal of premises and equipment | 530,000 | 22,000 | 2,000 |
Deferred income tax (benefit) expense | (591,000) | 942,000 | (1,973,000) |
Investment securities losses (gains) | 160,000 | (638,000) | 16,000 |
Provision for legal settlement | 13,000,000 | 0 | 0 |
Payment of legal settlement | (13,000,000) | 0 | 0 |
Return on investments in limited partnerships | (976,000) | 0 | 0 |
Loss (gain) on derivative terminations | 0 | 514,000 | (226,000) |
Income from life insurance | (2,339,000) | (2,273,000) | (2,261,000) |
(Increase) decrease in accrued interest receivable | (2,793,000) | 693,000 | (2,887,000) |
Increase in other liabilities | 20,492,000 | 1,167,000 | 953,000 |
Other, net | (8,819,000) | (2,046,000) | 6,660,000 |
Net cash provided by operating activities | 36,192,000 | 40,811,000 | 30,171,000 |
Cash flows from investing activities | |||
Proceeds from sales of AFS securities | 31,330,000 | 149,038,000 | 0 |
Maturities, repayments and calls of AFS securities | 50,105,000 | 39,082,000 | 56,239,000 |
Purchases of AFS securities | (181,529,000) | (195,049,000) | (26,691,000) |
Net (purchases) redemptions of restricted investments in bank stocks | (3,390,000) | 3,311,000 | 5,621,000 |
Net distributions from investments in limited partnerships | 1,410,000 | 0 | 0 |
Net (increase) decrease in loans | (172,607,000) | 1,396,000 | (349,947,000) |
Proceeds from sales of portfolio loans | 4,443,000 | 385,000 | 22,665,000 |
Purchases of bank premises and equipment | (895,000) | (1,254,000) | (1,303,000) |
Proceeds from disposal of OREO and premises held for sale | 0 | 1,078,000 | 4,096,000 |
Purchases of bank owned life insurance | 0 | 0 | (3,636,000) |
Death benefit proceeds from life insurance contracts | 142,000 | 0 | 391,000 |
Net cash used in investing activities | (270,991,000) | (2,013,000) | (292,565,000) |
Cash flows from financing activities | |||
Net increase in deposits | 11,307,000 | 108,020,000 | 481,277,000 |
Net increase (decrease) in borrowings with original maturities less than 90 days | 98,634,000 | 3,835,000 | (135,402,000) |
Proceeds from FHLB advances and other borrowings | 0 | 0 | 126,599,000 |
Payments on FHLB advances and other borrowings | (441,000) | (56,149,000) | (131,622,000) |
Settlement of terminated derivatives | 0 | (525,000) | 218,000 |
Dividends paid | (8,264,000) | (8,280,000) | (7,610,000) |
Acquisition of treasury stock | (14,172,000) | (1,869,000) | (1,170,000) |
Shares repurchased as treasury stock for employee taxes associated with restricted stock vesting | (285,000) | (514,000) | (717,000) |
Proceeds from issuance of employee stock purchase plan shares | 133,000 | 136,000 | 116,000 |
Net cash provided by financing activities | 86,912,000 | 44,654,000 | 331,689,000 |
Net (decrease) increase in cash and cash equivalents | (147,887,000) | 83,452,000 | 69,295,000 |
Cash and cash equivalents at beginning of year | 208,710,000 | 125,258,000 | 55,963,000 |
Cash and cash equivalents at end of year | 60,823,000 | 208,710,000 | 125,258,000 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 8,721,000 | 6,805,000 | 16,665,000 |
Cash paid for income taxes | 4,900,000 | 4,400,000 | 550,000 |
Supplemental schedule of noncash investing and financing activities: | |||
Loans transferred from LHFS to portfolio loans | 1,510,000 | 0 | 0 |
Premises and equipment transferred to held for sale | 2,991,000 | 0 | 0 |
Lease liabilities arising from obtaining ROU assets | 94,000 | 2,865,000 | 400,000 |
Deposits held for assumption in connection with sale of bank branch | $ 31,307,000 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES See the Glossary of Defined Terms at the beginning of this Report for terms used throughout the consolidated financial statements and related notes of this Form 10-K. Nature of Operations – Orrstown Financial Services, Inc. is a financial holding company that operates Orrstown Bank, a commercial bank providing banking and financial advisory services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania, and in Anne Arundel, Baltimore, Howard and Washington Counties, Maryland. The Company operates in the community banking segment and engages in lending activities, including commercial, residential, commercial mortgages, construction, municipal, and various forms of consumer lending, and deposit services, including checking, savings, time, and money market deposits. The Company’s lending area also includes adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. The Company also provides fiduciary services, investment advisory, insurance and brokerage services. Effective July 31, 2020, Wheatland Advisors, Inc., a registered investment advisor non-bank subsidiary, headquartered in Lancaster County, Pennsylvania was discontinued. The Company and the Bank are subject to regulation by certain federal and state agencies and undergo periodic examinations by such regulatory authorities. Basis of Presentation – The accompanying consolidated financial statements include the accounts of Orrstown Financial Services, Inc. and its wholly owned subsidiary, the Bank. The accounting and reporting policies of the Company conform to GAAP and, where applicable, to accounting and reporting guidelines prescribed by bank regulatory authorities. All significant intercompany transactions and accounts have been eliminated. Certain reclassifications have been made to prior year amounts to conform with current year classifications. These reclassifications did not have a material impact on the Company's consolidated financial condition or results of operations. The Company's management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company's consolidated financial statements and notes as required by GAAP. To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. Concentration of Credit Risk – The Company grants commercial, residential, construction, municipal, and various forms of consumer lending to clients primarily in its market area in south central Pennsylvania and in the greater Baltimore region and Washington County, Maryland, in addition to adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. Therefore, the Company's exposure to credit risk is significantly affected by changes in the economy in those areas. Although the Company maintains a diversified loan portfolio, a significant portion of its clients’ ability to honor their contracts is dependent upon economic sectors for commercial real estate, including office space, retail strip centers, sales finance, sub-dividers and developers, and multi-family, hospitality, and residential building operators. Management evaluates each clients' creditworthiness on a case-by-case basis. The amount of collateral obtained upon the extension of credit is based on management’s credit evaluation of the client. Types of collateral held varies, but generally include real estate and equipment. The types of securities the Company invests in are included in Note 2, Investment Securities, and the types of lending the Company engages in are included in Note 3, Loans and Allowance for Loan Losses. Cash and Cash Equivalents – Cash and cash equivalents include cash, balances due from banks, federal funds sold and interest-bearing deposits due on demand, all of which have original maturities of 90 days or less. Net cash flows are reported for client loan and deposit transactions, loans held for sale, redemption (purchases) of restricted investments in bank stocks, and short-term borrowings. Under the FRB regulations, the Bank generally had been required to maintain cash reserves against specified deposit liabilities. The FRB issued a final rule on December 22, 2020 that amended Regulation D by lowering the reserve requirement on all net transaction accounts maintained at depository institutions to 0%. Effective January 1, 2023, the FRB will establish the new reserve requirement exemption amount and low reserve tranche for 2023, but will not elevate the current reserve percentage of zero for depository institutions. Balances with correspondent banks may, at times, exceed federally insured limits. The Company considers this to be a normal business risk and reviews the financial condition of its correspondent banks on a quarterly basis. Restricted Investments in Bank Stocks – Restricted investments in bank stocks consist of Federal Reserve Bank of Philadelphia stock, FHLB of Pittsburgh stock and Atlantic Community Bankers Bank stock. Federal law requires a member institution of the district Federal Reserve Bank and FHLB to hold stock according to predetermined formulas. Atlantic Community Bankers Bank requires its correspondent banking institutions to hold stock as a condition of membership. The restricted investment in bank stocks is carried at cost. On a quarterly basis, management evaluates the bank stocks for impairment based on assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history, and impact of legislative and regulatory changes. Investment Securities – The Company typically classifies debt securities as available-for-sale ("AFS") on the date of purchase. At December 31, 2022 and 2021, the Company had no held to maturity or trading securities. AFS securities are reported at fair value. Interest income and dividends on debt securities are recognized in interest income on an accrual basis. Purchase premiums and discounts on debt securities are amortized to interest income using the interest method over the terms of the investment securities and approximate the level yield method. Changes in unrealized gains and losses, net of related deferred taxes, for AFS securities are recorded in AOCI. Realized gains and losses on securities are recorded on the trade date using the specific identification method and are included in noninterest income on the consolidated statements of income. AFS securities include investments that management intends to use as part of its asset/liability management strategy. Investment securities may be sold in response to changes in interest rates, changes in prepayment rates and other factors. The Company does not have the intent to sell any of its AFS securities that are in an unrealized loss position and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost. Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as an impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components: OTTI related to other factors, which is recognized in OCI, and the remaining OTTI, which is recognized in earnings. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The Company’s securities are exposed to various risks, such as interest rate risk, market risk, and credit risk. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment securities reported in the consolidated financial statements. Loans Held for Sale – The Company has elected to record the mortgage loans held for sale portfolio at fair market value as opposed to the lower of cost or market. The Company economically hedges its residential loans held for sale portfolio with forward sale agreements, which are reported at fair value. A lower of cost or market accounting treatment would not allow the Company to record the excess of the fair market value over book value, but would require the Company to record the corresponding reduction in value on the hedges. Both the loans and related hedges are carried at fair value, which reduces earnings volatility as the amounts more closely offset, particularly in environments when interest rates are declining. For loans held for sale for which the fair value option has been elected, the aggregate fair value was less than the aggregate principal balance by $1.2 million and $150 thousand as of December 31, 2022 and 2021, respectively. There were no loans held for sale that were nonaccrual or 90 or more days past due as of December 31, 2022 and 2021. Gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income. Interest income on these loans is recognized in interest and fees on loans in the consolidated statements of income. Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances adjusted for charge-offs, the ALL, and any corresponding deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and amortized as a yield adjustment over the respective term of the loan using the interest method. For SBA PPP loans, the loan origination fees, net of certain direct origination costs, are deferred and accreted into interest income as a yield adjustment under the effective yield method over the estimated life of the PPP loans, with any unamortized net fees being recognized as interest income at the time of forgiveness. For purchased loans that are not deemed impaired at the acquisition date, premiums and discounts are amortized or accreted as adjustments to interest income using the effective yield method. For all classes of loans, the accrual of interest income on loans, including impaired loans, ceases when principal or interest is past due 90 days or more or immediately if, in the opinion of management, full collection is unlikely. Interest will continue to accrue on loans past due 90 days or more if the collateral is adequate to cover principal and interest, and the loan is in the process of collection. Interest accrued, but not collected, at the date of placement on nonaccrual status, is reversed and charged against interest income, unless fully collateralized. Subsequent payments received are either applied to the outstanding principal balance or recorded as interest income, depending upon management’s assessment of the ultimate collectability of principal. Loans are returned to accrual status, for all loan classes, when all the principal and interest amounts contractually due are brought current, the loan has performed in accordance with the contractual terms of the note for a reasonable period of time, generally six months, and the ultimate collectability of the total contractual principal and interest is reasonably assured. Past due status is based on the contractual terms of the loan. Loans, the terms of which are modified, are classified as TDRs if a concession was granted in connection with the modification, for legal or economic reasons, related to the debtor’s financial difficulties. Concessions granted under a TDR typically involve a temporary deferral of scheduled loan payments, an extension of a loans' stated maturity date, a temporary reduction in interest rates, or granting of an interest rate below market rates given the risk of the transaction. If a modification occurs while the loan is on accrual status, it will continue to accrue interest under the modified terms. Nonaccrual TDRs may be restored to accrual status if scheduled principal and interest payments, under the modified terms, are current for six months after modification, and the borrower continues to demonstrate its ability to meet the modified terms. TDRs are evaluated individually for impairment on a quarterly basis including monitoring of performance according to their modified terms. In an effort to assist clients that were negatively impacted by the COVID-19 pandemic, the Bank offered various mitigation options, including a loan payment deferral program. Under this program, most commercial deferrals were for a 90-day period, while most consumer deferrals were for a 180-day period. In accordance with the revised Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronaviru s issued by the federal bank regulatory agencies on April 7, 2020, these deferrals are exempt from TDR status as they meet the specified requirements. As of December 31, 2021, the Company had a consumer loan under this deferral program of $56 thousand for which the deferral period subsequently expired in 2022. There were no loans under this deferral program as of December 31, 2022. Allowance for Loan Losses – The ALL is evaluated on at least a quarterly basis, as losses are estimated to be probable and incurred, and, if deemed necessary, is increased or decreased through the provision for loan losses on the consolidated statements of income. Loan losses are charged against the ALL when management determines that all or a portion of the loan is uncollectible. Recoveries on previously charged-off loans are credited to the ALL when received. The ALL is allocated to loan portfolio classes on a quarterly basis, but the entire balance is available to cover losses from any of the portfolio classes when those losses are confirmed. Management uses internal policies and bank regulatory guidance in periodically evaluating loans for collectability and incorporates historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. See Note 3, Loans and Allowance for Loan Losses, for additional information. Acquired Loans - Loans acquired in connection with business combinations are recorded at fair value with no carryover of any allowance for loan losses. Fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. These loans are accounted for under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"). The nonaccretable discount includes estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases in expected cash flows will require us to evaluate the need for an addition to the allowance for loan losses. Subsequent improvement in expected cash flows will result in the reversal of a corresponding amount of the nonaccretable discount, which we will then reclassify as accretable discount to be recognized into interest income over the remaining life of the loan. Loans acquired through business combinations that do meet the specific criteria of ASC 310-30 are individually evaluated each period to analyze expected cash flows. To the extent that the expected cash flows of a loan have decreased due to credit deterioration, the Company establishes an allowance. Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30 are accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. These loans are initially recorded at fair value, and include credit and interest rate marks associated with acquisition accounting adjustments. Purchase premiums or discounts are subsequently amortized as an adjustment to yield over the estimated contractual lives of the loans. There is no allowance for loan losses established at the acquisition date for acquired performing loans. An allowance for loan losses is recorded for any credit deterioration in these loans subsequent to acquisition. Acquired loans that meet the criteria for impairment or nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the client is contractually delinquent if the Company expects to fully collect the new carrying value (i.e., fair value) of the loans. As such, the Company may no longer consider the loan to be nonperforming and may accrue interest on these loans, including the impact of any accretable discount. In addition, charge-offs on such loans would be first applied to the nonaccretable difference portion of the fair value adjustment. Loan Commitments and Related Financial Instruments – Financial instruments include off-balance sheet credit commitments issued to meet client financing needs, such as commitments to make loans and commercial letters of credit. These financial instruments are recorded when they are funded. The face amount represents the exposure to loss, before considering client collateral or ability to repay. The Company maintains a reserve for probable losses on off-balance sheet commitments, which is included in other liabilities on the consolidated balance sheets. Loans Serviced – The Bank administers secondary market mortgage programs available through the FHLB and the Federal National Mortgage Association ("FNMA") and offers residential mortgage products and services to clients. The Bank originates single-family residential mortgage loans for sale in the secondary market and retains the servicing of those loans. At December 31, 2022 and 2021, the balance of loans serviced for others totaled $495.0 million and $502.5 million, respectively. Transfers of Financial Assets – Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Cash Surrender Value of Life Insurance – The Company has purchased life insurance policies on certain employees. Life insurance is recorded at the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Derivatives - FASB ASC 815, Derivatives and Hedging (“ASC 8 15”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes to the fair value of derivatives designated and that qualify as cash flow hedges are recorded in AOCI and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The Company discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period due to circumstances, such as the impact of the COVID-19 pandemic. Upon discontinuance, the associated gains and losses deferred in AOCI are reclassified immediately into earnings and subsequent changes in the fair value of the cash flow hedge are recognized in earnings. During 2022, the Company entered into two interest rate swaps designated as hedging instruments with a total notional value of $100.0 million for the purpose of hedging the variable cash flows of selected AFS securities or loans. The Company had no interest rate swaps designated as a hedging instrument at December 31, 2021. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps and interest rate caps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps and interest rate caps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. At December 31, 2022 and 2021, the Company had interest rate swaps and interest rate caps not designated as hedges with total notional value of $268.8 million and $75.8 million, respectively. The Company also may enter into risk participation agreements with a financial institution counterparty for an interest rate derivative contract related to a loan in which the Company may be a participant or the agent bank. The risk participation agreement provides credit protection to the agent bank should the borrower fail to perform on its interest rate derivative contracts with the agent bank. The Company manages its credit risk on risk participation agreements by monitoring the creditworthiness of the borrower, which follows the same credit review process as derivative instruments entered into directly with the borrower. The notional amount of a risk participation agreement reflects the Company's pro-rata share of the derivative instrument, consistent with its share of the related participated loan. Changes in the fair value of the risk participation agreement are recognized directly into earnings. At December 31, 2022 and 2021, the Company had a risk participation with sold protection with a notional value of $29.0 million and $15.9 million, respectively, and a risk participation with purchased protection with a notional value of $4.9 million and zero at December 31, 2022 and 2021, respectively. As a part of its normal residential mortgage operations, the Company will enter into an interest rate lock commitment with a potential borrower. The Company may enter into a corresponding commitment with an investor to sell that loan at a specific price shortly after origination. In accordance with FASB ASC 820, adjustments are recorded through earnings to account for the net change in fair value of these held for sale loans. The fair value of held for sale loans can vary based on the interest rate locked with the customer and the current market interest rate at the balance sheet date. At December 31, 2022 and 2021, the Company had interest rate lock commitments with a notional value of $1.4 million and $16.6 million, respectively, and forward sale loan commitments with a notional value of $3.5 million and $8.7 million, respectively. Premises and Equipment – Buildings, improvements, equipment, and furniture and fixtures are carried at cost less accumulated depreciation and amortization. Land is carried at cost. Depreciation and amortization has been recognized generally on the straight-line method and is computed over the estimated useful lives of the various assets as follows: buildings and improvements, including leasehold improvements – 10 to 40 years; and furniture and equipment – 3 to 15 years. Leasehold improvements are amortized over the shorter of the lease term or the indicated life. Repairs and maintenance are charged to operations as incurred, while additions and improvements are typically capitalized. Gains or losses on the retirement or disposal of individual assets is recorded as income or expense in the period of retirement or disposal. Premises no longer in use and held for sale are included in other assets on the consolidated balance sheets at the lower of carrying value or fair value and no depreciation is charged on them. At December 31, 2022 and 2021, premises held for sale totaled $2.0 million and $321 thousand, respectively. Leases - The Company evaluates its contracts at inception to determine if an arrangement either is a lease or contains one. Operating lease ROU assets are included in other assets and operating lease liabilities in accrued interest payable and other liabilities in the consolidated balance sheets. The Company had no finance leases at December 31, 2022. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company's leases do not provide an implicit rate, so the Company's incremental borrowing rate is used, which approximates its fully collateralized borrowing rate, based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is reevaluated upon lease modification. The operating lease ROU asset also includes any initial direct costs and prepaid lease payments made less any lease incentives. In calculating the present value of lease payments, the Company may include options to extend the lease when it is reasonably certain that it will exercise that option. In accordance with ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), the Company keeps leases with an initial term of 12 months or less off of the balance sheet. The Company recognizes these lease payments in the consolidated statements of income on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to account for them as a single lease component. The Company's operating leases relate primarily to bank branches and office space. The difference between the lease assets and lease liabilities primarily consists of deferred rent liabilities to reduce the measurement of the lease assets. Goodwill and Other Intangible Assets – Goodwill is calculated as the purchase premium, if any, after adjusting for the fair value of net assets acquired in purchase transactions. Goodwill is not amortized, but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit. Other intangible assets represent purchased assets that can be distinguished from goodwill because of contractual or other legal rights. The Company’s other intangible assets have finite lives and are amortized on either an accelerated amortization method or straight-line basis over their estimated lives, generally 10 years for deposit premiums and 10 to 15 years for other client relationship intangibles. Mortgage Servicing Rights – The estimated fair value of MSRs related to loans sold and serviced by the Company is recorded as an asset upon the sale of such loans. MSRs are amortized as a reduction to servicing income over the estimated lives of the underlying loans. MSRs are evaluated periodically for impairment by comparing the carrying amount to estimated fair value. Fair value is determined periodically through a discounted cash flow valuation performed by a third party. Significant inputs to the valuation include expected servicing income, net of expense, the discount rate and the expected life of the underlying loans. To the extent the amortized cost of the MSRs exceeds their estimated fair values, a valuation allowance is established for such impairment through a charge against servicing income on the consolidated statements of income. If the Company determines, based on subsequent valuations, that the impairment no longer exists or is reduced, the valuation allowance is reduced through a credit to earnings. MSRs, net of the valuation allowance, totaled $4.0 million at both December 31, 2022 and December 31, 2021, and are included in other assets on the consolidated balance sheets. Foreclosed Real Estate – Real estate acquired through foreclosure or other means is initially recorded at the fair value of the related real estate collateral at the transfer date less estimated selling costs, and subsequently at the lower of its carrying value or fair value less estimated costs to sell. Fair value is determined based on an indepen |
INVESTMENT SECURITIES
INVESTMENT SECURITIES | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENT SECURITIES | INVESTMENT SECURITIES At December 31, 2022 and 2021, all investment securities were classified as AFS. The following table summarizes amortized cost and fair value of AFS securities, and the corresponding amounts of gross unrealized gains and losses recognized in AOCI at December 31, 2022 and 2021. Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2022 U.S. Treasury securities $ 20,070 $ — $ 2,779 $ 17,291 U.S. government agencies 4,907 228 — 5,135 States and political subdivisions 225,825 19 28,430 197,414 GSE residential MBSs 63,778 — 4,376 59,402 GSE residential CMOs 75,446 — 7,068 68,378 Non-agency CMOs 42,298 243 2,783 39,758 Asset-backed 130,577 — 4,604 125,973 Other 377 — — 377 Totals $ 563,278 $ 490 $ 50,040 $ 513,728 December 31, 2021 U.S. Treasury securities $ 20,084 $ — $ 382 $ 19,702 States and political subdivisions 185,437 8,606 673 193,370 GSE residential MBSs 41,260 44 578 40,726 GSE residential CMOs 66,430 436 944 65,922 Non-agency CMOs 30,676 — 978 29,698 Asset-backed 122,520 401 300 122,621 Other 399 — — 399 Totals $ 466,806 $ 9,487 $ 3,855 $ 472,438 The following table summarizes investment securities with unrealized losses at December 31, 2022 and 2021, aggregated by major security type and length of time in a continuous unrealized loss position. Less Than 12 Months 12 Months or More Total # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses December 31, 2022 U.S. Treasury securities — $ — $ — 3 $ 17,291 $ 2,779 3 $ 17,291 $ 2,779 States and political subdivisions 29 135,579 13,809 17 60,102 14,621 46 195,681 28,430 GSE residential MBSs 5 26,100 925 10 33,302 3,451 15 59,402 4,376 GSE residential CMOs 8 28,732 1,884 9 39,646 5,184 17 68,378 7,068 Non-agency CMOs 4 26,555 1,135 2 8,639 1,648 6 35,194 2,783 Asset-backed 17 78,873 2,432 5 47,100 2,172 22 125,973 4,604 Totals 63 $ 295,839 $ 20,185 46 $ 206,080 $ 29,855 109 $ 501,919 $ 50,040 December 31, 2021 U.S. Treasury securities 3 $ 19,702 $ 382 — $ — $ — 3 $ 19,702 $ 382 States and political subdivisions 12 45,522 673 — — — 12 45,522 673 GSE residential MBSs 9 37,899 578 — — — 9 37,899 578 GSE residential CMOs 7 41,163 944 — — — 7 41,163 944 Non-agency CMOs 3 24,661 978 — — — 3 24,661 978 Asset-backed 3 21,245 138 3 34,180 162 6 55,425 300 Totals 37 $ 190,192 $ 3,693 3 $ 34,180 $ 162 40 $ 224,372 $ 3,855 The Company determines whether unrealized losses are temporary in nature in accordance with FASB ASC 320-10, Investments - Overall , (“FASB ASC 320-10”) and FASB ASC 325-40, Investments – Beneficial Interests in Securitized Financial Assets , when applicable. The evaluation is based upon factors such as the creditworthiness of the underlying borrowers, performance of the underlying collateral, if applicable, and the level of credit support in the security structure. Management also evaluates other factors and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost and near-term prospects of the issuer. FASB ASC 320-10 requires the Company to assess if an OTTI exists by considering whether the Company has the intent to sell the security or it is more likely than not that it will be required to sell the security before recovery. If either of these situations applies, the guidance requires the Company to record an OTTI charge to earnings on debt securities for the difference between the amortized cost basis of the security and the fair value of the security. If neither of these situations applies, the Company is required to assess whether it is expected to recover the entire amortized cost basis of the security. If the Company is not expected to recover the entire amortized cost basis of the security, the guidance requires the Company to bifurcate the identified OTTI into a credit loss component and a component representing loss related to other factors. A discount rate is applied which equals the effective yield of the security. The difference between the present value of the expected flows and the amortized book value is considered a credit loss, which would be recorded through earnings as an OTTI charge. When a market price is not readily available, the market value of the security is determined using the same expected cash flows; the discount rate is a rate the Company determines from the open market and other sources as appropriate for the security. The difference between the market value and the present value of cash flows expected to be collected is recognized in accumulated other comprehensive loss on the consolidated statements of financial condition. At December 31, 2022, 2021 and 2020, the Company had no cumulative OTTI. During 2022, unrealized losses were substantially higher due to market uncertainty resulting from inflation and rising interest rates. U.S. Treasury Securities. The unrealized losses presented in the table above have been caused by an increase in rates from the time these securities were purchased. Management considers the full faith and credit of the U.S. government in determining whether a security is OTTI. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at December 31, 2022 and 2021. States and Political Subdivisions. The unrealized losses presented in the table above have been caused by a widening of spreads and/or a rise in interest rates from the time these securities were purchased. Management considers the investment rating, the state of the issuer of the security and other credit support in determining whether the security is OTTI. As of December 31, 2022 and 2021, management concluded that an OTTI did not exist on any of the aforementioned securities based upon its assessment. Management also concluded that it does not intend to sell nor will it be required to sell the securities, before their recovery, which may be maturity, and management expects to recover the entire amortized cost basis of these securities. GSE Residential CMOs and GSE Residential MBS . The unrealized losses presented in the table above have been caused by a widening of spreads and/or a rise in interest rates from the time these securities were purchased. The contractual terms of these securities do not permit the issuer to settle the securities at a price less than its par value basis. As of December 31, 2022 and 2021, management concluded that an OTTI did not exist on any of the aforementioned securities based upon its assessment. Management also concluded that it does not intend to sell nor will it be required to sell the securities, before their recovery, which may be maturity, and management expects to recover the entire amortized cost basis of these securities. Non-agency CMOs . The unrealized losses presented in the table above were caused by a widening of spreads and a rise in interest rates from the time the securities were purchased. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at December 31, 2022 and 2021. For the year ended December 31, 2022, the Company recognized a loss of $171 thousand on the call of a non-agency CMO security at a price below its par value of $14.7 million, The realized loss was included in securities gains and losses in noninterest income in the consolidated statements of income. Asset-backed. The unrealized losses presented in the table above have been caused by a widening of spreads from the time the securities were purchased. Management considers the investment rating and other credit support in determining whether a security is other-than-temporarily impaired. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at December 31, 2022 and 2021. The following table summarizes amortized cost and fair value of investment securities by contractual maturity at December 31, 2022. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. Amortized Cost Fair Value Due in one year or less $ 249 $ 249 Due after one year through five years 6,403 6,043 Due after five years through ten years 83,348 72,161 Due after ten years 161,179 141,764 CMOs and MBSs 181,522 167,538 Asset-backed 130,577 125,973 $ 563,278 $ 513,728 The following table summarizes proceeds from sales of investment securities and gross gains and gross losses for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Proceeds from sale of investment securities $ 31,330 $ 149,038 $ — Gross gains 35 1,847 — Gross losses 25 1,209 16 During the year ended December 31, 2022, the Company recorded net investment security gains of $10 thousand compared to a net gain of $638 thousand for year ended December 31, 2021. A net loss of $16 thousand was recorded for year ended December 31, 2020 to adjust an equity security to market value. During 2022, the principal balance of $31.3 million of 19 securities were sold for proceeds of $31.3 million compared to 18 securities with a principal balance of $148.4 million that were sold for proceeds of $149.0 million during 2021. The Company recorded a loss of $171 thousand on the aforementioned call of a non-agency CMO for the year ended December 31, 2022. Investment securities with a fair value of $396.8 million and $295.6 million at December 31, 2022 and 2021, respectively, were pledged to secure public funds and for other purposes as required or permitted by law. |
LOANS AND ALLOWANCE FOR LOAN LO
LOANS AND ALLOWANCE FOR LOAN LOSSES | 12 Months Ended |
Dec. 31, 2022 | |
Receivables [Abstract] | |
LOANS AND ALLOWANCE FOR LOAN LOSSES | LOANS AND ALLOWANCE FOR LOAN LOSSES Consistent with ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Loan Losses, the Company's loan portfolio is grouped into segments, which are further broken down into classes to allow management to monitor the performance by the borrower and to monitor the yield on the portfolio. The risks associated with lending activities differ among the various loan classes and are subject to the impact of changes in interest rates, market conditions of collateral securing the loans, and general economic conditions. All of these factors may adversely impact both the borrower’s ability to repay its loans and associated collateral. The Company has various types of commercial real estate loans, which have differing levels of credit risk. Owner occupied commercial real estate loans are generally dependent upon the successful operation of the borrower’s business, with the cash flows generated from the business being the primary source of repayment of the loan. If the business suffers a downturn in sales or profitability, the borrower’s ability to repay the loan could be in jeopardy. Non-owner occupied and multi-family commercial real estate loans and non-owner occupied residential loans present a different credit risk to the Company than owner occupied commercial real estate loans, as the repayment of the loan is dependent upon the borrower’s ability to generate a sufficient level of occupancy to produce rental income that exceeds debt service requirements and operating expenses. Lower occupancy or lease rates may result in a reduction in cash flows, which hinders the ability of the borrower to meet debt service requirements, and may result in lower collateral values. The Company generally recognizes that greater risk is inherent in these credit relationships as compared to owner occupied loans mentioned above. Acquisition and development loans consist of 1-4 family residential construction and commercial and land development loans. The risk of loss on these loans is largely dependent on the Company’s ability to assess the property’s value at the completion of the project, which should exceed the property’s construction costs. During the construction phase, a number of factors could potentially negatively impact the collateral value, including cost overruns, delays in completing the project, competition, and real estate market conditions which may change based on the supply of similar properties in the area. In the event the collateral value at the completion of the project is not sufficient to cover the outstanding loan balance, the Company must rely upon other repayment sources, if any, including the guarantors of the project or other collateral securing the loan. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted. The CARES Act established the SBA PPP. The SBA PPP is intended to provide economic relief to small businesses nationwide adversely impacted under the COVID-19 Emergency Declaration issued on March 13, 2020. The SBA PPP, which began on April 3, 2020, provided small businesses with funds to cover up to 24 weeks of payroll costs and other expenses, including benefits. It also provides for forgiveness of up to the full principal amount of qualifying loans. In total, the Bank closed and funded almost 6,500 loans for a total gross loan amount of $699.4 million through December 31, 2021. Commercial and industrial loans include advances to local and regional businesses for general commercial purposes and include permanent and short-term working capital, machinery and equipment financing, and may be either in the form of lines of credit or term loans. Although commercial and industrial loans may be unsecured to our highest-rated borrowers, the majority of these loans are secured by the borrower’s accounts receivable, inventory and machinery and equipment. In a significant number of these loans, the collateral also includes the business real estate or the business owner’s personal real estate or assets. Commercial and industrial loans present credit exposure to the Company, as they are more susceptible to risk of loss during a downturn in the economy as borrowers may have greater difficulty in meeting their debt service requirements and the value of the collateral may decline. The Company attempts to mitigate this risk through its underwriting standards, including evaluating the creditworthiness of the borrower and, to the extent available, credit ratings on the business. Additionally, monitoring of the loans through annual renewals and meetings with the borrowers are typical. However, these procedures cannot eliminate the risk of loss associated with commercial and industrial lending. At December 31, 2022 and 2021, commercial and industrial loans include $13.8 million and $189.9 million, respectively, of loans, net of deferred fees and costs, originated through the SBA PPP. At December 31, 2022, the Bank has $262 thousand of net deferred SBA PPP fees remaining to be recognized through net interest income. The timing of the recognition of these fees is dependent upon the loan forgiveness process established by the SBA. As these loans are 100% guaranteed by the SBA, there is no associated allowance for loan losses at December 31, 2022 and 2021. Municipal loans consist of extensions of credit to municipalities and school districts within the Company’s market area. These loans generally present a lower risk than commercial and industrial loans, as they are generally secured by the municipality’s full taxing authority, by revenue obligations, or by its ability to raise assessments on its clients for a specific utility. The Company originates loans to its retail clients, including fixed-rate and adjustable first lien mortgage loans with the underlying 1-4 family owner occupied residential property securing the loan. The Company’s risk exposure is minimized in these types of loans through the evaluation of the creditworthiness of the borrower, including credit scores and debt-to-income ratios, and underwriting standards which limit the loan-to-value ratio to generally no more than 80% upon loan origination, unless the borrower obtains private mortgage insurance. Home equity loans, including term loans and lines of credit, present a slightly higher risk to the Company than 1-4 family first liens, as these loans can be first or second liens on 1-4 family owner occupied residential property, but can have loan-to-value ratios of no greater than 85% of the value of the real estate taken as collateral. The creditworthiness of the borrower is considered including credit scores and debt-to-income ratios. Installment and other loans’ credit risk are mitigated through prudent underwriting standards, including evaluation of the creditworthiness of the borrower through credit scores and debt-to-income ratios and, if secured, the collateral value of the assets. These loans can be unsecured or secured by assets the value of which may depreciate quickly or may fluctuate, and may present a greater risk to the Company than 1-4 family residential loans. The following table presents the loan portfolio by segment and class, excluding residential LHFS, at December 31, 2022 and 2021. 2022 2021 Commercial real estate: Owner-occupied $ 315,770 $ 238,668 Non-owner occupied 608,043 551,783 Multi-family 138,832 93,255 Non-owner occupied residential 104,604 106,112 Acquisition and development: 1-4 family residential construction 25,068 12,279 Commercial and land development 158,308 93,925 Commercial and industrial (1) 357,774 485,728 Municipal 12,173 14,989 Residential mortgage: First lien 229,849 198,831 Home equity – term 5,505 6,081 Home equity – lines of credit 183,241 160,705 Installment and other loans 12,065 17,630 Total loans $ 2,151,232 $ 1,979,986 (1) This balance includes $13.8 million and $189.9 million of SBA PPP loans, net of deferred fees and costs, at December 31, 2022 and 2021 , respectively. In order to monitor ongoing risk associated with its loan portfolio and specific loans within the segments, management uses an internal grading system. The first several rating categories, representing the lowest risk to the Bank, are combined and given a “Pass” rating. Management generally follows regulatory definitions in assigning criticized ratings to loans, including "Special Mention," "Substandard," "Doubtful" or "Loss." The Special Mention category includes loans that have potential weaknesses that may, if not monitored or corrected, weaken the asset or inadequately protect the Bank's position at some future date. These assets pose elevated risk, but their weakness does not yet justify a more severe, or classified rating. Substandard loans are classified as they have a well-defined weakness, or weaknesses that jeopardize liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Substandard loans include loans that management has determined not to be impaired, as well as loans considered to be impaired. A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as Loss is deferred. Loss loans are considered uncollectible, as the borrowers are often in bankruptcy, have suspended debt repayments, or have ceased business operations. Once a loan is classified as Loss, there is little prospect of collecting the loan’s principal or interest and it is charged-off. The Company has a loan review policy and program, which is designed to identify and monitor risk in the lending function. The Management ERM Committee, comprised of executive and senior officers and loan department personnel, is charged with the oversight of overall credit quality and risk exposure of the Company's loan portfolio. This includes the monitoring of the lending activities of all Company personnel with respect to underwriting and processing new loans and the timely follow-up and corrective action for loans showing signs of deterioration in quality. A loan review program provides the Company with an independent review of the commercial loan portfolio on an ongoing basis. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as extended delinquencies, bankruptcy, repossession or death of the borrower occurs, which heightens awareness as to a possible credit event. Internal loan reviews are completed annually on all commercial relationships with a committed loan balance in excess of $1.0 million, which includes confirmation of risk rating by an independent credit officer. In addition, all commercial relationships greater than $500 thousand rated substandard, doubtful or loss are reviewed quarterly and corresponding risk ratings are changed or reaffirmed by the Company's Problem Loan Committee, with subsequent reporting to the Management ERM Committee and the Board of Directors. The following summarizes the Company’s loan portfolio ratings based on its internal risk rating system at December 31, 2022 and 2021: Pass Special Mention Non-Impaired Substandard Impaired - Substandard Doubtful PCI Loans Total December 31, 2022 Commercial real estate: Owner-occupied $ 305,159 $ 2,109 $ 3,532 $ 2,767 $ — $ 2,203 $ 315,770 Non-owner occupied 601,244 4,243 2,273 — — 283 608,043 Multi-family 130,851 7,739 242 — — — 138,832 Non-owner occupied residential 102,674 810 482 81 — 557 104,604 Acquisition and development: 1-4 family residential construction 25,068 — — — — — 25,068 Commercial and land development 142,424 458 — 15,426 — — 158,308 Commercial and industrial 331,103 17,579 7,013 31 — 2,048 357,774 Municipal 12,173 — — — — — 12,173 Residential mortgage: First lien 222,849 — 215 2,520 — 4,265 229,849 Home equity – term 5,485 — — 5 — 15 5,505 Home equity – lines of credit 182,801 — 45 395 — — 183,241 Installment and other loans 12,017 — — 40 — 8 12,065 $ 2,073,848 $ 32,938 $ 13,802 $ 21,265 $ — $ 9,379 $ 2,151,232 December 31, 2021 Commercial real estate: Owner-occupied $ 219,250 $ 7,239 $ 6,087 $ 3,763 $ — $ 2,329 $ 238,668 Non-owner occupied 528,010 23,297 166 — — 310 551,783 Multi-family 84,414 8,238 603 — — — 93,255 Non-owner occupied residential 102,588 1,065 1,153 122 — 1,184 106,112 Acquisition and development: 1-4 family residential construction 12,279 — — — — — 12,279 Commercial and land development 92,049 1,385 491 — — — 93,925 Commercial and industrial 470,579 7,917 4,720 250 — 2,262 485,728 Municipal 14,989 — — — — — 14,989 Residential mortgage: First lien 191,386 — 225 2,635 — 4,585 198,831 Home equity – term 6,058 — — 7 — 16 6,081 Home equity – lines of credit 160,203 20 46 436 — — 160,705 Installment and other loans 17,584 — — 40 — 6 17,630 $ 1,899,389 $ 49,161 $ 13,491 $ 7,253 $ — $ 10,692 $ 1,979,986 For commercial real estate, acquisition and development, and commercial and industrial loans, a loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Generally, loans that are more than 90 days past due are deemed impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed to determine if the loan should be placed on nonaccrual status. Nonaccrual loans in the commercial and commercial real estate portfolios and any TDRs are, by definition, deemed to be impaired. Impairment is measured on a loan-by-loan basis for commercial, construction and restructured loans by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is collateral dependent if the repayment of the loan is expected to be provided solely by the underlying collateral. For loans that are deemed to be impaired for extended periods of time, periodic updates on fair values are obtained, which may include updated appraisals. Updated fair values are incorporated into the impairment analysis in the next reporting period. Loan charge-offs, which may include partial charge-offs, are taken on an impaired loan that is collateral dependent if the loan’s carrying balance exceeds its collateral’s appraised value, the loan has been identified as uncollectible, and it is deemed to be a confirmed loss. Typically, impaired loans with a charge-off or partial charge-off will continue to be considered impaired, unless the note is split into two, and management expects the performing note to continue to perform and is adequately secured. The second, or non-performing note, would be charged-off. Generally, an impaired loan with a partial charge-off may continue to have an impairment reserve on it after the partial charge-off, if factors warrant. At December 31, 2022 and 2021, nearly all of the Company’s loan impairments were measured based on the estimated fair value of the collateral securing the loan, except for TDRs. By definition, TDRs are considered impaired. All TDR impairment analyses are initially based on discounted cash flows for those loans. For real estate loans, collateral generally consists of commercial real estate or 1-4 family residential properties, but in the case of commercial and industrial loans, it could also consist of accounts receivable, inventory, equipment or other business assets. Commercial and industrial loans may also have real estate collateral. Updated appraisals are generally required every 18 months for classified commercial loans in excess of $250 thousand. The “as is" value provided in the appraisal is often used as the fair value of the collateral in determining impairment, unless circumstances, such as subsequent improvements, approvals, or other circumstances, dictate that another value than that provided by the appraiser is more appropriate. Generally, impaired commercial loans secured by real estate, other than performing TDRs, are measured at fair value using certified real estate appraisals that had been completed within the last 18 months. Appraised values are discounted for estimated costs to sell the property and other selling considerations to arrive at the property’s fair value. In those situations, in which it is determined an updated appraisal is not required for loans individually evaluated for impairment, fair values are based on either an existing appraisal or a discounted cash flow analysis as determined by management. The approaches are discussed below: • Existing appraisal – if the existing appraisal provides a strong loan-to-value ratio (generally 70% or lower) and, after consideration of market conditions and knowledge of the property and area, it is determined by the Credit Administration staff that there has not been a significant deterioration in the collateral value, the existing certified appraised value may be used. Discounts to the appraised value, as deemed appropriate for selling costs, are factored into the fair value. • Discounted cash flows – in limited cases, discounted cash flows may be used on projects in which the collateral is liquidated to reduce the borrowings outstanding, and is used to validate collateral values derived from other approaches. Collateral on certain impaired loans is not limited to real estate, and may consist of accounts receivable, inventory, equipment or other business assets. Estimated fair values a determined based on borrowers’ financial statements, inventory ledgers, accounts receivable agings or appraisals from individuals with knowledge in the business. Stated balances are generally discounted for the age of the financial information or the quality of the assets. In determining fair value, liquidation discounts are applied to this collateral based on existing loan valuation policies. The Company distinguishes substandard loans on both an impaired and non-impaired basis, as it places less emphasis on a loan’s classification, and increased reliance on whether the loan was performing in accordance with the contractual terms. A substandard classification does not automatically meet the definition of impaired. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual extensions of credit classified as substandard. As a result, the Company’s methodology includes an evaluation of certain accruing commercial real estate, acquisition and development, and commercial and industrial loans rated substandard to be collectively evaluated for impairment. Although the Company believes these loans meet the definition of substandard, they are generally performing and management has concluded that it is likely the Company will be able to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Larger groups of smaller balance homogeneous loans are collectively evaluated for impairment. Generally, the Company does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower. The following table, which excludes accruing PCI loans, summarizes impaired loans by segment and class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at December 31, 2022 and 2021. The recorded investment in loans excludes accrued interest receivable due to insignificance. Related allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending and any partial charge-off will be recorded when final information is received. Impaired Loans with a Specific Allowance Impaired Loans with No Specific Allowance Recorded Investment (Book Balance) Unpaid Principal Balance (Legal Balance) Related Allowance Recorded Investment (Book Balance) Unpaid Principal Balance (Legal Balance) December 31, 2022 Commercial real estate: Owner-occupied $ — $ — $ — $ 2,767 $ 3,799 Non-owner occupied residential — — — 81 207 Acquisition and development: Commercial and land development — — — 15,426 15,426 Commercial and industrial — — — 31 112 Residential mortgage: First lien 178 178 28 2,342 3,126 Home equity—term — — — 5 8 Home equity—lines of credit — — — 395 684 Installment and other loans — — — 40 40 $ 178 $ 178 $ 28 $ 21,087 $ 23,402 December 31, 2021 Commercial real estate: Owner-occupied $ — $ — $ — $ 3,763 $ 4,902 Non-owner occupied residential — — — 122 259 Commercial and industrial — — — 250 547 Residential mortgage: First lien 341 341 28 2,294 3,337 Home equity—term — — — 7 10 Home equity—lines of credit — — — 436 653 Installment and other loans — — — 40 40 $ 341 $ 341 $ 28 $ 6,912 $ 9,748 The following table, which excludes accruing PCI loans, summarizes the average recorded investment in impaired loans and related recognized interest income for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Average Impaired Balance Interest Income Recognized Average Impaired Balance Interest Income Recognized Average Impaired Balance Interest Income Recognized Commercial real estate: Owner-occupied $ 3,050 $ — $ 3,825 $ 1 $ 4,636 $ 1 Non-owner occupied — — — — 83 — Multi-family — — — — 205 — Non-owner occupied residential 96 — 225 — 388 — Acquisition and development: Commercial and land development 1,187 — 187 — 641 — Commercial and industrial 109 — 3,030 — 1,196 — Residential mortgage: First lien 2,389 33 2,539 43 2,995 48 Home equity – term 6 — 11 — 11 — Home equity – lines of credit 405 — 521 — 692 1 Installment and other loans 44 — 25 — 25 — $ 7,286 $ 33 $ 10,363 $ 44 $ 10,872 $ 50 The following table presents impaired loans that are TDRs, with the recorded investment at December 31, 2022 and 2021. 2022 2021 Number of Contracts Recorded Investment Number of Contracts Recorded Investment Accruing: Residential mortgage: First lien 8 682 8 804 8 682 8 804 Nonaccruing: Residential mortgage: First lien 4 212 5 285 Installment and other loans 1 2 — — 5 214 5 285 13 $ 896 13 $ 1,089 The following table presents the number of loans modified as TDRs, and their pre-modification and post-modification investment balances for the year ended December 31, 2022. There were two new TDRs, both on non-accrual status for the year ended December 31, 2022. During 2022, one of the two new TDRs was paid off in full. There were no loans modified as TDRs during 2021 and 2020. The loan presented in the table below was considered a TDR as a result of the Company agreeing to a below market interest rate given the risk of the transaction and a term extension, in order to give the borrowers an opportunity to improve their cash flows. For new and accruing TDRs, impairment is generally assessed using a discounted cash flow analysis. For TDRs in default of their modified terms, impairment is generally determined on a collateral dependent approach. Number of Contracts Pre- Modification Investment Balance Post- Modification Investment Balance December 31, 2022 Installment and other loans 1 $ 5 $ 2 Management further monitors the performance and credit quality of the loan portfolio by analyzing the length of time a portfolio is past due, by aggregating loans based on their delinquencies. The following table presents the classes of the loan portfolio summarized by aging categories of performing loans and nonaccrual loans at December 31, 2022 and 2021. Days Past Due Current 30-59 60-89 90+ (still accruing) Total Past Due Non- Accrual Total Loans December 31, 2022 Commercial real estate: Owner-occupied $ 310,769 $ 31 $ — $ — $ 31 $ 2,767 $ 313,567 Non-owner occupied 607,760 — — — — — 607,760 Multi-family 138,832 — — — — — 138,832 Non-owner occupied residential 103,782 184 — — 184 81 104,047 Acquisition and development: 1-4 family residential construction 24,622 446 — — 446 — 25,068 Commercial and land development 142,613 269 — — 269 15,426 158,308 Commercial and industrial 355,179 464 52 — 516 31 355,726 Municipal 12,173 — — — — — 12,173 Residential mortgage: First lien 219,715 3,485 414 132 4,031 1,838 225,584 Home equity – term 5,485 — — — — 5 5,490 Home equity – lines of credit 181,350 1,395 101 — 1,496 395 183,241 Installment and other loans 11,953 64 — — 64 40 12,057 Subtotal 2,114,233 6,338 567 132 7,037 20,583 2,141,853 Loans acquired with credit deterioration: Commercial real estate: Owner-occupied 2,203 — — — — — 2,203 Non-owner occupied 283 — — — — — 283 Non-owner occupied residential 452 — — 105 105 — 557 Commercial and industrial 2,048 — — — — — 2,048 Residential mortgage: First lien 3,657 327 79 202 608 — 4,265 Home equity – term 15 — — — — — 15 Installment and other loans 8 — — — — — 8 Subtotal 8,666 327 79 307 713 — 9,379 $ 2,122,899 $ 6,665 $ 646 $ 439 $ 7,750 $ 20,583 $ 2,151,232 Days Past Due Current 30-59 60-89 90+ (still accruing) Total Past Due Non- Accrual Total Loans December 31, 2021 Commercial real estate: Owner-occupied $ 231,371 $ 314 $ — $ 891 $ 1,205 $ 3,763 $ 236,339 Non-owner occupied 551,473 — — — — — 551,473 Multi-family 93,255 — — — — — 93,255 Non-owner occupied residential 104,645 161 — — 161 122 104,928 Acquisition and development: 1-4 family residential construction 12,279 — — — — — 12,279 Commercial and land development 93,793 132 — — 132 — 93,925 Commercial and industrial 483,088 128 — — 128 250 483,466 Municipal 14,989 — — — — — 14,989 Residential mortgage: First lien 189,043 2,995 281 96 3,372 1,831 194,246 Home equity – term 6,042 16 — — 16 7 6,065 Home equity – lines of credit 159,628 641 — — 641 436 160,705 Installment and other loans 17,467 109 8 — 117 40 17,624 Subtotal 1,957,073 4,496 289 987 5,772 6,449 1,969,294 Loans acquired with credit deterioration: Commercial real estate: Owner-occupied 2,329 — — — — — 2,329 Non-owner occupied 310 — — — — — 310 Non-owner occupied residential 479 — 587 118 705 — 1,184 Commercial and industrial 2,262 — — — — — 2,262 Residential mortgage: First lien 3,937 387 166 95 648 — 4,585 Home equity – term 15 — — 1 1 — 16 Installment and other loans 6 — — — — — 6 Subtotal 9,338 387 753 214 1,354 — 10,692 $ 1,966,411 $ 4,883 $ 1,042 $ 1,201 $ 7,126 $ 6,449 $ 1,979,986 The Company maintains its ALL at a level management believes adequate for probable incurred credit losses. The ALL is established and maintained through a provision for loan losses charged to earnings. On a quarterly basis, management assesses the adequacy of the ALL utilizing a defined methodology which considers specific credit evaluation of impaired loans as discussed above, historical loan loss experience, and qualitative factors. Management believes its approach properly addresses relevant accounting guidance for loans individually identified as impaired and for loans collectively evaluated for impairment, and other bank regulatory guidance. In connection with its quarterly evaluation of the adequacy of the ALL, management reviews its methodology to determine if it properly addresses the current risk in the loan portfolio. For each loan class, general allowances based on quantitative factors, principally historical loss trends, are provided for loans that are collectively evaluated for impairment. An adjustment to historical loss factors may be incorporated for delinquency and other potential risk not elsewhere defined within the ALL methodology. In addition to this quantitative analysis, adjustments to the ALL requirements are allocated on loans collectively evaluated for impairment based on additional qualitative factors, including: Nature and Volume of Loans – including loan growth in the current and subsequent quarters based on the Company’s targeted growth and strategic plan, coupled with the types of loans booked based on risk management and credit culture; the number of exceptions to loan policy; and supervisory loan to value exceptions. Concentrations of Credit and Changes within Credit Concentrations – including the composition of the Company’s overall portfolio makeup and management's evaluation related to concentration risk management and the inherent risk associated with the concentrations identified. Underwriting Standards and Recovery Practices – including changes to underwriting standards and perceived impact on anticipated losses; trends in the number of exceptions to loan policy; supervisory loan to value exceptions; and administration of loan recovery practices. Delinquency Trends – including delinquency percentages noted in the portfolio relative to economic conditions; severity of the delinquencies; and whether the ratios are trending upwards or downwards. Classified Loans Trends – including internal loan ratings of the portfolio; severity of the ratings; whether the loan segment’s ratings show a more favorable or less favorable trend; and underlying market conditions and impact on the collateral values securing the loans. Experience, Ability and Depth of Management/Lending staff – including the years’ experience of senior and middle management and the lending staff; turnover of the staff; and instances of repeat criticisms of ratings. Quality of Loan Review – including the years of experience of the loan review staff; in-house versus outsourced provider of review; turnover of staff and the perceived quality of their work in relation to other external information. National and Local Economic Conditions – including trends in the consumer price index, unemployment rates, the housing price index, housing statistics compared to the prior year, bankruptcy rates, regulatory and legal environment risks and competition. All factors noted above were evaluated and remained unchanged during the year ended December 31, 2022, except for a reduction in the National and Local Economic Conditions factor during the first quarter of 2022. This factor had been increased previously for economic concerns in the commercial real estate portfolio associated with the COVID-19 pandemic. The additional allocation was removed during 2022 as these concerns had subsided. The following table presents activity in the ALL for the years ended December 31, 2022, 2021 and 2020. Commercial Consumer Commercial Real Estate Acquisition and Development Commercial and Industrial Municipal Total Residential Mortgage Installment and Other Total Unallocated Total December 31, 2022 Balance, beginning of year $ 12,037 $ 2,062 $ 3,814 $ 30 $ 17,943 $ 2,785 $ 215 $ 3,000 $ 237 $ 21,180 Provision for loan losses 1,489 1,142 640 (6) 3,265 669 218 887 8 4,160 Charge-offs — — — — — (50) (360) (410) — (410) Recoveries 32 10 51 — 93 40 115 155 — 248 Balance, end of year $ 13,558 $ 3,214 $ 4,505 $ 24 $ 21,301 $ 3,444 $ 188 $ 3,632 $ 245 $ 25,178 December 31, 2021 Balance, beginning of year $ 11,151 $ 1,114 $ 3,942 $ 40 $ 16,247 $ 3,362 $ 324 $ 3,686 $ 218 $ 20,151 Provision for loan losses 710 938 23 (10) 1,661 (517) (73) (590) 19 1,090 Charge-offs (293) — (663) — (956) (92) (70) (162) — (1,118) Recoveries 469 10 512 — 991 32 34 66 — 1,057 Balance, end of year $ 12,037 $ 2,062 $ 3,814 $ 30 $ 17,943 $ 2,785 $ 215 $ 3,000 $ 237 $ 21,180 December 31, 2020 Balance, beginning of year $ 7,634 $ 959 $ 2,356 $ 100 $ 11,049 $ 3,147 $ 319 $ 3,466 $ 140 $ 14,655 Provision for loan losses 2,745 146 2,096 (60) 4,927 203 117 320 78 5,325 Charge-offs (3) — (748) — (751) (114) (146) (260) — (1,011) Recoveries 775 9 238 — 1,022 126 34 160 — 1,182 Balance, end of year $ 11,151 $ 1,114 $ 3,942 $ 40 $ 16,247 $ 3,362 $ 324 $ 3,686 $ 218 $ 20,151 The following table summarizes the ending loan balances individually evaluated for impairment based upon loan segment, as well as the related ALL loss allocation for each at December 31, 2022 and 2021. Accruing PCI loans are excluded from loans individually evaluated for impairment. Commercial Consumer Commercial Real Estate Acquisition and D |
PREMISES AND EQUIPMENT
PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PREMISES AND EQUIPMENT | PREMISES AND EQUIPMENT The following table summarizes premises and equipment at December 31, 2022 and 2021. 2022 2021 Land $ 7,583 $ 8,586 Buildings and improvements 24,813 27,852 Leasehold improvements 5,359 5,593 Furniture and equipment 21,849 23,681 Construction in progress 59 171 59,663 65,883 Less accumulated depreciation 30,335 31,838 $ 29,328 $ 34,045 Depreciation expense totaled $2.1 million, $2.3 million, and $3.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. During 2022, the Company announced strategic initiatives to drive long-term growth and improve operating efficiencies, which included the planned closure of five branch locations in Pennsylvania, and resulted in reductions to gross premises and equipment by $6.2 million and accumulated depreciation by $2.9 million due to write-downs of premises and equipment and the transfer of land and buildings to held-for-sale. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has primarily entered into operating leases for branches and office space. Most of the Company's leases contain renewal options, which the Company is reasonably certain to exercise. Including renewal options, the Company's leases range from 5 to 30 years. Operating lease right-of-use assets and lease liabilities are included in other assets and accrued interest and other liabilities on the Company's consolidated balance sheets. The Company uses its incremental borrowing rate to determine the present value of the lease payments, as the rate implicit in the Company's leases is not readily determinable. Lease agreements that contain non-lease components are generally accounted for as a single lease component, while variable costs, such as common area maintenance expenses and property taxes, are expensed as incurred. The following table summarizes the Company's right-of-use assets and related lease liabilities for the year ended December 31, 2022 and 2021. December 31, 2022 December 31, 2021 Operating lease ROU assets $ 9,270 $ 10,515 Operating lease ROU liabilities 9,976 11,119 Weighted-average remaining lease term (in years) 14.3 14.6 Weighted-average discount rate 4.1 % 4.1 % The following table presents information related to the Company's operating leases for the years ended December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Cash paid for operating lease liabilities $ 1,170 $ 1,266 Operating lease expense 1,406 1,544 The following table presents maturities of the Company's lease liabilities by year. 2023 $ 1,153 2024 1,179 2025 1,201 2026 1,233 2027 1,267 Thereafter 8,187 14,220 Less: imputed interest 4,244 Total lease liabilities $ 9,976 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS At December 31, 2022 and 2021, goodwill was $18.7 million. No impairment charges were recorded in December 31, 2022 and 2021. Goodwill is not amortized, but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit. The Company conducted its last annual goodwill impairment test as of November 30, 2022 using generally accepted valuation methods. As a result of that impairment test, no goodwill impairment was identified. No changes occurred that would impact the results of that analysis through December 31, 2022. The following table presents changes in and components of other intangible assets for the years ended December 31, 2022 and 2021. No impairment charge was recorded on other intangible assets during the years ended December 31, 2022 and 2021. 2022 2021 Balance, beginning of year $ 4,183 $ 5,458 Amortization expense (1,105) (1,275) Balance, end of year $ 3,078 $ 4,183 The following table presents the components of other identifiable intangible assets at December 31, 2022 and 2021. 2022 2021 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortized intangible assets: Core deposit intangibles $ 8,390 $ 5,312 $ 8,390 $ 4,208 Other client relationship intangibles 25 25 25 24 Total $ 8,415 $ 5,337 $ 8,415 $ 4,232 The following table presents future estimated aggregate amortization expense at December 31, 2022. 2023 $ 935 2024 766 2025 596 2026 427 2027 258 Thereafter 96 $ 3,078 The Company incurred amortization expense of $1.1 million, $1.3 million and $1.6 million in the years ending December 31, 2022, 2021 and 2020, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company files income tax returns in the U.S. federal jurisdiction, the Commonwealth of Pennsylvania and the State of Maryland. The Company is no longer subject to tax examination by tax authorities for years before 2019. The following table summarizes income tax expense for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Current expense $ 5,170 $ 7,072 $ 6,602 Deferred (benefit) expense (591) 942 (554) Income tax expense $ 4,579 $ 8,014 $ 6,048 The following table reconciles the Company's effective income tax rate to its statutory federal rate for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Statutory federal tax rate 21.0 % 21.0 % 21.0 % Increase (decrease) resulting from: State taxes, net of federal benefit 1.6 1.1 1.0 Tax exempt interest income (4.1) (1.7) (2.0) Income from life insurance (1.3) (0.9) (1.1) Disallowed interest expense 0.3 — 0.1 Low-income housing credits and related expense (0.2) (0.2) (0.8) Share-based compensation and related expense (0.5) 0.2 — Other 0.4 0.1 0.4 Effective income tax rate 17.2 % 19.6 % 18.6 % For the year ended December 31, 2022, net security losses resulted in an income tax benefit of $34 thousand, compared to income tax expense of $134 thousand related to net security gains for the year ended December 31, 2021, and an income tax benefit of $3 thousand related to net security losses for the year ended December 31, 2020. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the results of operations. There were no penalties or interest related to income taxes recorded in the consolidated statements of income for the years ended December 31, 2022, 2021 and 2020 and no amounts accrued for penalties at December 31, 2022 and 2021. The following table summarizes the Company's deferred tax assets and liabilities at December 31, 2022 and 2021. 2022 2021 Deferred tax assets: Allowance for loan losses $ 5,594 $ 4,655 Deferred compensation 434 515 Retirement and salary continuation plans 3,000 2,633 Share-based compensation 774 681 Off-balance sheet reserves 359 353 Nonaccrual loan interest 467 220 Deferred loan fees 493 1,604 Net unrealized losses on AFS securities 10,405 — Net unrealized losses on cash flow hedges 204 — Purchase accounting adjustments 896 1,236 Bonus accrual 1,241 930 Right-of-use lease liability 2,194 2,444 Net operating loss carryforward 1,974 2,218 Depreciation and other 99 67 Total deferred tax assets 28,134 17,556 Deferred tax liabilities: Depreciation — 368 Net unrealized gains on AFS securities — 1,183 Mortgage servicing rights 884 887 Purchase accounting adjustments 675 915 Right-of-use lease asset 2,054 2,311 Investment in partnerships 473 229 Other 17 15 Total deferred tax liabilities 4,103 5,908 Deferred tax asset, net $ 24,031 $ 11,648 At December 31, 2022, the Company had acquired federal and state net operating loss carryforwards of $9.0 million each, subject to annual loss limitation limits per IRC Section 382, that expire beginning in 2033. A deferred tax asset is recognized for these carryforwards because the benefit is more likely than not to be realized. FASB ASC 740, Income Taxes, (“ASC 740”) clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined in ASC 740 as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 was applied to all existing tax positions upon initial adoption. There was no liability for uncertain tax positions and no known unrecognized tax benefits at December 31, 2022 or 2021. |
RETIREMENT PLANS
RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
RETIREMENT PLANS | RETIREMENT PLANS The Company maintains a 401(k) profit-sharing plan for all qualified employees. Employees are eligible to participate in the 401(k) profit-sharing plan following completion of one month of service and attaining age 18. Pursuant to the 401(k) profit-sharing plan, employees can contribute up to the lesser of $61 thousand, or 100% of their compensation. Substantially all of the Company’s employees are covered by the plan, which contains limited match or safe harbor provisions. The Company will match 50% of the first 6% of the base contribution that an employee contributes. The Company’s match is immediately vested and paid at the end of the year. Employer contributions to the plan are based on the performance of the Company and are at the discretion of the Board of Directors. Employer contribution expense totaled $780 thousand, $669 thousand and $626 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. The Company has deferred compensation agreements with certain present and former directors, whereby a director or his beneficiaries will receive a monthly retirement benefit beginning at age 65. The arrangement is funded by an amount of life insurance on the participating director, which is calculated to meet the Company’s obligations under the compensation agreement. The cash value of the life insurance policies is an unrestricted asset of the Company. The estimated present value of future benefits to be paid totaled $18 thousand and $36 thousand at December 31, 2022 and 2021, respectively. Expense for this plan totaled $4 thousand, $5 thousand and $7 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. The Company also has supplemental discretionary deferred compensation plans for directors and executive officers. The plans are funded annually with director fees and salary reductions which are either placed in a trust account invested by the Bank’s OFA division or recognized as a liability. The trust account balance totaled $2.0 million and $2.3 million at December 31, 2022 and 2021, respectively, and is directly offset in other liabilities. Expense for these plans totaled $51 thousand for the year ended December 31, 2022 and $61 thousand for each of the years ended December 31, 2021 and 2020. In addition, the Company has two supplemental retirement and salary continuation plans for directors and executive officers. These plans are funded with single premium life insurance on the plan participants. The cash value of the life insurance policies is an unrestricted asset of the Company. The estimated present value of future benefits to be paid on these plans totaled $13.6 million and $12.3 million at December 31, 2022 and 2021, respectively. Expense for these plans totaled $2.0 million, $1.7 million and $1.5 million, for the years ended December 31, 2022, 2021 and 2020, respectively. The Company has promised a continuation of life insurance coverage to certain persons post-retirement. The estimated present value of future benefits to be paid totaled $1.7 million and $1.6 million at December 31, 2022 and 2021, respectively. Expense for this plan totaled $105 thousand, $104 thousand and $25 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. Trust account balances, and estimated present values of future benefits and deferred compensation liabilities, noted above are included in other assets and other liabilities, respectively, on the consolidated balance sheets. |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION PLANS | SHARE-BASED COMPENSATION PLANS The Company maintains share-based compensation plans under the shareholder-approved 2011 Plan. The purpose of the share-based compensation plans is to provide officers, employees, and non-employee members of the Board of Directors of the Company with additional incentive to further the success of the Company. At the Company's 2022 Annual Meeting of Shareholders held on April 26, 2022, the Company's shareholders approved an amendment to the 2011 Plan increasing the number of shares available for issuance under the 2011 Plan by 400,000. At December 31, 2022, 1,281,920 shares of the common stock of the Company were reserved to be issued and 537,027 shares were available to be issued. The 2011 Plan incentive awards may consist of grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, deferred stock units and performance shares. All employees and members of the Board of Directors of the Company and its subsidiaries, are eligible to participate in the 2011 Plan. The 2011 Plan allows for the Compensation Committee of the Board of Directors to determine the type of incentive to be awarded, its term, manner of exercise, vesting and restrictions on shares. Generally, awards are nonqualified under the IRC, unless the awards are deemed to be incentive awards to employees at the Compensation Committee’s discretion. The following table presents a summary of nonvested restricted shares activity for 2022. Shares Weighted Average Grant Date Fair Value Nonvested shares, beginning of year 274,697 $ 20.05 Granted 145,349 24.95 Forfeited (33,606) 21.37 Vested (101,531) 20.19 Nonvested shares, end of year 284,909 $ 22.35 The following table presents restricted shares compensation expense, with tax benefit information, and fair value of shares vested at December 31, 2022, 2021 and 2020. 2022 2021 2020 Restricted share award expense $ 2,012 $ 1,901 $ 1,710 Restricted share award federal tax benefit 423 334 359 Fair value of shares vested 2,498 1,539 1,384 At December 31, 2022, 2021 and 2020, unrecognized compensation expense related to the share awards totaled $3.0 million, $2.3 million, and $2.0 million, respectively. The unrecognized compensation expense at December 31, 2022 is expected to be recognized over a weighted-average period of 1.8 years. There were no outstanding and exercisable stock options at December 31, 2022 and 2021. The Company maintains an employee stock purchase plan to provide employees of the Company an opportunity to purchase Company common stock. Eligible employees may purchase shares in an amount that does not exceed the lesser of the IRS limit of $25,000 or 10% of their annual salary at the lower of 95% of the fair market value of the shares on the semi-annual offering date, or related purchase date. The Company reserved 350,000 shares of its common stock to be issued under the employee stock purchase plan. At December 31, 2022, 145,595 shares were available to be issued. The following table presents information for the employee stock purchase plan for years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Shares purchased 5,885 8,755 7,831 Weighted average price of shares purchased $ 22.53 $ 15.58 $ 14.85 Compensation expense recognized $ 15 $ 48 $ 6 The Company issues new shares or treasury shares, depending on market conditions, in its share-based compensation plans. |
DEPOSITS
DEPOSITS | 12 Months Ended |
Dec. 31, 2022 | |
Deposits [Abstract] | |
DEPOSITS | DEPOSITS The following table summarizes deposits by type at December 31, 2022 and 2021. During the fourth quarter of 2022, the Bank announced that it had entered into a Purchase and Assumption Agreement providing for the sale of its Path Valley branch and associated deposit liabilities. At December 31, 2022, approximately $31.3 million of deposits were expected to be conveyed in a branch sale, are reported within total deposits at cost on the consolidated balance sheets, and are comprised of $23.5 million in interest-bearing deposits and $7.8 million in non-interest bearing deposits. The transaction is expected to close in the second quarter of 2023. 2022 2021 Noninterest-bearing demand deposits $ 501,963 $ 553,238 Interest-bearing demand deposits 987,158 903,155 Savings 736,124 706,451 Time ($250,000 or less) 214,484 258,064 Time (over $250,000) 36,517 44,021 Total $ 2,476,246 $ 2,464,929 The following table summarizes scheduled future maturities of time deposits as of December 31, 2022. 2023 $ 179,009 2024 56,780 2025 6,518 2026 3,890 2027 3,341 Thereafter 1,463 $ 251,001 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Directors and executive officers of the Company, including their immediate families and companies in which they have a direct or indirect material interest, are considered to be related parties. In the ordinary course of business, the Company engages in various related party transactions, including extending credit, taking deposits and bank service transactions. The Company relies on the directors and executive officers for the identification of their associates. Federal banking regulations require that any extensions of credit to insiders and their related interests not be offered on terms more favorable than would be offered to non-related borrowers of similar creditworthiness. The following table presents the aggregate activity in loans to related parties during 2022. Balance, beginning of year $ 904 New loans 225 Repayments (908) Director and officer relationship changes (130) Balance, end of year $ 91 None of these loans are past due, on nonaccrual status or have been restructured to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower. There were no loans to a related party that were considered classified loans at December 31, 2022 or 2021. At December 31, 2022 and 2021, the Company had approximately $4.0 million and $4.7 million, respectively, in deposits from related parties, including directors and certain executive officers. |
SHORT-TERM BORROWINGS
SHORT-TERM BORROWINGS | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
SHORT-TERM BORROWINGS | SHORT-TERM BORROWINGS The Company has short-term borrowing capability from the FHLB, federal funds purchased and the FRB discount window. The following table summarizes these short-term borrowings at and for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Balance at year-end $ 104,684 $ — $ 55,729 Weighted average interest rate at year-end 4.45 % — % 0.41 % Average balance during the year $ 13,846 $ 38,546 $ 138,310 Average interest rate during the year 3.97 % 0.33 % 0.67 % Maximum month-end balance during the year $ 104,684 $ 55,729 $ 178,729 The Company also enters into borrowing arrangements with certain of its deposit clients by agreements to repurchase ("repurchase agreements") under which the Company pledges investment securities owned and under its control as collateral against the borrowing arrangement, which generally matures within one day from the transaction date. The Company is required to hold U.S. Treasury, U.S. Agency or U.S. GSE securities as underlying securities for repurchase agreements. The following table provides additional details for repurchase agreements at and for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Balance at year-end $ 17,251 $ 23,301 $ 19,466 Weighted average interest rate at year-end 0.60 % 0.11 % 0.23 % Average balance during the year $ 22,294 $ 22,888 $ 18,064 Average interest rate during the year 0.20 % 0.14 % 0.47 % Maximum month-end balance during the year $ 26,399 $ 27,595 $ 24,403 Fair value of securities underlying the agreements at year-end $ 17,188 $ 32,662 $ 29,477 |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT The following table presents components of the Company’s long-term debt at December 31, 2022, and 2021. Amount Weighted Average rate 2022 2021 2022 2021 Total FHLB amortizing advance requiring monthly principal and interest payments, maturing: 2025 $ 1,455 $ 1,896 4.74 % 4.74 % There were no new long term borrowings in 2022 or 2021. The following table summarizes the future annual principal payments required on these borrowings at December 31, 2022. 2023 $ 462 2024 485 2025 508 2026 — 2027 — Thereafter — $ 1,455 The Bank is a member of the FHLB of Pittsburgh and has access to the FHLB program of overnight and term advances. Under terms of a blanket collateral agreement for advances, lines and letters of credit from the FHLB, collateral for all outstanding advances, lines and letters of credit consisted of 1-4 family mortgage loans and other real estate secured loans totaling $1.0 billion at December 31, 2022. The Bank had additional availability of $909.6 million at the FHLB on December 31, 2022 based on its qualifying collateral, net of short-term borrowings and long-term debt detailed above, deposit letters of credit totaling $1.0 million and non-deposit letters of credit totaling $1.2 million at December 31, 2022. At December 31, 2022 and 2021 , the Company had availability under FHLB lines totaling $45.3 million and $150.0 million , respectively. |
SUBORDINATED NOTES
SUBORDINATED NOTES | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
SUBORDINATED NOTES | SUBORDINATED NOTESThe Company has unsecured subordinated notes payable, which mature on December 30, 2028. At December 31, 2022 and 2021, subordinated notes payable outstanding totaled $32.0 million for both periods, which qualified for Tier 2 capital. The notes are recorded on the consolidated balance sheets net of remaining debt issuance costs totaling $474 thousand and $537 thousand at December 31, 2022 and 2021, respectively, which are amortized over a 10-year period on an effective yield basis. The subordinated notes have a fixed interest rate of 6.0% through December 30, 2023, which then converts to a variable rate, equivalent to the LIBOR fallback rate, or any replacement reference rate, plus 3.16% through maturity. The Company may, at its option, redeem the notes, in whole or in part, on any interest payment date on or after December 30, 2023, and at any time upon the occurrence of certain events. As of December 31, 2022, the Company was in compliance with the covenants contained in the subordinated notes payable agreement. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used as risk management tools by the Company to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings and are not used for trading or speculative purposes. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company, however, discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period due to circumstances, such as the impact of the COVID-19 pandemic. Upon discontinuance, the associated gains and losses deferred in AOCI are reclassified immediately into earnings and subsequent changes in the fair value of the cash flow hedge are recognized in earnings. For the year ended December 31, 2022, the Company entered into two interest rate swaps designated as hedging instruments with a total notional value of $100.0 million for the purpose of hedging the variable cash flows of selected AFS securities or loans. For the year ended December 31, 2021, the Company had zero interest rate swaps designated as a hedging instrument as the Company terminated its interest rate derivative of $50.0 million that was designated as a cash flow hedge of interest-rate risk associated with overnight borrowings due to the unprecedented nature and impact of the COVID-19 pandemic, and reclassified $398 thousand of the realized losses from AOCI to current earnings because the hedged forecasted transaction was determined to be no longer probable of occurring. The Company enters into interest rate swaps that allow its commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. Under these agreements, the Company enters into a variable-rate loan agreement with a customer in addition to an interest rate swap agreement, which serves to effectively swap the customer’s variable-rate loan into a fixed-rate loan. In addition, the Company may enter into interest rate caps that allow its commercial loan customers to gain protection against significant interest rate increases and provide a limit on the variable interest rate. The Company then enters into a corresponding swap or cap agreement with a third party in order to economically hedge its exposure through the customer agreement. The interest rate swaps and interest rate caps with both the customers and third parties are not designated as hedges and are marked through earnings. At December 31, 2022, the Company had 26 customer and 26 corresponding third-party broker interest rate derivatives not designated as a hedging instrument with an aggregate notional amount of $268.8 million. The Company had $75.8 million of such derivative instruments at December 31, 2021. The Company entered into 14 new interest rate swaps with its commercial loan customers and recognized swap fee income of $2.5 million for the year ended December 31, 2022 compared to swap fee income of $240 thousand from three new interest rate swaps with its commercial loan customers for the year ended December 31, 2021, which are included in noninterest income in the consolidated statements of income. In addition, the Company entered into one new interest rate cap with a commercial loan customer and recognized fee income of $14 thousand for the year ended December 31, 2022, which is included in noninterest income in the consolidated statements of income. The Company did not enter into any interest rate cap agreements for the year ended December 31, 2021. At December 31, 2022 and 2021, the Company provided cash collateral of $5.4 million and $260 thousand with a counterparty for these derivatives, respectively. At December 31, 2022 and 2021, the Company received cash collateral of $8.5 million and $490 thousand from a counterparty for these derivatives, respectively. The Company also may enter into risk participation agreements with a financial institution counterparty for an interest rate derivative contract related to a loan in which the Company is a participant or the agent bank. The risk participation agreement provides credit protection to the agent bank should the borrower fail to perform on its interest rate derivative contracts with the agent bank. The Company manages its credit risk on the risk participation agreement by monitoring the creditworthiness of the borrower, which is based on the same credit review process as though the Company had entered into the derivative instruments directly with the borrower. The notional amount of such risk participation agreement reflects the Company’s pro-rata share of the derivative instrument, consistent with its share of the related participated loan. At December 31, 2022 and 2021, the Company had risk participation agreements with sold protection with a notional value of $29.0 million and $15.9 million, respectively. In addition, the Company had a risk participation with purchased protection with a notional value of $4.9 million at December 31, 2022. The Company did not enter into any risk participation agreements for the year ended December 31, 2021. The Company received an upfront fee of $140 thousand upon entry into two new risk participation agreements for the year ended December 31, 2022 compared to $53 thousand upon entry into one new risk participation with sold protection for the year ended December 31, 2021, which is included in noninterest income in the consolidated statements of income. As a part of its normal residential mortgage operations, the Company will enter into an interest rate lock commitment with a potential borrower. The Company may enter into a corresponding commitment to an investor to sell that loan at a specific price shortly after origination. In accordance with FASB ASC 820, adjustments are recorded through earnings to account for the net change in fair value of these transactions for the held for sale pipeline. In accordance with FASB ASC 820, adjustments are recorded through earnings to account for the net change in fair value of these held for sale loans. The fair value of held for sale loans can vary based on the interest rate locked with the customer and the current market interest rate at the balance sheet date. The following table summarizes the notional values and fair value of the Company's derivative instruments at December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Notional Amount Balance Sheet Location Fair Value Notional Amount Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps - balance sheet hedge $ 100,000 Other liabilities $ (973) $ — Not applicable $ — Total derivatives designated as hedging instruments $ (973) $ — Derivatives not designated as hedging instruments: Interest rate swaps $ 128,385 Other assets $ 10,437 $ 37,915 Other assets $ 764 Interest rate swaps 128,385 Other liabilities (10,262) 37,915 Other liabilities (758) Purchased Options – Rate Cap 6,000 Other assets 29 — Not applicable — Written Options – Rate Cap 6,000 Other liabilities (29) — Not applicable — Risk participations - sold credit protection 29,019 Other liabilities (69) 15,855 Other liabilities (2) Risk participations - purchased credit protection 4,941 Other assets 16 — Not applicable — Interest rate lock commitments with customers 1,356 Other assets 35 16,604 Other assets 353 Forward sale commitments 3,483 Other assets 140 8,665 Other assets 52 Total derivatives not designated as hedging instruments $ 297 $ 409 The following tables summarize the effect of the Company's derivative financial instruments on OCI and net income at December 31, 2022 and 2021: Amount of (Loss) Gain Recognized in OCI on Derivative 2022 2021 Derivatives in cash flow hedging relationships: Interest rate products $ (972) $ 473 Total $ (972) $ 473 Amount of Loss Reclassified from AOCI into Income Location of Loss Recognized from AOCI into Income 2022 2021 Derivatives in cash flow hedging relationships: Interest rate products $ — $ (757) Interest income (1) / Interest expense (2) Total $ — $ (757) (1) For interest rate swaps designated as cash flow hedges entered into for the year ended December 31, 2022, the amount of loss reclassified from AOCI will be recorded to other income in the unaudited condensed consolidated statements of income. (2) For the year ended December 31, 2021, the Company terminated its interest rate swap designated as a hedging instrument with a notional value of $50.0 million. The Company recorded a $514 thousand loss in other operating expenses in the consolidated statements of income. Amount of Gain (Loss) Recognized in Income Location of Gain (Loss) Recognized in Income 2022 2021 Derivatives not designated as hedging instruments: Interest rate products $ 30 $ 41 Other operating expenses Risk participation agreements 88 (2) Other operating expenses Interest rate lock commitments with customers (318) (320) Mortgage banking activities Forward sale commitments 88 113 Mortgage banking activities Total $ (113) $ (168) The following table is a summary of components for interest rate swap designated as cash flow hedges at December 31, 2022 and 2021. At December 31, 2022, the Company had two interest rate derivatives designated as cash flow hedges with a total notional of $100.0 million. During the year ended December 31, 2021, the Company terminated its remaining interest rate derivative of $50.0 million. December 31, 2022 December 31, 2021 Weighted average pay rate 3.81 % — % Weighted average receive rate 3.81 % — % Weighted average maturity in years 1.2 0.0 |
SHAREHOLDERS_ EQUITY AND REGULA
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL | SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL 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 accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under the Basel Committee on Banking Supervision's capital guidelines for U.S. Banks ("Basel III rules"), an entity must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The Company and the Bank have elected not to include net unrealized gain or loss included in accumulated other comprehensive income in computing regulatory capital. The consolidated asset limit on small bank holding companies is $3.0 billion, and a company with assets under that limit is not subject to the FRB consolidated capital rules, but may file reports that include capital amounts and ratios. The Company has elected to file those reports. Management believes, at December 31, 2022 and 2021, that the Parent Company and the Bank met 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, 2022, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's classification. The following table presents capital amounts and ratios at December 31, 2022 and 2021. Actual For Capital Adequacy Purposes (includes applicable capital conservation buffer) To Be Well Capitalized Under Prompt Corrective Action Regulations Amount Ratio Amount Ratio Amount Ratio December 31, 2022 Total risk-based capital: Orrstown Financial Services, Inc. $ 304,589 12.7 % $ 250,939 10.5 % n/a n/a Orrstown Bank 292,933 12.3 % 250,566 10.5 % $ 238,634 10.0 % Tier 1 risk-based capital: Orrstown Financial Services, Inc. 245,752 10.3 % 203,141 8.5 % n/a n/a Orrstown Bank 266,122 11.2 % 202,839 8.5 % 190,907 8.0 % Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc. 245,752 10.3 % 167,293 7.0 % n/a n/a Orrstown Bank 266,122 11.2 % 167,044 7.0 % 155,112 6.5 % Tier 1 leverage capital: Orrstown Financial Services, Inc. 245,752 8.5 % 116,325 4.0 % n/a n/a Orrstown Bank 266,122 9.2 % 116,219 4.0 % 145,273 5.0 % December 31, 2021 Total risk-based capital: Orrstown Financial Services, Inc. $ 297,823 15.0 % $ 208,617 10.5 % n/a n/a Orrstown Bank 278,780 14.0 % 208,550 10.5 % $ 198,619 10.0 % Tier 1 risk-based capital: Orrstown Financial Services, Inc. 243,075 12.2 % 168,880 8.5 % n/a n/a Orrstown Bank 255,995 12.9 % 168,826 8.5 % 158,895 8.0 % Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc. 243,075 12.2 % 139,078 7.0 % n/a n/a Orrstown Bank 255,995 12.9 % 139,033 7.0 % 129,102 6.5 % Tier 1 leverage capital: Orrstown Financial Services, Inc. 243,075 8.5 % 114,384 4.0 % n/a n/a Orrstown Bank 255,995 8.9 % 114,470 4.0 % 143,087 5.0 % The Company maintains a stockholder dividend reinvestment and stock purchase plan. Under the plan, shareholders may purchase additional shares of the Company’s common stock at the prevailing market prices with reinvestment dividends and voluntary cash payments. The Company reserved 1,045,000 shares of its common stock to be issued under the dividend reinvestment and stock purchase plan. At December 31, 2022, approximately 665,000 shares were available to be issued under the plan. In September 2015, the Board of Directors of the Company authorized a share repurchase program pursuant to which the Company could repurchase up to 416,000 shares of the Company's outstanding shares of common stock, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. On April 19, 2021, the Board of Directors authorized the additional future repurchase of up to 562,000 shares of its outstanding common stock for a total of 978,000 shares. When and if appropriate, repurchases may be made in open market or privately negotiated transactions, depending on market conditions, regulatory requirements and other corporate considerations, as determined by management. Share repurchases may not occur and may be discontinued at any time. At December 31, 2022, 818,941 shares had been repurchased under the program at a total cost of $18.7 million, or $22.78 per share. Common stock available for future repurchase totals 159,059 shares, or 1%, of the Company's outstanding common stock at December 31, 2022. On January 24, 2023, the Board declared a cash dividend of $0.20 per common share, which was paid on February 14, 2023 to shareholders of record on February 7, 2023. Banking regulations limit the ability of the Bank to pay dividends or make loans or advances to the Parent Company. Dividends that may be paid in any calendar year are limited to the current year's net profits, combined with the retained net profits of the preceding two years. At December 31, 2022, dividends from the Bank available to be paid to the Parent Company, without prior approval of the Bank's regulatory agency, totaled $45.9 million, subject to the Bank meeting or exceeding regulatory capital requirements. The Parent Company's principal source of funds for dividend payments to shareholders is dividends received from the Bank. At December 31, 2022, there were no loans from the Bank to any nonbank affiliate, including the Parent Company. The Bank's loans to a single affiliate may not exceed 10%, and loans to all affiliates may not exceed 20%, of the Bank’s capital stock, surplus, and undivided profits, plus the ALL (as defined by regulation). Loans from the Bank to nonbank affiliates, including the Parent Company, are also required to be collateralized according to regulatory guidelines. At December 31, 2022 and 2021, the maximum amount the Bank had available to loan to a nonbank affiliate was $29.3 million and $27.9 million, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The following table presents earnings per share for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Net income $ 22,037 $ 32,881 $ 26,463 Weighted average shares outstanding - basic 10,553 10,967 10,942 Dilutive effect of share-based compensation 153 139 92 Weighted average shares outstanding - diluted 10,706 11,106 11,034 Per share information: Basic earnings per share $ 2.09 $ 3.00 $ 2.42 Diluted earnings per share 2.06 2.96 2.40 |
FINANCIAL INSTRUMENTS WITH OFF-
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its clients. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The following table presents these contractual, or notional, amounts at December 31, 2022, and 2021. 2022 2021 Commitments to fund: Home equity lines of credit $ 296,213 $ 261,580 1-4 family residential construction loans 49,538 40,348 Commercial real estate, construction and land development loans 156,560 124,488 Commercial, industrial and other loans 338,286 378,996 Standby letters of credit 23,229 19,724 Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each client’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the client. Collateral varies but may include accounts receivable, inventory, equipment, residential real estate, and income-producing commercial properties. Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a client to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to clients. The Company holds collateral supporting those commitments when deemed necessary by management. The liability, at December 31, 2022 and 2021, for guarantees under standby letters of credit issued was not considered to be material. The Company maintains a reserve, based on historical loss experience of the related loan class, for off-balance sheet credit exposures that currently are not funded, in other liabilities on the condensed consolidated balance sheets. This reserve totaled $1.6 million at both December 31, 2022 and 2021. The net amount expensed for this off-balance sheet credit exposures reserve was $28 thousand, $57 thousand and $511 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. |
FAIR VALUE
FAIR VALUE | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Certain financial instruments and all non-financial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are: Level 1 – quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date. Level 2 – significant other observable inputs other than Level 1 prices such as prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – at least one significant unobservable input that reflects a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability. In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company used the following methods and significant assumptions to estimate fair value for financial instruments measured on a recurring basis: Where quoted prices are available in an active market, investment securities are classified within Level 1 of the valuation hierarchy. Level 1 investment securities include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, investment securities are classified within Level 2 and fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flow. Level 2 investment securities include U.S. agency securities, mortgage-backed securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, investment securities are classified within Level 3 of the valuation hierarchy. All of the Company’s investment securities are classified as available-for-sale. The fair values of interest rate swaps, interest rate caps and risk participation derivatives are determined using models that incorporate readily observable market data into a market standard methodology. This methodology nets the discounted future cash receipts and the discounted expected cash payments. The discounted variable cash receipts and payments are based on expectations of future interest rates derived from observable market interest rate curves. In addition, fair value is adjusted for the effect of nonperformance risk by incorporating credit valuation adjustments for the Company and its counterparties. These assets and liabilities are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2022 or 2021. Level 1 Level 2 Level 3 Total Fair Value Measurements December 31, 2022 Financial Assets Investment securities: U.S. Treasury securities $ 17,291 $ — $ — $ 17,291 U.S. Government Agencies — 5,135 — 5,135 States and political subdivisions — 191,488 5,926 197,414 GSE residential MBSs — 59,402 — 59,402 GSE residential CMOs — 68,378 — 68,378 Non-agency CMOs — 18,491 21,267 39,758 Asset-backed — 125,973 — 125,973 Other 377 — — 377 Loans held for sale — 10,880 — 10,880 Derivatives — 10,482 35 10,517 Totals $ 17,668 $ 490,229 $ 27,228 $ 535,125 Financial Liabilities Derivatives $ — $ 11,333 $ — $ 11,333 December 31, 2021 Financial Assets Investment securities: U.S. Treasury securities $ 19,702 $ — $ — $ 19,702 States and political subdivisions — 183,171 10,199 193,370 GSE residential MBSs — 40,726 — 40,726 GSE residential CMOs — 65,922 — 65,922 Non-agency CMOs — 16,750 12,948 29,698 Asset-backed — 122,621 — 122,621 Other 399 — — 399 Loans held for sale — 8,868 — 8,868 Derivatives — 764 353 1,117 Totals $ 20,101 $ 438,822 $ 23,500 $ 482,423 Financial Liabilities Derivatives $ — $ 760 $ — $ 760 The Company had one municipal bond and three CMOs measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at December 31, 2022 compared to one municipal bond and one non-agency CMO measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at December 31, 2021. The Level 3 valuation is based on a non-executable broker quote, which is considered a significant unobservable input. Such quotes are updated as available and may remain constant for a period of time for certain broker-quoted securities that do not move with the market or that are not interest rate sensitive as a result of their structure or overall attributes. The Company’s residential mortgage loans held-for-sale were recorded at fair value utilizing Level 2 measurements. This fair value measurement is determined based upon third party quotes obtained on similar loans. For loans held-for-sale for which the fair value option has b een elected, the aggregate fair value falls below the aggregate principal balance by $1.2 million as of December 31, 2022 and exceeded the aggregate principal balance $150 thousand as of December 31, 2021. The determination of the fair value of interest rate lock commitments on residential mortgages is based on agreed upon pricing with the respective investor on each loan and includes a pull through percentage. The pull through percentage represents an estimate of loans in the pipeline to be delivered to an investor versus the total loans committed for delivery. Significant changes in this input could result in a significantly higher or lower fair value measurement. As the pull through percentage is a significant unobservable input, this is deemed a Level 3 valuation input. The average pull through percentage, which is based upon historical experience, was 92% as of December 31, 2022. An increase or decrease of 5% in the pull through assumption would result in a positive or negative change of $1 thousand in the fair value of interest rate lock commitments at December 31, 2022 . The following provides details of the Level 3 fair value measurement activity for the years ended December 31, 2022 or 2021. Investment securities: 2022 2021 Balance, beginning of year $ 23,147 $ 31,503 Unrealized (loss) gain included in OCI (1,859) 31 Purchases 21,237 — Net discount accretion 56 — Principal payments and other (10) (4,842) Sales (3,053) (3,545) Calls (12,154) — OTTI (171) — Balance, end of year $ 27,193 $ 23,147 There were no transfers into or out of Level 3 at December 31, 2022 and 2021. Interest rate lock commitments on residential mortgages: 2022 2021 Balance, beginning of year $ 353 $ 673 Total losses included in earnings (318) (320) Balance, end of year $ 35 $ 353 Certain financial assets are measured at fair value on a nonrecurring basis. Adjustments to the fair value of these assets usually results from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The Company used the following methods and significant assumptions to estimate fair value for these financial assets. Impaired Loans Loans are designated as impaired when, in the judgment of management and based on current information and events, it is probable that all amounts due, according to the contractual terms of the loan agreement, will not be collected. The measurement of loss associated with impaired loans for all loan classes can be based on either the observable market price of the loan, the fair value of the collateral, or discounted cash flows using the rate of return implicit in the original loan for TDRs. For collateral-dependent loans, fair value is measured based on the value of the collateral securing the loan, less estimated costs to sell. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The value of the real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral is a house or building in the process of construction, or if management adjusts the appraisal value, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal, if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports (Level 3). Impaired loans with an allocation to the ALL are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the consolidated statements of income. Changes in the fair value of impaired loans for those still held at December 31 considered in the determination of the provision for loan losses totaled a nominal amount for the year ended December 31, 2022, and $(247) thousand and $244 thousand for the years ended December 31, 2021 and 2020, respectively. Foreclosed Real Estate OREO property acquired through foreclosure is initially recorded at the fair value of the property at the transfer date less estimated selling cost. Subsequently, OREO is carried at the lower of its carrying value or the fair value less estimated selling cost. Fair value is usually determined based upon an independent third-party appraisal of the property or occasionally upon a recent sales offer. The Company had no OREO balances at December 31, 2022 and 2021. Mortgage Servicing Rights The MSR fair value is estimated to be equal to its carrying value, unless the quarterly valuation model calculates the present value of the estimated net servicing income as less than its carrying value, in which case an impairment charge is taken. A t December 31, 2022 and 2021 , an impairment reserve of zero and $79 thousand, respectively, existed on the mortgage servicing right portfolio. For the years ended December 31, 2022 and 2021 , an impairment valuation allowance reversal of $79 thousand and $987 thousand were included, respectively, in mortgage banking activities on the consolidated statement of inc ome. The reversals during the years ended December 31, 2022 and 2021 were due to increases in market rates, which increased the MSR fair value. The following table summarizes assets measured at fair value on a nonrecurring basis at December 31, 2022 and 2021. Level 1 Level 2 Level 3 Total Fair Value Measurements December 31, 2022 Impaired loans Commercial real estate: Owner-occupied $ — $ — $ 116 $ 116 Non-owner occupied residential — — 9 9 Residential mortgage: First lien — — 309 309 Home equity - lines of credit — — 86 86 Total impaired loans $ — $ — $ 520 $ 520 Mortgage servicing rights $ — $ — $ — $ — December 31, 2021 Impaired loans Commercial real estate: Owner-occupied $ — $ — $ 751 $ 751 Non-owner occupied residential — — 24 24 Residential mortgage: First lien — — 545 545 Home equity - lines of credit — — 72 72 Total impaired loans $ — $ — $ 1,392 $ 1,392 Mortgage servicing rights $ — $ — $ 322 $ 322 The following table presents additional qualitative information about assets measured on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value. Fair Value Estimate Valuation Techniques Unobservable Input Range December 31, 2022 Impaired loans $ 520 Appraisal of collateral Management adjustments on appraisals for property type and recent activity 10% - 25% discount - Management adjustments for liquidation expenses 6.08% - 17.93% discount December 31, 2021 Impaired loans $ 1,392 Appraisal of collateral Management adjustments on appraisals for property type and recent activity 10% - 25% discount - Management adjustments for liquidation expenses 6.08% - 17.93% discount Mortgage servicing rights 322 Discounted cash flows Weighted average CPR 12.60% Discount rate 9.03% Fair values of financial instruments GAAP requires disclosure of the fair value of financial assets and liabilities, including those that are not measured and reported at fair value on a recurring or nonrecurring basis. The following table presents the carrying amounts and estimated fair values of financial assets and liabilities at December 31, 2022, and 2021. Carrying Amount Fair Value Level 1 Level 2 Level 3 December 31, 2022 Financial Assets Cash and due from banks $ 28,477 $ 28,477 $ 28,477 $ — $ — Interest-bearing deposits with banks 32,346 32,346 32,346 — — Restricted investments in bank stock 10,642 n/a n/a n/a n/a Investment securities 513,728 513,728 17,668 468,867 27,193 Loans held for sale 10,880 10,880 — 10,880 — Loans, net of allowance for loan losses 2,126,054 1,991,164 — — 1,991,164 Derivatives 10,517 10,517 — 10,482 35 Accrued interest receivable 11,027 11,027 — 4,441 6,586 Financial Liabilities Deposits 2,444,939 2,440,660 — 2,440,660 — Deposits held for assumption in connection with sale of bank branches 31,307 29,429 — 29,429 — Securities sold under agreements to repurchase 17,251 17,251 — 17,251 — FHLB advances and other 106,139 106,141 — 106,141 — Subordinated notes 32,026 31,321 — 31,321 — Derivatives 11,333 11,333 — 11,333 — Accrued interest payable 457 457 — 457 — Off-balance sheet instruments — — — — — December 31, 2021 Financial Assets Cash and due from banks $ 21,217 $ 21,217 $ 21,217 $ — $ — Interest-bearing deposits with banks 187,493 187,493 187,493 — — Restricted investments in bank stock 7,252 n/a n/a n/a n/a Investment securities 472,438 472,438 20,101 429,190 23,147 Loans held for sale 8,868 8,868 — 8,868 — Loans, net of allowance for loan losses 1,958,806 1,946,365 — — 1,946,365 Derivatives 1,117 1,117 — 764 353 Accrued interest receivable 8,234 8,235 — 2,203 6,032 Financial Liabilities Deposits 2,464,929 2,466,191 — 2,466,191 — Securities sold under agreements to repurchase 23,301 23,301 — 23,301 — FHLB advances and other 1,896 2,035 — 2,035 — Subordinated notes 31,963 31,815 — 31,815 — Derivatives 760 760 — 760 — Accrued interest payable 154 154 — 154 — Off-balance sheet instruments — — — — — In accordance with the Company's adoption of ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , the methods utilized to measure the fair value of financial instruments at December 31, 2022 and 2021 represents an approximation of exit price; however, an actual exit price may differ. For deposits held for assumption in connection with the sale of bank branches, the Company announced on |
REVENUE FROM CONTRACTS WITH CLI
REVENUE FROM CONTRACTS WITH CLIENTS | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CLIENTS | REVENUE FROM CONTRACTS WITH CLIENTS On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent amendments (collectively “ASC 606”). The update implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The majority of the Company's revenue comes from interest income, including loans and securities, that are outside the scope of ASC 606. The Company's services that fall within the scope of ASC 606 are presented within noninterest income on the consolidated statements of income and are recognized as revenue as the Company satisfies its obligation to the client. Services within the scope of ASC 606 include service charges on deposit accounts, income from trust and investment management and brokerage activities and interchange fees from service charges on ATM and debit card transactions. ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment was recorded. Descriptions of revenue generating activities that are within the scope of ASC 606 are as follows: Service Charges on Deposit Accounts - The Company earns fees from its deposit clients for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the client's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the client's account balance. Interchange Income - The Company earns interchange fees from debit/credit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is presented net of cardholder rewards. Swap Referral Fee Income - Through May 2020, the Company earned fees from a third-party service provider for loan hedging referrals provided to lending clients. The Company acted as an agent in arranging the relationship between our client and the third-party service provider. The Company was paid and recognized income upon completion of the loan hedge between our client and the third-party service provider. Trust and Investment Management Income - The Company earns wealth management and investment brokerage fees from its contracts with trust and wealth management clients to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted services and are generally assessed based on a tiered scale of the market value of assets under management. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e., the trade date. Other related services provided included financial planning services and the associated fees the Company earns, which are based on a fixed fee schedule, are recognized when the services are rendered. Services are generally billed in arrears and a receivable is recorded until fees are paid. Brokerage Income - The Company earns fees from investment management and brokerage services provided to its clients through a third-party service provider. The Company receives commissions from the third-party service provider and recognizes income on a weekly basis based upon client activity. As the Company acts as an agent in arranging the relationship between the client and the third-party service provider and does not control the services rendered to the clients, brokerage income is presented net of related costs. At December 31, 2022, 2021 and 2020, the Company had receivables from trust and wealth management clients totaling $641 thousand, $702 thousand and $661 thousand, respectively. The following table presents the Company's noninterest income disaggregated by revenue source for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Noninterest income Service charges on deposit accounts and ATM fees $ 4,157 $ 3,337 $ 3,113 Swap referral fee income — — 208 Trust and investment management income 7,631 7,896 6,912 Brokerage income 3,620 3,571 2,821 Interchange income 4,056 4,129 3,423 Revenue from contracts with clients 19,464 18,933 16,477 Other service charges 456 356 444 Mortgage banking activities 407 5,909 5,274 Gain on sale of commercial loans — — 2,803 Income from life insurance 2,339 2,273 2,261 Swap dealer fee income 2,632 293 639 Other income 1,814 750 427 Investment securities (losses) gains (160) 638 (16) Total noninterest income $ 26,952 $ 29,152 $ 28,309 |
ORRSTOWN FINANCIAL SERVICES, IN
ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION | ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION Condensed Balance Sheets December 31, 2022 2021 Assets Cash in bank subsidiary $ 8,477 $ 18,545 Investment in bank subsidiary 249,266 284,577 Other assets 3,466 553 Total assets $ 261,209 $ 303,675 Liabilities Subordinated notes $ 32,026 $ 31,963 Accrued interest and other liabilities 287 56 Total liabilities 32,313 32,019 Shareholders’ Equity Common stock 584 586 Additional paid-in capital 189,264 189,689 Retained earnings 92,473 78,700 Accumulated other comprehensive (loss) income (39,913) 4,449 Treasury stock (13,512) (1,768) Total shareholders’ equity 228,896 271,656 Total liabilities and shareholders’ equity $ 261,209 $ 303,675 Condensed Statements of Income For the Years Ended December 31, 2022 2021 2020 Income Dividends from bank subsidiary $ 27,000 $ 16,000 $ 14,000 Interest income from bank subsidiary 29 25 76 Other income 16 119 62 Total income 27,045 16,144 14,138 Expenses Interest on subordinated notes 2,013 2,009 2,006 Share-based compensation 511 433 463 Management fee to bank subsidiary 1,341 1,089 1,254 Provision for legal settlement 13,000 — — Other expenses 912 704 1,324 Total expenses 17,777 4,235 5,047 Income before income tax benefit and equity in undistributed income of subsidiaries 9,268 11,909 9,091 Income tax benefit (3,726) (863) (1,022) Income before equity in undistributed income of subsidiaries 12,994 12,772 10,113 Equity in undistributed income of subsidiaries 9,043 20,109 16,350 Net income $ 22,037 $ 32,881 $ 26,463 Condensed Statements of Cash Flows For the Years Ended December 31, 2022 2021 2020 Cash flows from operating activities: Net income $ 22,037 $ 32,881 $ 26,463 Adjustments to reconcile net income to cash provided by (used in) operating activities: Amortization 63 59 56 Deferred income taxes (7) (4) (39) Equity in undistributed income of subsidiaries (9,043) (20,109) (16,350) Share-based compensation 511 433 463 Net change in other liabilities 231 (40) (141) Net change in other assets (2,915) 375 (221) Net cash provided by operating activities 10,877 13,595 10,231 Cash flows from investing activities: Net cash paid for acquisitions — — (85) Net cash used in investing activities — — (85) Cash flows from financing activities: Dividends paid (8,264) (8,280) (7,610) Proceeds from issuance of common stock 1,644 1,516 1,628 Payments to repurchase common stock (14,468) (2,383) (1,887) Other, net 143 136 116 Net cash used in financing activities (20,945) (9,011) (7,753) Net (decrease) increase in cash (10,068) 4,584 2,393 Cash, beginning 18,545 13,961 11,568 Cash, ending $ 8,477 $ 18,545 $ 13,961 |
CONTINGENCIES
CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES The nature of the Company’s business generates a certain amount of litigation involving matters arising out of the ordinary course of business. Except as described below, in the opinion of management, there are no legal proceedings that might have a material effect on the results of operations, liquidity, or the financial position of the Company at this time. On March 5, 2019, Paul Parshall, a purported individual stockholder of Hamilton, filed, on behalf of himself and all of Hamilton’s stockholders other than the named defendants and their affiliates (the “Purported Class”), a derivative and putative class action complaint in the Circuit Court for Baltimore City, Maryland, captioned Paul Parshall v. Carol Coughlin et. al., naming each Hamilton director, Orrstown, and Hamilton as defendants (the “Action”). The Action alleged, among other things, that Hamilton’s directors breached their fiduciary duties to the Purported Class in connection with the merger, and that the Proxy Statement/Prospectus omitted certain material information regarding the merger. Orrstown was alleged to have aided and abetted the Hamilton directors’ alleged breaches of their fiduciary duties. The Action sought, among other remedies, to enjoin the merger or, in the event the merger was completed, rescission of the merger or rescissory damages; unspecified damages; and costs of the lawsuit, including attorneys’ and experts’ fees. A settlement was reached on the Action in March 2020, which resulted in a payment by the Company of $135 thousand in mootness fees to the defendants in April 2020. On May 25, 2012, the Southeastern Pennsylvania Transportation Authority (“SEPTA”) filed a putative class action complaint in the U.S. District Court for the Middle District of Pennsylvania against the Company, the Bank and nine independent current and former directors and three current and former officers of the Company and the Bank. The complaint asserted claims under Sections 11, 12(a) and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, and sought class certification, unspecified money damages, interest, costs, fees and equitable or injunctive relief. Under the Private Securities Litigation Reform Act of 1995, the Court appointed SEPTA Lead Plaintiff on August 20, 2012. On March 4, 2013, SEPTA filed an amended complaint. The amended complaint expanded the list of defendants in the action to include the Company’s former independent registered public accounting firm and the underwriters of the Company’s March 2010 public offering of common stock. In addition, among other things, the amended complaint extended the purported Exchange Act class period from March 15, 2010 through April 5, 2012. After years of litigation, on November 7, 2022, the Company, in order to avoid the cost, risks and distraction of continued litigation, entered into a Memorandum of Understanding (the “MOU”) to settle and resolve the lawsuit. The MOU memorialized the parties’ agreement to execute and submit a formal, binding settlement agreement for the Court’s approval, setting forth all of the material terms of the settlement reached by the plaintiffs and defendants. On December 7, 2022, the Company entered into a Stipulation and Agreement of Settlement (the “Stipulation”) providing for a payment to the Plaintiffs of $15.0 million, to which the Company agreed to contribute and has funded $13.0 million in escrow, a mutual release of claims against all parties, and a stipulation that the lawsuit will be dismissed with prejudice. The Stipulation does not include any admission of wrongdoing by any party. The Stipulation provides that the defendants have the option to terminate the settlement if class members who in the aggregate purchased more than a certain number of shares of the Company’s common stock during the class period, timely and validly exclude themselves from the class. The Stipulation was filed with the Court on December 8, 2022. On February 1, 2023, the Court issued an order which, among other things, preliminarily approved the Stipulation. The Stipulation is subject to final Court approval. On March 25, 2022, a customer of the Bank filed a putative class action complaint against the Bank in the Court of Common Pleas of Cumberland County, Pennsylvania, in a case captioned Alleman, on behalf of himself and all others similarly situated, v. Orrstown Bank. The complaint alleges, among other things, that the Bank breached its account agreements by charging certain overdraft fees. The complaint seeks a refund of all allegedly improper fees, damages in an amount to be proven at trial, attorneys’ fees and costs, and an injunction against the Bank’s allegedly improper overdraft practices. This lawsuit is similar to lawsuits recently filed against other financial institutions pertaining to overdraft fee disclosures. The Bank believes that the allegations and claims against the Bank are without merit. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations – Orrstown Financial Services, Inc. is a financial holding company that operates Orrstown Bank, a commercial bank providing banking and financial advisory services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania, and in Anne Arundel, Baltimore, Howard and Washington Counties, Maryland. The Company operates in the community banking segment and engages in lending activities, including commercial, residential, commercial mortgages, construction, municipal, and various forms of consumer lending, and deposit services, including checking, savings, time, and money market deposits. The Company’s lending area also includes adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. The Company also provides fiduciary services, investment advisory, insurance and brokerage services. Effective July 31, 2020, Wheatland Advisors, Inc., a registered investment advisor non-bank subsidiary, headquartered in Lancaster County, Pennsylvania was discontinued. The Company and the Bank are subject to regulation by certain federal and state agencies and undergo periodic examinations by such regulatory authorities. |
Basis of Presentation | Basis of Presentation – The accompanying consolidated financial statements include the accounts of Orrstown Financial Services, Inc. and its wholly owned subsidiary, the Bank. The accounting and reporting policies of the Company conform to GAAP and, where applicable, to accounting and reporting guidelines prescribed by bank regulatory authorities. All significant intercompany transactions and accounts have been eliminated. Certain reclassifications have been made to prior year amounts to conform with current year classifications. These reclassifications did not have a material impact on the Company's consolidated financial condition or results of operations. The Company's management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company's consolidated financial statements and notes as required by GAAP. To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. |
Concentration of Credit Risk | Concentration of Credit Risk – The Company grants commercial, residential, construction, municipal, and various forms of consumer lending to clients primarily in its market area in south central Pennsylvania and in the greater Baltimore region and Washington County, Maryland, in addition to adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. Therefore, the Company's exposure to credit risk is significantly affected by changes in the economy in those areas. Although the Company maintains a diversified loan portfolio, a significant portion of its clients’ ability to honor their contracts is dependent upon economic sectors for commercial real estate, including office space, retail strip centers, sales finance, sub-dividers and developers, and multi-family, hospitality, and residential building operators. Management evaluates each clients' creditworthiness on a case-by-case basis. The amount of collateral obtained upon the extension of credit is based on management’s credit evaluation of the client. Types of collateral held varies, but generally include real estate and equipment. The types of securities the Company invests in are included in Note 2, Investment Securities, and the types of lending the Company engages in are included in Note 3, Loans and Allowance for Loan Losses. |
Cash and Cash Equivalents | Cash and Cash Equivalents – Cash and cash equivalents include cash, balances due from banks, federal funds sold and interest-bearing deposits due on demand, all of which have original maturities of 90 days or less. Net cash flows are reported for client loan and deposit transactions, loans held for sale, redemption (purchases) of restricted investments in bank stocks, and short-term borrowings. Under the FRB regulations, the Bank generally had been required to maintain cash reserves against specified deposit liabilities. The FRB issued a final rule on December 22, 2020 that amended Regulation D by lowering the reserve requirement on all net transaction accounts maintained at depository institutions to 0%. Effective January 1, 2023, the FRB will establish the new reserve requirement exemption amount and low reserve tranche for 2023, but will not elevate the current reserve percentage of zero for depository institutions. Balances with correspondent banks may, at times, exceed federally insured limits. The Company considers this to be a normal business risk and reviews the financial condition of its correspondent banks on a quarterly basis. |
Restricted Investments in Bank Stocks | Restricted Investments in Bank Stocks – Restricted investments in bank stocks consist of Federal Reserve Bank of Philadelphia stock, FHLB of Pittsburgh stock and Atlantic Community Bankers Bank stock. Federal law requires a member institution of the district Federal Reserve Bank and FHLB to hold stock according to predetermined formulas. Atlantic Community Bankers Bank requires its correspondent banking institutions to hold stock as a condition of membership. The restricted investment in bank stocks is carried at cost. On a quarterly basis, management evaluates the bank stocks for impairment based on assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history, and impact of legislative and regulatory changes. |
Securities | Investment Securities – The Company typically classifies debt securities as available-for-sale ("AFS") on the date of purchase. At December 31, 2022 and 2021, the Company had no held to maturity or trading securities. AFS securities are reported at fair value. Interest income and dividends on debt securities are recognized in interest income on an accrual basis. Purchase premiums and discounts on debt securities are amortized to interest income using the interest method over the terms of the investment securities and approximate the level yield method. Changes in unrealized gains and losses, net of related deferred taxes, for AFS securities are recorded in AOCI. Realized gains and losses on securities are recorded on the trade date using the specific identification method and are included in noninterest income on the consolidated statements of income. AFS securities include investments that management intends to use as part of its asset/liability management strategy. Investment securities may be sold in response to changes in interest rates, changes in prepayment rates and other factors. The Company does not have the intent to sell any of its AFS securities that are in an unrealized loss position and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost. Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as an impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components: OTTI related to other factors, which is recognized in OCI, and the remaining OTTI, which is recognized in earnings. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The Company’s securities are exposed to various risks, such as interest rate risk, market risk, and credit risk. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment securities reported in the consolidated financial statements. |
Loans Held for Sale | Loans Held for Sale – The Company has elected to record the mortgage loans held for sale portfolio at fair market value as opposed to the lower of cost or market. The Company economically hedges its residential loans held for sale portfolio with forward sale agreements, which are reported at fair value. A lower of cost or market accounting treatment would not allow the Company to record the excess of the fair market value over book value, but would require the Company to record the corresponding reduction in value on the hedges. Both the loans and related hedges are carried at fair value, which reduces earnings volatility as the amounts more closely offset, particularly in environments when interest rates are declining. For loans held for sale for which the fair value option has been elected, the aggregate fair value was less than the aggregate principal balance by $1.2 million and $150 thousand as of December 31, 2022 and 2021, respectively. There were no loans held for sale that were nonaccrual or 90 or more days past due as of December 31, 2022 and 2021. Gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income. Interest income on these loans is recognized in interest and fees on loans in the consolidated statements of income. |
Loans | Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances adjusted for charge-offs, the ALL, and any corresponding deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and amortized as a yield adjustment over the respective term of the loan using the interest method. For SBA PPP loans, the loan origination fees, net of certain direct origination costs, are deferred and accreted into interest income as a yield adjustment under the effective yield method over the estimated life of the PPP loans, with any unamortized net fees being recognized as interest income at the time of forgiveness. For purchased loans that are not deemed impaired at the acquisition date, premiums and discounts are amortized or accreted as adjustments to interest income using the effective yield method. For all classes of loans, the accrual of interest income on loans, including impaired loans, ceases when principal or interest is past due 90 days or more or immediately if, in the opinion of management, full collection is unlikely. Interest will continue to accrue on loans past due 90 days or more if the collateral is adequate to cover principal and interest, and the loan is in the process of collection. Interest accrued, but not collected, at the date of placement on nonaccrual status, is reversed and charged against interest income, unless fully collateralized. Subsequent payments received are either applied to the outstanding principal balance or recorded as interest income, depending upon management’s assessment of the ultimate collectability of principal. Loans are returned to accrual status, for all loan classes, when all the principal and interest amounts contractually due are brought current, the loan has performed in accordance with the contractual terms of the note for a reasonable period of time, generally six months, and the ultimate collectability of the total contractual principal and interest is reasonably assured. Past due status is based on the contractual terms of the loan. Loans, the terms of which are modified, are classified as TDRs if a concession was granted in connection with the modification, for legal or economic reasons, related to the debtor’s financial difficulties. Concessions granted under a TDR typically involve a temporary deferral of scheduled loan payments, an extension of a loans' stated maturity date, a temporary reduction in interest rates, or granting of an interest rate below market rates given the risk of the transaction. If a modification occurs while the loan is on accrual status, it will continue to accrue interest under the modified terms. Nonaccrual TDRs may be restored to accrual status if scheduled principal and interest payments, under the modified terms, are current for six months after modification, and the borrower continues to demonstrate its ability to meet the modified terms. TDRs are evaluated individually for impairment on a quarterly basis including monitoring of performance according to their modified terms. In an effort to assist clients that were negatively impacted by the COVID-19 pandemic, the Bank offered various mitigation options, including a loan payment deferral program. Under this program, most commercial deferrals were for a 90-day period, while most consumer deferrals were for a 180-day period. In accordance with the revised Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronaviru s issued by the federal bank regulatory agencies on April 7, 2020, these deferrals are exempt from TDR status as they meet the specified requirements. As of December 31, 2021, the Company had a consumer loan under this deferral program of $56 thousand for which the deferral period subsequently expired in 2022. There were no loans under this deferral program as of December 31, 2022. Allowance for Loan Losses – The ALL is evaluated on at least a quarterly basis, as losses are estimated to be probable and incurred, and, if deemed necessary, is increased or decreased through the provision for loan losses on the consolidated statements of income. Loan losses are charged against the ALL when management determines that all or a portion of the loan is uncollectible. Recoveries on previously charged-off loans are credited to the ALL when received. The ALL is allocated to loan portfolio classes on a quarterly basis, but the entire balance is available to cover losses from any of the portfolio classes when those losses are confirmed. Management uses internal policies and bank regulatory guidance in periodically evaluating loans for collectability and incorporates historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. See Note 3, Loans and Allowance for Loan Losses, for additional information. Acquired Loans - Loans acquired in connection with business combinations are recorded at fair value with no carryover of any allowance for loan losses. Fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. These loans are accounted for under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"). The nonaccretable discount includes estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases in expected cash flows will require us to evaluate the need for an addition to the allowance for loan losses. Subsequent improvement in expected cash flows will result in the reversal of a corresponding amount of the nonaccretable discount, which we will then reclassify as accretable discount to be recognized into interest income over the remaining life of the loan. Loans acquired through business combinations that do meet the specific criteria of ASC 310-30 are individually evaluated each period to analyze expected cash flows. To the extent that the expected cash flows of a loan have decreased due to credit deterioration, the Company establishes an allowance. Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30 are accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. These loans are initially recorded at fair value, and include credit and interest rate marks associated with acquisition accounting adjustments. Purchase premiums or discounts are subsequently amortized as an adjustment to yield over the estimated contractual lives of the loans. There is no allowance for loan losses established at the acquisition date for acquired performing loans. An allowance for loan losses is recorded for any credit deterioration in these loans subsequent to acquisition. Acquired loans that meet the criteria for impairment or nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the client is contractually delinquent if the Company expects to fully collect the new carrying value (i.e., fair value) of the loans. As such, the Company may no longer consider the loan to be nonperforming and may accrue interest on these loans, including the impact of any accretable discount. In addition, charge-offs on such loans would be first applied to the nonaccretable difference portion of the fair value adjustment. |
Loan Commitments and Related Financial Instruments | Loan Commitments and Related Financial Instruments – Financial instruments include off-balance sheet credit commitments issued to meet client financing needs, such as commitments to make loans and commercial letters of credit. These financial instruments are recorded when they are funded. The face amount represents the exposure to loss, before considering client collateral or ability to repay. The Company maintains a reserve for probable losses on off-balance sheet commitments, which is included in other liabilities on the consolidated balance sheets. |
Loans Serviced | Loans Serviced – The Bank administers secondary market mortgage programs available through the FHLB and the Federal National Mortgage Association ("FNMA") and offers residential mortgage products and services to clients. The Bank originates single-family residential mortgage loans for sale in the secondary market and retains the servicing of those loans. |
Transfers of Financial Assets | Transfers of Financial Assets – Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
Cash Surrender Value of Life Insurance | Cash Surrender Value of Life Insurance – The Company has purchased life insurance policies on certain employees. Life insurance is recorded at the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. |
Derivatives | Derivatives - FASB ASC 815, Derivatives and Hedging (“ASC 8 15”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes to the fair value of derivatives designated and that qualify as cash flow hedges are recorded in AOCI and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The Company discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period due to circumstances, such as the impact of the COVID-19 pandemic. Upon discontinuance, the associated gains and losses deferred in AOCI are reclassified immediately into earnings and subsequent changes in the fair value of the cash flow hedge are recognized in earnings. During 2022, the Company entered into two interest rate swaps designated as hedging instruments with a total notional value of $100.0 million for the purpose of hedging the variable cash flows of selected AFS securities or loans. The Company had no interest rate swaps designated as a hedging instrument at December 31, 2021. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps and interest rate caps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps and interest rate caps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. At December 31, 2022 and 2021, the Company had interest rate swaps and interest rate caps not designated as hedges with total notional value of $268.8 million and $75.8 million, respectively. The Company also may enter into risk participation agreements with a financial institution counterparty for an interest rate derivative contract related to a loan in which the Company may be a participant or the agent bank. The risk participation agreement provides credit protection to the agent bank should the borrower fail to perform on its interest rate derivative contracts with the agent bank. The Company manages its credit risk on risk participation agreements by monitoring the creditworthiness of the borrower, which follows the same credit review process as derivative instruments entered into directly with the borrower. The notional amount of a risk participation agreement reflects the Company's pro-rata share of the derivative instrument, consistent with its share of the related participated loan. Changes in the fair value of the risk participation agreement are recognized directly into earnings. At December 31, 2022 and 2021, the Company had a risk participation with sold protection with a notional value of $29.0 million and $15.9 million, respectively, and a risk participation with purchased protection with a notional value of $4.9 million and zero at December 31, 2022 and 2021, respectively. As a part of its normal residential mortgage operations, the Company will enter into an interest rate lock commitment with a potential borrower. The Company may enter into a corresponding commitment with an investor to sell that loan at a specific price shortly after origination. In accordance with FASB ASC 820, adjustments are recorded through earnings to account for the net change in fair value of these held for sale loans. The fair value of held for sale loans can vary based on the interest rate locked with the customer and the current market interest rate at the balance sheet date. At December 31, 2022 and 2021, the Company had interest rate lock commitments with a notional value of $1.4 million and $16.6 million, respectively, and forward sale loan commitments with a notional value of $3.5 million and $8.7 million, respectively. |
Premises and Equipment | Premises and Equipment – Buildings, improvements, equipment, and furniture and fixtures are carried at cost less accumulated depreciation and amortization. Land is carried at cost. Depreciation and amortization has been recognized generally on the straight-line method and is computed over the estimated useful lives of the various assets as follows: buildings and improvements, including leasehold improvements – 10 to 40 years; and furniture and equipment – 3 to 15 years. Leasehold improvements are amortized over the shorter of the lease term or the indicated life. Repairs and maintenance are charged to operations as incurred, while additions and improvements are typically capitalized. Gains or losses on the retirement or disposal of individual assets is recorded as income or expense in the period of retirement or disposal. Premises no longer in use and held for sale are included in other assets on the consolidated balance sheets at the lower of carrying value or fair value and no depreciation is charged on them. At December 31, 2022 and 2021, premises held for sale totaled $2.0 million and $321 thousand, respectively. |
Leases | Leases - The Company evaluates its contracts at inception to determine if an arrangement either is a lease or contains one. Operating lease ROU assets are included in other assets and operating lease liabilities in accrued interest payable and other liabilities in the consolidated balance sheets. The Company had no finance leases at December 31, 2022. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company's leases do not provide an implicit rate, so the Company's incremental borrowing rate is used, which approximates its fully collateralized borrowing rate, based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is reevaluated upon lease modification. The operating lease ROU asset also includes any initial direct costs and prepaid lease payments made less any lease incentives. In calculating the present value of lease payments, the Company may include options to extend the lease when it is reasonably certain that it will exercise that option. In accordance with ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), the Company keeps leases with an initial term of 12 months or less off of the balance sheet. The Company recognizes these lease payments in the consolidated statements of income on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to account for them as a single lease component. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets – Goodwill is calculated as the purchase premium, if any, after adjusting for the fair value of net assets acquired in purchase transactions. Goodwill is not amortized, but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit. Other intangible assets represent purchased assets that can be distinguished from goodwill because of contractual or other legal rights. The Company’s other intangible assets have finite lives and are amortized on either an accelerated amortization method or straight-line basis over their estimated lives, generally 10 years for deposit premiums and 10 to 15 years for other client relationship intangibles. |
Mortgage Servicing Rights | Mortgage Servicing Rights – The estimated fair value of MSRs related to loans sold and serviced by the Company is recorded as an asset upon the sale of such loans. MSRs are amortized as a reduction to servicing income over the estimated lives of the underlying loans. MSRs are evaluated periodically for impairment by comparing the carrying amount to estimated fair value. Fair value is determined periodically through a discounted cash flow valuation performed by a third party. Significant inputs to the valuation include expected servicing income, net of expense, the discount rate and the expected life of the underlying loans. To the extent the amortized cost of the MSRs exceeds their estimated fair values, a valuation allowance is established for such impairment through a charge against servicing income on the consolidated statements of income. If the Company determines, based on subsequent valuations, that the impairment no longer exists or is reduced, the valuation allowance is reduced through a credit to earnings. |
Foreclosed Real Estate | Foreclosed Real Estate – Real estate acquired through foreclosure or other means is initially recorded at the fair value of the related real estate collateral at the transfer date less estimated selling costs, and subsequently at the lower of its carrying value or fair value less estimated costs to sell. Fair value is determined based on an independent third party appraisal of the property or, when appropriate, a recent sales offer. Costs to maintain such real estate are expensed as incurred. Costs that significantly improve the value of the properties are capitalized. |
Investments in Real Estate Partnerships | Investments in Real Estate Partnerships – The Company has a 99% limited partnership interest in several real estate partnerships in central Pennsylvania. These investments are affordable housing projects, which entitle the Company to tax deductions and credits that expire through 2025. The Company accounts for its investments in affordable housing projects under the proportional amortization method when the criteria are met, which is limited to one investment at December 31, 2022. There are five other investments accounted for under the equity method of accounting. |
Advertising | Advertising – The Company expenses advertising as incurred. |
Repurchase Agreements | Repurchase Agreements – The Company may enter into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities which are included in short-term borrowings on the consolidated balance sheets. Under these agreements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability on the Company’s consolidated balance sheets, while the securities underlying the repurchase agreements remaining are reflected in AFS securities. The repurchase obligation and underlying securities are not offset or netted as the Company does not enter into reverse repurchase agreements. The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., fail to make an interest payment to the counterparty). For the repurchase agreements, the collateral is held by the Company in a segregated custodial account under a third party agreement. Repurchase agreements are secured by U.S. government or government-sponsored debt securities and mature overnight. |
Share Compensation Plans | Stock Compensation Plans – The Company has stock compensation plans that cover employees and non-employee directors. Compensation expense relating to share-based payment transactions is measured based on the grant date fair value of the share award, including a Black-Scholes model for stock options. Compensation expense for all stock awards is calculated and recognized over the employees’ or non-employee directors' service period, generally defined as the vesting period. There were no outstanding and exercisable stock options at December 31, 2022 and 2021. |
Income Taxes | Income Taxes – Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of enacted tax law to taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes interest and penalties, if any, on income taxes as a component of income tax expense. The Company may earn federal tax credits from its investments in real estate and solar tax equity partnerships. The Company accounts for its investments in affordable housing projects under the proportional amortization method when the criteria are met and under the deferral method of accounting for its solar tax equity investments. |
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. |
Treasury Stock | Treasury Stock – Common stock shares repurchased are recorded as treasury stock, at cost on the consolidated balance sheets, on a settlement date basis. |
Earnings Per Share | Earnings Per Share – Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Restricted stock awards are included in weighted average common shares outstanding as they are earned. Diluted earnings per share includes additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock awards and are determined using the treasury stock method. Treasury shares are not deemed outstanding for earnings per share calculations. There were no outstanding and exercisable stock options at December 31, 2022 and 2021. |
Comprehensive Income | Comprehensive Income – Comprehensive income consists of net income and OCI. Unrealized gains (losses) on AFS securities and interest rate swaps used in cash flow hedges, net of tax, were the components of AOCI at December 31, 2022 and 2021. The Company had no interest rate swaps designated as a hedging instrument at December 31, 2021. |
Fair Value | Fair Value – Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in the Note 19 to the consolidated financial statements. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. |
Segment Reporting | Segment Reporting – The Company operates in one segment – Community Banking. The Company’s non-community banking activities are insignificant to the consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ( "ASU 2016-13" ). The amendments in this update require an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today are still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the amendments in this update amend the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration. For certain public companies, this update was effective for interim and annual periods beginning after December 15, 2019. The implementation deadline of ASU 2016-13 was extended for smaller reporting and other companies until the fiscal year and interim periods beginning after December 15, 2022. The Company will implement ASU 2016-13 effective January 1, 2023. ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ("ASU 2019-10"), extended the implementation deadline of ASU 2016-13 for smaller reporting and other companies until the fiscal year and interim periods beginning after December 15, 2022. The Company meets the requirements to be considered a smaller reporting company under SEC Regulation S-K and SEC Rule 405, and will adopt ASU 2016-13 effective January 1, 2023. To implement the new standard, the Company established a cross-discipline governance structure, which included a dedicated working group and a CECL Committee consisting of members from different functions including Finance, Credit, Risk and Lending, who will provide implementation oversight and review policy elections, key assumptions, processes, and model results. The working group is responsible for the implementation process that includes developing the loan segmentation, data sourcing and validation, loss driver inputs, qualitative factors, parallel model runs, scenario testing and back testing. The Company is utilizing a third-party vendor to assist in the implementation process of its new model to calculate credit losses over the estimated life of the applicable financial assets. The Company elected to use the discounted cash flow (“DCF”) methodology for the quantitative analysis for the majority of its loan segments, which applies the probability of default and loss given default factors to future cash flows, and then adjusts to the net present value to derive the required reserve. Reasonable and supportable macroeconomic conditions include unemployment and gross domestic product. Model assumptions include the discount rate, prepayments and curtailments. The development and validation of credit models also included determining the length of the reasonable and supportable forecast and regression period and utilizing national peer group’s historical loss rates. In addition, the remaining life methodology was selected for the consumer loan segments as practical expediency and based on the risk characteristics. The Company has completed parallel model runs, and continues to test and refine the credit loss models in parallel with the existing incurred loss approach. In addition, the Company is in the process of finalizing the review of the most recent model run and certain assumptions, completing policies, procedures and control enhancements, and concluding model validation by another third-party vendor. The status of the Company's implementation has been periodically presented to the Enterprise Risk Committee and Audit Committee. The Company expects to recognize a one-time cumulative-effect adjustment to the allowance for credit losses as of the January 1, 2023 date of adoption of the new standard, which is estimated to be between $2.0 million and $4.0 million. The Company will be electing the three-year phase in option of the day-one impact of this standard to regulatory capital. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The optional expedients apply consistently to all contracts or transactions within the scope of this topic, while the optional expedients for hedging relationships can be elected on an individual basis. The Company has formed a cross-functional working group to lead the transition from LIBOR to a planned adoption of an alternate index. The Company currently plans to replace LIBOR with the 30-Day Average SOFR or Term SOFR in its loan agreements. The Company implemented fallback language for loans with maturities after 2021. The Company expects to adopt the LIBOR transition relief allowed under this standard, and is currently evaluating the potential impact of this guidance on its financial statements. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates the troubled debt restructuring accounting model, and requires that the Company evaluate, based on the accounting for loan modifications, whether the modification results in a more-than-insignificant direct change in the contractual cash flows and represents a new loan or a continuation of an existing loan. This change will require all loan modifications to be accounted for under the general loan modification guidance in Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs, and subject entities to new disclosure requirements on loan modifications to borrowers experiencing financial difficulty. For entities that have adopted Topic 326, ASU 2022-02 is effective for periods beginning after December 15, 2022. For entities adopting Topic 326 in periods after December 15, 2022, A SU 20 22-02 is effective when the company adopts Topic 326. The Company will implement ASU 2022-02 effective January 1, 2023. The adoption of ASU No. 2022-02 is not expected to have a significant impact on the Company’s consolidated financial statements. |
Revenue | On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent amendments (collectively “ASC 606”). The update implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The majority of the Company's revenue comes from interest income, including loans and securities, that are outside the scope of ASC 606. The Company's services that fall within the scope of ASC 606 are presented within noninterest income on the consolidated statements of income and are recognized as revenue as the Company satisfies its obligation to the client. Services within the scope of ASC 606 include service charges on deposit accounts, income from trust and investment management and brokerage activities and interchange fees from service charges on ATM and debit card transactions. ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment was recorded. Descriptions of revenue generating activities that are within the scope of ASC 606 are as follows: Service Charges on Deposit Accounts - The Company earns fees from its deposit clients for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the client's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the client's account balance. Interchange Income - The Company earns interchange fees from debit/credit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is presented net of cardholder rewards. Swap Referral Fee Income - Through May 2020, the Company earned fees from a third-party service provider for loan hedging referrals provided to lending clients. The Company acted as an agent in arranging the relationship between our client and the third-party service provider. The Company was paid and recognized income upon completion of the loan hedge between our client and the third-party service provider. Trust and Investment Management Income - The Company earns wealth management and investment brokerage fees from its contracts with trust and wealth management clients to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted services and are generally assessed based on a tiered scale of the market value of assets under management. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e., the trade date. Other related services provided included financial planning services and the associated fees the Company earns, which are based on a fixed fee schedule, are recognized when the services are rendered. Services are generally billed in arrears and a receivable is recorded until fees are paid. |
INVESTMENT SECURITIES (Tables)
INVESTMENT SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Amortized Cost and Fair Value and Corresponding Amounts of Gross Unrealized Gains and Losses | The following table summarizes amortized cost and fair value of AFS securities, and the corresponding amounts of gross unrealized gains and losses recognized in AOCI at December 31, 2022 and 2021. Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2022 U.S. Treasury securities $ 20,070 $ — $ 2,779 $ 17,291 U.S. government agencies 4,907 228 — 5,135 States and political subdivisions 225,825 19 28,430 197,414 GSE residential MBSs 63,778 — 4,376 59,402 GSE residential CMOs 75,446 — 7,068 68,378 Non-agency CMOs 42,298 243 2,783 39,758 Asset-backed 130,577 — 4,604 125,973 Other 377 — — 377 Totals $ 563,278 $ 490 $ 50,040 $ 513,728 December 31, 2021 U.S. Treasury securities $ 20,084 $ — $ 382 $ 19,702 States and political subdivisions 185,437 8,606 673 193,370 GSE residential MBSs 41,260 44 578 40,726 GSE residential CMOs 66,430 436 944 65,922 Non-agency CMOs 30,676 — 978 29,698 Asset-backed 122,520 401 300 122,621 Other 399 — — 399 Totals $ 466,806 $ 9,487 $ 3,855 $ 472,438 |
Summary of Securities Available For Sale With Unrealized Losses | The following table summarizes investment securities with unrealized losses at December 31, 2022 and 2021, aggregated by major security type and length of time in a continuous unrealized loss position. Less Than 12 Months 12 Months or More Total # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses December 31, 2022 U.S. Treasury securities — $ — $ — 3 $ 17,291 $ 2,779 3 $ 17,291 $ 2,779 States and political subdivisions 29 135,579 13,809 17 60,102 14,621 46 195,681 28,430 GSE residential MBSs 5 26,100 925 10 33,302 3,451 15 59,402 4,376 GSE residential CMOs 8 28,732 1,884 9 39,646 5,184 17 68,378 7,068 Non-agency CMOs 4 26,555 1,135 2 8,639 1,648 6 35,194 2,783 Asset-backed 17 78,873 2,432 5 47,100 2,172 22 125,973 4,604 Totals 63 $ 295,839 $ 20,185 46 $ 206,080 $ 29,855 109 $ 501,919 $ 50,040 December 31, 2021 U.S. Treasury securities 3 $ 19,702 $ 382 — $ — $ — 3 $ 19,702 $ 382 States and political subdivisions 12 45,522 673 — — — 12 45,522 673 GSE residential MBSs 9 37,899 578 — — — 9 37,899 578 GSE residential CMOs 7 41,163 944 — — — 7 41,163 944 Non-agency CMOs 3 24,661 978 — — — 3 24,661 978 Asset-backed 3 21,245 138 3 34,180 162 6 55,425 300 Totals 37 $ 190,192 $ 3,693 3 $ 34,180 $ 162 40 $ 224,372 $ 3,855 |
Summary of Amortized Cost and Fair Value by Contractual Maturity | The following table summarizes amortized cost and fair value of investment securities by contractual maturity at December 31, 2022. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. Amortized Cost Fair Value Due in one year or less $ 249 $ 249 Due after one year through five years 6,403 6,043 Due after five years through ten years 83,348 72,161 Due after ten years 161,179 141,764 CMOs and MBSs 181,522 167,538 Asset-backed 130,577 125,973 $ 563,278 $ 513,728 |
Summary of Proceeds from Sale of Available for Sale Securities | The following table summarizes proceeds from sales of investment securities and gross gains and gross losses for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Proceeds from sale of investment securities $ 31,330 $ 149,038 $ — Gross gains 35 1,847 — Gross losses 25 1,209 16 |
LOANS AND ALLOWANCE FOR LOAN _2
LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Receivables [Abstract] | |
Summary of Loan Portfolio, Excluding Residential Loans Held for Sale | The following table presents the loan portfolio by segment and class, excluding residential LHFS, at December 31, 2022 and 2021. 2022 2021 Commercial real estate: Owner-occupied $ 315,770 $ 238,668 Non-owner occupied 608,043 551,783 Multi-family 138,832 93,255 Non-owner occupied residential 104,604 106,112 Acquisition and development: 1-4 family residential construction 25,068 12,279 Commercial and land development 158,308 93,925 Commercial and industrial (1) 357,774 485,728 Municipal 12,173 14,989 Residential mortgage: First lien 229,849 198,831 Home equity – term 5,505 6,081 Home equity – lines of credit 183,241 160,705 Installment and other loans 12,065 17,630 Total loans $ 2,151,232 $ 1,979,986 (1) This balance includes $13.8 million and $189.9 million of SBA PPP loans, net of deferred fees and costs, at December 31, 2022 and 2021 , respectively. |
Summary of Ratings Based on Internal Risk Rating System | The following summarizes the Company’s loan portfolio ratings based on its internal risk rating system at December 31, 2022 and 2021: Pass Special Mention Non-Impaired Substandard Impaired - Substandard Doubtful PCI Loans Total December 31, 2022 Commercial real estate: Owner-occupied $ 305,159 $ 2,109 $ 3,532 $ 2,767 $ — $ 2,203 $ 315,770 Non-owner occupied 601,244 4,243 2,273 — — 283 608,043 Multi-family 130,851 7,739 242 — — — 138,832 Non-owner occupied residential 102,674 810 482 81 — 557 104,604 Acquisition and development: 1-4 family residential construction 25,068 — — — — — 25,068 Commercial and land development 142,424 458 — 15,426 — — 158,308 Commercial and industrial 331,103 17,579 7,013 31 — 2,048 357,774 Municipal 12,173 — — — — — 12,173 Residential mortgage: First lien 222,849 — 215 2,520 — 4,265 229,849 Home equity – term 5,485 — — 5 — 15 5,505 Home equity – lines of credit 182,801 — 45 395 — — 183,241 Installment and other loans 12,017 — — 40 — 8 12,065 $ 2,073,848 $ 32,938 $ 13,802 $ 21,265 $ — $ 9,379 $ 2,151,232 December 31, 2021 Commercial real estate: Owner-occupied $ 219,250 $ 7,239 $ 6,087 $ 3,763 $ — $ 2,329 $ 238,668 Non-owner occupied 528,010 23,297 166 — — 310 551,783 Multi-family 84,414 8,238 603 — — — 93,255 Non-owner occupied residential 102,588 1,065 1,153 122 — 1,184 106,112 Acquisition and development: 1-4 family residential construction 12,279 — — — — — 12,279 Commercial and land development 92,049 1,385 491 — — — 93,925 Commercial and industrial 470,579 7,917 4,720 250 — 2,262 485,728 Municipal 14,989 — — — — — 14,989 Residential mortgage: First lien 191,386 — 225 2,635 — 4,585 198,831 Home equity – term 6,058 — — 7 — 16 6,081 Home equity – lines of credit 160,203 20 46 436 — — 160,705 Installment and other loans 17,584 — — 40 — 6 17,630 $ 1,899,389 $ 49,161 $ 13,491 $ 7,253 $ — $ 10,692 $ 1,979,986 |
Summary of Impaired Loans by Class | The following table, which excludes accruing PCI loans, summarizes impaired loans by segment and class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at December 31, 2022 and 2021. The recorded investment in loans excludes accrued interest receivable due to insignificance. Related allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending and any partial charge-off will be recorded when final information is received. Impaired Loans with a Specific Allowance Impaired Loans with No Specific Allowance Recorded Investment (Book Balance) Unpaid Principal Balance (Legal Balance) Related Allowance Recorded Investment (Book Balance) Unpaid Principal Balance (Legal Balance) December 31, 2022 Commercial real estate: Owner-occupied $ — $ — $ — $ 2,767 $ 3,799 Non-owner occupied residential — — — 81 207 Acquisition and development: Commercial and land development — — — 15,426 15,426 Commercial and industrial — — — 31 112 Residential mortgage: First lien 178 178 28 2,342 3,126 Home equity—term — — — 5 8 Home equity—lines of credit — — — 395 684 Installment and other loans — — — 40 40 $ 178 $ 178 $ 28 $ 21,087 $ 23,402 December 31, 2021 Commercial real estate: Owner-occupied $ — $ — $ — $ 3,763 $ 4,902 Non-owner occupied residential — — — 122 259 Commercial and industrial — — — 250 547 Residential mortgage: First lien 341 341 28 2,294 3,337 Home equity—term — — — 7 10 Home equity—lines of credit — — — 436 653 Installment and other loans — — — 40 40 $ 341 $ 341 $ 28 $ 6,912 $ 9,748 |
Summary of Average Recorded Investment in Impaired Loans and Related Interest Income | The following table, which excludes accruing PCI loans, summarizes the average recorded investment in impaired loans and related recognized interest income for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Average Impaired Balance Interest Income Recognized Average Impaired Balance Interest Income Recognized Average Impaired Balance Interest Income Recognized Commercial real estate: Owner-occupied $ 3,050 $ — $ 3,825 $ 1 $ 4,636 $ 1 Non-owner occupied — — — — 83 — Multi-family — — — — 205 — Non-owner occupied residential 96 — 225 — 388 — Acquisition and development: Commercial and land development 1,187 — 187 — 641 — Commercial and industrial 109 — 3,030 — 1,196 — Residential mortgage: First lien 2,389 33 2,539 43 2,995 48 Home equity – term 6 — 11 — 11 — Home equity – lines of credit 405 — 521 — 692 1 Installment and other loans 44 — 25 — 25 — $ 7,286 $ 33 $ 10,363 $ 44 $ 10,872 $ 50 |
Schedule of Impaired Loans that are TDRs | The following table presents impaired loans that are TDRs, with the recorded investment at December 31, 2022 and 2021. 2022 2021 Number of Contracts Recorded Investment Number of Contracts Recorded Investment Accruing: Residential mortgage: First lien 8 682 8 804 8 682 8 804 Nonaccruing: Residential mortgage: First lien 4 212 5 285 Installment and other loans 1 2 — — 5 214 5 285 13 $ 896 13 $ 1,089 |
Schedule of Number of Loans Modified | The following table presents the number of loans modified as TDRs, and their pre-modification and post-modification investment balances for the year ended December 31, 2022. There were two new TDRs, both on non-accrual status for the year ended December 31, 2022. During 2022, one of the two new TDRs was paid off in full. There were no loans modified as TDRs during 2021 and 2020. The loan presented in the table below was considered a TDR as a result of the Company agreeing to a below market interest rate given the risk of the transaction and a term extension, in order to give the borrowers an opportunity to improve their cash flows. For new and accruing TDRs, impairment is generally assessed using a discounted cash flow analysis. For TDRs in default of their modified terms, impairment is generally determined on a collateral dependent approach. Number of Contracts Pre- Modification Investment Balance Post- Modification Investment Balance December 31, 2022 Installment and other loans 1 $ 5 $ 2 |
Schedule of Classes of Loan Portfolio Summarized by Aging Categories | The following table presents the classes of the loan portfolio summarized by aging categories of performing loans and nonaccrual loans at December 31, 2022 and 2021. Days Past Due Current 30-59 60-89 90+ (still accruing) Total Past Due Non- Accrual Total Loans December 31, 2022 Commercial real estate: Owner-occupied $ 310,769 $ 31 $ — $ — $ 31 $ 2,767 $ 313,567 Non-owner occupied 607,760 — — — — — 607,760 Multi-family 138,832 — — — — — 138,832 Non-owner occupied residential 103,782 184 — — 184 81 104,047 Acquisition and development: 1-4 family residential construction 24,622 446 — — 446 — 25,068 Commercial and land development 142,613 269 — — 269 15,426 158,308 Commercial and industrial 355,179 464 52 — 516 31 355,726 Municipal 12,173 — — — — — 12,173 Residential mortgage: First lien 219,715 3,485 414 132 4,031 1,838 225,584 Home equity – term 5,485 — — — — 5 5,490 Home equity – lines of credit 181,350 1,395 101 — 1,496 395 183,241 Installment and other loans 11,953 64 — — 64 40 12,057 Subtotal 2,114,233 6,338 567 132 7,037 20,583 2,141,853 Loans acquired with credit deterioration: Commercial real estate: Owner-occupied 2,203 — — — — — 2,203 Non-owner occupied 283 — — — — — 283 Non-owner occupied residential 452 — — 105 105 — 557 Commercial and industrial 2,048 — — — — — 2,048 Residential mortgage: First lien 3,657 327 79 202 608 — 4,265 Home equity – term 15 — — — — — 15 Installment and other loans 8 — — — — — 8 Subtotal 8,666 327 79 307 713 — 9,379 $ 2,122,899 $ 6,665 $ 646 $ 439 $ 7,750 $ 20,583 $ 2,151,232 Days Past Due Current 30-59 60-89 90+ (still accruing) Total Past Due Non- Accrual Total Loans December 31, 2021 Commercial real estate: Owner-occupied $ 231,371 $ 314 $ — $ 891 $ 1,205 $ 3,763 $ 236,339 Non-owner occupied 551,473 — — — — — 551,473 Multi-family 93,255 — — — — — 93,255 Non-owner occupied residential 104,645 161 — — 161 122 104,928 Acquisition and development: 1-4 family residential construction 12,279 — — — — — 12,279 Commercial and land development 93,793 132 — — 132 — 93,925 Commercial and industrial 483,088 128 — — 128 250 483,466 Municipal 14,989 — — — — — 14,989 Residential mortgage: First lien 189,043 2,995 281 96 3,372 1,831 194,246 Home equity – term 6,042 16 — — 16 7 6,065 Home equity – lines of credit 159,628 641 — — 641 436 160,705 Installment and other loans 17,467 109 8 — 117 40 17,624 Subtotal 1,957,073 4,496 289 987 5,772 6,449 1,969,294 Loans acquired with credit deterioration: Commercial real estate: Owner-occupied 2,329 — — — — — 2,329 Non-owner occupied 310 — — — — — 310 Non-owner occupied residential 479 — 587 118 705 — 1,184 Commercial and industrial 2,262 — — — — — 2,262 Residential mortgage: First lien 3,937 387 166 95 648 — 4,585 Home equity – term 15 — — 1 1 — 16 Installment and other loans 6 — — — — — 6 Subtotal 9,338 387 753 214 1,354 — 10,692 $ 1,966,411 $ 4,883 $ 1,042 $ 1,201 $ 7,126 $ 6,449 $ 1,979,986 |
Schedule of Activity in Allowance for Loan Losses | The following table presents activity in the ALL for the years ended December 31, 2022, 2021 and 2020. Commercial Consumer Commercial Real Estate Acquisition and Development Commercial and Industrial Municipal Total Residential Mortgage Installment and Other Total Unallocated Total December 31, 2022 Balance, beginning of year $ 12,037 $ 2,062 $ 3,814 $ 30 $ 17,943 $ 2,785 $ 215 $ 3,000 $ 237 $ 21,180 Provision for loan losses 1,489 1,142 640 (6) 3,265 669 218 887 8 4,160 Charge-offs — — — — — (50) (360) (410) — (410) Recoveries 32 10 51 — 93 40 115 155 — 248 Balance, end of year $ 13,558 $ 3,214 $ 4,505 $ 24 $ 21,301 $ 3,444 $ 188 $ 3,632 $ 245 $ 25,178 December 31, 2021 Balance, beginning of year $ 11,151 $ 1,114 $ 3,942 $ 40 $ 16,247 $ 3,362 $ 324 $ 3,686 $ 218 $ 20,151 Provision for loan losses 710 938 23 (10) 1,661 (517) (73) (590) 19 1,090 Charge-offs (293) — (663) — (956) (92) (70) (162) — (1,118) Recoveries 469 10 512 — 991 32 34 66 — 1,057 Balance, end of year $ 12,037 $ 2,062 $ 3,814 $ 30 $ 17,943 $ 2,785 $ 215 $ 3,000 $ 237 $ 21,180 December 31, 2020 Balance, beginning of year $ 7,634 $ 959 $ 2,356 $ 100 $ 11,049 $ 3,147 $ 319 $ 3,466 $ 140 $ 14,655 Provision for loan losses 2,745 146 2,096 (60) 4,927 203 117 320 78 5,325 Charge-offs (3) — (748) — (751) (114) (146) (260) — (1,011) Recoveries 775 9 238 — 1,022 126 34 160 — 1,182 Balance, end of year $ 11,151 $ 1,114 $ 3,942 $ 40 $ 16,247 $ 3,362 $ 324 $ 3,686 $ 218 $ 20,151 |
Summary of Ending Loan Balance Individually Evaluated for Impairment | The following table summarizes the ending loan balances individually evaluated for impairment based upon loan segment, as well as the related ALL loss allocation for each at December 31, 2022 and 2021. Accruing PCI loans are excluded from loans individually evaluated for impairment. Commercial Consumer Commercial Real Estate Acquisition and Development Commercial and Industrial Municipal Total Residential Mortgage Installment and Other Total Unallocated Total December 31, 2022 Loans allocated by: Individually evaluated for impairment $ 2,848 $ 15,426 $ 31 $ — $ 18,305 $ 2,920 $ 40 $ 2,960 $ — $ 21,265 Collectively evaluated for impairment 1,164,401 167,950 357,743 12,173 1,702,267 415,675 12,025 427,700 — 2,129,967 $ 1,167,249 $ 183,376 $ 357,774 $ 12,173 $ 1,720,572 $ 418,595 $ 12,065 $ 430,660 $ — $ 2,151,232 Allowance for loan losses allocated by: Individually evaluated for impairment $ — $ — $ — $ — $ — $ 28 $ — $ 28 $ — $ 28 Collectively evaluated for impairment 13,558 3,214 4,505 24 21,301 3,416 188 3,604 245 25,150 $ 13,558 $ 3,214 $ 4,505 $ 24 $ 21,301 $ 3,444 $ 188 $ 3,632 $ 245 $ 25,178 December 31, 2021 Loans allocated by: Individually evaluated for impairment $ 3,885 $ — $ 250 $ — $ 4,135 $ 3,078 $ 40 $ 3,118 $ — $ 7,253 Collectively evaluated for impairment 985,933 106,204 485,478 14,989 1,592,604 362,539 17,590 380,129 — 1,972,733 $ 989,818 $ 106,204 $ 485,728 $ 14,989 $ 1,596,739 $ 365,617 $ 17,630 $ 383,247 $ — $ 1,979,986 Allowance for loan losses allocated by: Individually evaluated for impairment $ — $ — $ — $ — $ — $ 28 $ — $ 28 $ — $ 28 Collectively evaluated for impairment 12,037 2,062 3,814 30 17,943 2,757 215 2,972 237 21,152 $ 12,037 $ 2,062 $ 3,814 $ 30 $ 17,943 $ 2,785 $ 215 $ 3,000 $ 237 $ 21,180 |
Schedule of Activity for the Accretable Yield of Purchased Impaired Loans | The following table provides activity for the accretable yield of purchased impaired loans for the years ended December 31, 2022 and 2021. 2022 2021 Accretable yield, beginning of period $ 2,661 $ 3,438 Accretion of income (949) (1,093) Reclassifications from nonaccretable difference due to improvement in expected cash flows 388 160 Other changes, net 335 156 Accretable yield, end of period $ 2,435 $ 2,661 |
PREMISES AND EQUIPMENT (Tables)
PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Summary of Premises and Equipment | The following table summarizes premises and equipment at December 31, 2022 and 2021. 2022 2021 Land $ 7,583 $ 8,586 Buildings and improvements 24,813 27,852 Leasehold improvements 5,359 5,593 Furniture and equipment 21,849 23,681 Construction in progress 59 171 59,663 65,883 Less accumulated depreciation 30,335 31,838 $ 29,328 $ 34,045 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Summary of Right-of-use Assets and Related Lease Liabilities | The following table summarizes the Company's right-of-use assets and related lease liabilities for the year ended December 31, 2022 and 2021. December 31, 2022 December 31, 2021 Operating lease ROU assets $ 9,270 $ 10,515 Operating lease ROU liabilities 9,976 11,119 Weighted-average remaining lease term (in years) 14.3 14.6 Weighted-average discount rate 4.1 % 4.1 % |
Information Related to Operating Leases | The following table presents information related to the Company's operating leases for the years ended December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Cash paid for operating lease liabilities $ 1,170 $ 1,266 Operating lease expense 1,406 1,544 |
Maturities of Lease Liabilities | The following table presents maturities of the Company's lease liabilities by year. 2023 $ 1,153 2024 1,179 2025 1,201 2026 1,233 2027 1,267 Thereafter 8,187 14,220 Less: imputed interest 4,244 Total lease liabilities $ 9,976 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Components of Other Intangible Assets | The following table presents changes in and components of other intangible assets for the years ended December 31, 2022 and 2021. No impairment charge was recorded on other intangible assets during the years ended December 31, 2022 and 2021. 2022 2021 Balance, beginning of year $ 4,183 $ 5,458 Amortization expense (1,105) (1,275) Balance, end of year $ 3,078 $ 4,183 |
Schedule of Amortized Intangible Assets | The following table presents the components of other identifiable intangible assets at December 31, 2022 and 2021. 2022 2021 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortized intangible assets: Core deposit intangibles $ 8,390 $ 5,312 $ 8,390 $ 4,208 Other client relationship intangibles 25 25 25 24 Total $ 8,415 $ 5,337 $ 8,415 $ 4,232 |
Schedule of Estimated Amortization Expense | The following table presents future estimated aggregate amortization expense at December 31, 2022. 2023 $ 935 2024 766 2025 596 2026 427 2027 258 Thereafter 96 $ 3,078 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Tax Expense | The following table summarizes income tax expense for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Current expense $ 5,170 $ 7,072 $ 6,602 Deferred (benefit) expense (591) 942 (554) Income tax expense $ 4,579 $ 8,014 $ 6,048 |
Reconciliation of Effective Income Tax Rate to Statutory Federal Rate | The following table reconciles the Company's effective income tax rate to its statutory federal rate for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Statutory federal tax rate 21.0 % 21.0 % 21.0 % Increase (decrease) resulting from: State taxes, net of federal benefit 1.6 1.1 1.0 Tax exempt interest income (4.1) (1.7) (2.0) Income from life insurance (1.3) (0.9) (1.1) Disallowed interest expense 0.3 — 0.1 Low-income housing credits and related expense (0.2) (0.2) (0.8) Share-based compensation and related expense (0.5) 0.2 — Other 0.4 0.1 0.4 Effective income tax rate 17.2 % 19.6 % 18.6 % |
Summary of Deferred Tax Assets and Liabilities | The following table summarizes the Company's deferred tax assets and liabilities at December 31, 2022 and 2021. 2022 2021 Deferred tax assets: Allowance for loan losses $ 5,594 $ 4,655 Deferred compensation 434 515 Retirement and salary continuation plans 3,000 2,633 Share-based compensation 774 681 Off-balance sheet reserves 359 353 Nonaccrual loan interest 467 220 Deferred loan fees 493 1,604 Net unrealized losses on AFS securities 10,405 — Net unrealized losses on cash flow hedges 204 — Purchase accounting adjustments 896 1,236 Bonus accrual 1,241 930 Right-of-use lease liability 2,194 2,444 Net operating loss carryforward 1,974 2,218 Depreciation and other 99 67 Total deferred tax assets 28,134 17,556 Deferred tax liabilities: Depreciation — 368 Net unrealized gains on AFS securities — 1,183 Mortgage servicing rights 884 887 Purchase accounting adjustments 675 915 Right-of-use lease asset 2,054 2,311 Investment in partnerships 473 229 Other 17 15 Total deferred tax liabilities 4,103 5,908 Deferred tax asset, net $ 24,031 $ 11,648 |
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Nonvested Restricted Shares Activity | The following table presents a summary of nonvested restricted shares activity for 2022. Shares Weighted Average Grant Date Fair Value Nonvested shares, beginning of year 274,697 $ 20.05 Granted 145,349 24.95 Forfeited (33,606) 21.37 Vested (101,531) 20.19 Nonvested shares, end of year 284,909 $ 22.35 |
Schedule of Restricted Shares Compensation Expense | The following table presents restricted shares compensation expense, with tax benefit information, and fair value of shares vested at December 31, 2022, 2021 and 2020. 2022 2021 2020 Restricted share award expense $ 2,012 $ 1,901 $ 1,710 Restricted share award federal tax benefit 423 334 359 Fair value of shares vested 2,498 1,539 1,384 |
Employee Stock Ownership Plan | The following table presents information for the employee stock purchase plan for years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Shares purchased 5,885 8,755 7,831 Weighted average price of shares purchased $ 22.53 $ 15.58 $ 14.85 Compensation expense recognized $ 15 $ 48 $ 6 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Deposits [Abstract] | |
Summary of Composition of Deposits | The following table summarizes deposits by type at December 31, 2022 and 2021. During the fourth quarter of 2022, the Bank announced that it had entered into a Purchase and Assumption Agreement providing for the sale of its Path Valley branch and associated deposit liabilities. At December 31, 2022, approximately $31.3 million of deposits were expected to be conveyed in a branch sale, are reported within total deposits at cost on the consolidated balance sheets, and are comprised of $23.5 million in interest-bearing deposits and $7.8 million in non-interest bearing deposits. The transaction is expected to close in the second quarter of 2023. 2022 2021 Noninterest-bearing demand deposits $ 501,963 $ 553,238 Interest-bearing demand deposits 987,158 903,155 Savings 736,124 706,451 Time ($250,000 or less) 214,484 258,064 Time (over $250,000) 36,517 44,021 Total $ 2,476,246 $ 2,464,929 |
Scheduled Maturities of Time Deposits | The following table summarizes scheduled future maturities of time deposits as of December 31, 2022. 2023 $ 179,009 2024 56,780 2025 6,518 2026 3,890 2027 3,341 Thereafter 1,463 $ 251,001 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of Activity in Loans to Related Parties | The following table presents the aggregate activity in loans to related parties during 2022. Balance, beginning of year $ 904 New loans 225 Repayments (908) Director and officer relationship changes (130) Balance, end of year $ 91 |
SHORT-TERM BORROWINGS (Tables)
SHORT-TERM BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Summary of the Use of Short-Term Borrowings | The following table summarizes these short-term borrowings at and for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Balance at year-end $ 104,684 $ — $ 55,729 Weighted average interest rate at year-end 4.45 % — % 0.41 % Average balance during the year $ 13,846 $ 38,546 $ 138,310 Average interest rate during the year 3.97 % 0.33 % 0.67 % Maximum month-end balance during the year $ 104,684 $ 55,729 $ 178,729 |
Summary of the Use of Securities Sold Under Agreements to Repurchase | The following table provides additional details for repurchase agreements at and for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Balance at year-end $ 17,251 $ 23,301 $ 19,466 Weighted average interest rate at year-end 0.60 % 0.11 % 0.23 % Average balance during the year $ 22,294 $ 22,888 $ 18,064 Average interest rate during the year 0.20 % 0.14 % 0.47 % Maximum month-end balance during the year $ 26,399 $ 27,595 $ 24,403 Fair value of securities underlying the agreements at year-end $ 17,188 $ 32,662 $ 29,477 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | The following table presents components of the Company’s long-term debt at December 31, 2022, and 2021. Amount Weighted Average rate 2022 2021 2022 2021 Total FHLB amortizing advance requiring monthly principal and interest payments, maturing: 2025 $ 1,455 $ 1,896 4.74 % 4.74 % |
Summary of Future Principal Payments Required | The following table summarizes the future annual principal payments required on these borrowings at December 31, 2022. 2023 $ 462 2024 485 2025 508 2026 — 2027 — Thereafter — $ 1,455 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value of Derivative Instruments | The following table summarizes the notional values and fair value of the Company's derivative instruments at December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Notional Amount Balance Sheet Location Fair Value Notional Amount Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps - balance sheet hedge $ 100,000 Other liabilities $ (973) $ — Not applicable $ — Total derivatives designated as hedging instruments $ (973) $ — Derivatives not designated as hedging instruments: Interest rate swaps $ 128,385 Other assets $ 10,437 $ 37,915 Other assets $ 764 Interest rate swaps 128,385 Other liabilities (10,262) 37,915 Other liabilities (758) Purchased Options – Rate Cap 6,000 Other assets 29 — Not applicable — Written Options – Rate Cap 6,000 Other liabilities (29) — Not applicable — Risk participations - sold credit protection 29,019 Other liabilities (69) 15,855 Other liabilities (2) Risk participations - purchased credit protection 4,941 Other assets 16 — Not applicable — Interest rate lock commitments with customers 1,356 Other assets 35 16,604 Other assets 353 Forward sale commitments 3,483 Other assets 140 8,665 Other assets 52 Total derivatives not designated as hedging instruments $ 297 $ 409 |
Effect of Derivative Financial Instruments on OCI and Net Income | The following tables summarize the effect of the Company's derivative financial instruments on OCI and net income at December 31, 2022 and 2021: Amount of (Loss) Gain Recognized in OCI on Derivative 2022 2021 Derivatives in cash flow hedging relationships: Interest rate products $ (972) $ 473 Total $ (972) $ 473 Amount of Loss Reclassified from AOCI into Income Location of Loss Recognized from AOCI into Income 2022 2021 Derivatives in cash flow hedging relationships: Interest rate products $ — $ (757) Interest income (1) / Interest expense (2) Total $ — $ (757) (1) For interest rate swaps designated as cash flow hedges entered into for the year ended December 31, 2022, the amount of loss reclassified from AOCI will be recorded to other income in the unaudited condensed consolidated statements of income. (2) For the year ended December 31, 2021, the Company terminated its interest rate swap designated as a hedging instrument with a notional value of $50.0 million. The Company recorded a $514 thousand loss in other operating expenses in the consolidated statements of income. Amount of Gain (Loss) Recognized in Income Location of Gain (Loss) Recognized in Income 2022 2021 Derivatives not designated as hedging instruments: Interest rate products $ 30 $ 41 Other operating expenses Risk participation agreements 88 (2) Other operating expenses Interest rate lock commitments with customers (318) (320) Mortgage banking activities Forward sale commitments 88 113 Mortgage banking activities Total $ (113) $ (168) |
Summary of Interest Rate Swap Components | The following table is a summary of components for interest rate swap designated as cash flow hedges at December 31, 2022 and 2021. At December 31, 2022, the Company had two interest rate derivatives designated as cash flow hedges with a total notional of $100.0 million. During the year ended December 31, 2021, the Company terminated its remaining interest rate derivative of $50.0 million. December 31, 2022 December 31, 2021 Weighted average pay rate 3.81 % — % Weighted average receive rate 3.81 % — % Weighted average maturity in years 1.2 0.0 |
SHAREHOLDERS_ EQUITY AND REGU_2
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Schedule of Actual and Required Capital Amounts and Ratios | The following table presents capital amounts and ratios at December 31, 2022 and 2021. Actual For Capital Adequacy Purposes (includes applicable capital conservation buffer) To Be Well Capitalized Under Prompt Corrective Action Regulations Amount Ratio Amount Ratio Amount Ratio December 31, 2022 Total risk-based capital: Orrstown Financial Services, Inc. $ 304,589 12.7 % $ 250,939 10.5 % n/a n/a Orrstown Bank 292,933 12.3 % 250,566 10.5 % $ 238,634 10.0 % Tier 1 risk-based capital: Orrstown Financial Services, Inc. 245,752 10.3 % 203,141 8.5 % n/a n/a Orrstown Bank 266,122 11.2 % 202,839 8.5 % 190,907 8.0 % Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc. 245,752 10.3 % 167,293 7.0 % n/a n/a Orrstown Bank 266,122 11.2 % 167,044 7.0 % 155,112 6.5 % Tier 1 leverage capital: Orrstown Financial Services, Inc. 245,752 8.5 % 116,325 4.0 % n/a n/a Orrstown Bank 266,122 9.2 % 116,219 4.0 % 145,273 5.0 % December 31, 2021 Total risk-based capital: Orrstown Financial Services, Inc. $ 297,823 15.0 % $ 208,617 10.5 % n/a n/a Orrstown Bank 278,780 14.0 % 208,550 10.5 % $ 198,619 10.0 % Tier 1 risk-based capital: Orrstown Financial Services, Inc. 243,075 12.2 % 168,880 8.5 % n/a n/a Orrstown Bank 255,995 12.9 % 168,826 8.5 % 158,895 8.0 % Tier 1 common equity risk-based capital: Orrstown Financial Services, Inc. 243,075 12.2 % 139,078 7.0 % n/a n/a Orrstown Bank 255,995 12.9 % 139,033 7.0 % 129,102 6.5 % Tier 1 leverage capital: Orrstown Financial Services, Inc. 243,075 8.5 % 114,384 4.0 % n/a n/a Orrstown Bank 255,995 8.9 % 114,470 4.0 % 143,087 5.0 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share | The following table presents earnings per share for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Net income $ 22,037 $ 32,881 $ 26,463 Weighted average shares outstanding - basic 10,553 10,967 10,942 Dilutive effect of share-based compensation 153 139 92 Weighted average shares outstanding - diluted 10,706 11,106 11,034 Per share information: Basic earnings per share $ 2.09 $ 3.00 $ 2.42 Diluted earnings per share 2.06 2.96 2.40 |
FINANCIAL INSTRUMENTS WITH OF_2
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Commitments and Conditional Obligations | The following table presents these contractual, or notional, amounts at December 31, 2022, and 2021. 2022 2021 Commitments to fund: Home equity lines of credit $ 296,213 $ 261,580 1-4 family residential construction loans 49,538 40,348 Commercial real estate, construction and land development loans 156,560 124,488 Commercial, industrial and other loans 338,286 378,996 Standby letters of credit 23,229 19,724 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets Measured at Fair Value on a Recurring Basis | The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2022 or 2021. Level 1 Level 2 Level 3 Total Fair Value Measurements December 31, 2022 Financial Assets Investment securities: U.S. Treasury securities $ 17,291 $ — $ — $ 17,291 U.S. Government Agencies — 5,135 — 5,135 States and political subdivisions — 191,488 5,926 197,414 GSE residential MBSs — 59,402 — 59,402 GSE residential CMOs — 68,378 — 68,378 Non-agency CMOs — 18,491 21,267 39,758 Asset-backed — 125,973 — 125,973 Other 377 — — 377 Loans held for sale — 10,880 — 10,880 Derivatives — 10,482 35 10,517 Totals $ 17,668 $ 490,229 $ 27,228 $ 535,125 Financial Liabilities Derivatives $ — $ 11,333 $ — $ 11,333 December 31, 2021 Financial Assets Investment securities: U.S. Treasury securities $ 19,702 $ — $ — $ 19,702 States and political subdivisions — 183,171 10,199 193,370 GSE residential MBSs — 40,726 — 40,726 GSE residential CMOs — 65,922 — 65,922 Non-agency CMOs — 16,750 12,948 29,698 Asset-backed — 122,621 — 122,621 Other 399 — — 399 Loans held for sale — 8,868 — 8,868 Derivatives — 764 353 1,117 Totals $ 20,101 $ 438,822 $ 23,500 $ 482,423 Financial Liabilities Derivatives $ — $ 760 $ — $ 760 |
Level 3 Fair Value, Assets Measurement Activity | The following provides details of the Level 3 fair value measurement activity for the years ended December 31, 2022 or 2021. Investment securities: 2022 2021 Balance, beginning of year $ 23,147 $ 31,503 Unrealized (loss) gain included in OCI (1,859) 31 Purchases 21,237 — Net discount accretion 56 — Principal payments and other (10) (4,842) Sales (3,053) (3,545) Calls (12,154) — OTTI (171) — Balance, end of year $ 27,193 $ 23,147 There were no transfers into or out of Level 3 at December 31, 2022 and 2021. Interest rate lock commitments on residential mortgages: 2022 2021 Balance, beginning of year $ 353 $ 673 Total losses included in earnings (318) (320) Balance, end of year $ 35 $ 353 |
Summary of Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes assets measured at fair value on a nonrecurring basis at December 31, 2022 and 2021. Level 1 Level 2 Level 3 Total Fair Value Measurements December 31, 2022 Impaired loans Commercial real estate: Owner-occupied $ — $ — $ 116 $ 116 Non-owner occupied residential — — 9 9 Residential mortgage: First lien — — 309 309 Home equity - lines of credit — — 86 86 Total impaired loans $ — $ — $ 520 $ 520 Mortgage servicing rights $ — $ — $ — $ — December 31, 2021 Impaired loans Commercial real estate: Owner-occupied $ — $ — $ 751 $ 751 Non-owner occupied residential — — 24 24 Residential mortgage: First lien — — 545 545 Home equity - lines of credit — — 72 72 Total impaired loans $ — $ — $ 1,392 $ 1,392 Mortgage servicing rights $ — $ — $ 322 $ 322 |
Schedule of Additional Qualitative Information | The following table presents additional qualitative information about assets measured on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value. Fair Value Estimate Valuation Techniques Unobservable Input Range December 31, 2022 Impaired loans $ 520 Appraisal of collateral Management adjustments on appraisals for property type and recent activity 10% - 25% discount - Management adjustments for liquidation expenses 6.08% - 17.93% discount December 31, 2021 Impaired loans $ 1,392 Appraisal of collateral Management adjustments on appraisals for property type and recent activity 10% - 25% discount - Management adjustments for liquidation expenses 6.08% - 17.93% discount Mortgage servicing rights 322 Discounted cash flows Weighted average CPR 12.60% Discount rate 9.03% |
Schedule of Estimated Fair Values of Financial Instruments | The following table presents the carrying amounts and estimated fair values of financial assets and liabilities at December 31, 2022, and 2021. Carrying Amount Fair Value Level 1 Level 2 Level 3 December 31, 2022 Financial Assets Cash and due from banks $ 28,477 $ 28,477 $ 28,477 $ — $ — Interest-bearing deposits with banks 32,346 32,346 32,346 — — Restricted investments in bank stock 10,642 n/a n/a n/a n/a Investment securities 513,728 513,728 17,668 468,867 27,193 Loans held for sale 10,880 10,880 — 10,880 — Loans, net of allowance for loan losses 2,126,054 1,991,164 — — 1,991,164 Derivatives 10,517 10,517 — 10,482 35 Accrued interest receivable 11,027 11,027 — 4,441 6,586 Financial Liabilities Deposits 2,444,939 2,440,660 — 2,440,660 — Deposits held for assumption in connection with sale of bank branches 31,307 29,429 — 29,429 — Securities sold under agreements to repurchase 17,251 17,251 — 17,251 — FHLB advances and other 106,139 106,141 — 106,141 — Subordinated notes 32,026 31,321 — 31,321 — Derivatives 11,333 11,333 — 11,333 — Accrued interest payable 457 457 — 457 — Off-balance sheet instruments — — — — — December 31, 2021 Financial Assets Cash and due from banks $ 21,217 $ 21,217 $ 21,217 $ — $ — Interest-bearing deposits with banks 187,493 187,493 187,493 — — Restricted investments in bank stock 7,252 n/a n/a n/a n/a Investment securities 472,438 472,438 20,101 429,190 23,147 Loans held for sale 8,868 8,868 — 8,868 — Loans, net of allowance for loan losses 1,958,806 1,946,365 — — 1,946,365 Derivatives 1,117 1,117 — 764 353 Accrued interest receivable 8,234 8,235 — 2,203 6,032 Financial Liabilities Deposits 2,464,929 2,466,191 — 2,466,191 — Securities sold under agreements to repurchase 23,301 23,301 — 23,301 — FHLB advances and other 1,896 2,035 — 2,035 — Subordinated notes 31,963 31,815 — 31,815 — Derivatives 760 760 — 760 — Accrued interest payable 154 154 — 154 — Off-balance sheet instruments — — — — — |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CLIENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Noninterest Income Disaggregated by Revenue Source | The following table presents the Company's noninterest income disaggregated by revenue source for the years ended December 31, 2022, 2021 and 2020. 2022 2021 2020 Noninterest income Service charges on deposit accounts and ATM fees $ 4,157 $ 3,337 $ 3,113 Swap referral fee income — — 208 Trust and investment management income 7,631 7,896 6,912 Brokerage income 3,620 3,571 2,821 Interchange income 4,056 4,129 3,423 Revenue from contracts with clients 19,464 18,933 16,477 Other service charges 456 356 444 Mortgage banking activities 407 5,909 5,274 Gain on sale of commercial loans — — 2,803 Income from life insurance 2,339 2,273 2,261 Swap dealer fee income 2,632 293 639 Other income 1,814 750 427 Investment securities (losses) gains (160) 638 (16) Total noninterest income $ 26,952 $ 29,152 $ 28,309 |
ORRSTOWN FINANCIAL SERVICES, _2
ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Balance Sheets | Condensed Balance Sheets December 31, 2022 2021 Assets Cash in bank subsidiary $ 8,477 $ 18,545 Investment in bank subsidiary 249,266 284,577 Other assets 3,466 553 Total assets $ 261,209 $ 303,675 Liabilities Subordinated notes $ 32,026 $ 31,963 Accrued interest and other liabilities 287 56 Total liabilities 32,313 32,019 Shareholders’ Equity Common stock 584 586 Additional paid-in capital 189,264 189,689 Retained earnings 92,473 78,700 Accumulated other comprehensive (loss) income (39,913) 4,449 Treasury stock (13,512) (1,768) Total shareholders’ equity 228,896 271,656 Total liabilities and shareholders’ equity $ 261,209 $ 303,675 |
Condensed Statements of Income | Condensed Statements of Income For the Years Ended December 31, 2022 2021 2020 Income Dividends from bank subsidiary $ 27,000 $ 16,000 $ 14,000 Interest income from bank subsidiary 29 25 76 Other income 16 119 62 Total income 27,045 16,144 14,138 Expenses Interest on subordinated notes 2,013 2,009 2,006 Share-based compensation 511 433 463 Management fee to bank subsidiary 1,341 1,089 1,254 Provision for legal settlement 13,000 — — Other expenses 912 704 1,324 Total expenses 17,777 4,235 5,047 Income before income tax benefit and equity in undistributed income of subsidiaries 9,268 11,909 9,091 Income tax benefit (3,726) (863) (1,022) Income before equity in undistributed income of subsidiaries 12,994 12,772 10,113 Equity in undistributed income of subsidiaries 9,043 20,109 16,350 Net income $ 22,037 $ 32,881 $ 26,463 |
Condensed Statements of Cash Flows | Condensed Statements of Cash Flows For the Years Ended December 31, 2022 2021 2020 Cash flows from operating activities: Net income $ 22,037 $ 32,881 $ 26,463 Adjustments to reconcile net income to cash provided by (used in) operating activities: Amortization 63 59 56 Deferred income taxes (7) (4) (39) Equity in undistributed income of subsidiaries (9,043) (20,109) (16,350) Share-based compensation 511 433 463 Net change in other liabilities 231 (40) (141) Net change in other assets (2,915) 375 (221) Net cash provided by operating activities 10,877 13,595 10,231 Cash flows from investing activities: Net cash paid for acquisitions — — (85) Net cash used in investing activities — — (85) Cash flows from financing activities: Dividends paid (8,264) (8,280) (7,610) Proceeds from issuance of common stock 1,644 1,516 1,628 Payments to repurchase common stock (14,468) (2,383) (1,887) Other, net 143 136 116 Net cash used in financing activities (20,945) (9,011) (7,753) Net (decrease) increase in cash (10,068) 4,584 2,393 Cash, beginning 18,545 13,961 11,568 Cash, ending $ 8,477 $ 18,545 $ 13,961 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loans Held for Sale and Loans (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) loan | Dec. 31, 2021 USD ($) loan | |
Accounting Policies [Abstract] | ||
Fair value option, aggregate fair value exceeded principal amount | $ (1,200) | $ 150 |
Loans held for sale, nonaccrual or 90 Days or more past due | loan | 0 | 0 |
Maturity of interest bearing deposits | 90 days | |
Evaluation period to return non accrual TDRs to accrual status | 6 months | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | $ 2,151,232 | $ 1,979,986 |
SBA | Consumer | Payment Deferral | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | $ 0 | $ 56 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loans Serviced (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Balance of loans serviced for others | $ 495 | $ 502.5 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Derivatives (Details) $ in Thousands | Dec. 31, 2022 USD ($) swap | Dec. 31, 2021 USD ($) swap |
Interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | $ 100,000 | |
Interest rate contract | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Number of derivatives | swap | 0 | |
Interest rate contract | Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Number of derivatives | swap | 2 | |
Interest rate contract | Not Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | $ 268,800 | $ 75,800 |
Risk Participation Agreement | Other liabilities | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | 29,000 | 15,900 |
Risk Participation Agreement | Other assets | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | 4,900 | 0 |
Interest rate lock commitments with customers | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | 1,400 | 16,600 |
Forward sale commitments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | $ 3,500 | $ 8,700 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Premises and Equipment and Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Other Assets | ||
Property, Plant and Equipment [Line Items] | ||
Premises held-for-sale | $ 2,000 | $ 321 |
Minimum | Buildings and improvements, including leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 10 years | |
Minimum | Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Maximum | Buildings and improvements, including leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 40 years | |
Maximum | Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 15 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Deposit premiums | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated life | 10 years |
Minimum | Customer lists | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated life | 10 years |
Maximum | Customer lists | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated life | 15 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Mortgage Servicing Rights (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Balance of mortgage servicing rights | $ 4 | $ 4 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreclosed Real Estate (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Foreclosed real estate | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Investments in Real Estate Partnerships (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) investment contract | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||
Number of investments accounted for under the proportional amortization method | investment | 1 | ||
Number of investments accounted for under the equity method | contract | 5 | ||
Recorded investment in real estate partnerships | $ 2,100 | $ 2,600 | |
Investments accounted for under proportional amortization method | 707 | 921 | |
Losses accounted for under the equity method | 274 | 272 | $ 299 |
Losses on investments accounted for under proportional amortization method | 214 | 214 | 214 |
Federal tax credits | $ 260 | $ 315 | $ 460 |
Real Estate Partnerships Interest | |||
Schedule of Equity Method Investments [Line Items] | |||
Limited partner interest (as a percent) | 99% |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | |||
Advertising expense | $ 482 | $ 677 | $ 392 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock Compensation Plans (Details) - shares | Dec. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Options outstanding (in shares) | 0 | 0 |
Options exercisable (in shares) | 0 | 0 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment Reporting (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Accounting Policies [Abstract] | |
Number of significant segments | 1 |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Adoption of New ASU (Details) - USD ($) $ in Thousands | Jan. 01, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Allowance for credit loss | $ 25,178 | $ 21,180 | $ 20,151 | $ 14,655 | |
Cumulative Effect, Period of Adoption, Adjustment | Minimum | Forecast | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Allowance for credit loss | $ 2,000 | ||||
Cumulative Effect, Period of Adoption, Adjustment | Maximum | Forecast | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Allowance for credit loss | $ 4,000 |
INVESTMENT SECURITIES - Summary
INVESTMENT SECURITIES - Summary of Amortized Cost and Fair Value and Corresponding Amounts of Gross Unrealized Gains and Losses (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 563,278 | $ 466,806 |
Gross Unrealized Gains | 490 | 9,487 |
Gross Unrealized Losses | 50,040 | 3,855 |
Fair Value | 513,728 | 472,438 |
U.S. Treasury securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 20,070 | 20,084 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 2,779 | 382 |
Fair Value | 17,291 | 19,702 |
U.S. government agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 4,907 | |
Gross Unrealized Gains | 228 | |
Gross Unrealized Losses | 0 | |
Fair Value | 5,135 | |
States and political subdivisions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 225,825 | 185,437 |
Gross Unrealized Gains | 19 | 8,606 |
Gross Unrealized Losses | 28,430 | 673 |
Fair Value | 197,414 | 193,370 |
GSE residential MBSs | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 63,778 | 41,260 |
Gross Unrealized Gains | 0 | 44 |
Gross Unrealized Losses | 4,376 | 578 |
Fair Value | 59,402 | 40,726 |
GSE residential CMOs | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 75,446 | 66,430 |
Gross Unrealized Gains | 0 | 436 |
Gross Unrealized Losses | 7,068 | 944 |
Fair Value | 68,378 | 65,922 |
Non-agency CMOs | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 42,298 | 30,676 |
Gross Unrealized Gains | 243 | 0 |
Gross Unrealized Losses | 2,783 | 978 |
Fair Value | 39,758 | 29,698 |
Asset-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 130,577 | 122,520 |
Gross Unrealized Gains | 0 | 401 |
Gross Unrealized Losses | 4,604 | 300 |
Fair Value | 125,973 | 122,621 |
Other | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 377 | 399 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 377 | $ 399 |
INVESTMENT SECURITIES - Summa_2
INVESTMENT SECURITIES - Summary of Investment Securities With Unrealized Losses (Detail) $ in Thousands | Dec. 31, 2022 USD ($) security | Dec. 31, 2021 USD ($) security |
Number of Securities | ||
Less Than 12 Months | security | 63 | 37 |
12 Months or More | security | 46 | 3 |
Total | security | 109 | 40 |
Fair Value | ||
Less Than 12 Months | $ 295,839 | $ 190,192 |
12 Months or More | 206,080 | 34,180 |
Total | 501,919 | 224,372 |
Unrealized Losses | ||
Less Than 12 Months | 20,185 | 3,693 |
12 Months or More | 29,855 | 162 |
Total | $ 50,040 | $ 3,855 |
U.S. Treasury securities | ||
Number of Securities | ||
Less Than 12 Months | security | 0 | 3 |
12 Months or More | security | 3 | 0 |
Total | security | 3 | 3 |
Fair Value | ||
Less Than 12 Months | $ 0 | $ 19,702 |
12 Months or More | 17,291 | 0 |
Total | 17,291 | 19,702 |
Unrealized Losses | ||
Less Than 12 Months | 0 | 382 |
12 Months or More | 2,779 | 0 |
Total | $ 2,779 | $ 382 |
States and political subdivisions | ||
Number of Securities | ||
Less Than 12 Months | security | 29 | 12 |
12 Months or More | security | 17 | 0 |
Total | security | 46 | 12 |
Fair Value | ||
Less Than 12 Months | $ 135,579 | $ 45,522 |
12 Months or More | 60,102 | 0 |
Total | 195,681 | 45,522 |
Unrealized Losses | ||
Less Than 12 Months | 13,809 | 673 |
12 Months or More | 14,621 | 0 |
Total | $ 28,430 | $ 673 |
GSE residential MBSs | ||
Number of Securities | ||
Less Than 12 Months | security | 5 | 9 |
12 Months or More | security | 10 | 0 |
Total | security | 15 | 9 |
Fair Value | ||
Less Than 12 Months | $ 26,100 | $ 37,899 |
12 Months or More | 33,302 | 0 |
Total | 59,402 | 37,899 |
Unrealized Losses | ||
Less Than 12 Months | 925 | 578 |
12 Months or More | 3,451 | 0 |
Total | $ 4,376 | $ 578 |
GSE residential CMOs | ||
Number of Securities | ||
Less Than 12 Months | security | 8 | 7 |
12 Months or More | security | 9 | 0 |
Total | security | 17 | 7 |
Fair Value | ||
Less Than 12 Months | $ 28,732 | $ 41,163 |
12 Months or More | 39,646 | 0 |
Total | 68,378 | 41,163 |
Unrealized Losses | ||
Less Than 12 Months | 1,884 | 944 |
12 Months or More | 5,184 | 0 |
Total | $ 7,068 | $ 944 |
Non-agency CMOs | ||
Number of Securities | ||
Less Than 12 Months | security | 4 | 3 |
12 Months or More | security | 2 | 0 |
Total | security | 6 | 3 |
Fair Value | ||
Less Than 12 Months | $ 26,555 | $ 24,661 |
12 Months or More | 8,639 | 0 |
Total | 35,194 | 24,661 |
Unrealized Losses | ||
Less Than 12 Months | 1,135 | 978 |
12 Months or More | 1,648 | 0 |
Total | $ 2,783 | $ 978 |
Asset-backed | ||
Number of Securities | ||
Less Than 12 Months | security | 17 | 3 |
12 Months or More | security | 5 | 3 |
Total | security | 22 | 6 |
Fair Value | ||
Less Than 12 Months | $ 78,873 | $ 21,245 |
12 Months or More | 47,100 | 34,180 |
Total | 125,973 | 55,425 |
Unrealized Losses | ||
Less Than 12 Months | 2,432 | 138 |
12 Months or More | 2,172 | 162 |
Total | $ 4,604 | $ 300 |
INVESTMENT SECURITIES - Summa_3
INVESTMENT SECURITIES - Summary of Amortized Cost and Fair Value by Contractual Maturity (Detail) $ in Thousands | Dec. 31, 2022 USD ($) |
Amortized Cost | |
Due in one year or less | $ 249 |
Due after one year through five years | 6,403 |
Due after five years through ten years | 83,348 |
Due after ten years | 161,179 |
CMOs and MBSs | 181,522 |
Asset-backed | 130,577 |
Totals | 563,278 |
Fair Value | |
Due in one year or less | 249 |
Due after one year through five years | 6,043 |
Due after five years through ten years | 72,161 |
Due after ten years | 141,764 |
CMOs and MBSs | 167,538 |
Asset-backed | 125,973 |
Totals | $ 513,728 |
INVESTMENT SECURITIES - Summa_4
INVESTMENT SECURITIES - Summary of Proceeds from Sale of Available for Sale Securities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |||
Proceeds from sale of investment securities | $ 31,330 | $ 149,038 | $ 0 |
Gross gains | 35 | 1,847 | 0 |
Gross losses | $ 25 | $ 1,209 | $ 16 |
INVESTMENT SECURITIES - Narrati
INVESTMENT SECURITIES - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) security | Dec. 31, 2021 USD ($) security | Dec. 31, 2020 USD ($) | |
Debt Securities, Available-for-sale [Line Items] | |||
Cumulative OTTI | $ 0 | $ 0 | $ 0 |
Gain (loss) on investments | 10,000 | 638,000 | |
Investment securities | 513,728,000 | 472,438,000 | |
Proceeds from sale of investment securities | 31,330,000 | 149,038,000 | 0 |
Collateral Pledged | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment securities pledged to secure public funds | 396,800,000 | 295,600,000 | |
Non-agency CMOs | |||
Debt Securities, Available-for-sale [Line Items] | |||
Gain (loss) on investments | (171,000) | ||
Investment securities | 39,758,000 | 29,698,000 | |
Non-agency Collateralized Mortgage Obligations-Called | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment securities | 14,700,000 | ||
Equity securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Gain (loss) on investments | $ (16,000) | ||
Investment securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment securities | $ 31,300,000 | $ 148,400,000 | |
Number of Investments Securities Sold | security | 19 | 18 | |
Proceeds from sale of investment securities | $ 31,300,000 | $ 149,000,000 |
LOANS AND ALLOWANCE FOR LOAN _3
LOANS AND ALLOWANCE FOR LOAN LOSSES - Narrative (Detail) | 12 Months Ended | 21 Months Ended |
Dec. 31, 2022 USD ($) loan note | Dec. 31, 2021 USD ($) loan | |
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Loans | $ 2,151,232,000 | $ 1,979,986,000 |
SBA, loan guarantee, percentage | 100% | |
Maximum percentage of loan-to-value ratio upon loan origination (no more than) | 80% | |
Maximum percentage of loan-to-value ratios of the value of the real estate taken as collateral (no greater than) | 85% | |
Risk review of commercial relationships with committed loan balance amount (exceeds) | $ 1,000,000 | |
Amount of loans reviewed that require approval | $ 500,000 | |
Period past due when loans are deemed impaired | 90 days | |
Number of notes split | note | 2 | |
Appraisals, required period interval | 18 months | |
Minimum amount on which annual updated appraisals for criticized loans are required | $ 250,000 | |
Percentage of strong loan-to-value | 70% | |
Loans modified as TDR | loan | 2 | |
Loans modified as TDRs paid off | loan | 1 | |
Commercial And Industrial | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Loans | $ 357,774,000 | $ 485,728,000 |
SBA | Commercial | Payment Deferral | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Number of PPP loans | loan | 6,500 | |
PPP loans generated amount | $ 699,400,000 | |
Allowance for loan losses | 0 | 0 |
SBA | Commercial | 2021 Remaining Payment Deferrals | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
PPP Loan processing fee income | 262,000 | |
SBA | Consumer | Payment Deferral | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Loans | 0 | 56,000 |
SBA | Commercial And Industrial | SBA PPP Loans | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Loans | $ 13,800,000 | $ 189,900,000 |
LOANS AND ALLOWANCE FOR LOAN _4
LOANS AND ALLOWANCE FOR LOAN LOSSES - Summary of Loan Portfolio, Excluding Residential Loans Held for Sale (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | $ 2,151,232 | $ 1,979,986 |
Commercial real estate | Owner-occupied | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 315,770 | 238,668 |
Commercial real estate | Non-owner occupied | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 608,043 | 551,783 |
Commercial real estate | Multi-family | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 138,832 | 93,255 |
Commercial real estate | Non-owner occupied residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 104,604 | 106,112 |
Acquisition and development | 1-4 family residential construction | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 25,068 | 12,279 |
Acquisition and development | Commercial and land development | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 158,308 | 93,925 |
Commercial And Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 357,774 | 485,728 |
Commercial And Industrial | SBA | SBA PPP Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 13,800 | 189,900 |
Municipal | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 12,173 | 14,989 |
Residential mortgage | First lien | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 229,849 | 198,831 |
Residential mortgage | Home equity – term | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 5,505 | 6,081 |
Residential mortgage | Home equity – lines of credit | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | 183,241 | 160,705 |
Installment and other loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans | $ 12,065 | $ 17,630 |
LOANS AND ALLOWANCE FOR LOAN _5
LOANS AND ALLOWANCE FOR LOAN LOSSES - Summary of Loan Portfolio Ratings Based on Internal Risk Rating System (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | $ 2,151,232 | $ 1,979,986 |
Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 2,073,848 | 1,899,389 |
Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 32,938 | 49,161 |
Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 13,802 | 13,491 |
Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 21,265 | 7,253 |
Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 9,379 | 10,692 |
Commercial real estate | Owner-occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 315,770 | 238,668 |
Commercial real estate | Owner-occupied | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 305,159 | 219,250 |
Commercial real estate | Owner-occupied | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 2,109 | 7,239 |
Commercial real estate | Owner-occupied | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 3,532 | 6,087 |
Commercial real estate | Owner-occupied | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 2,767 | 3,763 |
Commercial real estate | Owner-occupied | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Owner-occupied | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 2,203 | 2,329 |
Commercial real estate | Non-owner occupied | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 608,043 | 551,783 |
Commercial real estate | Non-owner occupied | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 601,244 | 528,010 |
Commercial real estate | Non-owner occupied | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 4,243 | 23,297 |
Commercial real estate | Non-owner occupied | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 2,273 | 166 |
Commercial real estate | Non-owner occupied | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 283 | 310 |
Commercial real estate | Multi-family | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 138,832 | 93,255 |
Commercial real estate | Multi-family | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 130,851 | 84,414 |
Commercial real estate | Multi-family | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 7,739 | 8,238 |
Commercial real estate | Multi-family | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 242 | 603 |
Commercial real estate | Multi-family | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Multi-family | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Multi-family | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 104,604 | 106,112 |
Commercial real estate | Non-owner occupied residential | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 102,674 | 102,588 |
Commercial real estate | Non-owner occupied residential | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 810 | 1,065 |
Commercial real estate | Non-owner occupied residential | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 482 | 1,153 |
Commercial real estate | Non-owner occupied residential | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 81 | 122 |
Commercial real estate | Non-owner occupied residential | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied residential | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 557 | 1,184 |
Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 25,068 | 12,279 |
Acquisition and development | 1-4 family residential construction | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 25,068 | 12,279 |
Acquisition and development | 1-4 family residential construction | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Acquisition and development | 1-4 family residential construction | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Acquisition and development | 1-4 family residential construction | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Acquisition and development | 1-4 family residential construction | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Acquisition and development | 1-4 family residential construction | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Acquisition and development | Commercial and land development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 158,308 | 93,925 |
Acquisition and development | Commercial and land development | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 142,424 | 92,049 |
Acquisition and development | Commercial and land development | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 458 | 1,385 |
Acquisition and development | Commercial and land development | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 491 |
Acquisition and development | Commercial and land development | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 15,426 | 0 |
Acquisition and development | Commercial and land development | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Acquisition and development | Commercial and land development | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Commercial And Industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 357,774 | 485,728 |
Commercial And Industrial | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 331,103 | 470,579 |
Commercial And Industrial | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 17,579 | 7,917 |
Commercial And Industrial | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 7,013 | 4,720 |
Commercial And Industrial | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 31 | 250 |
Commercial And Industrial | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Commercial And Industrial | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 2,048 | 2,262 |
Municipal | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 12,173 | 14,989 |
Municipal | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 12,173 | 14,989 |
Municipal | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Municipal | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Municipal | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Municipal | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Municipal | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | First lien | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 229,849 | 198,831 |
Residential mortgage | First lien | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 222,849 | 191,386 |
Residential mortgage | First lien | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | First lien | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 215 | 225 |
Residential mortgage | First lien | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 2,520 | 2,635 |
Residential mortgage | First lien | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | First lien | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 4,265 | 4,585 |
Residential mortgage | Home equity – term | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 5,505 | 6,081 |
Residential mortgage | Home equity – term | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 5,485 | 6,058 |
Residential mortgage | Home equity – term | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | Home equity – term | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | Home equity – term | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 5 | 7 |
Residential mortgage | Home equity – term | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | Home equity – term | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 15 | 16 |
Residential mortgage | Home equity – lines of credit | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 183,241 | 160,705 |
Residential mortgage | Home equity – lines of credit | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 182,801 | 160,203 |
Residential mortgage | Home equity – lines of credit | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 20 |
Residential mortgage | Home equity – lines of credit | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 45 | 46 |
Residential mortgage | Home equity – lines of credit | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 395 | 436 |
Residential mortgage | Home equity – lines of credit | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | Home equity – lines of credit | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Installment and other loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 12,065 | 17,630 |
Installment and other loans | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 12,017 | 17,584 |
Installment and other loans | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Installment and other loans | Non-Impaired Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Installment and other loans | Impaired - Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 40 | 40 |
Installment and other loans | Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | 0 | 0 |
Installment and other loans | PCI Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loans | $ 8 | $ 6 |
LOANS AND ALLOWANCE FOR LOAN _6
LOANS AND ALLOWANCE FOR LOAN LOSSES - Summary of Impaired Loans by Class (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | $ 178 | $ 341 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 178 | 341 |
Impaired Loans with a Specific Allowance, Related Allowance | 28 | 28 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 21,087 | 6,912 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 23,402 | 9,748 |
Commercial real estate | Owner-occupied | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 2,767 | 3,763 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 3,799 | 4,902 |
Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 81 | 122 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 207 | 259 |
Acquisition and Development | Commercial and land development | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 15,426 | |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 15,426 | |
Commercial And Industrial | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 31 | 250 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 112 | 547 |
Residential mortgage | First lien | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 178 | 341 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 178 | 341 |
Impaired Loans with a Specific Allowance, Related Allowance | 28 | 28 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 2,342 | 2,294 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 3,126 | 3,337 |
Residential mortgage | Home equity – term | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 5 | 7 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 8 | 10 |
Residential mortgage | Home equity – lines of credit | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 395 | 436 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | 684 | 653 |
Installment and other loans | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired Loans with a Specific Allowance, Recorded Investment (Book Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Unpaid Principal Balance (Legal Balance) | 0 | 0 |
Impaired Loans with a Specific Allowance, Related Allowance | 0 | 0 |
Impaired Loans with No Specific Allowance, Recorded Investment (Book Balance) | 40 | 40 |
Impaired Loans with No Specific Allowance, Unpaid Principal Balance (Legal Balance) | $ 40 | $ 40 |
LOANS AND ALLOWANCE FOR LOAN _7
LOANS AND ALLOWANCE FOR LOAN LOSSES - Summary of Average Recorded Investment in Impaired Loans and Related Interest Income (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | $ 7,286 | $ 10,363 | $ 10,872 |
Interest Income Recognized | 33 | 44 | 50 |
Commercial real estate | Owner-occupied | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 3,050 | 3,825 | 4,636 |
Interest Income Recognized | 0 | 1 | 1 |
Commercial real estate | Non-owner occupied | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 0 | 0 | 83 |
Interest Income Recognized | 0 | 0 | 0 |
Commercial real estate | Multi-family | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 0 | 0 | 205 |
Interest Income Recognized | 0 | 0 | 0 |
Commercial real estate | Non-owner occupied residential | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 96 | 225 | 388 |
Interest Income Recognized | 0 | 0 | 0 |
Acquisition and development | Commercial and land development | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 1,187 | 187 | 641 |
Interest Income Recognized | 0 | 0 | 0 |
Commercial And Industrial | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 109 | 3,030 | 1,196 |
Interest Income Recognized | 0 | 0 | 0 |
Residential mortgage | First lien | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 2,389 | 2,539 | 2,995 |
Interest Income Recognized | 33 | 43 | 48 |
Residential mortgage | Home equity – term | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 6 | 11 | 11 |
Interest Income Recognized | 0 | 0 | 0 |
Residential mortgage | Home equity – lines of credit | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 405 | 521 | 692 |
Interest Income Recognized | 0 | 0 | 1 |
Installment and other loans | |||
Financing Receivable, Impaired [Line Items] | |||
Average Impaired Balance | 44 | 25 | 25 |
Interest Income Recognized | $ 0 | $ 0 | $ 0 |
LOANS AND ALLOWANCE FOR LOAN _8
LOANS AND ALLOWANCE FOR LOAN LOSSES - Schedule of Impaired Loans that are TDRs (Detail) $ in Thousands | Dec. 31, 2022 USD ($) contract | Dec. 31, 2021 USD ($) contract |
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 13 | 13 |
Recorded Investment | $ | $ 896 | $ 1,089 |
Accruing | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 8 | 8 |
Recorded Investment | $ | $ 682 | $ 804 |
Accruing | Residential mortgage | First lien | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 8 | 8 |
Recorded Investment | $ | $ 682 | $ 804 |
Nonaccruing | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 5 | 5 |
Recorded Investment | $ | $ 214 | $ 285 |
Nonaccruing | Residential mortgage | First lien | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 4 | 5 |
Recorded Investment | $ | $ 212 | $ 285 |
Nonaccruing | Installment and Other | ||
Financing Receivable, Modifications [Line Items] | ||
Number of Contracts | contract | 1 | 0 |
Recorded Investment | $ | $ 2 | $ 0 |
LOANS AND ALLOWANCE FOR LOAN _9
LOANS AND ALLOWANCE FOR LOAN LOSSES - Schedule of Number of Loans Modified as TDRs (Detail) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) contract | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Financing Receivable, Modifications [Line Items] | |||
Pre- Modification Investment Balance | $ 0 | $ 0 | |
Post- Modification Investment Balance | $ 0 | $ 0 | |
Installment and Other | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 1 | ||
Pre- Modification Investment Balance | $ 5,000 | ||
Post- Modification Investment Balance | $ 2,000 |
LOANS AND ALLOWANCE FOR LOAN_10
LOANS AND ALLOWANCE FOR LOAN LOSSES - Schedule of Classes of Loan Portfolio Summarized by Aging Categories (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | $ 439 | $ 1,201 |
Non- Accrual | 20,583 | 6,449 |
Loans | 2,151,232 | 1,979,986 |
Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 132 | 987 |
Non- Accrual | 20,583 | 6,449 |
Loans | 2,141,853 | 1,969,294 |
Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 307 | 214 |
Non- Accrual | 0 | 0 |
Loans | 9,379 | 10,692 |
Current | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 2,122,899 | 1,966,411 |
Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 2,114,233 | 1,957,073 |
Current | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 8,666 | 9,338 |
30 to 59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 6,665 | 4,883 |
30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 6,338 | 4,496 |
30 to 59 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 327 | 387 |
60 to 89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 646 | 1,042 |
60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 567 | 289 |
60 to 89 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 79 | 753 |
Total Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 7,750 | 7,126 |
Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 7,037 | 5,772 |
Total Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 713 | 1,354 |
Commercial real estate | Owner-occupied | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 315,770 | 238,668 |
Commercial real estate | Owner-occupied | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 891 |
Non- Accrual | 2,767 | 3,763 |
Loans | 313,567 | 236,339 |
Commercial real estate | Owner-occupied | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 0 | 0 |
Loans | 2,203 | 2,329 |
Commercial real estate | Owner-occupied | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 310,769 | 231,371 |
Commercial real estate | Owner-occupied | Current | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 2,203 | 2,329 |
Commercial real estate | Owner-occupied | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 31 | 314 |
Commercial real estate | Owner-occupied | 30 to 59 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Owner-occupied | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Owner-occupied | 60 to 89 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Owner-occupied | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 31 | 1,205 |
Commercial real estate | Owner-occupied | Total Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 608,043 | 551,783 |
Commercial real estate | Non-owner occupied | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 0 | 0 |
Loans | 607,760 | 551,473 |
Commercial real estate | Non-owner occupied | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 0 | 0 |
Loans | 283 | 310 |
Commercial real estate | Non-owner occupied | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 607,760 | 551,473 |
Commercial real estate | Non-owner occupied | Current | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 283 | 310 |
Commercial real estate | Non-owner occupied | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied | 30 to 59 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied | 60 to 89 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied | Total Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Multi-family | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 138,832 | 93,255 |
Commercial real estate | Multi-family | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 0 | 0 |
Loans | 138,832 | 93,255 |
Commercial real estate | Multi-family | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 138,832 | 93,255 |
Commercial real estate | Multi-family | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Multi-family | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Multi-family | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied residential | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 104,604 | 106,112 |
Commercial real estate | Non-owner occupied residential | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 81 | 122 |
Loans | 104,047 | 104,928 |
Commercial real estate | Non-owner occupied residential | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 105 | 118 |
Non- Accrual | 0 | 0 |
Loans | 557 | 1,184 |
Commercial real estate | Non-owner occupied residential | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 103,782 | 104,645 |
Commercial real estate | Non-owner occupied residential | Current | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 452 | 479 |
Commercial real estate | Non-owner occupied residential | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 184 | 161 |
Commercial real estate | Non-owner occupied residential | 30 to 59 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied residential | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial real estate | Non-owner occupied residential | 60 to 89 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 587 |
Commercial real estate | Non-owner occupied residential | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 184 | 161 |
Commercial real estate | Non-owner occupied residential | Total Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 105 | 705 |
Acquisition and development | 1-4 family residential construction | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 25,068 | 12,279 |
Acquisition and development | 1-4 family residential construction | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 0 | 0 |
Loans | 25,068 | 12,279 |
Acquisition and development | 1-4 family residential construction | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 24,622 | 12,279 |
Acquisition and development | 1-4 family residential construction | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 446 | 0 |
Acquisition and development | 1-4 family residential construction | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Acquisition and development | 1-4 family residential construction | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 446 | 0 |
Acquisition and development | Commercial and land development | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 158,308 | 93,925 |
Acquisition and development | Commercial and land development | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 15,426 | 0 |
Loans | 158,308 | 93,925 |
Acquisition and development | Commercial and land development | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 142,613 | 93,793 |
Acquisition and development | Commercial and land development | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 269 | 132 |
Acquisition and development | Commercial and land development | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Acquisition and development | Commercial and land development | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 269 | 132 |
Commercial And Industrial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 357,774 | 485,728 |
Commercial And Industrial | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 31 | 250 |
Loans | 355,726 | 483,466 |
Commercial And Industrial | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 0 | 0 |
Loans | 2,048 | 2,262 |
Commercial And Industrial | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 355,179 | 483,088 |
Commercial And Industrial | Current | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 2,048 | 2,262 |
Commercial And Industrial | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 464 | 128 |
Commercial And Industrial | 30 to 59 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial And Industrial | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 52 | 0 |
Commercial And Industrial | 60 to 89 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Commercial And Industrial | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 516 | 128 |
Commercial And Industrial | Total Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Municipal | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 12,173 | 14,989 |
Municipal | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 0 | 0 |
Loans | 12,173 | 14,989 |
Municipal | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 12,173 | 14,989 |
Municipal | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Municipal | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Municipal | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | First lien | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 229,849 | 198,831 |
Residential mortgage | First lien | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 132 | 96 |
Non- Accrual | 1,838 | 1,831 |
Loans | 225,584 | 194,246 |
Residential mortgage | First lien | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 202 | 95 |
Non- Accrual | 0 | 0 |
Loans | 4,265 | 4,585 |
Residential mortgage | First lien | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 219,715 | 189,043 |
Residential mortgage | First lien | Current | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 3,657 | 3,937 |
Residential mortgage | First lien | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 3,485 | 2,995 |
Residential mortgage | First lien | 30 to 59 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 327 | 387 |
Residential mortgage | First lien | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 414 | 281 |
Residential mortgage | First lien | 60 to 89 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 79 | 166 |
Residential mortgage | First lien | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 4,031 | 3,372 |
Residential mortgage | First lien | Total Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 608 | 648 |
Residential mortgage | Home equity – term | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 5,505 | 6,081 |
Residential mortgage | Home equity – term | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 5 | 7 |
Loans | 5,490 | 6,065 |
Residential mortgage | Home equity – term | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 1 |
Non- Accrual | 0 | 0 |
Loans | 15 | 16 |
Residential mortgage | Home equity – term | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 5,485 | 6,042 |
Residential mortgage | Home equity – term | Current | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 15 | 15 |
Residential mortgage | Home equity – term | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 16 |
Residential mortgage | Home equity – term | 30 to 59 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | Home equity – term | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | Home equity – term | 60 to 89 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Residential mortgage | Home equity – term | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 16 |
Residential mortgage | Home equity – term | Total Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 1 |
Residential mortgage | Home equity – lines of credit | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 183,241 | 160,705 |
Residential mortgage | Home equity – lines of credit | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 395 | 436 |
Loans | 183,241 | 160,705 |
Residential mortgage | Home equity – lines of credit | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 181,350 | 159,628 |
Residential mortgage | Home equity – lines of credit | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 1,395 | 641 |
Residential mortgage | Home equity – lines of credit | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 101 | 0 |
Residential mortgage | Home equity – lines of credit | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 1,496 | 641 |
Installment and other loans | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 12,065 | 17,630 |
Installment and other loans | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 40 | 40 |
Loans | 12,057 | 17,624 |
Installment and other loans | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
90+ (still accruing) | 0 | 0 |
Non- Accrual | 0 | 0 |
Loans | 8 | 6 |
Installment and other loans | Current | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 11,953 | 17,467 |
Installment and other loans | Current | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 8 | 6 |
Installment and other loans | 30 to 59 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 64 | 109 |
Installment and other loans | 30 to 59 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Installment and other loans | 60 to 89 Days Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 8 |
Installment and other loans | 60 to 89 Days Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 0 | 0 |
Installment and other loans | Total Past Due | Financial Asset, Other than Financial Asset Acquired with Credit Deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | 64 | 117 |
Installment and other loans | Total Past Due | Loans acquired with credit deterioration | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Loans | $ 0 | $ 0 |
LOANS AND ALLOWANCE FOR LOAN_11
LOANS AND ALLOWANCE FOR LOAN LOSSES - Schedule of Activity in Allowance for Loan Losses (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Activity in allowance for loan losses | |||
Balance, beginning of year | $ 21,180 | $ 20,151 | $ 14,655 |
Provision for loan losses | 4,160 | 1,090 | 5,325 |
Charge-offs | (410) | (1,118) | (1,011) |
Recoveries | 248 | 1,057 | 1,182 |
Balance, end of year | 25,178 | 21,180 | 20,151 |
Unallocated | |||
Activity in allowance for loan losses | |||
Balance, beginning of year | 237 | 218 | 140 |
Provision for loan losses | 8 | 19 | 78 |
Charge-offs | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 |
Balance, end of year | 245 | 237 | 218 |
Commercial | |||
Activity in allowance for loan losses | |||
Balance, beginning of year | 17,943 | 16,247 | 11,049 |
Provision for loan losses | 3,265 | 1,661 | 4,927 |
Charge-offs | 0 | (956) | (751) |
Recoveries | 93 | 991 | 1,022 |
Balance, end of year | 21,301 | 17,943 | 16,247 |
Commercial | Commercial Real Estate | |||
Activity in allowance for loan losses | |||
Balance, beginning of year | 12,037 | 11,151 | 7,634 |
Provision for loan losses | 1,489 | 710 | 2,745 |
Charge-offs | 0 | (293) | (3) |
Recoveries | 32 | 469 | 775 |
Balance, end of year | 13,558 | 12,037 | 11,151 |
Commercial | Acquisition and Development | |||
Activity in allowance for loan losses | |||
Balance, beginning of year | 2,062 | 1,114 | 959 |
Provision for loan losses | 1,142 | 938 | 146 |
Charge-offs | 0 | 0 | 0 |
Recoveries | 10 | 10 | 9 |
Balance, end of year | 3,214 | 2,062 | 1,114 |
Commercial | Commercial and Industrial | |||
Activity in allowance for loan losses | |||
Balance, beginning of year | 3,814 | 3,942 | 2,356 |
Provision for loan losses | 640 | 23 | 2,096 |
Charge-offs | 0 | (663) | (748) |
Recoveries | 51 | 512 | 238 |
Balance, end of year | 4,505 | 3,814 | 3,942 |
Commercial | Municipal | |||
Activity in allowance for loan losses | |||
Balance, beginning of year | 30 | 40 | 100 |
Provision for loan losses | (6) | (10) | (60) |
Charge-offs | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 |
Balance, end of year | 24 | 30 | 40 |
Consumer | |||
Activity in allowance for loan losses | |||
Balance, beginning of year | 3,000 | 3,686 | 3,466 |
Provision for loan losses | 887 | (590) | 320 |
Charge-offs | (410) | (162) | (260) |
Recoveries | 155 | 66 | 160 |
Balance, end of year | 3,632 | 3,000 | 3,686 |
Consumer | Residential Mortgage | |||
Activity in allowance for loan losses | |||
Balance, beginning of year | 2,785 | 3,362 | 3,147 |
Provision for loan losses | 669 | (517) | 203 |
Charge-offs | (50) | (92) | (114) |
Recoveries | 40 | 32 | 126 |
Balance, end of year | 3,444 | 2,785 | 3,362 |
Consumer | Installment and Other | |||
Activity in allowance for loan losses | |||
Balance, beginning of year | 215 | 324 | 319 |
Provision for loan losses | 218 | (73) | 117 |
Charge-offs | (360) | (70) | (146) |
Recoveries | 115 | 34 | 34 |
Balance, end of year | $ 188 | $ 215 | $ 324 |
LOANS AND ALLOWANCE FOR LOAN_12
LOANS AND ALLOWANCE FOR LOAN LOSSES - Summary of Ending Loan Balance Individually Evaluated for Impairment (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Loans allocated by: | ||
Individually evaluated for impairment | $ 21,265 | $ 7,253 |
Collectively evaluated for impairment | 2,129,967 | 1,972,733 |
Total Loans | 2,151,232 | 1,979,986 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 28 | 28 |
Collectively evaluated for impairment | 25,150 | 21,152 |
Allowance for loan losses, Total | 25,178 | 21,180 |
Commercial | ||
Loans allocated by: | ||
Individually evaluated for impairment | 18,305 | 4,135 |
Collectively evaluated for impairment | 1,702,267 | 1,592,604 |
Total Loans | 1,720,572 | 1,596,739 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 21,301 | 17,943 |
Allowance for loan losses, Total | 21,301 | 17,943 |
Commercial | Commercial Real Estate | ||
Loans allocated by: | ||
Individually evaluated for impairment | 2,848 | 3,885 |
Collectively evaluated for impairment | 1,164,401 | 985,933 |
Total Loans | 1,167,249 | 989,818 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 13,558 | 12,037 |
Allowance for loan losses, Total | 13,558 | 12,037 |
Commercial | Acquisition and Development | ||
Loans allocated by: | ||
Individually evaluated for impairment | 15,426 | 0 |
Collectively evaluated for impairment | 167,950 | 106,204 |
Total Loans | 183,376 | 106,204 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 3,214 | 2,062 |
Allowance for loan losses, Total | 3,214 | 2,062 |
Commercial | Commercial and Industrial | ||
Loans allocated by: | ||
Individually evaluated for impairment | 31 | 250 |
Collectively evaluated for impairment | 357,743 | 485,478 |
Total Loans | 357,774 | 485,728 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 4,505 | 3,814 |
Allowance for loan losses, Total | 4,505 | 3,814 |
Commercial | Municipal | ||
Loans allocated by: | ||
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 12,173 | 14,989 |
Total Loans | 12,173 | 14,989 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 24 | 30 |
Allowance for loan losses, Total | 24 | 30 |
Consumer | ||
Loans allocated by: | ||
Individually evaluated for impairment | 2,960 | 3,118 |
Collectively evaluated for impairment | 427,700 | 380,129 |
Total Loans | 430,660 | 383,247 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 28 | 28 |
Collectively evaluated for impairment | 3,604 | 2,972 |
Allowance for loan losses, Total | 3,632 | 3,000 |
Consumer | Residential Mortgage | ||
Loans allocated by: | ||
Individually evaluated for impairment | 2,920 | 3,078 |
Collectively evaluated for impairment | 415,675 | 362,539 |
Total Loans | 418,595 | 365,617 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 28 | 28 |
Collectively evaluated for impairment | 3,416 | 2,757 |
Allowance for loan losses, Total | 3,444 | 2,785 |
Consumer | Installment and other loans | ||
Loans allocated by: | ||
Individually evaluated for impairment | 40 | 40 |
Collectively evaluated for impairment | 12,025 | 17,590 |
Total Loans | 12,065 | 17,630 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 188 | 215 |
Allowance for loan losses, Total | 188 | 215 |
Unallocated | ||
Loans allocated by: | ||
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 0 | 0 |
Total Loans | 0 | 0 |
Allowance for loan losses allocated by: | ||
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 245 | 237 |
Allowance for loan losses, Total | $ 245 | $ 237 |
LOANS AND ALLOWANCE FOR LOAN_13
LOANS AND ALLOWANCE FOR LOAN LOSSES - Schedule of Accretable Yield of Purchased Impaired Loans (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||
Accretable yield, beginning of period | $ 2,661 | $ 3,438 |
Accretion of income | (949) | (1,093) |
Reclassifications from nonaccretable difference due to improvement in expected cash flows | 388 | 160 |
Other changes, net | 335 | 156 |
Accretable yield, end of period | $ 2,435 | $ 2,661 |
PREMISES AND EQUIPMENT - Summar
PREMISES AND EQUIPMENT - Summary of Premises and Equipment (Detail) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) branchLocation | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | $ 59,663 | $ 65,883 | |
Less accumulated depreciation | 30,335 | 31,838 | |
Bank premises and equipment, net | 29,328 | 34,045 | |
Depreciation expense | $ 2,100 | 2,300 | $ 3,200 |
Bank branch location closures | branchLocation | 5 | ||
Reduction to gross premised related to pending sale | $ 6,200 | ||
Reduction in accumulated depreciation, write-offs and write-downs related to pending sale | (2,900) | ||
Land | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 7,583 | 8,586 | |
Buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 24,813 | 27,852 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 5,359 | 5,593 | |
Furniture and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 21,849 | 23,681 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | $ 59 | $ 171 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Dec. 31, 2022 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 5 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 30 years |
LEASES - Right-of-use Assets, L
LEASES - Right-of-use Assets, Lease Liabilities and Other Information related to Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating lease ROU assets | $ 9,270 | $ 10,515 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other assets | Other assets |
Operating lease ROU liabilities | $ 9,976 | $ 11,119 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other liabilities | Other liabilities |
Weighted-average remaining lease term (in years) | 14 years 3 months 18 days | 14 years 7 months 6 days |
Weighted-average discount rate | 4.10% | 4.10% |
Cash paid for operating lease liabilities | $ 1,170 | $ 1,266 |
Operating lease expense | $ 1,406 | $ 1,544 |
LEASES - Maturities of Lease Li
LEASES - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2023 | $ 1,153 | |
2024 | 1,179 | |
2025 | 1,201 | |
2026 | 1,233 | |
2027 | 1,267 | |
Thereafter | 8,187 | |
Total payments due | 14,220 | |
Less: imputed interest | 4,244 | |
Total lease liabilities | $ 9,976 | $ 11,119 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) | 12 Months Ended | |||
Nov. 22, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill | $ 18,724,000 | $ 18,724,000 | ||
Goodwill impairment | $ 0 | 0 | 0 | |
Impairment of intangibles | 0 | 0 | $ 153,000 | |
Amortization expense | $ (1,105,000) | $ (1,275,000) | $ (1,569,000) |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Components of Other Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-lived Intangible Assets [Roll Forward] | |||
Balance, beginning of year | $ 4,183 | $ 5,458 | |
Amortization expense | (1,105) | (1,275) | $ (1,569) |
Ending Balance | $ 3,078 | $ 4,183 | $ 5,458 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortized Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 8,415 | $ 8,415 |
Accumulated Amortization | 5,337 | 4,232 |
Core deposit intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 8,390 | 8,390 |
Accumulated Amortization | 5,312 | 4,208 |
Other client relationship intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 25 | 25 |
Accumulated Amortization | $ 25 | $ 24 |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Estimated amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
2023 | $ 935 | ||
2024 | 766 | ||
2025 | 596 | ||
2026 | 427 | ||
2027 | 258 | ||
Thereafter | 96 | ||
Total | $ 3,078 | $ 4,183 | $ 5,458 |
INCOME TAXES - Summary of Incom
INCOME TAXES - Summary of Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Current expense | $ 5,170 | $ 7,072 | $ 6,602 |
Deferred (benefit) expense | (591) | 942 | (554) |
Income tax expense | $ 4,579 | $ 8,014 | $ 6,048 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Effective Income Tax Rate to Statutory Federal Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal tax rate | 21% | 21% | 21% |
Increase (decrease) resulting from: | |||
State taxes, net of federal benefit | 1.60% | 1.10% | 1% |
Tax exempt interest income | (4.10%) | (1.70%) | (2.00%) |
Income from life insurance | (1.30%) | (0.90%) | (1.10%) |
Disallowed interest expense | 0.30% | 0% | 0.10% |
Low-income housing credits and related expense | (0.20%) | (0.20%) | (0.80%) |
Share-based compensation and related expense | (0.50%) | 0.20% | 0% |
Other | 0.40% | 0.10% | 0.40% |
Effective income tax rate | 17.20% | 19.60% | 18.60% |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Income tax (benefit) expense related to net security (losses) and gains | $ (34,000) | $ 134,000 | $ (3,000) |
Income tax penalties or interest | 0 | 0 | $ 0 |
Accrued penalties | 0 | $ 0 | |
Federal operating loss carryforwards | 9,000,000 | ||
State and Local operating loss carryforwards | $ 9,000,000 |
INCOME TAXES - Summary of Defer
INCOME TAXES - Summary of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Allowance for loan losses | $ 5,594 | $ 4,655 |
Deferred compensation | 434 | 515 |
Retirement and salary continuation plans | 3,000 | 2,633 |
Share-based compensation | 774 | 681 |
Off-balance sheet reserves | 359 | 353 |
Nonaccrual loan interest | 467 | 220 |
Deferred loan fees | 493 | 1,604 |
Net unrealized losses on AFS securities | 10,405 | 0 |
Net unrealized losses on cash flow hedges | 204 | 0 |
Purchase accounting adjustments | 896 | 1,236 |
Bonus accrual | 1,241 | 930 |
Right-of-use lease liability | 2,194 | 2,444 |
Net operating loss carryforward | 1,974 | 2,218 |
Depreciation and other | 99 | 67 |
Total deferred tax assets | 28,134 | 17,556 |
Deferred tax liabilities: | ||
Depreciation | 0 | 368 |
Net unrealized gains on AFS securities | 0 | 1,183 |
Mortgage servicing rights | 884 | 887 |
Purchase accounting adjustments | 675 | 915 |
Right-of-use lease asset | 2,054 | 2,311 |
Investment in partnerships | 473 | 229 |
Other | 17 | 15 |
Total deferred tax liabilities | 4,103 | 5,908 |
Deferred tax asset, net | $ 24,031 | $ 11,648 |
RETIREMENT PLANS (Detail)
RETIREMENT PLANS (Detail) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) plan | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |||
Plan participant service requirement, period | 1 month | ||
Plan participant age required | 18 years | ||
Maximum annual contributions per employee | $ 61 | ||
Maximum annual contributions per employee, percent | 100% | ||
Employer matching contribution, percent of match of base contribution by employee | 0.50 | ||
Employer matching contribution, percent of employee contribution | 6% | ||
Employer contribution expense | $ 780 | $ 669 | $ 626 |
Deferred compensation arrangement | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Age at which a director or his beneficiaries will receive a monthly retirement benefit | 65 years | ||
Estimated present value of future benefits to be paid | $ 18 | 36 | |
Plan expense | 4 | 5 | 7 |
Supplemental discretionary deferred compensation plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Plan expense | 51 | 61 | 61 |
Trust account balance | 2,000 | 2,300 | |
Supplemental retirement and salary continuation plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Estimated present value of future benefits to be paid | 13,600 | 12,300 | |
Plan expense | $ 2,000 | 1,700 | 1,500 |
Number of supplemental retirement and salary continuation plans | plan | 2 | ||
Life insurance coverage post-retirement | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Estimated present value of future benefits to be paid | $ 1,700 | 1,600 | |
Plan expense | $ 105 | $ 104 | $ 25 |
SHARE-BASED COMPENSATION PLAN_2
SHARE-BASED COMPENSATION PLANS - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Apr. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options outstanding (in shares) | 0 | 0 | ||
Options exercisable (in shares) | 0 | 0 | ||
2011 Incentive Stock Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Increase in shares authorized (in shares) | 400,000 | |||
Number of shares reserved to be issued (in shares) | 1,281,920 | |||
Number of shares available to be issued (in shares) | 537,027 | |||
2011 Incentive Stock Plan | Restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 3 | $ 2.3 | $ 2 | |
Unrecognized compensation expense, weighted-average recognition period | 1 year 9 months 18 days | |||
Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares reserved to be issued (in shares) | 350,000 | |||
Number of shares available to be issued (in shares) | 145,595 | |||
Maximum shares purchase, as percentage of salary | 10% | |||
Percentage of value of the shares on the semi-annual offering | 95% |
SHARE-BASED COMPENSATION PLAN_3
SHARE-BASED COMPENSATION PLANS - Summary of Nonvested Restricted Shares Activity (Details) - 2011 Incentive Stock Plan - Restricted stock awards | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Shares | |
Nonvested shares, beginning of year (in shares) | shares | 274,697 |
Granted (in shares) | shares | 145,349 |
Forfeited (in shares) | shares | (33,606) |
Vested (in shares) | shares | (101,531) |
Nonvested shares, at end of year (in shares) | shares | 284,909 |
Weighted Average Grant Date Fair Value | |
Nonvested shares, beginning of year (in dollars per share) | $ / shares | $ 20.05 |
Granted (in dollars per share) | $ / shares | 24.95 |
Forfeited (in dollars per share) | $ / shares | 21.37 |
Vested (in dollars per share) | $ / shares | 20.19 |
Nonvested shares, at end of year (in dollars per share) | $ / shares | $ 22.35 |
SHARE-BASED COMPENSATION PLAN_4
SHARE-BASED COMPENSATION PLANS - Schedule of Restricted Shares Compensation Expense (Details) - 2011 Incentive Stock Plan - Restricted stock awards - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted share award expense | $ 2,012 | $ 1,901 | $ 1,710 |
Restricted share award federal tax benefit | 423 | 334 | 359 |
Fair value of shares vested | $ 2,498 | $ 1,539 | $ 1,384 |
SHARE-BASED COMPENSATION PLAN_5
SHARE-BASED COMPENSATION PLANS - Schedule of Employee Stock Purchase Plan Activity (Details) - Employee Stock Purchase Plan - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | |||
Shares purchased (in shares) | 5,885 | 8,755 | 7,831 |
Weighted average price of shares purchased (in dollars per share) | $ 22.53 | $ 15.58 | $ 14.85 |
Compensation expense recognized | $ 15 | $ 48 | $ 6 |
DEPOSITS - Narrative (Detail)
DEPOSITS - Narrative (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deposits [Abstract] | ||
Deposits held for assumption in connection with sale of bank branch | $ 31,307 | $ 0 |
Interest-bearing deposits held for assumption in connection with sale of bank branch | 23,500 | |
Non-interest-bearing deposits held for assumption in connection with sale of bank branch | 7,800 | |
Brokered time deposits | $ 0 | $ 0 |
DEPOSITS - Summary of Compositi
DEPOSITS - Summary of Composition of Deposits (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deposits [Abstract] | ||
Noninterest-bearing demand deposits | $ 494,131 | $ 553,238 |
Interest-bearing demand deposits | 987,158 | 903,155 |
Savings | 736,124 | 706,451 |
Time ($250,000 or less) | 214,484 | 258,064 |
Time (over $250,000) | 36,517 | 44,021 |
Total deposits | 2,476,246 | 2,464,929 |
Noninterest-Bearing Deposits Including Held For Assumption, Domestic | $ 501,963 | $ 553,238 |
DEPOSITS - Scheduled Maturities
DEPOSITS - Scheduled Maturities of Time Deposits (Detail) $ in Thousands | Dec. 31, 2022 USD ($) |
Deposits [Abstract] | |
2023 | $ 179,009 |
2024 | 56,780 |
2025 | 6,518 |
2026 | 3,890 |
2027 | 3,341 |
Thereafter | 1,463 |
Total | $ 251,001 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction, Loans To Related Party [Roll Forward] | ||
Balance, beginning of year | $ 904 | |
New loans | 225 | |
Repayments | (908) | |
Director and officer relationship changes | (130) | |
Balance, end of year | 91 | |
Deposits from related parties | $ 4,000 | $ 4,700 |
SHORT-TERM BORROWINGS - Summary
SHORT-TERM BORROWINGS - Summary of the Use of Short-Term Borrowings (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |||
Balance at year-end | $ 104,684 | $ 0 | $ 55,729 |
Weighted average interest rate at year-end | 4.45% | 0% | 0.41% |
Average balance during the year | $ 13,846 | $ 38,546 | $ 138,310 |
Average interest rate during the year | 3.97% | 0.33% | 0.67% |
Maximum month-end balance during the year | $ 104,684 | $ 55,729 | $ 178,729 |
SHORT-TERM BORROWINGS - Summa_2
SHORT-TERM BORROWINGS - Summary of the Use of Securities Sold Under Agreements to Repurchase (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |||
Balance at year-end | $ 17,251 | $ 23,301 | $ 19,466 |
Weighted average interest rate at year-end | 0.60% | 0.11% | 0.23% |
Average balance during the year | $ 22,294 | $ 22,888 | $ 18,064 |
Average interest rate during the year | 0.20% | 0.14% | 0.47% |
Maximum month-end balance during the year | $ 26,399 | $ 27,595 | $ 24,403 |
Fair value of securities underlying the agreements at year-end | $ 17,188 | $ 32,662 | $ 29,477 |
LONG-TERM DEBT - Schedule of Lo
LONG-TERM DEBT - Schedule of Long-Term Debt (Detail) - FHLB amortizing advance requiring monthly principal and interest payments, maturing - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Amount | ||
2025 | $ 1,455 | $ 1,896 |
Weighted Average rate | ||
2025 | 4.74% | 4.74% |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Detail) | Dec. 31, 2022 USD ($) bank | Dec. 31, 2021 USD ($) |
Line of Credit Facility [Line Items] | ||
Collateral for all outstanding loans | $ 1,000,000,000 | |
Additional availability at the FHLB based on qualifying collateral | 909,600,000 | |
Letters of credit | 1,000,000 | |
Letters of credit non-deposit | 1,200,000 | |
Available unsecured lines of credit | $ 30,000,000 | |
Number of correspondent banks | bank | 2 | |
Borrowings under lines of credit | $ 0 | $ 0 |
FHLB fixed rate advances maturing | ||
Line of Credit Facility [Line Items] | ||
New long term borrowings | 0 | 0 |
Line of Credit | Federal Home Loan Bank Program | ||
Line of Credit Facility [Line Items] | ||
Available unsecured lines of credit | $ 45,300,000 | $ 150,000,000 |
LONG-TERM DEBT - Summary of Fut
LONG-TERM DEBT - Summary of Future Principal Payments Required (Detail) $ in Thousands | Dec. 31, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 462 |
2024 | 485 |
2025 | 508 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total | $ 1,455 |
SUBORDINATED NOTES (Details)
SUBORDINATED NOTES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||
FHLB advances and other | $ 1,455 | |
Debt issuance costs | $ 474 | $ 537 |
Debt issuance cost amortization period | 10 years | |
Notes Payable | Subordinated Notes matures 2028 | ||
Debt Instrument [Line Items] | ||
FHLB advances and other | $ 32,000 | $ 32,000 |
Fixed interest rate, percentage | 6% | |
Notes Payable | Subordinated Notes matures 2028 | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 3.16% |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) contract customer derivativeInstrument broker swap | Dec. 31, 2021 USD ($) derivativeInstrument swap | Dec. 31, 2020 USD ($) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Swap fee income | $ 2,632 | $ 293 | $ 847 |
Cash collateral held by counterparty for derivatives | 5,400 | 260 | |
Cash collateral received from counterparty for derivatives | $ 8,500 | $ 490 | |
Number of new risk participation agreements | derivativeInstrument | 2 | 1 | |
Interest rate contract | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Number of derivatives | swap | 0 | ||
Number of customers | customer | 26 | ||
Number of third-party brokers | broker | 26 | ||
Interest rate contract | Designated as Hedging Instrument | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Number of derivatives | swap | 2 | ||
Terminated derivative, notional amount | $ 50,000 | ||
Reclassification of realized losses from AOCI | (398) | ||
Interest rate contract | Not Designated as Hedging Instrument | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, notional amount | $ 268,800 | $ 75,800 | |
Interest rate swaps | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Number of new interest rate swaps | swap | 14 | 3 | |
Swap fee income | $ 2,500 | $ 240 | |
Interest rate swaps | Designated as Hedging Instrument | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative liabilities | 0 | ||
Interest rate swaps | Designated as Hedging Instrument | Other liabilities | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative liabilities | 100,000 | ||
Interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, notional amount | 100,000 | ||
Interest rate swaps | Not Designated as Hedging Instrument | Other liabilities | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative liabilities | $ 128,385 | 37,915 | |
Interest Rate Cap | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Number of new interest rate caps | contract | 1 | ||
Interest rate cap fees | $ 14 | ||
Risk Participation Agreement | Agent Bank | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Upfront fee received | 140 | 53 | |
Risk Participation Agreement | Other liabilities | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, notional amount | 29,000 | 15,900 | |
Risk Participation Agreement | Other assets | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, notional amount | 4,900 | 0 | |
Risk Participation Agreement | Not Designated as Hedging Instrument | Other liabilities | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative liabilities | $ 29,019 | $ 15,855 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Summary of Fair Value of Derivative Instruments (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Designated as Hedging Instrument | ||
Fair Value | ||
Total derivatives | $ (973,000) | $ 0 |
Designated as Hedging Instrument | Interest rate swaps | ||
Notional Amount | ||
Derivative liabilities | 0 | |
Fair Value | ||
Derivative liabilities | 0 | |
Designated as Hedging Instrument | Other liabilities | Interest rate swaps | ||
Notional Amount | ||
Derivative liabilities | 100,000,000 | |
Fair Value | ||
Derivative liabilities | (973,000) | |
Not Designated as Hedging Instrument | ||
Fair Value | ||
Total derivatives | 297,000 | 409,000 |
Not Designated as Hedging Instrument | Purchased Options – Rate Cap | ||
Notional Amount | ||
Derivative assets | 0 | |
Fair Value | ||
Derivative assets | 0 | |
Not Designated as Hedging Instrument | Written Options – Rate Cap | ||
Notional Amount | ||
Derivative liabilities | 0 | |
Fair Value | ||
Derivative liabilities | 0 | |
Not Designated as Hedging Instrument | Risk Participation Agreement | ||
Notional Amount | ||
Derivative assets | 0 | |
Fair Value | ||
Derivative assets | 0 | |
Not Designated as Hedging Instrument | Other liabilities | Interest rate swaps | ||
Notional Amount | ||
Derivative liabilities | 128,385,000 | 37,915,000 |
Fair Value | ||
Derivative liabilities | (10,262,000) | (758,000) |
Not Designated as Hedging Instrument | Other liabilities | Written Options – Rate Cap | ||
Notional Amount | ||
Derivative liabilities | 6,000,000 | |
Fair Value | ||
Derivative liabilities | (29,000) | |
Not Designated as Hedging Instrument | Other liabilities | Risk Participation Agreement | ||
Notional Amount | ||
Derivative liabilities | 29,019,000 | 15,855,000 |
Fair Value | ||
Derivative liabilities | (69,000) | (2,000) |
Not Designated as Hedging Instrument | Other assets | Interest rate swaps | ||
Notional Amount | ||
Derivative assets | 128,385,000 | 37,915,000 |
Fair Value | ||
Derivative assets | 10,437,000 | 764,000 |
Not Designated as Hedging Instrument | Other assets | Purchased Options – Rate Cap | ||
Notional Amount | ||
Derivative assets | 6,000,000 | |
Fair Value | ||
Derivative assets | 29,000 | |
Not Designated as Hedging Instrument | Other assets | Risk Participation Agreement | ||
Notional Amount | ||
Derivative assets | 4,941,000 | |
Fair Value | ||
Derivative assets | 16,000 | |
Not Designated as Hedging Instrument | Other assets | Interest rate lock commitments with customers | ||
Notional Amount | ||
Derivative assets | 1,356,000 | 16,604,000 |
Fair Value | ||
Derivative assets | 35,000 | 353,000 |
Not Designated as Hedging Instrument | Other assets | Forward sale commitments | ||
Notional Amount | ||
Derivative assets | 3,483,000 | 8,665,000 |
Fair Value | ||
Derivative assets | $ 140,000 | $ 52,000 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Effect of Derivative Financial Instruments on OCI and Net Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount of (Loss) Gain Recognized in OCI on Derivative | $ (972) | $ 473 | $ (1,347) |
Reclassification adjustment for losses realized in net income | 0 | (757) | $ (117) |
Amount of Gain (Loss) Recognized in Income | (113) | (168) | |
Interest rate products | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount of (Loss) Gain Recognized in OCI on Derivative | (972) | 473 | |
Interest rate products | Interest Income | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Reclassification adjustment for losses realized in net income | 0 | ||
Interest rate products | Interest expense | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Reclassification adjustment for losses realized in net income | (757) | ||
Interest rate products | Other operating expenses | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Reclassification adjustment for losses realized in net income | 514 | ||
Amount of Gain (Loss) Recognized in Income | 30 | 41 | |
Risk Participation Agreement | Other operating expenses | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount of Gain (Loss) Recognized in Income | 88 | (2) | |
Interest rate lock commitments with customers | Mortgage banking activities | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount of Gain (Loss) Recognized in Income | (318) | (320) | |
Forward sale commitments | Mortgage banking activities | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount of Gain (Loss) Recognized in Income | $ 88 | $ 113 |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Summary of Interest Rate Swap Components (Details) - Interest rate swaps | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Weighted average pay rate | 3.81% | 0% |
Weighted average receive rate | 3.81% | 0% |
Weighted average maturity in years | 1 year 2 months 12 days | 0 years |
SHAREHOLDERS_ EQUITY AND REGU_3
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL - Narrative (Detail) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||||
Jan. 24, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 19, 2021 | Sep. 30, 2015 | |
Class of Stock [Line Items] | ||||||
Common stock reserved to be issued under dividend reinvestment and stock purchase plan (in shares) | 1,045,000 | |||||
Shares available to be issued under the plan (in shares) | 665,000 | |||||
Outstanding shares of common stock authorized to be repurchased (in shares) | 978,000 | 416,000 | ||||
Number of additional shares authorized to be repurchased | 562,000 | |||||
Shares repurchased under the program (in shares) | 818,941 | |||||
Total cost of shares repurchased under the program | $ 18.7 | |||||
Shares repurchased under the program, price per share (in dollars per share) | $ 22.78 | |||||
Stock available for future repurchases (in shares) | 159,059 | |||||
Stock available for future repurchases, percentage | 1% | |||||
Cash dividend declared by the Board (in dollars per share) | $ 0.76 | $ 0.74 | $ 0.68 | |||
Amount available for dividend distribution | $ 45.9 | |||||
Maximum amount available to loan nonbank affiliates | $ 29.3 | $ 27.9 | ||||
Subsequent Event | ||||||
Class of Stock [Line Items] | ||||||
Cash dividend declared by the Board (in dollars per share) | $ 0.20 |
SHAREHOLDERS_ EQUITY AND REGU_4
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL - Schedule of Actual and Required Capital Amounts and Ratios (Detail) $ in Thousands | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Orrstown Financial Services, Inc. | ||
Total risk-based capital: | ||
Actual, Amount | $ 304,589 | $ 297,823 |
Actual, Ratio | 0.127 | 0.150 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Amount | $ 250,939 | $ 208,617 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Ratio | 0.105 | 0.105 |
Tier 1 risk-based capital: | ||
Actual, Amount | $ 245,752 | $ 243,075 |
Actual, Ratio | 0.103 | 0.122 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Amount | $ 203,141 | $ 168,880 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Ratio | 0.085 | 0.085 |
Tier 1 common equity risk-based capital: | ||
Actual, Amount | $ 245,752 | $ 243,075 |
Actual, Ratio | 10.30% | 12.20% |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Amount | $ 167,293 | $ 139,078 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Ratio | 7% | 7% |
Tier 1 leverage capital: | ||
Actual, Amount | $ 245,752 | $ 243,075 |
Actual, Ratio | 0.085 | 0.085 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Amount | $ 116,325 | $ 114,384 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Ratio | 0.040 | 0.040 |
Orrstown Bank | ||
Total risk-based capital: | ||
Actual, Amount | $ 292,933 | $ 278,780 |
Actual, Ratio | 0.123 | 0.140 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Amount | $ 250,566 | $ 208,550 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Ratio | 0.105 | 0.105 |
To Be Well Capitalized Under Prompt Corrective Action Regulations, Amount | $ 238,634 | $ 198,619 |
To Be Well Capitalized Under Prompt Corrective Action Regulations, Ratio | 0.100 | 0.100 |
Tier 1 risk-based capital: | ||
Actual, Amount | $ 266,122 | $ 255,995 |
Actual, Ratio | 0.112 | 0.129 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Amount | $ 202,839 | $ 168,826 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Ratio | 0.085 | 0.085 |
To Be Well Capitalized Under Prompt Corrective Action Regulations, Amount | $ 190,907 | $ 158,895 |
To Be Well Capitalized Under Prompt Corrective Action Regulations, Ratio | 0.080 | 0.080 |
Tier 1 common equity risk-based capital: | ||
Actual, Amount | $ 266,122 | $ 255,995 |
Actual, Ratio | 11.20% | 12.90% |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Amount | $ 167,044 | $ 139,033 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Ratio | 7% | 7% |
To Be Well Capitalized Under Prompt Corrective Action Regulations, Amount | $ 155,112 | $ 129,102 |
To Be Well Capitalized Under Prompt Corrective Action Regulations, Ratio | 6.50% | 6.50% |
Tier 1 leverage capital: | ||
Actual, Amount | $ 266,122 | $ 255,995 |
Actual, Ratio | 0.092 | 0.089 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Amount | $ 116,219 | $ 114,470 |
For Capital Adequacy Purposes (includes applicable capital conservation buffer), Ratio | 0.040 | 0.040 |
To Be Well Capitalized Under Prompt Corrective Action Regulations, Amount | $ 145,273 | $ 143,087 |
To Be Well Capitalized Under Prompt Corrective Action Regulations, Ratio | 0.050 | 0.050 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |||
Net income | $ 22,037 | $ 32,881 | $ 26,463 |
Weighted average shares outstanding - basic (in shares) | 10,553 | 10,967 | 10,942 |
Dilutive effect of share-based compensation (in shares) | 153 | 139 | 92 |
Weighted average shares outstanding - diluted (in shares) | 10,706 | 11,106 | 11,034 |
Per share information: | |||
Basic earnings per share (in dollars per share) | $ 2.09 | $ 3 | $ 2.42 |
Diluted earnings per share (in dollars per share) | $ 2.06 | $ 2.96 | $ 2.40 |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Detail) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Average outstanding stock options not included in computation of earnings per share (in shares) | 0 | 0 | 16,109 |
Restricted Stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Average outstanding stock options not included in computation of earnings per share (in shares) | 0 | 0 | 16,109 |
FINANCIAL INSTRUMENTS WITH OF_3
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - Schedule of Commitments and Conditional Obligations (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Home equity – lines of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | $ 296,213 | $ 261,580 |
1-4 family residential construction loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 49,538 | 40,348 |
Commercial real estate, construction and land development loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 156,560 | 124,488 |
Commercial, industrial and other loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 338,286 | 378,996 |
Standby letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | $ 23,229 | $ 19,724 |
FINANCIAL INSTRUMENTS WITH OF_4
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - Narrative (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |||
Reserve in other liabilities | $ 1,600 | $ 1,600 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Reserve in other liabilities | 1,600 | 1,600 | |
Off-balance sheet credit exposures expense | 28 | 57 | $ 511 |
MPF Program | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total outstanding balance of loans sold under the MPF Program | 10,700 | 13,500 | |
Limited recourse back on loans | $ 387 | $ 714 |
FAIR VALUE - Summary of Assets
FAIR VALUE - Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investment securities: | ||
Investment securities | $ 513,728 | $ 472,438 |
U.S. Treasury securities | ||
Investment securities: | ||
Investment securities | 17,291 | 19,702 |
U.S. government agencies | ||
Investment securities: | ||
Investment securities | 5,135 | |
States and political subdivisions | ||
Investment securities: | ||
Investment securities | 197,414 | 193,370 |
GSE residential MBSs | ||
Investment securities: | ||
Investment securities | 59,402 | 40,726 |
GSE residential CMOs | ||
Investment securities: | ||
Investment securities | 68,378 | 65,922 |
Non-agency CMOs | ||
Investment securities: | ||
Investment securities | 39,758 | 29,698 |
Other | ||
Investment securities: | ||
Investment securities | 377 | 399 |
Fair Value, Measurements, Recurring | ||
Investment securities: | ||
Loans held for sale | 10,880 | 8,868 |
Totals | 535,125 | 482,423 |
Fair Value, Measurements, Recurring | Interest rate swaps | ||
Investment securities: | ||
Derivatives | 10,517 | 1,117 |
Financial Liabilities | ||
Derivatives | 11,333 | 760 |
Fair Value, Measurements, Recurring | U.S. Treasury securities | ||
Investment securities: | ||
Investment securities | 17,291 | 19,702 |
Fair Value, Measurements, Recurring | U.S. government agencies | ||
Investment securities: | ||
Investment securities | 5,135 | |
Fair Value, Measurements, Recurring | States and political subdivisions | ||
Investment securities: | ||
Investment securities | 197,414 | 193,370 |
Fair Value, Measurements, Recurring | GSE residential MBSs | ||
Investment securities: | ||
Investment securities | 59,402 | 40,726 |
Fair Value, Measurements, Recurring | GSE residential CMOs | ||
Investment securities: | ||
Investment securities | 68,378 | 65,922 |
Fair Value, Measurements, Recurring | Non-agency CMOs | ||
Investment securities: | ||
Investment securities | 39,758 | 29,698 |
Fair Value, Measurements, Recurring | Asset-backed | ||
Investment securities: | ||
Investment securities | 125,973 | 122,621 |
Fair Value, Measurements, Recurring | Other | ||
Investment securities: | ||
Investment securities | 377 | 399 |
Fair Value, Measurements, Recurring | Level 1 | ||
Investment securities: | ||
Loans held for sale | 0 | 0 |
Totals | 17,668 | 20,101 |
Fair Value, Measurements, Recurring | Level 1 | Interest rate swaps | ||
Investment securities: | ||
Derivatives | 0 | 0 |
Financial Liabilities | ||
Derivatives | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | U.S. Treasury securities | ||
Investment securities: | ||
Investment securities | 17,291 | 19,702 |
Fair Value, Measurements, Recurring | Level 1 | U.S. government agencies | ||
Investment securities: | ||
Investment securities | 0 | |
Fair Value, Measurements, Recurring | Level 1 | States and political subdivisions | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | GSE residential MBSs | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | GSE residential CMOs | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Non-agency CMOs | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Asset-backed | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Other | ||
Investment securities: | ||
Investment securities | 377 | 399 |
Fair Value, Measurements, Recurring | Level 2 | ||
Investment securities: | ||
Loans held for sale | 10,880 | 8,868 |
Totals | 490,229 | 438,822 |
Fair Value, Measurements, Recurring | Level 2 | Interest rate swaps | ||
Investment securities: | ||
Derivatives | 10,482 | 764 |
Financial Liabilities | ||
Derivatives | 11,333 | 760 |
Fair Value, Measurements, Recurring | Level 2 | U.S. Treasury securities | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | U.S. government agencies | ||
Investment securities: | ||
Investment securities | 5,135 | |
Fair Value, Measurements, Recurring | Level 2 | States and political subdivisions | ||
Investment securities: | ||
Investment securities | 191,488 | 183,171 |
Fair Value, Measurements, Recurring | Level 2 | GSE residential MBSs | ||
Investment securities: | ||
Investment securities | 59,402 | 40,726 |
Fair Value, Measurements, Recurring | Level 2 | GSE residential CMOs | ||
Investment securities: | ||
Investment securities | 68,378 | 65,922 |
Fair Value, Measurements, Recurring | Level 2 | Non-agency CMOs | ||
Investment securities: | ||
Investment securities | 18,491 | 16,750 |
Fair Value, Measurements, Recurring | Level 2 | Asset-backed | ||
Investment securities: | ||
Investment securities | 125,973 | 122,621 |
Fair Value, Measurements, Recurring | Level 2 | Other | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | ||
Investment securities: | ||
Loans held for sale | 0 | 0 |
Totals | 27,228 | 23,500 |
Fair Value, Measurements, Recurring | Level 3 | Interest rate swaps | ||
Investment securities: | ||
Derivatives | 35 | 353 |
Financial Liabilities | ||
Derivatives | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | U.S. Treasury securities | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | U.S. government agencies | ||
Investment securities: | ||
Investment securities | 0 | |
Fair Value, Measurements, Recurring | Level 3 | States and political subdivisions | ||
Investment securities: | ||
Investment securities | 5,926 | 10,199 |
Fair Value, Measurements, Recurring | Level 3 | GSE residential MBSs | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | GSE residential CMOs | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Non-agency CMOs | ||
Investment securities: | ||
Investment securities | 21,267 | 12,948 |
Fair Value, Measurements, Recurring | Level 3 | Asset-backed | ||
Investment securities: | ||
Investment securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Other | ||
Investment securities: | ||
Investment securities | $ 0 | $ 0 |
FAIR VALUE - Narrative (Detail)
FAIR VALUE - Narrative (Detail) | 12 Months Ended | |||
Dec. 23, 2022 | Dec. 31, 2022 USD ($) security | Dec. 31, 2021 USD ($) security | Dec. 31, 2020 USD ($) | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Fair value option, aggregate fair value exceeded principal amount | $ (1,200,000) | $ 150,000 | ||
OREO balances | 0 | 0 | ||
Valuation allowance for impairment of assets | 0 | 79,000 | ||
Mortgage servicing rights impairment | (79,000) | (987,000) | ||
Purchase and Assumption Agreement, deposit liability transferred, premium percent | 6% | |||
Impaired loans | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Changes in fair value of impaired loans and foreclosed real estate | 0 | $ (247,000) | $ 244,000 | |
Interest rate lock commitments with customers | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Increase (decrease) in fair value | $ 1,000 | |||
Level 3 | Municipal Bond | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Number of investment securities | security | 1 | 1 | ||
Level 3 | Non-agency CMOs | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Number of investment securities | security | 1 | |||
Level 3 | Collateralized Mortgage Obligations | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Number of investment securities | security | 3 | |||
Level 3 | Measurement Input, Pull Through | Interest rate lock commitments with customers | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Asset, measurement input (percent) | 0.92 | |||
Level 3 | Measurement Input, Pull Through Increase (Decrease) | Interest rate lock commitments with customers | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Asset, measurement input (percent) | 0.05 |
FAIR VALUE - Level 3 Fair Value
FAIR VALUE - Level 3 Fair Value Measurement Activity (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) investment | Dec. 31, 2021 USD ($) investment | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Number of investment transfers | investment | 0 | 0 |
Level 3 | Investment securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of year | $ 23,147 | $ 31,503 |
Unrealized (loss) gain included in OCI | (1,859) | 31 |
Purchases | 21,237 | 0 |
Net discount accretion | 56 | 0 |
Principal payments and other | (10) | (4,842) |
Sales | (3,053) | (3,545) |
Calls | (12,154) | 0 |
Balance, end of year | 27,193 | 23,147 |
Level 3 | Investment securities | Collateralized Mortgage Obligations | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
OTTI | (171) | 0 |
Level 3 | Interest rate lock commitments with customers | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of year | 353 | 673 |
Total gains (losses) included in earnings | (318) | (320) |
Balance, end of year | $ 35 | $ 353 |
FAIR VALUE - Summary of Asset_2
FAIR VALUE - Summary of Assets Measured at Fair Value on Nonrecurring Basis (Detail) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | $ 520 | $ 1,392 |
Mortgage servicing rights | 0 | 322 |
Commercial real estate | Owner-occupied | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 116 | 751 |
Commercial real estate | Non-owner occupied residential | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 9 | 24 |
Residential mortgage | First lien | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 309 | 545 |
Residential mortgage | Home equity – lines of credit | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 86 | 72 |
Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Level 1 | Commercial real estate | Owner-occupied | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Level 1 | Commercial real estate | Non-owner occupied residential | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Level 1 | Residential mortgage | First lien | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Level 1 | Residential mortgage | Home equity – lines of credit | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Level 2 | Commercial real estate | Owner-occupied | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Level 2 | Commercial real estate | Non-owner occupied residential | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Level 2 | Residential mortgage | First lien | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Level 2 | Residential mortgage | Home equity – lines of credit | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 0 | 0 |
Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 520 | 1,392 |
Mortgage servicing rights | 0 | 322 |
Level 3 | Commercial real estate | Owner-occupied | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 116 | 751 |
Level 3 | Commercial real estate | Non-owner occupied residential | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 9 | 24 |
Level 3 | Residential mortgage | First lien | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | 309 | 545 |
Level 3 | Residential mortgage | Home equity – lines of credit | ||
Assets, Fair Value Disclosure [Abstract] | ||
Impaired loans | $ 86 | $ 72 |
FAIR VALUE - Schedule of Additi
FAIR VALUE - Schedule of Additional Qualitative Information (Detail) - Fair Value, Measurements, Nonrecurring $ in Thousands | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Impaired loans | Measurement Input, Discount Rate | Minimum | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Asset, measurement input (percent) | 0.0608 | |
Impaired loans | Measurement Input, Discount Rate | Maximum | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Asset, measurement input (percent) | 0.1793 | |
Impaired loans | Appraisal of collateral | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Fair Value Estimate | $ 520 | $ 1,392 |
Impaired loans | Appraisal of collateral | Minimum | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Asset, measurement input (percent) | 0.0608 | |
Impaired loans | Appraisal of collateral | Maximum | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Asset, measurement input (percent) | 0.1793 | |
Impaired loans | Appraisal of collateral | Measurement Input, Discount Rate | Minimum | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Asset, measurement input (percent) | 0.10 | 0.10 |
Impaired loans | Appraisal of collateral | Measurement Input, Discount Rate | Maximum | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Asset, measurement input (percent) | 0.25 | 0.25 |
Mortgage servicing rights | Discounted cash flows | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Fair Value Estimate | $ 322 | |
Mortgage servicing rights | Discounted cash flows | Measurement Input, Discount Rate | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Asset, measurement input (percent) | 0.0903 | |
Mortgage servicing rights | Discounted cash flows | Measurement Input, Constant Prepayment Rate | ||
Fair Value Inputs and Valuation Techniques [Line Items] | ||
Asset, measurement input (percent) | 0.1260 |
FAIR VALUE - Schedule of Carryi
FAIR VALUE - Schedule of Carrying Amount and Estimated Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financial Assets | ||
Interest-bearing deposits with banks | $ 32,346 | $ 187,493 |
Restricted investments in bank stock | 10,642 | 7,252 |
Investment securities | 513,728 | 472,438 |
Carrying Amount | ||
Financial Assets | ||
Cash and due from banks | 28,477 | 21,217 |
Interest-bearing deposits with banks | 32,346 | 187,493 |
Restricted investments in bank stock | 10,642 | 7,252 |
Investment securities | 513,728 | 472,438 |
Loans held for sale | 10,880 | 8,868 |
Loans, net of allowance for loan losses | 2,126,054 | 1,958,806 |
Accrued interest receivable | 11,027 | 8,234 |
Financial Liabilities | ||
Deposits | 2,444,939 | 2,464,929 |
Deposits held for assumption in connection with sale of bank branches | 31,307 | |
Securities sold under agreements to repurchase | 17,251 | 23,301 |
FHLB advances and other | 106,139 | 1,896 |
Subordinated notes | 32,026 | 31,963 |
Accrued interest payable | 457 | 154 |
Off-balance sheet instruments | 0 | 0 |
Carrying Amount | Interest rate swaps | ||
Financial Assets | ||
Derivatives | 10,517 | 1,117 |
Financial Liabilities | ||
Derivatives | 11,333 | 760 |
Fair Value | ||
Financial Liabilities | ||
Subordinated notes | 31,815 | |
Fair Value | Fair Value | ||
Financial Assets | ||
Cash and due from banks | 28,477 | 21,217 |
Interest-bearing deposits with banks | 32,346 | 187,493 |
Investment securities | 513,728 | 472,438 |
Loans held for sale | 10,880 | 8,868 |
Loans, net of allowance for loan losses | 1,991,164 | 1,946,365 |
Accrued interest receivable | 11,027 | 8,235 |
Financial Liabilities | ||
Deposits | 2,440,660 | 2,466,191 |
Deposits held for assumption in connection with sale of bank branches | 29,429 | |
Securities sold under agreements to repurchase | 17,251 | 23,301 |
FHLB advances and other | 106,141 | 2,035 |
Subordinated notes | 31,321 | |
Accrued interest payable | 457 | 154 |
Off-balance sheet instruments | 0 | 0 |
Fair Value | Fair Value | Interest rate swaps | ||
Financial Assets | ||
Derivatives | 10,517 | 1,117 |
Financial Liabilities | ||
Derivatives | 11,333 | 760 |
Fair Value | Level 1 | ||
Financial Assets | ||
Cash and due from banks | 28,477 | 21,217 |
Interest-bearing deposits with banks | 32,346 | 187,493 |
Investment securities | 17,668 | 20,101 |
Loans held for sale | 0 | 0 |
Loans, net of allowance for loan losses | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Financial Liabilities | ||
Deposits | 0 | 0 |
Deposits held for assumption in connection with sale of bank branches | 0 | |
Securities sold under agreements to repurchase | 0 | 0 |
FHLB advances and other | 0 | 0 |
Subordinated notes | 0 | 0 |
Accrued interest payable | 0 | 0 |
Off-balance sheet instruments | 0 | 0 |
Fair Value | Level 1 | Interest rate swaps | ||
Financial Assets | ||
Derivatives | 0 | 0 |
Financial Liabilities | ||
Derivatives | 0 | 0 |
Fair Value | Level 2 | ||
Financial Assets | ||
Cash and due from banks | 0 | 0 |
Interest-bearing deposits with banks | 0 | 0 |
Investment securities | 468,867 | 429,190 |
Loans held for sale | 10,880 | 8,868 |
Loans, net of allowance for loan losses | 0 | 0 |
Accrued interest receivable | 4,441 | 2,203 |
Financial Liabilities | ||
Deposits | 2,440,660 | 2,466,191 |
Deposits held for assumption in connection with sale of bank branches | 29,429 | |
Securities sold under agreements to repurchase | 17,251 | 23,301 |
FHLB advances and other | 106,141 | 2,035 |
Subordinated notes | 31,321 | 31,815 |
Accrued interest payable | 457 | 154 |
Off-balance sheet instruments | 0 | 0 |
Fair Value | Level 2 | Interest rate swaps | ||
Financial Assets | ||
Derivatives | 10,482 | 764 |
Financial Liabilities | ||
Derivatives | 11,333 | 760 |
Fair Value | Level 3 | ||
Financial Assets | ||
Cash and due from banks | 0 | 0 |
Interest-bearing deposits with banks | 0 | 0 |
Investment securities | 27,193 | 23,147 |
Loans held for sale | 0 | 0 |
Loans, net of allowance for loan losses | 1,991,164 | 1,946,365 |
Accrued interest receivable | 6,586 | 6,032 |
Financial Liabilities | ||
Deposits | 0 | 0 |
Deposits held for assumption in connection with sale of bank branches | 0 | |
Securities sold under agreements to repurchase | 0 | 0 |
FHLB advances and other | 0 | 0 |
Subordinated notes | 0 | 0 |
Accrued interest payable | 0 | 0 |
Off-balance sheet instruments | 0 | 0 |
Fair Value | Level 3 | Interest rate swaps | ||
Financial Assets | ||
Derivatives | 35 | 353 |
Financial Liabilities | ||
Derivatives | $ 0 | $ 0 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CLIENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Receivables from customers | $ 641 | $ 702 | $ 661 |
Revenue from contracts with clients | 19,464 | 18,933 | 16,477 |
Other service charges | 456 | 356 | 444 |
Mortgage banking activities | 407 | 5,909 | 5,274 |
Gain on sale of portfolio loans | 0 | 0 | 2,803 |
Income from life insurance | 2,339 | 2,273 | 2,261 |
Swap dealer fee income | 2,632 | 293 | 639 |
Other income | 1,814 | 750 | 427 |
Investment securities (losses) gains | (160) | 638 | (16) |
Total noninterest income | 26,952 | 29,152 | 28,309 |
Service charges on deposit accounts and ATM fees | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contracts with clients | 4,157 | 3,337 | 3,113 |
Swap referral fee income | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contracts with clients | 0 | 0 | 208 |
Trust and investment management income | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contracts with clients | 7,631 | 7,896 | 6,912 |
Brokerage income | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contracts with clients | 3,620 | 3,571 | 2,821 |
Interchange income | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contracts with clients | $ 4,056 | $ 4,129 | $ 3,423 |
ORRSTOWN FINANCIAL SERVICES, _3
ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION - Condensed Balance Sheets (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Assets | ||||
Cash in bank subsidiary | $ 28,477 | $ 21,217 | ||
Other assets | 42,333 | 31,440 | ||
Total assets | 2,922,408 | 2,834,565 | ||
Liabilities | ||||
Subordinated notes | 32,026 | 31,963 | ||
Accrued interest and other liabilities | 61,850 | 40,820 | ||
Total liabilities | 2,693,512 | 2,562,909 | ||
Shareholders’ Equity | ||||
Common stock | 584 | 586 | ||
Additional paid-in capital | 189,264 | 189,689 | ||
Retained earnings | 92,473 | 78,700 | ||
Accumulated other comprehensive (loss) income | (39,913) | 4,449 | ||
Treasury stock | (13,512) | (1,768) | ||
Total shareholders’ equity | 228,896 | 271,656 | $ 246,249 | $ 223,249 |
Total liabilities and shareholders’ equity | 2,922,408 | 2,834,565 | ||
Orrstown Financial Services, Inc. | ||||
Assets | ||||
Cash in bank subsidiary | 8,477 | 18,545 | ||
Investment in bank subsidiary | 249,266 | 284,577 | ||
Other assets | 3,466 | 553 | ||
Total assets | 261,209 | 303,675 | ||
Liabilities | ||||
Subordinated notes | 32,026 | 31,963 | ||
Accrued interest and other liabilities | 287 | 56 | ||
Total liabilities | 32,313 | 32,019 | ||
Shareholders’ Equity | ||||
Common stock | 584 | 586 | ||
Additional paid-in capital | 189,264 | 189,689 | ||
Retained earnings | 92,473 | 78,700 | ||
Accumulated other comprehensive (loss) income | (39,913) | 4,449 | ||
Treasury stock | (13,512) | (1,768) | ||
Total shareholders’ equity | 228,896 | 271,656 | ||
Total liabilities and shareholders’ equity | $ 261,209 | $ 303,675 |
ORRSTOWN FINANCIAL SERVICES, _4
ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION - Condensed Statements of Income (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income | |||
Other income | $ 1,814 | $ 750 | $ 427 |
Expenses | |||
Interest on subordinated notes | 2,013 | 2,009 | 2,006 |
Share-based compensation | 2,154 | 1,949 | 2,092 |
Provision for legal settlement | 13,000 | 0 | 0 |
Income tax benefit | 4,579 | 8,014 | 6,048 |
Net income | 22,037 | 32,881 | 26,463 |
Orrstown Financial Services, Inc. | |||
Income | |||
Dividends from bank subsidiary | 27,000 | 16,000 | 14,000 |
Interest income from bank subsidiary | 29 | 25 | 76 |
Other income | 16 | 119 | 62 |
Total income | 27,045 | 16,144 | 14,138 |
Expenses | |||
Interest on subordinated notes | 2,013 | 2,009 | 2,006 |
Share-based compensation | 511 | 433 | 463 |
Management fee to bank subsidiary | 1,341 | 1,089 | 1,254 |
Provision for legal settlement | 13,000 | 0 | 0 |
Other expenses | 912 | 704 | 1,324 |
Total expenses | 17,777 | 4,235 | 5,047 |
Income before income tax benefit and equity in undistributed income of subsidiaries | 9,268 | 11,909 | 9,091 |
Income tax benefit | (3,726) | (863) | (1,022) |
Income before equity in undistributed income of subsidiaries | 12,994 | 12,772 | 10,113 |
Equity in undistributed income of subsidiaries | 9,043 | 20,109 | 16,350 |
Net income | $ 22,037 | $ 32,881 | $ 26,463 |
ORRSTOWN FINANCIAL SERVICES, _5
ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION - Condensed Statements of Cash Flows (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net income | $ 22,037 | $ 32,881 | $ 26,463 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | |||
Deferred income taxes | (591) | 942 | (1,973) |
Share-based compensation | 2,154 | 1,949 | 2,092 |
Net change in other assets | (8,819) | (2,046) | 6,660 |
Net cash provided by operating activities | 36,192 | 40,811 | 30,171 |
Cash flows from investing activities: | |||
Net cash used in investing activities | (270,991) | (2,013) | (292,565) |
Cash flows from financing activities: | |||
Dividends paid | (8,264) | (8,280) | (7,610) |
Payments to repurchase common stock | (14,172) | (1,869) | (1,170) |
Net cash provided by financing activities | 86,912 | 44,654 | 331,689 |
Net (decrease) increase in cash and cash equivalents | (147,887) | 83,452 | 69,295 |
Cash and cash equivalents at beginning of year | 208,710 | 125,258 | 55,963 |
Cash and cash equivalents at end of year | 60,823 | 208,710 | 125,258 |
Orrstown Financial Services, Inc. | |||
Cash flows from operating activities: | |||
Net income | 22,037 | 32,881 | 26,463 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | |||
Amortization | 63 | 59 | 56 |
Deferred income taxes | (7) | (4) | (39) |
Equity in undistributed income of subsidiaries | (9,043) | (20,109) | (16,350) |
Share-based compensation | 511 | 433 | 463 |
Net change in other liabilities | 231 | (40) | (141) |
Net change in other assets | (2,915) | 375 | (221) |
Net cash provided by operating activities | 10,877 | 13,595 | 10,231 |
Cash flows from investing activities: | |||
Net cash paid for acquisitions | 0 | 0 | (85) |
Net cash used in investing activities | 0 | 0 | (85) |
Cash flows from financing activities: | |||
Dividends paid | (8,264) | (8,280) | (7,610) |
Proceeds from issuance of common stock | 1,644 | 1,516 | 1,628 |
Payments to repurchase common stock | (14,468) | (2,383) | (1,887) |
Other, net | 143 | 136 | 116 |
Net cash provided by financing activities | (20,945) | (9,011) | (7,753) |
Net (decrease) increase in cash and cash equivalents | (10,068) | 4,584 | 2,393 |
Cash and cash equivalents at beginning of year | 18,545 | 13,961 | 11,568 |
Cash and cash equivalents at end of year | $ 8,477 | $ 18,545 | $ 13,961 |
CONTINGENCIES (Detail)
CONTINGENCIES (Detail) $ in Thousands | 1 Months Ended | ||
Dec. 07, 2022 USD ($) | Apr. 30, 2020 USD ($) | Dec. 31, 2022 claim | |
Commitments and Contingencies Disclosure [Abstract] | |||
Number of legal proceedings that might have a material effect on the results of operations | claim | 0 | ||
Litigation settlement, amount awarded to other party | $ 135 | ||
Loss Contingencies [Line Items] | |||
Litigation settlement, amount awarded to other party | $ 135 | ||
SEPTA Class Action | Settled Litigation | |||
Commitments and Contingencies Disclosure [Abstract] | |||
Litigation settlement, amount awarded to other party | $ 15,000 | ||
Loss Contingencies [Line Items] | |||
Indemnification costs | 13,000 | ||
Litigation settlement, amount awarded to other party | $ 15,000 |