Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 28, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 001-39036 | ||
Entity Registrant Name | ALERUS FINANCIAL CORPORATION | ||
Entity Incorporation, State | DE | ||
Entity Tax Identification Number | 45-0375407 | ||
Entity Address, Address Line One | 401 Demers Avenue | ||
Entity Address, City or Town | Grand Forks | ||
Entity Address, State or Province | ND | ||
Entity Address, Postal Zip Code | 58201 | ||
City Area Code | 701 | ||
Local Phone Number | 795-3200 | ||
Title of 12(b) Security | Common Stock, par value $1.00 per share | ||
Trading Symbol | ALRS | ||
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 | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 20,058,582 | ||
Entity Public Float | $ 389,265,666 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000903419 | ||
Amendment Flag | false | ||
Auditor Name | CliftonLarsonAllen LLP | ||
Auditor Firm ID | 655 | ||
Auditor Location | Minneapolis, Minnesota |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and cash equivalents | $ 58,242 | $ 242,311 |
Available-for-sale, at fair value | 717,324 | 853,649 |
Held-to-maturity, at carrying value | 321,902 | 352,061 |
Loans held for sale | 9,488 | 46,490 |
Loans | 2,443,994 | 1,758,020 |
Allowance for loan losses | (31,146) | (31,572) |
Net loans | 2,412,848 | 1,726,448 |
Land, premises and equipment, net | 17,288 | 18,370 |
Operating lease right-of-use assets | 5,419 | 3,727 |
Accrued interest receivable | 12,869 | 8,537 |
Bank-owned life insurance | 33,991 | 33,156 |
Goodwill | 47,087 | 31,490 |
Other intangible assets | 22,455 | 20,250 |
Servicing rights | 2,643 | 1,880 |
Deferred income taxes, net | 42,369 | 11,614 |
Other assets | 75,712 | 42,708 |
Total assets | 3,779,637 | 3,392,691 |
Deposits | ||
Noninterest-bearing | 860,987 | 938,840 |
Interest-bearing | 2,054,497 | 1,981,711 |
Total deposits | 2,915,484 | 2,920,551 |
Short-term borrowings | 378,080 | |
Long-term debt | 58,843 | 58,933 |
Operating lease liabilities | 5,902 | 4,275 |
Accrued expenses and other liabilities | 64,456 | 49,529 |
Total liabilities | 3,422,765 | 3,033,288 |
Stockholders' equity | ||
Preferred stock, $1 par value, 2,000,000 shares authorized: 0 issued and outstanding | ||
Common stock, $1 par value, 30,000,000 shares authorized: 19,991,681 and 17,212,588 issued and outstanding | 19,992 | 17,213 |
Additional paid-in capital | 155,095 | 92,878 |
Retained earnings | 280,426 | 253,567 |
Accumulated other comprehensive income (loss) | (98,641) | (4,255) |
Total stockholders' equity | 356,872 | 359,403 |
Total liabilities and stockholders' equity | $ 3,779,637 | $ 3,392,691 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Preferred stock, par value | $ 1 | $ 1 |
Preferred Stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 19,991,681 | 17,212,588 |
Common stock, shares outstanding | 19,991,681 | 17,212,588 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Interest Income | |||
Loans, including fees | $ 89,907 | $ 78,133 | $ 86,425 |
Taxable | 23,260 | 13,001 | 7,798 |
Exempt from federal income taxes | 848 | 925 | 949 |
Other | 1,562 | 598 | 930 |
Total interest income | 115,577 | 92,657 | 96,102 |
Interest Expense | |||
Deposits | 9,169 | 3,661 | 8,843 |
Short-term borrowings | 4,339 | ||
Long-term debt | 2,340 | 1,897 | 3,413 |
Total interest expense | 15,848 | 5,558 | 12,256 |
Net interest income | 99,729 | 87,099 | 83,846 |
Provision for loan losses | (3,500) | 10,900 | |
Net interest income after provision for loan losses | 99,729 | 90,599 | 72,946 |
Noninterest Income | |||
Mortgage banking | 16,921 | 48,502 | 61,641 |
Net gains (losses) on investment securities | 125 | 2,737 | |
Other | 4,863 | 4,604 | 5,177 |
Total noninterest income | 111,223 | 147,387 | 149,371 |
Noninterest Expense | |||
Compensation | 80,656 | 93,386 | 89,206 |
Employee taxes and benefits | 21,915 | 22,033 | 20,050 |
Occupancy and equipment expense | 7,605 | 8,148 | 10,058 |
Business services, software and technology expense | 19,487 | 20,486 | 19,135 |
Intangible amortization expense | 4,754 | 4,380 | 3,961 |
Professional fees and assessments | 8,367 | 6,292 | 4,834 |
Marketing and business development | 3,254 | 3,182 | 3,133 |
Supplies and postage | 2,440 | 2,361 | 2,174 |
Travel | 1,182 | 442 | 359 |
Mortgage and lending expenses | 2,183 | 4,250 | 5,707 |
Other | 6,927 | 3,949 | 5,182 |
Total noninterest expense | 158,770 | 168,909 | 163,799 |
Income before income taxes | 52,182 | 69,077 | 58,518 |
Income tax expense | 12,177 | 16,396 | 13,843 |
Net income | $ 40,005 | $ 52,681 | $ 44,675 |
Per Common Share Data | |||
Basic earnings per common share | $ 2.12 | $ 3.02 | $ 2.57 |
Diluted earnings per common share | 2.10 | 2.97 | 2.52 |
Dividends declared per common share | $ 0.70 | $ 0.63 | $ 0.60 |
Average common shares outstanding | 18,640 | 17,189 | 17,106 |
Diluted average common shares outstanding | 18,884 | 17,486 | 17,438 |
Retirement and Benefit Services | |||
Noninterest Income | |||
Revenue | $ 67,135 | $ 71,709 | $ 60,956 |
Wealth Management | |||
Noninterest Income | |||
Revenue | 20,870 | 21,052 | 17,451 |
Deposit Account | |||
Noninterest Income | |||
Revenue | $ 1,434 | $ 1,395 | $ 1,409 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Comprehensive Income | |||
Net Income | $ 40,005 | $ 52,681 | $ 44,675 |
Other Comprehensive Income (Loss), Net of Tax | |||
Unrealized gains (losses) on available-for-sale securities | (125,634) | (19,433) | 14,355 |
Accretion of (gains) losses on debt securities reclassified to held-to-maturity | (382) | (326) | |
Reclassification adjustment for losses (gains) realized in income | (125) | (2,737) | |
Total other comprehensive income (loss), before tax | (126,016) | (19,884) | 11,618 |
Income tax expense (benefit) related to items of other comprehensive income | (31,630) | (4,991) | 2,916 |
Other comprehensive income (loss), net of tax | (94,386) | (14,893) | 8,702 |
Total comprehensive income (loss) | $ (54,381) | $ 37,788 | $ 53,377 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders Equity - USD ($) $ in Thousands | Common Stock | Additional Paid in Capital. | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance at Dec. 31, 2019 | $ 17,050 | $ 88,650 | $ 178,092 | $ 1,936 | $ 285,728 |
Net income | 44,675 | 44,675 | |||
Other comprehensive income (loss) | 8,702 | 8,702 | |||
Common stock repurchased | (16) | (249) | (217) | (482) | |
Common stock dividends | (10,387) | (10,387) | |||
Share-based compensation expense | 14 | 1,913 | 1,927 | ||
Vesting of restricted stock | 77 | (77) | |||
Ending balance at Dec. 31, 2020 | 17,125 | 90,237 | 212,163 | 10,638 | 330,163 |
Net income | 52,681 | 52,681 | |||
Other comprehensive income (loss) | (14,893) | (14,893) | |||
Common stock repurchased | (18) | (348) | (346) | (712) | |
Common stock dividends | (10,931) | (10,931) | |||
Share-based compensation expense | 9 | 3,086 | 3,095 | ||
Vesting of restricted stock | 97 | (97) | |||
Ending balance at Dec. 31, 2021 | 17,213 | 92,878 | 253,567 | (4,255) | 359,403 |
Net income | 40,005 | 40,005 | |||
Other comprehensive income (loss) | (94,386) | (94,386) | |||
Common stock repurchased | (26) | (712) | (738) | ||
Common stock dividends | (13,146) | (13,146) | |||
Stock issuance from the acquisition of Metro Phoenix Bank | 2,681 | 61,149 | 63,830 | ||
Share-based compensation expense | 10 | 1,894 | 1,904 | ||
Vesting of restricted stock | 114 | (114) | |||
Ending balance at Dec. 31, 2022 | $ 19,992 | $ 155,095 | $ 280,426 | $ (98,641) | $ 356,872 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Activities | |||
Net income | $ 40,005 | $ 52,681 | $ 44,675 |
Adjustments to reconcile net income to net cash provided (used) by operating activities | |||
Deferred income taxes | 913 | 2,786 | (4,434) |
Provision for loan losses | (3,500) | 10,900 | |
Depreciation and amortization | 8,467 | 8,868 | 8,950 |
Amortization and accretion of premiums/discounts on investment securities | 3,387 | 3,744 | 1,760 |
Amortization of operating lease right-of-use assets | (229) | (58) | (25) |
Stock-based compensation | 1,904 | 3,095 | 1,927 |
Increase in value of bank-owned life insurance | (835) | (793) | (797) |
Realized loss (gain) on sale of fixed assets | (33) | (62) | 707 |
Realized loss (gain) on derivative instruments | 2,006 | 8,459 | 1,927 |
Realized loss (gain) on loans sold | (11,616) | (48,038) | (57,070) |
Realized loss (gain) on sale of foreclosed assets | 71 | (275) | (28) |
Realized loss (gain) on sale of investment securities | (125) | (2,737) | |
Realized loss (gain) on servicing rights | (702) | (638) | 936 |
Net change in: | |||
Loans held for sale | 48,539 | 123,945 | (18,621) |
Accrued interest receivable | (3,241) | 1,125 | (2,111) |
Other assets | 5,357 | (7,247) | (2,684) |
Accrued expenses and other liabilities | 8,973 | 5,865 | (5,527) |
Net cash provided (used) by operating activities | 102,966 | 149,832 | (22,252) |
Investing Activities | |||
Proceeds from sales or calls of investment securities available-for-sale | 13,189 | 75,647 | |
Proceeds from maturities of investment securities available-for-sale | 105,633 | 125,581 | 69,680 |
Purchases of investment securities available-for-sale | (95,600) | (571,595) | (414,724) |
Proceeds from sales or calls of investment securities held-to-maturity | 963 | 1,772 | |
Proceeds from maturities of investment securities held-to-maturity | 27,429 | 12,545 | |
Purchases of investment securities held-to-maturity | (218,363) | ||
Net (increase) decrease in equity securities | 2,808 | ||
Net (increase) decrease in loans | (416,150) | 221,006 | (259,130) |
Net (increase) decrease in FHLB stock | (15,556) | (716) | (10) |
Net cash received (paid) for business combinations | 101,511 | (9,279) | |
Purchases of premises and equipment | (1,789) | (1,706) | (3,811) |
Proceeds from sales of foreclosed assets | 937 | 629 | 429 |
Net cash provided (used) by investing activities | (292,622) | (417,658) | (538,390) |
Financing Activities | |||
Net increase (decrease) in deposits | (358,752) | 348,558 | 600,677 |
Net increase (decrease) in short-term borrowings | 378,080 | ||
Repayments of long-term debt | (203) | (49,920) | (210) |
Proceeds from the issuance of subordinated debt | 50,000 | ||
Cash dividends paid on common stock | (12,800) | (10,751) | (10,387) |
Repurchase of common stock | (738) | (712) | (482) |
Net cash provided (used) by financing activities | 5,587 | 337,175 | 589,598 |
Net change in cash and cash equivalents | (184,069) | 69,349 | 28,956 |
Cash and cash equivalents at beginning of period | 242,311 | 172,962 | 144,006 |
Cash and cash equivalents at end of period | 58,242 | 242,311 | 172,962 |
Cash paid for: | |||
Interest | 15,095 | 4,538 | 12,641 |
Income taxes | 12,531 | 13,124 | 13,582 |
Cash and cash equivalents acquired | 101,696 | 513 | |
Non-cash information | |||
Loan collateral transferred to foreclosed assets | 153 | 1,176 | 456 |
Unrealized gain (loss) on investment securities available-for-sale | (94,004) | (14,567) | 8,702 |
Accretion of unrealized (gain) loss on investment securities held-to-maturity | (382) | (326) | |
Investment securities transferred to held-to-maturity | 149,191 | ||
Right-of-use assets obtained in exchange for new operating leases | 4,266 | $ 267 | 1,555 |
Noncash assets acquired | 297,745 | 14,627 | |
Liabilities assumed | (354,358) | (5,348) | |
Issuance of common stock for the acquisition of Metro Phoenix Bank | (64,019) | ||
Net noncash acquired | $ (120,632) | $ 9,279 |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Significant Accounting Policies | |
Significant Accounting Policies | NOTE 1 Significant Accounting Policies Alerus Financial Corporation is a financial holding company organized under the laws of Delaware. Alerus Financial Corporation and its subsidiaries, or the Company, is a diversified financial services company headquartered in Grand Forks, North Dakota. Through its subsidiary, Alerus Financial, National Association, or the Bank, the Company provides innovative and comprehensive financial solutions to businesses and consumers through four distinct business lines – banking, retirement and benefit services, wealth management, and mortgage. The Bank operates under a national charter and provides full banking services. As a national bank, the Bank is subject to regulation by the Office of the Comptroller of Currency and the Federal Deposit Insurance Corporation. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries in which the Company has a controlling interest. Significant intercompany balances and transactions have been eliminated in consolidation. In the normal course of business, the Company may enter into a transaction with a variable interest entity, or VIE. VIEs are legal entities whose investors lack the ability to make decisions about the entity’s activities, or whose equity investors do not have the right to receive the residual returns of the entity. The applicable accounting guidance requires the Company to perform ongoing quantitative and qualitative analysis to determine whether it must consolidate any VIE. The Company does not have any ownership interest in or exert any control over any VIE, and thus no VIEs are included in the consolidated financial statements. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the fair value of assets acquired and liabilities assumed from an acquisition and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the valuation of investment securities, determination of the allowance for loan losses, valuation of reporting units for the purpose of testing goodwill and other intangible assets for impairment, valuation of deferred tax assets, and fair values of financial instruments. Emerging Growth Company The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, even if the Company complies with the greater obligations of public companies that are not emerging growth companies, the Company may avail itself of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as the Company is an emerging growth company. The Company will continue to be an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the date of the first sale of common equity securities under the Company’s Registration Statement on Form S-1, which was declared effective by the U.S. Securities and Exchange Commission, or SEC, on September 12, 2019; (2) the last day of the fiscal year in which the Company has $1.235 billion or more in annual revenues; (3) the date on which the Company is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act; or (4) the date on which the Company has, during the previous three-year period, issued publicly or privately, more than $1.0 billion in non-convertible debt securities. Management cannot predict if investors will find the Company’s common stock less attractive because it will rely on the exemptions available to emerging growth companies. If some investors find the Company’s common stock less attractive as a result, there may be a less active trading market for its common stock and the Company’s stock price may be more volatile. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the benefits of this extended transition period. Concentrations of Credit Risk Substantially all of the Company’s lending activities are with clients located within North Dakota, Minnesota, and Arizona. At December 31, 2022 and 2021 respectively, 23.9% and 24.8% of the Company’s loan portfolio consisted of commercial and industrial loans that were not secured by real estate. The Company does not have any significant loan concentrations in any one industry or with any one client. Note 6 (Loans and Allowance for Loan Losses) discusses the Company’s loan portfolio. The Company invests in a variety of investment securities and does not have any significant concentrations in any one industry or to any one issuer. Note 5 (Investment Securities) discusses the Company’s investment securities portfolio. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, cash and due from banks includes cash and cash equivalents, balances due from banks, and federal funds sold, all of which have an original maturity within 90 days. Cash flows from loans and deposits are reported net. Interest-bearing deposits in banks are carried at cost. Investment Securities Debt securities are classified as available-for-sale and are carried at estimated fair value with unrealized gains and losses reported in other comprehensive income (loss). Realized gains (losses) on investment securities available-for-sale are included in net gains (losses) on investment securities and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income. Gains (losses) on sales of investment securities are determined using the specific identification method on the trade date. The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the period to maturity. Declines in the estimated fair value of individual available-for-sale investment securities below their cost that are other than temporary, result in write-downs of the individual investment securities to their estimated fair value. The Company monitors the investment security portfolio for impairment on an individual security basis and has a process in place to identify investment securities that could potentially have a credit impairment that is other than temporary. This process involves analyzing the length of time and the extent to which the estimated fair value has been less than the amortized cost basis, the market liquidity for the security, the financial condition and near-term prospects of the issuer, expected cash flows, and the Company’s intent and ability to hold the investment for a period of time sufficient to recover the temporary loss. The ability to hold is determined by whether it is more likely than not that the Company will be required to sell the security before its anticipated recovery. A decline in value due to a credit event that is considered other than temporary is recorded as a loss in noninterest income. Certain debt securities that the Company has an intent to hold to maturity are classified as held-to-maturity and recorded at amortized cost. Interest earned on held-to-maturity debt securities is included in interest income. Amortization or accretion of premiums and discounts is also recognized in interest income using the effective interest method over the contractual life of the security and is adjusted to reflect actual prepayments. Transfers of debt securities from available-for-sale to held-to-maturity are made at fair value at the date of transfer. Unrealized holding gains and losses at the date of transfer are included in other comprehensive income and in the carrying value of held-to-maturity security are amortized over the remaining life of the security. Nonmarketable Equity Securities Nonmarketable equity securities include the Bank’s required investments in the stock of the Federal Home Loan Bank of Des Moines, or the FHLB and the Federal Reserve Bank, or the FRB. The Bank is a member of the FHLB as well as its regional FRB. Members are required to own a certain amount of stock based of the level of borrowing and other factors, and may invest in additional amounts. FHLB stock and FRB stock are carried at cost, classified as other assets, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. Loans Held for Sale/Branch Sale Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses are recognized through a valuation allowance by charges to income. Gains (losses) on loan sales are recorded in mortgage banking revenue on the consolidated statements of income. Loans Loans are stated at the amount of unpaid principal, reduced by an allowance for loan losses. Loans that management has the intent and ability to hold for the foreseeable future, until maturity or pay-off, generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, and the allowance for loan losses. Loan fees received that are associated with originating or acquiring certain loans are deferred, net of costs, and amortized over the life of the loan as a yield adjustment to interest income. The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer loans are typically charged-off no later than 120 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest in considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Allowance for Loan Losses The allowance for loan losses (allowance) is an estimate of loan losses inherent in the Company’s loan portfolio. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after loan losses and loan growth. Loan losses are charged-off against the allowance when the Company determines the loan balance to be uncollectible. Cash received on previously charged-off amounts is recorded as a recovery to the allowance. The allowance consists of three primary components, general reserves, specific reserves related to impaired loans, and unallocated reserves. The general component covers non-impaired loans and is based on historical losses adjusted for current qualitative factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent five years. This actual loss experience is adjusted for economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge- offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; uncertainty related to the effects of the COVID-19 pandemic; industry conditions; COVID-19 pandemic related modifications; and effects of changes in credit concentrations. These factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment. 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. Loans determined to be impaired are individually evaluated for impairment. When a loan is impaired, the Company measures impairment based on the present value of expected future cash flows discounted at the original contractual interest rate, except that as a practical expedient, it may measure impairment based on an observable market price for the estimated fair value of the collateral if collateral dependent. A loan is collateral dependent if the repayment is expected to be provided solely by the underlying collateral. Allowance allocations other than general and specific are included in the unallocated portion. While allocations are made for loans based upon historical loss analysis, the unallocated portion is designed to cover the uncertainty of how current economic conditions and other uncertainties may impact the existing loan portfolio. Factors to consider include national and state economic conditions such as unemployment or real estate lending values. The unallocated reserve addresses inherent probable losses not included elsewhere in the allowance for loan losses. The Company maintains a separate general valuation allowance for each portfolio segment. These portfolio segments include commercial and industrial, real estate construction, commercial real estate, residential real estate first mortgage, residential real estate junior liens, and other revolving and installment with risk characteristics described as follows: Commercial and Industrial: Real Estate Construction: Commercial Real Estate: Residential real estate first and junior liens: Other Revolving and Installment: Although management believes the allowance to be adequate, actual losses may vary from its estimates. On a quarterly basis, management reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions, and other factors. If the board of directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. Off-Balance Sheet Credit Related Financial Instruments In the ordinary course of business, the Company enters into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded. The Company establishes a reserve for unfunded commitments using historical loss data and utilization assumptions. This reserve is located under accrued expenses and other liabilities on the Consolidated Balance Sheets. Land, Premises and Equipment, Net Land is carried at cost. Other premises and equipment are carried at cost net of accumulated depreciation. Depreciation is computed on a straight-line method based principally on the estimated useful lives of the assets. Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized. Gains (losses) on dispositions are included in current operations. Bank-Owned Life Insurance The Company has purchased life insurance policies on certain key executives. Bank-owned life insurance is recorded at its cash surrender value, or the amount that can be realized, if lower. Goodwill and Other Intangibles, Net Goodwill resulting from acquisitions is not amortized, but is tested for impairment annually. As part of its testing, the Company first assesses the qualitative factors to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company determines the estimated fair value of a reporting unit is less than its carrying amount using these qualitative factors, the Company then compares the estimated fair value of the goodwill with its carrying amount, and then measures impairment loss by comparing the estimated fair value of goodwill with the carrying amount of that goodwill. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, incorporating general economic and market conditions, and selecting an appropriate control premium. At December 31, 2022, the Company believes it did not have any indications of potential impairment based on the estimated fair value of the reporting units. Intangible assets determined to have definite lives are amortized over the remaining useful lives. Intangible and other long-lived assets are reviewed for impairment whenever events occur, or circumstances indicate that the carrying amount may not be recoverable. Servicing Rights Servicing rights are recognized as separate assets when rights are acquired through the sale of loans. Servicing rights are initially recorded at estimated fair value based on assumptions provided by a third-party valuation service. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as servicing cost per loan, the discount rate, the escrow float rate, an inflation rate, ancillary income, prepayment speeds, and default rates and losses. Loan servicing income is recorded on the accrual basis and includes servicing fees from investors and certain charges collected from borrowers, such as late payment fees, and is net of estimated fair value adjustments to capitalized mortgage servicing rights. Capitalized servicing rights are amortized into noninterest income in proportion to, and over the period of, the estimated future servicing income of the underlying loans. Servicing rights are evaluated for impairment based upon the estimated fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant characteristics, such as interest rates and terms. Impairment is recognized through a valuation allowance for an individual tranche, to the extent that estimated fair value is less than the capitalized amount for the tranche. If the Company later determines that all or a portion of the impairment no longer exists for a particular tranche, a reduction of the allowance may be recorded as an increase to income. Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal, or a fixed amount per loan, and are recorded as income when earned. The amortization of servicing rights is netted against loan servicing fee income. Impairment of Long-Lived Assets The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. In the event such an asset is considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the asset exceeds the estimated fair value of the asset. Assets to be disposed of are reported at the lower of the carrying value of estimated fair value less estimated costs to sell. Foreclosed Assets Assets acquired through loan foreclosure are included in other assets and are initially recorded at estimated fair value less estimated selling costs. The estimated fair value of foreclosed assets is evaluated regularly and any decreases in value along with holding costs, such as taxes, insurance and utilities, are reported in noninterest expense. Transfers of Financial Assets and Participating Interests Transfers of financial assets are accounted for as sales when control over assets has been surrendered or in the case of loan participation, a portion of the asset has been surrendered and meets the definition of a “participating interest.” Control over transferred assets is deemed to be surrendered when 1) the assets have been isolated from the Company, 2) the transferee obtains the rights 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. Should the transfer not meet these three criteria, the transaction is treated as a secured financing. Loans serviced for others are not included in the accompanying consolidated balance sheets. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and collection and foreclosure processing. Derivatives and Hedging Activities In the ordinary course of business, the Company enters into derivative transactions to manage various risks and to accommodate the business requirements of its clients. Derivative instruments are reported in other assets or other liabilities at estimated fair value. Changes in a derivative’s estimated fair value are recognized currently in earnings unless specific hedge accounting criteria are met. Noninterest Income Specific guidelines are established for recognition of certain noninterest income components related to the Company’s consolidated financial statements. In accordance with Topic 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services that are promised within each contract and identifies those that contain performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The material groups of noninterest income that this methodology is applied to are defined as follows: Retirement and benefit services: Wealth management: Service charges on deposit accounts: Other noninterest income: Advertising Costs Advertising costs are expensed as incurred. Tax Credit Investments The Company invests in qualified affordable housing projects for the purpose of community reinvestment and obtaining tax credits. These investments are included in other assets on the balance sheet, and any unfunded commitments in accrued expenses and other liabilities on the balance sheet. The qualified affordable housing projects are accounted for under the proportional amortization method. Under the proportional amortization method, the initial cost of the investment is recognized over the period that the Company expects to receive the tax credits, with the expense included within income tax expense on the consolidated statements of income. Management analyzes these investments for potential impairment when events or changes in circumstances indicate that it is more likely than not that the carrying amount of the investment will not be realized. An impairment loss is measured as the amount by which the carrying amount of an investment exceeds its fair value. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be recognized if it is “more likely than not” that the deferred tax asset would not be realized. These calculations are based on many complex factors including estimates of the timing of reversals of temporary differences, the interpretation of federal and state income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax liabilities. The Company follows standards related to Accounting for Uncertainty in Income Taxes. These rules establish a higher standard for tax benefits to meet before they can be recognized in a Company’s consolidated financial statements. The Company can recognize in financial statements the impact of a tax position taken, or expected to be taken, if it is more likely than not that the position will be sustained on an audit based on the technical merit of the position. See Note 20 (Income Taxes) for additional disclosures. The Company recognizes both interest and penalties as components of other operating expenses. The amount of the uncertain tax position was not determined to be material. It is not expected that the unrecognized tax benefit will be material within the next 12 months. The Company did not incur any interest or penalties in 2022, 2021, or 2020. The Company files consolidated federal and state income tax returns. The Company is no longer subject to U.S. federal or state tax examinations by tax authorities for years before 2019. Comprehensive Income Recognized revenue, expenses, gains, and losses are included in net income. Certain changes in assets and liabilities, such as unrealized gains (losses) on investment securities available-for-sale, are reported as a separate component of the equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income. Stock Compensation Plans Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. The cost will be measured based on the grant date estimated fair value of the equity or liability instruments issued. The grant date estimated fair value is determined using the closing price of the Company’s common stock. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employee’s service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. Earnings per Share Earnings per share are calculated utilizing the two-class method. Basic earnings per share is calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted-average number of shares adjusted for the dilutive effect of common stock awards. |
New Accounting Pronouncements
New Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2022 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | NOTE 2 New Accounting Pronouncements The following Financial Accounting Standards Board, or FASB, Accounting Standards Updates, or ASUs are divided into pronouncements which have been adopted by the Company since January 1, 2022, and those which are not yet effective and have been evaluated or are currently being evaluated by management, as of December 31, 2022. Adopted Pronouncements In May 2019, the FASB issued ASU No. 2019-05, Targeted Transition Relief to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible instruments. In November 2019, the FASB issued ASU 2019-10, which amends the effective date of this ASU for certain entities, including private companies and smaller reporting companies until after December 15, 2022, including interim periods within those fiscal years. The Company adopted this standard during the first quarter of 2022 and the adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 by clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years beginning after and interim periods within those fiscal years beginning after December 15, 2020, for public business entities. For private companies and smaller reporting companies, this guidance is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2021. The Company adopted this standard during the first quarter of 2022 and the adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Pronouncements Not Yet Effective In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU implements a change from the current impaired loss model to an expected credit loss model over the life of an instrument, including loans and securities held-to-maturity. The expected credit loss model is expected to result in earlier recognition of losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods with those years. The Company has executed a project plan to implement this guidance. The project plan included an assessment of data, development of methodologies, model valuation, parallel runs, refining qualitative factors and forecast periods, and evaluation of related disclosures. Management is finalizing macroeconomic conditions and forecast assumptions to be used in our CECL model, however, we expect an initial increase to the allowance for credit losses, including the increase in reserve for unfunded commitments, of approximately $5.0 million - $7.0 million above the existing allowance for loan loss levels. The anticipated initial increase to the allowance for credit losses is expected to be substantially attributable to the fair value marks on prior acquisitions and the reserve required on unfunded commitments. When finalized, this one-time increase will be recorded, net of tax, as an adjustment to beginning retained earnings. Internal controls over financial reporting specifically related to CECL are being designed and evaluated, however, all internal controls related to CECL implementation are not operational. The Company is in the final stages of completing the formal governance and approval process. Ongoing impacts of the CECL methodology will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, portfolio duration and other factors. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. This update is not expected to have a significant impact on the Company’s consolidated financial statements. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326); Targeted Transition Relief. This ASU allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to held to maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. ASU 2019-05 has the same effective date as ASU 2016-13 (i.e., the first quarter of 2023 for the Company). The Company does not expect to elect the fair value option, and therefore, ASU 2019-05 is not expected to impact the Company’s consolidated financial statements. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses Troubled Debt Restructurings and Vintage Disclosures. The amendments in this update eliminate the accounting guidance for Troubled Debt Restructurings, or TDRs, by creditors in Subtopic 310-40, Receivables – Troubled Debt Restructurings by Creditors, while enhancing the disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. For public business entities, this amendment also has vintage disclosures that require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20 Financial Instruments – Credit Losses – Measured at Amortized Cost. For entities that have not yet adopted the amendments in ASU 2016-13, the effective dates for the amendments in this update are same as the effective date for ASU 2016-13. As the Company has immaterial TDR loans, ASU 2022-02 is not expected to have a material impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. This ASU represents changes to clarify or improve the Accounting Standards Codification, or ASU, related to seven topics. The amendments make the ASC easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. Issues 1, 2, 3, 4 and 5 are conforming amendments and for public business entities effective upon the issuance of the standard. Issues 6 and 7 are amendments that affect the guidance in ASU 2016-13. The Company will consider these clarifications and improvements in determining the appropriate adoption of ASU 2016-13. In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements removing Section A which included issues 1-16 because the issues in that section will be addressed in a separate ASU. The Company will not be affected by ASU 2020-03 for any remaining sections and will continue to review new standards as they are issued. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020, through December 31, 2022. In January 2021, the FASB issue ASU 2021-01. Reference Rate Reform (Topic 848) in response to concerns about structural risks in accounting for reference rate reform. The ASU clarifies certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that affected by the discontinuing transition. LIBOR is used as an index rate for a portion of the Company’s available-for-sale securities, derivative contracts, subordinated notes payable, junior subordinated debentures, and approximately 6.9% of the Company’s loans, as of December 31, 2022. If reference rates are discontinued, the existing contracts will be modified to replace the discounted rate with a replacement rate. For accounting purposes, such contract modifications would have to be evaluated to determine whether the modified contract is a new contract or a continuation of an existing contract. If they are considered new contracts, the previous contract would be extinguished. Under one of the optional expedients of ASU 2020-04, modifications of contracts within the scope of Topic 310, receivables, and 470, Debt, will be accounted for by prospectively adjusting the effective interest rates and no such evaluation is required. When elected, the optional expedient for contract modifications must be applied consistently for all eligible contracts or eligible transactions. The Company is in the process of evaluating the impact of this pronouncement of those financial assets and liabilities where LIBOR is used as an index rate. In December 2022, the FASB issued ASU 2022-06 Reference Rate Reform (Topic 848) Deferral of the Sunset Date of Topic 848. This amendment provides an update to defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which all entities will no longer be permitted to apply the relief in Topic 848. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations | |
Business Combinations | NOTE 3 Business Combinations On December 18, 2020, the Company acquired Retirement Planning Services, Inc, or RPS, located in Littleton, Colorado for a total purchase price of $13.4 million, which included cash consideration of $9.8 million and an earn out liability of $3.6 million. As part of the transaction, $11.5 million was allocated to an identified customer intangible and $2.9 million to goodwill. The purchase consisted of approximately 1,000 retirement and health benefit administration plans, with more than 48,000 plan participants, 300 COBRA clients and 10,000 COBRA members and $1.3 billion in assets under administration/management. The purchased assets and assumed liabilities were recorded at their respective acquisition date estimate fair values indicated in the following table: As recorded by Fair Value As recorded by (dollars in thousands) RPS Adjustments the Company Assets Cash and cash equivalents $ 513 $ — $ 513 Land premises and equipment, net 16 (16) — Other intangible assets 99 11,390 11,489 Other assets 304 (38) 266 Total assets 932 11,336 12,268 Liabilities Other liabilities 1,418 3,930 5,348 Total liabilities 1,418 3,930 5,348 Excess assets over liabilities $ (486) $ 7,406 6,920 Cash paid for RPS 9,792 Total goodwill recorded $ 2,872 On July 1, 2022, the Company acquired MPB BHC, Inc., the bank holding company for Metro Phoenix Bank located in Phoenix, Arizona, for a total purchase price of $64.0 million in a stock-for-stock transaction. The primary reasons for the acquisition were to expand the Company’s operations in the Phoenix MSA and grow the size of the Company’s business. As part of the transaction, $7.6 million was allocated to a customer deposit intangible and $15.1 million to goodwill. The purchase consisted of $270.4 million in loans and $353.7 million in deposits. The purchased assets and assumed liabilities were recorded at their respective acquisition date estimate fair values indicated in the following table: As recorded by Preliminary Fair Value As recorded by (dollars in thousands) Metro Phoenix Bank Adjustments the Company Assets Cash and cash equivalents $ 101,819 $ (123) $ 101,696 Fed funds sold 18,936 — 18,936 Core deposit intangible — 7,592 7,592 Loans 273,843 (3,440) 270,403 Accrued interest receivable 1,091 — 1,091 Other assets 3,342 188 3,530 Total assets 399,031 4,217 403,248 Liabilities Deposits 354,529 (844) 353,685 Other liabilities 673 — 673 Total liabilities 355,202 (844) 354,358 Excess assets over liabilities $ 43,829 $ 5,061 48,890 Stock issued for MPB 64,019 Total goodwill recorded $ 15,129 |
Restrictions on Cash and Due fr
Restrictions on Cash and Due from Banks | 12 Months Ended |
Dec. 31, 2022 | |
Restrictions on Cash and Due from Banks | |
Restrictions on Cash and Due from Banks | NOTE 4 Restrictions on Cash and Due from Banks Banking regulators require bank subsidiaries to maintain minimum average reserve balances, either in the form of vault cash or reserve balances held with central banks or other financial institutions. There was no amount of required reserve balances at December 31, 2022 and 2021. In addition to vault cash, the Company held balances at the Federal Reserve Bank and other financial institutions of $28.0 million and $224.4 million at December 31, 2022 and 2021, respectively, to meet these requirements. The balances are included in cash and cash equivalents on the Consolidated Balance Sheets. |
Investment Securities
Investment Securities | 12 Months Ended |
Dec. 31, 2022 | |
Investment Securities | |
Investment Securities | NOTE 5 Investment Securities The following tables present amortized cost, gross unrealized gains and losses, and fair value of the available-for-sale investment securities and held-to-maturity investment securities as of December 31, 2022 and 2021: December 31, 2022 Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Available-for-sale U.S. Treasury and agencies $ 3,518 $ 19 $ (17) $ 3,520 Mortgage backed securities Residential agency 705,845 2 (118,168) 587,679 Commercial 70,669 — (7,111) 63,558 Asset backed securities 34 — — 34 Corporate bonds 69,501 — (6,968) 62,533 Total available-for-sale investment securities 849,567 21 (132,264) 717,324 Held-to-maturity Obligations of state and political agencies 137,787 — (17,736) 120,051 Mortgage backed securities Residential agency 184,115 — (33,254) 150,861 Total held-to-maturity investment securities 321,902 — (50,990) 270,912 Total investment securities $ 1,171,469 $ 21 $ (183,254) $ 988,236 December 31, 2021 Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Available-for-sale U.S. Treasury and agencies $ 5,028 $ 75 $ — $ 5,103 Mortgage backed securities Residential agency 717,781 1,213 (11,837) 707,157 Commercial 88,362 2,674 (123) 90,913 Asset backed securities 52 2 — 54 Corporate bonds 49,035 1,398 (11) 50,422 Total available-for-sale investment securities 860,258 5,362 (11,971) 853,649 Held-to-maturity Obligations of state and political agencies 144,543 1,110 (349) 145,304 Mortgage backed securities Residential agency 207,518 — (3,145) 204,373 Total held-to-maturity investment securities 352,061 1,110 (3,494) 349,677 Total investment securities $ 1,212,319 $ 6,472 $ (15,465) $ 1,203,326 On April 1, 2021, the Company transferred its state and political agencies debt securities portfolio, with a fair value of $149.2 million and a net unrealized gain of $1.3 million, from available-for-sale to held-to-maturity. The amortized cost and estimated fair value of investment securities at December 31, 2022, by contractual maturity are as follows: Held-to-maturity Available-for-sale Carrying Fair Amortized Fair (dollars in thousands) Value Value Cost Value Due within one year or less $ 6,554 $ 6,522 $ 4 $ 4 Due after one year through five years 40,317 37,146 21,256 19,863 Due after five years through ten years 69,992 59,138 87,961 79,697 Due after 10 years 205,039 168,106 740,346 617,760 Total investment securities $ 321,902 $ 270,912 $ 849,567 $ 717,324 Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Investment securities with a total carrying value of $260.7 million and $192.8 million, were pledged at December 31, 2022 and 2021, respectively, to secure public deposits and for other purposes required or permitted by law. Proceeds from the sale of available-for-sale securities for the years ended December 31, 2022, 2021, and 2020 are displayed in the table below: Year ended December 31, (dollars in thousands) 2022 2021 2020 Proceeds $ — $ 13,189 $ 75,647 Realized gains — 114 2,737 Realized losses — — — Proceeds from the sale or call of held-to-maturity securities for the years ended December 31, 2022, 2021 and 2020 are displayed in the table below: Year ended December 31, (dollars in thousands) 2022 2021 2020 Proceeds $ 963 $ 1,772 $ — Realized gains — 11 — Realized losses — — — During the year ended December 31, 2022, there were no sales of held-to-maturity securities. During the year ended December 31, 2021 the company sold one held-to-maturity security with an amortized cost of $330 thousand. Proceeds from the sale totaled $348 thousand, resulting in realized gains of $11 thousand. For this sale of a held-to-maturity security, the Company received evidence of a significant deterioration of the issuer’s creditworthiness. There were no sales of held-to-maturity securities during the year ended December 31, 2020. Information pertaining to investment securities with gross unrealized losses that are not deemed to be other-than-temporarily impaired at December 31, 2022 and 2021 aggregated by investment category and length of time that individual investment securities have been in a continuous loss position, follows: December 31, 2022 Less than 12 Months Over 12 Months Total Unrealized Fair Unrealized Fair Unrealized Fair (dollars in thousands) Losses Value Losses Value Losses Value Available-for-sale U.S. Treasury and agencies $ (17) $ 509 $ — $ — $ (17) $ 509 Mortgage backed securities Residential agency (10,457) 79,693 (107,711) 507,418 (118,168) 587,111 Commercial (4,835) 50,437 (2,276) 13,120 (7,111) 63,557 Asset backed securities — 32 — 2 — 34 Corporate bonds (4,452) 48,048 (2,516) 14,484 (6,968) 62,532 Total available-for-sale investment securities (19,761) 178,719 (112,503) 535,024 (132,264) 713,743 Held-to-maturity Obligations of state and political agencies (3,336) 18,788 (14,400) 98,762 (17,736) 117,550 Mortgage backed securities Residential agency — — (33,254) 150,861 (33,254) 150,861 Total held-to-maturity investment securities (3,336) 18,788 (47,654) 249,623 (50,990) 268,411 Total investment securities $ (23,097) $ 197,507 $ (160,157) $ 784,647 $ (183,254) $ 982,154 December 31, 2021 Less than 12 Months Over 12 Months Total Unrealized Fair Unrealized Fair Unrealized Fair (dollars in thousands) Losses Value Losses Value Losses Value Available-for-sale U.S. Treasury and agencies $ — $ — $ — $ — $ — $ — Mortgage backed securities Residential agency (10,156) 554,811 (1,681) 55,082 (11,837) 609,893 Commercial (123) 17,470 — — (123) 17,470 Asset backed securities — — — 2 — 2 Corporate bonds (11) 5,989 — — (11) 5,989 Total available-for-sale investment securities (10,290) 578,270 (1,681) 55,084 (11,971) 633,354 Held-to-maturity Obligations of state and political agencies (349) 53,210 — — (349) 53,210 Mortgage backed securities Residential agency (3,145) 204,373 — — (3,145) 204,373 Total held-to-maturity investment securities (3,494) 257,583 — — (3,494) 257,583 Total investment securities $ (13,784) $ 835,853 $ (1,681) $ 55,084 $ (15,465) $ 890,937 For all of the above investment securities, the unrealized losses were generally due to changes in interest rates and unrealized losses are considered to be temporary as the fair value is expected to recover as the securities approach maturity. The Company evaluates securities for other-than-temporary impairment, or OTTI, on a quarterly basis, at a minimum, and more frequently when economic or market concerns warrant such evaluation. In estimating OTTI losses, consideration is given to the severity and duration of the impairment; the financial condition and near-term prospects of the issuer, which for debt securities, considers external credit ratings and recent downgrades and the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value. For the years ended December 31, 2022 and 2021, the Company did not believe any OTTI existed and therefore did not recognize any OTTI losses on its investment securities. As of December 31, 2022 and 2021, the carrying value of the Company’s Federal Reserve Bank stock and FHLB stock was as follows: December 31, December 31, (dollars in thousands) 2022 2021 Federal Reserve $ 4,595 $ 2,675 FHLB 19,362 3,806 These securities can only be redeemed or sold at their par value and only to the respective issuing institution or to another member institution. Management considers these non-marketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. Visa Class B Restricted Shares In 2008, the Company received Visa Class B restricted shares as part of Visa’s initial public offering. These shares are transferable only under limited circumstances until they can be converted into the publicly traded Class A common shares. This conversion will not occur until the settlement of certain litigation which will be indemnified by Visa members, including the Company. Visa funded an escrow account from its initial public offering to settle these litigation claims. Should this escrow account be insufficient to cover these litigation claims, Visa is entitled to fund additional amounts to the escrow account by reducing each member bank’s Class B conversion ratio to unrestricted Class A shares. As of December 31, 2022, the conversion ratio was 1.5991. Based on the existing transfer restriction and the uncertainty of the outcome of the Visa litigation mentioned above, the 6,924 Class B shares (11,702 Class A equivalents) that the Company owned as of December 31, 2022 and 2021, were carried at a zero cost basis. |
Loans and Allowance for Loan Lo
Loans and Allowance for Loan Losses | 12 Months Ended |
Dec. 31, 2022 | |
Loans and Allowance for Loan Losses | |
Loans and Allowance for Loan Losses | NOTE 6 Loans and Allowance for Loan Losses The following table presents total loans outstanding, by portfolio segment, as of December 31, 2022 and 2021: December 31, December 31, (dollars in thousands) 2022 2021 Commercial Commercial and industrial (1) $ 583,876 $ 436,761 Real estate construction 97,810 40,619 Commercial real estate 881,670 598,893 Total commercial 1,563,356 1,076,273 Consumer Residential real estate first mortgage 679,551 510,716 Residential real estate junior lien 150,479 125,668 Other revolving and installment 50,608 45,363 Total consumer 880,638 681,747 Total loans $ 2,443,994 $ 1,758,020 (1) Includes PPP loans of $737 thousand at December 31, 2022 and $33.6 million at December 31, 2021. Total loans include net deferred loan fees and costs of $919 thousand and $231 thousand at December 31, 2022 and 2021, respectively. Deferred loan fees on PPP loans were zero at December 31, 2022 and $881 thousand at December 31, 2021. Unearned discounts associated with the acquisition of Metro Phoenix Bank totaled $7.1 million as of December 31, 2022. As part of the acquisition of Metro Phoenix Bank, the Company acquired loans that displayed evidence of deterioration of credit quality since origination and which was probable that all contractually required payments would not be collected. The carrying amounts and contractually required payments of these loans which are included in the loan balances above are summarized in the following table: December 31, (dollars in thousands) 2022 Real estate construction $ 440 Outstanding balance 440 Carrying amount 262 Allowance for loan losses 97 Carrying amount, net of allowance for loan losses $ 165 Accretable yield, or income expected to be collected, is shown in the table below: For the year ended December 31, (dollars in thousands) 2022 Beginning balance $ — New loans purchased 225 Accretion of income (48) Ending balance $ 177 Management monitors the credit quality of its loan portfolio on an ongoing basis. Measurement of delinquency and past due status are based on the contractual terms of each loan. Past due loans are reviewed regularly to identify loans for nonaccrual status. The following tables present past due aging analysis of total loans outstanding, by portfolio segment, as of December 31, 2022 and 2021, respectively: December 31, 2022 90 Days Accruing 30 - 89 Days or More Total (dollars in thousands) Current Past Due Past Due Nonaccrual Loans Commercial Commercial and industrial $ 580,288 $ 2,426 $ — $ 1,162 $ 583,876 Real estate construction 97,370 — — 440 97,810 Commercial real estate 879,830 368 — 1,472 881,670 Total commercial 1,557,488 2,794 — 3,074 1,563,356 Consumer Residential real estate first mortgage 677,471 1,545 — 535 679,551 Residential real estate junior lien 149,918 377 — 184 150,479 Other revolving and installment 50,360 247 — 1 50,608 Total consumer 877,749 2,169 — 720 880,638 Total loans $ 2,435,237 $ 4,963 $ — $ 3,794 $ 2,443,994 December 31, 2021 90 Days Accruing 30 - 89 Days or More Total (dollars in thousands) Current Past Due Past Due Nonaccrual Loans Commercial Commercial and industrial $ 435,135 $ 168 $ 121 $ 1,337 $ 436,761 Real estate construction 40,619 — — — 40,619 Commercial real estate 598,264 — — 629 598,893 Total commercial 1,074,018 168 121 1,966 1,076,273 Consumer Residential real estate first mortgage 508,925 1,770 — 21 510,716 Residential real estate junior lien 125,412 167 — 89 125,668 Other revolving and installment 45,242 121 — — 45,363 Total consumer 679,579 2,058 — 110 681,747 Total loans $ 1,753,597 $ 2,226 $ 121 $ 2,076 $ 1,758,020 The Company’s consumer loan portfolio is primarily comprised of both secured and unsecured loans that are relatively small and are evaluated at origination on a centralized basis against standardized underwriting criteria. The Company generally does not risk rate consumer loans unless a default event such as bankruptcy or extended nonperformance takes place. Credit quality for the consumer loan portfolio is measured by delinquency rates, nonaccrual amounts, and actual losses incurred. The Company assigns a risk rating to all commercial loans, except pools of homogeneous loans, and periodically performs detailed internal and external reviews of risk rated loans over a certain threshold to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by the Company’s regulators. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate, and the estimated fair values of collateral securing the loans. These credit quality indicators are used to assign a risk rating to each individual loan. The Company’s ratings are aligned to pass and criticized categories. The criticized category includes special mention, substandard, and doubtful risk ratings. The risk ratings are defined as follows: Pass: Special Mention: loan or of the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard: Doubtful: Loss: The tables below present total loans outstanding, by portfolio segment and risk category, as of December 31, 2022 and 2021: December 31, 2022 Criticized Special (dollars in thousands) Pass Mention Substandard Doubtful Total Commercial Commercial and industrial $ 558,694 $ 21,969 $ 3,213 $ — $ 583,876 Real estate construction 97,548 — 262 — 97,810 Commercial real estate 873,270 — 8,400 — 881,670 Total commercial 1,529,512 21,969 11,875 — 1,563,356 Consumer Residential real estate first mortgage 678,743 63 745 — 679,551 Residential real estate junior lien 149,847 — 632 — 150,479 Other revolving and installment 50,607 — 1 — 50,608 Total consumer 879,197 63 1,378 — 880,638 Total loans $ 2,408,709 $ 22,032 $ 13,253 $ — $ 2,443,994 December 31, 2021 Criticized Special (dollars in thousands) Pass Mention Substandard Doubtful Total Commercial Commercial and industrial $ 430,235 $ 480 $ 6,046 $ — $ 436,761 Real estate construction 40,619 — — — 40,619 Commercial real estate 585,291 — 13,602 — 598,893 Total commercial 1,056,145 480 19,648 — 1,076,273 Consumer Residential real estate first mortgage 510,375 — 341 — 510,716 Residential real estate junior lien 124,898 — 770 — 125,668 Other revolving and installment 45,363 — — — 45,363 Total consumer 680,636 — 1,111 — 681,747 Total loans $ 1,736,781 $ 480 $ 20,759 $ — $ 1,758,020 The adequacy of the allowance for loan losses is assessed at the end of each quarter. The allowance for loan losses includes a specific component related to loans that are individually evaluated for impairment and a general component related to loans that are segregated into homogeneous pool and collectively evaluated for impairment. The factors applied to these pools are an estimate of probable incurred losses based on management’s evaluation of historical net losses from loans with similar characteristics, which are adjusted by management to reflect current events, trends, and conditions. The adjustments include consideration of the following: changes in lending policies and procedures, economic conditions, nature and volume of the portfolio, experience of lending management, volume and severity of past due loans, quality of the loan review system, value of underlying collateral for collateral dependent loans, concentrations, and other external factors. The following tables present, by loan portfolio segment, a summary of the changes in the allowance for loan losses for the three years ending December 31, 2022, 2021, and 2020: Year ended December 31, 2022 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 8,925 $ 1,168 $ (1,396) $ 461 $ 9,158 Real estate construction 783 587 — 76 1,446 Commercial real estate 12,376 178 — 134 12,688 Total commercial 22,084 1,933 (1,396) 671 23,292 Consumer Residential real estate first mortgage 6,532 (763) — — 5,769 Residential real estate junior lien 1,295 (288) — 282 1,289 Other revolving and installment 481 30 (153) 170 528 Total consumer 8,308 (1,021) (153) 452 7,586 Unallocated 1,180 (912) — — 268 Total $ 31,572 $ — $ (1,549) $ 1,123 $ 31,146 Year ended December 31, 2021 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 10,205 $ (1,710) $ (1,230) $ 1,660 $ 8,925 Real estate construction 658 125 — — 783 Commercial real estate 14,105 (2,015) (536) 822 12,376 Total commercial 24,968 (3,600) (1,766) 2,482 22,084 Consumer Residential real estate first mortgage 5,774 758 — — 6,532 Residential real estate junior lien 1,373 (201) — 123 1,295 Other revolving and installment 753 (259) (156) 143 481 Total consumer 7,900 298 (156) 266 8,308 Unallocated 1,378 (198) — — 1,180 Total $ 34,246 $ (3,500) $ (1,922) $ 2,748 $ 31,572 Year ended December 31, 2020 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 12,270 $ (2,168) $ (4,249) $ 4,352 $ 10,205 Real estate construction 303 355 — — 658 Commercial real estate 6,688 8,185 (865) 97 14,105 Total commercial 19,261 6,372 (5,114) 4,449 24,968 Consumer Residential real estate first mortgage 1,448 4,321 — 5 5,774 Residential real estate junior lien 671 507 (12) 207 1,373 Other revolving and installment 352 514 (242) 129 753 Total consumer 2,471 5,342 (254) 341 7,900 Unallocated 2,192 (814) — — 1,378 Total $ 23,924 $ 10,900 $ (5,368) $ 4,790 $ 34,246 The following tables present the recorded investment in loans and related allowance for the loan losses, by portfolio segment, disaggregated on the basis of the Company’s impairment methodology, as of December 31, 2022 and 2021: December 31, 2022 Recorded Investment Allowance for Loan Losses Individually Collectively Individually Collectively (dollars in thousands) Evaluated Evaluated Total Evaluated Evaluated Total Commercial Commercial and industrial $ 1,313 $ 582,563 $ 583,876 $ 275 $ 8,883 $ 9,158 Real estate construction 262 97,548 97,810 97 1,349 1,446 Commercial real estate 1,472 880,198 881,670 582 12,106 12,688 Total commercial 3,047 1,560,309 1,563,356 954 22,338 23,292 Consumer Residential real estate first mortgage 535 679,016 679,551 — 5,769 5,769 Residential real estate junior lien 184 150,295 150,479 — 1,289 1,289 Other revolving and installment 1 50,607 50,608 — 528 528 Total consumer 720 879,918 880,638 — 7,586 7,586 Unallocated — — — — — 268 Total loans $ 3,767 $ 2,440,227 $ 2,443,994 $ 954 $ 29,924 $ 31,146 December 31, 2021 Recorded Investment Allowance for Loan Losses Individually Collectively Individually Collectively (dollars in thousands) Evaluated Evaluated Total Evaluated Evaluated Total Commercial Commercial and industrial $ 1,831 $ 434,930 $ 436,761 $ 278 $ 8,647 $ 8,925 Real estate construction — 40,619 40,619 — 783 783 Commercial real estate 809 598,084 598,893 5 12,371 12,376 Total commercial 2,640 1,073,633 1,076,273 283 21,801 22,084 Consumer Residential real estate first mortgage 21 510,695 510,716 — 6,532 6,532 Residential real estate junior lien 91 125,577 125,668 — 1,295 1,295 Other revolving and installment — 45,363 45,363 — 481 481 Total consumer 112 681,635 681,747 — 8,308 8,308 Unallocated — — — — — 1,180 Total loans $ 2,752 $ 1,755,268 $ 1,758,020 $ 283 $ 30,109 $ 31,572 The tables below summarize key information on impaired loans. These impaired loans may have estimated losses which are included in the allowance for loan losses. December 31, 2022 December 31, 2021 Recorded Unpaid Related Recorded Unpaid Related (dollars in thousands) Investment Principal Allowance Investment Principal Allowance Impaired loans with a valuation allowance Commercial and industrial $ 675 $ 711 $ 275 $ 445 $ 464 $ 278 Real estate construction 262 440 97 — — — Commercial real estate 896 900 582 180 203 5 Residential real estate junior lien — — — — — — Other revolving and installment — — — — — — Total impaired loans with a valuation allowance 1,833 2,051 954 625 667 283 Impaired loans without a valuation allowance Commercial and industrial 638 767 — 1,386 1,575 — Real estate construction — — — — — — Commercial real estate 576 660 — 629 684 — Residential real estate first mortgage 535 573 — 21 24 — Residential real estate junior lien 184 218 — 91 120 — Other revolving and installment 1 1 — — — — Total impaired loans without a valuation allowance 1,934 2,219 — 2,127 2,403 — Total impaired loans Commercial and industrial 1,313 1,478 275 1,831 2,039 278 Real estate construction 262 440 97 — — — Commercial real estate 1,472 1,560 582 809 887 5 Residential real estate first mortgage 535 573 — 21 24 — Residential real estate junior lien 184 218 — 91 120 — Other revolving and installment 1 1 — — — — Total impaired loans $ 3,767 $ 4,270 $ 954 $ 2,752 $ 3,070 $ 283 The table below presents the average recorded investment in impaired loans and interest income for the three years ending December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Average Average Average Recorded Interest Recorded Interest Recorded Interest (dollars in thousands) Investment Income Investment Income Investment Income Impaired loans with a valuation allowance Commercial and industrial $ 722 $ 13 $ 517 $ 13 $ 765 $ 14 Real estate construction 442 — — — — — Commercial real estate 935 — 187 7 3,972 138 Residential real estate junior lien — — — — 19 — Other revolving and installment — — — — 28 — Total impaired loans with a valuation allowance 2,099 13 704 20 4,784 152 Impaired loans without a valuation allowance Commercial and industrial 707 — 1,988 20 4,151 25 Real estate construction — — — — — — Commercial real estate 618 — 672 — 1,614 — Residential real estate first mortgage 575 — 23 — 461 — Residential real estate junior lien 191 — 98 — 234 3 Other revolving and installment 1 — 1 — — — Total impaired loans without a valuation allowance 2,092 — 2,782 20 6,460 28 Total impaired loans Commercial and industrial 1,429 13 2,505 33 4,916 39 Real estate construction 442 — — — — — Commercial real estate 1,553 — 859 7 5,586 138 Residential real estate first mortgage 575 — 23 — 461 — Residential real estate junior lien 191 — 98 — 253 3 Other revolving and installment 1 — 1 — 28 — Total impaired loans $ 4,191 $ 13 $ 3,486 $ 40 $ 11,244 $ 180 Loans with a carrying value of $1.5 billion and $1.2 billion were pledged at December 31, 2022 and 2021, respectively, to secure FHLB borrowings, public deposits, and for other purposes required or permitted by law. Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring, or TDR, if the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt. During the year December 31, 2022, there were no loans modified as a TDR. During the second quarter of 2021, there were three loans modified as TDRs as a result of changing the terms allowing for interest rate reductions and an extension of the maturity dates. As of December 31, 2021, the carrying value of the restructured loans was $701 thousand. The loans are not currently performing in compliance with the modified terms and were placed on nonaccrual. There was no specific reserve for loan losses allocated to the loan modified as a TDR. Consistent with regulatory guidance urging banks to work with borrowers during the COVID-19 pandemic, the Company offered a payment deferral program for its lending clients that were adversely affected by the COVID-19 pandemic. These deferrals were generally no more than 90 days in duration and were not considered TDRs in accordance with the Interagency Statement on Loan Modifications and Reporting for Financial Institutions as issued on April 7, 2020. For the year ended December 31, 2022, the Company entered into no new modifications and as of December 31, 2022, only one loan with a total outstanding principal balance of $268 thousand remained on deferral. As of December 31, 2021, 6 loans with a total outstanding principal balance of $3.3 million had been granted second deferrals, 2 loans with a total outstanding principal balance of $72 thousand remained on the first deferral and the remaining loans have been returned to a normal payment status. As an SBA-Certified Preferred lender, we were delegated the authority as part of the CARES Act to make PPP SBA-guaranteed financing available to eligible borrowers. As of December 31, 2021, we had assisted 2,454 new and existing clients secure approximately $474.2 million of PPP financing. The SBA pays a processing fee based on the balance of the financing outstanding at the time of final disbursement. The processing fees were as follows: five percent for loans of not more than $350 thousand, three percent for loans of more than $350 thousand and less than $2 million, and one percent for loans of at least $2 million. Net processing fees in the amount of $15.7 million were being deferred and recognized as interest income on a level yield method of the life of the represented loans. At December 31, 2022, the Company recognized all of the net processing fees. The Company does not have material commitments to lend additional funds to borrowers with loans whose terms have been modified in TDRs or whose loans are on nonaccrual. |
Land, Premises and Equipment, N
Land, Premises and Equipment, Net | 12 Months Ended |
Dec. 31, 2022 | |
Land, Premises and Equipment, Net | |
Land, Premises and Equipment, Net | NOTE 7 Land, Premises and Equipment, Net Components of land, premises and equipment at December 31, 2022 and 2021 were as follows: December 31, December 31, (dollars in thousands) 2022 2021 Land $ 4,542 $ 4,542 Buildings and improvements 26,625 25,633 Leasehold improvements 2,657 2,657 Furniture, fixtures, and equipment 36,013 35,063 69,837 67,895 Less accumulated depreciation (52,549) (49,525) Total $ 17,288 $ 18,370 Depreciation expense for the years ended December 31, 2022, 2021, and 2020 amounted to $3.0 million, $3.6 million, and $3.9 million, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | NOTE 8 Goodwill and Other Intangible Assets As of December 31, 2022 and 2021, goodwill totaled $47.1 million and $31.5 million, respectively. The following table summarizes the carrying amounts of goodwill, by segment, as of December 31, 2022 and 2021: December 31, December 31, (dollars in thousands) 2022 2021 Banking (1) $ 35,260 $ 20,131 Retirement and benefit services 11,827 11,359 Total goodwill $ 47,087 $ 31,490 (1) Goodwill increases consisted of the Metro Phoenix Bank acquisition purchase accounting adjustments, where were finalized in the fourth quarter of 2022. The gross carrying amount and accumulated amortization for each type of identifiable intangible asset are as follows: December 31, 2022 December 31, 2021 (dollars in thousands) Gross Carrying Amount Accumulated Amortization Total Gross Carrying Amount Accumulated Amortization Total Identifiable customer intangibles $ 41,423 $ (25,927) $ 15,496 $ 42,057 $ (21,807) $ 20,250 Core deposit intangible assets 7,592 (633) 6,959 — — — Total intangible assets $ 49,015 $ (26,560) $ 22,455 $ 42,057 $ (21,807) $ 20,250 Aggregate amortization expense for the years ended December 31, 2022, 2021, and 2020 was $4.8 million, $4.4 million, and $4.0 million, respectively. Estimated aggregate amortization expense for future years is as follows: (dollars in thousands) Amount 2023 $ 5,297 2024 5,043 2025 3,904 2026 2,275 2027 2,275 Thereafter 3,661 Total $ 22,455 |
Loan Servicing
Loan Servicing | 12 Months Ended |
Dec. 31, 2022 | |
Loan Servicing | |
Loan Servicing | NOTE 9 Loan Servicing Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled $357.2 million and $345.8 million at December 31, 2022 and 2021, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and collection and foreclosure processing. Loan servicing income is recorded on an accrual basis and includes servicing fees from investors and certain charges collected from borrowers, such as late payment fees, and is net of fair value adjustments to capitalized mortgage servicing rights. The following table summarizes the Company’s activity related to servicing rights for the years ended December 31, 2022, 2021, and 2020: Year ended December 31, (dollars in thousands) 2022 2021 2020 Balance, beginning of period $ 1,880 $ 1,987 $ 3,845 Additions 622 225 178 Amortization (524) (745) (922) (Impairment)/Recovery 665 413 (1,114) Balance, end of period $ 2,643 $ 1,880 $ 1,987 The following is a summary of key data and assumptions used in the valuation of servicing rights as of December 31, 2022 and 2021. Increases or decreases in any one of these assumptions would result in lower or higher fair value measurements. December 31, December 31, (dollars in thousands) 2022 2021 Fair value of servicing rights $ 2,643 $ 1,880 Weighted-average remaining term, years 20.5 20.3 Prepayment speeds 6.9 % 14.2 % Discount rate 10.5 % 9.5 % |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | NOTE 10 Leases A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Substantially all the leases in which the Company is the lessee are comprised of real estate property for branches, and office equipment rentals with terms extending through 2032. We do not have any material subleased properties. Substantially all of the Company’s leases are classified as operating leases. The Company made a policy election to exclude the recognition requirements of Topic 842 to all leases with original terms of 12 months or less. Instead, the short-term lease payments are recognized in income or expense on a straight-line basis over the lease term. The following table presents the classification of the Company’s ROU assets and lease liabilities on the consolidated financial statements. December 31, December 31, (dollars in thousands) 2022 2021 Lease Right-of-Use Assets Classification Operating lease right-of-use assets Operating lease right-of-use assets $ 5,419 $ 3,727 Finance lease right-of-use assets Land, premises and equipment, net — 87 Total lease right-of-use assets $ 5,419 $ 3,814 Lease Liabilities Operating lease liabilities Operating lease liabilities $ 5,902 $ 4,275 Finance lease liabilities Long-term debt — 203 Total lease liabilities $ 5,902 $ 4,478 The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rates used to calculate the present value of the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever the rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For the Company’s only finance lease, the Company utilized its incremental borrowing rate at lease inception. December 31, December 31, 2022 2021 Weighted-average remaining lease term, years Operating leases 5.0 3.4 Finance leases — 0.8 Weighted-average discount rate Operating leases 3.1 % 2.5 % Finance leases — % 7.8 % As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance utilities. Variable lease cost also includes payments for usage or maintenance of those capitalized equipment operating leases. The following table presents lease costs and other lease information for the years ending December 31, 2022, 2021 and 2020: Year ended December 31, (dollars in thousands) 2022 2021 2020 Lease costs Operating lease cost $ 1,799 $ 1,827 $ 2,457 Variable lease cost 899 823 1,170 Short-term lease cost 217 181 395 Finance lease cost Interest on lease liabilities 7 25 42 Amortization of right-of-use assets 87 116 116 Sublease income (238) (228) (228) Net lease cost $ 2,771 $ 2,744 $ 3,952 Other information Cash paid for amounts included in the measurement of lease liabilities operating cash flows from operating leases $ 1,706 $ 1,763 $ 2,432 Right-of-use assets obtained in exchange for new operating lease liabilities 4,266 267 $ 1,555 Future minimum payments for leases with initial or remaining terms of one year or more as of December 31, 2022 are as follows: Operating (dollars in thousands) Leases Twelve months ended 2023 $ 1,987 2024 1,236 2025 1,118 2026 936 2027 385 Thereafter 854 Total future minimum lease payments $ 6,516 Amounts representing interest (614) Total operating lease liabilities $ 5,902 |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2022 | |
Other Assets | |
Other Assets | NOTE 11 Other Assets Other assets on the balance sheet consisted of the following balances at December 31, 2022 and 2021: December 31, December 31, (dollars in thousands) 2022 2021 Federal Reserve Bank stock $ 4,595 $ 2,675 Foreclosed assets 30 885 Prepaid expenses 6,770 5,325 Investments in partnerships 14 14 Trust fees accrued/receivable 14,684 14,680 Income tax refund receivable 2,856 1,146 Federal Home Loan Bank stock 19,362 3,806 Derivative instruments 6,333 3,382 Tax credit investments 17,642 7,906 Other assets 3,426 2,889 Total $ 75,712 $ 42,708 |
Deposits
Deposits | 12 Months Ended |
Dec. 31, 2022 | |
Deposits. | |
Deposits | NOTE 12 Deposits The components of deposits in the consolidated balance sheets at December 31, 2022 and 2021 were as follows: December 31, December 31, (dollars in thousands) 2022 2021 Noninterest-bearing $ 860,987 $ 938,840 Interest-bearing Interest-bearing demand 706,275 714,669 Savings accounts 99,882 96,825 Money market savings 1,035,981 937,305 Time deposits 212,359 232,912 Total interest-bearing 2,054,497 1,981,711 Total deposits $ 2,915,484 $ 2,920,551 The aggregate amount of deposit overdrafts included as loans were $202 thousand and $2.9 million at December 31, 2022 and 2021, respectively. Certificates of deposit in excess of $250,000 totaled $51.1 million and $91.5 million at December 31, 2022 and 2021, respectively. At December 31, 2022, the scheduled maturities of certificates of deposit were as follows: (dollars in thousands) Amount 2023 $ 169,062 2024 22,854 2025 4,802 2026 10,663 2027 1,833 Thereafter 3,145 Total $ 212,359 |
Short-Term Borrowings
Short-Term Borrowings | 12 Months Ended |
Dec. 31, 2022 | |
Short-Term Borrowings | |
Short-Term Borrowings | NOTE 13 Short-Term Borrowings Short-term borrowings at December 31, 2022, 2021, and 2020 consisted of the following: Year ended December 31, (dollars in thousands) 2022 2021 2020 Fed funds purchased Balance as of end of period $ 153,080 $ — $ — Average daily balance 63,296 3 80 Maximum month-end balance 251,880 — — Weighted-average rate During period 2.46 % — % — % End of period 4.26 % — % — % FHLB Short-term advances Balance as of end of period $ 225,000 $ — $ — Average daily balance 89,932 — — Maximum month-end balance 225,000 — — Weighted-average rate During period 3.10 % — % — % End of period 4.31 % — % — % The Company had outstanding credit capacity with the FHLB of $531.6 million and $677.4 million at December 31, 2022 and 2021 respectively, secured by pledged loans and investment securities. The Company also had $87.0 million of unsecured federal funds agreements with correspondent banks with no outstanding balances at December 31, 2022 and 2021. The Company has an unused $15.0 million unsecured line of credit with Bank of North Dakota. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Debt. | |
Long-Term Debt | NOTE 14 Long-Term Debt Long-term debt at December 31, 2022 and 2021 consisted of the following: December 31, 2022 Period End Face Carrying Interest Maturity (dollars in thousands) Value Value Interest Rate Rate Date Call Date Subordinated notes payable $ 50,000 $ 50,000 Fixed 3.50 % 3/30/2031 3/31/2026 Junior subordinated debenture (Trust I) 4,124 3,537 Three-month LIBOR + 3.10% 7.82 % 6/26/2033 6/26/2008 Junior subordinated debenture (Trust II) 6,186 5,306 Three-month LIBOR + 1.80% 6.57 % 9/15/2036 9/15/2011 Total long-term debt $ 60,310 $ 58,843 December 31, 2021 Period End Face Carrying Interest Maturity (dollars in thousands) Value Value Interest Rate Rate Date Call Date Subordinated notes payable $ 50,000 $ 50,000 Fixed 3.50 % 3/30/2031 3/31/2026 Junior subordinated debenture (Trust I) 4,124 3,492 Three-month LIBOR + 3.10% 3.32 % 6/26/2033 6/26/2008 Junior subordinated debenture (Trust II) 6,186 5,238 Three-month LIBOR + 1.80% 2.00 % 9/15/2036 9/15/2011 Finance lease liability 2,700 203 Fixed 7.81 % 10/31/2022 N/A Total long-term debt $ 63,010 $ 58,933 |
Financial Instruments with Off-
Financial Instruments with Off-Balance Sheet Risk | 12 Months Ended |
Dec. 31, 2022 | |
Financial Instruments with Off-Balance Sheet Risk | |
Financial Instruments with Off-Balance Sheet Risk | NOTE 15 Financial Instruments with Off-Balance Sheet Risk In the normal course of business, the Company has outstanding commitment and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not included in the accompanying consolidated financial statements. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making such commitments as it does for instruments that are included in the statements of financial condition. At December 31, 2022 and 2021, the following financial instruments whose contract amount represents credit risk were approximately as follows: December 31, December 31, (dollars in thousands) 2022 2021 Commitments to extend credit $ 806,431 $ 668,115 Standby letters of credit 13,089 10,529 Total $ 819,520 $ 678,644 At December 31, 2022 the Company had no outstanding letters of credit with the FHLB. At December 31, 2021, the Company had a $150 thousand letter of credit with the FHLB. Bank of North Dakota letters of credit are collateralized by loans pledged to the Bank of North Dakota in the amount of $215.5 million and $229.7 million at December 31, 2022, and 2021, respectively. The Company had no outstanding letters of credit with the Bank of North Dakota at December 31, 2022 and 2021, respectively. 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 creditworthiness on a case by case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property and equipment, and income producing commercial properties. The Company was not required to perform on any financial guarantees and did not incur any losses on its commitments during the past two years. |
Legal Contingencies
Legal Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Legal Contingencies | |
Legal Contingencies | NOTE 16 Legal Contingencies The Company may be subject to claims and lawsuits which may arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of these claims and lawsuits is currently not expected to have a material adverse effect on the financial position of the Company. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Compensation | |
Share-Based Compensation | NOTE 17 Share-Based Compensation Plan On May 6, 2019, the Company’s stockholders approved the Alerus Financial Corporation 2019 Equity Incentive Plan. This plan allows the compensation committee the ability to grant a wide variety of equity awards, including stock options, stock appreciation rights, restricted stock, restricted stock units, and cash incentive awards in such forms and amounts as it deems appropriate to accomplish the goals of the plan. Any shares subject to an award that is cancelled, forfeited, or expires prior to exercise or realization, either in full or in part, shall again become available for issuance under the plan. However, shares subject to an award shall not again be made available for issuance or delivery under the plan if such shares are (a) tendered in payment of the exercise price of a stock option, (b) delivered to, or withheld by, the Company to satisfy any tax withholding obligation, or (c) covered by a stock-settled stock appreciation right or other awards that were not issued upon the settlement of the award. Shares vest, become exercisable and contain such other terms and conditions as determined by the compensation committee and set forth in individual agreements with the participant receiving the award. The plan authorizes the issuance of up to 1,100,000 shares of common stock. As of December 31, 2022, 922,010 shares of common stock are still available for issue under the plan. Amounts granted under the plans have been retroactively adjusted for all stock splits effected in the form of dividends. Activity in the stock plan for the years ended December 31, 2022, and 2021 was as follows: Year ended December 31, 2022 2021 Weighted- Weighted- Average Grant Average Grant Awards Date Fair Value Awards Date Fair Value Restricted Stock and Restricted Stock Unit Awards Outstanding at beginning of period 260,850 $ 21.04 325,030 $ 19.48 Granted 102,265 25.44 66,664 26.63 Vested (113,562) 19.25 (104,119) 20.51 Forfeited or cancelled (11,067) 23.90 (26,725) 18.03 Outstanding at end of period 238,486 $ 23.65 260,850 $ 21.04 Unrecognized compensation expense related to share-based awards was $2.5 million and $2.2 million as of December 31, 2022 and 2021, respectively. The expense is expected to be recognized over a weighted-average period of 2.7 and 2.9 years, as of December 31, 2022 and 2021, respectively. Compensation expense relating to stock awards under these plans was $1.9 million in 2022, $3.1 million in 2021, and $1.9 million in 2020. The number of unvested shares outstanding was 128,267 and 140,228 respectively, at December 31, 2022 and 2021. The number of unvested units outstanding was 110,219 and 120,622 at December 31, 2022 and 2021, respectively. |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefits | |
Employee Benefits | NOTE 18 Employee Benefits The Company maintains two employee retirement plans including the Alerus Financial Corporation Employee Stock Ownership Plan, or ESOP, and a defined contribution salary reduction plan, or 401(k) plan. The plans cover substantially all full-time employees upon satisfying prescribed eligibility requirements for age and length of service. Contributions to the ESOP are determined annually by the Board of Directors, at its discretion, and allocated to participants based on a percentage of annual compensation. Shares of the Company stock within the ESOP are considered outstanding and dividends on these shares are charged to retained earnings. Under the 401(k) plan, the Company contributes 100% of amounts deferred by employees up to 3% of eligible compensation and 50% of amounts deferred by employees between 3% and 6% of eligible compensation. Retirement plan contributions are reflected under employee benefits in the income statement and for years ending December 31, 2022, 2021, and 2020 were as follows: December 31, December 31, December 31, (dollars in thousands) 2022 2021 2020 Salary reduction plan $ 3,148 $ 3,123 $ 2,960 ESOP 1,932 2,014 2,166 Total $ 5,080 $ 5,137 $ 5,126 Total ESOP shares outstanding 1,111,424 1,207,952 1,170,611 |
Noninterest Income
Noninterest Income | 12 Months Ended |
Dec. 31, 2022 | |
Noninterest Income | |
Noninterest Income | NOTE 19 Noninterest Income The following table presents the Company’s noninterest income for the years ended December 31, 2022, 2021, and 2020. Year ended December 31, (dollars in thousands) 2022 2021 2020 Retirement and benefits $ 67,135 $ 71,709 $ 60,956 Wealth management 20,870 21,052 17,451 Mortgage banking (1) 16,921 48,502 61,641 Service charges on deposit accounts 1,434 1,395 1,409 Net gains (losses) on investment securities (1) — 125 2,737 Other Interchange fees 2,246 2,180 2,140 Bank-owned life insurance income (1) 835 793 797 Misc. transactional fees 1,429 1,218 1,246 Other noninterest income 353 413 994 Total noninterest income $ 111,223 $ 147,387 $ 149,371 (1) Not within the scope of ASC 606. Contract balances: Contract acquisition costs commission). The Company utilizes the practical expedient |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | NOTE 20 Income Taxes The components of income tax expense (benefit) for the years ended December 31, 2022, 2021, and 2020 were as follows: Year ended December 31, (dollars in thousands) 2022 2021 2020 Federal Current $ 9,005 $ 10,731 $ 14,541 Deferred 727 2,212 (3,615) Federal income tax 9,732 12,943 10,926 State Current 2,298 2,879 3,736 Deferred 147 574 (819) State income tax 2,445 3,453 2,917 Total income tax expense $ 12,177 $ 16,396 $ 13,843 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021 were as follows: December 31, December 31, (dollars in thousands) 2022 2021 Deferred Tax Assets Allowance for loan losses $ 7,818 $ 7,925 Employee compensation and benefit accruals 2,455 2,762 Expense accruals 417 634 Identifiable intangible amortization 3,363 3,341 Deferred loan fees 1,665 58 Net operating loss carry forwards 3 42 Nonaccrual loan interest 74 86 Unrealized loss on available‑for‑sale investment securities 33,056 1,426 Other 884 518 Total deferred tax assets from temporary differences 49,735 16,792 Deferred Tax Liabilities Accumulated depreciation 835 918 Goodwill and intangible amortization 5,115 2,752 Servicing assets 663 451 Prepaid expenses 552 1,014 Other 201 43 Total deferred tax liabilities from temporary differences 7,366 5,178 Net Deferred Tax Assets $ 42,369 $ 11,614 The reconciliation between applicable income taxes and the amount computed at the applicable statutory Federal tax rate for years ending December 31, 2022, 2021, and 2020 was as follows: Year ended December 31, 2022 2021 2020 Percent of Percent of Percent of (dollars in thousands) Amount Pretax Income Amount Pretax Income Amount Pretax Income Taxes at statutory federal income tax rate $ 10,958 21.0 % $ 14,506 21.0 % $ 12,289 21.0 % Tax effect of: Tax exempt income (514) (1.0) % (556) (0.8) % (527) (0.9) % State income taxes, net of federal benefits 2,297 4.4 % 2,973 4.3 2,522 4.3 % Nondeductible items and other (564) (1.1) % (527) (0.8) (441) (0.8) % Applicable income taxes $ 12,177 23.3 % $ 16,396 23.7 % $ 13,843 23.6 % It is the opinion of management that the Company has no significant uncertain tax positions that would be subject to change upon examination. |
Tax Credit Investments
Tax Credit Investments | 12 Months Ended |
Dec. 31, 2022 | |
Tax Credit Investments. | |
Tax Credit Investments | NOTE 21 Tax Credit Investments The Company invests in qualified affordable housing projects for the purpose of community reinvestment and obtaining tax credits. The Company’s tax credit investments are limited to existing lending relationships with well-known developers and projects within the Company’s market area. The following table presents a summary of the Company’s investments in qualified affordable housing projects tax credit investments at December 31, 2022: December 31, 2022 December 31, 2021 (dollars in thousands) Investment Unfunded Commitment Investment Unfunded Commitment Investment Accounting Method Low income housing tax credit Proportional amortization $ 17,906 $ 15,559 $ 7,906 $ 6,999 Total $ 17,906 $ 15,559 $ 7,906 $ 6,999 For the year ended December 31, 2022, we had $264 thousand of amortization expense and $373 thousand of tax benefit recognized for the Company’s qualified affordable housing projects tax credit investments. For the year ended December 31, 2021, we had no amortization expense and $8 thousand of tax benefit recognized for the Company’s qualified affordable housing projects tax credit investments. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting | |
Segment Reporting | NOTE 22 Segment Reporting The Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to the Company’s financial statements, and management’s regular review of the operating results of those services. The Company operates through four operating segments: Banking, Retirement and Benefit Services, Wealth Management, and Mortgage. The financial information presented on each segment sets forth net interest income, provision for loan losses, direct noninterest income and direct noninterest expense before indirect allocations. Corporate Administration includes the indirect overhead expense and is set forth in the table below. The segment net income before taxes represents direct revenue and expense before indirect allocations and income taxes. The following table presents key metrics related to the Company’s segments as of and for the periods presented: Year ended December 31, 2022 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 100,190 $ — $ — $ 1,879 $ (2,340) $ 99,729 Provision for loan losses — — — — — — Noninterest income 6,199 67,135 20,870 16,921 98 111,223 Noninterest expense 67,068 26,204 5,979 18,590 40,929 158,770 Net income before taxes $ 39,321 $ 40,931 $ 14,891 $ 210 $ (43,171) $ 52,182 Total assets $ 3,696,676 $ 40,821 $ 4,032 $ 10,620 $ 27,488 $ 3,779,637 Year ended December 31, 2021 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 87,014 $ — $ — $ 1,981 $ (1,896) $ 87,099 Provision for loan losses (3,500) — — — — (3,500) Noninterest income 6,091 71,709 21,052 48,502 33 147,387 Noninterest expense 44,989 40,164 8,869 37,162 37,725 168,909 Net income before taxes $ 51,616 $ 31,545 $ 12,183 $ 13,321 $ (39,588) $ 69,077 Total assets $ 3,254,979 $ 44,953 $ 3,644 $ 75,713 $ 13,402 $ 3,392,691 Year ended December 31, 2020 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 85,167 $ — $ — $ 2,092 $ (3,413) $ 83,846 Provision for loan losses 10,900 — — — — 10,900 Noninterest income 10,017 60,956 17,451 61,641 (694) 149,371 Noninterest expense 46,883 35,236 8,289 36,323 37,068 163,799 Net income before taxes $ 37,401 $ 25,720 $ 9,162 $ 27,410 $ (41,175) $ 58,518 Total assets $ 2,827,792 $ 47,758 $ 3,009 $ 125,078 $ 10,134 $ 3,013,771 Banking The Banking division offers a complete line of loan, deposit, cash management, and treasury services through fourteen offices in North Dakota, Minnesota, and Arizona. These products and services are supported through web and mobile based applications. The majority of the Company’s assets and liabilities are in the Banking segments’ balance sheet. Retirement and Benefit Services Retirement and Benefit Services provides the following services nationally: recordkeeping and administration services to qualified retirement plans; ESOP trustee, recordkeeping, and administration; investment fiduciary services to retirement plans; and health savings account, flex spending account, and COBRA recordkeeping and administration services to employers. The division operates within the banking markets as well as in Lansing, Michigan, and Littleton, Colorado. Wealth Management The Wealth Management division provides advisory and planning services, investment management, and trust and fiduciary services to clients across the Company’s footprint. Mortgage The mortgage division offers first and second mortgage loans through the Banking office locations. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share | |
Earnings Per Share | NOTE 23 Earnings Per Share The calculation of basic and diluted earnings per share using the two-class method for the years ending December 31, 2022, 2021, and 2020 is presented below: Year ended December 31, (dollars and shares in thousands, except per share data) 2022 2021 2020 Net income $ 40,005 $ 52,681 $ 44,675 Dividends and undistributed earnings allocated to participating securities 416 802 770 Net income available to common shareholders $ 39,589 $ 51,879 $ 43,905 Weighted-average common shares outstanding for basic earnings per share 18,640 17,189 17,106 Dilutive effect of stock-based awards 244 297 332 Weighted-average common shares outstanding for diluted earnings per share 18,884 17,486 17,438 Earnings per common share: Basic earnings per common share $ 2.12 $ 3.02 $ 2.57 Diluted earnings per common share $ 2.10 $ 2.97 $ 2.52 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | NOTE 24 Related Party Transactions In the ordinary course of business, the Bank has extended loans to executive officers, directors, and their affiliates (related parties). These loans are made on substantially the same terms and conditions as those prevailing at the time for comparable transactions with outsiders and are not considered to involve more than the normal risk of collectability. The following table presents the activity associated with loans made between related parties at December 31, 2022 and 2021: Year ended December 31, (dollars in thousands) 2022 2021 Beginning balance $ 34 $ 254 New loans and advances 145 132 Repayments (95) (352) Changes to related parties (1) 46 — Ending balance $ 130 $ 34 (1) Represents changes related to directors that were added to the Board during the year. Deposits from related parties held by the Bank at December 31, 2022 and 2021, amounted to $587 thousand and $3.6 million, respectively. |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments | |
Derivative Instruments | NOTE 25 Derivative Instruments The Company maintains an overall interest rate risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings that are caused by interest rate volatility. The Company’s goal is to manage interest rate sensitivity by modifying the repricing or maturity characteristics of certain balance sheet assets and liabilities so that the net interest margin is not, on a material basis, adversely affected by movements in interest rates. As a result of the interest rate fluctuations, hedged assets and liabilities will appreciate or depreciate in market value. The effect of this unrealized appreciation or depreciation will generally be offset by income or loss on the derivative instruments that are linked to the hedged assets and liabilities. The Company views this strategy as a prudent management of interest rate sensitivity, such that earnings are not exposed to undue risk presented by changes in interest rate risks. Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps, futures contracts, and options contracts with indices that relate to the pricing of specific balance sheet assets and liabilities. Interest rate swaps generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date. Interest rate options represent contracts that allow the holder of the option to (1) receive cash or (2) purchase, sell, or enter into a financial instrument at a specified price within a specified period of time. Certain of these contracts also provide the Company with the right to enter into interest-rate swaps and cap and floor agreements with the writer of the option. By using derivative instruments, the Company is exposed to credit and market risk. If the counterparty fails to perform, credit risk is equal to the extent of the estimated fair value gain in a derivative. When the estimated fair value of a derivative contract is positive, this generally indicates that the counterparty owes the Company and therefore, creates a repayment risk for the Company. When the estimated fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it has no repayment risk. The Company minimizes the credit (or repayment) risk in derivative instruments by entering into transactions with high-quality counterparties that are reviewed periodically by the Company’s credit committee. The Company also maintains a policy of requiring that all derivative contracts be governed by an International Swaps and Derivatives Association Master Agreement. Various derivatives, including interest rate, commodity, equity, credit, and foreign exchange contracts, are offered to clients but usually offset the exposure from such contracts by purchasing other financial contracts. The customer accommodations and any offsetting financial contracts are treated as freestanding derivatives. Free-standing derivatives also include derivatives entered into for risk management that do not otherwise qualify for hedge accounting, including domestic hedge derivatives. The following table presents the total notional or contractual amounts and estimated fair values for derivatives not designated as hedging instruments that are recorded on the balance sheet in other assets or other liabilities. Customer accommodation, trading, and other free-standing derivatives are recorded on the balance sheet at fair value in trading assets or other liabilities at December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Fair Notional Fair Notional (dollars in thousands) Value Amount Value Amount Asset Derivatives Consolidated Balance Sheet Location Interest rate swaps Other assets $ 6,277 $ 43,430 $ 1,366 $ 44,826 Interest rate lock commitments Other assets 121 10,462 1,507 52,316 Forward loan sales commitments Other assets 7 351 490 13,418 TBA mortgage backed securities Other assets — — 34 97,000 Total asset derivatives $ 6,405 $ 54,243 $ 3,397 $ 207,560 Liability Derivatives Interest rate swaps Accrued expenses and other liabilities $ 6,277 $ 43,430 $ 1,368 $ 44,826 TBA mortgage backed securities Accrued expenses and other liabilities 26 25,750 — — Total liability derivatives $ 6,303 $ 69,180 $ 1,368 $ 44,826 The Company has third-party agreements that require a minimum dollar transfer amount upon a margin call. This requirement is dependent on certain specified credit measures. The amount of collateral posted with third parties at December 31, 2022 and 2021, respectively, was zero and $19 thousand. The amount of collateral posted with third parties is deemed to be sufficient to collateralize both the fair market value change a well as any additional amounts that may be required as a result of a change in the specified credit measures. The gain (loss) recognized on derivatives instruments for years ended December 31, 2022, 2021, and 2020 was as follows: Year ended Consolidated Statements December 31, December 31, December 31, (dollars in thousands) of Income Location 2022 2021 2020 Interest rate swaps Other noninterest income $ 2 $ 1 $ (3) Interest rate lock commitments Mortgage banking (1,464) (8,660) 8,798 Forward loan sales commitments Mortgage banking (483) (2,174) 2,271 TBA mortgage backed securities Mortgage banking 4,916 5,220 (12,997) Total gain/(loss) from derivative instruments $ 2,971 $ (5,613) $ (1,931) |
Regulatory Matters
Regulatory Matters | 12 Months Ended |
Dec. 31, 2022 | |
Regulatory Matters | |
Regulatory Matters | NOTE 26 Regulatory Matters The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s consolidated financial statements. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of common equity tier 1, tier 1, and total capital (as defined in the regulations) to risk weighted assets (as defined) and of tier 1 capital (as defined) to average assets (as defined). Management believes at December 31, 2022 and 2021, each of the Company and the Bank met all of the capital adequacy requirements to which it is subject. As of December 31, 2022, the most recent notification from the Federal Deposit Insurance Corporation, categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since the notification that management believe have changed in the Bank’s category. Actual capital amounts and ratios for the Company (consolidated) and the Bank at December 31, 2022 and 2021 are presented in the following table: December 31, 2022 Minimum to be Requirements Well Capitalized for Capital Under Prompt Actual Adequacy Purposes Corrective Action (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk weighted assets Consolidated $ 389,335 13.39 % $ 130,862 4.50 % $ N/A N/A Bank 370,749 12.76 % 130,791 4.50 % 188,920 6.50 % Tier 1 capital to risk weighted assets . Consolidated 398,179 13.69 % 174,482 6.00 % N/A N/A Bank 370,749 12.76 % 174,388 6.00 % 232,517 8.00 % Total capital to risk weighted assets Consolidated 479,325 16.48 % 232,643 8.00 % N/A N/A Bank 401,895 13.83 % 232,517 8.00 % 290,646 10.00 % Tier 1 capital to average assets Consolidated 398,179 11.25 % 141,514 4.00 % N/A N/A Bank 370,749 10.48 % 141,440 4.00 % 176,800 5.00 % December 31, 2021 Minimum to be Requirements Well Capitalized for Capital Under Prompt Actual Adequacy Purposes Corrective Action (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk weighted assets Consolidated $ 314,628 14.65 % $ 96,647 4.50 % $ N/A N/A Bank 297,453 13.87 % 96,538 4.50 % 139,444 6.50 % Tier 1 capital to risk weighted assets . Consolidated 323,358 15.06 % 128,862 6.00 % N/A N/A Bank 297,453 13.87 % 128,718 6.00 % 171,624 8.00 % Total capital to risk weighted assets Consolidated 400,263 18.64 % 171,816 8.00 % N/A N/A Bank 324,328 15.12 % 171,624 8.00 % 214,530 10.00 % Tier 1 capital to average assets Consolidated 323,358 9.79 % 132,112 4.00 % N/A N/A Bank 297,453 9.01 % 132,039 4.00 % 165,049 5.00 % The Bank is subject to certain restrictions on the amount of dividends that it may pay without prior regulatory approval. The Bank normally restricts dividends to a lesser amount. In addition, the Company must adhere to various U.S. Department of Housing and Urban Development, or HUD, regulatory guidelines including required minimum capital and liquidity to maintain their Federal Housing Administration approval status. Failure to comply with the HUD guidelines could result in withdrawal of this certification. As of December 31, 2022 and 2021 the Company was in compliance with HUD guidelines. |
Stock Repurchase Program
Stock Repurchase Program | 12 Months Ended |
Dec. 31, 2022 | |
Stock Repurchase Program | |
Stock Repurchase Program | NOTE 27 Stock Repurchase Program On February 18, 2021, the Board of Directors of the Company approved a stock repurchase program, or the Program, which authorizes the Company to repurchase up to 770,000 shares of its common stock subject to certain limitations and conditions. The Program was effective immediately and will continue for a period of 36 months, until February 18, 2024. The Program does not obligate the Company to repurchase any shares of its common stock and there is no assurance that the Company will do so. For the years ended December 31, 2022 and 2021, there were no shares repurchased under the Program. The Company also repurchases shares to pay withholding taxes on the vesting of restricted stock awards and units. |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value of Assets and Liabilities | |
Fair Value of Assets and Liabilities | NOTE 28 Fair Value of Assets and Liabilities The Company categorizes its assets and liabilities measured at estimated fair value into a three level hierarchy based on the priority of the inputs to the valuation technique used to determine estimated fair value. The estimated fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the estimated fair value measurement fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the estimated fair value measurement. Assets and liabilities valued at estimated fair value are categorized based on the following inputs to the valuation techniques as follows: Level 1 Level 2 Level 3 Professional standards allow entities the irrevocable option to elect to measure certain financial instruments and other items at estimated fair value for the initial and subsequent measurement on an instrument-by-instrument basis. The Company adopted the policy to value certain financial instruments at estimated fair value. The Company has not elected to measure any existing financial instruments at estimated fair value; however, it may elect to measure newly acquired financial instruments at estimated fair value in the future. Recurring Basis The Company uses estimated fair value measurements to record estimated fair value adjustments to certain assets and liabilities and to determine estimated fair value disclosures. For additional information on how the Company measures estimated fair value refer to Note 1 (Significant Accounting Policies). The following tables present the balances of the assets and liabilities measured at estimated fair value on a recurring basis at December 31, 2022 and 2021: December 31, 2022 (dollars in thousands) Level 1 Level 2 Level 3 Total Available-for-sale U.S. treasury and government agencies $ — $ 3,520 $ — $ 3,520 Mortgage backed securities Residential agency — 587,679 — 587,679 Commercial — 63,558 — 63,558 Asset backed securities — 34 — 34 Corporate bonds — 62,533 — 62,533 Total available-for-sale investment securities $ — $ 717,324 $ — $ 717,324 Other assets Derivatives $ — $ 6,405 $ — $ 6,405 Other liabilities Derivatives $ — $ 6,303 $ — $ 6,303 December 31, 2021 (dollars in thousands) Level 1 Level 2 Level 3 Total Available-for-sale U.S. treasury and government agencies $ — $ 5,103 $ — $ 5,103 Mortgage backed securities Residential agency — 707,157 — 707,157 Commercial — 90,913 — 90,913 Asset backed securities — 54 — 54 Corporate bonds — 50,422 — 50,422 Total available-for-sale investment securities $ — $ 853,649 $ — $ 853,649 Other assets Derivatives $ — $ 3,397 $ — $ 3,397 Other liabilities Derivatives $ — $ 1,368 $ — $ 1,368 The following is a description of the valuation methodologies used for instruments measured at estimated fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy. Investment Securities When available, the Company uses quoted market prices to determine the estimated fair value of investment securities; such items are classified in Level 1 of the estimated fair value hierarchy. For the Company’s investment securities for which quoted prices are not available for identical investment securities in an active market, the Company determines estimated fair value utilizing vendors who apply matrix pricing for similar bonds for which no prices are observable or may compile prices from various sources. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market, and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. Estimated fair values from these models are verified, where possible, against quoted prices for recent trading activity of assets with similar characteristics to the security being valued. Such methods are generally classified as Level 2. However, when prices from independent sources vary, cannot be obtained, or cannot be corroborated, a security is generally classified as Level 3. Derivatives All of the Company’s derivatives are traded in over-the-counter markets where quoted market prices are not readily available. For these derivatives, estimated fair value is measured using internally developed models that use primarily market observable inputs, such as yield curves and option volatilities, and accordingly, classify as Level 2. Examples of Level 2 derivatives are basic interest rate swaps and forward contracts. Any remaining derivative estimated fair value measurements using significant assumptions that are unobservable are classified as Level 3. Level 3 derivatives include interest rate lock commitments written for residential mortgage loans that are held for sale. Nonrecurring Basis Certain assets are measured at estimated fair value on a nonrecurring basis. These assets are not measured at estimated fair value on an ongoing basis; however, they are subject to estimated fair value adjustments in certain circumstances, such as when there is evidence of impairment or a change in the amount of previously recognized impairment. Net impairment losses related to nonrecurring estimated fair value measurements of certain assets for the years ended December 31, 2022 and 2021 consisted of the following: December 31, 2022 (dollars in thousands) Level 2 Level 3 Total Impairment Loans held for sale $ 9,488 $ — $ 9,488 $ — Impaired loans — 2,813 2,813 954 Foreclosed assets — 30 30 — Servicing rights — 2,643 2,643 — December 31, 2021 (dollars in thousands) Level 2 Level 3 Total Impairment Loans held for sale $ 46,490 $ — $ 46,490 $ — Impaired loans — 2,469 2,469 283 Foreclosed assets — 885 885 — Servicing rights — 1,880 1,880 — Loans Held for Sale Loans originated and held for sale are carried at the lower of cost or estimated fair value. The Company obtains quotes or bids on these loans directly from purchasing financial institutions. Typically, these quotes include a premium on the sale and thus these quotes indicate estimated fair value of the held for sale loans is greater than cost. Impairment losses for loans held for sale that are carried at the lower of cost or estimated fair value represent additional net write-downs during the period to record these loans at the lower of cost or estimated fair value subsequent to their initial classification as loans held for sale. Impaired Loans In accordance with the provisions of the loan impairment guidance, loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms are measured for impairment. Allowable methods for estimating fair value include using the estimated fair value of the collateral for collateral dependent loans or, where a loan is determined not to be collateral dependent, using a discounted cash flow method. The estimated fair value method requires obtaining a current independent appraisal of the collateral and applying a discount factor, if necessary, to the appraised value and including costs to the sell. Because many of these inputs are not observable, the measurements are classified as Level 3. Foreclosed Assets Foreclosed assets are recorded at estimated fair value based on property appraisals, less estimated selling costs, at the date of the transfer with any impairment amount charged to the allowance for loan losses. Subsequent to the transfer, foreclosed assets are carried at the lower of cost or estimated fair value, less estimated selling costs with changes in the estimated fair value or any impairment amount recorded in other noninterest expense. Fair value measurements may be based upon appraisals, third-party price opinions, or internally developed pricing methods. These measurements are classified as Level 3. Servicing Rights Servicing rights do not trade in an active market with readily observable prices. Accordingly, the estimated fair value of servicing rights is determined using a valuation model that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. Servicing rights are carried at lower of cost or market value, and therefore can be subject to estimated fair value measurements on a nonrecurring basis. Estimated fair value measurements of servicing rights use significant unobservable inputs and accordingly, are classified as Level 3. The Company obtains the estimated fair value of servicing rights from an independent third-party pricing service and records the unadjusted estimated fair values in the financial statements. The valuation techniques and significant unobservable inputs used to measure Level 3 estimated fair values at December 31, 2022 and 2021, are as follows: December 31, 2022 (dollars in thousands) Weighted Asset Type Valuation Technique Unobservable Input Fair Value Range Average Impaired loans Appraisal value Property specific adjustment $ 2,813 N/A N/A Foreclosed assets Appraisal value Property specific adjustment 30 N/A N/A Servicing rights Discounted cash flows Prepayment speed assumptions 2,643 103-137 115 Discount rate 10.5 % 10.5 % December 31, 2021 (dollars in thousands) Weighted Asset Type Valuation Technique Unobservable Input Fair Value Range Average Impaired loans Appraisal value Property specific adjustment $ 2,469 N/A N/A Foreclosed assets Appraisal value Property specific adjustment 885 N/A N/A Servicing rights Discounted cash flows Prepayment speed assumptions 1,880 161-327 237 Discount rate 9.5 % 9.5 % Disclosure of estimated fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the consolidated balance sheets. In cases in which quoted market prices are not available, estimated fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. In that regard, the derived estimated fair value estimates cannot be substantiated by comparison to independent markets and, in many cases could not be realized in immediate settlement of the instruments. Certain financial instruments with an estimated fair value that is not practicable to estimate and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate estimated fair value amounts presented do not necessarily represent the underlying value of the Company. The following disclosures represent financial instruments in which the ending balances at December 31, 2022 and 2021 are not carried at estimated fair value in their entirety on the consolidated balance sheets. Cash and Due from Banks and Accrued Interest The carrying amounts reported in the Consolidated Balance Sheets approximate those assets and liabilities estimated fair values. Loans For variable-rate loans that reprice frequently and with no significant change in credit risk, estimated fair values are based on carrying values. The estimated fair values of other loans are estimated using discounted cash flow analysis, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Bank-Owned Life Insurance Bank-owned life insurance is carried at the amount due upon surrender of the policy, which is also the estimated fair value. This amount was provided by the insurance companies based on the terms of the underlying insurance contract. Deposits The estimated fair values of demand deposits are, by definition, equal to the amount payable on demand at the consolidated balance sheet date. The estimated fair values of fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies current incremental interest rates being offered on certificates of deposit to a schedule of aggregated expected monthly maturities of the outstanding certificates of deposit. Short-Term Borrowings and Long-Term Debt For variable-rate borrowings that reprice frequently, estimated fair values are based on carrying values. The estimated fair value of fixed-rate borrowings is estimated using discounted cash flow analysis, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. Off-Balance Sheet Credit-Related Commitments Off-balance sheet credit related commitments are generally of short-term nature. The contract amount of such commitments approximates their estimated fair value since the commitments are comprised primarily of unfunded loan commitments which are generally priced at market at the time of funding. The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments are as follows: December 31, 2022 Carrying Estimated Fair Value (dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents $ 58,242 $ 58,242 $ — $ — $ 58,242 Investment securities held-to-maturity 321,902 — 270,912 — 270,912 Loans, net 2,412,848 — — 2,311,956 2,311,956 Accrued interest receivable 12,869 12,869 — — 12,869 Bank-owned life insurance 33,991 — 33,991 — 33,991 Financial Liabilities Noninterest-bearing deposits $ 860,987 $ — $ 860,987 $ — $ 860,987 Interest-bearing deposits 1,842,138 — 1,842,138 — 1,842,138 Time deposits 212,359 — — 208,550 208,550 Short-term borrowings 378,080 378,080 — — 378,080 Long-term debt 58,843 — 56,116 — 56,116 Accrued interest payable 2,426 2,426 — — 2,426 December 31, 2021 Carrying Estimated Fair Value (dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents $ 242,311 $ 242,311 $ — $ — $ 242,311 Investment securities held-to-maturity 352,061 — 349,677 — 349,677 Loans, net 1,726,448 — — 1,760,784 1,760,784 Accrued interest receivable 8,537 8,537 — — 8,537 Bank-owned life insurance 33,156 — 33,156 — 33,156 Financial Liabilities Noninterest-bearing deposits $ 938,840 $ — $ 938,840 $ — $ 938,840 Interest-bearing deposits 1,748,799 — 1,748,799 — 1,748,799 Time deposits 232,912 — — 232,970 232,970 Long-term debt 58,933 — 57,772 — 57,772 Accrued interest payable 1,674 1,674 — — 1,674 |
Parent Company Only Financial S
Parent Company Only Financial Statements | 12 Months Ended |
Dec. 31, 2022 | |
Parent Company Only Financial Statements | |
Parent Company Only Financial Statements | NOTE 29 Parent Company Only Financial Statements The condensed financial statements of Alerus Financial Corporation (parent company only) are presented below. These statements should be read in conjunction with the Notes to the Consolidated Financial Statements Alerus Financial Corporation Parent Company Condensed Balance Sheets December 31, December 31, (dollars in thousands) 2022 2021 Assets Cash and cash equivalents $ 84,017 $ 81,753 Land, premises and equipment, net — 87 Investment in subsidiaries 338,595 342,538 Deferred income taxes, net 904 1,000 Other assets 487 655 Total assets $ 424,003 $ 426,033 Liabilities and Stockholders’ Equity Long‑term debt $ 58,843 $ 58,933 Accrued expenses and other liabilities 8,288 7,697 Total liabilities 67,131 66,630 Stockholders’ equity 356,872 359,403 Total stockholders’ equity 356,872 359,403 Total liabilities and stockholders’ equity $ 424,003 $ 426,033 Alerus Financial Corporation Parent Company Condensed Statements of Income Year ended December 31, (dollars in thousands) 2022 2021 2020 Income Dividends from subsidiaries $ 18,500 $ 16,000 $ 16,000 Other income 16 4 10 Total operating income 18,516 16,004 16,010 Expenses 6,583 5,293 6,057 Income before equity in undistributed income 11,933 10,711 9,953 Equity in undistributed income of subsidiaries 26,424 40,642 33,208 Income before income taxes 38,357 51,353 43,161 Income tax benefit 1,648 1,328 1,514 Net income $ 40,005 $ 52,681 $ 44,675 Alerus Financial Corporation Parent Company Condensed Statements of Cash Flows Year ended December 31, (dollars in thousands) 2022 2021 2020 Operating activities Net income $ 40,005 $ 52,681 $ 44,675 Adjustments to reconcile net income to net cash provided by operating activities Equity in undistributed income of subsidiaries (26,424) (40,642) (33,208) Depreciation and amortization 87 115 116 Stock‑based compensation cost 1,904 3,095 1,927 Other, net 419 1,266 413 Net cash provided by operating activities 15,991 16,515 13,923 Investing activities Investment in bank subsidiary — — — Net cash (paid) for business combinations (189) — — Net cash provided by investing activities (189) — — Financing activities Cash dividends paid on common stock (12,800) (10,751) (10,387) Repurchase of common stock (738) (712) (482) Net cash provided by financing activities (13,538) (11,463) (10,869) Change in cash and cash equivalents 2,264 5,052 3,054 Cash and cash equivalents at beginning of period 81,753 76,701 73,647 Cash and cash equivalents at end of period $ 84,017 $ 81,753 $ 76,701 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events. | |
Subsequent Events | NOTE 30 Subsequent Events In February 2023, the Company entered into a 3-year Subsequent events have been evaluated through March 10, 2023, which is the date these financial statements were issued. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Significant Accounting Policies | |
Organization | Alerus Financial Corporation is a financial holding company organized under the laws of Delaware. Alerus Financial Corporation and its subsidiaries, or the Company, is a diversified financial services company headquartered in Grand Forks, North Dakota. Through its subsidiary, Alerus Financial, National Association, or the Bank, the Company provides innovative and comprehensive financial solutions to businesses and consumers through four distinct business lines – banking, retirement and benefit services, wealth management, and mortgage. The Bank operates under a national charter and provides full banking services. As a national bank, the Bank is subject to regulation by the Office of the Comptroller of Currency and the Federal Deposit Insurance Corporation. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries in which the Company has a controlling interest. Significant intercompany balances and transactions have been eliminated in consolidation. In the normal course of business, the Company may enter into a transaction with a variable interest entity, or VIE. VIEs are legal entities whose investors lack the ability to make decisions about the entity’s activities, or whose equity investors do not have the right to receive the residual returns of the entity. The applicable accounting guidance requires the Company to perform ongoing quantitative and qualitative analysis to determine whether it must consolidate any VIE. The Company does not have any ownership interest in or exert any control over any VIE, and thus no VIEs are included in the consolidated financial statements. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the fair value of assets acquired and liabilities assumed from an acquisition and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the valuation of investment securities, determination of the allowance for loan losses, valuation of reporting units for the purpose of testing goodwill and other intangible assets for impairment, valuation of deferred tax assets, and fair values of financial instruments. |
Emerging Growth Company | Emerging Growth Company The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, even if the Company complies with the greater obligations of public companies that are not emerging growth companies, the Company may avail itself of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as the Company is an emerging growth company. The Company will continue to be an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the date of the first sale of common equity securities under the Company’s Registration Statement on Form S-1, which was declared effective by the U.S. Securities and Exchange Commission, or SEC, on September 12, 2019; (2) the last day of the fiscal year in which the Company has $1.235 billion or more in annual revenues; (3) the date on which the Company is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act; or (4) the date on which the Company has, during the previous three-year period, issued publicly or privately, more than $1.0 billion in non-convertible debt securities. Management cannot predict if investors will find the Company’s common stock less attractive because it will rely on the exemptions available to emerging growth companies. If some investors find the Company’s common stock less attractive as a result, there may be a less active trading market for its common stock and the Company’s stock price may be more volatile. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company elected to take advantage of the benefits of this extended transition period. |
Concentrations of Credit Risk | Concentrations of Credit Risk Substantially all of the Company’s lending activities are with clients located within North Dakota, Minnesota, and Arizona. At December 31, 2022 and 2021 respectively, 23.9% and 24.8% of the Company’s loan portfolio consisted of commercial and industrial loans that were not secured by real estate. The Company does not have any significant loan concentrations in any one industry or with any one client. Note 6 (Loans and Allowance for Loan Losses) discusses the Company’s loan portfolio. The Company invests in a variety of investment securities and does not have any significant concentrations in any one industry or to any one issuer. Note 5 (Investment Securities) discusses the Company’s investment securities portfolio. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, cash and due from banks includes cash and cash equivalents, balances due from banks, and federal funds sold, all of which have an original maturity within 90 days. Cash flows from loans and deposits are reported net. Interest-bearing deposits in banks are carried at cost. |
Investment Securities | Investment Securities Debt securities are classified as available-for-sale and are carried at estimated fair value with unrealized gains and losses reported in other comprehensive income (loss). Realized gains (losses) on investment securities available-for-sale are included in net gains (losses) on investment securities and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income. Gains (losses) on sales of investment securities are determined using the specific identification method on the trade date. The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the period to maturity. Declines in the estimated fair value of individual available-for-sale investment securities below their cost that are other than temporary, result in write-downs of the individual investment securities to their estimated fair value. The Company monitors the investment security portfolio for impairment on an individual security basis and has a process in place to identify investment securities that could potentially have a credit impairment that is other than temporary. This process involves analyzing the length of time and the extent to which the estimated fair value has been less than the amortized cost basis, the market liquidity for the security, the financial condition and near-term prospects of the issuer, expected cash flows, and the Company’s intent and ability to hold the investment for a period of time sufficient to recover the temporary loss. The ability to hold is determined by whether it is more likely than not that the Company will be required to sell the security before its anticipated recovery. A decline in value due to a credit event that is considered other than temporary is recorded as a loss in noninterest income. Certain debt securities that the Company has an intent to hold to maturity are classified as held-to-maturity and recorded at amortized cost. Interest earned on held-to-maturity debt securities is included in interest income. Amortization or accretion of premiums and discounts is also recognized in interest income using the effective interest method over the contractual life of the security and is adjusted to reflect actual prepayments. Transfers of debt securities from available-for-sale to held-to-maturity are made at fair value at the date of transfer. Unrealized holding gains and losses at the date of transfer are included in other comprehensive income and in the carrying value of held-to-maturity security are amortized over the remaining life of the security. Nonmarketable Equity Securities Nonmarketable equity securities include the Bank’s required investments in the stock of the Federal Home Loan Bank of Des Moines, or the FHLB and the Federal Reserve Bank, or the FRB. The Bank is a member of the FHLB as well as its regional FRB. Members are required to own a certain amount of stock based of the level of borrowing and other factors, and may invest in additional amounts. FHLB stock and FRB stock are carried at cost, classified as other assets, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. |
Loans Held for Sale/Branch Sale | Loans Held for Sale/Branch Sale Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses are recognized through a valuation allowance by charges to income. Gains (losses) on loan sales are recorded in mortgage banking revenue on the consolidated statements of income. |
Loans | Loans Loans are stated at the amount of unpaid principal, reduced by an allowance for loan losses. Loans that management has the intent and ability to hold for the foreseeable future, until maturity or pay-off, generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, and the allowance for loan losses. Loan fees received that are associated with originating or acquiring certain loans are deferred, net of costs, and amortized over the life of the loan as a yield adjustment to interest income. The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer loans are typically charged-off no later than 120 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest in considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses (allowance) is an estimate of loan losses inherent in the Company’s loan portfolio. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after loan losses and loan growth. Loan losses are charged-off against the allowance when the Company determines the loan balance to be uncollectible. Cash received on previously charged-off amounts is recorded as a recovery to the allowance. The allowance consists of three primary components, general reserves, specific reserves related to impaired loans, and unallocated reserves. The general component covers non-impaired loans and is based on historical losses adjusted for current qualitative factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent five years. This actual loss experience is adjusted for economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge- offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; uncertainty related to the effects of the COVID-19 pandemic; industry conditions; COVID-19 pandemic related modifications; and effects of changes in credit concentrations. These factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment. 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. Loans determined to be impaired are individually evaluated for impairment. When a loan is impaired, the Company measures impairment based on the present value of expected future cash flows discounted at the original contractual interest rate, except that as a practical expedient, it may measure impairment based on an observable market price for the estimated fair value of the collateral if collateral dependent. A loan is collateral dependent if the repayment is expected to be provided solely by the underlying collateral. Allowance allocations other than general and specific are included in the unallocated portion. While allocations are made for loans based upon historical loss analysis, the unallocated portion is designed to cover the uncertainty of how current economic conditions and other uncertainties may impact the existing loan portfolio. Factors to consider include national and state economic conditions such as unemployment or real estate lending values. The unallocated reserve addresses inherent probable losses not included elsewhere in the allowance for loan losses. The Company maintains a separate general valuation allowance for each portfolio segment. These portfolio segments include commercial and industrial, real estate construction, commercial real estate, residential real estate first mortgage, residential real estate junior liens, and other revolving and installment with risk characteristics described as follows: Commercial and Industrial: Real Estate Construction: Commercial Real Estate: Residential real estate first and junior liens: Other Revolving and Installment: Although management believes the allowance to be adequate, actual losses may vary from its estimates. On a quarterly basis, management reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions, and other factors. If the board of directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. |
Off-Balance Sheet Credit Related Financial Instruments | Off-Balance Sheet Credit Related Financial Instruments In the ordinary course of business, the Company enters into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded. The Company establishes a reserve for unfunded commitments using historical loss data and utilization assumptions. This reserve is located under accrued expenses and other liabilities on the Consolidated Balance Sheets. |
Land, Premises and Equipment, Net | Land, Premises and Equipment, Net Land is carried at cost. Other premises and equipment are carried at cost net of accumulated depreciation. Depreciation is computed on a straight-line method based principally on the estimated useful lives of the assets. Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized. Gains (losses) on dispositions are included in current operations. |
Bank-Owned Life Insurance | Bank-Owned Life Insurance The Company has purchased life insurance policies on certain key executives. Bank-owned life insurance is recorded at its cash surrender value, or the amount that can be realized, if lower. |
Goodwill and Other Intangibles, Net | Goodwill and Other Intangibles, Net Goodwill resulting from acquisitions is not amortized, but is tested for impairment annually. As part of its testing, the Company first assesses the qualitative factors to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company determines the estimated fair value of a reporting unit is less than its carrying amount using these qualitative factors, the Company then compares the estimated fair value of the goodwill with its carrying amount, and then measures impairment loss by comparing the estimated fair value of goodwill with the carrying amount of that goodwill. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, incorporating general economic and market conditions, and selecting an appropriate control premium. At December 31, 2022, the Company believes it did not have any indications of potential impairment based on the estimated fair value of the reporting units. Intangible assets determined to have definite lives are amortized over the remaining useful lives. Intangible and other long-lived assets are reviewed for impairment whenever events occur, or circumstances indicate that the carrying amount may not be recoverable. |
Servicing Rights | Servicing Rights Servicing rights are recognized as separate assets when rights are acquired through the sale of loans. Servicing rights are initially recorded at estimated fair value based on assumptions provided by a third-party valuation service. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as servicing cost per loan, the discount rate, the escrow float rate, an inflation rate, ancillary income, prepayment speeds, and default rates and losses. Loan servicing income is recorded on the accrual basis and includes servicing fees from investors and certain charges collected from borrowers, such as late payment fees, and is net of estimated fair value adjustments to capitalized mortgage servicing rights. Capitalized servicing rights are amortized into noninterest income in proportion to, and over the period of, the estimated future servicing income of the underlying loans. Servicing rights are evaluated for impairment based upon the estimated fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant characteristics, such as interest rates and terms. Impairment is recognized through a valuation allowance for an individual tranche, to the extent that estimated fair value is less than the capitalized amount for the tranche. If the Company later determines that all or a portion of the impairment no longer exists for a particular tranche, a reduction of the allowance may be recorded as an increase to income. Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal, or a fixed amount per loan, and are recorded as income when earned. The amortization of servicing rights is netted against loan servicing fee income. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. In the event such an asset is considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the asset exceeds the estimated fair value of the asset. Assets to be disposed of are reported at the lower of the carrying value of estimated fair value less estimated costs to sell. |
Foreclosed Assets | Foreclosed Assets Assets acquired through loan foreclosure are included in other assets and are initially recorded at estimated fair value less estimated selling costs. The estimated fair value of foreclosed assets is evaluated regularly and any decreases in value along with holding costs, such as taxes, insurance and utilities, are reported in noninterest expense. |
Transfers of Financial Assets and Participating Interests | Transfers of Financial Assets and Participating Interests Transfers of financial assets are accounted for as sales when control over assets has been surrendered or in the case of loan participation, a portion of the asset has been surrendered and meets the definition of a “participating interest.” Control over transferred assets is deemed to be surrendered when 1) the assets have been isolated from the Company, 2) the transferee obtains the rights 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. Should the transfer not meet these three criteria, the transaction is treated as a secured financing. Loans serviced for others are not included in the accompanying consolidated balance sheets. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and collection and foreclosure processing. |
Derivatives and Hedging Activities | Derivatives and Hedging Activities In the ordinary course of business, the Company enters into derivative transactions to manage various risks and to accommodate the business requirements of its clients. Derivative instruments are reported in other assets or other liabilities at estimated fair value. Changes in a derivative’s estimated fair value are recognized currently in earnings unless specific hedge accounting criteria are met. |
Noninterest Income | Noninterest Income Specific guidelines are established for recognition of certain noninterest income components related to the Company’s consolidated financial statements. In accordance with Topic 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services that are promised within each contract and identifies those that contain performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The material groups of noninterest income that this methodology is applied to are defined as follows: Retirement and benefit services: Wealth management: Service charges on deposit accounts: Other noninterest income: |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. |
Tax Credit Investments | Tax Credit Investments The Company invests in qualified affordable housing projects for the purpose of community reinvestment and obtaining tax credits. These investments are included in other assets on the balance sheet, and any unfunded commitments in accrued expenses and other liabilities on the balance sheet. The qualified affordable housing projects are accounted for under the proportional amortization method. Under the proportional amortization method, the initial cost of the investment is recognized over the period that the Company expects to receive the tax credits, with the expense included within income tax expense on the consolidated statements of income. Management analyzes these investments for potential impairment when events or changes in circumstances indicate that it is more likely than not that the carrying amount of the investment will not be realized. An impairment loss is measured as the amount by which the carrying amount of an investment exceeds its fair value. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be recognized if it is “more likely than not” that the deferred tax asset would not be realized. These calculations are based on many complex factors including estimates of the timing of reversals of temporary differences, the interpretation of federal and state income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax liabilities. The Company follows standards related to Accounting for Uncertainty in Income Taxes. These rules establish a higher standard for tax benefits to meet before they can be recognized in a Company’s consolidated financial statements. The Company can recognize in financial statements the impact of a tax position taken, or expected to be taken, if it is more likely than not that the position will be sustained on an audit based on the technical merit of the position. See Note 20 (Income Taxes) for additional disclosures. The Company recognizes both interest and penalties as components of other operating expenses. The amount of the uncertain tax position was not determined to be material. It is not expected that the unrecognized tax benefit will be material within the next 12 months. The Company did not incur any interest or penalties in 2022, 2021, or 2020. The Company files consolidated federal and state income tax returns. The Company is no longer subject to U.S. federal or state tax examinations by tax authorities for years before 2019. |
Comprehensive Income | Comprehensive Income Recognized revenue, expenses, gains, and losses are included in net income. Certain changes in assets and liabilities, such as unrealized gains (losses) on investment securities available-for-sale, are reported as a separate component of the equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income. |
Stock Compensation Plans | Stock Compensation Plans Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. The cost will be measured based on the grant date estimated fair value of the equity or liability instruments issued. The grant date estimated fair value is determined using the closing price of the Company’s common stock. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employee’s service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. |
Earnings per Share | Earnings per Share Earnings per share are calculated utilizing the two-class method. Basic earnings per share is calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings per share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted-average number of shares adjusted for the dilutive effect of common stock awards. |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Planning Services, Inc | |
Business Combinations | |
Schedule of recognized identified assets acquired and liabilities assumed | As recorded by Fair Value As recorded by (dollars in thousands) RPS Adjustments the Company Assets Cash and cash equivalents $ 513 $ — $ 513 Land premises and equipment, net 16 (16) — Other intangible assets 99 11,390 11,489 Other assets 304 (38) 266 Total assets 932 11,336 12,268 Liabilities Other liabilities 1,418 3,930 5,348 Total liabilities 1,418 3,930 5,348 Excess assets over liabilities $ (486) $ 7,406 6,920 Cash paid for RPS 9,792 Total goodwill recorded $ 2,872 |
MPB | |
Business Combinations | |
Schedule of recognized identified assets acquired and liabilities assumed | As recorded by Preliminary Fair Value As recorded by (dollars in thousands) Metro Phoenix Bank Adjustments the Company Assets Cash and cash equivalents $ 101,819 $ (123) $ 101,696 Fed funds sold 18,936 — 18,936 Core deposit intangible — 7,592 7,592 Loans 273,843 (3,440) 270,403 Accrued interest receivable 1,091 — 1,091 Other assets 3,342 188 3,530 Total assets 399,031 4,217 403,248 Liabilities Deposits 354,529 (844) 353,685 Other liabilities 673 — 673 Total liabilities 355,202 (844) 354,358 Excess assets over liabilities $ 43,829 $ 5,061 48,890 Stock issued for MPB 64,019 Total goodwill recorded $ 15,129 |
Investment Securities (Tables)
Investment Securities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investment Securities | |
Schedule of amortized cost of investment securities to estimated fair values | December 31, 2022 Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Available-for-sale U.S. Treasury and agencies $ 3,518 $ 19 $ (17) $ 3,520 Mortgage backed securities Residential agency 705,845 2 (118,168) 587,679 Commercial 70,669 — (7,111) 63,558 Asset backed securities 34 — — 34 Corporate bonds 69,501 — (6,968) 62,533 Total available-for-sale investment securities 849,567 21 (132,264) 717,324 Held-to-maturity Obligations of state and political agencies 137,787 — (17,736) 120,051 Mortgage backed securities Residential agency 184,115 — (33,254) 150,861 Total held-to-maturity investment securities 321,902 — (50,990) 270,912 Total investment securities $ 1,171,469 $ 21 $ (183,254) $ 988,236 December 31, 2021 Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Available-for-sale U.S. Treasury and agencies $ 5,028 $ 75 $ — $ 5,103 Mortgage backed securities Residential agency 717,781 1,213 (11,837) 707,157 Commercial 88,362 2,674 (123) 90,913 Asset backed securities 52 2 — 54 Corporate bonds 49,035 1,398 (11) 50,422 Total available-for-sale investment securities 860,258 5,362 (11,971) 853,649 Held-to-maturity Obligations of state and political agencies 144,543 1,110 (349) 145,304 Mortgage backed securities Residential agency 207,518 — (3,145) 204,373 Total held-to-maturity investment securities 352,061 1,110 (3,494) 349,677 Total investment securities $ 1,212,319 $ 6,472 $ (15,465) $ 1,203,326 |
Schedule of contractual maturity of amortized cost and estimated fair value | Held-to-maturity Available-for-sale Carrying Fair Amortized Fair (dollars in thousands) Value Value Cost Value Due within one year or less $ 6,554 $ 6,522 $ 4 $ 4 Due after one year through five years 40,317 37,146 21,256 19,863 Due after five years through ten years 69,992 59,138 87,961 79,697 Due after 10 years 205,039 168,106 740,346 617,760 Total investment securities $ 321,902 $ 270,912 $ 849,567 $ 717,324 |
Schedule of proceeds from the sale of available for sale securities | Year ended December 31, (dollars in thousands) 2022 2021 2020 Proceeds $ — $ 13,189 $ 75,647 Realized gains — 114 2,737 Realized losses — — — |
Schedule of proceeds from the call of held-to-maturity investment securities | Year ended December 31, (dollars in thousands) 2022 2021 2020 Proceeds $ 963 $ 1,772 $ — Realized gains — 11 — Realized losses — — — |
Schedule of investment securities with gross unrealized losses | December 31, 2022 Less than 12 Months Over 12 Months Total Unrealized Fair Unrealized Fair Unrealized Fair (dollars in thousands) Losses Value Losses Value Losses Value Available-for-sale U.S. Treasury and agencies $ (17) $ 509 $ — $ — $ (17) $ 509 Mortgage backed securities Residential agency (10,457) 79,693 (107,711) 507,418 (118,168) 587,111 Commercial (4,835) 50,437 (2,276) 13,120 (7,111) 63,557 Asset backed securities — 32 — 2 — 34 Corporate bonds (4,452) 48,048 (2,516) 14,484 (6,968) 62,532 Total available-for-sale investment securities (19,761) 178,719 (112,503) 535,024 (132,264) 713,743 Held-to-maturity Obligations of state and political agencies (3,336) 18,788 (14,400) 98,762 (17,736) 117,550 Mortgage backed securities Residential agency — — (33,254) 150,861 (33,254) 150,861 Total held-to-maturity investment securities (3,336) 18,788 (47,654) 249,623 (50,990) 268,411 Total investment securities $ (23,097) $ 197,507 $ (160,157) $ 784,647 $ (183,254) $ 982,154 December 31, 2021 Less than 12 Months Over 12 Months Total Unrealized Fair Unrealized Fair Unrealized Fair (dollars in thousands) Losses Value Losses Value Losses Value Available-for-sale U.S. Treasury and agencies $ — $ — $ — $ — $ — $ — Mortgage backed securities Residential agency (10,156) 554,811 (1,681) 55,082 (11,837) 609,893 Commercial (123) 17,470 — — (123) 17,470 Asset backed securities — — — 2 — 2 Corporate bonds (11) 5,989 — — (11) 5,989 Total available-for-sale investment securities (10,290) 578,270 (1,681) 55,084 (11,971) 633,354 Held-to-maturity Obligations of state and political agencies (349) 53,210 — — (349) 53,210 Mortgage backed securities Residential agency (3,145) 204,373 — — (3,145) 204,373 Total held-to-maturity investment securities (3,494) 257,583 — — (3,494) 257,583 Total investment securities $ (13,784) $ 835,853 $ (1,681) $ 55,084 $ (15,465) $ 890,937 |
Schedule of federal home loan bank | December 31, December 31, (dollars in thousands) 2022 2021 Federal Reserve $ 4,595 $ 2,675 FHLB 19,362 3,806 |
Loans and Allowance for Loan _2
Loans and Allowance for Loan Losses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Loans and Allowance for Loan Losses | |
Schedule of total loans outstanding by portfolio segment | December 31, December 31, (dollars in thousands) 2022 2021 Commercial Commercial and industrial (1) $ 583,876 $ 436,761 Real estate construction 97,810 40,619 Commercial real estate 881,670 598,893 Total commercial 1,563,356 1,076,273 Consumer Residential real estate first mortgage 679,551 510,716 Residential real estate junior lien 150,479 125,668 Other revolving and installment 50,608 45,363 Total consumer 880,638 681,747 Total loans $ 2,443,994 $ 1,758,020 (1) Includes PPP loans of $737 thousand at December 31, 2022 and $33.6 million at December 31, 2021. |
Schedule of loan balances | December 31, (dollars in thousands) 2022 Real estate construction $ 440 Outstanding balance 440 Carrying amount 262 Allowance for loan losses 97 Carrying amount, net of allowance for loan losses $ 165 |
Schedule of accretable yield or income expected to be collected | For the year ended December 31, (dollars in thousands) 2022 Beginning balance $ — New loans purchased 225 Accretion of income (48) Ending balance $ 177 |
Schedule of past due aging analysis of the loan portfolio | December 31, 2022 90 Days Accruing 30 - 89 Days or More Total (dollars in thousands) Current Past Due Past Due Nonaccrual Loans Commercial Commercial and industrial $ 580,288 $ 2,426 $ — $ 1,162 $ 583,876 Real estate construction 97,370 — — 440 97,810 Commercial real estate 879,830 368 — 1,472 881,670 Total commercial 1,557,488 2,794 — 3,074 1,563,356 Consumer Residential real estate first mortgage 677,471 1,545 — 535 679,551 Residential real estate junior lien 149,918 377 — 184 150,479 Other revolving and installment 50,360 247 — 1 50,608 Total consumer 877,749 2,169 — 720 880,638 Total loans $ 2,435,237 $ 4,963 $ — $ 3,794 $ 2,443,994 December 31, 2021 90 Days Accruing 30 - 89 Days or More Total (dollars in thousands) Current Past Due Past Due Nonaccrual Loans Commercial Commercial and industrial $ 435,135 $ 168 $ 121 $ 1,337 $ 436,761 Real estate construction 40,619 — — — 40,619 Commercial real estate 598,264 — — 629 598,893 Total commercial 1,074,018 168 121 1,966 1,076,273 Consumer Residential real estate first mortgage 508,925 1,770 — 21 510,716 Residential real estate junior lien 125,412 167 — 89 125,668 Other revolving and installment 45,242 121 — — 45,363 Total consumer 679,579 2,058 — 110 681,747 Total loans $ 1,753,597 $ 2,226 $ 121 $ 2,076 $ 1,758,020 |
Schedule of loans outstanding, by portfolio segment and risk category | December 31, 2022 Criticized Special (dollars in thousands) Pass Mention Substandard Doubtful Total Commercial Commercial and industrial $ 558,694 $ 21,969 $ 3,213 $ — $ 583,876 Real estate construction 97,548 — 262 — 97,810 Commercial real estate 873,270 — 8,400 — 881,670 Total commercial 1,529,512 21,969 11,875 — 1,563,356 Consumer Residential real estate first mortgage 678,743 63 745 — 679,551 Residential real estate junior lien 149,847 — 632 — 150,479 Other revolving and installment 50,607 — 1 — 50,608 Total consumer 879,197 63 1,378 — 880,638 Total loans $ 2,408,709 $ 22,032 $ 13,253 $ — $ 2,443,994 December 31, 2021 Criticized Special (dollars in thousands) Pass Mention Substandard Doubtful Total Commercial Commercial and industrial $ 430,235 $ 480 $ 6,046 $ — $ 436,761 Real estate construction 40,619 — — — 40,619 Commercial real estate 585,291 — 13,602 — 598,893 Total commercial 1,056,145 480 19,648 — 1,076,273 Consumer Residential real estate first mortgage 510,375 — 341 — 510,716 Residential real estate junior lien 124,898 — 770 — 125,668 Other revolving and installment 45,363 — — — 45,363 Total consumer 680,636 — 1,111 — 681,747 Total loans $ 1,736,781 $ 480 $ 20,759 $ — $ 1,758,020 |
Summary of changes in allowances | Year ended December 31, 2022 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 8,925 $ 1,168 $ (1,396) $ 461 $ 9,158 Real estate construction 783 587 — 76 1,446 Commercial real estate 12,376 178 — 134 12,688 Total commercial 22,084 1,933 (1,396) 671 23,292 Consumer Residential real estate first mortgage 6,532 (763) — — 5,769 Residential real estate junior lien 1,295 (288) — 282 1,289 Other revolving and installment 481 30 (153) 170 528 Total consumer 8,308 (1,021) (153) 452 7,586 Unallocated 1,180 (912) — — 268 Total $ 31,572 $ — $ (1,549) $ 1,123 $ 31,146 Year ended December 31, 2021 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 10,205 $ (1,710) $ (1,230) $ 1,660 $ 8,925 Real estate construction 658 125 — — 783 Commercial real estate 14,105 (2,015) (536) 822 12,376 Total commercial 24,968 (3,600) (1,766) 2,482 22,084 Consumer Residential real estate first mortgage 5,774 758 — — 6,532 Residential real estate junior lien 1,373 (201) — 123 1,295 Other revolving and installment 753 (259) (156) 143 481 Total consumer 7,900 298 (156) 266 8,308 Unallocated 1,378 (198) — — 1,180 Total $ 34,246 $ (3,500) $ (1,922) $ 2,748 $ 31,572 Year ended December 31, 2020 Beginning Provision for Loan Loan Ending (dollars in thousands) Balance Loan Losses Charge-offs Recoveries Balance Commercial Commercial and industrial $ 12,270 $ (2,168) $ (4,249) $ 4,352 $ 10,205 Real estate construction 303 355 — — 658 Commercial real estate 6,688 8,185 (865) 97 14,105 Total commercial 19,261 6,372 (5,114) 4,449 24,968 Consumer Residential real estate first mortgage 1,448 4,321 — 5 5,774 Residential real estate junior lien 671 507 (12) 207 1,373 Other revolving and installment 352 514 (242) 129 753 Total consumer 2,471 5,342 (254) 341 7,900 Unallocated 2,192 (814) — — 1,378 Total $ 23,924 $ 10,900 $ (5,368) $ 4,790 $ 34,246 |
Schedule of loans distributed by portfolio segment and impairment methodology | December 31, 2022 Recorded Investment Allowance for Loan Losses Individually Collectively Individually Collectively (dollars in thousands) Evaluated Evaluated Total Evaluated Evaluated Total Commercial Commercial and industrial $ 1,313 $ 582,563 $ 583,876 $ 275 $ 8,883 $ 9,158 Real estate construction 262 97,548 97,810 97 1,349 1,446 Commercial real estate 1,472 880,198 881,670 582 12,106 12,688 Total commercial 3,047 1,560,309 1,563,356 954 22,338 23,292 Consumer Residential real estate first mortgage 535 679,016 679,551 — 5,769 5,769 Residential real estate junior lien 184 150,295 150,479 — 1,289 1,289 Other revolving and installment 1 50,607 50,608 — 528 528 Total consumer 720 879,918 880,638 — 7,586 7,586 Unallocated — — — — — 268 Total loans $ 3,767 $ 2,440,227 $ 2,443,994 $ 954 $ 29,924 $ 31,146 December 31, 2021 Recorded Investment Allowance for Loan Losses Individually Collectively Individually Collectively (dollars in thousands) Evaluated Evaluated Total Evaluated Evaluated Total Commercial Commercial and industrial $ 1,831 $ 434,930 $ 436,761 $ 278 $ 8,647 $ 8,925 Real estate construction — 40,619 40,619 — 783 783 Commercial real estate 809 598,084 598,893 5 12,371 12,376 Total commercial 2,640 1,073,633 1,076,273 283 21,801 22,084 Consumer Residential real estate first mortgage 21 510,695 510,716 — 6,532 6,532 Residential real estate junior lien 91 125,577 125,668 — 1,295 1,295 Other revolving and installment — 45,363 45,363 — 481 481 Total consumer 112 681,635 681,747 — 8,308 8,308 Unallocated — — — — — 1,180 Total loans $ 2,752 $ 1,755,268 $ 1,758,020 $ 283 $ 30,109 $ 31,572 |
Schedule of impaired loans | December 31, 2022 December 31, 2021 Recorded Unpaid Related Recorded Unpaid Related (dollars in thousands) Investment Principal Allowance Investment Principal Allowance Impaired loans with a valuation allowance Commercial and industrial $ 675 $ 711 $ 275 $ 445 $ 464 $ 278 Real estate construction 262 440 97 — — — Commercial real estate 896 900 582 180 203 5 Residential real estate junior lien — — — — — — Other revolving and installment — — — — — — Total impaired loans with a valuation allowance 1,833 2,051 954 625 667 283 Impaired loans without a valuation allowance Commercial and industrial 638 767 — 1,386 1,575 — Real estate construction — — — — — — Commercial real estate 576 660 — 629 684 — Residential real estate first mortgage 535 573 — 21 24 — Residential real estate junior lien 184 218 — 91 120 — Other revolving and installment 1 1 — — — — Total impaired loans without a valuation allowance 1,934 2,219 — 2,127 2,403 — Total impaired loans Commercial and industrial 1,313 1,478 275 1,831 2,039 278 Real estate construction 262 440 97 — — — Commercial real estate 1,472 1,560 582 809 887 5 Residential real estate first mortgage 535 573 — 21 24 — Residential real estate junior lien 184 218 — 91 120 — Other revolving and installment 1 1 — — — — Total impaired loans $ 3,767 $ 4,270 $ 954 $ 2,752 $ 3,070 $ 283 The table below presents the average recorded investment in impaired loans and interest income for the three years ending December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Average Average Average Recorded Interest Recorded Interest Recorded Interest (dollars in thousands) Investment Income Investment Income Investment Income Impaired loans with a valuation allowance Commercial and industrial $ 722 $ 13 $ 517 $ 13 $ 765 $ 14 Real estate construction 442 — — — — — Commercial real estate 935 — 187 7 3,972 138 Residential real estate junior lien — — — — 19 — Other revolving and installment — — — — 28 — Total impaired loans with a valuation allowance 2,099 13 704 20 4,784 152 Impaired loans without a valuation allowance Commercial and industrial 707 — 1,988 20 4,151 25 Real estate construction — — — — — — Commercial real estate 618 — 672 — 1,614 — Residential real estate first mortgage 575 — 23 — 461 — Residential real estate junior lien 191 — 98 — 234 3 Other revolving and installment 1 — 1 — — — Total impaired loans without a valuation allowance 2,092 — 2,782 20 6,460 28 Total impaired loans Commercial and industrial 1,429 13 2,505 33 4,916 39 Real estate construction 442 — — — — — Commercial real estate 1,553 — 859 7 5,586 138 Residential real estate first mortgage 575 — 23 — 461 — Residential real estate junior lien 191 — 98 — 253 3 Other revolving and installment 1 — 1 — 28 — Total impaired loans $ 4,191 $ 13 $ 3,486 $ 40 $ 11,244 $ 180 |
Land, Premises and Equipment,_2
Land, Premises and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Land, Premises and Equipment, Net | |
Schedule of Components of land, premises and equipment, net | December 31, December 31, (dollars in thousands) 2022 2021 Land $ 4,542 $ 4,542 Buildings and improvements 26,625 25,633 Leasehold improvements 2,657 2,657 Furniture, fixtures, and equipment 36,013 35,063 69,837 67,895 Less accumulated depreciation (52,549) (49,525) Total $ 17,288 $ 18,370 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Other Intangible Assets | |
Schedule of goodwill by segment | December 31, December 31, (dollars in thousands) 2022 2021 Banking (1) $ 35,260 $ 20,131 Retirement and benefit services 11,827 11,359 Total goodwill $ 47,087 $ 31,490 (1) Goodwill increases consisted of the Metro Phoenix Bank acquisition purchase accounting adjustments, where were finalized in the fourth quarter of 2022. |
Schedule of identifiable intangible assets | December 31, 2022 December 31, 2021 (dollars in thousands) Gross Carrying Amount Accumulated Amortization Total Gross Carrying Amount Accumulated Amortization Total Identifiable customer intangibles $ 41,423 $ (25,927) $ 15,496 $ 42,057 $ (21,807) $ 20,250 Core deposit intangible assets 7,592 (633) 6,959 — — — Total intangible assets $ 49,015 $ (26,560) $ 22,455 $ 42,057 $ (21,807) $ 20,250 |
Schedule of amortization expense | (dollars in thousands) Amount 2023 $ 5,297 2024 5,043 2025 3,904 2026 2,275 2027 2,275 Thereafter 3,661 Total $ 22,455 |
Loan Servicing (Tables)
Loan Servicing (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Loan Servicing | |
Summary of activity related to loan servicing | Year ended December 31, (dollars in thousands) 2022 2021 2020 Balance, beginning of period $ 1,880 $ 1,987 $ 3,845 Additions 622 225 178 Amortization (524) (745) (922) (Impairment)/Recovery 665 413 (1,114) Balance, end of period $ 2,643 $ 1,880 $ 1,987 |
Summary of key economic assumptions | December 31, December 31, (dollars in thousands) 2022 2021 Fair value of servicing rights $ 2,643 $ 1,880 Weighted-average remaining term, years 20.5 20.3 Prepayment speeds 6.9 % 14.2 % Discount rate 10.5 % 9.5 % |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Schedule of right-of-use assets and lease liabilities | December 31, December 31, (dollars in thousands) 2022 2021 Lease Right-of-Use Assets Classification Operating lease right-of-use assets Operating lease right-of-use assets $ 5,419 $ 3,727 Finance lease right-of-use assets Land, premises and equipment, net — 87 Total lease right-of-use assets $ 5,419 $ 3,814 Lease Liabilities Operating lease liabilities Operating lease liabilities $ 5,902 $ 4,275 Finance lease liabilities Long-term debt — 203 Total lease liabilities $ 5,902 $ 4,478 |
Schedule of weighted average remaining lease term and average discount rate | December 31, December 31, 2022 2021 Weighted-average remaining lease term, years Operating leases 5.0 3.4 Finance leases — 0.8 Weighted-average discount rate Operating leases 3.1 % 2.5 % Finance leases — % 7.8 % |
Schedule of lease costs and other lease information | Year ended December 31, (dollars in thousands) 2022 2021 2020 Lease costs Operating lease cost $ 1,799 $ 1,827 $ 2,457 Variable lease cost 899 823 1,170 Short-term lease cost 217 181 395 Finance lease cost Interest on lease liabilities 7 25 42 Amortization of right-of-use assets 87 116 116 Sublease income (238) (228) (228) Net lease cost $ 2,771 $ 2,744 $ 3,952 Other information Cash paid for amounts included in the measurement of lease liabilities operating cash flows from operating leases $ 1,706 $ 1,763 $ 2,432 Right-of-use assets obtained in exchange for new operating lease liabilities 4,266 267 $ 1,555 |
Schedule of future minimum payments for leases | Operating (dollars in thousands) Leases Twelve months ended 2023 $ 1,987 2024 1,236 2025 1,118 2026 936 2027 385 Thereafter 854 Total future minimum lease payments $ 6,516 Amounts representing interest (614) Total operating lease liabilities $ 5,902 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Assets | |
Schedule of other assets | December 31, December 31, (dollars in thousands) 2022 2021 Federal Reserve Bank stock $ 4,595 $ 2,675 Foreclosed assets 30 885 Prepaid expenses 6,770 5,325 Investments in partnerships 14 14 Trust fees accrued/receivable 14,684 14,680 Income tax refund receivable 2,856 1,146 Federal Home Loan Bank stock 19,362 3,806 Derivative instruments 6,333 3,382 Tax credit investments 17,642 7,906 Other assets 3,426 2,889 Total $ 75,712 $ 42,708 |
Deposits (Tables)
Deposits (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Deposits. | |
Schedule of components of deposits | December 31, December 31, (dollars in thousands) 2022 2021 Noninterest-bearing $ 860,987 $ 938,840 Interest-bearing Interest-bearing demand 706,275 714,669 Savings accounts 99,882 96,825 Money market savings 1,035,981 937,305 Time deposits 212,359 232,912 Total interest-bearing 2,054,497 1,981,711 Total deposits $ 2,915,484 $ 2,920,551 |
Scheduled maturities of certificate of deposits | (dollars in thousands) Amount 2023 $ 169,062 2024 22,854 2025 4,802 2026 10,663 2027 1,833 Thereafter 3,145 Total $ 212,359 |
Short-Term Borrowings (Tables)
Short-Term Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Short-Term Borrowings | |
Schedule of short-term borrowings | Year ended December 31, (dollars in thousands) 2022 2021 2020 Fed funds purchased Balance as of end of period $ 153,080 $ — $ — Average daily balance 63,296 3 80 Maximum month-end balance 251,880 — — Weighted-average rate During period 2.46 % — % — % End of period 4.26 % — % — % FHLB Short-term advances Balance as of end of period $ 225,000 $ — $ — Average daily balance 89,932 — — Maximum month-end balance 225,000 — — Weighted-average rate During period 3.10 % — % — % End of period 4.31 % — % — % |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Debt. | |
Schedule of long-term debt | December 31, 2022 Period End Face Carrying Interest Maturity (dollars in thousands) Value Value Interest Rate Rate Date Call Date Subordinated notes payable $ 50,000 $ 50,000 Fixed 3.50 % 3/30/2031 3/31/2026 Junior subordinated debenture (Trust I) 4,124 3,537 Three-month LIBOR + 3.10% 7.82 % 6/26/2033 6/26/2008 Junior subordinated debenture (Trust II) 6,186 5,306 Three-month LIBOR + 1.80% 6.57 % 9/15/2036 9/15/2011 Total long-term debt $ 60,310 $ 58,843 December 31, 2021 Period End Face Carrying Interest Maturity (dollars in thousands) Value Value Interest Rate Rate Date Call Date Subordinated notes payable $ 50,000 $ 50,000 Fixed 3.50 % 3/30/2031 3/31/2026 Junior subordinated debenture (Trust I) 4,124 3,492 Three-month LIBOR + 3.10% 3.32 % 6/26/2033 6/26/2008 Junior subordinated debenture (Trust II) 6,186 5,238 Three-month LIBOR + 1.80% 2.00 % 9/15/2036 9/15/2011 Finance lease liability 2,700 203 Fixed 7.81 % 10/31/2022 N/A Total long-term debt $ 63,010 $ 58,933 |
Financial Instruments with Of_2
Financial Instruments with Off-Balance Sheet Risk (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Financial Instruments with Off-Balance Sheet Risk | |
Schedule of financial instruments whose contract amount represents credit risk | December 31, December 31, (dollars in thousands) 2022 2021 Commitments to extend credit $ 806,431 $ 668,115 Standby letters of credit 13,089 10,529 Total $ 819,520 $ 678,644 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Compensation | |
Schedule of stock plan activity | Year ended December 31, 2022 2021 Weighted- Weighted- Average Grant Average Grant Awards Date Fair Value Awards Date Fair Value Restricted Stock and Restricted Stock Unit Awards Outstanding at beginning of period 260,850 $ 21.04 325,030 $ 19.48 Granted 102,265 25.44 66,664 26.63 Vested (113,562) 19.25 (104,119) 20.51 Forfeited or cancelled (11,067) 23.90 (26,725) 18.03 Outstanding at end of period 238,486 $ 23.65 260,850 $ 21.04 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefits | |
Schedule of retirement plan contributions under employee benefits | December 31, December 31, December 31, (dollars in thousands) 2022 2021 2020 Salary reduction plan $ 3,148 $ 3,123 $ 2,960 ESOP 1,932 2,014 2,166 Total $ 5,080 $ 5,137 $ 5,126 Total ESOP shares outstanding 1,111,424 1,207,952 1,170,611 |
Noninterest Income (Tables)
Noninterest Income (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Noninterest Income | |
Schedule of noninterest income | Year ended December 31, (dollars in thousands) 2022 2021 2020 Retirement and benefits $ 67,135 $ 71,709 $ 60,956 Wealth management 20,870 21,052 17,451 Mortgage banking (1) 16,921 48,502 61,641 Service charges on deposit accounts 1,434 1,395 1,409 Net gains (losses) on investment securities (1) — 125 2,737 Other Interchange fees 2,246 2,180 2,140 Bank-owned life insurance income (1) 835 793 797 Misc. transactional fees 1,429 1,218 1,246 Other noninterest income 353 413 994 Total noninterest income $ 111,223 $ 147,387 $ 149,371 (1) Not within the scope of ASC 606. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of components of income tax expense | Year ended December 31, (dollars in thousands) 2022 2021 2020 Federal Current $ 9,005 $ 10,731 $ 14,541 Deferred 727 2,212 (3,615) Federal income tax 9,732 12,943 10,926 State Current 2,298 2,879 3,736 Deferred 147 574 (819) State income tax 2,445 3,453 2,917 Total income tax expense $ 12,177 $ 16,396 $ 13,843 |
Schedule of deferred tax assets and liabilities | December 31, December 31, (dollars in thousands) 2022 2021 Deferred Tax Assets Allowance for loan losses $ 7,818 $ 7,925 Employee compensation and benefit accruals 2,455 2,762 Expense accruals 417 634 Identifiable intangible amortization 3,363 3,341 Deferred loan fees 1,665 58 Net operating loss carry forwards 3 42 Nonaccrual loan interest 74 86 Unrealized loss on available‑for‑sale investment securities 33,056 1,426 Other 884 518 Total deferred tax assets from temporary differences 49,735 16,792 Deferred Tax Liabilities Accumulated depreciation 835 918 Goodwill and intangible amortization 5,115 2,752 Servicing assets 663 451 Prepaid expenses 552 1,014 Other 201 43 Total deferred tax liabilities from temporary differences 7,366 5,178 Net Deferred Tax Assets $ 42,369 $ 11,614 |
Schedule of effective income tax rate reconciliation | Year ended December 31, 2022 2021 2020 Percent of Percent of Percent of (dollars in thousands) Amount Pretax Income Amount Pretax Income Amount Pretax Income Taxes at statutory federal income tax rate $ 10,958 21.0 % $ 14,506 21.0 % $ 12,289 21.0 % Tax effect of: Tax exempt income (514) (1.0) % (556) (0.8) % (527) (0.9) % State income taxes, net of federal benefits 2,297 4.4 % 2,973 4.3 2,522 4.3 % Nondeductible items and other (564) (1.1) % (527) (0.8) (441) (0.8) % Applicable income taxes $ 12,177 23.3 % $ 16,396 23.7 % $ 13,843 23.6 % |
Tax Credit Investments (Tables)
Tax Credit Investments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Tax Credit Investments. | |
Schedule of tax credits | December 31, 2022 December 31, 2021 (dollars in thousands) Investment Unfunded Commitment Investment Unfunded Commitment Investment Accounting Method Low income housing tax credit Proportional amortization $ 17,906 $ 15,559 $ 7,906 $ 6,999 Total $ 17,906 $ 15,559 $ 7,906 $ 6,999 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting | |
Schedule of key metrics related to segments | Year ended December 31, 2022 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 100,190 $ — $ — $ 1,879 $ (2,340) $ 99,729 Provision for loan losses — — — — — — Noninterest income 6,199 67,135 20,870 16,921 98 111,223 Noninterest expense 67,068 26,204 5,979 18,590 40,929 158,770 Net income before taxes $ 39,321 $ 40,931 $ 14,891 $ 210 $ (43,171) $ 52,182 Total assets $ 3,696,676 $ 40,821 $ 4,032 $ 10,620 $ 27,488 $ 3,779,637 Year ended December 31, 2021 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 87,014 $ — $ — $ 1,981 $ (1,896) $ 87,099 Provision for loan losses (3,500) — — — — (3,500) Noninterest income 6,091 71,709 21,052 48,502 33 147,387 Noninterest expense 44,989 40,164 8,869 37,162 37,725 168,909 Net income before taxes $ 51,616 $ 31,545 $ 12,183 $ 13,321 $ (39,588) $ 69,077 Total assets $ 3,254,979 $ 44,953 $ 3,644 $ 75,713 $ 13,402 $ 3,392,691 Year ended December 31, 2020 Retirement and Wealth Corporate (dollars in thousands) Banking Benefit Services Management Mortgage Administration Consolidated Net interest income $ 85,167 $ — $ — $ 2,092 $ (3,413) $ 83,846 Provision for loan losses 10,900 — — — — 10,900 Noninterest income 10,017 60,956 17,451 61,641 (694) 149,371 Noninterest expense 46,883 35,236 8,289 36,323 37,068 163,799 Net income before taxes $ 37,401 $ 25,720 $ 9,162 $ 27,410 $ (41,175) $ 58,518 Total assets $ 2,827,792 $ 47,758 $ 3,009 $ 125,078 $ 10,134 $ 3,013,771 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share | |
Schedule of basic and diluted earnings per share | The calculation of basic and diluted earnings per share using the two-class method for the years ending December 31, 2022, 2021, and 2020 is presented below: Year ended December 31, (dollars and shares in thousands, except per share data) 2022 2021 2020 Net income $ 40,005 $ 52,681 $ 44,675 Dividends and undistributed earnings allocated to participating securities 416 802 770 Net income available to common shareholders $ 39,589 $ 51,879 $ 43,905 Weighted-average common shares outstanding for basic earnings per share 18,640 17,189 17,106 Dilutive effect of stock-based awards 244 297 332 Weighted-average common shares outstanding for diluted earnings per share 18,884 17,486 17,438 Earnings per common share: Basic earnings per common share $ 2.12 $ 3.02 $ 2.57 Diluted earnings per common share $ 2.10 $ 2.97 $ 2.52 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Schedule of related party transactions | Year ended December 31, (dollars in thousands) 2022 2021 Beginning balance $ 34 $ 254 New loans and advances 145 132 Repayments (95) (352) Changes to related parties (1) 46 — Ending balance $ 130 $ 34 (1) Represents changes related to directors that were added to the Board during the year. |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments | |
Schedule of amounts recorded in the Company's consolidated balance sheets for derivatives not designated as hedging instruments | December 31, 2022 December 31, 2021 Fair Notional Fair Notional (dollars in thousands) Value Amount Value Amount Asset Derivatives Consolidated Balance Sheet Location Interest rate swaps Other assets $ 6,277 $ 43,430 $ 1,366 $ 44,826 Interest rate lock commitments Other assets 121 10,462 1,507 52,316 Forward loan sales commitments Other assets 7 351 490 13,418 TBA mortgage backed securities Other assets — — 34 97,000 Total asset derivatives $ 6,405 $ 54,243 $ 3,397 $ 207,560 Liability Derivatives Interest rate swaps Accrued expenses and other liabilities $ 6,277 $ 43,430 $ 1,368 $ 44,826 TBA mortgage backed securities Accrued expenses and other liabilities 26 25,750 — — Total liability derivatives $ 6,303 $ 69,180 $ 1,368 $ 44,826 |
Schedule of gain (loss) recognized on derivatives instruments | Year ended Consolidated Statements December 31, December 31, December 31, (dollars in thousands) of Income Location 2022 2021 2020 Interest rate swaps Other noninterest income $ 2 $ 1 $ (3) Interest rate lock commitments Mortgage banking (1,464) (8,660) 8,798 Forward loan sales commitments Mortgage banking (483) (2,174) 2,271 TBA mortgage backed securities Mortgage banking 4,916 5,220 (12,997) Total gain/(loss) from derivative instruments $ 2,971 $ (5,613) $ (1,931) |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Regulatory Matters | |
Schedule of Bank's actual capital amounts and ratios | December 31, 2022 Minimum to be Requirements Well Capitalized for Capital Under Prompt Actual Adequacy Purposes Corrective Action (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk weighted assets Consolidated $ 389,335 13.39 % $ 130,862 4.50 % $ N/A N/A Bank 370,749 12.76 % 130,791 4.50 % 188,920 6.50 % Tier 1 capital to risk weighted assets . Consolidated 398,179 13.69 % 174,482 6.00 % N/A N/A Bank 370,749 12.76 % 174,388 6.00 % 232,517 8.00 % Total capital to risk weighted assets Consolidated 479,325 16.48 % 232,643 8.00 % N/A N/A Bank 401,895 13.83 % 232,517 8.00 % 290,646 10.00 % Tier 1 capital to average assets Consolidated 398,179 11.25 % 141,514 4.00 % N/A N/A Bank 370,749 10.48 % 141,440 4.00 % 176,800 5.00 % December 31, 2021 Minimum to be Requirements Well Capitalized for Capital Under Prompt Actual Adequacy Purposes Corrective Action (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk weighted assets Consolidated $ 314,628 14.65 % $ 96,647 4.50 % $ N/A N/A Bank 297,453 13.87 % 96,538 4.50 % 139,444 6.50 % Tier 1 capital to risk weighted assets . Consolidated 323,358 15.06 % 128,862 6.00 % N/A N/A Bank 297,453 13.87 % 128,718 6.00 % 171,624 8.00 % Total capital to risk weighted assets Consolidated 400,263 18.64 % 171,816 8.00 % N/A N/A Bank 324,328 15.12 % 171,624 8.00 % 214,530 10.00 % Tier 1 capital to average assets Consolidated 323,358 9.79 % 132,112 4.00 % N/A N/A Bank 297,453 9.01 % 132,039 4.00 % 165,049 5.00 % |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value of Assets and Liabilities | |
Summary of balances of the assets and liabilities measured at estimated fair value on a recurring basis | December 31, 2022 (dollars in thousands) Level 1 Level 2 Level 3 Total Available-for-sale U.S. treasury and government agencies $ — $ 3,520 $ — $ 3,520 Mortgage backed securities Residential agency — 587,679 — 587,679 Commercial — 63,558 — 63,558 Asset backed securities — 34 — 34 Corporate bonds — 62,533 — 62,533 Total available-for-sale investment securities $ — $ 717,324 $ — $ 717,324 Other assets Derivatives $ — $ 6,405 $ — $ 6,405 Other liabilities Derivatives $ — $ 6,303 $ — $ 6,303 December 31, 2021 (dollars in thousands) Level 1 Level 2 Level 3 Total Available-for-sale U.S. treasury and government agencies $ — $ 5,103 $ — $ 5,103 Mortgage backed securities Residential agency — 707,157 — 707,157 Commercial — 90,913 — 90,913 Asset backed securities — 54 — 54 Corporate bonds — 50,422 — 50,422 Total available-for-sale investment securities $ — $ 853,649 $ — $ 853,649 Other assets Derivatives $ — $ 3,397 $ — $ 3,397 Other liabilities Derivatives $ — $ 1,368 $ — $ 1,368 |
Schedule of net impairment losses related to nonrecurring estimated fair value measurements of certain assets | December 31, 2022 (dollars in thousands) Level 2 Level 3 Total Impairment Loans held for sale $ 9,488 $ — $ 9,488 $ — Impaired loans — 2,813 2,813 954 Foreclosed assets — 30 30 — Servicing rights — 2,643 2,643 — December 31, 2021 (dollars in thousands) Level 2 Level 3 Total Impairment Loans held for sale $ 46,490 $ — $ 46,490 $ — Impaired loans — 2,469 2,469 283 Foreclosed assets — 885 885 — Servicing rights — 1,880 1,880 — |
Schedule of valuation techniques and significant unobservable inputs used to measure Level 3 estimated fair values | December 31, 2022 (dollars in thousands) Weighted Asset Type Valuation Technique Unobservable Input Fair Value Range Average Impaired loans Appraisal value Property specific adjustment $ 2,813 N/A N/A Foreclosed assets Appraisal value Property specific adjustment 30 N/A N/A Servicing rights Discounted cash flows Prepayment speed assumptions 2,643 103-137 115 Discount rate 10.5 % 10.5 % December 31, 2021 (dollars in thousands) Weighted Asset Type Valuation Technique Unobservable Input Fair Value Range Average Impaired loans Appraisal value Property specific adjustment $ 2,469 N/A N/A Foreclosed assets Appraisal value Property specific adjustment 885 N/A N/A Servicing rights Discounted cash flows Prepayment speed assumptions 1,880 161-327 237 Discount rate 9.5 % 9.5 % |
Summary of estimated fair values and related carrying or notional amounts, of the Company's financial instruments | December 31, 2022 Carrying Estimated Fair Value (dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents $ 58,242 $ 58,242 $ — $ — $ 58,242 Investment securities held-to-maturity 321,902 — 270,912 — 270,912 Loans, net 2,412,848 — — 2,311,956 2,311,956 Accrued interest receivable 12,869 12,869 — — 12,869 Bank-owned life insurance 33,991 — 33,991 — 33,991 Financial Liabilities Noninterest-bearing deposits $ 860,987 $ — $ 860,987 $ — $ 860,987 Interest-bearing deposits 1,842,138 — 1,842,138 — 1,842,138 Time deposits 212,359 — — 208,550 208,550 Short-term borrowings 378,080 378,080 — — 378,080 Long-term debt 58,843 — 56,116 — 56,116 Accrued interest payable 2,426 2,426 — — 2,426 December 31, 2021 Carrying Estimated Fair Value (dollars in thousands) Amount Level 1 Level 2 Level 3 Total Financial Assets Cash and cash equivalents $ 242,311 $ 242,311 $ — $ — $ 242,311 Investment securities held-to-maturity 352,061 — 349,677 — 349,677 Loans, net 1,726,448 — — 1,760,784 1,760,784 Accrued interest receivable 8,537 8,537 — — 8,537 Bank-owned life insurance 33,156 — 33,156 — 33,156 Financial Liabilities Noninterest-bearing deposits $ 938,840 $ — $ 938,840 $ — $ 938,840 Interest-bearing deposits 1,748,799 — 1,748,799 — 1,748,799 Time deposits 232,912 — — 232,970 232,970 Long-term debt 58,933 — 57,772 — 57,772 Accrued interest payable 1,674 1,674 — — 1,674 |
Parent Company Only Financial_2
Parent Company Only Financial Statements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Parent Company Only Financial Statements | |
Schedule of Parent Company Condensed Balance Sheets | December 31, December 31, (dollars in thousands) 2022 2021 Assets Cash and cash equivalents $ 84,017 $ 81,753 Land, premises and equipment, net — 87 Investment in subsidiaries 338,595 342,538 Deferred income taxes, net 904 1,000 Other assets 487 655 Total assets $ 424,003 $ 426,033 Liabilities and Stockholders’ Equity Long‑term debt $ 58,843 $ 58,933 Accrued expenses and other liabilities 8,288 7,697 Total liabilities 67,131 66,630 Stockholders’ equity 356,872 359,403 Total stockholders’ equity 356,872 359,403 Total liabilities and stockholders’ equity $ 424,003 $ 426,033 |
Schedule of Parent Company Condensed Statements of Income | Year ended December 31, (dollars in thousands) 2022 2021 2020 Income Dividends from subsidiaries $ 18,500 $ 16,000 $ 16,000 Other income 16 4 10 Total operating income 18,516 16,004 16,010 Expenses 6,583 5,293 6,057 Income before equity in undistributed income 11,933 10,711 9,953 Equity in undistributed income of subsidiaries 26,424 40,642 33,208 Income before income taxes 38,357 51,353 43,161 Income tax benefit 1,648 1,328 1,514 Net income $ 40,005 $ 52,681 $ 44,675 |
Schedule of Parent Company Condensed Statements of Cash Flows | Year ended December 31, (dollars in thousands) 2022 2021 2020 Operating activities Net income $ 40,005 $ 52,681 $ 44,675 Adjustments to reconcile net income to net cash provided by operating activities Equity in undistributed income of subsidiaries (26,424) (40,642) (33,208) Depreciation and amortization 87 115 116 Stock‑based compensation cost 1,904 3,095 1,927 Other, net 419 1,266 413 Net cash provided by operating activities 15,991 16,515 13,923 Investing activities Investment in bank subsidiary — — — Net cash (paid) for business combinations (189) — — Net cash provided by investing activities (189) — — Financing activities Cash dividends paid on common stock (12,800) (10,751) (10,387) Repurchase of common stock (738) (712) (482) Net cash provided by financing activities (13,538) (11,463) (10,869) Change in cash and cash equivalents 2,264 5,052 3,054 Cash and cash equivalents at beginning of period 81,753 76,701 73,647 Cash and cash equivalents at end of period $ 84,017 $ 81,753 $ 76,701 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Significant Accounting Policies | |||
Number of operating segments | segment | 4 | ||
Percentage of commercial and industrial loans not secured by real estate | 23.90% | 24.80% | |
Period when accrual of interest on loans is discontinued when loans are past due | 90 days | ||
Unrecognized tax position pertaining to interest and penalties | $ | $ 0 | $ 0 | $ 0 |
Maximum | |||
Significant Accounting Policies | |||
Period when consumer loans are charged off when loans are past due | 120 days |
Recent Accounting Pronouncement
Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | Jan. 01, 2023 | Dec. 31, 2022 |
New Accounting Pronouncements | ||
Percentage of Company Loans, LIBOR Used as Index Rate | 6.90% | |
Accounting Standards Update 2016-13 | Scenario Forecast Adjustment [Member] | Minimum | ||
New Accounting Pronouncements | ||
Increase in reserve for unfunded commitments | $ 5 | |
Accounting Standards Update 2016-13 | Scenario Forecast Adjustment [Member] | Maximum | ||
New Accounting Pronouncements | ||
Increase in reserve for unfunded commitments | $ 7 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) $ in Thousands | Jul. 01, 2022 USD ($) | Dec. 18, 2020 USD ($) individual client plan | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Business Combinations | ||||
Goodwill | $ 47,087 | $ 31,490 | ||
Retirement Planning Services, Inc | ||||
Business Combinations | ||||
Total purchase price | $ 13,400 | |||
Cash consideration | 9,792 | |||
Earn out liability | 3,600 | |||
Other intangible assets | 11,489 | |||
Goodwill | $ 2,872 | |||
Number of retirement and health benefit administration plans | plan | 1,000 | |||
Number of plan participants | individual | 48,000 | |||
Number of COBRA clients | client | 300 | |||
Number of COBRA members acquired | individual | 10,000 | |||
Assets under administration/management | $ 1,300,000 | |||
MPB | ||||
Business Combinations | ||||
Total purchase price | $ 64,000 | |||
Goodwill | 15,129 | |||
Core deposit intangible | 7,592 | |||
Loans | 270,403 | |||
Deposits | $ 353,685 |
Business Combinations - RPS - P
Business Combinations - RPS - Purchased assets and assumed liabilities at fair value (Details) - USD ($) $ in Thousands | Dec. 18, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 17, 2020 |
Assets | |||||
Cash and cash equivalents | $ 58,242 | $ 242,311 | |||
Land premises and equipment, net | 17,288 | 18,370 | |||
Other intangible assets | 22,455 | 20,250 | |||
Other assets | 75,712 | 42,708 | |||
Total assets | 3,779,637 | 3,392,691 | $ 3,013,771 | ||
Liabilities | |||||
Total liabilities | 3,422,765 | 3,033,288 | |||
Liabilities | |||||
Goodwill | $ 47,087 | $ 31,490 | |||
Retirement Planning Services, Inc | |||||
Fair Value Adjustments | |||||
Land premises and equipment, net | $ (16) | ||||
Other intangible assets | 11,390 | ||||
Other assets | (38) | ||||
Total assets | 11,336 | ||||
Other liabilities | 3,930 | ||||
Total liabilities | 3,930 | ||||
Excess assets over liabilities | 7,406 | ||||
Assets | |||||
Cash and cash equivalents | 513 | ||||
Other intangible assets | 11,489 | ||||
Other assets | 266 | ||||
Total assets | 12,268 | ||||
Liabilities | |||||
Other liabilities | 5,348 | ||||
Total liabilities | 5,348 | ||||
Excess assets over liabilities | 6,920 | ||||
Cash paid for RPS | 9,792 | ||||
Goodwill | $ 2,872 | ||||
Retirement Planning Services, Inc | |||||
Assets | |||||
Cash and cash equivalents | $ 513 | ||||
Land premises and equipment, net | 16 | ||||
Other intangible assets | 99 | ||||
Other assets | 304 | ||||
Total assets | 932 | ||||
Liabilities | |||||
Other liabilities | 1,418 | ||||
Total liabilities | 1,418 | ||||
Excess assets over liabilities | $ (486) |
Business Combinations - MPB BHC
Business Combinations - MPB BHC - Purchased assets and assumed liabilities at fair value (Details) - USD ($) $ in Thousands | Jul. 01, 2022 | Dec. 31, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Assets | |||||
Cash and cash equivalents | $ 58,242 | $ 242,311 | |||
Other intangible assets | 22,455 | 20,250 | |||
Loans | 2,443,994 | 1,758,020 | |||
Accrued interest receivable | 12,869 | 8,537 | |||
Other assets | 75,712 | 42,708 | |||
Total assets | 3,779,637 | 3,392,691 | $ 3,013,771 | ||
Liabilities | |||||
Deposits | 2,915,484 | 2,920,551 | |||
Total liabilities | 3,422,765 | 3,033,288 | |||
Liabilities | |||||
Goodwill | $ 47,087 | $ 31,490 | |||
MPB | |||||
Assets | |||||
Cash and cash equivalents | $ 101,819 | ||||
Fed funds sold | 18,936 | ||||
Loans | 273,843 | ||||
Accrued interest receivable | 1,091 | ||||
Other assets | 3,342 | ||||
Total assets | 399,031 | ||||
Liabilities | |||||
Deposits | 354,529 | ||||
Other liabilities | 673 | ||||
Total liabilities | 355,202 | ||||
Excess assets over liabilities | $ 43,829 | ||||
MPB | |||||
Assets | |||||
Cash and cash equivalents acquired | $ 101,696 | ||||
Fed funds sold | 18,936 | ||||
Core deposit intangible | 7,592 | ||||
Loans | 270,403 | ||||
Accrued interest receivable | 1,091 | ||||
Other assets | 3,530 | ||||
Total assets | 403,248 | ||||
Liabilities | |||||
Deposits | 353,685 | ||||
Other liabilities | 673 | ||||
Total liabilities | 354,358 | ||||
Excess assets over liabilities | 48,890 | ||||
Stock issued for MPB | 64,019 | ||||
Goodwill | 15,129 | ||||
Assets | |||||
Cash and cash equivalents | (123) | ||||
Core deposit intangible | 7,592 | ||||
Loans | (3,440) | ||||
Other assets | 188 | ||||
Total assets | 4,217 | ||||
Liabilities | |||||
Deposits | (844) | ||||
Total liabilities | (844) | ||||
Excess assets over liabilities | $ 5,061 |
Restrictions on Cash and Due _2
Restrictions on Cash and Due from Banks (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Restrictions on Cash and Due from Banks | ||
Amount of minimum average reserve balances required to be maintained | $ 0 | $ 0 |
Balances at the Federal Reserve Bank and other financial institutions | $ 28,000 | $ 224,400 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | Apr. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Investment securities available-for-sale | |||
Amortized Cost | $ 849,567 | $ 860,258 | |
Unrealized Gains | 21 | 5,362 | |
Unrealized Losses | (132,264) | (11,971) | |
Fair Value | 717,324 | 853,649 | |
Amortized Cost | 321,902 | 352,061 | |
Unrealized Gains | 1,110 | ||
Unrealized Losses | (50,990) | (3,494) | |
Fair Value | 270,912 | 349,677 | |
Amortized Cost | 1,171,469 | 1,212,319 | |
Unrealized Gains | 21 | 6,472 | |
Unrealized Losses | (183,254) | (15,465) | |
Fair Value | 988,236 | 1,203,326 | |
U.S. treasury and government agencies | |||
Investment securities available-for-sale | |||
Amortized Cost | 3,518 | 5,028 | |
Unrealized Gains | 19 | 75 | |
Unrealized Losses | (17) | ||
Fair Value | 3,520 | 5,103 | |
Mortgage backed securities - Residential agency | |||
Investment securities available-for-sale | |||
Amortized Cost | 705,845 | 717,781 | |
Unrealized Gains | 2 | 1,213 | |
Unrealized Losses | (118,168) | (11,837) | |
Fair Value | 587,679 | 707,157 | |
Amortized Cost | 184,115 | 207,518 | |
Unrealized Losses | (33,254) | (3,145) | |
Fair Value | 150,861 | 204,373 | |
Mortgage backed securities - Commercial | |||
Investment securities available-for-sale | |||
Amortized Cost | 70,669 | 88,362 | |
Unrealized Gains | 2,674 | ||
Unrealized Losses | (7,111) | (123) | |
Fair Value | 63,558 | 90,913 | |
Asset backed securities | |||
Investment securities available-for-sale | |||
Amortized Cost | 34 | 52 | |
Unrealized Gains | 2 | ||
Fair Value | 34 | 54 | |
Corporate bonds | |||
Investment securities available-for-sale | |||
Amortized Cost | 69,501 | 49,035 | |
Unrealized Gains | 1,398 | ||
Unrealized Losses | (6,968) | (11) | |
Fair Value | 62,533 | 50,422 | |
Obligations of state and political agencies. | |||
Investment securities available-for-sale | |||
Amortized Cost | 144,543 | ||
Unrealized Gains | 1,110 | ||
Unrealized Losses | (349) | ||
Fair Value | $ 145,304 | ||
Amortized Cost | 137,787 | ||
Unrealized Losses | (17,736) | ||
Fair Value | $ 120,051 | ||
Fair value of debt securities available-for-sale transferred to held-to-maturity | $ 149,200 | ||
Net unrealized gain from available-for-sale to held-to-maturity | $ 1,300 |
Investment Securities - Amortiz
Investment Securities - Amortized cost and estimated fair value (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Carrying Value | |
Due within one year or less | $ 6,554 |
Due after one year through five years | 40,317 |
Due after five years through ten years | 69,992 |
Due after 10 years | 205,039 |
Total investment securities | 321,902 |
Estimated Fair Value | |
Due within one year or less | 6,522 |
Due after one year through five years | 37,146 |
Due after five years through ten years | 59,138 |
Due after 10 years | 168,106 |
Total investment securities | 270,912 |
Amortized Cost | |
Due within one year or less | 4 |
Due after one year through five years | 21,256 |
Due after five years through ten years | 87,961 |
Due after 10 years | 740,346 |
Total investment securities available-for-sale | 849,567 |
Fair Value | |
Due within one year or less | 4 |
Due after one year through five years | 19,863 |
Due after five years through ten years | 79,697 |
Due after 10 years | 617,760 |
Total investment securities available-for-sale | $ 717,324 |
Investment Securities - Pledged
Investment Securities - Pledged (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Investment Securities | ||
Investment securities with carrying value | $ 260.7 | $ 192.8 |
Investment Securities - Proceed
Investment Securities - Proceeds from sale of available for sale securities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Investment Securities | ||
Proceeds | $ 13,189 | $ 75,647 |
Realized gains | $ 114 | $ 2,737 |
Investment Securities - Proce_2
Investment Securities - Proceeds from the call of held-to-maturity investment securities (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) security | Dec. 31, 2021 USD ($) security | Dec. 31, 2020 USD ($) | |
Investment Securities | |||
Proceeds | $ 963,000 | $ 1,772,000 | |
Realized gains | $ 11,000 | ||
Number of held to maturity securities sold | 0 | 1 | 0 |
Amortized Cost | $ 330,000 | ||
Proceeds from sales of investment securities held-to-maturity | $ 348,000 |
Investment Securities - Gross u
Investment Securities - Gross unrealized losses (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | $ (19,761) | $ (10,290) |
Fair value less than 12 months | 178,719 | 578,270 |
Unrealized losses over 12 months | (112,503) | (1,681) |
Fair value over 12 months | 535,024 | 55,084 |
Total Unrealized losses | (132,264) | (11,971) |
Total Fair value | 713,743 | 633,354 |
Held-to-maturity investment securities | ||
Unrealized losses less than 12 months | (3,336) | (3,494) |
Fair value less than 12 months | 18,788 | 257,583 |
Unrealized losses over 12 months | (47,654) | |
Fair value over 12 months | 249,623 | |
Total Unrealized losses | (50,990) | (3,494) |
Total Fair value | 268,411 | 257,583 |
Unrealized losses less than 12 months | (23,097) | (13,784) |
Fair value less than 12 months | 197,507 | 835,853 |
Unrealized losses over 12 months | (160,157) | (1,681) |
Fair value over 12 months | 784,647 | 55,084 |
Total Unrealized losses | (183,254) | (15,465) |
Total Fair value | 982,154 | 890,937 |
U.S. treasury and government agencies | ||
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | (17) | |
Fair value less than 12 months | 509 | |
Total Unrealized losses | (17) | |
Total Fair value | 509 | |
Mortgage backed securities - Residential agency | ||
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | (10,457) | (10,156) |
Fair value less than 12 months | 79,693 | 554,811 |
Unrealized losses over 12 months | (107,711) | (1,681) |
Fair value over 12 months | 507,418 | 55,082 |
Total Unrealized losses | (118,168) | (11,837) |
Total Fair value | 587,111 | 609,893 |
Held-to-maturity investment securities | ||
Unrealized losses less than 12 months | (3,145) | |
Fair value less than 12 months | 204,373 | |
Unrealized losses over 12 months | (33,254) | |
Fair value over 12 months | 150,861 | |
Total Unrealized losses | (33,254) | (3,145) |
Total Fair value | 150,861 | 204,373 |
Mortgage backed securities - Commercial | ||
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | (4,835) | (123) |
Fair value less than 12 months | 50,437 | 17,470 |
Unrealized losses over 12 months | (2,276) | |
Fair value over 12 months | 13,120 | |
Total Unrealized losses | (7,111) | (123) |
Total Fair value | 63,557 | 17,470 |
Asset backed securities | ||
Investment securities available-for-sale | ||
Fair value less than 12 months | 32 | |
Fair value over 12 months | 2 | 2 |
Total Fair value | 34 | 2 |
Corporate bonds | ||
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | (4,452) | (11) |
Fair value less than 12 months | 48,048 | 5,989 |
Unrealized losses over 12 months | (2,516) | |
Fair value over 12 months | 14,484 | |
Total Unrealized losses | (6,968) | (11) |
Total Fair value | 62,532 | 5,989 |
Obligations of state and political agencies. | ||
Investment securities available-for-sale | ||
Unrealized losses less than 12 months | (349) | |
Fair value less than 12 months | 53,210 | |
Total Unrealized losses | (349) | |
Total Fair value | $ 53,210 | |
Held-to-maturity investment securities | ||
Unrealized losses less than 12 months | (3,336) | |
Fair value less than 12 months | 18,788 | |
Unrealized losses over 12 months | (14,400) | |
Fair value over 12 months | 98,762 | |
Total Unrealized losses | (17,736) | |
Total Fair value | $ 117,550 |
Investment Securities - Carryin
Investment Securities - Carrying value (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investment Securities | ||
Federal Reserve | $ 4,595 | $ 2,675 |
FHLB | $ 19,362 | $ 3,806 |
Investment Securities - Visa Cl
Investment Securities - Visa Class B Restricted Shares (Details) - Visa $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | |
Common Class A | ||
Securities | ||
Investment shares owned, if converted | 11,702 | 11,702 |
Common Class B | ||
Securities | ||
Conversion ratio | 1.5991 | |
Investment shares owned | 6,924 | 6,924 |
Cost basis | $ | $ 0 | $ 0 |
Loans and Allowance for Loan _3
Loans and Allowance for Loan Losses - Loans outstanding by portfolio segment (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Loans and Allowance for Loan Losses | ||
Total loans | $ 2,443,994 | $ 1,758,020 |
Deferred loan fees and costs | 919 | 231 |
MPB | ||
Loans and Allowance for Loan Losses | ||
Unearned discount | 7,100 | |
Commercial | ||
Loans and Allowance for Loan Losses | ||
Total loans | 1,563,356 | 1,076,273 |
Consumer | ||
Loans and Allowance for Loan Losses | ||
Total loans | 880,638 | 681,747 |
Commercial and industrial | Commercial | ||
Loans and Allowance for Loan Losses | ||
Total loans | 583,876 | 436,761 |
Commercial and industrial | Commercial | PPP Loans | ||
Loans and Allowance for Loan Losses | ||
Total loans | 737 | 33,600 |
Deferred loan fees and costs | 0 | 881 |
Real estate construction | Commercial | ||
Loans and Allowance for Loan Losses | ||
Total loans | 97,810 | 40,619 |
Residential | Consumer | Real estate first mortgage | ||
Loans and Allowance for Loan Losses | ||
Total loans | 679,551 | 510,716 |
Residential | Consumer | Real estate junior lien | ||
Loans and Allowance for Loan Losses | ||
Total loans | 150,479 | 125,668 |
Commercial real estate | Commercial | ||
Loans and Allowance for Loan Losses | ||
Total loans | 881,670 | 598,893 |
Other revolving and installment | Consumer | ||
Loans and Allowance for Loan Losses | ||
Total loans | $ 50,608 | $ 45,363 |
Loans and Allowance for Loan _4
Loans and Allowance for Loan Losses - Loan balances (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Loans and Allowance for Loan Losses | ||
Outstanding balance | $ 4,270 | $ 3,070 |
Evidence of deterioration of credit quality | MPB | ||
Loans and Allowance for Loan Losses | ||
Outstanding balance | 440 | |
Carrying amount | 262 | |
Allowance for loan losses | 97 | |
Carrying amount, net of allowance for loan losses | 165 | |
Evidence of deterioration of credit quality | MPB | Real estate construction | ||
Loans and Allowance for Loan Losses | ||
Outstanding balance | $ 440 |
Loans and Allowance for Loan _5
Loans and Allowance for Loan Losses - Accretable yield, or income expected to be collected (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Loans and Allowance for Loan Losses | |
New loans purchased | $ 225 |
Accretion of income | (48) |
Ending balance | $ 177 |
Loans and Allowance for Loan _6
Loans and Allowance for Loan Losses - Past due aging analysis (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Past due aging analysis of loans | ||
Nonaccrual | $ 3,794 | $ 2,076 |
Loans and Leases Receivable, Gross, Total | 2,443,994 | 1,758,020 |
30 - 89 Days Past Due | ||
Past due aging analysis of loans | ||
Loans | 4,963 | 2,226 |
90 Days or More Past Due | ||
Past due aging analysis of loans | ||
Loans | 121 | |
Current | ||
Past due aging analysis of loans | ||
Loans | 2,435,237 | 1,753,597 |
Commercial | ||
Past due aging analysis of loans | ||
Nonaccrual | 3,074 | 1,966 |
Loans and Leases Receivable, Gross, Total | 1,563,356 | 1,076,273 |
Commercial | 30 - 89 Days Past Due | ||
Past due aging analysis of loans | ||
Loans | 2,794 | 168 |
Commercial | 90 Days or More Past Due | ||
Past due aging analysis of loans | ||
Loans | 121 | |
Commercial | Current | ||
Past due aging analysis of loans | ||
Loans | 1,557,488 | 1,074,018 |
Commercial | Commercial and industrial | ||
Past due aging analysis of loans | ||
Nonaccrual | 1,162 | 1,337 |
Loans and Leases Receivable, Gross, Total | 583,876 | 436,761 |
Commercial | Commercial and industrial | 30 - 89 Days Past Due | ||
Past due aging analysis of loans | ||
Loans | 2,426 | 168 |
Commercial | Commercial and industrial | 90 Days or More Past Due | ||
Past due aging analysis of loans | ||
Loans | 121 | |
Commercial | Commercial and industrial | Current | ||
Past due aging analysis of loans | ||
Loans | 580,288 | 435,135 |
Commercial | Real estate construction | ||
Past due aging analysis of loans | ||
Nonaccrual | 440 | |
Loans and Leases Receivable, Gross, Total | 97,810 | 40,619 |
Commercial | Real estate construction | Current | ||
Past due aging analysis of loans | ||
Loans | 97,370 | 40,619 |
Commercial | Commercial real estate | ||
Past due aging analysis of loans | ||
Nonaccrual | 1,472 | 629 |
Loans and Leases Receivable, Gross, Total | 881,670 | 598,893 |
Commercial | Commercial real estate | 30 - 89 Days Past Due | ||
Past due aging analysis of loans | ||
Loans | 368 | |
Commercial | Commercial real estate | Current | ||
Past due aging analysis of loans | ||
Loans | 879,830 | 598,264 |
Consumer | ||
Past due aging analysis of loans | ||
Nonaccrual | 720 | 110 |
Loans and Leases Receivable, Gross, Total | 880,638 | 681,747 |
Consumer | 30 - 89 Days Past Due | ||
Past due aging analysis of loans | ||
Loans | 2,169 | 2,058 |
Consumer | Current | ||
Past due aging analysis of loans | ||
Loans | 877,749 | 679,579 |
Consumer | Residential | Real estate first mortgage | ||
Past due aging analysis of loans | ||
Nonaccrual | 535 | 21 |
Loans and Leases Receivable, Gross, Total | 679,551 | 510,716 |
Consumer | Residential | Real estate first mortgage | 30 - 89 Days Past Due | ||
Past due aging analysis of loans | ||
Loans | 1,545 | 1,770 |
Consumer | Residential | Real estate first mortgage | Current | ||
Past due aging analysis of loans | ||
Loans | 677,471 | 508,925 |
Consumer | Residential | Real estate junior lien | ||
Past due aging analysis of loans | ||
Nonaccrual | 184 | 89 |
Loans and Leases Receivable, Gross, Total | 150,479 | 125,668 |
Consumer | Residential | Real estate junior lien | 30 - 89 Days Past Due | ||
Past due aging analysis of loans | ||
Loans | 377 | 167 |
Consumer | Residential | Real estate junior lien | Current | ||
Past due aging analysis of loans | ||
Loans | 149,918 | 125,412 |
Consumer | Other revolving and installment | ||
Past due aging analysis of loans | ||
Nonaccrual | 1 | |
Loans and Leases Receivable, Gross, Total | 50,608 | 45,363 |
Consumer | Other revolving and installment | 30 - 89 Days Past Due | ||
Past due aging analysis of loans | ||
Loans | 247 | 121 |
Consumer | Other revolving and installment | Current | ||
Past due aging analysis of loans | ||
Loans | $ 50,360 | $ 45,242 |
Loans and Allowance for Loan _7
Loans and Allowance for Loan Losses - Loans by risk category (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Loans outstanding by loan portfolio segment and risk category | ||
Loans | $ 2,443,994 | $ 1,758,020 |
Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 2,408,709 | 1,736,781 |
Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 22,032 | 480 |
Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 13,253 | 20,759 |
Commercial | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 1,563,356 | 1,076,273 |
Commercial | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 1,529,512 | 1,056,145 |
Commercial | Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 21,969 | 480 |
Commercial | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 11,875 | 19,648 |
Commercial | Commercial and industrial | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 583,876 | 436,761 |
Commercial | Commercial and industrial | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 558,694 | 430,235 |
Commercial | Commercial and industrial | Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 21,969 | 480 |
Commercial | Commercial and industrial | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 3,213 | 6,046 |
Commercial | Real estate construction | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 97,810 | 40,619 |
Commercial | Real estate construction | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 97,548 | 40,619 |
Commercial | Real estate construction | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 262 | |
Commercial | Commercial real estate | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 881,670 | 598,893 |
Commercial | Commercial real estate | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 873,270 | 585,291 |
Commercial | Commercial real estate | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 8,400 | 13,602 |
Consumer | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 880,638 | 681,747 |
Consumer | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 879,197 | 680,636 |
Consumer | Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 63 | |
Consumer | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 1,378 | 1,111 |
Consumer | Residential | Real estate first mortgage | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 679,551 | 510,716 |
Consumer | Residential | Real estate first mortgage | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 678,743 | 510,375 |
Consumer | Residential | Real estate first mortgage | Special Mention | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 63 | |
Consumer | Residential | Real estate first mortgage | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 745 | 341 |
Consumer | Residential | Real estate junior lien | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 150,479 | 125,668 |
Consumer | Residential | Real estate junior lien | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 149,847 | 124,898 |
Consumer | Residential | Real estate junior lien | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 632 | 770 |
Consumer | Other revolving and installment | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 50,608 | 45,363 |
Consumer | Other revolving and installment | Pass | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | 50,607 | $ 45,363 |
Consumer | Other revolving and installment | Substandard | ||
Loans outstanding by loan portfolio segment and risk category | ||
Loans | $ 1 |
Loans and Allowance for Loan _8
Loans and Allowance for Loan Losses - Changes in allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Changes in the allowance | |||
Beginning Balance | $ 31,572 | $ 34,246 | $ 23,924 |
Provision for loan losses | (3,500) | 10,900 | |
Loan charge-offs | (1,549) | (1,922) | (5,368) |
Loan recoveries | 1,123 | 2,748 | 4,790 |
Ending Balance | 31,146 | 31,572 | 34,246 |
Unallocated | |||
Changes in the allowance | |||
Beginning Balance | 1,180 | 1,378 | 2,192 |
Provision for loan losses | (912) | (198) | (814) |
Ending Balance | 268 | 1,180 | 1,378 |
Commercial | |||
Changes in the allowance | |||
Beginning Balance | 22,084 | 24,968 | 19,261 |
Provision for loan losses | 1,933 | (3,600) | 6,372 |
Loan charge-offs | (1,396) | (1,766) | (5,114) |
Loan recoveries | 671 | 2,482 | 4,449 |
Ending Balance | 23,292 | 22,084 | 24,968 |
Commercial | Commercial and industrial | |||
Changes in the allowance | |||
Beginning Balance | 8,925 | 10,205 | 12,270 |
Provision for loan losses | 1,168 | (1,710) | (2,168) |
Loan charge-offs | (1,396) | (1,230) | (4,249) |
Loan recoveries | 461 | 1,660 | 4,352 |
Ending Balance | 9,158 | 8,925 | 10,205 |
Commercial | Real estate construction | |||
Changes in the allowance | |||
Beginning Balance | 783 | 658 | 303 |
Provision for loan losses | 587 | 125 | 355 |
Loan recoveries | 76 | ||
Ending Balance | 1,446 | 783 | 658 |
Commercial | Commercial real estate | |||
Changes in the allowance | |||
Beginning Balance | 12,376 | 14,105 | 6,688 |
Provision for loan losses | 178 | (2,015) | 8,185 |
Loan charge-offs | (536) | (865) | |
Loan recoveries | 134 | 822 | 97 |
Ending Balance | 12,688 | 12,376 | 14,105 |
Consumer | |||
Changes in the allowance | |||
Beginning Balance | 8,308 | 7,900 | 2,471 |
Provision for loan losses | (1,021) | 298 | 5,342 |
Loan charge-offs | (153) | (156) | (254) |
Loan recoveries | 452 | 266 | 341 |
Ending Balance | 7,586 | 8,308 | 7,900 |
Consumer | Residential | Real estate first mortgage | |||
Changes in the allowance | |||
Beginning Balance | 6,532 | 5,774 | 1,448 |
Provision for loan losses | (763) | 758 | 4,321 |
Loan recoveries | 5 | ||
Ending Balance | 5,769 | 6,532 | 5,774 |
Consumer | Residential | Real estate junior lien | |||
Changes in the allowance | |||
Beginning Balance | 1,295 | 1,373 | 671 |
Provision for loan losses | (288) | (201) | 507 |
Loan charge-offs | (12) | ||
Loan recoveries | 282 | 123 | 207 |
Ending Balance | 1,289 | 1,295 | 1,373 |
Consumer | Other revolving and installment | |||
Changes in the allowance | |||
Beginning Balance | 481 | 753 | 352 |
Provision for loan losses | 30 | (259) | 514 |
Loan charge-offs | (153) | (156) | (242) |
Loan recoveries | 170 | 143 | 129 |
Ending Balance | $ 528 | $ 481 | $ 753 |
Loans and Allowance for Loan _9
Loans and Allowance for Loan Losses - Components of loans and associated allowance (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Loans and Allowance for Loan Losses | ||||
Recorded Investment, Individually Evaluated | $ 3,767 | $ 2,752 | ||
Recorded Investment, Collectively Evaluated | 2,440,227 | 1,755,268 | ||
Loans and Leases Receivable, Gross, Total | 2,443,994 | 1,758,020 | ||
Allowance for Loan Losses, Individually Evaluated | 954 | 283 | ||
Allowance for Loan Losses, Collectively Evaluated | 29,924 | 30,109 | ||
Loans and Leases Receivable, Allowance, Total | 31,146 | 31,572 | $ 34,246 | $ 23,924 |
Unallocated | ||||
Loans and Allowance for Loan Losses | ||||
Loans and Leases Receivable, Allowance, Total | 268 | 1,180 | 1,378 | 2,192 |
Commercial | ||||
Loans and Allowance for Loan Losses | ||||
Recorded Investment, Individually Evaluated | 3,047 | 2,640 | ||
Recorded Investment, Collectively Evaluated | 1,560,309 | 1,073,633 | ||
Loans and Leases Receivable, Gross, Total | 1,563,356 | 1,076,273 | ||
Allowance for Loan Losses, Individually Evaluated | 954 | 283 | ||
Allowance for Loan Losses, Collectively Evaluated | 22,338 | 21,801 | ||
Loans and Leases Receivable, Allowance, Total | 23,292 | 22,084 | 24,968 | 19,261 |
Commercial | Commercial and industrial | ||||
Loans and Allowance for Loan Losses | ||||
Recorded Investment, Individually Evaluated | 1,313 | 1,831 | ||
Recorded Investment, Collectively Evaluated | 582,563 | 434,930 | ||
Loans and Leases Receivable, Gross, Total | 583,876 | 436,761 | ||
Allowance for Loan Losses, Individually Evaluated | 275 | 278 | ||
Allowance for Loan Losses, Collectively Evaluated | 8,883 | 8,647 | ||
Loans and Leases Receivable, Allowance, Total | 9,158 | 8,925 | 10,205 | 12,270 |
Commercial | Real estate construction | ||||
Loans and Allowance for Loan Losses | ||||
Recorded Investment, Individually Evaluated | 262 | |||
Recorded Investment, Collectively Evaluated | 97,548 | 40,619 | ||
Loans and Leases Receivable, Gross, Total | 97,810 | 40,619 | ||
Allowance for Loan Losses, Individually Evaluated | 97 | |||
Allowance for Loan Losses, Collectively Evaluated | 1,349 | 783 | ||
Loans and Leases Receivable, Allowance, Total | 1,446 | 783 | 658 | 303 |
Commercial | Commercial real estate | ||||
Loans and Allowance for Loan Losses | ||||
Recorded Investment, Individually Evaluated | 1,472 | 809 | ||
Recorded Investment, Collectively Evaluated | 880,198 | 598,084 | ||
Loans and Leases Receivable, Gross, Total | 881,670 | 598,893 | ||
Allowance for Loan Losses, Individually Evaluated | 582 | 5 | ||
Allowance for Loan Losses, Collectively Evaluated | 12,106 | 12,371 | ||
Loans and Leases Receivable, Allowance, Total | 12,688 | 12,376 | 14,105 | 6,688 |
Consumer | ||||
Loans and Allowance for Loan Losses | ||||
Recorded Investment, Individually Evaluated | 720 | 112 | ||
Recorded Investment, Collectively Evaluated | 879,918 | 681,635 | ||
Loans and Leases Receivable, Gross, Total | 880,638 | 681,747 | ||
Allowance for Loan Losses, Collectively Evaluated | 7,586 | 8,308 | ||
Loans and Leases Receivable, Allowance, Total | 7,586 | 8,308 | 7,900 | 2,471 |
Consumer | Residential | Real estate first mortgage | ||||
Loans and Allowance for Loan Losses | ||||
Recorded Investment, Individually Evaluated | 535 | 21 | ||
Recorded Investment, Collectively Evaluated | 679,016 | 510,695 | ||
Loans and Leases Receivable, Gross, Total | 679,551 | 510,716 | ||
Allowance for Loan Losses, Collectively Evaluated | 5,769 | 6,532 | ||
Loans and Leases Receivable, Allowance, Total | 5,769 | 6,532 | 5,774 | 1,448 |
Consumer | Residential | Real estate junior lien | ||||
Loans and Allowance for Loan Losses | ||||
Recorded Investment, Individually Evaluated | 184 | 91 | ||
Recorded Investment, Collectively Evaluated | 150,295 | 125,577 | ||
Loans and Leases Receivable, Gross, Total | 150,479 | 125,668 | ||
Allowance for Loan Losses, Collectively Evaluated | 1,289 | 1,295 | ||
Loans and Leases Receivable, Allowance, Total | 1,289 | 1,295 | 1,373 | 671 |
Consumer | Other revolving and installment | ||||
Loans and Allowance for Loan Losses | ||||
Recorded Investment, Individually Evaluated | 1 | |||
Recorded Investment, Collectively Evaluated | 50,607 | 45,363 | ||
Loans and Leases Receivable, Gross, Total | 50,608 | 45,363 | ||
Allowance for Loan Losses, Collectively Evaluated | 528 | 481 | ||
Loans and Leases Receivable, Allowance, Total | $ 528 | $ 481 | $ 753 | $ 352 |
Loans and Allowance for Loan_10
Loans and Allowance for Loan Losses - Impaired loans (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Impaired | ||
Loans with related allowance for loan losses, Recorded investment | $ 1,833 | $ 625 |
Loans with related allowance for loan losses, unpaid principal | 2,051 | 667 |
Loans with related allowance for loan losses, Related Allowance | 954 | 283 |
Loans with no related allowance for loan losses, Recorded investment | 1,934 | 2,127 |
Loans with no related allowance for loan losses, unpaid principal | 2,219 | 2,403 |
Recorded investment | 3,767 | 2,752 |
Unpaid principal balance | 4,270 | 3,070 |
Commercial | Commercial and industrial | ||
Impaired | ||
Loans with related allowance for loan losses, Recorded investment | 675 | 445 |
Loans with related allowance for loan losses, unpaid principal | 711 | 464 |
Loans with related allowance for loan losses, Related Allowance | 275 | 278 |
Loans with no related allowance for loan losses, Recorded investment | 638 | 1,386 |
Loans with no related allowance for loan losses, unpaid principal | 767 | 1,575 |
Recorded investment | 1,313 | 1,831 |
Unpaid principal balance | 1,478 | 2,039 |
Commercial | Real estate construction | ||
Impaired | ||
Loans with related allowance for loan losses, Recorded investment | 262 | |
Loans with related allowance for loan losses, unpaid principal | 440 | |
Loans with related allowance for loan losses, Related Allowance | 97 | |
Recorded investment | 262 | |
Unpaid principal balance | 440 | |
Commercial | Commercial real estate | ||
Impaired | ||
Loans with related allowance for loan losses, Recorded investment | 896 | 180 |
Loans with related allowance for loan losses, unpaid principal | 900 | 203 |
Loans with related allowance for loan losses, Related Allowance | 582 | 5 |
Loans with no related allowance for loan losses, Recorded investment | 576 | 629 |
Loans with no related allowance for loan losses, unpaid principal | 660 | 684 |
Recorded investment | 1,472 | 809 |
Unpaid principal balance | 1,560 | 887 |
Consumer | Residential | Real estate first mortgage | ||
Impaired | ||
Loans with no related allowance for loan losses, Recorded investment | 535 | 21 |
Loans with no related allowance for loan losses, unpaid principal | 573 | 24 |
Recorded investment | 535 | 21 |
Unpaid principal balance | 573 | 24 |
Consumer | Residential | Real estate junior lien | ||
Impaired | ||
Loans with no related allowance for loan losses, Recorded investment | 184 | 91 |
Loans with no related allowance for loan losses, unpaid principal | 218 | 120 |
Recorded investment | 184 | 91 |
Unpaid principal balance | 218 | $ 120 |
Consumer | Other revolving and installment | ||
Impaired | ||
Loans with no related allowance for loan losses, Recorded investment | 1 | |
Loans with no related allowance for loan losses, unpaid principal | 1 | |
Recorded investment | 1 | |
Unpaid principal balance | $ 1 |
Loans and Allowance for Loan_11
Loans and Allowance for Loan Losses - Interest Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Impaired | |||
Loans with related allowance for loan losses, Average recorded investment | $ 2,099 | $ 704 | $ 4,784 |
Loans with no related allowance for loan losses, Average recorded investment | 2,092 | 2,782 | 6,460 |
Loans, Average recorded investment | 4,191 | 3,486 | 11,244 |
Loans with related allowance for loan losses, Interest income | 13 | 20 | 152 |
Loans with no related allowance for loan losses, Interest income | 20 | 28 | |
Loans, Interest income | 13 | 40 | 180 |
Commercial | Commercial and industrial | |||
Impaired | |||
Loans with related allowance for loan losses, Average recorded investment | 722 | 517 | 765 |
Loans with no related allowance for loan losses, Average recorded investment | 707 | 1,988 | 4,151 |
Loans, Average recorded investment | 1,429 | 2,505 | 4,916 |
Loans with related allowance for loan losses, Interest income | 13 | 13 | 14 |
Loans with no related allowance for loan losses, Interest income | 20 | 25 | |
Loans, Interest income | 13 | 33 | 39 |
Commercial | Real estate construction | |||
Impaired | |||
Loans with related allowance for loan losses, Average recorded investment | 442 | ||
Loans, Average recorded investment | 442 | ||
Commercial | Commercial real estate | |||
Impaired | |||
Loans with related allowance for loan losses, Average recorded investment | 935 | 187 | 3,972 |
Loans with no related allowance for loan losses, Average recorded investment | 618 | 672 | 1,614 |
Loans, Average recorded investment | 1,553 | 859 | 5,586 |
Loans with related allowance for loan losses, Interest income | 7 | 138 | |
Loans, Interest income | 7 | 138 | |
Consumer | Residential | Real estate first mortgage | |||
Impaired | |||
Loans with no related allowance for loan losses, Average recorded investment | 575 | 23 | 461 |
Loans, Average recorded investment | 575 | 23 | 461 |
Consumer | Residential | Real estate junior lien | |||
Impaired | |||
Loans with related allowance for loan losses, Average recorded investment | 19 | ||
Loans with no related allowance for loan losses, Average recorded investment | 191 | 98 | 234 |
Loans, Average recorded investment | 191 | 98 | 253 |
Loans with no related allowance for loan losses, Interest income | 3 | ||
Loans, Interest income | 3 | ||
Consumer | Other revolving and installment | |||
Impaired | |||
Loans with related allowance for loan losses, Average recorded investment | 28 | ||
Loans with no related allowance for loan losses, Average recorded investment | 1 | 1 | |
Loans, Average recorded investment | $ 1 | $ 1 | $ 28 |
Loans and Allowance for Loan_12
Loans and Allowance for Loan Losses - Pledged (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Loans and Allowance for Loan Losses | ||
Total loans | $ 2,443,994 | $ 1,758,020 |
Pledged | ||
Loans and Allowance for Loan Losses | ||
Total loans | $ 1,500,000 | $ 1,200,000 |
Loans and Allowance for Loan_13
Loans and Allowance for Loan Losses - Troubled Debt Restructurings (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2021 loan | Dec. 31, 2022 USD ($) loan | Dec. 31, 2021 USD ($) loan | |
Troubled debt restructuring | |||
Number of loans modified as a troubled debt restructuring | 0 | ||
Number of loan modifications during the period | 0 | ||
Maximum | |||
Troubled debt restructuring | |||
Typical loan deferral period under the CARES Act | 90 days | ||
Interest Rate Below Market Reduction | |||
Troubled debt restructuring | |||
Number of loans modified as a troubled debt restructuring | 3 | ||
Carrying value of restructured loan | $ | $ 701 | ||
Specific reserve for loan losses allocated | $ | $ 0 | ||
Second Deferral | |||
Troubled debt restructuring | |||
Number of loan modifications not considered TDRs, in connection with CARES Act | 6 | ||
Loan modifications not considered TDRS, in connection with CARES Act | $ | $ 3,300 | ||
Payment deferral | |||
Troubled debt restructuring | |||
Number of loan modifications outstanding | 1 | ||
Outstanding Principal Balance of loans modified as TDR | $ | $ 268 | ||
First Deferral | |||
Troubled debt restructuring | |||
Number of loan modifications not considered TDRs, in connection with CARES Act | 2 | ||
Loan modifications not considered TDRS, in connection with CARES Act | $ | $ 72 |
Loans and Allowance for Loan_14
Loans and Allowance for Loan Losses - CARES Act (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021 USD ($) client | |
PPP Loans | |
COVID-19 Pandemic Response | |
Number of clients assisted under the PPP | client | 2,454 |
Loans financed | $ 474,200 |
Net processing fees | $ 15,700 |
PPP Loans - Less than $350 Thousand | |
COVID-19 Pandemic Response | |
Processing fees on PPP loans (as a percent) | 5% |
Threshold value loans financed under the PPP | $ 350 |
PPP Loans - $350 Thousand to $2 Million | |
COVID-19 Pandemic Response | |
Processing fees on PPP loans (as a percent) | 3% |
PPP Loans - $350 Thousand to $2 Million | Minimum | |
COVID-19 Pandemic Response | |
Threshold value loans financed under the PPP | $ 350 |
PPP Loans - $350 Thousand to $2 Million | Maximum | |
COVID-19 Pandemic Response | |
Threshold value loans financed under the PPP | $ 2,000 |
PPP Loans - $2 Million | |
COVID-19 Pandemic Response | |
Processing fees on PPP loans (as a percent) | 1% |
Threshold value loans financed under the PPP | $ 2,000 |
Land, Premises and Equipment,_3
Land, Premises and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Land, Premises and Equipment, Net | |||
Land, Premises and Equipment | $ 69,837 | $ 67,895 | |
Less accumulated depreciation | (52,549) | (49,525) | |
Total | 17,288 | 18,370 | |
Depreciation expense | 3,000 | 3,600 | $ 3,900 |
Land | |||
Land, Premises and Equipment, Net | |||
Land, Premises and Equipment | 4,542 | 4,542 | |
Buildings and improvements | |||
Land, Premises and Equipment, Net | |||
Land, Premises and Equipment | 26,625 | 25,633 | |
Leasehold improvements | |||
Land, Premises and Equipment, Net | |||
Land, Premises and Equipment | 2,657 | 2,657 | |
Furniture, fixtures, and equipment | |||
Land, Premises and Equipment, Net | |||
Land, Premises and Equipment | $ 36,013 | $ 35,063 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill | ||
Total goodwill | $ 47,087 | $ 31,490 |
Banking | ||
Goodwill | ||
Total goodwill | 35,260 | 20,131 |
Retirement and Benefit Services | ||
Goodwill | ||
Total goodwill | $ 11,827 | $ 11,359 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill | |||
Gross Carrying Amount | $ 49,015 | $ 42,057 | |
Accumulated Amortization | (26,560) | (21,807) | |
Total | 22,455 | 20,250 | |
Intangible amortization expense | 4,754 | 4,380 | $ 3,961 |
Identifiable customer intangibles | |||
Goodwill | |||
Gross Carrying Amount | 41,423 | 42,057 | |
Accumulated Amortization | (25,927) | (21,807) | |
Total | 15,496 | $ 20,250 | |
Core deposit intangible assets | |||
Goodwill | |||
Gross Carrying Amount | 7,592 | ||
Accumulated Amortization | (633) | ||
Total | $ 6,959 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Amortization expense for Future Years (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill and Other Intangible Assets | ||
2023 | $ 5,297 | |
2024 | 5,043 | |
2025 | 3,904 | |
2026 | 2,275 | |
2027 | 2,275 | |
Thereafter | 3,661 | |
Total | $ 22,455 | $ 20,250 |
Loan Servicing (Details)
Loan Servicing (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Loan Servicing | |||
Loans serviced for others | $ 357,200 | $ 345,800 | |
Servicing Asset at Fair Value, Amount | |||
Balance, beginning of period | 1,880 | 1,987 | $ 3,845 |
Additions | 622 | 225 | 178 |
Amortization | (524) | (745) | (922) |
(Impairment)/Recovery | 665 | 413 | (1,114) |
Balance, end of period | $ 2,643 | $ 1,880 | $ 1,987 |
Loan Servicing - Key economic a
Loan Servicing - Key economic assumptions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Loan Servicing | ||
Fair value of servicing rights | $ 2,643 | $ 1,880 |
Weighted-average remaining term, years | 20 years 6 months | 20 years 3 months 18 days |
Prepayment speeds | 6.90% | 14.20% |
Discount rate | 10.50% | 9.50% |
Leases - Lease right-of-use ass
Leases - Lease right-of-use assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Lease Right-of-Use Assets | ||
Operating lease right-of-use assets | $ 5,419 | $ 3,727 |
Finance lease right-of-use assets | $ 87 | |
Finance Lease, Right-of-Use Asset, balance sheet location | Land, premises and equipment, net | Land, premises and equipment, net |
Total lease right-of-use assets | $ 5,419 | $ 3,814 |
Operating lease liabilities | $ 5,902 | 4,275 |
Finance lease liabilities | $ 203 | |
Finance lease liabilities, balance sheet location | Long-term debt | Long-term debt |
Total lease liabilities | $ 5,902 | $ 4,478 |
Leases - Weighted-average remai
Leases - Weighted-average remaining lease term and average discount rate (Details) - item | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases | ||
Minimum number of options to renew lease agreements | 1 | |
Weighted-average remaining lease term, Operating leases | 5 years | 3 years 4 months 24 days |
Weighted-average remaining lease term, Finance leases | 9 months 18 days | |
Weighted-average discount rate, Operating leases | 3.10% | 2.50% |
Weighted-average discount rate, Finance leases | 7.80% |
Leases - Lease costs and other
Leases - Lease costs and other lease information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lease costs | |||
Operating lease cost | $ 1,799 | $ 1,827 | $ 2,457 |
Variable lease cost | 899 | 823 | 1,170 |
Short-term lease cost | 217 | 181 | 395 |
Finance lease cost | |||
Interest on lease liabilities | 7 | 25 | 42 |
Amortization of right-of-use assets | 87 | 116 | 116 |
Sublease Income | (238) | (228) | (228) |
Net lease cost | 2,771 | 2,744 | 3,952 |
Cash paid for amounts included in the measurement of lease liabilities operating cash flows from operating leases | 1,706 | 1,763 | 2,432 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 4,266 | $ 267 | $ 1,555 |
Leases - Future minimum payment
Leases - Future minimum payments for leases (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Operating leases | ||
2023 | $ 1,987 | |
2024 | 1,236 | |
2025 | 1,118 | |
2026 | 936 | |
2027 | 385 | |
Thereafter | 854 | |
Total future minimum lease payments | 6,516 | |
Amounts representing interest | (614) | |
Total operating lease liabilities | $ 5,902 | $ 4,275 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Other Assets | ||
Federal Reserve Bank stock | $ 4,595 | $ 2,675 |
Foreclosed assets | 30 | 885 |
Prepaid expenses | 6,770 | 5,325 |
Investments in partnerships | 14 | 14 |
Trust fees accrued/receivable | 14,684 | 14,680 |
Income tax refund receivable | 2,856 | 1,146 |
Federal Home Loan Bank stock | 19,362 | 3,806 |
Derivative instruments | 6,333 | 3,382 |
Tax credit investments | 17,642 | 7,906 |
Other assets | 3,426 | 2,889 |
Total | $ 75,712 | $ 42,708 |
Deposits (Details)
Deposits (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deposits. | ||
Noninterest-bearing | $ 860,987 | $ 938,840 |
Interest-bearing demand | 706,275 | 714,669 |
Savings accounts | 99,882 | 96,825 |
Money market savings | 1,035,981 | 937,305 |
Time deposits | 212,359 | 232,912 |
Total interest-bearing | 2,054,497 | 1,981,711 |
Total deposits | 2,915,484 | 2,920,551 |
Deposit overdrafts | $ 202 | $ 2,900 |
Deposits - Scheduled maturities
Deposits - Scheduled maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deposits. | ||
Certificates of deposit in excess of $250,000 | $ 51,100 | $ 91,500 |
2023 | 169,062 | |
2024 | 22,854 | |
2025 | 4,802 | |
2026 | 10,663 | |
2027 | 1,833 | |
Thereafter | 3,145 | |
Total | $ 212,359 | $ 232,912 |
Short-Term Borrowings (Details)
Short-Term Borrowings (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Short-term borrowings | |||
Balance as of end of period | $ 378,080 | ||
Federal Funds Purchased | |||
Short-term borrowings | |||
Balance as of end of period | 153,080 | ||
Average daily balance | 63,296 | $ 3 | $ 80 |
Maximum month-end balance | $ 251,880 | ||
During period | 2.46% | ||
End of period | 4.26% | ||
FHLB Short-term advances | |||
Short-term borrowings | |||
Balance as of end of period | $ 225,000 | ||
Average daily balance | 89,932 | ||
Maximum month-end balance | $ 225,000 | ||
During period | 3.10% | ||
End of period | 4.31% |
Short-Term Borrowings - Narrati
Short-Term Borrowings - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Federal Funds Purchased | ||
Short-term borrowings | ||
Outstanding credit facility | $ 0 | $ 0 |
Unsecured maximum borrowing capacity | 87 | 87 |
FHLB Short-term advances | ||
Short-term borrowings | ||
Outstanding credit facility | 531.6 | $ 677.4 |
Unsecured Line Of Credit With Bank of North Dakota | ||
Short-term borrowings | ||
Unused line of credit | $ 15 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Long-Term Debt | ||
Face Value | $ 60,310 | $ 63,010 |
Carrying Amount | 58,843 | 58,933 |
Subordinated notes payable | ||
Long-Term Debt | ||
Face Value | 50,000 | 50,000 |
Carrying Amount | $ 50,000 | $ 50,000 |
Fixed interest rate | 3.50% | 3.50% |
Junior subordinated debenture (Trust I) | ||
Long-Term Debt | ||
Face Value | $ 4,124 | $ 4,124 |
Carrying Amount | $ 3,537 | $ 3,492 |
Period End Interest Rate | 7.82% | 3.32% |
Junior subordinated debenture (Trust I) | Three - month LIBOR | ||
Long-Term Debt | ||
Interest Rate | 3.10% | 3.10% |
Junior subordinated debenture (Trust II) | ||
Long-Term Debt | ||
Face Value | $ 6,186 | $ 6,186 |
Carrying Amount | $ 5,306 | $ 5,238 |
Period End Interest Rate | 6.57% | 2% |
Junior subordinated debenture (Trust II) | Three - month LIBOR | ||
Long-Term Debt | ||
Interest Rate | 1.80% | 1.80% |
Finance lease liability | ||
Long-Term Debt | ||
Face Value | $ 2,700 | |
Carrying Amount | $ 203 | |
Fixed interest rate | 7.81% |
Financial Instruments with Of_3
Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financial Instruments with Off Balance Sheet Risk | ||
Amount of credit risk | $ 819,520 | $ 678,644 |
Commitments to extend credit | ||
Financial Instruments with Off Balance Sheet Risk | ||
Amount of credit risk | 806,431 | 668,115 |
Standby letters of credit | ||
Financial Instruments with Off Balance Sheet Risk | ||
Amount of credit risk | $ 13,089 | $ 10,529 |
Financial Instruments with Off
Financial Instruments with Off Balance Sheet Risk - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Letter of credit with FHLB | ||
Financial Instruments with Off Balance Sheet Risk | ||
Outstanding letters of credit | $ 0 | $ 150 |
Letter of credit with Bank of North Dakota | ||
Financial Instruments with Off Balance Sheet Risk | ||
Outstanding letters of credit | 0 | 0 |
Collateralized loans | $ 215,500 | $ 229,700 |
Share-Based Compensation - Plan
Share-Based Compensation - Plan Information (Details) - 2019 Equity Incentive Plan - shares | Dec. 31, 2022 | May 06, 2019 |
Share-Based Compensation | ||
Awards authorized | 1,100,000 | |
Restricted stock awards | ||
Share-Based Compensation | ||
Number of shares available for grant | 922,010 |
Share-Based Compensation - Acti
Share-Based Compensation - Activity in stock (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Additional disclosures | |||
Compensation expense | $ 1.9 | $ 3.1 | $ 1.9 |
Restricted Stock Awards and Units. | |||
Restricted Stock Awards and Units | |||
Outstanding at beginning of period | 260,850 | 325,030 | |
Granted | 102,265 | 66,664 | |
Vested | (113,562) | (104,119) | |
Forfeited or cancelled | (11,067) | (26,725) | |
Outstanding at end of period | 238,486 | 260,850 | 325,030 |
Weighted Average Grant Date Fair Value | |||
Outstanding at beginning of period | $ 21.04 | $ 19.48 | |
Granted | 25.44 | 26.63 | |
Vested | 19.25 | 20.51 | |
Forfeited or cancelled | 23.90 | 18.03 | |
Outstanding at end of period | $ 23.65 | $ 21.04 | $ 19.48 |
Additional disclosures | |||
Unrecognized compensation cost | $ 2.5 | $ 2.2 | |
Weighted average period | 2 years 8 months 12 days | 2 years 10 months 24 days | |
Restricted stock awards | |||
Restricted Stock Awards and Units | |||
Outstanding at beginning of period | 140,228 | ||
Outstanding at end of period | 128,267 | 140,228 | |
Restricted stock units | |||
Restricted Stock Awards and Units | |||
Outstanding at beginning of period | 120,622 | ||
Outstanding at end of period | 110,219 | 120,622 |
Employee Benefits - Deferral Pe
Employee Benefits - Deferral Percentages (Details) | 12 Months Ended |
Dec. 31, 2022 plan | |
Employee Benefits | |
Number of employee retirement plans | 2 |
401K Plan | |
Employee Benefits | |
Company contribution percentage of amounts deferred by employee's up to 3% of compensation | 100% |
Company contribution percentage of amounts deferred by employee's between 3%-6% of compensation | 50% |
401K Plan | Minimum | |
Employee Benefits | |
Percentage of eligible compensation | 3% |
401K Plan | Maximum | |
Employee Benefits | |
Percentage of eligible compensation | 6% |
Employee Benefits - Retirement
Employee Benefits - Retirement plan contribution (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Benefits | |||
Retirement plan contributions | $ 5,080 | $ 5,137 | $ 5,126 |
Total ESOP shares outstanding | 1,111,424 | 1,207,952 | 1,170,611 |
Salary Reduction Plan | |||
Employee Benefits | |||
Retirement plan contributions | $ 3,148 | $ 3,123 | $ 2,960 |
ESOP | |||
Employee Benefits | |||
Retirement plan contributions | $ 1,932 | $ 2,014 | $ 2,166 |
Noninterest Income (Details)
Noninterest Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Noninterest income | |||
Mortgage banking | $ 16,921 | $ 48,502 | $ 61,641 |
Net gains (losses) on investment securities | 125 | 2,737 | |
Bank-owned life insurance income | 835 | 793 | 797 |
Total noninterest income | 111,223 | 147,387 | 149,371 |
Retirement and benefits | |||
Noninterest income | |||
Revenue | 67,135 | 71,709 | 60,956 |
Wealth management | |||
Noninterest income | |||
Revenue | 20,870 | 21,052 | 17,451 |
Deposit Account | |||
Noninterest income | |||
Revenue | 1,434 | 1,395 | 1,409 |
Interchange fees | |||
Noninterest income | |||
Revenue | 2,246 | 2,180 | 2,140 |
Misc. transactional fees | |||
Noninterest income | |||
Revenue | 1,429 | 1,218 | 1,246 |
Other noninterest income | |||
Noninterest income | |||
Revenue | $ 353 | $ 413 | $ 994 |
Noninterest Income - Contract C
Noninterest Income - Contract Costs (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Noninterest Income | |
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract | true |
Income Taxes - Components (Deta
Income Taxes - Components (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Federal | |||
Current | $ 9,005 | $ 10,731 | $ 14,541 |
Deferred | 727 | 2,212 | (3,615) |
Federal income tax | 9,732 | 12,943 | 10,926 |
State | |||
Current | 2,298 | 2,879 | 3,736 |
Deferred | 147 | 574 | (819) |
State income tax | 2,445 | 3,453 | 2,917 |
Applicable income taxes | $ 12,177 | $ 16,396 | $ 13,843 |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets and deferred tax liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets | ||
Allowance for loan losses | $ 7,818 | $ 7,925 |
Employee compensation and benefit accruals | 2,455 | 2,762 |
Expense accruals | 417 | 634 |
Identifiable intangible amortization | 3,363 | 3,341 |
Deferred loan fees | 1,665 | 58 |
Net operating loss carry forwards | 3 | 42 |
Nonaccrual loan interest | 74 | 86 |
Unrealized loss on availableforsale investment securities | 33,056 | 1,426 |
Other | 884 | 518 |
Total deferred tax assets from temporary differences | 49,735 | 16,792 |
Deferred Tax Liabilities | ||
Accumulated depreciation | 835 | 918 |
Goodwill and intangible amortization | 5,115 | 2,752 |
Servicing assets | 663 | 451 |
Prepaid expenses | 552 | 1,014 |
Other | 201 | 43 |
Total deferred tax liabilities from temporary differences | 7,366 | 5,178 |
Net Deferred Tax Assets | $ 42,369 | $ 11,614 |
Income Taxes - Reconciliation b
Income Taxes - Reconciliation between applicable income taxes and statutory federal tax rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Tax amount | |||
Taxes at statutory federal income tax rate | $ 10,958 | $ 14,506 | $ 12,289 |
Tax exempt income | (514) | (556) | (527) |
State income taxes, net of federal benefits | 2,297 | 2,973 | 2,522 |
Nondeductible items and other | (564) | (527) | (441) |
Applicable income taxes | $ 12,177 | $ 16,396 | $ 13,843 |
Percentage of pretax income | |||
Taxes at statutory federal income tax rate (as percentage) | 21% | 21% | 21% |
Tax exempt income (as percentage) | (1.00%) | (0.80%) | (0.90%) |
State income taxes, net of federal benefits (as percentage) | 4.40% | 4.30% | 4.30% |
Nondeductible items and other (as percentage) | (1.10%) | (0.80%) | (0.80%) |
Applicable income taxes (as percentage) | 23.30% | 23.70% | 23.60% |
Tax Credit Investments - Tax cr
Tax Credit Investments - Tax credits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Tax Credit Investments [Line items] | ||
Investment | $ 17,906 | $ 7,906 |
Unfunded Commitment | 15,559 | 6,999 |
Amortization expense on housing projects tax credit investments | 264 | 0 |
Tax benefit recognized for qualified affordable housing projects tax credit investments | 373 | 8 |
Proportional amortization | ||
Tax Credit Investments [Line items] | ||
Investment | 17,906 | 7,906 |
Unfunded Commitment | $ 15,559 | $ 6,999 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Segment Reporting | |||
Number of operating segments | segment | 4 | ||
Number of banking offices | item | 14 | ||
Key metrics related to segments | |||
Net interest income | $ 99,729 | $ 87,099 | $ 83,846 |
Provision for loan losses | (3,500) | 10,900 | |
Noninterest income | 111,223 | 147,387 | 149,371 |
Noninterest expense | 158,770 | 168,909 | 163,799 |
Net income before taxes | 52,182 | 69,077 | 58,518 |
Total assets | 3,779,637 | 3,392,691 | 3,013,771 |
Corporate Administration | |||
Key metrics related to segments | |||
Net interest income | (2,340) | (1,896) | (3,413) |
Noninterest income | 98 | 33 | (694) |
Noninterest expense | 40,929 | 37,725 | 37,068 |
Net income before taxes | (43,171) | (39,588) | (41,175) |
Total assets | 27,488 | 13,402 | 10,134 |
Banking | Operating Segments | |||
Key metrics related to segments | |||
Net interest income | 100,190 | 87,014 | 85,167 |
Provision for loan losses | (3,500) | 10,900 | |
Noninterest income | 6,199 | 6,091 | 10,017 |
Noninterest expense | 67,068 | 44,989 | 46,883 |
Net income before taxes | 39,321 | 51,616 | 37,401 |
Total assets | 3,696,676 | 3,254,979 | 2,827,792 |
Retirement and Benefit Services | Operating Segments | |||
Key metrics related to segments | |||
Noninterest income | 67,135 | 71,709 | 60,956 |
Noninterest expense | 26,204 | 40,164 | 35,236 |
Net income before taxes | 40,931 | 31,545 | 25,720 |
Total assets | 40,821 | 44,953 | 47,758 |
Wealth Management | Operating Segments | |||
Key metrics related to segments | |||
Noninterest income | 20,870 | 21,052 | 17,451 |
Noninterest expense | 5,979 | 8,869 | 8,289 |
Net income before taxes | 14,891 | 12,183 | 9,162 |
Total assets | 4,032 | 3,644 | 3,009 |
Mortgage | Operating Segments | |||
Key metrics related to segments | |||
Net interest income | 1,879 | 1,981 | 2,092 |
Noninterest income | 16,921 | 48,502 | 61,641 |
Noninterest expense | 18,590 | 37,162 | 36,323 |
Net income before taxes | 210 | 13,321 | 27,410 |
Total assets | $ 10,620 | $ 75,713 | $ 125,078 |
Earnings Per Share - Two-class
Earnings Per Share - Two-class method (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share | |||
Net Income | $ 40,005 | $ 52,681 | $ 44,675 |
Dividends and undistributed earnings allocated to participating securities | 416 | 802 | 770 |
Net income available to common shareholders | $ 39,589 | $ 51,879 | $ 43,905 |
Weighted-average common shares outstanding for basic earnings per share | 18,640 | 17,189 | 17,106 |
Dilutive effect of stock-based awards | 244 | 297 | 332 |
Weighted-average common shares outstanding for diluted earnings per share | 18,884 | 17,486 | 17,438 |
Per Common Share Data | |||
Basic earnings per common share | $ 2.12 | $ 3.02 | $ 2.57 |
Diluted earnings per common share | $ 2.10 | $ 2.97 | $ 2.52 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transactions | ||
Beginning balance | $ 34 | $ 254 |
New loans and advances | 145 | 132 |
Repayments | (95) | (352) |
Changes to related parties (1) | 46 | |
Ending balance | 130 | 34 |
Deposits from related parties | $ 587 | $ 3,600 |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Derivative Instruments | ||
Derivative Assets | $ 6,333 | $ 3,382 |
Not designated as hedging | ||
Derivative Instruments | ||
Derivative Assets | $ 6,405 | $ 3,397 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets. | Other Assets. |
Derivative liabilities | $ 6,303 | $ 1,368 |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities and Other Liabilities | Accrued Liabilities and Other Liabilities |
Notional Amount, Derivative Assets | $ 54,243 | $ 207,560 |
Notional Amount, Derivative Liabilities | 69,180 | 44,826 |
Not designated as hedging | Interest rate swaps | ||
Derivative Instruments | ||
Derivative Assets | 6,277 | 1,366 |
Derivative liabilities | 6,277 | 1,368 |
Notional Amount, Derivative Assets | 43,430 | 44,826 |
Notional Amount, Derivative Liabilities | 43,430 | 44,826 |
Not designated as hedging | Interest rate lock commitments | ||
Derivative Instruments | ||
Derivative Assets | 121 | 1,507 |
Notional Amount, Derivative Assets | 10,462 | 52,316 |
Not designated as hedging | Forward loan sales commitments | ||
Derivative Instruments | ||
Derivative Assets | 7 | 490 |
Notional Amount, Derivative Assets | 351 | 13,418 |
Not designated as hedging | TBA mortgage backed securities | ||
Derivative Instruments | ||
Derivative Assets | 34 | |
Derivative liabilities | 26 | |
Notional Amount, Derivative Assets | $ 97,000 | |
Notional Amount, Derivative Liabilities | $ 25,750 |
Derivative Instruments - Collat
Derivative Instruments - Collateral (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Derivative Instruments | ||
Collateral held by third parties | $ 0 | $ 19 |
Derivative Instruments - Gain (
Derivative Instruments - Gain (loss) recognized on derivatives instruments (Details) - Not designated as hedging - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Gain (loss) recognized on derivative instruments | |||
Total gain/(loss) from derivative instruments | $ 2,971 | $ (5,613) | $ (1,931) |
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Mortgage Banking Income, Noninterest Income, Other Operating Income | Mortgage Banking Income, Noninterest Income, Other Operating Income | Mortgage Banking Income, Noninterest Income, Other Operating Income |
Interest rate swaps | |||
Gain (loss) recognized on derivative instruments | |||
Total gain/(loss) from derivative instruments | $ 2 | $ 1 | $ (3) |
Interest rate lock commitments | |||
Gain (loss) recognized on derivative instruments | |||
Total gain/(loss) from derivative instruments | (1,464) | (8,660) | 8,798 |
Forward loan sales commitments | |||
Gain (loss) recognized on derivative instruments | |||
Total gain/(loss) from derivative instruments | (483) | (2,174) | 2,271 |
TBA mortgage backed securities | |||
Gain (loss) recognized on derivative instruments | |||
Total gain/(loss) from derivative instruments | $ 4,916 | $ 5,220 | $ (12,997) |
Regulatory Matters (Details)
Regulatory Matters (Details) $ in Thousands | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Common equity tier 1 capital to risk weighted assets | ||
Actual (Amount) | $ 389,335 | $ 314,628 |
Requirements for Capital Adequacy Purposes (Amount) | $ 130,862 | $ 96,647 |
Actual (Ratio) | 0.1339 | 0.1465 |
Requirements for Capital Adequacy Purposes (Ratio) | 0.0450 | 0.0450 |
Tier 1 capital to risk weighted assets | ||
Actual (Amount) | $ 398,179 | $ 323,358 |
Requirements for Capital Adequacy Purposes (Amount) | $ 174,482 | $ 128,862 |
Actual (Ratio) | 0.1369 | 0.1506 |
Requirements for Capital Adequacy Purposes (Ratio) | 0.0600 | 0.0600 |
Total capital to risk weighted assets | ||
Actual (Amount) | $ 479,325 | $ 400,263 |
Requirements for Capital Adequacy Purposes (Amount) | $ 232,643 | $ 171,816 |
Actual (Ratio) | 0.1648 | 0.1864 |
Requirements for Capital Adequacy Purposes (Ratio) | 0.0800 | 0.0800 |
Tier 1 capital to average assets | ||
Actual (Amount) | $ 398,179 | $ 323,358 |
Requirements for Capital Adequacy Purposes (Amount) | $ 141,514 | $ 132,112 |
Actual (Ratio) | 0.1125 | 0.0979 |
Requirements for Capital Adequacy Purposes (Ratio) | 0.0400 | 0.0400 |
Bank | ||
Common equity tier 1 capital to risk weighted assets | ||
Actual (Amount) | $ 370,749 | $ 297,453 |
Requirements for Capital Adequacy Purposes (Amount) | 130,791 | 96,538 |
Minimum to be Well Capitalized Under Prompt Corrective Action (Amount) | $ 188,920 | $ 139,444 |
Actual (Ratio) | 0.1276 | 0.1387 |
Requirements for Capital Adequacy Purposes (Ratio) | 0.0450 | 0.0450 |
Minimum to be Well Capitalized Under Prompt Corrective Action (Ratio) | 0.0650 | 0.0650 |
Tier 1 capital to risk weighted assets | ||
Actual (Amount) | $ 370,749 | $ 297,453 |
Requirements for Capital Adequacy Purposes (Amount) | 174,388 | 128,718 |
Minimum to be Well Capitalized Under Prompt Corrective Action (Amount) | $ 232,517 | $ 171,624 |
Actual (Ratio) | 0.1276 | 0.1387 |
Requirements for Capital Adequacy Purposes (Ratio) | 0.0600 | 0.0600 |
Minimum to be Well Capitalized Under Prompt Corrective Action (Ratio) | 0.0800 | 0.0800 |
Total capital to risk weighted assets | ||
Actual (Amount) | $ 401,895 | $ 324,328 |
Requirements for Capital Adequacy Purposes (Amount) | 232,517 | 171,624 |
Minimum to be Well Capitalized Under Prompt Corrective Action (Amount) | $ 290,646 | $ 214,530 |
Actual (Ratio) | 0.1383 | 0.1512 |
Requirements for Capital Adequacy Purposes (Ratio) | 0.0800 | 0.0800 |
Minimum to be Well Capitalized Under Prompt Corrective Action (Ratio) | 0.1000 | 0.1000 |
Tier 1 capital to average assets | ||
Actual (Amount) | $ 370,749 | $ 297,453 |
Requirements for Capital Adequacy Purposes (Amount) | 141,440 | 132,039 |
Minimum to be Well Capitalized Under Prompt Corrective Action (Amount) | $ 176,800 | $ 165,049 |
Actual (Ratio) | 0.1048 | 0.0901 |
Requirements for Capital Adequacy Purposes (Ratio) | 0.0400 | 0.0400 |
Minimum to be Well Capitalized Under Prompt Corrective Action (Ratio) | 0.0500 | 0.0500 |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details) - shares | 12 Months Ended | ||
Feb. 18, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Repurchase Program | |||
Number of shares authorized for repurchase | 770,000 | ||
Repurchase program period | 36 months | ||
Shares repurchased | 0 | 0 |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities - Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | $ 717,324 | $ 853,649 |
Derivative Assets | 6,333 | 3,382 |
U.S. treasury and government agencies | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 3,520 | 5,103 |
Mortgage backed securities - Residential agency | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 587,679 | 707,157 |
Mortgage backed securities - Commercial | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 63,558 | 90,913 |
Asset backed securities | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 34 | 54 |
Corporate bonds | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 62,533 | 50,422 |
Recurring | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Total available-for-sale investment securities | 717,324 | 853,649 |
Derivative Assets | 6,405 | 3,397 |
Derivative liabilities | 6,303 | 1,368 |
Recurring | U.S. treasury and government agencies | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 3,520 | 5,103 |
Recurring | Mortgage backed securities - Residential agency | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 587,679 | 707,157 |
Recurring | Mortgage backed securities - Commercial | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 63,558 | 90,913 |
Recurring | Asset backed securities | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 34 | 54 |
Recurring | Corporate bonds | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 62,533 | 50,422 |
Recurring | Level 2 | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Total available-for-sale investment securities | 717,324 | 853,649 |
Derivative Assets | 6,405 | 3,397 |
Derivative liabilities | 6,303 | 1,368 |
Recurring | Level 2 | U.S. treasury and government agencies | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 3,520 | 5,103 |
Recurring | Level 2 | Mortgage backed securities - Residential agency | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 587,679 | 707,157 |
Recurring | Level 2 | Mortgage backed securities - Commercial | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 63,558 | 90,913 |
Recurring | Level 2 | Asset backed securities | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | 34 | 54 |
Recurring | Level 2 | Corporate bonds | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Available-for-sale, at fair value | $ 62,533 | $ 50,422 |
Fair Value of Assets and Liab_4
Fair Value of Assets and Liabilities - Nonrecurring Basis (Details) - Non recurring - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Impaired loans | $ 2,813 | $ 2,469 |
Foreclosed assets | 30 | 885 |
Servicing rights | 2,643 | 1,880 |
Loans held for sale | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Loans held for sale | 9,488 | 46,490 |
Impaired loans | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Net impairment | 954 | 283 |
Level 2 | Loans held for sale | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Loans held for sale | 9,488 | 46,490 |
Level 3 | ||
Fair value, assets and liabilities measured on recurring and non recurring basis | ||
Impaired loans | 2,813 | 2,469 |
Foreclosed assets | 30 | 885 |
Servicing rights | $ 2,643 | $ 1,880 |
Fair Value of Assets and Liab_5
Fair Value of Assets and Liabilities - Valuation Technique (Details) - Level 3 $ in Thousands | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Impaired loans | Appraisal value | Property specific adjustment | ||
Valuation techniques and significant unobservable inputs | ||
Impaired loans | $ 2,813 | $ 2,469 |
Foreclosed assets | Appraisal value | Property specific adjustment | ||
Valuation techniques and significant unobservable inputs | ||
Foreclosed assets | $ 30 | $ 885 |
Servicing rights | ||
Valuation techniques and significant unobservable inputs | ||
Loans Held-for-sale, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember |
Servicing rights | Prepayment speed assumptions | ||
Valuation techniques and significant unobservable inputs | ||
Servicing rights | $ 2,643 | $ 1,880 |
Servicing rights | Prepayment speed assumptions | Minimum | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 1.03 | 1.61 |
Servicing rights | Prepayment speed assumptions | Maximum | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 1.37 | 3.27 |
Servicing rights | Prepayment speed assumptions | Weighted average | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 1.15 | 2.37 |
Servicing rights | Discount rate | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 0.105 | 0.095 |
Servicing rights | Discount rate | Weighted average | ||
Valuation techniques and significant unobservable inputs | ||
Servicing Asset, Measurement Input | 0.105 | 0.095 |
Fair Value of Assets and Liab_6
Fair Value of Assets and Liabilities - Off-Balance Sheet Credit-Related Commitments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financial Assets | ||
Investment securities held-to-maturity | $ 270,912 | $ 349,677 |
Carrying Amount | ||
Financial Assets | ||
Cash and cash equivalents | 58,242 | 242,311 |
Investment securities held-to-maturity | 321,902 | 352,061 |
Loans, net | 2,412,848 | 1,726,448 |
Accrued interest receivable | 12,869 | 8,537 |
Bank-owned life insurance | 33,991 | 33,156 |
Financial Liabilities | ||
Noninterest-bearing deposits | 860,987 | 938,840 |
Interest-bearing deposits | 1,842,138 | 1,748,799 |
Time deposits | 212,359 | 232,912 |
Short-term borrowings | 378,080 | |
Long-term debt | 58,843 | 58,933 |
Accrued interest payable | 2,426 | 1,674 |
Estimated Fair Value | ||
Financial Assets | ||
Cash and cash equivalents | 58,242 | 242,311 |
Investment securities held-to-maturity | 270,912 | 349,677 |
Loans, net | 2,311,956 | 1,760,784 |
Accrued interest receivable | 12,869 | 8,537 |
Bank-owned life insurance | 33,991 | 33,156 |
Financial Liabilities | ||
Noninterest-bearing deposits | 860,987 | 938,840 |
Interest-bearing deposits | 1,842,138 | 1,748,799 |
Time deposits | 208,550 | 232,970 |
Short-term borrowings | 378,080 | |
Long-term debt | 56,116 | 57,772 |
Accrued interest payable | 2,426 | 1,674 |
Level 1 | Estimated Fair Value | ||
Financial Assets | ||
Cash and cash equivalents | 58,242 | 242,311 |
Accrued interest receivable | 12,869 | 8,537 |
Financial Liabilities | ||
Short-term borrowings | 378,080 | |
Accrued interest payable | 2,426 | 1,674 |
Level 2 | Estimated Fair Value | ||
Financial Assets | ||
Investment securities held-to-maturity | 270,912 | 349,677 |
Bank-owned life insurance | 33,991 | 33,156 |
Financial Liabilities | ||
Noninterest-bearing deposits | 860,987 | 938,840 |
Interest-bearing deposits | 1,842,138 | 1,748,799 |
Long-term debt | 56,116 | 57,772 |
Level 3 | Estimated Fair Value | ||
Financial Assets | ||
Loans, net | 2,311,956 | 1,760,784 |
Financial Liabilities | ||
Time deposits | $ 208,550 | $ 232,970 |
Parent Company Only Financial_3
Parent Company Only Financial Statements - Parent Company Condensed Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Assets | ||||
Cash and cash equivalents | $ 58,242 | $ 242,311 | ||
Land, premises and equipment, net | 17,288 | 18,370 | ||
Deferred income taxes, net | 42,369 | 11,614 | ||
Other assets | 75,712 | 42,708 | ||
Total assets | 3,779,637 | 3,392,691 | $ 3,013,771 | |
Liabilities and Stockholders' Equity | ||||
Long-term debt | 58,843 | 58,933 | ||
Accrued expenses and other liabilities | 64,456 | 49,529 | ||
Total liabilities | 3,422,765 | 3,033,288 | ||
Total stockholders' equity | 356,872 | 359,403 | $ 330,163 | $ 285,728 |
Total liabilities and stockholders' equity | 3,779,637 | 3,392,691 | ||
Parent Company | ||||
Assets | ||||
Cash and cash equivalents | 84,017 | 81,753 | ||
Land, premises and equipment, net | 87 | |||
Investment in subsidiaries | 338,595 | 342,538 | ||
Deferred income taxes, net | 904 | 1,000 | ||
Other assets | 487 | 655 | ||
Total assets | 424,003 | 426,033 | ||
Liabilities and Stockholders' Equity | ||||
Long-term debt | 58,843 | 58,933 | ||
Accrued expenses and other liabilities | 8,288 | 7,697 | ||
Total liabilities | 67,131 | 66,630 | ||
Total stockholders' equity | 356,872 | 359,403 | ||
Total liabilities and stockholders' equity | $ 424,003 | $ 426,033 |
Parent Company Only Financial_4
Parent Company Only Financial Statements - Parent Company Condensed Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Total interest income | $ 115,577 | $ 92,657 | $ 96,102 |
Expenses | 15,848 | 5,558 | 12,256 |
Income before income taxes | 52,182 | 69,077 | 58,518 |
Income tax benefit | (12,177) | (16,396) | (13,843) |
Net income | 40,005 | 52,681 | 44,675 |
Parent Company | |||
Dividends from subsidiaries | 18,500 | 16,000 | 16,000 |
Other income | 16 | 4 | 10 |
Total interest income | 18,516 | 16,004 | 16,010 |
Expenses | 6,583 | 5,293 | 6,057 |
Income before equity in undistributed income | 11,933 | 10,711 | 9,953 |
Equity in undistributed income of subsidiaries | 26,424 | 40,642 | 33,208 |
Income before income taxes | 38,357 | 51,353 | 43,161 |
Income tax benefit | 1,648 | 1,328 | 1,514 |
Net income | $ 40,005 | $ 52,681 | $ 44,675 |
Parent Company Only Financial_5
Parent Company Only Financial Statements - Parent Company Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Activities | |||
Net income | $ 40,005 | $ 52,681 | $ 44,675 |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Depreciation and amortization | 8,467 | 8,868 | 8,950 |
Stock-based compensation cost | 1,904 | 3,095 | 1,927 |
Net cash provided (used) by operating activities | 102,966 | 149,832 | (22,252) |
Investing Activities | |||
Net cash (paid) for business combinations | 101,511 | (9,279) | |
Net cash provided by investing activities | (292,622) | (417,658) | (538,390) |
Financing Activities | |||
Repurchase of common stock | (738) | (712) | (482) |
Net cash provided (used) by financing activities | 5,587 | 337,175 | 589,598 |
Net change in cash and cash equivalents | (184,069) | 69,349 | 28,956 |
Cash and cash equivalents at beginning of period | 242,311 | 172,962 | 144,006 |
Cash and cash equivalents at end of period | 58,242 | 242,311 | 172,962 |
Parent Company | |||
Operating Activities | |||
Net income | 40,005 | 52,681 | 44,675 |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Equity in undistributed income of subsidiaries | (26,424) | (40,642) | (33,208) |
Depreciation and amortization | 87 | 115 | 116 |
Stock-based compensation cost | 1,904 | 3,095 | 1,927 |
Other, net | 419 | 1,266 | 413 |
Net cash provided (used) by operating activities | 15,991 | 16,515 | 13,923 |
Investing Activities | |||
Net cash (paid) for business combinations | (189) | ||
Net cash provided by investing activities | (189) | ||
Financing Activities | |||
Cash dividends paid on common stock | (12,800) | (10,751) | (10,387) |
Repurchase of common stock | (738) | (712) | (482) |
Net cash provided (used) by financing activities | (13,538) | (11,463) | (10,869) |
Net change in cash and cash equivalents | 2,264 | 5,052 | 3,054 |
Cash and cash equivalents at beginning of period | 81,753 | 76,701 | 73,647 |
Cash and cash equivalents at end of period | $ 84,017 | $ 81,753 | $ 76,701 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events - Interest rate swaps $ in Millions | Feb. 23, 2023 USD ($) |
Subsequent Events | |
Term of interest rate swap | 3 years |
Derivative, Notional Amount | $ 200 |