UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period From To
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of |
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(I.R.S. Employer |
Incorporation or Organization) |
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Identification No.) |
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(Address of Principal Executive Offices) |
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(Zip Code) |
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(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging Growth Company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of April 30, 2024, there were
Hanmi Financial Corporation and Subsidiaries Quarterly Report on Form 10-Q
Three Months Ended March 31, 2024
Table of Contents
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Part I – Financial Information |
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Item 1. |
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3 |
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Consolidated Balance Sheets at March 31, 2024 (unaudited) and December 31, 2023 |
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3 |
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Consolidated Statements of Income for the three months ended March 31, 2024 and 2023 (unaudited) |
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4 |
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5 |
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Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2024 and 2023 (unaudited) |
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6 |
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Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited) |
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7 |
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8 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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39 |
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Item 3. |
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55 |
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Item 4. |
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55 |
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Part II – Other Information |
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Item 1. |
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56 |
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Item 1A. |
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56 |
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Item 2. |
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Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities |
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56 |
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Item 3. |
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56 |
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Item 4. |
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56 |
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Item 5. |
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56 |
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Item 6. |
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57 |
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58 |
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2
Part I — Financial Information
Item 1. Financial Statements
Hanmi Financial Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
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March 31, |
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December 31, |
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2024 |
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2023 |
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(Unaudited) |
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Assets |
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Cash and due from banks |
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$ |
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$ |
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Securities available for sale, at fair value (amortized cost of $ |
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Loans held for sale, at the lower of cost or fair value |
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Loans receivable, net of allowance for credit losses of $ |
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Accrued interest receivable |
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Premises and equipment, net |
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Customers' liability on acceptances |
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Servicing assets |
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Goodwill and other intangible assets, net |
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Federal Home Loan Bank ("FHLB") stock, at cost |
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Income tax assets |
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Bank-owned life insurance |
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Prepaid expenses and other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Liabilities: |
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Deposits: |
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Noninterest-bearing |
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$ |
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$ |
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Interest-bearing |
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Total deposits |
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Accrued interest payable |
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Bank's liability on acceptances |
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Borrowings |
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Subordinated debentures ($ |
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Accrued expenses and other liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss, net of tax benefit of $ |
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Retained earnings |
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Less treasury stock; |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See Accompanying Notes to Consolidated Financial Statements (Unaudited)
3
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share data)
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Three Months Ended |
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March 31, |
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2024 |
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2023 |
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Interest and dividend income: |
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Interest and fees on loans receivable |
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$ |
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$ |
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Interest on securities |
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Dividends on FHLB stock |
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Interest on deposits in other banks |
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Total interest and dividend income |
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Interest expense: |
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Interest on deposits |
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Interest on borrowings |
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Interest on subordinated debentures |
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Total interest expense |
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Net interest income before credit loss expense |
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Credit loss expense |
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Net interest income after credit loss expense |
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Noninterest income: |
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Service charges on deposit accounts |
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Trade finance and other service charges and fees |
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Gain on sale of Small Business Administration ("SBA") loans |
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Other operating income |
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Total noninterest income |
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Noninterest expense: |
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Salaries and employee benefits |
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Occupancy and equipment |
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Data processing |
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Professional fees |
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Supplies and communications |
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Advertising and promotion |
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Other operating expenses |
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Total noninterest expense |
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Income before tax |
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Income tax expense |
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Net income |
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$ |
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$ |
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Basic earnings per share |
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$ |
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$ |
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Diluted earnings per share |
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$ |
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$ |
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Weighted-average shares outstanding: |
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Basic |
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Diluted |
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See Accompanying Notes to Consolidated Financial Statements (Unaudited)
4
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(in thousands)
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Three Months Ended |
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March 31, |
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2024 |
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2023 |
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Net income |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Unrealized gain (loss): |
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Unrealized holding gain (loss) on available for sale securities |
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( |
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Unrealized gain (loss) on cash flow hedges |
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( |
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— |
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Unrealized gain (loss) |
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( |
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Income tax benefit (expense) related to other comprehensive income items |
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( |
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Other comprehensive income (loss), net of tax |
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( |
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Total comprehensive income |
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$ |
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$ |
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See Accompanying Notes to Consolidated Financial Statements (Unaudited)
5
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
For the Three Months Ended March 31, 2024 and 2023
(in thousands, except share data)
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Common Stock - Number of Shares |
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Stockholders' Equity |
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Accumulated |
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Additional |
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Other |
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Treasury |
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Total |
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Shares |
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Treasury |
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Shares |
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Common |
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Paid-in |
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Comprehensive |
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Retained |
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Stock, |
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Stockholders' |
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Issued |
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Shares |
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Outstanding |
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Stock |
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Capital |
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Loss |
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Earnings |
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at Cost |
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Equity |
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Balance at January 1, 2023 |
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( |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Stock options exercised |
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( |
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— |
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— |
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— |
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( |
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Issuance of awards pursuant to equity incentive plans, net of forfeitures |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares surrendered to satisfy tax liability upon vesting of equity awards |
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— |
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( |
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( |
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— |
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— |
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— |
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— |
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( |
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( |
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Repurchase of common stock |
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— |
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( |
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( |
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— |
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— |
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— |
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— |
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— |
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— |
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Cash dividends paid (common stock, $ |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Change in unrealized gain (loss) on securities available for sale, net of income taxes |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2023 |
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( |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Balance at January 1, 2024 |
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( |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Issuance of awards pursuant to equity incentive plans, net of forfeitures |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares surrendered to satisfy tax liability upon vesting of equity awards |
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— |
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( |
) |
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( |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Repurchase of common stock |
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— |
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( |
) |
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( |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Cash dividends paid (common stock, $ |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Change in unrealized gain (loss) on securities available for sale, net of income taxes |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
) |
Change in unrealized gain (loss) on cash flow hedge, net of income taxes |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Balance at March 31, 2024 |
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( |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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See Accompanying Notes to Consolidated Financial Statements (Unaudited)
6
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
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Three Months Ended March 31, |
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2024 |
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2023 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of servicing assets - net |
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Share-based compensation expense |
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Credit loss expense |
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Gain on sales of SBA loans |
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( |
) |
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( |
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Origination of SBA loans held for sale |
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( |
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( |
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Proceeds from sales of SBA loans |
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Gain on sales of mortgage loans |
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( |
) |
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— |
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Change in bank-owned life insurance |
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( |
) |
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( |
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Change in prepaid expenses and other assets |
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( |
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Change in income tax assets |
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|
||
Valuation adjustment on servicing assets |
|
|
— |
|
|
|
( |
) |
Change in accrued interest payable and other liabilities |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of securities available for sale |
|
|
( |
) |
|
|
( |
) |
Proceeds from matured, called and repayment of securities |
|
|
|
|
|
|
||
Purchases of loans receivable |
|
|
( |
) |
|
|
— |
|
Proceeds from sales of mortgage loans |
|
|
|
|
|
— |
|
|
Purchases of premises and equipment |
|
|
( |
) |
|
|
( |
) |
Change in loans receivable, excluding purchases |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Change in deposits |
|
|
|
|
|
|
||
Change in borrowings |
|
|
( |
) |
|
|
— |
|
Proceeds from exercise of stock options |
|
|
— |
|
|
|
|
|
Cash paid for employee vested shares surrendered due to employee tax liability |
|
|
( |
) |
|
|
( |
) |
Repurchase of common stock |
|
|
( |
) |
|
|
— |
|
Cash dividends paid |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
( |
) |
|
|
|
|
Net increase (decrease) in cash and due from banks |
|
|
( |
) |
|
|
|
|
Cash and due from banks at beginning of year |
|
|
|
|
|
|
||
Cash and due from banks at end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
||
Interest paid |
|
$ |
|
|
$ |
|
||
Income taxes paid |
|
$ |
|
|
$ |
|
||
Non-cash activities: |
|
|
|
|
|
|
||
Income tax benefit (expense) related to other comprehensive income items |
|
$ |
|
|
$ |
( |
) |
|
Change in right-of-use asset obtained in exchange for lease liability |
|
$ |
( |
) |
|
$ |
( |
) |
See Accompanying Notes to Consolidated Financial Statements (Unaudited)
7
Hanmi Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 1 — Organization and Basis of Presentation
Hanmi Financial Corporation (“Hanmi Financial,” the “Company,” “we,” “us” or “our”) is a bank holding company whose primary subsidiary is Hanmi Bank (the “Bank”). Our primary operations are related to traditional banking activities, including the acceptance of deposits and the lending and investing of money by the Bank.
In management’s opinion, the accompanying unaudited consolidated financial statements of Hanmi Financial and its subsidiaries reflect all adjustments of a normal and recurring nature that are necessary for a fair presentation of the results for the interim period ended March 31, 2024. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. The unaudited consolidated financial statements are prepared in conformity with GAAP and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. Operating results for the three-month period ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ended December 31, 2024 or for any other period. The interim information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”).
The preparation of interim unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions affect the amounts reported in the unaudited financial statements and disclosures provided, and actual results could differ.
Recently Issued Accounting Standards Not Yet Effective
Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures: In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 to enhance the transparency and usefulness of income tax disclosures primarily related to income tax rate reconciliation and income taxes information. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The adoption of ASU 2023-09 is not expected to have material effect on the Company’s operating results or financial condition.
ASU 2023-07, Segment Reporting (Topic 280): Segment Reporting: In November 2023, FASB issued ASU 2023-07 to provide updates that improve reportable segment disclosure requirements, primarily through enhanced disclosures on significant segment expenses. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 is not expected to have material effect on the Company’s operating results or financial condition.
8
Note 2 — Securities
The following is a summary of securities available for sale as of the dates indicated:
|
|
|
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
||||
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
||||
|
|
Cost |
|
|
Gain |
|
|
Loss |
|
|
Value |
|
||||
|
|
(in thousands) |
|
|||||||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
U.S. government agency and sponsored agency obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities - residential |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities - commercial |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Collateralized mortgage obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Debt securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total U.S. government agency and sponsored agency obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Municipal bonds-tax exempt |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
U.S. government agency and sponsored agency obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities - residential |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities - commercial |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Collateralized mortgage obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Debt securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total U.S. government agency and sponsored agency obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Municipal bonds-tax exempt |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The amortized cost and estimated fair value of securities as of March 31, 2024 and December 31, 2023, by contractual or expected maturity, are shown below. Collateralized mortgage obligations are included in the table shown below based on their expected maturities. All other securities are included based on their contractual maturities.
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Available for Sale |
|
|
Available for Sale |
|
||||||||||
|
|
Amortized |
|
|
Estimated |
|
|
Amortized |
|
|
Estimated |
|
||||
|
|
Cost |
|
|
Fair Value |
|
|
Cost |
|
|
Fair Value |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Within one year |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Over one year through five years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Over five years through ten years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Over ten years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
9
The following table summarizes debt securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded at March 31, 2024 or December 31, 2023, aggregated by major security type and length of time in a continuous unrealized loss position:
|
|
Holding Period |
|
|||||||||||||||||||||||||||||||||
|
|
Less than 12 Months |
|
|
12 Months or More |
|
|
Total |
|
|||||||||||||||||||||||||||
|
|
Gross |
|
|
Estimated |
|
|
Number |
|
|
Gross |
|
|
Estimated |
|
|
Number |
|
|
Gross |
|
|
Estimated |
|
|
Number |
|
|||||||||
|
|
Unrealized |
|
|
Fair |
|
|
of |
|
|
Unrealized |
|
|
Fair |
|
|
of |
|
|
Unrealized |
|
|
Fair |
|
|
of |
|
|||||||||
|
|
Loss |
|
|
Value |
|
|
Securities |
|
|
Loss |
|
|
Value |
|
|
Securities |
|
|
Loss |
|
|
Value |
|
|
Securities |
|
|||||||||
|
|
(in thousands, except number of securities) |
|
|||||||||||||||||||||||||||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
||||||
U.S. government agency and sponsored agency obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Mortgage-backed securities - residential |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Mortgage-backed securities - commercial |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Collateralized mortgage obligations |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Debt securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Total U.S. government agency and sponsored agency obligations |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Municipal bonds-tax exempt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Total |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
||||||
U.S. government agency and sponsored agency obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Mortgage-backed securities - residential |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Mortgage-backed securities - commercial |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Collateralized mortgage obligations |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Debt securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Total U.S. government agency and sponsored agency obligations |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Municipal bonds-tax exempt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Total |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
||||||
The Company evaluates its available for sale securities portfolio for impairment on a quarterly basis. The Company did
Securities available for sale with market values of $
At March 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies in an amount greater than
10
Note 3 — Loans
Loans Receivable
Loans consisted of the following as of the dates indicated:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(in thousands) |
|
|||||
Real estate loans: |
|
|
|
|
|
|
||
Commercial property |
|
|
|
|
|
|
||
Retail |
|
$ |
|
|
$ |
|
||
Hospitality |
|
|
|
|
|
|
||
Office |
|
|
|
|
|
|
||
Other (1) |
|
|
|
|
|
|
||
Total commercial property loans |
|
|
|
|
|
|
||
Construction |
|
|
|
|
|
|
||
Residential (2) |
|
|
|
|
|
|
||
Total real estate loans |
|
|
|
|
|
|
||
Commercial and industrial loans (3) |
|
|
|
|
|
|
||
Equipment financing agreements |
|
|
|
|
|
|
||
Loans receivable |
|
|
|
|
|
|
||
Allowance for credit losses |
|
|
( |
) |
|
|
( |
) |
Loans receivable, net |
|
$ |
|
|
$ |
|
||
Accrued interest on loans was $
At March 31, 2024 and December 31, 2023, loans with carrying values of $
Loans Held for Sale
The following is the activity for loans held for sale for the following periods:
|
|
Real Estate |
|
|
Commercial and Industrial |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
Three months ended March 31, 2024 |
|
|
|
|
|
|
|
|
|
|||
Balance at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Originations and transfers |
|
|
|
|
|
|
|
|
|
|||
Sales |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Principal paydowns and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Three months ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
Balance at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Originations and transfers |
|
|
|
|
|
|
|
|
|
|||
Sales |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Principal paydowns and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|||
11
The following table presents loans purchased by portfolio segment for the following periods:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
Commercial real estate |
|
$ |
|
|
$ |
— |
|
|
Commercial and industrial |
|
|
|
|
|
— |
|
|
Residential real estate |
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
— |
|
|
Allowance for Credit Losses
The following table details the information on the allowance for credit losses by portfolio segment for the following periods:
|
|
Real Estate |
|
|
Commercial and Industrial |
|
|
Equipment Financing Agreements |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Three months ended March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
||||
Charge-offs |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Credit loss expense (recovery) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three months ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Credit loss expense (recovery) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The table below presents the allowance for credit losses by portfolio segment as a percentage of the total allowance for credit losses and loans by portfolio segment as a percentage of the aggregate investment of loans receivable as of:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||||||||||||||||||||||||||
|
|
Allowance Amount |
|
|
Percentage of Total Allowance |
|
|
Total Loans |
|
|
Percentage of Total Loans |
|
|
Allowance Amount |
|
|
Percentage of Total Allowance |
|
|
Total Loans |
|
|
Percentage of Total Loans |
|
||||||||
|
|
(dollars in thousands) |
|
|||||||||||||||||||||||||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Retail |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
Hospitality |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Office |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total commercial property loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equipment financing agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
12
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(in thousands) |
|
|||||
Real estate loans: |
|
|
|
|
|
|
||
Commercial property |
|
|
|
|
|
|
||
Retail |
|
$ |
— |
|
|
$ |
|
|
Hospitality |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total commercial property loans |
|
|
|
|
|
|
||
Residential |
|
|
— |
|
|
|
|
|
Total real estate loans |
|
|
|
|
|
|
||
Commercial and industrial loans |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Loan Quality Indicators
As part of the on-going monitoring of the quality of our loans portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from 1 to 8) for each loan in our portfolio. Third-party loan reviews are conducted annually on a sample basis. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows:
Pass and Pass-Watch: Pass and Pass-Watch loans, grades (1-4), are in compliance with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weaknesses as defined under “Special Mention”, “Substandard” or “Doubtful.” This category is the strongest level of the Bank’s loan grading system. It consists of all performing loans with no identified credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans.
Special Mention: A Special Mention loan, grade (5), has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment of the debt and result in a Substandard classification. Loans that have significant actual, not potential, weaknesses are considered more severely classified.
Substandard: A Substandard loan, grade (6), has a well-defined weakness that jeopardizes the liquidation of the debt. A loan graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected.
Doubtful: A Doubtful loan, grade (7), is one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the loan, and therefore the amount or timing of a possible loss cannot be determined at the current time.
Loss: A loan classified as Loss, grade (8), is considered uncollectible and of such little value that their continuance as active bank assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be possible in the future. Loans classified as Loss will be charged off in a timely manner.
Under regulatory guidance, loans graded special mention or worse are considered criticized loans, and loans graded substandard or worse are considered classified loans.
13
Loans by Vintage Year and Risk Rating
|
|
Term Loans |
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Amortized Cost Basis by Origination Year (1) |
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
Prior |
|
|
Revolving |
|
|
Total |
|
||||||||
|
|
(in thousands) |
|
|||||||||||||||||||||||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
` |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special Mention |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Classified |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Special Mention |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Classified |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total construction |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Special Mention |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Classified |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Special Mention |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Classified |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Special Mention |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Classified |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total commercial and industrial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equipment financing agreements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Special Mention |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Classified |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Total equipment financing agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
YTD gross charge-offs |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total loans receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Special Mention |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Classified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total loans receivable |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||||
14
|
|
Term Loans |
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Amortized Cost Basis by Origination Year (1) |
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
Prior |
|
|
Revolving |
|
|
Total |
|
||||||||
|
|
|
|
|||||||||||||||||||||||||||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special Mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Classified |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Total commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Special Mention |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Classified |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total construction |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Special Mention |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Classified |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Special Mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Classified |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Special Mention |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||||
Classified |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total commercial and industrial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equipment financing agreements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Special Mention |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Classified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Total equipment financing agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
YTD gross charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
YTD net charge-offs (recoveries) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total loans receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk Rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass / Pass-Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Special Mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Classified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total loans receivable |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
YTD gross charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD net charge-offs (recoveries) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||||
15
Loans by Vintage Year and Payment Performance
|
|
Term Loans |
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Amortized Cost Basis by Origination Year (1) |
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
Prior |
|
|
Revolving |
|
|
Total |
|
||||||||
|
|
(in thousands) |
|
|||||||||||||||||||||||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Nonperforming |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Nonperforming |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total construction |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total commercial and industrial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equipment financing agreements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Nonperforming |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Total equipment financing agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
YTD gross charge-offs |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total loans receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total loans receivable |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||||
16
|
|
Term Loans |
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Amortized Cost Basis by Origination Year (1) |
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
Prior |
|
|
Revolving |
|
|
Total |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Nonperforming |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Total commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Nonperforming |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total construction |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Total commercial and industrial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD gross charge-offs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
YTD net charge-offs (recoveries) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equipment financing agreements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Total equipment financing agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
YTD gross charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
YTD net charge-offs (recoveries) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total loans receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total loans receivable |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
YTD gross charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
YTD net charge-offs (recoveries) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||||
17
The following is an aging analysis of loans, including loans on nonaccrual status, disaggregated by loan class, as of:
|
|
30-59 |
|
|
60-89 |
|
|
90 Days |
|
|
Total |
|
|
Current |
|
|
Total |
|
||||||
|
|
(in thousands) |
|
|||||||||||||||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Retail |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Hospitality |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Office |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total commercial property loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Construction |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Residential |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial and industrial loans |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Equipment financing agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total loans receivable |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Retail |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Hospitality |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Office |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total commercial property loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Construction |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial and industrial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equipment financing agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total loans receivable |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
18
Nonaccrual Loans and Nonperforming Assets
The following table represents the amortized cost basis of loans on nonaccrual status and loans past due 90 days and still accruing as of March 31, 2024 and December 31, 2023.
|
|
March 31, 2024 |
|
|||||||||||||
|
|
Nonaccrual Loans |
|
|
Nonaccrual Loans |
|
|
Loans |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Retail |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Hospitality |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Office |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total commercial property loans |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total real estate loans |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Commercial and industrial loans |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Equipment financing agreements |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2023 |
|
|||||||||||||
|
|
Nonaccrual Loans |
|
|
Nonaccrual Loans |
|
|
Loans |
|
|
Total |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Retail |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Hospitality |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total commercial property loans |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Residential |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total real estate loans |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Commercial and industrial loans |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Equipment financing agreements |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
The Company recognized $
The following table details nonperforming assets as of the dates indicated:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(in thousands) |
|
|||||
Nonaccrual loans |
|
$ |
|
|
$ |
|
||
Total nonperforming loans receivable |
|
|
|
|
|
|
||
Other real estate owned (“OREO”) |
|
|
|
|
|
|
||
Total nonperforming assets |
|
$ |
|
|
$ |
|
||
OREO of $
19
Loan Modifications
Note 4 — Servicing Assets
The changes in servicing assets for the three months ended March 31, 2024 and 2023 were as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(in thousands) |
|
|||||
|
|
|
|
|
|
|
||
Balance at beginning of period |
|
$ |
|
|
$ |
|
||
Addition related to sale of SBA loans |
|
|
|
|
|
|
||
Amortization |
|
|
( |
) |
|
|
( |
) |
Change in valuation allowance |
|
|
— |
|
|
|
|
|
Balance at end of period |
|
$ |
|
|
$ |
|
||
At March 31, 2024 and December 31, 2023, we serviced loans sold to unaffiliated parties of $
The Company recorded servicing fee income of $
The fair value of servicing rights was $
Note 5 — Income Taxes
The Company’s income tax expense was $
Management concluded that as of March 31, 2024 and December 31, 2023, a valuation allowance of $
As of March 31, 2024, the Company was subject to examination by various taxing authorities for its federal tax returns for the periods ended after December 31, 2019 and state tax returns for the periods ended after December 31, 2018. During the quarter ended March 31, 2024, there was
20
Note 6 — Goodwill and other Intangibles
The third-party originator's intangible of $
|
|
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||||||||||||||||||
|
|
Amortization |
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
||||||
|
|
|
|
(in thousands) |
|
|||||||||||||||||||||
Core deposit intangible |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Third-party originator's intangible |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
||
Goodwill |
|
N/A |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Total intangible assets |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The Company performed an impairment analysis in the first quarter of 2024 and determined there was
Note 7 — Deposits
The scheduled maturities of time deposits are as follows for the periods indicated:
|
|
Time |
|
|
Other Time |
|
|
Total |
|
|||
|
|
(in thousands) |
|
|||||||||
At March 31, 2024 |
|
|
|
|
|
|
|
|
|
|||
2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
2025 |
|
|
|
|
|
|
|
|
|
|||
2026 |
|
|
|
|
|
|
|
|
|
|||
2027 |
|
|
— |
|
|
|
|
|
|
|
||
2028 and thereafter |
|
|
— |
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
At December 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
2025 |
|
|
|
|
|
|
|
|
|
|||
2026 |
|
|
|
|
|
|
|
|
|
|||
2027 |
|
|
— |
|
|
|
|
|
|
|
||
2028 and thereafter |
|
|
— |
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Accrued interest payable on deposits was $
21
Note 8 — Borrowings and Subordinated Debentures
At March 31, 2024, the Bank had $
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Outstanding |
|
|
Weighted |
|
|
Outstanding |
|
|
Weighted |
|
||||
|
|
(dollars in thousands) |
|
|||||||||||||
Open advances |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Advances due within 12 months |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Advances due over 12 months through 24 months |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Advances due over 24 months through 36 months |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding advances |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
The following is financial data pertaining to FHLB advances:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(dollars in thousands) |
|
|||||
Weighted-average interest rate at end of period |
|
|
% |
|
|
% |
||
Weighted-average interest rate during the period |
|
|
% |
|
|
% |
||
Average balance of FHLB advances |
|
$ |
|
|
$ |
|
||
Maximum amount outstanding at any month-end |
|
$ |
|
|
$ |
|
||
The Bank maintains a secured credit facility with the FHLB, allowing the Bank to borrow on an overnight and term basis. The Bank had pledged $
The Bank also had securities pledged with the FRB with market values of $
On August 20, 2021, the Company issued $
The Company assumed Junior Subordinated Deferrable Interest Debentures (“Subordinated Debentures”) as a result of an acquisition in 2014 with an unpaid principal balance of $
22
Earnings per share (“EPS”) is calculated on both a basic and a diluted basis. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted from the issuance of common stock that then shared in earnings, excluding common shares in treasury. For diluted EPS, the weighted-average number of common shares includes the impact of unvested performance stock units (“PSUs”) under the treasury method.
Unvested restricted stock containing rights to non-forfeitable dividends are considered participating securities prior to vesting and have been included in the earnings allocation in computing basic and diluted EPS under the two-class method.
The following table is a reconciliation of the components used to derive basic and diluted EPS for the periods indicated:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(dollars in thousands, except per share amounts) |
|
|||||
Basic EPS |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Less: income allocated to unvested restricted stock |
|
|
|
|
|
|
||
Income allocated to common shares |
|
$ |
|
|
$ |
|
||
Weighted-average shares for basic EPS |
|
|
|
|
|
|
||
Basic EPS (1) |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Effect of dilutive stock options and unvested performance stock units |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Diluted EPS |
|
|
|
|
|
|
||
Income allocated to common shares |
|
$ |
|
|
$ |
|
||
Weighted-average shares for diluted EPS |
|
|
|
|
|
|
||
Diluted EPS (1) |
|
$ |
|
|
$ |
|
||
On a weighted-average basis, options to purchase
23
Note 10 — Regulatory Matters
Federal bank regulatory agencies require bank holding companies and banks to maintain a minimum ratio of qualifying total capital to risk-weighted assets of
In order for banks to be considered “well capitalized,” federal bank regulatory agencies require a minimum ratio of qualifying total capital to risk-weighted assets of
At March 31, 2024, the Bank’s capital ratios exceeded the minimum requirements for the Bank to be considered “well capitalized” and the Company exceeded all of its applicable minimum regulatory capital ratio requirements.
A capital conservation buffer of
In March 2020, federal banking agencies announced an interim final rule to delay the impact on regulatory capital arising from the implementation of CECL. The interim final rule maintains the three-year transition option in the previous rule and provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). The Company and the Bank adopted the capital transition relief over the permissible five-year period.
The capital ratios of Hanmi Financial and the Bank as of March 31, 2024 and December 31, 2023 were as follows:
|
|
|
|
|
|
|
|
Minimum |
|
|
Minimum to Be |
|
||||||||||||
|
|
|
|
|
|
|
|
Regulatory |
|
|
Categorized as |
|
||||||||||||
|
|
Actual |
|
|
Requirement |
|
|
“Well Capitalized” |
|
|||||||||||||||
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
||||||
|
|
(dollars in thousands) |
|
|||||||||||||||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total capital (to risk-weighted assets): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hanmi Financial |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
N/A |
|
|
N/A |
|
||||||
Hanmi Bank |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Tier 1 capital (to risk-weighted assets): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hanmi Financial |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
N/A |
|
|
N/A |
|
||||||
Hanmi Bank |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Common equity Tier 1 capital (to risk-weighted assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hanmi Financial |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
N/A |
|
|
N/A |
|
||||||
Hanmi Bank |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Tier 1 capital (to average assets): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hanmi Financial |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
N/A |
|
|
N/A |
|
||||||
Hanmi Bank |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total capital (to risk-weighted assets): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hanmi Financial |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
N/A |
|
|
N/A |
|
||||||
Hanmi Bank |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Tier 1 capital (to risk-weighted assets): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hanmi Financial |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
N/A |
|
|
N/A |
|
||||||
Hanmi Bank |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Common equity Tier 1 capital (to risk-weighted assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hanmi Financial |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
N/A |
|
|
N/A |
|
||||||
Hanmi Bank |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Tier 1 capital (to average assets): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Hanmi Financial |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
N/A |
|
|
N/A |
|
||||||
Hanmi Bank |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
24
Note 11 — Fair Value Measurements
Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The three-level fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are defined as follows:
Fair value is used on a recurring basis for certain assets and liabilities in which fair value is the primary basis of accounting. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes.
We record securities available for sale at fair value on a recurring basis. Certain other assets, such as loans held for sale, impaired loans, OREO, and core deposit intangible, are recorded at fair value on a non-recurring basis. Non-recurring fair value measurements typically involve assets that are periodically evaluated for impairment and for which any impairment is recorded in the period in which the re-measurement is performed.
The following methods and assumptions were used to estimate the fair value of each class of financial instrument below:
Securities available for sale - The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges. If quoted prices are not available, fair values are measured using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities, or other model-based valuation techniques requiring observable inputs other than quoted prices such as yield curve, prepayment speeds, and default rates. Level 1 securities include U.S. Treasury securities that are traded on an active exchange or by dealers or brokers in active over-the-counter markets. The fair value of these securities is determined by quoted prices on an active exchange or over-the-counter market. Level 2 securities primarily include U.S. government agency and sponsored agency mortgage-backed securities, collateralized mortgage obligations and debt securities as well as municipal bonds in markets that are active. In determining the fair value of the securities categorized as Level 2, we obtain reports from nationally recognized broker-dealers detailing the fair value of each investment security held as of each reporting date. The broker-dealers use prices obtained from nationally recognized pricing services to value our fixed income securities. The fair value of the municipal securities is determined based on pricing data provided by nationally recognized pricing services. We review the prices obtained for reasonableness based on our understanding of the marketplace, and also consider any credit issues related to the bonds. As we have not made any adjustments to the market quotes provided to us and as they are based on observable market data, they have been categorized as Level 2 within the fair value hierarchy. Level 3 securities are instruments that are not traded in the market. As such, no observable market data for the instrument is available, which necessitates the use of significant unobservable inputs.
Derivatives – The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.
25
Loans held for sale - Loans held for sale includes the guaranteed portion of SBA 7(a) loans carried at the lower of cost or fair value. Management obtains quotes, bids or pricing indication sheets on all or part of the loans directly from the purchasing financial institutions. Premiums received or to be received on the quotes, bids or pricing indication sheets are indicative of the fact that cost is lower than fair value. At March 31, 2024 and December 31, 2023, the entire balance of loans held for sale was recorded at its cost. We record loans held for sale on a nonrecurring basis with Level 2 inputs.
Nonperforming loans – Nonaccrual loans receivable and loans 90-days past due and still accruing interest are considered nonperforming for reporting purposes and are measured and recorded at fair value on a non-recurring basis. All nonperforming loans with a carrying balance over $
OREO - Fair value of OREO is based primarily on third party appraisals, less costs to sell and result in a Level 3 classification of the inputs for determining fair value. Appraisals are required annually and may be updated more frequently as circumstances require and the fair value adjustments are made to OREO based on the updated appraised value of the property.
Servicing assets - On a quarterly basis, the Company utilizes a third party service to evaluate servicing assets related to loans sold to unaffiliated parties with servicing retained, and result in a Level 3 classification. Servicing assets are assessed for impairment or increased obligation based on fair value at each reporting date.
Other repossessed assets – Fair value of equipment from equipment financing agreements is based primarily on a third party valuation service, less costs to sell and result in a Level 3 classification of the inputs for determining fair value. Valuations are required at the time the asset is repossessed and may be subsequently updated periodically due to the Company’s short-term possession of the asset prior to sale or as circumstances require and the fair value adjustments are made to the asset based on its value prior to sale.
26
Assets and Liabilities Measured at Fair Value on a Recurring Basis
As of March 31, 2024 and December 31, 2023, assets and liabilities measured at fair value on a recurring basis are as follows:
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
|
|
||||
|
|
|
|
|
Significant |
|
|
|
|
|
|
|
||||
|
|
|
|
|
Observable |
|
|
|
|
|
|
|
||||
|
|
Quoted Prices in |
|
|
Inputs with No |
|
|
|
|
|
|
|
||||
|
|
Active Markets |
|
|
Active Market |
|
|
Significant |
|
|
|
|
||||
|
|
for Identical |
|
|
with Identical |
|
|
Unobservable |
|
|
|
|
||||
|
|
Assets |
|
|
Characteristics |
|
|
Inputs |
|
|
Total Fair Value |
|
||||
|
|
(in thousands) |
|
|||||||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. government agency and sponsored agency obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities - residential |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities - commercial |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collateralized mortgage obligations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total U.S. government agency and sponsored agency obligations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Municipal bonds-tax exempt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. government agency and sponsored agency obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities - residential |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities - commercial |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collateralized mortgage obligations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total U.S. government agency and sponsored agency obligations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Municipal bonds-tax exempt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
27
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
As of March 31, 2024 and December 31, 2023, assets and liabilities measured at fair value on a non-recurring basis are as follows:
|
|
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
|
|
|
|
|
|
Significant |
|
|
|
|
||||
|
|
|
|
|
|
|
|
Observable |
|
|
|
|
||||
|
|
|
|
|
Quoted Prices in |
|
|
Inputs With No |
|
|
|
|
||||
|
|
|
|
|
Active Markets |
|
|
Active Market |
|
|
Significant |
|
||||
|
|
|
|
|
for Identical |
|
|
With Identical |
|
|
Unobservable |
|
||||
|
|
Total |
|
|
Assets |
|
|
Characteristics |
|
|
Inputs |
|
||||
|
|
(in thousands) |
|
|||||||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collateral dependent loans (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other real estate owned |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Repossessed personal property |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collateral dependent loans (2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other real estate owned |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Repossessed personal property |
|
|
|
|
|
|
|
|
|
|
|
|
||||
28
The following table represents quantitative information about Level 3 fair value assumptions for assets measured at fair value on a non-recurring basis at March 31, 2024 and December 31, 2023:
|
|
Fair Value |
|
|
Valuation |
|
Unobservable |
|
Range (Weighted |
|
|
|
|
(in thousands) |
|
||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
Collateral dependent loans: |
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
Hospitality |
|
$ |
|
|
|
Adjustments to market data |
|
( |
(1) |
||
Other |
|
|
|
|
|
Adjustments to market data |
|
( |
(1) |
||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans |
|
|
|
|
|
Adjustments to market data |
|
N/A |
(2) |
||
Total |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned |
|
$ |
|
|
|
Adjustments to market data |
|
(1) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Repossessed personal property |
|
|
|
|
|
Adjustments to market data |
|
N/A |
(3) |
||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
Collateral dependent loans: |
|
|
|
|
|
|
|
|
|
|
|
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
Commercial property |
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
$ |
|
|
|
Adjustments to market data |
|
(1) |
|||
Hospitality |
|
|
|
|
|
Adjustments to market data |
|
( |
(1) |
||
Other |
|
|
|
|
|
Adjustments to market data |
|
( |
(1) |
||
Residential |
|
|
|
|
|
Adjustments to market data |
|
( |
(1) |
||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial loans |
|
|
|
|
|
Adjustments to market data |
|
( |
(1) |
||
Total |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned |
|
$ |
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Adjustments to market data |
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