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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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California
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33-0898238
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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949 South Coast Drive, Suite 300, Costa Mesa, California
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92626
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(Address of principal executive offices)
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(Zip Code)
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Title of each class registered
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Name of each Exchange on which registered
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Common Stock without par value
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NASDAQ Global Select Market
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Page No.
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•
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A broad range of loan and deposit products and banking and financial services, more typically offered by larger banks, in order to gain a competitive advantage over independent or community banks that do not provide the same range or breadth of services that we are able to provide to our customers; and
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•
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A high level of personal service and responsiveness, more typical of independent and community banks, which we believe gives us a competitive advantage over large out-of-state and other large multi-regional banks that are unable, or unwilling, due to the expense involved, to provide that same level of personal service to this segment of the banking market.
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Year-to-Date Average Balance December 31, 2016
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Balance at December 31, 2016
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||||
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(Dollars in thousands)
|
||||||
Type of Deposit
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||||
Noninterest-bearing checking accounts
(1)
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$
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299,447
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$
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332,573
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Interest-bearing checking accounts
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60,024
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75,366
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Money market and savings deposits
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327,401
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335,453
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Certificates of deposit
(2)
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263,569
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257,908
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Totals
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$
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950,441
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$
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1,001,300
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(1)
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Excludes noninterest bearing deposits maintained at the Bank by the Company with an annual average balance of
$10.7 million
for the year ended
December 31, 2016
and a balance of
$8.4 million
at
December 31, 2016
. Excludes noninterest bearing deposits maintained at the Bank by PMAR with an annual average balance of
$1.4 million
for the year ended
December 31, 2016
and a balance of
$1.7 million
at
December 31, 2016
.
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(2)
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Comprised of time certificates of deposit in varying denominations under and over $100,000. Excludes certificates of deposit maintained by the Company at the Bank with an average balance of
$250,000
for the year ended
December 31, 2016
and a balance at
December 31, 2016
of
$250,000
. Excludes certificates of deposit maintained by PMAR at the Bank with an average balance of
$102,000
for the year ended
December 31, 2016
and a balance at
December 31, 2016
of
$102,000
.
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At December 31, 2016
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|||||
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Amount
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Percent of Total
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|||
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(Dollars in thousands)
|
|||||
Commercial loans
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$
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333,376
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35.2
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%
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Commercial real estate loans – owner occupied
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214,420
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22.7
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%
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Commercial real estate loans – all other
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173,223
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18.3
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%
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Residential mortgage loans – multi-family
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130,930
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13.8
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%
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Residential mortgage loans – single family
(1)
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34,527
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3.6
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%
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Land development loans
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18,485
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2.0
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%
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Consumer loans
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41,563
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4.4
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%
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Gross loans
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$
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946,524
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100.0
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%
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(1)
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These loans originated prior to March 2014 and our subsequent exit from the mortgage business and are retained in our loan portfolio as a loan diversification strategy.
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•
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Our online business banking portal allows our clients to conduct online transactions and access account information; features include the ability to:
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◦
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View account balances and activity, including statements
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◦
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Transfer funds between accounts
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◦
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Access wires, ACH and bill pay capabilities
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◦
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View check images
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◦
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Setup account alerts
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◦
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Prepare customizable reports and dashboards views
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◦
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Download activity into Intuit QuickBooks and Quicken
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•
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Our mobile banking platform allows our clients to conduct transactions and access account information from their mobile device; features include the ability to:
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◦
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View available balances, transactions and transaction details
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◦
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Create one time balance transfers
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◦
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Create bill payments for existing payees
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◦
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Schedule future dated bill payments
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◦
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Cancel scheduled bill payments
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◦
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View recent payments
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◦
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Approve wires, ACH, and balance transfer transactions
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◦
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Deposit checks
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◦
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Find bank locations
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•
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Collection services such as remote deposit capture services (PMB xPress Deposit), remittance payments (Lockbox), and incoming ACH and wire reporting and notification.
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•
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Payable services such as checks, wire transfer and ACH origination, business bill pay service, and business credit cards. We also provide courier and onsite vault services for those clients with cash needs.
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•
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Fraud prevention services such as Positive Pay, ACH Positive Pay, and transactional alerts.
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•
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Service Continuity. In order to better ensure continuity of service, we have located our critical servers and telecommunications systems at an offsite hardened and secure data center. This center provides the physical environment necessary to keep servers up and running 24 hours a day, 7 days a week. This data center has raised floors, temperature control systems with separate cooling zones, seismically braced racks, and generators to keep the system operating during power outages and has been designed to withstand fires and major earthquakes. The center also has a wide range of physical security features, including smoke detection and fire suppression systems, motion sensors, and 24/7 secured access, as well as video camera surveillance and security breach alarms. The center is connected to the Internet by redundant high speed data circuits with advanced capacity monitoring.
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•
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Physical Security. All servers and network computers reside in secure facilities. Only employees with proper identification may enter the primary server areas.
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•
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Monitoring. Customer transactions on online servers and internal computer systems produce one or more entries into transactional logs. Our personnel routinely review these logs as a means of identifying and taking appropriate action with respect to any abnormal or unusual activity.
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•
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Transport Layer Security;
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•
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digital certificates;
|
•
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multi-factor authentication;
|
•
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data loss prevention systems;
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•
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anti-virus, anti-malware, and patch management systems;
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•
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intrusion detection/prevention systems;
|
•
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vulnerability management systems; and
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•
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firewall protection.
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•
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misappropriation of a customer’s account number or password;
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•
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compromise of the customer’s computer system;
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•
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penetration of our servers by an outside “hacker;”
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•
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fraud committed by a new customer in completing his or her loan application or opening a deposit account with us; and
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•
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fraud committed by employees or service providers.
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•
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emphasize personal contacts with existing and potential new customers by our directors, officers and other employees;
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•
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develop and participate in local promotional activities; and
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•
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seek to develop specialized or streamlined services for customers.
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•
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conduct periodic asset quality reviews to identify problem assets, estimate the inherent losses in problem assets and establish reserves that are sufficient to absorb those estimated losses;
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•
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compare problem asset totals to capital;
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•
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take appropriate corrective action to resolve problem assets;
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•
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consider the size and potential risks of material asset concentrations; and
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•
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provide periodic asset quality reports with adequate information for the Bank's management and the board of directors to assess the level of asset risk.
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•
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Core Capital (Tier 1).
Tier 1 capital includes common equity, retained earnings, qualifying non-cumulative perpetual preferred stock, minority interests in equity accounts of consolidated subsidiaries (and, under existing standards, a limited amount of qualifying trust preferred securities and qualifying cumulative perpetual preferred stock at the holding company level), less goodwill, most intangible assets and certain other assets.
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•
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Supplementary Capital (Tier 2)
. Tier 2 capital includes, among other things, perpetual preferred stock and trust preferred securities not meeting the Tier 1 definition, qualifying mandatory convertible debt securities, qualifying subordinated debt, and allowances for loan and lease losses, subject to limitations.
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•
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6.625% Tier 1 capital to risk-weighted assets.
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•
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8.625% Total capital to risk-weighted assets.
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•
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4.0% Tier 1 capital to average assets.
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Applicable Federal Regulatory Requirement
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|||||||||||||
At December 31, 2016
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Actual Capital
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For Capital Adequacy Purposes
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To be Categorized As Well Capitalized
|
|||||||||||||
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Amount
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Ratio
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Amount
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Ratio
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Amount
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Ratio
|
|||||||
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(Dollars in thousands)
|
|||||||||||||||||
Total Capital to Risk Weighted Assets:
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Company
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$
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131,043
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12.8
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%
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$
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88,230
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At least 8.625
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N/A
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N/A
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Bank
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114,412
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|
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11.4
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%
|
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86,566
|
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At least 8.625
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$
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100,366
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|
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At least 10.0
|
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Common Equity Tier 1 Capital to Risk Weighted Assets:
|
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|
|
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|
|
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|
|||||||
Company
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101,199
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|
|
9.9
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%
|
|
52,427
|
|
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At least 5.125
|
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N/A
|
|
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N/A
|
|||
Bank
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101,807
|
|
|
10.1
|
%
|
|
51,438
|
|
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At least 5.125
|
|
65,238
|
|
|
At least 6.5
|
|||
Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
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|
|||||||||
Company
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118,199
|
|
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11.6
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%
|
|
67,771
|
|
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At least 6.625
|
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N/A
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N/A
|
|||
Bank
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101,807
|
|
|
10.1
|
%
|
|
66,492
|
|
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At least 6.625
|
|
80,293
|
|
|
At least 8.0
|
|||
Tier 1 Capital to Average Assets:
|
|
|
|
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|
|
|
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|
|||||||||
Company
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118,199
|
|
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10.5
|
%
|
|
44,923
|
|
|
At least 4.0
|
|
N/A
|
|
|
N/A
|
|||
Bank
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101,807
|
|
|
9.2
|
%
|
|
44,360
|
|
|
At least 4.0
|
|
55,450
|
|
|
At least 5.0
|
•
|
establish due diligence requirements for financial institutions that administer, maintain, or manage private bank accounts and foreign correspondent accounts;
|
•
|
prohibit U.S. institutions from providing correspondent accounts to foreign shell banks;
|
•
|
establish standards for verifying customer identification at account opening; and
|
•
|
set rules to promote cooperation among financial institutions, regulatory agencies and law enforcement entities in identifying parties that may be involved in terrorism or money laundering.
|
•
|
verifying the identity of any person seeking to open an account, to the extent reasonable and practicable;
|
•
|
maintaining records of the information used to verify the person’s identity; and
|
•
|
determining whether the person appears on any list of known or suspected terrorists or terrorist organizations.
|
•
|
The Home Ownership and Equity Protection Act of 1994, which requires additional disclosures and consumer protections to borrowers designed to protect them against certain lending practices, such as practices deemed to constitute “predatory lending.”
|
•
|
Laws and regulations requiring banks to establish privacy policies which limit the disclosure of nonpublic information about consumers to nonaffiliated third parties.
|
•
|
The Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, which requires banking institutions and financial services businesses to adopt practices and procedures designed to help deter identity theft, including developing appropriate fraud response programs, and provides consumers with greater control of their credit data.
|
•
|
The Truth in Lending Act, which requires that credit terms be disclosed in a meaningful and consistent way so that consumers may compare credit terms more readily and knowledgeably.
|
•
|
The Equal Credit Opportunity Act, which generally prohibits, in connection with any consumer or business credit transaction, discrimination on the basis of race, color, religion, national origin, sex, marital status, age (except in limited circumstances), or the fact that a borrower is receiving income from public assistance programs.
|
•
|
The Fair Housing Act, which regulates many lending practices, including making it unlawful for any lender to discriminate in its housing-related lending activities against any person because of race, color, religion, national origin, sex, handicap or familial status.
|
•
|
The Home Mortgage Disclosure Act, which includes a “fair lending” aspect that requires the collection and disclosure of data about applicant and borrower characteristics as a way of identifying possible discriminatory lending patterns and enforcing anti-discrimination statutes.
|
•
|
The Real Estate Settlement Procedures Act, which requires lenders to provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits certain abusive practices, such as kickbacks.
|
•
|
The National Flood Insurance Act, which requires homes in flood-prone areas with mortgages from a federally regulated lender to have flood insurance.
|
•
|
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, which requires mortgage loan originator employees of federally insured institutions to register with the Nationwide Mortgage Licensing System and Registry, a database created by the states to support the licensing of mortgage loan originators, prior to originating residential mortgage loans.
|
•
|
a decline in the demand for loans, which would cause a decline in interest income and our net interest margin;
|
•
|
a decline in the value of our loans or other assets secured by residential or commercial real estate or by trading assets of our borrowers;
|
•
|
a decrease in deposit balances due to overall reductions in the accounts of customers, which would adversely impact our liquidity position;
|
•
|
an impairment of our investment securities and other real estate owned (“OREO”); and
|
•
|
an increase in the volume of loans that become delinquent or the number of borrowers that file for protection under bankruptcy laws or default on their home loans or commercial loan obligations to us, either of which could result in a higher level of non-performing assets and cause us to increase our ALLL, thereby reducing our earnings.
|
•
|
quarterly fluctuations in our operating results or financial condition;
|
•
|
failure to meet analysts’ revenue or earnings estimates;
|
•
|
the restrictions, described below, on our ability to pay cash dividends on our common stock;
|
•
|
the imposition of additional regulatory restrictions on our business and operations or an inability to meet regulatory requirements;
|
•
|
an inability to successfully implement our growth strategy;
|
•
|
strategic actions by us or our competitors, such as acquisitions or restructurings;
|
•
|
fluctuations in the stock prices and operating results of our competitors;
|
•
|
general market conditions and, in particular, developments related to market conditions for the financial services industry stocks;
|
•
|
proposed or newly adopted legislative or regulatory changes or developments aimed at the financial services industry;
|
•
|
any future proceedings or litigation that may involve or affect us; and
|
•
|
continuing concerns and a lack of confidence among investors that economic and market conditions will improve.
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2016
|
|
|
|
||||
First Quarter
|
$
|
7.45
|
|
|
$
|
6.37
|
|
Second Quarter
|
$
|
7.59
|
|
|
$
|
6.67
|
|
Third Quarter
|
$
|
7.91
|
|
|
$
|
6.57
|
|
Fourth Quarter
|
$
|
7.78
|
|
|
$
|
5.30
|
|
Year Ended December 31, 2015
|
|
|
|
||||
First Quarter
|
$
|
7.25
|
|
|
$
|
6.83
|
|
Second Quarter
|
$
|
7.94
|
|
|
$
|
6.16
|
|
Third Quarter
|
$
|
7.77
|
|
|
$
|
6.41
|
|
Fourth Quarter
|
$
|
7.22
|
|
|
$
|
6.48
|
|
|
(1)
|
The source of the above graph and chart is SNL.
|
|
Period Ending
|
||||||||||||||||
Index
|
12/31/11
|
|
12/31/12
|
|
12/31/13
|
|
12/31/14
|
|
12/31/15
|
|
12/31/16
|
||||||
Pacific Mercantile Bancorp
|
100.00
|
|
|
192.94
|
|
|
190.80
|
|
|
215.95
|
|
|
218.71
|
|
|
223.93
|
|
Russell 2000 Index
|
100.00
|
|
|
116.35
|
|
|
161.52
|
|
|
169.43
|
|
|
161.95
|
|
|
196.45
|
|
SNL Western Bank Index
|
100.00
|
|
|
126.20
|
|
|
177.56
|
|
|
213.09
|
|
|
220.79
|
|
|
206.32
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(Dollars in thousands except per share data)
|
||||||||||||||||||
Selected Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total interest income
|
$
|
41,000
|
|
|
$
|
38,797
|
|
|
$
|
38,290
|
|
|
$
|
35,651
|
|
|
$
|
38,426
|
|
Total interest expense
|
5,477
|
|
|
5,269
|
|
|
5,829
|
|
|
5,317
|
|
|
8,049
|
|
|||||
Net interest income
|
35,523
|
|
|
33,528
|
|
|
32,461
|
|
|
30,334
|
|
|
30,377
|
|
|||||
Provision for loan and lease losses
|
19,870
|
|
|
—
|
|
|
1,500
|
|
|
4,505
|
|
|
1,950
|
|
|||||
Net interest income after provision for loan and lease losses
|
15,653
|
|
|
33,528
|
|
|
30,961
|
|
|
25,829
|
|
|
28,427
|
|
|||||
Total noninterest income
|
2,937
|
|
|
2,686
|
|
|
4,370
|
|
|
1,193
|
|
|
3,762
|
|
|||||
Total noninterest expense
|
36,401
|
|
|
35,324
|
|
|
36,808
|
|
|
36,346
|
|
|
36,470
|
|
|||||
(Loss) income before income taxes
|
(17,811
|
)
|
|
890
|
|
|
(1,477
|
)
|
|
(9,324
|
)
|
|
(4,281
|
)
|
|||||
Income tax provision (benefit)
|
16,832
|
|
|
(11,551
|
)
|
|
(608
|
)
|
|
5,610
|
|
|
(6,920
|
)
|
|||||
Net (loss) income from continuing operations
|
$
|
(34,643
|
)
|
|
$
|
12,441
|
|
|
$
|
(869
|
)
|
|
$
|
(14,934
|
)
|
|
$
|
2,639
|
|
Net income from discontinued operations
|
—
|
|
|
—
|
|
|
1,226
|
|
|
(7,282
|
)
|
|
7,015
|
|
|||||
Accumulated declared dividends on preferred stock
|
—
|
|
|
—
|
|
|
(547
|
)
|
|
(538
|
)
|
|
(941
|
)
|
|||||
Accumulated undeclared dividends on preferred stock
|
—
|
|
|
—
|
|
|
(616
|
)
|
|
(544
|
)
|
|
(17
|
)
|
|||||
Dividends on preferred stock
|
—
|
|
|
(927
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Inducements for exchange of the preferred stock
|
—
|
|
|
(512
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net (loss) income allocable to common shareholders
|
$
|
(34,643
|
)
|
|
$
|
11,002
|
|
|
$
|
(806
|
)
|
|
$
|
(23,298
|
)
|
|
$
|
8,696
|
|
Per share data-basic:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) from continuing operations
|
$
|
(1.51
|
)
|
|
$
|
0.54
|
|
|
$
|
(0.11
|
)
|
|
$
|
(0.88
|
)
|
|
$
|
0.11
|
|
Net income (loss) allocable to common shareholders
|
$
|
(1.51
|
)
|
|
$
|
0.54
|
|
|
$
|
(0.04
|
)
|
|
$
|
(1.28
|
)
|
|
$
|
0.57
|
|
Per share data-diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) from continuing operations
|
$
|
(1.51
|
)
|
|
$
|
0.53
|
|
|
$
|
(0.11
|
)
|
|
$
|
(0.88
|
)
|
|
$
|
0.15
|
|
Net income (loss) allocable to common shareholders
|
$
|
(1.51
|
)
|
|
$
|
0.53
|
|
|
$
|
(0.04
|
)
|
|
$
|
(1.28
|
)
|
|
$
|
0.55
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
22,958,644
|
|
|
20,516,575
|
|
|
19,230,913
|
|
|
18,240,891
|
|
|
15,386,106
|
|
|||||
Diluted
|
22,958,644
|
|
|
20,675,279
|
|
|
19,230,913
|
|
|
18,240,891
|
|
|
17,674,974
|
|
|||||
Dividends per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(Dollars in thousands except for per share information)
|
||||||||||||||||||
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
(1)
|
$
|
138,845
|
|
|
$
|
113,921
|
|
|
$
|
177,135
|
|
|
$
|
106,940
|
|
|
$
|
128,208
|
|
Total loans, net
|
931,525
|
|
|
849,733
|
|
|
824,197
|
|
|
765,426
|
|
|
719,257
|
|
|||||
Total assets
|
1,140,689
|
|
|
1,062,389
|
|
|
1,099,610
|
|
|
996,583
|
|
|
1,053,941
|
|
|||||
Total deposits
|
1,001,300
|
|
|
893,840
|
|
|
916,309
|
|
|
780,225
|
|
|
845,395
|
|
|||||
Junior subordinated debentures
|
17,527
|
|
|
17,527
|
|
|
17,527
|
|
|
17,527
|
|
|
17,527
|
|
|||||
Total shareholders’ equity
|
99,719
|
|
|
133,916
|
|
|
119,281
|
|
|
115,158
|
|
|
122,876
|
|
|||||
Book value per share
|
$
|
4.33
|
|
|
$
|
5.87
|
|
|
$
|
5.53
|
|
|
$
|
5.47
|
|
|
$
|
6.75
|
|
|
(1)
|
Cash and cash equivalents include cash and due from banks and federal funds sold.
|
|
For the Year Ended December 31,
|
|||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|||||
|
(unaudited)
|
|||||||||||||
Selected Financial Ratios:
|
|
|
|
|
|
|
|
|
|
|||||
Return on average assets
|
(3.13
|
)%
|
|
1.17
|
%
|
|
(0.08
|
)%
|
|
(1.59
|
)%
|
|
0.27
|
%
|
Return on average equity
|
(27.56
|
)%
|
|
10.23
|
%
|
|
(0.74
|
)%
|
|
(11.47
|
)%
|
|
2.55
|
%
|
Ratio of average equity to average assets
|
11.35
|
%
|
|
11.48
|
%
|
|
11.30
|
%
|
|
13.82
|
%
|
|
10.77
|
%
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
% Change
|
|
2015 vs. 2014
% Change |
|||||
|
(Dollars in thousands)
|
|
|
|
|
|||||||||
Interest income
|
41,000
|
|
|
38,797
|
|
|
38,290
|
|
|
5.7
|
%
|
|
1.3
|
%
|
Interest expense
|
5,477
|
|
|
5,269
|
|
|
5,829
|
|
|
3.9
|
%
|
|
(9.6
|
)%
|
Provision for loan and lease losses
|
19,870
|
|
|
—
|
|
|
1,500
|
|
|
100.0
|
%
|
|
(100.0
|
)%
|
Non-interest income
|
2,937
|
|
|
2,686
|
|
|
4,370
|
|
|
9.3
|
%
|
|
(38.5
|
)%
|
Non-interest expense
|
36,401
|
|
|
35,324
|
|
|
36,808
|
|
|
3.0
|
%
|
|
(4.0
|
)%
|
Income tax provision (benefit)
|
16,832
|
|
|
(11,551
|
)
|
|
(608
|
)
|
|
(245.7
|
)%
|
|
1,799.8
|
%
|
Net (loss) income from continuing operations
|
(34,643
|
)
|
|
12,441
|
|
|
(869
|
)
|
|
(378.5
|
)%
|
|
(1,531.6
|
)%
|
Net income from discontinued operations
|
—
|
|
|
—
|
|
|
1,226
|
|
|
—
|
%
|
|
(100.0
|
)%
|
Net (loss) income allocable to common shareholders
|
(34,643
|
)
|
|
11,002
|
|
|
(806
|
)
|
|
(414.9
|
)%
|
|
(1,465.0
|
)%
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||||||||||||||
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
|
|
Average
Balance
|
|
Interest
Earned/
Paid
|
|
Average
Yield/
Rate
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||
Interest earning assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Short-term investments
(1)
|
$
|
162,585
|
|
|
$
|
842
|
|
|
0.52
|
%
|
|
$
|
139,341
|
|
|
$
|
370
|
|
|
0.27
|
%
|
|
$
|
134,641
|
|
|
$
|
333
|
|
|
0.25
|
%
|
Securities available for sale and stock
(2)
|
57,135
|
|
|
1,578
|
|
|
2.76
|
%
|
|
64,960
|
|
|
1,710
|
|
|
2.63
|
%
|
|
71,202
|
|
|
1,613
|
|
|
2.27
|
%
|
||||||
Loans
(3)
|
857,666
|
|
|
38,580
|
|
|
4.50
|
%
|
|
827,900
|
|
|
36,717
|
|
|
4.43
|
%
|
|
799,900
|
|
|
36,344
|
|
|
4.54
|
%
|
||||||
Total interest-earning assets
|
1,077,386
|
|
|
41,000
|
|
|
3.81
|
%
|
|
1,032,201
|
|
|
38,797
|
|
|
3.76
|
%
|
|
1,005,743
|
|
|
38,290
|
|
|
3.81
|
%
|
||||||
Noninterest-earning assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash and due from banks
|
15,533
|
|
|
|
|
|
|
16,621
|
|
|
|
|
|
|
12,947
|
|
|
|
|
|
||||||||||||
All other assets
|
14,550
|
|
|
|
|
|
|
10,113
|
|
|
|
|
|
|
21,121
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
1,107,469
|
|
|
|
|
|
|
$
|
1,058,935
|
|
|
|
|
|
|
$
|
1,039,811
|
|
|
|
|
|
|||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing checking accounts
|
$
|
60,024
|
|
|
$
|
162
|
|
|
0.27
|
%
|
|
$
|
40,916
|
|
|
$
|
95
|
|
|
0.23
|
%
|
|
$
|
36,281
|
|
|
100
|
|
|
0.28
|
%
|
|
Money market and savings accounts
|
327,401
|
|
|
2,048
|
|
|
0.63
|
%
|
|
300,088
|
|
|
1,699
|
|
|
0.57
|
%
|
|
170,047
|
|
|
585
|
|
|
0.34
|
%
|
||||||
Certificates of deposit
|
263,569
|
|
|
2,610
|
|
|
0.99
|
%
|
|
308,529
|
|
|
2,765
|
|
|
0.90
|
%
|
|
431,789
|
|
|
4,133
|
|
|
0.96
|
%
|
||||||
Other borrowings
|
7,407
|
|
|
75
|
|
|
1.01
|
%
|
|
26,164
|
|
|
203
|
|
|
0.78
|
%
|
|
52,031
|
|
|
437
|
|
|
0.84
|
%
|
||||||
Junior subordinated debentures
|
17,527
|
|
|
582
|
|
|
3.32
|
%
|
|
17,527
|
|
|
507
|
|
|
2.89
|
%
|
|
17,527
|
|
|
574
|
|
|
3.27
|
%
|
||||||
Total interest bearing liabilities
|
675,928
|
|
|
5,477
|
|
|
0.81
|
%
|
|
693,224
|
|
|
5,269
|
|
|
0.76
|
%
|
|
707,675
|
|
|
5,829
|
|
|
0.82
|
%
|
||||||
Noninterest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Demand deposits
|
299,447
|
|
|
|
|
|
|
237,371
|
|
|
|
|
|
|
206,295
|
|
|
|
|
|
||||||||||||
Accrued expenses and other liabilities
|
6,380
|
|
|
|
|
|
|
6,773
|
|
|
|
|
|
|
8,355
|
|
|
|
|
|
||||||||||||
Shareholders' equity
|
125,714
|
|
|
|
|
|
|
121,567
|
|
|
|
|
|
|
117,486
|
|
|
|
|
|
||||||||||||
Total liabilities and shareholders' equity
|
$
|
1,107,469
|
|
|
|
|
|
|
$
|
1,058,935
|
|
|
|
|
|
|
$
|
1,039,811
|
|
|
|
|
|
|||||||||
Net interest income
|
|
|
$
|
35,523
|
|
|
|
|
|
|
$
|
33,528
|
|
|
|
|
|
|
$
|
32,461
|
|
|
|
|||||||||
Net interest income/spread
|
|
|
|
|
3.00
|
%
|
|
|
|
|
|
3.00
|
%
|
|
|
|
|
|
2.99
|
%
|
||||||||||||
Net interest margin
|
|
|
|
|
3.30
|
%
|
|
|
|
|
|
3.25
|
%
|
|
|
|
|
|
3.23
|
%
|
|
(1)
|
Short-term investments consist of federal funds sold and interest bearing deposits that we maintain at other financial institutions.
|
(2)
|
Stock consists of Federal Home Loan Bank (“FHLB”) stock and Federal Reserve Bank stock.
|
(3)
|
Loans include the average balance of nonaccrual loans and loan fees.
|
|
2016 Compared to 2015
Increase (Decrease) due to Changes in |
|
2015 Compared to 2014
Increase (Decrease) due to Changes in |
||||||||||||||||||||
|
Volume
|
|
Rates
|
|
Total
Increase
(Decrease)
|
|
Volume
|
|
Rates
|
|
Total
Increase
(Decrease)
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term investments
(1)
|
$
|
70
|
|
|
$
|
402
|
|
|
$
|
472
|
|
|
$
|
12
|
|
|
$
|
25
|
|
|
$
|
37
|
|
Securities available for sale and stock
(2)
|
(213
|
)
|
|
81
|
|
|
(132
|
)
|
|
(149
|
)
|
|
246
|
|
|
97
|
|
||||||
Loans
|
1,334
|
|
|
529
|
|
|
1,863
|
|
|
1,254
|
|
|
(881
|
)
|
|
373
|
|
||||||
Total earning assets
|
1,191
|
|
|
1,012
|
|
|
2,203
|
|
|
1,117
|
|
|
(610
|
)
|
|
507
|
|
||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing checking accounts
|
50
|
|
|
17
|
|
|
67
|
|
|
12
|
|
|
(17
|
)
|
|
(5
|
)
|
||||||
Money market and savings accounts
|
162
|
|
|
187
|
|
|
349
|
|
|
604
|
|
|
510
|
|
|
1,114
|
|
||||||
Certificates of deposit
|
(428
|
)
|
|
273
|
|
|
(155
|
)
|
|
(1,118
|
)
|
|
(250
|
)
|
|
(1,368
|
)
|
||||||
Borrowings
|
(176
|
)
|
|
48
|
|
|
(128
|
)
|
|
(203
|
)
|
|
(31
|
)
|
|
(234
|
)
|
||||||
Junior subordinated debentures
|
—
|
|
|
75
|
|
|
75
|
|
|
—
|
|
|
(67
|
)
|
|
(67
|
)
|
||||||
Total interest-bearing liabilities
|
(392
|
)
|
|
600
|
|
|
208
|
|
|
(705
|
)
|
|
145
|
|
|
(560
|
)
|
||||||
Net interest income
|
$
|
1,583
|
|
|
$
|
412
|
|
|
$
|
1,995
|
|
|
$
|
1,822
|
|
|
$
|
(755
|
)
|
|
$
|
1,067
|
|
|
(1)
|
Short-term investments consist of federal funds sold and interest bearing deposits that we maintain at financial institutions.
|
(2)
|
Stock consists of FHLB stock and Federal Reserve Bank stock.
|
|
Year Ended December 31,
|
||||||||||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Percentage
Change
|
|
Percentage
Change
|
||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||||
Service fees on deposits and other banking services
|
$
|
1,093
|
|
|
$
|
918
|
|
|
$
|
896
|
|
|
19.1
|
%
|
|
2.5
|
%
|
Net loss on sale of other assets
|
(527
|
)
|
|
(58
|
)
|
|
—
|
|
|
808.6
|
%
|
|
(100.0
|
)%
|
|||
Net gain on sale of small business administration loans
|
40
|
|
|
—
|
|
|
2,074
|
|
|
100.0
|
%
|
|
(100.0
|
)%
|
|||
Other noninterest income
|
2,331
|
|
|
1,826
|
|
|
1,400
|
|
|
27.7
|
%
|
|
30.4
|
%
|
|||
Total noninterest income
|
$
|
2,937
|
|
|
$
|
2,686
|
|
|
$
|
4,370
|
|
|
9.3
|
%
|
|
(38.5
|
)%
|
•
|
An increase
of
$40 thousand
in net gain on sale of small business administration (“SBA”) loans for the
year
ended
December 31, 2016
as compared to the same period in
2015
;
|
•
|
An increase of $386 thousand in recoveries on charged off loans in excess of the amount previously charged off against the ALLL; and
|
•
|
An increase in loan servicing and referral fees during the
year
ended
December 31, 2016
as compared to the same period in
2015
; partially offset by
|
•
|
A net loss of $527 thousand on the sale of other assets in the fourth quarter of 2016.
|
•
|
A decrease of
$2.1 million
in net gain on sale of SBA loans for the year ended
December 31, 2015
as compared to the same period in
2014
; and
|
•
|
A $200 thousand recovery during the year ended December 31, 2015 on a charged off loan in excess of the amount previously charged off against the ALLL; and
|
•
|
An increase in loan servicing and referral fees during the year ended December 31, 2015 as compared to the same period in 2014.
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Percent Change
|
|
Percent Change
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||||
Salaries and employee benefits
|
$
|
21,817
|
|
|
$
|
22,002
|
|
|
$
|
22,571
|
|
|
(0.8
|
)%
|
|
(2.5
|
)%
|
Occupancy
|
3,061
|
|
|
2,871
|
|
|
2,499
|
|
|
6.6
|
%
|
|
14.9
|
%
|
|||
Equipment and depreciation
|
1,802
|
|
|
1,652
|
|
|
1,541
|
|
|
9.1
|
%
|
|
7.2
|
%
|
|||
Data processing
|
1,271
|
|
|
1,035
|
|
|
931
|
|
|
22.8
|
%
|
|
11.2
|
%
|
|||
FDIC expense
|
950
|
|
|
1,250
|
|
|
1,336
|
|
|
(24.0
|
)%
|
|
(6.4
|
)%
|
|||
Other real estate owned expense, net
|
(70
|
)
|
|
365
|
|
|
1,962
|
|
|
(119.2
|
)%
|
|
(81.4
|
)%
|
|||
Professional fees
|
4,046
|
|
|
2,514
|
|
|
2,434
|
|
|
60.9
|
%
|
|
3.3
|
%
|
|||
Business development
|
795
|
|
|
488
|
|
|
262
|
|
|
62.9
|
%
|
|
86.3
|
%
|
|||
Loan related expense
|
375
|
|
|
414
|
|
|
532
|
|
|
(9.4
|
)%
|
|
(22.2
|
)%
|
|||
Insurance
|
291
|
|
|
341
|
|
|
484
|
|
|
(14.7
|
)%
|
|
(29.5
|
)%
|
|||
Other operating expenses
(1)
|
2,063
|
|
|
2,392
|
|
|
2,256
|
|
|
(13.8
|
)%
|
|
6.0
|
%
|
|||
Total noninterest expense
|
$
|
36,401
|
|
|
$
|
35,324
|
|
|
$
|
36,808
|
|
|
3.0
|
%
|
|
(4.0
|
)%
|
|
(1)
|
Other operating expenses primarily consist of telephone, investor relations, promotional, regulatory expenses, and correspondent bank fees.
|
•
|
An increase of
$1.5 million
in our professional fees primarily related to an increase in accounting and legal fees during the year ended December 31, 2016; and
|
•
|
An increase in various expense accounts related to the normal course of operating, including expenses related to the conversion of some of our branches to loan production offices, as well as an increase in our data processing expense; partially offset by
|
•
|
A decrease
of
$185 thousand
in salaries and employee benefits primarily related to the reversal of our incentive compensation accrual in the fourth quarter of 2016;
|
•
|
A decrease
of
$300 thousand
in our FDIC insurance expense as a result of a decrease in our insurance premium rate; and
|
•
|
A decrease
of
$435 thousand
in other real estate owned (“OREO”) as a result of lower carrying costs and other expenses related to OREO during the
year
ended
December 31, 2016
as compared to the same period in
2015
.
|
•
|
A decrease of
$1.6 million
in the carrying costs and other costs associated with OREO and other expenses related to OREO during the year ended December 31, 2015 as compared to the same period in 2014; and
|
•
|
A decrease of
$569 thousand
in salaries and employee benefits primarily related to decreases in our workmen's compensation premium, employment agency fees, and consulting fees and forfeitures in our 401(k) plan; partially offset by
|
•
|
An increase in various expense accounts related to the normal course of operating, including expenses related to an increase in the square footage of our leased premises, the implementation of our mobile banking platform and the roll out of our new credit card platform.
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(Dollars in thousands)
|
||||||
Interest-bearing deposits with financial institutions
(1)
|
$
|
122,056
|
|
|
$
|
103,276
|
|
Interest-bearing time deposits with financial institutions
|
3,669
|
|
|
4,665
|
|
||
Federal Reserve Bank of San Francisco and Federal Home Loan Bank Stock, at cost
|
8,170
|
|
|
8,170
|
|
||
Securities available for sale, at fair value
|
43,480
|
|
|
52,249
|
|
||
Loans (net of allowances of $16,801 and $12,716, respectively)
|
931,525
|
|
|
849,733
|
|
|
(1)
|
Includes interest-earning balances maintained at the Federal Reserve Bank of San Francisco (“FRBSF”).
|
(Dollars in thousands)
|
Amortized Cost
|
|
Gross
Unrealized Gain
|
|
Gross
Unrealized Loss
|
|
Estimated
Fair Value
|
||||||||
Securities available for sale at December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
Residential mortgage backed securities issued by U.S. Agencies
|
$
|
37,813
|
|
|
$
|
6
|
|
|
$
|
(1,144
|
)
|
|
$
|
36,675
|
|
Residential collateralized mortgage obligations issued by non agencies
|
484
|
|
|
—
|
|
|
(16
|
)
|
|
468
|
|
||||
Asset backed security
|
2,025
|
|
|
—
|
|
|
(592
|
)
|
|
1,433
|
|
||||
Mutual funds
|
5,000
|
|
|
11
|
|
|
(107
|
)
|
|
4,904
|
|
||||
Total securities available for sale
|
$
|
45,322
|
|
|
$
|
17
|
|
|
$
|
(1,859
|
)
|
|
$
|
43,480
|
|
Securities available for sale at December 31, 2015:
|
|
|
|
|
|
|
|
||||||||
Residential mortgage backed securities issued by U.S. Agencies
|
46,126
|
|
|
4
|
|
|
(976
|
)
|
|
45,154
|
|
||||
Residential collateralized mortgage obligations issued by non agencies
|
646
|
|
|
—
|
|
|
(14
|
)
|
|
632
|
|
||||
Asset backed security
|
2,027
|
|
|
—
|
|
|
(547
|
)
|
|
1,480
|
|
||||
Mutual funds
|
5,000
|
|
|
33
|
|
|
(50
|
)
|
|
4,983
|
|
||||
Total securities available for sale
|
$
|
53,799
|
|
|
$
|
37
|
|
|
$
|
(1,587
|
)
|
|
$
|
52,249
|
|
Securities available for sale at December 31, 2014:
|
|
|
|
|
|
|
|
||||||||
Residential mortgage backed securities issued by U.S. Agencies
|
54,653
|
|
|
26
|
|
|
(940
|
)
|
|
53,739
|
|
||||
Residential collateralized mortgage obligations issued by non agencies
|
790
|
|
|
—
|
|
|
(13
|
)
|
|
777
|
|
||||
Asset backed security
|
2,083
|
|
|
—
|
|
|
(433
|
)
|
|
1,650
|
|
||||
Mutual funds
|
4,750
|
|
|
45
|
|
|
(35
|
)
|
|
4,760
|
|
||||
Total securities available for sale
|
$
|
62,276
|
|
|
$
|
71
|
|
|
$
|
(1,421
|
)
|
|
$
|
60,926
|
|
|
December 31, 2016
Maturing in
|
|||||||||||||||||||||||||||||||||
|
One year
or less
|
|
Over one
year through
five years
|
|
Over five
years through
ten years
|
|
Over ten
years
|
|
Total
|
|||||||||||||||||||||||||
(Dollars in thousands)
|
Amortized Cost
|
|
Weighted
Average
Yield
|
|
Amortized Cost
|
|
Weighted
Average
Yield
|
|
Amortized Cost
|
|
Weighted
Average
Yield
|
|
Amortized Cost
|
|
Weighted
Average
Yield
|
|
Amortized Cost
|
|
Weighted
Average
Yield
|
|||||||||||||||
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Residential mortgage backed securities issued by U.S. Agencies
|
$
|
7,584
|
|
|
1.37
|
%
|
|
$
|
19,014
|
|
|
1.43
|
%
|
|
$
|
9,933
|
|
|
1.58
|
%
|
|
$
|
1,282
|
|
|
1.80
|
%
|
|
$
|
37,813
|
|
|
1.47
|
%
|
Residential collateralized mortgage obligations issued by non agencies
|
484
|
|
|
3.24
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
484
|
|
|
3.24
|
%
|
|||||
Asset backed security
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
2,025
|
|
|
3.37
|
%
|
|
2,025
|
|
|
3.37
|
%
|
|||||
Mutual funds
|
—
|
|
|
—
|
%
|
|
5,000
|
|
|
1.84
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
5,000
|
|
|
1.84
|
%
|
|||||
Total Securities Available for sale
|
$
|
8,068
|
|
|
1.48
|
%
|
|
$
|
24,014
|
|
|
1.52
|
%
|
|
$
|
9,933
|
|
|
1.58
|
%
|
|
$
|
3,307
|
|
|
2.76
|
%
|
|
$
|
45,322
|
|
|
1.62
|
%
|
|
Securities with Unrealized Loss at December 31, 2016
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
||||||||||||
Residential mortgage backed securities issued by U.S. Agencies
|
$
|
16,110
|
|
|
$
|
(267
|
)
|
|
$
|
19,975
|
|
|
$
|
(877
|
)
|
|
$
|
36,085
|
|
|
$
|
(1,144
|
)
|
Residential collateralized mortgage obligations issued by non agencies
|
—
|
|
|
—
|
|
|
468
|
|
|
(16
|
)
|
|
468
|
|
|
(16
|
)
|
||||||
Asset backed security
|
—
|
|
|
—
|
|
|
1,433
|
|
|
(592
|
)
|
|
1,433
|
|
|
(592
|
)
|
||||||
Mutual funds
|
3,185
|
|
|
(65
|
)
|
|
957
|
|
|
(42
|
)
|
|
4,142
|
|
|
(107
|
)
|
||||||
Total
|
$
|
19,295
|
|
|
$
|
(332
|
)
|
|
$
|
22,833
|
|
|
$
|
(1,527
|
)
|
|
$
|
42,128
|
|
|
$
|
(1,859
|
)
|
(Dollars in thousands)
|
Gross Other-
Than-
Temporary
Impairments
|
|
Other-Than-
Temporary
Impairments
Included in Other
Comprehensive
Loss
|
|
Net Other-Than-
Temporary
Impairments
Included in
Retained Earnings
(Deficit)
|
||||||
Balance – December 31, 2014
|
$
|
(986
|
)
|
|
$
|
(433
|
)
|
|
$
|
(553
|
)
|
Changes in market value on securities for which an OTTI was previously recognized
|
(166
|
)
|
|
(166
|
)
|
|
—
|
|
|||
Principal received on OTTI security
|
52
|
|
|
52
|
|
|
—
|
|
|||
Balance – December 31, 2015
|
$
|
(1,100
|
)
|
|
$
|
(547
|
)
|
|
$
|
(553
|
)
|
Change in market value on a security for which an OTTI was previously recognized
|
(47
|
)
|
|
(47
|
)
|
|
—
|
|
|||
Principal received on OTTI security
|
2
|
|
|
2
|
|
|
—
|
|
|||
Balance – December 31, 2016
|
$
|
(1,145
|
)
|
|
$
|
(592
|
)
|
|
$
|
(553
|
)
|
|
At December 31,
|
|||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||
Commercial loans
|
$
|
333,376
|
|
|
35.2
|
%
|
|
$
|
347,300
|
|
|
40.3
|
%
|
|
$
|
301,746
|
|
|
36.0
|
%
|
|
$
|
226,450
|
|
|
29.2
|
%
|
|
$
|
170,792
|
|
|
23.4
|
%
|
Commercial real estate loans – owner occupied
|
214,420
|
|
|
22.7
|
%
|
|
195,554
|
|
|
22.7
|
%
|
|
212,515
|
|
|
25.4
|
%
|
|
174,221
|
|
|
22.4
|
%
|
|
165,922
|
|
|
22.7
|
%
|
|||||
Commercial real estate loans – all other
|
173,223
|
|
|
18.3
|
%
|
|
146,641
|
|
|
17.0
|
%
|
|
146,676
|
|
|
17.5
|
%
|
|
177,884
|
|
|
22.9
|
%
|
|
150,189
|
|
|
20.6
|
%
|
|||||
Residential mortgage loans – multi-family
|
130,930
|
|
|
13.8
|
%
|
|
81,487
|
|
|
9.5
|
%
|
|
95,276
|
|
|
11.4
|
%
|
|
96,565
|
|
|
12.4
|
%
|
|
105,119
|
|
|
14.4
|
%
|
|||||
Residential mortgage loans – single family
|
34,527
|
|
|
3.6
|
%
|
|
52,072
|
|
|
6.0
|
%
|
|
64,326
|
|
|
7.7
|
%
|
|
75,660
|
|
|
9.7
|
%
|
|
87,263
|
|
|
11.9
|
%
|
|||||
Land development loans
|
18,485
|
|
|
2.0
|
%
|
|
10,001
|
|
|
1.2
|
%
|
|
7,745
|
|
|
0.9
|
%
|
|
18,458
|
|
|
2.4
|
%
|
|
24,018
|
|
|
3.3
|
%
|
|||||
Consumer loans
|
41,563
|
|
|
4.4
|
%
|
|
28,663
|
|
|
3.3
|
%
|
|
9,687
|
|
|
1.2
|
%
|
|
7,599
|
|
|
1.0
|
%
|
|
27,296
|
|
|
3.7
|
%
|
|||||
Total loans
|
946,524
|
|
|
100.0
|
%
|
|
861,718
|
|
|
100.0
|
%
|
|
837,971
|
|
|
100.0
|
%
|
|
776,837
|
|
|
100.0
|
%
|
|
730,599
|
|
|
100.0
|
%
|
|||||
Deferred fee (income) costs, net
|
1,802
|
|
|
|
|
731
|
|
|
|
|
59
|
|
|
|
|
(53
|
)
|
|
|
|
(461
|
)
|
|
|
||||||||||
Allowance for loan and lease losses
|
(16,801
|
)
|
|
|
|
(12,716
|
)
|
|
|
|
(13,833
|
)
|
|
|
|
(11,358
|
)
|
|
|
|
(10,881
|
)
|
|
|
||||||||||
Loans, net
|
$
|
931,525
|
|
|
|
|
$
|
849,733
|
|
|
|
|
$
|
824,197
|
|
|
|
|
$
|
765,426
|
|
|
|
|
$
|
719,257
|
|
|
|
|
December 31, 2016
|
||||||||||||||
|
One Year
or Less
|
|
Over One
Year
Through
Five Years
|
|
Over Five
Years
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Real estate loans
(1)
|
|
|
|
|
|
|
|
||||||||
Floating rate
|
$
|
12,744
|
|
|
$
|
68,022
|
|
|
$
|
147,317
|
|
|
$
|
228,083
|
|
Fixed rate
|
3,507
|
|
|
53,587
|
|
|
120,951
|
|
|
178,045
|
|
||||
Commercial loans
|
|
|
|
|
|
|
|
||||||||
Floating rate
|
117,434
|
|
|
116,552
|
|
|
25,837
|
|
|
259,823
|
|
||||
Fixed rate
|
21,134
|
|
|
40,643
|
|
|
11,776
|
|
|
73,553
|
|
||||
Total
|
$
|
154,819
|
|
|
$
|
278,804
|
|
|
$
|
305,881
|
|
|
$
|
739,504
|
|
|
(1)
|
Does not include mortgage loans on single or multi-family residences or consumer loans, which totaled
$165.5 million
and
$41.6 million
, respectively, at
December 31, 2016
.
|
|
At December 31, 2016
|
|
At December 31, 2015
|
||||
|
(Dollars in thousands)
|
||||||
Nonaccrual loans:
|
|
|
|
||||
Commercial loans
|
$
|
20,330
|
|
|
$
|
12,284
|
|
Commercial real estate
|
4,346
|
|
|
10,083
|
|
||
Residential real estate
|
221
|
|
|
1,148
|
|
||
Land development
|
—
|
|
|
1,618
|
|
||
Total nonaccrual loans
|
$
|
24,897
|
|
|
$
|
25,133
|
|
Loans past due 90 days and still accruing interest:
|
|
|
|
||||
Total loans past due 90 days and still accruing interest
|
$
|
—
|
|
|
$
|
—
|
|
Other real estate owned (OREO):
|
|
|
|
||||
Residential real estate
|
$
|
—
|
|
|
$
|
650
|
|
Total other real estate owned
|
$
|
—
|
|
|
$
|
650
|
|
Total nonperforming assets
|
$
|
24,897
|
|
|
$
|
25,783
|
|
Restructured loans:
|
|
|
|
||||
Accruing loans
|
$
|
—
|
|
|
$
|
724
|
|
Nonaccruing loans (included in nonaccrual loans above)
|
8,931
|
|
|
20,070
|
|
||
Total restructured loans
|
$
|
8,931
|
|
|
$
|
20,794
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||
|
Loans
|
|
Reserves for
Loan Losses
|
|
% of
Reserves to
Loans
|
|
Loans
|
|
Reserves for
Loan Losses
|
|
% of
Reserves to
Loans
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
Impaired loans with specific reserves
|
$
|
3,309
|
|
|
$
|
2,042
|
|
|
61.7
|
%
|
|
$
|
1,621
|
|
|
$
|
484
|
|
|
29.9
|
%
|
Impaired loans without specific reserves
|
21,588
|
|
|
—
|
|
|
—
|
|
|
24,236
|
|
|
—
|
|
|
—
|
|
||||
Total impaired loans
|
$
|
24,897
|
|
|
$
|
2,042
|
|
|
8.2
|
%
|
|
$
|
25,857
|
|
|
$
|
484
|
|
|
1.9
|
%
|
•
|
The effects of changes that we may make in our loan policies or underwriting standards on the quality of the loans and the risks in our loan portfolios;
|
•
|
Trends and changes in local, regional and national economic conditions, as well as changes in industry specific conditions, and any other reasonably foreseeable events that could affect the performance or the collectability of the loans in our loan portfolios;
|
•
|
Material changes that may occur in the mix or in the volume of the loans in our loan portfolios that could alter, whether positively or negatively, the risk profile of those portfolios;
|
•
|
Changes in management or loan personnel or other circumstances that could, either positively or negatively, impact the application of our loan underwriting standards, the monitoring of nonperforming loans or our loan collection efforts; and
|
•
|
External factors that, in addition to economic conditions, can affect the ability of borrowers to meet their loan obligations, such as fires, earthquakes and terrorist attacks.
|
(Dollars in thousands)
|
Commercial
|
|
Real Estate
|
|
Land
Development
|
|
Consumer and
Single Family
Mortgages
|
|
Unallocated
|
|
Total
|
||||||||||||
ALLL for the year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
6,639
|
|
|
$
|
5,109
|
|
|
$
|
282
|
|
|
$
|
686
|
|
|
$
|
—
|
|
|
$
|
12,716
|
|
Charge offs
|
(15,390
|
)
|
|
(1,119
|
)
|
|
—
|
|
|
(540
|
)
|
|
—
|
|
|
(17,049
|
)
|
||||||
Recoveries
|
1,189
|
|
|
1
|
|
|
57
|
|
|
17
|
|
|
—
|
|
|
1,264
|
|
||||||
Provision
|
18,838
|
|
|
235
|
|
|
4
|
|
|
479
|
|
|
314
|
|
|
19,870
|
|
||||||
Balance at end of year
|
$
|
11,276
|
|
|
$
|
4,226
|
|
|
$
|
343
|
|
|
$
|
642
|
|
|
$
|
314
|
|
|
$
|
16,801
|
|
Allowance for loan and lease losses as a percentage of average total loans
|
|
|
|
|
|
|
|
|
|
|
1.96
|
%
|
|||||||||||
Allowance for loan and lease losses as a percentage of total outstanding loans
|
|
|
|
|
|
|
|
|
|
|
1.78
|
%
|
|||||||||||
Ratio of net charge-offs to average loans outstanding during the period
|
|
|
|
|
|
|
|
|
|
|
1.84
|
%
|
|||||||||||
ALLL for the year ended December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
7,670
|
|
|
$
|
5,133
|
|
|
$
|
296
|
|
|
$
|
734
|
|
|
$
|
—
|
|
|
$
|
13,833
|
|
Charge offs
|
(2,643
|
)
|
|
—
|
|
|
(85
|
)
|
|
(199
|
)
|
|
—
|
|
|
(2,927
|
)
|
||||||
Recoveries
|
1,798
|
|
|
4
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
1,810
|
|
||||||
Provision
|
(186
|
)
|
|
(28
|
)
|
|
71
|
|
|
143
|
|
|
—
|
|
|
—
|
|
||||||
Balance at end of year
|
$
|
6,639
|
|
|
$
|
5,109
|
|
|
$
|
282
|
|
|
$
|
686
|
|
|
$
|
—
|
|
|
$
|
12,716
|
|
Allowance for loan and lease losses as a percentage of average total loans
|
|
|
|
|
|
|
|
|
|
|
1.54
|
%
|
|||||||||||
Allowance for loan and lease losses as a percentage of total outstanding loans
|
|
|
|
|
|
|
|
|
|
|
1.48
|
%
|
|||||||||||
Ratio of net charge-offs to average loans outstanding during the period
|
|
|
|
|
|
|
|
|
|
|
0.13
|
%
|
|||||||||||
ALLL for the year ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
5,812
|
|
|
$
|
4,517
|
|
|
$
|
165
|
|
|
$
|
864
|
|
|
$
|
—
|
|
|
$
|
11,358
|
|
Charge offs
|
(551
|
)
|
|
—
|
|
|
—
|
|
|
(102
|
)
|
|
—
|
|
|
(653
|
)
|
||||||
Recoveries
|
1,467
|
|
|
76
|
|
|
—
|
|
|
85
|
|
|
—
|
|
|
1,628
|
|
||||||
Provision
|
942
|
|
|
540
|
|
|
131
|
|
|
(113
|
)
|
|
—
|
|
|
1,500
|
|
||||||
Balance at end of year
|
$
|
7,670
|
|
|
$
|
5,133
|
|
|
$
|
296
|
|
|
$
|
734
|
|
|
$
|
—
|
|
|
$
|
13,833
|
|
Allowance for loan and lease losses as a percentage of average total loans
|
|
|
|
|
|
|
|
|
|
|
1.73
|
%
|
|||||||||||
Allowance for loan and lease losses as a percentage of total outstanding loans
|
|
|
|
|
|
|
|
|
|
|
1.65
|
%
|
|||||||||||
Ratio of net charge-offs to average loans outstanding during the period
|
|
|
|
|
|
|
|
|
|
|
(0.12
|
)%
|
|||||||||||
ALLL for the year ended December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
6,340
|
|
|
$
|
3,487
|
|
|
$
|
248
|
|
|
$
|
806
|
|
|
$
|
—
|
|
|
$
|
10,881
|
|
Charge offs
|
(5,945
|
)
|
|
(308
|
)
|
|
(5
|
)
|
|
(200
|
)
|
|
—
|
|
|
(6,458
|
)
|
||||||
Recoveries
|
2,337
|
|
|
5
|
|
|
54
|
|
|
34
|
|
|
—
|
|
|
2,430
|
|
||||||
Provision
|
3,080
|
|
|
1,333
|
|
|
(132
|
)
|
|
224
|
|
|
—
|
|
|
4,505
|
|
||||||
Balance at end of year
|
$
|
5,812
|
|
|
$
|
4,517
|
|
|
$
|
165
|
|
|
$
|
864
|
|
|
$
|
—
|
|
|
$
|
11,358
|
|
Allowance for loan and lease losses as a percentage of average total loans
|
|
|
|
|
|
|
|
|
|
|
1.59
|
%
|
|||||||||||
Allowance for loan and lease losses as a percentage of total outstanding loans
|
|
|
|
|
|
|
|
|
|
|
1.46
|
%
|
|||||||||||
Ratio of net charge-offs to average loans outstanding during the period
|
|
|
|
|
|
|
|
|
|
|
0.56
|
%
|
|||||||||||
ALLL for the year ended December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
8,908
|
|
|
$
|
5,777
|
|
|
$
|
316
|
|
|
$
|
626
|
|
|
$
|
—
|
|
|
$
|
15,627
|
|
Charge offs
|
(6,664
|
)
|
|
(1,184
|
)
|
|
(158
|
)
|
|
(568
|
)
|
|
—
|
|
|
(8,574
|
)
|
||||||
Recoveries
|
1,657
|
|
|
198
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
1,878
|
|
||||||
Provision
|
2,439
|
|
|
(1,304
|
)
|
|
90
|
|
|
725
|
|
|
—
|
|
|
1,950
|
|
||||||
Balance at end of year
|
$
|
6,340
|
|
|
$
|
3,487
|
|
|
$
|
248
|
|
|
$
|
806
|
|
|
$
|
—
|
|
|
$
|
10,881
|
|
Allowance for loan and lease losses as a percentage of average total loans
|
|
|
|
|
|
|
|
|
|
|
1.56
|
%
|
|||||||||||
Allowance for loan and lease losses as a percentage of total outstanding loans
|
|
|
|
|
|
|
|
|
|
|
1.49
|
%
|
|||||||||||
Ratio of net charge-offs to average loans outstanding during the period
|
|
|
|
|
|
|
|
|
|
|
0.96
|
%
|
•
|
Loans rated "Pass" totaled
$879.8 million
, an
increase
of
$63.5 million
from
$816.3 million
at
December 31, 2015
. The
increase
was primarily attributable to
new loan growth
and $6.4 million upgraded from "Special Mention", partially offset by downgrades to "Special Mention", "Substandard" and "Doubtful" of $12.2 million, $30.5 million and $3.3 million, respectively, and paydowns of principal payments.
|
•
|
Loans rated "Special Mention" totaled
$14.7 million
, a
decrease
of
$521 thousand
from
$15.3 million
at
December 31, 2015
. The
decrease
was primarily the result of $5.1 million in downgrades to "Substandard", $6.4 million upgraded to "Pass", and payoffs and principal payments, partially offset by $12.2 million downgraded from "Pass".
|
•
|
Loans rated "Substandard" totaled
$48.7 million
, an
increase
of
$18.5 million
from
$30.2 million
at
December 31, 2015
. This
increase
was primarily the result of $30.5 million downgraded from "Pass" and $4.3 million downgraded from "Special Mention", partially offset by principal payments of $2.4 million, payoffs of $10.8 million, $2.5 million of loans charged off and upgrades of $548 thousand.
|
•
|
Loans rated "Doubtful" totaled
$3.3 million
, an
increase
of
$3.3 million
from
$0.0 million
at
December 31, 2015
. This
increase
was the result of two commercial loan relationships downgraded from "Pass."
|
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||
Loans Delinquent:
|
(Dollars in thousands)
|
||||||||||||||||||
90 days or more:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial loans
|
$
|
13,946
|
|
|
$
|
8,663
|
|
|
$
|
6,910
|
|
|
$
|
8,193
|
|
|
$
|
8,766
|
|
Commercial real estate
|
1,003
|
|
|
1,011
|
|
|
6,076
|
|
|
6,229
|
|
|
6,004
|
|
|||||
Residential mortgages
|
—
|
|
|
—
|
|
|
—
|
|
|
535
|
|
|
535
|
|
|||||
Land development loans
|
—
|
|
|
—
|
|
|
1,140
|
|
|
1,595
|
|
|
1,618
|
|
|||||
|
14,949
|
|
|
9,674
|
|
|
14,126
|
|
|
16,552
|
|
|
16,923
|
|
|||||
30-89 days:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial loans
|
7,055
|
|
|
6,287
|
|
|
3,215
|
|
|
28,781
|
|
|
3,018
|
|
|||||
Commercial real estate
|
4,142
|
|
|
1,034
|
|
|
—
|
|
|
247
|
|
|
316
|
|
|||||
Residential mortgages
|
—
|
|
|
62
|
|
|
2,364
|
|
|
—
|
|
|
—
|
|
|||||
Consumer loans
|
38
|
|
|
—
|
|
|
115
|
|
|
250
|
|
|
—
|
|
|||||
|
11,235
|
|
|
7,383
|
|
|
5,694
|
|
|
29,278
|
|
|
3,334
|
|
|||||
Total Past Due
(1)
:
|
$
|
26,184
|
|
|
$
|
17,057
|
|
|
$
|
19,820
|
|
|
$
|
45,830
|
|
|
$
|
20,257
|
|
|
(1)
|
Past due balances include nonaccrual loans.
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Average
Balance
|
|
Average
Rate
|
|
Average
Balance
|
|
Average
Rate
|
|
Average
Balance
|
|
Average
Rate
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Noninterest bearing demand deposits
|
$
|
299,447
|
|
|
—
|
|
|
$
|
237,371
|
|
|
—
|
|
|
$
|
206,295
|
|
|
—
|
|
Interest-bearing checking accounts
|
60,024
|
|
|
0.27
|
%
|
|
40,916
|
|
|
0.23
|
%
|
|
36,281
|
|
|
0.28
|
%
|
|||
Money market and savings deposits
|
327,401
|
|
|
0.63
|
%
|
|
300,088
|
|
|
0.57
|
%
|
|
170,047
|
|
|
0.34
|
%
|
|||
Time deposits
(1)
|
263,569
|
|
|
0.99
|
%
|
|
308,529
|
|
|
0.90
|
%
|
|
431,789
|
|
|
0.96
|
%
|
|||
Total deposits
|
$
|
950,441
|
|
|
0.51
|
%
|
|
$
|
886,904
|
|
|
0.51
|
%
|
|
$
|
844,412
|
|
|
0.57
|
%
|
|
(1)
|
Comprised of time certificates of deposit in denominations of less than and more than $100,000.
|
|
At December 31, 2016
|
|
At December 31, 2015
|
||||||||||
|
Amounts
|
|
% of Total Deposits
|
|
Amounts
|
|
% of Total Deposits
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Core deposits
|
|
|
|
|
|
|
|
||||||
Noninterest bearing demand deposits
|
$
|
332,573
|
|
|
33.2
|
%
|
|
$
|
249,676
|
|
|
27.9
|
%
|
Savings and other interest-bearing transaction deposits
|
410,819
|
|
|
41.0
|
%
|
|
363,838
|
|
|
40.7
|
%
|
||
Time deposits
|
257,908
|
|
|
25.8
|
%
|
|
280,326
|
|
|
31.4
|
%
|
||
Total deposits
|
$
|
1,001,300
|
|
|
100.0
|
%
|
|
$
|
893,840
|
|
|
100.0
|
%
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
Maturities
|
Certificates of
Deposit Under
$ 100,000
|
|
Certificates of
Deposit $100,000
or more
|
|
Certificates of
Deposit Under
$100,000
|
|
Certificates of
Deposit $100,000
or more
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Three months or less
|
$
|
9,269
|
|
|
$
|
72,671
|
|
|
$
|
13,419
|
|
|
$
|
109,179
|
|
Over three and through six months
|
4,794
|
|
|
35,800
|
|
|
5,453
|
|
|
31,336
|
|
||||
Over six and through twelve months
|
11,077
|
|
|
75,932
|
|
|
12,286
|
|
|
83,252
|
|
||||
Over twelve months
|
5,577
|
|
|
42,788
|
|
|
3,957
|
|
|
21,444
|
|
||||
Total
|
$
|
30,717
|
|
|
$
|
227,191
|
|
|
$
|
35,115
|
|
|
$
|
245,211
|
|
•
|
well capitalized
|
•
|
adequately capitalized
|
•
|
undercapitalized
|
•
|
significantly undercapitalized; or
|
•
|
critically undercapitalized
|
|
|
|
|
|
Applicable Federal Regulatory Requirement
|
|||||||||||||
At December 31, 2016
|
Actual Capital
|
|
For Capital Adequacy Purposes
|
|
To be Categorized As Well Capitalized
|
|||||||||||||
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||||||
Total Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|||||||||
Company
|
$
|
131,043
|
|
|
12.8
|
%
|
|
$
|
88,230
|
|
|
At least 8.625
|
|
N/A
|
|
|
N/A
|
|
Bank
|
114,412
|
|
|
11.4
|
%
|
|
86,566
|
|
|
At least 8.625
|
|
$
|
100,366
|
|
|
At least 10.0
|
||
Common Equity Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Company
|
101,199
|
|
|
9.9
|
%
|
|
52,427
|
|
|
At least 5.125
|
|
N/A
|
|
|
N/A
|
|||
Bank
|
101,807
|
|
|
10.1
|
%
|
|
51,438
|
|
|
At least 5.125
|
|
65,238
|
|
|
At least 6.5
|
|||
Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|||||||||
Company
|
$
|
118,199
|
|
|
11.6
|
%
|
|
$
|
67,771
|
|
|
At least 6.625
|
|
N/A
|
|
|
N/A
|
|
Bank
|
101,807
|
|
|
10.1
|
%
|
|
66,492
|
|
|
At least 6.625
|
|
$
|
80,293
|
|
|
At least 8.0
|
||
Tier 1 Capital to Average Assets:
|
|
|
|
|
|
|
|
|
|
|||||||||
Company
|
$
|
118,199
|
|
|
10.5
|
%
|
|
$
|
44,923
|
|
|
At least 4.0
|
|
N/A
|
|
|
N/A
|
|
Bank
|
101,807
|
|
|
9.2
|
%
|
|
44,360
|
|
|
At least 4.0
|
|
$
|
55,450
|
|
|
At least 5.0
|
|
Maturity/Obligation by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Deposits
|
$
|
1,001,300
|
|
|
$
|
957,572
|
|
|
$
|
43,413
|
|
|
$
|
315
|
|
|
$
|
—
|
|
FHLB Borrowings
|
15,000
|
|
|
15,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Junior Subordinated Debentures
|
17,527
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,527
|
|
|||||
Operating Leases
|
7,535
|
|
|
2,463
|
|
|
4,066
|
|
|
1,006
|
|
|
—
|
|
|||||
Total
|
$
|
1,041,362
|
|
|
$
|
975,035
|
|
|
$
|
47,479
|
|
|
$
|
1,321
|
|
|
$
|
17,527
|
|
Original Issue Dates
|
Principal Amount
|
|
Interest Rates
|
|
Maturity Dates
|
||
September 2002
|
$
|
7,217
|
|
|
LIBOR plus 3.40%
|
|
September 2032
|
October 2004
|
10,310
|
|
|
LIBOR plus 2.00%
|
|
October 2034
|
|
Total
|
$
|
17,527
|
|
|
|
|
|
|
(1)
|
Subject to the receipt of prior regulatory approval, we may redeem the Debentures, in whole or in part, without premium or penalty, at any time prior to maturity.
|
|
At December 31, 2016
|
||
|
(Dollars in thousands)
|
||
2017
|
$
|
2,463
|
|
2018
|
2,069
|
|
|
2019
|
1,997
|
|
|
2020
|
901
|
|
|
2021 and beyond
|
105
|
|
|
Total
|
$
|
7,535
|
|
|
At December 31, 2016
|
||
|
(In thousands)
|
||
2017
|
$
|
184,403
|
|
2018
|
40,358
|
|
|
2019
|
2,188
|
|
|
2020
|
101
|
|
|
2021 and beyond
|
141
|
|
|
Total
|
$
|
227,191
|
|
•
|
Loan structures, which includes the lien priority, amortization terms and loan tenors;
|
•
|
Collateral requirements, coverage margins and valuation methods;
|
•
|
Underwriting considerations which include recommended due diligence and verification requirements; and
|
•
|
Specific credit performance standards. Examples include minimum debt service coverage ratios, liquidity requirements as well as limits on financial leverage.
|
Change in Market Interest Rates (basis points)
|
|
Amount ($)
|
|
Percent (%)
|
|||
|
|
(in thousands)
|
|
|
|||
+200
|
|
$
|
4,433
|
|
|
10.90
|
%
|
+100
|
|
2,192
|
|
|
5.40
|
%
|
|
-100
|
|
(3,722
|
)
|
|
(9.20
|
)%
|
Change in Market Interest Rates (basis points)
|
|
Amount ($)
|
|
Percent (%)
|
|||
|
|
(in thousands)
|
|
|
|||
+200
|
|
$
|
25,520
|
|
|
17.40
|
%
|
+100
|
|
12,496
|
|
|
8.50
|
%
|
|
-100
|
|
(4,458
|
)
|
|
(3.00
|
)%
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS
|
|
Page No.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
Cash and due from banks
|
$
|
16,789
|
|
|
$
|
10,645
|
|
Interest bearing deposits with financial institutions
|
122,056
|
|
|
103,276
|
|
||
Cash and cash equivalents
|
138,845
|
|
|
113,921
|
|
||
Interest-bearing time deposits with financial institutions
|
3,669
|
|
|
4,665
|
|
||
Federal Reserve Bank of San Francisco and Federal Home Loan Bank Stock, at cost
|
8,170
|
|
|
8,170
|
|
||
Securities available for sale, at fair value
|
43,480
|
|
|
52,249
|
|
||
Loans (net of allowances of $16,801 and $12,716, respectively)
|
931,525
|
|
|
849,733
|
|
||
Other real estate owned
|
—
|
|
|
650
|
|
||
Accrued interest receivable
|
2,702
|
|
|
2,266
|
|
||
Premises and equipment, net
|
1,257
|
|
|
1,142
|
|
||
Net deferred tax assets
|
—
|
|
|
17,576
|
|
||
Other assets
|
11,041
|
|
|
12,017
|
|
||
Total assets
|
$
|
1,140,689
|
|
|
$
|
1,062,389
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Deposits:
|
|
|
|
||||
Noninterest-bearing
|
$
|
332,573
|
|
|
$
|
249,676
|
|
Interest-bearing
|
668,727
|
|
|
644,164
|
|
||
Total deposits
|
1,001,300
|
|
|
893,840
|
|
||
Borrowings
|
15,000
|
|
|
10,000
|
|
||
Accrued interest payable
|
201
|
|
|
255
|
|
||
Other liabilities
|
6,942
|
|
|
6,851
|
|
||
Junior subordinated debentures
|
17,527
|
|
|
17,527
|
|
||
Total liabilities
|
1,040,970
|
|
|
928,473
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, no par value, 2,000,000 shares authorized:
|
|
|
|
||||
Series B Convertible 8.4% Noncumulative Preferred Stock, 300,000 shares authorized; 0 issued and outstanding at December 31, 2016 and December 31, 2015; liquidation preference $100 per share, plus accumulated but undeclared dividends
|
—
|
|
|
—
|
|
||
Series C 8.4% Noncumulative Preferred Stock, 300,000 shares authorized; 0 issued and outstanding at December 31, 2016 and December 31, 2015; liquidation preference $100 per share plus accumulated but undeclared dividends
|
—
|
|
|
—
|
|
||
Common stock, no par value, 85,000,000 shares authorized; 23,004,668 and 22,820,332 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively
|
148,680
|
|
|
147,202
|
|
||
Accumulated deficit
|
(47,119
|
)
|
|
(12,476
|
)
|
||
Accumulated other comprehensive loss
|
(1,842
|
)
|
|
(810
|
)
|
||
Total shareholders’ equity
|
99,719
|
|
|
133,916
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,140,689
|
|
|
$
|
1,062,389
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Interest income:
|
|
|
|
|
|
||||||
Loans, including fees
|
$
|
38,580
|
|
|
$
|
36,717
|
|
|
$
|
36,344
|
|
Securities available for sale and stock
|
1,578
|
|
|
1,710
|
|
|
1,613
|
|
|||
Interest-bearing deposits with financial institutions
|
842
|
|
|
370
|
|
|
333
|
|
|||
Total interest income
|
41,000
|
|
|
38,797
|
|
|
38,290
|
|
|||
Interest expense:
|
|
|
|
|
|
||||||
Deposits
|
4,820
|
|
|
4,559
|
|
|
4,817
|
|
|||
Borrowings
|
657
|
|
|
710
|
|
|
1,012
|
|
|||
Total interest expense
|
5,477
|
|
|
5,269
|
|
|
5,829
|
|
|||
Net interest income
|
35,523
|
|
|
33,528
|
|
|
32,461
|
|
|||
Provision for loan and lease losses
|
19,870
|
|
|
—
|
|
|
1,500
|
|
|||
Net interest income after provision for loan and lease losses
|
15,653
|
|
|
33,528
|
|
|
30,961
|
|
|||
Noninterest income
|
|
|
|
|
|
||||||
Service fees on deposits and other banking services
|
1,093
|
|
|
918
|
|
|
896
|
|
|||
Net gain on sale of small business administration loans
|
40
|
|
|
—
|
|
|
2,074
|
|
|||
Net loss on sale of other assets
|
(527
|
)
|
|
(58
|
)
|
|
—
|
|
|||
Other noninterest income
|
2,331
|
|
|
1,826
|
|
|
1,400
|
|
|||
Total noninterest income
|
2,937
|
|
|
2,686
|
|
|
4,370
|
|
|||
Noninterest expense
|
|
|
|
|
|
||||||
Salaries and employee benefits
|
21,817
|
|
|
22,002
|
|
|
22,571
|
|
|||
Occupancy
|
3,061
|
|
|
2,871
|
|
|
2,499
|
|
|||
Equipment and depreciation
|
1,802
|
|
|
1,652
|
|
|
1,541
|
|
|||
Data processing
|
1,271
|
|
|
1,035
|
|
|
931
|
|
|||
FDIC expense
|
950
|
|
|
1,250
|
|
|
1,336
|
|
|||
Other real estate owned expense, net
|
(70
|
)
|
|
365
|
|
|
1,962
|
|
|||
Professional fees
|
4,046
|
|
|
2,514
|
|
|
2,434
|
|
|||
Business development
|
795
|
|
|
488
|
|
|
262
|
|
|||
Loan related expense
|
375
|
|
|
414
|
|
|
532
|
|
|||
Insurance
|
291
|
|
|
341
|
|
|
484
|
|
|||
Other operating expense
|
2,063
|
|
|
2,392
|
|
|
2,256
|
|
|||
Total noninterest expense
|
36,401
|
|
|
35,324
|
|
|
36,808
|
|
|||
(Loss) income before income taxes
|
(17,811
|
)
|
|
890
|
|
|
(1,477
|
)
|
|||
Income tax provision (benefit)
|
16,832
|
|
|
(11,551
|
)
|
|
(608
|
)
|
|||
Net (loss) income from continuing operations
|
(34,643
|
)
|
|
12,441
|
|
|
(869
|
)
|
|||
Discontinued Operations
|
|
|
|
|
|
||||||
Income from discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
1,937
|
|
|||
Income tax provision
|
—
|
|
|
—
|
|
|
711
|
|
|||
Net income from discontinued operations
|
—
|
|
|
—
|
|
|
1,226
|
|
|||
Net (loss) income
|
(34,643
|
)
|
|
12,441
|
|
|
357
|
|
|||
Accumulated declared dividends on preferred stock
|
—
|
|
|
—
|
|
|
(547
|
)
|
|||
Accumulated undeclared dividends on preferred stock
|
—
|
|
|
—
|
|
|
(616
|
)
|
|||
Dividends on preferred stock
|
—
|
|
|
(927
|
)
|
|
—
|
|
|||
Inducements for exchange of the preferred stock
|
—
|
|
|
(512
|
)
|
|
—
|
|
|||
Net (loss) income allocable to common shareholders
|
$
|
(34,643
|
)
|
|
$
|
11,002
|
|
|
$
|
(806
|
)
|
Basic (loss) income per common share:
|
|
|
|
|
|
||||||
Net (loss) income from continuing operations
|
$
|
(1.51
|
)
|
|
$
|
0.54
|
|
|
$
|
(0.11
|
)
|
Net (loss) income available to common shareholders
|
$
|
(1.51
|
)
|
|
$
|
0.54
|
|
|
$
|
(0.04
|
)
|
Diluted (loss) income per common share:
|
|
|
|
|
|
||||||
Net (loss) income from continuing operations
|
$
|
(1.51
|
)
|
|
$
|
0.53
|
|
|
$
|
(0.11
|
)
|
Net (loss) income available to common shareholders
|
$
|
(1.51
|
)
|
|
$
|
0.53
|
|
|
$
|
(0.04
|
)
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
22,958,644
|
|
|
20,516,575
|
|
|
19,230,913
|
|
|||
Diluted
|
22,958,644
|
|
|
20,675,279
|
|
|
19,230,913
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net (loss) income
|
$
|
(34,643
|
)
|
|
$
|
12,441
|
|
|
$
|
357
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Change in unrealized (loss) gain on securities available for sale
|
(1,032
|
)
|
|
(118
|
)
|
|
1,462
|
|
|||
Total comprehensive (loss) income
|
$
|
(35,675
|
)
|
|
$
|
12,323
|
|
|
$
|
1,819
|
|
|
Series B and C
Preferred stock
|
|
Common stock
|
|
Retained
earnings
(accumulated
deficit)
|
|
Accumulated
other
comprehensive
income (loss)
|
|
Total
|
||||||||||||||||
Number
of shares
|
|
Amount
|
|
Number
of shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 31, 2013
|
130
|
|
|
$
|
10,565
|
|
|
19,135
|
|
|
$
|
128,877
|
|
|
$
|
(22,130
|
)
|
|
$
|
(2,154
|
)
|
|
$
|
115,158
|
|
Issuance of restricted stock, net
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Tax effect from vesting of restricted stock
|
|
|
|
|
(12
|
)
|
|
(52
|
)
|
|
|
|
|
|
(52
|
)
|
|||||||||
Series C Preferred Stock issued as a stock dividend on Series B Preferred Stock
|
11
|
|
|
1,112
|
|
|
—
|
|
|
—
|
|
|
(1,112
|
)
|
|
—
|
|
|
—
|
|
|||||
Common stock based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
1,139
|
|
|
—
|
|
|
—
|
|
|
1,139
|
|
|||||
Common stock options exercised
|
—
|
|
|
—
|
|
|
289
|
|
|
1,217
|
|
|
—
|
|
|
—
|
|
|
1,217
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
357
|
|
|
—
|
|
|
357
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,462
|
|
|
1,462
|
|
|||||
Balance at December 31, 2014
|
141
|
|
|
$
|
11,677
|
|
|
19,463
|
|
|
$
|
131,181
|
|
|
$
|
(22,885
|
)
|
|
$
|
(692
|
)
|
|
$
|
119,281
|
|
Exchange of Series B Preferred Stock for common stock
|
(112
|
)
|
|
(8,747
|
)
|
|
2,105
|
|
|
8,747
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exchange of Series C Preferred Stock for common stock
|
(35
|
)
|
|
(3,523
|
)
|
|
662
|
|
|
3,523
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Dividends on preferred stock exchanged for common stock
|
—
|
|
|
—
|
|
|
174
|
|
|
927
|
|
|
(927
|
)
|
|
—
|
|
|
—
|
|
|||||
Inducement for exchange of preferred stock for common stock
|
|
|
|
|
68
|
|
|
512
|
|
|
(512
|
)
|
|
—
|
|
|
—
|
|
|||||||
Costs related to the exchange of preferred stock for common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(324
|
)
|
|
—
|
|
|
—
|
|
|
(324
|
)
|
|||||
Issuance of restricted stock, net
|
—
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Tax effect from vesting of restricted stock
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(109
|
)
|
|
—
|
|
|
—
|
|
|
(109
|
)
|
|||||
Series C Preferred Stock issued as a stock dividend on Series B Preferred Stock
|
6
|
|
|
593
|
|
|
—
|
|
|
—
|
|
|
(593
|
)
|
|
—
|
|
|
—
|
|
|||||
Common Stock based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
1,234
|
|
|
—
|
|
|
—
|
|
|
1,234
|
|
|||||
Common stock options exercised
|
—
|
|
|
—
|
|
|
296
|
|
|
1,511
|
|
|
—
|
|
|
—
|
|
|
1,511
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,441
|
|
|
—
|
|
|
12,441
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(118
|
)
|
|
(118
|
)
|
|||||
Balance at December 31, 2015
|
—
|
|
|
$
|
—
|
|
|
22,820
|
|
|
$
|
147,202
|
|
|
$
|
(12,476
|
)
|
|
$
|
(810
|
)
|
|
$
|
133,916
|
|
Issuance of restricted stock, net
|
—
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Tax effect from vesting of restricted stock
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|||||
Common stock based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
1,039
|
|
|
—
|
|
|
—
|
|
|
1,039
|
|
|||||
Common stock options exercised
|
—
|
|
|
—
|
|
|
97
|
|
|
455
|
|
|
—
|
|
|
—
|
|
|
455
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,643
|
)
|
|
—
|
|
|
(34,643
|
)
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,032
|
)
|
|
(1,032
|
)
|
|||||
Balance at December 31, 2016
|
—
|
|
|
$
|
—
|
|
|
23,005
|
|
|
$
|
148,680
|
|
|
$
|
(47,119
|
)
|
|
$
|
(1,842
|
)
|
|
$
|
99,719
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(34,643
|
)
|
|
$
|
12,441
|
|
|
$
|
357
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
485
|
|
|
525
|
|
|
462
|
|
|||
Provision for loan and lease losses
|
19,870
|
|
|
—
|
|
|
1,500
|
|
|||
Amortization of premium on securities
|
283
|
|
|
319
|
|
|
331
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(105
|
)
|
|||
Net amortization of deferred fees and unearned income on loans
|
(349
|
)
|
|
(607
|
)
|
|
(662
|
)
|
|||
Net gain on sales of other real estate owned
|
(107
|
)
|
|
(44
|
)
|
|
296
|
|
|||
Net gain on sale of premises and equipment
|
—
|
|
|
(27
|
)
|
|
(56
|
)
|
|||
Net loss on sale of other assets
|
527
|
|
|
—
|
|
|
—
|
|
|||
Net gain on sale of small business administration loans
|
(40
|
)
|
|
—
|
|
|
(2,074
|
)
|
|||
Small business administration loan originations
|
(806
|
)
|
|
—
|
|
|
(27,097
|
)
|
|||
Proceeds from sale of small business administration loans
|
840
|
|
|
—
|
|
|
29,245
|
|
|||
Write down of other real estate owned
|
—
|
|
|
85
|
|
|
343
|
|
|||
Stock-based compensation expense
|
1,039
|
|
|
1,234
|
|
|
1,139
|
|
|||
Tax effect of restricted stock vesting
|
(16
|
)
|
|
(109
|
)
|
|
(52
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Net (increase) decrease in accrued interest receivable
|
(436
|
)
|
|
170
|
|
|
(419
|
)
|
|||
Net decrease (increase) in other assets
|
144
|
|
|
(561
|
)
|
|
(696
|
)
|
|||
Net decrease (increase) in deferred taxes
|
16,837
|
|
|
(11,562
|
)
|
|
1,620
|
|
|||
Net decrease (increase) in income taxes receivable
|
681
|
|
|
(49
|
)
|
|
(691
|
)
|
|||
Net (decrease) increase in accrued interest payable
|
(54
|
)
|
|
33
|
|
|
(2,063
|
)
|
|||
Net increase (decrease) in other liabilities
|
91
|
|
|
80
|
|
|
(1,304
|
)
|
|||
Net cash provided by discontinued operations
|
—
|
|
|
—
|
|
|
8,702
|
|
|||
Net cash provided by operating activities
|
4,346
|
|
|
1,928
|
|
|
8,776
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Net decrease (increase) in interest-bearing time deposits with financial institutions
|
996
|
|
|
3
|
|
|
(2,245
|
)
|
|||
Maturities of and principal payments received on securities available for sale and other stock
|
8,193
|
|
|
8,409
|
|
|
9,403
|
|
|||
Purchase of securities available for sale and other stock
|
—
|
|
|
(283
|
)
|
|
(1,863
|
)
|
|||
Principal payments received on other investments
|
—
|
|
|
2,087
|
|
|
—
|
|
|||
Purchase of other investments
|
(385
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of other real estate owned
|
757
|
|
|
1,181
|
|
|
15,269
|
|
|||
Capitalized cost of other real estate owned
|
—
|
|
|
—
|
|
|
(21
|
)
|
|||
Net increase in loans
|
(101,331
|
)
|
|
(25,209
|
)
|
|
(65,668
|
)
|
|||
Proceeds from sale of other assets
|
33
|
|
|
—
|
|
|
—
|
|
|||
Purchases of premises and equipment
|
(600
|
)
|
|
(575
|
)
|
|
(334
|
)
|
|||
Proceeds from sale of premises and equipment
|
—
|
|
|
27
|
|
|
77
|
|
|||
Net cash (used in) provided by investing activities
|
(92,337
|
)
|
|
(14,360
|
)
|
|
(45,382
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Payments for exchange of preferred stock for common stock
|
—
|
|
|
(324
|
)
|
|
—
|
|
|||
Net increase (decrease) in deposits
|
107,460
|
|
|
(22,469
|
)
|
|
136,084
|
|
|||
Proceeds from borrowings
|
15,000
|
|
|
—
|
|
|
—
|
|
|||
Payments of borrowings
|
(10,000
|
)
|
|
(29,500
|
)
|
|
(30,500
|
)
|
|||
Proceeds from exercise of common stock options
|
455
|
|
|
1,511
|
|
|
1,217
|
|
|||
Net cash provided by (used in) financing activities
|
112,915
|
|
|
(50,782
|
)
|
|
106,801
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
24,924
|
|
|
(63,214
|
)
|
|
70,195
|
|
|||
Cash and Cash Equivalents, beginning of period
|
113,921
|
|
|
177,135
|
|
|
106,940
|
|
|||
Cash and Cash Equivalents, end of period
|
$
|
138,845
|
|
|
$
|
113,921
|
|
|
$
|
177,135
|
|
Supplementary Cash Flow Information:
|
|
|
|
|
|
||||||
Cash paid for interest on deposits and other borrowings
|
$
|
5,531
|
|
|
$
|
5,236
|
|
|
$
|
7,892
|
|
Cash paid for income taxes
|
$
|
12
|
|
|
$
|
58
|
|
|
$
|
—
|
|
(Dollars in thousands)
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Non-Cash Investing Activities:
|
|
|
|
|
|
||||||
Transfer of loans into other real estate owned
|
$
|
—
|
|
|
$
|
280
|
|
|
$
|
5,188
|
|
Non-Cash Financing Activities:
|
|
|
|
|
|
||||||
Series C Preferred Stock issued in connection with dividends on Series B Preferred Stock
|
$
|
—
|
|
|
$
|
593
|
|
|
$
|
1,112
|
|
Exchange of Series B and Series C Preferred Stock for common stock
|
$
|
—
|
|
|
$
|
13,709
|
|
|
$
|
—
|
|
Furniture and equipment
|
Three to seven years
|
Leasehold improvements
|
Lesser of the lease term or estimated useful life
|
Level 1
|
Valuation is based upon quoted prices for identical instruments traded in active markets.
|
|
|
Level 2
|
Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
|
|
|
Level 3
|
Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
|
|
At December 31, 2016
|
||||||||||||||
(Dollars in thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets and Liabilities at Fair Value:
|
|
|
|
|
|
|
|
||||||||
Investment securities available for sale
|
|
|
|
|
|
|
|
||||||||
Mortgage backed securities issued by U.S. agencies
|
$
|
36,675
|
|
|
$
|
—
|
|
|
$
|
36,675
|
|
|
$
|
—
|
|
Collateralized mortgage obligations issued by non-agency
|
468
|
|
|
—
|
|
|
468
|
|
|
—
|
|
||||
Asset-backed securities
|
1,433
|
|
|
—
|
|
|
—
|
|
|
1,433
|
|
||||
Mutual funds
|
4,904
|
|
|
4,904
|
|
|
—
|
|
|
—
|
|
||||
Total securities available for sale at fair value
|
$
|
43,480
|
|
|
$
|
4,904
|
|
|
$
|
37,143
|
|
|
$
|
1,433
|
|
|
At December 31, 2015
|
||||||||||||||
(Dollars in thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets and Liabilities at Fair Value:
|
|
|
|
|
|
|
|
||||||||
Investment securities available for sale
|
|
|
|
|
|
|
|
||||||||
Mortgage backed securities issued by U.S. agencies
|
$
|
45,154
|
|
|
$
|
—
|
|
|
$
|
45,154
|
|
|
$
|
—
|
|
Collateralized mortgage obligations issued by non agency
|
632
|
|
|
—
|
|
|
632
|
|
|
—
|
|
||||
Asset-backed securities
|
1,480
|
|
|
—
|
|
|
—
|
|
|
1,480
|
|
||||
Mutual funds
|
4,983
|
|
|
4,983
|
|
|
—
|
|
|
—
|
|
||||
Total securities available for sale at fair value
|
$
|
52,249
|
|
|
$
|
4,983
|
|
|
$
|
45,786
|
|
|
$
|
1,480
|
|
|
Asset Backed Securities
|
||
|
(Dollars in thousands)
|
||
Balance of recurring Level 3 instruments at December 31, 2015
|
$
|
1,480
|
|
Total gains or losses (realized/unrealized):
|
|
||
Included in other comprehensive income
|
(47
|
)
|
|
Settlements
|
—
|
|
|
Transfers in and/or out of Level 3
|
—
|
|
|
Balance of Level 3 assets at December 31, 2016
|
$
|
1,433
|
|
|
At December 31, 2016
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets at Fair Value:
|
(Dollars in thousands)
|
||||||||||||||
Impaired loans
|
$
|
24,897
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,897
|
|
Total
|
$
|
24,897
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,897
|
|
|
Fair Value Measurement as of December 31, 2016
|
|
Valuation Techniques
|
|
Unobservable Inputs
|
|
Range
|
|
Weighted Average
|
||
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
||
Assets
|
|
|
|
|
|
|
|
|
|
||
Asset-backed security
|
$
|
1,433
|
|
|
Third-Party Pricing
|
|
Marketability discount
|
|
N/A
(1)
|
||
|
|
|
|
|
Illiquidity discount
|
|
N/A
(1)
|
||||
Impaired loans
|
24,897
|
|
|
Third-Party Pricing
|
|
Appraisals
|
|
N/A
(2)
|
|||
|
$
|
26,330
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Information is unavailable as valuation was obtained from third-party pricing services.
|
(2)
|
We obtain appraisals for our various properties included within impaired loans which primarily rely upon market comparisons. These market comparisons support our assumption that the carrying value of the respective loans either requires or does not require additional impairment.
|
|
Estimated Fair Value
|
|||||||||||||||||||||||||||||||||||
At December 31, 2016
|
|
At December 31, 2015
|
||||||||||||||||||||||||||||||||||
Carrying Value
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Carrying Value
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Cash and cash equivalents
|
$
|
138,845
|
|
|
$
|
138,845
|
|
|
$
|
138,845
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
113,921
|
|
|
$
|
113,921
|
|
|
113,921
|
|
|
—
|
|
|
—
|
|
Interest-bearing deposits with financial institutions
|
3,669
|
|
|
3,669
|
|
|
3,669
|
|
|
—
|
|
|
—
|
|
|
4,665
|
|
|
4,665
|
|
|
4,665
|
|
|
—
|
|
|
—
|
|
|||||||
Federal Reserve Bank of San Francisco and Federal Home Loan Bank stock
|
8,170
|
|
|
8,170
|
|
|
8,170
|
|
|
—
|
|
|
—
|
|
|
8,170
|
|
|
8,170
|
|
|
8,170
|
|
|
—
|
|
|
—
|
|
|||||||
Loans, net
|
931,525
|
|
|
928,885
|
|
|
—
|
|
|
—
|
|
|
928,885
|
|
|
849,733
|
|
|
846,690
|
|
|
—
|
|
|
—
|
|
|
846,690
|
|
|||||||
Accrued interest receivable
|
2,702
|
|
|
2,702
|
|
|
2,702
|
|
|
—
|
|
|
—
|
|
|
2,266
|
|
|
2,266
|
|
|
2,266
|
|
|
—
|
|
|
—
|
|
|||||||
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Noninterest bearing deposits
|
332,573
|
|
|
332,573
|
|
|
332,573
|
|
|
—
|
|
|
—
|
|
|
249,676
|
|
|
249,676
|
|
|
249,676
|
|
|
—
|
|
|
—
|
|
|||||||
Interest-bearing deposits
|
668,727
|
|
|
668,089
|
|
|
—
|
|
|
668,089
|
|
|
—
|
|
|
644,164
|
|
|
643,935
|
|
|
—
|
|
|
643,935
|
|
|
—
|
|
|||||||
Borrowings
|
15,000
|
|
|
15,000
|
|
|
—
|
|
|
15,000
|
|
|
—
|
|
|
10,000
|
|
|
9,999
|
|
|
—
|
|
|
9,999
|
|
|
—
|
|
|||||||
Junior subordinated debentures
|
17,527
|
|
|
17,527
|
|
|
—
|
|
|
17,527
|
|
|
—
|
|
|
17,527
|
|
|
17,527
|
|
|
—
|
|
|
17,527
|
|
|
—
|
|
|||||||
Accrued interest payable
|
201
|
|
|
201
|
|
|
201
|
|
|
—
|
|
|
—
|
|
|
255
|
|
|
255
|
|
|
255
|
|
|
—
|
|
|
—
|
|
(Dollars in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||
Amortized
Cost
|
|
Gross Unrealized
|
|
Estimated
Fair Value
|
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Estimated
Fair Value
|
|||||||||||||||||||||
Gain
|
|
Loss
|
|
Gain
|
|
Loss
|
|
||||||||||||||||||||||||
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mortgage backed securities issued by U.S. Agencies
(1)
|
$
|
37,813
|
|
|
$
|
6
|
|
|
$
|
(1,144
|
)
|
|
$
|
36,675
|
|
|
$
|
46,126
|
|
|
$
|
4
|
|
|
$
|
(976
|
)
|
|
$
|
45,154
|
|
Collateralized mortgage obligations issued by non agencies
(1)
|
484
|
|
|
—
|
|
|
(16
|
)
|
|
468
|
|
|
646
|
|
|
—
|
|
|
(14
|
)
|
|
632
|
|
||||||||
Asset backed security
(2)
|
2,025
|
|
|
—
|
|
|
(592
|
)
|
|
1,433
|
|
|
2,027
|
|
|
—
|
|
|
(547
|
)
|
|
1,480
|
|
||||||||
Mutual funds
(3)
|
5,000
|
|
|
11
|
|
|
(107
|
)
|
|
4,904
|
|
|
5,000
|
|
|
33
|
|
|
(50
|
)
|
|
4,983
|
|
||||||||
Total
|
$
|
45,322
|
|
|
$
|
17
|
|
|
$
|
(1,859
|
)
|
|
$
|
43,480
|
|
|
$
|
53,799
|
|
|
$
|
37
|
|
|
$
|
(1,587
|
)
|
|
$
|
52,249
|
|
|
(1)
|
Secured by closed-end first liens on 1-4 family residential mortgages.
|
(2)
|
Comprised of a security that represents an interest in a pool of trust preferred securities issued by U.S.-based banks and insurance companies.
|
(3)
|
Consists primarily of mutual fund investments in closed-end first lien 1-4 family residential mortgages.
|
|
At December 31, 2016 Maturing in
|
||||||||||||||||||
(Dollars in thousands)
|
One year
or less
|
|
Over one
year through
five years
|
|
Over five
years through
ten years
|
|
Over ten
Years
|
|
Total
|
||||||||||
Securities available for sale, amortized cost
|
$
|
8,068
|
|
|
$
|
24,014
|
|
|
$
|
9,933
|
|
|
$
|
3,307
|
|
|
$
|
45,322
|
|
Securities available for sale, estimated fair value
|
7,831
|
|
|
23,344
|
|
|
9,619
|
|
|
2,686
|
|
|
43,480
|
|
|||||
Weighted average yield
|
1.48
|
%
|
|
1.52
|
%
|
|
1.58
|
%
|
|
2.76
|
%
|
|
1.62
|
%
|
|
At December 31, 2015 Maturing in
|
||||||||||||||||||
(Dollars in thousands)
|
One year
or less
|
|
Over one
year through
five years
|
|
Over five
years through
ten years
|
|
Over ten
Years
|
|
Total
|
||||||||||
Securities available for sale, amortized cost
|
$
|
7,761
|
|
|
$
|
26,178
|
|
|
$
|
14,164
|
|
|
$
|
5,696
|
|
|
$
|
53,799
|
|
Securities available for sale, estimated fair value
|
7,599
|
|
|
25,716
|
|
|
13,857
|
|
|
5,077
|
|
|
52,249
|
|
|||||
Weighted average yield
|
1.63
|
%
|
|
1.60
|
%
|
|
1.60
|
%
|
|
2.05
|
%
|
|
1.65
|
%
|
|
Securities with Unrealized Loss at December 31, 2016
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
||||||||||||
Residential mortgage backed securities issued by U.S. Agencies
|
$
|
16,110
|
|
|
$
|
(267
|
)
|
|
$
|
19,975
|
|
|
$
|
(877
|
)
|
|
$
|
36,085
|
|
|
$
|
(1,144
|
)
|
Non-agency collateralized mortgage obligations
|
—
|
|
|
—
|
|
|
468
|
|
|
(16
|
)
|
|
468
|
|
|
(16
|
)
|
||||||
Asset backed security
|
—
|
|
|
—
|
|
|
1,433
|
|
|
(592
|
)
|
|
1,433
|
|
|
(592
|
)
|
||||||
Mutual funds
|
3,185
|
|
|
(65
|
)
|
|
957
|
|
|
(42
|
)
|
|
4,142
|
|
|
(107
|
)
|
||||||
Total
|
$
|
19,295
|
|
|
$
|
(332
|
)
|
|
$
|
22,833
|
|
|
$
|
(1,527
|
)
|
|
$
|
42,128
|
|
|
$
|
(1,859
|
)
|
|
Securities With Unrealized Loss as of December 31, 2015
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
(Dollars In thousands)
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
||||||||||||
Residential mortgage backed securities issued by U.S. Agencies
|
$
|
20,597
|
|
|
$
|
(197
|
)
|
|
$
|
23,865
|
|
|
$
|
(779
|
)
|
|
$
|
44,462
|
|
|
$
|
(976
|
)
|
Non-agency collateralized mortgage obligations
|
—
|
|
|
—
|
|
|
631
|
|
|
(14
|
)
|
|
631
|
|
|
(14
|
)
|
||||||
Asset backed security
|
—
|
|
|
—
|
|
|
1,480
|
|
|
(547
|
)
|
|
1,480
|
|
|
(547
|
)
|
||||||
Mutual funds
|
1,728
|
|
|
(23
|
)
|
|
973
|
|
|
(27
|
)
|
|
2,701
|
|
|
(50
|
)
|
||||||
Total
|
$
|
22,325
|
|
|
$
|
(220
|
)
|
|
$
|
26,949
|
|
|
$
|
(1,367
|
)
|
|
$
|
49,274
|
|
|
$
|
(1,587
|
)
|
(Dollars in thousands)
|
Gross Other-
Than-
Temporary
Impairments
|
|
Other-Than-
Temporary
Impairments
Included in Other
Comprehensive
Loss
|
|
Net Other-Than-
Temporary
Impairments
Included in
Retained Earnings
(Deficit)
|
||||||
Balance – December 31, 2014
|
$
|
(986
|
)
|
|
$
|
(433
|
)
|
|
$
|
(553
|
)
|
Changes in market value on securities for which an OTTI was previously recognized
|
(166
|
)
|
|
(166
|
)
|
|
—
|
|
|||
Principal received on OTTI security
|
52
|
|
|
52
|
|
|
—
|
|
|||
Balance – December 31, 2015
|
$
|
(1,100
|
)
|
|
$
|
(547
|
)
|
|
$
|
(553
|
)
|
Change in market value on a security for which an OTTI was previously recognized
|
(47
|
)
|
|
(47
|
)
|
|
—
|
|
|||
Principal received on OTTI security
|
2
|
|
|
2
|
|
|
—
|
|
|||
Balance – December 31, 2016
|
$
|
(1,145
|
)
|
|
$
|
(592
|
)
|
|
$
|
(553
|
)
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Investments accounted for under the cost method
|
$
|
666
|
|
|
$
|
281
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
(Dollars in thousands)
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
Commercial loans
|
$
|
333,376
|
|
|
35.2
|
%
|
|
$
|
347,300
|
|
|
40.3
|
%
|
Commercial real estate loans – owner occupied
|
214,420
|
|
|
22.7
|
%
|
|
195,554
|
|
|
22.7
|
%
|
||
Commercial real estate loans – all other
|
173,223
|
|
|
18.3
|
%
|
|
146,641
|
|
|
17.0
|
%
|
||
Residential mortgage loans – multi-family
|
130,930
|
|
|
13.8
|
%
|
|
81,487
|
|
|
9.5
|
%
|
||
Residential mortgage loans – single family
|
34,527
|
|
|
3.6
|
%
|
|
52,072
|
|
|
6.0
|
%
|
||
Land development loans
|
18,485
|
|
|
2.0
|
%
|
|
10,001
|
|
|
1.2
|
%
|
||
Consumer loans
|
41,563
|
|
|
4.4
|
%
|
|
28,663
|
|
|
3.3
|
%
|
||
Gross loans
|
946,524
|
|
|
100.0
|
%
|
|
861,718
|
|
|
100.0
|
%
|
||
Deferred fee (income) costs, net
|
1,802
|
|
|
|
|
731
|
|
|
|
||||
Allowance for loan and lease losses
|
(16,801
|
)
|
|
|
|
(12,716
|
)
|
|
|
||||
Loans, net
|
$
|
931,525
|
|
|
|
|
$
|
849,733
|
|
|
|
•
|
Pass: Loans classified as pass include current loans performing in accordance with contractual terms, installment/consumer loans that are not individually risk rated, and loans which exhibit certain risk factors that require greater than usual monitoring by management.
|
•
|
Special Mention: Loans classified as special mention, while generally not delinquent, have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Bank’s credit position at some future date.
|
•
|
Substandard: Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
|
•
|
Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard loan, and may also be at delinquency status and have defined weaknesses based on currently existing facts, conditions and values making collection or liquidation in full highly questionable and improbable.
|
(Dollars in thousands)
|
Commercial
|
|
Real Estate
|
|
Land
Development
|
|
Consumer and
Single Family
Mortgages
|
|
Unallocated
|
|
Total
|
||||||||||||
ALLL in the year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
6,639
|
|
|
$
|
5,109
|
|
|
$
|
282
|
|
|
$
|
686
|
|
|
$
|
—
|
|
|
$
|
12,716
|
|
Charge offs
|
(15,390
|
)
|
|
(1,119
|
)
|
|
—
|
|
|
(540
|
)
|
|
—
|
|
|
(17,049
|
)
|
||||||
Recoveries
|
1,189
|
|
|
1
|
|
|
57
|
|
|
17
|
|
|
—
|
|
|
1,264
|
|
||||||
Provision
|
18,838
|
|
|
235
|
|
|
4
|
|
|
479
|
|
|
314
|
|
|
19,870
|
|
||||||
Balance at end of year
|
$
|
11,276
|
|
|
$
|
4,226
|
|
|
$
|
343
|
|
|
$
|
642
|
|
|
$
|
314
|
|
|
$
|
16,801
|
|
ALLL in the year ended December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
7,670
|
|
|
$
|
5,133
|
|
|
$
|
296
|
|
|
$
|
734
|
|
|
$
|
—
|
|
|
$
|
13,833
|
|
Charge offs
|
(2,643
|
)
|
|
—
|
|
|
(85
|
)
|
|
(199
|
)
|
|
—
|
|
|
(2,927
|
)
|
||||||
Recoveries
|
1,798
|
|
|
4
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
1,810
|
|
||||||
Provision
|
(186
|
)
|
|
(28
|
)
|
|
71
|
|
|
143
|
|
|
—
|
|
|
—
|
|
||||||
Balance at end of year
|
$
|
6,639
|
|
|
$
|
5,109
|
|
|
$
|
282
|
|
|
$
|
686
|
|
|
$
|
—
|
|
|
$
|
12,716
|
|
ALLL in the year ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
5,812
|
|
|
$
|
4,517
|
|
|
$
|
165
|
|
|
$
|
864
|
|
|
$
|
—
|
|
|
$
|
11,358
|
|
Charge offs
|
(551
|
)
|
|
—
|
|
|
—
|
|
|
(102
|
)
|
|
—
|
|
|
(653
|
)
|
||||||
Recoveries
|
1,467
|
|
|
76
|
|
|
—
|
|
|
85
|
|
|
—
|
|
|
1,628
|
|
||||||
Provision
|
942
|
|
|
540
|
|
|
131
|
|
|
(113
|
)
|
|
—
|
|
|
1,500
|
|
||||||
Balance at end of year
|
$
|
7,670
|
|
|
$
|
5,133
|
|
|
$
|
296
|
|
|
$
|
734
|
|
|
$
|
—
|
|
|
$
|
13,833
|
|
(Dollars in thousands)
|
Commercial
|
|
Real Estate
|
|
Land
Development
|
|
Consumer and
Single Family
Mortgages
|
|
Unallocated
|
|
Total
|
||||||||||||
ALLL balance at December 31, 2016 related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans individually evaluated for impairment
|
$
|
2,042
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,042
|
|
Loans collectively evaluated for impairment
|
$
|
9,234
|
|
|
$
|
4,226
|
|
|
$
|
343
|
|
|
$
|
642
|
|
|
$
|
314
|
|
|
$
|
14,759
|
|
Total
|
$
|
11,276
|
|
|
$
|
4,226
|
|
|
$
|
343
|
|
|
$
|
642
|
|
|
$
|
314
|
|
|
$
|
16,801
|
|
Loans balance at December 31, 2016 related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans individually evaluated for impairment
|
$
|
20,330
|
|
|
$
|
4,346
|
|
|
$
|
—
|
|
|
$
|
221
|
|
|
$
|
—
|
|
|
$
|
24,897
|
|
Loans collectively evaluated for impairment
|
313,046
|
|
|
514,227
|
|
|
18,485
|
|
|
75,869
|
|
|
—
|
|
|
921,627
|
|
||||||
Total
|
$
|
333,376
|
|
|
$
|
518,573
|
|
|
$
|
18,485
|
|
|
$
|
76,090
|
|
|
$
|
—
|
|
|
$
|
946,524
|
|
ALLL balance at December 31, 2015 related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans individually evaluated for impairment
|
$
|
—
|
|
|
$
|
484
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
484
|
|
Loans collectively evaluated for impairment
|
$
|
6,639
|
|
|
$
|
4,625
|
|
|
$
|
282
|
|
|
$
|
686
|
|
|
$
|
—
|
|
|
$
|
12,232
|
|
Total
|
$
|
6,639
|
|
|
$
|
5,109
|
|
|
$
|
282
|
|
|
$
|
686
|
|
|
$
|
—
|
|
|
$
|
12,716
|
|
Loans balance at December 31, 2015 related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans individually evaluated for impairment
|
$
|
12,431
|
|
|
$
|
11,107
|
|
|
$
|
1,618
|
|
|
$
|
701
|
|
|
$
|
—
|
|
|
$
|
25,857
|
|
Loans collectively evaluated for impairment
|
334,869
|
|
|
412,575
|
|
|
8,383
|
|
|
80,034
|
|
|
—
|
|
|
835,861
|
|
||||||
Total
|
$
|
347,300
|
|
|
$
|
423,682
|
|
|
$
|
10,001
|
|
|
$
|
80,735
|
|
|
$
|
—
|
|
|
$
|
861,718
|
|
(Dollars in thousands)
|
30-59 Days Past Due
|
|
60-89 Days Past Due
|
|
90 Days and Greater
|
|
Total Past Due
|
|
Current
|
|
Total Loans Outstanding
|
|
Loans >90 Days and Accruing
|
||||||||||||||
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial loans
|
$
|
7,055
|
|
|
$
|
—
|
|
|
$
|
13,946
|
|
|
$
|
21,001
|
|
|
$
|
312,375
|
|
|
$
|
333,376
|
|
|
$
|
—
|
|
Commercial real estate loans – owner-occupied
|
275
|
|
|
2,341
|
|
|
1,003
|
|
|
3,619
|
|
|
210,801
|
|
|
214,420
|
|
|
—
|
|
|||||||
Commercial real estate loans – all other
|
512
|
|
|
1,014
|
|
|
—
|
|
|
1,526
|
|
|
171,697
|
|
|
173,223
|
|
|
—
|
|
|||||||
Residential mortgage loans – multi-family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
130,930
|
|
|
130,930
|
|
|
—
|
|
|||||||
Residential mortgage loans – single family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,527
|
|
|
34,527
|
|
|
—
|
|
|||||||
Land development loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,485
|
|
|
18,485
|
|
|
—
|
|
|||||||
Consumer loans
|
38
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
41,525
|
|
|
41,563
|
|
|
—
|
|
|||||||
Total
|
$
|
7,880
|
|
|
$
|
3,355
|
|
|
$
|
14,949
|
|
|
$
|
26,184
|
|
|
$
|
920,340
|
|
|
$
|
946,524
|
|
|
$
|
—
|
|
At December 31, 2015
|
|
||||||||||||||||||||||||||
Commercial loans
|
$
|
2,010
|
|
|
$
|
1,008
|
|
|
$
|
8,766
|
|
|
$
|
11,784
|
|
|
$
|
335,516
|
|
|
$
|
347,300
|
|
|
$
|
—
|
|
Commercial real estate loans – owner-occupied
|
—
|
|
|
—
|
|
|
797
|
|
|
797
|
|
|
194,757
|
|
|
195,554
|
|
|
—
|
|
|||||||
Commercial real estate loans – all other
|
316
|
|
|
—
|
|
|
5,207
|
|
|
5,523
|
|
|
141,118
|
|
|
146,641
|
|
|
—
|
|
|||||||
Residential mortgage loans – multi-family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
81,487
|
|
|
81,487
|
|
|
—
|
|
|||||||
Residential mortgage loans – single family
|
—
|
|
|
—
|
|
|
535
|
|
|
535
|
|
|
51,537
|
|
|
52,072
|
|
|
—
|
|
|||||||
Land development loans
|
—
|
|
|
—
|
|
|
1,618
|
|
|
1,618
|
|
|
8,383
|
|
|
10,001
|
|
|
—
|
|
|||||||
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,663
|
|
|
28,663
|
|
|
—
|
|
|||||||
Total
(1)
|
$
|
2,326
|
|
|
$
|
1,008
|
|
|
$
|
16,923
|
|
|
$
|
20,257
|
|
|
$
|
841,461
|
|
|
$
|
861,718
|
|
|
$
|
—
|
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Nonaccrual loans:
|
|
|
|
||||
Commercial loans
|
$
|
20,330
|
|
|
$
|
12,284
|
|
Commercial real estate loans – owner occupied
|
2,643
|
|
|
3,815
|
|
||
Commercial real estate loans – all other
|
1,703
|
|
|
6,268
|
|
||
Residential mortgage loans - multi family
|
—
|
|
|
447
|
|
||
Residential mortgage loans – single family
|
221
|
|
|
701
|
|
||
Land development loans
|
—
|
|
|
1,618
|
|
||
Total
(1)
|
$
|
24,897
|
|
|
$
|
25,133
|
|
|
|
December 31,
|
||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Increase
(Decrease)
|
||||||
Pass:
|
|
|
|
|
|
||||||
Commercial loans
|
$
|
287,717
|
|
|
$
|
329,192
|
|
|
$
|
(41,475
|
)
|
Commercial real estate loans – owner occupied
|
197,497
|
|
|
189,944
|
|
|
7,553
|
|
|||
Commercial real estate loans – all other
|
169,292
|
|
|
127,702
|
|
|
41,590
|
|
|||
Residential mortgage loans – multi family
|
130,930
|
|
|
81,040
|
|
|
49,890
|
|
|||
Residential mortgage loans – single family
|
34,306
|
|
|
51,371
|
|
|
(17,065
|
)
|
|||
Land development loans
|
18,485
|
|
|
8,383
|
|
|
10,102
|
|
|||
Consumer loans
|
41,563
|
|
|
28,663
|
|
|
12,900
|
|
|||
Total pass loans
|
$
|
879,790
|
|
|
$
|
816,295
|
|
|
$
|
63,495
|
|
Special Mention:
|
|
|
|
|
|
||||||
Commercial loans
|
$
|
4,672
|
|
|
$
|
5,626
|
|
|
$
|
(954
|
)
|
Commercial real estate loans – owner occupied
|
7,834
|
|
|
177
|
|
|
7,657
|
|
|||
Commercial real estate loans – all other
|
2,228
|
|
|
9,452
|
|
|
(7,224
|
)
|
|||
Total special mention loans
|
$
|
14,734
|
|
|
$
|
15,255
|
|
|
$
|
(521
|
)
|
Substandard:
|
|
|
|
|
|
||||||
Commercial loans
|
$
|
37,668
|
|
|
$
|
12,482
|
|
|
$
|
25,186
|
|
Commercial real estate loans – owner occupied
|
9,089
|
|
|
5,433
|
|
|
3,656
|
|
|||
Commercial real estate loans – all other
|
1,703
|
|
|
9,487
|
|
|
(7,784
|
)
|
|||
Residential mortgage loans – multi family
|
—
|
|
|
447
|
|
|
(447
|
)
|
|||
Residential mortgage loans – single family
|
221
|
|
|
701
|
|
|
(480
|
)
|
|||
Land development loans
|
—
|
|
|
1,618
|
|
|
(1,618
|
)
|
|||
Total substandard loans
|
$
|
48,681
|
|
|
$
|
30,168
|
|
|
$
|
18,513
|
|
Doubtful:
|
|
|
|
|
|
||||||
Commercial loans
|
$
|
3,319
|
|
|
$
|
—
|
|
|
$
|
3,319
|
|
Total doubtful loans
|
$
|
3,319
|
|
|
$
|
—
|
|
|
$
|
3,319
|
|
Total Loans:
|
$
|
946,524
|
|
|
$
|
861,718
|
|
|
$
|
84,806
|
|
|
December 31,
|
||||||
(Dollars in thousands)
|
2016
|
|
2015
|
||||
Impaired loans:
|
|
||||||
Nonaccruing loans
|
$
|
15,966
|
|
|
$
|
5,063
|
|
Nonaccruing restructured loans
|
8,931
|
|
|
20,070
|
|
||
Accruing restructured loans
(1)
|
—
|
|
|
724
|
|
||
Total impaired loans
|
$
|
24,897
|
|
|
$
|
25,857
|
|
Impaired loans less than 90 days delinquent and included in total impaired loans
|
$
|
9,948
|
|
|
$
|
6,584
|
|
|
(1)
|
See "Troubled Debt Restructurings" below for a description of accruing restructured loans at
December 31, 2016
and
December 31, 2015
.
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related Allowance (1)
|
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related Allowance (1)
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
No allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
$
|
17,021
|
|
|
$
|
19,048
|
|
|
$
|
—
|
|
|
$
|
12,431
|
|
|
$
|
14,137
|
|
|
$
|
—
|
|
Commercial real estate loans – owner occupied
|
2,643
|
|
|
4,335
|
|
|
—
|
|
|
2,371
|
|
|
2,515
|
|
|
—
|
|
||||||
Commercial real estate loans – all other
|
1,703
|
|
|
1,965
|
|
|
—
|
|
|
6,668
|
|
|
6,806
|
|
|
—
|
|
||||||
Residential mortgage loans – multi-family
|
—
|
|
|
—
|
|
|
—
|
|
|
447
|
|
|
450
|
|
|
—
|
|
||||||
Residential mortgage loans – single family
|
221
|
|
|
225
|
|
|
—
|
|
|
701
|
|
|
1,037
|
|
|
—
|
|
||||||
Land development loans
|
—
|
|
|
—
|
|
|
—
|
|
|
1,618
|
|
|
1,732
|
|
|
—
|
|
||||||
Total
|
21,588
|
|
|
25,573
|
|
|
—
|
|
|
24,236
|
|
|
26,677
|
|
|
—
|
|
||||||
With allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
$
|
3,309
|
|
|
$
|
4,764
|
|
|
$
|
2,042
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial real estate loans – owner occupied
|
—
|
|
|
—
|
|
|
—
|
|
|
1,621
|
|
|
1,872
|
|
|
484
|
|
||||||
Total
|
3,309
|
|
|
4,764
|
|
|
2,042
|
|
|
1,621
|
|
|
1,872
|
|
|
484
|
|
||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
$
|
20,330
|
|
|
$
|
23,812
|
|
|
$
|
2,042
|
|
|
$
|
12,431
|
|
|
$
|
14,137
|
|
|
$
|
—
|
|
Commercial real estate loans – owner occupied
|
2,643
|
|
|
4,335
|
|
|
—
|
|
|
3,992
|
|
|
4,387
|
|
|
484
|
|
||||||
Commercial real estate loans – all other
|
1,703
|
|
|
1,965
|
|
|
—
|
|
|
6,668
|
|
|
6,806
|
|
|
—
|
|
||||||
Residential mortgage loans – multi-family
|
—
|
|
|
—
|
|
|
—
|
|
|
447
|
|
|
450
|
|
|
—
|
|
||||||
Residential mortgage loans – single family
|
221
|
|
|
225
|
|
|
—
|
|
|
701
|
|
|
1,037
|
|
|
—
|
|
||||||
Land development loans
|
—
|
|
|
—
|
|
|
—
|
|
|
1,618
|
|
|
1,732
|
|
|
—
|
|
||||||
Total
|
24,897
|
|
|
30,337
|
|
|
2,042
|
|
|
25,857
|
|
|
28,549
|
|
|
484
|
|
|
(1)
|
When the discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, then specific reserves are not required to be set aside for the loan within the ALLL. This typically occurs when the impaired loans have been partially charged-off and/or there have been interest payments received and applied to the balance of the principal outstanding.
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||
|
Average Balance
|
|
Interest Income Recognized
|
|
Average Balance
|
|
Interest Income Recognized
|
|
Average Balance
|
|
Interest Income Recognized
|
||||||||||||
|
|
|
|
|
|
||||||||||||||||||
No allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
$
|
13,686
|
|
|
$
|
437
|
|
|
$
|
13,455
|
|
|
$
|
178
|
|
|
$
|
12,590
|
|
|
$
|
782
|
|
Commercial real estate loans – owner occupied
|
2,455
|
|
|
3
|
|
|
2,494
|
|
|
115
|
|
|
2,088
|
|
|
18
|
|
||||||
Commercial real estate loans – all other
|
4,413
|
|
|
—
|
|
|
6,256
|
|
|
337
|
|
|
6,442
|
|
|
290
|
|
||||||
Residential mortgage loans – multi-family
|
350
|
|
|
—
|
|
|
451
|
|
|
13
|
|
|
—
|
|
|
—
|
|
||||||
Residential mortgage loans – single family
|
339
|
|
|
9
|
|
|
3,137
|
|
|
—
|
|
|
3,732
|
|
|
148
|
|
||||||
Land development loans
|
871
|
|
|
—
|
|
|
1,665
|
|
|
7
|
|
|
1,246
|
|
|
91
|
|
||||||
Consumer loans
|
173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
22,287
|
|
|
449
|
|
|
27,458
|
|
|
650
|
|
|
26,098
|
|
|
1,329
|
|
||||||
With allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
4,728
|
|
|
457
|
|
|
528
|
|
|
—
|
|
|
2,298
|
|
|
34
|
|
||||||
Commercial real estate loans – owner occupied
|
962
|
|
|
—
|
|
|
815
|
|
|
—
|
|
|
121
|
|
|
—
|
|
||||||
Total
|
5,690
|
|
|
457
|
|
|
1,343
|
|
|
—
|
|
|
2,419
|
|
|
34
|
|
||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
18,414
|
|
|
894
|
|
|
13,983
|
|
|
178
|
|
|
14,888
|
|
|
816
|
|
||||||
Commercial real estate loans – owner occupied
|
3,417
|
|
|
3
|
|
|
3,309
|
|
|
115
|
|
|
2,209
|
|
|
18
|
|
||||||
Commercial real estate loans – all other
|
4,413
|
|
|
—
|
|
|
6,256
|
|
|
337
|
|
|
6,442
|
|
|
290
|
|
||||||
Residential mortgage loans – multi-family
|
350
|
|
|
—
|
|
|
451
|
|
|
13
|
|
|
—
|
|
|
—
|
|
||||||
Residential mortgage loans – single family
|
339
|
|
|
9
|
|
|
3,137
|
|
|
—
|
|
|
3,732
|
|
|
148
|
|
||||||
Land development loans
|
871
|
|
|
—
|
|
|
1,665
|
|
|
7
|
|
|
1,246
|
|
|
91
|
|
||||||
Consumer loans
|
173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
27,977
|
|
|
$
|
906
|
|
|
$
|
28,801
|
|
|
$
|
650
|
|
|
$
|
28,517
|
|
|
$
|
1,363
|
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||||||||||||||
(Dollars in thousands)
|
Number of
loans
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
Post-Modification
Outstanding
Recorded
Investment
|
|
Number of
loans
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
Post-Modification
Outstanding
Recorded
Investment
|
|
Number of
loans
|
|
Pre-Modification
Outstanding
Recorded
Investment
|
|
Post-Modification
Outstanding
Recorded
Investment
|
|||||||||||||||
Performing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial loans
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
|
|
$
|
147
|
|
|
$
|
147
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial real estate - owner occupied
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
177
|
|
|
177
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Commercial real estate – all other
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
400
|
|
|
400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
724
|
|
|
724
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial loans
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
2,634
|
|
|
2,634
|
|
|
3
|
|
|
2,716
|
|
|
2,672
|
|
||||||
Commercial real estate – owner occupied
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
1,778
|
|
|
1,778
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Commercial real estate – all other
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
4,114
|
|
|
4,114
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Residential mortgage loans – single family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
244
|
|
|
242
|
|
||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
8,526
|
|
|
8,526
|
|
|
4
|
|
|
2,960
|
|
|
2,914
|
|
||||||
Total troubled debt restructurings
(1)
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
10
|
|
|
$
|
9,250
|
|
|
$
|
9,250
|
|
|
4
|
|
|
$
|
2,960
|
|
|
$
|
2,914
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Number of loans
|
|
Recorded Investment
|
|
Number of loans
|
|
Recorded Investment
|
|
Number of loans
|
|
Recorded Investment
|
|||||||||
|
(Dollars in thousands)
|
|
|
|
|
|||||||||||||||
Commercial real estate - owner occupied
|
1
|
|
|
$
|
753
|
|
|
1
|
|
|
$
|
4,114
|
|
|
—
|
|
|
$
|
—
|
|
(Dollars in thousands)
|
December 31,
|
||||||
2016
|
|
2015
|
|||||
Furniture and equipment
|
$
|
7,589
|
|
|
$
|
8,371
|
|
Leasehold improvements
|
206
|
|
|
1,910
|
|
||
|
7,795
|
|
|
10,281
|
|
||
Accumulated depreciation and amortization
|
(6,538
|
)
|
|
(9,139
|
)
|
||
Total
|
$
|
1,257
|
|
|
$
|
1,142
|
|
(Dollars in thousands)
|
At December 31, 2016
|
||
2017
|
$
|
214,180
|
|
2018
|
41,059
|
|
|
2019
|
2,354
|
|
|
2020
|
9
|
|
|
2021 and beyond
|
306
|
|
|
Total
|
$
|
257,908
|
|
|
December 31,
|
||||||
(Dollars in thousands)
|
2016
|
|
2015
|
||||
FHLB advances—short-term
|
$
|
15,000
|
|
|
$
|
10,000
|
|
FHLB advances—long-term
|
—
|
|
|
—
|
|
||
Total
|
$
|
15,000
|
|
|
$
|
10,000
|
|
|
Original Issue Dates
|
Principal Amount
|
|
Interest Rate
(1)
|
|
Maturity Dates
|
||
|
(In thousands)
|
|
|
|
|
||
September 2002
|
$
|
7,217
|
|
|
LIBOR plus 3.40%
|
|
September 2032
|
October 2004
|
10,310
|
|
|
LIBOR plus 2.00%
|
|
October 2034
|
|
Total
|
$
|
17,527
|
|
|
|
|
|
|
(1)
|
Interest rate resets quarterly.
|
|
Year Ended December 31,
|
||||||
(Dollars in thousands)
|
2016
|
|
2015
(1)
|
||||
Beginning balance
|
$
|
—
|
|
|
$
|
96
|
|
New loans granted
|
—
|
|
|
—
|
|
||
Principal repayments
|
—
|
|
|
(96
|
)
|
||
Ending balance
|
$
|
—
|
|
|
$
|
—
|
|
|
(1)
|
No loans made to executive officers who are not also directors.
|
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Current taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
7
|
|
State
|
(5
|
)
|
|
4
|
|
|
—
|
|
|||
Total current taxes
|
(5
|
)
|
|
9
|
|
|
7
|
|
|||
Deferred taxes:
|
|
|
|
|
|
||||||
Federal
|
10,044
|
|
|
(8,490
|
)
|
|
(455
|
)
|
|||
State
|
6,793
|
|
|
(3,070
|
)
|
|
(160
|
)
|
|||
Total deferred taxes
|
16,837
|
|
|
(11,560
|
)
|
|
(615
|
)
|
|||
Total income tax expense (benefit)
|
$
|
16,832
|
|
|
$
|
(11,551
|
)
|
|
$
|
(608
|
)
|
(Dollars in thousands)
|
December 31,
|
||||||
2016
|
|
2015
|
|||||
Deferred tax asset:
|
|
|
|
||||
Allowance for loan and lease losses
|
$
|
6,932
|
|
|
$
|
5,253
|
|
Other than temporary impairment on securities
|
78
|
|
|
78
|
|
||
Deferred compensation
|
1,033
|
|
|
1,098
|
|
||
Other accrued expenses
|
2,075
|
|
|
1,421
|
|
||
Charitable contributions
|
244
|
|
|
208
|
|
||
Reserve for unfunded commitments
|
144
|
|
|
113
|
|
||
Tax credits
|
158
|
|
|
158
|
|
||
Net operating loss carry forward
|
13,410
|
|
|
8,313
|
|
||
Stock based compensation
|
747
|
|
|
651
|
|
||
Depreciation and amortization
|
166
|
|
|
177
|
|
||
Unrealized losses on securities and deferred compensation
|
758
|
|
|
637
|
|
||
Total deferred tax assets
|
25,745
|
|
|
18,107
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
State taxes
|
1
|
|
|
(230
|
)
|
||
Other
|
(742
|
)
|
|
(301
|
)
|
||
Total deferred tax liabilities
|
(741
|
)
|
|
(531
|
)
|
||
Valuation allowance
|
(25,004
|
)
|
|
—
|
|
||
Total net deferred tax asset
|
$
|
—
|
|
|
$
|
17,576
|
|
|
|
Federal
|
|
State
|
|
Expiration
|
||||
|
|
(amounts in thousands)
|
|
|
||||||
2008
(1)
|
|
$
|
—
|
|
|
$
|
4,368
|
|
|
12/31/2032
|
2009
(1)
|
|
—
|
|
|
21,324
|
|
|
12/31/2032
|
||
2010
(1)
|
|
—
|
|
|
5,258
|
|
|
12/31/2032
|
||
2012
|
|
852
|
|
|
774
|
|
|
12/31/2032
|
||
2013
|
|
14,977
|
|
|
8,967
|
|
|
12/31/2033
|
||
2015
|
|
288
|
|
|
280
|
|
|
12/31/2035
|
||
2016
|
|
12,569
|
|
|
13,237
|
|
|
12/31/2036
|
||
|
|
$
|
28,686
|
|
|
$
|
54,208
|
|
|
|
|
(1)
|
California net operating loss carryforwards were suspended by the Franchise Tax Board during these periods and the carryover was extended.
|
|
Year Ended December 31,
|
||||||||||
Assumptions with respect to:
|
2016
|
|
2015
|
|
2014
|
||||||
Expected volatility
|
38
|
%
|
|
44
|
%
|
|
44
|
%
|
|||
Risk-free interest rate
|
1.70
|
%
|
|
1.82
|
%
|
|
2.15
|
%
|
|||
Expected dividends
|
—
|
%
|
|
—
|
%
|
|
0.61
|
%
|
|||
Expected term (years)
|
6.3
|
|
|
6.0
|
|
|
6.7
|
|
|||
Weighted average fair value of options granted during period
|
$
|
2.78
|
|
|
$
|
3.13
|
|
|
$
|
2.84
|
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
Per Share
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
Per Share
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
Per Share
|
|||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
Outstanding – January 1,
|
838,696
|
|
|
$
|
6.20
|
|
|
1,257,390
|
|
|
$
|
6.51
|
|
|
1,821,000
|
|
|
$
|
6.88
|
|
Granted
|
402,051
|
|
|
6.89
|
|
|
112,828
|
|
|
7.09
|
|
|
58,970
|
|
|
6.38
|
|
|||
Exercised
|
(97,292
|
)
|
|
4.66
|
|
|
(296,100
|
)
|
|
5.15
|
|
|
(288,892
|
)
|
|
4.24
|
|
|||
Forfeited/Canceled
|
(76,541
|
)
|
|
9.74
|
|
|
(235,422
|
)
|
|
9.59
|
|
|
(333,688
|
)
|
|
10.47
|
|
|||
Outstanding – December 31,
|
1,066,914
|
|
|
6.35
|
|
|
838,696
|
|
|
6.20
|
|
|
1,257,390
|
|
|
6.51
|
|
|||
Options Exercisable – December 31,
|
604,970
|
|
|
5.95
|
|
|
622,770
|
|
|
6.06
|
|
|
788,886
|
|
|
6.69
|
|
|||
Options Vested – December 31,
|
604,970
|
|
|
$
|
5.95
|
|
|
622,770
|
|
|
$
|
6.06
|
|
|
788,886
|
|
|
$
|
6.69
|
|
Options Outstanding as of December 31, 2016
|
|
Options Exercisable
as of December 31, 2016 (1) |
||||||||||||||||
|
Vested
|
|
Unvested
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Shares
|
|
Weighted
Average
Exercise Price
|
|||||||
$2.97 – $4.99
|
96,503
|
|
|
—
|
|
|
$
|
3.62
|
|
|
3.81
|
|
96,503
|
|
|
$
|
3.62
|
|
$5.00 – $6.99
|
484,629
|
|
|
301,117
|
|
|
6.48
|
|
|
7.43
|
|
484,629
|
|
|
6.31
|
|
||
$7.00– $10.00
|
21,038
|
|
|
160,827
|
|
|
7.10
|
|
|
8.74
|
|
21,038
|
|
|
7.10
|
|
||
$10.01-$14.29
|
2,800
|
|
|
|
|
|
14.29
|
|
|
0.29
|
|
2,800
|
|
|
14.29
|
|
||
|
604,970
|
|
|
461,944
|
|
|
$
|
6.35
|
|
|
7.30
|
|
604,970
|
|
|
$
|
5.95
|
|
|
(1)
|
The weighted average remaining contractual life of the options that were exercisable as of
December 31, 2016
was
6.04
years.
|
|
For the year ended
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Number of
Shares Subject
to Options
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Number of
Shares Subject to Options |
|
Weighted
Average Grant Date Fair Value |
|
Number of
Shares Subject to Options |
|
Weighted
Average Grant Date Fair Value |
|||||||||
Unvested at the beginning of the year
|
215,926
|
|
|
$
|
2.93
|
|
|
468,504
|
|
|
$
|
2.68
|
|
|
785,566
|
|
|
$
|
2.57
|
|
Granted
|
402,051
|
|
|
2.75
|
|
|
112,828
|
|
|
3.13
|
|
|
58,970
|
|
|
2.84
|
|
|||
Vested
|
(108,820
|
)
|
|
2.86
|
|
|
(248,406
|
)
|
|
2.63
|
|
|
(338,558
|
)
|
|
2.45
|
|
|||
Forfeited/Canceled
|
(47,213
|
)
|
|
2.88
|
|
|
(117,000
|
)
|
|
2.78
|
|
|
(37,474
|
)
|
|
2.57
|
|
|||
Unvested at the end of the year
|
461,944
|
|
|
$
|
2.79
|
|
|
215,926
|
|
|
$
|
2.93
|
|
|
468,504
|
|
|
$
|
2.68
|
|
|
For the year ended
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
|
Number of Shares
|
|
Average Grant Date Fair Value
|
|
Number of Shares
|
|
Average Grant Date Fair Value
|
||||||
Outstanding at the beginning of the year
|
129,283
|
|
|
$
|
6.75
|
|
|
141,254
|
|
|
$
|
6.29
|
|
Granted
|
121,775
|
|
|
6.79
|
|
|
98,829
|
|
|
7.11
|
|
||
Vested
|
(67,456
|
)
|
|
6.68
|
|
|
(80,709
|
)
|
|
6.48
|
|
||
Forfeited
|
(32,304
|
)
|
|
6.64
|
|
|
(30,091
|
)
|
|
6.44
|
|
||
Outstanding at the end of the year
|
151,298
|
|
|
$
|
6.84
|
|
|
129,283
|
|
|
$
|
6.75
|
|
|
Estimated Stock Based Compensation Expense Stock Options
|
|
Estimated Stock Based Compensation Expense Restricted Stock
|
|
Estimated Stock Based Compensation Expense Total
|
||||||
(Dollars in thousands)
|
|
|
|
|
|
||||||
For the years ending December 31,
|
|
|
|
|
|
||||||
2017
|
$
|
404
|
|
|
$
|
302
|
|
|
$
|
706
|
|
2018
|
319
|
|
|
158
|
|
|
477
|
|
|||
2019
|
73
|
|
|
41
|
|
|
114
|
|
|||
2020
|
29
|
|
|
17
|
|
|
46
|
|
|||
2021 and beyond
|
16
|
|
|
8
|
|
|
24
|
|
|||
|
$
|
841
|
|
|
$
|
526
|
|
|
$
|
1,367
|
|
|
At December 31,
|
||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Change in benefit obligation:
|
|
|
|
|
|
||||||
Benefit obligation at beginning of period
|
$
|
2,667
|
|
|
$
|
2,815
|
|
|
$
|
2,954
|
|
Service cost
|
—
|
|
|
—
|
|
|
—
|
|
|||
Interest cost
|
150
|
|
|
159
|
|
|
168
|
|
|||
Actuarial loss/(gain)
|
—
|
|
|
—
|
|
|
—
|
|
|||
(Benefits paid)
|
(306
|
)
|
|
(307
|
)
|
|
(307
|
)
|
|||
Benefit obligation at end of period
|
$
|
2,511
|
|
|
$
|
2,667
|
|
|
$
|
2,815
|
|
Funded status:
|
|
|
|
|
|
||||||
Amounts recognized in the Statement of Financial Condition
|
|
|
|
|
|
||||||
Unfunded accrued SERP liability—current
|
$
|
(299
|
)
|
|
$
|
(299
|
)
|
|
$
|
(299
|
)
|
Unfunded accrued SERP liability—noncurrent
|
(2,212
|
)
|
|
(2,368
|
)
|
|
(2,516
|
)
|
|||
Total unfunded accrued SERP liability
|
$
|
(2,511
|
)
|
|
$
|
(2,667
|
)
|
|
$
|
(2,815
|
)
|
Net amount recognized in accumulated other comprehensive income
|
|
|
|
|
|
||||||
Prior service cost/(benefit)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net actuarial loss/(gain)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total net amount recognized in accumulated other comprehensive income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accumulated benefit obligation
|
$
|
2,511
|
|
|
$
|
2,667
|
|
|
$
|
2,815
|
|
Components of net periodic SERP cost year to date:
|
|
|
|
|
|
||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
150
|
|
|
159
|
|
|
168
|
|
|||
Amortization of prior service cost/(benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Amortization of net actuarial loss/(gain)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net periodic SERP cost
|
$
|
150
|
|
|
$
|
159
|
|
|
$
|
168
|
|
(In thousands, except per share data)
|
For the Year Ended December 31,
|
||||||||||
2016
|
|
2015
|
|
2014
|
|||||||
Numerator:
|
|
|
|
|
|
||||||
Net (loss) income from continuing operations
|
$
|
(34,643
|
)
|
|
$
|
12,441
|
|
|
$
|
(869
|
)
|
Accumulated declared dividends on preferred stock
|
—
|
|
|
—
|
|
|
(547
|
)
|
|||
Accumulated undeclared dividends on preferred stock
|
—
|
|
|
—
|
|
|
(616
|
)
|
|||
Dividends on preferred stock
|
—
|
|
|
(927
|
)
|
|
—
|
|
|||
Inducements for exchange of the preferred stock
|
—
|
|
|
(512
|
)
|
|
—
|
|
|||
Numerator for basic and diluted net (loss) income from continuing operations
|
(34,643
|
)
|
|
11,002
|
|
|
(2,032
|
)
|
|||
Net income from discontinued operations
|
—
|
|
|
—
|
|
|
1,226
|
|
|||
Numerator for basic and diluted net (loss) income available to common shareholders
|
$
|
(34,643
|
)
|
|
$
|
11,002
|
|
|
$
|
(806
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average outstanding shares of common stock
|
22,959
|
|
|
20,517
|
|
|
19,231
|
|
|||
Dilutive effect of employee stock options and contingently issuable shares
|
—
|
|
|
159
|
|
|
—
|
|
|||
Diluted weighted average common stock and common stock equivalents
|
22,959
|
|
|
20,675
|
|
|
19,231
|
|
|||
Basic (loss) income per common share
(1)
:
|
|
|
|
|
|
||||||
Net (loss) income from continuing operations
|
$
|
(1.51
|
)
|
|
$
|
0.54
|
|
|
$
|
(0.11
|
)
|
Net (loss) income from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.07
|
|
Net (loss) income available to common shareholders
|
$
|
(1.51
|
)
|
|
$
|
0.54
|
|
|
$
|
(0.04
|
)
|
Diluted (loss) income per common share
(1)
:
|
|
|
|
|
|
||||||
Net (loss) income from continuing operations
|
$
|
(1.51
|
)
|
|
$
|
0.53
|
|
|
$
|
(0.11
|
)
|
Net (loss) income from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.07
|
|
Net (loss) income available to common shareholders
|
$
|
(1.51
|
)
|
|
$
|
0.53
|
|
|
$
|
(0.04
|
)
|
|
(1)
|
The basic and diluted earnings per share amounts for the year ended December 31, 2015 are the same under both the Treasury Stock Method and the Two-Class Method as prescribed in FASB ASC 260-10,
Earnings Per Share
. The Two-Class Method is not required for the years ended December 31, 2016 and 2014.
|
|
For the Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Stock options
(1)(2)
|
1,038,317
|
|
|
360,600
|
|
|
1,746,696
|
|
Convertible securities
(3)
|
—
|
|
|
—
|
|
|
2,602,707
|
|
Shares subject to stock purchase warrants
(4)
|
—
|
|
|
—
|
|
|
761,278
|
|
|
(1)
|
Stock options were excluded from the computation of diluted earnings per common share for the years ended December 31, 2016 and 2014 as we reported a net loss from continuing operations.
|
(2)
|
Stock options were excluded from the computation of diluted earnings per common share for the year ended December 31, 2015 because the options were either “out-of-the-money” or the effect of exercise would have been antidilutive.
|
(3)
|
Convertible securities were excluded from the computation of diluted earnings per common share for the year ended December 31, 2014 as we reported a net loss from continuing operations.
|
(4)
|
Stock purchase warrants were excluded from the computation of diluted earnings per common share for the year ended December 31, 2014 because the exercisability of those warrants was conditioned on the happening of certain future events.
|
|
Unrealized Gain (Loss) on Securities Available-for-Sale, net of tax
|
|
Accumulated Other Comprehensive Income, Net
|
||||
|
(Dollars in thousands)
|
||||||
Beginning balance as of January 1, 2014
|
$
|
(2,154
|
)
|
|
$
|
(2,154
|
)
|
Other comprehensive income before reclassifications, net of tax provision of $847 thousand
(1)
|
1,462
|
|
|
1,462
|
|
||
Amounts reclassified from accumulated other comprehensive income, net of tax
|
—
|
|
|
—
|
|
||
Other comprehensive income, net of tax provision of $847 thousand
|
1,462
|
|
|
1,462
|
|
||
Ending balance as of December 31, 2014
|
$
|
(692
|
)
|
|
$
|
(692
|
)
|
Other comprehensive income before reclassifications, net of tax provision of $81 thousand
(1)
|
(118
|
)
|
|
(118
|
)
|
||
Amounts reclassified from accumulated other comprehensive income, net of tax
|
—
|
|
|
—
|
|
||
Other comprehensive income, net of tax provision of $81 thousand
|
(118
|
)
|
|
(118
|
)
|
||
Ending balance as of December 31, 2015
|
$
|
(810
|
)
|
|
$
|
(810
|
)
|
Other comprehensive income before reclassifications, net of tax provision of $739 thousand
(1)
|
(1,032
|
)
|
|
(1,032
|
)
|
||
Amounts reclassified from accumulated other comprehensive income, net of tax
|
—
|
|
|
—
|
|
||
Other comprehensive income, net of tax provision of $739 thousand
|
(1,032
|
)
|
|
(1,032
|
)
|
||
Ending balance as of December 31, 2016
|
$
|
(1,842
|
)
|
|
$
|
(1,842
|
)
|
|
(1)
|
Tax impact included in
Deferred tax assets
.
|
|
2016
|
|
2015
|
||||
Beginning balance
|
$
|
314
|
|
|
$
|
381
|
|
Provision for repurchases
|
(60
|
)
|
|
(1
|
)
|
||
Settlements
|
—
|
|
|
(66
|
)
|
||
Total repurchases reserve
|
$
|
254
|
|
|
$
|
314
|
|
|
|
|
|
|
Applicable Federal Regulatory Requirement
|
|||||||||||||
At December 31, 2016
|
Actual Capital
|
|
For Capital Adequacy Purposes
|
|
To be Categorized As Well Capitalized
|
|||||||||||||
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||||||
Total Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|||||||||
Company
|
$
|
131,043
|
|
|
12.8
|
%
|
|
$
|
88,230
|
|
|
At least 8.625
|
|
N/A
|
|
|
N/A
|
|
Bank
|
114,412
|
|
|
11.4
|
%
|
|
86,566
|
|
|
At least 8.625
|
|
$
|
100,366
|
|
|
At least 10.0
|
||
Common Equity Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Company
|
101,199
|
|
|
9.9
|
%
|
|
52,427
|
|
|
At least 5.125
|
|
N/A
|
|
|
N/A
|
|||
Bank
|
101,807
|
|
|
10.1
|
%
|
|
51,438
|
|
|
At least 5.125
|
|
65,238
|
|
|
At least 6.5
|
|||
Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|||||||||
Company
|
$
|
118,199
|
|
|
11.6
|
%
|
|
$
|
67,771
|
|
|
At least 6.625
|
|
N/A
|
|
|
N/A
|
|
Bank
|
101,807
|
|
|
10.1
|
%
|
|
66,492
|
|
|
At least 6.625
|
|
$
|
80,293
|
|
|
At least 8.0
|
||
Tier 1 Capital to Average Assets:
|
|
|
|
|
|
|
|
|
|
|||||||||
Company
|
$
|
118,199
|
|
|
10.5
|
%
|
|
$
|
44,923
|
|
|
At least 4.0
|
|
N/A
|
|
|
N/A
|
|
Bank
|
101,807
|
|
|
9.2
|
%
|
|
44,360
|
|
|
At least 4.0
|
|
$
|
55,450
|
|
|
At least 5.0
|
|
|
|
|
|
Applicable Federal Regulatory Requirement
|
|||||||||||||
At December 31, 2015
|
Actual Capital
|
|
For Capital Adequacy
Purposes
|
|
To be Categorized
As Well Capitalized
|
|||||||||||||
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||||||
Total Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Company
|
$
|
154,884
|
|
|
16.8
|
%
|
|
$
|
73,871
|
|
|
At least 8.0
|
|
N/A
|
|
|
N/A
|
|
Bank
|
136,457
|
|
|
15.0
|
%
|
|
72,672
|
|
|
At least 8.0
|
|
$
|
90,841
|
|
|
At least 10.0
|
||
Common Equity Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Company
|
131,188
|
|
|
14.2
|
%
|
|
41,552
|
|
|
At least 4.5
|
|
N/A
|
|
|
N/A
|
|||
Bank
|
125,018
|
|
|
13.8
|
%
|
|
40,878
|
|
|
At least 4.5
|
|
59,046
|
|
|
At least 6.5
|
|||
Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Company
|
$
|
143,260
|
|
|
15.5
|
%
|
|
$
|
55,403
|
|
|
At least 6.0
|
|
N/A
|
|
|
N/A
|
|
Bank
|
125,018
|
|
|
13.8
|
%
|
|
54,504
|
|
|
At least 6.0
|
|
$
|
72,672
|
|
|
At least 8.0
|
||
Tier 1 Capital to Average Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Company
|
$
|
143,260
|
|
|
13.3
|
%
|
|
$
|
42,984
|
|
|
At least 4.0
|
|
N/A
|
|
|
N/A
|
|
Bank
|
125,018
|
|
|
11.8
|
%
|
|
42,319
|
|
|
At least 4.0
|
|
$
|
52,899
|
|
|
At least 5.0
|
|
December 31,
|
||||||
(Dollars in thousands)
|
2016
|
|
2015
|
||||
Assets:
|
|
|
|
||||
Due from banks and interest-bearing deposits with financial institutions
|
$
|
8,621
|
|
|
$
|
9,736
|
|
Investment in subsidiaries
|
108,088
|
|
|
141,197
|
|
||
Other assets
|
630
|
|
|
649
|
|
||
Total assets
|
$
|
117,339
|
|
|
$
|
151,582
|
|
Liabilities and shareholders’ equity:
|
|
|
|
||||
Liabilities
|
$
|
93
|
|
|
$
|
139
|
|
Junior subordinated debentures
|
17,527
|
|
|
17,527
|
|
||
Shareholders’ equity
|
99,719
|
|
|
133,916
|
|
||
Total liabilities and shareholders’ equity
|
$
|
117,339
|
|
|
$
|
151,582
|
|
|
Year Ended December 31,
|
||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Interest income
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
10
|
|
Interest expense
|
(582
|
)
|
|
(507
|
)
|
|
(580
|
)
|
|||
Other income
|
17
|
|
|
28
|
|
|
81
|
|
|||
Other expenses
|
(1,012
|
)
|
|
(984
|
)
|
|
(849
|
)
|
|||
Equity in undistributed (loss) earnings of subsidiaries
|
(33,075
|
)
|
|
13,895
|
|
|
1,695
|
|
|||
Income tax benefit (expense)
|
7
|
|
|
—
|
|
|
—
|
|
|||
Net (loss) income
|
$
|
(34,643
|
)
|
|
$
|
12,441
|
|
|
$
|
357
|
|
|
Year Ended December 31,
|
||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(34,643
|
)
|
|
$
|
12,441
|
|
|
$
|
357
|
|
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
|
|
|
|
|
||||||
Net increase in other assets
|
(19
|
)
|
|
(7
|
)
|
|
(47
|
)
|
|||
Net decrease in deferred taxes
|
38
|
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation expense
|
1,039
|
|
|
1,233
|
|
|
1,139
|
|
|||
Undistributed loss (income) of subsidiary
|
33,075
|
|
|
(13,895
|
)
|
|
(1,695
|
)
|
|||
Net (decrease) increase in interest payable
|
(71
|
)
|
|
81
|
|
|
(2,055
|
)
|
|||
Net increase (decrease) in other liabilities
|
27
|
|
|
—
|
|
|
(220
|
)
|
|||
Net cash used in operating activities
|
(554
|
)
|
|
(147
|
)
|
|
(2,521
|
)
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Net decrease in loans
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by investing activities
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Payments for exchange of preferred stock for common stock
|
—
|
|
|
(324
|
)
|
|
—
|
|
|||
Common stock options exercised
|
455
|
|
|
1,511
|
|
|
1,218
|
|
|||
Tax effect included in stockholders equity of restricted stock vesting
|
(16
|
)
|
|
(109
|
)
|
|
(52
|
)
|
|||
Return of capital from subsidiaries
|
4,000
|
|
|
—
|
|
|
—
|
|
|||
Capital contribution to subsidiaries
|
(5,000
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(561
|
)
|
|
1,078
|
|
|
1,166
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
(1,115
|
)
|
|
931
|
|
|
(1,355
|
)
|
|||
Cash and Cash Equivalents, beginning of period
|
9,736
|
|
|
8,805
|
|
|
10,160
|
|
|||
Cash and Cash Equivalents, end of period
|
$
|
8,621
|
|
|
$
|
9,736
|
|
|
$
|
8,805
|
|
(Dollars in thousands)
|
Commercial
|
|
Other
|
|
Total from continuing operations
|
|
Discontinued Operations
|
|
Total including discontinued operations
|
||||||||||
Net interest income for the year ended December 31,
|
|
||||||||||||||||||
2016
|
$
|
36,044
|
|
|
$
|
(521
|
)
|
|
$
|
35,523
|
|
|
$
|
—
|
|
|
$
|
35,523
|
|
2015
|
$
|
33,932
|
|
|
$
|
(404
|
)
|
|
$
|
33,528
|
|
|
$
|
—
|
|
|
$
|
33,528
|
|
2014
|
$
|
32,702
|
|
|
$
|
(241
|
)
|
|
$
|
32,461
|
|
|
$
|
77
|
|
|
$
|
32,538
|
|
Noninterest income for the year ended December 31,
|
|
|
|
|
|
|
|
|
|
||||||||||
2016
|
$
|
3,438
|
|
|
$
|
(501
|
)
|
|
$
|
2,937
|
|
|
$
|
—
|
|
|
$
|
2,937
|
|
2015
|
$
|
2,658
|
|
|
$
|
28
|
|
|
$
|
2,686
|
|
|
$
|
—
|
|
|
$
|
2,686
|
|
2014
|
$
|
4,289
|
|
|
$
|
81
|
|
|
$
|
4,370
|
|
|
$
|
1,039
|
|
|
$
|
5,409
|
|
Segment Assets at:
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2016
|
$
|
1,126,890
|
|
|
$
|
13,799
|
|
|
$
|
1,140,689
|
|
|
$
|
—
|
|
|
$
|
1,140,689
|
|
December 31, 2015
|
$
|
1,051,501
|
|
|
$
|
10,888
|
|
|
$
|
1,062,389
|
|
|
$
|
—
|
|
|
$
|
1,062,389
|
|
|
Three Months Ended
|
||||||||||||||
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31, 2016
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Total interest income
|
$
|
10,613
|
|
|
$
|
10,598
|
|
|
$
|
9,835
|
|
|
$
|
9,954
|
|
Total interest expense
|
1,462
|
|
|
1,409
|
|
|
1,355
|
|
|
1,251
|
|
||||
Net interest income
|
9,151
|
|
|
9,189
|
|
|
8,480
|
|
|
8,703
|
|
||||
Provision for loan and lease losses
|
—
|
|
|
10,730
|
|
|
8,720
|
|
|
420
|
|
||||
Net interest income after provision for loan and lease losses
|
9,151
|
|
|
(1,541
|
)
|
|
(240
|
)
|
|
8,283
|
|
||||
Total noninterest income
|
265
|
|
|
1,054
|
|
|
864
|
|
|
754
|
|
||||
Total noninterest expense
|
9,266
|
|
|
9,687
|
|
|
8,893
|
|
|
8,555
|
|
||||
Income (loss) before income taxes
|
150
|
|
|
(10,174
|
)
|
|
(8,269
|
)
|
|
482
|
|
||||
Income tax (benefit) provision
|
(159
|
)
|
|
20,352
|
|
|
(3,559
|
)
|
|
198
|
|
||||
Net income (loss) allocable to common shareholders
|
$
|
309
|
|
|
$
|
(30,526
|
)
|
|
$
|
(4,710
|
)
|
|
$
|
284
|
|
Per share data-basic:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.01
|
|
|
$
|
(1.33
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.01
|
|
Net income (loss) allocable to common shareholders
|
$
|
0.01
|
|
|
$
|
(1.33
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.01
|
|
Per share data-diluted:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.01
|
|
|
$
|
(1.33
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.01
|
|
Net income (loss) allocable to common shareholders
|
$
|
0.01
|
|
|
$
|
(1.33
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.01
|
|
|
Three Months Ended
|
||||||||||||||
|
December 31, 2015
|
|
September 30, 2015
|
|
June 30, 2015
|
|
March 31, 2015
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Total interest income
|
$
|
9,860
|
|
|
$
|
9,653
|
|
|
$
|
9,813
|
|
|
$
|
9,471
|
|
Total interest expense
|
1,281
|
|
|
1,342
|
|
|
1,324
|
|
|
1,322
|
|
||||
Net interest income
|
8,579
|
|
|
8,311
|
|
|
8,489
|
|
|
8,149
|
|
||||
Provision for loan and lease losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net interest income after provision for loan and lease losses
|
8,579
|
|
|
8,311
|
|
|
8,489
|
|
|
8,149
|
|
||||
Total noninterest income
|
626
|
|
|
562
|
|
|
616
|
|
|
882
|
|
||||
Total noninterest expense
|
8,689
|
|
|
8,552
|
|
|
8,967
|
|
|
9,116
|
|
||||
Income (loss) from continuing operations before income taxes
|
516
|
|
|
321
|
|
|
138
|
|
|
(85
|
)
|
||||
Income tax (benefit) provision
|
(11,551
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income (loss) from continuing operations
|
$
|
12,067
|
|
|
$
|
321
|
|
|
$
|
138
|
|
|
$
|
(85
|
)
|
Accumulated undeclared dividends on preferred stock
|
—
|
|
|
—
|
|
|
(309
|
)
|
|
(309
|
)
|
||||
Dividends on preferred stock
|
—
|
|
|
(309
|
)
|
|
—
|
|
|
—
|
|
||||
Inducements for exchange of the preferred stock
|
—
|
|
|
(512
|
)
|
|
—
|
|
|
—
|
|
||||
Net income (loss) allocable to common shareholders
|
$
|
12,067
|
|
|
$
|
(500
|
)
|
|
$
|
(171
|
)
|
|
$
|
(394
|
)
|
Per share data-basic:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.53
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
Net income (loss) allocable to common shareholders
|
$
|
0.53
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
Per share data-diluted:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
0.53
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
Net income (loss) allocable to common shareholders
|
$
|
0.53
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America;
|
•
|
provide reasonable assurance that our receipts and expenditures are being made only in accordance with authorization of our management and board of directors; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our consolidated financial statements.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
(1)
|
Financial Statements
. The Consolidated Financial Statements of Pacific Mercantile Bancorp: See Index to Consolidated Financial Statements on Page
59
of this Annual Report.
|
(2)
|
Financial Statement Schedules
. No financial statement schedules are included in this Annual Report as such schedules are not required or the information that would be included in such schedules is not material or is otherwise furnished.
|
(3)
|
Exhibits
. See Index to Exhibits, elsewhere in this Report, for a list and description of (i) exhibits previously filed by the Company with the Commission and (ii) the exhibits being filed with this Report.
|
PACIFIC MERCANTILE BANCORP
|
||
|
|
|
By:
|
|
/
S
/ THOMAS M. VERTIN
|
|
|
Thomas M. Vertin
|
|
|
President and Chief Executive Officer
|
/
S
/ THOMAS M. VERTIN
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
March 10, 2017
|
Thomas M. Vertin
|
|
|
||
/
S
/ CURT CHRISTIANSSEN
|
|
Chief Financial Officer (Principal Financial Officer)
|
|
March 10, 2017
|
Curt Christianssen
|
|
|
||
/
S
/ NANCY GRAY
|
|
Chief Accounting Officer (Principal Accounting Officer)
|
|
March 10, 2017
|
Nancy Gray
|
|
|
|
|
/s/ EDWARD J. CARPENTER
|
|
Chairman of the Board and Director
|
|
March 10, 2017
|
Edward J. Carpenter
|
|
|
||
/S/ ROMIR BOSU
|
|
Director
|
|
March 10, 2017
|
Romir Bosu
|
|
|
||
/S/ WARREN T. FINLEY
|
|
Director
|
|
March 10, 2017
|
Warren T. Finley
|
|
|
||
/S/ JOHN D. FLEMMING
|
|
Director
|
|
March 10, 2017
|
John D. Flemming
|
|
|
||
/s/ MICHAEL P. HOOPIS
|
|
Director
|
|
March 10, 2017
|
Michael P. Hoopis
|
|
|
|
|
/s/ DENIS KALSCHEUR
|
|
Director
|
|
March 10, 2017
|
Denis Kalscheur
|
|
|
||
/s/ DAVID J. MUNIO
|
|
Director
|
|
March 10, 2017
|
David Munio
|
|
|
||
/S/ JOHN THOMAS, M.D.
|
|
Director
|
|
March 10, 2017
|
John Thomas, M.D
|
|
|
||
/S/ STEPHEN P. YOST
|
|
Director
|
|
March 10, 2017
|
Stephen P. Yost
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
3.1
|
|
Articles of Incorporation of Pacific Mercantile Bancorp. (Incorporated by reference to the same numbered exhibit to the Company’s Registration Statement (No. 333-33452) on Form S-1 filed with the Commission on March 28, 2000.)
|
|
|
|
3.2
|
|
Certificate of Amendment of Articles of Incorporation of Pacific Mercantile Bancorp (Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed with the Commission on August 14, 2001.)
|
|
|
|
3.3
|
|
Certificate of Amendment of Articles of Incorporation of Pacific Mercantile Bancorp (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated January 26, 2012 and filed with the Commission on February 1, 2012.)
|
|
|
|
3.4
|
|
Certificate of Determination of Rights, Preferences, Privileges and Restrictions of Series A Convertible 10% Cumulative Preferred Stock of Pacific Mercantile Bancorp. (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (No. 000-30777) dated October 13, 2009.)
|
|
|
|
3.5
|
|
Certificate of Amendment of Certificate of Determination of Rights, Preferences, Privileges and Restrictions of the Series A Convertible 10% Cumulative Preferred Stock of Pacific Mercantile Bancorp. (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K dated January 26, 2012 and filed with the Commission on February 1, 2012.)
|
|
|
|
3.6
|
|
Certificate of Determination of Rights, Preferences, Privileges and Restrictions of the Series B Convertible 8.4% Noncumulative Preferred Stock of Pacific Mercantile Bancorp. (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (No. 000-30777) dated August 22, 2011.)
|
|
|
|
3.7
|
|
Certificate of Determination of Rights, Preferences, Privileges and Restrictions of the Series C 8.4% Noncumulative Preferred Stock of Pacific Mercantile Bancorp. (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K (No. 000-30777) dated August 22, 2011.)
|
|
|
|
3.8
|
|
Pacific Mercantile Bancorp Bylaws, Amended and Restated as of January 22, 2014. (Incorporated by reference Exhibit 3.1 to the Current Report on Form 8-K dated January 27, 2014.)
|
|
|
|
4.1
|
|
Specimen form of Pacific Mercantile Bancorp Common Stock Certificate. (Incorporated by reference to the same numbered exhibit to the Company’s Registration Statement (No. 333-33452) on Form S-1 filed with the Commission on June 14, 2000.)
|
|
|
|
10.1
|
|
Common Stock Purchase Agreement, dated August 26, 2011, between the Company, Carpenter Community Bancfund, L.P. and Carpenter Community Bancfund-A, L.P. (Incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K (No. 000-30777) dated August 30, 2011.)
|
10.2
|
|
Exchange Agreement, dated as of August 28, 2015, by and among Pacific Mercantile Bancorp, SBAV, LP, Carpenter Community BancFund, L.P. and Carpenter Community BancFund-A, L.P. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated August 28, 2015 and filed with the Commission on August 31, 2015.)
|
|
|
|
10.3
|
|
Registration Rights Agreement, dated as of August 28, 2015, by and among Pacific Mercantile Bancorp, SBAV, LP, Carpenter Community BancFund, L.P. and Carpenter Community BancFund-A, L.P. (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated August 28, 2015 and filed with the Commission on August 31, 2015.)
|
|
|
|
10.4+
|
|
Form of Indemnification Agreement. (Incorporated by reference to Exhibit 10.1 to the Registration Statement (No. 333-177141) on Form S-8 dated October 3, 2011.)
|
|
|
|
10.5+
|
|
Pacific Mercantile Bancorp 2004 Stock Incentive Plan (Incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K (No. 000-30777) for the year ended December 31, 2004.)
|
|
|
|
10.6+
|
|
Pacific Mercantile Bancorp 2008 Equity Incentive Plan. (Incorporated by reference to Appendix A to the Company’s 2008 Definitive Proxy Statement filed with the Commission on April 18, 2008.)
|
|
|
|
10.7+
|
|
Pacific Mercantile Bancorp 2010 Equity Incentive Plan, as amended June 5, 2013. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.)
|
|
|
|
10.8
|
|
Stock Purchase Agreement effective as of February 27, 2013 by and between the Company and the Carpenter Funds. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated February 27, 2013 and filed with the Commission on March 5, 2013.
|
|
|
|
10.9+
|
|
Pacific Mercantile Bancorp Change in Control Severance Plan. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated January 27, 2014.)
|
|
|
|
10.10+
|
|
Pacific Mercantile Bancorp Change in Control Severance Plan Participation Agreement. (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated January 27, 2014.)
|
|
|
|
10.11+
|
|
Employment Agreement between Pacific Mercantile Bank and Curt A. Christianssen dated January 20, 2015. (Incorporated by reference to Exhibit 10.97 to the Current Report on Form 8-K dated January 20, 2015.)
|
|
|
|
10.12+
|
|
Employment Agreement between Pacific Mercantile Bank and Thomas M. Vertin dated December 8, 2015 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated December 8, 2015 and filed with the Commission on December 10, 2015.)
|
|
|
|
10.13+
|
|
Employment Agreement between Pacific Mercantile Bank and Thomas J. Inserra dated May 31, 2016 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (No. 000-30777) dated May 27, 2016).
|
|
|
|
10.14+
|
|
Change in Control Severance Plan Participation Agreement, dated May 27, 2016, by and among the Pacific Mercantile Bank and Thomas J. Inserra (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (No. 000-30777) dated May 27, 2016).
|
|
|
|
10.15+*
|
|
Employment Agreement between Pacific Mercantile Bank and Maxwell G. Sinclair dated May 27, 2016.
|
|
|
|
21*
|
|
Subsidiaries of the Company
|
|
|
|
23.1*
|
|
Consent of RSM US LLP, Independent Registered Public Accounting Firm
|
|
|
|
24.1
|
|
Power of Attorney (contained on the Signature Page of this Annual Report on Form 10-K)
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1**
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.2**
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
Exhibit 101.INS*
|
|
XBRL Instance Document
|
|
|
|
Exhibit 101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
Exhibit 101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
Exhibit 101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
Exhibit 101.LAB*
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
|
Exhibit 101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Name of Subsidiary
|
|
State of Incorporation or Organization
|
|
Percentage Ownership
|
|
Pacific Mercantile Bank
|
|
A California corporation
|
|
100
|
%
|
PMB Statutory Trust III
|
|
A Connecticut trust
|
|
100
|
%
|
PMB Capital Trust III
|
|
A Delaware trust
|
|
100
|
%
|
PM Asset Resolution, Inc.
|
|
A California corporation
|
|
100
|
%
|
1.
|
I have reviewed this
Annual Report
on Form
10-K
of Pacific Mercantile Bancorp for the
fiscal year
ended
December 31, 2016
.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ THOMAS M. VERTIN
|
Thomas M. Vertin
|
President and Chief Executive Officer
|
1.
|
I have reviewed this
Annual Report
on Form
10-K
of Pacific Mercantile Bancorp for the
fiscal year
ended
December 31, 2016
.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ CURT CHRISTIANSSEN
|
Curt Christianssen
|
Chief Financial Officer
|
/
S
/ THOMAS M. VERTIN
|
Thomas M. Vertin
|
President and Chief Executive Officer
|
|
/
S
/ CURT CHRISTIANSSEN
|
Curt Christianssen
|
Chief Financial Officer
|
|