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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
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, without par value
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PMBC
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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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x
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Emerging growth 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 clients; 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 may be 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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Average Balance
During the Year Ended
December 31, 2019
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Balance at December 31, 2019
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||||
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(Dollars in thousands)
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||||||
Type of Deposit
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Noninterest-bearing checking accounts(1)
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$
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382,198
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$
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397,000
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Interest-bearing checking accounts
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109,234
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108,941
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Money market and savings deposits
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438,814
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416,751
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Certificates of deposit(2)
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265,859
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276,878
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Totals
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$
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1,196,105
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$
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1,199,570
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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 $15.8 million for the year ended December 31, 2019 and a balance of $15.5 million at December 31, 2019.
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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, 2019 and a balance at December 31, 2019 of $250,000.
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At December 31, 2019
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|||||
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Amount
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Percent of Total
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|||
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(Dollars in thousands)
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|||||
Commercial loans
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$
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409,420
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36.2
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%
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Commercial real estate loans – owner occupied
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219,483
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19.5
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%
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Commercial real estate loans – all other
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208,283
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18.5
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%
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Residential mortgage loans – multi-family
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176,523
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15.7
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%
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Residential mortgage loans – single family(1)
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18,782
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1.7
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%
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Land development loans
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2,981
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0.3
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%
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Consumer loans
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90,867
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8.1
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%
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Gross loans
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$
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1,126,339
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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 are retained in our loan portfolio as a loan diversification strategy subsequent to our exit from the mortgage business.
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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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Monitoring. Client 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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•
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multi-factor authentication;
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•
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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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•
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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 client’s account number or password;
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•
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compromise of the client’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 client 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 clients 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 clients.
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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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establish due diligence requirements for financial institutions that administer, maintain, or manage private bank accounts and foreign correspondent accounts;
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•
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prohibit U.S. institutions from providing correspondent accounts to foreign shell banks;
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•
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establish standards for verifying customer identification at account opening; and
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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.
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verifying the identity of any person seeking to open an account, to the extent reasonable and practicable;
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maintaining records of the information used to verify the person’s identity; and
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determining whether the person appears on any list of known or suspected terrorists or terrorist organizations.
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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.”
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Laws and regulations requiring banks to establish privacy policies which limit the disclosure of nonpublic information about consumers to nonaffiliated third parties.
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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.
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•
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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.
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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.
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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.
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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.
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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.
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The National Flood Insurance Act, which requires homes in flood-prone areas with mortgages from a federally regulated lender to have flood insurance.
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•
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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
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•
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a decline in the demand for loans, which would cause a decline in interest income and our net interest margin;
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•
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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;
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•
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a decrease in deposit balances due to overall reductions in the accounts of clients, which would adversely impact our liquidity position;
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•
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an impairment of our investment securities and other real estate owned (“OREO”); and
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•
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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 allowance for loan and lease losses (“ALLL”), thereby reducing our earnings.
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•
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quarterly fluctuations in our operating results or financial condition;
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•
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failure to meet analysts’ revenue or earnings estimates;
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•
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the restrictions on our ability to pay cash dividends on our common stock as described below;
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•
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the imposition of additional regulatory restrictions on our business and operations or an inability to meet regulatory requirements;
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•
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an inability to successfully implement our growth strategy;
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•
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strategic actions by us or our competitors, such as acquisitions or restructurings;
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•
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fluctuations in the stock prices and operating results of our competitors;
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•
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general market conditions and, in particular, developments related to market conditions for financial services industry stocks;
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•
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proposed or newly adopted legislative or regulatory changes or developments aimed at the financial services industry; and
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•
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any future proceedings or litigation that may involve or affect us.
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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(1)
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The source of the above graph and chart is S&P Global Market Intelligence.
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Period Ending
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||||||||||||||||
Index
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12/31/14
|
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12/31/15
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12/31/16
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12/31/17
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|
12/31/18
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12/31/19
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Pacific Mercantile Bancorp
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100.00
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101.28
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103.69
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124.29
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101.56
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115.34
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Russell 2000 Index
|
100.00
|
|
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95.59
|
|
|
115.95
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|
|
132.94
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|
|
118.30
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|
|
148.49
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SNL Western Bank Index
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100.00
|
|
|
103.61
|
|
|
114.87
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|
|
128.07
|
|
|
101.40
|
|
|
123.66
|
|
|
Year Ended December 31,
|
||||||||||||||||||
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2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
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(Dollars in thousands except per share data)
|
||||||||||||||||||
Selected Statement of Operations Data:
|
|
|
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|
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|
||||||||||
Total interest income
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$
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65,677
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|
$
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62,542
|
|
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$
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51,573
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|
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$
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41,000
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|
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$
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38,797
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Total interest expense
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16,121
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|
|
13,620
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|
|
7,831
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|
|
5,477
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|
|
5,269
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|
|||||
Net interest income
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49,556
|
|
|
48,922
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|
|
43,742
|
|
|
35,523
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|
|
33,528
|
|
|||||
Provision for loan and lease losses
|
9,150
|
|
|
—
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|
|
—
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|
|
19,870
|
|
|
—
|
|
|||||
Net interest income after provision for loan and lease losses
|
40,406
|
|
|
48,922
|
|
|
43,742
|
|
|
15,653
|
|
|
33,528
|
|
|||||
Total noninterest income
|
5,588
|
|
|
4,635
|
|
|
4,374
|
|
|
2,937
|
|
|
2,686
|
|
|||||
Total noninterest expense
|
38,179
|
|
|
36,970
|
|
|
37,758
|
|
|
36,401
|
|
|
35,324
|
|
|||||
Income before income taxes
|
7,815
|
|
|
16,587
|
|
|
10,358
|
|
|
(17,811
|
)
|
|
890
|
|
|||||
Income tax provision (benefit)
|
2,135
|
|
|
(10,752
|
)
|
|
(91
|
)
|
|
16,832
|
|
|
(11,551
|
)
|
|||||
Net income
|
5,680
|
|
|
27,339
|
|
|
10,449
|
|
|
(34,643
|
)
|
|
12,441
|
|
|||||
Dividends on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(927
|
)
|
|||||
Inducements for exchange of the preferred stock
|
—
|
|
|
—
|
|
|
—
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|
|
—
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|
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(512
|
)
|
|||||
Net income allocable to common shareholders
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
|
$
|
(34,643
|
)
|
|
$
|
11,002
|
|
Per share data-basic:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
$
|
0.24
|
|
|
$
|
1.17
|
|
|
$
|
0.45
|
|
|
$
|
(1.51
|
)
|
|
$
|
0.54
|
|
Net income (loss) allocable to common shareholders
|
$
|
0.24
|
|
|
$
|
1.17
|
|
|
$
|
0.45
|
|
|
$
|
(1.51
|
)
|
|
$
|
0.54
|
|
Per share data-diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
$
|
0.24
|
|
|
$
|
1.16
|
|
|
$
|
0.45
|
|
|
$
|
(1.51
|
)
|
|
$
|
0.53
|
|
Net income (loss) allocable to common shareholders
|
$
|
0.24
|
|
|
$
|
1.16
|
|
|
$
|
0.45
|
|
|
$
|
(1.51
|
)
|
|
$
|
0.53
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
22,811,215
|
|
|
22,788,164
|
|
|
23,071,671
|
|
|
22,802,439
|
|
|
20,516,575
|
|
|||||
Diluted
|
23,631,879
|
|
|
23,527,183
|
|
|
23,312,292
|
|
|
22,958,644
|
|
|
20,675,279
|
|
|
December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(Dollars in thousands except for per share information)
|
||||||||||||||||||
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents(1)
|
$
|
220,138
|
|
|
$
|
187,718
|
|
|
$
|
198,208
|
|
|
$
|
138,845
|
|
|
$
|
113,921
|
|
Total loans, net
|
1,117,511
|
|
|
1,083,240
|
|
|
1,053,201
|
|
|
931,525
|
|
|
849,733
|
|
|||||
Total assets
|
1,416,154
|
|
|
1,349,338
|
|
|
1,322,604
|
|
|
1,140,689
|
|
|
1,062,389
|
|
|||||
Total deposits
|
1,199,570
|
|
|
1,136,002
|
|
|
1,139,393
|
|
|
1,001,300
|
|
|
893,840
|
|
|||||
Junior subordinated debentures
|
17,527
|
|
|
17,527
|
|
|
17,527
|
|
|
17,527
|
|
|
17,527
|
|
|||||
Total shareholders’ equity
|
149,048
|
|
|
141,374
|
|
|
112,876
|
|
|
99,719
|
|
|
133,916
|
|
|||||
Book value per share
|
$
|
6.74
|
|
|
$
|
6.06
|
|
|
$
|
4.86
|
|
|
$
|
4.33
|
|
|
$
|
5.87
|
|
|
(1)
|
Cash and cash equivalents include cash and due from banks and federal funds sold.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
|
|
|
|
||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
% Change
|
|
2018 vs. 2017
% Change |
||||||||
|
(Dollars in thousands)
|
|
|
|
|
||||||||||||
Interest income
|
$
|
65,677
|
|
|
$
|
62,542
|
|
|
$
|
51,573
|
|
|
5.0
|
%
|
|
21.3
|
%
|
Interest expense
|
16,121
|
|
|
13,620
|
|
|
7,831
|
|
|
18.4
|
%
|
|
73.9
|
%
|
|||
Provision for loan and lease losses
|
9,150
|
|
|
—
|
|
|
—
|
|
|
100.0
|
%
|
|
—
|
%
|
|||
Non-interest income
|
5,588
|
|
|
4,635
|
|
|
4,374
|
|
|
20.6
|
%
|
|
6.0
|
%
|
|||
Non-interest expense
|
38,179
|
|
|
36,970
|
|
|
37,758
|
|
|
3.3
|
%
|
|
(2.1
|
)%
|
|||
Income tax provision (benefit)
|
2,135
|
|
|
(10,752
|
)
|
|
(91
|
)
|
|
(119.9
|
)%
|
|
11,715.4
|
%
|
|||
Net income allocable to common shareholders
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
|
(79.2
|
)%
|
|
161.6
|
%
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||||||||||||||
|
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)
|
$
|
239,268
|
|
|
$
|
5,264
|
|
|
2.20
|
%
|
|
$
|
195,736
|
|
|
$
|
3,756
|
|
|
1.92
|
%
|
|
$
|
123,761
|
|
|
$
|
1,379
|
|
|
1.11
|
%
|
Securities available for sale and stock(2)
|
36,716
|
|
|
1,065
|
|
|
2.90
|
%
|
|
39,744
|
|
|
1,160
|
|
|
2.92
|
%
|
|
49,745
|
|
|
1,237
|
|
|
2.49
|
%
|
||||||
Loans(3)
|
1,100,082
|
|
|
59,348
|
|
|
5.39
|
%
|
|
1,071,874
|
|
|
57,626
|
|
|
5.38
|
%
|
|
996,696
|
|
|
48,957
|
|
|
4.91
|
%
|
||||||
Total interest-earning assets
|
1,376,066
|
|
|
65,677
|
|
|
4.77
|
%
|
|
1,307,354
|
|
|
62,542
|
|
|
4.78
|
%
|
|
1,170,202
|
|
|
51,573
|
|
|
4.41
|
%
|
||||||
Noninterest-earning assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash and due from banks
|
15,975
|
|
|
|
|
|
|
16,785
|
|
|
|
|
|
|
14,482
|
|
|
|
|
|
||||||||||||
All other assets(3)
|
26,528
|
|
|
|
|
|
|
14,577
|
|
|
|
|
|
|
(1,116
|
)
|
|
|
|
|
||||||||||||
Total assets
|
$
|
1,418,569
|
|
|
|
|
|
|
$
|
1,338,716
|
|
|
|
|
|
|
$
|
1,183,568
|
|
|
|
|
|
|||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing checking accounts
|
$
|
109,234
|
|
|
$
|
645
|
|
|
0.59
|
%
|
|
$
|
69,841
|
|
|
$
|
363
|
|
|
0.52
|
%
|
|
$
|
87,771
|
|
|
347
|
|
|
0.40
|
%
|
|
Money market and savings accounts
|
438,814
|
|
|
7,635
|
|
|
1.74
|
%
|
|
412,366
|
|
|
6,358
|
|
|
1.54
|
%
|
|
334,703
|
|
|
2,859
|
|
|
0.85
|
%
|
||||||
Certificates of deposit
|
265,859
|
|
|
6,002
|
|
|
2.26
|
%
|
|
315,189
|
|
|
5,349
|
|
|
1.70
|
%
|
|
298,531
|
|
|
3,752
|
|
|
1.26
|
%
|
||||||
Other borrowings
|
39,315
|
|
|
947
|
|
|
2.41
|
%
|
|
36,209
|
|
|
705
|
|
|
1.95
|
%
|
|
4,538
|
|
|
203
|
|
|
4.47
|
%
|
||||||
Junior subordinated debentures
|
17,527
|
|
|
892
|
|
|
5.09
|
%
|
|
17,527
|
|
|
845
|
|
|
4.82
|
%
|
|
17,527
|
|
|
670
|
|
|
3.82
|
%
|
||||||
Total interest bearing liabilities
|
870,749
|
|
|
16,121
|
|
|
1.85
|
%
|
|
851,132
|
|
|
13,620
|
|
|
1.60
|
%
|
|
743,070
|
|
|
7,831
|
|
|
1.05
|
%
|
||||||
Noninterest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Demand deposits
|
382,198
|
|
|
|
|
|
|
348,923
|
|
|
|
|
|
|
326,105
|
|
|
|
|
|
||||||||||||
Accrued expenses and other liabilities
|
19,032
|
|
|
|
|
|
|
10,931
|
|
|
|
|
|
|
7,566
|
|
|
|
|
|
||||||||||||
Shareholders' equity
|
146,590
|
|
|
|
|
|
|
127,730
|
|
|
|
|
|
|
106,827
|
|
|
|
|
|
||||||||||||
Total liabilities and shareholders' equity
|
$
|
1,418,569
|
|
|
|
|
|
|
$
|
1,338,716
|
|
|
|
|
|
|
$
|
1,183,568
|
|
|
|
|
|
|||||||||
Net interest income
|
|
|
$
|
49,556
|
|
|
|
|
|
|
$
|
48,922
|
|
|
|
|
|
|
$
|
43,742
|
|
|
|
|||||||||
Net interest income/spread
|
|
|
|
|
2.92
|
%
|
|
|
|
|
|
3.18
|
%
|
|
|
|
|
|
3.36
|
%
|
||||||||||||
Net interest margin
|
|
|
|
|
3.60
|
%
|
|
|
|
|
|
3.74
|
%
|
|
|
|
|
|
3.74
|
%
|
|
(1)
|
Short-term investments consist of federal funds sold and interest bearing deposits that we maintain at other financial institutions.
|
(2)
|
Stock consists of FHLB stock and Federal Reserve Bank stock.
|
(3)
|
Loans include the average balance of nonaccrual loans and loan fees. The allowance for loan and lease losses is included within the "All other assets" line item.
|
|
2019 Compared to 2018
Increase (Decrease) due to Changes in |
|
2018 Compared to 2017
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)
|
$
|
909
|
|
|
$
|
599
|
|
|
$
|
1,508
|
|
|
$
|
1,060
|
|
|
$
|
1,317
|
|
|
$
|
2,377
|
|
Securities available for sale and stock(2)
|
(88
|
)
|
|
(7
|
)
|
|
(95
|
)
|
|
(272
|
)
|
|
195
|
|
|
(77
|
)
|
||||||
Loans
|
1,521
|
|
|
201
|
|
|
1,722
|
|
|
3,848
|
|
|
4,821
|
|
|
8,669
|
|
||||||
Total earning assets
|
2,342
|
|
|
793
|
|
|
3,135
|
|
|
4,636
|
|
|
6,333
|
|
|
10,969
|
|
||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing checking accounts
|
227
|
|
|
55
|
|
|
282
|
|
|
(80
|
)
|
|
96
|
|
|
16
|
|
||||||
Money market and savings accounts
|
425
|
|
|
852
|
|
|
1,277
|
|
|
783
|
|
|
2,716
|
|
|
3,499
|
|
||||||
Certificates of deposit
|
(926
|
)
|
|
1,579
|
|
|
653
|
|
|
219
|
|
|
1,378
|
|
|
1,597
|
|
||||||
Borrowings
|
64
|
|
|
178
|
|
|
242
|
|
|
677
|
|
|
(175
|
)
|
|
502
|
|
||||||
Junior subordinated debentures
|
|
|
|
47
|
|
|
47
|
|
|
—
|
|
|
175
|
|
|
175
|
|
||||||
Total interest-bearing liabilities
|
(210
|
)
|
|
2,711
|
|
|
2,501
|
|
|
1,599
|
|
|
4,190
|
|
|
5,789
|
|
||||||
Net interest income
|
$
|
2,552
|
|
|
$
|
(1,918
|
)
|
|
$
|
634
|
|
|
$
|
3,037
|
|
|
$
|
2,143
|
|
|
$
|
5,180
|
|
|
(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
|
||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||||
Service fees on deposits and other banking services
|
$
|
1,782
|
|
|
$
|
1,549
|
|
|
$
|
1,347
|
|
|
15.0
|
%
|
|
15.0
|
%
|
Net gain on sale of securities available for sale
|
—
|
|
|
48
|
|
|
(4
|
)
|
|
(100.0
|
)%
|
|
(1,300.0
|
)%
|
|||
Net loss on sale of other assets
|
(42
|
)
|
|
(4
|
)
|
|
(37
|
)
|
|
950.0
|
%
|
|
(89.2
|
)%
|
|||
Net gain on sale of Small Business Administration loans
|
1,029
|
|
|
—
|
|
|
—
|
|
|
100.0
|
%
|
|
—
|
%
|
|||
Other noninterest income
|
2,819
|
|
|
3,042
|
|
|
3,068
|
|
|
(7.3
|
)%
|
|
(0.8
|
)%
|
|||
Total noninterest income
|
$
|
5,588
|
|
|
$
|
4,635
|
|
|
$
|
4,374
|
|
|
20.6
|
%
|
|
6.0
|
%
|
•
|
Net gain on sale of SBA loans of $1.0 million during the year ended December 31, 2019 as compared to no SBA sales during the same period in 2018; and
|
•
|
An increase of $233 thousand in deposit related fees, credit card fees and loan service fees during the year ended December 31, 2019 as compared to the same period in 2018; partially offset by
|
•
|
A decrease of $223 thousand in other non-interest income during the year ended December 31, 2019 as compared to the same period in 2018 due to decreased foreign exchange and trade income in 2019; and
|
•
|
A gain of $48 thousand on the sale of securities available for sale during the year ended December 31, 2018 that did not occur in the same period in 2019.
|
•
|
An increase in loan servicing and referral fees during the year ended December 31, 2018 as compared to the same period in 2017; and
|
•
|
An increase of $52 thousand in gain on sale of securities available-for-sale during the year ended December 31, 2018 compared to the same period in 2017; partially offset by
|
•
|
A decrease in other noninterest income attributable to recoveries of fees on previously charged off loans during the second quarter of 2017 for which a similar level of recoveries did not occur during the year ended December 31, 2018.
|
|
Year Ended December 31,
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||
|
Amount
|
|
Amount
|
|
Amount
|
|
Percent Change
|
|
Percent Change
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||||
Salaries and employee benefits
|
$
|
23,411
|
|
|
$
|
23,749
|
|
|
$
|
22,977
|
|
|
(1.4
|
)%
|
|
3.4
|
%
|
Occupancy
|
2,553
|
|
|
2,388
|
|
|
2,605
|
|
|
6.9
|
%
|
|
(8.3
|
)%
|
|||
Equipment and depreciation
|
1,884
|
|
|
1,802
|
|
|
1,687
|
|
|
4.6
|
%
|
|
6.8
|
%
|
|||
Data processing
|
2,184
|
|
|
1,681
|
|
|
1,479
|
|
|
29.9
|
%
|
|
13.7
|
%
|
|||
FDIC expense
|
427
|
|
|
927
|
|
|
1,073
|
|
|
(53.9
|
)%
|
|
(13.6
|
)%
|
|||
Other real estate owned expense, net
|
69
|
|
|
123
|
|
|
—
|
|
|
(43.9
|
)%
|
|
100.0
|
%
|
|||
Professional fees
|
3,982
|
|
|
2,468
|
|
|
4,215
|
|
|
61.3
|
%
|
|
(41.4
|
)%
|
|||
Business development
|
803
|
|
|
946
|
|
|
729
|
|
|
(15.1
|
)%
|
|
29.8
|
%
|
|||
Loan related expense
|
639
|
|
|
769
|
|
|
456
|
|
|
(16.9
|
)%
|
|
68.6
|
%
|
|||
Insurance
|
245
|
|
|
248
|
|
|
221
|
|
|
(1.2
|
)%
|
|
12.2
|
%
|
|||
Other operating expenses (1)
|
1,982
|
|
|
1,869
|
|
|
2,316
|
|
|
6.0
|
%
|
|
(19.3
|
)%
|
|||
Total noninterest expense
|
$
|
38,179
|
|
|
$
|
36,970
|
|
|
$
|
37,758
|
|
|
3.3
|
%
|
|
(2.1
|
)%
|
|
(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 higher legal fees in 2019 and the recovery of legal fees attributable to the payoff of a loan relationship in 2018 that was previously on nonaccrual status; and
|
•
|
An increase of $247 thousand in occupancy and equipment expense related to building and equipment maintenance; and
|
•
|
An increase of $503 thousand in data processing fees primarily related to a higher credit card and deposit volume; and
|
•
|
An increase in various expense accounts related to the normal course of operating, including expenses related to loan production and business development; partially offset by
|
•
|
A decrease of $338 thousand in salaries and employee benefits primarily related to a decrease in employee benefits and incentive compensation partially offset by severance payments and acceleration of equity awards of a former executive; and
|
•
|
A decrease of $500 thousand in our FDIC insurance expenses as the result of a lower rate and rebate.
|
•
|
A decrease of $1.7 million in our professional fees primarily related to lower legal fees in the first quarter of 2018, the recovery of legal fees attributable to the payoff of a loan relationship in the second quarter of 2018 that was previously on nonaccrual status and the recovery of legal fees in the third quarter of 2018 related to a loan relationship that was fully charged off in previous years; partially offset by
|
•
|
An increase of $772 thousand in salaries and employee benefits primarily related to an increase in employee compensation expense;
|
•
|
An increase of $123 thousand in other real estate owned expense during the year ended December 31, 2018 as compared to the same period in 2017; and
|
•
|
An increase in various expense accounts related to the normal course of operating, including expenses related to loan production and business development during the year ended December 31, 2018 as compared to the year ended December 31, 2017.
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
(Dollars in thousands)
|
||||||
Interest-bearing deposits with financial institutions (1)
|
$
|
202,729
|
|
|
$
|
174,468
|
|
Interest-bearing time deposits with financial institutions
|
2,420
|
|
|
2,420
|
|
||
Federal Reserve Bank of San Francisco and Federal Home Loan Bank Stock, at cost
|
7,910
|
|
|
8,822
|
|
||
Securities available for sale, at fair value
|
28,344
|
|
|
31,231
|
|
||
Loans (net of allowances of $13,611 and $13,506, respectively)
|
1,117,511
|
|
|
1,083,240
|
|
|
(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, 2019:
|
|
|
|
|
|
|
|
||||||||
Residential mortgage backed securities issued by U.S. Agencies
|
$
|
19,380
|
|
|
$
|
12
|
|
|
$
|
(277
|
)
|
|
$
|
19,115
|
|
Commercial mortgage backed securities issued by U.S. Agencies
|
9,147
|
|
|
128
|
|
|
(46
|
)
|
|
9,229
|
|
||||
Total securities available for sale
|
$
|
28,527
|
|
|
$
|
140
|
|
|
$
|
(323
|
)
|
|
$
|
28,344
|
|
Securities available for sale at December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
$
|
2,999
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
2,980
|
|
Residential mortgage backed securities issued by U.S. Agencies
|
24,739
|
|
|
1
|
|
|
(1,023
|
)
|
|
23,717
|
|
||||
Commercial mortgage backed securities issued by U.S. Agencies
|
4,495
|
|
|
40
|
|
|
(1
|
)
|
|
4,534
|
|
||||
Total securities available for sale
|
$
|
32,233
|
|
|
$
|
41
|
|
|
$
|
(1,043
|
)
|
|
$
|
31,231
|
|
Securities available for sale at December 31, 2017:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
$
|
2,996
|
|
|
$
|
—
|
|
|
$
|
(25
|
)
|
|
$
|
2,971
|
|
Residential mortgage backed securities issued by U.S. Agencies
|
30,894
|
|
|
5
|
|
|
(777
|
)
|
|
30,122
|
|
||||
Asset backed security
|
1,992
|
|
|
—
|
|
|
(251
|
)
|
|
1,741
|
|
||||
Mutual funds
|
5,000
|
|
|
11
|
|
|
(107
|
)
|
|
4,904
|
|
||||
Total securities available for sale
|
$
|
40,882
|
|
|
$
|
16
|
|
|
$
|
(1,160
|
)
|
|
$
|
39,738
|
|
|
December 31, 2019
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
|
$
|
4,759
|
|
|
1.46
|
%
|
|
$
|
11,060
|
|
|
1.50
|
%
|
|
$
|
3,457
|
|
|
1.66
|
%
|
|
$
|
104
|
|
|
2.72
|
%
|
|
$
|
19,380
|
|
|
1.53
|
%
|
Commercial mortgage backed securities issued by U.S. Agencies
|
527
|
|
|
2.62
|
%
|
|
1,972
|
|
|
2.51
|
%
|
|
3,385
|
|
|
2.80
|
%
|
|
3,263
|
|
|
2.52
|
%
|
|
9,147
|
|
|
2.63
|
%
|
|||||
Total Securities Available for sale
|
$
|
5,286
|
|
|
1.58
|
%
|
|
$
|
13,032
|
|
|
1.66
|
%
|
|
$
|
6,842
|
|
|
2.22
|
%
|
|
$
|
3,367
|
|
|
2.53
|
%
|
|
$
|
28,527
|
|
|
1.88
|
%
|
|
Securities with Unrealized Loss at December 31, 2019
|
||||||||||||||||||||||
|
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
|
$
|
76
|
|
|
$
|
(1
|
)
|
|
$
|
15,965
|
|
|
$
|
(276
|
)
|
|
$
|
16,041
|
|
|
$
|
(277
|
)
|
Commercial mortgage backed securities issued by U.S. Agencies
|
4,472
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
4,472
|
|
|
(46
|
)
|
||||||
Total
|
$
|
4,548
|
|
|
$
|
(47
|
)
|
|
$
|
15,965
|
|
|
$
|
(276
|
)
|
|
$
|
20,513
|
|
|
$
|
(323
|
)
|
|
At December 31,
|
|||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||
Commercial loans
|
$
|
409,420
|
|
|
36.2
|
%
|
|
$
|
444,441
|
|
|
40.7
|
%
|
|
$
|
394,493
|
|
|
37.1
|
%
|
|
$
|
333,376
|
|
|
35.2
|
%
|
|
$
|
347,300
|
|
|
40.3
|
%
|
Commercial real estate loans – owner occupied
|
219,483
|
|
|
19.5
|
%
|
|
211,645
|
|
|
19.3
|
%
|
|
214,365
|
|
|
20.1
|
%
|
|
214,420
|
|
|
22.7
|
%
|
|
195,554
|
|
|
22.7
|
%
|
|||||
Commercial real estate loans – all other
|
208,283
|
|
|
18.5
|
%
|
|
226,441
|
|
|
20.7
|
%
|
|
228,090
|
|
|
21.4
|
%
|
|
173,223
|
|
|
18.3
|
%
|
|
146,641
|
|
|
17.0
|
%
|
|||||
Residential mortgage loans – multi-family
|
176,523
|
|
|
15.7
|
%
|
|
97,173
|
|
|
8.9
|
%
|
|
114,302
|
|
|
10.7
|
%
|
|
130,930
|
|
|
13.8
|
%
|
|
81,487
|
|
|
9.5
|
%
|
|||||
Residential mortgage loans – single family
|
18,782
|
|
|
1.7
|
%
|
|
21,176
|
|
|
1.9
|
%
|
|
24,848
|
|
|
2.3
|
%
|
|
34,527
|
|
|
3.6
|
%
|
|
52,072
|
|
|
6.0
|
%
|
|||||
Construction and land development loans
|
2,981
|
|
|
0.3
|
%
|
|
38,496
|
|
|
3.5
|
%
|
|
34,614
|
|
|
3.3
|
%
|
|
18,485
|
|
|
2.0
|
%
|
|
10,001
|
|
|
1.2
|
%
|
|||||
Consumer loans
|
90,867
|
|
|
8.1
|
%
|
|
54,514
|
|
|
5.0
|
%
|
|
53,918
|
|
|
5.1
|
%
|
|
41,563
|
|
|
4.4
|
%
|
|
28,663
|
|
|
3.3
|
%
|
|||||
Total loans
|
1,126,339
|
|
|
100.0
|
%
|
|
1,093,886
|
|
|
100.0
|
%
|
|
1,064,630
|
|
|
100.0
|
%
|
|
946,524
|
|
|
100.0
|
%
|
|
861,718
|
|
|
100.0
|
%
|
|||||
Deferred fee (income) costs, net
|
4,783
|
|
|
|
|
2,860
|
|
|
|
|
2,767
|
|
|
|
|
1,802
|
|
|
|
|
731
|
|
|
|
||||||||||
Allowance for loan and lease losses
|
(13,611
|
)
|
|
|
|
(13,506
|
)
|
|
|
|
(14,196
|
)
|
|
|
|
(16,801
|
)
|
|
|
|
(12,716
|
)
|
|
|
||||||||||
Loans, net
|
$
|
1,117,511
|
|
|
|
|
$
|
1,083,240
|
|
|
|
|
$
|
1,053,201
|
|
|
|
|
$
|
931,525
|
|
|
|
|
$
|
849,733
|
|
|
|
|
December 31, 2019
|
||||||||||||||
|
One Year
or Less
|
|
Over One
Year
Through
Five Years
|
|
Over Five
Years
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Real estate loans(1)
|
|
|
|
|
|
|
|
||||||||
Floating rate
|
$
|
25,615
|
|
|
$
|
28,975
|
|
|
$
|
102,802
|
|
|
$
|
157,392
|
|
Fixed rate
|
14,459
|
|
|
64,859
|
|
|
194,037
|
|
|
273,355
|
|
||||
Commercial loans
|
|
|
|
|
|
|
|
||||||||
Floating rate
|
130,190
|
|
|
125,341
|
|
|
33,961
|
|
|
289,492
|
|
||||
Fixed rate
|
30,777
|
|
|
60,113
|
|
|
29,037
|
|
|
119,927
|
|
||||
Total
|
$
|
201,041
|
|
|
$
|
279,288
|
|
|
$
|
359,837
|
|
|
$
|
840,166
|
|
|
(1)
|
Does not include mortgage loans on single or multi-family residences or consumer loans, which totaled $195.3 million and $90.9 million, respectively, at December 31, 2019.
|
|
At December 31, 2019
|
|
At December 31, 2018
|
|
At December 31, 2017
|
|
At December 31, 2016
|
|
At December 31, 2015
|
||||||||||
|
(Dollars in thousands)
|
|
|
|
|
|
|
||||||||||||
Nonaccrual loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial loans
|
$
|
9,101
|
|
|
$
|
3,352
|
|
|
$
|
3,222
|
|
|
$
|
20,330
|
|
|
$
|
12,284
|
|
Commercial real estate
|
6,507
|
|
|
831
|
|
|
2,461
|
|
|
4,346
|
|
|
10,083
|
|
|||||
Residential real estate
|
—
|
|
|
—
|
|
|
171
|
|
|
221
|
|
|
1,148
|
|
|||||
Construction and land development
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,618
|
|
|||||
Consumer
|
74
|
|
|
43
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|||||
Total nonaccrual loans
|
$
|
15,682
|
|
|
$
|
4,226
|
|
|
$
|
5,910
|
|
|
$
|
24,897
|
|
|
$
|
25,133
|
|
Loans past due 90 days and still accruing interest:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial loans
|
$
|
—
|
|
|
$
|
1,278
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total loans past due 90 days and still accruing interest(1)
|
$
|
—
|
|
|
$
|
1,278
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other real estate owned (OREO):
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial loans
|
$
|
—
|
|
|
$
|
1,173
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Residential real estate
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
650
|
|
|||
Total other real estate owned
|
$
|
—
|
|
|
$
|
1,173
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
650
|
|
Other nonperforming assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Other foreclosed assets
|
164
|
|
|
91
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|||||
Total nonperforming assets(2)
|
$
|
15,846
|
|
|
$
|
5,490
|
|
|
$
|
5,946
|
|
|
$
|
24,897
|
|
|
$
|
25,783
|
|
Restructured loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accruing loans
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
450
|
|
|
$
|
—
|
|
|
$
|
724
|
|
Nonaccruing loans (included in nonaccrual loans above)
|
—
|
|
|
—
|
|
|
809
|
|
|
8,931
|
|
|
20,070
|
|
|||||
Total restructured loans
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,259
|
|
|
$
|
8,931
|
|
|
$
|
20,794
|
|
(1)
|
This amount represents one loan relationship. Subsequent to December 31, 2018, this balance was paid off.
|
(2)
|
Excludes loans past due 90 days and still accruing interest.
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||
|
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
|
$
|
1,105
|
|
|
$
|
561
|
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
Impaired loans without specific reserves
|
14,577
|
|
|
—
|
|
|
—
|
|
|
4,226
|
|
|
—
|
|
|
—
|
|
||||
Total impaired loans
|
$
|
15,682
|
|
|
$
|
561
|
|
|
3.6
|
%
|
|
$
|
4,226
|
|
|
$
|
—
|
|
|
—
|
%
|
•
|
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
|
|
Construction and Land
Development
|
|
Consumer and
Single Family
Mortgages
|
|
Unallocated
|
|
Total
|
||||||||||||
ALLL for the year ended December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
8,071
|
|
|
$
|
3,643
|
|
|
$
|
426
|
|
|
$
|
1,290
|
|
|
$
|
76
|
|
|
$
|
13,506
|
|
Charge offs
|
(9,903
|
)
|
|
(42
|
)
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
(9,984
|
)
|
||||||
Recoveries
|
918
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
939
|
|
||||||
Provision
|
9,797
|
|
|
(704
|
)
|
|
(392
|
)
|
|
525
|
|
|
(76
|
)
|
|
9,150
|
|
||||||
Balance at end of year
|
$
|
8,883
|
|
|
$
|
2,897
|
|
|
$
|
34
|
|
|
$
|
1,797
|
|
|
$
|
—
|
|
|
$
|
13,611
|
|
Allowance for loan and lease losses as a percentage of average total loans
|
|
|
|
|
|
|
|
|
|
|
1.24
|
%
|
|||||||||||
Allowance for loan and lease losses as a percentage of total outstanding loans
|
|
|
|
|
|
|
|
|
|
|
1.21
|
%
|
|||||||||||
Ratio of net charge-offs to average loans outstanding during the period
|
|
|
|
|
|
|
|
|
|
|
0.82
|
%
|
|||||||||||
ALLL for the year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
9,155
|
|
|
$
|
2,906
|
|
|
$
|
650
|
|
|
$
|
1,043
|
|
|
$
|
442
|
|
|
$
|
14,196
|
|
Charge offs
|
(2,757
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(2,765
|
)
|
||||||
Recoveries
|
1,959
|
|
|
69
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
2,075
|
|
||||||
Provision
|
(286
|
)
|
|
668
|
|
|
(224
|
)
|
|
208
|
|
|
(366
|
)
|
|
—
|
|
||||||
Balance at end of year
|
$
|
8,071
|
|
|
$
|
3,643
|
|
|
$
|
426
|
|
|
$
|
1,290
|
|
|
$
|
76
|
|
|
$
|
13,506
|
|
Allowance for loan and lease losses as a percentage of average total loans
|
|
|
|
|
|
|
|
|
|
|
1.26
|
%
|
|||||||||||
Allowance for loan and lease losses as a percentage of total outstanding loans
|
|
|
|
|
|
|
|
|
|
|
1.23
|
%
|
|||||||||||
Ratio of net charge-offs to average loans outstanding during the period
|
|
|
|
|
|
|
|
|
|
|
0.06
|
%
|
|||||||||||
ALLL for the year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
11,276
|
|
|
$
|
4,226
|
|
|
$
|
343
|
|
|
$
|
642
|
|
|
$
|
314
|
|
|
$
|
16,801
|
|
Charge offs
|
(4,124
|
)
|
|
(432
|
)
|
|
—
|
|
|
(179
|
)
|
|
—
|
|
|
(4,735
|
)
|
||||||
Recoveries
|
1,852
|
|
|
72
|
|
|
27
|
|
|
179
|
|
|
—
|
|
|
2,130
|
|
||||||
Provision
|
151
|
|
|
(960
|
)
|
|
280
|
|
|
401
|
|
|
128
|
|
|
—
|
|
||||||
Balance at end of year
|
$
|
9,155
|
|
|
$
|
2,906
|
|
|
$
|
650
|
|
|
$
|
1,043
|
|
|
$
|
442
|
|
|
$
|
14,196
|
|
Allowance for loan and lease losses as a percentage of average total loans
|
|
|
|
|
|
|
|
|
|
|
1.42
|
%
|
|||||||||||
Allowance for loan and lease losses as a percentage of total outstanding loans
|
|
|
|
|
|
|
|
|
|
|
1.33
|
%
|
|||||||||||
Ratio of net charge-offs to average loans outstanding during the period
|
|
|
|
|
|
|
|
|
|
|
0.26
|
%
|
|||||||||||
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
|
%
|
•
|
Loans rated “Pass” totaled $1.061 billion, a decrease of $10.9 million from $1.072 billion at December 31, 2018. The decrease was primarily attributable to downgrades of $45.2 million and $29.6 million to “Special Mention” and “Substandard”, respectively, and paydowns of principal, partially offset by upgrades from “Special Mention” of $7.3 million, and new loan growth.
|
•
|
Loans rated “Special Mention” totaled $28.3 million, an increase of $13.0 million from $15.3 million at December 31, 2018. The increase was primarily the result of $45.2 million downgraded from “Pass” and additional outstanding balances of $6.5 million on lines of credit, partially offset by $7.3 million upgraded to "Pass", $18.5 million downgraded to "Substandard", and $12.9 million of payoffs and principal payments.
|
•
|
Loans rated “Substandard” totaled $37.0 million, an increase of $30.4 million from $6.7 million at December 31, 2018. This increase was primarily the result of $29.6 million downgraded from "Pass", $16.9 million downgraded from "Special Mention", partially offset by $161 thousand transferred to other assets, $4.3 million of loans charged-off, and $11.6 million in principal payments.
|
•
|
Loans rated “Doubtful” was zero at both December 31, 2019 and December 31, 2018.
|
|
December 31, 2019
|
|
September 30, 2019
|
|
June 30, 2019
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||
Loans Delinquent:
|
(Dollars in thousands)
|
||||||||||||||||||
90 days or more:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial loans
|
$
|
533
|
|
|
$
|
82
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,273
|
|
Commercial real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Residential mortgages
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Land development loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
533
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
4,273
|
|
|||||
30-89 days:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial loans
|
1,715
|
|
|
3,490
|
|
|
5,334
|
|
|
351
|
|
|
3,705
|
|
|||||
Commercial real estate
|
749
|
|
|
—
|
|
|
—
|
|
|
807
|
|
|
831
|
|
|||||
Residential mortgages
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Land development loans
|
—
|
|
|
4,267
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Consumer loans
|
315
|
|
|
70
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||
|
2,779
|
|
|
7,827
|
|
|
5,334
|
|
|
1,158
|
|
|
4,549
|
|
|||||
Total Past Due(1):
|
$
|
3,312
|
|
|
$
|
7,913
|
|
|
$
|
5,334
|
|
|
$
|
1,158
|
|
|
$
|
8,822
|
|
|
(1)
|
Past due balances include nonaccrual loans.
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Average
Balance
|
|
Average
Rate
|
|
Average
Balance
|
|
Average
Rate
|
|
Average
Balance
|
|
Average
Rate
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Noninterest bearing demand deposits
|
$
|
382,198
|
|
|
—
|
|
|
$
|
348,923
|
|
|
—
|
|
|
$
|
326,105
|
|
|
—
|
|
Interest-bearing checking accounts
|
109,234
|
|
|
0.59
|
%
|
|
69,841
|
|
|
0.52
|
%
|
|
87,771
|
|
|
0.40
|
%
|
|||
Money market and savings deposits
|
438,814
|
|
|
1.74
|
%
|
|
412,366
|
|
|
1.54
|
%
|
|
334,703
|
|
|
0.85
|
%
|
|||
Time deposits(1)
|
265,859
|
|
|
2.26
|
%
|
|
315,189
|
|
|
1.70
|
%
|
|
298,531
|
|
|
1.26
|
%
|
|||
Total deposits
|
$
|
1,196,105
|
|
|
1.19
|
%
|
|
$
|
1,146,319
|
|
|
1.05
|
%
|
|
$
|
1,047,110
|
|
|
0.66
|
%
|
|
(1)
|
Comprised of time certificates of deposit in denominations of less than and more than $100,000.
|
|
At December 31, 2019
|
|
At December 31, 2018
|
||||||||||
|
Amounts
|
|
% of Total Deposits
|
|
Amounts
|
|
% of Total Deposits
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Core deposits
|
|
|
|
|
|
|
|
||||||
Noninterest bearing demand deposits
|
$
|
397,000
|
|
|
33.1
|
%
|
|
$
|
340,406
|
|
|
30.0
|
%
|
Savings and other interest-bearing transaction deposits
|
525,692
|
|
|
43.8
|
%
|
|
524,499
|
|
|
46.2
|
%
|
||
Time deposits
|
276,878
|
|
|
23.1
|
%
|
|
271,097
|
|
|
23.9
|
%
|
||
Total deposits
|
$
|
1,199,570
|
|
|
100.0
|
%
|
|
$
|
1,136,002
|
|
|
100.0
|
%
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
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
|
$
|
6,532
|
|
|
$
|
46,621
|
|
|
$
|
7,074
|
|
|
$
|
60,802
|
|
Over three and through six months
|
4,376
|
|
|
45,882
|
|
|
5,162
|
|
|
64,020
|
|
||||
Over six and through twelve months
|
8,186
|
|
|
93,316
|
|
|
9,936
|
|
|
80,212
|
|
||||
Over twelve months
|
4,926
|
|
|
67,039
|
|
|
4,710
|
|
|
39,181
|
|
||||
Total
|
$
|
24,020
|
|
|
$
|
252,858
|
|
|
$
|
26,882
|
|
|
$
|
244,215
|
|
•
|
well-capitalized
|
•
|
adequately capitalized
|
•
|
undercapitalized
|
•
|
significantly undercapitalized; or
|
•
|
critically undercapitalized
|
|
|
|
|
|
Applicable Federal Regulatory Requirement
|
|||||||||||
At December 31, 2019
|
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:
|
|
|
|
|
|
|
|
|
|
|||||||
Bank
|
171,613
|
|
|
13.8
|
%
|
|
123,451
|
|
|
At least 8.625
|
|
$
|
123,938
|
|
|
At least 10.0
|
Common Equity Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bank
|
157,652
|
|
|
12.7
|
%
|
|
63,518
|
|
|
At least 5.125
|
|
80,560
|
|
|
At least 6.5
|
|
Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|||||||
Bank
|
157,652
|
|
|
12.7
|
%
|
|
82,109
|
|
|
At least 6.625
|
|
$
|
99,151
|
|
|
At least 8.0
|
Tier 1 Capital to Average Assets:
|
|
|
|
|
|
|
|
|
|
|||||||
Bank
|
157,652
|
|
|
11.0
|
%
|
|
57,253
|
|
|
At least 4.0
|
|
$
|
71,566
|
|
|
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
|
$
|
1,199,570
|
|
|
$
|
1,127,605
|
|
|
$
|
67,294
|
|
|
$
|
4,671
|
|
|
$
|
—
|
|
FHLB Borrowings
|
30,000
|
|
|
30,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Junior Subordinated Debentures
|
17,527
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,527
|
|
|||||
Operating Leases
|
13,937
|
|
|
2,408
|
|
|
5,096
|
|
|
6,433
|
|
|
—
|
|
|||||
Total
|
$
|
1,261,034
|
|
|
$
|
1,160,013
|
|
|
$
|
72,390
|
|
|
$
|
11,104
|
|
|
$
|
17,527
|
|
Principal Amounts
|
|
Interest Rate
|
|
Maturity Dates
|
||
(Dollars in thousands)
|
||||||
10,000
|
|
|
1.78
|
%
|
|
January 23, 2020
|
10,000
|
|
|
1.97
|
%
|
|
March 30, 2020
|
10,000
|
|
|
1.71
|
%
|
|
December 30, 2020
|
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, 2019
|
||
|
(Dollars in thousands)
|
||
2020
|
$
|
2,408
|
|
2021
|
2,517
|
|
|
2022
|
2,579
|
|
|
2023
|
2,664
|
|
|
2024 and beyond
|
3,769
|
|
|
Total
|
$
|
13,937
|
|
|
At December 31, 2019
|
||
|
(In thousands)
|
||
2020
|
$
|
185,819
|
|
2021
|
49,434
|
|
|
2022
|
13,527
|
|
|
2023
|
1,043
|
|
|
2024 and beyond
|
3,035
|
|
|
Total
|
$
|
252,858
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS
|
|
Page No.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Cash and due from banks
|
$
|
17,409
|
|
|
$
|
13,250
|
|
Interest bearing deposits with financial institutions
|
202,729
|
|
|
174,468
|
|
||
Cash and cash equivalents
|
220,138
|
|
|
187,718
|
|
||
Interest-bearing time deposits with financial institutions
|
2,420
|
|
|
2,420
|
|
||
Federal Reserve Bank of San Francisco and Federal Home Loan Bank Stock, at cost
|
7,910
|
|
|
8,822
|
|
||
Securities available for sale, at fair value
|
28,344
|
|
|
31,231
|
|
||
Loans (net of allowances of $13,611 and $13,506, respectively)
|
1,117,511
|
|
|
1,083,240
|
|
||
Other real estate owned
|
—
|
|
|
1,173
|
|
||
Accrued interest receivable
|
4,095
|
|
|
4,003
|
|
||
Premises and equipment, net
|
1,117
|
|
|
1,039
|
|
||
Net deferred tax assets
|
8,434
|
|
|
10,935
|
|
||
Other assets
|
26,185
|
|
|
18,757
|
|
||
Total assets
|
$
|
1,416,154
|
|
|
$
|
1,349,338
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Deposits:
|
|
|
|
||||
Noninterest-bearing
|
$
|
397,000
|
|
|
$
|
340,406
|
|
Interest-bearing
|
802,570
|
|
|
795,596
|
|
||
Total deposits
|
1,199,570
|
|
|
1,136,002
|
|
||
Borrowings
|
30,000
|
|
|
40,000
|
|
||
Accrued interest payable
|
398
|
|
|
361
|
|
||
Other liabilities
|
19,611
|
|
|
14,074
|
|
||
Junior subordinated debentures
|
17,527
|
|
|
17,527
|
|
||
Total liabilities
|
1,267,106
|
|
|
1,207,964
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, no par value, 2,000,000 shares authorized:
|
|
|
|
||||
Series A Non-Voting Preferred Stock, no par value, 0 and 1,467,155 shares authorized at December 31, 2019 and December 31, 2018, respectively; 0 and 1,467,155 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively
|
—
|
|
|
8,480
|
|
||
Common stock, no par value, 85,000,000 shares of common stock and 2,000,000 shares of non-voting common stock authorized; 22,106,374 and 1,467,155 shares, respectively, issued and outstanding at December 31, 2019, and 21,916,195 and 0 shares, respectively, issued and outstanding at December 31, 2018.
|
153,570
|
|
|
143,466
|
|
||
Accumulated deficit
|
(3,955
|
)
|
|
(9,428
|
)
|
||
Accumulated other comprehensive loss
|
(567
|
)
|
|
(1,144
|
)
|
||
Total shareholders’ equity
|
149,048
|
|
|
141,374
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,416,154
|
|
|
$
|
1,349,338
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest income:
|
|
|
|
|
|
||||||
Loans, including fees
|
$
|
59,348
|
|
|
$
|
57,626
|
|
|
$
|
48,957
|
|
Securities available for sale and stock
|
1,065
|
|
|
1,160
|
|
|
1,237
|
|
|||
Interest-bearing deposits with financial institutions
|
5,264
|
|
|
3,756
|
|
|
1,379
|
|
|||
Total interest income
|
65,677
|
|
|
62,542
|
|
|
51,573
|
|
|||
Interest expense:
|
|
|
|
|
|
||||||
Deposits
|
14,282
|
|
|
12,070
|
|
|
6,958
|
|
|||
Borrowings
|
1,839
|
|
|
1,550
|
|
|
873
|
|
|||
Total interest expense
|
16,121
|
|
|
13,620
|
|
|
7,831
|
|
|||
Net interest income
|
49,556
|
|
|
48,922
|
|
|
43,742
|
|
|||
Provision for loan and lease losses
|
9,150
|
|
|
—
|
|
|
—
|
|
|||
Net interest income after provision for loan and lease losses
|
40,406
|
|
|
48,922
|
|
|
43,742
|
|
|||
Noninterest income
|
|
|
|
|
|
||||||
Service fees on deposits and other banking services
|
1,782
|
|
|
1,549
|
|
|
1,347
|
|
|||
Net gain on sale of securities available for sale
|
—
|
|
|
48
|
|
|
(4
|
)
|
|||
Net gain on sale of Small Business Administration loans
|
1,029
|
|
|
—
|
|
|
—
|
|
|||
Net loss on sale of other assets
|
(42
|
)
|
|
(4
|
)
|
|
(37
|
)
|
|||
Other noninterest income
|
2,819
|
|
|
3,042
|
|
|
3,068
|
|
|||
Total noninterest income
|
5,588
|
|
|
4,635
|
|
|
4,374
|
|
|||
Noninterest expense
|
|
|
|
|
|
||||||
Salaries and employee benefits
|
23,411
|
|
|
23,749
|
|
|
22,977
|
|
|||
Occupancy
|
2,553
|
|
|
2,388
|
|
|
2,605
|
|
|||
Equipment and depreciation
|
1,884
|
|
|
1,802
|
|
|
1,687
|
|
|||
Data processing
|
2,184
|
|
|
1,681
|
|
|
1,479
|
|
|||
FDIC expense
|
427
|
|
|
927
|
|
|
1,073
|
|
|||
Other real estate owned expense, net
|
69
|
|
|
123
|
|
|
—
|
|
|||
Professional fees
|
3,982
|
|
|
2,468
|
|
|
4,215
|
|
|||
Business development
|
803
|
|
|
946
|
|
|
729
|
|
|||
Loan related expense
|
639
|
|
|
769
|
|
|
456
|
|
|||
Insurance
|
245
|
|
|
248
|
|
|
221
|
|
|||
Other operating expense
|
1,982
|
|
|
1,869
|
|
|
2,316
|
|
|||
Total noninterest expense
|
38,179
|
|
|
36,970
|
|
|
37,758
|
|
|||
Income before income taxes
|
7,815
|
|
|
16,587
|
|
|
10,358
|
|
|||
Income tax provision (benefit)
|
2,135
|
|
|
(10,752
|
)
|
|
(91
|
)
|
|||
Net income allocable to common shareholders
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
Basic income per common share:
|
|
|
|
|
|
||||||
Net income allocable to common shareholders
|
$
|
0.24
|
|
|
$
|
1.17
|
|
|
$
|
0.45
|
|
Diluted income per common share:
|
|
|
|
|
|
||||||
Net income allocable to common shareholders
|
$
|
0.24
|
|
|
$
|
1.16
|
|
|
$
|
0.45
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
22,811,215
|
|
|
22,788,164
|
|
|
23,071,671
|
|
|||
Diluted
|
23,631,879
|
|
|
23,527,183
|
|
|
23,312,292
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Change in unrealized holding gain (loss) on securities available for sale
|
577
|
|
|
(50
|
)
|
|
695
|
|
|||
Less: Reclassification adjustment for change in accounting principle
|
—
|
|
|
(97
|
)
|
|
—
|
|
|||
Less: Reclassification adjustment for net gains included in net income
|
—
|
|
|
48
|
|
|
(4
|
)
|
|||
Net unrealized holding gain (loss) on securities available for sale
|
577
|
|
|
(1
|
)
|
|
699
|
|
|||
Total comprehensive income
|
$
|
6,257
|
|
|
$
|
27,338
|
|
|
$
|
11,148
|
|
|
Series A Non-Voting
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, 2016
|
—
|
|
|
$
|
—
|
|
|
23,005
|
|
|
$
|
148,680
|
|
|
$
|
(47,119
|
)
|
|
$
|
(1,842
|
)
|
|
$
|
99,719
|
|
Issuance of restricted stock, net
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
796
|
|
|
—
|
|
|
—
|
|
|
796
|
|
|||||
Common stock options exercised
|
—
|
|
|
—
|
|
|
206
|
|
|
1,213
|
|
|
—
|
|
|
—
|
|
|
1,213
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,449
|
|
|
—
|
|
|
10,449
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
699
|
|
|
699
|
|
|||||
Balance at December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
23,233
|
|
|
$
|
150,689
|
|
|
$
|
(36,670
|
)
|
|
$
|
(1,143
|
)
|
|
$
|
112,876
|
|
Exchange common stock for Series A Non-Voting Preferred Stock
|
1,467
|
|
|
8,480
|
|
|
(1,467
|
)
|
|
(8,480
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Implementation of ASU 2016-01
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|||||
Issuance of restricted stock, net
|
—
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
885
|
|
|
—
|
|
|
—
|
|
|
885
|
|
|||||
Common stock options exercised
|
—
|
|
|
—
|
|
|
75
|
|
|
372
|
|
|
—
|
|
|
—
|
|
|
372
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,339
|
|
|
—
|
|
|
27,339
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||
Balance at December 31, 2018
|
1,467
|
|
|
$
|
8,480
|
|
|
21,916
|
|
|
$
|
143,466
|
|
|
$
|
(9,428
|
)
|
|
$
|
(1,144
|
)
|
|
$
|
141,374
|
|
Exchange Series A Non-Voting Preferred Stock to Non-Voting Common Stock
|
(1,467
|
)
|
|
(8,480
|
)
|
|
1,467
|
|
|
8,480
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Implementation of ASU 2016-02
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(207
|
)
|
|
—
|
|
|
(207
|
)
|
|||||
Issuance of restricted stock, net
|
—
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Common stock based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
1,057
|
|
|
—
|
|
|
—
|
|
|
1,057
|
|
|||||
Common stock options exercised
|
—
|
|
|
—
|
|
|
86
|
|
|
567
|
|
|
—
|
|
|
—
|
|
|
567
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,680
|
|
|
—
|
|
|
5,680
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
577
|
|
|
577
|
|
|||||
Balance at December 31, 2019
|
—
|
|
|
$
|
—
|
|
|
23,574
|
|
|
$
|
153,570
|
|
|
$
|
(3,955
|
)
|
|
$
|
(567
|
)
|
|
$
|
149,048
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
419
|
|
|
405
|
|
|
428
|
|
|||
Provision for loan and lease losses
|
9,150
|
|
|
—
|
|
|
—
|
|
|||
Amortization of premium on securities
|
150
|
|
|
179
|
|
|
221
|
|
|||
Net (gain) loss on sale of securities available for sale
|
—
|
|
|
(48
|
)
|
|
4
|
|
|||
Unrealized gain/loss on other investments
|
—
|
|
|
59
|
|
|
—
|
|
|||
Net amortization of deferred fees and unearned income on loans
|
(663
|
)
|
|
50
|
|
|
(388
|
)
|
|||
Net loss (gain) on sales of other real estate owned
|
66
|
|
|
(29
|
)
|
|
—
|
|
|||
Net gain on sale of premises and equipment
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Net loss on sale of other assets
|
42
|
|
|
4
|
|
|
37
|
|
|||
Net gain on sale of small business administration loans
|
(1,029
|
)
|
|
—
|
|
|
—
|
|
|||
Small business administration loan originations
|
(12,009
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of small business administration loans
|
13,173
|
|
|
—
|
|
|
—
|
|
|||
Write down of other real estate owned
|
—
|
|
|
102
|
|
|
—
|
|
|||
Stock-based compensation expense
|
1,057
|
|
|
885
|
|
|
796
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Net increase in accrued interest receivable
|
(92
|
)
|
|
(131
|
)
|
|
(1,170
|
)
|
|||
Net decrease (increase) in other assets
|
5,940
|
|
|
(3,193
|
)
|
|
(4,376
|
)
|
|||
Net decrease (increase) in deferred taxes
|
2,259
|
|
|
(11,077
|
)
|
|
—
|
|
|||
Net decrease (increase) in income taxes receivable
|
188
|
|
|
226
|
|
|
(215
|
)
|
|||
Net increase (decrease) in accrued interest payable
|
37
|
|
|
(36
|
)
|
|
196
|
|
|||
Net (decrease) increase in other liabilities
|
(7,347
|
)
|
|
2,529
|
|
|
4,603
|
|
|||
Net cash provided by operating activities
|
17,021
|
|
|
17,264
|
|
|
10,583
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Net decrease in interest-bearing time deposits with financial institutions
|
—
|
|
|
500
|
|
|
749
|
|
|||
Maturities of and principal payments received on securities available for sale and other stock
|
8,580
|
|
|
5,978
|
|
|
7,247
|
|
|||
Purchase of securities available for sale and other stock
|
(5,024
|
)
|
|
(5,215
|
)
|
|
(3,350
|
)
|
|||
Proceeds from sale of securities available for sale and other stock
|
912
|
|
|
6,883
|
|
|
382
|
|
|||
Principal payments received on other investments
|
—
|
|
|
17
|
|
|
—
|
|
|||
Purchase of other investments
|
(876
|
)
|
|
(364
|
)
|
|
(227
|
)
|
|||
Proceeds from sale of other real estate owned
|
1,107
|
|
|
827
|
|
|
—
|
|
|||
Net increase in loans
|
(42,993
|
)
|
|
(32,316
|
)
|
|
(120,205
|
)
|
|||
Proceeds from sale of other assets
|
55
|
|
|
32
|
|
|
141
|
|
|||
Purchases of premises and equipment
|
(497
|
)
|
|
(350
|
)
|
|
(265
|
)
|
|||
Proceeds from sale of premises and equipment
|
—
|
|
|
—
|
|
|
2
|
|
|||
Net cash used in investing activities
|
(38,736
|
)
|
|
(24,008
|
)
|
|
(115,526
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Net increase (decrease) in deposits
|
63,568
|
|
|
(3,391
|
)
|
|
138,093
|
|
|||
Proceeds from borrowings
|
95,000
|
|
|
71,000
|
|
|
70,000
|
|
|||
Payments of borrowings
|
(105,000
|
)
|
|
(71,727
|
)
|
|
(45,000
|
)
|
|||
Proceeds from exercise of common stock options
|
567
|
|
|
372
|
|
|
1,213
|
|
|||
Net cash provided by (used in) financing activities
|
54,135
|
|
|
(3,746
|
)
|
|
164,306
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
32,420
|
|
|
(10,490
|
)
|
|
59,363
|
|
|||
Cash and Cash Equivalents, beginning of period
|
187,718
|
|
|
198,208
|
|
|
138,845
|
|
|||
Cash and Cash Equivalents, end of period
|
$
|
220,138
|
|
|
$
|
187,718
|
|
|
$
|
198,208
|
|
Supplementary Cash Flow Information:
|
|
|
|
|
|
||||||
Cash paid for interest on deposits and other borrowings
|
$
|
16,084
|
|
|
$
|
13,656
|
|
|
$
|
7,635
|
|
Cash paid for income taxes
|
$
|
62
|
|
|
$
|
99
|
|
|
$
|
123
|
|
(Dollars in thousands)
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Non-Cash Investing Activities:
|
|
|
|
|
|
||||||
Transfer of loans into other real estate owned
|
$
|
—
|
|
|
$
|
1,346
|
|
|
$
|
—
|
|
Transfer of loans into other assets
|
$
|
161
|
|
|
$
|
15
|
|
|
$
|
217
|
|
Participation sold accounted for as other borrowings
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
866
|
|
Impact of change in accounting principle
|
$
|
—
|
|
|
$
|
97
|
|
|
$
|
—
|
|
Assumption of debt upon foreclosure of property
|
$
|
—
|
|
|
$
|
727
|
|
|
$
|
—
|
|
Right of use assets
|
$
|
12,677
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-Cash Financing Activities:
|
|
|
|
|
|
||||||
Exchange of common stock for non-voting preferred stock
|
$
|
—
|
|
|
$
|
8,480
|
|
|
$
|
—
|
|
Exchange of non-voting preferred stock for non-voting common stock
|
$
|
8,480
|
|
|
$
|
—
|
|
|
$
|
—
|
|
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, 2019
|
||||||||||||||
(Dollars in thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets at Fair Value:
|
|
|
|
|
|
|
|
||||||||
Debt securities available for sale
|
|
|
|
|
|
|
|
||||||||
Commercial mortgage backed securities issued by U.S. Agencies
|
$
|
9,229
|
|
|
$
|
—
|
|
|
$
|
9,229
|
|
|
$
|
—
|
|
Residential mortgage backed securities issued by U.S. agencies
|
19,115
|
|
|
—
|
|
|
19,115
|
|
|
—
|
|
||||
Total debt securities available for sale at fair value
|
$
|
28,344
|
|
|
$
|
—
|
|
|
$
|
28,344
|
|
|
$
|
—
|
|
|
At December 31, 2018
|
||||||||||||||
(Dollars in thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets at Fair Value:
|
|
|
|
|
|
|
|
||||||||
Debt securities available for sale
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
$
|
2,980
|
|
|
$
|
—
|
|
|
$
|
2,980
|
|
|
$
|
—
|
|
Commercial mortgage backed securities issued by U.S. Agencies
|
4,534
|
|
|
—
|
|
|
4,534
|
|
|
—
|
|
||||
Residential mortgage backed securities issued by U.S. agencies
|
23,717
|
|
|
—
|
|
|
23,717
|
|
|
—
|
|
||||
Total debt securities available for sale
|
31,231
|
|
|
—
|
|
|
31,231
|
|
|
—
|
|
|
At December 31, 2019
|
|
At December 31, 2018
|
||||||||||||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||
Assets at Fair Value:
|
(Dollars in thousands)
|
|
|
||||||||||||||||||||||||||||
Impaired loans
|
$
|
15,682
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,682
|
|
|
$
|
4,226
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,226
|
|
Other foreclosed assets
|
164
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
91
|
|
|
—
|
|
|
91
|
|
|
—
|
|
||||||||
Other real estate owned
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,173
|
|
|
—
|
|
|
1,173
|
|
|
—
|
|
||||||||
Total
|
$
|
15,846
|
|
|
$
|
—
|
|
|
$
|
164
|
|
|
$
|
15,682
|
|
|
$
|
5,490
|
|
|
$
|
—
|
|
|
$
|
1,264
|
|
|
$
|
4,226
|
|
|
Fair Value Measurement as of December 31, 2019
|
|
Valuation Techniques
|
|
Unobservable Inputs
|
|
Range
|
|
Weighted Average
|
||
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
||
Assets
|
|
|
|
|
|
|
|
|
|
||
Impaired loans
|
15,682
|
|
|
Third-Party Pricing
|
|
Discounted cash flow
|
|
N/A (2)
|
|||
|
$
|
15,682
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As part of our process, 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.
|
(2)
|
As of December 31, 2019, there has been no change to our valuation techniques or the types of unobservable inputs used in the calculation of fair value from December 31, 2018.
|
|
Estimated Fair Value
|
||||||||||||||||||||||||||||||||||
At December 31, 2019
|
|
At December 31, 2018
|
|||||||||||||||||||||||||||||||||
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
|
$
|
220,138
|
|
|
$
|
220,138
|
|
|
$
|
220,138
|
|
|
—
|
|
|
—
|
|
|
$
|
187,718
|
|
|
$
|
187,718
|
|
|
$
|
187,718
|
|
|
—
|
|
|
—
|
|
Interest-bearing deposits with financial institutions
|
2,420
|
|
|
2,420
|
|
|
2,420
|
|
|
—
|
|
|
—
|
|
|
2,420
|
|
|
2,420
|
|
|
2,420
|
|
|
—
|
|
|
—
|
|
||||||
Federal Reserve Bank of San Francisco and Federal Home Loan Bank stock
|
7,910
|
|
|
7,910
|
|
|
7,910
|
|
|
—
|
|
|
—
|
|
|
8,822
|
|
|
8,822
|
|
|
8,822
|
|
|
—
|
|
|
—
|
|
||||||
Loans, net
|
1,117,511
|
|
|
1,120,096
|
|
|
—
|
|
|
—
|
|
|
1,120,096
|
|
|
1,083,240
|
|
|
1,066,147
|
|
|
—
|
|
|
—
|
|
|
1,066,147
|
|
||||||
Accrued interest receivable
|
4,095
|
|
|
4,095
|
|
|
4,095
|
|
|
—
|
|
|
—
|
|
|
4,003
|
|
|
4,003
|
|
|
4,003
|
|
|
—
|
|
|
—
|
|
||||||
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Noninterest bearing deposits
|
397,000
|
|
|
397,000
|
|
|
397,000
|
|
|
—
|
|
|
—
|
|
|
340,406
|
|
|
340,406
|
|
|
340,406
|
|
|
—
|
|
|
—
|
|
||||||
Interest-bearing deposits
|
802,570
|
|
|
803,549
|
|
|
—
|
|
|
803,549
|
|
|
—
|
|
|
795,596
|
|
|
794,321
|
|
|
—
|
|
|
794,321
|
|
|
—
|
|
||||||
Borrowings
|
30,000
|
|
|
29,974
|
|
|
—
|
|
|
29,974
|
|
|
—
|
|
|
40,000
|
|
|
39,976
|
|
|
—
|
|
|
39,976
|
|
|
—
|
|
||||||
Junior subordinated debentures
|
17,527
|
|
|
17,527
|
|
|
—
|
|
|
17,527
|
|
|
—
|
|
|
17,527
|
|
|
17,527
|
|
|
—
|
|
|
17,527
|
|
|
—
|
|
||||||
Accrued interest payable
|
398
|
|
|
398
|
|
|
398
|
|
|
—
|
|
|
—
|
|
|
361
|
|
|
361
|
|
|
361
|
|
|
—
|
|
|
—
|
|
(Dollars in thousands)
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
Amortized
Cost
|
|
Gross Unrealized
|
|
Estimated
Fair Value
|
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Estimated
Fair Value
|
|||||||||||||||||||||
Gain
|
|
Loss
|
|
Gain
|
|
Loss
|
|
||||||||||||||||||||||||
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Treasury securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,999
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
2,980
|
|
Commercial mortgage backed securities issued by U.S. Agencies(1)
|
9,147
|
|
|
128
|
|
|
(46
|
)
|
|
9,229
|
|
|
4,495
|
|
|
40
|
|
|
(1
|
)
|
|
4,534
|
|
||||||||
Residential mortgage backed securities issued by U.S. Agencies(2)
|
19,380
|
|
|
12
|
|
|
(277
|
)
|
|
19,115
|
|
|
24,739
|
|
|
1
|
|
|
(1,023
|
)
|
|
23,717
|
|
||||||||
Total
|
$
|
28,527
|
|
|
$
|
140
|
|
|
$
|
(323
|
)
|
|
$
|
28,344
|
|
|
$
|
32,233
|
|
|
$
|
41
|
|
|
$
|
(1,043
|
)
|
|
$
|
31,231
|
|
|
(1)
|
Secured by first liens on commercial apartment building mortgages.
|
(2)
|
Secured by closed-end first liens on 1-4 family residential mortgages.
|
|
At December 31, 2019 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
|
$
|
5,286
|
|
|
$
|
13,032
|
|
|
$
|
6,842
|
|
|
$
|
3,367
|
|
|
$
|
28,527
|
|
Securities available for sale, estimated fair value
|
5,230
|
|
|
12,887
|
|
|
6,849
|
|
|
3,378
|
|
|
28,344
|
|
|||||
Weighted average yield
|
1.58
|
%
|
|
1.66
|
%
|
|
2.22
|
%
|
|
2.53
|
%
|
|
1.88
|
%
|
|
At December 31, 2018 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
|
$
|
7,874
|
|
|
$
|
13,466
|
|
|
$
|
9,971
|
|
|
$
|
922
|
|
|
$
|
32,233
|
|
Securities available for sale, estimated fair value
|
7,663
|
|
|
12,934
|
|
|
9,710
|
|
|
924
|
|
|
31,231
|
|
|||||
Weighted average yield
|
1.46
|
%
|
|
1.62
|
%
|
|
2.22
|
%
|
|
3.13
|
%
|
|
1.81
|
%
|
|
Securities with Unrealized Loss at December 31, 2019
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
||||||||||||
U.S. Treasury securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial mortgage backed securities issued by U.S. Agencies
|
4,472
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
4,472
|
|
|
(46
|
)
|
||||||
Residential mortgage backed securities issued by U.S. Agencies
|
76
|
|
|
(1
|
)
|
|
15,965
|
|
|
(276
|
)
|
|
16,041
|
|
|
(277
|
)
|
||||||
Total
|
$
|
4,548
|
|
|
$
|
(47
|
)
|
|
$
|
15,965
|
|
|
$
|
(276
|
)
|
|
$
|
20,513
|
|
|
$
|
(323
|
)
|
|
Securities with Unrealized Loss at December 31, 2018
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
||||||||||||
U.S. Treasury securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,980
|
|
|
$
|
(19
|
)
|
|
$
|
2,980
|
|
|
$
|
(19
|
)
|
Commercial mortgage backed securities issued by U.S. Agencies
|
999
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
999
|
|
|
(1
|
)
|
||||||
Residential mortgage backed securities issued by U.S. Agencies
|
361
|
|
|
(3
|
)
|
|
23,299
|
|
|
(1,020
|
)
|
|
23,660
|
|
|
(1,023
|
)
|
||||||
Total
|
$
|
1,360
|
|
|
$
|
(4
|
)
|
|
$
|
26,279
|
|
|
$
|
(1,039
|
)
|
|
$
|
27,639
|
|
|
$
|
(1,043
|
)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
(Dollars in thousands)
|
||||||
Equity investments without readily determinable fair value
|
$
|
2,117
|
|
|
$
|
1,240
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||
(Dollars in thousands)
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
Commercial loans
|
$
|
409,420
|
|
|
36.2
|
%
|
|
$
|
444,441
|
|
|
40.7
|
%
|
Commercial real estate loans – owner occupied
|
219,483
|
|
|
19.5
|
%
|
|
211,645
|
|
|
19.3
|
%
|
||
Commercial real estate loans – all other
|
208,283
|
|
|
18.5
|
%
|
|
226,441
|
|
|
20.7
|
%
|
||
Residential mortgage loans – multi-family
|
176,523
|
|
|
15.7
|
%
|
|
97,173
|
|
|
8.9
|
%
|
||
Residential mortgage loans – single family
|
18,782
|
|
|
1.7
|
%
|
|
21,176
|
|
|
1.9
|
%
|
||
Construction and land development loans
|
2,981
|
|
|
0.3
|
%
|
|
38,496
|
|
|
3.5
|
%
|
||
Consumer loans
|
90,867
|
|
|
8.1
|
%
|
|
54,514
|
|
|
5.0
|
%
|
||
Gross loans
|
1,126,339
|
|
|
100.0
|
%
|
|
1,093,886
|
|
|
100.0
|
%
|
||
Deferred loan fees and costs, net
|
4,783
|
|
|
|
|
2,860
|
|
|
|
||||
Allowance for loan and lease losses
|
(13,611
|
)
|
|
|
|
(13,506
|
)
|
|
|
||||
Loans, net
|
$
|
1,117,511
|
|
|
|
|
$
|
1,083,240
|
|
|
|
•
|
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
|
|
Construction and Land
Development
|
|
Consumer and
Single Family
Mortgages
|
|
Unallocated
|
|
Total
|
||||||||||||
ALLL in the year ended December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
8,071
|
|
|
$
|
3,643
|
|
|
$
|
426
|
|
|
$
|
1,290
|
|
|
$
|
76
|
|
|
$
|
13,506
|
|
Charge offs
|
(9,903
|
)
|
|
(42
|
)
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
(9,984
|
)
|
||||||
Recoveries
|
918
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
939
|
|
||||||
Provision
|
9,797
|
|
|
(704
|
)
|
|
(392
|
)
|
|
525
|
|
|
(76
|
)
|
|
9,150
|
|
||||||
Balance at end of year
|
$
|
8,883
|
|
|
$
|
2,897
|
|
|
$
|
34
|
|
|
$
|
1,797
|
|
|
$
|
—
|
|
|
$
|
13,611
|
|
ALLL in the year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
9,155
|
|
|
$
|
2,906
|
|
|
$
|
650
|
|
|
$
|
1,043
|
|
|
$
|
442
|
|
|
$
|
14,196
|
|
Charge offs
|
(2,757
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(2,765
|
)
|
||||||
Recoveries
|
1,959
|
|
|
69
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
2,075
|
|
||||||
Provision
|
(286
|
)
|
|
668
|
|
|
(224
|
)
|
|
208
|
|
|
(366
|
)
|
|
—
|
|
||||||
Balance at end of year
|
$
|
8,071
|
|
|
$
|
3,643
|
|
|
$
|
426
|
|
|
$
|
1,290
|
|
|
$
|
76
|
|
|
$
|
13,506
|
|
ALLL in the year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of year
|
$
|
11,276
|
|
|
$
|
4,226
|
|
|
$
|
343
|
|
|
$
|
642
|
|
|
$
|
314
|
|
|
$
|
16,801
|
|
Charge offs
|
(4,124
|
)
|
|
(432
|
)
|
|
—
|
|
|
(179
|
)
|
|
—
|
|
|
(4,735
|
)
|
||||||
Recoveries
|
1,852
|
|
|
72
|
|
|
27
|
|
|
179
|
|
|
—
|
|
|
2,130
|
|
||||||
Provision
|
151
|
|
|
(960
|
)
|
|
280
|
|
|
401
|
|
|
128
|
|
|
—
|
|
||||||
Balance at end of year
|
$
|
9,155
|
|
|
$
|
2,906
|
|
|
$
|
650
|
|
|
$
|
1,043
|
|
|
$
|
442
|
|
|
$
|
14,196
|
|
(Dollars in thousands)
|
Commercial
|
|
Real Estate
|
|
Land
Development
|
|
Consumer and
Single Family
Mortgages
|
|
Unallocated
|
|
Total
|
||||||||||||
ALLL balance at December 31, 2019 related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans individually evaluated for impairment
|
$
|
561
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
561
|
|
Loans collectively evaluated for impairment
|
$
|
8,322
|
|
|
$
|
2,897
|
|
|
$
|
34
|
|
|
$
|
1,797
|
|
|
$
|
—
|
|
|
$
|
13,050
|
|
Total
|
$
|
8,883
|
|
|
$
|
2,897
|
|
|
$
|
34
|
|
|
$
|
1,797
|
|
|
$
|
—
|
|
|
$
|
13,611
|
|
Loans balance at December 31, 2019 related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans individually evaluated for impairment
|
$
|
9,056
|
|
|
$
|
6,507
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,563
|
|
Loans collectively evaluated for impairment
|
400,364
|
|
|
597,782
|
|
|
2,981
|
|
|
109,649
|
|
|
—
|
|
|
1,110,776
|
|
||||||
Total
|
$
|
409,420
|
|
|
$
|
604,289
|
|
|
$
|
2,981
|
|
|
$
|
109,649
|
|
|
$
|
—
|
|
|
$
|
1,126,339
|
|
ALLL balance at December 31, 2018 related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans individually evaluated for impairment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Loans collectively evaluated for impairment
|
$
|
8,071
|
|
|
$
|
3,643
|
|
|
$
|
426
|
|
|
$
|
1,290
|
|
|
$
|
76
|
|
|
$
|
13,506
|
|
Total
|
$
|
8,071
|
|
|
$
|
3,643
|
|
|
$
|
426
|
|
|
$
|
1,290
|
|
|
$
|
76
|
|
|
$
|
13,506
|
|
Loans balance at December 31, 2018 related to:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans individually evaluated for impairment
|
$
|
3,352
|
|
|
$
|
831
|
|
|
$
|
—
|
|
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
4,226
|
|
Loans collectively evaluated for impairment
|
441,089
|
|
|
534,428
|
|
|
38,496
|
|
|
75,647
|
|
|
—
|
|
|
1,089,660
|
|
||||||
Total
|
$
|
444,441
|
|
|
$
|
535,259
|
|
|
$
|
38,496
|
|
|
$
|
75,690
|
|
|
$
|
—
|
|
|
$
|
1,093,886
|
|
(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, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial loans
|
$
|
354
|
|
|
$
|
1,361
|
|
|
$
|
533
|
|
|
$
|
2,248
|
|
|
$
|
407,172
|
|
|
$
|
409,420
|
|
|
$
|
—
|
|
Commercial real estate loans – owner-occupied
|
749
|
|
|
—
|
|
|
—
|
|
|
749
|
|
|
218,734
|
|
|
219,483
|
|
|
—
|
|
|||||||
Commercial real estate loans – all other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
208,283
|
|
|
208,283
|
|
|
—
|
|
|||||||
Residential mortgage loans – multi-family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
176,523
|
|
|
176,523
|
|
|
—
|
|
|||||||
Residential mortgage loans – single family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,782
|
|
|
18,782
|
|
|
—
|
|
|||||||
Land development loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,981
|
|
|
2,981
|
|
|
—
|
|
|||||||
Consumer loans
|
312
|
|
|
3
|
|
|
—
|
|
|
315
|
|
|
90,552
|
|
|
90,867
|
|
|
—
|
|
|||||||
Total
|
$
|
1,415
|
|
|
$
|
1,364
|
|
|
$
|
533
|
|
|
$
|
3,312
|
|
|
$
|
1,123,027
|
|
|
$
|
1,126,339
|
|
|
$
|
—
|
|
At December 31, 2018
|
|
||||||||||||||||||||||||||
Commercial loans
|
$
|
—
|
|
|
$
|
3,705
|
|
|
$
|
4,273
|
|
|
$
|
7,978
|
|
|
$
|
436,463
|
|
|
$
|
444,441
|
|
|
$
|
1,278
|
|
Commercial real estate loans – owner-occupied
|
—
|
|
|
831
|
|
|
—
|
|
|
831
|
|
|
210,814
|
|
|
211,645
|
|
|
—
|
|
|||||||
Commercial real estate loans – all other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
226,441
|
|
|
226,441
|
|
|
—
|
|
|||||||
Residential mortgage loans – multi-family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97,173
|
|
|
97,173
|
|
|
—
|
|
|||||||
Residential mortgage loans – single family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,176
|
|
|
21,176
|
|
|
—
|
|
|||||||
Land development loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,496
|
|
|
38,496
|
|
|
—
|
|
|||||||
Consumer loans
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
54,501
|
|
|
54,514
|
|
|
—
|
|
|||||||
Total
|
$
|
13
|
|
|
$
|
4,536
|
|
|
$
|
4,273
|
|
|
$
|
8,822
|
|
|
$
|
1,085,064
|
|
|
$
|
1,093,886
|
|
|
$
|
1,278
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Nonaccrual loans:
|
|
|
|
||||
Commercial loans
|
$
|
9,101
|
|
|
$
|
3,352
|
|
Commercial real estate loans – owner occupied
|
6,507
|
|
|
831
|
|
||
Consumer loans
|
74
|
|
|
43
|
|
||
Total(1)
|
$
|
15,682
|
|
|
$
|
4,226
|
|
|
|
December 31,
|
||||||||||
(Dollars in thousands)
|
2019
|
|
2018
|
|
Increase
(Decrease)
|
||||||
Pass:
|
|
|
|
|
|
||||||
Commercial loans
|
$
|
357,079
|
|
|
$
|
428,287
|
|
|
$
|
(71,208
|
)
|
Commercial real estate loans – owner occupied
|
206,589
|
|
|
205,914
|
|
|
675
|
|
|||
Commercial real estate loans – all other
|
208,283
|
|
|
226,441
|
|
|
(18,158
|
)
|
|||
Residential mortgage loans – multi family
|
176,523
|
|
|
97,173
|
|
|
79,350
|
|
|||
Residential mortgage loans – single family
|
18,782
|
|
|
21,176
|
|
|
(2,394
|
)
|
|||
Construction and land development loans
|
2,981
|
|
|
38,496
|
|
|
(35,515
|
)
|
|||
Consumer loans
|
90,793
|
|
|
54,415
|
|
|
36,378
|
|
|||
Total pass loans
|
$
|
1,061,030
|
|
|
$
|
1,071,902
|
|
|
$
|
(10,872
|
)
|
Special Mention:
|
|
|
|
|
|
||||||
Commercial loans
|
$
|
21,894
|
|
|
$
|
10,411
|
|
|
$
|
11,483
|
|
Commercial real estate loans – owner occupied
|
6,387
|
|
|
4,900
|
|
|
1,487
|
|
|||
Total special mention loans
|
$
|
28,281
|
|
|
$
|
15,311
|
|
|
$
|
12,970
|
|
Substandard:
|
|
|
|
|
|
||||||
Commercial loans
|
$
|
30,447
|
|
|
$
|
5,743
|
|
|
$
|
24,704
|
|
Commercial real estate loans – owner occupied
|
6,507
|
|
|
831
|
|
|
5,676
|
|
|||
Consumer loans
|
74
|
|
|
99
|
|
|
(25
|
)
|
|||
Total substandard loans
|
$
|
37,028
|
|
|
$
|
6,673
|
|
|
$
|
30,355
|
|
Total Loans:
|
$
|
1,126,339
|
|
|
$
|
1,093,886
|
|
|
$
|
32,453
|
|
|
December 31,
|
||||||
(Dollars in thousands)
|
2019
|
|
2018
|
||||
Impaired loans:
|
|
||||||
Nonaccruing loans
|
$
|
15,682
|
|
|
$
|
4,226
|
|
Total impaired loans
|
$
|
15,682
|
|
|
$
|
4,226
|
|
Impaired loans less than 90 days delinquent and included in total impaired loans
|
$
|
15,149
|
|
|
$
|
1,359
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related Allowance (1)
|
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related Allowance (1)
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
No allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
$
|
7,996
|
|
|
$
|
12,090
|
|
|
$
|
—
|
|
|
$
|
3,352
|
|
|
$
|
4,516
|
|
|
$
|
—
|
|
Commercial real estate loans – owner occupied
|
6,507
|
|
|
6,784
|
|
|
—
|
|
|
831
|
|
|
925
|
|
|
—
|
|
||||||
Consumer loans
|
74
|
|
|
101
|
|
|
—
|
|
|
43
|
|
|
65
|
|
|
—
|
|
||||||
Total
|
14,577
|
|
|
18,975
|
|
|
—
|
|
|
4,226
|
|
|
5,506
|
|
|
—
|
|
||||||
With allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
$
|
1,105
|
|
|
$
|
1,122
|
|
|
$
|
561
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
1,105
|
|
|
1,122
|
|
|
561
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
$
|
9,101
|
|
|
$
|
13,212
|
|
|
$
|
561
|
|
|
$
|
3,352
|
|
|
$
|
4,516
|
|
|
$
|
—
|
|
Commercial real estate loans – owner occupied
|
6,507
|
|
|
6,784
|
|
|
—
|
|
|
831
|
|
|
925
|
|
|
—
|
|
||||||
Consumer loans
|
74
|
|
|
101
|
|
|
—
|
|
|
43
|
|
|
65
|
|
|
—
|
|
||||||
Total
|
15,682
|
|
|
20,097
|
|
|
561
|
|
|
4,226
|
|
|
5,506
|
|
|
—
|
|
|
(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,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
|
Average Balance
|
|
Interest Income Recognized
|
|
Average Balance
|
|
Interest Income Recognized
|
|
Average Balance
|
|
Interest Income Recognized
|
||||||||||||
|
|
|
|
|
|
||||||||||||||||||
No allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
$
|
3,828
|
|
|
$
|
581
|
|
|
$
|
4,289
|
|
|
$
|
101
|
|
|
$
|
10,178
|
|
|
$
|
128
|
|
Commercial real estate loans – owner occupied
|
3,038
|
|
|
267
|
|
|
856
|
|
|
—
|
|
|
1,215
|
|
|
—
|
|
||||||
Commercial real estate loans – all other
|
—
|
|
|
—
|
|
|
370
|
|
|
—
|
|
|
1,616
|
|
|
—
|
|
||||||
Residential mortgage loans – single family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183
|
|
|
—
|
|
||||||
Consumer loans
|
69
|
|
|
3
|
|
|
48
|
|
|
—
|
|
|
80
|
|
|
5
|
|
||||||
Total
|
6,935
|
|
|
851
|
|
|
5,563
|
|
|
101
|
|
|
13,272
|
|
|
133
|
|
||||||
With allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
221
|
|
|
53
|
|
|
96
|
|
|
—
|
|
|
3,150
|
|
|
33
|
|
||||||
Total
|
221
|
|
|
53
|
|
|
96
|
|
|
—
|
|
|
3,150
|
|
|
33
|
|
||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans
|
4,049
|
|
|
634
|
|
|
4,385
|
|
|
101
|
|
|
13,328
|
|
|
161
|
|
||||||
Commercial real estate loans – owner occupied
|
3,038
|
|
|
267
|
|
|
856
|
|
|
—
|
|
|
1,215
|
|
|
—
|
|
||||||
Commercial real estate loans – all other
|
—
|
|
|
—
|
|
|
370
|
|
|
—
|
|
|
1,616
|
|
|
—
|
|
||||||
Residential mortgage loans – single family
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183
|
|
|
—
|
|
||||||
Consumer loans
|
69
|
|
|
3
|
|
|
48
|
|
|
—
|
|
|
80
|
|
|
5
|
|
||||||
Total
|
$
|
7,156
|
|
|
$
|
904
|
|
|
$
|
5,659
|
|
|
$
|
101
|
|
|
$
|
16,422
|
|
|
$
|
166
|
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||||||||||||||
(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
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1
|
|
|
$
|
450
|
|
|
$
|
450
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
450
|
|
|
450
|
|
||||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1,329
|
|
|
809
|
|
||||||
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1,329
|
|
|
809
|
|
||||||
Total troubled debt restructurings(1)
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
|
|
$
|
1,779
|
|
|
$
|
1,259
|
|
|
(1)
|
No loans were restructured during the years ended December 31, 2019 or December 31, 2018.
|
(Dollars in thousands)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Furniture and equipment
|
$
|
2,424
|
|
|
$
|
3,170
|
|
Leasehold improvements
|
1,112
|
|
|
42
|
|
||
|
3,536
|
|
|
3,212
|
|
||
Accumulated depreciation and amortization
|
(2,419
|
)
|
|
(2,173
|
)
|
||
Total
|
$
|
1,117
|
|
|
$
|
1,039
|
|
(Dollars in thousands)
|
At December 31, 2019
|
||
2020
|
$
|
87,850
|
|
2021
|
21,861
|
|
|
2022
|
1,703
|
|
|
2023
|
—
|
|
|
2024 and beyond
|
333
|
|
|
Total
|
$
|
111,747
|
|
|
|
Year Ended December 31,
|
||
|
|
2019
|
||
Lease cost
|
(Dollars in thousands)
|
|||
Operating lease cost
|
|
$
|
2,271
|
|
Short-term lease cost(1)
|
|
158
|
|
|
Total lease cost
|
|
$
|
2,429
|
|
|
|
|
||
Weighted-average remaining lease term—operating leases (in years)
|
|
5.37
|
|
|
|
Financial Statement Classification
|
|
December 31, 2019
|
||
|
|
|
(Dollars in thousands)
|
||
Operating right-of-use assets
|
Other assets
|
|
$
|
12,159
|
|
Operating lease liabilities
|
Other liabilities
|
|
$
|
13,020
|
|
|
Year Ended December 31,
|
||
|
2019
|
||
|
(Dollars in thousands)
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
||
Operating cash flows from operating leases (fixed payments)
|
$
|
2,031
|
|
|
|
||
Non-cash activities:
|
|
||
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
12,677
|
|
|
December 31,
|
||||||
(Dollars in thousands)
|
2019
|
|
2018
|
||||
FHLB advances—short-term
|
$
|
30,000
|
|
|
$
|
40,000
|
|
Total
|
$
|
30,000
|
|
|
$
|
40,000
|
|
Principal Amounts
|
|
Interest Rate
|
|
Maturity Dates
|
||
(Dollars in thousands)
|
||||||
10,000
|
|
|
1.78
|
%
|
|
January 23, 2020
|
10,000
|
|
|
1.97
|
%
|
|
March 30, 2020
|
10,000
|
|
|
1.71
|
%
|
|
December 30, 2020
|
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.
|
(Dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Current taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(125
|
)
|
State
|
48
|
|
|
97
|
|
|
34
|
|
|||
Total current taxes
|
48
|
|
|
97
|
|
|
(91
|
)
|
|||
Deferred taxes:
|
|
|
|
|
|
||||||
Federal
|
1,469
|
|
|
(6,065
|
)
|
|
—
|
|
|||
State
|
618
|
|
|
(4,784
|
)
|
|
—
|
|
|||
Total deferred taxes
|
2,087
|
|
|
(10,849
|
)
|
|
—
|
|
|||
Total income tax (benefit) expense
|
$
|
2,135
|
|
|
$
|
(10,752
|
)
|
|
$
|
(91
|
)
|
(Dollars in thousands)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Deferred tax asset:
|
|
|
|
||||
Allowance for loan and lease losses
|
$
|
4,025
|
|
|
$
|
3,996
|
|
State taxes
|
18
|
|
|
20
|
|
||
Deferred compensation
|
503
|
|
|
641
|
|
||
Litigation reserve
|
—
|
|
|
81
|
|
||
Other accrued expenses
|
539
|
|
|
504
|
|
||
Charitable contributions
|
161
|
|
|
127
|
|
||
Reserve for unfunded commitments
|
103
|
|
|
103
|
|
||
Tax credits
|
227
|
|
|
368
|
|
||
Net operating loss carry forward
|
3,699
|
|
|
5,642
|
|
||
Stock based compensation
|
448
|
|
|
166
|
|
||
Unrealized losses on securities
|
54
|
|
|
296
|
|
||
Lease liability
|
3,849
|
|
|
—
|
|
||
Total deferred tax assets
|
13,626
|
|
|
11,944
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
(185
|
)
|
|
(163
|
)
|
||
ROU Lease asset
|
(3,595
|
)
|
|
—
|
|
||
Other
|
(1,414
|
)
|
|
(846
|
)
|
||
Total deferred tax liabilities
|
(5,194
|
)
|
|
(1,009
|
)
|
||
Total net deferred tax asset
|
$
|
8,432
|
|
|
$
|
10,935
|
|
|
|
Federal
|
|
State
|
|
Expiration
|
||||
|
|
(amounts in thousands)
|
|
|
||||||
2009(1)
|
|
—
|
|
|
(438
|
)
|
|
12/31/2032
|
||
2010(1)
|
|
—
|
|
|
5,258
|
|
|
12/31/2032
|
||
2012
|
|
—
|
|
|
774
|
|
|
12/31/2032
|
||
2013
|
|
—
|
|
|
8,727
|
|
|
12/31/2033
|
||
2015
|
|
—
|
|
|
280
|
|
|
12/31/2035
|
||
2016
|
|
6,001
|
|
|
14,453
|
|
|
12/31/2036
|
||
2017
|
|
—
|
|
|
—
|
|
|
12/31/2037
|
||
2018(2)
|
|
—
|
|
|
—
|
|
|
12/31/2038
|
||
|
|
$
|
6,001
|
|
|
$
|
29,054
|
|
|
|
|
(1)
|
California net operating loss carryforwards were suspended by the Franchise Tax Board during these periods and the carryover was extended.
|
(2)
|
As a result of the Tax Cuts and Jobs Act, federal net operating loss carryforwards do not expire starting with any losses sustained during 2018 or later. California net operating loss carryforwards begin to expire on the date listed.
|
|
Year Ended December 31,
|
||||||||||
Assumptions with respect to:
|
2019
|
|
2018
|
|
2017
|
||||||
Expected volatility
|
28
|
%
|
|
30
|
%
|
|
33
|
%
|
|||
Risk-free interest rate
|
1.35
|
%
|
|
2.69
|
%
|
|
1.98
|
%
|
|||
Expected dividends
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Expected term (years)
|
5.1
|
|
|
5.8
|
|
|
5.7
|
|
|||
Weighted average fair value of options granted during period
|
$
|
1.99
|
|
|
$
|
2.81
|
|
|
$
|
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
|
|||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Outstanding – January 1,
|
864,330
|
|
|
$
|
6.86
|
|
|
792,577
|
|
|
$
|
6.41
|
|
|
1,066,914
|
|
|
$
|
6.35
|
|
Granted
|
250,000
|
|
|
7.33
|
|
|
154,011
|
|
|
8.20
|
|
|
3,700
|
|
|
8.21
|
|
|||
Exercised
|
(86,229
|
)
|
|
6.57
|
|
|
(75,108
|
)
|
|
4.95
|
|
|
(205,970
|
)
|
|
5.89
|
|
|||
Forfeited/Canceled
|
(18,635
|
)
|
|
8.15
|
|
|
(7,150
|
)
|
|
6.47
|
|
|
(72,067
|
)
|
|
7.06
|
|
|||
Outstanding – December 31,
|
1,009,466
|
|
|
6.98
|
|
|
864,330
|
|
|
6.86
|
|
|
792,577
|
|
|
6.41
|
|
|||
Options Exercisable – December 31,
|
675,144
|
|
|
6.72
|
|
|
588,873
|
|
|
6.49
|
|
|
537,229
|
|
|
6.17
|
|
|||
Options Vested – December 31,
|
675,144
|
|
|
$
|
6.72
|
|
|
588,873
|
|
|
$
|
6.49
|
|
|
537,229
|
|
|
$
|
6.17
|
|
Options Outstanding as of December 31, 2019
|
|
Options Exercisable
as of December 31, 2019(1) |
||||||||||||||||
|
Vested
|
|
Unvested
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Shares
|
|
Weighted
Average
Exercise Price
|
|||||||
$2.97 – $3.99
|
18,003
|
|
|
—
|
|
|
$
|
3.48
|
|
|
1.45
|
|
18,003
|
|
|
$
|
3.48
|
|
$4.00 – $5.99
|
16,000
|
|
|
—
|
|
|
4.34
|
|
|
1.30
|
|
16,000
|
|
|
4.34
|
|
||
$6.00– $6.99
|
415,937
|
|
|
13,300
|
|
|
6.58
|
|
|
4.28
|
|
415,937
|
|
|
6.57
|
|
||
$7.00– $7.99
|
155,750
|
|
|
250,000
|
|
|
7.23
|
|
|
8.18
|
|
155,750
|
|
|
7.08
|
|
||
$8.00-$8.40
|
69,454
|
|
|
71,022
|
|
|
8.19
|
|
|
8.13
|
|
69,454
|
|
|
8.17
|
|
||
|
675,144
|
|
|
334,322
|
|
|
$
|
6.98
|
|
|
6.29
|
|
675,144
|
|
|
$
|
6.72
|
|
|
(1)
|
The weighted average remaining contractual life of the options that were exercisable as of December 31, 2019 was 4.84 years.
|
|
For the year ended
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
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
|
275,457
|
|
|
$
|
2.79
|
|
|
255,348
|
|
|
$
|
2.80
|
|
|
461,944
|
|
|
$
|
2.79
|
|
Granted
|
250,000
|
|
|
1.99
|
|
|
154,011
|
|
|
2.81
|
|
|
3,700
|
|
|
2.84
|
|
|||
Vested
|
(173,160
|
)
|
|
2.79
|
|
|
(126,752
|
)
|
|
2.84
|
|
|
(141,829
|
)
|
|
2.83
|
|
|||
Forfeited/Canceled
|
(17,975
|
)
|
|
2.81
|
|
|
(7,150
|
)
|
|
2.66
|
|
|
(68,467
|
)
|
|
2.68
|
|
|||
Unvested at the end of the year
|
334,322
|
|
|
$
|
2.19
|
|
|
275,457
|
|
|
$
|
2.79
|
|
|
255,348
|
|
|
$
|
2.80
|
|
|
For the year ended
|
|
|
|
|
|||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Number of Shares
|
|
Average Grant Date Fair Value
|
|
Number of Shares
|
|
Average Grant Date Fair Value
|
|
Number of Shares
|
|
Average Grant Date Fair Value
|
|||||||||
Outstanding at the beginning of the year
|
115,031
|
|
|
$
|
8.04
|
|
|
103,508
|
|
|
$
|
7.33
|
|
|
151,298
|
|
|
$
|
6.84
|
|
Granted
|
126,976
|
|
|
8.58
|
|
|
82,217
|
|
|
8.33
|
|
|
40,907
|
|
|
8.02
|
|
|||
Vested
|
(94,779
|
)
|
|
8.07
|
|
|
(64,204
|
)
|
|
7.29
|
|
|
(69,667
|
)
|
|
6.80
|
|
|||
Forfeited
|
(23,026
|
)
|
|
8.66
|
|
|
(6,490
|
)
|
|
7.92
|
|
|
(19,030
|
)
|
|
6.82
|
|
|||
Outstanding at the end of the year
|
124,202
|
|
|
$
|
8.44
|
|
|
115,031
|
|
|
$
|
8.04
|
|
|
103,508
|
|
|
$
|
7.33
|
|
|
For the twelve months ended December 31,
|
||||||||||||
|
2019
|
|
2018 (1)
|
||||||||||
|
Number of Shares
|
|
Average Grant Date Fair Value Per Share
|
|
Number of Shares
|
|
Average Grant Date Fair Value Per Share
|
||||||
Outstanding at the beginning of the period
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
100,000
|
|
|
7.33
|
|
|
—
|
|
|
—
|
|
||
Vested
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Outstanding at the end of the period
|
100,000
|
|
|
$
|
7.33
|
|
|
—
|
|
|
$
|
—
|
|
|
Estimated Stock Based Compensation Expense
|
||||||||||||||
|
Stock Options
|
|
Restricted Stock
|
|
Stock Units
|
|
Total
|
||||||||
(Dollars in thousands)
|
|
|
|
|
|
|
|
||||||||
For the years ending December 31,
|
|
|
|
|
|
|
|
||||||||
2020
|
$
|
201
|
|
|
$
|
337
|
|
|
$
|
245
|
|
|
$
|
783
|
|
2021
|
134
|
|
|
241
|
|
|
244
|
|
|
619
|
|
||||
2022
|
115
|
|
|
83
|
|
|
164
|
|
|
362
|
|
||||
2023
|
102
|
|
|
36
|
|
|
—
|
|
|
138
|
|
||||
2024 and beyond
|
67
|
|
|
10
|
|
|
—
|
|
|
77
|
|
||||
|
$
|
619
|
|
|
$
|
707
|
|
|
$
|
653
|
|
|
$
|
1,979
|
|
|
At December 31,
|
||||||||||
(Dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Change in benefit obligation:
|
|
|
|
|
|
||||||
Benefit obligation at beginning of period
|
$
|
2,169
|
|
|
$
|
2,345
|
|
|
$
|
2,511
|
|
Service cost
|
—
|
|
|
—
|
|
|
—
|
|
|||
Interest cost
|
120
|
|
|
131
|
|
|
141
|
|
|||
Actuarial loss/(gain)
|
—
|
|
|
—
|
|
|
—
|
|
|||
(Benefits paid)
|
(307
|
)
|
|
(307
|
)
|
|
(307
|
)
|
|||
Benefit obligation at end of period
|
$
|
1,982
|
|
|
$
|
2,169
|
|
|
$
|
2,345
|
|
Funded status:
|
|
|
|
|
|
||||||
Amounts recognized in the Statement of Financial Condition
|
|
|
|
|
|
||||||
Unfunded accrued SERP liability—current
|
$
|
(299
|
)
|
|
$
|
(299
|
)
|
|
$
|
(299
|
)
|
Unfunded accrued SERP liability—noncurrent
|
(1,684
|
)
|
|
(1,870
|
)
|
|
(2,046
|
)
|
|||
Total unfunded accrued SERP liability
|
$
|
(1,983
|
)
|
|
$
|
(2,169
|
)
|
|
$
|
(2,345
|
)
|
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
|
$
|
1,982
|
|
|
$
|
2,169
|
|
|
$
|
2,345
|
|
Components of net periodic SERP cost year to date:
|
|
|
|
|
|
||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
120
|
|
|
131
|
|
|
141
|
|
|||
Amortization of prior service cost/(benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Amortization of net actuarial loss/(gain)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net periodic SERP cost
|
$
|
120
|
|
|
$
|
131
|
|
|
$
|
141
|
|
(In thousands, except per share data)
|
For the Year Ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Basic EPS:
|
|
|
|
|
|
||||||
Net income
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
Less dividends on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|||
Less dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|||
Less dividends on unvested shares
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income allocable to common shareholders
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
Less earnings allocated to participating securities
|
166
|
|
|
648
|
|
|
49
|
|
|||
Earnings allocated to common shareholders
|
$
|
5,514
|
|
|
$
|
26,691
|
|
|
$
|
10,400
|
|
Weighted average common shares outstanding
|
22,811
|
|
|
22,788
|
|
|
23,072
|
|
|||
Basic earnings per common share
|
$
|
0.24
|
|
|
$
|
1.17
|
|
|
$
|
0.45
|
|
Diluted EPS:
|
|
|
|
|
|
||||||
Earnings allocated to common shareholders
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
Weighted average common shares outstanding
|
22,811
|
|
|
22,788
|
|
|
23,072
|
|
|||
Add dilutive effects of restricted stock grants
|
149
|
|
|
115
|
|
|
109
|
|
|||
Add dilutive effects for assumed conversion of Series A preferred stock
|
539
|
|
|
438
|
|
|
—
|
|
|||
Add dilutive effect for stock options
|
133
|
|
|
186
|
|
|
131
|
|
|||
Weighted average diluted common shares outstanding
|
23,632
|
|
|
23,527
|
|
|
23,312
|
|
|||
Diluted earnings per common share
|
$
|
0.24
|
|
|
$
|
1.16
|
|
|
$
|
0.45
|
|
|
(1)
|
The basic and diluted earnings per share amounts for the years ended December 31, 2019, 2018 and 2017 are the same under both the Treasury Stock Method and the Two-Class Method as prescribed in FASB ASC 260-10, Earnings Per Share.
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Stock options(1)
|
265,093
|
|
|
138,608
|
|
|
200,824
|
|
|
(1)
|
Stock options were excluded from the computation of diluted earnings per common share for the years ended December 31, 2019, 2018 and 2017 because the options were either “out-of-the-money” or the effect of exercise would have been antidilutive.
|
|
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, 2017
|
$
|
(1,842
|
)
|
|
$
|
(1,842
|
)
|
Other comprehensive income before reclassifications(1)
|
695
|
|
|
695
|
|
||
Amounts reclassified from accumulated other comprehensive income, net of tax(2)
|
4
|
|
|
4
|
|
||
Other comprehensive income(1)
|
699
|
|
|
699
|
|
||
Ending balance as of December 31, 2017
|
$
|
(1,143
|
)
|
|
$
|
(1,143
|
)
|
Other comprehensive income before reclassifications, net of tax of $142 thousand
|
(50
|
)
|
|
(50
|
)
|
||
Amounts reclassified from accumulated other comprehensive loss(3)
|
49
|
|
|
49
|
|
||
Other comprehensive loss, net of tax of $142 thousand
|
(1
|
)
|
|
(1
|
)
|
||
Ending balance as of December 31, 2018
|
$
|
(1,144
|
)
|
|
$
|
(1,144
|
)
|
Other comprehensive income before reclassifications, net of tax of $62 thousand
|
577
|
|
|
577
|
|
||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
||
Other comprehensive loss, net of tax of $62 thousand
|
577
|
|
|
577
|
|
||
Ending balance as of December 31, 2019
|
$
|
(567
|
)
|
|
$
|
(567
|
)
|
|
(1)
|
No tax impact as a result of the full valuation allowance recorded against our deferred tax asset at December 31, 2017.
|
(2)
|
Relates to the realized loss on our securities available for sale. The realized loss is included within Net loss on sale of securities available for sale.
|
(3)
|
This balance consists of the $48 thousand net gain on sale of available for sale debt securities included in our consolidated statement of operations offset by $97 thousand included in our consolidated statement of shareholders' equity as an adjustment to our beginning retained earnings.
|
•
|
well-capitalized
|
•
|
adequately capitalized
|
•
|
undercapitalized
|
•
|
significantly undercapitalized; or
|
•
|
critically undercapitalized
|
|
|
|
|
|
Applicable Federal Regulatory Requirement
|
|||||||||||
At December 31, 2019
|
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:
|
|
|
|
|
|
|
|
|
|
|||||||
Bank
|
171,613
|
|
|
13.8
|
%
|
|
123,451
|
|
|
At least 8.625
|
|
$
|
123,938
|
|
|
At least 10.0
|
Common Equity Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bank
|
157,652
|
|
|
12.7
|
%
|
|
63,518
|
|
|
At least 5.125
|
|
80,560
|
|
|
At least 6.5
|
|
Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bank
|
157,652
|
|
|
12.7
|
%
|
|
82,109
|
|
|
At least 6.625
|
|
$
|
99,151
|
|
|
At least 8.0
|
Tier 1 Capital to Average Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bank
|
157,652
|
|
|
11.0
|
%
|
|
57,253
|
|
|
At least 4.0
|
|
$
|
71,566
|
|
|
At least 5.0
|
|
|
|
|
|
Applicable Federal Regulatory Requirement
|
|||||||||||
At December 31, 2018
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bank
|
160,372
|
|
|
13.0
|
%
|
|
106,072
|
|
|
At least 8.625
|
|
$
|
122,982
|
|
|
At least 10.0
|
Common Equity Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bank
|
146,516
|
|
|
11.9
|
%
|
|
63,028
|
|
|
At least 5.125
|
|
79,938
|
|
|
At least 6.5
|
|
Tier 1 Capital to Risk Weighted Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bank
|
146,516
|
|
|
11.9
|
%
|
|
81,475
|
|
|
At least 6.625
|
|
$
|
98,385
|
|
|
At least 8.0
|
Tier 1 Capital to Average Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bank
|
146,516
|
|
|
10.8
|
%
|
|
54,403
|
|
|
At least 4.0
|
|
$
|
68,004
|
|
|
At least 5.0
|
|
December 31,
|
||||||
(Dollars in thousands)
|
2019
|
|
2018
|
||||
Assets:
|
|
|
|
||||
Due from banks and interest-bearing deposits with financial institutions
|
$
|
15,717
|
|
|
$
|
16,699
|
|
Investment in subsidiaries
|
160,302
|
|
|
151,516
|
|
||
Other assets
|
630
|
|
|
(286
|
)
|
||
Total assets
|
$
|
176,649
|
|
|
$
|
167,929
|
|
Liabilities and shareholders’ equity:
|
|
|
|
||||
Liabilities
|
$
|
93
|
|
|
$
|
102
|
|
Junior subordinated debentures
|
17,527
|
|
|
17,527
|
|
||
Shareholders’ equity
|
159,029
|
|
|
150,300
|
|
||
Total liabilities and shareholders’ equity
|
$
|
176,649
|
|
|
$
|
167,929
|
|
|
Year Ended December 31,
|
||||||||||
(Dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Interest income
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Interest expense
|
(893
|
)
|
|
(845
|
)
|
|
(670
|
)
|
|||
Other income
|
27
|
|
|
25
|
|
|
24
|
|
|||
Other expenses
|
(1,608
|
)
|
|
(1,302
|
)
|
|
(1,045
|
)
|
|||
Equity in undistributed earnings (loss) of subsidiaries
|
7,359
|
|
|
29,889
|
|
|
12,195
|
|
|||
Income tax (expense) benefit
|
789
|
|
|
(432
|
)
|
|
(58
|
)
|
|||
Net income (loss)
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
|
Year Ended December 31,
|
||||||||||
(Dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
5,680
|
|
|
$
|
27,339
|
|
|
$
|
10,449
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
||||||
Net decrease (increase) in other assets
|
(65
|
)
|
|
9
|
|
|
47
|
|
|||
Net decrease in deferred taxes
|
(851
|
)
|
|
331
|
|
|
—
|
|
|||
Stock-based compensation expense
|
1,057
|
|
|
885
|
|
|
796
|
|
|||
Undistributed (income) loss of subsidiary
|
(7,359
|
)
|
|
(29,889
|
)
|
|
(12,195
|
)
|
|||
Net increase (decrease) in interest payable
|
(10
|
)
|
|
26
|
|
|
11
|
|
|||
Net (decrease) increase in other liabilities
|
—
|
|
|
(1
|
)
|
|
(26
|
)
|
|||
Net cash used in operating activities
|
(1,548
|
)
|
|
(1,300
|
)
|
|
(918
|
)
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Net cash provided by investing activities
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Common stock options exercised
|
566
|
|
|
372
|
|
|
1,213
|
|
|||
Return of capital from subsidiaries
|
—
|
|
|
3,711
|
|
|
15,000
|
|
|||
Capital contribution to subsidiaries
|
—
|
|
|
—
|
|
|
(10,000
|
)
|
|||
Net cash provided by financing activities
|
566
|
|
|
4,083
|
|
|
6,213
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(982
|
)
|
|
2,783
|
|
|
5,295
|
|
|||
Cash and Cash Equivalents, beginning of period
|
16,699
|
|
|
13,916
|
|
|
8,621
|
|
|||
Cash and Cash Equivalents, end of period
|
$
|
15,717
|
|
|
$
|
16,699
|
|
|
$
|
13,916
|
|
(Dollars in thousands)
|
Commercial
|
|
Other(1)
|
|
Total
|
||||||
Net interest income (expense) for the year ended December 31,
|
|
||||||||||
2019
|
$
|
50,443
|
|
|
$
|
(887
|
)
|
|
$
|
49,556
|
|
2018
|
$
|
48,150
|
|
|
$
|
772
|
|
|
$
|
48,922
|
|
2017
|
$
|
42,995
|
|
|
$
|
747
|
|
|
$
|
43,742
|
|
Noninterest income for the year ended December 31,
|
|
|
|
|
|
||||||
2019
|
$
|
5,561
|
|
|
$
|
27
|
|
|
$
|
5,588
|
|
2018
|
$
|
4,610
|
|
|
$
|
25
|
|
|
$
|
4,635
|
|
2017
|
$
|
3,948
|
|
|
$
|
426
|
|
|
$
|
4,374
|
|
Segment Assets at:
|
|
|
|
|
|
||||||
December 31, 2019
|
$
|
1,414,996
|
|
|
$
|
1,158
|
|
|
$
|
1,416,154
|
|
December 31, 2018
|
$
|
1,349,097
|
|
|
$
|
241
|
|
|
$
|
1,349,338
|
|
|
(1)
|
Represents net interest income and noninterest income for PMAR and PMBC.
|
|
Three Months Ended
|
||||||||||||||
|
December 31, 2019
|
|
September 30, 2019
|
|
June 30, 2019
|
|
March 31, 2019
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Total interest income
|
$
|
16,277
|
|
|
$
|
16,767
|
|
|
$
|
16,466
|
|
|
$
|
16,167
|
|
Total interest expense
|
3,734
|
|
|
4,024
|
|
|
4,247
|
|
|
4,116
|
|
||||
Net interest income
|
12,543
|
|
|
12,743
|
|
|
12,219
|
|
|
12,051
|
|
||||
Provision for loan and lease losses
|
3,750
|
|
|
2,100
|
|
|
—
|
|
|
3,300
|
|
||||
Net interest income after provision for loan and lease losses
|
8,793
|
|
|
10,643
|
|
|
12,219
|
|
|
8,751
|
|
||||
Total noninterest income
|
1,369
|
|
|
1,342
|
|
|
1,386
|
|
|
1,490
|
|
||||
Total noninterest expense
|
9,790
|
|
|
9,697
|
|
|
9,707
|
|
|
8,983
|
|
||||
Income before income taxes
|
372
|
|
|
2,288
|
|
|
3,898
|
|
|
1,258
|
|
||||
Income tax (benefit) provision
|
(68
|
)
|
|
658
|
|
|
1,170
|
|
|
376
|
|
||||
Net income allocable to common shareholders
|
$
|
440
|
|
|
$
|
1,630
|
|
|
$
|
2,728
|
|
|
$
|
882
|
|
Per share data-basic:
|
|
|
|
|
|
|
|
||||||||
Net income allocable to common shareholders
|
$
|
0.02
|
|
|
$
|
0.07
|
|
|
$
|
0.12
|
|
|
$
|
0.04
|
|
Per share data-diluted:
|
|
|
|
|
|
|
|
||||||||
Net income allocable to common shareholders
|
$
|
0.02
|
|
|
$
|
0.07
|
|
|
$
|
0.12
|
|
|
$
|
0.04
|
|
|
Three Months Ended
|
||||||||||||||
|
December 31, 2018
|
|
September 30, 2018
|
|
June 30, 2018
|
|
March 31, 2018
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Total interest income
|
$
|
16,395
|
|
|
$
|
15,218
|
|
|
$
|
15,914
|
|
|
$
|
15,015
|
|
Total interest expense
|
3,794
|
|
|
3,529
|
|
|
3,467
|
|
|
2,830
|
|
||||
Net interest income
|
12,601
|
|
|
11,689
|
|
|
12,447
|
|
|
12,185
|
|
||||
Provision for loan and lease losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net interest income after provision for loan and lease losses
|
12,601
|
|
|
11,689
|
|
|
12,447
|
|
|
12,185
|
|
||||
Total noninterest income
|
1,329
|
|
|
1,115
|
|
|
1,136
|
|
|
1,055
|
|
||||
Total noninterest expense
|
9,135
|
|
|
9,002
|
|
|
9,299
|
|
|
9,533
|
|
||||
Income before income taxes
|
4,795
|
|
|
3,802
|
|
|
4,284
|
|
|
3,707
|
|
||||
Income tax (benefit) provision
|
431
|
|
|
(98
|
)
|
|
(11,085
|
)
|
|
—
|
|
||||
Net income (loss) allocable to common shareholders
|
$
|
4,364
|
|
|
$
|
3,900
|
|
|
$
|
15,369
|
|
|
$
|
3,707
|
|
Per share data-basic:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) allocable to common shareholders
|
$
|
0.19
|
|
|
$
|
0.17
|
|
|
$
|
0.66
|
|
|
$
|
0.16
|
|
Per share data-diluted:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) allocable to common shareholders
|
$
|
0.19
|
|
|
$
|
0.17
|
|
|
$
|
0.65
|
|
|
$
|
0.16
|
|
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 below 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.
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2*
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3+
|
|
|
|
|
|
10.4+
|
|
|
|
|
|
10.5+
|
|
|
|
|
|
10.6+
|
|
|
|
|
|
10.7+
|
|
|
|
|
|
10.8+
|
|
|
|
|
|
10.9+
|
|
|
|
|
|
10.10+
|
|
|
|
|
|
10.11+
|
|
|
|
|
|
10.12+
|
|
|
|
|
|
10.13+
|
|
|
|
|
|
10.14+
|
|
|
|
|
|
10.15+
|
|
|
|
|
|
10.16+
|
|
|
|
|
|
10.17+
|
|
|
|
|
|
10.18+
|
|
|
|
|
|
10.19+
|
|
|
|
|
|
10.20+
|
|
|
|
|
|
21*
|
|
|
|
|
|
23.1*
|
|
|
|
|
|
24.1
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
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
|
PACIFIC MERCANTILE BANCORP
|
||
|
|
|
By:
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/S/ BRAD R. DINSMORE
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Brad R. Dinsmore
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President and Chief Executive Officer
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/S/ BRAD R. DINSMORE
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President, Chief Executive Officer and Director
(Principal Executive Officer)
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March 6, 2020
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Brad R. Dinsmore
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/S/ CURT A. CHRISTIANSSEN
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Chief Financial Officer (Principal Financial Officer)
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March 6, 2020
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Curt A. Christianssen
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/S/ NANCY GRAY
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Chief Accounting Officer (Principal Accounting Officer)
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March 6, 2020
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Nancy Gray
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/s/ EDWARD J. CARPENTER
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Chairman of the Board and Director
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March 6, 2020
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Edward J. Carpenter
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/S/ JAMES DEUTSCH
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Director
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March 6, 2020
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James Deutsch
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/s/ MANISH DUTTA
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Director
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March 6, 2020
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Manish Dutta
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/s/ SHANNON F. EUSEY
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Director
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March 6, 2020
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Shannon F. Eusey
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/s/ MICHAEL P. HOOPIS
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Director
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March 6, 2020
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Michael P. Hoopis
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/s/ DENIS KALSCHEUR
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Director
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March 6, 2020
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Denis Kalscheur
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/s/ MICHELE S. MIYAKAWA
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Director
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March 6, 2020
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Michele S. Miyakawa
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/s/ DAVID J. MUNIO
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Director
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March 6, 2020
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David J. Munio
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/s/ STEPHEN P. YOST
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Director
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March 6, 2020
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Stephen P. Yost
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Name of Subsidiary
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State of Incorporation or Organization
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Percentage Ownership
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Pacific Mercantile Bank
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A California corporation
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100
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%
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PMB Statutory Trust III
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A Connecticut trust
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100
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%
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PMB Capital Trust III
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A Delaware trust
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100
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%
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PM Asset Resolution, Inc.
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A California corporation
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100
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%
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1.
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I have reviewed this Annual Report on Form 10-K of Pacific Mercantile Bancorp for the fiscal year ended December 31, 2019.
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/S/ BRADFORD R. DINSMORE
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Bradford R. Dinsmore
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President and Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 10-K of Pacific Mercantile Bancorp for the fiscal year ended December 31, 2019.
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/S/ CURT A. CHRISTIANSSEN
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Curt A. Christianssen
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Chief Financial Officer
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/S/ BRADFORD R. DINSMORE
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Bradford R. Dinsmore
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President and Chief Executive Officer
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/S/ CURT A. CHRISTIANSSEN
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Curt A. Christianssen
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Chief Financial Officer
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