Utah
|
| |
6022
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| |
83-0356689
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(State or other jurisdiction of
incorporation or organization)
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| |
(Primary Standard Industrial
Classification Code Number)
|
| |
(I.R.S. Employer
Identification Number)
|
Peter G. Smith, Esq.
Terrence Shen, Esq.
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, NY 10036
(212) 715-9100
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| |
Beth A. Whitaker, Esq.
Heather Archer Eastep, Esq.
Hunton Andrews Kurth LLP
1445 Ross Avenue, Suite 3700
Dallas, TX 75202
(214) 979-3000
|
Large accelerated filer
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| |
☐
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| |
Accelerated filer
|
| |
☐
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Non-accelerated filer
|
| |
☒
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| |
Smaller reporting company
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☒
|
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Emerging growth company
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☒
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Title of each Class of Security to be Registered
|
| |
Proposed
Maximum Aggregate
Offering Price(1)(2)
|
| |
Amount of
Registration Fee(3)
|
Common Stock, $0.001 par value per share
|
| |
$50,000,000
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| |
$5,455
|
(1)
|
Includes shares of common stock to be sold by the selling shareholder and shares of common stock that may be purchased by the underwriters pursuant to their option to purchase additional shares in the offering.
|
(2)
|
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933. This amount represents the proposed maximum aggregate offering price of the securities registered hereunder to be sold by the Registrant.
|
(3)
|
Calculated pursuant to Rule 475(o) under Securities Act of 1933, based on an estimate of the proposed maximum aggregate offering price.
|
|
| |
Per Share
|
| |
Total
|
Initial public offering price
|
| |
$
|
| |
$
|
Underwriting discount(1)
|
| |
$
|
| |
$
|
Proceeds to us (before expenses)
|
| |
$
|
| |
$
|
Proceeds to the selling shareholder (before expenses)
|
| |
$
|
| |
$
|
(1)
|
The underwriters will also be reimbursed for certain expenses incurred in this offering. See “Underwriting” for additional information.
|
Piper Sandler & Co.
|
| |
UBS Investment Bank
|
•
|
permitted to present only two years of audited financial statements, in addition to any required interim financial statements, and only two years of related discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations;”
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•
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exempt from the requirement to obtain an attestation from our auditors on management’s assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;
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•
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permitted to choose not to comply with any new requirements adopted by the Public Company Accounting Oversight Board, or PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and our audited financial statements;
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•
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permitted to provide less extensive disclosure about our executive compensation arrangements; and
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•
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not required to hold non-binding shareholder advisory votes on executive compensation or golden parachute arrangements.
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•
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our strategic relationships with third party loan origination platforms, many of whom use technology to facilitate loan origination, that allow us to capture a high volume of diverse loan origination and loan performance data from the billions of dollars of loans that we have originated, sold or held in four main lending areas;
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•
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our FinView™ Analytics Platform (“FinView™”), including our enterprise data warehouse, which is a proprietary technology developed by us to enhance our ability to gather and interpret performance data for the loans originated by us and to help us identify attractive risk-adjusted market sectors;
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•
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our core deposits which, as of March 31, 2021 and December 31, 2020, constituted 91.1% and 91.5% of our funding sources, respectively (excluding the Paycheck Protection Program Liquidity Facility (the “PPPLF”)), and have been highly reliable and relatively low cost (our core deposits comprise the sum of demand deposits, negotiable order of withdrawal (“NOW”) accounts, money market deposit accounts (“MMDA”), savings accounts, and time deposits under $250,000 that are not brokered deposits); and
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•
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our seasoned management team, which has considerable banking experience, particularly in our core lines of business.
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Year
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Comparable
Banks & Thrifts By Size
|
| |
Comparable
Banks & Thrifts Count
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| |
FinWise Bank
Rank
|
| |
Percentile
|
2020
|
| |
<$3 billion in Assets
|
| |
4,287
|
| |
#2
|
| |
99.9%
|
2019
|
| |
<$3 billion in Assets
|
| |
4,391
|
| |
#41
|
| |
99.1%
|
2018
|
| |
<$3 billion in Assets
|
| |
4,619
|
| |
#12
|
| |
99.7%
|
2017
|
| |
<$1 billion in Assets
|
| |
4,383
|
| |
#3
|
| |
99.9%
|
2016
|
| |
<$1 billion in assets
|
| |
4,585
|
| |
#26
|
| |
99.4%
|
•
|
In SBA 7(a) lending, we lend to small business and professionals. Our credit risk management is augmented by the fact the loans are partially guaranteed by the SBA. We further mitigate our credit risk in this program by using data, such as the nature of the business, use of proceeds, length of time in business and management experience to help us target loans that we believe have lower credit risk. Our prudent underwriting, closing and servicing processes are essential to effective utilization of the SBA 7(a) program, as the SBA guaranty is conditioned upon proper underwriting, closing and servicing by the lender.
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•
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In our Strategic Program lending, we originate unsecured and secured consumer and business loans to borrowers with certain Bank-approved credit profiles. The credit profiles are based on specific predetermined underwriting criteria informed by our extensive data and analytics. While we sell the vast majority of loans in this lending program shortly after origination, the Bank may choose to retain a portion of the funded loans and/or receivables. Our credit risk is mitigated by focusing on amortizing loans, lending to borrowers with demonstrated ability to repay, and extending loans that are priced appropriately to the credit profile of the borrower (including credit history). Smaller loans are often unsecured and therefore rely more on predictive models that allow us to appropriately price credit based on probable losses.
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•
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SBA 7(a) Lending: Since 2014, we have utilized relationships with third parties (primarily BFG) to originate loans partially guaranteed by the SBA, to small businesses and professionals. We typically sell the SBA-guaranteed portion (generally 75% of the principal balance) of the loans we originate at a premium in the secondary market while retaining all servicing rights and the unguaranteed portion. We analyze public data provided by the SBA to target or avoid loans and industries with specific characteristics that may lead to unacceptable rates of future loan losses. We believe the experience of our management team, our ability to analyze loan performance data, our loan processing structure, our ability to leverage our referral relationship with BFG, careful underwriting, servicing and proactive collection policies have resulted in charge-off experience in our SBA portfolio that outperforms industry averages. Based on data sets for the SBA beginning October 1, 2012 through March 31, 2021, SBA 7(a) loans made by the Bank have a charge-off rate of 0.3% versus 1.2% for the entire SBA 7(a) lending industry on average. We believe, based on our current relatively low market penetration, the opportunity to continue to expand this business line is significant and that the SBA 7(a) product provides an entry point to broaden our banking relationship with these customers to potentially include deposits and POS financing opportunities. Loan terms generally range from 120 to 300 months and interest rates currently range from the prime rate plus 200 basis points to the prime rate plus 275 basis points, as adjusted quarterly. In 2020, we originated approximately $80.3 million in SBA 7(a) loans and held approximately $96.2 million of SBA 7(a) loans on our balance sheet as of December 31, 2020, excluding PPP loans. During the three months ended March 31, 2021, we originated approximately $37.5 million in SBA 7(a) loans and held approximately $101.9 million of SBA 7(a) loans on our balance sheet as of March 31, 2021, excluding PPP loans, of which $48.0 million
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•
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Strategic Programs: Over the past five years, we have established Strategic Programs with various third-party consumer and commercial loan origination platforms that use technology to streamline the origination of consumer and small commercial loans. We currently have nine Strategic Program relationships. We are highly selective in establishing relationships with loan origination platforms for our Strategic Programs. We also place a high priority on regulatory compliance and have implemented comprehensive compliance management systems with an emphasis on oversight of loan origination platforms in our Strategic Program. Finally, we seek to establish relationships with Strategic Program loan origination platforms whose philosophy aligns with our goal of helping our customers move forward, and who augment our product offerings and enable us to realize operating efficiencies. We typically retain Strategic Program loans for a number of business days after origination, following which we sell the loan receivables or whole loans to the Strategic Program loan origination platform or other investors. The terms of our Strategic Programs generally require each Strategic Program loan origination platform to establish a reserve deposit account with the Bank, intended to protect the Bank in the event a purchaser of loan receivables originated through our Strategic Programs cannot meet its contractual obligation to purchase.
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•
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Residential and Commercial Real Estate Lending. We operate a single branch location in Sandy, Utah. From this branch, we offer commercial and consumer banking services throughout the greater Salt Lake City, Utah MSA. These products are delivered using a high-touch service, relationship banking approach. The majority of the lending product consists of residential non-speculative construction loans which generate both non-interest income and interest income. Construction loan terms generally range from 9 to 12 months and interest rates currently range from the prime rate to the prime rate plus 200 basis points. All of the loans generated through this branch are held on our balance sheet. As of December 31, 2020, our branch-based banking operations consisted of approximately $25.3 million in loans (including approximately $20.6 million of residential and commercial real estate loans) and approximately
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•
|
Consumer Lending via our POS Lending Program: Since 2011, the Bank has offered collateralized and uncollateralized loans to finance the purchase of retail goods and services, such as pianos, spas, and home improvements. Loan applications are submitted at the point-of-sale through an online portal. Historically, all of the loans originated through our POS lending program have been held on our balance sheet. We currently manage the credit risk associated with these loans through a variety of processes, including targeting super prime (FICO score of 720 and higher), prime (FICO score of 660 through 719) and near-prime (FICO score of 640 through 659) borrowers, prudent underwriting, proper administration, careful servicing, proactive collection policies and comprehensive merchant due diligence. Loan terms are generally 60 months and interest rates currently range from 7.0% to 14.5%. We utilize a high degree of automation in this program and track loan applications, analyze credit and approve loans by deploying a combination of FinView™ and “off-the-shelf” technology solutions. The majority of the approximately $5.5 million and $4.8 million in consumer loans outstanding as of December 31, 2020 and March 31, 2021, respectively, that were not generated through our Strategic Programs were originated in connection with our POS lending program. In 2020, we originated approximately $2.8 million in POS loans and held approximately $4.4 million of POS loans on our balance sheet as of December 31, 2020. During the three months ended March 31, 2021, we originated approximately $0.6 million in POS loans and held approximately $3.9 million of POS loans on our balance sheet as of March 31, 2021. We expect to expand this program via enhanced marketing efforts.
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YE 2020 Origination Volume
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| |
Loan Portfolio as of 12/31/20
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|
YE 2020 Revenue by Business Line
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|||
|
Q1 2021 Origination Volume
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| |
Loan Portfolio as of 3/31/21
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Q1 Revenue by Business Line
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|
1
|
Note to Draft: PSC to provide formatted Q1 chart. Below is placeholder only.
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Return on Average Assets
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| |
Return on Average Equity
|
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| |
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Net Interest Margin
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| |
Noninterest Income / Average Assets
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|
Efficiency Ratio
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NAICS
Sub-Sector
Code
|
| |
Description
|
| |
March 31, 2021
% of Total
|
541
|
| |
Professional, Scientific and Technical Services
|
| |
18.3%
|
454
|
| |
Non-Store Retailers (Electronic Shopping)
|
| |
14.7%
|
621
|
| |
Ambulatory Health Care Services
|
| |
7.7%
|
423
|
| |
Merchant Wholesalers, Durable Goods
|
| |
5.4%
|
445
|
| |
Food and Beverage Stores (Grocery, Convenience)
|
| |
5.2%
|
623
|
| |
Nursing and Residential Care Facilities
|
| |
5.2%
|
448
|
| |
Clothing and Clothing Accessories Stores
|
| |
4.5%
|
811
|
| |
Manufacturing Repair and Maintenance
|
| |
4.2%
|
238
|
| |
Specialty Trade Contractors
|
| |
3.8%
|
442
|
| |
Furniture and Home Furnishings Stores
|
| |
3.5%
|
|
| |
All Other
|
| |
27.5%
|
Total
|
| |
|
| |
100.0%
|
•
|
Strategic Programs: $100 billion in total available market based on industry data and estimates. Our estimation of the total available market for the Strategic Program business line is based on industry data for unsecured personal loans. We believe the total available market may be larger than this as the Bank offers Strategic Programs specific to POS lending and commercial lending which may not be accounted for in the above estimates.
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•
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SBA Lending $150 billion in total available market based on SBA agency reports.
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•
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POS Lending: $160 billion in total available market based on industry data and estimates.
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Asset Growth Rate (Over Prior Period)
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| |
Total Loan Originations ($000s)
|
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| |
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•
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Kent Landvatter. Mr. Landvatter joined the Company and the Bank in September 2010 as the President and Chief Executive Officer. Mr. Landvatter has over 40 years of financial services and banking experience, including experience with distressed banks and serving as the president of two de novo banks, Comenity Capital Bank and Goldman Sachs Bank, USA.
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•
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Javvis Jacobson. Mr. Jacobson joined the Company and the Bank in March 2015 as the Executive Vice President and Chief Financial Officer. Mr. Jacobson has over 20 years of financial services experience, including at Deloitte, where he served for several years managing audits of financial institutions. Mr. Jacobson also served for several years as the Chief Financial Officer of Beehive Credit Union with over $190 million in assets.
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•
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James Noone. Mr. Noone joined the Bank in February 2018 and was named Executive Vice President and Chief Credit Officer in June 2018. Mr. Noone has 20 years of financial services experience including commercial and investment banking as well as private equity. Prior to joining the Bank, Mr. Noone served as Executive Vice President of Prudent Lenders, an SBA service provider from 2012 to 2018.
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•
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Dawn Cannon. Ms. Cannon joined the Bank in March 2020 as the Senior Operating Officer and was named Executive Vice President and Chief Operating Officer in July 2020. Ms. Cannon has over 17 years of banking experience, including serving as the Executive Vice President of Operations of EnerBank, an industrial bank that focused on lending programs similar to our POS lending program, where she was instrumental in building it from 23 to 285 full time employees and from $10 million to $1.4 billion in total assets.
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•
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David Tilis. Mr. Tilis joined the Bank in March 2016 as a Vice President and Director of Specialty Lending and now serves as the Chief Strategy Officer and Senior Vice President. Mr. Tilis has over 15 years of financial services experience, including serving as a Vice President of Cross River Bank overseeing SBA lending and playing a significant role in strategic relationships.
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•
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Suzanne Musgrow. Ms. Musgrow joined the Bank in December 2016 and now serves as a Senior Vice President and the Chief Risk Officer. Ms. Musgrow has over 20 years of banking experience in the areas of credit, compliance and operations.
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•
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Rachael Hadley. Ms. Hadley joined the Bank in September 2016 and now serves as a Senior Vice President and the Chief Regulatory Compliance Officer. Ms. Hadley has over 15 years legal and banking experience.
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•
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the impact, duration and severity of the ongoing Covid-19 pandemic, the response of governmental authorities to the Covid-19 pandemic and our participation in Covid-19-related government programs such as the PPP administered by the SBA and created under the CARES Act;
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•
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cybersecurity breaches and system failures affecting FinView™;
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•
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operational and strategic risks, including the risk that we may not be able to implement our growth strategy and risks related to cybersecurity, our continued ability to establish relationships with Strategic Program service providers, and the possible loss of key members of our senior leadership team;
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•
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credit risks, including risks related to the significance of SBA 7(a), Strategic Programs and construction loans in our portfolio, our relationship with BFG, our ability to effectively manage our credit risk and the potential deterioration of the business and economic conditions in our markets;
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•
|
liquidity and funding risks, including the risk that we will not be able to meet our obligations due to risks relating to our funding sources;
|
•
|
market and interest rate risks, including risks related to interest rate fluctuations and the monetary policies and regulations of the Board of Governors of the Federal Reserve System, or the Federal Reserve;
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•
|
third-party risk, including risks that we may be unable to maintain or increase loan originations facilitated through our Strategic Programs;
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•
|
reputational risks, including the risk that we may be subject to negative publicity about us or our industry, including the transparency, fairness, user experience, quality, and reliability of our lending products or distribution channels;
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•
|
legislative, regulatory, legal, and reputational risks related to our Strategic Programs, including those relating to our small dollar lending program;
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•
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reversal of regulatory pronouncements that provided clarity for Strategic Programs on “true lender” rules;
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•
|
legal, accounting and compliance risks, including risks related to the extensive state and federal regulation under which we operate and changes in such regulations;
|
•
|
changes in the regulatory oversight environment impacting our Strategic Programs or non-compliance of federal and state consumer protection laws by our Strategic Program service providers; and
|
•
|
offering and investment risks, including illiquidity and volatility in the trading of our common stock, limitations on our ability to pay dividends and the dilution that investors in this offering will experience.
|
•
|
assumes no exercise by the underwriters of their option to purchase up to an additional shares of common stock;
|
•
|
assumes that the shares of common stock sold in this offering are sold at $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus;
|
•
|
excludes 157,148 shares of common stock issuable upon exercise of stock options outstanding as of March 31, 2021, at a weighted average exercise price of $26.05 per share (comprising 80,150 shares of fully vested common stock issuable upon exercise of stock options and 76,998 shares of unvested common stock issuable upon exercise of stock options); and
|
•
|
excludes 45,000 shares of common stock issuable upon exercise of fully vested warrants outstanding at a weighted average exercise price of $40.00 per share.
|
Balance Sheet Data
|
| |
As of and for the
Three Months Ended
March 31,
|
| |
As of and for the years ended
December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Total assets
|
| |
$330,053
|
| |
$180,803
|
| |
$317,515
|
| |
$177,062
|
| |
$116,085
|
Cash and cash equivalents
|
| |
74,222
|
| |
62,854
|
| |
47,383
|
| |
34,779
|
| |
26,004
|
Investment securities held-to-maturity, at cost
|
| |
1,670
|
| |
2,169
|
| |
1,809
|
| |
453
|
| |
570
|
Loans receivable, net
|
| |
201,136
|
| |
95,106
|
| |
232,074
|
| |
105,725
|
| |
78,034
|
Strategic Program loans held-for-sale, at lower of cost or fair value
|
| |
37,847
|
| |
10,641
|
| |
20,948
|
| |
25,109
|
| |
6,956
|
SBA servicing asset
|
| |
3,074
|
| |
2,205
|
| |
2,415
|
| |
2,034
|
| |
1,581
|
Investment in Business Funding Group, at fair value
|
| |
3,873
|
| |
3,404
|
| |
3,770
|
| |
3,459
|
| |
—
|
Deposits
|
| |
188,511
|
| |
141,347
|
| |
164,476
|
| |
142,021
|
| |
94,824
|
PPP Liquidity Facility
|
| |
79,704
|
| |
—
|
| |
101,007
|
| |
—
|
| |
—
|
Total shareholders’ equity
|
| |
52,310
|
| |
35,695
|
| |
45,872
|
| |
33,095
|
| |
19,225
|
Tangible shareholders’ equity(1)
|
| |
52,310
|
| |
35,695
|
| |
45,872
|
| |
33,095
|
| |
19,225
|
|
| |
For the Three Months
Ended March 31,
|
| |
For the Years Ended December 31,
|
|||||||||
($ in thousands, except for per share data)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Income Statement Data
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest income
|
| |
$8,806
|
| |
$8,039
|
| |
$29,506
|
| |
$21,408
|
| |
$8,073
|
Interest expense
|
| |
372
|
| |
434
|
| |
1,756
|
| |
1,462
|
| |
846
|
Net interest income
|
| |
8,434
|
| |
7,605
|
| |
27,750
|
| |
19,946
|
| |
7,227
|
Provision for loan losses
|
| |
633
|
| |
3,814
|
| |
5,234
|
| |
5,288
|
| |
980
|
Net interest income after provision for loan losses
|
| |
7,801
|
| |
3,791
|
| |
22,516
|
| |
14,658
|
| |
6,247
|
Noninterest income:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Strategic Program fees
|
| |
2,953
|
| |
2,606
|
| |
9,591
|
| |
8,866
|
| |
5,026
|
Gain on sale of loans
|
| |
2,603
|
| |
1,013
|
| |
2,849
|
| |
4,167
|
| |
2,957
|
SBA loan servicing fees
|
| |
152
|
| |
275
|
| |
1,028
|
| |
607
|
| |
545
|
Other noninterest income
|
| |
371
|
| |
17
|
| |
905
|
| |
223
|
| |
128
|
Total noninterest income
|
| |
6,079
|
| |
3,911
|
| |
14,373
|
| |
13,863
|
| |
8,656
|
Noninterest expense
|
| |
6,663
|
| |
5,288
|
| |
21,749
|
| |
15,685
|
| |
9,538
|
Provision for income taxes
|
| |
1,926
|
| |
600
|
| |
3,942
|
| |
3,177
|
| |
1,333
|
Net income
|
| |
$5,291
|
| |
$1,814
|
| |
$11,198
|
| |
$9,659
|
| |
$4,032
|
|
| |
For the Three Months
Ended March 31,
|
| |
For the Years Ended December 31,
|
|||||||||
($ in thousands, except for per share data)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Per Share Data (Common Stock)
|
| |
|
| |
|
| |
|
| |
|
| |
|
Earnings:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$3.66
|
| |
$1.25
|
| |
$7.75
|
| |
$8.21
|
| |
$3.90
|
Diluted(2)
|
| |
$3.55
|
| |
$1.24
|
| |
$7.70
|
| |
$8.20
|
| |
$3.90
|
Book value(3)
|
| |
$36.01
|
| |
$24.49
|
| |
$31.78
|
| |
$22.80
|
| |
$16.45
|
Tangible book value(1)
|
| |
$36.01
|
| |
$24.49
|
| |
$31.78
|
| |
$22.80
|
| |
$16.45
|
|
| |
March 31,
|
| |
December 31,
|
|||||||||
Selected Performance Metrics
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Return on average assets(4)(7)
|
| |
6.5%
|
| |
4.1%
|
| |
4.5%
|
| |
6.6%
|
| |
4.5%
|
Return on average equity(4)(7)
|
| |
43.1%
|
| |
21.1%
|
| |
28.4%
|
| |
36.9%
|
| |
26.6%
|
Average yield on loans(5)
|
| |
13.6%
|
| |
24.0%
|
| |
14.1%
|
| |
19.3%
|
| |
10.9%
|
Average cost of deposits(5)
|
| |
1.5%
|
| |
2.0%
|
| |
1.9%
|
| |
2.0%
|
| |
1.6%
|
Net interest margin(5)
|
| |
11.0%
|
| |
16.7%
|
| |
11.0%
|
| |
14.1%
|
| |
8.1%
|
Efficiency ratio(1)
|
| |
45.9%
|
| |
45.9%
|
| |
51.6%
|
| |
46.4%
|
| |
60.1%
|
Noninterest income to total revenue(6)
|
| |
41.9%
|
| |
34.0%
|
| |
34.1%
|
| |
41.0%
|
| |
54.5%
|
Noninterest income to average assets(7)
|
| |
7.5%
|
| |
8.7%
|
| |
5.8%
|
| |
9.5%
|
| |
9.6%
|
Average equity to average assets(7)
|
| |
15.2%
|
| |
19.2%
|
| |
16.0%
|
| |
17.8%
|
| |
16.7%
|
Total shareholders’ equity to total assets
|
| |
15.8%
|
| |
19.7%
|
| |
14.4%
|
| |
18.7%
|
| |
16.6%
|
Tangible shareholders’ equity to tangible assets(1)
|
| |
15.8%
|
| |
19.7%
|
| |
14.4%
|
| |
18.7%
|
| |
16.6%
|
Employees at period end
|
| |
98
|
| |
83
|
| |
95
|
| |
86
|
| |
54
|
|
| |
As of and
For the Three Months
Ended March 31,
|
| |
As of and For the Years Ended December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Selected Loan Metrics
|
| |
|
| |
|
| |
|
| |
|
| |
|
Number of loans originated
|
| |
207,088
|
| |
160,488
|
| |
749,746
|
| |
522,981
|
| |
145,839
|
Amount of loans originated
|
| |
$1,013,408
|
| |
$638,706
|
| |
$2,596,809
|
| |
$1,724,523
|
| |
$762,716
|
Number of loans serviced
|
| |
1,745
|
| |
1478
|
| |
2,045
|
| |
1,482
|
| |
1,252
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Asset Quality Ratios
|
| |
|
| |
|
| |
|
| |
|
| |
|
Nonperforming loans
|
| |
$789
|
| |
$1,110
|
| |
$831
|
| |
$1,108
|
| |
$87
|
Nonperforming loans to total assets
|
| |
0.2%
|
| |
0.3%
|
| |
0.3%
|
| |
0.6%
|
| |
0.1%
|
Net charge offs to average loans
|
| |
1.0%
|
| |
3.7%
|
| |
1.7%
|
| |
2.3%
|
| |
0.2%
|
Allowance for loan losses to loans held for investment
|
| |
3.0%
|
| |
6.9%
|
| |
2.6%
|
| |
4.1%
|
| |
2.1%
|
Allowance for loan losses to total loans
|
| |
2.5%
|
| |
6.3%
|
| |
2.4%
|
| |
3.3%
|
| |
2.0%
|
Allowance for loan losses to total loans (less PPP loans)(1)
|
| |
3.4%
|
| |
6.3%
|
| |
4.0%
|
| |
3.3%
|
| |
2.0%
|
Net charge-offs
|
| |
$648
|
| |
$1,204
|
| |
$3,559
|
| |
$2,492
|
| |
$163
|
|
| |
March 31,
|
| |
December 31,
|
|||||||||
Capital Ratios8
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Leverage ratio (under CBLR)
|
| |
19.4%
|
| |
16.2%
|
| |
16.6%
|
| |
—
|
| |
—
|
Tier 1 leverage ratio (Bank)
|
| |
—
|
| |
—
|
| |
—
|
| |
16.2%
|
| |
15.7%
|
Tier 1 risk-based capital ratio (Bank)
|
| |
—
|
| |
—
|
| |
—
|
| |
19.3%
|
| |
19.4%
|
Total risk-based capital ratio (Bank)
|
| |
—
|
| |
—
|
| |
—
|
| |
20.5%
|
| |
20.6%
|
Common equity Tier 1 (Bank)
|
| |
—
|
| |
—
|
| |
—
|
| |
19.3%
|
| |
19.4%
|
(1)
|
These measures are not measures recognized under United States generally accepted accounting principles, or GAAP, and are therefore considered to be non-GAAP financial measures. See “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation of these measures to their most comparable GAAP measures. Tangible shareholders’ equity is defined as total shareholders’ equity less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholder’s equity. We had no goodwill or other intangible assets as of any of the dates indicated. We have not considered loan servicing rights as an intangible asset for purposes of this calculation. As a result, tangible shareholders’ equity is the same as total shareholders’ equity as of each of the dates indicated. The efficiency ratio is defined as total noninterest expense divided by the sum of net interest income and noninterest income. We believe this measure is important as an indicator of productivity because it shows the amount of revenue generated for each
|
(2)
|
We calculated our diluted earnings per share for each year shown as our net income divided by the weighted average number of shares of our common stock outstanding during the relevant period adjusted for the dilutive effect of outstanding options to purchase shares of our common stock. See Note 16 to our audited consolidated financial statements appearing elsewhere in this prospectus for more information regarding the dilutive effect. We calculated earnings per share on a basic and diluted basis using the following outstanding share amounts:
|
|
| |
For the Three Months
Ended March 31,
|
| |
For the Years Ended
December 31,
|
|||||||||
Share data
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Weighted average shares outstanding, basic
|
| |
1,348,531
|
| |
1,335,821
|
| |
1,337,565
|
| |
1,173,149
|
| |
1,034,807
|
Weighted average shares outstanding, diluted
|
| |
1,389,295
|
| |
1,341,392
|
| |
1,344,939
|
| |
1,175,559
|
| |
1,034,807
|
Shares outstanding at end of period
|
| |
1,452,685
|
| |
1,457,422
|
| |
1,443,389
|
| |
1,451,626
|
| |
1,168,867
|
(3)
|
Book value per share equals our total shareholders’ equity as of the date presented divided by the number of shares of our common stock outstanding as of the date presented. The number of shares of our common stock outstanding as of March 31, 2021 and December 31, 2020, 2019 and 2018 has been presented in note (2) above.
|
(4)
|
We have calculated our return on average assets and return on average equity for a year by dividing our net income for that year by our average assets and average equity, as the case may be, for that year.
|
(5)
|
We calculate average yield on loans by dividing loan interest income by average loans. We calculate average cost of deposits by dividing deposit expense by average interest-earning deposits. We calculate our average loans and average interest-earning deposits for a year by dividing the sum of our total loans balance or interest-earning deposit balance, as the case may be, as of the close of business on each day in the relevant year and dividing by the number of days in the year. Net interest margin represents net interest income divided by average interest-earning assets. Loan fees are included in interest income on loans and represent approximately $1.3 million (including approximately $0.9 million in fees related to PPP loans) and $0.2 million for the quarters ended March 31, 2021 and 2020, and $1.4 million (including approximately $1.2 million in fees related to PPP loans), $0.9 million, and $0.6 million for the years ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively.
|
(6)
|
We calculate the ratio of noninterest income to total revenue as noninterest income (excluding securities gains or losses) divided by the sum of net interest income plus noninterest income (excluding securities gains or losses).
|
(7)
|
We calculate our average assets and average equity for a year by dividing the sum of our total asset balance or total shareholder’s equity balance, as the case may be, as of the beginning of the relevant year and at the end of the relevant year, and dividing by two. We calculate our average assets and average equity for a quarter by dividing (a) the sum of our total asset balance or total shareholder’s equity balance, as the case may be, as of the close of business (i) at the beginning of the relevant quarter and (ii) at the ending of the relevant quarter, by (b) two.
|
(8)
|
Under the prompt corrective action rules, an institution is deemed “well capitalized” if its leverage ratio, Common Equity Tier 1 ratio, Tier 1 Capital ratio, and Total Capital ratio meet or exceed 5%, 6.5%, 8%, and 10%, respectively. On September 17, 2019, the federal banking agencies jointly finalized a rule intending to simplify the regulatory capital requirements described above for qualifying community banking organizations that opt into the Community Bank Leverage Ratio (“CBLR”) framework, as required by Section 201 of Economic Growth, the Regulatory Relief and Consumer Protection Act (the “Regulatory Relief Act”). The Bank has elected to opt into the Community Bank Leverage Ratio framework starting in 2020. Under these new capital requirements, as temporarily amended by the CARES Act, the Bank must maintain a leverage ratio greater than 8% for 2020. See these changes more fully discussed under “Supervision and Regulation—The Regulatory Relief Act.”
|
•
|
“Tangible shareholders’ equity” is defined as total shareholders’ equity less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholder’s equity. We had no goodwill or other intangible assets as of any of the dates indicated. We have not considered loan servicing rights as an intangible asset for purposes of this calculation. As a result, tangible shareholders’ equity is the same as total shareholders’ equity as of each of the dates indicated.
|
•
|
“Tangible book value per share” is defined as book value per share less goodwill and other intangible assets, divided by the outstanding number of common shares at the end of each period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets as of any of the dates indicated. We have not considered loan servicing rights as an intangible asset for purposes of this calculation. As a result, tangible book value per share is the same as book value per share as of each of the dates indicated.
|
•
|
“Efficiency ratio” is defined as total noninterest expense divided by the sum of net interest income and noninterest income. We believe this measure is important as an indicator of productivity because it shows the amount of revenue generated for each dollar spent.
|
•
|
“Tangible shareholders’ equity to tangible assets” is defined as total shareholders’ equity less goodwill and other intangible assets, divided by total assets less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholders’ equity to total assets. We had no goodwill or other intangible assets as of any of the dates indicated. We have not considered loan servicing rights as an intangible asset for purposes of this calculation. As a result, tangible shareholders’ equity to tangible assets is the same as total shareholders’ equity to total assets as of each of the dates indicated.
|
•
|
“Allowance for loan losses to total loans (less PPP loans)” is defined as the allowance for loan losses divided by total loans minus PPP loans. The most directly comparable GAAP financial measure is allowance for loan losses to total loans. We believe this measure is important because the allowance for loan losses will not be utilized for PPP loans since they are 100% guaranteed by the SBA. We believe that the non-GAAP measure more accurately discloses the proportion of loans that might utilize the allowance for loan losses consistently with periods prior to the presence of PPP loans.
|
•
|
“Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)” is defined as the sum of nonperforming assets and troubled debt restructurings divided by total assets minus PPP loans. The most directly comparable GAAP financial measure is the sum of nonperforming assets and troubled debt restructurings to total assets. We believe this measure is important because we believe that PPP loans will not be included in nonperforming assets or troubled debt restructurings since PPP loans are 100% guaranteed by the SBA. We believe that the non-GAAP measure more accurately discloses the proportion of nonperforming assets and troubled debt restructurings to total assets consistently with periods prior to the presence of PPP loans.
|
|
| |
Three Months Ended
March 31,
|
| |
Year Ended December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Noninterest expense
|
| |
$6,663
|
| |
$5,288
|
| |
$21,749
|
| |
$15,685
|
| |
$9,538
|
Net interest income
|
| |
$8,434
|
| |
$7,605
|
| |
$27,750
|
| |
$19,946
|
| |
$7,227
|
Total noninterest income
|
| |
$6,079
|
| |
$3,911
|
| |
14,373
|
| |
13,863
|
| |
8,656
|
Adjusted operating revenue
|
| |
$14,513
|
| |
$11,516
|
| |
$42,123
|
| |
$33,809
|
| |
$15,883
|
Efficiency ratio
|
| |
45.9%
|
| |
45.9%
|
| |
51.6%
|
| |
46.4%
|
| |
60.1%
|
|
| |
As of March 31,
|
| |
Year Ended December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Allowance for loan losses
|
| |
$6,184
|
| |
$7,141
|
| |
$6,199
|
| |
$4,531
|
| |
$1,735
|
Total loans
|
| |
$245,226
|
| |
$113,748
|
| |
$261,777
|
| |
$136,662
|
| |
$87,816
|
PPP loans
|
| |
$65,858
|
| |
$0
|
| |
$107,145
|
| |
$0
|
| |
$0
|
Total loans less PPP loans
|
| |
$179,368
|
| |
$113,748
|
| |
$154,632
|
| |
$136,662
|
| |
$87,816
|
Allowance for loan losses to total loans
(less PPP loans)
|
| |
3.4%
|
| |
6.3%
|
| |
4.0%
|
| |
3.3%
|
| |
2.0%
|
|
| |
As of March 31,
|
| |
Year Ended December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Total nonperforming assets and troubled debt restructuring
|
| |
$1,659
|
| |
$1,193
|
| |
$1,701
|
| |
$1,108
|
| |
$87
|
Total assets
|
| |
$330,053
|
| |
$180,803
|
| |
$317,515
|
| |
$177,062
|
| |
$116,085
|
PPP loans
|
| |
$65,858
|
| |
$0
|
| |
$107,145
|
| |
$0
|
| |
$0
|
Total assets less PPP loans
|
| |
$264,195
|
| |
$180,803
|
| |
$210,370
|
| |
$177,062
|
| |
$116,085
|
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)
|
| |
0.6%
|
| |
0.7%
|
| |
0.8%
|
| |
0.6%
|
| |
0.1%
|
•
|
demand for our products and services may decline, making it difficult to grow assets and income;
|
•
|
if the economy is unable to fully reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, requests for deferrals and modifications, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;
|
•
|
collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;
|
•
|
our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods or if the federal government fails to guarantee or forgive our customers’ PPP loans, which will adversely affect our net income;
|
•
|
the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;
|
•
|
as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may continue to decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;
|
•
|
it may be challenging to grow our core business if the recovery from the economic impact caused by Covid-19 is slow or unpredictable;
|
•
|
our PPP loan customers may fail to qualify for PPP loan forgiveness, or we may experience other uncertainties or losses related to our PPP loans;
|
•
|
our cybersecurity risks are increased as the result of an increase in the number of employees working remotely;
|
•
|
we rely on third party vendors for certain services and the unavailability of a critical service due to the Covid-19 outbreak could have an adverse effect on us; and
|
•
|
FDIC premiums may increase if the agency experiences additional resolution costs.
|
•
|
possible constraints on liquidity and capital, due to supporting client activities or regulatory actions,
|
•
|
higher operating costs, increased cybersecurity risks and a potential loss of productivity while we work remotely, and
|
•
|
higher level of loan modifications and distressed credit management.
|
•
|
navigating complex and evolving regulatory and competitive environments;
|
•
|
increasing the number of borrowers and investors utilizing a marketplace;
|
•
|
verifying borrowers’ creditworthiness and ensuring accurately and appropriately priced loans;
|
•
|
the use of alternative credit models that pose regulatory uncertainties, or otherwise increase regulatory risk;
|
•
|
increasing the volume of loans facilitated through a marketplace and transaction fees received for matching borrowers and investors through a marketplace;
|
•
|
entering into new markets and introducing new loan products;
|
•
|
monitoring business activities to avoid being deemed an investment company or being required to register as a broker-dealer and the increased cost and regulation associated therewith;
|
•
|
continuing to revise proprietary credit decision-making and scoring models, particularly in the face of changing macro and economic conditions;
|
•
|
continuing to develop, maintain and scale a platform;
|
•
|
effectively using limited personnel and technology resources;
|
•
|
effectively maintaining and scaling financial and risk management controls and procedures;
|
•
|
maintaining the security of the platform and the confidentiality of the information provided and utilized across the platform; and
|
•
|
attracting, integrating and retaining an appropriate number of qualified employees.
|
•
|
difficulty in estimating the value of any target company;
|
•
|
investing time and incurring expense associated with identifying and evaluating potential investments or acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operation of our existing business;
|
•
|
the lack of history among our management team in working together on acquisitions and related integration activities;
|
•
|
obtaining necessary regulatory approvals, which we may have difficulty obtaining or be unable to obtain;
|
•
|
the time, expense and difficulty of integrating the operations and personnel of any combined businesses;
|
•
|
unexpected asset quality problems with acquired companies;
|
•
|
inaccurate estimates and judgments used to evaluate credit, operations, management and market risks with respect to any target institution or assets;
|
•
|
risks of impairment to goodwill or other-than-temporary impairment of investment securities;
|
•
|
potential exposure to unknown or contingent liabilities of banks and businesses we acquire;
|
•
|
an inability to realize expected synergies or returns on investment;
|
•
|
potential disruption of our ongoing banking business;
|
•
|
maintaining adequate regulatory capital; and
|
•
|
loss of key employees, key customers or key business counterparties following our investment or acquisition.
|
•
|
actual or anticipated fluctuations in our operating results, financial condition or asset quality;
|
•
|
changes in general economic or business conditions;
|
•
|
the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve;
|
•
|
publication of research reports about us, our competitors or the financial services industry generally, or changes in, or failure to meet, securities analysts’ estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage;
|
•
|
operating and stock price performance of companies that investors deem comparable to us;
|
•
|
additional or anticipated sales of our common stock or other securities by us or our existing shareholders;
|
•
|
additions or departures of key personnel;
|
•
|
perceptions in the marketplace regarding our competitors or us;
|
•
|
significant acquisitions or business combinations, strategic relationships, joint ventures or capital commitments by or involving our competitors or us;
|
•
|
other economic, competitive, governmental, regulatory or technological factors affecting our operations, pricing, products and services; and
|
•
|
other news, announcements or disclosures (whether by us or others) related to us, our competitors, our core markets or the financial services industry.
|
•
|
because the Company is a legal entity separate and distinct from the Bank and does not have any stand-alone operations, our ability to pay dividends depends on the ability of the Bank to pay dividends to
|
•
|
Federal Reserve policy requires bank holding companies to pay cash dividends on common shares only out of net income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition; and
|
•
|
our board of directors may determine that, even though funds are available for dividend payments, retaining the funds for internal uses, such as expansion of our operations, is necessary or appropriate in light of our business plan and objectives.
|
•
|
conditions relating to the Covid-19 pandemic, including the severity and duration of the associated economic slowdown either nationally or in our market areas, and the response of governmental authorities to the Covid-19 pandemic and our participation in Covid-19-related government programs such as the PPP;
|
•
|
system failure or cybersecurity breaches of our network security;
|
•
|
the success of the financial technology industry, the development and acceptance of which is subject to a high degree of uncertainty, as well as the continued evolution of the regulation of this industry;
|
•
|
our ability to keep pace with rapid technological changes in the industry or implement new technology effectively;
|
•
|
our reliance on third-party service providers for core systems support, informational website hosting, internet services, online account opening and other processing services;
|
•
|
general economic conditions, either nationally or in our market areas (including interest rate environment, government economic and monetary policies, the strength of global financial markets and inflation and deflation), that impact the financial services industry and/or our business;
|
•
|
increased competition in the financial services industry, particularly from regional and national institutions and other companies that offer banking services;
|
•
|
our ability to measure and manage our credit risk effectively and the potential deterioration of the business and economic conditions in our primary market areas;
|
•
|
the adequacy of our risk management framework;
|
•
|
the adequacy of our allowance for loan losses;
|
•
|
the financial soundness of other financial institutions;
|
•
|
new lines of business or new products and services;
|
•
|
changes in SBA rules, regulations and loan products, including specifically the Section 7(a) program, changes in SBA standard operating procedures or changes to the status of the Bank as an SBA Preferred Lender;
|
•
|
changes in the value of collateral securing our loans;
|
•
|
possible increases in our levels of nonperforming assets;
|
•
|
potential losses from loan defaults and nonperformance on loans;
|
•
|
our ability to protect our intellectual property and the risks we face with respect to claims and litigation initiated against us;
|
•
|
the inability of small- and medium-sized businesses to whom we lend to weather adverse business conditions and repay loans;
|
•
|
our ability to implement aspects of our growth strategy and to sustain our historic rate of growth;
|
•
|
our ability to continue to originate, sell and retain loans, including through our Strategic Programs;
|
•
|
the concentration of our lending and depositor relationships through Strategic Programs in the financial technology industry generally;
|
•
|
our ability to attract additional merchants and retain and grow our existing merchant relationships;
|
•
|
interest rate risk associated with our business, including sensitivity of our interest earning assets and interest bearing liabilities to interest rates, and the impact to our earnings from changes in interest rates;
|
•
|
the effectiveness of our internal control over financial reporting and our ability to remediate any future material weakness in our internal control over financial reporting;
|
•
|
potential exposure to fraud, negligence, computer theft and cyber-crime and other disruptions in our computer systems relating to our development and use of new technology platforms;
|
•
|
our dependence on our management team and changes in management composition;
|
•
|
the sufficiency of our capital, including sources of capital and the extent to which we may be required to raise additional capital to meet our goals;
|
•
|
compliance with laws and regulations, supervisory actions, the Dodd-Frank Act, the Regulatory Relief Act, capital requirements, the Bank Secrecy Act, anti-money laundering laws, predatory lending laws, and other statutes and regulations;
|
•
|
changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters;
|
•
|
our ability to maintain a strong core deposit base or other low-cost funding sources;
|
•
|
results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our allowance for loan losses or to write-down assets;
|
•
|
our involvement from time to time in legal proceedings, examinations and remedial actions by regulators;
|
•
|
further government intervention in the U.S. financial system;
|
•
|
the ability of our Strategic Program service providers to comply with regulatory regimes, including laws and regulations applicable to consumer credit transactions, and our ability to adequately oversee and monitor our Strategic Program service providers;
|
•
|
our ability to maintain and grow our relationships with our Strategic Program service providers;
|
•
|
natural disasters and adverse weather, acts of terrorism, pandemics, an outbreak of hostilities or other international or domestic calamities, and other matters beyond our control;
|
•
|
compliance with requirements associated with being a public company;
|
•
|
level of coverage of our business by securities analysts;
|
•
|
the effective use of proceeds from this offering;
|
•
|
future equity and debt issuances; and
|
•
|
other factors that are discussed in the section entitled “Risk Factors,” beginning on page 26.
|
•
|
on an actual basis; and
|
•
|
on an as adjusted basis to give effect to the issuance and sale by us of shares of common stock in this offering and our receipt of the net proceeds therefrom (assuming the underwriters do not exercise their option to purchase additional shares) at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and estimated offering expenses payable by us.
|
|
| |
March 31, 2021
|
|||
($ in thousands, except per share data)
|
| |
Actual
|
| |
As Adjusted(1)
|
Cash and cash equivalents
|
| |
$74,222
|
| |
|
PPP Liquidity Facility
|
| |
79,704
|
| |
|
|
| |
|
| |
|
Shareholders’ equity
|
| |
|
| |
|
Preferred stock, $.001 par value, 5,000,000 authorized; no shares issued and outstanding as of March 31, 2021, actual and adjusted
|
| |
—
|
| |
|
Common stock, $.001 par value, 20,000,000 shares authorized; 1,452,685 shares issued and outstanding as of March 31, 2021, actual and adjusted, respectively
|
| |
1
|
| |
|
Additional paid-in-capital
|
| |
18,008
|
| |
|
Retained earnings
|
| |
34,301
|
| |
|
Total shareholders’ equity
|
| |
$52,310
|
| |
$—
|
Total capitalization
|
| |
$132,014
|
| |
|
|
| |
|
| |
|
Company capital ratios:
|
| |
|
| |
|
Leverage ratio(2)
|
| |
19.4%
|
| |
|
Total equity to total assets
|
| |
15.8%
|
| |
|
Tangible shareholders’ equity to tangible assets (3)
|
| |
15.8%
|
| |
|
|
| |
|
| |
|
Per Share:
|
| |
|
| |
|
Book value per share
|
| |
$36.01
|
| |
|
Tangible book value per share (3)
|
| |
$36.01
|
| |
|
(1)
|
Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) our as adjusted total shareholders’ equity and total capitalization by approximately $ million, assuming no change to the number of shares of common stock being offered hereby as set forth on the cover page of this prospectus, and after deducting underwriting discounts and estimated offering expenses payable by us.
|
(2)
|
See discussion under “Supervision and Regulation—The Regulatory Relief Act” describing the regulatory capital framework applicable to the Bank.
|
(3)
|
These measures are not measures recognized under GAAP and are therefore considered to be non-GAAP financial measures. See “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation of these measures to their most comparable GAAP measures.
|
Assumed initial public offering price per share
|
| |
$
|
Tangible book value per share of common stock at March 31, 2021
|
| |
36.01
|
Increase in tangible book value per share of common stock attributable to new investors in this offering
|
| |
|
As adjusted tangible book value per share of common stock after this offering
|
| |
|
Dilution per share of common stock to new investors in this offering
|
| |
$
|
|
| |
Shares Purchased
|
| |
Total Consideration
(Dollars in thousands)
|
| |
Average
Price
|
||||||
|
| |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| |
Per
Share
|
Shareholders as of March 31, 2021
|
| |
|
| |
%
|
| |
$
|
| |
%
|
| |
$
|
New investors in this offering
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total
|
| |
|
| |
%
|
| |
$
|
| |
%
|
| |
$
|
•
|
our strategic relationships with third party loan origination platforms, many of whom use technology to facilitate loan origination, that allow us to capture a high volume of diverse loan origination and loan performance data from the billions of dollars of loans that we have originated, sold or held in four main lending areas;
|
•
|
our FinView™ Analytics Platform, including our enterprise data warehouse, which is a proprietary technology developed by us to enhance our ability to gather and interpret performance data for the loans originated by us and to help us identify attractive risk-adjusted market sectors;
|
•
|
our core deposits which, as of March 31, 2021 and December 31, 2020, constitute 91.1% and 91.5% of our funding sources (excluding the PPPLF), respectively and have been highly reliable and relatively low cost (our core deposits comprise the sum of demand deposits, NOW accounts, MMDA accounts, savings accounts, and time deposits under $250,000 that are not brokered deposits); and
|
•
|
our seasoned management team, which has considerable banking experience, particularly in our core lines of business.
|
Year
|
| |
Comparable
Banks & Thrifts By Size
|
| |
Comparable
Banks & Thrifts Count
|
| |
FinWise Bank
Rank
|
| |
Percentile
|
2020
|
| |
<$3 billion in Assets
|
| |
4,287
|
| |
#2
|
| |
99.9%
|
2019
|
| |
<$3 billion in Assets
|
| |
4,391
|
| |
#41
|
| |
99.1%
|
2018
|
| |
<$3 billion in Assets
|
| |
4,619
|
| |
#12
|
| |
99.7%
|
2017
|
| |
<$1 billion in Assets
|
| |
4,383
|
| |
#3
|
| |
99.9%
|
2016
|
| |
<$1 billion in Assets
|
| |
4,585
|
| |
#26
|
| |
99.4%
|
-
|
2011
|
○
|
Raised approximately $0.3 million through the private placement of our common stock to position the Company for growth
|
○
|
Enhanced Bank control environment by revising policies and procedures, establishing oversight committees, and developing a standardized process for the Bank to launch new programs
|
○
|
In August, the FDIC Cease and Desist Order was removed
|
○
|
Resumed lending in the local community after the capital raise and removal of FDIC Cease and Desist Order
|
○
|
Launched our POS lending program
|
○
|
Launched our commercial leasing program
|
○
|
Introduced our strategy for using technology and data as a competitive advantage
|
-
|
2013
|
○
|
Returned to profitability
|
-
|
2014
|
○
|
Raised approximately $0.2 million through the private placement of our common stock to fund Company growth
|
○
|
Launched our SBA 7(a) lending program and began receiving loan referrals from BFG, a nationally significant referral source of SBA loans and the Bank’s primary SBA referral source
|
-
|
2015
|
○
|
Mr. Javvis Jacobson joined the Company and the Bank as Executive Vice President and Chief Financial Officer to lead our financial and day-to-day operational matters
|
-
|
2016
|
○
|
Mr. David Tilis, Senior Vice President and Chief Strategy Officer, joined the Bank’s management team to lead the launch of our Strategic Programs
|
○
|
Managed one Strategic Program loan origination platform at year end as a result of launching one new third-party loan origination platform focused on unsecured, closed-end debt consolidation credit products
|
○
|
Launched the initial development of FinView™, including our initial development of our data warehouse, in conjunction with the start of our Strategic Programs
|
○
|
Raised approximately $0.7 million through the private placement of our common stock to support Company growth
|
○
|
Ranked #26 by S&P in top 100 best performing banks and thrifts under $1 billion in total assets
|
-
|
2017
|
○
|
Managed one Strategic Program loan origination platform at year end as a result of launching one new third party loan origination platform focused on unsecured, closed-end, debt consolidation credit products
|
○
|
Further developed FinView™ to include the use of the first Application Programming Interface (“API”) to connect with our Strategic Program service providers to facilitate credit decisioning and funding
|
○
|
Raised approximately $2.7 million through the private placement stock to support Company growth
|
○
|
Ranked #3 by S&P in top 100 best performing banks and thrifts under $1 billion in total assets
|
-
|
2018
|
○
|
Opened a loan production office in Rockville Centre, New York primarily to support our Strategic Programs and SBA 7(a) lending programs
|
○
|
Mr. James Noone joined the Bank as Executive Vice President and Chief Credit Officer and implemented comprehensive processes leading to a significant expansion of our SBA 7(a) lending program
|
○
|
Managed seven Strategic Program loan origination platforms at year end as a result of launching three new third-party loan origination platforms which were focused on unsecured, closed-end, consumer installment credit products
|
○
|
Commenced credit analyses that now form the basis of FinView™ and, as a result, we began retaining selected Strategic Program loans
|
○
|
Raised approximately $4.0 million through the private placement of our common stock to support Company growth
|
○
|
Ranked #12 by S&P in top 100 best performing banks and thrifts under $3 billion in total assets
|
-
|
2019
|
○
|
Managed eight Strategic Program loan origination platforms at year end as a result of launching one new third-party loan origination platform which was focused on unsecured, closed-end, consumer installment credit products
|
○
|
Continued the buildout of our credit analyses that now form the basis of FinView™ and, as a result, we began retaining additional Strategic Program loans
|
○
|
To further solidify our mutually beneficial relationship with BFG, the Company issued additional shares of its common stock, representing 10.9% of the Company’s outstanding common stock, to certain members of BFG in exchange for certain of their interests in BFG, representing a 10.0% aggregate membership interest in BFG
|
○
|
Ranked #41 by S&P in top 100 best performing banks and thrifts under $3 billion in total assets
|
○
|
Ranked 9th largest SBA 7(a) originator in the state of New York
|
-
|
2020
|
○
|
Managed eight Strategic Program loan origination platforms at year end as a result of launching one new third-party loan origination platform which was focused on commercial working capital credit products and the closure, due to the Covid-19 pandemic, of one third-party loan origination platform launched in 2017 which was focused on commercial working capital credit products
|
○
|
Completed the buildout of our enterprise data warehouse which supports the compilation and storage of origination and servicing loan data for FinView™
|
○
|
Began development of new API version 2.0 to optimize connection with our Strategic Program loan origination platforms to facilitate a more efficient onboarding experience for new Strategic Program launches and automation of certain regulatory compliance, enterprise risk management and testing programs oversight at the Bank
|
○
|
Issued warrants to acquire shares of Company common stock to certain members of BFG in exchange for a right of first refusal to acquire, and an option to purchase, any and all membership interests in BFG until January 1, 2028
|
○
|
The Bank’s diversification strategy was tested by the Covid-19 pandemic. Our planned reduction in the at-risk loan portfolio during 2020 and our ability to generate income from multiple sources resulted in revenues and net income exceeding those generated in 2019
|
○
|
Ms. Dawn Cannon joined the Bank’s management team as Executive Vice President and Chief Operating Officer to lead and expand our operational capabilities, including the growth of our POS lending programs as part of our long-term strategic plan
|
○
|
Ranked #2 by S&P in the top 100 best performing banks and thrifts under $3 billion in total assets
|
•
|
In SBA 7(a) lending, we lend to small business and professionals. Our credit risk management is augmented by the fact the loans are partially guaranteed by the SBA. We further mitigate our credit risk in this program by using data, such as the nature of the business, use of proceeds, length of time in business and management experience to help us target loans that we believe have lower credit risk. Our prudent underwriting, closing and servicing processes are essential to effective utilization of the SBA 7(a) program, as the SBA guaranty is conditioned upon proper underwriting, closing and servicing by the lender.
|
•
|
In our Strategic Program lending, we originate unsecured and secured consumer and business loans to borrowers with certain Bank-approved credit profiles. The credit profiles are based on specific predetermined underwriting criteria informed by our extensive data and analytics. While we sell the vast majority of loans in this lending program shortly after origination, the Bank may choose to retain a portion of the funded loans and/or receivables. Our credit risk is mitigated by focusing on amortizing loans, lending to borrowers with demonstrated ability to repay, and extending loans that are priced appropriately to the credit profile of the borrower (including credit history). Smaller loans are often unsecured and therefore rely more on predictive models that allow us to appropriately price credit based on probable losses.
|
Return on Average Assets
|
| |
Return on Average Equity
|
|
| |
|
Net Interest Margin
|
| |
Noninterest Income / Average Assets
|
|
| |
|
NAICS
Sub-Sector
Code
|
| |
Description
|
| |
March 31,
2021
% of Total
|
541
|
| |
Professional, Scientific and Technical Services
|
| |
18.3%
|
454
|
| |
Non-Store Retailers (Electronic Shopping)
|
| |
14.7%
|
621
|
| |
Ambulatory Health Care Services
|
| |
7.7%
|
423
|
| |
Merchant Wholesalers, Durable Goods
|
| |
5.4%
|
445
|
| |
Food and Beverage Stores (Grocery, Convenience)
|
| |
5.2%
|
623
|
| |
Nursing and Residential Care Facilities
|
| |
5.2%
|
448
|
| |
Clothing and Clothing Accessories Stores
|
| |
4.5%
|
811
|
| |
Manufacturing Repair and Maintenance
|
| |
4.2%
|
238
|
| |
Specialty Trade Contractors
|
| |
3.8%
|
442
|
| |
Furniture and Home Furnishings Stores
|
| |
3.5%
|
|
| |
All Other
|
| |
27.5%
|
Total
|
| |
100.0%
|
•
|
Strategic Programs: $100 billion in total available market based on industry data and estimates. Our estimation of the total available market for the Strategic Program business line is based on industry data for unsecured personal loans. We believe the total available market may be larger than this as the Bank offers Strategic Programs specific to POS lending and commercial lending which may not be accounted for in the above estimates.
|
•
|
SBA Lending $150 billion in total available market based on SBA agency reports.
|
•
|
POS Lending: $160 billion in total available market based on industry data and estimates.
|
Asset Growth Rate (Over Prior Period)
|
| |
Total Loan Originations ($000s)
|
|
| |
|
•
|
Kent Landvatter. Mr. Landvatter joined the Company and the Bank in September 2010 as the President and Chief Executive Officer. Mr. Landvatter has over 40 years of financial services and banking experience, including experience with distressed banks and serving as the president of two de novo banks, Comenity Capital Bank and Goldman Sachs Bank, USA.
|
•
|
Javvis Jacobson. Mr. Jacobson joined the Company and the Bank in March 2015 as the Executive Vice President and Chief Financial Officer. Mr. Jacobson has over 20 years of financial services experience, including at Deloitte, where he served for several years managing audits of financial institutions. Mr. Jacobson also served for several years as the Chief Financial Officer of Beehive Credit Union with over $190 million in assets.
|
•
|
James Noone. Mr. Noone joined the Bank in February 2018 and was named Executive Vice President and Chief Credit Officer in June 2018. Mr. Noone has 20 years of financial services experience including commercial and investment banking as well as private equity. Prior to joining the Bank, Mr. Noone served as Executive Vice President of Prudent Lenders, an SBA service provider from 2012 to 2018.
|
•
|
Dawn Cannon. Ms. Cannon joined the Bank in March 2020 as the Senior Operating Officer and was named Executive Vice President and Chief Operating Officer in July 2020. Ms. Cannon has over 17 years of banking experience, including serving as the Executive Vice President of Operations of EnerBank, an industrial bank that focused on lending programs similar to our POS lending program, where she was instrumental in building it from 23 to 285 full time employees and from $10 million to $1.4 billion in total assets.
|
•
|
David Tilis. Mr. Tilis joined the Bank in March 2016 as a Vice President and Director of Specialty Lending and now serves as the Chief Strategy Officer and Senior Vice President. Mr. Tilis has over 15 years of financial services experience, including serving as a Vice President of Cross River Bank overseeing SBA lending and playing a significant role in strategic relationships.
|
•
|
Suzanne Musgrow. Ms. Musgrow joined the Bank in December 2016 and now serves as a Senior Vice President and the Chief Risk Officer. Ms. Musgrow has over 20 years of banking experience in the areas of credit, compliance and operations.
|
•
|
Rachael Hadley. Ms. Hadley joined the Bank in September 2016 and now serves as a Senior Vice President and the Chief Regulatory Compliance Officer. Ms. Hadley has over 15 years legal and banking experience.
|
YE 2020 Origination Volume
|
| |
Loan Portfolio as of 12/31/20
|
|
| |
|
Q1 2021 Origination Volume
|
| |
Loan Portfolio as of 3/31/21
|
|
| |
|
Q1 Revenue by Business Line
|
|||
|
2
|
Note to Draft: PSC to provide formatted Q1 chart. Below is placeholder only.
|
|
| |
March 31,
|
| |
December 31,
|
||||||
|
| |
2021
|
| |
2020
|
||||||
|
| |
Total Loans
|
| |
% of Loans in
Category of
total loans
|
| |
Total Loans
|
| |
% of Loans in
Category of
total loans
|
SBA
|
| |
$167,824
|
| |
68.3%
|
| |
$203,317
|
| |
77.7%
|
Commercial, non-real estate
|
| |
3,867
|
| |
1.6%
|
| |
4,020
|
| |
1.5%
|
Residential real estate
|
| |
21,712
|
| |
8.9%
|
| |
17,740
|
| |
6.8%
|
Strategic Program loans
|
| |
44,427
|
| |
18.1%
|
| |
28,265
|
| |
10.8%
|
Commercial real estate
|
| |
2,589
|
| |
1.1%
|
| |
2,892
|
| |
1.1%
|
Consumer
|
| |
4,807
|
| |
2.0%
|
| |
5,543
|
| |
2.1%
|
Total
|
| |
$245,226
|
| |
100.0%
|
| |
$261,777
|
| |
100.0%
|
•
|
understanding the customer’s financial condition and ability to repay the loan;
|
•
|
evaluating management performance and expertise and industry experience;
|
•
|
verifying that the primary and secondary sources of repayment are adequate in relation to the amount and structure of the loan;
|
•
|
observing appropriate loan-to-value guidelines for collateral secured loans;
|
•
|
maintaining our targeted levels of diversification for the loan portfolio, both as to type of borrower and type of collateral; and
|
•
|
ensuring that each loan is properly documented with perfected liens on collateral.
|
•
|
whether the applicant has any other loans(s) (including through the PPP, SBA EIDL, other stimulus financing) that have repayment or contingent repayment requirements which could impact cash flow;
|
•
|
for commercial applicants, whether the business revenue and staffing levels have been impacted by the Covid-19 pandemic and whether business has a contingency plan for revenues and operations for a minimum of the next 18 months;
|
•
|
for individual applicants, whether his or her source of income has been or may be impacted;
|
•
|
how governmental restrictions, including stay-at-home orders, social distancing, travel, traffic flow, and trade limitations have impacted applicant’s business operations or personal cash flow;
|
•
|
whether historical financial information can be reasonably relied upon based on current market conditions; and
|
•
|
the impact current market conditions have on collateral adequacy.
|
•
|
Ensure the Safety of Principal—Bank investments are generally limited to investment-grade instruments that fully comply with all applicable regulatory guidelines and limitations. Allowable non-investment-grade instruments must be approved by the board of directors.
|
•
|
Income Generation—The Bank’s investment portfolio is managed to maximize income on invested funds in a manner that is consistent with the Bank’s overall financial goals and risk considerations.
|
•
|
Provide Liquidity—The Bank’s investment portfolio is managed to remain sufficiently liquid to meet anticipated funding demands either through declines in deposits and/or increases in loan demand.
|
•
|
Mitigate Interest Rate Risk—Portfolio strategies are used to assist the Bank in managing its overall interest rate sensitivity position in accordance with goals and objectives approved by our board of directors.
|
Location
|
| |
Owned/
Leased
|
| |
Lease
Expiration
|
| |
Type of Office
|
Murray, Utah
|
| |
Leased
|
| |
December 31, 2021
|
| |
Corporate Headquarters
|
Sandy, Utah
|
| |
Leased
|
| |
July 31, 2024
|
| |
Retail Bank Branch
|
Rockville Centre, New York
|
| |
Leased
|
| |
December 31, 2022
|
| |
Loan Production Office
|
|
| |
For Three Months Ended
March 31,
|
| |
For the Years Ended
December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Interest income
|
| |
$8,806
|
| |
$8,039
|
| |
$29,506
|
| |
$21,408
|
| |
$8,073
|
Interest expense
|
| |
(372)
|
| |
(434)
|
| |
(1,756)
|
| |
(1,462)
|
| |
(846)
|
Provision for loan losses
|
| |
(633)
|
| |
(3,814)
|
| |
(5,234)
|
| |
(5,288)
|
| |
(980)
|
Non-interest income
|
| |
6,079
|
| |
3,911
|
| |
14,373
|
| |
13,863
|
| |
8,656
|
Non-interest expense
|
| |
(6,663)
|
| |
(5,288)
|
| |
(21,749)
|
| |
(15,685)
|
| |
(9,538)
|
Provision for income taxes
|
| |
(1,926)
|
| |
(600)
|
| |
(3,942)
|
| |
(3,177)
|
| |
(1,333)
|
Net income
|
| |
5,291
|
| |
1,814
|
| |
11,198
|
| |
9,659
|
| |
4,032
|
|
| |
Three Months Ended March 31,
|
|||||||||||||||
|
| |
2021
|
| |
2020
|
||||||||||||
($ in thousands)
|
| |
Average
Balance
|
| |
Interest
|
| |
Average
Yield/Rate
|
| |
Average
Balance
|
| |
Interest
|
| |
Average
Yield/Rate
|
Interest earning assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest-bearing deposits with the Federal Reserve, non
|
| |||||||||||||||||
U.S. central banks and other banks
|
| |
$46,885
|
| |
$10
|
| |
0.1%
|
| |
$49,942
|
| |
$170
|
| |
1.4%
|
Investment securities
|
| |
1,750
|
| |
6
|
| |
1.5%
|
| |
464
|
| |
4
|
| |
3.1%
|
Loans held for sale
|
| |
35,349
|
| |
3,566
|
| |
40.3%
|
| |
21,613
|
| |
2,765
|
| |
51.2%
|
Loans held for investment
|
| |
223,728
|
| |
5,224
|
| |
9.3%
|
| |
109,712
|
| |
5,100
|
| |
18.6%
|
Total interest earning assets
|
| |
307,712
|
| |
8,806
|
| |
11.4%
|
| |
181,731
|
| |
8,039
|
| |
17.7%
|
Less: allowance for loan losses
|
| |
(6,289)
|
| |
|
| |
|
| |
(5,132)
|
| |
|
| |
|
Non-interest earning assets
|
| |
11,355
|
| |
|
| |
|
| |
7,937
|
| |
|
| |
|
Total assets
|
| |
$312,778
|
| |
|
| |
|
| |
$184,536
|
| |
|
| |
|
Interest bearing liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Demand
|
| |
$6,287
|
| |
$14
|
| |
0.9%
|
| |
$274
|
| |
$—
|
| |
0.1%
|
Savings
|
| |
6,851
|
| |
3
|
| |
0.2%
|
| |
5,532
|
| |
3
|
| |
0.2%
|
Money market accounts
|
| |
17,728
|
| |
16
|
| |
0.4%
|
| |
16,982
|
| |
31
|
| |
0.7%
|
Certificates of deposit
|
| |
50,888
|
| |
264
|
| |
2.1%
|
| |
65,174
|
| |
400
|
| |
2.5%
|
Total deposits
|
| |
81,754
|
| |
297
|
| |
1.5%
|
| |
87,962
|
| |
434
|
| |
2.0%
|
Other borrowings
|
| |
87,267
|
| |
75
|
| |
0.3%
|
| |
—
|
| |
—
|
| |
0.0%
|
Total interest bearing liabilities
|
| |
169,021
|
| |
372
|
| |
0.9%
|
| |
87,962
|
| |
434
|
| |
2.0%
|
Non-interest bearing deposits
|
| |
89,111
|
| |
|
| |
|
| |
59,301
|
| |
|
| |
|
Non-interest bearing liabilities
|
| |
6,586
|
| |
|
| |
|
| |
2,925
|
| |
|
| |
|
Shareholders’ equity
|
| |
48,060
|
| |
|
| |
|
| |
34,348
|
| |
|
| |
|
Total liabilities and shareholders’ equity
|
| |
$312,778
|
| |
|
| |
|
| |
$184,536
|
| |
|
| |
|
Net interest income and interest rate spread
|
| |
|
| |
$8,434
|
| |
10.6%
|
| |
|
| |
$7,605
|
| |
15.7%
|
Net interest margin
|
| |
|
| |
|
| |
11.0%
|
| |
|
| |
|
| |
16.7%
|
Ratio of average interest-earning assets to average interest- bearing liabilities
|
| |
|
| |
|
| |
182.1%
|
| |
|
| |
|
| |
206.6%
|
|
| |
Years Ended December 31,
|
||||||||||||||||||||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
||||||||||||||||||
($ in thousands)
|
| |
Average
Balance
|
| |
Interest
|
| |
Average
Yield/Rate
|
| |
Average
Balance
|
| |
Interest
|
| |
Average
Yield/Rate
|
| |
Average
Balance
|
| |
Interest
|
| |
Average
Yield/Rate
|
Interest earning assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest-bearing deposits with the Federal Reserve, non
|
| ||||||||||||||||||||||||||
U.S. central banks and other banks
|
| |
$43,892
|
| |
$201
|
| |
0.5%
|
| |
$33,290
|
| |
$664
|
| |
2.0%
|
| |
$17,673
|
| |
$313
|
| |
1.8%
|
Investment securities
|
| |
1,622
|
| |
34
|
| |
2.1%
|
| |
516
|
| |
16
|
| |
3.0%
|
| |
493
|
| |
10
|
| |
2.0%
|
Loans held for sale
|
| |
20,154
|
| |
10,560
|
| |
52.4%
|
| |
12,249
|
| |
7,782
|
| |
63.5%
|
| |
5,120
|
| |
2,409
|
| |
47.0%
|
Loans held for investment
|
| |
187,314
|
| |
18,711
|
| |
10.0%
|
| |
94,954
|
| |
12,946
|
| |
13.6%
|
| |
65,785
|
| |
5,341
|
| |
8.1%
|
Total interest earning assets
|
| |
252,982
|
| |
29,506
|
| |
11.7%
|
| |
141,009
|
| |
21,408
|
| |
15.2%
|
| |
89,071
|
| |
8,073
|
| |
9.1%
|
Less: allowance for loan losses
|
| |
(6,706)
|
| |
|
| |
|
| |
(2,708)
|
| |
|
| |
|
| |
(1,087)
|
| |
|
| |
|
Non-interest earning assets
|
| |
8,130
|
| |
|
| |
|
| |
4,005
|
| |
|
| |
|
| |
2,086
|
| |
|
| |
|
Total assets
|
| |
$254,406
|
| |
|
| |
|
| |
$142,306
|
| |
|
| |
|
| |
$90,070
|
| |
|
| |
|
Interest bearing liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Demand
|
| |
$3,237
|
| |
$62
|
| |
1.9%
|
| |
$222
|
| |
$—
|
| |
0.1%
|
| |
$276
|
| |
$—
|
| |
0.2%
|
Savings
|
| |
6,234
|
| |
16
|
| |
0.2%
|
| |
4,762
|
| |
12
|
| |
0.2%
|
| |
4,292
|
| |
11
|
| |
0.2%
|
Money market accounts
|
| |
16,327
|
| |
104
|
| |
0.6%
|
| |
14,973
|
| |
109
|
| |
0.7%
|
| |
10,951
|
| |
76
|
| |
0.7%
|
Certificates of deposit
|
| |
57,496
|
| |
1,401
|
| |
2.4%
|
| |
52,691
|
| |
1,341
|
| |
2.5%
|
| |
36,424
|
| |
759
|
| |
2.1%
|
Total deposits
|
| |
83,294
|
| |
1,583
|
| |
1.9%
|
| |
72,648
|
| |
1,462
|
| |
2.0%
|
| |
51,943
|
| |
846
|
| |
1.6%
|
Other borrowings
|
| |
49,044
|
| |
173
|
| |
0.4%
|
| |
—
|
| |
—
|
| |
0.0%
|
| |
—
|
| |
—
|
| |
0.0%
|
Total interest bearing liabilities
|
| |
132,338
|
| |
1,756
|
| |
1.3%
|
| |
72,648
|
| |
1,462
|
| |
2.0%
|
| |
51,943
|
| |
846
|
| |
1.6%
|
Non-interest bearing deposits
|
| |
80,537
|
| |
|
| |
|
| |
41,866
|
| |
|
| |
|
| |
21,430
|
| |
|
| |
|
Non-interest bearing liabilities
|
| |
3,941
|
| |
|
| |
|
| |
3,888
|
| |
|
| |
|
| |
1,581
|
| |
|
| |
|
Shareholders’ equity
|
| |
37,590
|
| |
|
| |
|
| |
23,904
|
| |
|
| |
|
| |
15,116
|
| |
|
| |
|
Total liabilities and shareholders’ equity
|
| |
$254,406
|
| |
|
| |
|
| |
$142,306
|
| |
|
| |
|
| |
$90,070
|
| |
|
| |
|
Net interest income and interest rate spread
|
| |
|
| |
$27,750
|
| |
10.3%
|
| |
|
| |
$19,946
|
| |
13.2%
|
| |
|
| |
$7,227
|
| |
7.4%
|
Net interest margin
|
| |
|
| |
|
| |
11.0%
|
| |
|
| |
|
| |
14.1%
|
| |
|
| |
|
| |
8.1%
|
Ratio of average interest-earning assets to average interest- bearing liabilities
|
| |
|
| |
|
| |
191.2%
|
| |
|
| |
|
| |
194.1%
|
| |
|
| |
|
| |
171.5%
|
|
| |
Three Months Ended
March 31,
|
||||||
|
| |
2021
|
||||||
|
| |
Increase (Decrease) Due to
|
||||||
($ in thousands)
|
| |
Rate
|
| |
Volume
|
| |
Total
|
Interest income:
|
| |
|
| |
|
| |
|
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks
|
| |
$(150)
|
| |
$(10)
|
| |
$(160)
|
Investment securities
|
| |
(1)
|
| |
3
|
| |
2
|
Loans held-for-sale
|
| |
(399)
|
| |
1,200
|
| |
801
|
Loans held for investment
|
| |
(115)
|
| |
239
|
| |
124
|
Total interest income
|
| |
(665)
|
| |
1,432
|
| |
767
|
Interest expense:
|
| |
|
| |
|
| |
|
Demand
|
| |
3
|
| |
12
|
| |
15
|
Savings
|
| |
(2)
|
| |
1
|
| |
(1)
|
Money market accounts
|
| |
(16)
|
| |
1
|
| |
(15)
|
Certificates of deposit
|
| |
(56)
|
| |
(80)
|
| |
(136)
|
Other borrowings
|
| |
38
|
| |
37
|
| |
75
|
Total interest bearing liabilities
|
| |
(34)
|
| |
(28)
|
| |
(62)
|
Net interest income
|
| |
$(631)
|
| |
$1,460
|
| |
$829
|
|
| |
Years Ended December 31,
|
|||||||||||||||
|
| |
2020
|
| |
2019
|
||||||||||||
|
| |
Increase (Decrease) Due to
|
| |
Increase (Decrease) Due to
|
||||||||||||
($ in thousands)
|
| |
Rate
|
| |
Volume
|
| |
Total
|
| |
Rate
|
| |
Volume
|
| |
Total
|
Interest income:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks
|
| |
$(790)
|
| |
$327
|
| |
$(463)
|
| |
$44
|
| |
$307
|
| |
$351
|
Investment securities
|
| |
(3)
|
| |
21
|
| |
18
|
| |
5
|
| |
1
|
| |
6
|
Loans held-for-sale
|
| |
(1,036)
|
| |
3,814
|
| |
2,778
|
| |
1,080
|
| |
4,293
|
| |
5,373
|
Loans held for investment
|
| |
(2,185)
|
| |
7,950
|
| |
5,765
|
| |
4,601
|
| |
3,004
|
| |
7,605
|
Total interest income
|
| |
(4,014)
|
| |
12,112
|
| |
8,098
|
| |
5,731
|
| |
7,604
|
| |
13,335
|
Interest expense:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Demand
|
| |
30
|
| |
32
|
| |
62
|
| |
—
|
| |
—
|
| |
—
|
Savings
|
| |
—
|
| |
4
|
| |
4
|
| |
—
|
| |
1
|
| |
1
|
Money market accounts
|
| |
(18)
|
| |
13
|
| |
(5)
|
| |
4
|
| |
29
|
| |
33
|
Certificates of deposit
|
| |
(52)
|
| |
112
|
| |
60
|
| |
193
|
| |
389
|
| |
582
|
Other borrowings
|
| |
87
|
| |
86
|
| |
173
|
| |
—
|
| |
—
|
| |
—
|
Total interest bearing liabilities
|
| |
47
|
| |
247
|
| |
294
|
| |
197
|
| |
419
|
| |
616
|
Net interest income
|
| |
$(4,060)
|
| |
$11,864
|
| |
$7,804
|
| |
$5,534
|
| |
$7,185
|
| |
$12,719
|
|
| |
For the
Three Months Ended
March 31,
|
| |
Change
|
||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
Noninterest income:
|
| |
|
| |
|
| |
|
| |
|
Strategic Program fees
|
| |
$2,953
|
| |
$2,606
|
| |
$347
|
| |
13.3%
|
Gain on sale of loans
|
| |
2,603
|
| |
1,013
|
| |
1,589
|
| |
156.9%
|
SBA loan servicing fees
|
| |
152
|
| |
275
|
| |
(122)
|
| |
(44.5%)
|
Change in fair value on investment in BFG
|
| |
360
|
| |
—
|
| |
360
|
| |
100.0%
|
Other miscellaneous income
|
| |
11
|
| |
17
|
| |
(6)
|
| |
(37.2%)
|
Total noninterest income
|
| |
$6,079
|
| |
$3,911
|
| |
$2,168
|
| |
55.4%
|
|
| |
For the Years Ended
December 31,
|
| |
Change
|
||||||
($ in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
Noninterest income:
|
| |
|
| |
|
| |
|
| |
|
Strategic Program fees
|
| |
$9,591
|
| |
$8,866
|
| |
$725
|
| |
8.2%
|
Gain on sale of loans
|
| |
2,849
|
| |
4,167
|
| |
(1,318)
|
| |
(31.6%)
|
SBA loan servicing fees
|
| |
1,028
|
| |
607
|
| |
421
|
| |
69.4%
|
Change in fair value on investment in BFG
|
| |
856
|
| |
122
|
| |
734
|
| |
601.6%
|
Other miscellaneous income
|
| |
49
|
| |
101
|
| |
(52)
|
| |
(51.5%)
|
Total noninterest income
|
| |
$14,373
|
| |
$13,863
|
| |
$510
|
| |
3.7%
|
|
| |
For the Years Ended
December 31,
|
| |
Change
|
||||||
($ in thousands)
|
| |
2019
|
| |
2018
|
| |
$
|
| |
%
|
Noninterest income:
|
| |
|
| |
|
| |
|
| |
|
Strategic Program fees
|
| |
$8,866
|
| |
$5,026
|
| |
$3,840
|
| |
76.4%
|
Gain on sale of loans
|
| |
4,167
|
| |
2,957
|
| |
1,210
|
| |
40.9%
|
SBA loan servicing fees
|
| |
607
|
| |
545
|
| |
62
|
| |
11.4%
|
Change in fair value on investment in BFG
|
| |
122
|
| |
—
|
| |
122
|
| |
100.0%
|
Other miscellaneous income
|
| |
101
|
| |
128
|
| |
(27)
|
| |
(21.3%)
|
Total noninterest income
|
| |
$13,863
|
| |
$8,656
|
| |
$5,207
|
| |
60.2%
|
($ in thousands)
|
| |
For the
Three Months Ended
March 31,
|
| |
Change
|
||||||
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
Noninterest expense:
|
| |
|
| |
|
| |
|
| |
|
Salaries and employee benefits
|
| |
$4,895
|
| |
$4,006
|
| |
$889
|
| |
22.2%
|
Occupancy and equipment expenses
|
| |
194
|
| |
143
|
| |
51
|
| |
35.5%
|
Loss on investment in BFG
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Other operating expenses
|
| |
1,574
|
| |
1,139
|
| |
435
|
| |
38.2%
|
Total noninterest expense
|
| |
$6,663
|
| |
$5,288
|
| |
$1,375
|
| |
26.0%
|
($ in thousands)
|
| |
For the Years Ended
December 31,
|
| |
Change
|
||||||
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
Noninterest expense:
|
| |
|
| |
|
| |
|
| |
|
Salaries and employee benefits
|
| |
$16,835
|
| |
$11,894
|
| |
$4,941
|
| |
41.5%
|
Occupancy and equipment expenses
|
| |
694
|
| |
529
|
| |
165
|
| |
31.2%
|
Loss on investment in BFG
|
| |
50
|
| |
—
|
| |
50
|
| |
100.0%
|
Other operating expenses
|
| |
4,170
|
| |
3,262
|
| |
908
|
| |
27.8%
|
Total noninterest expense
|
| |
$21,749
|
| |
$15,685
|
| |
$6,064
|
| |
38.7%
|
|
| |
For the Years Ended
December 31,
|
| |
Change
|
||||||
($ in thousands)
|
| |
2019
|
| |
2018
|
| |
$
|
| |
%
|
Noninterest expense
|
| |
|
| |
|
| |
|
| |
|
Salaries and employee benefits
|
| |
$11,894
|
| |
$7,517
|
| |
$4,377
|
| |
58.2%
|
Occupancy and equipment expenses
|
| |
529
|
| |
342
|
| |
187
|
| |
54.7%
|
Other operating expenses
|
| |
3,262
|
| |
1,679
|
| |
1,583
|
| |
94.3%
|
Total noninterest expense
|
| |
$15,685
|
| |
$9,538
|
| |
$6,147
|
| |
64.4%
|
|
| |
As of March 31,
2021
|
| |
As of December 31,
|
||||||||||||||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|||||||||||||||
|
| |
Amount
|
| |
% of
total
loans
|
| |
Amount
|
| |
% of
total
loans
|
| |
Amount
|
| |
% of
total
loans
|
| |
Amount
|
| |
% of
total
loans
|
SBA(1)
|
| |
$167,824
|
| |
68.3%
|
| |
$203,317
|
| |
77.7%
|
| |
$56,295
|
| |
41.2%
|
| |
$48,637
|
| |
55.4%
|
Commercial, non real estate
|
| |
3,867
|
| |
1.6%
|
| |
4,020
|
| |
1.5%
|
| |
6,045
|
| |
4.4%
|
| |
7,294
|
| |
8.3%
|
Residential real estate
|
| |
21,712
|
| |
8.9%
|
| |
17,740
|
| |
6.8%
|
| |
22,495
|
| |
16.4%
|
| |
14,735
|
| |
16.8%
|
Strategic Program loans
|
| |
44,427
|
| |
18.1%
|
| |
28,265
|
| |
10.8%
|
| |
42,439
|
| |
31.1%
|
| |
8,412
|
| |
9.6%
|
Commercial real estate
|
| |
2,589
|
| |
1.1%
|
| |
2,892
|
| |
1.1%
|
| |
3,666
|
| |
2.7%
|
| |
3,773
|
| |
4.3%
|
Consumer
|
| |
4,807
|
| |
2.0%
|
| |
5,543
|
| |
2.1%
|
| |
5,722
|
| |
4.2%
|
| |
4,965
|
| |
5.6%
|
Total
|
| |
245,226
|
| |
100.0%
|
| |
$261,777
|
| |
100.0%
|
| |
$136,662
|
| |
100.0%
|
| |
$87,816
|
| |
100.0%
|
(1)
|
The amount of SBA loans as of March 31, 2021 and December 31, 2020 includes approximately $65.9 million and $107.1 million of PPP loans.
|
At March 31, 2021
|
| |
Remaining Contractual Maturity Held for Investment
|
||||||||||||
($ in thousands)
|
| |
One Year
or Less
|
| |
After One
Year and
Through
Five Years
|
| |
After Five
Years and
Through
Fifteen
Years
|
| |
After
Fifteen
Years
|
| |
Total
|
Fixed rate loans:
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA(1)
|
| |
$56,996
|
| |
$9,173
|
| |
$327
|
| |
$155
|
| |
$66,651
|
Commercial, non-real estate
|
| |
1,714
|
| |
2,085
|
| |
67
|
| |
1
|
| |
3,867
|
Residential real estate
|
| |
4,340
|
| |
1,625
|
| |
27
|
| |
2
|
| |
5,994
|
Strategic Program loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Commercial real estate
|
| |
1,854
|
| |
728
|
| |
—
|
| |
—
|
| |
2,582
|
Consumer
|
| |
1,476
|
| |
2,940
|
| |
22
|
| |
—
|
| |
4,438
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Variable rate loans:
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
6,292
|
| |
25,114
|
| |
42,399
|
| |
27,368
|
| |
101,173
|
Commercial, non-real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Residential real estate
|
| |
14,913
|
| |
625
|
| |
180
|
| |
—
|
| |
15,718
|
Strategic Program loans
|
| |
5,860
|
| |
720
|
| |
—
|
| |
—
|
| |
6,580
|
Commercial real estate
|
| |
7
|
| |
—
|
| |
—
|
| |
—
|
| |
7
|
Consumer
|
| |
146
|
| |
223
|
| |
—
|
| |
—
|
| |
369
|
Total
|
| |
$93,598
|
| |
$43,233
|
| |
$43,022
|
| |
$27,526
|
| |
$207,379
|
(1)
|
The amount of SBA fixed rate loans includes approximately $65.9 million of PPP loans. PPP loans originated prior to June 5, 2020, have a two year term. PPP loans originated on or after June 5, 2020, have a five year term. For PPP borrowers who submit completed applications for forgiveness, loan payments are automatically deferred until the SBA renders a decision on the forgiveness request. PPP borrowers who fail to submit timely forgiveness applications are required to made monthly payments beginning ten months from the end of the chosen “covered period”. The “covered period” is a maximum of 24 weeks from the origination date. Assuming a 24 week covered period, PPP borrowers are not required to begin making payments until 16 months after the origination date. At the time payments begin, if the borrower and lender of a two year PPP loan mutually agree to extend the term of the loan it can be extended to a five year term. As of March 31, 2021, no PPP loans have requested maturity date extensions.
|
At December 31, 2020
|
| |
Remaining Contractual Maturity Held for Investment
|
||||||||||||
($ in thousands)
|
| |
One Year
or Less
|
| |
After One
Year and
Through
Five Years
|
| |
After Five
Years and
Through
Fifteen
Years
|
| |
After
Fifteen
Years
|
| |
Total
|
Fixed rate loans:
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA(1)
|
| |
$53,093
|
| |
$54,376
|
| |
$339
|
| |
$158
|
| |
$107,966
|
Commercial, non-real estate
|
| |
1,746
|
| |
2,203
|
| |
70
|
| |
1
|
| |
4,020
|
Residential real estate
|
| |
4,788
|
| |
1,392
|
| |
—
|
| |
—
|
| |
6,180
|
Strategic Program loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Commercial real estate
|
| |
1,902
|
| |
766
|
| |
17
|
| |
—
|
| |
2,685
|
Consumer
|
| |
1,737
|
| |
3,226
|
| |
20
|
| |
—
|
| |
4,983
|
At December 31, 2020
|
| |
Remaining Contractual Maturity Held for Investment
|
||||||||||||
($ in thousands)
|
| |
One Year
or Less
|
| |
After One
Year and
Through
Five Years
|
| |
After Five
Years and
Through
Fifteen
Years
|
| |
After
Fifteen
Years
|
| |
Total
|
Variable rate loans:
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
5,762
|
| |
23,009
|
| |
39,866
|
| |
26,714
|
| |
95,351
|
Commercial, non-real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Residential real estate
|
| |
10,696
|
| |
747
|
| |
117
|
| |
—
|
| |
11,560
|
Strategic Program loans
|
| |
6,547
|
| |
770
|
| |
—
|
| |
—
|
| |
7,317
|
Commercial real estate
|
| |
207
|
| |
—
|
| |
—
|
| |
—
|
| |
207
|
Consumer
|
| |
191
|
| |
369
|
| |
—
|
| |
—
|
| |
560
|
Total
|
| |
$86,669
|
| |
$86,858
|
| |
$40,429
|
| |
$26,873
|
| |
$240,829
|
(1)
|
The amount of SBA fixed rate loans includes approximately $107.1 million of PPP loans.
|
At December 31, 2019
|
| |
Remaining Contractual Maturity Held for Investment
|
||||||||||||
($ in thousands)
|
| |
One Year
or Less
|
| |
After One
Year and
Through
Five Years
|
| |
After Five
Years and
Through
Fifteen
Years
|
| |
After Fifteen
Years
|
| |
Total
|
Fixed rate loans:
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
$59
|
| |
$234
|
| |
$360
|
| |
$183
|
| |
$836
|
Commercial, non-real estate
|
| |
2,921
|
| |
3,065
|
| |
59
|
| |
—
|
| |
6,045
|
Residential real estate
|
| |
5,217
|
| |
1,832
|
| |
—
|
| |
—
|
| |
7,049
|
Strategic Program loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Commercial real estate
|
| |
2,413
|
| |
1,201
|
| |
52
|
| |
—
|
| |
3,666
|
Consumer
|
| |
1,423
|
| |
3,325
|
| |
31
|
| |
—
|
| |
4,779
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Variable rate loans:
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
3,346
|
| |
13,387
|
| |
22,929
|
| |
15,797
|
| |
55,459
|
Commercial, non-real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Residential real estate
|
| |
13,916
|
| |
1,127
|
| |
403
|
| |
—
|
| |
15,446
|
Strategic Program loans
|
| |
9,942
|
| |
7,333
|
| |
55
|
| |
—
|
| |
17,330
|
Commercial real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Consumer
|
| |
242
|
| |
701
|
| |
—
|
| |
—
|
| |
943
|
Total
|
| |
$39,479
|
| |
$32,205
|
| |
$23,889
|
| |
$15,980
|
| |
$111,553
|
|
| |
As of
March 31,
2021
|
| |
As of December 31,
|
||||||
($ in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
|||
Nonaccrual loans:
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
$789
|
| |
$816
|
| |
$861
|
| |
$87
|
Commercial, non real estate
|
| |
—
|
| |
—
|
| |
247
|
| |
—
|
Residential real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Strategic Program loans
|
| |
—
|
| |
15
|
| |
—
|
| |
—
|
Total nonperforming loans
|
| |
$789
|
| |
$831
|
| |
$1,108
|
| |
$87
|
|
| |
|
| |
|
| |
|
| |
|
Total accruing loans past due 90 days or more
|
| |
$9
|
| |
$1
|
| |
$—
|
| |
$—
|
Nonaccrual troubled debt restructuring
|
| |
$53
|
| |
$53
|
| |
$66
|
| |
$8
|
Total troubled debt restructurings
|
| |
870
|
| |
870
|
| |
—
|
| |
—
|
Other Real Estate Owned
|
| |
|
| |
—
|
| |
—
|
| |
—
|
Less nonaccrual troubled debt restructurings
|
| |
(53)
|
| |
(53)
|
| |
(66)
|
| |
(8)
|
Total nonperforming assets and troubled debt restructurings
|
| |
1,659
|
| |
$1,701
|
| |
$1,108
|
| |
$87
|
Total nonperforming loans to total loans
|
| |
0.3%
|
| |
0.3%
|
| |
0.8%
|
| |
0.1%
|
Total nonperforming loans to total assets
|
| |
0.2%
|
| |
0.3%
|
| |
0.6%
|
| |
0.1%
|
Total nonperforming assets and troubled debt restructurings to total loans
|
| |
0.7%
|
| |
0.6%
|
| |
0.8%
|
| |
0.1%
|
Total nonperforming assets and troubled debt restructurings to total assets
|
| |
0.5%
|
| |
0.5%
|
| |
0.6%
|
| |
0.1%
|
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans) (1)
|
| |
0.6%
|
| |
0.8%
|
| |
0.6%
|
| |
0.1%
|
(1)
|
See “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation of this measure to its most comparable GAAP measure.
|
|
| |
As of March 31, 2021
|
| |||||||||||
($ in thousands)
|
| |
Pass
Grade 1-4
|
| |
Special
Mention
Grade 5
|
| |
Classified/
Doubtful
Grade 6-7
|
| |
Loss
Grade 8
|
| |
Total
|
SBA
|
| |
$165,004
|
| |
$1,930
|
| |
$890
|
| |
—
|
| |
$167,824
|
Commercial, non real estate
|
| |
3,807
|
| |
60
|
| |
—
|
| |
—
|
| |
3,867
|
Residential real estate
|
| |
20,956
|
| |
—
|
| |
756
|
| |
—
|
| |
21,712
|
Commercial real estate
|
| |
2,589
|
| |
—
|
| |
—
|
| |
—
|
| |
2,589
|
Consumer
|
| |
4,807
|
| |
—
|
| |
—
|
| |
—
|
| |
4,807
|
Not Risk Graded
|
| |
|
| |
|
| |
|
| |
—
|
| |
|
Strategic Program(1) loans
|
| |
|
| |
|
| |
|
| |
—
|
| |
44,427
|
Total
|
| |
$197,163
|
| |
$1,990
|
| |
$1,646
|
| |
—
|
| |
$245,226
|
|
| |
As of December 31, 2020
|
||||||||||||
($ in thousands)
|
| |
Pass
Grade 1-4
|
| |
Special
Mention
Grade 5
|
| |
Classified/
Doubtful
Grade 6-7
|
| |
Loss
Grade 8
|
| |
Total
|
SBA
|
| |
$200,360
|
| |
$2,040
|
| |
$917
|
| |
—
|
| |
$203,317
|
Commercial, non real estate
|
| |
3,960
|
| |
60
|
| |
—
|
| |
—
|
| |
4,020
|
Residential real estate
|
| |
16,984
|
| |
—
|
| |
756
|
| |
—
|
| |
17,740
|
Commercial real estate
|
| |
2,892
|
| |
—
|
| |
—
|
| |
—
|
| |
2,892
|
Consumer
|
| |
5,543
|
| |
—
|
| |
—
|
| |
—
|
| |
5,543
|
Not Risk Graded
|
| |
|
| |
|
| |
|
| |
—
|
| |
|
Strategic Program(1) loans
|
| |
|
| |
|
| |
|
| |
—
|
| |
28,265
|
Total
|
| |
$229,739
|
| |
$2,100
|
| |
$1,673
|
| |
—
|
| |
$261,777
|
(1)
|
The Strategic Program loan balance includes $21.0 million of loans classified as held-for-sale.
|
•
|
Specific allowance for identified impaired loans. For such loans that are identified as impaired, an allowance is established when the discounted cash flows (or collateral value if the loan is collateral dependent) or observable market price of the impaired loan are lower than the carrying value of that loan.
|
•
|
General valuation allowance. This component represents a valuation allowance on the remainder of the loan portfolio, after excluding impaired loans. For this portion of the allowance, loans are reviewed based on industry, stage and structure and are assigned allowance percentages based on historical loan loss experience for similar loans with similar characteristics and trends adjusted for qualitative factors. Qualitative factors that, in management’s judgment, affect the collectability of the portfolio as of the evaluation date, may include changes in lending policies and procedures; changes in national and local economic and business conditions, including the condition of various market sectors; changes in the nature and volume of the portfolio; changes in the experience, ability and depth of lending management and staff; changes in the volume and severity of past due
|
|
| |
For the Three Months
Ended March 31,
|
| |
For the Year Ended
December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Allowance for loan losses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Beginning balance
|
| |
$6,199
|
| |
$4,431
|
| |
$4,531
|
| |
$1,735
|
| |
$918
|
Provision for loan losses
|
| |
633
|
| |
3,814
|
| |
5,227
|
| |
5,288
|
| |
980
|
Charge offs
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
(7)
|
| |
(167)
|
| |
(197)
|
| |
(279)
|
| |
(148)
|
Commercial, non-real estate
|
| |
(41)
|
| |
—
|
| |
(332)
|
| |
(145)
|
| |
—
|
Residential real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Strategic Program loans
|
| |
(741)
|
| |
(1,050)
|
| |
(3,255)
|
| |
(2,212)
|
| |
(2)
|
Commercial real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Consumer
|
| |
(2)
|
| |
(5)
|
| |
(17)
|
| |
(30)
|
| |
(23)
|
Recoveries
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
11
|
| |
—
|
| |
—
|
| |
29
|
| |
—
|
Commercial, non-real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
1
|
| |
10
|
Residential real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Strategic Program loans
|
| |
132
|
| |
14
|
| |
236
|
| |
94
|
| |
—
|
Commercial real estate
|
| |
—
|
| |
4
|
| |
5
|
| |
—
|
| |
—
|
Consumer
|
| |
—
|
| |
—
|
| |
1
|
| |
50
|
| |
—
|
Ending balance
|
| |
$6,184
|
| |
$7,141
|
| |
$6,199
|
| |
$4,531
|
| |
$1,735
|
|
| |
March 31, 2021
|
|||||||||
($ in thousands)
|
| |
Amount
|
| |
Total Loans
|
| |
% of
Total
Allowance
|
| |
% of Loans in
Category of
Total Loans
|
SBA
|
| |
$924
|
| |
$167,824
|
| |
14.9%
|
| |
68.3%
|
Commercial, non real estate
|
| |
192
|
| |
3,867
|
| |
3.1%
|
| |
1.6%
|
Residential real estate
|
| |
855
|
| |
21,712
|
| |
13.8%
|
| |
8.9%
|
Strategic Program loans
|
| |
4,134
|
| |
44,427
|
| |
66.9%
|
| |
18.1%
|
Commercial real estate
|
| |
19
|
| |
2,589
|
| |
0.3%
|
| |
1.1%
|
Consumer
|
| |
60
|
| |
4,807
|
| |
1.0%
|
| |
2.0%
|
Total
|
| |
$6,184
|
| |
$245,226
|
| |
100.0%
|
| |
100.0%
|
|
| |
December 31, 2020
|
|||||||||
($ in thousands)
|
| |
Amount
|
| |
Total Loans
|
| |
% of
Total
Allowance
|
| |
% of Loans in
Category of
Total Loans
|
SBA
|
| |
$920
|
| |
$203,317
|
| |
14.8%
|
| |
77.7%
|
Commercial, non real estate
|
| |
232
|
| |
4,020
|
| |
3.8%
|
| |
1.5%
|
Residential real estate
|
| |
855
|
| |
17,740
|
| |
13.8%
|
| |
6.8%
|
Strategic Program loans
|
| |
4,111
|
| |
28,265
|
| |
66.3%
|
| |
10.8%
|
Commercial real estate
|
| |
19
|
| |
2,892
|
| |
0.3%
|
| |
1.1%
|
Consumer
|
| |
62
|
| |
5,543
|
| |
1.0%
|
| |
2.1%
|
Total
|
| |
$6,199
|
| |
$261,777
|
| |
100.0%
|
| |
100.0%
|
|
| |
December 31, 2019
|
|||||||||
($ in thousands)
|
| |
Amount
|
| |
Total
Loans
|
| |
% of
Total
Allowance
|
| |
% of Loans in
Category of
Total Loans
|
SBA
|
| |
$907
|
| |
$56,295
|
| |
20.0%
|
| |
41.2%
|
Commercial, non real estate
|
| |
64
|
| |
6,045
|
| |
1.4%
|
| |
4.4%
|
Residential real estate
|
| |
55
|
| |
22,495
|
| |
1.2%
|
| |
16.4%
|
Strategic Program loans
|
| |
3,430
|
| |
42,439
|
| |
75.7%
|
| |
31.1%
|
Commercial real estate
|
| |
14
|
| |
3,666
|
| |
0.3%
|
| |
2.7%
|
Consumer
|
| |
61
|
| |
5,722
|
| |
1.4%
|
| |
4.2%
|
Total
|
| |
$4,531
|
| |
$136,662
|
| |
100.0%
|
| |
100.0%
|
|
| |
December 31, 2018
|
|||||||||
($ in thousands)
|
| |
Amount
|
| |
Total
Loans
|
| |
% of
Total
Allowance
|
| |
% of Loans in
Category of
Total Loans
|
SBA
|
| |
$1,075
|
| |
$48,637
|
| |
62.0%
|
| |
55.4%
|
Commercial, non real estate
|
| |
108
|
| |
7,294
|
| |
6.2%
|
| |
8.3%
|
Residential real estate
|
| |
95
|
| |
14,735
|
| |
5.5%
|
| |
16.8%
|
Strategic Program loans
|
| |
382
|
| |
8,412
|
| |
22.0%
|
| |
9.6%
|
Commercial real estate
|
| |
14
|
| |
3,773
|
| |
0.8%
|
| |
4.3%
|
Consumer
|
| |
61
|
| |
4,965
|
| |
3.5%
|
| |
5.6%
|
Total
|
| |
$1,735
|
| |
$87,816
|
| |
100.0%
|
| |
100.0%
|
|
| |
Three Months
Ended March 31,
|
| |
As of December 31,
|
|||||||||
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Allowances for loan losses to nonperforming loans
|
| |
783.6%
|
| |
643.3%
|
| |
745.9%
|
| |
409.3%
|
| |
1994.3%
|
Net charge-offs to average loans outstanding by loan category
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
0.0%
|
| |
1.3%
|
| |
0.1%
|
| |
0.5%
|
| |
0.4%
|
Commercial, non-real estate
|
| |
4.0%
|
| |
0.0%
|
| |
5.9%
|
| |
2.0%
|
| |
(0.1%)
|
Residential real estate
|
| |
0.0%
|
| |
0.0%
|
| |
0.0%
|
| |
0.0%
|
| |
0.0%
|
Strategic Program loans
|
| |
5.7%
|
| |
10.2%
|
| |
9.6%
|
| |
11.4%
|
| |
0.0%
|
Commercial real estate
|
| |
0.0%
|
| |
(0.5)%
|
| |
(0.1%)
|
| |
0.0%
|
| |
0.0%
|
Consumer
|
| |
0.1%
|
| |
0.4%
|
| |
0.3%
|
| |
(0.4%)
|
| |
0.5%
|
|
| |
At March 31, 2021
|
|||||||||
|
| |
One Year or Less
|
| |
After One to Five Years
|
||||||
($ in thousands)
|
| |
Amortized
Cost
|
| |
Weighted
Average Yield
|
| |
Amortized
Cost
|
| |
Weighted
Average Yield
|
Mortgage-backed securities
|
| |
$—
|
| |
—
|
| |
$—
|
| |
—
|
|
| |
At March 31, 2021
|
| |
Total
Amortized
Cost
|
|||||||||
|
| |
After Five to Ten Years Weighted
|
| |
After Ten Years Weighted
|
| ||||||||
($ in thousands)
|
| |
Amortized
Cost
|
| |
Weighted
Average Yield
|
| |
Amortized
Cost
|
| |
Weighted
Average Yield
|
| ||
Mortgage-backed securities
|
| |
$709
|
| |
1.3%
|
| |
$961
|
| |
1.6%
|
| |
$1,670
|
|
| |
For the Three Months
Ended March 31,
2021
|
| |
For the Years Ended December 31,
|
||||||||||||
|
| |
2020
|
| |
2019
|
||||||||||||
($ in thousands)
|
| |
Total
|
| |
Percent
|
| |
Total
|
| |
Percent
|
| |
Total
|
| |
Percent
|
Period end:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Noninterest-bearing demand deposits
|
| |
$100,809
|
| |
53.5%
|
| |
$88,067
|
| |
53.5%
|
| |
$53,290
|
| |
37.5%
|
Interest-bearing deposits:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Demand
|
| |
6,682
|
| |
3.5%
|
| |
6,095
|
| |
3.7%
|
| |
264
|
| |
0.2%
|
Savings
|
| |
6,882
|
| |
3.7%
|
| |
7,435
|
| |
4.5%
|
| |
5,380
|
| |
3.8%
|
Money markets
|
| |
17,582
|
| |
9.3%
|
| |
17,567
|
| |
10.7%
|
| |
17,064
|
| |
12.0%
|
Time certificates of deposit
|
| |
56,556
|
| |
30.0%
|
| |
45,312
|
| |
27.6%
|
| |
66,023
|
| |
46.5%
|
Total period end deposits
|
| |
$188,511
|
| |
100.0%
|
| |
$164,476
|
| |
100.0%
|
| |
$142,021
|
| |
100.0%
|
Average:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Noninterest-bearing demand deposits
|
| |
$89,111
|
| |
52.2%
|
| |
$80,537
|
| |
49.2%
|
| |
$41,866
|
| |
36.5%
|
Interest-bearing deposits:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Demand
|
| |
6,287
|
| |
3.7%
|
| |
3,237
|
| |
2.0%
|
| |
222
|
| |
0.2%
|
Savings
|
| |
6,851
|
| |
4.0%
|
| |
6,234
|
| |
3.8%
|
| |
4,762
|
| |
4.2%
|
Money market
|
| |
17,728
|
| |
10.3%
|
| |
16,327
|
| |
9.9%
|
| |
14,973
|
| |
13.1%
|
Time certificates of deposit
|
| |
50,888
|
| |
29.8%
|
| |
57,496
|
| |
35.1%
|
| |
52,691
|
| |
46.0%
|
Total average deposits
|
| |
170,865
|
| |
100.0%
|
| |
$163,831
|
| |
100.0%
|
| |
$114,514
|
| |
100.0%
|
($ in thousands)
|
| |
Three
months
or less
|
| |
More than
three months
to six months
|
| |
More than
six months
to twelve
months
|
| |
More than
twelve
months
|
| |
Total
|
Time deposits, uninsured
|
| |
$64
|
| |
$8
|
| |
$499
|
| |
$128
|
| |
$699
|
|
| |
March 31,
|
| |
December 31,
|
| |
Well-
Capitalized
Requirement
|
|||||||||
Capital Ratios
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
| ||
Leverage Ratio (under CBLR)
|
| |
19.4%
|
| |
16.2%
|
| |
16.6%
|
| |
—
|
| |
—
|
| |
8.0%
|
Tier 1 leverage ratio
|
| |
—
|
| |
—
|
| |
—
|
| |
16.2%
|
| |
15.7%
|
| |
5.0%
|
Tier 1 risk-based capital ratio
|
| |
—
|
| |
—
|
| |
—
|
| |
19.3%
|
| |
19.4%
|
| |
8.0%
|
Total risk-based capital ratio
|
| |
—
|
| |
—
|
| |
—
|
| |
20.5%
|
| |
20.6%
|
| |
10.0%
|
Common equity Tier 1
|
| |
—
|
| |
—
|
| |
—
|
| |
19.3%
|
| |
19.4%
|
| |
6.5%
|
($ in thousands)
|
| |
Total
|
| |
Less than
One Year
|
| |
One to
Three
Years
|
| |
Three to
Five Years
|
| |
More
Than Five
Years
|
Contractual Obligations
|
| |
|
| |
|
| |
|
| |
|
| |
|
Deposits without stated maturity
|
| |
$107,491
|
| |
$107,491
|
| |
$—
|
| |
$—
|
| |
$—
|
Time deposits
|
| |
56,556
|
| |
19,001
|
| |
26,731
|
| |
10,824
|
| |
—
|
Long term borrowings(1)
|
| |
79,704
|
| |
—
|
| |
79,078
|
| |
626
|
| |
—
|
Operating lease obligations
|
| |
623
|
| |
363
|
| |
210
|
| |
50
|
| |
—
|
Total
|
| |
$244,374
|
| |
$126,855
|
| |
$106,019
|
| |
$11,500
|
| |
$—
|
(1)
|
Balances in this category pertain to the PPPLF and are fully-collateralized with PPP loans
|
|
| |
March 31,
2021
|
| |
As of December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
|||
Revolving, open-end lines of credit
|
| |
$1,482
|
| |
$757
|
| |
$1,157
|
Commercial real estate
|
| |
15,585
|
| |
14,468
|
| |
12,577
|
Other unused commitments
|
| |
902
|
| |
928
|
| |
321
|
Total commitments
|
| |
$17,969
|
| |
$16,153
|
| |
$14,055
|
Change in interest rates
|
| |
+300 bp
|
| |
+200 bp
|
| |
+100 bp
|
| |
0 bp
|
| |
—100 bp
|
| |
—200 bp
|
March 31, 2021
|
| |
4.1%
|
| |
1.6%
|
| |
(0.8%)
|
| |
(3.2%)
|
| |
(4.7%)
|
| |
(6.2%)
|
December 31, 2020
|
| |
3.2%
|
| |
0.6%
|
| |
(1.8%)
|
| |
(4.1%)
|
| |
(5.6%)
|
| |
(7.1%)
|
December 31, 2019
|
| |
(0.6%)
|
| |
(1.4%)
|
| |
(2.2%)
|
| |
(3.6%)
|
| |
(3.9%)
|
| |
(4.1%)
|
Change in interest rates
|
| |
+400 bp
|
| |
+300 bp
|
| |
+200 bp
|
| |
+100 bp
|
| |
—100 bp
|
| |
—200 bp
|
March 31, 2021
|
| |
49.0%
|
| |
33.2%
|
| |
22.5%
|
| |
12.5%
|
| |
4.9%
|
| |
8.1%
|
December 31, 2020
|
| |
24.8%
|
| |
16.5%
|
| |
10.9%
|
| |
5.7%
|
| |
0.9%
|
| |
2.7%
|
December 31, 2019
|
| |
25.5%
|
| |
18.2%
|
| |
13.6%
|
| |
10.8%
|
| |
(2.0%)
|
| |
(5.5%)
|
•
|
Expected Term. The expected term represents the period that our awards are expected to be outstanding. We calculated the expected term using a permitted simplified method, which is based on the vesting period and contractual term for each tranche of awards.
|
•
|
Expected Volatility. The expected volatility was based on the historical share volatility of several comparable publicly traded companies over a period of time equal to the expected term of the awards, as we do not have any trading history to use the volatility of our own common shares. The comparable companies were chosen based on their size, stage in life cycle and area of specialty. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own share price becomes available.
|
•
|
Risk-Free Interest Rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life.
|
•
|
Expected Dividend Yield. We have not paid dividends on our common shares nor do we expect to pay dividends in the foreseeable future. Therefore, we used an expected dividend yield of zero.
|
•
|
Our financial performance, capital structure and stage of development;
|
•
|
Our management team and business strategy;
|
•
|
External market conditions affecting our industry, including competition and regulatory landscape;
|
•
|
Our financial position and forecasted operating results;
|
•
|
The lack of an active public or private market for our equity shares;
|
•
|
Historical discussions we have had with potential private investors;
|
•
|
The likelihood of achieving a liquidity event, such as a sale of the Company or an initial public offering of our equity shares; and
|
•
|
Market performance analyses, including with respect to share price valuation, of similar companies in our industry.
|
Name
|
| |
Age
|
| |
Position with
the Company
|
| |
Company Director
Since
|
| |
Bank Director
Since
|
Russell F. Healey, Jr.
|
| |
72
|
| |
Chairman of the Board
|
| |
2003
|
| |
2003
|
Howard I. Reynolds
|
| |
64
|
| |
Vice Chairman of the Board
|
| |
2002
|
| |
1999
|
Kent Landvatter
|
| |
66
|
| |
President, Chief Executive Officer and Director
|
| |
2010
|
| |
2010
|
James N. Giordano
|
| |
63
|
| |
Director
|
| |
2017
|
| |
2017
|
Thomas E. Gibson, Jr.
|
| |
71
|
| |
Director
|
| |
2015
|
| |
2015
|
Lisa Ann Nievaard
|
| |
52
|
| |
Director
|
| |
2020
|
| |
2020
|
Alan Weichselbaum(1)
|
| |
57
|
| |
Director
|
| |
2015
|
| |
2015
|
Jeana Hutchings
|
| |
56
|
| |
Director
|
| |
2020
|
| |
2020
|
Gerald E. Cunningham
|
| |
63
|
| |
Director
|
| |
2002
|
| |
1999
|
(1)
|
Alan Weichselbaum resigned from our board of directors on May 7, 2021.
|
Name
|
| |
Age
|
| |
Position with
the Company
|
| |
Position with
the Bank
|
Kent Landvatter
|
| |
66
|
| |
Chief Executive Officer and President
|
| |
Chief Executive Officer and President
|
Javvis Jacobson
|
| |
49
|
| |
Chief Financial Officer and Executive Vice President
|
| |
Chief Financial Officer and Executive Vice President
|
James Noone
|
| |
42
|
| |
None
|
| |
Chief Credit Officer and Executive Vice President
|
Dawn Cannon
|
| |
43
|
| |
None
|
| |
Chief Operating Officer and Executive Vice President
|
David Tilis
|
| |
37
|
| |
None
|
| |
Chief Strategy Officer and Senior Vice President
|
Rachel Hadley
|
| |
39
|
| |
None
|
| |
Chief Regulatory Compliance Officer and Senior Vice President
|
Suzanne Musgrow
|
| |
48
|
| |
None
|
| |
Chief Risk Officer and Senior Vice President
|
•
|
overseeing the quality and integrity of the Company’s financial reporting processes, financial statements, and systems of internal accounting and financial controls;
|
•
|
overseeing the annual independent audit of the Company’s financial statements and internal control over the Bank’s financial reporting, and selecting and reviewing the performance of our independent auditor and approving, in advance, all engagements and fee arrangements;
|
•
|
reviewing reports from the independent auditor, at least annually, regarding its internal quality control procedures and any material issues raised by the most recent internal quality-control or peer review or by governmental or professional authorities, and any steps taken to deal with such issues and obtaining and reviewing each inspection report issued by the PCAOB;
|
•
|
reviewing the independence of our independent auditor and setting policies for hiring employees or former employees of our independent auditor and for audit partner rotation and independent auditor rotation in accordance with applicable laws, rules and regulations;
|
•
|
resolving any disagreements regarding financial reporting between management and the independent auditor;
|
•
|
overseeing and evaluating the performance of our internal audit function and review;
|
•
|
reviewing operating and control issues identified in internal audit reports, management letters, examination reports of regulatory agencies and monitoring management’s compliance with recommendations contained in those reports;
|
•
|
meeting with management and the independent auditor to review the effectiveness of our system of internal controls and internal audit procedures, and to address any deficiencies in such procedures;
|
•
|
monitoring management’s compliance with all applicable laws, rules and regulations;
|
•
|
reviewing our earnings releases and reports filed with the SEC;
|
•
|
preparing the Audit Committee report required to be included in the proxy statement relating to our annual meeting of shareholders;
|
•
|
reviewing the adequacy and effectiveness of our accounting and financial controls, including guidelines and policies for assessing and managing our risk exposure;
|
•
|
establishing and overseeing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and for the confidential anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters;
|
•
|
reviewing actions by management on recommendations of the independent auditors and internal auditors;
|
•
|
reviewing and approving or ratifying all related party transactions in accordance with our policies and procedures;
|
•
|
reviewing reports and recommendations provided by senior management or third party consultants retained by the committee related to the Company’s financial, operational, credit, strategic, market, investment, liquidity, reputational and compliance risks;
|
•
|
reviewing significant aggregate risk concentrations and other escalations, and approving significant corrective actions recommended by senior management;
|
•
|
conducting an annual evaluation of the performance of the Audit Committee and the adequacy of its charter and recommending to our board of directors any changes that it deems necessary; and
|
•
|
handling such other matters as are specifically delegated to the Audit Committee by our board of directors from time to time.
|
•
|
reviewing and determining, and recommending to the board of directors for its confirmation, the annual compensation, annual incentive compensation and any other matter relating to the compensation of our named executive officers; all employment agreements, severance or termination agreements, change in control agreements to be entered into between any executive officer and us;
|
•
|
reviewing and comparing compensation practices of any relevant peer group in order to assist in the committee’s evaluation of the appropriateness of the Company’s compensation practices and programs;
|
•
|
reviewing and determining, and recommending to the board of directors for its confirmation, the annual compensation, modifications to our philosophy and compensation practices relating to compensation of our directors and management;
|
•
|
reviewing and determining, and recommending to the board of directors for its confirmation, the establishment of performance measures and the applicable performance targets for each performance-based cash and equity incentive award to be made under any benefit plan;
|
•
|
taking all actions required or permitted under the terms of our benefit plans, with separate but concurrent authority;
|
•
|
reviewing, approving and administering each of our benefit plans, and performing such other duties and responsibilities as may be assigned to the Compensation Committee under the terms of such plans;
|
•
|
reviewing with our Chief Executive Officer the compensation payable to employees other than the named executive officers, including equity and non-equity incentive compensation and other benefits and our total incentive compensation program envisioned for each fiscal year;
|
•
|
reviewing the performance of our executive officers for each fiscal year;
|
•
|
overseeing the administration of our equity plans and other incentive compensation plans and programs and preparing recommendations and periodic reports to our board of directors relating to these matters;
|
•
|
overseeing and making recommendations to the board of directors regarding the Company’s compliance with SEC rules and regulations regarding shareholder approval of certain executive compensation matters, including advisory votes on executive compensation and golden parachute compensation, and the requirement under the NASDAQ rules that, with limited exceptions, shareholders approve equity compensation plans;
|
•
|
conducting an annual evaluation of the performance of the Compensation Committee and the adequacy of its charter and recommending to the board of directors any changes that it deems necessary; and
|
•
|
handling such other matters as are specifically delegated to the Compensation Committee by our board of directors from time to time.
|
•
|
reviewing the performance of our boards of directors of the Company and each of our subsidiaries;
|
•
|
identifying, assessing and determining the qualification, attributes and skills of, and recommending, persons to be nominated by our board of directors for election as directors and to fill any vacancies on the boards of directors of the Company and each of our subsidiaries;
|
•
|
reviewing the background, qualifications and independence of individuals being considered as director candidates, including persons proposed by our shareholders;
|
•
|
reviewing and recommending to our board of directors each director’s suitability for continued service as a director upon the expiration of his or her term and upon any material change in his or her status;
|
•
|
reviewing the size and composition of the board of directors of the Company and each of our subsidiaries and recommending any appropriate changes to reflect the appropriate balance of required independence, knowledge, experience, skills, expertise and diversity;
|
•
|
monitoring the function of our standing committees and recommending any changes, including the director assignments, creation or elimination of any committee;
|
•
|
developing, reviewing and monitoring compliance with our corporate governance guidelines and the corporate governance provisions of the federal securities laws and the listing rules applicable to us;
|
•
|
investigating any alleged violations of such guidelines and the applicable corporate governance provisions of federal securities laws and listing rules, and reporting such violations to our board of directors with recommended corrective actions;
|
•
|
reviewing our corporate governance practices in light of best corporate governance practices among our peers and determining whether any changes in our corporate governance practices are necessary;
|
•
|
considering any resignation tendered to our board of directors by a director and recommend the acceptance of such resignation if appropriate;
|
•
|
reviewing, at least annually, with the principal executive officer, the succession plans relating to the position of principal executive officer;
|
•
|
considering questions of possible conflicts of interest involving directors, including operations that could be considered competitive with our operations or otherwise present a conflict of interest;
|
•
|
overseeing our director orientation and continuing education programs for the board of directors;
|
•
|
reviewing its charter and recommending to our board of directors any modifications or changes; and
|
•
|
handling such other matters as are specifically delegated to the Nominating and Corporate Governance Committee by our board of directors from time to time.
|
•
|
adherence to high ethical standards and high standards of integrity;
|
•
|
sufficient educational background, professional experience, business experience, service on other boards of directors and other experience, qualifications, diversity of viewpoints, attributes and skills that will allow the candidate to serve effectively on the board of directors and the specific committee for which he or she is being considered;
|
•
|
evidence of leadership, sound professional judgment and professional acumen;
|
•
|
evidence the nominee is well recognized in the community and has a demonstrated record of service to the community;
|
•
|
a willingness to abide by any published code of conduct or ethics for the Company and to objectively appraise management performance;
|
•
|
the ability and willingness to devote sufficient time to carrying out the duties and responsibilities required of a director;
|
•
|
any related party transaction in which the candidate has or may have a material direct or indirect interest and in which we participate; and
|
•
|
the fit of the individual’s skills and personality with those of other directors and potential directors in building a board of directors that is effective, collegial and responsive to the needs of the Company and the interests of our shareholders.
|
•
|
attendance and performance at meetings of the Company’s board of directors and the committees on which such director serves;
|
•
|
length of service on the Company’s board of directors;
|
•
|
experience, skills and contributions that the sitting director brings to the Company’s board of directors;
|
•
|
independence and any conflicts of interest; and
|
•
|
any significant change in the director’s status, including with respect to the attributes considered for initial membership on the Company’s board of directors.
|
Name and
Principal
Positions
|
| |
Year
|
| |
Salary
|
| |
Bonus
|
| |
Stock
Awards(1)
|
| |
Option
Awards(3)
|
| |
All Other
Compensation(4)
|
| |
Total
|
Kent Landvatter
President and Chief Executive Officer
|
| |
2020
|
| |
$261,433
|
| |
$251,069
|
| |
$0
|
| |
$0
|
| |
$79,061
|
| |
$591,563
|
|
2019
|
| |
$254,096
|
| |
$125,000
|
| |
$2,809,936(2)
|
| |
$270,749
|
| |
$60,265
|
| |
$3,520,046
|
||
James F. Noone
Chief Credit Officer(5)
|
| |
2020
|
| |
$219,385
|
| |
$203,480
|
| |
$0
|
| |
$0
|
| |
$12,410
|
| |
$435,275
|
|
2019
|
| |
$212,885
|
| |
$203,480
|
| |
$416,342
|
| |
$68,587
|
| |
$18,164
|
| |
$919,458
|
||
David Tilis
Chief Strategy Officer
|
| |
2020
|
| |
$304,865
|
| |
$2,414,179
|
| |
$0
|
| |
$0
|
| |
$19,404
|
| |
$2,738,448
|
|
2019
|
| |
$299,686
|
| |
$1,400,214
|
| |
$0
|
| |
$0
|
| |
$28,724
|
| |
$1,728,624
|
(1)
|
These amounts represent the aggregate grant date fair value of restricted stock granted in 2019 and 2020, calculated in accordance with ASC 718 (see “Management’s Discussion and Analysis – Critical Accounting Policies and Estimates – Stock-Based Compensation” and Note 10 of our audited financial statements included elsewhere in this prospectus). The resulting fair value of the restricted stock granted in 2019 was $21.83 per share. The stock awards are scheduled to vest in monthly increments over approximately four years from the date of grant or in full in the event of (a) certain consolidations or mergers involving the Company, (b) a sale of substantially all of the assets of the Company, or (c) a sale of the Company’s equity capital to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended.
|
(2)
|
The restricted stock awards granted to Mr. Landvatter in 2019 were made in lieu of awards agreed to in his employment agreement at the time when Mr. Landvatter was hired by the Bank in 2010. In July of 2014, Mr. Landvatter entered into an agreement for our benefit and at our request terminating his right to be issued additional stock or exercise additional options under his 2010 employment agreement with the understanding that when we were financially able to do so we would issue him such compensation. The stock awards granted to Mr. Landvatter will vest in full upon his death or permanent disability so long as at the time of such death or disability Mr. Landvatter is employed by the Company.
|
(3)
|
The option awards are scheduled to vest in monthly increments over approximately four years from the date of grant. These amounts represent the aggregate grant date fair value of options granted in 2019 and 2020, calculated in accordance with ASC 718 (see “Management’s Discussion and Analysis – Critical Accounting Policies and Estimates – Stock-Based Compensation” and Note 10 of our audited financial statements included elsewhere in this prospectus). The resulting fair value of the stock options granted in 2019 was $21.83 per share and in 2020 was $26.99 per share.
|
(4)
|
“All Other Compensation” for the named executive officers is further described below.
|
(5)
|
Pursuant to an offer letter Mr. Noone was granted 23,840 shares in 2018 subject to vesting over a five-year period. Only 4,768 shares vested pursuant to the offer letter. In December 2019 we agreed with Mr. Noone to terminate the remaining shares granted pursuant to the offer letter prior to vesting and in lieu thereof issue a combination of stock and stock options to Mr. Noone.
|
Name
|
| |
Year
|
| |
401(k) Profit
sharing
Contribution
|
| |
Auto
Allowance
|
| |
Cell Phone
Reimbursement
|
| |
Health &
Welfare(1)
|
| |
Director Fee
|
| |
Other
|
| |
Total
|
Kent Landvatter
|
| |
2020
|
| |
$10,447
|
| |
$6,000
|
| |
$1,708
|
| |
$20,886
|
| |
$40,020
|
| |
n/a
|
| |
$79,061
|
|
2019
|
| |
$14,000
|
| |
$6,000
|
| |
$2,625
|
| |
$7,140
|
| |
$30,500
|
| |
n/a
|
| |
$60,265
|
||
James F. Noone
|
| |
2020
|
| |
$8,775
|
| |
n/a
|
| |
$0
|
| |
$3,635
|
| |
n/a
|
| |
n/a
|
| |
$12,410
|
|
2019
|
| |
$12,857
|
| |
n/a
|
| |
$0
|
| |
$3,570
|
| |
n/a
|
| |
$1,737
|
| |
$18,164
|
||
David Tilis
|
| |
2020
|
| |
$11,000
|
| |
n/a
|
| |
$1,386
|
| |
$7,018
|
| |
n/a
|
| |
n/a
|
| |
$19,404
|
|
2019
|
| |
$14,000
|
| |
n/a
|
| |
$2,431
|
| |
$12,293
|
| |
n/a
|
| |
n/a
|
| |
$28,724
|
(1)
|
A portion of these amounts includes health or medical reimbursement benefits that are not generally available to all salaried employees. Such additional health and medical benefits are in excess of the benefits generally available to all salaried employees.
|
•
|
Salary and cash bonus compensation for prior years;
|
•
|
Equity-based compensation awards for prior years;
|
•
|
Vested and unvested equity-based compensation held; and
|
•
|
The value of benefits and perquisites.
|
|
| |
Option Awards
|
| |
Stock Awards
|
||||||||||||
Name
|
| |
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
| |
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
| |
Option
Exercise
Price
|
| |
Option
Expiration
Date
|
| |
Number of shares of
stock that have not
vested
|
| |
Market value of shares of
stock that have not
vested(1)
|
Kent Landvatter
|
| |
2,736
|
| |
4,083
|
| |
$21.83
|
| |
12/24/2029
|
| |
75,300
|
| |
$2,032,347
|
Kent Landvatter
|
| |
9,160
|
| |
13,740
|
| |
$21.83
|
| |
12/23/2029
|
| |
n/a
|
| |
n/a
|
James F. Noone
|
| |
0
|
| |
6,000
|
| |
$14.24
|
| |
2/5/2028
|
| |
10,177
|
| |
$274,677
|
James F. Noone
|
| |
3,458
|
| |
4,171
|
| |
$21.83
|
| |
12/24/2029
|
| |
n/a
|
| |
n/a
|
David Tilis
|
| |
0
|
| |
2,996
|
| |
$14.16
|
| |
1/1/2028
|
| |
None
|
| |
None
|
(1)
|
Assumptions used in the calculation of these amounts are discussed in the Note 10 to our consolidated financial statements as of December 31, 2020. The fair market value of shares as of December 31, 2020 of $26.99 per share was determined by the board of directors.
|
Name
|
| |
Fees Earned or
Paid in Cash
|
| |
Stock Option Awards(1)(4)
|
| |
Total
|
Russell F. Healey, Jr.
|
| |
$65,480
|
| |
$31,720
|
| |
$97,200
|
Howard Reynolds
|
| |
$62,180
|
| |
$31,720
|
| |
$93,900
|
Jim Giordano
|
| |
$49,100
|
| |
$31,720
|
| |
$80,820
|
Gerald Cunningham
|
| |
$51,800
|
| |
$31,720
|
| |
$83,520
|
Lisa Nivaard
|
| |
$17,575
|
| |
$15,860
|
| |
$33,435
|
Jeana Hutchings
|
| |
$7,420
|
| |
$15,860
|
| |
$23,280
|
Tom Gibson
|
| |
$52,400
|
| |
$31,720
|
| |
$84,120
|
Alan Weichselbaum(2)
|
| |
$48,950
|
| |
$31,720
|
| |
$80,670
|
Keith Terry(3)
|
| |
$27,345
|
| |
n/a
|
| |
$27,345
|
(1)
|
The amount reported here does not reflect the actual economic value realized by each director. Directors having served less than two years as of December 31, 2020 received half the award granted to longer tenured directors. Represents the grant date fair value of stock option awards calculated in accordance with FASB ASC Topic 718. The total grant date fair value of options awarded to directors was approximately $0.1 million for the year ended December 31, 2020. Assumptions used in the calculation of these amounts are discussed in the Note 10 to our consolidated financial statements as of December 31, 2020. The fair market value of the underlying shares of common stock as of December 31, 2020 of $26.99 per share was determined by the board of directors and was based on an independent valuation. The strike price for these option awards is $40 per share.
|
(2)
|
Alan Weichselbaum resigned from our board of directors on May 7, 2021.
|
(3)
|
Keith Terry retired from our board of directors in 2020.
|
(4)
|
On March 30, 2021, following the Compensation Committee’s consultation with its independent compensation consultant in January 2021, an aggregate of 17,500 stock options representing approximately $0.1 million of the original grant date fair value of these stock option awards were cancelled.
|
|
| |
Cash Compensation
|
|||||||||||||||
|
| |
Retainer
|
| |
Meeting Fees
|
| |
Bonus
|
| |
Total
Cash
|
||||||
Director Role
|
| |
Monthly
|
| |
Annual
|
| |
Monthly
|
| |
Annual
|
| |||||
Normal Outside Director
|
| |
$2,585
|
| |
$31,020
|
| |
$750
|
| |
$9,000
|
| |
$8,780
|
| |
$48,800
|
Chairman
|
| |
$3,675
|
| |
$44,100
|
| |
$1,000
|
| |
$12,000
|
| |
$8,780
|
| |
$64,880
|
Vice Chairman
|
| |
$3,375
|
| |
$40,500
|
| |
$800
|
| |
$9,600
|
| |
$8,780
|
| |
$58,880
|
|
| |
Meeting Fees
|
| |
Number of
Meetings
|
|||
Board Committee
|
| |
Chair
|
| |
Member
|
| ||
Loan Committee
|
| |
$300
|
| |
$300
|
| |
2 to 4
|
Audit Committee
|
| |
$300
|
| |
$300
|
| |
4
|
Compliance Committee
|
| |
$300
|
| |
$300
|
| |
4
|
•
|
each shareholder known by us to beneficially own more than 5% of our outstanding common stock;
|
•
|
each of our directors;
|
•
|
each of our named executive officers;
|
•
|
all our directors and executive officers as a group; and
|
•
|
each selling shareholder.
|
|
| |
Common Stock
Beneficial
Ownership Prior to
the Offering
|
| |
Shares Offered
(Number)
|
| |
Common Stock Beneficial Ownership After the Offering
|
||||||||||||
Name of
Beneficial
Owner
|
| |
Number
|
| |
Percent
|
| |
|
| |
If Option is
Not
Exercised
(Number)
|
| |
If Option is
Not
Exercised
(Percent)
|
| |
If Option
is
Exercised
in Full
(Number)
|
| |
If Option
is
Exercised
in Full
(Percent)
|
Greater than 5% shareholders and selling shareholder:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Jarret Prussin(3)
|
| |
109,543
|
| |
7.5%
|
| |
|
| |
|
| |
|
| |
|
| |
|
Kent Landvatter(1)
|
| |
155,728
|
| |
10.6%
|
| |
|
| |
|
| |
|
| |
|
| |
|
Matthew Aaron Moskowitz
|
| |
95,404
|
| |
6.6%
|
| |
|
| |
|
| |
|
| |
|
| |
|
Menachem Wilenkin(4)
|
| |
107,470
|
| |
7.4%
|
| |
|
| |
|
| |
|
| |
|
| |
|
Paul Brown(5)
|
| |
94,040
|
| |
6.5%
|
| |
93,005
|
| |
|
| |
|
| |
|
| |
|
Yaakov Markowitz
|
| |
100,385
|
| |
6.9%
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Company directors and named executive officers:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Russell F. Healey, Jr.(6)
|
| |
70,008
|
| |
4.8%
|
| |
|
| |
|
| |
|
| |
|
| |
|
Howard Reynolds(7)
|
| |
38,708
|
| |
2.7%
|
| |
|
| |
|
| |
|
| |
|
| |
|
Gerald E. Cunningham(8)
|
| |
27,934
|
| |
1.9%
|
| |
|
| |
|
| |
|
| |
|
| |
|
James E. Giordano(9)
|
| |
68,270
|
| |
4.7%
|
| |
|
| |
|
| |
|
| |
|
| |
|
Thomas E. Gibson(10)
|
| |
7,250
|
| |
*
|
| |
|
| |
|
| |
|
| |
|
| |
|
Lisa A Nievaard(11)
|
| |
750
|
| |
*
|
| |
|
| |
|
| |
|
| |
|
| |
|
Jeana Hutchings(11)
|
| |
750
|
| |
*
|
| |
|
| |
|
| |
|
| |
|
| |
|
James F. Noone(2)
|
| |
45,457
|
| |
3.1%
|
| |
|
| |
|
| |
|
| |
|
| |
|
David Tilis
|
| |
50,788
|
| |
3.5%
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
All our directors and executive officers as a group (14 persons)
|
| |
522,246
|
| |
34.1%
|
| |
|
| |
|
| |
|
| |
|
| |
|
*
|
Represents beneficial ownership of less than 1% of our outstanding common shares.
|
(1)
|
Includes (i) 62,748 shares of unvested restricted stock, (ii) 11,700 held by Mr. Landvatter’s individual retirement account, and (iii) 15,859 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 13,860 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
(2)
|
Includes (i) 7,825 shares of unvested restricted stock, and (ii) 14,746 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 6,883 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
(3)
|
Includes 7,880 shares of our common stock underlying warrants owned by a limited liability company as to which Mr. Prussin shares voting and dispositive power.
|
(4)
|
Includes 7,880 shares of our common stock underlying warrants owned by a limited liability company as to which Mr. Wilenkin shares voting and dispositive power.
|
(5)
|
Includes 1,035 shares of our common stock underlying warrants owned by a corporation as to which Mr. Brown shares voting and dispositive power.
|
(6)
|
Includes (i) 52,008 shares owned in a trust over which Mr. Healey has voting and dispositive power, and (ii) 5,000 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 1,500 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
(7)
|
Includes (i) 31,708 shares owned by a corporation as to which Mr. Reynolds shares voting and dispositive power, and (ii) 5,000 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 1,500 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
(8)
|
Includes (i) 14,077 shares owned in a trust over which Mr. Cunningham has voting and dispositive power, and (ii) 5,000 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 1,500 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
(9)
|
Includes (i) 2,000 shares of our common stock underlying warrants owned by a limited liability company as to which Mr. Giordano shares voting and dispositive power, and (ii) 5,000 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 1,500 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
(10)
|
Includes 5,000 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 1,500 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
(11)
|
Includes 750 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 750 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
•
|
we have been or are to be a participant;
|
•
|
the amount involved exceeds or will exceed $120,000; and
|
•
|
any of our directors, executive officers or beneficial holders of more than five percent of our capital stock, or any immediate family member of or person sharing the household with any of these individuals (other than tenants or employees), had or will have a direct or indirect material interest.
|
Shareholder
|
| |
Description of private placement
|
| |
Issue
Date
|
| |
Shares
|
| |
Total Sales
Price
|
Paul Brown
|
| |
Exchange for a 10% aggregate ownership interest in BFG
|
| |
12/31/2019
|
| |
39,616
|
| |
$864,818
|
Menachem Wilenkin
|
| |
Exchange for a 10% aggregate ownership interest in BFG
|
| |
12/31/2019
|
| |
39,616
|
| |
$864,817
|
Yaakov Markowitz
|
| |
Exchange for a 10% aggregate ownership interest in BFG
|
| |
12/31/2019
|
| |
39,616
|
| |
$864,817
|
Jarret Prussin
|
| |
Exchange for a 10% aggregate ownership interest in BFG
|
| |
12/31/2019
|
| |
39,616
|
| |
$864,817
|
Shareholder
|
| |
Repurchase
Date
|
| |
Shares
Sold
|
| |
Funds
Received
|
| |
Price per
Share
|
Rachael Hadley (executive officer)
|
| |
5/6/2019
|
| |
2,004
|
| |
$32,725
|
| |
$16.33
|
Kent Landvatter (executive officer)
|
| |
12/31/2019
|
| |
47,626
|
| |
$1,039,676
|
| |
$21.83
|
James Noone (executive officer)
|
| |
12/31/2019
|
| |
4,196
|
| |
$91,599
|
| |
$21.83
|
Javvis Jacobson (executive officer)
|
| |
12/31/2019
|
| |
6,820
|
| |
$148,881
|
| |
$21.83
|
Kent Landvatter (executive officer)
|
| |
4/6/2020
|
| |
3,862
|
| |
$84,307
|
| |
$21.83
|
James Noone (executive officer)
|
| |
4/6/2020
|
| |
3,433
|
| |
$74,942
|
| |
$21.83
|
Javvis Jacobson (executive officer)
|
| |
4/6/2020
|
| |
5,000
|
| |
$109,150
|
| |
$21.83
|
|
| |
Basel III
Minimum for
Capital
Adequacy
Purposes
|
| |
Basel III
Additional
Capital
Conservation
Buffer
|
| |
Basel III Ratio
with Capital
Conservation
Buffer
|
Total Risk Based Capital (total capital to risk-weighted assets)
|
| |
8.00%
|
| |
2.50%
|
| |
10.50%
|
Tier 1 Risk Based Capital (tier 1 to risk-weighted assets)
|
| |
6.00%
|
| |
2.50%
|
| |
8.50%
|
Tier 1 Leverage Ratio (tier 1 to average assets)
|
| |
4.00%
|
| |
—%
|
| |
4.00%
|
Common Equity Tier 1 Risk Based Capital (CET1 to risk-weighted assets)
|
| |
4.50%
|
| |
2.50%
|
| |
7.00%
|
•
|
requires bank holding companies and banks to be both well capitalized and well managed in order to acquire banks located outside their home state and requires any bank holding company electing to be treated as a financial holding company to be both well managed and well capitalized;
|
•
|
eliminates all remaining restrictions on interstate banking by authorizing national and state banks to establish de novo branches in any state that would permit a bank chartered in that state to open a branch at that location; and
|
•
|
repeals Regulation Q, the federal prohibition on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts.
|
•
|
Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
|
•
|
HMDA, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
|
•
|
Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed, or other prohibited factors in extending credit;
|
•
|
Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit Transactions Act, governing the use and provision of information to credit reporting agencies, certain identity theft protections, and certain credit and other disclosures;
|
•
|
Fair Debt Collection Practices Act, governing how consumer debts may be collected by collection agencies;
|
•
|
Real Estate Settlement Procedures Act, requiring certain disclosures concerning loan closing costs and escrows, and governing transfers of loan servicing and the amounts of escrows for loans secured by one-to-four family residential properties;
|
•
|
Rules and regulations established by the National Flood Insurance Program;
|
•
|
Rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
|
•
|
Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;
|
•
|
Truth-In-Savings Act, requiring certain disclosures for consumer deposit accounts;
|
•
|
Electronic Funds Transfer Act and Regulation E of the Federal Reserve, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and
|
•
|
Rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
|
•
|
On March 15, 2020, the Federal Reserve issued a statement encouraging banks to use their capital and liquidity buffers to lend to households and businesses impacted by the Covid-19 pandemic. The following day, the Federal Reserve issued a statement encouraging banks to access the Federal Reserve’s discount window to assist with capital and liquidity management in light of the increased credit needs of banking customers.
|
•
|
The Bank is also typically required by the Federal Reserve to maintain in reserves certain amounts of vault cash and/or deposits with the Federal Reserve, however, in response to the Covid-19 pandemic, this requirement has been eliminated until further notice.
|
•
|
Section 4013 of the CARES Act provides financial institutions the option to suspend the application of GAAP to any loan modification related to Covid-19 from treatment as a TDR for the period between March 1, 2020 and the earlier of (i) 60 days after the end of the national emergency proclamation or (ii) December 31, 2020. Section 541 of the Consolidated Appropriations Act, 2021, amended Section 4013 of the CARES Act to extend this relief to the earlier of (i) 60 days after the end of the national emergency proclamation or (ii) January 1, 2022. A financial institution may elect to suspend GAAP only for a loan that was not more than 30 days past due as of December 31, 2019. In addition, the temporary suspension of GAAP does not apply to any adverse impact on the credit of a borrower that is not related to Covid-19. The suspension of GAAP is applicable for the entire term of the modification, including an interest rate modification, a forbearance agreement, a repayment plan, or other agreement that defers or delays the payment of principal and/or interest. Accordingly, a financial institution that elects to suspend GAAP should not be required to increase its reported TDRs at the end of the period of relief, unless the loans require further modification after the expiration of that period.
|
•
|
U.S. expatriates and former citizens or long-term residents of the United States;
|
•
|
persons subject to special tax accounting rules as a result of any item of gross income with respect to our common stock being taken into account in an “applicable financial statement” (as defined in the Internal Revenue Code);
|
•
|
persons in special situations, such as those that have elected to mark securities to market or that hold our common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment or those that have acquired shares of common stock as compensation or otherwise in connection with the performance of services;
|
•
|
banks, insurance companies, and other financial institutions;
|
•
|
investment funds, brokers, dealers or traders in securities;
|
•
|
corporations that accumulate earnings to avoid U.S. federal income tax;
|
•
|
partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
|
•
|
regulated investment companies or real estate investment trusts;
|
•
|
“controlled foreign corporations” or “passive foreign investment companies;”
|
•
|
tax-exempt organizations or governmental organizations;
|
•
|
persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code; and
|
•
|
tax-qualified retirement plans, “qualified foreign pension funds” as defined in Section 897(l)(2) of the Internal Revenue Code and entities all of the interests of which are held by qualified foreign pension funds.
|
•
|
a non-resident alien individual, other than a former citizen or resident of the United States subject to U.S. tax as an expatriate;
|
•
|
a corporation (or other entity that is taxable as a corporation) not created or organized in the United States or under the laws of the United States or of any State (or the District of Columbia);
|
•
|
an estate other than an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source; or
|
•
|
a trust other than a trust: (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust; or (B) that was in existence on August 20, 1996, was treated as a United States person on the previous day, and elected to continue to be so treated.
|
•
|
the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment or fixed base in the United States to which such gain is attributable);
|
•
|
the Non-U.S. Holder is a non-resident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or
|
•
|
we are or have been a U.S. real property holding corporation, or USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition and the Non-U.S. Holder’s holding period for our common stock, or the relevant period, and the Non-U.S. Holder (i) disposes of our common stock during a calendar year when our common stock is not regularly traded on an established securities market or (ii) owned (directly, indirectly, and constructively) more than 5% of our common stock at any time during the relevant period.
|
Name
|
| |
Number of
Shares
|
Piper Sandler & Co.
|
| |
|
UBS Securities LLC
|
| |
|
|
| |
|
Total
|
| |
|
|
| |
Per Share
|
| |
Total Without
Option to Purchase
Additional Shares
|
| |
Total With
Option to Purchase
Additional Shares
|
Price to public
|
| |
|
| |
|
| |
|
Underwriting discount
|
| |
|
| |
|
| |
|
Proceeds to us, before expenses
|
| |
|
| |
|
| |
|
Proceeds to selling shareholder, before expenses
|
| |
|
| |
|
| |
|
•
|
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any shares of our common stock or any securities convertible into or exchangeable or exercisable for our common stock, whether now owned or hereafter acquired or with respect to which such person has or hereafter acquires the power of disposition;
|
•
|
make any demand or exercise any right with respect to the registration thereof, or file or cause to be filed any registration statement under the Securities Act, with respect to any of the foregoing;
|
•
|
enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of shares of our common stock or any securities convertible into or exchangeable or exercisable for our common stock, whether any such swap or transaction is to be settled by delivery of shares of our common stock or other securities, in cash or otherwise; or
|
•
|
publicly disclose any intention to do any of the foregoing.
|
•
|
stabilizing transactions;
|
•
|
short sales; and
|
•
|
purchases to cover positions created by short sales.
|
Condensed Consolidated Financial Statements
|
| |
|
| | ||
| | ||
| | ||
| | ||
| | ||
|
| |
|
Consolidated Financial Statements
|
| |
|
| | ||
| | ||
| | ||
| | ||
| | ||
| |
|
| |
March 31,
2021
|
| |
December 31,
2020
|
ASSETS
|
| |
|
| |
|
Cash and cash equivalents
|
| |
|
| |
|
Cash and due from banks
|
| |
$397
|
| |
$405
|
Interest bearing deposits
|
| |
73,825
|
| |
46,978
|
Total cash and cash equivalents
|
| |
74,222
|
| |
47,383
|
Investment securities held to maturity, at amortized cost
|
| |
1,670
|
| |
1,809
|
Investment in Federal Home Loan Bank (FHLB) stock, at cost
|
| |
378
|
| |
205
|
Loans receivable, net
|
| |
201,136
|
| |
232,074
|
Strategic Program loans held-for-sale, at lower of cost or fair value
|
| |
37,847
|
| |
20,948
|
Premises and equipment, net
|
| |
1,488
|
| |
1,264
|
Accrued interest receivable
|
| |
1,395
|
| |
1,629
|
Deferred taxes, net
|
| |
670
|
| |
452
|
SBA servicing asset
|
| |
3,074
|
| |
2,415
|
Investment in Business Funding Group (BFG), at fair value
|
| |
3,873
|
| |
3,770
|
Other assets
|
| |
4,300
|
| |
5,566
|
Total assets
|
| |
$330,053
|
| |
$317,515
|
|
| |
|
| |
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
| |
|
| |
|
Liabilities
|
| |
|
| |
|
Deposits
|
| |
|
| |
|
Noninterest bearing
|
| |
$100,809
|
| |
$88,067
|
Interest bearing
|
| |
87,702
|
| |
76,409
|
Total deposits
|
| |
188,511
|
| |
164,476
|
Accrued interest payable
|
| |
218
|
| |
195
|
Income taxes payable, net
|
| |
2,847
|
| |
709
|
PPP Liquidity Facility
|
| |
79,704
|
| |
101,007
|
Other liabilities
|
| |
6,463
|
| |
5,256
|
Total liabilities
|
| |
277,743
|
| |
271,643
|
|
| |
|
| |
|
Commitments and contingencies (Note 7)
|
| |
|
| |
|
|
| |
|
| |
|
Shareholders' equity
|
| |
|
| |
|
Preferred stock, $.001 par value, 5,000,000 authorized; no shares issued and outstanding as of March 31, 2021 and December 31, 2020
|
| |
—
|
| |
—
|
Common stock, $.001 par value, 20,000,000 shares authorized; 1,452,685 and 1,443,389 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
|
| |
1
|
| |
1
|
Additional paid-in-capital
|
| |
18,008
|
| |
16,861
|
Retained earnings
|
| |
34,301
|
| |
29,010
|
Total shareholders' equity
|
| |
52,310
|
| |
45,872
|
Total liabilities and shareholders' equity
|
| |
$330,053
|
| |
$317,515
|
|
| |
Three Months Ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
Interest income
|
| |
|
| |
|
Interest and fees on loans
|
| |
8,790
|
| |
$7,865
|
Interest on securities
|
| |
6
|
| |
4
|
Other interest income
|
| |
10
|
| |
170
|
Total interest income
|
| |
8,806
|
| |
8,039
|
|
| |
|
| |
|
Interest expense
|
| |
|
| |
|
Interest on deposits
|
| |
297
|
| |
434
|
Interest on PPP Liquidity Facility
|
| |
75
|
| |
—
|
Total interest expense
|
| |
372
|
| |
434
|
Net interest income
|
| |
8,434
|
| |
7,605
|
|
| |
|
| |
|
Provision for loan losses
|
| |
633
|
| |
3,814
|
Net interest income after provision for loan losses
|
| |
7,801
|
| |
3,791
|
|
| |
|
| |
|
Non-interest income
|
| |
|
| |
|
Strategic Program fees
|
| |
2,953
|
| |
2,606
|
Gain on sale of loans
|
| |
2,603
|
| |
1,013
|
SBA loan servicing fees
|
| |
152
|
| |
275
|
Change in fair value on investment in BFG
|
| |
360
|
| |
—
|
Other miscellaneous income
|
| |
11
|
| |
17
|
Total non-interest income
|
| |
6,079
|
| |
3,911
|
|
| |
|
| |
|
Non-interest expense
|
| |
|
| |
|
Salaries and employee benefits
|
| |
4,895
|
| |
4,006
|
Occupancy and equipment expenses
|
| |
194
|
| |
143
|
Other operating expenses
|
| |
1,574
|
| |
1,139
|
Total non-interest expense
|
| |
6,663
|
| |
5,288
|
Income before income tax expense
|
| |
7,217
|
| |
2,414
|
|
| |
|
| |
|
Provision for income taxes
|
| |
1,926
|
| |
600
|
Net income
|
| |
$5,291
|
| |
$1,814
|
|
| |
|
| |
|
Earnings per share, basic
|
| |
$3.66
|
| |
$1.25
|
Earnings per share, diluted
|
| |
$3.55
|
| |
$1.24
|
|
| |
|
| |
|
Weighted average shares outstanding, basic
|
| |
1,348,531
|
| |
1,335,821
|
Weighted average shares outstanding, diluted
|
| |
1,389,295
|
| |
1,341,392
|
|
| |
Common Stock
|
| |
Additional
Paid-In
Capital
|
| |
Retained
Earnings
|
| |
Total
Shareholders'
Equity
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance at January 1, 2020
|
| |
1,451,626
|
| |
$1
|
| |
$15,282
|
| |
$17,812
|
| |
$33,095
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
704
|
| |
—
|
| |
704
|
Stock options exercised
|
| |
5,796
|
| |
—
|
| |
82
|
| |
—
|
| |
82
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
1,814
|
| |
1,814
|
Balance at March 31, 2020
|
| |
1,457,422
|
| |
$1
|
| |
$16,068
|
| |
$19,626
|
| |
$35,695
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
375
|
| |
—
|
| |
375
|
Issuance of warrants to BFG
|
| |
—
|
| |
—
|
| |
50
|
| |
—
|
| |
50
|
Repurchase of restricted stock
|
| |
(12,295)
|
| |
—
|
| |
(268)
|
| |
—
|
| |
(268)
|
Repurchase of common stock
|
| |
(1,738)
|
| |
—
|
| |
(41)
|
| |
—
|
| |
(41)
|
Net income
|
| |
—
|
| |
—
|
| |
|
| |
1,078
|
| |
1,078
|
Balance at June 30, 2020
|
| |
1,443,389
|
| |
$1
|
| |
$16,184
|
| |
$20,704
|
| |
$36,889
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
350
|
| |
—
|
| |
350
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
3,690
|
| |
3,690
|
Balance at September 30, 2020
|
| |
1,443,389
|
| |
$1
|
| |
$16,534
|
| |
$24,394
|
| |
$40,929
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
327
|
| |
—
|
| |
327
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
4,616
|
| |
4,616
|
Balance at December 31, 2020
|
| |
1,443,389
|
| |
$1
|
| |
$16,861
|
| |
$29,010
|
| |
$45,872
|
|
| |
Common Stock
|
| |
Additional
Paid-In
Capital
|
| |
Retained
Earnings
|
| |
Total
Shareholders'
Equity
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance at January 1, 2021
|
| |
1,443,389
|
| |
$1
|
| |
$16,861
|
| |
$29,010
|
| |
$45,872
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
981
|
| |
—
|
| |
981
|
Stock options exercised
|
| |
9,296
|
| |
—
|
| |
166
|
| |
—
|
| |
166
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
5,291
|
| |
5,291
|
Balance at March 31, 2021
|
| |
1,452,685
|
| |
$1
|
| |
$18,008
|
| |
$34,301
|
| |
$52,310
|
|
| |
Three Months Ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
Cash flows from operating activities:
|
| |
|
| |
|
Net income
|
| |
$5,291
|
| |
$1,814
|
|
| |
|
| |
|
Adjustments to reconcile net income to net cash from operating activities
|
| |
|
| |
|
Depreciation and amortization
|
| |
311
|
| |
99
|
Provision for loan losses
|
| |
633
|
| |
3,814
|
Net amortization (accretion) in securities discounts and premiums
|
| |
7
|
| |
(2)
|
Capitalized servicing assets
|
| |
(899)
|
| |
(213)
|
Gain on sale of SBA loans, net
|
| |
(2,603)
|
| |
(1,013)
|
Originations of Strategic Program loans held for sale
|
| |
(955,539)
|
| |
(635,301)
|
Proceeds on Strategic Program loans held for sale
|
| |
938,640
|
| |
649,769
|
Change in fair value of BFG
|
| |
(360)
|
| |
—
|
Stock-based compensation expense
|
| |
981
|
| |
704
|
Deferred income tax expense
|
| |
(218)
|
| |
—
|
Net changes in:
|
| |
|
| |
|
Accrued interest receivable
|
| |
234
|
| |
(110)
|
Accrued interest payable
|
| |
23
|
| |
2
|
Other assets
|
| |
1,266
|
| |
1,212
|
Other liabilities
|
| |
3,345
|
| |
1,813
|
Net cash (used in) provided by operating activities
|
| |
(8,888)
|
| |
22,588
|
|
| |
|
| |
|
Cash flows from investing activities:
|
| |
|
| |
|
Net decrease in loans receivable
|
| |
32,908
|
| |
7,818
|
Distributions of BFG
|
| |
257
|
| |
55
|
Purchase of bank premises and equipment
|
| |
(295)
|
| |
(80)
|
Proceeds from maturities and paydowns of securities held to maturity
|
| |
132
|
| |
31
|
Purchases of securities held to maturity
|
| |
—
|
| |
(1,745)
|
Purchase of FHLB stock
|
| |
(173)
|
| |
—
|
Net cash provided by investing activities
|
| |
32,829
|
| |
6,079
|
|
| |
|
| |
|
Cash flows from financing activities:
|
| |
|
| |
|
Net increase (decrease) in deposits
|
| |
24,035
|
| |
(674)
|
Proceeds from exercise of stock options
|
| |
166
|
| |
82
|
Proceeds from PPP Liquidity Facility
|
| |
5,558
|
| |
—
|
Repayment of PPP Liquidity Facility
|
| |
(26,861)
|
| |
—
|
Net cash provided by (used in) financing activities
|
| |
2,898
|
| |
(592)
|
|
| |
|
| |
|
Net change in cash and cash equivalents
|
| |
26,839
|
| |
28,075
|
Cash and cash equivalents, beginning of the period
|
| |
47,383
|
| |
34,779
|
Cash and cash equivalents, end of the period
|
| |
$74,222
|
| |
$62,854
|
|
| |
|
| |
|
Supplemental disclosures of cash flow information:
|
| |
|
| |
|
Cash paid during the period
|
| |
|
| |
|
Income taxes
|
| |
$1,926
|
| |
$600
|
Interest
|
| |
$349
|
| |
$432
|
|
| |
March 31, 2021
|
|||||||||
($ in thousands)
|
| |
Amortized
Cost
|
| |
Unrealized
Gain
|
| |
Unrealized
Loss
|
| |
Estimated
Fair Value
|
Mortgage-backed securities
|
| |
$1,670
|
| |
$55
|
| |
$—
|
| |
$1,725
|
|
| |
December 31, 2020
|
|||||||||
($ in thousands)
|
| |
Amortized
Cost
|
| |
Unrealized
Gain
|
| |
Unrealized
Loss
|
| |
Estimated
Fair Value
|
Mortgage-backed securities
|
| |
$1,809
|
| |
$70
|
| |
$—
|
| |
$1,879
|
($ in thousands)
|
| |
Amortized
Cost
|
| |
Estimated
Fair Value
|
Securities held-to-maturity
|
| |
|
| |
|
Due in one year or less
|
| |
$—
|
| |
$—
|
Due after one year through five years
|
| |
—
|
| |
—
|
Due after five years through ten years
|
| |
709
|
| |
732
|
Due after ten years
|
| |
961
|
| |
994
|
|
| |
$1,670
|
| |
$1,725
|
($ in thousands)
|
| |
March 31,
2021
|
| |
December 31,
2020
|
SBA
|
| |
$167,824
|
| |
$203,317
|
Commercial, non-real estate
|
| |
3,867
|
| |
4,020
|
Residential real estate
|
| |
21,712
|
| |
17,740
|
Strategic Program loans
|
| |
44,427
|
| |
28,265
|
Commercial real estate
|
| |
2,589
|
| |
2,892
|
Consumer
|
| |
4,807
|
| |
5,543
|
Total loans
|
| |
$245,226
|
| |
$261,777
|
|
| |
|
| |
|
Loans held-for-sale
|
| |
(37,847)
|
| |
(20,948)
|
Total loans held for investment
|
| |
$207,379
|
| |
$240,829
|
|
| |
|
| |
|
Deferred loan fees, net
|
| |
(58)
|
| |
(2,556)
|
Allowance for loan losses
|
| |
(6,184)
|
| |
(6,199)
|
Net loans
|
| |
$201,137
|
| |
$232,074
|
($ in thousands)
|
| |
March 31,
2021
|
| |
December 31,
2020
|
Retained Strategic Program loans
|
| |
$6,580
|
| |
$7,317
|
Strategic Program loans held-for-sale
|
| |
37,847
|
| |
20,948
|
Total Strategic Program loans
|
| |
$44,427
|
| |
$28,265
|
March 31, 2021
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Recorded
Investment
|
| |
Unpaid
Principal
Balance
|
| |
Related
Allowance
|
| |
Average
Recorded
Investment
|
| |
Interest Income
Recognized
|
With no related allowance recorded
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
$890
|
| |
$890
|
| |
$—
|
| |
$904
|
| |
$45
|
Commercial, non-real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Residential real estate
|
| |
756
|
| |
756
|
| |
—
|
| |
756
|
| |
—
|
Strategic Program loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Commercial real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Consumer
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Total
|
| |
$1,646
|
| |
$1,646
|
| |
$—
|
| |
$1,660
|
| |
$45
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Recorded
Investment
|
| |
Unpaid
Principal
Balance
|
| |
Related
Allowance
|
| |
Average
Recorded
Investment
|
| |
Interest Income
Recognized
|
With no related allowance recorded
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
$917
|
| |
$917
|
| |
$—
|
| |
$892
|
| |
$45
|
Commercial, non-real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
123
|
| |
—
|
Residential real estate
|
| |
756
|
| |
756
|
| |
—
|
| |
378
|
| |
—
|
Strategic Program loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Commercial real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Consumer
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Total
|
| |
$1,673
|
| |
$1,673
|
| |
$—
|
| |
$1,393
|
| |
$45
|
March 31, 2021
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Current
|
| |
30-59 Days
Past Due
|
| |
60-89 Days
Past Due
|
| |
90+ Days
Past Due &
Still Accruing
|
| |
Total
Past Due
|
| |
Non-Accrual
|
| |
Total
|
SBA
|
| |
$167,035
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$789
|
| |
$167,824
|
Commercial, non-real estate
|
| |
3,867
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,867
|
Residential real estate
|
| |
20,956
|
| |
756
|
| |
—
|
| |
—
|
| |
756
|
| |
—
|
| |
21,712
|
Strategic Program loans
|
| |
44,093
|
| |
214
|
| |
113
|
| |
9
|
| |
335
|
| |
—
|
| |
44,427
|
Commercial real estate
|
| |
2,589
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,589
|
Consumer
|
| |
4,807
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
4,807
|
Total
|
| |
$243,347
|
| |
$970
|
| |
$113
|
| |
$9
|
| |
$1,091
|
| |
$789
|
| |
$245,226
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Current
|
| |
30-59 Days
Past Due
|
| |
60-89 Days
Past Due
|
| |
90+ Days
Past Due &
Still Accruing
|
| |
Total
Past Due
|
| |
Non-Accrual
|
| |
Total
|
SBA
|
| |
$202,501
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$816
|
| |
$203,317
|
Commercial, non-real estate
|
| |
4,020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
4,020
|
Residential real estate
|
| |
17,740
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
17,740
|
Strategic Program loans
|
| |
27,886
|
| |
235
|
| |
128
|
| |
1
|
| |
364
|
| |
15
|
| |
28,265
|
Commercial real estate
|
| |
2,892
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,892
|
Consumer
|
| |
5,543
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
5,543
|
Total
|
| |
$260,581
|
| |
$235
|
| |
$128
|
| |
$1
|
| |
$364
|
| |
$831
|
| |
$261,777
|
March 31, 2021
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Pass
Grade 1-4
|
| |
Special Mention
Grade 5
|
| |
Classified/
Doubtful/Loss
Grade 6-8
|
| |
Total
|
SBA
|
| |
$165,004
|
| |
$1,930
|
| |
$890
|
| |
$167,824
|
Commercial, non-real estate
|
| |
3,807
|
| |
60
|
| |
—
|
| |
3,867
|
Residential real estate
|
| |
20,956
|
| |
—
|
| |
756
|
| |
21,712
|
Commercial real estate
|
| |
2,589
|
| |
—
|
| |
—
|
| |
2,589
|
Consumer
|
| |
4,807
|
| |
—
|
| |
—
|
| |
4,807
|
Not Risk Graded
|
| |
|
| |
|
| |
|
| |
|
Strategic Program loans
|
| |
|
| |
|
| |
|
| |
44,427
|
Total
|
| |
$197,163
|
| |
$1,990
|
| |
$1,646
|
| |
$245,226
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Pass
Grade 1-4
|
| |
Special Mention
Grade 5
|
| |
Classified/
Doubtful/Loss
Grade 6-8
|
| |
Total
|
SBA
|
| |
$200,360
|
| |
$2,040
|
| |
$917
|
| |
$203,317
|
Commercial, non-real estate
|
| |
3,960
|
| |
60
|
| |
—
|
| |
4,020
|
Residential real estate
|
| |
16,984
|
| |
—
|
| |
756
|
| |
17,740
|
Commercial real estate
|
| |
2,892
|
| |
—
|
| |
—
|
| |
2,892
|
Consumer
|
| |
5,543
|
| |
—
|
| |
—
|
| |
5,543
|
Not Risk Graded
|
| |
|
| |
|
| |
|
| |
|
Strategic Program loans
|
| |
|
| |
|
| |
|
| |
28,265
|
Total
|
| |
$229,739
|
| |
$2,100
|
| |
$1,673
|
| |
$261,777
|
($ in thousands)
|
| |
Number of
Contracts
|
| |
Pre-
Modification
Outstanding
Recorded
Investment
|
| |
Post-
Modification
Outstanding
Recorded
Investment
|
March 31, 2021
|
| |
|
| |
|
| |
|
SBA
|
| |
3
|
| |
$114
|
| |
$114
|
Residential real estate
|
| |
1
|
| |
756
|
| |
756
|
Total
|
| |
4
|
| |
$870
|
| |
$870
|
Non-Accrual
|
| |
|
| |
|
| |
|
SBA
|
| |
1
|
| |
$53
|
| |
$53
|
December 31, 2020
|
| |
|
| |
|
| |
|
SBA
|
| |
3
|
| |
$114
|
| |
$114
|
Residential real estate
|
| |
1
|
| |
756
|
| |
756
|
Total
|
| |
4
|
| |
$870
|
| |
$870
|
Non-Accrual
|
| |
|
| |
|
| |
|
SBA
|
| |
1
|
| |
$53
|
| |
$53
|
|
| |
March 31,
2021
|
| |
December 31,
2020
|
($ in thousands)
|
| |
|
| |
|
Demand
|
| |
$107,491
|
| |
$94,162
|
Savings
|
| |
6,882
|
| |
7,435
|
Money markets
|
| |
17,582
|
| |
17,567
|
Time certificates of deposit
|
| |
56,556
|
| |
45,312
|
Total deposits
|
| |
$188,511
|
| |
$164,476
|
Nine Months Ended December 31, 2021
|
| |
$14,920
|
Year Ended December 31, 2022
|
| |
17,044
|
Year Ended December 31, 2023
|
| |
10,041
|
Year Ended December 31, 2024
|
| |
7,971
|
Year Ended December 31, 2025
|
| |
2,315
|
Thereafter
|
| |
4,265
|
Total
|
| |
56,556
|
|
| |
Three Months Ended March 31,
|
|||
($ in thousands)
|
| |
2021
|
| |
2020
|
Beginning balance
|
| |
$2,415
|
| |
$2,034
|
Additions to servicing asset
|
| |
899
|
| |
213
|
Amortization of servicing asset
|
| |
(240)
|
| |
(42)
|
Ending balance
|
| |
$3,074
|
| |
$2,205
|
|
| |
Actual
|
| |
Well-Capitalized Requirement*
|
||||||
($ in thousands)
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
March 31, 2021
|
| |
|
| |
|
| |
|
| |
|
Leverage ratio (CBLR election)
|
| |
$42,388
|
| |
19.4%
|
| |
$18,617
|
| |
8.5%
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
Leverage ratio (CBLR election)
|
| |
$37,806
|
| |
16.6%
|
| |
$18,212
|
| |
8.0%
|
*
|
On March 27, 2020 the CARES Act became law. Section 4012 of the CARES Act directs the agencies to issue an interim final rule reducing the CBLR ratio requirement from 9% to 8% for the last two quarters of the year 2020, 8.5% for the calendar year 2021, and 9% thereafter.
|
|
| |
March 31,
|
| |
December 31,
|
($ in thousands)
|
| |
2021
|
| |
2020
|
Revolving, open-end lines of credit
|
| |
$1,482
|
| |
$757
|
Commercial real estate
|
| |
15,585
|
| |
14,468
|
Other unused commitments
|
| |
902
|
| |
928
|
|
| |
$17,969
|
| |
$16,153
|
|
| |
For the Three Months Ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
Risk-free interest rate
|
| |
0.4%-0.7%
|
| |
0.5%-1.8%
|
Expected term in years
|
| |
5.0-7.5
|
| |
5.0-7.5
|
Expected volatility
|
| |
45.7%-47.6%
|
| |
41.3%-43.7%
|
Expected dividend yield
|
| |
—
|
| |
—
|
|
| |
Stock Options
|
| |
Weighted
Average
Exercise Price
|
| |
Weighted
Average
Remaining
Contractual
Life (in years)
|
| |
Aggregate
Intrinsic Value
|
Outstanding at December 31, 2020
|
| |
106,444
|
| |
21.24
|
| |
8.6
|
| |
$653,991
|
Options granted
|
| |
149,100
|
| |
37.20
|
| |
3.9
|
| |
2,041,190
|
Options exercised
|
| |
(9,296)
|
| |
17.82
|
| |
|
| |
307,432
|
Options forfeited
|
| |
(89,100)
|
| |
39.82
|
| |
|
| |
986,466
|
Outstanding at March 31, 2021
|
| |
157,148
|
| |
$26.05
|
| |
8.9
|
| |
$3,903,155
|
Options vested and exercisable at March 31, 2021
|
| |
80,150
|
| |
$25.82
|
| |
8.9
|
| |
$2,008,979
|
|
| |
Number of
Shares
|
| |
Weighted
Average Grant
Price
|
Unvested as of December 31, 2020
|
| |
103,611
|
| |
$21.83
|
Vested
|
| |
(8,964)
|
| |
21.83
|
Unvested as of March 31, 2021
|
| |
94,647
|
| |
$21.83
|
|
| |
|
| |
March 31, 2021
|
| |
December 31, 2020
|
||||||
($ in thousands)
|
| |
Level
|
| |
Carrying
Amount
|
| |
Estimated
Fair Value
|
| |
Carrying
Amount
|
| |
Estimated Fair
Value
|
Financial assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
1
|
| |
$74,222
|
| |
$74,222
|
| |
$47,383
|
| |
$47,383
|
Investment securities held to maturity
|
| |
2
|
| |
1,670
|
| |
1,725
|
| |
1,809
|
| |
1,879
|
Investment in FHLB stock
|
| |
2
|
| |
378
|
| |
378
|
| |
205
|
| |
205
|
Loans held for investment
|
| |
3
|
| |
201,136
|
| |
177,535
|
| |
232,074
|
| |
211,299
|
Loans held for sale
|
| |
2
|
| |
37,847
|
| |
37,847
|
| |
20,948
|
| |
20,948
|
Accrued interest receivable
|
| |
2
|
| |
1,395
|
| |
1,395
|
| |
1,629
|
| |
1,629
|
SBA servicing asset
|
| |
2
|
| |
3,074
|
| |
3,222
|
| |
2,415
|
| |
2,532
|
|
| |
|
| |
March 31, 2021
|
| |
December 31, 2020
|
||||||
($ in thousands)
|
| |
Level
|
| |
Carrying
Amount
|
| |
Estimated
Fair Value
|
| |
Carrying
Amount
|
| |
Estimated Fair
Value
|
Investment in BFG
|
| |
3
|
| |
3,873
|
| |
3,873
|
| |
3,770
|
| |
3,770
|
Financial liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total deposits
|
| |
2
|
| |
188,511
|
| |
188,903
|
| |
164,476
|
| |
162,628
|
Accrued interest payable
|
| |
2
|
| |
218
|
| |
218
|
| |
195
|
| |
195
|
PPP Liquidity Facility
|
| |
2
|
| |
79,704
|
| |
83,554
|
| |
101,007
|
| |
105,886
|
($ in thousands)
|
| |
|
| |
Fair Value Measurements Using
|
||||||
Description of Financial Instrument
|
| |
Fair Value
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
March 31, 2021
|
| |
|
| |
|
| |
|
| |
|
Nonrecurring assets
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,646
|
| |
$—
|
| |
$—
|
| |
$1,646
|
|
| |
|
| |
|
| |
|
| |
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
Nonrecurring assets
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,673
|
| |
$—
|
| |
$—
|
| |
$1,673
|
($ in thousands)
|
| |
Fair Value
|
| |
Valuation
Technique
|
| |
Unobservable
Input
|
| |
Range
(Weighted Average)
|
March 31, 2021
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,646
|
| |
Market comparable
|
| |
Adjustment to appraisal value
|
| |
0.82%
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,673
|
| |
Market comparable
|
| |
Adjustment to appraisal value
|
| |
0.73%
|
|
| |
Three Months Ended March 31,
|
|||
|
| |
2021
|
| |
2020
|
Numerator:
|
| |
|
| |
|
Net income
|
| |
$5,291
|
| |
$1,814
|
Amount allocated to participating common shareholders(1)
|
| |
(357)
|
| |
(145)
|
Net income allocate to common shareholders
|
| |
$4,934
|
| |
$1,670
|
|
| |
|
| |
|
Denominator:
|
| |
|
| |
|
Weighted average shares outstanding, basic
|
| |
1,348,531
|
| |
1,335,821
|
Weighted average effect of dilutive securities - stock options
|
| |
40,764
|
| |
5,571
|
Weighted average shares outstanding, diluted
|
| |
1,389,295
|
| |
1,341,392
|
|
| |
|
| |
|
Earnings per share, basic
|
| |
$3.66
|
| |
$1.25
|
Earnings per share, diluted
|
| |
$3.55
|
| |
$1.24
|
(1)
|
Represents earnings attributable to holders of unvested restricted stock issued outside of the Plan to the Company's employees.
|
|
| |
Three Months Ended March 31,
|
|||
($ in thousands)
|
| |
2021
|
| |
2020
|
Interest income
|
| |
|
| |
|
Interest income, not-in-scope
|
| |
|
| |
|
Interest and fees on loans
|
| |
$8,790
|
| |
$7,865
|
Interest on securities
|
| |
6
|
| |
4
|
Other interest income
|
| |
10
|
| |
170
|
Total interest income
|
| |
$8,807
|
| |
$8,039
|
Non-interest income
|
| |
|
| |
|
Non-interest income, in-scope
|
| |
|
| |
|
Service charges on deposit accounts
|
| |
$7
|
| |
$13
|
Strategic Program set up fees
|
| |
—
|
| |
148
|
Non-interest income, not in-scope
|
| |
|
| |
|
Strategic Program fees
|
| |
2,873
|
| |
2,276
|
Gain on sale of loans
|
| |
2,603
|
| |
1,013
|
SBA loan servicing fees
|
| |
152
|
| |
275
|
Unrealized gain on investment in BFG
|
| |
360
|
| |
—
|
Other miscellaneous income
|
| |
4
|
| |
4
|
Strategic Program service charges
|
| |
80
|
| |
182
|
Total non-interest income
|
| |
$6,079
|
| |
$3,911
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
ASSETS
|
| |
|
| |
|
Cash and cash equivalents
|
| |
|
| |
|
Cash and due from banks
|
| |
$405
|
| |
$423
|
Interest-bearing deposits
|
| |
46,978
|
| |
34,356
|
Total cash and cash equivalents
|
| |
47,383
|
| |
34,779
|
Investment securities held-to-maturity, at cost
|
| |
1,809
|
| |
453
|
Investment in Federal Home Loan Bank (FHLB) stock, at cost
|
| |
205
|
| |
140
|
Loans receivable, net
|
| |
232,074
|
| |
105,725
|
Strategic Program loans held-for-sale, at lower of cost or fair value
|
| |
20,948
|
| |
25,109
|
Premises and equipment, net
|
| |
1,264
|
| |
926
|
Accrued interest receivable
|
| |
1,629
|
| |
943
|
Deferred taxes, net
|
| |
452
|
| |
140
|
SBA servicing asset
|
| |
2,415
|
| |
2,034
|
Investment in Business Funding Group (BFG), at fair value
|
| |
3,770
|
| |
3,459
|
Other assets
|
| |
5,566
|
| |
3,354
|
Total assets
|
| |
$317,515
|
| |
$177,062
|
|
| |
|
| |
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
| |
|
| |
|
Liabilities
|
| |
|
| |
|
Deposits
|
| |
|
| |
|
Noninterest-bearing
|
| |
$88,067
|
| |
$53,290
|
Interest-bearing
|
| |
76,409
|
| |
88,731
|
Total deposits
|
| |
164,476
|
| |
142,021
|
Accrued interest payable
|
| |
195
|
| |
64
|
Income taxes payable, net
|
| |
709
|
| |
169
|
PPP Liquidity Facility
|
| |
101,007
|
| |
—
|
Other liabilities
|
| |
5,256
|
| |
1,713
|
Total liabilities
|
| |
271,643
|
| |
143,967
|
|
| |
|
| |
|
Commitments and contingencies (Note 8)
|
| |
|
| |
|
|
| |
|
| |
|
Shareholders' equity
|
| |
|
| |
|
Preferred stock, $.001 par value, 5,000,000 authorized; no shares issued and outstanding as of December 31, 2020 and December 31, 2019
|
| |
—
|
| |
—
|
Common stock, $.001 par value, 20,000,000 shares authorized; 1,443,389 and 1,451,626 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively
|
| |
1
|
| |
1
|
Additional paid-in-capital
|
| |
16,861
|
| |
15,282
|
Retained earnings
|
| |
29,010
|
| |
17,812
|
Total shareholders' equity
|
| |
45,872
|
| |
33,095
|
Total liabilities and shareholders' equity
|
| |
$317,515
|
| |
$177,062
|
|
| |
For the Years Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Interest income
|
| |
|
| |
|
Interest and fees on loans
|
| |
$29,271
|
| |
$20,728
|
Interest on securities
|
| |
34
|
| |
16
|
Other interest income
|
| |
201
|
| |
664
|
Total interest income
|
| |
29,506
|
| |
21,408
|
|
| |
|
| |
|
Interest expense
|
| |
|
| |
|
Interest on deposits
|
| |
1,583
|
| |
1,462
|
Interest on PPP Liquidity Facility
|
| |
173
|
| |
—
|
Total interest expense
|
| |
1,756
|
| |
1,462
|
Net interest income
|
| |
27,750
|
| |
19,946
|
|
| |
|
| |
|
Provision for loan losses
|
| |
5,234
|
| |
5,288
|
Net interest income after provision for loan losses
|
| |
22,516
|
| |
14,658
|
|
| |
|
| |
|
Non-interest income
|
| |
|
| |
|
Strategic Program fees
|
| |
9,591
|
| |
8,866
|
Gain on sale of loans
|
| |
2,849
|
| |
4,167
|
SBA loan servicing fees
|
| |
1,028
|
| |
607
|
Change in fair value on investment in BFG
|
| |
856
|
| |
122
|
Other miscellaneous income
|
| |
49
|
| |
101
|
Total non-interest income
|
| |
14,373
|
| |
13,863
|
|
| |
|
| |
|
Non-interest expense
|
| |
|
| |
|
Salaries and employee benefits
|
| |
16,835
|
| |
11,894
|
Occupancy and equipment expenses
|
| |
694
|
| |
529
|
Loss on investment in BFG
|
| |
50
|
| |
—
|
Other operating expenses
|
| |
4,170
|
| |
3,262
|
Total non-interest expense
|
| |
21,749
|
| |
15,685
|
Income before income tax expense
|
| |
15,140
|
| |
12,836
|
|
| |
|
| |
|
Provision for income taxes
|
| |
3,942
|
| |
3,177
|
Net income
|
| |
$11,198
|
| |
$9,659
|
|
| |
|
| |
|
Earnings per share, basic
|
| |
$7.75
|
| |
$8.21
|
Earnings per share, diluted
|
| |
$7.70
|
| |
$8.20
|
|
| |
|
| |
|
Weighted average shares outstanding, basic
|
| |
1,337,565
|
| |
1,173,149
|
Weighted average shares outstanding, diluted
|
| |
1,344,939
|
| |
1,175,559
|
|
| |
Common Stock
|
| |
Additional
Paid-In
Capital
|
| |
Retained
Earnings
|
| |
Total
Shareholders’
Equity
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance at December 31, 2018
|
| |
1,168,867
|
| |
$1
|
| |
$11,071
|
| |
$8,153
|
| |
$19,225
|
Stock-based compensation expense
|
| |
166,719
|
| |
—
|
| |
1,765
|
| |
—
|
| |
1,765
|
Issuance of common stock in lieu of cash bonus
|
| |
14,654
|
| |
—
|
| |
231
|
| |
—
|
| |
231
|
Issuance of common stock for investment in BFG
|
| |
158,464
|
| |
—
|
| |
3,459
|
| |
—
|
| |
3,459
|
Repurchase of restricted stock to pay for employee withholding taxes
|
| |
(58,642)
|
| |
—
|
| |
(1,280)
|
| |
—
|
| |
(1,280)
|
Stock options exercised
|
| |
8,794
|
| |
—
|
| |
125
|
| |
—
|
| |
125
|
Repurchase of common stock
|
| |
(7,230)
|
| |
—
|
| |
(89)
|
| |
—
|
| |
(89)
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
9,659
|
| |
9,659
|
Balance at December 31, 2019
|
| |
1,451,626
|
| |
$1
|
| |
$15,282
|
| |
$17,812
|
| |
$33,095
|
Stock-based compensation expense
|
| |
—
|
| |
—
|
| |
1,756
|
| |
—
|
| |
1,756
|
Issuance of warrants to BFG
|
| |
—
|
| |
—
|
| |
50
|
| |
—
|
| |
50
|
Repurchase of restricted stock to pay for employee withholding taxes
|
| |
(12,295)
|
| |
—
|
| |
(268)
|
| |
—
|
| |
(268)
|
Stock options exercised
|
| |
5,796
|
| |
—
|
| |
82
|
| |
—
|
| |
82
|
Repurchase of common stock
|
| |
(1,738)
|
| |
—
|
| |
(41)
|
| |
—
|
| |
(41)
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
11,198
|
| |
11,198
|
Balance at December 31, 2020
|
| |
1,443,389
|
| |
$1
|
| |
$16,861
|
| |
$29,010
|
| |
$45,872
|
|
| |
For the Years Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Cash flows from operating activities:
|
| |
|
| |
|
Net income
|
| |
$11,198
|
| |
$9,659
|
Adjustments to reconcile net income to net cash from operating activities
|
| |
|
| |
|
Depreciation and amortization
|
| |
1,012
|
| |
460
|
Provision for loan losses
|
| |
5,234
|
| |
5,288
|
Net amortization (accretion) in securities discounts and premiums
|
| |
14
|
| |
(8)
|
Capitalized servicing assets
|
| |
(1,139)
|
| |
(729)
|
Gain on sale of SBA loans, net
|
| |
(2,849)
|
| |
(4,167)
|
Originations of Strategic Program loans held-for-sale
|
| |
(2,312,697)
|
| |
(1,583,463)
|
Proceeds on Strategic Program loans held-for-sale
|
| |
2,316,858
|
| |
1,565,310
|
Change in fair value of BFG
|
| |
(856)
|
| |
—
|
Loss on investment in BFG
|
| |
50
|
| |
—
|
Stock-based compensation expense
|
| |
1,756
|
| |
1,765
|
Deferred income tax expense (benefit)
|
| |
(312)
|
| |
11
|
Net changes in:
|
| |
|
| |
|
Accrued interest receivable
|
| |
(686)
|
| |
(478)
|
Accrued interest payable
|
| |
131
|
| |
8
|
Other assets
|
| |
(2,212)
|
| |
(1,678)
|
Other liabilities
|
| |
4,083
|
| |
133
|
Net cash provided by (used in) operating activities
|
| |
19,585
|
| |
(7,889)
|
|
| |
|
| |
|
Cash flows from investing activities:
|
| |
|
| |
|
Net increase in loans receivable
|
| |
(128,734)
|
| |
(28,812)
|
Distributions from BFG
|
| |
545
|
| |
—
|
Purchase of bank premises and equipment
|
| |
(592)
|
| |
(540)
|
Proceeds from maturities and paydowns of securities held-to-maturity
|
| |
375
|
| |
125
|
Purchases of securities held-to-maturity
|
| |
(1,745)
|
| |
—
|
Purchase of FHLB stock
|
| |
(65)
|
| |
(62)
|
Net cash used in investing activities
|
| |
(130,216)
|
| |
(29,289)
|
|
| |
|
| |
|
Cash flows from financing activities:
|
| |
|
| |
|
Net increase in deposits
|
| |
22,455
|
| |
47,197
|
Proceeds from exercise of stock options
|
| |
82
|
| |
125
|
Proceeds from PPP Liquidity Facility
|
| |
115,975
|
| |
—
|
Repayment of PPP Liquidity Facility
|
| |
(14,968)
|
| |
—
|
Repurchase of restricted stock to pay for employee withholding taxes
|
| |
(268)
|
| |
(1,280)
|
Repurchase of common stock
|
| |
(41)
|
| |
(89)
|
Net cash provided by financing activities
|
| |
123,235
|
| |
45,953
|
|
| |
|
| |
|
Net change in cash and cash equivalents
|
| |
12,604
|
| |
8,775
|
Cash and cash equivalents, beginning of the period
|
| |
34,779
|
| |
26,004
|
Cash and cash equivalents, end of the period
|
| |
$47,383
|
| |
$34,779
|
|
| |
|
| |
|
Supplemental disclosures of cash flow information:
|
| |
|
| |
|
Cash paid during the period
|
| |
|
| |
|
Income taxes
|
| |
$3,329
|
| |
$3,177
|
Interest
|
| |
$1,625
|
| |
$1,398
|
|
| |
|
| |
|
Non-cash financing and investing activities:
|
| |
|
| |
|
Issuance of common stock for investment in BFG
|
| |
$—
|
| |
$3,459
|
Issuance of common stock in lieu of cash bonus
|
| |
$—
|
| |
$231
|
|
| |
December 31, 2020
|
|||||||||
($ in thousands)
|
| |
Amortized
Cost
|
| |
Unrealized
Gain
|
| |
Unrealized
Loss
|
| |
Estimated
Fair Value
|
Mortgage-backed securities
|
| |
$1,809
|
| |
$70
|
| |
$—
|
| |
$1,879
|
|
| |
December 31, 2019
|
|||||||||
($ in thousands)
|
| |
Amortized
Cost
|
| |
Unrealized
Gain
|
| |
Unrealized
Loss
|
| |
Estimated
Fair Value
|
Mortgage-backed securities
|
| |
$453
|
| |
$13
|
| |
$—
|
| |
$466
|
($ in thousands)
|
| |
Amortized
Cost
|
| |
Estimated
Fair Value
|
Securities held-to-maturity
|
| |
|
| |
|
Due in one year or less
|
| |
$—
|
| |
$—
|
Due after one year through five years
|
| |
—
|
| |
—
|
Due after five years through ten years
|
| |
762
|
| |
789
|
Due after ten years
|
| |
1,047
|
| |
1,090
|
|
| |
$1,809
|
| |
$1,879
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
($ in thousands)
|
| |
|
| |
|
SBA
|
| |
$203,317
|
| |
$56,295
|
Commercial, non-real estate
|
| |
4,020
|
| |
6,045
|
Residential real estate
|
| |
17,740
|
| |
22,495
|
Strategic Program loans
|
| |
28,265
|
| |
42,439
|
Commercial real estate
|
| |
2,892
|
| |
3,666
|
Consumer
|
| |
5,543
|
| |
5,722
|
Total loans
|
| |
$261,777
|
| |
$136,662
|
Loans held-for-sale
|
| |
(20,948)
|
| |
(25,109)
|
Total loans held for investment
|
| |
$240,829
|
| |
$111,553
|
Deferred loan fees, net
|
| |
(2,556)
|
| |
(1,297)
|
Allowance for loan losses
|
| |
(6,199)
|
| |
(4,531)
|
Net loans
|
| |
$232,074
|
| |
$105,725
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
($ in thousands)
|
| |
|
| |
|
Retained Strategic Program loans
|
| |
$7,317
|
| |
$17,330
|
Strategic Program loans held-for-sale
|
| |
20,948
|
| |
25,109
|
Total Strategic Program loans
|
| |
$28,265
|
| |
$42,439
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
SBA
|
| |
Commercial,
Non-Real
Estate
|
| |
Residential
Real Estate
|
| |
Strategic
Program Loans
|
| |
Commercial
Real Estate
|
| |
Consumer
|
| |
Total
|
Beginning balance
|
| |
$907
|
| |
$64
|
| |
$55
|
| |
$3,430
|
| |
$14
|
| |
$61
|
| |
$4,531
|
Charge-offs
|
| |
(197)
|
| |
(332)
|
| |
—
|
| |
(3,255)
|
| |
—
|
| |
(17)
|
| |
(3,801)
|
Recoveries
|
| |
—
|
| |
—
|
| |
—
|
| |
236
|
| |
5
|
| |
1
|
| |
242
|
Provision
|
| |
210
|
| |
500
|
| |
800
|
| |
3,700
|
| |
—
|
| |
17
|
| |
5,227
|
Balance at end of year
|
| |
$920
|
| |
$232
|
| |
$855
|
| |
$4,111
|
| |
$19
|
| |
$62
|
| |
$6,199
|
Ending balance individually evaluated for impairment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Ending balance collectively evaluated for impairment
|
| |
$920
|
| |
$232
|
| |
$855
|
| |
$4,111
|
| |
$19
|
| |
$62
|
| |
$6,199
|
Loans receivable
|
| |
$203,317
|
| |
$4,020
|
| |
$17,740
|
| |
$7,317
|
| |
$2,892
|
| |
$5,543
|
| |
$240,829
|
Ending balance individually evaluated for impairment
|
| |
917
|
| |
—
|
| |
756
|
| |
—
|
| |
—
|
| |
—
|
| |
1,673
|
Ending balance collectively evaluated for impairment
|
| |
$202,400
|
| |
$4,020
|
| |
$16,984
|
| |
$7,317
|
| |
$2,892
|
| |
$5,543
|
| |
$239,156
|
December 31, 2019
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
SBA
|
| |
Commercial,
Non-Real
Estate
|
| |
Residential
Real Estate
|
| |
Strategic
Program Loans
|
| |
Commercial
Real Estate
|
| |
Consumer
|
| |
Total
|
Beginning balance
|
| |
$1,075
|
| |
$108
|
| |
$95
|
| |
$382
|
| |
$14
|
| |
$61
|
| |
$1,735
|
Charge-offs
|
| |
(279)
|
| |
(145)
|
| |
—
|
| |
(2,212)
|
| |
—
|
| |
(30)
|
| |
(2,666)
|
Recoveries
|
| |
29
|
| |
1
|
| |
—
|
| |
94
|
| |
—
|
| |
50
|
| |
174
|
Provision (recapture)
|
| |
82
|
| |
100
|
| |
(40)
|
| |
5,166
|
| |
—
|
| |
(20)
|
| |
5,288
|
Balance at end of year
|
| |
$907
|
| |
$64
|
| |
$55
|
| |
$3,430
|
| |
$14
|
| |
$61
|
| |
$4,531
|
Ending balance individually evaluated for impairment
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Ending balance collectively evaluated for impairment
|
| |
$907
|
| |
$64
|
| |
$55
|
| |
$3,430
|
| |
$14
|
| |
$61
|
| |
$4,531
|
Loans receivable
|
| |
$56,295
|
| |
$6,045
|
| |
$22,495
|
| |
$17,330
|
| |
$3,666
|
| |
$5,722
|
| |
$111,553
|
Ending balance individually evaluated for impairment
|
| |
866
|
| |
247
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,113
|
Ending balance collectively evaluated for impairment
|
| |
$55,429
|
| |
$5,798
|
| |
$22,495
|
| |
$17,330
|
| |
$3,666
|
| |
$5,722
|
| |
$110,440
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Recorded
Investment
|
| |
Unpaid
Principal
Balance
|
| |
Related
Allowance
|
| |
Average
Recorded
Investment
|
| |
Interest Income
Recognized
|
($ in thousands)
|
| |
|
| |
|
| |
|
| |
|
| |
|
With no related allowance recorded
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
$917
|
| |
$917
|
| |
$—
|
| |
$892
|
| |
$45
|
Commercial, non-real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
123
|
| |
—
|
Residential real estate
|
| |
756
|
| |
756
|
| |
—
|
| |
378
|
| |
—
|
Strategic Program loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Commercial real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Consumer
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Total
|
| |
$1,673
|
| |
$1,673
|
| |
$—
|
| |
$1,393
|
| |
$45
|
December 31, 2019
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Recorded
Investment
|
| |
Unpaid
Principal
Balance
|
| |
Related
Allowance
|
| |
Average
Recorded
Investment
|
| |
Interest Income
Recognized
|
($ in thousands)
|
| |
|
| |
|
| |
|
| |
|
| |
|
With no related allowance recorded
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
$866
|
| |
$866
|
| |
$—
|
| |
$481
|
| |
$24
|
Commercial, non-real estate
|
| |
247
|
| |
247
|
| |
—
|
| |
404
|
| |
—
|
Residential real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Strategic Program loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Commercial real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Consumer
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Total
|
| |
$1,113
|
| |
$1,113
|
| |
$—
|
| |
$885
|
| |
$24
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Current
|
| |
30-59 Days
Past Due
|
| |
60-89 Days
Past Due
|
| |
90+ Days
Past Due &
Still Accruing
|
| |
Total
Past Due
|
| |
Non-Accrual
|
| |
Total
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
$202,501
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$816
|
| |
$203,317
|
Commercial, non-real estate
|
| |
4,020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
4,020
|
Residential real estate
|
| |
17,740
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
17,740
|
Strategic Program loans
|
| |
27,886
|
| |
235
|
| |
128
|
| |
1
|
| |
364
|
| |
15
|
| |
28,265
|
Commercial real estate
|
| |
2,892
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,892
|
Consumer
|
| |
5,543
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
5,543
|
Total
|
| |
$260,582
|
| |
$235
|
| |
$128
|
| |
$1
|
| |
$364
|
| |
$831
|
| |
$261,777
|
December 31, 2019
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Current
|
| |
30-59 Days
Past Due
|
| |
60-89 Days
Past Due
|
| |
90+ Days
Past Due &
Still Accruing
|
| |
Total
Past Due
|
| |
Non-Accrual
|
| |
Total
|
SBA
|
| |
$55,417
|
| |
$17
|
| |
$—
|
| |
$—
|
| |
$17
|
| |
861
|
| |
$56,295
|
Commercial, non-real estate
|
| |
5,798
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
247
|
| |
6,045
|
Residential real estate
|
| |
22,495
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
22,495
|
Strategic Program loans
|
| |
41,925
|
| |
369
|
| |
145
|
| |
—
|
| |
514
|
| |
—
|
| |
42,439
|
Commercial real estate
|
| |
3,666
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,666
|
Consumer
|
| |
5,706
|
| |
16
|
| |
—
|
| |
—
|
| |
16
|
| |
—
|
| |
5,722
|
Total
|
| |
$135,007
|
| |
$402
|
| |
$145
|
| |
$—
|
| |
$547
|
| |
$1,108
|
| |
$136,662
|
December 31, 2020
($ in thousands)
|
| |
Pass
Grade 1-4
|
| |
Special Mention
Grade 5
|
| |
Classified/
Doubtful/Loss
Grade 6-8
|
| |
Total
|
SBA
|
| |
$200,360
|
| |
$2,040
|
| |
$917
|
| |
$203,317
|
Commercial, non-real estate
|
| |
3,960
|
| |
60
|
| |
—
|
| |
4,020
|
Residential real estate
|
| |
16,984
|
| |
—
|
| |
756
|
| |
17,740
|
Commercial real estate
|
| |
2,892
|
| |
—
|
| |
—
|
| |
2,892
|
Consumer
|
| |
5,543
|
| |
—
|
| |
—
|
| |
5,543
|
Not Risk Graded
|
| |
|
| |
|
| |
|
| |
|
Strategic Program loans
|
| |
|
| |
|
| |
|
| |
28,265
|
Total at December 31, 2020
|
| |
$229,739
|
| |
$2,100
|
| |
$1,673
|
| |
$261,777
|
December 31, 2019
($ in thousands)
|
| |
Pass
Grade 1-4
|
| |
Special Mention
Grade 5
|
| |
Classified/
Doubtful/Loss
Grade 6-8
|
| |
Total
|
SBA
|
| |
$54,659
|
| |
$770
|
| |
$866
|
| |
$56,295
|
Commercial, non-real estate
|
| |
5,798
|
| |
—
|
| |
247
|
| |
6,045
|
Residential real estate
|
| |
22,495
|
| |
—
|
| |
—
|
| |
22,495
|
Commercial real estate
|
| |
3,531
|
| |
135
|
| |
—
|
| |
3,666
|
Consumer
|
| |
5,722
|
| |
—
|
| |
—
|
| |
5,722
|
Not Risk Graded
|
| |
|
| |
|
| |
|
| |
|
Strategic Program loans
|
| |
|
| |
|
| |
|
| |
42,439
|
Total at December 31, 2019
|
| |
$92,205
|
| |
$905
|
| |
$1,113
|
| |
$136,662
|
($ in thousands)
|
| |
Number of
Contracts
|
| |
Pre-
Modification
Outstanding
Recorded
Investment
|
| |
Post-
Modification
Outstanding
Recorded
Investment
|
December 31, 2020
|
| |
|
| |
|
| |
|
SBA
|
| |
3
|
| |
$114
|
| |
$114
|
Residential real estate
|
| |
1
|
| |
756
|
| |
756
|
Total at December 31, 2020
|
| |
4
|
| |
$870
|
| |
$870
|
Non-Accrual
|
| |
|
| |
|
| |
|
SBA
|
| |
1
|
| |
$53
|
| |
$53
|
December 31, 2019
|
| |
|
| |
|
| |
|
Non-Accrual
|
| |
|
| |
|
| |
|
SBA
|
| |
1
|
| |
$66
|
| |
$66
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
($ in thousands)
|
| |
|
| |
|
Leasehold improvements
|
| |
$80
|
| |
$80
|
Furniture, fixtures, and equipment
|
| |
1,782
|
| |
1,526
|
Construction in progress
|
| |
436
|
| |
100
|
Total premises and equipment
|
| |
$2,298
|
| |
$1,706
|
Less accumulated depreciation
|
| |
(1,034)
|
| |
(780)
|
Premises and equipment, net
|
| |
$1,264
|
| |
$926
|
Year Ended December 31, 2021
|
| |
$484
|
Year Ended December 31, 2022
|
| |
126
|
Year Ended December 31, 2023
|
| |
84
|
Year Ended December 31, 2024
|
| |
50
|
Total
|
| |
$744
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
($ in thousands)
|
| |
|
| |
|
Demand
|
| |
$94,162
|
| |
$53,554
|
Savings
|
| |
7,435
|
| |
5,380
|
Money markets
|
| |
17,567
|
| |
17,064
|
Time certificates of deposit
|
| |
45,312
|
| |
66,023
|
Total deposits
|
| |
$164,476
|
| |
$142,021
|
Year Ended December 31, 2021
|
| |
$18,764
|
Year Ended December 31, 2022
|
| |
13,963
|
Year Ended December 31, 2023
|
| |
7,530
|
Year Ended December 31, 2024
|
| |
4,581
|
Year Ended December 31, 2025
|
| |
474
|
Total
|
| |
45,312
|
|
| |
For the Years Ended December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
Beginning balance
|
| |
$2,034
|
| |
$1,581
|
Additions to servicing asset
|
| |
1,139
|
| |
729
|
Amortization of servicing asset
|
| |
(758)
|
| |
(276)
|
Ending balance
|
| |
$2,415
|
| |
$2,034
|
|
| |
Actual
|
| |
Minimum Capital Requirement
|
| |
Well-Capitalized Requirement
|
|||||||||
($ in thousands)
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Leverage ratio (CBLR election)
|
| |
$37,806
|
| |
16.6%
|
| |
$18,212*
|
| |
8.0%
|
| |
$18,212*
|
| |
8.0%
|
December 31, 2019
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Tier 1 capital to average assets
|
| |
$27,142
|
| |
19.3%
|
| |
$6,339
|
| |
4.5%
|
| |
$9,157
|
| |
6.5%
|
Tier 1 capital to risk-weighted assets
|
| |
27,142
|
| |
19.3%
|
| |
8,452
|
| |
6.0%
|
| |
11,270
|
| |
8.0%
|
Total capital to risk-weighted assets
|
| |
28,397
|
| |
20.5%
|
| |
11,270
|
| |
8.0%
|
| |
14,087
|
| |
10.0%
|
Tier 1 leverage
|
| |
27,142
|
| |
16.2%
|
| |
6,714
|
| |
4.0%
|
| |
8,393
|
| |
5.0%
|
*
|
On March 27, 2020 the CARES Act became law. Section 4012 of the CARES Act directs the agencies to issue an interim final rule reducing the CBLR ratio requirement from 9% to 8% for the last two quarters of the year 2020, 8.5% for the calendar year 2021, and 9% thereafter.
|
|
| |
December 31,
|
|||
|
| |
2020
|
| |
2019
|
($ in thousands)
|
| |
|
| |
|
Revolving, open-end lines of credit
|
| |
$757
|
| |
$1,157
|
Commercial real estate
|
| |
14,468
|
| |
12,577
|
Other unused commitments
|
| |
928
|
| |
321
|
|
| |
$16,153
|
| |
$14,055
|
|
| |
For the Years Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Risk-free interest rate
|
| |
0.5% - 1.8%
|
| |
1.7% - 2.6%
|
Expected term in years
|
| |
5.0 - 7.5
|
| |
5.0 - 7.5
|
Expected volatility
|
| |
41.3% - 43.7%
|
| |
41.3% - 44.8%
|
Expected dividend yield
|
| |
-
|
| |
-
|
|
| |
Stock Options
|
| |
Weighted
Average
Exercise Price
|
| |
Weighted
Average
Remaining
Contractual
Life (in years)
|
| |
Aggregate
Intrinsic Value
|
Outstanding at December 31, 2018
|
| |
32,886
|
| |
$14.20
|
| |
9.0
|
| |
$30,614
|
Options granted
|
| |
61,248
|
| |
20.80
|
| |
9.7
|
| |
63,250
|
Options exercised
|
| |
(8,794)
|
| |
14.18
|
| |
|
| |
67,290
|
Options forfeited
|
| |
(700)
|
| |
16.33
|
| |
|
| |
3,850
|
Outstanding at December 31, 2019
|
| |
84,640
|
| |
$18.96
|
| |
9.3
|
| |
$243,061
|
Options granted
|
| |
65,100
|
| |
28.17
|
| |
4.0
|
| |
70,626
|
Options exercised
|
| |
(5,796)
|
| |
14.19
|
| |
|
| |
68,863
|
Options forfeited
|
| |
(37,500)
|
| |
29.21
|
| |
|
| |
22,235
|
Outstanding at December 31, 2020
|
| |
106,444
|
| |
$21.24
|
| |
8.6
|
| |
$653,991
|
Options vested and exercisable at December 31, 2020
|
| |
46,618
|
| |
$22.62
|
| |
8.6
|
| |
$245,877
|
|
| |
Number of
Shares
|
| |
Weighted
Average Grant
Price
|
Unvested as of as of January 1, 2019
|
| |
—
|
| |
$—
|
Granted
|
| |
178,791
|
| |
21.83
|
Vested
|
| |
(58,646)
|
| |
21.83
|
Unvested as of December 31, 2019
|
| |
120,145
|
| |
$21.83
|
Vested
|
| |
(16,534)
|
| |
21.83
|
Unvested as of December 31, 2020
|
| |
103,611
|
| |
$21.83
|
|
| |
|
| |
December 31, 2020
|
| |
December 31, 2019
|
||||||
($ in thousands)
|
| |
Level
|
| |
Carrying
Amount
|
| |
Estimated Fair
Value
|
| |
Carrying
Amount
|
| |
Estimated Fair
Value
|
Financial assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
1
|
| |
$47,383
|
| |
$47,383
|
| |
$34,779
|
| |
$34,779
|
Investment securities held-to-maturity
|
| |
2
|
| |
1,809
|
| |
1,879
|
| |
453
|
| |
466
|
Investment in FHLB stock
|
| |
2
|
| |
205
|
| |
205
|
| |
140
|
| |
140
|
Loans held for investment
|
| |
3
|
| |
232,074
|
| |
211,299
|
| |
105,725
|
| |
98,709
|
Loans held-for-sale
|
| |
2
|
| |
20,948
|
| |
20,948
|
| |
25,109
|
| |
25,109
|
Accrued interest receivable
|
| |
2
|
| |
1,629
|
| |
1,629
|
| |
943
|
| |
943
|
SBA servicing asset
|
| |
2
|
| |
2,415
|
| |
2,532
|
| |
2,034
|
| |
2,090
|
Investment in BFG
|
| |
3
|
| |
3,770
|
| |
3,770
|
| |
3,459
|
| |
3,459
|
Financial liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total deposits
|
| |
2
|
| |
164,476
|
| |
164,845
|
| |
142,021
|
| |
139,224
|
Accrued interest payable
|
| |
2
|
| |
195
|
| |
195
|
| |
64
|
| |
64
|
PPP Liquidity Facility
|
| |
2
|
| |
101,007
|
| |
105,886
|
| |
—
|
| |
—
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
|
| |
Fair Value Measurements Using
|
||||||
Description of Financial Instrument
|
| |
Fair Value
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
Nonrecurring assets
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,673
|
| |
$—
|
| |
$—
|
| |
$1,673
|
December 31, 2019
|
| |
|
| |
|
| |
|
| |
|
Nonrecurring assets
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,113
|
| |
$—
|
| |
$—
|
| |
$1,113
|
($ in thousands)
|
| |
Fair Value
|
| |
Valuation
Technique
|
| |
Unobservable
Input
|
| |
Range
(Weighted Average)
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,673
|
| |
Market
comparable
|
| |
Adjustment to
appraisal value
|
| |
0.73%
|
|
| |
|
| |
|
| |
|
| |
|
December 31, 2019
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,113
|
| |
Market
comparable
|
| |
Adjustment to
appraisal value
|
| |
6.40%
|
Income tax expense consist of
|
| |
|
|||
|
| |
For the Years Ended December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
Current tax expense
|
| |
|
| |
|
Federal
|
| |
$3,385
|
| |
$2,465
|
State
|
| |
869
|
| |
701
|
Deferred tax expense (benefit)
|
| |
|
| |
|
Federal
|
| |
(252)
|
| |
9
|
State
|
| |
(60)
|
| |
2
|
Income tax expense
|
| |
$3,942
|
| |
$3,177
|
|
| |
December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
Deferred tax assets
|
| |
|
| |
|
Reserve for loan loss
|
| |
$872
|
| |
$883
|
Accrued bonuses
|
| |
11
|
| |
5
|
Nonqualified stock options
|
| |
32
|
| |
3
|
Other
|
| |
15
|
| |
85
|
Total deferred tax assets
|
| |
930
|
| |
976
|
Deferred tax liabilities
|
| |
|
| |
|
Stock compensation
|
| |
(291)
|
| |
(631)
|
Intangibles
|
| |
(2)
|
| |
(6)
|
Net book value of fixed assets
|
| |
(185)
|
| |
(199)
|
Total deferred tax liabilities
|
| |
(478)
|
| |
(836)
|
Net deferred tax asset
|
| |
$452
|
| |
$140
|
|
| |
For the Years Ended December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
Federal income tax expense at statutory rates
|
| |
$3,171
|
| |
$2,693
|
Effect of permanent differences
|
| |
67
|
| |
79
|
State income tax expense, net
|
| |
603
|
| |
516
|
Other
|
| |
101
|
| |
(111)
|
Income tax expense
|
| |
$3,942
|
| |
$3,177
|
|
| |
For the Years Ended December 31,
|
|||
|
| |
2020
|
| |
2019
|
Numerator:
|
| |
|
| |
|
Net income
|
| |
$11,198
|
| |
$9,659
|
Amount allocated to participating common shareholders(1)
|
| |
(837)
|
| |
(22)
|
Net income allocate to common shareholders
|
| |
$10,361
|
| |
$9,637
|
Denominator:
|
| |
|
| |
|
Weighted average shares outstanding, basic
|
| |
1,337,565
|
| |
1,173,149
|
Weighted average shares outstanding, diluted
|
| |
1,344,939
|
| |
1,175,559
|
Earnings per share, basic
|
| |
$7.75
|
| |
$8.21
|
Earnings per share, diluted
|
| |
$7.70
|
| |
$8.20
|
(1)
|
Represents earnings attributable to holders of unvested restricted stock issued outside of the Plan to the Company's employees.
|
|
| |
For the Years Ended December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
Interest income
|
| |
|
| |
|
Interest income, not-in-scope
|
| |
|
| |
|
Interest and fees on loans
|
| |
$29,271
|
| |
$20,728
|
Interest on securities
|
| |
34
|
| |
16
|
Other interest income
|
| |
201
|
| |
664
|
Total interest income
|
| |
$29,506
|
| |
$21,408
|
Non-interest income
|
| |
|
| |
|
Non-interest income, in-scope
|
| |
|
| |
|
Service charges on deposit accounts
|
| |
$35
|
| |
$88
|
Strategic Program set up fees
|
| |
148
|
| |
343
|
Non-interest income, not in-scope
|
| |
|
| |
|
Strategic Program fees
|
| |
8,992
|
| |
8,090
|
Gain on sale of loans
|
| |
2,849
|
| |
4,167
|
SBA loan servicing fees
|
| |
1,028
|
| |
607
|
Unrealized gain on investment in BFG
|
| |
856
|
| |
122
|
Other miscellaneous income
|
| |
14
|
| |
13
|
Strategic Program service charges
|
| |
451
|
| |
433
|
Total non-interest income
|
| |
$14,373
|
| |
$13,863
|
|
| |
December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
ASSETS
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$2,217
|
| |
$359
|
Investment in subsidiary bank
|
| |
40,717
|
| |
29,327
|
Investment in Business Funding Group (BFG), at fair value
|
| |
3,770
|
| |
3,459
|
Other assets
|
| |
105
|
| |
31
|
Total assets
|
| |
$46,809
|
| |
$33,176
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
| |
|
| |
|
Deferred taxes, net
|
| |
$46
|
| |
$—
|
Income taxes payable
|
| |
11
|
| |
67
|
Other liabilities
|
| |
880
|
| |
14
|
Shareholders' equity
|
| |
45,872
|
| |
33,095
|
Total liabilities and shareholders' equity
|
| |
$46,809
|
| |
$33,176
|
|
| |
For the Years Ended December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
Non-interest income
|
| |
|
| |
|
Change in fair value on investment in BFG
|
| |
$856
|
| |
$122
|
Equity in undistributed earnings of subsidiary
|
| |
11,390
|
| |
10,227
|
Total non-interest income
|
| |
12,246
|
| |
10,349
|
Non-interest expense
|
| |
|
| |
|
Salaries and employee benefits
|
| |
572
|
| |
578
|
Loss on investment in BFG
|
| |
50
|
| |
—
|
Other operating expenses
|
| |
485
|
| |
304
|
Total non-interest expense
|
| |
1,107
|
| |
882
|
Income before income tax expense
|
| |
11,139
|
| |
9,467
|
Provision for income taxes
|
| |
(59)
|
| |
(192)
|
Net income
|
| |
$11,198
|
| |
$9,659
|
|
| |
For the Years Ended December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
Cash flows from operating activities:
|
| |
|
| |
|
Net income
|
| |
$11,198
|
| |
$9,659
|
Adjustments to reconcile net income to net cash from
|
| |
|
| |
|
operating activities
|
| |
|
| |
|
Change in fair value of BFG
|
| |
(856)
|
| |
—
|
Loss on investment in BFG
|
| |
50
|
| |
—
|
Stock-based compensation expense
|
| |
1,756
|
| |
1,765
|
Deferred income tax expense
|
| |
(56)
|
| |
67
|
Net changes in:
|
| |
|
| |
|
Income tax receivable
|
| |
46
|
| |
—
|
Other assets
|
| |
(74)
|
| |
75
|
Other liabilities
|
| |
866
|
| |
245
|
Net cash provided by operating activities
|
| |
12,930
|
| |
11,811
|
Cash flows from investing activities:
|
| |
|
| |
|
Investment in subsidiary bank
|
| |
(11,390)
|
| |
(10,228)
|
Distributions of BFG
|
| |
545
|
| |
—
|
Net cash used in investing activities
|
| |
(10,845)
|
| |
(10,228)
|
Cash flows from financing activities:
|
| |
|
| |
|
Proceeds from exercise of stock options
|
| |
82
|
| |
125
|
Repurchase of restricted stock to pay for employee withholding taxes
|
| |
(268)
|
| |
(1,280)
|
Repurchase of common stock
|
| |
(41)
|
| |
(89)
|
Net cash used in financing activities
|
| |
(227)
|
| |
(1,244)
|
Net change in cash and cash equivalents
|
| |
1,858
|
| |
339
|
Cash and cash equivalents, beginning of year
|
| |
359
|
| |
20
|
Cash and cash equivalents, end of year
|
| |
$2,217
|
| |
$359
|
Non-cash financing and investing activities:
|
| |
|
| |
|
Issuance of common stock for investment in BFG
|
| |
$—
|
| |
$3,459
|
Issuance of common stock in lieu of cash bonus
|
| |
$—
|
| |
$231
|
Piper Sandler & Co.
|
| |
UBS Investment Bank
|
ITEM 13.
|
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
|
SEC registration fee
|
| |
$5,455
|
FINRA filing fee
|
| |
$9,125
|
NASDAQ listing fees and expenses
|
| |
$*
|
Transfer agent and registrar fees and expenses
|
| |
$*
|
Printing fees and expenses
|
| |
$*
|
Legal fees and expenses
|
| |
$*
|
Underwriter expenses
|
| |
$*
|
Accounting expenses
|
| |
$*
|
Miscellaneous expenses
|
| |
$*
|
Total
|
| |
$*
|
*
|
To be furnished by amendment
|
ITEM 14.
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
|
•
|
His conduct was in good faith.
|
•
|
He reasonably believed that his conduct was in, or not opposed to, the corporation’s best interests.
|
•
|
In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.
|
•
|
A proceeding by or in the right of the corporation in which the director was determined to be liable to the corporation.
|
•
|
Any other proceeding charging that the director derived an improper personal benefit (whether or not the proceeding involved action in the director’s official capacity), in which proceeding the director was determined to be liable on the basis that the director derived an improper personal benefit.
|
•
|
The director furnishes the corporation a written affirmation of his good faith belief that he has met the applicable standard of conduct described in Section 16-10a-902 of the Utah Code.
|
•
|
The director furnishes to the corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct.
|
•
|
A determination is made that the facts then known to those making the determination would not preclude indemnification.
|
•
|
An officer of a corporation is entitled to mandatory indemnification to the same extent as a director of the corporation.
|
•
|
A corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the corporation to the same extent as to a director.
|
•
|
A corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent than to a director. However, this must be consistent with public policy and provided for in the corporation’s articles of incorporation, bylaws, action of its board of directors, or contract.
|
ITEM 15.
|
RECENT SALES OF UNREGISTERED SECURITIES.
|
(1)
|
In the past three years, the Company has granted (i) a net total of 16,850 stock options pursuant to the Company’s 2016 Plan (19,750 stock options granted; 2,900 options surrendered), (ii) a net total of 82,719 stock options pursuant to the Company’s 2019 Plan (93,710 stock options granted; 10,991 options surrendered), (iii) a net total of 46,319 stock options not pursuant to any plan (162,488 stock options granted; 116,169 options surrendered), and (iv) a net total of 45,000 warrants (45,000 warrants granted; no warrants surrendered), as of June 30, 2021. No underwriter or placement agent was involved in the issuance or sale of any of these securities, and no underwriting discounts or commissions were paid. The issuance
|
(2)
|
In the past three years, the Company has granted a net total of 166,719 shares of common stock (185,791 shares granted; 19,072 shares surrendered) to executives and directors as of June 30, 2021. No underwriter or placement agent was involved in the issuance or sale of any of these securities, and no underwriting discounts or commissions were paid. The issuance and sale of the securities described above were made in reliance upon exemptions from registration requirements under Section 4(a)(2) of the Securities Act and/or pursuant to Rule 701 promulgated under the Securities Act as a transaction by an issuer not involving any public offering and pursuant to benefit plans and contracts relating to compensation.
|
(3)
|
In the past three years as of June 30, 2021, the Company has issued 14,654 shares of the Company’s common stock to employees in lieu of cash bonus for a purchase price of approximately $0.2 million in the aggregate. No underwriter or placement agent was involved in the issuance or sale of any of these securities, and no underwriting discounts or commissions were paid. The issuance and sale of the securities described above were made in reliance upon exemptions from registration requirements under Section 4(a)(2) of the Securities Act and/or pursuant to Rule 701 promulgated under the Securities Act as a transaction by an issuer not involving any public offering and pursuant to benefit plans and contracts relating to compensation.
|
(4)
|
Between June 30, 2018 and July 31, 2018, the Company issued 102,000 shares of the Company’s common stock for a purchase price of approximately $1.1 million in the aggregate to accredited investors. No underwriter or placement agent was involved in the issuance or sale of any of these securities, and no underwriting discounts or commissions were paid. The issuance and sale of the securities described above were made in reliance upon exemptions from registration requirements under Section 4(a)(2) of the Securities Act and/or pursuant to Rule 701 promulgated under the Securities Act as a transaction by an issuer not involving any public offering and pursuant to benefit plans and contracts relating to compensation.
|
(5)
|
On December 31, 2019, the Company issued 158,464 shares of the Company’s common stock to members of BFG to acquire a 10% ownership interest in BFG for the purchase price of approximately $3.5 million in the aggregate. The securities issued in this transaction were issued under an exemption from registration pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder as a transaction by an issuer not involving any public offering.
|
ITEM 16.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
(a)
|
Exhibits: The list of exhibits set forth under “Exhibit Index” at the end of this registration statement is incorporated herein by reference.
|
(b)
|
Financial Statement Schedules: All schedules have been omitted as not applicable or not required under the rules of Regulation S-X.
|
ITEM 17.
|
UNDERTAKINGS.
|
(1)
|
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective; and
|
(2)
|
For purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
NUMBER
|
| |
DESCRIPTION
|
1.1
|
| |
Form of Underwriting Agreement*
|
| |
Third Amended and Restated Articles of Incorporation
|
|
| |
Restated Bylaws
|
|
| |
Specimen common stock certificate
|
|
| |
Form of Warrant to BFG Members to Purchase Common Stock of FinWise Bancorp
|
|
5.1
|
| |
Opinion of Kirton McConkie PC*
|
| |
FinWise Bancorp 2019 Stock Option Plan(1)
|
|
| |
Form of Stock Option Agreement under the FinWise Bancorp 2019 Stock Option Plan(1)
|
|
| |
FinWise Bancorp 2016 Stock Option Plan(1)
|
|
| |
Form of Stock Option Agreement under the FinWise Bancorp 2016 Stock Option Plan(1)
|
|
| |
Form of Restricted Stock Award Agreement
|
|
| |
Employment Agreement dated January 1, 2018, by and among FinWise Bancorp, FinWise Bank and David Tilis(1)(2)
|
|
| |
Standstill Agreement dated January 19, 2016, by and between FinWise Bancorp and Business Funding Group
|
|
| |
Right of First Refusal and Option Agreement dated March 31, 2020, by and among FinWise Bancorp and the members of Business Funding Group
|
|
| |
Membership Interest Purchase Agreement dated December 31, 2019 by and among FinWise Bancorp, Business Funding Group and certain members of Business Funding Group
|
|
| |
Sublease dated December 7, 2018, between Motorola Solutions, Inc. and FinWise Bancorp
|
|
| |
Lease dated January 27, 1999, between FPA Sandy Mall Associates, LLC and FinWise Bancorp
|
|
| |
First Amendment to Lease dated June 3, 2009, between FPA Sandy Mall Associates, LLC and FinWise Bancorp
|
|
| |
Second Amendment to Lease dated April 25, 2014, between FPA Sandy Mall Associates, LLC and FinWise Bancorp
|
|
| |
Lease dated December 2017, between North Village Centre, Inc. and FinWise Bancorp
|
|
| |
Subsidiaries of FinWise Bancorp
|
|
23.1
|
| |
Consent of Kirton McConkie PC (contained in Exhibit 5.1)*
|
| |
Consent of Moss Adams LLP
|
|
| |
Power of attorney (included on signature page)
|
*
|
To be filed by amendment.
|
(1)
|
Indicates a management contract or compensatory plan.
|
(2)
|
Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Regulation S-K, Item 601(b)(10).
|
|
| |
FINWISE BANCORP
|
| ||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Kent Landvatter
|
|
| |
|
| |
Kent Landvatter
President and Chief Executive Officer
|
Signature
|
| |
Title
|
| |
Date
|
|||
By:
|
| |
/s/ Kent Landvatter
|
| |
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
| |
July 15, 2021
|
|
| |
Kent Landvatter
|
| |
|
|||
|
| |
|
| |
|
| |
|
By:
|
| |
/s/ Javvis Jacobson
|
| |
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
| |
July 15, 2021
|
|
| |
Javvis Jacobson
|
| |
|
|||
|
| |
|
| |
|
| |
|
By:
|
| |
/s/ Russell F. Healey, Jr.
|
| |
Chairman of the Board
|
| |
July 15, 2021
|
|
| |
Russell F. Healey, Jr.
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
By:
|
| |
/s/ Howard I. Reynolds
|
| |
Vice Chairman of the Board
|
| |
July 15, 2021
|
|
| |
Howard I. Reynolds
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
By:
|
| |
/s/ James N. Giordano
|
| |
Director
|
| |
July 15, 2021
|
|
| |
James N. Giordano
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
By:
|
| |
/s/ Thomas E. Gibson, Jr.
|
| |
Director
|
| |
July 15, 2021
|
|
| |
Thomas E. Gibson, Jr.
|
| |
|
| |
|
|
| |
|
| |
|
| ||
By:
|
| |
/s/ Lisa Ann Nievaard
|
| |
Director
|
| |
July 15, 2021
|
|
| |
Lisa Ann Nievaard
|
| |
|
| |
|
|
| |
|
| |
|
| ||
By:
|
| |
/s/ Jeana Hutchings
|
| |
Director
|
| |
July 15, 2021
|
|
| |
Jeana Hutchings
|
| |
|
| |
|
|
| |
|
| |
|
| ||
By:
|
| |
/s/ Gerald E. Cunningham
|
| |
Director
|
| |
July 15, 2021
|
|
| |
Gerald E. Cunningham
|
| |
|
| |
|
1.
|
The name of the Corporation prior to the filing of these Amended and Restated Articles of
Incorporation is: All West Bancorp.
|
2.
|
The Articles of lncorporation are hereby amended in their entirety as follows:
|
3.
|
The amendments to the foregoing amended and restated articles were adopted by Action by Majority Consent of the Corporation’s Shareholders as of March 4, 202 l .
|
4.
|
The numbcr of shares of common stock of the Corporation outstanding and entitled to vote thereon at the time of such adoption was 1,444,889. The designation and nunbcr of outstanding shares
of the only class entitled to vote thereon as a class were these 1,444,889 shares of common stock.
|
5.
|
The number of shares voted for such amendment was 970,687 and the number of shares voted against such amendment was 0.
|
|
|
/s/ Kent Landvetter
|
|
|
Kent Landvetter
|
Article I – Purposes
|
1 | ||
Section 1.01
|
Purpose
|
1 | |
Article II – Offices
|
1 | ||
Section 2.01
|
Offices
|
1 | |
Section 2.02
|
Registered Office
|
1 | |
Article III – Shareholders
|
1 | ||
Section 3.01
|
Annual Meeting
|
1 | |
Section 3.02
|
Special Meeting
|
1 | |
Section 3.03
|
Place of Meeting
|
2 | |
Section 3.04
|
Action Without a Meeting
|
2 | |
(a) Action By Written Consent
|
2 | ||
(b) Notice of Action
|
2 | ||
(c) Withdrawal of Consent
|
2 | ||
(d) Effective Date of Action
|
2 | ||
(e) Election of Directors
|
3 | ||
(f) Record Date
|
3 | ||
Section 3.05
|
Notice of Meeting
|
3 | |
(a) Notice Required
|
3 | ||
(b) Exception to Notice Requirement
|
3 | ||
(c) Contents of Notice
|
3 | ||
(d) Waiver of Notice
|
4 | ||
(e) Waiver by Attendance
|
4 | ||
Section 3.06
|
Record Date .
|
4 | |
(a) Fixing of Record Date
|
4 | ||
(b) Default Record Date
|
4 | ||
(c) Adjournment
|
5 | ||
Section 3.07
|
Record Date of Dividends and Other Distributions
|
5 | |
Section 3.08
|
Meetings by Telecommunication
|
5 | |
Section 3.09
|
Voting Lists
|
5 | |
(a) Requirements for Voting List
|
5 | ||
(b) Inspection of Voting List Prior to a Meeting
|
5 | ||
(c) Inspection of Voting List at the Meeting
|
5 | ||
(d) Effect on Meeting
|
5 |
Section 3.10
|
Proxies
|
5 | |
(a) Manner of Voting
|
5 | ||
(b) Appointment of Proxy
|
6 | ||
(c) Effective Date
|
6 | ||
(d) Term
|
6 | ||
(e) Revocation
|
6 | ||
Section 3.11
|
Voting Entitlement of Shares
|
6 | |
Section 3.12
|
Quorum
|
6 | |
Section 3.13
|
Vote Required to take Action for Other than Election of Directors
|
6 | |
Section 3.14
|
Voting for Directors
|
6 | |
(a) Manner of Voting
|
6 | ||
(b) Vote Required
|
6 | ||
Section 3.15
|
Conduct of Meetings
|
7 | |
Article IV – Board of Directors
|
7 | ||
Section 4.01
|
General Powers
|
7 | |
Section 4.02
|
Number
|
7 | |
Section 4.03
|
Chair
|
7 | |
Section 4.04
|
Election
|
7 | |
Section 4.05
|
Term
|
7 | |
Section 4.06
|
Qualifications
|
8 | |
Section 4.07
|
Resignation
|
8 | |
Section 4.08
|
Removal
|
8 | |
(a) Shareholders' Right to Remove Directors
|
8 | ||
(b) Notice Requirement
|
8 | ||
(c) Vote Required
|
8 | ||
Section 4.09
|
Vacancies
|
8 | |
Section 4.10
|
Compensation
|
8 | |
Section 4.11
|
Regular Meetings
|
8 | |
Section 4.12
|
Special Meetings
|
9 | |
Section 4.13
|
Action Without a Meeting
|
9 | |
Section 4.14
|
Notice of Special Meetings
|
9 | |
Section 4.15
|
Waiver of Notice
|
9 | |
(a) Written Waiver
|
9 | ||
(b) Waiver by Attendance
|
9 | ||
Section 4.16
|
Quorum
|
10 | |
Section 4.17
|
Manner of Acting
|
10 | |
Section 4.18
|
Meetings by Telecommunication
|
10 | |
Section 4.19
|
Presumption of Assent
|
10 | |
Article V – Committees
|
10 | ||
Section 5.01
|
Creation of Committees
|
10 |
Section 5.02
|
Membership
|
11 | |
Section 5.03
|
Notice, Etc
|
11 | |
Section 5.04
|
Authority
|
11 | |
Section 5.05
|
Executive Committee
|
11 | |
Article VI – Officers
|
11 | ||
Section 6.01
|
Number
|
11 | |
Section 6.02
|
Appointment and Term of Office
|
11 | |
Section 6.03
|
Removal
|
12 | |
Section 6.04
|
Resignation
|
12 | |
Section 6.05
|
Vacancies
|
12 | |
Section 6.06
|
The President/Chief Executive Officer
|
12 | |
Section 6.07
|
The Vice President
|
12 | |
Section 6.08
|
The Secretary
|
13 | |
Section 6.09
|
The Chief Financial Officer/Treasurer
|
13 | |
Section 6.10
|
Assistant Secretaries and Assistant Treasurers
|
13 | |
Section 6.11
|
Compensation
|
13 | |
Article VII – Certificates for Shares and Their Transfer
|
13 | ||
Section 7.01
|
Certificates for Shares
|
13 | |
(a) Shareholder's Right to a Certificate; Contents
|
13 | ||
(b) Signatures
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14 | ||
(c) Shareholder Register
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14 | ||
Section 7.02
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Transfers of Stock
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14 | |
Section 7.03
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Regulations
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14 | |
Section 7.04
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Transfer Agent
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14 | |
Section 7.05
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Lost, Stolen, Destroyed, and Mutilated Certificates
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14 | |
Section 7.06
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Legends
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15 | |
Article VIII – Contracts, Loans, Checks and Deposits
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15 | ||
Section 8.01
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Contracts
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15 | |
Section 8.02
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Loans
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15 | |
Section 8.03
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Checks, Drafts, etc.
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15 | |
Section 8.04
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Deposits
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15 | |
Article IX – Dividends
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15 | ||
Section 9.01
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Dividends
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15 | |
Article X – Indemnification
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15 | ||
Section 10.01
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Definitions
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15 | |
Section 10.02
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Authority to Indemnify Directors
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Section 10.03
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Mandatory Indemnification of Directors
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17 | |
Section 10.04
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Advance of Expenses for Directors
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18 | |
Section 10.05
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Court-Ordered Indemnification of Directors
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18 | |
Section 10.06
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Determination of Indemnification of Directors
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18 | |
Section 10.07
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Indemnification of Officers, Employees, Fiduciaries, and Agents
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19 | |
Section 10.08
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Insurance
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20 | |
Section 10.09
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Limits on Directors' Liability
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20 | |
Section 10.10
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Savings Clause
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20 | |
Article XI – Miscellaneous
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20 | ||
Section 11.01
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Seal
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20 | |
Section 11.02
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Amendments
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20 | |
Section 11.03
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Fiscal Year
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21 | |
Section 11.04
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Voting of Stock in Other Corporations
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21 | |
Secretary’s Certificate
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22 |
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/s/ Keith Terry
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Keith Terry, Secretary
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All West Bancorp
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By:
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Kent Landvatter, President
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Name of Assignee
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Address
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No. of Common Shares
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By:
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Name:
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Address:
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PARTICIPANT
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ALL WEST BANCORPORATION
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Signature
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By
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Print Name
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Print Name
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Title
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Residence Address
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Submitted by:
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Accepted by:
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PARTICIPANT
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ALL WEST BANCORPORATION
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Signature
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By
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Print Name
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Print Name
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Title
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Address:
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Address:
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Date Received
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PARTICIPANT
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COMPANY
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:
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ALL WEST BANCORPORATION
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SECURITY
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:
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COMMON STOCK
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AMOUNT
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:
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SHARES
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DATE
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:
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PARTICIPANT
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Signature
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Print Name
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Date
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Name:
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Address:
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Date of Grant
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Vesting Commencement Date
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Exercise Price per Share
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Total Number of Shares Granted
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Total Exercise Price
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Type of Option:
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____
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Incentive Stock Option
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____
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Nonstatutory Stock Option
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Term/Expiration Date:
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PARTICIPANT
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ALL WEST BANCORPORATION
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Signature
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By
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Print Name
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Print Name
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Title
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Residence Address
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Submitted by:
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Accepted by:
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PARTICIPANT
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ALL WEST BANCORPORATION
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Signature
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By
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Print Name
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Print Name
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Title
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Address:
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Address:
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Date Received
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PARTICIPANT
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: ____________________
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COMPANY
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: ALL WEST BANCORPORATION
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SECURITY
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: COMMON STOCK
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AMOUNT
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: ________ SHARES
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DATE
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: __________________
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PARTICIPANT
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Signature
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Print Name
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Date
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FINWISE BANK,
a Utah corporation |
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By:
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Name:
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Its:
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ALL WEST BANCORP,
a Utah bank holding company |
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By:
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Name:
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Its:
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Exhibit 10.6
2018 EMPLOYMENT AGREEMENT
THIS 2018 EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the 1st day of January, 2018 among All West Bancorp, a Utah community bank holding company (the “Holding Company”) and its wholly-owned subsidiary FinWise Bank, (the “Bank”) and David Tilis, an individual (the “Executive”).
WHEREAS, Executive serves as the Senior Vice President – Director of Specialty Lending;
WHEREAS, the Bank and Executive are parties to an Employment Agreement dated February 5, 2016 that expires on December 31, 2017;
WHEREAS, Executive desires to continue to serve as an executive of the Bank as the Senior Vice President – Director of Specialty Lending;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings made herein, the Bank and the Executive, each intending to be legally bound, hereby agree as follows:
1. Employment as Employee. Executive hereby accepts employment, as the Senior Vice President – Director of Specialty Lending or other agreed upon role upon the terms and conditions set forth in this Agreement.
2. Term of Employment. Subject to the terms hereof the term of this agreement, Executive’s employment under this Agreement shall commence on January 1, 2018 (the “Effective Date”) and shall continue until March 15, 2022 (the “Term”) unless earlier terminated pursuant to the provisions hereof.
3. Position. The Executive shall be employed as the Senior Vice President – Director of Specialty Lending, and shall perform such duties as may be assigned to the Executive from time to time by the President of the Bank. The Executive’s employment will be on a fulltime basis in New York, subject to such travel as may be required from time to time to perform Executive’s duties. The Executive further agrees to devote his full time and attention to the business of the Bank and to perform such duties as may be required of him to the best of his abilities, and will not accept any other employment without the prior written consent of the President of the Bank.
4. Compensation. The Bank shall pay to the Executive compensation for his services during the Term of Employment as follows:
(a) An annual salary of $300,000 during the Term on a pro-rata basis at least monthly in accordance with the Bank’s payroll policies.
(b) The Executive shall be eligible to receive annual cash bonuses during the Term. Upon mutual agreement by the parties, the annual bonus may be paid in more frequent installments such as quarterly. It is anticipated that such bonus will be tied to the Pre-Tax Net Profit of the Market Place Lending business originated by Executive and his direct reports. For purposes of this Agreement, “Marketplace Lending’ means the practice of pairing borrowers and lenders through the use of non-traditional lending such as an online internet based platform without a typical bank intermediary where a third party will assist the Bank to process the loan application and assess, grade and assign an interest rate using the marketplace lender’s proprietary credit scoring tool. All bonuses shall be contingent upon satisfaction of mutually agreeable business objectives. Subject to eligibility, any bonuses payable during a Term shall be equal to [****] of the Pre-Tax Net Profits of the Market Place Lending line of business generated by the Executive and his direct reports for the first [****] of revenues actually received by the Bank in a single calendar year from the Market Place Lending line of business and [****] of Pre-Tax Net Revenue of revenue actually received by the Bank in excess of such [****] for the same calendar year. By way of clarification and not limitation, the Bank must first receive revenues from the Market Place Lending business in excess of [****] in a given calendar year for the [****] of Pre-Tax Net Revenue to be payable. By way of clarification, the month the Bank receives revenues of [****] that month will convert to [****] from [****].
(c) For purposes of this Agreement, “Pre-Tax Net Profits” shall mean gross revenues actually collected from business generated by the Executive and his direct reports less all costs and expenses directly attributable to the generation of such revenues, including, without limitation, the cost of all materials, equipment, professional fees, provision for loan loss reserves and software as well as the salaries, benefits and other costs of all employees and service providers of the Bank providing services in connection with business generated by the Executive; provided, however, if any of the Bank’s employees provide less than full-time services with respect to business generated by the Executive, or any of the equipment and software are not exclusively used by the line of business, then such costs will be pro-rated. Costs and expenses used to determine “Pre-Tax Net Profits” shall not include existing fixed overhead (other than the costs of the Bank’s New York office) and executive management, that are not part of the Market Place Lending Line of business, but may include future fixed overhead required to conduct business.
(d) In addition to compensation set forth above, Executive shall be eligible to be paid a commission upon the closing of SBA loans originated solely by Executive as follows:
Executive shall be paid a commission of 1% of the principal loan amount of SBA Loans originated by Executive if Business Funding Group (“BFG”) is retained by the SBA borrower to provide services related to the SBA Loan for which the Bank pays BFG a fee and a commission of ½% of the principal loan amount of SBA loans originated by Executive where BFG is not retained to provide services.
5. Benefits. The Executive shall be entitled to receive benefits, including health insurance benefits, in accordance with the benefit policies developed for the Bank and approved by the Board of Directors for Senior Executives. In addition to the foregoing, and without limitation, Executive shall be entitled to the following benefits:
(a) Executive shall be entitled to participate in the Bank’s 401(k) plan as soon as he becomes eligible pursuant to the terms of such plan.
(b) Executive shall be entitled to 16 days of personal time off (PTO) each year as of the Effective Date. At the beginning of each subsequent year, one additional day will be awarded up to a total of 21 days of PTO per year.
6. Business Expenses. The Company shall promptly reimburse Executive for all reasonable out-of-pocket business expenses that he incurs in fulfilling his duties hereunder, in accordance with the general policy of the Company in effect from time to time; provided that Executive furnishes to the Company adequate records and other, documentary evidence required by all federal and state statutes and regulations issued by the appropriate taxes authorities for the substantiation of each such business expense as a deduction on the federal or state income tax returns of the Company.
7. Termination for Cause. The Bank may terminate Executive’s employment for Cause, upon written notice to the Executive which notice shall specify the reasons for the termination. In the event of termination for Cause, the Executive shall not be entitled to any further payment of benefits or bonuses under this Agreement other than salary accruing up to the date of termination. For purposes of the Agreement, “Cause” shall mean; (i) the failure by the Executive to perform his duties hereunder or the failure to abide by the Bank’s employment or other policies, after at least one warning in writing from the Holding Company or the Bank identifying any such failure; (ii) the willful misconduct of the Executive in the performance of his duties hereunder; (iii) commission of a crime (other than a minor traffic violation) or the violation of any formal written agreement, memorandum or order governing the Bank or the Executive issued by any federal or state regulatory authority having jurisdiction over the Holding Company or the Bank or the Executive; (iv) alcohol and/or drug abuse; (v) excessive absenteeism, after at least one warning in writing from the Holding Company or the Bank; (vi) the unauthorized disclosure or use of any confidential information or proprietary data of the Bank; or (vii) the commission of an immoral act that could adversely impact the reputation of the Bank.
8. Death or Disability. If during the Term of Employment, the Executive shall become permanently disabled or is otherwise unable to perform his essential job functions hereunder with or without reasonable accommodation for three (3) consecutive months, or for shorter periods aggregating three (3) months, in any twelve (12) month period, or dies, the Bank may terminate the employment of the Executive hereunder upon written notice to the Executive. In such event, the Executive shall not be entitled to any further payments or benefits under this Agreement other than: (a) in the case of termination for disability, payments under any disability policy that the Bank may obtain for the benefit of its officers generally and salary accruing up to the date of termination; and (b) in the case of death, payments from a Bank-Owned Life Insurance policy, if any, on Executive’s life; provided that the amount payable from the proceeds of such policy shall not exceed the amount that would otherwise be payable to Executive in the event of termination of Executive’s employment without cause pursuant to Section 9 below.
9. Termination Without Cause. During the Term, the Bank may terminate the Executive’s employment without Cause upon written notice to the Executive. If the Bank terminates the Executive’s employment without Cause, the Bank shall pay the Executive an amount equal to his monthly salary each month during the six (6) month period immediately following Executive’s termination without Cause (the ‘‘Severance Payment”). The ‘‘Severance Payment” shall be in addition to any salary accruing up to the date of termination. In addition to the Severance Payment, if Executive is terminated without cause, Executive shall also receive an amount equal to the annual bonus otherwise payable pursuant to Section 4(b) above as if Executive had not been terminated (the “Severance Bonus”). Any Severance Bonus payable hereunder shall be paid at the same time and in the same manner as annual bonuses; provided, however, that the Bank, at its option, may pay the Severance Bonus in advance of the time it would be payable as an annual bonus, in which event the Severance Bonus shall be calculated based upon the Bank’s performance for the 18-month period immediately prior to final payment of the Severance Bonus. By way of illustration, and not limitation, if Executive’s employment is terminated without cause on October 1, 2018, the Bank shall pay a portion of the Severance Bonus at the same time that it pays annual bonuses to other employees for the 2018 and 2019 calendar years and shall pay the remainder of the Severance Bonus the three-month period ending March, 2020, unless the Bank determines to make payments in advance.
The payment of the “Severance Payment” and “Severance Bonus” by the Bank is conditioned upon the Executive resigning from all positions held as an officer and employee of the Bank and providing both the Holding Company and the Bank with a general release, in form and substance acceptable to the Holding Company and the Bank, releasing any and all claims Executive may have against the Holding Company, the Bank and/or their officers, directors and affiliates.
Failure to Offer a Renewal Agreement. If, upon expiration of this agreement, the Bank does not offer to the Executive a new agreement with substantially similar terms, it is understood that the severance payment and severance bonus outlined in section 9 will not be payable, rather the Bank agrees to pay a separate severance payment of six (6) months salary and separate severance bonus six (6) months bonus as calculated in section 9 (the “Failure to Renew Severance and Bonus”). If the Bank offers a new agreement with substantially similar terms and the Executive does not accept the agreement, the Failure to Renew Severance and Bonus will not be paid.
In the event the Executive’s employment hereunder shall be terminated by the Bank without Cause, the Executive shall be obligated to promptly inform the Bank of any new employment. Except as set forth in this Section 9, the Executive shall not be entitled to any other payments or benefits following a termination without Cause. Notwithstanding the foregoing, in the event the Bank is at any time classified as a troubled institution, or to the extent that Severance Payments, if paid, would constitute a “golden parachute payment” within the meaning of 12 CFR part 39, no such payment shall be paid or payable to Executive without the prior consent of the federal and state regulators having jurisdiction over the Bank and the Holding Company or either of them.
10. Resignation. The Executive may resign from his employment with the Bank hereunder at any time during the Term for any reason upon sixty (60) days prior written notice.
11. | Confidentiality; Non-Disclosure; Non-Competition. |
(a) Except as may be required in the course of his employment with the Bank and in pursuit of the business of the Bank, the Executive shall not, at any time during or following the Term of Employment, disclose to any person or use any confidential information or proprietary data of the Holding Company and/or the Bank, or their subsidiaries, if any. The Executive agrees that all information concerning the Holding Company’s and/or the Bank’s relations with their customers is confidential information. The obligations of the Executive under this Section 11(a) shall survive the termination of the Executive’s employment hereunder and the expiration of this Agreement.
(b) The Executive agrees that for a period of twelve (18) months after the termination of his employment hereunder for any reason, he will not directly or indirectly solicit, cause any other person to solicit, or assist any other person with soliciting any customer, referral source, loan originator, depositor or borrower of the Holding Company or the Bank to become a customer, referral source, loan originator, depositor or borrower of another financial institution. Executive further agrees that for a period of twelve (18) months after the termination of his employment hereunder for any reason, he will not directly or indirectly participate in the solicitation of any employee, consultant or agent of the Bank to cease their employment with the Bank or to accept employment or a consulting or agency position with any other person or entity.
12. No Improper Use of Information of Prior Employers and Others. Executive agrees not to improperly use or disclose any confidential information or trade secrets, if any, of any current employer (prior to being employed by the Bank) and any former employer or any other person to whom Executive has an obligation of confidentiality, and Executive will not bring onto the premises of the Bank, nor use for the benefit of the Bank, any property belonging to any former employer or any other person to whom Executive has an obligation of confidentiality unless consented to in writing by that former employer or person. Executive will use in connection with his Employment with the Bank only information which is generally known and used by persons with training and experience comparable to Executive’s training and experience, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Bank.
13. Waiver of Breach. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach, nor shall any waiver of any provision of this Agreement in any instance shall be deemed to be a waiver of any other provision in any other instance.
14. Representation by Counsel. The Executive represents and warrants to the Holding Company and the Bank that he has been advised to retain legal counsel in connection with the preparation, negotiation and execution of the Agreement.
15 Governing Law. The Term of this Agreement shall be governed by, and interpreted and construed in accordance with the laws of Utah applicable to agreements made and fully to be performed in such state. Notwithstanding the foregoing, in the event that Executive initiates a lawsuit against the Bank, Executive shall initiate such lawsuit in Salt Lake County, State of Utah. In the event that the Bank initiates a lawsuit against the Executive, the Bank shall initiate that lawsuit in state or federal courts located in the State of New York.
16. Entire Agreement; Amendment. This Agreement sets forth the entire understanding of the parties hereto with respect to its subject matter and supersedes all prior agreements, negotiations and understandings, written or oral, with respect to matters covered hereby. The amendments or termination of this Agreement may be made only in a writing executed by the Holding Company, the Bank and the Executive, and no amendment or termination of this Agreement shall be effective unless and until made in such a writing.
17. Assignment. This Agreement is personal to the Executive and the Executive may not assign any of his rights or duties hereunder, but this Agreement shall be enforceable by the Executive’s legal representatives, executors or administrators. This Agreement may be assigned by the Holding Company and/or the Bank to any entity which acquires all or substantially all of the assets of the Holding Company existing at the time of such acquisition, or with or into which the Holding Company is consolidated or merged.
18. Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
19. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and together shall constitute one and the same instrument.
[Signatures on next page]
IN WITNESS WHEREOF, the Holding Company and the Bank have caused this Agreement to be signed by its duly authorized officer, and the Executive has executed this Agreement, as of the day and year first written above.
ALL WEST BANCORP | ||
By: | /s/ Kent Landvatter | |
Name: | Kent Landvatter | |
Title: | Chief Executive Officer | |
FinWise BANK | ||
By: | /s/ Kent Landvatter | |
Name: | Kent Landvatter | |
Title: | President | |
EXECUTIVE | ||
By: | /s/ David Tilis | |
Name: | David Tilis |
(a)
|
The execution, delivery and performance by Bancorp of this Agreement and the consummation by Bancorp of the transactions contemplated by this Agreement and the Purchase Agreement are within its corporate
powers and have been duly authorized by all necessary corporate action on its part. This Agreement constitutes a legal, valid and binding agreement of Bancorp enforceable against Bancorp in accordance with its terms (i) except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, including the effect of statutory and other laws regarding
fraudulent conveyances and preferential transfers, and (ii) subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity); and
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(b)
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The execution, delivery and performance of this Agreement by Bancorp does not and will not contravene or conflict with or constitute a default under Bancorp’s articles of incorporation or by-laws.
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(a)
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The execution, delivery and performance by BFG of this Agreement and the consummation by BFG of the transactions contemplated by this Agreement are within its corporate powers and have been duly authorized
by all necessary corporate action on its part. This Agreement constitutes a legal, valid and binding agreement of BFG enforceable against BFG in accordance with its terms (i) except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, including the effect of statutory and other laws regarding fraudulent conveyances and preferential
transfers, and (ii) subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity);
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(b)
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The execution, delivery and performance of this Agreement by BFG does not and will not contravene or conflict with or constitute a default under BFG’s certificate of incorporation or by-laws; and
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(c)
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BFG “beneficially owns” (as such term is defined in Rule 13d-3 under the 1934 Act) 20,685 shares of Common Stock and neither BFG nor any “affiliate” or “associate” (as such terms are defined in Rule 12b-2
under the 1934 Act), owns any other Voting Securities (as defined in Section 2.01 herein) except for any Voting Securities held in any account managed for the benefit of another person by any member of the Financial Services Group (as
defined in Section 3.01).
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(a)
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acquire, offer to acquire, or agree to acquire, by purchase, gift or otherwise, any Voting Securities, except pursuant to a stock split, stock dividend, rights offering, recapitalization, reclassification or
similar transaction;
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(b)
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make, or in any way participate in any “solicitation” of “proxies” to vote (as such terms are defined in Rule 14a-1 under the 1934 Act), solicit any consent or communicate with or seek to advise or influence any person or entity with
respect to the voting of any Voting Securities or become a “participant” in any “election contest” (as such terms are defined or used in Rule 14a-11 under the 1934 Act) with respect to Bancorp;
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(c)
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form, join or encourage the formation of, any “person” within the meaning of Section 13(d)(3) of the 1934 Act with respect to any Voting Securities;
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(d)
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deposit any Voting Securities into a voting trust or subject any such Voting Securities to any arrangement or agreement with respect to the voting thereof;
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(e)
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initiate, propose or otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to Bancorp as described in Rule 14a-8 under the 1934 Act, or induce or attempt to induce
any other person to initiate any stockholder proposal;
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(f)
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except for this Agreement, seek election to or seek to place a representative on the Board of Directors of Bancorp (other than pursuant to Section 3.02 hereof) or except with the approval of management of
Bancorp, seek the removal of any member of the Board of Directors of Bancorp;
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(g)
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except with the approval of management of Bancorp, call or seek to have called any meeting of the stockholders of Bancorp;
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(h)
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except through its representatives on the Board of Directors (or any committee thereof) of Bancorp and except as otherwise contemplated by the Transaction Documents otherwise act to seek to control, disrupt
or influence the management, policies or affairs, of Bancorp except with the approval of management of Bancorp;
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(i)
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sell or otherwise transfer in any manner any Voting Securities to any “person” (within the meaning of Section 13(d)(3) of the 1934 Act) who owns or who as a result of such sale or transfer will own more than
five percent (5%) of any class of Voting Securities or who, without the approval of the Board of Directors of Bancorp, has proposed a business combination or similar transaction with, or a change of control of, Bancorp or who has
proposed a tender offer for Voting Securities or who has discussed the possibility of proposing a business combination or similar transaction with, or a change in control of, Bancorp with BFG or any of its respective affiliates or
associates;
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(j)
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solicit, seek to effect, negotiate with or provide any information to any other party with respect to, or make any statement or proposal, whether written or oral, to the Board of Directors of Bancorp or any
director or officer of Bancorp or otherwise make any public announcement or proposal whatsoever with respect to, any form of business combination transaction involving Bancorp, including, without limitation, a merger, exchange offer or
liquidation of Bancorp’s assets, or any restructuring, recapitalization or similar transaction with respect to Bancorp; or
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(k)
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solicit, seek to effect, negotiate or file an application with federal and state banking regulators for a change of control of the Bancorp or proposal whatsoever with respect to, any form of business
combination transaction involving a change of control of Bancorp or its subsidiary (the “Bank”), including, without limitation, a merger, exchange offer or liquidation of Bancorp’s or Bank’s assets, or any restructuring,
recapitalization or similar transaction with respect to Bancorp or Bank unless and until such action has been approved by Bancorp’ s Board of Directors, in the sole discretion of the Board; or
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(l)
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instigate or encourage any third party to do any of the foregoing.
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(a)
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Subject to the provisions of Section 3.01, if BFG desires to transfer any Voting Securities it shall give written notice (“BFG’s Notice”) to Bancorp (i) stating that it desires to make such transfer, and
(ii) setting forth the number of shares of Voting Securities proposed to be transferred (the “Offered Shares”), the cash price per share that BFG proposes to be paid for such Offered Shares (the “Offer Price”), and the other material
terms and conditions of such transfer. BFG’s Notice shall constitute an irrevocable offer by BFG to sell to Bancorp the Offered Shares at the Offer Price in cash.
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(b)
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Within 60 Days after receipt of BFG’s Notice, Bancorp may elect to purchase all (but not less than all) of the Offered Shares at the Offer Price in cash by delivery of a notice (“Bancorp’s Notice”) to BFG
stating Bancorp’s irrevocable acceptance of the Offer.
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(c)
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If Bancorp fails to elect to purchase all of the Offered Shares within the time period specified in Section 4.0l(b), then BFG may, within a period of 120 days following the expiration of the time period
specified in Section 4.0l(b), transfer (or enter into an agreement to transfer) all or any Offered Shares; provided that if the purchase, price per share to be paid by any purchaser of the Offered Shares is not less than the Offer
Price.
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(d)
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If Bancorp fails to elect to purchase the Offered Shares at the Offer Price within the relevant time period specified in Section 4.0l(b) and BFG shall not have transferred or entered into an agreement to
transfer the Offered Shares prior to the expiration of the 120-day period specified in Section 4.0l(c), the right of first offer under this Section 4.01 shall again apply in connection with any subsequent transfer of such Offered
Shares.
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(e)
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Any purchase of Voting Securities by Bancorp pursuant to this Section 4.01 shall be on a mutually determined closing date which shall not be more than 15 days after the last notice is given with respect to
such purchase. The closing shall be held at 10:00 a.m., local time, at the principal office of Bancorp, or at such other time or place as the parties mutually agree.
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(f)
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On the closing date, BFG shall deliver (i) certificates representing the shares of Voting Securities being sold, free and clear of any lien, claim or encumbrance, and (ii) such other documents, including
evidence of ownership and authority, as Bancorp may reasonably request. The purchase price shall be paid by wire transfer of immediately available funds no later than 2:00 p.m. on the closing date.
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(g)
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Notwithstanding the foregoing, BFG agrees not to sale the Voting Securities to any Restricted Person (as defined below) without the prior written consent of Bancorp, which consent may be withheld for any
reason or for no reason. BFG gives Bancorp the right to purchase the Offered Shares at the Offer Price (or Reduced Transfer Price, as the case may be) within 90 days from the date of notice from BFG of the proposed sale at which the
Restricted Person agreed to purchase the Offered Shares. If Bancorp fails to purchase the Offered Shares within such 90-day period, BFG shall be permitted to proceed with its sale to such Restricted Person in accordance with Section
4.01 (c). “Restricted Person” shall mean a person who is a significant competitor of Bancorp or the Bank or whose ownership of Voting Securities of Bancorp would cause a change in control of Bancorp.
|
(a)
|
BFG, on the one hand, and Bancorp, on the other, acknowledge and agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. Accordingly, the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically its provisions in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they may be entitled at law or in equity.
|
(b)
|
Bancorp and BFG each irrevocably agrees that any legal action or proceeding against it with respect to this Agreement and any transaction contemplated by this Agreement may be brought in the courts of the
State of Utah, or of the United States of America for the Northern District of Utah, and by execution and delivery of this Agreement.
|
|
(a) If to Bancorp, to:
|
|
|
|
|
All West Bancorp |
|
|
|
820 East 9400 South
|
|
Sandy, UT 84094 |
|
(b) If to BFG, to:
|
|
|
|
|
Business Funding Group, LLC
|
|
|
|
261 Madison Avenue
|
|
New York, New York 10016 |
ALL WEST BANCORP
|
||
By:
|
|
|
Its:
|
CEO/President
|
BUSINESS FUNDING GROUP, LLC
|
||
By:
|
|
|
Its:
|
Managing Member
|
TO COMPANY:
|
Jarret Prussin
|
Business Funding Group, LLC
|
|
3 Harbor View Ave
|
|
Norwalk, CT 06854
|
TO ANY MEMBER:
|
Steve Rabinovici
|
Business Funding Group, LLC
|
|
3 Harbor View Ave
|
|
Norwalk, CT 06854
|
TO BANCORP:
|
All West Bancorp
|
756 Winchester, 1st Floor
|
|
Murray, UT 84107
|
COMPANY:
|
BANCORP:
|
|||
Business Funding Group, LLC
|
ALL West Bancorp, Inc.
|
|||
By:
|
/s/ Steven Rabinovici
|
By:
|
/s/ Kent Landvatter
|
|
Name/Title:
|
Kent Landvatter, President
|
|||
Steven Rabinovici , Chairman
|
MEMBERS:
|
||
/s/ Yaakov Markowitz
|
/s/ John Sikura
|
|
Yaakov Markowitz
|
John Sikura
|
|
/s/ Scott Caruthers
|
/s/ Alan Smith
|
|
Scott Caruthers
|
Alan Smith
|
Rabinovici Family, LLC
|
JBNA, LLC
|
|||
By:
|
/s/ Steven Rabinovici
|
By:
|
/s/ Jim Giordano
|
|
Name:
|
Steven Rabinovici
|
Name:
|
Jim Giordano
|
|
Title:
|
Chairman
|
Title:
|
CEO
|
|
Address:
|
48 Country Dr Plainview, NY
|
Address:
|
208 Harristowm Rd, Glen Rock, NJ
|
Menchem Wilenkin, LLC
|
Nyrmac , LLC
|
|||
By:
|
/s/ Mendy Wilenkin
|
By:
|
/s/ Jarret Prussin
|
|
Name:
|
Mendy Wilenkin
|
Name:
|
Jarret Prussin
|
|
Title:
|
Partner
|
Title:
|
Partner
|
|
Address:
|
1441 President St Brooklyn, NY
|
Address:
|
17 Dexter Road Westport CT 06880
|
Tesla Trust
|
Aroma, LLC
|
|||
By:
|
/s/ Lyndi Adler
|
By:
|
/s/ Alan Weichselbaum
|
|
Name:
|
Lyndi Adler
|
Name:
|
Alan Weichselbaum
|
|
Title:
|
Director
|
Title:
|
Member
|
|
Address:
|
27 Macqurate Pl, Sydney NSW 2000
|
Address:
|
50 Sealy Drive, Lawrence, NY 11559
|
OIC Nominees Limited
|
||
By:
|
/s/ Paul Brown
|
|
Name:
|
Paul Brown
|
|
Title:
|
Director
|
|
Address:
|
4 rue des acores, Monaco MC 98000
|
Name of Member
|
Allocation Percentage
|
Warrants
|
||
Rabinovici Family, LLC
|
20.29%
|
9,130
|
||
Nyrmac, LLC
|
17.51%
|
7,880
|
||
Yaakov Markowitz
|
17.51%
|
7,880
|
||
Mendy Wilenkin LLC
|
17.51%
|
7,880
|
||
Lynda Sharon Adler
|
15.21%
|
6,845
|
||
OIC Nominees Limited
|
2.30%
|
1,035
|
||
Aroma LLC
|
2.22%
|
1,000
|
||
JBNA LLC
|
4.44%
|
2,000
|
||
John Sikura
|
1.00%
|
450
|
||
Scott Caruthers
|
1.00%
|
450
|
||
Alan Smith
|
1.00%
|
450
|
||
Totals
|
100.000%
|
45,000
|
All West Bancorp
|
||
By:
|
||
Kent Landvatter, President |
Signature:
|
||
(signature must conform in all respects to name of
Holder as specified on the face of the Warrant
Certificate.)
|
Name of Assignee
|
Address
|
No. of Common Shares
|
By:
|
ARTICLE I. SALE AND PURCHASE OF MEMBERSHIP INTEREST
|
1
|
|
1.1 Sale and Purchase of Membership Interest
|
1
|
|
ARTICLE II. PAYMENT OF PURCHASE PRICE
|
2
|
|
2.1 Payment of Purchase Price for Membership Interests
|
2
|
|
ARTICLE III. THE CLOSING
|
2
|
|
3.1 Time and Place of Closing
|
2
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND BENEFICIAL OWNERS REGARDING THE COMPANY
|
2
|
|
4.1 Organization, Standing and Authorization
|
3
|
|
4.2 Absence of Conflicting Agreements
|
3
|
|
4.3 Consents
|
3
|
|
4.4 Membership Interests
|
4
|
|
4.5 Assets
|
4
|
|
4.6 Contracts
|
4
|
|
4.7 Financial Statements
|
5
|
|
4.8 Material Changes
|
5
|
|
4.9 Licenses; Permits
|
5
|
|
4.10 Title, Condition of Personal Property
|
6
|
|
4.11 Legal Proceedings
|
6
|
|
4.12 Employees
|
6
|
|
4.13 Undisclosed Liabilities
|
6
|
|
4.14 ERISA
|
7
|
|
4.15 Insurance and Surety Agreements
|
7
|
|
4.16 Absence of Certain Events
|
7
|
|
4.17 Compliance with Laws
|
8
|
|
4.18 Real Property
|
8
|
|
4.19 Taxes
|
8
|
|
4.20 Encumbrances Created by this Agreement
|
10
|
|
4.21 Environmental Matters
|
10
|
|
4.22 Affiliate Transactions
|
10
|
|
4.24 Power and Authority
|
11
|
|
4.25 Binding Effect
|
11
|
|
4.26 Finders
|
11
|
|
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER
|
11
|
|
5.1 Organization; Good Standing and Qualification
|
11
|
|
5.2 Subsidiaries
|
12
|
|
5.3 Capitalization
|
12
|
|
5.4 Authorization
|
12
|
|
5.5 Financial Statements and Call Reports
|
13
|
|
5.6 No Material Changes
|
13
|
|
5.7 Material Contracts
|
14
|
|
5.8 Intellectual Property
|
14
|
|
5.9 Title to Properties and Assets; Liens
|
15
|
5.10 Compliance with Other Instruments
|
15
|
|
5.11 Litigation
|
15
|
|
5.12 Governmental Consent
|
15
|
|
5.13 Permits
|
16
|
|
5.14 Tax Returns and Payments
|
16
|
|
5.15 Insurance
|
16
|
|
5.16 Corporate Documents
|
16
|
|
5.17 Environmental Laws
|
16
|
|
5.18 Employees
|
17
|
|
5.19 Absence of Conflicting Agreements
|
17
|
|
5.20 Consents
|
17
|
|
5.21 Assets
|
17
|
|
5.22 Brokers or Finders
|
17
|
|
ARTICLE VI – REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE BENEFICIAL OWNERS FOR THEMSELVES
|
18
|
|
6.1 No Registration
|
18
|
|
6.2 Investment Intent
|
18
|
|
6.3 Investment Experience
|
18
|
|
6.4 Investment Risk
|
18
|
|
6.5 Access to Data
|
18
|
|
6.6 Accredited Investor
|
18
|
|
6.7 Residency
|
19
|
|
6.8 Rule 144 and Stock Transfer Restrictions
|
19
|
|
6.9 No Public Market
|
19
|
|
6.10 Authorization
|
19
|
|
6.11 Brokers or Finders
|
20
|
|
6.12 Tax Advisors
|
20
|
|
6.13 Legends
|
20
|
|
6.14 Beneficial Owners
|
21
|
|
6.15 Non-Foreign Person
|
21
|
|
ARTICLE VII OBLIGATIONS OF THE PARTIES UNTIL CLOSING
|
21
|
|
7.1 Conduct of Business
|
21
|
|
7.2 Negative Covenants of the Company and Buyer
|
21
|
|
7.3 Access to Information and Records before Closing
|
22
|
|
ARTICLE VIII. CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONS
|
22
|
|
8.1 Representations and Warranties
|
22
|
|
8.2 Performance of Covenants
|
22
|
|
8.3 Legal Matters
|
22
|
|
8.4 Authorization Documents from Company
|
23
|
|
8.5 Officer Certificate
|
23
|
|
8.6 Certificate of Managing Member of Company
|
23
|
|
8.7 Amendment of Company’s Operating Agreement
|
23
|
|
8.8 Approvals
|
23
|
|
8.9 No Material Adverse Effect
|
23
|
|
8.10 Authorization Documents from Exchangors
|
23
|
8.11 Certificate of Company
|
23
|
|
8.12 [Reserved]
|
23
|
|
8.13 Compliance with Securities Laws
|
24
|
|
8.14 Other Documents
|
24
|
|
ARTICLE IX. CONDITIONS PRECEDENT TO SELLERS’ OBLIGATIONS
|
24
|
|
9.1 Representations and Warranties
|
24
|
|
9.2 Performance of Covenants
|
24
|
|
9.3 Legal Matters
|
24
|
|
9.4 Authorization Documents from Buyer
|
24
|
|
9.5 Officer Certificate
|
24
|
|
9.6 Certificate of Representative
|
24
|
|
9.7 Approvals
|
25
|
|
9.8 Regulatory Approval
|
25
|
|
9.9 Other Documents
|
25
|
|
ARTICLE X. SURVIVAL AND INDEMNIFICATION
|
25
|
|
10.1 Survival of Representations, Warranties and Covenants
|
25
|
|
10.2 Indemnification by Sellers
|
25
|
|
10.3 Indemnification by Buyer
|
26
|
|
10.4 Assertion of Claims
|
26
|
|
10.5 Control of Defense of Indemnifiable Claims
|
26
|
|
10.6 Limitations
|
27
|
|
10.7 Exclusions
|
28
|
|
ARTICLE XI. TERMINATION
|
28
|
|
11.1 Termination
|
28
|
|
11.2 Effect of Termination
|
28
|
|
ARTICLE XII. MISCELLANEOUS
|
28
|
|
12.1 Costs and Expenses
|
28
|
|
12.2 Benefit and Assignment
|
28
|
|
12.3 Effect and Construction of this Agreement
|
28
|
|
12.4 Cooperation - Further Assistance
|
29
|
|
12.5 Notices
|
29
|
|
12.6 Waiver, Discharge, Etc.
|
29
|
|
12.7 Rights of Persons Not Parties
|
30
|
|
12.8 Governing Law
|
30
|
|
12.9 Amendments, Supplements, Etc.
|
30
|
|
12.10 Severability
|
30
|
|
12.11 Force Majeure
|
30
|
|
12.12 Counterparts
|
30
|
|
12.13 Share Transfer Restrictions
|
30
|
|
12.14 NYRMAC Exchange
|
31
|
Company Schedules
|
||
Schedule 2.1
|
-
|
Sellers
|
Schedule 4.1(a)
|
-
|
Articles of Organization & Amended and Restated Operating Agreement
|
Schedule 4.2
|
-
|
Conflicting Agreements
|
Schedule 4.3
|
-
|
Consents
|
Schedule 4.4(a)
|
-
|
Equity Interests
|
Schedule 4.5
|
-
|
Assets
|
Schedule 4.6
|
-
|
Contracts
|
Schedule 4.7(a)
|
-
|
Financial Statements
|
Schedule 4.7(b)
|
-
|
Exceptions to Financial Statements
|
Schedule 4.10
|
-
|
Title, Condition of Personal Property
|
Schedule 4.11
|
-
|
Legal Proceedings
|
Schedule 4.12(a)
|
-
|
Employee Payroll
|
Schedule 4.12(b)
|
-
|
Collective Bargaining Agreements
|
Schedule 4.18
|
-
|
Real Property
|
Schedule 4.19
|
-
|
Taxes
|
Schedule 4.21
|
-
|
Environmental Matters
|
Schedule 4.22(a)
|
-
|
Obligations to Seller or Beneficial Owner
|
Schedule 4.22(b)
|
-
|
Obligations to Related Parties
|
Buyer Schedules
|
||
Schedule 5.3
|
-
|
Capitalization
|
Schedule 5.5(a)
|
-
|
Financial Statements
|
Schedule 5.5(b)
|
-
|
Call Report
|
Schedule 5.6
|
-
|
No Material Changes
|
Schedule 5.9
|
-
|
Permitted Liens
|
Schedule 5.11
|
-
|
Legal Proceedings
|
Schedule 5.16
|
-
|
Corporate Documents
|
Schedule 5.18
|
-
|
Employee Matters
|
Schedule 5.19
|
-
|
Conflicting Agreements
|
Schedule 5.20
|
-
|
Consents
|
Schedule 5.21
|
-
|
Assets
|
Exchangor Schedules
|
||
Schedule 6.14
|
-
|
Beneficial Owners
|
Schedule 6.15
|
-
|
Non-Foreign Person
|
Exhibits
|
||
Exhibit 8.12
|
-
|
FIRPTA
|
If to the Buyer:
|
All West Bancorp, Inc.
756 Winchester, 1st Floor
Murray, Utah 84107
Attn: Kent Landvatter |
|
with a copy to:
|
R. Gary Winger
Kirton & McConkie
50 E. South Temple, Suite 400
Salt Lake City, UT 84111
|
|
If to the Members:
|
Business Funding Group, LLC
17 Dexter Road
Westport, CT 06880
|
|
with a copy to:
|
Kurzman Eisenberg Corbin & Lever, LLP
One North Broadway, 12th Floor
White Plains, NY 10601
Attn: Kenneth S. Rose, Esq.
|
BUYER:
|
|||
ALL WEST BANCORP, INC.
|
|||
By:
|
/s/ Illegible
|
||
Its:
|
CEO/President
|
||
THE COMPANY:
|
|||
BUSINESS FUNDING GROUP, LLC
|
|||
By: |
|
||
Its: |
|
BUYER:
|
|
ALL WEST BANCORP, INC.
|
|
By:
|
|
Its:
|
|
THE COMPANY:
|
|
BUSINESS FUNDING GROUP, LLC
|
|
By: /s/ Steven Rabinovici
|
|
Steven Rabinovici, Managing Member
|
SELLERS:
|
|
/s/ Yaakov Markowitz
|
|
Yakov Markowitz
|
|
NYRMAC, LLC
|
|
By:
|
|
Jarret Prussin, Member | |
MENDY WILENKIN, LLC
|
|
By:
|
|
Menachem Wilenkin, Member
|
|
OIC NOMINEES LIMITED
|
|
By:
|
|
Paul Brown, Member |
SELLERS:
|
|
|
|
Yaakov Markowitz
|
|
NYRMAC, LLC
|
|
By: /s/ Jarret Prussin
|
|
Jarret Prussin, Member
|
|
MENDY WILENKIN, LLC
|
|
By:
|
|
Menachem Wilenkin, Member
|
|
OIC NOMINEES LIMITED
|
|
By:
|
|
Paul Brown, Member
|
|
SELLERS:
|
Yaakov Markowitz
|
|
NYRMAC, LLC
|
|
By:
|
|
Jarret Prussin, Member
|
|
MENDY WILENKIN, LLC
|
|
|
|
By: /s/ Menachem Wilenkin
|
|
Menachem Wilenkin, Member | |
OIC NOMINEES LIMITED
|
|
By:
|
|
Paul Brown, Member
|
SELLERS:
|
|
Yaako Markowilz
|
|
NYRMAC, LLC
|
|
|
|
By:
|
|
Jarret Prussin, Member | |
MENDY WILENKIN, LLC
|
|
|
|
By:
|
|
Menachem Wilenkin, Member
|
|
OIC NOMINEES LIMITED
|
|
By: /s/ Paul Brown
|
|
Paul Brown, Member
|
BENEFICIAL OWNER OF
NYRMAC,LLC
|
|
/s/ Jarret Prussin
|
|
Jarret Prussin
|
|
BENEFICIAL OWNER OF
OIC NOMINEES LIMITED
|
|
Paul Brown
|
|
BENEFICIAL OWNER OF
|
|
MENDY WILENKIN, LLC
|
|
|
|
Menachem Wilenkin
|
BENEFICIAL OWNER OF
|
|
NYRMAC, LLC
|
|
Jarret Prussin
|
|
BENEFICIAL OWNER OF
OIC NOMINEES LIMITED
|
|
/s/ Paul Brown
|
|
Paul Brown
|
|
BENEFICIAL OWNER OF
MENDY WILENKIN, LLC
|
|
Menachem Wilenkin
|
BENEFICIAL OWNER OF
|
|
NYRMAC, LLC
|
|
Jarret Prussin
|
|
BENEFICIAL OWNER OF
OIC NOMINEES LIMITED
|
|
Paul Brown
|
|
BENEFICIAL OWNER OF
MENDY WILENKIN, LLC
|
|
/s/ Menachem Wilenkin
|
|
Menachem Wilenkin
|
Sublandlord:
1303 East Algonquin Road, 3rd Floor
Schaumburg, IL 60196 Attention: Global Real Estate Lease
Administration
|
Subtenant:
All West Bancorp
756 East Winchester Street, Suite 100
Murray, Utah 84107
Attn: Javvis Jacobson
|
||
with a copy to:
500 West Monroe St, 37th Floor
Chicago, IL 60661
Attention: Global Real Estate
|
with a copy to:
All West Bancorp
756 East Winchester Street, Suite 100
Murray, Utah 84107
Attn: Teralea Monroe
|
SUBLANDLORD:
|
|||
Motorola Solutions, Inc.
|
|||
By:
|
|
||
Name: Rita Rojas
|
|||
Title: Authorized Representative
|
SUBTENANT:
|
|||
All West Bancorp
|
|||
By:
|
|
||
Name: Kent Landvatter
|
|||
Title: President/CEO
|
Months
|
Annual
Rent/SF
|
Monthly Rent
|
||||||
1-12
|
$
|
18.00
|
$
|
28,353.00
|
||||
13-24
|
$
|
18.54
|
$
|
29,203.59
|
||||
25-[Last month of the Term]
|
$
|
19.10
|
$
|
30,079.70
|
Exhibit 10.11
LEASE AGREEMENT
THIS LEASE AGREEMENT is entered in this 27 day of January, 1999, by and between Mariemont Holdings, L.L.C., herein call “Landlord,” and Utah Community Bank, which also does business under the name Utah Community Bank, herein called “Tenant”.
In consideration of the rent, covenants and agreements hereinafter set forth, the Landlord demises and leases to the Tenant, and the Tenant rents from Landlord, the hereinafter described premises upon the following terms and conditions:
1. Fundamental Lease Terms. The Fundamental Lease Terms set forth below shall have the following definitions and meanings when they appear in the body of this Lease Agreement as if fully set forth therein:
Shopping Center: | The Sandy Mall located in Sandy City, Salt Lake County, State of Utah at the intersection of 9400 South and 700 East Street. |
Premises: | Space Number- Pad A- in the Sandy Mall as more fully described and shown on Exhibit “A” containing approximately Four Thousand Four Hundred Eighty Four (4,484) square feet. |
Permitted use of Premises: | The Premises shall be used only for: |
Community Banking Services | |
Lease Term: | Five (-5-) consecutive Lease Years (plus the partial calendar month, if any, prior to the first Lease year). |
Commencement Date: | See Section 3.1 below. |
Minimum Monthly Rent: | See Exhibit “D”------------------------ Dollars ($_----_) per month, which amount is subject to being increased from time to time as provided in Article 4 of this Lease. |
Percentage Rent: | N/A percent (-- %) of Gross Sales as defined in Article 5 of this Lease in excess of Minimum Monthly Rent. |
Competition: | (2) mile radius from the outside boundary of the Shopping Center. |
Address for Notices:
To: Landlord: | To Tenant: |
Mariemont Holdings, L.L.C. | K. Vincent Bluth |
c/o Milcom, Inc. | Utah Community Bank |
329 West Pierpont Avenue, #200 | 820 E. 9400 S. |
Salt Lake City, Utah 84101-1712 | Sandy, Utah 84094 |
2. | PREMISES |
In consideration of the rents, covenants and agreements contained herein, Landlord leases to Tenant, and Tenant leases from Landlord certain commercial space comprising a building or portion of a building. The leased commercial space is referred to herein as the “Premises”. The location, approximate dimensions, and approximate area of the Premises are delineated red on Exhibit “A” attached hereto and incorporated herein.
3. | TERM |
3.1 Commencement Date and Lease Term. The Lease Term and Tenant’s obligation to pay rent hereunder shall commence upon the earlier of: (a) thirty (30) days after the Tenant obtains approvals to operate a banking business on the Premises from the Utah Division of Financial Institutions and the Federal Deposit Insurance Corporation, or (b) the date Tenant opens for business. If such approvals are not obtained on or before May 1, 1999, then Landlord shall have the right to terminate this Lease upon written notice to Tenant at any time thereafter. If such approvals are not obtained on or before August 1, 1999, or if such approvals are declined, then this lease shall terminate automatically without further action by Landlord or Tenant. Unless sooner terminated pursuant to other provisions herein, the Lease Term shall continue for the Lease Term stated in Section 1 and shall end at midnight on the last day of the last Lease Year of the Lease Term.
3.2 Lease Year. The term “Lease Year” as used herein shall mean a period of twelve (12) full consecutive calendar months, beginning on the first day of the calendar month coinciding with or immediately following the Commencement Date.
3.3
Tenant’s Certificate. From time to time during the term upon written request by Landlord, Tenant shall execute and, within fifteen (15) days following such request, deliver to Landlord a written certificate: (1) ratifying this Lease; (2) expressing the Commencement Date and Termination Date hereof; (3) certifying that this Lease is in full force and effect and has not been assigned, modified, or amended (except by such writings as shall be described); (4) stating that all conditions under this Lease to be performed by Landlord have been so performed or have been waived by Tenant (or stating which conditions remain unsatisfied); (5) stating that there are no defenses or offsets against the enforcement of this Lease by Landlord, or stating such defenses and offsets as are then claimed by Tenant; (6) stating the amount of any advance rentals then paid by Tenant; (7) stating the date to which rentals have been paid; (8) setting forth the amount of any security deposited with Landlord; and (9) setting forth such other information as Landlord may reasonably request. Landlord, Landlord’s mortgage lenders and any purchasers of all or a portion of the Shopping Center shall be entitled to rely upon such certificate.
4. | MINIMUM MONTHLY RENT |
4.1
Monthly Rent. Subject to the abatement provisions Tenant agrees to pay to Landlord at such place as Landlord may designate, without prior demand therefore and without any deduction or setoff whatsoever, as fixed minimum guaranteed rent on a monthly basis (“Minimum Monthly Rent”), the sum set forth as a Fundamental Lease Term, in lawful money of the United States of America, in advance on the first day of each calendar month during the term of the Lease. Proportionate amounts of the other expenses to be paid by Tenant under Article 6 shall be paid at the same time as, and with, the Minimum Monthly Rent. Rent and other charges are due on the first of the month, and considered late on the second of the month. Upon the signing of this Lease Agreement, Tenant agrees to pay Landlord the first and last month’s Minimum Monthly Rent. In the event that the Commencement Date occurs on a day other than the first day of a month, then the Monthly Rent for the initial fractional month shall be prorated on a per diem basis.
4.2
Adjustment to Minimum Monthly Rent. The fixed Minimum Monthly Rental set forth above shall be subject to being increased in accordance with changes in the Consumer Price Index (referred to herein as the “Price Index” and defined in Section 31.12). The Price Index for the most recent month available immediately preceding the Commencement Date shall be designated as the “Base Price Index”. The Minimum Monthly Rent shall be increased in accordance with the following provisions: As of the first day of each full Lease Year, the Minimum Monthly Rental set forth above shall be adjusted by multiplying such monthly rental by a fraction, the numerator of which is the Price Index for the most recent month available at the beginning of each such Lease Year and the denominator of which is the Base Price Index. Tenant shall then pay the resulting adjusted Minimum Monthly Rental for the entire Lease Year, but in no event shall such adjustment reduce the Minimum Monthly Rental. Landlord shall give Tenant written notice of the adjusted rent; provided, however, that failure to give timely notice shall in no way result in a waiver of, or otherwise preclude Landlord from collecting the full amounts of, all rental adjustments, whether retroactively or otherwise, after such notice is given.
5. | PERCENTAGE RENT |
6. | ADDITIONAL RENT |
6.1
General. It is the intent of both parties that the Minimum Monthly Rent and Percentage Rent herein specified shall be absolutely net to Landlord throughout each Lease Year of the term of this Lease, that all costs, expenses, and obligations of every kind relating to the Premises which may arise or become due during the term hereof shall be paid by Tenant and that Landlord shall be indemnified by Tenant against such costs, expenses, and obligations. In furtherance thereof, Tenant shall pay additional rent, without demand therefor and without setoff or deduction, its Proportionate Share of expenses and charges as set forth below, plus, 10% of such expenses and charges to cover administrative and overhead costs. All taxes, charges, costs, and expenses which Tenant is required to pay hereunder, together with interest and penalties that may accrue thereon in the event of Tenant’s failure to pay such amounts, and all damages, costs, and expenses which Landlord may incur by reason of any default of Tenant or failure on Tenant’s part to comply with the terms of this Lease, shall be deemed to be additional rent and, in the event of nonpayment by Tenant, Landlord shall have all the rights and remedies with respect thereto as Landlord has for the nonpayment of the Minimum Monthly Rent. The “Proportionate Share” of Tenant shall be obtained by multiplying the expense in question by a fraction, the numerator of which shall be the square-foot area of the Premises and the denominator of which shall be the square-foot area of all space leased in the Shopping Center.
Tenant’s Proportionate Share of the expenses and charges set forth below shall be computed on the basis of periods of twelve (12) consecutive calendar months as designated by Landlord and estimated payments toward the same shall be made by Tenant in equal installments in advance on the first day of each calendar month in an amount to be established by Landlord with Tenant’s payment of Minimum Monthly Rent. Within sixty (60) days after the end of each twelve (12) month period Landlord shall furnish to Tenant a statement showing the Shopping Center’s actual expenses and charges for the preceding period and any adjustments to be made as a result thereof. In the case of deficiency, Tenant shall within ten (10) days remit the amount of such deficiency to Landlord. In the case of a surplus, Landlord shall apply Tenant’s share of such surplus to payments next falling due from Tenant under this Article.
6.2
Taxes.
(a) Tenant shall pay its Proportionate Share of all taxes, assessments, levies, and charges, whether special, extraordinary, or otherwise, whether foreseen or unforeseen, which may be levied, assessed, or imposed upon, on account of or with respect to: (i) the ownership of, and/or all other taxable interests in, all land situated in the Shopping Center; (ii) all buildings, structures, and other improvements situated thereon; (iii) rents or rental income, whether such tax be levied on the Landlord or the Tenant.
(b) The amount of real estate taxes upon which such payment is based shall be the amount reflected in the most current notice(s) of assessment or tax bill(s) concerning the entire Shopping Center or, if there are none, such amount as Landlord may reasonably estimate. Tenant at all times shall be responsible for and shall pay, before delinquency, all municipal, county, state, or federal taxes assessed against any leasehold interest or any personal property of any kind owned, installed or used by Tenant. Should the taxing authorities include in such real estate taxes the value of any improvements made by Tenant, or include machinery, equipment, fixtures, inventory, or other personal property of Tenant, then Tenant shall also pay the entire real estate taxes for such items. A tax bill submitted by Landlord to Tenant shall be conclusive evidence of the amount of taxes assessed or levied, as well as items taxed.
6.3
Common Area Expenses. Tenant shall pay to Landlord its Proportionate Share of the Shopping Center’s operating cost. The “Shopping Center’s Operating Cost” means the total cost and expense incurred in operating and maintaining the Common Area, hereinafter defined, excluding only items of expense commonly known and designated as carrying charges, but specifically including, without limitation, utility expenses, personal property taxes and assessments on the Common Area improvements and equipment; premiums on fire and extended insurance coverage, vandalism and plate glass insurance for the Common Areas and all other insurance procured by Landlord pursuant to Article 17; maintenance, repair and replacement of Common Area pavement and mechanical equipment, if any; maintenance and cleaning of the Common Area; gardening and landscaping, repairs, security, line painting, lighting, sanitary control, removal of snow, trash, rubbish, garbage, and other refuse. “Common Areas” means all area, space, equipment, and special services provided for the common or joint use and benefit of the lessees or occupants of the Shopping Center, or portions thereof, their employees, agents, servants, customers, and other invitees, including without limitation, parking areas, driveways, landscaped areas, truck service ways, loading docks, ramps and sidewalks, and washrooms.
7. | ALTERATIONS AND IMPROVEMENTS |
7.1
Alterations and Improvements. Without first obtaining Landlord’s consent, Tenant, its employees, agents, licensees, or contractors shall not (a) make or install any alterations, improvements, additions, or fixtures that affect the exterior of the Premises or any structural, mechanical, or electrical component of the Premises, or (b) mark, paint, drill, or in any way deface any floors, walls, ceilings, partitions, or any wood, stone, or iron work. All alterations and other work consented to by Landlord shall be completed at Tenant’s sole cost and expense in a good and workmanlike manner. Any such alterations and other work shall be completed strictly in accordance with all laws and ordinances related thereto and in accordance with plans and specifications approved by Landlord.
7.2
Title to Alterations and Fixtures. All alterations, improvements, additions, or fixtures, other than trade fixtures not permanently affixed to realty, that may be made or are installed upon the Premises by either of the parties and that in any manner are attached to the floors, walls, or ceilings, shall be the property of Landlord, and, at the expiration or earlier termination of this Lease, shall remain upon and be surrendered with the Premises as a part of the Premises, without disturbance or injury. Any floor covering that may be cemented or otherwise affixed to the floor of the Premises shall be and become the property of Landlord.
7.3
Mechanics’ Liens. Tenant shall pay, when due, all sums of money that may become due or purportedly due for any labor, services, materials, supplies, or equipment alleged to have been furnished or to be furnished to or for Tenant in, at, upon, or about the Premises and which may be secured by any mechanics’, materialmen’s or other lien against the Premises or Landlord’s interest in the Premises and Tenant shall cause each such lien to be fully discharged and released at the time performance of the obligations secured matures or becomes due.
No liens of any character whatsoever created or suffered by Tenant shall in any way or to any extent attach to or affect the rights of Landlord in the Premises or the improvements thereon or the building of which the Premises are a part. No provision of this lease authorizes Tenant to act as an agent of the Landlord for the purpose of installing or contracting for any improvements to the Premises.
7.4 Indemnity. Tenant agrees to indemnify, hold Landlord harmless from, and defend Landlord against any liability, loss, damage, cost, attorneys’ fees and all related expenses arising out of mechanic’s liens or related claims of laborers or materialmen or others for work performed or materials or supplies furnished for Tenant, or persons claiming under Tenant, or to the Premises in the course of any work undertaken by Tenant pursuant to this Lease.
7.5 Signs, Store Front, Roof. Tenant shall not, without Landlord’s prior written consent, (i) make any changes to the store front as shown in the working drawings, or (ii) in stall any exterior lighting, awnings or canopy, or any exterior decorations or paintings, or (iii) install any drapes, blinds, shades or other coverings on exterior windows and doors, or (iv) erect or install any sign, window or door lettering, placards, decorations or advertising media of any type which can be viewed from the exterior of the Premises, excepting only dignified displays of customary type for its display windows. Tenant’s exterior sign plans whether on the Premises or elsewhere in the Shopping Center must be approved by Landlord in writing and shall be in accordance with sign specifications as provided by Landlord. All signs, awnings, canopies, decorations, lettering, advertising matter, as well as all other items or things referred to herein, or which may be approved by Landlord, shall be kept in good repair and in proper operating condition at all times at Tenant’s expense, shall be removed at the termination of the Lease and any damage caused by such removal shall be repaired at Tenant’s expense. Use of the roof is reserved to the Landlord, and Landlord may install upon the roof equipment, signs, antenna, displays and other objects, and may construct additional stores above the Premises provided such use does not unreasonably interfere with Tenant’s occupancy. Landlord may, at Tenant’s cost, remove any item erected in violation of this Section.
7.6 Changes to Shopping Center. Landlord hereby reserves the right at any time to make changes, alterations or additions, including the building and leasing of additional commercial space, in or on the building in which the Premises are contained, anywhere in the Shopping Center. Tenant shall not, in such event, claim or be allowed any damages or right to terminate this Lease for injury or inconvenience occasioned thereby.
7.7 Default by Tenant in Performing Work. Failure of the Tenant to perform or cause to have performed the work to be accomplished by Tenant in a good and workmanlike manner shall constitute a default under the provisions of this Lease by Tenant, and Landlord shall have all the rights and remedies available under the terms of this Lease or at law or in equity with respect to such default.
7.8 Acceptance of Premises. Except as expressly provided otherwise herein, Tenant accepts the Premises in their current condition, dimensions, and configuration. In the event this Lease Agreement provides for or anticipates the completion of any improvements or remodeling by Landlord, Tenant shall be deemed to have approved and accepted the improvements and/or remodelling either by oral or written approval of the plans and any written modifications thereof, or by occupancy of the Premises. Tenant acknowledges and consents to alterations of the plans required in order to comply with building, fire, or similar codes, or as required by sound engineering or construction practices. Tenant’s occupancy of the Premises shall constitute Tenant’s acceptance of the Premises as suitable for Tenant’s purposes and, upon occupancy, Tenant shall be deemed to have waived any claim that the Premises are other than as described and required by this Lease Agreement. In no event may Tenant assert any defense to payment of, or offset against, any sums owed under this Lease Agreement by reason of any defect or deficiency, or alleged defect or deficiency, in the configuration or approximate area of the Premises, or any other claim relating to the finishing or suitability of the Premises, if Tenant has theretofore moved into or occupied the Premises.
8. | USE |
Tenant shall use the Premises solely for the purpose of conducting its business, which is expressly limited to the Permitted Use of Premises set forth as a Fundamental Lease Term. Tenant’s business shall be operated under the trade name set forth above. Tenant shall not use or permit the Premises to be used for any other purpose or purposes or under any other names without the prior written consent of Landlord, which consent may be withheld, if Landlord determines, in the exercise of its discretion, that the proposed use or name will or may have an adverse effect on the mix of Shopping Center tenants or on the Business of any Tenant or the Shopping Center in general.
9. | CONTINUOUS OPERATION |
During the term of this Lease Tenant covenants to continuously conduct in the Premises the business specified in Article 8 with due diligence and efficiency so as to provide a maximum volume of Gross Sales, unless prevented from doing so by causes beyond Tenant’s reasonable control, such as strikes, lockouts, fire or other damage, civil commotion, or similar causes. Subject to inability by reason of strikes or labor disputes, Tenant shall keep and maintain at all time within and upon the Premises such a stock of merchandise as shall be reasonably designed to produce the maximum volume or gross sales and shall keep on the Premises at all times sufficient personnel to service the usual and ordinary requirements of its customers. Tenant shall conduct its business on the Premises with due diligence and without interruption during the regular and customary days and hours for such type of business in the city or trade area in which the Shopping Center is located. Tenant shall install and maintain at all times displays of merchandise in the display windows (if any) on the Premises, and shall keep the display windows and signs (if any) on the Premises well lighted during the hours from sundown to 10:00 o’clock p.m. Tenant shall also comply with the rules and regulations established and modified from time to time by Landlord for the operation of the Premises, Common Area and Shopping Center. The current form of rules and regulations are attached hereto as Exhibit “B”, which form may be modified by Landlord in its discretion without notice to Tenant. As liquidated damages for the failure of Tenant to comply with the terms of this Section, and in addition to all other remedies Landlord may have hereunder, Landlord shall have the right at its option to collect not only the Minimum Monthly Rent, but additional rent equal to the greater of (i) one-thirtieth (1/30th) of the Minimum Monthly Rent, and (ii) 1/360th of the Percentage Rent due for the prior calendar year, for each and every day that Tenant shall fail to conduct its business as herein provided. Said additional rent shall be in addition to any Percentage Rent as calculated and assessed , as liquidated damages for Tenant’s failure to conduct its business as agreed.
10. | LAWS, WASTE, NUISANCE |
Tenant covenants that it: (i) will not use or suffer or permit any person or persons to use the Premises or any part thereof, or adjacent sidewalks, for conducting thereon a second hand store or any auction, distress, fire, bankruptcy, or going-out-of-business sale; (ii) will comply with all governmental laws, ordinances, regulations, and requirements, now in force or which hereafter may be in force, of any governmental body or authorities having jurisdiction over the Premises; (iii) will maintain the Premises and every part thereof in a clean, neat, and orderly condition, free of objectionable noise, odors, or nuisances, and will in all respects and at all times fully comply with all health and police regulations; and (iv) shall not suffer, permit, or commit any waste or nuisance.
11. | COMPETITION |
Neither Tenant nor any affiliate or principal of Tenant shall directly or indirectly open, own, manage, or have any interest whatsoever in any similar or competing business within a radius set forth as a Fundamental Lease Term from the outside boundary of the Shopping Center. In the event of a breach of this covenant and in addition to any remedy otherwise available, Landlord may require that all sales made from any such other business be included in the computation of the Percentage Rent as though such sales had actually been made from the premises.
12. | MAINTENANCE |
12.1
Maintenance by Tenant. Tenant, at its sole cost and expense, shall at all times keep the Premises, including exterior entrances, all glass and show window moldings and sidewalks (whether included in the description of the Premises or adjoining the Premises) and all partitions, doors, fixtures, equipment, and appurtenances thereof, including lighting, heating fixtures, plumbing, electrical systems, sewage facilities, electric motors, and any air-conditioning system, in good order, condition and repair, including the replacement thereof when necessary, modifying the obligation of Tenant under this section, Landlord may from time to time monitor and engage in routine maintenance of equipment and fixtures (other than trade fixtures) utilized by Tenant and any other tenants and may charge the Proportionate Share of the costs of all such monitoring and routine maintenance to Tenant as a Common Area Expense.
Tenant shall be directly responsible for maintenance of the heating and air conditioning units, air distribution systems, make-up air systems, exhaust systems, etc., on a quarterly basis, and shall provide Landlord with proof of same. If proof is not provided, Landlord shall contract for the maintenance of same, and the cost of Tenant heating and air conditioning maintenance and repair service will be billed directly to Tenant.
12.2
Maintenance by Landlord. Landlord shall maintain the structural components of the Shopping Center; provided that, if Landlord is required to make structural repairs by reason of Tenant’s negligent act or omission, Tenant shall pay Landlord’s costs for making such repairs plus twenty percent (20%) for overhead immediately upon presentation of bill therefor. Failure of Tenant to pay such amount within ten (10) days after written notice has been sent from the Landlord to Tenant shall constitute a default by Tenant hereunder.
12.3
Landlord’s Right to Cure. If Tenant refuses or neglects to maintain and repair property as required hereunder to the reasonable satisfaction of Landlord as soon as reasonably possible after written demand, Landlord may make such repairs without liability on its part to Tenant for any loss or damage that may accrue to Tenant’s merchandise, fixtures, or other property or to Tenant’s business by reason thereof, and upon completion thereof, Tenant shall pay Landlord’s cost for making such repairs plus twenty percent (20%) for overhead, immediately upon presentation of a bill therefor. Failure of Tenant to pay such amount immediately shall constitute a default by Tenant hereunder.
13. | UTILITIES |
Landlord shall not be liable in the event of any interruption in the supply of any utility services to the Premises or Shopping Center. Tenant agrees that it will not install any equipment which will exceed or overload the capacity of any utility facilities and if any equipment installed by Tenant shall require additional utility facilities, the same shall be installed at Tenant’s expense in accordance with plans and specifications to be approved in writing by Landlord. Tenant shall be solely responsible for, and shall promptly pay, all charges for use or consumption of heat, sewer, water, gas, electricity, or any other utility services. Should Landlord elect to supply any utility services, Tenant agrees to purchase and pay for the same as additional rent at the applicable rates charged by the utility company furnishing the same.
14. | COMMON AREAS |
All common areas in the Shopping Center which Tenant may be permitted to use if any such license be revoked or if the amount of such areas be changed or diminished, Landlord shall not be subject to any liability nor shall Tenant be entitled to any compensation or diminution or abatement of rent nor shall revocation or diminution of such areas be deemed constructive or actual eviction. All common areas and other facilities in or about the Shopping Center shall be subject to the exclusive control and management of Landlord. Landlord shall have the right to construct, maintain, and operate lighting and other facilities on all said areas and improvements; to police the same; to change the area, level, location, and arrangement of parking areas and other facilities; to restrict parking by tenants, their officers, agents, and employees; to close all or any portion of said areas or facilities to such extent as may be legally sufficient to prevent a dedication thereof or the accrual of any right to any person or the public therein; and to close temporarily all or any portion of the parking area or facilities to discourage non-customer parking. Landlord shall operate and maintain the Common Areas in such manner as Landlord in its discretion shall determine, shall have full right and authority to employ and discharge all personnel with respect thereto, and shall have the right, through reasonable rules, regulations, and/or restrictive covenants promulgated by it from time to time, to control use and operation of the common areas in order that the same may occur in a proper and orderly fashion.
15. | ASSIGNMENT AND SUBLETTING |
15.1
Assignment and Subletting Prohibited. Tenant shall not transfer, assign, or encumber this Lease or permit the use of the Premises by licensees or concessionaires, or sublet the Premises, without the prior written consent of Landlord, and any such transfer, assignment or other described action without such consent shall be void and, at the option of Landlord, shall terminate this Lease. Such prohibition against assigning or subletting shall include any assignment, subletting, or transfer by operation of law. Any transfer of this Lease from the Tenant by merger, consolidation, transfer of assets, or liquidation shall constitute a prohibited assignment for the purposes of this Section. In the event that Tenant is a corporation, an unincorporated association, or a partnership, the transfer or assignment (whether in a single or multiple transactions or whether directly or indirectly) of any stock or ownership interest in such corporation, association, or partnership in the aggregate in excess of forty-nine percent (49%) shall be deemed a prohibited assignment within the meaning of this Section.
15.2
Landlord’s Right in Event of Assignment Without Consent. If an Assignment occurs without Landlord’s consent having been first obtained, Landlord may, in addition to its other remedies under this Lease, collect rent and other charges from any such assignee or other occupant, and apply the amount collected to the rent and other charges reserved under this Lease, and such collection shall not constitute consent or waiver of the necessity of consent to the Assignment, nor shall such collection constitute the recognition of such assignee as the tenant under this Lease or a release of Tenant from the further performance of all of the covenants and obligations of Tenant under this Lease.
16. INDEMNITY
16.1
Tenant Obligated to Indemnify. Tenant shall indemnify Landlord and save and hold it harmless from and against any and all suits, actions damages, claims, liability, and expense in connection with loss of life, bodily or personal injury, or property damage arising from or out of any occurrence in, upon, at or from the Premises, or the occupancy or use by Tenant of the Premises or any part thereof, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, invitees, licensees, or concessionaires, including acts or omissions relating to the sidewalks and Common Areas within the Shopping Center.
16.2
Limitation of Liability. Landlord shall not be responsible or liable at any time for any loss or damage to Tenant’s merchandise, equipment, fixtures, or other personal property or to Tenant’s business, including any loss or damage to either the person or property of Tenant that may be occasioned by or through the acts or omissions of persons occupying adjacent, connecting, or adjoining space. Tenant shall store its property in and shall use and enjoy the Premises and all other portions of the Shopping Center at its own risk, and hereby releases Landlord, to full extent permitted by law, from all claims of every kind resulting in loss of life, personal or bodily injury, or property damage.
16.3
Notice of Fires, Accidents. Tenant shall give prompt notice to Landlord in case of fire or accidents in the Premises or in the building of which the Premises are a part or of defects therein or in any fixture or equipment.
16.4
Indemnification of Litigation Costs. In case Landlord shall without fault on its part be made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold Landlord harmless and shall pay all costs, expenses, and reasonable attorneys’ fees. Tenant expressly acknowledges that all of the foregoing provisions of this Article shall apply and become effective from and after the date Landlord shall deliver possession of the Premises to Tenant in accordance with the terms of this Lease, or upon entry upon the Premises by Tenant, whichever shall first occur.
17. INSURANCE
17.1
Fire, Vandalism and All-Risk Insurance on Real Estate. Landlord, at the expense of Tenant as provided above, shall keep the buildings and improvements to the Shopping Center, insured in an amount equivalent to not less than eighty percent (80%) of the full insurable value thereof against: (i) loss or damage by fire; (ii) all risks customarily covered under extended coverage endorsements; and (iii) vandalism and malicious mischief. Landlord (and, at Landlord’s option, the lender interested under any mortgage or similar instrument then affecting the Premises) shall be solely responsible for determining the amount of fire and extended coverage insurance and the specific endorsements to be maintained. Landlord may also maintain boiler insurance on all heating boilers within the Shopping Center in such amounts as it determines. Landlord shall be named as an insured on each such policy. The proceeds of such insurance in case of loss or damage shall be paid to Landlord to be applied on account of the obligation of Landlord to repair and/or rebuild the Premises as provided herein. Any proceeds not required for such purpose shall be the sole property of Landlord. In any event, Tenant shall have no interest in or claim to any such proceeds.
17.2
Insurance on Tenant’s Fixtures. At all times during the term hereof, Tenant shall keep in force, at its sole cost and expense, fire insurance and extended coverage issued by insurance companies acceptable to Landlord, equal to the replacement cost of Tenant’s improvements, trade fixtures, furnishings, equipment, and contents upon the Premises, and naming Landlord as an Additional Insured.
17.3
Liability Insurance. Landlord, at the expense of Tenant as provided above, shall procure general liability insurance insuring Landlord against death, bodily or personal injury, or property damage occurring on or within the Shopping Center in at least a combined single amount of One Million Dollars ($1,000,000), or such other amount as Landlord may reasonably determine is necessary, and a copy of the policy or a Certificate of Insurance shall be delivered to Landlord within sixty (60) days of Lease Commencement.
Tenant agrees during the entire term hereof, to keep in full force and effect a policy of public liability and property damage insurance with respect to the Premises, the business operated by Tenant, and any subtenants, concessionaires, or licensees of Tenant in the Premises, with limits of public liability coverage of not less than $500,000 per person and $1,000,000 per occurrence and with limits of property damage liability coverage of not less than $300,000 per accident or occurrence. The policy shall name Landlord, any person, firms, or corporations designated by Landlord, and Tenant as insureds. The insurance shall be issued by an insurance company approved by Landlord and a copy of the policy or a certificate of insurance shall be delivered to Landlord.
17.4
Subrogation. Tenant waives its right of subrogation against Landlord for any reason whatsoever, and any insurance policies herein required to be procured by Tenant shall contain an express waiver of any right of subrogation by the insurer against Landlord.
17.5
Lenders. Any mortgage lender interested in any part of the Shopping Center may, at Landlord’s option, be afforded coverage under any policy required to be secured by Landlord or Tenant hereunder, by use of a mortgagee’s endorsement to the policy concerned.
17.6
Increase in Insurance Premiums. Tenant shall not stock, use, or sell any article or do anything in or about the Premises which may be prohibited by Landlord’s insurance policies or any endorsements or forms attached thereto, or which will increase any insurance rates and premiums on the Premises, the building of which they are a part, or any other buildings in the Shopping Center. Tenant shall pay on demand any increase in premiums for Landlord’s insurance that may be charged on such insurance carried by Landlord resulting from Tenant’s use and occupancy of the Premises or the Shopping Center, whether or not Landlord has consented to the same.
18. DESTRUCTION
If the Premises shall be partially damaged by any casualty insured against under Landlord’s insurance policy, Landlord shall, upon receipt of the insurance proceeds, repair the Premises. Until any such repair is complete the Minimum Rent shall be abated proportionately as to that portion of the Premises rendered untenantable. Notwithstanding the foregoing, if: (i) the Premises by reason of such occurrence are rendered wholly untenantable, or (ii) the Premises should be damaged as a result of a risk which is not covered by Landlord’s insurance, or (iii) that Premises should be damaged in whole or in part during the last three (3) years of the term or of any renewal hereof, or (iv) the Premises or the building of which it is a part, whether the Premises are damaged or not, or all of the buildings which then comprise the Shopping Center, should be damaged to the extent of twenty-five percent (25%) or more of the then replacement cost of the improvements, or (v) any or all of the buildings or common areas of the Shopping Center are damaged, whether or not the Premises are damaged, to such an extent that the Shopping Center cannot, in the sole judgment of Landlord, be operated as an integral unit, or (vi) by reason of the right of any lender to retain or control the use of any insurance proceeds and the retention of proceeds or the exercise of control makes the repair of the Premises impracticable in the sole judgment of Landlord, then and in any of such events, Landlord may either elect to repair the damage or may cancel this Lease by notice of cancellation within one hundred eighty (180) days after such event and thereupon this Lease shall terminate, and Tenant shall vacate and surrender the Premises to Landlord. Tenant’s liability for rent upon the termination of this Lease shall cease as of the day following Landlord’s giving notice of cancellation and Tenant shall have no further right or interest in the Premises. In the event Landlord elects to repair any damage, any abatement of Minimum Rent shall end five (5) days after notice by Landlord to Tenant that the Premises have been repaired. Nothing in this Article shall be construed to abate or affect Percentage Rent, provided that if Minimum Monthly Rent is abated pursuant to this Article, then “Minimum Monthly Rent” used to calculate the amount of Percentage Rent shall be the Minimum Monthly Rent as abated. If the damage is caused by the negligence of Tenant or its employees, agents, invitees, or concessionaires, there shall be no abatement of Minimum Monthly Rent. Landlord’s obligation to repair under this Article if undertaken, shall extend only to the construction of the basic building and store front and not to the repair or replacement of Tenant improvements. If such repair is undertaken by Landlord, Tenant shall be obligated to repair and re-fixture the interior of the Premises in a manner and in at least a condition equal to that existing prior to the destruction or casualty and the proceeds of all insurance carried by Tenant on its property and fixtures shall be held in trust by Tenant for the benefit of Landlord to assure fulfillment of Tenant’s repair and replacement obligations.
19. CONDEMNATION
19.1
Definition. As used in this Article the term “condemnation proceeding” means any action or proceeding in which any interest in the Premises is taken for any public or quasi-public purpose by any lawful authority through exercise of the power of eminent domain or right of condemnation of by purchase or otherwise in lieu thereof.
19.2
Total Condemnation. If the whole of the Premises shall be acquired or taken by condemnation proceeding, then this Lease shall cease and terminate as of the date of title vesting in such proceeding.
19.3
Partial Condemnation. If more than 25% of the Premises shall be taken by condemnation, either Landlord or Tenant shall have the right to terminate this Lease and, upon exercise of the right by either party giving notice to the other within thirty (30) days after title is vested in the condemning authority, then this Lease shall cease and terminate. In the event of a taking of 25% or less of the Premises or the partial taking of more than 25% of the Premises without either party exercising its right to terminate this Lease, then this Lease shall continue in effect except that the Minimum Rent shall be reduced in the same proportion that the gross square footage of the Premises (including basement, if any) taken bears to the original gross square footage of the Premises, and Landlord shall, upon receipt of the award in condemnation, make all necessary repairs or alterations to the building in which Premises are located so as to make the portion of the building not taken a complete architectural unit, but such work shall not exceed the scope of the work to be done by Landlord in originally constructing said building, nor shall Landlord in any event be required to expend for such work an amount in excess of the “Amount Received by Landlord” as damages for the part of the Premises so taken. “Amount Received by Landlord” shall mean that part of the award in condemnation which is paid to Landlord free and clear of any rights of mortgage lenders to collect or retain the proceeds.
19.4
Landlord’s Rights to Terminate. In addition to the rights to terminate the Lease provided below, Landlord shall have the following rights to terminate the Lease in the event of condemnation. If more than twenty-five percent (25%) of the gross square footage of leasable space in the building in which the Premises are located or the Common Area of the Shopping Center shall be taken by condemnation, Landlord may terminate this Lease, by giving written notice to Tenant within thirty (30) days after the vesting of title in the condemning authority. Notwithstanding anything to the contrary in this Article, Landlord shall also have a right to terminate this Lease by giving written notice as provided above in the event of a taking of 25% or less of the Premises if the Amount Received by Landlord will not be adequate to pay the necessary repairs and alterations. If this Lease is terminated as provided in this section, rent shall be paid up to the day that written notice is given by Landlord and Landlord shall make an equitable refund of any rent paid by Tenant in advance.
19.5
Award. Tenant shall not be entitled to, and hereby expressly waives all claim to, any condemnation award for any taking, whether whole or partial and whether for diminution in value of the leasehold or to the fee estate, and all such awards shall belong to Landlord. Tenant, however, shall have the right, to the extent that the same shall not reduce Landlord’s award, to claim from the condemning authority, but not from the Landlord, such compensation as may be recoverable by Tenant in its own right for damages relating only to Tenant’s business and fixtures. Tenant shall be required to make its own claim, if any, to the condemning authority, and will bear all costs and expenses in connection with any such claims.
20. EVENTS OF DEFAULT; REMEDIES
20.1
DEFAULT BY TENANT. Upon the occurrence of any of the following events, Landlord shall have the remedies set forth below.
(a) Tenants fails to pay Minimum Rent, Percentage Rent or any item of additional rent or any other sum due under this Lease within ten (10) days after the same shall be due.
(b) Tenants fails to perform any other term, condition, or covenant to be performed by it pursuant to this Lease within thirty (30) days after written notice of such default shall have been given to Tenant by Landlord.
(c) Tenant or its agent shall falsify any report required to be furnished to Landlord hereunder.
(d) Tenant or any guarantor of this Lease shall become bankrupt or insolvent or file any debtor proceedings or have taken against such party in any court pursuant to state or federal statute, a petition in bankruptcy or insolvency, reorganization, or appointment of a receiver or trustee; or Tenant petitions for or enters into an arrangement; or suffers this Lease to be taken under writ of execution.
(e) Tenant violates either Articles 8 or Article 15.
20.2
Remedies. Upon the occurrence of one or more events of default, in addition to any and all rights and remedies available to the Landlord under applicable law, Landlord shall have the option to take any or all of the following actions, without further notice or demand of any kind to Tenant or any other person:
(a) Immediately reenter and remove all persons or properly from the Premises, storing said property in a public place, warehouse, or elsewhere at the cost of, and for the account of Tenant, all without service of notice or resort to legal process and without being deemed guilty of or liable in trespass. No such reentry or taking possession of the Premises by Landlord shall be construed as an election on its part to terminate this Lease unless a written notice of such intention is given by Landlord to Tenant. No such action by Landlord shall be considered or construed to be a forcible entry.
(b) Collect by suit or otherwise any unpaid rents or other sum as it becomes due hereunder, or enforce, by suit or otherwise, any other term or provision hereof on the part of Tenant required to be kept or performed.
(c) Claim and exercise a Landlord’s lien over any or all of Tenant’s fixtures, furniture, equipment, improvements, additions, alterations, and other personal property. All such property may, at Landlord’s option, remain on the Premises, and Landlord shall have the right to take the exclusive possession of the property and to use the property, rent or charge free, or to sell the property and apply the net proceeds of such a sale against the amounts due Landlord from Tenant. At its option, at any time during the length of the default, Landlord may require Tenant to forthwith remove that property or may remove the same at the expense of Tenant.
(d) Terminate this Lease by written notice to Tenant. In the event of such termination, Tenant agrees to immediately surrender possession of the Premises. Should Landlord terminate this Lease, Tenant shall have no further interest in this Lease or in the Tenant’s breach, including (i) cost of recovering the Premises, (ii) reasonable attorneys’ fees, (iii) the worth at the time of such termination of the excess, if any, of the amount of rent and charges equivalent to rent reserved in this Lease for the remainder of the stated term over the then-resonable rental value of the Premises for the remainder of the stated term, all of which amounts shall be immediately due and payable at Landlord’s election from Tenant to Landlord. In determining the rent which would be payable by Tenant hereunder subsequent to default, the rent for each year of the unexpired term shall be equal to the average Minimum Monthly Rent, Percentage Rent and additional rents paid by Tenant from the commencement Date to the time of default, or during the preceding three (3) full calendar years, whichever period is shorter.
(e) Should Landlord reenter, as provided above, or should it take possession pursuant to legal proceedings or pursuant to any notice provided by law, and whether or not it terminates this Lease, it may be necessary to relet the Premises, and relet the same or any part thereof for such term or terms (which may be for a term extending beyond the term of this Lease) and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable. Upon each such reletting all rentals and/or deposits received by the Landlord from such reletting shall be applied, at Landlord’s election, first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such reletting, including brokerage fees and attorney’s fees and costs of any alterations and repairs; third, to the payment of rent due and unpaid hereunder, and the residue, if any, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. If such rentals received from such reletting during any month be less than that to be paid during such month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. No such reentry and reletting of the Premises by landlord shall be construed as an election on its part to terminate this Lease unless a written notice of such intention be given to Tenant pursuant to subsection (d), or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach.
The remedies given to Landlord in this Article shall be in addition to and supplemental to all other rights or remedies which Landlord may have under law or equity.
21. ACCESS TO PREMISES
Landlord shall have the right to place, maintain, and repair all utility equipment of any kind in, upon, and under the Premises as may be necessary for the servicing of the Premises and other portions of the Shopping Center. Landlord shall also have the right to enter the Premises at all times to inspect or to exhibit the same to prospective purchasers, mortgagees, tenants, and lessees, and to make such repairs, additions, alterations, or improvements as Landlord may deem desirable. Landlord shall be allowed to take all material upon said Premises that may be required therefor without the same constituting an actual or constructive eviction of Tenant in whole or in part and the rents reserved herein shall in no way abate while said work is in progress by reason of loss or interruption of Tenant’s business or otherwise, and Tenant shall have no claim for damages. During the six (6) months prior to the expiration of this Lease or of any renewal term, Landlord may place upon the Premises “To Let” or “For Sale” signs which Tenant shall permit to remain thereon.
22. FINANCING
22.1
Subordination. Tenant agrees that this Lease shall be subordinate to any mortgages or trust deeds that may hereafter be placed upon the Premises, to any and all advances made or to be made under them, to the interest and all obligations secured by them, and to all renewals, replacements and extensions of them. Provided, however, the mortgagee or beneficiary named in any such mortgages or trust deeds shall recognize the lease of the Tenant in the event of foreclosure if the Tenant is not in default under the terms of this Lease. If any mortgagee or beneficiary elects to have this Lease superior in its mortgage or deed of trust and gives notice of its election to Tenant, then this Lease shall be superior to the lien of any mortgage or trust deed whether this Lease is dated or recorded before or after the mortgage or trust deed.
22.2
Amendment. Tenant agrees that from time to time it shall, if so requested by Landlord and if doing so will not substantially and adversely affect Tenant’s economic interests under this Lease, join with Landlord in amending the terms of this Lease so as to meet the reasonable needs or requirements of any lender which is considering furnishing or which has furnished any of the financing referred to in the above Subsection.
23. ATTORNMENT
In the event of the sale or assignment of Landlord’s interest in the building of which the Premises are a part, or in the event of any proceedings brought for the foreclosure of, or in the event of exercise of the power of sale under, any mortgage or other security instrument made by Landlord covering the Premises, Tenant shall attorn to the Assignee or purchaser and recognize such purchaser as Landlord under this Lease.
24. | RIGHT TO CURE |
In the event of breach, default, or noncompliance hereunder by Landlord, Tenant shall, before exercising any right or remedy available to it (including, without limitation, assertion of any right or claim of setoff or recoupment), give Landlord written notice of the claimed breach, default, or noncompliance. If prior to its giving such notice Tenant has been notified in writing (by way of Notice of Assignment of Rents and Leases, or otherwise) of the address of a lender which has furnished any of the financing referred to in Section 22.1 hereof, concurrently with giving the aforesaid notice to Landlord, Tenant shall, be registered mail, transmit a copy thereof to such lender. For the thirty (30) days following the giving of the notice(s) required by the foregoing portion of this Article (or such longer period of time as may be reasonably required to cure a matter which, due to its nature, cannot reasonably be rectified within thirty (30) days), Landlord shall have the right to cure the breach, default, or noncompliance involved. If Landlord has failed to cure a default within said period, any such lender shall have an additional thirty (30) days within which to cure the same or, if such default cannot be cured with that period, such additional time as may be necessary if within such thirty (30) day period said lender has commenced and is diligently pursuing the actions or remedies necessary to cure the breach, default, or noncompliance involved (including, but not limited to, commencement and prosecution of proceedings to foreclose or otherwise exercise its rights under its mortgage or other security instrument, if necessary to effect such cure), in which event this Lease shall not be terminated by Tenant so long as such actions or remedies are being diligently pursued by said lender.
25. | SURRENDER OF PREMISES |
At the expiration of this Lease, Tenant shall surrender the Premises in the same condition as they were in upon delivery of possession thereto under this Lease, reasonable wear and tear excepted, and shall deliver all keys to Landlord. Before surrendering the Premises, Tenant shall remove all of its Personal Property and trade fixtures and such alterations or additions to the Premises made by Tenant as may be specified for removal by Landlord, and shall repair any damage caused by such property or the removal thereof. If Tenant fails to remove its personal property and fixtures upon the expiration of this Lease, the same shall be deemed abandoned and shall become the property of Landlord.
26. | HOLDING OVER |
Any holding over after the expiration of the term hereof or of any renewal term shall be construed to be a tenancy from month to month at the rents herein specified (prorated on a monthly basis) and shall otherwise be on the terms herein specified so far as possible.
27. | ATTORNEYS’ FEES |
In the event that at any time during the term of this Lease either Landlord or the Tenant institutes any action or proceeding against the other relating to the provisions of this Lease or any default hereunder, then the unsuccessful party in such action or proceeding agrees to reimburse the successful party of the reasonable expenses of such action including reasonable attorneys’ fees, incurred therein by the successful party. In the event of default hereunder by Tenant, Tenant agrees to pay any and all costs of Landlord, including reasonable attorney’s fees, in enforcing this Lease or Landlord’s rights and remedies hereunder, whether or not a lawsuit is commenced.
28. | PAST DUE SUMS; APPLICATION OF PAYMENTS |
If Tenant fails to pay, when the same is due and payable, any rent, additional rent, or other sum required to be paid by it hereunder, such unpaid amounts shall bear interest from the due date thereof to the date of payment at a Variable Rate which shall be the greater of (i) twenty-one percent (21%) per annum or (ii) four percent (4%) over the “prime rate” as published in the Wall Street Journal from time to time (or, if not so published, the “prime rate” of First Security Bank of Utah, N.A.), as that prime lending rate is established and changed from time to time, which changes in the prime lending rate shall be reflected in the Variable Rate on and for the day of each change. In addition, Landlord may charge as a service fee for processing overdue amounts a sum equal to the greater of $50.00 or four percent (4%) of the overdue sum. Notwithstanding the foregoing, however, Landlord’s right to collect such interest and service fee shall be limited to the maximum amount which may properly be charged by Landlord for such purposes under any applicable law.
Payments received from the Tenant shall be applied in the order and to the items determined by Landlord, in its sole discretion, notwithstanding any designation by the Tenant or other payor.
29. | QUIET ENJOYMENT |
Tenant, upon paying the rents and observing and performing all of the terms, covenants, and conditions on its part to be performed hereunder, shall peaceably and quietly enjoy the Premises for the Lease Term. In the event Tenant claims or asserts that its quiet enjoyment of the Premises is disturbed by the actions or inactions of another tenant, Tenant shall give written notice thereof to Landlord of each such claim within forty-eight (48) hours of the event, specifying the particular actions or inactions of which Tenant complains. In the absence of such written notice, Tenant may not assert a breach of this covenant. Upon receipt of such notice, the Landlord shall investigate the matter complained of by Tenant, and shall report to Tenant its findings and, if deemed appropriate by Landlord, its corrective actions. Landlord shall make reasonable efforts to enforce compliance by other tenants with the rules and regulations of the Shopping Center and the respective leases of other tenants, insofar as the interests of Tenant are affected; provided, however, no breach of this Article may be asserted by Tenant based upon the actions or inactions of another tenant of the Shopping Center unless Landlord reasonably determines that such other tenant’s actions or inactions constitute a default that entitles Landlord to terminate such other tenant’s lease.
30. | MERCHANT’S ASSOCIATION |
Tenant shall join and at all times during the Lease Term maintain membership in the Merchants’ Association (the “Association”), which consists of Landlord and substantially all merchandising tenants of the Shopping Center. The purpose of the Association shall be the general furtherance of the business interests of the Shopping Center as a whole, including advertising, promotion and special events to benefit the Shopping Center and the business of all tenants located therein. The Association shall make its own rules and regulations with respect to such matters. As part of its financial obligations under this Lease, Tenant agrees to contribute to the Association the sum of $80.00 per month, which sum shall be paid by separate check to the Sandy Mall Merchants’ Association at the address of the on-site mall office (9455 So. 700 East, Sandy, UT 84070).
Tenant’s monthly Association charge shall be increased at the end of each calendar year as determined by the Board of Directors of the Association by at least $5.00 per month, but not more than $20.00 per month, to be capped at a total monthly increase of $70.00 every 5-year period.
In lieu and instead of the Merchants’ Association, the Landlord shall have the right and option to convert the Association into a marketing fund. In case of such conversion, (a) Landlord agrees to establish a Tenant Advisory Board to obtain Lessee participation and consultation on expenditure of funds, and (b) Tenant agrees to pay to the marketing fund a monthly amount equal to Tenant’s Merchants’ Association charge as described or amended above.
31. | MISCELLANEOUS PROVISIONS |
31.1
No partnership. Neither the provisions herein set forth for the computation of the Percentage Rent, nor any one or more agreements herein contained, is intended, nor shall the same be deemed or construed, to create a partnership between Landlord and Tenant, to make them joint venturers, nor to make Landlord in any way responsible for the debts or losses of the Tenant.
31.2
Force Majeure. Landlord shall be excused for the period of any delay in the performance of any obligation hereunder when prevented form so doing by cause or causes beyond Landlord’s control, including labor disputes, civil commotion, war, governmental regulations or controls, fire or other casualty, inability to obtain any material or services, or acts of God. Tenant and Landlord agree that, in the event Landlord and/or Tenant are precluded by court order from permitting Tenant to use the premises as a bank, (unless such order is dissolved within sixty days of the date of entry), then this Lease shall automatically terminate and neither party shall have any further liability to the other hereunder, except as set forth in the following sentence. In the event the Lease so terminates, then Landlord agrees to reimburse Tenant for a portion of Tenant’s leasehold improvements to the Premises, calculated as follows: Tenant’s lese hold expenses, not to exceed a maximum of $25,000, shall be amortized monthly on a straight line basis over sixty months, and Landlord shall pay to Tenant one-half of the unamortized amount of such leasehold expenses as of the date of termination.
31.3
No Waiver. Failure of Landlord to insist upon the strict performance of any provision or to exercise any option hereunder shall not be deemed a waiver of such breach. No provision of this Lease shall be deemed to have been waived unless such waiver be in writing signed by Landlord.
31.4
Notices. Any notice, demand, request, or other instrument which may be or is required to be given under this Lease shall be delivered in person or sent by United States certified or registered mail, postage prepaid, and shall be addressed to Landlord and to Tenant at the respective addresses as set forth as Fundamental Lease Terms. Either party may designate such other address as shall be given by written notice.
31.5
Recording. Tenant shall not record this Lease but may record a memorandum thereof without the written consent of Landlord. Landlord, at its option and at any time, may file this Lease for record with the Recorder of the County in which the Shopping Center is located.
31.6
Partial Invalidity. If any provision of this Lease or the application thereof to any person or circumstance shall to any extent be invalid, the remainder of this Lease or the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby and each provision of this Lease shall be valid and enforced to the fullest extent permitted by law.
31.7
Broker’s Commissions. Tenant represents and warrants that there are no claims for brokerage commissions or finder’s fees in connection with this Lease and agrees to liabilities arising from such claim, including any attorneys’ fees connected therewith.
31.8
Tenant and Landlord Defined: Use of Pronouns. The word “Tenant” shall be deemed and taken to mean each and every person or party executing this document as a Tenant herein, any successor of those persons or parties who becomes a tenant in compliance with the provisions of Article 15 of this Lease or by order of any court of competent jurisdiction, and any trustee in bankruptcy of any such Tenant. If there is more than one Tenant, any notice required or permitted by the terms of this lease may be given by or to any one thereof, and shall have the same force and effect as if given by or to all thereof. “Landlord” shall refer to the party executing this Lease and any and all successors in interest to the ownership of the Shopping Center or the rights of Landlord under this Lease. The use of the neuter singular pronoun to refer to Landlord or Tenant shall be deemed a proper reference even though Landlord or Tenant may be an individual, a partnership, a corporation, or a group of two or more individuals or corporations. The necessary grammatical changes required to make the provisions of this Lease apply in the plural sense where there is more than one Landlord or Tenant and to corporations, associations, partnerships, or individuals, males or females, shall in all instances be assumed as though in each case fully expressed.
31.9
Binding Effect. Except as otherwise provided, all provisions herein shall be binding upon and shall inure to the benefit of the parties, their legal representatives, heirs, successors, and assigns. Each provision to be performed by Tenant shall be construed to be both a covenant and a condition, and if there shall be more than one Tenant, they shall all be bound, jointly and severally, by such provisions. In the event of any sale or assignment (except for purposes of security or collateral) by Landlord of the Shopping Center, the Premises, or this Lease, Landlord shall be entirely relieved of all of its obligations as of the time of such sale or assignment.
31.10
Entire Agreement Etc. This Lease and the Exhibits, Riders, and/or Addenda, if any, attached hereto, set forth the entire agreement between the parties. All Exhibits, Riders, or Addenda mentioned in this Lease are incorporated herein by reference. Any drawings or plans attached hereto are acknowledged by the Tenant to be approximate representations only. Any prior conversations or writings are merged herein and extinguished. No subsequent amendment to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by both parties. Submission of this Lease for examination does not constitute an option for the Premises and becomes effective as a Lease only upon execution and delivery thereof by Landlord to Tenant. If any provision contained in a Rider or Addendum is inconsistent with a provision in the body of this Lease, the provision contained in the Rider or Addendum shall control. It is agreed that this Lease contains no restrictive covenants or exclusive use permits in favor of Tenant. The captions and section numbers appearing herein are inserted only as a matter of convenience and are not intended to define, limit, construe, or describe the scope or intent of any Article, Section or paragraph.
31.11
Recourse by Tenant. Anything in this Lease to the contrary notwithstanding, Tenant agrees that it shall look solely to the estate and property
of Landlord in the land and building comprising the Shopping Center, and subject to prior rights of any mortgagee or beneficiary of any trust deed of the Shopping Center or any part thereof, for the collection of any judgment (or other judicial
process) requiring the payment of money by Landlord in the event of any default or breach by Landlord with respect to any of the terms, covenants, and conditions of this Lease to be observed and/or performed by Landlord, and no other assets of
Landlord shall be subject to levy, execution, or other procedures for the satisfaction of Tenant’s remedies.
31.12
Definition of Price Index. For purposes hereof, “Consumer Price Index” or “Price Index” shall mean the average for “All Items” shown on the “U.S. City Average For Urban Wage Earners And Clerical Workers (Including Single Workers), All Items, Groups, Subgroups, And Special Groups Of Items” as promulgated by the Bureau of Labor Statistics of the U.S. Department of Labor or any successor agency. In the event such index ceases to be published or produced, or is otherwise unavailable for use, Landlord and tenant shall mutually select and use such other index as both determine is reasonably comparable.
32. | AUTHORITY OF SIGNATORIES |
Each person executing this Lease individually and personally represents and warrants that he is duly authorized to execute and deliver the same on behalf of the entity for which he is signing (whether it be a corporation, general or limited partnership, or otherwise), and that this Lease is binding upon said entity in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the date set forth above.
“Landlord” | ||
Mariemont Holdings, L.L.C. | ||
By | /s/ [ILLEGIBLE] |
Its | [ILLEGIBLE] |
“Tenant” | ||
Utah Community Bank | ||
By | /s/ K. Vincent Bluth | |
K. Vincent Bluth | ||
Its | President |
EXHIBIT “A”
1. |
All loading and unloading of goods shall be done only at such times, in the areas and through the entrances designated for such purposes by
Landlord.
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2. |
The delivery or shipping of merchandise, supplies and fixtures to and from the Leased Premises shall be subject to such rules and regulations as in
the judgment of Landlord are necessary for the proper operation of the Leased Premises or Shopping Center.
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3. |
All garbage and refuse shall be kept in the kind of container specified by Landlord, and shall be placed outside of the Leased Premises prepared for
collection in the manner and at the times and places specified by Landlord. If Landlord shall provide or designate a service for picking up refuse and garbage, Tenant shall use same at Tenant’s cost. Tenant shall pay the cost of removal of
any of Tenant’s refuse or rubbish.
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4. |
No radio or television or other similar device shall be installed without first obtaining in each instance Landlord’s consent in writing. No aerial
shall be erected on the roof or exterior walls of the Leased Premises or on the grounds, without in each instance, the written consent of Landlord. Any aerial so installed without such written consent shall be subject to removal without
notice at any time.
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5. |
No loud speakers, televisions, phonographs, radios or other devices shall be used in a manner so as to be heard or seen outside of the Leased
Premises without the prior written consent of Landlord.
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6. |
If the Leased Premises are equipped with heating facilities separate from those in the remainder of the Shopping Center, Tenant shall keep the
Leased Premises at a temperature sufficiently high to prevent freezing of water in pipes and fixtures.
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7. |
The exterior areas immediately adjoining the Leased Premises shall be kept clean and free from snow, ice, dirt and rubbish by Tenant to the
satisfaction of Landlord, and Tenant shall not place or permit any obstructions or merchandise in such areas. Tenant shall not be permitted to utilize any of the Common Areas of the Mall for purposes of the conduct of any sale or business
without the prior written consent of the Landlord.
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8.
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Tenant and Tenant’s employees shall park their cars only in those parking areas designated for the purpose by Owner. Tenant shall furnish Landlord
with State automobile license numbers assigned to Tenant’s car or cars, and cars of Tenant’s employees, within five (5) days after taking possession of the Leased Premises and shall thereafter notify Landlord of any changes within five (5)
days after such changes occur. In the event that Tenant or its employees fail to park their cars in designated parking areas as aforesaid, then Landlord at its option shall charge Tenant Ten Dollars ($10.00) per day per car parked in any area
other than those designated, as and for liquidated damage.
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9. |
The plumbing facilities shall not be used for any other purpose than that for which they are constructed, and no foreign substance of any kind shall
be thrown therein, and the expense of any breakage, stoppage or damage resulting from a violation of this provision shall be borne by Tenant who shall, or whose employees, agents or invitees shall, have caused it.
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10. |
Tenant shall use at Tenant’s cost such pest extermination contractor as Landlord may direct and at such intervals as Landlord may require.
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11. |
Tenant shall not burn any trash or garbage of any kind in or about the Leased Premises, the Shopping Center, or within one mile of the outside
property lines of the Shopping Center.
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12. |
Tenant shall not make noises, cause disturbances, or create odors which may be offensive to other Tenants of the Shopping Center or their officers,
employees, agents, servants, customers or invitees.
|
“Landlord”
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||||
Mariemont Holdings, L.L.C.
|
||||
By
|
/s/ [ILLEGIBLE]
|
|||
Its
|
[ILLEGIBLE]
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|||
“Tenant”
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||||
Utah Community Bank
|
||||
By
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/s/ K. Vincent Bluth
|
|||
K. Vincent Bluth
|
||||
Its
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President
|
A. |
GENERAL REQUIREMENTS
|
|
1. |
Tenant shall submit or cause to be submitted to Landlord for approval before fabrication one (1) copy of detailed drawings indicating the location,
size, layout, design and color of the proposed signs, including all lettering and/or graphics. Said drawing shall be submitted within thirty (30) days after the signing of the Lease or prior to the opening of Tenant’s business to the public,
whichever occurs first.
|
|
2. |
All permits for signs and their installation shall be obtained by the Tenant or his representative.
|
|
3. |
All signs shall be constructed and installed at Tenant’s expense.
|
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4. |
Tenant shall be responsible for the fulfillment of all requirements of these criteria, and shall submit samples of sign material if requested by
Landlord.
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B. |
GENERAL SPECIFICATIONS
|
|
1. |
No animated, flashing or audible signs will be permitted.
|
|
2. |
All signs shall bear the UL Label, and their installation shall comply with all local building and electrical codes.
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3. |
No exposed raceways, crossovers or conduits will be permitted.
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4. |
All cabinets, conductors, transformers and other equipment shall be concealed. Visible fasteners will not be permitted.
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5. |
Electrical service to all signs shall be on Tenant’s meter.
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6. |
Painted lettering will not be permitted, except as specified under Article F-2.
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C. |
LOCATION OF SIGNS
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1. |
Signs on the exterior of the Mall buildings shall be permitted only for those tenants
having exterior public entrances and as located within the sign areas designated by the Mall Developer.
|
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2. |
Tenant will be permitted to install one illuminated sign on their storefront. The maximum projection of the sign from the face of the storefront
shall be six inches (6”).
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D. |
DESIGN REQUIREMENTS
|
|
1. |
All Tenant storefront entrance/store identification designs shall be subject to the approval of the Landlord. Imaginative designs which depart from
traditional methods and placement will be encouraged.
|
|
2. |
Wording of signs shall not include the product sold except as part of Tenant’s trade name or insignia.
|
|
3. |
Tenants shall have identification signs designed in a manner compatible with and complimentary to adjacent storefronts and to the overall design
concept of the Mall.
|
|
4. |
Tenants are encouraged to have signs designed as an integral part of the storefront design with letter size and location appropriately scaled and
proportioned to the overall storefront design. The design of all signs, including style and placement of lettering, size, color, materials and method of illumination shall be subject to the approval of the Landlord.
|
|
5. |
Signs shall be composed of individual or script lettering. Signs with background panels shall be designed in a manner compatible with the
storefront. Sign boxes and cans will not be permitted.
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E. |
CONSTRUCTION REQUIREMENTS
|
|
1. |
Exterior sign lettering, bolts, fastenings and clips shall be of porcelain enamel finish, stainless steel, aluminum, brass or bronze.
|
|
2. |
All letters shall be fabricated using full-welded construction.
|
|
3. |
All penetrations of the building structure required for sign installation shall be neatly sealed in a watertight manner.
|
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4. |
Tenant or Sign Contractor, at Tenant’s expense shall repair any damage to the Mall or Mall buildings caused as a result of the installation or
removal of Tenant’s sign.
|
|
5. |
Tenant shall be fully responsible for the operations of Tenant’s sign.
|
F. |
MISCELLANEOUS REQUIREMENTS
|
|
1. |
Tenant will be permitted to place upon each entrance of its Premises not more than One Hundred Forty Four (144) square inches of gold leaf or decal
application lettering not to exceed two inches (2”) in height, indication hours of business, emergency telephone numbers, etc.
|
|
2. |
If Tenant has non-customer door for receiving merchandise, it may have uniformly applied on said door in location, as directed by Landlord, in two
inches (2”) high block letters, the Tenant’s name and address. Where more than one (1) Tenant used the same door, each name and address shall be applied.
|
|
3. |
Tenant may install on the Mall front, if required by the U.S. Post Office, the numbers only for the street address in exact location stipulated by
the Landlord. Size, type and color of numbers shall be a stipulation by Landlord.
|
|
4. |
Floor signs, such as inserts into terrazzo, etc. shall be permitted within the Tenant’s lease line in their storefronts, if approved by the
Landlord.
|
|
5. |
Tenant shall be allowed to have a professionally constructed banner attached to their building, 3 times per year for a period not to exceed 30 days
each time. Tenant must approve the wording, location and manner of installation of each banner with the Landlord. Tenant must get any necessary permits from Sandy City. Except as provided herein, no advertising placards, banners, pennants,
names, insignia, trademarks, or other descriptive material shall be affixed or maintained upon the glass panes and supports of the show windows and doors, or upon the exterior walls of the building or storefront.
|
“Landlord”
|
“Tenant”
|
|
||||||
Mariemont Holdings, L.L.C.
|
Utah Community Bank
|
|
||||||
By
|
/s/ [ILLEGIBLE]
|
By
|
/s/ [ILLEGIBLE]
|
|||||
Its
|
[ILLEGIBLE]
|
Its
|
President
|
Lease Year 1:
|
$14.00 per square foot
|
$5,231.33 per month
|
||
Lease Year 2:
|
$14.00 per square foot
|
$5,231.33 per month
|
||
Lease Year 3:
|
$14.00 per square foot
|
$5,231.33 per month
|
||
Lease Year 4:
|
Increased by CPI
|
See below
|
||
Lease Year 5:
|
Increased by CPI
|
See Below
|
Exhibit 10.12
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (the “First Amendment”) is made and entered into as of the 3rd day of June, 2009, by and between FPA Sandy Mall Associates, LLC, a Delaware limited liability company, (the “Landlord”) and Utah Community Bank, a Utah Corporation (the “Tenant”).
RECITALS
WHEREAS, Landlord is the successor-in-interest to Mariemont Holdings, LLC and Tenant are parties to that certain Lease, dated as of January 27, 1999 and subsequent Lease Renewal/Extension Agreement dated February 12, 2004 (the “Original Lease”), whereby Tenant leased that certain retail space located at 820 East 9400 South, Sandy, Utah 84070 consisting of approximately 4,484 rentable square feet (the “Premises”).
AND WHEREAS, by this First Amendment to Lease, Landlord and Tenant desire to extend the term of the lease for the above referenced Premises. All other terms and conditions of the original lease and subsequent amendments will remain unchanged and in full force and effect.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
PREMISES: | 820 East 9400 South in the Sandy Village Shopping Center consisting of approximately 4,484 rentable square feet. |
LEASE TERM: | Sixty (60) months, commencing August 1, 2009 and terminating July 31, 2014. |
BASE RENT: | August 1, 2009 – July 31, 2011 | $6,191.18 NNN per month |
August 1, 2011 – July 31, 2012 | $6,376.92 NNN per month | |
August 1, 2012 – July 31, 2013 | $6,568.22 NNN per month | |
August 1, 2013 – July 31, 2014 | $6,765.27 NNN per month |
OPERATING EXPENSES: | Triple Net Lease. Tenant is responsible for paying their own utilities, maintenance and repairs and a proportional share of the common area expenses, taxes and insurance of the Shopping Center. |
SECURITY DEPOSIT: | Tenant currently has a security deposit n file with Landlord in the amount of $5,231.33. No additional deposit will be due at Amendment execution. |
OPTION TO RENEW: | Tenant shall have the option to renew this lease for an additional five (5) years by giving Landlord written notice 180 days prior to lease expiration, on or before February 1, 2014 with rents to be negotiated at that time. |
INSURANCE: | Tenant shall procure a $1,000,000 per occurrence General Liability Policy as explained more specifically in the original lease document. Ownership and Management companies shall be listed as additional insureds. |
BROKERAGE FEE: | It is understood and agreed that Trinity Property Consultants, LLC is the only broker involved in this transaction. |
CONFIDENTIALITY: | Tenant acknowledges that all correspondence and all communication between Landlord and Tenant concerning information that is part of this Lease Agreement is confidential information (collectively the “Confidential Information”). Tenant shall keep the Confidential Information strictly confidential and shall not disclose the Confidential Information to any person or entity other than Tenant’s financial or legal consultants. |
IN WITNESS THEREOF, this First Amendment has been executed as of the day and year first above written.
“LANDLORD”: | “TENANT”: | ||||
FPA Sandy Mall Associates, LLC
a Delaware limited liability company |
Utah Community Bank
a Utah Corporation |
||||
By: Its Manager: GF Sandy Mall, LLC | By: |
/s/ Philip C. Gibson
|
|||
a Delaware limited liability company | |||||
Printed Name:
|
Philip C. Gibson
|
||||
By: | /s/ Michael B. Earl | ||||
Michael B. Earl - Manager | Title: | Senior Vice Pres. |
|
Exhibit 10.13
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (the “Second Amendment”) is made and entered into as of the 25th day of April, 2014, by and between FPA Sandy Mall Associates, LLC, a Delaware limited liability company, (the “Landlord”) and Utah Community Bank, a Utah Corporation (the “Tenant”).
RECITALS
WHEREAS, Landlord is the successor-in-interest to Mariemont Holdings, LLC and Tenant are parties to that certain Lease, dated as of January 27, 1999 (the “Original Lease”) and subsequent Lease Renewal/Extension Agreement dated February 12, 2004 and First Amendment to Lease dated June 3, 2009, whereby Tenant leased that certain retail space located at 820 East 9400 South, Sandy, Utah 84070 consisting of approximately 4,484 rentable square feet (the “Premises”).
AND WHEREAS, by this Second Amendment to Lease, Landlord and Tenant desire to extend the term of the lease for the above referenced Premises. All other terms and conditions of the original lease and subsequent amendments will remain unchanged and in full force and effect.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
PREMISES: | 820 East 9400 South in the Sandy Village Shopping Center consisting of approximately 4,484 rentable square feet. |
LEASE TERM: | One Hundred Twenty (120) months commencing August 1, 2014 and terminating July 31, 2024. |
BASE RENT: | August 1, 2014 – July 31, 2015 | $5,963.00 NNN per month |
August 1, 2015 – July 31, 2016 | $6,082.26 NNN per month | |
August 1, 2016 – July 31, 2017 | $6,203.91 NNN per month | |
August 1, 2017 – July 31, 2018 | $6,327.98 NNN per month | |
August 1, 2018 – July 31, 2019 | $6,454.54 NNN per month | |
August 1, 2019 – July 31, 2020 | $6,583.63 NNN per month | |
August 1, 2020 – July 31, 2021 | $6,715.31 NNN per month | |
August 1, 2021 – July 31, 2022 | $6,849.61 NNN per month | |
August 1, 2022 – July 31, 2023 | $6,986.60 NNN per month | |
August 1, 2023 – July 31, 2024 | $7,126.34 NNN per month | |
OPERATING
EXPENSES: | Triple Net Lease. Tenant is responsible for paying their own utilities, maintenance and repairs and a proportional share of the common area expenses, taxes and insurance of the Shopping Center. |
TENANT
IMPROVEMENTS: | Landlord to pay for the tenant improvements in the premises as outlined below: |
● | Sand and wash with solvent the damaged stained wood. Stain and refinish at base boards and check counter. |
● | Demo existing carpet, move office furniture and install new carpet in the offices upstairs, the stairs to the basement and the hallway in the basement. |
This work will done after hours and on weekends per Bank’s request.
SECURITY | |
DEPOSIT: | Tenant currently has a security deposit n file with Landlord in the amount of $5,231.33. No additional deposit will be due at Amendment execution. |
INSURANCE: | Tenant shall procure a $2,000,000 per occurrence General Liability Policy as explained more specifically in the original lease document. Ownership and Management companies shall be listed as additional insureds. |
REPRESENTATION: | It is understood and agreed that Red Tail Acquisitions, LLC is the only representative involved in this transaction. |
CONFIDENTIALITY: | Tenant acknowledges that all correspondence and all communication between Landlord and Tenant concerning information that is part of this Lease Agreement is confidential information (collectively the “Confidential Information”). Tenant shall keep the Confidential Information strictly confidential and shall not disclose the Confidential Information to any person or entity other than Tenant’s financial or legal consultants. |
IN WITNESS THEREOF, this Second Amendment has been executed as of the day and year first above written.
“LANDLORD”: | “TENANT”: | |||||
FPA Sandy Mall Associates, LLC a Delaware limited liability company |
Utah Community Bank a Utah Corporation |
|||||
By: Its Manager: GF Sandy Mall, LLC | By: | /s/ Kent Landvatter | ||||
a Delaware limited liability company | Kent Landvatter – President & CEO | |||||
By: | /s/ Michael B. Earl | |||||
Michael B. Earl - Manager |
LEASE RENEWAL/EXTENSION AGREEMENT
This Lease Renewal/Extension Agreement is made and entered into this 12 day of February, 2004, by and between Mariemont Holdings, LLC (“Landlord”) and Utah Community Bank (“Tenant”), with respect to the following.
RECITALS
A. Landlord and Tenant are parties to a Lease Agreement, dated January 27, 1999 (the “Lease”). A subsquent Lease Amendment No. 1 was executed August, 1999. A subsquent Lease Amendment No. 2 was executed September, 1999.
B. The term of the Lease presently expires on July 31, 2004.
C. Landlord and Tenant desire to extend the term of the Lease, adjust the minimum monthly rent due thereunder, and otherwise modify the Lease, upon the following terms and conditions.
TERMS AND CONDITIONS
1. The term of the Lease is hereby extended for a period of Five Years, commencing August 1, 2004 and terminating on July 31, 2009 (“Extension Period”).
2. Minimum monthly rent during the Extension Period shall be $5,534.00 per month. Beginning year two (2) of the Extension Period the annual CPI increase shall not exceed 5% annually.
3. Effective as of September 1, 2000 (the beginning of the Extension Period), Article 6 of the Lease is replaced in its entirety with the following:
4. Tenant has 2-5 year options remaining under the initial Lease Agreement.
“6. Additional Rent: CAM Expenses, Real Estate Taxes. It is the intent of both parties that the Minimum Monthly Rent and Percentage Rent, if any, herein specified shall be absolutely net to Landlord throughout each Lease Year of the term of this Lease, that all costs, expenses, and obligations of every kind relating to the Premises which may arise or become due during the term hereof shall be paid by Tenant and that Landlord shall be indemnified by Tenant against such costs, expenses, and obligations. In furtherance thereof, Tenant shall pay as additional rent, without demand therefor and without setoff or deduction, its Proportionate Share of expenses and charges as set forth below. All taxes, charges, costs, and expenses which Tenant is required to pay hereunder, together with interest and penalties that may accrue thereon in the event of Tenant’s failure to pay such amounts, and all damages, costs, and expenses which Landlord may incur by reason of any default of Tenant or failure on Tenant’s part to comply with the terms of this Lease, shall be deemed to be additional rent and, in the event of nonpayment by Tenant, Landlord shall have all the rights and remedies with respect thereto as Landlord has for the nonpayment of the Minimum Monthly Rent.
6.1 | Proportionate Share: Estimated Payments; Reconciliation. |
(a) The “Proportionate Share” of Tenant shall be obtained by multiplying the expense in question by a fraction, the numerator of which shall be the square-foot area of the Premises and the denominator of which shall be the square-foot area of all space leased in the Shopping Center.
(b) Tenant’s Proportionate Share of the expenses and charges set forth in this Section shall be computed on the basis of periods of twelve (12) consecutive calendar months as designated by Landlord and payments toward the same shall be made by Tenant in equal installments in advance on the first day of each calendar month, in an amount to be established by Landlord, with Tenant’s payment of monthly rent.
(c) Within sixty (60) days after the end of each twelve (12) month period, Landlord shall furnish to Tenant a statement showing the Shopping Center’s actual expenses and charges for the preceding period and any adjustments to be made as a result thereof. In the case of deficiency, Tenant shall within ten (10) days remit the amount of such deficiency to Landlord. In the case of a surplus, Landlord shall apply Tenant’s share of such surplus to payments next falling due from Tenant under this Article.
6.2 | Expenses. |
(a) Tenant shall pay its Proportionate Share of: (1) all taxes, assessments, levies, and charges, whether special, extraordinary, or otherwise, whether foreseen or unforeseen, which may be levied, assessed, or imposed upon, on account of or with respect to: (i) the ownership of, and/or all other taxable interests in, all land situated in the Shopping Center; (ii) all buildings, structures, and other improvements situated thereon; (iii) rents or rental income, whether such tax be levied on the Landlord or the Tenant; (2) the Shopping Center’s Operating Cost, as defined below; and (3) ten percent (10%) of the foregoing to cover administrative and overhead costs.
(b) The amount of real estate taxes upon which such payment is based shall be the amount reflected in the most current notice(s) of assessment or tax bill(s) concerning the entire Shopping Center or, if there are none, such amount as Landlord may reasonably estimate. In the event Landlord protests the assessed value of the real property, then Landlord may, at its option, estimate the amount of real estate taxes it believes will finally be owed as a consequence of its protest, and such estimate shall be used for purposes of determining Tenant’s Proportionate Share of expenses. When any such protest is resolved, then the amounts actually determined to be owed for real estate taxes shall be reconciled to the amounts paid by the Tenant, and the deficiency or surplus paid or applied as set forth in Section 6.1(c) above. Tenant at all times shall be responsible for and shall pay, before delinquency, all municipal. county, state, or federal taxes assessed against any leasehold interest or any personal property of any kind owned, installed or used by Tenant. Should the taxing authorities include in such real estate taxes the value of any improvements made by Tenant, or include machinery, equipment, fixtures, inventory, or other personal property of Tenant, then Tenant shall also pay the entire real estate taxes for such items. A tax bill submitted by Landlord to Tenant shall be conclusive evidence of the amount of taxes assessed or levied, as well as items taxed.
(c) The “Shopping Center’s Operating Cost” means the total cost and expense incurred in operating and maintaining the Common Area, hereinafter defined, excluding only items of expense commonly known and designated as carrying charges, but specifically including, without limitation, utility expenses; personal property taxes and assessments on the Common Area improvements and equipment; premiums on fire and extended insurance coverage, vandalism and plateglass insurance for the Common Areas and all other insurance procured by Landlord pursuant to the Lease; Landlord’s out-of-pocket expenses incurred in contesting or seeking reductions in real estate taxes or assessments; maintenance, repair and replacement of Common Area pavement and mechanical equipment, if any; maintenance and cleaning of the Common Area; gardening and landscaping; repairs; line painting; lighting; security services; sanitary control; and removal of snow, trash, rubbish, garbage, and other refuse. “Common Area” means all area, space, equipment, and special services provided for the common or joint use and benefit of the lessees or occupants of the Shopping Center, or portions thereof, their employees, agents, servants, customers, and other invitees, including without limitation, parking areas, driveways, landscaped areas, truck service ways, loading docks, ramps and sidewalks, and washrooms.”
4. All terms used herein shall have the same meaning as used in the Lease, unless expressly contradicted herein. In the event of a conflict between the provisions of the Lease and those of this Agreement, the provisions of this Agreement will control. Except as modified herein, the Lease is hereby ratified and confirmed, and shall remain in full force and effect as amended hereby. Guarantors, if any, that sign this Agreement hereby ratify and confirm that their guarantee of the Lease shall continue for the Extension Period, and any modifications, holdovers, renewals, or extensions of said Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first set forth above.
LANDLORD: | ||
MARIEMONT HOLDINGS, LLC, a Utah limited liability company | ||
By: | /s/ [ILLEGIBLE] |
Printed Name: |
Title: | Partner |
TENANT: | ||
UTAH COMMUNTY BANK | ||
By: |
/s/ Philip C. Gibson
|
Printed Name: |
Philip C. Gibson
|
Title: |
Senior Vice Pres.
|
|
By: |
/s/ Jeff Loosle
|
Printed Name: |
Jeff Loosle
|
Title: | President |
Exhibit 10.14
RIDER TO LEASE
DATED: | January , 2018 |
PREMISES: | 43 North Village Avenue, Rockville Centre, New York 11570 (Second Floor) |
LANDLORD: | North Village Centre Inc. |
TENANT: | FinWise Bank |
In the event this Rider to Lease is in any way inconsistent with or contradicts the terms of the form portion of the Lease, this Rider shall control.
RENTAL SCHEDULE
The base annual rental during the initial two (2) year term of this lease by year shall be:
FIRST YEAR
THIRTY EIGHT THOUSAND and 00/100 ($38,000.00) DOLLARS
SECOND YEAR
THIRTY NINE THOUSAND ONE HUNDRED FORTY and 00/100 ($39,140.00) DOLLARS
The base annual rent during the THREE (3) year renewal term of this lease by year shall be:
THIRD YEAR
FORTY THOUSAND THREE HUNDRED FOURTEEN and 00/100 ($40,314.00) DOLLARS
FOURTH YEAR
FORTY ONE THOUSAND FIVE HUNDRED TWENTY FOUR and 00/100 ($41,524.00) DOLLARS
FIFTH YEAR
FORTY TWO THOUSAND SEVEN HUNDRED SIXTY NINE and 00/100 ($42,769.00) DOLLARS
The aforesaid base annual rent shall be payable in equal monthly installments on the first day of each and every month during the term and the renewal term, if any, of the lease as follows:
Year 1 in the amount of $3,166.67 per month;
Year 2 in the amount of $3,261.67 per month;
Year 3 in the amount of $3,359.52 per month;
Year 4 in the amount of $3,460.30 per month; and
Year 5 in the amount of $3,564.11 per month.
Upon the execution of this lease, the Tenant shall pay the first month’s rent and the security deposit in the amount of $ 6,333 reflecting 2 month’s rent which security shall be increased each year to reflect any rent increase. Under no circumstances will the security deposit be used as the final months’ rent and the Landlord shall be free to use it for any purpose and have no obligation to maintain the security deposit in a segregated account of any kind. All taxes, assessments, insurance premiums and other charges or additional rent to be paid by the Tenant hereunder, are in addition to the above set forth “base annual rentals” pursuant to the terms of this lease of which this rider forms a part.
THIRTY-SIXTH: The Tenant shall, at the Tenant’s own cost and expense maintain and take good care of the non-structural portions of the premises and all fixtures and appurtenances thereto; make all non- structural repairs to the premises; and pay for structural repairs only if a structural repair is required or occasioned due to the acts or omissions of the Tenant and/or his invitees, agents and/or representatives, in which event Tenant shall be responsible for such repairs, subject to the waiver of subrogation provisions set forth in Article Thirty-Ninth herein. In the event Tenant is required to, but fails or refuses to diligently commence to provide maintenance or make a repair as set forth above and thereafter, after notice of such failure, continue to provide maintenance or make a repair with due diligence to completion of same, Landlord may, in addition to any other remedies provided hereunder, pay for such maintenance or repair, in which event, the reasonable cost of same shall become additional rent due with the next ensuing monthly rent payment. Landlord shall make all structural repairs and all repairs to the mechanical systems that do not exclusively serve the Premises, not caused by Tenant’s negligent acts or omissions, including for example the roof, roof and floor support beams, ceiling, plumbing system, foundation and exterior walls and the sidewalks and curbs adjacent to the Building (including, without limitation, cleaning the sidewalks and causing the sidewalks to be free of snow, ice and debris).
THIRTY-SEVENTH: Landlord shall be under no obligation to provide Tenant with any services, utilities, water, electricity, heat, air conditioning or other amenities, this being a net lease with Tenant being solely responsible to provide such services, utilities and amenities as it needs at its own expense; provided, however, that, notwithstanding anything to the contrary contained in this Lease, in the event that there is any failure, interruption or defect in any utility service to the Premises as the result of any negligent act or negligent failure to act by Landlord and/or its agents, employees and/or contractors (as opposed to a public service utility company), and Tenant shall be unable for at least seventy-two (72) consecutive hours to operate, its business in the Premises in substantially the same manner as such business was operated prior to such interruption, the base annual rent and additional rent shall abate until the earlier of the date on which (i) such service is restored and (ii) Tenant is able to recommence conducting its business in the Demised Premises in its customary manner. Landlord represents that all utilities are separately metered, available at the Premises and billed, and that all utilities servicing the demised premises are paid to date and will be paid to the date Tenant becomes obligated to pay rent.
THIRTY-EIGHTH: As and for additional rent, the Tenant shall pay to the Landlord an amount equal to forty three percent (43%) of all increases in real property and school taxes and assessments (including any special assessments) covering the leased premises over and above the taxes assessed and charged prior to any reduction through tax contest if any, for the base year 2018 by the County of Nassau or Town of Hempstead and the second half of 2017/2018 and the first half of 2018/19 by the Village of Rockville Centre for Village and school taxes. Landlord represents that to the best of its knowledge the building and real property on which the demised premises are located is fully assessed without abatement and that no abatement or exemptions shall apply or be included as taxes for any applicable base year. Landlord agrees that it shall take all reasonable steps to obtain a reduction of the taxes affecting the real property on which the premises are located each year or, in the alternative, give Tenant the right to pursue such tax relief. Tenant shall be entitled to its pro rata share of any tax refund net of fees and expenses incurred to obtain same For purposes of this lease, the leased premises are agreed to constitute forty three percent (43%) of the building area of the building which is subject to such taxes and assessments. Such additional rent shall be due and payable on the first day of the month following the delivery to the Tenant of a copy of the new tax bill for the premises by regular mail at the address of the premises herein leased or within twenty (20) days after a copy of the bill is delivered to tenant, whichever is later. All partial years shall be apportioned pro rata at the beginning and end of the lease term. Anything contained in this Lease to the contrary notwithstanding, Taxes shall not include any (a) any special assessments or Taxes resulting from the future expansion of the Building or from any improvements exclusively made by or for the benefit of any other tenant in the Building, (b) taxes upon the Building’s “net income,” (c) any fines, penalties, interest or late charges providing Tenant is current in its rent payments, or discounts for prepayment or (d) income, excess profit, capital stock, estate, inheritance or franchise taxes. If, by law, any assessment may be paid in installments, then, for the purposes hereof (a) such assessment shall be deemed to have been payable in the maximum number of installments permitted by law and (b) there shall be included in real estate taxes, for each year in which such installments may be paid, the installments of such assessments so becoming payable during such year, together with interest payable during such year.
THIRTY-NINTH: The Tenant shall obtain and pay the premium for a general liability insurance policy in standard form satisfactory to Landlord from a reputable insurance carrier in the amount of at least $2,000,000.00 which names the Landlord as an additional insured and which provides that same cannot be canceled or reduced in amount without prior written notice to Landlord. Such policy shall insure Landlord against any and all claims, demands, losses and/or risks which arise from Tenant’s occupation, use and control of the premises including, without limitation, property damage or personal injury to Landlord or to a third party. This insurance obligation shall be interpreted and construed together with paragraph second of the form portion of this Lease in the broadest possible manner in favor of providing protection and legal defense to the Landlord from claims made as a result of Tenant’s acts, omissions or strict liability under the law. Tenant shall likewise obtain and pay for a Plate Glass replacement insurance policy naming the Landlord as an additional insured. Certificates of insurance naming Landlord as an additional insured together with a copy of the declaration page of the underlying policy which binds Tenant’s insurance carrier’s obligations to Landlord as an additional insured as stated in the certificate of insurance certificates evidencing any renewals or substitutions shall be furnished to Landlord’s attorney for review at least three (3) business days prior to the commencement of this lease or the effective date of any renewal or replacement policy, whichever applies, throughout the term of this lease. Such insurance shall be maintained by the Tenant at its sole costs in continual effect throughout the term hereof. Notwithstanding anything to the contrary contained elsewhere in this Lease, Tenant shall not be liable to Landlord or to any insurance company insuring the Landlord by way of subrogated rights or otherwise, for any loss or damage caused by fire or any other hazard or peril covered by fire or extended coverage or all risk insurance, to the extent such loss or damage is covered by insurance to any building structure or other tangible property, or any resulting loss of income, even though such loss or damage may have been occasioned by the negligence of Tenant, its agents or employees provided such waiver of subrogation shall be obtainable. If such policies shall not be obtainable or shall be obtainable only at a premium over that chargeable without such waiver, Landlord shall notify the other thereof, and Tenant shall have 10 business days thereafter to agree to pay such additional premium. If Tenant fails to pay such additional premium, this paragraph shall have no effect during such time as such policies shall not be obtainable or Tenant shall refuse to pay the additional premium. The waiver of subrogation and the releases of Tenant, insofar as they are provided for in this paragraph, shall apply to any damage caused by act, omission, or negligence, not only in the Premises but also in the Building of which the Premises are a part._
FORTIETH: The Tenant covenants and agrees not to place or store, or permit to be placed or stored, any vending machines, coin operated devices or receptacles of any kind or description outside the premises and it agrees that all deliveries to, and any shipment from, the demised premises shall be made at the rear of the premises at such times and in such manner as to comply with all applicable laws.
FORTY-FIRST: The Tenant shall not do, or permit to be done, any act or thing upon said premises, including without limitation storage of any hazardous materials or substances, which will invalidate or be in conflict with fire insurance policies covering the building of which the demised premises form a part, and any fixtures and property therein, and shall not do, or permit to be done, any act or thing upon such premises which shall or might subject the landlord to any liability or responsibility for injury to any person or persons or to the property by reason of any business or operation being carried on upon said premises, or for any other reason. The Tenant, as its sole expense, shall comply with all rules, orders, regulations and requirements of the New York Board of Fire Underwriters, or any other similar body, and shall not do, or permit anything to be done, in or upon said premises, or bring or keep anything therein except as is permitted by the Fire Department, Board of Fire Underwriters, Fire Insurance Rating Organization, or other authority having jurisdiction thereof. Landlord represents that it has no knowledge of any release of hazardous materials at the demised premises or the building or real property of which the demised premises are a part. Landlord hereby represents that, to the best of Landlord’s knowledge, Tenant’s normal business operations in the Premises as contemplated by the permitted use described herein will not result in any increase in the rate of or violate the terms of any insurance carried by Landlord as of the date hereof.
FORTY-SECOND: This lease is, and shall be and remain, subject to any and all easements which the Landlord or its predecessors in interest may have heretofore granted, or may hereafter grant in connection with the installation of water, gas, electric, telephone and other public utility servicing the building. Landlord represents that it has not and will not grant any easements that will unreasonably interfere with the operation of Tenant’s business at the demised premises.
FORTY-THIRD: If the Tenant shall at any time be in default in respect to any of the covenants, terms, conditions or provisions of this lease, or if the Tenant shall be in default in the payment of any rent, and if the Landlord shall engage the services of an attorney to enforce this lease, institute any action, or summary proceedings against the Tenant based upon such default, the said action or summary proceedings shall include a charge therein, and , providing the Landlord is the prevailing party, the Tenant agrees to reimburse the Landlord for its reasonable attorney’s fees, costs and disbursements which may be incurred by the Landlord; and the amount of such expenses, attorney’s fees, costs and disbursements shall, at the option of the Landlord, be deemed to be additional rent hereunder and shall be due from the Tenant to the Landlord immediately upon the incurring of such respective expenses. The Tenant hereby agrees that in the event the Landlord commences any action or summary proceeding for the non-payment of rent or additional rent under the terms of this lease, no set-off or counterclaim whatsoever of any nature or description will be interposed by, or on behalf of, the Tenant in any such action or summary proceedings. Any and all taxes, assessments and/or insurance premiums or other charges to be paid by the Tenant hereunder shall be deemed additional rent and a default in payment thereof following notice and applicable cure periods set forth in this Lease shall constitute a default of rent due hereunder, entitling the Landlord to all remedies the Landlord may be entitled to in the event of a default in rent.
FORTY-FOURTH: The Tenant has inspected the premises and the equipment, furnishings and fixtures located thereon, if any, and the Tenant accepts the same in their “as is” condition. The Landlord makes no representations whatsoever as regards the premises, their condition or the suitability thereof for Tenant’s business purposes, except that Landlord hereby represents that the plumbing, heating/air conditioning and electrical systems shall be in working order and the roof and basement, if any, free of leaks at the commencement date of this lease. Tenant shall at all times maintain the premises and all the equipment, mechanical and otherwise, located thereon or servicing same, in good working condition and order and shall deliver the same to the Landlord at the termination of the lease, in good working condition, reasonable wear and tear excepted. Notwithstanding the foregoing, at the expiration date of this Lease, Tenant shall surrender the plumbing, heating/air conditioning and electrical systems in their “as is” condition as of the date . it take possession of the Premises subject to reasonable wear and tear over time.
FORTY-FIFTH: All improvements made by the Tenant to or upon the demises premises, (except trade fixtures), shall when made at once be deemed to be attached to the premises and become the property of the Landlord and, at the expiration or sooner termination of the lease term, shall be surrendered to the Landlord in as good order and condition as they were when Page 7 of 10 installed, reasonable wear and tear excepted. At the expiration or termination of this lease Tenant shall be responsible for the removal of any trade fixtures and other personal property which is the Tenant’s property and to restore and turn back restore and return possession of the premises in a vacant and broom clean condition. Landlord agrees to deliver the premises in a vacant, broom clean condition upon the commencement of the term.
FORTY-SIXTH: The Tenant expressly agrees not to interpose any claim or counterclaim in any action or summary proceeding for non-payment of rent or additional rent, brought by the Landlord to recover any monies due or the possession of the premises under the terms of this lease; and the Tenant further agrees that any claim or claims which he may have against the Landlord shall be prosecuted only in a separate and independent action. The Tenant also expressly agrees that he will not move or seek to consolidate any action or proceeding which he might bring against the Landlord with any such action or summary proceeding commenced by the Landlord against the Tenant.
FORTY-SEVENTH: Nothing herein contained shall be deemed or interpreted to be knowledge, consent or approval on the part of the Landlord under the Mechanic’s Lien Law or any other statute or law, so as to entitle any persons supplying materials or services or furnishing labor at said premises, at Tenant’s request, to file a Mechanic’s Lien or make any other claim against the Landlord or the demised premises; it being specifically understood and agreed that all such persons shall look solely and only to the Tenant hereunder for the payment of any monies for any labor, services or materials they may furnish, at Tenant’s instance and request, at the demised premises; and the Tenant expressly agrees to cancel, discharge and remove any and all Mechanic’s Liens, claims or judgments that may be filed, made or recovered against the Landlord or the demised . premises by any contractor, architect, subcontractor or material man for work, labor and/or materials furnished at said premises at the Tenant’s instance or request; and the Tenant expressly agrees to bond, discharge or satisfy any such lien, claim, judgment or encumbrance within twenty (20) business days after notification of same is delivered to Tenant or any of his employees or agents at the leased premises and in default thereof, the Landlord shall have the right and option to terminate this lease on giving thirty (30) days written notice to the Tenant; and upon the failure of the Tenant to bond, discharge or otherwise satisfy such Mechanic’s Liens, claims or judgments within said period of thirty (30) days, this lease shall, at the option of the Landlord, terminate and come to an end upon the expiration of the said thirtieth day as if the term of this lease had originally ended and terminated on the said thirtieth day after such notice; and all the rights and remedies of the Landlord under the terms of this lease to recover damages against the Tenant by reason of an earlier termination of this lease shall apply in each and every respect to the termination under the provisions of this paragraph.
FORTY-EIGHTH: The Tenant shall not make any alterations or structural changes to the premises without the prior written approval of the Landlord, which approval shall not be unreasonably withheld or delayed with respect to non-structural alterations only. The term “alteration” as used herein does not include changes to decor, furnishings, interior lighting, window treatments, floor coverings, wall covering or any other alterations that are decorative in nature and do not alter the floor plan of the premises. At the request of the Landlord, Tenant shall furnish to Landlord, before the commencement of any work on the premises, reasonably satisfactory proof of insurance provided by any contractor who is to perform the work insuring against any liability to any worker or third party arising from the work and satisfactory proof that the Landlord is an additional insured thereunder. In the event any such alterations or structural changes to the premises, or if for any other reason, any act or omission of the Tenant shall cause the Landlord’s insurance rates covering the premises to be increased, then, as further additional rent hereunder, the Tenant shall reimburse and pay the Landlord for any such additional premiums charged as a result of such rate increase. Tenant shall comply with all building, fire, health, and other codes, rules or regulations with regard to any alterations or structural changes to the premises and shall secure such permits, approvals and certificates of completion or occupancy as may be required to establish the legality of its use of the premises and any such alterations or structural changes.
FORTY NINTH: In the event the Tenant fails to pay any rent or additional rent as provided in this lease within ten (10) days from the date due, the Tenant shall be responsible to pay to the Landlord a sum equal to five percent (5%) of the then due rent or additional rent as a rental service charge, which shall be added to the rent then due. In the event any check tendered by Tenant to landlord is returned for insufficient or uncollected funds, Tenant shall pay a fee of $250.00 to defray the expense and inconvenience to Landlord.
FIFTIETH: Any dates and time periods for notices, etc., as may be set forth in this lease, time shall be strictly construed and enforced.
FIFTY-FIRST: Tenant shall have no right to assign this lease or to sublet the premises without Landlord’s prior written consent, which consent shall not be unreasonably withheld.
FIFTY-SECOND: The Commencement Date shall be the date Landlord delivers vacant broom clean possession of the demised premises to Tenant. The anticipated Commencement Date shall be the January 15, 2018. Notwithstanding the foregoing, Tenant shall be entitled to an abatement of base annual rent for two weeks after the Commencement Date. Moreover, in the event Landlord fails to deliver the demised premises on or before February 1, 2018, Tenant shall receive a credit against base annual rent equal to one (1) days’ base annual rent for each day that delivery of the demised premises has been so delayed; provided further that if Landlord fails to deliver the demised premises on or before March 1, 2018 (“Outside Date”), then Tenant may, by notice to Landlord delivered no later than ten (10) business days after the Outside Date cancel the Lease, whereupon neither party shall have any obligation to the other except that Landlord shall return to Tenant any advance rent and security previously delivered to Landlord .
FIFTY-THIRD: Except as herein elsewhere provided, all notices to either party shall be by Certified mail return receipt requested or by a nationally recognized overnight delivery service to the address on the face page of this lease and/or to such other address as may be requested in writing. Tenant hereby designates its address for all purposes under this lease including notices and service of legal process as 43 North Village Avenue, Second Floor, Rockville Centre, New York 11570, Attention: David Tillis, with a copy to Wachtel Missry LLP, 885 Second Avenue, 47th Floor, New York, New York 10017, Attention: Allan Weiss, Esq. A notice given by counsel for Landlord or Tenant shall be deemed a valid notice if addressed and sent in accordance with the provisions of this Article. A copy of all Tenant notices shall also be served on Landlord’s attorney, E. Michael Rosenstock at 55 Maple Avenue, Suite 206, Rockville Centre, New York 11570
FIFTY-FOURTH: Tenant intends to use the demises premises as a “office space”. Tenant shall be permitted to engage in this use and Landlord shall obtain any and all necessary permits and licenses required by the Village of Rockville Centre and any other governmental entity or municipal authority and complies with all laws, rules, regulations and codes which apply to such use at Landlord’s sole cost and expense. Landlord represents that Tenant’s intended use of the premises is a legal use under the zoning laws which apply to the premises. If Tenant’s use is not permitted at the Premises, Tenant shall have the option to terminate this Lease, which termination shall be effective upon the tenth (10th) day following written notice from Tenant requesting such termination. Upon such notice, Tenant shall have no further liability to Landlord for any matter accruing from and after such date and would be entitled to a return of its security deposit (except if due to cover monetary defaults as otherwise set forth in the Lease) it being clear that such an exercise would not be deemed a forfeiture of Tenant’s security deposit.
Tenant shall not be obligated under any circumstances to install a fire sprinkler system or make any other modification to the Premises to make the same comply with any current or future laws. Notwithstanding anything to the contrary contained in this Lease, Landlord agrees to sand and finish the wood floors and deliver the bathrooms in good operating condition and in compliance with all laws, rules and regulations enacted by all federal, state and municipal governments having jurisdiction thereof, at Landlord’s sole expense, prior to the Commencement Date. All Landlord’s work shall be standard builder quality.
FIFTY-FIFTH: Intentionally Omitted.
FIFTY-SIXTH: Providing Tenant is not in default hereunder and has not been more than fifteen (15) days late in payment of rent and additional rent more than twice in any previous year of this lease, Tenant shall have the option to renew this lease for an additional three (3) year period upon the same terms and conditions set forth herein including, without limitation, annual increases of three (3%) percent in base rent as reflected in the RENT SCHEDULE above. Tenant must exercise each such option in writing no sooner than six (6) months and no later than three (3) months prior to the expiration of the original term of the lease and failure to do so shall constitute a waiver by Tenant of the right to exercise the option to renew.
Dated:
North Village Centre, Inc. | Fin Wise Bank | |||||
By: | (Landlord) | By: | /s/ [ILLEGIBLE] | (Tenant) | ||
Jason Lee, Agent |
constitute a waiver by Tenant of the right to exercise the option to renew.
Dated:
North Village Centre, Inc. | Fin Wise Bank | |||||
By: | /s/ Jason Lee, Agent | (Landlord) | By: | /s/ [ILLEGIBLE] | (Tenant) | |
Jason Lee, Agent |
Name
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Jurisdiction of Organization
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FinWise Bank
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Utah
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