☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
California
|
|
68-0450397
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
195 N. First Street, Dixon, California
|
|
95620
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading symbols(s)
|
Name of each exchange on which registered
|
||
None
|
|
Not Applicable
|
Yes ☒
|
No ☐
|
Yes ☒
|
No ☐
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☒
|
Smaller reporting company ☒
|
Emerging growth company ☐
|
Yes ☐
|
No ☒
|
|
Page
|
PART I – Financial Information
|
3
|
3
|
|
3
|
|
4
|
|
5
|
|
6
|
|
7
|
|
8
|
|
33
|
|
51
|
|
51
|
|
PART II – OTHER INFORMATION
|
51
|
51
|
|
51
|
|
53
|
|
53
|
|
53
|
|
53
|
|
53
|
|
54
|
(in thousands, except share amounts)
|
June 30, 2021
|
December 31, 2020
|
||||||
|
||||||||
Assets
|
||||||||
|
||||||||
Cash and cash equivalents
|
$
|
332,595
|
$
|
267,177
|
||||
Certificates of deposit
|
13,003
|
16,923
|
||||||
Investment securities – available-for-sale
|
561,559
|
435,080
|
||||||
Loans, net of allowance for loan losses of $15,379 at June 30, 2021 and $15,416 at December 31, 2020
|
872,750
|
875,830
|
||||||
Loans held-for-sale
|
1,306
|
9,190
|
||||||
Stock in Federal Home Loan Bank and other equity securities, at cost
|
7,097
|
6,480
|
||||||
Premises and equipment, net
|
6,381
|
6,513
|
||||||
Interest receivable and other assets
|
39,885
|
38,183
|
||||||
|
||||||||
Total Assets
|
$
|
1,834,576
|
$
|
1,655,376
|
||||
|
||||||||
Liabilities and Stockholders’ Equity
|
||||||||
|
||||||||
Liabilities:
|
||||||||
|
||||||||
Demand deposits
|
$
|
744,432
|
$
|
645,538
|
||||
Interest-bearing transaction deposits
|
418,359
|
390,126
|
||||||
Savings and MMDA’s
|
446,644
|
385,908
|
||||||
Time, $250,000 or less
|
39,360
|
41,947
|
||||||
Time, over $250,000
|
14,432
|
14,643
|
||||||
Total deposits
|
1,663,227
|
1,478,162
|
||||||
|
||||||||
Federal Home Loan Bank advances
|
—
|
5,000
|
||||||
Interest payable and other liabilities
|
18,875
|
21,557
|
||||||
|
||||||||
Total Liabilities
|
1,682,102
|
1,504,719
|
||||||
Commitments and contingencies (Note 7)
|
|
|
||||||
Stockholders’ Equity:
|
||||||||
Common stock, no par value; 16,000,000 shares authorized; 13,600,536 shares issued and outstanding at June 30, 2021 and 13,634,463 shares issued and outstanding at December 31, 2020
|
107,223
|
107,527
|
||||||
Additional paid-in capital
|
977
|
977
|
||||||
Retained earnings
|
43,262
|
37,115
|
||||||
Accumulated other comprehensive income, net
|
1,012
|
5,038
|
||||||
Total Stockholders’ Equity
|
152,474
|
150,657
|
||||||
|
||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
1,834,576
|
$
|
1,655,376
|
(in thousands, except per share amounts)
|
Three months ended
June 30, 2021
|
Three months ended
June 30, 2020
|
Six months ended
June 30, 2021
|
Six months ended
June 30, 2020
|
||||||||||||
Interest and dividend income:
|
||||||||||||||||
Loans
|
$
|
10,474
|
$
|
9,702
|
$
|
19,711
|
$
|
18,937
|
||||||||
Due from banks interest bearing accounts
|
144
|
159
|
292
|
692
|
||||||||||||
Investment securities
|
||||||||||||||||
Taxable
|
1,491
|
1,667
|
2,977
|
3,424
|
||||||||||||
Non-taxable
|
140
|
124
|
283
|
224
|
||||||||||||
Other earning assets
|
103
|
83
|
185
|
207
|
||||||||||||
Total interest and dividend income
|
12,352
|
11,735
|
23,448
|
23,484
|
||||||||||||
Interest expense:
|
||||||||||||||||
Deposits
|
231
|
385
|
455
|
903
|
||||||||||||
Total interest expense
|
231
|
385
|
455
|
903
|
||||||||||||
Net interest income
|
12,121
|
11,350
|
22,993
|
22,581
|
||||||||||||
Provision for loan losses
|
—
|
800
|
300
|
1,450
|
||||||||||||
Net interest income after provision for loan losses
|
12,121
|
10,550
|
22,693
|
21,131
|
||||||||||||
Non-interest income:
|
||||||||||||||||
Service charges on deposit accounts
|
406
|
219
|
766
|
655
|
||||||||||||
Gains on sales of loans held-for-sale
|
407
|
586
|
1,046
|
750
|
||||||||||||
Investment and brokerage services income
|
152
|
126
|
296
|
284
|
||||||||||||
Mortgage brokerage income
|
14
|
19
|
14
|
54
|
||||||||||||
Loan servicing income
|
105
|
5
|
460
|
128
|
||||||||||||
Debit card income
|
672
|
507
|
1,271
|
1,007
|
||||||||||||
(Losses) gains on sales/calls of available-for-sale securities
|
(191
|
)
|
4
|
(201
|
)
|
42
|
||||||||||
Other income
|
219
|
182
|
422
|
377
|
||||||||||||
Total non-interest income
|
1,784
|
1,648
|
4,074
|
3,297
|
||||||||||||
Non-interest expenses:
|
||||||||||||||||
Salaries and employee benefits
|
5,589
|
5,411
|
11,228
|
11,163
|
||||||||||||
Occupancy and equipment
|
879
|
892
|
1,706
|
1,787
|
||||||||||||
Data processing
|
927
|
713
|
1,718
|
1,328
|
||||||||||||
Stationery and supplies
|
76
|
75
|
133
|
154
|
||||||||||||
Advertising
|
84
|
103
|
150
|
173
|
||||||||||||
Directors’ fees
|
84
|
77
|
122
|
121
|
||||||||||||
Other real estate owned recovery
|
—
|
(1
|
)
|
—
|
(1
|
)
|
||||||||||
Other expense
|
1,717
|
1,237
|
2,800
|
2,352
|
||||||||||||
Total non-interest expenses
|
9,356
|
8,507
|
17,857
|
17,077
|
||||||||||||
Income before provision for income taxes
|
4,549
|
3,691
|
8,910
|
7,351
|
||||||||||||
Provision for income taxes
|
1,243
|
986
|
2,426
|
1,967
|
||||||||||||
|
||||||||||||||||
Net income
|
$
|
3,306
|
$
|
2,705
|
$
|
6,484
|
$
|
5,384
|
||||||||
|
||||||||||||||||
Basic earnings per common share
|
$
|
0.24
|
$
|
0.20
|
$
|
0.48
|
$
|
0.40
|
||||||||
Diluted earnings per common share
|
$
|
0.24
|
$
|
0.20
|
$
|
0.47
|
$
|
0.40
|
(in thousands)
|
Three months ended
June 30, 2021
|
Three months ended
June 30, 2020
|
Six months ended
June 30, 2021
|
Six months ended
June 30, 2020
|
||||||||||||
Net income
|
$
|
3,306
|
$
|
2,705
|
$
|
6,484
|
$
|
5,384
|
||||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||||||
Unrealized holding gains (losses) arising during the period, net of tax effect of $5 and $501 for the three months ended June 30, 2021 and June 30, 2020, respectively, and $(1,682) and $2,556 for the six months ended June 30, 2021 and June 30, 2020, respectively
|
10
|
1,242
|
(4,169
|
)
|
6,338
|
|||||||||||
Less: reclassification adjustment due to losses (gains) realized on sales of securities, net of tax effect of $55 and $(1) for the three months ended June 30, 2021 and June 30, 2020, respectively, and $58 and $(12) for the six months ended June 30, 2021 and June 30, 2020, respectively
|
136
|
(3
|
)
|
143
|
(30
|
)
|
||||||||||
Other comprehensive income (loss), net of tax
|
$
|
146
|
$
|
1,239
|
$
|
(4,026
|
)
|
$
|
6,308
|
|||||||
|
||||||||||||||||
Comprehensive income
|
$
|
3,452
|
$
|
3,944
|
$
|
2,458
|
$
|
11,692
|
|
Common Stock
|
Additional
Paid-in
|
Retained
|
Accumulated
Other
Comprehensive
Income (Loss),
|
||||||||||||||||||||
|
Shares
|
Amounts
|
Capital
|
Earnings
|
net of tax
|
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance at December 31, 2019
|
12,919,132
|
$
|
100,187
|
$
|
977
|
$
|
31,617
|
$
|
134
|
$
|
132,915
|
|||||||||||||
Net income
|
2,679
|
2,679
|
||||||||||||||||||||||
Other comprehensive income, net of taxes
|
5,069
|
5,069
|
||||||||||||||||||||||
Stock dividend adjustment
|
1,310
|
348
|
(348
|
)
|
—
|
|||||||||||||||||||
Cash in lieu of fractional shares
|
(166
|
)
|
(8
|
)
|
(8
|
)
|
||||||||||||||||||
Stock-based compensation
|
134
|
134
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
38,224
|
—
|
—
|
|||||||||||||||||||||
Stock options exercised, net
|
10,067
|
4
|
4
|
|||||||||||||||||||||
Balance at March 31, 2020
|
12,968,567
|
$
|
100,673
|
$
|
977
|
$
|
33,940
|
$
|
5,203
|
$
|
140,793
|
|||||||||||||
Net income
|
2,705
|
2,705
|
||||||||||||||||||||||
Other comprehensive income, net of taxes
|
1,239
|
1,239
|
||||||||||||||||||||||
Stock-based compensation
|
149
|
149
|
||||||||||||||||||||||
Balance at June 30, 2020
|
12,968,567
|
$
|
100,822
|
$
|
977
|
$
|
36,645
|
$
|
6,442
|
$
|
144,886
|
|||||||||||||
Balance at December 31, 2020
|
13,634,463
|
$
|
107,527
|
$
|
977
|
$
|
37,115
|
$
|
5,038
|
$
|
150,657
|
|||||||||||||
Net income
|
3,178
|
3,178
|
||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
(4,172
|
)
|
(4,172
|
)
|
||||||||||||||||||||
Stock dividend adjustment
|
1,282
|
329
|
(329
|
)
|
—
|
|||||||||||||||||||
Cash in lieu of fractional shares
|
(168
|
)
|
(8
|
)
|
(8
|
)
|
||||||||||||||||||
Stock-based compensation
|
144
|
144
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
38,400
|
—
|
—
|
|||||||||||||||||||||
Stock options exercised, net
|
6,108
|
—
|
—
|
|||||||||||||||||||||
Balance at March 31, 2021
|
13,680,085
|
$
|
108,000
|
$
|
977
|
$
|
39,956
|
$
|
866
|
$
|
149,799
|
|||||||||||||
Net income
|
3,306
|
3,306
|
||||||||||||||||||||||
Other comprehensive income, net of taxes
|
146
|
146
|
||||||||||||||||||||||
Stock-based compensation
|
148
|
148
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
3,000
|
—
|
—
|
|||||||||||||||||||||
Stock repurchase and retirement
|
(82,549
|
)
|
(925
|
)
|
(925
|
)
|
||||||||||||||||||
Balance at June 30, 2021
|
13,600,536
|
$
|
107,223
|
$
|
977
|
$
|
43,262
|
$
|
1,012
|
$
|
152,474
|
|
(in thousands)
|
|||||||
|
Six months ended
June 30, 2021
|
Six months ended
June 30, 2020
|
||||||
Cash Flows From Operating Activities
|
||||||||
Net income
|
$
|
6,484
|
$
|
5,384
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
377
|
480
|
||||||
Accretion and amortization of investment securities premiums and discounts, net
|
1,879
|
835
|
||||||
Valuation adjustment on mortgage servicing rights
|
(34
|
)
|
198
|
|||||
Increase in deferred loan origination fees and costs, net
|
1,614
|
5,685
|
||||||
Provision for loan losses
|
300
|
1,450
|
||||||
Stock-based compensation
|
292
|
283
|
||||||
Losses (gains) on sales/calls of available-for-sale securities
|
201
|
(42
|
)
|
|||||
Amortization of operating lease right-of-use asset
|
503
|
511
|
||||||
Gains on sales of loans held-for-sale
|
(1,046
|
)
|
(750
|
)
|
||||
Proceeds from sales of loans held-for-sale
|
44,091
|
36,088
|
||||||
Originations of loans held-for-sale
|
(36,926
|
)
|
(33,056
|
)
|
||||
Changes in assets and liabilities:
|
||||||||
Increase in interest receivable and other assets
|
(547
|
)
|
(1,004
|
)
|
||||
Decrease in interest payable and other liabilities
|
(2,682
|
)
|
(2,297
|
)
|
||||
Net cash provided by operating activities
|
14,506
|
13,765
|
||||||
|
||||||||
Cash Flows From Investing Activities
|
||||||||
Proceeds from calls or maturities of available-for-sale securities
|
10,190
|
21,700
|
||||||
Proceeds from sales of available-for-sale securities
|
19,447
|
10,344
|
||||||
Principal repayments on available-for-sale securities
|
43,134
|
29,691
|
||||||
Purchase of available-for-sale securities
|
(206,980
|
)
|
(46,777
|
)
|
||||
Net decrease (increase) in certificates of deposit
|
3,920
|
(5,638
|
)
|
|||||
Net decrease (increase) in loans
|
2,931
|
(218,356
|
)
|
|||||
Net (increase) decrease in stock in Federal Home Loan Bank and other equity securities, at cost
|
(617
|
)
|
94
|
|||||
Purchases of premises and equipment
|
(245
|
)
|
(779
|
)
|
||||
Net cash used in investing activities
|
(128,220
|
)
|
(209,721
|
)
|
||||
|
||||||||
Cash Flows From Financing Activities
|
||||||||
Net increase in deposits
|
185,065
|
299,571
|
||||||
(Decrease) increase in Federal Home Loan Bank advances
|
(5,000
|
)
|
10,000
|
|||||
Cash dividends paid in lieu of fractional shares
|
(8
|
)
|
(8
|
)
|
||||
Stock options exercised
|
—
|
4
|
||||||
Repurchases of common stock
|
(925
|
)
|
—
|
|||||
Net cash provided by financing activities
|
179,132
|
309,567
|
||||||
|
||||||||
Net increase in Cash and Cash Equivalents
|
65,418
|
113,611
|
||||||
Cash and Cash Equivalents, beginning of period
|
267,177
|
111,493
|
||||||
Cash and Cash Equivalents, end of period
|
$
|
332,595
|
$
|
225,104
|
||||
|
||||||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
452
|
$
|
912
|
||||
Income taxes
|
$
|
2,670
|
$
|
2,450
|
||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||
Stock dividend distributed
|
$
|
6,636
|
$
|
7,016
|
||||
Unrealized holding (losses) gains on available for sale securities, net of taxes
|
$
|
(4,026
|
)
|
$
|
6,308
|
|||
Transfer of loans held-for-sale to loans held-for-investment
|
$
|
1,765
|
$
|
—
|
1. |
BASIS OF PRESENTATION
|
2. |
ACCOUNTING POLICIES
|
3. |
INVESTMENT SECURITIES
|
(in thousands)
|
Amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Estimated
fair value
|
||||||||||||
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Treasury Securities
|
$
|
74,057
|
$
|
696
|
$
|
(152
|
)
|
$
|
74,601
|
|||||||
Securities of U.S. government agencies and corporations
|
95,718
|
562
|
(967
|
)
|
95,313
|
|||||||||||
Obligations of states and political subdivisions
|
35,693
|
1,585
|
(118
|
)
|
37,160
|
|||||||||||
Collateralized mortgage obligations
|
110,918
|
1,474
|
(308
|
)
|
112,084
|
|||||||||||
Mortgage-backed securities
|
240,724
|
3,133
|
(1,456
|
)
|
242,401
|
|||||||||||
Total debt securities
|
$
|
557,110
|
$
|
7,450
|
$
|
(3,001
|
)
|
$
|
561,559
|
(in thousands)
|
Amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Estimated
fair value
|
||||||||||||
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Treasury Securities
|
$
|
37,910
|
$
|
982
|
$
|
(1
|
)
|
$
|
38,891
|
|||||||
Securities of U.S. government agencies and corporations
|
105,506
|
1,317
|
(265
|
)
|
106,558
|
|||||||||||
Obligations of states and political subdivisions
|
31,013
|
1,878
|
(9
|
)
|
32,882
|
|||||||||||
Collateralized mortgage obligations
|
71,531
|
1,937
|
(8
|
)
|
73,460
|
|||||||||||
Mortgage-backed securities
|
179,021
|
4,359
|
(91
|
)
|
183,289
|
|||||||||||
Total debt securities
|
$
|
424,981
|
$
|
10,473
|
$
|
(374
|
)
|
$
|
435,080
|
(in thousands)
|
Amortized
cost
|
Estimated
fair value
|
||||||
|
||||||||
Maturity in years:
|
||||||||
Due in one year or less
|
$
|
16,109
|
$
|
16,274
|
||||
Due after one year through five years
|
111,664
|
112,446
|
||||||
Due after five years through ten years
|
55,291
|
55,165
|
||||||
Due after ten years
|
22,404
|
23,189
|
||||||
Subtotal
|
205,468
|
207,074
|
||||||
MBS & CMO
|
351,642
|
354,485
|
||||||
Total
|
$
|
557,110
|
$
|
561,559
|
(in thousands)
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
|||||||||||||||||||
|
||||||||||||||||||||||||
U.S. Treasury Securities
|
$
|
38,466
|
$
|
(152
|
)
|
$
|
—
|
$
|
—
|
$
|
38,466
|
$
|
(152
|
)
|
||||||||||
Securities of U.S. government agencies and corporations
|
64,890
|
(967
|
)
|
—
|
—
|
64,890
|
(967
|
)
|
||||||||||||||||
Obligations of states and political subdivisions
|
6,642
|
(118
|
)
|
—
|
—
|
6,642
|
(118
|
)
|
||||||||||||||||
Collateralized Mortgage obligations
|
28,160
|
(308
|
)
|
—
|
—
|
28,160
|
(308
|
)
|
||||||||||||||||
Mortgage-backed securities
|
133,878
|
(1,456
|
)
|
—
|
—
|
133,878
|
(1,456
|
)
|
||||||||||||||||
Total
|
$
|
272,036
|
$
|
(3,001
|
)
|
$
|
—
|
$
|
—
|
$
|
272,036
|
$
|
(3,001
|
)
|
(in thousands)
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
|||||||||||||||||||
|
||||||||||||||||||||||||
U.S. Treasury Securities
|
$
|
4,276
|
$
|
(1
|
)
|
$
|
—
|
$
|
—
|
$
|
4,276
|
$
|
(1
|
)
|
||||||||||
Securities of U.S. government agencies and corporations
|
58,164
|
(265
|
)
|
—
|
—
|
58,164
|
(265
|
)
|
||||||||||||||||
Obligations of states and political subdivisions
|
1,603
|
(9
|
)
|
—
|
—
|
1,603
|
(9
|
)
|
||||||||||||||||
Collateralized Mortgage obligations
|
1,697
|
(8
|
)
|
—
|
—
|
1,697
|
(8
|
)
|
||||||||||||||||
Mortgage-backed securities
|
30,208
|
(91
|
)
|
—
|
—
|
30,208
|
(91
|
)
|
||||||||||||||||
Total
|
$
|
95,948
|
$
|
(374
|
)
|
$
|
—
|
$
|
—
|
$
|
95,948
|
$
|
(374
|
)
|
4. |
LOANS
|
($ in thousands)
|
June 30, 2021
|
December 31, 2020
|
||||||
|
||||||||
Commercial
|
$
|
224,897
|
$
|
255,926
|
||||
Commercial Real Estate
|
483,005
|
454,053
|
||||||
Agriculture
|
86,842
|
95,048
|
||||||
Residential Mortgage
|
74,018
|
64,497
|
||||||
Residential Construction
|
3,985
|
4,223
|
||||||
Consumer
|
18,964
|
19,467
|
||||||
|
891,711
|
893,214
|
||||||
Allowance for loan losses
|
(15,379
|
)
|
(15,416
|
)
|
||||
Net deferred origination fees and costs
|
(3,582
|
)
|
(1,968
|
)
|
||||
Loans, net
|
$
|
872,750
|
$
|
875,830
|
($ in thousands)
|
Current & Accruing
|
30-59 Days Past Due & Accruing
|
60-89 Days Past Due & Accruing
|
90 Days or
More Past Due & Accruing
|
Nonaccrual
|
Total Loans
|
||||||||||||||||||
June 30, 2021
|
||||||||||||||||||||||||
Commercial
|
$
|
224,869
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
28
|
$
|
224,897
|
||||||||||||
Commercial Real Estate
|
476,435
|
—
|
—
|
—
|
6,570
|
483,005
|
||||||||||||||||||
Agriculture
|
77,696
|
16
|
—
|
—
|
9,130
|
86,842
|
||||||||||||||||||
Residential Mortgage
|
73,874
|
—
|
—
|
—
|
144
|
74,018
|
||||||||||||||||||
Residential Construction
|
3,985
|
—
|
—
|
—
|
—
|
3,985
|
||||||||||||||||||
Consumer
|
18,279
|
—
|
—
|
—
|
685
|
18,964
|
||||||||||||||||||
Total
|
$
|
875,138
|
$
|
16
|
$
|
—
|
$
|
—
|
$
|
16,557
|
$
|
891,711
|
||||||||||||
|
||||||||||||||||||||||||
December 31, 2020
|
||||||||||||||||||||||||
Commercial
|
$
|
255,563
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
363
|
$
|
255,926
|
||||||||||||
Commercial Real Estate
|
449,178
|
—
|
—
|
—
|
4,875
|
454,053
|
||||||||||||||||||
Agriculture
|
85,918
|
—
|
—
|
—
|
9,130
|
95,048
|
||||||||||||||||||
Residential Mortgage
|
64,344
|
—
|
—
|
—
|
153
|
64,497
|
||||||||||||||||||
Residential Construction
|
4,223
|
—
|
—
|
—
|
—
|
4,223
|
||||||||||||||||||
Consumer
|
18,777
|
—
|
—
|
—
|
690
|
19,467
|
||||||||||||||||||
Total
|
$
|
878,003
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
15,211
|
$
|
893,214
|
($ in thousands)
|
Unpaid Contractual
Principal Balance
|
Recorded
Investment
with
No Allowance
|
Recorded
Investment with
Allowance
|
Total Recorded
Investment
|
Related Allowance
|
|||||||||||||||
June 30, 2021
|
||||||||||||||||||||
Commercial
|
$
|
56
|
$
|
28
|
$
|
—
|
$
|
28
|
$
|
—
|
||||||||||
Commercial Real Estate
|
7,051
|
6,570
|
—
|
6,570
|
—
|
|||||||||||||||
Agriculture
|
9,189
|
1,365
|
7,765
|
9,130
|
3,990
|
|||||||||||||||
Residential Mortgage
|
683
|
144
|
525
|
669
|
84
|
|||||||||||||||
Residential Construction
|
250
|
—
|
251
|
251
|
4
|
|||||||||||||||
Consumer
|
770
|
685
|
64
|
749
|
3
|
|||||||||||||||
Total
|
$
|
17,999
|
$
|
8,792
|
$
|
8,605
|
$
|
17,397
|
$
|
4,081
|
||||||||||
|
||||||||||||||||||||
December 31, 2020
|
||||||||||||||||||||
Commercial
|
$
|
1,087
|
$
|
363
|
$
|
661
|
$
|
1,024
|
$
|
11
|
||||||||||
Commercial Real Estate
|
5,146
|
4,875
|
—
|
4,875
|
—
|
|||||||||||||||
Agriculture
|
9,189
|
1,365
|
7,765
|
9,130
|
2,093
|
|||||||||||||||
Residential Mortgage
|
1,046
|
153
|
883
|
1,036
|
159
|
|||||||||||||||
Residential Construction
|
684
|
—
|
652
|
652
|
83
|
|||||||||||||||
Consumer
|
773
|
690
|
64
|
754
|
1
|
|||||||||||||||
Total
|
$
|
17,925
|
$
|
7,446
|
$
|
10,025
|
$
|
17,471
|
$
|
2,347
|
($ in thousands)
|
Three Months Ended
June 30, 2021
|
Three Months Ended
June 30, 2020
|
||||||||||||||
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
||||||||||||
Commercial
|
$
|
156
|
$
|
6
|
$
|
1,468
|
$
|
14
|
||||||||
Commercial Real Estate
|
6,687
|
—
|
3,231
|
—
|
||||||||||||
Agriculture
|
9,130
|
—
|
4,572
|
—
|
||||||||||||
Residential Mortgage
|
846
|
5
|
1,071
|
6
|
||||||||||||
Residential Construction
|
253
|
4
|
676
|
9
|
||||||||||||
Consumer
|
750
|
2
|
645
|
1
|
||||||||||||
Total
|
$
|
17,822
|
$
|
17
|
$
|
11,663
|
$
|
30
|
($ in thousands)
|
Six Months Ended
June 30, 2021
|
Six Months Ended
June 30, 2020
|
||||||||||||||
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
||||||||||||
Commercial
|
$
|
445
|
$
|
7
|
$
|
1,529
|
$
|
35
|
||||||||
Commercial Real Estate
|
6,083
|
—
|
2,393
|
4
|
||||||||||||
Agriculture
|
9,130
|
—
|
3,048
|
—
|
||||||||||||
Residential Mortgage
|
910
|
13
|
1,075
|
15
|
||||||||||||
Residential Construction
|
386
|
8
|
681
|
18
|
||||||||||||
Consumer
|
752
|
3
|
541
|
3
|
||||||||||||
Total
|
$
|
17,706
|
$
|
31
|
$
|
9,267
|
$
|
75
|
($ in thousands)
|
Three Months Ended June 30, 2021
|
|||||||||||
Number of
Contracts
|
Pre-modification
outstanding
recorded
investment
|
Post-
modification
outstanding
recorded
investment
|
||||||||||
Consumer
|
1
|
$
|
99
|
$
|
99
|
|||||||
Total
|
1
|
$
|
99
|
$
|
99
|
($ in thousands)
|
Six Months Ended June 30, 2021
|
|||||||||||
Number of
Contracts
|
Pre-modification
outstanding
recorded
investment
|
Post-
modification
outstanding
recorded
investment
|
||||||||||
Consumer
|
1
|
$
|
99
|
$
|
99
|
|||||||
Total
|
1
|
$
|
99
|
$
|
99
|
($ in thousands)
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Loss
|
Total
|
||||||||||||||||||
June 30, 2021
|
||||||||||||||||||||||||
Commercial
|
$
|
214,546
|
$
|
9,947
|
$
|
404
|
$
|
—
|
$
|
—
|
$
|
224,897
|
||||||||||||
Commercial Real Estate
|
467,965
|
3,793
|
11,247
|
—
|
—
|
483,005
|
||||||||||||||||||
Agriculture
|
77,616
|
96
|
1,365
|
7,765
|
—
|
86,842
|
||||||||||||||||||
Residential Mortgage
|
73,696
|
—
|
322
|
—
|
—
|
74,018
|
||||||||||||||||||
Residential Construction
|
3,985
|
—
|
—
|
—
|
—
|
3,985
|
||||||||||||||||||
Consumer
|
18,279
|
—
|
685
|
—
|
—
|
18,964
|
||||||||||||||||||
Total
|
$
|
856,087
|
$
|
13,836
|
$
|
14,023
|
$
|
7,765
|
$
|
—
|
$
|
891,711
|
||||||||||||
|
||||||||||||||||||||||||
December 31, 2020
|
||||||||||||||||||||||||
Commercial
|
$
|
244,327
|
$
|
10,731
|
$
|
868
|
$
|
—
|
$
|
—
|
$
|
255,926
|
||||||||||||
Commercial Real Estate
|
431,381
|
9,255
|
13,417
|
—
|
—
|
454,053
|
||||||||||||||||||
Agriculture
|
83,493
|
—
|
11,555
|
—
|
—
|
95,048
|
||||||||||||||||||
Residential Mortgage
|
64,018
|
—
|
479
|
—
|
—
|
64,497
|
||||||||||||||||||
Residential Construction
|
4,223
|
—
|
—
|
—
|
—
|
4,223
|
||||||||||||||||||
Consumer
|
18,697
|
—
|
770
|
—
|
—
|
19,467
|
||||||||||||||||||
Total
|
$
|
846,139
|
$
|
19,986
|
$
|
27,089
|
$
|
—
|
$
|
—
|
$
|
893,214
|
Three months ended June 30, 2021
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Balance as of March 31, 2021
|
$
|
1,468
|
$
|
7,561
|
$
|
5,171
|
$
|
680
|
$
|
37
|
$
|
186
|
$
|
610
|
$
|
15,713
|
||||||||||||||||
Provision for loan losses
|
421
|
(223
|
)
|
88
|
(46
|
)
|
18
|
—
|
(258
|
)
|
—
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Charge-offs
|
(334
|
)
|
—
|
—
|
—
|
—
|
(3
|
)
|
—
|
(337
|
)
|
|||||||||||||||||||||
Recoveries
|
—
|
—
|
—
|
—
|
—
|
3
|
—
|
3
|
||||||||||||||||||||||||
Net charge-offs
|
(334
|
)
|
—
|
—
|
—
|
—
|
—
|
—
|
(334
|
)
|
||||||||||||||||||||||
Balance as of June 30, 2021
|
$
|
1,555
|
$
|
7,338
|
$
|
5,259
|
$
|
634
|
$
|
55
|
$
|
186
|
$
|
352
|
$
|
15,379
|
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Period-end amount allocated to:
|
||||||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
—
|
$
|
—
|
$
|
3,990
|
$
|
84
|
$
|
4
|
$
|
3
|
$
|
—
|
$
|
4,081
|
||||||||||||||||
Loans collectively evaluated for impairment
|
1,555
|
7,338
|
1,269
|
550
|
51
|
183
|
352
|
11,298
|
||||||||||||||||||||||||
Ending Balance
|
$
|
1,555
|
$
|
7,338
|
$
|
5,259
|
$
|
634
|
$
|
55
|
$
|
186
|
$
|
352
|
$
|
15,379
|
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Period-end amount allocated to:
|
||||||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
19
|
$
|
—
|
$
|
—
|
$
|
167
|
$
|
73
|
$
|
1
|
$
|
—
|
$
|
260
|
||||||||||||||||
Loans collectively evaluated for impairment
|
2,319
|
7,434
|
1,655
|
373
|
172
|
223
|
1,195
|
13,371
|
||||||||||||||||||||||||
Ending Balance
|
$
|
2,338
|
$
|
7,434
|
$
|
1,655
|
$
|
540
|
$
|
245
|
$
|
224
|
$
|
1,195
|
$
|
13,631
|
Year ended December 31, 2020
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Balance as of December 31, 2019
|
$
|
2,354
|
$
|
6,846
|
$
|
2,054
|
$
|
466
|
$
|
201
|
$
|
236
|
$
|
199
|
$
|
12,356
|
||||||||||||||||
Provision for loan losses
|
(91
|
)
|
1,069
|
1,780
|
169
|
(73
|
)
|
(43
|
)
|
239
|
3,050
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Charge-offs
|
(212
|
)
|
—
|
—
|
—
|
—
|
(15
|
)
|
—
|
(227
|
)
|
|||||||||||||||||||||
Recoveries
|
201
|
—
|
—
|
—
|
—
|
36
|
—
|
237
|
||||||||||||||||||||||||
Net (charge-offs) recoveries
|
(11
|
)
|
—
|
—
|
—
|
—
|
21
|
—
|
10
|
|||||||||||||||||||||||
Ending Balance
|
$
|
2,252
|
$
|
7,915
|
$
|
3,834
|
$
|
635
|
$
|
128
|
$
|
214
|
$
|
438
|
$
|
15,416
|
||||||||||||||||
Period-end amount allocated to:
|
||||||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
11
|
$
|
—
|
$
|
2,093
|
$
|
159
|
$
|
83
|
$
|
1
|
$
|
—
|
$
|
2,347
|
||||||||||||||||
Loans collectively evaluated for impairment
|
2,241
|
7,915
|
1,741
|
476
|
45
|
213
|
438
|
13,069
|
||||||||||||||||||||||||
Balance as of December 31, 2020
|
$
|
2,252
|
$
|
7,915
|
$
|
3,834
|
$
|
635
|
$
|
128
|
$
|
214
|
$
|
438
|
$
|
15,416
|
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Total
|
|||||||||||||||||||||
June 30, 2021
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
28
|
$
|
6,570
|
$
|
9,130
|
$
|
669
|
$
|
251
|
$
|
749
|
$
|
17,397
|
||||||||||||||
Loans collectively evaluated for impairment
|
224,869
|
476,435
|
77,712
|
73,349
|
3,734
|
18,215
|
874,314
|
|||||||||||||||||||||
Ending Balance
|
$
|
224,897
|
$
|
483,005
|
$
|
86,842
|
$
|
74,018
|
$
|
3,985
|
$
|
18,964
|
$
|
891,711
|
||||||||||||||
|
||||||||||||||||||||||||||||
June 30, 2020
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
1,473
|
$
|
5,708
|
$
|
9,145
|
$
|
1,067
|
$
|
671
|
$
|
961
|
$
|
19,025
|
||||||||||||||
Loans collectively evaluated for impairment
|
332,845
|
453,790
|
87,185
|
68,620
|
15,298
|
22,063
|
979,801
|
|||||||||||||||||||||
Ending Balance
|
$
|
334,318
|
$
|
459,498
|
$
|
96,330
|
$
|
69,687
|
$
|
15,969
|
$
|
23,024
|
$
|
998,826
|
||||||||||||||
|
||||||||||||||||||||||||||||
December 31, 2020
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
1,024
|
$
|
4,875
|
$
|
9,130
|
$
|
1,036
|
$
|
652
|
$
|
754
|
$
|
17,471
|
||||||||||||||
Loans collectively evaluated for impairment
|
254,902
|
449,178
|
85,918
|
63,461
|
3,571
|
18,713
|
875,743
|
|||||||||||||||||||||
Ending Balance
|
$
|
255,926
|
$
|
454,053
|
$
|
95,048
|
$
|
64,497
|
$
|
4,223
|
$
|
19,467
|
$
|
893,214
|
5. |
MORTGAGE OPERATIONS
|
|
June 30, 2021
|
December 31, 2020
|
||||||
|
||||||||
Constant prepayment rate
|
17.46
|
%
|
20.22
|
%
|
||||
Discount rate
|
9.50
|
%
|
10.00
|
%
|
||||
Weighted average life (years)
|
4.65
|
3.96
|
|
(in thousands)
|
|||||||||||||||
|
December 31, 2020
|
Additions
|
Reductions
|
June 30, 2021
|
||||||||||||
|
||||||||||||||||
Mortgage servicing rights
|
$
|
1,628
|
$
|
391
|
$
|
(229
|
)
|
$
|
1,790
|
|||||||
Valuation allowance
|
(386
|
)
|
—
|
34
|
(352
|
)
|
||||||||||
Mortgage servicing rights, net of valuation allowance
|
$
|
1,242
|
$
|
391
|
$
|
(195
|
)
|
$
|
1,438
|
6. |
FAIR VALUE MEASUREMENTS
|
(in thousands)
|
||||||||||||||||
June 30, 2021
|
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
U.S. Treasury securities
|
$
|
74,601
|
$
|
74,601
|
$
|
—
|
$
|
—
|
||||||||
Securities of U.S. government agencies and corporations
|
95,313
|
—
|
95,313
|
—
|
||||||||||||
Obligations of states and political subdivisions
|
37,160
|
—
|
37,160
|
—
|
||||||||||||
Collateralized mortgage obligations
|
112,084
|
—
|
112,084
|
—
|
||||||||||||
Mortgage-backed securities
|
242,401
|
—
|
242,401
|
—
|
||||||||||||
Total investments at fair value
|
$
|
561,559
|
$
|
74,601
|
$
|
486,958
|
$
|
—
|
(in thousands)
|
||||||||||||||||
December 31, 2020
|
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
U.S. Treasury securities
|
$
|
38,891
|
$
|
38,891
|
$
|
—
|
$
|
—
|
||||||||
Securities of U.S. government agencies and corporations
|
106,558
|
—
|
106,558
|
—
|
||||||||||||
Obligations of states and political subdivisions
|
32,882
|
—
|
32,882
|
—
|
||||||||||||
Collateralized mortgage obligations
|
73,460
|
—
|
73,460
|
—
|
||||||||||||
Mortgage-backed securities
|
183,289
|
—
|
183,289
|
—
|
||||||||||||
Total investments at fair value
|
$
|
435,080
|
$
|
38,891
|
$
|
396,189
|
$
|
—
|
(in thousands)
|
||||||||||||||||
June 30, 2021
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Impaired loans
|
$
|
3,774
|
$
|
—
|
$
|
—
|
$
|
3,774
|
||||||||
Mortgage servicing rights
|
1,438
|
—
|
—
|
1,438
|
||||||||||||
Total assets at fair value
|
$
|
5,212
|
$
|
—
|
$
|
—
|
$
|
5,212
|
(in thousands)
|
||||||||||||||||
December 31, 2020
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Impaired loans
|
$
|
5,700
|
$
|
—
|
$
|
—
|
$
|
5,700
|
||||||||
Mortgage servicing rights
|
1,242
|
—
|
—
|
1,242
|
||||||||||||
Total assets at fair value
|
$
|
6,942
|
$
|
—
|
$
|
—
|
$
|
6,942
|
|
Method
|
Assumption Inputs
|
|
|
|
Impaired loans
|
Collateral, market, income, enterprise, liquidation
|
External appraised values, management assumptions regarding market trends or other relevant factors, selling costs generally ranging from 6% to 10%.
|
Mortgage servicing rights
|
Discounted cash flows
|
Present value of expected future cash flows was estimated using a discount rate factor of 9.50% and 10.00% as of June 30, 2021 and December 31, 2020, respectively. A constant prepayment rate of 17.46% and 20.22% as of June 30, 2021 and December 31, 2020, respectively, was utilized.
|
(in thousands)
|
June 30, 2021
|
December 31, 2020
|
||||||||||||||||||
|
Level
|
Carrying
amount
|
Fair value
|
Carrying
amount
|
Fair value
|
|||||||||||||||
|
||||||||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
1
|
$
|
332,595
|
$
|
332,595
|
$
|
267,177
|
$
|
267,177
|
|||||||||||
Certificates of deposit
|
2
|
13,003
|
13,367
|
16,923
|
17,455
|
|||||||||||||||
Stock in Federal Home Loan Bank and other equity securities
|
3
|
7,097
|
7,097
|
6,480
|
6,480
|
|||||||||||||||
Loans receivable:
|
||||||||||||||||||||
Net loans
|
3
|
872,750
|
819,330
|
875,830
|
830,448
|
|||||||||||||||
Loans held-for-sale
|
2
|
1,306
|
1,332
|
9,190
|
9,522
|
|||||||||||||||
Interest receivable
|
2
|
4,804
|
4,804
|
5,099
|
5,099
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
3
|
1,663,227
|
1,642,997
|
1,478,162
|
1,457,051
|
|||||||||||||||
Federal Home Loan Bank advances
|
2
|
—
|
—
|
5,000
|
4,996
|
|||||||||||||||
Interest payable
|
2
|
62
|
62
|
59
|
59
|
7. |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
|
(in thousands)
|
June 30, 2021
|
December 31, 2020
|
||||||
|
||||||||
Undisbursed loan commitments
|
$
|
178,389
|
$
|
189,097
|
||||
Standby letters of credit
|
3,122
|
1,731
|
||||||
Commitments to sell loans
|
190
|
1,052
|
||||||
|
$
|
181,701
|
$
|
191,880
|
8. |
STOCK PLANS
|
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in years)
|
||||||||||||
Options outstanding at Beginning of Period
|
597,947
|
$
|
9.01
|
|||||||||||||
Granted
|
—
|
—
|
||||||||||||||
Expired
|
—
|
—
|
||||||||||||||
Cancelled / Forfeited
|
—
|
—
|
||||||||||||||
Exercised
|
—
|
—
|
||||||||||||||
Options outstanding at End of Period
|
597,947
|
$
|
9.01
|
$
|
1,342,898
|
6.33
|
||||||||||
Exercisable (vested) at End of Period
|
394,704
|
$
|
8.21
|
$
|
1,200,243
|
5.36
|
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in years)
|
||||||||||||
Options outstanding at Beginning of Period
|
607,631
|
$
|
8.91
|
|||||||||||||
Granted
|
—
|
$
|
—
|
|||||||||||||
Expired
|
—
|
$
|
—
|
|||||||||||||
Cancelled / Forfeited
|
—
|
—
|
||||||||||||||
Exercised
|
(9,684
|
)
|
3.31
|
|||||||||||||
Options outstanding at End of Period
|
597,947
|
$
|
9.01
|
$
|
1,342,898
|
6.33
|
||||||||||
Exercisable (vested) at End of Period
|
394,704
|
$
|
8.21
|
$
|
1,200,243
|
5.36
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Remaining
Contractual
Term (in years)
|
||||
Non-vested Restricted stock outstanding at Beginning of Period
|
|
160,147
|
|
$
|
10.46
|
|
_
|
|
_
|
||
Granted
|
|
3,000
|
|
11.45
|
|
|
|||||
Cancelled / Forfeited
|
|
—
|
|
—
|
|
|
|||||
Exercised/Released/Vested
|
|
(1,708)
|
|
10.59
|
|
|
|||||
Non-vested restricted stock outstanding at End of Period
|
|
161,439
|
|
$
|
10.47
|
|
$
|
1,816,189
|
|
|
2.78
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Remaining
Contractual
Term (in years)
|
||||
Non-vested Restricted stock outstanding at Beginning of Period
|
|
148,699
|
|
$
|
10.31
|
|
_ _
|
|
_ _
|
||
Granted
|
|
43,320
|
|
|
10.50
|
|
|
|
|
||
Cancelled / Forfeited
|
|
—
|
|
—
|
|
|
|
|
|||
Exercised/Released/Vested
|
|
(30,580)
|
|
|
9.70
|
|
|
|
|
||
Non-vested restricted stock outstanding at End of Period
|
|
161,439
|
|
$
|
10.47
|
|
$
|
1,816,189
|
|
|
2.78
|
|
Three Months Ended
June 30, 2021
|
Six Months Ended
June 30, 2021
|
||||||
Risk Free Interest Rate
|
0.10
|
%
|
0.10
|
%
|
||||
|
||||||||
Expected Dividend Yield
|
0.00
|
%
|
0.00
|
%
|
||||
|
||||||||
Expected Life in Years
|
1.00
|
1.00
|
||||||
|
||||||||
Expected Price Volatility
|
25.30
|
%
|
25.30
|
%
|
9. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
(in thousands)
|
Unrealized
Gains on
Securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
Other
Comprehensive
Income
|
||||||||||||
Balance as of March 31, 2021
|
$
|
3,024
|
$
|
(2,105
|
)
|
$
|
(53
|
)
|
$
|
866
|
||||||
Current period other comprehensive income
|
146
|
—
|
—
|
146
|
||||||||||||
Balance as of June 30, 2021
|
$
|
3,170
|
$
|
(2,105
|
)
|
$
|
(53
|
)
|
$
|
1,012
|
(in thousands)
|
Unrealized
Gains on
Securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
Other
Comprehensive
Income
|
||||||||||||
Balance as of December 31, 2020
|
$
|
7,196
|
$
|
(2,105
|
)
|
$
|
(53
|
)
|
$
|
5,038
|
||||||
Current period other comprehensive loss
|
(4,026
|
)
|
—
|
—
|
(4,026
|
)
|
||||||||||
Balance as of June 30, 2021
|
$
|
3,170
|
$
|
(2,105
|
)
|
$
|
(53
|
)
|
$
|
1,012
|
(in thousands)
|
Unrealized
Gains on
Securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
Other
Comprehensive
Income
|
||||||||||||
Balance as of March 31, 2020
|
$
|
6,630
|
$
|
(1,411
|
)
|
$
|
(16
|
)
|
$
|
5,203
|
||||||
Current period other comprehensive income
|
1,239
|
—
|
—
|
1,239
|
||||||||||||
Balance as of June 30, 2020
|
$
|
7,869
|
$
|
(1,411
|
)
|
$
|
(16
|
)
|
$
|
6,442
|
(in thousands)
|
Unrealized
Gains on
Securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
Other
Comprehensive
Income
|
||||||||||||
Balance as of December 31, 2019
|
$
|
1,561
|
$
|
(1,411
|
)
|
$
|
(16
|
)
|
$
|
134
|
||||||
Current period other comprehensive income
|
6,308
|
—
|
—
|
6,308
|
||||||||||||
Balance as of June 30, 2020
|
$
|
7,869
|
$
|
(1,411
|
)
|
$
|
(16
|
)
|
$
|
6,442
|
10. |
OUTSTANDING SHARES AND EARNINGS PER SHARE
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||||
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
Basic earnings per share:
|
||||||||||||||||
Net income
|
$
|
3,306
|
$
|
2,705
|
$
|
6,484
|
$
|
5,384
|
||||||||
|
||||||||||||||||
Weighted average common shares outstanding
|
13,520,646
|
13,471,089
|
13,507,501
|
13,454,992
|
||||||||||||
Basic EPS
|
$
|
0.24
|
$
|
0.20
|
$
|
0.48
|
$
|
0.40
|
||||||||
|
||||||||||||||||
Diluted earnings per share:
|
||||||||||||||||
Net income
|
$
|
3,306
|
$
|
2,705
|
$
|
6,484
|
$
|
5,384
|
||||||||
|
||||||||||||||||
Weighted average common shares outstanding
|
13,520,646
|
13,471,089
|
13,507,501
|
13,454,992
|
||||||||||||
|
||||||||||||||||
Effect of dilutive shares
|
176,796
|
95,828
|
164,932
|
125,634
|
||||||||||||
|
||||||||||||||||
Adjusted weighted average common shares outstanding
|
13,697,442
|
13,566,917
|
13,672,433
|
13,580,626
|
||||||||||||
Diluted EPS
|
$
|
0.24
|
$
|
0.20
|
$
|
0.47
|
$
|
0.40
|
11. |
LEASES
|
(in thousands)
|
June 30, 2021
|
|||
2021
|
$
|
591
|
||
2022
|
1,083
|
|||
2023
|
948
|
|||
2024
|
840
|
|||
2025
|
817
|
|||
2026 and thereafter
|
2,192
|
|||
Total lease payments
|
6,471
|
|||
Less: interest
|
(525
|
)
|
||
Present value of lease liabilities
|
$
|
5,946
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
||||||||||||||
(in thousands)
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
Cash paid for amounts included in the measurement of lease liabilities
|
||||||||||||||||
Operating cash flows from operating leases
|
$
|
293
|
$
|
300
|
$
|
583
|
$
|
549
|
||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities
|
—
|
221
|
—
|
221
|
|
June 30, 2021
|
December 31, 2020
|
||||||
Weighted-average remaining lease term – operating leases, in years
|
6.89
|
7.23
|
||||||
Weighted-average discount rate – operating leases
|
2.43
|
%
|
2.43
|
%
|
12. |
SHORT-TERM BORROWINGS
|
● |
Our business objectives, strategies and initiatives, our organizational structure, the growth of our business and our competitive position and prospects, and the effect of competition on our business and strategies
|
● |
Our assessment of significant factors and developments that have affected or may affect our results
|
● |
Legal and regulatory actions, and future legislative and regulatory developments, including the effects of the Dodd-Frank Wall Street Reform and Protection Act (the “Dodd-Frank Act”), the Economic Growth, Regulatory Relief and Consumer Protection Act (the “EGRRCPA”), and other legislation and governmental measures introduced in response to the financial crisis which began in 2008 and the ensuing recession affecting the banking system, financial markets and the U.S. economy, as well as the effect of the federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), enacted in March 2020, in an effort to mitigate the consequences of the coronavirus pandemic and the governmental actions in response to the pandemic
|
● |
Regulatory and compliance controls, processes and requirements and their impact on our business
|
● |
The costs and effects of legal or regulatory actions
|
● |
Expectations regarding draws on performance letters of credit and liabilities that may result from recourse provisions in standby letters of credit
|
● |
Our intent to sell or hold, and the likelihood that we would be required to sell, various investment securities
|
● |
Our regulatory capital requirements, including the capital rules established after the 2008 financial crisis by the U.S. federal banking agencies and our current intention not to elect to use the community bank leverage framework
|
● |
Expectations regarding our non-payment of a cash dividend on our common stock in the foreseeable future
|
● |
Credit quality and provision for credit losses and management of asset quality and credit risk, expectations regarding collections and expectations regarding the forgiveness and SBA reimbursement and guarantee of loans made under the Paycheck Protection Program (“PPP”) and the timing thereof
|
● |
Our allowances for credit losses, including the conditions we consider in determining the unallocated allowance and our portfolio credit quality, the adequacy of the allowance for loan losses, underwriting standards, and risk grading
|
● |
Our assessment of economic conditions and trends and credit cycles and their impact on our business
|
● |
The seasonal nature of our business
|
● |
The impact of changes in interest rates and our strategy to manage our interest rate risk profile and the possible effect of changes in residential mortgage interest rates on new originations and refinancing of existing residential mortgage loans
|
● |
Loan portfolio composition and risk grade trends, expected charge-offs, portfolio credit quality, our strategy regarding troubled debt restructurings (“TDRs”), delinquency rates and our underwriting standards and our expectations regarding our recognition of interest income on loans that were provided payment deferrals upon completion of the payment forbearance period
|
● |
Our deposit base including renewal of time deposits
|
● |
The impact on our net interest income and net interest margin from the current low interest rate environment
|
● |
The effect of possible changes in the initiatives and policies of the federal bank regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters
|
● |
Tax rates and the impact of changes in the U.S. tax laws, including the Tax Cuts and Jobs Act
|
● |
Our pension and retirement plan costs
|
● |
Our liquidity strategies and beliefs concerning the adequacy of our liquidity position
|
● |
Critical accounting policies and estimates, the impact or anticipated impact of recent accounting pronouncements or changes in accounting principles
|
● |
Expected rates of return, maturities, loss exposure, growth rates, yields, and projected results
|
● |
The possible impact of weather-related conditions, including drought, fire or flooding, seismic events, and related governmental responses, including related electrical power outages, on economic conditions, especially in the agricultural sector
|
● |
Maintenance of insurance coverages appropriate for our operations
|
● |
Threats to the banking sector and our business due to cybersecurity issues and attacks and regulatory expectations related to cybersecurity
|
● |
Our expectations regarding the adoption of the expected loss model for determining the allowance for credit losses
|
● |
The effects of the coronavirus pandemic on the U.S., California and global economies and the actions of governments to reduce the spread of the virus and to mitigate the resulting economic consequences
|
● |
Descriptions of assumptions underlying or relating to any of the foregoing
|
• |
Net income of $6.5 million for the six months ended June 30, 2021, up 20.4% from $5.4 million earned for the same period last year. Net income of $3.3 million for the three months ended June 30, 2021, up 22.2% from $2.7 million for the same period last year.
|
• |
Diluted income per share of $0.47 for the six months ended June 30, 2021, up 17.5% from diluted income per share of $0.40 in the same period last year. Diluted income per share of $0.24 for the three months ended June 30, 2021, up 20.0% from diluted income per share of $0.20 for the same period last year.
|
• |
Net interest income of $23.0 million for the six months ended June 30, 2021, up 1.8% from $22.6 million for the same period last year. Net interest income of $12.1 million for the three months ended June 30, 2021, up 6.8% from $11.4 million for the same period last year.
|
• |
Net interest margin of 2.74% for the six months ended June 30, 2021, down 18.5% from 3.36% for the same period last year. Net interest margin of 2.81% for the three months ended June 30, 2021, down 10.2% from 3.13% for the same period last year.
|
• |
Provision for loan losses of $0.3 million for the six months ended June 30, 2021, down 79.3% from $1.5 million for the same period last year. No provision for loan losses for the three months ended June 30, 2021, compared to $0.8 million for the same period last year. The decrease was primarily due to the overall improvement in economic conditions, which was partially offset by an increase in specific reserve on impaired loans.
|
• |
Total assets of $1.8 billion as of June 30, 2021, up 10.8% from $1.7 billion as of December 31, 2020.
|
• |
Total net loans (including loans held-for-sale) of $874.1 million as of June 30, 2021, down 1.2% from $885.0 million as of December 31, 2020.
|
• |
Total investment securities of $561.6 million as of June 30, 2021, up 29.1% from $435.1 million as of December 31, 2020.
|
• |
Total deposits of $1.7 billion as of June 30, 2021, up 12.5% from $1.5 billion as of December 31, 2020.
|
|
Three Months
Ended June 30,
2021
|
Three Months
Ended June 30,
2020
|
Six Months
Ended June 30,
2021
|
Six Months
Ended June 30,
2020
|
||||||||||||
(dollars in thousands except for per share amounts)
|
||||||||||||||||
For the Period:
|
||||||||||||||||
Net Income
|
$
|
3,306
|
$
|
2,705
|
$
|
6,484
|
$
|
5,384
|
||||||||
Basic Earnings Per Common Share
|
$
|
0.24
|
$
|
0.20
|
$
|
0.48
|
$
|
0.40
|
||||||||
Diluted Earnings Per Common Share
|
$
|
0.24
|
$
|
0.20
|
$
|
0.47
|
$
|
0.40
|
||||||||
Net Income to Average Assets (annualized)
|
0.73
|
%
|
0.70
|
%
|
0.74
|
%
|
0.75
|
%
|
||||||||
Net Income to Average Equity (annualized)
|
8.76
|
%
|
7.56
|
%
|
8.64
|
%
|
7.73
|
%
|
||||||||
Average Equity to Average Assets
|
8.34
|
%
|
9.27
|
%
|
8.54
|
%
|
9.76
|
%
|
|
June 30, 2021
|
December 31, 2020
|
||||||
(in thousands except for ratios)
|
||||||||
At Period End:
|
||||||||
Total Assets
|
$
|
1,834,576
|
$
|
1,655,376
|
||||
Total Investment Securities, at fair value
|
$
|
561,559
|
$
|
435,080
|
||||
Total Loans, Net (including loans held-for-sale)
|
$
|
874,056
|
$
|
885,020
|
||||
Total Deposits
|
$
|
1,663,227
|
$
|
1,478,162
|
||||
Loan-To-Deposit Ratio
|
52.6
|
%
|
59.9
|
%
|
|
Three months ended
June 30, 2021
|
Three months ended
June 30, 2020
|
||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
918,149
|
$
|
10,474
|
4.58
|
%
|
$
|
919,301
|
$
|
9,702
|
4.23
|
%
|
||||||||||||
Certificate of deposits
|
14,198
|
77
|
2.18
|
%
|
22,486
|
123
|
2.19
|
%
|
||||||||||||||||
Interest bearing due from banks
|
292,371
|
67
|
0.09
|
%
|
163,031
|
36
|
0.09
|
%
|
||||||||||||||||
Investment securities, taxable
|
471,995
|
1,491
|
1.27
|
%
|
324,040
|
1,667
|
2.06
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
26,041
|
140
|
2.16
|
%
|
19,929
|
124
|
2.50
|
%
|
||||||||||||||||
Other interest earning assets
|
6,995
|
103
|
5.91
|
%
|
6,502
|
83
|
5.12
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,729,749
|
12,352
|
2.86
|
%
|
1,455,289
|
11,735
|
3.23
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
38,086
|
35,907
|
||||||||||||||||||||||
Premises and equipment, net
|
6,464
|
6,375
|
||||||||||||||||||||||
Interest receivable and other assets
|
41,338
|
50,343
|
||||||||||||||||||||||
Total average assets
|
$
|
1,815,637
|
$
|
1,547,914
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
425,200
|
64
|
0.06
|
%
|
347,261
|
81
|
0.09
|
%
|
||||||||||||||||
Savings and MMDA’s
|
437,113
|
116
|
0.11
|
%
|
386,804
|
218
|
0.23
|
%
|
||||||||||||||||
Time, $250,000 or less
|
40,987
|
35
|
0.34
|
%
|
38,046
|
57
|
0.60
|
%
|
||||||||||||||||
Time, over $250,000
|
15,028
|
16
|
0.43
|
%
|
13,309
|
29
|
0.87
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
918,328
|
231
|
0.10
|
%
|
785,420
|
385
|
0.20
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Federal Home Loan Bank advances
|
2,308
|
5,275
|
||||||||||||||||||||||
Non-interest-bearing demand deposits
|
725,415
|
595,343
|
||||||||||||||||||||||
Interest payable and other liabilities
|
18,240
|
18,358
|
||||||||||||||||||||||
Total liabilities
|
1,664,291
|
1,404,396
|
||||||||||||||||||||||
Total average stockholders’ equity
|
151,346
|
143,518
|
||||||||||||||||||||||
Total average liabilities and stockholders’ equity
|
$
|
1,815,637
|
$
|
1,547,914
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
12,121
|
2.81
|
%
|
$
|
11,350
|
3.13
|
%
|
(1) |
Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest thereon is excluded. Loan interest income includes loan fees of approximately $2,144 and $1,859 for the three months ended June 30, 2021 and 2020, respectively. Loan fees for the three months ended June 30, 2021 and June 30, 2020 include $1,584 and $1,981 in PPP loan fees recognized, respectively.
|
(4) |
For disclosure purposes, yield /rates are annualized by dividing the number of days in the reported period by 365.
|
|
Six months ended
June 30, 2021
|
Six months ended
June 30, 2020
|
||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
913,252
|
$
|
19,711
|
4.35
|
%
|
$
|
836,798
|
$
|
18,937
|
4.54
|
%
|
||||||||||||
Certificate of deposits
|
15,127
|
162
|
2.16
|
%
|
20,323
|
237
|
2.34
|
%
|
||||||||||||||||
Interest bearing due from banks
|
281,154
|
130
|
0.09
|
%
|
139,268
|
455
|
0.66
|
%
|
||||||||||||||||
Investment securities, taxable
|
448,173
|
2,977
|
1.34
|
%
|
326,667
|
3,424
|
2.10
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
26,475
|
283
|
2.16
|
%
|
18,108
|
224
|
2.48
|
%
|
||||||||||||||||
Other interest earning assets
|
6,739
|
185
|
5.54
|
%
|
6,538
|
207
|
6.35
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,690,920
|
23,448
|
2.80
|
%
|
1,347,702
|
23,484
|
3.49
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
36,663
|
34,590
|
||||||||||||||||||||||
Premises and equipment, net
|
6,468
|
6,452
|
||||||||||||||||||||||
Interest receivable and other assets
|
38,315
|
43,216
|
||||||||||||||||||||||
Total average assets
|
$
|
1,772,366
|
$
|
1,431,960
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
412,911
|
120
|
0.06
|
%
|
339,462
|
239
|
0.14
|
%
|
||||||||||||||||
Savings and MMDA’s
|
423,168
|
221
|
0.11
|
%
|
365,943
|
486
|
0.27
|
%
|
||||||||||||||||
Time, $250,000 or less
|
41,780
|
74
|
0.36
|
%
|
38,475
|
113
|
0.59
|
%
|
||||||||||||||||
Time, over $250,000
|
15,319
|
40
|
0.53
|
%
|
13,459
|
65
|
0.97
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
893,178
|
455
|
0.10
|
%
|
757,339
|
903
|
0.24
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Federal Home Loan Bank Advances
|
3,646
|
2,637
|
||||||||||||||||||||||
Non-interest-bearing demand deposits
|
705,366
|
513,453
|
||||||||||||||||||||||
Interest payable and other liabilities
|
18,812
|
18,799
|
||||||||||||||||||||||
Total liabilities
|
1,621,002
|
1,292,228
|
||||||||||||||||||||||
Total average stockholders’ equity
|
151,364
|
139,732
|
||||||||||||||||||||||
Total average liabilities and stockholders’ equity
|
$
|
1,772,366
|
$
|
1,431,960
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
22,993
|
2.74
|
%
|
$
|
22,581
|
3.36
|
%
|
(1) |
Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest thereon is excluded. Loan interest income includes loan fees of approximately $3,009 and $1,857 for the six months ended June 30, 2021 and 2020, respectively. Loan fees for the six months ended June 30, 2021 and June 30, 2020 include $2,344 and $1,981 in PPP loan fees recognized, respectively.
|
(2) |
Interest income and yields on tax-exempt securities are not presented on a taxable-equivalent basis.
|
(4) |
For disclosure purposes, yield /rates are annualized by dividing the number of days in the reported period by 365.
|
|
Three months ended
June 30, 2021
|
Three months ended
March 31, 2021
|
||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
918,149
|
$
|
10,474
|
4.58
|
%
|
$
|
908,301
|
$
|
9,237
|
4.12
|
%
|
||||||||||||
Certificates of deposit
|
14,198
|
77
|
2.18
|
%
|
16,065
|
85
|
2.15
|
%
|
||||||||||||||||
Interest bearing due from banks
|
292,371
|
67
|
0.09
|
%
|
269,813
|
63
|
0.09
|
%
|
||||||||||||||||
Investment securities, taxable
|
471,995
|
1,491
|
1.27
|
%
|
424,086
|
1,486
|
1.42
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
26,041
|
140
|
2.16
|
%
|
26,915
|
143
|
2.15
|
%
|
||||||||||||||||
Other interest earning assets
|
6,995
|
103
|
5.91
|
%
|
6,480
|
82
|
5.13
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,729,749
|
12,352
|
2.86
|
%
|
1,651,660
|
11,096
|
2.72
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
38,086
|
35,225
|
||||||||||||||||||||||
Premises and equipment, net
|
6,464
|
6,471
|
||||||||||||||||||||||
Interest receivable and other assets
|
41,338
|
35,258
|
||||||||||||||||||||||
Total average assets
|
$
|
1,815,637
|
$
|
1,728,614
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
425,200
|
64
|
0.06
|
%
|
400,485
|
55
|
0.06
|
%
|
||||||||||||||||
Savings and MMDA’s
|
437,113
|
116
|
0.11
|
%
|
409,068
|
105
|
0.10
|
%
|
||||||||||||||||
Time, $250,000 and under
|
40,987
|
35
|
0.34
|
%
|
43,357
|
40
|
0.37
|
%
|
||||||||||||||||
Time, over $250,000
|
15,028
|
16
|
0.43
|
%
|
14,838
|
24
|
0.66
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
918,328
|
231
|
0.10
|
%
|
867,748
|
224
|
0.10
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Federal Home Loan Bank Advances
|
2,308
|
5,000
|
||||||||||||||||||||||
Non-interest-bearing demand deposits
|
725,415
|
684,279
|
||||||||||||||||||||||
Interest payable and other liabilities
|
18,240
|
19,390
|
||||||||||||||||||||||
Total liabilities
|
1,664,291
|
1,576,417
|
||||||||||||||||||||||
Total average stockholders’ equity
|
151,346
|
152,197
|
||||||||||||||||||||||
Total average liabilities and stockholders’ equity
|
$
|
1,815,637
|
$
|
1,728,614
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
12,121
|
2.81
|
%
|
$
|
10,872
|
2.67
|
%
|
(1) |
Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest is excluded. Loan interest income includes loan fees of approximately $2,144 and $864 for the three months ended June 30, 2021 and March 31, 2021, respectively. Loan fees for the three months ended June 30, 2021 and March 31, 2021 include $1,584 and $760 in PPP loan fees recognized, respectively.
|
(2) |
Interest income and yields on tax-exempt securities are not presented on a taxable equivalent basis.
|
(3) |
Net interest margin is computed by dividing net interest income by total average interest-earning assets.
|
(4) |
For disclosure purposes, yield/rates are annualized by dividing the number of days in the reported period by 365.
|
|
(in thousands)
|
|||||||||||||||
Three months ended
June 30, 2021
|
Three months
ended
June 30, 2020
|
Six months ended
June 30, 2021
|
Six months ended
June 30, 2020
|
|||||||||||||
Other non-interest expenses
|
||||||||||||||||
(Reversal of) provision for unfunded loan commitments
|
$
|
(100
|
)
|
$
|
10
|
$
|
(300
|
)
|
$
|
110
|
||||||
FDIC assessments
|
120
|
130
|
255
|
130
|
||||||||||||
Contributions
|
36
|
32
|
80
|
81
|
||||||||||||
Legal fees
|
123
|
125
|
173
|
209
|
||||||||||||
Accounting and audit fees
|
115
|
114
|
230
|
228
|
||||||||||||
Consulting fees
|
167
|
120
|
217
|
194
|
||||||||||||
Postage expense
|
45
|
44
|
84
|
66
|
||||||||||||
Telephone expense
|
38
|
31
|
68
|
59
|
||||||||||||
Public relations
|
31
|
30
|
57
|
92
|
||||||||||||
Training expense
|
23
|
16
|
35
|
43
|
||||||||||||
Loan origination expense
|
94
|
65
|
120
|
110
|
||||||||||||
Computer software depreciation
|
17
|
17
|
33
|
34
|
||||||||||||
Sundry losses
|
114
|
15
|
169
|
79
|
||||||||||||
Loan collection expense
|
365
|
68
|
595
|
102
|
||||||||||||
Minibank interchange fees
|
141
|
107
|
270
|
242
|
||||||||||||
Other non-interest expense
|
388
|
313
|
714
|
573
|
||||||||||||
Total other non-interest expenses
|
$
|
1,717
|
$
|
1,237
|
$
|
2,800
|
$
|
2,352
|
|
(in thousands)
|
|||||||
June 30, 2021
|
December 31, 2020
|
|||||||
Undisbursed loan commitments
|
$
|
178,389
|
$
|
189,097
|
||||
Standby letters of credit
|
3,122
|
1,731
|
||||||
Commitments to sell loans
|
190
|
1,052
|
||||||
$
|
181,701
|
$
|
191,880
|
• |
Substandard Assets – A substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
|
• |
Doubtful Assets – An asset classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable or improbable.
|
|
At June 30, 2021
|
At December 31, 2020
|
||||||||||||||||||||||
|
Gross
|
Guaranteed
|
Net
|
Gross
|
Guaranteed
|
Net
|
||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Commercial
|
$
|
28
|
$
|
—
|
$
|
28
|
$
|
363
|
$
|
63
|
$
|
300
|
||||||||||||
Commercial real estate
|
6,570
|
28
|
6,542
|
4,875
|
34
|
4,841
|
||||||||||||||||||
Agriculture
|
9,130
|
—
|
9,130
|
9,130
|
—
|
9,130
|
||||||||||||||||||
Residential mortgage
|
144
|
—
|
144
|
153
|
—
|
153
|
||||||||||||||||||
Residential construction
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Consumer
|
685
|
—
|
685
|
690
|
—
|
690
|
||||||||||||||||||
Total non-accrual loans
|
$
|
16,557
|
$
|
28
|
$
|
16,529
|
$
|
15,211
|
$
|
97
|
$
|
15,114
|
|
At June 30, 2021
|
At December 31, 2020
|
||||||||||||||||||||||
Gross
|
Guaranteed
|
Net
|
Gross
|
Guaranteed
|
Net
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Non-accrual loans
|
$
|
16,557
|
$
|
28
|
$
|
16,529
|
$
|
15,211
|
$
|
97
|
$
|
15,114
|
||||||||||||
Loans 90 days past due and still accruing
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Total non-performing loans
|
16,557
|
28
|
16,529
|
15,211
|
97
|
15,114
|
||||||||||||||||||
Other real estate owned
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Total non-performing assets
|
$
|
16,557
|
$
|
28
|
$
|
16,529
|
$
|
15,211
|
$
|
97
|
$
|
15,114
|
||||||||||||
Non-performing loans (net of guarantees) to total loans
|
1.9
|
%
|
1.7
|
%
|
||||||||||||||||||||
Non-performing assets (net of guarantees) to total assets
|
0.9
|
%
|
0.9
|
%
|
||||||||||||||||||||
Allowance for loan and lease losses to non-performing loans (net of guarantees)
|
93.0
|
%
|
102.0
|
%
|
|
Six months ended
June 30,
|
Year ended
December 31,
|
||||||||||
2021
|
2020
|
2020
|
||||||||||
Balance at beginning of period
|
$
|
15,416
|
$
|
12,356
|
$
|
12,356
|
||||||
Provision for loan losses
|
300
|
1,450
|
3,050
|
|||||||||
Loans charged-off:
|
||||||||||||
Commercial
|
(347
|
)
|
(184
|
)
|
(212
|
)
|
||||||
Commercial Real Estate
|
—
|
—
|
—
|
|||||||||
Agriculture
|
—
|
—
|
—
|
|||||||||
Residential Mortgage
|
—
|
—
|
—
|
|||||||||
Residential Construction
|
—
|
—
|
—
|
|||||||||
Consumer
|
(6
|
)
|
(13
|
)
|
(15
|
)
|
||||||
Total charged-off
|
(353
|
)
|
(197
|
)
|
(227
|
)
|
||||||
Recoveries:
|
||||||||||||
Commercial
|
8
|
12
|
201
|
|||||||||
Commercial Real Estate
|
—
|
—
|
—
|
|||||||||
Agriculture
|
—
|
—
|
—
|
|||||||||
Residential Mortgage
|
—
|
—
|
—
|
|||||||||
Residential Construction
|
—
|
—
|
—
|
|||||||||
Consumer
|
8
|
10
|
36
|
|||||||||
Total recoveries
|
16
|
22
|
237
|
|||||||||
Net charge-offs
|
(337
|
)
|
(175
|
)
|
10
|
|||||||
Balance at end of period
|
$
|
15,379
|
$
|
13,631
|
$
|
15,416
|
||||||
Ratio of net charge-offs to average loans outstanding during the period (annualized)
|
(0.07
|
%)
|
(0.04
|
%)
|
0.00
|
%
|
||||||
Allowance for loan losses
|
||||||||||||
To total loans at the end of the period
|
1.72
|
%
|
1.36
|
%
|
1.73
|
%
|
||||||
To non-performing loans, net of guarantees at the end of the period
|
93.0
|
%
|
84.4
|
%
|
102.0
|
%
|
|
(in thousands)
|
|||||||
June 30, 2021
|
December 31, 2020
|
|||||||
Three months or less
|
$
|
4,762
|
$
|
5,110
|
||||
Over three to twelve months
|
3,910
|
5,877
|
||||||
Over twelve months
|
5,760
|
3,656
|
||||||
Total
|
$
|
14,432
|
$
|
14,643
|
|
(amounts in thousands except percentage amounts)
|
|||||||||||
|
Actual
|
Well Capitalized
|
||||||||||
|
Capital
|
Ratio
|
Ratio
Requirement
|
|||||||||
Leverage
|
$
|
148,149
|
8.18
|
%
|
5.0
|
%
|
||||||
Common Equity Tier 1
|
$
|
148,149
|
16.24
|
%
|
6.5
|
%
|
||||||
Tier 1 Risk-Based
|
$
|
148,149
|
16.24
|
%
|
8.0
|
%
|
||||||
Total Risk-Based
|
$
|
159,610
|
17.50
|
%
|
10.0
|
%
|
|
(a)
|
(b)
|
(c)
|
(d)
|
||||
Period
|
Total number of
shares purchased
|
|
Average price paid
per share
|
|
Number of shares
purchased as part of
publicly announced
plans or programs
|
|
Maximum number of
shares that may yet be
purchased under the
plans or programs
|
|
June 1 - June 30, 2021
|
82,549
|
11.15
|
82,549
|
464,654
|
Exhibit
Number
|
|
Description of Document
|
|
|
|
Change of Control Agreement between First Northern Bank of Dixon and Denise Burris, Executive Vice President and Chief Information Officer
|
||
Executive Retirement/Retention Participation Agreement for Denise Burris, Executive Vice President and Chief Information Officer
|
||
|
Rule 13a — 14(a) Certification of Chief Executive Officer
|
|
|
|
|
|
Rule 13a — 14(a) Certification of Chief Financial Officer
|
|
|
|
|
|
Statement of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
|
|
|
|
|
|
Statement of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
|
|
|
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
|
|
|
|
FIRST NORTHERN COMMUNITY BANCORP
|
|
|
|
|
Date:
|
August 5, 2021
|
By:
|
/s/ Kevin Spink
|
|
|
|
|
|
|
|
Kevin Spink, Executive Vice President / Chief Financial Officer
|
|
|
|
(Principal Financial Officer and Duly Authorized Officer)
|
|
1. |
Change of Control. Change of Control means the occurrence of any of the following events with
respect to the Bank or its parent holding Company, FIRST NORTHERN COMMUNITY BANCORP (“Bancorp”)
|
|
a. |
Merger. A merger into or consolidation with another corporation, or merger of another
corporation into Bank of Bancorp, and as a result less than 50% of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Bank or Bancorp
immediately before the merger or consolidation.
|
|
b. |
Acquisition of Significant Share Ownership. One person, or more than one person acting as a
group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock possessing thirty percent (30%) or more of the total voting power of the
stock of Bank or Bancorp (this constitutes acquisition of “Effective Control”). No Change of Control shall occur if additional voting shares are acquired by a person or persons who possessed Effective Control prior to acquiring additional
shares. This subpart (b) shall not apply to beneficial ownership of voting shares held in a fiduciary capacity by an entity of which Bank or Bancorp directly or indirectly beneficially owns fifty percent (50%) or more of the outstanding
voting securities, or voting shares held by an employee benefit plan maintained for the benefit of the Bank’s employees.
|
|
c. |
Change in Board Composition. A majority of the members of the Board of Directors of Bank or
Bancorp is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors of Bank or Bancorp before the date of the appointment or election. This
subparagraph shall only apply with respect to Bancorp if no other corporation is a majority shareholder of Bancorp.
|
|
d. |
Bancorp. A Change of Control shall only occur with respect to Bancorp if Bancorp (i) is a
majority shareholder of the Bank; (ii) is a majority shareholder of any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in the Bank; or (iii) is otherwise
a “Relevant Corporation” as that term is used and defined in Internal Revenue Code (“Code”) Section 409A (“Section 409A”). For purposes of this section, majority shareholder means a shareholder owning more than 50% of the total fair market
value and total voting power of the Bank, Bancorp, or a corporation in the chain referenced above. No Change of Control shall occur unless the event constitutes a “Change of Ownership of a Corporation” or a “Change in the Effective Control
of a Corporation” as defined under Section 409A.
|
|
2. |
Resignation due to Change of Control. The Executive shall be entitled to the benefits provided in Section 3 of this Agreement if the
Executive resigns within six (6) months following a Change in Control in response to one or more of the following events, occurring after the Change in Control; (i) a material diminution in the Executive’s base compensation; (ii) a material
diminution in the Executive’s authority, duties, or responsibilities; (iii) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report, including a requirement that the
Executive report to a corporate officer or employee instead of reporting directly to the Board; (iv) a material diminution in the budget over which the Executive retains authority; or (v) a material change in geographic location at which the
Executive must perform services. In the event of Executive’s resignation, Executive’s employment will be deemed to have been involuntarily terminated under Section 3 of this Agreement only if Executive delivers written notice of one or more
conditions described above to the employer at least thirty (30) days prior to resignation and the employer does not remedy the conditions within thirty (30) days after notice is received.
|
|
3. |
Involuntary Termination.
|
|
a. |
Compensation. If within six (6) months following Bank’s formal approval of a Change of Control
that then occurs, Executive’s employment is terminated without cause (i.e., termination for cause includes poor performance, insubordination, felony conviction, breach of ethics or morals adversely affecting the Executive’s performance at
Bank), or if Executive resigns pursuant to Section 2 of this Agreement, Executive shall receive:
|
|
i. |
200% of the sum of (i) Executive’s annual base salary as in effect on the date of the Change of Control and (ii) the average of the annual bonuses awarded to Executive by the Bank for
the most recent three (3) consecutive years prior to the date of the Change of Control,
|
|
ii. |
Any incentive compensation earned but not yet paid,
|
|
iii. |
Any expenses reimbursable under the Bank’s policies and incurred but not yet reimbursed, and
|
|
iv. |
Outplacement may be considered.
|
|
b. |
Terms of Payment. The payment to which Executive is entitled pursuant to this Section 3 shall be
paid in a single installment within the earlier of (i) forty-five (45) days of termination or (ii) two and one-half (2 ½) months after the end of the Executive’s taxable year in which the termination occurred, with no percent value or other
discount.
|
|
c. |
Insurance. Upon Termination of Employment within six (6) months following a Change of Control,
Executive (and, where applicable, Executive’s dependents) shall be entitled to continuation coverage (as California’s Cal-COBRA provisions) under the group insurance plans maintained by the Bank, including life, disability and health
insurance programs, for up to twenty-four (24) months, subject to the terms, condition s and limitations set forth in such plans. For a period up to the first twelve (12) months of continuation coverage, the Bank shall pay the same portion
of group insurance premiums for the Executive’s continued overage as is paid for other executives who are current employees. If the Executive becomes eligible for comparable group insurance coverage in connection with new employment, the
Bank shall no longer be responsible for the cost of continuation coverage. Beginning with the thirteenth (13) month of continuation coverage, coverage may be continued at the Executive’s own expense.
|
|
d. |
Delayed Payments to Specified Employees. If Executive is a Specified Employee as of the date the
Executive ceases to be employed by Bank and separates from service with the Bank (the “Termination of Employment”), benefit payments under this subsection shall be delayed and shall not begin prior to the date that is six (6) months after the
Termination of Employment (or, if earlier than the end of the six-month period, the date of death of the Executive). Payments to which the Executive would otherwise be entitled during the first six (6) months following the Termination of
Employment, but for this provision, shall be accumulated and paid on the first day of the seventh month following the Termination of Employment. If Executive is a Key Employee of the Bank or any entity that is aggregated with the Bank under
Code Section 414(b) or (c) as of December 31st of any year ) (the “Determination Date”), and the Bank of any entity that is aggregated with the Bank under Code
section 414(b) or (c) has stock that is publicly traded on an established securities market or otherwise, the Executive shall be treated as a Specified Employee during the 12-month period beginning on the April 1st following the Determination Date. An Executive is a Key Employee as of a Determination Date if the Executive meets the requirements of Code section 416(i)(1)(A)(i), (ii) or (iii)
(applied in accordance with the regulations thereunder and disregarding section 416(i)(5) at any time during the twelve (12) months preceding the Determination Date.
|
|
e. |
Except as provided in this Section 3 or required by law, all of Executive’s employee benefits and compensation shall cease on the last day on which he performs services as an employee
of the Bank.
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f. |
Executive shall not be required to mitigate the amount of any payment or benefit contemplated by this Section 3 (whether by seeking new employment or otherwise) and no such payment or
benefit shall be reduced by earnings that Executive may receive from any other source.
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g. |
If employment is terminated due to a Change in Control of the Bank the Executive shall receive whatever rights may be specified pursuant to the Frist Northern Bank of Dixon Supplemental
Employee Retirement Plan.
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4. |
Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable taxes.
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5. |
Advice of Counsel. Before signing this Agreement, Executive either (i) consulted with and obtained advice from Executive’s
independent legal counsel in respect to the legal nature and operation of this Agreement, including its impact on executive’s rights, privileges and obligations; or (ii) freely and voluntarily decided not to have the benefit of such
consultation and advice with legal counsel.
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6. |
Term of Agreement. The Bank agrees to continue, and Executive agrees this Agreement will remain in effect, from July 1, 2021 (the
“Commencement Date”), until the earliest of (i) December 31, 2021 or (ii) the date on which Executive’s Termination of Employment, as applicable, provided that the terms and conditions of this Agreement shall automatically extend for
consecutive one (1) year periods, on and after December 31, 2021 unless either Executive or the Bank notifies the other in writing at least sixty (60) days before the end of the then current term that, for any reason, the Executive or the
Bank has elected not to extend the term.
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|
7. |
Entire Agreement. This Agreement supersedes and replaces (rather than supplements) all pervious oral or written agreements, memoranda,
correspondence or other communications between the parties hereto to the extent they deal with Change of Control compensation described in the Agreement.
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|
8. |
FDIC. In addition, the payment of any and all Executive Benefits under this Plan shall be subject to and conditioned upon compliance with
12 U.S.C. Section 1828(k) and any regulations promulgated thereunder, and any Executive Benefits and rights under the Plan shall be forfeited to the extent barred or prohibited by an action or order issued by the California Department of
Financial Institutions, the FDIC, or any government agency which has jurisdiction over the Bank.
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|
9. |
Law Governing Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of California for
contracts to be performed entirely within this state.
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|
10. |
No Employment Agreement. Nothing in this Agreement creates an employment contract or otherwise changes the at-will employment
relationship between the Bank and the Executive.
|
FIRST NORTHERN BANK OF DIXON
|
|
/s/ Louise A. Walker
|
|
Louise A. Walker,
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|
President & Chief Executive Officer
|
|
EXECUTIVE
|
|
/s/ Denise Burris
|
|
Denise Burris,
|
|
Executive Vice President, Chief Information Officer
|
|
(a) |
Voluntary Termination at an Early Retirement Date – If the Executive voluntarily terminates employment without Good Reason at an Early
Termination Date, then the Executive shall forfeit any unvested deferral balances derived from the deferral of Executive Retirement/Retention Awards granted under the terms of this Agreement.
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|
(b) |
Involuntary Termination without Cause or Voluntary Termination for Good Reason– If the Executive’s
employment is involuntarily terminated without Cause (as described in Section 3.3 of this Agreement), or voluntarily terminated for Good Reason, the Executive shall vest 100% in all deferral balances derived from Executive
Retirement/Retention Awards granted under this Agreement. The payment of such amounts shall be determined by the terms of the Plan.
|
|
(c) |
Involuntary Termination With Cause – If the Executive’s employment is involuntarily terminated with Cause (as described in Section 3.3 of this
Agreement), the Executive shall forfeit any and all deferral balances derived from the deferral of Executive Retirement/Retention Awards granted under the terms of this Agreement.
|
|
(d) |
Termination Due to Death, Disability, or Change in Control -- If the Executive’s employment is terminated due to the Executive’s death,
Disability, or within 24 months of a Change in Control, then the Executive shall vest 100% in all deferral balances derived by Executive Retirement/Retention Awards granted under this Agreement. The payment of such amounts shall be
determined by the terms of the Plan.
|
|
(a) |
Willfully and intentionally violated any state or federal banking or securities laws or the bylaws, rules, policies or resolutions of the Company or the rules or regulations of the
Federal Deposit Insurance Corporation, Federal Reserve Board or other regulatory agency or governmental authority having jurisdiction over the Company; or
|
|
(b) |
Been convicted of any felony or a crime involving moral turpitude, or willfully and intentionally committed a fraudulent or dishonest act; or
|
|
(c) |
Willfully and intentionally disclosed, without authority, any secret or confidential information concerning the Company or any customer of the Company or taken any action which the
Board determines, in its sole discretion and subject to good faith, fair dealing and reasonableness, constitutes unfair competition with or induces any customer to breach any contract with the Company.
|
FIRST NORTHERN BANK
Louise Walker
|
||
By:
|
/s/ Louise Walker
|
|
Title:
|
President/CEO
|
EXECUTIVE – Mrs. Denise Burris
|
||
By:
|
/s/ Denise Burris
|
|
Title:
|
Executive Vice President / Chief Information Officer
|
Date: August 5, 2021
|
|
|
|
/s/ Louise A. Walker
|
|
|
|
Louise A. Walker, President and Chief Executive Officer
|
|
|
|
|
|
/s/ Kevin Spink
|
|
|
|
Kevin Spink, Executive Vice President / Chief Financial Officer
|
|
Date:
|
August 5, 2021
|
|
/s/ Louise A. Walker
|
|
|
|
|
|
|
|
Louise A. Walker, President and Chief Executive Officer
|
Date:
|
August 5, 2021
|
|
/s/ Kevin Spink
|
|
|
|
|
|
|
|
Kevin Spink, Executive Vice President / Chief Financial Officer
|