|
| |
Per Share
|
| |
Total
|
Initial public offering price
|
| |
$10.50
|
| |
$36,750,000
|
Underwriting discount(1)
|
| |
$0.74
|
| |
$2,572,500
|
Proceeds to us (before expenses)
|
| |
$9.76
|
| |
$34,177,500
|
(1)
|
The underwriters will also be reimbursed for certain expenses incurred in this offering. See “Underwriting” for additional information.
|
|
| |
|
•
|
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;”
|
•
|
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;
|
•
|
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;
|
•
|
permitted to provide less extensive disclosure about our executive compensation arrangements; and
|
•
|
not required to hold non-binding shareholder advisory votes on executive compensation or golden parachute arrangements.
|
•
|
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 (“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;
|
•
|
our core deposits which, as of September 30, 2021 and December 31, 2020, constituted 79.3% 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
|
•
|
our seasoned management team, which has considerable banking experience, particularly in our core lines of business.
|
•
|
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.
|
•
|
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 January 1, 2014 through September 30, 2021, SBA 7(a) loans made by the Bank have a charge-off rate of 0.2% versus 0.9% 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
|
•
|
Strategic Programs: Over the past five years, we have established Strategic Programs with various third-party consumer and commercial platforms that use technology to streamline the Bank’s origination of consumer and small commercial loans. We currently have 11 Strategic Program relationships. We are highly selective in establishing relationships with 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 platforms in our Strategic Program. Finally, we seek to establish relationships with Strategic Program 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 we originate the loans, following which we may sell the loan receivables or whole loans to the Strategic Program platform or other investors. The terms of our Strategic Programs generally require each Strategic Program 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.
|
•
|
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
|
•
|
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 $4.7 million in consumer loans outstanding as of December 31, 2020 and September 30, 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 nine months ended September 30, 2021, we originated approximately $1.8 million in POS loans and held approximately $3.9 million of POS loans on our balance sheet as of September 30, 2021. We expect to expand this program via enhanced marketing efforts.
|
Year End 2020 Origination Volume
|
| |
Loan Portfolio as of 12/31/20
|
|
| |
|
Year End 2020 Revenue by Business Line
|
|||
|
Q3 2021 Origination Volume
|
| |
Loan Portfolio as of 09/30/21
|
|
| |
|
Q3 2021 Revenue by Business Line
|
|||
|
Return on Average Assets
|
| |
Return on Average Equity
|
|
| |
|
Net Interest Margin
|
| |
Noninterest Income / Average Assets
|
|
| |
|
Efficiency Ratio
|
|||
|
NAICS
Sub-Sector
Code
|
| |
Description
|
| |
September 30, 2021
% of Total
|
541
|
| |
Professional, Scientific and Technical Services
|
| |
15.9%
|
454
|
| |
Non-Store Retailers (Electronic Shopping)
|
| |
15.6%
|
423
|
| |
Merchant Wholesalers, Durable Goods
|
| |
8.5%
|
621
|
| |
Ambulatory Health Care Services
|
| |
6.3%
|
445
|
| |
Food and Beverage Stores (Grocery, Convenience)
|
| |
4.5%
|
623
|
| |
Nursing and Residential Care Facilities
|
| |
4.4%
|
448
|
| |
Clothing and Clothing Accessories Stores
|
| |
4.3%
|
238
|
| |
Specialty Trade Contractors
|
| |
4.1%
|
811
|
| |
Manufacturing Repair and Maintenance
|
| |
3.8%
|
442
|
| |
Furniture and Home Furnishings Stores
|
| |
2.9%
|
|
| |
All Other
|
| |
29.7%
|
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.
|
•
|
Michael O’Brien. Mr. O’Brien joined the Company and the Bank in September 2021 as Executive Vice President, Chief Compliance and Risk Officer and Corporate Counsel. Mr. O’Brien has over 20 years of legal, compliance and risk management experience in financial services. He practiced law in New York and Washington, D.C. with nationally recognized law firms prior to legal positions with E*TRADE Financial and Sallie Mae Bank. Mr. O’Brien also previously served as Chief Compliance Officer of EnerBank USA, a Utah industrial bank. He is currently licensed to practice law in Utah and Washington, D.C.
|
•
|
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.
|
•
|
the impact, duration and severity of the ongoing Covid-19 pandemic (including the emergence of any new variants thereof), 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;
|
•
|
cybersecurity breaches and system failures affecting FinView™;
|
•
|
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;
|
•
|
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;
|
•
|
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;
|
•
|
third-party risk, including risks that we may be unable to maintain or increase loan originations facilitated through our Strategic Programs;
|
•
|
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;
|
•
|
legislative, regulatory, legal, and reputational risks related to our Strategic Programs, including those relating to our small dollar lending program;
|
•
|
reversal of regulatory pronouncements that provided clarity for Strategic Programs on “true lender” rules;
|
•
|
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 525,000 shares of common stock;
|
•
|
excludes 881,988 shares of common stock issuable upon exercise of stock options outstanding as of September 30, 2021, at a weighted average exercise price of $4.30 per share (comprising 481,728 shares of fully vested common stock issuable upon exercise of stock options and 400,260 shares of unvested common stock issuable upon exercise of stock options);
|
•
|
does not attribute to any director, executive officer, employee, principal shareholder, business associate or other related person any purchases of shares of our common stock in this offering, including through the directed share program described in “Underwriting—Directed Share Program”; and
|
•
|
excludes 270,000 shares of common stock issuable upon exercise of fully vested warrants outstanding at a weighted average exercise price of $6.67 per share.
|
Balance Sheet Data
|
| |
As of and for the
Nine Months Ended
September 30,
|
| |
As of and for the years ended
December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Total assets
|
| |
$338,316
|
| |
$318,340
|
| |
$317,515
|
| |
$177,062
|
| |
$116,085
|
Cash and cash equivalents
|
| |
68,106
|
| |
32,169
|
| |
47,383
|
| |
34,779
|
| |
26,004
|
Investment securities held-to-maturity, at cost
|
| |
4,414
|
| |
1,929
|
| |
1,809
|
| |
453
|
| |
570
|
Loans receivable, net
|
| |
178,748
|
| |
227,266
|
| |
232,074
|
| |
105,725
|
| |
78,034
|
Strategic Program loans held-for-sale, at lower of cost or fair value
|
| |
62,702
|
| |
45,035
|
| |
20,948
|
| |
25,109
|
| |
6,956
|
SBA servicing asset
|
| |
4,368
|
| |
2,419
|
| |
2,415
|
| |
2,034
|
| |
1,581
|
Investment in Business Funding Group, at fair value
|
| |
5,241
|
| |
3,785
|
| |
3,770
|
| |
3,459
|
| |
—
|
Deposits
|
| |
253,036
|
| |
184,623
|
| |
164,476
|
| |
142,021
|
| |
94,824
|
PPP Liquidity Facility
|
| |
2,259
|
| |
84,330
|
| |
101,007
|
| |
—
|
| |
—
|
Total shareholders’ equity
|
| |
69,138
|
| |
40,929
|
| |
45,872
|
| |
33,095
|
| |
19,225
|
Tangible shareholders’ equity(1)
|
| |
69,138
|
| |
40,929
|
| |
45,872
|
| |
33,095
|
| |
19,225
|
|
| |
For the Nine Months
Ended
September 30,
|
| |
For the Years Ended
December 31,
|
|||||||||
($ in thousands, except for per share data)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Income Statement Data
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest income
|
| |
$33,690
|
| |
$20,941
|
| |
$29,506
|
| |
$21,408
|
| |
$8,073
|
Interest expense
|
| |
984
|
| |
1,352
|
| |
1,756
|
| |
1,462
|
| |
846
|
Net interest income
|
| |
32,706
|
| |
19,589
|
| |
27,750
|
| |
19,946
|
| |
7,227
|
Provision for loan losses
|
| |
5,536
|
| |
5,234
|
| |
5,234
|
| |
5,288
|
| |
980
|
Net interest income after provision for loan losses
|
| |
27,170
|
| |
14,355
|
| |
22,516
|
| |
14,658
|
| |
6,247
|
Noninterest income:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Strategic Program fees
|
| |
11,877
|
| |
6,878
|
| |
9,591
|
| |
8,866
|
| |
5,026
|
Gain on sale of loans
|
| |
7,876
|
| |
2,560
|
| |
2,849
|
| |
4,167
|
| |
2,957
|
SBA loan servicing fees
|
| |
800
|
| |
745
|
| |
1,028
|
| |
607
|
| |
545
|
Other noninterest income
|
| |
2,162
|
| |
758
|
| |
905
|
| |
223
|
| |
128
|
Total noninterest income
|
| |
22,715
|
| |
10,941
|
| |
14,373
|
| |
13,863
|
| |
8,656
|
Noninterest expense
|
| |
21,140
|
| |
16,092
|
| |
21,749
|
| |
15,685
|
| |
9,538
|
Provision for income taxes
|
| |
7,273
|
| |
2,622
|
| |
3,942
|
| |
3,177
|
| |
1,333
|
Net income
|
| |
$21,472
|
| |
$6,582
|
| |
$11,198
|
| |
$9,659
|
| |
$4,032
|
|
| |
For the Nine Months
Ended
September 30,
|
| |
For the Years Ended
December 31,
|
|||||||||
($ in thousands, except for per share data)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Per Share Data (Common Stock)
|
| |
|
| |
|
| |
|
| |
|
| |
|
Earnings:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$2.47
|
| |
$0.76
|
| |
$1.29
|
| |
$1.37
|
| |
$0.65
|
Diluted(2)
|
| |
$2.34
|
| |
$0.76
|
| |
$1.28
|
| |
$1.37
|
| |
$0.65
|
Book value(3)
|
| |
$7.91
|
| |
$4.73
|
| |
$5.30
|
| |
$3.80
|
| |
$2.74
|
Tangible book value(1)
|
| |
$7.91
|
| |
$4.73
|
| |
$5.30
|
| |
$3.80
|
| |
$2.74
|
|
| |
September 30,
|
| |
December 31,
|
|||||||||
Selected Performance Metrics
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Return on average assets(4)(7)
|
| |
8.7%
|
| |
3.5%
|
| |
4.5%
|
| |
6.6%
|
| |
4.5%
|
Return on average equity(4)(7)
|
| |
49.8%
|
| |
23.7%
|
| |
28.4%
|
| |
36.9%
|
| |
26.6%
|
Average yield on loans(5)
|
| |
18.0%
|
| |
14.8%
|
| |
14.1%
|
| |
19.3%
|
| |
10.9%
|
Average cost of deposits(5)
|
| |
1.2%
|
| |
2.0%
|
| |
1.9%
|
| |
2.0%
|
| |
1.6%
|
Net interest margin(5)
|
| |
14.5%
|
| |
11.2%
|
| |
11.0%
|
| |
14.1%
|
| |
8.1%
|
Efficiency ratio(1)
|
| |
38.1%
|
| |
52.7%
|
| |
51.6%
|
| |
46.4%
|
| |
60.1%
|
Noninterest income to total revenue(6)
|
| |
41.0%
|
| |
35.8%
|
| |
34.1%
|
| |
41.0%
|
| |
54.5%
|
Noninterest income to average assets(7)
|
| |
9.2%
|
| |
5.9%
|
| |
5.8%
|
| |
9.5%
|
| |
9.6%
|
Average equity to average assets(7)
|
| |
17.5%
|
| |
14.9%
|
| |
16.0%
|
| |
17.8%
|
| |
16.7%
|
Total shareholders’ equity to total assets
|
| |
20.4%
|
| |
12.9%
|
| |
14.4%
|
| |
18.7%
|
| |
16.6%
|
Tangible shareholders’ equity to tangible assets(1)
|
| |
20.4%
|
| |
12.9%
|
| |
14.4%
|
| |
18.7%
|
| |
16.6%
|
Employees at period end
|
| |
113
|
| |
89
|
| |
95
|
| |
86
|
| |
54
|
|
| |
As of and
For the Nine Months
Ended
September 30,
|
| |
As of and For the Years Ended December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Selected Loan Metrics
|
| |
|
| |
|
| |
|
| |
|
| |
|
Number of loans originated
|
| |
877,328
|
| |
410,318
|
| |
749,746
|
| |
522,981
|
| |
145,839
|
Amount of loans originated
|
| |
$4,260,611
|
| |
$1,745,882
|
| |
$2,596,809
|
| |
$1,724,523
|
| |
$762,716
|
Number of loans serviced
|
| |
1,422
|
| |
2,158
|
| |
2,045
|
| |
1,482
|
| |
1,252
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Asset Quality Ratios
|
| |
|
| |
|
| |
|
| |
|
| |
|
Nonperforming loans
|
| |
$757
|
| |
$940
|
| |
$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
|
| |
1.1%
|
| |
2.0%
|
| |
1.7%
|
| |
2.3%
|
| |
0.2%
|
Allowance for loan losses to loans held for investment
|
| |
5.2%
|
| |
3.0%
|
| |
2.6%
|
| |
4.1%
|
| |
2.1%
|
Allowance for loan losses to total loans
|
| |
3.9%
|
| |
2.5%
|
| |
2.4%
|
| |
3.3%
|
| |
2.0%
|
Allowance for loan losses to total loans (less PPP loans)(1)
|
| |
3.9%
|
| |
4.5%
|
| |
4.0%
|
| |
3.3%
|
| |
2.0%
|
Net charge-offs
|
| |
$2,095
|
| |
$2,737
|
| |
$3,559
|
| |
$2,492
|
| |
$163
|
|
| |
September 30,
|
| |
December 31,
|
|||||||||
Capital Ratios8
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Leverage ratio (under CBLR)
|
| |
19.5%
|
| |
16.3%
|
| |
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
|
(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 Nine Months
Ended
September 30,
|
| |
For the Years Ended
December 31,
|
|||||||||
Share data
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Weighted average shares outstanding, basic
|
| |
8,177,575
|
| |
8,021,902
|
| |
8,025,390
|
| |
7,038,896
|
| |
6,208,840
|
Weighted average shares outstanding, diluted
|
| |
8,630,356
|
| |
8,038,545
|
| |
8,069,634
|
| |
7,053,354
|
| |
6,208,842
|
Shares outstanding at end of period
|
| |
8,746,110
|
| |
8,660,334
|
| |
8,660,334
|
| |
8,709,756
|
| |
7,013,202
|
(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 September 30, 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 $3.2 million (including approximately $1.8 million in fees related to PPP loans) and $1.1 million (including approximately $0.5 million in fees related to PPP loans) for the nine months ended September 30, 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 given reporting period representing a less than annual period 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 reporting period and (ii) at the ending of the relevant reporting period, 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 and 8.5% for 2021. 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.
|
|
| |
Nine Months Ended
September 30,
|
| |
Year Ended
December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Noninterest expense
|
| |
$21,140
|
| |
$16,092
|
| |
$21,749
|
| |
$15,685
|
| |
$9,538
|
Net interest income
|
| |
$32,706
|
| |
$19,589
|
| |
$27,750
|
| |
$19,946
|
| |
$7,227
|
Total noninterest income
|
| |
$22,715
|
| |
$10,941
|
| |
$14,373
|
| |
$13,863
|
| |
$8,656
|
Adjusted operating revenue
|
| |
$55,421
|
| |
$30,530
|
| |
$42,123
|
| |
$33,809
|
| |
$15,883
|
Efficiency ratio
|
| |
38.1%
|
| |
52.7%
|
| |
51.6%
|
| |
46.4%
|
| |
60.1%
|
|
| |
As of
September 30,
|
| |
Year Ended
December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Allowance for loan losses
|
| |
$9,640
|
| |
$7,028
|
| |
$6,199
|
| |
$4,531
|
| |
$1,735
|
Total loans
|
| |
$249,214
|
| |
$281,989
|
| |
$261,777
|
| |
$136,662
|
| |
$87,816
|
PPP loans
|
| |
$2,303
|
| |
$126,625
|
| |
$107,145
|
| |
$0
|
| |
$0
|
Total loans less PPP loans
|
| |
$246,911
|
| |
$155,364
|
| |
$154,632
|
| |
$136,662
|
| |
$87,816
|
Allowance for loan losses to total loans
(less PPP loans)
|
| |
3.9%
|
| |
4.5%
|
| |
4.0%
|
| |
3.3%
|
| |
2.0%
|
|
| |
As of
September 30,
|
| |
Year Ended
December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Total nonperforming assets and troubled debt restructuring
|
| |
$864
|
| |
$1,119
|
| |
$1,701
|
| |
$1,108
|
| |
$87
|
Total assets
|
| |
$338,316
|
| |
$318,340
|
| |
$317,515
|
| |
$177,062
|
| |
$116,085
|
PPP loans
|
| |
$2,303
|
| |
$126,625
|
| |
$107,145
|
| |
$0
|
| |
$0
|
Total assets less PPP loans
|
| |
$336,013
|
| |
$191,715
|
| |
$210,370
|
| |
$177,062
|
| |
$116,085
|
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans)
|
| |
0.3%
|
| |
0.6%
|
| |
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;
|
•
|
conduct debt collection and servicing activities in compliance with federal, state and municipal laws;
|
•
|
effectively training internal employees, third-party vendors and service providers in requirements imposed by federal, state and municipal laws and ensuring said employees, vendors and service providers comply with said laws;
|
•
|
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 us, and the FDIC, the UDFI and Utah state law may, under certain circumstances, restrict the payment of dividends to us from the Bank;
|
•
|
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 3,500,000 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 the initial public offering price of $10.50 per share, after deducting underwriting discounts and estimated offering expenses payable by us.
|
|
| |
September 30, 2021
|
|||
($ in thousands, except per share data)
|
| |
Actual
|
| |
As Adjusted(1)
|
Cash and cash equivalents
|
| |
$68,106
|
| |
$99,060
|
PPP Liquidity Facility
|
| |
2,259
|
| |
2,259
|
|
| |
|
| |
|
Shareholders’ equity
|
| |
|
| |
|
Preferred stock, $.001 par value, 4,000,000 authorized; no shares issued and outstanding as of September 30, 2021, actual and adjusted
|
| |
—
|
| |
—
|
Common stock, $.001 par value, 40,000,000 shares authorized; 8,746,110 shares and 12,246,110 shares issued and outstanding as of September 30, 2021, actual and adjusted, respectively
|
| |
9
|
| |
13
|
Additional paid-in-capital
|
| |
18,647
|
| |
49,597
|
Retained earnings
|
| |
50,482
|
| |
50,482
|
Total shareholders’ equity
|
| |
$69,138
|
| |
$100,092
|
Total capitalization
|
| |
$71,397
|
| |
$102,351
|
|
| |
|
| |
|
Company capital ratios:
|
| |
|
| |
|
Leverage ratio(2)
|
| |
19.5%
|
| |
30.4%
|
Total equity to total assets
|
| |
20.4%
|
| |
27.1%
|
Tangible shareholders’ equity to tangible assets(3)
|
| |
20.4%
|
| |
27.1%
|
|
| |
|
| |
|
Per Share:
|
| |
|
| |
|
Book value per share
|
| |
$7.91
|
| |
$8.17
|
Tangible book value per share(3)
|
| |
$7.91
|
| |
$8.17
|
(1)
|
The As Adjusted leverage ratio assumes all net proceeds from this offering will be contributed to the Bank as regulatory capital. Although we intend to contribute substantially all net proceeds from this offering to the Bank as regulatory capital, our management will retain broad discretion to allocate the net proceeds of this offering and may not in fact contribute substantially all net proceeds from this offering to the Bank as regulatory capital.
|
(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.
|
Initial public offering price per share
|
| |
$10.50
|
Tangible book value per share of common stock at September 30, 2021
|
| |
$7.91
|
Increase in tangible book value per share of common stock attributable to this offering
|
| |
$0.26
|
As adjusted tangible book value per share of common stock after this offering
|
| |
$8.17
|
Dilution per share of common stock to new investors in this offering
|
| |
$2.33
|
|
| |
Shares Purchased
|
| |
Total Consideration
(Dollars in thousands)
|
| |
Average
Price
|
||||||
|
| |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| |
Per
Share
|
Shareholders as of September 30, 2021
|
| |
8,746,110
|
| |
71.4%
|
| |
$18,656
|
| |
33.7%
|
| |
$2.13
|
New investors in this offering
|
| |
3,500,000
|
| |
28.6%
|
| |
$36,750
|
| |
66.3%
|
| |
$10.50
|
Total
|
| |
12,246,110
|
| |
100.0%
|
| |
$55,406
|
| |
100.0%
|
| |
$4.52
|
•
|
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 September 30, 2021 and December 31, 2020, constitute 79.3% 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 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 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 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 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 at the time of purchase, 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 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 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
|
-
|
2021
|
○
|
Managed 11 Strategic Program platforms as of September 30, 2021 as a result of launching two new third-party platforms, one focused on unsecured student tuition credit products and one focused on unsecured, open-end, consumer credit products
|
○
|
Loan originations exceeded $4.3 billion as of September 30, 2021
|
○
|
Mr. Michael O’Brien joined the Company’s and the Bank’s management team as Executive Vice President, Chief Compliance and Risk Officer and Corporate Counsel to lead the newly combined Compliance and Risk Departments and to serve as our Corporate Counsel
|
•
|
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
|
| |
September 30,
2021
% of Total
|
541
|
| |
Professional, Scientific and Technical Services
|
| |
15.9%
|
454
|
| |
Non-Store Retailers (Electronic Shopping)
|
| |
15.6%
|
423
|
| |
Merchant Wholesalers, Durable Goods
|
| |
8.5%
|
621
|
| |
Ambulatory Health Care Services
|
| |
6.3%
|
445
|
| |
Food and Beverage Stores (Grocery, Convenience)
|
| |
4.5%
|
623
|
| |
Nursing and Residential Care Facilities
|
| |
4.4%
|
448
|
| |
Clothing and Clothing Accessories Stores
|
| |
4.3%
|
238
|
| |
Specialty Trade Contractors
|
| |
4.1%
|
811
|
| |
Manufacturing Repair and Maintenance
|
| |
3.8%
|
442
|
| |
Furniture and Home Furnishings Stores
|
| |
2.9%
|
|
| |
All Other
|
| |
29.7%
|
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.
|
•
|
Michael O’Brien. Mr. O’Brien joined the Company and the Bank in September 2021 as Executive Vice President, Chief Compliance and Risk Officer and Corporate Counsel. Mr. O’Brien has over 20 years of legal, compliance and risk management experience in the financial services industry. He practiced law in New York and Washington, D.C. with nationally recognized law firms prior to legal positions with E*TRADE Financial and Sallie Mae Bank. Mr. O’Brien also previously served as Chief Compliance Officer of EnerBank USA, a Utah industrial bank. He is currently licensed to practice law in Utah and Washington, D.C.
|
•
|
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.
|
Year End 2020 Origination Volume
|
| |
Loan Portfolio as of 12/31/20
|
|
| |
|
Q3 2021 Origination Volume
|
| |
Loan Portfolio as of 09/30/21
|
|
| |
|
Q3 2021 Revenue by Business Line
|
|||
|
|
| |
September 30,
|
| |
December 31,
|
||||||
|
| |
2021
|
| |
2020
|
||||||
|
| |
Total Loans
|
| |
% of Loans in
Category of
total loans
|
| |
Total Loans
|
| |
% of Loans in
Category of
total loans
|
SBA
|
| |
$125,192
|
| |
50.2%
|
| |
$203,317
|
| |
77.7%
|
Commercial, non-real estate
|
| |
3,955
|
| |
1.6%
|
| |
4,020
|
| |
1.5%
|
Residential real estate
|
| |
25,105
|
| |
10.1%
|
| |
17,740
|
| |
6.8%
|
Strategic Program loans
|
| |
87,876
|
| |
35.3%
|
| |
28,265
|
| |
10.8%
|
Commercial real estate
|
| |
2,357
|
| |
0.9%
|
| |
2,892
|
| |
1.1%
|
Consumer
|
| |
4,729
|
| |
1.9%
|
| |
5,543
|
| |
2.1%
|
Total
|
| |
$249,214
|
| |
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
|
| |
November 1, 2021
|
| |
Corporate Headquarters
|
Sandy, Utah
|
| |
Leased
|
| |
July 31, 2024
|
| |
Retail Bank Branch
|
Rockville Centre, New York
|
| |
Leased
|
| |
December 31, 2022
|
| |
Loan Production Office
|
|
| |
For Nine Months Ended
September 30,
|
| |
For the Years Ended
December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Interest income
|
| |
$33,690
|
| |
$20,941
|
| |
$29,506
|
| |
$21,408
|
| |
$8,073
|
Interest expense
|
| |
(984)
|
| |
(1,352)
|
| |
(1,756)
|
| |
(1,462)
|
| |
(846)
|
Provision for loan losses
|
| |
(5,536)
|
| |
(5,234)
|
| |
(5,234)
|
| |
(5,288)
|
| |
(980)
|
Non-interest income
|
| |
22,715
|
| |
10,941
|
| |
14,373
|
| |
13,863
|
| |
8,656
|
Non-interest expense
|
| |
(21,140)
|
| |
(16,092)
|
| |
(21,749)
|
| |
(15,685)
|
| |
(9,538)
|
Provision for income taxes
|
| |
(7,273)
|
| |
(2,622)
|
| |
(3,942)
|
| |
(3,177)
|
| |
(1,333)
|
Net income
|
| |
21,472
|
| |
6,582
|
| |
11,198
|
| |
9,659
|
| |
4,032
|
|
| |
Nine Months Ended September 30,
|
|||||||||||||||
|
| |
2021
|
| |
2020
|
||||||||||||
($ 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
|
| |
$50,303
|
| |
$36
|
| |
0.1%
|
| |
$45,147
|
| |
$193
|
| |
0.6%
|
Investment securities
|
| |
1,687
|
| |
19
|
| |
1.5%
|
| |
1,533
|
| |
25
|
| |
2.2%
|
Loans held for sale
|
| |
50,212
|
| |
14,908
|
| |
39.6%
|
| |
17,073
|
| |
6,963
|
| |
54.4%
|
Loans held for investment
|
| |
198,767
|
| |
18,727
|
| |
12.6%
|
| |
169,092
|
| |
13,760
|
| |
10.8%
|
Total interest earning assets
|
| |
300,968
|
| |
33,690
|
| |
14.9%
|
| |
232,845
|
| |
20,941
|
| |
12.0%
|
Less: allowance for loan losses
|
| |
(6,908)
|
| |
|
| |
|
| |
(6,689)
|
| |
|
| |
|
Non-interest earning assets
|
| |
14,522
|
| |
|
| |
|
| |
7,718
|
| |
|
| |
|
Total assets
|
| |
$308,582
|
| |
|
| |
|
| |
$233,874
|
| |
|
| |
|
Interest bearing liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Demand
|
| |
$5,604
|
| |
$38
|
| |
0.9%
|
| |
$2,234
|
| |
$48
|
| |
2.9%
|
Savings
|
| |
8,006
|
| |
9
|
| |
0.2%
|
| |
6,053
|
| |
11
|
| |
0.2%
|
Money market accounts
|
| |
19,641
|
| |
55
|
| |
0.4%
|
| |
15,893
|
| |
84
|
| |
0.7%
|
Certificates of deposit
|
| |
61,587
|
| |
757
|
| |
1.6%
|
| |
60,617
|
| |
1,109
|
| |
2.4%
|
Total deposits
|
| |
94,838
|
| |
859
|
| |
1.2%
|
| |
84,797
|
| |
1,252
|
| |
2.0%
|
Other borrowings
|
| |
48,133
|
| |
125
|
| |
0.3%
|
| |
37,973
|
| |
100
|
| |
0.4%
|
Total interest bearing liabilities
|
| |
142,971
|
| |
984
|
| |
0.9%
|
| |
122,770
|
| |
1,352
|
| |
1.5%
|
Non-interest bearing deposits
|
| |
100,704
|
| |
|
| |
|
| |
71,741
|
| |
|
| |
|
Non-interest bearing liabilities
|
| |
9,732
|
| |
|
| |
|
| |
3,448
|
| |
|
| |
|
Shareholders’ equity
|
| |
55,175
|
| |
|
| |
|
| |
35,915
|
| |
|
| |
|
Total liabilities and shareholders’ equity
|
| |
$308,582
|
| |
|
| |
|
| |
$233,874
|
| |
|
| |
|
Net interest income and interest rate spread
|
| |
|
| |
$32,706
|
| |
14.0%
|
| |
|
| |
$19,589
|
| |
10.5%
|
Net interest margin
|
| |
|
| |
|
| |
14.5%
|
| |
|
| |
|
| |
11.2%
|
Ratio of average interest-earning assets to average interest- bearing liabilities
|
| |
|
| |
|
| |
210.5%
|
| |
|
| |
|
| |
189.7%
|
|
| |
Years Ended December 31,
|
||||||||||||||||||||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
||||||||||||||||||
($ 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%
|
| |
|
| |
$7,227
|
| |
7.4%
|
Net interest margin
|
| |
|
| |
|
| |
11.0%
|
| |
|
| |
|
| |
14.1%
|
| |
|
| |
|
| |
8.1%
|
Ratio of average interest-earning assets to average interest- bearing liabilities
|
| |
|
| |
|
| |
191.2%
|
| |
|
| |
|
| |
194.1%
|
| |
|
| |
|
| |
171.5%
|
|
| |
Nine Months Ended
September 30,
|
||||||
|
| |
2021
|
||||||
|
| |
Increase (Decrease) Due to
|
||||||
($ in thousands)
|
| |
Rate
|
| |
Volume
|
| |
Total
|
Interest income:
|
| |
|
| |
|
| |
|
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks
|
| |
$(182)
|
| |
$25
|
| |
$(157)
|
Investment securities
|
| |
(9)
|
| |
3
|
| |
(6)
|
Loans held-for-sale
|
| |
(1,339)
|
| |
9,284
|
| |
7,945
|
Loans held for investment
|
| |
2,476
|
| |
2,491
|
| |
4,967
|
Total interest income
|
| |
946
|
| |
11,803
|
| |
12,749
|
Interest expense:
|
| |
|
| |
|
| |
|
Demand
|
| |
9
|
| |
(19)
|
| |
(10)
|
Savings
|
| |
(13)
|
| |
11
|
| |
(2)
|
Money market accounts
|
| |
(58)
|
| |
29
|
| |
(29)
|
Certificates of deposit
|
| |
(371)
|
| |
18
|
| |
(353)
|
Other borrowings
|
| |
(1)
|
| |
27
|
| |
26
|
Total interest bearing liabilities
|
| |
(434)
|
| |
66
|
| |
(368)
|
Net interest income
|
| |
$1,380
|
| |
$11,737
|
| |
$13,117
|
|
| |
Years Ended December 31,
|
|||||||||||||||
|
| |
2020
|
| |
2019
|
||||||||||||
|
| |
Increase (Decrease) Due to
|
| |
Increase (Decrease) Due to
|
||||||||||||
($ 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
|
| |
$12,719
|
|
| |
For the
Nine Months Ended
September 30,
|
| |
Change
|
||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
Noninterest income:
|
| |
|
| |
|
| |
|
| |
|
Strategic Program fees
|
| |
$11,877
|
| |
$6,878
|
| |
$4,999
|
| |
72.7%
|
Gain on sale of loans
|
| |
7,876
|
| |
2,560
|
| |
5,316
|
| |
207.6%
|
SBA loan servicing fees
|
| |
800
|
| |
745
|
| |
55
|
| |
7.4%
|
Change in fair value on investment in BFG
|
| |
2,127
|
| |
719
|
| |
1,408
|
| |
196.0%
|
Other miscellaneous income
|
| |
35
|
| |
39
|
| |
(4)
|
| |
(9.4%)
|
Total noninterest income
|
| |
$22,715
|
| |
$10,941
|
| |
$11,774
|
| |
107.6%
|
|
| |
For the Years Ended
December 31,
|
| |
Change
|
||||||
($ 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
Nine Months Ended
September 30,
|
| |
Change
|
||||||
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
Noninterest expense:
|
| |
|
| |
|
| |
|
| |
|
Salaries and employee benefits
|
| |
$16,313
|
| |
$12,336
|
| |
$3,977
|
| |
32.2%
|
Occupancy and equipment expenses
|
| |
602
|
| |
513
|
| |
89
|
| |
17.3%
|
Loss on investment in BFG
|
| |
—
|
| |
50
|
| |
(50)
|
| |
(100.0%)
|
Other operating expenses
|
| |
4,225
|
| |
3,193
|
| |
1,032
|
| |
32.3%
|
Total noninterest expense
|
| |
$21,140
|
| |
$16,092
|
| |
$5,048
|
| |
31.4%
|
($ 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 September 30,
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)
|
| |
$125,192
|
| |
50.2%
|
| |
$203,317
|
| |
77.7%
|
| |
$56,295
|
| |
41.2%
|
| |
$48,637
|
| |
55.4%
|
Commercial, non real estate
|
| |
3,955
|
| |
1.6%
|
| |
4,020
|
| |
1.5%
|
| |
6,045
|
| |
4.4%
|
| |
7,294
|
| |
8.3%
|
Residential real estate
|
| |
25,105
|
| |
10.1%
|
| |
17,740
|
| |
6.8%
|
| |
22,495
|
| |
16.4%
|
| |
14,735
|
| |
16.8%
|
Strategic Program loans
|
| |
87,876
|
| |
35.3%
|
| |
28,265
|
| |
10.8%
|
| |
42,439
|
| |
31.1%
|
| |
8,412
|
| |
9.6%
|
Commercial real estate
|
| |
2,357
|
| |
0.9%
|
| |
2,892
|
| |
1.1%
|
| |
3,666
|
| |
2.7%
|
| |
3,773
|
| |
4.3%
|
Consumer
|
| |
4,729
|
| |
1.9%
|
| |
5,543
|
| |
2.1%
|
| |
5,722
|
| |
4.2%
|
| |
4,965
|
| |
5.6%
|
Total
|
| |
249,214
|
| |
100.0%
|
| |
$261,777
|
| |
100.0%
|
| |
$136,662
|
| |
100.0%
|
| |
$87,816
|
| |
100.0%
|
(1)
|
The amount of SBA loans as of September 30, 2021 and December 31, 2020 includes approximately $2.3 million and $107.1 million of PPP loans.
|
At September 30, 2021
|
| |
Remaining Contractual Maturity Held for Investment
|
||||||||||||
($ 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)
|
| |
$1,964
|
| |
$640
|
| |
$311
|
| |
$146
|
| |
$3,061
|
Commercial, non-real estate
|
| |
1,555
|
| |
2,310
|
| |
89
|
| |
1
|
| |
3,955
|
Residential real estate
|
| |
3,939
|
| |
1,603
|
| |
—
|
| |
—
|
| |
5,542
|
Strategic Program loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Commercial real estate
|
| |
1,570
|
| |
680
|
| |
—
|
| |
—
|
| |
2,250
|
Consumer
|
| |
1,520
|
| |
2,938
|
| |
70
|
| |
—
|
| |
4,528
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Variable rate loans:
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
6,874
|
| |
27,462
|
| |
50,426
|
| |
37,369
|
| |
122,131
|
Commercial, non-real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Residential real estate
|
| |
18,741
|
| |
542
|
| |
280
|
| |
—
|
| |
19,563
|
Strategic Program loans
|
| |
17,550
|
| |
7,624
|
| |
—
|
| |
—
|
| |
25,174
|
Commercial real estate
|
| |
107
|
| |
—
|
| |
—
|
| |
—
|
| |
107
|
Consumer
|
| |
60
|
| |
141
|
| |
—
|
| |
—
|
| |
201
|
Total
|
| |
$53,880
|
| |
$43,940
|
| |
$51,176
|
| |
$37,516
|
| |
$186,512
|
(1)
|
The amount of SBA fixed rate loans includes approximately $2.3 million of PPP loans. PPP loans originated prior to June 5, 2020, have a two year term. PPP loans originated on or after June 5, 2020, have a five year term. For PPP borrowers who submit completed applications for forgiveness, loan payments are automatically deferred until the SBA renders a decision on the forgiveness request. PPP borrowers who fail to submit timely forgiveness applications are required to made monthly payments beginning ten months from the end of the chosen “covered period”. The “covered period” is a maximum of 24 weeks from the origination date. Assuming a 24 week covered period, PPP borrowers are not required to begin making payments until 16 months after the origination date. At the time payments begin, if the borrower and lender of a two year PPP loan mutually agree to extend the term of the loan it can be extended to a five year term. As of September 30, 2021, two PPP loans have been granted maturity date extensions.
|
At December 31, 2020
|
| |
Remaining Contractual Maturity Held for Investment
|
||||||||||||
($ 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
|
| |
$111,553
|
|
| |
As of
September 30,
2021
|
| |
As of December 31,
|
||||||
($ in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
|||
Nonaccrual loans:
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
$757
|
| |
$816
|
| |
$861
|
| |
$87
|
Commercial, non real estate
|
| |
—
|
| |
—
|
| |
247
|
| |
—
|
Residential real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Strategic Program loans
|
| |
—
|
| |
15
|
| |
—
|
| |
—
|
Total nonperforming loans
|
| |
$757
|
| |
$831
|
| |
$1,108
|
| |
$87
|
|
| |
|
| |
|
| |
|
| |
|
Total accruing loans past due 90 days or more
|
| |
$—
|
| |
$1
|
| |
$—
|
| |
$—
|
Nonaccrual troubled debt restructuring
|
| |
$25
|
| |
$53
|
| |
$66
|
| |
$8
|
Total troubled debt restructurings
|
| |
107
|
| |
870
|
| |
—
|
| |
—
|
Other Real Estate Owned
|
| |
|
| |
—
|
| |
—
|
| |
—
|
Less nonaccrual troubled debt restructurings
|
| |
(25)
|
| |
(53)
|
| |
(66)
|
| |
(8)
|
Total nonperforming assets and troubled debt restructurings
|
| |
864
|
| |
$1,701
|
| |
$1,108
|
| |
$87
|
Total nonperforming loans to total loans
|
| |
0.3%
|
| |
0.3%
|
| |
0.8%
|
| |
0.1%
|
Total nonperforming loans to total assets
|
| |
0.2%
|
| |
0.3%
|
| |
0.6%
|
| |
0.1%
|
Total nonperforming assets and troubled debt restructurings to total loans
|
| |
0.3%
|
| |
0.6%
|
| |
0.8%
|
| |
0.1%
|
Total nonperforming assets and troubled debt restructurings to total assets
|
| |
0.3%
|
| |
0.5%
|
| |
0.6%
|
| |
0.1%
|
Total nonperforming assets and troubled debt restructurings to total assets (less PPP loans) (1)
|
| |
0.3%
|
| |
0.8%
|
| |
0.6%
|
| |
0.1%
|
(1)
|
See “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation of this measure to its most comparable GAAP measure.
|
|
| |
As of September 30, 2021
|
| |||||||||||
($ in thousands)
|
| |
Pass
Grade 1-4
|
| |
Special
Mention
Grade 5
|
| |
Classified/
Doubtful
Grade 6-7
|
| |
Loss
Grade 8
|
| |
Total
|
SBA
|
| |
$122,449
|
| |
$1,664
|
| |
$1,079
|
| |
—
|
| |
$125,192
|
Commercial, non real estate
|
| |
3,904
|
| |
51
|
| |
—
|
| |
—
|
| |
3,955
|
Residential real estate
|
| |
25,105
|
| |
—
|
| |
—
|
| |
—
|
| |
25,105
|
Commercial real estate
|
| |
2,357
|
| |
—
|
| |
—
|
| |
—
|
| |
2,357
|
Consumer
|
| |
4,729
|
| |
—
|
| |
—
|
| |
—
|
| |
4,729
|
Not Risk Graded
|
| |
|
| |
|
| |
|
| |
|
| |
|
Strategic Program(1) loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
87,876
|
Total
|
| |
$158,544
|
| |
$1,715
|
| |
$1,079
|
| |
—
|
| |
$249,214
|
|
| |
As of December 31, 2020
|
||||||||||||
($ 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 $62.7 million and $21.0 million of loans classified as held-for-sale as of September 30, 2021 and December 31, 2020, respectively.
|
•
|
Specific allowance for identified impaired loans. For such loans that are identified as impaired, an allowance is established when the discounted cash flows (or collateral value if the loan is collateral dependent) or observable market price of the impaired loan are lower than the carrying value of that loan.
|
•
|
General valuation allowance. This component represents a valuation allowance on the remainder of the loan portfolio, after excluding impaired loans. For this portion of the allowance, loans are reviewed based on industry, stage and structure and are assigned allowance percentages based on historical loan loss experience for similar loans with similar characteristics and trends adjusted for qualitative factors. Qualitative factors that, in management’s judgment, affect the collectability of the portfolio as of the evaluation date, may include changes in lending policies and procedures; changes in national and local economic and business conditions, including the condition of various market sectors; changes in the nature and volume of the portfolio; changes in the experience, ability and depth of lending management and staff; changes in the volume and severity of past due
|
|
| |
For the Nine Months
Ended September 30,
|
| |
For the Year Ended
December 31,
|
|||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Allowance for loan losses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Beginning balance
|
| |
$6,199
|
| |
$4,531
|
| |
$4,531
|
| |
$1,735
|
| |
$918
|
Provision for loan losses
|
| |
5,537
|
| |
5,234
|
| |
5,227
|
| |
5,288
|
| |
980
|
Charge offs
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
(55)
|
| |
(180)
|
| |
(197)
|
| |
(279)
|
| |
(148)
|
Commercial, non-real estate
|
| |
(63)
|
| |
(100)
|
| |
(332)
|
| |
(145)
|
| |
—
|
Residential real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Strategic Program loans
|
| |
(2,305)
|
| |
(2,634)
|
| |
(3,255)
|
| |
(2,212)
|
| |
(2)
|
Commercial real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Consumer
|
| |
(3)
|
| |
(6)
|
| |
(17)
|
| |
(30)
|
| |
(23)
|
Recoveries
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
41
|
| |
—
|
| |
—
|
| |
29
|
| |
—
|
Commercial, non-real estate
|
| |
92
|
| |
—
|
| |
—
|
| |
1
|
| |
10
|
Residential real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Strategic Program loans
|
| |
196
|
| |
178
|
| |
236
|
| |
94
|
| |
—
|
Commercial real estate
|
| |
—
|
| |
4
|
| |
5
|
| |
—
|
| |
—
|
Consumer
|
| |
1
|
| |
1
|
| |
1
|
| |
50
|
| |
—
|
Ending balance
|
| |
$9,640
|
| |
$7,028
|
| |
$6,199
|
| |
$4,531
|
| |
$1,735
|
|
| |
September 30, 2021
|
|||||||||
($ in thousands)
|
| |
Amount
|
| |
Total Loans
|
| |
% of
Total
Allowance
|
| |
% of Loans in
Category of
Total Loans
|
SBA
|
| |
$1,155
|
| |
$125,192
|
| |
12.0%
|
| |
50.2%
|
Commercial, non real estate
|
| |
261
|
| |
3,955
|
| |
2.7%
|
| |
1.6%
|
Residential real estate
|
| |
855
|
| |
25,105
|
| |
8.9%
|
| |
10.1%
|
Strategic Program loans
|
| |
7,290
|
| |
87,876
|
| |
75.6%
|
| |
35.3%
|
Commercial real estate
|
| |
19
|
| |
2,357
|
| |
0.2%
|
| |
0.9%
|
Consumer
|
| |
60
|
| |
4,729
|
| |
0.6%
|
| |
1.9%
|
Total
|
| |
$9,640
|
| |
$249,214
|
| |
100.0%
|
| |
100.0%
|
|
| |
December 31, 2020
|
|||||||||
($ 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
|
| |
$87,816
|
| |
100.0%
|
| |
100.0%
|
|
| |
Nine Months
Ended September 30,
|
| |
As of December 31,
|
|||||||||
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
Allowances for loan losses to nonperforming loans
|
| |
1,272.8%
|
| |
672.3%
|
| |
745.9%
|
| |
409.3%
|
| |
1994.3%
|
Net charge-offs to average loans outstanding by loan category
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
0.0%
|
| |
0.2%
|
| |
0.1%
|
| |
0.5%
|
| |
0.4%
|
Commercial, non-real estate
|
| |
(1.0%)
|
| |
2.3%
|
| |
5.9%
|
| |
2.0%
|
| |
(0.1%)
|
Residential real estate
|
| |
0.0%
|
| |
0.0%
|
| |
0.0%
|
| |
0.0%
|
| |
0.0%
|
Strategic Program loans
|
| |
4.5%
|
| |
10.9%
|
| |
9.6%
|
| |
11.4%
|
| |
0.0%
|
Commercial real estate
|
| |
0.0%
|
| |
(0.2%)
|
| |
(0.1%)
|
| |
0.0%
|
| |
0.0%
|
Consumer
|
| |
0.1%
|
| |
0.1%
|
| |
0.3%
|
| |
(0.4%)
|
| |
0.5%
|
|
| |
At September 30, 2021
|
|||||||||
|
| |
One Year or Less
|
| |
After One to Five Years
|
||||||
($ in thousands)
|
| |
Amortized
Cost
|
| |
Weighted
Average Yield
|
| |
Amortized
Cost
|
| |
Weighted
Average Yield
|
Mortgage-backed securities
|
| |
$—
|
| |
—
|
| |
$—
|
| |
—
|
|
| |
At September 30, 2021
|
| |
Total
Amortized
Cost
|
|||||||||
|
| |
After Five to Ten Years Weighted
|
| |
After Ten Years Weighted
|
| ||||||||
($ in thousands)
|
| |
Amortized
Cost
|
| |
Weighted
Average Yield
|
| |
Amortized
Cost
|
| |
Weighted
Average Yield
|
| ||
Mortgage-backed securities
|
| |
$602
|
| |
1.4%
|
| |
$3,812
|
| |
1.7%
|
| |
$4,414
|
|
| |
For the Nine Months
Ended September 30,
2021
|
| |
For the Years Ended December 31,
|
||||||||||||
|
| |
2020
|
| |
2019
|
||||||||||||
($ in thousands)
|
| |
Total
|
| |
Percent
|
| |
Total
|
| |
Percent
|
| |
Total
|
| |
Percent
|
Period end:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Noninterest-bearing demand deposits
|
| |
$109,459
|
| |
43.4%
|
| |
$88,067
|
| |
53.5%
|
| |
$53,290
|
| |
37.5%
|
Interest-bearing deposits:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Demand
|
| |
5,398
|
| |
2.1%
|
| |
6,095
|
| |
3.7%
|
| |
264
|
| |
0.2%
|
Savings
|
| |
8,146
|
| |
3.2%
|
| |
7,435
|
| |
4.5%
|
| |
5,380
|
| |
3.8%
|
Money markets
|
| |
25,679
|
| |
10.1%
|
| |
17,567
|
| |
10.7%
|
| |
17,064
|
| |
12.0%
|
Time certificates of deposit
|
| |
104,354
|
| |
41.2%
|
| |
45,312
|
| |
27.6%
|
| |
66,023
|
| |
46.5%
|
Total period end deposits
|
| |
$253,036
|
| |
100.0%
|
| |
$164,476
|
| |
100.0%
|
| |
$142,021
|
| |
100.0%
|
Average:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Noninterest-bearing demand deposits
|
| |
$100,704
|
| |
51.5%
|
| |
$80,537
|
| |
49.2%
|
| |
$41,866
|
| |
36.5%
|
Interest-bearing deposits:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Demand
|
| |
5,604
|
| |
2.9%
|
| |
3,237
|
| |
2.0%
|
| |
222
|
| |
0.2%
|
Savings
|
| |
8,006
|
| |
4.1%
|
| |
6,234
|
| |
3.8%
|
| |
4,762
|
| |
4.2%
|
Money market
|
| |
19,641
|
| |
10.0%
|
| |
16,327
|
| |
9.9%
|
| |
14,973
|
| |
13.1%
|
Time certificates of deposit
|
| |
61,587
|
| |
31.5%
|
| |
57,496
|
| |
35.1%
|
| |
52,691
|
| |
46.0%
|
Total average deposits
|
| |
195,542
|
| |
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
|
| |
$—
|
| |
$500
|
| |
$150
|
| |
$714
|
|
| |
September 30,
|
| |
December 31,
|
| |
Well-
Capitalized
Requirement
|
|||||||||
Capital Ratios
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| |
2018
|
| ||
Leverage Ratio (under CBLR)
|
| |
19.5%
|
| |
16.3%
|
| |
16.6%
|
| |
—
|
| |
—
|
| |
8.5%(1)
|
Tier 1 leverage ratio
|
| |
—
|
| |
—
|
| |
—
|
| |
16.2%
|
| |
15.7%
|
| |
5.0%
|
Tier 1 risk-based capital ratio
|
| |
—
|
| |
—
|
| |
—
|
| |
19.3%
|
| |
19.4%
|
| |
8.0%
|
Total risk-based capital ratio
|
| |
—
|
| |
—
|
| |
—
|
| |
20.5%
|
| |
20.6%
|
| |
10.0%
|
Common equity Tier 1
|
| |
—
|
| |
—
|
| |
—
|
| |
19.3%
|
| |
19.4%
|
| |
6.5%
|
(1)
|
The Well-Capitalized Requirement for 2020 was 8.0%.
|
($ 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
|
| |
$114,857
|
| |
$114,857
|
| |
$—
|
| |
$—
|
| |
$—
|
Time deposits
|
| |
104,354
|
| |
54,296
|
| |
32,537
|
| |
17,521
|
| |
—
|
Long term borrowings(1)
|
| |
2,259
|
| |
1,751
|
| |
—
|
| |
508
|
| |
—
|
Operating lease obligations
|
| |
8,858
|
| |
121
|
| |
2,074
|
| |
2,190
|
| |
4,473
|
Total
|
| |
$230,328
|
| |
$171,026
|
| |
$34,612
|
| |
$20,218
|
| |
$4,473
|
(1)
|
Balances in this category pertain to the PPPLF and are fully-collateralized with PPP loans
|
|
| |
September 30,
2021
|
| |
As of December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
|||
Revolving, open-end lines of credit
|
| |
$1,368
|
| |
$757
|
| |
$1,157
|
Commercial real estate
|
| |
18,483
|
| |
14,468
|
| |
12,577
|
Other unused commitments
|
| |
530
|
| |
928
|
| |
321
|
Total commitments
|
| |
$20,382
|
| |
$16,153
|
| |
$14,055
|
Change in interest rates
|
| |
+300 bp
|
| |
+200 bp
|
| |
+100 bp
|
| |
0 bp
|
| |
-100 bp
|
| |
-200 bp
|
September 30, 2021
|
| |
6.5%
|
| |
4.4%
|
| |
2.3%
|
| |
0.2%
|
| |
(1.3%)
|
| |
(2.8%)
|
December 31, 2020
|
| |
7.8
|
| |
5.1%
|
| |
2.8%
|
| |
0.5%
|
| |
(1.1%)
|
| |
(2.6%)
|
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
|
September 30, 2021
|
| |
29.2%
|
| |
20.5%
|
| |
13.8%
|
| |
7.0%
|
| |
(0.8%)
|
| |
0.7%
|
December 31, 2020
|
| |
25.1%
|
| |
16.8%
|
| |
11.1%
|
| |
5.8%
|
| |
0.9%
|
| |
2.6%
|
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
|
| |
67
|
| |
President, Chief Executive Officer and Director
|
| |
2010
|
| |
2010
|
James N. Giordano
|
| |
64
|
| |
Director
|
| |
2017
|
| |
2017
|
Thomas E. Gibson, Jr.
|
| |
71
|
| |
Director
|
| |
2015
|
| |
2015
|
Lisa Ann Nievaard
|
| |
53
|
| |
Director
|
| |
2020
|
| |
2020
|
Jeana Hutchings
|
| |
57
|
| |
Director
|
| |
2020
|
| |
2020
|
Gerald E. Cunningham
|
| |
63
|
| |
Director
|
| |
2002
|
| |
1999
|
Name
|
| |
Age
|
| |
Position with
the Company
|
| |
Position with
the Bank
|
Kent Landvatter
|
| |
67
|
| |
Chief Executive Officer and President
|
| |
Chief Executive Officer and President
|
Javvis Jacobson
|
| |
50
|
| |
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
|
| |
44
|
| |
None
|
| |
Chief Operating Officer and Executive Vice President
|
Michael O’Brien
|
| |
50
|
| |
Chief Compliance and Risk Officer, Corporate Counsel and Executive Vice President
|
| |
Chief Compliance and Risk Officer, Corporate Counsel and Executive Vice President
|
David Tilis
|
| |
38
|
| |
None
|
| |
Chief Strategy 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.
|
•
|
Kent Landvatter, President and Chief Executive Officer;
|
•
|
James F. Noone, Chief Credit Officer; and
|
•
|
David Tilis, Chief Strategy Officer.
|
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 $3.64 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 $3.64 per share and in 2020 was $4.50 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 143,040 shares in 2018 subject to vesting over a five-year period. Only 28,608 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
|
| |
16,416
|
| |
24,498
|
| |
$3.64
|
| |
12/24/2029
|
| |
451,800
|
| |
$2,033,100
|
Kent Landvatter
|
| |
54,960
|
| |
82,440
|
| |
$3.64
|
| |
12/23/2029
|
| |
n/a
|
| |
n/a
|
James F. Noone
|
| |
0
|
| |
36,000
|
| |
$2.37
|
| |
2/5/2028
|
| |
61,062
|
| |
$274,779
|
James F. Noone
|
| |
20,748
|
| |
25,026
|
| |
$3.64
|
| |
12/24/2029
|
| |
n/a
|
| |
n/a
|
David Tilis
|
| |
0
|
| |
17,976
|
| |
$2.36
|
| |
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 $4.50 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.(2)
|
| |
$71,080
|
| |
$31,720
|
| |
$102,800
|
Howard Reynolds(2)
|
| |
$67,780
|
| |
$31,720
|
| |
$99,500
|
James N. Giordano(2)
|
| |
$54,700
|
| |
$31,720
|
| |
$86,420
|
Gerald Cunningham
|
| |
$51,800
|
| |
$31,720
|
| |
$83,520
|
Lisa Ann Nievaard
|
| |
$17,575
|
| |
$15,860
|
| |
$33,435
|
Jeana Hutchings
|
| |
$7,420
|
| |
$15,860
|
| |
$23,280
|
Tom Gibson
|
| |
$52,400
|
| |
$31,720
|
| |
$84,120
|
Alan Weichselbaum(3)
|
| |
$48,950
|
| |
$31,720
|
| |
$80,670
|
Keith Terry(4)
|
| |
$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 $4.50 per share was determined by the board of directors and was based on an independent valuation. The strike price for these option awards is $6.67 per share.
|
(2)
|
In addition to the Board-Related and Committee-Related Fees noted below, each of Messrs. Healey, Reynolds and Giordano received $5,600 for their board service in 2020 related to certain capital raising efforts by the Company.
|
(3)
|
Alan Weichselbaum resigned from our board of directors on May 7, 2021.
|
(4)
|
Keith Terry retired from our board of directors in 2020.
|
(5)
|
On March 30, 2021, following the Compensation Committee’s consultation with its independent compensation consultant in January 2021, an aggregate of 105,000 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; and
|
•
|
all our directors and executive officers as a group.
|
|
| |
Common Stock
Beneficial
Ownership Prior to
the Offering
|
| |
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:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Jarret Prussin(3)
|
| |
657,258
|
| |
7.5%
|
| |
657,258
|
| |
5.3%
|
| |
657,258
|
| |
5.1%
|
Kent Landvatter(1)
|
| |
859,218
|
| |
9.7%
|
| |
859,218
|
| |
7.0%
|
| |
859,218
|
| |
6.7%
|
Matthew Aaron Moskowitz
|
| |
572,424
|
| |
6.5%
|
| |
572,424
|
| |
4.7%
|
| |
572,424
|
| |
4.5%
|
Menachem Wilenkin(4)
|
| |
644,820
|
| |
7.3%
|
| |
644,820
|
| |
5.2%
|
| |
644,820
|
| |
5.0%
|
Paul Brown(5)
|
| |
564,240
|
| |
6.4%
|
| |
564,240
|
| |
4.6%
|
| |
564,240
|
| |
4.4%
|
Yaakov Markowitz
|
| |
602,310
|
| |
6.8%
|
| |
602,310
|
| |
4.9%
|
| |
602,310
|
| |
4.7%
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Company directors and named executive officers:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Russell F. Healey, Jr.(6)
|
| |
429,048
|
| |
4.9%
|
| |
429,048
|
| |
3.5%
|
| |
429,048
|
| |
3.3%
|
Howard Reynolds(7)
|
| |
241,248
|
| |
2.7%
|
| |
241,248
|
| |
2.0%
|
| |
241,248
|
| |
1.9%
|
Gerald E. Cunningham(8)
|
| |
176,604
|
| |
2.0%
|
| |
176,604
|
| |
1.4%
|
| |
176,604
|
| |
1.4%
|
James N. Giordano(9)
|
| |
418,620
|
| |
4.8%
|
| |
418,620
|
| |
3.4%
|
| |
418,620
|
| |
3.3%
|
Thomas E. Gibson(10)
|
| |
52,500
|
| |
*
|
| |
52,500
|
| |
*
|
| |
52,500
|
| |
*
|
Lisa Ann Nievaard(11)
|
| |
9,000
|
| |
*
|
| |
9,000
|
| |
*
|
| |
9,000
|
| |
*
|
Jeana Hutchings(11)
|
| |
9,000
|
| |
*
|
| |
9,000
|
| |
*
|
| |
9,000
|
| |
*
|
James F. Noone(2)
|
| |
277,560
|
| |
3.1%
|
| |
277,560
|
| |
2.2%
|
| |
277,560
|
| |
2.2%
|
David Tilis
|
| |
304,728
|
| |
3.5%
|
| |
304,728
|
| |
2.5%
|
| |
304,728
|
| |
2.4%
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
All our directors and executive officers as a group (13 persons)
|
| |
3,123,834
|
| |
33.6%
|
| |
3,123,834
|
| |
24.4%
|
| |
3,123,834
|
| |
23.4%
|
*
|
Represents beneficial ownership of less than 1% of our outstanding common shares.
|
(1)
|
Includes (i) 313,728 shares of unvested restricted stock, (ii) 70,200 shares of common stock held by Mr. Landvatter’s individual retirement account, and (iii) 110,004 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 68,310 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
(2)
|
Includes (i) 35,190 shares of unvested restricted stock, and (ii) 93,294 shares of our common stock underlying options that have vested or that will vest within 60 days. Excludes 36,480 shares of our common stock underlying options that are subject to vesting later than 60 days from the date hereof.
|
(3)
|
Includes 47,280 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 47,280 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 6,210 shares of our common stock underlying warrants owned by a corporation as to which Mr. Brown shares voting and dispositive power.
|
(6)
|
Includes (i) 312,048 shares owned in a trust over which Mr. Healey has voting and dispositive power, and (ii) 39,000 shares of our common stock underlying options that have vested or that will vest within 60 days.
|
(7)
|
Includes (i) 190,248 shares owned by a corporation as to which Mr. Reynolds shares voting and dispositive power, and (ii) 39,000 shares of our common stock underlying options that have vested or that will vest within 60 days.
|
(8)
|
Includes (i) 84,462 shares owned in a trust over which Mr. Cunningham has voting and dispositive power, and (ii) 39,000 shares of our common stock underlying options that have vested or that will vest within 60 days.
|
(9)
|
Includes (i) 12,000 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) 39,000 shares of our common stock underlying options that have vested or that will vest within 60 days.
|
(10)
|
Includes 39,000 shares of our common stock underlying options that have vested or that will vest within 60 days.
|
(11)
|
Includes 9,000 shares of our common stock underlying options that have vested or that will vest within 60 days.
|
•
|
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
|
| |
237,696
|
| |
$864,818
|
Menachem Wilenkin
|
| |
Exchange for a 10% aggregate ownership interest in BFG
|
| |
12/31/2019
|
| |
237,696
|
| |
$864,817
|
Yaakov Markowitz
|
| |
Exchange for a 10% aggregate ownership interest in BFG
|
| |
12/31/2019
|
| |
237,696
|
| |
$864,817
|
Jarret Prussin
|
| |
Exchange for a 10% aggregate ownership interest in BFG
|
| |
12/31/2019
|
| |
237,696
|
| |
$864,817
|
Shareholder
|
| |
Repurchase
Date
|
| |
Shares
Sold
|
| |
Funds
Received
|
| |
Price per
Share
|
Rachael Hadley(1) (executive officer)
|
| |
5/6/2019
|
| |
12,024
|
| |
$32,725
|
| |
$2.72
|
Kent Landvatter (executive officer)
|
| |
12/31/2019
|
| |
285,756
|
| |
$1,039,676
|
| |
$3.64
|
James Noone (executive officer)
|
| |
12/31/2019
|
| |
25,176
|
| |
$91,599
|
| |
$3.64
|
Javvis Jacobson (executive officer)
|
| |
12/31/2019
|
| |
40,920
|
| |
$148,881
|
| |
$3.64
|
Kent Landvatter (executive officer)
|
| |
4/6/2020
|
| |
23,172
|
| |
$84,307
|
| |
$3.64
|
James Noone (executive officer)
|
| |
4/6/2020
|
| |
20,598
|
| |
$74,942
|
| |
$3.64
|
Javvis Jacobson (executive officer)
|
| |
4/6/2020
|
| |
30,000
|
| |
$109,150
|
| |
$3.64
|
(1)
|
Rachael Hadley’s employment with the Bank ended on August 23, 2021.
|
•
|
prior to the date of the transaction that resulted in the shareholder becoming an interested shareholder, our board approved the business combination or the transaction that resulted in the shareholder becoming an interested shareholder;
|
•
|
upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of our voting stock (other than certain excluded shares) outstanding at the time the transaction commenced;
|
•
|
on or subsequent to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the business combination is approved by the board and authorized at an annual or special meeting of shareholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested shareholder; or
|
•
|
the shareholder is the owner of 15% or more of the outstanding voting stock of the Company at the time of the consummation of this offering.
|
|
| |
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.
|
| |
2,100,000
|
Stephens Inc.
|
| |
1,400,000
|
Total
|
| |
3,500,000
|
|
| |
Per Share
|
| |
Total Without
Option to Purchase
Additional Shares
|
| |
Total With
Option to Purchase
Additional Shares
|
Price to public
|
| |
$10.50
|
| |
$36,750,000
|
| |
$42,262,500
|
Underwriting discount
|
| |
$0.74
|
| |
$2,572,500
|
| |
$2,958,375
|
Proceeds to us, before expenses
|
| |
$9.76
|
| |
$34,177,500
|
| |
$39,304,125
|
•
|
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
|
| |
|
| | ||
| | ||
| | ||
| | ||
| |
|
| |
September 30,
2021
|
| |
December 31,
2020
|
ASSETS
|
| |
|
| |
|
Cash and cash equivalents
|
| |
|
| |
|
Cash and due from banks
|
| |
$410
|
| |
$405
|
Interest bearing deposits
|
| |
67,696
|
| |
46,978
|
Total cash and cash equivalents
|
| |
68,106
|
| |
47,383
|
Investment securities held to maturity, at amortized cost
|
| |
4,414
|
| |
1,809
|
Investment in Federal Home Loan Bank (FHLB) stock, at cost
|
| |
377
|
| |
205
|
Loans receivable, net
|
| |
178,748
|
| |
232,074
|
Strategic Program loans held-for-sale, at lower of cost or fair value
|
| |
62,702
|
| |
20,948
|
Premises and equipment, net
|
| |
2,484
|
| |
1,264
|
Accrued interest receivable
|
| |
1,297
|
| |
1,629
|
Deferred taxes, net
|
| |
1,597
|
| |
452
|
SBA servicing asset
|
| |
4,368
|
| |
2,415
|
Investment in Business Funding Group (BFG), at fair value
|
| |
5,241
|
| |
3,770
|
Other assets
|
| |
8,982
|
| |
5,566
|
Total assets
|
| |
$338,316
|
| |
$317,515
|
|
| |
|
| |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| |
|
| |
|
Liabilities
|
| |
|
| |
|
Deposits
|
| |
|
| |
|
Noninterest bearing
|
| |
$109,459
|
| |
$88,067
|
Interest bearing
|
| |
143,577
|
| |
76,409
|
Total deposits
|
| |
253,036
|
| |
164,476
|
Accrued interest payable
|
| |
43
|
| |
195
|
Income taxes payable, net
|
| |
823
|
| |
709
|
PPP Liquidity Facility
|
| |
2,259
|
| |
101,007
|
Other liabilities
|
| |
13,017
|
| |
5,256
|
Total liabilities
|
| |
269,178
|
| |
271,643
|
|
| |
|
| |
|
Commitments and contingencies (Note 7)
|
| |
|
| |
|
|
| |
|
| |
|
Shareholders’ equity
|
| |
|
| |
|
Preferred stock, $.001 par value, 4,000,000 authorized; no shares issued and outstanding as of September 30, 2021 and December 31, 2020
|
| |
—
|
| |
—
|
Common stock, $.001 par value, 40,000,000 shares authorized; 8,746,110 and 8,660,334 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
|
| |
9
|
| |
9
|
Additional paid-in-capital
|
| |
18,647
|
| |
16,853
|
Retained earnings
|
| |
50,482
|
| |
29,010
|
Total shareholders’ equity
|
| |
69,138
|
| |
45,872
|
Total liabilities and shareholders’ equity
|
| |
$338,316
|
| |
$317,515
|
|
| |
Nine Months Ended September 30,
|
|||
|
| |
2021
|
| |
2020
|
Interest income
|
| |
|
| |
|
Interest and fees on loans
|
| |
33,635
|
| |
$20,723
|
Interest on securities
|
| |
19
|
| |
25
|
Other interest income
|
| |
36
|
| |
193
|
Total interest income
|
| |
33,690
|
| |
20,941
|
|
| |
|
| |
|
Interest expense
|
| |
|
| |
|
Interest on deposits
|
| |
859
|
| |
1,252
|
Interest on PPP Liquidity Facility
|
| |
125
|
| |
100
|
Total interest expense
|
| |
984
|
| |
1,352
|
Net interest income
|
| |
32,706
|
| |
19,589
|
|
| |
|
| |
|
Provision for loan losses
|
| |
5,536
|
| |
5,234
|
Net interest income after provision for loan losses
|
| |
27,170
|
| |
14,355
|
|
| |
|
| |
|
Non-interest income
|
| |
|
| |
|
Strategic Program fees
|
| |
11,877
|
| |
6,878
|
Gain on sale of loans
|
| |
7,876
|
| |
2,560
|
SBA loan servicing fees
|
| |
800
|
| |
745
|
Change in fair value on investment in BFG
|
| |
2,127
|
| |
719
|
Other miscellaneous income
|
| |
35
|
| |
39
|
Total non-interest income
|
| |
22,715
|
| |
10,941
|
|
| |
|
| |
|
Non-interest expense
|
| |
|
| |
|
Salaries and employee benefits
|
| |
16,313
|
| |
12,336
|
Occupancy and equipment expenses
|
| |
602
|
| |
513
|
Loss on investment in BFG
|
| |
—
|
| |
50
|
Other operating expenses
|
| |
4,225
|
| |
3,193
|
Total non-interest expense
|
| |
21,140
|
| |
16,092
|
Income before income tax expense
|
| |
28,745
|
| |
9,204
|
|
| |
|
| |
|
Provision for income taxes
|
| |
7,273
|
| |
2,622
|
Net income
|
| |
$21,472
|
| |
$6,582
|
|
| |
|
| |
|
Earnings per share, basic
|
| |
$2.47
|
| |
$0.76
|
Earnings per share, diluted
|
| |
$2.34
|
| |
$0.76
|
|
| |
|
| |
|
Weighted average shares outstanding, basic
|
| |
8,177,575
|
| |
8,021,902
|
Weighted average shares outstanding, diluted
|
| |
8,630,356
|
| |
8,038,545
|
|
| |
Common Stock
|
| |
Additional
Paid-In
Capital
|
| |
Retained
Earnings
|
| |
Total
Shareholders’
Equity
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance at January 1, 2020
|
| |
8,709,756
|
| |
$9
|
| |
$15,274
|
| |
$17,812
|
| |
$33,095
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
704
|
| |
—
|
| |
704
|
Stock options exercised
|
| |
34,776
|
| |
—
|
| |
82
|
| |
—
|
| |
82
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
1,814
|
| |
1,814
|
Balance at March 31, 2020
|
| |
8,744,532
|
| |
$9
|
| |
$16,060
|
| |
$19,626
|
| |
$35,695
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
375
|
| |
—
|
| |
375
|
Issuance of warrants to BFG
|
| |
—
|
| |
—
|
| |
50
|
| |
—
|
| |
50
|
Repurchase of restricted stock
|
| |
(73,770)
|
| |
—
|
| |
(268)
|
| |
—
|
| |
(268)
|
Repurchase of common stock
|
| |
(10,428)
|
| |
—
|
| |
(41)
|
| |
—
|
| |
(41)
|
Net income
|
| |
—
|
| |
—
|
| |
1,078
|
| |
1,078
|
| |
|
Balance at June 30, 2020
|
| |
8,660,334
|
| |
$9
|
| |
$16,176
|
| |
$20,704
|
| |
$36,889
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
350
|
| |
—
|
| |
350
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
3,690
|
| |
3,690
|
Balance at September 30, 2020
|
| |
8,660,334
|
| |
$9
|
| |
$16,526
|
| |
$24,394
|
| |
$40,929
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
327
|
| |
—
|
| |
327
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
4,616
|
| |
4,616
|
Balance at December 31, 2020
|
| |
8,660,334
|
| |
$9
|
| |
$16,853
|
| |
$29,010
|
| |
$45,872
|
|
| |
Common Stock
|
| |
Additional
Paid-In
Capital
|
| |
Retained
Earnings
|
| |
Total
Shareholders’
Equity
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance at January 1, 2021
|
| |
8,660,334
|
| |
$9
|
| |
$16,853
|
| |
$29,010
|
| |
$45,872
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
981
|
| |
—
|
| |
981
|
Stock options exercised
|
| |
55,776
|
| |
—
|
| |
166
|
| |
—
|
| |
166
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
5,291
|
| |
5,291
|
Balance at March 31, 2021
|
| |
8,716,110
|
| |
$9
|
| |
$18,000
|
| |
$34,301
|
| |
$52,310
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
274
|
| |
—
|
| |
274
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
7,739
|
| |
7,739
|
Balance at June 30, 2021
|
| |
8,716,110
|
| |
$9
|
| |
$18,274
|
| |
$42,040
|
| |
$60,323
|
Stock-based compensation
|
| |
—
|
| |
—
|
| |
230
|
| |
—
|
| |
230
|
Stock options exercised
|
| |
30,000
|
| |
—
|
| |
143
|
| |
—
|
| |
143
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
8,442
|
| |
8,442
|
Balance at September 30, 2021
|
| |
8,746,110
|
| |
$9
|
| |
$18,647
|
| |
$50,482
|
| |
$69,138
|
|
| |
Nine Months Ended September 30,
|
|||
|
| |
2021
|
| |
2020
|
Cash flows from operating activities:
|
| |
|
| |
|
Net income
|
| |
$21,472
|
| |
$6,582
|
|
| |
|
| |
|
Adjustments to reconcile net income to net cash from operating activities
|
| |
|
| |
|
Depreciation and amortization
|
| |
667
|
| |
564
|
Provision for loan losses
|
| |
5,536
|
| |
5,234
|
Net amortization in securities premiums
|
| |
19
|
| |
8
|
Capitalized servicing assets
|
| |
(2,391)
|
| |
(767)
|
Gain on sale of SBA loans, net
|
| |
(7,876)
|
| |
(2,560)
|
Originations of Strategic Program loans held for sale
|
| |
(4,064,999)
|
| |
(1,511,970)
|
Proceeds on Strategic Program loans held for sale
|
| |
4,023,245
|
| |
1,492,044
|
Change in fair value of BFG
|
| |
(2,127)
|
| |
(719)
|
Stock-based compensation expense
|
| |
1,485
|
| |
1,429
|
Loss on investment in BFG
|
| |
—
|
| |
50
|
Deferred income tax expense
|
| |
(1,145)
|
| |
70
|
Net changes in:
|
| |
|
| |
|
Accrued interest receivable
|
| |
332
|
| |
(314)
|
Accrued interest payable
|
| |
(152)
|
| |
85
|
Other assets
|
| |
(3,416)
|
| |
378
|
Other liabilities
|
| |
7,875
|
| |
6,427
|
Net cash used in operating activities
|
| |
(21,475)
|
| |
(3,459)
|
|
| |
|
| |
|
Cash flows from investing activities:
|
| |
|
| |
|
Net (increase) decrease in loans receivable
|
| |
61,665
|
| |
(124,215)
|
Purchase of loans receivable
|
| |
(6,000)
|
| |
—
|
Distributions of BFG
|
| |
656
|
| |
392
|
Purchase of bank premises and equipment
|
| |
(1,448)
|
| |
(484)
|
Proceeds from maturities and paydowns of securities held to maturity
|
| |
381
|
| |
261
|
Purchases of securities held to maturity
|
| |
(3,005)
|
| |
(1,745)
|
(Purchase) sale of FHLB stock
|
| |
(172)
|
| |
65
|
Net cash (used in) provided by investing activities
|
| |
52,077
|
| |
(125,856)
|
|
| |
|
| |
|
Cash flows from financing activities:
|
| |
|
| |
|
Net increase in deposits
|
| |
88,560
|
| |
42,602
|
Proceeds from exercise of stock options
|
| |
309
|
| |
82
|
Proceeds from PPP Liquidity Facility
|
| |
5,558
|
| |
85,243
|
Repayment of PPP Liquidity Facility
|
| |
(104,306)
|
| |
(913)
|
Repurchase of common stock
|
| |
—
|
| |
(309)
|
Net cash provided by (used in) financing activities
|
| |
(9,879)
|
| |
126,705
|
|
| |
|
| |
|
Net change in cash and cash equivalents
|
| |
20,723
|
| |
(2,610)
|
Cash and cash equivalents, beginning of the period
|
| |
47,383
|
| |
34,779
|
Cash and cash equivalents, end of the period
|
| |
$68,106
|
| |
$32,169
|
|
| |
|
| |
|
Supplemental disclosures of cash flow information:
|
| |
|
| |
|
Cash paid during the period
|
| |
|
| |
|
Income taxes
|
| |
$7,273
|
| |
$2,869
|
Interest
|
| |
$1,136
|
| |
$1,267
|
|
| |
September 30, 2021
|
|||||||||
($ in thousands)
|
| |
Amortized
Cost
|
| |
Unrealized
Gain
|
| |
Unrealized
Loss
|
| |
Estimated
Fair Value
|
Mortgage-backed securities
|
| |
$4,414
|
| |
$39
|
| |
$—
|
| |
$4,453
|
|
| |
December 31, 2020
|
|||||||||
($ 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
|
| |
602
|
| |
619
|
Due after ten years
|
| |
3,812
|
| |
3,834
|
|
| |
$4,414
|
| |
$4,453
|
($ in thousands)
|
| |
September 30,
2021
|
| |
December 31,
2020
|
SBA
|
| |
$125,192
|
| |
$203,317
|
Commercial, non-real estate
|
| |
3,955
|
| |
4,020
|
Residential real estate
|
| |
25,105
|
| |
17,740
|
Strategic Program loans
|
| |
87,876
|
| |
28,265
|
Commercial real estate
|
| |
2,357
|
| |
2,892
|
Consumer
|
| |
4,729
|
| |
5,543
|
Total loans
|
| |
$249,214
|
| |
$261,777
|
|
| |
|
| |
|
Strategic Program loans held-for-sale
|
| |
(62,702)
|
| |
(20,948)
|
Total loans held for investment
|
| |
$186,512
|
| |
$240,829
|
|
| |
|
| |
|
Deferred loan (fees) costs, net
|
| |
1,876
|
| |
(2,556)
|
Allowance for loan losses
|
| |
(9,640)
|
| |
(6,199)
|
Net loans
|
| |
$178,748
|
| |
$232,074
|
($ in thousands)
|
| |
September 30,
2021
|
| |
December 31,
2020
|
Retained Strategic Program loans
|
| |
$25,174
|
| |
$7,317
|
Strategic Program loans held-for-sale
|
| |
62,702
|
| |
20,948
|
Total Strategic Program loans
|
| |
$87,876
|
| |
$28,265
|
September 30, 2021
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Recorded
Investment
|
| |
Unpaid
Principal
Balance
|
| |
Related
Allowance
|
| |
Average
Recorded
Investment
|
| |
Interest Income
Recognized
|
With no related allowance recorded
|
| |
|
| |
|
| |
|
| |
|
| |
|
SBA
|
| |
$1,079
|
| |
$1,079
|
| |
$—
|
| |
$998
|
| |
$50
|
Commercial, non-real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Residential real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
252
|
| |
—
|
Strategic Program loans
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Commercial real estate
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Consumer
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Total
|
| |
$1,079
|
| |
$1,079
|
| |
$—
|
| |
$1,250
|
| |
$50
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ 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
|
| |
$45
|
September 30, 2021
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ 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
|
| |
$124,220
|
| |
$215
|
| |
$—
|
| |
$—
|
| |
$215
|
| |
$757
|
| |
$125,192
|
Commercial, non-real estate
|
| |
3,955
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,955
|
Residential real estate
|
| |
25,105
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
25,105
|
Strategic Program loans
|
| |
86,574
|
| |
861
|
| |
441
|
| |
—
|
| |
1,302
|
| |
—
|
| |
87,876
|
Commercial real estate
|
| |
2,357
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,357
|
Consumer
|
| |
4,729
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
4,729
|
Total
|
| |
$246,940
|
| |
$1,076
|
| |
$441
|
| |
$—
|
| |
$1,517
|
| |
$757
|
| |
$249,214
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
($ 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
|
| |
$261,777
|
September 30, 2021
|
| |
|
| |
|
| |
|
| |
|
($ in thousands)
|
| |
Pass
Grade 1-4
|
| |
Special Mention
Grade 5
|
| |
Classified/
Doubtful/Loss
Grade 6-8
|
| |
Total
|
SBA
|
| |
$122,449
|
| |
$1,664
|
| |
$1,079
|
| |
$125,192
|
Commercial, non-real estate
|
| |
3,904
|
| |
51
|
| |
—
|
| |
3,955
|
Residential real estate
|
| |
25,105
|
| |
—
|
| |
—
|
| |
25,105
|
Commercial real estate
|
| |
2,357
|
| |
—
|
| |
—
|
| |
2,357
|
Consumer
|
| |
4,729
|
| |
—
|
| |
—
|
| |
4,729
|
Not Risk Graded
|
| |
|
| |
|
| |
|
| |
|
Strategic Program loans
|
| |
|
| |
|
| |
|
| |
87,876
|
Total
|
| |
$158,544
|
| |
$1,715
|
| |
$1,079
|
| |
$249,214
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
($ 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
|
September 30, 2021
|
| |
|
| |
|
| |
|
SBA
|
| |
2
|
| |
$107
|
| |
$107
|
Total
|
| |
2
|
| |
$107
|
| |
$107
|
Non-Accrual
|
| |
|
| |
|
| |
|
SBA
|
| |
1
|
| |
$25
|
| |
$25
|
December 31, 2020
|
| |
|
| |
|
| |
|
SBA
|
| |
3
|
| |
$114
|
| |
$114
|
Residential real estate
|
| |
1
|
| |
756
|
| |
756
|
Total
|
| |
4
|
| |
$870
|
| |
$870
|
Non-Accrual
|
| |
|
| |
|
| |
|
SBA
|
| |
1
|
| |
$53
|
| |
$53
|
|
| |
September 30,
2021
|
| |
December 31,
2020
|
($ in thousands)
|
| |
|
| |
|
Demand
|
| |
$114,857
|
| |
$94,162
|
Savings
|
| |
8,146
|
| |
7,435
|
Money markets
|
| |
25,679
|
| |
17,567
|
Time certificates of deposit
|
| |
104,354
|
| |
45,312
|
Total deposits
|
| |
$253,036
|
| |
$164,476
|
Three Months Ended December 31, 2021
|
| |
$33,689
|
Year Ended December 31, 2022
|
| |
23,731
|
Year Ended December 31, 2023
|
| |
18,255
|
Year Ended December 31, 2024
|
| |
13,574
|
Year Ended December 31, 2025
|
| |
6,499
|
Thereafter
|
| |
8,606
|
Total
|
| |
104,354
|
|
| |
Nine Months Ended September 30,
|
|||
($ in thousands)
|
| |
2021
|
| |
2020
|
Beginning balance
|
| |
$2,415
|
| |
$2,034
|
Additions to servicing asset
|
| |
2,391
|
| |
767
|
Amortization of servicing asset
|
| |
(438)
|
| |
(382)
|
Ending balance
|
| |
$4,368
|
| |
$2,419
|
|
| |
Actual
|
| |
Well-Capitalized Requirement*
|
||||||
($ in thousands)
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
September 30, 2021
|
| |
|
| |
|
| |
|
| |
|
Leverage ratio (CBLR election)
|
| |
$55,530
|
| |
19.5%
|
| |
$24,209
|
| |
8.5%
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
Leverage ratio (CBLR election)
|
| |
$37,806
|
| |
16.6%
|
| |
$18,212
|
| |
8.0%
|
*
|
On March 27, 2020 the CARES Act became law. Section 4012 of the CARES Act directs the agencies to issue an interim final rule reducing the CBLR ratio requirement from 9% to 8% for the last two quarters of the year 2020, 8.5% for the calendar year 2021, and 9% thereafter.
|
|
| |
September 30,
|
| |
December 31,
|
($ in thousands)
|
| |
2021
|
| |
2020
|
Revolving, open-end lines of credit
|
| |
$1,368
|
| |
$757
|
Commercial real estate
|
| |
18,483
|
| |
14,468
|
Other unused commitments
|
| |
530
|
| |
928
|
|
| |
$20,382
|
| |
$16,153
|
|
| |
For the Nine Months Ended September 30,
|
|||
|
| |
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
|
| |
638,664
|
| |
$3.54
|
| |
8.1
|
| |
$653,991
|
Options granted
|
| |
894,600
|
| |
6.20
|
| |
3.4
|
| |
|
Options exercised
|
| |
(85,776)
|
| |
3.60
|
| |
|
| |
501,522
|
Options forfeited
|
| |
(565,500)
|
| |
6.56
|
| |
|
| |
1,156,255
|
Outstanding at September 30, 2021
|
| |
881,988
|
| |
$4.30
|
| |
8.4
|
| |
$6,132,073
|
Options vested and exercisable at September 30, 2021
|
| |
481,728
|
| |
$4.23
|
| |
8.4
|
| |
$3,380,833
|
|
| |
Number of
Shares
|
| |
Weighted
Average Grant
Price
|
Unvested as of December 31, 2020
|
| |
621,666
|
| |
$3.64
|
Vested
|
| |
(161,352)
|
| |
3.64
|
Unvested as of September 30, 2021
|
| |
460,314
|
| |
$3.64
|
|
| |
Nine Months Ended September 30,
|
|||
($ in thousands)
|
| |
2021
|
| |
2020
|
Stock options
|
| |
$883
|
| |
$335
|
Restricted shares
|
| |
602
|
| |
1,094
|
Total
|
| |
$1,485
|
| |
$1,429
|
After-tax
|
| |
|
| |
|
Stock options
|
| |
$757
|
| |
$307
|
Restricted shares
|
| |
800
|
| |
1,327
|
Total
|
| |
$1,557
|
| |
$1,634
|
|
| |
|
| |
September 30, 2021
|
| |
December 31, 2020
|
||||||
($ in thousands)
|
| |
Level
|
| |
Carrying
Amount
|
| |
Estimated
Fair Value
|
| |
Carrying
Amount
|
| |
Estimated Fair
Value
|
Financial assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
1
|
| |
$68,106
|
| |
$68,106
|
| |
$47,383
|
| |
$47,383
|
Investment securities held to maturity
|
| |
2
|
| |
4,414
|
| |
4,453
|
| |
1,809
|
| |
1,879
|
Investment in FHLB stock
|
| |
2
|
| |
377
|
| |
377
|
| |
205
|
| |
205
|
Loans held for investment
|
| |
3
|
| |
178,748
|
| |
179,099
|
| |
232,074
|
| |
211,299
|
Loans held for sale
|
| |
2
|
| |
62,702
|
| |
62,695
|
| |
20,948
|
| |
20,948
|
Accrued interest receivable
|
| |
2
|
| |
1,297
|
| |
1,297
|
| |
1,629
|
| |
1,629
|
SBA servicing asset
|
| |
2
|
| |
4,368
|
| |
4,579
|
| |
2,415
|
| |
2,532
|
Investment in BFG
|
| |
3
|
| |
5,241
|
| |
5,241
|
| |
3,770
|
| |
3,770
|
|
| |
|
| |
September 30, 2021
|
| |
December 31, 2020
|
||||||
($ in thousands)
|
| |
Level
|
| |
Carrying
Amount
|
| |
Estimated
Fair Value
|
| |
Carrying
Amount
|
| |
Estimated Fair
Value
|
Financial liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total deposits
|
| |
2
|
| |
253,036
|
| |
252,809
|
| |
164,476
|
| |
164,845
|
Accrued interest payable
|
| |
2
|
| |
43
|
| |
43
|
| |
195
|
| |
195
|
PPP Liquidity Facility
|
| |
2
|
| |
2,259
|
| |
2,368
|
| |
101,007
|
| |
105,886
|
($ in thousands)
|
| |
|
| |
Fair Value Measurements Using
|
||||||
Description of Financial Instrument
|
| |
Fair Value
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
September 30, 2021
|
| |
|
| |
|
| |
|
| |
|
Nonrecurring assets
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,079
|
| |
$—
|
| |
$—
|
| |
$1,079
|
|
| |
|
| |
|
| |
|
| |
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
Nonrecurring assets
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,673
|
| |
$—
|
| |
$—
|
| |
$1,673
|
($ in thousands)
|
| |
Fair Value
|
| |
Valuation
Technique
|
| |
Unobservable
Input
|
| |
Range
(Weighted Average)
|
September 30, 2021
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,079
|
| |
Market comparable
|
| |
Adjustment to appraisal value
|
| |
0.60%
|
December 31, 2020
|
| |
|
| |
|
| |
|
| |
|
Impaired loans
|
| |
$1,673
|
| |
Market comparable
|
| |
Adjustment to appraisal value
|
| |
0.73%
|
|
| |
Nine Months Ended September 30,
|
|||
|
| |
2021
|
| |
2020
|
Numerator:
|
| |
|
| |
|
Net income
|
| |
$21,472
|
| |
$6,582
|
Amount allocated to participating common shareholders(1)
|
| |
(1,312)
|
| |
(498)
|
Net income allocate to common shareholders
|
| |
$20,160
|
| |
$6,084
|
|
| |
|
| |
|
Denominator:
|
| |
|
| |
|
Weighted average shares outstanding, basic
|
| |
8,177,575
|
| |
8,021,902
|
Weighted average effect of dilutive securities - stock options
|
| |
394,770
|
| |
16,643
|
Weighted average effect of dilutive securities - warrants
|
| |
58,011
|
| |
—
|
Weighted average shares outstanding, diluted
|
| |
8,630,356
|
| |
8,038,545
|
|
| |
|
| |
|
Earnings per share, basic
|
| |
$2.47
|
| |
$0.76
|
Earnings per share, diluted
|
| |
$2.34
|
| |
$0.76
|
(1)
|
Represents earnings attributable to holders of unvested restricted stock issued outside of the Plan to the Company’s employees.
|
|
| |
Nine Months Ended September 30,
|
|||
($ in thousands)
|
| |
2021
|
| |
2020
|
Interest income
|
| |
|
| |
|
Interest income, not-in-scope
|
| |
|
| |
|
Interest and fees on loans
|
| |
$33,635
|
| |
$20,723
|
Interest on securities
|
| |
19
|
| |
25
|
Other interest income
|
| |
36
|
| |
193
|
Total interest income
|
| |
$33,690
|
| |
$20,941
|
Non-interest income
|
| |
|
| |
|
Non-interest income, in-scope
|
| |
|
| |
|
Service charges on deposit accounts
|
| |
$22
|
| |
$29
|
Strategic Program set up fees
|
| |
47
|
| |
228
|
Non-interest income, not in-scope
|
| |
|
| |
|
Strategic Program fees
|
| |
11,451
|
| |
6,273
|
Gain on sale of loans
|
| |
7,876
|
| |
2,560
|
SBA loan servicing fees
|
| |
800
|
| |
745
|
Unrealized gain on investment in BFG
|
| |
2,127
|
| |
719
|
Other miscellaneous income
|
| |
13
|
| |
10
|
Strategic Program service charges
|
| |
379
|
| |
377
|
Total non-interest income
|
| |
$22,715
|
| |
$10,941
|
|
| |
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; 8,716,110 and 8,660,334 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively
|
| |
9
|
| |
9
|
Additional paid-in-capital
|
| |
16,853
|
| |
15,274
|
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
|
| |
$1.29
|
| |
$1.37
|
Earnings per share, diluted
|
| |
$1.28
|
| |
$1.37
|
|
| |
|
| |
|
Weighted average shares outstanding, basic
|
| |
8,025,390
|
| |
7,038,896
|
Weighted average shares outstanding, diluted
|
| |
8,069,634
|
| |
7,053,354
|
|
| |
Common Stock
|
| |
Additional
Paid-In
Capital
|
| |
Retained
Earnings
|
| |
Total
Shareholders’
Equity
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance at December 31, 2018
|
| |
7,013,202
|
| |
$7
|
| |
$11,065
|
| |
$8,153
|
| |
$19,225
|
Stock-based compensation expense
|
| |
1,000,314
|
| |
1
|
| |
1,764
|
| |
—
|
| |
1,765
|
Issuance of common stock in lieu of cash bonus
|
| |
87,924
|
| |
—
|
| |
231
|
| |
—
|
| |
231
|
Issuance of common stock for investment in BFG
|
| |
950,784
|
| |
1
|
| |
3,458
|
| |
—
|
| |
3,459
|
Repurchase of restricted stock to pay for employee withholding taxes
|
| |
(351,852)
|
| |
—
|
| |
(1,280)
|
| |
—
|
| |
(1,280)
|
Stock options exercised
|
| |
52,764
|
| |
—
|
| |
125
|
| |
—
|
| |
125
|
Repurchase of common stock
|
| |
(43,380)
|
| |
—
|
| |
(89)
|
| |
—
|
| |
(89)
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
9,659
|
| |
9,659
|
Balance at December 31, 2019
|
| |
8,709,756
|
| |
$9
|
| |
$15,274
|
| |
$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
|
| |
(73,770)
|
| |
—
|
| |
(268)
|
| |
—
|
| |
(268)
|
Stock options exercised
|
| |
34,776
|
| |
—
|
| |
82
|
| |
—
|
| |
82
|
Repurchase of common stock
|
| |
(10,428)
|
| |
—
|
| |
(41)
|
| |
—
|
| |
(41)
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
11,198
|
| |
11,198
|
Balance at December 31, 2020
|
| |
8,660,334
|
| |
$9
|
| |
$16,853
|
| |
$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
|
| |
(122,734)
|
| |
(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%
|
| |
$9,157
|
| |
6.5%
|
Tier 1 capital to risk-weighted assets
|
| |
27,142
|
| |
19.3%
|
| |
8,452
|
| |
6.0%
|
| |
11,270
|
| |
8.0%
|
Total capital to risk-weighted assets
|
| |
28,397
|
| |
20.5%
|
| |
11,270
|
| |
8.0%
|
| |
14,087
|
| |
10.0%
|
Tier 1 leverage
|
| |
27,142
|
| |
16.2%
|
| |
6,714
|
| |
4.0%
|
| |
8,393
|
| |
5.0%
|
*
|
On March 27, 2020 the CARES Act became law. Section 4012 of the CARES Act directs the agencies to issue an interim final rule reducing the CBLR ratio requirement from 9% to 8% for the last two quarters of the year 2020, 8.5% for the calendar year 2021, and 9% thereafter.
|
|
| |
December 31,
|
|||
($ in thousands)
|
| |
2020
|
| |
2019
|
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
|
| |
197,316
|
| |
$2.37
|
| |
9.0
|
| |
$30,614
|
Options granted
|
| |
367,488
|
| |
3.47
|
| |
9.7
|
| |
63,250
|
Options exercised
|
| |
(52,764)
|
| |
2.36
|
| |
|
| |
67,290
|
Options forfeited
|
| |
(4,200)
|
| |
2.72
|
| |
|
| |
3,850
|
Outstanding at December 31, 2019
|
| |
507,840
|
| |
$3.16
|
| |
9.3
|
| |
$243,061
|
Options granted
|
| |
390,600
|
| |
4.70
|
| |
4.0
|
| |
70,626
|
Options exercised
|
| |
(34,776)
|
| |
2.36
|
| |
|
| |
68,863
|
Options forfeited
|
| |
(225,000)
|
| |
4.87
|
| |
|
| |
22,235
|
Outstanding at December 31, 2020
|
| |
638,664
|
| |
$3.54
|
| |
8.6
|
| |
$653,991
|
Options vested and exercisable at December 31, 2020
|
| |
279,708
|
| |
$3.77
|
| |
8.6
|
| |
$245,877
|
|
| |
Number of
Shares
|
| |
Weighted
Average Grant
Price
|
Unvested as of as of January 1, 2019
|
| |
—
|
| |
$—
|
Granted
|
| |
1,072,746
|
| |
3.64
|
Vested
|
| |
(351,876)
|
| |
3.64
|
Unvested as of December 31, 2019
|
| |
720,870
|
| |
$3.64
|
Vested
|
| |
(99,204)
|
| |
3.64
|
Unvested as of December 31, 2020
|
| |
621,666
|
| |
$3.64
|
|
| |
|
| |
December 31, 2020
|
| |
December 31, 2019
|
||||||
($ 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
|
| |
8,025,390
|
| |
7,038,896
|
Weighted average shares outstanding, diluted
|
| |
8,069,634
|
| |
7,053,354
|
Earnings per share, basic
|
| |
$1.29
|
| |
$1.37
|
Earnings per share, diluted
|
| |
$1.28
|
| |
$1.37
|
(1)
|
Represents earnings attributable to holders of unvested restricted stock issued outside of the Plan to the Company's employees.
|
|
| |
For the Years Ended December 31,
|
|||
($ 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
|
|
| |
|