☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Texas
|
75-2453320
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
5219 City Bank Parkway
Lubbock, Texas
|
79407
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $1.00 par value per share
|
SPFI
|
The Nasdaq Stock Market, LLC
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☒
|
Page
|
||
PART I.
|
3
|
|
Item 1.
|
3
|
|
3
|
||
4
|
||
6 | ||
7
|
||
9 | ||
Item 2.
|
33
|
|
Item 3.
|
60
|
|
Item 4.
|
60
|
|
PART II.
|
60
|
|
Item 1.
|
60
|
|
Item 1A.
|
60
|
|
Item 2.
|
60
|
|
Item 3.
|
61
|
|
Item 4.
|
61
|
|
Item 5.
|
61
|
|
Item 6.
|
61
|
|
61
|
June 30,
2019 |
December 31,
2018 |
|||||||
ASSETS
|
||||||||
Cash and due from banks
|
$
|
38,302
|
$
|
47,802
|
||||
Interest-bearing deposits in banks
|
367,064
|
198,187
|
||||||
Federal funds sold
|
2,750
|
-
|
||||||
Cash and cash equivalents
|
408,116
|
245,989
|
||||||
Securities available for sale
|
263,564
|
338,196
|
||||||
Loans held for sale
|
38,932
|
38,382
|
||||||
Loans held for investment
|
1,935,653
|
1,957,197
|
||||||
Allowance for loan losses
|
(24,171
|
)
|
(23,126
|
)
|
||||
Accrued interest receivable
|
9,976
|
12,957
|
||||||
Premises and equipment, net
|
59,705
|
59,787
|
||||||
Bank-owned life insurance
|
57,794
|
57,172
|
||||||
Other assets
|
27,601
|
26,191
|
||||||
Total assets
|
$
|
2,777,170
|
$
|
2,712,745
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing
|
$
|
513,383
|
$
|
510,067
|
||||
Interest-bearing
|
1,768,475
|
1,767,387
|
||||||
Total deposits
|
2,281,858
|
2,277,454
|
||||||
Short-term borrowings
|
8,810
|
17,705
|
||||||
Accrued expenses and other liabilities
|
27,524
|
29,416
|
||||||
Notes payable & other borrowings
|
95,000
|
95,000
|
||||||
Subordinated debt securities
|
26,472
|
34,002
|
||||||
Junior subordinated deferrable interest debentures
|
46,393
|
46,393
|
||||||
Total liabilities
|
2,486,057
|
2,499,970
|
||||||
Commitments and contingent liabilities |
||||||||
ESOP owned shares |
- | 58,195 |
||||||
Stockholders’ equity:
|
||||||||
Common stock, $1.00 par value per share, 30,000,000 shares authorized; 17,978,520 and 14,771,520 issued and outstanding at June 30, 2019 and December 31, 2018,
respectively
|
17,979
|
14,772
|
||||||
Additional paid-in capital
|
140,189
|
80,412
|
||||||
Retained earnings
|
129,408
|
119,834
|
||||||
Accumulated other comprehensive income (loss)
|
3,537
|
(2,243
|
)
|
|||||
291,113
|
212,775
|
|||||||
Less ESOP owned shares
|
- | 58,195 |
||||||
Total stockholders’ equity
|
291,113 |
154,580 | ||||||
Total liabilities and stockholders’ equity
|
$
|
2,777,170
|
$
|
2,712,745
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Interest income:
|
||||||||||||||||
Loans, including fees
|
$
|
28,592
|
$
|
25,627
|
$
|
56,690
|
$
|
49,736
|
||||||||
Securities:
|
||||||||||||||||
Taxable
|
1,816
|
792
|
3,992
|
1,587
|
||||||||||||
Non taxable
|
218
|
1,021
|
443
|
2,116
|
||||||||||||
Federal funds sold and interest-bearing deposits in banks
|
1,883
|
968
|
3,388
|
2,252
|
||||||||||||
Total interest income
|
32,509
|
28,408
|
64,513
|
55,691
|
||||||||||||
Interest expense:
|
||||||||||||||||
Deposits
|
6,139
|
3,796
|
12,028
|
7,289
|
||||||||||||
Notes payable & other borrowings
|
618
|
473
|
1,268
|
903
|
||||||||||||
Subordinated debt securities
|
403
|
245
|
809
|
490
|
||||||||||||
Junior subordinated deferrable interest debentures
|
512
|
455
|
1,025
|
852
|
||||||||||||
Total interest expense
|
7,672
|
4,969
|
15,130
|
9,534
|
||||||||||||
Net interest income
|
24,837
|
23,439
|
49,383
|
46,157
|
||||||||||||
Provision for loan losses
|
875
|
1,540
|
1,483
|
2,318
|
||||||||||||
Net interest income, after provision for loan losses
|
23,962
|
21,899
|
47,900
|
43,839
|
||||||||||||
Noninterest income:
|
||||||||||||||||
Service charges on deposit accounts
|
1,979
|
1,861
|
3,884
|
3,778
|
||||||||||||
Income from insurance activities
|
1,210
|
1,135
|
2,960
|
2,530
|
||||||||||||
Net gain on sales of loans
|
6,235
|
5,899
|
10,895
|
10,210
|
||||||||||||
Bank card services and interchange fees
|
2,071
|
2,051
|
4,081
|
4,009
|
||||||||||||
Investment commissions
|
493
|
425
|
826
|
875
|
||||||||||||
Other
|
1,715
|
1,597
|
3,132
|
3,034
|
||||||||||||
Total noninterest income
|
13,703
|
12,968
|
25,778
|
24,436
|
||||||||||||
Noninterest expense:
|
||||||||||||||||
Salaries and employee benefits
|
18,784
|
17,818
|
37,909
|
35,419
|
||||||||||||
Occupancy and equipment, net
|
3,416
|
3,391
|
6,823
|
6,715
|
||||||||||||
Professional services
|
1,611
|
1,400
|
3,317
|
2,829
|
||||||||||||
Marketing and development
|
796
|
760
|
1,513
|
1,578
|
||||||||||||
IT and data services
|
689
|
553
|
1,382
|
1,103
|
||||||||||||
Bank card expenses
|
806
|
659
|
1,530
|
1,323
|
||||||||||||
Appraisal expenses
|
407
|
354
|
730
|
639
|
||||||||||||
Other
|
3,421
|
3,487
|
6,762
|
6,693
|
||||||||||||
Total noninterest expense
|
29,930
|
28,422
|
59,966
|
56,299
|
||||||||||||
Income before income taxes
|
7,735
|
6,445
|
13,712
|
11,976
|
||||||||||||
Income tax expense (benefit)
|
1,655
|
(6,568
|
)
|
2,859
|
(6,538
|
)
|
||||||||||
Net income
|
$
|
6,080
|
$
|
13,013
|
$
|
10,853
|
$
|
18,514
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Earnings per share:
|
||||||||||||||||
Basic
|
$
|
0.37
|
$
|
0.88
|
$
|
0.69
|
$
|
1.25
|
||||||||
Diluted
|
$
|
0.37
|
$
|
0.88
|
$
|
0.69
|
$
|
1.25
|
||||||||
Net income
|
$
|
6,080
|
$
|
13,013
|
$
|
10,853
|
$
|
18,514
|
||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Change in net unrealized loss on securities available for sale
|
4,410
|
(1,011
|
)
|
7,317
|
(4,171
|
)
|
||||||||||
Tax effect
|
(926
|
)
|
970
|
(1,537
|
)
|
970
|
||||||||||
Other comprehensive income (loss)
|
3,484
|
(41
|
)
|
5,780
|
(3,201
|
)
|
||||||||||
Comprehensive income
|
$
|
9,564
|
$
|
12,972
|
$
|
16,633
|
$
|
15,313
|
||||||||
Pro Forma Information (unaudited):
|
||||||||||||||||
Net income
|
$
|
5,333
|
$
|
9,981
|
||||||||||||
Income tax expense
|
$
|
969
|
$
|
1,852
|
||||||||||||
Earnings per share:
|
||||||||||||||||
Basic
|
$
|
0.36
|
$
|
0.68
|
||||||||||||
Diluted
|
$
|
0.36
|
$
|
0.68
|
Common Stock
|
Additional
Paid-in
|
Retained
|
Accumulated
Other
Comprehensive
|
Treasury
|
Less:
ESOP
Owned
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income (Loss)
|
Stock
|
Shares
|
Total
|
|||||||||||||||||||||||||
Six Months Ended June 30 |
||||||||||||||||||||||||||||||||
Balance at January 1, 2018
|
15,153,510
|
$
|
15,154
|
$
|
85,888
|
$
|
120,589
|
$
|
(446
|
)
|
$
|
(5,858
|
)
|
$
|
(57,121
|
)
|
$
|
158,206
|
||||||||||||||
Net income
|
-
|
-
|
-
|
18,514
|
-
|
-
|
-
|
18,514
|
||||||||||||||||||||||||
Cash dividends:
|
||||||||||||||||||||||||||||||||
Common - $1.19 per share
|
-
|
-
|
-
|
(17,544
|
)
|
-
|
-
|
-
|
(17,544
|
)
|
||||||||||||||||||||||
Other comprehensive (loss), (net of tax)
|
-
|
-
|
-
|
-
|
(3,201
|
)
|
-
|
-
|
(3,201
|
)
|
||||||||||||||||||||||
Balance at June 30, 2018
|
15,153,510
|
$
|
15,154
|
$
|
85,888
|
$
|
121,559
|
$
|
(3,647
|
)
|
$
|
(5,858
|
)
|
$
|
(57,121
|
)
|
$
|
155,975
|
||||||||||||||
Balance at January 1, 2019
|
14,771,520
|
$
|
14,772
|
$
|
80,412
|
$
|
119,834
|
$
|
(2,243
|
)
|
$
|
-
|
$
|
(58,195
|
)
|
$
|
154,580
|
|||||||||||||||
Issuance of common stock, net
|
3,207,000
|
3,207
|
48,185
|
-
|
-
|
-
|
-
|
51,392
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
10,853
|
-
|
-
|
-
|
10,853
|
||||||||||||||||||||||||
Other comprehensive income, (net of tax)
|
-
|
-
|
-
|
-
|
5,780
|
-
|
-
|
5,780
|
||||||||||||||||||||||||
Terminated ESOP put option
|
-
|
-
|
-
|
-
|
-
|
-
|
58,195
|
58,195
|
||||||||||||||||||||||||
Stock based compensation
|
-
|
-
|
142
|
-
|
-
|
-
|
-
|
142
|
||||||||||||||||||||||||
Share-based liability awards modified to equity awards
|
-
|
-
|
11,450
|
-
|
-
|
-
|
-
|
11,450
|
||||||||||||||||||||||||
Cumulative change in accounting principle
|
-
|
-
|
-
|
(1,279
|
)
|
-
|
-
|
-
|
(1,279
|
)
|
||||||||||||||||||||||
Balance at June 30, 2019
|
17,978,520
|
$
|
17,979
|
$
|
140,189
|
$
|
129,408
|
$
|
3,537
|
$
|
-
|
$
|
-
|
$
|
291,113
|
Three Months Ended June 30 |
||||||||||||||||||||||||||||||||
Balance at April 1, 2018
|
15,153,510
|
$
|
15,154
|
$
|
85,888
|
$
|
123,875
|
$
|
(3,606
|
)
|
$
|
(5,858
|
)
|
$
|
(57,121
|
)
|
$
|
158,332
|
||||||||||||||
Net income
|
-
|
-
|
-
|
13,013
|
-
|
-
|
-
|
13,013
|
||||||||||||||||||||||||
Cash dividends:
|
||||||||||||||||||||||||||||||||
Common - $1.04 per share
|
-
|
-
|
-
|
(15,329
|
)
|
-
|
-
|
-
|
(15,329
|
)
|
||||||||||||||||||||||
Other comprehensive (loss), (net of tax)
|
-
|
-
|
-
|
-
|
(41
|
)
|
-
|
-
|
(41
|
)
|
||||||||||||||||||||||
Balance at June 30, 2018
|
15,153,510
|
$
|
15,154
|
$
|
85,888
|
$
|
121,559
|
$
|
(3,647
|
)
|
$
|
(5,858
|
)
|
$
|
(57,121
|
)
|
$
|
155,975
|
||||||||||||||
Balance at April 1, 2019
|
14,771,520
|
$
|
14,772
|
$
|
80,412
|
$
|
123,328
|
$
|
53
|
$
|
-
|
$
|
(58,195
|
)
|
$
|
160,370
|
||||||||||||||||
Issuance of common stock, net
|
3,207,000
|
3,207
|
48,185
|
-
|
-
|
-
|
-
|
51,392
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
6,080
|
-
|
-
|
-
|
6,080
|
||||||||||||||||||||||||
Other comprehensive income, (net of tax)
|
-
|
-
|
-
|
-
|
3,484
|
-
|
-
|
3,484
|
||||||||||||||||||||||||
Terminated ESOP put option
|
-
|
-
|
-
|
-
|
-
|
-
|
58,195
|
58,195
|
||||||||||||||||||||||||
Stock based compensation
|
-
|
-
|
142
|
-
|
-
|
-
|
-
|
142
|
||||||||||||||||||||||||
Share-based liability awards modified to equity awards
|
-
|
-
|
11,450
|
-
|
-
|
-
|
-
|
11,450
|
||||||||||||||||||||||||
Balance at June 30, 2019
|
17,978,520
|
$
|
17,979
|
$
|
140,189
|
$
|
129,408
|
$
|
3,537
|
$
|
-
|
$
|
-
|
$
|
291,113
|
For the Six Months Ended June 30,
|
||||||||
2019
|
2018
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
10,853
|
$
|
18,514
|
||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||
Provision for loan losses
|
1,483
|
2,318
|
||||||
Depreciation and amortization
|
2,474
|
2,611
|
||||||
Accretion and amortization
|
(296
|
)
|
1,228
|
|||||
Other gains, net
|
(149
|
)
|
(107
|
)
|
||||
Net gain on sales of loans
|
(10,895
|
)
|
(10,210
|
)
|
||||
Proceeds from sales of loans held for sale
|
274,021
|
275,120
|
||||||
Loans originated for sale
|
(263,676
|
)
|
(266,918
|
)
|
||||
Earnings on bank-owned life insurance
|
(622
|
)
|
(666
|
)
|
||||
Stock based compensation
|
142
|
-
|
||||||
Net change in:
|
||||||||
Accrued interest receivable and other assets
|
45
|
(6,340
|
)
|
|||||
Accrued expenses and other liabilities
|
8,279
|
5,152
|
||||||
Net cash from operating activities
|
21,659
|
20,702
|
||||||
Cash flows from investing activities:
|
||||||||
Activity in securities available for sale:
|
||||||||
Purchases
|
(11,233
|
)
|
(200,664
|
)
|
||||
Maturities, prepayments, and calls
|
93,478
|
210,172
|
||||||
Activity in securities held to maturity:
|
||||||||
Maturities, prepayments, and calls
|
-
|
14,675
|
||||||
Loan originations and principal collections, net
|
19,940
|
(83,319
|
)
|
|||||
Purchases of premises and equipment, net
|
(2,406
|
)
|
(1,721
|
)
|
||||
Proceeds from sales of premises and equipment
|
74
|
35
|
||||||
Proceeds from sales of foreclosed assets
|
1,244
|
1,848
|
||||||
Net cash from investing activities
|
101,097
|
(58,974
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Net change in deposits
|
4,404
|
29,550
|
||||||
Net change in short-term borrowings
|
(8,895
|
)
|
10,800
|
|||||
Proceeds from common stock issuance, net
|
51,392
|
-
|
||||||
Payments made on notes payable and other borrowings
|
(7,530
|
)
|
-
|
|||||
Cash dividends on common stock
|
-
|
(17,544
|
)
|
|||||
Net cash from financing activities
|
39,371
|
22,806
|
For the Six Months Ended June 30,
|
||||||||
2019
|
2018
|
|||||||
Net change in cash and cash equivalents
|
$
|
162,127
|
$
|
(15,466
|
)
|
|||
Beginning cash and cash equivalents
|
245,989
|
294,563
|
||||||
Ending cash and cash equivalents
|
$
|
408,116
|
$
|
279,097
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Interest paid on deposits and borrowed funds
|
$
|
14,866
|
$
|
7,313
|
||||
Income taxes paid
|
2,853
|
-
|
||||||
Supplemental schedule of noncash investing and financing activities:
|
||||||||
Loans transferred to foreclosed assets
|
$
|
1,166
|
$
|
5,526
|
||||
Share-based liability awards modified to equity awards
|
11,450
|
-
|
Wholly Owned, Consolidated Subsidiaries:
|
|
City Bank
|
Bank subsidiary
|
Windmark Insurance Agency, Inc.
|
Non-bank subsidiary
|
Ruidoso Retail, Inc.
|
Non-bank subsidiary
|
CB Provence, LLC
|
Non-bank subsidiary
|
CBT Brushy Creek, LLC
|
Non-bank subsidiary
|
CBT Properties, LLC
|
Non-bank subsidiary
|
Wholly Owned, Equity Method Subsidiaries:
|
|
South Plains Financial Capital Trusts (SPFCT) III-V
|
Non-bank subsidiaries
|
2.
|
SECURITIES
|
Amortized
Cost
|
Gross
UnrealizedGains
|
Gross
UnrealizedLosses
|
Fair
Value
|
|||||||||||||
June 30, 2019
|
||||||||||||||||
Available for sale:
|
||||||||||||||||
U.S. government and agencies
|
$
|
10,343
|
$
|
63
|
$
|
(2
|
)
|
$
|
10,404
|
|||||||
State and municipal
|
31,249
|
772
|
(31
|
)
|
31,990
|
|||||||||||
Mortgage-backed securities
|
179,509
|
3,199
|
(127
|
)
|
182,581
|
|||||||||||
Asset-backed and other amortizing securities
|
37,986
|
603
|
-
|
38,589
|
||||||||||||
$
|
259,087
|
$
|
4,637
|
$
|
(160
|
)
|
$
|
263,564
|
Amortized
Cost |
Gross
UnrealizedGains
|
Gross
UnrealizedLosses
|
Fair
Value
|
|||||||||||||
December 31, 2018
|
||||||||||||||||
Available for sale:
|
||||||||||||||||
U.S. government and agencies
|
$
|
84,765
|
$
|
18
|
$
|
(76
|
)
|
$
|
84,707
|
|||||||
State and municipal
|
32,205
|
480
|
(375
|
)
|
32,310
|
|||||||||||
Mortgage-backed securities
|
184,267
|
29
|
(2,040
|
)
|
182,256
|
|||||||||||
Asset-backed and other amortizing securities
|
39,799
|
1
|
(877
|
)
|
38,923
|
|||||||||||
$
|
341,036
|
$
|
528
|
$
|
(3,368
|
)
|
$
|
338,196
|
Available for Sale
|
||||||||
Amortized
Cost |
Fair
Value |
|||||||
Within 1 year
|
$
|
3,496
|
$
|
3,496
|
||||
After 1 year through 5 years
|
7,317
|
7,380
|
||||||
After 5 years through 10 years
|
10,105
|
10,249
|
||||||
After 10 years
|
20,674
|
21,269
|
||||||
Other
|
217,495
|
221,170
|
||||||
$
|
259,087
|
$
|
263,564
|
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
Fair Value
|
Unrealized
Loss
|
|||||||||||||||||||
June 30, 2019
|
||||||||||||||||||||||||
U.S. government and agencies
|
$
|
-
|
$
|
-
|
$
|
5,591
|
$
|
2
|
$
|
5,591
|
$
|
2
|
||||||||||||
State and municipal
|
-
|
-
|
4,395
|
31
|
4,395
|
31
|
||||||||||||||||||
Mortgage-backed securities
|
-
|
-
|
42,240
|
127
|
42,240
|
127
|
||||||||||||||||||
Asset-backed and other amortizing securities
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
$
|
-
|
$
|
-
|
$
|
52,226
|
$
|
160
|
$
|
52,226
|
$
|
160
|
|||||||||||||
December 31, 2018
|
||||||||||||||||||||||||
U.S. government and agencies
|
$
|
77,891
|
$
|
27
|
$
|
2,048
|
$
|
49
|
$
|
79,939
|
$
|
76
|
||||||||||||
State and municipal
|
5,662
|
92
|
9,781
|
283
|
15,443
|
375
|
||||||||||||||||||
Mortgage-backed securities
|
108,962
|
293
|
54,035
|
1,747
|
162,997
|
2,040
|
||||||||||||||||||
Asset-backed and other amortizing securities
|
-
|
-
|
37,351
|
877
|
37,351
|
877
|
||||||||||||||||||
$
|
192,515
|
$
|
412
|
$
|
103,215
|
$
|
2,956
|
$
|
295,730
|
$
|
3,368
|
3.
|
LOANS
|
June 30,
2019 |
December 31,
2018 |
|||||||
Commercial real estate
|
$
|
533,680
|
$
|
538,037
|
||||
Commercial - specialized
|
294,188
|
305,022
|
||||||
Commercial - general
|
391,434
|
427,728
|
||||||
Consumer:
|
||||||||
1-4 family residential
|
348,569
|
346,153
|
||||||
Auto loans
|
206,777
|
191,647
|
||||||
Other consumer
|
71,559
|
70,209
|
||||||
Construction
|
89,446
|
78,401
|
||||||
1,935,653
|
1,957,197
|
|||||||
Allowance for loan losses
|
(24,171
|
)
|
(23,126
|
)
|
||||
Loans, net
|
$
|
1,911,482
|
$
|
1,934,071
|
Beginning
Balance
|
Provision for
loan losses
|
Charge-offs
|
Recoveries
|
Ending
Balance
|
||||||||||||||||
For the three months ended
June 30, 2019
|
||||||||||||||||||||
Commercial real estate
|
$
|
5,335
|
$
|
(28
|
)
|
$
|
-
|
$
|
108
|
$
|
5,415
|
|||||||||
Commercial - specialized
|
2,327
|
985
|
(5
|
)
|
39
|
3,346
|
||||||||||||||
Commercial - general
|
8,504
|
(324
|
)
|
(60
|
)
|
205
|
8,325
|
|||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
2,416
|
(127
|
)
|
-
|
21
|
2,310
|
||||||||||||||
Auto loans
|
3,067
|
202
|
(248
|
)
|
46
|
3,067
|
||||||||||||||
Other consumer
|
1,174
|
216
|
(233
|
)
|
42
|
1,199
|
||||||||||||||
Construction
|
558
|
(49
|
)
|
-
|
-
|
509
|
||||||||||||||
Total
|
$
|
23,381
|
$
|
875
|
$
|
(546
|
)
|
$
|
461
|
$
|
24,171
|
|||||||||
For the three months ended
June 30, 2018
|
||||||||||||||||||||
Commercial real estate
|
$
|
5,129
|
$
|
746
|
$
|
(1,539
|
)
|
$
|
-
|
$
|
4,336
|
|||||||||
Commercial - specialized
|
2,650
|
265
|
-
|
9
|
2,924
|
|||||||||||||||
Commercial - general
|
8,925
|
(313
|
)
|
(28
|
)
|
149
|
8,733
|
|||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
1,427
|
160
|
(140
|
)
|
4
|
1,451
|
||||||||||||||
Auto loans
|
2,386
|
372
|
(184
|
)
|
29
|
2,603
|
||||||||||||||
Other consumer
|
1,053
|
184
|
(140
|
)
|
61
|
1,158
|
||||||||||||||
Construction
|
399
|
126
|
(15
|
)
|
-
|
510
|
||||||||||||||
Total
|
$
|
21,969
|
$
|
1,540
|
$
|
(2,046
|
)
|
$
|
252
|
$
|
21,715
|
Beginning
Balance
|
Provision for
loan losses
|
Charge-offs
|
Recoveries
|
Ending
Balance
|
||||||||||||||||
For the six months ended
June 30, 2019
|
||||||||||||||||||||
Commercial real estate
|
$
|
5,579
|
$
|
(379
|
)
|
$
|
-
|
$
|
215
|
$
|
5,415
|
|||||||||
Commercial - specialized
|
2,516
|
804
|
(37
|
)
|
63
|
3,346
|
||||||||||||||
Commercial - general
|
8,173
|
(60
|
)
|
(65
|
)
|
277
|
8,325
|
|||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
2,249
|
28
|
(19
|
)
|
52
|
2,310
|
||||||||||||||
Auto loans
|
2,994
|
500
|
(506
|
)
|
79
|
3,067
|
||||||||||||||
Other consumer
|
1,192
|
429
|
(513
|
)
|
91
|
1,199
|
||||||||||||||
Construction
|
423
|
161
|
(75
|
)
|
-
|
509
|
||||||||||||||
Total
|
$
|
23,126
|
$
|
1,483
|
$
|
(1,215
|
)
|
$
|
777
|
$
|
24,171
|
For the six months ended
June 30, 2018
|
||||||||||||||||||||
Commercial real estate
|
$
|
3,769
|
$
|
2,106
|
$
|
(1,539
|
)
|
$
|
-
|
$
|
4,336
|
|||||||||
Commercial - specialized
|
2,367
|
530
|
(38
|
)
|
65
|
2,924
|
||||||||||||||
Commercial - general
|
10,151
|
(1,626
|
)
|
(127
|
)
|
335
|
8,733
|
|||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
1,787
|
(199
|
)
|
(141
|
)
|
4
|
1,451
|
|||||||||||||
Auto loans
|
2,068
|
892
|
(418
|
)
|
61
|
2,603
|
||||||||||||||
Other consumer
|
971
|
438
|
(349
|
)
|
98
|
1,158
|
||||||||||||||
Construction
|
348
|
177
|
(15
|
)
|
-
|
510
|
||||||||||||||
Total
|
$
|
21,461
|
$
|
2,318
|
$
|
(2,627
|
)
|
$
|
563
|
$
|
21,715
|
Recorded Investment
|
Allowance for Loan Losses
|
|||||||||||||||
Individually
Evaluated
|
Collectively
Evaluated
|
Individually
Evaluated
|
Collectively
Evaluated
|
|||||||||||||
June 30, 2019
|
||||||||||||||||
Commercial real estate
|
$
|
403
|
$
|
533,277
|
$
|
-
|
$
|
5,415
|
||||||||
Commercial - specialized
|
1,922
|
292,266
|
68
|
3,278
|
||||||||||||
Commercial - general
|
2,667
|
388,767
|
333
|
7,992
|
||||||||||||
Consumer:
|
||||||||||||||||
1-4 family residential
|
2,432
|
346,137
|
35
|
2,275
|
||||||||||||
Auto loans
|
-
|
206,777
|
-
|
3,067
|
||||||||||||
Other consumer
|
-
|
71,559
|
-
|
1,199
|
||||||||||||
Construction
|
-
|
89,446
|
-
|
509
|
||||||||||||
Total
|
$
|
7,424
|
$
|
1,928,229
|
$
|
436
|
$
|
23,735
|
||||||||
December 31, 2018
|
||||||||||||||||
Commercial real estate
|
$
|
1,819
|
$
|
536,218
|
$
|
-
|
$
|
5,579
|
||||||||
Commercial - specialized
|
2,116
|
302,906
|
-
|
2,516
|
||||||||||||
Commercial - general
|
2,950
|
424,778
|
233
|
7,940
|
||||||||||||
Consumer:
|
||||||||||||||||
1-4 family residential
|
2,475
|
343,678
|
8
|
2,241
|
||||||||||||
Auto loans
|
-
|
191,647
|
-
|
2,994
|
||||||||||||
Other consumer
|
-
|
70,209
|
-
|
1,192
|
||||||||||||
Construction
|
-
|
78,401
|
-
|
423
|
||||||||||||
Total
|
$
|
9,360
|
$
|
1,947,837
|
$
|
241
|
$
|
22,885
|
Unpaid
Contractual
Principal
Balance
|
Recorded
Investment
With No
Allowance
|
Recorded
Investment
With
Allowance
|
Total
Recorded
Investment
|
Related
Allowance
|
Average
Recorded
Investment
|
|||||||||||||||||||
June 30, 2019
|
||||||||||||||||||||||||
Commercial real estate
|
$
|
858
|
$
|
403
|
$
|
-
|
$
|
403
|
$
|
-
|
$
|
1,111
|
||||||||||||
Commercial - specialized
|
3,137
|
1,875
|
47
|
1,922
|
68
|
2,019
|
||||||||||||||||||
Commercial - general
|
3,260
|
-
|
2,667
|
2,667
|
333
|
2,809
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
1-4 family
|
2,851
|
1,976
|
456
|
2,432
|
35
|
2,454
|
||||||||||||||||||
Auto loans
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Other consumer
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Construction
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
10,106
|
$
|
4,254
|
$
|
3,170
|
$
|
7,424
|
$
|
436
|
$
|
8,393
|
||||||||||||
December 31, 2018
|
||||||||||||||||||||||||
Commercial real estate
|
$
|
2,274
|
$
|
1,819
|
$
|
-
|
$
|
1,819
|
$
|
-
|
$
|
4,590
|
||||||||||||
Commercial - specialized
|
2,116
|
2,116
|
-
|
2,116
|
-
|
3,742
|
||||||||||||||||||
Commercial - general
|
4,758
|
240
|
2,710
|
2,950
|
233
|
3,963
|
||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||
1-4 family
|
2,894
|
2,111
|
364
|
2,475
|
8
|
2,881
|
||||||||||||||||||
Auto loans
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Other consumer
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Construction
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
12,042
|
$
|
6,286
|
$
|
3,074
|
$
|
9,360
|
$
|
241
|
$
|
15,176
|
30-89 Days Past
Due
|
90 Days or
More Past Due
|
Nonaccrual
|
||||||||||
June 30, 2019
|
||||||||||||
Commercial real estate
|
$
|
545
|
$
|
309
|
$
|
294
|
||||||
Commercial - specialized
|
1,717
|
224
|
2,445
|
|||||||||
Commercial - general
|
777
|
650
|
2,096
|
|||||||||
Consumer:
|
||||||||||||
1-4 Family residential
|
1,488
|
111
|
1,749
|
|||||||||
Auto loans
|
616
|
24
|
-
|
|||||||||
Other consumer
|
539
|
44
|
-
|
|||||||||
Construction
|
1,186
|
-
|
-
|
|||||||||
Total
|
$
|
6,868
|
$
|
1,362
|
$
|
6,584
|
||||||
December 31, 2018
|
||||||||||||
Commercial real estate
|
$
|
1,748
|
$
|
-
|
$
|
217
|
||||||
Commercial - specialized
|
992
|
-
|
2,550
|
|||||||||
Commercial - general
|
2,625
|
-
|
2,134
|
|||||||||
Consumer:
|
||||||||||||
1-4 Family residential
|
1,611
|
440
|
1,489
|
|||||||||
Auto loans
|
825
|
50
|
||||||||||
Other consumer
|
883
|
74
|
||||||||||
Construction
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
8,684
|
$
|
564
|
$
|
6,390
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
||||||||||||||||
June 30, 2019
|
||||||||||||||||||||
Commercial real estate
|
$
|
509,597
|
$
|
21,096
|
$
|
2,987
|
$
|
-
|
$
|
533,680
|
||||||||||
Commercial - specialized
|
282,369
|
-
|
11,819
|
-
|
294,188
|
|||||||||||||||
Commercial - general
|
380,703
|
1,304
|
9,427
|
-
|
391,434
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
343,337
|
-
|
5,232
|
-
|
348,569
|
|||||||||||||||
Auto loans
|
206,396
|
-
|
381
|
-
|
206,777
|
|||||||||||||||
Other consumer
|
71,334
|
-
|
225
|
-
|
71,559
|
|||||||||||||||
Construction
|
89,446
|
-
|
-
|
-
|
89,446
|
|||||||||||||||
Total
|
$
|
1,883,182
|
$
|
22,400
|
$
|
30,071
|
$
|
-
|
$
|
1,935,653
|
||||||||||
December 31, 2018
|
||||||||||||||||||||
Commercial real estate
|
$
|
514,249
|
$
|
17,300
|
$
|
6,488
|
$
|
-
|
$
|
538,037
|
||||||||||
Commercial - specialized
|
301,289
|
-
|
3,733
|
-
|
305,022
|
|||||||||||||||
Commercial - general
|
415,675
|
1,449
|
10,604
|
-
|
427,728
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
340,836
|
-
|
5,317
|
-
|
346,153
|
|||||||||||||||
Auto loans
|
191,435
|
-
|
212
|
-
|
191,647
|
|||||||||||||||
Other consumer
|
70,075
|
-
|
134
|
-
|
70,209
|
|||||||||||||||
Construction
|
78,401
|
-
|
-
|
-
|
78,401
|
|||||||||||||||
Total
|
$
|
1,911,960
|
$
|
18,749
|
$
|
26,488
|
$
|
-
|
$
|
1,957,197
|
4. |
BORROWING ARRANGEMENTS
|
5. |
EMPLOYEE BENEFITS
|
6. |
STOCK-BASED COMPENSATION
|
Number
of Shares
|
Weighted-
Average
Exercise Price
|
Weighted-
Average
Remaining
Contractual
Life in Years
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Six Months Ended June 30, 2019
|
||||||||||||||||
Outstanding at beginning of year:
|
-
|
$
|
-
|
-
|
$
|
-
|
||||||||||
Granted
|
1,411,342
|
12.50
|
5.59
|
6,223 | ||||||||||||
Exercised
|
-
|
-
|
-
|
-
|
||||||||||||
Forfeited
|
-
|
-
|
-
|
-
|
||||||||||||
Balance, June 30, 2019
|
1,411,342
|
$
|
12.50
|
5.59
|
$
|
6,223 | ||||||||||
Exercisable at end of period
|
-
|
$
|
-
|
-
|
$
|
-
|
||||||||||
Vested at end of period
|
1,206,900
|
$
|
11.53 | 5.96 |
$
|
6,223 |
Six Months
Ended June
30, 2019
|
||||
Expected volatility
|
24.88% to 28.64
|
%
|
||
Expected dividend yield
|
0.70
|
%
|
||
Expected term (years)
|
0.5 - 7.0 years
|
|||
Risk-free interest rate
|
2.39% to 2.63
|
%
|
||
Weighted average grant date fair value
|
$
|
8.61
|
Number
of Shares
|
Weighted-
Average
Grant Date
Fair Value
|
|||||||
Six Months Ended June 30, 2019
|
||||||||
Outstanding at beginning of year:
|
-
|
$
|
-
|
|||||
Granted
|
52,764
|
21.32
|
||||||
Exercised
|
-
|
-
|
||||||
Forfeited
|
-
|
-
|
||||||
Balance, June 30, 2019
|
52,764
|
$
|
21.32
|
|||||
Exercisable at end of period
|
-
|
$
|
-
|
|||||
Vested at end of period
|
-
|
$
|
-
|
7. |
COMMITMENTS AND CONTINGENCIES
|
June 30,
2019
|
December 31,
2018
|
|||||||
Commitments to grant loans and unfunded commitments under lines of credit
|
$
|
386,601
|
$
|
346,245
|
||||
Standby letters-of-credit
|
8,195
|
5,062
|
8.
|
CAPITAL AND REGULATORY MATTERS
|
Actual
|
Minimum Required
Under BASEL III
Fully Phased-In
|
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
|
||||||||||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||||||
June 30, 2019:
|
||||||||||||||||||||||||
Total Capital to Risk Weighted Assets:
|
||||||||||||||||||||||||
Consolidated
|
$
|
383,399
|
17.7
|
%
|
$
|
226,833
|
10.5
|
%
|
N/A
|
N/A
|
||||||||||||||
City Bank
|
305,013
|
14.1
|
%
|
226,793
|
10.5
|
%
|
$
|
215,994
|
10.0
|
%
|
||||||||||||||
Tier I Capital to Risk Weighted Assets:
|
||||||||||||||||||||||||
Consolidated
|
332,575
|
15.4
|
%
|
183,627
|
8.5
|
%
|
N/A
|
N/A
|
||||||||||||||||
City Bank
|
280,662
|
13.0
|
%
|
183,594
|
8.5
|
%
|
172,795
|
8.0
|
%
|
|||||||||||||||
Common Tier 1 (CET1):
|
||||||||||||||||||||||||
Consolidated
|
287,525
|
13.3
|
%
|
151,222
|
7.0
|
%
|
N/A
|
N/A
|
||||||||||||||||
City Bank
|
280,662
|
13.0
|
%
|
151,195
|
7.0
|
%
|
140,396
|
6.5
|
%
|
|||||||||||||||
Tier I Capital to Average Assets:
|
||||||||||||||||||||||||
Consolidated
|
332,575
|
12.1
|
%
|
108,707
|
4.0
|
%
|
N/A
|
N/A
|
||||||||||||||||
City Bank
|
280,662
|
10.2
|
%
|
109,919
|
4.0
|
%
|
137,398
|
5.0
|
%
|
|||||||||||||||
December 31, 2018:
|
||||||||||||||||||||||||
Total Capital to Risk Weighted Assets:
|
||||||||||||||||||||||||
Consolidated
|
$
|
309,798
|
14.3
|
%
|
$
|
214,301
|
9.9
|
%
|
N/A
|
N/A
|
||||||||||||||
City Bank
|
294,572
|
13.6
|
%
|
214,246
|
9.9
|
%
|
$
|
216,958
|
10.0
|
%
|
||||||||||||||
Tier I Capital to Risk Weighted Assets:
|
||||||||||||||||||||||||
Consolidated
|
260,020
|
12.0
|
%
|
170,898
|
7.9
|
%
|
N/A
|
N/A
|
||||||||||||||||
City Bank
|
271,266
|
12.5
|
%
|
170,855
|
7.9
|
%
|
173,567
|
8.0
|
%
|
|||||||||||||||
Common Tier 1 (CET1):
|
||||||||||||||||||||||||
Consolidated
|
215,020
|
9.9
|
%
|
138,346
|
6.4
|
%
|
N/A
|
N/A
|
||||||||||||||||
City Bank
|
271,266
|
12.5
|
%
|
138,311
|
6.4
|
%
|
141,023
|
6.5
|
%
|
|||||||||||||||
Tier I Capital to Average Assets:
|
||||||||||||||||||||||||
Consolidated
|
260,020
|
9.6
|
%
|
108,033
|
4.0
|
%
|
N/A
|
N/A
|
||||||||||||||||
City Bank
|
271,266
|
10.1
|
%
|
107,940
|
4.0
|
%
|
134,925
|
5.0
|
%
|
9. |
DERIVATIVES
|
June 30, 2019
|
December 31, 2018
|
|||||||||||||||
Notional
Amount
|
Fair
Value
|
Notional
Amount
|
Fair
Value
|
|||||||||||||
Included in other liabilities:
|
||||||||||||||||
Interest rate swaps related to fixed rate loans
|
$
|
10,768
|
$
|
331
|
$
|
-
|
$
|
-
|
||||||||
Included in other assets:
|
||||||||||||||||
Interest rate swaps related to fixed rate loans
|
$
|
-
|
$
|
-
|
$
|
10,917
|
$
|
169
|
June 30, 2019
|
December 31, 2018
|
|||||||||||||||
Notional
Amount
|
Fair
Value
|
Notional
Amount
|
Fair
Value
|
|||||||||||||
Included in other assets:
|
||||||||||||||||
Forward contracts related to mortgage loans held for sale
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Interest rate lock commitments
|
73,812
|
1,537
|
46,891
|
1,063
|
||||||||||||
Total included in other assets
|
$
|
73,812
|
$
|
1,537
|
$
|
46,891
|
$
|
1,063
|
||||||||
Included in other liabilities:
|
||||||||||||||||
Forward contracts related to mortgage loans held for sale
|
$
|
73,151
|
$
|
496
|
$
|
54,998
|
$
|
672
|
||||||||
Interest rate lock commitments
|
-
|
-
|
-
|
-
|
||||||||||||
Total included in other liabilities
|
$
|
73,151
|
$
|
496
|
$
|
54,998
|
$
|
672
|
10. |
EARNINGS PER SHARE
|
Three Months Ended June,
|
Six Months Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Net income
|
$
|
6,080
|
$
|
13,013
|
$
|
10,853
|
$
|
18,514
|
||||||||
Weighted average common shares outstanding - basic
|
16,459,366
|
14,771,520
|
15,620,106
|
14,771,520
|
||||||||||||
Effect of dilutive securities:
|
||||||||||||||||
Stock-based compensation awards
|
104,177
|
-
|
104,215
|
-
|
||||||||||||
Weighted average common shares outstanding - diluted
|
16,563,543
|
14,771,520
|
15,724,321
|
14,771,520
|
||||||||||||
Basic earnings per share
|
$
|
0.37
|
$
|
0.88
|
$
|
0.69
|
$
|
1.25
|
||||||||
Diluted earnings per share
|
$
|
0.37
|
$
|
0.88
|
$
|
0.69
|
$
|
1.25
|
11. |
SEGMENT INFORMATION
|
Three months ended June 30, 2019
|
Banking
|
Insurance
|
Consolidated
|
|||||||||
Net interest income
|
$
|
24,837
|
$
|
-
|
$
|
24,837
|
||||||
Provision for loan loss
|
(875
|
)
|
-
|
(875
|
)
|
|||||||
Noninterest income
|
12,563
|
1,140
|
13,703
|
|||||||||
Noninterest expense
|
(29,098
|
)
|
(832
|
)
|
(29,930
|
)
|
||||||
Income before income taxes
|
7,427
|
308
|
7,735
|
|||||||||
Income tax (expense) benefit
|
(1,590
|
)
|
(65
|
)
|
(1,655
|
)
|
||||||
Net income
|
$
|
5,837
|
$
|
243
|
$
|
6,080
|
Three months ended June 30, 2018
|
Banking
|
Insurance
|
Consolidated
|
|||||||||
Net interest income
|
$
|
23,439
|
$
|
-
|
$
|
23,439
|
||||||
Provision for loan loss
|
(1,540
|
)
|
-
|
(1,540
|
)
|
|||||||
Noninterest income
|
11,905
|
1,063
|
12,968
|
|||||||||
Noninterest expense
|
(27,615
|
)
|
(807
|
)
|
(28,422
|
)
|
||||||
Income before income taxes
|
6,189
|
256
|
6,445
|
|||||||||
Income tax (expense) benefit
|
6,402
|
166
|
6,568
|
|||||||||
Net income
|
$
|
12,591
|
$
|
422
|
$
|
13,013
|
Six months ended June 30, 2019
|
Banking
|
Insurance
|
Consolidated
|
|||||||||
Net interest income
|
$
|
49,383
|
$
|
-
|
$
|
49,383
|
||||||
Provision for loan loss
|
(1,483
|
)
|
-
|
(1,483
|
)
|
|||||||
Noninterest income
|
22,933
|
2,845
|
25,778
|
|||||||||
Noninterest expense
|
(58,170
|
)
|
(1,796
|
)
|
(59,966
|
)
|
||||||
Income before income taxes
|
12,663
|
1,049
|
13,712
|
|||||||||
Income tax (expense) benefit
|
(2,730
|
)
|
(129
|
)
|
(2,859
|
)
|
||||||
Net income
|
$
|
9,933
|
$
|
920
|
$
|
10,853
|
Six months ended June 30, 2018
|
Banking
|
Insurance
|
Consolidated
|
|||||||||
Net interest income
|
$
|
46,157
|
$
|
-
|
$
|
46,157
|
||||||
Provision for loan loss
|
(2,318
|
)
|
-
|
(2,318
|
)
|
|||||||
Noninterest income
|
22,040
|
2,396
|
24,436
|
|||||||||
Noninterest expense
|
(54,569
|
)
|
(1,730
|
)
|
(56,299
|
)
|
||||||
Income before income taxes
|
11,310
|
666
|
11,976
|
|||||||||
Income tax (expense) benefit
|
6,372
|
166
|
6,538
|
|||||||||
Net income
|
$
|
17,682
|
$
|
832
|
$
|
18,514
|
12. |
FAIR VALUE DISCLOSURES
|
•
|
Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the
measurement date.
|
•
|
Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might
include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset
or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
|
•
|
Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that
market participants would use in pricing the assets or liabilities.
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
June 30, 2019
|
||||||||||||||||
Assets (liabilities) measured at fair value on a recurring basis:
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
U.S. government and agencies
|
$
|
-
|
$
|
10,404
|
$
|
-
|
$
|
10,404
|
||||||||
State and municipal
|
-
|
31,990
|
-
|
31,990
|
||||||||||||
Mortgage-backed securities
|
-
|
182,581
|
-
|
182,581
|
||||||||||||
Asset-backed and other amortizing securities
|
-
|
38,589
|
-
|
38,589
|
||||||||||||
Loans held for sale (mandatory)
|
-
|
30,861
|
-
|
30,861
|
||||||||||||
Mortgage servicing rights
|
-
|
1,589
|
-
|
1,589
|
||||||||||||
Asset derivatives
|
-
|
1,537
|
-
|
1,537
|
||||||||||||
Liability derivatives
|
-
|
(827
|
)
|
-
|
(827
|
)
|
||||||||||
Assets measured at fair value on a non-recurring basis:
|
||||||||||||||||
Impaired loans
|
-
|
-
|
6,988
|
6,988
|
||||||||||||
Other real estate owned
|
-
|
-
|
2,305
|
2,305
|
||||||||||||
Loans held for sale (best efforts)
|
-
|
8,071
|
-
|
8,071
|
December31, 2018
|
||||||||||||||||
Assets (liabilities) measured at fair value on a recurring basis:
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
U.S. government and agencies
|
$
|
74,419
|
$
|
10,288
|
$
|
-
|
$
|
84,707
|
||||||||
State and municipal
|
-
|
32,310
|
-
|
32,310
|
||||||||||||
Mortgage-backed securities
|
-
|
182,256
|
-
|
182,256
|
||||||||||||
Asset-backed and other amortizing securities
|
-
|
38,923
|
-
|
38,923
|
||||||||||||
Loans held for sale (mandatory)
|
-
|
31,874
|
-
|
31,874
|
||||||||||||
Mortgage servicing rights
|
-
|
1,270
|
-
|
1,270
|
||||||||||||
Asset derivatives
|
-
|
1,232
|
-
|
1,232
|
||||||||||||
Liability derivatives
|
-
|
(672
|
)
|
-
|
(672
|
)
|
||||||||||
Assets measured at fair value on a non-recurring basis:
|
||||||||||||||||
Impaired loans
|
-
|
-
|
9,119
|
9,119
|
||||||||||||
Other real estate owned
|
-
|
-
|
2,285
|
2,285
|
||||||||||||
Loans held for sale (best efforts)
|
-
|
6,508
|
-
|
6,508
|
Fair
Value
|
Valuation Techniques
|
Unobservable Inputs
|
Range of
Discounts
|
||||||||
June 30, 2019
|
|||||||||||
Impaired loans
|
$
|
6,988
|
Third party appraisals or inspections
|
Collateral discounts and selling costs
|
0%-100
|
%
|
|||||
Other real estate owned
|
2,305
|
Third party appraisals or inspections
|
Collateral discounts and selling costs
|
15%-66
|
%
|
||||||
December 31, 2018
|
|||||||||||
Impaired loans
|
$
|
9,119
|
Third party appraisals or inspections
|
Collateral discounts and selling costs
|
0%-100
|
%
|
|||||
Other real estate owned
|
2,285
|
Third party appraisals or inspections
|
Collateral discounts and selling costs
|
15%-66
|
%
|
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
|
||||||||||||||||
June 30, 2019
|
||||||||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
408,116
|
$
|
408,116
|
$
|
-
|
$
|
-
|
$
|
408,116
|
||||||||||
Loans, net
|
1,911,482
|
-
|
-
|
1,903,358
|
1,903,358
|
|||||||||||||||
Accrued interest receivable
|
9,976
|
-
|
9,976
|
-
|
9,976
|
|||||||||||||||
Bank-owned life insurance
|
57,794
|
-
|
57,794
|
-
|
57,794
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
$
|
2,281,858
|
$
|
2,050,839
|
$
|
233,483
|
$
|
-
|
$
|
2,284,322
|
||||||||||
Accrued interest payable
|
2,306
|
-
|
2,306
|
-
|
2,306
|
|||||||||||||||
Notes payable & other borrowings
|
95,000
|
-
|
95,000
|
-
|
95,000
|
|||||||||||||||
Junior subordinated deferrable interest debentures
|
46,393
|
-
|
46,393
|
-
|
46,393
|
|||||||||||||||
Subordinated debt securities
|
26,472
|
-
|
26,472
|
-
|
26,472
|
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
|
||||||||||||||||
December 31, 2018
|
||||||||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
245,989
|
$
|
245,989
|
$
|
-
|
$
|
-
|
$
|
245,989
|
||||||||||
Loans, net
|
1,934,071
|
-
|
-
|
1,923,167
|
1,923,167
|
|||||||||||||||
Accrued interest receivable
|
12,957
|
-
|
12,957
|
-
|
12,957
|
|||||||||||||||
Bank-owned life insurance
|
57,172
|
-
|
57,172
|
-
|
57,172
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
$
|
2,277,454
|
$
|
1,965,925
|
$
|
312,524
|
$
|
-
|
$
|
2,278,449
|
||||||||||
Accrued interest payable
|
2,042
|
-
|
2,042
|
-
|
2,042
|
|||||||||||||||
Notes payable & other borrowings
|
95,000
|
-
|
95,000
|
-
|
95,000
|
|||||||||||||||
Junior subordinated deferrable interest debentures
|
46,393
|
-
|
46,393
|
-
|
46,393
|
|||||||||||||||
Subordinated debt securities
|
34,002
|
-
|
34,002
|
-
|
34,002
|
13. |
SUBSEQUENT EVENTS
|
• |
our ability to effectively execute our expansion strategy and manage our growth, including identifying and consummating suitable acquisitions;
|
• |
business and economic conditions, particularly those affecting our market areas, as well as the concentration of our business in such market areas;
|
• |
high concentrations of loans secured by real estate located in our market areas;
|
• |
risks associated with our commercial loan portfolio, including the risk for deterioration in value of the general business assets that secure such loans;
|
• |
potential changes in the prices, values and sales volumes of commercial and residential real estate securing our real estate loans;
|
• |
risks associated with our agricultural loan portfolio, including the heightened sensitivity to weather conditions, commodity prices, and other factors generally outside the borrowers and our control;
|
• |
risks associated with the sale of crop insurance products, including termination of or substantial changes to the federal crop insurance program;
|
• |
risks related to the significant amount of credit that we have extended to a limited number of borrowers and in a limited geographic area;
|
• |
public funds deposits comprising a relatively high percentage of our deposits;
|
• |
our ability to maintain our reputation;
|
• |
our ability to successfully manage our credit risk and the sufficiency of our allowance;
|
• |
our ability to attract, hire and retain qualified management personnel;
|
• |
our dependence on our management team, including our ability to retain executive officers and key employees and their customer and community relationships;
|
• |
interest rate fluctuations, which could have an adverse effect on our profitability;
|
• |
competition from banks, credit unions and other financial services providers;
|
• |
our ability to keep pace with technological change or difficulties when implementing new technologies;
|
• |
system failures, service denials, cyber-attacks and security breaches;
|
• |
our ability to maintain effective internal control over financial reporting;
|
• |
employee error, fraudulent activity by employees or customers and inaccurate or incomplete information about our customers and counterparties;
|
• |
increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all;
|
• |
our ability to maintain adequate liquidity and to raise necessary capital to fund our acquisition strategy and operations or to meet increased minimum regulatory capital levels;
|
• |
costs and effects of litigation, investigations or similar matters to which we may be subject, including any effect on our reputation;
|
• |
severe weather, acts of god, acts of war or terrorism;
|
• |
tariffs and trade barriers;
|
• |
compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities and tax matters; and
|
• |
changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, accounting, tax, trade, monetary and fiscal matters, including the policies of the Board of
Governors of the Federal Reserve System and as a result of initiatives of the Trump administration.
|
Three Months Ended June
30, 2018
|
Six Months Ended June
30, 2018
|
|||||||
(Dollars in thousands)
|
||||||||
S Corporation
|
||||||||
Net income(1)
|
$
|
13,013
|
$ |
18,514
|
||||
Pro forma C Corporation
|
||||||||
Combined effective income tax rate(2)
|
15.0
|
% |
15.2
|
%
|
||||
Income tax provision (3)
|
$
|
939
|
$ |
1,792
|
||||
Net income
|
$
|
5,333
|
$ |
9,981
|
(1) |
A portion of our net income in this period was derived from non-taxable investment income, offset by nondeductible expenses. This has the effect of lowering the statutory tax rate.
|
(2) |
Based on a statutory federal income tax rate of 21%. As our state income taxes are insignificant, they are not reflected in these calculations.
|
(3) |
Excludes the recording of the $6.5 million deferred tax asset upon the revocation of our S Corporation election.
|
Three Months Ended June 30,
|
||||||||||||||||||||||||
2019
|
2018
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Total loans(1)
|
$
|
1,946,602
|
$
|
28,635
|
5.90
|
%
|
$
|
1,899,744
|
$
|
25,674
|
5.42
|
%
|
||||||||||||
Investment securities – taxable
|
248,915
|
1,754
|
2.83
|
116,455
|
746
|
2.57
|
||||||||||||||||||
Investment securities – non-taxable
|
31,387
|
275
|
3.51
|
145,146
|
1,292
|
3.57
|
||||||||||||||||||
Other interest-earning assets (2)
|
348,106
|
1,946
|
2.24
|
231,191
|
1,014
|
1.76
|
||||||||||||||||||
Total interest-earning assets
|
2,575,010
|
32,610
|
5.08
|
2,392,536
|
28,726
|
4.82
|
||||||||||||||||||
Noninterest-earning assets
|
174,944
|
166,913
|
||||||||||||||||||||||
Total assets
|
$
|
2,749,954
|
$
|
2,559,449
|
||||||||||||||||||||
Liabilities and Shareholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
NOW, savings and money market deposits
|
$
|
1,449,169
|
$
|
4,696
|
1.30
|
%
|
$
|
1,340,158
|
$
|
2,722
|
0.81
|
%
|
||||||||||||
Time deposits
|
317,323
|
1,443
|
1.82
|
310,404
|
1,074
|
1.39
|
||||||||||||||||||
Short-term borrowings
|
11,085
|
57
|
2.06
|
16,174
|
54
|
1.34
|
||||||||||||||||||
Notes payable & other longer-term borrowings
|
95,000
|
561
|
2.37
|
95,000
|
419
|
1.77
|
||||||||||||||||||
Subordinated debt securities
|
26,472
|
403
|
6.11
|
20,887
|
245
|
4.70
|
||||||||||||||||||
Junior subordinated deferrable interest debentures
|
46,393
|
512
|
4.43
|
46,393
|
455
|
3.93
|
||||||||||||||||||
Total interest-bearing liabilities
|
$
|
1,945,442
|
$
|
7,672
|
1.58
|
%
|
$
|
1,829,016
|
$
|
4,969
|
1.09
|
%
|
||||||||||||
Noninterest-bearing liabilities:
|
||||||||||||||||||||||||
Noninterest-bearing deposits
|
$
|
516,783
|
$
|
486,943
|
||||||||||||||||||||
Other liabilities
|
32,890
|
29,215
|
||||||||||||||||||||||
Total noninterest-bearing liabilities
|
549,673
|
516,158
|
||||||||||||||||||||||
Shareholders’ equity
|
254,839
|
214,275
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
2,749,954
|
$
|
2,559,449
|
||||||||||||||||||||
Net interest income
|
$
|
24,938
|
$
|
23,757
|
||||||||||||||||||||
Net interest spread
|
3.50
|
%
|
3.73
|
%
|
||||||||||||||||||||
Net interest margin(3)
|
3.88
|
%
|
3.98
|
%
|
(1) |
Average loan balances include nonaccrual loans and loans held for sale.
|
(2) |
Includes income and average balances for interest-earning deposits at other banks, nonmarketable securities, federal funds sold and other miscellaneous interest-earning assets.
|
(3) |
Net interest margin is calculated as the annualized net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
2019
|
2018
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Total loans(1)
|
$
|
1,951,193
|
$
|
56,776
|
5.87
|
%
|
$
|
1,863,068
|
$
|
49,832
|
5.39
|
%
|
||||||||||||
Investment securities – taxable
|
279,293
|
3,863
|
2.79
|
117,361
|
1,505
|
2.59
|
||||||||||||||||||
Investment securities – non-taxable
|
31,780
|
561
|
3.56
|
149,803
|
2,678
|
3.60
|
||||||||||||||||||
Other interest-earning assets (2)
|
295,858
|
3,517
|
2.40
|
275,588
|
2,334
|
1.71
|
||||||||||||||||||
Total interest-earning assets
|
2,558,124
|
64,717
|
5.10
|
2,405,820
|
56,349
|
4.72
|
||||||||||||||||||
Noninterest-earning assets
|
175,689
|
169,901
|
||||||||||||||||||||||
Total assets
|
$
|
2,733,813
|
$
|
2,575,721
|
||||||||||||||||||||
Liabilities and Shareholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
NOW, savings and money market deposits
|
$
|
1,459,684
|
$
|
9,230
|
1.28
|
%
|
$
|
1,350,496
|
$
|
5,131
|
0.77
|
%
|
||||||||||||
Time deposits
|
313,505
|
2,798
|
1.80
|
317,259
|
2,158
|
1.37
|
||||||||||||||||||
Short-term borrowings
|
16,904
|
168
|
2.00
|
20,804
|
126
|
1.22
|
||||||||||||||||||
Notes payable & other longer-term borrowings
|
95,000
|
1,100
|
2.33
|
95,000
|
777
|
1.65
|
||||||||||||||||||
Subordinated debt securities
|
27,100
|
809
|
6.02
|
20,887
|
490
|
4.73
|
||||||||||||||||||
Junior subordinated deferrable interest debentures
|
46,393
|
1,025
|
4.46
|
46,393
|
852
|
3.70
|
||||||||||||||||||
Total interest-bearing liabilities
|
$
|
1,958,586
|
$
|
15,130
|
1.56
|
%
|
$
|
1,850,838
|
$
|
9,534
|
1.04
|
%
|
||||||||||||
Noninterest-bearing liabilities:
|
||||||||||||||||||||||||
Noninterest-bearing deposits
|
$
|
508,951
|
$
|
480,468
|
||||||||||||||||||||
Other liabilities
|
31,021
|
29,312
|
||||||||||||||||||||||
Total noninterest-bearing liabilities
|
539,974
|
509,781
|
||||||||||||||||||||||
Shareholders’ equity
|
235,255
|
215,103
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
2,733,813
|
$
|
2,575,721
|
||||||||||||||||||||
Net interest income
|
$
|
49,587
|
$
|
46,815
|
||||||||||||||||||||
Net interest spread
|
3.54
|
%
|
3.68
|
%
|
||||||||||||||||||||
Net interest margin(3)
|
3.91
|
%
|
3.92
|
%
|
(1) |
Average loan balances include nonaccrual loans and loans held for sale.
|
(2) |
Includes income and average balances for interest-earning deposits at other banks, nonmarketable securities, federal funds sold and other miscellaneous interest-earning assets.
|
(3) |
Net interest margin is calculated as the annualized net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.
|
Three Months Ended June 30,
|
||||||||||||
2019 over 2018
|
||||||||||||
Change due to:
|
||||||||||||
Volume
|
Rate
|
Total Variance
|
||||||||||
(Dollars in thousands)
|
||||||||||||
Interest-earning assets:
|
||||||||||||
Loans
|
$
|
633
|
$
|
2,328
|
$
|
2,961
|
||||||
Investment securities – taxable
|
849
|
159
|
1,008
|
|||||||||
Investment securities – non-taxable
|
(1,013
|
)
|
(4
|
)
|
(1,017
|
)
|
||||||
Other interest-earning assets
|
513
|
419
|
932
|
|||||||||
Total increase (decrease) in interest income
|
982
|
2,902
|
3,884
|
|||||||||
Interest-bearing liabilities:
|
||||||||||||
NOW, Savings, MMDAs
|
221
|
1,753
|
1,974
|
|||||||||
Time deposits
|
24
|
345
|
369
|
|||||||||
Short-term borrowings
|
(17
|
)
|
20
|
3
|
||||||||
Notes payable & other borrowings
|
—
|
142
|
142
|
|||||||||
Subordinated debt securities
|
66
|
92
|
158
|
|||||||||
Junior subordinated deferrable interest debentures
|
—
|
57
|
57
|
|||||||||
Total increase (decrease) interest expense:
|
294
|
2,409
|
2,703
|
|||||||||
Increase (decrease) in net interest income
|
$
|
688
|
$
|
493
|
$
|
1,181
|
Six Months Ended June 30,
|
||||||||||||
2019 over 2018
|
||||||||||||
Change due to:
|
||||||||||||
Volume
|
Rate
|
Total Variance
|
||||||||||
(Dollars in thousands)
|
||||||||||||
Interest-earning assets:
|
||||||||||||
Loans
|
$
|
2,357
|
$
|
4,587
|
$
|
6,944
|
||||||
Investment securities – taxable
|
2,077
|
281
|
2,358
|
|||||||||
Investment securities – non-taxable
|
(2,110
|
)
|
(7
|
)
|
(2,117
|
)
|
||||||
Other interest-earning assets
|
172
|
1,011
|
1,183
|
|||||||||
Total increase (decrease) in interest income
|
2,496
|
5,872
|
8,368
|
|||||||||
Interest-bearing liabilities:
|
||||||||||||
NOW, Savings, MMDAs
|
415
|
3,684
|
4,099
|
|||||||||
Time deposits
|
(26
|
)
|
666
|
640
|
||||||||
Short-term borrowings
|
(24
|
)
|
66
|
42
|
||||||||
Notes payable & other borrowings
|
—
|
323
|
323
|
|||||||||
Subordinated debt securities
|
146
|
173
|
319
|
|||||||||
Junior subordinated deferrable interest debentures
|
—
|
173
|
173
|
|||||||||
Total increase (decrease) interest expense:
|
511
|
5,085
|
5,596
|
|||||||||
Increase (decrease) in net interest income
|
$
|
1,985
|
$
|
787
|
$
|
2,772
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||||||||||
2019
|
2018
|
Increase
(decrease)
|
2019
|
2018
|
Increase
(decrease)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Noninterest income:
|
||||||||||||||||||||||||
Service charges on deposit accounts
|
$
|
1,979
|
$
|
1,861
|
$
|
118
|
$ |
3,884
|
$ |
3,778
|
$ |
106
|
||||||||||||
Income from insurance activities
|
1,210
|
1,135
|
75
|
2,960
|
2,530
|
430
|
||||||||||||||||||
Bank card services and interchange fees
|
2,071
|
2,051
|
20
|
4,081
|
4,009
|
72
|
||||||||||||||||||
Mortgage banking activities
|
6,652
|
6,397
|
255
|
11,518
|
11,064
|
454
|
||||||||||||||||||
Investment commissions
|
493
|
425
|
68
|
826
|
875
|
(49
|
)
|
|||||||||||||||||
Fiduciary income
|
367
|
363
|
4
|
743
|
735
|
8
|
||||||||||||||||||
Other income and fees(1)
|
931
|
736
|
195
|
1,766
|
1,445
|
321
|
||||||||||||||||||
Total noninterest income
|
$
|
13,703
|
$
|
12,968
|
$
|
735
|
$ |
25,778
|
$ |
24,436
|
$ |
1,342
|
(1)
|
Other income and fees includes the increase in the cash surrender value of life insurance, safe deposit box rental, check printing, collections, wire transfer and other miscellaneous
services.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||||||||||
2019
|
2018
|
Increase
(decrease)
|
2019
|
2018
|
Increase
(decrease)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Noninterest expense:
|
||||||||||||||||||||||||
Salaries and employee benefits
|
$
|
18,784
|
$
|
17,818
|
$
|
966
|
$ |
37,909
|
$ |
35,419
|
$ |
2,490
|
||||||||||||
Occupancy expense, net
|
3,416
|
3,391
|
25
|
6,823
|
6,715
|
108
|
||||||||||||||||||
Professional services
|
1,611
|
1,400
|
211
|
3,317
|
2,829
|
488
|
||||||||||||||||||
Marketing and development
|
796
|
760
|
36
|
1,513
|
1,578
|
(65
|
)
|
|||||||||||||||||
IT and data services
|
689
|
553
|
136
|
1,382
|
1,103
|
279
|
||||||||||||||||||
Bankcard expenses
|
806
|
659
|
147
|
1,530
|
1,323
|
207
|
||||||||||||||||||
Appraisal expenses
|
407
|
354
|
53
|
730
|
639
|
91
|
||||||||||||||||||
Other expenses(1)
|
3,421
|
3,487
|
(66
|
)
|
6,762
|
693
|
69 | |||||||||||||||||
Total noninterest expense
|
$
|
29,930
|
$
|
28,422
|
$
|
1,508
|
$ |
59,966
|
$ |
56,299
|
$ |
3,667
|
(1)
|
Other expenses include items such as telephone expenses, postage, courier fees, directors’ fees, and insurance.
|
June 30, 2019
|
December 31, 2018
|
|||||||||||||||
Amount
|
% of
Total
|
Amount
|
% of
Total
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Commercial real estate
|
$
|
533,680
|
27.6
|
%
|
$
|
538,037
|
27.5
|
%
|
||||||||
Commercial – specialized
|
294,188
|
15.2
|
305,022
|
15.6
|
||||||||||||
Commercial – general
|
391,434
|
20.2
|
427,728
|
21.8
|
||||||||||||
Consumer:
|
||||||||||||||||
1-4 family residential
|
348,569
|
18.0
|
346,153
|
17.7
|
||||||||||||
Auto loans
|
206,777
|
10.7
|
191,647
|
9.8
|
||||||||||||
Other consumer
|
71,559
|
3.7
|
70,209
|
3.6
|
||||||||||||
Construction
|
89,446
|
4.6
|
78,401
|
4.0
|
||||||||||||
Gross loans
|
1,935,653
|
100.0
|
%
|
1,957,197
|
100.0
|
%
|
||||||||||
Allowance for loan losses
|
(24,171
|
)
|
(23,126
|
)
|
||||||||||||
Net loans
|
$
|
1,911,482
|
$
|
1,934,071
|
Beginning
Balance
|
Charge-offs
|
Recoveries
|
Provision
|
Ending Balance
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Three Months Ended June 30, 2019
|
||||||||||||||||||||
Commercial real estate
|
$
|
5,335
|
$
|
—
|
$
|
108
|
$
|
(28
|
)
|
$
|
5,415
|
|||||||||
Commercial – specialized
|
2,327
|
(5
|
)
|
39
|
985
|
3,346
|
||||||||||||||
Commercial – general
|
8,504
|
(60
|
)
|
205
|
(324
|
)
|
8,325
|
|||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
2,416
|
-
|
21
|
(127
|
)
|
2,310
|
||||||||||||||
Auto loans
|
3,067
|
(248
|
) |
46
|
202
|
3,067
|
||||||||||||||
Other consumer
|
1,174
|
(233
|
) |
42
|
216
|
1,199
|
||||||||||||||
Construction
|
558
|
-
|
—
|
(49
|
)
|
509
|
||||||||||||||
Total
|
$
|
23,381
|
$
|
(546
|
)
|
$
|
461
|
$
|
875
|
$
|
24,171
|
Beginning
Balance
|
Charge-offs
|
Recoveries
|
Provision
|
Ending Balance
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Three Months Ended June 30, 2018
|
||||||||||||||||||||
Commercial real estate
|
$
|
5,129
|
$
|
(1,539
|
)
|
$
|
—
|
$
|
746
|
$
|
4,336
|
|||||||||
Commercial – specialized
|
2,650
|
-
|
9
|
265
|
2,924
|
|||||||||||||||
Commercial – general
|
8,925
|
(28
|
)
|
149
|
(313
|
)
|
8,733
|
|||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
1,427
|
(140
|
)
|
4
|
160
|
1,451
|
||||||||||||||
Auto loans
|
2,386
|
(184
|
)
|
29
|
372
|
2,603
|
||||||||||||||
Other consumer
|
1,053
|
(140
|
)
|
61
|
184
|
1,158
|
||||||||||||||
Construction
|
399
|
(15
|
)
|
—
|
126
|
510
|
||||||||||||||
Total
|
$
|
21,969
|
$
|
(2,046
|
)
|
$
|
252
|
$
|
1,540
|
$
|
21,715
|
Beginning
Balance
|
Charge-offs
|
Recoveries
|
Provision
|
Ending Balance
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Six Months Ended June 30, 2019
|
||||||||||||||||||||
Commercial real estate
|
$
|
5,579
|
$
|
—
|
$
|
215
|
$
|
(379
|
)
|
$
|
5,415
|
|||||||||
Commercial – specialized
|
2,516
|
(37
|
)
|
63
|
804
|
3,346
|
||||||||||||||
Commercial – general
|
8,173
|
(65
|
)
|
277
|
(60
|
)
|
8,325
|
|||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
2,249
|
(19
|
)
|
52
|
28
|
2,310
|
||||||||||||||
Auto loans
|
2,994
|
(506
|
)
|
79
|
500
|
3,067
|
||||||||||||||
Other consumer
|
1,192
|
(513
|
)
|
91
|
429
|
1,199
|
||||||||||||||
Construction
|
423
|
(75
|
)
|
—
|
161
|
509
|
||||||||||||||
Total
|
$
|
23,126
|
$
|
(1,215
|
)
|
$
|
777
|
$
|
1,483
|
$
|
24,171
|
Beginning
Balance
|
Charge-offs
|
Recoveries
|
Provision
|
Ending Balance
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Six Months Ended June 30, 2018
|
||||||||||||||||||||
Commercial real estate
|
$
|
3,769
|
$
|
(1,539
|
)
|
$
|
-
|
$
|
2,106
|
$
|
4,336
|
|||||||||
Commercial – specialized
|
2,367
|
(38
|
)
|
65
|
530
|
2,924
|
||||||||||||||
Commercial – general
|
10,151
|
(127
|
)
|
335
|
(1,626
|
)
|
8,733
|
|||||||||||||
Consumer:
|
||||||||||||||||||||
1-4 family residential
|
1,787
|
(141
|
)
|
4
|
(199
|
)
|
1,451
|
|||||||||||||
Auto loans
|
2,068
|
(418
|
)
|
61
|
892
|
2,603
|
||||||||||||||
Other consumer
|
971
|
(349
|
)
|
98
|
438
|
1,158
|
||||||||||||||
Construction
|
348
|
(15
|
)
|
—
|
177
|
510
|
||||||||||||||
Total
|
$
|
21,461
|
$
|
(2,627
|
)
|
$
|
563
|
$
|
2,318
|
$
|
21,715
|
June 30, 2019
|
December 31, 2018
|
|||||||||||||||
Amount
|
% of
Total
|
Amount
|
% of
Total
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Commercial real estate
|
$
|
5,415
|
22.4
|
%
|
$
|
5,579
|
24.1
|
%
|
||||||||
Commercial – specialized
|
3,346
|
13.8
|
2,516
|
10.9
|
||||||||||||
Commercial – general
|
8,325
|
34.4
|
8,173
|
35.4
|
||||||||||||
Consumer:
|
||||||||||||||||
1-4 family residential
|
2,310
|
9.6
|
2,249
|
9.7
|
||||||||||||
Auto loans
|
3,067
|
12.7
|
2,994
|
12.9
|
||||||||||||
Other consumer
|
1,199
|
5.0
|
1,192
|
5.2
|
||||||||||||
Construction
|
509
|
2.1
|
423
|
1.8
|
||||||||||||
Total allowance for loan losses
|
$
|
24,171
|
100.0
|
%
|
$
|
23,126
|
100.0
|
%
|
June 30,
2019
|
December 31,
2018
|
|||||||
(Dollars in thousands)
|
||||||||
Nonaccrual loans:
|
||||||||
Commercial real estate
|
$
|
294
|
$
|
217
|
||||
Commercial – specialized
|
2,445
|
2,550
|
||||||
Commercial – general
|
2,096
|
2,134
|
||||||
Consumer:
|
||||||||
1-4 family residential
|
1,749
|
1,489
|
||||||
Auto loans
|
—
|
—
|
||||||
Other consumer
|
—
|
—
|
||||||
Construction
|
— |
—
|
||||||
Total nonaccrual loans
|
6,584
|
6,390
|
||||||
Past due loans 90 days or more and still accruing
|
1,362
|
564
|
||||||
Total nonperforming loans
|
7,946
|
6,954
|
||||||
Other real estate owned
|
2,305
|
2,285
|
||||||
Total nonperforming assets
|
$
|
10,251
|
$
|
9,239
|
||||
Restructured loans - nonaccrual(1)
|
$
|
466
|
$
|
494
|
||||
Restructured loans - accruing
|
$
|
1,869
|
$
|
3,351
|
(1)
|
Restructured loans, nonaccrual, are included in nonaccrual loans which are a component of nonperforming loans.
|
June 30, 2019
|
December 31, 2018
|
|||||||||||||||||||||||
Amortized
Cost
|
Fair Value
|
Unrealized
Gain/(Loss)
|
Amortized
Cost
|
Fair Value
|
Unrealized
Gain/(Loss)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Available-for-sale
|
||||||||||||||||||||||||
U.S. government and agencies
|
$
|
10,343
|
$
|
10,404
|
$
|
61
|
$
|
84,765
|
$
|
84,707
|
$
|
(58
|
)
|
|||||||||||
State and municipal
|
31,249
|
31,990
|
741
|
32,205
|
32,310
|
105
|
||||||||||||||||||
Mortgage-backed securities
|
179,509
|
182,581
|
3,072
|
184,267
|
182,256
|
(2,011
|
)
|
|||||||||||||||||
Asset-backed and other amortizing securities
|
37,986
|
38,589
|
603
|
39,799
|
38,923
|
(876
|
)
|
|||||||||||||||||
Total available-for-sale
|
$
|
259,087
|
$
|
263,564
|
$
|
4,477
|
$
|
341,036
|
$
|
338,196
|
$
|
(2,840
|
)
|
As of June 30, 2019 | ||||||||||||||||||||||||||||||||
|
Due in One Year or Less
|
Due after One Year
Through Five Years
|
Due after Five Years
Through Ten Years
|
Due after Ten Years
|
||||||||||||||||||||||||||||
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
|||||||||||||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||
Available-for-sale
|
||||||||||||||||||||||||||||||||
U.S. government and agencies
|
$
|
3,496
|
2.19
|
%
|
$
|
6,847
|
2.55
|
%
|
$
|
—
|
—
|
%
|
$
|
—
|
—
|
%
|
||||||||||||||||
State and municipal
|
—
|
—
|
470
|
4.00
|
10,105
|
2.19
|
20,674
|
3.01
|
||||||||||||||||||||||||
Mortgage-backed securities
|
—
|
—
|
1,247
|
1.60
|
26,971
|
2.16
|
151,291
|
3.01
|
||||||||||||||||||||||||
Asset-backed and other amortizing securities
|
—
|
—
|
—
|
—
|
—
|
—
|
37,986
|
2.82
|
||||||||||||||||||||||||
Total available-for-sale
|
$
|
3,496
|
2.19
|
%
|
$
|
8,564
|
2.49
|
%
|
$
|
37,076
|
2.17
|
%
|
$
|
209,951
|
2.98
|
%
|
As of December 31, 2018 | ||||||||||||||||||||||||||||||||
|
Due in One Year or Less
|
Due after One Year
Through Five Years
|
Due after Five Years
Through Ten Years
|
Due after Ten Years
|
||||||||||||||||||||||||||||
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
Amortized
Cost
|
Weighted
Average
Yield
|
|||||||||||||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||
Available-for-sale
|
||||||||||||||||||||||||||||||||
U.S. government and agencies
|
$
|
77,918
|
2.40
|
%
|
$
|
6,847
|
2.55
|
%
|
$
|
—
|
—
|
%
|
$
|
—
|
—
|
%
|
||||||||||||||||
State and municipal
|
—
|
—
|
470
|
4.00
|
8,995
|
2.17
|
22,740
|
3.01
|
||||||||||||||||||||||||
Mortgage-backed securities
|
—
|
—
|
97
|
2.28
|
32,037
|
2.20
|
152,133
|
2.96
|
||||||||||||||||||||||||
Asset-backed and other amortizing securities
|
—
|
—
|
—
|
—
|
—
|
—
|
39,799
|
2.82
|
||||||||||||||||||||||||
Total available-for-sale
|
$
|
77,918
|
2.40
|
%
|
$
|
7,414
|
2.64
|
%
|
$
|
41,032
|
2.19
|
%
|
$
|
214,672
|
2.94
|
%
|
|
June 30, 2019
|
December 31, 2018
|
||||||||||||||
|
Amount
|
% of Total
|
Amount
|
% of Total
|
||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||
Noninterest-bearing deposits
|
$
|
513,383
|
22.5
|
%
|
$
|
510,067
|
22.3
|
%
|
||||||||
NOW and other transaction accounts
|
259,111
|
11.4
|
277,041
|
12.2
|
||||||||||||
Money market and other savings
|
1,193,619
|
52.3
|
1,178,809
|
51.8
|
||||||||||||
Time deposits
|
315,745
|
13.8
|
311,537
|
13.7
|
||||||||||||
Total deposits
|
$
|
2,281,858
|
100.0
|
%
|
$
|
2,277,454
|
100.0
|
%
|
(Dollars in thousands)
|
June 30,
2019
|
|||
Time deposits $100,000 or greater with remaining maturity of:
|
||||
Three months or less
|
$
|
58,874
|
||
After three months through six months
|
22,019
|
|||
After six months through twelve months
|
45,276
|
|||
After twelve months
|
111,611
|
|||
Total
|
$
|
237,780
|
|
As of/For the Three
Months Ended
June 30,
|
As of/For the Six
Months Ended
June 30,
|
||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||
Amount outstanding at end of the period
|
$
|
95,000
|
$
|
95,000
|
$ |
95,000
|
$ |
95,000
|
||||||||
Weighted average interest rate at end of the period
|
2.18
|
%
|
1.90
|
%
|
2.18
|
1.90
|
||||||||||
Maximum month-end balance during the period
|
$
|
95,000
|
$
|
95,000
|
$ |
95,000
|
$ |
95,000
|
||||||||
Average balance outstanding during the period
|
$
|
95,000
|
$
|
95,000
|
$ |
95,000
|
$ |
95,000
|
||||||||
Weighted average interest rate during the period
|
2.37
|
%
|
1.77
|
%
|
2.33
|
1.65
|
Name of Trust
|
Issue
Date
|
Amount
of Trust
Preferred
Securities
|
Amount of
Debentures
|
Stated
Maturity Date
of Trust
Preferred
Securities and
Debentures(1)
|
Interest Rate of
Trust Preferred
Securities and
Debentures(2)(3)
|
||||||||||
(Dollars in thousands)
|
|||||||||||||||
South Plains Financial Capital Trust III
|
2004
|
$
|
10,000
|
$
|
10,310
|
2034
|
3-mo. LIBOR
+ 265 bps; 5.24%
|
||||||||
South Plains Financial Capital Trust IV
|
2005
|
20,000
|
20,619
|
2035
|
3-mo. LIBOR
+ 139 bps; 3.80%
|
||||||||||
South Plains Financial Capital Trust V
|
2007
|
15,000
|
15,464
|
2037
|
3-mo. LIBOR
+ 150 bps; 3.91%
|
||||||||||
Total
|
$
|
45,000
|
$
|
46,393
|
(1)
|
May be redeemed at the Company’s option.
|
(2)
|
Interest payable quarterly with principal due at maturity.
|
(3)
|
Rate as of last reset date, prior to June 30, 2019.
|
June 30, 2019
|
December 31, 2018
|
|||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
South Plains Financial, Inc.:
|
||||||||||||||||
Total capital (to risk-weighted assets)
|
$
|
383,399
|
17.75
|
%
|
$
|
309,798
|
14.28
|
%
|
||||||||
Tier 1 capital (to risk-weighted assets)
|
332,575
|
15.39
|
260,020
|
11.98
|
||||||||||||
CET 1 capital (to risk-weighted assets)
|
287,575
|
13.31
|
215,020
|
9.91
|
||||||||||||
Tier 1 capital (to average assets)
|
332,575
|
12.10
|
260,020
|
9.63
|
||||||||||||
City Bank:
|
||||||||||||||||
Total capital (to risk-weighted assets)
|
$
|
305,013
|
14.12
|
%
|
$
|
294,572
|
13.58
|
%
|
||||||||
Tier 1 capital (to risk-weighted assets)
|
280,662
|
12.99
|
271,266
|
12.50
|
||||||||||||
CET 1 capital (to risk-weighted assets)
|
280,662
|
12.99
|
271,266
|
12.50
|
||||||||||||
Tier 1 capital (to average assets)
|
280,662
|
10.21
|
271,266
|
10.05
|
June 30,
2019
|
December 31,
2018
|
|||||||
|
(Dollars in thousands)
|
|||||||
Commitments to grant loans and unfunded commitments under lines of credit
|
$
|
386,601
|
$
|
346,245
|
||||
Standby letters of credit
|
8,195
|
5,062
|
||||||
Total
|
$
|
394,796
|
$
|
351,307
|
June 30,
2019
|
December 31, 2018
|
||||||||
Change in Interest Rates (Basis Points)
|
Percent
Change in
Net
Interest
Income
|
Percent
Change in
Net
Interest
Income
|
|||||||
+300
|
2.31
|
(0.95
|
)
|
||||||
+200
|
1.92
|
(0.39
|
)
|
||||||
+100
|
1.30
|
0.06
|
|||||||
-100
|
(2.24
|
)
|
(1.90
|
)
|
Exhibit
Number
|
Description
|
Amended and Restated Certificate of Formation of South Plains Financial, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form S-1 filed with the Commission on April 12, 2019) (File No.
333-230851)
|
|
Amended and Restated Bylaws of South Plains Financial, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Form S-1 filed with the Commission on April 12, 2019) (File No. 333-230851)
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101*
|
The following material from South Plains Financial, Inc.’s Form 10-Q for the quarter ended June 30, 2019, formatted in XBRL (eXtensible Business Reporting Language), filed herewith: (i) Consolidated
Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Changes in Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Consolidated Financial
Statements.
|
*
|
Filed with this Form 10-Q
|
**
|
Furnished with this Form 10-Q
|
|
South Plains Financial, Inc.
|
||
|
|
|
|
Date:
|
August 14, 2019 |
By:
|
/s/ Curtis C. Griffith
|
|
|
Curtis C. Griffith
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
Date:
|
August 14, 2019 |
By:
|
/s/ Steven B. Crockett
|
|
|
Steven B. Crockett
|
|
|
|
Chief Financial Officer and Treasurer
|
1. |
I have reviewed this Quarterly Report on Form10-Q of South Plains Financial, Inc. for the quarter ended June 30, 2019;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 14, 2019
|
By:
|
/s/ Curtis C. Griffith
|
Curtis C. Griffith
|
||
Chairman and Chief Executive Officer
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of South Plains Financial, Inc. for the quarter ended June 30, 2019;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 14, 2019
|
By:
|
/s/ Steven B. Crockett
|
Steven B. Crockett
|
||
Chief Financial Officer
|
(1) |
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 14, 2019
|
By:
|
/s/ Curtis C. Griffith
|
Curtis C. Griffith
|
||
Chairman and Chief Executive Officer
|
(1) |
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 14, 2019
|
By:
|
/s/ Steven B. Crockett
|
Steven B. Crockett
|
||
Chief Financial Officer
|