What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-15 compared with 2020-03-16 · 93 added, 109 removed, 139 unchanged (59% of the section changed)

12 unchanged sentences

The following table provides information as of December 31, 2020, with respect to options and RSUs outstanding and shares available for future awards under the Company’s active equity incentive plans.

Plan Category

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights

Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a))

Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders:

4 unchanged sentences

Equity compensation plans not approved by security holders — — —

1,169,413 $ 12.21 144,049

Unregistered Sales and Issuer Repurchases of Common Stock

There were no unregistered sales of the Company’s stock during the fourth quarter of 2019 .

There were no unregistered sales of the Company’s stock during the year ended December 31, 2020.

On April 25, 2019, the Company announced a stock repurchase program.

The program enables the Company to repurchase up to $5.0 million of its outstanding common stock, and expires on December 31, 2020.

During the three months ended December 31, 2019, the Company repurchased shares under the approved stock repurchase program, as reflected in the following table.

Total Number of Shares Purchased

Average price paid per share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

The program enables the Company to repurchase up to $5.0 million of its outstanding common stock, and expired on December 31, 2020.

During the year ended December 31, 2019 and the year ended December 31, 2020, the Company repurchased shares under the approved stock repurchase program, as reflected in the following table.

Periods Total Number of Shares Purchased Average price paid per share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

Through December 31, 2019 28,480 $ 13.00 28,480 $ 4,629,646

For the three months ended March 31, 2020 112,134 $ 11.41 112,134 $ 3,349,806

For the three months ended June 30, 2020 1,500 $ 9.41 1,500 $ 3,335,691

For the three months ended September 30, 2020 141,200 $ 10.40 141,200 $ 1,866,947

October 1, 2020 to October 31, 2020 11,946 $ 9.91 11,946 $ 1,748,899

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December 1, 2020 to December 31, 2020 — $ — — $ —

For the three months ended December 31, 2020 49,280 $ 10.67 49,280 $ 1,342,748

For the twelve months ended December 31, 2020 304,114 $ 10.81 304,114 $ 1,342,748

Total 332,594 332,594

SELECTED FINANCIAL DATA

3 unchanged sentences

We have derived the selected financial data as of and for the years ended December 31, 2018 2017 and 2016 from our audited financial statements not included in this filing.

T he information presented in the table below has been adjusted to give effect to a four-for-one stock split of our common stock completed effective August 15, 2018.

The information presented in the table below has been adjusted to give effect to a four-for-one stock split of our common stock completed effective August 15, 2018.

The effect of the stock split on outstanding shares and per share figures has been retroactively applied to all periods presented below.

6 unchanged sentences

(Dollars are in thousands, except per share information)

2020 2019 2018 2017 2016

Statement of Income Data:

Interest income

$ 97,251 $ 82,180 $ 69,127 $ 56,666 $ 49,243

Interest expense

13,182 15,842 11,239 7,755 6,484

Net interest income

84,069 67,512 57,888 48,911 42,759

Provision for loan losses

11,242 2,791 2,140 2,655 4,291

Noninterest income

61,061 25,692 16,124 15,149 20,473

Noninterest expense

98,751 66,525 54,123 47,306 43,380

Income before income taxes

35,137 23,888 17,749 14,099 15,561

Income tax expense

Net income, as adjusted (1)

9,314 5,819 4,982 6,990 6,120

25,823 16,895 12,767 7,109 9,441

Balance Sheet Data:

Cash and due from banks

$ 18,456 $ 10,530 $ 10,431 $ 8,189 $ 4,827

Investment securities available for sale

99,787 60,828 46,932 54,029 47,985

Mortgage loans held for sale

Loans, net of unearned income

Core deposit intangible

107,154 71,030 18,526 26,344 49,167

Loans, net of deferred fees and allowance

1,292,068 1,156,934 1,002,260 887,420 763,430

SBA-PPP loans receivable, net

201,018 — — — —

1,876,593 1,428,495 1,105,058 1,026,009 905,600

1,652,128 1,225,421 955,240 904,899 790,924

FHLB advances and repurchase agreements

Senior promissory note, due July 31, 2019

22,000 32,222 5,332 13,260 15,659

Subordinated debentures

14,016 15,423 15,393 15,361 15,327

Total liabilities

1,717,282 1,295,164 990,494 945,890 834,853

Total stockholders’ equity

159,311 133,331 114,564 80,119 70,748

Tangible common equity (1)

159,311 133,331 114,564 80,119 70,748

Years Ended December 31,

(Dollars are in thousands, except per share information)

2020 2019 2018 2017 2016

Selected Performance Ratios:

Return on average assets (ROAA)

Return on average assets, as adjusted (1)

1.56 % 1.38 % 1.22 % 0.74 % 1.13 %

Return on average equity (ROAE)

Return on average equity, as adjusted (1)

Return on average tangible common equity (ROATCE) (2)(3)(4)

Return on average tangible common equity, as adjusted (1)(2)

18.00 13.66 13.94 9.29 14.39

Net interest margin 5.14 5.60 5.59 5.12 5.18

Net interest margin, as adjusted (1)(2)(3)

Net interest margin, excluding credit cards (3)

Noninterest income / average assets

3.68 2.01 1.54 1.57 2.46

Noninterest expense / average assets

5.95 5.45 5.18 4.90 5.21

Net operating expense / average assets

2.27 3.44 3.63 3.33 2.75

Efficiency ratio (1)

Efficiency ratio, as adjusted (1)(4)

68.04 72.29 73.13 73.85 68.60

Loan yield (5)

7.27 7.37 7.16 6.44 6.45

Loan yield, excluding credit card portfolio (2)

5.53 5.91 5.76 5.57 5.76

Per Share Data:

Common shares issued and outstanding

Basic weighted average shares outstanding

Diluted weighted average shares outstanding

Basic earnings per share

$ 1.87 $ 1.23 $ 1.05 $ 0.63 $ 0.86

Diluted earnings per share (4)

Diluted earnings per share, as adjusted (1)(2)(7)

1.87 1.21 1.02 0.62 0.84

Book value per share

11.58 9.60 8.38 6.94 6.35

Tangible book value per share (1)

Non-Performing Assets:

Non-performing loans

11.58 9.60 8.38 6.94 6.35

Common shares issued and outstanding

13,753,529 13,894,842 13,672,479 11,537,196 11,144,696

Basic weighted average shares outstanding

13,793,256 13,733,131 12,116,459 11,261,132 10,963,132

Diluted weighted average shares outstanding

13,800,176 13,968,585 12,462,138 11,428,000 11,289,044

Non-Performing Assets (“NPA”):

Non-performing loans (“NPL”) $ 9,237 $ 4,720 $ 4,679 $ 5,407 $ 4,518

Troubled debt restructurings 440 459 284 3,811 941

Foreclosed real estate

3,326 2,384 142 93 90

Non-performing assets 12,563 7,104 4,821 5,500 4,608

Asset Quality Ratios:

Non-performing assets / assets

Non-performing loans / loans (8)

Non-performing assets / loans (8) + foreclosed real estate

0.67 % 0.50 % 0.44 % 0.54 % 0.51 %

NPL / loans (5)

0.61 0.40 0.47 0.61 0.59

NPA / loans (5) + foreclosed real estate

0.82 0.60 0.48 0.62 0.60

Net charge-offs (recoveries) to average loans (5)

0.09 0.08 0.09 0.15 0.33

Allowance for loan losses to total loans (5)

Allowance for loan losses to non-performing loans

1.78 1.14 1.13 1.13 1.13

Allowance for loan losses to NPL

253.71 281.80 241.72 185.57 190.32

Bank Capital Ratios:

6 unchanged sentences

(Dollars are in thousands, except per share information)

2020 2019 2018 2017 2016

Composition of Loans Held for Investment:

Portfolio Loans Receivable

Residential real estate

$ 437,860 $ 427,926 $ 407,844 $ 342,684 $ 286,332

Commercial real estate

392,550 348,091 278,691 259,853 234,869

Construction real estate

224,904 198,702 157,586 144,932 134,540

157,127 151,109 122,264 108,982 87,563

102,186 45,526 34,673 31,507 20,446

Other consumer

1,649 1,285 1,202 1,053 1,157

SBA - PPP Loans Receivable

204,920 — — — —

Composition of Deposits:

1 unchanged sentence

Interest bearing demand 257,125 174,166 186,422 69,455 50,628

Savings 4,800 3,675 3,994 3,365 3,326

Money Markets 447,077 429,078 313,131 282,840 252,486

2 unchanged sentences

Origination of loans held for sale

$ 1,308,912 $ 593,189 $ 337,122 $ 418,912 $ 853,674

Proceeds from loans held for sale, net of mortgage banking revenue

1,272,788 540,686 344,940 441,960 844,464

Purchase volume as a % of originations

Gross proceeds from the sale of loans

31.90 % 51.89 % 79.43 % 52.50 % 18.79 %

Mortgage banking revenue

$ 40,649 $ 15,955 $ 9,477 $ 10,377 $ 15,373

Gain on sale as a % of loan sold

3.02 % 2.95 % 2.75 % 2.01 % 1.82 %

OpenSky Credit Card Portfolio Metrics:

Total active customer accounts 568,373 223,379 169,981 149,226 96,404

Total loans $ 102,186 $ 45,526 $ 34,673 $ 31,507 $ 20,446

Total deposits at the Bank $ 192,520 $ 78,223 $ 59,954 $ 53,625 $ 39,062

_______________

Presentation of this financial measure as of or for the year ended December 31, 2017 excludes the effects of certain non-recurring expenses incurred with the conversion of our credit card processing systems and the revaluation of our deferred tax assets due to the effects of the Tax Act.

See “—GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation of this financial measure to its most comparable GAAP financial measure.

(1) This financial measure is not recognized under GAAP and is therefore considered to be a non-GAAP measure.

See “—GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation of this financial measure to its most comparable GAAP financial measure.

Net interest margin is a ratio calculated as net interest income divided by average interest earning assets for the same period.

Efficiency ratio is calculated by dividing noninterest expense by net interest income plus noninterest income.

(2) Includes non-accrual loans and loans 90 days and more past due.

7 unchanged sentences

Non-GAAP financial measures do not include operating and other statistical measures or ratios that are calculated using exclusively financial measures presented in accordance with GAAP.

This report includes certain non-GAAP financial measures for the year ended December 31, 2017 in order to present our results of operations for that period on a basis consistent with our historical operations.

During the fourth quarter of 2017, we undertook a conversion of our credit card portfolio system to further scale our OpenSky® credit card division.

The one-time expense related to this data processing system conversion was approximately $2.3 million in the fourth quarter of 2017.

As a result of the conversion, we refunded or did not charge our OpenSky® customers for 60 days of interest and applicable fees on their accounts, which resulted in a loss of revenue of approximately $2.4 million .

This forbearance of certain interest and fees on customers ’ accounts was conducted in accordance with the safe harbor provisions of the Truth in Lending Act as implemented by Regulation Z.

The provisions of Regulation Z address, among other areas, open-end credit, such as credit cards or home equity lines, and closed-end credit, such as car loans or mortgages, as well as certain administrative matters such as a change to the payment address.

In connection with the conversion of our credit card portfolio system, the address for the payment of principal, interest and fees related to our credit card portfolio was changed and, accordingly, we did not assess certain interest and fees on customers’ accounts for a period of 60 days during the fourth quarter of 2017 in accordance with the safe harbor provisions of Regulation Z.

We believe that these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP.

3 unchanged sentences

Our management uses the non-GAAP financial measures set forth below in its analysis of our performance

“ Net interest margin, as adjusted” is a non-GAAP measure herein defined as net interest income, plus non-recurring foregone interest and fees, divided by average interest earning assets.

“ Net income, as adjusted” is a non-GAAP measure herein defined as net income, less bargain purchase gain (net of taxes), plus non-recurring foregone interest and fees, plus non-recurring data processing expenses, plus non-recurring deferred tax revaluation and less the tax impact of conversion-related items.

“Efficiency ratio, as adjusted” is a non-GAAP measure herein defined as total non interest expense, less non-recurring data processing expenses, divided by the sum of net interest income, noninterest income and non-recurring foregone interest and fees .

“Diluted earnings per share, as adjusted” is a non-GAAP measure herein defined as net income, less bargain purchase gain (net of taxes), plus non-recurring foregone interest and fees, plus non-recurring data processing expenses, plus non-recurring deferred tax revaluation, less the tax impact of conversion-related items, divided by the diluted weighted average shares outstanding.

“ Return on average assets, as adjusted” is a non-GAAP measure herein defined as net income, less bargain purchase gain (net of taxes), plus non-recurring foregone interest and fees, plus non-recurring data processing expenses, plus non-recurring deferred tax revaluation, less the tax impact of conversion-related items, divided by average total assets.

“ Return on average equity, as adjusted” is a non-GAAP measure herein defined as net income, less bargain purchase gain (net of taxes), plus non-recurring foregone interest and fees, plus non-recurring data processing expenses, plus non-recurring deferred tax revaluation, less the tax impact of conversion-related items, divided by average total equity.

• “Tangible common equity” is a non-GAAP measure defined as total stockholders’ equity, less intangible assets.

“R eturn on average tangible common equity” is a non-GAAP measure herein defined as net income, less bargain purchase gain (net of taxes), plus the amortization of intangible assets (net of taxes), divided by average total equity net of average intangible assets.

“ Return on average tangible common equity, as adjusted” is a non-GAAP measure herein defined as net income, less bargain purchase gain (net of taxes), plus non-recurring foregone interest and fees, plus non-recurring data processing expenses, plus non-recurring deferred tax revaluation, less the tax impact of conversion-related items, plus the amortization of intangible assets (net of taxes), divided by average total equity, net of average intangible assets.

• “Tangible book value per share” is a non-GAAP measure defined as total stockholders’ equity, less intangible assets, divided by shares of common stock outstanding.

2 unchanged sentences

(Dollars are in thousands, except per share information)

Net Interest Margin, as adjusted:

Net interest income

Non-recurring foregone interest and fees

Adjusted net interest income

Divide by average interest earning assets

Net interest margin, as adjusted

Net Income, as adjusted:

Non-recurring foregone interest and fees

Non-recurring data processing expenses

Non-recurring deferred tax revaluation

Tax impact of conversion related items (1)

Net income, as adjusted

Years Ended December 31,

(Dollars are in thousands, except per share information)

Efficiency Ratio, as adjusted:

Noninterest expense

Non-recurring data processing expenses

Adjusted noninterest expense

Net interest income

Noninterest income

Non-recurring foregone interest and fees

Divide by adjusted revenue

Efficiency ratio, as adjusted

Diluted Earnings per Share, as adjusted:

Net income, as adjusted

Convertible debt interest expense

Net income for diluted earnings per share, as adjusted

Diluted weighted average shares outstanding (2)

Diluted earnings per share, as adjusted (2)

Return on Average Assets, as adjusted:

Net income, as adjusted

Divide by average total assets

Return on average assets, as adjusted

Return on Average Equity, as adjusted:

Net income, as adjusted

Divide by average total equity

Return on average equity, as adjusted

2020 2019 2018 2017 2016

Tangible Common Equity:

Total stockholders’ equity

$ 159,311 $ 133,331 $ 114,564 $ 80,119 $ 70,748

intangible assets

Tangible common equity $ 159,311 $ 133,331 $ 114,564 $ 80,119 $ 70,748

Return on Average Tangible Common Equity:

Bargain purchase gain, net of taxes

Intangible asset amortization, net of taxes

Net income excluding intangible amortization, as adjusted

Average total equity

average intangible assets

Divide by average tangible common equity

Return on average tangible common equity

Years Ended December 31,

(Dollars are in thousands, except per share information)

Return on Average Tangible Common Equity, as adjusted:

Net income, as adjusted

Intangible asset amortization, net of taxes

Net income excluding intangible amortization, as adjusted

Average total equity

average intangible assets

Divide by average tangible common equity

Return on average tangible common equity, as adjusted

Tangible Book Value per Share:

Total stockholders’ equity

$ 159,311 $ 133,331 $ 114,564 $ 80,119 $ 70,748

intangible assets — — — — —

Tangible common equity

$ 159,311 $ 133,331 $ 114,564 $ 80,119 $ 70,748

Divide by shares of common stock outstanding (1)

13,753,529 13,894,842 13,672,479 11,537,196 11,144,696

Tangible book value per share (1)

$ 11.58 $ 9.60 $ 8.38 $ 6.94 $ 6.35

Assumes an income tax rate of 39.75% for the year ended December 31, 2017, which is tax expense exclusive of the effect of the deferred tax revaluation.

_______________

(1) Gives effect to a four-for-one stock split of our common stock completed effective August 15, 2018.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity