3 unchanged sentences
(dollars in thousands, except per share data)
−Removed: March 31, 2020
+Added: June 30, 2020
December 31, 2019
2 unchanged sentences
Interest bearing deposits with banks and other short-term investments
−Removed: Investment securities available-for-sale, at fair value
+Added: Investment securities available for sale, at fair value (amortized cost of $ 750,653 and $ 839,192 and allowance for credit losses of $ 138 and $ 0 as of June 30, 2020 and December 31, 2019, respectively).
Federal Reserve and Federal Home Loan Bank stock
32 unchanged sentences
(dollars in thousands, except per share data)
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30,
+Added: Six Months Ended June 30,
Interest Income
36 unchanged sentences
(dollars in thousands)
−Removed: Three Months Ended March 31,
−Removed: Other comprehensive income (loss), net of tax:
−Removed: Unrealized gain (loss) on securities available for sale
+Added: Three Months Ended June 30,
+Added: Six Months Ended June 30,
+Added: Other comprehensive income, net of tax:
+Added: Unrealized gain on securities available for sale
Reclassification adjustment for net gains included in net income
−Removed: Total unrealized gain (loss) on investment securities
−Removed: Unrealized (loss) gain on derivatives
+Added: Total unrealized gain on investment securities
+Added: Unrealized gain (loss) on derivatives
Reclassification adjustment for amounts included in net income
−Removed: Total unrealized (loss) gain on derivatives
−Removed: Other comprehensive income (loss)
+Added: Total unrealized gain (loss) on derivatives
+Added: Other comprehensive income
Comprehensive Income
3 unchanged sentences
(dollars in thousands except share data)
+Added: Additional Paid
Comprehensive
Shareholders'
−Removed: Income (Loss)
+Added: Balance April 1, 2020
+Added: Other comprehensive income, net of tax
+Added: Stock-based compensation expense
+Added: Vesting of time based stock awards issued at date of grant, net of shares withheld for payroll taxes
+Added: Time based stock awards granted
+Added: Issuance of common stock related to employee stock purchase plan
+Added: Cash dividends declared ($ 0.22 per share)
+Added: Balance June 30, 2020
+Added: Balance April 1, 2019
+Added: Other comprehensive income, net of tax
+Added: Stock-based compensation expense
+Added: Issuance of common stock related to options exercised, net of shares withheld for payroll taxes
+Added: Vesting of time based stock awards issued at date of grant, net of shares withheld for payroll taxes
+Added: Issuance of common stock related to employee stock purchase plan
+Added: Cash dividends declared ($ 0.22 per share)
+Added: Balance June 30, 2019
+Added: Comprehensive
+Added: Shareholders’
Balance January 1, 2020
2 unchanged sentences
Stock-based compensation expense
−Removed: Issuance of common stock related to options exercised, net of shares withheld for payroll taxes
Vesting of time based stock awards issued at date of grant, net of shares withheld for payroll taxes
5 unchanged sentences
( 1,182,841 )
−Removed: Balance March 31, 2020
+Added: Balance June 30, 2020
Balance January 1, 2019
6 unchanged sentences
Issuance of common stock related to employee stock purchase plan
−Removed: Balance March 31, 2019
+Added: Cash dividends declared ($ 0.22 per share)
+Added: Balance June 30, 2019
See notes to consolidated financial statements.
2 unchanged sentences
(dollars in thousands)
−Removed: Three Months Ended March 31,
+Added: Six Months Ended June 30,
Cash Flows From Operating Activities:
24 unchanged sentences
Net increase in loans
−Removed: Increase in premises and equipment
+Added: Increase (decrease) in premises and equipment
Net cash used in investing activities
1 unchanged sentence
Increase (decrease) in deposits
−Removed: Increase (decrease) in customer repurchase agreements
+Added: Increase in customer repurchase agreements
Increase in short-term borrowings
4 unchanged sentences
Cash dividends paid
−Removed: Net cash provided (used in) by financing activities
+Added: Net cash provided by financing activities
Net Increase (Decrease) In Cash and Cash Equivalents
24 unchanged sentences
Certain reclassifications have been made to amounts previously reported to conform to the current period presentation.
+Added: The following table presents a breakdown of the provision for credit losses included in our Consolidated Statements of Income for the applicable periods (in thousands):
+Added: Three Months Ended
+Added: Six Months Ended
+Added: (dollars in thousands)
+Added: June 30, 2020
+Added: June 30, 2020
+Added: Provision for credit losses- loans
+Added: Provision for credit losses- AFS debt securities
+Added: Total provision for credit losses
Nature of Operations
21 unchanged sentences
The package also includes extensive emergency funding for hospitals and providers.
−Removed: In addition to the general impact of COVID-19, certain provisions of the CARES Act as well as other recent legislative and regulatory relief efforts are expected to have a material impact on the Company’s operations.
+Added: In addition to the general impact of COVID-19, certain provisions of the CARES Act as well as other recent legislative and regulatory relief efforts have had and are expected to continue to have a material impact on the Company’s operations.
The Company’s business is dependent upon the willingness and ability of its employees and customers to conduct banking and other financial transactions.
5 unchanged sentences
These reductions in fees are thought, at this time, to be temporary in conjunction with the length of the expected COVID-19 related economic crisis.
−Removed: At this time, the Company is unable to project the materiality of such an impact, but recognize the breadth of the economic impact is likely to impact its fee income in future periods.
+Added: At this time, the Company is unable to project the materiality of such an impact, but recognizes the breadth of the economic impact is likely to impact its fee income in future periods.
The Company’s interest income could be reduced due to COVID-19.
6 unchanged sentences
The Company maintains access to multiple sources of liquidity.
−Removed: Wholesale funding markets have remained open to us, but rates for short term funding have recently been volatile.
−Removed: If funding costs are elevated for an extended period of time, it could have an adverse effect on the Company’s net interest margin.
+Added: Wholesale funding markets have remained open to us, and rates for short term funding have recently been very low.
+Added: If funding costs were to become elevated for an extended period of time, it could have an adverse effect on the Company’s net interest margin.
If an extended recession caused large numbers of the Company’s customers to withdraw their funds, the Company might become more reliant on volatile or more expensive sources of funding.
3 unchanged sentences
While certain valuation assumptions and judgments will change to account for pandemic-related circumstances such as widening credit spreads, the Company does not anticipate significant changes in methodology used to determine the fair value of assets measured in accordance with GAAP.
−Removed: COVID-19 could cause a further and sustained decline in the Company’s stock price or the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to perform a goodwill impairment test and result in an impairment charge being recorded for that period.
−Removed: In the event that the Company concludes that all or a portion of its goodwill is impaired, a non-cash charge for the amount of such impairment would be recorded to earnings.
−Removed: Such a charge would have no impact on tangible capital or regulatory capital.
+Added: COVID-19 could cause a further and sustained decline in the Company’s stock price.
+Added: As of June 30, 2020, the Company performed a qualitative assessment to determine whether it was more likely than not that the fair value of the reporting unit was less than its carrying amount.
+Added: A triggering event was deemed to have occurred as a result of COVID-19 and, accordingly, a step one assessment was performed by comparing the fair value of the reporting unit with its carrying amount (including goodwill).
+Added: Determining the fair value of a reporting unit under the goodwill impairment test is subjective and often involves the use of significant estimates and assumptions.
+Added: Estimates of fair value are primarily determined using discounted cash flows, market comparisons and recent transactions.
+Added: These approaches use significant estimates and assumptions including projected future cash flows, discount rates reflecting the market rate of return, projected growth rates and determination and evaluation of appropriate market comparables.
+Added: Based on the results of the assessment of all reporting units, the Company concluded that no impairment existed as of June 30, 2020.
+Added: However, future events could cause the Company to conclude that goodwill or other intangibles have become impaired, which would result in recording an impairment loss.
+Added: Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations.
Business Continuity Plan
8 unchanged sentences
The deferred payments along with interest accrued during the deferral period are due and payable on the maturity date of the existing loan.
−Removed: As of March 31, 2020, we granted temporary modifications on approximately 32 loans representing approximately $ 45 million in outstanding exposure.
−Removed: Through April 30, 2020, we granted approximately 382 temporary modifications representing approximately $ 576 million in outstanding exposure.
−Removed: None of these loans were considered restructured as of March 31, 2020 due to the provision of the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) that permits U.S.
+Added: As of June 30, 2020, we granted temporary modifications on approximately 708 loans representing approximately $ 1.63 billion (approximately 20 % of total loans) in outstanding exposure.
+Added: Some of these deferrals may not have met the criteria for treatment under U.S.
+Added: GAAP as troubled debt restructurings ("TDRs").
+Added: Additionally, none of the deferrals are reflected in the Company's asset quality measures (i.e.
+Added: non-performing loans) due to the provision of the CARES Act that permits U.S.
financial institutions to temporarily suspend the U.S.
GAAP requirements to treat such short-term loan modifications as TDR.
−Removed: These provisions have also been confirmed by interagency guidance issued by the federal banking agencies and confirmed with staff members of the Financial Accounting Standards Board.
+Added: Similar provisions have also been confirmed by interagency guidance issued by the federal banking agencies and confirmed with staff members of the Financial Accounting Standards Board.
With the passage of the Paycheck Protection Program (“PPP”), administered by the Small Business Administration (“SBA”), the Company is actively participating in assisting its customers with applications for resources through the program.
−Removed: PPP loans have a two-year term and earn interest at 1 %.
+Added: The PPP loans originated by the Bank generally have a two-year term and earn interest at 1 %.
The Company believes that the majority of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program.
−Removed: As of April 30, 2020, principal outstanding on PPP loans totaled $ 444.8 million across 1,090 borrowers.
−Removed: As of April 30, 2020 the Company had approved 1,233 applications totaling $ 449.7 million in PPP loans.
+Added: As of June 30, 2020, principal outstanding on PPP loans totaled $ 456 million to just over 1,400 businesses.
The Company understands that loans funded through the PPP program are fully guaranteed by the U.S.
12 unchanged sentences
In addition, ASU 2016-13 made changes to the accounting for available-for-sale (“AFS”) debt securities.
−Removed: One such change is to require credit-related impairments to be recognized as an allowance for credit losses rather than as a write-down of the securities amortized cost basis when management does not intend to sell or believes that it is not that they will be required to sell the securities prior to recovery of the securities amortized cost basis.
+Added: One such change is to require credit-related impairments to be recognized as an allowance for credit losses rather than as a write-down of the securities amortized cost basis when management does not intend to sell or believes that it is not more than likely that they will be required to sell the securities prior to recovery of the securities amortized cost basis.
We adopted ASU 2016-13 using the modified retrospective method.
1 unchanged sentence
The Company does not own Held to Maturity investment debt securities.
−Removed: The following table illustrates the impact of ASC 326.
−Removed: January 1, 2020
−Removed: Impact of ASC
−Removed: (dollars in thousands)
−Removed: Under ASC 326
−Removed: Income producing - commercial real estate
−Removed: Owner occupied - commercial real estate
−Removed: Real estate mortgage - residential
−Removed: Construction - commercial and residential
−Removed: Construction - C&I (owner occupied)
−Removed: Other consumer
−Removed: Allowance for credit losses on loans
−Removed: Reserve for Unfunded Commitments
Loans held for investment are stated at the amount of unpaid principal reduced by deferred income (net of costs).
6 unchanged sentences
The most common change in terms provided by the Company is an extension of an interest only term.
−Removed: As of March 31, 2020, all performing TDRs were categorized as interest-only modifications.
+Added: As of June 30, 2020, all performing TDRs were categorized as interest-only modifications.
A loan is considered past due when a contractually due payment has not been received by the contractual due date.
74 unchanged sentences
We do not measure an allowance for credit losses on accrued interest receivable balances because these balances are written off in a timely manner as a reduction to interest income when loans are placed on non-accrual status.
−Removed: Allowance for Credit Losses - Available-for-Sale Debt Securities
−Removed: The impairment model for available-for-sale debt securities differs from the CECL approach utilized by HTM debt securities because AFS debt securities are measured at fair value rather than amortized cost.
−Removed: Although ASU No.
−Removed: 2016-13 replaced the legacy other-than-temporary impairment (“OTTI”) model with a credit loss model, it retained the fundamental nature of the legacy OTTI model.
−Removed: One notable change from the legacy OTTI model is when evaluating whether credit loss exists, an entity may no longer consider the length of time fair value has been less than amortized cost.
−Removed: For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis.
−Removed: If either criterion is met, the security’s amortized cost basis is written down to fair value through income.
−Removed: For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.
−Removed: In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.
−Removed: If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.
−Removed: If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.
−Removed: Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
−Removed: Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit losses.
−Removed: Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
−Removed: Any impairment not recorded through an allowance for credit loss is recognized in other comprehensive income as a noncredit-related impairment.
−Removed: As of March 31, 2020, the Company determined that the unrealized loss positions in AFS securities were not the result of credit losses, and therefore, an allowance for credit losses was not recorded.
−Removed: See Note 3 Investment Securities for more information.
−Removed: We have made a policy election to exclude accrued interest from the amortized cost basis of available-for-sale debt securities and report accrued interest separately in accrued interest and other assets in the consolidated balance sheets.
−Removed: Available-for-sale debt securities are placed on non- accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due.
−Removed: Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status.
−Removed: Accordingly, we do not recognize an allowance for credit loss against accrued interest receivable.
−Removed: The majority of available for sale debt securities as of March 31, 2020 and December 31, 2019 were issued by US agencies.
−Removed: As such, we do not consider an allowance for credit losses necessary.
Discounted Cash Flow Method
2 unchanged sentences
The modeling of expected prepayment speeds is based on historical internal data.
−Removed: The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default.
+Added: The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default.
This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers.
−Removed: For all loan pools utilizing the DCF method, management utilizes and forecasts national unemployment as a loss driver.
−Removed: COVID-19 has negatively impacted unemployment projections, which inform our CECL economic forecast and increased our loss reserve as of March 31, 2020.
+Added: For all loan pools utilizing the DCF method, management utilizes and forecasts regional unemployment as a loss driver.
+Added: COVID-19 has negatively impacted unemployment projections, which inform our CECL economic forecast and increased our loss reserve as of June 30, 2020.
For all DCF models, management has determined that eight quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over twelve months on a straight-line basis.
1 unchanged sentence
The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level.
−Removed: Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net NPV.
+Added: Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level Net Present Value ("NPV ").
An ACL is established for the difference between the instrument’s NPV and amortized cost basis.
6 unchanged sentences
The Company’s estimate of the ACL reflects losses expected over the remaining contractual life of the assets.
−Removed: The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected troubled debt restructuring (“TDR”).
−Removed: A loan that has been modified or renewed is considered a troubled debt restructuring when two conditions are met:
+Added: The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected TDR.
+Added: A loan that has been modified or renewed is considered a TDR when two conditions are met:
1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower's benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics.
2 unchanged sentences
Reasonably expected TDRs and executed non-performing TDRs are evaluated individually to determine the required ACL.
+Added: Refer to page 10 for a discussion on the impact of the CARES Act on TDRs.
+Added: Allowance for Credit Losses - Available-for-Sale Debt Securities
+Added: Although ASU No.
+Added: 2016-13 replaced the legacy other-than-temporary impairment (“OTTI”) model with a credit loss model, it retained the fundamental nature of the legacy OTTI model.
+Added: One notable change from the legacy OTTI model is when evaluating whether credit loss exists, an entity may no longer consider the length of time fair value has been less than amortized cost.
+Added: For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis.
+Added: If either criterion is met, the security’s amortized cost basis is written down to fair value through income.
+Added: For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.
+Added: In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.
+Added: If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.
+Added: If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.
+Added: Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
+Added: Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit losses.
+Added: Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
+Added: Any impairment not recorded through an allowance for credit loss is recognized in other comprehensive income as a non credit-related impairment.
+Added: The majority of available-for-sale debt securities as of June 30, 2020 and December 31, 2019 were issued by US agencies.
+Added: However, as of June 30, 2020, the Company determined that part of the unrealized loss positions in AFS corporate and municipal
+Added: securities could be the result of credit losses, and therefore, an allowance for credit losses of $ 138 thousand was recorded.
+Added: See Note 3 Investment Securities for more information.
+Added: We have made a policy election to exclude accrued interest from the amortized cost basis of available-for-sale debt securities and report accrued interest separately in accrued interest and other assets in the consolidated balance sheets.
+Added: Available-for-sale debt securities are placed on non- accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due.
+Added: Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status.
+Added: Accordingly, we do not recognize an allowance for credit loss against accrued interest receivable.
Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
3 unchanged sentences
The Company records a reserve for unfunded commitments (“RUC”) on off-balance sheet credit exposures through a charge to provision for credit loss expense in the Company’s consolidated statements of operations.
−Removed: The RUC on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur, and is included in Reserve for Unfunded Commitments on the Company’s consolidated balance sheets.
+Added: The RUC on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur, and is included in the RUC on the Company’s consolidated balance sheets.
These statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
3 unchanged sentences
The interagency statement was effective immediately and impacted accounting for loan modifications.
−Removed: Under Accounting Standards Codification 310-40, “Receivables – Troubled Debt Restructurings by Creditors,” (“ASC 310-40”), a restructuring of debt constitutes a troubled debt restructuring if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider.
+Added: Under Accounting Standards Codification 310-40, “Receivables – Troubled Debt Restructurings by Creditors,” (“ASC 310-40”), a restructuring of debt constitutes a TDR if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider.
The Agencies confirmed with the staff of the Financial Accounting Standards Board (“FASB”) that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not to be considered TDRs.
4 unchanged sentences
See Note 5 to the Consolidated Financial Statements for further detail.
−Removed: ASU 2016-13, “Measurement of Credit Losses on Financial Instruments (Topic 326).” This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.
−Removed: In issuing the standard, the FASB is responding to criticism that today’s guidance for determining the allowance for credit losses delays recognition of expected future credit losses.
−Removed: The standard will replace today’s “incurred loss” approach with an “expected loss” model.
−Removed: The new model, referred to as the CECL model, will apply to:
−Removed: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures.
−Removed: This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees.
−Removed: The CECL model does not apply to AFS debt securities.
−Removed: For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities.
−Removed: The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans.
−Removed: ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses.
−Removed: In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.
−Removed: Under the CECL standard and based on the January 1, 2020 effective date, the Company made an initial adjustment to the allowance for credit losses of $ 10.6 million along with $ 4.1 million to the reserve for unfunded commitments.
+Added: ASU 2016-13, “Measurement of Credit Losses on Financial Instruments (Topic 326).” Under the CECL standard and based on the January 1, 2020 effective date, the Company made an initial adjustment to the allowance for credit losses of $ 10.6 million along with $ 4.1 million to the reserve for unfunded commitments.
In accordance with adoption of CECL, the initial January 1, 2020 cumulative-effect adjustment was to retained earnings,net of taxes under the modified retrospective approach.
3 unchanged sentences
("ASU 2020-02") incorporates SEC SAB 119 (updated from SAB 102) into the Accounting Standards Codification (the "Codification") by aligning SEC recommended policies and procedures with ASC 326.
−Removed: ASU 2020-02 was effective on January 1, 2020 and has no significant impact on our documentation requirements.
+Added: ASU 2020-02 was effective on January 1, 2020 and had no significant impact on our documentation requirements, financial statement or disclosures.
ASU 2020-03 "Codification Improvements to Financial Instruments"
21 unchanged sentences
Amortized cost and estimated fair value of securities available-for-sale are summarized as follows:
−Removed: March 31, 2020
+Added: June 30, 2020
(dollars in thousands)
11 unchanged sentences
Other equity investments
−Removed: In addition, at March 31, 2020 and December 31, 2019 the Company held $ 40.0 million and $ 35.2 million, respectively, in equity securities in a combination of Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stocks, which are required to be held for regulatory purposes and which are not marketable, and therefore are carried at cost.
−Removed: Accrued interest on available for sale securities totaled $ 3.4 million and $ 3.2 million at March 31, 2020 and December 31, 2019, respectively, and was included in other assets in the consolidated balance sheets.
+Added: In addition, at June 30, 2020 and December 31, 2019 the Company held $ 40.0 million and $ 35.2 million, respectively, in equity securities in a combination of Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stocks, which are required to be held for regulatory purposes and which are not marketable, and therefore are carried at cost.
+Added: Accrued interest on available-for-sale securities totaled $ 2.7 million and $ 3.2 million at June 30, 2020 and December 31, 2019, respectively, and was included in other assets in the consolidated balance sheets.
Gross unrealized losses and fair value of available-for-sale securities for which an allowance for credit losses has not been recorded, by length of time that individual securities have been in a continuous unrealized loss position are as follows:
−Removed: March 31, 2020
+Added: June 30, 2020
(dollars in thousands)
7 unchanged sentences
Municipal bonds
−Removed: The majority of the AFS debt securities in an unrealized loss position as of March 31, 2020, consisted of debt securities issued by U.S.
+Added: The majority of the AFS debt securities in an unrealized loss position as of June 30, 2020, consisted of debt securities issued by U.S.
government agencies or U.S.
2 unchanged sentences
government, are widely recognized as “risk free,” and have a long history of zero credit loss.
−Removed: As of March 31, 2020 total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities.
+Added: As of June 30, 2020, total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities.
+Added: However, as of June 30, 2020, the Company determined that part of the unrealized loss positions in AFS corporate and municipal securities could be the result of credit losses, and therefore, an allowance for credit losses of $ 138 thousand was recorded.
The weighted average duration of debt securities, which comprise 99.9 % of total investment securities, is relatively short at 3.1 years.
1 unchanged sentence
The Company does not intend to sell the investments and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be at maturity.
−Removed: The amortized cost and estimated fair value of investments available-for-sale at March 31, 2020 and December 31, 2019 by contractual maturity are shown in the table below.
+Added: The amortized cost and estimated fair value of investments available-for-sale at June 30, 2020 and December 31, 2019 by contractual maturity are shown in the table below.
Expected maturities for residential mortgage backed securities (“MBS”) will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
−Removed: March 31, 2020
+Added: June 30, 2020
December 31, 2019
15 unchanged sentences
Other equity investments
−Removed: For the three months ended March 31, 2020, gross realized gains on sales of investments securities were $ 822 thousand and there were no gross realized losses on sales of investment securities.
−Removed: For the three months ended March 31, 2019, gross realized gains on sales of investments securities were $ 912 thousand and there were no gross realized losses on sales of investment securities.
−Removed: Proceeds from sales and calls of investment securities for the three months ended March 31, 2020 were $ 78.0 million compared to $ 22.8 million for the same period in 2019.
−Removed: The carrying value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase, and certain lines of credit with correspondent banks at March 31, 2020 and December 31, 2019 was $ 364 million and $ 378 million, respectively, which is well in excess of required amounts in order to operationally provide significant reserve amounts for new business.
−Removed: As of March 31, 2020 and December 31, 2019, there were no holdings of securities of any one issuer, other than the U.S.
+Added: Allowance for Credit Losses
+Added: For the six months ended June 30, 2020, gross realized gains on sales of investments securities were $ 1.5 million and there were no gross realized losses on sales of investment securities.
+Added: For the six months ended June 30, 2019, gross realized gains on sales of investments securities were $ 1.5 million primarily due to the $ 829 thousand of noninterest income recognized during March 2019 on interest rate swap terminations, and there were no gross realized losses on sales of investment securities.
+Added: Proceeds from sales and calls of investment securities for the six months ended June 30, 2020 were $ 120.0 million compared to $ 42.1 million for the same period in 2019.
+Added: The carrying value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase, and certain lines of credit with correspondent banks at June 30, 2020 and December 31, 2019 was $ 346 million and $ 378 million, respectively, which is well in excess of required amounts in order to operationally provide significant reserve amounts for new business.
+Added: As of June 30, 2020 and December 31, 2019, there were no holdings of securities of any one issuer, other than the U.S.
Government and U.S.
13 unchanged sentences
The fair value of the mortgage banking derivatives is recorded as a freestanding asset or liability with the change in value being recognized in current earnings during the period of change.
−Removed: At March 31, 2020 the Bank had mortgage banking derivative financial instruments with a notional value of $ 140.1 million related to its forward contracts as compared to $ 71.7 million at December 31, 2019.
−Removed: The fair value of these mortgage banking derivative instruments at March 31, 2020 was $ 331 thousand included in other assets and $ 1.6 million included in other liabilities as compared to $ 280 thousand included in other assets and $ 66 thousand included in other liabilities at December 31, 2019.
−Removed: Included in other noninterest income for the three months ended March 31, 2020 was a net loss of $ 1.3 million relating to mortgage banking derivative instruments as compared to a net gain of $ 134 thousand for the three months ended March 31, 2019.
−Removed: The amount included in other noninterest income for the three months ended March 31, 2020 pertaining to its mortgage banking hedging activities was a net realized loss of $ 1.3 million as compared to a net realized gain of $ 45 thousand for the three months ended March 31, 2019.
+Added: At June 30, 2020, the Bank had no material mortgage banking derivative financial instruments.
+Added: During the second quarter of 2020, the Company suspended locking loans for sale on a mandatory basis as a result of significant market dislocation that was experienced as a result of COVID-19 as well as the operational strain associated with the mandatory underwriting process given the volume of residential mortgages.
+Added: At June 30, 2019 the Bank had mortgage banking derivative financial instruments with a notional value of $ 124.5 million related to its forward contracts.
+Added: The fair value of these mortgage banking derivative instruments at December 31, 2019 was $ 280 thousand included in other assets and $ 66 thousand included in other liabilities.
+Added: Included in other noninterest income for the three and six months ended June 30, 2020 was a net gain of $ 1.1 million and a net loss of $ 165 thousand relating to mortgage banking derivative instruments as compared to a net gain of $ 84 thousand and net gain of $ 219 thousand for the three and six months ended June 30, 2019.
+Added: The amount included in other noninterest income for the three and six months ended June 30, 2020 pertaining to its mortgage banking hedging activities was a net realized gain of $ 1.3 million and a net loss of $ 7 thousand, respectively, as compared to a net loss of $ 94 thousand and net loss of $ 49 thousand, respectively, for the three and six months ended June 30, 2019.
Loans and Allowance for Credit Losses
2 unchanged sentences
A substantial portion of the Bank’s loan portfolio consists of loans to businesses secured by real estate and other business assets.
−Removed: Loans, net of unamortized net deferred fees, at March 31, 2020 and December 31, 2019 are summarized by type as follows:
−Removed: March 31, 2020
+Added: Loans, net of unamortized net deferred fees, at June 30, 2020 (unaudited) and December 31, 2019 are summarized by type as follows:
+Added: June 30, 2020
December 31, 2019
7 unchanged sentences
allowance for credit losses
−Removed: Net loans (1)
−Removed: (1) Excludes accrued interest receivable of $ 22.6 million and $ 21.3 million at March 31, 2020 and December 31, 2019, respectively, which is recorded in Other assets.
−Removed: Unamortized net deferred fees amounted to $ 24.8 million and $ 25.2 million at March 31, 2020 and December 31, 2019, respectively.
−Removed: As of March 31, 2020 and December 31, 2019, the Bank serviced $ 101 million and $ 99 million, respectively, of multifamily FHA loans, SBA loans and other loan participations which are not reflected as loan balances on the Consolidated Balance Sheets.
+Added: (1) Excludes accrued interest receivable of $ 36.2 million and $ 21.3 million at June 30, 2020 and December 31, 2019, respectively, which is recorded in other assets.
+Added: Unamortized net deferred fees amounted to $ 34.8 million and $ 25.2 million at June 30, 2020 and December 31, 2019, respectively.
+Added: As of June 30, 2020 and December 31, 2019, the Bank serviced $ 96 million and $ 99 million, respectively, of multifamily FHA loans, SBA loans and other loan participations which are not reflected as loan balances on the Consolidated Balance Sheets.
Loan Origination / Risk Management
5 unchanged sentences
The composition of the Company’s loan portfolio is heavily weighted toward commercial real estate, both owner occupied and income producing real estate.
−Removed: At March 31, 2020, owner occupied - commercial real estate and construction – Commercial and Industrial (“C&I”) (owner occupied) represent approximately 13 % of the loan portfolio .
−Removed: At March 31, 2020, non-owner occupied commercial real estate and real estate construction represented approximately 62 % of the loan portfolio.
+Added: At June 30, 2020, owner occupied - commercial real estate and construction – Commercial and Industrial (“C&I”) (owner occupied) represent approximately 14 % of the loan portfolio .
+Added: At June 30, 2020, non-owner occupied commercial real estate and real estate construction represented approximately 58 % of the loan portfolio.
The combined owner occupied and commercial real estate and construction loans represent approximately 72 % of the loan portfolio.
5 unchanged sentences
The Company is also an active traditional commercial lender providing loans for a variety of purposes, including working capital, equipment and account receivable financing.
−Removed: This loan category represents approximately 23 % of the loan portfolio at March 31, 2020 and was generally variable or adjustable rate.
+Added: This loan category represents approximately 20 % of the loan portfolio at June 30, 2020 and was generally variable or adjustable rate.
Commercial loans meet reasonable underwriting standards, including appropriate collateral and cash flow necessary to support debt service.
5 unchanged sentences
SBA loans are subject to a maximum loan size established by the SBA as well as internal loan size guidelines.
−Removed: Approximately 1 % of the loan portfolio at March 31, 2020 consists of home equity loans and lines of credit and other consumer loans.
+Added: Approximately 6 % of the loan portfolio at June 30, 2020 consists of PPP loans to eligible customers.
+Added: PPP loans are expected to primarily be repaid via forgiveness from the SBA.
+Added: These loans are fully guaranteed as to principal and interest by the SBA and ultimately by the full faith and credit of the U.S.
+Added: as a result, they were approved utilizing different underwriting standards than the Bank's other commercial loans.
+Added: PPP loans are included in the CECL model but do not carry an allowance for credit loss due to the aforementioned government guarantees.
+Added: Approximately 1 % of the loan portfolio at June 30, 2020 consists of home equity loans and lines of credit and other consumer loans.
These credits, while making up a small portion of the loan portfolio, demand the same emphasis on underwriting and credit evaluation as other types of loans advanced by the Bank.
26 unchanged sentences
The Company’s loan portfolio includes acquisition, development and construction (“ADC”) real estate loans including both investment and owner occupied projects.
−Removed: ADC loans amounted to $ 1.41 billion at March 31, 2020.
+Added: ADC loans amounted to $ 1.47 billion at June 30, 2020.
A portion of the ADC portfolio, both speculative and non-speculative, includes loan funded interest reserves at origination.
−Removed: ADC loans that provide for the use of interest reserves represent approximately 60 % of the outstanding ADC loan portfolio at March 31, 2020.
+Added: ADC loans that provide for the use of interest reserves represent approximately 59 % of the outstanding ADC loan portfolio at June 30, 2020.
The decision to establish a loan-funded interest reserve is made upon origination of the ADC loan and is based upon a number of factors considered during underwriting of the credit including:
13 unchanged sentences
If a project has not performed as expected, it is not the customary practice of the Company to increase loan funded interest reserves.
−Removed: The following tables detail activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2020 and 2019.
+Added: The following tables detail activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2020 and 2019.
+Added: PPP loans are excluded from these tables since they do not carry an allowance for credit loss, as these loans are fully guaranteed as to principal and interest by the SBA, whose guarantee is backed by the full faith and credit of the U.S.
Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
4 unchanged sentences
(dollars in thousands)
−Removed: For the Three Months Ended March 31, 2020
+Added: Three Months Ended June 30, 2020
Allowance for credit losses:
+Added: Balance at beginning of period
+Added: Loans charged-off
+Added: Recoveries of loans previously charged-off
+Added: Net loans charged-off
+Added: Provision for credit losses
+Added: Ending balance
+Added: Six Months Ended June 30, 2020
+Added: Allowance for credit losses:
Balance at beginning of period, prior to adoption of ASC 326
2 unchanged sentences
Recoveries of loans previously charged-off
−Removed: Net loans charged-off
+Added: Net loans (charged-off) recoveries
Provision for credit losses
Ending balance
−Removed: As of March 31, 2020
+Added: As of June 30, 2020
Allowance for credit losses:
2 unchanged sentences
Ending balance
−Removed: Three Months Ended March 31, 2019
+Added: Three Months Ended June 30, 2019
Allowance for credit losses:
5 unchanged sentences
Ending balance
−Removed: As of March 31, 2019
+Added: Six Months Ended June 30, 2019
Allowance for credit losses:
+Added: Balance at beginning of period
+Added: Loans charged-off
+Added: Recoveries of loans previously charged-off
+Added: Net loans (charged-off) recoveries
+Added: Provision for credit losses
+Added: Ending balance
+Added: As of June 30, 2019
+Added: Allowance for credit losses:
Individually evaluated for impairment
1 unchanged sentence
Ending balance
−Removed: During the first quarter of 2020, we adopted ASU 2016-13, which replaces the incurred loss methodology for determining our provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model.
+Added: During the first quarter of 2020, we adopted ASU 2016-13, which replaced the incurred loss methodology for determining our provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model.
Upon adoption, the allowance for credit losses was increased by $ 14.7 million, which included a $ 4.1 million increase to the allowance for unfunded commitments, with no impact to the consolidated statement of operations.
−Removed: We recorded a $ 16.4 million provision for credit losses for the first quarter of 2020 utilizing the newly adopted CECL methodology, a significant increase from prior quarters.
−Removed: The increase resulted primarily from the impact of reserve build related to the COVID-19 pandemic and to a lesser extent loan growth, offset by lower charge offs than in the comparable quarters.
−Removed: We recorded $ 2.2 million in net charge-offs during the first quarter of 2020, compared to $ 3.4 million during the first quarter of 2019.
+Added: We recorded a $ 19.7 million and $ 34.0 million provision for credit losses for the three and six months ended second June 30, 2020 under CECL.
+Added: We recorded $ 7.1 million and $ 9.4 million in net charge-offs during the three and six months ended June 30, 2020, respectively, compared to $ 1.5 million and $ 4.8 million during the three and six months ended June 30, 2019.
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.
−Removed: The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2020:
+Added: The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of June 30, 2020:
Business/Other
31 unchanged sentences
The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the assets, its classification as an estimated loss is deferred until its more exact status may be determined.
−Removed: Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:
−Removed: March 31, 2020 (dollars in thousands)
+Added: Based on the most recent analysis performed, the risk category of loans by class of loans and year of origination is as follows:
+Added: June 30, 2020 (dollars in thousands)
Special Mention
7 unchanged sentences
Total Recorded Investment
−Removed: The Company’s credit quality indicators are updated generally on a quarterly basis, but no less frequently than annually.
+Added: The Company’s credit quality indicators are generally updated annually;
+Added: however, credits rated watch or below are reviewed more frequently.
The following table presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of December 31, 2019:
12 unchanged sentences
Additionally, Credit Administration specifically analyzes the status of development and construction projects, sales activities and utilization of interest reserves in order to carefully and prudently assess potential increased levels of risk requiring additional reserves.
−Removed: The following table presents, by class of loan, an aging analysis and the recorded investments in loans past due as of March 31, 2020 and December 31, 2019.
+Added: The following table presents, by class of loan, an aging analysis and the recorded investments in loans past due as of June 30, 2020 and December 31, 2019:
Total Recorded
2 unchanged sentences
More Past Due
−Removed: March 31, 2020
+Added: June 30, 2020
Income producing - commercial real estate
10 unchanged sentences
Other consumer
−Removed: The following presents the nonaccrual loans as of March 31, 2020 and December 31, 2019:
−Removed: March 31, 2020
+Added: The following presents the nonaccrual loans as of June 30, 2020 and December 31, 2019:
+Added: June 30, 2020
December 31, 2019
9 unchanged sentences
Other consumer
−Removed: (1) Excludes troubled debt restructurings (“TDRs”) that were performing under their restructured terms totaling $ 17.9 million at March 31, 2020 and $16.6.0 million at December 31, 2019.
−Removed: (2) Gross interest income of $ 717 thousand and $ 701 thousand would have been recorded for the three months ended March 31, 2020 and 2019, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while there was no interest recorded on such loans for the three months ended March 31, 2020 and 2019, respectively.
+Added: (1) Excludes TDRs that were performing under their restructured terms totaling $ 12.3 million at June 30, 2020 and $ 16.6 million at December 31, 2019.
+Added: (2) Gross interest income of $ 1.7 million and $ 1.2 million would have been recorded for the six months ended June 30, 2020 and 2019, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while the interest actually recorded on such loans was $ 57 thousand and $ 86 thousand for the six months ended June 30, 2020 and 2019, respectively.
See Note 1 to the Consolidated Financial Statements for a description of the Company’s policy for placing loans on nonaccrual status.
4 unchanged sentences
Impaired loans, or portions thereof, were charged-off when deemed uncollectible.
−Removed: The following table presents, by class of loan, information related to impaired loans for the period December 31, 2019.
+Added: The following table presents, by class of loan, information related to impaired loans at December 31, 2019:
Average Recorded
13 unchanged sentences
The most common change in terms provided by the Company is an extension of an interest only term.
−Removed: As of March 31, 2020, all performing TDRs were categorized as interest-only modifications .
+Added: As of June 30, 2020, all performing TDRs were categorized as interest-only modifications .
Loans modified in a TDR for the Company may have the financial effect of increasing the specific allowance associated with the loan.
4 unchanged sentences
The deferred payments along with interest accrued during the deferral period are due and payable on the maturity date.
−Removed: As of March 31, 2020, we granted temporary modifications on approximately 32 loans representing approximately $ 45 million in outstanding exposure.
−Removed: Through April 30, 2020, we granted approximately 382 temporary modifications representing approximately $ 576 million in outstanding exposure.
−Removed: Under the applicable guidance, none of these loans were considered TDRs as of March 31, 2020.
−Removed: The following table presents by class, the recorded investment of loans modified in TDRs held by the Company for the periods ended March 31, 2020 and 2019.
−Removed: For the Three Months Ended March 31, 2020
+Added: As of June 30, 2020, we granted temporary modifications on approximately 708 loans representing approximately $ 1.63 billion ( 20 % of total loans) in outstanding exposure.
+Added: Some of these deferrals may not have met the criteria for treatment under U.S.
+Added: Additionally, none of the deferrals are reflected in the Company's asset quality measures (i.e.
+Added: non-performing loans) due to the provision of the CARES Act that permits U.S.
+Added: financial institutions to temporarily suspend the U.S.
+Added: GAAP requirements to treat such short-term loan modifications as TDR.
+Added: Similar provisions have also been confirmed by interagency guidance issued by the federal banking agencies and confirmed with staff members of the Financial Accounting Standards Board.
+Added: The following table presents by class, the recorded investment of loans modified in TDRs held by the Company for the periods ended June 30, 2020 and 2019.
+Added: For the Six Months Ended June 30, 2020
Construction -
5 unchanged sentences
Restructured and subsequently defaulted
−Removed: For the Three Months Ended March 31, 2019
+Added: For the Six Months Ended June 30, 2019
Construction -
5 unchanged sentences
Restructured and subsequently defaulted
−Removed: The Company had thirteen TDR’s at March 31, 2020 totaling approximately $ 20.4 million.
−Removed: Eleven of these loans totaling approximately $ 17.9 million are performing under their modified terms.
−Removed: For the first quarter of 2020 and 2019, there were no performing TDR loans that defaulted on their modified terms.
+Added: The Company had thirteen TDR’s at June 30, 2020 totaling approximately $ 20.3 million.
+Added: Ten of these loans totaling approximately $ 12.3 million are performing under their modified terms.
+Added: For both the first six months of 2020 and 2019, there was one performing TDR loan, totaling $ 5.5 million and $ 2.3 million, respectively, that defaulted on its modified terms.
A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on non-accrual status.
+Added: For the three months ended June 30, 2020, there were two restructured loans totaling approximately $ 870 thousand where the collateral was sold and the loans paid in full, as compared to the same period in 2019, when there was one restructured loan totaling approximately $ 4.8 million that had its collateral property sold for approximately $ 3 million and the remaining $ 1.8 million charged-off during the quarter.
+Added: During the three months ended June 30, 2020, no loans were re-underwritten and removed from TDR status, as compared to the three months ended June 30, 2019, there was one loan totaling $ 10.4 million that was re-underwritten into two new loans which provided better collateral for the Bank.
Commercial and consumer loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default.
1 unchanged sentence
The allowance may be increased, adjustments may be made in the allocation of the allowance or partial charge-offs may be taken to further write-down the carrying value of the loan.
−Removed: For the three months ended March 31, 2020, there were four loans totaling $ 1.3 million modified in a TDR, as compared to the three months ended March 31, 2019, there was one loan totaling $ 2.3 million modified in a TDR.
+Added: For both the three months ended June 30, 2020 and 2019, there were no loans modified in a TDR.
A lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.
On January 1, 2019, the Company adopted ASU No.
−Removed: 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842.
+Added: 2016-02 “Leases” (Topic 842) and has adopted all subsequent ASUs that modified Topic 842.
For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.
1 unchanged sentence
Substantially all of our leases are classified as operating leases, and as such, were previously not recognized on the Company’s Consolidated Statements of Condition.
−Removed: With the adoption of Topic 842, operating lease agreements were required to be recognized on the Consolidated Statements of Condition as a right-of-use (“ROU”) asset and a corresponding lease liability.
−Removed: As of March 31, 2020, the Company had $ 25.7 million of operating lease ROU assets and $ 28.2 million of operating lease liabilities on the Company’s Consolidated Balance Sheet.
+Added: With the adoption of Topic 842, operating lease agreements were
+Added: required to be recognized on the Consolidated Statements of Condition as a right-of-use (“ROU”) asset and a corresponding lease liability.
+Added: As of June 30, 2020, the Company had $ 25.4 million of operating lease ROU assets and $ 27.1 million of operating lease liabilities on the Company’s Consolidated Balance Sheet.
As of December 31, 2019, the Company had $ 27.4 million of operating lease ROU assets and $ 30.0 million of operating lease liabilities on the Company’s Consolidated Balance Sheet.
2 unchanged sentences
If these criteria are not met, the options are not included in our ROU assets and lease liabilities.
−Removed: As of March 31, 2020, our leases do not contain material residual value guarantees or impose restrictions or covenants related to dividends or the Company’s ability to incur additional financial obligations.
−Removed: As of March 31, 2020, there were no leases that have been signed but did not yet commence as of the reporting date that create significant rights and obligations for the Company.
+Added: As of June 30, 2020, our leases do not contain material residual value guarantees or impose restrictions or covenants related to dividends or the Company’s ability to incur additional financial obligations.
+Added: As of June 30, 2020, there were no leases that have been signed but did not yet commence as of the reporting date that create significant rights and obligations for the Company.
The following table presents lease costs and other lease information.
−Removed: Three Months Ended
+Added: Six Months Ended
(dollars in thousands)
−Removed: March 31, 2020
−Removed: March 31,2019
+Added: June 30, 2020
Operating Lease Cost (Cost resulting from lease payments)
6 unchanged sentences
Weighted Average Discount Rate - Operating Leases
−Removed: Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2020 were as follows:
+Added: Future minimum payments for operating leases with initial or remaining terms of more than one year as of June 30, 2020 were as follows:
(dollars in thousands)
Twelve Months Ended:
−Removed: March 31, 2021
−Removed: March 31, 2022
−Removed: March 31, 2023
−Removed: March 31, 2024
−Removed: March 31, 2025
+Added: June 30, 2021
+Added: June 30, 2022
+Added: June 30, 2023
+Added: June 30, 2024
+Added: June 30, 2025
Total Future Minimum Lease Payments
1 unchanged sentence
Present Value of Net Future Minimum Lease Payments
−Removed: Note 7 – Affordable Housing Projects Tax Credit Partnerships
−Removed: Included in Other Assets, the Company makes equity investments in various limited partnerships that sponsor affordable housing projects utilizing the Low Income Housing Tax Credit (“LIHTC”) pursuant to Section 42 of the Internal Revenue Code.
−Removed: The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of affordable housing products offerings, and to assist in achieving goals associated with the Community Reinvestment Act.
−Removed: The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants.
−Removed: Generally, these types of investments are funded through a combination of debt and equity.
−Removed: The Company is a limited partner in each LIHTC limited partnership.
−Removed: Each limited partnership is managed by an unrelated third party general partner who exercises significant control over the affairs of the limited partnership.
−Removed: The general partner has all the rights, powers and authority granted or permitted to be granted to a general partner of a limited partnership.
−Removed: Duties entrusted to the general partner of each limited partnership include, but are not limited to:
−Removed: investment in operating companies, company expenditures, investment of excess funds, borrowing funds, employment of agents, disposition of fund property, prepayment and refinancing of liabilities, votes and consents, contract authority, disbursement of funds, accounting methods, tax elections, bank accounts, insurance, litigation, cash reserve, and use of working capital reserve funds.
−Removed: Except for limited rights granted to the limited partner(s) relating to the approval of certain transactions, the limited partner(s) may not participate in the operation, management, or control of the limited partnership’s business, transact any business in the limited partnership’s name or have any power to sign documents for or otherwise bind the limited partnership.
−Removed: In addition, the general partner may only be removed by the limited partner(s) in the event the general partner fails to comply with the terms of the agreement or is negligent in performing its duties.
−Removed: The general partner of each limited partnership has both the power to direct the activities which most significantly affect the performance of each partnership and the obligation to absorb losses or the right to receive benefits that could be significant to the entities.
−Removed: Therefore, the Company has determined that it is not the primary beneficiary of any LIHTC partnership.
−Removed: The Company accounts for its affordable housing tax credit investments using the proportional amortization method.
−Removed: The Company’s net affordable housing tax credit investments were $ 28.9 million and related unfunded commitments were $ 11.3 million as of March 31, 2020 and are included in Other Assets and Other Liabilities in the Consolidated Statements of Condition.
−Removed: The Company's net affordable housing tax credit investments were $ 29.7 million and related unfunded commitments were $ 11.3 million as of December 31, 2019.
Other Derivatives
11 unchanged sentences
The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions.
−Removed: As of March 31, 2020 and December 31, 2019, the Company had one designated cash flow hedge notional interest rate swap transaction outstanding amounting to $ 100 million associated with the Company’s variable rate deposits.
+Added: As of June 30, 2020 and December 31, 2019, the Company had one designated cash flow hedge notional interest rate swap transaction outstanding amounting to $ 100 million associated with the Company’s variable rate deposits.
The Company recognized $ 829 thousand in noninterest income during March 2019 due to the termination of two of its interest rate swap transactions as part of the Company’s asset liability strategy as well as declines in market interest rates.
20 unchanged sentences
3) if the Company fails to maintain its status as a well-capitalized institution then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.
−Removed: As of March 31, 2020, the aggregate fair value of the derivative contract with credit risk contingent features (i.e., containing collateral posting or termination provisions based on our capital status) that was in a net liability position totaled $ 4.7 million.
+Added: As of June 30, 2020, the aggregate fair value of the derivative contract with credit risk contingent features (i.e., containing collateral posting or termination provisions based on our capital status) that was in a net liability position totaled $ 6.1 million.
The Company has a minimum collateral posting threshold with its derivative counterparty.
−Removed: As of March 31, 2020, the Company was required to post collateral totaling $ 1.5 million with its derivative counterparty against its obligations under this agreement.
−Removed: If the Company had breached any provisions under the agreement at March 31, 2020, it could have been required to settle its obligations under the agreement at the termination value.
−Removed: The table below identifies the balance sheet category and fair value of the Company’s designated cash flow hedge derivative instruments and non-designated hedges as of March 31, 2020 and December 31, 2019.
−Removed: March 31,2020
+Added: As of June 30, 2020, the Company was required to post collateral totaling $ 1.9 million with its derivative counterparty against its obligations under this agreement.
+Added: If the Company had breached any provisions under the agreement at June 30, 2020, it could have been required to settle its obligations under the agreement at the termination value.
+Added: The table below identifies the balance sheet category and fair value of the Company’s designated cash flow hedge derivative instruments and non-designated hedges as of June 30, 2020 (unaudited) and December 31, 2019.
December 31,2019
−Removed: Derivatives designated as hedging instruments
Balance Sheet
Balance Sheet
−Removed: (dollars in thousands)
+Added: Derivatives designated as hedging instruments
Interest rate product
12 unchanged sentences
Other Liabilities
−Removed: The table below presents the pre-tax net gains (losses) of the Company’s designated cash flow hedges for the three months ended March 31, 2020 and 2019.
+Added: Other Liabilities
+Added: The table below presents the pre-tax net gains (losses) of the Company’s designated cash flow hedges for the three and six months ended June 30, 2020 and 2019 (unaudited):
The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income
1 unchanged sentence
Amount of Gain or (Loss)
−Removed: Amount of Gain or (Loss) Recognized in OCI
+Added: Amount of (Loss) Recognized in
Recognized from
Reclassified from Accumulated OCI
−Removed: on Derivative
+Added: OCI on Derivative
Accumulated Other
Derivatives in Subtopic 815-20 Hedging
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30,
Comprehensive Income into
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30,
Relationships (dollars in thousands)
2 unchanged sentences
Interest Expense
+Added: Location of Gain or (Loss)
+Added: Recognized from
+Added: Accumulated Other
+Added: Amount of Gain or (Loss)
+Added: Amount of (Loss) Recognized in
+Added: Comprehensive Income into
+Added: Reclassified from Accumulated OCI
+Added: OCI on Derivative
+Added: Derivatives in Subtopic 815-20 Hedging
+Added: Six Months Ended June 30,
+Added: Six Months Ended June 30,
+Added: Relationships (dollars in thousands)
+Added: Derivatives in Cash Flow Hedging Relationships
Interest Rate Products
+Added: Interest Expense
+Added: Interest Rate Products
Gain on sale of investment securities
−Removed: The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019.
+Added: The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019 (unaudited):
The Effect of Fair Value and Cash Flow Hedge Accounting on the Statements of Operation
−Removed: Location and Amount of Gain or (Loss) Recognize in Income on
+Added: Location and Amount of Gain or (Loss) Recognized in Income on
Fair Value and Cash Flow Hedging Relationships (in 000's)
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30,
+Added: Six Months Ended June 30,
Gain on sale of
9 unchanged sentences
Amount of Gain or (Loss)
+Added: Amount of (Loss)
Recognized in Income on
+Added: Recognized in Income on
Location of Gain or
1 unchanged sentence
(Loss) Recognized in
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30,
+Added: Six Months Ended June 30,
Instruments under Subtopic 815-20
9 unchanged sentences
The Company generally offsets such financial instruments for financial reporting purposes.
−Removed: The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s cash flow hedge derivatives as of March 31, 2020 and December 31, 2019.
−Removed: As of March 31, 2020
+Added: The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s cash flow hedge derivatives as of June 30, 2020 (unaudited) and December 31, 2019.
+Added: As of June 30, 2020
Gross Amounts Not Offset in the
12 unchanged sentences
Other Real Estate Owned
−Removed: The activity within Other Real Estate Owned (“OREO”) for the three months ended March 31, 2020 and 2019 is presented in the table below.
−Removed: There were no residential real estate loans in the process of foreclosure as of March 31, 2020.
−Removed: For the three months ended March 31, 2020 and 2019, there were no sales of OREO property.
−Removed: Three Months Ended March 31,
+Added: The activity within Other Real Estate Owned (“OREO”) for the three and six months ended June 30, 2020 and 2019 (unaudited) is presented in the table below.
+Added: There were no residential real estate loans in the process of foreclosure as of June 30, 2020.
+Added: For the three and six months ended June 30, 2020 and 2019, there were no sales of OREO property.
+Added: Three Months Ended June 30,
+Added: Six Months Ended June 30,
(dollars in thousands)
4 unchanged sentences
Long-Term Borrowings
−Removed: The following table presents information related to the Company’s long-term borrowings as of March 31, 2020 and December 31, 2019.
+Added: The following table presents information related to the Company’s long-term borrowings as of June 30, 2020 (unaudited) and December 31, 2019.
(dollars in thousands)
−Removed: March 31, 2020
+Added: June 30, 2020
December 31, 2019
10 unchanged sentences
The net proceeds were approximately $ 147.35 million, which includes $ 2.6 million in deferred financing costs which are being amortized over the life of the 2026 Notes.
−Removed: On February 26th, 2020, the Bank advanced $ 50 million dollars under its borrowing arrangement with the Federal Home Loan Bank of Atlanta at a fixed rate of 1.81 % with a maturity date of February 26, 2030 as part of the overall asset liability strategy and to support loan growth.
+Added: On February 26, 2020, the Bank borrowed $ 50 million dollars under its borrowing arrangement with the Federal Home Loan Bank of Atlanta at a fixed rate of 1.81 % with a maturity date of February 26, 2030 as part of the overall asset liability strategy and to support loan growth.
Net Income per Common Share
−Removed: The calculation of net income per common share for the three months ended March 31, 2020 and 2019 was as follows:
−Removed: Three Months Ended March 31,
+Added: The calculation of net income per common share for the three and six months ended June 30, 2020 and 2019 (unaudited) was as follows:
+Added: Three Months Ended June 30,
+Added: Six Months Ended June 30,
(dollars and shares in thousands, except per share data)
7 unchanged sentences
Other Comprehensive Income
−Removed: The following table presents the components of other comprehensive income (loss) for the three months ended March 31, 2020 and 2019.
+Added: The following table presents the components of other comprehensive income (loss) for the three and six months ended June 30, 2020 and 2019 (unaudited).
(dollars in thousands)
−Removed: Three Months Ended March 31, 2020
+Added: Three Months Ended June 30, 2020
Net unrealized gain on securities available-for-sale
2 unchanged sentences
Net unrealized loss on derivatives
+Added: Reclassification adjustment for loss included in net income
+Added: Total unrealized gain
+Added: Other Comprehensive Income
+Added: Three Months Ended June 30, 2019
+Added: Net unrealized gain on securities available-for-sale
+Added: Reclassification adjustment for net gains included in net income
+Added: Total unrealized gain
+Added: Net unrealized loss on derivatives
Reclassification adjustment for gain included in net income
1 unchanged sentence
Other Comprehensive Income
−Removed: Three Months Ended March 31, 2019
−Removed: Net unrealized loss on securities available-for-sale
+Added: Six Months Ended June 30, 2020
+Added: Net unrealized gain on securities available-for-sale
Reclassification adjustment for net gains included in net income
+Added: Total unrealized gain
+Added: Net unrealized loss on derivatives
+Added: Reclassification adjustment for gain included in net income
Total unrealized loss
+Added: Other Comprehensive Income
+Added: Six Months Ended June 30, 2019
+Added: Net unrealized gain on securities available-for-sale
+Added: Reclassification adjustment for net gains included in net income
+Added: Total unrealized gain
Net unrealized loss on derivatives
2 unchanged sentences
Other Comprehensive Income
−Removed: The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2020 and 2019.
+Added: The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax, for the three and six months ended June 30, 2020 and 2019 (unaudited).
Accumulated Other
1 unchanged sentence
(dollars in thousands)
−Removed: Three Months Ended March 31, 2020
+Added: Three Months Ended June 30, 2020
Balance at Beginning of Period
−Removed: Other comprehensive income (loss) before reclassifications
+Added: Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive income (loss)
+Added: Net other comprehensive income during period
+Added: Balance at End of Period
+Added: Accumulated Other
+Added: Comprehensive Income
+Added: (dollars in thousands)
+Added: Three Months Ended June 30, 2019
+Added: Balance at Beginning of Period
+Added: Other comprehensive income (loss) before reclassifications
+Added: Amounts reclassified from accumulated other comprehensive income
Net other comprehensive income (loss) during period
Balance at End of Period
−Removed: Three Months Ended March 31, 2019
+Added: Accumulated Other
+Added: Comprehensive Income
+Added: (dollars in thousands)
+Added: Six Months Ended June 30, 2020
Balance at Beginning of Period
Other comprehensive income (loss) before reclassifications
−Removed: Amounts reclassified from accumulated other comprehensive income (loss)
+Added: Amounts reclassified from accumulated other comprehensive income
Net other comprehensive income (loss) during period
Balance at End of Period
−Removed: The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three months ended March 31, 2020 and 2019.
+Added: Accumulated Other
+Added: Comprehensive Income
+Added: (dollars in thousands)
+Added: Six Months Ended June 30, 2019
+Added: Balance at Beginning of Period
+Added: Other comprehensive income (loss) before reclassifications
+Added: Amounts reclassified from accumulated other comprehensive income
+Added: Net other comprehensive income (loss) during period
+Added: Balance at End of Period
+Added: The following tables present the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and six months ended June 30, 2020 and 2019 (unaudited).
Amount Reclassified from
5 unchanged sentences
Comprehensive Income Components
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30,
Net Income is Presented
2 unchanged sentences
Gain on sale of investment securities
+Added: Interest income derivative deposits
+Added: Interest expense on deposits
+Added: Income tax expense
+Added: Income Tax Expense
+Added: Total Reclassifications for the Period
+Added: Amount Reclassified from
+Added: Accumulated Other
+Added: Affected Line Item in
+Added: Details about Accumulated Other
+Added: Comprehensive (Loss) Income
+Added: the Statement Where
+Added: Comprehensive Income Components
+Added: Six Months Ended June 30,
+Added: Net Income is Presented
+Added: (dollars in thousands)
+Added: Realized gain on sale of investment securities
+Added: Gain on sale of investment securities
Realized gain on swap termination
Gain on sale of investment securities
−Removed: Interest income (expense) derivative deposits
+Added: Interest income derivative deposits
Interest expense on deposits
−Removed: Income tax (expense) benefit
Income tax expense
+Added: Income Tax Expense
Total Reclassifications for the Period
18 unchanged sentences
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
−Removed: The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019.
+Added: The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 (unaudited) and December 31, 2019.
Quoted Prices
(dollars in thousands)
−Removed: March 31, 2020
+Added: June 30, 2020
Investment securities available-for-sale:
6 unchanged sentences
Interest Rate Caps
−Removed: Mortgage banking derivatives
−Removed: Total assets measured at fair value on a recurring basis as of March 31, 2020
+Added: Total assets measured at fair value on a recurring basis as of June 30, 2020
Interest rate swap derivatives
1 unchanged sentence
Interest Rate Caps
−Removed: Mortgage banking derivatives
−Removed: Total liabilities measured at fair value on a recurring basis as of March 31, 2020
+Added: Total liabilities measured at fair value on a recurring basis as of June 30, 2020
December 31, 2019
29 unchanged sentences
As such, the Company classifies loans subjected to fair value adjustments as Level 2 valuation.
−Removed: The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for loans held for sale measured at fair value as of March 31, 2020 and December 31, 2019.
−Removed: March 31, 2020
+Added: The following tables summarize the difference between the aggregate fair value and the aggregate unpaid principal balance for loans held for sale measured at fair value as of June 30, 2020 (unaudited) and December 31, 2019.
+Added: June 30, 2020
(dollars in thousands)
−Removed: Residential mortgage loans held for sale
−Removed: FHA mortgage loans held for sale
+Added: Loans held for sale
December 31, 2019
(dollars in thousands)
−Removed: Residential mortgage loans held for sale
−Removed: FHA mortgage loans held for sale
−Removed: No residential mortgage loans held for sale were 90 or more days past due or on nonaccrual status as of March 31, 2020 or December 31, 2019.
+Added: Loans held for sale
+Added: No residential mortgage loans held for sale were 90 or more days past due or on nonaccrual status as of June 30, 2020 or December 31, 2019.
Interest rate swap derivatives:
23 unchanged sentences
Beginning balance at January 1, 2020
−Removed: Realized (loss) gain included in earnings
+Added: Realized gain (loss) included in earnings
Unrealized gain included in other comprehensive income
1 unchanged sentence
Principal redemption
−Removed: Ending balance at March 31, 2020
+Added: Ending balance at June 30, 2020
Beginning balance at January 1, 2020
1 unchanged sentence
Principal redemption
−Removed: Ending balance at March 31, 2020
+Added: Ending balance at June 30, 2020
Mortgage Banking
13 unchanged sentences
The Company measures certain assets at fair value on a nonrecurring basis and the following is a general description of the methods used to value such assets.
−Removed: At March 31, 2020, substantially all of the Company’s individually evaluated loans were evaluated based upon the fair value of the collateral.
+Added: At June 30, 2020, substantially all of the Company’s individually evaluated loans were evaluated based upon the fair value of the collateral.
In accordance with ASC Topic 820, individually evaluated loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy.
5 unchanged sentences
The Company considered a loan impaired when it was probable that the Company would be unable to collect all amounts due according to the original contractual terms of the note agreement, including both principal and interest.
−Removed: Management had determined that nonaccrual loans and loans that had their terms restructured in a troubled debt restructuring met this impaired loan definition.
+Added: Management had determined that nonaccrual loans and loans that had their terms restructured in a TDR met this impaired loan definition.
Once a loan was identified as individually impaired, management measures impairment in accordance with ASC Topic 310, “Receivables.” The fair value of impaired loans was estimated using one of several methods, including the collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows.
6 unchanged sentences
(dollars in thousands)
−Removed: March 31, 2020
+Added: June 30, 2020
Income producing - commercial real estate
4 unchanged sentences
Other real estate owned
−Removed: Total assets measured at fair value on a nonrecurring basis as of March 31, 2020
+Added: Total assets measured at fair value on a nonrecurring basis as of June 30, 2020
Quoted Prices
16 unchanged sentences
In addition, the estimates are only indicative of individual financial instrument values and should not be considered an indication of the fair value of the Company taken as a whole.
−Removed: The estimated fair value of the Company’s financial instruments at March 31, 2020 and December 31, 2019 are as follows:
+Added: The estimated fair value of the Company’s financial instruments at June 30, 2020 and December 31, 2019 are as follows:
Fair Value Measurements
(dollars in thousands)
−Removed: March 31, 2020
+Added: June 30, 2020
Cash and due from banks
14 unchanged sentences
Interest Rate Caps
−Removed: Mortgage banking derivatives
December 31, 2019
16 unchanged sentences
Mortgage banking derivatives
−Removed: Supplemental Executive Retirement Plan
−Removed: The Bank has entered into Supplemental Executive Retirement and Death Benefit Agreements (the “SERP Agreements”) with certain of the Bank’s executive officers, which upon the executive’s retirement, will provide for a stated monthly payment for such executive’s lifetime subject to certain death benefits described below.
−Removed: The retirement benefit is computed as a percentage of each executive’s projected average base salary over the five years preceding retirement, assuming retirement at age 67 .
−Removed: The SERP Agreements provide that (a) the benefits vest ratably over six years of service to the Bank, with the executive receiving credit for years of service prior to entering into the SERP Agreement, (b) death, disability and change-in-control shall result in immediate vesting, and (c) the monthly amount will be reduced if retirement occurs earlier than age 67 for any reason other than death, disability or change-in-control.
−Removed: The SERP Agreements further provide for a death benefit in the event the retired executive dies prior to receiving 180 monthly installments, paid either in a lump sum payment or continued monthly installment payments, such that the executive’s beneficiary has received payment(s) sufficient to equate to a cumulative 180 monthly installments.
−Removed: The SERP Agreements are unfunded arrangements maintained primarily to provide supplemental retirement benefits and comply with Section 409A of the Internal Revenue Code.
−Removed: The Bank financed the retirement benefits by purchasing fixed annuity contracts with four insurance carriers in 2013 totaling $ 11.4 million and two insurance carriers in 2019 totaling $ 2.6 million.
−Removed: These annuity contracts have been designed to provide a future source of funds for the lifetime retirement benefits of the SERP Agreements.
−Removed: The primary impetus for utilizing fixed annuities is a substantial savings in compensation expenses for the Bank as opposed to a traditional SERP Agreement.
−Removed: For the three months ended March 31, 2020, the annuity contracts accrued $ 40 thousand of income which was included in other noninterest income on the Consolidated Statement of Operations.
−Removed: For the three months ended March 31, 2019, the annuity contracts accrued $ 32 thousand of income which was included in other noninterest income on the Consolidated Statement of Operations.
−Removed: The cash surrender value of the annuity contracts was $ 14.7 million at March 31, 2020 and December 31, 2019, respectively, and is included in other assets on the Consolidated Balance Sheets.
−Removed: For the three months ended March 31, 2020, the Company recorded benefit expense accruals of $ 108 thousand for this post retirement benefit.
−Removed: For the three months ended March 31, 2019, the Company recorded benefit expense accruals of $ 101 thousand for this post retirement benefit.
−Removed: Upon death of a named executive, the annuity contract related to such executive terminates.
−Removed: The Bank has purchased additional bank owned life insurance contracts, which would effectively finance payments (up to a 15 year certain amount) to the executives’ named beneficiaries.
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.