1 unchanged sentence
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ( Crowe LLP Los Angeles, California PCAOB ID 173 )
−Removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Eide Bailly LLP Laguna Hills, California PCAOB ID 286) 78
CONSOLIDATED FINANCIAL STATEMENTS
6 unchanged sentences
Report of Independent Registered Public Accounting Firm
−Removed: Shareholders and the Board of Directors of
+Added: Shareholders and the Board of Directors of RBB Bancorp
Los Angeles, California
−Removed: Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of RBB Bancorp (the "Company") as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the years ended December 31, 2023 and 2022, and the related notes (collectively referred to as the "financial statements").
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years ended December 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework:
−Removed: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 12, 2024 expressed an adverse opinion.
+Added: Opinion on the Financial Statements and Internal Control over Financial Reporting
+Added: We have audited the accompanying consolidated balance sheets of RBB Bancorp (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").
+Added: We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:
+Added: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
+Added: In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
+Added: Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:
+Added: (2013) issued by COSO.
Change in Accounting Principal
4 unchanged sentences
Basis for Opinion
−Removed: These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company's financial statements based on our audits.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
+Added: The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.
+Added: Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.
+Added: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
+Added: Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matters
+Added: Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
+Added: Our audits also included performing such other procedures as we considered necessary in the circumstances.
+Added: We believe that our audits provide a reasonable basis for our opinions.
+Added: Definition and Limitations of Internal Control Over Financial Reporting
+Added: A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
+Added: A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
+Added: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
+Added: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
+Added: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
+Added: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
+Added: Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
4 unchanged sentences
Measurement of Credit Losses on Financial Instruments”, effective January 1, 2022, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination.
−Removed: Due to the adoption of Current Expected Credit Losses (CECL), the Company recorded a $2.10 million transition adjustment for the allowance for credit losses (ACL) through retained earnings on January 1, 2022.
−Removed: As of December 31, 2023, the Company had gross loan portfolio of $3.03 billion and a related allowance for credit losses on loans of $41.90 million.
+Added: As of December 31, 2024, the Company had a gross loan portfolio of $3.05 billion and a related allowance for credit losses on loans of $47.73 million.
The Company’s discounted cash flow methodology incorporates a probability of default, loss given default and exposure at default model, as well as expectations of future economic conditions, using reasonable and supportable forecasts.
20 unchanged sentences
March 17, 2025
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: Shareholders and the Board of Directors of
−Removed: Los Angeles, California
−Removed: Opinion on Internal Control over Financial Reporting
−Removed: We have audited RBB Bancorp’s (the “Company”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework:
−Removed: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
−Removed: In our opinion, because of the effects of the material weaknesses discussed in the following paragraph, the Company has not maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework:
−Removed: (2013) issued by COSO.
−Removed: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: The following material weakness has been identified and included in management's report.
−Removed: Material weakness in controls related to infrequent transactions such as the income recognition for the Community Development Financial Institution Equitable Recovery Program award.
−Removed: Material weakness in the Company’s control environment.
−Removed: Specifically, the Company failed to demonstrate a commitment to attract, develop, and retain competent individuals in the area of internal control over financial reporting.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of RBB Bancorp (the "Company") as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the years ended December 31, 2023 and 2022, and the related notes (collectively referred to as the "financial statements") and our report dated March 12, 2024 expressed an unqualified opinion.
−Removed: We considered the material weaknesses identified above in determining the nature, timing, and extent of audit procedures applied in our audit of the 2023 financial statements, and this report on Internal Control over Financial Reporting does not affect such report on the financial statements.
−Removed: Basis for Opinion
−Removed: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.
−Removed: Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
−Removed: Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
−Removed: Our audit also included performing such other procedures as
−Removed: we considered necessary in the circumstances.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: Definition and Limitations of Internal Control Over Financial Reporting
−Removed: A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
−Removed: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
−Removed: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
−Removed: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: /s/ Crowe LLP
−Removed: Los Angeles, California
−Removed: March 12, 2024
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: Board of Directors and Shareholders of
RBB BANCORP AND SUBSIDIARIES
−Removed: Los Angeles, California
−Removed: Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows of RBB Bancorp and Subsidiaries (the Company) for the year ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).
−Removed: In our opinion, these financial statements present fairly, in all material respects, the results of operations and cash flows of RBB Bancorp and Subsidiaries for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
−Removed: Change in Accounting Principle
−Removed: As discussed in Note 2 and Note 14 to the financial statements, the Company has adopted the provisions of FASB Accounting Standards Codification Topic 842, Leases , as of January 1, 2021 using the modified retrospective approach with an adjustment at the beginning of the adoption period.
−Removed: Our opinion is not modified with respect to this matter.
−Removed: Basis for Opinion
−Removed: The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
−Removed: Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that responds to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: Our audit also included performing such other procedures as we considered necessary in the circumstances.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: We served as the Company’s auditor since 2019.
−Removed: Vavrinek, Trine, Day & Co., LLP, who joined Eide Bailly LLP in 2019, had served as the Company’s auditor since 2008.
−Removed: Laguna Hills, California
−Removed: March 12, 2024
−Removed: RBB BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
4 unchanged sentences
Interest-earning deposits in other financial institutions
+Added: 229,998 408,702
+Added: Cash and cash equivalents
+Added: 257,745 431,373
+Added: Interest-earning time deposits in other financial institutions
Available for sale
1 unchanged sentence
Held to maturity (fair value of $ 4,948 and $ 5,097 at December 31, 2024 and December 31, 2023)
−Removed: Mortgage loans held for sale
+Added: Loans held for sale
Loans held for investment
3,053,230 3,031,861
−Removed: Unaccreted discount on acquired loans
−Removed: ( 970 ) ( 1,238 )
−Removed: Deferred loan costs, net
−Removed: Total loans, net of deferred loan costs and unaccreted discounts on acquired loans
−Removed: 3,031,861 3,336,449
Allowance for loan losses
( 47,729 ) ( 41,903 )
−Removed: Total loans held for investment, net
+Added: Loans held for investment, net of allowance for loan losses
3,005,501 2,989,958
5 unchanged sentences
19,055 15,765
+Added: Income tax receivable
Cash surrender value of bank owned life insurance (BOLI)
56 unchanged sentences
Interest and fees on loans
−Removed: $ 194,264 $ 171,099 $ 141,569
Interest on interest-earning deposits
−Removed: 10,746 1,353 552
Interest on investment securities
−Removed: 14,028 6,084 3,379
Dividend income on FHLB stock
−Removed: 1,125 938 869
Interest on federal funds sold and other
−Removed: 985 1,496 694
Total interest and dividend income
−Removed: 221,148 180,970 147,063
Interest expense:
Interest on savings deposits, NOW and money market accounts
−Removed: 12,205 5,561 2,786
Interest on time deposits
−Removed: 76,837 13,338 9,170
−Removed: Interest on subordinated debentures and long-term debt
−Removed: 9,951 9,645 8,999
−Removed: Interest on other borrowed funds
−Removed: 2,869 2,872 1,765
+Added: Interest on long-term debt and subordinated debentures
+Added: Interest on FHLB advances
Total interest expense
−Removed: 101,862 31,416 22,720
Net interest income before provision for credit losses
−Removed: 119,286 149,554 124,343
Provision for credit losses
−Removed: 3,362 4,935 3,959
Net interest income after provision for credit losses
−Removed: 115,924 144,619 120,384
Noninterest income:
Service charges and fees
−Removed: 4,172 4,145 4,524
Loan servicing fees, net of amortization
−Removed: 2,576 2,209 684
Increase in cash surrender value of BOLI
−Removed: 1,409 1,322 1,067
Gain on sale of loans
−Removed: 374 1,895 9,991
Gain on sale of fixed assets
−Removed: 6,455 924 2,479
Total noninterest income
−Removed: 15,018 11,252 18,745
Noninterest expense:
Salaries and employee benefits
−Removed: 37,795 35,488 33,568
Occupancy and equipment expenses
−Removed: 9,629 9,092 8,691
Data processing
−Removed: 5,326 5,060 4,474
Legal and professional
−Removed: 8,198 5,383 3,773
Office expenses
−Removed: 1,512 1,438 1,197
Marketing and business promotion
−Removed: 1,132 1,578 1,157
Insurance and regulatory assessments
−Removed: 3,165 1,850 1,561
Core deposit premium amortization
−Removed: 923 1,086 1,121
Other expenses
−Removed: 3,016 3,551 2,650
Total noninterest expense
−Removed: 70,696 64,526 58,192
Net income before income taxes
−Removed: 60,246 91,345 80,937
Income tax expense
−Removed: 17,781 27,018 24,031
−Removed: $ 42,465 $ 64,327 $ 56,906
Net income per share
−Removed: $ 2.24 $ 3.37 $ 2.92
−Removed: 2.24 3.33 2.86
Weighted-average common shares outstanding
−Removed: 18,965,346 19,099,509 19,423,549
−Removed: 18,985,233 19,332,639 19,834,306
The accompanying notes are an integral part of these consolidated financial statements.
3 unchanged sentences
(In thousands)
−Removed: $ 42,465 $ 64,327 $ 56,906
−Removed: Other comprehensive income/(loss):
−Removed: Unrealized gains/(losses) on securities available for sale
−Removed: 3,149 ( 28,905 ) ( 3,957 )
+Added: Other comprehensive (loss)/income:
+Added: Unrealized (losses)/gains on securities available for sale
Related income tax effect
−Removed: ( 996 ) 8,896 1,172
−Removed: Total other comprehensive income/(loss)
−Removed: 2,153 ( 20,009 ) ( 2,785 )
+Added: Total other comprehensive (loss)/income
Total comprehensive income
−Removed: $ 44,618 $ 44,318 $ 54,121
The accompanying notes are an integral part of these consolidated financial statements.
6 unchanged sentences
Non- Controlling Interest
−Removed: Other Comprehensive Income (Loss)
+Added: Other Comprehensive (Loss) Income
Balance at January 1, 2022
19,455,544 $ 282,335 $ 4,603 $ 181,329 $ 72 $ ( 1,656 ) $ 466,683
+Added: Cumulative effect of change in accounting principle related to ASC 326 (1)
— — — ( 2,204 ) — — ( 2,204 )
+Added: — — — 64,327 — — 64,327
Stock-based compensation, net
— — 848 — — — 848
−Removed: Restricted stock granted
+Added: Restricted stock cancelled
( 40,000 ) — — — — — —
1 unchanged sentence
— 355 ( 355 ) — — — —
+Added: Restricted stock unit vested
+Added: 7,450 202 ( 202 ) — — — —
Cash dividends on common stock ($ 0.56 per share)
8 unchanged sentences
18,965,776 $ 276,912 $ 3,361 $ 225,883 $ 72 $ ( 21,665 ) $ 484,563
−Removed: Cumulative effect of change in accounting principle related to ASC 326 (1)
— — — 42,465 — — 42,465
−Removed: — — — 64,327 — — 64,327
Stock-based compensation, net
— — 750 — — — 750
−Removed: Restricted stock cancelled
−Removed: ( 40,000 ) — — — — — —
−Removed: Restricted stock vested
−Removed: — 355 ( 355 ) — — — —
Restricted stock unit vested
6 unchanged sentences
( 396,374 ) ( 5,770 ) — ( 1,033 ) — — ( 6,803 )
−Removed: Other comprehensive loss, net of taxes
+Added: Other comprehensive income, net of taxes
— — — — — 2,153 2,153
12 unchanged sentences
( 1,036,750 ) ( 15,039 ) — ( 5,637 ) — — ( 20,676 )
−Removed: Other comprehensive income, net of taxes
+Added: Other comprehensive loss, net of taxes
— — — — — ( 745 ) ( 745 )
8 unchanged sentences
Operating activities
−Removed: $ 42,465 $ 64,327 $ 56,906
Adjustments to reconcile net income to net cash from Operating activities:
Depreciation and amortization of premises and equipment
−Removed: 2,018 2,022 1,943
Net accretion of discount for securities, loans, deposits, and other
−Removed: ( 5,396 ) ( 432 ) ( 191 )
−Removed: Unrealized (gain)/loss on equity securities
+Added: Unrealized gain on equity securities
Amortization of investment in affordable housing tax credits
−Removed: 1,127 1,053 1,037
Amortization of intangible assets
−Removed: 2,568 3,853 6,347
−Removed: Reversal of an impairment allowance on mortgage servicing rights
Amortization of right-of-use asset
−Removed: 5,042 5,145 5,245
Change in operating lease liabilities
−Removed: ( 4,730 ) ( 4,897 ) ( 5,058 )
Provision for credit losses
−Removed: 3,362 4,935 3,959
Stock-based compensation, net
−Removed: 750 848 1,086
−Removed: Deferred tax expense/(benefit)
−Removed: 216 ( 2,249 ) ( 1,093 )
+Added: Deferred tax (benefit)/expense
Gain on sale of loans
−Removed: ( 374 ) ( 1,895 ) ( 9,991 )
−Removed: Gain on sale of OREO
Gain on sale of fixed assets
−Removed: ( 32 ) ( 757 ) —
Increase in cash surrender value of BOLI
−Removed: ( 1,409 ) ( 1,322 ) ( 1,067 )
Loans originated and purchased for sale, net
−Removed: ( 15,058 ) ( 39,152 ) ( 161,972 )
Proceeds from loans sold
−Removed: 18,743 60,170 305,337
−Removed: 2,158 2,163 ( 256 )
Net cash provided by operating activities
−Removed: 51,292 93,812 202,175
Investing activities
Securities available for sale:
−Removed: ( 694,210 ) ( 402,656 ) ( 603,836 )
Maturities, repayments and calls
−Removed: 640,993 485,796 442,056
Securities held to maturity:
Maturities, repayments and calls
−Removed: Redemption of Federal Home Loan Bank stock
Purchase of Federal Home Loan Bank stock and other equity securities, net
−Removed: ( 479 ) ( 2,608 ) ( 5,839 )
Net increase of investment in qualified affordable housing projects
−Removed: ( 279 ) ( 227 ) ( 763 )
−Removed: Net decrease/(increase) in loans
−Removed: 296,693 ( 411,316 ) ( 315,551 )
+Added: Net (increase)/decrease in loans
Proceeds from sales of OREO
−Removed: Purchase of bank owned life insurance
−Removed: — — ( 19,800 )
Net cash received in connection with acquisition
1 unchanged sentence
Purchases of premises and equipment
−Removed: ( 652 ) ( 2,065 ) ( 1,989 )
−Removed: Net cash provided by/(used in) investing activities
−Removed: 243,309 ( 260,171 ) ( 504,181 )
+Added: Net cash (used in)/provided by investing activities
Financing activities
−Removed: Net (decrease)/increase in demand deposits and savings accounts
−Removed: ( 241,730 ) ( 886,712 ) 870,803
−Removed: Net increase/(decrease) in time deposits
−Removed: 438,625 397,329 ( 120,178 )
+Added: Net increase/(decrease) in demand deposits and savings accounts
+Added: Net (decrease)/increase in time deposits
Advances from Federal Home Loan Bank
−Removed: 80,000 570,000 —
Repayment of Federal Home Loan Bank borrowings
−Removed: ( 150,000 ) ( 500,000 ) —
Cash dividends paid
−Removed: ( 12,163 ) ( 10,736 ) ( 9,947 )
+Added: Restricted stock units vesting
Redemption of subordinated notes
−Removed: ( 55,000 ) — ( 50,000 )
−Removed: Issuance of subordinated notes, net of issuance costs
Common stock repurchased, net of repurchased costs
−Removed: ( 6,803 ) ( 19,822 ) ( 10,540 )
Exercise of stock options
−Removed: 295 5,476 3,475
−Removed: Net cash provided by/(used in) financing activities
−Removed: 53,224 ( 444,465 ) 801,724
−Removed: Net increase/(decrease) in cash and cash equivalents
−Removed: 347,825 ( 610,824 ) 499,718
+Added: Net cash (used in)/provided by financing activities
+Added: Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
−Removed: 83,548 694,372 194,654
Cash and cash equivalents at end of period
−Removed: $ 431,373 $ 83,548 $ 694,372
Supplemental disclosure of cash flow information
1 unchanged sentence
Interest paid
−Removed: $ 93,721 $ 29,734 $ 22,507
−Removed: 21,389 24,019 25,786
Non-cash investing and financing activities:
Transfer from loans to other real estate owned
−Removed: Loans transfer to held for sale, net
−Removed: 5,254 13,166 89,368
+Added: Loans transferred to held for sale, net
Additions to servicing assets
−Removed: 234 771 2,361
Recognition of operating lease right-of-use assets
−Removed: ( 9,398 ) ( 8,138 ) ( 27,699 )
Recognition of operating lease liabilities
−Removed: 9,398 8,138 27,699
Assets acquired, net of cash received
1 unchanged sentence
Cash receipts
−Removed: — ( 71,040 ) —
The accompanying notes are an integral part of these consolidated financial statements.
5 unchanged sentences
When we refer to “we”, “us”, “our”, or the “Company”, we are referring to RBB Bancorp and its consolidated subsidiaries including the Bank, collectively.
−Removed: When we refer to the “parent company”, “Bancorp”, or the “holding company”, we are referring to RBB Bancorp, the parent company, on a stand-along basis.
−Removed: At December 31, 2023, the Company had total assets of $ 4.0 billion, gross consolidated loans (held for investment and held for sale) of $ 3.0 billion, total deposits of $ 3.2 billion and total shareholders' equity of $ 511.3 million.
−Removed: The Bank provides business-banking products and services predominantly to the Asian-American communities through full service branches located in Los Angeles County, Orange County and Ventura County in California, in the Las Vegas, Nevada and New York City metropolitan areas, Chicago (Illinois), Edison (New Jersey) and Honolulu (Hawaii).
−Removed: The products and services include commercial and investor real estate loans, business loans and lines of credit, Small Business Administration (“SBA”) 7A and 504 loans, mortgage loans, trade finance and a full range of depository accounts, including specialized services such as remote deposit, E-banking, and mobile banking.
+Added: When we refer to the “parent company”, “Bancorp”, or the “holding company”, we are referring to RBB Bancorp, the parent company, on a stand-alone basis.
+Added: At December 31, 2024, the Company had total assets of $ 4.0 billion, gross consolidated loans of $ 3.1 billion, total deposits of $ 3.1 billion and total shareholders' equity of $ 507.9 million.
+Added: The Bank provides business-banking and consumer products and services predominantly to the Asian-centric communities through full service branches located in Los Angeles County, Orange County and Ventura County in California, Las Vegas (Nevada), the New York City metropolitan areas, Chicago (Illinois), Edison (New Jersey) and Honolulu (Hawaii).
+Added: The products and services include commercial and investor real estate loans, business loans and lines of credit, Small Business Administration (“SBA”) 7A and 504 loans, mortgage loans, trade finance and a full range of depository accounts, including specialized services such as remote deposit, E-banking, mobile banking and treasury management services.
The Bank acquired the Honolulu, Hawaii branch (the “Hawaii Branch”) from Bank of the Orient (“BOTO”) on January 14, 2022.
−Removed: The Company operates full-service banking offices in Arcadia, Cerritos, Diamond Bar, Irvine, Los Angeles, Monterey Park, Oxnard, Rowland Heights, San Gabriel, Silver Lake, Torrance, and Westlake Village, California;
+Added: We operate as a minority depository institution (“MDI”), which is defined by the Federal Deposit Insurance Corporation (“FDIC”) as a federally insured depository institution where 51% or more of the voting stock is owned by minority individuals or a majority of the board of directors is minority and the community that the institution serves is predominantly minority.
+Added: A MDI is eligible to receive support from the FDIC and other federal regulatory agencies such as training, technical assistance and review of proposed new deposit taking and lending programs, and the adoption of applicable policies and procedures governing such programs.
+Added: We intend to maintain our MDI designation, as it is expected that at least 51% of our issued and outstanding shares of capital shall remain owned by minority individuals.
+Added: The MDI designation has been historically beneficial to us, and we continue to use the program for technical assistance.
+Added: In addition, we have been designated a community development financial institution (“CDFI”).
+Added: CDFIs are certified by the CDFI Fund at the U.S.
+Added: Department of the Treasury (“Treasury”), which provide funds to CDFIs through a variety of programs.
+Added: We have established a CDFI advisory board to assist the Bank in finding organizations to support low-to-moderate income individuals.
+Added: We operate 24 banking offices in Arcadia, Cerritos, Diamond Bar, Irvine, Los Angeles, Monterey Park, Oxnard, Rowland Heights, San Gabriel, Silver Lake, Torrance, and Westlake Village, California;
Las Vegas, Nevada;
3 unchanged sentences
and Honolulu, Hawaii.
−Removed: The Company's primary source of revenue is providing loans to customers, who are predominately small and middle-market businesses and individuals.
−Removed: The Company generates its revenue primarily from interest received on loans and leases and, to a lesser extent, from interest received on investment securities.
−Removed: The Company also derives income from noninterest sources, such as fees received in connection with various lending and deposit services, loan servicing, gain on sales of loans and wealth management services.
−Removed: The Company’s principle expenses include interest expense on deposits and other long-term debt, and operating expenses, such as salaries and employee benefits, occupancy and equipment, data processing, and income tax expense.
−Removed: The Company completed six whole bank acquisitions and one branch acquisition from July 2011 through January 2022.
−Removed: All of the Company’s acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the operating results of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates.
−Removed: The Company previously disclosed that, on December 28, 2021, it entered into a definitive agreement to acquire Gateway Bank F.S.B.
−Removed: (“Gateway”) in an all cash transaction, subject to certain terms and conditions.
−Removed: On September 28, 2023, the Company announced that it and Gateway have mutually agreed to terminate the definitive agreement, effective as of September 28, 2023.
−Removed: Neither party has or will have any liability or pay any penalty to the other party as a result of the termination, and each party has released the other from any and all claims related to the definitive agreement or the transactions contemplated by the definitive agreement.
+Added: Our primary source of revenue is providing loans to customers, who are predominately small and middle-market businesses and individuals.
+Added: We generate our revenue primarily from interest received on loans and, to a lesser extent, from interest received on investment securities.
+Added: We also derive income from noninterest sources, such as fees received in connection with various lending and deposit services, loan servicing, gain on sales of loans and wealth management services.
+Added: Our principal expenses include interest expense on deposits and borrowings, and operating expenses, such as salaries and employee benefits, occupancy and equipment, data processing, and income tax expense.
+Added: We completed six whole bank acquisitions and one branch acquisition from July 2011 through January 2022.
+Added: All of our acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the operating results of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
−Removed: The accompanying consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10 -K and conform to practices within the banking industry and include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for financial reporting.
+Added: The accompanying consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10 -K and conform to practices within the banking industry and include all of the information and disclosures required by U.S.
+Added: Generally Accepted Accounting Principles (“GAAP”) for financial reporting.
Principles of Consolidation and Nature of Operations
−Removed: The accompanying consolidated financial statements include the accounts of RBB Bancorp and its wholly-owned subsidiaries RBB and RAM.
+Added: The accompanying consolidated financial statements include the accounts of RBB Bancorp and its wholly-owned subsidiaries, the Bank and RAM.
All significant intercompany transactions have been eliminated.
1 unchanged sentence
However, through our whole bank acquisition activity, we have acquired three statutory business trusts:
−Removed: TFC Statutory Trust, FAIC Statutory Trust and PGB Capital Trust I.
+Added: TFC Statutory Trust, FAIC Statutory Trust I and PGB Capital Trust I.
These trusts issued trust preferred securities representing undivided preferred beneficial interests in the assets of these trusts.
1 unchanged sentence
The parent company only condensed financial information on RBB Bancorp is provided in Note 23.
−Removed: In connection with the 2018 acquisition of First American International Corp (“FAIC”), the Company acquired FAIB Capital Corp.
+Added: In connection with the 2018 acquisition of First American International Corp (“FAIC”), we acquired FAIB Capital Corp.
(“FAICC”), a real estate investment trust formed on August 28, 2013 as a New York State corporation, which operates as a wholly-owned subsidiary of the Bank.
3 unchanged sentences
The allowance for credit losses, realization of deferred tax assets, the valuation of goodwill and other intangible assets, other derivatives, and the fair value measurement of financial instruments are particularly subject to change and such change could have a material effect on the consolidated financial statements.
+Added: Summary of Significant Accounting Policies
Cash and Cash Equivalents
−Removed: Cash and cash equivalents include cash and due from banks, term federal funds sold and interest-bearing deposits in other financial institutions with original maturities of less than 90 days.
−Removed: Net cash flows are reported for customer loan and deposit transactions and interest-bearing deposits in other financial institutions.
+Added: Cash and cash equivalents include cash and due from banks and interest-earning deposits in other financial institutions with original maturities of less than 90 days.
+Added: Net cash flows are reported for customer loan and deposit transactions and interest-earning deposits in other financial institutions.
Cash and Due from Banks
1 unchanged sentence
There were no reserves required to be held as of December 31, 2024 and 2023.
−Removed: The Company maintains amounts in due from bank accounts, which may exceed federally insured limits.
−Removed: The Company has not experienced any losses in such accounts.
−Removed: Interest-Earning Deposits in Other Financial Institutions
−Removed: Interest-bearing deposits in other financial institutions not included in cash and cash equivalents are carried at cost and generally mature in one year or less.
+Added: We maintain amounts in due from bank accounts, which may exceed federally insured limits.
+Added: We have not experienced any losses in such accounts.
+Added: Interest-Earning Time Deposits in Other Financial Institutions
+Added: Interest-earning time deposits in other financial institutions not included in cash and cash equivalents are carried at cost and generally mature in one year or less.
Investment Securities
−Removed: Investment securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity.
−Removed: Debt securities not classified as held to maturity are classified as available for sale.
−Removed: Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.
+Added: Investment securities are classified as held to maturity (“HTM”) and carried at amortized cost when management has the positive intent and ability to hold them to maturity.
+Added: Investment securities not classified as HTM are classified as available for sale (“AFS”).
+Added: AFS securities are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.
Interest income includes amortization of purchase premiums or discounts.
1 unchanged sentence
Gains and losses on sales are recorded on the trade date and determined using the specific identification method.
−Removed: Prior to January 1, 2022, management evaluated debt securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.
−Removed: For securities in an unrealized loss position, management considered the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer.
−Removed: Management also assessed whether it intended to sell, or it was more likely than not that it would be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis.
−Removed: If either of the criteria regarding intent or requirement to sell was met, the entire difference between amortized cost and fair value was recognized as impairment through earnings.
−Removed: For debt securities that do not meet the aforementioned criteria, the amount of impairment was split into two components as follows;
−Removed: OTTI related to credit loss, which must be recognized in the income statement and;
−Removed: OTTI related to other factors, which was recognized in other comprehensive income.
−Removed: The credit loss was defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.
−Removed: Effective January 1, 2022, upon the adoption of ASU 2016 - 13, Financial Instruments—Credit Losses (Topic 326 ), the Company accounts for credit losses on available for sale securities in accordance with ASC 326 - 30.
−Removed: Debt securities are measured at fair value and subject to impairment testing.
−Removed: When a debt security is considered impaired, the Company must determine if the decline in fair value has resulted from a credit-related loss or other factors and then, ( 1 ) recognize an allowance for credit loss by a charge to earnings for the credit-related component (if any) of the decline in fair value, and ( 2 ) recognize in other comprehensive income (loss) any non-credit related components of the fair value change.
−Removed: If the amount of the amortized cost basis expected to be recovered increases in a future period, the valuation reserve would be reduced, but not more than the amount of the current existing reserve for that security.
−Removed: For available-for-sale 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: Allowance for Credit Losses - HTM securities
+Added: Management measures expected credit losses on HTM debt securities on a collective basis by major security type and accrued interest receivable on HTM debt securities is excluded from the estimate of credit losses.
+Added: The estimate of expected credit losses on HTM securities considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.
+Added: Allowance for Credit Losses - AFS securities
+Added: For AFS debt securities in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of the amortized cost basis.
If either of the criteria regarding intent or requirement to sell is met, then the security’s amortized cost basis is written down to fair value through income.
−Removed: For debt securities available-for-sale 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.
+Added: For debt securities AFS that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors.
+Added: In making this assessment, we consider 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.
If this assessment indicates that a credit loss exists, then the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.
1 unchanged sentence
Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss).
−Removed: Changes in the allowance for credit losses are recorded as credit loss expense (or reversal).
−Removed: Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
−Removed: Accrued interest receivable on available-for-sale debt securities totaled $ 919,000 and $ 759,000 at December 31, 2023 and 2022, and is excluded from the estimate of credit losses.
−Removed: Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type.
−Removed: Accrued interest receivable on held-to-maturity debt securities totaled $ 43,000 and $ 51,000 at December 31, 2023 and 2022, and is excluded from the estimate of credit losses.
+Added: Changes in the allowance for credit losses on AFS securities are recorded as credit loss expense (or reversal).
+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: Accrued interest receivable on AFS debt securities is excluded from the estimate of credit losses.
Loans Held For Sale
Mortgage loans originated or acquired and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors.
−Removed: Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.
−Removed: Loans held for sale consist primarily of first trust deed mortgages on single-family residential properties located in California and New York.
Mortgage loans held for sale are generally sold with servicing rights retained.
1 unchanged sentence
Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loans sold.
−Removed: Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances reduced by any charge-offs and net of any deferred fees or costs on originated loans, or unamortized premiums or discounts on purchased loans.
+Added: We may transfer loans from held for investment to held for sale.
+Added: Upon transfer, the carrying value of the loan is adjusted to the lower of cost or estimated fair value.
+Added: Any write-downs in the carrying amount of the loan at the date of transfer are recorded as charge-offs to allowance for loan losses.
+Added: The unamortized balance of deferred fees and costs associated with loans held for sale is deferred until the time of sale and are included in the determination of the lower of cost or fair value adjustments and/or the gain or loss recognized at the time of sale.
+Added: Gains or losses on the sale of these loans are recorded as noninterest income in the consolidated statements of earnings.
+Added: Loans held for sale at December 31, 2024 consisted primarily of nonperforming commercial real estate loans under contract for sale.
+Added: Loans held for sale at December 31, 2023 consisted primarily of first trust deed mortgages on single-family residential properties located in California and New York.
+Added: Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances reduced by any charge-offs and net of any unamortized deferred fees or costs on originated loans, or unamortized premiums or discounts on purchased loans.
Loan origination fees and certain direct origination costs are deferred and recognized in interest income using the level-yield method without anticipating prepayments.
1 unchanged sentence
Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans.
−Removed: The accrual of interest on loans is discontinued when principal or interest is past due 90 days or when, in the opinion of management, there is reasonable doubt as to collectability based on contractual terms of the loan.
+Added: The accrual of interest on loans is discontinued when principal or interest is past due 90 days or when, in the opinion of management, there is reasonable doubt as to collectability based on the contractual terms of the loan.
When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income.
1 unchanged sentence
Interest accruals are resumed on such loans only when they are brought current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to all principal and interest.
−Removed: Allowance for Credit Losses - Loans
−Removed: Effective January 1, 2022, upon the adoption of ASU 2016 - 13, Financial Instruments—Credit Losses (Topic 326 ), the Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination.
−Removed: The allowance for credit losses (“ACL”) is maintained at a level deemed appropriate by management to provide for expected credit losses in the loan portfolio as of the date of the consolidated balance sheet.
+Added: Allowance for Credit Losses (“ACL”) - Loans
+Added: Effective January 1, 2022, upon the adoption of ASU 2016 - 13, Financial Instruments—Credit Losses (ASC 326 ), we account for credit losses on loans in accordance with ASC 326, which requires us to record an estimate of expected lifetime credit losses for loans at the time of origination.
+Added: The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the loan portfolio as of the date of the consolidated balance sheets.
Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts.
The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics.
−Removed: The Company has elected to utilize a DCF approach for all segments except for consumer loans and loans to non-depository financial institutions, which use a remaining life approach.
−Removed: The Company’s DCF methodology incorporates a probability of default, loss given default and exposure at default model, as well as expectations of future economic conditions, using reasonable and supportable forecasts.
−Removed: The Company uses both internal and external qualitative factors within the current expected credit losses (“CECL”) model including:
+Added: We have elected to utilize a DCF approach for all segments except for consumer loans and loans to non-depository financial institutions, which use a remaining life approach.
+Added: Our DCF methodology incorporates a probability of default, loss given default and exposure at default model, as well as expectations of future economic conditions, using reasonable and supportable forecasts.
+Added: We use both internal and external qualitative factors within the current expected credit losses (“CECL”) model including:
lending policies, procedures, and strategies;
7 unchanged sentences
and economic conditions.
−Removed: The Company determines the weighting of the qualitative factors based on management’s ability to directly control or influence the level of risk exposure.
−Removed: The factors related to economic conditions, collateral values, and the regulatory and business environment were assigned a higher allocation, and the remaining factors related to internal conditions received a lower allocation.
+Added: We determine the weighting of the qualitative factors based on management’s ability to directly control or influence the level of risk exposure.
Management further estimates the allowance balance required using past loan loss experience from peers with similar portfolio sizes and geographic locations to the Company, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.
−Removed: The Company’s CECL methodology utilizes a four -quarter reasonable and supportable forecast period, and a four -quarter reversion period.
+Added: Our CECL methodology utilizes a four -quarter reasonable and supportable forecast period, and a four -quarter reversion period.
The Company is using the Federal Open Market Committee to obtain forecasts for the unemployment rate, while reverting to a long-run average of each considered economic factor.
−Removed: The Company records a liability for lifetime expected credit losses on off-balance-sheet credit exposure that do not fit the definition of unconditionally cancelable in accordance with ASC 326.
−Removed: The Company uses the loss rate and exposure of default framework to estimate a reserve for unfunded commitments.
+Added: We record a liability for expected credit losses on off-balance-sheet credit exposure that do not fit the definition of unconditionally cancelable in accordance with ASC 326.
+Added: The Company uses the loss rate and exposure at default framework to estimate a reserve for unfunded commitments.
Loss rates for the expected funded balances are determined based on the associated pooled loan analysis loss rate and the exposure at default is based on an estimated utilization given default.
−Removed: The Company assesses expected credit losses for individual instruments that have different risk characteristics than those that are evaluated on a collective (pooled) basis, in accordance with ASC 326.
+Added: We assess expected credit losses for individual instruments that have different risk characteristics than those that are evaluated on a collective (pooled) basis, in accordance with ASC 326.
An individual analysis will provide a specific reserve for instruments involved with fair market value of collateral or present value of future cash flow.
1 unchanged sentence
Credit losses are not estimated for accrued interest receivable as interest that is deemed uncollectible is written off through interest income.
−Removed: The Company adopted ASU 2022 - 02, Financial Instruments—Credit Losses (Topic 326 ), effective January 1, 2023.
−Removed: Upon adoption, the Company evaluates all receivable modifications under ASC 310 to determine whether a modification made to a borrower results in a new loan or a continuation of the existing loan.
+Added: We adopted ASU 2022 - 02, Financial Instruments—Credit Losses (Topic 326 ), effective January 1, 2023.
+Added: Upon adoption, we evaluate all receivable modifications under ASC 310 to determine whether a modification made to a borrower results in a new loan or a continuation of the existing loan.
The Company no longer considers renewals, modifications, or extensions resulting from reasonably expected troubled debt restructurings (“TDRs”) when calculating the allowance for credit losses under ASC 326.
The post-modification effective interest rate is used to calculate the allowance for credit losses when the DCF method is applied.
−Removed: Allowance for Loan Losses (prior to January 1, 2022)
−Removed: Prior to the Company's adoption of ASC 326, Financial Instruments—Credit Losses, on January 1, 2022, the Company maintained an allowance for loan losses (“ALL”) in accordance with ASC 450, Contingencies, and ASC 310, Receivables.
−Removed: The ALL was a valuation allowance for probable incurred credit losses.
−Removed: Loan losses were charged against the allowance when management believed the uncollectibility of a loan balance was confirmed.
−Removed: Subsequent recoveries, if any, were credited to the allowance.
−Removed: Management estimated the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations, estimated collateral values, economic conditions, and other factors.
−Removed: Allocations of the allowance may have been made for specific loans, but the entire allowance was available for any loan that, in management's judgment, should be charged-off.
−Removed: Amounts were charged-off when available information confirmed that specific loans or portions thereof, were uncollectible.
−Removed: This methodology for determining charge-offs was consistently applied to each segment.
Servicing Rights
2 unchanged sentences
All classes of servicing assets are subsequently measured using the amortization method, which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.
−Removed: Quarterly impairment is based upon the fair value of the rights as compared to carrying amount.
+Added: Quarterly impairment (if any) is based upon the fair value of the rights as compared to carrying amount.
Impairment is recognized through a charge to income to establish a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.
−Removed: If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.
+Added: If we later determine that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.
The estimated fair value of the servicing rights is obtained through independent third party valuations based on an analysis of future cash flows, incorporating key assumptions including discount rates, prepayment speeds and interest rates.
4 unchanged sentences
Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished.
−Removed: Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
−Removed: Gains on sale of mortgage loans totaled $ 112,000 , $ 1.2 million, and $ 7.9 million, and gains on sale of SBA loans totaled $ 262,000 , $ 696,000 , and $ 2.1 million in 2023, 2022, and 2021, respectively.
+Added: Control over transferred assets is deemed to be surrendered when the assets have been isolated from us, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and we do not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
+Added: We sold $ 47.7 million, $ 34.1 million and $ 46.1 million in mortgage loans during 2024, 2023, and 2022.
+Added: In addition, we sold $ 13.8 million, $ 4.2 million and $ 12.7 million in the guaranteed portion of SBA loans during 2024, 2023, and 2022.
+Added: Gains on sale of mortgage loans totaled $ 818,000 , $ 112,000 , and $ 1.2 million, and gains on sale of SBA loans totaled $ 768,000 , $ 262,000 , and $ 696,000 in 2024, 2023, and 2022.
Premises and Equipment
3 unchanged sentences
Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the remaining lease term, whichever is shorter.
−Removed: Expenditures for betterments or major repairs are capitalized and those for ordinary repairs and maintenance are charged to operations as incurred.
+Added: Expenditures for improvements or major repairs are capitalized and those for ordinary repairs and maintenance are charged to operations as incurred.
Operating Lease ROU Assets and Lease Liabilities
−Removed: Operating lease Right-of-Use (“ROU”) assets and lease liabilities are included in other assets and other liabilities, respectively, on the Company’s consolidated balance sheet.
+Added: Operating lease Right-of-Use (“ROU”) assets and lease liabilities are included in other assets and other liabilities, respectively, on our consolidated balance sheet.
The ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.
−Removed: The lease terms include periods covered by options to extend or terminate the lease depending on whether the Company is reasonably certain to exercise such options.
−Removed: The Company uses its incremental borrowing rate to determine the present value of its lease liabilities.
−Removed: The ROU asset, at adoption of ASU 2016 - 02, Leases (Topic 842 ), was recorded at the amount of the lease liability plus any prepaid rent and initial direct costs, less any lease incentives and accrued rent.
−Removed: Upon adoption of this Topic on January 1, 2021, the Company elected the package of practical expedients that permits the Company to not reassess its prior conclusions about lease identification, lease classification and initial direct costs.
−Removed: The Company also elected all of the new standard’s available transition practical expedients, including the short-term lease recognition exemption that includes not recognizing ROU assets or lease liabilities for existing short-term leases, and the practical expedient to not separate lease and non-lease components for all of the Company’s leases.
−Removed: The Company determines if a contract arrangement is a lease at inception and primarily enters into operating lease contracts for its branch locations, office space, and certain equipment.
−Removed: As part of its property lease agreements, the Company may seek to include options to extend or terminate at lease when it is reasonably certain that the Company will exercise those options.
−Removed: The Company's measurement of the ROU assets and operating lease liabilities does not include payments associated with the option to extend or terminate the lease term unless the Company is reasonably certain to exercise such options then the period will cover the option to extend or terminate.
−Removed: The ROU lease asset also includes any lease payments made and lease incentives.
+Added: The lease terms include periods covered by options to extend or terminate the lease if we are reasonably certain to exercise such options.
+Added: We use our incremental borrowing rate to determine the present value of our lease liabilities, and we do not recognize ROU assets or lease liabilities for short-term leases.
+Added: We determine if a contract arrangement is a lease at inception and we primarily enter into operating lease contracts for our branch locations, office space, and certain equipment.
Lease expense for lease payments is recognized on a straight-line basis over the lease term.
−Removed: The Company did not possess any leases that have variable lease payments or residual value guarantees as of December 31, 2023.
+Added: We did not possess any leases that have variable lease payments or residual value guarantees as of December 31, 2024.
Other Real Estate Owned
Real estate acquired by foreclosure or deed in lieu of foreclosure is recorded at fair value at the date of foreclosure, establishing a new cost basis by a charge to the allowance for credit losses, if necessary.
−Removed: Other real estate owned is carried at the lower of the Company's carrying value of the property or its fair value, less estimated carrying costs and costs of disposition.
+Added: Other real estate owned is carried at the lower of our carrying value of the property or its fair value, less estimated carrying costs and costs of disposition.
Fair value is based on current appraisals less estimated selling costs.
4 unchanged sentences
Goodwill resulting from whole bank and branch acquisitions is not amortized, but tested for impairment at least annually.
−Removed: The Company has selected October 1 as the date to perform the annual impairment test.
−Removed: Goodwill amounted to $ 71.5 million as of December 31, 2023 and 2022, and is the only intangible asset with an indefinite life on the balance sheet.
−Removed: No impairment was recognized on goodwill during 2023 and 2022.
−Removed: Goodwill in the amount of $ 2.3 million was recognized in conjunction with the acquisition of the Hawaii Branch from BOTO.
−Removed: After evaluating the prolonged decrease in the Company’s market value, management performed a quantitative goodwill impairment analysis as of September 30, 2023.
−Removed: Management engaged a third -party valuation specialist to assist with the quantitative analysis.
−Removed: The evaluation used two methods to estimate the value of the Company:
−Removed: the market approach and the income approach.
−Removed: The market approach uses pricing information available on publicly traded companies that are similar to the subject company to determine the value of the subject company.
−Removed: Estimates used in the market approach included selecting a representative peer group of institutions, determining the price to tangible book value based on the results of the peer group institutions, and estimating a control premium based on the whole-bank acquisition prices for representative transactions.
−Removed: The income approach is based on the discounted free cash flows of the subject company using projections of future results, and considering future economic forecasts and management’s plans.
−Removed: Estimates used in the income approach include management’s projections of the Company’s income in future periods and an appropriate rate of return that would be required by a market participant.
−Removed: Based on this quantitative analysis, the fair value of the Company exceeds its carrying amount with a passing amount of 9.6 % at September 30, 2023.
−Removed: In addition, due to changes in the Company’s projections of income in future periods during the fourth quarter of 2023 resulting from the current economic environment, at December 31, 2023, management performed certain calculations and sensitivity analyses related to the quantitative goodwill impairment analysis performed at September 30, 2023 and the current information.
−Removed: Based on this most recent analysis, management concluded that goodwill was also not impaired at December 31, 2023.
−Removed: Other intangible assets consist of core deposit intangible (“CDI”) assets arising from acquisitions.
−Removed: CDI assets are amortized on an accelerated method over their estimated useful life of 8 to 10 years.
−Removed: CDI was recognized in the 2013 acquisition of Los Angeles National Bank, in the 2016 acquisition of TFC Holding Company, in the 2018 acquisition of FAIC and in the 2020 acquisition of PGBH.
−Removed: In January 2022, $ 729,000 of CDI was recognized in conjunction with the Hawaii Branch purchase from BOTO.
−Removed: The following table presents changes in the carrying amount of CDI for the periods indicated:
−Removed: Year ended December 31,
−Removed: (dollars in thousands)
−Removed: Core deposit intangibles
−Removed: Balance, beginning of year
−Removed: $ 10,459 $ 9,730 $ 9,730
−Removed: Acquired from acquisitions
−Removed: Balance, end of year
−Removed: $ 10,459 $ 10,459 $ 9,730
−Removed: Accumulated amortization:
−Removed: Balance, beginning of year
−Removed: $ 6,741 $ 5,655 $ 4,534
−Removed: 923 1,086 1,121
−Removed: Balance, end of year
−Removed: $ 7,664 $ 6,741 $ 5,655
−Removed: Core deposit intangibles, net
−Removed: $ 2,795 $ 3,718 $ 4,075
−Removed: Estimated CDI amortization expense for the next 5 years is as follows:
−Removed: (dollars in thousands)
−Removed: Year ending December 31:
+Added: ASC Topic 350 provides entities with the option to perform a qualitative assessment to determine whether it is more likely than not (i.e., a likelihood of more than 50% ) that the fair value of a reporting unit is less than its carrying amount, including goodwill (the "Step 0" analysis).
Bank Owned Life Insurance
−Removed: The Company has purchased life insurance policies on a select group of employees and directors.
+Added: We have purchased life insurance policies on a select group of employees and directors.
Bank Owned Life Insurance (“BOLI”) is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.
−Removed: Increases of the cash value of these policies, as well as insurance proceeds received, are recorded in the other noninterest income and are not subject to income tax for as long as they are held for the life of the covered employees and directors.
+Added: Increases in the cash value of these policies, as well as insurance proceeds received, are recorded in the other noninterest income and are not subject to income tax for as long as they are held for the life of the covered employees and directors.
FHLB Stock and Other Equity Securities
−Removed: The Company is a member of the Federal Home Loan Bank (“FHLB”) system.
+Added: We are a member of the Federal Home Loan Bank (“FHLB”) system.
Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts.
1 unchanged sentence
Both cash and stock dividends are reported as income.
−Removed: The Company also owns an equity investment in Pacific Coast Banker’s Bank and Atlantic Community Bankers Bank stock.
−Removed: The Company adopted ASU 2016 - 01 on January 1, 2019, and elected the measurement alternative for measuring equity securities without readily determinable fair values at cost less impairment, plus or minus observable price changes in orderly transactions.
−Removed: As of December 31, 2023, the Company had several equity investments without readily determinable fair values in the amount of $ 22.3 million, and $ 22.2 million at December 31, 2022.
+Added: We also own several Community Reinvestment Act (“CRA”) equity investments, other bank stock, and other equity investments without readily determinable fair values included in “Accrued interest and other assets” on the consolidated balance sheets.
+Added: We measure these equity securities at cost less impairment, plus or minus observable price changes in orderly transactions.
+Added: Equity securities totaled $ 22.9 million and $ 23.4 million as of December 31, 2024 and December 31, 2023.
There were no impairment charges in 2024 or 2023.
−Removed: There was a $ 360,000 impairment charge in 2021.
Stock-Based Compensation
−Removed: The Company currently recognizes stock-based compensation based on the grant date fair value of equity awards, including stock options, restricted stock units and restricted stock, which have been granted to employees.
+Added: We currently recognize stock-based compensation based on the grant date fair value of equity awards, including stock options, restricted stock units and restricted stock, which have been granted to employees.
The expense related to equity-based awards granted to directors or other qualified non-employee awardees is recognized as other noninterest expense.
Stock option compensation expense is calculated based on the fair value of the award at the grant date for those options expected to vest and is recognized as an expense over the vesting period of the grant using the straight-line method.
−Removed: The Company uses the Black-Scholes option-pricing model to estimate the value of granted stock options.
−Removed: This model takes into account the option exercise price, the expected life, the current price of the underlying stock, the expected volatility of the Company’s stock, expected dividends on the stock and a risk-free interest rate.
−Removed: The Company estimates the expected volatility based on the Company’s historical stock prices for the period corresponding to the expected life of the stock options.
−Removed: Restricted stock and restricted stock units are valued based on the closing price of the Company’s stock on the date of the grant.
+Added: We use the Black-Scholes option-pricing model to estimate the value of granted stock options.
+Added: This model takes into account the option exercise price, the expected life, the current price of the underlying stock, the expected volatility of our stock, expected dividends on the stock and a risk-free interest rate.
+Added: We estimate the expected volatility based on our historical stock prices for the period corresponding to the expected life of the stock options.
+Added: Restricted stock and restricted stock units are valued based on the closing price of our stock on the date of the grant.
Stock-based compensation expense is recognized over the period which an employee is required to provide services in exchange for the award, generally defined as the vesting period.
−Removed: When the options are exercised, the Company’s policy is to issue new shares of stock.
−Removed: The Company’s accounting policy is to recognize forfeitures as they occur.
−Removed: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.
−Removed: The Company files its income taxes on a consolidated basis with its subsidiaries.
−Removed: The allocation of income tax expense represents each entity’s proportionate share of the consolidated provision for income taxes.
+Added: When the options are exercised, our policy is to issue new shares of stock.
+Added: Our accounting policy is to recognize forfeitures as they occur.
Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.
Income taxes are accounted for under the asset and liability method.
−Removed: Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates.
+Added: Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.
+Added: Deferred tax assets are also recognized for operating loss and tax credit carryforwards.
+Added: Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period that includes the enactment date.
−Removed: A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
−Removed: Tax effects from an uncertain tax position are recognized in the financial statements only if, based on its merits, the position is more likely than not to be sustained on audit by the taxing authorities.
−Removed: Interest and penalties related to uncertain tax positions are recorded as part of income tax expense.
−Removed: Under ASC 740, a valuation allowance is required to be recognized if it is “more likely than not” that all or a portion of the Company's deferred tax assets will not be realized.
−Removed: The Company's policy is to evaluate the deferred tax assets on a quarterly basis and record a valuation allowance for the Company's deferred tax assets if there is not sufficient positive evidence available to demonstrate utilization of the Company's deferred tax assets.
−Removed: Initial setup or an increase to deferred tax asset valuation allowance would be charged to income tax expense that would negatively impact our earnings.
+Added: The value of deferred tax assets and liabilities are based on many factors including:
+Added: estimates of the timing of reversals of temporary differences, the application of federal and state income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities.
+Added: Actual results could differ from the estimates and interpretations used in determining the current and deferred income tax liabilities.
+Added: Under ASC 740, a valuation allowance is required to be recognized if it is “more likely than not” that all or a portion of our deferred tax assets will not be realized.
+Added: Our policy is to evaluate the deferred tax assets on a quarterly basis and record a valuation allowance for our deferred tax assets if there is not sufficient positive evidence available to demonstrate utilization of our deferred tax assets.
+Added: An initial setup or an increase to deferred tax asset valuation allowance would be charged to income tax expense that would negatively impact our earnings.
+Added: Purchased Federal Transferable Tax Credits
+Added: Purchased federal transferable tax credits represent qualifying federal income tax credits acquired from an unrelated third party to offset amounts that otherwise would be due and payable to the IRS.
+Added: A purchased federal transferrable tax credit is recognized as a payable to the third party seller in the year the underlying qualifying project, which is generating the tax credits, is placed in service and at the same time an income tax receivable from the IRS is established.
+Added: Such federal tax credits are purchased at a discount which is recognized as a reduction in the federal income tax expense by the purchaser.
+Added: See Note 12 for more information and disclosures relating to purchased federal transferable tax credits.
Retirement Plans
−Removed: The Company established a 401 (k) plan in 2010.
−Removed: The Company contributed $ 707,000 , $ 594,000 , and $ 532,000 in 2023, 2022 and 2021, respectively.
+Added: We established a 401 (k) plan in 2010.
+Added: We contributed $ 826,000 , $ 707,000 , and $ 594,000 in 2024, 2023 and 2022.
Comprehensive Income
2 unchanged sentences
Financial Instruments
−Removed: In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of its customers.
−Removed: These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit as described in Note 13.
+Added: In the ordinary course of business, we enter into financial commitments to meet the financing needs of its customers.
+Added: These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit.
Such financial instruments are recorded in the financial statements when they are funded.
−Removed: Interest Rate Lock Commitments (“IRLCs”) are agreements under which the Company agrees to extend credit to a borrower under certain specified terms and conditions in which the interest rate and the maximum amount of the loan are set prior to funding.
−Removed: Under the agreement, the Company commits to lend funds to a potential borrower (subject to the Company’s approval of the loan) on a fixed or adjustable rate basis, regardless of whether interest rates change in the market, or on a floating rate basis.
+Added: See Note 13 for more information and disclosures relating to our financial instruments.
+Added: Interest Rate Lock Commitments (“IRLCs”) are agreements under which we agree to extend credit to a borrower under certain specified terms and conditions in which the interest rate and the maximum amount of the loan are set prior to funding.
+Added: Under the agreement, we commit to lend funds to a potential borrower (subject to our approval of the loan) on a fixed or adjustable rate basis, regardless of whether interest rates change in the market, or on a floating rate basis.
As such, outstanding IRLCs are subject to interest rate risk and related price risk during the period from the date of issuance through the date of loan funding, cancelling or expiration.
1 unchanged sentence
however, the borrower is not obligated to obtain the loan.
−Removed: The Company is subject to fallout risk related to IRLCs, which is realized if approved borrowers choose not to close on the loans within the terms of the IRLCs.
−Removed: The Company uses best efforts commitments to substantially eliminate these risks.
+Added: We are subject to fallout risk related to IRLCs, which is realized if approved borrowers choose not to close on the loans within the terms of the IRLCs.
+Added: We use best efforts commitments to substantially eliminate these risks.
Historical commitment-to-closing ratios are considered to estimate the quantity of mortgage loans that will fund within the terms of the IRLCs.
2 unchanged sentences
Commitments to originate mortgage loans to be held for investment and other types of loans are generally not derivatives.
−Removed: The Company has elected to account for these obligations at fair value.
+Added: We have elected to account for these obligations at fair value.
Forward Mortgage Loan Sale Contracts (“FMLSC”) are utilized to avoid interest rate risk at the time an interest rate lock commitment is made to the buyer.
−Removed: The Company is subject to interest rate and price risk on its mortgage loans held for sale from the loan funding date until the date the loan is sold.
−Removed: Best efforts commitments which fix the forward sales price that will be realized in the secondary market are used to eliminate the interest rate and price risk to the Company.
−Removed: To avoid interest rate risk, the Company will enter into FMLSCs at the time they make an interest rate lock commitment to the buyer.
+Added: We are subject to interest rate and price risk on its mortgage loans held for sale from the loan funding date until the date the loan is sold.
+Added: Best efforts commitments which fix the forward sales price that will be realized in the secondary market are used to eliminate our interest rate and price risk.
+Added: To avoid interest rate risk, we will enter into FMLSCs at the time they make an interest rate lock commitment to the buyer.
The buyer can enter into mortgage loan sales commitments on a “mandatory” or “best efforts” basis.
5 unchanged sentences
They require or permit net settlement as the institution via a pair-off transaction or the payment of a pair-off fee.
−Removed: See Note 18 for more information and disclosures relating to the Company's derivatives.
+Added: See Note 18 for more information and disclosures relating to our derivatives.
Earnings Per Share ( “ EPS ” )
−Removed: Basic and diluted EPS are calculated using the two -class method since the Company has issued share-based payment awards considered participating securities because they entitle holders the rights to dividends during the vesting term.
+Added: Basic and diluted EPS are calculated using the two -class method since we have issued share-based payment awards considered participating securities because they entitle holders the rights to dividends during the vesting term.
The two -class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings.
Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period.
−Removed: Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
+Added: Diluted EPS reflects the potential dilution, utilizing the treasury method for restricted awards and stock options, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
+Added: See Note 19 for more information and disclosures relating to our EPS.
Fair Value Measurement
7 unchanged sentences
Significant unobservable inputs that reflect the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.
−Removed: See Note 18 for more information and disclosures relating to the Company's fair value measurements.
+Added: See Note 18 for more information and disclosures relating to our fair value measurements.
Operating Segments
Management has determined that since generally all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment.
+Added: See Note 21 for more information and disclosures relating to our operating segment.
Recent Accounting Pronouncements
Recently Adopted
−Removed: In June 2016, the FASB issued ASU 2016 - 13, Measurement of Credit Losses on Financial Instrument (Topic 326 ), including subsequent amendments to this ASU.
−Removed: This ASU changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.
−Removed: The standard replaced the “incurred loss” approach with an “expected loss” model.
−Removed: The new model, referred to as the CECL model, applies 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: For available for sale (“AFS”) debt securities with unrealized losses, losses will be recognized as allowances rather than reductions in the amortized cost of the securities.
−Removed: ASU 2016 - 13 also expands the disclosure requirements regarding an entity's assumptions, models, and methods for estimating the allowance for credit losses.
−Removed: In addition, entities are required to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.
−Removed: The Company retroactively adopted CECL to January 1, 2022 as the Company’s emerging growth company status expired as of December 31, 2022.
−Removed: A one -time cumulative adjustment of $ 2.1 million was made to the Company’s ACL, which was recorded through retained earnings upon adoption of ASU 2016 - 13 as of January 1, 2022.
−Removed: The following table sets forth the cumulative effect of the changes to the Company's consolidated balance sheets at January 1, 2022, for the adoption of ASU 2016 - 13:
−Removed: (dollars in thousands)
−Removed: December 31, 2021
−Removed: January 1, 2022
−Removed: Allowance for credit losses on loans
−Removed: $ 32,912 $ 2,135 $ 35,047
−Removed: Deferred tax assets
−Removed: 4,855 977 5,832
−Removed: Reserve for unfunded commitments
−Removed: $ 1,203 $ 1,045 $ 2,248
−Removed: Stockholders' equity:
−Removed: Retained earnings, net of tax
−Removed: $ 181,329 $ ( 2,204 ) $ 179,125
−Removed: In February 2019, the U.S.
−Removed: federal bank regulatory agencies approved a final rule modifying their regulatory capital rules and providing an option to phase in over a three -year period the day- one adverse regulatory capital effects of ASU 2016 - 13.
−Removed: Additionally, in March 2020, the U.S.
−Removed: federal bank regulatory agencies issued an interim final rule that provided banking organizations that adopted CECL in the 2020 an option to delay the estimated CECL impact on regulatory capital for an additional two years for a total transition period of up to five years to provide regulatory relief to banking organizations to better focus on supporting lending to creditworthy households and businesses in light of recent strains on the U.S.
−Removed: economy as a result of the novel coronavirus disease 2019 (“COVID- 19” ) pandemic.
−Removed: As a result, entities that adopted CECL in 2020 had the option to gradually phase in the full effect of CECL on regulatory capital over a five -year transition period.
−Removed: For entities who adopted CECL after 2020, the three -year phase-in transition provision is available if any entity experiences a reduction in retained earnings due to CECL adoption as of the beginning of the fiscal year in which the institution adopts CECL and makes an election to use this phase-in option.
−Removed: Effective January 1, 2022, the Company adopted ASU 2016 - 13, reflected the full effect of CECL at December 31, 2022, and did not elect the three -year CECL phase-in option on regulatory capital.
−Removed: In January 2017, the FASB issued ASU 2017 - 04, Intangibles—Goodwill and Other (Topic 350 ).
−Removed: This Update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test.
−Removed: Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.
−Removed: The amendments in this Update are required for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill.
−Removed: As a result, under this Update, “an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;
−Removed: however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.” The Company adopted this ASU on December 31, 2022.
−Removed: Adoption of ASU 2017 - 04 did not have a significant impact on the Company’s consolidated financial statements.
−Removed: In February 2020, the FASB issued ASU 2020 - 02, Financial Instruments—Credit Losses (Topic 326 ) and Leases (Topic 842 )—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.
−Removed: 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No.
−Removed: 2016 - 02, Leases (Topic 842 ) (SEC Update).
−Removed: This is an amendment to add the SEC Staff guidance on CECL) to the FASB codification.
−Removed: It contains guidance on what the SEC would expect the Company to perform and document when measuring and recording its allowance for credit losses for financial assets recorded at amortized cost.
−Removed: The Company implemented CECL on January 1, 2022.
−Removed: Upon adoption of CECL, the Company recorded a $ 2.1 million transition adjustment for the allowance for credit losses through retained earnings.
−Removed: In March 2020, the FASB issued ASU 2020 - 04, Reference Rate Reform (Topic 848 ), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate (“LIBOR”) to an alternative reference rate such as Secured Overnight Financing Rate (“SOFR”).
−Removed: This pronouncement is applicable to all companies with contracts or hedging relationships that reference an interest rate that is expected to be discontinued.
−Removed: The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued.
−Removed: Companies can apply the ASU immediately.
−Removed: However, the guidance will only be available for a limited time.
−Removed: The optional relief generally does not apply to contract modifications made, sales and transfers of HTM debt securities, and hedging relationships entered into or evaluated after December 31, 2022.
−Removed: The guidance was effective upon issuance and generally can be applied through December 31, 2022.
−Removed: In December 2022, the FASB issued 2022 - 06, Reference Rate Reform (Topic 848 ):
−Removed: Deferral of the Sunset Date of Topic 848, to defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.
−Removed: The LIBOR termination date was June 30, 2023.
−Removed: The Company converted all loans indexed under LIBOR to CME Term SOFR with relevant spread adjustment as the alternative reference rate beginning on and after July 3, 2023.
−Removed: No LIBOR indexed loans are being originated.
−Removed: The Company has several issuances of LIBOR based long-term debt and subordinated debentures.
−Removed: Refer to Notes 9 and 10 of the Company’s consolidated financial statements included in this Annual Report.
−Removed: In October 2021, the FASB issued ASU 2021 - 08, Accounting for Contract Assets and Contract Liabilities, to require an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with revenue recognition guidance as if the acquirer had originated the contract.
−Removed: That is, such acquired contracts will not be measured at fair value.
−Removed: The Update is effective for public companies in fiscal years starting after December 15, 2022.
−Removed: The Company adopted ASU 2021 - 08 on January 1, 2023 and the adoption did not have a material impact on the Company's consolidated financial statements.
−Removed: In March 2022, the FASB issued ASU 2022 - 02, Financial Instruments-Credit Losses (Topic 326 ).
−Removed: The standard addresses the following:
−Removed: 1 ) eliminates the accounting guidance for TDRs, and will require an entity to determine whether a modification results in a new loan or a continuation of an existing loan, 2 ) expands disclosures related to modifications, and 3 ) will require disclosure of current period gross write-offs of financing receivables within the vintage disclosures table.
−Removed: The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and are applied prospectively, except with respect to the recognition and measurement of TDRs, where an entity has the option to apply a modified retrospective transition method.
−Removed: Early adoption of the amendments in this ASU is permitted.
−Removed: An entity may elect to early adopt the amendments regarding TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures.
−Removed: The Company adopted ASU 2022 - 02 on January 1, 2023 and see Note 5 for the disclosure impact.
−Removed: Recently Issued;
−Removed: Not Yet Effective
In June 2022, the FASB issued ASU 2022 - 03 , Fair Value Measurement (Topic 820 )—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.
1 unchanged sentence
ASU 2022 - 03 also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and requires certain new disclosures for equity securities subject to contractual sale restrictions.
−Removed: ASU 2022 - 03 will be effective for the Company on January 1, 2024 .
−Removed: Adoption of ASU 2022 - 03 is not expected to have a material impact on the Company’s consolidated financial statements.
+Added: We adopted ASU 2022 - 03 on January 1, 2024 and the adoption did not have a material impact on our consolidated financial statements.
In March 2023, the FASB issued ASU 2023 - 02 , Investments - Equity Method and Joint Ventures (Topic 323 ).
2 unchanged sentences
The reporting entity needs to disclose the nature of its tax equity investments and the effect of its tax equity investments on its financial position and results of operations.
−Removed: ASU 2023 - 02 will be effective for the Company in fiscal years beginning after December 15, 2023 , including interim periods within those fiscal years.
−Removed: Adoption of ASU 2023 - 02 is not expected to have a material impact on the Company's consolidated financial statements.
+Added: We adopted ASU 2023 - 02 on January 1, 2024 and the adoption did not have a material impact on our consolidated financial statements.
+Added: In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ) - Improvements to Reportable Segments.
+Added: The amendments in this Update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis.
+Added: Amendments in this Update include:
+Added: a requirement that a public entity provide all annual disclosures about a reportable segment’s profit or loss in its interim period disclosures, disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), disclosure of amounts for other segment items by reportable segment and a description of its composition, clarification that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss, a requirement that a public entity disclose the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss, and a requirement that a public entity that has a single reportable segment provide all the disclosures required by this Update as well as all existing disclosures required in Topic 280.
+Added: The amendments in this Update are effective for us beginning with our annual financial statement disclosures for the year ended December 31, 2024, and for all interim and annual periods thereafter.
+Added: We adopted ASU 2023 - 07 on December 31, 2024 and the adoption did not have a material impact on our consolidated financial statements.
+Added: See Note 21 for more information and disclosures relating to our segment information.
+Added: Recently Issued;
+Added: Not Yet Effective
In October 2023, the FASB issued ASU 2023 - 06 , Disclosure Improvements.
4 unchanged sentences
If the SEC has not removed the applicable requirement from Regulation S- X or Regulation S-K by June 30, 2027, the pending amendments will be removed and will not become effective for any entity.
+Added: Adoption of ASU 2023 - 06 is not expected to have a material impact on the Company's consolidated financial statements.
In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures.
5 unchanged sentences
The amendments in this Update should be applied on a prospective basis.
−Removed: Retrospective application is permitted.
+Added: However, retrospective application in all prior periods presented is permitted.
Adoption of ASU 2023 - 09 is not expected to have a material impact on the Company's consolidated financial statements.
−Removed: NOTE 3 – ACQUISITIONS
−Removed: Completion of Acquisition of Certain Assets and Liabilities of the Honolulu, Hawaii Branch Office of Bank of the Orient
−Removed: On January 14, 2022, the Company completed the acquisition of the Hawaii Branch from BOTO.
−Removed: The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of January 14, 2022.
−Removed: The total fair value of assets acquired approximated $ 8.5 million, which included $ 312,000 in cash and cash equivalents, $ 7.4 million in selected performing loans, $ 729,000 in core deposit intangible assets and $ 64,000 in other assets.
−Removed: The total fair value of liabilities assumed was $ 81.8 million, which included $ 81.7 million in deposits, $ 27,000 in certificate of deposit premium, and $ 90,000 in other liabilities.
−Removed: The Bank received $ 71.0 million in cash in connection with the acquisition, which represented consideration for the deposits assumed by the Bank, partially offset by the purchase price of the assets acquired and the premium paid.
−Removed: The Company acquired Hawaii Branch from BOTO to strategically establish a presence in the Hawaiian Islands area.
−Removed: Goodwill in the amount of $ 2.3 million and core deposit intangible of $ 729,000 was recognized in connection with this acquisition.
−Removed: Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities.
−Removed: Goodwill is not deductible for income tax purposes.
−Removed: The following table represents the assets acquired and liabilities assumed from the Hawaii Branch as of January 14, 2022 and the fair value adjustments and amounts recorded by the Company under the acquisition method of accounting:
−Removed: (dollars in thousands)
−Removed: Assets acquired
−Removed: Cash and cash equivalents
−Removed: $ 312 $ — $ 312
−Removed: 7,352 38 7,390
−Removed: Bank premises and equipment
−Removed: Core deposit intangible
−Removed: 412 ( 360 ) 52
−Removed: Total assets acquired
−Removed: $ 8,088 $ 407 $ 8,495
−Removed: Liabilities assumed
−Removed: $ 81,673 $ 27 $ 81,700
−Removed: Escrow Payable
−Removed: Other liabilities
−Removed: 460 ( 372 ) 88
−Removed: Total liabilities assumed
−Removed: 82,135 ( 345 ) 81,790
−Removed: Excess of assets acquired over liabilities assumed
−Removed: ( 74,047 ) 752 ( 73,295 )
−Removed: $ 8,088 $ 407
−Removed: Cash received
−Removed: Goodwill recognized
−Removed: The Company accounted for this transaction under the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires purchased assets and liabilities assumed to be recorded at their respective fair values at the date of acquisition.
−Removed: The loan portfolio of the Hawaii branch was recorded at fair value at the date of acquisition with the assistance of a third -party valuation.
−Removed: A valuation of the loan portfolio was performed as of the acquisition date to assess the fair value of the loan portfolio.
−Removed: The loan portfolio was segmented into two groups;
−Removed: loans with credit deterioration and loans without credit deterioration, and then split further by loan type.
−Removed: There were no loans acquired with credit deterioration.
−Removed: The fair value was calculated on an individual loan basis using a DCF analysis.
−Removed: The discount rate utilized was based on a weighted average cost of capital, considering the cost of equity and cost of debt.
−Removed: Also factored into the fair value estimates were loss rates, recovery period and prepayment rates based on industry standards.
−Removed: The Company also determined the fair value of the core deposit intangible, premises and equipment and deposits with the assistance of third -party valuations.
−Removed: The core deposit intangible on non-maturing deposits was determined by evaluating the underlying characteristics of the deposit relationships, including customer attrition, deposit interest rates, service charge income, overhead expense and costs of alternative funding.
−Removed: Since the fair value of intangible assets are calculated as if they were stand-alone assets, the presumption is that a hypothetical buyer of the intangible asset would be able to take advantage of potential tax benefits resulting from the asset purchase.
−Removed: The value of the benefit is the present value over the period of the tax benefit, using the discount rate applicable to the asset.
−Removed: In determining the fair value of certificates of deposit, a DCF analysis was used, which involved present valuing the contractual payments over the remaining life of the certificates of deposit at market-based interest rates.
−Removed: Third-party acquisition related expenses are recognized as incurred and continue until the acquired system is converted and operational functions become fully integrated.
NOTE 3 - INVESTMENT SECURITIES
The following table summarizes the amortized cost and fair value of available for sale (“AFS”) securities and held to maturity (“HTM”) securities at December 31, 2024 and 2023, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss:
−Removed: (dollars in thousands)
+Added: Amortized Unrealized Unrealized Fair
December 31, 2024
Available for sale
+Added: (dollars in thousands)
Government agency securities
12 unchanged sentences
34,733 43 ( 2,961 ) 31,815
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
12,602 — ( 3,527 ) 9,075
3 unchanged sentences
$ 500 $ 1 $ — $ 501
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
4,691 — ( 244 ) 4,447
$ 5,191 $ 1 $ ( 244 ) $ 4,948
−Removed: (dollars in thousands)
Amortized Unrealized Unrealized Fair
1 unchanged sentence
Available for sale
+Added: (dollars in thousands)
Government agency securities
4 unchanged sentences
40,507 — ( 5,855 ) 34,652
−Removed: Mortgage-backed securities:
−Removed: 4,887 — ( 16 ) 4,871
Collateralized mortgage obligations:
6 unchanged sentences
34,800 — ( 4,109 ) 30,691
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
12,636 — ( 3,127 ) 9,509
3 unchanged sentences
$ 501 $ 3 $ — $ 504
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
4,708 — ( 115 ) 4,593
$ 5,209 $ 3 $ ( 115 ) $ 5,097
−Removed: There was no sale of investment securities during the years ended December 31, 2023, 2022, and 2021.
+Added: There were no sales of investment securities during the years ended December 31, 2024, 2023, and 2022.
At December 31, 2024, we pledged investment securities with a fair value of $ 23.4 million for certificates of deposit from the state of California.
One security with a fair value of $ 48,000 and $ 61,000 was pledged to secure a local agency deposit at December 31, 2024 and 2023.
−Removed: Accrued interest receivable for investment debt securities at December 31, 2023 and 2022 totaled $ 962,000 and $ 810,000 .
+Added: Accrued interest receivable for investment securities at December 31, 2024 and 2023 totaled $ 1.6 million and $ 962,000 .
The amortized cost and fair value of the investment securities portfolio as of December 31, 2024 and 2023 are shown by expected maturity below.
5 unchanged sentences
More than Ten Years
−Removed: Amortized Amortized Amortized Amortized Amortized
−Removed: (dollars in thousands)
December 31, 2024
+Added: (dollars in thousands)
Government agency securities
$ 90 $ 88 $ 11,644 $ 11,304 $ 9,858 $ 9,650 $ — $ — $ 21,592 $ 21,042
−Removed: SBA securities
+Added: SBA agency securities
— — 5,934 5,721 21,297 21,043 — — 27,231 26,764
9 unchanged sentences
2,000 1,989 11,886 11,706 18,233 16,250 2,614 1,870 34,733 31,815
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
— — — — — — 12,602 9,075 12,602 9,075
3 unchanged sentences
$ 500 $ 501 $ — $ — $ — $ — $ — $ — $ 500 $ 501
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
— — 360 347 2,985 2,795 1,346 1,305 4,691 4,447
1 unchanged sentence
$ 500 $ 501 $ 360 $ 347 $ 2,985 $ 2,795 $ 1,346 $ 1,305 $ 5,191 $ 4,948
−Removed: (dollars in thousands)
December 31, 2023
1 unchanged sentence
$ — $ — $ 8,705 $ 8,161 $ — $ — $ — $ — $ 8,705 $ 8,161
−Removed: SBA securities
−Removed: — — 2,634 2,411 — — — — 2,634 2,411
−Removed: Mortgage-backed securities:
+Added: SBA agency securities
— — 2,292 2,095 10,997 11,122 — — 13,289 13,217
9 unchanged sentences
— — 12,912 12,491 19,249 16,232 2,639 1,968 34,800 30,691
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
— — — — — — 12,636 9,509 12,636 9,509
3 unchanged sentences
$ — $ — $ 501 $ 504 $ — $ — $ — $ — $ 501 $ 504
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
— — — — 2,952 2,873 1,756 1,720 4,708 4,593
3 unchanged sentences
For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 2 Summary of Significant Accounting Policies - Allowance for Credit Losses on Available for Sale Securities and Held to Maturity Securities.
−Removed: At December 31, 2023 and 2022, there was no reserve of credit losses on the HTM securities portfolio.
−Removed: Based on the Company’s review of its debt securities in an unrealized loss position, the Company concluded the unrealized losses were due to non-credit factors primarily attributed to yield curve movement, together with widened liquidity spreads.
−Removed: The issuers have not, to the Company's knowledge, established any cause for default on these securities.
−Removed: All the securities that the Company owned were investment grade at December 31, 2023.
−Removed: At December 31, 2023, unrealized losses of $ 28.7 million comprised of $ 18.1 million, or 62.8 %, residential mortgage-backed securities and collateralized mortgage obligations, $ 4.1 million, or 14.3 %, corporate debt securities, $ 3.1 million, or 10.9 %, municipal securities, $ 2.7 million, or 9.3 %, commercial collateralized mortgage obligations, and $ 760,000 , or 2.6 %, government agency securities and SBA securities.
−Removed: The Company expects to recover the amortized cost basis of its securities and has no present intent to sell and will not be required to sell securities that have declined below their cost before their anticipated recovery based on the Company’s current financial condition.
+Added: At December 31, 2024 and 2023, there was no ACL on the HTM securities portfolio.
+Added: We concluded that the unrealized losses were primarily attributed to yield curve movement, together with widened liquidity spreads and credit spreads.
+Added: All SBA agency securities, mortgage-backed securities, and collateralized mortgage obligations are issued by government or government sponsored entities and have the support of the U.S.
+Added: federal government.
+Added: The issuers have not, to our knowledge, established any cause for default on these securities.
+Added: We expect to recover the amortized cost basis of our securities and have no present intent to sell and will not be required to sell securities that have declined below their cost before their anticipated recovery.
+Added: As of December 31, 2024, all of our HTM securities were rated “AA-” or above.
+Added: Accordingly, no ACL was recorded as of December 31, 2024 and December 31, 2023, against HTM or AFS securities, and there was no provision for credit losses recognized for the year ended December 31, 2024 and 2023.
The following tables show the related fair value and the gross unrealized losses of the Company's investment securities, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2024, and December 31, 2023:
1 unchanged sentence
Twelve Months or More
−Removed: (dollars in thousands)
Unrealized Losses
+Added: # of Issuances
Unrealized Losses
+Added: # of Issuances
Unrealized Losses
+Added: # of Issuances
December 31, 2024
+Added: (dollars in thousands)
Government agency securities
$ 14,620 $ ( 219 ) 3 $ 6,422 $ ( 331 ) 4 $ 21,042 $ ( 550 ) 7
−Removed: SBA securities
+Added: SBA agency securities
24,971 ( 273 ) 7 1,793 ( 194 ) 4 26,764 ( 467 ) 11
9 unchanged sentences
— — — 26,035 ( 2,961 ) 30 26,035 ( 2,961 ) 30
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
— — — 9,075 ( 3,527 ) 11 9,075 ( 3,527 ) 11
1 unchanged sentence
$ 185,863 $ ( 2,089 ) 33 $ 158,892 $ ( 27,534 ) 106 $ 344,755 $ ( 29,623 ) 139
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
$ — $ — — $ 4,447 $ ( 244 ) 10 $ 4,447 $ ( 244 ) 10
1 unchanged sentence
$ — $ — — $ 4,447 $ ( 244 ) 10 $ 4,447 $ ( 244 ) 10
−Removed: ( 1 ) The Company held $ 19.9 million of commercial paper where the recorded value and fair value are equal as of December 31, 2023.
Less than Twelve Months
Twelve Months or More
−Removed: (dollars in thousands)
−Removed: Unrealized Losses
−Removed: Unrealized Losses
−Removed: Unrealized Losses
December 31, 2023
+Added: (dollars in thousands)
Government agency securities
$ 4,238 $ ( 72 ) 1 $ 3,923 $ ( 472 ) 3 $ 8,161 $ ( 544 ) 4
−Removed: SBA securities
−Removed: 2,411 ( 223 ) — — 2,411 ( 223 )
−Removed: Mortgage-backed securities:
+Added: SBA agency securities
5,102 ( 18 ) 1 2,094 ( 198 ) 4 7,196 ( 216 ) 5
9 unchanged sentences
— — — 30,691 ( 4,109 ) 32 30,691 ( 4,109 ) 32
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
— — — 9,509 ( 3,127 ) 11 9,509 ( 3,127 ) 11
1 unchanged sentence
$ 83,611 $ ( 213 ) 14 $ 176,221 $ ( 28,516 ) 107 $ 259,832 $ ( 28,729 ) 121
−Removed: Municipal taxable securities
−Removed: $ 498 $ ( 3 ) $ — $ — $ 498 $ ( 3 )
−Removed: Municipal securities
+Added: Municipal tax-exempt securities
$ 1,397 $ ( 19 ) 3 $ 3,196 $ ( 96 ) 7 $ 4,593 $ ( 115 ) 10
1 unchanged sentence
$ 1,397 $ ( 19 ) 3 $ 3,196 $ ( 96 ) 7 $ 4,593 $ ( 115 ) 10
−Removed: ( 1 ) The Company held $ 9.9 million of commercial paper where the recorded value and fair value are equal as of December 31, 2022.
NOTE 4 - LOANS AND ALLOWANCE FOR CREDIT LOSSES - LOANS
−Removed: The Company's loan portfolio consists primarily of loans to borrowers within the Los Angeles, California metropolitan area, the New York City metropolitan area, Chicago, Illinois metropolitan area and Las Vegas, Nevada.
−Removed: Although the Company seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Company's market area and, as a result, the Company's loan and collateral portfolios are, to some degree, concentrated in those industries.
−Removed: The types of loans in the Company's consolidated balance sheets as of December 31, 2023, and December 31, 2022 were as follows:
+Added: Our loan portfolio consists primarily of loans to borrowers within the Southern California metropolitan area, the New York City metropolitan area, Chicago (Illinois), Las Vegas (Nevada), Edison (New Jersey) and Honolulu (Hawaii).
+Added: Although we seek to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in our market area and, as a result, our loan and collateral portfolios are, to some degree, concentrated in those industries.
+Added: The following table presents the balances in our loans held for investment (“HFI”) portfolio as of December 31, 2024, and December 31, 2023:
(dollars in thousands)
Construction and land development
+Added: $ 173,290 $ 181,469
Commercial real estate (2)
5 unchanged sentences
47,263 52,074
−Removed: 12,569 20,699
−Removed: Total loans (1)
+Added: Total loans HFI (1)
$ 3,053,230 $ 3,031,861
1 unchanged sentence
( 47,729 ) ( 41,903 )
−Removed: Total loans, net
+Added: Total loans HFI, net
$ 3,005,501 $ 2,989,958
−Removed: ( 1 ) net of discounts on acquired loans and deferred fees and costs
−Removed: ( 2 ) includes non-farm & non-residential real estate loans, multifamily resident and 1 - 4 family single-family residential loan for a business purpose
+Added: ( 1 ) Net of premiums(discounts) on acquired loans and deferred (fees) and costs
+Added: ( 2 ) Includes non-farm and non-residential real estate loans, multifamily residential and single-family residential loans for a business purpose
A summary of the changes in the ACL for the years indicated follows:
−Removed: (dollars in thousands)
+Added: 2024 2023 2022
Allowance for Loan Losses
7 unchanged sentences
Allowance for Credit Losses
+Added: (dollars in thousands)
Beginning balance
12 unchanged sentences
$ 47,729 $ 729 $ 48,458 $ 41,903 $ 640 $ 42,543 $ 41,076 $ 1,156 $ 42,232
−Removed: ( 1 ) Reserve was under the ALL method in accordance with ASC 450 and ASC 310.
−Removed: The following tables present the activity in the ALL by portfolio segment for the years ended December 31, 2023 and 2022:
−Removed: (dollars in thousands)
+Added: The following tables present the balance and activity in the ALL by portfolio segment for the years ended December 31, 2024, 2023, and 2022:
December 31, 2024
4 unchanged sentences
Allowance for loan losses:
+Added: (dollars in thousands)
Beginning of year
$ 1,219 $ 17,826 $ 20,117 $ 1,348 $ 1,196 $ 197 $ 41,903
−Removed: (Reversals)/provisions for credit losses
+Added: Provisions/(reversals) for credit losses
5,982 6,637 ( 2,599 ) — ( 464 ) 212 9,768
3 unchanged sentences
$ 6,053 $ 21,879 $ 17,518 $ 1,339 $ 654 $ 286 $ 47,729
−Removed: (dollars in thousands)
December 31, 2023
4 unchanged sentences
Allowance for loan losses:
+Added: (dollars in thousands)
Beginning of year
$ 2,638 $ 17,657 $ 17,640 $ 1,804 $ 621 $ 716 $ 41,076
−Removed: ASU 2016-13 Transition Adjustment
−Removed: 314 ( 2,662 ) 3,960 ( 188 ) ( 416 ) 1,127 2,135
−Removed: Adjusted beginning balance
−Removed: $ 4,464 $ 13,941 $ 11,799 $ 2,625 $ 564 $ 1,654 $ 35,047
(Reversals)/provisions for credit losses
4 unchanged sentences
$ 1,219 $ 17,826 $ 20,117 $ 1,348 $ 1,196 $ 197 $ 41,903
−Removed: The following table presents the activity in the ALL by portfolio segment for the year ended December 31, 2021, prior to the adoption of ASU 2016 - 13:
−Removed: (dollars in thousands)
December 31, 2022
4 unchanged sentences
Allowance for loan losses:
+Added: (dollars in thousands)
Beginning of year
$ 4,150 $ 16,603 $ 7,839 $ 2,813 $ 980 $ 527 $ 32,912
−Removed: Provisions/(reversals)
+Added: ASU 2016-13 Transition Adjustment
314 ( 2,662 ) 3,960 ( 188 ) ( 416 ) 1,127 2,135
+Added: Adjusted beginning balance
$ 4,464 $ 13,941 $ 11,799 $ 2,625 $ 564 $ 1,654 $ 35,047
+Added: (Reversals)/provisions for credit losses
( 1,826 ) 3,716 5,841 ( 818 ) ( 156 ) ( 730 ) 6,027
+Added: — — — ( 5 ) ( 14 ) ( 237 ) ( 256 )
+Added: — — — 2 227 29 258
Ending allowance balance
$ 2,638 $ 17,657 $ 17,640 $ 1,804 $ 621 $ 716 $ 41,076
−Removed: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors.
−Removed: The Company analyzes loans individually by classifying the loans as to credit risk.
−Removed: This analysis typically includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans.
+Added: We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors.
+Added: We analyze loans individually by classifying the loans as to credit risk.
+Added: This analysis typically includes larger, non-homogeneous loans such as C&D, CRE and C&I loans.
This analysis is performed on an ongoing basis as new information is obtained.
−Removed: The Company uses the following definitions for risk ratings:
+Added: We use the following definitions for risk ratings:
Pass - Loans classified as pass include loans not meeting the risk ratings defined below.
5 unchanged sentences
Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
−Removed: The following tables summarize the Company's loan held for investment as of December 31, 2023 and 2022 by loan portfolio segments, risk ratings and vintage year.
+Added: The following tables summarize our loans HFI by loan portfolio segment, risk rating and vintage year as of the dates indicated.
The vintage year is the year of origination, renewal or major modification.
−Removed: Revolving loans that are converted to term loans presented in the table below are excluded from the term loans by vintage year columns.
−Removed: (dollars in thousands)
Term Loan by Vintage
1 unchanged sentence
Revolving Converted to Term During the Period
+Added: (dollars in thousands)
Construction and land development
5 unchanged sentences
$ 62,541 $ 17,727 $ — $ 38,101 $ 54,856 $ 65 $ — $ — $ 173,290
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ — $ 1,148 $ — $ — $ — $ — $ — $ 1,148
6 unchanged sentences
$ 220,623 $ 58,597 $ 390,514 $ 168,439 $ 161,708 $ 201,539 $ — $ — $ 1,201,420
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ 164 $ — $ — $ 2,064 $ 417 $ — $ — $ 2,645
6 unchanged sentences
$ 159,940 $ 137,264 $ 551,703 $ 227,278 $ 110,399 $ 306,312 $ 1,126 $ — $ 1,494,022
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ — $ — $ — $ — $ — $ — $ — $ —
6 unchanged sentences
$ 7,304 $ 1,126 $ 2,663 $ 3,991 $ 3,587 $ 10,062 $ 100,852 $ — $ 129,585
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ 8 $ — $ 3 $ — $ — $ — $ — $ — $ 11
5 unchanged sentences
$ 6,954 $ 1,813 $ 10,855 $ 10,065 $ 400 $ 17,176 $ — $ — $ 47,263
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ 78 $ — $ — $ — $ — $ — $ — $ — $ 78
5 unchanged sentences
$ — $ 130 $ 1,517 $ 5,741 $ 246 $ — $ 16 $ — $ 7,650
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ — $ 4 $ 191 $ 6 $ — $ — $ — $ 201
6 unchanged sentences
$ 457,362 $ 216,657 $ 957,252 $ 453,615 $ 331,196 $ 535,154 $ 101,994 $ — $ 3,053,230
−Removed: Total YTD gross write-offs
+Added: Total YTD gross charge-offs
$ 86 $ 164 $ 1,155 $ 191 $ 2,070 $ 417 $ — $ — $ 4,083
−Removed: (Dollars in thousands)
Term Loan by Vintage
1 unchanged sentence
Revolving Converted to Term During the Period
+Added: (Dollars in thousands)
Construction and land development
5 unchanged sentences
$ 127,602 $ 25,880 $ 23,844 $ 3,919 $ 192 $ 32 $ — $ — $ 181,469
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ — $ — $ — $ — $ 140 $ — $ — $ 140
6 unchanged sentences
$ 90,427 $ 423,564 $ 186,904 $ 187,060 $ 104,810 $ 175,092 $ — $ — $ 1,167,857
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ 2,078 $ — $ 459 $ — $ — $ — $ — $ 2,537
6 unchanged sentences
$ 156,372 $ 594,258 $ 240,879 $ 130,331 $ 83,547 $ 280,645 $ 1,764 $ — $ 1,487,796
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ — $ — $ 93 $ — $ — $ — $ — $ 93
6 unchanged sentences
$ 1,305 $ 3,370 $ 6,281 $ 4,311 $ 2,056 $ 9,652 $ 103,121 $ — $ 130,096
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ — $ — $ — $ — $ — $ — $ — $ —
5 unchanged sentences
$ 5,642 $ 11,023 $ 10,368 $ 2,324 $ 4,673 $ 18,044 $ — $ — $ 52,074
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ — $ — $ — $ — $ 62 $ — $ — $ 62
5 unchanged sentences
$ 193 $ 2,807 $ 8,841 $ 681 $ 29 $ — $ 18 $ — $ 12,569
−Removed: YTD gross write-offs
+Added: YTD gross charge-offs
$ — $ 79 $ 273 $ 10 $ — $ — $ — $ — $ 362
6 unchanged sentences
$ 381,541 $ 1,060,902 $ 477,117 $ 328,626 $ 195,307 $ 483,465 $ 104,903 $ — $ 3,031,861
−Removed: Total YTD gross write-offs
+Added: Total YTD gross charge-offs
$ — $ 2,157 $ 273 $ 562 $ — $ 202 $ — $ — $ 3,194
−Removed: The following tables present the aging of the recorded investment in past-due loans as of December 31, 2023 and 2022 by class of loans.
−Removed: Past due loans presented in tables below also include non-accrual loans.
−Removed: (dollars in thousands)
−Removed: 30 - 59 60 - 89 90 Days
+Added: The following tables present the aging of the recorded investment in past due loans HFI as of December 31, 2024 and 2023 by loan class.
+Added: Past due loans presented in tables below also include nonaccrual loans.
December 31, 2024
+Added: 90 Days Or More (1)
+Added: Total Past Due
+Added: Total Loans HFI
+Added: Nonaccrual Loans (2)
+Added: (dollars in thousands)
Construction and land development
9 unchanged sentences
$ 10,670 $ 42,017 $ 28,605 $ 81,292 $ 2,971,938 $ 3,053,230 $ 69,843
−Removed: Single-family residential mortgage loans held for sale
________________
−Removed: ________________
+Added: ( 1 ) All loans 90 days or more past due are nonaccrual.
+Added: We had no loans that were 90 days or more past due and still accruing.
( 2 ) Included in total loans
−Removed: (dollars in thousands)
−Removed: 30 - 59 60 - 89 90 Days
+Added: ( 3 ) Nonaccrual SFR mortgage loans include $4.4 million of loans in the process of foreclosure.
December 31, 2023
+Added: 90 Days Or More (1)
+Added: Total Past Due
+Added: Total Loans HFI
+Added: Nonaccrual Loans (2)
+Added: (dollars in thousands)
Construction and land development
9 unchanged sentences
$ 12,451 $ 6,031 $ 19,663 $ 38,145 $ 2,993,716 $ 3,031,861 $ 31,619
−Removed: Single-family residential mortgage loans held for sale
−Removed: $ — $ — $ — $ — $ — $ — $ —
+Added: ( 1 ) All 90 days or more past due are nonaccrual.
+Added: We had no loans that were 90 days or more past due and still accruing.
( 2 ) Included in total loans
−Removed: The Company has no loans that are 90 days or more past due and still accruing at December 31, 2023 and December 31, 2022.
−Removed: The following tables present the loans on nonaccrual status as of December 31, 2023 and 2022:
−Removed: (dollars in thousands)
+Added: The following table present the loans HFI on nonaccrual status and the balance of such loans with no ALL, by loan class, as of the dates indicated:
December 31, 2024
−Removed: for Credit Loss
+Added: December 31, 2023
+Added: Nonaccrual Loans
+Added: Nonaccrual Loans
+Added: for Loan Loss
+Added: Nonaccrual Loans
+Added: for Loan Loss
+Added: Nonaccrual Loans
+Added: (dollars in thousands)
+Added: Construction and land development
+Added: $ 18,226 $ 44,621 $ — $ —
Commercial real estate
4 unchanged sentences
4,708 4,819 610 854
−Removed: (dollars in thousands)
+Added: 1,514 1,514 937 2,085
+Added: $ 36,318 $ 69,843 $ 30,219 $ 31,619
+Added: ( 1 ) A C&I loan of $ 4.7 million is secured by a SFR and is cross collateralized with a CRE loan with a specific reserve.
+Added: The following tables present the amortized cost basis of individually evaluated collateral-dependent loans, by loan segment and class and type of collateral which secures such loans as of the dates indicated:
December 31, 2024
−Removed: for Credit Loss
+Added: Commercial Real Estate
+Added: Residential Real Estate
+Added: Business Assets
+Added: (dollars in thousands)
Construction and land development
+Added: $ 18,226 $ 26,395 $ — $ 44,621
Commercial real estate
+Added: 7,131 222 — 7,353
Single-family residential mortgages
+Added: — 11,524 — 11,524
Commercial and industrial
— 4,708 111 4,819
−Removed: At December 31, 2023, nonaccrual commercial real estate loans comprised of $ 8.8 million collateralized by office, $ 1.4 million by warehouse, and $ 360,000 by other.
+Added: 1,323 40 151 1,514
+Added: $ 26,680 $ 42,889 $ 262 $ 69,831
+Added: December 31, 2023
+Added: Commercial Real Estate
+Added: Residential Real Estate
+Added: Business Assets
+Added: (dollars in thousands)
+Added: Commercial real estate
+Added: $ 10,353 $ 216 $ — $ 10,569
+Added: Single-family residential mortgages
+Added: — 18,103 — 18,103
+Added: Commercial and industrial
+Added: — 610 244 854
+Added: 800 1,200 85 2,085
+Added: $ 11,153 $ 20,129 $ 329 $ 31,611
No interest income was recognized on a cash basis during the years ended December 31, 2024 and 2023.
We did not recognize any interest income on nonaccrual loans during the years ended December 31, 2024 and December 31, 2023 while the loans were in nonaccrual status.
−Removed: Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, or interest rate reduction.
−Removed: The Company may provide multiple types of concessions on one loan.
+Added: On January 1, 2023, we adopted ASU 2022 - 02, "Financial Instruments - Credit Losses (Topic 326 ):
+Added: Troubled Debt Restructurings and Vintage Disclosures." Under this guidance, in cases where a borrower is experiencing financial difficulties, we may make certain concessionary modifications to the contractual terms.
+Added: These concessions may include principal forgiveness, an interest rate reduction, term extension, payment delay, or other actions intended to minimize potential losses.
+Added: We may provide multiple types of concessions on one loan.
When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for loan losses.
−Removed: There were no loans that were both experiencing financial difficulty and modified during the year ended December 31, 2023 and 2022.
−Removed: There were no commitments to lend additional amounts at December 31, 2023 and 2022 to customers with outstanding modified loans.
−Removed: There were no nonaccrual loans that were modified during the past twelve months that had payment defaults during the periods.
−Removed: NOTE 6 - LOAN SERVICING
−Removed: The mortgage loans and SBA loans being serviced for others are not reported as assets in the Company’s consolidated balance sheet.
−Removed: The principal balances of the loans serviced for others are as follows for the dates indicated:
−Removed: At December 31,
+Added: Loans modified to borrowers experiencing financial difficulty totaled $ 54.4 million at December 31, 2024 and zero at December 31, 2023.
+Added: During 2024, three C&D loans and two CRE loans were modified with balances totaling $ 47.6 million and $ 6.8 million at December 31, 2024.
+Added: There were no loans modified to borrowers experiencing financial difficulty during the year ended December 31, 2023.
+Added: The modifications made during 2024 included $ 35.8 million of term extensions for C&D loans impacted by construction delays and an increase in market interest rates since origination, including a $ 26.4 million loan for a partially complete mixed-use commercial project for which we have established a specific reserve of $ 4.5 million.
+Added: We had $ 5.6 million in unfunded commitments related to these borrowers.
+Added: We closely monitor the performance of loans modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts.
+Added: The following table presents the type of concession, by class of loans, during the last 12 months:
+Added: Payment Delay
+Added: Term Extension
+Added: Combination Term Extension Interest Rate Reduction
+Added: Total Modified Loans
+Added: Modified Loans as a Percentage of Class of Loans
+Added: Weighted-Average Term Extension (in Years)
+Added: Weighted-Average Rate Reduction
(dollars in thousands)
+Added: Construction and land development
+Added: $ — $ 35,839 $ 11,706 $ 47,545 27.4 % 0.41 0.12 %
+Added: Commercial real estate
+Added: 6,616 — 222 6,838 0.6 % 1.83 0.00 %
+Added: $ 6,616 $ 35,839 $ 11,928 $ 54,383
+Added: NOTE 5 - LOAN SERVICING
+Added: The loans being serviced for others are not reported as assets in our consolidated balance sheet.
+Added: The table below presents the underlying principal balances of the loans serviced for others, by class of loans, as of the dates indicated:
Loans serviced for others:
−Removed: Mortgage loans
+Added: (dollars in thousands)
+Added: Single-family residential mortgages
$ 922,183 $ 1,014,017
92,678 100,336
−Removed: Commercial real estate loans
−Removed: Construction loans
−Removed: Loan servicing fees, net of amortization, totaled $ 2.6 million, $ 2.2 million and $ 684,000 for the years ended December 31, 2023, 2022 and 2021.
−Removed: Custodial balances maintained in connection with the foregoing loan servicing (including in non-interest bearing deposits) totaled $ 6.4 million and $ 7.0 million as of December 31, 2023 and 2022.
+Added: Commercial real estate
+Added: Construction and land development
+Added: Loan servicing fees, net of amortization, totaled $ 2.3 million, $ 2.6 million and $ 2.2 million for the years ended December 31, 2024, 2023 and 2022.
+Added: Custodial balances maintained in connection with the foregoing loan servicing (included in noninterest-bearing deposits) totaled $ 8.3 million and $ 6.4 million as of December 31, 2024 and 2023.
When mortgage and SBA loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sale of loans.
3 unchanged sentences
Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.
−Removed: If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.
−Removed: During the year ended December 31, 2021, the Company reversed an impairment allowance of $ 417,000 on mortgage servicing rights, which is included in other income.
−Removed: The following table presents the activity in serving assets for the years ended December 31, 2023, 2022, and 2021:
−Removed: (dollars in thousands)
+Added: If we later determine that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.
+Added: The following table presents the activity in servicing assets for the years ended December 31, 2024, 2023, and 2022:
+Added: Loans Loans Loans Loans Loans Loans
Servicing assets:
+Added: (dollars in thousands)
Beginning of period
2 unchanged sentences
( 443 ) ( 187 ) ( 329 ) ( 344 ) ( 794 ) ( 478 )
−Removed: Amortized to expense
( 700 ) ( 228 ) ( 692 ) ( 280 ) ( 1,132 ) ( 363 )
−Removed: Impairment reversal
−Removed: — — — — 417 —
End of period
4 unchanged sentences
The analysis accounts for recent transactions, and supply and demand within the market.
−Removed: The fair value of servicing assets for mortgage loans was $ 12.1 million and $ 18.3 million as of December 31, 2023 and 2022, respectively.
+Added: The fair value of servicing assets for mortgage loans was $ 11.4 million and $ 12.1 million as of December 31, 2024 and 2023.
Fair value at December 31, 2024 was determined using a discount rate of 11.16 %, average prepayment speed of 7.52 %, depending on the stratification of the specific right, and a weighted-average default rate of 0.10 %.
Fair value at December 31, 2023 was determined using a discount rate of 11.23 %, average prepayment speed of 7.91 %, depending on the stratification of the specific right, and a weighted-average default rate of 0.10 %.
−Removed: The fair value of servicing assets for SBA loans was $ 2.8 million and $ 3.5 million as of December 31, 2023 and 2022, respectively.
+Added: The fair value of servicing assets for SBA loans was $ 2.3 million and $ 2.8 million as of December 31, 2024 and 2023.
Fair value at December 31, 2024 was determined using a discount rate of 8.5 %, average prepayment speed of 19.46 %, depending on the stratification of the specific right, and a weighted-average default rate of 1.04 %.
13 unchanged sentences
$ 24,601 $ 25,684
−Removed: Depreciation and leasehold amortization expense was $ 2.0 million, $ 2.0 million, and $ 1.9 million for 2023, 2022, and 2021, respectively.
+Added: Depreciation and leasehold amortization expense was $ 1.9 million, $ 2.0 million, and $ 2.0 million for 2024, 2023, and 2022.
+Added: There were no sales of fixed assets during 2024.
A $ 32,000 gain on sale of fixed assets was recorded from the sale of an automobile during 2023.
A $ 757,000 gain on sale of fixed assets was recorded from the sale of a real estate asset during 2022, which was used to house staff while traveling.
+Added: NOTE 7 - GOODWILL AND INTANGIBLES
+Added: Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.
+Added: Goodwill resulting from whole bank and branch acquisitions is not amortized, but tested for impairment at least annually.
+Added: We have selected October 1 as the date to perform the annual impairment test.
+Added: Goodwill amounted to $ 71.5 million as of December 31, 2024 and 2023, and is the only intangible asset with an indefinite life on the balance sheet.
+Added: No impairment was recognized on goodwill during 2024 and 2023.
+Added: In 2023, after evaluating the prolonged decrease in our stock price, management performed a quantitative goodwill impairment analysis as of September 30, 2023.
+Added: Management engaged a third -party valuation specialist to assist with the quantitative analysis.
+Added: The evaluation used two methods to estimate our value:
+Added: the market approach and the income approach.
+Added: The market approach used pricing information available on publicly traded companies that are similar to the company to determine the value of the company.
+Added: Estimates used in the market approach included selecting a representative peer group of institutions, determining the price to tangible book value based on the results of the peer group institutions, and estimating a control premium based on the whole-bank acquisition prices for representative transactions.
+Added: The income approach was based on the discounted free cash flows of the company using projections of future results, and considering future economic forecasts and management’s plans.
+Added: Estimates used in the income approach included management’s projections of our income in future periods and an appropriate rate of return that would be required by a market participant.
+Added: Based on this quantitative analysis performed at September 30, 2023, our fair value exceeded our carrying amount with a passing amount of 9.6 %.
+Added: Also, at December 31, 2023, due to changes in our projections of income in future periods during the fourth quarter of 2023 resulting from the economic environment, management performed certain calculations and sensitivity analyses related to the quantitative goodwill impairment analysis performed at September 30, 2023 and the current information and concluded that goodwill was also not impaired at December 31, 2023.
+Added: In the fourth quarter of 2024, we performed a qualitative analysis and concluded that it is more likely than not that our fair value exceeds our carrying value and goodwill was not impaired at December 31, 2024.
+Added: Other intangible assets consist of core deposit intangible (“CDI”) assets arising from acquisitions.
+Added: CDI assets are amortized on an accelerated method over their estimated useful life of 8 to 10 years.
+Added: CDI was recognized in the 2013 acquisition of Los Angeles National Bank, in the 2016 acquisition of TFC Holding Company, in the 2018 acquisition of FAIC and in the 2020 acquisition of PGB Holdings, Inc.
+Added: In January 2022, $ 729,000 of CDI was recognized in conjunction with the Hawaii Branch purchase from BOTO.
+Added: The following table presents changes in the carrying amount of CDI for the periods indicated:
+Added: Year ended December 31,
+Added: 2024 2023 2022
+Added: Core deposit intangibles
+Added: (dollars in thousands)
+Added: Balance, beginning of year
+Added: $ 10,459 $ 10,459 $ 9,730
+Added: Acquired from acquisitions
+Added: Balance, end of year
+Added: $ 10,459 $ 10,459 $ 10,459
+Added: Accumulated amortization:
+Added: Balance, beginning of year
+Added: $ 7,664 $ 6,741 $ 5,655
+Added: 784 923 1,086
+Added: Balance, end of year
+Added: $ 8,448 $ 7,664 $ 6,741
+Added: Core deposit intangibles, net
+Added: $ 2,011 $ 2,795 $ 3,718
+Added: Estimated CDI amortization expense for the next 5 years is as follows:
+Added: CDI Amortization Expense
+Added: Year ending December 31:
+Added: (dollars in thousands)
NOTE 8 - DEPOSITS
At December 31, 2024, the scheduled maturities of time deposits are as follows:
+Added: $250,000 and under
+Added: Greater than $250,000
+Added: Time Deposits Maturities Periods:
(dollars in thousands)
−Removed: December 31, 2023
−Removed: Two to three years
+Added: One year or less
+Added: $ 999,099 $ 847,314 $ 1,846,413
+Added: One year to three years
+Added: 7,732 2,677 10,409
Over three years
+Added: $ 1,007,452 $ 850,291 $ 1,857,743
Time deposits include deposits acquired through both retail and wholesale channels.
−Removed: Wholesale funding includes brokered deposits, collateralized deposits from the State of California, and deposits acquired through internet listing services totaled $ 405.6 million at December 31, 2023.
−Removed: Retail deposits include time deposits.
+Added: Wholesale channels include brokered deposits, collateralized deposits from the State of California, and deposits acquired through internet listing services.
+Added: Wholesale time deposits totaled $ 147.5 million at December 31, 2024 and $ 405.6 million at December 31, 2023.
Brokered time deposits were $ 93.2 million at December 31, 2024 and $ 254.9 million at December 31, 2023.
−Removed: Collateralized deposits from the State of California totaled $ 80.0 million at December 31, 2023 and none at December 31, 2022.
+Added: Collateralized deposits from the State of California totaled $ 20.0 million at December 31, 2024 and $ 80.0 million at December 31, 2023.
Time deposits acquired through internet listing services totaled $ 34.2 million at December 31, 2024 and $ 61.4 million at December 31, 2023.
1 unchanged sentence
Time deposits held through the CDARS program were $ 130.6 million at December 31, 2024 and $ 135.7 million at December 31, 2023.
+Added: ICS deposits totaled $ 146.1 million at December 31, 2024 and $ 109.2 million at December 31, 2023.
NOTE 9 - LONG-TERM DEBT
−Removed: In November 2018, the Company issued $ 55.0 million of 6.18 % fixed-to-floating rate subordinated notes, with a December 1, 2028 maturity date (the “2028 Subordinated Notes”).
+Added: In November 2018, we issued $ 55.0 million of 6.18 % fixed-to-floating rate subordinated notes, with a December 1, 2028 maturity date (the “2028 Subordinated Notes”).
The interest rate was fixed through December 1, 2023 and was scheduled to float at three -month CME Term SOFR plus applicable tenor spread adjustment of 26 basis points plus 315 basis points thereafter.
On December 1, 2023, the Company redeemed the 2028 Subordinated Notes at a redemption price equal to 100 % of the principal amount plus accrued and unpaid interest.
−Removed: In March 2021, the Company issued $ 120.0 million of 4.00 % fixed-to-floating rate subordinated notes, with an April 1, 2031 maturity date (the “2031 Subordinated Notes”).
+Added: In March 2021, we issued $ 120.0 million of 4.00 % fixed-to-floating rate subordinated notes, with an April 1, 2031 maturity date (the “2031 Subordinated Notes”).
The interest rate is fixed through April 1, 2026 and is scheduled to float at three -month SOFR plus 329 basis points thereafter.
1 unchanged sentence
The 2031 Subordinated Notes are considered Tier 2 capital at the Company.
−Removed: Long-term debt and unamortized debt issuance costs were as follows as of the dates indicated:
−Removed: At December 31, 2023
−Removed: At December 31, 2022
+Added: The table below presents the long-term debt and unamortized debt issuance costs as of the dates indicated:
+Added: December 31, 2024
+Added: December 31, 2023
(dollars in thousands)
−Removed: Unamortized debt issuance costs
−Removed: Unamortized debt issuance costs
−Removed: 2028 Subordinated Notes
$ 120,000 $ 120,000
−Removed: 2031 Subordinated Notes
+Added: Unamortized debt issuance costs
( 471 ) ( 853 )
+Added: Long-term debt, net of issuance costs
$ 119,529 $ 119,147
−Removed: The following table presents interest and amortization expense the Company incurred for the years ended December 31, 2023 and 2022:
+Added: The following table presents interest and amortization expense on the subordinated notes for the year indicated:
For the Year Ended December 31,
−Removed: (dollars in thousands)
Interest Expense:
+Added: (dollars in thousands)
$ 4,800 $ 7,916 $ 8,199
−Removed: At December 31, 2023, the Company duly and punctually paid all payments and timely delivered both the annual reports and compliance certificate to the Trustee as agreed.
−Removed: The Company was in compliance with all covenants under the long-term debt at December 31, 2023.
+Added: We were in compliance with all covenants under the long-term debt as of December 31, 2024.
NOTE 10 - SUBORDINATED DEBENTURES
−Removed: Subordinated debentures consist of subordinated debentures issued in connection with three separate trust preferred securities and totaled $ 14.9 million and $ 14.7 million as of December 31, 2022 and 2023, respectively.
+Added: Subordinated debentures consist of subordinated debentures issued in connection with three separate trust preferred securities and totaled $ 15.2 million and $ 14.9 million as of December 31, 2024 and 2023.
Under the terms of our subordinated debentures issued in connection with the issuance of trust preferred securities, we are not permitted to declare or pay any dividends on our capital stock if an event of default occurs under the terms of the long-term debt.
−Removed: In addition, the Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.
+Added: In addition, we have the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.
The subordinated debentures may be included in Tier 1 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.
−Removed: The Company may redeem the subordinated debentures, subject to prior approval by the Board of Governors of the Federal Reserve System at 100% of the principal amount, plus accrued and unpaid interest.
−Removed: These subordinated debentures consist of the following and are described in detail after the table below:
−Removed: December 31, 2023
−Removed: (dollars in thousands)
−Removed: Valuation Reserve
−Removed: Effective Rate
+Added: We may redeem the subordinated debentures, subject to prior approval by the Board of Governors of the Federal Reserve System at 100% of the principal amount, plus accrued and unpaid interest.
+Added: The table below presents subordinated debentures at December 31, 2024:
+Added: Principal Amount
+Added: Unamortized Valuation Reserve
+Added: Recorded Value
+Added: Stated Rate Description
+Added: December 31, 2024 Effective Rate
+Added: Stated Maturity
Subordinated debentures
+Added: (dollars in thousands)
December 22, 2006
9 unchanged sentences
Represents applicable tenor spread adjustment when the original Libor index was discontinued on June 30, 2023
−Removed: In 2016, the Company, through the acquisition of TomatoBank and its holding company, TFC Holding Company (“TFC”), acquired TFC Statutory Trust (the “TFC Trust”).
+Added: In 2016, we acquired TFC Statutory Trust (the “TFC Trust”) through the acquisition of TomatoBank and its holding company, TFC Holding Company (“TFC”).
TFC Trust issued 5,000 fixed-to-floating rate capital securities with an aggregate liquidation amount of $ 5.0 million to an independent investor, and all of its common securities, with an aggregate liquidation amount of $ 155,000 .
TFC issued $ 5 million of subordinated debentures to TFC Trust in exchange for ownership of all of the common securities of TFC Trust and the proceeds of the preferred securities sold by TFC Trust.
−Removed: The Company is not considered the primary beneficiary of TFC trust (variable interest entity), therefore TFC Trust is not consolidated in the Company's financial statements, but rather the subordinated debentures are shown as a liability.
−Removed: The Company also purchased an investment in the common stock of TFC Trust for $ 155,000 , which is included in other assets.
+Added: We are not considered the primary beneficiary of TFC Trust (variable interest entity), therefore TFC Trust is not consolidated in our financial statements, but rather the subordinated debentures are shown as a liability.
+Added: We also purchased an investment in the common stock of TFC Trust for $ 155,000 , which is included in other assets.
At the close of this acquisition, a $ 1.9 million valuation reserve was recorded to arrive at its fair market value, which is treated as a yield adjustment and amortized over the life of the security.
The unamortized valuation reserve was $ 1.1 million at December 31, 2024 and $ 1.2 million at December 31, 2023.
−Removed: The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 1.65 %, which was 7.30 % as of December 31, 2023, and three -month LIBOR plus 1.65 %, which was 6.42 % at December 31, 2022.
−Removed: In October 2018, the Company, through the acquisition of FAIC, acquired First American International Statutory Trust I (“FAIC Trust”).
−Removed: FAIC Trust issued 7,000 units of thirty -year fixed-to-floating rate capital securities with an aggregate liquidation amount of $ 7.0 million to an independent investor, and all of its common securities, with an aggregate liquidation amount of $ 217,000 .
−Removed: The Company is not considered the primary beneficiary of FAIC Trust (variable interest entity), therefore FAIC Trust is not consolidated in the Company's financial statements, but rather the subordinated debentures are shown as a liability.
−Removed: The Company purchased an investment in the common stock of FAIC Trust for $ 217,000 , which is included in other assets.
+Added: The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 1.65 %, which was 6.27 % as of December 31, 2024, and 7.30 % at December 31, 2023.
+Added: In October 2018, we acquired First American International Statutory Trust I (“FAIC Trust I”) through the acquisition of FAIC.
+Added: FAIC Trust I issued 7,000 units of 30 -year fixed-to-floating rate capital securities with an aggregate liquidation amount of $ 7.0 million to an independent investor, and all of its common securities, with an aggregate liquidation amount of $ 217,000 .
+Added: We are not considered the primary beneficiary of FAIC Trust I (variable interest entity), therefore FAIC Trust I is not consolidated in our financial statements, but rather the subordinated debentures are shown as a liability.
+Added: We purchased an investment in the common stock of FAIC Trust I for $ 217,000 , which is included in other assets.
At the close of this acquisition, a $ 1.2 million valuation reserve was recorded to arrive at its fair market value, which is treated as a yield adjustment and amortized over the life of the security.
The unamortized valuation reserve was $ 765,000 at December 31, 2024 and $ 842,000 at December 31, 2023.
−Removed: The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 1.65 %, which was 7.90 % as of December 31, 2023, and three -month LIBOR plus 2.25 %, which was 7.02 % at December 31, 2022.
−Removed: In January 2020, the Company, through the acquisition of PGBH, acquired PGB Capital Trust I (“PGBH Trust”).
−Removed: PGBH Trust issued 5,000 units of fixed-to-floating rate capital securities with an aggregate liquidation amount of $ 5 million to an independent investor, and all of its common securities, with an aggregate liquidation amount of $ 155,000 .
−Removed: The Company is not considered the primary beneficiary of PGBH Trust (variable interest entity), therefore PGBH Trust is not consolidated in the Company's financial statements, but rather the subordinated debentures are shown as a liability.
−Removed: The Company purchased an investment in the common stock of PGBH Trust for $ 155,000 , which is included in other assets.
−Removed: At the close of this acquisition, a $ 763,000 valuation reserve recorded to arrive at it fair market value, which is treated as a yield adjustment and amortized over the life of the security.
+Added: The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 2.25 %, which was 6.87 % as of December 31, 2024, and 7.90 % at December 31, 2023.
+Added: In January 2020, we acquired PGB Capital Trust I (“PGBH Trust I”) through the acquisition of PGBH.
+Added: PGBH Trust I issued 5,000 units of fixed-to-floating rate capital securities with an aggregate liquidation amount of $ 5 million to an independent investor, and all of its common securities, with an aggregate liquidation amount of $ 155,000 .
+Added: We are not considered the primary beneficiary of PGBH Trust I (variable interest entity), therefore PGBH Trust I is not consolidated in our financial statements, but rather the subordinated debentures are shown as a liability.
+Added: We purchased an investment in the common stock of PGBH Trust I for $ 155,000 , which is included in other assets.
+Added: At the close of this acquisition, a $ 763,000 valuation reserve was recorded to arrive at it fair market value, which is treated as a yield adjustment and amortized over the life of the security.
The unamortized valuation reserve was $ 507,000 at December 31, 2024 and $ 559,000 at December 31, 2023.
−Removed: The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 1.65 %, which was 7.75 % as of December 31, 2023, and three -month LIBOR plus 2.10 %, which was 6.87 % at December 31, 2022.
−Removed: The Company paid interest expense of $ 1.3 million in 2023, $ 650,000 in 2022 and $ 377,000 in 2021.
−Removed: The amount of aggregate amortization expense recognized was $ 218,000 in each of the years ended December 31, 2023, 2022 and 2021.
−Removed: For regulatory reporting purposes, the Federal Reserve Board has indicated that the capital securities qualify as Tier 1 capital of the Company subject to previously specified limitations, until further notice.
−Removed: If regulators make a determination that the capital securities can no longer be considered in regulatory capital, the securities become callable and the Company may redeem them.
+Added: The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 2.10 %, which was 6.72 % as of December 31, 2024, and 7.75 % at December 31, 2023.
+Added: We recorded interest expense of $ 1.3 million in 2024, $ 1.3 million in 2023 and $ 650,000 in 2022 on the subordinated debentures.
+Added: The aggregate amount of amortization expense was $ 218,000 in each of the years ended December 31, 2024, 2023 and 2022.
+Added: For regulatory reporting purposes, the Federal Reserve has indicated that the capital or trust preferred securities qualify as Tier 1 capital of the Company subject to previously specified limitations (including that the asset size of the issuer did not exceed $15 billion), until further notice.
+Added: If regulators make a determination that the capital securities can no longer be considered in regulatory capital, the securities become callable and we may redeem them.
At December 31, 2024, the Company duly and punctually paid all payments, maintained 100% ownership of the common securities, and did not incur any additional indebtedness as agreed.
1 unchanged sentence
NOTE 11 - BORROWING ARRANGEMENTS
−Removed: The Company has established secured and unsecured lines of credit.
−Removed: The Company may borrow funds from time to time on a term or overnight basis from the Federal Home Loan Bank of San Francisco (“FHLB”), the Federal Reserve Bank of San Francisco (“FRB”) and other financial institutions as indicated below.
−Removed: Federal Funds Arrangements with Commercial Bank s.
−Removed: As of December 31, 2023, the Company may borrow on an unsecured basis, up to $ 92.0 million from other financial institutions.
−Removed: Letter of Credit Arrangements.
−Removed: As of December 31, 2023, the Company had an unsecured commercial letter of credit line with another financial institution for $ 2.0 million.
−Removed: FRB Secured Line of Credit.
−Removed: As of December 31, 2023, the Bank had a secured borrowing capacity with the FRB of $ 42.3 million at December 31, 2023 collateralized by pledged loans with a carrying value of $ 62.8 million.
+Added: We have established secured and unsecured lines of credit.
+Added: We may borrow funds from time to time on a term or overnight basis from the FHLB, the Federal Reserve Bank of San Francisco (“FRB”) and other financial institutions as indicated below.
FHLB Secured Line of Credit and Advances.
−Removed: As of December 31, 2023, the Bank had a secured borrowing capacity with the FHLB of $ 1.0 billion collateralized by pledged residential and commercial loans with a carrying value of $ 1.5 billion.
−Removed: At December 31, 2023, the Company had no overnight advances and $ 150.0 million of long-term advances with an original term of 5 years at a weighted average rate of 1.18 %.
−Removed: The Company paid interest expenses of $ 2.9 million, $ 2.9 million and $ 1.8 million on such FHLB advances for the years ended December 31, 2023, 2022 and 2021, respectively.
−Removed: There were no amounts outstanding under any of the other borrowing arrangements above as of December 31, 2023 except FHLB advances maturing in 2025.
+Added: At December 31, 2024, the Bank had a secured borrowing capacity with the FHLB of $ 1.1 billion collateralized by pledged residential and commercial loans with a carrying value of $ 1.4 billion.
+Added: At December 31, 2024, we had no overnight advances and $ 200.0 million of term advances, of which $ 150 million had an original term of five years, a maturity date in the first quarter of 2025, and an average fixed rate of 1.18 %.
+Added: A putable advance of $ 50 million was executed on September 30, 2024 with a four year final maturity with a one -time option for the FHLB to call the debt after a one -year lock out period and prepayment symmetry at a rate of 3.42 %.
+Added: We recognized interest on FHLB advances of $ 2.2 million, $ 2.9 million, and $ 2.9 million for the years ended December 31, 2024, 2023 and 2022.
+Added: FRB Secured Line of Credit.
+Added: At December 31, 2024, the Bank had a secured borrowing capacity with the FRB of $ 47.2 million collateralized by pledged loans with a carrying value of $ 62.5 million.
+Added: Federal Funds Arrangements with Commercial Bank s.
+Added: At December 31, 2024, the Company may borrow on an unsecured basis, up to $ 97.0 million from other financial institutions.
+Added: There were no amounts outstanding under any of the other borrowing arrangements above as of December 31, 2024, except the FHLB term advances totaling $ 200.0 million.
NOTE 12 - INCOME TAXES
1 unchanged sentence
Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
−Removed: Income tax expense consists of the following:
+Added: The table below presents the components of income tax expense for the years indicated:
+Added: For the Year Ended December 31,
+Added: 2024 2023 2022
(dollars in thousands)
9 unchanged sentences
$ 9,014 $ 17,781 $ 27,018
−Removed: A comparison of the federal statutory income tax rates to the Company's effective income tax rates for the years ended December 31 follows:
+Added: The following table presents a comparison of the federal statutory income tax rates to the Company's effective income tax rates for the years indicated:
+Added: For the Year Ended December 31,
+Added: Amount Rate Amount Rate Amount Rate
(dollars in thousands)
1 unchanged sentence
$ 7,493 21.0 % $ 12,652 21.0 % $ 19,182 21.0 %
−Removed: % $ 19,182 21.0 % $ 16,997 21.0 %
State tax, net of federal benefit
2 unchanged sentences
( 429 ) ( 1.2 )% ( 399 ) ( 0.7 )% ( 355 ) ( 0.4 )%
−Removed: )% ( 355 ) ( 0.4 )% ( 285 ) ( 0.4 )%
Stock-based compensation
( 10 ) 0.0 % 54 0.1 % ( 396 ) ( 0.4 )%
+Added: Tax credits, net of amortization
+Added: ( 978 ) ( 2.7 )% ( 62 ) ( 0.1 )% ( 80 ) ( 0.1 )%
Other items, net
2 unchanged sentences
$ 9,014 25.3 % $ 17,781 29.5 % $ 27,018 29.6 %
−Removed: Deferred taxes are a result of differences between income tax accounting and generally accepted accounting principles with respect to income and expense recognition.
+Added: Deferred taxes are a result of differences between income tax accounting and GAAP with respect to income and expense recognition.
The following is a summary of the components of the net deferred tax asset accounts recognized in the accompanying balance sheets as of December 31:
−Removed: (dollars in thousands)
Deferred tax assets:
+Added: (dollars in thousands)
Allowance for credit losses
19 unchanged sentences
$ 19,055 $ 15,765
−Removed: At December 31, 2023, the Company has usable net operating loss carryforwards from acquisitions of $ 21,104 for federal and $ 5,570 for California income tax purposes.
+Added: At December 31, 2024, we have usable net operating loss carryforwards from acquisitions of $ 18,466 for federal and $ 5,570 for California income tax purposes.
Net operating loss carry forwards, to the extent not used, will begin to expire in 2028.
1 unchanged sentence
Benefits not expected to be realized due to the limitation have been excluded from the deferred tax asset and net operating loss carryforward amounts noted above.
−Removed: Based on management's assessment, the Company concluded that no valuation allowance was necessary for the Company's deferred tax assets as of December 31, 2023.
−Removed: The Company files income tax returns in federal and various state jurisdictions.
−Removed: The Company is subject to examinations in federal jurisdiction for the years ended after December 31, 2019.
+Added: Based on management's assessment, we concluded that no valuation allowance was necessary for the deferred tax assets as of December 31, 2024.
+Added: We file income tax returns in federal and various state jurisdictions.
+Added: We are subject to examinations in federal jurisdiction for the years ended after December 31, 2020.
The statutes of limitations for state income tax returns remain open for tax years in accordance with each state's statutes.
−Removed: The audit of the Company's New York State tax returns for the tax period from January 1, 2018 to December 31, 2020 was completed in August 2023.
−Removed: The Company paid additional tax and interest of $ 70,000 without penalties to settle the tax audit findings with New York State.
−Removed: The Company had no material uncertain tax positions at December 31, 2023 and 2022, and recognized no material interest or penalties as part of income taxes for the years ended December 31, 2023, 2022, and 2021.
+Added: The audit of our New York State tax returns for the tax period from January 1, 2018 to December 31, 2020 was completed in August 2023 and we paid additional tax and interest of $ 70,000 without penalties to settle the tax audit findings with New York State.
+Added: We recorded a $ 1.1 million liability related to uncertain tax positions at December 31, 2024.
+Added: We recognized no material interest or penalties as part of income taxes for the years ended December 31, 2024, 2023, and 2022.
+Added: Purchased Federal Transferable Tax Credits
+Added: On September 13, 2024, we entered into a Purchase and Sale Agreement (PSA) for the purchase of approximately $ 23.2 million in federal transferable tax credits to be generated by four projects.
+Added: Two of the projects were placed in service in 2024 and generated approximately $ 12.9 million of federal transferable tax credits.
+Added: The approximate purchase price of $ 12.0 million will be paid by us to the seller, an independent third party, upon the achievement of certain benchmarks outlined in the PSA.
+Added: We utilized the purchased tax credits of $ 12.9 million to offset amounts that otherwise would be due and payable to the IRS for 2024 and potentially prior tax years.
+Added: The accounting treatment is an increase in income tax receivable from the IRS, a liability to the seller, and a reduction to income tax expense in the period the qualifying project is placed in service.
NOTE 13 - COMMITMENTS AND CONTINGENCIES
−Removed: In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of its customers.
+Added: In the ordinary course of business, we enter into financial commitments to meet the financing needs of our customers.
These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit.
−Removed: Those instruments involve to varying degrees, elements of credit and interest rate risk not recognized in the Company's financial statements.
−Removed: The Company's exposure to loan loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments.
−Removed: The Company uses the same credit policies in making commitments as it does for loans reflected in the financial statements.
−Removed: As of December 31, 2023 and 2022, the Company had the following financial commitments whose contractual amount represents credit risk:
+Added: Those instruments involve varying degrees of credit and interest rate risk not recognized in our financial statements.
+Added: Our exposure to loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments.
+Added: We use the same credit policies in making commitments as we do for loans reflected in the financial statements.
+Added: At December 31, 2024 and 2023, we had the following financial commitments whose contractual amount represents credit risk:
+Added: Rate Rate Rate Rate
(dollars in thousands)
10 unchanged sentences
Since many of the commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements.
−Removed: The Company evaluates each client's credit worthiness on a case-by-case basis.
−Removed: The amount of collateral obtained if deemed necessary by the Company is based on management's credit evaluation of the customer.
−Removed: The Company records a liability for lifetime expected losses on off-balance-sheet credit exposure that do not fit the definition of unconditionally cancelable in accordance with ASC 326.
−Removed: The Company uses the loss rate and exposure of default framework to estimate a reserve for unfunded commitments.
+Added: We evaluate each client's creditworthiness on a case-by-case basis.
+Added: We record a liability for lifetime expected losses on off-balance-sheet credit exposure that does not fit the definition of unconditionally cancelable in accordance with ASC 326.
+Added: We use the loss rate and exposure at default framework to estimate a reserve for unfunded commitments.
Loss rates for the expected funded balances are determined based on the associated pooled loan analysis loss rate and the exposure at default is based on an estimated utilization given default.
−Removed: The off-balance sheet commitment allowance were $ 640,000 and $ 1.2 million as of December 31, 2023 and December 31, 2022, respectively.
−Removed: The (reversal of)/provision for off-balance sheet commitments totaled were ($ 516,000 ) and $ 1.1 million for the years ended December 31, 2023 and 2022.
−Removed: Additionally, we have commitments to invest in certain affordable housing partnerships and SBIC funds that call for capital contributions up to an amount specific in the partnership agreements.
−Removed: Such unfunded commitments totaled $ 3.3 million and $ 3.5 million as of December 31, 2023 and 2022.
−Removed: The Company is involved in various matters of litigation, which have arisen in the ordinary course of business, and accruals for estimates of potential losses have been provided when necessary and appropriate under generally accepted accounting principles.
−Removed: In the opinion of management, the disposition of such pending litigation will not have a material effect on the Company's financial statements.
+Added: The reserve for off-balance sheet commitments was $ 729,000 and $ 640,000 as of December 31, 2024 and December 31, 2023.
+Added: We recorded a provision for unfunded loan commitments of $ 89,000 for the year ended December 31, 2024, and a reversal of provision for unfunded loan commitments of $ 516,000 for the year ended December 31, 2023.
+Added: In addition, we invest in various affordable housing partnerships and Small Business Investment Company funds.
+Added: Pursuant to these investments, we commit to an investment amount to be fulfilled in future periods.
+Added: Such unfunded commitments totaled $ 5.7 million as of December 31, 2024 and $ 3.3 million as of December 31, 2023.
+Added: We are involved in various matters of litigation which have arisen in the ordinary course of business and accruals for estimates of potential losses have been provided when necessary and appropriate under GAAP.
+Added: In the opinion of management, the disposition of such pending litigation will not have a material effect on the Company's consolidated financial statements.
NOTE 14 - LEASES
−Removed: The Company leases several of its operating facilities under various non-cancellable operating leases expiring at various dates through 2037.
−Removed: The Company is also responsible for common area maintenance, taxes, and insurance at the various branch locations.
−Removed: Future minimum rent payments on the Company’s leases were as follows at December 31, 2023:
−Removed: (dollars in thousands)
+Added: We lease several of our operating facilities under various non-cancellable operating leases expiring at various dates through 2037.
+Added: We are also responsible for common area maintenance, taxes, and insurance at the various branch locations.
+Added: Future minimum rent payments on our leases were as follows at December 31, 2024:
For the year ended December 31,:
+Added: (dollars in thousands)
Less amount of payment representing interest
1 unchanged sentence
The minimum rent payments shown above are given for the existing lease obligation and are not a forecast of future rental expense.
−Removed: Total rental expense, recognized on a straight-line basis, was $ 5.7 million, $ 5.4 million, and $ 5.3 million for the years ended December 31, 2023, 2022, and 2021, respectively.
−Removed: The Company received rental income of $ 570,000 , $ 548,000 , and $ 479,000 for the years ended December 31, 2023, 2022, and 2021, respectively.
−Removed: The following table presents the operating lease related assets and liabilities recorded on the consolidated balance sheets, and the weighted-average remaining lease terms and discount rates as of December 31, 2023 and December 31, 2022 :
−Removed: (dollars in thousands)
+Added: Total rental expense, recognized on a straight-line basis, was $ 5.8 million, $ 5.7 million, and $ 5.4 million for the years ended December 31, 2024, 2023, and 2022.
+Added: The Company received rental income of $ 612,000 , $ 570,000 , and $ 548,000 for the years ended December 31, 2024, 2023, and 2022.
+Added: The following table presents the operating lease related assets and liabilities recorded on the consolidated balance sheets, and the weighted-average remaining lease terms and discount rates as of the dates indicated :
Operating Leases
+Added: (dollars in thousands)
$ 28,048 $ 29,803
5 unchanged sentences
NOTE 15 - RELATED PARTY TRANSACTIONS
−Removed: Loans to principal officers, directors, and their affiliates were as follows:
−Removed: For the year ended December 31,
−Removed: (dollars in thousands)
−Removed: Beginning balance
−Removed: $ 6,869 $ 8,441
−Removed: Balance re-categorized to non-related party
−Removed: Ending balance
−Removed: Outstanding loan commitments to executive officers, directors and their related interests with whom they are associated were none and $ 1.6 million as of December 31, 2023 and 2022, respectively.
−Removed: Deposits from principal officers, directors, and their affiliates at December 31, 2023 and 2022 were $ 25.7 million and $ 88.1 million, respectively.
−Removed: Certain directors and their affiliates own $ 6.0 million of RBB subordinated debentures as of December 31, 2023 and $ 8.1 million as of December 31, 2022.
−Removed: NOTE 16 - STOCK OPTION PLAN
+Added: There were no loans or outstanding loan commitments to any principal officers or directors, or any of their affiliates at December 31, 2024 and 2023.
+Added: Deposits from principal officers, directors, and their affiliates at December 31, 2024 and 2023 were $ 32.5 million and $ 25.7 million.
+Added: Certain directors and their affiliates own $ 6.0 million of RBB subordinated debentures as of December 31, 2024 and 2023.
+Added: NOTE 16 - STOCK BASED COMPENSATION
RBB Bancorp 2010 Stock Option Plan
−Removed: Under the RBB Bancorp 2010 Stock Option Plan (the “2010 Plan”), the Company was permitted to grant awards to eligible persons in the form of qualified and non-qualified stock options.
−Removed: The Company reserved up to 30 % of the issued and outstanding shares of common stock as of the date the Company adopted the 2010 Plan, or 3,494,478 shares, for issuance under the 2010 Plan.
+Added: Under the RBB Bancorp 2010 Stock Option Plan (the “2010 Plan”), we were permitted to grant awards to eligible persons in the form of qualified and non-qualified stock options.
+Added: We reserved up to 30 % of the issued and outstanding shares of common stock as of the date we adopted the 2010 Plan, or 3,494,478 shares, for issuance under the 2010 Plan.
Following receipt of shareholder approval of the 2017 Omnibus Stock Incentive Plan (the “OSIP”) in May 2017 , no additional grants were made under the 2010 Plan.
4 unchanged sentences
Amended and Restated RBB Bancorp 2017 Omnibus Stock Incentive Plan
−Removed: The Amended and Restated RBB Bancorp 2017 Omnibus Stock Incentive Plan (the “Amended OSIP”) was approved by the Company’s board of directors in January 2019 and approved by the Company’s shareholders in May 2022 .
−Removed: The Amended OSIP was designed to ensure continued availability of equity awards that will assist the Company in attracting and retaining competent managerial personnel and rewarding key employees, directors and other service providers for high levels of performance.
−Removed: Pursuant to the Amended OSIP, the Company’s board of directors are allowed to grant awards to eligible persons in the form of qualified and non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights and other incentive awards.
−Removed: The Company has reserved up to 30 % of issued and outstanding shares of common stock as of the date the Company adopted the Amended OSIP, or 3,848,341 shares.
+Added: The Amended and Restated RBB Bancorp 2017 Omnibus Stock Incentive Plan (the “Amended OSIP”) was approved by our board of directors in January 2019 and approved by our shareholders in May 2022 .
+Added: The Amended OSIP was designed to ensure continued availability of equity awards that will assist us in attracting and retaining competent managerial personnel and rewarding key employees, directors and other service providers for high levels of performance.
+Added: Pursuant to the Amended OSIP, our board of directors are allowed to grant awards to eligible persons in the form of qualified and non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights and other incentive awards.
+Added: We have reserved up to 30 % of issued and outstanding shares of common stock as of the date we adopted the Amended OSIP, or 3,848,341 shares.
As of December 31, 2024, there were 1,004,658 shares of common stock available for issuance under the Amended OSIP.
4 unchanged sentences
If a participant’s job is terminated for cause, then all awards expire at the date of termination.
−Removed: The Company recognized total stock-based compensation expense of $ 750,000 , $ 848,000 , and $ 1.1 million in 2023, 2022 and 2021.
−Removed: The total unrecognized stock-based expense totaled $ 517,000 , $ 581,000 , and $ 1.4 million as of December 31, 2023, 2022, and 2021.
+Added: We recognized total stock-based compensation expense of $ 1.1 million, $ 750,000 , and $ 848,000 in 2024, 2023, and 2022.
+Added: The total unrecognized stock-based expense totaled $ 1.9 million, $ 517,000 , and $ 581,000 as of December 31, 2024, 2023, and 2022.
Stock Options
−Removed: The recorded compensation expense for stock option was $ 246,000 , $ 300,000 , and $ 485,000 and the Company recognized income tax expense/(benefit) of $ 3,000 , ($ 587,000 ), and ($ 873,000 ) for the years ended December 31, 2023, 2022, and 2021, respectively.
−Removed: Unrecognized stock-based compensation expense related to options was $ 179,000 , $ 400,000 , and $ 635,000 as of December 31, 2023, 2022, and 2021, respectively.
−Removed: Unrecognized stock-based compensation expense will be recognized over a weighted-average period of 1.2 years as of December 31, 2023.
+Added: Compensation expense for stock options was $ 62,000 , $ 246,000 , and $300,000 for the years ended December 31, 2024, 2023, and 2022.
+Added: Unrecognized stock-based compensation expense related to options was $ 117,000 , $ 179,000 , and $ 400,000 as of December 31, 2024, 2023, and 2022.
+Added: Unrecognized compensation expense related to stock options, as of December 31, 2024, is expected to be recognized over the next 2.3 years.
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions presented below for 2023 and 2022.
+Added: No stock options have been granted after March 31, 2023.
December 2022
2 unchanged sentences
Expected term (years)
−Removed: 8.0 8.0 6.0 6.0 6.0
Expected dividends
4 unchanged sentences
$ 5.49 $ 6.16 $ 5.28
−Removed: The expected volatility was based on the historical volatility of the Company stock trading history.
−Removed: The expected term represents the estimated average period of time that the options remain outstanding.
−Removed: The expected term represents the estimated average period of time that the options remain outstanding.
+Added: The expected volatility was based on the historical volatility of our stock trading history.
The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding.
1 unchanged sentence
Treasury bonds over the expected term of the options.
−Removed: A summary of the status of the Company's stock option plan as of December 31, 2023 and changes during the year ended is presented below:
−Removed: (dollars in thousands, except for shares and per share data)
−Removed: Term in years
+Added: The table below presents a summary of our stock option awards and activity as of and for the year ended December 31, 2024:
+Added: Shares Price Term in years Value
Outstanding at beginning of year
7 unchanged sentences
153,167 $ 17.88 4.64 $ 406
−Removed: The total fair value of the shares vested was $ 1.1 million, $ 1.1 million, and $ 1.2 million in 2023, 2022, and 2021, respectively.
−Removed: The number of unvested stock options were 65,671 , 127,005 , and 237,500 with a weighted average grant date fair value of $ 4.99 , $ 4.69 , and $ 4.28 as of December 31, 2023, 2022 and 2021, respectively.
−Removed: The decrease of unvested stock options during 2023 was due to 56,334 stock options vested with a weighted average grant date stock price of $ 18.40 , 30,000 stock options forfeited with a weighted average grant date stock price of $ 19.87 , 5,000 stock options exercised with a weighted average grant date stock price of $ 17.74 , offset by 30,000 stock options granted with a weighted average grant date stock price of $ 19.87 .
−Removed: Cash received from the exercise of 19,403 share options was $ 295,000 for the period ended December 31, 2023.
−Removed: Cash received from the exercise of 445,308 share options was $ 5.5 million for the period ended December 31, 2022.
−Removed: Cash received from the exercise of 302,744 share options was $ 3.5 million for the period ended December 31, 2021.
−Removed: The intrinsic value of options exercised was $ 90,000 , $ 4.0 million, and $ 3.8 million in 2023, 2022, and 2021, respectively.
+Added: The total fair value of the shares vested was $ 581,000 , $ 1.1 million, and $ 1.1 million in 2024, 2023, and 2022.
+Added: Unvested stock options totaled 21,333 , 65,671 , and 127,005 with a weighted average grant date fair value of $ 6.02 , $ 4.99 , and $ 4.69 as of December 31, 2024, 2023 and 2022.
+Added: The decrease of unvested stock options during 2024 was due to 28,337 stock options vested with a weighted average grant date stock price of $ 18.18 , and 16,001 stock options exercised with a weighted average grant date stock price of $ 19.03 .
+Added: Cash received from the exercise of 112,250 share options was $ 1.8 million for the year ended December 31, 2024.
+Added: Cash received from the exercise of 19,403 share options was $ 295,000 for the year ended December 31, 2023.
+Added: Cash received from the exercise of 445,308 share options was $ 5.5 million for the year ended December 31, 2022.
+Added: The intrinsic value of options exercised was $ 429,000 , $ 90,000 , and $ 4.0 million in 2024, 2023, and 2022.
Restricted Stock Units
−Removed: The Company granted 32,248 restricted stock units at a closing price of $ 20.46 on January 18, 2023 to its directors and executive officers and 16,500 restricted stock units at a closing price of $ 13.93 on July 20, 2023 to its new president.
−Removed: These restricted stock units are scheduled to vest over a one year period for shares granted to directors and a three -year period for shares granted to executive officers from the grant date.
−Removed: As of December 31, 2023, there were 43,160 remaining unvested restricted stock units.
−Removed: The recorded compensation expense for restricted stock units was $ 504,000 and $ 453,000 for the years ended December 31, 2023 and 2022, respectively.
−Removed: The Company did not grant restricted stock units in 2021.
−Removed: Unrecognized stock-based compensation expense related to restricted stock units was $ 338,000 and $ 182,000 as of December 31, 2023 and 2022, respectively.
−Removed: As of December 31, 2023, unrecognized stock-based compensation expense related to restricted stock units is expected to be recognized over the next 1.5 years.
+Added: We award time-based restricted stock units (“TRSUs”) and performance-based restricted stock units (“PRSUs”), which we also refer to collectively as restricted stock units (“RSUs”).
+Added: We granted 138,668 RSUs during the year ended December 31, 2024, with a weighted average price of $ 18.37 .
+Added: The RSUs granted during the year ended December 31, 2024 included 31,270 PRSUs with an estimated fair value as of the March 20, 2024 grant date of $ 19.13 and are subject to pre-established performance metrics with market conditions that will be measured in the future and subject to oversight and approval by the Board of Director’s Compensation Committee.
+Added: The TRSUs have original lives ranging from 1 to 4 years and PRSUs have an original life of 3 years.
+Added: As of December 31, 2024, there were 140,475 unvested RSUs outstanding.
+Added: The recorded compensation expense for RSUs was $ 994,000 , $ 504,000 , and $ 453,000 for the years ended December 31, 2024, 2023, and 2022.
+Added: Unrecognized stock-based compensation expense related to RSUs was $ 1.8 million and $ 338,000 as of December 31, 2024 and 2023.
+Added: As of December 31, 2024, unrecognized stock-based compensation expense related to RSUs is expected to be recognized over the next 2.3 years.
The following table presents restricted stock unit activity during the twelve months ended December 31, 2024.
3 unchanged sentences
138,668 18.37
+Added: ( 41,353 ) 19.05
Outstanding at end of period
140,475 18.33
−Removed: Restricted Stock Awards
−Removed: The Company granted restricted stock awards for 60,000 shares at a closing price of $ 17.74 in 2021 .
−Removed: These restricted stock awards were scheduled to vest over a three -year period from the January 21, 2021 grant date.
−Removed: Unvested restricted stock awards of 40,000 shares were forfeited and the expense related to the forfeited shares was reversed on April 8, 2022 , due to a former employee's resignation.
−Removed: As of December 31, 2023, there were no outstanding restricted stock awards.
−Removed: The Company did not grant restricted stock awards in 2023 or 2022 .
−Removed: The recorded compensation expense for restricted stock awards was zero , $ 95,000 , and $ 602,000 for the years ended December 31, 2023, 2022, and 2021, respectively.
−Removed: Unrecognized stock-based compensation expense related to restricted stock awards was zero , zero , and $ 729,000 as of December 31, 2023, 2022, and 2021, respectively.
NOTE 17 - REGULATORY MATTERS
−Removed: Update on Previously Disclosed Regulatory Matters
−Removed: As previously disclosed in the Company's Current Report on Form 8 -K filed with the Securities and Exchange Commission (“SEC”) on October 31, 2023 , effective on October 25, 2023 , the Bank entered into a Stipulation to the Issuance of a Consent Order (the “Stipulation”) with the Federal Deposit Insurance Corporation (the “FDIC”) and the California Department of Financial Protection and Innovation (the “DFPI”), consenting to the issuance of a consent order (the “Consent Order”) relating to the Bank’s Anti-Money Laundering/Countering the Financing of Terrorism (“AML/CFT”) compliance program.
−Removed: In connection to the issuance of the Consent Order, the Bank did not admit or deny any charges of violating Bank Secrecy Act (“BSA”) and its implementing regulations.
−Removed: Regulatory Capital
Holding companies (with assets over $ 3 billion at the beginning of the year) and banks are subject to various regulatory capital requirements administered by the federal banking agencies.
−Removed: Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements.
−Removed: In July 2013, the federal bank regulatory agencies approved the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S.
−Removed: The new rules became effective on January 1, 2015, with certain of the requirements phased-in over a multi-year schedule.
−Removed: Under the rules, minimum requirements increased for both the quantity and quality of capital held by the Bank.
−Removed: The rules include a new common equity Tier 1 ( “CET1” ) capital to risk-weighted assets ratio with minimums for capital adequacy and prompt corrective action purposes of 4.5 % and 6.5 %, respectively.
−Removed: The minimum Tier 1 capital to risk-weighted assets ratio was raised from 4.0 % to 6.0 % under the capital adequacy framework and from 6.0 % to 8.0 % to be well capitalized under the prompt corrective action framework.
−Removed: In addition, the rules introduced the concept of a “conservation buffer” of 2.5 % applicable to the three capital adequacy risk-weighted asset ratios ( CET1, Tier 1, and Total).
−Removed: The implementation of the capital conservation buffer began on January 1, 2016 at 0.625 % and was phased in over a four -year period (increasing by that amount on each subsequent January 1, until it reached 2.5 % on January 1, 2019).
+Added: Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on our financial statements.
+Added: Final comprehensive regulatory capital rules for U.S.
+Added: banking organizations pursuant to the capital framework of the Basel Committee on Banking Supervision, generally referred to as “Basel III,” implemented a requirement for all banking organizations to maintain a capital conservation buffer of 2.5 % above the minimum risk-based capital requirements.
+Added: The capital conservation buffer is exclusively comprised of common equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio.
+Added: At December 31, 2024, the Company and the Bank were in compliance with the capital conservation buffer requirements.
If the capital adequacy minimum ratios plus the phased-in conservation buffer amount exceed actual risk-weighted capital ratios, then dividends, share buybacks, and discretionary bonuses to executives could be limited in amount.
2 unchanged sentences
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and CET1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined).
−Removed: As permitted by the regulators for financial institutions that are not deemed to be “advanced approaches” institutions, the Company has elected to opt out of the Basel III requirement to include accumulated other comprehensive income in risk-based capital.
−Removed: Management believes, at December 31, 2023 and December 31, 2022, that the Bank satisfied all capital adequacy requirements to which it is subject.
−Removed: In February 2019, the U.S.
−Removed: federal bank regulatory agencies approved a final rule modifying their regulatory capital rules and providing an option to phase in over a three -year period the day- one adverse regulatory capital effects of ASU 2016 - 13.
−Removed: Additionally, in March 2020, the U.S.
−Removed: federal bank regulatory agencies issued an interim final rule that provides banking organizations an option to delay the estimated CECL impact on regulatory capital for an additional two years for a total transition period of up to five years to provide regulatory relief to banking organizations to better focus on supporting lending to creditworthy households and businesses in light of recent strains on the U.S.
−Removed: economy as a result of the novel coronavirus disease 2019 (“COVID- 19” ) pandemic.
−Removed: As a result, entities that adopted CECL in 2020 had the option to gradually phase in the full effect of CECL on regulatory capital over a five -year transition period.
−Removed: Effective January 1, 2022, the Company adopted ASU 2016 - 13, reflected the full effect of CECL at December 31, 2022, and did not elect the three -year CECL phase-in options on regulatory capital.
+Added: As permitted by the regulators for financial institutions that are not deemed to be “advanced approaches” institutions, we have elected to opt out of the Basel III requirement to include accumulated other comprehensive income in risk-based capital.
+Added: Management believes, at December 31, 2024 and December 31, 2023, we satisfied all capital adequacy requirements to which we were subject.
As of December 31, 2024 and 2023, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action (there are no conditions or events since that notification that management believes have changed the Bank’s category).
To be categorized as well capitalized, the Bank must maintain minimum ratios as set forth in the table below.
−Removed: The following table sets forth Bancorp’s consolidated and the Bank’s actual capital amounts and ratios and related regulatory requirements for the Bank as of December 31, 2023:
+Added: The following table sets forth Bancorp’s consolidated and the Bank’s actual capital amounts and ratios and related regulatory requirements as of the dates indicated:
Amount of Capital Required
3 unchanged sentences
Capital Adequacy Purposes
−Removed: (dollars in thousands)
As of December 31, 2024:
+Added: (dollars in thousands)
Tier 1 Leverage Ratio
11 unchanged sentences
( 1 ) These ratios are exclusive of the 2.5 % capital conservation buffer.
−Removed: The following table sets forth Bancorp’s consolidated and the Bank’s actual capital amounts and ratios and related regulatory requirements for the Bank as of December 31, 2022:
Amount of Capital Required
3 unchanged sentences
Capital Adequacy Purposes
−Removed: (dollars in thousands)
As of December 31, 2023:
+Added: (dollars in thousands)
Tier 1 Leverage Ratio
16 unchanged sentences
NOTE 18 - FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
−Removed: In accordance with accounting guidance, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.
+Added: In accordance with accounting guidance, we group financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy are described as follows:
+Added: Fair Value Hierarchy
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
4 unchanged sentences
Valuation techniques may include use of matrix pricing, DCF models, and similar techniques.
−Removed: The following is a description of valuation methodologies used for assets and liabilities recorded at fair value:
+Added: Assets and Liabilities Measured at Fair Value on a Recurring Basis
The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 ) or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 ).
−Removed: Other Real Estate Owned :
−Removed: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value, less costs to sell.
−Removed: In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.
−Removed: Fair values are generally based on third party appraisals of the property which are commonly adjusted by management to reflect an expectation of the amount to be ultimately collected and selling costs (Level 3 ).
−Removed: Appraisals for other real estate owned are performed by state licensed appraisers (for commercial properties) or state certified appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.
−Removed: When a Notice of Default is recorded, an appraisal report is ordered.
−Removed: Once received, a member of the credit administration department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison to independent data sources such as recent market data or industry wide-statistics for residential appraisals.
−Removed: Commercial appraisals are sent to an independent third party to review.
−Removed: The Company also compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustments, if any, should be made to the appraisal values on any remaining other real estate owned to arrive at fair value.
−Removed: If the existing appraisal is older than twelve months, a new appraisal report is ordered.
−Removed: No significant adjustments to appraised values have been made as a result of this comparison process as of December 31, 2023.
Interest Rate Lock Contracts and Forward Mortgage Loan Sale Contracts:
The fair values of interest rate lock contracts and forward mortgage loan sale contracts are determined by loan lock-in rate, loan funded rate, market interest rate, fees to be collected from the borrower, fees and costs associated with the origination of the loan, expiration timing, sale price, and the value of the retained servicing.
−Removed: The company classified these derivatives as level 3 due to management’s estimate of market rate, cost and expiration timing on these contracts.
+Added: We classified these derivatives as level 3 due to management’s estimate of market rate, cost and expiration timing on these contracts.
+Added: Assets and Liabilities Measured on a Non-Recurring Basis
Collateral-dependent individually evaluated loans :
−Removed: Collateral-dependent individually evaluated loans are carried at fair value when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the original loan agreement and the loan has been written down to the fair value of its underlying collateral, net of expected disposition costs where applicable.
−Removed: The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value at December 31, 2023 and 2022:
−Removed: (dollars in thousands)
+Added: Collateral-dependent individually evaluated loans are carried at fair value when it is probable that we will be unable to collect all amounts due according to the contractual terms of the original loan agreement and the loan has been written down to the fair value of its underlying collateral, net of expected selling costs.
+Added: The fair value of collateral-dependent individually evaluated loans is based on third party appraisals of the property, less management’s estimate of selling costs.
+Added: Third party appraisals generally use a sales comparison or income capitalization approach to derive the appraised value based on market transactions involving similar or comparable properties.
+Added: Adjustments are routinely made by the third party appraisers to adjust for differences between the comparable sales and income data used in the appraisal.
+Added: Adjustments may also result from the consideration of relevant economic and demographic factors which may affect property values.
+Added: Positive adjustments in the appraisal represent increases to the sales comparisons and negative adjustments represent decreases.
+Added: Other Real Estate Owned (“OREO”) :
+Added: OREO is initially recorded at fair value less estimated selling costs at the date of transfer.
+Added: This amount becomes the property's new basis.
+Added: Fair values are generally based on third party appraisals of the property and discounted by management to reflect estimated selling costs (Level 3 ).
+Added: The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value as of the dates indicated:
Fair Value Measurements Using:
1 unchanged sentence
Assets measured at fair value:
+Added: (dollars in thousands)
On a recurring basis:
13 unchanged sentences
Municipal securities
−Removed: Interest Rate Lock Contracts
−Removed: Forward Mortgage Loan Sale Contracts
— 9,075 — 9,075
+Added: $ — $ 420,190 $ — $ 420,190
On a non-recurring basis:
−Removed: Commercial real estate loans - collateral-dependent impaired loans
+Added: Collateral dependent individually evaluated loans:
+Added: Construction and land development loans
$ — $ — $ 35,176 $ 35,176
−Removed: SBA loans - collateral-dependent impaired loans
+Added: Commercial real estate loans (1)
— — 7,007 7,007
$ — $ — $ 42,249 $ 42,249
+Added: Collateral includes CRE and a SFR.
December 31, 2023
Assets measured at fair value:
+Added: (dollars in thousands)
On a recurring basis:
14 unchanged sentences
— 9,509 — 9,509
+Added: Interest Rate Lock Contracts
Forward Mortgage Loan Sale Contracts
1 unchanged sentence
On a non-recurring basis:
−Removed: Other real estate owned
+Added: Collateral dependent individually evaluated loans:
+Added: Commercial real estate loans
$ — $ — $ 10,209 $ 10,209
−Removed: There was a $ 521,000 write-down on collateral-dependent loans that were individually evaluated to the fair value of $ 11.4 million as of December 31, 2023 .
−Removed: There was no collateral-dependent loan that was individually evaluated and written down to the fair value as of December 31, 2022 .
−Removed: Collateral-dependent individually evaluated loans were evaluated by third party appraisals with unobservable input of management adjustment of 10 % to reflect selling costs.
−Removed: Quantitative information about the Company's OREO non-recurring Level 3 fair value measurements as of December 31, 2023 and 2022 is as follows:
−Removed: There was no OREO as of December 31, 2023 and there were two single-family residences with a fair value of $ 577,000 as of December 31, 2022.
−Removed: During 2023, the Company sold one of the properties with a book value of $ 293,000 for a gain of $ 190,000 and the other property with a book value of $ 284,000 was sold for a loss of $ 57,000 .
−Removed: OREO was evaluated by third party appraisals with unobservable input of management adjustment in the range of 5 %- 6 % to reflect current conditions and selling costs.
−Removed: No write-downs to OREO were recorded in 2023 or 2022.
−Removed: The fair value measurement of IRLCs and FMLSCs were primarily based on the buy price from borrowers ranging from 99.5 to 100.3 , the sale price to Fannie Mae ranging from 102 to 104 , and the significant unobservable inputs using margin cost rate of ranging from 0.50 % to 1.00 %.
+Added: — — 1,148 1,148
+Added: $ — $ — $ 11,357 $ 11,357
+Added: The individually evaluated loan balances shown in the table above as measured on a non-recurring basis represent those defaulted loans for which expected credit loss was recognized during the years ended December 31, 2024 and 2023.
+Added: The credit loss includes any charge-offs and specific reserves recognized during each period.
+Added: During the year ended December 31, 2024, there were partial charge-offs of $ 1.6 million and specific reserves of $ 6.8 million for collateral-dependent individually evaluated loans with an aggregate fair value of $ 42.2 million as of December 31, 2024.
+Added: The fair value is based on third party appraisals, including adjustments to comparable market data as summarized in the table below.
+Added: December 31, 2024
+Added: Valuation Techniques
+Added: Unobservable Input(s)
+Added: (dollars in thousands)
+Added: Collateral dependent loans:
+Added: Construction and land development loans
+Added: $ 35,176 Market approach
+Added: Adjustments (2)
+Added: Commercial real estate loans (1)
+Added: 7,007 Market approach
+Added: Adjustments (2)
+Added: 66 Market approach
+Added: Adjustments (2)
+Added: Collateral includes CRE and a SFR.
+Added: ( 2 ) Represents the minimum and maximum range of adjustments made by appraisers for differences in comparable sales.
+Added: During the year ended December 31, 2023, there were partial charge-offs of $ 521,000 on collateral-dependent individually evaluated loans with an aggregate fair value of $ 11.4 million as of December 31, 2023.
+Added: The fair value is based on third party appraisals, including adjustments to comparable market data as summarized in the table below.
+Added: December 31, 2023
+Added: Valuation Techniques
+Added: Unobservable Input(s)
+Added: (dollars in thousands)
+Added: Collateral dependent loans:
+Added: Commercial real estate loans
+Added: $ 10,209 Market approach
+Added: Adjustments (1)
+Added: 1,148 Market approach
+Added: Adjustments (1)
+Added: Represents the minimum and maximum range of adjustments made by appraisers for differences in comparable sales.
+Added: There was no OREO as of December 31, 2024 or December 31, 2023.
+Added: During 2024, we foreclosed on and sold three properties, and recognized a total gain on OREO of $ 1.0 million.
The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
6 unchanged sentences
Additionally, tax consequences related to the realization of the unrealized gains and losses can have a potential effect on fair value estimates and have not been considered in many of the estimates.
−Removed: Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments, and other factors.
+Added: Because no market exists for a significant portion of our financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments, and other factors.
These estimates are subjective in nature, and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the fair values presented.
−Removed: Management uses its best judgment in estimating the fair value of the Company’s financial instruments;
+Added: Management uses its best judgment in estimating the fair value of our financial instruments;
however, there are inherent limitations in any estimation technique.
3 unchanged sentences
These estimates are made at a specific point in time based on relevant market data and information about the financial instruments.
−Removed: These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments.
+Added: These estimates do not reflect any premium or discount that could result from offering our entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments.
In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates.
3 unchanged sentences
Investment securities available for sale and held to maturity -- Fair values are measured by using quoted market prices for similar securities or dealer quotes, a Level 2 measurement.
−Removed: Mortgage Loans Held for Sale -- The Company records mortgage loans held for sale at fair value based on the net premium received on recent sales of mortgage loans for identical pools of loans, a Level 2 measurement.
+Added: Loans Held for Sale -- Fair value is based on quotes or bids from third party investors, recent sale prices, or third party appraisals, a Level 2 measurement.
Loans -- For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying amounts.
The fair values for all other loans are estimated using DCF analyses, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality.
−Removed: In accordance with the prospective adoption of ASU 2016 - 01, the fair value of loans as of December 31, 2023, and 2022 was measured using an exit price notion, a Level 3 measurement.
−Removed: Equity Securities -- The fair values of the Company’s equity securities are measured based on unobservable inputs at the reporting date, a Level 3 measurement.
−Removed: Equity securities are comprised of affordable housing investment funds and other restricted stocks.
+Added: The fair value of loans as of December 31, 2024, and 2023 was measured using an exit price notion, a Level 3 measurement.
+Added: Individually evaluated loans -- Defaulted loans are reviewed individually for expected credit loss, if any, and are recorded at fair value on a non-recurring basis.
+Added: These defaulted loans are excluded from the loan pools used within the collective evaluation of estimated credit losses.
+Added: When a defaulted loan is collateral dependent, we measure expected credit loss based on the estimated fair value of the underlying collateral.
+Added: The fair value of each loan’s collateral is based on third party appraisals, adjusted for estimated selling costs;
+Added: a Level 2 measurement.
+Added: When adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable and the fair value measurement is categorized as a Level 3 measurement.
+Added: Equity Securities -- The fair values of equity securities are measured based on unobservable inputs at the reporting date, a Level 3 measurement.
+Added: Equity securities are comprised primarily of affordable housing investment funds, CRA investments, other bank stocks and investments in limited partnerships with less than 3% ownership.
+Added: Investment in FHLB Stock -- Investments in FHLB stock are recorded at cost and measured for impairment quarterly.
+Added: Ownership of FHLB stock is restricted to member banks and does not have a readily determinable market value.
+Added: Purchases and sales of these securities are at par value with the issuer.
+Added: The fair value of investments in FHLB stock is equal to the carrying amount and is categorized as a Level 2 measurement.
Servicing Rights -- Mortgage and SBA servicing rights are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan, a Level 3 measurement.
2 unchanged sentences
Unobservable inputs that reflect the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability result in a Level 3 measurement.
−Removed: Deposits -- The fair values disclosed for demand deposits, including interest and non-interest demand accounts, savings, and certain types of money market accounts are, by definition based on carrying value.
+Added: Deposits -- The fair values disclosed for demand deposits, including interest and noninterest demand accounts, savings, and certain types of money market accounts are, by definition based on carrying value.
Fair value for fixed-rate certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregate expected monthly maturities on time deposits, a Level 2 measurement.
3 unchanged sentences
Subordinated Debentures -- The fair values of the Company’s subordinated debentures are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement.
+Added: Accrued Interest Payable -- Accrued interest payable includes accrued interest on deposits (Level 2 ), accrued interest on FHLB advances (Level 3 ), accrued interest on long-term debt (Level 3 ), and accrued interest on subordinated debentures (Level 3 ).
Fair value is estimated in accordance with ASC Topic 825 .
Fair value estimates are made at specific points in time, based on relevant market information and information about the financial instrument.
−Removed: These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument.
−Removed: Because no market exists for a significant portion of the Bank’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.
+Added: These estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument.
+Added: Because no market exists for a significant portion of our financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.
These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.
3 unchanged sentences
December 31, 2023
−Removed: (dollars in thousands)
+Added: Value Value Value Value
Financial Assets:
+Added: (dollars in thousands)
Cash and due from banks
6 unchanged sentences
5,191 4,948 5,209 5,097
−Removed: Mortgage loans held for sale
+Added: Loans held for sale
11,250 11,250 1,911 1,845
2 unchanged sentences
22,944 22,944 23,392 23,392
+Added: Investment in FHLB stock
+Added: 15,000 15,000 15,000 15,000
Servicing assets
6 unchanged sentences
Forward Mortgage Loan Sale Contracts (1)
−Removed: 1,104 14 1,179 18
Financial Liabilities:
9 unchanged sentences
( 1 ) Included in “Accrued interest and other assets” on the consolidated balance sheets.
−Removed: NOTE 19 - EARNINGS PER SHARE (“ EPS” )
−Removed: The following is a reconciliation of net income and shares outstanding to the income and number of shares used to compute EPS:
−Removed: (dollars in thousands except shares and per share data)
+Added: NOTE 19 - EARNINGS PER SHARE
+Added: The following is a reconciliation of net income and shares outstanding to the net income and number of shares used to compute earnings per share (“EPS”):
Income Shares Income Shares Income Shares
+Added: (dollars in thousands, except shares and per share data)
Net income as reported
1 unchanged sentence
Earnings allocated to participating securities
−Removed: — ( 34 ) ( 192 )
Shares outstanding
9 unchanged sentences
35,788 4,565 21,653
+Added: Performance Stock Unit
Used in dilutive EPS
4 unchanged sentences
$ 1.47 $ 2.24 $ 3.33
−Removed: Stock options for 332,500 shares of common stock and restricted stock units for 6,012 shares were not considered in computing diluted earnings per common share for December 31, 2023 because they were anti-dilutive.
−Removed: Stock options for zero share of common stock and restricted stock units for zero share were not considered in computing diluted earnings per common share for December 31, 2022 and 2021, respectively, because they were anti-dilutive.
+Added: Options to purchase 18,000 , 332,500 , and zero shares of common stock were excluded from the calculation of diluted earnings per share for December 31, 2024, 2023, and 2022, because their effect would have been anti-dilutive.
+Added: There were zero, 6,012 , and zero antidilutive unvested RSUs outstanding for December 31, 2024, 2023, and 2022.
NOTE 20 – REVENUE FROM CONTRACTS WITH CUSTOMERS
−Removed: The following is a summary of revenue from contracts with customers that are in-scope and not in-scope under Topic 606:
+Added: The following is a summary of revenue from contracts with customers that are in-scope and not in-scope under Topic 606 for the periods indicated:
For the Year Ended December 31,
−Removed: (dollars in thousands)
+Added: 2024 2023 2022
Non-interest income, in scope
+Added: (dollars in thousands)
Fees and service charges on deposit accounts
+Added: $ 1,898 $ 2,014 $ 2,051
Other fees (1)
Other income (2)
+Added: 2,217 2,158 2,094
Gain on sale of OREO and fixed assets
Total in-scope non-interest income
+Added: 5,293 5,322 5,579
Non-interest income, not in scope (3)
+Added: 10,042 9,696 5,673
Total non-interest income
−Removed: There were no adjustments to the Company's financial statements recorded as a result of the adoption of ASC 606.
+Added: $ 15,335 $ 15,018 $ 11,252
Other fees consist of wealth management fees, miscellaneous loan fees and postage/courier fees.
Other income consists of safe deposit box rental income, wire transfer fees, security brokerage fees, annuity sales, insurance activity, and OREO income.
−Removed: The amounts primarily represent revenue from contracts with customers that are out of scope of ASC 606:
−Removed: Net loan servicing income, letter of credit commissions, import/export commissions, recoveries on purchased loans, BOLI income, gains (losses) on sales of mortgage loans, loans and investment securities, and CDFI ERP award.
−Removed: The major revenue streams by fee type that are within the scope of ASC 606 presented in the above tables are described in additional detail below:
+Added: Primarily represents:
+Added: Net loan servicing income, letter of credit commissions, import/export commissions, recoveries on purchased loans, BOLI income, gains (losses) on sales of loans, income from equity investments, gain on transfer to OREO, and CDFI Equitable Recovery Program and Bank Enterprise Award.
Fees and Services Charges on Deposit Accounts
4 unchanged sentences
Periodic service charges are generally collected monthly directly from the customer’s deposit account, and at the end of a statement cycle, while transaction based service charges are typically collected at the time of or soon after the service is performed.
−Removed: The adoption of ASU 2014 - 09 had no impact to the recognition of fees and service charges on deposit accounts.
Wealth Management Fees
−Removed: The Company employs financial consultants to provide investment planning services for customers including wealth management services, asset allocation strategies, portfolio analysis and monitoring, investment strategies, and risk management strategies.
−Removed: The commission fees the Company earns are variable and are generally received monthly.
−Removed: The Company recognizes revenue for the services performed at quarter-end based on actual transaction details received from the broker dealer the Company engages.
−Removed: In the Company’s wealth management division, revenue is primarily generated from ( 1 ) securities brokerage accounts, ( 2 ) investment advisor accounts, ( 3 ) full service brokerage implementation fees, and ( 4 ) life insurance and annuity products.
+Added: In our wealth management division, revenue is primarily generated from ( 1 ) securities brokerage accounts, ( 2 ) investment advisor accounts, ( 3 ) full service brokerage implementation fees, and ( 4 ) life insurance and annuity products.
+Added: We employ financial consultants to provide investment planning services for customers including wealth management services, asset allocation strategies, portfolio analysis and monitoring, investment strategies, and risk management strategies.
+Added: The commission fees we earn are variable and are generally received monthly.
+Added: We recognize revenue for the services performed based on actual transaction details received from the broker dealer that we engage.
Gain (loss) on Sales of Other Real Estate Owned and Fixed Assets
−Removed: The Company records a gain or loss from the sale of OREO and fixed assets, when control of the property or asset transfers to the buyer, which generally occurs at the time of an executed deed or sales agreement.
−Removed: When the Company finances the sale of OREO to a buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable.
+Added: We record a gain or loss from the sale of OREO and fixed assets, when control of the property or asset transfers to the buyer, which generally occurs at the time of an executed deed or sales agreement.
+Added: When we finance the sale of OREO to a buyer, we assess whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable.
Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon transfer of control of the property to the buyer.
−Removed: In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain or loss on sale if a significant financing component is present.
+Added: In determining the gain or loss on the sale, we adjust the transaction price and related gain or loss on sale if a significant financing component is present.
+Added: NOTE 21 – SEGMENT INFORMATION
+Added: Our reportable segments are determined by the Chief Executive Officer and Chief Financial Officer, who are the designated chief operating decision makers ("CODM"), based upon information provided by our products and services offered, primarily banking operations.
+Added: The segments are also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business, which are aggregated if operating performance, products/services, and customers are similar.
+Added: The CODM will evaluate the financial performance of our business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing our segment and in the determination of allocating resources.
+Added: The CODM uses consolidated net income, total assets, total loans, and total deposits to benchmark us against our competitors.
+Added: The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation.
+Added: Loans, investments, and deposits provide the revenues in the banking operation.
+Added: Interest expense, provisions for credit losses and payroll provide the significant expenses in the banking operation.
+Added: All operations are domestic.
+Added: Accounting policies for segments are the same as those described in Note 2 — Summary of Significant Accounting Policies .
+Added: Segment performance is evaluated using consolidated net income, total assets, total loans, and total deposits.
+Added: Information reported internally for performance assessment by the CODM follows:
+Added: For the Year Ended December 31,
+Added: Banking Segment
+Added: (dollars in thousands)
+Added: Interest and dividend income
+Added: $ 216,661 $ 221,148
+Added: Reconciliation of revenue
+Added: Other revenues
+Added: 15,335 15,018
+Added: Total consolidated revenues
+Added: $ 231,996 $ 236,166
+Added: Interest expense
+Added: 117,297 101,862
+Added: Segment net interest income and noninterest income
+Added: $ 114,699 $ 134,304
+Added: Provision for credit losses
+Added: Salaries and benefits expense
+Added: 39,395 37,795
+Added: Other segment items (1)
+Added: 29,768 32,901
+Added: Income tax expense
+Added: Consolidated net income
+Added: $ 26,665 $ 42,465
+Added: $ 3,992,477 $ 4,026,025
+Added: $ 3,064,480 $ 3,033,772
+Added: Total Deposits
+Added: $ 3,083,789 $ 3,174,760
+Added: ( 1 ) Other segment items include expenses for occupancy and equipment, data processing, legal and professional, office, marketing and business promotion, insurance and regulatory assessments, core deposit premium amortization and other expenses.
NOTE 22 – QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS
−Removed: The Company began investing in qualified affordable housing projects in 2016.
−Removed: At December 31, 2023 and December 31, 2022, the balance of the investment for qualified affordable housing projects was $ 6.4 million and $ 7.6 million, respectively.
−Removed: This balance is reflected in the accrued interest and other assets line on the consolidated balance sheets.
−Removed: Total unfunded commitments related to the investments in qualified affordable housing projects totaled $ 2.3 million and $ 2.6 million at December 31, 2023 and December 31, 2022.
+Added: At December 31, 2024 and December 31, 2023, investments in qualified affordable housing projects totaled $ 10.1 million and $ 6.4 million.
+Added: This balance is reflected in accrued interest and other assets on the consolidated balance sheets.
+Added: Total unfunded commitments related to the investments in qualified affordable housing projects totaled $ 4.8 million at December 31, 2024 and $ 2.3 million at December 31, 2023.
The Company expects to fulfill these commitments between 2025 and 2041.
−Removed: During the years ended December 31, 2023, 2022 and 2021, the Company recognized amortization expense of $ 1.1 million, $ 1.1 million, and $ 1.0 million, respectively, which was included within income tax expense on the consolidated statements of income.
−Removed: During the years ended December 31, 2023, 2022 and 2021, the Company recognized tax credits from its investment in affordable housing tax credits of $ 1.0 million, $ 991,000 and $ 1.0 million, respectively.
−Removed: The Company had no impairment losses during the years ended December 31, 2023, 2022 and 2021.
+Added: During the years ended December 31, 2024, 2023 and 2022, we recognized tax credits from these investments totaling $ 1.2 million, $ 1.0 million and $ 991,000 .
+Added: We had no impairment losses during the years ended December 31, 2024, 2023 and 2022.
+Added: The amortization of these investments was also included within income tax expense as an offset to such tax credits.
+Added: During the years ended December 31, 2024, 2023 and 2022, we recognized amortization expense of $ 1.3 million, $ 1.1 million, and $ 1.1 million.
NOTE 23 - PARENT ONLY CONDENSED FINANCIAL INFORMATION
The parent company only condensed balance sheet as of December 31, 2024 and 2023, and the related condensed statements of income and condensed statements of cash flows for the years ended December 31, 2024, 2023 and 2022 are presented below:
−Removed: Condensed Balance Sheet
+Added: Condensed Balance Sheets
+Added: As of December 31,
(dollars in thousands)
Cash and cash equivalents
+Added: $ 32,101 $ 47,125
Investment in Bank
+Added: 602,681 589,998
Investment in RAM
+Added: $ 644,122 $ 646,700
LIABILITIES AND SHAREHOLDERS' EQUITY
Long term debt
+Added: $ 119,529 $ 119,147
Subordinated debentures
+Added: 15,156 14,938
Other liabilities
Total liabilities
+Added: 136,245 135,440
Shareholders' equity:
+Added: 259,957 271,925
Additional paid-in capital
Retained earnings
+Added: 264,460 255,152
Non-controlling interest
Accumulated other comprehensive loss
+Added: ( 20,257 ) ( 19,512 )
Total shareholders' equity
+Added: 507,877 511,260
Total liabilities and shareholders' equity
+Added: $ 644,122 $ 646,700
Condensed Statements of Income
+Added: For the Year Ended December 31,
+Added: 2024 2023 2022
(dollars in thousands)
Dividend from subsidiaries
−Removed: Interest (reversal)/income
+Added: $ 20,000 $ 85,000 $ —
+Added: Interest income/(reversal)
Interest expense
+Added: 6,699 9,951 9,645
Noninterest expense
+Added: 1,126 1,897 2,056
Income/(loss) before equity in undistributed income of subsidiaries
−Removed: (Distributed income in excess of earnings)/undistributed income of:
+Added: 12,193 73,111 ( 11,649 )
+Added: Undistributed income/(distributed income in excess of earnings) of:
+Added: 12,075 ( 34,477 ) 72,340
Income before income taxes
+Added: 24,268 38,829 60,748
Income tax benefit
−Removed: Other comprehensive income/(loss)
+Added: 2,397 3,636 3,579
+Added: 26,665 42,465 64,327
+Added: Other comprehensive (loss)/income
+Added: ( 745 ) 2,153 ( 20,009 )
Total comprehensive income
+Added: $ 25,920 $ 44,618 $ 44,318
Condensed Statements of Cash Flows
−Removed: (dollars in thousands)
+Added: For the Year Ended December 31,
+Added: 2024 2023 2022
Cash flows from operating activities:
+Added: (dollars in thousands)
+Added: $ 26,665 $ 42,465 $ 64,327
Net amortization of other
Provision for deferred income taxes
+Added: ( 18 ) ( 72 ) ( 57 )
Distributed income in excess of earnings/(undistributed income) of subsidiaries
+Added: ( 12,075 ) 34,282 ( 72,397 )
Change in other assets and liabilities
Net cash provided by/(used in) operating activities
+Added: 15,742 77,568 ( 7,115 )
Cash flows from investment activities:
Purchase of other equity securities, net
+Added: ( 103 ) ( 490 ) ( 1,663 )
Net cash used in investing activities
+Added: ( 103 ) ( 490 ) ( 1,663 )
Cash flows from financing activities:
−Removed: Issuance of subordinated debentures, net of issuance costs
Redemptions of subordinated debentures
+Added: — ( 55,000 ) —
Dividends paid
+Added: ( 11,720 ) ( 12,163 ) ( 10,736 )
+Added: Restricted stock units vesting
Common stock repurchased, net of repurchased costs
+Added: ( 20,676 ) ( 6,803 ) ( 19,822 )
Stock options exercised
−Removed: Net cash (used in)/provided by financing activities
−Removed: Increase/(decrease) in cash and cash equivalents
+Added: 1,841 295 5,476
+Added: Net cash used in financing activities
+Added: ( 30,663 ) ( 73,671 ) ( 25,082 )
+Added: (Decrease)/increase in cash and cash equivalents
+Added: ( 15,024 ) 3,407 ( 33,860 )
Cash and cash equivalents beginning of year
+Added: 47,125 43,718 77,578
Cash and cash equivalents end of year
+Added: $ 32,101 $ 47,125 $ 43,718
NOTE 24 – REPURCHASE OF COMMON STOCK
−Removed: On April 22, 2021, March 16, 2022 and June 14, 2022, the Board of Directors approved a stock repurchase program to buy back up to an aggregate of 500,000 shares of Company common stock for each authorization date.
−Removed: In 2021, the Company repurchased 473,122 shares of common stock for a total of $ 10.5 million at a weighted average share price of $ 22.28 .
−Removed: In 2022, the Company repurchased 902,526 shares of common stock for a total of $ 19.8 million at a weighted average share price of $ 21.96 .
−Removed: In 2023, the Company repurchased 396,374 shares of common stock for a total of $ 6.8 million at a weighted average share price of $ 17.02 .
−Removed: As of December 31, 2023, the Company may repurchase up to 36,750 shares under the remaining authorized repurchase program.
+Added: On February 29, 2024, the Board of Directors authorized a stock repurchase plan providing for the repurchase of up to 1,000,000 shares of our common stock through March 31, 2026, which was completed by December 31, 2024.
+Added: We repurchased 1,036,750 shares of common stock for a total of $ 20.7 million at a weighted average share price of $ 19.77 during 2024.
+Added: On April 22, 2021, March 16, 2022 and June 14, 2022, the Board of Directors approved a stock repurchase program to buy back up to an aggregate of 500,000 shares of our common stock for each authorization date.
+Added: In 2023, we repurchased 396,374 shares of common stock for a total of $ 6.8 million at a weighted average share price of $ 17.02 .
+Added: In 2022, we repurchased 902,526 shares of common stock for a total of $ 19.8 million at a weighted average share price of $ 21.96 .
NOTE 25 – SUBSEQUENT EVENTS
On January 16, 2025 , the Company announced the Board of Directors had declared a common stock cash dividend of $ 0.16 per share, payable on February 12, 2025 to common shareholders of record as of January 31, 2025 .
−Removed: On February 29, 2024, the Company announced the Board of Directors authorized a stock repurchase plan providing for the repurchase of up to 1 million shares of the Company’s outstanding common stock through March 31, 2026.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
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.