UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 2018
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from to
Commission File Number 1-34403
TERRITORIAL BANCORP INC.
(Exact Name of Registrant as Specified in Charter)
Maryland |
|
26-4674701 |
(State or Other Jurisdiction of Incorporation) |
|
(I.R.S. Employer Identification No.) |
1132 Bishop Street, Suite 2200, Honolulu, Hawaii |
|
96813 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
(808) 946-1400
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and formal fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
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Accelerated filer ☒ |
Non-accelerated filer ☐ |
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(Do not check if a smaller reporting company) |
Smaller reporting company ☐ |
|
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 9,733,830 shares of Common Stock, par value $0.01 per share, were issued and outstanding as of April 30, 2018.
TERRITORIAL BANCORP INC.
Form 10-Q Quarterly Report
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1 | ||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
27 | |
37 | ||
38 | ||
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39 | ||
39 | ||
39 | ||
39 | ||
39 | ||
39 | ||
39 | ||
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41 |
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except share data)
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March 31, |
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December 31, |
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||
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2018 |
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2017 |
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ASSETS |
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|
|
|
|
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Cash and cash equivalents |
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$ |
65,112 |
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$ |
32,089 |
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Investment securities available for sale |
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2,733 |
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2,851 |
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Investment securities held to maturity, at amortized cost (fair value of $402,659 and $406,663 at March 31, 2018 and December 31, 2017, respectively) |
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409,285 |
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404,792 |
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Loans held for sale |
|
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— |
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|
403 |
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Loans receivable, net |
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1,505,058 |
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1,488,971 |
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Federal Home Loan Bank stock, at cost |
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6,325 |
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6,541 |
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Federal Reserve Bank stock, at cost |
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3,106 |
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3,103 |
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Accrued interest receivable |
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5,183 |
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5,142 |
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Premises and equipment, net |
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5,588 |
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5,721 |
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Bank-owned life insurance |
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44,416 |
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44,201 |
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Income taxes receivable |
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13 |
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1,571 |
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Deferred income tax assets, net |
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4,993 |
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4,609 |
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Prepaid expenses and other assets |
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3,889 |
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3,852 |
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Total assets |
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$ |
2,055,701 |
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$ |
2,003,846 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Liabilities: |
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Deposits |
|
$ |
1,665,172 |
|
$ |
1,597,295 |
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Advances from the Federal Home Loan Bank |
|
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98,000 |
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107,200 |
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Securities sold under agreements to repurchase |
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30,000 |
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30,000 |
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Accounts payable and accrued expenses |
|
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24,645 |
|
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26,390 |
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Income taxes payable |
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1,617 |
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|
1,483 |
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Advance payments by borrowers for taxes and insurance |
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3,895 |
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6,624 |
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Total liabilities |
|
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1,823,329 |
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1,768,992 |
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Stockholders’ Equity: |
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|
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Preferred stock, $0.01 par value; authorized 50,000,000 shares, no shares issued or outstanding |
|
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— |
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— |
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Common stock, $0.01 par value; authorized 100,000,000 shares; issued and outstanding 9,733,830 and 9,915,058 shares at March 31, 2018 and December 31, 2017, respectively |
|
|
97 |
|
|
99 |
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Additional paid-in capital |
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67,557 |
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|
73,050 |
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Unearned ESOP shares |
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(5,260) |
|
|
(5,383) |
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Retained earnings |
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176,856 |
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172,782 |
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Accumulated other comprehensive loss |
|
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(6,878) |
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(5,694) |
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Total stockholders’ equity |
|
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232,372 |
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234,854 |
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Total liabilities and stockholders’ equity |
|
$ |
2,055,701 |
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$ |
2,003,846 |
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
1
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)
|
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Three Months Ended |
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March 31, |
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2018 |
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2017 |
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Interest income: |
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|
|
|
|
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Loans |
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$ |
14,907 |
|
$ |
13,513 |
|
Investment securities |
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3,129 |
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3,081 |
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Other investments |
|
|
198 |
|
|
187 |
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Total interest income |
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18,234 |
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16,781 |
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|
|
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Interest expense: |
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|
|
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Deposits |
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2,451 |
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|
1,651 |
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Advances from the Federal Home Loan Bank |
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419 |
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254 |
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Securities sold under agreements to repurchase |
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125 |
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216 |
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Total interest expense |
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2,995 |
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2,121 |
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|
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Net interest income |
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15,239 |
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14,660 |
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Provision for loan losses |
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9 |
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71 |
|
|
|
|
|
|
|
|
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Net interest income after provision for loan losses |
|
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15,230 |
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14,589 |
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|
|
|
|
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Noninterest income: |
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Service fees on loan and deposit accounts |
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415 |
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556 |
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Income on bank-owned life insurance |
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215 |
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226 |
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Gain on sale of investment securities |
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— |
|
|
95 |
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Gain on sale of loans |
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43 |
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63 |
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Other |
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|
69 |
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|
82 |
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Total noninterest income |
|
|
742 |
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1,022 |
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Noninterest expense: |
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Salaries and employee benefits |
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5,647 |
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5,083 |
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Occupancy |
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1,516 |
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1,449 |
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Equipment |
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942 |
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|
866 |
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Federal deposit insurance premiums |
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153 |
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148 |
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Other general and administrative expenses |
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1,135 |
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1,161 |
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Total noninterest expense |
|
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9,393 |
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8,707 |
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Income before income taxes |
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6,579 |
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6,904 |
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Income taxes |
|
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1,759 |
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2,583 |
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Net income |
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$ |
4,820 |
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$ |
4,321 |
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Basic earnings per share |
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$ |
0.52 |
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$ |
0.47 |
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Diluted earnings per share |
|
$ |
0.51 |
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$ |
0.46 |
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Cash dividends declared per common share |
|
$ |
0.20 |
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$ |
0.20 |
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Basic weighted-average shares outstanding |
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9,284,496 |
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9,215,142 |
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Diluted weighted-average shares outstanding |
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9,484,177 |
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9,445,989 |
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See accompanying notes to consolidated financial statements.
2
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Unaudited)
(Dollars in thousands)
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Three Months Ended |
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March 31, |
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2018 |
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2017 |
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Net income |
|
$ |
4,820 |
|
$ |
4,321 |
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|
|
|
|
|
|
|
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Change in unrealized loss on securities |
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(49) |
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|
2 |
|
Other comprehensive income (loss), net of tax |
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(49) |
|
|
2 |
|
Comprehensive income |
|
$ |
4,771 |
|
$ |
4,323 |
|
See accompanying notes to consolidated financial statements.
3
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity (Unaudited)
(Dollars in thousands, except per share data)
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Accumulated |
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|
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|
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Additional |
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Unearned |
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Other |
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Total |
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Common |
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Paid-in |
|
ESOP |
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Retained |
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Comprehensive |
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Stockholders’ |
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Stock |
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Capital |
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Shares |
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Earnings |
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Income (Loss) |
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Equity |
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||||||
Balances at December 31, 2016 |
|
$ |
98 |
|
$ |
71,914 |
|
$ |
(5,872) |
|
$ |
168,962 |
|
$ |
(5,316) |
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$ |
229,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income |
|
|
— |
|
|
— |
|
|
— |
|
|
4,321 |
|
|
— |
|
|
4,321 |
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Other comprehensive income |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2 |
|
|
2 |
|
Cash dividends paid ($0.20 per share) |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,842) |
|
|
— |
|
|
(1,842) |
|
Share-based compensation |
|
|
— |
|
|
(38) |
|
|
— |
|
|
— |
|
|
— |
|
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(38) |
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Allocation of 12,233 ESOP shares |
|
|
— |
|
|
273 |
|
|
122 |
|
|
— |
|
|
— |
|
|
395 |
|
Repurchase of 28,702 shares of company common stock |
|
|
(1) |
|
|
(954) |
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|
— |
|
|
— |
|
|
— |
|
|
(955) |
|
Exercise of 54,976 options for common stock |
|
|
1 |
|
|
954 |
|
|
— |
|
|
— |
|
|
— |
|
|
955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at March 31, 2017 |
|
$ |
98 |
|
$ |
72,149 |
|
$ |
(5,750) |
|
$ |
171,441 |
|
$ |
(5,314) |
|
$ |
232,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2017 |
|
$ |
99 |
|
$ |
73,050 |
|
$ |
(5,383) |
|
$ |
172,782 |
|
$ |
(5,694) |
|
$ |
234,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
— |
|
|
— |
|
|
— |
|
|
4,820 |
|
|
— |
|
|
4,820 |
|
Other comprehensive loss |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(49) |
|
|
(49) |
|
Reclassification of deferred taxes |
|
|
— |
|
|
— |
|
|
— |
|
|
1,135 |
|
|
(1,135) |
|
|
— |
|
Cash dividends paid ($0.20 per share) |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,881) |
|
|
— |
|
|
(1,881) |
|
Share-based compensation |
|
|
— |
|
|
67 |
|
|
— |
|
|
— |
|
|
— |
|
|
67 |
|
Allocation of 12,233 ESOP shares |
|
|
— |
|
|
253 |
|
|
123 |
|
|
— |
|
|
— |
|
|
376 |
|
Repurchase of 199,236 shares of company common stock |
|
|
(2) |
|
|
(6,125) |
|
|
— |
|
|
— |
|
|
— |
|
|
(6,127) |
|
Exercise of 18,008 options for common stock |
|
|
— |
|
|
312 |
|
|
— |
|
|
— |
|
|
— |
|
|
312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at March 31, 2018 |
|
$ |
97 |
|
$ |
67,557 |
|
$ |
(5,260) |
|
$ |
176,856 |
|
$ |
(6,878) |
|
$ |
232,372 |
|
See accompanying notes to consolidated financial statements.
4
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
|
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Three Months Ended |
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March 31, |
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2018 |
|
2017 |
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Cash flows from operating activities: |
|
|
|
|
|
|
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Net income |
|
$ |
4,820 |
|
$ |
4,321 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
|
Provision for loan losses |
|
|
9 |
|
|
71 |
|
Depreciation and amortization |
|
|
314 |
|
|
243 |
|
Deferred income tax expense (benefit) |
|
|
(367) |
|
|
367 |
|
Amortization of fees, discounts, and premiums |
|
|
(136) |
|
|
(129) |
|
Origination of loans held for sale |
|
|
(4,129) |
|
|
(8,098) |
|
Proceeds from sales of loans held for sale |
|
|
4,575 |
|
|
8,011 |
|
Gain on sale of loans, net |
|
|
(43) |
|
|
(63) |
|
Net gain on sale of real estate owned |
|
|
(4) |
|
|
— |
|
Gain on sale of investment securities held to maturity |
|
|
— |
|
|
(95) |
|
ESOP expense |
|
|
376 |
|
|
395 |
|
Share-based compensation expense |
|
|
67 |
|
|
(38) |
|
Increase in accrued interest receivable |
|
|
(41) |
|
|
(34) |
|
Net increase in bank-owned life insurance |
|
|
(215) |
|
|
(226) |
|
Net increase in prepaid expenses and other assets |
|
|
(37) |
|
|
(304) |
|
Net increase (decrease) in accounts payable and accrued expenses |
|
|
(1,769) |
|
|
161 |
|
Net decrease in advance payments by borrowers for taxes and insurance |
|
|
(2,729) |
|
|
(2,188) |
|
Net decrease in income taxes receivable |
|
|
1,558 |
|
|
122 |
|
Net increase in income taxes payable |
|
|
134 |
|
|
1,712 |
|
|
|
|
|
|
|
|
|
Net cash from operating activities |
|
|
2,383 |
|
|
4,228 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchases of investment securities held to maturity |
|
|
(14,983) |
|
|
— |
|
Principal repayments on investment securities held to maturity |
|
|
10,495 |
|
|
14,162 |
|
Principal repayments on investment securities available for sale |
|
|
49 |
|
|
— |
|
Proceeds from sale of investment securities held to maturity |
|
|
— |
|
|
1,589 |
|
Loan originations, net of principal repayments on loans receivable |
|
|
(16,008) |
|
|
(31,158) |
|
Purchases of Federal Home Loan Bank stock |
|
|
(252) |
|
|
(68) |
|
Proceeds from redemption of Federal Home Loan Bank stock |
|
|
468 |
|
|
— |
|
Purchases of Federal Reserve Bank stock |
|
|
(3) |
|
|
(8) |
|
Proceeds from sale of real estate owned |
|
|
50 |
|
|
— |
|
Purchases of premises and equipment |
|
|
(181) |
|
|
(759) |
|
|
|
|
|
|
|
|
|
Net cash from investing activities |
|
|
(20,365) |
|
|
(16,242) |
|
(Continued)
5
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
|
|
Three Months Ended |
|
||||
|
|
March 31, |
|
||||
|
|
2018 |
|
2017 |
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
|
Net increase in deposits |
|
$ |
67,877 |
|
$ |
55,706 |
|
Proceeds from advances from the Federal Home Loan Bank |
|
|
2,500 |
|
|
— |
|
Repayments of advances from the Federal Home Loan Bank |
|
|
(11,700) |
|
|
— |
|
Repurchases of common stock |
|
|
(5,815) |
|
|
— |
|
Cash dividends paid |
|
|
(1,857) |
|
|
(1,842) |
|
|
|
|
|
|
|
|
|
Net cash from financing activities |
|
|
51,005 |
|
|
53,864 |
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
33,023 |
|
|
41,850 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of the period |
|
|
32,089 |
|
|
61,273 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period |
|
$ |
65,112 |
|
$ |
103,123 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
Cash paid for: |
|
|
|
|
|
|
|
Interest on deposits and borrowings |
|
$ |
2,590 |
|
$ |
2,003 |
|
Income taxes |
|
|
434 |
|
|
429 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
|
Company stock acquired through stock swap and net settlement transactions |
|
$ |
312 |
|
$ |
955 |
|
Loans transferred to real estate owned |
|
|
46 |
|
|
— |
|
Dividends declared, not yet paid |
|
|
24 |
|
|
— |
|
See accompanying notes to consolidated financial statements.
6
TERRITORIAL BANCORP INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements of Territorial Bancorp Inc. (the Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements and notes should be read in conjunction with the Company’s consolidated financial statements and notes thereto filed as part of the Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments necessary for a fair presentation have been made and consist only of normal recurring adjustments. Interim results of operations are not necessarily indicative of results to be expected for the year.
.
(2) Organization
On July 10, 2009, Territorial Savings Bank completed a conversion from a mutual holding company to a stock holding company. As part of the conversion, Territorial Mutual Holding Company and Territorial Savings Group, Inc., the former holding companies for Territorial Savings Bank, ceased to exist as separate legal entities, and Territorial Bancorp Inc. became the holding company for Territorial Savings Bank. Upon completion of the conversion and reorganization, a special “liquidation account” was established in an amount equal to the total equity of Territorial Mutual Holding Company as of December 31, 2008. The liquidation account is to provide eligible account holders and supplemental eligible account holders who maintain their deposit accounts with Territorial Savings Bank after the conversion with a liquidation interest in the unlikely event of the complete liquidation of Territorial Savings Bank after the conversion. The balance of the liquidation account at December 31, 2017 was $11.0 million.
On June 25, 2014, Territorial Savings Bank converted from a federal savings bank to a Hawaii state-chartered savings bank. On July 10, 2014, Territorial Savings Bank became a member of the Federal Reserve System.
(3) Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) amended the Revenue Recognition topic of the FASB Accounting Standards Codification (ASC). The amendment seeks to clarify the principles for recognizing revenue as well as to develop common revenue standards for U.S. generally accepted accounting principles and International Financial Reporting Standards. The Company reviewed all revenue sources to determine if the sources are in scope for this guidance. Net interest income from financial assets and liabilities are explicitly excluded from the scope of the amendment. The Company’s overall assessment of key in-scope revenue sources include service charges on deposit accounts, rental income from safe deposit boxes and commissions on insurance and annuity sales. Based on the Company’s analysis of these revenue sources, including the amount of revenue, the timing of services rendered and timing of payment for these services, there is no material change in the timing of revenue recognition under the amendment. The Company adopted this amendment on January 1, 2018, using the modified retrospective approach. Since there was no material impact on the timing of revenue recognition, no adjustment to beginning retained earnings was deemed necessary. See Note 14, Revenue Recognition, for further information.
In January 2016, the FASB amended the Financial Instruments – Overall topic of the FASB ASC. The amendment addresses several aspects of recognition, measurement, presentation and disclosure of financial instruments. Included are: (a) a requirement to measure equity investments at fair value, with changes in fair value recognized in net income, (b) a simplification of the impairment assessment of equity investments without readily determinable fair values, (c) the elimination of the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost on the balance sheet, and (d) a requirement to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The Company adopted this amendment as of January 1, 2018, and there was no material effect on its consolidated financial statements.
7
In February 2016, the FASB amended the Leases topic of the FASB ASC. The primary effects of the amendment will be to recognize lease assets and lease liabilities on the balance sheet and to disclose certain information about leasing arrangements. The amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has several lease agreements for branch locations and equipment that will require recognition on the consolidated balance sheets upon adoption of the amendment. The Company will continue to evaluate the effects that the adoption of this amendment will have on its consolidated financial statements.
In June 2016, the FASB amended various sections of the FASB ASC related to the accounting for credit losses on financial instruments. The amendment changes the threshold for recognizing losses from a “probable” to an “expected” model. The new model is referred to as the current expected credit loss model and applies to loans, leases, held-to-maturity investments, loan commitments and financial guarantees. The amendment requires the measurement of all expected credit losses for financial assets as of the reporting date (including historical experience, current conditions and reasonable and supportable forecasts) and enhanced disclosures that will help financial statement users understand the estimates and judgments used in estimating credit losses and evaluating the credit quality of an organization’s portfolio. The amendment is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company will apply the amendment’s provisions as a cumulative-effect adjustment to retained earnings at the beginning of the first period the amendment is effective. The Company is currently evaluating the effects that the adoption of this amendment will have on its consolidated financial statements by gathering the information that is necessary to make the calculations required by the amendment. This may result in increased credit losses on financial instruments recorded in the consolidated financial statements.
In March 2017, the FASB amended the Compensation – Retirement Benefits topic of the FASB ASC. The amendment requires the service cost component of net benefit cost to be reported in the same line item as other compensation costs arising from employee services. It also requires the other components of net benefit cost to be reported in the income statement separately from the service cost component. The Company adopted this amendment on January 1, 2018, and there was no material effect on its consolidated financial statements.
In February 2018, the FASB amended the Income Statement – Reporting Comprehensive Income topic of the FASB ASC. Prior to the adoption of the amendment, deferred taxes previously included in accumulated other comprehensive income were not allowed to be adjusted for changes in tax rates. This amendment allows the reclassification of the tax effects resulting from the change in the federal corporate tax rate in the Tax Cuts and Jobs Act, which was passed in December 2017, from accumulated other comprehensive income to retained earnings. The amendment is effective for fiscal years beginning after December 15, 2018, with early adoption permitted in any period for which financial statements have not yet been issued. The Company adopted this amendment during the first quarter of 2018 with the reclassification of $1.1 million of deferred taxes from accumulated other comprehensive income to retained earnings.
(4) Cash and Cash Equivalents
The table below presents the balances of cash and cash equivalents:
|
|
March 31, |
|
December 31, |
|
||
(Dollars in thousands) |
|
2018 |
|
2017 |
|
||
Cash and due from banks |
|
$ |
8,779 |
|
$ |
9,114 |
|
Interest-earning deposits in other banks |
|
|
56,333 |
|
|
22,975 |
|
Cash and cash equivalents |
|
$ |
65,112 |
|
$ |
32,089 |
|
Interest-earning deposits in other banks consist primarily of deposits at the Federal Reserve Bank of San Francisco.
8
(5) Investment Securities
The amortized cost and fair values of investment securities are as follows:
|
|
Amortized |
|
Gross Unrealized |
|
Estimated |
|
||||||
(Dollars in thousands) |
|
Cost |
|
Gains |
|
Losses |
|
Fair Value |
|
||||
March 31, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government-sponsored mortgage-backed securities |
|
$ |
2,821 |
|
$ |
— |
|
$ |
(88) |
|
$ |
2,733 |
|
Total |
|
$ |
2,821 |
|
$ |
— |
|
$ |
(88) |
|
$ |
2,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government-sponsored mortgage-backed securities |
|
$ |
409,026 |
|
$ |
2,935 |
|
$ |
(10,083) |
|
$ |
401,878 |
|
Trust preferred securities |
|
|
259 |
|
|
522 |
|
|
— |
|
|
781 |
|
Total |
|
$ |
409,285 |
|
$ |
3,457 |
|
$ |
(10,083) |
|
$ |
402,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government-sponsored mortgage-backed securities |
|
$ |
2,870 |
|
$ |
— |
|
$ |
(19) |
|
$ |
2,851 |
|
Total |
|
$ |
2,870 |
|
$ |
— |
|
$ |
(19) |
|
$ |
2,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government-sponsored mortgage-backed securities |
|
$ |
404,365 |
|
$ |
6,056 |
|
$ |
(4,603) |
|
$ |
405,818 |
|
Trust preferred securities |
|
|
427 |
|
|
418 |
|
|
— |
|
|
845 |
|
Total |
|
$ |
404,792 |
|
$ |
6,474 |
|
$ |
(4,603) |
|
$ |
406,663 |
|
The amortized cost and estimated fair value of investment securities by maturity date at March 31, 2018 are shown below. Incorporated in the maturity schedule are mortgage-backed and trust preferred securities, which are allocated using the contractual maturity as a basis. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
|
|
Amortized |
|
Estimated |
|
||
(Dollars in thousands) |
|
Cost |
|
Fair Value |
|
||
Available-for-sale: |
|
|
|
|
|
|
|
Due within 5 years |
|
$ |
— |
|
$ |
— |
|
Due after 5 years through 10 years |
|
|
— |
|
|
— |
|
Due after 10 years |
|
|
2,821 |
|
|
2,733 |
|
Total |
|
$ |
2,821 |
|
$ |
2,733 |
|
|
|
|
|
|
|
|
|
Held-to-maturity: |
|
|
|
|
|
|
|
Due within 5 years |
|
$ |
8 |
|
$ |
8 |
|
Due after 5 years through 10 years |
|
|
79 |
|
|
80 |
|
Due after 10 years |
|
|
409,198 |
|
|
402,571 |
|
Total |
|
$ |
409,285 |
|
$ |
402,659 |
|
|
|
|
|
|
|
|
|
9
Realized gains and losses and the proceeds from sales of held-to-maturity securities are shown in the table below. All sales of securities were U.S. government-sponsored mortgage-backed securities.
|
|
Three Months Ended |
|
||||
|
|
March 31, |
|
||||
(Dollars in thousands) |
|
2018 |
|
2017 |
|
||
Proceeds from sales |
|
$ |
— |
|
$ |
1,589 |
|
Gross gains |
|
|
— |
|
|
95 |
|
Gross losses |
|
|
— |
|
|
— |
|
The sale of these mortgage-backed securities, for which the Company had already collected a substantial portion of the outstanding purchased principal (at least 85%), is in accordance with the Investments – Debt and Equity Securities topic of the FASB ASC and does not taint management’s assertion of intent to hold remaining securities in the held-to-maturity portfolio to maturity.
Investment securities with amortized costs of $324.1 million and $287.2 million at March 31, 2018 and December 31, 2017, respectively, were pledged to secure deposits made by state and local governments, securities sold under agreements to repurchase and transaction clearing accounts.
Provided below is a summary of investment securities which were in an unrealized loss position at March 31, 2018 and December 31, 2017. The Company does not intend to sell held-to-maturity and available-for-sale securities until such time as the value recovers or the securities mature and it is not more likely than not that the Company will be required to sell the securities prior to recovery of value or the securities mature.
|
|
Less Than 12 Months |
|
12 Months or Longer |
|
Total |
|
||||||||||||||
|
|
|
|
|
Unrealized |
|
|
|
|
Unrealized |
|
Number of |
|
|
|
|
Unrealized |
|
|||
Description of securities |
|
Fair Value |
|
Losses |
|
Fair Value |
|
Losses |
|
Securities |
|
Fair Value |
|
Losses |
|
||||||
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government-sponsored mortgage-backed securities |
|
$ |
2,733 |
|
$ |
88 |
|
$ |
— |
|
$ |
— |
|
1 |
|
$ |
|