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

    

Commission file

June 30, 2020

number 00139215

Professional Holding Corp.

(Exact name of Registrant as specified in its charter)

Florida

    

    

46-5144312

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

396 Alhambra Circle, Suite 255

Coral Gables, FL 33134 (786) 483-1757

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Class A Common Stock

 

PFHD

 

NASDAQ Global Select Market

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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

Accelerated filer

Non-accelerated filer

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

Number of shares of common stock outstanding as of August 12, 2020: 13,450,393


TABLE OF CONTENTS

Part I

    

Financial Information

3

Item 1

Consolidated Financial Statements (unaudited)

3

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3

Quantitative and Qualitative Disclosures About Market Risk

58

Item 4

Controls and Procedures

58

Part II

Other Information

58

Item 1

Legal Proceedings

58

Item 1A

Risk Factors

58

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

59

Item 3

Defaults Upon Senior Securities

60

Item 4

Mine Safety Disclosures

60

Item 5

Other Information

60

Item 6

Exhibits

60

2


PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (unaudited).

PROFESSIONAL HOLDING CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands, except share data)

     

June 30, 

     

December 31, 

2020

2019

ASSETS

 

  

 

  

Cash and due from banks

$

38,034

$

21,408

Interest-bearing deposits

 

215,007

 

150,572

Federal funds sold

 

39,444

 

26,970

Cash and cash equivalents

 

292,485

 

198,950

Securities available for sale, at fair value

 

105,213

 

28,441

Securities held to maturity (fair value June 30, 2020 – $1,652, December 31, 2019 – $224)

 

1,635

 

214

Equity securities

 

995

 

971

Loans, net of allowance of $9,045 and $6,548 as of June 30, 2020 and December 31, 2019, respectively

 

1,559,861

 

785,167

Federal Home Loan Bank stock, at cost

 

4,291

 

2,994

Federal Reserve Bank stock, at cost

 

4,745

 

2,074

Accrued interest receivable

 

5,495

 

2,498

Premises and equipment, net

 

5,300

 

4,307

Bank owned life insurance

 

17,113

 

16,858

Goodwill

14,728

Core deposit intangibles

3,783

Other assets

 

16,108

 

10,667

$

2,031,752

$

1,053,141

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Deposits

 

 

Demand – non-interest bearing

$

495,086

$

184,211

Demand – interest bearing

 

763,108

 

599,318

Time deposits

 

258,249

 

109,344

Total deposits

 

1,516,443

 

892,873

Federal Home Loan Bank advances

 

65,077

 

55,000

Subordinated debt

9,932

Official checks

 

4,439

 

6,191

Line of credit

9,999

PPPLF advances

218,080

Accrued interest and other liabilities

 

15,347

 

9,776

Total liabilities

 

1,829,318

 

973,839

Commitments and contingent liabilities

 

 

Stockholders’ equity

 

 

Preferred stock, 10,000,000 shares authorized, none issued

 

 

Class A Voting Common stock, $0.01 par value; authorized 50,000,000 shares, issued 13,252,745 and outstanding 12,692,451 shares as of June 30, 2020 and authorized 50,000,000 shares, issued 5,360,262 and outstanding 5,115,262 shares at December 31, 2019

 

132

 

53

Class B Non-Voting Common stock, $0.01 par value; 10,000,000 shares authorized,752,184 shares issued and outstanding at June 30, 2020 and December 31, 2019

 

7

 

7

Treasury stock, at cost

 

(9,132)

 

(4,155)

Additional paid-in capital

 

202,438

 

77,019

Retained earnings

 

8,265

 

6,451

Accumulated other comprehensive gain (loss)

 

724

 

(73)

Total stockholders’ equity

 

202,434

 

79,302

$

2,031,752

$

1,053,141

3


PROFESSIONAL HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)

(Dollar amounts in thousands, except share data)

Three Months Ended June 30, 

Six Months Ended June 30, 

 

2020

    

2019

 

    

2020

    

2019

Interest income

Loans, including fees

$

17,897

$

8,712

$

27,912

$

16,787

Taxable securities

 

438

 

161

 

660

 

332

Dividend income on restricted stock

 

131

 

70

 

210

 

127

Other

 

56

 

555

 

760

 

1,024

Total interest income

 

18,522

 

9,498

 

29,542

 

18,270

Interest expense

 

 

  

 

 

  

Deposits

 

1,617

 

2,398

 

4,243

 

4,411

Federal Home Loan Bank advances

 

287

 

269

 

565

 

507

Other borrowings

327

382

Total interest expense

 

2,231

 

2,667

 

5,190

 

4,918

Net interest income

 

16,291

 

6,831

 

24,352

 

13,352

Provision for loan losses

 

1,750

 

495

 

2,595

 

382

Net interest income after provision for loan losses

 

14,541

 

6,336

 

21,757

 

12,970

Non-interest income

 

 

  

 

 

  

Service charges on deposit accounts

 

307

 

281

 

529

 

357

Income from Bank owned life insurance

 

126

 

85

 

255

 

142

Gain on sale and call of securities

11

3

15

3

Other

 

524

 

554

 

1,025

 

781

Total non-interest income

 

968

 

923

 

1,824

 

1,283

Non-interest expense

 

 

  

 

 

  

Salaries and employee benefits

 

6,912

 

4,558

 

12,175

 

8,872

Occupancy and equipment

 

1,081

 

602

 

1,855

 

1,123

Data processing

 

421

 

162

 

597

 

324

Marketing

 

151

 

133

 

288

 

272

Professional fees

 

806

 

307

 

1,161

 

582

Acquisition expenses

560

2,223

Regulatory assessments

 

300

 

145

 

514

 

307

Other

 

1,317

 

630

 

2,221

 

1,567

Total non-interest expense

 

11,548

 

6,537

 

21,034

 

13,047

Income before income taxes

 

3,961

 

722

 

2,547

 

1,206

Income tax provision

 

830

 

223

 

733

 

352

Net income

 

3,131

 

499

 

1,814

 

854

Earnings (loss) per share:

 

 

  

 

 

  

Basic

$

0.23

$

0.08

$

0.16

$

0.14

Diluted

$

0.22

$

0.08

$

0.15

$

0.14

Other comprehensive income:

 

 

  

 

 

  

Unrealized holding gain (loss) on securities available for sale

 

743

 

215

 

1,068

 

483

Tax effect

 

(188)

 

(54)

 

(271)

 

(122)

Other comprehensive gain (loss), net of tax

 

555

 

161

 

797

 

361

Comprehensive income (loss)

$

3,686

$

660

$

2,611

$

1,215

4


PROFESSIONAL HOLDING CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(Dollar amounts in thousands, except share data)

Accumulated

Additional

Other

Common Stock

Treasury

Paid-in

Retained

Comprehensive

Shares

Amount

Stock

Capital

Earnings

 

Income (Loss)

Total

Balance at March 31, 2020

13,537,565

    

$

138

    

$

(6,257)

    

$

201,670

    

$

5,134

    

$

169

    

$

200,854

Issuance of common stock, net of issuance cost

 

89,167

 

1

 

 

450

 

 

 

451

Treasury stock

 

(182,097)

 

 

(2,875)

 

(5)

 

 

 

(2,880)

Employee stock purchase plan

 

 

 

 

27

 

 

 

27

Net income

 

 

 

 

 

3,131

 

 

3,131

Other comprehensive gain

 

 

 

 

 

 

555

 

555

Stock based compensation

 

 

 

 

296

 

 

 

296

Balance at June 30, 2020

 

13,444,635

$

139

$

(9,132)

$

202,438

$

8,265

$

724

$

202,434

Balance at March 31, 2019

5,916,987

    

$

60

    

$

(393)

    

$

76,244

    

$

4,470

    

$

(225)

    

$

80,156

Issuance of common stock, net of issuance cost

 

36,000

 

 

 

330

 

 

 

330

Treasury stock

 

(15,000)

 

 

(262)

 

 

 

 

(262)

Employee stock purchase plan

 

 

 

 

30

 

 

 

30

Net income

 

 

 

 

 

499

 

 

499

Other comprehensive gain

 

 

 

 

 

 

161

 

161

Stock based compensation

 

 

 

 

8

 

 

 

8

Balance at June 30, 2019

 

5,937,987

$

60

$

(655)

$

76,612

$

4,969

$

(64)

$

80,922

Balance at December 31, 2019

    

5,867,446

    

$

60

    

$

(4,155)

    

$

77,019

    

$

6,451

    

$

(73)

    

$

79,302

Issuance of common stock, net of Issuance cost

 

3,664,667

 

37

 

 

60,221

 

 

 

60,258

Treasury stock

 

(315,294)

 

 

(4,977)

 

(9)

 

 

 

(4,986)

Marquis Bancorp (MBI) acquisition

4,227,816

 

42

 

 

64,657

 

 

 

64,699

Employee stock purchase plan

 

 

 

 

58

 

 

 

58

Net income

 

 

 

 

 

1,814

 

 

1,814

Other comprehensive gain

 

 

 

 

 

 

797

 

797

Stock based compensation

 

 

 

 

492

 

 

 

492

Balance at June 30, 2020

 

13,444,635

 

139

 

(9,132)

 

202,438

 

8,265

 

724

 

202,434

Balance at January 1, 2019

5,923,884

    

$

59

    

$

(220)

    

$

76,152

    

$

4,115

    

$

(425)

    

$

79,681

Issuance of common stock, net of Issuance cost

 

39,103

 

1

 

 

385

 

 

 

386

Treasury stock

 

(25,000)

 

 

(435)

 

 

 

 

(435)

Employee stock purchase plan

 

 

 

 

57

 

 

 

57

Net income

 

 

 

 

 

854

 

 

854

Other comprehensive gain

 

 

 

 

 

 

361

 

361

Stock based compensation

 

 

 

 

18

 

 

 

18

Balance at June 30, 2019

 

5,937,987

$

60

$

(655)

$

76,612

$

4,969

$

(64)

$

80,922

5


PROFESSIONAL HOLDING CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollar amounts in thousands, except share data)

Six Months Ended June 30, 

    

2020

    

2019

Cash flows from operating activities

 

  

 

  

Net income (loss)

$

1,814

$

854

Adjustments to reconcile net income to net cash from operating activities

 

  

 

  

Provision for loan losses

 

2,595

 

382

Deferred income tax benefit

 

(499)

 

199

Depreciation and amortization

 

739

 

156

Gain on sale of securities

4

3

Gain on call of securities

11

Equity unrealized change in market value

(24)

Net amortization of securities

 

(936)

 

(278)

Net amortization of deferred loan fees

 

1,118

 

407

Employee stock purchase plan

58

Stock compensation

 

492

 

57

Income from bank owned life insurance

 

(255)

 

(142)

Changes in operating assets and liabilities:

 

  

 

  

Accrued interest receivable

 

(1,472)

 

(466)

Other assets

 

1,887

 

(635)

Official checks, accrued interest, interest payable and other liabilities

 

(3,395)

 

7,194

Net cash provided by operating activities

 

2,137

 

7,731

Cash flows from investing activities

 

  

 

  

Proceeds from maturities and paydowns of securities available for sale

 

6,256

 

285

Proceeds from calls of securities available for sale

4,835

2,805

Proceeds from paydowns of securities held to maturity

 

44

 

22

Purchase of securities available for sale

 

(60,693)

 

(10,308)

Sale of securities available for sale

1,739

4,504

Loans originations, net of principal repayments

 

(257,801)

 

(115,113)

Proceeds from sale of loan

110

Purchase of Federal Reserve Bank stock

 

(2,671)

 

(361)

Purchase of Federal Home Loan Bank Stock

 

(1,297)

 

(1,015)

Proceeds of Federal Home Loan Bank Stock

425

Purchase of company owned life insurance

(8,000)

Purchases of premises and equipment

 

(741)

 

(490)

Proceeds from acquisition

26,860

Net cash used in investing activities

 

(283,359)

 

(127,246)

Cash flows from financing activities

 

  

 

  

Net increase (decrease) in deposits

 

126,404

 

136,456

Proceeds from issuance of stock, net of issuance costs

 

60,258

 

404

Purchase of treasury stock

(4,986)

(435)

Proceeds from Federal Home Loan Bank advances

 

10,000

 

20,000

Repayments of Federal Home Loan advances

 

(25,000)

 

(10,000)

Repayment of line of credit

(9,999)

Proceeds from PPPLF advances

218,080

Net cash provided by financing activities

 

374,757

 

146,425

Increase in cash and cash equivalents

 

93,535

 

26,910

Cash and cash equivalents at beginning of period

 

198,950

 

86,883

Cash and cash equivalents at end of period

$

292,485

$

113,793

Supplemental cash flow information:

 

  

 

  

Cash paid during the period for interest

$

4,907

$

4,891

Cash paid during the period for taxes

 

20

 

389

Supplemental noncash disclosures:

 

  

 

  

Other comprehensive gain (loss) – change in unrealized gain (loss) on securities available for sale, net of tax

$

797

$

361

Lease liabilities arising from obtaining right of use assets

1,620

5,673

Total asset acquired

589,374

Total liabilities assumed

539,403

6


PROFESSIONAL HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Tables in thousands, except share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements of Professional Holding Corp. and its subsidiary, Professional Bank (the “Bank” and collectively with Professional Holding Corp., the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain prior period amounts have been reclassified to conform to the current period presentation.

Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any other period. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates:

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

The outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the global economy and created uncertainty in world financial markets. The economic effects of the coronavirus COVID-19 pandemic have significantly impacted business and economic activity in the U.S. and around the world. There have been full and partial business closures, increases in unemployment as workers are furloughed, laid off, or had hours limited. Such disruptions could adversely affect our loan and deposit fee income as well as create downward pressure on the quality of our loan portfolio possibly leading to an increase in loan charge-offs.

The coronavirus COVID-19 is an unprecedented event that has created high levels of uncertainty. We are hopeful that the CARES Act and derivative programs will be a stabilizing force for the next 90 to 180 days, and we are vigilantly monitoring global events and actions being taken by various Federal and State Agencies. We have maintained interim periodic communications with our regulators and have not experienced any material deposit outflows to date and frequently communicate with our credit clients. Given the fluidity of the situation, management cannot predict the long-term impact of novel coronavirus COVID-19 for the remainder of 2020 or beyond.

7


New accounting standards that have not yet been adopted:

The following provides a brief description of accounting standards that have been issued but are not yet adopted that could have a material effect on the Company’s financial statements:

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326)

Description

In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (i.e. loan commitments, standby letters of credit, financial guarantees and other similar instruments).

Date of Adoption

For PBEs that are non-SEC filers and for SEC filers that are considered emerging growth companies, it is effective for January 1, 2023. Early adoption is still permitted.

Effect on the Consolidated Financial Statements

The Company's management is in the process of evaluating credit loss estimation models. Updates to business processes and the documentation of accounting policy decisions are ongoing. The company may recognize an increase in the allowance for credit losses upon adoption, recorded as a one-time cumulative adjustment to retained earnings. However, the magnitude of the impact on the Company's consolidated financial statements has not yet been determined. The Company will adopt this accounting standard effective January 1, 2023.

NOTE 2 — EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding plus the effect of employee stock options during the year.

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2020

    

2019

2020

    

2019

Basic earnings per share:

 

  

 

  

  

 

  

Net Income(loss)

$

3,131

$

499

$

1,814

$

854

Total weighted average common stock outstanding

 

13,416

 

5,919

 

11,517

 

5,920

Net income(loss) per share

$

0.23

$

0.08

$

0.16

$

0.14

Diluted earnings per share:

 

 

 

 

Net Income

$

3,131

$

499

$

1,814

$

854

Total weighted average common stock outstanding

 

13,416

 

5,919

 

11,517

 

5,920

Add: Dilutive effect of employee stock options

518

204

527

214

Total weighted average diluted stock outstanding

13,934

6,123

12,044

6,134

Net income per share

$

0.22

$

0.08

$

0.15

$

0.14

For the three months ended June 30, 2020 and 2019 there were 29 thousand and no stock options that were anti-dilutive, respectively. For the six months ended June 30, 2020 and 2019 there were 29 thousand and no stock options that were anti-dilutive, respectively.

8


NOTE 3 — SECURITIES

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at June 30, 2020 and December 31, 2019 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses:

    

    

Gross

    

Gross

    

Amortized

Unrealized

Unrealized

June 30, 2020

Cost

Gains

Losses

Fair Value

Available-for-sale

Small Business Administration loan pools

$

33,340

$

35

$

(277)

$

33,098

Mortgage-backed securities

 

36,201

 

572

 

(17)

 

36,756

U.S. agency obligations

8,015

149

(1)

8,163

Community Development District bonds

22,616

489

(8)

23,097

Municipals

1,070

25

-

1,095

Corporate bonds

 

3,002

 

3

 

(1)

 

3,004

Total available-for-sale

$

104,244

$

1,273

$

(304)

$

105,213

    

    

Gross

    

Gross

    

 

Amortized

Unrecognized

Unrecognized

Cost

Gains

Losses

Fair Value

Held-to-Maturity

 

  

 

  

 

  

 

  

Mortgage-backed securities

$

430

$

19

$

$

449

US Treasury

204

204

Foreign Bonds

1,001

(2)

999

Total Held-to-Maturity

$

1,635

$

19

$

(2)

$

1,652

    

    

Gross

    

Gross

    

Amortized

Unrealized

Unrealized

Fair

December 31, 2019

Cost

Gains

Losses

Value

Available-for-sale

 

  

 

  

 

  

 

  

Small Business Administration loan pools

$

17,303

$

19

$

(139)

$

17,183

Mortgage-backed securities

 

5,237

 

 

(52)

 

5,185

U.S. agency obligations

4,000

70

4,070

Corporate bonds

 

2,000

 

3

 

 

2,003

Total available-for-sale

$

28,540

$

92

$

(191)

$

28,441

    

    

Gross

    

Gross

Amortized

Unrecognized

Unrecognized

Fair

Cost

Gains

Losses

    

Value

Held-to-Maturity

 

  

 

  

 

  

 

  

Mortgage-backed securities

$

214

$

10

$

$

224

Total Held-to-Maturity

$

214

$

10

$

$

224

As of June 30, 2020 and December 31, 2019, Corporate bonds are comprised of investments in the financial services industry. During the six months ended June 30, 2020, the net investment portfolio increased by $78.2 million as a result of purchases and acquisitions. Proceeds from sales of securities during the three and six months ended June 30, 2020 were $0 and $1.7 million, with gross realized gains of $0 and $4 thousand, respectively. Proceeds from calls of securities during the three and six months ended June 30, 2020 were $4.8 million and $4.8 million, with gross realized gains of $11 and $11 thousand, respectively. Proceeds from sales and calls of securities for the year ended December 31, 2019 were $4.5 million and $0.5 million, respectively. Securities pledged as of June 30, 2020, and December 31, 2019 were $13.6 million and $14.9 million, respectively.

9


The scheduled maturities of securities as of June 30, 2020 are as follows. The amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

June 30, 2020

    

Amortized

    

Fair

Cost

Value

Available-for-sale

Due in one year or less

$

4,013

$

4,014

Due after one year through five years

 

26,880

 

27,463

Due after five years through ten years

3,495

3,573

Due after ten years

315

309

Subtotal

$

34,703

$

35,359

SBA loan pools

$

33,340

$

33,098

Mortgage-backed securities

36,201

36,756

Total available-for-sale

$

104,244

$

105,213

Held-to-maturity

Due in one year or less

$

204

$

204

Due after one year through five years

1,001

999

Subtotal

$

1,205

$

1,203

Mortgage-backed securities

$

430

$

449

Total held-to-maturity

$

1,635

$

1,652

At  June 30, 2020 and December 31, 2019, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

The tables below indicate the fair value of debt securities with unrealized losses and for the period of time of which these losses were outstanding at June 30, 2020 and December 31, 2019, respectively, aggregated by major security type and length of time in a continuous unrealized loss position:

Less Than 12 Months

12 Months or Longer

Total

    

Fair

    

Unrealized

    

Fair

    

Unrealized

    

Fair

    

Unrealized

Value

Losses

Value

Losses

Value

Losses

June 30, 2020

Available-for-sale

Small Business Administration loan pools

$

25,008

$

(204)

$

4,278

$

(73)

$

29,286

$

(277)

Mortgage-backed securities

 

2,970

 

(17)

 

 

 

2,970

 

(17)

U.S. agency obligations

2,004

(1)

2,004

(1)

Community Development District bonds

587

(8)

587

(8)

Municipals

Corporate bonds

 

1,000

 

(1)

 

 

 

1,000

 

(1)

Total available-for-sale

$

31,569

$

(231)

$

4,278

$

(73)

$

35,847

$

(304)

December 31, 2019

 

  

 

  

 

  

 

  

 

  

 

  

Available-for-sale

 

  

 

  

 

  

 

  

 

  

 

  

SBA loan pools

$

9,984

$

(63)

$

4,035

$

(76)

$

14,019

$

(139)

Mortgage-backed

 

1,914

 

(24)

 

2,541

 

(28)

 

4,455

 

(52)

U.S. agency obligations

 

 

 

Corporate bonds

 

 

 

 

 

 

Total available-for-sale

$

11,898

$

(87)

$

6,576

$

(104)

$

18,474

$

(191)

The unrealized holding losses within the investment portfolio are considered to be temporary and are mainly due to changes in the interest rate cycle. The unrealized loss positions may fluctuate positively or negatively with changes in interest rates or spreads. Because

10


the decline in fair value is attributable to changes in interest rates and not credit quality, since we do not have any securities in an OTTI position, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2020. No credit losses were recognized in operations during for the six months ended June 30, 2020 or during 2019.

NOTE 4 — LOANS

Loans