CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||
| Amortized Cost | $ 1,335,225 | $ 731,489 |
| Allowance for credit losses | 4,134 | 8,220 |
| Securities HTM | $ 636,840 | $ 710,021 |
| Preferred stock par or stated value per share | $ 0.001 | |
| Preferred stock, shares issued | 29,811 | |
| Preferred stock, shares outstanding | 29,811 | |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 200,000,000 | 100,000,000 |
| Common stock, shares issued | 82,365,388 | 56,467,623 |
| Common stock, shares outstanding | 82,365,388 | 56,467,623 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Interest income: | |||
| Loans | $ 474,322 | $ 488,718 | $ 370,078 |
| Securities | 81,949 | 39,912 | 26,411 |
| FHLB Stock, fed funds sold and interest-bearing deposits | 54,725 | 45,061 | 7,389 |
| Total interest income | 610,996 | 573,691 | 403,878 |
| Interest expense: | |||
| Deposits | 358,515 | 310,760 | 61,845 |
| Borrowings | 62,988 | 53,791 | 16,951 |
| Subordinated debt | 6,849 | 6,835 | 6,392 |
| Total interest expense | 428,352 | 371,386 | 85,188 |
| Net interest income | 182,644 | 202,305 | 318,690 |
| Provision (reversal) for credit losses | 20,700 | (482) | 532 |
| Net interest income after provision for credit losses | 161,944 | 202,787 | 318,158 |
| Noninterest income: | |||
| Asset management, consulting and other fees | $ 36,229 | $ 35,272 | $ 38,787 |
| Type of Revenue [Extensible List] | us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember | us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember | us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember |
| Gain on sale of loans | $ 5,068 | $ 0 | |
| Gain on sale of securities available-for-sale | 1,204 | 2,304 | |
| Capital market activities | (119,138) | ||
| Gain on sale of REO | 679 | ||
| Other income | 10,086 | 11,775 | $ 9,447 |
| Total noninterest income | (65,872) | 49,351 | 48,234 |
| Noninterest expense: | |||
| Compensation and benefits | 83,917 | 84,297 | 110,222 |
| Occupancy and depreciation | 37,502 | 36,809 | 36,236 |
| Professional services and marketing costs | 17,997 | 15,184 | 13,660 |
| Customer service costs | 63,586 | 76,806 | 38,178 |
| Goodwill impairment | 215,252 | ||
| Other expenses | 30,450 | 23,854 | 18,293 |
| Total noninterest expense | 233,452 | 452,202 | 216,589 |
| (Loss) income before income taxes | (137,380) | (200,064) | 149,803 |
| Income tax (benefit) expense | (44,973) | (1,000) | 39,291 |
| Net (loss) income | $ (92,407) | $ (199,064) | $ 110,512 |
| Net (loss) income per share: | |||
| Basic (in dollars per share) | $ (1.41) | $ (3.53) | $ 1.96 |
| Diluted (in dollars per share) | $ (1.41) | $ (3.53) | $ 1.96 |
| Shares used in computation: | |||
| Basic (in shares) | 65,598,430 | 56,426,093 | 56,422,450 |
| Diluted (in shares) | 65,598,430 | 56,426,093 | 56,490,060 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) $ in Thousands |
12 Months Ended |
|---|---|
|
Dec. 31, 2024
USD ($)
| |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |
| Net (loss) income | $ (92,407) |
| Other comprehensive income (loss), net of tax: | |
| Unrealized holding gains (losses) on securities arising during the period | 2,863 |
| Reclassification adjustment for gain included in net income | (852) |
| Total change in unrealized gain (loss) on available-for-sale securities | 2,011 |
| Unrealized gain on cash flow hedge arising during this period | 5,324 |
| Reclassification adjustment for gain included in net income | (1,673) |
| Total change in unrealized gain on cash flow hedge | 3,651 |
| Amortization of unrealized gain (loss) on securities transferred from available-for-sale to held-to-maturity | (390) |
| Total other comprehensive income (loss) | 5,272 |
| Total comprehensive (loss) income | $ (87,135) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business First Foundation Inc. (“FFI”) is a financial services holding company whose operations are conducted through its wholly owned subsidiaries: First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB” or the “Bank”) and the wholly owned subsidiaries of FFB, First Foundation Public Finance (“FFPF”), First Foundation Insurance Services (“FFIS”) and Blue Moon Management, LLC (collectively the “Company”). FFI also has two inactive wholly owned subsidiaries, First Foundation Consulting (“FFC”) and First Foundation Advisors, LLC (“FFA LLC”). FFI is incorporated in the state of Delaware. The corporate headquarters for FFI is located in Dallas, Texas. The Company provides a comprehensive platform of financial services to individuals, businesses and other organizations and has offices in California, Nevada, Florida, Texas, and Hawaii. FFA, established in 1985 and incorporated in the state of California, began operating in 1990 as a fee-based registered investment advisor. FFA provides (i) investment management and financial planning services for high net-worth individuals, retirement plans, charitable institutions and private foundations; (ii) financial, investment and economic advisory and related services to high net-worth individuals and their families, family-owned businesses, and other related organizations; and (iii) support services involving the processing and transmission of financial and economic data for charitable organizations. At the end of 2024, these services were provided to approximately 1,500 clients, primarily located in Southern California, with an aggregate of $5.4 billion of assets under management. The Bank commenced operations in 2007, is incorporated in the state of California and currently operates in California, Nevada, Florida, Texas, and Hawaii. The Bank offers a wide range of deposit instruments including personal and business checking and savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificates of deposit (“CD”) accounts. As a lender, the Bank originates, and retains for its portfolio, loans secured by real estate and commercial loans. The Bank also offers a wide range of specialized services including trust services, on-line banking, remote deposit capture, merchant credit card services, ATM cards, Visa debit cards, business sweep accounts, and through FFIS, insurance brokerage services. The Bank has a state non-member bank charter and is subject to continued examination by the California Department of Financial Protection and Innovation, the Federal Deposit Insurance Corporation (“FDIC”), and the Consumer Financial Protection Bureau (“CFPB”). At December 31, 2024, the Company employed 551 employees. Basis of Presentation and Use of Estimates The consolidated financial statements have been prepared in conformity with U.S. GAAP and prevailing practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses during the reporting periods and related disclosures. Actual results could differ significantly from those estimates. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. Variable Interest Entities The Company may have variable interests in Variable Interest Entities (“VIEs”) arising from debt, equity or other monetary interests in an entity, which change with fluctuations in the fair value of the entity’s assets. VIEs are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. The primary beneficiary of a VIE (i.e., the party that has a controlling financial interest) is required to consolidate the assets and liabilities of the VIE. The primary beneficiary is the party that has both (1) the power to direct the activities of an entity that most significantly impact the VIE’s economic performance; and (2) through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company has sold loans, in 2021, 2020, 2019, 2018, 2016 and 2015, through securitizations sponsored by a government sponsored entity, Freddie Mac, who also provided credit enhancement of the loans through certain guarantee provisions. The Company retained the right to provide servicing for the loans except for special servicing for which an unrelated third party was engaged by the VIE. For the 2016 and 2015 securitizations, the Company acquired the “B” piece of the securitizations, which is structured to absorb any losses from the securitizations, as well as interest only strips from the securitization. For the 2021, 2020, 2019, and 2018 securitizations, the Company provides collateral to support its obligation to reimburse for credit losses incurred on loans in the securitization. Because the Company does not act as the special servicer for the VIE and because of the power of Freddie Mac over the VIE that holds the assets from the mortgage loan securitizations, the Company is not the primary beneficiary of the VIE and therefore the VIE is not consolidated. Cash and Cash Equivalents Cash and cash equivalents include cash, due from banks, certificates of deposits with original maturities of less than ninety days, investment securities with original maturities of less than ninety days, money market mutual funds and federal funds sold. At times, the Company maintains cash at major financial institutions in excess of FDIC insured limits. However, as the Company places these deposits with major well-capitalized financial institutions and monitors the financial condition of these institutions, management believes the risk of loss to be minimal. The Company maintains most of its excess cash at the Federal Reserve Bank, with well-capitalized correspondent banks or with other depository institutions at amounts less than the FDIC insured limits. At December 31, 2024, included in cash and cash equivalents were $959 million in funds held at the Federal Reserve Bank. Banking regulations require that banks maintain a percentage of their deposits as reserves in cash or on deposit with the Federal Reserve Bank. The Company was in compliance with its reserve requirements as of December 31, 2024. Certificates of Deposit From time to time, the Company may invest funds with other financial institutions through certificates of deposit. Certificates of deposit are included as cash and cash equivalents. Certificates of deposit are carried at cost. Investment Securities Investment securities for which the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and are reported at cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity. Investment securities classified as trading are those securities that are bought and held principally for the purpose of selling them in the near term. Investments not classified as trading securities nor as held-to-maturity securities are classified as available-for-sale securities and recorded at fair value. Unrealized gains or losses on available-for-sale securities are excluded from net income and reported as an amount net of taxes as a separate component of other comprehensive income included in shareholders’ equity. Premiums or discounts on held-to-maturity and available-for-sale securities are amortized or accreted into income using the interest method. The interest method takes into consideration prepayments received on investment securities such as mortgage-backed securities as the amortization or accretion is based on the estimated average lives of the securities. Loan Origination Fees and Costs Loan origination fees and direct costs associated with lending are deferred and amortized to interest income as an adjustment to yield over the respective lives of the loans using the interest method. The amortization of deferred fees and costs is discontinued on loans that are placed on nonaccrual status. When a loan is paid off, any unamortized deferred fees and costs are recognized in interest income. Loans Held for Investment Loans held for investment are reported at the principal amount outstanding, net of cumulative charge-offs, interest applied to principal (for loans accounted for using the cost recovery method), unamortized net deferred loan origination fees and costs and unamortized premiums or discounts on purchased loans. Interest on loans is accrued and recognized as interest income at the contractual rate of interest. When a loan is designated as held for investment, the intent is to hold these loans for the foreseeable future or until maturity or payoff. If subsequent changes occur, the Company may change its intent to hold these loans. Once a determination has been made to sell such loans, they are immediately transferred to loans held for sale and carried at the lower of cost or fair value. Loans Held for Sale Loans designated for sale through securitization or in the secondary market are classified as loans held for sale. Loans held for sale are accounted for at the lower of amortized cost or fair value. The fair value of loans held for sale is based upon a discounted cash flow model which involves estimating the future cash flows from the loans in the portfolio and discounting to a present value. Contractual cash flows associated with the loans are adjusted to reflect certain assumptions, such as prepayment, default, and loss severity assumptions, to form expected prepayment and credit-adjusted expected cash flows. The expected cash flows are then discounted to present value at a rate of return which considers other costs and risks, such as market risk and liquidity. Related gains and losses are recognized in net gain on mortgage loan origination and sale activities. Loans held for sale balances were recorded at their fair value and totaled $1.3 billion and zero as of December 31, 2024, and 2023, respectively. Nonaccrual Loans Loans are placed on nonaccrual status when the full and timely collection of principal and interest is doubtful, generally when the loan becomes 90 days or more past due for principal or interest payment. All payments received on nonaccrual loans are accounted for using the cost recovery method. Under the cost recovery method, all cash collected is applied to first reduce the principal balance. A loan may be returned to accrual status if all delinquent principal and interest payments are brought current and the collectability of the remaining principal and interest payments in accordance with the loan agreement is reasonably assured. Loans that are well secured and in the collection process may be maintained on accrual status, even if they are 90 days or more past due. Allowance for Credit Losses The ACL represents the estimated amount considered necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The measurement of expected credit losses is applicable to loans held for investment and investment securities. The measurement of expected credit losses is not applicable to loans held for sale, as credit risk on loans held for sale is considered in its fair value adjustment instead of in the ACL. It also applies to off-balance sheet credit exposures such as unfunded loan commitments. The allowance is established through a provision for credit losses that is charged against income. The methodology for determining the ACL for loans held for investment is and investment securities are considered critical accounting estimates by management because of a high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes in the amount of the recorded ACL The ACL for loans held for investment and investment securities are reported separately as contra-assets on the consolidated balance sheets. The expected credit loss for unfunded loan commitments is reported on the consolidated balance sheets in accounts payable and other liabilities. See Note 5: Allowance for Loan Losses in the consolidated financial statements for additional information related to our allowance for credit losses on loans held for investment. ACL – Investment Securities The ACL on investment securities is determined for both held-to-maturity and available-for-sale classifications of the investment portfolio and is evaluated on a quarterly basis. The ACL for held-to-maturity investment securities is determined on a collective basis, based on shared risk characteristics, and is determined at the individual security level when we deem a security to no longer possess shared risk characteristics. The Company’s portfolio of held-to-maturity investment securities consists of agency mortgage-backed securities, such as those guaranteed by the U.S. government or government sponsored entities, where we have reason to believe the credit loss exposure is remote. For these held-to-maturity securities, a zero-loss expectation is applied, resulting in no estimate and recognition of ACL For AFS securities in an unrealized loss position, we first evaluate whether we intend to sell, or whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the security amortized cost basis is written down to fair value through income. If neither criterion is met, we are required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. In determining whether a security’s decline in fair value is credit related, we consider a number of factors including, but not limited to: (i) the extent to which the fair value of the investment is less than its amortized cost; (ii) the financial condition and near-term prospects of the issuer; (iii) downgrades in credit ratings; (iv) payment structure of the security; and (v) the ability of the issuer of the security to make scheduled principal and interest payments. If, after considering these factors, the present value of expected cash flows to be collected is less than the amortized cost basis, a credit loss exists, and an allowance for credit loss is recorded through income as a component of provision for credit loss expense. Any interest received after the security has been placed on nonaccrual status is recognized on a cash basis. If the assessment indicates that a credit loss does not exist, we record the decline in fair value through other comprehensive income, net of related income tax effects. We have elected to exclude accrued interest receivable on securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of a security is confirmed or when either of the criterion regarding intent or requirement to sell is met. See Note 3: Securities in the consolidated financial statements for additional information related to our allowance for credit losses on securities AFS. The provision (reversal) for credit losses on the consolidated statement of operations includes the provision (reversal) for credit losses for loans held for investment and securities AFS. The provision (reversal) for credit losses was $20.7 million, ($0.5) million, and $0.5 million respectively for the years ended December 31, 2024, 2023, and 2022. Loan Commitments and Related Financial Instruments In the ordinary course of business, the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are incurred or received. Investment in Federal Home Loan Bank Stock As a member of the FHLB, the Bank is required to purchase FHLB stock in accordance with its advances, securities and deposit agreement. This stock, which is carried at cost, may be redeemed at par value. However, there are substantial restrictions regarding redemption and the Company can only receive a full redemption in connection with the Company surrendering its FHLB membership. At December 31, 2024 and 2023, the Company held $37.9 million and $24.6 million of FHLB stock, respectively. The Company does not believe that this stock is currently impaired and no to its carrying value have been recorded. Premises and Equipment Premises and equipment are carried at cost, less accumulated depreciation and amortization, which is charged to expense on a straight-line basis over the estimated useful lives of to 10 years. Premises under leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful life of the improvements, whichever is shorter. Expenditures for major renewals and betterments of premises and equipment are capitalized and those for maintenance and repairs are charged to expense as incurred. Depreciable assets sold or retired are removed from the asset and related accumulated depreciation accounts and any gain or loss is reflected in the statement of operations. The Company periodically evaluates the recoverability of long-lived assets, such as premises and equipment, to ensure the carrying value has not been impaired. A valuation allowance is established for any impaired long-lived assets. The Company did not have impaired long-lived assets as of December 31, 2024 or 2023. Real Estate Owned Real estate owned (“REO”) represents the collateral acquired through foreclosure in full or partial satisfaction of the related loan. REO is recorded at the fair value less estimated selling costs at the date of foreclosure. Any write-down at the date of transfer is charged to the allowance for credit losses related to loans. The recognition of gains or losses on sales of REO is dependent upon various factors relating to the nature of the property being sold and the terms of sale. REO values are reviewed on an ongoing basis and any decline in value is recognized as foreclosed asset expense in the current period. All legal fees and direct costs, including foreclosure and other related costs, are expensed as incurred. Bank Owned Life Insurance (“BOLI”) The Bank has bank owned life insurance (“BOLI”) acquired through a prior bank acquisition. BOLI is recorded at the amount that can be realized under the insurance contract, which is the cash surrender value. Changes in the cash surrender value of BOLI and the death benefits received under these policies are recorded as noninterest income in the consolidated statements of income. As of December 31, 2024 and 2023, BOLI totaled $50.0 million and $48.7 million, respectively. Mortgage Servicing Rights When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the statement of operations effect recorded in gains on sales of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income. 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. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. 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. As of December 31, 2024 and 2023, mortgage servicing rights net of the valuation allowance totaled $6.4 million and $5.5 million, respectively and is classified as a component of other assets in the accompanying consolidated balance sheets. Servicing fee income, which is reported on the statement of operations as other income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal. The amortization of mortgage servicing rights is netted against loan servicing fee income. Derivative Instruments (Cash Flow Hedge) On February 1, 2024, the Bank entered into an interest rate swap agreement with an institutional counterparty used to manage our exposure to changes in interest rates as part of our overall interest rate risk management strategy. This agreement was solely undertaken as a cash flow hedge of interest rate risk, specifically of the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity. This agreement is a derivative instrument and qualifies for hedge accounting under ASU 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”. To qualify for hedge accounting, the cash flow hedge must be highly effective at reducing the risk associated with the hedged exposure. The effectiveness of the hedging relationship is documented at inception and is monitored on at least a quarterly basis through the life of the transaction. A cash flow hedge that is designated as highly effective is carried at fair value with the change in fair value recorded in other comprehensive income (loss) (“AOCI”). If the cash flow hedge becomes ineffective, the change in fair value is reclassified from AOCI to earnings. The cash flow hedge is classified as either derivative assets (if fair value is a net asset) or derivative liabilities (if fair value is a net liability) in the accompanying consolidated balance sheets. The earnings and cash flow impact from this derivative asset are classified as an offset to interest expense which is consistent with the underlying hedged item. Core Deposit Intangibles Core deposit intangibles are deemed to have definite useful lives and arise from whole bank acquisitions. Core deposit intangibles are amortized on an accelerated method over their estimated useful lives, which range from 7 to 10 years. Leases The Company accounts for its leases in accordance with ASC 842- Leases. Most leases are recognized on the balance sheet by recording a right-of-use asset and lease liability for each lease. The right-of-use asset represents the right to use the asset under lease for the lease term, and the lease liability represents the contractual obligation to make lease payments. The right-of-use asset is tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. As a lessee, the Company enters into operating leases for certain Bank branches. The right-of-use assets and lease liabilities are initially recognized based on the net present value of the remaining lease payments which include renewal options where the Company is reasonably certain they will be exercised. The net present value is determined using the incremental collateralized borrowing rate at commencement date. The right-of-use asset and lease liability is amortized over the individual lease terms. Right-of-use assets are included in other assets, while right-of-use liabilities are included in accounts payable and other liabilities in the consolidated financial statements. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For additional information regarding leases, see Note 19: Leases. Transfers of Financial Assets Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. 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. Revenue Recognition The Company accounts for certain of its revenue streams deemed to arise from contracts with customers in accordance with ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Revenue streams within the scope of and accounted for under Topic 606 include: service charges and fees on deposit accounts; fees associated with our wealth management and trust administration services; and fees from other services the Bank provides its customers. These revenue streams are included in noninterest income in the consolidated statements of income. Topic 606 requires revenue to be recognized when the Company satisfies related performance obligations by transferring to the customer a good or service. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the transfer of goods or services to the associated customer. The Company’s primary sources of revenues are generated from financial instruments, such as loans and investment securities that are not within the scope of Topic 606 and are accounted for under other applicable GAAP. Contracts with Customers Contracts with customers are open-ended, and we provide services on an ongoing basis for an unspecified contract term. For these ongoing services, the fees are variable, since they are dependent on factors such as the value of underlying assets under management or volume of transactions. Contract liabilities, or deferred revenue, are recorded when payments from customers are received in advance of providing services to customers. We generally receive payments for our services during the period or at the time services are provided, therefore, we do not have deferred revenue balances at period-end. Employees receive incentive compensation in the form of commissions, which are considered incremental and recoverable costs to obtain the contract. We utilize the practical expedient not to capitalize such costs as the amortization period of the asset is less than 12 months, and therefore we expense the commissions as incurred. Descriptions of our primary revenue-generating activities that are presented in our statements of operations are as follows: Interest on Loans Interest income is accrued daily on the Company’s outstanding loan balances. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full, timely collection of interest or principal and, generally, when a loan becomes contractually past due for ninety days or more with respect to principal or interest. The accrual of interest may be continued on a well-secured loan contractually past due ninety days or more with respect to principal or interest if the loan is in the process of collection or collection of the principal and interest is deemed probable. When a loan is placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period income. Interest on such loans is then recognized only to the extent that cash is received and where the future collection of principal is probable. Accrual of interest is resumed on loans only when, in the judgment of management, the loan is estimated to be fully collectible. The Bank continues to accrue interest on modified loans since full payment of principal and interest is expected and such loans are performing or are less than ninety days delinquent and, therefore, do not meet the criteria for nonaccrual status. Modified loans that have been placed on nonaccrual status are returned to accrual status when the remaining loan balance, net of any charge-offs related to the restructure, is estimated to be fully collectible by management and performing in accordance with the applicable loan terms. Wealth management and trust fee income Asset management fees are billed on a monthly or quarterly basis based on the amount of assets under management and the applicable contractual fee percentage. Asset management fees are recognized as revenue in the period in which they are earned. Financial planning fees are due and billed at the completion of the planning project and are recognized as revenue at that time. Service charges on deposit accounts Service charges on deposit accounts represent general service fees for monthly account maintenance and activity or transaction-based fees. Revenue is recognized when our performance obligation is completed which are generally monthly for account maintenance services or when a transaction has been completed. Payment for such performance obligations is generally received at the time the performance obligations are satisfied. Gains and Losses on Sales of REO To record a sale of REO, the Bank evaluates if: (a) a commitment on the buyer’s part exists, (b) collection is probable in circumstances where the initial investment is minimal and (c) the buyer has obtained control of the asset, including the significant risks and rewards of the ownership. If there is no commitment on the buyer’s part, collection is not probable or the buyer has not obtained control of the asset, then a gain cannot be recognized. Other non-interest income includes revenue related to mortgage servicing activities and gains on sales of loans, and securities which are not subject to the requirements of ASU 2014-09. Stock-Based Compensation The Company issues various forms of stock-based compensation awards to officers, directors, and employees of the Company, including stock options and restricted stock units (“RSUs”). The related compensation costs are based on the grant-date fair value of those awards. This cost is recognized in the statement of operations over the period in which they are expected to vest. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock units. Marketing Costs The Company expenses marketing costs, including advertising, in the period incurred. Marketing costs in the amount of $0.6 million, $1.0 million, and $1.1 million were expensed during the years ended December 31, 2024, 2023, and 2022, respectively. Income Taxes The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is established if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized. The tax effects from an uncertain tax position can be 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. Interest and penalties related to uncertain tax positions are recorded as part of income tax expense. Comprehensive Income (loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Changes in unrealized gains and losses on available-for-sale securities, cash flow hedge, and the related tax costs or benefits are the only components of other comprehensive income (loss) for the Company. Total comprehensive income (loss) and the components of accumulated other comprehensive income (loss) are presented in the Consolidated Statements of Changes in Stockholders’ Equity and Consolidated Statements of Comprehensive Income (Loss). Earnings Per Share (“EPS”) Basic earnings per share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options, restricted stock units, and warrants which are all determined using the treasury stock method. Fair Value Measurement Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 2: Fair Value. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates. New Accounting Pronouncements Accounting Standards Adopted in 2024 In June 2022, FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. ASU 2022-03 clarifies how the fair value of equity securities subject to contractual sale restrictions is determined. Prior to its issuance, there was diversity in practice as to whether the effects of a contractual restriction that prohibits the sale of an equity security should be considered in measuring the security's fair value. ASU 2022-03 clarifies that a contractual sale restriction should not be considered in measuring fair value. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023. The Company’s equity securities portfolio consists solely of investments in Small Business Administration (“SBA”) loan funds which can be redeemed at any time and are not subject to contractual sale restrictions. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements. In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures”. ASU 2023-07 requires public entities to disclose “significant segment expenses” by reportable segment if they are regularly provided to the Chief Operating Decision Maker (“CODM”) for review of profit and loss by segment and as a tool in resource-allocation decisions. A significant segment expense category may be reported for one reportable segment but not for others. Similarly, reportable segments may have different significant segment expense categories due to the nature of their operations. The ASU also requires public entities to disclose the title and position of the individual or the name of the group identified as the CODM and how the CODM uses each reportable measure of segment profit or loss to assess performance and allocate resources to the segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023. For financial reporting purposes, the Company has two segments: Banking and Wealth Management. These disclosures are presented in Note 26: Segment Reporting in the accompanying financial statements. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Guidance Not Yet Effective In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures. The FASB issued this Update to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid. The amendments in this Update are effective for annual periods beginning after December 15, 2024, and are not expected to have a material impact on the Company’s consolidated financial statements. |
FAIR VALUE |
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| FAIR VALUE | NOTE 2: FAIR VALUE Assets Measured at Fair Value on a Recurring Basis Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Current accounting guidance establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s estimates for market assumptions. These two types of inputs create the following fair value hierarchy: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever possible. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Valuations may be determined using pricing models, discounted cash flow methodologies, or similar techniques. The following tables show the recorded amounts of assets measured at fair value on a recurring basis as of:
The decrease in Level 3 assets from December 31, 2023 was due to the write-down of an interest-only strip security in the amount of $3.1 million and securitization paydowns during the year ended December 31, 2024. Assets Measured at Fair Value on a Nonrecurring Basis From time to time, we may be required to measure at fair value other assets on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. Loans. Loans measured at fair value on a nonrecurring basis include collateral dependent loans held for investment. The specific reserves for these loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally developed discounted cash flow analyses. Internal discounted cash flow analyses are also utilized to estimate the fair value of these loans, which considers internally developed, unobservable inputs such as discount rates, default rates, and loss severity. When the fair value of the collateral is based on an observable market price or a current appraised value, we measure the impaired loan at nonrecurring Level 2. When an appraised value is not available, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price or a discounted cash flow has been used to determine the fair value, we measure the impaired loan at nonrecurring Level 3. Loans for which an appraised value is not available include commercial loans which are secured by non-real estate assets such as accounts receivable and inventory. To establish fair value for these loans, we apply a recovery factor against eligible receivables and inventory. This recovery factor may be either increased or decreased subject to additional support and analysis of the quality of receivables and the companies owning the receivables. The total collateral dependent loans were $26.5 million and $3.8 million at December 31, 2024 and December 31, 2023, respectively. Specific reserves related to these loans were $0.7 million and $0 at December 31, 2024, and December 31, 2023, respectively. Real Estate Owned (REO). The fair value of REO is based on external appraised values that include adjustments for estimated selling costs and assumptions of market conditions that are not directly observable, resulting in a Level 3 classification. Real estate owned classified as Level 3 totaled $6.2 million and $8.4 million at December 31, 2024, and 2023, respectively. For additional information regarding REO, see Note 7: Real Estate Owned. Mortgage Servicing Rights. When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income, resulting in a Level 3 classification. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. 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. 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. Significant assumptions in the valuation of these Level 3 mortgage servicing rights as of December 31, 2024 included prepayment rates ranging from 20% to 30% and a discount rate of 10%. Significant assumptions in the valuation of these Level 3 mortgage servicing rights as of December 31, 2023 included prepayment rates ranging from 15% to 30% and a discount rate of 10%. For additional information regarding mortgage servicing rights, see Note 10: Loan Sales and Mortgage Servicing Rights. Loans Held for Sale. Loans held for sale are accounted for at the lower of amortized cost or fair value. The fair value for loans held for sale is based upon a discounted cash flow model which involves estimating the future cash flows from the loans in the portfolio and discounting to a present value. Contractual cash flows associated with the loans are adjusted to reflect certain assumptions, such as prepayment, default, and loss severity assumptions, to form expected prepayment and credit-adjusted expected cash flows. The expected cash flows are then discounted to present value at a rate of return which considers other costs and risks, such as market risk and liquidity. Significant assumptions in the valuation of these Level 3 loans held for sale as of December 31, 2024, included prepayment rates of 5% and 15% for fixed-rate and floating-rate loans, respectively; discount rates ranging from 2.10% to 6.25%; and annual expected loss assumption rate of 0.05%. These assumptions applied to 97.4% of the total principal balance of the loan portfolio. The remaining 2.6% of the principal balance of the loan portfolio consisted of seventeen loans that were rated as substandard, and for which separate assumptions were used to account for the lower credit quality of the loans. Fair Value of Financial Instruments FASB ASC 825, “Disclosures about Fair Value of Financial Instruments” requires disclosure of the fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate such value. The methodologies for estimating the fair value of financial assets and financial liabilities measured at fair value on a recurring and non-recurring basis are discussed above. The estimated fair value amounts have been determined by management using available market information and appropriate valuation methodologies, and are based on the exit price notion set forth by ASU 2016-1. In cases where quoted market prices are not available, fair values are based on estimates using present value or other market value techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. The aggregate fair value amounts presented below do not represent the underlying value of the Company. Fair value estimates are made at a discrete point in time based on relevant market information and other information about the financial instruments. Because no active market exists for a significant portion of our financial instruments, fair value estimates are based in large part on judgments we make primarily regarding current economic conditions, risk characteristics of various financial instruments, prepayment rates, and future expected loss experience. These estimates are subjective in nature and invariably involve some inherent uncertainties. Additionally, unexpected changes in events or circumstances can occur that could require us to make changes to our assumptions and which, in turn, could significantly affect our metrics and require us to make changes to our previous estimates of fair value. In addition, the fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of existing and anticipated future customer relationships and the value of assets and liabilities that are not considered financial instruments, such as premises and equipment and other real estate owned. The following methods and assumptions were used to estimate the fair value of financial instruments: Cash and Cash Equivalents. The fair value of cash and cash equivalents approximates its carrying value. Interest-Bearing Deposits with Financial Institutions. The fair values of interest-bearing deposits maturing within ninety days approximate their carrying values. These financial instruments are classified as a component of cash and cash equivalents in the accompanying consolidated balance sheets. Investment Securities Available-for-Sale. Investment securities available-for-sale are measured at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the investment security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. When a market is illiquid or there is a lack of transparency around the inputs to valuation, the investment securities are classified as Level 3 and reliance is placed upon external third-party models, and management judgment and evaluation for valuation. Level 1 investment securities include those traded on an active exchange, such as the NYSE, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 investment securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Investment securities classified as level 3 include beneficial interests in FHLMC securitizations. Significant assumptions in the valuation of these Level 3 investment securities as of December 31, 2024 included a prepayment rate of 20% and a discount rate of 6.87%. Significant assumptions in the valuation of these Level 3 investment securities as of December 31, 2023 included a prepayment rate of 25% and discount rates ranging from 8.35% to 10.0%. Investment Securities Held-to-Maturity. Investment securities held-to-maturity are carried at amortized cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity. Investment securities held-to-maturity consist of agency mortgage-backed securities issued by government sponsored entities. Fair value is determined based upon the same independent pricing model utilized for valuation of Level 2 investment securities available-for-sale. Investment in Equity Securities. The fair value on investment in equity securities is the carrying amount and is evaluated for impairment on an annual basis. Loans Held for Investment. The fair value for loans with variable interest rates is the carrying amount. The fair value of fixed-rate loans is derived by calculating the discounted value of future cash flows expected to be received by the various homogeneous categories of loans or by reference to secondary market pricing. All loans have been adjusted to reflect changes in credit risk. Accrued Interest Receivable. The fair value of accrued interest receivable on loans and investment securities approximates the carrying value. Derivative Instruments (Cash Flow Hedge). The Bank entered into a pay-fixed, receive-variable interest rate swap agreement with a counterparty. This agreement was solely undertaken as a cash flow hedge of interest rate risk, specifically of the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity. We estimate the fair value of this agreement based on inputs from a third-party pricing model, which incorporates such factors as the Treasury curve, the secured overnight financial rate (“SOFR”), and the pay rate on the interest rate swaps. The fair value of this derivative instrument is based on a discounted cash flow approach. The observable nature of the inputs used in deriving its fair value results in a Level 2 classification. Deposits. The fair value of demand deposits, savings deposits, and money market deposits is defined as the amounts payable on demand resulting in a Level 1 classification. The fair value of fixed maturity certificates of deposit is estimated based on the discounted value of the future cash flows expected to be paid on the deposits resulting in a Level 2 classification. Borrowings. The fair value of borrowings is the carrying value of overnight FHLB advances and federal funds purchased that approximate fair value because of the short-term maturity of these instruments, resulting in a Level 2 classification. The fair value of borrowings in the form of FHLB putable advances also approximates carrying value and are classified as Level 2 instruments. Subordinated Debt. The fair value of term borrowings is derived by calculating the discounted value of future cash flows expected to be paid out by the Company resulting in a Level 3 classification. Accrued Interest Payable. The fair value of accrued interest payable on deposits, borrowings, and subordinated debt approximates its carrying value. The following table sets forth the estimated fair values and related carrying amounts of our financial instruments as of:
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| SECURITIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SECURITIES | NOTE 3: SECURITIES The following table provides a summary of the Company’s securities AFS portfolio as of:
The following table provides a summary of the Company’s securities HTM portfolio as of:
As of December 31, 2024, the tables above include $325.7 million of agency mortgage-backed securities pledged as collateral to the state of Florida to meet regulatory requirements; $1.3 million in U.S. Treasury securities pledged as collateral to various states to meet regulatory requirements related to the Bank’s trust operations; $256.5 million of agency mortgage-backed securities pledged as collateral as support for the Bank’s obligations under loan sales and securitization agreements entered into from 2018 and 2021; and $77.3 million in securities consisting of SBA securities, collateralized mortgage obligations, and agency mortgage-backed securities pledged as collateral for repurchase agreements obtained from a prior bank acquisition. A total of $916.8 million in SBA and agency mortgage-backed securities, collateralized mortgage obligations, corporate and municipal bonds are pledged as collateral to the Federal Reserve Bank’s discount window from which the Bank may borrow. As of December 31, 2023, the tables above include $398.8 million of U.S. Treasury securities pledged as collateral to the state of Florida to meet regulatory requirements; $262.1 million of agency mortgage-backed securities pledged as collateral as support for the Bank’s obligations under loan sales and securitization agreements entered into from 2018 and 2021; and $76.3 million in securities consisting of SBA securities, collateralized mortgage obligations, and agency mortgage-backed securities pledged as collateral for repurchase agreements obtained from a prior bank acquisition. A total of $542.3 million in SBA and agency mortgage-backed securities, collateralized mortgage obligations, corporate and municipal bonds are pledged as collateral to the Federal Reserve Bank’s discount window and bank term funding program from which the Bank may borrow. We monitor the credit quality of these securities by evaluating various quantitative attributes. The credit quality indicators the Company monitors include, but are not limited to, credit ratings of individual securities and the credit rating of United States government-sponsored enterprises that guarantee the securities. Credit ratings express opinions about the credit quality of a security. Securities rated investment grade, as defined by NRSROs, are generally considered by the rating agencies and market participants to be low credit risk. As of December 31, 2024, all of the Company’s securities were either investment grade or were issued by a U.S. government agency or a GSE with an investment grade rating, with the exception of two corporate bonds having a combined market value of $33.2 million which were below investment grade. The tables below indicate the gross unrealized losses and fair values of our securities AFS portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.
Unrealized losses in the securities AFS portfolio have not been recognized into income because the securities are either of high credit quality, management does not intend to sell, it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, or the decline in fair value is largely due to changes in discount rates and assumptions regarding future interest rates. The fair value is expected to recover as the bonds approach maturity. The tables below indicate the gross unrecognized losses and fair value of our securities HTM portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrecognized loss position.
For the year ended December 31, 2024, securities available-for-sale with an amortized cost of $741 million were sold, resulting in gross realized gains of $1.4 million and gross realized losses of $0.2 million. For the year ended December 31, 2023, securities available-for-sale with an amortized cost of $175.0 million were sold, resulting in gross realized gains of $2.3 million.
The following is a rollforward of the Company’s allowance for credit losses related to investments for the year ended December 31:
Provision (reversal) for credit losses of ($956) thousand, $752 thousand, and $1.0 million were recorded on the consolidated statements of operations for the years ended December 31, 2024, 2023, and 2022, respectively. On a quarterly basis, the Company engages with an independent third party to perform an analysis of expected credit losses for its municipal and corporate bond securities in order to supplement our own internal review. As of December 31, 2024, the analysis concluded and the Company concurred that fifteen corporate bonds were impacted by credit loss, for which $757 thousand was recorded as ACL related to available-for-sale securities. For the year ended December 31, 2024, the Company recorded charge-offs of $3.1 million related to several interest-only strip securities. The ACL related to available-for-sale securities totaled $4.1 million at December 31, 2024. For the year ended December 31, 2023, the Company recorded charge-offs of $4.0 million related to several interest-only strip securities. The AC related to available-for-sale securities totaled $8.2 million at December 31, 2023. The amortized cost and fair value of investment securities AFS and HTM by contractual maturity are shown in the tables below. Expected maturities may differ from contractual maturities for securities whereby borrowers have the right to prepay such obligations without penalty such as agency mortgage-backed securities and beneficial interests in FHLMC securitizations. The amortized cost and fair value of investment securities AFS by contractual maturity were as follows for the periods indicated:
The amortized cost and fair value of investment securities HTM by contractual maturity were as follows for the periods indicated:
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| LOANS | NOTE 4: LOANS The following is a summary of our loans held for investment as of:
The Company’s loans held for investment portfolio is segmented according to loans that share similar attributes and risk characteristics. In August 2024, a portion of the Company’s multifamily portfolio totaling $1.9 billion in principal balance was reclassified from loans held for investment to loans held for sale. In December 2024, $489 million in principal balance of these loans was securitized, resulting in gross realized gains of $4.4 million recorded to earnings and $2.8 million in mortgage servicing right asset recorded on the balance sheet. At December 31, 2024, loans held-for- sale totaled $1.3 billion, which consisted of $1.4 billion in net amortized cost, less $91 million in fair market value adjustment. There were no outstanding loans held for sale as of December 31, 2023. Loans secured by real estate include those secured by either residential or commercial real estate properties, such as multifamily and single-family residential loans; owner occupied and non-owner occupied commercial real estate loans; and land and construction loans. Commercial and industrial loans are loans to businesses where the operating cash flow of the business is the primary source of payment. This segment includes commercial revolving lines of credit and term loans, municipal finance loans, equipment finance loans and SBA loans. Consumer loans include personal installment loans and line of credit, and home equity lines of credit. These loan products are offered as an accommodation to clients of our primary business lines. Loans with a collateral value totaling $176 million and $283.7 million were pledged as collateral to secure borrowings with the Federal Reserve Bank at December 31, 2024 and December 31, 2023, respectively. Loans with a market value of $4.1 billion and $4.2 billion were pledged as collateral to secure borrowings with the FHLB at December 31, 2024, and December 31, 2023, respectively. For the year ended December 31, 2024, loans totaling $496.9 million in unpaid principal balance were sold, resulting in a net gain on sale of loans of $5.1 million. There were no loan sales for the year ended December 31, 2023. The following table summarizes our delinquent and nonaccrual loans as of:
The following table summarizes our nonaccrual loans as of:
The Company adopted ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023. The amendments in this ASU eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendments in this ASU were applied prospectively, and therefore, loan modification and charge-off information is provided for only those items occurring after the January 1, 2023 adoption date. Based on the guidance in ASU 2022-02, a loan modification or refinancing results in a new loan if the terms of the new loan are at least as favorable to the lender as the terms with customers with similar collection risks that are not refinancing or restructuring their loans and the modification to the terms of the loan are more than minor. If a loan modification or refinancing does not result in a new loan, it is classified as a loan modification. There are additional disclosures for modification of loans with borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows. The disclosures are applicable to situations where there is interest rate reduction, term extensions, principal forgiveness, other-than-insignificant payment delays, or a combination of any of these items. The following table presents our loan modifications made to borrowers experiencing financial difficulty by type of modification for the twelve months ended December 30, 2024 and 2023, respectively with related amortized cost balances, respective percentage share of the total class of loans, and the related financial effect:
The following table presents the amortized cost basis of loans that had a payment default since modification for the twelve-months ended December 31, 2024
All loans modified during the twelve-month period ended December 31, 2023, were current with respect to payments and were not in default. Outstanding commitments to lend on modified loans totaled $1 thousand and $379 thousand at December 31, 2024 and 2023, respectively. The following table presents the payment status of our loan modifications made during the twelve months ended December 31, 2024:
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ALLOWANCE FOR CREDIT LOSSES |
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| ALLOWANCE FOR CREDIT LOSSES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES | NOTE 5: ALLOWANCE FOR CREDIT LOSSES The Company accounts for ACL related to loans in accordance with ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the Company to record an estimate of current expected credit losses (“CECL”) for loans at the time of origination. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated balance sheet. The measurement of the ACL is performed by collectively pooling and evaluating loans with similar risk characteristics. The quantitative CECL model estimates credit losses by applying pool-specific probability of default (“PD”) and loss given default (“LGD”) rates to the expected exposure at default ("EAD") over the contractual life of the loans. A significant portion of the ACL is calculated and measured on a collective pool basis, representing $7.8 billion or approximately 97.6% of the total blended loans held for investment portfolio as of December 31, 2024. As of December 31, 2023, the ACL was calculated and measured based upon $9.9 billion or 97.2% of the total blended portfolio evaluated on a collective pool basis and $268 million in small homogeneous loan portfolios or 2.6% of the total blended portfolio evaluated using historical loss factors. Pooled loan segments consisted of multifamily, commercial, single-family, non-owner occupied commercial real estate, and construction loans. The remaining portion of the loan portfolio, representing $164.7 million or approximately 2.1% of the total blended loans held for investment portfolio, consisted of small homogeneous loan portfolios which has its quantitative reserve calculated separately based on historical loss factors for the respective portfolios or, if no historical loss is available, based on peer group historical losses. These loan portfolios include equipment finance, land, consumer and commercial small balance loans. In addition, collateral dependent loans totaling $26.5 million or 0.3% of the total blended loans held for investment portfolio, are separately valued based on the fair value of the underlying collateral. The measurement also incorporates qualitative components such as internal and external risk factors that may not be adequately assessed in the quantitative model. Qualitative adjustments primarily relate to segments of the loan portfolio deemed by management to be of a higher-risk profile or other factors where management believes the quantitative component of the ACL model may not be fully reflective of levels deemed adequate in the judgment of management. Qualitative adjustments may also relate to uncertainty as to future macroeconomic conditions and the related impact on certain loan segments. Management reviews the need for an appropriate level of quantitative adjustments on a quarterly basis, and as such, the amount and allocation of qualitative adjustments may change in future periods. Management applies a two-year time horizon in its ACL model at which there is a gradual reversion back to historical loss experience over two year period. For purposes of calculating the ACL, the Company has elected to include deferred loan fees and expenses in the loan balance and exclude accrued interest from loan balances. The following is a rollforward of the allowance for credit losses related to loans held for investment for the years ended December 31:
At December 31, 2024, the Company maintained an allowance for unfunded loan commitments totaling $1.3 million which is included in accounts payable and other liabilities. The allowance is calculated based mostly on loss rates for the type of loan/collateral in which the loan commitment relates with a drawdown probability applied to the available credit balance based on utilization rates for the prior year. The Company’s primary regulatory agencies periodically review the allowance for credit losses and such agencies may require the Company to recognize additions to the allowance based on information and factors available to them at the time of their examinations. Accordingly, no assurance can be given that the Company will not recognize additional provisions for credit losses with respect to the loan portfolio. Credit Risk Management 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. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as loans secured by multifamily or commercial real estate and commercial and industrial loans. This analysis is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings: Pass: Loans classified as pass are strong credits with no existing or known potential weaknesses deserving of management’s close attention. Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Loans listed as pass include larger non-homogeneous loans not meeting the risk rating definitions above and smaller, homogeneous loans not assessed on an individual basis. The following tables present risk categories of loans held for investment based on year of origination, and includes gross charge-offs in accordance with ASU 2022-02 as of the dates presented:
A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral. Collateral dependent loans are evaluated individually to determine expected credit losses and any ACL allocation is determined based upon the amount by which amortized costs exceed the estimated fair value of the collateral, adjusted for estimated selling costs (if applicable). The following table presents the amortized cost basis of collateral dependent loans, and the related ACL allocated to these loans as of the dates indicated:
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PREMISES AND EQUIPMENT |
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| PREMISES AND EQUIPMENT | NOTE 6: PREMISES AND EQUIPMENT A summary of premises and equipment is as follows at December 31:
Depreciation expense for premises and equipment was $4.8 million, $4.4 million, and $4.0 million as of December 31, 2024, 2023 and 2022, respectively. |
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REAL ESTATE OWNED |
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| REAL ESTATE OWNED | NOTE 7: REAL ESTATE OWNED The activity in our portfolio of REO is as follows during the periods ending December 31:
During the year ended December 31, 2024, one of the two REO properties held at December 31, 2023 was sold, resulting in a gain on sale of REO of $679 thousand which is included in the consolidated statements of operations. At December 31, 2024, REO consisted of one property which is carried at amortized cost as the appraised value adjusted for estimated selling costs exceeded the amortized cost basis. |
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GOODWILL AND CORE DEPOSIT INTANGIBLES |
12 Months Ended |
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Dec. 31, 2024 | |
| GOODWILL AND CORE DEPOSIT INTANGIBLES | |
| GOODWILL AND CORE DEPOSIT INTANGIBLES | NOTE 8: GOODWILL AND CORE DEPOSIT INTANGIBLES Goodwill is recorded upon completion of a business combination as the difference between the purchase price and the fair value of net identifiable assets acquired. Goodwill is deemed to have an indefinite useful life and as such is not subject to amortization and instead is tested for impairment annually unless a triggering event occurs thereby requiring an updated assessment. Our regular annual impairment assessment occurs in the fourth quarter. Impairment exists when the carrying value of the goodwill exceeds its fair value. An impairment loss would be recognized in an amount equal to that excess as a charge to noninterest expense in the consolidated statement of operations. The closure of three large regional banks during the year ended December 31, 2023, coupled with the drastic change in macroeconomic conditions and persistent rate increases by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) caused a significant decline in bank stock prices including our own. These triggering events required an updated assessment of our goodwill as of June 30, 2023, which concluded that our goodwill was impaired. As a result, we recorded a goodwill impairment charge equal to our entire goodwill balance of $215.3 million in the second quarter of 2023 as the estimated fair value of equity was less than book value. The updated assessment utilized three approaches, each receiving equal weighting: (1) the guideline public company (“GPC”) method which compares benchmarking data of the Company to a set of comparable GPCs; (2) the guideline transaction (“GT”) method utilizing financial results of the Company for the latest twelve months and comparing to publicly available transaction data, and (3) a discounted cash flow method, taking into consideration expectations of the Company’s growth and profitability going forward. The goodwill impairment is a non-cash charge and has no impact on our regulatory capital ratios, cash flows, or liquidity position. Core deposit intangibles are deemed to have definite useful lives and arise from whole bank acquisitions. Core deposit intangibles are amortized on an accelerated method over their estimated useful lives, which range from 7 to 10 years. At December 31, 2024 and 2023, core deposit intangible assets totaled $3.6 million and $4.9 million, respectively, and we recognized $1.4 million, $1.6 million and $1.9 million in core deposit intangible amortization expense in 2024, 2023 and 2022, respectively. The estimated aggregate amortization expense related to our core deposit intangibles for the next five years succeeding December 31, 2024, in order from the present, is $1.2 million, $960 thousand, $751 thousand, $331 thousand, and $179 thousand. |
DERIVATIVE ASSETS |
12 Months Ended |
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Dec. 31, 2024 | |
| DERIVATIVE ASSETS | |
| DERIVATIVE ASSETS | NOTE 9: DERIVATIVE ASSETS On February 1, 2024, the Bank entered into an interest rate swap agreement with an institutional counterparty to hedge against our exposure to changes in interest rates as part of our overall interest rate risk management strategy. On the date the agreement was entered into, the derivative was designated as a cash flow hedge, as it was undertaken to manage the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity. At inception and on a quarterly basis thereafter, an assessment is performed to determine the effectiveness of the derivative at reducing the risk associated with the hedged exposure. A cash flow hedge designated as highly effective is carried at fair value on the balance sheet with the portion of change in fair value of the cash flow hedge considered highly effective recognized in AOCI. If the cash flow hedge becomes ineffective, the portion of the change in fair value of the cash flow hedge considered ineffective is reclassified from AOCI to earnings. The hedging instrument is a pay-fixed, receive variable interest rate swap agreement having a beginning notional amount of $450 million. The Bank pays quarterly interest at a fixed rate of 3.583% and receives quarterly interest payments calculated at the Daily Simple SOFR over the same period. The original term of the agreement is five years, expiring on February 1, 2029. On March 28, 2024, the original hedge position notional amount was reduced by $100 million, and a corresponding amount of the hedged item was simultaneously de-designated, resulting in the recording of a gain of $1.7 million, classified as capital markets activities on the accompanying statements of operations. At December 31, 2024, the fair value of the cash flow hedge was $5.1 million and is classified as derivative assets with a corresponding amount classified as a component of AOCI on the accompanying balance sheet. On January 29, 2025, the Bank entered into an interest rate swap agreement with an institutional counterparty to hedge the interest rate risk to earnings associated with fair value changes in the valuation allowance previously established as a result of loans that were reclassified from loans held for investment to loans held for sale during the second half of 2024. The hedging instrument is a pay-fixed, receive variable interest rate swap agreement with a notional amount of $1.0 billion that will amortize down to $400 million over four years. The Bank will pay quarterly interest at a fixed rate of 4.03% and receive quarterly interest payments calculated at the Daily Simple SOFR over the same period. The original term of the agreement is four years, expiring on January 29, 2029. Since the fair value changes of the valuation allowance for reclassified loans in loans held for sale already flow through earnings, the Bank has elected to not designate the hedge for hedge accounting to ensure that changes in the derivative’s value are reported in current earnings each period.
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LOAN SALES AND MORTGAGE SERVICING RIGHTS |
12 Months Ended |
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Dec. 31, 2024 | |
| LOAN SALES AND MORTGAGE SERVICING RIGHTS | |
| LOAN SALES AND MORTGAGE SERVICING RIGHTS | NOTE 10: LOAN SALES AND MORTGAGE SERVICING RIGHTS The Company retained servicing rights for most of the loans sold and recognized mortgage servicing rights in connection with multifamily loan sale transactions that occurred in 2024 as well as 2021 and prior. As of December 31, 2024 and 2023, mortgage servicing rights net of valuation allowance totaled $6.4 million and $5.5 million, respectively and is classified as a component of other assets in the accompanying consolidated balance sheets. The amount of loans serviced for others totaled $1.3 billion and $962 million at December 31, 2024 and 2023, respectively. Servicing fees collected in 2024, 2023, and 2022 were $2.5 million, $2.5 million, and $3.0 million, respectively. In 2024, $489 million principal balance of multifamily loans were sold and the Company recognized a gain of $4.4 million in earnings and recorded a mortgage servicing right asset of $2.8 million on the consolidated balance sheets. There were no loan sale transactions in 2023 that resulted in the recognition of mortgage servicing rights. There were no loan purchase transactions in 2024 or 2023. |
DEPOSITS |
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| DEPOSITS | NOTE 11: DEPOSITS The following table summarizes the outstanding balance of deposits and average rates paid thereon as of:
The following table provides the remaining maturities of certificates of deposit accounts greater than $250,000 as of:
Large depositor relationships, consisting of deposit relationships which exceed 2% of total deposits, accounted for, in the aggregate, 19.7% and 12.5% of our total deposits as of December 31, 2024 and 2023, respectively. The composition of our large depositor relationships includes mortgage servicing clients who have maintained long-term depository relationships with us. The balances in these depository accounts are subject to seasonal inflows and outflows, common in the mortgage servicing industry, and average balances in the portfolio unexpectedly grew in the later part of 2024. Accrued interest payable on deposits, which is included in accounts payable and other liabilities, was $27.7 million and $36.7 million at December 31, 2024 and 2023, respectively. |
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BORROWINGS |
12 Months Ended |
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Dec. 31, 2024 | |
| BORROWINGS | |
| BORROWINGS | NOTE 12: BORROWINGS The Bank has established secured and unsecured lines of credit under which it may borrow funds from time to time on a term or overnight basis from the FHLB, Federal Reserve Bank of San Francisco (the “Federal Reserve Bank”), and other institutions. At December 31, 2024, our borrowings consisted of $1.0 billion in FHLB putable advances at the Bank, $400 million of FHLB term advances at the Bank, and $25 million in repurchase agreements at the Bank. At December 31, 2023, our borrowings consisted of $800 million in FHLB putable advances at the Bank, $100 million of FHLB term advances at the Bank, $160 million in overnight advances and $285 million in term advances from the Federal Reserve Bank, and $64 million in repurchase agreements at the Bank. FHLB Advances The FHLB putable advances outstanding at December 31, 2024 had a weighted average remaining life of 6.25 years and a weighted average interest rate of 3.74%. The putable advances can be called quarterly until maturity at the option of the FHLB at various put dates, with $300 million eligible for exercising in March 2025 and the remaining $700 million eligible for exercising beginning in June 2025. The FHLB term advances outstanding at December 31, 2024 consist of the following: $300 million in a three-year fixed-rate advance maturing on May 28, 2027 at an interest rate of 4.95% $100 million in a five-year fixed-rate advance maturing on June 28, 2028 at an interest rate of 4.21% FHLB advances are collateralized primarily by loans secured by single-family, multifamily, and commercial real estate properties with a market value of $4.1 billion as of December 31, 2024. The Bank’s total unused borrowing capacity from the FHLB as of December 31, 2024 was $1.7 billion. The Bank had in place $69 million in letters of credit from the FHLB, $59 million of which is used as collateral for the 2024 multifamily loan sale/securitization, and $10 million of which is used as collateral for public fund deposits. The FHLB putable advances outstanding at December 31, 2023 had a weighted average remaining life of 5.41 years and a weighted average fixed interest rate of 3.74%. The FHLB term advances had a fixed interest rate of 4.21% and matures on June 28, 2028. FHLB advances were collateralized primarily by loans secured by single-family, multifamily, and commercial real estate properties with a market value of $4.3 billion as of December 31, 2023. The Bank’s total unused borrowing capacity from the FHLB as of December 31, 2023 was $2.0 billion. The Bank had in place $310 million of letters of credit from the FHLB as of December 31, 2023, which were used to meet collateral requirements for deposits from the State of California and local agencies. Federal Reserve Bank Borrowings The Bank has a secured line of credit with the Federal Reserve Bank including the secured borrowing capacity through the Federal Reserve Bank’s Discount Window, and Borrower-in-Custody (“BIC”) programs. Borrowings under the BIC program are overnight advances with interest chargeable at the primary credit borrowing rate. At December 31, 2024, the Bank did not have any borrowings outstanding under any of the Federal Reserve Bank programs. At December 31, 2024, the Bank had secured unused borrowing capacity of $1.1 billion under this agreement. At December 31, 2023, the Bank had outstanding BIC program borrowings totaling $160 million, bearing a fixed interest rate of 5.50% and were repaid in full in early January, 2024. At December 31, 2023, the Bank had outstanding Bank Term Funding Program borrowings totaling $285 million, which were paid in full in December 2024. At December 31, 2023, the Bank had secured unused borrowing capacity of $823 million under this agreement. Uncommitted Credit Facilities: The Bank has a total of $240 million in borrowing capacity through unsecured federal funds lines, ranging in size from $20 million to $100 million, with six correspondent financial institutions. At December 31, 2024 and 2023, there were no balances outstanding under these arrangements. Holding Company Line of Credit: FFI has entered into a loan agreement with an unaffiliated lender that provides for a revolving line of credit for up to $20 million maturing in April 2025. The loan bears an interest rate of Prime rate, plus basis points (0.50%). FFI’s obligations under the loan agreement are secured by, among other things, a pledge of all of its equity in the Bank. As of December 31, 2024 and December 31, 2023, there were no balances outstanding under this agreement. Repurchase Agreements: The repurchase agreements are treated as overnight borrowings with the obligations to repurchase securities sold reflected as a liability. The investment securities underlying these agreements remain in the Company’s securities AFS portfolio. As of December 31, 2024 and December 31, 2023, the repurchase agreements are collateralized by investment securities with a fair value of approximately $77.3 million and $76.3 million, respectively. |
SUBORDINATED DEBT |
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| SUBORDINATED DEBT | NOTE 13: SUBORDINATED DEBT At December 31, 2024 and December 31, 2023, FFI had two issuances of subordinated notes outstanding with an aggregate carrying value of $173 million. At December 31, 2024 and December 31, 2023, FFI was in compliance with all covenants under its subordinated debt agreements. The following table summarizes the outstanding subordinated notes as of the dates indicated:
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SHAREHOLDERS' EQUITY |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| SHAREHOLDERS' EQUITY | |
| SHAREHOLDERS' EQUITY | NOTE 14: SHAREHOLDERS’ EQUITY FFI is a holding company and does not have any direct operating activities. Any future cash flow needs of FFI are expected to be met by its existing cash and cash equivalents and dividends from its subsidiaries. The Bank is subject to various laws and regulations that limit the amount of dividends that a bank can pay without obtaining prior approval from bank regulators. FFI’s cash and cash equivalents totaled $7.7 million and $15.3 million at December 31, 2024 and 2023, respectively. On July 8, 2024, the Company raised approximately $228 million of gross proceeds in an equity capital raise (“July 2024 Capital Raise”) with certain investors. In the July 2024 Capital Raise, the Company sold and issued to the investors: (a) 11,308,676 shares of common stock at a purchase price per share of $4.10 (on July 1, 2024, the day before the announcement of the July 2024 Capital Raise, the closing price of the common stock was $6.47); (b) 29,811 shares of a new series of preferred stock, par value $0.001 per share, of the Company designated as Series A Noncumulative Convertible Preferred Stock (the “Series A Preferred Stock”), at a price per share of $4,100, and each share of which is convertible into 1,000 shares of common stock, and all of which shares of Series A Preferred Stock represent the right (on an as converted basis) to receive approximately 29,811,000 shares of common stock; (c) 14,490 shares of a new series of preferred stock, par value $0.001 per share, of the Company designated as Series B Noncumulative Preferred Stock (the “Series B Preferred Stock”), at a price per share of $4,100, each share of which is convertible into 1,000 shares of common stock, and all of which shares of Series B Preferred Stock represent the right (on an as converted basis) to receive approximately 14,490,000 shares of common stock; and (d) Issued Warrants, affording the holder thereof the right, until the seven-year anniversary of the issuance of such Issued Warrant, to purchase for $5,125 per share, 22,239 shares of Series C non-voting, common-equivalent preferred stock (the “Series C NVCE Stock”). Each share of Series C NVCE Stock is convertible into 1,000 shares of common stock, all of which shares of Series C NVCE Stock, upon issuance, will represent the right (on an as converted basis) to receive approximately 22,239,000 shares of common stock. The investors were subject to a 180-day lock-up period with respect to the securities purchased. Net proceeds from the July 2024 Capital Raise of $214.5 million, consisting of the $228 million gross proceeds less issuance costs of $13.5 million, were allocated amongst the newly issued equity instruments under the relative fair value method. Under the relative fair value method, each equity instrument was allocated a portion of the net proceeds based on the proportion of its fair value to the sum of the fair values of all of the equity instruments covered in the allocation. The terms of the Series A Preferred Stock, Series B Preferred Stock, and Series C NVCE Stock are more fully described in the respective Certificates of Designation, which were included as Exhibit 3.1, Exhibit 3.2, and Exhibit 3.3, respectively to the Company’s Current Report on Form 8-K filed with the SEC on July 9, 2024, and incorporated by reference therein. The terms of the Issued Warrants are more fully described in the Issued Warrant, a form of which was included as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 9, 2024, and incorporated by reference therein. On September 30, 2024, stockholders approved and adopted an amendment to the Company’s certificate of incorporation, as amended, to increase the number of authorized shares of common stock from 100,000,000 shares to 200,000,000 shares, and also approved the issuance of shares of common stock in connection with the July 2024 Capital Raise pursuant to NYSE listing rules. As a result of these approvals, all of the issued and outstanding shares of the Series B Preferred Stock automatically converted into shares of common stock as of the close of business on October 2, 2024, in accordance with the terms of the Certificate of Designation for the Series B Preferred Stock. In addition, the quarterly non-cumulative cash dividend (annual rate of 13%) and liquidation preference rights of the Series A Preferred Stock ceased to apply. Shares of Series A Preferred Stock (a) are now entitled to receive dividends at the same time and on the same terms as shares of common stock in accordance with the Certificate of Designation for the Series A Preferred Stock, and (b) rank as equal to shares of common stock in any liquidation of the Company. Furthermore, the Company will not be required to issue any cash-settled warrants to the investors who participated in the July 2024 Capital Raise. At December 31, 2024, there were no declared dividends outstanding with respect to the Series A Preferred Stock. |
EARNINGS PER SHARE |
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| EARNINGS PER SHARE | NOTE 15: EARNINGS PER SHARE Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if contracts to issue common stock were exercised or converted into common stock that would then share in earnings. Contracts to issue common stock include warrants, convertible preferred stock, stock options, restricted stock, and other contingent shares. As the average common share price was above the $5.125 per share exercise price (on an as-converted basis) of the warrants, the warrants would have been included in the dilutive share count and diluted earnings per share as of December 31, 2024, if the Company had positive earnings for the period. The following table sets forth the Company’s earnings per share calculations for the years ended December 31:
Stock options for the 22,550 shares of common stock outstanding at December 31, 2023 were not considered in computing earnings per share because they are antidilutive. There were no stock options outstanding as of December 31, 2024.
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STOCK BASED COMPENSATION |
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| STOCK BASED COMPENSATION | NOTE 16: STOCK BASED COMPENSATION In 2015, shareholders approved an equity incentive plan (“2015 Plan”) whereby: the Company can no longer issue Equity Incentive Awards under the previously approved plans; 750,000 shares of common stock will be available for the grant of Equity Incentive Awards to the Company’s executive officers, other key employees and directors; Equity Incentive Awards that are outstanding under the prior plans will remain outstanding and unchanged and subject to the terms of those Plans; and upon termination, cancellation or forfeiture of any of the Equity Incentive Awards that are outstanding under the prior plans, those shares will be added to the pool of shares available for future grants of Equity Incentive Awards under the plan approved in 2015. In 2024, shareholders approved an equity incentive plan (“2024 Plan”) that replaced the 2015 Plan with respect to issuing new equity compensation awards. Awards outstanding under the 2015 Plan will continue to be governed by the terms of the 2015 Plan. The 2024 Plan permits the discretionary award of incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), and restricted stock units to directors, officers, employees and consultants or the directors, officers, employees, and consultants of any of the Company’s subsidiaries or affiliates as well as prospective employees and consultants who have agreed to serve the Company. The maximum number of shares that may be issued under the 2024 Plan will be 1,500,000 shares of common stock, which number is subject to adjustment per terms of the 2024 Plan. The Company recognized stock-based compensation expense of $2.0 million, $1.7 million, and $3.5 million in 2024, 2023, and 2022, respectively, related to RSUs. Stock options, when granted, have an exercise price not less than the current market value of the common stock and expire after ten years if not exercised. If applicable, vesting periods are set at the date of grant and the Plans provide for accelerated vesting should a change in control occur. The following table summarizes the activities in the Plans during 2024:
The following table summarizes the activities in the Plans during 2023:
The intrinsic value of stock options exercised in 2023 was $0. The following table summarizes the activities in the Plans during 2022:
The intrinsic value of stock options exercised in 2022 was $33,400. The following table provides a summary of the RSUs issued by the Company under its equity incentive plans for the periods ended December 31:
The fair value of the shares vested and issued was $0.9 million, $1.9 million and $3.4 million in , and , respectively. As of December 31, 2024, the Company had $6.4 million of unrecognized compensation costs related to outstanding RSUs, which will be recognized through October 2027 subject to the related vesting requirements. |
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401(k) PROFIT SHARING PLAN |
12 Months Ended |
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Dec. 31, 2024 | |
| 401(k) PROFIT SHARING PLAN | |
| 401(k) PROFIT SHARING PLAN | NOTE 17: 401(k) PROFIT SHARING PLAN The Company’s employees participate in the Company’s 401(k) profit sharing plan (the “401k Plan”) that covers all employees eighteen years of age or older who have completed three months of employment. Each employee eligible to participate in the 401k Plan may contribute up to 100% of his or her compensation, subject to certain statutory limitations. In 2024, 2023, and 2022, the Company matched 100% of a participant’s contribution up to 3% of a participant’s compensation and an additional 50% of a participant’s contribution up to the next 2% of a participant’s compensation. These employer contributions are subject to the plan’s vesting schedule. The Company contributions of $2.0 million, $2.4 million and $2.8 million were included in compensation and benefits for 2024, 2023 and 2022, respectively. The Company may also make an additional profit-sharing contribution on behalf of eligible employees. No profit-sharing contributions were made in 2024, 2023 or 2022. |
INCOME TAXES |
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| INCOME TAXES | NOTE 18: INCOME TAXES The Company is subject to federal income tax and California franchise tax. Income tax expense (benefit) was as follows for the years ended December 31:
The following is a comparison of the federal statutory income tax rates to the Company’s effective income tax rate for the years ended December 31:
Deferred taxes are a result of differences between income tax accounting and generally accepted accounting principles with respect to income tax recognition. The following is a summary of the components of the net deferred tax assets recognized in the accompanying consolidated balance sheets at December 31:
As part of a merger in 2012, the Company acquired operating loss carryforwards of $13.4 million. These operating loss carryforwards are subject to limitation under Section 382 of the Internal Revenue Code and expire in 2032. As a result, the Company will only be able to utilize operating loss carryforwards of $7.6 million, ratably over a period of 20 years. As part of a merger in 2015, the Company acquired operating loss carryforwards of $3.6 million. These operating loss carryforwards are subject to limitation under Section 382 of the Internal Revenue Code and expire in 2035. As part of the mergers in 2017 and 2018, the Company acquired operating loss carryforwards of $0.7 and $3.2 million, respectively. These operating loss carryforwards are subject to limitation under Section 382 of the Internal Revenue Code and have been fully utilized as of the end of 2020. As of December 31, 2024, the remaining operating loss carryforwards from acquisitions available to be utilized by the Company were $5.2 million. The Company estimates it will have at total $182.9 million of net operating loss carryforwards at December 31, 2024 that do not expire. The Company has experienced cumulative losses over the past three years, primarily due to the significant increase in market rates experienced since 2022 and the mark-to-market adjustment related to the transfer of approximately $1.9 billion of multifamily loans from loans held for investment to loans held for sale in the third quarter of 2024. However, the Company has not recorded a valuation allowance against its deferred tax assets, as it has implemented a tax planning strategy that is expected to generate sufficient taxable income to realize these assets. This strategy includes dispositioning the aforementioned multifamily loans transferred to loans held for sale. Removing these relatively low-yielding assets from the balance sheet will improve profitability, either through the reduction of high-cost funding or reinvestment of proceeds into higher-yielding assets. Management has evaluated the feasibility of this strategy under current tax laws and considers it both prudent and objectively verifiable. The Company will continue to monitor its performance and reassess the need for a valuation allowance if necessary. The Company’s federal income tax returns for the periods 2021 through 2023 are open to audit. The Company’s California and other state income tax returns for the periods ranging between 2020 through 2023 are open to audit. |
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LEASES |
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| LEASES | NOTE 19: LEASES The Company leases certain facilities for its corporate offices and branch operations under non-cancelable operating leases that expire through 2035. Right-of-use assets are classified as other assets and their corresponding lease liabilities are classified as accounts payable and other liabilities in the consolidated balance sheets. Certain leases include options to renew, with renewal terms that can extend the lease term. The depreciable life of leased assets are limited by the expected lease term. The following table presents supplemental lease information at or for the twelve months ended December:
The calculated amount of the right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. GAAP requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used. Lease expense for 2024, 2023, and 2022 was $6.6 million, $6.9 million, and $7.7 million, respectively and is included in occupancy and depreciation expense in the consolidated statements of operations. Future minimum lease commitments under all non-cancelable operating leases at December 31, 2024 are as follows:
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COMMITMENTS AND CONTINGENCIES |
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| COMMITMENTS AND CONTINGENCIES | NOTE 20: COMMITMENTS AND CONTINGENCIES Financial Instruments with Off-Balance Sheet Risk In the normal course of business, the Bank is a party to financial instruments with off-balance sheet risk to meet the financing needs of customers and to reduce exposure to fluctuations in interest rates. These financial instruments may include commitments to extend credit and standby and commercial letters of credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Standby and commercial letters of credit and financial guarantees are conditional commitments issued by the Bank to guaranty the performance of a customer to a third party. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The following table provides the off-balance sheet arrangements of the Bank as of December 31:
Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include deposits, marketable securities, accounts receivable, inventory, property, plant and equipment, motor vehicles and real estate. Other Commitments The Company has commitments to invest in qualified affordable housing projects as discussed in Note 22: Qualified Affordable Housing Project Investments. Litigation From time to time, the Company may become party to various lawsuits, which have arisen in the course of business. While it is not possible to predict with certainty the outcome of such litigation, it is the opinion of management, based in part upon opinions of counsel, that the liability, if any, arising from such lawsuits would not have a material adverse effect on the Company’s financial position or results of operations. |
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RELATED PARTY TRANSACTIONS |
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Dec. 31, 2024 | |
| RELATED PARTY TRANSACTIONS | |
| RELATED PARTY TRANSACTIONS | NOTE 21: RELATED-PARTY TRANSACTIONS The Bank held $2.4 million and $3.2 million of deposits from related parties, including directors and executive officers of the Company and their affiliates, as of December 31, 2024 and December 31, 2023, respectively. Interest paid on deposit accounts held by related parties was $17,000 in 2024, $180,000 in 2023 and $8,000 in 2022. As of December 31, 2023, related parties, including directors and executive officers of the Company and their affiliates, held $4.8 million in assets under management with FFA and FFB. In 2023, 2022, and 2021 the Company received $20,000, $26,000, and $19,000, respectively, in fees related to these assets under management. At of December 31, 2023, the CEO of the Company was a director of another financial services company, and its financial institution subsidiary, that had deposits with the Bank and, in 2018 and 2017, purchased $52.1 million and $121.9 million of loans respectively, from the Bank for which the Bank continued to provide servicing. The balance of deposits held at the Bank was $0.3 million at December 31, 2023, and the interest paid by the Bank was $156,000 in 2023. The amount of loans serviced for this financial institution was $25.6 million December 31, 2023. In 2017, the Bank participated in a subordinated note offering from the financial services company for $15 million. The Bank earned $1.3 million from this investment in 2023. This relationship is no longer considered a related party transaction as of December 31, 2024, as the CEO of the Company as of December 31, 2023 retired in November 2024 and is no longer the CEO of the Company as of December 31, 2024. |
QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS |
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| QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS | |
| QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS | NOTE 22: QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS The Company began investing in qualified affordable housing projects in the last quarter of 2019. These investments may qualify for Community Reinvestment Act (CRA) credit and generate low-income housing tax credits (LIHTC) and other tax benefits over an approximate 10 year period. The Company records these investments using the proportional amortization method and amortizes the initial cost of the investment in proportion to the tax benefits, and the net benefit is recognized in the statement of operations as a component of income tax expense. At December 31, 2024 and December 31, 2023, the balance of the investment for qualified affordable housing projects were $73.6 million and $85.2 million, respectively. Total unfunded commitments related to the investments in qualified affordable housing projects was $27.1 million and $43.9 million at December 31, 2024 and December 31, 2023, respectively. The Company expects to fulfill these commitments between 2024 and 2038. During 2024, 2023, and 2022, the Company recognized amortization expense of $8.7 million, $7.4 million, and $4.7 million respectively, and recognized tax credits from its investment in affordable housing tax credits of $8.0 million, $6.2 million, and $4.1 million respectively. These amounts were included within income tax expense. The Company had no impairment losses during 2024, 2023 and 2022. |
REGULATORY MATTERS |
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| REGULATORY MATTERS | NOTE 23: REGULATORY MATTERS FFI and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possible additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on FFI and the Bank’s financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of FFI and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgment by the regulators about components, risk-weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies. FFI and the Bank are required to meet risk-based capital standards under the revised capital framework referred to as Basel III set by their respective regulatory authorities. The risk-based capital standards require the achievement of a minimum common equity Tier 1 (“CET1”) risk-based capital ratio of 4.5%, Tier 1 risk-based capital ratio of 6.0% and the total risk-based capital ratio of 8.0%. In addition, the regulatory authorities require the highest rated institutions to maintain a minimum leverage ratio of 4.0%. To be considered “well-capitalized” for bank regulatory purposes, the Bank and the Company are required to have a Tier 1 leverage ratio equal to or greater than 5.0%, a CET1 risk-based capital ratio equal to or greater than 6.5%, a Tier 1 risk-based capital ratio equal to or greater than 8.0%, and total risk-based capital ratio equal to or greater than 10.0%. In addition to meeting the minimum capital requirements, under the Basel III Capital Rules, FFI and the Bank must also maintain the required Capital Conservation Buffer to avoid becoming subject to restrictions on capital distributions and certain discretionary bonus payments to management. The Capital Conservation Buffer is calculated as a ratio of CET1 risk-based capital to risk-weighted assets, and it effectively increases the required minimum risk-based capital ratios. The Capital Conservation Buffer is now at its fully phased-in level of 2.5% and with the minimum required plus capital conservation buffer of 7.0% for the common equity Tier 1 (“CET1”) risk-based capital ratio, 8.5% for the Tier 1 risk-based capital ratio and 10.5% for the total risk-based capital ratio. If a banking organization does not hold a capital conservation buffer composed of common equity tier 1 capital above its minimum risk-based capital requirements, it will face constraints on dividends, equity repurchases and executive compensation based on the amount of the shortfall. Quantitative measures established by the regulators to ensure capital adequacy require FFI and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to assets (as defined). Management believes, as of December 31, 2024 and December 31, 2023 that FFI and the Bank met all capital adequacy requirements. The following table sets forth the capital and capital ratios of FFI (on a consolidated basis) and FFB (on a stand-alone basis) as of the respective dates and as compared to the respective regulatory requirements applicable to them:
As of each of the dates set forth in the above table, FFI exceeded the minimum required capital ratios applicable to it and FFB’s capital ratios exceeded the minimums necessary to qualify as a well-capitalized depository institution under the prompt corrective action regulations. The required ratios for capital adequacy set forth in the above table do not include the additional capital conservation buffer, though each of the Company and FFB maintained capital ratios necessary to satisfy the capital conservation buffer requirements as of the dates indicated. As of December 31, 2024, the amount of capital at FFB in excess of amounts required to be well capitalized was $580 million for the Common equity tier 1 ratio, $480 million for the Leverage ratio, $451 million for the Tier 1 risk-based capital ratio and $314 million for the Total risk-based capital ratio. No conditions or events have occurred since December 31, 2024 that we believe have changed FFI’s or FFB’s capital adequacy classifications from those set forth in the above table. |
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| NONINTEREST INCOME | NOTE 24: NONINTEREST INCOME The following table represents revenue from contracts with customers as well as other noninterest income for the years ended December 31:
Valuation loss on equity investment at December 31, 2022 relates to the Company’s equity investment in NYDIG which is recorded as a component of other assets in the consolidated balance sheets. |
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OTHER EXPENSES |
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| OTHER EXPENSES | NOTE 25: OTHER EXPENSES The following items are included in the consolidated statements of operations as other expenses for the years ended December 31:
The increase in regulatory assessment expense is due to an increase in FDIC insurance premiums. |
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SEGMENT REPORTING |
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| SEGMENT REPORTING | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT REPORTING | NOTE 26: SEGMENT REPORTING In 2024, 2023, and 2022 the Company had two reportable business segments: Banking (FFB) and Wealth Management (FFA). The results of FFI and any elimination entries are included in the column labeled Other. The reportable segments are determined by products and services offered and the corporate structure. Business segment earnings before taxes are the primary measure of the segment’s performance as evaluated by management. Business segment earnings before taxes include direct revenue and expenses of the segment as well as corporate and inter-company cost allocations. Allocations of corporate expenses, such as finance and accounting, data processing and human resources, are calculated based on estimated activity or usage levels. The management accounting process measures the performance of the operating segments based on the Company’s management structure and is not necessarily comparable with similar information for other financial services companies. If the management structures and/or the allocation process changes, allocations, transfers and assignments may change. In accordance with ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, the significant expenses shown in the tables below are those that are regularly provided to the chief operating decision maker (“CODM”) who regularly uses them, along with other information in assessing the segment’s performance and in decisions regarding allocation of resources. With respect to ASU 2023-07, the CODM for the Company is the Chief Executive Officer. The following tables show key operating results for each of our business segments used to arrive at our consolidated totals for the years ended December 31:
The following tables show the financial position for each of our business segments, and of FFI which is included in the column labeled Other, and the eliminating entries used to arrive at our consolidated totals at December 31:
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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | NOTE 27: QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
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PARENT ONLY FINANCIAL STATEMENTS |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| PARENT ONLY FINANCIAL STATEMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PARENT ONLY FINANCIAL STATEMENTS | NOTE 28: PARENT ONLY FINANCIAL STATEMENTS BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
STATEMENTS OF CASH FLOWS
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SUBSEQUENT EVENTS |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| SUBSEQUENT EVENTS | |
| SUBSEQUENT EVENTS | NOTE 29: SUBSEQUENT EVENTS On January 7, 2025 wildfires occurred in Los Angeles County, continuing over several days and causing severe property damage. There has been no significant collateral loss to the Company or business interruption to our commercial customers as a result of the recent wildfires.
|
Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 |
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
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| Pay vs Performance Disclosure | |||||||||||||||
| Net Income (Loss) | $ (14,111) | $ (82,174) | $ 3,085 | $ 793 | $ 2,548 | $ 2,180 | $ (212,288) | $ 8,496 | $ 17,354 | $ 29,006 | $ 33,316 | $ 30,836 | $ (92,407) | $ (199,064) | $ 110,512 |
Insider Trading Arrangements |
3 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Trading Arrangements, by Individual | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
Insider Trading Policies and Procedures |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Insider Trading Policies and Procedures [Line Items] | |
| Insider Trading Policies and Procedures Adopted | true |
Cybersecurity Risk Management and Strategy Disclosure |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Cybersecurity Risk Management, Strategy, and Governance [Line Items] | |
| Cybersecurity Risk Management Processes for Assessing, Identifying, and Managing Threats [Text Block] | We recognize the security of our banking operations is critical to protecting our customers, maintaining our reputation and preserving our enterprise value. We maintain a comprehensive process for identifying, assessing, and managing material risks from cybersecurity threats as part of our broader risk management system and processes. The Company’s Information Security Officer is primarily responsible for developing, monitoring, and implementing our cybersecurity program, which establishes policies and procedures for the measurement of the effectiveness and efficiency of information security controls related to both design and operations. The Chief Technology Officer is responsible for implementing the appropriate controls and monitoring them towards adherence with the established standards. As a regulated financial institution, we have designed our cybersecurity program based on the requirements of the Gramm-Leach Bliley Act of 1999 and Federal Financial Institutions Examination Council (“FFIEC”) Cybersecurity Assessment Tool. Our processes for identifying, assessing and managing material risks from cybersecurity threats rely on the FFIEC Cybersecurity Assessment Tool as well as recurring audits and assessments of our cybersecurity program and controls. As part of our cybersecurity program, we have developed an incident response plan based on industry-standard cybersecurity frameworks, with procedures for responding to and remediating a cyber-incident. We also review and test our incident response plan through simulations and assessments. Further, we employ recurring security awareness training for employees and produce recurring security awareness material for our customers. We engage third-party services to conduct penetration testing as well as other regular evaluations of our security protocols and processes. Additionally, we assess and monitor the cybersecurity controls of third-party service providers and partners. Ongoing and regular monitoring of our third parties is also managed through our Information Security Program team’s protocols in partnership with the vendor management, enterprise risk management, and internal audit departments. |
| Cybersecurity Risk Management Processes Integrated [Flag] | true |
| Cybersecurity Risk Management Processes Integrated [Text Block] | We recognize the security of our banking operations is critical to protecting our customers, maintaining our reputation and preserving our enterprise value. We maintain a comprehensive process for identifying, assessing, and managing material risks from cybersecurity threats as part of our broader risk management system and processes. The Company’s Information Security Officer is primarily responsible for developing, monitoring, and implementing our cybersecurity program, which establishes policies and procedures for the measurement of the effectiveness and efficiency of information security controls related to both design and operations. The Chief Technology Officer is responsible for implementing the appropriate controls and monitoring them towards adherence with the established standards. As a regulated financial institution, we have designed our cybersecurity program based on the requirements of the Gramm-Leach Bliley Act of 1999 and Federal Financial Institutions Examination Council (“FFIEC”) Cybersecurity Assessment Tool. Our processes for identifying, assessing and managing material risks from cybersecurity threats rely on the FFIEC Cybersecurity Assessment Tool as well as recurring audits and assessments of our cybersecurity program and controls. As part of our cybersecurity program, we have developed an incident response plan based on industry-standard cybersecurity frameworks, with procedures for responding to and remediating a cyber-incident. We also review and test our incident response plan through simulations and assessments. Further, we employ recurring security awareness training for employees and produce recurring security awareness material for our customers. We engage third-party services to conduct penetration testing as well as other regular evaluations of our security protocols and processes. Additionally, we assess and monitor the cybersecurity controls of third-party service providers and partners. Ongoing and regular monitoring of our third parties is also managed through our Information Security Program team’s protocols in partnership with the vendor management, enterprise risk management, and internal audit departments. |
| Cybersecurity Risk Management Third Party Engaged [Flag] | true |
| Cybersecurity Risk Third Party Oversight and Identification Processes [Flag] | true |
| Cybersecurity Risk Materially Affected or Reasonably Likely to Materially Affect Registrant [Flag] | false |
| Cybersecurity Risk Board of Directors Oversight [Text Block] | The Board of Directors, through the Audit Committee and Directors’ Risk Committee, provides direction and oversight of the Company’s risk management system. Our Chief Technology Officer is responsible for managing our information security team, while our Information Security Officer is responsible for maintaining and continuing to develop and implement our cybersecurity program enterprise-wide and assessing and managing risks from cybersecurity threats. Both the Information Security Officer and Chief Technology Officer have extensive experience in the banking industry and in information technology and information security. The Information Security Officer has served in information security roles for twenty-five years and in banking for thirty-five years. The Chief Technology Officer has been with the Company since 2010 and has over twenty years of experience in information technology and cybersecurity within the banking industry. We have processes to inform the Directors’ Risk Committee, Audit Committee and the Board about risks from cybersecurity threats. Our management team reports its findings using the FFIEC Cybersecurity Assessment Tool and our information security team’s determination as to whether our security controls, at a minimum, are in place and effective. The Information Security Officer and Chief Technology Officer regularly report to the Director Risk Committee, Audit Committee and the Board regarding cybersecurity and related threats and trends, changes, control effectiveness and residual risk, the areas where our cybersecurity program may be improved and improvements made to address and remediate issues.
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| Cybersecurity Risk Board Committee or Subcommittee Responsible for Oversight [Text Block] | Audit Committee and Directors’ Risk Committee |
| Cybersecurity Risk Process for Informing Board Committee or Subcommittee Responsible for Oversight [Text Block] | We have processes to inform the Directors’ Risk Committee, Audit Committee and the Board about risks from cybersecurity threats. Our management team reports its findings using the FFIEC Cybersecurity Assessment Tool and our information security team’s determination as to whether our security controls, at a minimum, are in place and effective. The Information Security Officer and Chief Technology Officer regularly report to the Director Risk Committee, Audit Committee and the Board regarding cybersecurity and related threats and trends, changes, control effectiveness and residual risk, the areas where our cybersecurity program may be improved and improvements made to address and remediate issues.
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| Cybersecurity Risk Role of Management [Text Block] | Our Chief Technology Officer is responsible for managing our information security team, while our Information Security Officer is responsible for maintaining and continuing to develop and implement our cybersecurity program enterprise-wide and assessing and managing risks from cybersecurity threats. Both the Information Security Officer and Chief Technology Officer have extensive experience in the banking industry and in information technology and information security. The Information Security Officer has served in information security roles for twenty-five years and in banking for thirty-five years. The Chief Technology Officer has been with the Company since 2010 and has over twenty years of experience in information technology and cybersecurity within the banking industry. We have processes to inform the Directors’ Risk Committee, Audit Committee and the Board about risks from cybersecurity threats. Our management team reports its findings using the FFIEC Cybersecurity Assessment Tool and our information security team’s determination as to whether our security controls, at a minimum, are in place and effective. The Information Security Officer and Chief Technology Officer regularly report to the Director Risk Committee, Audit Committee and the Board regarding cybersecurity and related threats and trends, changes, control effectiveness and residual risk, the areas where our cybersecurity program may be improved and improvements made to address and remediate issues. |
| Cybersecurity Risk Management Positions or Committees Responsible [Flag] | true |
| Cybersecurity Risk Management Positions or Committees Responsible [Text Block] | Information Security Officer and Chief Technology Officer |
| Cybersecurity Risk Management Expertise of Management Responsible [Text Block] | Both the Information Security Officer and Chief Technology Officer have extensive experience in the banking industry and in information technology and information security. The Information Security Officer has served in information security roles for twenty-five years and in banking for thirty-five years. The Chief Technology Officer has been with the Company since 2010 and has over twenty years of experience in information technology and cybersecurity within the banking industry. |
| Cybersecurity Risk Process for Informing Management or Committees Responsible [Text Block] | We have processes to inform the Directors’ Risk Committee, Audit Committee and the Board about risks from cybersecurity threats. Our management team reports its findings using the FFIEC Cybersecurity Assessment Tool and our information security team’s determination as to whether our security controls, at a minimum, are in place and effective. The Information Security Officer and Chief Technology Officer regularly report to the Director Risk Committee, Audit Committee and the Board regarding cybersecurity and related threats and trends, changes, control effectiveness and residual risk, the areas where our cybersecurity program may be improved and improvements made to address and remediate issues |
| Cybersecurity Risk Management Positions or Committees Responsible Report to Board [Flag] | true |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
| Business | Business First Foundation Inc. (“FFI”) is a financial services holding company whose operations are conducted through its wholly owned subsidiaries: First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB” or the “Bank”) and the wholly owned subsidiaries of FFB, First Foundation Public Finance (“FFPF”), First Foundation Insurance Services (“FFIS”) and Blue Moon Management, LLC (collectively the “Company”). FFI also has two inactive wholly owned subsidiaries, First Foundation Consulting (“FFC”) and First Foundation Advisors, LLC (“FFA LLC”). FFI is incorporated in the state of Delaware. The corporate headquarters for FFI is located in Dallas, Texas. The Company provides a comprehensive platform of financial services to individuals, businesses and other organizations and has offices in California, Nevada, Florida, Texas, and Hawaii. FFA, established in 1985 and incorporated in the state of California, began operating in 1990 as a fee-based registered investment advisor. FFA provides (i) investment management and financial planning services for high net-worth individuals, retirement plans, charitable institutions and private foundations; (ii) financial, investment and economic advisory and related services to high net-worth individuals and their families, family-owned businesses, and other related organizations; and (iii) support services involving the processing and transmission of financial and economic data for charitable organizations. At the end of 2024, these services were provided to approximately 1,500 clients, primarily located in Southern California, with an aggregate of $5.4 billion of assets under management. The Bank commenced operations in 2007, is incorporated in the state of California and currently operates in California, Nevada, Florida, Texas, and Hawaii. The Bank offers a wide range of deposit instruments including personal and business checking and savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificates of deposit (“CD”) accounts. As a lender, the Bank originates, and retains for its portfolio, loans secured by real estate and commercial loans. The Bank also offers a wide range of specialized services including trust services, on-line banking, remote deposit capture, merchant credit card services, ATM cards, Visa debit cards, business sweep accounts, and through FFIS, insurance brokerage services. The Bank has a state non-member bank charter and is subject to continued examination by the California Department of Financial Protection and Innovation, the Federal Deposit Insurance Corporation (“FDIC”), and the Consumer Financial Protection Bureau (“CFPB”). At December 31, 2024, the Company employed 551 employees. |
| Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The consolidated financial statements have been prepared in conformity with U.S. GAAP and prevailing practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses during the reporting periods and related disclosures. Actual results could differ significantly from those estimates. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. |
| Variable Interest Entities | Variable Interest Entities The Company may have variable interests in Variable Interest Entities (“VIEs”) arising from debt, equity or other monetary interests in an entity, which change with fluctuations in the fair value of the entity’s assets. VIEs are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. The primary beneficiary of a VIE (i.e., the party that has a controlling financial interest) is required to consolidate the assets and liabilities of the VIE. The primary beneficiary is the party that has both (1) the power to direct the activities of an entity that most significantly impact the VIE’s economic performance; and (2) through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company has sold loans, in 2021, 2020, 2019, 2018, 2016 and 2015, through securitizations sponsored by a government sponsored entity, Freddie Mac, who also provided credit enhancement of the loans through certain guarantee provisions. The Company retained the right to provide servicing for the loans except for special servicing for which an unrelated third party was engaged by the VIE. For the 2016 and 2015 securitizations, the Company acquired the “B” piece of the securitizations, which is structured to absorb any losses from the securitizations, as well as interest only strips from the securitization. For the 2021, 2020, 2019, and 2018 securitizations, the Company provides collateral to support its obligation to reimburse for credit losses incurred on loans in the securitization. Because the Company does not act as the special servicer for the VIE and because of the power of Freddie Mac over the VIE that holds the assets from the mortgage loan securitizations, the Company is not the primary beneficiary of the VIE and therefore the VIE is not consolidated. |
| Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash, due from banks, certificates of deposits with original maturities of less than ninety days, investment securities with original maturities of less than ninety days, money market mutual funds and federal funds sold. At times, the Company maintains cash at major financial institutions in excess of FDIC insured limits. However, as the Company places these deposits with major well-capitalized financial institutions and monitors the financial condition of these institutions, management believes the risk of loss to be minimal. The Company maintains most of its excess cash at the Federal Reserve Bank, with well-capitalized correspondent banks or with other depository institutions at amounts less than the FDIC insured limits. At December 31, 2024, included in cash and cash equivalents were $959 million in funds held at the Federal Reserve Bank. Banking regulations require that banks maintain a percentage of their deposits as reserves in cash or on deposit with the Federal Reserve Bank. The Company was in compliance with its reserve requirements as of December 31, 2024. |
| Certificates of Deposit | Certificates of Deposit From time to time, the Company may invest funds with other financial institutions through certificates of deposit. Certificates of deposit are included as cash and cash equivalents. Certificates of deposit are carried at cost. |
| Investment Securities | Investment Securities Investment securities for which the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and are reported at cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity. Investment securities classified as trading are those securities that are bought and held principally for the purpose of selling them in the near term. Investments not classified as trading securities nor as held-to-maturity securities are classified as available-for-sale securities and recorded at fair value. Unrealized gains or losses on available-for-sale securities are excluded from net income and reported as an amount net of taxes as a separate component of other comprehensive income included in shareholders’ equity. Premiums or discounts on held-to-maturity and available-for-sale securities are amortized or accreted into income using the interest method. The interest method takes into consideration prepayments received on investment securities such as mortgage-backed securities as the amortization or accretion is based on the estimated average lives of the securities. |
| Loan Origination Fees and Costs | Loan Origination Fees and Costs Loan origination fees and direct costs associated with lending are deferred and amortized to interest income as an adjustment to yield over the respective lives of the loans using the interest method. The amortization of deferred fees and costs is discontinued on loans that are placed on nonaccrual status. When a loan is paid off, any unamortized deferred fees and costs are recognized in interest income. |
| Loans Held for Investment | Loans Held for Investment Loans held for investment are reported at the principal amount outstanding, net of cumulative charge-offs, interest applied to principal (for loans accounted for using the cost recovery method), unamortized net deferred loan origination fees and costs and unamortized premiums or discounts on purchased loans. Interest on loans is accrued and recognized as interest income at the contractual rate of interest. When a loan is designated as held for investment, the intent is to hold these loans for the foreseeable future or until maturity or payoff. If subsequent changes occur, the Company may change its intent to hold these loans. Once a determination has been made to sell such loans, they are immediately transferred to loans held for sale and carried at the lower of cost or fair value. |
| Loans Held for Sale | Loans Held for Sale Loans designated for sale through securitization or in the secondary market are classified as loans held for sale. Loans held for sale are accounted for at the lower of amortized cost or fair value. The fair value of loans held for sale is based upon a discounted cash flow model which involves estimating the future cash flows from the loans in the portfolio and discounting to a present value. Contractual cash flows associated with the loans are adjusted to reflect certain assumptions, such as prepayment, default, and loss severity assumptions, to form expected prepayment and credit-adjusted expected cash flows. The expected cash flows are then discounted to present value at a rate of return which considers other costs and risks, such as market risk and liquidity. Related gains and losses are recognized in net gain on mortgage loan origination and sale activities. Loans held for sale balances were recorded at their fair value and totaled $1.3 billion and zero as of December 31, 2024, and 2023, respectively. |
| Nonaccrual Loans | Nonaccrual Loans Loans are placed on nonaccrual status when the full and timely collection of principal and interest is doubtful, generally when the loan becomes 90 days or more past due for principal or interest payment. All payments received on nonaccrual loans are accounted for using the cost recovery method. Under the cost recovery method, all cash collected is applied to first reduce the principal balance. A loan may be returned to accrual status if all delinquent principal and interest payments are brought current and the collectability of the remaining principal and interest payments in accordance with the loan agreement is reasonably assured. Loans that are well secured and in the collection process may be maintained on accrual status, even if they are 90 days or more past due. |
| Allowance for Credit Losses | Allowance for Credit Losses The ACL represents the estimated amount considered necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The measurement of expected credit losses is applicable to loans held for investment and investment securities. The measurement of expected credit losses is not applicable to loans held for sale, as credit risk on loans held for sale is considered in its fair value adjustment instead of in the ACL. It also applies to off-balance sheet credit exposures such as unfunded loan commitments. The allowance is established through a provision for credit losses that is charged against income. The methodology for determining the ACL for loans held for investment is and investment securities are considered critical accounting estimates by management because of a high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes in the amount of the recorded ACL The ACL for loans held for investment and investment securities are reported separately as contra-assets on the consolidated balance sheets. The expected credit loss for unfunded loan commitments is reported on the consolidated balance sheets in accounts payable and other liabilities. See Note 5: Allowance for Loan Losses in the consolidated financial statements for additional information related to our allowance for credit losses on loans held for investment. ACL – Investment Securities The ACL on investment securities is determined for both held-to-maturity and available-for-sale classifications of the investment portfolio and is evaluated on a quarterly basis. The ACL for held-to-maturity investment securities is determined on a collective basis, based on shared risk characteristics, and is determined at the individual security level when we deem a security to no longer possess shared risk characteristics. The Company’s portfolio of held-to-maturity investment securities consists of agency mortgage-backed securities, such as those guaranteed by the U.S. government or government sponsored entities, where we have reason to believe the credit loss exposure is remote. For these held-to-maturity securities, a zero-loss expectation is applied, resulting in no estimate and recognition of ACL For AFS securities in an unrealized loss position, we first evaluate whether we intend to sell, or whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the security amortized cost basis is written down to fair value through income. If neither criterion is met, we are required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. In determining whether a security’s decline in fair value is credit related, we consider a number of factors including, but not limited to: (i) the extent to which the fair value of the investment is less than its amortized cost; (ii) the financial condition and near-term prospects of the issuer; (iii) downgrades in credit ratings; (iv) payment structure of the security; and (v) the ability of the issuer of the security to make scheduled principal and interest payments. If, after considering these factors, the present value of expected cash flows to be collected is less than the amortized cost basis, a credit loss exists, and an allowance for credit loss is recorded through income as a component of provision for credit loss expense. Any interest received after the security has been placed on nonaccrual status is recognized on a cash basis. If the assessment indicates that a credit loss does not exist, we record the decline in fair value through other comprehensive income, net of related income tax effects. We have elected to exclude accrued interest receivable on securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of a security is confirmed or when either of the criterion regarding intent or requirement to sell is met. See Note 3: Securities in the consolidated financial statements for additional information related to our allowance for credit losses on securities AFS. The provision (reversal) for credit losses on the consolidated statement of operations includes the provision (reversal) for credit losses for loans held for investment and securities AFS. The provision (reversal) for credit losses was $20.7 million, ($0.5) million, and $0.5 million respectively for the years ended December 31, 2024, 2023, and 2022. |
| Loan Commitments and Related Financial Instruments | Loan Commitments and Related Financial Instruments In the ordinary course of business, the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are incurred or received. |
| Investment in Federal Home Loan Bank Stock | Investment in Federal Home Loan Bank Stock As a member of the FHLB, the Bank is required to purchase FHLB stock in accordance with its advances, securities and deposit agreement. This stock, which is carried at cost, may be redeemed at par value. However, there are substantial restrictions regarding redemption and the Company can only receive a full redemption in connection with the Company surrendering its FHLB membership. At December 31, 2024 and 2023, the Company held $37.9 million and $24.6 million of FHLB stock, respectively. The Company does not believe that this stock is currently impaired and no to its carrying value have been recorded. |
| Premises and Equipment | Premises and Equipment Premises and equipment are carried at cost, less accumulated depreciation and amortization, which is charged to expense on a straight-line basis over the estimated useful lives of to 10 years. Premises under leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful life of the improvements, whichever is shorter. Expenditures for major renewals and betterments of premises and equipment are capitalized and those for maintenance and repairs are charged to expense as incurred. Depreciable assets sold or retired are removed from the asset and related accumulated depreciation accounts and any gain or loss is reflected in the statement of operations. The Company periodically evaluates the recoverability of long-lived assets, such as premises and equipment, to ensure the carrying value has not been impaired. A valuation allowance is established for any impaired long-lived assets. The Company did not have impaired long-lived assets as of December 31, 2024 or 2023. |
| Real Estate Owned | Real Estate Owned Real estate owned (“REO”) represents the collateral acquired through foreclosure in full or partial satisfaction of the related loan. REO is recorded at the fair value less estimated selling costs at the date of foreclosure. Any write-down at the date of transfer is charged to the allowance for credit losses related to loans. The recognition of gains or losses on sales of REO is dependent upon various factors relating to the nature of the property being sold and the terms of sale. REO values are reviewed on an ongoing basis and any decline in value is recognized as foreclosed asset expense in the current period. All legal fees and direct costs, including foreclosure and other related costs, are expensed as incurred. |
| Bank Owned Life Insurance ("BOLI") | Bank Owned Life Insurance (“BOLI”) The Bank has bank owned life insurance (“BOLI”) acquired through a prior bank acquisition. BOLI is recorded at the amount that can be realized under the insurance contract, which is the cash surrender value. Changes in the cash surrender value of BOLI and the death benefits received under these policies are recorded as noninterest income in the consolidated statements of income. As of December 31, 2024 and 2023, BOLI totaled $50.0 million and $48.7 million, respectively. |
| Mortgage Servicing Rights | Mortgage Servicing Rights When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the statement of operations effect recorded in gains on sales of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income. 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. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. 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. As of December 31, 2024 and 2023, mortgage servicing rights net of the valuation allowance totaled $6.4 million and $5.5 million, respectively and is classified as a component of other assets in the accompanying consolidated balance sheets. Servicing fee income, which is reported on the statement of operations as other income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal. The amortization of mortgage servicing rights is netted against loan servicing fee income. |
| Derivative Instruments (Cash Flow Hedge) | Derivative Instruments (Cash Flow Hedge) On February 1, 2024, the Bank entered into an interest rate swap agreement with an institutional counterparty used to manage our exposure to changes in interest rates as part of our overall interest rate risk management strategy. This agreement was solely undertaken as a cash flow hedge of interest rate risk, specifically of the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity. This agreement is a derivative instrument and qualifies for hedge accounting under ASU 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”. To qualify for hedge accounting, the cash flow hedge must be highly effective at reducing the risk associated with the hedged exposure. The effectiveness of the hedging relationship is documented at inception and is monitored on at least a quarterly basis through the life of the transaction. A cash flow hedge that is designated as highly effective is carried at fair value with the change in fair value recorded in other comprehensive income (loss) (“AOCI”). If the cash flow hedge becomes ineffective, the change in fair value is reclassified from AOCI to earnings. The cash flow hedge is classified as either derivative assets (if fair value is a net asset) or derivative liabilities (if fair value is a net liability) in the accompanying consolidated balance sheets. The earnings and cash flow impact from this derivative asset are classified as an offset to interest expense which is consistent with the underlying hedged item. |
| Core Deposit Intangibles | Core Deposit Intangibles Core deposit intangibles are deemed to have definite useful lives and arise from whole bank acquisitions. Core deposit intangibles are amortized on an accelerated method over their estimated useful lives, which range from 7 to 10 years. |
| Leases | Leases The Company accounts for its leases in accordance with ASC 842- Leases. Most leases are recognized on the balance sheet by recording a right-of-use asset and lease liability for each lease. The right-of-use asset represents the right to use the asset under lease for the lease term, and the lease liability represents the contractual obligation to make lease payments. The right-of-use asset is tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. As a lessee, the Company enters into operating leases for certain Bank branches. The right-of-use assets and lease liabilities are initially recognized based on the net present value of the remaining lease payments which include renewal options where the Company is reasonably certain they will be exercised. The net present value is determined using the incremental collateralized borrowing rate at commencement date. The right-of-use asset and lease liability is amortized over the individual lease terms. Right-of-use assets are included in other assets, while right-of-use liabilities are included in accounts payable and other liabilities in the consolidated financial statements. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For additional information regarding leases, see Note 19: Leases. |
| Transfers of Financial Assets | Transfers of Financial Assets Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. 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. |
| Revenue Recognition | Revenue Recognition The Company accounts for certain of its revenue streams deemed to arise from contracts with customers in accordance with ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Revenue streams within the scope of and accounted for under Topic 606 include: service charges and fees on deposit accounts; fees associated with our wealth management and trust administration services; and fees from other services the Bank provides its customers. These revenue streams are included in noninterest income in the consolidated statements of income. Topic 606 requires revenue to be recognized when the Company satisfies related performance obligations by transferring to the customer a good or service. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the transfer of goods or services to the associated customer. The Company’s primary sources of revenues are generated from financial instruments, such as loans and investment securities that are not within the scope of Topic 606 and are accounted for under other applicable GAAP. Contracts with Customers Contracts with customers are open-ended, and we provide services on an ongoing basis for an unspecified contract term. For these ongoing services, the fees are variable, since they are dependent on factors such as the value of underlying assets under management or volume of transactions. Contract liabilities, or deferred revenue, are recorded when payments from customers are received in advance of providing services to customers. We generally receive payments for our services during the period or at the time services are provided, therefore, we do not have deferred revenue balances at period-end. Employees receive incentive compensation in the form of commissions, which are considered incremental and recoverable costs to obtain the contract. We utilize the practical expedient not to capitalize such costs as the amortization period of the asset is less than 12 months, and therefore we expense the commissions as incurred. Descriptions of our primary revenue-generating activities that are presented in our statements of operations are as follows: Interest on Loans Interest income is accrued daily on the Company’s outstanding loan balances. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full, timely collection of interest or principal and, generally, when a loan becomes contractually past due for ninety days or more with respect to principal or interest. The accrual of interest may be continued on a well-secured loan contractually past due ninety days or more with respect to principal or interest if the loan is in the process of collection or collection of the principal and interest is deemed probable. When a loan is placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period income. Interest on such loans is then recognized only to the extent that cash is received and where the future collection of principal is probable. Accrual of interest is resumed on loans only when, in the judgment of management, the loan is estimated to be fully collectible. The Bank continues to accrue interest on modified loans since full payment of principal and interest is expected and such loans are performing or are less than ninety days delinquent and, therefore, do not meet the criteria for nonaccrual status. Modified loans that have been placed on nonaccrual status are returned to accrual status when the remaining loan balance, net of any charge-offs related to the restructure, is estimated to be fully collectible by management and performing in accordance with the applicable loan terms. Wealth management and trust fee income Asset management fees are billed on a monthly or quarterly basis based on the amount of assets under management and the applicable contractual fee percentage. Asset management fees are recognized as revenue in the period in which they are earned. Financial planning fees are due and billed at the completion of the planning project and are recognized as revenue at that time. Service charges on deposit accounts Service charges on deposit accounts represent general service fees for monthly account maintenance and activity or transaction-based fees. Revenue is recognized when our performance obligation is completed which are generally monthly for account maintenance services or when a transaction has been completed. Payment for such performance obligations is generally received at the time the performance obligations are satisfied. Gains and Losses on Sales of REO To record a sale of REO, the Bank evaluates if: (a) a commitment on the buyer’s part exists, (b) collection is probable in circumstances where the initial investment is minimal and (c) the buyer has obtained control of the asset, including the significant risks and rewards of the ownership. If there is no commitment on the buyer’s part, collection is not probable or the buyer has not obtained control of the asset, then a gain cannot be recognized. Other non-interest income includes revenue related to mortgage servicing activities and gains on sales of loans, and securities which are not subject to the requirements of ASU 2014-09. |
| Stock-Based Compensation | Stock-Based Compensation The Company issues various forms of stock-based compensation awards to officers, directors, and employees of the Company, including stock options and restricted stock units (“RSUs”). The related compensation costs are based on the grant-date fair value of those awards. This cost is recognized in the statement of operations over the period in which they are expected to vest. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock units. |
| Marketing Costs | Marketing Costs The Company expenses marketing costs, including advertising, in the period incurred. Marketing costs in the amount of $0.6 million, $1.0 million, and $1.1 million were expensed during the years ended December 31, 2024, 2023, and 2022, respectively. |
| Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is established if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized. The tax effects from an uncertain tax position can be 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. Interest and penalties related to uncertain tax positions are recorded as part of income tax expense. |
| Comprehensive Income (loss) | Comprehensive Income (loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Changes in unrealized gains and losses on available-for-sale securities, cash flow hedge, and the related tax costs or benefits are the only components of other comprehensive income (loss) for the Company. Total comprehensive income (loss) and the components of accumulated other comprehensive income (loss) are presented in the Consolidated Statements of Changes in Stockholders’ Equity and Consolidated Statements of Comprehensive Income (Loss). |
| Earnings Per Share ("EPS") | Earnings Per Share (“EPS”) Basic earnings per share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options, restricted stock units, and warrants which are all determined using the treasury stock method. |
| Fair Value Measurement | Fair Value Measurement Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 2: Fair Value. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates. |
| New Accounting Pronouncements | New Accounting Pronouncements Accounting Standards Adopted in 2024 In June 2022, FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. ASU 2022-03 clarifies how the fair value of equity securities subject to contractual sale restrictions is determined. Prior to its issuance, there was diversity in practice as to whether the effects of a contractual restriction that prohibits the sale of an equity security should be considered in measuring the security's fair value. ASU 2022-03 clarifies that a contractual sale restriction should not be considered in measuring fair value. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023. The Company’s equity securities portfolio consists solely of investments in Small Business Administration (“SBA”) loan funds which can be redeemed at any time and are not subject to contractual sale restrictions. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements. In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures”. ASU 2023-07 requires public entities to disclose “significant segment expenses” by reportable segment if they are regularly provided to the Chief Operating Decision Maker (“CODM”) for review of profit and loss by segment and as a tool in resource-allocation decisions. A significant segment expense category may be reported for one reportable segment but not for others. Similarly, reportable segments may have different significant segment expense categories due to the nature of their operations. The ASU also requires public entities to disclose the title and position of the individual or the name of the group identified as the CODM and how the CODM uses each reportable measure of segment profit or loss to assess performance and allocate resources to the segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023. For financial reporting purposes, the Company has two segments: Banking and Wealth Management. These disclosures are presented in Note 26: Segment Reporting in the accompanying financial statements. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Guidance Not Yet Effective In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures. The FASB issued this Update to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid. The amendments in this Update are effective for annual periods beginning after December 15, 2024, and are not expected to have a material impact on the Company’s consolidated financial statements. |
FAIR VALUE (Tables) |
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| FAIR VALUE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recorded Amounts of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables show the recorded amounts of assets measured at fair value on a recurring basis as of:
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| Carrying Amounts and Estimated Fair Value of Financial Instruments | The following table sets forth the estimated fair values and related carrying amounts of our financial instruments as of:
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SECURITIES (Tables) |
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| SECURITIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of AFS Securities Portfolio | The following table provides a summary of the Company’s securities AFS portfolio as of:
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| Summary of HTM Securities Portfolio | The following table provides a summary of the Company’s securities HTM portfolio as of:
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| Schedule of Securities in a Continuous Unrealized Loss Position Aggregated by Investment Category and Length of Time | The tables below indicate the gross unrealized losses and fair values of our securities AFS portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.
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| Summary of Allowance For Credit Losses - Securities AFS | The following is a rollforward of the Company’s allowance for credit losses related to investments for the year ended December 31:
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| Schedule Maturities of Securities AFS by Contractual Maturity | The amortized cost and fair value of investment securities AFS and HTM by contractual maturity are shown in the tables below. Expected maturities may differ from contractual maturities for securities whereby borrowers have the right to prepay such obligations without penalty such as agency mortgage-backed securities and beneficial interests in FHLMC securitizations. The amortized cost and fair value of investment securities AFS by contractual maturity were as follows for the periods indicated:
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| Schedule of Maturities of Securities HTM | The amortized cost and fair value of investment securities HTM by contractual maturity were as follows for the periods indicated:
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LOANS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LOANS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of summary of loans held for investment | The following is a summary of our loans held for investment as of:
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| Summary of delinquent and nonaccrual loans | The following table summarizes our delinquent and nonaccrual loans as of:
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| Summary of nonaccrual loans |
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| Schedule of composition of TDRs by accrual and nonaccrual status | The following table presents our loan modifications made to borrowers experiencing financial difficulty by type of modification for the twelve months ended December 30, 2024 and 2023, respectively with related amortized cost balances, respective percentage share of the total class of loans, and the related financial effect:
The following table presents the amortized cost basis of loans that had a payment default since modification for the twelve-months ended December 31, 2024
All loans modified during the twelve-month period ended December 31, 2023, were current with respect to payments and were not in default. Outstanding commitments to lend on modified loans totaled $1 thousand and $379 thousand at December 31, 2024 and 2023, respectively. The following table presents the payment status of our loan modifications made during the twelve months ended December 31, 2024:
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ALLOWANCE FOR CREDIT LOSSES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of allowance for credit losses |
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| Schedule of risk category of loans based on year of origination | The following tables present risk categories of loans held for investment based on year of origination, and includes gross charge-offs in accordance with ASU 2022-02 as of the dates presented:
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| Schedule of the amortized cost basis of collateral dependent loans and the related ACL allocated to these loans | A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral. Collateral dependent loans are evaluated individually to determine expected credit losses and any ACL allocation is determined based upon the amount by which amortized costs exceed the estimated fair value of the collateral, adjusted for estimated selling costs (if applicable). The following table presents the amortized cost basis of collateral dependent loans, and the related ACL allocated to these loans as of the dates indicated:
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PREMISES AND EQUIPMENT (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PREMISES AND EQUIPMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Premises and Equipment | A summary of premises and equipment is as follows at December 31:
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REAL ESTATE OWNED (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||
| REAL ESTATE OWNED | |||||||||||||||||||||||||||||||||||||||||||
| Schedule of Activity in Portfolio of REO | The activity in our portfolio of REO is as follows during the periods ending December 31:
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DEPOSITS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEPOSITS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Outstanding Balance of Deposits and Average Rates | The following table summarizes the outstanding balance of deposits and average rates paid thereon as of:
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| Summary of Large Denomination Certificates of Deposit Maturity Distribution |
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SUBORDINATED DEBT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUBORDINATED DEBT. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of outstanding subordinated notes |
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EARNINGS PER SHARE (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS PER SHARE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of computation of basic and diluted earnings per share |
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STOCK BASED COMPENSATION (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCK BASED COMPENSATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Stock Option Activity | The following table summarizes the activities in the Plans during 2024:
The following table summarizes the activities in the Plans during 2023:
The intrinsic value of stock options exercised in 2023 was $0. The following table summarizes the activities in the Plans during 2022:
The intrinsic value of stock options exercised in 2022 was $33,400. |
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| Summary of RSUs Issued under Equity Incentive Plan | The following table provides a summary of the RSUs issued by the Company under its equity incentive plans for the periods ended December 31:
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Income Tax Expense (Benefit) | The Company is subject to federal income tax and California franchise tax. Income tax expense (benefit) was as follows for the years ended December 31:
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| Schedule of Comparison of the Federal Statutory Income Tax Rates | The following is a comparison of the federal statutory income tax rates to the Company’s effective income tax rate for the years ended December 31:
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| Summary of Components of the Net Deferred Tax Assets Recognized |
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LEASES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule Of Supplemental Lease Information | The following table presents supplemental lease information at or for the twelve months ended December:
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| Summary of Maturity of Remaining Lease Liabilities | Future minimum lease commitments under all non-cancelable operating leases at December 31, 2024 are as follows:
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COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES. | ||||||||||||||||||||||||||||||||||||
| Summary of Off Balance Sheet Arrangements | The following table provides the off-balance sheet arrangements of the Bank as of December 31:
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REGULATORY MATTERS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| REGULATORY MATTERS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Capital and Capital Ratios |
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NONINTEREST INCOME (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NONINTEREST INCOME | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Revenue from Contracts with Customers and Other Noninterest Income | The following table represents revenue from contracts with customers as well as other noninterest income for the years ended December 31:
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OTHER EXPENSES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| OTHER EXPENSES | |||||||||||||||||||||||||||||||||||||||||
| Schedule of Items Included in the Consolidated Statements of Operations as Other Expenses | The following items are included in the consolidated statements of operations as other expenses for the years ended December 31:
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SEGMENT REPORTING (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT REPORTING | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of key operating results of business segments | In accordance with ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, the significant expenses shown in the tables below are those that are regularly provided to the chief operating decision maker (“CODM”) who regularly uses them, along with other information in assessing the segment’s performance and in decisions regarding allocation of resources. With respect to ASU 2023-07, the CODM for the Company is the Chief Executive Officer. The following tables show key operating results for each of our business segments used to arrive at our consolidated totals for the years ended December 31:
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| Summary of Financial Position of Business Segments | The following tables show the financial position for each of our business segments, and of FFI which is included in the column labeled Other, and the eliminating entries used to arrive at our consolidated totals at December 31:
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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule Of Quarterly Financial Information |
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PARENT ONLY FINANCIAL STATEMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| PARENT ONLY FINANCIAL STATEMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Condensed Balance Sheets | BALANCE SHEETS
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| Condensed Income Statements | STATEMENTS OF OPERATIONS
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| Condensed Statements of Comprehensive Income (Loss) | STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
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| Condensed Statements Cash Flows | STATEMENTS OF CASH FLOWS
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SECURITIES - Summary of HTM Securities Portfolio (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Held-to-maturity Securities | ||
| Amortized Cost | $ 712,105 | $ 789,578 |
| Gross Unrealized Gain | 1 | |
| Gross Unrealized Loss | (75,265) | (79,558) |
| Estimated Fair Value | 636,840 | 710,021 |
| Agency mortgage-backed securities | ||
| Schedule of Held-to-maturity Securities | ||
| Amortized Cost | 712,105 | 789,578 |
| Gross Unrealized Gain | 1 | |
| Gross Unrealized Loss | (75,265) | (79,558) |
| Estimated Fair Value | $ 636,840 | $ 710,021 |
SECURITIES - Schedule of HTM Securities in a Continuous Unrealized Loss Position Aggregated by Investment Category and Length of Time (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Held-to-maturity Securities | ||
| Less than 12 months, Fair Value | $ 15,440 | |
| Less than 12 months, Unrecognized Loss | (61) | |
| 12 months or more, Fair Value | 621,400 | $ 689,454 |
| 12 months or more, Unrecognized Loss | (75,204) | (79,558) |
| Total, Fair Value | 636,840 | 689,454 |
| Total, Unrecognized Loss | (75,265) | (79,558) |
| Agency mortgage-backed securities | ||
| Schedule of Held-to-maturity Securities | ||
| Less than 12 months, Fair Value | 15,440 | |
| Less than 12 months, Unrecognized Loss | (61) | |
| 12 months or more, Fair Value | 621,400 | 689,454 |
| 12 months or more, Unrecognized Loss | (75,204) | (79,558) |
| Total, Fair Value | 636,840 | 689,454 |
| Total, Unrecognized Loss | $ (75,265) | $ (79,558) |
SECURITIES - Schedule of Allowance for Credit Losses (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Schedule Of Available For Sale Securities | |||
| Beginning Balance for period | $ 8,220 | $ 11,439 | $ 10,399 |
| Provision (Reversal) for Credit Losses | (956) | 752 | 1,040 |
| Charge-offs | (3,130) | (3,971) | |
| Ending Balance for period | 4,134 | 8,220 | 11,439 |
| Beneficial interests in FHLMC securitization | |||
| Schedule Of Available For Sale Securities | |||
| Beginning Balance for period | 6,818 | 11,439 | 10,399 |
| Provision (Reversal) for Credit Losses | (311) | (650) | 1,040 |
| Charge-offs | (3,130) | (3,971) | |
| Ending Balance for period | 3,377 | 6,818 | $ 11,439 |
| Corporate bonds | |||
| Schedule Of Available For Sale Securities | |||
| Beginning Balance for period | 1,402 | ||
| Provision (Reversal) for Credit Losses | (645) | 1,402 | |
| Ending Balance for period | $ 757 | $ 1,402 | |
LOANS - Summary of Nonaccrual Loans (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Loans | ||
| Nonaccrual with Allowance for Credit Losses | $ 14,043 | $ 7,406 |
| Nonaccrual with no Allowance for Credit Losses | 26,401 | 4,425 |
| Outstanding commitments | 1 | 379 |
| Commercial and industrial loans | ||
| Loans | ||
| Nonaccrual with Allowance for Credit Losses | 9,174 | 7,406 |
| Nonaccrual with no Allowance for Credit Losses | 1,398 | |
| Real estate loans | Residential loans | ||
| Loans | ||
| Nonaccrual with Allowance for Credit Losses | 1,420 | |
| Nonaccrual with no Allowance for Credit Losses | 21,904 | 112 |
| Real estate loans | Commercial properties | ||
| Loans | ||
| Nonaccrual with Allowance for Credit Losses | 3,449 | |
| Nonaccrual with no Allowance for Credit Losses | $ 4,497 | $ 2,915 |
PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| PREMISES AND EQUIPMENT | |||
| Leasehold improvements and artwork | $ 27,160 | $ 26,842 | |
| Information technology equipment | 13,933 | 12,991 | |
| Furniture and fixtures | 3,311 | 3,297 | |
| Land and auto | 14,096 | 16,152 | |
| Total | 58,500 | 59,282 | |
| Accumulated depreciation and amortization | (22,694) | (19,357) | |
| Net | 35,806 | 39,925 | |
| Depreciation expense | $ 4,758 | $ 4,426 | $ 4,036 |
REAL ESTATE OWNED (Details) |
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2024
USD ($)
|
Dec. 31, 2023
USD ($)
|
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| REAL ESTATE OWNED | ||
| Beginning Balance | $ 8,381,000 | $ 6,210,000 |
| Loans transferred to REO | 2,171,000 | |
| Dispositions of REO | (2,171,000) | |
| Ending Balance | $ 6,210,000 | $ 8,381,000 |
| Number of real estate properties sold | 1 | |
| Number of real estate properties | 1 | 2 |
| Gain on sale of REO | $ 679,000 | |
GOODWILL AND CORE DEPOSIT INTANGIBLES (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| CORE DEPOSIT INTANGIBLES | ||||
| Goodwill impairment | $ 215,252 | $ 215,252 | ||
| Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
| 2025 | $ 1,200 | |||
| 2026 | 960 | |||
| 2027 | 751 | |||
| 2028 | 331 | |||
| 2029 | 179 | |||
| Core Deposit | ||||
| CORE DEPOSIT INTANGIBLES | ||||
| Core deposit intangible assets | 3,600 | 4,900 | ||
| Core deposit intangible amortization expense | $ 1,400 | $ 1,600 | $ 1,900 | |
| Minimum | Core Deposit | ||||
| CORE DEPOSIT INTANGIBLES | ||||
| Estimated useful lives of other intangible assets | 7 years | |||
| Maximum | Core Deposit | ||||
| CORE DEPOSIT INTANGIBLES | ||||
| Estimated useful lives of other intangible assets | 10 years | |||
DERIVATIVE ASSETS (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
Jan. 29, 2025 |
Mar. 28, 2024 |
Feb. 01, 2024 |
Dec. 31, 2024 |
|
| Derivatives Fair Value [Line Items] | ||||
| Gain from derivative activity | $ (119,138) | |||
| Interest Rate Swaps | ||||
| Derivatives Fair Value [Line Items] | ||||
| Notional amount | $ 450,000 | |||
| Quarterly interest at a fixed rate | 3.583% | |||
| Term of the agreement | 5 years | |||
| Notional amount reduction | $ 100,000 | |||
| Gain from derivative activity | $ 1,700 | |||
| Cash flow hedge classified as derivative assets | $ 5,100 | |||
| Interest Rate Swaps | Subsequent Event | ||||
| Derivatives Fair Value [Line Items] | ||||
| Swap at close, value | $ 400,000 | |||
| Notional amount | $ 1,000,000 | |||
| Quarterly interest at a fixed rate | 4.03% | |||
| Term of the agreement | 4 years |
DEPOSITS - Summary of Outstanding Balance of Deposits and Average Rates (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| DEPOSITS | ||
| Demand deposits, Noninterest-bearing | $ 1,956,628 | $ 1,467,806 |
| Demand deposits, Interest-bearing | 1,995,397 | 2,881,786 |
| Money market and savings | 3,524,801 | 3,195,670 |
| Certificates of deposit | 2,393,453 | 3,143,670 |
| Total | $ 9,870,279 | $ 10,688,932 |
| Demand deposits, Interest-bearing, Weighted Average Rate | 3.29% | 2.94% |
| Money market and savings, Weighted Average Rate | 3.60% | 3.81% |
| Certificates of deposit, Weighted Average Rate | 4.72% | 4.87% |
| Total, Weighted Average Rate | 3.09% | 3.36% |
DEPOSITS - Remaining Maturities of Certificate of Deposit Accounts (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| DEPOSITS | ||
| 3 months or less | $ 76,691 | $ 343,078 |
| Over 3 months through 6 months | 44,619 | 24,126 |
| Over 6 months through 12 months | 92,960 | 56,415 |
| Over 12 months | 13,417 | 30,994 |
| Total | $ 227,687 | $ 454,613 |
DEPOSITS - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| DEPOSITS | ||
| Large depositor relationships, percentage of total deposits | 2.00% | 2.00% |
| Large depositor relationships, consisting of deposit relationships, total deposits | 19.70% | 12.50% |
| Accrued interest payable on deposits | $ 27.7 | $ 36.7 |
SUBORDINATED DEBT (Details) $ in Thousands |
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2024
USD ($)
item
|
Dec. 31, 2023
USD ($)
item
|
|
| Subordinated Debt | ||
| Number of subordinated notes | item | 2 | 2 |
| Current Principal Balance | $ 174,165 | |
| Carrying Value | $ 173,459 | $ 173,397 |
| Subordinated notes due 2032 | ||
| Subordinated Debt | ||
| Current Interest Rate | 3.50% | |
| Current Principal Balance | $ 150,000 | |
| Carrying Value | $ 148,298 | 148,058 |
| Subordinated notes due 2032 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||
| Subordinated Debt | ||
| Current Interest Rate | 2.04% | |
| Subordinated notes due 2030 | ||
| Subordinated Debt | ||
| Current Interest Rate | 6.00% | |
| Current Principal Balance | $ 24,165 | |
| Carrying Value | $ 25,161 | $ 25,339 |
| Subordinated notes due 2030 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||
| Subordinated Debt | ||
| Current Interest Rate | 5.90% | |
EARNINGS PER SHARE - Summary of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 |
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| EARNINGS PER SHARE | |||||||||||||||
| Net (loss) income, Basic | $ (92,407) | $ (199,064) | $ 110,512 | ||||||||||||
| Net (loss) income, Diluted | $ (92,407) | $ (199,064) | $ 110,512 | ||||||||||||
| Weighted average basic common shares outstanding | 65,598,430 | 56,426,093 | 56,422,450 | ||||||||||||
| Dilutive effect of options, restricted stock, warrants, and contingent shares issuable | 67,610 | ||||||||||||||
| Diluted common shares outstanding | 65,598,430 | 56,426,093 | 56,490,060 | ||||||||||||
| Net (loss) income per share, Basic | $ (0.17) | $ (1.23) | $ 0.05 | $ 0.01 | $ 0.05 | $ 0.04 | $ (3.76) | $ 0.15 | $ 0.31 | $ 0.51 | $ 0.59 | $ 0.55 | $ (1.41) | $ (3.53) | $ 1.96 |
| Net (loss) income per share, Diluted | $ (0.17) | $ (1.23) | $ 0.05 | $ 0.01 | $ 0.05 | $ 0.04 | $ (3.76) | $ 0.15 | $ 0.31 | $ 0.51 | $ 0.59 | $ 0.55 | $ (1.41) | $ (3.53) | $ 1.96 |
EARNINGS PER SHARE - Anti-dilutive (Details) - $ / shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| EARNINGS PER SHARE | ||
| Anti-dilutive securities excluded from computation of earnings per share | 0 | 22,550 |
| Average share price | $ 5.125 | |
STOCK BASED COMPENSATION - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Options Granted | |||
| Outstanding at beginning of period | 22,550 | 45,050 | 47,050 |
| Options exercised | (19,500) | (2,000) | |
| Options forfeited | (22,550) | (3,000) | |
| Outstanding at end of period | 22,550 | 45,050 | |
| Options exercisable | 22,550 | 45,050 | |
| Weighted Average Exercise Price | |||
| Outstanding at beginning of period | $ 9 | $ 8.67 | $ 8.68 |
| Options exercised | 8.08 | 9 | |
| Options forfeited | $ 9 | 10 | |
| Outstanding at end of period | 9 | 8.67 | |
| Options exercisable | $ 9 | $ 8.67 | |
| Weighted-Average Remaining Contractual Term | |||
| Outstanding at end of period | 2 months 12 days | 11 months 12 days | |
| Options exercisable | 2 months 12 days | 11 months 12 days | |
| Aggregate Intrinsic Value | |||
| Outstanding at end of period | $ 255 | $ 255 | |
| Options exercisable | $ 255 | $ 255 | |
401(k) PROFIT SHARING PLAN (Details) - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| 401(k) profit sharing plan | |||
| Duration to join 401k Plan | 3 months | ||
| Employee contribution on compensation, maximum | 100.00% | ||
| Percentage of employees' annual contribution, eligible for employers match | 100.00% | 100.00% | 100.00% |
| Additional percentage of employees' annual contribution, eligible for employers match | 50.00% | 50.00% | 50.00% |
| Percentage of employees' annual contribution matched | 3.00% | 3.00% | 3.00% |
| Additional percentage of employees' annual contribution matched | 2.00% | 2.00% | 2.00% |
| Employer contribution amount | $ 2,000,000 | $ 2,400,000 | $ 2,800,000 |
| Deferred Profit Sharing | |||
| 401(k) profit sharing plan | |||
| Employer contribution amount | $ 0 | $ 0 | $ 0 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 |
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| INCOME TAXES | |||||||||||||||
| Current Federal Tax Expense (Benefit) | $ 4,534 | $ 4,536 | $ 25,708 | ||||||||||||
| Current State and Local Tax Expense (Benefit) | 266 | (1,924) | 13,096 | ||||||||||||
| Deferred Federal Income Tax Expense (Benefit) | (39,052) | (3,170) | 803 | ||||||||||||
| Deferred State and Local Income Tax Expense (Benefit) | (10,721) | (442) | (316) | ||||||||||||
| Income tax (benefit) expense | $ (8,848) | $ (34,794) | $ (421) | $ (910) | $ (2,300) | $ (600) | $ (300) | $ 2,200 | $ 3,591 | $ 10,530 | $ 12,911 | $ 12,259 | $ (44,973) | $ (1,000) | $ 39,291 |
INCOME TAXES - Schedule of Reconciliation of Statutory Income Taxes and Effective Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 |
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||||||||||||||
| Federal statutory income tax rate | 21.00% | 21.00% | 21.00% | ||||||||||||
| State tax, net of Federal benefit, rate | 6.83% | 7.22% | 8.07% | ||||||||||||
| Windfall benefit - exercise of stock options, rate | (0.24%) | (0.15%) | (0.14%) | ||||||||||||
| Goodwill impairment, rate | (30.36%) | ||||||||||||||
| Low income housing, net benefit, rate | 2.98% | 0.51% | (0.67%) | ||||||||||||
| Tax exempt interest income, rate | 2.70% | 1.87% | (1.98%) | ||||||||||||
| Other items, net, rate | (0.53%) | 0.41% | (0.05%) | ||||||||||||
| Effective income tax rate | 32.74% | 0.50% | 26.23% | ||||||||||||
| (Loss) income before taxes | $ (22,959) | $ (116,968) | $ 2,664 | $ (117) | $ 248 | $ 1,580 | $ (212,588) | $ 10,696 | $ 20,945 | $ 39,536 | $ 46,227 | $ 43,095 | $ (137,380) | $ (200,064) | $ 149,803 |
| Federal statutory income tax, amount | (28,850) | (42,013) | 31,459 | ||||||||||||
| State tax, net of Federal benefit, amount | (9,382) | (14,435) | 12,085 | ||||||||||||
| Windfall benefit - exercise of stock options, amount | 333 | 299 | (205) | ||||||||||||
| Goodwill impairment, amount | 60,733 | ||||||||||||||
| Low income housing, net benefit, amount | (4,093) | (1,020) | (998) | ||||||||||||
| Tax exempt interest income, amount | (3,713) | (3,751) | (2,965) | ||||||||||||
| Other items, net, amount | 732 | (813) | (85) | ||||||||||||
| Total | $ (8,848) | $ (34,794) | $ (421) | $ (910) | $ (2,300) | $ (600) | $ (300) | $ 2,200 | $ 3,591 | $ 10,530 | $ 12,911 | $ 12,259 | $ (44,973) | $ (1,000) | $ 39,291 |
INCOME TAXES - Net Deferred Tax Assets Recognized (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Deferred tax assets (liabilities) | ||
| Allowance for credit losses | $ 11,788 | $ 11,167 |
| Net operating loss and tax credit carryforwards | 58,777 | 9,643 |
| State taxes | 27 | 18 |
| Stock-based compensation | 223 | 249 |
| Market valuation: merger | 2,704 | 2,784 |
| Capital activities - mark to market | 500 | 697 |
| Compensation related | 1,044 | 1,215 |
| Core deposit intangible | (990) | (1,396) |
| Prepaid expenses | (2,143) | (2,674) |
| Depreciation | (1,257) | (542) |
| Accumulated other comprehensive income | 3,599 | 5,863 |
| Other | 2,378 | 2,118 |
| Net deferred tax assets | $ 76,650 | $ 29,142 |
INCOME TAXES - Operating Loss Carryforwards (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2024 |
Dec. 31, 2024 |
|
| Operating loss carryforwards | ||
| Operating loss carryforwards from acquisitions | $ 5.2 | |
| Net operating loss carryforwards | 182.9 | |
| Loans from loans held for investment | $ 1,900.0 | |
| Tax Year 2012 | ||
| Operating loss carryforwards | ||
| Operating loss carryforwards | 13.4 | |
| Operating loss carryfowards, utilization amount | $ 7.6 | |
| Operating loss carryforwards, utilization period | 20 years | |
| Tax Year 2015 | ||
| Operating loss carryforwards | ||
| Operating loss carryforwards | $ 3.6 | |
| Tax Year 2017 | ||
| Operating loss carryforwards | ||
| Operating loss carryforwards | 0.7 | |
| Tax Year 2018 | ||
| Operating loss carryforwards | ||
| Operating loss carryforwards | $ 3.2 |
LEASES (Details) - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| LEASES | |||
| Operating lease, existence of options to renew | true | ||
| Lease expense | $ 6.6 | $ 6.9 | $ 7.7 |
LEASES - Schedule of Supplemental Lease Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Balance Sheet: | |||
| Operating lease asset classified as other assets | $ 22,313 | $ 26,455 | |
| Operating Lease Right of Use Asset Statement of Financial Position [Extensible List] | Other assets | Other assets | |
| Operating lease liability classified as other liabilities | $ 28,321 | $ 28,248 | |
| Operating Lease Liability Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilities | us-gaap:OtherLiabilities | |
| Statement of Operations: | |||
| Operating lease cost classified as occupancy and equipment expense | $ 6,661 | $ 7,446 | $ 7,638 |
| Weighted average lease term, in years | 5 years 3 months 3 days | 5 years 4 months 9 days | 5 years 11 months 1 day |
| Weighted average discount rate | 5.50% | 5.73% | 5.62% |
| Operating cash flows | $ 6,053 | $ 6,869 | $ 7,611 |
LEASES - Summary of Maturity of Remaining Lease Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| LEASES | ||
| 2025 | $ 6,823 | |
| 2026 | 6,397 | |
| 2027 | 5,241 | |
| 2028 | 5,183 | |
| 2029 | 4,071 | |
| 2030 and after | 3,113 | |
| Total future minimum lease payments | 30,828 | |
| Discount on cash flows | (2,507) | |
| Total lease liability | $ 28,321 | $ 28,248 |
COMMITMENTS AND CONTINGENCIES - Off Balance Sheet Arrangements of Bank (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| COMMITMENTS AND CONTINGENCIES. | ||
| Commitments to fund new loans | $ 4,900 | |
| Commitments to fund under existing loans, lines of credit | $ 1,032,887 | 1,143,175 |
| Commitments under standby letters of credit | $ 34,901 | $ 19,487 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 |
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
| Related Party Transactions | |||||||||||||||||
| Deposits | $ 9,870,279,000 | $ 10,688,932,000 | $ 9,870,279,000 | $ 10,688,932,000 | |||||||||||||
| Interest expense | 101,163,000 | $ 108,037,000 | $ 107,085,000 | $ 112,067,000 | 104,105,000 | $ 92,692,000 | $ 96,344,000 | $ 78,245,000 | $ 51,298,000 | $ 21,074,000 | $ 8,166,000 | $ 4,650,000 | 428,352,000 | 371,386,000 | $ 85,188,000 | ||
| Purchase of loans | 0 | ||||||||||||||||
| Loans serviced for other financial institution | 1,300,000,000 | 962,000,000 | 1,300,000,000 | 962,000,000 | |||||||||||||
| Directors, executive officers and affiliates | Related Party. | |||||||||||||||||
| Related Party Transactions | |||||||||||||||||
| Deposits | 2,400,000 | 3,200,000 | 2,400,000 | 3,200,000 | |||||||||||||
| Interest Expense | 17,000 | 180,000 | 8,000 | ||||||||||||||
| Assets under management | $ 4,800,000 | 4,800,000 | |||||||||||||||
| Fees amount received | $ 20,000 | 26,000 | $ 19,000 | ||||||||||||||
| Chief Executive Officer | Related Party. | |||||||||||||||||
| Related Party Transactions | |||||||||||||||||
| Deposits | 300,000,000 | 300,000,000 | |||||||||||||||
| Interest Expense | 156,000 | ||||||||||||||||
| Assets under management | $ 15,000,000 | ||||||||||||||||
| Fees amount received | 1,300,000 | ||||||||||||||||
| Purchase of loans | $ 52,100,000,000 | $ 121,900,000,000 | |||||||||||||||
| Loans serviced for other financial institution | $ 25,600,000 | $ 25,600,000 | |||||||||||||||
REGULATORY MATTERS - Additional Information (Details) - First Foundation Bank $ in Millions |
Dec. 31, 2024
USD ($)
|
|---|---|
| Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items] | |
| CET1 capital ratio, to be well-capitalized amount | $ 580 |
| Tier 1 leverage ratio, to be well-capitalized amount | 480 |
| Tier 1 risk-based capital ratio, to be well-capitalized amount | 451 |
| Excess total risk-based capital ratio, to be well-capitalized amount | $ 314 |
NONINTEREST INCOME (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Disaggregation Of Revenue [Line Items] | |||
| Asset management, consulting and other fees | $ 36,229 | $ 35,272 | $ 38,787 |
| Other income (loss) | 10,086 | 11,775 | 9,447 |
| Wealth management | |||
| Disaggregation Of Revenue [Line Items] | |||
| Asset management, consulting and other fees | 29,462 | 28,165 | 28,997 |
| Trust Fees | |||
| Disaggregation Of Revenue [Line Items] | |||
| Asset management, consulting and other fees | 6,458 | 6,753 | 9,394 |
| Consulting Fees | |||
| Disaggregation Of Revenue [Line Items] | |||
| Asset management, consulting and other fees | 309 | 354 | 396 |
| Deposit Fees | |||
| Disaggregation Of Revenue [Line Items] | |||
| Other income (loss) | 1,843 | 2,019 | 2,507 |
| Loan Related Fees | |||
| Disaggregation Of Revenue [Line Items] | |||
| Other income (loss) | 5,608 | 7,213 | 9,228 |
| Valuation gain (loss) on equity investment | |||
| Disaggregation Of Revenue [Line Items] | |||
| Other income (loss) | 204 | 1 | (6,258) |
| Other | |||
| Disaggregation Of Revenue [Line Items] | |||
| Other income (loss) | $ 2,431 | $ 2,542 | $ 3,970 |
OTHER EXPENSES (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| OTHER EXPENSES | |||
| Regulatory assessments | $ 20,454 | $ 14,729 | $ 6,089 |
| Directors' compensation expenses | $ 1,073 | $ 1,009 | $ 1,020 |
SEGMENT REPORTING (Details) - segment |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| SEGMENT REPORTING | |||
| Reportable business segments | 2 | 2 | 2 |
SEGMENT REPORTING - Summary of Key Operating Results of Business Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 |
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Segment Reporting Information | |||||||||||||||
| Interest income | $ 152,473 | $ 157,156 | $ 150,914 | $ 150,453 | $ 146,598 | $ 144,765 | $ 145,328 | $ 137,000 | $ 126,017 | $ 108,746 | $ 89,971 | $ 79,144 | $ 610,996 | $ 573,691 | $ 403,878 |
| Interest expense | 101,163 | 108,037 | 107,085 | 112,067 | 104,105 | 92,692 | 96,344 | 78,245 | 51,298 | 21,074 | 8,166 | 4,650 | 428,352 | 371,386 | 85,188 |
| Net interest income | 51,310 | 49,119 | 43,829 | 38,386 | 42,493 | 52,073 | 48,984 | 58,755 | 74,719 | 87,672 | 81,805 | 74,494 | 182,644 | 202,305 | 318,690 |
| Provision (reversal) for credit losses | 20,647 | 282 | (806) | 577 | 229 | (2,015) | 887 | 417 | 1,173 | (22) | 173 | (792) | 20,700 | (482) | 532 |
| Noninterest income | 13,367 | 11,937 | 13,658 | 12,683 | 51,645 | ||||||||||
| Noninterest income | 13,876 | 11,698 | 12,079 | 11,698 | 7,223 | 12,184 | 13,400 | 15,427 | (65,872) | 49,351 | 48,234 | ||||
| LHFS LOCOM adjustment | (117,517) | (117,517) | |||||||||||||
| Goodwill impairment | 215,252 | 215,252 | |||||||||||||
| Compensation and benefits | 83,917 | 84,297 | 110,222 | ||||||||||||
| Customer service costs | 63,586 | 76,806 | 38,178 | ||||||||||||
| Professional services and marketing costs | 17,997 | 15,184 | 13,660 | ||||||||||||
| Other | 67,952 | 60,663 | 54,529 | ||||||||||||
| (Loss) income before income taxes | (22,959) | (116,968) | 2,664 | (117) | 248 | 1,580 | (212,588) | 10,696 | 20,945 | 39,536 | 46,227 | 43,095 | (137,380) | (200,064) | 149,803 |
| Income tax expense (benefit) | (8,848) | (34,794) | (421) | (910) | (2,300) | (600) | (300) | 2,200 | 3,591 | 10,530 | 12,911 | 12,259 | (44,973) | (1,000) | 39,291 |
| Net (loss) income | $ (14,111) | $ (82,174) | $ 3,085 | $ 793 | $ 2,548 | $ 2,180 | $ (212,288) | $ 8,496 | $ 17,354 | $ 29,006 | $ 33,316 | $ 30,836 | (92,407) | (199,064) | 110,512 |
| Operating Segments | Banking | |||||||||||||||
| Segment Reporting Information | |||||||||||||||
| Interest income | 610,996 | 573,691 | 403,878 | ||||||||||||
| Interest expense | 421,503 | 364,310 | 78,766 | ||||||||||||
| Net interest income | 189,493 | 209,381 | 325,112 | ||||||||||||
| Provision (reversal) for credit losses | 20,700 | (482) | 532 | ||||||||||||
| Noninterest income | 22,518 | ||||||||||||||
| Noninterest income | 21,540 | 26,148 | |||||||||||||
| LHFS LOCOM adjustment | (117,517) | ||||||||||||||
| Goodwill impairment | 215,252 | ||||||||||||||
| Compensation and benefits | 64,954 | 67,114 | 90,186 | ||||||||||||
| Customer service costs | 63,586 | 76,806 | 38,178 | ||||||||||||
| Professional services and marketing costs | 12,574 | 9,626 | 9,193 | ||||||||||||
| Other | 63,903 | 56,968 | 51,062 | ||||||||||||
| (Loss) income before income taxes | (131,223) | (194,363) | 162,109 | ||||||||||||
| Income tax expense (benefit) | (43,790) | 560 | 42,698 | ||||||||||||
| Net (loss) income | (87,433) | (194,923) | 119,411 | ||||||||||||
| Operating Segments | Wealth Management | |||||||||||||||
| Segment Reporting Information | |||||||||||||||
| Noninterest income | 30,583 | ||||||||||||||
| Noninterest income | 29,358 | 30,027 | |||||||||||||
| Compensation and benefits | 16,602 | 16,049 | 18,705 | ||||||||||||
| Professional services and marketing costs | 3,825 | 3,487 | 3,211 | ||||||||||||
| Other | 2,606 | 2,564 | 2,455 | ||||||||||||
| (Loss) income before income taxes | 7,550 | 7,258 | 5,656 | ||||||||||||
| Income tax expense (benefit) | 2,129 | 2,072 | 1,660 | ||||||||||||
| Net (loss) income | 5,421 | 5,186 | 3,996 | ||||||||||||
| Other | |||||||||||||||
| Segment Reporting Information | |||||||||||||||
| Interest expense | 6,849 | 7,076 | 6,422 | ||||||||||||
| Net interest income | (6,849) | (7,076) | (6,422) | ||||||||||||
| Noninterest income | (1,456) | ||||||||||||||
| Noninterest income | (1,547) | (7,941) | |||||||||||||
| Compensation and benefits | 2,361 | 1,134 | 1,331 | ||||||||||||
| Professional services and marketing costs | 1,598 | 2,071 | 1,256 | ||||||||||||
| Other | 1,443 | 1,131 | 1,012 | ||||||||||||
| (Loss) income before income taxes | (13,707) | (12,959) | (17,962) | ||||||||||||
| Income tax expense (benefit) | (3,312) | (3,632) | (5,067) | ||||||||||||
| Net (loss) income | $ (10,395) | $ (9,327) | $ (12,895) | ||||||||||||
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 |
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Effect of Fourth Quarter Events [Line Items] | |||||||||||||||
| Interest income | $ 152,473 | $ 157,156 | $ 150,914 | $ 150,453 | $ 146,598 | $ 144,765 | $ 145,328 | $ 137,000 | $ 126,017 | $ 108,746 | $ 89,971 | $ 79,144 | $ 610,996 | $ 573,691 | $ 403,878 |
| Interest expense | 101,163 | 108,037 | 107,085 | 112,067 | 104,105 | 92,692 | 96,344 | 78,245 | 51,298 | 21,074 | 8,166 | 4,650 | 428,352 | 371,386 | 85,188 |
| Net interest income | 51,310 | 49,119 | 43,829 | 38,386 | 42,493 | 52,073 | 48,984 | 58,755 | 74,719 | 87,672 | 81,805 | 74,494 | 182,644 | 202,305 | 318,690 |
| Provision (reversal) for credit losses | 20,647 | 282 | (806) | 577 | 229 | (2,015) | 887 | 417 | 1,173 | (22) | 173 | (792) | 20,700 | (482) | 532 |
| Noninterest income | 13,367 | 11,937 | 13,658 | 12,683 | 51,645 | ||||||||||
| Noninterest income | 13,876 | 11,698 | 12,079 | 11,698 | 7,223 | 12,184 | 13,400 | 15,427 | (65,872) | 49,351 | 48,234 | ||||
| LHFS LOCOM adjustment | (117,517) | (117,517) | |||||||||||||
| Noninterest expense | 66,989 | 60,225 | 55,629 | 50,609 | 59,824 | 60,342 | 48,805 | 47,618 | 233,452 | 452,202 | 216,589 | ||||
| Goodwill impairment | 215,252 | 215,252 | |||||||||||||
| Operating | 55,892 | 64,206 | 57,512 | 59,340 | 236,950 | ||||||||||
| (Loss) income before income taxes | (22,959) | (116,968) | 2,664 | (117) | 248 | 1,580 | (212,588) | 10,696 | 20,945 | 39,536 | 46,227 | 43,095 | (137,380) | (200,064) | 149,803 |
| Income tax expense (benefit) | (8,848) | (34,794) | (421) | (910) | (2,300) | (600) | (300) | 2,200 | 3,591 | 10,530 | 12,911 | 12,259 | (44,973) | (1,000) | 39,291 |
| Net (loss) income | $ (14,111) | $ (82,174) | $ 3,085 | $ 793 | $ 2,548 | $ 2,180 | $ (212,288) | $ 8,496 | $ 17,354 | $ 29,006 | $ 33,316 | $ 30,836 | $ (92,407) | $ (199,064) | $ 110,512 |
| Net (loss) income per share: | |||||||||||||||
| Basic (in dollars per share) | $ (0.17) | $ (1.23) | $ 0.05 | $ 0.01 | $ 0.05 | $ 0.04 | $ (3.76) | $ 0.15 | $ 0.31 | $ 0.51 | $ 0.59 | $ 0.55 | $ (1.41) | $ (3.53) | $ 1.96 |
| Diluted (in dollars per share) | $ (0.17) | $ (1.23) | $ 0.05 | $ 0.01 | $ 0.05 | $ 0.04 | $ (3.76) | $ 0.15 | $ 0.31 | $ 0.51 | $ 0.59 | $ 0.55 | $ (1.41) | $ (3.53) | $ 1.96 |
PARENT ONLY FINANCIAL STATEMENTS - Statement of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2024 |
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Noninterest income: | |||||||||||||||
| Other income (loss) | $ 10,086 | $ 11,775 | $ 9,447 | ||||||||||||
| Noninterest income | $ 13,367 | $ 11,937 | $ 13,658 | $ 12,683 | 51,645 | ||||||||||
| Total noninterest (loss) income | $ 13,876 | $ 11,698 | $ 12,079 | $ 11,698 | $ 7,223 | $ 12,184 | $ 13,400 | $ 15,427 | (65,872) | 49,351 | 48,234 | ||||
| Noninterest expense: | |||||||||||||||
| Compensation and benefits | 83,917 | 84,297 | 110,222 | ||||||||||||
| Occupancy and depreciation | 37,502 | 36,809 | 36,236 | ||||||||||||
| Professional services and marketing costs | 17,997 | 15,184 | 13,660 | ||||||||||||
| Other expenses | 30,450 | 23,854 | 18,293 | ||||||||||||
| Total noninterest expense | 66,989 | 60,225 | 55,629 | 50,609 | 59,824 | 60,342 | 48,805 | 47,618 | 233,452 | 452,202 | 216,589 | ||||
| (Loss) income before income taxes | (22,959) | (116,968) | 2,664 | (117) | 248 | 1,580 | (212,588) | 10,696 | 20,945 | 39,536 | 46,227 | 43,095 | (137,380) | (200,064) | 149,803 |
| Income tax (benefit) expense | (8,848) | (34,794) | (421) | (910) | (2,300) | (600) | (300) | 2,200 | 3,591 | 10,530 | 12,911 | 12,259 | (44,973) | (1,000) | 39,291 |
| Net (loss) income | $ (14,111) | $ (82,174) | $ 3,085 | $ 793 | $ 2,548 | $ 2,180 | $ (212,288) | $ 8,496 | $ 17,354 | $ 29,006 | $ 33,316 | $ 30,836 | (92,407) | (199,064) | 110,512 |
| FFI | |||||||||||||||
| Interest expense-borrowings and subordinated debt | 6,849 | 7,076 | 6,422 | ||||||||||||
| Noninterest income: | |||||||||||||||
| (Loss) earnings from investment in subsidiaries | (82,012) | (189,737) | 123,407 | ||||||||||||
| Other income (loss) | (1) | (6,251) | |||||||||||||
| Total noninterest (loss) income | (82,012) | (189,738) | 117,156 | ||||||||||||
| Noninterest expense: | |||||||||||||||
| Compensation and benefits | 2,361 | 1,135 | 1,331 | ||||||||||||
| Occupancy and depreciation | 25 | 9 | 12 | ||||||||||||
| Professional services and marketing costs | 3,054 | 3,617 | 2,946 | ||||||||||||
| Other expenses | 1,418 | 1,120 | 1,000 | ||||||||||||
| Total noninterest expense | 6,858 | 5,881 | 5,289 | ||||||||||||
| (Loss) income before income taxes | (95,719) | (202,695) | 105,445 | ||||||||||||
| Income tax (benefit) expense | (3,312) | (3,631) | (5,067) | ||||||||||||
| Net (loss) income | $ (92,407) | $ (199,064) | $ 110,512 | ||||||||||||