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RESTATEMENT OF THE CONSOLIDATED FINANCIAL STATEMENTS | 9 Months Ended
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Sep. 30, 2022
Prior Period Adjustment [Abstract] |
RESTATEMENT OF THE CONSOLIDATED FINANCIAL STATEMENTS | NOTE 3 – RESTATEMENT OF THE CONSOLIDATED FINANCIAL STATEMENTS ​ On July 18, 2023, the audit committee of the Company’s board of directors concluded that the Company’s previously issued unaudited interim consolidated financial statements for period ended March 31, 2023 and the consolidated financial statements for the year ended December 31, 2022, as well as for the unaudited interim periods included in that fiscal year, should no longer be relied upon because of errors related to the accounting for unrealized losses on preferred equity securities that resulted in material misstatements of noninterest income and accumulated other comprehensive income. ​ At the time of its purchase of the preferred equity securities for investment purposes, the Company inappropriately accounted for them as available for sale debt securities under Accounting Standards Codification (“ASC”) Topic 320 – Investments-Debt Securities. As such, the changes in the fair value of these securities were not recorded as part of net income but rather as a component of shareholders’ equity (in accumulated other comprehensive income, net of tax). However, as a result of subsequent research and third-party consultation, the Company determined that the securities should instead have been accounted for under ASC Topic 321 – Investments-Equity Securities. The result of this change in classification of the preferred equity securities is that the change in the fair value of the securities each quarter should have been recorded in noninterest income on the consolidated statements of income. ​ As disclosed in the Original Report, the Company recorded the change, net of taxes, in the fair value of preferred equity securities totaling $259,000 and $2.9 million for the three and nine months ended September 30, 2022, respectively as part of Other Comprehensive loss, net of taxes, under ASC Topic 320 – Investments-Debt Securities rather than as part of noninterest income under ASC Topic 321 – Investments-Equity Securities. ​ In addition to the below, various footnotes reflect the effects of these restatements including, but not limited to, Note 4, Acquisitions and Note 5, Investment Securities. ​ The tables below show the effects of the restatement on the Company’s condensed consolidated balance sheets, condensed consolidated statements of income, condensed consolidated statements of comprehensive income, condensed consolidated statements of changes in shareholders’ equity, and condensed consolidated statement of cash flows as of and for the quarter ended September 30, 2022 (in thousands, except for per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2022
Consolidated Balance Sheet | ​ | (As Previously Reported) | Adjustments | (As Restated)
ASSETS |  | ​ |  | ​ |  | ​ |
Cash and due from banks | ​ | $ | 32,206 | $ | — | $ | 32,206
Federal funds sold | ​ |  | 192,475 |  | — |  | 192,475
Cash and cash equivalents | ​ | ​ | 224,681 | ​ | — | ​ | 224,681
Interest bearing deposits in banks | ​ | ​ | 2,490 | ​ | — | ​ | 2,490
Investment securities available-for-sale | ​ | ​ | 167,213 | ​ | (14,403) | ​ | 152,810
Equity securities | ​ | ​ | — | ​ | 14,403 | ​ | 14,403
Federal Home Loan Bank ("FHLB") stock, at par | ​ | ​ | 10,679 | ​ | — | ​ | 10,679
Federal Reserve Bank ("FRB") stock, at par | ​ | ​ | 9,595 | ​ | — | ​ | 9,595
Loans held for sale | ​ | ​ | 3,491 | ​ | — | ​ | 3,491
Loans, net of allowance for loan losses of $18,050 at September 30, 2022 and $17,700 December 31, 2021 | ​ | ​ | 1,976,916 | ​ | — | ​ | 1,976,916
Premises and equipment, net | ​ | ​ | 13,697 | ​ | — | ​ | 13,697
Other real estate owned ("OREO") | ​ | ​ | 21 | ​ | — | ​ | 21
Core deposit intangible, net | ​ | ​ | 5,718 | ​ | — | ​ | 5,718
Cash surrender value of bank owned life insurance ("BOLI") policies, net | ​ | ​ | 22,043 | ​ | — | ​ | 22,043
Right-of-use assets ("ROU"), net | ​ | ​ | 15,875 | ​ | — | ​ | 15,875
Goodwill | ​ | ​ | 38,838 | ​ | — | ​ | 38,838
Interest receivable and other assets | ​ | ​ | 43,241 | ​ | — | ​ | 43,241
Total assets | ​ | $ | 2,534,498 | $ | — | $ | 2,534,498
LIABILITIES AND SHAREHOLDERS’ EQUITY | ​ |  | ​ |  | ​ |  | ​
Noninterest and interest bearing deposits | ​ | $ | 2,115,451 | $ | — | $ | 2,115,451
Junior subordinated deferrable interest debentures, net | ​ |  | 8,464 |  | — |  | 8,464
Subordinated debt, net | ​ | ​ | 63,669 | ​ | — | ​ | 63,669
Salary continuation plan | ​ |  | 4,724 |  | — |  | 4,724
Lease liabilities | ​ |  | 16,411 |  | — |  | 16,411
Interest payable and other liabilities | ​ |  | 11,376 |  | — |  | 11,376
Total liabilities | ​ |  | 2,220,095 |  | — |  | 2,220,095
Commitments and contingencies (Note 19) | ​ |  |  |  |  |  |
Shareholders' equity | ​ |  |  |  |  |  |
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding at both September 30, 2022 and December 31, 2021 | ​ |  | — |  | — |  | —
Common stock, no par value; 100,000,000 shares authorized; 13,075,447 and 10,680,386 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | ​ |  | 208,483 |  | — |  | 208,483
Additional paid in capital | ​ |  | 287 |  | — |  | 287
Accumulated other comprehensive loss, net of tax | ​ |  | (14,338) |  | 2,829 |  | (11,509)
Retained earnings | ​ |  | 119,971 |  | (2,829) |  | 117,142
Total shareholders’ equity | ​ |  | 314,403 |  | — |  | 314,403
Total liabilities and shareholders’ equity | ​ | $ | 2,534,498 | $ | — | $ | 2,534,498
​ ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended September 30, 2022
Consolidated Statement of Income |  | (As Previously Reported) | ​ | Adjustments | ​ | (As Restated)
Interest income: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans, including fees | ​ | $ | 24,010 | ​ | $ | — | ​ | $ | 24,010
Investment securities | ​ |  | 1,555 | ​ |  | — | ​ |  | 1,555
Fed funds sold and interest bearing balances in banks | ​ | ​ | 1,286 | ​ | ​ | ​ | ​ | ​ | 1,286
FHLB dividends | ​ |  | 160 | ​ |  | — | ​ |  | 160
FRB dividends | ​ |  | 126 | ​ |  | — | ​ |  | 126
Total interest and dividend income | ​ |  | 27,137 | ​ |  | — | ​ |  | 27,137
Interest expense: | ​ |  |  | ​ |  |  | ​ |  |
Deposits | ​ |  | 1,387 | ​ |  | — | ​ |  | 1,387
Subordinated debt | ​ | ​ | 896 | ​ | ​ | — | ​ | ​ | 896
Other borrowings | ​ |  | 129 | ​ |  | — | ​ |  | 129
Total interest expense | ​ |  | 2,412 | ​ |  | — | ​ |  | 2,412
Net interest income | ​ |  | 24,725 | ​ |  | — | ​ |  | 24,725
Provision for loan losses | ​ |  | 1,194 | ​ |  | — | ​ |  | 1,194
Net interest income after provision for loan losses | ​ |  | 23,531 | ​ |  | — | ​ |  | 23,531
Noninterest income: | ​ |  |  | ​ |  |  | ​ |  |
Gain on sale of loans | ​ |  | 1,278 | ​ |  | — | ​ |  | 1,278
Loss on equity securities | ​ | ​ | — | ​ | ​ | (362) | ​ | ​ | (362)
Service charges and other fees | ​ |  | 817 | ​ |  | — | ​ |  | 817
Loan servicing and other loan fees | ​ |  | 488 | ​ |  | — | ​ |  | 488
Income on investment in Small Business Investment Company (“SBIC”) fund | ​ |  | (63) | ​ |  | — | ​ |  | (63)
Bargain purchase gain | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Other income and fees | ​ |  | 224 | ​ |  | — | ​ |  | 224
Total noninterest income | ​ |  | 2,744 | ​ |  | (362) | ​ |  | 2,382
Noninterest expense: | ​ |  |  | ​ |  |  | ​ |  |
Salaries and employee benefits | ​ |  | 10,164 | ​ |  | — | ​ |  | 10,164
Occupancy and equipment | ​ |  | 2,043 | ​ |  | — | ​ |  | 2,043
Data processing | ​ |  | 1,562 | ​ |  | — | ​ |  | 1,562
Other expense | ​ |  | 2,327 | ​ |  | — | ​ |  | 2,327
Total noninterest expense | ​ |  | 16,096 | ​ |  | — | ​ |  | 16,096
Income before provision for income taxes | ​ |  | 10,179 | ​ |  | (362) | ​ |  | 9,817
Provision for income taxes | ​ |  | 2,950 | ​ |  | (103) | ​ |  | 2,847
Net income | ​ | $ | 7,229 | ​ | $ | (259) | ​ | $ | 6,970
Earnings per common share: | ​ |  | ​ | ​ |  |  | ​ |  | ​
Basic earnings per common share | ​ | $ | 0.54 | ​ | $ | (0.02) | ​ | $ | 0.52
Weighted average shares outstanding | ​ |  | 13,307,555 | ​ |  | 13,307,555 | ​ |  | 13,307,555
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Diluted earnings per common share | ​ | $ | 0.54 | ​ | $ | (0.02) | ​ | $ | 0.52
Weighted average shares outstanding | ​ |  | 13,307,555 | ​ |  | 13,307,555 | ​ |  | 13,307,555
​ ​ ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine months ended September 30, 2022
Consolidated Statement of Income |  | (As Previously Reported) | ​ | Adjustments | ​ | (As Restated)
Interest income: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans, including fees | ​ | $ | 69,921 | ​ | $ | — | ​ | $ | 69,921
Investment securities and interest bearing deposits in banks | ​ |  | 4,483 | ​ |  | — | ​ |  | 4,483
Fed funds sold and interest bearing balances in banks | ​ | ​ | 2,303 | ​ | ​ | ​ | ​ | ​ | 2,303
FHLB dividends | ​ |  | 467 | ​ |  | — | ​ |  | 467
FRB dividends | ​ |  | 387 | ​ |  | — | ​ |  | 387
Total interest and dividend income | ​ |  | 77,561 | ​ |  | — | ​ |  | 77,561
Interest expense: | ​ |  |  | ​ |  |  | ​ |  |
Deposits | ​ |  | 4,310 | ​ |  | — | ​ |  | 4,310
Subordinated debt | ​ | ​ | 2,687 | ​ | ​ | — | ​ | ​ | 2,687
Other borrowings | ​ |  | 319 | ​ |  | — | ​ |  | 319
Total interest expense | ​ |  | 7,316 | ​ |  | — | ​ |  | 7,316
Net interest income | ​ |  | 70,245 | ​ |  | — | ​ |  | 70,245
Provision for loan losses | ​ |  | 3,824 | ​ |  | — | ​ |  | 3,824
Net interest income after provision for loan losses | ​ |  | 66,421 | ​ |  | — | ​ |  | 66,421
Noninterest income: | ​ |  |  | ​ |  |  | ​ |  |
Gain on sale of loans | ​ |  | 2,714 | ​ |  | — | ​ |  | 2,714
Loss on equity securities | ​ | ​ | — | ​ | ​ | (3,971) | ​ | ​ | (3,971)
Service charges and other fees | ​ |  | 2,165 | ​ |  | — | ​ |  | 2,165
Loan servicing and other loan fees | ​ |  | 1,670 | ​ |  | — | ​ |  | 1,670
Income on investment in Small Business Investment Company (“SBIC”) fund | ​ |  | 155 | ​ |  | — | ​ |  | 155
Bargain purchase gain | ​ | ​ | 1,665 | ​ | ​ | — | ​ | ​ | 1,665
Other income and fees | ​ |  | 796 | ​ |  | — | ​ |  | 796
Total noninterest income | ​ |  | 9,165 | ​ |  | (3,971) | ​ |  | 5,194
Noninterest expense: | ​ |  |  | ​ |  |  | ​ |  |
Salaries and employee benefits | ​ |  | 29,751 | ​ |  | — | ​ |  | 29,751
Occupancy and equipment | ​ |  | 6,388 | ​ |  | — | ​ |  | 6,388
Data processing | ​ |  | 5,502 | ​ |  | — | ​ |  | 5,502
Other expense | ​ |  | 7,986 | ​ |  | — | ​ |  | 7,986
Total noninterest expense | ​ |  | 49,627 | ​ |  | — | ​ |  | 49,627
Income before provision for income taxes | ​ |  | 25,959 | ​ |  | (3,971) | ​ |  | 21,988
Provision for income taxes | ​ |  | 7,024 | ​ |  | (1,142) | ​ |  | 5,882
Net income | ​ | $ | 18,935 | ​ | $ | (2,829) | ​ | $ | 16,106
Earnings per common share: | ​ |  |  | ​ |  |  | ​ |  |
Basic earnings per common share | ​ | $ | 1.44 | ​ | $ | (0.22) | ​ | $ | 1.22
Weighted average shares outstanding | ​ |  | 13,179,263 | ​ |  | 13,179,263 | ​ |  | 13,179,263
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Diluted earnings per common share | ​ | $ | 1.44 | ​ | $ | (0.22) | ​ | $ | 1.22
Weighted average shares outstanding | ​ |  | 13,179,263 | ​ |  | 13,179,263 | ​ |  | 13,179,263
​ ​ ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended September 30, 2022
Consolidated Statement of Comprehensive Income | ​ | (As Previously Reported) | ​ | Adjustments | ​ | (As Restated)
Net income | ​ | $ | 7,229 | ​ | $ | (259) | ​ | $ | 6,970
Other comprehensive loss: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Change in unrealized loss on available-for-sale securities | ​ |  | (7,198) | ​ |  | 363 | ​ |  | (6,835)
Deferred tax benefit | ​ |  | 2,071 | ​ |  | (104) | ​ |  | 1,967
Other comprehensive loss, net of tax | ​ |  | (5,127) | ​ |  | 259 | ​ |  | (4,868)
Total comprehensive income | ​ | $ | 2,102 | ​ | $ | — | ​ | $ | 2,102
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine months ended September 30, 2022
Consolidated Statement of Comprehensive Income | ​ | (As Previously Reported) | ​ | Adjustments | ​ | (As Restated)
Net income | ​ | $ | 18,935 | ​ | $ | (2,829) | ​ | $ | 16,106
Other comprehensive loss: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Change in unrealized loss on available-for-sale securities | ​ |  | (23,172) | ​ |  | 3,971 | ​ |  | (19,201)
Deferred tax benefit | ​ |  | 6,668 | ​ |  | (1,142) | ​ |  | 5,526
Other comprehensive loss, net of tax | ​ |  | (16,504) | ​ |  | 2,829 | ​ |  | (13,675)
Total comprehensive income | ​ | $ | 2,431 | ​ | $ | — | ​ | $ | 2,431
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine months ended September 30, 2022
Consolidated Statement of Cash Flow Changes |  | (As Previously Reported) | ​ | Adjustments | ​ | (As Restated)
Cash flows from operating activities: |  | ​ |  | ​ | ​ | ​ | ​ | ​ | ​
Net income | ​ | $ | 18,935 | ​ | ​ | (2,829) | ​ | ​ | 16,106
Adjustments to reconcile net income to net cash provided by operating activities: | ​ |  |  | ​ | ​ |  | ​ | ​ |
Decrease in deferred tax assets | ​ |  | (7) | ​ | ​ | (1,142) | ​ | ​ | (1,149)
Loss on equity securities | ​ | ​ | — | ​ | ​ | 3,971 | ​ | ​ | 3,971
Net cash provided by operating activities | ​ |  | 23,756 | ​ | ​ | — | ​ | ​ | 23,756
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-cash investing and financing activities: | ​ |  |  | ​ |  |  | ​ |  |
Change in unrealized loss on available-for-sale securities, net of tax | ​ | $ | (16,504) | ​ | $ | 2,829 | ​ | $ | (13,675)
​

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