0001104659-23-089160 | 10-Q | XBRL Viewer

Mortgage Servicing Rights, net (Tables)

6 Months Ended

Jun. 30, 2023

Schedule of principal balance of mortgage loans serviced for others


	June 30,		December 31,
	2023		2022
Residential real estate mortgage loan portfolios serviced for:
FNMA	$	109,527	$	113,704
FHLB		32,206		34,282
Private investors		37,391		43,274
Total	$	179,124	$	191,260

Schedule of activity for mortgage servicing rights and related valuation allowance


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Mortgage servicing rights:
Beginning of period	$	1,766	$	3,088	$	1,840	$	3,332
Additions		—		2		—		11
Disposals		—		(376)		—		(376)
Amortization		(65)		(172)		(139)		(425)
End of period		1,701		2,542		1,701		2,542

Valuation allowance:
Beginning of period		63		200		46		610
Additions (recoveries)		(20)		(111)		(3)		(521)
End of period		43		89		43		89
Mortgage servicing rights, net	$	1,658	$	2,453	$	1,658	$	2,453

Mortgage Servicing Rights, net

6 Months Ended

Jun. 30, 2023

Mortgage Servicing Rights, net

Mortgage Servicing Rights, net

Note 6—Mortgage Servicing Rights, net

The Company records servicing assets from the sale of residential real estate mortgage loans to the secondary market for which servicing has been retained. Residential real estate mortgage loans serviced for others are not included in the condensed consolidated balance sheets. The principal balance of these loans at June 30, 2023 and December 31, 2022 are as follows:


	June 30,		December 31,
	2023		2022
Residential real estate mortgage loan portfolios serviced for:
FNMA	$	109,527	$	113,704
FHLB		32,206		34,282
Private investors		37,391		43,274
Total	$	179,124	$	191,260

Custodial escrow balances maintained with these serviced loans were $540 and $380 at June 30, 2023 and December 31, 2022, respectively. These balances are included in noninterest-bearing deposits in the condensed consolidated balance sheets.

Activity for mortgage servicing rights and the related valuation allowance are as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Mortgage servicing rights:
Beginning of period	$	1,766	$	3,088	$	1,840	$	3,332
Additions		—		2		—		11
Disposals		—		(376)		—		(376)
Amortization		(65)		(172)		(139)		(425)
End of period		1,701		2,542		1,701		2,542

Valuation allowance:
Beginning of period		63		200		46		610
Additions (recoveries)		(20)		(111)		(3)		(521)
End of period		43		89		43		89
Mortgage servicing rights, net	$	1,658	$	2,453	$	1,658	$	2,453

Servicing income (loss), net of amortization of servicing rights and changes in the valuation allowance, was $102 and $(177) for the three months ended June 30, 2023 and 2022, respectively, and $161 and $266 for the six months ended June 30, 2023 and 2022, respectively.

The fair value of mortgage servicing rights was $2,002 and $2,154 at June 30, 2023 and December 31, 2022, respectively. The fair value of mortgage servicing rights is highly sensitive to changes in underlying assumptions. Changes in prepayment speed assumptions have the most significant impact on the estimate of the fair value of mortgage servicing rights. The fair value at June 30, 2023 was determined using discount rates ranging from 10.0% to 12.5%, prepayment speeds with a weighted average of 9.9% (depending on the stratification of the specific right), a weighted average life of the mortgage servicing right of 77 months and a weighted average default rate of 0.2%. The fair value at December 31, 2022 was determined using discount rates ranging from 10.0% to 12.5%, prepayment speeds with a weighted average of 10.2% (depending on the stratification of the specific right), a weighted average life of the mortgage servicing right of 77 months and a weighted average default rate of 0.2%.

Impairment is determined by stratifying the mortgage servicing rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. At June 30, 2023 and December 31, 2022, the carrying amount of certain individual groupings exceeded their fair value, resulting in write-downs to fair value. Refer to Note 15—Fair Values of Financial Instruments.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

+ References

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+ Details

Commitments and Contingencies - Rollforwrad of the activity in the liability for unfunded commitments (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	$ (198)
Liability for unfunded commitment, end of period	381
ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	579
Residential real estate
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	(44)
Liability for unfunded commitment, end of period	9
Residential real estate \| ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	53
Commercial real estate
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	38
Liability for unfunded commitment, end of period	163
Commercial real estate \| ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	125
Construction
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	(191)
Liability for unfunded commitment, end of period	207
Construction \| ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	398
Commercial and industrial
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	(1)
Liability for unfunded commitment, end of period	2
Commercial and industrial \| ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Increase (decrease) in provision for (recovery of) credit losses	$ 3

Fair Values of Financial Instruments - Assets measured at fair value on a recurring basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	$ 334,508	$ 343,558
Equity securities
Equity securities	4,640	4,642
U.S. Treasury and Agency securities
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	170,072	168,437
U.S. Treasury and Agency securities \| Recurring
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	170,072	168,437
U.S. Treasury and Agency securities \| Level 1 \| Recurring
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	118,086	116,355
U.S. Treasury and Agency securities \| Level 2 \| Recurring
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	51,986	52,082
Mortgage-backed securities
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	34,510	36,733
Mortgage-backed securities \| Recurring
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	34,510	36,733
Mortgage-backed securities \| Level 2 \| Recurring
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	34,510	36,733
Collateralized mortgage obligations
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	129,782	138,241
Collateralized mortgage obligations \| Recurring
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	129,782	138,241
Collateralized mortgage obligations \| Level 2 \| Recurring
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	129,782	138,241
Collateralized debt obligations
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	144	147
Collateralized debt obligations \| Recurring
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	144	147
Collateralized debt obligations \| Level 3 \| Recurring
Available for sale debt securities:
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	144	147
Equity securities \| Recurring
Equity securities
Equity securities	4,394	4,396
Equity securities \| Level 1 \| Recurring
Equity securities
Equity securities	$ 4,394	$ 4,396

Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($)	Common Stock	Additional Paid-in Capital	Retained Earnings Cumulative effect adjustment	Retained Earnings	Accumulated Other Comprehensive Loss	Cumulative effect adjustment	Total
Balance at beginning of the period at Dec. 31, 2021	$ 82,157,000	$ 14,124,000		$ 248,243,000	$ (897,000)		$ 343,627,000
Balance at beginning of the period (in shares) at Dec. 31, 2021	50,460,932
Increase (Decrease) in Stockholders' Equity
Net income (loss)				5,260,000			5,260,000
Repurchase of restricted shares to pay employee tax liability		(84,000)					(84,000)
Repurchase of restricted shares to pay employee tax liability (in shares)	(13,383)
Stock-based compensation		146,000					146,000
Stock-based compensation (in shares)	49,284
Other comprehensive loss					(7,543,000)		(7,543,000)
Balance at end of the period at Mar. 31, 2022	$ 82,157,000	14,186,000		253,503,000	(8,440,000)		341,406,000
Balance at end of the period (in shares) at Mar. 31, 2022	50,496,833
Balance at beginning of the period at Dec. 31, 2021	$ 82,157,000	14,124,000		248,243,000	(897,000)		343,627,000
Balance at beginning of the period (in shares) at Dec. 31, 2021	50,460,932
Increase (Decrease) in Stockholders' Equity
Net income (loss)							3,063,000
Other comprehensive loss							(12,685,000)
Balance at end of the period at Jun. 30, 2022	$ 83,295,000	14,313,000		251,306,000	(13,582,000)		335,332,000
Balance at end of the period (in shares) at Jun. 30, 2022	50,818,212
Balance at beginning of the period at Dec. 31, 2021	$ 82,157,000	$ 14,124,000		$ 248,243,000	$ (897,000)		343,627,000
Balance at beginning of the period (in shares) at Dec. 31, 2021	50,460,932
Increase (Decrease) in Stockholders' Equity
Net income (loss) \| ASU 2016-13						$ 778,000
Net income (loss) \| ASU 2022-02						276,000
Balance at end of the period (ASU 2016-13) at Dec. 31, 2022			$ 778,000			778,000
Balance at end of the period (ASU 2022-02) at Dec. 31, 2022			(276,000)			(276,000)
Balance at end of the period at Dec. 31, 2022	$ 50,795,871						$ 312,627,000
Balance at end of the period (in shares) at Dec. 31, 2022	83,295,000	14,808,000		234,049,000	(19,525,000)		312,627,000
Balance at beginning of the period at Mar. 31, 2022	$ 82,157,000	$ 14,186,000		$ 253,503,000	$ (8,440,000)		$ 341,406,000
Balance at beginning of the period (in shares) at Mar. 31, 2022	50,496,833
Increase (Decrease) in Stockholders' Equity
Net income (loss)				(2,197,000)			(2,197,000)
Repurchase of restricted shares to pay employee tax liability		(112,000)					(112,000)
Repurchase of restricted shares to pay employee tax liability (in shares)	(16,345)
Issuance of shares of common stock to defined contribution retirement plan (in shares)	160,978
Issuance of shares of common stock to defined contribution retirement plan	$ 1,138,000						1,138,000
Stock-based compensation		239,000					239,000
Stock-based compensation (in shares)	176,746
Other comprehensive loss					(5,142,000)		(5,142,000)
Balance at end of the period at Jun. 30, 2022	$ 83,295,000	$ 14,313,000		$ 251,306,000	$ (13,582,000)		335,332,000
Balance at end of the period (in shares) at Jun. 30, 2022	50,818,212
Balance at beginning of the period at Dec. 31, 2022	$ 50,795,871						$ 312,627,000
Balance at beginning of the period (in shares) at Dec. 31, 2022	83,295,000	14,808,000		234,049,000	(19,525,000)		312,627,000
Increase (Decrease) in Stockholders' Equity
Net income (loss)				$ (503,000)			$ (503,000)
Repurchase of restricted shares to pay employee tax liability		$ (75,000)					(75,000)
Repurchase of restricted shares to pay employee tax liability (in shares)	(12,166)
Stock-based compensation		173,000					173,000
Stock-based compensation (in shares)	24,411
Other comprehensive loss					$ 2,786,000		2,786,000
Balance at end of the period at Mar. 31, 2023	$ 83,295,000	$ 14,906,000		$ 234,048,000	$ (16,739,000)		315,510,000
Balance at end of the period (in shares) at Mar. 31, 2023	50,808,116
Balance at beginning of the period (ASU 2016-13) at Dec. 31, 2022			778,000			778,000
Balance at beginning of the period (ASU 2022-02) at Dec. 31, 2022			$ (276,000)			$ (276,000)
Balance at beginning of the period at Dec. 31, 2022	$ 50,795,871						$ 312,627,000
Balance at beginning of the period (in shares) at Dec. 31, 2022	83,295,000	14,808,000		234,049,000	(19,525,000)		312,627,000
Increase (Decrease) in Stockholders' Equity
Net income (loss)							$ 2,036,000
Other comprehensive loss							1,193,000
Balance at end of the period at Jun. 30, 2023	$ 84,323,000	$ 15,098,000		$ 236,587,000	$ (18,332,000)		317,676,000
Balance at end of the period (in shares) at Jun. 30, 2023	52,081,886
Balance at beginning of the period at Mar. 31, 2023	$ 83,295,000	14,906,000		234,048,000	(16,739,000)		315,510,000
Balance at beginning of the period (in shares) at Mar. 31, 2023	50,808,116
Increase (Decrease) in Stockholders' Equity
Net income (loss)				2,539,000			2,539,000
Repurchase of restricted shares to pay employee tax liability		(158,000)					(158,000)
Repurchase of restricted shares to pay employee tax liability (in shares)	(28,826)
Issuance of shares of common stock to defined contribution retirement plan (in shares)	184,928
Issuance of shares of common stock to defined contribution retirement plan	$ 1,028,000						1,028,000
Stock-based compensation		350,000					350,000
Stock-based compensation (in shares)	1,117,668
Other comprehensive loss					(1,593,000)		(1,593,000)
Balance at end of the period at Jun. 30, 2023	$ 84,323,000	$ 15,098,000		$ 236,587,000	$ (18,332,000)		$ 317,676,000
Balance at end of the period (in shares) at Jun. 30, 2023	52,081,886

Mortgage Servicing Rights, net - Valuation techniques (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Mortgage Servicing Rights
Fair value of mortgage servicing rights	$ 2,002	$ 2,154
Prepayment speed range	9.90%	10.20%
Weighted average life of the mortgage servicing right	77 months	77 months
Weighted average default rate	0.20%	0.20%
Minimum
Mortgage Servicing Rights
Discount rate range	10.00%	10.00%
Maximum
Mortgage Servicing Rights
Discount rate range	12.50%	12.50%

Investment Securities - Amortized Cost and Fair Value By Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Available for sale, Amortized Cost
Available for sale, Amortized Cost	$ 359,793	$ 370,489
Available for sale, Fair Value
Available for sale, Fair Value	334,508	343,558
U.S. Treasury and Agency securities
Available for sale, Amortized Cost
Due less than one year	97,419
Due after one year through five years	79,349
Available for sale, Amortized Cost	176,768	175,878
Available for sale, Fair Value
Due less than one year	96,169
Due after one year through five years	73,903
Available for sale, Fair Value	170,072	168,437
Mortgage-backed securities
Available for sale, Amortized Cost
Available for sale, Amortized Cost	38,883	41,388
Available for sale, Fair Value
Available for sale, Fair Value	34,510	36,733
Collateralized mortgage obligations
Available for sale, Amortized Cost
Available for sale, Amortized Cost	143,987	153,066
Available for sale, Fair Value
Available for sale, Fair Value	129,782	138,241
Collateralized debt obligations
Available for sale, Amortized Cost
Available for sale, Amortized Cost	155	157
Available for sale, Fair Value
Available for sale, Fair Value	$ 144	$ 147

Employee Benefit Plans (Details) - Split-dollar life program - Cash surrender value - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	May 31, 2022	Jun. 30, 2022	Jun. 30, 2022
Employee Benefit Plans
Cash surrender value	$ 24,877
Increase in the cash surrender value	$ 13,142
Income tax expense		$ 3,614	$ 3,614
Additional taxes		1,314	1,314
Benefit plan benefit obligation		$ 4,514	$ 4,514

FHLB Borrowings - Other Borrowings (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Other Banks
Other Borrowings
Maximum borrowing capacity	$ 80,000	$ 80,000
Outstanding balance	0		$ 0
FRB
Other Borrowings
Outstanding balance	0
Prepayment penalty	0
Unused borrowing capacity	$ 65,000
FRB \| Maximum
Other Borrowings
Maturity period	1 year

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Subordinated Notes, net (Tables)

6 Months Ended

Jun. 30, 2023

Subordinated Notes, net

Schedule of subordinated notes


	June 30,		December 31,
	2023		2022
Subordinated Notes	$	65,000	$	65,000
Unamortized note premium		234		271
Total	$	65,234	$	65,271

Fair Values of Financial Instruments - Assets Measured at Fair Value on a Nonrecurring Basis and Fair Value of Financial Instruments (Details) $ in Thousands	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Financial Assets
Interest-bearing time deposits with other banks	$ 934	$ 934
Loans held for sale		7,725
Financial Liabilities
Interest-bearing deposits	1,996,692	1,900,996
Nonrecurring \| Mortgage servicing rights
Fair value of financial assets and liabilities
Assets measured at fair value on a nonrecurring basis	333	391
Nonrecurring \| Mortgage servicing rights \| Level 3
Fair value of financial assets and liabilities
Assets measured at fair value on a nonrecurring basis	333	391
Nonrecurring \| Mortgage servicing rights \| Level 3 \| Discounted cash flow
Fair value of financial assets and liabilities
Assets measured at fair value on a nonrecurring basis	$ 333	$ 391
Nonrecurring \| Mortgage servicing rights \| Maximum \| Level 3 \| Discounted cash flow \| Discount rate
Fair value of financial assets and liabilities
Assets measured at fair value, measurement input	0.125	0.125
Nonrecurring \| Mortgage servicing rights \| Maximum \| Level 3 \| Discounted cash flow \| Prepayment speed
Fair value of financial assets and liabilities
Assets measured at fair value, measurement input	0.227	0.224
Nonrecurring \| Mortgage servicing rights \| Maximum \| Level 3 \| Discounted cash flow \| Default rate
Fair value of financial assets and liabilities
Assets measured at fair value, measurement input	0.002	0.002
Nonrecurring \| Mortgage servicing rights \| Minimum \| Level 3 \| Discounted cash flow \| Discount rate
Fair value of financial assets and liabilities
Assets measured at fair value, measurement input	0.100	0.100
Nonrecurring \| Mortgage servicing rights \| Minimum \| Level 3 \| Discounted cash flow \| Prepayment speed
Fair value of financial assets and liabilities
Assets measured at fair value, measurement input	0.075	0.075
Nonrecurring \| Mortgage servicing rights \| Minimum \| Level 3 \| Discounted cash flow \| Default rate
Fair value of financial assets and liabilities
Assets measured at fair value, measurement input	0.001	0.001
Nonrecurring \| Mortgage servicing rights \| Weighted Average \| Level 3 \| Discounted cash flow \| Discount rate
Fair value of financial assets and liabilities
Assets measured at fair value, measurement input	0.122	0.122
Nonrecurring \| Mortgage servicing rights \| Weighted Average \| Level 3 \| Discounted cash flow \| Prepayment speed
Fair value of financial assets and liabilities
Assets measured at fair value, measurement input	0.191	0.190
Nonrecurring \| Mortgage servicing rights \| Weighted Average \| Level 3 \| Discounted cash flow \| Default rate
Fair value of financial assets and liabilities
Assets measured at fair value, measurement input	0.002	0.002
Carrying value per balance sheet
Financial Assets
Cash and due from banks	$ 655,391	$ 379,798
Interest-bearing time deposits with other banks	934	934
Loans held for sale		7,725
Loans, net	1,449,709	1,613,385
Financial Liabilities
Time deposits	981,298	861,733
Federal Home Loan Bank borrowings	50,000	50,000
Subordinated notes, net	65,234	65,271
Estimated fair value
Financial Assets
Cash and due from banks	655,391	379,798
Interest-bearing time deposits with other banks	934	934
Loans held for sale		7,833
Loans, net	1,403,677	1,516,771
Financial Liabilities
Time deposits	984,901	855,566
Federal Home Loan Bank borrowings	48,595	48,360
Subordinated notes, net	65,234	65,355
Estimated fair value \| Level 1
Financial Assets
Cash and due from banks	655,391	379,798
Interest-bearing time deposits with other banks	934	934
Estimated fair value \| Level 2
Financial Assets
Loans held for sale		7,833
Financial Liabilities
Time deposits	984,901	855,566
Federal Home Loan Bank borrowings	48,595	48,360
Subordinated notes, net	65,234	65,355
Estimated fair value \| Level 3
Financial Assets
Loans, net	$ 1,403,677	$ 1,516,771

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies

Summary of the activity in the liability for unfunded commitments



	Residential		Commercial				Commercial		Other
	Real Estate		Real Estate		Construction		and Industrial		Consumer		Total
Balance at the beginning of the period	$	—	$	—	$	—	$	—	$	—	$	—
Adoption of ASU 2016-13		53		125		398		3		—		579
Increase (decrease) in provision for (recovery of) credit losses		(44)		38		(191)		(1)		—		(198)
Total ending balance	$	9	$	163	$	207	$	2	$	—	$	381

Summary of total amount of unfunded commitments to extend credit and standby letters of credit outstanding


	June 30,		December 31,
	2023		2022
Commitments to make loans	$	—	$	—
Unused lines of credit		16,629		20,865
Standby letters of credit		24		24

Schedule of activity in the mortgage repurchase liability


	Six Months Ended
	June 30,
	2023		2022
Balance, beginning of period	$	809	$	2,954
Net provision (recovery)		61		(525)
Loss on loan repurchases		—		(622)
Balance, end of the period	$	870	$	1,807

Related Party Transactions (Details) $ in Thousands	6 Months Ended
Related Party Transactions (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Controlling Shareholders
Related party transactions
Sublease income	$ 112

FHLB Borrowings

6 Months Ended

Jun. 30, 2023

FHLB Borrowings

FHLB Borrowings

Note 8—FHLB Borrowings

FHLB Advances

At June 30, 2023 and December 31, 2022, the Company has a long-term fixed-rate advance of $50,000 with a maturity date of May 2029. The advance requires monthly interest-only payments at 1.96% per annum with the principal amount due on the maturity date and may contain a prepayment penalty if paid before maturity. The advance is callable by the FHLB in May 2024.

FHLB Overdraft Line of Credit and Letters of Credit

The Company has established a short-term overdraft line of credit agreement with the FHLB, which provides for maximum borrowings of $20,000 through October 2023. The overdraft line of credit was not used during six months ended June 30, 2023 and 2022. Borrowings accrue interest at a variable-rate based on the FHLB’s overnight cost of funds rate, which was 5.50% and 4.74% at June 30, 2023 and December 31, 2022, respectively. At June 30, 2023 and December 31, 2022, there were no outstanding borrowings under this agreement. The overdraft line of credit is issued for a one-year term and automatically extends for an additional one-year term unless terminated in advance of the renewal by the Company.

In 2021, the Company entered into irrevocable standby letters of credit arrangements with the FHLB totaling $11,500 to provide credit support for certain of its obligations related to its commitment to repurchase certain pools of Advantage Loan Program loans. An irrevocable standby letter of credit of $7,500 had a 16-month term and expired in July 2022. An irrevocable standby letter of credit of $4,000 has a 36-month term and expires in July 2024. This letter of credit was reduced to $2,000 during the second quarter of 2022; thereby, the Company has total available letters of credit of $2,000 at June 30, 2023 and December 31, 2022, respectively. There were no borrowings outstanding on these standby letters of credit during the six months ended June 30, 2023 and 2022.

The long-term fixed-rate advance and the overdraft line of credit are collateralized by certain investment securities and loans. Based on this collateral and holdings of FHLB stock, the Company had additional borrowing capacity with the FHLB of $379,673 at June 30, 2023. Refer to Note 4—Investment Securities for further information on securities pledged and Note 5—Loans for further information on loans pledged.

Other Borrowings

The Company has available unsecured credit lines with other banks totaling $80,000 at June 30, 2023 and December 31, 2022. There were no borrowings under these unsecured credit lines during the six months ended June 30, 2023 and 2022.

In addition, as a result of the recent bank failures, the FRB has made available to banks a new borrowing facility under the Bank Term Funding Program. This program allows for the Company to borrow with qualifying collateral, which includes the majority of its investment securities, except the non-Agency collateralized mortgage obligations and those allowable investments pledged with FHLB, valued at par. Advances under the program may have a term of up to one year with the interest rate fixed at the time the advance is taken and there is no prepayment penalty. At June 30, 2023, the Company pledged certain allowable investments, and based on the collateral, the Company has unused borrowing capacity of $65,000. The Company had no advances outstanding under this program. The program expires on March 11, 2024. Refer to Note 4—Investment Securities for further information on securities pledged.

FHLB Borrowings - FHLB Advances (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
FHLB Borrowings
Long-term fixed-rate FHLBNY advances	$ 50,000	$ 50,000
Long-Term Debt
FHLB Borrowings
FHLB interest rates (as a percent)	1.96%

Employee Benefit Plans

6 Months Ended

Jun. 30, 2023

Employee Benefit Plans

Employee Benefit Plans

Note 14—Employee Benefit Plans

In May 2022, the Bank surrendered a large split-dollar life program and a few smaller company-owned life insurance policies related to former executives and a controlling shareholder with a cash surrender value of $24,877. The increase in cash surrender value of the policies of $13,142 over the duration of the ownership of the policies has moved from non-taxable income to taxable income, resulting in a $3,614 increase in income tax expense for the three and six months ended June 30, 2022. Additional taxes of $1,314 relating to this surrender are included in other expense within non-interest expense during the three and six months ended June 30, 2022.

In connection with the surrender, the Bank also cancelled certain deferred compensation and the split dollar life insurance agreement with its controlling shareholder which resulted in the reversal of the related liabilities of $4,514 which are included as a reduction in salaries and employee benefits expense for the three and six months ended June 30, 2022.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 70
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480794/715-70-50-1

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 17
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480482/715-20-55-17

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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-Paragraph 1
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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-Paragraph 1
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480266/715-60-50-3

+ Details

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 3— Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP. The condensed consolidated financial statements include the results of Sterling Bancorp, Inc. and its wholly-owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates.

Concentration of Credit Risk

The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At June 30, 2023 and December 31, 2022, residential real estate loans accounted for 82% and 84%, respectively, of total gross loans. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At June 30, 2023 and December 31, 2022, approximately 80% and 81%, respectively, of gross loans were originated with respect to properties or businesses located in the state of California.

In December 2019, the Company terminated a loan product consisting of one-, three-, five- or seven-year adjustable-rate mortgages that required a down payment of at least 35% (also referred to herein as “Advantage Loan Program loans”) which continues to be the largest portion of gross residential loans. An internal review of the Advantage Loan Program indicated that certain employees engaged in misconduct in connection with the origination of a significant number of such loans, including with respect to verification of income, the amount of income reported for borrowers, reliance on third parties and related documentation. Refer to Note 17—Commitments and Contingencies.

Advantage Loan Program loans (including residential real estate loans held for sale of $6,181 at December 31, 2022) totaled $731,359 and $880,373, or 60% and 63% of gross residential loans, at June 30, 2023 and December 31, 2022, respectively.

Investment Securities

Debt Securities (Effective January 1, 2023)

Debt securities are classified as either available for sale or held to maturity. Management determines the classification of the debt securities when they are purchased.

All debt securities were categorized as available for sale as of June 30, 2023 and December 31, 2022. Available for sale debt securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive loss, net of income taxes. The amortized cost of debt securities is adjusted for amortization of premiums (noncallable) and accretion of discounts. The Company amortizes premiums and accretes discounts using the effective interest method over the contractual life of the individual securities or, in the case of asset-backed securities, using the effective yield method over the estimated life of the individual securities.

Interest income includes amortization or accretion of purchase premium or discount. Gains and losses realized on the sales of available for sale debt securities are recorded on the settlement date and determined using the specific identification method.

For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available for sale debt securities that do not meet the aforementioned criteria, the Company evaluates at the individual security level whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of income taxes.

Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit losses. Losses are charged against the allowance for credit losses when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on available for sale debt securities is recorded separately from the amortized cost basis of the debt securities in the condensed consolidated balance sheets and is excluded from the estimate of credit losses.

Equity Securities

Equity securities with readily determinable fair values are stated at fair value with unrealized and realized gains and losses reported in income. Those equity securities without readily determinable fair values are recorded at cost less any impairments, adjusted for subsequent observable price changes in orderly transactions for an identical or similar investment of the same issuer. Any changes in the carrying value of the equity investments are recognized in income.

Management performs a qualitative assessment each reporting period to identify impairment of equity securities without readily determinable fair values. When a qualitative assessment indicates that an impairment exists, management determines the fair value of the investment and if the fair value is less than the investment’s carrying value, an impairment charge is recorded in income equal to the difference between the fair value and the carrying amount of the investment.

Loans Held for Sale

The Company originates certain loans intended for sale in the secondary market. Loans held for sale are carried at the lower of amortized cost or fair value on an individual loan basis. The fair value of loans held for sale are primarily determined based on quoted prices for similar loans in active markets or outstanding commitments from third-party investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to non-interest income in the condensed consolidated statements of operations.

Performing residential real estate loans that are held for sale are generally sold with servicing rights retained. The carrying value of mortgage loans sold is reduced by the amount allocated to the servicing right. On the sale of an originated loan, the servicing right is recorded at its estimated fair value. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold and are recorded as a component of non-interest income.

Loans that are originated and classified as held for investment are periodically sold in order to manage liquidity, asset credit quality, interest rate risk or concentration risk. Loans that are reclassified into loans held for sale from loans held for investment, due to a change in intent, are recorded at the lower of cost or fair value.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at amortized cost, net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred loan fees and costs. Accrued interest receivable related to loans is recorded separately from the amortized cost basis of loans on the condensed consolidated balance sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct loan origination costs, are deferred and amortized over the contractual lives of the respective loans as a yield adjustment using the effective interest method. Other credit-related fees are recognized as fee income, as a component of non-interest income.

Interest income on loans is accrued as earned using the interest method over the term of the loan. The accrual of interest income is discontinued at the time the loan is 90 days past due or earlier if conditions warrant and placed on nonaccrual status. In all cases, loans are placed on nonaccrual status at an earlier date if collection of principal or interest is considered doubtful. All interest accrued and not received for loans placed on nonaccrual status is reversed against interest income. Any payments received on nonaccrual loans are applied to interest income on a cash basis if the loan is considered well secured. Otherwise, all payments received are applied first to outstanding loan principal amounts and then to the recovery of the charged off loan amounts. Any excess is treated as a recovery of interest and fees. Loans are returned to accrual status after all principal and interest amounts contractually due are made and future payments are reasonably assured.

Allowance for Credit Losses - Loans (Effective January 1, 2023)

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of held for investment loans to present the net amount expected to be collected on the loans. The allowance for credit losses is adjusted through a charge (recovery) to provision for (recovery of) credit losses in the condensed consolidated statements of operations. When the Company determines that all or a portion of a loan is uncollectible, the appropriate amount is written off, and the allowance for credit losses is reduced by the same amount. The Company applies judgment to determine when a loan is deemed uncollectible; however, generally a loan will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the allowance for credit losses when received. Portions of the allowance for credit losses may be allocated for specific credits; however, the entire allowance for credit losses is available for any credit that, in management’s judgment, should be charged off.

The Company estimates the allowance for credit losses on loans based on the underlying loans’ amortized cost. If the collection of principal becomes uncertain, the Company stops accruing interest and reverses the accrued but unpaid interest against interest income. The Company has made a policy election to exclude accrued interest receivable from the measurement of the allowance for credit losses. The allowance for credit losses process involves procedures to appropriately consider the unique characteristics of the Company’s portfolio segments. The allowance for credit losses is measured on a collective (pool) basis for portfolios of loans with similar risk characteristics and risk profiles. The Company’s portfolio segments include the following: (i) commercial real estate, (ii) commercial construction, (iii) commercial and industrial, (iv) residential real estate and (v) home equity lines of credit. These portfolio segments were identified based on their common characteristics: loan type/purpose of loan, underlying collateral type, historical/expected credit loss patterns, availability of credit quality indicators (i.e., FICO, risk rating, delinquency) and completeness of the historical information. Loans which do not share risk characteristics—generally, nonaccrual commercial and construction loans, and collateral-dependent loans where the borrower is experiencing financial difficulty — are individually assessed for credit loss. The Company has elected, as a practical expedient, to measure the allowance for credit losses on a collateral-dependent loan, where the borrower is experiencing financial difficulty, at the fair value of the collateral less estimated costs to sell. The portfolio segments are reviewed at least annually or when major changes occur in the loan portfolio to ensure that the segmentation is still appropriate.

The amount of the allowance for credit losses represents management’s best estimate of current expected credit losses on loans considering available information from internal and external sources, which is relevant to assessing collectability of the loans over the loans’ contractual terms, adjusted for expected prepayments. The contractual term excludes expected extensions, renewals and modifications unless: (i) management has a reasonable expectation at the reporting date that an individual borrower is experiencing financial difficulty and a modification of the loan will be executed, or (ii) the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

The Company estimates the allowance for credit losses using relevant available information related to past events, current conditions, and reasonable and supportable forecasts. In determining the total allowance for credit losses, the Company calculates the quantitative portion of the allowance for credit losses using a methodology, the Advanced Probability of Default model, a logistic regression model, and adds qualitative adjustments to the model results and the results from any individual loan assessments.

The Advanced Probability of Default model estimates the expected lifetime net charge off balance utilizing the following: (i) probability that the loan will stop performing or default; (ii) probability that a loan will pay-off entirely prior to maturity; and (iii) macroeconomic variables, including but not limited to unemployment rates, gross domestic product, and the Treasury Yield Curve. This information is specific to each portfolio segment, though not necessarily solely reliant on internally sourced data. Internal data is supplemented by, but not replaced by, peer data when required, primarily to determine the probability of default. The Company then applies a recovery rate to reflect the recoveries over an approximate 10-year period.

The probability of default is estimated by analyzing the relationship between the historical performance of each loan pool and historical economic trends over a complete economic cycle. The probability of default for each pool is adjusted using a statistical model to reflect the current impact of certain macroeconomic variables and their expected changes over a reasonable and supportable forecast period of eight quarters. The Company determined that it was reasonably able to forecast the macroeconomic variables used in the forecast modeling processes with an acceptable degree of confidence for a total of eight quarters. This forecast period is followed by a reversion process whereby the macroeconomic variables are relaxed to revert to the average historical loss rates for periods after the forecasted eight-quarter period.

Management qualitatively adjusts the allowance for credit loss model results for risk factors not considered within the quantitative modeling processes but are nonetheless relevant in assessing the expected credit losses within the portfolio segments. These qualitative risk factor adjustments may increase or decrease management’s estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. Qualitative risk factors considered include adjustments for model limitations, management’s adjustments to economic market forecasts and other current or forecasted events not captured in the Company’s historical loss experience.

For loans that do not share risk characteristics that are evaluated on an individual basis, specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. In such cases, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The Company reevaluates the fair value of collateral supporting collateral dependent loans on an annual basis.

As disclosed above, the Company has identified the following portfolio segments used in measuring its expected credit losses in the loan portfolio and their respective risk characteristics.

The Residential Real Estate Mortgages portfolio includes residential first mortgages and residential second mortgages. The degree of risk in residential real estate lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. Economic trends determined by unemployment rates and other key economic indicators, particularly at the regional and local levels, are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers’ capacity to repay their obligations may be deteriorating.

The Home Equity Lines of Credit portfolio includes residential second mortgages in the form of a revolving line of credit that requires interest only payments for a period followed by an amortizing period. These loans have higher risk of default compared to first liens making it harder to rely on loan-to-value ratios and loan balances can fluctuate. These loans are secured by the residential real estate by serving as a second lien behind the first mortgage lien.

The Commercial Real Estate portfolio includes commercial loans made to many types of businesses involving retail, multifamily, offices, hotels/single-room occupancy hotels, industrial and other commercial properties. Adverse economic developments or an overbuilt market may impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for the properties to produce sufficient cash flow to service debt obligations.

The Construction Loans portfolio is comprised of loans to builders and developers primarily for residential, commercial and mixed-use development. In addition to general commercial real estate risks, construction loans have additional risk of cost overruns, market deterioration during construction, lack of permanent financing, and no operating history.

The Commercial and Industrial portfolio is comprised of loans to many types of businesses for their operating needs of the business. The risk characteristics of these loans vary based on the borrowers’ business and industry as repayment is typically dependent on cash flows generated from the underlying business. These loans may be secured by real estate or other assets or may be unsecured.

Liability for Unfunded Commitments (Effective January 1, 2023)

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for these off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk through a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The estimate of expected credit losses generally follows the same methodology as the funded loans by utilizing the loss rates generated for each portfolio segment with an adjustment for the probability of funding to occur. The liability for unfunded commitments, which is recorded in accrued expenses and other liabilities in the condensed consolidated balance sheets, is adjusted through the provision for (recovery of) credit losses.

Loans - Impaired Loans by Class of Loans Prior to Adoption (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2022
Loans
Unpaid principal balance, with no related allowance for loan losses recorded			$ 2,819
Total Unpaid Principal Balance			2,898
Recorded investment, with no related allowance for loan losses recorded			2,592
Total Recorded Investment			2,637
Allowance for Loan Losses			11
Average recorded investment, with no related allowance for loan losses recorded	$ 8,488	$ 8,511
Total Average Recorded Investment	8,630	8,701
Interest Income Recognized, with no related allowance for loan losses recorded	41	82
Total Interest Income Recognized	41	83
Cash Basis Interest Recognized, with no related allowance for loan losses recorded	28	69
Total Cash Basis Interest Recognized	28	70
Residential real estate \| Real estate loan, first mortgage
Loans
Unpaid principal balance, with an allowance for loan losses recorded			79
Recorded investment, with an allowance for loan losses recorded			45
Allowance for Loan Losses			11
Average recorded investment, with no related allowance for loan losses recorded	55	57
Average recorded investment, with an allowance for loan losses recorded	142	190
Interest Income Recognized, with no related allowance for loan losses recorded	1	1
Interest Income Recognized, with an allowance for loan losses recorded		1
Cash Basis Interest Recognized, with no related allowance for loan losses recorded	1	1
Cash Basis Interest Recognized, with an allowance for loan losses recorded		1
Commercial real estate \| Retail
Loans
Unpaid principal balance, with no related allowance for loan losses recorded			227
Construction
Loans
Unpaid principal balance, with no related allowance for loan losses recorded			2,485
Recorded investment, with no related allowance for loan losses recorded			2,485
Average recorded investment, with no related allowance for loan losses recorded	8,320	8,340
Interest Income Recognized, with no related allowance for loan losses recorded	39	78
Cash Basis Interest Recognized, with no related allowance for loan losses recorded	26	65
Commercial and industrial \| Private banking
Loans
Unpaid principal balance, with no related allowance for loan losses recorded			107
Recorded investment, with no related allowance for loan losses recorded			$ 107
Average recorded investment, with no related allowance for loan losses recorded	113	114
Interest Income Recognized, with no related allowance for loan losses recorded	1	3
Cash Basis Interest Recognized, with no related allowance for loan losses recorded	$ 1	$ 3

Regulatory Capital Requirements - Actual and minimum required capital amounts and ratios and dividend restrictions (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Regulatory Capital Requirements
Minimum required Tier 1 leverage ratio for CBRL framework	9.00%
Maximum allowed total consolidated assets for CBRL framework	$ 10,000,000
Leverage ratio percentage	8.00%
Dividend Restrictions
Minimum percentage of assets be maintained as per Qualified Thrift Lender ("QTL") test	65.00%
Risk-weighting 100% Scenario
Total adjusted capital to risk-weighted assets, Amount
Actual		$ 390,591
For Capital Adequacy Purposes		$ 121,888
Total adjusted capital to risk-weighted assets, Ratio
Actual		0.2564
For Capital Adequacy Purposes		0.0800
Tier 1 (core) capital to risk-weighted assets, Amount
Actual		$ 332,068
For Capital Adequacy Purposes		$ 91,416
Tier 1 (core) capital to risk-weighted assets, Ratio
Actual		0.2179
For Capital Adequacy Purposes		0.0600
Common Equity Tier 1 (CET1), Amount
Actual		$ 332,068
For Capital Adequacy Purposes		$ 68,562
Common Equity Tier 1 (CET1), Ratio
Actual		0.2179
For Capital Adequacy Purposes		0.0450
Tier 1 (core) capital to average total assets, Amount
Actual	$ 335,924	$ 332,068
For Capital Adequacy Purposes		$ 98,073
To be Well Capitalized	$ 224,950
Tier 1 (core) capital to average total assets, Leverage Ratio
Actual	0.1344	0.1354
For Capital Adequacy Purposes		0.0400
To be Well Capitalized	0.0900
Bank \| Risk-weighting 100% Scenario
Total adjusted capital to risk-weighted assets, Amount
Actual		$ 425,159
For Capital Adequacy Purposes		$ 121,795
Total adjusted capital to risk-weighted assets, Ratio
Actual		0.2793
For Capital Adequacy Purposes		0.0800
Tier 1 (core) capital to risk-weighted assets, Amount
Actual		$ 405,803
For Capital Adequacy Purposes		$ 91,346
Tier 1 (core) capital to risk-weighted assets, Ratio
Actual		0.2665
For Capital Adequacy Purposes		0.0600
Common Equity Tier 1 (CET1), Amount
Actual		$ 405,803
For Capital Adequacy Purposes		$ 68,510
Common Equity Tier 1 (CET1), Ratio
Actual		0.2665
For Capital Adequacy Purposes		0.0450
Tier 1 (core) capital to average total assets, Amount
Actual	$ 322,532	$ 405,803
For Capital Adequacy Purposes		$ 98,032
To be Well Capitalized	$ 224,881
Tier 1 (core) capital to average total assets, Leverage Ratio
Actual	0.1291	0.1656
For Capital Adequacy Purposes		0.0400
To be Well Capitalized	0.0900
Bank \| Risk-weighting 100% Scenario \| Advantage Loan Program
Total adjusted capital to risk-weighted assets, Amount
For Capital Adequacy Purposes		$ 121,795
To be Well Capitalized		$ 152,244
Total adjusted capital to risk-weighted assets, Ratio
To be Well Capitalized		0.1000
Tier 1 (core) capital to risk-weighted assets, Ratio
To be Well Capitalized		0.0800
Common Equity Tier 1 (CET1), Amount
To be Well Capitalized		$ 98,959
Common Equity Tier 1 (CET1), Ratio
To be Well Capitalized		0.0650
Tier 1 (core) capital to average total assets, Amount
To be Well Capitalized		$ 122,540
Tier 1 (core) capital to average total assets, Leverage Ratio
To be Well Capitalized		0.0500

Loans - Loans Held for Investment - Major categories, accrued interest, pledged (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Mar. 31, 2023	Mar. 31, 2023	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Loans
Total loans			$ 1,485,862
Total loans				$ 1,658,849
Less: allowance for loan losses			(36,153)	(45,464)	$ (51,766)	$ (52,455)	$ (56,548)
Less: Allowance for loan losses	$ (38,565)	$ (38,565)	(36,153)
Total outstanding principal balance			1,449,709
Total outstanding principal balance			1,449,709	1,613,385
Accrued interest receivable related to gross loans			6,440	6,894
Transfer of residential real estate loans from loans held for sale			3,906
Assets pledged as collateral \| FHLB borrowings
Loans
Total outstanding principal balance			457,984
Total outstanding principal balance				389,830
Residential real estate
Loans
Total loans			1,214,439
Total loans				1,391,276
Less: allowance for loan losses				(27,951)	(29,982)	(29,911)	(32,202)
Less: Allowance for loan losses	(20,498)	(20,498)	(16,909)
Transfer of residential real estate loans from loans held for sale	3,906
Loans receivable charged off	6,478
Nonaccrual residential real estate loans
Loans
Transfer of residential real estate loans from loans held for sale		3,906
Commercial real estate
Loans
Total loans			221,658
Total loans				221,669
Less: allowance for loan losses				(11,694)	(15,035)	(13,709)	(12,608)
Less: Allowance for loan losses	(16,067)	(16,067)	(16,728)
Construction
Loans
Total loans			31,978
Total loans				44,503
Less: allowance for loan losses				(5,781)	(6,708)	$ (8,829)	$ (11,730)
Less: Allowance for loan losses	(1,994)	(1,994)	(2,475)
Commercial and industrial
Loans
Total loans			17,772
Total loans				1,396
Less: allowance for loan losses				(38)
Less: Allowance for loan losses	$ (6)	$ (6)	(41)
Other consumer
Loans
Total loans			$ 15
Total loans				$ 5
Less: allowance for loan losses					$ (5)

Adoption of New Accounting Standards

6 Months Ended

Jun. 30, 2023

Adoption of New Accounting Standards

Adoption of New Accounting Standards

Note 2—Adoption of New Accounting Standards

In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2022-02, Financial Instruments – Credit Losses ( Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminates the accounting guidance for troubled debt restructurings by creditors and enhances disclosure requirements for certain loan refinancings and restructurings made to borrowers experiencing financial difficulty. Under the new guidance, creditors should evaluate all loan modifications to determine if they result in a new loan or a continuation of the existing loan under the general loan modification guidance. Public business entities are required to disclose current-period gross write-offs by year of origination for loan financing receivables and net investment in leases. The Company adopted the provisions of ASU 2022-02 on January 1, 2023 on a prospective basis, along with its adoption of ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) as discussed in Note 3—Summary of Significant Accounting Policies. On the date of adoption, the Company recorded a cumulative effect adjustment of $276, net of tax, to decrease the opening balance of retained earnings as of January 1, 2023, for the initial application of ASU 2022-02. The cumulative effect adjustment represents the difference between the allowance previously determined under the troubled debt restructuring model and the allowance determined under the new credit loss accounting model for existing troubled debt restructuring loans on the adoption date.

In June 2016, the FASB issued ASU 2016-13 (and subsequent amendments), which significantly changes estimates for credit losses related to financial assets measured at amortized cost, including loan receivables and other contracts, such as off-balance sheet credit exposure, specifically, loan commitments and standby letters of credit, financial guarantees and other similar instruments. The guidance replaced the current incurred loss accounting model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model requires the measurement of the lifetime expected credit losses on financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Additionally, ASU 2016-13 requires credit losses on available for sale debt securities to be presented as an allowance rather than as a write-down. The guidance requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio.

The Company adopted ASU 2016-13 on January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while amounts for prior periods continue to be reported in accordance with previously applicable accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company recorded a cumulative effect adjustment of $778, net of tax, to increase the opening balance of retained earnings as of January 1, 2023, for the initial application of CECL. Upon adoption, the allowance for credit losses for loans decreased by $1,651 primarily driven by the allowance for credit losses on the construction loan portfolio due to the short contractual maturities of the loans in this portfolio segment (all construction loans mature in 2023). This was partially offset by an increase in the allowance for credit losses in both the residential real estate and commercial real estate portfolio segments which have longer contractual maturities. In addition, the Company established a liability for unfunded commitments of $579.

The details of the changes and quantitative impact on the financial statement line items in the condensed consolidated balance sheet as of January 1, 2023 for the adoption of ASU 2016-13, along with the adoption of ASU 2022-02, were as follows:



	Prior to		Adjustments for		Adjustments for		After
	Adoption		ASU 2016-13		ASU 2022-02		Adoption
Assets:
Allowance for credit losses – loans	$	45,464	$	(1,651)	$	380	$	44,193
Liabilities:
Liability for unfunded commitments		—		579		—		579
Pretax cumulative effect adjustment of a change in accounting principle				(1,072)		380
Less: income taxes				294		(104)
Cumulative effect adjustment of a change in accounting principle, net of tax			$	(778)	$	276

The loan portfolio is pooled into segments with similar characteristics and risk profiles for which the probability of default/loss given default methodology is then applied. The Company utilizes a 24-month economic forecast. For all classes of financial assets deemed collateral dependent, the Company elected the practical expedient to estimate the expected credit losses based on the respective collateral’s fair value less cost to sell.

The Company also made an accounting policy election to not measure an allowance for credit losses on accrued interest receivable and to present accrued interest receivable separately from the related financial asset on the condensed consolidated balance sheet.

The Company’s available for sale debt securities are comprised of debt, mortgage-backed securities and collateralized mortgage obligations. The debt, mortgage-backed securities and the majority of the collateralized mortgage obligations are issued by the U.S. government, its agencies and government-sponsored enterprises. The Company has a long history with no credit losses from these issuers. Thus, the Company has not recorded an allowance for credit losses for its available for sale debt securities at the date of adoption.

As stated, the comparative prior period information presented before January 1, 2023 has not been adjusted and continues to be reported under the Company’s historical allowance for loan losses policies as described in Note 2 to the consolidated financial statements in the 2022 Form 10-K.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

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-Name Accounting Standards Codification
-Section 65
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+ Details

Loans - Credit risk profiles prior to adoption (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Loans
Total	$ 1,658,849
Pass
Loans
Total	1,577,541
Special Mention
Loans
Total	37,560
Substandard
Loans
Total	43,748
Residential real estate
Loans
Total	1,391,276
Residential real estate \| Real estate loan, first mortgage
Loans
Total	1,381,299
Residential real estate \| Real estate loan, first mortgage \| Pass
Loans
Total	1,347,763
Residential real estate \| Real estate loan, first mortgage \| Substandard
Loans
Total	33,536
Residential real estate \| Real estate loan, second mortgage
Loans
Total	9,977
Residential real estate \| Real estate loan, second mortgage \| Pass
Loans
Total	9,788
Residential real estate \| Real estate loan, second mortgage \| Substandard
Loans
Total	189
Commercial real estate
Loans
Total	221,669
Commercial real estate \| Retail
Loans
Total	28,971
Commercial real estate \| Retail \| Pass
Loans
Total	28,971
Commercial real estate \| Multifamily
Loans
Total	81,444
Commercial real estate \| Multifamily \| Pass
Loans
Total	67,361
Commercial real estate \| Multifamily \| Special Mention
Loans
Total	14,083
Commercial real estate \| Office
Loans
Total	39,610
Commercial real estate \| Office \| Pass
Loans
Total	39,610
Commercial real estate \| Hotels/Single-room occupancy hotels
Loans
Total	5,208
Commercial real estate \| Hotels/Single-room occupancy hotels \| Special Mention
Loans
Total	3,669
Commercial real estate \| Hotels/Single-room occupancy hotels \| Substandard
Loans
Total	1,539
Commercial real estate \| Industrial
Loans
Total	30,242
Commercial real estate \| Industrial \| Pass
Loans
Total	30,242
Commercial real estate \| Other
Loans
Total	36,194
Commercial real estate \| Other \| Pass
Loans
Total	21,036
Commercial real estate \| Other \| Special Mention
Loans
Total	15,158
Construction
Loans
Total	44,503
Construction \| Pass
Loans
Total	31,369
Construction \| Special Mention
Loans
Total	4,650
Construction \| Substandard
Loans
Total	8,484
Commercial Lines of Credit
Loans
Total	1,396
Commercial Lines of Credit \| Private banking
Loans
Total	107
Commercial Lines of Credit \| Private banking \| Pass
Loans
Total	107
Commercial Lines of Credit \| C&I lending
Loans
Total	1,289
Commercial Lines of Credit \| C&I lending \| Pass
Loans
Total	1,289
Other consumer
Loans
Total	5
Other consumer \| Pass
Loans
Total	$ 5

Investment Securities (Tables)

6 Months Ended

Jun. 30, 2023

Investment Securities

Summary of amortized cost and fair value of debt securities available for sale


	June 30, 2023
	Amortized		Gross Unrealized				Fair
	Cost		Gain		Loss		Value
Available for sale:
U.S. Treasury and Agency securities	$	176,768	$	13	$	(6,709)	$	170,072
Mortgage-backed securities		38,883		—		(4,373)		34,510
Collateralized mortgage obligations		143,987		79		(14,284)		129,782
Collateralized debt obligations		155		—		(11)		144
Total	$	359,793	$	92	$	(25,377)	$	334,508


	December 31, 2022
	Amortized		Gross Unrealized				Fair
	Cost		Gain		Loss		Value
Available for sale:
U.S. Treasury and Agency securities	$	175,878	$	17	$	(7,458)	$	168,437
Mortgage-backed securities		41,388		—		(4,655)		36,733
Collateralized mortgage obligations		153,066		4		(14,829)		138,241
Collateralized debt obligations		157		—		(10)		147
Total	$	370,489	$	21	$	(26,952)	$	343,558

Schedule of information pertaining to sales of available for sale debt securities


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Proceeds from the sale of debt securities	$	—	$	—	$	2,977	$	—

Gross realized gains	$	—	$	—	$	1	$	—
Gross realized losses		—		—		(3)		—
Total net realized losses	$	—	$	—	$	(2)	$	—

Schedule of amortized cost and fair value of debt securities available for sale, shown by contractual maturity


	Amortized		Fair
	Cost		Value
U.S. Treasury and Agency securities:
Due less than one year	$	97,419	$	96,169
Due after one year through five years		79,349		73,903
Mortgage-backed securities		38,883		34,510
Collateralized mortgage obligations		143,987		129,782
Collateralized debt obligations		155		144
Total	$	359,793	$	334,508

Summary of available for sale debt securities, at fair value, continuous unrealized loss position


	June 30, 2023
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and Agency securities	$	39,572	$	(323)	$	107,487	$	(6,386)	$	147,059	$	(6,709)
Mortgage-backed securities		5,628		(167)		28,882		(4,206)		34,510		(4,373)
Collateralized mortgage obligations		23,891		(678)		94,351		(13,606)		118,242		(14,284)
Collateralized debt obligations		—		—		144		(11)		144		(11)
Total	$	69,091	$	(1,168)	$	230,864	$	(24,209)	$	299,955	$	(25,377)


	December 31, 2022
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and Agency securities	$	100,815	$	(2,839)	$	44,605	$	(4,619)	$	145,420	$	(7,458)
Mortgage-backed securities		5,792		(139)		30,941		(4,516)		36,733		(4,655)
Collateralized mortgage obligations		69,088		(3,169)		64,715		(11,660)		133,803		(14,829)
Collateralized debt obligations		—		—		147		(10)		147		(10)
Total	$	175,695	$	(6,147)	$	140,408	$	(20,805)	$	316,103	$	(26,952)

Summary of unrealized and realized gains and losses recognized in the condensed consolidated statements of income


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net loss recorded during the period on equity securities	$	(71)	$	(170)	$	—	$	(406)
Less: net gains (loss) recorded during the period on equity securities sold during the period		—		—		—		—
Unrealized loss recorded during the period on equity securities held at the reporting date	$	(71)	$	(170)	$	—	$	(406)

Subordinated Notes, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
Subordinated Notes, net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Subordinated Notes, net
Total	$ 65,234		$ 65,234		$ 65,271
Interest expense	$ 1,791	$ 1,090	$ 3,484	$ 2,054
Subordinated notes
Subordinated Notes, net
Interest rate (in percent)	7.00%		7.00%
Subordinated Notes	$ 65,000		$ 65,000		65,000
Unamortized note premium	234		234		271
Total	65,234		$ 65,234		$ 65,271
Interest rate (as a percent)			11.08%		9.90%
Interest expense	$ 1,791	$ 1,090	$ 3,484	$ 2,054
Redemption price percentage of outstanding principal amount			100.00%
LIBOR \| Subordinated notes
Subordinated Notes, net
Variable interest rate on subordinate notes (in percent)			5.82%

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows From Operating Activities
Net income	$ 2,036	$ 3,063
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (recovery of) credit losses	(2,228)	(5,398)
Deferred income taxes	4,524	4,281
Loss on sale of investment securities	2
Unrealized loss on equity securities		406
Net amortization (accretion) on investment securities	(1,140)	(41)
Depreciation and amortization on leasehold improvements and equipment	693	787
Net principal payments (originations) of loans held for sale	(2,655)	2,250
Proceeds from sale of mortgage loans held for sale	2,979	1,831
Gain on sale of mortgage loans held for sale	(1,695)	(200)
Net provision for (recovery of) mortgage repurchase liability	61	(525)
Increase in cash surrender value of company-owned life insurance, net of premiums	(104)	(240)
Valuation allowance adjustments and amortization of mortgage servicing rights	136	280
Stock-based compensation	523	385
Other	(1)	(35)
Change in operating assets and liabilities:
Accrued interest receivable	340	975
Other assets	1,843	2,735
Accrued expenses and other liabilities	(4,794)	(4,907)
Net cash provided by operating activities	520	5,647
Cash Flows From Investing Activities
Maturities and principal receipts of investment securities	11,684	21,904
Sales of investment securities	2,977
Purchases of investment securities	(2,979)	(108,267)
Maturities (purchases) of investment securities, net	153
Proceeds received from redemption of Federal Home Loan Bank stock		2,662
Net decrease in loans	136,336	268,078
Purchases of portfolio loans		(31,002)
Proceeds received from settlement of company-owned life insurance policies		20,234
Principal payments received on loans held for sale previously classified as portfolio loans	1,959	2,521
Proceeds from loans held for sale previously classified as portfolio loans	37,930	49,610
Proceeds from the sales of equipment	46
Purchases of leasehold improvements and equipment	(254)	(214)
Net cash provided by investing activities	187,852	225,526
Cash Flows From Financing Activities
Net increase (decrease) in deposits	87,454	(257,488)
Repayments of Federal Home Loan Bank advances		(100,000)
Cash paid for surrender of vested shares to satisfy employee tax liability	(233)	(196)
Net cash provided by (used in) financing activities	87,221	(357,684)
Net change in cash and due from banks	275,593	(126,511)
Cash and due from banks at beginning of period	379,798	411,676
Cash and due from banks at end of period	655,391	285,165
Cash paid for:
Interest	26,382	7,127
Income taxes	300	457
Noncash investing and financing activities:
Transfer of residential real estate loans to loans held for sale	34,581
Transfer of residential real estate loans from loans held for sale	3,906
Shares of common stock issued in satisfaction of Company's matching contribution in defined contribution retirement plan	$ 1,028	$ 1,138

Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Condensed Consolidated Statements of Comprehensive Income (Loss)
Unrealized gain (loss) on investment securities, arising during the period, net of tax effect	$ (603)	$ (1,950)	$ 451	$ (4,883)
Reclassification adjustment for gains (losses) included in net income on sale of investment securities, before tax	$ 1		$ 2

Loans - Credit quality indicator by origination year (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Commercial Portfolio Segment [Member] \| Internal Noninvestment Grade [Member] \| Construction Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020	$ 9,886
2019	15,381
Prior	6,711
Total, term and revolving loans by origination year	31,978
Commercial Portfolio Segment [Member] \| Internal Noninvestment Grade [Member] \| C&I lending
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	16,433
2022	1,086
Prior	104
Revolving Loans Amortized Costs Basis	34
Revolving Loans Converted to Term	115
Total, term and revolving loans by origination year	17,772
Commercial Portfolio Segment [Member] \| Internal Noninvestment Grade [Member] \| Commercial Mortgage Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	6,955
2022	84,188
2021	48,332
2020	38,278
2019	18,557
Prior	25,348
Total, term and revolving loans by origination year	221,658
Commercial Portfolio Segment [Member] \| Pass \| Construction Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020	9,886
2019	5,496
Prior	6,711
Total, term and revolving loans by origination year	22,093
Commercial Portfolio Segment [Member] \| Pass \| C&I lending
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	16,433
2022	1,086
Prior	104
Revolving Loans Amortized Costs Basis	34
Revolving Loans Converted to Term	115
Total, term and revolving loans by origination year	17,772
Commercial Portfolio Segment [Member] \| Pass \| Commercial Mortgage Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	6,955
2022	80,566
2021	36,569
2020	35,538
2019	7,011
Prior	14,078
Total, term and revolving loans by origination year	180,717
Commercial Portfolio Segment [Member] \| Special Mention \| Commercial Mortgage Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	3,622
2020	2,740
2019	8,709
Prior	5,433
Total, term and revolving loans by origination year	20,504
Commercial Portfolio Segment [Member] \| Substandard \| Construction Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2019	9,885
Total, term and revolving loans by origination year	9,885
Commercial Portfolio Segment [Member] \| Substandard \| Commercial Mortgage Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2021	11,763
2019	2,837
Prior	5,837
Total, term and revolving loans by origination year	20,437
Residential Portfolio Segment [Member] \| Performing And Nonperforming Financial Instruments [Member] \| Residential Mortgage Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	769
2022	74,348
2021	134,911
2020	104,879
2019	243,145
Prior	647,573
Revolving Loans Amortized Costs Basis	8,522
Revolving Loans Converted to Term	292
Total, term and revolving loans by origination year	1,214,439
Residential Portfolio Segment [Member] \| Accrual \| Commercial Mortgage Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2023	769
2022	74,348
2021	134,911
2020	104,879
2019	242,793
Prior	645,863
Revolving Loans Amortized Costs Basis	8,522
Revolving Loans Converted to Term	292
Total, term and revolving loans by origination year	1,212,377
Residential Portfolio Segment [Member] \| Nonaccrual \| Residential Mortgage Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2019	352
Prior	1,710
Total, term and revolving loans by origination year	2,062
Residential Portfolio Segment [Member] \| Current Period Gross Charge offs, Performance Rated [Member] \| Residential Mortgage Loans [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2019	1,858
Prior	4,601
Revolving Loans Amortized Costs Basis	19
Total, term and revolving loans by origination year	$ 6,478

Shareholders' Equity

6 Months Ended

Jun. 30, 2023

Shareholders' Equity.

Shareholders' Equity

Note 10—Shareholders’ Equity

In April 2023, the Company issued and contributed 184,928 shares of common stock to fund the matching contribution made under the Bank’s defined contribution retirement plan. The contribution amount of $1,028 was valued using the closing market price of the stock on the date contributed or $5.56 per share.

In April 2022, the Company issued and contributed 160,978 shares of common stock to fund the matching contribution made under the Bank’s defined contribution retirement plan. The contribution amount of $1,138 was valued using the closing market price of the stock on the date contributed or $7.07 per share.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 505
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481004/946-505-50-6

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480237/815-40-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 16
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-16

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

Mortgage Servicing Rights, net - Activity and Related Valuation Allowance (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Mortgage servicing rights activity
Mortgage servicing rights Beginning of period	$ 1,766	$ 3,088	$ 1,840	$ 3,332
Additions		2		11
Disposals		(376)		(376)
Amortization	(65)	(172)	(139)	(425)
Mortgage servicing rights End of period	1,701	2,542	1,701	2,542
Valuation allowance at beginning of period	63	200	46	610
Additions (recoveries)	(20)	(111)	(3)	(521)
Valuation allowance at end of period	43	89	43	89
Mortgage servicing rights, net	1,658	2,453	1,658	2,453	$ 1,794
Net servicing income (loss)	$ 102	$ (177)	$ 161	$ 266

Commitments and Contingencies - Mortgage Repurchase Liability and Offers (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2020
Commitments and Contingencies
Net recovery			$ 870		$ 809
Other non-interest expense	$ 1,537	$ 3,876	3,516	$ 5,422
Unpaid principal balance	1,449,709		1,449,709		1,613,385
Outstanding principal balance	19,254		19,254
Advantage Loan Program
Commitments and Contingencies
Mortgage loan repurchase liability	$ 870	$ 1,807	870	1,807	$ 809	$ 2,954
Net recovery			$ 61	$ (525)
Percentage of loans offered to each of investors to repurchase							100.00%

FHLB Borrowings - FHLB Overdraft Line of Credit and Letters of Credit (Details) - USD ($) $ in Thousands	1 Months Ended			6 Months Ended
	Jul. 31, 2024	Oct. 31, 2023	Jul. 31, 2022	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
FHLB Borrowings
FHLB letter of credit				$ 2,000	$ 2,000		$ 11,500
Borrowings outstanding on FHLB standby letters of credit				0		$ 0
FHLB fixed rate advances and overdraft line of credit additional borrowing capacity				379,673
FHLB short-term overdraft line of credit expiring October, 2023
FHLB Borrowings
FHLB overdraft line of credit outstanding borrowings				$ 0	$ 0
FHLB overdraft line of credit (as percent)				5.50%	4.74%
FHLB, agreement term				1 year
FHLB, additional agreement term				1 year
FHLB short-term overdraft line of credit expiring October, 2023 \| Subsequent events
FHLB Borrowings
FHLB overdraft line of credit		$ 20,000
FHLB, overdraft line of credit term		1 year
Standby letter of credit expiring July, 2022
FHLB Borrowings
FHLB overdraft line of credit outstanding borrowings				$ 0		0
FHLB letter of credit			$ 7,500
FHLB letter of credit term			16 months
Standby letters of credit expiring July 2024
FHLB Borrowings
FHLB letter of credit	$ 4,000					$ 2,000
FHLB letter of credit term	36 months

Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Concentration of Credit Risk
Loans held for sale		$ 7,725
Loans receivable		1,658,849
Residential real estate
Concentration of Credit Risk
Loans receivable		$ 1,391,276
Residential real estate loans \| Loans receivables \| Residential real estate
Concentration of Credit Risk
Concentration of credit risk	82.00%	84.00%
California \| Loans receivables \| Residential real estate
Concentration of Credit Risk
Concentration of credit risk	80.00%	81.00%
Advantage Loan Program \| Loans receivables \| Residential real estate
Concentration of Credit Risk
Loans held for sale		$ 6,181
Loans receivable	$ 731,359	$ 880,373
Concentration of credit risk	60.00%	63.00%

Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2023

Fair Values of Financial Instruments

Fair Values of Financial Instruments

Note 15—Fair Values of Financial Instruments

Financial instruments include assets carried at fair value, as well as certain assets and liabilities carried at cost or amortized cost but disclosed at fair value in these condensed consolidated financial statements. Fair value is defined as the exit price, the price that would be received for an asset or paid to transfer a liability in the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date under current market conditions. The inputs to valuation techniques used to measure fair value are prioritized into a three-level hierarchy. The hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

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.

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 a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following methods and significant assumptions are used to estimate fair value:

Investment Securities

The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar investment securities (Level 2). For investment securities where quoted prices or market prices of similar investment securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). The fair value of the collateralized debt obligations, which are categorized as Level 3, is obtained from third-party pricing information. It is determined by calculating discounted cash flows that include spreads that adjust for credit risk and illiquidity. The Company also performs an internal analysis that considers the structure and term of the collateralized debt obligations and the financial condition of the underlying issuers to corroborate the information used from the independent third party.

Loans Held for Sale

Loans held for sale are carried at the lower of amortized cost or fair value. Loans held for sale may be carried at fair value on a nonrecurring basis when fair value is less than cost. The fair value is based on outstanding commitments from investors or quoted prices for loans with similar characteristics (Level 2).

Mortgage Servicing Rights

Fair value of mortgage servicing rights is initially determined at the individual grouping level based on an internal valuation model that calculates the present value of estimated future net servicing income. On a quarterly basis, mortgage servicing rights are evaluated for impairment based upon third-party valuations obtained. As disclosed in Note 6—Mortgage Servicing Rights, net, the valuation model utilizes interest rate, prepayment speed and default rate assumptions that market participants would use in estimating future net servicing income (Level 3).

Assets Measured at Fair Value on a Recurring Basis

The table below presents the assets measured at fair value on a recurring basis categorized by the level of inputs used in the valuation of each asset at June 30, 2023 and December 31, 2022:


			Fair Value Measurements
			at June 30, 2023
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Available for sale debt securities:
U.S. Treasury and Agency securities	$	170,072	$	118,086	$	51,986	$	—
Mortgage-backed securities		34,510		—		34,510		—
Collateralized mortgage obligations		129,782		—		129,782		—
Collateralized debt obligations		144		—		—		144
Equity securities		4,394		4,394		—		—


			Fair Value Measurements
			at December 31, 2022
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Available for sale debt securities:
U.S. Treasury and Agency securities	$	168,437	$	116,355	$	52,082	$	—
Mortgage-backed securities		36,733		—		36,733		—
Collateralized mortgage obligations		138,241		—		138,241		—
Collateralized debt obligations		147		—		—		147
Equity securities		4,396		4,396		—		—

The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2023 and 2022:


	Fair Value
	Measurements Using Significant
	Unobservable Inputs (Level 3)
	Collateralized Debt Obligations
	Six Months Ended June 30,
	2023		2022
Balance of recurring Level 3 assets at beginning of period	$	147	$	203
Total gains or losses (realized/unrealized):
Included in other comprehensive income (loss)		—		3
Principal maturities/settlements		(3)		(53)
Balance of recurring Level 3 assets at end of period	$	144	$	153

Assets Measured at Fair Value on a Nonrecurring Basis

From time to time, the Company may be required to measure certain other assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. For assets measured at fair value on a nonrecurring basis that were recorded in the condensed consolidated balance sheets at June 30, 2023 and December 31, 2022, the following table provides the level of valuation assumptions used to determine each adjustment and the related carrying value:

Fair Value Measurements

at June 30, 2023

Quoted Prices in

Significant Other

Significant

Active Markets

Observable

Unobservable

Fair

Identical Assets

Inputs

Value

(Level 1)

(Level 2)

(Level 3)

Mortgage servicing rights

333

—

333

Fair Value Measurements

at December 31, 2022

Quoted Prices in

Significant Other

Significant

Active Markets for

Observable

Unobservable

Fair

Identical Assets

Inputs

Value

(Level 1)

(Level 2)

(Level 3)

Mortgage servicing rights

391

—

391

The following tables present quantitative information about Level 3 fair value measurements for assets measured at fair value on a nonrecurring basis at June 30, 2023 and December 31, 2022:


	Quantitative Information about Level 3 Fair Value Measurements at June 30, 2023
					Range
	Fair Value		Valuation Technique	Unobservable Inputs	(Weighted Average) ⁽¹⁾
Mortgage servicing rights	$	333	Discounted cash flow	Discount rate	10.0% - 12.5%
					(12.2%)
				Prepayment speed	7.5% - 22.7%
					(19.1%)
				Default rate	0.1%-0.2%
					(0.2%)


	Quantitative Information about Level 3 Fair Value Measurements at December 31, 2022
					Range
	Fair Value		Valuation Technique	Unobservable Inputs	(Weighted Average) ⁽¹⁾
Mortgage servicing rights	$	391	Discounted cash flow	Discount rate	10.0% - 12.5%
					(12.2%)
				Prepayment speed	7.5% - 22.4%
					(19.0%)
				Default rate	0.1% - 0.2%
					(0.2%)

(1)	The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments not carried at fair value at June 30, 2023 and December 31, 2022, are as follows:


	Fair Value Measurements
	at June 30, 2023
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	655,391	$	655,391	$	655,391	$	—	$	—
Interest-bearing time deposits with other banks		934		934		934		—		—
Loans, net		1,449,709		1,403,677		—		—		1,403,677

Financial Liabilities
Time deposits		981,298		984,901		—		984,901		—
Federal Home Loan Bank borrowings		50,000		48,595		—		48,595		—
Subordinated notes, net		65,234		65,234		—		65,234		—


	Fair Value Measurements
	at December 31, 2022
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	379,798	$	379,798	$	379,798	$	—	$	—
Interest-bearing time deposits with other banks		934		934		934		—		—
Loans held for sale		7,725		7,833		—		7,833		—
Loans, net		1,613,385		1,516,771		—		—		1,516,771

Financial Liabilities
Time deposits		861,733		855,566		—		855,566		—
Federal Home Loan Bank borrowings		50,000		48,360		—		48,360		—
Subordinated notes, net		65,271		65,355		—		65,355		—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Investment Securities

6 Months Ended

Jun. 30, 2023

Investment Securities

Investment Securities

Note 4—Investment Securities

Debt Securities

The following tables summarize the amortized cost and fair value of debt securities available for sale at June 30, 2023 and December 31, 2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss:


	June 30, 2023
	Amortized		Gross Unrealized				Fair
	Cost		Gain		Loss		Value
Available for sale:
U.S. Treasury and Agency securities	$	176,768	$	13	$	(6,709)	$	170,072
Mortgage-backed securities		38,883		—		(4,373)		34,510
Collateralized mortgage obligations		143,987		79		(14,284)		129,782
Collateralized debt obligations		155		—		(11)		144
Total	$	359,793	$	92	$	(25,377)	$	334,508


	December 31, 2022
	Amortized		Gross Unrealized				Fair
	Cost		Gain		Loss		Value
Available for sale:
U.S. Treasury and Agency securities	$	175,878	$	17	$	(7,458)	$	168,437
Mortgage-backed securities		41,388		—		(4,655)		36,733
Collateralized mortgage obligations		153,066		4		(14,829)		138,241
Collateralized debt obligations		157		—		(10)		147
Total	$	370,489	$	21	$	(26,952)	$	343,558

Investment securities with a fair value of $107,515 were pledged as collateral on the FHLB borrowings at June 30, 2023. Additionally, investment securities with a fair value of $62,557 were held by the FRB as collateral for available borrowings under the Bank Term Funding Program.

Accrued interest receivable on available for sale debt securities totaled $861 and $808 at June 30, 2023 and December 31, 2022, respectively.

The mortgage-backed securities, and a majority of the collateralized mortgage obligations are issued and/or guaranteed by a U.S. government agency (Government National Mortgage Association) or a U.S. government-sponsored enterprise (Federal Home Loan Mortgage Corporation (“Freddie Mac”) or Federal National Mortgage Association (“Fannie Mae”)). The fair value of the private-label collateralized mortgage obligations was $338 and $353 at June 30, 2023 and December 31, 2022, respectively.

No securities of any single issuer, other than debt securities issued by the U.S. government, government agency and government-sponsored enterprises, were in excess of 10% of total shareholders’ equity as of June 30, 2023 and December 31, 2022.

Information pertaining to the sales of available for sale debt securities for the three and six months ended June 30, 2023 and 2022 is as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Proceeds from the sale of debt securities	$	—	$	—	$	2,977	$	—

Gross realized gains	$	—	$	—	$	1	$	—
Gross realized losses		—		—		(3)		—
Total net realized losses	$	—	$	—	$	(2)	$	—

The income tax expense related to the net realized losses was $1 for the six months ended June 30, 2023.

The amortized cost and fair value of U.S. Treasury and Agency securities at June 30, 2023 are shown by contractual maturity in the table below. Mortgage-backed securities, collateralized mortgage obligations and collateralized debt obligations are disclosed separately as the expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized		Fair
	Cost		Value
U.S. Treasury and Agency securities:
Due less than one year	$	97,419	$	96,169
Due after one year through five years		79,349		73,903
Mortgage-backed securities		38,883		34,510
Collateralized mortgage obligations		143,987		129,782
Collateralized debt obligations		155		144
Total	$	359,793	$	334,508

The following table summarizes available for sale debt securities, at fair value, in an unrealized loss position for which an allowance for credit losses has not been recorded at June 30, 2023 and December 31, 2022, aggregated by major security type and length of time the individual debt securities have been in a continuous unrealized loss position:


	June 30, 2023
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and Agency securities	$	39,572	$	(323)	$	107,487	$	(6,386)	$	147,059	$	(6,709)
Mortgage-backed securities		5,628		(167)		28,882		(4,206)		34,510		(4,373)
Collateralized mortgage obligations		23,891		(678)		94,351		(13,606)		118,242		(14,284)
Collateralized debt obligations		—		—		144		(11)		144		(11)
Total	$	69,091	$	(1,168)	$	230,864	$	(24,209)	$	299,955	$	(25,377)


	December 31, 2022
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and Agency securities	$	100,815	$	(2,839)	$	44,605	$	(4,619)	$	145,420	$	(7,458)
Mortgage-backed securities		5,792		(139)		30,941		(4,516)		36,733		(4,655)
Collateralized mortgage obligations		69,088		(3,169)		64,715		(11,660)		133,803		(14,829)
Collateralized debt obligations		—		—		147		(10)		147		(10)
Total	$	175,695	$	(6,147)	$	140,408	$	(20,805)	$	316,103	$	(26,952)

As of June 30, 2023, the debt securities portfolio consisted of 32 debt securities, with 27 debt securities in an unrealized loss position. For debt securities in an unrealized loss position, the Company has both the intent and ability to hold these investments and, based on current conditions, the Company does not believe it is likely that it will be required to sell these debt securities prior to recovery of the amortized cost. As the Company had the intent and the ability to hold the debt securities in an unrealized loss position at June 30, 2023, each security with an unrealized loss position was further assessed to determine if a credit loss exists.

The Company’s debt, mortgage-backed securities and the majority of the collateralized mortgage obligations are issued by the U.S. government, its agencies and government-sponsored enterprises. The Company has a long history with no credit losses from issuers of U.S. government, its agencies and government-sponsored enterprises. Also, the Company’s available for sale debt securities are explicitly or implicitly fully guaranteed by the U.S. government. As a result, management does not expect any credit losses on its available for sale debt securities. Accordingly, the Company has not recorded an allowance for credit losses for its available for sale debt securities at June 30, 2023. Similarly, for the same reasons noted above, as of December 31, 2022, the Company determined that the unrealized losses in these securities were due to non-credit-related factors, including changes in interest rates and other market conditions.

Equity Securities

Equity securities consist of an investment in a qualified community reinvestment act investment fund, which is a publicly-traded mutual fund and an investment in the common equity of Pacific Coast Banker’s Bank, a thinly traded restricted stock. At June 30, 2023 and December 31, 2022, equity securities totaled $4,640 and $4,642, respectively.

Equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in non-interest income in the condensed consolidated statements of operations. At June 30, 2023 and December 31, 2022, equity securities with readily determinable fair values were $4,394 and $4,396, respectively. The following is a summary of unrealized and realized gains and losses recognized in the condensed consolidated statements of operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net loss recorded during the period on equity securities	$	(71)	$	(170)	$	—	$	(406)
Less: net gains (loss) recorded during the period on equity securities sold during the period		—		—		—		—
Unrealized loss recorded during the period on equity securities held at the reporting date	$	(71)	$	(170)	$	—	$	(406)

The Company has elected to account for its investment in a thinly traded, restricted stock using the measurement alternative for equity securities without readily determinable fair values, resulting in the investment carried at cost based on no evidence of impairment or observable trading activity during the six months ended June 30, 2023 and 2022. The investment was reported at $246 at June 30, 2023 and December 31, 2022.

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Interest income
Interest and fees on loans	$ 21,892	$ 20,746	$ 44,052	$ 44,614
Interest and dividends on investment securities and restricted stock	2,666	1,353	5,122	2,188
Interest on interest-bearing cash deposits	7,002	791	11,809	1,006
Total interest income	31,560	22,890	60,983	47,808
Interest expense
Interest on deposits	13,337	2,016	23,146	4,346
Interest on Federal Home Loan Bank borrowings	248	314	493	666
Interest on subordinated notes	1,791	1,090	3,484	2,054
Total interest expense	15,376	3,420	27,123	7,066
Net interest income	16,184	19,470	33,860	40,742
Provision for (recovery of) credit losses	(2,902)	(1,109)	(2,228)	(5,398)
Net interest income after provision for (recovery of) credit losses	19,086	20,579	36,088	46,140
Non-interest income
Service charges and fees	78	105	172	227
Loss on the sale of investment securities			(2)
Gain on sale of mortgage loans held for sale	1,720	3	1,695	200
Unrealized loss on equity securities	(71)	(170)		(406)
Net servicing income (loss)	102	(177)	161	266
Income earned on company-owned life insurance	81	255	161	583
Other	1	29	2	586
Total non-interest income	1,911	45	2,189	1,456
Non-interest expense
Salaries and employee benefits	9,274	5,569	18,684	15,186
Occupancy and equipment	2,051	2,187	4,163	4,329
Professional fees	3,521	7,066	6,742	12,223
FDIC insurance assessments	263	346	520	715
Data processing	754	762	1,492	1,567
Net provision for (recovery of) mortgage repurchase liability	(59)	(312)	61	(525)
Other	1,537	3,876	3,516	5,422
Total non-interest expense	17,341	19,494	35,178	38,917
Income before income taxes	3,656	1,130	3,099	8,679
Income tax expense	1,117	3,327	1,063	5,616
Net income (loss)	$ 2,539	$ (2,197)	$ 2,036	$ 3,063
Income (loss) per share, basic	$ 0.05	$ (0.04)	$ 0.04	$ 0.06
Income (loss) per share, diluted	$ 0.05	$ (0.04)	$ 0.04	$ 0.06
Weighted average common shares outstanding:
Basic	50,672,461	50,386,856	50,559,092	50,289,612
Diluted	50,778,213	50,386,856	50,705,998	50,496,487

Investment Securities - Amortized Cost and Fair Value, Realized Gains and Losses (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Investment Securities
Debt securities available for sale, amortized cost	$ 359,793	$ 370,489
Debt securities available for sale, Gross Unrealized Gain	92	21
Debt securities available for sale, Gross Unrealized Loss	(25,377)	(26,952)
Debt securities available for sale, at fair value	334,508	343,558
Accrued interest receivable on available for sale debt securities	861	808
Carrying value of debt securities held of any single issuer in excess of 10% of shareholders equity	$ 0	$ 0
Threshold percentage of total shareholders' equity above which securities of any single issuer exceed	10.00%	10.00%
Proceeds from the sale of debt securities	$ 2,977
Gross realized gains	1
Gross realized losses	(3)
Total net realized losses	(2)
Income tax expense on net realized losses	1
Collateralized mortgage obligations \| US Government Corporations and Agencies Securities
Investment Securities
Debt securities available for sale, at fair value	338	$ 353
Debt securities \| Assets pledged as collateral \| FHLB borrowings
Investment Securities
Debt securities available for sale, at fair value	107,515
Debt securities \| Assets pledged as collateral \| FRB
Investment Securities
Debt securities available for sale, at fair value	62,557
U.S. Treasury and Agency securities
Investment Securities
Debt securities available for sale, amortized cost	176,768	175,878
Debt securities available for sale, Gross Unrealized Gain	13	17
Debt securities available for sale, Gross Unrealized Loss	(6,709)	(7,458)
Debt securities available for sale, at fair value	170,072	168,437
Mortgage-backed securities
Investment Securities
Debt securities available for sale, amortized cost	38,883	41,388
Debt securities available for sale, Gross Unrealized Loss	(4,373)	(4,655)
Debt securities available for sale, at fair value	34,510	36,733
Collateralized mortgage obligations
Investment Securities
Debt securities available for sale, amortized cost	143,987	153,066
Debt securities available for sale, Gross Unrealized Gain	79	4
Debt securities available for sale, Gross Unrealized Loss	(14,284)	(14,829)
Debt securities available for sale, at fair value	129,782	138,241
Collateralized debt obligations
Investment Securities
Debt securities available for sale, amortized cost	155	157
Debt securities available for sale, Gross Unrealized Loss	(11)	(10)
Debt securities available for sale, at fair value	$ 144	$ 147

Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions

Related Party Transactions

Note 16—Related Party Transactions

The Company subleased certain office space to entities owned by the Company’s controlling shareholders. Amounts received under such subleases totaled $112 for the six months ended June 30, 2022. The sublease agreements ended March 31, 2022.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

Loans - Activity in the Allowance For Loan Losses by Portfolio Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Allowance for loan losses
Beginning balance		$ 52,455	$ 45,464	$ 56,548
Provision (recovery) for loan losses		(1,109)		(5,398)
Charge offs		(197)		(197)
Recoveries		617		813
Total ending balance	$ 36,153	51,766	36,153	51,766
Allowance for loan losses
Allowance for credit losses beginning of period	38,565
Allowance for credit losses	36,153	51,766	36,153	51,766
Provision (recovery) for loan losses	(2,814)		(2,030)
Charge offs			(6,478)
Recoveries	402		468
Total ending balance	36,153		36,153
ASU 2016-13
Allowance for loan losses
Total ending balance	(1,651)		(1,651)
ASU 2022-02
Allowance for loan losses
Total ending balance	380		380
Residential Real Estate
Allowance for loan losses
Beginning balance		29,911	27,951	32,202
Provision (recovery) for loan losses		(272)		(2,753)
Charge offs		(197)		(197)
Recoveries		540		730
Total ending balance		29,982		29,982
Allowance for loan losses
Allowance for credit losses beginning of period	20,498
Allowance for credit losses		29,982		29,982
Provision (recovery) for loan losses	(3,895)		(5,784)
Charge offs			(6,478)
Recoveries	306		366
Total ending balance	16,909		16,909
Residential Real Estate \| ASU 2016-13
Allowance for loan losses
Total ending balance	865		865
Residential Real Estate \| ASU 2022-02
Allowance for loan losses
Total ending balance	(11)		(11)
Commercial Real Estate
Allowance for loan losses
Beginning balance		13,709	11,694	12,608
Provision (recovery) for loan losses		1,251		2,347
Recoveries		75		80
Total ending balance		15,035		15,035
Allowance for loan losses
Allowance for credit losses beginning of period	16,067
Allowance for credit losses		15,035		15,035
Provision (recovery) for loan losses	566		3,783
Recoveries	95		100
Total ending balance	16,728		16,728
Commercial Real Estate \| ASU 2016-13
Allowance for loan losses
Total ending balance	1,151		1,151
Construction
Allowance for loan losses
Beginning balance		8,829	5,781	11,730
Provision (recovery) for loan losses		(2,123)		(5,025)
Recoveries		2		3
Total ending balance		6,708		6,708
Allowance for loan losses
Allowance for credit losses beginning of period	1,994
Allowance for credit losses		6,708		6,708
Provision (recovery) for loan losses	480		(66)
Recoveries	1		2
Total ending balance	2,475		2,475
Construction \| ASU 2016-13
Allowance for loan losses
Total ending balance	(3,633)		(3,633)
Construction \| ASU 2022-02
Allowance for loan losses
Total ending balance	391		391
Commercial Lines of Credit
Allowance for loan losses
Beginning balance		6	38	8
Provision (recovery) for loan losses		30		28
Total ending balance		36		36
Allowance for loan losses
Allowance for credit losses		36		36
Commercial and industrial
Allowance for loan losses
Beginning balance			38
Allowance for loan losses
Allowance for credit losses beginning of period	6
Allowance for credit losses
Provision (recovery) for loan losses	35		37
Total ending balance	41		41
Commercial and industrial \| ASU 2016-13
Allowance for loan losses
Total ending balance	$ (34)		$ (34)
Other consumer
Allowance for loan losses
Provision (recovery) for loan losses		5		5
Total ending balance		5		5
Allowance for loan losses
Allowance for credit losses		$ 5		$ 5

Nature of Operations And Basis of Presentation (Details)	6 Months Ended
	Jun. 30, 2023 item segment
Nature of Operations and Basis of Presentation
Number of branches	28
Number of reportable segments \| segment	1
San Francisco and Los Angeles, California
Nature of Operations and Basis of Presentation
Number of branches	26

Adoption of New Accounting Standards (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Adoption of New Accounting Standards
Retained earnings	$ 236,587				$ 236,587		$ 234,049
Allowance for credit losses	36,153		$ 51,766	$ 52,455	36,153	$ 51,766	45,464	$ 56,548
Liability for unfunded commitments	43,433				43,433		46,810
Pretax cumulative effect adjustment of a change in accounting principle	3,656		1,130		3,099	8,679
Income tax expense	1,117		3,327		1,063	5,616
Net income (loss)	$ 2,539	$ (503)	$ (2,197)	$ 5,260	$ 2,036	$ 3,063
After Adoption of ASC
Adoption of New Accounting Standards
Allowance for credit losses							44,193
Liability for unfunded commitments							579
ASU 2016-13 \| Cumulative effect adjustment
Adoption of New Accounting Standards
Retained earnings							778
Allowance for credit losses							(1,651)
Liability for unfunded commitments							579
Pretax cumulative effect adjustment of a change in accounting principle							(1,072)
Income tax expense							294
Net income (loss)							778
ASU 2022-02 \| Cumulative effect adjustment
Adoption of New Accounting Standards
Retained earnings							(276)
Allowance for credit losses							380
Pretax cumulative effect adjustment of a change in accounting principle							380
Income tax expense							(104)
Net income (loss)							$ 276

Loans (Tables)

6 Months Ended

Jun. 30, 2023

Loans

Schedule of major categories of loans held for sale, investment and allowance for loan losses


	June 30,		December 31,
	2023		2022
Residential real estate	$	—	$	6,181
Commercial real estate		—		1,544
Total loans held for sale	$	—	$	7,725


	June 30,		December 31,
	2023		2022
Residential real estate	$	1,214,439	$	1,391,276
Commercial real estate		221,658		221,669
Construction		31,978		44,503
Commercial and industrial		17,772		1,396
Other consumer		15		5
Total loans		1,485,862		1,658,849
Less: allowance for credit losses		(36,153)		(45,464)
Loans, net	$	1,449,709	$	1,613,385

Schedule of activity in allowance for loan losses and recorded investment by portfolio segment


	Residential		Commercial				Commercial		Other
Three Months Ended June 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Consumer		Total
Allowance for credit losses:
Balance at the beginning of the period	$	20,498	$	16,067	$	1,994	$	6	$	—	$	38,565
Provision for (recovery of) credit losses		(3,895)		566		480		35		—		(2,814)
Charge offs		—		—		—		—		—		—
Recoveries		306		95		1		—		—		402
Total ending balance	$	16,909	$	16,728	$	2,475	$	41	$	—	$	36,153


	Residential		Commercial				Commercial		Other
Six Months Ended June 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Consumer		Total
Allowance for credit losses:
Balance at the beginning of the period	$	27,951	$	11,694	$	5,781	$	38	$	—	$	45,464
Adoption of ASU 2016-13		865		1,151		(3,633)		(34)		—		(1,651)
Adoption of ASU 2022-02		(11)		—		391		—		—		380
Provision for (recovery of) credit losses		(5,784)		3,783		(66)		37		—		(2,030)
Charge offs		(6,478)		—		—		—		—		(6,478)
Recoveries		366		100		2		—		—		468
Total ending balance	$	16,909	$	16,728	$	2,475	$	41	$	—	$	36,153


							Commercial
	Residential		Commercial				Lines of		Other
Three Months Ended June 30, 2022	Real Estate		Real Estate		Construction		Credit		Consumer		Total
Allowance for loan losses:
Beginning balance	$	29,911	$	13,709	$	8,829	$	6	$	—	$	52,455
Provision for (recovery of) loan losses		(272)		1,251		(2,123)		30		5		(1,109)
Charge offs		(197)		—		—		—		—		(197)
Recoveries		540		75		2		—		—		617
Total ending balance	$	29,982	$	15,035	$	6,708	$	36	$	5	$	51,766


							Commercial
	Residential		Commercial				Lines of		Other
Six Months Ended June 30, 2022	Real Estate		Real Estate		Construction		Credit		Consumer		Total
Allowance for loan losses:
Beginning balance	$	32,202	$	12,608	$	11,730	$	8	$	—	$	56,548
Provision for (recovery of) loan losses		(2,753)		2,347		(5,025)		28		5		(5,398)
Charge offs		(197)		—		—		—		—		(197)
Recoveries		730		80		3		—		—		813
Total ending balance	$	29,982	$	15,035	$	6,708	$	36	$	5	$	51,766


							Commercial
	Residential		Commercial				Lines of		Other
December 31, 2022	Real Estate		Real Estate		Construction		Credit		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	11	$	—	$	—	$	—	$	—	$	11
Collectively evaluated for impairment		27,940		11,694		5,781		38		—		45,453
Total ending allowance balance	$	27,951	$	11,694	$	5,781	$	38	$	—	$	45,464
Loans:
Loans individually evaluated for impairment	$	45	$	—	$	2,485	$	107	$	—	$	2,637
Loans collectively evaluated for impairment		1,391,231		221,669		42,018		1,289		5		1,656,212
Total ending loans balance	$	1,391,276	$	221,669	$	44,503	$	1,396	$	5	$	1,658,849

Schedule of information related to impaired loans by class of loans, as determined prior to adoption of ASU 2016-13

The following table presents information related to impaired loans by class of loans as of December 31, 2022, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13:


	At December 31, 2022
	Unpaid				Allowance
	Principal		Recorded		for Loan
	Balance		Investment		Losses
With no related allowance for loan losses recorded:
Commercial real estate:
Retail	$	227	$	—	$	—
Construction		2,485		2,485		—
Commercial lines of credit:
Private banking		107		107		—
Subtotal		2,819		2,592		—
With an allowance for loan losses recorded:
Residential real estate, first mortgage		79		45		11
Total	$	2,898	$	2,637	$	11

The following table presents average impaired loans, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13, and interest recognized on such loans, for the three and six months ended June 30, 2022:


	Three Months Ended						Six Months Ended
	June 30, 2022						June 30, 2022
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance for loan losses recorded:
Residential real estate, first mortgage	$	55	$	1	$	1	$	57	$	1	$	1
Construction		8,320		39		26		8,340		78		65
Commercial lines of credit:
Private banking		113		1		1		114		3		3
Subtotal		8,488		41		28		8,511		82		69
With an allowance for loan losses recorded:
Residential real estate, first mortgage		142		—		—		190		1		1
Total	$	8,630	$	41	$	28	$	8,701	$	83	$	70

Schedule of recorded investment in nonaccrual and loans past due over 90 days or more and still on accrual by class of loans and aging of the recorded investment in past due loans


	June 30, 2023						December 31, 2022
			Nonaccrual						Nonaccrual
			With No		Past Due 90				With No		Past Due 90
			Allowance		Days or More				Allowance		Days or More
	Nonaccrual		for Credit		and Still		Nonaccrual		for Credit		and Still
	Loans		Losses		Accruing		Loans		Losses		Accruing
Residential real estate:
Residential first mortgage	$	2,062	$	—	$	33	$	33,501	$	—	$	35
Residential second mortgage		—		—		—		189		—		—
Total	$	2,062	$	—	$	33	$	33,690	$	—	$	35

The following table presents an aging of the amortized cost basis of contractually past due loans as of June 30, 2023:


	30 - 59		60 - 89		90 Days
	Days		Days		or More		Total		Current
June 30, 2023	Past Due		Past Due		Past Due		Past Due		Loans		Total
Residential real estate	$	12,633	$	2,385	$	2,095	$	17,113	$	1,197,326	$	1,214,439
Commercial real estate		—		—		—		—		221,658		221,658
Construction		—		—		—		—		31,978		31,978
Commercial and industrial		—		—		—		—		17,772		17,772
Other consumer		—		—		—		—		15		15
Total	$	12,633	$	2,385	$	2,095	$	17,113	$	1,468,749	$	1,485,862

The following table presents the aging of the recorded investment in past due loans, presented in accordance with ASC 310, as of December 31, 2022, by class of loans:


	30 - 59		60 - 89		90 Days
	Days		Days		or More		Total		Current
December 31, 2022	Past Due		Past Due		Past Due		Past Due		Loans		Total
Residential real estate:
Residential first mortgage	$	17,881	$	5,337	$	33,536	$	56,754	$	1,324,545	$	1,381,299
Residential second mortgage		99		—		189		288		9,689		9,977
Commercial real estate:
Retail		—		—		—		—		28,971		28,971
Multifamily		—		—		—		—		81,444		81,444
Office		—		—		—		—		39,610		39,610
Hotels/Single-room occupancy hotels		—		—		—		—		5,208		5,208
Industrial		—		—		—		—		30,242		30,242
Other		—		—		—		—		36,194		36,194
Construction		—		—		—		—		44,503		44,503
Commercial lines of credit:
Private banking		—		—		—		—		107		107
C&I lending		—		—		—		—		1,289		1,289
Other consumer		—		—		—		—		5		5
Total	$	17,980	$	5,337	$	33,725	$	57,042	$	1,601,807	$	1,658,849

Schedule of risk rating of loans by class of loans

For residential and consumer loan classes, the Company evaluates credit quality based on the accrual status of the loan. The following table presents the amortized cost in residential loans based on accrual status:


	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
As of June 30, 2023	2023		2022		2021		2020		2019		Prior		Costs Basis		to Term		Total
Residential lending
Residential mortgage loans:
Payment performance:
Accrual	$	769	$	74,348	$	134,911	$	104,879	$	242,793	$	645,863	$	8,522	$	292	$	1,212,377
Nonaccrual		—		—		—		—		352		1,710		—		—		2,062
Total residential mortgage loans	$	769	$	74,348	$	134,911	$	104,879	$	243,145	$	647,573	$	8,522	$	292	$	1,214,439
Residential mortgage loans:
Current period gross write offs	$	—	$	—	$	—	$	—	$	1,858	$	4,601	$	19	$	—	$	6,478

The amortized cost basis by year of origination and credit quality indicator of the Company’s commercial loans based on the most recent analysis performed was as follows:


	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
As of June 30, 2023	2023		2022		2021		2020		2019		Prior		Costs Basis		to Term		Total
Commercial lending
Real estate - construction:
Risk rating
Pass	$	—	$	—	$	—	$	9,886	$	5,496	$	6,711	$	—	$	—	$	22,093
Special mention		—		—		—		—		—		—		—		—		—
Substandard or lower		—		—		—		—		9,885		—		—		—		9,885
Total real estate – construction	$	—	$	—	$	—	$	9,886	$	15,381	$	6,711	$	—	$	—	$	31,978
Real estate – construction:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial:
Risk rating
Pass	$	16,433	$	1,086	$	—	$	—	$	—	$	104	$	34	$	115	$	17,772
Total commercial and industrial	$	16,433	$	1,086	$	—	$	—	$	—	$	104	$	34	$	115	$	17,772
Commercial and industrial:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate – commercial real estate:
Risk rating
Pass	$	6,955	$	80,566	$	36,569	$	35,538	$	7,011	$	14,078	$	—	$	—	$	180,717
Special mention		—		3,622		—		2,740		8,709		5,433		—		—		20,504
Substandard or lower		—		—		11,763		—		2,837		5,837		—		—		20,437
Total real estate – commercial real estate	$	6,955	$	84,188	$	48,332	$	38,278	$	18,557	$	25,348	$	—	$	—	$	221,658
Real estate – commercial mortgage:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

The credit risk profiles by internally assigned grade for loans by class of loans as of December 31, 2022, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13, were as follows:


			Special
December 31, 2022	Pass		Mention		Substandard		Doubtful		Total
Residential real estate:
Residential first mortgage	$	1,347,763	$	—	$	33,536	$	—	$	1,381,299
Residential second mortgage		9,788		—		189		—		9,977
Commercial real estate:
Retail		28,971		—		—		—		28,971
Multifamily		67,361		14,083		—		—		81,444
Office		39,610		—		—		—		39,610
Hotels/ Single-room occupancy hotels		—		3,669		1,539		—		5,208
Industrial		30,242		—		—		—		30,242
Other		21,036		15,158		—		—		36,194
Construction		31,369		4,650		8,484		—		44,503
Commercial lines of credit:
Private banking		107		—		—		—		107
C&I lending		1,289		—		—		—		1,289
Other consumer		5		—		—		—		5
Total	$	1,577,541	$	37,560	$	43,748	$	—	$	1,658,849

Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Stock-based Compensation
Number of stock options granted			0	0
Stock options
Stock-based Compensation
Maximum term of stock awards granted			10 years
Weighted Average Remaining Contractual Term
Stock-based compensation costs recognized		$ 2	$ 1	$ (11)
Restricted Stock
Stock-based Compensation
Number of share instruments issued			1,195,838	230,427
Restricted Stock \| Key employee
Stock-based Compensation
Number of share instruments issued			1,135,838
Weighted average grant-date fair value			$ 5.08	$ 6.77
Restricted Stock \| Non-employee directors Restricted Stock Awards
Stock-based Compensation
Number of share instruments issued			60,000
Weighted average grant-date fair value			$ 6.09	$ 5.75
2017 Omnibus Equity Incentive Plan
Stock-based Compensation
Number of shares authorized	4,237,100		4,237,100
2017 Omnibus Equity Incentive Plan \| Stock options
Number of Shares
Outstanding at January 1, 2023			349,545
Forfeited/expired			(6,000)
Outstanding at June 30, 2023	343,545		343,545		349,545
Exercisable at June 30, 2023	343,545		343,545
Weighted Average Exercise Price
Outstanding at January 1, 2023			$ 5.19
Forfeited/expired			13.73
Outstanding at June 30, 2023	$ 5.04		5.04		$ 5.19
Exercisable at June 30, 2023	$ 5.04		$ 5.04
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term (Years)			6 years 8 months 15 days		7 years 2 months 1 day
Weighted Average Remaining Contractual Term, Exercisable			6 years 8 months 15 days
Aggregate Intrinsic Value	$ 441		$ 441		$ 627
Aggregate Intrinsic Value Exercisable	441		$ 441
2017 Omnibus Equity Incentive Plan \| Stock Options granted starting in 2020
Stock-based Compensation
Vesting period			3 years
2017 Omnibus Equity Incentive Plan \| Stock Options granted starting in 2020 \| Awards vesting on the first anniversary of the grant date
Stock-based Compensation
Percentage of awards vesting			33.33%
2017 Omnibus Equity Incentive Plan \| Stock Options granted starting in 2020 \| Awards vesting at the end of the second year
Stock-based Compensation
Percentage of awards vesting			33.33%
2017 Omnibus Equity Incentive Plan \| Stock Options granted starting in 2020 \| Awards vesting at the end of the third year
Stock-based Compensation
Percentage of awards vesting			33.33%
2017 Omnibus Equity Incentive Plan \| Restricted Stock
Weighted Average Remaining Contractual Term
Shares withheld in order to pay employee tax liabilities on vested awards			40,992	29,728
Stock-based compensation costs recognized	350	$ 237	$ 522	$ 396
Employee tax liability associated with restricted stock awards the vested during the period			233	196
Total unrecognized compensation cost - restricted stock awards	$ 6,874		$ 6,874
Unrecognized compensation cost related to nonvested awards, expected to be recognized over a weighted-average period			2 years 4 months 24 days
Number of Shares
Nonvested, Opening balance			390,125
Granted			1,195,838
Vested			(149,567)
Forfeited			(53,759)
Nonvested, Ending balance	1,382,637		1,382,637		390,125
Weighted Average Grant Date Fair Value
Nonvested, Opening balance			$ 6.17
Granted			5.15
Vested			6.33
Forfeited			6.18
Nonvested, Ending balance	$ 5.27		$ 5.27		$ 6.17
Grant Date Fair Value of Restricted Stock that Vested During the year
Fair value of restricted stock awards vested			$ 863	$ 655
2020 Omnibus Equity Incentive Plan
Stock-based Compensation
Number of shares authorized	3,979,661		3,979,661
Number of shares available for future grants	2,299,858		2,299,858
2020 Omnibus Equity Incentive Plan \| Restricted Stock
Stock-based Compensation
Vesting period	18 months		3 years
2020 Omnibus Equity Incentive Plan \| Restricted Stock \| Awards vesting on the first anniversary of the grant date
Stock-based Compensation
Percentage of awards vesting	33.33%		33.33%
2020 Omnibus Equity Incentive Plan \| Restricted Stock \| Awards vesting at the end of the second year
Stock-based Compensation
Percentage of awards vesting			33.33%
2020 Omnibus Equity Incentive Plan \| Restricted Stock \| Awards vesting at the end of the third year
Stock-based Compensation
Percentage of awards vesting			33.33%
2020 Omnibus Equity Incentive Plan \| Restricted Stock \| Key employee
Stock-based Compensation
Number of share instruments issued				185,427
2020 Omnibus Equity Incentive Plan \| Restricted Stock \| Non-employee directors Restricted Stock Awards
Stock-based Compensation
Number of share instruments issued				45,000

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2023
Summary of Significant Accounting Policies
Principles of Consolidation	Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP. The condensed consolidated financial statements include the results of Sterling Bancorp, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates.
Concentration of Credit Risk	Concentration of Credit Risk The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At June 30, 2023 and December 31, 2022, residential real estate loans accounted for 82% and 84%, respectively, of total gross loans. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At June 30, 2023 and December 31, 2022, approximately 80% and 81%, respectively, of gross loans were originated with respect to properties or businesses located in the state of California. In December 2019, the Company terminated a loan product consisting of one-, three-, five- or seven-year adjustable-rate mortgages that required a down payment of at least 35% (also referred to herein as “Advantage Loan Program loans”) which continues to be the largest portion of gross residential loans. An internal review of the Advantage Loan Program indicated that certain employees engaged in misconduct in connection with the origination of a significant number of such loans, including with respect to verification of income, the amount of income reported for borrowers, reliance on third parties and related documentation. Refer to Note 17—Commitments and Contingencies. Advantage Loan Program loans (including residential real estate loans held for sale of $6,181 at December 31, 2022) totaled $731,359 and $880,373, or 60% and 63% of gross residential loans, at June 30, 2023 and December 31, 2022, respectively.
Investment Securities	Investment Securities Debt Securities (Effective January 1, 2023) Debt securities are classified as either available for sale or held to maturity. Management determines the classification of the debt securities when they are purchased. All debt securities were categorized as available for sale as of June 30, 2023 and December 31, 2022. Available for sale debt securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive loss, net of income taxes. The amortized cost of debt securities is adjusted for amortization of premiums (noncallable) and accretion of discounts. The Company amortizes premiums and accretes discounts using the effective interest method over the contractual life of the individual securities or, in the case of asset-backed securities, using the effective yield method over the estimated life of the individual securities. Interest income includes amortization or accretion of purchase premium or discount. Gains and losses realized on the sales of available for sale debt securities are recorded on the settlement date and determined using the specific identification method. For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available for sale debt securities that do not meet the aforementioned criteria, the Company evaluates at the individual security level whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of income taxes. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit losses. Losses are charged against the allowance for credit losses when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available for sale debt securities is recorded separately from the amortized cost basis of the debt securities in the condensed consolidated balance sheets and is excluded from the estimate of credit losses. Equity Securities Equity securities with readily determinable fair values are stated at fair value with unrealized and realized gains and losses reported in income. Those equity securities without readily determinable fair values are recorded at cost less any impairments, adjusted for subsequent observable price changes in orderly transactions for an identical or similar investment of the same issuer. Any changes in the carrying value of the equity investments are recognized in income. Management performs a qualitative assessment each reporting period to identify impairment of equity securities without readily determinable fair values. When a qualitative assessment indicates that an impairment exists, management determines the fair value of the investment and if the fair value is less than the investment’s carrying value, an impairment charge is recorded in income equal to the difference between the fair value and the carrying amount of the investment.
Loans Held for Sale	Loans Held for Sale The Company originates certain loans intended for sale in the secondary market. Loans held for sale are carried at the lower of amortized cost or fair value on an individual loan basis. The fair value of loans held for sale are primarily determined based on quoted prices for similar loans in active markets or outstanding commitments from third-party investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to non-interest income in the condensed consolidated statements of operations. Performing residential real estate loans that are held for sale are generally sold with servicing rights retained. The carrying value of mortgage loans sold is reduced by the amount allocated to the servicing right. On the sale of an originated loan, the servicing right is recorded at its estimated fair value. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold and are recorded as a component of non-interest income. Loans that are originated and classified as held for investment are periodically sold in order to manage liquidity, asset credit quality, interest rate risk or concentration risk. Loans that are reclassified into loans held for sale from loans held for investment, due to a change in intent, are recorded at the lower of cost or fair value.
Loans	Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at amortized cost, net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred loan fees and costs. Accrued interest receivable related to loans is recorded separately from the amortized cost basis of loans on the condensed consolidated balance sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct loan origination costs, are deferred and amortized over the contractual lives of the respective loans as a yield adjustment using the effective interest method. Other credit-related fees are recognized as fee income, as a component of non-interest income. Interest income on loans is accrued as earned using the interest method over the term of the loan. The accrual of interest income is discontinued at the time the loan is 90 days past due or earlier if conditions warrant and placed on nonaccrual status. In all cases, loans are placed on nonaccrual status at an earlier date if collection of principal or interest is considered doubtful. All interest accrued and not received for loans placed on nonaccrual status is reversed against interest income. Any payments received on nonaccrual loans are applied to interest income on a cash basis if the loan is considered well secured. Otherwise, all payments received are applied first to outstanding loan principal amounts and then to the recovery of the charged off loan amounts. Any excess is treated as a recovery of interest and fees. Loans are returned to accrual status after all principal and interest amounts contractually due are made and future payments are reasonably assured.
Allowance for Credit Losses - Loans	Allowance for Credit Losses - Loans (Effective January 1, 2023) The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of held for investment loans to present the net amount expected to be collected on the loans. The allowance for credit losses is adjusted through a charge (recovery) to provision for (recovery of) credit losses in the condensed consolidated statements of operations. When the Company determines that all or a portion of a loan is uncollectible, the appropriate amount is written off, and the allowance for credit losses is reduced by the same amount. The Company applies judgment to determine when a loan is deemed uncollectible; however, generally a loan will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the allowance for credit losses when received. Portions of the allowance for credit losses may be allocated for specific credits; however, the entire allowance for credit losses is available for any credit that, in management’s judgment, should be charged off. The Company estimates the allowance for credit losses on loans based on the underlying loans’ amortized cost. If the collection of principal becomes uncertain, the Company stops accruing interest and reverses the accrued but unpaid interest against interest income. The Company has made a policy election to exclude accrued interest receivable from the measurement of the allowance for credit losses. The allowance for credit losses process involves procedures to appropriately consider the unique characteristics of the Company’s portfolio segments. The allowance for credit losses is measured on a collective (pool) basis for portfolios of loans with similar risk characteristics and risk profiles. The Company’s portfolio segments include the following: (i) commercial real estate, (ii) commercial construction, (iii) commercial and industrial, (iv) residential real estate and (v) home equity lines of credit. These portfolio segments were identified based on their common characteristics: loan type/purpose of loan, underlying collateral type, historical/expected credit loss patterns, availability of credit quality indicators (i.e., FICO, risk rating, delinquency) and completeness of the historical information. Loans which do not share risk characteristics—generally, nonaccrual commercial and construction loans, and collateral-dependent loans where the borrower is experiencing financial difficulty — are individually assessed for credit loss. The Company has elected, as a practical expedient, to measure the allowance for credit losses on a collateral-dependent loan, where the borrower is experiencing financial difficulty, at the fair value of the collateral less estimated costs to sell. The portfolio segments are reviewed at least annually or when major changes occur in the loan portfolio to ensure that the segmentation is still appropriate. The amount of the allowance for credit losses represents management’s best estimate of current expected credit losses on loans considering available information from internal and external sources, which is relevant to assessing collectability of the loans over the loans’ contractual terms, adjusted for expected prepayments. The contractual term excludes expected extensions, renewals and modifications unless: (i) management has a reasonable expectation at the reporting date that an individual borrower is experiencing financial difficulty and a modification of the loan will be executed, or (ii) the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company. The Company estimates the allowance for credit losses using relevant available information related to past events, current conditions, and reasonable and supportable forecasts. In determining the total allowance for credit losses, the Company calculates the quantitative portion of the allowance for credit losses using a methodology, the Advanced Probability of Default model, a logistic regression model, and adds qualitative adjustments to the model results and the results from any individual loan assessments. The Advanced Probability of Default model estimates the expected lifetime net charge off balance utilizing the following: (i) probability that the loan will stop performing or default; (ii) probability that a loan will pay-off entirely prior to maturity; and (iii) macroeconomic variables, including but not limited to unemployment rates, gross domestic product, and the Treasury Yield Curve. This information is specific to each portfolio segment, though not necessarily solely reliant on internally sourced data. Internal data is supplemented by, but not replaced by, peer data when required, primarily to determine the probability of default. The Company then applies a recovery rate to reflect the recoveries over an approximate 10-year period. The probability of default is estimated by analyzing the relationship between the historical performance of each loan pool and historical economic trends over a complete economic cycle. The probability of default for each pool is adjusted using a statistical model to reflect the current impact of certain macroeconomic variables and their expected changes over a reasonable and supportable forecast period of eight quarters. The Company determined that it was reasonably able to forecast the macroeconomic variables used in the forecast modeling processes with an acceptable degree of confidence for a total of eight quarters. This forecast period is followed by a reversion process whereby the macroeconomic variables are relaxed to revert to the average historical loss rates for periods after the forecasted eight-quarter period. Management qualitatively adjusts the allowance for credit loss model results for risk factors not considered within the quantitative modeling processes but are nonetheless relevant in assessing the expected credit losses within the portfolio segments. These qualitative risk factor adjustments may increase or decrease management’s estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. Qualitative risk factors considered include adjustments for model limitations, management’s adjustments to economic market forecasts and other current or forecasted events not captured in the Company’s historical loss experience. For loans that do not share risk characteristics that are evaluated on an individual basis, specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. In such cases, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The Company reevaluates the fair value of collateral supporting collateral dependent loans on an annual basis. As disclosed above, the Company has identified the following portfolio segments used in measuring its expected credit losses in the loan portfolio and their respective risk characteristics. The Residential Real Estate Mortgages portfolio includes residential first mortgages and residential second mortgages. The degree of risk in residential real estate lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. Economic trends determined by unemployment rates and other key economic indicators, particularly at the regional and local levels, are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers’ capacity to repay their obligations may be deteriorating. The Home Equity Lines of Credit portfolio includes residential second mortgages in the form of a revolving line of credit that requires interest only payments for a period followed by an amortizing period. These loans have higher risk of default compared to first liens making it harder to rely on loan-to-value ratios and loan balances can fluctuate. These loans are secured by the residential real estate by serving as a second lien behind the first mortgage lien. The Commercial Real Estate portfolio includes commercial loans made to many types of businesses involving retail, multifamily, offices, hotels/single-room occupancy hotels, industrial and other commercial properties. Adverse economic developments or an overbuilt market may impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for the properties to produce sufficient cash flow to service debt obligations. The Construction Loans portfolio is comprised of loans to builders and developers primarily for residential, commercial and mixed-use development. In addition to general commercial real estate risks, construction loans have additional risk of cost overruns, market deterioration during construction, lack of permanent financing, and no operating history. The Commercial and Industrial portfolio is comprised of loans to many types of businesses for their operating needs of the business. The risk characteristics of these loans vary based on the borrowers’ business and industry as repayment is typically dependent on cash flows generated from the underlying business. These loans may be secured by real estate or other assets or may be unsecured.
Liability for Unfunded Commitments	Liability for Unfunded Commitments (Effective January 1, 2023) Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for these off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk through a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The estimate of expected credit losses generally follows the same methodology as the funded loans by utilizing the loss rates generated for each portfolio segment with an adjustment for the probability of funding to occur. The liability for unfunded commitments, which is recorded in accrued expenses and other liabilities in the condensed consolidated balance sheets, is adjusted through the provision for (recovery of) credit losses.

- Definition

Disclosure of accounting policy for credit loss on financial instrument measured at amortized cost basis, net investment in lease, off-balance sheet credit exposure, and available-for-sale debt security. Includes, but is not limited to, methodology used to estimate allowance for credit loss, how writeoff of uncollectible amount is recognized, and determination of past due status and nonaccrual status.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 326
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-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479319/326-20-50-14

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 326
-SubTopic 20
-Name Accounting Standards Codification
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-Paragraph 5A
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-URI https://asc.fasb.org//1943274/2147479391/326-20-30-5A

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 326
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-Name Accounting Standards Codification
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-Paragraph 3C
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-URI https://asc.fasb.org//1943274/2147479319/326-20-50-3C

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 35
-Paragraph 8A
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-URI https://asc.fasb.org//1943274/2147479366/326-20-35-8A

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 3D
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-URI https://asc.fasb.org//1943274/2147479319/326-20-50-3D

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 326
-SubTopic 20
-Name Accounting Standards Codification
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-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479344/326-20-45-5

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 326
-SubTopic 30
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-Publisher FASB
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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-SubTopic 30
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-Section 50
-Paragraph 3C
-Publisher FASB
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 3A
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479106/326-30-50-3A

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 326
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 3D
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479106/326-30-50-3D

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 13A
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Topic 326
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-Name Accounting Standards Codification
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-Paragraph 21
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-URI https://asc.fasb.org//1943274/2147479319/326-20-50-21

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 17: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
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+ Details

Regulatory Capital Requirements (Tables)

6 Months Ended

Jun. 30, 2023

Regulatory Capital Requirements

Schedule of minimum requirements under prompt corrective action regulations classifications


					To be Well
						Capitalized Under Prompt Corrective
						Action Regulations (CBLR
	Actual					Framework)
	Amount		Ratio		Amount		Ratio
June 30, 2023
Tier 1 (core) capital to average total assets (leverage ratio)
Consolidated	$	335,924	13.44	%	$	224,950	9.00	%
Bank		322,532	12.91	%		224,881	9.00	%


					For Capital					To be Well
	Actual				Adequacy Purposes					Capitalized
	Amount		Ratio		Amount		Ratio			Amount	Ratio
December 31, 2022
Total adjusted capital to risk-weighted assets
Consolidated	$	390,591	25.64	%	$	121,888	8.00	%		N/A	N/A
Bank		425,159	27.93			121,795	8.00		$	152,244	10.00	%
Tier 1 (core) capital to risk-weighted assets
Consolidated		332,068	21.79			91,416	6.00			N/A	N/A
Bank		405,803	26.65			91,346	6.00			121,795	8.00
Common Equity Tier 1 (CET1)
Consolidated		332,068	21.79			68,562	4.50			N/A	N/A
Bank		405,803	26.65			68,510	4.50			98,959	6.50
Tier 1 (core) capital to average total assets (leverage ratio)
Consolidated		332,068	13.54			98,073	4.00			N/A	N/A
Bank		405,803	16.56			98,032	4.00			122,540	5.00

Commitments and Contingencies - Mortgage Repurchase Liability Activity and Balances (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Commitments and Contingencies
Unpaid principal balance	$ 1,449,709		$ 1,449,709		$ 1,613,385
Unpaid principal balance	1,449,709		1,449,709
Mortgage repurchase liability:
Net provision (recovery)			870		809
Net provision (recovery)	(59)	$ (312)	61	$ (525)
Obligation to repurchase receivables sold member \| Residential real estate
Commitments and Contingencies
Unpaid principal balance	74,840		74,840		112,542
Advantage Loan Program
Mortgage repurchase liability:
Balance, beginning of period			809	2,954	2,954
Net provision (recovery)			61	(525)
Loss on loan repurchases				(622)
Balance, end of the period	870	$ 1,807	870	$ 1,807	809
Advantage Loan Program \| Obligation to repurchase receivables sold member \| Residential real estate
Commitments and Contingencies
Unpaid principal balance	$ 37,391		$ 37,391		$ 43,274

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets
Cash and due from banks	$ 655,391	$ 379,798
Interest-bearing time deposits with other banks	934	934
Debt securities available for sale, at fair value (amortized cost $359,793 and $370,489)	334,508	343,558
Equity securities	4,640	4,642
Loans held for sale		7,725
Loans, net of allowance for credit losses of $36,153 and $45,464	1,449,709	1,613,385
Accrued interest receivable	7,489	7,829
Mortgage servicing rights, net	1,658	1,794
Leasehold improvements and equipment, net	5,850	6,301
Operating lease right-of-use assets	13,025	14,800
Federal Home Loan Bank stock, at cost	20,288	20,288
Company-owned life insurance	8,605	8,501
Deferred tax asset, net	18,538	23,704
Other assets	11,375	11,476
Total assets	2,532,010	2,444,735
Liabilities
Noninterest-bearing deposits	44,799	53,041
Interest-bearing deposits	1,996,692	1,900,996
Total deposits	2,041,491	1,954,037
Federal Home Loan Bank borrowings	50,000	50,000
Subordinated notes, net	65,234	65,271
Operating lease liabilities	14,176	15,990
Accrued expenses and other liabilities	43,433	46,810
Total liabilities	2,214,334	2,132,108
Shareholders' equity
Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding
Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 52,081,866 shares and 50,795,871 shares at June 30, 2023 and December 31, 2022, respectively	84,323	83,295
Additional paid-in capital	15,098	14,808
Retained earnings	236,587	234,049
Accumulated other comprehensive loss	(18,332)	(19,525)
Total shareholders' equity	317,676	312,627
Total liabilities and shareholders' equity	$ 2,532,010	$ 2,444,735

Loans

6 Months Ended

Jun. 30, 2023

Loans

Loans

Note 5—Loans

Loans Held for Sale

The major categories of loans held for sale were as follows:


	June 30,		December 31,
	2023		2022
Residential real estate	$	—	$	6,181
Commercial real estate		—		1,544
Total loans held for sale	$	—	$	7,725

At December 31, 2022, loans held for sale included nonaccrual residential real estate loans of $1,942.

In March 2023, residential real estate loans held for investment with an amortized cost of $41,059 were transferred to loans held for sale due to management’s change in intent and decision to sell the loans. On the transfer, the Company recorded a $6,478 charge off applied against the allowance for credit losses to reflect these loans at their estimated fair value. In addition, residential real estate loans held for sale with an amortized cost of $3,906 were transferred to loans held for investment due to management’s change in intent and decision to not sell the loans.

During the three months ended June 30, 2023, the Company sold loans held for sale, with a carrying value of $36,210 on the date of sale to a third party for net cash proceeds of $37,930. The Company recorded a gain on the sale of the loans of $1,720.

In February 2022, the Company sold substantially all of its commercial real estate loans held for sale, which loans had a carrying value of $49,455 on the date of sale, to a third party for cash proceeds of $49,610.

Loans Held for Investment and Allowance for Credit Losses

The major categories of loans held for investment and the allowance for credit losses were as follows:


	June 30,		December 31,
	2023		2022
Residential real estate	$	1,214,439	$	1,391,276
Commercial real estate		221,658		221,669
Construction		31,978		44,503
Commercial and industrial		17,772		1,396
Other consumer		15		5
Total loans		1,485,862		1,658,849
Less: allowance for credit losses		(36,153)		(45,464)
Loans, net	$	1,449,709	$	1,613,385

Accrued interest receivable related to total gross loans, including loans held for sale, was $6,440 and $6,894 as of June 30, 2023 and December 31, 2022, respectively.

As disclosed above, residential real estate loans with an amortized cost of $41,059 were transferred to loans held for sale and subsequently sold in May 2023. Also, in March 2023, residential real estate loans with an amortized cost of $3,906 were transferred from loans held for sale to loans held for investment.

Loans totaling $457,984 and $389,830 were pledged as collateral on the FHLB borrowings at June 30, 2023 and December 31, 2022, respectively.

During the three months ended June 30, 2022, the Bank repurchased a pool of Advantage Loan Program loans with a total outstanding principal balance of $30,380. In connection with this repurchase, the Company recognized a loss of $695 related to a fair value discount in other non-interest expense and a disposition of $376 of mortgage servicing rights, and a loss of $622 against the mortgage repurchase liability.

The Advantage Loan Program loans that had been repurchased and included in the loan portfolio have an outstanding principal balance of $154,765 and $179,828 at June 30, 2023 and December 31, 2022, respectively. For more information on the repurchases of Advantage Loan Program loans, refer to Note 17—Commitments and Contingencies.

The allowance for credit losses at June 30, 2023 was estimated using the current expected credit loss model. The Company’s estimate of the allowance for credit losses reflects losses expected over the remaining contractual life of the loans. The contractual term does not consider extensions, renewals or modifications unless the Company has identified a loan where the individual borrower is experiencing financial difficulty. The following tables present the activity in the allowance for credit losses related to loans held for investment by portfolio segment for the three and six months ended June 30, 2023:


	Residential		Commercial				Commercial		Other
Three Months Ended June 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Consumer		Total
Allowance for credit losses:
Balance at the beginning of the period	$	20,498	$	16,067	$	1,994	$	6	$	—	$	38,565
Provision for (recovery of) credit losses		(3,895)		566		480		35		—		(2,814)
Charge offs		—		—		—		—		—		—
Recoveries		306		95		1		—		—		402
Total ending balance	$	16,909	$	16,728	$	2,475	$	41	$	—	$	36,153


	Residential		Commercial				Commercial		Other
Six Months Ended June 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Consumer		Total
Allowance for credit losses:
Balance at the beginning of the period	$	27,951	$	11,694	$	5,781	$	38	$	—	$	45,464
Adoption of ASU 2016-13		865		1,151		(3,633)		(34)		—		(1,651)
Adoption of ASU 2022-02		(11)		—		391		—		—		380
Provision for (recovery of) credit losses		(5,784)		3,783		(66)		37		—		(2,030)
Charge offs		(6,478)		—		—		—		—		(6,478)
Recoveries		366		100		2		—		—		468
Total ending balance	$	16,909	$	16,728	$	2,475	$	41	$	—	$	36,153

The following tables present the activity in the allowance for loan losses for the three and six months ended June 30, 2022, as determined in accordance with ASC 310, Receivables (“ASC 310”), prior to the adoption of ASU 2016-13:


							Commercial
	Residential		Commercial				Lines of		Other
Three Months Ended June 30, 2022	Real Estate		Real Estate		Construction		Credit		Consumer		Total
Allowance for loan losses:
Beginning balance	$	29,911	$	13,709	$	8,829	$	6	$	—	$	52,455
Provision for (recovery of) loan losses		(272)		1,251		(2,123)		30		5		(1,109)
Charge offs		(197)		—		—		—		—		(197)
Recoveries		540		75		2		—		—		617
Total ending balance	$	29,982	$	15,035	$	6,708	$	36	$	5	$	51,766


							Commercial
	Residential		Commercial				Lines of		Other
Six Months Ended June 30, 2022	Real Estate		Real Estate		Construction		Credit		Consumer		Total
Allowance for loan losses:
Beginning balance	$	32,202	$	12,608	$	11,730	$	8	$	—	$	56,548
Provision for (recovery of) loan losses		(2,753)		2,347		(5,025)		28		5		(5,398)
Charge offs		(197)		—		—		—		—		(197)
Recoveries		730		80		3		—		—		813
Total ending balance	$	29,982	$	15,035	$	6,708	$	36	$	5	$	51,766

Prior to the adoption of ASU 2016-13, the Company individually evaluated commercial real estate loans, construction loans and commercial lines of credit for impairment and large homogeneous loans, such as residential real estate loans and other consumer loans were collectively evaluated for impairment. The following table presents loans individually and collectively evaluated for impairment and their respective allowance for credit loss allocation as of December 31, 2022, as determined in accordance with ASC 310, prior to the adoption of ASU 2016-13:


							Commercial
	Residential		Commercial				Lines of		Other
December 31, 2022	Real Estate		Real Estate		Construction		Credit		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	11	$	—	$	—	$	—	$	—	$	11
Collectively evaluated for impairment		27,940		11,694		5,781		38		—		45,453
Total ending allowance balance	$	27,951	$	11,694	$	5,781	$	38	$	—	$	45,464
Loans:
Loans individually evaluated for impairment	$	45	$	—	$	2,485	$	107	$	—	$	2,637
Loans collectively evaluated for impairment		1,391,231		221,669		42,018		1,289		5		1,656,212
Total ending loans balance	$	1,391,276	$	221,669	$	44,503	$	1,396	$	5	$	1,658,849

The following table presents information related to impaired loans by class of loans as of December 31, 2022, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13:


	At December 31, 2022
	Unpaid				Allowance
	Principal		Recorded		for Loan
	Balance		Investment		Losses
With no related allowance for loan losses recorded:
Commercial real estate:
Retail	$	227	$	—	$	—
Construction		2,485		2,485		—
Commercial lines of credit:
Private banking		107		107		—
Subtotal		2,819		2,592		—
With an allowance for loan losses recorded:
Residential real estate, first mortgage		79		45		11
Total	$	2,898	$	2,637	$	11


	Three Months Ended						Six Months Ended
	June 30, 2022						June 30, 2022
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance for loan losses recorded:
Residential real estate, first mortgage	$	55	$	1	$	1	$	57	$	1	$	1
Construction		8,320		39		26		8,340		78		65
Commercial lines of credit:
Private banking		113		1		1		114		3		3
Subtotal		8,488		41		28		8,511		82		69
With an allowance for loan losses recorded:
Residential real estate, first mortgage		142		—		—		190		1		1
Total	$	8,630	$	41	$	28	$	8,701	$	83	$	70

Nonaccrual Loans and Past Due Loans

Past due loans held for investment are loans contractually past due 30 days or more as to principal or interest payments. A loan held for investment is classified as nonaccrual, and the accrual of interest on such loan is discontinued, when the contractual payment of principal or interest becomes 90 days past due. In addition, a loan may be placed on nonaccrual at any other time management has serious doubts about further collectability of principal or interest according to the contractual terms, even though the loan is currently performing. A loan held for investment may remain in accrual status if it is in the process of collection and well secured. When a loan held for investment is placed in nonaccrual status, interest accrued but not received is reversed against interest income. Interest received on such loans is applied to the principal balance of the loan until qualifying for return of accrual status. Loans are returned to accrual status after all principal and interest amounts contractually due are made to return the loan to current status and future payments are reasonably assured.

The following table presents the amortized cost basis of loans on nonaccrual status, amortized cost basis of loans on nonaccrual status with no related allowance for credit losses and loans past due 90 days or more and still accruing as of June 30, 2023 and December 31, 2022:


	June 30, 2023						December 31, 2022
			Nonaccrual						Nonaccrual
			With No		Past Due 90				With No		Past Due 90
			Allowance		Days or More				Allowance		Days or More
	Nonaccrual		for Credit		and Still		Nonaccrual		for Credit		and Still
	Loans		Losses		Accruing		Loans		Losses		Accruing
Residential real estate:
Residential first mortgage	$	2,062	$	—	$	33	$	33,501	$	—	$	35
Residential second mortgage		—		—		—		189		—		—
Total	$	2,062	$	—	$	33	$	33,690	$	—	$	35

At June 30, 2023, the Company had nonaccrual loans of $2,062 in its held for investment loan portfolio. The decrease in nonaccrual loans from December 31, 2022 is primarily due to nonaccrual loans of $24,406 that were transferred to held for sale in March 2023 and subsequently sold in May 2023, and nonaccrual loans of $4,231 that were charged off to the allowance for credit losses. The remainder of the decrease in nonaccrual loans is primarily due to loans of $3,649 that were paid in full and loans of $5,538 that were returned to accrual status. Partially offsetting these decreases, loans totaling $6,358 were added to nonaccrual status, a portion of which were transferred to held for sale and sold in May 2023.

The total interest income that would have been recorded if the nonaccrual loans had been current in accordance with their original terms was $41 and $632 for the three months ended June 30, 2023 and 2022, respectively, and $49 and $1,387 for the six months ended June 30, 2023 and 2022, respectively. The Company does not record interest income on nonaccrual loans.

Aging Analysis of Past Due Loans

The following table presents an aging of the amortized cost basis of contractually past due loans as of June 30, 2023:


	30 - 59		60 - 89		90 Days
	Days		Days		or More		Total		Current
June 30, 2023	Past Due		Past Due		Past Due		Past Due		Loans		Total
Residential real estate	$	12,633	$	2,385	$	2,095	$	17,113	$	1,197,326	$	1,214,439
Commercial real estate		—		—		—		—		221,658		221,658
Construction		—		—		—		—		31,978		31,978
Commercial and industrial		—		—		—		—		17,772		17,772
Other consumer		—		—		—		—		15		15
Total	$	12,633	$	2,385	$	2,095	$	17,113	$	1,468,749	$	1,485,862

The following table presents the aging of the recorded investment in past due loans, presented in accordance with ASC 310, as of December 31, 2022, by class of loans:


	30 - 59		60 - 89		90 Days
	Days		Days		or More		Total		Current
December 31, 2022	Past Due		Past Due		Past Due		Past Due		Loans		Total
Residential real estate:
Residential first mortgage	$	17,881	$	5,337	$	33,536	$	56,754	$	1,324,545	$	1,381,299
Residential second mortgage		99		—		189		288		9,689		9,977
Commercial real estate:
Retail		—		—		—		—		28,971		28,971
Multifamily		—		—		—		—		81,444		81,444
Office		—		—		—		—		39,610		39,610
Hotels/Single-room occupancy hotels		—		—		—		—		5,208		5,208
Industrial		—		—		—		—		30,242		30,242
Other		—		—		—		—		36,194		36,194
Construction		—		—		—		—		44,503		44,503
Commercial lines of credit:
Private banking		—		—		—		—		107		107
C&I lending		—		—		—		—		1,289		1,289
Other consumer		—		—		—		—		5		5
Total	$	17,980	$	5,337	$	33,725	$	57,042	$	1,601,807	$	1,658,849

Collateral-Dependent Loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. For all classes of financial assets deemed collateral-dependent, the Company estimates the expected credit losses based on the collateral’s fair value less cost to sell. At June 30, 2023, the Company did not have any collateral-dependent loans held for investment.

Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Historically, the Company has provided loan forbearances to residential borrowers when mandated and modified construction loans by providing term extensions. The Company did not have any loans held for investment made to borrowers experiencing financial difficulty that were modified during the six months ended June 30, 2023. The Company did not have any loans held for investment made to borrowers experiencing financial difficulty that were previously modified that subsequently defaulted during the six months ended June 30, 2023.

Foreclosure Proceedings

At June 30, 2023, there were no loans in formal foreclosure proceedings. At December 31, 2022, the recorded investment of residential mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $5,711. Of the loans in formal foreclosure proceedings, $603 were included in loans held for sale in the condensed consolidated balance sheet at December 31, 2022 and were carried at the lower of amortized cost or fair value. The balance of the loans at December 31, 2022 were classified as held for investment and received an allocation of the allowance for credit losses consistent with a substandard loan loss allocation rate as the loans were classified as substandard.

Credit Quality Indicators

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, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes homogeneous loans, such as residential real estate and other consumer loans, and non-homogeneous loans, such as commercial and industrial, construction and commercial real estate loans. This analysis is performed at least quarterly. The Company uses the following definitions for risk ratings:

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 Company’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 loan. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered pass-rated loans.


	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
As of June 30, 2023	2023		2022		2021		2020		2019		Prior		Costs Basis		to Term		Total
Residential lending
Residential mortgage loans:
Payment performance:
Accrual	$	769	$	74,348	$	134,911	$	104,879	$	242,793	$	645,863	$	8,522	$	292	$	1,212,377
Nonaccrual		—		—		—		—		352		1,710		—		—		2,062
Total residential mortgage loans	$	769	$	74,348	$	134,911	$	104,879	$	243,145	$	647,573	$	8,522	$	292	$	1,214,439
Residential mortgage loans:
Current period gross write offs	$	—	$	—	$	—	$	—	$	1,858	$	4,601	$	19	$	—	$	6,478

The amortized cost basis by year of origination and credit quality indicator of the Company’s commercial loans based on the most recent analysis performed was as follows:


	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
As of June 30, 2023	2023		2022		2021		2020		2019		Prior		Costs Basis		to Term		Total
Commercial lending
Real estate - construction:
Risk rating
Pass	$	—	$	—	$	—	$	9,886	$	5,496	$	6,711	$	—	$	—	$	22,093
Special mention		—		—		—		—		—		—		—		—		—
Substandard or lower		—		—		—		—		9,885		—		—		—		9,885
Total real estate – construction	$	—	$	—	$	—	$	9,886	$	15,381	$	6,711	$	—	$	—	$	31,978
Real estate – construction:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial:
Risk rating
Pass	$	16,433	$	1,086	$	—	$	—	$	—	$	104	$	34	$	115	$	17,772
Total commercial and industrial	$	16,433	$	1,086	$	—	$	—	$	—	$	104	$	34	$	115	$	17,772
Commercial and industrial:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate – commercial real estate:
Risk rating
Pass	$	6,955	$	80,566	$	36,569	$	35,538	$	7,011	$	14,078	$	—	$	—	$	180,717
Special mention		—		3,622		—		2,740		8,709		5,433		—		—		20,504
Substandard or lower		—		—		11,763		—		2,837		5,837		—		—		20,437
Total real estate – commercial real estate	$	6,955	$	84,188	$	48,332	$	38,278	$	18,557	$	25,348	$	—	$	—	$	221,658
Real estate – commercial mortgage:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


			Special
December 31, 2022	Pass		Mention		Substandard		Doubtful		Total
Residential real estate:
Residential first mortgage	$	1,347,763	$	—	$	33,536	$	—	$	1,381,299
Residential second mortgage		9,788		—		189		—		9,977
Commercial real estate:
Retail		28,971		—		—		—		28,971
Multifamily		67,361		14,083		—		—		81,444
Office		39,610		—		—		—		39,610
Hotels/ Single-room occupancy hotels		—		3,669		1,539		—		5,208
Industrial		30,242		—		—		—		30,242
Other		21,036		15,158		—		—		36,194
Construction		31,369		4,650		8,484		—		44,503
Commercial lines of credit:
Private banking		107		—		—		—		107
C&I lending		1,289		—		—		—		1,289
Other consumer		5		—		—		—		5
Total	$	1,577,541	$	37,560	$	43,748	$	—	$	1,658,849

Loans - Nonaccrual loans cost basis, Aging analysis of past due loans, foreclosure (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended			6 Months Ended
	Mar. 31, 2023	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Loans
Total							$ 1,658,849
Total		$ 1,485,862			$ 1,485,862
Nonaccrual loans held for sale		2,062			2,062
Transfer of loans to loans held for sale					34,581
Loans in formal foreclosure proceedings		0			0
Gain (Loss) on Sale of Mortgage Loans		1,720		$ 3	1,695	$ 200
Advantage Loan Program
Loans
Loans repurchased during the period		30,380
Loss on fair value discount in other non-interest expense		695
Disposition of mortgage servicing rights		376
Gain (Loss) on Sale of Mortgage Loans		622
Advantage Loan Program loans repurchased
Loans
Total		154,765			154,765		179,828
Not Past Due
Loans
Total							1,601,807
Total		1,468,749			1,468,749
Past Due
Loans
Total							57,042
Total		17,113			17,113
30 - 59 Days Past Due
Loans
Total							17,980
Total		12,633			12,633
60 - 89 Days Past Due
Loans
Total							5,337
Total		2,385			2,385
90 Days or More Past Due
Loans
Total							33,725
Total		2,095			2,095
Residential real estate
Loans
Nonaccrual loans		2,062			2,062		33,690
Past Due Over 90 Days and Still Accruing		33			33		35
Total							1,391,276
Total		1,214,439			1,214,439
Transfer of loans to loans held for sale	$ 41,059		$ 41,059
Nonaccrual residential real estate loan charge off					4,231
Payment of nonaccrual residential real estate loan		3,649			3,649
Loans returned to accrual status					5,538
Loans added to nonaccrual status					6,358
Total interest income on nonaccrual loan		41		$ 632	49	$ 1,387
Loans in formal foreclosure proceedings							5,711
Residential real estate \| Mortgage loans held for sale
Loans
Loans in formal foreclosure proceedings							603
Residential real estate \| Not Past Due
Loans
Total		1,197,326			1,197,326
Residential real estate \| Past Due
Loans
Total		17,113			17,113
Residential real estate \| 30 - 59 Days Past Due
Loans
Total		12,633			12,633
Residential real estate \| 60 - 89 Days Past Due
Loans
Total		2,385			2,385
Residential real estate \| 90 Days or More Past Due
Loans
Total		2,095			2,095
Residential real estate \| Real estate loan, first mortgage
Loans
Nonaccrual loans		2,062			2,062		33,501
Past Due Over 90 Days and Still Accruing		33			33		35
Total							1,381,299
Residential real estate \| Real estate loan, first mortgage \| Not Past Due
Loans
Total							1,324,545
Residential real estate \| Real estate loan, first mortgage \| Past Due
Loans
Total							56,754
Residential real estate \| Real estate loan, first mortgage \| 30 - 59 Days Past Due
Loans
Total							17,881
Residential real estate \| Real estate loan, first mortgage \| 60 - 89 Days Past Due
Loans
Total							5,337
Residential real estate \| Real estate loan, first mortgage \| 90 Days or More Past Due
Loans
Total							33,536
Residential real estate \| Real estate loan, second mortgage
Loans
Nonaccrual loans							189
Total							9,977
Residential real estate \| Real estate loan, second mortgage \| Not Past Due
Loans
Total							9,689
Residential real estate \| Real estate loan, second mortgage \| Past Due
Loans
Total							288
Residential real estate \| Real estate loan, second mortgage \| 30 - 59 Days Past Due
Loans
Total							99
Residential real estate \| Real estate loan, second mortgage \| 90 Days or More Past Due
Loans
Total							189
Commercial real estate
Loans
Total							221,669
Total		221,658			221,658
Commercial real estate \| Not Past Due
Loans
Total		221,658			221,658
Commercial real estate \| Retail
Loans
Total							28,971
Commercial real estate \| Retail \| Not Past Due
Loans
Total							28,971
Commercial real estate \| Multifamily
Loans
Total							81,444
Commercial real estate \| Multifamily \| Not Past Due
Loans
Total							81,444
Commercial real estate \| Office
Loans
Total							39,610
Commercial real estate \| Office \| Not Past Due
Loans
Total							39,610
Commercial real estate \| Hotels/Single-room occupancy hotels
Loans
Total							5,208
Commercial real estate \| Hotels/Single-room occupancy hotels \| Not Past Due
Loans
Total							5,208
Commercial real estate \| Industrial
Loans
Total							30,242
Commercial real estate \| Industrial \| Not Past Due
Loans
Total							30,242
Commercial real estate \| Other
Loans
Total							36,194
Commercial real estate \| Other \| Not Past Due
Loans
Total							36,194
Construction
Loans
Total							44,503
Total		31,978			31,978
Construction \| Not Past Due
Loans
Total							44,503
Total		31,978			31,978
Commercial and industrial
Loans
Total							1,396
Total		17,772			17,772
Commercial and industrial \| Not Past Due
Loans
Total		17,772			17,772
Commercial Lines of Credit
Loans
Total							1,396
Commercial Lines of Credit \| Private banking
Loans
Total							107
Commercial Lines of Credit \| Private banking \| Not Past Due
Loans
Total							107
Commercial Lines of Credit \| C&I lending
Loans
Total							1,289
Commercial Lines of Credit \| C&I lending \| Not Past Due
Loans
Total							1,289
Other consumer
Loans
Total							5
Total		15			15
Other consumer \| Not Past Due
Loans
Total							$ 5
Total		$ 15			$ 15

Deposits (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Deposits
Interest-bearing time deposits	$ 981,298	$ 861,733
Time deposits that meet or exceed the FDIC insurance limit of $250	$ 287,420	$ 243,861

Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator:
Net income (loss)	$ 2,539	$ (503)	$ (2,197)	$ 5,260	$ 2,036	$ 3,063
Denominator:
Weighted average common shares outstanding, basic	50,672,461		50,386,856		50,559,092	50,289,612
Weighted average effect of potentially dilutive common shares:
Weighted average common shares outstanding, diluted	50,778,213		50,386,856		50,705,998	50,496,487
Income (loss) per share:
Basic (in dollars per shares)	$ 0.05		$ (0.04)		$ 0.04	$ 0.06
Diluted (in dollars per shares)	$ 0.05	$ 0.05	$ (0.04)	$ (0.04)	$ 0.04	$ 0.06
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive	576,087		762,831		248,978	108,619
Stock options
Income (loss) per share:
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive	45,457		344,506		47,490	49,545
Restricted stock
Income (loss) per share:
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive	530,630		418,325		201,488	59,074
Common Stock \| Stock options
Weighted average effect of potentially dilutive common shares:
Incremental shares from share-based compensation	71,580				86,368	112,422
Common Stock \| Restricted stock
Weighted average effect of potentially dilutive common shares:
Incremental shares from share-based compensation	34,172				60,538	94,453

Regulatory Capital Requirements

6 Months Ended

Jun. 30, 2023

Regulatory Capital Requirements

Regulatory Capital Requirements

Note 12—Regulatory Capital Requirements

The Bank is subject to the capital adequacy requirements of the OCC. The Company, as a thrift holding company, generally is subject to the capital adequacy requirements of the Federal Reserve. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Prompt corrective action regulations provide five classifications for depository institutions like the Bank, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors, and the regulators, in their discretion, can require the Company to lower classifications in certain cases. Failure to meet minimum capital requirements can initiate regulatory action that could have a direct material effect on the Company’s business, financial condition and results of operations.

The federal banking agencies’ regulations provide for an optional simplified measure of capital adequacy for qualifying community banking organizations (that is, the “CBLR” framework), as implemented pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018. The CBLR framework is designed to reduce the burden of the requirements for calculating and reporting risk-based capital ratios for qualifying community banking organizations that opt into the framework. In order to qualify for the CBLR framework, a community banking organization must have (i) a Tier 1 leverage ratio of greater than 9.0%, (ii) less than $10 billion in total consolidated assets, and (iii) limited amounts of off-balance-sheet exposure and trading assets and liabilities. A qualifying community banking organization that opts into the CBLR framework and meets all requirements under the framework will be considered to have met the capital ratio requirements for the “well capitalized” capital category under applicable prompt corrective action regulations and will not be required to report or calculate risk-based capital under generally applicable capital adequacy requirements. Failure to meet the qualifying criteria within the grace period of two reporting periods, or to maintain a leverage ratio of 8.0% or greater, would require the institution to comply with the generally applicable capital adequacy requirements. An eligible banking organization can opt out of the CBLR framework and revert to compliance with general capital adequacy requirements and capital measurements under prompt corrective action regulations without restriction.

The Company and the Bank have determined the organization is a qualifying community banking organization and has elected to measure capital adequacy under the CBLR framework, effective as of January 1, 2023. Management believes as of June 30, 2023, the Company and the Bank meet all capital adequacy requirements to which they are subject. The following tables present the consolidated Company’s and the Bank’s actual and minimum required capital amounts and ratios at June 30, 2023 and December 31, 2022:


					To be Well
						Capitalized Under Prompt Corrective
						Action Regulations (CBLR
	Actual					Framework)
	Amount		Ratio		Amount		Ratio
June 30, 2023
Tier 1 (core) capital to average total assets (leverage ratio)
Consolidated	$	335,924	13.44	%	$	224,950	9.00	%
Bank		322,532	12.91	%		224,881	9.00	%


					For Capital					To be Well
	Actual				Adequacy Purposes					Capitalized
	Amount		Ratio		Amount		Ratio			Amount	Ratio
December 31, 2022
Total adjusted capital to risk-weighted assets
Consolidated	$	390,591	25.64	%	$	121,888	8.00	%		N/A	N/A
Bank		425,159	27.93			121,795	8.00		$	152,244	10.00	%
Tier 1 (core) capital to risk-weighted assets
Consolidated		332,068	21.79			91,416	6.00			N/A	N/A
Bank		405,803	26.65			91,346	6.00			121,795	8.00
Common Equity Tier 1 (CET1)
Consolidated		332,068	21.79			68,562	4.50			N/A	N/A
Bank		405,803	26.65			68,510	4.50			98,959	6.50
Tier 1 (core) capital to average total assets (leverage ratio)
Consolidated		332,068	13.54			98,073	4.00			N/A	N/A
Bank		405,803	16.56			98,032	4.00			122,540	5.00

Dividend Restrictions

As noted above, federal banking regulations require the Bank to maintain certain capital levels and may limit the dividends paid by the Bank to the holding company or by the holding company to its shareholders. The holding company’s principal source of funds for dividend payments is dividends received from the Bank. Regulatory approval is required if (i) the total capital distributions for the applicable calendar year exceed the sum of the Bank’s net income for that year to date plus the Bank’s retained net income for the preceding two years or (ii) the Bank would not be at least “adequately capitalized” following the distribution. In addition, the Company currently is required to obtain the prior approval of the FRB in order to pay dividends to the Company’s shareholders. Refer to Note 17—Commitments and Contingencies.

The Qualified Thrift Lender (“QTL”) test requires that a minimum of 65% of assets be maintained in qualified thrift investments, including mortgage loans, housing- and real estate-related finance and other specified areas. If the QTL test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends, or the Bank must convert to a commercial bank charter. Management believes that the QTL test has been met. Refer to Note 18—Subsequent Events for further information regarding the Company’s application to operate as a “covered savings association.”

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References + Details

Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		3 Months Ended
	Apr. 30, 2023	Apr. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Shareholders' Equity.
Number of shares common stock to fund the matching contribution issued and contributed	184,928	160,978
Contribution amount	$ 1,028	$ 1,138	$ 1,028	$ 1,138
Share price	$ 5.56	$ 7.07

Loans - Loans Held for Sale (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended			6 Months Ended
	Mar. 31, 2023	Feb. 28, 2022	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Loans
Total loans held for sale								$ 7,725
Nonaccrual loans held for sale			$ 2,062			$ 2,062
Transfer of residential real estate loans to loans held for sale						34,581
Transfer of residential real estate loans from loans held for sale						3,906
Loans carrying value on date of sale			36,210			36,210
Proceeds from sale of loans held for sale			37,930
Gain on sale of loans held for sale			$ 1,720
Charge offs					$ 197		$ 197
Residential real estate
Loans
Total loans held for sale								6,181
Transfer of residential real estate loans to loans held for sale	$ 41,059			$ 41,059
Transfer of residential real estate loans from loans held for sale	$ 3,906
Charge offs					$ 197		$ 197
Nonaccrual residential real estate loans
Loans
Nonaccrual loans held for sale								1,942
Transfer of residential real estate loans to loans held for sale						$ 24,406
Transfer of residential real estate loans from loans held for sale				$ 3,906
Commercial real estate
Loans
Total loans held for sale								$ 1,544
Loans carrying value on date of sale		$ 49,455
Proceeds from sale of loans held for sale		$ 49,610

Adoption of New Accounting Standards (Tables)

6 Months Ended

Jun. 30, 2023

Adoption of New Accounting Standards

Schedule of recently adopted accounting guidance



	Prior to		Adjustments for		Adjustments for		After
	Adoption		ASU 2016-13		ASU 2022-02		Adoption
Assets:
Allowance for credit losses – loans	$	45,464	$	(1,651)	$	380	$	44,193
Liabilities:
Liability for unfunded commitments		—		579		—		579
Pretax cumulative effect adjustment of a change in accounting principle				(1,072)		380
Less: income taxes				294		(104)
Cumulative effect adjustment of a change in accounting principle, net of tax			$	(778)	$	276

Investment Securities - Aggregated by Major Security Type and Length of Time in a Continuous Unrealized Loss Position (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) security	Dec. 31, 2022 USD ($)
Fair Value
Less than 12 Months, Fair value	$ 69,091	$ 175,695
12 Months or More, Fair Value	230,864	140,408
Available for sale, Continuous unrealized loss position, Fair Value	299,955	316,103
Unrealized Losses
Less than 12 Months, Unrealized Losses	(1,168)	(6,147)
12 Months or More, Unrealized Losses	(24,209)	(20,805)
Available for sale, Continuous unrealized loss position, Unrealized Losses	$ (25,377)	(26,952)
Number of debt securities in portfolio \| security	32
Number of debt securities in an unrealized loss position \| security	27
U.S. Treasury and Agency securities
Fair Value
Less than 12 Months, Fair value	$ 39,572	100,815
12 Months or More, Fair Value	107,487	44,605
Available for sale, Continuous unrealized loss position, Fair Value	147,059	145,420
Unrealized Losses
Less than 12 Months, Unrealized Losses	(323)	(2,839)
12 Months or More, Unrealized Losses	(6,386)	(4,619)
Available for sale, Continuous unrealized loss position, Unrealized Losses	(6,709)	(7,458)
Mortgage-backed securities
Fair Value
Less than 12 Months, Fair value	5,628	5,792
12 Months or More, Fair Value	28,882	30,941
Available for sale, Continuous unrealized loss position, Fair Value	34,510	36,733
Unrealized Losses
Less than 12 Months, Unrealized Losses	(167)	(139)
12 Months or More, Unrealized Losses	(4,206)	(4,516)
Available for sale, Continuous unrealized loss position, Unrealized Losses	(4,373)	(4,655)
Collateralized mortgage obligations
Fair Value
Less than 12 Months, Fair value	23,891	69,088
12 Months or More, Fair Value	94,351	64,715
Available for sale, Continuous unrealized loss position, Fair Value	118,242	133,803
Unrealized Losses
Less than 12 Months, Unrealized Losses	(678)	(3,169)
12 Months or More, Unrealized Losses	(13,606)	(11,660)
Available for sale, Continuous unrealized loss position, Unrealized Losses	(14,284)	(14,829)
Collateralized debt obligations
Fair Value
12 Months or More, Fair Value	144	147
Available for sale, Continuous unrealized loss position, Fair Value	144	147
Unrealized Losses
12 Months or More, Unrealized Losses	(11)	(10)
Available for sale, Continuous unrealized loss position, Unrealized Losses	$ (11)	$ (10)

Deposits

6 Months Ended

Jun. 30, 2023

Deposits

Deposits

Note 7—Deposits

Time deposits, included in interest-bearing deposits, were $981,298 and $861,733 at June 30, 2023 and December 31, 2022, respectively.

Time deposits that meet or exceed the FDIC insurance limit of $250 were $287,420 and $243,861 at June 30, 2023 and December 31, 2022, respectively.

Investment Securities - Equity Securities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2022
Investment Securities
Equity securities	$ 4,640			$ 4,642
Investment in equity securities without readily determinable fair value	4,394			4,396
Equity securities with readily determinable fair values
Net loss recorded during the period on equity securities	(71)	$ (170)	$ (406)
Unrealized loss recorded during the period on equity securities held at the reporting date	(71)	$ (170)	$ (406)
Level 3
Investment Securities
Investment in equity securities without readily determinable fair value	$ 246			$ 246

Fair Values of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Fair Values of Financial Instruments

Schedule of assets measured at fair value on a recurring basis categorized by level of inputs


			Fair Value Measurements
			at June 30, 2023
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Available for sale debt securities:
U.S. Treasury and Agency securities	$	170,072	$	118,086	$	51,986	$	—
Mortgage-backed securities		34,510		—		34,510		—
Collateralized mortgage obligations		129,782		—		129,782		—
Collateralized debt obligations		144		—		—		144
Equity securities		4,394		4,394		—		—


			Fair Value Measurements
			at December 31, 2022
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Available for sale debt securities:
U.S. Treasury and Agency securities	$	168,437	$	116,355	$	52,082	$	—
Mortgage-backed securities		36,733		—		36,733		—
Collateralized mortgage obligations		138,241		—		138,241		—
Collateralized debt obligations		147		—		—		147
Equity securities		4,396		4,396		—		—

Summary of reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs


	Fair Value
	Measurements Using Significant
	Unobservable Inputs (Level 3)
	Collateralized Debt Obligations
	Six Months Ended June 30,
	2023		2022
Balance of recurring Level 3 assets at beginning of period	$	147	$	203
Total gains or losses (realized/unrealized):
Included in other comprehensive income (loss)		—		3
Principal maturities/settlements		(3)		(53)
Balance of recurring Level 3 assets at end of period	$	144	$	153

Schedule of assets measured at fair value on a nonrecurring basis categorized by level of inputs

Fair Value Measurements

at June 30, 2023

Quoted Prices in

Significant Other

Significant

Active Markets

Observable

Unobservable

Fair

Identical Assets

Inputs

Value

(Level 1)

(Level 2)

(Level 3)

Mortgage servicing rights

333

—

333

Fair Value Measurements

at December 31, 2022

Quoted Prices in

Significant Other

Significant

Active Markets for

Observable

Unobservable

Fair

Identical Assets

Inputs

Value

(Level 1)

(Level 2)

(Level 3)

Mortgage servicing rights

391

—

391

Schedule of quantitative information about nonrecurring Level 3 fair value measurements


	Quantitative Information about Level 3 Fair Value Measurements at June 30, 2023
					Range
	Fair Value		Valuation Technique	Unobservable Inputs	(Weighted Average) ⁽¹⁾
Mortgage servicing rights	$	333	Discounted cash flow	Discount rate	10.0% - 12.5%
					(12.2%)
				Prepayment speed	7.5% - 22.7%
					(19.1%)
				Default rate	0.1%-0.2%
					(0.2%)


	Quantitative Information about Level 3 Fair Value Measurements at December 31, 2022
					Range
	Fair Value		Valuation Technique	Unobservable Inputs	(Weighted Average) ⁽¹⁾
Mortgage servicing rights	$	391	Discounted cash flow	Discount rate	10.0% - 12.5%
					(12.2%)
				Prepayment speed	7.5% - 22.4%
					(19.0%)
				Default rate	0.1% - 0.2%
					(0.2%)

(1)	The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

Schedule of carrying amounts and estimated fair values of financial instruments not carried at fair value


	Fair Value Measurements
	at June 30, 2023
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	655,391	$	655,391	$	655,391	$	—	$	—
Interest-bearing time deposits with other banks		934		934		934		—		—
Loans, net		1,449,709		1,403,677		—		—		1,403,677

Financial Liabilities
Time deposits		981,298		984,901		—		984,901		—
Federal Home Loan Bank borrowings		50,000		48,595		—		48,595		—
Subordinated notes, net		65,234		65,234		—		65,234		—


	Fair Value Measurements
	at December 31, 2022
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	379,798	$	379,798	$	379,798	$	—	$	—
Interest-bearing time deposits with other banks		934		934		934		—		—
Loans held for sale		7,725		7,833		—		7,833		—
Loans, net		1,613,385		1,516,771		—		—		1,516,771

Financial Liabilities
Time deposits		861,733		855,566		—		855,566		—
Federal Home Loan Bank borrowings		50,000		48,360		—		48,360		—
Subordinated notes, net		65,271		65,355		—		65,355		—

Nature of Operations and Basis of Presentation

6 Months Ended

Jun. 30, 2023

Nature of Operations and Basis of Presentation

Nature of Operations and Basis of Presentation

Note 1—Nature of Operations and Basis of Presentation

Nature of Operations

Sterling Bancorp, Inc. (unless stated otherwise or the context otherwise requires, together with its subsidiaries, the “Company”) is a unitary thrift holding company that was incorporated in 1989 and the parent company of its wholly owned subsidiary, Sterling Bank and Trust, F.S.B. (the “Bank”). The Company’s business is conducted through the Bank, which was formed in 1984. The Bank originates commercial real estate loans, commercial and industrial loans and consumer loans and provides deposit products, consisting primarily of checking, savings and term certificate accounts. Historically, the Company’s largest asset class has been residential mortgage loans. The Bank’s residential lending program has been suspended since the third-party residential lending service provider announced in November 2022 its intention to cease conducting business. Pending residential loan applications were processed through February 2023. The Company is currently performing an evaluation of its alternatives for new banking products and services. The Bank also engages in mortgage banking activities and, as such, acquires, sells and services residential mortgage loans. The Bank operates through a network of 28 branches of which 26 branches are located in the San Francisco and Los Angeles, California metropolitan areas with the remaining branches located in New York, New York and Southfield, Michigan.

The Company is headquartered in Southfield, Michigan, and its operations are in the financial services industry. Management evaluates the performance of the Company’s business based on one reportable segment, community banking.

The Company is subject to regulation, examination and supervision by the Board of Governors of the Federal Reserve System (the “FRB” or “Federal Reserve”). The Bank is a federally chartered stock savings bank that is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (“OCC”) of the U.S. Department of Treasury and the Federal Deposit Insurance Corporation (“FDIC”) and is a member of the Federal Home Loan Bank (“FHLB”) system.

Basis of Presentation

The condensed consolidated balance sheet as of June 30, 2023, and the condensed consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity and cash flows for the three and six months ended June 30, 2023 and 2022 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, in the opinion of management, of a normal recurring nature that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The financial data and other financial information disclosed in these notes to the condensed consolidated financial statements related to these periods are also unaudited. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ended December 31, 2023 or for any future annual or interim period. The condensed consolidated balance sheet at December 31, 2022 included herein was derived from the audited financial statements as of that date. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2023 (the “2022 Form 10-K”).

Income (Loss) Per Share

6 Months Ended

Jun. 30, 2023

Income (Loss) Per Share

Income (Loss) Per Share

Note 13—Income (Loss) Per Share

Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income per common share further includes any common shares available to be issued upon the exercise of outstanding stock options and restricted stock awards if such inclusions would be dilutive. The Company determines the potentially dilutive common shares using the treasury stock method. In periods of a net loss, basic and diluted per share information are the same.

The following table presents the computation of income (loss) per share, basic and diluted:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	2,539	$	(2,197)	$	2,036	$	3,063

Denominator:
Weighted average common shares outstanding, basic		50,672,461		50,386,856		50,559,092		50,289,612
Weighted average effect of potentially dilutive common shares:
Stock options		71,580		—		86,368		112,422
Restricted stock		34,172		—		60,538		94,453
Weighted average common shares outstanding, diluted		50,778,213		50,386,856		50,705,998		50,496,487

Income (loss) per share, basic and diluted	$	0.05	$	(0.04)	$	0.04	$	0.06

The weighted average effect of certain stock options and nonvested restricted stock that were excluded from the computation of weighted average diluted shares outstanding, as inclusion would be anti-dilutive, are summarized as follows:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2023	2022	2023	2022
Stock options	45,457	344,506	47,490	49,545
Restricted stock	530,630	418,325	201,488	59,074
Total	576,087	762,831	248,978	108,619

Income (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Income (Loss) Per Share

Schedule of computation of income (loss) per share, basic and diluted


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	2,539	$	(2,197)	$	2,036	$	3,063

Denominator:
Weighted average common shares outstanding, basic		50,672,461		50,386,856		50,559,092		50,289,612
Weighted average effect of potentially dilutive common shares:
Stock options		71,580		—		86,368		112,422
Restricted stock		34,172		—		60,538		94,453
Weighted average common shares outstanding, diluted		50,778,213		50,386,856		50,705,998		50,496,487

Income (loss) per share, basic and diluted	$	0.05	$	(0.04)	$	0.04	$	0.06

Schedule of anti-dilutive shares that were excluded from the computation of weighted average diluted shares outstanding


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2023	2022	2023	2022
Stock options	45,457	344,506	47,490	49,545
Restricted stock	530,630	418,325	201,488	59,074
Total	576,087	762,831	248,978	108,619

Regulatory Capital Requirements - Actual ratios of Company and Bank (Details) - Risk-weighting 100% Scenario	Jun. 30, 2023	Dec. 31, 2022
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total adjusted capital to risk weighted assets, Actual, Ratio		0.2564
Tier 1 (core) capital to risk weighted assets, Actual, Ratio		0.2179
Common Tier 1 (CET1), Actual, Ratio		0.2179
Tier 1 (core) capital to adjusted tangible assets (leverage ratio)	0.1344	0.1354
Bank
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total adjusted capital to risk weighted assets, Actual, Ratio		0.2793
Tier 1 (core) capital to risk weighted assets, Actual, Ratio		0.2665
Common Tier 1 (CET1), Actual, Ratio		0.2665
Tier 1 (core) capital to adjusted tangible assets (leverage ratio)	0.1291	0.1656

Stock-based Compensation

6 Months Ended

Jun. 30, 2023

Stock-based Compensation

Stock-based Compensation

Note 11—Stock-based Compensation

The board of directors established the 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which was approved by the shareholders in December 2020. The 2020 Plan provides for the grant of up to 3,979,661 shares of common stock for stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares for issuance to employees, consultants and the board of directors of the Company, of which 2,299,858 shares were available for future grants. The stock-based awards are issued at no less than the market price on the date the awards are granted.

Previously, the board of directors had established a 2017 Omnibus Equity Incentive Plan (the “2017 Plan”) which was approved by the shareholders. The 2017 Plan initially provided for the grant of up to 4,237,100 shares of common stock for stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards for issuance to employees, consultants and the board of directors of the Company. The stock-based awards were issued at no less than the market price on the date the awards were granted. Due to the adoption of the 2020 Plan, no further grants will be issued under the 2017 Plan.

Stock Options

Stock option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of grant. The stock option awards vest one-third per year over three years after the date of grant. All stock option awards have a maximum term of ten years. No stock option awards were granted during the six months ended June 30, 2023 and 2022.

A summary of the Company’s stock option activity as of and for the six months ended June 30, 2023 is as follows:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
	of Shares	Price		Term	Value
				(Years)
Outstanding at January 1, 2023	349,545	$	5.19	7.17	$	627
Granted	—
Exercised	—
Forfeited/expired	(6,000)		13.73
Outstanding at June 30, 2023	343,545	$	5.04	6.71	$	441
Exercisable at June 30, 2023	343,545	$	5.04	6.71	$	441

The Company recorded stock-based compensation expense associated with stock options of $2 for the three months ended June 30, 2022, and $1 and $(11) for the six months ended June 30, 2023 and 2022, respectively.

Restricted Stock Awards

Restricted stock awards are issued to independent directors and certain key employees. The restricted stock awards generally vest one-third per year over three years after the date of grant, unless the Compensation Committee determines to establish a different vesting schedule for specific grants. In particular, in the three months ended June 30, 2023, the Company granted its chief executive officer a restricted stock award that vests in one-third increments every six months over an eighteen-month period and granted other executive officers restricted stock awards that vest in one-third increments on the third, fourth and fifth anniversary of the date of grant. The value of a restricted stock award is based on the market value of the Company’s common stock at the date of grant reduced by the present value of dividends per share expected to be paid during the period the shares are not vested. Upon a change in control, as defined in the 2017 Plan and 2020 Plan, the outstanding restricted stock awards will immediately vest.

During the six months ended June 30, 2023, the board of directors approved the issuance of 1,195,838 shares of restricted stock, of which 60,000 were awarded to independent directors with a weighted average grant-date fair value of $6.09 and 1,135,838 shares were awarded to key employees with a weighted average grant-date fair value of $5.08. During the six months ended June 30, 2022, the board of directors approved the issuance of 230,427 shares of restricted stock, of which 45,000 shares were awarded to independent directors with a weighted average grant-date fair value of $5.75 and 185,427 shares were awarded to key employees with a weighted average grant-date fair value of $6.77.

During the six months ended June 30, 2023 and 2022, the Company withheld 40,992 shares and 29,728 shares of common stock, respectively, representing a portion of the restricted stock awards that vested during the period in order to satisfy certain related employee tax withholding liabilities of $233 and $196, respectively, associated with vesting. These withheld shares are treated the same as repurchased shares for accounting purposes.

A summary of the restricted stock awards activity for the six months ended June 30, 2023 is as follows:


		Weighted Average
	Number	Grant Date
	of Shares	Fair Value
Nonvested at January 1, 2023	390,125	$	6.17
Granted	1,195,838		5.15
Vested	(149,567)		6.33
Forfeited	(53,759)		6.18
Nonvested at June 30, 2023	1,382,637	$	5.27

The fair value of the award is recorded as compensation expense on a straight-line basis over the vesting period. The Company recorded stock-based compensation expense associated with restricted stock awards of $350 and $237 for the three months ended June 30, 2023 and 2022, respectively, and $522 and $396 for the six months ended June 30, 2023 and 2022, respectively. At June 30, 2023, there was $6,874 of total unrecognized compensation cost related to the nonvested stock granted which is expected to be recognized over a weighted-average period of 2.4 years. The total fair value of shares vested during the six months ended June 30, 2023 and 2022 was $863 and $655, respectively.

Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events

Subsequent Events

Note 18—Subsequent Events

Subordinated Notes

On July 15, 2023, the Company redeemed its outstanding Subordinated Notes at a redemption price equal to 100% of the outstanding principal amount plus accrued interest, for a total cash payment of $66,821. The Company recorded a gain on the extinguishment of the Subordinated Notes equal to the remaining unamortized note premium.

Election to Operate as a “Covered Savings Association”

After June 30, 2023, the Company submitted the requisite regulatory filings for the Bank to operate as a “covered savings association” under the Home Owners’ Loan Act, as amended by the Economic Growth, Regulatory Relief and Consumer Protection Act, which would allow the Bank to operate as a commercial bank without being subject to the QTL test. Under the QTL test, a savings institution is required to maintain at least 65% of its portfolio assets in certain qualified thrift investments (primarily residential mortgages and related investments, including certain mortgage-backed and related securities) in at least nine months out of each 12-month period. The Company currently anticipates that this election will be effective before December 31, 2023. As part of this election, the Bank is required to become a member of the Federal Reserve System and to purchase $9,001 of capital stock of the Federal Reserve Bank of Chicago. In addition, as a company that controls a covered savings association, the Company generally would be treated as a bank holding company. The change in regulatory treatment to a “covered savings association” is not expected to have a material impact on the Company’s financial position or results of operations; however, the election is expected to allow the Bank to continue to shift away from its historical reliance on residential mortgage lending as its primary loan product.

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Condensed Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$ 2,539	$ (2,197)	$ 2,036	$ 3,063
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on investment securities, arising during the period, net of tax effect of $1,054, $(1,950) $X and $(4,883), respectively	(1,593)	(5,142)	1,192	(12,685)
Reclassification adjustment for loss included in net income of $2 and $-, respectively, included in loss on sale of investment securities, net of tax effect of $1, $-, $1 and $-, respectively			1
Total other comprehensive income (loss)	(1,593)	(5,142)	1,193	(12,685)
Comprehensive income (loss)	$ 946	$ (7,339)	$ 3,229	$ (9,622)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Fair Values of Financial Instruments - Reconciliation and income statement classification using Level 3 inputs (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
Fair Value, Asset, Recurring Basis, Unobservable Input Reconciliation, Asset, Gain (Loss), Statement of Other Comprehensive Income or Comprehensive Income [Extensible Enumeration]	Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax	Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax
Collateralized debt obligations \| Recurring \| Level 3
Reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
Included in other comprehensive income (loss)		$ 3
Balance of recurring Level 3 assets at beginning of year	$ 147	203
Principal maturities/settlements	(3)	(53)
Balance of recurring Level 3 assets at end of year	$ 144	$ 153

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies

Commitments and Contingencies

Note 17—Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit, such as loan commitments and unused credit lines, and standby letters of credit, which are not reflected in the condensed consolidated financial statements.

The Company adopted ASU 2016-13, effective January 1, 2023, which requires the Company to estimate expected credit losses for off-balance sheet credit exposures which are unconditionally cancellable. The Company maintains an estimated liability for unfunded commitments, primarily related to commitments to extend credit, on the condensed consolidated balance sheet. The liability for unfunded commitments is reduced in the period in which the off-balance sheet financial instruments expire, loan funding occurs or is otherwise settled. The following presents the activity in the liability for unfunded commitments for the six months ended June 30, 2023:



	Residential		Commercial				Commercial		Other
	Real Estate		Real Estate		Construction		and Industrial		Consumer		Total
Balance at the beginning of the period	$	—	$	—	$	—	$	—	$	—	$	—
Adoption of ASU 2016-13		53		125		398		3		—		579
Increase (decrease) in provision for (recovery of) credit losses		(44)		38		(191)		(1)		—		(198)
Total ending balance	$	9	$	163	$	207	$	2	$	—	$	381

Unfunded Commitments to Extend Credit

A commitment to extend credit, such as a loan commitment, credit line and overdraft protection, is a legally binding agreement to lend funds to a customer, usually at a stated interest rate and for a specific purpose. Such commitments have fixed expiration dates and generally require a fee. The extension of a commitment gives rise to credit risk. The actual liquidity requirements or credit risk that the Company may experience is expected to be lower than the contractual amount of commitments to extend credit because a significant portion of those commitments are expected to expire without being used. Certain commitments are subject to loan agreements containing covenants regarding the financial performance of the customer that must be met before the Company is required to fund the commitment. The Company uses the same credit policies in making commitments to extend credit as it does in making loans.

The commitments outstanding to make loans include primarily residential real estate loans that are made for a period of 90 days or less. At June 30, 2023, there were no outstanding commitments to make loans as the Bank’s residential lending program has been suspended while the Company performs an evaluation of its alternatives for new products and services.

Unused Lines of Credit

The Company also issues credit lines to meet customer financing needs. At June 30, 2023, the unused lines of credit include residential second mortgages of $10,813, construction loans of $4,844 and commercial and industrial loans of $972, totaling $16,629. These variable-rate unused lines of credit commitments have interest rates ranging from 4.72% to 10.63% at June 30, 2023 with maturities ranging from 2 months to 22 years.

Standby Letters of Credit

Standby letters of credit are issued on behalf of customers in connection with construction contracts between the customers and third parties. Under standby letters of credit, the Company assures that the third parties will receive specified funds if customers fail to meet their contractual obligations. The credit risk to the Company arises from its obligation to make payment in the event of a customer’s contractual default. The maximum amount of potential future payments guaranteed by the Company is limited to the contractual amount of these letters. Collateral may be obtained at exercise of the commitment. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.

The following is a summary of the total amount of unfunded commitments to extend credit and standby letters of credit outstanding at June 30, 2023 and December 31, 2022:


	June 30,		December 31,
	2023		2022
Commitments to make loans	$	—	$	—
Unused lines of credit		16,629		20,865
Standby letters of credit		24		24

Legal Proceedings

The Company and its subsidiaries may be subject to legal actions and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened legal proceedings, except as described below, that are considered other than routine legal proceedings. The Company believes that the ultimate disposition or resolution of its routine legal proceedings, in the aggregate, are immaterial to its financial position, results of operations or liquidity.

On March 15, 2023, the Company entered into a Plea Agreement with the U.S. Department of Justice (the “DOJ”), resolving the DOJ’s investigation focused on the Bank’s Advantage Loan Program and related issues, including residential lending practices and public disclosures about that program contained in the Company’s filings with the SEC. On July 19, 2023, the United States District Court for the Eastern District of Michigan approved the Plea Agreement. Under the Plea Agreement, the Company pleaded guilty to one count of securities fraud primarily relating to disclosures with respect to the Advantage Loan Program contained in the Company’s 2017 IPO Registration Statement and its immediately following Annual Reports on Form 10-K filed in March 2018 and March 2019. Consistent with the Plea Agreement, the sentence issued by the court requires the Company to pay $27,239 in restitution for the benefit of non-insider victim shareholders; further enhance its compliance program and internal controls with respect to securities law compliance; and provide periodic reports to the DOJ with respect to compliance matters. The restitution amount will be paid by the Company in the third quarter of 2023 and will be administered by a special master to be appointed by the court. No criminal fine was imposed. The Company’s obligations under the Plea Agreement are generally effective for three years. This resolution releases the Company, as well as the Bank, from further prosecution for securities fraud and underlying mortgage fraud in the Advantage Loan Program.

In addition, on June 20, 2023, the Company received a letter from the Division of Enforcement of the SEC informing the Company that the Division of Enforcement had concluded its investigation of the Company and does not intend to recommend an enforcement action by the SEC against the Company. As previously disclosed, the Company understood that the SEC’s investigation related to accounting, financial reporting and disclosure matters, as well as its internal controls, related to its now-terminated Advantage Loan Program.

At June 30, 2023 and December 31, 2022, the Company has a liability for contingent losses of $27,239 for the outcome of the pending investigations which is recorded in accrued expenses and other liabilities in the condensed consolidated balance sheets.

The Bank has incurred and expects to continue to incur significant costs in connection with its ongoing cooperation with the government investigations of certain individuals and the reimbursement of third parties for the legal costs pursuant to requests for indemnification and advancement of expenses, which are reflected in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2023 and 2022.

Mortgage Repurchase Liability

The Company has previously sold portfolio loans originated under the Advantage Loan Program to private investors in the secondary market. The Company also sells conventional residential real estate loans (which excludes Advantage Loan Program loans) in the secondary market primarily to Fannie Mae on an ongoing basis. In connection with these loans sold, the Company makes customary representations and warranties about various characteristics of each loan. The Company may be required pursuant to the terms of the applicable mortgage loan purchase and sale agreements to repurchase any previously sold loan or indemnify (make whole) the investor for which the representation or warranty of the Company proves to be inaccurate, incomplete or misleading. In the event of a repurchase, the Company is typically required to pay the unpaid principal balance, the proportionate premium received when selling the loan and certain expenses. As a result, the Company may incur a loss with respect to each repurchased loan.

To avoid the uncertainty of audits and inquiries by third-party investors in the Advantage Loan Program, beginning at the end of the second quarter of 2020, the Company commenced making offers to each of those investors to repurchase 100% of the previously sold Advantage Loan Program loans. These loans were previously sold to third-party investors with servicing of the loan retained. Losses expected to be incurred upon the repurchase of such loans were reflected in the mortgage repurchase liability.

Pursuant to the existing agreements with such investors, the Company also agreed to repurchase additional pools of Advantage Loan Program loans at the predetermined repurchase prices as stated in the agreements. At June 30, 2023, there was an outstanding agreement to repurchase an additional pool of Advantage Loan Program loans with an unpaid principal balance of $19,254 that extends to July 2025, with the final decision to effect any such repurchase as determined by the applicable investor.

At June 30, 2023 and December 31, 2022, the mortgage repurchase liability was $870 and $809, respectively, which is included in accrued expenses and other liabilities in the condensed consolidated balance sheets. The unpaid principal balance of residential real estate loans sold that were subject to potential repurchase obligations in the event of breach of representations and warranties totaled $74,840 and $112,542 at June 30, 2023 and December 31, 2022, respectively, including Advantage Loan Program loans totaling $37,391 and $43,274 at June 30, 2023 and December 31, 2022, respectively.

Activity in the mortgage repurchase liability was as follows:


	Six Months Ended
	June 30,
	2023		2022
Balance, beginning of period	$	809	$	2,954
Net provision (recovery)		61		(525)
Loss on loan repurchases		—		(622)
Balance, end of the period	$	870	$	1,807

Commitments and Contingencies - Unfunded Commitments and Litigation (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Loss contingency from Internal review of Advantage Loan Program
Commitments and Contingencies
Liability for contingent losses	$ 27,239	$ 27,239
Litigation settlement amount	27,239
Unfunded commitments to extend credit \| Residential real estate
Commitments and Contingencies
Outstanding commitments with fixed interest rates	$ 0
Unfunded commitments to extend credit \| Residential real estate \| Maximum \| Demand letter from purported stockholders
Commitments and Contingencies
Maturity period	90 days
Unused lines of credit
Commitments and Contingencies
Unused lines of credit	$ 16,629	20,865
Unused lines of credit \| Minimum
Commitments and Contingencies
Variable interest rate (as a percentage)	4.72%
Maturity period for variable interest loans	2 months
Unused lines of credit \| Maximum
Commitments and Contingencies
Variable interest rate (as a percentage)	10.63%
Maturity period for variable interest loans	22 years
Unused lines of credit \| Construction
Commitments and Contingencies
Unused lines of credit	$ 4,844
Unused lines of credit \| Commercial and industrial loans
Commitments and Contingencies
Unused lines of credit	972
Unused lines of credit \| Real estate loan, second mortgage
Commitments and Contingencies
Unused lines of credit	10,813
Standby letters of credit
Commitments and Contingencies
Unused lines of credit	$ 24	$ 24

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2023	Jul. 31, 2023
Document and Entity Information
Document Type	10-Q
Document Period End Date	Jun. 30, 2023
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-38290
Entity Registrant Name	Sterling Bancorp, Inc.
Entity Incorporation, State or Country Code	MI
Entity Tax Identification Number	38-3163775
Entity Address, Address Line One	One Towne Square
Entity Address, Address Line Two	Suite 1900
Entity Address, City or Town	Southfield
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48076
City Area Code	248
Local Phone Number	355-2400
Title of 12(b) Security	Common Stock
Trading Symbol	SBT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		52,076,082
Entity Central Index Key	0001680379
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheets
Debt securities available for sale, amortized cost	$ 359,793	$ 370,489
Allowance for credit losses	$ 36,153	$ 45,464
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, authorized (in shares)	500,000,000	500,000,000
Common stock, issued (in shares)	52,081,886	50,795,871
Common stock, outstanding (in shares)	52,081,886	50,795,871

Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Stock-based Compensation

Schedule of stock option activity


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
	of Shares	Price		Term	Value
				(Years)
Outstanding at January 1, 2023	349,545	$	5.19	7.17	$	627
Granted	—
Exercised	—
Forfeited/expired	(6,000)		13.73
Outstanding at June 30, 2023	343,545	$	5.04	6.71	$	441
Exercisable at June 30, 2023	343,545	$	5.04	6.71	$	441

Summary of the company's restricted stock awards activity


		Weighted Average
	Number	Grant Date
	of Shares	Fair Value
Nonvested at January 1, 2023	390,125	$	6.17
Granted	1,195,838		5.15
Vested	(149,567)		6.33
Forfeited	(53,759)		6.18
Nonvested at June 30, 2023	1,382,637	$	5.27

Subsequent Events (Details) - USD ($) $ in Thousands		6 Months Ended
Subsequent Events (Details) - USD ($) $ in Thousands	Jul. 15, 2023	Jun. 30, 2023
Subsequent Events
Federal Reserve Bank stock required to be purchased for membership in the Federal Reserve System		$ 9,001
Subsequent events \| Subordinated notes
Subsequent Events
Redemption price percentage	100.00%
Cash payment on redemption	$ 66,821

Loans - Disaggregation of the Allowance For Credit Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Ending allowance balance attributable to loans:
Individually evaluated for impairment			$ 11
Collectively evaluated for impairment			45,453
Total ending allowance balance	$ 36,153		45,464	$ 51,766	$ 52,455	$ 56,548
Total ending allowance balance	36,153	$ 38,565
Loans:
Loans individually evaluated for impairment			2,637
Loans collectively evaluated for impairment			1,656,212
Total loans			1,658,849
Residential Real Estate
Ending allowance balance attributable to loans:
Individually evaluated for impairment			11
Collectively evaluated for impairment			27,940
Total ending allowance balance			27,951	29,982	29,911	32,202
Total ending allowance balance	16,909	20,498
Loans:
Loans individually evaluated for impairment			45
Loans collectively evaluated for impairment			1,391,231
Total loans			1,391,276
Commercial Real Estate
Ending allowance balance attributable to loans:
Collectively evaluated for impairment			11,694
Total ending allowance balance			11,694	15,035	13,709	12,608
Total ending allowance balance	16,728	16,067
Loans:
Loans collectively evaluated for impairment			221,669
Total loans			221,669
Construction
Ending allowance balance attributable to loans:
Collectively evaluated for impairment			5,781
Total ending allowance balance			5,781	6,708	8,829	11,730
Total ending allowance balance	$ 2,475	$ 1,994
Loans:
Loans individually evaluated for impairment			2,485
Loans collectively evaluated for impairment			42,018
Total loans			44,503
Commercial and industrial
Ending allowance balance attributable to loans:
Collectively evaluated for impairment			38
Total ending allowance balance			38	36	$ 6	$ 8
Loans:
Loans individually evaluated for impairment			107
Loans collectively evaluated for impairment			1,289
Total loans			1,396
Other consumer
Ending allowance balance attributable to loans:
Total ending allowance balance				$ 5
Loans:
Loans collectively evaluated for impairment			5
Total loans			$ 5

Mortgage Servicing Rights, net - Principle Balance by Category (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Mortgage Servicing Rights
Total	$ 179,124	$ 191,260
Custodial escrow balances	540	380
FNMA
Mortgage Servicing Rights
Total	109,527	113,704
FHLB
Mortgage Servicing Rights
Total	32,206	34,282
Private investors
Mortgage Servicing Rights
Total	$ 37,391	$ 43,274

Subordinated Notes, net

6 Months Ended

Jun. 30, 2023

Subordinated Notes, net

Subordinated Notes, net

Note 9—Subordinated Notes, net

The Company’s 7% Fixed to Floating Subordinated Notes, due April 15, 2026 (the “Subordinated Notes”) were as follows:


	June 30,		December 31,
	2023		2022
Subordinated Notes	$	65,000	$	65,000
Unamortized note premium		234		271
Total	$	65,234	$	65,271

The Subordinated Notes accrue interest at a variable interest rate based on the three-month London Interbank Offered Rate (“LIBOR”) rate plus a margin of 5.82%, payable quarterly in arrears. The interest rate was 11.08% and 9.90% at June 30, 2023 and December 31, 2022, respectively. Note premium costs are amortized over the contractual term of the Subordinated Notes into interest expense using the effective interest method. Interest expense on these Subordinated Notes was $1,791 and $1,090 for the three months ended June 30, 2023 and 2022, respectively, and $3,484 and $2,054 for the six months ended June 30, 2023 and 2022, respectively.

The Company may redeem the Subordinated Notes, in whole or in part, at an amount equal to 100% of the outstanding principal amount being redeemed plus accrued interest. The Subordinated Notes are not subject to redemption by the noteholders. On June 15, 2023, the Company provided notice to the holders of the Subordinated Notes that it would redeem all of the outstanding Subordinated Notes on July 15, 2023. Refer to Note 18—Subsequent Events.

The Subordinated Notes are unsecured obligations and are subordinated in right of payment to all existing and future indebtedness, deposits and other liabilities of the Company’s current and future subsidiaries, including the Bank’s deposits as well as the Company’s subsidiaries’ liabilities to general creditors and liabilities arising during the ordinary course of business. Prior to January 1, 2023, the Subordinated Notes were included in Tier 2 capital for the Company as permitted by applicable regulatory guidelines and interpretations. On January 1, 2023, the Company and the Bank elected to use the Community Bank Leverage Ratio (“CBLR”) framework for compliance with capital adequacy requirements and such framework does not require a computation involving Tier 2 capital. Refer to Note 12—Regulatory Capital Requirements. As long as the Subordinated Notes were outstanding, the Company was permitted to pay dividends if prior to such dividends, the Bank was considered well capitalized, as defined by regulatory guidelines.

The Company currently may not issue new debt without the prior approval of the FRB.