0001636286 false Q2 --12-31 true us-gaap:AccountingStandardsUpdate201613Member 0001636286 2021-01-01 2021-06-30 xbrli:shares 0001636286 2021-07-31 iso4217:USD 0001636286 2021-06-30 0001636286 2020-12-31 iso4217:USD xbrli:shares 0001636286 2021-04-01 2021-06-30 0001636286 2020-04-01 2020-06-30 0001636286 2020-01-01 2020-06-30 0001636286 us-gaap:CommonStockMember 2019-12-31 0001636286 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001636286 us-gaap:RetainedEarningsMember 2019-12-31 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001636286 2019-12-31 0001636286 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001636286 2020-01-01 2020-03-31 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001636286 us-gaap:RetainedEarningsMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 2020-03-31 0001636286 us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 2020-03-31 0001636286 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001636286 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001636286 us-gaap:CommonStockMember 2020-03-31 0001636286 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001636286 us-gaap:RetainedEarningsMember 2020-03-31 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001636286 2020-03-31 0001636286 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0001636286 us-gaap:AdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0001636286 us-gaap:CommonStockMember 2020-04-01 2020-06-30 0001636286 us-gaap:CommonStockMember 2020-06-30 0001636286 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001636286 us-gaap:RetainedEarningsMember 2020-06-30 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001636286 2020-06-30 0001636286 us-gaap:CommonStockMember 2020-12-31 0001636286 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001636286 us-gaap:RetainedEarningsMember 2020-12-31 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001636286 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001636286 2021-01-01 2021-03-31 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001636286 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001636286 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001636286 us-gaap:CommonStockMember 2021-03-31 0001636286 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001636286 us-gaap:RetainedEarningsMember 2021-03-31 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001636286 2021-03-31 0001636286 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-01 2021-06-30 0001636286 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001636286 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001636286 us-gaap:CommonStockMember 2021-06-30 0001636286 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001636286 us-gaap:RetainedEarningsMember 2021-06-30 0001636286 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 alta:Branch 0001636286 alta:PeoplesIntermountainBankMember 2021-06-30 0001636286 srt:MinimumMember 2021-06-30 0001636286 us-gaap:BuildingAndBuildingImprovementsMember srt:MinimumMember 2021-01-01 2021-06-30 0001636286 us-gaap:BuildingAndBuildingImprovementsMember srt:MaximumMember 2021-01-01 2021-06-30 0001636286 us-gaap:LeaseholdImprovementsMember srt:MinimumMember 2021-01-01 2021-06-30 0001636286 us-gaap:LeaseholdImprovementsMember srt:MaximumMember 2021-01-01 2021-06-30 0001636286 us-gaap:FurnitureAndFixturesMember srt:MinimumMember 2021-01-01 2021-06-30 0001636286 us-gaap:FurnitureAndFixturesMember srt:MaximumMember 2021-01-01 2021-06-30 0001636286 us-gaap:SoftwareDevelopmentMember srt:MinimumMember 2021-01-01 2021-06-30 0001636286 us-gaap:SoftwareDevelopmentMember srt:MaximumMember 2021-01-01 2021-06-30 0001636286 us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-06-30 0001636286 us-gaap:AccountingStandardsUpdate201613Member 2021-06-30 0001636286 us-gaap:AccountingStandardsUpdate201613Member 2021-01-01 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateLoanMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:ScenarioPreviouslyReportedMember us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateLoanMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:RestatementAdjustmentMember us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateLoanMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember alta:ConstructionAndLandDevelopmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:ScenarioPreviouslyReportedMember us-gaap:CommercialRealEstatePortfolioSegmentMember alta:ConstructionAndLandDevelopmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:RestatementAdjustmentMember us-gaap:CommercialRealEstatePortfolioSegmentMember alta:ConstructionAndLandDevelopmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:ScenarioPreviouslyReportedMember us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:RestatementAdjustmentMember us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 alta:CommercialAndIndustrialPortfolioLoansSegmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:ScenarioPreviouslyReportedMember alta:CommercialAndIndustrialPortfolioLoansSegmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:RestatementAdjustmentMember alta:CommercialAndIndustrialPortfolioLoansSegmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 us-gaap:ConsumerPortfolioSegmentMember alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:ScenarioPreviouslyReportedMember us-gaap:ConsumerPortfolioSegmentMember alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:RestatementAdjustmentMember us-gaap:ConsumerPortfolioSegmentMember alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 us-gaap:ConsumerPortfolioSegmentMember alta:ConsumerAndOtherMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:ScenarioPreviouslyReportedMember us-gaap:ConsumerPortfolioSegmentMember alta:ConsumerAndOtherMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:RestatementAdjustmentMember us-gaap:ConsumerPortfolioSegmentMember alta:ConsumerAndOtherMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:ScenarioPreviouslyReportedMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:RestatementAdjustmentMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:ScenarioPreviouslyReportedMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 srt:RestatementAdjustmentMember us-gaap:AccountingStandardsUpdate201613Member 2020-01-01 0001636286 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2021-06-30 0001636286 us-gaap:MunicipalBondsMember 2021-06-30 0001636286 us-gaap:MortgageBackedSecuritiesMember 2021-06-30 0001636286 us-gaap:CorporateBondSecuritiesMember 2021-06-30 0001636286 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-12-31 0001636286 us-gaap:MunicipalBondsMember 2020-12-31 0001636286 us-gaap:MortgageBackedSecuritiesMember 2020-12-31 0001636286 us-gaap:CorporateBondSecuritiesMember 2020-12-31 0001636286 alta:USGovernmentBackedSecuritiesMember 2021-06-30 0001636286 alta:InvestmentGradeRatingMember 2021-06-30 0001636286 alta:UnratedInvestmentSecuritiesMember 2021-06-30 0001636286 alta:USGovernmentBackedSecuritiesMember 2020-12-31 0001636286 alta:InvestmentGradeRatingMember 2020-12-31 0001636286 alta:UnratedInvestmentSecuritiesMember 2020-12-31 alta:Securities 0001636286 us-gaap:RealEstateLoanMember us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-06-30 0001636286 us-gaap:RealEstateLoanMember us-gaap:CommercialRealEstatePortfolioSegmentMember 2020-12-31 0001636286 alta:ConstructionAndLandDevelopmentMember us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-06-30 0001636286 alta:ConstructionAndLandDevelopmentMember us-gaap:CommercialRealEstatePortfolioSegmentMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember 2020-12-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2021-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2020-12-31 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:ConsumerPortfolioSegmentMember 2021-06-30 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:ConsumerPortfolioSegmentMember 2020-12-31 0001636286 alta:ConsumerAndOtherMember us-gaap:ConsumerPortfolioSegmentMember 2021-06-30 0001636286 alta:ConsumerAndOtherMember us-gaap:ConsumerPortfolioSegmentMember 2020-12-31 0001636286 us-gaap:ConsumerPortfolioSegmentMember 2021-06-30 0001636286 us-gaap:ConsumerPortfolioSegmentMember 2020-12-31 0001636286 alta:SBAPPPLoansMember alta:CommercialAndIndustrialPortfolioSegmentMember 2021-06-30 alta:Loan 0001636286 alta:SBAPPPLoansMember alta:CommercialAndIndustrialPortfolioSegmentMember 2021-01-01 2021-06-30 0001636286 us-gaap:RealEstateLoanMember 2021-03-31 0001636286 alta:ConstructionAndLandDevelopmentMember 2021-03-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2021-03-31 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2021-03-31 0001636286 alta:ConsumerAndOtherMember 2021-03-31 0001636286 us-gaap:RealEstateLoanMember 2021-04-01 2021-06-30 0001636286 alta:ConstructionAndLandDevelopmentMember 2021-04-01 2021-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2021-04-01 2021-06-30 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2021-04-01 2021-06-30 0001636286 alta:ConsumerAndOtherMember 2021-04-01 2021-06-30 0001636286 us-gaap:RealEstateLoanMember 2021-06-30 0001636286 alta:ConstructionAndLandDevelopmentMember 2021-06-30 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2021-06-30 0001636286 alta:ConsumerAndOtherMember 2021-06-30 0001636286 us-gaap:RealEstateLoanMember 2020-03-31 0001636286 alta:ConstructionAndLandDevelopmentMember 2020-03-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2020-03-31 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2020-03-31 0001636286 alta:ConsumerAndOtherMember 2020-03-31 0001636286 us-gaap:RealEstateLoanMember 2020-04-01 2020-06-30 0001636286 alta:ConstructionAndLandDevelopmentMember 2020-04-01 2020-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2020-04-01 2020-06-30 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2020-04-01 2020-06-30 0001636286 alta:ConsumerAndOtherMember 2020-04-01 2020-06-30 0001636286 us-gaap:RealEstateLoanMember 2020-06-30 0001636286 alta:ConstructionAndLandDevelopmentMember 2020-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2020-06-30 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2020-06-30 0001636286 alta:ConsumerAndOtherMember 2020-06-30 0001636286 us-gaap:RealEstateLoanMember 2020-12-31 0001636286 alta:ConstructionAndLandDevelopmentMember 2020-12-31 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2020-12-31 0001636286 alta:ConsumerAndOtherMember 2020-12-31 0001636286 us-gaap:RealEstateLoanMember 2021-01-01 2021-06-30 0001636286 alta:ConstructionAndLandDevelopmentMember 2021-01-01 2021-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2021-01-01 2021-06-30 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2021-01-01 2021-06-30 0001636286 alta:ConsumerAndOtherMember 2021-01-01 2021-06-30 0001636286 us-gaap:RealEstateLoanMember 2019-12-31 0001636286 alta:ConstructionAndLandDevelopmentMember 2019-12-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2019-12-31 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2019-12-31 0001636286 alta:ConsumerAndOtherMember 2019-12-31 0001636286 us-gaap:RealEstateLoanMember srt:RestatementAdjustmentMember 2019-12-31 0001636286 alta:ConstructionAndLandDevelopmentMember srt:RestatementAdjustmentMember 2019-12-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember srt:RestatementAdjustmentMember 2019-12-31 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember srt:RestatementAdjustmentMember 2019-12-31 0001636286 alta:ConsumerAndOtherMember srt:RestatementAdjustmentMember 2019-12-31 0001636286 srt:RestatementAdjustmentMember 2019-12-31 0001636286 us-gaap:RealEstateLoanMember 2020-01-01 2020-06-30 0001636286 alta:ConstructionAndLandDevelopmentMember 2020-01-01 2020-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember 2020-01-01 2020-06-30 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember 2020-01-01 2020-06-30 0001636286 alta:ConsumerAndOtherMember 2020-01-01 2020-06-30 0001636286 alta:CommercialAndIndustrialLoanMember 2021-06-30 0001636286 alta:CommercialAndIndustrialLoanMember 2020-12-31 0001636286 us-gaap:NonperformingFinancingReceivableMember us-gaap:LoansInsuredOrGuaranteedByUsGovernmentAuthoritiesMember 2021-06-30 0001636286 us-gaap:NonperformingFinancingReceivableMember us-gaap:LoansInsuredOrGuaranteedByUsGovernmentAuthoritiesMember 2020-12-31 0001636286 alta:TroubledDebtRestructuredLoansMember 2021-06-30 0001636286 alta:FinancingReceivablesTwoThousandAndTwentyMember 2021-01-01 2021-06-30 0001636286 alta:FinancingReceivablesTwoThousandAndNineteenMember 2021-01-01 2021-06-30 0001636286 alta:FinancingReceivablesTwoThousandAndTwentyMember 2021-06-30 0001636286 alta:FinancingReceivablesTwoThousandAndNineteenMember 2021-06-30 0001636286 us-gaap:PaymentDeferralMember 2020-01-01 2020-06-30 0001636286 us-gaap:PaymentDeferralMember 2020-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateLoanMember us-gaap:PassMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateLoanMember us-gaap:SpecialMentionMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateLoanMember us-gaap:SubstandardMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember alta:ConstructionAndLandDevelopmentMember us-gaap:PassMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember alta:ConstructionAndLandDevelopmentMember us-gaap:SpecialMentionMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:PassMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SpecialMentionMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SubstandardMember 2021-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember us-gaap:PassMember 2021-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember us-gaap:SpecialMentionMember 2021-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember us-gaap:SubstandardMember 2021-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember us-gaap:DoubtfulMember 2021-06-30 0001636286 us-gaap:ConsumerPortfolioSegmentMember alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:PassMember 2021-06-30 0001636286 us-gaap:ConsumerPortfolioSegmentMember alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:SubstandardMember 2021-06-30 0001636286 us-gaap:ConsumerPortfolioSegmentMember alta:ConsumerAndOtherMember us-gaap:PassMember 2021-06-30 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:PassMember 2021-06-30 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:SubstandardMember 2021-06-30 0001636286 us-gaap:PassMember 2021-06-30 0001636286 us-gaap:SpecialMentionMember 2021-06-30 0001636286 us-gaap:SubstandardMember 2021-06-30 0001636286 us-gaap:DoubtfulMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateLoanMember us-gaap:PassMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateLoanMember us-gaap:SpecialMentionMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateLoanMember us-gaap:SubstandardMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember alta:ConstructionAndLandDevelopmentMember us-gaap:PassMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember alta:ConstructionAndLandDevelopmentMember us-gaap:SpecialMentionMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember alta:ConstructionAndLandDevelopmentMember us-gaap:SubstandardMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:PassMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SpecialMentionMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SubstandardMember 2020-12-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember us-gaap:PassMember 2020-12-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember us-gaap:SpecialMentionMember 2020-12-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember us-gaap:SubstandardMember 2020-12-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember us-gaap:DoubtfulMember 2020-12-31 0001636286 us-gaap:ConsumerPortfolioSegmentMember alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:PassMember 2020-12-31 0001636286 us-gaap:ConsumerPortfolioSegmentMember alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:SubstandardMember 2020-12-31 0001636286 us-gaap:ConsumerPortfolioSegmentMember alta:ConsumerAndOtherMember us-gaap:PassMember 2020-12-31 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:PassMember 2020-12-31 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:SubstandardMember 2020-12-31 0001636286 us-gaap:PassMember 2020-12-31 0001636286 us-gaap:SpecialMentionMember 2020-12-31 0001636286 us-gaap:SubstandardMember 2020-12-31 0001636286 us-gaap:DoubtfulMember 2020-12-31 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialRealEstateMember us-gaap:PassMember 2021-06-30 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialRealEstateMember 2021-06-30 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:ResidentialRealEstateMember us-gaap:SubstandardMember 2021-06-30 0001636286 us-gaap:RealEstateLoanMember us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateMember 2021-06-30 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateMember 2021-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember alta:AccountsReceivableAsCollateralMember 2021-06-30 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember alta:AutoMember 2021-06-30 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:RealEstateMember 2021-06-30 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:RealEstateMember 2021-06-30 0001636286 us-gaap:RealEstateMember 2021-06-30 0001636286 alta:AccountsReceivableAsCollateralMember 2021-06-30 0001636286 alta:AutoMember 2021-06-30 0001636286 us-gaap:RealEstateLoanMember us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateMember 2020-12-31 0001636286 alta:ConstructionAndLandDevelopmentMember us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateMember 2020-12-31 0001636286 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateMember 2020-12-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember alta:AccountsReceivableAsCollateralMember 2020-12-31 0001636286 alta:CommercialAndIndustrialPortfolioSegmentMember alta:AutoMember 2020-12-31 0001636286 alta:ResidentialMortgageAndHomeEquityLinesOfCreditMember us-gaap:ConsumerPortfolioSegmentMember us-gaap:RealEstateMember 2020-12-31 0001636286 us-gaap:ConsumerPortfolioSegmentMember us-gaap:RealEstateMember 2020-12-31 0001636286 us-gaap:RealEstateMember 2020-12-31 0001636286 alta:AccountsReceivableAsCollateralMember 2020-12-31 0001636286 alta:AutoMember 2020-12-31 0001636286 srt:AffiliatedEntityMember 2021-06-30 0001636286 srt:AffiliatedEntityMember 2020-12-31 0001636286 us-gaap:CommitmentsToExtendCreditMember 2021-06-30 0001636286 us-gaap:CommitmentsToExtendCreditMember 2020-12-31 0001636286 alta:StandbyLettersOfCreditAndBondCommitmentMember 2021-06-30 0001636286 alta:StandbyLettersOfCreditAndBondCommitmentMember 2020-12-31 0001636286 us-gaap:UnusedLinesOfCreditMember 2021-06-30 0001636286 us-gaap:UnusedLinesOfCreditMember 2020-12-31 0001636286 alta:UnsecuredCommitmentsIncludedInCommitmentsToExtendCreditMember 2021-06-30 0001636286 alta:UnsecuredCommitmentsIncludedInCommitmentsToExtendCreditMember 2020-12-31 0001636286 alta:UnsecuredCommitmentsIncludedInStandbyLettersOfCreditAndBondCommitmentsMember 2021-06-30 0001636286 alta:UnsecuredCommitmentsIncludedInStandbyLettersOfCreditAndBondCommitmentsMember 2020-12-31 0001636286 us-gaap:FairValueInputsLevel1Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2021-06-30 0001636286 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-06-30 0001636286 us-gaap:FairValueInputsLevel1Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-12-31 0001636286 us-gaap:FairValueInputsLevel1Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-12-31 0001636286 us-gaap:FairValueInputsLevel2Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2021-06-30 0001636286 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-06-30 0001636286 us-gaap:FairValueInputsLevel2Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-12-31 0001636286 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-12-31 0001636286 us-gaap:FairValueInputsLevel3Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2021-06-30 0001636286 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-06-30 0001636286 us-gaap:FairValueInputsLevel3Member us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-12-31 0001636286 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-12-31 0001636286 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2021-06-30 0001636286 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-06-30 0001636286 us-gaap:FairValueMeasurementsRecurringMember 2021-06-30 0001636286 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2021-06-30 0001636286 us-gaap:FairValueMeasurementsNonrecurringMember 2021-06-30 0001636286 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0001636286 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001636286 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001636286 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001636286 us-gaap:FairValueMeasurementsNonrecurringMember 2020-12-31 xbrli:pure 0001636286 alta:AltabankMember 2021-06-30 0001636286 alta:AltabankMember 2020-12-31 0001636286 2020-03-26 0001636286 alta:ShareBasedIncentivePlanMember 2020-05-27 0001636286 alta:ShareBasedIncentivePlanMember srt:MaximumMember 2020-05-27 2020-05-27 0001636286 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-06-30 0001636286 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-06-30 0001636286 us-gaap:RestrictedStockUnitsRSUMember srt:MinimumMember 2021-01-01 2021-06-30 0001636286 us-gaap:RestrictedStockUnitsRSUMember srt:MaximumMember 2021-01-01 2021-06-30 0001636286 alta:GlacierBancorpIncorporationMember 2021-05-18 2021-05-18 0001636286 alta:GlacierBancorpIncorporationMember srt:MaximumMember 2021-05-18 0001636286 alta:GlacierBancorpIncorporationMember us-gaap:AcquisitionRelatedCostsMember 2021-04-01 2021-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37416

ALTABANCORP

(Exact name of registrant as specified in its charter)

Utah		87-0622021
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)
1 East Main Street American Fork, Utah		84003
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (801) 642-3998

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

ALTA

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes No ☒

As of July 31, 2021, the registrant had 18,887,450 shares of common stock $0.01 par value per share, outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1 – Financial Statements
Unaudited Consolidated Balance Sheets	2
Unaudited Consolidated Statements of Income	3
Unaudited Consolidated Statements of Comprehensive Income	4
Unaudited Consolidated Statements of Changes in Shareholders’ Equity	5
Unaudited Consolidated Statements of Cash Flows	6
Notes to Unaudited Consolidated Financial Statements	7
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3 – Quantitative and Qualitative Disclosures about Market Risk	52
Item 4 – Controls and Procedures	53
PART II. OTHER INFORMATION
Item 1 – Legal Proceedings	54
Item 1A – Risk Factors	54
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3 – Defaults upon Senior Securities	54
Item 4 – Mine Safety Disclosures	54
Item 5 – Other Information	54
Item 6 – Exhibits	54
Signatures	55

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ALTABANCORP^TM AND SUBSIDIARY

UNAUDITED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
(Dollars in thousands, except share amounts)	2021			2020
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	35,446		$	39,312
Interest-bearing deposits		27,045			197,769
Federal funds sold		838			2,793
Total cash and cash equivalents		63,329			239,874
Investment securities - available for sale, at fair value		1,491,707			1,320,393
Non-marketable equity securities		4,042			2,890
Loans held for sale		6,672			14,152
Loans:
Loans held for investment		1,873,685			1,695,496
Allowance for credit losses		(34,958	)		(41,236	)
Total loans held for investment, net		1,838,727			1,654,260
Premises and equipment, net		34,821			36,460
Goodwill		25,673			25,673
Bank-owned life insurance		43,234			42,720
Deferred income tax assets, net		11,787			7,389
Accrued interest receivable		9,537			11,336
Other intangibles		4,831			4,451
Other real estate owned		-			-
Other assets		6,445			6,630
Total assets	$	3,540,805		$	3,366,228
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing deposits	$	1,145,009		$	1,039,844
Interest bearing deposits		2,011,698			1,876,464
Total deposits		3,156,707			2,916,308
Short-term borrowings		-			64,554
Accrued interest payable		325			616
Other liabilities		13,142			13,612
Total liabilities		3,170,174			2,995,090

Shareholders’ equity:
Preferred shares, $0.01 par value: 3,000,000 shares authorized; no shares issued		-			-
Common shares, $0.01 par value: 30,000,000 shares authorized; 18,880,610
and 18,828,522 shares issued and outstanding as of June 30, 2021
and December 31, 2020, respectively		189			188
Additional paid-in capital		88,209			87,574
Retained earnings		285,633			269,157
Accumulated other comprehensive (loss) / income		(3,400	)		14,219
Total shareholders’ equity		370,631			371,138
Total liabilities and shareholders’ equity	$	3,540,805		$	3,366,228

See accompanying notes to the unaudited consolidated financial statements.

ALTABANCORP^TM AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands, except share and per share amounts)	2021			2020			2021			2020
Interest income
Interest and fees on loans	$	22,573		$	23,649		$	45,387		$	49,574
Interest and dividends on investments		4,190			3,753			6,520			7,212
Total interest income		26,763			27,402			51,907			56,786
Interest expense		1,466			1,613			3,012			3,776
Net interest income		25,297			25,789			48,895			53,010
(Recapture) / provision for credit losses		(5,000	)		2,100			(5,000	)		2,750
Net interest income after provision for credit losses		30,297			23,689			53,895			50,260
Non-interest income
Mortgage banking		2,404			3,036			5,185			4,746
Card processing		1,211			917			2,282			1,624
Service charges on deposit accounts		651			763			1,343			1,543
Net gain on sale of investment securities		-			1,441			206			1,441
Other		1,026			(41	)		1,658			502
Total non-interest income		5,292			6,116			10,674			9,856
Non-interest expense
Salaries and employee benefits		10,707			10,786			21,794			21,630
Occupancy, equipment and depreciation		1,209			831			2,404			2,370
Data processing		2,434			2,383			4,283			3,519
Marketing and advertising		330			339			636			771
FDIC premiums		247			165			473			165
Acquisition-related costs		2,215			-			2,215			-
Other		1,713			1,771			3,595			3,981
Total non-interest expense		18,855			16,275			35,400			32,436
Income before income tax expense		16,734			13,530			29,169			27,680
Income tax expense		4,034			3,192			7,031			6,569
Net income	$	12,700		$	10,338		$	22,138		$	21,111
Earnings per common share:
Basic	$	0.67		$	0.55		$	1.17		$	1.12
Diluted	$	0.67		$	0.55		$	1.16		$	1.11
Weighted average common shares outstanding:
Basic		18,876,688			18,789,561			18,870,626			18,837,209
Diluted		19,036,575			18,932,511			19,028,175			18,985,319

See accompanying notes to the unaudited consolidated financial statements.

ALTABANCORP^TM AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands)	2021			2020			2021			2020
Net income	$	12,700		$	10,338		$	22,138		$	21,111
Other comprehensive income
Unrealized holding gains / (loss) on securities available for sale		14,034			3,951			(23,286	)		14,518
Reclassification adjustment for gains on available for sale securities		-			(1,441	)		(206	)		(1,441	)
Net unrealized holding gains / (loss) on securities available for sale		14,034			2,510			(23,492	)		13,077

Income tax (expense) / benefit		(3,508	)		(627	)		5,873			(3,270	)
Other comprehensive income / (loss), net of tax		10,526			1,883			(17,619	)		9,807
Total comprehensive income	$	23,226		$	12,221		$	4,519		$	30,918

See accompanying notes to the unaudited consolidated financial statements.

ALTABANCORP^TM AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

													Accumulated
							Additional						Other
(Dollars in thousands, except share and per share	Common			Common			Paid-in			Retained			Comprehensive
amounts)	Shares			Stock			Capital			Earnings			Income (Loss)			Total
Balance as of January 1, 2020		18,870,498		$	189		$	87,913		$	242,878		$	1,382		$	332,362
Net income		-			-			-			10,773			-			10,773
Other comprehensive income		-			-			-			-			7,924			7,924
Cash dividends ($0.14 per share)		-			-			-			(2,646	)		-			(2,646	)
Reclass related to ASC 326 adoption (CECL)		-			-			-			(6,680	)		-			(6,680	)
Shares repurchased		(120,906	)		(1	)		(2,139	)		-			-			(2,140	)
Share-based compensation		-			-			385			-			-			385
Issuance of shares under stock incentive plans		38,218			-			159			-			-			159
Balance as of March 31, 2020		18,787,810		$	188		$	86,318		$	244,325		$	9,306		$	340,137
Net income		-			-			-			10,338			-			10,338
Other comprehensive income		-			-			-			-			1,883			1,883
Cash dividends ($0.14 per share)		-			-			-			(2,631	)		-			(2,631	)
Share-based compensation		-			-			380			-			-			380
Issuance of shares under stock incentive plans		5,407			-			23			-			-			23
Balance as of June 30, 2020		18,793,217		$	188		$	86,721		$	252,032		$	11,189		$	350,130

Balance as of January 1, 2021		18,828,522		$	188		$	87,574		$	269,157		$	14,219		$	371,138
Net income		-			-			-			9,438			-			9,438
Other comprehensive loss		-			-			-			-			(28,145	)		(28,145	)
Cash dividends ($0.15 per share)		-			-			-			(2,830	)		-			(2,830	)
Share-based compensation		-			-			351			-			-			351
Issuance of shares under stock incentive plans		45,399			1			(82	)		-			-			(81	)
Balance as of March 31, 2021		18,873,921		$	189		$	87,843		$	275,765		$	(13,926	)	$	349,871
Net income		-			-			-			12,700			-			12,700
Other comprehensive income		-			-			-			-			10,526			10,526
Cash dividends ($0.15 per share)		-			-			-			(2,832	)		-			(2,832	)
Share-based compensation		-			-			343			-			-			343
Issuance of shares under stock incentive plans		6,689			-			23			-			-			23
Balance as of June 30, 2021		18,880,610		$	189		$	88,209		$	285,633		$	(3,400	)	$	370,631

See accompanying notes to the unaudited consolidated financial statements.

ALTABANCORP^TM AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	June 30,
(Dollars in thousands)	2021			2020
Cash flows from operating activities:
Net income	$	22,138		$	21,111
Adjustments to reconcile net income to net cash provided by operating activities:
(Recapture) / provision for credit losses		(5,000	)		2,750
Depreciation and amortization		1,407			1,822
Deferred income taxes		1,475			(24	)
Net amortization of securities premiums and discounts		9,411			1,541
Gain on sale of available for sale securities		(206	)		-
Increase in cash surrender value of bank-owned life insurance		(514	)		(293	)
Share-based compensation		694			765
Gain on sale of loans held for sale		(3,878	)		(3,467	)
Originations of loans held for sale		(192,536	)		(136,459	)
Proceeds from sale of loans held for sale		203,894			129,332
Net changes in:
Accrued interest receivable		1,799			(3,778	)
Other assets		238			(938	)
Accrued interest payable		(291	)		(138	)
Other liabilities		(1,518	)		1,552
Net cash provided by operating activities		37,113			13,776
Cash flows from investing activities:
Net change in loans held for investment		(178,086	)		22,057
Purchase of available for sale securities		(663,600	)		(674,709	)
Proceeds from maturities/sales of available for sale securities		459,589			118,783
Purchase of premises and equipment		(534	)		(1,354	)
Proceeds from sale of OREO, net of improvements		-			343
Purchase of non-marketable equity securities		(5,891	)		(267	)
Proceeds from sale of non-marketable equity securities		4,739			-
Net cash used in investing activities		(383,783	)		(535,147	)
Cash flows from financing activities:
Net increase in deposits		240,399			556,972
(Costs) / Proceeds related to exercise of stock options		(58	)		182
Net change in short-term borrowings		(64,554	)		83,490
Net cash used in share repurchase program		-			(2,140	)
Cash dividends paid		(5,662	)		(5,277	)
Net cash provided by financing activities		170,125			633,227
Net change in cash and cash equivalents		(176,545	)		111,856
Cash and cash equivalents, beginning of period		239,874			211,981
Cash and cash equivalents, end of period	$	63,329		$	323,837
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,303		$	3,914
Income taxes paid	$	4,470		$	25
Supplemental disclosures of non-cash investing transactions:
Reclassifications from loans to other real estate owned	$	-		$	344
Net unrealized (loss) / gains on securities available for sale	$	(23,492	)	$	13,077

See accompanying notes to the unaudited consolidated financial statements.

ALTABANCORP^TM AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of Presentation and Significant Accounting Policies

Nature of operations and basis of consolidation — Altabancorp^TM (“ALTA”) is a Utah corporation headquartered in American Fork, Utah and is the bank holding company for Altabank^TM (the “Bank” and together with ALTA, the “Company”). The Company operates all business activities through the Bank, which was organized in 1913. The Bank is a Utah state-chartered bank. The Bank operates under the jurisdiction of the Utah Department of Financial Institutions (“UDFI”), and its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Bank is not a member of the Federal Reserve System; however, ALTA operates as a bank holding company under the Federal Bank Holding Company Act of 1956 and is the sole shareholder of the Bank. Both ALTA and the Bank are subject to periodic examination by these applicable federal and state regulatory agencies and file periodic reports and other information with the agencies. The Company considers the Bank to be its sole operating segment.

The Bank is a community bank that provides highly personalized retail and commercial banking products and services to small-to-medium sized businesses and to individuals. Products and services are offered primarily through 25 retail branches located throughout Utah and southern Idaho. The Bank offers a full range of short-term to long-term commercial, personal, and mortgage loans. Commercial loans include both secured and unsecured loans for working capital (including inventory and accounts receivable), business expansion (including acquisition of real estate and improvements), and purchase of equipment and machinery. Consumer loans include secured and unsecured loans to finance automobiles, home improvements, education, and personal investments. The Bank also offers mortgage loans secured by personal residences. The Bank offers a full range of deposit services typically available in most financial institutions, including checking accounts, savings accounts, and time deposits. The Bank solicits these accounts from individuals, businesses, associations, organizations, and governmental entities.

The accompanying unaudited interim consolidated financial statements include the accounts of ALTA together with its subsidiary Bank. All intercompany transactions and balances have been eliminated. These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements.

Use of estimates — The preparation of consolidated financial statements in conformity with GAAP requires the Company’s management (“Management”) to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses (“ACL”), the determination of the fair value of certain financial instruments, the valuation of real estate acquired through foreclosure, deferred income tax assets, and share-based compensation.

Reclassifications — Certain reclassifications have been made to the 2020 Consolidated Financial Statements and/or schedules to conform to the 2021 presentation. These reclassifications may have affected certain ratios for the prior periods. The effect of these reclassifications is considered immaterial.

Business combinations — Business combinations are accounted for using the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed, both tangible and intangible, and consideration exchanged are recorded at fair value on the acquisition date. The excess purchase consideration over fair value of net assets acquired is recorded as goodwill. Expenses incurred in connection with a business combination are expensed as incurred. Changes in deferred tax asset valuation allowances related to acquired tax uncertainties are recognized in net income after the measurement period.

Note 1 — Basis of Presentation and Significant Accounting Policies – Continued

Cash and cash equivalents — Cash and cash equivalents consist of cash on hand, amounts due from banks, interest bearing deposits, and federal funds sold, all of which have original maturities of three months or less. The Company places its cash with high credit quality institutions. The amounts on deposit fluctuate and, at times, exceed the insured limit by the FDIC, which potentially subjects the Company to credit risk.

Investment securities — Investment securities are classified as held to maturity (“HTM”) when the Company has the positive intent and ability to hold the securities to maturity. Investment securities are classified as available for sale (“AFS”) when the Company has the intent of holding the security for an indefinite period of time, but not necessarily to maturity. The Company determines the appropriate classification at the time of purchase, and periodically thereafter. Investment securities classified as HTM are carried at amortized cost. Investment securities classified as AFS are reported at fair value. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Debt securities classified as held to maturity are carried at cost, net of the allowance for credit losses on debt securities, adjusted for amortization of premiums and discounts to the earliest callable date. Debt securities classified as available for sale are measured at fair value. Unrealized holding gains and losses on debt securities classified as available for sale are excluded from earnings and are reported net of tax as accumulated other comprehensive income (“AOCI”), a component of shareholders’ equity, until realized. When AFS securities, specifically identified, are sold, the unrealized gain or loss is reclassified from AOCI to non-interest income. Debt securities classified as trading are also measured at fair value. Unrealized holding gains and losses on securities classified as trading are included in earnings.

FASB ASC Subtopic 326-30, Financial Instruments—Credit Losses—Available for Sale Debt Securities - describes the accounting for expected credit losses associated with AFS debt securities. Credit losses for AFS debt securities are evaluated as of each reporting date when the fair value is less than amortized cost. FASB ASC Subtopic 326-30 requires credit losses to be calculated individually, rather than collectively, using a discounted cash flow method, through which Management compares the present value of expected cash flows with the amortized cost basis of the security. An ACL is established, with a charge to the provision for credit losses (“PCL”), to reflect the credit loss component of the decline in fair value below amortized cost. If the fair value of the security increases over time, any ACL that has not been written off may be reversed through a credit to the PCL. The ACL for an available for sale debt security is limited by the amount that the fair value is less than the amortized cost, which is referred to as the fair value floor.

If the Company intends to sell an AFS debt security or will more likely than not be required to sell the security before recovery of the amortized cost basis, the security’s ACL should be written off and the amortized cost basis of the security should be written down to its fair value at the reporting date with any incremental credit losses reported in income. A change during the reporting period in the non-credit component of any decline in fair value below amortized cost on an AFS debt security is reported in AOCI, net of applicable income taxes.

The Company has excluded accrued interest receivable from the amortized cost of the debt securities and from the calculation of current expected credit losses.

Each reporting period, Management reviews all AFS debt securities. If the debt securities are guaranteed by a Federal government agency or Federal government sponsored agency, Management believes that any change in the fair value of such securities is only related to changes in interest rates, and no ACL will be recorded. Management reviews the remaining debt securities by evaluating the credit rating provided by Nationally Recognized Statistical Ration Organizations (“NRSRO”). If the NRSRO credit rating is investment grade rated or higher, Management believes that any change in the fair value of such securities is only related to changes in interest rates, and no ACL will be recorded. If any remaining debt securities either have a NRSRO credit rating that is below investment grade or is unrated, Management will determine if an ACL should be recorded by comparing the net present value of expected cash flows with the amortized cost basis of the security with any difference recorded to ACL.

Non-marketable equity securities — Non-marketable equity securities primarily consist of Federal Home Loan Bank (“FHLB”) stock. FHLB stock is restricted because such stock may only be sold to FHLB at its par value. Due to the restrictive terms, and the lack of a readily determinable market value, FHLB stock is carried at cost. The investments in FHLB stock are required investments related to the Bank’s borrowings from FHLB. FHLB obtains its funding primarily through issuance of consolidated obligations of the FHLB system. The U.S. Government does not guarantee these obligations, and each of the regional FHLBs are jointly and severally liable for repayment of each other’s obligations.

Note 1 — Basis of Presentation and Significant Accounting Policies – Continued

Loans held for sale — Single-family residential mortgage loans originated with the intent to be sold in the secondary market are considered held for sale. Loans with best effort delivery commitments are carried at the lower of aggregate cost or estimated fair value. Loans under mandatory delivery commitments are carried at fair value to match changes in the value of the loans with the value of the economic hedges on the loans. Fair values for loans held for sale are determined by comparing actual loan rates to current secondary market prices for similar loans. Net unrealized losses on loans held for sale that are carried at lower of cost or market are recognized through the valuation allowance by charges to income. Mortgage loans held for sale are generally sold with the mortgage servicing rights. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the carrying value of the related mortgage loans sold.

Loans held for investment — Loans that Management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance adjusted for any charge-offs, the allowance for credit losses, any deferred fees or costs on originated loans, and unamortized premiums or discounts on acquired loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the effective interest method. The Company has excluded accrued interest receivable from the amortized cost of loans held for investment and from the calculation of current expected credit losses.

Loans are placed on non-accrual status when they become 90 days or more past due or at such earlier time as Management determines timely recognition of interest to be in doubt. Accrual of interest is discontinued on a loan when Management believes, after considering economic and business conditions, collection efforts, and the borrower’s financial condition, that the borrower will be unable to make payments as they become due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received, or payment is considered certain. Loans may be returned to accrual status when all delinquent interest and principal amounts contractually due are brought current and future payments are reasonably assured.

Troubled debt restructuring — Expected credit losses on financial assets modified in troubled debt restructurings (“TDRs”) are estimated under the same current expected credit loss (“CECL”) methodology that is applied to other financial assets measured at amortized cost. Expected credit losses can be evaluated either on a collective basis or on an individual basis if a TDR does not share similar risk characteristics with other financial assets.

FASB ASC Topic 326 allows an institution to use any appropriate loss estimation method to estimate ACLs for TDRs. However, there are circumstances when specific measurement methods are required. If a TDR is collateral-dependent, the ACL is estimated using the fair value of collateral.

In addition, the expected effect of the modification (e.g., term extension or interest rate concession) will be included in the estimate of the ACL. Management will determine, support, and document how the Company identifies and estimates the effect of a reasonably expected TDR and how the Company estimates the related ACL. The Company may include the estimated effect of reasonably expected TDRs in its qualitative factor adjustments.

The Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) and the Consolidated Appropriations Act 2021 (the “CAA”) provide guidance regarding modification of loans as a result of the COVID-19 pandemic, including that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief are not TDRs. This includes short-term (e.g., six months) modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. To qualify as an eligible loan under the CARES Act, a loan modification must be: (1) related to COVID-19; (2) involve a loan that was not more than 30 days past due as of December 31, 2019; and (3) occur between March 1, 2020 and the earlier of (a) 60 days after the date of termination of the national emergency declared by the President or (b) December 31, 2020. The CAA extended the modification relief offered under the CARES Act through the earlier of January 1, 2022, or 60 days after the end of the national emergency declared by the President.

Note 1 — Basis of Presentation and Significant Accounting Policies – Continued

As a result, the Company has not recognized eligible loan modifications under the CARES Act as TDRs. Additionally, loans qualifying for such modification are not required to be reported as delinquent, nonaccrual, impaired, or criticized having resulted from the economic effects of the COVID-19 pandemic. Modifications include deferral of principal and interest payments, as well as interest only periods. The Company accrues and recognizes interest income on loans under payment relief based on the original contractual interest rates. When payments resume at the end of the relief period, loans are generally re-amortized with an extended maturity date to keep the monthly payment similar to before the COVID-related deferral occurred.

Purchased credit-deteriorated assets – ASC Topic 326 introduces the concept of purchased credit-deteriorated (“PCD”) assets. PCD assets are acquired financial assets that, at acquisition, have experienced more-than-insignificant deterioration in credit quality since origination.

PCD assets are recorded at fair value at the time of acquisitions. Subsequently, the amount of expected credit losses as of the acquisition date is added to the carrying value of the PCD assets with an offsetting entry to ACL. Any difference between the unpaid principal balance of the PCD assets and the amortized cost basis of the assets as of the acquisition date is the non-credit discount or premium. The initial ACL and non-credit discount or premium determined on a collective basis at that acquisition date will be allocated to the individual PCD assets.

To the extent that Management changes the Company’s estimate of expected credit losses on PCD assets, the Company’s ACL will be increased or decreased with a corresponding entry to PCL. The non-credit discount recorded at acquisition will be accreted to interest income over the remaining life of the PCD assets on a level-yield basis.

Purchased assets not credit deteriorated – ASC Topic 326 provides guidance regarding purchased assets that are not credit deteriorated (“Non-PCD”). Non-PCD assets are also recorded at fair value at the time of acquisition, including estimates of current expected credit losses. However, ASB ASC Topic 326 does not allow for expected credit losses as of the acquisition date to be added to the purchase price of Non-PCD assets with an offsetting entry to ACL. Current expected credit losses for Non-PCD loans are to be set aside in ACL with an offsetting entry to PCL. Expected credit losses included in the fair value of a Non-PCD loan are accreted to interest income over the remaining life of a Non-PCD loan on a level-yield basis.

Allowance for credit losses – Loans — On January 1, 2020, the Company adopted Accounting Standard Update (“ASU”) No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU significantly changed the accounting for credit loss measurement on loans and debt securities. The ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The ACL is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected increase or decrease of expected credit losses that have taken place during the period. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances.

For loans and held to maturity debt securities, the ASU requires a CECL measurement to estimate the ACL for the remaining estimated life of the financial asset (including off-balance sheet credit exposures) using historical experience, current conditions, and reasonable and supportable forecasts. The ASU eliminated the existing guidance for Purchased Credit Impaired (“PCI”) loans but requires an allowance for purchased financial assets with more than an insignificant deterioration since origination, otherwise known as PCD assets. In addition, the ASU modified the other-than-temporary impairment (“OTTI”) model for available for sale debt securities to require an allowance for credit losses instead of a direct write-down, which allows for reversal of credit losses in future periods based on an improvement in credit.

Note 1 — Basis of Presentation and Significant Accounting Policies – Continued

Both the Federal Financial Institution Regulatory Agencies (“FFIRA”) and the Securities and Exchange Commission (“SEC”), confirmed that smaller, less complex organizations are not required to implement complex models, developed by outside vendors to calculate current expected credit losses. These agencies have noted that there is no expectation that a less complex entity should have to implement a sophisticated model to satisfy the requirements of Update 2016-13. If an entity is using a loss rate-based method today, that entity may be able to continue with a comparable method, including the WARM method. However, compared with the method it uses today to estimate incurred losses, the entity’s assumptions and inputs will need to change to arrive at an estimate for expected credit losses that contemplates the contractual term of the financial assets adjusted for prepayments as well as reasonable and supportable forecasts.

Given the size of the organization, the Company has developed a CECL reserve model that uses the weighted average remaining maturity (“WARM”) methodology, adjusting for prepayments. The foundation of CECL modeling is the ability to estimate expected credit losses over the lifetime of a loan. The Company uses relevant available information about past events (e.g., historical losses), current conditions, and reasonable and supportable forecasts about future conditions. Historical losses serve as the starting point to estimate expected credit losses. The Company determined to use a “through-the-cycle” historical credit loss experience as its baseline for historical credit losses. The Company determined a representative period for a full credit cycle would be 2008 to 2017 (ten-year credit cycle). The Company has collected historical loss information on its own loan portfolio, as well as peer group information, by seventeen loan segments over this time horizon. The Company calculated WARM for seventeen loan segments using its Asset/Liability Management (“ALM”) models, which has been certified by independent specialists.

Management has identified the following loan portfolio segments to evaluate and measure the Company’s ACL:

Real estate term: Includes farmland, multifamily, owner-occupied commercial real estate, and non-owner occupied commercial real estate term loans.

Construction and land development: Includes 1-4 family residential construction loans, other construction loans, land development loans, and other land loans.

Commercial and industrial: Includes agricultural loans, commercial and industrial loans, municipal loans, and lease financing receivables.

Residential and home equity: Includes revolving 1-4 family residential lines of credit, first lien 1-4 family residential term loans, and junior lien 1-4 family residential term loans.

Consumer and other: Includes consumer credit cards, automobile loans, revolving consumer lines of credit, and other consumer loans.

The Company evaluates macroeconomic information, as well as internal trends in credit performance on the Company’s loan portfolio, to assist in determining current conditions and its economic forecast. The Company uses qualitative factors as defined by the Interagency Policy Statement on the Allowance for Loan and Lease Losses (the “Interagency Policy Statement”). The Interagency Policy Statement notes that after determining the appropriate historical loss rate for each group of loans with similar risk characteristics, management should consider those current qualitative or environmental factors that are likely to cause estimated credit losses as of the evaluation date to differ from the group’s historical loss experience. Institutions typically reflect the overall effect of these factors on a loan group as an adjustment that, as appropriate, increases or decreases the historical loss rate applied to the loan group. Alternatively, the effect of these factors may be reflected through separate standalone adjustments within the FAS 5 [superseded by ASC Topic 326] component of the ALLL. Both methods are consistent with GAAP provided the adjustments for qualitative or environmental factors are reasonably and consistently determined, are adequately documented, and represent estimated credit losses. For each group of loans, an institution should apply its adjusted historical loss rate, or its historical loss rate and separate standalone adjustments, to the recorded investment in the group when determining its estimated credit losses.

Note 1 — Basis of Presentation and Significant Accounting Policies – Continued

Management must exercise significant judgment when evaluating the effect of qualitative factors on the amount of the ALLL because data may not be reasonably available or directly applicable for management to determine the precise impact of a factor on the collectability of the institution’s loan portfolio as of the evaluation date. Accordingly, institutions should support adjustments to historical loss rates and explain how the adjustments reflect current information, events, circumstances, and conditions in the loss measurements. Management should maintain reasonable documentation to support which factors affected the analysis and the impact of those factors on the loss measurement. Support and documentation include descriptions of each factor, management’s analysis of how each factor has changed over time, which loan groups’ loss rates have been adjusted, the amount by which loss estimates have been adjusted for changes in conditions, an explanation of how management estimated the impact, and other available data that supports the reasonableness of the adjustments. Examples of underlying supporting evidence could include, but are not limited to, relevant articles from newspapers and other publications that describe economic events affecting a particular geographic area, economic reports and data, and notes from discussions with borrowers.

As defined by the Interagency Policy Statement, the Company considers qualitative or environmental factors that are likely to cause estimated credit losses associated with the Company’s existing portfolio to differ from historical loss experience, as defined in the Interagency Guidance, including but not limited to:

•

Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.

•

Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.

•

Changes in the nature and volume of the portfolio and in the terms of loans.

•

Changes in the experience, ability, and depth of lending management and other relevant staff.

•

Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans.

•

Changes in the quality of the institution’s loan review system.

•

Changes in the value of underlying collateral for collateral-dependent loans.

•

The existence and effect of any concentrations of credit, and changes in the levels of such concentrations.

•

The effect of other external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the institution’s existing portfolio.

Charge-offs of loans are generally processed by policy as well as regulatory guidance. Secured consumer loans, including residential real estate loans, that are 120 days past due, are written down to the fair value of the collateral. Unsecured loans are charged-off once the loan is 120 days past due. Decisions on when to charge-off commercial loans and loans secured by commercial real estate are made on an individual basis rather than length of delinquency, though it is a factor in the decision. The financial resources of the borrower and/or guarantor and the nature and value of any collateral are other factors considered.

Premises and equipment — Land is carried at cost. Premises and equipment are carried at cost, net of accumulated depreciation and amortization. Depreciation and amortization expense is computed using the straight-line method based on the estimated useful lives of the related assets below:


Building and building improvements		15 to 40 years
Leasehold improvements		3 to 15 years
Furniture and equipment		3 to 15 years
Computers, software and equipment		3 to 5 years

Note 1 — Basis of Presentation and Significant Accounting Policies – Continued

Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized.

Bank-owned life insurance (“BOLI”) — The Bank has purchased life insurance policies. These policies provide protection against the adverse financial effects that could result from the death of a key employee and provide tax-exempt income to offset expenses associated with the plans. It is the Bank’s intent to hold these policies as a long-term investment; however, there may be an income tax impact if the Bank chooses to surrender certain policies. Although the lives of individual current or former management-level employees are insured, the Bank is the owner and sole or partial beneficiary. BOLI is carried at the cash surrender value (“CSV”) of the underlying insurance contract. Changes in the CSV and any death benefits received in excess of the CSV are recognized as non-interest income.

Goodwill — Goodwill represents the excess of the purchase considerations paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in a business combination and is not amortized but is reviewed annually, or more frequently as current circumstances and conditions warrant, for impairment. An assessment of qualitative factors is completed to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative analysis concludes that further analysis is required, then a quantitative impairment test would be completed. The quantitative goodwill impairment compares the reporting unit's estimated fair values, including goodwill, to its carrying amount. If the carrying amount exceeds its reporting unit’s fair value, then an impairment loss would be recognized as a charge to earnings but is limited by the amount of goodwill allocated to that reporting unit.

Other intangible assets — Other intangible assets consist primarily of core deposit intangibles (“CDI”), which are amounts recorded in business combinations or deposit purchase transactions related to the value of transaction-related deposits and the value of the client relationships associated with the deposits. Core deposit intangibles are amortized over the estimated useful life of such deposits. These assets are reviewed at least annually for events or circumstances that could affect their recoverability. These events could include loss of the underlying core deposits, increased competition or adverse changes in the economy. To the extent other identifiable intangible assets are deemed unrecoverable, impairment losses are recorded in other non-interest expense to reduce the carrying amount of the assets.

Mortgage and other servicing rights — Mortgage and other servicing rights are recognized as separate assets when rights are acquired through purchase of such rights or through the sale of loans. Generally, purchased servicing rights are capitalized at the cost to acquire the rights. For loans sold, the fair value of the servicing rights are estimated and capitalized. Fair value is based on market prices for comparable servicing rights contracts. Capitalized servicing rights are reported in other intangibles and are amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.

Other real estate owned (”OREO”) — Assets acquired through, or in lieu of, foreclosure are held for sale and are initially recorded at the lower of the carrying amount of the foreclosed loan or the fair value of the foreclosed asset, less costs to sell, at the date of foreclosure. Subsequent to foreclosure, Management periodically performs valuations and the assets are carried at the lower of carrying amount or fair value, less selling costs. Revenues and expenses from operations and changes in the valuation allowance are included in other real estate owned expense.

Transfers of financial assets — Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Income taxes — Deferred income tax assets and deferred income tax liabilities represent the tax effect of temporary differences between financial reporting and tax reporting measured at enacted tax rates in effect for the year in which the differences are expected to reverse. The Company recognizes only the impact of tax positions that, based on their technical merits, are more likely than not to be sustained upon an audit by the taxing authority.

Developing the provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires significant judgment and expertise in federal and state income tax laws, regulations and strategies, including the determination of deferred income tax assets and liabilities and any estimated valuation allowances deemed necessary to value deferred income tax assets. Judgments and tax strategies are subject to audit by various taxing authorities. While the Company believes it has no significant uncertain income tax positions in the consolidated financial statements, adverse determinations by these taxing authorities could have a material adverse effect on the consolidated financial positions, result of operations, or cash flows.

Note 1 — Basis of Presentation and Significant Accounting Policies – Continued

Off-balance sheet credit related financial instruments — In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit card arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded.

Allowance for credit losses on off-balance sheet credit exposures — The Company estimates expected credit losses on off-balance sheet credit exposures using the same CECL historical loss rates applied to loans held for investment 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, adjusted for funding factors. The allowance for credit losses on off-balance sheet credit exposures is reported in other liabilities on the unaudited consolidated balance sheets with an offset to other non-interest expense. The estimate of CECL includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated life.

The Company recognizes provision for credit losses on the allowance for off-balance sheet credit exposures (e.g., unfunded loan commitments) together with provision for credit losses on the loan portfolio in the income statement line item provision for credit losses. The following table presents the provision for credit losses on the loan portfolio and off-balance sheet exposures:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(Dollars in thousands)	2021			2020		2021			2020
Provision for credit loss loans	$	(6,381	)	$	2,100	$	(6,381	)	$	2,750
Provision for credit losses unfunded		1,381			-		1,381			-
Total provision for credit losses	$	(5,000	)	$	2,100	$	(5,000	)	$	2,750

Share-based compensation plans — The fair value of incentive share-based awards is recorded as compensation expense over the vesting period of the award. Compensation expense for stock options is estimated at the date of grant using the Black-Scholes option-pricing model. Compensation expense for RSUs is based on the fair value of the Company’s common shares at the date of grant. RSU awards generally vest in thirds over three years from date of grant.

Earnings per share — Basic earnings per common share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares include shares that may be issued by the Company for outstanding stock options determined using the treasury stock method and for all outstanding RSUs.

Earnings per common share has been computed based on the following:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands, except share and per share data)	2021		2020		2021		2020
Numerator
Net income	$	12,700	$	10,338	$	22,138	$	21,111
Denominator
Weighted-average number of common shares outstanding		18,876,688		18,789,561		18,870,626		18,837,209
Incremental shares assumed for stock options and RSUs		159,887		142,950		157,549		148,110
Weighted-average number of dilutive shares outstanding		19,036,575		18,932,511		19,028,175		18,985,319
Basic earnings per common share	$	0.67	$	0.55	$	1.17	$	1.12
Diluted earnings per common share	$	0.67	$	0.55	$	1.16	$	1.11

Note 1 — Basis of Presentation and Significant Accounting Policies – Continued

Comprehensive income —GAAP generally requires that recognized revenues, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, net of the related income tax effect, are reported as a separate component of the equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income.

Impact of recent authoritative accounting guidance — The Accounting Standards Codification™ (“ASC”) is the FASB officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities. Periodically, the FASB will issue Accounting Standard Updates (“ASU”) to its ASC. Rules and interpretive releases of the SEC under the authority of the federal securities laws are also sources of authoritative GAAP to use as an SEC registrant. All other accounting literature is non-authoritative.

On January 1, 2020, the Company adopted ASC 326 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, 2020, are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company adopted ASC 326 using the prospective transition approach for financial assets purchased through an acquisition or business combination. Loans that were previously classified as PCI and accounted for under ASC 310-30 were reclassified as PCD loans. In accordance with the new standard, Management did not reassess whether PCI loans met the criteria of PCD loan as of the date of adoption. On January 1, 2020, the amortized cost basis for PCD loans was increased by $1.5 million to reflect the addition of credit discounts to ACL. The remaining noncredit discount will be accreted into interest income over the remaining life of the portfolio. For Non-PCD loans, the Company increased its ACL by $2.6 million using the same methodology used for loans held for investment. The remaining credit and noncredit discount will be accreted into interest income over the remaining life of the portfolio. Additionally, the Company further increased its ACL by $5.4 million to reflect the change in accounting methodology for CECL.

The following table illustrates the impact of the adoption of CECL (ASC 326):

	January 1, 2020
(Dollars in thousands)	Reported Under ASC 326		Reported Pre Adoption		Impact of ASC 326 Adoption
Assets:
Allowance for credit losses:
Commercial real estate loans:
Real estate term	$	12,683	$	12,275	$	408
Construction and land development		13,393		6,990		6,403
Total commercial real estate		26,076		19,265		6,811
Commercial and industrial loans		11,541		10,892		649
Consumer loans:
Residential and home equity		2,635		1,118		1,517
Consumer and other		640		151		489
Total consumer		3,275		1,269		2,006
Total allowance for credit losses on loans	$	40,892	$	31,426	$	9,466

Liabilities and shareholders' equity:
Reserve for off-balance sheet obligations		1,669		880		789

Shareholders' equity		325,682		332,362		(6,680	)

Subsequent events — The Company has evaluated events occurring subsequent to June 30, 2021 for disclosure in the consolidated financial statements.

Note 2 — Investment Securities

Amortized cost and estimated fair value of investment securities available for sale are summarized as follows:

					Gross Unrealized Losses
					Less			12
			Gross		Than			Months
	Amortized		Unrealized		12			or			Fair
(Dollars in thousands)	Cost		Gains		Months			Longer			Value
As of June 30, 2021
U.S. Government-sponsored securities	$	12,373	$	252	$	(3	)	$	(3	)	$	12,619
Municipal securities		30,140		989		-			-			31,129
Mortgage-backed securities		1,448,728		7,677		(13,339	)		(4	)		1,443,062
Corporate securities		5,000		9		-			(112	)		4,897
	$	1,496,241	$	8,927	$	(13,342	)	$	(119	)	$	1,491,707
As of December 31, 2020
U.S. Government-sponsored securities	$	12,844	$	369	$	-		$	(8	)	$	13,205
Municipal securities		36,010		1,277		-			-			37,287
Mortgage-backed securities		1,247,581		17,587		(134	)		(8	)		1,265,026
Corporate securities		5,000		5		-			(130	)		4,875
	$	1,301,435	$	19,238	$	(134	)	$	(146	)	$	1,320,393

At June 30, 2021 and December 31, 2020, the gross unrealized losses and the fair value for securities available for sale were as follows:

	As of June 30, 2021
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
Available for Sale
U.S. Government-sponsored securities	$	225	$	(3	)	$	568	$	(3	)	$	793	$	(6	)
Municipal securities		-		-			-		-			-		-
Mortgage-backed securities		858,172		(13,339	)		590		(4	)		858,762		(13,343	)
Corporate securities		-		-			2,887		(112	)		2,887		(112	)
	$	858,397	$	(13,342	)	$	4,045	$	(119	)	$	862,442	$	(13,461	)

	As of December 31, 2020
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
Available for Sale
U.S. Government-sponsored securities	$	-	$	-		$	777	$	(8	)	$	777	$	(8	)
Municipal securities		-		-			-		-			-		-
Mortgage-backed securities		76,978		(134	)		1,785		(8

Altabancorp 10-Q