2020 Annual Report

mitigate the deposit insurance assessment effects of participating in the PPP and the Federal Reserve’s PPP Liquidity Facility and Money Market Mutual Fund Liquidity Facility. Capital and Liquidity. At December 31, 2020, the Company and Bank’s capital ratios were in excess of all regulatory requirements. The Company maintains access to multiple sources of liquidity. In addition, the Company issued $50.0 million of 5.25% Fixed-to-Floating Rate Subordinated Notes due June 2030 in a private placement on June 19, 2020. These notes are callable starting in 2025 and qualify for tier 2 capital treatment at the holding company level. The Company injected $25.0 million of capital into the Bank in connection with the subordinated note issuance, which qualifies for tier 1 capital treatment at the bank level. Asset Valuation. During the year ended December 31, 2020, the economic turmoil and market volatility resulting from the COVID-19 pandemic caused a substantial decline in the Company’s stock price and market capitalization. The Company believed such a decline was a triggering event requiring an interim goodwill impairment analysis during the year. The Company performed an interim analysis and determined that goodwill was not more likely than not impaired, resulting in no impairment charge for the period. In the event that all or a portion of goodwill is impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital or regulatory capital. At December 31, 2020, the Company had goodwill of $2.6 million. Active Management of Credit Risk. The Company has modified its internal policies to increase oversight and analysis of all credits, especially in vulnerable industries such as hospitality and restaurants to proactively monitor evolving credit risk. The Company has not yet experienced charge-offs related to the COVID-19 pandemic, but the continued uncertainty regarding the severity and duration of the pandemic and related economic effects has and will continue to affect the Company’s estimate of its allowance for loan losses and resulting provision for loan losses. The Company will continue to monitor credits closely while working with clients to provide relief when appropriate. COVID-19 Related Loan Deferrals and PPP Lending. The Company has developed programs for assisting existing clients through this uncertain time by providing, when appropriate, loan modifications that may include loan payment deferrals, interest-only modifications, or extended amortization. As of December 31, 2020, the Company had active loan modifications for 26 loans totaling $66.6 million. Of that total, loan modifications to interest-only payments totaled $61.1 million, loans with payment deferrals totaled $613,000, and loans with extended amortization periods totaled $4.8 million. In accordance with recent regulatory guidance and the CARES Act, as extended by the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (a part of the Consolidated Appropriations Act, 2021), loans modified in response to the COVID-19 pandemic are not considered TDRs. In a further effort to assist both existing and new clients, the Company participated in government loan programs through the SBA, primarily the PPP. As of December 31, 2020, principal balances originated under the program totaled $181.6 million, $138.5 million of which was outstanding as of December 31, 2020. The Company has generated fees from the SBA, net of costs, of $5.7 million, $2.9 million of which was recognized in the year ended December 31, 2020. The Company has begun originating additional PPP loans under the most recent COVID-19 relief package signed into law on December 27, 2020. As of March 5, 2021, the Company had originated 416 new PPP loans totaling $56.1 million. Processes, Controls, and Business Continuity. The Company’s operations are being conducted in material compliance with current federal, state and local government guidelines regarding social distancing, sanitation, and personal hygiene. During the third quarter of 2020, the Company began allowing employees to return to the office in accordance with new health and safety procedures, including increasing physical space between employees, using face coverings, alternating schedules for employees in the workspace and requiring employees with COVID-19 symptoms or exposure to quarantine away from the office. Additional information about the Company’s COVID-19 pandemic assistance programs, including relevant disclosures and up-to-date information, is maintained at bwbmn.com.

The Company’s ongoing investments in technology, digital platforms and electronic banking have allowed clients and employees to transact with minimal interruption during this time of uncertainty. Additional team members

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