0001437749-20-023147 | 10-Q | XBRL Viewer

Nature of Operations [Text Block]

NOTE 1 - BUSINESS DESCRIPTION

RBB Bancorp (“RBB”) is a financial holding company registered under the Bank Holding Company Act of 1956, as amended. RBB Bancorp’s principal business is to serve as the holding company for its wholly-owned banking subsidiaries, Royal Business Bank ("Bank") and RBB Asset Management Company ("RAM"), collectively referred to herein as "the Company". RAM was formed to hold and manage problem assets acquired in business combinations.

At September 30, 2020, the Company had total consolidated assets of $3.4 billion, gross consolidated loans (held for investment and held for sale) of $2.8 billion, total consolidated deposits of $2.6 billion and total consolidated stockholders' equity of $421.4 million. RBB’s common stock trades on the Nasdaq Global Select Market under the symbol “RBB”.

The Bank provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, Ventura County, Las Vegas, the New York City metropolitan area and the Chicago metropolitan area, including remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, Small Business Administration (“SBA”) 7A and 504 loans, mortgage loans, trade finance and a full range of depository accounts.

The Company operates full-service banking offices in Arcadia, Cerritos, Diamond Bar, Irvine, Los Angeles, Monterey Park, Oxnard, Rowland Heights, San Gabriel, Silver Lake, Torrance, and Westlake Village, California; Las Vegas, Nevada; Manhattan, Brooklyn, Flushing, and Elmhurst, New York; and the Bridgeport and Chinatown areas of Chicago, Illinois. The Company’s primary source of revenue is providing loans to customers, who are predominantly small and middle-market businesses and individuals.

The Company generates its revenue primarily from interest received on loans and leases and, to a lesser extent, from interest received on investment securities. The Company also derives income from noninterest sources, such as fees received in connection with various lending and deposit services, residential mortgage loan originations, loan servicing, gain on sales of loans and wealth management services. The Company’s principal expenses include interest expense on deposits and subordinated debentures, and operating expenses, such as salaries and employee benefits, occupancy and equipment, data processing, and income tax expense.

The Company has completed six acquisitions from July 8, 2011 through January 10, 2020, including the acquisition of PGB Holdings Inc. (“PGBH”) and its wholly-owned subsidiary, Pacific Global Bank (“PGB”), which closed on January 10, 2020. PGB operated three branches in Chicago. See Note 3 – Acquisition, for more information about the PGBH acquisition transaction. All of the Company’s acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the operating results of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates.

Note 2 - Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Basis of Presentation and Significant Accounting Policies [Text Block]

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10-Q and conform to practices within the banking industry and include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the three months and nine months ended September 30, 2020 are not necessarily indicative of the results for the full year. These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2019, included in our Annual Report filed on Form 10-K for the fiscal year ended December 31, 2019 (our “2019 Annual Report”).

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. It is reasonably possible our estimate of the allowance for loan losses and the fair value of mortgage servicing rights could change as actual results could differ from those estimates. Actual results could differ from those estimates.

Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements were compiled in accordance with the accounting policies set forth in Note 2 – Basis of Presentation and Summary of Significant Policies in our Consolidated Financial Statements as of and for the year ended December 31, 2019, included in our 2019 Annual Report. The Financial Accounting Standards Board ("FASB") issues Accounting Standards Updates ("ASU" or “Update”) and Accounting Standards Codifications (“ASC”), which are the primary source of GAAP.

Recent Accounting Pronouncements

When RBB conducted its initial public offering (“IPO”) in 2017, we qualified as an emerging growth company (“EGC”). We will remain an EGC until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1.0 billion or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of our IPO, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We anticipate no longer qualifying as an EGC on December 31, 2022. EGCs are entitled to reduced regulatory and reporting requirements under the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act, as compared to public business entities ("PBE").

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), including subsequent amending ASUs. The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases, which is generally defined as a lease term of less than 12 months. This change will result in lessees recognizing right-of-use assets and lease liabilities for most leases currently accounted for as operating leases under current lease accounting guidance. As amended by ASU 2020-05, this ASU is effective for an EGC for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022. The Company has several lease agreements which are currently considered operating leases and are therefore not included on the Company’s Consolidated Balance Sheets. Under the new guidance the Company expects that some of the lease agreements will be recognized on the Consolidated Balance Sheets as a right-of-use asset with a corresponding lease liability. Based upon a preliminary evaluation, the Company expects that the ASU will have an impact on the Company’s Consolidated Balance Sheets. As of this Quarterly Report and the Company’s current leases, we estimate the right-of-use asset and lease liability will be in the range of $25-30 million as of the expected December 31, 2022 EGC adoption date. The effective date for this ASU for PBEs is for years beginning after December 15, 2018, and for interim periods within those fiscal years. The Company will continue to evaluate how extensive the impact will be under the ASU on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instrument (Topic 326), including subsequent amending ASUs. This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The standard will replace today's "incurred loss" approach with an "expected loss" model. The new model, referred to as the current expected credit loss ("CECL") model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held to maturity securities, loan commitments, and financial guarantees. For available for sale (“AFS”) debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. ASU 2016-13 also expands the disclosure requirements regarding an entity's assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 was originally proposed to be effective for interim and annual reporting periods for an emerging growth company beginning after December 15, 2020 (however, see below). Entities will apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company has begun its evaluation of the impact of the implementation of ASU 2016-13. The implementation of the provisions of ASU 2016-13 will most likely impact the Company’s consolidated financial statements as to the level of reserves that will be required for credit losses. The Company will continue to assess the potential impact that this Update will have on the Company’s consolidated financial statements. The Company will adopt CECL (ASU 2016-13) on December 31, 2022.

In February 2019, the U.S. federal bank regulatory agencies approved a final rule modifying their regulatory capital rules and providing an option to phase in over a three year period the day-one adverse regulatory capital effects of ASU 2016-13. Additionally, in March 2020, the U.S. federal bank regulatory agencies issued an interim final rule that provides banking organizations an option to delay the estimated CECL impact on regulatory capital for an additional two years for a total transition period of up to five years to provide regulatory relief to banking organizations to better focus on supporting lending to creditworthy households and businesses in light of recent strains on the U.S. economy as a result of the novel coronavirus disease 2019 ("COVID-19") pandemic. As a result, entities will have the option to gradually phase in the full effect of CECL on regulatory capital over a five-year transition period.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350). This Update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The amendments in this Update are required for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. As a result, under this Update, “an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.” For PBE's, ASU 2017-04 is effective for annual and any interim impairment tests performed in periods beginning after December 15, 2019. As an EGC, the Company will adopt this ASU on December 31, 2022. Adoption of ASU 2017-04 is not expected to have a significant impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which is intended to enhance “the accounting for the amortization of premiums for purchased callable debt securities.” This Update shortens the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The amendments in this Update affects all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendment does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The ASU’s amendments are effective for EGC’s for interim periods beginning after December 15, 2020 and annual periods beginning after December 15, 2019. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The implementation of the provisions of ASU 2017-08 will most likely not have a material impact the Company’s consolidated financial statements. The Company will continue to assess the potential impact that this ASU will have on the Company’s consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this Update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. For EGCs, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. This Update has the potential to only impact share-based payments to members of the Company’s non-employees. The Company adopted this ASU on January 1, 2020 and this ASU did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this Update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. These disclosure requirements were removed from the topic: (1) The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements. These disclosure requirements were modified: (1) For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly, and (2) the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The following disclosure requirements were added: (1) The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. In addition, the amendments eliminate “at a minimum” from the phrase “an entity shall disclose at a minimum to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements”. The amendments in this Update are effective for EGCs for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. As an EGC, the Company adopted this Update on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This Update provides additional guidance to ASU 2015-05, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (CCA), on the accounting for implementation, setup, and other upfront costs (collectively referred to as implementation costs) apply to entities that are a customer in a hosting arrangement. This Update applies to entities that are a customer in a hosting arrangement that is a service contract. Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. This Update also requires the customer to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. This Update is effective for an EGC for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, for all entities. The amendments in this Update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. This Update will most likely not have a material impact unless the Company incurs implementation costs for a CCA that is a service contract.

In November 2019, the FASB issued ASU 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606), Codification Improvements—Share-Based Consideration Payable to a Customer. This ASU will affect companies that issue share-based payments (e.g., options or warrants) to their customers. In June 2018, the FASB issued ASU 2018-07 that expanded the scope of Topic 718, Compensation—Stock Compensation, to include share-based payments to non-employees in exchange for goods and services. That ASU substantially aligned the accounting for share-based payments to non-employees and employees. However, it required share-based payments to nonemployee customers to be accounted for under Topic 606, Revenue from Contracts with Customers, as a reduction of revenue, similar to other sales incentives (such as coupons and rebates). While that ASU provided guidance on the income statement classification of payments to customers (as a reduction of revenue), that ASU did not specify when to measure such awards or how to classify awards on the balance sheet (for example as a liability or as equity). To address diversity in these areas, the new guidance requires companies to measure and classify (on the balance sheet) share-based payments to customers by applying the guidance in Topic 718. As a result, the amount recorded as a reduction in revenue would be measured based on the grant-date fair value of the share-based payment. ASU 2019-08 is effective for entities that have not yet adopted the amendments in ASU 2018-07, the amendments in ASU 2019-08 are effective for an EGC in fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company adopted the ASU as of December 31, 2019 and this ASU did not have a material impact on the Company’s financial statements as the Company has not issued share-based payments to non-employees, except for non-employee members of the board of directors.

In January 2020, the FASB issued ASU 2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)”. This ASU is for equity securities accounted for by the equity method. The amendment clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The Company has equity securities on our balance sheet but are not material to be considered for the equity method. For an EGC, this ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

In February 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update)”. This is an amendment to add the SEC Staff guidance on CECL) to the FASB codification. It contains guidance on what the SEC would expect the Company to perform and document when measuring and recording its allowance for credit losses for financial assets recorded at amortized cost. As an EGC, the Company will implement CECL on December 31, 2022.

In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments”. The ASU clarifies the accounting and disclosure guidance in various codification topics for financial instruments. In particular, the amendments (1) clarify certain disclosure requirements, including fair value option disclosures, (2) add cross-references in U.S. GAAP to clarify certain guidance, (3) make clear the applicability of the portfolio exception in ASC 820, Fair Value Measurement, to nonfinancial items, (4) clarify the determination of the contractual life of a net investment in leases in estimating expected credit losses under ASC 326, Financial Instruments – Credit Losses, and (5) explain the interaction between the guidance in ASC 860-20, Transfers and Servicing: Sales of Financial Assets, and ASC 326. For RBB as an EGC, issues 1, 2, 4 and 5 are applicable for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years beginning after December 15, 2020. The amendment related to Issue 3 is a conforming amendment that affects the guidance in the amendments in ASU 2019-04. We are currently evaluating this guidance to determine the financial impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides temporary optional expedients to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate (“LIBOR”) to an alternative reference rate such as Secured Overnight Financing Rate (“SOFR”). This pronouncement is applicable to all companies with contracts or hedging relationships that reference an interest rate that is expected to be discontinued. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. Companies can apply the ASU immediately. However, the guidance will only be available for a limited time (generally through December 31, 2022). For contract modifications, companies can account for the modification as a continuation of the existing contract without additional analysis. For held-to-maturity (“HTM”) debt securities, one-time sale and/or transfer to available-for-sale or trading may be made for HTM debt securities that both reference an eligible reference rate and were classified as HTM before January 1, 2020. Regarding the effective date and transition: (1) companies can apply the ASU as of the beginning of the interim period that includes March 12, 2020 (e.g. January 1, 2020 for calendar year-end companies) or any date thereafter, (2) the ASU applies prospectively to contract modifications and hedging relationships, and (3) the one-time election to sell and/or transfer debt securities classified as HTM may be made at any time after March 12, 2020. The optional relief generally does not apply to contract modifications made, sales and transfers of HTM debt securities, and hedging relationships entered into or evaluated after December 31, 2022. The guidance was effective upon issuance and generally can be applied through December 31, 2022. Of the Company’s $2.8 billion in total gross loans as of September 30, 2020, approximately 15% have a LIBOR based reference rate. The Company has several issuances of LIBOR based long-term debt and subordinated debentures. Refer to Notes 9 and 10 of the Company’s consolidated financial statements included in this Form 10-Q. We are currently evaluating this guidance to determine the financial impact on the Company’s consolidated financial statements.

In June 2020, the FASB issued ASU 2020-05, “Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities”. This ASU allows for the deferral of the effective dates of ASC 606 and ASC 842 (including amendments issued after the issuance of the original Update) to provide immediate, near-term relief for certain entities for whom these Updates are either currently effective or imminently effective. The Company has already implemented Topic 606 and will implement topic 842 on January 1, 2022.

Note 3 - Acquisition

9 Months Ended

Sep. 30, 2020

Business Combination Disclosure [Text Block]

NOTE 3 – ACQUISITION

PGB Holdings, Inc. Acquisition:

On January 10, 2020, the Company acquired all the assets and assumed all the liabilities of PGBH and its wholly owned bank subsidiary, in exchange for cash of $32.9 million. PGBH operated three branches in the Chicago, Illinois metropolitan area. The Company acquired PGBH to strategically establish a presence in the Chicago area. Goodwill in the amount of $10.7 million was recognized in this acquisition. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities. Goodwill is not deductible for income tax purposes.

The following table represents the assets acquired and liabilities assumed of PGBH as of January 10, 2020 and the fair value adjustments and amounts recorded by the Company in 2020 under the acquisition method of accounting:

	*PGBH*			*Fair Value*			*Fair*
*(dollars in thousands)*	*Book Value*			*Adjustments*			*Value*
Assets acquired
Cash and cash equivalents	$	17,033		$	—		$	17,033
Fed funds sold		8,300			—			8,300
Interest-bearing deposits in other financial Institutions		14,186			—			14,186
Investments - held to maturity		—			—			—
Investments - available for sale		—			—			—
Mortgage loans held for sale		—			—			—
Loans, gross		172,443			666			173,109
Allowance for loan losses		(2,265	)		2,265			—
Bank premises and equipment		6,394			1,639			8,033
Mortgage servicing rights		—			—			—
Core deposit premium		—			491			491
Investment in trust		155			—			155
Other assets		1,687			(194	)		1,493
Total assets acquired	$	217,933		$	4,867		$	222,800

Liabilities assumed
Deposits	$	187,393		$	969		$	188,362
Escrow Payable		4,277			—			4,277
Subordinated debentures		5,155			(763	)		4,392
Deferred income taxes		1,016			1,721			2,737
Other liabilities		1,211			(384	)		827
Total liabilities assumed		199,052			1,543			200,595
Excess of assets acquired over liabilities assumed		18,881			3,324			22,205
	$	217,933		$	4,867
Cash paid								32,885
Goodwill recognized							$	10,680

The fair values are estimates and are subject to adjustment for up to one year after the merger date.

The Company accounted for these transactions under the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires purchased assets and liabilities assumed to be recorded at their respective fair values at the date of acquisition.

The loan portfolio of PGBH was recorded at fair value at the date of acquisition with the assistance of a third-party valuation. A valuation of PGBH’s loan portfolio was performed as of the acquisition date to assess the fair value of the loan portfolio. The loan portfolio was segmented into two groups; loans with credit deterioration and loans without credit deterioration, and then split further by loan type. The fair value was calculated on an individual loan basis using a discounted cash flow analysis. The discount rate utilized was based on a weighted average cost of capital, considering the cost of equity and cost of debt. Also factored into the fair value estimates were loss rates, recovery period and prepayment rates based on industry standards.

The Company also determined the fair value of the core deposit intangible, securities and deposits with the assistance of third-party valuations.

The core deposit intangible on non-maturing deposits was determined by evaluating the underlying characteristics of the deposit relationships, including customer attrition, deposit interest rates, service charge income, overhead expense and costs of alternative funding. Since the fair value of intangible assets are calculated as if they were stand-alone assets, the presumption is that a hypothetical buyer of the intangible asset would be able to take advantage of potential tax benefits resulting from the asset purchase. The value of the benefit is the present value over the period of the tax benefit, using the discount rate applicable to the asset.

In determining the fair value of certificates of deposit, a discounted cash flow analysis was used, which involved present valuing the contractual payments over the remaining life of the certificates of deposit at market-based interest rates.

For loans acquired from PGBH, the contractual amounts due, expected cash flows to be collected, interest component and fair value as of the respective acquisition dates were as follows:

	*PGBH Acquired Loans*
Contractual amounts due	$	195,227
Cash flows not expected to be collected		5,176
Expected cash flows		190,051
Interest component of expected cash flows		16,942
Fair value of acquired loans	$	173,109

The operating results of the Company for the nine months ended September 30, 2020 include the operating results of PGBH since its acquisition date. The following table presents the net interest and other income, net income and earnings per share as if the acquisition of PGBH was effective as of January 1, 2020. There were no material, nonrecurring adjustments to the pro forma net interest and other income, net income and earnings per share presented below:

	*Three Months Ended*				*Nine Months Ended*
	*September 30, 2020*		*September 30, 2019*		*September 30, 2020*		*September 30, 2019*
Net interest and other income	$	29,978	$	28,715	$	85,662	$	92,856
Net income		8,520		8,531		20,615		30,432
Basic earnings per share		0.43		0.43		1.04		1.52
Diluted earnings per share		0.43		0.42		1.03		1.49

Third-party acquisition related expenses are recognized as incurred and continue until the acquired system is converted and operational functions become fully integrated. The Company incurred third-party acquisition related expenses in the consolidated statements of income for the periods indicated in the Statements of Income in the expense item “Merger and conversion expenses”.

Note 4 - Investment Securities

9 Months Ended

Sep. 30, 2020

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 4 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of available for sale (“AFS”) securities and held to maturity (“HTM”) securities as of September 30, 2020 and December 31, 2019, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

			*Gross*		*Gross*
*(dollars in thousands)*	*Amortized*		*Unrealized*		*Unrealized*			*Fair*
September 30, 2020	*Cost*		*Gains*		*Losses*			*Value*
Available for sale
Government agency securities	$	1,258	$	30	$	—		$	1,288
SBA agency securities		4,262		253		—			4,515
Mortgage-backed securities- Government sponsored agencies		17,530		294		(6	)		17,818
Collateralized mortgage obligations		45,948		479		(91	)		46,336
Commercial paper		109,188		—		—			109,188
Corporate debt securities		33,412		560		(42	)		33,930
Municipal securities		1,623		—		(36	)		1,587
Total	$	213,221	$	1,616	$	(175	)	$	214,662

Held to maturity
Municipal taxable securities	$	2,797	$	156	$	—		$	2,953
Municipal securities		4,772		257		—			5,029
Total	$	7,569	$	413	$	—		$	7,982


December 31, 2019
Available for sale
Government agency securities	$	1,591	$	—	$	(19	)	$	1,572
SBA agency securities		4,671		42		(22	)		4,691
Mortgage-backed securities- Government sponsored agencies		19,126		74		(29	)		19,171
Collateralized mortgage obligations		11,641		38		(25	)		11,654
Corporate debt securities		88,700		281		—			88,981
Total	$	125,729	$	435	$	(95	)	$	126,069

Held to maturity
Municipal taxable securities	$	3,505	$	147	$	—		$	3,652
Municipal securities		4,827		153		—			4,980
Total	$	8,332	$	300	$	—		$	8,632

One security with a fair value of $ 418,000 and $627,000 at September 30, 2020 and December 31, 2019, respectively, was pledged to secure a local agency deposit.

Proceeds of $3.8 million and $11.7 million were received from the sale of investment securities during the three and nine months ended September 30, 2020, respectively, and $6.1 million during the three and nine months ended September, 30 2019. There were $52,000 and $ 210,000 of gains realized on sales of investment securities during the three and nine months ended September 30, 2020, respectively, compared to $7,000 of gains realized during the three and nine months ended September 30, 2019.

The amortized cost and fair value of the investment securities portfolio at September 30, 2020 and December 31, 2019 are shown by expected maturity below. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	*Less than One Year*				*More than One Year to Five Years*				*More than Five Years to Ten Years*				*More than Ten Years*				*Total*
	*Amortized*		*Estimated*		*Amortized*		*Estimated*		*Amortized*		*Estimated*		*Amortized*		*Estimated*		*Amortized*		*Estimated*
*(dollars in thousands)*	*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*
September 30, 2020
Government agency securities	$	—	$	—	$	1,258	$	1,288	$	—	$	—	$	—	$	—	$	1,258	$	1,288
SBA securities		—		—		596		629		3,666		3,886		—		—		4,262		4,515
Mortgage-backed securities- Government sponsored agencies		3,010		3,014		14,520		14,804		—		—		—		—		17,530		17,818
Collateralized mortgage obligations		—		—		13,895		14,274		32,053		32,062		—		—		45,948		46,336
Commercial paper		109,188		109,188		—		—		—		—		—		—		109,188		109,188
Corporate debt securities		2,001		2,031		14,668		14,742		12,743		13,159		4,000		3,998		33,412		33,930
Municipal securities		—		—		—		—		—		—		1,623		1,587		1,623		1,587
Total available for sale	$	114,199	$	114,233	$	44,937	$	45,737	$	48,462	$	49,107	$	5,623	$	5,585	$	213,221	$	214,662

Municipal taxable securities	$	979	$	998	$	1,818	$	1,955	$	—	$	—	$	—	$	—	$	2,797	$	2,953
Municipal securities		—		—		—		—		874		922		3,898		4,107		4,772		5,029
Total held to maturity	$	979	$	998	$	1,818	$	1,955	$	874	$	922	$	3,898	$	4,107	$	7,569	$	7,982

December 31, 2019
Government agency securities	$	—	$	—	$	1,591	$	1,572	$	—	$	—	$	—	$	—	$	1,591	$	1,572
SBA securities		—		—		714		725		3,957		3,966		—		—		4,671		4,691
Mortgage-backed securities- Government sponsored agencies		3,663		3,679		13,027		13,059		2,436		2,433		—		—		19,126		19,171
Collateralized mortgage obligations		—		—		9,288		9,265		2,353		2,389		—		—		11,641		11,654
Corporate debt securities		70,914		70,919		2,002		2,008		11,772		12,024		4,012		4,030		88,700		88,981
Total available for sale	$	74,577	$	74,598	$	26,622	$	26,629	$	20,518	$	20,812	$	4,012	$	4,030	$	125,729	$	126,069

Municipal taxable securities	$	285	$	289	$	2,716	$	2,784	$	504	$	579	$	—	$	—	$	3,505	$	3,652
Municipal securities		—		—		40		40		366		379		4,421		4,561		4,827		4,980
Total held to maturity	$	285	$	289	$	2,756	$	2,824	$	870	$	958	$	4,421	$	4,561	$	8,332	$	8,632

The following table summarizes investment securities with unrealized losses at September 30, 2020 and December 31, 2019, aggregated by major security type and length of time in a continuous unrealized loss position:

	*Less than Twelve Months*							*Twelve Months or More*							*Total*
	*Unrealized*			*Estimated*		*No. of*		*Unrealized*			*Estimated*		*No. of*		*Unrealized*			*Estimated*		*No. of*
*(dollars in thousands)*	*Losses*			*Fair Value*		*Issuances*		*Losses*			*Fair Value*		*Issuances*		*Losses*			*Fair Value*		*Issuances*
September 30, 2020
Mortgage-backed securities- Government sponsored agencies		(6	)		9,998		2		—			—		—		(6	)		9,998		2
Collateralized mortgage obligations		(91	)		29,260		6									(91	)		29,260		6
Corporate debt securities		(42	)		5,958		4		—			—		—		(42	)		5,958		4
Municipal securities		(36	)		1,587		3									(36	)		1,587		3
Total available for sale	$	(175	)	$	46,803		15	$	—		$	—		—	$	(175	)	$	46,803	$	15

Total held to maturity	$	—		$	—		—	$	—		$	—		—	$	—		$	—		—

December 31, 2019
Government agency securities	$	(19	)	$	1,572		2	$	—		$	—		—	$	(19	)	$	1,572		2
SBA securities		(22	)		1,469		2		—			—		—		(22	)		1,469		2
Mortgage-backed securities- Government sponsored agencies		(5	)		2,631		4		(24	)		3,912		6		(29	)		6,543		10
Collateralized mortgage obligations		(10	)		5,738		3		(15	)		953		2		(25	)		6,691		5
Total available for sale	$	(56	)	$	11,410		11	$	(39	)	$	4,865		8	$	(95	)	$	16,275		19

Total held to maturity	$	—		$	—		—	$	—		$	—		—	$	—		$	—		—

Unrealized losses have not been recognized into income because the issuer bonds are of high credit quality, management does not intend to sell, it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery and the decline in fair value is largely due to changes in interest rates. The fair value is expected to recover as the bonds approach maturity.

Management evaluates securities for other-than-temporary impairment (“OTTI”) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.

Equity Securities - The Company recognized no net gain or loss for the three and nine months ended September 30, 2020, respectively, due to the increase or decrease in the fair value of equity investments without readily determinable fair values. For the three and nine months ended September 30, 2019, respectively, there was no net gain and a gain of $147,000 due to the increase in the fair value of equity investments without readily determinable fair values. Equity securities were $11.9 million as of September 30, 2020 and $11.8 million as of December 31, 2019.

Note 5 - Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2020

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 5 - LOANS AND ALLOWANCE FOR LOAN LOSSES

The Company's loan portfolio consists primarily of loans to borrowers within the Southern California metropolitan area, the New York City metropolitan area, the Chicago, Illinois metropolitan area and Las Vegas, Nevada. Although the Company seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Company's market area and, as a result, the Company's loan and collateral portfolios are, to some degree, concentrated in those industries.

The following tables present the balance and activity related to the allowance for loan losses for held for investment loans by type for the periods presented.

	*Three Months Ended September 30,*
	*2020*												*2019*
*(dollars in thousands)*	*Real Estate*		*Commercial*			*Other*		*Unallocated*		*Total*			*Real Estate*		*Commercial*		*Other*		*Unallocated*		*Total*
Allowance for loan losses:
Beginning balance	$	18,985	$	3,813		$	22	$	—	$	22,820		$	14,582	$	3,976	$	3	$	—	$	18,561
Additions (reductions) to the allowance charged to expense		2,858		990			13		—		3,861			558		25		3		238		824
Charge-offs on loans		—		(48	)		—		—		(48	)		—		—		—		—		—
Recoveries on loans		—		1			—		—		1			—		1		—		—		1
Ending balance	$	21,843	$	4,756		$	35	$	—	$	26,634		$	15,140	$	4,002	$	6	$	238	$	19,386

	*Nine Months Ended September 30,*
	*2020*													*2019*
*(dollars in thousands)*	*Real Estate*		*Commercial*			*Other*		*Unallocated*			*Total*			*Real Estate*		*Commercial*			*Other*		*Unallocated*		*Total*
Allowance for loan losses:
Beginning of year	$	15,118	$	3,588		$	9	$	101		$	18,816		$	13,437	$	4,140		$	—	$	—	$	17,577
Additions (reductions) to the allowance charged to expense		6,725		2,165			26		(101	)		8,815			1,703		(216	)		6		238		1,731
Charge-offs on loans		—		(998	)		—		—			(998	)		—		110			—		—		110
Recoveries on loans		—		1			—		—			1			—		(32	)		—		—		(32	)
Ending balance	$	21,843	$	4,756		$	35	$	—		$	26,634		$	15,140	$	4,002		$	6	$	238	$	19,386

	*For the year end December 31, 2019*
*(dollars in thousands)*	*Real Estate*			*Commercial*			*Other*		*Unallocated*		*Total*
Allowance for loan losses:
Beginning of year	$	13,437		$	4,140		$	—	$	—	$	17,577
Additions (reductions) to the allowance charged to expense		1,847			433			9		101		2,390
Charge-offs on loans		(166	)		(1,093	)		—		—		(1,259	)
Recoveries on loans		—			108			—		—		108
Ending balance	$	15,118		$	3,588		$	9	$	101	$	18,816

The following table presents the recorded investment in loans and impairment method as of September 30, 2020, September 30, 2019, and December 31, 2019, by portfolio segment:

*(dollars in thousands)*
September 30, 2020	*Real Estate*		*Commercial*		*Other*		*Unallocated*		*Total*
Reserves:
Specific	$	—	$	436	$	—	$	—	$	436
General		21,843		4,320		35		—		26,198
Total allowance for loan losses	$	21,843	$	4,756	$	35	$	—	$	26,634
Loans evaluated for impairment:
Individually	$	6,119	$	11,842	$	15	$	—	$	17,976
Collectively		2,316,619		417,242		3,316		—		2,737,177
Total loans, net of deferred loan fees and unaccreted discount on acquired loans	$	2,322,738	$	429,084	$	3,331	$	—	$	2,755,153

September 30, 2019	Real Estate		Commercial		Other		Unallocated		Total
Reserves:
Specific	$	127	$	303	$	—	$	—	$	430
General		15,013		3,699		6		238		18,956
Total allowance for loan losses	$	15,140	$	4,002	$	6		238		19,386
Loans evaluated for impairment:
Individually	$	4,537	$	5,091	$	—	$	—	$	9,628
Collectively		1,773,616		342,365		536		—		2,116,517
Total loans, net of deferred loan fees and unaccreted discount on acquired loans	$	1,778,153	$	347,456	$	536	$	—	$	2,126,145

December 31, 2019	*Real Estate*		*Commercial*		*Other*		*Unallocated*		*Total*
Reserves:
Specific	$	—	$	—	$	—	$	—	$	—
General		15,118		3,588		9		101		18,816
Total allowance for loan losses	$	15,118	$	3,588	$	9	$	101	$	18,816
Loans evaluated for impairment:
Individually	$	3,795	$	9,423	$	—	$	—	$	13,218
Collectively		1,842,747		340,148		821		—		2,183,716
Total loans, net of deferred loan fees and unaccreted discount on acquired loans	$	1,846,542	$	349,571	$	821	$	—	$	2,196,934

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans. This analysis is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:

Pass - Loans classified as pass include loans not meeting the risk ratings defined below.

Special Mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Impaired - A loan is considered impaired, when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Additionally, all loans classified as troubled debt restructurings are considered impaired.

The risk category of loans by class of loans was as follows at September 30, 2020 and December 31, 2019:

*(dollars in thousands)*			*Special*
September 30, 2020	*Pass*		*Mention*		*Substandard*		*Impaired*		*Total (1)*
Real estate:
Construction and land development	$	182,808	$	—	$	—	$	761	$	183,569
Commercial real estate		913,868		5,980		52,728		2,611		975,187
Single-family residential mortgages		1,158,935		2,083		217		2,747		1,163,982
Commercial:
Other		308,412		—		7,354		2,125		317,891
SBA		97,010		187		4,279		9,717		111,193
Other:		3,316		—		—		15		3,331
Total loans	$	2,664,349	$	8,250	$	64,578	$	17,976	$	2,755,153

*(dollars in thousands)*			*Special*
December 31, 2019	*Pass*		*Mention*		*Substandard*		*Impaired*		*Total(1)*
Real estate:
Construction and land development	$	95,756	$	—	$	—	$	264	$	96,020
Commercial real estate		767,603		5,353		18,115		2,197		793,268
Single-family residential mortgages		955,327		—		593		1,334		957,254
Commercial:
Other		265,178		4,078		5,330		—		274,586
SBA		61,496		189		3,877		9,423		74,985
Other:		821		—		—		—		821
Total loans	$	2,146,181	$	9,620	$	27,915	$	13,218	$	2,196,934

(1)

Loans, net of deferred fees

The following table presents the aging of the recorded investment in past-due loans at September 30, 2020 and December 31, 2019 by class of loans:

*(dollars in thousands)*	30-59		60-89		*90 Days*		*Total*		*Loans Not*		*Total*		*Non-Accrual*
September 30, 2020	*Days*		*Days*		*Or More*		*Past Due*		*Past Due*		*Loans*		*Loans (1)*
Real estate:
Construction and land development	$	—	$	400	$	361	$	761	$	182,808	$	183,569	$	761
Commercial real estate		7,578		11,791		1,168		20,537		954,650		975,187		1,168
Single-family residential mortgages		2,408		791		799		3,998		1,159,984		1,163,982		2,747
Commercial:
Other		—		—		882		882		317,009		317,891		1,622
SBA		—		37		9,680		9,717		101,476		111,193		9,680
Other:		12		—		15		27		3,304		3,331		15
	$	9,998	$	13,019	$	12,905	$	35,922	$	2,719,231	$	2,755,153	$	15,993

	30-59		60-89		*90 Days*		*Total*		*Loans Not*		*Total*		*Non-Accrual*
December 31, 2019	*Days*		*Days*		*Or More*		*Past Due*		*Past Due*		*Loans*		*Loans (1)*
Real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	96,020	$	96,020	$	—
Commercial real estate		—		—		725		725		792,543		793,268		725
Single-family residential mortgages		1,454		1,560		450		3,464		953,790		957,254		1,334
Commercial:
Other		—		—		—		—		274,586		274,586		—
SBA		2,263		—		9,378		11,641		63,344		74,985		9,378
Other:		—		—		—		—		821		821		—
	$	3,717	$	1,560	$	10,553	$	15,830	$	2,181,104	$	2,196,934	$	11,437

(1)

Included in total loans.

The Company has no loans that are 90 days or more past due and still accruing at September 30, 2020 and December 31, 2019.

Information relating to individually impaired loans presented by class of loans was as follows at September 30, 2020 and December 31, 2019:

*(dollars in thousands)*	*Principal*		*Recorded*		*Related*
September 30, 2020	*Balance*		*Investment*		*Allowance*
With no related allowance recorded
Construction and land development	$	761	$	761	$	—
Commercial and industrial		1,764		1,713
Commercial real estate		2,611		2,611		—
Residential mortgage loans		2,846		2,747		—
Commercial – SBA		9,695		9,680		—
Other		15		15		—
With related allowance recorded
Commercial and industrial		430		412		430
Commercial - SBA		37		37		6
Total	$	18,159	$	17,976	$	436

*(dollars in thousands)*	*Principal*		*Recorded*		*Related*
December 31, 2019	*Balance*		*Investment*		*Allowance*
With no related allowance recorded
Construction and land development	$	264	$	264	$	—
Commercial real estate		2,198		2,197		—
Residential mortgage loans		1,349		1,334		—
Commercial – SBA		9,423		9,423		—
With related allowance recorded
Commercial – SBA		—		—		—
Total	$	13,234	$	13,218	$	—

The following table presents information on impaired loans and leases, disaggregated by loan segment, for the periods indicated:

	*Three Months Ended*								*Nine Months Ended*
	*September 30, 2020*				*September 30, 2019*				*September 30, 2020*				*September 30, 2019*
	*Average*		*Interest*		*Average*		*Interest*		*Average*		*Interest*		*Average*		*Interest*
*(dollars in thousands)*	*Balance*		*Income*		*Balance*		*Income*		*Balance*		*Income*		*Balance*		*Income*
With no related allowance recorded
Construction and land development	$	762	$	—	$	269	$	18	$	765	$	—	$	271	$	24
Commercial and industrial		1,782		7		—		—		1,819		24		—		—
Commercial real estate		2,679		25		2,552		152		2,689		77		2,560		169
Residential mortgage loans		2,916		—		906		3		2,755		—		907		25
Commercial – SBA		10,017		—		3,005		3		12,682		—		3,007		4
Other		15		—		—		—		15		—		—
With related allowance recorded
Commercial and industrial		433		—		—		—		482		—		—		—
Commercial real estate		—		—		894		—		—		—		895		—
Commercial – SBA		39		1		2,128		—		41		2		2,131		—
	$	18,643	$	33	$	9,754	$	176	$	21,248	$	103	$	9,771	$	222

No interest income on non-accrual loans was recognized on a cash basis for the three and nine months ended September 30, 2020 and 2019 and for the year ended December 31, 2019.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), signed into law on March 27, 2020, permits financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized as troubled debt restructurings ("TDRs") and suspend any determination related thereto if (i) the loan modification is made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the coronavirus emergency declaration and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. In addition, federal bank regulatory authorities have issued guidance to encourage financial institutions to make loan modifications for borrowers affected by COVID-19 and have assured financial institutions that they will neither receive supervisory criticism for such prudent loan modifications, nor be required by examiners to automatically categorize COVID-19-related loan modifications as TDRs. The Company is applying this guidance to qualifying loan modifications.

The Company identified six loans as TDRs at September 30, 2020 and four loans at December 31, 2019, respectively, with aggregate balances of $3.1 million and $1.8 million, respectively. Non-accrual TDRs were $1.1 million at September 30, 2020, and zero at December 31, 2019. There were no specific reserves allocated to the loans as of September 30, 2020 and December 31, 2019. There are no commitments to lend additional amounts at September 30, 2020 and December 31, 2019 to customers with outstanding loans that are classified as TDRs. There were two non-accrual loans that were modified as TDRs during the past twelve months that had payment defaults during the periods.

The following table presents loans by class modified as TDRs that occurred during the nine months ended September 30, 2020. There was one loan modified as a TDR during the three months ended September 30, 2020 and three loans modified as TDRs during the nine months ended September 30, 2020. There were no loans and one new TDRs during the three and nine months ended September 30, 2019, respectively. The modification of the terms generally included loans where a moratorium on loan payments was granted. Such moratoriums ranged from six months to nine months on the loans restructured in 2020 and 2019.

Pre-

Post-

Modification

(dollars in thousands)

Number of

Recorded

September 30, 2020

Loans

Investment

Commercial and industrial

1,719

Total

1,719

Note 6 - Loan Servicing

9 Months Ended

Sep. 30, 2020

Loan Servicing [Text Block]

NOTE 6 - LOAN SERVICING

Mortgage and SBA loans serviced for others are not reported as assets. The principal balances at September 30, 2020 and December 31, 2019 are as follows:

	*September 30,*		*December 31,*
*(dollars in thousands)*	*2020*		*2019*
Loans serviced for others:
Mortgage loans	$	1,569,407	$	1,683,298
SBA loans	$	153,382	$	170,849
Commercial real estate loans	$	4,164	$	4,216

The fair value of servicing assets for mortgage loans was $11.2 million million and $15.1 million at September 30, 2020 and December 31, 2019, respectively. The fair value of servicing assets for SBA loans was $5.0 million and $5.6 million at September 30, 2020 and December 31, 2019, respectively. Estimates of the loan servicing asset fair value are derived through a discounted cash flow analysis. Portfolio characteristics include loan delinquency rates, age of loans, note rate and geography. The assumptions embedded in the valuation are obtained from a range of metrics utilized by active buyers in the market place. The analysis accounts for recent transactions, and supply and demand within the market.

Servicing fees net of servicing asset amortization totaled $546,000 and $1.8 million for the three and nine months ended September 30, 2020, respectively, and $827,000 and $2.6 million for the three and nine months ended September 30, 2019, respectively.

When mortgage and SBA loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. During the nine months ended September 30, 2020, the Company recorded an impairment writedown of $416,000 on mortgage servicing rights due to the impact of the COVID-19 pandemic.

Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal. The amortization of mortgage servicing rights is netted against loan servicing fee income.

	*Three Months Ended*						*Nine Months Ended*
	*September 30, 2020*						*September 30, 2020*
	*Mortgage*			*SBA*			*Mortgage*			*SBA*
*(dollars in thousands)*	*Loans*			*Loans*			*Loans*			*Loans*
Servicing assets:
Beginning of period	$	11,981		$	3,614		$	12,997		$	4,086
Additions		228			—			1,055			70
Disposals		(360	)		(5	)		(998	)		(270	)
Amortized to expense		(551	)		(133	)		(1,391	)		(410	)
Impairment		(50	)		—			(415	)		—
End of period	$	11,248		$	3,476		$	11,248		$	3,476

	*Three Months Ended*						*Nine Months Ended*
	*September 30, 2019*						*September 30, 2019*
	*Mortgage*			*SBA*			*Mortgage*			*SBA*
*(dollars in thousands)*	*Loans*			*Loans*			*Loans*			*Loans*
Servicing assets:
Beginning of period	$	13,244		$	4,343		$	12,858		$	4,512
Additions		130			379			1,471			819
Disposals		(42	)		(219	)		(128	)		(483	)
Amortized to expense		(458	)		(197	)		(1,327	)		(542	)
End of period	$	12,874		$	4,306		$	12,874		$	4,306

Note 7 - Goodwill and Intangibles

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 7 - GOODWILL AND INTANGIBLES

Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill resulting from whole bank acquisitions is not amortized, but tested for impairment at least annually. The Company has historically selected December 31st as the date to perform the annual impairment test. However, since the COVID-19 pandemic, the Company has performed goodwill impairment tests quarterly. Goodwill amounted to $69.2 million at September 30, 2020 and $58.6 million at December 31, 2019, and is the only intangible asset with an indefinite life on the balance sheet. The Company performed goodwill impairment tests as of March 31 and June 30, 2020. There were no impairment losses recognized on goodwill during the three months and nine months ended September 30, 2020.

Other intangible assets consist of core deposit intangible ("CDI") assets arising from whole bank acquisitions. CDI assets are amortized on an accelerated method over their estimated useful life of 8 to 10 years. The unamortized balance at September 30, 2020 and December 31, 2019 was $5.5 million and $6.1 million, respectively. CDI amortization expense was $357,0000 and $384,000 for the three months ended September 30, 2020 and 2019, respectively, and $1.1 million and $1.2 million for the nine months ended September 30, 2020 and 2019, respectively.

Estimated CDI amortization expense for future years is as follows:

*(dollars in thousands)*
As of September 30:
Remainder of 2020	$	322
2021		1,121
2022		936
2023		800
2024		683
Thereafter		1,657
Total	$	5,519

Note 8 - Deposits

9 Months Ended

Sep. 30, 2020

Deposit Liabilities Disclosures [Text Block]

NOTE 8 - DEPOSITS

At September 30, 2020, the scheduled maturities of time deposits are as follows:

*(dollars in thousands)*	*September 30, 2020*
One year	$	1,232,580
Two to three years		70,341
Over three years		12,117
Total	$	1,315,038

The Board of Governors of the Federal Reserve System (“Federal Reserve”) announced the reduction of the reserve requirement ratio to zero percent across all deposit tiers, effective March 26, 2020. Depository institutions that were required to maintain deposits in a Federal Reserve bank account to satisfy reserve requirements will no longer be required to do so, and can use the additional liquidity to lend to individuals and businesses. The Federal Reserve has indicated that it may adjust reserve requirement ratios in the future if conditions warrant.

Note 9 - Long-term Debt

9 Months Ended

Sep. 30, 2020

Long-term Debt [Text Block]

NOTE 9 - LONG-TERM DEBT

In March 2016, the Company issued $50 million of 6.5% fixed to floating rate subordinated debentures, due March 31, 2026. The interest rate is fixed through March 31, 2021 and floats at the 3 month LIBOR plus 516 basis points thereafter. The Company can redeem these subordinated debentures beginning March 31, 2021. The subordinated debentures are considered Tier 2 capital at the Company. The Company contributed $35 million to the Bank as Tier 1 capital.

In November 2018, the Company issued $55 million of 6.18% fixed to floating rate subordinated debentures, due December 1, 2028. The interest rate is fixed through December 1, 2023 and floats at 3 month LIBOR plus 315 basis points thereafter. The Company can redeem these subordinated debentures beginning December 1, 2023. The subordinated debentures are considered Tier 2 capital at the Company. The Company contributed $25 million to the Bank as Tier 1 capital.

At September 30, 2020 and December 31, 2019, long-term debt was as follows:

	*September 30,*		*December 31,*
*(dollars in thousands)*	*2020*		*2019*
Principal	$	105,000	$	105,000
Unamortized debt issuance costs	$	695	$	951

The following table presents interest and amortization expense the Company incurred for the three and nine months ended September 30, 2020 and 2019:

	*For the Three Months Ended September 30,*				*For the Nine Months Ended September 30,*
*(dollars in thousands)*	*2020*		*2019*		*2020*		*2019*
Interest Expense:
Interest	$	1,662	$	1,662	$	4,987	$	4,987
Amortization		85		85		256		256

In July 2017, British banking regulators announced plans to eliminate the LIBOR rate by the end of 2021, before this long-term debt and subordinated debentures mature. For these subordinated debentures, there are provisions for amendments to establish a new interest rate benchmark.

Note 10 - Subordinated Debentures

9 Months Ended

Sep. 30, 2020

Subordinated Borrowings Disclosure [Text Block]

NOTE 10 - SUBORDINATED DEBENTURES

The Company, through the acquisition of TFC Holding Company (“TFC”) in 2016, acquired TFC Statutory Trust (the “Trust”). The Trust conducted a pooled private offering of 5,000 trust preferred securities with a liquidation amount of $1,000 per security. TFC issued $5 million of subordinated debentures to the Trust in exchange for ownership of all of the common securities of the Trust and the proceeds of the preferred securities sold by the Trust. The Company is not considered the primary beneficiary of this Trust (variable interest entity), therefore the Trust is not consolidated in the Company's financial statements, but rather the subordinated debentures are shown as a liability at market value as of the close of the acquisition, which was $3.3 million. There was a $1.9 million valuation reserve recorded to arrive at market value, which is treated as a yield adjustment and is amortized over the life of the security. The Company also purchased an investment in the common stock of the Trust for $155,000, which is included in other assets. The Company may redeem the subordinated debentures, subject to prior approval by the Federal Reserve on or after March 15, 2012, at 100% of the principal amount, plus accrued and unpaid interest. The subordinated debentures mature on March 15, 2037. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years. The Company has been paying interest on a quarterly basis. The subordinated debentures may be included in Tier I capital (with certain limitations applicable) under current regulatory guidelines and interpretations. The subordinated debentures have a variable rate of interest equal to the three month LIBOR plus 1.65%, which was 1.90% as of September 30, 2020 and 3.54% at December 31, 2019.

In October 2018, the Company, through the acquisition of First American International Corp. (“FAIC”), acquired First American International Statutory Trust I (“FAIC Trust”), a Delaware statutory trust formed in December 2004. The FAIC Trust issued 7,000 units of thirty-year fixed to floating rate capital securities with an aggregate liquidation amount of $7,000,000 to an independent investor, and FAIC issued $7.2 million of subordinated debentures to the FAIC Trust for all of its common securities, amounting to $217,000, which is included in other assets. There was a $1.2 million valuation reserve recorded to arrive at market value which is treated as a yield adjustment and is amortized over the life of the security. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years. The subordinated debentures have a variable rate of interest equal to the three-month LIBOR plus 2.25% through final maturity on December 15, 2034. The rate at September 30, 2020 was 2.50% and 4.14% at December 31, 2019.

In January 2020, the Company, through the acquisition of PGBH, acquired Pacific Global Bank Trust I (“PGBH Trust”), a Delaware statutory trust formed in December 2004. PGBH Trust issued 5,000 units of fixed to floating rate capital securities with an aggregate liquidation amount of $5,000,000 and 155 common securities with an aggregate liquidation amount of $155,000. PGBH issued $5.2 million of subordinated debentures to PGBH Trust in exchange for ownership of all the common securities of PGBH Trust. There was a $763,000 valuation reserve recorded to arrive at market value which is treated as a yield adjustment and is amortized over the life of the security. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years. The subordinated debentures have a variable rate of interest equal to the three-month LIBOR plus 2.10% through final maturity on December 15, 2034. The rate at September 30, 2020 was 2.35%.

The Company paid interest expense of $102,000 and $131,000 for the three months ended September 30, 2020 and 2019, respectively and $369,000 and $415,000 for the nine months ended September 30, 2020 and 2019, respectively, on the subordinated debentures. The amount of aggregate amortization expense recognized for the three months ended September 30, 2020 and 2019 was $54,000 and $42,000, respectively and $164,000 and $125,000 for the nine months ended September 30, 2020 and 2019, respectively.

For regulatory reporting purposes, the Federal Reserve has indicated that the capital or trust preferred securities qualify as Tier I capital of the Company subject to previously specified limitations, until further notice. If regulators make a determination that the capital securities can no longer be considered in regulatory capital, the securities become callable and the Company may redeem them.

In July 2017, British banking regulators announced plans to eliminate the LIBOR rate by the end of 2021, before these subordinated notes and debentures mature. For these subordinated debentures, there are provisions for amendments to establish a new interest rate benchmark.

Note 11 - Borrowing Arrangements

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Text Block]

NOTE 11 - BORROWING ARRANGEMENTS

The Company has established secured and unsecured lines of credit. The Company may borrow funds from time to time on a term or overnight basis from the Federal Home Loan Bank of San Francisco ("FHLB"), the Federal Reserve Bank of San Francisco ("FRB") and other financial institutions as indicated below.

Federal Funds Arrangements with Commercial Banks. At September 30, 2020, the Company may borrow on an unsecured basis, up to $20.0 million, $10.0 million, $12.0 million and $50.0 million overnight from Zions Bank, Wells Fargo Bank, First Horizon National Bank, and Pacific Coast Bankers' Bank, respectively.

Letter of Credit Arrangements. At September 30, 2020, the Company had an unsecured commercial letter of credit line with Wells Fargo Bank for $2.0 million.

FRB Secured Line of Credit. The secured borrowing capacity with the FRB of $14.9 million million at September 30, 2020 is collateralized by loans pledged with a carrying value of $28.6 million.

FHLB Secured Line of Credit. The secured borrowing capacity with the FHLB of $859.9 million at September 30, 2020 is collateralized by loans pledged with a carrying value of $1.1 billion.

FHLB Advances. At September 30, 2020, the Company had $40.0 million in overnight advances at a rate of 0.18%, and $150.0 million at a weighted average rate of 1.18% in long-term (five year) advances with the FHLB. There were no overnight or long-term advances at December 31, 2019. The Company paid interest expenses of $444,000 and $1.0 million on such FHLB advances for the three and nine months ended September 30, 2020. There were no amounts outstanding under any of the other borrowing arrangements above as of September 30, 2020 and at December 31, 2019 except FHLB advances maturing in 2025.

Note 12 - Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Text Block]

NOTE 12 - INCOME TAXES

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

During the three months ended September 30, 2020 and 2019, the Company recorded an income tax provision of $3.6 million and $3.7 million, respectively, reflecting an effective tax rate of 29.8% and 31.5% for the three months ended September 30, 2020 and 2019, respectively. During the nine months ended September 30, 2020 and 2019, the Company recorded an income tax provision of $9.8 million and $12.0 million, respectively, reflecting an effective tax rate of 31.0% and 29.5% for the nine months ended September 30, 2020 and 2019, respectively. The Company recognized a tax benefit from stock option exercises of zero and a tax benefit of $38,000 for the three months ended September 30, 2020 and 2019, respectively. The Company recognized a tax benefit from stock option exercises of $26,000 and $78,000 for the nine months ended September 30, 2020 and 2019, respectively.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

Note 13 - Commitments

9 Months Ended

Sep. 30, 2020

Commitments Disclosure [Text Block]

NOTE 13 - COMMITMENTS

The Company leases several of its operating facilities under various noncancellable operating leases expiring at various dates through 2034. The Company is also responsible for common area maintenance, taxes and insurance at the various branch locations.

Future minimum rent payments on the Company’s leases were as follows at September 30, 2020:

*(dollars in thousands)*
Year ending December 31:
2020 remaining	$	1,464
2021		5,181
2022		4,727
2023		3,778
2024		2,693
Thereafter		12,032
Total	$	29,875

The minimum rent payments shown above are given for the existing lease obligation and are not a forecast of future rental expense. Total rental expense, recognized on a straight-line basis, was $1.4 million and $1.6 million for the three months ended September 30, 2020 and 2019, respectively and $4.3 million and $4.6 million for nine months ended September 30, 2020 and 2019, respectively. The Company received rental income of $82,000 and $49,000 in the third quarter of 2020 and 2019, respectively and $263,000 and $148,000 for the nine months ended September 30, 2020 and 2019, respectively.

In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of its customers. These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit. Those instruments involve to varying degrees, elements of credit and interest rate risk not recognized in the Company's financial statements.

The Company's exposure to loan loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for loans reflected in the financial statements.

At September 30, 2020 and December 31, 2019, the Company had the following financial commitments whose contractual amount represents credit risk:

	*September 30,*		*December 31,*
*(dollars in thousands)*	*2020*		*2019*
Commitments to extend credit	$	447,111	$	326,126
Commercial and similar letters of credit		296		358
Standby letters of credit		4,114		3,715
Total	$	451,521	$	330,199

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. The Company evaluates each client's credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company is based on management's credit evaluation of the customer.

The Company is involved in various matters of litigation which have arisen in the ordinary course of business and accruals for estimates of potential losses have been provided when necessary and appropriate under generally accepted accounting principles. In the opinion of management, the disposition of such pending litigation will not have a material effect on the Company's financial statements.

Note 14 - Related Party Transactions

9 Months Ended

Sep. 30, 2020

NOTE 14 - RELATED PARTY TRANSACTIONS

Loans to principal officers, directors, and their affiliates were as follows:

	*September 30,*			*December 31,*
*(dollars in thousands)*	*2020*			*2019*
Beginning balance	$	4,000		$	3,600
New loans and advances		7,376			16,180
Repayments		(11,376	)		(15,780	)
Ending balance	$	-		$	4,000

There were $11.4 million unfunded loan commitments outstanding to executive officers, directors and their related interests with whom they are associated at September 30, 2020 and none at December 31, 2019.

Deposits from principal officers, directors, and their affiliates at September 30, 2020 and December 31, 2019 were $53.8 million and $84.6 million, respectively.

Note 15 - Stock-based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Text Block]

NOTE 15 - STOCK-BASED COMPENSATION

RBB Bancorp 2010 Stock Option Plan

Under the RBB Bancorp 2010 Stock Option Plan (the “2010 Plan”), the Company was permitted to grant awards to eligible persons in the form of qualified and non-qualified stock options. The Company reserved up to 30% of the issued and outstanding shares of common stock as of the date the Company adopted the 2010 Plan or 3,494,478 shares, for issuance under the 2010 Plan. Following receipt of shareholder approval of the 2017 Omnibus Stock Incentive Plan (the “OSIP”) in May 2017, no additional grants were made under the 2010 Plan. The 2010 Plan has been terminated and options that were granted under that Plan have become subject to the OSIP. Awards that were granted under the 2010 Plan will remain exercisable pursuant to the terms and conditions set forth in individual award agreements, but such awards will be assumed and administered under the OSIP. The 2010 Plan award agreements allow for acceleration of exercise privileges of grants upon occurrence of a change in control of the Company. If a participant’s job is terminated for cause, then all unvested awards expire at the date of termination.

RBB Bancorp 2017 Omnibus Stock Incentive Plan

The OSIP was adopted by the Company’s board of directors in January 2017 and approved by the Company’s shareholders in May 2017. The OSIP was designed to ensure continued availability of equity awards that will assist the Company in attracting and retaining competent managerial personnel and rewarding key employees, directors and other service providers for high levels of performance. Pursuant to the OSIP, the Company’s board of directors are allowed to grant awards to eligible persons in the form of qualified and non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights and other incentive awards. The Company has reserved up to 30% of issued and outstanding shares of common stock as of the date the Company adopted the OSIP, or 3,848,341 shares. As of September 30, 2020, there were 1,239,045 shares of common stock available for issuance under the OSIP. This represents 6.28% of the issued and outstanding shares of the Company’s common stock as of September 30, 2020. Awards vest, become exercisable and contain such other terms and conditions as determined by the board of directors and set forth in individual agreements with the employees receiving the awards. The OSIP enables the board of directors to set specific performance criteria that must be met before an award vests. The OSIP allows for acceleration of vesting and exercise privileges of grants if a participant’s termination of employment is due to a change in control, death or total disability. If a participant’s job is terminated for cause, then all awards expire at the date of termination.

The Company recognized stock-based compensation expense of $167,000 and $147,000 and recognized income tax benefit of $0 and $38,000 for the three months ended September 30, 2020 and 2019, respectively. The Company recognized stock-based compensation expense of $494,000 and $543,000 and recognized income tax benefits on that expense of $26,000 and $78,000 for the nine months ended September 30, 2020 and 2019, respectively.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions presented below for 2020 and 2019.

	*2020*			*2019*
Expected volatility		28.5	%		35.0	%
Expected term (in years)		6.0			6.0
Expected dividends		1.99	%		1.90	%
Risk free rate		1.31	%		2.66	%
Grant date fair value	$	4.61		$	6.32

Since the Company had a limited amount of historical stock activity, the expected volatility was based on the historical volatility of similar banks that had a longer trading history. The expected term represents the estimated average period of time that the options remain outstanding. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding. The risk free rate of return reflects the grant date interest rate offered for zero coupon U.S. Treasury bonds over the expected term of the options.

A summary of the status of awards pursuant to the Company's stock option plans as of September 30, 2020 and changes during the nine months ended is presented below:

						*Weighted-*
				*Weighted-*		*Average*
				*Average*		*Remaining*		*Aggregate*
				*Exercise*		*Contractual*		*Intrinsic*
*(dollars in thousands, except for share amounts)*	*Shares*			*Price*		*Term (in years)*		*Value*
Outstanding at beginning of year		1,090,968		$	13.11
Granted		51,000			20.10
Exercised		(56,498	)		12.61
Forfeited/cancelled		(36,000	)		18.32
Outstanding at end of year		1,049,470		$	13.30		3.52 years	$	189,917

Options exercisable		958,470		$	12.73		3.01 years	$	189,917

As of September 30, 2020 there was approximately $393,000 of total unrecognized compensation cost related to outstanding stock options that will be recognized over a weighted-average period of 1.7 years.

The total fair value of the shares vested was $221,000, and $484,000 in 2020 and 2019, respectively. The number of unvested stock options were 90,000, and 76,500 with a weighted-average grant date fair value of $5.35 and $6.32 as of September 30, 2020 and December 31, 2019, respectively.

Cash received from the exercise of 56,498 share options was $712,000 for the nine months ended September 30, 2020 and cash received from the exercise of 200,629 share options was $2.8 million for the year ended December 31, 2019. The intrinsic value of options exercised was $389,000, and $1.2 million for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively.

Note 16 - Regulatory Matters

9 Months Ended

Sep. 30, 2020

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 16 - REGULATORY MATTERS

Holding companies (with assets over $3 billion at the beginning of the year) and banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements.

In July 2013, the federal bank regulatory agencies approved the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks. The new rules became effective on January 1, 2015, with certain of the requirements phased-in over a multi-year schedule. Under the rules, minimum requirements increased for both the quantity and quality of capital held by the Bank. The rules include a common equity Tier 1 (“CET1”) capital to risk-weighted assets ratio with minimums for capital adequacy and prompt corrective action purposes of 4.5% and 6.5%, respectively. The minimum Tier 1 capital to risk-weighted assets ratio was raised from 4.0% to 6.0% under the capital adequacy framework and from 6.0% to 8.0% to be well-capitalized under the prompt corrective action framework. In addition, the rules introduced the concept of a "conservation buffer" of 2.5% applicable to the three capital adequacy risk-weighted asset ratios (CET1, Tier 1, and Total). The implementation of the capital conservation buffer began on January 1, 2016 at 0.625% and was phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reached 2.5% on January 1, 2019). If the capital adequacy minimum ratios plus the phased-in conservation buffer amount exceed actual risk-weighted capital ratios, then dividends, share buybacks, and discretionary bonuses to executives could be limited in amount.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and CET1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). As permitted by the regulators for financial institutions that are not deemed to be “advanced approaches” institutions, the Company has elected to opt out of the Basel III requirement to include accumulated other comprehensive income in risk-based capital. Management believes, at September 30, 2020 and December 31, 2019, that RBB and the Bank satisfied all capital adequacy requirements to which they were subject.

As defined in applicable regulations and set forth in the tables below, RBB and the Bank continue to exceed the regulatory capital minimum requirements and the Bank continues to exceed the "well capitalized" standards at the dates indicated:

						*Amount of Capital Required*
											*Minimum Required Plus*					*To Be Well-*
						*Minimum Required for*					*Conservation Buffer Capital*					*Capitalized Under Prompt*
	*Actual*					*Capital Adequacy Purposes*					*Fully Phased-In*					*Corrective Provisions*
*(dollars in thousands)*	*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*
As of September 30, 2020:
Tier 1 Leverage Ratio
Consolidated	$	361,290		11.47	%	$	125,998		4.0	%	$	125,998		4.0	%	$	157,497		5.0	%
Bank		445,699		14.16	%		125,929		4.0	%		125,929		4.0	%		157,411		5.0	%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated		347,061		14.11	%		110,704		4.5	%		172,207		7.0	%		159,906		6.5	%
Bank		445,699		18.13	%		110,432		4.5	%		171,783		7.0	%		159,513		6.5	%
Tier 1 Risk-Based Capital Ratio
Consolidated		361,290		14.69	%		147,606		6.0	%		209,108		8.5	%		196,808		8.0	%
Bank		445,699		18.13	%		147,242		6.0	%		208,593		8.5	%		196,323		8.0	%
Total Risk-Based Capital Ratio
Consolidated		493,358		20.05	%		196,808		8.0	%		258,310		10.5	%		246,010		10.0	%
Bank		473,462		19.26	%		196,323		8.0	%		257,674		10.5	%		245,404		10.0	%

						*Amount of Capital Required*
											*Minimum Required Plus*					*To Be Well-*
						*Minimum Required for*					*Capital Conservation Buffer*					*Capitalized Under Prompt*
	*Actual*					*Capital Adequacy Purposes*					*Fully Phased-In*					*Corrective Provisions*
*(dollars in thousands)*	*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*
As of December 31, 2019:
Tier 1 Leverage Ratio
Consolidated	$	353,572		12.89	%	$	109,735		4.0	%	$	109,735		4.0	%	$	137,169		5.0	%
Bank		417,036		15.23	%		108,150		4.0	%		108,150		4.0	%		135,187		5.0	%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated		343,899		17.16	%		90,165		4.5	%		140,256		7.0	%		130,238		6.5	%
Bank		417,036		20.87	%		89,127		4.5	%		138,642		7.0	%		128,739		6.5	%
Tier 1 Risk-Based Capital Ratio
Consolidated		353,572		17.65	%		120,219		6.0	%		170,311		8.5	%		160,292		8.0	%
Bank		417,036		20.87	%		118,836		6.0	%		168,351		8.5	%		158,448		8.0	%
Total Risk-Based Capital Ratio
Consolidated		477,262		23.82	%		160,292		8.0	%		210,384		10.5	%		200,366		10.0	%
Bank		436,677		21.86	%		158,448		8.0	%		207,964		10.5	%		198,061		10.0	%

The California Financial Code generally acts to prohibit banks from making a cash distribution to its shareholders in excess of the lesser of the bank's undivided profits or the bank's net income for its last three fiscal years less the amount of any distribution made by the bank's shareholders during the same period.

The California General Corporation Law generally acts to prohibit companies from paying dividends on common stock unless its retained earnings, immediately prior to the dividend payment, equals or exceeds the amount of the dividend. If a company fails this test, then it may still pay dividends if after giving effect to the dividend the company's assets are at least 125% of its liabilities.

Additionally, the Federal Reserve has issued guidance which requires that they be consulted before payment of a dividend if a financial holding company does not have earnings over the prior four quarters of at least equal to the dividend to be paid, plus other holding company obligations.

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.

Note 17 - Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block]

NOTE 17 - FAIR VALUE MEASUREMENTS

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value:

Securities: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1) or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2).

Other Real Estate Owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (“OREO”) are measured at the lower of carrying amount or fair value, less costs to sell. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized. Fair values are generally based on third party appraisals of the property which are commonly adjusted by management to reflect an expectation of the amount to be ultimately collected and selling costs (Level 3).

Appraisals for OREO are performed by state licensed appraisers (for commercial properties) or state certified appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. When a Notice of Default is recorded, an appraisal report is ordered. Once received, a member of the credit administration department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison to independent data sources such as recent market data or industry wide-statistics for residential appraisals. Commercial appraisals are sent to an independent third party to review. The Company also compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustments, if any, should be made to the appraisal values on any remaining other real estate owned to arrive at fair value. If the existing appraisal is older than twelve months a new appraisal report is ordered. No significant adjustments to appraised values have been made as a result of this comparison process as of September 30, 2020.

Collateral-dependent impaired loans: Collateral-dependent impaired loans are carried at fair value when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the original loan agreement and the loan has been written down to the fair value of its underlying collateral, net of expected disposition costs where applicable.

The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value at September 30, 2020 and December 31, 2019:

*(dollars in thousands)*	*Fair Value Measurements Using:*
September 30, 2020	*Level 1*		*Level 2*		*Level 3*		*Total*
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities	$	—	$	1,288	$	—	$	1,288
SBA agency securities		—		4,515		—		4,515
Mortgage-backed securities		—		17,818		—		17,818
Collateralized mortgage obligations		—		46,336		—		46,336
Commercial paper		—		109,188		—		109,188
Corporate debt securities		—		33,930		—		33,930
Municipal securities		—		1,587		—		1,587
	$	—	$	214,662	$	—	$	214,662

On a non-recurring basis:
Other real estate owned		—		—		293		293
	$	—	$	—	$	293	$	293

December 31, 2019	*Level 1*		*Level 2*		*Level 3*		*Total*
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities	$	—	$	1,572	$	—	$	1,572
SBA agency securities		—		4,691		—		4,691
Mortgage-backed securities		—		19,171		—		19,171
Collateralized mortgage obligations		—		11,654		—		11,654
Commercial paper		—		69,898		—		69,898
Corporate debt securities		—		19,083		—		19,083
	$	—	$	126,069	$	—	$	126,069

On a non-recurring basis:
Other real estate owned	$	—	$	—	$	293	$	293

No write-downs to OREO were recorded for nine months ended September 30, 2020 or for the year ended December 31, 2019.

Quantitative information about the Company's impaired loans and OREO non-recurring Level 3 fair value measurements at September 30, 2020 and December 31, 2019 is as follows:


*(dollars in thousands)*	*Fair Value*		*Valuation*	*Unobservable*	*Adjustment*
September 30, 2020	*Amount*		*Technique*	*Input*	*Range*
Other real estate owned	$	293	Third Party Appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	5% - 6%

December 31, 2019
Other real estate owned	$	293	Third Party Appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	5% - 6%

OREO as of September 30, 2020 consists of one single-family residence with a fair value of $293,000.

Note 18 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Text Block]

NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on financial instruments both on and off the balance sheet without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Additionally, tax consequences related to the realization of the unrealized gains and losses can have a potential effect on fair value estimates and have not been considered in many of the estimates.

In accordance with accounting guidance, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, volatilities, etc.) or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly, in the market.

Level 3 - Valuation is generated from model-based techniques where one or more significant inputs are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing, discounted cash flow models, and similar techniques.

Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the fair values presented. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Management maximizes the use of observable inputs and attempts to minimize the use of unobservable inputs when determining fair value measurements. Estimated fair values are disclosed for financial instruments for which it is practicable to estimate fair value. These estimates are made at a specific point in time based on relevant market data and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates.

The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments:

For cash and due from banks, Federal funds sold, and cash equivalents, the carrying amount is assumed to be a reasonable estimate of fair value, a Level 1 measurement.

For short-term investments and interest-bearing deposits, the carrying amount is assumed to be a reasonable estimate of fair value, a Level 1 measurement.

Securities available for sale are measured by using quoted market prices for similar securities or dealer quotes, a Level 2 measurement. This category generally includes U.S. Government agency securities, U.S. Government sponsored entities, state and municipal securities, mortgage backed securities (“MBS”), collateralized mortgage obligations and corporate bonds.

Equity securities fair value are measured based on quoted market prices in active exchange markets at the reporting date, a level 3 measurement. Equity securities are comprised of other equity securities.

Fair values are estimated for portfolios of loans with similar financial characteristics. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories. The fair values are based primarily on third-party vendor pricing to determine fair values based on the exit price notion.

The fair value of performing loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan, a Level 3 measurement.

The fair value of impaired loans is calculated based on the net realizable fair value of the collateral or the observable market price of the most recent sale or quoted price from loans held for sale. The Company does not record loans at fair value on a recurring basis. Nonrecurring fair value adjustments to collateral dependent impaired loans are recorded based on the adjusted appraised value of the collateral, a Level 3 measurement.

The Company records loans held for sale at fair value based on quoted prices from third party sale analysis, existing sale agreements, or appraisal reports adjusted by sales commission assumption, a Level 1 measurement.

Mortgage and SBA servicing rights are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan, a Level 2 measurement.

For accrued interest receivable, the carrying amount is assumed to be a reasonable estimate of fair value, a Level 1 measurement.

The fair value of demand deposits, savings accounts, and certain money market deposits is assumed to be the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits with similar remaining maturities, a Level 2 measurement.

The fair value of FHLB advances is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement.

Subordinated debentures fair value is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement.

The fair value of long-term debt is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement.

For accrued interest payable, the carrying amount is assumed to be a reasonable estimate of fair value, a Level 1 measurement.

Fair value is estimated in accordance with ASC Topic 825. Fair value estimates are made at specific points in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Bank’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The fair value hierarchy level and estimated fair value of significant financial instruments at September 30, 2020 and December 31, 2019 are summarized as follows:

		*September 30,*				*December 31,*
		*2020*				*2019*
	*Fair Value*	*Carrying*		*Fair*		*Carrying*		*Fair*
*(dollars in thousands)*	*Hierarchy*	*Value*		*Value*		*Value*		*Value*
Financial Assets:
Cash and due from banks	Level 1	$	121,630	$	121,630	$	114,763	$	114,763
Federal funds sold and other cash equivalents	Level 1		57,000		57,000		67,000		67,000
Interest-earning deposits in other financial institutions	Level 1		600		600		600		600
Investment securities - AFS	Level 2		214,662		214,662		126,069		126,069
Investment securities - HTM	Level 2		7,569		7,982		8,332		8,632
Mortgage loans held for sale	Level 1		23,886		24,224		108,194		109,385
Loans, net	Level 3		2,728,519		2,741,656		2,178,118		2,158,970
Equity security	Level 3		11,854		11,854		11,826		11,826
Mortgage and SBA serving rights	Level 2		14,724		16,253		17,083		20,752
Accrued interest receivable	Level 1		15,542		15,542		8,942		8,942

Financial Liabilities:
Deposits	Level 2	$	2,611,748	$	2,611,531	$	2,248,938	$	2,236,329
FHLB advances	Level 3		190,000		189,965		—		—
Long-term debt	Level 3		104,305		137,628		104,049		109,877
Subordinated debentures	Level 3		14,229		14,562		9,673		11,709
Accrued interest payable	Level 1		3,645		3,645		2,987		2,987

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.

Note 19 - Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Text Block]

NOTE 19 - EARNINGS PER SHARE

The following is a reconciliation of net income and shares outstanding to the income and number of shares used to compute earnings per share (“EPS”):

	*For the Three Months Ended September 30,*
	*2020*						*2019*
*(dollars in thousands except per share amounts)*	*Income*			*Shares*			*Income*		*Shares*
Net income as reported	$	8,520					$	8,012
Less: Earnings allocated to participating securities		(9	)					-
Shares outstanding					19,739,280					20,030,866
Impact of weighting shares					(21,713	)				36,981
Used in basic EPS		8,511			19,717,568			8,012		20,067,847
Dilutive effect of outstanding
Stock options					87,324					358,119
Used in dilutive EPS	$	8,511			19,804,892		$	8,012		20,425,966

Basic earnings per common share	$	0.43					$	0.40
Diluted earnings per common share		0.43						0.39

	*For the Nine Months Ended September 30,*
	*2020*					*2019*
*(dollars in thousands except per share amounts)*	*Income*			*Shares*		*Income*		*Shares*
Net income as reported	$	21,781				$	28,534
Less: Earnings allocated to participating securities	$	(29	)
Shares outstanding					19,739,280				20,030,866
Impact of weighting shares					60,337				32,613
Used in basic EPS		21,752			19,799,617		28,534		20,063,479
Dilutive effect of outstanding
Stock options					158,994				372,388
Used in dilutive EPS	$	21,752			19,958,612	$	28,534		20,435,867

Basic earnings per common share	$	1.10				$	1.42
Diluted earnings per common share		1.09					1.40

Stock options for 378,709 shares and 76,500 shares of common stock were not considered in computing diluted earnings per common share for September 30, 2020 and 2019, respectively because they were anti-dilutive.

Note 20 - Revenue From Contracts With Customers

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Text Block]

NOTE 20 – REVENUE FROM CONTRACTS WITH CUSTOMERS

On January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers - Topic 606 and all subsequent ASUs that modified ASC 606. The Company adopted ASC 606 using the modified retrospective method applied to those contracts that were not completed as of January 1, 2019. The new standard did not materially impact the timing or measurement of the Company’s revenue recognition as it is consistent with the Company’s existing accounting for contracts within the scope of the new standard. There was no cumulative effect adjustment to retained earnings as a result of adopting this new standard.

The following is a summary of revenue from contracts with customers that are in-scope and not in-scope under Topic 606:

	*For the Three Months Ended September 30,*				*For the Nine Months Ended September 30,*
*(dollars in thousands)*	*2020*		*2019*		*2020*		*2019*
Non-interest income, in scope ⁽¹⁾
Fees and service charges on deposit accounts	$	353	$	340	$	1,244	$	953
Other fees ⁽²⁾		254		168		513		791
Other income ⁽³⁾		466		375		1,403		1,108
Gain on sale of fixed assets		—		11		—		17
Total in-scope non-interest income		1,073		894		3,160		2,869
Non-interest income, not in scope ⁽⁴⁾		1,654		1,905		6,390		9,628
Total non-interest income	$	2,727	$	2,799	$	9,550	$	12,497

(1)

There were no adjustments to the Company's financial statements recorded as a result of the adoption of ASC 606.

(2)

Other fees consists of wealth management fees, miscellaneous loan fees and postage/courier fees.

(3)

Other income consists of safe deposit box rental income, wire transfer fees, security brokerage fees, annuity sales, insurance activity and OREO income.

(4)

The amounts primarily represent revenue from contracts with customers that are out of scope of ASC 606: Net loan servicing income, letter of credit commissions, import/export commissions, recoveries on purchased loans, BOLI income, and gains (losses) on sales of mortgage loans, loans and investment securities.

The major revenue streams by fee type that are within the scope of ASC 606 presented in the above tables are described in additional detail below:

Fees and Services Charges on Deposit Accounts

Fees and service charges on deposit accounts include charges for analysis, overdraft, cash checking, ATM, and safe deposit activities executed by our deposit clients, as well as interchange income earned through card payment networks for the acceptance of card based transactions. Fees earned from our deposit clients are governed by contracts that provide for overall custody and access to deposited funds and other related services, and can be terminated at will by either party; this includes fees from money service businesses (“MSBs”). Fees received from deposit clients for the various deposit activities are recognized as revenue once the performance obligations are met. The adoption of ASU 2014-09 had no impact to the recognition of fees and service charges on deposit accounts.

Wealth Management Fees

The Company employs financial consultants to provide investment planning services for customers including wealth management services, asset allocation strategies, portfolio analysis and monitoring, investment strategies, and risk management strategies. The fees the Company earns are variable and are generally received monthly. The Company recognizes revenue for the services performed at quarter-end based on actual transaction details received from the broker dealer the Company engages.

In the Company’s wealth management division, revenue is primarily generated from (1) securities brokerage accounts, (2) investment advisor accounts, (3) full service brokerage implementation fees, and (4) life insurance and annuity products.

Gain on Sales of OREO and Fixed Assets

The Company records a gain or loss from the sale of OREO and fixed assets, when control of the property or asset transfers to the buyer, which generally occurs at the time of an executed deed or sales agreement. When the Company finances the sale of OREO to a buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain or loss on sale if a significant financing component is present.

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Note 21 - Qualified Affordable Housing Project Investments

9 Months Ended

Sep. 30, 2020

Affordable Housing Program [Text Block]

NOTE 21 - QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS

The Company began investing in qualified housing projects in 2016. At September 30, 2020 and December 31, 2019, the balance of the investment for qualified affordable housing projects was $7.9 million and $8.6 million, respectively. This balance is reflected in the accrued interest and other assets line on the consolidated balance sheets. Total unfunded commitments related to the investments in qualified housing projects totaled $2.0 million and $4.2 million at September 30, 2020 and December 31, 2019, respectively. The Company expects to fulfill these commitments between 2020 and 2027.

For the three months ended September 30, 2020 and 2019, the Company recognized amortization expense of $247,000 and $225,000, respectively, which was included within income tax expense on the consolidated statements of income. For the nine months ended September 30, 2020 and 2019, the Company recognized amortization expense of $740,000 and $675,000, respectively, which was included within income tax expense on the consolidated statements of income.

Note 22 - Recent Developments

9 Months Ended

Sep. 30, 2020

Recent Developments Disclosure [Text Block]

NOTE 22 - RECENT DEVELOPMENTS

On October 1, 2020 the Bank closed the real estate transaction to purchase a 3-story building located at 2057 56^th Street, Brooklyn, NY 11214 for $3.5 million. The first floor is a commercial space. The Bank plans to convert this space into a branch after the Bank reaches an agreement with the existing tenant to early terminate the lease. The first floor lease is presently scheduled to expire on June 1, 2022. The second and third floors are residential apartments with one lease on a month to month basis and the other expiring on May 31, 2021.

On October 23, 2020, RBB announced a cash dividend of $0.09 per share for the third quarter of 2020. The dividend is payable on November 16, 2020 to common shareholders of record as of November 2, 2020.

Significant Accounting Policies (Policies)	9 Months Ended
Significant Accounting Policies (Policies)	Sep. 30, 2020
Accounting Policies [Abstract]
Basis of Accounting, Policy [Policy Text Block]	Basis of Presentation The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10-Q and conform to practices within the banking industry and include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the three months and nine months ended September 30, 2020 are not necessarily indicative of the results for the full year. These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2019, included in our Annual Report filed on Form 10-K for the fiscal year ended December 31, 2019 (our “2019 Annual Report”).
Use of Estimates, Policy [Policy Text Block]	Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. It is reasonably possible our estimate of the allowance for loan losses and the fair value of mortgage servicing rights could change as actual results could differ from those estimates. Actual results could differ from those estimates.
Summary of Significant Accounting Policies [Policy Text Block]	Summary of Significant Accounting Policies The accompanying unaudited consolidated financial statements were compiled in accordance with the accounting policies set forth in Note 2 – Basis of Presentation and Summary of Significant Policies in our Consolidated Financial Statements as of and for the year ended December 31, 2019, included in our 2019 Annual Report. The Financial Accounting Standards Board ("FASB") issues Accounting Standards Updates ("ASU" or “Update”) and Accounting Standards Codifications (“ASC”), which are the primary source of GAAP.
New Accounting Pronouncements, Policy [Policy Text Block]	Recent Accounting Pronouncements When RBB conducted its initial public offering (“IPO”) in 2017, we qualified as an emerging growth company (“EGC”). We will remain an EGC until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1.0 billion or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of our IPO, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We anticipate no longer qualifying as an EGC on December 31, 2022. EGCs are entitled to reduced regulatory and reporting requirements under the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act, as compared to public business entities ("PBE"). In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), including subsequent amending ASUs. The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases, which is generally defined as a lease term of less than 12 months. This change will result in lessees recognizing right-of-use assets and lease liabilities for most leases currently accounted for as operating leases under current lease accounting guidance. As amended by ASU 2020-05, this ASU is effective for an EGC for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022. The Company has several lease agreements which are currently considered operating leases and are therefore not included on the Company’s Consolidated Balance Sheets. Under the new guidance the Company expects that some of the lease agreements will be recognized on the Consolidated Balance Sheets as a right-of-use asset with a corresponding lease liability. Based upon a preliminary evaluation, the Company expects that the ASU will have an impact on the Company’s Consolidated Balance Sheets. As of this Quarterly Report and the Company’s current leases, we estimate the right-of-use asset and lease liability will be in the range of $25-30 million as of the expected December 31, 2022 EGC adoption date. The effective date for this ASU for PBEs is for years beginning after December 15, 2018, and for interim periods within those fiscal years. The Company will continue to evaluate how extensive the impact will be under the ASU on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instrument (Topic 326), including subsequent amending ASUs. This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The standard will replace today's "incurred loss" approach with an "expected loss" model. The new model, referred to as the current expected credit loss ("CECL") model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held to maturity securities, loan commitments, and financial guarantees. For available for sale (“AFS”) debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. ASU 2016-13 also expands the disclosure requirements regarding an entity's assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 was originally proposed to be effective for interim and annual reporting periods for an emerging growth company beginning after December 15, 2020 (however, see below). Entities will apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company has begun its evaluation of the impact of the implementation of ASU 2016-13. The implementation of the provisions of ASU 2016-13 will most likely impact the Company’s consolidated financial statements as to the level of reserves that will be required for credit losses. The Company will continue to assess the potential impact that this Update will have on the Company’s consolidated financial statements. The Company will adopt CECL (ASU 2016-13) on December 31, 2022. In February 2019, the U.S. federal bank regulatory agencies approved a final rule modifying their regulatory capital rules and providing an option to phase in over a three year period the day-one adverse regulatory capital effects of ASU 2016-13. Additionally, in March 2020, the U.S. federal bank regulatory agencies issued an interim final rule that provides banking organizations an option to delay the estimated CECL impact on regulatory capital for an additional two years for a total transition period of up to five years to provide regulatory relief to banking organizations to better focus on supporting lending to creditworthy households and businesses in light of recent strains on the U.S. economy as a result of the novel coronavirus disease 2019 ("COVID-19") pandemic. As a result, entities will have the option to gradually phase in the full effect of CECL on regulatory capital over a five-year transition period. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350). This Update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The amendments in this Update are required for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. As a result, under this Update, “an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.” For PBE's, ASU 2017-04 is effective for annual and any interim impairment tests performed in periods beginning after December 15, 2019. As an EGC, the Company will adopt this ASU on December 31, 2022. Adoption of ASU 2017-04 is not expected to have a significant impact on the Company’s consolidated financial statements. In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which is intended to enhance “the accounting for the amortization of premiums for purchased callable debt securities.” This Update shortens the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The amendments in this Update affects all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendment does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The ASU’s amendments are effective for EGC’s for interim periods beginning after December 15, 2020 and annual periods beginning after December 15, 2019. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The implementation of the provisions of ASU 2017-08 will most likely not have a material impact the Company’s consolidated financial statements. The Company will continue to assess the potential impact that this ASU will have on the Company’s consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this Update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. For EGCs, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. This Update has the potential to only impact share-based payments to members of the Company’s non-employees. The Company adopted this ASU on January 1, 2020 and this ASU did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this Update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. These disclosure requirements were removed from the topic: (1) The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements. These disclosure requirements were modified: (1) For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly, and (2) the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The following disclosure requirements were added: (1) The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. In addition, the amendments eliminate “at a minimum” from the phrase “an entity shall disclose at a minimum to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements”. The amendments in this Update are effective for EGCs for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. As an EGC, the Company adopted this Update on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This Update provides additional guidance to ASU 2015-05, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (CCA), on the accounting for implementation, setup, and other upfront costs (collectively referred to as implementation costs) apply to entities that are a customer in a hosting arrangement. This Update applies to entities that are a customer in a hosting arrangement that is a service contract. Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages are expensed as the activities are performed. This Update also requires the customer to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. This Update is effective for an EGC for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, for all entities. The amendments in this Update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. This Update will most likely not have a material impact unless the Company incurs implementation costs for a CCA that is a service contract. In November 2019, the FASB issued ASU 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606), Codification Improvements—Share-Based Consideration Payable to a Customer. This ASU will affect companies that issue share-based payments (e.g., options or warrants) to their customers. In June 2018, the FASB issued ASU 2018-07 that expanded the scope of Topic 718, Compensation—Stock Compensation, to include share-based payments to non-employees in exchange for goods and services. That ASU substantially aligned the accounting for share-based payments to non-employees and employees. However, it required share-based payments to nonemployee customers to be accounted for under Topic 606, Revenue from Contracts with Customers, as a reduction of revenue, similar to other sales incentives (such as coupons and rebates). While that ASU provided guidance on the income statement classification of payments to customers (as a reduction of revenue), that ASU did not specify when to measure such awards or how to classify awards on the balance sheet (for example as a liability or as equity). To address diversity in these areas, the new guidance requires companies to measure and classify (on the balance sheet) share-based payments to customers by applying the guidance in Topic 718. As a result, the amount recorded as a reduction in revenue would be measured based on the grant-date fair value of the share-based payment. ASU 2019-08 is effective for entities that have not yet adopted the amendments in ASU 2018-07, the amendments in ASU 2019-08 are effective for an EGC in fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company adopted the ASU as of December 31, 2019 and this ASU did not have a material impact on the Company’s financial statements as the Company has not issued share-based payments to non-employees, except for non-employee members of the board of directors. In January 2020, the FASB issued ASU 2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)”. This ASU is for equity securities accounted for by the equity method. The amendment clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The Company has equity securities on our balance sheet but are not material to be considered for the equity method. For an EGC, this ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. In February 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update)”. This is an amendment to add the SEC Staff guidance on CECL) to the FASB codification. It contains guidance on what the SEC would expect the Company to perform and document when measuring and recording its allowance for credit losses for financial assets recorded at amortized cost. As an EGC, the Company will implement CECL on December 31, 2022. In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments”. The ASU clarifies the accounting and disclosure guidance in various codification topics for financial instruments. In particular, the amendments (1) clarify certain disclosure requirements, including fair value option disclosures, (2) add cross-references in U.S. GAAP to clarify certain guidance, (3) make clear the applicability of the portfolio exception in ASC 820, Fair Value Measurement, to nonfinancial items, (4) clarify the determination of the contractual life of a net investment in leases in estimating expected credit losses under ASC 326, Financial Instruments – Credit Losses, and (5) explain the interaction between the guidance in ASC 860-20, Transfers and Servicing: Sales of Financial Assets, and ASC 326. For RBB as an EGC, issues 1, 2, 4 and 5 are applicable for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years beginning after December 15, 2020. The amendment related to Issue 3 is a conforming amendment that affects the guidance in the amendments in ASU 2019-04. We are currently evaluating this guidance to determine the financial impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides temporary optional expedients to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate (“LIBOR”) to an alternative reference rate such as Secured Overnight Financing Rate (“SOFR”). This pronouncement is applicable to all companies with contracts or hedging relationships that reference an interest rate that is expected to be discontinued. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. Companies can apply the ASU immediately. However, the guidance will only be available for a limited time (generally through December 31, 2022). For contract modifications, companies can account for the modification as a continuation of the existing contract without additional analysis. For held-to-maturity (“HTM”) debt securities, one-time sale and/or transfer to available-for-sale or trading may be made for HTM debt securities that both reference an eligible reference rate and were classified as HTM before January 1, 2020. Regarding the effective date and transition: (1) companies can apply the ASU as of the beginning of the interim period that includes March 12, 2020 (e.g. January 1, 2020 for calendar year-end companies) or any date thereafter, (2) the ASU applies prospectively to contract modifications and hedging relationships, and (3) the one-time election to sell and/or transfer debt securities classified as HTM may be made at any time after March 12, 2020. The optional relief generally does not apply to contract modifications made, sales and transfers of HTM debt securities, and hedging relationships entered into or evaluated after December 31, 2022. The guidance was effective upon issuance and generally can be applied through December 31, 2022. Of the Company’s $2.8 billion in total gross loans as of September 30, 2020, approximately 15% have a LIBOR based reference rate. The Company has several issuances of LIBOR based long-term debt and subordinated debentures. Refer to Notes 9 and 10 of the Company’s consolidated financial statements included in this Form 10-Q. We are currently evaluating this guidance to determine the financial impact on the Company’s consolidated financial statements. In June 2020, the FASB issued ASU 2020-05, “Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities”. This ASU allows for the deferral of the effective dates of ASC 606 and ASC 842 (including amendments issued after the issuance of the original Update) to provide immediate, near-term relief for certain entities for whom these Updates are either currently effective or imminently effective. The Company has already implemented Topic 606 and will implement topic 842 on January 1, 2022.

Note 3 - Acquisition (Tables)

9 Months Ended

Sep. 30, 2020

Business Combination, Loans Acquired [Table Text Block]

	*PGBH Acquired Loans*
Contractual amounts due	$	195,227
Cash flows not expected to be collected		5,176
Expected cash flows		190,051
Interest component of expected cash flows		16,942
Fair value of acquired loans	$	173,109

Business Acquisition, Pro Forma Information [Table Text Block]

	*Three Months Ended*				*Nine Months Ended*
	*September 30, 2020*		*September 30, 2019*		*September 30, 2020*		*September 30, 2019*
Net interest and other income	$	29,978	$	28,715	$	85,662	$	92,856
Net income		8,520		8,531		20,615		30,432
Basic earnings per share		0.43		0.43		1.04		1.52
Diluted earnings per share		0.43		0.42		1.03		1.49

PGB Holdings Inc. [Member]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	*PGBH*			*Fair Value*			*Fair*
*(dollars in thousands)*	*Book Value*			*Adjustments*			*Value*
Assets acquired
Cash and cash equivalents	$	17,033		$	—		$	17,033
Fed funds sold		8,300			—			8,300
Interest-bearing deposits in other financial Institutions		14,186			—			14,186
Investments - held to maturity		—			—			—
Investments - available for sale		—			—			—
Mortgage loans held for sale		—			—			—
Loans, gross		172,443			666			173,109
Allowance for loan losses		(2,265	)		2,265			—
Bank premises and equipment		6,394			1,639			8,033
Mortgage servicing rights		—			—			—
Core deposit premium		—			491			491
Investment in trust		155			—			155
Other assets		1,687			(194	)		1,493
Total assets acquired	$	217,933		$	4,867		$	222,800

Liabilities assumed
Deposits	$	187,393		$	969		$	188,362
Escrow Payable		4,277			—			4,277
Subordinated debentures		5,155			(763	)		4,392
Deferred income taxes		1,016			1,721			2,737
Other liabilities		1,211			(384	)		827
Total liabilities assumed		199,052			1,543			200,595
Excess of assets acquired over liabilities assumed		18,881			3,324			22,205
	$	217,933		$	4,867
Cash paid								32,885
Goodwill recognized							$	10,680

Note 4 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Available for Sale Securities, and Held to Maturity [Table Text Block]

			*Gross*		*Gross*
*(dollars in thousands)*	*Amortized*		*Unrealized*		*Unrealized*			*Fair*
September 30, 2020	*Cost*		*Gains*		*Losses*			*Value*
Available for sale
Government agency securities	$	1,258	$	30	$	—		$	1,288
SBA agency securities		4,262		253		—			4,515
Mortgage-backed securities- Government sponsored agencies		17,530		294		(6	)		17,818
Collateralized mortgage obligations		45,948		479		(91	)		46,336
Commercial paper		109,188		—		—			109,188
Corporate debt securities		33,412		560		(42	)		33,930
Municipal securities		1,623		—		(36	)		1,587
Total	$	213,221	$	1,616	$	(175	)	$	214,662

Held to maturity
Municipal taxable securities	$	2,797	$	156	$	—		$	2,953
Municipal securities		4,772		257		—			5,029
Total	$	7,569	$	413	$	—		$	7,982


December 31, 2019
Available for sale
Government agency securities	$	1,591	$	—	$	(19	)	$	1,572
SBA agency securities		4,671		42		(22	)		4,691
Mortgage-backed securities- Government sponsored agencies		19,126		74		(29	)		19,171
Collateralized mortgage obligations		11,641		38		(25	)		11,654
Corporate debt securities		88,700		281		—			88,981
Total	$	125,729	$	435	$	(95	)	$	126,069

Held to maturity
Municipal taxable securities	$	3,505	$	147	$	—		$	3,652
Municipal securities		4,827		153		—			4,980
Total	$	8,332	$	300	$	—		$	8,632

Investments Classified by Contractual Maturity Date [Table Text Block]

	*Less than One Year*				*More than One Year to Five Years*				*More than Five Years to Ten Years*				*More than Ten Years*				*Total*
	*Amortized*		*Estimated*		*Amortized*		*Estimated*		*Amortized*		*Estimated*		*Amortized*		*Estimated*		*Amortized*		*Estimated*
*(dollars in thousands)*	*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*
September 30, 2020
Government agency securities	$	—	$	—	$	1,258	$	1,288	$	—	$	—	$	—	$	—	$	1,258	$	1,288
SBA securities		—		—		596		629		3,666		3,886		—		—		4,262		4,515
Mortgage-backed securities- Government sponsored agencies		3,010		3,014		14,520		14,804		—		—		—		—		17,530		17,818
Collateralized mortgage obligations		—		—		13,895		14,274		32,053		32,062		—		—		45,948		46,336
Commercial paper		109,188		109,188		—		—		—		—		—		—		109,188		109,188
Corporate debt securities		2,001		2,031		14,668		14,742		12,743		13,159		4,000		3,998		33,412		33,930
Municipal securities		—		—		—		—		—		—		1,623		1,587		1,623		1,587
Total available for sale	$	114,199	$	114,233	$	44,937	$	45,737	$	48,462	$	49,107	$	5,623	$	5,585	$	213,221	$	214,662

Municipal taxable securities	$	979	$	998	$	1,818	$	1,955	$	—	$	—	$	—	$	—	$	2,797	$	2,953
Municipal securities		—		—		—		—		874		922		3,898		4,107		4,772		5,029
Total held to maturity	$	979	$	998	$	1,818	$	1,955	$	874	$	922	$	3,898	$	4,107	$	7,569	$	7,982

December 31, 2019
Government agency securities	$	—	$	—	$	1,591	$	1,572	$	—	$	—	$	—	$	—	$	1,591	$	1,572
SBA securities		—		—		714		725		3,957		3,966		—		—		4,671		4,691
Mortgage-backed securities- Government sponsored agencies		3,663		3,679		13,027		13,059		2,436		2,433		—		—		19,126		19,171
Collateralized mortgage obligations		—		—		9,288		9,265		2,353		2,389		—		—		11,641		11,654
Corporate debt securities		70,914		70,919		2,002		2,008		11,772		12,024		4,012		4,030		88,700		88,981
Total available for sale	$	74,577	$	74,598	$	26,622	$	26,629	$	20,518	$	20,812	$	4,012	$	4,030	$	125,729	$	126,069

Municipal taxable securities	$	285	$	289	$	2,716	$	2,784	$	504	$	579	$	—	$	—	$	3,505	$	3,652
Municipal securities		—		—		40		40		366		379		4,421		4,561		4,827		4,980
Total held to maturity	$	285	$	289	$	2,756	$	2,824	$	870	$	958	$	4,421	$	4,561	$	8,332	$	8,632

Schedule of Unrealized Loss on Investments [Table Text Block]

	*Less than Twelve Months*							*Twelve Months or More*							*Total*
	*Unrealized*			*Estimated*		*No. of*		*Unrealized*			*Estimated*		*No. of*		*Unrealized*			*Estimated*		*No. of*
*(dollars in thousands)*	*Losses*			*Fair Value*		*Issuances*		*Losses*			*Fair Value*		*Issuances*		*Losses*			*Fair Value*		*Issuances*
September 30, 2020
Mortgage-backed securities- Government sponsored agencies		(6	)		9,998		2		—			—		—		(6	)		9,998		2
Collateralized mortgage obligations		(91	)		29,260		6									(91	)		29,260		6
Corporate debt securities		(42	)		5,958		4		—			—		—		(42	)		5,958		4
Municipal securities		(36	)		1,587		3									(36	)		1,587		3
Total available for sale	$	(175	)	$	46,803		15	$	—		$	—		—	$	(175	)	$	46,803	$	15

Total held to maturity	$	—		$	—		—	$	—		$	—		—	$	—		$	—		—

December 31, 2019
Government agency securities	$	(19	)	$	1,572		2	$	—		$	—		—	$	(19	)	$	1,572		2
SBA securities		(22	)		1,469		2		—			—		—		(22	)		1,469		2
Mortgage-backed securities- Government sponsored agencies		(5	)		2,631		4		(24	)		3,912		6		(29	)		6,543		10
Collateralized mortgage obligations		(10	)		5,738		3		(15	)		953		2		(25	)		6,691		5
Total available for sale	$	(56	)	$	11,410		11	$	(39	)	$	4,865		8	$	(95	)	$	16,275		19

Total held to maturity	$	—		$	—		—	$	—		$	—		—	$	—		$	—		—

Note 5 - Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2020

Financing Receivable, Allowance for Credit Loss [Table Text Block]

	*Three Months Ended September 30,*
	*2020*												*2019*
*(dollars in thousands)*	*Real Estate*		*Commercial*			*Other*		*Unallocated*		*Total*			*Real Estate*		*Commercial*		*Other*		*Unallocated*		*Total*
Allowance for loan losses:
Beginning balance	$	18,985	$	3,813		$	22	$	—	$	22,820		$	14,582	$	3,976	$	3	$	—	$	18,561
Additions (reductions) to the allowance charged to expense		2,858		990			13		—		3,861			558		25		3		238		824
Charge-offs on loans		—		(48	)		—		—		(48	)		—		—		—		—		—
Recoveries on loans		—		1			—		—		1			—		1		—		—		1
Ending balance	$	21,843	$	4,756		$	35	$	—	$	26,634		$	15,140	$	4,002	$	6	$	238	$	19,386

	*Nine Months Ended September 30,*
	*2020*													*2019*
*(dollars in thousands)*	*Real Estate*		*Commercial*			*Other*		*Unallocated*			*Total*			*Real Estate*		*Commercial*			*Other*		*Unallocated*		*Total*
Allowance for loan losses:
Beginning of year	$	15,118	$	3,588		$	9	$	101		$	18,816		$	13,437	$	4,140		$	—	$	—	$	17,577
Additions (reductions) to the allowance charged to expense		6,725		2,165			26		(101	)		8,815			1,703		(216	)		6		238		1,731
Charge-offs on loans		—		(998	)		—		—			(998	)		—		110			—		—		110
Recoveries on loans		—		1			—		—			1			—		(32	)		—		—		(32	)
Ending balance	$	21,843	$	4,756		$	35	$	—		$	26,634		$	15,140	$	4,002		$	6	$	238	$	19,386

	*For the year end December 31, 2019*
*(dollars in thousands)*	*Real Estate*			*Commercial*			*Other*		*Unallocated*		*Total*
Allowance for loan losses:
Beginning of year	$	13,437		$	4,140		$	—	$	—	$	17,577
Additions (reductions) to the allowance charged to expense		1,847			433			9		101		2,390
Charge-offs on loans		(166	)		(1,093	)		—		—		(1,259	)
Recoveries on loans		—			108			—		—		108
Ending balance	$	15,118		$	3,588		$	9	$	101	$	18,816

*(dollars in thousands)*
September 30, 2020	*Real Estate*		*Commercial*		*Other*		*Unallocated*		*Total*
Reserves:
Specific	$	—	$	436	$	—	$	—	$	436
General		21,843		4,320		35		—		26,198
Total allowance for loan losses	$	21,843	$	4,756	$	35	$	—	$	26,634
Loans evaluated for impairment:
Individually	$	6,119	$	11,842	$	15	$	—	$	17,976
Collectively		2,316,619		417,242		3,316		—		2,737,177
Total loans, net of deferred loan fees and unaccreted discount on acquired loans	$	2,322,738	$	429,084	$	3,331	$	—	$	2,755,153

September 30, 2019	Real Estate		Commercial		Other		Unallocated		Total
Reserves:
Specific	$	127	$	303	$	—	$	—	$	430
General		15,013		3,699		6		238		18,956
Total allowance for loan losses	$	15,140	$	4,002	$	6		238		19,386
Loans evaluated for impairment:
Individually	$	4,537	$	5,091	$	—	$	—	$	9,628
Collectively		1,773,616		342,365		536		—		2,116,517
Total loans, net of deferred loan fees and unaccreted discount on acquired loans	$	1,778,153	$	347,456	$	536	$	—	$	2,126,145

December 31, 2019	*Real Estate*		*Commercial*		*Other*		*Unallocated*		*Total*
Reserves:
Specific	$	—	$	—	$	—	$	—	$	—
General		15,118		3,588		9		101		18,816
Total allowance for loan losses	$	15,118	$	3,588	$	9	$	101	$	18,816
Loans evaluated for impairment:
Individually	$	3,795	$	9,423	$	—	$	—	$	13,218
Collectively		1,842,747		340,148		821		—		2,183,716
Total loans, net of deferred loan fees and unaccreted discount on acquired loans	$	1,846,542	$	349,571	$	821	$	—	$	2,196,934

Financing Receivable Credit Quality Indicators [Table Text Block]

*(dollars in thousands)*			*Special*
September 30, 2020	*Pass*		*Mention*		*Substandard*		*Impaired*		*Total (1)*
Real estate:
Construction and land development	$	182,808	$	—	$	—	$	761	$	183,569
Commercial real estate		913,868		5,980		52,728		2,611		975,187
Single-family residential mortgages		1,158,935		2,083		217		2,747		1,163,982
Commercial:
Other		308,412		—		7,354		2,125		317,891
SBA		97,010		187		4,279		9,717		111,193
Other:		3,316		—		—		15		3,331
Total loans	$	2,664,349	$	8,250	$	64,578	$	17,976	$	2,755,153

*(dollars in thousands)*			*Special*
December 31, 2019	*Pass*		*Mention*		*Substandard*		*Impaired*		*Total(1)*
Real estate:
Construction and land development	$	95,756	$	—	$	—	$	264	$	96,020
Commercial real estate		767,603		5,353		18,115		2,197		793,268
Single-family residential mortgages		955,327		—		593		1,334		957,254
Commercial:
Other		265,178		4,078		5,330		—		274,586
SBA		61,496		189		3,877		9,423		74,985
Other:		821		—		—		—		821
Total loans	$	2,146,181	$	9,620	$	27,915	$	13,218	$	2,196,934

Financing Receivable, Past Due [Table Text Block]

*(dollars in thousands)*	30-59		60-89		*90 Days*		*Total*		*Loans Not*		*Total*		*Non-Accrual*
September 30, 2020	*Days*		*Days*		*Or More*		*Past Due*		*Past Due*		*Loans*		*Loans (1)*
Real estate:
Construction and land development	$	—	$	400	$	361	$	761	$	182,808	$	183,569	$	761
Commercial real estate		7,578		11,791		1,168		20,537		954,650		975,187		1,168
Single-family residential mortgages		2,408		791		799		3,998		1,159,984		1,163,982		2,747
Commercial:
Other		—		—		882		882		317,009		317,891		1,622
SBA		—		37		9,680		9,717		101,476		111,193		9,680
Other:		12		—		15		27		3,304		3,331		15
	$	9,998	$	13,019	$	12,905	$	35,922	$	2,719,231	$	2,755,153	$	15,993

	30-59		60-89		*90 Days*		*Total*		*Loans Not*		*Total*		*Non-Accrual*
December 31, 2019	*Days*		*Days*		*Or More*		*Past Due*		*Past Due*		*Loans*		*Loans (1)*
Real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	96,020	$	96,020	$	—
Commercial real estate		—		—		725		725		792,543		793,268		725
Single-family residential mortgages		1,454		1,560		450		3,464		953,790		957,254		1,334
Commercial:
Other		—		—		—		—		274,586		274,586		—
SBA		2,263		—		9,378		11,641		63,344		74,985		9,378
Other:		—		—		—		—		821		821		—
	$	3,717	$	1,560	$	10,553	$	15,830	$	2,181,104	$	2,196,934	$	11,437

Impaired Financing Receivables [Table Text Block]

*(dollars in thousands)*	*Principal*		*Recorded*		*Related*
September 30, 2020	*Balance*		*Investment*		*Allowance*
With no related allowance recorded
Construction and land development	$	761	$	761	$	—
Commercial and industrial		1,764		1,713
Commercial real estate		2,611		2,611		—
Residential mortgage loans		2,846		2,747		—
Commercial – SBA		9,695		9,680		—
Other		15		15		—
With related allowance recorded
Commercial and industrial		430		412		430
Commercial - SBA		37		37		6
Total	$	18,159	$	17,976	$	436

*(dollars in thousands)*	*Principal*		*Recorded*		*Related*
December 31, 2019	*Balance*		*Investment*		*Allowance*
With no related allowance recorded
Construction and land development	$	264	$	264	$	—
Commercial real estate		2,198		2,197		—
Residential mortgage loans		1,349		1,334		—
Commercial – SBA		9,423		9,423		—
With related allowance recorded
Commercial – SBA		—		—		—
Total	$	13,234	$	13,218	$	—

Summary Of Impaired Loans And Leases [Table Text Block]

	*Three Months Ended*								*Nine Months Ended*
	*September 30, 2020*				*September 30, 2019*				*September 30, 2020*				*September 30, 2019*
	*Average*		*Interest*		*Average*		*Interest*		*Average*		*Interest*		*Average*		*Interest*
*(dollars in thousands)*	*Balance*		*Income*		*Balance*		*Income*		*Balance*		*Income*		*Balance*		*Income*
With no related allowance recorded
Construction and land development	$	762	$	—	$	269	$	18	$	765	$	—	$	271	$	24
Commercial and industrial		1,782		7		—		—		1,819		24		—		—
Commercial real estate		2,679		25		2,552		152		2,689		77		2,560		169
Residential mortgage loans		2,916		—		906		3		2,755		—		907		25
Commercial – SBA		10,017		—		3,005		3		12,682		—		3,007		4
Other		15		—		—		—		15		—		—
With related allowance recorded
Commercial and industrial		433		—		—		—		482		—		—		—
Commercial real estate		—		—		894		—		—		—		895		—
Commercial – SBA		39		1		2,128		—		41		2		2,131		—
	$	18,643	$	33	$	9,754	$	176	$	21,248	$	103	$	9,771	$	222

Financing Receivable, Troubled Debt Restructuring [Table Text Block]

Pre-

Post-

Modification

(dollars in thousands)

Number of

Recorded

September 30, 2020

Loans

Investment

Commercial and industrial

1,719

Total

1,719

Note 6 - Loan Servicing (Tables)

9 Months Ended

Sep. 30, 2020

Mortgage And Small Business Administration Loans Serviced For Others [Table Text Block]

	*September 30,*		*December 31,*
*(dollars in thousands)*	*2020*		*2019*
Loans serviced for others:
Mortgage loans	$	1,569,407	$	1,683,298
SBA loans	$	153,382	$	170,849
Commercial real estate loans	$	4,164	$	4,216

Servicing Asset at Amortized Cost [Table Text Block]

	*Three Months Ended*						*Nine Months Ended*
	*September 30, 2020*						*September 30, 2020*
	*Mortgage*			*SBA*			*Mortgage*			*SBA*
*(dollars in thousands)*	*Loans*			*Loans*			*Loans*			*Loans*
Servicing assets:
Beginning of period	$	11,981		$	3,614		$	12,997		$	4,086
Additions		228			—			1,055			70
Disposals		(360	)		(5	)		(998	)		(270	)
Amortized to expense		(551	)		(133	)		(1,391	)		(410	)
Impairment		(50	)		—			(415	)		—
End of period	$	11,248		$	3,476		$	11,248		$	3,476

	*Three Months Ended*						*Nine Months Ended*
	*September 30, 2019*						*September 30, 2019*
	*Mortgage*			*SBA*			*Mortgage*			*SBA*
*(dollars in thousands)*	*Loans*			*Loans*			*Loans*			*Loans*
Servicing assets:
Beginning of period	$	13,244		$	4,343		$	12,858		$	4,512
Additions		130			379			1,471			819
Disposals		(42	)		(219	)		(128	)		(483	)
Amortized to expense		(458	)		(197	)		(1,327	)		(542	)
End of period	$	12,874		$	4,306		$	12,874		$	4,306

Note 7 - Goodwill and Intangibles (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

*(dollars in thousands)*
As of September 30:
Remainder of 2020	$	322
2021		1,121
2022		936
2023		800
2024		683
Thereafter		1,657
Total	$	5,519

Note 8 - Deposits (Tables)

9 Months Ended

Sep. 30, 2020

Time Deposit Maturities [Table Text Block]

*(dollars in thousands)*	*September 30, 2020*
One year	$	1,232,580
Two to three years		70,341
Over three years		12,117
Total	$	1,315,038

Note 9 - Long-term Debt (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Long-term Debt Instruments [Table Text Block]

	*September 30,*		*December 31,*
*(dollars in thousands)*	*2020*		*2019*
Principal	$	105,000	$	105,000
Unamortized debt issuance costs	$	695	$	951

Schedule of Interest and Amortizations Expense [Table Text Block]

	*For the Three Months Ended September 30,*				*For the Nine Months Ended September 30,*
*(dollars in thousands)*	*2020*		*2019*		*2020*		*2019*
Interest Expense:
Interest	$	1,662	$	1,662	$	4,987	$	4,987
Amortization		85		85		256		256

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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Note 13 - Commitments (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

*(dollars in thousands)*
Year ending December 31:
2020 remaining	$	1,464
2021		5,181
2022		4,727
2023		3,778
2024		2,693
Thereafter		12,032
Total	$	29,875

Schedule of Fair Value, Off-balance Sheet Risks [Table Text Block]

	*September 30,*		*December 31,*
*(dollars in thousands)*	*2020*		*2019*
Commitments to extend credit	$	447,111	$	326,126
Commercial and similar letters of credit		296		358
Standby letters of credit		4,114		3,715
Total	$	451,521	$	330,199

Note 14 - Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2020

	*September 30,*			*December 31,*
*(dollars in thousands)*	*2020*			*2019*
Beginning balance	$	4,000		$	3,600
New loans and advances		7,376			16,180
Repayments		(11,376	)		(15,780	)
Ending balance	$	-		$	4,000

Note 15 - Stock-based Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	*2020*			*2019*
Expected volatility		28.5	%		35.0	%
Expected term (in years)		6.0			6.0
Expected dividends		1.99	%		1.90	%
Risk free rate		1.31	%		2.66	%
Grant date fair value	$	4.61		$	6.32

Share-based Payment Arrangement, Option and Stock Appreciation Rights, Activity [Table Text Block]

						*Weighted-*
				*Weighted-*		*Average*
				*Average*		*Remaining*		*Aggregate*
				*Exercise*		*Contractual*		*Intrinsic*
*(dollars in thousands, except for share amounts)*	*Shares*			*Price*		*Term (in years)*		*Value*
Outstanding at beginning of year		1,090,968		$	13.11
Granted		51,000			20.10
Exercised		(56,498	)		12.61
Forfeited/cancelled		(36,000	)		18.32
Outstanding at end of year		1,049,470		$	13.30		3.52 years	$	189,917

Options exercisable		958,470		$	12.73		3.01 years	$	189,917

Note 16 - Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

						*Amount of Capital Required*
											*Minimum Required Plus*					*To Be Well-*
						*Minimum Required for*					*Conservation Buffer Capital*					*Capitalized Under Prompt*
	*Actual*					*Capital Adequacy Purposes*					*Fully Phased-In*					*Corrective Provisions*
*(dollars in thousands)*	*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*
As of September 30, 2020:
Tier 1 Leverage Ratio
Consolidated	$	361,290		11.47	%	$	125,998		4.0	%	$	125,998		4.0	%	$	157,497		5.0	%
Bank		445,699		14.16	%		125,929		4.0	%		125,929		4.0	%		157,411		5.0	%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated		347,061		14.11	%		110,704		4.5	%		172,207		7.0	%		159,906		6.5	%
Bank		445,699		18.13	%		110,432		4.5	%		171,783		7.0	%		159,513		6.5	%
Tier 1 Risk-Based Capital Ratio
Consolidated		361,290		14.69	%		147,606		6.0	%		209,108		8.5	%		196,808		8.0	%
Bank		445,699		18.13	%		147,242		6.0	%		208,593		8.5	%		196,323		8.0	%
Total Risk-Based Capital Ratio
Consolidated		493,358		20.05	%		196,808		8.0	%		258,310		10.5	%		246,010		10.0	%
Bank		473,462		19.26	%		196,323		8.0	%		257,674		10.5	%		245,404		10.0	%

						*Amount of Capital Required*
											*Minimum Required Plus*					*To Be Well-*
						*Minimum Required for*					*Capital Conservation Buffer*					*Capitalized Under Prompt*
	*Actual*					*Capital Adequacy Purposes*					*Fully Phased-In*					*Corrective Provisions*
*(dollars in thousands)*	*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*			*Amount*		*Ratio*
As of December 31, 2019:
Tier 1 Leverage Ratio
Consolidated	$	353,572		12.89	%	$	109,735		4.0	%	$	109,735		4.0	%	$	137,169		5.0	%
Bank		417,036		15.23	%		108,150		4.0	%		108,150		4.0	%		135,187		5.0	%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated		343,899		17.16	%		90,165		4.5	%		140,256		7.0	%		130,238		6.5	%
Bank		417,036		20.87	%		89,127		4.5	%		138,642		7.0	%		128,739		6.5	%
Tier 1 Risk-Based Capital Ratio
Consolidated		353,572		17.65	%		120,219		6.0	%		170,311		8.5	%		160,292		8.0	%
Bank		417,036		20.87	%		118,836		6.0	%		168,351		8.5	%		158,448		8.0	%
Total Risk-Based Capital Ratio
Consolidated		477,262		23.82	%		160,292		8.0	%		210,384		10.5	%		200,366		10.0	%
Bank		436,677		21.86	%		158,448		8.0	%		207,964		10.5	%		198,061		10.0	%

Note 17 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

*(dollars in thousands)*	*Fair Value Measurements Using:*
September 30, 2020	*Level 1*		*Level 2*		*Level 3*		*Total*
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities	$	—	$	1,288	$	—	$	1,288
SBA agency securities		—		4,515		—		4,515
Mortgage-backed securities		—		17,818		—		17,818
Collateralized mortgage obligations		—		46,336		—		46,336
Commercial paper		—		109,188		—		109,188
Corporate debt securities		—		33,930		—		33,930
Municipal securities		—		1,587		—		1,587
	$	—	$	214,662	$	—	$	214,662

On a non-recurring basis:
Other real estate owned		—		—		293		293
	$	—	$	—	$	293	$	293

December 31, 2019	*Level 1*		*Level 2*		*Level 3*		*Total*
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities	$	—	$	1,572	$	—	$	1,572
SBA agency securities		—		4,691		—		4,691
Mortgage-backed securities		—		19,171		—		19,171
Collateralized mortgage obligations		—		11,654		—		11,654
Commercial paper		—		69,898		—		69,898
Corporate debt securities		—		19,083		—		19,083
	$	—	$	126,069	$	—	$	126,069

On a non-recurring basis:
Other real estate owned	$	—	$	—	$	293	$	293

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]


*(dollars in thousands)*	*Fair Value*		*Valuation*	*Unobservable*	*Adjustment*
September 30, 2020	*Amount*		*Technique*	*Input*	*Range*
Other real estate owned	$	293	Third Party Appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	5% - 6%

December 31, 2019
Other real estate owned	$	293	Third Party Appraisals	Management Adjustments to Reflect Current Conditions and Selling Costs	5% - 6%

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

Note 18 - Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value, by Balance Sheet Grouping [Table Text Block]

		*September 30,*				*December 31,*
		*2020*				*2019*
	*Fair Value*	*Carrying*		*Fair*		*Carrying*		*Fair*
*(dollars in thousands)*	*Hierarchy*	*Value*		*Value*		*Value*		*Value*
Financial Assets:
Cash and due from banks	Level 1	$	121,630	$	121,630	$	114,763	$	114,763
Federal funds sold and other cash equivalents	Level 1		57,000		57,000		67,000		67,000
Interest-earning deposits in other financial institutions	Level 1		600		600		600		600
Investment securities - AFS	Level 2		214,662		214,662		126,069		126,069
Investment securities - HTM	Level 2		7,569		7,982		8,332		8,632
Mortgage loans held for sale	Level 1		23,886		24,224		108,194		109,385
Loans, net	Level 3		2,728,519		2,741,656		2,178,118		2,158,970
Equity security	Level 3		11,854		11,854		11,826		11,826
Mortgage and SBA serving rights	Level 2		14,724		16,253		17,083		20,752
Accrued interest receivable	Level 1		15,542		15,542		8,942		8,942

Financial Liabilities:
Deposits	Level 2	$	2,611,748	$	2,611,531	$	2,248,938	$	2,236,329
FHLB advances	Level 3		190,000		189,965		—		—
Long-term debt	Level 3		104,305		137,628		104,049		109,877
Subordinated debentures	Level 3		14,229		14,562		9,673		11,709
Accrued interest payable	Level 1		3,645		3,645		2,987		2,987

Note 19 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	*For the Three Months Ended September 30,*
	*2020*						*2019*
*(dollars in thousands except per share amounts)*	*Income*			*Shares*			*Income*		*Shares*
Net income as reported	$	8,520					$	8,012
Less: Earnings allocated to participating securities		(9	)					-
Shares outstanding					19,739,280					20,030,866
Impact of weighting shares					(21,713	)				36,981
Used in basic EPS		8,511			19,717,568			8,012		20,067,847
Dilutive effect of outstanding
Stock options					87,324					358,119
Used in dilutive EPS	$	8,511			19,804,892		$	8,012		20,425,966

Basic earnings per common share	$	0.43					$	0.40
Diluted earnings per common share		0.43						0.39

	*For the Nine Months Ended September 30,*
	*2020*					*2019*
*(dollars in thousands except per share amounts)*	*Income*			*Shares*		*Income*		*Shares*
Net income as reported	$	21,781				$	28,534
Less: Earnings allocated to participating securities	$	(29	)
Shares outstanding					19,739,280				20,030,866
Impact of weighting shares					60,337				32,613
Used in basic EPS		21,752			19,799,617		28,534		20,063,479
Dilutive effect of outstanding
Stock options					158,994				372,388
Used in dilutive EPS	$	21,752			19,958,612	$	28,534		20,435,867

Basic earnings per common share	$	1.10				$	1.42
Diluted earnings per common share		1.09					1.40

Note 20 - Revenue From Contracts With Customers (Tables)

9 Months Ended

Sep. 30, 2020

Disaggregation of Revenue [Table Text Block]

	*For the Three Months Ended September 30,*				*For the Nine Months Ended September 30,*
*(dollars in thousands)*	*2020*		*2019*		*2020*		*2019*
Non-interest income, in scope ⁽¹⁾
Fees and service charges on deposit accounts	$	353	$	340	$	1,244	$	953
Other fees ⁽²⁾		254		168		513		791
Other income ⁽³⁾		466		375		1,403		1,108
Gain on sale of fixed assets		—		11		—		17
Total in-scope non-interest income		1,073		894		3,160		2,869
Non-interest income, not in scope ⁽⁴⁾		1,654		1,905		6,390		9,628
Total non-interest income	$	2,727	$	2,799	$	9,550	$	12,497

Note 1 - Business Description (Details Textual) $ in Thousands	102 Months Ended
	Jan. 10, 2020	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Assets, Total		$ 3,359,576		$ 2,788,535
Loans Held for Investment and Held for Sale, Gross		2,800,000
Deposits, Total		2,611,748		2,248,938
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance		$ 421,416	$ 414,025	$ 407,690	$ 398,841	$ 393,820	$ 374,621
Number of Businesses Acquired	6
PGB Holdings Inc. [Member]
Number of Branches	3
PGB Holdings Inc. [Member] \| ILLINOIS
Number of Branches	3

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

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Amount of stockholders' equity (deficit), net of receivables from officers, directors, owners, and affiliates of the entity, attributable to both the parent and noncontrolling interests. Amount excludes temporary equity. Alternate caption for the concept is permanent equity.

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