Bankguam Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow

10-Q 1 bkgm-10q_20200331.htm BKGM-Q1 03312020 bkgm-10q_20200331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2020

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

For the transition period from to .

Commission file number: 000-54483

BankGuam Holding Company

(Exact name of registrant as specified in its charter)

Guam

66-0770448

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

P.O. Box BW

Hagåtña, Guam 96932

(671) 472-5300

(Address, including Zip Code, and telephone number, including area code, of the registrant’s principal executive offices)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

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

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.2083 par value per share	“BKGM”	Not listed

As of May 13, 2020, there were 9,682,351 shares outstanding

BANKGUAM HOLDING COMPANY

FORM 10-Q

QUARTERLY REPORT

TABLE OF CONTENTS


PART 1. FINANCIAL INFORMATION		3

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3

	Condensed Consolidated Statements of Financial Condition at March 31, 2020, and December 31, 2019	3

	Condensed Consolidated Statements of Income for the three months ended March 31, 2020 and 2019	4

	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2020 and 2019	6

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 4.	Controls and Procedures	51

PART II. OTHER INFORMATION		52

Item 6.	Exhibits	52

Signatures		53

Cautionary Note Regarding Forward-Looking Statements

For purposes of this Quarterly Report, the terms the “Company,” “we,” “us” and “our” refer to BankGuam Holding Company and its subsidiaries. This Quarterly Report on Form 10-Q contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These include, among other things, statements regarding:

•

Competition for loans and deposits and failure to attract or retain deposits and loans;

•

Local, regional, national and global economic conditions, and the impact they may have on us and our customers, and our assessment of that impact on our estimates, including the allowance for loan losses and fair value measurements;

•

The effects of the COVID-19 pandemic, including reduced tourism in Guam, volatility in the international and national economy and credit markets, quarantines or other travel or health-related restrictions, the length and severity of the COVID-19 pandemic and the pace of recovery following the COVID-19 pandemic;

•

Risks associated with concentrations in real estate related loans;

•

Changes in the level of nonperforming assets and charge-offs and other credit quality measures, and their impact on the adequacy of our allowance for loan losses and our provision for loan losses;

•

The effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Open Market Committee of the Federal Reserve Board;

•

Stability of funding sources and continued availability of borrowings;

•

The effect of changes in laws and regulations with which the Company and Bank of Guam must comply, including any change in Federal Deposit Insurance Corporation insurance premiums;

•

Our ability to raise capital or incur debt on reasonable terms;

•

Regulatory limits on Bank of Guam’s ability to pay dividends to the Company;

•

The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters;

•

Changes in the deferred tax asset valuation allowance in future quarters;

•

The costs and effects of legal and regulatory developments, including resolution of legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations or reviews;

•

The ability to increase market share and control expenses; and,

•

Our success in managing the risks involved in the foregoing items, as well as other statements regarding our future operations, financial condition and prospects, and business strategies.

We are not able to predict all of the factors that may affect future results. Forward-looking statements may be preceded by, followed by or include the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “is designed to” and similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business that could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included in filings we make from time to time with the U.S. Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for our fiscal year ended December 31, 2019. We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New information, future events or risks could cause the forward-looking statements we discuss in this Quarterly Report not to occur. You should not place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this Quarterly Report.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

BankGuam Holding Company

Unaudited Condensed Consolidated Statements of Financial Condition

(in Thousands, Except Par Value)

	March 31, 2020			December 31, 2019
ASSETS
Cash and due from banks	$	33,074		$	37,870
Interest bearing deposits in banks		122,268			93,846
Total cash and cash equivalents		155,342			131,716
Restricted cash		150			400
Investment in unconsolidated subsidiary		7,490			7,443
Investment securities available-for-sale, at fair value		384,762			377,130
Investment securities held-to-maturity, at amortized cost (Fair Value $49,822 at 3/31/2020 and $50,204 at 12/31/2019)		49,075			49,984
Federal Home Loan Bank stock, at cost		2,335			2,267
Loans, net of allowance for loan losses ($29,065 at 3/31/2020 and $27,870 at 12/31/2019)		1,296,539			1,275,272
Accrued interest receivable		6,435			5,581
Premises and equipment, net		19,477			19,754
Other assets		71,779			83,515
Total assets	$	1,993,384		$	1,953,062

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	563,078		$	582,967
Interest bearing		1,197,599			1,146,939
Total deposits		1,760,677			1,729,906
Accrued interest payable		89			118
Subordinated debt, net		14,757			14,751
Other liabilities		46,740			44,044
Total liabilities		1,822,263			1,788,819
Commitments and contingencies (Note 6)

Stockholders’ equity:
Common stock $0.2083 par value; 48,000 shares authorized; 9,713 and 9,704 shares issued and 9,681 and 9,672 shares outstanding at 3/31/2020 and 12/31/2019, respectively		2,025			2,023
Preferred stock $100 par value; 300 shares authorized; 9.8 shares issued and outstanding		980			980
Additional paid-in capital, Common stock		24,569			24,478
Additional paid-in capital, Preferred stock		8,803			8,803
Retained earnings		131,718			129,576
Accumulated other comprehensive income (loss)		3,316			(1,327	)
Common stock in treasury, at cost (32 shares)		(290	)		(290	)
Total stockholders’ equity		171,121			164,243
Total liabilities and stockholders’ equity	$	1,993,384		$	1,953,062

The accompanying notes are an integral part of the condensed consolidated financial statements.

BankGuam Holding Company

Unaudited Condensed Consolidated Statements of Income

(Dollar and Share Amounts in Thousands, Except Per Share Amounts)

	Three Months Ended March 31,
	2020			2019
Interest income:
Loans	$	19,767		$	20,333
Investment securities		1,974			2,513
Deposits with banks		358			571
Total interest income		22,099			23,417
Interest expense:
Savings deposits		474			472
Time deposits		18			28
Other borrowed funds		241			-
Total interest expense		733			500
Net interest income		21,366			22,917
Provision for loan losses		2,207			3,852
Net interest income, after provision for loan losses		19,159			19,065

Non-interest income:
Service charges and fees		1,738			1,470
Income from merchant services, net		543			577
Cardholders income, net		157			98
Trustee fees		635			628
Other income		998			853
Total non-interest income		4,071			3,626
Non-interest expense:
Salaries and employee benefits		9,524			9,076
Occupancy		2,156			2,027
Equipment and depreciation		2,972			2,760
Insurance		474			472
Telecommunications		343			345
FDIC assessment		279			361
Professional services		577			604
Contract services		515			360
Other real estate owned		28			513
Stationery and supplies		200			228
Training and education		185			200
General, administrative and other		1,977			2,026
Total non-interest expense		19,230			18,972
Income before income taxes		4,000			3,719
Income tax expense		755			817
Net income		3,245			2,902
Preferred stock dividend		(136	)		(134	)
Net income attributable to common stockholders	$	3,109		$	2,768

Earnings per common share:
Basic	$	0.32		$	0.29
Diluted	$	0.32		$	0.29
Dividends declared per common share	$	0.10		$	0.10
Basic weighted average common shares		9,673			9,647
Diluted weighted average common shares		9,673			9,647

The accompanying notes are an integral part of the condensed consolidated financial statements.

BankGuam Holding Company

Unaudited Condensed Consolidated Statements of Comprehensive Income

(in Thousands)

	Three Months Ended March 31,
	2020		2019
Net income	$	3,245	$	2,902
Other comprehensive income:
Unrealized holding gain on available-for-sale securities arising during the period, net of tax		4,570		1,493
Amortization of post-transfer unrealized holding loss on held-to-maturity securities during the period, net of tax		73		87
Total other comprehensive income		4,643		1,580
Total comprehensive income	$	7,888	$	4,482

The accompanying notes are an integral part of the condensed consolidated financial statements.

BankGuam Holding Company

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

(Dollar Amounts in Thousands, Except Number of Shares)

	Number of Common Shares		Common Stock		Preferred Stock		Additional Paid-in Capital - Common		Additional Paid-in Capital - Preferred		Retained Earnings			Accumulated Other Comprehensive Income/(loss)			Treasury Stock			Total
Balances, January 1, 2020		9,671,556	$	2,023	$	980	$	24,478	$	8,803	$	129,576		$	(1,327	)	$	(290	)	$	164,243
Comprehensive income:
Net income		-		-		-		-		-		3,245			-			-			3,245
Change in accumulated other comprehensive income:
Unrealized gain on available-for-sale securities, net		-		-		-		-		-		-			4,643			-			4,643
Common stock issued under Employee Stock Purchase Plan & Service Awards		8,990		2		-		91		-		-			-			-			93
Cash dividends on common stock		-		-		-		-		-		(967	)		-			-			(967	)
Cash dividends on preferred stock		-		-		-		-		-		(136	)		-			-			(136	)
Balances, March 31, 2020		9,680,546	$	2,025	$	980	$	24,569	$	8,803	$	131,718		$	3,316		$	(290	)	$	171,121

	Number of Common Shares		Common Stock		Preferred Stock		Additional Paid-in Capital - Common		Additional Paid-in Capital - Preferred		Retained Earnings			Accumulated Other Comprehensive Income/(loss)			Treasury Stock			Total
Balances, January 1, 2019		9,646,344	$	2,017	$	980	$	24,214	$	8,803	$	117,339		$	(4,768	)	$	(290	)	$	148,295
Comprehensive income:
Net income		-		-		-		-		-		2,902			-			-			2,902
Reclassification related to adoption of new accounting standard		-		-		-		-		-		496			-			-			496
Change in accumulated other comprehensive income:
Unrealized loss on available-for-sale securities, net		-		-		-		-		-		-			1,580			-			1,580
Common stock issued under Employee Stock Purchase Plan & Service Awards		6,881		2		-		71		-		-			-			-			73
Cash dividends on common stock		-		-		-		-		-		(965	)		-			-			(965	)
Cash dividends on preferred stock		-		-		-		-		-		(134	)		-			-			(134	)
Balances, March 31,2019		9,653,225	$	2,019	$	980	$	24,285	$	8,803	$	119,638		$	(3,188	)	$	(290	)	$	152,247

The accompanying notes are an integral part of the condensed consolidated financial statements.

BankGuam Holding Company

Unaudited Condensed Consolidated Statements of Cash Flows

(in Thousands)

	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net income	$	3,245		$	2,902
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		2,207			3,852
Depreciation		1,036			940
Amortization of debt issuance costs		6			-
Amortization of fees, discounts and premiums		260			217
Gain (loss) on sales of other real estate owned, net		-			17
Proceeds from sales of loans held for sale		3,416			9,215
Origination of loans held for sale		(3,416	)		(9,215	)
Decrease (increase) in mortgage servicing rights		(23	)		73
Realized gain on sale of premises and equipment		2			10
Noncash lease expense		681			902
Net change in operating assets and liabilities:
Accrued interest receivable		(854	)		(572	)
Other assets		11,034			1,356
Accrued interest payable		(29	)		(8	)
Lease liability		1,050			(828	)
Other liabilities		1,646			837
Net cash provided by operating activities		20,261			9,698

Cash flows from investing activities:
Purchases of available-for-sale securities		(52,599	)		(12,335	)
Maturities, prepayments and calls of available-for-sale securities		49,326			13,321
Maturities, prepayments and calls of held-to-maturity securities		934			3,672
Loan originations and principal collections, net		(23,432	)		(39,199	)
Income from equity investment in unconsolidated subsidiary		(244	)		(96	)
Dividends received from unconsolidated subsidiary		196			110
Costs (proceeds) from FHLB stock purchase		(68	)		89
Proceeds from sales of other real estate owned		-			40
Proceeds from sales of premises and equipment		2			10
Purchases of premises and equipment		(761	)		(1,482	)
Net cash used in investing activities		(26,646	)		(35,870	)

Cash flows from financing activities:
Net increase (decrease) in deposits		30,771			(3,518	)
Proceeds from issuance of common stock		93			73
Dividends paid		(1,103	)		(1,099	)
Net cash provided by (used in) financing activities		29,761

Price	-0.00	EPS	1
Shares	10	P/E	-0
MCap	-0	P/FCF	-0
Net Debt	-190	EBIT	19
TEV	-190	TEV/EBIT	-10
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-13
10-K	2019-12-31	Filed 2020-03-19
10-Q	2019-09-30	Filed 2019-11-08
10-Q	2019-06-30	Filed 2019-08-09
10-Q	2019-03-31	Filed 2019-05-10
10-K	2018-12-31	Filed 2019-03-15
10-Q	2018-09-30	Filed 2018-11-09
10-Q	2018-06-30	Filed 2018-08-13
10-Q	2018-03-31	Filed 2018-08-03
10-K	2017-12-31	Filed 2018-06-29
10-Q	2017-09-30	Filed 2017-11-20
10-Q	2017-06-30	Filed 2017-08-09
10-Q	2017-03-31	Filed 2017-05-11
10-K	2016-12-31	Filed 2017-03-14
10-Q	2016-09-30	Filed 2016-11-08
10-Q	2016-06-30	Filed 2016-08-08
10-Q	2016-03-31	Filed 2016-05-11
10-K	2015-12-31	Filed 2016-03-14
10-Q	2015-09-30	Filed 2015-11-10
10-Q	2015-06-30	Filed 2015-08-11
10-Q	2015-03-31	Filed 2015-05-12
10-K	2014-12-31	Filed 2015-03-17
10-Q	2014-09-30	Filed 2014-11-10
10-Q	2014-06-30	Filed 2014-08-12
10-Q	2014-03-31	Filed 2014-05-12
10-K	2013-12-31	Filed 2014-03-17
10-Q	2013-09-30	Filed 2013-11-08
10-Q	2013-06-30	Filed 2013-08-09
10-Q	2013-03-31	Filed 2013-05-09
10-K	2012-12-31	Filed 2013-03-21
10-Q	2012-09-30	Filed 2012-11-13
10-Q	2012-06-30	Filed 2012-08-13
10-Q	2012-03-31	Filed 2012-05-21
10-K	2011-12-31	Filed 2012-04-06
10-Q	2011-09-30	Filed 2011-11-14

8-K	2020-05-18	Shareholder Vote
8-K	2020-03-23	Amend Bylaw
8-K	2020-02-24	Other Events, Exhibits
8-K	2020-02-05	Other Events
8-K	2020-01-24	Other Events
8-K	2019-11-25	Other Events, Exhibits
8-K	2019-08-26	Other Events, Exhibits
8-K	2019-06-27	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-05-28	Other Events, Exhibits
8-K	2019-05-20	Shareholder Vote
8-K	2019-03-20	Officers, Exhibits
8-K	2019-02-25	Officers, Other Events, Exhibits
8-K	2018-12-26	Officers
8-K	2018-11-26	Officers, Other Events, Exhibits
8-K	2018-10-15	Officers
8-K	2018-09-04	Shareholder Vote
8-K	2018-08-27	Other Events, Exhibits
8-K	2018-06-11	Regulation FD, Exhibits
8-K	2018-05-29	Officers, Other Events, Exhibits
8-K	2018-04-12	Accountant, Exhibits
8-K	2018-03-26	Officers
8-K	2018-02-26	Other Events, Exhibits
8-K	2018-02-09	Other Events
8-K	2017-12-29	Officers, Exhibits

EX-3.01	bkgm-ex301_181.htm
EX-31.01	bkgm-ex3101_7.htm
EX-31.02	bkgm-ex3102_6.htm
EX-32.01	bkgm-ex3201_8.htm

BKGMF 10Q Quarterly Report

Bankguam Earnings 2020-03-31