Bankguam Holding Earnings 2019-06-30

BKGMF 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 bkgmf-10q_20190630.htm 10-Q bkgmf-10q_20190630.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 June 30, 2019

☐	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)

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(b) 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	“BKGMF”	Not listed
As of August 9, 2019, there were 9,660,171 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 June 30, 2019, and December 31, 2018	3

	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019 and 2018	4

	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and 2018	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018	6

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 4.	Controls and Procedures	55

PART II. OTHER INFORMATION		56

Item 6.	Exhibits	56

Signatures		57

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 events, 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;

•

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 impact of the Dodd Frank Wall Street Reform and Consumer Protection Act and the implementation of its associated rules and regulations;

•

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, 2018, and our Quarterly Reports on Form 10-Q filed by us in fiscal 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)

	June 30, 2019			December 31, 2018
ASSETS
Cash and due from banks	$	31,193		$	33,279
Interest bearing deposits in banks		114,224			121,816
Total cash and cash equivalents		145,417			155,095
Restricted cash		400			400
Investment in unconsolidated subsidiary		3,169			3,291
Investment securities available-for-sale, at fair value		384,731			381,042
Investment securities held-to-maturity, at amortized cost (Fair Value $60,910 at 6/30/19 and $67,477 at 12/31/18)		60,753			68,088
Federal Home Loan Bank stock, at cost		2,267			2,356
Loans, net of allowance for loan losses ($27,088 at 6/30/19 and $23,774 at 12/31/18)		1,240,706			1,212,141
Accrued interest receivable		6,406			6,221
Premises and equipment, net		19,917			18,471
Other assets		78,233			44,597
Total assets	$	1,941,999		$	1,891,702

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	544,049		$	538,168
Interest bearing		1,181,809			1,190,655
Total deposits		1,725,858			1,728,823
Accrued interest payable		126			137
Subordinated debt, net		14,738			-
Other liabilities		44,351			14,447
Total liabilities		1,785,073			1,743,407
Commitments and contingencies (Note 6)

Stockholders’ equity:
Common stock $0.2083 par value; 48,000 shares authorized; 9,692 and 9,679 shares issued and 9,660 and 9,646 shares outstanding at 6/30/19 and 12/31/18, respectively		2,020			2,017
Preferred stock $100 par value; 300 shares authorized; 9.8 shares issued and outstanding		980			980
Additional paid-in capital, Common stock		24,357			24,214
Additional paid-in capital, Preferred stock		8,803			8,803
Retained earnings		122,895			117,339
Accumulated other comprehensive loss		(1,839	)		(4,768	)
Common stock in treasury, at cost (32 shares)		(290	)		(290	)
Total stockholders’ equity		156,926			148,295
Total liabilities and stockholders’ equity	$	1,941,999		$	1,891,702

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 June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Interest income:
Loans	$	20,679		$	20,067		$	41,013		$	39,258
Investment securities		2,517			2,551			5,030			4,986
Deposits with banks		558			124			1,128			372
Total interest income		23,754			22,742			47,171			44,616
Interest expense:
Savings deposits		478			510			950			1,020
Time deposits		27			28			55			59
Other borrowed funds		11			9			11			10
Total interest expense		516			547			1,016			1,089
Net interest income		23,238			22,195			46,155			43,527
Provision for loan losses		2,098			2,099			5,951			4,838
Net interest income, after provision for loan losses		21,140			20,096			40,204			38,689

Non-interest income:
Service charges and fees		1,772			1,754			3,242			3,438
Loss on sale of investment securities		-			(362	)		-			(413	)
Income from merchant services, net		629			485			1,206			1,177
Cardholders income, net		(57	)		171			41			179
Trustee fees		613			879			1,241			1,079
Other income		890			916			1,744			1,799
Total non-interest income		3,847			3,843			7,474			7,259
Non-interest expense:
Salaries and employee benefits		8,861			9,251			17,937			18,056
Occupancy		1,971			1,815			3,998			3,611
Equipment and depreciation		2,796			2,543			5,556			4,857
Insurance		456			423			929			854
Telecommunications		351			487			697			980
FDIC assessment		345			339			706			709
Professional services		768			946			1,372			1,528
Contract services		632			422			992			833
Other real estate owned		659			21			1,171			43
Stationery and supplies		185			185			413			379
Training and education		332			348			531			540
General, administrative and other		2,210			2,208			4,237			4,135
Total non-interest expense		19,566			18,988			38,539			36,525
Income before income taxes		5,421			4,951			9,139			9,423
Income tax expense		1,061			1,054			1,877			1,898
Net income		4,360			3,897			7,262			7,525
Preferred stock dividend		(137	)		(136	)		(271	)		(271	)
Net income attributable to common stockholders	$	4,223		$	3,761		$	6,991		$	7,254

Earnings per common share:
Basic	$	0.44		$	0.39		$	0.72		$	0.76
Diluted	$	0.44		$	0.39		$	0.72		$	0.76
Dividends declared per common share	$	0.10		$	0.10		$	0.20		$	0.20
Basic weighted average common shares		9,654			9,635			9,650			9,590
Diluted weighted average common shares		9,654			9,635			9,650			9,590

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 June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
Net income	$	4,360	$	3,897		$	7,262	$	7,525
Other comprehensive income (loss):
Unrealized holding gain (loss) on available-for-sale securities arising during the period, net of tax		1,262		(599	)		2,754		(2,681	)
Reclassification for loss realized on available-for-sale securities		-		362			-		413
Amortization of post-transfer unrealized holding loss on held-to-maturity securities during the period, net of tax		87		155			175		276
Total other comprehensive income (loss)		1,349		(82	)		2,929		(1,992	)
Total comprehensive income	$	5,709	$	3,815		$	10,191	$	5,533

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		Paid-in Capital - Common		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 gain 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
Common stock issued		-		-		-		-		-		-			-			-			-
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
Comprehensive income:
Net income		-	$	-	$	-	$	-	$	-	$	4,360		$	-		$	-		$	4,360
Change in accumulated other comprehensive income:		-		-		-		-		-		-			-			-			-
Unrealized gain on available-for-sale securities, net		-		-		-		-		-		-			1,349			-			1,349
Common stock issued under Employee Stock Purchase Plan & Service Awards		6,821		1		-		72		-		-			-			-			73
Cash dividends on common stock		-		-		-		-		-		(966	)		-			-			(966	)
Cash dividends on preferred stock		-		-		-		-		-		(137	)		-			-			(137	)
Balances, June 30, 2019		9,660,046	$	2,020	$	980	$	24,357	$	8,803	$	122,895		$	(1,839	)	$	(290	)	$	156,926

	Number of Common Shares		Common Stock		Preferred Stock		Paid-in Capital - Common		Paid-in Capital - Preferred		Retained Earnings			Accumulated Other Comprehensive Income/(loss)			Treasury Stock			Total
Balances, January 1, 2018		9,413,958	$	1,969	$	980	$	21,472	$	8,803	$	108,900		$	(3,687	)	$	(290	)	$	138,147
Comprehensive income:
Net income		-		-		-		-		-		3,628			-

10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

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

EOCC	Enel Generacion Chile	168,300
CTAM	Castle A M	7
BDCO	Blue Dolphin Energy	6
MHTX	Manhattan Scientifics	5
ACLZ	Accelerize	4
GIGL	Giggles N' Hugs	3
GIDYL	GI Dynamics	0
EOSS	EOS	0
KLDK	Global House Holdings	0
CBAI	CBA Florida	0

EX-10.02	bkgmf-ex1002_231.htm
EX-31.01	bkgmf-ex3101_6.htm
EX-31.02	bkgmf-ex3102_8.htm
EX-32.01	bkgmf-ex3201_12.htm