Bankguam Holding Earnings 2019-09-30

BKGMF 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 bkgmf-10q_20190930.htm BKGMF-Q3-20190930 bkgmf-10q_20190930.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 September 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)

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	“BKGMF”	Not listed
As of November 8, 2019, there were 9,665,581 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 September 30, 2019, and December 31, 2018	3

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

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

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

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 4.	Controls and Procedures	56

PART II. OTHER INFORMATION		57

Item 6.	Exhibits	57

Signatures		58

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 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)

	September 30, 2019			December 31, 2018
ASSETS
Cash and due from banks	$	29,312		$	33,279
Interest bearing deposits in banks		160,097			121,816
Total cash and cash equivalents		189,409			155,095
Restricted cash		400			400
Investment in unconsolidated subsidiary		7,393			3,291
Investment securities available-for-sale, at fair value		353,959			381,042
Investment securities held-to-maturity, at amortized cost (Fair Value $56,875 at 9/30/19 and $67,477 at 12/31/18)		56,678			68,088
Federal Home Loan Bank stock, at cost		2,267			2,356
Loans, net of allowance for loan losses ($27,852 at 9/30/19 and $23,774 at 12/31/18)		1,238,465			1,212,141
Accrued interest receivable		6,373			6,221
Premises and equipment, net		20,195			18,471
Other assets		76,592			44,597
Total assets	$	1,951,731		$	1,891,702

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	546,095		$	538,168
Interest bearing		1,183,573			1,190,655
Total deposits		1,729,668			1,728,823
Accrued interest payable		118			137
Subordinated debt, net		14,744			-
Other liabilities		46,080			14,447
Total liabilities		1,790,610			1,743,407
Commitments and contingencies (Note 6)

Stockholders’ equity:
Common stock $0.2083 par value; 48,000 shares authorized; 9,698 and 9,679 shares issued and 9,666 and 9,646 shares outstanding at 9/30/19 and 12/31/18, respectively		2,022			2,017
Preferred stock $100 par value; 300 shares authorized; 9.8 shares issued and outstanding		980			980
Additional paid-in capital, Common stock		24,415			24,214
Additional paid-in capital, Preferred stock		8,803			8,803
Retained earnings		126,839			117,339
Accumulated other comprehensive loss		(1,648	)		(4,768	)
Common stock in treasury, at cost (32 shares)		(290	)		(290	)
Total stockholders’ equity		161,121			148,295
Total liabilities and stockholders’ equity	$	1,951,731		$	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 September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Interest income:
Loans	$	20,162		$	19,950		$	61,175		$	59,208
Investment securities		2,551			2,270			7,581			7,255
Deposits with banks		567			354			1,695			726
Total interest income		23,280			22,574			70,451			67,189
Interest expense:
Savings deposits		480			487			1,430			1,507
Time deposits		26			29			81			88
Other borrowed funds		244			-			254			10
Total interest expense		750			516			1,765			1,605
Net interest income		22,530			22,058			68,686			65,584
Provision for loan losses		1,919			3,134			7,869			7,972
Net interest income, after provision for loan losses		20,611			18,924			60,817			57,612

Non-interest income:
Service charges and fees		1,744			1,567			4,986			5,005
Gain (loss) on sale of investment securities		347			(181	)		347			(593	)
Income from merchant services, net		606			611			1,812			1,788
Cardholders income, net		433			68			473			247
Trustee fees		715			787			1,957			1,866
Other income		1,026			897			2,769			2,695
Total non-interest income		4,871			3,749			12,344			11,008
Non-interest expense:
Salaries and employee benefits		9,315			8,977			27,251			27,033
Occupancy		2,294			1,825			6,292			5,435
Equipment and depreciation		3,006			2,628			8,562			7,485
Insurance		478			442			1,407			1,296
Telecommunications		341			491			1,038			1,471
FDIC assessment		-			348			706			1,056
Professional services		488			709			1,860			2,237
Contract services		523			432			1,515			1,266
Other real estate owned		63			196			1,235			238
Stationery and supplies		168			243			581			622
Training and education		268			276			799			816
General, administrative and other		2,124			2,133			6,361			6,268
Total non-interest expense		19,068			18,700			57,607			55,223
Income before income taxes		6,414			3,973			15,554			13,397
Income tax expense		1,367			699			3,245			2,597
Net income		5,047			3,274			12,309			10,800
Preferred stock dividend		(138	)		(138	)		(409	)		(409	)
Net income attributable to common stockholders	$	4,909		$	3,136		$	11,900		$	10,391

Earnings per common share:
Basic	$	0.51		$	0.33		$	1.23		$	1.08
Diluted	$	0.51		$	0.33		$	1.23		$	1.08
Dividends declared per common share	$	0.10		$	0.10		$	0.30		$	0.30
Basic weighted average common shares		9,660			9,635			9,654			9,605
Diluted weighted average common shares		9,660			9,635			9,654			9,605

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 September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	5,047		$	3,274		$	12,309		$	10,800
Other comprehensive income (loss):
Unrealized holding gain (loss) on available-for-sale securities arising during the period, net of tax		451			(670	)		3,205			(3,349	)
Reclassification for (gain) loss realized on available-for- sale securities		(347	)		181			(347	)		593
Amortization of post-transfer unrealized holding loss on held-to-maturity securities during the period, net of tax		87			199			262			474
Total other comprehensive income (loss)		191			(290	)		3,120			(2,282	)
Total comprehensive income	$	5,238		$	2,984		$	15,429		$	8,518

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, 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
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
Comprehensive income:
Net income		-		-		-		-		-		5,047			-			-			5,047
Change in accumulated other comprehensive income:
Unrealized gain (loss) on available-for- sale securities, net		-		-		-		-		-		-			191			-			191
Common stock issued under Employee Stock Purchase Plan & Service Awards		5,485		2		-		58		-		-			-			-			60
Cash dividends on common stock		-		-		-		-		-		(965	)		-			-

10-Q	2019-09-30	Quarter: 2019-09-30
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	2019-11-25	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

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BCYC	Bicycle Therapeutics	0
CAVF	Cavendish Futures Fund	0
HIT	Hospitality Investors Trust	0
LUNG	Prolung	0
CFFA	CF Finance Acquisition	0
REE	Rare Element Resources	0
ODYY	Odyssey Group	0

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EX-31.02	bkgmf-ex3102_6.htm
EX-32.01	bkgmf-ex3201_7.htm